World Acceptance Corp (WRLD) 2019 Q1 法說會逐字稿

Good morning, and welcome to the World Acceptance Corporation-sponsored first quarter press release conference call.

This call is being recorded.

(Operator Instructions) .

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 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 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 31, 2018, 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.

This is Chad Prashad.

I'm excited to be on my first call as President and CEO of World Acceptance Corporation.

I'm joined here with Johnny Calmes who is our CFO.

I hope you've all had time to review the press release and the earnings script.

And so at this time, I'll go ahead and open it up to any questions you have.

(Operator Instructions) We'll take our first question from Vincent Caintic with Stephens.

Chad, welcome on board and just I guess the first broad question, Chad, is if you could maybe -- on your seat as CEO, if you could discuss kind of your vision and priorities for the company in the near term and the long term?

Any changes from where we've been going in the most recent past?

Thanks for the question.

So I've been with World for 4 years and we've made a lot of changes over the last year or two.

Hopefully you guys have begun to see the results of some of our investments and the changes we've made to our strategy.

So my plan is to continue to do those changes.

Our -- my vision for the company is that we continue to improve our communities by offering the millions of folks who don't have access to credit that doesn't come from a payday lender or doesn't come with the expectation of losing their vehicle with a default, okay.

So we want to continue that vision.

The things that have brought us success so far are hiring talented people, investing in high-performing teams, providing quality data and insight to make better decisions at all levels of the company.

And one of the biggest things for us has been providing flexible infrastructure to get those decisions out amongst the field.

So we want to continue those things going forward.

We believe there's a lot of potential serving the segment of population that we're currently in.

So this past quarter, I believe it's mentioned in the earnings release -- or sorry in the script, we've increased our new customers by about 20% year-over-year.

We've seen success in the current segment we're in without having to move in the larger loans with lower yields.

So while that's a possibility in the future, for now we are focused in continuing to do what's brought us success recently.

Okay, great.

My next question on the Mexico business and particularly on the sale, if you could maybe describe the decisioning around selling that business.

In particular, I think it was an impairment you took and then the, I guess, from keeping the loss by identifying the buyer, just kind of wondering where your thoughts are in terms of why the sale and then any plans for the proceeds?

So I can take that question, Vincent.

So when we looked at selling the company, the way we approached it was do we feel like the returns from Mexico in the future will exceed our cost of capital.

And as we've said in past earnings calls, we were winding down the Viva business.

And currently, we still have revenues from the Viva business, but those will continue to diminish over the next 6 months to 12 months.

And as it happens, while we can reduce some of the costs related to the Viva business, it's not proportional.

So we're expecting to see our returns diminish in that business in the future.

So we thought it was the right decision to sell the company.

So there was an impairment taken on the sale.

But as you can see in the earnings release, the vast majority of that was the currency translation adjustment that's been held in equity and built up in equity over the last 12 years.

So while that had a negative impact on equity in this quarter, once the sale is completed, equity goes up by that same amount, so it's equity-neutral once they complete the transaction.

So we tend to sort of ignore that number to a large extent.

Okay, got it.

Is there -- if you could help us in modeling going forward what we should be thinking about for Mexico in terms of the -- if you can go through the revenues, expenses and so on, just what should we be taking out on a -- to get to a U.S. go-forward basis?

I say all the information will be in our filing, so it's -- when you look at the segment reporting from past years or taking this quarter, we presented just the continuing operations, right?

So the Mexico results have been stripped out of our income statement or at least isolated into the discontinued operations.

I think that's probably your best place to start.

(Operator Instructions) We'll go next to John Rowan with Janney.

How do you guys feel about the price you got for Mexico?

What other deal did you possibly use as a comparable to look at the business?

And was it $45 million you received for it?

Right.

So I think, anybody would always like to get a higher price than they got, right?

But we tried to get the best possible price we could and this is where we landed.

Okay.

Was it an open process to find a buyer?

Or was it a limited marketing of the business?

It was, I think, fair to say that it was a limited process.

Okay.

And then I know you said you're not going to comment on share repurchases, but maybe just -- if we -- well, I guess, the assumption would be that the guarantees that you've given to the buyers about Mexico maybe you're holding off on share repurchase.

I mean, is that an appropriate comment?

Or do we just have to wait until the Mexico investigation is over to really see any potential for the repo activity to resume?

So I think that's something that we reassess that position on a regular basis and we'll continue to do that going forward.

Yes, I think it's probably a fair assumption to think that they won't resume until after the investigation is resolved, but at the same time, we'll continue to reassess.

And if we feel comfortable restarting the buybacks prior to that, we could do that.

(Operator Instructions) With no further questions in the queue, I would like to turn the call back over to Chad Prashad with any additional or closing remarks.

Thank you guys for joining us on the call today.

We're -- we continue to be very optimistic about the U.S. business going forward and focusing here.

With the sale of Mexico, it allows us to really shift a lot of our efforts here towards what we believe is a best investment for us, which continues to be in the U.S. We are very excited about the prospects we have going forward, and appreciate your time this morning.

This does conclude today's conference.

We thank you for your participation.

You may now disconnect.