America's CAR-MART Inc (CRMT) 2012 Q1 法說會逐字稿

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  • Operator

  • Good morning, everyone. Thank you for holding and welcome to America's Car-Mart's first-quarter 2012 conference call. The topic of this call will be the earnings and operating results for the Company's 2012 fiscal first quarter.

  • 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 this morning's press release, which can be found on America 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 provision 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 ending April 30, 2011 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, Eddie Hight, the Company's Chief Operating Officer; and Jeff Williams, Chief Financial Officer. And now I would like to turn the call over to the Company's Chief Executive Officer, Hank Henderson.

  • Hank Henderson - President & CEO

  • Good morning, everyone. We appreciate you joining us today. We are very pleased with the increase in sales for this quarter over last year. Revenue was up almost 10% for the quarter year-to-year. Our sales levels are staying at a significantly higher level than just a few years ago. I would point out that if we look back to '08, we sold less than 6000 units for the same quarter at that time and we are now up over 9000 and that is an increase of over 50%. So this is very significant to us.

  • As we said back at that time, we needed to increase our average number of units sold per store and we needed to keep it up in order for us to consistently attain the sales volumes we are capable of. Back in '08, we averaged just about 21 sales per lot for the same quarter and for the past three years now, we have averaged over 28 sales per store for each month of the first quarter, while opening several new stores along the way.

  • A key factor in our sales growth has been the outstanding job our purchasing department has done meeting the demands of increasing sales, maintaining not only a good flow of adequate numbers of vehicles, but a very good mix and selection as well.

  • And our sales support staff is also to be commended for their great work. I recently had the opportunity to attend a seminar of sales trainers we are conducting in central Arkansas and I could not have been more impressed. There is no question that our sales associates are receiving the best training we have ever had in this area.

  • And certainly our investments in developing our brand identity are paying off. We've maintained a very consistent ad campaign. Our slogan, Drive Easy, has become more well known at a level I think higher than any of us ever envisioned when we first began this effort and we feel confident that this has increased traffic over time to help us to maintain these higher levels. We will try to vary the presentation slightly from time to time, spice it up a bit, but our plan is to continue to consistently deliver the same Drive Easy message.

  • Overall, this quarter was very a solid start for us for the year. Sales were strong with good terms as our down payments were actually up slightly from last year and as I have already mentioned, the purchasing side of the business was very solid as we were actually able to bring down average prices just a bit. And collections were solid; although we do feel like we could have done a little better job in that area.

  • As we have said many times before, working with our customers is the very heart of what we do and where we set ourselves apart. As the increasing cost of cars over the years has outpaced the increases in wages for our average customer, we know this is more important than ever. And we have our COO, Eddie Hight, with us today. Eddie has been with Car-Mart for over 25 years and has seen our Company and our customers weather good times and bad together and I have asked him to speak a bit to you today about how we are assuring we are developing the necessary relationships and working with our customers as effectively as possible. Eddie?

  • Eddie Hight - COO

  • Thank you, Hank. Good morning, everyone. I guess the best place to start would be with our mission statement. We strive to earn the repeat business of our customers by providing quality vehicles, affordable payment terms and excellent service. Excellent service is obviously a broad term that encompasses everything from the smile on our face when our customer comes in the door and remembering each customer's name to how clean our bathroom is.

  • Very critical to our business is the level of customer service we provide when our customer is delinquent. It is not just a normal collection process. We understand our customers are on a tight budget and there will be events in their lives that make it more difficult at times to make their payment. It is imperative that we develop a good relationship with our customers so that we can work together to come up with creative solutions to help them get through a tough time and our ultimate goal for them is to be a repeat customer.

  • And to do this, we have to hire the right people and we have to train them correctly. We put forth a great effort to assure our associates understand very early on the Car-Mart way and to do so, we have recently developed a video on our Company history for the orientation of all new associates to help them gain an appreciation of our routes to help them understand why and how we are different from the rest.

  • Our intent is to do everything we can to work together with our customers even when seriously delinquent. We understand that whenever we become adversarial in the collection process, we have lost. We understand it sometimes takes some special extra effort from our customers to make their payments and if we are to expect that extra effort from them, we have to be willing to do the same as well. So it is very critical that each and every associate maintain the right attitude in all of our dealings with customers and they remain mindful of our ultimate goal -- just the repeat business.

  • While this is always with us and is never an ending process, there are times when we recognize we have to step it up and we know we are going into a time of year where seasonally collections seem to be a little more of a challenge. So it is more important than ever that we are at the very top of our game in this area of our business.

  • We are stepping up this message at all levels, in all training sessions with our associate development department, in our managers meetings and certainly the weekly staff meetings at every store. We want to do everything we can to assure that every customer receives the time and attention they need to work through any challenges they may have.

  • Jeff Williams - CFO

  • Thanks, Eddie. This is Jeff Williams, Chief Financial Officer. Our 9.9% top-line revenue increase for the quarter was the result of a 6.7% increase in unit volume, a 2.2% increase in average retail sales price, a 15.2% increase in interest income and a $670,000 increase in wholesale sales. Same-store sales revenues increased by 3.6% for the quarter.

  • Our down payment percentage was 7.3% compared to 7.2% for the first quarter of last year. Collections, as a percentage of average financed receivables, was 15.9% for the quarter compared to 16.3% last year. For the quarter, our average initial loan term was 26.4 months, which is up just slightly from the prior-year quarter and from the fourth quarter of fiscal 2011, both of which were at 26.3.

  • Our weighted average contract term for the entire portfolio, including modifications, was 27.4 months. This compares to 27.7 months at this time last year. We continue to expect benefits from software and operational changes related to our deal structuring, especially as related to the scheduling of payments during future tax refund periods. And we are very pleased with the trend in overall term length within the portfolio.

  • The average retail sales price increased to $9,441 from $9,242, or 2.2% from the first quarter of last year. Sequentially, we are very happy to report that the average retail sales price actually decreased $79, or 0.8%, which means that we were able to pass on our great results on the purchasing side directly to our customers in the form of lower sales prices.

  • Vehicle supply does remain d very tight and our purchasing agents continue to do an outstanding job with the quantity, quality and mix of units on our lots and at the same time keep the purchase price increases to a minimum. We are working very hard to maintain gross margins in the 43% range and holding at this level will depend heavily on top-line sales volumes, wholesale volumes driven by repossession activity relative to top line and by continuing to leverage our purchasing strengths, expense controls and pricing efficiencies. Minimizing increases and purchase costs will be key to us maintaining gross margin percentages into the future.

  • The overall average retail units sold per month per lot for the quarter decreased slightly to 28.2 from 28.8 for the prior-year quarter and down from a seasonally higher 29.4 sequentially. The monthly average by age category was, for the 21 lots, under five years of age, we averaged 22. This compares to 21 for the prior-year period for this category. For the 32 lots that are between 5 and 10 years of age, we averaged 23. Now this compares to 26 for the prior-year period and for the lots over 10 years of age, we averaged 33 compared to 34 for the prior-year period.

  • We believe that most all of our dealerships have significant room for top-line growth, especially those dealerships that are less than 10 years old. The loss of productivity we saw in the lots in the 5 to 10-year category was highly concentrated in our Texas dealerships and solid steps are being taken to address our shortfall in Texas.

  • We would like to note that credits performance in our Texas locations trended positive when compared to last year's first quarter. Now the current quarter issue was sales productivity, a situation that we consider to be very fixable.

  • Our overall same-store revenue increase of 3.6% is very good, but a little less that we would like to see. We have to be realistic that negative macro issues and the [cost and coverage] by media are certainly weighing somewhat on our customers in our markets.

  • Additionally, we know that a portion of our repeat customer base is choosing to go without a car payment for a period of time after completion of their contracts. This is in contrast to the more normal trade in/trade up behavior that we have historically seen.

  • On a positive note, we feel very strongly that this is a perfect time for Car-Mart to be adding locations and investing in our business and positioning our sales to continue to pick up marketshare into the future. We believe that our historical growth rates and same-store revenues will return at some point, but in the meantime, we are still seeing very positive revenue trends even in this current environment.

  • Interest income was up 15.2% for the quarter due to an increase in average financed receivables outstanding of $21 million and an increase in the weighted average interest rate during the quarter to approximately 14% from 13% for the first quarter of last year. The weighted average interest rate for all financed receivables at July 31, 2011 was approximately 14.5% compared to 13.8% at this time last year.

  • I would like to note that, in mid-July, we did begin charging a 15% interest rate for all new contracts for all lots in all states. As such, eventually we expect overall annualized interest rates on our portfolio, including late fee income, to settle in slightly above 15% versus the 14% prior to the systemwide change in July.

  • For the fourth quarter of this year, our gross profit margin percentage was 42.9% of sales, down from 43.8% for the first quarter of last year, but up from 42.3% sequentially. The reduction from the prior-year quarter relates primarily to higher wholesale sales, the increased average selling price and higher service contract expenditures. The increase sequentially relates to lower inventory repairs, the fact that the fourth-quarter estimated losses on our PPP product from storms in Alabama came in lower than anticipated and we did experience just minor losses associated with the May tornado in Joplin offset by negative effects from higher average selling prices.

  • To continue, we continue to work on holding down our expense costs and overall unit purchase costs, as well as maximizing pricing efficiencies. We are making every effort to balance affordability for our customers with appropriate gross margin percentages in the face of increasing sales prices and we expect to continue to see some challenges in the gross margin area.

  • In the first quarter of this year, SG&A as a percentage of sales was flat to the prior year at 17.9%. The $1.4 million increase in overall SG&A dollars related primarily to higher payroll costs and other incremental costs related to new lot openings. We had an average of 107 dealerships operating during the current quarter compared to 98 for the first quarter of last year, as well as higher utility and advertising costs.

  • For the current quarter, net charge-offs as a percentage of average financed receivables was 5.6%, up from 5.1% for the prior-year quarter, but down significantly from 6.4% sequentially. Principal collections as a percentage of average financed receivables was 15.9%, down from 16.3% for the prior-year period. We did collect 1.2 million more in interest during the current quarter and when you combine interest and principal collected, the current quarter was at 19.4% compared to 19.6% for the prior-year period. So basically flat.

  • Our 30 plus past due accounts were at 4% compared to 3.6% at this time last year. Our allowance for loan losses remains unchanged at 22% at July 31, 2011. The provision for credit losses was 20.5% of sales for the current quarter, up from 19.5% for the prior-year quarter, but still very good by any historical standards and at the lower end of our acceptable range.

  • As Eddie indicated, we're working with our customers to help them succeed and we do expect future credit performance to be in line with our historical experience. As we have previously stated, annualized credit losses in the 20% to 22% range are what we expect into the future. We continue to push for improvements in lot level execution within the collections area.

  • At July 31, our total debt was $57 million, which gave us $33 million in additional availability under our revolving credit facilities. Our current debt to equity ratio is 31.1% and our debt to financed receivables ratio is 19.5%.

  • Since February 1, 2010, we have repurchased over $42 million in common stock, 1.7 million shares or about 14% of our Company and we have grown the receivable base by approximately $33 million at the same time. We do expect to open eight additional lots during the remainder of this year and we are very excited about our new store openings and our future prospects. Now I will turn it over to Hank.

  • Hank Henderson - President & CEO

  • All right, thanks, Jeff. Well, as Jeff just mentioned about our new lots, I would like to say a word about that. We continue to be very pleased with the new stores and as Jeff had mentioned, our average sales for this group have increased, which has been very significant in keeping our average sales per store up where we need them to be. We did open two new stores in this first quarter -- Bartlesville, Oklahoma and Albertville, Alabama. So we are at 108 now and we are right on pace with where we intended to be on our new openings.

  • We have projects already underway for future openings in Missouri, Kentucky and Alabama that will all open within the fiscal year. Actually a couple should come on very soon and also very excited about the fact we will soon be announcing the opening of our first store in Mississippi as we add another state. So that concludes our prepared remarks, so we would now like to move onto your questions. Operator?

  • Operator

  • (Operator Instructions). David Burtzlaff, Stephens Inc.

  • David Burtzlaff - Analyst

  • Good morning, guys. Great quarter. Just kind of wanted to address the Texas issue on the sales and maybe what you are doing to correct that or kind of what are you seeing in Texas in terms of causing sales to be weak?

  • Hank Henderson - President & CEO

  • I think, as Jeff mentioned, our credit losses have come down there and we have had some issues in past years in Texas. So we needed to make sure we were being more conservative I guess than typical there. We have had -- actually our average down payments the past couple of years in Texas have been higher than the Company average as we have made sure we have toed the line in that regard. So probably have been not as aggressive in that particular area companywide.

  • We are actually, as we speak, we are putting forth some extra efforts on the purchasing side in Texas to really make sure we have got absolutely the best inventory we can. And it has also been an area that, as I said, probably a little more conservative than typical on the sales side. So we haven't advertised as aggressively in that area as we have in some other parts of the Company. And so on all those fronts, we are going to be stepping that up over the next few months because we do feel a lot more confident in our ability to collect our money down there now.

  • David Burtzlaff - Analyst

  • Okay. And then speaking of kind of your repeat business and maybe people going longer or holding their cars longer rather than the constant trade-in, I mean how much do you think that is affecting the business? Is there a way to quantify that? Are you seeing fewer -- in terms of the number or the percentage of repeat customers say during the quarter?

  • Hank Henderson - President & CEO

  • Our repeat business still remains very good and we measure our repeat business as a percentage of overall sales each month. And so as our stores mature, we see that continuing to grow. And no, we don't really have a number on this, but certainly we have got a lot of experienced managers in the Company and as we talk to them, they are all pretty much in agreement that they are seeing more of their good customers.

  • For so many years, just the car payment is just an expected and normal part of the budget, but when a customer sees an opportunity, hey, I have still got a good car here and they can go a little while without that, they are taking advantage of it. And we are happy with that. If our customers do well, eventually we are going to do well. We just want to make sure they are coming back to us. But as far as how big a piece of it, it would be a guess. I'm not sure.

  • David Burtzlaff - Analyst

  • Okay. And then, finally, regarding kind of the loss rates, they did tick up and you did kind of address this, but -- and I think, Hank, you said in your opening remarks that you thought you could have collected a little better. Now I mean -- so you think some of that is partly due to execution? Obviously, the economy I think is playing into that as well. Just the macro pressures making it more difficult for the consumer, but I mean if you look at the second quarter last year where execution was a problem, I mean do you see that as part of the reason here or is it really more economic driven?

  • Hank Henderson - President & CEO

  • Well, I think the attitude we take is we can't do anything about the economy, so we focus on the things we can do something about and I think that is what we mean there. And as Jeff pointed out, we are still very well within our range, even at the lower end of our acceptable range, but anytime we see a tick-up, that means we have done better before and it all really comes down to how well we work with our customers because we know they need a car and we know they are going to have challenges from the day we sell it to them. Budgets are tight.

  • So I guess my comment there is just that anytime we see a tick-up, we know we have got to -- we don't want to start a trend of going up and realistically we know that seasonally this tends to, for whatever the various reasons, this tends to be one of the little tougher times of the year and we do typically see a little tick-up in collections. So we just know that is where our focus needs to be at this time.

  • David Burtzlaff - Analyst

  • Okay, thank you.

  • Operator

  • John Hecht, JMP Securities.

  • Kyle Joseph - Analyst

  • Good morning, guys. This is actually call [Kyle Joseph] filling in for John. First of all, congrats to Skip and we wish him the best. We will miss him.

  • Hank Henderson - President & CEO

  • Absolutely. We will too.

  • Kyle Joseph - Analyst

  • Secondly, congrats on a great quarter. With regards to the same store sales moderating a bit, was any of that attributable to the storms and the tornadoes?

  • Hank Henderson - President & CEO

  • No, it wasn't because actually Joplin they got hit worst of all. Actually their sales went up, had some replacement sales there, so no.

  • Kyle Joseph - Analyst

  • Okay. And then with regards to your consumer and the higher gas prices and uncertain economic environment, I know you guys mentioned you are seeing less trade-in/trade-up activity. Have you seen a shift in kind of the demand for cars or is there more demand for smaller cars versus trucks?

  • Hank Henderson - President & CEO

  • No, not really. I would say our demand is about the same as it has always been, same mix.

  • Kyle Joseph - Analyst

  • Okay. And then with regards to your interest rates, how much of your Arkansas portfolio has reset?

  • Jeff Williams - CFO

  • Well, we were almost all the way to the full 12% in mid-July when the decision was made to take everybody everywhere to 15%. So our overall rate was very close to -- just above 14% prior to our decision to go to 15% companywide July 15. So we have got -- in the future, we are going to go from a little over 14% to a little over 15% for the entire portfolio.

  • Kyle Joseph - Analyst

  • All right, that's helpful. Thanks, Hank and Jeff.

  • Operator

  • Bill Armstrong, CL King & Associates.

  • Bill Armstrong - Analyst

  • Good morning, guys. Not to beat a dead horse on this same-store sales, but so is it fair to say that this was really concentrated in Texas and that your non-Texas stores might have had higher same-store sales?

  • Jeff Williams - CFO

  • Without the Texas effect, the per unit volumes would have been basically flat with last year. So we saw a productivity decrease of about 2.1%. It would've been basically flat had those Texas lots been a little higher on the sales volume side.

  • Bill Armstrong - Analyst

  • Was this a matter of just less customer traffic coming in or are you also maybe tightening up on who you will make loans to out there?

  • Hank Henderson - President & CEO

  • I wouldn't say we have made any great changes with regard to who we will sell to. I would say that we do continue to work harder at structuring better deals. And so while our requirements may not have increased, I just think the course of tightening up down payment requirements, terms and all that probably cuts out a few sales just when you sit down and go through the customer's budget with them and here is how much your payment is going to be and the time. That probably cost us a few.

  • Overall, our traffic is good. I just would say we haven't seen any big increases, but we continue to see good traffic at our stores. And again, as I started out, all in all, we are very pleased with the sales we saw for the quarter. I think all things considered and the quality of the deals that we are seeing, we were very pleased.

  • Bill Armstrong - Analyst

  • Okay. How is inventory availability these days?

  • Hank Henderson - President & CEO

  • Good for us. We have added a couple more purchasing agents. We have added a few more areas that we are now buying in. As we've said before, for our size of business, just being able to avail ourselves to more cars to look at. So certainly quarter-to-quarter, as we mentioned, we actually even brought down average prices and all of our lots are very well stocked with good selections. So we feel good about that part of our business.

  • Bill Armstrong - Analyst

  • Okay. And on the interest rate, it is 15% even, right, the new rate?

  • Jeff Williams - CFO

  • Yes, it is.

  • Bill Armstrong - Analyst

  • What was behind the decision to have this kind of flat rate across all your stores? That is obviously a departure from what you have done in the past.

  • Hank Henderson - President & CEO

  • Going back in time, we have some different rules in different states, particularly what we had seen in Arkansas. And I know you are very well aware of all we went through there. And it was not a long process. This had long been our intent is try to get to that point and after we got through our various issues in Arkansas, we still had a little bit of an overhang. Although we are very confident we are going to be fine. We were just kind of leaving it alone. We had a Supreme Court decision out there, but that came through favorable, everything is fine. And so after it was all shored up, it finally put us in the situation where we could comfortably set our rates the same everywhere.

  • Bill Armstrong - Analyst

  • Okay, great. Thanks and good luck.

  • Operator

  • Mark Mandel, ThinkEquity.

  • Mark Mandel - Analyst

  • Thank you and good morning, everyone. Just to dig a little deeper into this Texas thing, if I may. Any differences in the competitive environment in that state versus your other markets' differences? I know Texas is a huge state, so any differences in the dispersion of your stores, which would affect the brand awareness and so on?

  • Hank Henderson - President & CEO

  • No, not really. I think most of the town -- we are primarily in eastern Texas. I think most of the towns look a whole lot like the towns in Arkansas and Alabama and such. It is no secret we struggled somewhat for a time there and as we said, we wanted to make sure that we had got our collections shored up and improving our purchasing side of the business and all that. We just haven't been as aggressive there of late as we probably have elsewhere in the Company. So I think competitively it is about the same.

  • Mark Mandel - Analyst

  • Okay, all right. And given the current interest rate environment, the rates continue to drift lower. How is that going to affect your funding cost and how are the timing of those changes, any changes bear out?

  • Jeff Williams - CFO

  • Well, our funding cost is not directly tied to our receivable base. So our borrowing currently is at prime less a quarter on our revolving credit line and the interest rate of 15% is certainly, on the receivable side, is certainly very competitive and some we consider low for the customer base. So I think that as far as funding costs, there is no effect at all from this.

  • Mark Mandel - Analyst

  • Do you see any opportunities arising to reduce those costs?

  • Jeff Williams - CFO

  • Well, we are always looking at that. There is nothing specifically at this point, but we are always looking for some cost savings.

  • Mark Mandel - Analyst

  • And next question, on the reconditioning, could you give us some color as to how reconditioning expenses are trending, if you are seeing any savings? Is that having an impact on your gross margins?

  • Jeff Williams - CFO

  • We have seen some improvements of late in reconditioning costs and overall cost of sales expenditures. The guys are doing a real good job of focusing in that area and we have seen some good favorable results recently. It is certainly allowing us to maintain that margin in that 43% range.

  • Mark Mandel - Analyst

  • Okay, and I apologize if I missed this, but did you give any specific color as to your current sales trends this month?

  • Hank Henderson - President & CEO

  • We have and we can certainly tell you we started off very well in the current month we are in. So feel good about sales.

  • Mark Mandel - Analyst

  • Okay, so it's fair to say that same-store sales are running above what they did for the first quarter as a whole?

  • Jeff Williams - CFO

  • Well, it's very early in the quarter, but so far in August, sales have been good.

  • Mark Mandel - Analyst

  • Okay, great. Well, thanks and good luck.

  • Operator

  • Dan Furtado, Jefferies.

  • Dan Furtado - Analyst

  • Good morning, guys. Thanks for taking my call and nice quarter. The question was more or less asked, but I just want to kind of revisit it one more time and this is kind of -- customer traffic and behavior or behavioral shifts you have started to see in the month of August, are you seeing anything there or does it just kind of feel like business as usual? I appreciate it is early in the quarter and your comment you just made on the earlier caller in terms of same-store sales, but I am just trying to get a feel like what is your gut telling you that your consumers -- are they doing anything different or is this the volatility we have been seeing in the market is just so far kind of staying on Wall Street and you are not seeing it in your customer base right now?

  • Hank Henderson - President & CEO

  • Well, with regard to traffic, I would tell you that what we have seen so far in our current month is certainly very good and so we call it business as usual, as you said. But we feel very good about the traffic that we are seeing now. And yes, there is no question, being in small towns in the South, our customers realize challenges and their own budgets don't always track what is happening at Wall Street.

  • We don't see big swings in employment rates that some of the larger cities do and such. But certainly things such as gas prices and normal things are going to kind of burst the daily budget. Those do impact our customers and it appears at least recently we have gotten a little bit of relief in the gasoline prices. So we feel like that is good and again, we feel very good about the traffic we are seeing right now.

  • Dan Furtado - Analyst

  • Excellent. Thanks a lot, guys. I appreciate the time.

  • Operator

  • (Operator Instructions). Jordan Hymowitz, Philadelphia Financial.

  • Jordan Hymowitz - Analyst

  • Hey, guys, two quick questions. One is auctions prices are starting to trend down a little bit. What percent do you guys buy from auctions and is that a benefit for you guys?

  • Hank Henderson - President & CEO

  • Well, anytime cars are cheaper anywhere, it has got to be a good thing for us, but it represents a small portion of our overall inventory. Typically most months for us, it runs less than 10%.

  • Jordan Hymowitz - Analyst

  • Okay. And have you noticed that accelerating at all? The auction prices are nearly a record high and they have come down I think the last two months, according to Mannheim. Have you noticed or is it still negligible at this point?

  • Jeff Williams - CFO

  • I think that was -- the decrease we saw for the quarter in the ASP was certainly nice to see and it looks like some slight decreases over the next few months are certainly possible. But then in our business as we get closer and closer to next tax time, we certainly don't expect to see long-term pricing decreases in our market.

  • Jordan Hymowitz - Analyst

  • And final question is why did you decide to raise the interest rate and if you did, why not just make it standard at the 12% or 13% that it was?

  • Hank Henderson - President & CEO

  • Well, it was 12% in Arkansas and we did have some other states that were higher and as Jeff said, it put our blended rate effectively just over 14% and so we flattened it at 15% in all states.

  • Jordan Hymowitz - Analyst

  • All right. Thank you.

  • Operator

  • I am showing no further questions at this time. I would like to turn the call back over to management for closing remarks.

  • Hank Henderson - President & CEO

  • All right, well, thank -- we would like to thank everyone for joining us today and also we would like to thank Skip Falgout, our Chairman. As you saw in our press release, Skip will be retiring effective in October at our shareholders meeting. We have been together now for I guess 12 years, 11 years, something like that. It has been quite a ride for all of us during this time and so we wish him all the best in his future projects and again, we thank everyone for being with us today and we hope to have even bigger news for you the next time we talk. So thank you all.

  • Operator

  • Ladies and gentlemen, that does conclude today's conference. You may all disconnect and have a wonderful day.