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WORLD ACCEPTANCE CORP (WRLD)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 revenue rose 2.3% year over year to $132.5M and beat Wall Street by ~$10.1M, while diluted EPS fell to $0.25 and missed consensus by $1.91; operating income margin compressed to 8.7% versus 17.5% in Q1 FY2025 on higher CECL provision and G&A . Revenue Consensus Mean=$122.38M*; EPS Consensus Mean=$2.16*.
  • Credit metrics improved versus March: 61+ day recency delinquency fell to 5.4% (6.0% in Q4), 90+ day recency delinquency to 3.3% (3.7% in Q4), and customer base grew 4.0% y/y; net charge-offs increased sequentially to $44.8M (19.4% annualized) as expected given prior late-stage delinquency mix .
  • Strategic catalysts: new $640M senior secured ABL (3-year) enabling accelerated buybacks—board authorized up to $100M and facility permits up to $100M plus 100% of cumulative net income since Jan 1, 2025; management plans to redeem ~$170M of 2021 notes by end of August to remove repurchase constraints .
  • Management emphasized yield expansion (+~234 bps y/y), moderated growth with credit discipline, and live customer testing of the Smile credit card to improve unit economics and retention, reinforcing a medium-term EPS growth narrative via higher yields and lower share count .

What Went Well and What Went Wrong

  • What Went Well
    • “Gross yields have increased over 230 basis points year-over-year,” supporting revenue growth despite portfolio mix shifts .
    • Delinquency improved sequentially: 61+ day recency to 5.4% (from 6.0% in March) and 90+ day to 3.3% (from 3.7%), positioning for lower charge-offs in coming quarters .
    • Customer base expanded 4.0% y/y, with higher borrowing across new (+30.8%), former (+6.3%), and refinance (+9.6%) customers versus prior-year Q1 .
  • What Went Wrong
    • EPS dropped to $0.25 due to higher CECL provision ($50.5M, +$5.1M y/y) driven by growth, a seasonal adjustment (~$5M), and a $1.0M tax advance reserve; G&A rose 14.6% y/y on compensation and benefits .
    • Net charge-offs increased to $44.8M (19.4% annualized) from $38.7M (16.4%) y/y, reflecting the December cohort’s higher new customer mix .
    • Insurance income declined 10.8% y/y while overall operating income margin fell to 8.7% from 17.5% in the prior year quarter .

Financial Results

Quarterly Performance vs Prior Periods and Estimates

MetricQ3 FY2025Q4 FY2025Q1 FY2026Est. Q1 FY2026
Total Revenues ($USD)$138,632,000 $165,272,000 $132,452,000 $122,384,500*
Diluted EPS ($)$2.45 $8.13 $0.25 $2.16*
Operating Income as % of Revenue19.7% 40.1% 8.7% —

Note: Estimates marked with * are from S&P Global; values retrieved from S&P Global.

Revenue Breakdown

MetricQ3 FY2025Q4 FY2025Q1 FY2026
Interest & Fee Income ($USD)$122,390,000 $117,634,000 $115,303,000
Insurance & Other Income, net ($USD)$16,242,000 $47,638,000 $17,149,000

Credit KPIs and Portfolio

KPIQ3 FY2025Q4 FY2025Q1 FY2026
Gross Loans Outstanding (period-end)$1.38B $1.23B $1.26B
61+ Day Recency Delinquency (%)5.7% 6.0% 5.4%
90+ Day Recency Delinquency (%)3.4% 3.7% 3.3%
Net Charge-offs ($USD)$42.4M $45.8M $44.8M
Net Charge-offs (% of Avg Net Loans, annualized)17.2% 18.5% 19.4%
Allowance for Credit Losses (% of Net Loans)11.4% 11.3% 11.6%
Customer Base YoY change (%)+3.7% +3.5% +4.0%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue/EPS GuidanceFY2026None disclosed None disclosed Maintained (no formal guidance)
Share Repurchase AuthorizationNext 12 monthsPrior authorizations (~remaining capacity variable) Board authorized up to $100M; facility allows $100M upfront + 100% of cumulative net income from Jan 1, 2025 Raised capacity framework
Repurchase Capacity (constraint)As of Q1 FY2026Debt covenants limited capacityRepurchase ability currently ~$7.2M until 2021 notes redeemed; then >$200M potential over 12 months (~23–25% of shares at prevailing price) Constraint lifted post redemption
Debt RedemptionBy end of Aug FY2026~$169–$170M outstanding 7.00% 2026 notes Plan to redeem remaining ~$170M by end of August Accelerated deleveraging
Credit Facility3-year termPrior revolver smallerNew $640M senior secured ABL; accordion up to $790M; 3.50% margin over Term SOFR; enhanced buyback permissions Expanded liquidity and flexibility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 FY2025)Current Period (Q1 FY2026)Trend
Portfolio growth & customer baseQ3: Gross loans +6.6% seq; customer base +3.7% y/y; tighter new customer lending; yield up 208 bps y/y . Q4: Sequential runoff; customer base +3.5% y/y; yield up 110 bps y/y .Customer base +4.0% y/y; gross loans +3.2% seq; new originations +12.6% y/y .Improving growth with disciplined mix
Delinquency/charge-offsQ3: 61+ recency 5.7%; 90+ recency 3.4%; NCO 17.2% . Q4: 61+ recency 6.0%; 90+ recency 3.7%; NCO 18.5% .61+ recency 5.4%; 90+ recency 3.3%; NCO 19.4% (seasonal/December mix) .Delinquency improving; NCO elevated near term
Yields/pricingQ3/Q4: Yield expansion 332/110 bps vs reference periods .Gross yields +~234 bps y/y .Sustained yield expansion
Capital actions (debt & buybacks)Q4: Bond repurchases; buybacks 226k shares ($32M) .New $640M ABL; plan to redeem ~$170M notes; buyback potential >$200M/12 months post redemption .Stronger capacity, near-term catalyst
Product/technologyNot discussed in PRs.Smile credit card live customer testing; aim: align yield/risk, retention, lower acquisition costs .Pilot underway, cautious rollout
Seasonality narrativeQ3/Q4 seasonal patterns cited in PRs .Q1 historically lowest EPS; Q1 averages 5.6% of annual net income .Reinforced investor framing

Management Commentary

  • “That capacity may be over $200 million for share repurchases over the next 12 months, which is approximately 23%-25% of outstanding shares at this morning's stock price” .
  • “Gross yields have increased over 230 basis points year-over-year” .
  • “We completed the first phase of internal testing [Smile credit card] and have moved on to live testing with customers... use this product slowly and wisely... better align yield with risk... lower our overall cost of acquisition and service, improve customer retention” .
  • CFO on portfolio risk: “Zero to five-month customers made up 8.7% in December ($120M), now 7.2% in June ($91M)... a lot of the risk has come out as that cohort becomes a smaller proportion” .
  • “Historically, the Q1 is our lowest quarter for earnings... Q1 net income has made up an average of only 5.6% of our total annual net income” .

Q&A Highlights

  • Credit outlook: Elevated Q1 charge-offs tied to December cohort; delinquency trends improving as early-tenure customer mix declines, supporting forward charge-off moderation .
  • Mix/strategy: Balanced investment in new and returning customers; no pursuit of double-digit portfolio growth; focus on credit discipline and retention to sustain yield expansion .
  • Buybacks/constraints: Upfront $100M allowance plus 100% cumulative net income bucket; current repurchases capped (~$7.2M) until bond redemption; post-redemption capacity rises materially .
  • Facility covenants/asset quality indicator: Progressive CPI-type measures with ample cushion (around 18 vs default threshold ~23–24) .
  • Macro/consumer: No notable deterioration in new customer credit bands or first-pay defaults despite broader market sentiment shifts .

Estimates Context

  • Q1 FY2026 vs Wall Street: Revenue beat ($132.45M actual vs $122.38M est), EPS miss ($0.25 actual vs $2.16 est). Implication: estimate revisions likely lower for EPS near term due to seasonal provision and higher G&A, while revenue trajectory benefits from yield expansion and customer growth.

Note: Estimates marked with * are from S&P Global; values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term EPS volatility is seasonal and provision-driven; management explicitly frames Q1 as the lowest earnings quarter historically, tempering the headline EPS miss .
  • Sequential improvement in delinquency (61+/90+) and stable first-pay defaults support a constructive outlook for charge-offs and yield-through earnings in subsequent quarters .
  • Capital actions are a potential stock catalyst: new $640M ABL, planned redemption of ~$170M high-yield notes, and expanded buyback capacity (> $200M over 12 months post redemption) .
  • Revenue growth levers are intact: gross yield expansion (~+234 bps y/y), higher borrowing across customer cohorts, and portfolio mix favoring smaller/higher-yield loans .
  • Operating cost pressures (G&A +14.6% y/y) warrant monitoring; share-based comp and benefits drove Q1 increases—watch for normalization and operating leverage in Q2–Q4 .
  • Smile credit card pilot could improve unit economics and retention, particularly in rate-cap states; progress and risk controls will determine scaling potential .
  • With improved liquidity and buyback flexibility, declining share count plus yield momentum underpin a medium-term EPS growth narrative once seasonal and mix-related loss intensities recede .

Citations: Press releases and filings ; Q4 FY2025 PR ; Q3 FY2025 PR ; Earnings call transcripts .

Note: Estimates marked with * are from S&P Global; values retrieved from S&P Global.