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spk00: Good morning and welcome to the World Acceptance Corporation's fourth quarter 2024 earnings conference call. This call is being recorded. At this time, all participants have been placed in a 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 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 factor sections of the Corporation's most recent form 10K for the fiscal year ended March 31, 2023, 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.
spk03: Good morning, and thank you for joining our fiscal 2024 year-end earnings call. Before we open up to questions, there are a few areas I'd like to highlight. Nearly two years ago in the spring of 2022, we began to see the effects of the stimulus hangover impacting our customer base, mainly through inflation and increased financial insecurity about their future. At that time, we began what has been nearly a two-year period of tightened underwriting, reduced outstandings with our highest credit risk customers, and a focus on building a stronger portfolio base that included stopping and reversing the reduction in gross yields. Earlier this fiscal year, we signaled that we would continue with tighter credit and would not anticipate our normal portfolio growth pace for the year. During this portfolio right-sizing process, we decreased our portfolio size by .1% this fiscal year. However, our customer base was largely unchanged with a .5% decrease in the number of customers at year-end compared to 2023. For branches that were open in both fiscal years, the reduction in customer base was negligible at 0.2%. This is an important distinction as we've used this time to right-size and de-risk the portfolio through improving the overall credit quality of our customer base and reducing our realized and expected losses, while at the same time improving the yield and decreasing our average customer outstandings. The results show significant reductions in delinquency, with our recently 60-day or longer rate improving significantly by 9% from .5% to 5% when comparing the end of 2024 to the end of 2023, and our 90-plus delinquency improving by 11% from .5% to 3.1%, again comparing date of 2024 to 2023. Also, our annualized net charge-off rate improved by more than 500 basis points, more than 20% on a relative basis when comparing the end of fiscal 2024 to 2023. I'm also very proud of our capital position, especially in the current economic climate. I think the prudent use of our debt has led to a reduced interest expense in the fourth quarter when compared to fiscal 2023 and a very conservative 1.2 to 1 -to-equity ratio at the end of the year. New loan volumes increased 7% this quarter compared to the fourth quarter last year as demand for our former and new customers continues to remain high. Former customer loan volume in particular was 14% higher in the fourth quarter this year compared to last year and improved 11% -over-year for the entire fiscal year. During the quarter, new customer approval rates were relatively flat when compared to the same quarter last year, with our continued focus on credit quality and our early indications performance through first payment defaults are significantly lower than the prior two fiscal years and in line with or better than pre-pandemic first pay defaults comparisons. For new customers and the portfolio as a whole, our yields continue to improve. This is a result of improved gross yields as well as reduced delinquencies. While we are pleased with our current progress in delinquency improvement and trending of the underlying portfolio, we still believe there is room for improvement in the current and upcoming quarters. With the expectations of economic stability continuing to increase and decreasing likelihood of a major unemployment event impacting our customer base, management continues to accrue for the long-term incentive plan with besting tiers of $16.35 and $20.45 earnings per share due to the overall much improved credit quality and operating conditions. We anticipate returning to modest growth this year with a continued focus on reducing delinquency and net charge-offs. We will continue to monitor both of these especially in the first several quarters of fiscal year 2025 as those assumptions are fairly vital to us achieving $20.45 for the full fiscal year. Finally, I would like to thank our wonderful team members here at World who have helped so many customers from our communities throughout the entire fiscal year of 2024 helping to establish and rebuild credit as well as meeting immediate financial needs. We have an absolutely amazing team. I am very grateful for their commitment to their customers as well as to each other. At this time, Johnny Calamese, our Chief Financial and Strategy Officer, and I would like to open up to any questions you have.
spk00: 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 John Rowan with Channy. Please go ahead.
spk02: Good morning, guys. Chad, my phone broke up for a second there. Did you give some type of guidance for the upcoming quarter in the year or were you just kind of restating what the vesting goals are?
spk03: Yeah, really just restating what our vesting goals are at $16.35 per share and $20.45 per share. Also reinforcing that, we realize that there's two major events. One is modest growth and the other is continuing to reduce our delinquency and net charge-off rates that we'll have to continue to focus on, especially in the first one to two quarters this year, to remain confident that those tiers, especially the $20.45, are achievable.
spk02: Okay. Obviously, you charged off quite a bit less or you provisioned quite a bit less than your charge-off for the quarter. Is that just a function of portfolio liquidation and CSOL or are there changes to macro assumptions for lifetime loss?
spk01: It's probably just, yeah, the biggest thing is the decrease in the portfolio that happens in the underlying loss rates that drive the CSOL model. Obviously, lower delinquency also factors in there as well. All those things together led to a lower provision during the quarter.
spk02: Okay. There were changes to the lifetime loss assumptions based on delinquencies or whatever you have going into that assumption?
spk01: That's right, yeah.
spk02: Okay. One last question. Any unusual items in G&A?
spk01: No, nothing unusual this quarter.
spk02: Okay. All right. That's it for me. Thank you.
spk00: Again, if you have a question, please press star, then one. Seeing no further questions, I would like to turn the conference back over to Chad Prashad for any closing remarks.
spk03: Thank you for taking the time to join us today. John, thank you for your question. This concludes the fourth quarter earnings call for World Acceptance Corporation. Thank you.
spk00: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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