WORLD ACCEPTANCE CORP

World Acceptance Corporation operates a small-loan consumer finance (installment loan) business in sixteen states as of March 31, 2026 ¹. The traditional installment loan industry is a highly fragmented segment of the consumer lending industry, with the majority of participants being independent operators with generally less than 100 branches ². Installment loan finance companies generally make loans to individuals of less than $2,000 with maturities of less than 18 months ³, while commercial banks, credit unions and some other consumer finance businesses typically make loans of more than $5,000 with maturities of greater than one year ⁴. As a result of their higher credit standards, commercial banks and credit unions typically charge lower interest rates and fees and experience lower delinquency and charge-off rates than small-loan consumer finance companies ⁵. The Company believes that competition between small-loan consumer finance companies occurs primarily on the basis of the strength of customer relationships, customer service and reputation in the local community ⁶.

The Company is one of the nation's largest small-loan consumer finance companies ⁷. The majority of the Company's competitors are independent operators with generally less than 100 branches ⁸. The Company believes that its relatively large size affords it a competitive advantage over smaller companies by increasing its access to, and reducing its cost of, capital ⁹. The Company believes that online lending could be affecting the consumer lending market within which it operates, though it currently appears online lenders are marketing to a different customer segment than that of the Company's primary customers ¹⁰. Competition from community banks and credit unions is limited because they typically do not make loans of less than $5,000 ¹¹.

The Company generates revenue primarily through interest and fee income from consumer installment loans, with such income accounting for 82.9% ¹², 82.4% ¹³, and 81.8% ¹⁴ of total revenues in fiscal years 2026, 2025, and 2024, respectively. The Company offers traditional installment loans generally between $400 and $5,300 ¹⁵, with the average loan origination being $2,015 ¹⁶ in fiscal 2026. The Company generally serves individuals with limited access to other sources of consumer credit such as banks, credit unions, other consumer finance businesses and credit card lenders ¹⁷. The Company also offers income tax return preparation services to its loan customers and other individuals ¹⁸. The Company's loans are payable in fully-amortizing monthly installments with terms generally from 6 to 15 months and are prepayable at any time without penalty ¹⁹.

The Company offers small loans with minimum origination of $150 ²⁰ and maximum origination of $2,450 ²¹, with terms from 3 ²² to 30 ²³ months. Large loans have minimum origination of $2,500 ²⁴ and maximum origination of $25,200 ²⁵, with terms from 6 ²⁶ to 60 ²⁷ months. Tax advance loans have minimum origination of $500 ²⁸ and maximum origination of $7,000 ²⁹, with terms from 8 ³⁰ to 35 ³¹ months. As of March 31, 2026, annual percentage rates applicable to gross loans receivable as defined by the Truth in Lending Act were as follows: $489,284,284 ³² or 38.3% ³³ of total gross loans receivable at 0 to 36%, and $789,704,039 ³⁴ or 61.7% ³⁵ at greater than 36%. The average annual percentage rate of the portfolio was 51.4% ³⁶ as of March 31, 2026. The Company, as an agent for an unaffiliated insurance company, markets and sells credit life, credit accident and health, credit property and auto, unemployment, and accidental death and dismemberment insurance in connection with its loans in selected states ³⁷. The Company has a wholly-owned, captive insurance subsidiary that reinsures a portion of the credit insurance sold ³⁸. In fiscal 2026, the captive insurance subsidiary reinsured approximately 9.0% ³⁹ of the credit insurance sold by the Company and contributed approximately $2.0 million ⁴⁰ to the Company's total revenue. The Company also offers automobile club memberships as an agent for an unaffiliated automobile club to its borrowers in fourteen states ⁴¹. The Company offers income tax return preparation and electronic filing services in all but a few of its branches ⁴², preparing approximately 91,000 ⁴³, 82,000 ⁴⁴, and 83,000 ⁴⁵ returns in fiscal years 2026, 2025, and 2024, respectively. Net revenue generated from this program during fiscal 2026, 2025, and 2024 amounted to approximately $40.4 million ⁴⁶, $36.5 million ⁴⁷, and $29.1 million ⁴⁸, respectively.

The Company's loan portfolio is composed of small loans of $700,310,192 ⁴⁹, large loans of $572,155,010 ⁵⁰, and tax advance loans of $6,523,121 ⁵¹ as of March 31, 2026. As of March 31, 2026, the Company had 1,009 ⁵² branches in 16 states, with over 100 branches located in each of Texas and Georgia ⁵³. The Company's four largest states accounted for approximately 51% ⁵⁴ of the Company's gross loans receivable balance as of March 31, 2026. The Company's loan volume was 2,989,614 ⁵⁵ in fiscal 2026. For fiscal 2026, 2025, and 2024, the percentages of the Company's loan originations that were refinancings of existing loans were 65.8% ⁵⁶, 65.7% ⁵⁷, and 67.3% ⁵⁸, respectively. Refinancings of delinquent loans represented 1.2% ⁵⁹, 1.0% ⁶⁰, and 1.3% ⁶¹ of the Company's loan volume in fiscal 2026, 2025, and 2024, respectively. Approximately 16.9% ⁶², 17.7% ⁶³, and 18.8% ⁶⁴ of the Company's loans were generated through the origination of new loans to previous customers in fiscal 2026, 2025, and 2024, respectively.

During fiscal 2026, the Company did not have any acquisitions and merged 15 ⁶⁵ branches into other existing branches due to their inability to generate sufficient returns or for efficiency reasons. On September 3, 2025, in accordance with its share repurchase program, the Company repurchased 347,064 ⁶⁶ shares of its common stock for $60.0 million ⁶⁷ in a privately negotiated transaction from certain affiliates of Prescott General Partners, LLC at a price per share of $172.88 ⁶⁸. On February 11, 2026, the Board of Directors authorized the Company to repurchase up to $50.0 million ⁶⁹ of the Company's outstanding common stock, inclusive of the amount that remained available for repurchase under prior repurchase authorizations. As of March 31, 2026, the Company had $12.2 million ⁷⁰ in aggregate remaining repurchase capacity under its current share repurchase program. On July 22, 2025, an irrevocable notice of full redemption of the Notes was delivered, calling for the redemption of all outstanding Notes on August 29, 2025 at a redemption price equal to 101.75% ⁷¹ of the principal amount, plus accrued and unpaid interest. The aggregate principal amount of the Notes redeemed was $168.3 million ⁷². As a result of the Redemption, the Company recognized an additional $3.7 million ⁷³ in interest expense, for which $3.0 million ⁷⁴ represents an early redemption premium and $0.7 million ⁷⁵ represents the write-off of the remaining unamortized debt issuance costs. During fiscal 2026 and prior to the Redemption, the Company repurchased and extinguished $17.0 million ⁷⁶ of its Notes on the open market for a reacquisition price of $17.0 million ⁷⁷. On September 29, 2025, the Company and its wholly-owned subsidiary, WFC Receivables I, LLC, an SPE, entered into a Credit Agreement for a $175.0 million ⁷⁸ warehouse facility.

Net income for fiscal 2026 was $34.6 million ⁷⁹, a 61.2% ⁸⁰ decrease from the $89.2 million ⁸¹ earned during fiscal 2025. Total revenues increased $21.0 million ⁸², or 3.7% ⁸³, to $585.2 million ⁸⁴ in fiscal 2026, from $564.2 million ⁸⁵ in fiscal 2025. The provision for credit losses during fiscal 2026 increased by $19.4 million ⁸⁶, or 11.5% ⁸⁷, from the previous year. General and administrative expenses during fiscal 2026 increased by $60.9 million ⁸⁸, or 25.3% ⁸⁹, over the previous fiscal year. General and administrative expenses as a percent of total revenues increased to 51.6% ⁹⁰ in fiscal 2026 from 42.7% ⁹¹ in fiscal 2025. Interest expense increased by $6.7 million ⁹², or 15.8% ⁹³, during fiscal 2026 when compared to the previous fiscal year. Net cash provided by operating activities for fiscal year 2026 was $259.4 million ⁹⁴.

The Company plans to enter into new markets through opening new branches and acquisitions as opportunities arise ⁹⁵. The Company believes it can continue to improve its gross loans receivable growth rates through acquisitions, improved marketing processes, and analytics ⁹⁶. In fiscal 2027, the Company may open or acquire new branches in its existing market areas or commence operations in new states where it believes demographic profiles and state regulations are attractive ⁹⁷. The Company's ability to continue existing operations and expand its operations in existing or new states is dependent upon, among other things, laws and regulations that permit the Company to operate its business profitably and its ability to obtain necessary regulatory approvals and licenses ⁹⁸. The Company's expansion is also dependent upon its ability to identify attractive locations for new branches and to hire suitable personnel to staff, manage, and supervise new branches ⁹⁹.

The Company believes that attractive opportunities to acquire new branches or receivables from its competitors or to acquire branches in communities not currently served by the Company will continue to become available as conditions in local economies and the financial circumstances of owners change ¹⁰⁰. The Company expects to repurchase shares in fiscal 2027; however, the timing and actual number of shares of common stock repurchased will depend on a variety of factors, including the stock price, corporate and regulatory requirements, restrictions under the revolving credit facility and other market and economic conditions ¹⁰¹. The Company continues to believe stock repurchases are a viable component of the Company's long-term financial strategy and an excellent use of excess cash when the opportunity arises ¹⁰².

The Company did not provide specific margin or cost outlook for fiscal 2027 in the filing.

During fiscal 2026, the Company's human capital efforts were focused on accelerating the transformation of its technology for workforce management through investments in upgraded systems and processes, and continuing to increase its agility to meet the quickly changing needs of the business ¹⁰³. The Company utilizes an enhanced training tool, which provides continuous, real-time, online training to all locations ¹⁰⁴. As of March 31, 2026, the Company employed 2,907 ¹⁰⁵ full and part-time employees, 260 ¹⁰⁶ of whom were corporate employees based out of the main corporate office in Greenville, South Carolina.

As of March 31, 2026, subject to further approval from the Board of Directors, the Company could repurchase approximately $59.9 million ¹⁰⁷ of shares under the terms of its debt facilities. The Company's revolving credit agreement allows it to borrow up to $640.0 million ¹⁰⁸, with an accordion feature permitting the maximum aggregate commitments to increase to $790.0 million ¹⁰⁹ provided that certain conditions are met. The warehouse facility allows the Company to borrow up to $175.0 million ¹¹⁰. The Company did not disclose specific R&D spending or capital expenditure plans for fiscal 2027.

The Company's financial performance is highly dependent upon the business and economic environments in the markets where it operates and in the United States as a whole ¹¹¹. Many of the Company's customers are primarily non-prime borrowers, who have historically been more likely to be affected by adverse macro-economic factors than prime borrowers ¹¹². The U.S. economy is undergoing a period of significant uncertainty, including with respect to trade and tariffs and the possibility that significant inflationary pressures will develop ¹¹³. During an economic downturn or recession, demand for credit products often decreases and credit losses in the financial services industry generally increase ¹¹⁴. Additionally, during an economic downturn, the Company's loan servicing costs and collection costs may increase ¹¹⁵.

The Company is subject to extensive regulation, supervision, and licensing under various federal and state laws and regulations, as well as local ordinances ¹¹⁶. Any federal legislative or regulatory action that severely restricts or prohibits the provision of small-loan consumer credit and similar services on terms substantially similar to those currently provided would, if enacted, have a material adverse impact on the Company's business, prospects, results of operations, and financial condition ¹¹⁷. Any federal law that would impose a maximum annualized credit rate cap in the range of 36% on the Company's products would, if enacted, almost certainly eliminate the Company's ability to continue its current operations ¹¹⁸. The Company has experienced significant management transitions in the past six months, including the resignation of the former President and Chief Executive Officer, appointment of an interim President and Chief Executive Officer, retirement of the Executive Vice President and Chief Branch Operations Officer and appointment of a new Executive Vice President and Chief Operating Officer ¹¹⁹.

The Company's lending activities risk the potential of borrower default, as its customers generally do not qualify for credit from traditional sources and the historical delinquency and default experience on its loans may be higher than those experienced by traditional financial products ¹²⁰. The net charge-off ratio was 18.5% ¹²¹ for fiscal 2026, and accounts that were 91 days or more past due represented 3.5% ¹²² of the loan portfolio on a recency basis at March 31, 2026. Any federal law that would impose a maximum annualized credit rate cap in the range of 36% on the Company's products would, if enacted, almost certainly eliminate the Company's ability to continue its current operations ¹²³. The Company's debt outstanding was $587.2 million ¹²⁴ as of March 31, 2026, with a total debt-to-equity ratio of approximately 1.7 to 1.0 ¹²⁵, and the Company depends to a substantial extent on borrowings under its revolving credit agreement and warehouse facility to fund its liquidity needs ¹²⁶. As of March 31, 2026, based on filings made with the SEC, Prescott General Partners, LLC and its affiliates beneficially owned approximately 46.3% ¹²⁷ of the Company's common stock, enabling them to significantly influence matters presented to shareholders ¹²⁸.

Management's message emphasizes that the Company's financial performance continues to be dependent in large part upon the growth in its outstanding loans receivable, the maintenance of loan quality and acceptable levels of operating expenses ¹²⁹. Since March 31, 2022, gross loans receivable have decreased at a 4.27% ¹³⁰ annual compounded rate from $1.52 billion ¹³¹ to $1.28 billion ¹³² at March 31, 2026. Management believes the Company can continue to improve its gross loans receivable growth rates through acquisitions, improved marketing processes, and analytics ¹³³. The Company plans to enter into new markets through opening new branches and acquisitions as opportunities arise ¹³⁴. Management states that the Company continues to believe stock repurchases are a viable component of the Company's long-term financial strategy and an excellent use of excess cash when the opportunity arises ¹³⁵. Management's first priority is to ensure the Company has enough capital to fund loan growth ¹³⁶.