QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices) | ||
(Zip Code) |
(registrant's telephone number, including area code) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, no par value | WRLD | The NASDAQ Stock Market LLC (NASDAQ Global Select Market) |
x | Accelerated filer | ☐ | ||||
Non-accelerated filer | o | Smaller reporting company | ||||
Emerging growth company |
Item No. | Contents | Page |
GLOSSARY OF DEFINED TERMS | ||
PART I - FINANCIAL INFORMATION | ||
1. | Consolidated Financial Statements (unaudited): | |
Consolidated Balance Sheets as of September 30, 2019 and March 31, 2019 | ||
Consolidated Statements of Operations for the three and six months ended September 30, 2019 and September 30, 2018 | ||
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended September 30, 2019 and September 30, 2018 | ||
Consolidated Statements of Shareholders' Equity for the three and six months ended September 30, 2019 and September 30, 2018 | ||
Consolidated Statements of Cash Flows for the six months ended September 30, 2019 and September 30, 2018 | ||
Notes to Consolidated Financial Statements | ||
2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
3. | Quantitative and Qualitative Disclosures about Market Risk | |
4. | Controls and Procedures | |
PART II - OTHER INFORMATION | ||
1. | Legal Proceedings | |
1A. | Risk Factors | |
2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
3. | Defaults Upon Senior Securities | |
4. | Mine Safety Disclosures | |
5. | Other Information | |
6. | Exhibits | |
EXHIBIT INDEX | ||
SIGNATURES |
Term | Definition |
ASU | Accounting Standards Update |
CEO | Chief Executive Officer |
CFO | Chief Financial Officer |
CFPB | U.S. Consumer Financial Protection Bureau |
Compensation Committee | Compensation and Stock Option Committee |
DOJ | U.S. Department of Justice |
Exchange Act | Securities Exchange Act of 1934, as amended |
FASB | Financial Accounting Standards Board |
FCPA | U.S. Foreign Corrupt Practices Act of 1977, as amended |
G&A | General and administrative |
GAAP | U.S. generally accepted accounting principles |
IRC | Internal Revenue Code of 1986, as amended |
IRS | U.S. Internal Revenue Service |
LIBOR | London Interbank Offered Rate |
Option Measurement Period | The 6.5 year performance period beginning on September 30, 2018 and ending on March 31, 2025 over which the Performance Options are eligible to vest, following certification by the Compensation Committee of achievement |
Purchasers | Jointly, Astro Wealth S.A. de C.V. and Astro Assets S.A. de C.V. |
Performance Share Measurement Period | The 6.5 year performance period beginning on September 30, 2018 and ending on March 31, 2025 over which the Performance Shares are eligible to vest, following certification by the Compensation Committee of achievement |
Performance Options | Performance-based stock options |
Performance Shares | Service- and performance-based restricted stock awards |
Restricted Stock | Service-based restricted stock awards |
SEC | U.S. Securities and Exchange Commission |
Service Options | Service-based stock options |
SWAC | Servicios World Acceptance Corporation de México, S. de R.L. de C.V, a former subsidiary of World Acceptance Corporation |
WAC de Mexico | WAC de México, S.A. de C.V., SOFOM, E.N.R., a former subsidiary of World Acceptance Corporation |
September 30, 2019 | March 31, 2019 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | $ | |||||
Gross loans receivable | |||||||
Less: | |||||||
Unearned interest, insurance and fees | ( | ) | ( | ) | |||
Allowance for loan losses | ( | ) | ( | ) | |||
Loans receivable, net | |||||||
Right-of-use asset (Note 6) | |||||||
Property and equipment, net | |||||||
Deferred income taxes, net | |||||||
Other assets, net | |||||||
Goodwill | |||||||
Intangible assets, net | |||||||
Total assets | $ | $ | |||||
LIABILITIES & SHAREHOLDERS' EQUITY | |||||||
Liabilities: | |||||||
Senior notes payable | $ | $ | |||||
Income taxes payable | |||||||
Lease liability (Note 6) | |||||||
Accounts payable and accrued expenses | |||||||
Total liabilities | |||||||
Commitments and contingencies (Note 12) | |||||||
Shareholders' equity: | |||||||
Preferred stock, no par value Authorized 5,000,000, no shares issued or outstanding | |||||||
Common stock, no par value Authorized 95,000,000 shares; issued and outstanding 7,945,842 and 9,284,118 shares at September 30, 2019 and March 31, 2019, respectively | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Total shareholders' equity | |||||||
Total liabilities and shareholders' equity | $ | $ |
Three months ended September 30, | Six months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Continuing operations | |||||||||||||||
Revenues: | |||||||||||||||
Interest and fee income | $ | $ | $ | $ | |||||||||||
Insurance income, net and other income | |||||||||||||||
Total revenues | |||||||||||||||
Expenses: | |||||||||||||||
Provision for loan losses | |||||||||||||||
General and administrative expenses: | |||||||||||||||
Personnel | |||||||||||||||
Occupancy and equipment | |||||||||||||||
Advertising | |||||||||||||||
Amortization of intangible assets | |||||||||||||||
Other | |||||||||||||||
Total general and administrative expenses | |||||||||||||||
Interest expense | |||||||||||||||
Total expenses | |||||||||||||||
Income from continuing operations before income taxes | |||||||||||||||
Income taxes (benefit) | ( | ) | |||||||||||||
Income from continuing operations | |||||||||||||||
Discontinued operations (Note 2) | |||||||||||||||
Income from discontinued operations before disposal of discontinued operations and income taxes | |||||||||||||||
Gain (loss) on disposal of discontinued operations | ( | ) | |||||||||||||
Income taxes | |||||||||||||||
Loss from discontinued operations | ( | ) | |||||||||||||
Net income (loss) | $ | $ | $ | $ | ( | ) | |||||||||
Net income per common share from continuing operations: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ | |||||||||||
Net income (loss) per common share from discontinued operations: |
Basic | $ | $ | $ | $ | ( | ) | |||||||||
Diluted | $ | $ | $ | $ | ( | ) | |||||||||
Net income (loss) per common share: | |||||||||||||||
Basic | $ | $ | $ | $ | ( | ) | |||||||||
Diluted | $ | $ | $ | $ | ( | ) | |||||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | |||||||||||||||
Diluted |
Three months ended September 30, | Six months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) | $ | $ | $ | $ | ( | ) | |||||||||
Foreign currency translation adjustments | ( | ) | |||||||||||||
Reclassification of cumulative foreign currency translation adjustments due to sale of Mexico business | |||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Three months ended September 30, 2019 | |||||||||||||||
Common Stock | |||||||||||||||
Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, net | Total Shareholders' Equity | |||||||||||
Balances at June 30, 2019 | $ | ||||||||||||||
Proceeds from exercise of stock options | — | — | |||||||||||||
Common stock repurchases | ( | ) | — | ( | ) | — | ( | ) | |||||||
Restricted common stock expense under stock option plan, net of cancellations ($8,481) | ( | ) | — | — | |||||||||||
Stock option expense | — | — | — | ||||||||||||
Net income | — | — | — | ||||||||||||
Balances at September 30, 2019 | $ | ||||||||||||||
Three months ended September 30, 2018 | |||||||||||||||
Common Stock | |||||||||||||||
Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, net | Total Shareholders' Equity | |||||||||||
Balances at June 30, 2018 | $ | ( | ) | ||||||||||||
Proceeds from exercise of stock options | — | — | |||||||||||||
Common stock repurchases | — | — | |||||||||||||
Restricted common stock expense under stock option plan | — | — | |||||||||||||
Stock option expense | — | — | — | ||||||||||||
Other comprehensive loss | — | — | — | ||||||||||||
Reclassification of cumulative foreign currency translation adjustments due to sale of Mexico Business | — | — | — | 31,290,918 | 31,290,918 | ||||||||||
Net loss | — | — | — | ||||||||||||
Balances at September 30, 2018 | $ | ||||||||||||||
Six months ended September 30, 2019 | ||||||||||||||||
Common Stock | ||||||||||||||||
Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, net | Total Shareholders' Equity | ||||||||||||
Balances at March 31, 2019 | $ | $ | ||||||||||||||
Proceeds from exercise of stock options | — | — | ||||||||||||||
Common stock repurchases | ( | ) | — | ( | ) | — | ( | ) | ||||||||
Restricted common stock expense under stock option plan, net of cancellations ($246,650) | ( | ) | — | — | ||||||||||||
Stock option expense | — | — | — | |||||||||||||
Net income | — | — | — | |||||||||||||
Balances at September 30, 2019 | $ | $ |
Six months ended September 30, 2018 | ||||||||||||||||
Common Stock | ||||||||||||||||
Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, net | Total Shareholders' Equity | ||||||||||||
Balances at March 31, 2018 | $ | ( | ) | $ | ||||||||||||
Proceeds from exercise of stock options | — | — | ||||||||||||||
Restricted common stock expense under stock option plan | — | — | ||||||||||||||
Stock option expense | — | — | — | |||||||||||||
Other comprehensive loss | — | — | — | ( | ) | ( | ) | |||||||||
Reclassification of cumulative foreign currency translation adjustments due to sale of Mexico business | — | — | — | |||||||||||||
Net loss | — | — | ( | ) | — | ( | ) | |||||||||
Balances at September 30, 2018 | $ | $ |
Six months ended September 30, | |||||||
2019 | 2018 | ||||||
Cash flow from operating activities: | |||||||
Net income (loss) | $ | $ | ( | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Loss on sale of discontinued operations | |||||||
Amortization of intangible assets | |||||||
Amortization of debt issuance costs | |||||||
Provision for loan losses | |||||||
Depreciation | |||||||
Loss (gain) on sale of property and equipment | ( | ) | |||||
Deferred income tax benefit | ( | ) | ( | ) | |||
Compensation related to stock option and restricted stock plans, net of taxes and adjustments | |||||||
Change in accounts: | |||||||
Other assets, net | ( | ) | |||||
Income taxes payable | ( | ) | ( | ) | |||
Accounts payable and accrued expenses | ( | ) | |||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Increase in loans receivable, net | ( | ) | ( | ) | |||
Net assets acquired from branch acquisitions, primarily loans | ( | ) | ( | ) | |||
Increase in intangible assets from acquisitions | ( | ) | ( | ) | |||
Purchases of property and equipment | ( | ) | ( | ) | |||
Proceeds from sale of property and equipment | |||||||
Proceeds from sale of Mexico business | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flow from financing activities: | |||||||
Borrowings from senior notes payable | |||||||
Payments on senior notes payable | ( | ) | ( | ) | |||
Debt issuance costs associated with senior notes payable | ( | ) | ( | ) | |||
Proceeds from exercise of stock options | |||||||
Payments for taxes related to net share settlement of equity awards | ( | ) | |||||
Repurchase of common stock | ( | ) | |||||
Net cash provided by (used in) financing activities | ( | ) | |||||
Effects of foreign currency fluctuations on cash and cash equivalents | |||||||
Net change in cash and cash equivalents | ( | ) | |||||
Cash and cash equivalents at beginning of period from continuing operations | |||||||
Cash and cash equivalents at beginning of period from discontinued operations | |||||||
Cash and cash equivalents at end of period | $ | $ | |||||
Cash and cash equivalents at end of period from continuing operations | $ | $ | |||||
Cash and cash equivalents at end of period from discontinued operations | $ | $ | |||||
Supplemental Disclosures: | |||||||
Interest paid during the period | $ | $ | |||||
Income taxes paid during the period | $ | $ |
Three months ended September 30, | Six months ended September 30, | |||||
2018 | 2018 | |||||
Revenues | $ | |||||
Provision for loan losses | ||||||
General and administrative expenses | ||||||
Income from discontinued operations before disposal of discontinued operations and income taxes | ||||||
Gain (loss) on disposal of discontinued operations | ( | ) | ||||
Income taxes | ||||||
Loss from discontinued operations | $ | ( | ) |
Six months ended September 30, | ||||||||
2019 | 2018 | |||||||
Cash provided by operating activities: | $ | $ | ||||||
Cash provided by investing activities: | ||||||||
Cash provided by (used in) financing activities: | $ | $ | ( | ) |
• | The Company elected to apply the new guidance retrospectively at the beginning of the period of adoption, and, as a result, the adoption date is the beginning of the reporting period in which the Company first applies the guidance in Topic 842. The Company has not adjusted comparative years in the consolidated financial statements or make the new required disclosures for periods before the adoption date. The new required disclosures are only presented in the period of adoption and subsequently thereafter. |
• | The Company elected, by class of underlying asset, to expense short-term leases on a straight-line basis over the life of the lease rather than applying the recognition requirements in Topic 842 according to the following table: |
Class of Underlying Asset | Election? Yes/No |
Buildings (Office Space) | No |
Office Equipment | Yes |
• | The Company elected, by class of underlying asset, not to separate non-lease components from lease components and instead account for each separate lease component and the non-lease components associated with those lease components as a single lease component according to the following table: |
Class of Underlying Asset | Election? Yes/No |
Buildings (Office Space) | Yes |
Office Equipment | Yes |
• | The Company elected the following practical expedients, which must be elected as a package, when applying Topic 842 to leases that commenced before the adoption date: |
1. | Not to reassess whether any expired or existing contracts are or contain leases; |
2. | Not to reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with Topic 840 are classified as operating leases, and all existing leases that were classified as capital leases in accordance with Topic 840 are classified as finance leases); and, |
3. | Not to reassess initial direct costs for any existing leases. |
• | The Company elected to use hindsight in determining the lease term (that is, when considering lessee options to extend or terminate the lease and to purchase the underlying asset) and in assessing impairment of the its right-of-use assets when applying Topic 842 to leases that commenced before the adoption date. |
• | Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. |
• | Level 2 – Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less active. |
• | Level 3 – Unobservable inputs for assets or liabilities reflecting the reporting entity’s own assumptions. |
September 30, 2019 | March 31, 2019 | ||||||||||||||
Input Level | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||
ASSETS | |||||||||||||||
Cash and cash equivalents | 1 | $ | $ | ||||||||||||
Loans receivable, net | 3 | ||||||||||||||
LIABILITIES | |||||||||||||||
Senior notes payable | 3 |
September 30, 2019 | March 31, 2019 | September 30, 2018 | |||||||||
Small loans | $ | $ | $ | ||||||||
Large loans | |||||||||||
Tax advance loans | |||||||||||
Total gross loans | $ | $ | $ |
Three months ended September 30, | Six months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Balance at beginning of period | $ | $ | $ | ||||||||||||
Provision for loan losses | |||||||||||||||
Loan losses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Recoveries | |||||||||||||||
Balance at end of period | $ | $ | $ | $ |
September 30, 2019 | Loans individually evaluated for impairment (impaired loans) | Loans collectively evaluated for impairment | Total | ||||||
Gross loans in bankruptcy, excluding contractually delinquent | $ | ||||||||
Gross loans contractually delinquent | |||||||||
Loans not contractually delinquent and not in bankruptcy | |||||||||
Gross loan balance | |||||||||
Unearned interest and fees | ( | ) | ( | ) | ( | ) | |||
Net loans | |||||||||
Allowance for loan losses | ( | ) | ( | ) | ( | ) | |||
Loans, net of allowance for loan losses | $ |
March 31, 2019 | Loans individually evaluated for impairment (impaired loans) | Loans collectively evaluated for impairment | Total | ||||||
Gross loans in bankruptcy, excluding contractually delinquent | $ | ||||||||
Gross loans contractually delinquent | |||||||||
Loans not contractually delinquent and not in bankruptcy | |||||||||
Gross loan balance | |||||||||
Unearned interest and fees | ( | ) | ( | ) | ( | ) | |||
Net loans | |||||||||
Allowance for loan losses | ( | ) | ( | ) | ( | ) | |||
Loans, net of allowance for loan losses | $ |
September 30, 2018 | Loans individually evaluated for impairment (impaired loans) | Loans collectively evaluated for impairment | Total | ||||||
Gross loans in bankruptcy, excluding contractually delinquent | $ | ||||||||
Gross loans contractually delinquent | |||||||||
Loans not contractually delinquent and not in bankruptcy | |||||||||
Gross loan balance | |||||||||
Unearned interest and fees | ( | ) | ( | ) | ( | ) | |||
Net loans | |||||||||
Allowance for loan losses | ( | ) | ( | ) | ( | ) | |||
Loans, net of allowance for loan losses | $ |
September 30, 2019 | March 31, 2019 | September 30, 2018 | |||||||||
Credit risk | |||||||||||
Consumer loans- non-bankrupt accounts | $ | $ | $ | ||||||||
Consumer loans- bankrupt accounts | |||||||||||
Total gross loans | $ | $ | $ | ||||||||
Consumer credit exposure | |||||||||||
Credit risk profile based on payment activity, performing | $ | $ | $ | ||||||||
Contractual non-performing, 61 or more days delinquent (1) | |||||||||||
Total gross loans | $ | $ | $ | ||||||||
Credit risk profile based on customer type | |||||||||||
New borrower | $ | $ | $ | ||||||||
Former borrower | |||||||||||
Refinance | |||||||||||
Delinquent refinance | |||||||||||
Total gross loans | $ | $ | $ |
September 30, 2019 | March 31, 2019 | September 30, 2018 | |||||||
Contractual basis: | |||||||||
30-60 days past due | $ | ||||||||
61-90 days past due | |||||||||
91 days or more past due | |||||||||
Total | $ | ||||||||
Percentage of period-end gross loans receivable | % | % | % | ||||||
Recency basis: | |||||||||
30-60 days past due | $ | ||||||||
61-90 days past due | |||||||||
91 days or more past due | |||||||||
Total | $ | ||||||||
Percentage of period-end gross loans receivable | % | % | % |
Three months ended September 30, | Six months ended September 30, | |||||||
2019 | 2019 | |||||||
Lease Cost | ||||||||
Operating lease cost | $ | $ | ||||||
Variable lease cost | ||||||||
Total lease cost | $ | $ |
Three months ended September 30, | Six months ended September 30, | |||||||
2019 | 2019 | |||||||
Other Lease Information | ||||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | $ | ||||||
Right-of-use assets obtained in exchange for new operating lease liabilities(1) | $ | $ | ||||||
Weighted average remaining lease term — operating leases | ||||||||
Weighted-average discount rate — operating leases | % | % |
Operating lease liability maturity analysis | ||||
FY2020 | $ | |||
FY2021 | ||||
FY2022 | ||||
FY2023 | ||||
FY2024 | ||||
FY2025 | ||||
Thereafter | ||||
Total undiscounted lease liability | $ | |||
Imputed interest | ||||
Total discounted lease liability | $ |
Three months ended September 30, | Six months ended September 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Basic: | |||||||||||
Weighted average common shares outstanding (denominator) | |||||||||||
Diluted: | |||||||||||
Weighted average common shares outstanding | |||||||||||
Dilutive potential common shares securities | |||||||||||
Weighted average diluted shares outstanding (denominator) |
Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025 | Restricted Stock Eligible for Vesting (Percentage of Award) |
$ | |
$ |
Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025 | Options Eligible for Vesting (Percentage of Award) |
$ |
Three months ended September 30, | Six months ended September 30, | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Dividend Yield | |||||||
Expected Volatility | |||||||
Average risk-free rate | |||||||
Expected Life |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||
Options outstanding, beginning of period | $ | |||||||||||
Granted during period | ||||||||||||
Exercised during period | ( | ) | ||||||||||
Forfeited during period | ( | ) | ||||||||||
Expired during period | ( | ) | ||||||||||
Options outstanding, end of period | $ | $ | ||||||||||
Options exercisable, end of period | $ | $ |
September 30, 2019 | September 30, 2018 | ||||||
Three months ended | $ | $ | |||||
Six months ended | $ | $ |
Shares | Weighted Average Fair Value at Grant Date | |||||
Outstanding at March 31, 2019 | $ | |||||
Granted during the period | ||||||
Vested during the period | ( | ) | ||||
Forfeited during the period | ||||||
Outstanding at September 30, 2019 | $ |
Three months ended September 30, | Six months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Stock-based compensation related to equity classified awards: | |||||||||||||||
Stock-based compensation related to stock options | $ | $ | $ | $ | |||||||||||
Stock-based compensation related to restricted stock, net of adjustments and exclusive of cancellations | |||||||||||||||
Total stock-based compensation related to equity classified awards | $ | $ | $ | $ |
Six months ended September 30, | ||||||||
2019 | 2018 | |||||||
Acquisitions: | ||||||||
Number of branches acquired through business combinations | ||||||||
Number of loan portfolios acquired through asset purchases | ||||||||
Total acquisitions | ||||||||
Purchase price | $ | $ | ||||||
Tangible assets: | ||||||||
Loans receivable, net | ||||||||
Property and equipment | ||||||||
Total tangible assets | ||||||||
Excess of purchase prices over carrying value of net tangible assets | $ | $ | ||||||
Customer lists | $ | |||||||
Non-compete agreements | $ | |||||||
Goodwill | $ |
No. | Acquiree Name | Acquiree State(s) | Date |
1 | Western Shamrock Corporation (11 branches) | GA | 4/29/2019 |
2 | Western Shamrock Corporation (7 branches) | SC | 5/9/2019 |
3 | Western Shamrock Corporation (3 branches) | AL | 5/14/2019 |
4 | Loyal Loans (7 branches) | UT | 8/27/2019 |
5 | Courtesy Loans (1 branch) | IL | 8/28/2019 |
6 | Courtesy Loans (8 branches) | MO, LA | 9/6/2019 |
Three months ended September 30, | Six months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Gross loans receivable | $ | 1,274,147 | $ | 1,126,793 | $ | 1,274,147 | $ | 1,126,793 | |||||||
Average gross loans receivable (1) | 1,253,249 | 1,098,797 | 1,212,281 | 1,063,148 | |||||||||||
Net loans receivable (2) | 939,820 | 829,094 | 939,820 | 829,094 | |||||||||||
Average net loans receivable (3) | 923,046 | 807,450 | 894,935 | 783,708 | |||||||||||
Expenses as a percentage of total revenue: | |||||||||||||||
Provision for loan losses | 37.4 | % | 31.7 | % | 33.7 | % | 28.4 | % | |||||||
General and administrative | 55.4 | % | 51.1 | % | 57.2 | % | 53.1 | % | |||||||
Interest expense | 4.5 | % | 3.3 | % | 3.8 | % | 3.4 | % | |||||||
Operating income as a % of total revenue (4) | 7.2 | % | 17.2 | % | 9.1 | % | 18.5 | % | |||||||
Loan volume | 729,775 | 647,271 | 1,481,923 | 1,319,512 | |||||||||||
Net charge-offs as percent of average net loans receivable | 16.8 | % | 14.4 | % | 16.6 | % | 14.7 | % | |||||||
Return on average assets (trailing 12 months) | 6.0 | % | 6.9 | % | 6.0 | % | 6.9 | % | |||||||
Return on average equity (trailing 12 months) | 10.8 | % | 11.0 | % | 10.8 | % | 11.0 | % | |||||||
Branches opened or acquired (merged or closed), net | 16 | 8 | 41 | 12 | |||||||||||
Branches open (at period end) | 1,234 | 1,189 | 1,234 | 1,189 |
(a) Total number of shares purchased | (b) Average price paid per share | (c) Total number of shares purchased as part of publicly announced plans or programs | (d) Approximate dollar value of shares that may yet be purchased under the plans or programs | ||||||||||
July 1 through July 31, 2019 | 150,333 | $ | 145.66 | 150,333 | $ | 156,291,485 | |||||||
August 1 through August 31, 2019 | 840,770 | 132.11 | 840,770 | 45,219,253 | |||||||||
September 1 through September 30, 2019 | 260,000 | 135.34 | 260,000 | 10,030,853 | |||||||||
Total for the quarter | 1,251,103 | $ | 134.41 | 1,251,103 |
Exhibit Number | Exhibit Description | Filed Herewith | Incorporated by Reference | |||
Form or Registration Number | Exhibit | Filing Date | ||||
31.01 | * | |||||
31.02 | * | |||||
32.01 | * | |||||
32.02 | * | |||||
101.01 | The following materials from the Company's Quarterly Report for the fiscal quarter ended September 30, 2019, formatted in Inline XBRL: | * | ||||
(i) | Consolidated Balance Sheets as of September 30, 2019 and March 31, 2019; | |||||
(ii) | Consolidated Statements of Operations for the three and six months ended September 30, 2019 and September 30, 2018; | |||||
(iii) | Condensed Consolidated Statements of Comprehensive Income for the three and six months ended September 30, 2019 and September 30, 2018; | |||||
(iv) | Consolidated Statements of Shareholders' Equity for the three and six months ended September 30, 2019 and September 30, 2018; | |||||
(v) | Consolidated Statements of Cash Flows for the six months ended September 30, 2019 and September 30, 2018; and | |||||
(vi) | Notes to the Consolidated Financial Statements. | |||||
104.01 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | * |
* | Submitted electronically herewith. |
+ | Management Contract or other compensatory plan required to be filed under Item 6 of this report and Item 601 of Regulation S-K of the Securities and Exchange Commission. |
WORLD ACCEPTANCE CORPORATION | |||
By: /s/ R. Chad Prashad | |||
R. Chad Prashad | |||
President and Chief Executive Officer | |||
Signing on behalf of the registrant and as principal executive officer | |||
Date: | November 6, 2019 | ||
By: /s/ John L. Calmes, Jr. | |||
John L. Calmes, Jr. | |||
Executive Vice President and Chief Financial and Strategy Officer | |||
Signing on behalf of the registrant and as principal financial officer | |||
Date: | November 6, 2019 | ||
By: /s/ Scott McIntyre | |||
Scott McIntyre | |||
Senior Vice President of Accounting | |||
Signing on behalf of the registrant and as principal accounting officer | |||
Date: | November 6, 2019 |
1. | I have reviewed this Quarterly Report on Form 10-Q of World Acceptance Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | November 6, 2019 | /s/ R. Chad Prashad |
R. Chad Prashad | ||
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of World Acceptance Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | November 6, 2019 | /s/ John L. Calmes, Jr. |
John L. Calmes, Jr. | ||
Executive Vice President and Chief Financial and Strategy Officer |
(1) | the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2019, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 6, 2019 | /s/ R. Chad Prashad |
R. Chad Prashad | ||
President and Chief Executive Officer |
(1) | the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2019, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 6, 2019 | /s/ John L. Calmes, Jr. |
John L. Calmes, Jr. | ||
Executive Vice President and Chief Financial and Strategy Officer |
STOCK-BASED COMPENSATION (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value [Table Text Block] | Fair value was estimated at grant date using the weighted-average assumptions listed below:
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Tabular disclosure of performance shares vesting based on EPS targets [Table Text Block] | The Performance Option performance target is set forth below.
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Summary schedule of stock option activity | ption activity for the six months ended September 30, 2019 was as follows:
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Intrinsic value of options exercised | The total intrinsic value of options exercised during the periods ended September 30, 2019 and 2018 was as follows:
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Summary of the status and changes restricted stock | A summary of the status of the Company’s restricted stock as of September 30, 2019, and changes during the six months ended September 30, 2019, are presented below:
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Share-based compensation included as a component of net income | Total stock-based compensation included as a component of net income during the three and six month periods ended September 30, 2019 and 2018 was as follows:
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Restricted Stock [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tabular disclosure of performance shares vesting based on EPS targets [Table Text Block] | The Performance Share performance targets are set forth below.
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Leases (Notes) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases of Lessee Disclosure [Text Block] | ASU No. 2016-02 Adoption The Company adopted the new lease accounting standard on April 1, 2019. See Note 3, “Summary of Significant Accounting Policies,” for an overview of the transition to this standard. Accounting Policies and Matters Requiring Management's Judgment When determining the economic life of a lease the Company adopts a convention of applying an economic life equal to the useful life as specified in its accounting policy. Refer to Note 1, “Property and Equipment,” to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019 for a description of the Company's accounting policy regarding useful lives. The Company uses its effective annual interest rate as the discount rate when evaluating leases under Topic 842. Management applies its effective annual interest rate to leases entered for the entirety of the subsequent year. For example, fiscal 2019’s annual effective interest rate of 6.7% will be used in the determination of lease type as well as the discount rate when calculating the present value of lease payments for all leases entered into in fiscal 2020 or until a new annual effective interest rate is available for application. Based on its historical practice, the Company believes it is reasonably certain to exercise a given option associated with a given office space lease. Therefore, the Company classifies all lease options for office space as “reasonably certain” unless it has specific knowledge to the contrary for a given lease. The Company does not believe it is reasonably certain to exercise any options associated with its office equipment leases. Periodic Disclosures The Company's leases consist of real estate leases for office space as well as office equipment leases, all of which were classified as operating at September 30, 2019. Both the real estate and office equipment leases range from three years tofive years, and generally contain options to extend which mirror the original terms of the lease. The following table reports information about the Company's lease cost for the three and six months ended September 30, 2019:
The following table reports other information about the Company's leases for the three and six months ended September 30, 2019:
_______________________________________________________ (1) In May 2019 the Company executed a new 10 year lease agreement for its corporate headquarters in Greenville, SC. The lease payments are projected to commence in December 2019; however, execution of the lease agreement triggered recognition of the right-of-use asset in May 2019 for approximately $26.9 million. The following table reports information about the maturity of the Company's operating leases as of September 30, 2019:
The Company had no leases with related parties at September 30, 2019.
|
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RECEIVABLES AND ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
|
Financing Receivable, Impaired [Line Items] | |||||||
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment | $ 53,400,000 | $ 44,200,000 | |||||
Allowance for Loan Losses [Roll Forward] | |||||||
Balance at beginning of period | $ 87,353,087 | $ 68,029,622 | 81,519,624 | 66,088,139 | |||
Provision for loan losses | 52,968,036 | 40,358,696 | 94,259,107 | 70,949,315 | |||
Loan losses | (42,604,434) | (32,572,205) | (82,128,421) | (65,013,346) | |||
Recoveries | 3,752,624 | 3,494,262 | 7,819,003 | 7,286,267 | |||
Balance at end of period | 101,469,313 | 79,310,375 | 101,469,313 | 79,310,375 | |||
Summary of loans individually and collectively evaluated for impairment [Abstract] | |||||||
Bankruptcy, gross loans | $ 5,919,237 | $ 4,644,203 | $ 5,002,410 | ||||
91 days or more delinquent, excluding bankruptcy | 67,515,456 | 59,633,541 | 54,677,031 | ||||
Loans less than 91 days delinquent and not in bankruptcy | 1,200,712,101 | 1,063,679,639 | 1,067,112,755 | ||||
Loans and Leases Receivable, Gross | 1,274,146,794 | 1,127,957,383 | 1,126,792,196 | ||||
Unearned interest and fees | (334,326,349) | (290,813,752) | (297,698,553) | ||||
Net loans | 939,820,445 | 837,143,631 | 829,093,643 | ||||
Allowance for loan losses | (87,353,087) | (68,029,622) | (81,519,624) | (66,088,139) | (101,469,313) | (81,519,624) | (79,310,375) |
Loans receivable, net | 838,351,132 | 755,624,007 | 749,783,268 | ||||
Loans individually evaluated for impairment (impaired loans) [Member] | |||||||
Allowance for Loan Losses [Roll Forward] | |||||||
Balance at beginning of period | 45,511,124 | ||||||
Balance at end of period | 52,358,792 | 42,369,717 | 52,358,792 | 42,369,717 | |||
Summary of loans individually and collectively evaluated for impairment [Abstract] | |||||||
Bankruptcy, gross loans | 5,919,237 | 4,644,203 | 5,002,410 | ||||
91 days or more delinquent, excluding bankruptcy | 67,515,456 | 59,633,541 | 54,677,031 | ||||
Loans less than 91 days delinquent and not in bankruptcy | 0 | 0 | 0 | ||||
Loans and Leases Receivable, Gross | 73,434,693 | 64,277,744 | 59,679,441 | ||||
Unearned interest and fees | (15,408,232) | (14,319,795) | (12,519,916) | ||||
Net loans | 58,026,461 | 49,957,949 | 47,159,525 | ||||
Allowance for loan losses | (52,358,792) | (42,369,717) | (52,358,792) | (42,369,717) | (52,358,792) | (45,511,124) | (42,369,717) |
Loans receivable, net | 5,667,669 | 4,446,825 | 4,789,808 | ||||
Loans collectively evaluated for impairment [Member] | |||||||
Allowance for Loan Losses [Roll Forward] | |||||||
Balance at beginning of period | 36,008,500 | ||||||
Balance at end of period | 49,110,521 | 36,940,658 | 49,110,521 | 36,940,658 | |||
Summary of loans individually and collectively evaluated for impairment [Abstract] | |||||||
Bankruptcy, gross loans | 0 | 0 | 0 | ||||
91 days or more delinquent, excluding bankruptcy | 0 | 0 | 0 | ||||
Loans less than 91 days delinquent and not in bankruptcy | 1,200,712,101 | 1,063,679,639 | 1,067,112,755 | ||||
Loans and Leases Receivable, Gross | 1,200,712,101 | 1,063,679,639 | 1,067,112,755 | ||||
Unearned interest and fees | (318,918,117) | (276,493,957) | (285,178,637) | ||||
Net loans | 881,793,984 | 787,185,682 | 781,934,118 | ||||
Allowance for loan losses | $ (49,110,521) | $ (36,940,658) | $ (49,110,521) | $ (36,940,658) | (49,110,521) | (36,008,500) | (36,940,658) |
Loans receivable, net | $ 832,683,463 | $ 751,177,182 | $ 744,993,460 |
AVERAGE SHARE INFORMATION (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Basic: | ||||
Weighted average common shares outstanding (in shares) | 7,807,229 | 9,072,160 | 8,155,263 | 9,063,524 |
Diluted: | ||||
Weighted average common shares outstanding (in shares) | 7,807,229 | 9,072,160 | 8,155,263 | 9,063,524 |
Dilutive potential common shares stock options (in shares) | 394,368 | 220,726 | 376,749 | 209,580 |
Weighted average diluted shares outstanding (in shares) | 8,201,597 | 9,292,886 | 8,532,012 | 9,273,104 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 655,462 | 468,253 | 669,374 | 477,357 |
Net Income (Loss) Attributable to Parent | $ 4,220,001 | $ 14,537,645 | $ 12,828,400 | $ (6,965,649) |
Earnings Per Share, Basic | $ 0.54 | $ 1.60 | $ 1.57 | $ (0.77) |
Earnings Per Share, Diluted | $ 0.51 | $ 1.56 | $ 1.50 | $ (0.75) |
INCOME TAXES |
6 Months Ended |
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Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES As of September 30, 2019 and March 31, 2019, the Company had $6.0 million and $5.8 million, respectively, of total gross unrecognized tax benefits including interest. Approximately $5.5 million and $5.4 million, respectively, represent the amount of net unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate. At September 30, 2019, approximately $1.6 million of gross unrecognized tax benefits are expected to be resolved during the next twelve months through the expiration of the statute of limitations and settlement with taxing authorities. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. As of September 30, 2019, the Company had approximately $1.9 million accrued for gross interest, of which $166.8 thousand was accrued during the six months ended September 30, 2019. The Company is subject to U.S. income taxes, as well as various other state and local jurisdictions. With the exception of a few states, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2015, although carryforward attributes that were generated prior to 2015 may still be adjusted upon examination by the taxing authorities if they either have been or will be used in a future period. The Company’s effective income tax rate for continuing operations decreased to (10.3)% for the quarter ended September 30, 2019 compared to 20.4% for the prior year quarter. The decrease is primarily due to the recognition of tax credits under the Federal Historic Tax Credit program and a reduction in the permanent difference related to non-qualified stock option expense in the current quarter, which was partially offset by an increase in disallowed executive compensation under IRC Section 162(m).
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AVERAGE SHARE INFORMATION |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AVERAGE SHARE INFORMATION | AVERAGE SHARE INFORMATION The following is a summary of the basic and diluted average common shares outstanding:
Options to purchase 655,462 and 468,253 shares of common stock at various prices were outstanding during the three months ended September 30, 2019 and 2018 respectively, but were not included in the computation of diluted EPS because the option exercise price exceeded the market value of the shares. |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2019 |
Mar. 31, 2019 |
---|---|---|
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 95,000,000 | 95,000,000 |
Common stock, shares issued (in shares) | 7,945,842 | 9,284,118 |
Common stock, shares outstanding (in shares) | 7,945,842 | 9,284,118 |
BASIS OF PRESENTATION |
6 Months Ended |
---|---|
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The consolidated financial statements of the Company at September 30, 2019, and for the three and six months then ended were prepared in accordance with the instructions for Form 10-Q and are unaudited; however, in the opinion of management all adjustments (consisting only of items of a normal, recurring nature) necessary for a fair presentation of the financial position at September 30, 2019, and the results of operations and cash flows for the periods ended September 30, 2019 and 2018, have been included. The results for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended March 31, 2019, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019, as filed with the SEC.
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Increase (Decrease) in Shareholders' Equity [Roll Forward] | ||||
Proceeds from exercise of stock options (in shares) | 15,706 | 4,446 | 55,472 | 25,276 |
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation | $ 0 | $ 0 | ||
Proceeds from exercise of stock options, tax benefits | $ 0 | $ 0 | ||
Adjustments Related to Tax Withholding for Share-based Compensation | $ 8,482 | $ 0 | $ 246,650 | $ 0 |
ALLOWANCE FOR LOAN LOSSES Financing Receivables (Details) - USD ($) |
Sep. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans and Leases Receivable, Gross | $ 1,274,146,794 | $ 1,127,957,383 | $ 1,126,792,196 |
Small loans [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans and Leases Receivable, Gross | 839,609,690 | 736,643,663 | 762,471,067 |
Large loans [Member] [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans and Leases Receivable, Gross | 433,389,225 | 383,686,372 | 363,884,295 |
Sales finance loans [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans and Leases Receivable, Gross | $ 1,147,879 | $ 7,627,348 | $ 436,834 |
STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock Incentive Plans The Company has a 2005 Stock Option Plan, a 2008 Stock Option Plan, a 2011 Stock Option Plan and a 2017 Stock Incentive Plan for the benefit of certain non-employee directors, officers, and key employees. Under these plans, a total of 4,350,000 shares of common stock have been authorized and reserved for issuance pursuant to grants approved by the Compensation Committee of the Board of Directors. Stock options granted under these plans have a maximum duration of 10 years, may be subject to certain vesting requirements, which are generally three to five years for officers, non-employee directors, and key employees, and are priced at the market value of the Company's common stock on the option's grant date. At September 30, 2019, there were a total of 204,744 shares of common stock available for grant under the plans. Stock-based compensation is recognized as provided under FASB ASC Topic 718-10 and FASB ASC Topic 505-50. FASB ASC Topic 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the consolidated financial statements based on their grant date fair values. The Company has applied the Black-Scholes valuation model in determining the grant date fair value of the stock option awards. Compensation expense is recognized only for those options expected to vest. Long-term Incentive Program and Non-Employee Director Awards On October 15, 2018, the Compensation Committee and Board approved and adopted a new long-term incentive program that seeks to motivate and reward certain employees and to align management’s interest with shareholders' interest by focusing executives on the achievement of long-term results. The program is comprised of four components: Service Options, Performance Options, Restricted Stock, and Performance Shares. Pursuant to this program, the Compensation Committee approved certain grants of Service Options, Performance Options, Restricted Stock and Performance Shares under the World Acceptance Corporation 2011 Stock Option Plan and the World Acceptance Corporation 2017 Stock Incentive Plan to certain employee directors, vice presidents of operations, vice presidents, senior vice presidents, and executive officers. Separately, the Compensation Committee approved certain grants of Service Options and Restricted Stock to certain of the Company's non-employee directors. Under the long-term incentive program, up to 100% of the shares of restricted stock subject to the Performance Shares shall vest, if at all, based on the achievement of two trailing earnings per share performance targets established by the Compensation Committee that are based on earnings per share (measured at the end of each calendar quarter, commencing with the calendar quarter ending September 30, 2019) for the previous four calendar quarters. The Performance Shares are eligible to vest over the Performance Share Measurement Period and subject to each respective employee’s continued employment at the Company through the last day of the applicable Performance Share Measurement Period (or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement). The Performance Share performance targets are set forth below.
The Restricted Stock awards vest in six equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The Service Options vest in six equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Service Options have a 10-year term. The Performance Options will fully vest if the Company attains the trailing earnings per share target over four consecutive calendar quarters occurring between September 30, 2018 and March 31, 2025 described below. Such performance target was established by the Compensation Committee and will be measured at the end of each calendar quarter commencing on September 30, 2019. The Performance Options are eligible to vest over the Option Measurement Period, subject to each respective employee’s continued employment at the Company through the last day of the Option Measurement Period or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Performance Options have a 10-year term. The Performance Option performance target is set forth below.
Stock Options The weighted-average fair value at the grant date for options issued during the three months ended September 30, 2019 was $71.31. There were no options issued during the three months ended September 30, 2018. The weighted-average fair value at the grant date for options issued during the six months ended September 30, 2019 and 2018 was $70.69 and $49.67, respectively. Fair value was estimated at grant date using the weighted-average assumptions listed below:
The expected stock price volatility is based on the historical volatility of the Company's common stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after the grant date. The risk-free rate reflects the interest rate at grant date on zero coupon U.S. governmental bonds having a remaining life similar to the expected option term. Option activity for the six months ended September 30, 2019 was as follows:
The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on September 30, 2019 and the exercise price, multiplied by the number of in-the-money options) that would have been received by option holders had all option holders exercised their options as of September 30, 2019. This amount will change as the market price of the common stock changes. The total intrinsic value of options exercised during the periods ended September 30, 2019 and 2018 was as follows:
As of September 30, 2019, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $12.6 million, which is expected to be recognized over a weighted-average period of approximately 4.8 years. Restricted Stock The Company did not grant any shares of restricted stock during the first six months of fiscal 2020. During fiscal 2019, the Company granted 760,420 shares of restricted stock (which are equity classified), to certain vice presidents, senior vice presidents, executive officers, and non-employee directors with a grant date weighted average fair value of $101.61. During fiscal 2018, the Company granted 24,456 shares of restricted stock (which are equity classified) to certain executive officers, with a grant date weighted average fair value of $107.52 per share. One-third of these awards vest on each anniversary of the grant date over the three years following the grant date. Compensation expense related to restricted stock is based on the number of shares expected to vest and the fair market value of the common stock on the grant date. The Company recognized compensation expense of $13.4 million and $1.9 million for the six months ended September 30, 2019 and 2018, respectively, which is included as a component of general and administrative expenses in the Company’s consolidated statements of operations. As of September 30, 2019, there was approximately $52.5 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over the next 4.0 years based on current estimates. A summary of the status of the Company’s restricted stock as of September 30, 2019, and changes during the six months ended September 30, 2019, are presented below:
Total Stock-Based Compensation Total stock-based compensation included as a component of net income during the three and six month periods ended September 30, 2019 and 2018 was as follows:
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SUMMARY OF SIGNIFICANT POLICIES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT POLICIES | SUMMARY OF SIGNIFICANT POLICIES Nature of Operations The Company is a small-loan consumer finance company headquartered in Greenville, South Carolina that offers short-term small loans, medium-term larger loans, related credit insurance products and ancillary products and services to individuals who have limited access to other sources of consumer credit. The Company offers income tax return preparation services to its loan customers and other individuals. Seasonality The Company's loan volume and corresponding loans receivable follow seasonal trends. The Company's highest loan demand generally occurs from October through December, its third fiscal quarter. Loan demand is generally lowest and loan repayment highest from January to March, its fourth fiscal quarter. Loan volume and average balances remain relatively level during the remainder of the year. Consequently, the Company experiences significant seasonal fluctuations in its operating results and cash needs. Operating results for the Company's third fiscal quarter are generally lower than in other quarters and operating results for its fourth fiscal quarter are generally higher than in other quarters. Reclassification Certain prior period amounts have been reclassified to conform to the current presentation. Such reclassifications had no impact on previously reported net income or shareholders' equity. Recently Adopted Accounting Standards Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The ASU, as amended by ASU 2018-01, ASU 2018-10, and 2018-11, requires lessees to recognize assets and liabilities from leases with terms greater than 12 months and to disclose information related to the amount, timing and uncertainty of cash flows arising from leases, including various qualitative and quantitative requirements. The amendments of this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Upon adoption of this guidance on April 1, 2019 the Company removed its deferred rent expense balance of $0.4 million, recorded a right-of-use asset of $92.3 million, and recorded a lease liability of $92.7 million. Amounts recorded upon adoption of Topic 842 were adjusted from what was reported in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019 due to the Company finalizing its implementation since that filing. In conjunction with adoption the Company made the following elections as outlined in ASU 2016-02 and its amendments:
Adoption of the standard did not impact the Company's consolidated statements of operations nor did adoption require the Company to alter its revolving credit facility to remain in compliance with its debt covenants. Recently Issued Accounting Standards Not Yet Adopted Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. The amendments in this update are effective for public entities who are SEC filers for fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. The amendment seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For public business entities the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements. The adoption of this ASU could have a material impact on the provision for loan losses in the consolidated statements of operations and allowance for loan losses in the consolidated balance sheets. We reviewed all other newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on the consolidated financial statements as a result of future adoption.
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LITIGATION |
6 Months Ended |
---|---|
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION | Mexico Investigation As previously disclosed, the Company has retained outside legal counsel and forensic accountants to conduct an investigation of its operations in Mexico, focusing on the legality under the FCPA, and certain local laws of certain payments related to loans, the maintenance of the Company’s books and records associated with such payments, and the treatment of compensation matters for certain employees. The investigation continues to address whether and to what extent improper payments, which may violate the FCPA and other local laws, were made approximately between 2010 and 2017 by or on behalf of WAC de Mexico, to government officials in Mexico relating to loans made to unionized employees. The Company voluntarily contacted the SEC and the DOJ in June 2017 to advise both agencies that an internal investigation was underway and that the Company intended to cooperate with both agencies. The Company has and will continue to cooperate with both agencies. The SEC has issued a formal order of investigation. A conclusion cannot be drawn at this time as to what potential remedies these agencies may seek. The Company cannot determine at this time the ultimate effect that the investigation or any remedial measures will have on its financial condition or results of operations. If violations of the FCPA or other local laws occurred, the Company could be subject to fines, civil and criminal penalties, equitable remedies, including profit disgorgement and related interest, and injunctive relief. In addition, any disposition of these matters could result in modifications to our business practices and compliance programs. Any disposition could also potentially require that a monitor be appointed to review future business practices with the goal of ensuring compliance with the FCPA and other applicable laws. The Company could also face fines, sanctions, and other penalties from authorities in Mexico, as well as third-party claims by shareholders and/or other stakeholders of the Company. In addition, disclosure of the investigation or its ultimate disposition could adversely affect the Company’s reputation and its ability to obtain new business or retain existing business from its current customers and potential customers, to attract and retain employees, and to access the capital markets. If it is determined that a violation of the FCPA or other laws has occurred, such violation may give rise to an event of default under the Company’s credit agreement if such violation were to have a material adverse effect on the Company’s business, operations, properties, assets, or condition (financial or otherwise) or if the amount of any settlement, penalties, fines or other payments resulted in the Company failing to satisfy any financial covenants. Additional potential FCPA violations or violations of other laws or regulations may be uncovered through the investigation. In addition to the ultimate liability for disgorgement and related interest, the Company believes that it could be further liable for fines and penalties. The Company is continuing its discussions with the DOJ and SEC regarding the matters under investigation, but the Company cannot reasonably estimate the amount of any fine or penalty that it may have to pay as a part of any possible settlement or assess the potential liability that might be incurred if a settlement is not reached and the government were to litigate the matter. As such, based on the information available at this time, any additional liability related to this matter is not reasonably estimable. The Company will continue to evaluate the amount of its liability pending final resolution of the investigation and any related discussions with the government. Further, under the terms of the stock purchase agreement among the Company and the Purchasers in connection with the sale of our Mexico operations, we are obligated to indemnify the Purchasers for claims and liabilities relating to certain investigations of our former Mexico operations, the Company, and its affiliates by the DOJ or the SEC that commenced prior to July 1, 2018. Any such indemnification claims could have a material adverse effect on our financial condition, including liquidity, and results of operations. General In addition, from time to time the Company is involved in litigation matters relating to claims arising out of its operations in the normal course of business. Estimating an amount or range of possible losses resulting from litigation, government actions and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve fines, penalties or damages that are discretionary in amount, involve a large number of claimants or significant discretion by regulatory authorities, represent a change in regulatory policy or interpretation, present novel legal theories, are in the early stages of the proceedings, are subject to appeal or could result in a change in business practices. In addition, because most legal proceedings are resolved over extended periods of time, potential losses are subject to change due to, among other things, new developments, changes in legal strategy, the outcome of intermediate procedural and substantive rulings and other parties’ settlement posture and their evaluation of the strength or weakness of their case against us. For these reasons, we are currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from, the matters described above. Based on information currently available, the Company does not believe that any reasonably possible losses arising from currently pending legal matters will be material to the Company’s results of operations or financial condition. However, in light of the inherent uncertainties involved in such matters, an adverse outcome in one or more of these matters could materially and adversely affect the Company’s financial condition, results of operations or cash flows in any particular reporting period.
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