Good morning, and welcome to the World Acceptance Corporation sponsored Fourth Quarter Press Release Conference Call. Please note, this call is being recorded. At this time, all participants have been placed in a listen-only mode. Before we begin, the Corporation has requested that I make the following announcement.

The comments made during this conference may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represent the Corporation's expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties.

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.

Additional information regarding forward-looking statements and any factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements are included in the paragraph discussing forward-looking statements.

In today's earnings press release and in the Risk Factors section of the Corporation's most recent Form 10-K for the fiscal year ended March 31, 2016 and subsequent reports filed with or furnished to the SEC from time-to-time. The Corporation does not undertake any obligation to update any forward-looking statements it makes.

At this time, it is my pleasure to turn the floor over to your host, Ms. Janet Lewis Matricciani, CEO. Please go ahead, ma'am..

Thank you. Good morning everyone and welcome to our fourth quarter fiscal year 2017 earnings call. As well as our earnings release, we have issued a script that provides more details on our results and activity, that I will assume that everyone on the call today has read the script. The script is filed with the SEC, as an attachment to our 8-K.

To summarize briefly for the quarter, we are pleased with our results in both our Mexico and U.S. businesses, and we are now ready to take any questions that you may have..

[Operator Instructions]. Our first question will come from John Rowan with Janney..

Good morning..

Good morning John..

Janet, in the script it said that you are going to open many branches or you had sites selected for many branches in 2018.

Can you kind of narrow down what many means?.

Yes. In the past, we have opened, sometimes 40 or 50 branches in a year, and we believe that that is too many, because it is a long process to find the right folks to run and manage those branches and to manage that level of branch growth. So I would say that, in fiscal year 2018, we will be tempered in how we approach it and select the best location.

The good news from our perspective is this, we believe we will have more attractive locations in fiscal year 2018, than the number of branches we plan to open. So there is some runway to continue opening branches..

Okay.

You guys talk about changing your long characteristics, right? Just from a modeling perspective, does that change kind of the loss emergence period? Does it change kind of the seasonality to the allowance ratio?.

I don't think so, right. I guess, it will impact -- so we tried to see how the loans originating, that were performing over the first three and six months, right, and over the last year, those originations have performed as well or better than recent history, right.

So we don't find there is -- even if that has changed dramatically in that loan product.

Does that answer your question?.

Yeah, that's fine. And then, just to go back to yesterday's announcement of the credit facility, obviously saw that you -- you maybe thinking of [ph] combined 20% of your trailing net income, but does that repurchase authorization -- not authorization.

But do you still need two-thirds consent from the lenders on the facility to buy 50% of trailing net income, or do you just have that authorization?.

We just had that authorization..

Okay. All right. Thank you..

Thank you, John. Our next question will come from Bill Armstrong with CL King and Associates..

Good morning everyone. So the 61 day and up delinquency rate was 7.8% versus 7.1%, so increasing.

So should we not then expect perhaps a continued elevated charge-off levels for the time being?.

Most of that elevation is in the 90 days past due, which, again as you know, are fully reserved. So we may have -- continue to have some elevated charge-offs. But the income statement impact, so that has already been provided for through the income statement. More importantly, the fund in delinquency, but USA, Mexico has improved a lot since last year.

So for example, in the U.S. on a delinquency [ph] basis, zero to 30 days past due dropped 19.4% to 15.9%. The 30 to 60 day delinquency dropped from 3.3% to 2.8%, and a 60 day drop in monthly 9% is to 1.8%. So while charge-offs may remain elevated, we think going forward, it should moderate just a little bit..

Okay, got it. And then with the cessation of the in-person collections, is it -- almost a year and a half ago.

What collection methods are you seeing now, to be most effective as we move forward?.

Well there's a couple of things. One is, of course we have a fund calling cover, so we may no longer visit the place of home or work, but we have a fund policy that we adhere to and we use that for all our late [ph] customers. But we also have ramped up our work on recoveries and how we manage charged off accounts.

So we have an internal recoveries unit, that has grown enormously from when we started it this fiscal year, in terms of personnel answering calls, and how we think about settlements and so on for charged off accounts..

I see. Okay. Another question, maybe a little bit on the housekeeping, but it looks like you restated last year's fourth quarter insurance and other income.

You originally reported, I think $20 million and now that's $22.7 million?.

Right. It wasn't a restatement. We changed that before we issued the 10-K. So if you look at the quarterly financials at the back of the 10-K, you will see the updated number. The interest income did increase in between earnings release and the 10-K last year..

Okay, got it. And the tax refund anticipation loans, interest free and fee free.

Could you talk about how that's helped you tax prep business during the quarter?.

Sure. We believe that our change in products and strategy for our tax prep business had a very positive effect, both last year, where we made some improvements, and then most recently in this most recent tax season.

And when we look at the performance of the tax loans, we find they were performing very well in terms of paybacks and so on, like just the one they did last year. So very pleased with the results of our tax prep business and the products we offer..

Okay.

And then the increase in tax prep revenue of $2.7 million, I assume that's all from the price increase, so those loans don't have fees or interest?.

We don't -- we are now making money off the loan. We receive a fee for preparing the tax returns, right. So the tax advance loan is really just an incentive for our customers to use us to prepare their taxes..

As a result in increasing revenue, it's both from an average price increase in our tax preparation services, and from the significant increase in tax preparations that we prepared in this past tax season as per the earnings script..

Right, okay. I see that 13% increase in volume and 7% increase in price. That's pretty good. Okay, that's all I had. Thank you..

Thanks..

Thank you. Our next question will come from John Hecht with Jefferies..

Good morning guys. And I apologize. It took me a while to get in, so I missed the [indiscernible] prepared remarks, although I read them on the 8-K. But I apologize if someone has asked these questions, because I missed of them. So first of all, why was the -- and I am sure this probably has been asked.

Why was the other income elevated, into just say, new kind of base rate?.

Just what -- we just discussed. So the primary reason for other income being elevated, is because of the additional tax recurrence we prepared this year, and in the higher rate, we charged all those tax prep ratios..

And what about the auto -- the United Auto Corp, is that in the other income line?.

It is as well. So there is details in the script as well. So as United Auto Corp was flat this quarter. Also actually, it was up this quarter, flat for the year. But that's important, because it had been decreasing quite a bit over the last several quarters..

Okay. And then it looks like you entered Georgia with an acquisition.

Have you guys disclosed anything about valuation ranges in that acquisition and do you have some other pipelines of acquisitions at this point?.

So we have seen a lot more acquisition opportunities arise over the last several months. I don't want to discuss too much about how we value those acquisitions because of that. But we do expect that there will be some additional opportunities going forward..

Okay. And then final question, again I apologize if these are redundant. How do you guys look -- I mean, obviously, so you have got some financing in place. You have worked through some operational changes.

How do you see secular growth now, once things are fully kind of stabilized versus two or three years ago?.

So I think we are on the process of continuous improvement, John. I don't think there is much that we haven't looked at. It's not just about innovation and bringing in new technology, how we run and manage every single department to make it world class.

Having a data analytics department, having that being world class and following marketing, so that we are having a stronger digital marketing presence.

Improving IT, so that we are stronger in loan origination, loan management system and even in a myriad of small functions that we use across the company and how we manage the helpdesk support and everything. There is going to be continual improvement, and there is a lot of room for us to improve and strengthen and grow the company on every level.

So I think we have done a lot in the last three years. They are pretty transparent about the changes that we have made, and there is a lot more that we are working on right now..

Okay, guys. Thanks very much for the color..

Thank you, John. [Operator Instructions]. We will hear from John Rowan with Janney..

Hey guys, just wanted a follow-up question. It has been a long time, since we have kind of seen an active repurchase program from you guys, and you know, prior programs are quite aggressive and they kind of targeted, where I think the debt-to-equity ratio, if I am not mistaken. I mean, we are thinking several years back high level.

Can you give us a sense of what any type of share purchases look like, or is there a metric that you are targeting, just help us frame out what you can do on that front?.

Sure. So the [indiscernible] buyback. They would get back to the two to one that we were targeting in the past. So if you look at it based on kind of the pool that we build for 2017 net income, will allow us to buy back 36 million in the first quarter.

If you assume we have the same earnings as we did last year, that allows about -- around 57 million for -- during fiscal 2018 and around 72 million through Q1 of fiscal 2019. So it won't be at the same levels as -- that we were doing several years ago, but still allows for quite a bit of repurchases..

Okay. Thank you..

Thank you. Next we will hear from Vincent Caintic with Stephens..

Hey, thanks very much guys. Good morning..

Good morning..

Good morning. You touched on the improved charge-offs a little bit.

I am just kind of wondering if you could parse, how much of that is maybe consumer driven versus the adjustments you made to the systems to get the same type of the consumer to improve?.

So a lot of the improvement is partially to do with the comp of last year, right? So Q4 of last year was, the first quarter after we ceased field calls. So obviously those charge-offs were elevated, as our managers lost contact with a lot of the customers, once we weren't able to field calls anymore. So that explains some of it.

Obviously at the same time, we are lending to a lot more new borrowers today than we had in recent history, right? And we know the lost rates on new customers are the highest of any of our customers. So that will also have a negative impact on net charge-offs.

And the same way with Live Checks, so they tend to have slightly higher charge-off rates than they have -- they will put you [indiscernible]. So all those things together could lead to elevated charge-offs in the future. But I think it is necessary..

And I will just add, as Johnnie said, our Live Checks program is right now to former borrowers, just a less risky than new borrowers. But also that at every type of customer, former borrowers, new customers and of course, our present borrowers, our credit scores are improving for those customers.

So to the extent you believe there is a link between you know, credit scores in our jobs that we do, and we can expect that this will have a positive effect on charge-offs, on the other side of the equation..

Great, so as these -- I guess you have changed your procedures as opposed to last year, and maybe that you are growing a bit.

As those loans cease, and I guess through fiscal 2018; so this trajectory for lower delinquencies, lower charge-offs, and then how you think impacted your reserves levels as well?.

So what I would say is this, we have talked in several past earnings calls about how we have tightened our lending at lower credit scores. For simplicity sake of course, we have more details behind this.

But at lower credit scores, we have tightened our lending and we have generally seen as well, through our strength in underwriting that the credit scores of our new format and current customers are going up. And we have talked about this for a couple of quarters.

So going forward, to the extent there aren't other factors, impacts, the economy and so on and so forth, you'd expect that to have a positive impact on charge-offs. Certainly not positive, but if you have not tightened your credit score..

Got it. And then --.

You know what I mean?.

Yeah, that makes sense. And then kind of a similar theme on your reserves, as you are rolling out Live Checks, but you are also going after, maybe new borrowers.

How do you think about your reserve methodology, given the loan coverage that you would like?.

So, that all comes through the -- our migration announcements, right. So as those loans move through delinquency, if they move through at a faster rate, our old model will compensate for that..

Furthermore, as we do more and more Live Check campaigns, we have done five now. We get, of course, more knowledgeable about the performance of those customers, and so we can restrict [ph] they will change the criteria, in order to improve the performance each time, learning from each test..

Helpful. And just separate question, you mentioned the Georgia acquisition, that you might be seeing more -- there might be some more available.

Are you seeing generally more opportunities out there, or it's just now that you are -- the opportunities have been there, it's just that you are now able to seize those opportunities -- and new opportunities, what's driving others to be willing to sell? Thanks..

Yeah. So generally the volume of inbound calls of people looking to sell their business has increased. You can expect like why that is. I think it's probably just a more favorable [indiscernible] environment, and people feel that they can get a better valuation than they could a year or two ago.

Other than that, [indiscernible] would just be speculating..

Very helpful. Thanks so much guys..

Thank you. Our next question in the queue will come from Clifford Sosin with CAS Investment Partners..

Hi guys. Thank you for taking my questions.

Do you mind just spending a moment, providing us some color on how you thought about sizing the new revolving credit facility? Given the constraint on repurchases, it does seem like a fairly large amount of liquidity, and I guess, I just wanted to get your thoughts on why that size?.

Yeah. So I believe, we hope we can use it, right. So we hope through growing the portfolio and share repurchases, and maintain a reasonable level of liquidity at the same time, we felt that it was the perfect level..

Also that our strategy and the changes that we have made and the good quarters that we have experienced recently, we believe that we are in a stronger position to not feel in any way, constrained by a credit facility, when we move into growth season this year.

So we aren't diverting our effort and focus on growing in the best way we can, to worrying about a credit constraint..

Thank you..

Thank you. [Operator Instructions]. And at this time, we have no further questions in our queue. We will turn the conference back over to our speakers for any additional or closing remarks..

Just to say thank you to everybody who has been on this call. We appreciate your support..

Thank you. And ladies and gentlemen, thank you for your participation. This concludes the World Acceptance Corporation quarterly teleconference..