Good morning, and welcome to World Acceptance Corporation's Third Quarter 2026 Earnings Conference Call. 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 call may contain 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 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 performance to differ from the expectations expressed or implied in such forward-looking statements are included in the paragraph discussion forward-looking statements in today's earnings press release and in the Risk Factors section of the corporation's most recent Form 10-Ks for the fiscal year ended 03/31/2025, 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, Chad Prashad, President and Chief Executive Officer.

Good morning. Thank you for joining our fiscal 2026 third quarter earnings call. There are a few important aspects of the portfolio to cover in more detail. While we originated 16% more in new customer volume during the quarter, we actually ended the quarter with 25% more outstanding ledger. Our active new customers than the same quarter of last year. And our new customers are, again, our riskiest customer segment. This 25% increase in the new customer outstanding portfolio required around an $8 million additional provision for this customer segment in the same quarter last year. The third quarter had the highest new customers since the same quarter of calendar 2021. Already, early performance indicates that these continue to be good investments in line with expectations. Compared to the prior high volume mark, of the 2021, the first pay defaults are already 19% lower relatively speaking. In addition, we continue to make credit box improvements on a regular basis. In some cases, we changes are due to credit performance in small credit and geographical pockets. But the majority of improvements in underwriting are to drive a faster return on the initial investment, and increase long term ROI with our most loyal customers. This is a long term investment that will continue to improve both credit performance as well as customer retention. When combined continue to improve long term yields. As we noted, yields improved 84 basis points year over year, as income has also improved. We expect this trend to continue due to improved rates in a few states, continued discipline with credit limits and underwriting, improving customer retention as longer tenured customers are also lower risk for us, and continued smart investments in our customer base and overall ledger. Our customer base has grown substantially around 5.4% organically year…

Thank you. We will now begin the question and answer session. And the first question today will come from Kyle Joseph with Stephens. Please go ahead.

Hey, good morning. Thanks for taking my questions. I totally get the dynamics of the portfolio growth and and particularly related to to new consumers. But just looking for an update on kind of the health of the underlying consumer aside from that. Obviously, there were concerns in the fall. Particularly related to the auto segment. But just any any trends you kinda seen in the consumer since then, and and then how you're thinking about the outlook in the tax refund season with all the headlines that the consumers are expected to get larger tax refunds.

Yeah. I would say from the overall consumer perspective, we haven't seen a degradation in in collections or in credit quality. There has been a I would say, a slight increase in demand There's also been a a significant decrease in our cost of acquisition for our higher credit quality new customers, which may be related to that. May not not really super sure on that one. But we haven't seen a significant change in our consumer behavior whether it's due to you know, tariffs or, you know, other expenses. On the the tax filing side, we are seeing definitely an increased demand in taxes and tax filings. We are expecting to see larger returns or larger refunds this year a lot of those are probably due to some of the tax law changes last year that would affect our customer base in particular We have also changed marketing sort of last minute early in January, late December to to really attract customers who are gonna be in some of those segments, customers who are either paid but through tips so there's a you know, might be experiencing refunds this season or other sort of changes in the tax code from last year. But on the tax filing side, we we do remain optimistic this will be a very strong tax year for us.

Got it. And then, yes, just shifting to G and A. The growth there, get the sense it was largely incentive comp and and, you know, the majority of that was stock based comp. I I think a a couple calls ago, you gave us kind of a a little bit of a schedule in terms of, you know, how long it would be elevated. Can you just, you know, walk us through if there's any sort of if it should be elevated in the coming quarters or how you would expect the personal line personnel line item to to trend coming first.

Yeah. So you you you should start to see that incentive line come down starting with Q4 There was a share based comp grant last December has been fully expensed to this point. And there'll be another sort of cliff in December year. And but also, the sort of the field level incentives could start to tighten a little bit as we move forward as well. So I do expect to see some some decent decreases in in that incentive comp expense going forward.

Got it. That's it for me. Thanks for taking my questions.

And the next question will come from Guy Riegel with Ingalls and Snyder. Please go ahead.

Hi, guys. Question, in the report earnings report, you had talked about an increase in headcount in the field level offices branch offices. And then and you spoke about deciding to have a reduction in headcount going forward of of 3% to 5% Why the increase? And then why the decision to decrease?

Yeah. Great question. So first, the decision to increase was building up a quality team in anticipation of some reduction in some underperforming team members and also some underperforming parts of the company. So really, it's it's building up in advance of turnover. We've done it across, I would say, roughly 80% of the company and about 50% of that was done very quickly. There's still sort of a a lagging period where in anticipation of of turnover or some underperforming team members, we're we're holding on to some of our underperforming team members a little longer than anticipated as we're building up the base there, if that makes sense. So really, it's just building up in anticipation of that turnover. So should expect to see the reduction pretty quickly within this quarter.

I see. And the underperformers, is it related to their ability not to collect or just any color on that?

Yeah. It's it's it's related to a number of things. One of those is their ability not to collect. I think just just overall performance in general, engagement, that sort of thing in in the current operating environment.

Okay. And one last question. I don't know if you have a crystal you don't have a crystal ball, but the headlines related to a 10% cap on credit cards. Was any of that related to underwriting? I mean, you guys underwrite your the loans you you make. Was there any discussion about your area

So as far as I know, there's been no discussions how that would relate to installment loans. But I would imagine with a 10% rate cap with the current cost of capital in the environment, there would be a severe reduction in access to credit cards. And, you know, my rough estimate would be somewhere around the seven fifty to seven eighty credit score. Anyone who's below that would probably see a sort severe reduction in their access to credit. I think it would it would definitely drive up demand for our product or for installment loans in general. But you know, aside from that, in in the our own credit card portfolio currently is still very small. I believe we currently have expanded with active customers, and I believe it's 46 states. But, again, we're we're still very small in general, just a few million dollars outstanding. So we we can pivot very quickly on that end if needed, but I I don't think for now there's there's really any serious implications negatively for our major portfolio.

Great. Okay. Thanks, guys.

This will conclude our question and answer session. I would like to turn the conference back over to Mr. Prashad for any closing remarks.

Yes. Thank you for joining our third quarter fiscal 2026 earnings call. And this concludes the earnings call. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.