World Acceptance Corp. (
Q3 2010 Earnings Call
October 26, 2010 10:00 am ET
Sandy McLean - Chairman & CEO
Kelly Malson - CFO
David Burtzlaff - Stephens Financial
John Rowan - Sidoti Company
Henry Coffey - Sterne, Agee
Previous Statements by WRLD
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Good morning and welcome to the World Acceptance Corporation sponsored second quarter press release conference call. This call has been recorded. At this time, all participants have been placed on listen-only mode. A question-and-answer session will follow the presentation by the Corporation CEO and its other officers. Before we begin, the Corporation has requested that I make the following announcement.
The comments made during this conference may contain certain forward-looking statements within the meaning of Section 27A 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 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, amount of revenues that may be recognized by the Corporation, changes in current revenue and expense trends, changes in the Corporation's market 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's my pleasure to turn the floor over to your host, Sandy McLean, Chairman and CEO.
Thank you Holly and welcome to the World Acceptance Corporation second quarter conference call. As Holly said, I'm Sandy McLean. With me are Mark Roland, our President and COO; and Kelly Malson, our Chief Financial Officer; along with other members of our management team. As is customary, I'll spend a few minutes reviewing the quarterly results and then we'll be happy to answer any questions.
I'm once again very pleased with our quarterly financial performance and am happy that operational improvements that we experienced during our first fiscal quarter have duly continued into the second quarter. Demand of our loan products remained stronger in the quarter and as expected, we have continued to experience improvement in our loan loss ratios. Net income for the second fiscal quarter was $20.2 million or $1.26 per diluted share compared to 14.6 million or $0.89 per diluted share for the prior year quarter.
This represents a 38.5% increase in net income and a 41.6% increase in net income per diluted share when comparing to two quarterly periods. For the first six months of the fiscal 2011, net income was 38.9 million or $2.40 per share representing a 33.2% and a 34.1% increase in net income and EPS respectively with the first six months of fiscal 2010.
Gross loan remained at the 868 million at September 30th, a 15% increase over the 755 million outstanding at September 30th, 2009, a 12.7% increase since the beginning of the fiscal New Year. This growth was fairly evenly distributed throughout the company with nine of our 11 state experienced in at least a 12% growth rate.
Additionally, a 15% year-over-year growth resulted from 8.5% increase in the number of accounts outstanding and a 6.5% increase in average balances. While acquisitions will always remain an important factor in the overall growth strategy of the company, it has been very little purchase activity during the first two quarters of fiscal year. Nine small offices consisting of 3,872 and 3 million in gross loans were purchased. Out of nine, four became new office locations five were merged into existing offices. For comparison purposes, during the first two quarters of fiscal 2010, the company acquired 1,132 accounts and 841 million in gross loan balances and two separate offices both of which were consolidated in two existing locations.
We remain on track with the expansion of our branch network during the first six months of the current fiscal year, which is as previously disclosed a little more aggressive than fiscal 2010. We began fiscal 2011 with 990 offices, opened 41 purchased four and closed one give us a total of 1,034 offices at September 30th, 2010.
Our plan for fiscal 2011 has opened 55 offices in the US and 15 in Mexico possible evaluate acquisitions and opportunities arise.
Total revenue for the quarter amounted to 118 million, a 13.3% increase over the 104 million during the second quarter of the prior fiscal year. This resulted from a 14.2% increase in average net loans when comparing the two quarterly periods. The company did see a slight decrease in yields due to a greater increase in larger loans outstanding when compared to the small installment loans. However this change in overall mix was not dramatic.
Revenues from the 937 offices throughout both quarterly periods increased by 11%. The company continued to see improvement in its delinquencies and charge-offs during the second quarter in spite the ongoing difficult economic environment. Accounts that were 61 plus days past decreased by 3.3% to 2.9% on a recently basis and from 4.6 to 4.2% on a contractual basis when comparing the two quarter end statistics.
Net charge-off as a percentage of average net loans decreased from 16.2% annualized during the prior year second quarter to 14.8% annualized during the most recent quarter. This is the sixth straight quarter that the charge off ratio has declined from the (inaudible) of the previous year and the current loss percentages are back in line with historical levels. Over the last ten years charge-off ratios during the second fiscal quarter have ranged from a 17% in fiscal 2008 through a low of 14% in fiscal 2006. The company remains focused on controlling operating expenses on an ongoing basis.