Welcome to America’s Car-Mart’s First Quarter 2013 Conference Call. The topic of this call will be the earnings and operating results for the company’s fiscal first quarter 2013. Before we begin, I’d like to remind everyone that this call is being recorded and will be available for replay for the next 30 days. The dial-in number and access information are included in this morning’s press release, which can be found on America’s Car-Mart’s website at www.car-mart.com. As you all know, some of management’s comments today may include forward-looking statements, which inherently involve risks and uncertainties that could cause actual results to differ materially from management’s present view. These statements are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. The company cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements. For more information regarding the forward-looking statement information, please see Item 1 of Part 1 of the company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2012, and its current and quarterly results furnished to or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q. Participating on the call this morning are Hank Henderson, the company’s Chief Executive Officer and President; and Jeff Williams, Chief Financial Officer. I’d now like to turn the conference over to the company’s Chief Executive Officer, Hank Henderson.

Good morning. We appreciate you joining us today. As most of you know our focus has long been the success of our customers and affordability is obviously critical to their success. We are very pleased that for the second quarter in a row we have brought down our average sales price, and have we continued on the trend we are seeing about this time a year ago. We would now be at an average sales price of little over $10,000 and we are happy to report that our average sales price for most recent quarter was actually down to $9,584. And that’s $200 lower than the prior quarter and $338 lower than the quarter before that. And Jeff will go into some detail as to how that specifically impacts us in the short-term. We have been in this business long enough to understand that our real value lies in our long-term focus and that is where ours remain. We have long being committed to keeping your vehicles affordable for customers while maintaining quality and we will continue to do so. Our purchasing department has done an outstanding increasing our number of sources so that we can continue to increase the number of vehicles our agents have an opportunity to inspect and truly maintain the level of quality our customers need while also being very focused on keeping our sales prices affordable. I believe it's also noteworthy to point out that even as we brought down our average sales price for 2 quarters in a row we still saw top line growth of 9.4% for the quarter more than 5.5% increase in same-store revenues. So, I’m going to ahead and turn it over to Jeff now to go into some detail about our recent results, and then I'll come back with few more comments. So, Jeff.

Thanks, Hank. Once again our financial performance for the quarter was solid for the quarter as Hank mentioned our top line growth was 9.4% to $110 million, 5.5 increase in same-store revenues. These increases are even more impressive when considering the average selling price decreases we’ve seen, 2% sequential decrease following a 1.4% sequential decrease in the fourth quarter of 2012. Had our first quarter ASP been flat with the fourth quarter our top line would have been up about $2 million more and our revenue increase would have been over 11%. In many industries higher selling prices may be viewed as a positive but we know that decreasing price trends had many long-term positive implications for our business, which is great news for our customers and the affordability of our transactions. Our down payment percentage was 7.2% for the quarter, basically flat with the prior year quarter. The weighted average down payment amount for all contracts at the end of July was at an all-time high of $660 which is up $31 or 4.9% from this time last year. Our collections as a percentage of average finance receivables was 14.9% compared to 15.9% for last year’s first quarter. For the quarter our average of initial contract term was 26.7 months compared to 26.4 months for the prior year quarter. Our weighted average contract term for the entire portfolio including modifications was 28.1 months compared to 27.4 months at this time last year. The increases in term are primarily related our efforts to keep our payments affordable for our customers and to continue to work with them on experienced financial difficulties. We have been very aggressive on keeping our relative term length shorter over the last several years and we will continue to focus on this. The lower selling prices…

All right. Thanks, Jeff. As I mentioned earlier, we remained focused on the long-term and for the past several years we have done lot of work building the right infrastructure we need to carry us into the future. And many of our discussions around here involve asking the question of particular change in a procedure or an advancement in infrastructure service as we double in size. And as our intent is to say we are well prepared ahead of our growth, I’m very pleased to report that we are continuing to make big strides with regard to the training and development of our associates. We will soon be rolling out much more online training to provide more self-study for associates than we ever had before. And this will not at all replace or reduce our face-to-face training but will supplement it and allow our associates to go back to refreshers as needed and will also serve as the means to introduce new procedures and processes as they are updated. We are very mindful that to provide excellent service we must have excellent training, and these tools will be extremely beneficial and it is certainly one of the biggest developments ever in this area for us. We also have some very big initiatives underway within our IT department that will allow us to be much more nimble with our operational software as we grow, so that we will be able to update and improve our systems more quickly in the future as needs present themselves. And you can expect to hear us talk more about this as these developments come into play through the upcoming year. Very often when people are trying to understand our business, we ask what am I missing? And I suppose different people can miss different little…

[Operator Instructions] Our first question comes from John Hecht from Stephens.

First one is, Jeff, you cited I think 33 cars per lot per month at 10-plus years. Do you have a figure or can you give us some details around what the younger lots do on average?

Yes, the lots from 0 to 5 years of age in the low to mid-20s and then the lots that are from 5 to 10 years old are going to be in that mid-20 range.

And then moving on to gross margins, you guys said it's some operational efficiencies which have been protecting and enhancing margins more recently. What about looking in terms that the cost of the car and a journey have been any characteristic changes to the types of cars you are buying in terms of the mix of product or the age or the mileage or anything?

I wouldn’t say that the mix hasn’t really changed, and our goal with the mix has always been to all of our lots to have whether it's SUVs, trucks, vans so forth, to have a good mix so that we don’t miss sales when customers come. I think process in general have flattened out a bit, but we have made efforts to hold down, bring down our average price. So, we have seen little bit of an uptick on mileage that doesn’t necessarily mean we have compromised any quality there because as I have mentioned we have put forth some efforts to avail ourselves to lot more cars to look at. So, I think quality remains good, but yes pushing down the price, meaning we have little bit higher average mileage out there.

And final question related more to the credit side. You’ve had a modest rise in charge-offs, while your 30-plus day statistics have been relatively stable. What can you tell us about the roll rates from 30 to 90 to 90-plus and what's that telling you about the customer behavior, the types of stresses that your customers are going through?

We don’t have many accounts at all, any dollars at all in the 60 or 90-day categories. We don’t have a big backlog of accounts out there that are in need of charge-offs at any one point.

I think it's fair to say that part hasn’t changed because it’s remained low.

So the roll rates move from early stage delinquencies to later stage delinquencies that you haven’t seen any major fluctuations in that.

Our customers are living paycheck to paycheck as they always have and we are seeing some maybe a little higher delinquencies in those 0 to 28-day categories just as they struggle to make the payments, but that’s not anything thing different than we have seen through the years. So, not any big changes there, we do see collections during the first of the month, higher than towards the end of the month, just as those customers try to manage their money. But that’s been going on for few years now.

Our next question comes from John Rowan from Sidoti & Company.

Just couple of questions here, first Hank you did say that, the average mileage has ticked up a little bit, but you also mentioned in the prepared remarks about controlling what you are spending on cars especially with some of the insurance products against warranty issues. How do you see that going forward, obviously with the increase in the cars, are they just better where you have to put less money into them or do you think there is some type of uptick in where you have to spend on to maintain these cars.

I think lot of that has to do -- we tied this into some of the training that we talked about. Keep in mind that we have opened a number of new stores over the past couple of years and certainly managing the expenses as far as lot of expertise and training and some of the new tools which is all connected because some of the new IT tools we put in place give us a lot more visibility on the spending, enable us to better compare rate we are paying in some areas with others. So, we do feel like we have -- we can still gain some efficiencies, just average amounts we are paying for payers. And again I felt like we can have a little bit of uptick on mileage without really having to expect to see more repairs across the board. I mean it’s a slight uptick, it's not dramatic. So, I actually feel like and it's a big focus of everyone here this year. I think we can actually feel gains are going on [ph] at the same time with regard to our repair expenses.

The second question just in general outside of just the buy here, pay here space, there are just lots of privately-held companies that provide credit through other used car dealerships, when you look at that group, have you seen any increase in competition of labor, has it actually pulled back?

No, I’m sure it’s out there, but we're certainly aware more dollars going into that as far as to say how -- that we actually felt that or measure it, I wouldn’t say so. Because our sales are continuing to go up. But certainly I’m sure it's out there, but we don’t have a lot of customers that are going to move to the next level out of our market. Our market is plenty big enough to keep us busy.

I think back when the economy took a hit, we expect a big trend down into our market and really never saw it. So, now the financing has come back and above us we are not seeing a negative effect the other way either.

Our next question comes from Martin Kemnec from Jefferies.

Jeff, just one question for you, I know you guys target 20% to 22% provision on an annual basis. With the upward trend in mileage and vehicle age, I’m just wondering, does that influence your recoverability estimates? And then does that in turn change the way that you think about your forward outlook for provisions?

No, the mileage increases we were talking about are pretty minor, and if we do have to a take car back the mileage differences we are talking about are going to have no real effect on that wholesale value that car to speak off. So, it's a minor factor but it's just not very important in the overall analysis.

And then I mean on the increase this quarter is that just more a function of the growth in the book or how should we think about that?

As we had new lots which we have certainly been aggressive the last few years, we expect those newer lots to have higher credit losses for a period of time and so the percentage of lots that are younger and experiencing those little higher loss rates, the percentage is higher. And that’s just part of our price to develop those lots and get them down lower over time, but they do start out little higher and that is expected.

[Operator Instructions] Our next question comes from Bill Armstrong from CL King & Associates.

So you had $200 reduction in your average selling price and it sounds like at least part of that is from the higher average miles. Are you seeing any relief in terms of overall pricing in your acquisition cost?

Yes, we are, we don’t exactly track like a Manheim Index, but I think, overall, there has been a little bit of loosening in the market for used cars and that’s a good thing and we are certainly taking advantage of that. But I think we are doing a better job internally in addition to just the general market decreases.

In terms of the higher mileage, what sort of risk do you see maybe down the road of a higher number of these cars breaking down before the loan is paid off?

If we had made, if we have seen a big move in that, I think that will be a concern, but I don’t think we are seeing enough of the change there to really expect to see any measurable difference as a result of the additional mileage. It's been pretty slight.

Moving onto just from a question asked earlier. As there is more accessible auto financing available to subprime consumers across the board, are you seeing maybe more competition from other buy here pay here dealers because they have more ability [ph] to provide more financing or not necessarily?

Not necessarily, I’d say our competition remains about the same across the board primarily where the competition is still mom and pops and we haven’t seen lot of change there.

And then finally, just a question for Jeff, on the collection rate. Could you just go over those factors that you cited before on why the collection rate was down year-over-year about 100 basis points? I think you have indicated that you expect it to improve going forward a little bit.

To maintain affordability and if we really looked at payment amounts in terms a little bit. We have been so aggressive to the last 4, 5 years that we realized to maintain affordability, we had to give a little bit on term. When you are talking about going from 27 months to 28 months on average that has pretty big effect on the percentage of principle collected during a quarter and that was a biggest factor in that decrease from 15.9% to 14.9%. In addition to that the modification activity we had, where we are working with customers and pushing payments out just a little bit, certainly had an effect in the fact that the quarter ended on a Tuesday versus Saturday last year had a pretty good effect on that number. And as we mentioned we are also actively scheduling payments out in next year’s tax time. So, all of those factors contribute to little lower collections currently, but increasing affordability and keeping our customers in those cars is what we’re primarily focused on. I think guys in the field are making good decisions when they are having to refine [ph] account and I think we have taken pretty good advantage of our customers expected tax refund and in the next tax time. So, we do expect a good third and fourth quarter from principle collected standpoint. And some of these factors kind of hurt us in the short-term.

And you did mention more loan modification which would indicate that at least some customers are having a tougher time, making their payments. What kind of concerns does that bring to you?

Actually, in some regards it's a good thing. It means that this is how we operate and it means that we are successfully working with customers in keeping them in their vehicles even though they have some tougher times. So, I felt like it’s pretty much business as usual for us.

Good in terms of they are not so far gone, you have to repossess the vehicle and you are able to work through better terms.

Absolutely.

Our next question is a follow-up from Martin Kemnec from Jefferies.

I just had one follow-up on the loan modifications. Can you quantify that and how that relates to your previous experience, was that up materially or is it just kind of something you wanted to highlight this quarter.

It was up about 10% over what we have seen historically. So, there was an increase in modifications but as Hank just mentioned, that means our folks out in the lots are really working with these customers, keeping them in their vehicles and we feel like our managers do a very good job when they modify an account getting that things setup for success. So, we feel good about the long-term decisions there, but the modification rate is up 10% from last year.

[Operator Instructions] I show no further questions at this time, and would like to turn the conference back to Mr. Hank Henderson for closing remarks.

I’d like to again thank everyone for being with us this morning. I think I’d just like to reiterate that, we saw this past quarter with our sales process coming down, this isn’t just something that occurred with what’s happening in the world, moreover I think our response to it. We are focused on long-term, and our customers are becoming repeat customers. In order to do that we need for them to be successful and we know that keeping vehicles out there on our lots that better fit, their budget is critical. So, for us right here, it is good news, and that we are doing the right thing to take good care of our customers. And so we feel like that as long as we do that, that our long-term future is very, very bright. And so our attitude is certainly very positive about the future of our company. So, we do look forward to talking to you more throughout the year and continue to bring good news. Thank you, everyone.

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may all disconnect at this time.