World Acceptance Corp (WRLD) 2004 Q1 法說會逐字稿

Good afternoon and welcome to the World Acceptance Corporation sponsored fourth-quarter press release conference call. At this time all participants have been placed on a listen-only mode. A question-and-answer session will follow the presentation by the corporation's chairman and his other officers. Before we begin the Corporation has requested I make the following announcement.

The comments made during this conference may contain certain forward-looking statements within the meaning of the section 27-A of the Securities and Exchange Act 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. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include changes in the timing and amount of revenue that may be recognized by the Corporation; changes in current revenue and expense trends; changes in the Corporation's markets; and changes in the economy.

Such factors are discussed in greater detail in the Corporation's filings with the Securities and Exchange Commission. At this time it is my pleasure to turn the floor over to your host, Charles Walters. Sir, you may begin.

Good afternoon everyone. Thanks very much for joining us. Joining me are Sandy McLean, our Chief Financial Officer. Doug Jones, our Chief Operating Officer along with our general counsel and other members of our management team. First of all, I would like to mention that this is our first quarter report instead of the fourth-quarter as was announced earlier. To start with, we are very pleased to once again report another strong quarter for your company. Both net income and earnings per share are up significantly. We are also experiencing good growth in our loans receivable as loan demand continues to remain strong and acquisition opportunities are still available, and we have been able to capitalize on that segment of our growth strategy as well.

While delinquency crept up slightly during the quarter, which is typical during summer months, they are still at good levels and we are very, very pleased that our charge-offs continue to be stabilized. Our excellent earnings results are also aided of course by the reduction in our interest costs, as rates are continued to decline. Good expense control as that has reduced as well. These factors coupled with excellent loan volume contributed to our strong profitability.

Our ParaData subsidiary continues to be profitable, which is their primary goal, and our World Class Buying Club also saw a nice increase in earnings over the same period last year. Our return on assets, while always have been very strong, showed some nice improvement this quarter as well and equated it to a continued strong return on the Company's equity.

I'd like to turn the presentation now over to Sandy McLean, who will review the financial results in detail after which time we will be happy to entertain your questions. Sandy?

We did have what we felt was an extremely good quarter as our net income and diluted earnings per share both grew by 20 percent over the same quarter of the prior year. For the three months ending June 30, 2003 our net income was 5,611,000 or 30 cents per diluted share, compared with 4,668,000 or 25 cents per diluted share for the same quarter of the prior fiscal year. This growth in earnings was due primarily to our growth in our loan portfolio. At the end of the quarter at June 30, 2003 we had 279.8 million in gross loans outstanding, which represented a 13.2 percent increase over the 247.2 million of loans outstanding at June 30, 2002. This also represented a 4.9 percent increase since the beginning of our current fiscal year.

Our average net loans amounted to 204.8 million for the current fiscal quarter compared to 177 million for the same quarter last year, which represented a 15.7 percent increase on a quarter-over-quarter basis. The mix in our Loan portfolio has shifted slightly back toward the smaller loans during the quarter, as our small loan portfolio made up consisted of -- made up 7 to 1 percent of the total portfolio. Our larger loans represented 27 percent and the sales finance loans a little less than 2 percent.

Loan volume continued to be very strong in the quarter as total loan volume of 208,743,000 which was a 14.2 increase over the 183 million for the same quarter of fiscal 2003. This growth in loans contributed to an increase in our revenue which amounted to 40.3 million during the first quarter of this fiscal year, which was a 15.6 percent increase over the 34.8 million for the three months ended June 30, 2002.

As Charlie mentioned we continue to benefit from the lower cost of money as our interest costs actually reduced by 4 percent, while our average debt outstanding increased by 7 percent, when comparing the two quarterly periods. Our same-store revenues or the revenue in the 435 offices that were open throughout both quarterly periods, grew by 10.2 percent over those periods. Our office expansion -- we did not open a whole lot of offices this year. We began the fiscal year with 470 offices, we opened one new office, purchased two and actually merged one of the nonperforming offices to end the quarter at 472.

I expect our new office openings to increase during the second quarter of this fiscal year. Acquisitions continue to be very important in our overall growth strategy and during quarter we actually had eight office acquisitions, we purchased 2581 accounts for $3.1 million. As Charlie mentioned, the only negative if anything during the quarter, was we did have a slight increase in delinquencies. At June 30, 2003 our total (indiscernible) delinquency managed at 7,936,000 or 2.8 percent of our gross loans outstanding, and this compared to 6.328 million or 3.6 percent of our portfolios the prior year. On a contractual basis delinquencies amounted to 4.3 percent at the end of the current quarter versus 4 percent for the same time the prior year.

Our net charge-offs did remain flat when comparing the two quarters and amounted to 13.5 percent of the net average loans over that period. Finally, we continued to maintain our G&A expenses on a very good level during the period. Total G&A for the most recent quarter was 22.6 million, and represented 56.2 percent of revenues and this compared to 20.2 million for the same quarter last year which was 58 percent of total revenues at that time. And this represented a 12.2 percent increase in G&A over the two corresponding periods.

And finally, as Charlie mentioned, the other selective (ph) ratios were very good for the quarter as our annualized return on assets amounted to 9.7 percent for the current quarter versus 9.2 percent for the same quarter for the prior fiscal year. And our return on equity on an annualized basis was level with last year at 8.7 percent. Overall this is a summary of the financial results. At this point in time we will be more than happy to answer any questions that you may have.

(CALLER INSTRUCTIONS) Henry Coffey of Faris (indiscernible) Watts.

Great quarter obviously. Sandy, can you give us some insight into what your average cost of funds were during the period? And given the recent discount rate, how much more that is likely to drop?

Just one second. Our average cost of funds for the quarter was 3.87 percent. For the current year this compared to 4.3 percent; for the prior year, and given that most of our debt is variable rate debt I would not -- and of course we haven't had any real rate reductions during the most recent quarter, I think there's one instance -- but I would not anticipate this cost of funds dropping a whole lot below this.

Any notion to sort of extend maturities in here given where -- given how cheap money is or --

This is something that this is an insurance policy that we always evaluate on an ongoing basis and discuss, and we have no current plans to do so right now, but will continue to evaluate over time.

Thank you.

(CALLER INSTRUCTIONS) There appear to be no further questions. I'll turn the floor back over to you for any further remarks.

Thank you very much for joining us. We appreciate your support and we look forward to giving you the second quarter results in October. Thank you and goodbye.

Thank you for your participation. Before concluding this afternoon's teleconference, the Corporation has asked again to remind you that the comments made during this conference may have contained certain forward-looking statements within the meaning of the section 27-A of the Securities and Exchange Act that represents the Corporation's expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include changes in the timing and amount of revenues that may be recognized by the Corporation, changes in current revenue and expense trends, changes in the Corporation's markets and changes in the economy. Such factors are discussed in greater detail in the Corporation's filings with the Securities and Exchange Commission.

This concludes the World Acceptance Corporation quarterly teleconference.

(CONFERENCE CALL CONCLUDED)