America’s Car Mart 4Q15 Earnings Call Notes

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Hank Henderson

January was slow, but sales did pick up in February

“Actually, I think it started out – the quarter started out kind of average at the very beginning, but then it did pick up in December. December was better. January is one of those months I think people are getting so close to tax time, they are holding off on purchases until the refunds start coming in. And with the delay in some of the refunds in some years past, we have seen some tax dollars at the end of January. We did not see that this year. They didn’t start coming in until February, which I can tell you we did – sales did pick up in February when they started rolling in. So I think part of the slowdown in January was just that holding off, wait a couple more weeks before they got to [indiscernible] at least some portion of our sales.”

There’s a lot of folks living paycheck to paycheck

“In reality, a lot of folks are living paycheck to paycheck. Times are tough and certainly the cost inflation of cars has outpaced their wages and a lot of other things. But there is a need, and we feel strongly that a 30-month term, even though it’s a little longer than we were, a 30-month term fits the needs of a lot of folks a lot better than signing up for 70 months, 72 months and other things that we hear of. So we are trying to do what we feel like is practical and meets their budget.”

We have to approach the competitive environment as if it’s here to stay

“While, on one hand, we still do anticipate some relief out there in the future just thinking [indiscernible] quickly enough, it’s been around long enough that we have to get our head around the fact that we have to approach the business as if it’s here to stay.”

A few markets are feeling pressure from oil and gas but most arent

“Yes, in a few. Fortunately, most of our stores in Texas and Oklahoma aren’t directly affected by that. It tends to be more out in western Oklahoma from what we are hearing. But yes, I have – I was at a meeting with those guys a couple of weeks ago, got to talk with them. And we do have a few stores that are feeling some stress. Some of the customers have lost their jobs. So fortunately, it’s not most of the markets out there but it is hitting a few of them.”

Jeff Williams

Underwriting quality has improved but competition push term out longer

” The one negative is just the fact that we are having to put the term out a little longer, and we are watching that closely and not doing anything more than we absolutely need to. And always focused on making sure that that term is not beyond the useful life of that asset. And that’s been really tough from a competitive standpoint as that view is not shared by all out there, but we are certainly standing by that and it will help customer success down the road.”

Maybe one of these days we’ll see some tightening from competitors

“we would love to see some tightening, and maybe we do, maybe we don’t. We’ve certainly felt like that should have happened by now, but one of these days it will. ”

Seeing higher prices for trucks and SUVs, lower prices for compacts

“it’s pretty spotty based on the type. The trucks and the SUVs are up quite a bit. Our trucks and SUVs are up more than you might see on the Manheim Index. And we have the same thing everybody is seeing on the sedans and lower compact cars. They’ve actually lost quite a bit of value.”