World Acceptance Corporation

Good morning, and welcome to World Acceptance Corporation's third quarter 2025 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 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 risk 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 31st, 2024 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. Thank you for joining our fiscal 2025 third quarter earnings call. Before we open up to questions, there are a few areas I'd like to highlight. We're excited about the results we're seeing throughout the portfolio after a few years of right-sizing and de-risking. Notably, yields have improved by over 200 basis points year-over-year. Portfolio growth in the third quarter returned to pre-pandemic norms. The loan portfolio itself continues to perform well as first-pay default rates remain low. Even as we've increased our growth, over the last several quarters. And finally, our portfolios returned to essentially the same size year-over-year after shrinking 10% year-over-year at the end of the third quarter last year, as well as shrinking three of the last four years year-to-date. Our customer base has actually increased by 4% year-over-year compared to shrinking 2.2% for the 12 months ending December of 2024 and shrinking 14% for the same period of fiscal 23. All of these results show a stabilized portfolio with both higher credit quality and higher yields as we're poised to steadily grow in fiscal 26. During the third quarter of 25, we grew the portfolio by 6.6% compared to 1.5% during the third quarter of fiscal 24, and shrinking 2.8% in fiscal 23. For the customer base, we experienced 7% growth in our customer base during the third quarter, which compares to 3% during the third quarter of the prior year, as well as an average of 6.3% customer-based growth pre-pandemic. We work diligently to regrow our customer base with higher credit quality customers while decreasing our overall average balance to ensure the right risk-reward profile across our customer base and to improve our yields and long-term customer profitability. Year over year, our average balance has decreased by almost 5.1% from December 31st, 2023, and by 12.6% from December 31st, 2022. Our yields have improved notably for the entire portfolio, driven by an improvement in yields for both our non-refinance customers as well as now including our refinance customers. Our non-refinance volume has rebounded during the third quarter with over 18% more loans made during the third quarter compared to fiscal 24 and 53% more compared to fiscal 23. All this growth comes with marked improvement in yield as well as stable early performance indicators for credit quality. For new customers, marketing and acquisition channel adjustments continue to show increased quality in applications. Our approval rates for new customers has improved dramatically. The third quarter approval rates increased by 47% compared to the same period of fiscal 24 and by 80% compared to the same period of fiscal 23. all again while maintaining low first payment default rates and improving our gross yields. With these shifts in the portfolio makeup and the weighting continuing into this current calendar year, we expect to see yields and delinquency trends continue to convert into the same revenue and income trends that we've already seen so far this year, as well as into fiscal 26. We do continue to see an opportunity to improve our delinquency and charge-off rates, especially related to the large loan portfolio which stems from our outsized investments into large loans made during fiscal years 21 and 22. Finally, in closing, we have an absolutely amazing team, and I'm very grateful to their commitment to our customers and to each other. They are helping our customers every day to establish credit, rebuild credit, as well as meeting an immediate financial need. At this time, Johnny Cummings, our Chief Financial and Strategy Officer, and I would like to open up to any questions you have.

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. 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 come from Kyle Joseph with Stevens. Please go ahead.