Slide 1: World Acceptance Corporation, March 31, 2011
7 Acceptance Corporation NASDAQ; WRLD March 31, 2011
Slide 2: Cautionary Note About Forward-Looking Statements
Cautionary Note About Forward-Looking Statements Forward-Looking Statements Certain oral or written statements made in this presentation or additional commentary by the Company or its management may constitute “forward looking statements” within the meaning of the Private Securities Litigation Refor
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 with limited access to banks and other related credit sources z 1,067 consumer loan offices in twelve states and Mexico as of March 31, 2011 z $2.57 billion gross loan
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 network – U.S. 5 68 66 66 82 103 44 97 51 247 40 103 At March 31, 2011: 972 offices in the United States 6
Slide 7: "Average" World office – US locations (972)
“Average” World office – US locations (972) 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 787 accounts as of March 31, 2011 z $847,000 gross loans receivable as of March 31, 2011 z Average loan made during fiscal 2011
Slide 8: Consumer finance office network – Mexico
Consumer finance office network – Mexico At March 31, 2011: 95 offices in Mexico 8
Slide 9: "Average" World office – Mexico locations (95)
“Average” World office – Mexico locations (95) z Medium to large cities– Typically in small strip centers z 1,725 S.F. – approximately $1,800 per month lease z 7.6 employees z 1,080 accounts as of March 31, 2011 z $541,000 gross loans receivable as of March 31, 2011 z Average loan made during fiscal
Slide 10: Geographic composition of loan portfolio
Geographic composition of loan portfolio Wisconsin, Alabama, 4.0% Kentucky, 8.9% 0.1% New Mexico, 2.4% Georgia, 13.4% Missouri, 5.9% Illinois, 6.4% Texas, 19.3% Tennessee, 13.6% Louisiana, 2.2% Oklahoma, 6.5% South Carolina, 11.4% Mexico, 5.9% As of March 31, 2011 10
Slide 11: Our employees – U.S.
Our employees (1) 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 (3.4 ye
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 Financial 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% 4.3% 4.2% 4.2% 4.0% 4.1% 4.0% 4% 3.8% 3.8% 3.8% 3.4% 3.5% 3% 2.7% 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 2008 2009 2010 2011 16
Slide 17: Credit loss experience – Fiscal Year
Credit loss experience – Fiscal Year 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: Agenda
Agenda z Company overview z Credit & portfolio review z Growth strategy z Financial review 18
Slide 19: Growth strategy
Growth strategy z Our plan is to open 63 new offices in the U.S. and 10 new offices in Mexico in fiscal 2012 z Evaluate acquisitions as opportunities arise z Evaluate new states with favorable regulations and demographics for de novo openings z Maintain focus on growing existing branches 19
Slide 20: Offices open at year end
Offices open at year end 1100 1,067 990 944 900 838 732 700 620 579 526 500 470 441 420 300 100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20
Slide 21: Offices open at year end in Mexico
Offices open AT YEAR END in Mexico 100 95 90 80 80 70 63 60 50 40 37 30 20 16 10 2 0 2006 2007 2008 2009 2010 2011 21
Slide 22: Year end gross loans receivable
Year end gross loans receivable (in millions) 900 $875 800 $770 700 $671 $600 600 $506 500 $416 400 $352 $310 300 $267 $211 $226 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 22
Slide 23: Loan origination volume
Loan origination volume (in millions) 2600 $2,572 2400 $2,261 2200 2000 $1,935 1800 $1,734 1600 $1,455 1400 $1,218 1200 $1,029 1000 $878 $764 800 $620 $660 600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 23
Slide 24: 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 $ 9,084,000 Fiscal 2007 86 36 41
Slide 25: World's tax preparation
World’s tax preparation z Provides additional service for existing customers z Excellent fit for World’s customer demographics z Excellent fit for World’s employees due to seasonality z Excellent revenue potential with little additional expense z 48,000 returns completed in fiscal 2011 z Approximate
Slide 26: Expansion in Mexico
Expansion in Mexico Why Mexico? z Favorable regulatory climate z Tremendous potential market z Very little competition Status at March 31, 2011 z Ninety-five offices opened since September 2005 z Approximately 103,000 accounts z Approximately $51.4 million in gross ledger balance z 18.2% net charge-
Slide 27: Agenda
Agenda z Company overview z Credit & portfolio review z Growth strategy z Financial review 27
Slide 28: Financial highlights
Financial highlights Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 (1) (1) (1) Revenue 14.0% 15.1% 17.6% 15.4% 20.2% 18.4% 13.8% 12.4% 11.5% Increase Net Income 18.2% 25.8% 18.2% 13.3% 19.9% 8.8% 12.4% 30.4% 23.9% Increase Avg. Net Loan 12.0% 13.4% 18.1% 14.2% 20.2% 20.0% 14.1% 13.7% 14.5
Slide 29: Net Earnings – Fiscal years
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 (1) 2008 (1) 2009 (1) 2010 2011 (1) Restated in accordance with FSP APB14-1 “Accounting for convertible debt instruments that may be settled in ca
Slide 30: Earnings Per Share – Fiscal years
Earnings Per Share – Fiscal years $6.00 $5.63 $5.00 $4.45 $4.00 $3.43 $3.00 $2.89 $2.51 $2.02 $2.00 $1.74 $1.49 $1.25 $1.00 $1.00 $0.83 $0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (1) (1) (1) (1) Restated in accordance with FSP APB14-1 “Accounting for convertible debt instruments th
Slide 31: Operating returns as a percent of total revenues
Operating returns as a percent of total revenues 35% 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 convertible debt instruments
Slide 32: 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 instruments th
Slide 33: World's return on assets and equity
World’s return on assets and equity 35% ROA ROE 30% 25% 22.2% 22.8% 21.5% 22.1% 21.1% 21.2% 20.9% 21.2% 21.2% 20.1% 19.9% 20% 15% 13.9% 12.2% 12.7% 11.7% 11.8% 11.9% 10.4% 11.0% 10.9% 9.9% 10% 8.8% 5% 0% 2001 2002 2003 2004 2005 2006 2007(1) 2008(1) 2009(1) 2010 2011 (1) Restated in accordance with
Slide 34: Capitalization: Equity rich
Capitalization: Equity rich (At March 31, 2011; $ millions) Junior Subordinate Note Payable, $30.0, 4.8% Convertible Notes, $77.0*, 12.2% Revolving Senior Notes, $82.3, 13.0% Equity, $442.6, 70.0% Availability Junior Subordinated Notes – $45.0 *Face value of the convertible notes Revolver – $142.7 3
Slide 35: Cash flow growth strengthens the balance sheet
Cash flow growth strengthens the balance sheet Total capitalization ($ millions) 750 700 Equity Debt 650 600 550 $189 500 $176 450 400 $208 350 $215 $171 300 250 $101 $84 $443 200 $95 $383 $103 150 $83 $296 $92 $229 $245 100 $190 $210 $157 50 $102 $116 $83 - 2001 2002 2003 2004 2005 2006 2007 2008 2
Slide 36: 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 2006 800,4
Slide 37: 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 z Focused on Core Business z Management Bonus Structure Focused on Building Maximu
Slide 38: Questions
67. Acceptance Corporanon QUESTIONS