World Acceptance Corporation · NASDAQ:WRLD
World Acceptance — Investor Presentation (February 2012)
39 slides from World Acceptance's investor presentation, February 2012
Slide 1: NASDAQ: WRLD December 31, 2011
NASDAQ: WRLD December b 31,, 2011 2
Slide 2: Cautionary Note About Forward-Looking Statements
Cautionary Note About Forward-Looking Statements Forward-Looking Statements Certain statements in this presentation constitute “forward looking-statements” under the Private Securities Litigation Reform Act of 1995. Statements other than those of historical fact, as well as those identified by the u
Slide 3: Agenda
Agenda z Company overview z Credit & portfolio review z Growth strategy z Financial review 3
Slide 4: Company overview
Company overview z Leading small loan consumer finance company z Founded in 1962 in Greenville, South Carolina z Serves individuals i di id l with i h li limited i d access to b banks k and d other h related credit sources z 1,120 consumer loan offices in twelve states and Mexico as of December 31,
Slide 5: Financial highlights: Consecutive years of growth
Financial highlights: Consecutive years of growth Revenue (mm) PreTax Margin (%) 600 35% 30% 500 25% 400 20% 300 15% 200 10% 100 5% 0 0% 2001 2002 2003 2004 2005 2006 2007* 2008* 2009* 2010 2011 * Restated in accordance with FSP APB14-1 “Accounting for convertible debt instruments that may be settle
Slide 6: Consumer finance office network – U.S.
Consumer finance office U S network – U.S. 11 73 70 69 82 105 44 97 62 260 44 103 At December 31, 2011: 1,020 offices in the United States 6
Slide 7: "Average" World office – US locations (1020)
“Average” World office – US locations (1020) z Rural America – Typically downtown or small strip center z 1,500 S.F. – approximately $1,400 per month lease z 3.3 employees z 860 accounts as of December 31, 2011 z $994,000 gross loans receivable as of December 31, 2011 z Average loan made during fisc
Slide 8: Consumer finance office network – Mexico
Consumer finance office network – Mexico SONORA 8 CHIHUAHUA 20 COAHUILA 12 NUEVO LEON DURANGO 24 1 TAMAULIPAS 15 SLP AGUAS CALIENTES 5 2 QUERETARO 3 YUCATAN GUANAJUATO 3 QUINTANA 6 ROO 1 At December 31, 2011: 100 offices in Mexico 8
Slide 9: "Average" World office – Mexico locations (100)
“Average” World office – Mexico locations (100) z Medium to large cities– cities– Typically in small strip centers z 1,725 1 725 SS.F. F – approximately $1,800 $1 800 per month lease z 7.6 employees z 1,144 , accounts as of December 31,, 2011 z $520,000 gross loans receivable as of December 31, 2011
Slide 10: Geographic composition of loan portfolio
Geographic composition of loan portfolio Wisconsin, Alabama, 4.5% Kentucky, 8.8% 0 3% 0.3% New Mexico, 2.4% Georgia, 13.2% Missouri, 5.9% Illinois, 6.5% Texas, 20.1% T Tennessee, 13 13.3% 3% Louisiana, 2.5% Oklahoma, 6.4% South Carolina,, 11.2% M i 4 Mexico, 4.9% 9% As of December 31, 2011 10
Slide 11: Our employees – U.S.
Our employees (1) U S U.S. 3 Sr. Vice 74.9% Female Presidents Average branch level salary (20.5 years) of $25,372 Significant bonus 14 Vice Presidents of Operations opportunity in addition to (16.4 years) salary Average Tenure 3.4 years 100 Supervisors (11.3 years) 2,886 Branch Employees (3.
Slide 12: Our employees – Mexico
Our employees (1) mexico 51.0% Female 1 Sr. Vice President Average branch level salary (6.0 years) of $6,316 USD Significant bonus 4 Vice Presidents of Operations opportunity in addition to (10.4 years) salary Average Tenure 1.5 years 23 Supervisors (3.4 years) 737 Branch Employees (1.7 year
Slide 13: Legislative risk
LegislatiVE RISK z State z State Trade Associations z Federal z American Financiall Services Association z National Installment Lenders Association 13
Slide 14: Agenda
AGENDA z Company overview z Credit & portfolio review z Growth strategy z Financial review 14
Slide 15: Administration and risk control
Administration and risk control z Decentralized loan approval and collections z Individual loan approval authority based on experience and position z Local presence with strong emphasis on “relationship” lending z Consistent underwriting policies with objective credit evaluation criteria; with empha
Slide 16: Loan delinquency – 61 Days +
Loan delinquency – 61 Days + Delinquencies as % of fiscal year – end gross loans 6% Recency Contractual 5% QTD 4 % 4.3% 4.2% 4.2% 4 % 4.3% 4.0% 4.1% 4.0% 4.0% 4% 3.8% 3.8% 3.8% 3.4% 3.5% 3.0% 3% 2.7% 2.8% 2.5% 2.5% 2.5% 2.6% 2.3% 2.3% 2.4% 2.4% 2.1% 2.2% 2% 1% 0% 2001 2002 2003 2004 2005 2006 2007 2
Slide 17: Credit loss experience – Fiscal Year
Credit loss experience – Fiscal Year Charge-off Charge off as % average loans receivable 25% 20% 16.7% 15.5% 14.8% 14.7% 14.7% 14.6% 14.8% 14.5% 15% 14.3% 13.3% 10% 5% 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 17
Slide 18: Credit loss experience 3rd Fiscal quarter
Credit loss experience 3rd Fiscal quarter Charge-off as % average loans receivable (Annualized) 25% 19.6% 20% 17.4% 17.8% 16.7% 16.3% 15.7% 15.9% 15.6% 15.9% 15% 10% 5% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 Quarter ended December 31 18
Slide 19: Agenda
Agenda z Company overview z Credit & portfolio review z Growth strategy z Financial review 19
Slide 20: Growth strategy
Growth strategy z As of December 31, 2011, we have opened 47 of the 63 p planned new offices in the U.S. and 6 of the 10 planned new offices in Mexico for fiscal 2012. z Evaluate acquisitions as opportunities arise z Evaluate new states with favorable regulations and demographics for de novo opening
Slide 21: Offices open at year end
Offices open at year end 1300 1,120 1100 1,067 990 944 900 838 732 700 620 579 526 500 470 420 441 300 100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Dec 2011 * CAGR computed for Fiscal Year 2001 - 2011 21
Slide 22: Offices open at year end in Mexico
Offices open AT YEAR END in Mexico 120 100 100 95 80 80 63 60 40 37 20 16 2 0 2006 2007 2008 2009 2010 2011 Dec 2011 22
Slide 23: Year end gross loans receivable (in millions)
Year end gross loans receivable (in millions) 1200 $1,066 1000 $875 800 $770 $671 $600 600 $506 $416 400 $352 $310 $267 $211 $226 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Dec 2011 * CAGR computed for Fiscal Year 2001 - 2011 23
Slide 24: Loan origination volume (in millions)
Loan origination volume (in millions) 2800 $2,572 2600 2400 $2,261 2200 2000 $ $1,935 1800 $1,734 1600 $1,455 1400 $1,218 1200 $1,029 1000 $878 $764 800 $660 $620 600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 24
Slide 25: Acquisition history
Acquisition history Number Retained Number Fiscal year offices offices Accounts Gross loans Fiscal 2002 36 15 15,771 $ 14,890,000 Fiscal 2003 42 21 19,931 $ 22,558,000 Fiscal 2004 68 39 28,888 $ 24,499,000 Fiscal 2005 60 30 26,969 $ 27,434,000 Fiscal 2006 25 3 11 096 11,096 $ 9,084,000 9 084 000 Fis
Slide 26: World's tax preparation
World’s tax preparation z Provides additional service for existing customers z Excellent fit for World World’ss customer demographics z Excellent fit for World’s employees due to seasonality z Excellent revenue potential with little additional expense z 48,000 48 000 returns completed in fiscal 2011
Slide 27: Expansion in Mexico
Expansion in Mexico Why Me Wh Mexico? ico? z Favorable regulatory climate z Tremendous potential market z Very V little littl competition titi Status at December 31, 2011 z One hundred h d d offices ffi openedd since i September b 2005 5 z Approximately 114,000 accounts z Approximately $52.0 million
Slide 28: Agenda
Agenda z Company overview z Credit & portfolio review z Growth strategy z Financial review 28
Slide 29: Financial highlights
Financial highlights Fiscal Year 2003 2004 2005 2006 2007 (1) 2008 (1) 2009 (1) 2010 2011 Nine months ended December 31, 2011 R Revenue 14.0% 15.1% 17.6% 15.4% 20.2% 18.4% 13.8% 12.4% 11.5% 10.4% Increase Net Income 18.2% 25.8% 18.2% 13.3% 19.9% 8.8% 12.4% 30.4% 23.9% 10.6% Increase Earnings Per 25.
Slide 30: Net Earnings – Fiscal years (in millions)
Net Earnings – Fiscal years (in millions) 100 $91 90 80 $74 70 60 $56 $50 50 $46 $39 40 $34 $29 30 $23 $19 20 $16 10 0 2001 2002 2003 2004 2005 2006 2007 ((2)) 2008 ((2)) 2009 ((2)) 2010 2011 (1) CAGR from fiscal year 2001 – 2011 (2) Restated in accordance with FSP APB14-1 “Accounting for convertibl
Slide 31: Earnings Per Share Fiscal years
Earnings Per Share Fiscal years $7.00 $6.00 $5.63 $5 00 $5.00 $4.45 $4.00 $3.43 $2.89 $3.00 $2.51 $2.02 $2.00 $1.74 $1.49 $1 25 $1.25 $1.00 $1.00 $0.83 $0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (2) (2) (2) (1) CAGR from fiscal year 2001 – 2011. (2) Restated in accordance with FSP
Slide 32: Operating returns as a percent of total revenues
Operating returns as a percent of total revenues 35% 32 2% 32.2% 29.7% 30.3% 30% 28.3% 28.7% 27.6% 27.8% 27.0% 27.1% 26.0% 25.9% 25% 20% 15% 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007 (1) ( ) 2008 (1) ( ) 2009 (1) ( ) 2010 2011 (1) Restated in accordance with FSP APB14-1 “Accounting for convertibl
Slide 33: Operating returns on average loans – Fiscal years
Operating returns on average loans – Fiscal years 30% 24.9% 25% 24.2% 24.1% 23.0% 23.3% 22.3% 22.4% 21.9% 20.7% 20.5% 20.8% 20% 15% 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007 (1) ( ) 2008 (1) ( ) 2009 (1) ( ) 2010 2011 (1) Restated in accordance with FSP APB14-1 “Accounting for convertible debt in
Slide 34: World's return on assets and equity
World’s return on assets and equity 30% ROA ROE 25% 22.8% 22.2% 22.1% 21 1% 21.1% 21.2% 21.5% 21.2% 21.2% 20 9% 20.9% 20.1% 19.9% 20% 15% 13 9% 13.9% 12.2% 12.7% 11.7% 11.8% 11.9% 11.0% 10.9% 9.9% 10.4% 10% 8.8% 5% 0% 2001 2002 2003 2004 2005 2006 2007 (1) 2008 (1) 2009 (1) 2010 2011 (1) Restated in
Slide 35: Capitalization: Equity rich
Capitalization: Equity rich (At DECEMBER 31 31, 2011; $ millions) Junior Subordinate Note Payable $50.0 , 6.5% Revolving Senior Notes Equity $278.9 , 36.3% $439 5 , 57 $439.5 57.2% 2% Availability Junior Subordinated Notes – $20.0 Revolver – $21.1 35
Slide 36: Cash flow growth strengthens the balance sheet
Cash flow growth strengthens the balance sheet Total capitalization ($ millions) 900 Equity E it Debt D bt 800 700 600 $329 $189 500 $176 400 $208 $215 300 $171 $101 $84 $443 $440 200 $95 $383 $103 $83 $296 $92 $229 $22 $245 100 $190 $210 $157 $83 $102 $116 - 2001 2002 2003 2004 2005 2006 2007 2008
Slide 37: Stock repurchase program
Stock repurchase program • Fiscal 1996 176,000 shares $10.00 • Fiscal 1997 1,810,000 shares $ 7.88 • Fiscal 2000 144,000 shares $ 5.03 • Fiscal 2001 275,000 shares $ 5.21 • Fiscal 2002 251,891 shares $ 8.65 • Fiscal 2003 1,623,549 shares $ 7.39 • Fiscal 2005 486,000 shares $18.00 • Fiscal Fi l 2006
Slide 38: Key considerations
Key considerations z Profitable and Growing Company Serving an Expanding Market z Experienced and Involved Management Team z Proven Profitability in Various Economic Conditions z Low Leverage Offers Future Flexibility l bl z Focused on Core Business z Management Bonus Structure Focused on Building M
Slide 39: Questions
67. Acceptance Corporation QUESTIONS
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