World Acceptance Corporation

Good morning and welcome to the World Acceptance Corporation sponsored fourth quarter press release conference call. If you require operator assistance, please press star then zero. This call is being recorded. At this time, all participants have been placed in listen-only mode. Before we begin, the corporation has requested that I make the following announcement. 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 represent 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 fact, 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, 2020, 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.

Good morning, and thank you for joining the World Acceptance Earnings Call for the end of the 2021 fiscal year and fourth quarter. As we've all experienced, this year has presented so many challenges, both professionally and personally, for all people. Our customers and team members are no exceptions. and both have risen to adapt and overcome the challenges. I first want to highlight a few amazing outcomes from this year. First, on the operating side, we've adapted this new environment, creating safe and flexible work arrangements for employees, adjusting branch hours, expediting technology improvements, adapting underwriting and marketing with 39% of new customers now being sourced through digital channels, centralizing certain decisioning and loan funding segments, with a quarter of loans in our fourth quarter, approximately 24%, being funded and closed remotely, all the while continuing and improving upon our already world-class customer service. We're now seeing an all-time low in terms of loan delinquency, and we continue to see signs that customers' financial situations remain improved. Our culture also continues to be among one of our best assets, winning many Top Workplaces awards across the country, including being the only South Carolina-based company to be named a Top Workplaces USA in 2021. We also remain excited and optimistic in light of our successful execution across a range of initiatives in such an otherwise challenging year. We are now exceptionally well positioned for the future. Our capital and financing positions are solid. with our recently amended bank agreement and $117 million in stock repurchase capacity today and continued low leverage. In order to fuel continued large loan growth, we expect to add another diversified funding source later this year. We pivoted to serve higher credit quality customers in Illinois with the recent passage of a 36% rate cap. our portfolio in Illinois shrunk by less than 1% during the last fiscal year. This is compared to our entire portfolio, which decreased approximately 8.6% due to both the pandemic and the resulting stimulus impacts. On the heels of this operational underwriting pivot in Illinois, we are proactively growing our large loan and lower interest rate portfolio in all of our states. During fiscal 2021, our large loan portfolio loans greater than $2,500 grew by 7.4% compared to the end of March 2020. This is not a shift to focus on large loans and away from smaller loans, but an additional focus on serving customers as they move up the credit market. In the states we currently operate in, this could roughly double the potential customer base and triple the potential portfolio size of just new customers in our expanded total adjustable market. We've also been quite busy this quarter working with stakeholders across the country to convey the importance of equal access to regulated credit for all Americans. As in Illinois, rate caps can make it mathematically impossible to lend to large segments of the population, excluding millions of people from affordable, regulated, credit building, and risk-priced credit. While world acceptance has proven our ability to quickly pivot to higher credit quality customers, As a community-based lender, we feel the responsibility to our communities to ensure that these citizens aren't left with choices, they don't give them a way to improve their credit history, and or put their assets at significant risk. In the near future, we hope our customers will see us less as a lender and more as their one-stop shop for financial wellness. This includes our current installment loan and tax products, but also seeks to improve the overall financial health of our customers with credit building products, banking products like checking and savings accounts, revolving lines of credit and budget coaching that increases the financial stability through both proactively reducing monthly expenses and also increasing savings towards the customer's goals. We've piloted several financial health related programs throughout fiscal 2021 and expect to announce several partnerships later this year to allow us to improve the financial lives of the 1.3 to 1.5 million customers we serve annually. This is in addition to our traditional land products. There's much to be excited about in the future. At this time, John Calmes, our Chief Financial and Strategy Officer, and I would like to open it up to any questions about our fourth quarter fiscal 2021 earnings.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Kyle Joseph with Jefferies. Please go ahead.