World Earnings Report (WRLD) Q1 2026 Teleconference Transcript

World Earnings Report (WRLD) Q1 2026 Teleconference Transcript

World Acceptance Corporation, a leading financial services company, has announced a positive outlook for share repurchases following the completion of its new credit agreement and the scheduled redemption of its 2021 bonds.

Enhanced Liquidity and Flexibility

The company has entered into a new $640 million senior secured credit facility, providing it with enhanced liquidity and flexibility to pursue share repurchases. This new facility replaces prior revolving credit arrangements and terminates the previous credit agreements, which had maturity dates in 2026.

Share Repurchases Authorization

As of mid-2025, the company has already repurchased shares under this authorization, with authority for up to $100 million in buybacks, subject to certain restrictions. Additionally, a new share repurchase program was approved on July 22, 2025, reflecting management’s intention to continue repurchasing shares, contingent on credit agreements and remaining capacity.

Redemption of 2021 Bonds

The redemption of the older senior unsecured notes and refinancing aligns the balance sheet to support ongoing buybacks. Approximately $170 million in remaining 2021 high-yield notes will be redemptioned by August, removing prior constraints on accelerated share repurchases.

Customer Base Expansion

The company's customer base expanded by 4% compared to the first quarter of the prior fiscal year, marking the first-quarter customer base increase in three years and returning to levels last seen in Q1 2023.

Moderate Growth and Focus on Customer Retention

Management is not looking to massively grow the portfolio, either the base or the ledger, and are not targeting double-digit growth rates. Instead, they are prioritizing customer retention and credit quality.

New Credit Agreement and Repurchase Framework

The new credit agreement permits stock repurchases of up to 100% of net income beginning Jan. 1, 2025, and includes a $100 million upfront repurchase allowance. As of Q1 FY2026, approximately $45 million in net income generated since Jan. 1, 2025, is available for use within the new repurchase framework.

Internal Testing and Future Plans

Internal testing of the World Finance Smile credit card has concluded, advancing to live customer pilots with a stated goal to better align yield and risk, reduce acquisition costs, and improve retention, especially in regulated ("rate cap") states.

Stable First Pay Default Rates and Delinquency Trends

Despite growth in Q1 FY2026, first pay default rates and delinquency trends have stabilized or improved. Management stated, "we haven't seen any real dramatic shifts in terms of first pay defaults or their ability to repay."

No Increase in Risk from Newer Customers

Management confirmed that they have not seen any increase in risk from their newer customers. The proportion of recent customers (zero to five months tenure) declined from 8.7% ($120 million) in December 2024 to 7.2% ($91 million) in June, reducing portfolio risk exposure.

CPI Measure and Default Threshold

The CPI measure in the new credit agreement is approximately 18, with a default threshold of around 23-24. Management has stated that there is "plenty of cushion at this point."

Management's Commitment

Management has stated that they are not looking to take any unnecessary risks from a credit perspective. They aim for overall increase in customer retention, especially in terms of returning customers and overall customer retention.

In conclusion, the new credit agreement and the scheduled redemption of 2021 bonds have positioned World Acceptance Corporation to responsibly manage its capital structure while supporting share repurchase activity as part of its capital return strategies. The company's outlook for share repurchases is cautiously optimistic, with management signaling ongoing repurchase plans post-completion of the credit agreements and bond redemptions.

1. The new credit agreement allows World Acceptance Corporation to repurchase up to 100% of its net earnings, beginning January 1, 2025, with a $100 million upfront repurchase allowance.
2. The company's customer base expanded by 4% compared to the first quarter of the prior fiscal year, marking a return to levels last seen in Q1 2023.
3. Management is prioritizing customer retention and credit quality, rather than massively growing the portfolio.
4. Technology, such as the World Finance Smile credit card, is being used to align yield and risk, reduce acquisition costs, and improve retention, especially in regulated states.

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