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Date
Jan. 27, 2026 at 10 a.m. ET
Call participants
- Chief Executive Officer — Chad Prashad
- Chief Financial and Strategy Officer — Johnny Calmes
Takeaways
- New customer portfolio growth -- Outstanding ledger for new customers increased by 25%, with origination volume for new customers up 16%.
- Provision for loan losses -- Approximately $8 million additional provision required for the increased new customer segment.
- Default rates -- Third-quarter first pay defaults for new customers declined by 19% relative to previous high-volume periods.
- Gross yield improvement -- Yields increased by 84 basis points year over year, attributed to higher rates, disciplined underwriting, and organic customer base growth.
- Customer base expansion -- Total customer count grew organically by 5.4%, compared to 2.2% organic growth last year and two years of declines before that.
- Ledger growth -- Organic ledger balance rose 2.4% year over year, reversing a 2.4% decline in the previous year.
- Average loan balance -- Average outstanding loan dropped by 2.5% year over year, reflecting a shift towards lower-balance new customers and tighter underwriting.
- Share repurchases -- Nearly 600,000 shares were repurchased during the first nine months, reducing outstanding shares by 11%; $60 million capacity remaining, equal to about 9% of shares at the closing price, with a target to reach a total reduction of ~20% this year.
- Tax filing business momentum -- Mid-quarter update indicates substantial year-over-year improvement in tax filings volume and revenue despite weather-related branch closures.
- Incentive compensation outlook -- Calmes stated, "I do expect to see some decent decreases in that incentive comp expense going forward" as certain one-time grants and elevated incentives will decline in future quarters.
- Headcount adjustments -- Planned reduction of 3%-5% in field office headcount this quarter after a period of overstaffing in anticipation of turnover and performance management.
- Credit card segment exposure -- The company described its credit card portfolio as "very small in general, just a few million dollars outstanding" and noted capability to pivot if regulatory changes arise.
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Risks
- Increased new customer portfolio required approximately $8 million in additional loan loss provision and management identified new customers as "our riskiest customer segment."
- Higher share-based and personnel expenses, described as a "headwind" to year-over-year earnings comparability, arising from temporary overstaffing and new customer investments.
- Branch operations in about 10 states experienced temporary weather-related closures, potentially affecting local revenue and volume during the quarter.
Summary
World Acceptance Corporation (WRLD 18.10%) reported notable expansion in both customer numbers and outstanding ledgers, driven by substantial new customer originations and a focus on credit performance improvement. The company expects incentive compensation expenses to decrease in the next quarter as one-time share grants and field-level incentives phase out. Management stressed ongoing improvement in tax preparation service revenue, with early indicators highlighting increased demand and successful marketing shifts.
- Planned field office headcount cuts of 3%-5% are designed to align staff levels with performance standards and anticipated turnover.
- Exposure to proposed credit card rate-cap regulations is minimal due to the company’s small position in the credit card market and ability to adjust quickly if needed.
- Leadership transition in branch operations is under way, with emphasis on strengthening analytics and marketing expertise.
Industry glossary
- First pay default: Loan accounts in which customers fail to make their initial scheduled payment, highlighting early-stage credit risk.
- Gross yield: The ratio of total interest and fee income generated by the loan portfolio to average loan receivables, before deduction of loan losses and operating expenses.
- Ledger: The aggregate balance of all outstanding loans, often referred to as "outstanding ledger" in portfolio context.
Full Conference Call Transcript
Chad Prashad: Good morning. Thank you for joining our fiscal 2026 third quarter earnings call. There are a few important aspects of the portfolio to cover in more detail. While we originated 16% more in new customer volume during the quarter, we actually ended the quarter with 25% more outstanding ledger. Our active new customers than the same quarter of last year. And our new customers are, again, our riskiest customer segment. This 25% increase in the new customer outstanding portfolio required around an $8 million additional provision for this customer segment in the same quarter last year. The third quarter had the highest new customers since the same quarter of calendar 2021.
Already, early performance indicates that these continue to be good investments in line with expectations. Compared to the prior high volume mark, of the 2021, the first pay defaults are already 19% lower relatively speaking. In addition, we continue to make credit box improvements on a regular basis. In some cases, we changes are due to credit performance in small credit and geographical pockets. But the majority of improvements in underwriting are to drive a faster return on the initial investment, and increase long term ROI with our most loyal customers. This is a long term investment that will continue to improve both credit performance as well as customer retention. When combined continue to improve long term yields.
As we noted, yields improved 84 basis points year over year, as income has also improved. We expect this trend to continue due to improved rates in a few states, continued discipline with credit limits and underwriting, improving customer retention as longer tenured customers are also lower risk for us, and continued smart investments in our customer base and overall ledger. Our customer base has grown substantially around 5.4% organically year over year. To put that in perspective, last year we grew 2.2%, year over year. And declined in the two years prior to that. One of our largest growth years was in fiscal year 2022, where we experienced a 5.6% increase in our customer base organically.
As mentioned earlier, the first pay default rates on our new customers made during the third quarter of this year already 19% lower, relatively speaking, than new customers of that same year of fiscal 2022. Organic growth in ledger is 2.4% year over year compared to a decline of 2.4% last year. Our average outstanding loan has declined around 2.5% in average balance year over year. That's due to the increased discipline around our underwriting, and larger investments in new customers who are typically at lower balances. Again, this all combines to improve gross yields.
Year over year earnings comparisons are complicated with the headwinds during this quarter of increased share based comp expense, personnel expense, as we have temporarily overstaffed to improve our branch team members. Investments in new customers as well as our provision for loan losses. However, we remain committed to the long term soundness and profitability of the portfolio and operations. We're most excited about putting several years several years of shrinking the portfolio behind us. And continuing to see these gross yields grow. The customer base continues to expand and customer retention and tenure continues to improve. As one of our largest investments, we continue to be focused on improving branch operations and personnel management.
This year, we've already repurchased nearly 600,000 shares. Reducing our outstanding shares by 11% the first nine months of the year. We have over $60 million of remaining capacity for repurchases, is approximately 9% of the outstanding shares as of yesterday's closing price. Would a total of around 20% of outstanding shares this year. As a mid quarter update, which very early in our tax filing season, and we've already seen substantial improvement year over year in both the volume of filings as well as the revenue.
While the current ice storm has affected approximately 10 of our states so far this week, by some portion of their branches being closed we are optimistic and continue to be optimistic that we'll experience an increase in tax filing volume and revenue throughout this quarter. I'd also like to take a moment to thank Clint Dyer his incredible contribution to the company over the last thirty years. To celebrate his upcoming retirement. Clint's added tremendous value to our branch leadership over the decades and has produced many of our key leaders under his mentorship. We wish him the best his upcoming adventures.
I'm also grateful to our branch leadership under Clint for their commitment to world and embracing the new style that Tovin Turner has brought in and stepping in to lead branch operations during the transition. Sylvan brings his deep knowledge of analytics and marketing as well as retail operations to his approach of the management structure. We are excited about the current portfolio and its trajectory again includes substantial customer base expansion, strong loan growth, improved loan approval rates while maintaining credit quality. Stable and improving delinquency lower cost of acquisitions and improving yields as well as declining share count. All of which ultimately returns value to our shareholders through strong earnings per share growth.
At this time, Johnny Calmes, our Chief Financial and Strategy Officer, and I would to open up to any questions you
Operator: Thank you. We will now begin the question and answer session. And the first question today will come from Kyle Joseph with Stephens. Please go ahead.
Kyle Joseph: Hey, good morning. Thanks for taking my questions. I totally get the dynamics of the portfolio growth and particularly related to new consumers. But just looking for an update on kind of the health of the underlying consumer aside from that. Obviously, there were concerns in the fall. Particularly related to the auto segment. But just any trends you kinda seen in the consumer since then, and then how you're thinking about the outlook in the tax refund season with all the headlines that the consumers are expected to get larger tax refunds.
Chad Prashad: Yeah. I would say from the overall consumer perspective, we haven't seen a degradation in collections or in credit quality. There has been a I would say, a slight increase in demand There's also been a significant decrease in our cost of acquisition for our higher credit quality new customers, which may be related to that. May not really super sure on that one. But we haven't seen a significant change in our consumer behavior whether it's due to you know, tariffs or, you know, other expenses. On the tax filing side, we are seeing definitely an increased demand in taxes and tax filings.
We are expecting to see larger returns or larger refunds this year a lot of those are probably due to some of the tax law changes last year that would affect our customer base in particular We have also changed marketing sort of last minute early in January, late December to really attract customers who are gonna be in some of those segments, customers who are either paid but through tips so there's a you know, might be experiencing refunds this season or other sort of changes in the tax code from last year. But on the tax filing side, we do remain optimistic this will be a very strong tax year for us.
Kyle Joseph: Got it. And then, yes, just shifting to G and A. The growth there, get the sense it was largely incentive comp and, you know, the majority of that was stock based comp. I think a couple calls ago, you gave us kind of a little bit of a schedule in terms of, you know, how long it would be elevated. Can you just, you know, walk us through if there's any sort of if it should be elevated in the coming quarters or how you would expect the personal line personnel line item to trend coming first.
Johnny Calmes: Yeah. So you should start to see that incentive line come down starting with Q4 There was a share based comp grant last December has been fully expensed to this point. And there'll be another sort of cliff in December year. And but also, the sort of the field level incentives could start to tighten a little bit as we move forward as well. So I do expect to see some decent decreases in that incentive comp expense going forward.
Kyle Joseph: Got it. That's it for me. Thanks for taking my questions.
Operator: And the next question will come from Guy Riegel with Ingalls and Snyder. Please go ahead.
Guy Riegel: Hi, guys. Question, in the report earnings report, you had talked about an increase in headcount in the field level offices branch offices. And then and you spoke about deciding to have a reduction in headcount going forward of 3% to 5% Why the increase? And then why the decision to decrease?
Chad Prashad: Yeah. Great question. So first, the decision to increase was building up a quality team in anticipation of some reduction in some underperforming team members and also some underperforming parts of the company. So really, it's it's building up in advance of turnover. We've done it across, I would say, roughly 80% of the company and about 50% of that was done very quickly. There's still sort of a lagging period where in anticipation of turnover or some underperforming team members, we're we're holding on to some of our underperforming team members a little longer than anticipated as we're building up the base there, if that makes sense. So really, it's just building up in anticipation of that turnover.
So should expect to see the reduction pretty quickly within this quarter.
Guy Riegel: I see. And the underperformers, is it related to their ability not to collect or just any color on that?
Chad Prashad: Yeah. It's it's it's related to a number of things. One of those is their ability not to collect. I think just overall performance in general, engagement, that sort of thing in the current operating environment.
Guy Riegel: Okay. And one last question. I don't know if you have a crystal you don't have a crystal ball, but the headlines related to a 10% cap on credit cards. Was any of that related to underwriting? I mean, you guys underwrite your the loans you make. Was there any discussion about your area
Chad Prashad: So as far as I know, there's been no discussions how that would relate to installment loans. But I would imagine with a 10% rate cap with the current cost of capital in the environment, there would be a severe reduction in access to credit cards. And, you know, my rough estimate would be somewhere around the seven fifty to seven eighty credit score. Anyone who's below that would probably see a sort severe reduction in their access to credit. I think it would it would definitely drive up demand for our product or for installment loans in general. But you know, aside from that, in the our own credit card portfolio currently is still very small.
I believe we currently have expanded with active customers, and I believe it's 46 states. But, again, we're we're still very small in general, just a few million dollars outstanding. So we can pivot very quickly on that end if needed, but I don't think for now there's there's really any serious implications negatively for our major portfolio.
Guy Riegel: Great. Okay. Thanks, guys.
Operator: This will conclude our question and answer session. I would like to turn the conference back over to Mr. Prashad for any closing remarks.
Chad Prashad: Yes. Thank you for joining our third quarter fiscal 2026 earnings call. And this concludes the earnings call. Thank you.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.