World Acceptance Corp (WRLD) 2015 Q3 法說會逐字稿

Good morning and welcome to the World Acceptance Corporation third quarter 2015 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. Comments made during this conference may contain certain forward-looking statements within the meaning of the section 21(e) of the Securities Exchange Act of 1934. 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.

Statements other than those of historical fact as well as those identified by 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 to 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 31, 2014, 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, Mr. Sandy McLean, CEO.

Thank you, Randy, and welcome everybody to our third quarter conference call. I hope all of you had a chance to review our press release as well as the narrative and comments that we provided in conjunction with that. Rather than highlighting the issues that are in that narrative and/or the press release, I'd like to just move forward and get into our session of questions. Randy?

Thank you. (Operator Instructions). We'll now take our first question from J. R. Bizzell, from Stephens, Incorporated.

Thanks for taking my questions. Sandy, to what do you all tribute this lack of demand that you're seeing in the US? Is it along the lines of maybe you're seeing different moves by your competitors, new competitors, are there new options out there that you all could speak to and just give us a thought around the demand?

Well, before doing that, in conjunction with that, obviously the two main issues that we're facing right now is the slowdown in the demand in the US. And, you know, just to highlight, our loan volume for the first nine months was down about 8.8% from the same period last year. In the US we had about $2.3 billion in fiscal 2014 versus 2.1. I know borrowers, based on numbers are down about 5.7%, our former borrowers are down about 2%. And our refinancings are down about 14%. The refinancings we can explain and understand and is consistent with the reductions that we've had over the last two or three quarters, ever since we made that change regarding the solicitation of those lower dollar renewals. The things that we have been attempting to address is the attraction of, or getting additional traffic in the office, both in the form of new borrowers and getting or former borrowers back into the office.

And we've talked about some of the initiatives that Janet and the senior VPs have been putting into place over the last few quarters, and I believe that, as these things come to fruition, then we should see a benefit. But as far as the what has happened, I think, number 1, is, most of our marketing has been from a direct mail, relies upon our direct mail. And over the years I think, you know, our directive market has done a great job but direct mail in and of itself is not the only solution.

And we're not seeing the effectiveness of that direct mail. So we hope and believe that these other initiatives, like the online applications and the programs that we've put in place in the offices and more emphasis on certain types of solicitation like texting and so forth, we believe that will continue to benefit.

Now, as far as what, you know, specifically what is happening, I don't know whether it's competition, I don't know whether it's, you know, people are not borrowing for various reasons. I don't know if we're the only people, the only company seeing these things downtrend. I don't believe that to be the case.

But I certainly believe that there is a strong demand for our product and there's a extremely large segment of the population that needs access to this type of credit. We've just got to do a better job of getting our name out in front of them and getting them in our office. I hope that kind of answers your question but it's not very specific because it's hard to pinpoint, you know, specifically why these trends have been continuing for the last couple quarters.

You know, building on that, and you're talking about the initiatives and I know Janet did a good job on the last call talking about them, I'm just wondering if you can give us kind of an update how far you're penetrated with the texting and other initiatives. I know texting was something you were really excited about last quarter and I'm wondering if you're still seeing kind of the positive trends from the facilities that are utilizing that texting, and I'm hoping that's something that you think is going to help the renewals and the new growth.

I think Janet would love to give you an update on where she stands on some of these initiatives, and we certainly, I mean, we're encourage about the direction we're going but I can't say that we've actually broken through the mold and all of a sudden we've seen these magic results. Let me let her give you an update on where we stand on some of those.

Sure. Yes. Hi, J.R., I'm pleased to talk about our new initiatives to get growth into our stores. I just give you a few of them and a a few statistics you might find interesting. I think as you know we (inaudible) our branch locator in the middle of last year. We didn't have any ability to find a branch on the web before and we're guessing at the peak growth season 30,000 folks doing that branch locator. We believe that will help us but again, we take time to get people into the stores. And our website, we have the online start application. We still close in the branch because we believe it's very important to have that face-to-face conversation and relationship, but, we've had more than 12,000 of those online starter app's completed and that is only a (inaudible) in middle November and these 12,000 online starter app's have been completed and we have not been pushing folks with any form of search engine optimization until the last couple weeks because we first wanted to get the online starter app up and working perfectly and looking good. We haven't done any kind of optimization on our website with the word encoding that you can kind of use behind the scenes. We just completed that a few days ago.

And even so, with these 12,000 app's, we're seeing about a 30% booking rate compared to about a 50% to 65% in stores, so we're very pleased with the app's booking in a couple of days but some still taking be longer but still booking. Also on our website for the first time in our history we do tax prep and we just had a huge tax prep. I wouldn't call them app's, I would call them informational sort of app's, informational forms so that we can call someone back if they want to fill it in but it's now clear to the more than 50,000 unique visitors we get a month but we do tax prep on digital channels. I think Sandy' s right that we haven't focused on digital channels in the past. We just started facing (inaudible). We're getting a pretty good click through to approval rate. Our partner, on-line expertise tells us that we have a very high approval rate (inaudible). So, we're pretty pleased with the web but, of course, over time you get better. You start adding better optimization and you start to improve your position in your digital channels which we're playing a catch up game compared to not having had this in the past and we'll move ahead.

We've got debit cards in our branches. 470 of our branches now. It's very positive for our customers and employees who wanted this very much to offer and get 2% or 3% of our transactions and while it's marketed, we can get over 10%. All of the branches will have these terminals by the end of May, making it easier for our customers. Another option is a debit card. You asked about texting. 36% of our customers are enrolled, still increasing. In our new states that could as high as 86% as a course of just asking every new customer that comes in, and texting is a double win for us because it's much lower cost than a printed mail and it's higher response. Plus you have options and follow that very strictly so we use texting for marketing where folks have opted in and for friendly payment reminders. Very exciting as well, the world of texting for us. We got about 220,000 texts in November and that's possibly very small. Pay by the phone we're using in our, bringing in, I should say, we're not using it yet.

I should say, not using it yet. That will happen. We're going through the process for our collections center in Alabama and Georgia because in the collections center people don't come in, they live hundreds of miles away often. We're going through that process carefully and thoughtfully any and expect to get that option to our customers who are in collections and want to pay. Also, I'll just mention, we're putting in place a customer database that will enable us to look better at customer characteristics as well as loan characteristics and get smarter about how we target customers, potential customers and bring them in.

That's some of the key initiatives but certainly we are looking at all aspects of our operational ongoing continuing basis so hopefully continue to make World a better and a more hopefully a more profitable business going forward.

Sandy, building on this, when I'm thinking about this and how we're projecting this out, is this something that we should think about in the back half of this year or is it something we need to be more focused on for next year? Because that's a lot of initiatives and a lot of learning within the stores. I just want to understand how you all are thinking about it internally and how we should think about it projecting forward.

Well, so much of this is new territory for us so it's very difficult to quantify the impact that it's going to have. And so I don't really know how to guide you a whole lot better. We're moving forward as quickly as possible and hopefully the benefits will be better than expected, but only time will tell. Janet has a lot of ideas, there's no question about that, and some of them I think will be wonderful and some of them probably not as good, but we will weigh and evaluate, you know, all of them and, you know, continue to move forward and hopefully see some tangible results in the near future.

Great. Thanks, guys.

Okay.

And we'll now take our next question from John Rowan from Sidoti & Company.

Good morning, everyone.

Good morning, John.

Sandy, as you look back and consider the changes that you made to the incentives for the branch managers on collection and the way you changed the delinquency portion of their compensation, did you expect there to be a bigger impact now that the dust has settled on your net charge-off rate than there was in the quarter?

Not really. All we really did is deferred accounts that would have previously been charged off in the second quarter. Awe grew the 90 day bucket, and then we knew at some point that would stabilize. Those loans are fully reserved so from a P&L impact it really hasn't changed anything.

So we really expect to see some leveling off in the overall net charge-offs. We've certainly got timing issues. If you look at the charge-offs in the second quarter they were dramatically down in a three to nine months period, dramatically down. But they could kind of level off. And how much of that is timing and how much of it is the true benefits we'll get from this decision is yet to be determined. But the early indications are, we are moving, or collecting, more of our 30 -60 day accounts and collecting some of the 90 day accounts. The intent was never, well, it was hopefully to continue the collections efforts on those 90 accounts until we really believed that the proper collection work had been done, but it was also to focus the managers on paying more attention to the 30s and 60s before they ever became 90s. So there is evidence that all of that is improving but it's not a dramatic change and was never really expected to be that much of a dramatic change.

I understand, obviously, the one time nature, in the second quarter charge-off rate. I was just kind of trying to understand, I obviously know the change was a means to encourage the store managers to collect on the older delinquency buckets and I was just curious if that had the impact that you were hoping for, if you were actually getting better or worse collections out of those buckets than you thought you were going to.

Probably. I mean, the results have been, we have collected a little bit more out of that bucket, but it has not been dramatic, but the key focus has been to make sure the managers not only don't ignore those 90 day accounts but work that much harder on the 30s and 60s because that's what impacts their monthly bonus plan instead of the entire delinquency bucket. So it's really hopefully to improve all aspects of our collections in all the buckets.

Okay.

To answer your question directly, we have not seen a dramatic change, but we have seen slight improvements in all of those, and given the nature of the change, there's been no real problem with our financials or the reporting and so forth and it's just now got this bucket of the non earning assets that has stabilized over time.

Okay. As far as the CID goes, are there any updates?

Unfortunately, there is not. We have not heard anything back, really, since we issued it.

So the CFPB hasn't asked to interview anyone, there's been basically radio silence from them still so in terms of this, I believe in March?

It was issued March the 10th, we submitted our response on April 10th, and we have had no direct communications with them since that date, or I should say a day or so after to make sure they got it in proper format and so forth, but no response whatsoever.

Okay. I know you were thinking about ways to try to force their hand to just make a movement on it. Are you still thinking about any of those options? Are you content to, I don't want to say content, but is this just going to remain something that's sitting out there that's going to be a binary event on your stock at some point in the future?

I mean, we're not really in a position to demand it. They respond to us. I don't necessarily think that would be the wisest course of action. But it's my understanding, while we were under the impression we would hear something within six months. It's come to our attention that this is not totally uncommon, that it could go as long as this. So I would expect that we'd hear something in the near future but the timing of that is out of our hands and no we will not be doing anything aggressively to force their hand.

Okay. And last question, do you see any impacts from any of the various bills? I know it's still early but Texas is obviously in session so I'm curious if you're monitoring any bills that could have an impact on your Company.

The only one I'm aware of is a bill that has been introduced in New Mexico, that deals with a 36% rate cap. This is not the first time that this has been proposed but it's certainly something we are monitoring or, you know, through our trade associations and so forth, we're trying to make sure that everybody is educated on the negative impact of such a bill being passed.

So that's a straight 36% rate cap on all products, including payment and installment?

Yes.

Yes.

All right. Thank you very much.

I will now take our next question from John Hecht from Jefferies.

Good morning, thanks very much. The first question, maybe just if you want to highlight Mexico, the overall trends there, and then you mentioned kind of the one union payment. What's the status with that?

I'm really glad you asked that because I intended to highlight that but I kind of got sidetracked, but, anyway, as I had mentioned, the two main issues that we're facing are, the first is that we've just discussed, is the reduced loan growth in the US. And I think we've discussed the things that we're doing to hopefully offset that challenge. And the second is the delayed payments by one of our unions in the (inaudible) region. That has had an impact on us.

If you take into consideration the amount of accounts that have moved into non accrual basis as well as the revenue that we're not getting on those non accrual loans because of those delayed payments, it's had a $2.2 million impact on the current quarter. Now, we have not charged these accounts off although they are fully reserved, because we still believe that these payments are forthcoming. This particular area of Mexico has had a lot of political unrest, and we're not the only lenders not receiving payment. The difference is, almost all of the lenders that have funded those loans through the unions have continued to do so, and we discontinued that about four or five months ago.

But from everything we hear, there is still a very high likelihood that we will ultimately get those payments. There has been a change in as far as the way those unions are being paid, they're being paid directly through the Federal Government beginning the first of this year, and we should start getting payments on an ongoing basis on these loans moving forward. And then it's just a matter of working with the States and the unions to get those back payments. We still believe that this is a timing focus which has had a big impact on us the last two quarters.

But I'd just like to also highlight, the impact. Given the number of shares that we have outstanding, if you take that 2.2 million from Mexico and then you add to that the increased legal expenses and some changes and our reduction the World Class Buying Club, our earnings except for some of these items, would have been very close to what was expected. But there's no question that our biggest challenge remains in the revenue line item. But that being said, we are very encouraged about all other aspects of what's going on in Mexico.

All the other unions are paying us on a timely basis. We have an opportunity to get into a national union down there which we think would be a big opportunity. And we're disappointed with the growth in the traditional installment loan offices down there, but they're still doing very well, they just haven't grown like we had originally had hoped. Between the opportunities in the unions loans and the continued opportunities in the traditional installment loans, you know, we're still are very optimistic about the opportunity.

That's good color. Just so I'm clear, it sounds like as this one union issue might get solved, you might have kind of a quick catch-up payment. If you do, is that this quarter and next quarter or kind of how would we think about the potential timing of that? payments that we've not received previously.

Well, once these particular loans start, we start receiving payment on it, then normally we would go ahead and reverse out the allowance associated with it, but given the size of the payments, that are past due, we may actually maintain the reserve on that portion of the past part that we had not previously seen, and then reverse the other part. So we'll have kind of a special allowance on specific payments we have not received but then reversed the specific allowance from all of those non earning assets on that union. So there would definitely be a pickup when that happens, there would be a much bigger pickup when we in fact resolve the issue about those payments that we've not received previously.

Okay. That's helpful.

Okay, good.

That is. And the second question is, just trying to kind of establish a guesstimate, if you will, of the repurchase activity this year and just in the context of the borrowing line and where you are at keeping some free liquidity on the borrowing line as well as the seasonality and so forth. Can you just tell us what you're balancing internally in terms of determining when and how much you repurchase?

Well, just to give you some idea, we basically, between December of 2013 and December of 2014, we purchased, during that 12-month period, $132 million in share repurchases. During the course of that, we increased our outstanding notes by $8.7 million and reduced our equity by $15.5 million. Even at our levels of growth, there's a great deal of earnings and cash flow that are being generated that would allow us to continue to be fairly aggressive in the share repurchase. At the same time, we have a remaining authorization of $13.5 million just from previous Board approvals and I would expect once that's done, there will be additional approvals.

However, given the size of the facility and, you know, I mean the number of banks and so forth, we have got to continue to be conscious of our capitalization, and at some point it may be appropriate to look at other types of capitalization, but these are the things we are evaluating on an ongoing basis, but all things being equal, we would prefer to grow loans, but if we continue to struggle in that respect and we continue to generate this type of cash flow, then we think the excess earnings is better used to reduce the shares, especially at those price levels that we're looking at today.

All right. I appreciate all these answers. Last question is, it just came up that, one of those alternative sources of financing, could you consider a private label securitization or would it be more traditional debt markets?

I don't know. I mean, we will evaluate everything but I have been very hesitant to do these securitizations given the short-term nature of our loans and so forth, but, you know, that's Johnny's problem. We'll let him figure out all these alternatives.

All right. Thanks very much.

We'll now take our next question from Vincent Caintic from Macquarie.

Hi, good morning, guys. Just to touch on the funding strategy and in particular what's your thoughts on the replacement of some of those bank lines and also potential of the term debt and have there been any other reactions from other bank lines?

There's been no other reactions from the bank lines since the AK that we filed regarding the most recent renewal, and given the direction of one of the banks in the second one, it won't make a change in June. As I said, we're evaluating different capital structures, and whether it's in the term of additional debt or whether it's finding we've had notification from several banks that they would like to join the line, but, you know, it's something that we're very focused on, but are not in a position to make any comment at this point because we're not that sure of the direction we're going to make. Suffice it to say we are very conscious of our need for financing and it's one of our, I guess we said we had two main issues, I guess we have three main priorities, and that would be included in one of them.

Okay. Got it. So you're evaluating. I guess you have multiple options, whether it be bank lines or term debt or other sorts of capital structures.

That is correct.

Okay. And then one on loans, could you give us the same store sales growth and then in terms of loan balance, has the growth been, I guess if you could break it down between growth in new loans versus growth from larger balances of loans? Thanks.

Johnny's got that. (inaudible) growth was zero, it actually was like a total year-over-year growth was minus .2%. The amount that came, it was a negative.

Yes, I believe the growth from large loan increases was .7, that was offset by the decrease in accounts of .8.

In the same store sales, it was actually a negative.

Okay. Thanks very much, guys.

Accounts decreased .18%, and the average balance increased 17.

Okay. Great. Thank you.

We'll now take our next question from Bob Ramsey from FBR Capital Markets.

Hey, good morning, everyone. Just a couple questions. One, it looked to me like the loan yield was down a couple hundred basis points year-over-year, and I was just curious if you had any thoughts behind what was sort of driving that and what the outlook for loan yield looks like?

Certainly. There's three things that contribute to that. No. 1, while we only had in the US we only had a decrease in our balances of .6%, if you include the increase in the 90 day accounts, which are non earning accounts, the reality is on a year-over-year basis it was really down about 1.9%. So you've got more non earning accounts in there on the same earnings, so that has an impact on the yield. No. 2, we still have had a continued slight shift in the mix. I think the mix of our small loans and what we consider internally small loans, they're all installment loans, it was 63% last year and a little over 61% this year. So we're still seeing a slight shift, but it's not dramatic.

And finally, I think an impact is your yield will decline as your renewal volume declines. And we anticipated that when we changed our solicitations on those low renewal loans, and we will have hopefully left that change as we move into the fourth quarter. This was started in February of last year, and we should see some stabilization in our yields and our loan volumes and other things. I'm not concerned about the renewal volumes, so as long as Janet and the senior VPs can figure out a way to get more people in the offices, I think you'll see a great deal of stabilization as we move into fiscal 2016.

Okay. Fair enough. Then on the repurchase front, I know you've been asked the question a few different ways. It looks like you didn't buy any stock back this quarter. I know seasonally this is the lightest quarter. Seasonally, fourth quarter, March quarter, is usually when you are the most active. Would you expect this year to follow normal seasonal trends in that respect?

Well, we're getting a lot of payments in, as our customers get their taxes filed and get these refunds, and of course our earnings are always the greatest this quarter. So this is a quarter of a great deal of deleveraging, so we will certainly be as aggressive in our share repurchases as we feel prudent. But given that we want to continuously think about our capitalization and availability of capital for future funding, we may not be as aggressive as we had in the past. I think we will monitor that, and all I can say is we will be repurchasing stock on an ongoing basis, but at what level, all of these factors will come into play in our considerations.

Okay. Fair enough. I guess last question, I know you all mentioned in the prepared remarks merging some underperforming offices. I just wondered if you could give a little bit more color around sort of what you guys are doing there and what the opportunity looks like?

Well, you know, given the fact that we're not attracting people in these offices as quickly as we have in the past, it's taken long for new offices to build to a profitable level. So we may not be opening new offices quite as quickly. But at the same time we're taking a hard look at some of these offices, especially some offices we purchased in Texas, and in other states, that, let me back up. The old philosophy is that if you open it, they will ultimately build to the point that they will become profitable and once they become profitable, incrementally we will be better off.

But we have identified some offices that, after five years, have just not, they're in close proximity to other offices and we believe that it may be better off to combine those offices and reduce the operating expenses associated with it, and cut our losses and move forward. So over the next three to six months, you may see us close more offices than in the past, but this is not going to be a tremendous number of offices. It may be 10-20 or something of the worst performing. And then on an ongoing basis, hopefully we will continue to use data and other things to make the selection process and the best open offices better.

Okay. Great. Thank you, guys.

We'll now take our next question from Bill Armstrong from CL King and Associates.

Good morning, Sandy and John. The union in (inaudible), are you still making loans to the employees in that union?

We are not. We discontinued that four or five months ago. We will re-begin the lending process as soon as we establish the status of these payments and so forth. A lot of our competitors are still making those loans.

You basically are cutting off new loans, does that impact your ability or their willingness to collect on these loans at all?

We do not believe that to be the case at all. We still have a good relationship with our contacts there. We've been assured that we will get paid, and it's kind of a difficult political situation down there at this point in time.

I see. Okay. And my phone cut out a little earlier. You had mentioned what the same store revenues were. I missed that.

I don't think we actually did. I said it was down. For the quarter, it was down like 4%, in that range, and for the year-to-date it was pretty much flat. And I don't have that in front of me but I can look real quick. Hold on. I'm sorry, for the quarter, same store sales were down 6%, and year-to-date it was down 1.3%.

Okay. Six and 1.3. Okay. Thank you.

Okay.

We'll now take our next question from Randy Heck from Goodnow Investment Group.

Hi Sandy, Janet, John. Actually, just about all of my questions have been answered, and thank you for some of the color, especially all the initiatives that Janet's got going, but just to confirm, if we add back the list of one timers, the (inaudible) the stock comp reversal a year ago, the exiting of the sales finance business, the legal costs, by my math, you would have reported something like $2.20 a share for this quarter versus $1.95 at year ago. Is that about right?

Well, if you adjust...

Give or take?

If you adjust for the reversal, last year was Mark's leaving, there was about a $2.9 million reversal, so if you adjust for that, it is the $2.20 to $2.25 rate versus the $1.93, that is correct.

Okay. All right. Okay. Well, look forward to hearing more about Janet's initiatives going forward and thanks so much and speak to you soon.

Thank you.

(Operator Instructions). We'll now take our next question from Henry Coffey from Stern Agee.

Good morning, everyone.

Good morning.

There have been a lot of headwinds on the installment loan business and suddenly the (inaudible) shop guys have reported pretty anemic volumes in the US this quarter. They actually were pulling out of there (inaudible) for a while. They attributed it to "gasoline", puts less pressure on the wallet. I think when we look at your business, you could also ask questions about product intrusion and of course the whole change in rollovers and renewals. And if you were looking at those three, product intrusion, change in small things like gasoline and its impact on discretionary income, and then of course the change in rollover and renewal activity, where does it all sort out in terms of where you think you're losing business?

Well, I think that was the first question that was answered, and that was the first question I was unable to answer. I think everything you just mentioned is contributing.

But you don't have the systems in place yet to kind of understand what's happening with your customers? It seems every time we ask --

I don't think that's a very fair question. We are getting loans through a thousand different offices, and, you know, we have people coming in for various reasons and so forth all the time. I think that our primary source of marketing has been direct mail in the past, and over time it's become less effective. So are we properly reaching out to people or do people have different alternatives or because the price of gas has gone down, they do not need to borrow as much? You know, it's a combination of all of those things.

You don't have a sense of where you might be losing customers to?When you do a focus group, what do they tell you?

We don't have that information.

All right. Thank you.

We'll now take our next question from Clifford Sosin from CAS Investment Partners.

Hi, guys, thank you for taking my question. You mentioned a maybe more modest impact was the impact of closing the world class buyers club. Do you mind breaking out in a little bit more detail some of the impact? I imagine there's a revenue impact, there's a loan volume impact, there's an interest income impact, and there may be some expense impacts that all float through?

Well, the revenue impact on the quarter was about $600,000, both from the gross profit on the sale as well as the interest associated with it. Once we made that announcement, then obviously we sold a great deal less than that. The positive impact going forward, and I don't know exactly the impact this year, is our offices will be going down because the losses on that portfolio were substantial. And that is the reason that we chose, you know, to make the decision that we did.

A lot of the expense impact is co-mingled in within the other expenses and so it's going to be hard to measure that incrementally except for the few people here in the home office that were devoted to that product. So, you know, we know that this on the surface, the gross profits of this program was over a million dollars a year on a pretax basis, but if you take a lot of the intangibles and additional hidden costs and so forth, we did not believe that it was the type of business that we wanted to continue to focus on.

So I don't think I answered your question completely, not because I'm trying to avoid or evade anything, it's just I don't have all the specific components. But the key component is the impact on revenue during the quarter, which it was probably, I guess I don't know the impact of the provision was but I know the impact going forward will be dramatic on the provision.

Would it be fair for me to assume that typically in the December quarter, the world class buyers club has more sales volume and thus is more profitable, and then the rest of the year where you kind of wear the loan losses associated with that volume, the world class buyers club, is less profitable and maybe even loss-making?

Because we don't record the gross profit on the sale at the time of the sale, then obviously the gross profit and the interest is recorded over the life of that loan. But there's no question that the volume of sales that take place during the third fiscal quarter are the busy season, is probably a very high % of the total sales for the entire year.

Got it. Thank you. And this is a question for Janet. You mentioned the 12,000 applications with the 30% booking rate through the website since mid November. I just wanted to clarify, was that through the end of January or through the end of the quarter?

We started this in about mid-November and as of today have about 12,800 app's since we starting about mid-November. Does that clarify it?

Yes, thank you very much.

At this time there are no questions in the queue.

Well, I'd just like to end by saying thank you for joining us today, and we're not especially pleased with where we are at this point but we're striving diligently to move forward to return to levels of growth and profitability that we previously had. And thank you very much for joining us.

Thank you for your participation. This concludes the World Acceptance Corporation quarterly teleconference.