Good morning and welcome to the World Acceptance Corporation Third Quarter 2015 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. Comments made during this conference may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, that represents the corporation’s expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Statements other than those of historical fact, as well as those identified by the words anticipate, estimate, intend, plan, expect, believe, may, will, and should or any variation of the foregoing and similar expressions are forward-looking statements. Additional information regarding forward-looking statements and any factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements are included in the paragraphs discussing forward-looking statements in today’s earnings press release and in the Risk Factors section of the Corporation’s most recent Form 10-K for the fiscal year ended March 31 2014 and subsequent reports filed with or furnished to the SEC from time-to-time. The Corporation does not undertake any obligation to make an update to any forward-looking statements it makes. At this time, it is my pleasure to turn the floor over to your host, Sandy McLean, CEO.

Thank you Randy and welcome everybody to our third quarter conference call. I hope all of you had a chance to review our press release as well as the narrative and comments that we provided in conjunction with that, rather than high lightened issues that are in that narrative and of the press release. I would like to just move forward and get into the session of question, Randy.

(Operator Instructions). And we will now take our first question from J.R. Bizzell from Stephens Incorporated.

Thanks for taking my questions. Sandy I wondered if to what do you all attribute kind of lack demand that you are seeing in the U.S. is it along the lines as maybe you are seeing different moves by your competitors, new competitors, are there new options out there that you all can speak to? And just give us kind of thought around the demand?

The fourth one in conjunction with that obviously the two main issues that we are facing is the slowdown in the demand in the U.S. and just to highlight our loan volume for the first nine months was down about 8.8% from the same period last year and we had about U.S. about 3.3 billion versus 2.3 billion on fiscal 2014 versus 3.1. Our new borrowers based by numbers are down by 5.7% and former borrowers are down about 2% and our refinancing are down about 14%. So refinancing we can explain and understand in it’s consistent with the reduction that we had over the last two quarters or three quarters since we made that change regarding the solicitation of those lower dollar renewals. The thing that we have been attempting to address is the attraction or getting additional traffic in the office both in the form of new borrowers and getting out our former borrowers back into [indiscernible] office. We have talked about some of the initiatives that they have added in and [singular] fees have been putting into place over the last few quarters and I believe that as these things come to fruition then we should see a benefit. But as far as the what has happened. I think number one, is we have been almost -- most of our marketing has been from a direct mail -- relies upon our direct mail. And over the years I think our director market has done a great job but direct mail in and off itself is not the only solution and we are not seeing the effectiveness of that direct mail. So we hope and believe that these other initiatives like the online applications and the programs that we put in place in the offices and more emphasis on certain types of solicitation like texting and so forth, we believe that, that will continue to benefit. Now as far as what -- specifically what is happening I don’t know whether it’s competition, I don’t know whether it’s people are not borrowing for various reasons, I don’t know if we are the only people only Company seeing these same downtrends I don’t believe that would be the case, but I certainly believe that there is a strong demand for our product and there is a vast majority of those extremely large segments of populations that need access to this type of credit. We've just got to do a better job of getting out name of and front of them and getting them in our office. I hope that kind of answers your question but it’s not very specific because it’s hard to pinpoint specifically why these trends have been continued into last couple of quarters.

And building on that and you’re talking about the initiative and I know Janet did a good job on the last call talking about them. I am just wondering if you can give us kind of an update how far you’re penetrated with texting and other initiatives. I know texting with something you were really excited about last quarter and I am wondering if you’re still seeing kind of the positive trends from the facilities that are utilizing that texting and I am hoping that something that you think is going to help the renewals and to new growth?

I think Janet would love to give you an update on she stands in some of these initiatives and we certainly -- we’re encouraged in the direction we’re going, but I can’t say that we’ve actually broken through the mold and all of sudden we’ve seen these magic results, but let’s Janet -- let her give you an update on where we stand in some of those.

I am pleased to talk about on new initiative to get growth into us so I’ll just give you a few of the model’s key statistics you might find interesting. I think as you know we worked on branch locator. The middle of last year did have any ability to find any branch on the web before and we’re getting in the peak growth season 30,000 folks viewing that branch locator. We believe that will help us again and stay kind to get people into the store. On our Web site, we have the online start application. We still close in branch because we believe it’s very important to have that face to face conversation and relationship, but we’ve had more than 12,000 of those online start apps completed and that was only launch in mid-November and these 12,000 online data completed and we have not been pushing folks with any form of search engine optimization until the couple of weeks because we first wanted to test the online start app up and working perfectly and looking good. We haven’t found any kind of optimization on our Web site. The word encoding that you can kind of use behind the scenes. We just completed that a few days ago. And even so with these 12,000 app listing about 30% booking rate compared to about 50% to 60% in stores that we were very, very pleased. Plus with the app booking within a couple of days, but some still taking considerably longer and still booking, we also on our Web site to the first time in our history we do tax prep and we just had a huge tax prep. I wouldn’t call them app I would call them informational sort of apps, informational sort of app for activation form so…

Certainly we’re looking at all aspects of our operational ongoing continuing basis to hopefully continue to make World better and hopefully more profitable business going forward.

Is this a calendar, when I am thinking about this and how we’re projecting this out is this something that we should think about in the back half, but this year is something we need to be more focused on for next year because that’s a lot of initiatives and a lot of learning in within the stores, I just want to think -- I just want to understand how you all are thinking about it internally and how we should we think about it projecting forward?

So much of this is new territory for us, so it's very difficult to quantify the impact that it's going to have. And so I don’t really know to how to guide you a whole lot better, we are moving forward as quickly as possible and hopefully the benefits will be better than expected. But only time will tell, I am sure that Janet has a lot ideas, there is no question about that and some of them I think will be wonderful and some of them probably not as good. But we will wait and evaluate all of them and continue to move forward and hopefully base on tangible results in the near future.

And we’ll now take our next question from John Rowan from Sidoti & Company.

Sandy as you look back consider the changes that you made to the incentives to the branch managers on selection and the way you change the delinquency portion of their competition. Did you expect there would be a bigger impact now to just settle on your net charge-offs rates then there was in the quarter?

Not really, all we really did is differed account which would have previously been charged off in the second quarter, as they move -- we grew the 90 day bucket and when you look at some point that would stabilize and those loans are fully reserve, from an P&L impact it really hasn’t been change anything. So, we really expected to -- to see some leveling off in the overall net charge-offs. I mean we certainly got timing issues, if you don’t look at the net charge-off in the second quarter they we’re dramatically down and three to nine-month period was dramatically down. But they did however level off and how much of that’s timing and how much of it is the true benefits we’ll get firm this decision is yet to be determine. But early indications are we’re moving or collecting more of our 30 and 60 day accounts and collecting some of the 90-day accounts. The intent was never -- well it was hopefully continue the collection efforts on those 90 accounts until we really believed that proper collection work had been done, but it was also focus the managers own paying more attention to the 30 and 60 day before they ever became 90. So, there is evidence that, that is all of action proving but it's not a dramatic change and was never really expected to be that much of a dramatic change.

I understand obviously the one-time nature in the second quarter charge-off, I was just kind of trying to understand obviously not the change was means to encourage a store managers to collect on the older delinquency buckets and I was just curious if that had impact that you are hoping for if you're actually getting better or worse collection out of those buckets than you saw you are going to?

Probably I mean the result but then we have collected a little bit more out of that bucket, but it has not been dramatic, but the key focus has been to make sure the managers not only don't ignore those 90-day accounts, but work that much harder on the 30s and 60s because that’s what impacts their monthly bonus and instead of the entire delinquency bucket. And it's really hopefully to prove all aspects of our collection in all the buckets. And your question directly is we have not seen a dramatic change, but we have seen slight improvements in all of those and given the nature of the change there has been no real -- no real problem with our financials or the reporting and so forth, it is just now got this bucket of non-earning assets it’s stabilize overtime.

As far as the CID goes there any updates?

Unfortunately there is not, we have not heard anything back really as we issued.

So the CFPB hasn't asked to interview anyone, there's been basically radio silence from them still, since when there [indiscernible], I believe in March?

It was issued March, the 10th we submitted our response on April 10th and we have had no direct communications with them since that day, I think they have so I have to make sure that they got it in proper format and so forth, but no response whatsoever.

I know you had -- thinking about ways to try to force our hands -- just making movement on, are you still thinking about any of those options are we can tend to balance that content, but is this going to remain something that’s sitting out there that is going to be binary event in your stock some point in the future?

We are not really in a position to demand, if they respond us. I don’t necessarily think that would be the wisest course of action. But it’s my understanding while we were under the impression we will hear something within six months. It’s come to our attention that this is not totally uncommon, that it could as long as this. So I would expect and we will hear something in the near future. But the timing of that is totally out of our hand and no we will not be doing anything aggressively to force their hand.

Okay, then last question. Do you see any impacts from any other various bills, I know it’s so early but Texas is obviously in session. So just curious if you are monitoring any bills that could have an impact on your company?

The only one I am aware of is this that a bill been introduced in New Mexico, that deals with a 36% rate cap. This is not the first time that this has been proposed but it’s certainly something we are monitoring through our trade associations and so forth, we are trying to make sure everybody is educated on negative impact of such bill being passed.

So that’s just straight 36% rate cap on all products including payment and installment?

Yes.

We will now take our next question from John Hecht from Jefferies.

Good morning, thanks very much. The first question, maybe just if you want to highlight Mexico, the overall trends there. And then you mentioned kind of the backed up of one union payment, what’s a status with that?

I am really glad you asked that, because I intended to highlight that but I got sidetracked, but anyway as I had mentioned two main issues that we are facing the first is as we just discussed is the reduced loan growth in the U.S. and I think we have discussed the things that we are doing to hopefully offset that challenge. And the second is the delayed payments by one of our unions in [Guerra] region. That had an impact on us. If you take into consideration the amount of accounts that have moved into non-accrual basis as well as the revenue that we are not getting on those non-accrual loans because of those delayed payment, it’s had a $2.2 million impact on the current quarter. Now we have not charged these accounts off although they are fully reserved because we still believe that these payments are forthcoming. If this particular area of Mexico had a lot of political unrest, and we are not the only lenders not receiving payments. The difference is, almost all of the lenders that have funded those loans through the union have continued to do so and we discontinued that by four months five months ago. But from everything we hear there is a still a very high likelihood that we will ultimately get those payments. There has been a change in as far as way those unions have been paid they have been paid directly for the federal government beginning the first of this year and we should start getting our payments on the ongoing basis on these loans moving forward and then it’s just a matter of working with the states and the unions to get those back payment. So we still believe that this is a timing focus which has had a big impact on the last two quarters. But I would just like to also highlight the impact, given the number of shares that we have outstanding if you take that 2.2 million from Mexico and then you add to that of the increased legal expenses and some changes and our reduction from the World Class Buying Club, our earnings except some of these items we have been very close to what was expected. But there is still question that our biggest challenge remains in the revenue line item. But that being said we are very encouraged about all of the aspects of what’s going in Mexico. All the other unions are paying us on the timely basis. We have an opportunity to get into a national union which we think would be a big opportunity. And we are disappointed with the growth in the traditional installment loan offices down there but they are still doing very well, they just haven't grown like we had originally had hoped. Between the opportunities in the unions loans and the continued opportunities in the traditional installment loan we are still very optimistic about the opportunities.

That’s good color. Just so I'm clear, it sounds like as this one union issue might get solved, you might have a kind of a quick catch up payment and if you do as that this quarter and next quarter how would we be thinking about the potential timing of that?

Well once these particular -- once these loans we start receiving payments on them, then normally we would go ahead and reserve out the allowance associate with it, but given the size of the payment that are past due, we may actually we have maintained the reserve on that portion of the past talks that we had not previously seen and then reversed the other part, they still have a kind of special allowance on specific payments that we had received but then reversed the specific allowance from all of those non-recurring -- non-earning assets on that union. So there will definitely be a pickup when that happens and it will be a much bigger pickup when we in fact resolve the issue of those payments that we had not received previously.

The second question is, trying to kind of establish a guess estimate if you will repurchase activity this year and just in the context of the borrowing line and where you are and keeping some free liquidity on the borrowing line and as well as the seasonality and so forth. Can you just tell us what you are balancing internally in terms of determining when and how much you would repurchase?

Well just to give you some idea we basically -- between December of '13 and December of '14 we purchased during that 12 month period a $132 million in share repurchases. During the course of that we increased our outstanding notes by 8.7 million and reduced our equity by a 15.5 million. So there is -- even in our levels of growth there is a great deal of earnings and cash flow there being generated that will allow us to continue to be fairly aggressive in the share repurchase. At the same time when you have a remaining authorization of 13.5 million just from previous Board approvals and I would expect once that's done there will be additional approval. However given the size of the facility -- the size of the number of banks and so forth we are just continue to be conscious of our capitalization and at some point maybe appropriate to look at other types of capitalization but these are things that we're evaluating on a ongoing basis but all things being equal we would prefer to grow loans and you know if we continue to struggle in that respect and we continue to generate this sizable cash flow till we think the excess earnings is better used to share especially the price levels that we're looking at today.

Alright. I appreciate all these answers, last question just came up. What are those alternative sources of financing could you consider like a private label securitization or to be more just traditional debt markets?

I don't know, we will evaluate everything. But I have been very hesitant to do these securitizations given the short-term nature of our loans and so forth, that's Johnny's problem we will let him figure out all of these alternatives.

. :

Just to touch on the funding strategy and particularly what's your thoughts on the replacement of some of those bank lines and also potential about term debt and has there been any other reactions from your other bank clients?

There is no Vincent no other reactions from the bank clients since the 8-K that we filed regarding the most recent renewal. And given the direction of one of the banks and the second one is it wants to make a change in June, we will -- as I said we're evaluating different capital structures and whether it's nothing in terms of additional debt whether it's funding. We’ve had notification from several banks that they would like to join the line. But it's not something that we are very focused on but are not in a position to make any comment at this point because we’re not sure if the direction was okay. So suffice to say we are very conscious of the our need for financing and we’ll -- and it's one of our -- I guess that's it we got too many issues and I guess we have three main priorities and that would be included in one of them.

Okay. Got it, so you are evaluating I guess you have multiple options whether it be bank lines or term debt or other sorts of capital structures?

That's correct.

Okay. And then one on loans, could you give us the same-store sales growth and then in terms of loan balance has the growth been -- I guess if you could break it down between growth in new loans versus growth from larger balances of loans? Thanks.

Given since our growth was zero, I guess total year-over-year growth was minus [0.8%] the amount came from -- they were both negative. I believe the growth from large loan increases was 0.7 and that was offset by a decrease in account of [indiscernible]. The same-store sales was actually a negative. Accounts decreased 0.8% and the average balance increased 17.

We'll now take our next question from Bob Ramsey from FBR Capital Markets.

Just a couple of questions. One it look to me like the loan yield was down a couple of 100 basis points year-over-year and I was just curious if you have any thoughts behind what was sort of driving that and what's the outlook for loan yield looks like?

Certainly, there are three things that contribute to that. Number one, while we only had -- in the U.S. we only had a decrease in our balances of 0.6%. If you include the increase in the 90 day accounts which are non-earning accounts, the reality of year-over-year basis our -- it was really down about 1.9%. So you've got more non-returning accounts in there on the same earnings so that has an impact on the yield. Number two, we still have had a continued slight shift in the mix, I think the mix of our small loans I mean in what we consider internally small loans they're all installment loans it was 63% last June a little over 61 this year, so we're still seeing a slight shift, but it's not dramatic. And finally, I think the impact is on the -- yield will decline as your renewal volume declines and we anticipated that when we changed our solicitations on those low renewal loans. And we will have hopefully lap that change as we move into the fourth quarter, this was started at end of February last year. And we should see some stabilization in our yields, in our loan volumes and other things and if we -- I'm not concerned about renewal volumes, so as long as Janet can -- Janet, the Senior VPs can figure out where it's more low more people in the office is I think you'll see a great deal of stabilization as we move into fiscal 2016.

And then on the repurchase front, I know you've been asked the question a few different ways, looks like you all didn't buyback a stock this quarter I know seasonally this is the lightest quarter, seasonally fourth quarter March quarter is usually one you're the most active. Would you expect this year to follow normal seasonal trends in that respect?

Well we're getting a lot of payments and as our customers get their taxes filed and get these refunds and we're of course our earnings are always the greatest this quarter, so this is a quarter of great deal of deleveraging so we will certainly be as aggressive in our share repurchases as we build throughput given that as we're going to continuously think about our capitalization and availability of capital for future funding, but we may not be as aggressive as we had in the past. I think we will monitor that and all I can say is we will be repurchasing stock on an ongoing basis but at what levels all of these factors will have a -- will come into play into our considerations.

I guess last question. I know you mentioned in the prepared remarks merging the some underperforming offices, I just wondered you have a little more color around sort of what you guys are doing there and what the opportunity looks like?

Well it -- given the fact we're not attracting people in these offices as quickly as we had in the past it's taking long for new offices to build to a profitable level. So in -- we may not be opening new offices quite as quickly, but at the same time we're taking a hard look at some of these offices, especially some offices we purchased in Texas and in all the states that that -- let me back up. The old philosophy is that if you open then it will ultimately build to the point that they will become profitable and once they become profitable incrementally we would be better off. But we have identified some offices that after five years have just not they're in close proximity to other offices and we believe that it may be better off to combine those offices and reduce the operating expenses associated with it and cut our losses and move forward. So over the next three months to six months, you may see us close more offices than the past, but this is not going to be a tremendous number of offices maybe into 20 or something of the worst performing. And then on an ongoing basis, hopefully we will continue to produce data and other things to make the selection process or whatever it's best to open offices or better.

And we'll now take our next question from Bill Armstrong from CL King & Associates.

The union in Guerra so are you still making loans to the employees in that union?

We are not. We discontinued that four months or five months ago. We will re-begin the lending process as soon as we'd established the status of these payment and so forth. Apart of that competitors are still making those loans.

Does the -- I mean basically cutting off new loan does that impact your ability or their willingness to collect on these loans at all?

We do not believe that be the case at all. We still have a good relationship with our contact there and we’ve assured that they -- we will get paid and it’s just kind of difficult politician situation down there this one time.

Okay and my phone call had little earlier you had mentioned what the same-stores revenue were I missed that?

I don’t think we actually did and I think it was down and it was -- I think it’s down like -- for the quarter it was down like 4% in that range for the year to-date it was pretty flat, but I don’t have front this time but it’s tangled little quickly. For the quarter the same store sales were down 6% and year to-date it was down 1.3%.

Okay 6 and 1.3. Okay thank you.

We’ll now take our next question from Randy Heck from Goodnow Investment Group.

Actually just about all my questions have been answered and thank you for the some of the colors specially the all the initiatives that Janet has got going, but just to confirm, if we add back all the list of onetime, the Guerra, the stock comp reversal a year ago, the exiting of the sales finance business at legal cost, by my math you would have reported something like 220 this year for this quarter versus about 95 a year ago, is that about right? Give or take.

If you adjust for the reversal last year while Marks leaving, there was about $2.9 million reversals, so if you just for that it is -- it’s 220 to 225 rate versus $1.93 that is correct.

Okay, all right. Well, look forward to hearing more about Janet’s imitative going forward and thanks so much and speak you soon.

(Operator Instructions) We will now take our next question from Henry Coffey from Sterne Agee.

Good morning everyone. There has been a lot of headwinds on the installment loan business and suddenly the pawn shop guys have reported pretty anemic volumes in the U.S. this quarter, they actually were pulling out of their guards for a while. They attributed to quote gasoline, puts less pressure on wallet. I think when you look at your business you could also ask questions about product intrusion and of course the whole change and rollovers in renewal. And if you were looking at those three product intrusion change in small things like gasoline and impact discretionary income and the of course the change in rollover renewal activity where does it all sort out in terms of where you think they’re losing business?

Well, I think that was the first question it was answered and that was first question I was unable to answer. I think everything you don’t mention is contributing.

You don’t have the systems in place yet to kind of understand what’s happening with your customer? The change every time.

I don’t think that’s very fair question. We are giving loans through a thousand different offices and we have people coming in from various regions all the times. I think that our primary source of marketing has being the direct mail in the past and overtime it’s been become less of less effective. So are we probably reaching out to people or do people have different alternatives or because the prices of gas gone down they do not need to leave -- the borrow is much. It’s a combination of all of those things.

You don’t have a chance to where you might be losing customers too and when you do a focus group what they tell you?

We don’t have that information.

We’ll now take our next question from Clifford Sosin from CAS Investment Partners.

You’ve mentioned on making more modest impact was the impact of course in the World Class Buyers Club, do you mind breaking out in a little bit more detail some of the impact I imagine, there is a revenue impact there is a loan volume impact there is interest income impact and there may be some expense impact that also through?

Well, the revenue impact on the quarter was about $600,000 both on the profit -- the gross profit on the sale as well as the interest associated with it, once we made that announcement and obviously we sold for a great deal less than that. The positive impact going forward and I don’t know exactly the impact this year is our offices will be going down, the cost of losses on that portfolio were substantial. And that is the reason that we chose, you know to make the decision that we did. A lot of the expense impact is co-mingled in within the other expenses and so it's going to be hard to measure that incrementally except or the few people here in home office devoted to that product. So, we know this all of service the gross profit of this program was over $1 million a year on a pre-tax basis, but if you take the lot of the intangibles and additional cost, hidden cost and so forth we will not believe that it was the type of business that we wanted to continue to focus on. So, I don’t think I answered your question completely, not because I am trying to avoid or vague anything is I don’t have all the specific component. But the key component is the impact on revenue during the quarter which it was probably a -- I guess I don’t know the impact of the provision was but I know the impact going forward will be dramatic on those provisions.

Would it be fair for me to assume that typically in the December quarter the World Class Buyers Club has more sales volume and thus generates more -- is more profitable and then the rest of the year where you kind of where the loan losses associated with that volume the world class buyers because there is profitable and maybe even loss making?

Well the cost we don’t report to gross profit on the sale at the time of sale, then obviously the gross profit and interest is recorded over the life of that loan. But there is no question that the volume of sales to take place during the third fiscal quarter or the busy season is probably a very high percent of the total sales of entire year.

And this is a question for Janet, you mentioned the 12,000 applications with the 30% booking rate, there is a Web site since mid-November I just wanted to clarify was that through the end of January or through the end of the quarter?

It started about mid-November and as of today have about 12,800 app since we starting about mid-November. Does that clarify it?

Yes.

At this time there are no questions in the queue.

Well, I just like to thank you for joining us today and we’re not completely and we’re not especially pleased where we are at this point, but we’re striving diligently to move forward to return to levels of growth and profitability that we previously had and thank you very much for joining us.

Thank you for your participation. This concludes the World Acceptance Corporation quarterly teleconference.