Edited Transcript of WRLD earnings conference call or presentation 9-May-19 2:00pm GMT

Thomson Reuters StreetEvents - finance.yahoo.com Posted 5 years ago

Q4 2019 World Acceptance Corp Earnings Call

Greenville May 9, 2019 (Thomson StreetEvents) -- Edited Transcript of World Acceptance Corp earnings conference call or presentation Thursday, May 9, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* John L. Calmes

World Acceptance Corporation - Executive VP, CFO, Chief Strategy Officer & Treasurer

* Ravin Chad Prashad

World Acceptance Corporation - President, CEO & Director

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Conference Call Participants

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* John J. Rowan

Janney Montgomery Scott LLC, Research Division - Director of Specialty Finance

* Kyle M. Joseph

Jefferies LLC, Research Division - Equity Analyst

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Presentation

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Operator [1]

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Good morning, and welcome to the World Acceptance Corporation sponsored fourth quarter press release conference call. This call is being recorded. (Operator Instructions) Before we begin, the corporation has requested that I make the following announcements.

The comments made during this conference call may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represents the corporation's expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Statements other than those of historical facts, as well as those identified by the words anticipate, estimate, intend, plan, expect, believe, may, will and should or any variation of the foregoing and similar expressions are forward-looking statements. Additional information regarding forward-looking statements and any factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements are included in the paragraph discussing forward-looking statements in today's earnings press release and in the Risk Factors section of the corporation's most recent Form 10-K for the fiscal year ended March 31, 2019, and subsequent reports filed with or furnished to the SEC from time to time. The corporation does not undertake any obligation to update any forward-looking statements it makes.

At this time, it is my pleasure to turn the floor over to your host, Chad Prashad, President and Chief Executive Officer.

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Ravin Chad Prashad, World Acceptance Corporation - President, CEO & Director [2]

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Good morning. This is Chad Prashad, President and CEO of World Acceptance. I'm also joined by John Calmes, our Chief Financial Officer and Strategy officer; and Luke Umstetter, General Counsel.

I that trust you've all had a chance to read our press release and the earnings transcript that we released earlier this morning. At this time, we'll then open up to any questions that you may have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from Kyle Joseph from Jefferies.

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Kyle M. Joseph, Jefferies LLC, Research Division - Equity Analyst [2]

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Just regarding the acceleration of growth you guys are seeing, can you give us a sense for what's driving that? Any changes in the competitive environment? Or is it more a thing -- more initiatives you guys have undertaken because it's continued to accelerate? So you obviously guys are doing a good job, but just give us a little more sense of what's driving that.

Story continues

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John L. Calmes, World Acceptance Corporation - Executive VP, CFO, Chief Strategy Officer & Treasurer [3]

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Yes, sure. So this past year, we did have a couple of acquisitions in the third quarter, which contributed to about 4% of our total year-over-year growth.

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Ravin Chad Prashad, World Acceptance Corporation - President, CEO & Director [4]

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4% to 5%, yes.

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John L. Calmes, World Acceptance Corporation - Executive VP, CFO, Chief Strategy Officer & Treasurer [5]

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4% to 5% of our total year-over-year growth out of that 12.3% growth that you see for the year. The rest of the growth, the organic growth of around 8% or so, 7.5% to 8%, most of that has to do with improvements in marketing, also increased digital presence and just general referrals and word-of-mouth from our customers.

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Kyle M. Joseph, Jefferies LLC, Research Division - Equity Analyst [6]

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Got it. And additionally, it looked like the insurance revenue has accelerated. Anything driving that? Is that anything related to new customers? Or is that a trend we can expect to continue?

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John L. Calmes, World Acceptance Corporation - Executive VP, CFO, Chief Strategy Officer & Treasurer [7]

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So a lot of that is driven by where some of the growth has been. And some of the acquisitions that we've had over last year have been in states that rely on insurance products. So it really will be a function of where the -- which states the growth happens in. But it should grow, all things equal, in line with overall growth of the portfolio.

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Kyle M. Joseph, Jefferies LLC, Research Division - Equity Analyst [8]

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Got it, that's helpful. And then shifting to credit. Totally understand how new accounts impact credit performance and the dynamics there. Just want to give -- get a sense for -- so for repeat borrowers, what kind of credit trends are you seeing there? Have those been fairly stable?

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Ravin Chad Prashad, World Acceptance Corporation - President, CEO & Director [9]

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Yes. Across the board for customers that have a lot of tender with us or key customers, we're seeing similar to improved delinquency and charge-off rates.

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Kyle M. Joseph, Jefferies LLC, Research Division - Equity Analyst [10]

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Got it. And then lastly, on the buybacks, so you guys did about 600,000 shares in the quarter. Can you just remind us your remaining authorization and your appetite?

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John L. Calmes, World Acceptance Corporation - Executive VP, CFO, Chief Strategy Officer & Treasurer [11]

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Sure. So at the end of the quarter, we had $2.4 million available under the current authorization, and we have around $22.3 million available under the current credit facility structure, adding on 50% of the Q4 net income. We still see the purchase as an attractive option for -- an attractive use of capital in the short term and medium term.

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Kyle M. Joseph, Jefferies LLC, Research Division - Equity Analyst [12]

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Got it. One last one from me, apology. Can you just talk about the delays in tax refunds and any impacts in the quarter?

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Ravin Chad Prashad, World Acceptance Corporation - President, CEO & Director [13]

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So I think, overall, we haven't seen a huge impact to us throughout the fourth quarter. And most of our tax refunds, it seems to come in late February, early March, just about a week later than last year. We did experience an increase in our tax preparation this year. I think we're at about 17% year-over-year in a number of taxes that we prepared and filed. And the -- either the government shutdown or the proxy offer or some combination of the 2 may have contributed to that increase.

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Operator [14]

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(Operator Instructions) We'll take the next question from John Rowan of Janney.

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John J. Rowan, Janney Montgomery Scott LLC, Research Division - Director of Specialty Finance [15]

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Just, I mean, how I had the repurchase model is basically 50% of net income. But it seems like -- in the fourth quarter, was that a catch-up because of kind of the institution of the program that you could maybe buy more of the trailing 12 months, and that maybe going forward, kind of 50% of net income is more of an appropriate rate in perpetuity sort of?

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John L. Calmes, World Acceptance Corporation - Executive VP, CFO, Chief Strategy Officer & Treasurer [16]

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That's right. So we've had a buildup in that bucket over the -- that included all of fiscal '17, fiscal '18 and year-to-date, fiscal 2019. So that's how we've gotten to that initial buying level. At this point, we will achieve all that, and we'll just be building. So as of middle of the quarter or as of right now, we have $22.3 million available to buy under the facility. And on the current facility, we'll add to that at 50% of consolidated net income.

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John J. Rowan, Janney Montgomery Scott LLC, Research Division - Director of Specialty Finance [17]

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Okay. So the $23 million, that's the current authorization, or that's the current that's available based on the buildup of prior income for your credit agreement?

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John L. Calmes, World Acceptance Corporation - Executive VP, CFO, Chief Strategy Officer & Treasurer [18]

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Right. So that's the buildup under the current credit facility that we have available to repurchase.

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John J. Rowan, Janney Montgomery Scott LLC, Research Division - Director of Specialty Finance [19]

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