World Acceptance Corporation

Good morning and welcome to the World Acceptance Corporation's sponsored third quarter press release conference call. This call is being recorded. At this time, all participants have been placed on a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. 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 Security 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 are included in the paragraph discussing forward-looking statements in today's earnings press release and in the risk factor section of the corporation's most recent Form 10-K for the fiscal year ended March 31, 2021, 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. Please go ahead.

Good morning, and thank you for joining our fiscal third quarter 2022 earnings call. Before we open up the questions, there are a few areas I'd like to highlight. First of all, I'm pleased to report that we experienced record portfolio growth for the second consecutive quarter. The overall portfolio grew $211 million, or 15.1% during the quarter, and $340 million, or 27% year over year. This is the largest single growth quarter on record, surpassing last quarter's $170 million in growth and our prior largest third quarter growth, which was $157 million in fiscal year 2021. Further, we experienced this broad expansion of the portfolio across all customer types and continue to see tremendous increases in new and returning customer loan volume when compared to last year and even pre-pandemic levels. Delinquency remains low on a relative basis and within our expectations. It's important to note that with the change to CECL provisioning last year, we expect to grow our provision in real time as our portfolio grows and reduce our provision in real time with seasonal runoff during tax season. During periods of this rapid growth, this temporarily depresses net income as compared to our historical delinquency-based provisioning model. The loan growth and earlier provisioning of CECL should positively impact revenue and income in future quarters. We expect the origination cohort performance to remain relatively consistent in the near term based on several factors, including overall economic environment, changes to our credit underwriting over the last year, and an increase of larger loans to retain the most attractive option for our best customers. We continue to expect to hit our long-term incentive EPS targets before the end of fiscal year 2025. As a result of these changes, today, over 43% of our portfolio is below 36% APR, and 66% of our portfolio is below 50% APR, demonstrating our ability to offer attractive loan terms to increase retention of our best customers. Finally, as we close out this calendar year 2021, we have much to be thankful for at World. First, our branch team and those who support them have done a tremendous job of navigating the last two years during the COVID pandemic, putting our customers and their needs and their safety first. We continue to win top workplace awards across the country, including most recently Oklahoma, second only at Tennessee and New Mexico this year. in addition to being Sacraline's only Top Workplace USA winner in 2021, truly reflecting the incredible work family that our team has created, and I couldn't be prouder of them. At this time, Johnny Camise, our Chief Financial and Strategy Officer, we would like to open it up to questions about our third quarter fiscal 2022 earnings.

Thank you. We will now begin our 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. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. And the first question will be from John Rowan from Jannie. Please go ahead.