World Acceptance Corporation Reports Fiscal 2025 Fourth Quarter Results

World Acceptance Corporation (NASDAQ:WRLD) today reported financial results for its fourth quarter of fiscal 2025.

Fourth fiscal quarter highlights

During its fourth fiscal quarter, World Acceptance Corporation achieved improved earnings driven by an increase in our tax preparation revenue. The quarter also benefited from a partial forfeiture of our performance-based restricted shares granted in 2018 that had a $16.35 earnings per share (EPS) performance target (the $16.35 Performance Shares). The forfeiture of such shares resulted in a $2.8 million after tax release of share based compensation expense, resulting in EPS of $16.36 per diluted share on a rolling four-quarter basis. Prior to the forfeiture of such shares, EPS would have been approximately $15.98 for the rolling four quarters.

Highlights from the fourth quarter include:

• Increase in total revenues to $165.3 million, including a 110 basis point yield increase compared to the same quarter in the prior year
• Net income of $44.3 million
• Diluted net income per share of $8.13
• Customer base increased by 3.5%

Portfolio results

Gross loans outstanding were $1.23 billion as of March 31, 2025, a 4.0% decrease from the $1.28 billion of gross loans outstanding as of March 31, 2024. During the most recent quarter, gross loans outstanding decreased sequentially 11.3%, or $155.8 million, from $1.38 billion as of December 31, 2024, compared to a decrease of 8.8%, or $123.5 million, in the comparable quarter of the prior year.

During the most recent quarter, our new and former customer borrowing was similar to the same quarter of fiscal year 2024 while our current customer borrowing decreased. Specifically, during the quarter, new customer loan volume increased 1.3%, while former and refinance customer loan volume decreased 2.5% and 14.2%, respectively, compared to the same quarter of fiscal year 2024. Our customer base increased by 3.5% during the twelve-month period ended March 31, 2025, compared to a decrease of 1.5% for the comparable period ended March 31, 2024. During the quarter ended March 31, 2025, the number of unique borrowers in the portfolio decreased by 6.3% compared to a decrease of 6.2% during the quarter ended March 31, 2024. As we continue to shrink the average gross loan balance in the portfolio through increasing new and former customer small loan volume and maintain the tighter underwriting of large loans, we expect the portfolio gross and net yield to continue to improve.

The following table includes the volume of gross loan origination balances, excluding tax advance loans, by customer type for the following comparative quarterly periods:

As of March 31, 2025, the Company had 1,024 open branches. For branches open at least twelve months, same store gross loans decreased 2.5% in the twelve-month period ended March 31, 2025, compared to a decrease of 6.7% for the twelve-month period ended March 31, 2024. For branches open throughout both periods, the customer base over the twelve-month period ended March 31, 2025, increased 5.1% compared to a decrease of 0.2% for the twelve-month period ended March 31, 2024.

Three-month financial results

Net income for the fourth quarter of fiscal 2025 increased to $44.3 million compared to $35.1 million for the same quarter of the prior year. Net income per diluted share increased to $8.13 per share in the fourth quarter of fiscal 2025 compared to $6.09 per share for the same quarter of the prior year. Although net income was negatively impacted by an increase in provision for credit losses, primarily related to our new growth, we expect solid returns on our fiscal 2025 originations given early payment performance and yield.

Total revenues for the fourth quarter of fiscal 2025 increased to $165.3 million, a 3.8% increase from $159.3 million for the same quarter of the prior year. Interest and fee income increased 1.2%, from $116.3 million in the fourth quarter of fiscal 2024 to $117.6 million in the fourth quarter of fiscal 2025. Insurance income decreased by 10.8% to $11.7 million in the fourth quarter of fiscal 2025 compared to $13.2 million in the fourth quarter of fiscal 2024. The large loan portfolio decreased from 55.8% of the overall portfolio as of March 31, 2024, to 48.5% as of March 31, 2025. Interest and insurance yields for the quarter ended March 31, 2025 increased 110 basis points compared to the quarter ended March 31, 2024. Other income increased $6.1 million, or 20.4%, to $35.9 million in the fourth quarter of fiscal 2025 compared to $29.8 million in the fourth quarter of fiscal 2024. Revenues from our tax return preparation business increased by $6.8 million, or 25.8%, in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024 due to an increase in our average preparation fee.

The Company accrues for expected losses with a current expected credit loss ("CECL") methodology, which requires us to create a provision for credit losses on the day we originate the loan. The provision for credit losses increased $3.7 million to $33.0 million from $29.3 million when comparing the fourth quarter of fiscal 2025 to the fourth quarter of fiscal 2024. The table below itemizes the key components of the CECL allowance and provision impact during the quarter.

The provision was negatively impacted by higher 90 day past due accounts and a smaller decrease in expected loss rates compared to the same quarter of the prior year. Specifically, our 90 day past due accounts and expected loss rates were negatively impacted by an increase in our 0-5 month customers, our riskiest customers, as a percentage of the portfolio during the current quarter.

Net charge-offs for the quarter decreased $1.6 million, from $47.4 million in the fourth quarter of fiscal 2024 to $45.8 million in the fourth quarter of fiscal 2025. Net charge-offs as a percentage of average net loans receivable on an annualized basis decreased to 18.5% in the fourth quarter of fiscal 2025 from 18.8% in the fourth quarter of fiscal 2024.

Accounts 61 days or more past due increased to 6.0% on a recency basis at March 31, 2025, compared to 5.0% at March 31, 2024. Our allowance for credit losses as a percent of net loans receivable was 11.3% at March 31, 2025, compared to 10.8% at March 31, 2024. Recency delinquency on accounts at least 90 days past due increased from 3.1% at March 31, 2024, to 3.7% at March 31, 2025. Recency delinquency on accounts 0 to 60 days past due decreased from 19.5% at March 31, 2024 to 18.7% at March 31, 2025.

The table below is updated to use the customer tenure-based methodology that aligns with our CECL methodology. After experiencing rapid portfolio growth during fiscal years 2019 and 2020, primarily in new customers, our gross loan balance experienced pandemic related declines in fiscal 2021 before rebounding during fiscal 2022. Over the last two and a half years, we have tightened our lending to new customers substantially. The tables below illustrate the changes in the portfolio weighting.

General and administrative ("G&A") expenses decreased $5.7 million, or 7.9%, to $65.9 million in the fourth quarter of fiscal 2025 compared to $71.6 million in the same quarter of the prior fiscal year. As a percentage of revenues, G&A expenses decreased from 45.0% during the fourth quarter of fiscal 2024 to 39.9% during the fourth quarter of fiscal 2025. G&A expenses per average open branch decreased by 6.1% when comparing the fourth quarter of fiscal 2025 to the fourth quarter of fiscal 2024.

Personnel expense decreased $3.1 million, or 6.9%, during the fourth quarter of fiscal 2025 as compared to the fourth quarter of fiscal 2024. Salary expense increased approximately $0.8 million, or 2.7%, during the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024. Our headcount as of March 31, 2025, decreased 1.2% compared to March 31, 2024. Benefit expense decreased approximately $2.9 million, or 33.4%, when comparing the quarterly periods ended March 31, 2025 and 2024. Incentive expense decreased $1.7 million, in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024. The decrease in incentive expense is primarily due to the $3.5 million partial reversal of expense associated with the forfeiture of certain $16.35 Performance Shares, as described above, offset by a $1.5 million increase in stock compensation expense associated with new grants issued in the third quarter of fiscal 2025.

Occupancy and equipment expense decreased $0.3 million, or 2.3%, when comparing the quarterly periods ended March 31, 2025 and 2024.

Advertising expense increased $0.1 million, or 6.5%, in the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024 due to increased spending on customer acquisition programs.

Interest expense for the quarter ended March 31, 2025, decreased by $0.6 million, or 4.8%, from the corresponding quarter of the previous year. Interest expense decreased due to a 5.2% decrease in average debt outstanding for the quarter and a 5.0% decrease in the effective interest rate from 8.7% to 8.3%. The average debt outstanding decreased from $558.3 million to $529.2 million when comparing the quarters ended March 31, 2024 and 2025. The Company's debt to equity ratio decreased to 1.0:1 at March 31, 2025, compared to 1.2:1 at March 31, 2024. As of March 31, 2025, the Company had $446.9 million of debt outstanding, net of unamortized debt issuance costs related to the unsecured senior notes payable. The Company repurchased and canceled $39.9 million of its previously issued bonds for a purchase price of $39.8 million during the fourth quarter of fiscal 2025.

Other key return ratios for the fourth quarter of fiscal 2025 included a 8.5% return on average assets and a return on average equity of 21.0% (both on a trailing twelve-month basis).

The Company repurchased 225,985 shares of its common stock at an aggregate purchase price of approximately $32.0 million during the fourth quarter of fiscal 2025. This is in addition to repurchases of 174,632 shares during the first three quarters of fiscal 2025 at an aggregate purchase price of approximately $22.2 million. As of March 31, 2025, the Company had $0.4 million in aggregate remaining repurchase capacity under its current share repurchase program and approximately $18.8 million under the terms of our debt facilities (subject to further board approval). The Company repurchased 295,201 shares during fiscal 2024 at an aggregate purchase price of approximately $36.2 million. The Company had approximately 5.2 million common shares outstanding, excluding 159,683 unvested restricted shares, as of March 31, 2025.

Twelve-Month Results

Net income for the year ended March 31, 2025, increased $12.4 million to $89.7 million compared to $77.3 million for the same period of the prior year. This resulted in a net income of $16.30 per diluted share for the year ended March 31, 2025, compared to $13.19 per diluted share in the prior-year period. Total revenues for fiscal 2025 decreased 1.5% to $564.8 million, compared to $573.2 million during the previous fiscal year due to a decrease in loans outstanding. Annualized net charge-offs as a percent of average net loans decreased from 17.7% during fiscal 2024 to 17.5% for fiscal 2025.

About World Acceptance Corporation (World Finance)

Founded in 1962, World Acceptance Corporation (NASDAQ:WRLD), is a people-focused finance company that provides personal installment loan solutions and personal tax preparation and filing services to over one million customers each year. Headquartered in Greenville, South Carolina, the Company operates more than 1,000 community-based World Finance branches across 16 states. The Company primarily serves a segment of the population that does not have ready access to credit; however, unlike many other lenders in this segment, we strive to work with our customers to understand their broader financial pictures, ensure they have the ability and stability to make payments, and help them achieve their financial goals. For more information, visit www.loansbyworld.com.

Fourth quarter conference call

The senior management of World Acceptance Corporation will be discussing these results in its quarterly conference call to be held at 10:00 a.m. Eastern Time today. A simulcast of the conference call will be available on the Internet at https://event.choruscall.com/mediaframe/webcast.html?webcastid=dy7gFHDm. The call will be available for replay on the Internet for approximately 30 days.

During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end. The Company's responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been disclosed previously.

Cautionary Note Regarding Forward-looking Information

This press release may contain various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, that represent the Company's current expectations or beliefs concerning future events. Statements other than those of historical fact, as well as those identified by words such as "anticipate," "estimate," intend," "plan," "expect," "project," "believe," "may," "will," "should," "would," "could," "probable" and any variation of the foregoing and similar expressions are forward-looking statements. Such forward-looking statements are inherently subject to risks and uncertainties. The Company's actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include the following: recently enacted, proposed or future legislation and the manner in which it is implemented, including pursuant to policies of the new U.S. administration; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that is or may be exercised by regulators, including, but not limited to, U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory examinations, proceedings and litigation; employee misconduct or misconduct by third parties; uncertainties associated with management turnover and the effective succession of senior management; media and public characterization of consumer installment loans; labor unrest; the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company's reported consolidated financial statements or necessitate material delays or changes in the issuance of the Company's audited consolidated financial statements; the Company's assessment of its internal control over financial reporting; changes in interest rates; the impact of inflation; risks relating to the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net charge-offs, the loss of key personnel, integration or migration issues, the failure to achieve anticipated synergies, increased costs of servicing, incomplete records, and retention of customers; risks inherent in making loans, including repayment risks and value of collateral; cybersecurity threats or incidents, including the potential or actual misappropriation of assets or sensitive information, corruption of data or operational disruption and the cost of the associated response thereto; our dependence on debt and the potential impact of limitations in the Company's amended revolving credit facility or other impacts on the Company's ability to borrow money on favorable terms, or at all; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquency and charge-offs); the impact of extreme weather events and natural disasters; changes in the Company's markets and general changes in the economy (particularly in the markets served by the Company).

These and other factors are discussed in greater detail in Part I, Item 1A,"Risk Factors" in the Company's most recent annual report on Form 10-K for the fiscal year ended March 31, 2024, as filed with the SEC and the Company's other reports filed with, or furnished to, the SEC from time to time. World Acceptance Corporation does not undertake any obligation to update any forward-looking statements it makes. The Company is also not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet services.

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John L. Calmes, Jr.

Executive VP, Chief Financial & Strategy Officer, and Treasurer

(864) 298-9800