World Acceptance Corporation Q1 FY2026 earnings call

• Completed a new credit agreement increasing commitments to $640 million, allowing stock repurchases up to 100% of net income with a $100 million upfront repurchase allowance and 100% of net income from January 1, 2025. - In the process of redeeming remaining 2021 bonds, with around $170 million outstanding to redeem by end of August, removing constraint for accelerated stock repurchases. - First quarter is historically the lowest earnings quarter due to seasonal factors, but current portfolio has customer base expansion, strong loan growth, improved approval rates, stable credit quality, growth in yields, and stable to improving late-stage delinquency. - Refinance volume increased 10% this quarter over first quarter last year; new originations increased 12.6% over last year's first quarter, with dollars lent in new originations up 12.8% year-over-year. - Customer base increased 4% this quarter, first positive first quarter customer base growth in 3 years, returning to largest customer base since first quarter 2023. - Gross yields increased over 230 basis points year-over-year. - Completed first phase of internal testing for New World Finance Smile credit card, moving to live testing of customers with goals to align yield with risk, lower acquisition and service costs, improve retention, and expand markets.

No specific product segment financial performance details provided in the transcript.

• New credit agreement allows stock repurchases up to 100% of net income, with capacity for over $200 million share repurchases in next 12 months (approximately 23%-25% of outstanding shares at current stock price). - Not aiming for massive portfolio growth, not looking for double-digit growth in portfolio base or ledger, and not taking unnecessary credit risks. - Aiming to continue strategy weighing new and returning customers heavily, with focus on customer retention.

Q: Just want to parse through some of the credit developments in the quarter. So I understand that you guys were expecting charge-offs to be higher because of late-stage DQs last quarter. Obviously, delinquencies moved in the right direction this quarter. Just -- is there anything that's driving that, whether it's underwriting changes in macro and how that kind of positions your outlook for charge-offs for the remainder of the year?

A: Yes. So the biggest thing is the proportion of new customers in the portfolio. So we had a really good third quarter or December quarter with new customer growth. And at the end of December, our 0 to 5-month customer, right? So they only had been with us for up to 5 months. That made up 8.7% of our portfolio at December or $120 million. That's now down to 7.2% or $91 million at June, right? So a lot of the risk has come out of the portfolio as that 0 to 5-month customer becomes a smaller proportion of the overall portfolio.

Q: Can you -- Chad, can you repeat what you said about the repurchase authorization with the buckets that, I guess, come in once you retire the remaining notes?

A: Yes. So with the new credit agreement, there's really 2 things at play here. So there's an upfront repurchase allowance around $100 million in the first 12 months. In addition to that, we can also repurchase up to 100% of net income, which begins with January 1, 2025. So, there's already approximately $45 million in that bucket as well. So as we sit today, that's around $145 million.