Q3 2021 World Acceptance Corp Earnings Call

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Good morning, and welcome to the World Acceptance Corporation sponsored third quarter Press release conference call.

This call is being recorded at this time, all participants have been placed in a listen only mode.

We begin the corporation has requested that I make the following announcement the comments made during this conference may contain certain forward looking statements within the meaning of section 21 E of the Securities Exchange Act of 1930 for 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 and any variation of the foregoing or similar expressions are forward looking statements. Additionally, information regarding forward looking.

Statements and any factors that could cause actual results or performance to differ from the expected 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. Other corporations. Most recent form 10-K for the fiscal year end.

At March 31 of 2020.

And subsequent reports filed with or furnished to the SEC from time to time. The Corp 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 Mr. Chad for shot President and Chief Executive Officer. Please go ahead.

Good morning.

And thank you for joining us for our third quarter earnings call.

Before we begin I would like to extend a big thank you to all of our team members calendar.

Calendar 2020 was a very challenging year in the third quarter was our busiest quarter in company history. So I want to thank all of you for being flexible dedicated and helping them navigate these challenges as we serve our communities and our customers.

Thank you.

And with that.

We'll open up for questions.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're using a hit if you're using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we'll pause momentarily to assemble our roster.

And our first question will come from Kyle Joseph with Jefferies. Please go ahead.

Hey, good morning, Thanks for taking my question.

Just on the.

I noticed you factored incremental stimulus in India Reserve.

If you could just give us a sense for you know there remains some uncertainty in terms of the the magnitude and the timing there, but just your.

Your thoughts on incremental stimulus and potential impacts on loan demand.

Sure I mean, I'm not going to speak to the impacts of a on the allowance and other.

I'll, let chad speak to demand going forward.

Yeah.

Through the second quarter.

We've built up.

Qualitative reserve sort of specifically tied to the higher unemployment rates.

And as other end of the quarter given the additional federal unemployment and stainless we felt like those those were needed in any longer.

But still looking forward.

There is some uncertainty around how long the pandemic last and what that might mean to the losses. So we still have.

The allowance.

On the conservative end of the range.

Until there's a little bit more certainty.

Yeah got it man.

Yes as to demand going forward.

We saw a pretty precipitous drop in demand with the first round of stimulus in April.

But then began to see a rebound.

Several months later.

Into the third quarter, which was our.

Highest demand for former customers we've had.

Company history so.

Yeah.

It is likely that with another round of stimulus. It will just be delayed for some period of time as we've seen just recently, but it's too early to tell him a lot of it depends on exactly what the stimulus package looks like.

Got it I appreciate that.

Then one follow up for me, Illinois passed some legislation.

Last week can you guys quantify your ear exposure and potential impacts on the business from the from the Illinois Bill.

Sure.

Illinois did pass.

So for me you legislation last week.

In anticipation of it being signed in the law in the coming weeks.

We have already pivoted to only serving customers that we can serve.

About 36%.

As our first full week of doing that.

We recognize it will have an impact on the roughly 70% of customer base that we used to serve in Illinois that we will no longer be able to serve there.

But we're very confident that.

We will be able to pivot quickly and swiftly.

Throughout the next couple of weeks and months and Illinois to.

To grow our sub 36% in larger loan business in Illinois.

One of the other pieces to the equation is we will be able to take these learnings and Illinois.

And so credit to other states and grow our large loans at 36% business in other states as well.

Got it and actually that brings up one other question for me in net assure your customer count was down more than your loan balances is that a result of you guys focusing on the larger loan balances.

Not specifically, it's good question.

It is really a result of decreased demand and loans from new customers throughout.

Really first quarter and second quarter, where we had very minimal demand.

And the most of our loans were two former customers from refinancing.

Third quarter, we had our biggest quarter for former customers ever.

Those are typically going to be much larger loans than our new customers.

New customer demand did rebound and it was down about 20%, 25% year over year.

However, those are typically larger smaller loans so.

Its a re rating of the portfolio.