World Acceptance Corporation NASDAQ: WRLD December 31, 2016
Cautionary Note About Forward-Looking Statements Certain statements in this presentation constitute “forward looking-statements” under the Private Securities Litigation Reform Act of 1995. Statements other than those of historical fact, as well as those identified by the words “anticipate,” “estimate,” ”intend,” “plan,” “expect,” “believe,” “may,” “will,” and “should” or any variation of the foregoing and similar expressions are forward-looking statements. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include the following: recently enacted, proposed or future legislation and the manner in which it is implemented; the nature and scope of regulatory authority, particularly discretionary authority, that may be exercised by regulators having jurisdiction over the Company’s business or consumer financial transactions generically, including, but not limited to, the Consumer Financial Protection Bureau (the “CFPB”), having jurisdiction over the Company’s business or consumer financial transactions generically; the unpredictable nature of regulatory proceedings and litigation; and any determinations, findings, claims or actions made or taken by the CFPB, other regulators or third parties in connection with or resulting from the previously disclosed civil investigative demand from the CFPB that assert or establish that the Company’s lending practices or other aspects of its business violate applicable laws or regulations; the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported financial statements or necessitate material delays or changes in the issuance of the Company’s audited financial statements; the Company's assessment of its internal control over financial reporting, and the timing and effectiveness of the Company's efforts to remediate any reported material weakness in its internal control over financial reporting; changes in interest rates; risks related to expansion and foreign operations; risks inherent in making loans, including repayment risks and value of collateral; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquencies and charge-offs); and changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company). These and other factors are discussed in greater detail in Part I, Item 1A, “Risk Factors” in the Company’s most recent annual report on Form 10-K for the fiscal year ended March 31, 2016 filed with the Securities and Exchange Commission (“SEC”) and the Company’s other reports filed with, or furnished to, the SEC from time to time. World Acceptance Corporation does not undertake any obligation to update any forward-looking statements it makes. 2
Table of Contents Sect ection 1 1 Compan any y Overv rview an and Key y Investment Highlights ts.... 4 Sect ection 2 Bu Business Over erview.... ....... ....... ....... ....... ....... ....... ....... ...... ....... ....... ....... ....... ....... ....... .... 11 11 Sect ection 3 3 Financi cial Summary..... ....... ...... ....... ....... ....... ....... ....... ....... ...... ....... ....... ....... ....... ...... ... 23 23 3
Co Company Ov Over erview an and K Key ey Inves estmen ent Highlights 4
World Acceptance Overview Largest Domestic c Branch ch Network… 50+ year old small-loan consumer finance company Provides loans to individuals with limited 20 30 access to credit Well positioned to capitalize on favorable 80 29 supply/demand imbalance within the non-prime 75 78 lending space 104 76 41 95 Originated over $27 billion dollars worth of loans 20 66 112 since 1994 47 294 Total: 1,167 Focused on relationship-lending business model …With th a St Stro rong Pre resence in in M Mexic ico Branch nch Coun unt Total: 156 1,600 1,350 1,323 1,400 1,271 Sonora Nuevo Leon 23 12 1,200 Chihuahua 990 Tamaulipas 11 Coahuila 29 1,000 12 800 620 Queretaro 3 Sinaloa 7 600 441 Hildalgo 3 360 Baja California Sur 2 400 217 Puebla 5 SLP 4 Aguas Calientes 4 200 Yucatan 4 Guanajuato 5 0 Veracruz 2 Jalisco 3 Quintana Roo 5 '94 '98 '02 '06 '10 '14 '16 '17 Edo De Mexico 4 Chiapas 8 Guerrero 4 Campeche 1 Morelos 3 Oaxaca 2 5
Key Investment Highlights Experienced Long Operating Management Team History Attractive Market Consistently Supported by Strong Profitable through Supply/Demand Multiple Cycles Dynamics High-Touch Stable Business Business Model Model with Low Enhances Risk Volatility of Earnings Monitoring and Losses Strong Balance Sheet with Compelling Cash Flow Characteristics 6
Consistently Profitable through Multiple Cycles Worl rld Accept ptanc nce has s remai aine ned d profitabl able while operating ng with h strong ng and d stabl ble marg rgins in in vari riou ous econ onomic e c environ ronments Net t Incom ome & Retu turn on Av Average As Assets 1 ($ in millions) 12.7% 13.9% 13.9% 13.0% 12.3% 12.5% $200 16.0% 11.7% 11.8% 11.9% 12.2% 11.0% 10.9% 10.8% 11.9% $160 9.9% 10.4% 10.0% 8.4% 9.7% 12.0% 8.8% 8.4% 8.2% 8.2% $91 $101 $104 $107 $111 $120 7.2% $87 8.0% $70 $74 $80 $56 $50 $48 $39 $34 $29 4.0% $23 $19 $40 $14 $16 $11 $9 $8 $8 $7 $6 $0 0.0% '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Net Charge-Off ffs 20+ Yea 20 ear Av Aver erage e NCOs Os 2 : 1 13. 3.6% 20.0% 16.7% 15.5% 16.6% 14.8% 14.7% 14.8% 14.7% 14.8% 14.6% 14.6% 14.5% 14.3% 14.1% 13.9% 13.3% 15.0% 12.9% 12.0% 12.0% 11.2% 9.7% 9.4% 10.6% 10.0% 7.6% 5.0% 0.0% '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 _________________ Note: Fiscal year-end is 3/31. FY 2017 numbers represent last twelve months. (1) Return on Average Assets is calculated as net income over the Average Total Assets for the respective period. Average Total Assets are defined as a 5-quarter average, ending at the respective period end (2) 20+ Year Average represents average from 3/31/1996 to 3/31/2016 7
Strong Balance Sheet with Compelling Cash Flow Characteristics World d Accept ptanc nce’s strong ng cash sh flows hav ave al allowed the C Compa pany ny t to operate at low low lever erage e levels Cash sh Flow ows From Operation ons ($ in millions) $300 $246 $242 $232 $219 $250 $206 $200 $184 $200 $154 $136 $150 $110 $98 $88 $70 $100 $55 $48 $39 $32 $22 $21 $21 $50 $19 $0 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Lever erage e Profile e (Debt/Equity) 4.5x 4.0x 3.5x 3.0x 20+ Yea ear Av Aver erage Lev e Lever erage 2 : . : .9x 2.5x 1.6x 2.0x 1.6x 1.5x 1.4x 1.3x 1.2x 1.1x 1.5x 0.9x 1.1x 0.8x 1.0x 0.9x 0.9x 0.8x 0.8x 0.4x 0.7x 1.0x 0.5x 0.4x 0.6x 0.7x 0.5x 0.5x 0.0x '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 _________________ Note: Fiscal year-end is 3/31 (1) 20 - Year CAGR represents CAGR from 3/31/1996 to 3/31/2016 (2) 20+ Year Average Leverage represents average from 3/31/1996 to 12/31/2016 8
Traditional Loan Product Provider to Underserved Clients Worl rld Acc cceptance ce pr provides an an at attractive pr product to an an unde derserved customer ba base, focusing on the customer's stability, abi ability an and willingness to pay pay Tradit ition ional Auto T o Title itle Credit Ca Cr Card Paw awn Pay ayday Installm llment Lo Loans Underwr writ itin ing Ability to pay and Solely collateral Solely collateral Bank account and Ability to pay Approach App credit history value value employment Pas ast D Due Centralized calling Sale of loan Auto debit bank Branch calling Repo automobile Sale to a 3 rd party Resolution ion collateral account Revolving Fully amortizing Lo Loan Balloon Balloon Balloon Low minimum Fixed, equal Amortiz ization ion payment monthly payments Average 0 – 3 Ren enew ewals Revolving Borrower’s option 8 renewals/year 1 9 renewals/year 2 renewals/year Aver Av erage e Large: 3-5 years Revolving 2 – 4 months 30 days 1 2 - 3 weeks 2 Te Term Small: 12-24 months Cred edit Report to bureaus Report to bureaus No reporting No reporting No reporting Re Reporting _________________ Source: Company filings, CFPB, Center for Responsible Lending Report (Feb 2013), Wall Street Research (1) Center for Responsible Lending, “The State of Lending in America & its Impact on U.S. Households." Data represents 30-Day Balloon Payment Car-Title Loans (2) CFPB, “Payday Loans and Deposit Advance Products” 9
Experienced Management Team Emplo ployee H Hie iera rarchy and A d Avg. T Tenure W Wit ith WRLD Senior Management U.S. Mexico 1 21 6 Senior Vice Presidents years years 20 3 Vice President of Operations years years 14 3 Supervisors years years 5 2 Branch Employees years years _________________ (1) Mexico locations opened in 2005 10
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