World Acceptance Corporation Reports Record First Quarter
July 28, 2010
GREENVILLE, SC – July 27, 2010 – World Acceptance Corporation (NASDAQ:WRLD) today reported record financial results for its first fiscal quarter ended June 30, 2010.
Net income for the first quarter rose 27.9% to $18.7 million compared with $14.6 million for the same quarter of the prior year. Net income per diluted share increased 26.7% to $1.14 in the first quarter of fiscal 2011 compared with $0.90 in the prior year quarter.
World Acceptance’s record first quarter benefited from continued strong loan demand, our focus on expense control and our close management of credit risks, stated Sandy McLean, CEO. We also continued to use our strong cash flow to aggressively pursue our stock repurchase program and during the quarter the Company bought 899,621 shares of its stock.
Total revenues increased to $110.4 million in the first quarter of fiscal 2011, a 10.1% increase over the $100.2 million reported in the first quarter last year. The growth in revenues benefited from higher interest and fee income and insurance revenues, partially offset by a $2.4 million (pre-tax) gain arising from the Company’s repurchase of $10 million face value of its 3% convertible subordinated debt in the first quarter of fiscal 2010.
Interest and fee income increased 12.9%, from $85.1 million to $96.1 million in the first quarter fiscal 2011 due to continued growth in loan volume. Insurance and other income was $14.3 million in the first quarter of fiscal 2011 compared with $15.2 million in the first quarter of fiscal 2010. The first quarter fiscal 2011 results included a $1.5 million, or 18.2%, increase in insurance revenues when comparing the two quarterly periods. The first quarter fiscal 2010 results included a $2.4 million (pre-tax) extinguishment of debt gain, while no comparable extinguishment of debt gain was booked in the first quarter of fiscal 2011.
Gross loans outstanding increased 13.6% to $824.9 million at June 30, 2010, up from $726.1 million at June 30, 2009. Average net loans rose 14.1% when comparing the two quarterly periods.
We made solid progress in improving our credit performance ratios during the latest quarter, continued Mr. McLean. Our provision for loan losses was down 3.6% to $19.7 million in the first quarter 2011 compared to $20.4 million in the first quarter of fiscal 2010. Annualized net charge-offs as a percentage of average net loans decreased from 13.8% in the first quarter of last year, to 12.5% in the first quarter of the current year, contributing to the decrease in provision expense. The 130 basis point reduction in charge offs is comparable to the decreases the Company has experienced over the past three quarters. We are pleased with these improved results over recent quarters; however, we remain cautious about future credit risks in light of current economic conditions.
Total general and administrative expenses improved to 51.9% of total revenues compared with 53.2% during the first quarter of the prior fiscal year. The improved results benefited from the Company’s leverage of expenses as it expanded its office network by opening 18 additional offices and acquiring two new offices during the first quarter of fiscal 2011.
Key return ratios for the first quarter included a 13.0% return on average assets for a trailing 12 month period and a 22.3% return on average equity for a trailing 12 month period.
About World Acceptance Corporation
World Acceptance Corporation is one of the largest small-loan consumer finance companies, operating 1,010 offices in 11 states and Mexico. It is also the parent company of ParaData Financial Systems, a provider of computer software solutions for the consumer finance industry.
World Acceptance Corporation
Condensed Consolidated Statements of Operations
-----------------------------------------------
(unaudited and in thousands, except per share amounts)
Three Months
Ended
June 30,
--------
2010 2009
---- ----
Interest & fees $96,071 $85,068
Insurance & other 14,327 15,162
------ ------
Total revenues 110,398 100,230
Expenses:
Provision for loan losses 19,698 20,428
General and administrative expenses
Personnel 39,734 36,291
Occupancy & equipment 7,189 6,704
Advertising 2,462 2,372
Intangible amortization 507 565
Other 7,406 7,401
----- -----
57,298 53,333
Interest expense 3,354 3,110
----- -----
Total expenses 80,350 76,871
------ ------
Income before taxes 30,048 23,359
Income taxes 11,334 8,724
------ -----
Net income $18,714 $14,635
======= =======
Diluted earnings per share $1.14 $0.90
===== =====
Weighted average shares outstanding
(diluted) 16,446 16,351
====== ======
Condensed Consolidated Balance Sheets
(unaudited and in thousands)
March
June 30, 31, June 30,
2010 2010 2009
---- ---- ----
ASSETS
Cash $6,284 $5,445 $7,140
Gross loans receivable 824,941 770,265 726,057
Less: Unearned interest & fees (217,573) (199,179) (191,761)
Allowance for loan losses (44,106) (42,897) (40,787)
Loans receivable, net 563,262 528,189 493,509
Property and equipment, net 23,031 22,986 23,319
Deferred tax benefit 11,837 11,642 12,700
Goodwill 5,654 5,616 5,581
Intangibles 7,243 7,614 8,514
Other assets 11,948 11,560 9,560
------ ------ -----
$629,259 $593,052 $560,323
======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities:
Notes payable 218,447 170,642 213,563
Income tax payable 16,111 14,043 12,592
Accounts payable and accrued
expenses 23,586 25,419 20,464
Total liabilities 258,144 210,104 246,619
Shareholders' equity 371,115 382,948 313,704
------- ------- -------
$629,259 $593,052 $560,323
======== ======== ========
Selected Consolidated Statistics
(dollars in thousands)
Three Months Ended
June 30,
--------
2010 2009
---- ----
Expenses as a percent of
total revenues:
Provision for loan losses 17.8% 20.4%
General and administrative
expenses 51.9% 53.2%
Interest expense 3.0% 3.1%
Average gross loans
receivable $796,368 $697,258
Average loans receivable $588,022 $515,177
Loan volume $627,785 $553,349
Net charge-offs as percent
of average loans 12.5% 13.8%
Return on average assets
(trailing 12 months ) 13.0% 11.2%
Return on average equity
(trailing 12 months) 22.3% 21.3%
Offices opened (closed)
during the period, net 20 5
Offices open at end of period 1010 949
Source: World Acceptance Corporation
