I would now like to turn the conference over to Mr. Adair. You may begin.
Thank you. It's my pleasure to welcome everyone to the fourth quarter call. Before we start, I'm going to transfer it over to Will Franklin, who will do our safe harbor. He'll pass it back to me. I'll give you a quick update. He'll review the financials. We'll open it up for Q&A. With that, I'd like to turn it over to Will.
Thank you, Jay. Before we begin our comments, I'd like to remind everyone on the call that our remarks will contain forward-looking statements, including statements concerning our views of trends in our business. These statements are neither promises nor guarantees and are subject to certain risks and uncertainties that could cause the final results to differ substantially from those projected or implied by our statements and comments. The company expressly disclaims any obligation to update or revise these statements or comments. For a more complete discussion of the risks that could affect our business, please review the management discussion and analysis and the risk factors contained in our 10-K, 10-Q, and other SEC filings. With that, I'll turn the call back to you, Jay, to begin the comments on our fourth quarter results.
Thank you, Will. Will give you an update on the financials for the quarter. I'm going to focus primarily on some of the successes that we achieved in the quarter and in the year. We had a great year. We had a great quarter. We did start off the year with significantly higher ASPs or average selling prices of cars. We saw those average selling prices come down from Q1 to Q2 all the way to the end of the year. There were some unanticipated headwinds that we faced in that, because as vehicle sale price sells for less, we end up generating less revenue on a per unit sold. We believe the primary driver of this was the decrease in scrap. The lower scrap prices basically caused buyers to pay less for the cars that we were auctioning off.
In addition to that, we would throw in the strengthening of the U.S. dollar that took place during the same timeframe in the last fiscal year, again, making it harder for international buyers to pay as much at auction for vehicles that we were selling. In spite of these headwinds and these challenges, we had a record year and a record quarter. As I said, I'll leave that to Will to talk about. The beginning of the year, we talked about our focus on G&A, and in the quarter, we made huge improvements in our G&A. I would call that out so that there's some focus by the analysts and by investors to look at the improvements that we made.
It can be very hard for companies in a growth mode, adding locations and making improvements to the business to, at the same time, reduce G&A, and our team's just been really, really successful this year in getting that done and executing on those fronts, and we're really proud of them for that. Across the board, from operations to sales to our technology teams, we produced improvements for the company, and you'll see the fruits of those improvements in the year that we're currently in. We expect to, in Q1, 2, 3, and 4 of this year, to be launching some new products, opening up in some new markets, and driving volume for the company associated with that. In the UAE, we added two more facilities this year in Oman and Bahrain in the fourth quarter.
We finished the year with 183 yards worldwide, of which 28 are now outside of the U.S. We now have two years of vehicle sales with our third-generation virtual bidding technology. We refer to that as VB3. As an example, this platform enabled us this year to sell a vehicle, a 2003 Ferrari Enzo, located in East Bethel, Minnesota, to a buyer not too far away in Essex, Maryland. We often give these great stories of vehicles selling in all sorts of foreign countries, and I've got another one that I'll give you that is similar to that. This is one that's not too far away, but the price is the key. It was the most expensive vehicle we sold in the year. It was $706,000. We had five Teslas that we sold this year to buyers in Ukraine.
I thought that was interesting that they're buying those types of vehicles. It just really speaks to the power of VB3 and our technology, and our ability to drive results even in the face of those headwinds that we talked about in the form of low scrap prices and the U.S. dollar. In previous calls, we've talked about the average sale price, I'm sorry, the average age rather, of vehicles that we're selling. In 2008, that average vehicle age was 8.6 years. In 2011, it had grown to 9.7. It is currently, in 2015, 11.4. We believe that's going to drive additional unit volume as it has in the past. As vehicles are aging, their probability of becoming total loss is going up.
You'll see and you'll hear from Will some investments that we made in additional locations, expansions, et cetera, to make sure that we have the capacity to handle the additional volume that continues to come in. Finally, I'll just close with another cue on technology, we've got mobile technology. We launched our first mobile app in 2013 on the iPhone platform. We launched the Android platform this year.
I'm happy to say that we have received over $8.8 billion worth of bids now via mobile. In 2015, we finished selling now 12.5% of our vehicles over mobile devices. It has become a very strong part of our platform. Again, I think back to the days of having to physically show up to auctions, putting those auctions online allowed buyers to eliminate travel and weather and all the other friction points. Now you don't even have to be in your office. You can literally be bidding on vehicles from the local Starbucks. We're seeing that now as 12.5% of our bids are coming in through mobile devices. With that, I'll transfer it over to Will, upon his completion, we'll open it up for Q&A. Thank you very much.
Thank you, Jay. I'm going to make a few brief comments about our financial results for the quarter. Total revenue declined by $5.2 million, or 1.8%, as the growth in volume was offset by a decline in revenue per transaction and the impact to the change of the percentage of cars sold on a principal basis, which carry a higher revenue per transaction versus cars sold on the agency basis. Overall, volume grew by 8.2%. In North America, it grew by 8.6%. The decline in ASPs resulted primarily from lower commodity and the impact pricing and the impact of the stronger dollar. The index for crushed car bodies, which we believe to be highly correlated to junk and dismantler buyer behavior, declined by over 44% year-over-year. The stronger dollar continued to inhibit auction participation by our international buyers and impacted the ultimate selling prices.
Finally, the stronger dollar against primarily the pound, the real, and the euro on a year-over-year basis resulted in a reduction in total revenue of approximately $5.8 million. Purchase car revenue declined by $7.6 million, or 16.4%. The decline resulted from reduced auction selling prices as the volume remained relatively flat. In addition to the impact of commodity pricing and the stronger dollar, the average selling price was impacted by a change in mix as a higher percentage of cars came from our direct purchase program versus our insurance suppliers. In our direct purchase program, we buy and sell cars for our own account. While purchased car volume remained flat on an absolute basis, it declined as a percentage of total units sold.
Service revenue remained relatively flat, increasing by $2.4 million, or 1%, as the increase in agency car volume was offset by a reduction in revenue per car and the impact of FX. Yard operation expenses declined by $900,000 and was driven by a reduction in the average cost to process each car and the beneficial impact of FX. General administrative costs declined by $7.2 million. The same quarter last year contained $1.1 million of one-time cost associated with the restructuring of a department from California to Texas. In the current quarter, reductions came primarily from the rationalization of technology resources, lower legal expenses, and the beneficial impact of FX. We expect our G&A cost to increase in fiscal 2016 due to growing international activity. On an overall basis, the change in FX reduced EBIT by approximately $1.5 million.
During the quarter, we expended $30.1 million for yard expansion, equipment, and technology. This included $9 million in lease buyouts. During the quarter, we expended $233.5 million for the repurchase of approximately 6.5 million shares of our common stock at an average price of $36 per share. We exited the quarter with $456 million in cash and $645.8 million in bank and private placement debt. Excuse me. With that, I will turn the call back over to you, Cassidy, to manage the Q&A segment of the call.
At this time, we will open the floor for questions. If you would like to ask a question, please press the star key followed by the one key on your touch-tone phone now. Questions will be taken in the order in which they are received. If at any time you would like to remove yourself from the question queue, just press star two. Again, to ask a question, please press star one. Our first question comes from Robert Labick with CJS Securities, Inc..
Good morning. Congratulations on a nice quarter.
Hi, Bob. Thank you.
Hi, Bob.
Hi.
I wanted to start. The service gross margins were up year-over-year, despite the FX and scrap you alluded to. Will, you just mentioned that it was, I think, due to the lower processing cost per car. That trend had been going up a little while ago. Can you talk about the drivers and how you lowered the cost to process each car and where you expect that to go over the next several quarters?
Sure. First off, we've cycled completely through the integration pain of the QCSA acquisition. Second, and probably more importantly, is we're starting to see again the efficiencies that are endemic in our model, and that is we have a lot of fixed costs. In fact, if you exclude the titling cost and the sub-haul cost, almost all of our costs are fixed. Two of the most important metrics that we look at are the number of cars per head and number of cars per yard. Both those are up nicely during the quarter. We're starting to see the benefit of what we call fixed cost absorption in our processing cost.
The third element of that is Sean Eldridge, our Chief Operating Officer, and his team have worked extremely diligently to carve out any waste in our system, and he's been very successful in the last year in doing so. Going forward, I wouldn't expect to see a meaningful change. I think it will control the cost, but I wouldn't expect to see significant reductions going forward.
Okay, thank you. On to growth opportunities and internationally in particular. Could you give us an update on the German market and your process there, what's going on there and any luck in terms of turning it more towards a U.S. style insurance market?
Sure. We've had growth in that market in the year with our existing businesses there. We are poised to enter into that market in the next calendar year. I always hate to speculate on when that'll happen and how that'll look, but the plan is that as soon as we are open, we'll make an announcement, as we've always done with press releases, and then we can talk about that further, Bob, on calls as to the success we're having in that market. Clearly Germany is the biggest opportunity. We've also grown in the Middle East, and we've grown in Brazil. Across the board, if you roll up the international team as a unit or as a whole, as we do, as we think about it, we've seen growth throughout the whole market. We're happy with it. It's been good.
Great. Thanks. The last one, I'll get back in queue. You mentioned the $30 million in CapEx, and I think you said $9 million in land. Was that U.S. land? Was that international? Do you have any idea for a ballpark of CapEx for next year?
No. Actually, that $9 million was a lease buyout. I guess you could say that's land. There's other outlying purchases of land that's included in the $30.1 million. All those lease buyouts were domestic in nature. We generally don't make predictions and give guidance on CapEx because of the uncertainties that surround buying this land. You can imagine how difficult it is getting zonings and how sometimes we can get up to the very moment of closing a deal and find out we don't have the right zoning, and we have to start all over again. It's just really hard to predict how much we'll be spending in a certain period of time.
Got it. Okay. Thank you very much.
Thank you, Bob.
Our next question comes from Ben Bienvenu with Stephens Inc.
Hey, good morning, guys.
Morning.
Morning.
You referenced growth in G&A over time. That was a source of nice upside in the quarter, and you guys have done a good job at reducing absolute $ spent on G&A. What's a reasonable expectation for where that should go, and how high off of this level where we are today do you think we could see that skew?
Well, once again, we hesitate to give guidance in that other than to tell you that there's going to be more upward pressure in the absolute number during the course of fiscal 2016. That'll be driven primarily by, like I said, international expansion. Some of that will be driven by the need to add more resources in our technology rollout for a rollout of some of our technology. I actually wouldn't expect it to grow much faster than I think it'll be leverageable.
Okay.
Right.
Maybe just touching on the tender offer and share repurchase. Stock is now below where the tender offer was done. You still have quite a bit of cash on the balance sheet. You generate nice cash. I'd be curious to hear your thoughts around your outlook for share repurchase, your strategy there, and how you think about allocating capital given the surplus of cash on your balance sheet.
Well, we're always hesitant to discuss on calls how we view buying stock back. I would just put it this way, the tender price, as you stated already, was higher than the current price, and the amount that we asked to buy in was higher than what we ended up selling. I think most investors can probably read between the lines on that, how we view the stock. We discuss this at the board level, and if it's something that we think makes sense going forward, then we'll do it.
Okay. Last question for me. You've seen in recent quarters, typically the correlation between your unit growth and your largest competitor over the last couple of years has been a fairly tight correlation. In the last couple of quarters, you've seen that disparity widen. While your unit growth has been strong, it hasn't matched up with your peer, and it hasn't matched up with the inventory growth that we've seen. I'd just be curious to see, help us understand what's going on the unit growth side, so that I can get better clarity there.
Well, I'm not sure what you're looking at. We don't disclose units. They don't disclose units, so it's very difficult for us to be able to see what units they're selling compared to us and vice versa.
Okay. You referenced unit growth up 8.2% in this most recent quarter. They had unit growth up 14%. Those are sort of the numbers that I'm looking at.
Well, we're a lot larger company in terms of volume. When you talk about % I think that's one piece I would look at. The other thing is, it's timing. Our quarters don't line up, and you're talking about months that are going to have more activity in them than other months. As a company, for us, having the kind of growth that we're seeing right now, we're really, really happy with it.
Okay. Sorry, one last quick on just housekeeping on what was the diluted share count at the end of the quarter?
It's 130.2 million.
Okay, perfect. Thanks so much. I'll get back in the queue.
Our next question comes from Ryan Brinkman with JPMorgan.
Hi, this is Sameek on behalf of Ryan Brinkman. The first question I had was primarily related to the impact or the influence on pricing that you're seeing from the stronger USD, like the increased demand you're seeing from international buyers. Curious to know if you can sort of ballpark for us what % of your buyers at your U.S. auctions are international buyers and sort of give us a sense of what influence that is having.
We look at the value of what we're selling internationally. In this quarter, that was down to 21.8%. As a comparison, in the second quarter of fiscal 2014, that was 29.3%. We're seeing a significant impact on their behavior because of the stronger dollar.
Got it. Everything sequentially going down through each quarter this year, is that a good way to think about it?
No, actually, I said sequentially we're flat.
Okay. Great. The second question I had was more about what you're seeing now in terms of lower scrap prices, et cetera, which is pressuring pricing. Can you sort of talk about what levels you have or what is the ability that you have to take pricing to be able to offset some of this pressure that you're seeing?
Yeah, we don't discuss pricing on conference calls.
Okay. That's fine. I just had a housekeeping question at the end, which was I didn't sort of catch if you disclosed your inventory number, like what was it up year-over-year? If you can just share that.
Yeah. Inventory was up in North America about 9.6%. Worldwide, it was up 9%.
Okay, great. Thanks for taking our questions. Thank you.
You're welcome.
Our next question comes from Elizabeth Suzuki with Bank of America Merrill Lynch.
Good morning. Last quarter you noted that the stronger dollar impacted revenue by about $6.8 million negative and EBIT by $1.3 million. In this quarter, those numbers were, I think you said $5.8 million to revenue and $1.5 to EBIT. Do you expect that foreign exchange headwind to continue to ease or should we be modeling in kind of continued headwind for 2016?
We don't have any information that the market doesn't have. I would speak with a commodities or foreign currency expert in that respect.
Okay, thanks. Second question, is the year-over-year benefit from the roll-up of the QCSA integration cost now complete or is there more that you expect in the coming quarters?
No, it's done. They're completely absorbed.
Okay. One more quick one. At this point, we understand that it's still very early to determine what the ultimate impact of the Volkswagen controversy would be on the industry. If impacted vehicles have to be sent to salvage auctions, I'd imagine that'd be a tailwind, but if they get retrofitted and there's a cascading impact on residual values, that could be a headwind for ASPs. Do you have any approximate estimate of what percentage of vehicles that come through your auctions are VWs?
No, not off the top of my head.
All right. Well, thank you.
You're welcome.
Our next question comes from William Armstrong with C.L. King & Associates.
Good morning, guys. Just a quick follow-up on the G&A. Were there any non-recurring items within that that might have kept it down during the fourth quarter or anything that might have been pushed out into the new fiscal year?
No, there really weren't. There's always one time. When you have a company this size, you'll have things that are unusual in every period. There's nothing that's material that we'd call out this quarter. We do a pretty good job of calling out those things that are material just so you can do your modeling.
Right. Got it. Okay, thanks. That's really all I had. Thank you.
You're welcome. Thanks, Bill.
Again, to ask any final questions, please press star key followed by the one key. Our next question comes from Gary Prestopino with Barrington Research.
Hey, good morning, guys.
Hey, Gary.
Good morning.
Hey, Jay, you basically said at the beginning of the call that we're going to have some new markets and new products Q1 to three of this year. I know enough not to ask you what those new products would be because you're not going to tell us anyway. In terms of new markets, are you looking to go into new regions of the world where you aren't right now or countries that are tangential to where you are in, say, Europe?
Yeah, I think I resemble that remark that you just made. We are going to be looking at expanding in existing markets that we're in. We are anticipating, based on what we can currently see in terms of volume coming in the U.S., we're anticipating having a good year in terms of that. Some of the new products I talked about, our customers are aware of them, they're waiting for them. We'll be releasing them this year. Some of them are going to allow us to expand further in some of our existing international footprints. That's really what I was referring to.
Okay. I think one of the questions was asked. I didn't quite get it. Did you say your international revenue was about 22% this quarter versus 29% last year's fourth quarter?
No, international revenue is less than 2% of our total revenue. Well, excluding the U.K. and excluding Canada. If you're looking at the emerging side of our international strategy, it's less than 2% of our revenue.
No, what I'm getting at is what's your total international revenue as a % of sales?
Yeah, the numbers Will was giving out was international buying. That was what % of the value of the cars that we sell to international buyers.
Oh, yes.
I believe that's what he's referring to.
I'm sorry.
Down from 29 to 21-ish.
Yes.
In terms of the percentage that's total international in this quarter, do you have that handy?
That's what I gave you. That was 21.
Okay, 21. Okay, that's fine. That's what I'm trying to get at. Then, if you look at that, how does that break down between vehicle sales and service? At one time, the majority of that was vehicle sales because it was U.K., but has that shifted more as a percentage into service? Can you give us a breakdown there?
Yeah. Just to be clear, the number I gave you were the North American units sold to non-North American buyers. Those are almost exclusively agency cars.
Okay.
To be clear, you were not giving him our international revenues as a percentage of the company.
Correct.
I think he might have thought that's what it was.
Yeah.
All right. I'll follow up with you guys after the call. Anyway, in terms of the tax rate going forward, Will, what should we use as a tax rate for next year?
You should probably be 35.5%, 36%.
35.5%, 36%. Okay. Thank you very much.
You're welcome.
Thank you, Gary. Ending the fourth quarter call and fiscal 2015. We look forward to reporting in the first quarter. Goodbye.
Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.