World Acceptance (WRLD) Q2 2027 Earnings Call Transcript

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DATE

Friday, Oct. 23, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - John Calmes
• Chief Operating Officer - Tobin Turner

TAKEAWAYS

• Net Income -- $8.8 million, representing a $10.4 million increase from a net loss of $1.7 million in the prior-year quarter.
• Diluted EPS -- $1.92, compared to a net loss of $0.33 per diluted share during the same period last year.
• Total Revenue -- $139.2 million, an increase of 3.2% driven by a 3.6% rise in interest and fee income.
• Gross Loans Outstanding -- $1.319 billion, a 0.3% increase compared to $1.315 billion as of Sept. 30, 2025.
• 0 to 60 Day Delinquency -- 18.9% on a recency basis, a decrease from 20.0% in the prior-year quarter.
• 61 Plus Day Delinquency -- 5.4%, down from 5.8% as of Sept. 30, 2025, reflecting improved portfolio quality.
• Share Repurchases -- $25.0 million during the quarter, representing 133,199 shares or 3.0% of outstanding common stock.
• Refinanced Loan Volume -- $587.6 million, an increase of 4.4% compared to the prior-year period.
• New and Former Customer Volume -- $51.2 million and $94.4 million, representing declines of 18.1% and 9.9%, respectively.
• Interest and Insurance Yields -- Increased 158 basis points compared to the quarter ended Sept. 30, 2025.
• Provision for Credit Losses -- $46.0 million, a decrease of $3.8 million from the second quarter of fiscal 2026.
• Net Charge-offs -- $42.2 million, representing 17.6% of average net loans receivable on an annualized basis.
• G&A Expenses -- $69.9 million, a 2.9% decrease from the prior-year quarter due to lower personnel and incentive costs.
• Headcount -- Decreased 3.4% year over year as part of a disciplined approach to operating expenses.
• Interest Expense -- $11.7 million, an 18.8% reduction resulting from the absence of a nonrecurring $3.0 million early call penalty incurred last year.
• Customer Base -- Decreased 5.4% during the 12-month period ended Sept. 30, 2026, due to intentional underwriting tightening for new customers.
• Adjusted Net Income -- $18.5 million for the first six months of the fiscal year, excluding a $3.6 million after-tax expense related to a CEO transition.
• Advertising Expense -- $3.0 million, a 36.7% increase reflecting higher spending on new customer acquisition programs.
• Debt to Equity Ratio -- 1.7:1 as of Sept. 30, 2026, compared to 1.6:1 as of Sept. 30, 2025.
• Allowance for Credit Losses -- $116.3 million, or 12.0% of net loans receivable at the end of the quarter.
• Same Store Gross Loans -- Increased 0.1% over the 12-month period ended Sept. 30, 2026, compared to 3.3% growth in the prior year.

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RISKS

• Calmes stated, "gas prices will have an impact on the -- our customer," noting that macro factors could influence borrower delinquency.
• Management noted that "increasing macroeconomic uncertainty" prompted the company to tighten underwriting of new customers at the end of the prior fiscal year.

SUMMARY

World Acceptance Corporation (NASDAQ:WRLD) reported a shift toward profitability in the second quarter of fiscal 2027, supported by higher loan yields and improved credit performance across the portfolio. Management reported that the company deliberately focused on refinancing existing customers while reducing exposure to new borrowers in response to macroeconomic uncertainty. This strategy led to a 5.4% decrease in the total customer base but resulted in lower delinquency rates and a reduced provision for credit losses. Total revenue grew despite the smaller customer count, as interest and insurance yields expanded by 158 basis points year over year. The company also maintained strict expense discipline, reducing general and administrative costs and headcount.

• CEO Calmes noted the company is currently "focused right now on the blocking and tackling and getting the fundamentals right of the operations" as a priority over aggressive growth.
• The company has recently loosened underwriting and expects to "carefully increase new customer lending in the coming quarters."
• COO Turner commented on the status of the credit card pilot, stating, "We're probably at least a quarter or 2 away from trying to make a decision on how to scale that."
• Management reported a $4.2 million decrease in incentive expense, primarily attributed to a reduction in share-based compensation.
• The company continues to Pilot a credit card offering and is currently monitoring the behavior of the initial portfolio to determine long-term scalability.
• Management stated that debt outstanding increased 13.3% to $582.8 million to support the portfolio and share repurchase activities.

INDUSTRY GLOSSARY

• CECL: Current Expected Credit Loss, an accounting standard requiring companies to estimate and record expected credit losses over the life of a loan.
• Recency Basis: A method of calculating loan delinquency based on the number of days since the last payment was received.
• Net Charge-offs: The amount of debt that a company believes it is unlikely to collect, net of any recoveries on previously charged-off amounts.
• Yield: The interest and fee income generated by a loan portfolio expressed as a percentage of the total loan balance.
• Refinance Customer: An existing borrower who takes out a new loan to replace or add to an current loan balance.

Full Conference Call Transcript

Operator: Good morning, and welcome to World Acceptance Corporation's Second Quarter Fiscal 2027 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. 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 matters that are inherently subject to risks and uncertainties.

And statements other than those of historical fact as well as those identified by words anticipate, estimate, intend, planned, 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, 2026 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, John Calmes, President and Chief Executive Officer. Please go ahead.

John Calmes: Thank you. Good morning, and thank you for joining our fiscal 2027 2nd quarter earnings call. We are pleased with our second quarter results, and more importantly, we believe we are well positioned for the remainder of fiscal 2027 this quarter reflects steady progress against our core priorities: growing loan portfolio responsibly, improving credit quality and maintaining a disciplined approach to expenses. . We achieved adjusted earnings per share of $1.92 for the second quarter. Earnings benefited from a 3.2% increase in revenue as well as a 7.7% decrease in provision expense. Importantly, our credit quality continued to improve. We saw improvement in delinquency on both the front end and back end.

Most overly front-end delinquency decreased from 20% to 18.9%. These trends reinforce our confidence in the health of the portfolio and the strength of our underwriting. On expenses, we saw improvement in our G&A expense, and we expect to maintain disciplined approach to expenses going forward. At this time, Tobin Turner, our Chief Operating Officer, and I would like to open up to any questions you may have.

Operator: [Operator Instructions] The first question will come from Kyle Joseph with Stephens.

Kyle Joseph: I want to pick your brain on what's going on macro, specifically. Just kind of want to get a sense for how sensitive is the consumer or your consumer to gas prices? Is it to the point where you kind of see delinquencies kind of move in line with gas prices or are we at the point where gas is less of an important portion of their budget?

John Calmes: Yes. Historically, we've always seen that gas prices will have an impact on the -- our customer, right? But right now, we've been pretty conservative in our underwriting. So overall, the credit metrics continue to improve. So I guess you could ask with the where they've improved about more than they have, if we didn't have sort of higher gas prices, it's hard to know that for sure. But in general, with our portfolio, because we've been pretty cautious on our lending, the overall portfolio has seen improvement.

Kyle Joseph: Yes. And then a lot of variables there. So hard to pinpoint for sure. But yes. And then in terms of kind of the strategy going forward, are you guys -- I mean, obviously, it's paying off, you guys are putting up strong credit results here, but are you kind of happy growing kind of the existing customer base being a little bit more cautious, call it, on new consumers? Is that kind of the plan, at least for the medium near term, given what's going on macroeconomically?

John Calmes: Yes, that's right. So we're focused right now on the blocking and tackling and getting the fundamentals right of the operations and then taking a cautious approach to lending. So we -- right now, we're a little looser than we were, say, in the March quarter, but we're still a lot tighter than we were at this point last year. So we may continue to kind of put some of those levers to increase growth a little bit, but I wouldn't expect any dramatic change in our growth trajectory in the near term.

Operator: [Operator Instructions] The next question will come from Guy Riegel with Ingalls & Snyder.

Guy Riegel: It's Guy here. Part of my questions were answered, previous person, analyst. But I was curious, can you speak to the competitive environment? And last one would be, are you still testing a credit card offering?

J. Turner: Great questions. Hey, this is Tobin Turner speaking. On the competitive standpoint, we, at a macro level, still feel very confident. We're pleased with our overall app flow. So we kind of like where we're positioned. We see some opportunities to grow when and as we see fit. So from a competitive standpoint, we feel pretty good. On the credit card front, we have we're still kind of pilot testing where we are. We've got enough cards out there that we're kind of getting to see how people behave over time. We really are in just letting that initial portfolio bake.

And we're probably at least a quarter or 2 away from trying to make a decision on how to scale that.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Calmes for any closing remarks.

John Calmes: Thank you for joining our second quarter earnings call, and thanks for your interest.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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