World Acceptance Corporation Q3 FY2026 earnings call

• Originated 16% more new customer volume, ended quarter with 25% more outstanding ledger. First pay defaults on third quarter new customers 19% lower than those in fiscal 2022. - Made credit box improvements for underwriting, majority to drive faster return on investment and increase long-term ROI with loyal customers. - Customer base grew 5.4% organically year over year, up from 2.2% last year. - Repurchased nearly 600,000 shares, reducing outstanding shares by 11% in first nine months. - Optimistic about strong tax filing season due to expected larger tax refunds and marketing adjustments. - Focused on improving branch operations and personnel management, with Sylvan bringing new approaches to management structure.

During the third quarter, new customer volume was 16% more, and outstanding ledger was 25% more. Yields improved 84 basis points year over year. The customer base grew 5.4% organically year over year. Organic growth in ledger was 2.4% year over year, and average outstanding loan balance declined around 2.5% year over year. Revenue contribution details weren't explicitly broken down by product segment in terms of percentage, but key financial metrics related to new customers, ledger growth, yields, and customer base were highlighted.

• Expect yield trend to continue due to improved rates in some states, credit limit and underwriting discipline, improving customer retention, and smart investments. - Optimistic about increased tax filing volume and revenue during the quarter. - Remaining over $60 million of capacity for share repurchases, approximately 9% of outstanding shares as of yesterday's closing price.

• Ice storm affected approximately 10 states, closing some branches. - Potential impact of 10% credit card cap on access to credit, which could drive up demand for installment loans, though not directly affecting major portfolio of World Acceptance. - Underperforming team members related to collection ability, engagement, etc. in the operating environment.

Q: Hey, good morning. Thanks for taking my questions. I totally get the dynamics of the portfolio growth and particularly related to new consumers. But just looking for an update on kind of the health of the underlying consumer aside from that. Obviously, there were concerns in the fall. Particularly related to the auto segment. But just any trends you kinda seen in the consumer since then, and then how you're thinking about the outlook in the tax refund season with all the headlines that the consumers are expected to get larger tax refunds.

A: Yeah. I would say from the overall consumer perspective, we haven't seen a degradation in in collections or in credit quality. There has been a I would say, a slight increase in demand There's also been a a significant decrease in our cost of acquisition for our higher credit quality new customers, which may be related to that. May not not really super sure on that one. But we haven't seen a significant change in our consumer behavior whether it's due to you know, tariffs or, you know, other expenses. On the the tax filing side, we are seeing definitely an increased demand in taxes and tax filings. We are expecting to see larger returns or larger refunds this year a lot of those are probably due to some of the tax law changes last year that would affect our customer base in particular We have also changed marketing sort of last minute early in January, late December to to really attract customers who are gonna be in some of those segments, customers who are either paid but through tips so there's a you know, might be experiencing refunds this season or other sort of changes in the tax code from last year. But on the tax filing side, we we do remain optimistic this will be a very strong tax year for us.

Q: Hi, guys. Question, in the report earnings report, you had talked about an increase in headcount in the field level offices branch offices. And then and you spoke about deciding to have a reduction in headcount going forward of of 3% to 5% Why the increase? And then why the decision to decrease?

A: Yeah. Great question. So first, the decision to increase was building up a quality team in anticipation of some reduction in some underperforming team members and also some underperforming parts of the company. So really, it's it's building up in advance of turnover. We've done it across, I would say, roughly 80% of the company and about 50% of that was done very quickly. There's still sort of a a lagging period where in anticipation of of turnover or some underperforming team members, we're we're holding on to some of our underperforming team members a little longer than anticipated as we're building up the base there, if that makes sense. So really, it's just building up in anticipation of that turnover. So should expect to see the reduction pretty quickly within this quarter.

Q: I don't know if you have a crystal you don't have a crystal ball, but the headlines related to a 10% cap on credit cards. Was any of that related to underwriting? I mean, you guys underwrite your the loans you you make. Was there any discussion about your area A: So as far as I know, there's been no discussions how that would relate to installment loans. But I would imagine with a 10% rate cap with the current cost of capital in the environment, there would be a severe reduction in access to credit cards. And, you know, my rough estimate would be somewhere around the seven fifty to seven eighty credit score. Anyone who's below that would probably see a sort severe reduction in their access to credit. I think it would it would definitely drive up demand for our product or for installment loans in general. But you know, aside from that, in in the our own credit card portfolio currently is still very small. I believe we currently have expanded with active customers, and I believe it's 46 states. But, again, we're we're still very small in general, just a few million dollars outstanding. So we we can pivot very quickly on that end if needed, but I I don't think for now there's there's really any serious implications negatively for our major portfolio.