Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

World Acceptance Corporation (NASDAQ:WRLD)

F4Q09 (Qtr End 03/31/09) Earnings Call

April 29, 2009, 10:00 AM ET

Executives

Sandy McLean - Chairman and CEO

Mark Roland - President and COO

Kelly Molson - CFO

Analysts

Henry Coffey - Sterne, Agee, & Leach

Joe Gagan - Atlantic Equity Research

Bill Dezellem - Titan Capital Management

Rick Shane - Jefferies & Company

James Hom - Miller Tabak Roberts

David Burtzlaff - Stephens Incorporated

John Rowan, Sidoti & Company

Henry Coffey - Sterne, Agee, & Leach

Presentation

Operator

Good morning and welcome to the World Acceptance Corporation's Sponsored Fourth Quarter Press Release Conference Call. At this time, all participants have been placed in listen-only mode. A question-and-answer session will follow the presentation by the corporation's 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 27-A 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 are 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 markets, 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 is my pleasure to turn the floor over to your host, Mr. Sandy McLean, Chairman and CEO. Please go ahead, sir.

Sandy McLean

Think you, Kelly. Good morning and welcome to the World Acceptance Corporation fourth quarter conference call. As Kelly said, I am Sandy McLean, the Company's Chairman and CEO. With me are Mark Roland, our President and Chief Operating Officer, and Kelly Molson, our Chief Financial Officer, along with other members of our management team.

As we have done in the past, I will spend a few minutes reviewing the quarterly and annual results, after which we will be happy to answer any questions.

Fiscal 2009 was certainly one of our more challenging years for World Acceptance Corporation, as was the case with most financial services companies. However, we are very pleased with our improved profitability on a year-over-year basis in a very difficult economic environment.

We are glad to be able to report the continued expansion of our office network, the growth in our receivable portfolio, and the increase in our net earnings as well as other areas of improvement.

Net income for the fourth fiscal quarter was $28 million or $1.72 per diluted share compared to $24.4 million or $1.44 per diluted share for the fourth quarter of fiscal 2008. This represents a 14.7% increase in net income and a 19.4% increase in net income per diluted share when comparing the two quarterly periods.

For the 12 months period ended March 31, 2009, net income was $60.7 million or $3.69 per share compared to $53 million or $3.05 per share for the prior fiscal year. This represented a 14.5% and a 21% increase in net income and diluted earnings per share respectively. The difference between the net income and the per share increases is due to the substantial number of shares that the Company repurchased during the current and prior fiscal years under its stock repurchase plan.

During fiscal 2008, the Company repurchased 1.375 million shares for aggregated purchase price of $41.9 million. During the current fiscal year, the Company repurchased 288,700 shares for a total purchase price of $7.8 million. During the fourth quarter, the Company did not repurchase any shares due to the uncertainty in the lending markets as well as the opportunity to retire some of its convertible bonds at a substantial discount, which the Company felt was a better use of funds.

Going forward, the Company considers share repurchases to be an important part of its long-term strategy but will do so only when it determines that there is an availability of excess capital and there are no other more beneficial uses of that capital.

Gross loans amounted to $671 million at March 31, 2009, a 12% increase over the $599 million outstanding at March 31, 2008. This is a slight increase in the year-over-year growth rate of 11% at the end of December. We are pleased with our current growth considering the economic downturn and the increase in our loss ratios.

Acquisitions continued to be an important factor in our overall growth during fiscal 2009 as the Company acquired 9000 accounts and $10.9 million in gross loan balances in 22 separate offices. Of the 22 offices acquired, 11 remained open and the rest were consolidated into existing locations. For comparison purposes during fiscal 2008, the Company purchased approximately 8700 accounts and $4.5 million in gross loans in 25 offices. Of these, 13 offices remained open.

As previously disclosed, we continued the expansion of our branch in our network during the fourth fiscal quarter. We began fiscal 2009 with 838 offices. We opened 98 offices, acquired 11, and merged three, giving us a total of 944 offices at March 31, 2009. Of the 98 De Novo offices, 70 were in the United States and 28 were in Mexico.

Because of the accelerated office openings during the last three years, we intend to slow this growth rate for one year to strengthen our middle management level, which has been stressed to a certain degree during recent periods.

Our plans for fiscal 2010 are to open 30 offices in the United States and 15 offices in Mexico plus evaluate acquisitions as opportunities arise.

Total revenue for the current quarter amounted to $113.9 million, a 12.3% increase over the $101.4 million during the fourth quarter of fiscal 2008. For fiscal 2009, total revenue grew by 13.8% to $393.7 million compared to $346 million for fiscal 2008. This corresponds to the 11.4% and 14.1% increases in average net loans when comparing the two quarterly and annual periods respectively.

Revenues from the 747 offices opened throughout both annual periods increased by 9.3%. Revenues from our tax preparation business grew slightly during the fourth quarter of fiscal 2009 although there was a small decline in the number of returns that we prepared during the period. The number of returns prepared was approximately the same excluding the stimulus return, information returns that were prepared last year. During the current tax season, we prepared approximately 63,000 returns compared to approximately 65,000 returns during the prior year fourth quarter.

Net fees generated from tax preparation amounted to $9.4 million during the recent quarter, a 3.2% increase over the $9.1 million during the prior year quarter. During the most recent fiscal year, there were several nonrecurring items that had a significant impact on our quarterly and annual net revenues. In October, the Company sold a $10 million foreign currency option and recorded a net gain of approximately $1.5 million.

In December, the Company repurchased a $5 million face amount of its convertible notes at a substantial discount which resulted in a net gain of approximately $2 million. During the fourth quarter, the Company repurchased an additional $10 million face value of its convertible notes, also at a significant discount, resulting in additional $3.5 million.

The pretax gains of approximately $7.1 million were partially offset by $773,000 unrealized loss on the sale variance of outstanding interest rate swaps. These nonrecurring gains provided an after-tax increase in earnings per share of $0.14 per diluted share for the fourth quarter and $0.24 per share for fiscal year.

Loan delinquencies and charge-offs will always remain a primary area of management concern and focus. Accounts that were 61 days or more past due increased from 2.6% to 2.7% on recency basis and from 4% to 4.2% on a contractual basis when comparing the two quarter-end statistics.

Consistent with the rise in delinquencies, we have seen a continued increase in our loan losses. Not charge-offs as a percentage of average net loans increased from 13.0% annualized during the prior year fourth quarter to 15.1% annualized during the most recent quarter.

Unlike we experienced in the first three quarters, the 15.1% loss ratio was not the highest charge-off percentage that the Company has ever experienced during the fourth fiscal quarter. Previous high charge-off ratios for the fourth fiscal quarters were 15.4% in March of 2002 and 14.4% in March of 2003.

For the year ended March 31, 2009, net charge-offs to average net loans were 16.7% when compared to 14.5% for the prior fiscal year. While the loss ratios were generally higher than historical levels during the most recent quarter, we did see an improvement in the quarter-over-quarter increases from the third fiscal quarter.

We believe that we will continue to see improvement in loss ratios in future quarters, however, there is no assurance that they will return to historical levels in the near future.

General and administrative expenses amounted to $51.3 million in the fourth fiscal quarter, a 7.8% increase over the $47.6 million in the same quarter of the prior fiscal year. As a percentage of revenues, they decreased from 45.1% during the current quarter from 47% for the prior year quarter. For the year ended March 31, 2009, G&A expenses increased by 11.7% to $200.2 million from $179.2 million for the prior year. As a percent of revenue, they decreased from 50.9% from 51.8% over the two yearly periods.

Our G&A for average opened office increased only 0.1% when comparing the two fiscal years. Highlights of our expansion into Mexico include the following, 63 offices were opened at March 31, 2009, an increase of 12 during the current quarter and 28 during the current fiscal year. At year-end, we had 55,000 accounts and approximately $20 million in gross loans outstanding.

Our growth in loan balances as measured in pesos amounted to a 91.6% increase when comparing the two year ends but was only 41.4% in US dollars over same period. The increase in value of the dollar to the peso during the year reduced to reported growth in loans and was the primary cause for the $4.4 million and other comprehensive loss reflected in the change of shareholders equity.

We had net charge-offs of approximately $1.6 million during the year or 13.6% of average net loans. The increase in net charge-offs during the year was due to the management issues resulting from our rapid expansion primarily in the Monterey region that were discussed last quarter.

Steps have been taken to relieve these issues and we believe we expect our charge-offs in Mexico to return to reduced levels as we enter the new fiscal year.

Our 61-plus day delinquencies were 2.9% and 3.4% on a recent fee and contractual basis. During the current fiscal year, the Mexican subsidiary has lost approximately $63,000 which we believe is very reasonable in a rapidly expanding market. We expect Mexico to contribute greatly for fiscal 2010 net earnings.

Finally, the Company's annualized return on average assets of 11.6% and return on equity of 23.5% remain consistent with historical returns for the current fiscal year. Before opening the call to questions, I would like to give a brief overview of the regulatory and legislative landscape.

As you know, legislative risk have always been our most significant Company risk. This is a risk that we have successfully managed throughout our Company's history. As you also know, there has recently been a great deal of focus on the credit markets at both the state and federal levels.

While several states where we operate have had proposed legislation that could have an adverse effect on our business model, we believe that the risk capacity is minimal in 10 of our 11 states at this time. However, in Illinois, Representative Hamos has submitted several versions of a bill that could have a significant detrimental effect on our industry.

None of these bills which have gained support so far in the appropriate committee but we believe another version of the bill is likely to be introduced early next week.

Hopefully, we can continue to educate enough representatives that the law is greatly restricting installment lending will have a very negative impact on the consumers but the activists believe they are healthy.

They will eliminate access to the only reasonable credit available to thousands of consumers in Illinois. At the federal level, there are several bills that have been introduced in both houses that would have a significant adverse impact on our business. By working through the American Financial Services Association and the National Installment Lenders Association, we are trying to educate legislators about the need for our product and to differentiate our business models from other forms of credit. At this time we believe that there is not enough support for this type of legislation to move out of committee. But there is so much activity regarding the financial services that anything could happen. At this time any of us will be more than happy to try to answer any of your questions.

Question-and-Answer Session

Operator

(Operator Instructions). We will go first to David Burtzlaff with Stephens Incorporated.

David Burtzlaff - Stephens Incorporated

Good morning, Sandy and guys great quarter here.

Sandy McLean

Thank you.

David Burtzlaff - Stephens Incorporated

I just have a few questions. First, Sandy, do you have the amount of principal repayments on loans in the quarter?

Sandy McLean

Principal repayments, I do not. I mean, the numbers are extremely large. We have access to that information, but what we report basically is the change in our net loans. We have a very fluid portfolio as you know with, we have a small loan that has a lot of refinancing and the track, we have actually reported true principal repayments.

David Burtzlaff - Stephens Incorporated

Okay.

Sandy McLean

So I mean it's a number that, it is extremely large.

David Burtzlaff - Stephens Incorporated

Okay. You said you expected losses to improve going forward. I mean are you looking at year-over-year improvements? Do you think that is sustainable this year or are we still going to see higher loss provisions into 2010?

Sandy McLean

I mean that's an extremely tricky question from a, it's not tricky, but it's very difficult to answer. But all I can say is that we saw improvement at the end of March regarding some of our delinquencies and some of our expected charge-offs. But whether, I certainly believe you will see an improvement in our year-over-year increases and it's hopeful even that we can get back to close to the level of charge-offs that we saw last year. But it's certainly unlikely for us to get back to historical levels in the foreseeable future.

David Burtzlaff - Stephens Incorporated

Okay. Then finally, you talked about you think Mexico will be profitable this year. Do you kind of have a range of what that could be?

Sandy McLean

No, it would be dangerous to predict that but I know with our aggressive growth over the last three years, its certainly had a pretty major impact on the ability to show positive earnings. But to quantify what we expect at this point would, I just would not feel comfortable doing.

David Burtzlaff - Stephens Incorporated

Okay, all right, thank you very much.

Operator

We will go next to John Rowan, Sidoti & Company.

John Rowan - Sidoti & Company

Good morning. Have you guys seen any decrease in foot traffic down in Mexico given some of the issues that are going on down there?

Sandy McLean

I don't believe that's the case. We are continuing to see growth, year-over-year growth in all of our, not all of our offices, certainly some of the more mature are not growing like other ones. But there is no indication that there has been a direct impact on our business at this point. Certainly its something we are concerned with.

John Rowan - Sidoti & Company

Okay and just make sure, you said a few things earlier about one-time items in the fourth quarter. I just want to make sure. Those together all together what you named were $0.14 in the fourth fiscal quarter of this year, correct?

Sandy McLean

And $0.24 for the year.

John Rowan - Sidoti & Company

$0.24 for the year. Okay thank you.

Sandy McLean

Yes, correct.

Operator

We will go next to Henry Coffey with Sterne, Agee.

Henry Coffey - Sterne, Agee, & Leach

Yeah good morning, everyone. Can you give us some details on the quarter in terms of a dollar value of net charge-offs? And what recoveries look like?

Sandy McLean

If you bear with me for a second, during the quarter?

Henry Coffey - Sterne, Agee, & Leach

Yeah.

Sandy McLean

Charge-offs were $21.9 million and recoveries were $2.5 million.

Henry Coffey - Sterne, Agee, & Leach

Okay and compared to what cash years that recovery level is about consistent or?

Sandy McLean

It's $2.4 million for the same quarter of the last year versus $2.5 million this year, so basically it's the same.

Henry Coffey - Sterne, Agee, & Leach

And in terms of our modeling, what sort of benchmarks should we use relative to expected net charge-offs to figure out what the reserves should be?

Sandy McLean

Henry you know that I cannot, I don't get into predicting what's going to happen. The best indicator I can give you is what we've done in the past with hopefully some improvement looking forward.

Henry Coffey - Sterne, Agee, & Leach

And you expect, when you were talking about net charge-offs going lower, the expectation is that the rate of increase slows or you actually see a decline back to, say, fiscal 2008 levels?

Sandy McLean

Well, certainly we would like to see it get back to our fiscal, I mean stay at fiscal 2009 levels or improve, but, I certainly but anyway, it's hard to predict exactly what level it's going to be. It is still not a great economy.

Henry Coffey - Sterne, Agee, & Leach

And in Illinois, the new bill coming up, is that a bill that has sponsorship of the industry or is it just another version of what's been going on there for the last couple of years?

Sandy McLean

I think it's still in the process of being worked on. And really at this point, I believe from what I've heard what is currently being suggested would certainly not get any sponsorship of the industry at this point. I know that we have been with the two associations in Illinois that are working with various people on this bill. I mean it certainly would be our hope that a compromise bill could be introduced that would allow the consumers to have access to credit, but it is difficult to say.

Henry Coffey - Sterne, Agee, & Leach

Are they trying to shut you all down or are they just trying to shut down the payday loan product?

Sandy McLean

I think the current product is addressing the installment loan industry because there is already some type of payday lending bill that was passed last year.

Henry Coffey - Sterne, Agee, & Leach

Then getting back to the sort of charge-off issue, if charge-offs start to come down, should reserve levels fall as well?

Sandy McLean

Not unless we have a dramatic increase, as I have told you, we believe that our allowance model is appropriate given a range of charge-offs. We have not changed the model this year as we've seen the charge-off ratios increase. As we mentioned last quarter, we believe that if the charge-off levels continue to increase dramatically that we would probably have to take a look at the allowance.

Henry Coffey - Sterne, Agee, & Leach

No, but I mean if they start to come down, are you going to start to lower the allowance?

Sandy McLean

No, not until they come down substantially because this model has worked within a pretty wide range of charge-off levels. So that has to be pretty dramatic.

Henry Coffey - Sterne, Agee, & Leach

Thank you very much.

Sandy McLean

Okay.

Operator

We will go next to Joe Gagan with Atlantic Equity Research.

Joe Gagan - Atlantic Equity Research

Yes, I just have two questions. The first question is according to my analysis of the data here, the charge-offs for the year increased 15.1%, the charge-offs as a percentage of receivables. And the provisions for loan losses as a percentage of the revenues increased 11%. And I think year-over-year if you look at the balance sheet, the allowance for loan losses as a percentage of gross loans was 5.6%, up from 5.5% last year. So, my question is it seems like the charge-offs are going up at a much higher rate percentage increase than the allowance and the provision for loan losses. And the previous guy, he asked the charge-offs went down. He said if the charge-offs went down, would the provision for loan losses go down, but I guess my question would be why would the provisions go down if they have lagged the charge-offs the last year?

Sandy McLean

I will try to answer that question if I understood exactly, but we have got three moving components here. We've got charge-offs. We have the provision and we have the allowance. As charge-offs go up, the provision automatically goes up because it's a very important part of the provision itself. The allowance itself, the balance sheet reserve for loan losses stays much closer to a flat percentage than you will see the charge-offs as they move up and down, not only on a quarterly basis but a year-over-year as our loss ratios.

Joe Gagan - Atlantic Equity Research

Okay, so I'm sorry. Why don' we make it simple then?

Sandy McLean

Okay.

Joe Gagan - Atlantic Equity Research

The provision for loan losses went up 11% for the year and the charge-offs went up 15%. So, just simple math dictates the charge-offs are going off at a higher rate than provisions. So why are the provisions less, going up less?

Sandy McLean

I don't understand, because the provision for loan losses went up 26.6% last year but net charge-offs actually went up like 30%.

Joe Gagan - Atlantic Equity Research

I was looking at the ratio, so for example, the rate, maybe I'm looking at the wrong way but the ratio I was looking at if you look at the provision for loan losses as a percentage of revenues, I think it went from 11.5% last year to 13% this year, right? And then the charge-offs went up 15% if you look at the charge-offs as a percentage of the gross receivables.

Sandy McLean

Let's use actual numbers. The provision as a percent of average loans went up from 15.8% to 17.6%. Net charge-offs went up from 14.5% to 16.7%. Once again, I'm trying to answer your question but I'm not really sure what that question is. You will always see the relationship with the provision as the charge-offs go up, as our charge-offs go up, the provision will automatically go up.

Joe Gagan - Atlantic Equity Research

Right.

Sandy McLean

Our allowance grows as our portfolio grows. Now what, the determining factor is do we believe that the balance sheet allowance is adequate at any point in time? And we believe as I just stated that the allowance is appropriate for a wide range of charge-offs ratios before we have to go in and change our models. If you look at our net, if you look at our allowance for loan losses and you look at the number of times our portfolio turns over in a period of, in any given year, it's about 3.5 times. And you look at our charge-off percentages and you will see that our coverage of the allowance is more than 3.5 times. We believe we should not be setting up for a specific reserve or even a general reserve for loan on our books that is going to be charged off in the fourth quarter of next year.

Joe Gagan - Atlantic Equity Research

Okay, but just getting away from the allowance for loan losses, so should the provision for loan losses follow the increases in charge-offs to a certain degree? Or am I wrong on that assumption?

Sandy McLean

Yes, they do.

Joe Gagan - Atlantic Equity Research

Okay. My next question is this. I think that you guys consider a loan delinquent if it's after 45 days?

Sandy McLean

No, we consider a loan delinquent when a person does not make the payment on the day that it is due. Now, we have two measures of delinquency.

Joe Gagan - Atlantic Equity Research

Okay.

Sandy McLean

We have recency delinquency and we have contractual delinquency. And we have multiple different types of reporting delinquency. We have a potential that are not a full month past due. We have a 30. We have a 60. We have a 90. What we report is 61 day or more past due on both a recency and contractual basis.

Joe Gagan - Atlantic Equity Research

So you don't have a data point that says that delinquency, that there is a delinquency after 45 days? It's just 60, you said. Right?

Sandy McLean

No, we do not have a 45-day delinquency.

Joe Gagan - Atlantic Equity Research

Okay, thank you.

Operator

We go next to Bill Dezellem with Titan Capital Management.

Bill Dezellem - Titan Capital Management

Thank you. We have a group of questions. First of all, how does the De Novo office slowing, how does that affect your appetite for acquisitions?

Sandy McLean

It does not have an impact. We evaluate all acquisitions that we are presented with on an individual basis and we will continue to do so. As you know, we do not go out and target companies. They generally through our contacts and so forth, when an independent for some reason wants to get out of the business, they will approach us and we will continue to evaluate those acquisition opportunities as they arise.

Bill Dezellem - Titan Capital Management

And the reason that you are okay with that growth but wanting to moderate the De Novo growth is that the acquisitions, they come with their own branch managers and people so you don't have that hurdle to overcome?

Mark Roland

This is Mark Roland. That is certainly a factor. Generally speaking, when we buy offices that we are going to remain open, those will come with seasoned, consumer finance staff with them unless they are going to be rolled into existing locations again. In that case, we have already got somebody to run them.

Bill Dezellem - Titan Capital Management

Thank you. And then how many offices do you have in Illinois?

Sandy McLean

61.

Bill Dezellem - Titan Capital Management

Did I hear correct 61, 61?

Sandy McLean

61, that's correct.

Bill Dezellem - Titan Capital Management

Okay, thank you. And then circling back to the credit issues, you had referenced in your remarks I think in answer to a question that you saw some improvements late in the quarter. Would you provide some more details as qualitatively behind the improvements that you saw and when you saw them with the credit trends, please?

Sandy McLean

In February and March periods, which are historically our lowest delinquency periods, we saw improvement in year-over-year delinquency in both a recency and contractual basis in narrowing the spread from the prior year. I don't have the exact December recency and contractual comparisons from both December ending periods, but I do know that the March period showed a significant narrowing of the gap to I believe a tenth of a percent on a recency basis and maybe a couple of tenths on a contractual basis. And that's kind of a rounding deal.

So, basically those move together. In addition, the growth in the portfolio from the 11% reported at December quarter end to 12% March quarter end was reflected not only in that growth but in loan volumes surrounding that which helped create the growth. So from an operations perspective as we moved into March month end, we were pleased with our ability to grow the portfolio and also with our ability to control the delinquencies at that period end.

Bill Dezellem - Titan Capital Management

And that's a nice segue to the next question I had which was relative to loan demand. If we just take a step back and think about your customers, are you finding that as the economy seems to be at least stabilizing and not in freefall that they are getting more interested in borrowing money than they had been when the economy was in freefall? Or have you seen any change in the customer's desire or interest to borrow?

Mark Roland

That's hard to answer. Again this is Mark. If you look back over the entire year last year, we started April 1 at a little over 18% greater in loan balances than the prior same quarter, dropped to the mid-16s in the June and September quarter and where the bottom dropped out was the December quarter. And if you recall the mood of the economy at the time, the mood on the news and in the newspaper was ultimate doom and gloom. I think people were more interested in putting money under their mattress than they were on spending it for the holidays.

For us to have rebounded from that December month-end period again is a marginally positive sign to me that loan demand is coming back. It's certainly not a divining rod to say that we are going to see improvements back into those 15%, 16%, 17% ranges that we saw before, but I certainly can't downplay the fact that I believe it was a step in the right direction.

Bill Dezellem - Titan Capital Management

That's helpful. Thank you both.

Operator

(Operator Instructions). We will go next to Rick Shane with Jefferies & Company.

Rick Shane - Jefferies & Company

Hi, guys. Thanks for taking my questions. Just a couple. In terms of the originations this quarter, what percentage were refinances?

Mark Roland

We are looking.

Rick Shane - Jefferies & Company

Great, as you are doing that, the other question and it really follows up on the previous caller's question in terms of what you saw during the quarter. One of the commentaries we've seen pretty consistently is that this year there was, it seems to be that there was a greater impact from tax refunds, tax refunds were up depending upon the numbers 6% to 9% year-over-year. And it sounds like commentary or based on commentary from other companies both large and small and both targeting high-end borrowers and low-end borrowers that lenders saw greater impact from tax refunds this year. Did you see that in your business? Do you think that that may be creating a little bit of noise in terms of what you saw in February and March, the peak periods for tax refunds especially for low-end borrowers?

Mark Roland

Historically February and March have always been our lowest delinquency periods there, certainly the period when our customers have more available free money, free income than in any other period. But I don't believe that there was any evidence that there was any more. In fact, tax refunds by number were down. You are referring I assume to dollar refunds per individual taxpayer. We did not really see any difference and kind of the proof of that is that the paydowns in fact decreased. I mean we grew the portfolio on a linear basis from December through March. So, I am not sure that I can support the idea that you are alluding to.

Sandy McLean

To answer your other question, as far as renewal percentages of total loan volume, 79.2% of our loan volume was renewals in the fourth quarter of this year compared to 79.5% for the same quarter of the prior year. If you look at those numbers on an annual basis, 75% were renewals during the entire fiscal 2009 compared to 73.3% during fiscal 2008.

Rick Shane - Jefferies & Company

Okay, great. That's very helpful. I appreciate the data. I am not sure I understand the last statement though. The last statement was that you saw fewer paydowns related to tax refunds and that you basically saw denominator growth in terms of your delinquency data. So, does that suggest that the improvement in terms of delinquency ratios was a function of growth?

Sandy McLean

I think what Mark was saying is that when you look at your loan balance in December and you look in your loan balances in March and you look at what happened, generally speaking during the fourth quarter because of, number one, the lack of, I mean, it's not the lack of, but the reduction in loan volume compared to the fourth quarter when we are having so much new borrowings for Christmas and so forth. These borrowers are not backing and borrowing as often in the fourth quarter as well as the fact that they are getting the most amount of money that they have access to during any period of the year. But our reduction between December and March was a little less than we have seen in prior years. Does that help?

Rick Shane - Jefferies & Company

No, I think my head is starting to spin here a little bit. I took the original comment to mean that your delinquency improvement sequentially from December '08 to March '09 was a better rate of improvement than what you saw the previous year. And now I am wondering if that is because you saw stronger loan growth December to March than you did the previous year and actually fewer paydowns related to what is usually your best seasonal attribute, which is people taking their tax refunds and paying down bills.

Sandy McLean

I think my head is beginning to spin a little bit after that. Number one, Mark, in his comments did not, in talking about tax refunds did not really refer to delinquencies at all. I think when he compares delinquency and the only way we can compare delinquency is not between one quarter and the next but between where you stand this year versus the same time period of last year. And when Mark said that his delinquencies were down slightly, he was not referring to just the 60 plus delinquencies that we normally report but he's looking at it from an overall standpoint. So talking strictly about delinquencies and what impact it had upon our receipts during the quarter is kind of a disconnect. I think I don't know how to answer your question because I'm not really sure exactly what you are asking.

Rick Shane - Jefferies & Company

Okay, I think we should probably go through this off-line. We will follow up. Sandy, Mark, thank you.

Sandy McLean

I apologize, but I'm not sure I can answer the question whatever.

Rick Shane - Jefferies & Company

No, I understand and I want to present the data in a little clearer way so we can have a better discussion about this. Thank you.

Sandy McLean

Okay.

Operator

We will go next to James Hom with Miller Tabak Roberts.

James Hom - Miller Tabak Roberts

Hi, good morning and congratulations on an excellent quarter.

Sandy McLean

Thank you.

James Hom - Miller Tabak Roberts

Most of my questions have been addressed, but just to follow up on your balance sheet, according to my calculation I guess it looks like you have about $74 million available on your revolver and only about $95 million outstanding of the fee percent converts at quarter end. Is that about fair?

Kelly Malson

This is Kelly and that is correct.

James Hom - Miller Tabak Roberts

Okay, thank you very much and that's it for me.

Operator

And there appear to be no further questions at this time. Mr. McLean, I will turn the conference back to you for closing remarks.

Sandy McLean

Thank you very much for joining us today. We appreciate it.

Operator

Thank you for your participation. Before concluding this morning's teleconference, the corporation has asked again to remind you that 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 are 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 markets; and changes in the economy. Such factors are discussed in greater detail in the Corporation's filings with the Securities and Exchange Commission.

That concludes this World Acceptance Corporation’s quarterly conference. Have a good day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: World Acceptance Corporation, F4Q09 (Qtr End 03/31/09) Earnings Call Transcript
This Transcript
All Transcripts