World Acceptance Corporation · NASDAQ:WRLD
World Acceptance — Investor Presentation (June 2015)
27 slides from World Acceptance's investor presentation, Jun 30, 2015
Slide 1: World Acceptance Corporation
World Acceptance Corporation NASDAQ: WRLD June 30, 2015
Slide 2: Cautionary Note About Forward-Looking Statements
Cautionary Note About 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 words “anticipate,” “estimat
Slide 3: Table of Contents
Table of Contents Section 1 Company Overview and Key Investment Highlights.... 4 Section 2 Business Overview..................................................... 10 Section 3 Financial Summary.................................................... 23 3
Slide 4: Company Overview and Key Investment Highlights
Company Overview and Key Investment Highlights 4
Slide 5: World Acceptance Overview
World Acceptance Overview Largest Domestic Branch Network… 50+ year old small-loan consumer finance company Provides loans to individuals with limited 12 28 access to credit Well positioned to capitalize on favorable 82 24 supply/demand imbalance within the non-prime 78 79 lending space 107 82
Slide 6: Key Investment Highlights
Key Investment Highlights Experienced Long Operating Management Team History Attractive Market Consistently Supported by Strong Profitable through Supply/Demand Multiple Cycles Dynamics High-Touch Stable Business Business Model Model with Low Enhances Risk Volatility of Earnings Monitoring Strong Ba
Slide 7: Consistently Profitable through Multiple Cycles
Consistently Profitable through Multiple Cycles World Acceptance has remained profitable while operating with strong and stable margins in various economic environments Net Income & Return on Average Assets1 ($ in millions) $200 13.9% 13.9% 16.0% 12.7% 13.0% 12.3% 12.5% 12.6% 11.9% 11.7% 11.8% 11.9%
Slide 8: Strong Balance Sheet with Compelling Cash Flow Characteristics
Strong Balance Sheet with Compelling Cash Flow Characteristics World Acceptance’s strong cash flows have allowed the Company to operate at low leverage levels Cash Flows From Operations ($ in millions) $300 $232 $246 $242 $250 $219 $200 $184 $200 $154 $136 $150 $110 $88 $98 $100 $70 $48 $55 $32 $39
Slide 9: Traditional Loan Product Provider to Underserved Clients
Traditional Loan Product Provider to Underserved Clients World Acceptance provides an attractive product to an underserved customer base, focusing on the customer's stability, ability and willingness to pay Traditional Auto Title Credit Card Pawn Payday Installment Loans Underwriting Ability to pay
Slide 10: Experienced Management Team
Experienced Management Team Employee Hierarchy and Avg. Tenure With WRLD Senior Management U.S. Mexico1 24 9 Senior Vice Presidents years years 19 3 Vice President of Operations years years 13 3 Supervisors years years 4 2 Branch Employees years years _________________ (1) Mexico locations opened in
Slide 11: Business Overview
Business Overview ~ Acceptance Corporation
Slide 12: World Acceptance Branch Overview
World Acceptance Branch Overview Managers have full P&L responsibility for their branch and are tasked with fostering an ownership attitude Typical Branch Representative Branch Characteristics Branch Employees Portfolio 1,500 square $892,000 gross 3.3 employees feet loans per branch receivable
Slide 13: Historical Branch Growth
Historical Branch Growth Conservative and disciplined manner of entering states and opening branches December 1974: September 2013: May 1991: 1996: Illinois, Mississippi Texas and Georgia January 2003: December 2010: Louisiana Missouri and New Alabama Wisconsin Mexico 1962 1974 1980 1991 1993 1996 2
Slide 14: Loan Characteristics
Loan Characteristics World Acceptance operates predominately in the small-loan installment space All loans are fully amortized with a fixed rate and term Installment loans standardized by amount, rate and maturity Loans underwritten to allow customers to make affordable payments from their dis
Slide 15: Portfolio Overview
Portfolio Overview Diversified portfolio by size and geography No state has greater than a 20% loan concentration Larger loans (>$1,500) have been growing as a percentage of the portfolio Currently comprise approximately one-third of World Acceptance’s loan portfolio Portfolio By Geography1 U.
Slide 16: Portfolio Overview (cont'd)
Portfolio Overview (cont’d) World Acceptance’s deep knowledge of its borrower base has enabled the Company to lend effectively throughout the non-prime segment Approximately 25% of the loans in the U.S. portfolio have APRs of 36% or less More than 94% of U.S. loans have an APR of less than 100%
Slide 17: Rigorous Loan Underwriting Process
Rigorous Loan Underwriting Process World Acceptance’s time-tested underwriting process coupled with an understanding of the local demographic profile has yielded strong performance Time-tested underwriting principles produce 1 consistently strong performance Take Application Mitigate net charge-
Slide 18: Robust Collections Process
Robust Collections Process World Acceptance utilizes a rigid collection process and makes numerous attempts to work with the borrower prior to charging-off a loan 6+ Days 14 Days 20-30 Days 180+ Days Automatic reminder Phone place of Weekly field calls Account is charged letters are mailed e
Slide 19: Credit Performance
Credit Performance Rigorous underwriting standards have led to stable loan losses and performance across economic cycles Net Charge-Offs 24.0% 20.0% 16.7% 14.6% 14.8% 14.5% 15.5% 14.7% 14.7% 13.3% 14.3% 14.1% 13.9% 16.0% 12.9% 12.7% 12.0% 8.0% 4.0% 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2
Slide 20: Ancillary Products
Ancillary Products World Acceptance’s ancillary products complement installment loans and provide additional growth opportunities FY 2015 Description Revenue Contribution World Acceptance acts as an independent agent for an unaffiliated company in offering optional insurance products connected wit
Slide 21: Enterprise Risk Management: 3 Lines of Defense Model
Enterprise Risk Management High Degree of Senior Management Involvement Regulatory matters Information technology Setting policy and procedures Annual risk and fraud assessments Risk oversight and management Addressing state audit reports Culture of Compliance Quarterly supervision of
Slide 22: Risk and Compliance
Risk and Compliance World Acceptance has built a culture of compliance that understands and seeks to anticipate a changing regulatory environment Maintain a compliance program to identify deficiencies within all business processes Identify Perform compliance and fair lending risk assessments R
Slide 23: Financial Summary
Financial Summary ~ Acceptance Corporation
Slide 24: Financial Highlights
Financial Highlights Three months ended Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 June 30, 2015 (2) Revenue 17.6% 15.4% 20.2% 18.4% 13.8% 12.4% 11.5% 9.9% 8.1% 5.8% 1.9% (6.0%) Increase Net Income 18.2% 13.3% 19.9% 8.8% 12.4% 30.4% 23.9% 10.4% 3.4% 2.4% 6.8% 4.8% Increase EP
Slide 25: Historical Financial Performance
Historical Financial Performance Gross Loans Receivables Loan Origination Volume ($ in millions) ($ in millions) $1,200 $1,112 $1,110 $3,500 $1,067 $2,985 $2,954 $973 $3,000 $2,820 $2,724 $1,000 $875 $2,572 $770 $2,500 $2,261 $800 $2,000 $600 $1,500 $400 $1,000 $200 $500 $0 $0 2010 2011 2012 2013 20
Slide 26: Stock repurchase program
Stock repurchase program FISCAL YEAR SHARES PURCHASED AVERAGE PURCHASE PRICE PER SHARE • 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
Slide 27: World's return on assets and equity
World’s return on assets and equity 40.0% 36.6% 35.0% 31.2% 30.0% 27.0% 25.0% 23.6% 22.8% 22.1% 20.0% 15.0% 13.9% 13.9% 13.0% 12.5% 12.7% 12.3% 10.0% 5.0% 0.0% 2010 2011 2012 2013 2014 2015 Return on Average Assets Return on Average Equity 27