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1月前
World Acceptance Corporation Reports Fiscal 2026 Fourth Quarter ResultsApril 30, 2026 7:30 AM
Business Wire
World Acceptance Corporation (NASDAQ: WRLD) today reported financial results for its fourth quarter of fiscal 2026.
Fourth fiscal quarter highlights
Following a period of economic uncertainty and elevated inflation, the Company took decisive action to tighten underwriting standards dramatically in an effort to manage conservatively through the lending environment and focus on improvement to overall portfolio credit quality. As a result, outstanding balances declined each year from fiscal 2023 to fiscal 2025. During fiscal 2025, however, we shifted strategy to reintroduce targeted portfolio growth.
We are pleased to report that for the third consecutive quarter, outstanding loans increased year over year. Excluding acquisitions, organic growth increased 4.9% and our unique customer base grew 3.5% compared to the same quarter last fiscal year. To reverse the prior trend of declining balances while maintaining high credit quality, we had been focused on new customers with higher credit quality and, during the third quarter of fiscal 2026, we increased new customers as a percentage of the portfolio from 6.4% as of September 30, 2024 to 9.9% as of December 31, 2025. While these new customers continue to perform well, new customers carry a substantially higher reserve for loan losses under our allowance methodology than existing customers. Having increased the new customer funnel for several consecutive quarters, we are now in a position to decelerate new customer growth and focus on overall portfolio health while allowing these new customers to season. As of March 31, 2026, new customers decreased to 8.2% as the portfolio begins to mature.
We expect that our portfolio will continue to deliver results in the coming fiscal year as we pursue growth with a lower proportion of new customers. As the customer base matures and growth becomes more broadly distributed across customer types, we anticipate lower charge-offs, reduced reserve rates, and improved profitability.
Highlights from the fourth quarter include:
Net income per diluted share of $7.70 in the fourth quarter;
Interest, fee, and insurance income increased $7.0 million, or 5.4%, including a 146 basis point yield increase, compared to the same quarter in the prior year;
Increased gross loans outstanding 4.4% from March 31, 2025;
Decreased loans 0-60 days past due on a recency basis from 18.7% as of March 31, 2025 to 17.0% as of March 31, 2026; and
Decreased loans 61 days or more past due on a recency basis from 6.0% as of March 31, 2025 to 5.6% as of March 31, 2026.
Portfolio results
Gross loans outstanding were $1.28 billion as of March 31, 2026, a 4.4% increase from the $1.23 billion of gross loans outstanding as of March 31, 2025. This represents a substantial improvement from shrinking 4.0% year over year as of March 31, 2025.
During the most recent quarter, our former and current customer borrowing increased compared to the same quarter of fiscal year 2025. Former and refinanced customer loan volume increased 5.4% and 26.9%, respectively, compared to the same quarter of fiscal year 2025. Our customer base increased by 2.5% during the twelve-month period ended March 31, 2026, compared to an increase of 3.5% for the comparable period ended March 31, 2025.
The following table includes the volume of gross loan origination balances, excluding tax advance loans, by customer type for the following comparative quarterly periods:
Q4 FY 2026
Q4 FY 2025
Q4 FY 2024
New Customers
$24,189,173
$26,854,288
$26,511,522
Former Customers
$60,199,603
$57,132,803
$58,583,919
Refinance Customers
$470,620,087
$370,890,796
$432,270,234
As of March 31, 2026, the Company had 1,009 open branches. For branches open at least twelve months, same store gross loans increased 4.9% in the twelve-month period ended March 31, 2026, compared to a 2.5% decrease for the twelve-month period ended March 31, 2025. For branches open throughout both periods, the customer base over the twelve-month period ended March 31, 2026 increased 3.2%, compared to an increase of 5.1% for the twelve-month period ended March 31, 2025.
Three-month financial results
The fourth quarter's $36.5 million net income was a $7.8 million decrease from net income of $44.3 million for the same quarter of the prior year. Net income per diluted share was $7.70 in the fourth quarter of fiscal 2026, as compared to net income per diluted share of $8.13 for the same quarter of the prior year. The fourth quarter included $4.8 million in share based compensation expense, which is a $5.9 million increase compared to the same quarter of the prior year.
Total revenues for the fourth quarter of fiscal 2026 increased to $177.6 million, a 7.4% increase from $165.3 million for the same quarter of the prior year. Interest and fee income increased 5.9%, from $117.6 million in the fourth quarter of fiscal 2025 to $124.6 million in the fourth quarter of fiscal 2026. Insurance income remained relatively flat at $11.8 million in the fourth quarter of fiscal 2026 as compared to the fourth quarter of fiscal 2025. The large loan portfolio decreased from 48.5% of the overall portfolio as of March 31, 2025, to 44.7% as of March 31, 2026. Interest and insurance yields for the quarter ended March 31, 2026 increased 146 basis points as compared to the quarter ended March 31, 2025. Other income increased $5.3 million, or 14.7%, to $41.2 million in the fourth quarter of fiscal 2026, as compared to $35.9 million in the fourth quarter of fiscal 2025. Revenues from our tax return preparation business increased $5.3 million, or 15.9%, in the fourth quarter of fiscal 2026 compared to the fourth quarter of fiscal 2025 primarily due to an increase in the number of returns prepared.
The Company accrues for expected losses with a current expected credit loss ("CECL") methodology, which requires us to create a provision for credit losses on the day we originate the loan. The provision for credit losses increased $3.8 million to $36.8 million, from $33.0 million when comparing the fourth quarter of fiscal 2026 to the fourth quarter of fiscal 2025. The table below itemizes the key components of the CECL allowance and provision impact during the quarter.
CECL Allowance and Provision (Dollars in millions)
Q4 FY 2026
Q4 FY 2025
Difference
Reconciliation
Beginning Allowance - December 31
$122.6
$116.2
$6.4
Change due to Growth
$(10.9)
$(13.1)
$2.2
$2.2
Change due to Expected Loss Rate on Performing Loans
$(0.7)
$(1.8)
$1.1
$1.1
Change due to 90 days past due
$1.0
$2.1
$(1.1)
$(1.1)
Ending Allowance - March 31
$112.0
$103.4
$8.6
$2.2
Net Charge-offs
$47.4
$45.8
$1.6
$1.6
Provision
$36.8
$33.0
$3.8
$3.8
Note: The change in allowance for the quarter plus net charge-offs for the quarter equals the provision for the quarter (see above reconciliation).
The provision was negatively impacted by an increase in net charge-offs and lower run-off during the quarter.
Net charge-offs for the quarter increased $1.6 million, from $45.8 million in the fourth quarter of fiscal 2025, to $47.4 million in the fourth quarter of fiscal 2026. Net charge-offs as a percentage of average net loans receivable on an annualized basis increased to 18.7% in the fourth quarter of fiscal 2026 from 18.5% in the fourth quarter of fiscal 2025.
Accounts 61 days or more past due decreased to 5.6% on a recency basis at March 31, 2026, compared to 6.0% at March 31, 2025. Our allowance for credit losses as a percentage of net loans receivable was 11.7% at March 31, 2026, compared to 11.3% at March 31, 2025. Recency delinquency on accounts 0 to 60 days past due decreased from 18.7% at March 31, 2025, to 17.0% at March 31, 2026.
The table below has been updated to reflect the customer tenure-based methodology, which aligns with our CECL methodology and illustrates changes in portfolio weighting.
Gross Loan Balance By Customer Tenure at Origination
As of
Less Than 2 Years
More Than 2 Years
Total
03/31/2021
$342,202,779
$762,610,487
$1,104,813,266
03/31/2022
$482,248,578
$1,040,695,747
$1,522,944,325
03/31/2023
$348,513,335
$1,041,619,563
$1,390,132,898
03/31/2024
$270,069,839
$1,007,164,462
$1,277,234,301
03/31/2025
$272,485,920
$953,259,509
$1,225,745,429
03/31/2026
$317,440,246
$959,068,001
$1,276,508,247
Year-Over-Year Growth (Decline) in Gross Loan Balance by Customer Tenure at Origination
12 Month Period Ended
Less Than 2 Years
More Than 2 Years
Total
03/31/2021
$(75,398,715)
$(30,052,612)
$(105,451,327)
03/31/2022
$140,045,799
$278,085,260
$418,131,059
03/31/2023
$(133,735,243)
$923,816
$(132,811,427)
03/31/2024
$(78,443,496)
$(34,455,101)
$(112,898,597)
03/31/2025
$2,416,081
$(53,904,953)
$(51,488,872)
03/31/2026
$44,954,326
$5,808,492
$50,762,818
Portfolio Mix by Customer Tenure at Origination
As of
Less Than 2 Years
More Than 2 Years
03/31/2021
31.0%
69.0%
03/31/2022
31.7%
68.3%
03/31/2023
25.1%
74.9%
03/31/2024
21.1%
78.9%
03/31/2025
22.2%
77.8%
03/31/2026
24.9%
75.1%
General and administrative (“G&A”) expenses increased $15.6 million, or 23.6%, to $81.5 million in the fourth quarter of fiscal 2026, compared to $65.9 million in the same quarter of the prior fiscal year. As a percentage of revenues, G&A expenses increased from 39.9% during the fourth quarter of fiscal 2025, to 45.9% during the fourth quarter of fiscal 2026. G&A expenses per average open branch increased by 25.9%, when comparing the fourth quarter of fiscal 2026 to the fourth quarter of fiscal 2025.
Personnel expense increased $13.7 million, or 33.2%, during the fourth quarter of fiscal 2026 as compared to the fourth quarter of fiscal 2025.
Salary expense increased approximately $2.8 million, or 8.7%, during the quarter ended March 31, 2026, compared to the quarter ended March 31, 2025. Our headcount as of March 31, 2026 increased 2.4% compared to March 31, 2025. During the third quarter of the current fiscal year, the Company hired branch personnel aggressively to fill service gaps in our operations. During the current quarter, we right sized our headcount and are excited about our talent improvement in the field. Excluding severance expense, our salary expense in the month of March 2026 decreased approximately $1.0 million compared to our salary expense in the month of December 2025.
Benefit expense increased approximately $3.6 million, or 62.4%, when comparing the quarterly periods ended March 31, 2026 and 2025. The increase was largely driven by a one-time rebate received in the prior-year quarter.
Incentive expense increased $7.6 million in the fourth quarter of fiscal 2026 compared to the fourth quarter of fiscal 2025. The increase in incentive expense is primarily due to a $5.9 million increase in share based compensation expense. Share based compensation expense increased primarily due to the $3.5 million partial reversal of expense associated with the forfeiture of certain performance shares (which had a $16.35 trailing four-quarter EPS target) in the prior-year quarter as well as share based compensation associated with grants issued in June of 2025.
Occupancy and equipment expense remained relatively flat at $12.3 million when comparing the quarterly periods ended March 31, 2026 and 2025.
Advertising expense increased $1.1 million, or 81.7%, in the fourth quarter of fiscal 2026 as compared to the fourth quarter of fiscal 2025 due to increased spending on customer acquisition programs for our tax preparation program.
Interest expense for the quarter ended March 31, 2026 increased by $1.5 million, or 13.4%, from the corresponding quarter of the previous year. Interest expense primarily increased due to a 23.0% increase in average debt outstanding for the quarter, partially offset by a 6.3% decrease in the effective interest rate from 8.3% to 7.7%. The average debt outstanding increased from $529.2 million to $651.0 million, when comparing the quarters ended March 31, 2025 and 2026. The Company’s debt to equity ratio increased to 1.7:1 at March 31, 2026, compared to 1.0:1 at March 31, 2025. As of March 31, 2026, the Company had $587.2 million of debt outstanding.
Other key return ratios for the fourth quarter of fiscal 2026 included a 3.3% return on average assets and a return on average equity of 9.0% (both on a trailing twelve-month basis).
The Company repurchased 282,607 shares, or 5.9% of its outstanding common stock, at an aggregate purchase price of approximately $37.8 million during the fourth quarter of fiscal 2026. This is in addition to repurchases of 576,035 shares during the first three quarters of fiscal 2026 at an aggregate purchase price of approximately $94.6 million. The Company has repurchased 16.5% of its outstanding shares in fiscal 2026. As of March 31, 2026, the Company had approximately $12.2 million in aggregate remaining repurchase capacity under its current share repurchase program and $59.9 million in aggregate remaining repurchase capacity under the terms of its revolving credit facility. The Company repurchased 400,617 shares during fiscal 2025 at an aggregate purchase price of approximately $54.2 million. The Company had approximately 4.5 million common shares outstanding, excluding 172,500 unvested restricted shares, as of March 31, 2026.
Twelve-month financial results
Net income for the year ended March 31, 2026 decreased $54.7 million to $35.0 million compared to a net income of $89.7 million for the year ended March 31, 2025. This resulted in net income of $6.97 per diluted share for the year ended March 31, 2026, compared to $16.30 per diluted share in the prior-year period. Total revenues for fiscal 2026 increased 3.7% to $585.7 million, compared to $564.8 million during the corresponding period of the previous year primarily due to an increase in loans outstanding. Annualized net charge-offs as a percentage of average net loans increased from 17.5% during fiscal 2025 to 18.5% for fiscal 2026.
About World Acceptance Corporation (World Finance)
Founded in 1962, World Acceptance Corporation (NASDAQ: WRLD), is a people-focused finance company that provides personal installment loan solutions and personal tax preparation and filing services to over one million customers each year. Headquartered in Greenville, South Carolina, the Company operates more than 1,000 community-based World Finance branches across 16 states. The Company primarily serves a segment of the population that does not have ready access to credit; however, unlike many other lenders in this segment, we strive to work with our customers to understand their broader financial pictures, ensure they have the ability and stability to make payments, and help them achieve their financial goals. For more information, visit www.loansbyworld.com.
Fourth quarter conference call
The senior management of World Acceptance Corporation will be discussing these results in its quarterly conference call to be held at 10:00 a.m. Eastern Time today. A simulcast of the conference call will be available on the Internet at https://event.choruscall.com/mediaframe/webcast.html?webcastid=GzwQl9KE. The call will be available for replay on the Internet for approximately 30 days.
During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end. The Company’s responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been disclosed previously.
Cautionary Note Regarding Forward-looking Information
This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, that represent the Company’s current expectations or beliefs concerning future events. Statements other than those of historical fact, as well as those identified by words such as “anticipate,” “estimate,” "intend,” “plan,” “expect,” “project,” “believe,” “may,” “will,” “should,” “would,” “could,” “probable” and any variation of the foregoing and similar expressions are forward-looking statements. Such forward-looking statements are inherently subject to risks and uncertainties. The Company’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important 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, including pursuant to policies of the current U.S. administration; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that is or may be exercised by regulators, including, but not limited to, U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory examinations, proceedings and litigation; employee misconduct or misconduct by third parties; uncertainties associated with management turnover and the effective succession of senior management; media and public characterization of consumer installment loans; labor unrest; the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported consolidated financial statements or necessitate material delays or changes in the issuance of the Company’s audited consolidated financial statements; the Company's assessment of its internal control over financial reporting; changes in interest rates; the impact of inflation; political and other risks, including the impact of wars, geopolitical conflict, regional conflicts and terrorism; risks relating to the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net charge-offs, the loss of key personnel, integration or migration issues, the failure to achieve anticipated synergies, increased costs of servicing, incomplete records, and retention of customers; risks inherent in making loans, including repayment risks and value of collateral; cybersecurity threats or incidents, including the potential or actual misappropriation of assets or sensitive information, corruption of data or operational disruption and the cost of the associated response thereto; our dependence on debt and the potential impact of limitations in the Company’s amended revolving credit facility or other impacts on the Company's ability to borrow money on favorable terms, or at all; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquency and charge-offs); the impact of extreme weather events and natural disasters; 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, 2025, as filed with the 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. The Company is also not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet services.
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
Three months ended March 31,
Twelve months ended March 31,
2026
2025
2026
2025
Revenues:
Interest and fee income
$
124,596
$
117,634
$
484,830
$
465,091
Insurance and other income, net
52,977
47,638
100,912
99,751
Total revenues
177,573
165,272
585,742
564,842
Expenses:
Provision for credit losses
36,822
33,024
188,602
169,215
General and administrative expenses:
Personnel
54,951
41,255
200,021
141,060
Occupancy and equipment
12,315
12,346
48,361
49,140
Advertising
2,360
1,299
10,587
10,225
Amortization of intangible assets
768
907
3,185
3,810
Other
11,099
10,133
39,725
36,697
Total general and administrative expenses
81,493
65,940
301,879
240,932
Interest expense
12,684
11,190
49,443
42,710
Total expenses
130,999
110,154
539,924
452,857
Income before income taxes
46,574
55,118
45,818
111,985
Income tax expense
10,044
10,840
10,804
22,244
Net income
$
36,530
$
44,278
$
35,014
$
89,741
Net income per common share, diluted
$
7.70
$
8.13
$
6.97
$
16.30
Weighted average diluted shares outstanding
4,745
5,446
5,026
5,507
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
March 31, 2026
March 31, 2025
March 31, 2024
ASSETS
Cash
$
5,107
$
4,714
$
5,174
Gross loans receivable
1,278,988
1,225,636
1,277,149
Less:
Unearned interest, insurance and fees
(325,064
)
(309,320
)
(326,746
)
Allowance for credit losses
(112,047
)
(103,347
)
(102,963
)
Loans receivable, net
841,877
812,969
847,440
Restricted cash
23,303
5,016
6,665
Income taxes receivable
2,421
—
3,091
Operating lease right-of-use assets, net
71,527
76,235
79,501
Property and equipment, net
17,431
19,766
22,897
Deferred income taxes, net
40,233
33,291
30,943
Other assets, net
38,669
40,871
42,199
Goodwill
7,371
7,371
7,371
Intangible assets, net
4,209
7,394
11,070
Total assets
$
1,052,148
$
1,007,627
$
1,056,351
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Revolving credit facility
$
443,935
$
262,451
$
223,419
Warehouse facility
143,293
—
—
Senior unsecured notes payable, net
—
184,418
272,610
Income taxes payable
—
223
—
Operating lease liability
73,965
78,690
81,921
Accounts payable and accrued expenses
37,032
42,365
53,974
Total liabilities
698,225
568,147
631,924
Shareholders' equity
353,923
439,480
424,427
Total liabilities and shareholders' equity
$
1,052,148
$
1,007,627
$
1,056,351
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED STATISTICS
(unaudited and in thousands, except percentages and branches)
Three months ended March 31,
Twelve months ended March 31,
2026
2025
2026
2025
Gross loans receivable
$
1,278,988
$
1,225,636
$
1,278,988
$
1,225,636
Average gross loans receivable (1)
1,357,198
1,324,086
1,305,870
1,300,782
Net loans receivable (2)
953,924
916,316
953,924
916,316
Average net loans receivable (3)
1,013,424
987,890
971,370
965,331
Expenses as a percentage of total revenue:
Provision for credit losses
20.7
%
20.0
%
32.2
%
30.0
%
General and administrative
45.9
%
39.9
%
51.5
%
42.7
%
Interest expense
7.1
%
6.8
%
8.4
%
7.6
%
Operating income as a % of total revenue (4)
33.4
%
40.1
%
16.3
%
27.4
%
Loan volume (5)
675,460
553,357
2,989,614
2,714,988
Net charge-offs as percent of average net loans receivable on an annualized basis
18.7
%
18.5
%
18.5
%
17.5
%
Return on average assets (trailing 12 months)
3.3
%
8.5
%
3.3
%
8.5
%
Return on average equity (trailing 12 months)
9.0
%
21.0
%
9.0
%
21.0
%
Branches opened or acquired (merged or closed), net
(4
)
(11
)
(15
)
(24
)
Branches open (at period end)
1,009
1,024
1,009
1,024
_______________________________________________________
(1) Average gross loans receivable is determined by averaging month-end gross loans receivable over the indicated period.
(2) Net loans receivable is defined as gross loans receivable less unearned interest and deferred fees.
(3) Average net loans receivable is determined by averaging month-end gross loans receivable less unearned interest and deferred fees over the indicated period.
(4) Operating income is computed as total revenues less provision for credit losses and general and administrative expenses.
(5) Loan volume includes all loan balances originated by the Company. It does not include loans purchased through acquisitions.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260430038975/en/
John L. Calmes, Jr.
Executive VP, Chief Financial & Strategy Officer, and Treasurer
(864) 298-9800
Original: World Acceptance Corporation Reports Fiscal 2026 Fourth Quarter Results
US Market News
4月前
World Acceptance Corporation Reports Fiscal 2026 Third Quarter ResultsJanuary 27, 2026 12:30 PM
Business Wire
GREENVILLE, S.C. (January 27, 2026) - World Acceptance Corporation (NASDAQ: WRLD) today reported financial results for its third quarter of fiscal 2026.
Third fiscal quarter highlights
Following the pandemic, the Company made the strategic decision to tighten underwriting standards dramatically in an effort to manage conservatively through the uncertainty and improve the credit quality of our portfolio. One consequence of this decision was that our outstanding balances decreased each year from fiscal 2023 to fiscal 2025. During fiscal 2025, we made the decision to resume a strategy of targeted growth in the portfolio.
As a result, we are pleased to report that for the second quarter in a row, we grew our outstanding loans year over year and in the third quarter of this fiscal year, our balances increased 1.5% as compared to the same quarter last fiscal year. Excluding acquisitions, our organic growth was up 2.5% year over year. More importantly, the unique customer base increased 4.1% as compared to the same quarter last fiscal year, the largest growth and largest customer base we've had since fiscal 2022. To reverse the trend after several years of declining balances and still maintain high credit quality, we targeted more high credit quality new customers and as a result new customers as a percent of the portfolio has increased from 6.4% of the portfolio as of September 30, 2024, to 9.9% as of December 31, 2025. While these new customers continue to perform well, new customers carry a substantially higher reserve for loan losses under our allowance methodology than existing customers.
As a result of an increased proportion of the portfolio being new customers, we were required to rebuild our allowance substantially to account for the resumption of our targeted growth strategy. To put this into perspective, our provision for credit losses exceeded our net charge-offs by $4.9 million in the fiscal third quarter and $19.3 million for the nine months ended December 31, 2025.
We expect that the investments we made in our portfolio this year will begin to pay off towards the next fiscal year as we continue our targeted growth with fewer new customers as a percent of the mix. We expect lower charge-offs and reserve rates and improved profitability as the new customers gain tenure in the portfolio and additional growth is more widely dispersed.
Highlights from the third quarter include:
Interest, fee, and insurance income increased $3.6 million, or 2.7%, including a 84 basis point yield increase, compared to the same quarter in the prior year;
Increased customer base 4.1% during the 12 month period ended December 31, 2025, compared to the same period in the prior fiscal year;
Increased gross loans outstanding 1.5% from December 31, 2024;
Increased loan origination volume for new customers 16.6% and refinance customers 8.0% compared to the same quarter in the prior fiscal year;
Decreased loans 0-60 days past due on a recency basis from 20.0% as of December 31, 2024, to 18.1% as of December 31, 2025; and
Decreased loans 60 days or more past due on a recency basis from 5.7% as of December 31, 2024, to 5.6% as of December 31, 2025.
Portfolio results
Gross loans outstanding were $1.40 billion as of December 31, 2025, a 1.5% increase from the $1.38 billion of gross loans outstanding as of December 31, 2024. This represents a substantial improvement from shrinking 4.0% year over year as of March 31, 2025.
During the most recent quarter, our new and current customer borrowing increased when compared to the same quarter of fiscal year 2025. New and refinanced customer loan volume increased 16.6% and 8.0%, respectively, compared to the same quarter of fiscal year 2025. Our customer base increased by 4.1% during the twelve-month period ended December 31, 2025, compared to an increase of 3.7% for the comparable period ended December 31, 2024. During the quarter ended December 31, 2025, the number of unique borrowers in the portfolio increased by 4.2%, compared to an increase of 6.2% during the quarter ended December 31, 2024.
The following table includes the volume of gross loan origination balances, excluding tax advance loans, by customer type for the following comparative quarterly periods:
Q3 FY 2026
Q3 FY 2025
Q3 FY 2024
New Customers
$66,853,712
$57,332,913
$46,768,269
Former Customers
$107,454,807
$109,982,248
$96,582,426
Refinance Customers
$658,594,065
$609,851,426
$600,866,594
As of December 31, 2025, the Company had 1,013 open branches. For branches open at least twelve months, same store gross loans increased 2.5% in the twelve-month period ended December 31, 2025, compared to a 0.2% decrease for the twelve-month period ended December 31, 2024. For branches open throughout both periods, the customer base over the twelve-month period ended December 31, 2025, increased 4.8%, compared to an increase of 4.9% for the twelve-month period ended December 31, 2024.
Three-month financial results
The third quarter's $0.9 million net loss was a $14.3 million decrease from net income of $13.4 million for the same quarter of the prior year. Net loss per diluted share was $0.19 in the third quarter of fiscal 2026, as compared to net income per diluted share of $2.45 for the same quarter of the prior year. The third quarter included $5.4 million in share based compensation expense, which is a $5.0 million increase compared to the same quarter of the prior year. Net loss was also negatively impacted by an increase in provision for credit losses, largely related to our new loan growth. However, we expect solid returns on our fiscal 2025 and fiscal 2026 originations given early payment performance and yield.
Total revenues for the third quarter of fiscal 2026 increased to $141.3 million, a 1.9% increase from $138.6 million for the same quarter of the prior year. Interest and fee income increased 2.9%, from $122.4 million in the third quarter of fiscal 2025 to $126.0 million in the third quarter of fiscal 2026. Insurance income remained relatively flat at $12.5 million in the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025. The large loan portfolio decreased from 48.2% of the overall portfolio as of December 31, 2024, to 43.5% as of December 31, 2025. Interest and insurance yields for the quarter ended December 31, 2025, increased 84 basis points as compared to the quarter ended December 31, 2024. Other income decreased $1.0 million, or 25.5%, to $2.8 million in the third quarter of fiscal 2026, compared to $3.8 million in the third quarter of fiscal 2025.
The Company accrues for expected losses with a current expected credit loss ("CECL") methodology, which requires us to create a provision for credit losses on the day we originate the loan. The provision for credit losses increased $7.3 million to $51.4 million, from $44.1 million when comparing the third quarter of fiscal 2026 to the third quarter of fiscal 2025. The table below itemizes the key components of the CECL allowance and provision impact during the quarter.
CECL Allowance and Provision (Dollars in millions)
Q3 FY 2026
Q3 FY 2025
Difference
Reconciliation
Beginning Allowance - September 30
$117.8
$114.5
$3.3
Change due to Growth
$7.7
$7.6
$0.1
$0.1
Change due to Expected Loss Rate on Performing Loans
$(2.0)
$(5.6)
$3.6
$3.6
Change due to 90 day past due
$(0.9)
$(0.3)
$(0.6)
$(0.6)
Ending Allowance – December 31
$122.6
$116.2
$6.4
$3.1
Net Charge-offs
$46.6
$42.4
$4.2
$4.2
Provision
$51.4
$44.1
$7.3
$7.3
Note: The change in allowance for the quarter plus net charge-offs for the quarter equals the provision for the quarter (see above reconciliation).
The provision was negatively impacted by an increase in net charge-offs and growth in new customers during the quarter. Our 0-5 month customers increased as a percentage of the portfolio from 8.6% as of September 30, 2025, to 9.9% as of December 31, 2025. This led to an increase in the overall expected loss rates of the portfolio during the quarter.
Net charge-offs for the quarter increased $4.2 million, from $42.4 million in the third quarter of fiscal 2025, to $46.6 million in the third quarter of fiscal 2026. Net charge-offs as a percentage of average net loans receivable on an annualized basis increased to 18.7% in the third quarter of fiscal 2026 from 17.2% in the third quarter of fiscal 2025.
Accounts 61 days or more past due decreased to 5.6% on a recency basis at December 31, 2025, compared to 5.7% at December 31, 2024. Our allowance for credit losses as a percent of net loans receivable was 11.8% at December 31, 2025, compared to 11.4% at December 31, 2024. Recency delinquency on accounts 0 to 60 days past due decreased from 20.0% at December 31, 2024, to 18.1% at December 31, 2025.
The table below has been updated to reflect the customer tenure-based methodology, which aligns with our CECL methodology and illustrates changes in portfolio weighting.
Gross Loan Balance By Customer Tenure at Origination
As of
Less Than 2 Years
More Than 2 Years
Total
12/31/2020
$413,509,916
$851,073,804
$1,264,583,720
12/31/2021
$527,433,398
$1,078,703,853
$1,606,137,251
12/31/2022
$421,291,725
$1,132,819,599
$1,554,111,324
12/31/2023
$315,059,832
$1,085,605,652
$1,400,665,484
12/31/2024
$310,926,501
$1,070,584,174
$1,381,510,675
12/31/2025
$364,031,807
$1,037,006,479
$1,401,038,286
Year-Over-Year Growth (Decline) in Gross Loan Balance by Customer Tenure at Origination
12 Month Period Ended
Less Than 2 Years
More Than 2 Years
Total
12/31/2020
$(76,430,390)
$(31,803,438)
$(108,233,828)
12/31/2021
$113,923,482
$227,630,049
$341,553,531
12/31/2022
$(106,141,673)
$54,115,746
$(52,025,927)
12/31/2023
$(106,231,893)
$(47,213,947)
$(153,445,840)
12/31/2024
$(4,133,331)
$(15,021,478)
$(19,154,809)
12/31/2025
$53,105,306
$(33,577,695)
$19,527,611
Portfolio Mix by Customer Tenure at Origination
As of
Less Than 2 Years
More Than 2 Years
12/31/2020
32.7%
67.3%
12/31/2021
32.8%
67.2%
12/31/2022
27.1%
72.9%
12/31/2023
22.5%
77.5%
12/31/2024
22.5%
77.5%
12/31/2025
26.0%
74.0%
General and administrative (“G&A”) expenses increased $10.8 million, or 16.1%, to $78.1 million in the third quarter of fiscal 2026, compared to $67.2 million in the same quarter of the prior fiscal year. As a percentage of revenues, G&A expenses increased from 48.5% during the third quarter of fiscal 2025, to 55.3% during the third quarter of fiscal 2026. G&A expenses per average open branch increased by 19.1%, when comparing the third quarter of fiscal 2026 to the third quarter of fiscal 2025.
Personnel expense increased $10.2 million, or 24.9%, during the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025. Salary expense increased approximately $2.8 million, or 8.7%, during the quarter ended December 31, 2025, compared to the quarter ended December 31, 2024. Our headcount as of December 31, 2025, increased 10.2% compared to December 31, 2024. Benefit expense increased approximately $0.8 million, or 10.1%, when comparing the quarterly periods ended December 31, 2025 and 2024. Incentive expense increased $6.9 million in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. The increase in incentive expense is primarily due to a $5.0 million increase in share based compensation expense. Share based compensation expense increased due to share grants in December of 2024 and June of 2025. There was also a significant increase in field level incentives. Over the last several months we have increased headcount in the field to further improve branch level performance. We expect a 3-5% reduction in headcount moving forward as we right size our staffing levels.
Occupancy and equipment expense increased $0.1 million, or 1.2%, when comparing the quarterly periods ended December 31, 2025 and 2024.
Advertising expense decreased $0.7 million, or 15.5%, in the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025 due to increased efficiency in our customer acquisition programs.
Interest expense for the quarter ended December 31, 2025, increased by $1.5 million, or 13.2%, from the corresponding quarter of the previous year. Interest expense primarily increased due to a 17.1% increase in average debt outstanding for the quarter, partially offset by a 2.8% decrease in the effective interest rate from 8.4% to 8.1%. The average debt outstanding increased from $534.0 million to $625.4 million, when comparing the quarters ended December 31, 2024 and 2025. The Company’s debt to equity ratio increased to 1.9:1 at December 31, 2025, compared to 1.3:1 at December 31, 2024. As of December 31, 2025, the Company had $677.2 million of debt outstanding.
Income tax benefit was $0.1 million in the third quarter of fiscal 2026, compared to income tax expense of $2.6 million in the third quarter of fiscal 2025.
Other key return ratios for the third quarter of fiscal 2026 included a 4.0% return on average assets and a return on average equity of 10.6% (both on a trailing twelve-month basis).
The Company repurchased 102,559 shares, or 2.1% of its outstanding common stock, at an aggregate purchase price of approximately $15.0 million during the third quarter of fiscal 2026. This is in addition to repurchases of 473,476 shares during the first half of fiscal 2026 at an aggregate purchase price of approximately $79.6 million. The Company has repurchased 11.0% of its outstanding shares fiscal year to date. As of December 31, 2025, the Company had approximately $18.4 million in aggregate remaining repurchase capacity under its current share repurchase program and $61.1 million in aggregate remaining repurchase capacity under the terms of its revolving credit facility. The Company repurchased 400,617 shares during fiscal 2025 at an aggregate purchase price of approximately $54.2 million. The Company had approximately 4.8 million common shares outstanding, excluding 181,469 unvested restricted shares, as of December 31, 2025.
Nine-month financial results
Net loss for the nine-months ended December 31, 2025, decreased $47.0 million to $1.5 million compared to net income of $45.5 million for the same period of the prior year. This resulted in a net loss of $0.30 per diluted share for the nine months ended December 31, 2025, compared to net income of $8.23 per diluted share in the prior-year period. Total revenues for the first nine-months of fiscal 2026 increased 2.2% to $408.2 million, compared to $399.6 million during the corresponding period of the previous year due to an increase in loans outstanding. Annualized net charge-offs as a percent of average net loans increased from 17.1% during the first nine-months of fiscal 2025 to 18.4% for the first nine-months of fiscal 2026.
About World Acceptance Corporation (World Finance)
Founded in 1962, World Acceptance Corporation (NASDAQ: WRLD), is a people-focused finance company that provides personal installment loan solutions and personal tax preparation and filing services to over one million customers each year. Headquartered in Greenville, South Carolina, the Company operates more than 1,000 community-based World Finance branches across 16 states. The Company primarily serves a segment of the population that does not have ready access to credit; however, unlike many other lenders in this segment, we strive to work with our customers to understand their broader financial pictures, ensure they have the ability and stability to make payments, and help them achieve their financial goals. For more information, visit www.loansbyworld.com.
Third quarter conference call
The senior management of World Acceptance Corporation will be discussing these results in its quarterly conference call to be held at 10:00 a.m. Eastern Time today. A simulcast of the conference call will be available on the Internet at https://event.choruscall.com/mediaframe/webcast.html?webcastid=CbIofLwS. The call will be available for replay on the Internet for approximately 30 days.
During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end. The Company’s responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been disclosed previously.
Cautionary Note Regarding Forward-looking Information
This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, that represent the Company’s current expectations or beliefs concerning future events. Statements other than those of historical fact, as well as those identified by words such as “anticipate,” “estimate,” intend,” “plan,” “expect,” “project,” “believe,” “may,” “will,” “should,” “would,” “could,” “probable” and any variation of the foregoing and similar expressions are forward-looking statements. Such forward-looking statements are inherently subject to risks and uncertainties. The Company’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important 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, including pursuant to policies of the new U.S. administration; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that is or may be exercised by regulators, including, but not limited to, U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory examinations, proceedings and litigation; employee misconduct or misconduct by third parties; uncertainties associated with management turnover and the effective succession of senior management; media and public characterization of consumer installment loans; labor unrest; the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported consolidated financial statements or necessitate material delays or changes in the issuance of the Company’s audited consolidated financial statements; the Company's assessment of its internal control over financial reporting; changes in interest rates; the impact of inflation; risks relating to the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net charge-offs, the loss of key personnel, integration or migration issues, the failure to achieve anticipated synergies, increased costs of servicing, incomplete records, and retention of customers; risks inherent in making loans, including repayment risks and value of collateral; cybersecurity threats or incidents, including the potential or actual misappropriation of assets or sensitive information, corruption of data or operational disruption and the cost of the associated response thereto; our dependence on debt and the potential impact of limitations in the Company’s amended revolving credit facility or other impacts on the Company's ability to borrow money on favorable terms, or at all; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquency and charge-offs); the impact of extreme weather events and natural disasters; 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, 2025, as filed with the 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. The Company is also not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet services.
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
Three months ended December 31,
Nine months ended December 31,
2025
2024
2025
2024
Revenues:
Interest and fee income
$
125,973
$
122,390
$
360,234
$
347,457
Insurance and other income, net
15,279
16,242
47,936
52,113
Total revenues
141,252
138,632
408,170
399,570
Expenses:
Provision for credit losses
51,423
44,103
151,780
136,191
General and administrative expenses:
Personnel
51,319
41,075
145,070
99,805
Occupancy and equipment
12,441
12,293
36,046
36,794
Advertising
3,757
4,448
8,226
8,926
Amortization of intangible assets
777
938
2,417
2,903
Other
9,763
8,469
28,626
26,564
Total general and administrative expenses
78,057
67,223
220,385
174,992
Interest expense
12,786
11,294
36,758
31,520
Total expenses
142,266
122,620
408,923
342,703
Income (loss) before income taxes
(1,014
)
16,012
(753
)
56,867
Income tax expense (benefit)
(102
)
2,624
760
11,404
Net income (loss)
$
(912
)
$
13,388
$
(1,513
)
$
45,463
Net income (loss) per common share, diluted
$
(0.19
)
$
2.45
$
(0.30
)
$
8.23
Weighted average diluted shares outstanding
4,759
5,464
5,025
5,527
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
December 31, 2025
March 31, 2025
December 31, 2024
ASSETS
Cash
$
9,448
$
4,714
$
10,304
Gross loans receivable
1,402,316
1,225,636
1,381,462
Less:
Unearned interest, insurance and fees
(366,582
)
(309,320
)
(361,444
)
Allowance for credit losses
(122,649
)
(103,347
)
(116,111
)
Loans receivable, net
913,085
812,969
903,907
Restricted cash
32,767
5,016
5,279
Income taxes receivable
16,370
—
7,188
Operating lease right-of-use assets, net
72,273
76,235
78,857
Property and equipment, net
17,850
19,766
20,551
Deferred income taxes, net
32,106
33,291
31,967
Other assets, net
36,131
40,871
36,775
Goodwill
7,371
7,371
7,371
Intangible assets, net
4,978
7,394
8,301
Total assets
$
1,142,379
$
1,007,627
$
1,110,500
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Revolving Credit Facility
$
575,685
$
262,451
$
335,949
Warehouse Facility
101,548
—
—
Senior unsecured notes payable, net
—
184,418
223,910
Income taxes payable
—
223
—
Operating lease liability
74,694
78,690
81,207
Accounts payable and accrued expenses
38,850
42,365
41,264
Total liabilities
790,777
568,147
682,330
Shareholders' equity
351,602
439,480
428,170
Total liabilities and shareholders' equity
$
1,142,379
$
1,007,627
$
1,110,500
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED STATISTICS
(unaudited and in thousands, except percentages and branches)
Three months ended December 31,
Nine months ended December 31,
2025
2024
2025
2024
Gross loans receivable
$
1,402,316
$
1,381,462
$
1,402,316
$
1,381,462
Average gross loans receivable (1)
1,348,387
1,336,375
1,294,836
1,299,519
Net loans receivable (2)
1,035,734
1,020,018
1,035,734
1,020,018
Average net loans receivable (3)
998,690
987,833
960,838
961,767
Expenses as a percentage of total revenue:
Provision for credit losses
36.4
%
31.8
%
37.2
%
34.1
%
General and administrative
55.3
%
48.5
%
54.0
%
43.8
%
Interest expense
9.1
%
8.1
%
9.0
%
7.9
%
Operating income as a % of total revenue (4)
8.3
%
19.7
%
8.8
%
22.1
%
Loan volume (5)
832,849
777,197
2,314,154
2,161,632
Net charge-offs as percent of average net loans receivable on an annualized basis
18.7
%
17.2
%
18.4
%
17.1
%
Return on average assets (trailing 12 months)
4.0
%
7.5
%
4.0
%
7.5
%
Return on average equity (trailing 12 months)
10.6
%
19.2
%
10.6
%
19.2
%
Branches opened or acquired (merged or closed), net
—
(10
)
(11
)
(13
)
Branches open (at period end)
1,013
1,035
1,013
1,035
_______________________________________________________
(1) Average gross loans receivable is determined by averaging month-end gross loans receivable over the indicated period, excluding tax advances.
(2) Net loans receivable is defined as gross loans receivable less unearned interest and deferred fees.
(3) Average net loans receivable is determined by averaging month-end gross loans receivable less unearned interest and deferred fees over the indicated period, excluding tax advances.
(4) Operating income is computed as total revenues less provision for credit losses and general and administrative expenses.
(5) Loan volume includes all loan balances originated by the Company. It does not include loans purchased through acquisitions.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260127313882/en/
John L. Calmes, Jr.
Executive VP, Chief Financial & Strategy Officer, and Treasurer
(864) 298-9800
Original: World Acceptance Corporation Reports Fiscal 2026 Third Quarter Results
lucky, mydog
6年前
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 89489 / August 6, 2020
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 4158 / August 6, 2020
ADMINISTRATIVE PROCEEDING
File No. 3-19905
In the Matter of
World Acceptance
Corporation,
Respondent.
ORDER INSTITUTING CEASE-ANDDESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASEAND-DESIST ORDER
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate that ceaseand-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against World Acceptance Corporation (“WAC” or
“Respondent”).
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over it and the subject matter of these
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Ceaseand-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.
2
III.
On the basis of this Order and Respondent’s Offer, the Commission finds1
that:
Summary
1. This matter concerns violations of the anti-bribery, books and records, and internal
accounting controls provisions of the Foreign Corrupt Practices Act (“FCPA”) by World
Acceptance Corporation, a consumer loan company headquartered in Greenville, South Carolina.
The bribery scheme took place at WAC’s former wholly-owned subsidiary in Mexico, WAC de
Mexico, S.A. de C.V. (“WAC Mexico”), which paid approximately $4.1 million USD in bribes,
directly or through intermediaries, to Mexican government officials and union officials, from at
least December 2010 through June 2017 to obtain and retain business.
2. WAC failed to make and keep accurate books and records and failed to devise and
maintain a sufficient system of internal accounting controls necessary to detect and prevent these
bribe payments. The bribe payments were inaccurately recorded as legitimate “commission”
expenses in WAC’s books and records. WAC failed to implement sufficient internal accounting
controls over vendor management and accounts payable at WAC Mexico, failed to provide
reasonable assurances that WAC Mexico had implemented an FCPA policy and was adhering to it,
failed to provide FCPA training at WAC and WAC Mexico, and lacked sufficient entity level
controls over WAC Mexico. In addition, WAC management lacked the appropriate tone at the top
regarding internal audit and compliance, thereby undermining the effectiveness of those functions.
3. As a result of the bribery scheme, WAC was unjustly enriched by approximately
$18 million.
Respondent
4. World Acceptance Corporation is a consumer loan company, headquartered in
Greenville, South Carolina. WAC’s common stock is registered under Section 12(b) of the
Exchange Act, and trades on the NasdaqGS under ticker WRLD. WAC sold its wholly-owned
subsidiary, WAC Mexico, effective July 1, 2018. WAC currently does not have any foreign
subsidiaries, or conduct any business internationally.
1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding
on any other person or entity in this or any other proceeding.
3
Facts
The Bribery Scheme
5. WAC, through its former wholly-owned subsidiary, WAC Mexico, engaged in a
bribery scheme from at least December 2010 through June 2017, paying approximately $4.1
million USD ($64 million MXN) in bribes to obtain and retain business related to its Préstamos
Viva business line (“Viva”).
6. WAC Mexico had two lines of business, Préstamos Avance (“Avance”) and Viva.
Avance offered small loans directly to consumers, while Viva offered small loans to state and
federal government employees. Viva had less collection risk than Avance because government
employees had greater job security, and loan repayments were automatically deducted from the
government employee’s paycheck, collected by the unions, and sent to WAC Mexico. WAC
Mexico entered into at least 30 Viva contracts with government entities and/or worker unions
representing government employees, most of whom worked in healthcare and education. To
obtain Viva business and to ensure that loan repayments continued to be sent to WAC Mexico in a
timely manner, WAC Mexico paid monetary bribes to Mexican government officials and union
officials.
7. The Viva contracts were signed by government officials (e.g., the secretary of
health or education for a particular state government), and/or union officials (e.g. the general
secretary of a particular union). To enter into these contracts, WAC Mexico paid monetary bribes,
known internally as the “glove,” to Mexican government officials and union officials. During the
performance of these contracts, WAC Mexico also made ongoing payments, referred to as “royalty
payments,” “scholarship,” or “support,” to officials to ensure that loan repayments continued to be
sent to WAC Mexico in a timely manner. Regardless of who signed the contracts with WAC
Mexico, government officials were paid bribes to obtain or retain the ability to make loans to the
government employees under all of the contracts.
8. The $4.1 million in bribe payments to government officials and union officials were
paid in cash, a bank deposit into their bank account, or a bank deposit into the bank account of a
relative or friend of the official. WAC Mexico also hired third-party intermediaries to assist with
obtaining business, and make ongoing bribe payments to officials. These intermediaries kept a
small portion of the payments as their fee. One of WAC Mexico’s intermediaries flew to different
municipalities in Mexico with large bags of cash to pay officials. Employees at WAC Mexico
communicated with the intermediaries via email through servers located in the U.S.
9. Of the $4.1 million USD in payments, at least $1.5 million was paid to government
officials, $580,000 paid to union officials, and $480,000 paid to third party intermediaries who
used the funds to pay government officials and union officials. Due to the lack of appropriate
recordkeeping at WAC Mexico, it is unclear how the remaining $1.5 million in payments were
split between those made directly to government officials or union officials, or an intermediary
4
who used the funds to pay the officials.
WAC’s Inaccurate Books and Records and Insufficient Internal
Accounting Controls to Detect or Prevent Bribery
10. The bribe payments were inaccurately recorded as legitimate “commission”
expenses in WAC’s books and records. WAC and WAC Mexico lacked the internal accounting
controls sufficient to detect or prevent such payments. For example, WAC Mexico did not have a
vendor management system, did not maintain a master list of approved vendors, did not conduct
formal due diligence on new vendors, and did not have formal procedures or controls in place to
approve new vendors. These internal control failures over vendors allowed WAC Mexico to hire
third party intermediaries to pay bribes to government officials and union officials.
11. In addition, WAC Mexico did not have a sufficient accounts payable system.
Instead, manual checks were used for payment, which resulted in managers pre-signing blank
checks, making it impossible to enforce authorization limits in place over payments. Moreover,
WAC Mexico manually prepared a monthly spreadsheet that listed the checks paid that month, and
provided an expense category for each check. The payments made to government officials and
union officials were inaccurately categorized as “commission” expenses. WAC Mexico sent the
spreadsheet each month to WAC’s accounting department in Greenville, South Carolina without
invoices or backup support, and WAC failed to require such backup support. WAC then manually
coded each expense, including the “commission” expenses, for recording in WAC’s general ledger,
which was used to prepare WAC’s financial statements. Another example of the lack of controls
over accounts payable was the senior vice president of WAC Mexico approved check payments
with or without invoices, and starting in or about July 2014, WAC increased his authorization limit
to $1 million MXN (about $75,000 USD) to make payments related to any Viva contract.
12. WAC did not identify the high risk of bribery and corruption in Mexico and did not
implement sufficient internal accounting controls to address that risk. Although starting sometime
in 2013, WAC had an FCPA policy in its corporate compliance manual, there was no effective
formal monitoring, or internal controls in place, to ensure that WAC Mexico was adhering to that
policy. Moreover, neither WAC or WAC Mexico provided FCPA training to its personnel from at
least December 2010 through October 2017.
13. WAC also lacked entity level controls over WAC Mexico as a result of the lack of
oversight over personnel in Mexico.
14. Lastly, the tone at the top from WAC management did not support robust internal
audit and compliance functions, and undermined the effectiveness of those functions. For
example, in October 2015 the then-CEO of WAC terminated the vice president of internal audit
after he raised compliance concerns, including concerns about the lack of internal accounting
controls at WAC Mexico. The then-CEO then combined the internal audit function and the
compliance function into one department under one VP, had the VP report to her, and pressured
the VP to eliminate staffing and become more “bare-bones,” according to the VP. Prior to this
5
change, both vice presidents of internal audit and compliance had reported directly to the Board of
Directors and the Audit Committee. In November 2016, the then-CEO told the internal audit and
compliance VP that she would now report to the then-general counsel. Shortly thereafter, the VP
voiced concerns that the internal audit and compliance functions were not sound, and the thenCEO terminated her. The then-general counsel took over as the head of internal audit and
compliance, even though the general counsel had no prior audit or accounting experience. WAC’s
then-CEO also told the then-general counsel and an internal audit director that she did not care
whether WAC had a “world class [internal] audit function.”
15. After the bribery allegations came to light in March 2017, WAC’s management and
its independent audit firm reported in WAC’s FYE 2017 Form 10-K (ending March 31, 2017) that
WAC had material weaknesses in its Internal Control over Financial Reporting (“ICFR”) and, as a
result, WAC did not maintain effective ICFR. Specifically, WAC’s independent audit firm
identified the following material weaknesses: “control design gaps in [WAC’s] accounts payable
environment related to vendor management and payment processes in Mexico and in [WAC’s]
entity level control environment related to adherence to U.S. and foreign laws and regulations,
including the FCPA, and corporate governance of the Mexico operations.” WAC’s management
also identified the same material weaknesses.
Legal Standards and Violations
16. Under Section 21C(a) of the Exchange Act, the Commission may impose a ceaseand-desist order upon any person who is violating, has violated, or is about to violate any provision
of the Exchange Act or any rule or regulation thereunder, and upon any other person that is, was,
or would be a cause of the violation, due to an act or omission the person knew or should have
known would contribute to such violation.
17. As a result of the conduct described above regarding payments to government
officials, WAC violated Section 30A of the Exchange Act, which prohibits any issuer with a class
of securities registered pursuant to Section 12 of the Exchange Act, or any officer, director,
employee, or agent acting on behalf of such issuer, in order to obtain or retain business, from
corruptly giving or authorizing the giving of, anything of value to any foreign official for the
purposes of influencing the official or inducing the official to act in violation of his or her lawful
duties, or to secure any improper advantage, or to induce a foreign official to use his influence with
a foreign governmental instrumentality to influence any act or decision of such government or
instrumentality.
18. As a result of the conduct described above related to payments to government
officials and union officials, WAC violated Section 13(b)(2)(A) of the Exchange Act, which
requires every issuer with a class of securities registered pursuant to Exchange Act Section 12 to
make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and disposition of the assets of the issuer.
6
19. As a result of the conduct described above related to payments to government
officials and union officials, WAC violated Section 13(b)(2)(B) of the Exchange Act which
requires every issuer with a class of securities registered pursuant to Exchange Act Section 12 to
devise and maintain a system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s general or specific
authorization; (ii) transactions are recorded as necessary (I) to permit preparation of financial
statements in conformity with generally accepted accounting principles or any other criteria
applicable to such statements, and (II) to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
WAC’s Cooperation and Remedial Efforts
20. In determining to accept the Offer, the Commission considered remedial acts
promptly undertaken by WAC and cooperation afforded the Commission staff, including
facilitating witnesses traveling from Mexico to the U.S. for interviews. WAC’s remedial acts
included personnel changes made in late 2017 and early 2018, such as terminating the senior vice
president of WAC Mexico, and WAC’s CEO and general counsel (on terms previously
disclosed), and in mid-2018 WAC divested itself of WAC Mexico.
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent WAC’s Offer.
Accordingly, it is hereby ORDERED that:
A. Pursuant to Section 21C of the Exchange Act, WAC cease and desist from
committing or causing any violations and any future violations of Sections 30A, 13(b)(2)(A) and
13(b)(2)(B) of the Exchange Act.
B. WAC shall, within fourteen days of the entry of this Order, pay disgorgement of
$17,826,000, prejudgment interest of $1,900,000, and civil penalties of $2,000,000, for a total
payment of $21,726,000 to the Securities and Exchange Commission for transfer to the general
fund of the United States Treasury, subject to Section 21F(g)(3) of the Exchange Act. If timely
payment of disgorgement and prejudgment interest is not made, additional interest shall accrue
pursuant to SEC Rule of Practice 600. If timely payment of the civil penalty is not made,
additional interest shall accrue pursuant to 31 U.S.C. §3717.
Payment must be made in one of the following ways:
(1) Respondent may transmit payment electronically to the Commission, which
will provide detailed ACH transfer/Fedwire instructions upon request;
7
(2) Respondent may make direct payment from a bank account via Pay.gov
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or
(3) Respondent may pay by certified check, bank cashier’s check, or United
States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:
Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
Payments by check or money order must be accompanied by a cover letter identifying
WAC as a Respondent in these proceedings, and the file number of these proceedings; a copy of
the cover letter and check or money order must be sent to Charles Cain, FCPA Unit Chief,
Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington,
DC 20549.
C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be
treated as penalties paid to the government for all purposes, including all tax purposes. To
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor
Action, WAC shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any
award of compensatory damages by the amount of any part of Respondent’s payment of a civil
penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such a
Penalty Offset, Respondent agrees that WAC shall, within 30 days after entry of a final order
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of
the Penalty Offset to the Securities and Exchange Commission. Such a payment shall not be
deemed an additional civil penalty and shall not be deemed to change the amount of the civil
penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action”
means a private damages action brought against Respondent by or on behalf of one or more
investors based on substantially the same facts as alleged in the Order instituted by the
Commission in this proceeding.
By the Commission.
Vanessa A. Countryman
Secretary
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