William Henderson - President and Chief Executive Officer Jeff Williams - Chief Financial Officer

Elizabeth Suzuki - BofA Merrill Lynch John Hecht - Jefferies J.R. Bizzell - Stephens Inc.

Bill Armstrong - CL King & Associates

Thank you. Good morning, everyone.

We appreciate you joining us today. As you can see in our press release we had solid top-line growth for the quarter of 12.2% over last year same time.

Unit sales were up 10.7% for the quarter and 9.9% for the year. And those of you who have been following us for a long time understand the importance of our growth in active customers and how that's a key factor for continued growth and future sales.

And I am very pleased to report that for the year we gained close to 5,000 active customers, putting us now over 64,000. In our fourth quarter last year, sales had fallen off a bit at the end of the quarter, so our team was fully committed to ensuring we did not let that happen this year, and they did not disappoint.

So, it was both a solid quarter and a solid year for sales, and perhaps even more impressive when you consider it is still a fiercely competitive field out there. While we did finish with losses flat or actually even down a bit year-to-year we were not pleased with where we ended.

We know we had more room for improvement with regard to collections and losses than we achieved. We think perhaps with our added focus on sales we may have taken our eye off the ball somewhat and not stayed on top of our collections at every location as well as we know we are capable, so that is without question our top priority as we began this new year.

All-in-all it was a good year with some areas we were extremely pleased and some others where we know we could have done better, but I suppose never being completely satisfied and always looking harder where we can do better has served us very well over the years so that is what we will continue to do. And I would probably be remiss not to acknowledge the fact that we did have more than our usual number of distractions this year.

Our General Managers did have a lot of additional things to keep out with this year as if their job wasn’t already challenging enough. Every store went through a complete overhaul of our operation software which handles all the inventory management, sales, payments, expenses, collection et cetera.

It was somewhat like trying to change a tire on a moving car. In addition to our IT systems improvement, we have also had a great number of process and procedure changes as we greatly beefed up our compliance management systems as well.

None of that is said to make any excuses for where we may have fallen short, but more of a hats off to our General Managers and their staffs for enduring that all in a short period of time and growing the business while doing so and also a big thanks go to all of our staff here at the corporate office as well for their dedication and many, many extra hours they put in to make it happen. We have a great team with tremendously positive can-do attitude, and it is times like we’ve been through recently that they become all the more evident.

So we are truly very fortunate to have such positive dedicated people. So with that I will go ahead and turn it over to Jeff to give you more detail on our recent results and then I am going to come back a little later and talk about some of our new store openings.

Jeff?

Yes, thank you Hank. As mentioned total revenues were up 12.2% with same-store revenues up 7.5% for the quarter.

As we mentioned in our third quarter call, we were expecting a top line improvement for the fourth quarter compared to the last year and we were certainly happy to see the nice growth. Revenues from stores in the 10-plus year category was up little over 3%, stores in the five to ten-year category was up around 11% and revenues for stores in a less than five years of age category was up around 49% to about $36 million.

The overall average retail units sold per month per lot for the quarter was 28.1 up 4.5% from 26.9 for the fourth quarter of last year and up slightly from 28 sequentially. At the end of the quarter 46 or 33% of our dealerships were from zero to five years old, 21% or 15% were from five years to 10 years old with the remaining 74 dealerships being 10 years old or older.

Our 10-plus year lots produced 29.3 units sold per month for the quarter compared to 29.4 for the prior year. That’s a slight decrease of 0.2%, our 21 lots in the five to 10 year category produced 28.3, compared to 26.8, a 5.6% increase and the lots less than five years of age category produced 26, compared to 21.9 for the fourth quarter of last year, that’s an 18.7% increase.

Sequentially these younger lots were up about 2% from 25.4 for the third quarter of this year. Competition is still intense and we will continue to focus our efforts on customer retention, earning repeat business and offering good quality vehicles that are affordable under rational terms.

As we previously discussed our new 12 month service contract has had the effect of increasing overall selling price for this quarter over $100 of the selling price increase related to the new service contract on top of the increase we saw last quarter excluding the effect of the change in our service contract our average selling price was basically flat with the fourth quarter of last year. The full effect from the service contract on selling price for the 12 month product is pretty much fully baked in at this point.

We continue to believe that this longer service contract product priced at around $600 will help more customers succeed and that’s why we made the change. As always we will focus on basic transportation needs, we know we compete much more effectively at a lower price points.

We will continue to target flat to slightly increasing overall sales prices into the future and our efforts to keep our payments affordable with rational term lengths to increase customer success rates. Our efforts to gain market share in all price points including less expensive more affordable vehicles is key to leveraging our fixed cost structure and more importantly to build a good solid base of repeat customers.

Our down payment percentage was 9% for the quarter compared to 9.7% from last year, a little over a $60 decrease. The prior year amount of percentage was higher than normal as we were more conservative last year with our deal structures.

The down payment percentage for the fourth quarter of 2013 was 8.7%, we saw a slight increase in the fourth quarter for down payments compared to 2013. The higher downs due contribute to better credit results in the future.

Collections as a percentage of average finance receivables were 16.7% compared to 17.5% last year and prior to this quarter we had seen three consecutive quarters with a higher collection percentage than the prior year. We’re not happy with the collections for the fourth quarter and working hard to rectify that situation.

Our overall initial contract term was up to 28.3 months compared to 27.4 months for the prior year quarter compared to 27.9 months for the third quarter. We will always work hard to keeping term lengths down and customer equity up to help success rates and we’re also focused on the affordability for payment in light of competition.

As planned we were little more aggressive in the fourth quarter with sales this year, which is reflected in the lower down payment percentage and the slightly longer-term. We felt like we missed some opportunities last year.

Our more experienced managers continue to be given more room on term in an effort to increase volumes at our older dealerships, which have been the most effective by the increased competitive pressures and based on the fact that productivity was basically flat at our older dealerships, just another indication that the competition is still pretty high. We are very aware of the downside with longer-terms, but we’re balancing this against the competitive landscape.

Our weighted average contract term for the entire portfolio including modifications was 30.2 months, which was up from 29.8 months at this time last year and up from 29.7 months sequentially. A weighted average age of the portfolio was 8.4 months at the end of the quarter compared to 8.5 months at this time last year.

For competitive reasons our term lengths may continue to increase some into the future but we as always are committed to minimizing any increases. Interest income was up for the quarter as we had $30 million in additional average finance receivables compared to last year.

The weighted average interest rate for finance receivables was approximately 14.9% flat with the fourth quarter of 2014. For the fourth quarter our gross profit margin percentage was 41.5% of sales.

This was basically flat. The benefits of lower relative wholesale sales was offset by higher repair expense.

We will continue to work hard at reducing vehicle related expenditures. Our goal is to balance affordability for our customers the appropriate gross margin percentages to enhance customer success.

We expect gross margin percentages to remain generally in the current range over the near-term. SG&A as a percentage of sales was 17.2% compared to 17.9% for the prior-year quarter, and for the full-year we saw SG&A decreased to 17.7% sales from 18.1%.

The $1.6 million increase in overall SG&A dollars compared to the prior-year quarter related primarily to higher payroll costs and another incremental costs related to new lot openings and infrastructure cost to support our growth mostly in the IT and compliance areas. Additionally, we did incur around $600,000 in GPS expenses for the quarter and ended the quarter with about 84% of our accounts having the product.

As we mentioned last quarter, we are working hard on operational efficiencies with the GPS product and are hopeful that we can get the cost closer to $3 per account per month, but we are still currently operating closer to $4. We are aggressively managing our expenses and we will continue to expect some longer-term SG&A leveraging over time as we grow our revenues, but it is always hard to pinpoint on a quarter-to-quarter basis.

Net charge-offs as a percentage of average finance receivables was 7.8% that’s down from 8.3% for the prior-year quarter. The decrease for the quarter related to lower frequency of losses offset by an increase in severity.

The higher severity of losses resulted from lower wholesale values at repo point. Our wholesale recovery rates continue to come under pressure, the values at auctions especially at the low end has really taken a beating.

Our losses for the quarter were about $1.2 million higher based on lower wholesale values or about 100 basis points on the credit losses for the quarter that related to increase the severity because of lower wholesale prices. Even though frequency of losses is down for the quarter, it's up from historical perspective and certainly higher than we had hoped for the fourth quarter.

Competitive pressures both at the point-of-sale and at default point continue to be high, but may have leveled off just a little bit or at least not gotten any worse in recent months. Principal collected as a percentage of receivables for the quarter was 16.7% that’s down from 17.5%.

The decrease in percentage collected resulted primarily from a higher delinquencies, the increase in the average term in the fact that our customers did receive some income tax refund dollars at the very end of this year's third quarter, which shifted some collection dollars to the third quarter and out of the fourth for this year. Also the average percentage of AR current for the quarter was 76.6% compared to 78.9% and our accounts over 30 days past due are at 5.8% compared to 4.4% at the end of last fiscal year which tells us we are going to have to really work hard to minimize the effect of these higher delinquencies as we roll into 2016.

Credit losses on the income statement was down from 25.3% to 25%. We saw nice improvement for our 10-plus year old dealerships.

Again, maybe an indication of a slightly better competitive environment offset by higher losses for our less than five year old dealerships. The negative effect for the quarter on credit losses from the shifting of the age of our dealerships, the average age was about 45 basis points for the quarter.

Even though our credit losses are higher that we would like to see for reasons we discussed our cash on cash returns are strong and we are committed to continue to deploy capital in growing our base business and growth rates that we – they will allow us to keep a good handle on things from an infrastructure standpoint. We would like to think the credit losses will come back down at some point in the future, but we’re not counting on that and we will stay focused on cash returns and good solid expense management and helping as many customers as possible to succeed.

At the end of the year our total debt was $103 million that’s up only $5.7 million for the fiscal year and during the year we have repurchased another 5% of our company for $20 million and we opened seven new dealerships of CapEx was about $4 million. As Hank mentioned we had over 5,000 active accounts, we increased our earning receivable asset by $38 million and our current debt-to-equity is low 44.8% and debt finance receivables were 24.6%.

Obviously, we are maintaining a very, very healthy balance sheet with our growth and we had an additional $39 million in availability under revolving credit facilities at the end of the year. We are not at all content with our results and we will keep pushing for improvements in all areas of business specifically as related to collections and helping customers succeed.

Now, I will turn it back over to Hank.

All right, thanks, Jeff. We finished the year with a 141 locations we opened two new stores in Oklahoma, two in Georgia and one each in Kentucky, Alabama and Tennessee.

So we did successfully spread out the openings very effectively not loading up any single region. We would also hope to have another new opening in Missouri prior to the year end that had a couple of delays so actually that one should be opening up this next month.

We do have several other projects already in the works for this upcoming year and are very excited to announce that we will be adding a new state this year we have secured a great new location in Burlington, Iowa and are already scouting out a few other towns in the area. In the past five years we’ve opened 45 new locations and as a group they are off to an excellent start.

If we continue for the next five years on the same growth pace we will have 200 stores in the year 2020 and that is a number we are using for all of our over long-term planning around here. We are confident that we have the systems and processes to support this level of growth.

Our task, or challenge rather is to develop the people for this and to do so in a way that is consistent with our value that have gotten us to this point. So that concludes our prepared remarks.

So we would now like to move on to your questions. Operator?

Good morning, guys. What do you think are the biggest factors that are leading to the increase in accounts over 30 days past due, and difficulties in principal collections?

Has there been a shift in the average credit quality of your customers? Or what have your store managers been saying about trends that they're seeing in their customer base?

No, I think the real answer really has to do with execution and I say that because we can see the comparisons from store to store, area to area, region to region and so forth and we do actually have a particular couple of regions that we can see that from the stores within them or actually their collections are in excellent shape I think. As I mentioned earlier we did have probably more focus than usual on the sales side as we finished out as you know that then we do at the local level or collections and sales are all very integrated and I think it had to do with execution quite frankly.

So it’s a kind of good news or bad news we should have done better but the reality is this is something I think that is within our control to fix. Yes, and we’re disappointed with where we finished out the year there.

Okay. Are you seeing any real negative impact in your Texas and Oklahoma stores from the decline in oil, or does it seem like lower gas prices are more of a net positive for your customers?

Again I don't think that really the factors we’re seeing macro factors really affecting our collections that much in those areas specifically because even within those areas we have some stores outperforming the others quite frankly. And if we saw it all the way across the board then I would – we would probably tend to think that, but that doesn't seem to be the case.

Okay. Thanks.

That's helpful. Last quarter, you mentioned that you thought your competitors were starting to act more rationally, and were getting a little less aggressive in their financing offers and incentives.

Was there any continuation of that rationalization this past quarter, or does it seem like it's kind of turning back and getting more competitive?

I would say that we’re probably at the same place we were three months ago in terms of the competitive outlook, anecdotally we think we’re getting a little bit of relief there, but when you talk to the guys in the field there is still plenty of competition, if anything it’s just been a slight marginal improvement and certainly things aren’t getting any worse or any more aggressive. So we haven't seen any huge changes from the update from three months ago.

Okay, thank you.

Thank you.

Thank you.

Good morning, guys. Thanks very much.

The first question is I guess 45 dealerships under five years old. I think you referred to the growth rate of that vintage.

What is the kind of growth expectations for that right now?

Well, the productivity was 26 for the quarter, that’s up quite a bit from last year. I think more than anything they were just underperforming for the fourth quarter of last year, sequentially it was up just a little bit that those dealerships are in some really good talents and we got some really good folks leading the charge in the management side in the field for those dealerships.

So 26 is the productivity number and we are hoping to show some decent improvements on that as we grow.

You mentioned it's 26, up from a somewhat depressed fourth quarter last year. If you kind of tried to normalize, in your opinion, what the fourth quarter been last year, what would the year-over-year rate of growth been in that vintage?

Yes, we were unusually low under 22 I think was the number last year so that was too low maybe more normal would have been about 24, so apples-to-apples it should have been more or like a 24 to 26 for that.

Okay. Jeff, you mentioned – you talked about severity rates under pressure; it's not a frequency issue.

What's your outlook for severity rates? What's your opinion on the used car market?

Is it stabilizing? Is there further downside?

How should we think about that?

Now, we are hoping it stays flat; we’ve seen such a drop off in the last couple of years especially more recently that we’ve really got hammered with those values we’re thinking it may have reached bottom here and it won’t get any worse, but it certainly has had a big negative effect on credit losses but I think our expectations are that it’s kind of bottomed out at this point.

Okay. You spoke about that the increase or the change in the service contract helped drive up the average price, and that's rolled through.

Any outlook on your ability to increase or decrease your average price, or should we just think about it being flat going forward?

Yes, as we’ve talked about many times our goal is to keep as affordable as we can and it’s always forever been that question of the cost versus quality. So our goal is to keep the quality where it is and keep that price as flat as possible.

Okay, and then final question. Obviously, you guys, over time, have been an active repurchaser.

Just looking over the last four or five quarters, it's kind of ranged from a few thousand to over 100,000 in any particular quarter. In terms of modeling forward for purchases, do you have any thoughts on the pace of repurchases or where you might go with that?

We are always looking at it opportunistically and balancing what other options we have for deploying capital and we certainly believe in the long-term value of the company and feel like we are going to continue to be stock repurchasers. We’re always trying to balance that against any other needs that might come up.

Okay, great. Thank you very much.

Thanks, John.

Thanks, John.

Yes, good morning, guys. Thanks for taking my questions.

Hitting again on collection, I know that's something that we've already talked about a few times, but just wondering, is it as simple as just making them refocus on the collection? Because, clearly, sales have improved because that was a focus I'm just wondering, do you view this collection change and this refocusing on that to be a pretty simple fix?

Is it something that you think is just a matter of refocusing the general manager and the team?

Yes, for the most part it is. And I will give a little bit more clarity on that.

In addition over the past couple of years with regard to the addition of the GPS devices we’ve got more strict on our procedures with as we beefed up some of our compliance systems. So we have had some procedural changes with regard to our collections so it has been a little bit of learning adjustment.

As you know we got many managers that have been around for many, many years and it has been and sometimes retraining is can be a little bit more challenging than just the training aspect. So there have been some minor changes to our procedures, so I think that has had some effect, but yes it is the heart of what we do, it’s one of our strengths is that our sales and collections are so highly integrated at the local level that, at the same time, sometimes that’s also one of our challenges and I think we experience some of that.

So we went through a competitive time past couple of years with regard to sales and I think that did cause us to shift a little more of our energies over to that side. And this is a balance.

So yes, I think as we are going into this year we’re certainly stepping up the collections back to the priority of everyday business that it should be. So I think that is our biggest answer.

Okay. And I know last quarter we kind of discussed this, Hank, but just wondering, you had some general management turnover - saw a little increase, if I remember correctly.

And just wondering if you think that had something to do with kind of that collection shift? And just wondering, have you seen kind of a slowdown given the sales increases around that General Manager turnover?

Well, that’s a excellent question. As you go back two years ago to the prior year we have had high turnover.

So that means we did have a number of newer managers and that will certainly have an effect, there is no question about that. I am pleased to say that this past year that we just ended, we dramatically improved that and so as those guys stay with us and come a little more seasoned again that’s a very good question, because that’s what we talk about here, having been through this most recent year being much better with regards to turnover our expectations is that’s going to have a very positive effect on our collections going forward this year.

Great. And then last one from me, and I know you spoke you've got 84% of the system with the GPS now.

You're continuing to see that age well. You're continuing to see them utilize and better use that product.

And I think, last conference call we spoke to just the fact that you could actually find the asset was the key. Just wondering how you're thinking about that moving forward, when we should start to see that maybe benefit more so than just finding the asset.

We feel we have a lot of work to do there in that regard. I would tell you and obviously as we’ve talked recently we’ve actually – we’ve more people now or more of our vehicles out there with the GPS device on it, yes we’re seeing a slight uptick not an improvement.

So we’re disappointed, we’ve made a big investment in our GPS and we are not – we don’t feel like we have realized the use of that, the way we should. Hopefully now with another year under our belt, we are getting better at it and we’ll use it better going forward, but I would say that this investment has been a bit of a disappointment for us.

Okay. Thanks for taking my question guys.

Thanks.

Thank you.

Good morning, Hank and Jeff. I know that the collections issue is mostly execution-related, but tax refunds from the IRS through April 30 was down about 1% versus a year ago.

Do you think that might have had anything to do with it, either with collections or with the lower average down payment that you experienced?

No, I don't think it really had much of an effect with our customer, I think maybe a few of our customers were affected by the healthcare penalty and maybe a few had some refunds affected by some estimated income amounts that ended up being different, but it wasn't a large percentage. As far as the down payment being a little bit lower I think we’re just really conservative the fourth quarter of last year in that 9.7% that we’re comparing to was just higher than normal.

And in terms of kind of having a focus on sales, and maybe a less of a focus on collections during the quarter, how did that work? Did you guys provide some sort of incentive to your store-level people to drive more sales, and maybe that kind of shifted their attention away from collections?

And then, how would you get them back to focusing on collections?

I think it’s pretty basic management it’s what’s talk about the most where our focus lies and I think as you said we kind of rallied the troops going into the last quarters. We fell off at the end of April or in April of last year that we are not going to have a repeat of that and I think that we where a lot of the focus was across the board.

There wasn’t any – we always have various sales incentives going on, it’s certainly all of our – as you know Bill, our managers are compensated also the bottom line of the stores. So they are no more heavily compensated on the sales side and on the collections side.

And I think it was just matter of overall focus.

As Hank mentioned Bill, 45 new dealerships for us to really get a handle on manager turnover for these guys to go through one or two tax seasons and learn to sell and collect at the same – a part of it is keep these managers in place is going to get much better over time.

Got it. Okay and on the GPS, you mentioned today, and I think you mentioned before, too, that you'd like to get that cost down to about $3 per car, per month.

What levers do you have or what ability do you have to actually get those costs lower? I assume you're leasing these units at some fixed cost, so how can you lower the cost of that?

It’s all operational, it's the reusing the units when you have a trade back, when you have repossessed cars, it's really being aggressive on pulling those units out reusing them elsewhere and then maximizing the life on the product. We’ve got some definite room for improvement there.

Right and they're in about 84% of the vehicles now. What was that percentage a year ago?

Do you have that?

I don’t have that in front of me. It was 80% last quarter I don't know what it was a year ago.

Okay. That's all I had.

Thanks.

Thank you, Bill.

Thanks. End of Q&A

Okay, we thank you all for joining us today and as we think we may clear our focus here will be on our collections. So we’ll get back to work.

Thank you all and have a great day.