America’s Car Mart FY 3Q15 Earnings Call Notes

Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

Everyone wants to know what’s up with subprime auto

“We continue to get a lot of questions regarding competition, so I thought we might go ahead and just touch on that first.”

Two and a half years ago we saw increased competition

“About two and half years ago, we did in fact begin to experience some significantly increased competition. It’s seemed at the time that almost everyone want to be in the business of loaning money on higher risk auto loans and we began to see some of our customers qualifying elsewhere for financing on higher dollar cars and longer terms than anyone could have previously imagine was possible.”

We thought it wouldn’t last but it has

“At the same time, we were confident that this would be short-lived as we had seen similar cycles come and go in the past, well, obviously that turn out to not exactly be the case and while it may have lined up somewhat from where it was, more this type of financing remains available and was out there few years ago.”

Updating our systems was much harder than we expected

“I told you that we were in the process of completely rewriting our operational software and this undertaking was not just enhancing what we had, but rather building in an entirely new system that handles all of our inventory management sales quotes, credit information, sales docs, payments, customer information reports, collections and so on. And I probably made the mistake of telling you about that, about a year or two early as we had apparently imagined the magnitude of the project to be only about half of what it really was because it ended up taking as twice as long and costing twice as much as originally planned.”

There have been a lot of long days

“A lot of people have put an incredible amount of time and effort to make this happen and doing all that in addition to their normal responsibilities and it has been quite a stress test as a team. There have been more than a few days around here and we think we’ve all have gotten on each other’s last nerve. ”

Credit losses still higher than we’d like

“even though our credit losses are little bit than last year, they are still much higher than we would like to see — much higher than we’ve seen historically.”

There’s a little less silliness than there was 12 months ago

“more when you put everything together and you see our better down payments, our lower 30-day delinquencies, our higher collection and lower charge-offs and then you — when you talk to folks in the field, we are just seeing a little less pressure and a little less silliness than we saw 12 months ago. It’s — but the competition is still out there, the securitization market is still very strong ”