Good morning, and thank you for holding. Welcome to the Conn's Inc. conference call to discuss the earnings for the first quarter ended April 30, 2012. My name is Mary, and I will be your operator today. [Operator Instructions] As a reminder, this conference call is being recorded. The company's earnings release dated June 4, 2012, distributed before the market opened this morning and slides that will be referenced during today's conference call can be accessed via the company's Investor Relations website at ir.conns.com. I must remind you that some of the statements made in this call are forward-looking statements within the meaning of the Securities and Exchange Act of 1934. These forward-looking statements represent the company's present expectations or beliefs concerning future events. The company cautions that such statements are necessarily based on certain assumptions, which are subject to risks and uncertainties, which could cause actual results to differ materially from those indicated today. Your speakers today are Theodore Wright, the company CEO; Mike Poppe, the company COO; Brian Taylor, the company's CFO; and David Trahan, President of the company's Retail Division. I would now like to turn the conference over to Mr. Wright. Please go ahead, sir.

Good morning, and welcome to Conn's First Quarter Fiscal 2013 Earnings Conference Call. Joining me this morning is Mike Poppe, our Chief Operating Officer; Brian Taylor, our Chief Financial Officer; and David Trahan, President of our Retail Division. I'll begin the call with an overview focused on our Retail segment, Mike will then discuss our Credit segment and Brian will complete our prepared comments with additional financial information and review of our capital position. Conn's is providing a valuable credit alternative to customers. The mix of credit sources for consumers is on Slide 1. Credit remains our primary competitive advantage. Slide 2 is our company's mission statement. This statement, I think, captures the value of Conn's to consumers. On Slide 3, you can see our same-store sales performance by product category. The trend in same-store sales growth continued in May, with May same-store sales increasing approximately 24%. Same-store sales of furniture and mattresses increased about 55% in May. Comparisons do become progressively more difficult over the next several months. Overall market conditions in all of our major categories except mattresses are not robust. Television remains a challenging category, but our strategy of promoting higher-priced, higher-margin products is generating profits despite the pressure on sales. Our television vendors' unilateral pricing programs are holding so far and are well aligned with our strategy to focus on higher price points and larger screen sizes. In May, our #1 selling television was the 70-inch Sharp, #2 was the 60-inch Samsung. We expect to have a 90-inch flat-panel screen on the floor this month and have done well with 80-inch sizes. The appliance market remains challenged, but we're taking share in that market. We're excited to be able to add Sealy as a supplier and have increased our assortment of mattress SKUs as a result. Sealy gives us another powerful lineup of brands that resonate strongly with our core customer. Our long-term goal is to generate 30% or more of total revenues from furniture and mattresses. As our marketing, assortment and sales associate training improve and the sales floor space increases, we believe this goal can be achieved. It's impossible to assess with precision how much of our same-store sales growth resulted from the benefit of store closings and remodeling of existing stores. Our best estimate is stores not remodeled or adjacent to closed stores increased same-store sales by 13% in the quarter. Slide 4 illustrates our gross margins by product category compared to the same period a year ago. This slide demonstrates that we remain price competitive in the retail market by product category. Competitive pricing is part of the value that we offer consumers. Compared to our peer group, we believe our margins are typical. The primary drivers of our improvement in our gross margin percentage are the mix shift, the furniture and mattresses and the improvement in furniture sourcing. These margin improvements are structural and we think sustainable. We expect to complete restructuring of our furniture sourcing in the current quarter. Our gross margins in this category should improve modestly from the level in Q1. As we obtained sourcing, many of our furniture and mattress SKUs changed as well. Some of the new SKUs will not perform, and inventory turns in this category slower than we expect long term. Nevertheless, our accounts payable coverage of inventory was 88% at the end of Q1, much improved from historical levels. Once our product lines become more stable, we believe we can deliver 100% accounts payable coverage of inventory. Discontinued end of life cycle or aged inventory is about 1/3 of year-ago levels. Aged inventory is now negligible. Markdown percentages on the sales floor and at our clearance centers have declined. Inventory availability is adequate in all of our categories with the disaster-related disruptions of last year behind us. As we continue to grow the furniture and mattress categories, complete execution of changes to furniture sourcing and benefit from an improved inventory management and related reduction in markdowns, we believe we can meet our long-term goal of 35% retail gross margins. Many of our stores are at this level today. Retail SG&A expenses were well controlled in the quarter as shown on Slide 5. When you consider our SG&A expenses in relation to gross margin dollars generated, SG&A expenses declined. Our overall Retail segment operating income margins at 6.4% compare favorably to our peers. As we add stores and improve gross margins, we should be able to capture operating leverage. Our sales floor execution, although still not acceptable, is improving. Sales associate productivity improved to $59,000 per sales associate in May. Sales associate turnover declined to 55.5% in the quarter compared to 87.9% in the prior year quarter. Our better trained, more productive associates are delivering a better sales experience. Sales customer satisfaction has been steadily improving, closing rates are improving, secret shopper ports are improving. There is much work left to be done, but we're getting measurably better. Our Retail business model is stabilizing and generating better profitability, we now need to generate more traffic. During the past year, we improved our consumer messaging to help communicate our credit offering. We're now working on refining these messages and better aligning our media mix with our customer base. The Internet and digital media is a critical piece of the media assortment, and we're acquiring new customers through this media as shown on Slide 7. Our surveys, as well as sales results, demonstrate that our lower income core customer is engaging with digital messages. Historically, half of our advertising expenditures have been in print media. Our core customer is not likely to be a newspaper subscriber, and we have verified this through our own work. We're testing different approaches to media allocation and intend to continue testing over the next quarter. Our remarketing of 2 of our remodeled stores has given us opportunities to test new strategies to drive traffic in our stores. Many consumers still aren't aware of our furniture and mattress offerings. Our future advertising will include more furniture and mattress messages and direct mail and broadcast media. Over time, we believe we can drive additional traffic to our stores as we improve both content and media without increasing our advertising spending as a percentage of sales. We expect to add 5 to 7 stores in the current fiscal year with one store opening this month. Two stores are expected to open late in Q3 with the remainder to open in the fourth quarter. Depending on the pace of construction, we have a number of stores that could open either near the end of this fiscal year or very early in fiscal 2014. As we prove the ability to execute store opening, our long-term goal is to increase store counts by 10% to 15% per year. New stores will have somewhat larger square footage than our average store today and the planned store locations serve markets with higher than our average stores sales potential. We believe we have the infrastructure and management resources to support this reasonable growth base. Keep in mind, we closed 12 stores in the last year. The stores adjacent to closed stores continue to benefit from customers who are loyal to Conn's. With the completion of our announced store closings this month, all stores are currently generating a four-wall profit and contributing to covering overhead. We have a handful of stores that are not generating a profit after allocation of 100% of segment expenses. We'll continue to evaluate locations and opportunistically close, relocate or expand to maximize the potential of our store base. However, we don't expect to announce closing of any additional groups of stores with related substantial charges. Remodeling of existing stores continues, and 4 to 6 more stores will be completed this quarter. These stores represent roughly 10% of our sales volume. At about 10 locations, we are pursuing relocation to better sites as we approach the end of lease terms. The relocation sites would provide us additional square footage for furniture and mattresses. We relocated one of our Lafayette, Louisiana stores in early March, and we're able to effectively advertise our relocated store. The store has increased footage for furniture and mattresses, but all categories improved sales rates. From March through May, our sales in this location increased an average of 90%. Because of this experience, we have rearranged our remodeling plan to the extent possible to complete entire markets near the same time and relaunch these markets. We were able to advertise our remodeling in one other location that had already been completed. In this store, we've seen a substantial improvement in sales rate. In June, we will relaunch our McAllen, Texas market, which is already strong performer for Conn's. As we return to growth and our business stabilizes, we're more comfortable providing long-term guidance about our goals and objectives, and I've included a number of these in my comments. Our overall goal is to deliver returns on equity of 17%. Our updated guidance for this year implies a return on equity of about 13%. But if we achieve our gross margin, product mix and store growth goals, we believe a 17% return on equity is possible. Now I'll turn the call over to Mike.

Thank you, Theo. First quarter Credit segment performance showed continued improvement with increased operating income contribution as SG&A and provision for bad debts declined year-over-year and sequentially, though finance revenues declined. In underwriting, during the first quarter, we continued our plan of shortening the contract terms at origination. As a result, we saw the weighted average origination term drop to 29 months for April originations compared to 32 months the same time last year. Along with an increase in short-term, no-interest financing, we expect to see a higher payment rate over time, requiring less capital to support the credit operation and improving overall portfolio performance. This should improve our capital allocation efficiency, allowing us to invest more of our capital in the higher return Retail business. Finance revenues declined as the interest income and fee yield fell to 18% in the first quarter from 18.5% in the same quarter last year. The decline was due to increased promotional credit balances combined with the expected high level of charge-offs. The percent of the portfolio represented by noninterest-bearing promotional receivables increased to 16% of the average portfolio balance during the quarter, up from 13% during the fourth quarter and 11% during the first quarter last year. We expect this to increase to between 20% and 25% of the portfolio over the next few quarters based on our recent sales and finance penetration trends. This may put additional pressure on the yields. Keep in mind that these no-interest receivables are short term, 3-, 6- and 12-month promotional credit programs, and we use GE Capital for the long-term promotional credit offerings. Beginning in the third quarter last year, we began offering our short-term promotional credit programs to a broader range of customers, largely for purchases of high-ASP, high-margin products in an effort to encourage more rapid payoff of their accounts. If these customers take advantage of the no-interest offer at a high rate, the reduced interest earnings will be offset by the benefit of a more rapid repayment of the receivables. If they don't, then we will see the yield increase from first quarter levels. We can control the amount of promotional credit offered, and we'll adjust our plans based on the results we experienced and the impact on our use of capital. We do expect to see some yield benefit from reduced charge-off levels over the next few quarters starting in the third quarter, ultimately providing a 20 to 40 basis point improvement. Servicing costs declined sequentially and year-over-year as improvements in credit portfolio quality allowed us to reduce collection expenses. The reduction is primarily from lower payroll costs as we continue to shrink the size of our workforce to match the size of the pool of delinquent accounts. Similar to what has happened in the Retail operations, we've reduced collector turnover and have seen improved productivity. The provision for bad debts also declined due to the improvements in the credit quality of the receivables portfolio. 60-day delinquency was down 130 basis points from January 31 to 7.3% as we typically see declines this time of year. Also, as shown on Slide 8, we continue to reduce the volume of accounts re-aged. Remember, re-aging is extending an account past its original maturity date. Only 2.8% of balances were re-aged during the quarter compared to 8.2% last year. And we estimate 60-day delinquency would've been at least 200 to 300 basis points lower if we had re-aged at the same pace as last year. As a result, as shown on Slide 9, the percent of the portfolio re-aged was down 220 basis points since last year-end and 780 basis points since last April to 11.6% of the portfolio. The improving quality of the receivables in the portfolio is also shown in the credit score of the receivables at the end of April, which rose to 601 from 589 last year as shown on Slide 10. Because we are continuing to assess our collection practices and strategies and due to the number of changes we have made over the past year, we still do not have perfect clarity about how quickly the expected improvements will be reflected in our results, though the indicators are positive. To understand the earnings sensitivity related to our guidance for the provision of bad debts, a 100 basis point change in the provision from the midpoint would be a 16% change or about $0.12 impact to EPS. As we look forward, we expect the charge-off rate to decline during fiscal 2013, starting late second quarter. This is supported by the fact that roughly 2/3 of our charge-offs are re-aged accounts, the balance of which is declining rapidly. And preliminary May results indicate that 60-day delinquency was essentially unchanged compared to the end of April while the percent of the portfolio re-aged dropped an additional 60 basis points during May. With the improving profitability and credit portfolio trends, we believe we are on track to deliver improved and consistent profit contribution from the credit operation over time. However, while our results show continued improvement in the performance of the credit business, the improvements have come slowly, and we're working to accelerate the pace of change. Now I'll turn the call over to Brian Taylor. Brian?

Thank you, Mike. It is a pleasure to join you and communicate continued improvement in our operating performance, liquidity and returns on my initial call. Net income for the quarter was $11.6 million or $0.35 per diluted share, an increase of 163% from last year on revenue growth of just under 5%. Profit expansion was driven principally by our Retail segment. Revenues for this segment rose 6.3% to $167.2 million despite the closure of 11 stores in fiscal 2012. On a same-store basis, revenues increased 17.8% from the prior year quarter, driven by higher average selling prices, expansion of our furniture and mattress offering and retention of a portion of the unit volume from closed stores. Retail gross margin was 33.7% this quarter, up 320 basis points over the prior year period. The increase in the retail gross margin was driven by a favorable shift in product mix. This was particularly evident in the furniture and mattress category, where we saw significant sales and margin growth, which outpaced growth in the other categories. Operating income for our Retail operations more than doubled over last year, equaling $10.8 million. Retail operating margin for the current quarter was 6.4%, 330 basis points above the same quarter last year. The year-over-year improvement in operating margin was driven by the expansion in gross margin and improved leverage on SG&A. The Credit segment also contributed to the year-over-year growth in operating income. Credit segment results for the quarter reflect the impact of lower compensation-related servicing costs, reduced provision for bad debts, a reduction in the average portfolio balance and a decline in interest income and fees. We have seen continued decline in servicing costs and the provision for bad debts driven by the improvement in the credit quality of the receivable portfolio. Interest expense declined $3.8 million from the prior-year period as a result of our debt refinancing in the second quarter of last year and a reduction in outstanding debt. Moving to the balance sheet. As expected with the policy changes introduced last year, we have seen an increase in customer receivable charge-offs against established reserves. This was particularly pronounced within re-aged accounts, which are declining through a combination of collections and charge-offs. Re-aged accounts declined $15.1 million in the quarter, and the allowance for doubtful accounts was down $4.5 million. Inventory turns were 6.5 for the quarter, improving sequentially and year-over-year with the liquidation of end-of-life and slow-moving products. We reentered the securitization market at the end of April, issuing $103.7 million in amortizing asset-backed notes, which bear interest at 4%. After considering discounts and transaction costs, the effective cost of the notes is estimated at 8.25% over the 12-month expected term. It's important to note that while the legal term is longer, if the notes are not repaid by April 15, 2013, we will incur a step-up in the annual interest rate of 8.5%. We would expect the cost of any future transactions to be lower, mostly by reducing transaction costs. Net proceeds from the offering were used to reduce borrowings under our asset-based lending facility, providing us with additional borrowing availability. With the completion of the ABS transaction and the interest rate caps in place, our sensitivity to interest rate fluctuations declined. Now turning to Slide 11. Our outstanding debt declined by $23.6 million during the quarter to $298.1 million at April 30, which compares to a customer receivable portfolio balance of $635.2 million at quarter end. Our debt-to-equity ratio continues to improve and stood at 0.8x at April 30, 2012. As of April 30, we had immediately available borrowing capacity of $145.4 million with an additional $113.5 million that could become available with growth in the eligible receivable and inventory, giving us total borrowing capacity of approximately $259 million at quarter end. During the first quarter of 2013, we generate cash flows from operations of $37.1 million. Additionally, we receive $2.9 million in cash from employees' exercise of stock options. We would expect additional option exercises this year dependent on stock price performance. Annualized return on stockholders equity was 12.8% for the first quarter compared to our long-term goal of a high teens return on equity. Given our current capital positioning both planned for next year, we do not believe additional capital will be required to fund the business for at least the next 12 months. We will continue, however, to pursue financing opportunistically. Turning to Slide 12, we increased our earnings guidance by $0.10 for fiscal 2013 to $1.30 to $1.40 per share based on the following full year expectations: same-store sales up mid to high single digits, open 5 to 7 new stores, retail gross margin ranges between 32% and 34%, an increasing credit portfolio balance, provision for bad debt ranges between 5.5% and 6.5% of the average portfolio balance outstanding, SG&A expense ranges between 28.5% and 29.5% of total revenues. Interest expense increases approximately $2 million over the balance in fiscal 2013 with the issuance of the ABS notes in April. Our average debt balance for the remainder of fiscal 2013 increases approximately 5% over the April 30 level. Much of this analysis and more will be available on our Form 10-Q to be filed with the SEC. That completes our prepared remarks. Operator, please begin the question-and-answer portion of the call.

[Operator Instructions] And our first question comes from Peter Keith from Piper Jaffray.

I was hoping you can provide a little bit more clarity just around your gross margin outlook. That seems to be the main contributor to the increase in your earnings outlook. It's a very nice bump up. I guess, what's changed in the last couple of months here that's given you the confidence to take up the gross margin guidance by that much despite some increasingly tough compares in the months ahead?

Peter, what's changed is 2 things. One, we have more confidence in the growth of our furniture and mattress business and the proportion of our sales that will be provided by those 2 categories. The second thing is we are actually seeing the benefit of better sourcing in those categories. We thought we would see that, but now we're actually seeing it and have confidence that we'll get that benefit. That's really what's driving our increased guidance there and our increased comfort that we can achieve higher levels of gross margin.

Okay, great. So, yes, I noticed that your -- the furniture and mattress category by itself, over 1,000 basis points of gross margin expansion. Was that driven solely by the improved sourcing? Or did you have any shift in mix and maybe specifically, higher mattress sales?

A shift in mix to higher ASP products within both furniture and mattress categories rather than a shift between those 2. That also affected the gross margin percentage. So it was both better mix within those categories and better sourcing.

Okay, great. If I could just shift gears here real quick on your -- the remodeling program that you have in place. So you're still targeting 20 stores, I may have missed that. But could you give us an update on how many you've done this quarter and kind of what the cadence is through the year?

We expect to complete 4 to 6 this quarter, 2 of those are really already completed with the remainder to be finished over the rest of the quarter. And we expect that kind of cadence for the rest of the year, and I'll call it 5 or so per quarter. And we have about 6 completed now -- or we had 6 completed at the beginning of the quarter, so we should finish the year with 20 or maybe 1 or 2 more remodels fully completed by the end of this fiscal year.

Our next question comes from Rick Nelson from Stephens.

See, while I was visiting stores in the Houston market here recently, saw the CONN'S HOME PLUS, is that the format that you're -- all the remodels being called Conn's Home Plus and how's that type of format in terms of square footage devoted to furniture, et cetera?

Yes, our remodeled stores will be rebranded Conn's Home Plus. We've done that in our remodeled locations so far, and we have market tested that, some, and have gotten a positive response both to the branding and the remodel itself. Plus, we've had a number of them opened for a while so we've seen the results. The square footage devoted to furniture and mattresses is going to vary based on the square footage that's available within the stores. So some stores will have more and some stores will have less. As we look at new stores, that's similar as well, we're going into second-generation space almost exclusively, so store sizes won't be perfectly consistent. They won't be all exactly the same size. Having said that, our new stores and the remodels will all include more square footage devoted to furniture and mattresses and a furniture and mattress presentation consistent with what you saw when you visited our store in Houston that had been remodeled.

Now the Sealy assortment in the new stores, lots more mattresses, can you talk about the SKUs now in the mattress category versus what you were maybe a year ago?

Yes, Rick. We were SKU-ing approximately 18 SKUs per store. Now, our SKU mix with our Sealy offering is averaging around 36 mattress sets per store.

And that -- the mix shift, is it shifting then toward mattresses, and is that what's helping drive this margin expansion?

No, Rick, it really isn't. In fact, in May, our furniture sales growth outpaced mattresses.

And, Rick, this is Mike, on a year-over-year basis, we've pretty well had a doubling of SKUs across the furniture categories too, and in some cases, bedroom has an even greater increase in number of SKUs relatively year-over-year.

Got you. And a question on the RAC Acceptance, do you think that the 5% target, is that still reasonable?

We think it's still reasonable with the right mix of store locations. We have a lot of locations that are at 5% or better today. I don't think, though, based on our experience, a goal of above 5% is realistic unless there are changes in how either we or RAC operates.

Got you. And if I can ask a final one on the Credit business. The number of active accounts looks like a 3-year low this quarter. Should that start to grow now that you're pursuing store growth with some of the sales numbers we're seeing?

Yes, Rick, we would expect -- you saw the balance is actually higher year-over-year in April, and we're writing slightly average higher balances and newer account levels, but there's always a drop in the first quarter. Seasonally, that happens. And so, yes, we would expect to start seeing growth in account balance -- number of accounts.

Our next question comes from David Magee from SunTrust Robinson.

Really, 2 bigger picture questions. One is the -- are you seeing better enforcement of map pricing on the consumer electronic side, the business right now?

Yes, we have, and also we see it sticking, so that really bodes on our favor.

Do you think that the pricing has been set at appropriate levels to successfully enforce that going forward?

Well, I think, as always, when the first product is introduced, it comes out -- does the market adjust and also we see another adjustment coming with the fourth quarter as well. But that's typically MO of electronics business.

Are you seeing any benefits yet from consolidation in your marketplace?

We see benefits from consolidation in our marketplace principally in the furniture category, and I would say that's more exit of competitors rather than consolidation. I think in the electronics and appliance categories, the market is dominated by a number of large national competitors that have not consolidated. So I don't think we're seeing a significant benefit in those categories from reduction in competitors.

[Operator Instructions] Our next question comes from Dan Binder from Jefferies.

Hi, this is John Gugliuzza, in for Dan. So I just wanted to ask a little bit more about furniture and mattress gross margin. It seems like the sourcing benefits came in pretty strong this quarter. I remember you guys commenting on that in the past, and it sounded like it might take to a good portion of the year to play out, so it seems like it's come a little bit faster than you originally expected. So I was just wondering if you could comment on the timing of the sourcing benefits and how we should think about the long-term furniture and mattress gross margin.

The timing came faster than we expected partly because we found, as we were talking about changing sources, our existing vendors were more cooperative. So the timing was somewhat faster than we expected, but I think the result is what we expected. As far as the gross margins long term, we think we have a few hundred basis points yet to go. I think we're going to continue to be promotional in this category. We're not trying to necessarily maximize possible gross margins, we're trying to maximize the total amount of gross margin dollars we deliver. So I think high 40s is -- as much as we have the potential to achieve, and we certainly aren't expecting that tomorrow, but we think we could get to the higher 40s as we become stronger with these categories.

Okay. And with the gross margin guidance being raised up 2 points, I know you already commented, but this is mainly being driven by the furniture mix and the sourcing benefit, but has your view changed at all with regard to the margin outlook for your other categories?

It hasn't changed materially. We're always looking for more opportunities to get margin, and we think there are some. But we're not going to stop being competitive in these categories. We're going to continue to try to drive traffic and volume in these categories. So we don't see a significant change in margin in appliances, electronics and home office.

Okay. And just one more question if I may. The provision for bad debts was lower this quarter. You mentioned in the release it reflected improved overall credit quality in the portfolio. But at the same time the guidance for the year, provision I think became a little bit more conservative than previously. It looks like it's up about 50 bps. So can you comment on what's changing your view for the provision for the balance of the year?

You bet, John, this is Mike. And it's really -- as I've noted in my comments, just the pace of change that we're seeing and how quickly we expect to get to our expected performance level. But we still expect to get to the same end result.

I show no further questions -- actually, one moment. Our next question comes from Scott Tilghman from Caris & Company.

A quick question for you going back to the credit side. Again, the last question was on the bad debt provisions, but I wanted to ask when the charge-off ratio going up. First off, it looks like you restated that number from last year. I was wondering why that was. And second, just wanted to get my hands around, if that's tied to the change in the re-aging process or if there's something else going on there.

So as far as the prior year number, remember, when we revised our presentation at year-end, that was when that number got restated, so everything previously was restated with our presentation change at year-end. As far as the 8.5% charge-off rate this quarter, it ties exactly in with the changes we made in our charge-off and our re-age policies later last year and those more highly re-aged, older accounts flowing through the portfolio. And it's consistent with the expectation I think we've been communicating the last quarter or so that we expected fourth and first quarter to be higher and then starting in the summer, to start see the charge-off rate turn down.

I show no further questions in the queue and would like to turn the conference back to the speakers for closing remarks.

Thanks, everyone, for joining us.

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.