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

John Hecht - Stephens Jeremy Frazer - JMP Securities Daniel Furtado - Jefferies

Good morning everyone. Thank you for holding and welcome to America’s Car-Mart’s Second Quarter 2014 Conference Call. The topic of this call will be the earnings and operating results for the company’s fiscal second quarter 2014. Before we begin, I would 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 last night’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 the 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 provisions 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 forward-looking 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, 2013 and its current and quarterly reports 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. And now, I’d like to turn the call over to the company’s Chief Executive Officer, Hank Henderson.

Well, good morning everyone. We appreciate you joining us today. And we are pleased that we continue to move in the right direction on our top line with an increase of little over 10% for the quarter year-to-year, but we are not satisfied with the overall short-term results we saw for this quarter. Our older stores, I mean, those over 10 years were down from 30.8 sales per month for the same time last year to 30.2 sales this year. On an individual store basis, that’s not a significant change, but considering that half of our stores fall into that category, it does add up. Over time, as our stores mature or they each grow their core base of loyal repeat customers and tend to drift up a bit on average price is having the inventory to move customers up into a nicer vehicle than the previous one is helpful in preserving repeat business. However, if the inventory is weighted too heavily to the higher end, we can miss out on some sales by not having an adequate selection of entry level vehicles. This past month, we have heard more and more from our General Managers that more customers are looking for a lower priced car and we feel we may have missed out an a few sales for lack of adequate selection at that end. So we are in the process of correcting this and do expect to pick up some additional sales going forward. It’s not a radical change to not have any significant impact on average prices we are simply looking to broaden our offering on several of our older stores to pick up some of these sales we feel like we have missed. For as long as we have been in this business, we’ve continually had to move up and down a bit on the cost to quality curve to find that point that best matches our customer needs. So this week is nothing new for us. I think it’s also important to note that the added competitive pressure due to the increased availability in financing is mostly at the high end of our price range and over 10 years old stores have an ASP that’s a little over $650 higher than the younger stores and their sales have been flat. And as we look at those stores, where ASP is lower, we are continuing to see solid year-over-year growth in sales. So we know we have got some good opportunity here. And another area of opportunity for us is with our expenses. We have done a very good job these past few years building up our infrastructure and we will not be making any cuts that adversely impact the level of support provided to our stores. However, as you all know that as companies grow certain areas can get a little fat, so you have to periodically reel that back in. And we have identified and taken action in the few areas that together will result in some good reductions in the expenses for the remainder of the year. And this is one example over the past few months we have had a headcount reduction in our corporate office. Those associates having moved out to the lots as we have had some opportunities open up. We feel that we can operate a bit leaner without sacrificing service and support to our managers. Being a low cost operator has always been a big part of who we are, and we know that staying true to that is the key factor to our past, present and future success. So with that, I will now turn it over to Jeff to give you more details on our quarter.

Okay, thank you Hank. Total revenues for the second quarter were right at $121 million, up over 10% that’s made up of a sales increase of 9.7% and an increase in interest income of 13.6%. Same-store revenues were up 3.8% with about a third of that coming from our stores in the 5-year to 10-year category and two-thirds of that coming from the stores in that less than 5-year category. Revenues for stores 10 years old and older were flat as higher interest income did offset some lower volumes. Given the challenging competitive environment, we are generally pleased with our top line growth. Our average retail sales price for the quarter was up 2% to 9,710, but down 1.3% sequentially due to our continuing efforts keeping our selling prices down for affordability purposes. As always, we will work hard to supply our customers with the very best mechanically sound cars to meet their basic transportation needs. We will leverage our purchasing strengths to the benefit of our customers and we would welcome flat to slightly decreasing overall sales prices, some of which could relate to the efforts on our older lots that Hank mentioned, which could help with affordability and ultimate customer success. Of course, the supply and demand of cars for our market will dictate where we land on this, but taking this longer term view for customer success has always been what sets Car-Mart apart and we feel like this is the perfect environment to ensure we stick with this core philosophy. The down payment percentage was 6.2% for the quarter, down from 6.4% or around $20 per unit sold. Collections, as a percentage of average finance receivables, was 13.6% compared to 14.5% last year. Our average initial contract term was up to 27.3 months compared to 26.6 months for the prior year quarter, but it was down sequentially from 27.7 months as we continue to work hard at keeping the term lengths down by offering customers special payment options during the term of their contracts including some tax down payment options. Our weighted average contract term for the entire portfolio including modifications was 29.5 months, which was flat sequentially, but up from 28.3 months at this time last year. The increases in term from the prior year related to our efforts to keep payments affordable for competitive reasons and to continue to work with our customers as they experience financial difficulties. For competitive reasons our term lengths may continue to increase some into the future, but we are committed to minimizing these increases. We are certainly aware of the downside that comes with increased term lengths and lower down payments. We remain committed to not stretching terms or reducing downs anymore than we think is absolutely necessary to attract and retain our target customers. Our mission is to earn the repeat business, which can only happen if our customers are ultimately successful. The competitive and macroeconomic environment continues to present some headwinds for us, but we will stay focused on customer success and earning repeat business and we believe that our future is very bright. The overall average retail units sold per month per lot for the quarter was 27.6 compared to 28.2 for the prior year. At quarter end 38 or 30% of our dealerships were from zero to five years old, 26 or 20% were for five to 10 years old with the remaining 65 being 10 years old or older. Our 10-year plus lots produced 30.2 units sold per month per lot for the quarter compared to 30.8 for the prior year, about a 2% decrease. Our lots in the five to 10 year category produced 26.3 compared to 25.3, about a 4% increase. And our lots less than five years of age had productivity of 24 compared to 24.7 for the second quarter of last year. That was a slight decrease and related to pulling back a little on certain newer lots to ensure credit performance was where it needed to be. The productivity at our older dealerships continues to be negatively affected by macro and competitive factors. We will continue to focus on customer retention and earning repeat business. Our more mature dealerships do have a deep pool of past and current customers. We will continue to highlight the benefits of our excellent service and our local face to face offering to the market. Interest income was up $1.6 million or 13.6% for the quarter due to the $49 million increase in average finance receivables. Related average interest rate for all finance receivables at the end of October was approximately 14.9%, flat with this time last year. The longer contract terms have had a positive effect on interest income and our ultimate cash returns. For the second quarter our gross profit margin percentage was 41.7% of sales compared to 42.8% for this time last year and compared to 42.5% sequentially. The decrease relates primarily the higher repair expenses and higher claims under our payment protection plan. We will continue to focus on minimizing repair costs. The competitive environment does put some pressure on discretionary repair expenses. Our goal is to balance affordability for our customers with appropriate gross margin percentages to enhance customer success. We expect our gross margin percentages to remain generally in the current range over the near term. For the quarter SG&A as a percentage of sales increased to 18.2% compared to 17.7%, a $2.2 million increase in overall SG&A dollars compared to the prior year quarter related primarily to higher payroll costs and other incremental costs related to new lot openings. Additionally we did incur around $200,000 in GPS expenses for the quarter and ended the quarter with approximately 25% of the accounts having the product. We did successfully pilot the product in certain lots during fiscal 2013 and we started and almost completed our full company rollout for all new sales during the first quarter. Average SG&A dollars or overall SG&A dollars were basically flat sequentially. We are aggressively managing our expenses and we do expect some SG&A leveraging into the future as we grow our revenues. We will continue to invest on our infrastructure to support our growth. We consider the GPS effort to be a long-term infrastructure investment that we pay off with some direct cost savings, but more importantly will enhance our operational efficiencies out in the field. When this project is completely rolled out, we expect the cost to be from $3 to $4 per account per month, hopefully closer to the $3 as we will work hard to squeeze efficiencies out of this effort. A year from now we do expect somewhere above 80% of our accounts to have this product. For the quarter, net charge-offs as a percentage of average finance receivables, was 6.9%, up from 6.5% for the prior year quarter. The increase for this quarter related to higher frequency of losses with severity measured as a percentage of principal outstanding being down a little. Our associates did a good job of minimizing losses for those accounts that did default during the quarter, but we did see a higher relative number of losses. Principal collections as a percentage of average finance receivables for the quarter was 13.6%, down from 14.5% for the prior year quarter. The decrease in principal collected between periods can be attributed to the increase in the average term of 1.2 months, the fact that we did modify a higher number of accounts and we had more delinquent accounts during the quarter. Credit losses on the income statement is higher for the quarter due to lower principal collections and higher charge-offs, with charge-offs having a little more open effect and due to the effect of overall wholesale levels being down. Overall, credit losses were about 40 basis points higher due to the shift in the relative age of our lots versus this time last year. We do have several operational initiatives in place for collections, GPS, credit reporting, focus of our area operations managers and we feel good about the performance of the portfolio into the future, but we do expect credit losses on the income statement to continue to be elevated over the near-term due to macroeconomic and competitive factors. As always, we review our allowance for credit losses at least quarterly and have concluded that the 21.5% is appropriate at the end of October. We are preparing for the most important collection period of the year tax time and our performance during that upcoming period will be a key factor in determining if any adjustment on a non-cash basis would be needed for that reserve. We should note that our expected cash on cash returns in effect our spread or the amount of cash we collect over time compared to the amount of cash we put out on the street upfront, for the capital that we allocate through receivables is very attractive and well in excess of our cost of capital. With longer terms, credit losses that do occur are generally little more severe and happen earlier in the relative term, but more overall interest is earned, which enhances cash returns throughout the entire term. Once again, our cash on cash returns are very attractive and we are aggressively managing the expense side of the business in our efforts to be efficient and best-in-class with both our finance business and our dealership business. It’s tough sometimes to manage this business from a public company standpoint on a quarterly basis and with only 9 million shares outstanding, a few 100 additional account losses on a base of 60,000 accounts can indeed have a pretty dramatic effect. We always look to long-term and focus on cash returns and customer success. Our business has certainly been stress-tested over the last 18 months from both the funding side and from the negative macro environment for our customers. We will get better in this environment. And if market conditions do improve, we would expect to be in a position to take advantage. At the end of October, with our total debt of $101.7 million, we had $41 million in additional availability under our revolving credit facilities. Our current debt to equity ratio was 47% and our debt to finance receivables ratio was 26.1%. We do plan to allocate capital to our share repurchase program opportunistically in the future, but our first priority will be to continue to grow the business in a healthy manner. And now, I will turn it back over to Hank.

Thanks, Jeff. There is no question that the business has been ever changing in various ways in our 30 plus years of business. But one thing that has never changed is our customers need for dependable transportation and financing with the local face-to-face relationship that helps them work through the challenges as they arise. So we are very excited about our future. We have opened five new stores since the beginning of this fiscal year which was May 1 two in Georgia, I mean Rome and Covington. And then also we opened in Grove, Oklahoma, Richmond, Kentucky and Meridian Mississippi bringing us to 129 locations. We presently have four more underway, two in Alabama and then one each in Oklahoma and Tennessee. Before we go on to your questions I would like to comment on the retirement of Eddie High, our COO. Obviously first and foremost the comment I would have is a big thank you to Eddie. He has been with Car-Mart for 30 years and without question played a very major role in the growth of our company throughout his 30 years here. Eddie is a big reason the culture and values of our company had been well preserved. He has passionately held on to them himself and passed them on to many associates along his way. And fortunately for us he will still be around to continue to do so. He has joined our Board of Directors and for this next year he will be working with our training department to ensure that all have an understanding and commitment to carrying forward our company values and culture that have got us to where we are today. That concludes our prepared remarks. We would like to move on to your questions at this time. Operator?

(Operator Instructions) At this time, the participants will now answer questions from the callers. I would like to reiterate that my earlier comments regarding forward-looking statements applies both to the participants' prepared remarks and to anything that may come up during this Q&A. (Operator Instructions) Our first question is from John Hecht of Stephens. You may begin. John Hecht - Stephens: Good morning guys. Thank you so much for taking my questions. First question is if I heard you right that the term - relative to last quarter, the terms were slightly shorter, but in the press release you talk about you have to consider longer terms and lower payments to compete effectively. I am just wondering which direction you are thinking about going for the near term, and how do you balance the extended terms versus the kind of credit experience with those?

Some of that is seasonal. We – as we get closer to tax time, we are able to have some special payments out there and limit the overall term. So the sequential decrease is somewhat seasonal, but I think with some of the efforts that Hank talked about and offering a little lower dollar car and as focused on the down payments we are pushing hard to keep that term extensions lower. But we realize that we might have to make some adjustments and continue to look at that as an option for better customers in face of competition. So we don’t have an exact answer, but our expectation is that maybe on a quarter-to-quarter basis, we will be faced with some additional term extensions. But we are going to try to keep those to the minimum and maybe if we have some success with these lower priced cars maybe be able to bring that back down some so.

I would add to that, the thing where we do have the longer terms we are trying as best can to mostly offer the longer terms to the repeat customers, it’s a retention tool that the general managers have. And as we said as customers graduate up into the nicer or to our higher end that’s presently where we see more of the competition and that’s one of the things that we are seeing from increased availability with the longer term which helps to do the payment down. And so there is more risk for us for the longer term, but there is also substantially less risk with a repeat customer. And so we hope there is offset there and we pretty well are eliminating that to the repeat customer. John Hecht - Stephens: Okay that’s helpful. Thanks. And then second question is do - you discussed some of the pricing pressures and in part those are related to your quest to be the lowest cost retailer. I am wondering on the pricing side or on the supply side the Manheim I know it’s not the same type of composition as the type of car you are buying, but Manheim has been trading lower. Is there any relief on the supply side that you see in the near-term?

Yes. We have a good supply and we are in good shape going into our tax time on the inventory. And as Jeff just mentioned about the seasonality of tax time we typically begin to see prices get pushed up this time of year as more people are looking for that same car as we get closer to tax time. So I would anticipate that over the course of next couple of months we will see some pressure on that car pushed up.

Overall, with the new car sales levels being up and up, I think we are in great shape on inventory and then the guys in purchasing are doing a super job and we should be in good shape on both the cost and the quality and the mix. John Hecht - Stephens: Okay. And then the GPS, I was just – you guys did mention this last quarter, so it’s nothing new, but Jeff in hearing you, do you expect to push this expense to the consumer, will you bear some of it, if you do will there be any margin impact from the GPS on those cars?

No, it’s not going to be anything pushed to the customer there. It’s going to be an internal cost for us. It’s going to be an SG&A item, but we do expect some direct cost reductions to offset that, but the big benefit is going to be just the enhancement of efficiencies as we try to manage 60,000 or 100,000 accounts. We are going to view this as infrastructure investment to enhance efficiencies in the productivity out in the field. John Hecht - Stephens: Okay, that’s very helpful. And my final question, this has been a medium cycle of intense competition, I mean, you guys are in a very good position to deal with it, but evaluating the mom and pop competitors would feel like they are at a competitive disadvantage or maybe to a material degree in this type of cycle. What are you seeing with the mom and pop competitors and are any expressing distress or shutting down?

Well, I wouldn’t say we are seeing more shutdowns, but they are definitely - I think you are exactly on the point and we have had some of those same discussions here just in the past few days, yes, they are definitely feeling some of the pressure, I would guess, that their sales are down year-to-year. John Hecht - Stephens: Thanks guys.

Alright, thank you John.

Thank you. Our next question is from Jeremy Frazer of JMP Securities. You may begin. Jeremy Frazer - JMP Securities: Good morning gentlemen. I am on the line for David. And I guess, some of my questions were kind of answered already, but just kind of big picture, how should we think about maybe normalized environment for provisioning expense, where terms are maybe even extended past that 30-month term and the down payments are kind of below 6%?

Well, I wish we had exact answer for you. We are certainly aware of the fact that the credit loss provisions on the income statement will be elevated with longer terms. We know we can do better internally on our collections efforts. We think that the GPS product and credit reporting and the other efforts we have going on, but the collections are going to help over time. And then if we get any relief on the macro side from the customer or competitive side on funding, then we hope to get some offset there, but no, our credit losses any time you have term extensions just the nature of – the timing of losses is going to be a little more front end. And then on a cash basis, you are going to have the interest income for the pool that’s going to be stretched out over a longer period of time. So you are going to be taking more credit losses on your income statement upfront, but then recognizing more interest income over a longer period of time. So the provisioning on the income statement is certainly going to be higher as terms expand, but if we have some success with keeping those terms down, we should see some leveling off and hopefully even some improvements with some of these other factors down the road. Jeremy Frazer - JMP Securities: Okay, thank you. And then just as a kind of housekeeping, I just kind of missed it, could you give me the quick breakdown of the number of lots by age?

Sure. We at the end of quarter 38 of our lots were from zero to five years old, 26 were from five to 10 and the remaining 65 were 10 years old or older. Jeremy Frazer - JMP Securities: Alright, thank you guys.

Thank you.

Thank you.

Thank you. (Operational instructions) We have a question from Daniel Furtado of Jefferies. You may begin. Daniel Furtado - Jefferies: Good morning guys. Thanks for taking my question.

Hi, good morning Daniel Furtado - Jefferies: Good morning. So I just kind of want to get a bigger picture question and if we think about the current environment, this influx of securitized lenders in the marketplace, could you compare and contrast it to the last time we saw this, which I believe and correct me if I am wrong was kind of like the ‘04, ‘05 and ’06 time periods. Is this substantially similar or do you see differences between this current environment and the last time we saw this type of competitive flex?

Yes, I would say it is definitely more significant than it was before. I think some of the deals and offerings we hear are more aggressive than that time period. And actually, it seems to be sustained longer this time than it was before. And again, I would tell you this is not a complete overlap of our business, but more so, on that upper end vehicle that we have. Yes, it’s definitely more aggressive than I think we saw the last time. Daniel Furtado - Jefferies: Okay. Okay, well thank you for that color.

Thank you.

Thank you. I am showing no further questions at this time. I will turn the conference back over to Hank Henderson for closing remarks.

All right. Well, thank you to everyone for joining us this morning. And as Jeff mentioned earlier, we are getting into our tax time. We have that promotion in place now and we certainly do expect as we get a little better at this each year. I think we are looking forward to some good success with this plan. And so with that, we do anticipate some better results going forward. So thank you all. Have a good day.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. Have a wonderful day.