America's Car-Mart, Inc. (CRMT) Q1 2016 Earnings Call Transcript
Published at 2015-08-21 11:56:00
Hank Henderson - President and Chief Executive Officer Jeff Williams - Chief Financial Officer
Elizabeth Suzuki - Bank of America Merrill Lynch David Scharf - JMP Securities John Rowan - Janney Montgomery Scott John Hecht - Jefferies Bill Armstrong - CL King & Associates Jeffrey Matthews - Ram Partners
Good morning, everyone and thank you for holding and welcome to America's Car-Mart First Quarter 2016 Conference Call. The topic of this call will be the earnings and operating results for the Company's fiscal first quarter 2016. 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 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 estimates, 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, 2015 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 this call this morning are Hank Henderson, the Company's Chief Executive Officer and President; 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. Please go ahead.
Good morning, everyone. We appreciate you joining us today. Bottom line results for this quarter were obviously disappointing. Sales were very solid and we're pleased with that aspect. Credit losses however were not. And we're not pleased with our results. Sales were up 12.5% over same time last year. With same store sales up 8.9%, so it was a good start to the year, on sales. However, our provision for credit losses were 27.7% for the quarter versus 24.6% last year and that is of course not, how we wanted to start off this year. We finished the year end, April 30 at 5.8% on or over 30-day. So we did anticipate higher losses and unfortunately, we saw a more of those in typical, worked out and so we did end up with even more than expected. The elevation in losses was not, however, across the board at all stores. We have about third of our stores with credit losses that were lower than last year's first quarter and actually we have several stores, with remarkably low credit losses and also many that were relatively flat. The bulk of our increase in losses is attributable to somewhere 25 to 30. However, stores depending on where you draw the line and it is apparent to us that for these stores, this was primarily an execution issue. As we discussed on our last call, we had another ordinary year, with numerous policy, procedure and system changes that took place continuously throughout the year and the distractions proved to be more difficult for some than for others. We're focused intently on the improved performance of each of these stores, by better supporting each of these general managers with better training, retraining as in sales and their staffs were appropriate. And providing an increased level of accountability in all the areas that impact credit losses, which in our business is essentially, every area. We have implemented to our underwriting oversight and are increasing the frequency and intensity of the review of collection processes. Additionally, we need to do a better job with the level of accountability of our area of operations managers as well to better ensure the stores under their charge, don't get back into this situation. Improving the loss rates particularly for these stores, is how we will help our general managers to succeed and help our customers be successful with their accounts as well and that is our mission. The good news to this part of our business is at this past quarter. We actually saw some of the biggest improvements made throughout every region, with regard to our collections and delinquency rates than we've seen in years. Now part of that because we had more improvement to make and we should have, but nevertheless the progress was made. As I said earlier, we began the quarter with 5.8% in the over 30 days past due category. However, we ended the quarter at 3.8% and that's a significant improvement and it's also a big improvement over the 4.7%, where we were at the same time last year. Now this reduction effectively means, we have 1,200 fewer accounts sitting in the 30 plus category starting off in the second quarter, than we had beginning the first. Again, we aren't happy with the fact that we had so much room for improvement but it is great to see that we got to us back to where it needed to be quickly. I'll go here now and turn it over to Jeff to give you more detail on recent results.
Okay, thank you. Hank. Total revenues was up 12% and as mentioned same store revenues was up 8.9% for the quarter. Revenues from stores in the 10 plus year category was up 5.5%. Stores in the five-year to 10-year category was up around 7% and revenues for stores in less than five-year age category was up about 30% to $36 million for the quarter. The overall average retail unit sold per month for the quarter was 28.9, that's up 1.8% from 28.4 for the first quarter of last year and up from 28.1 sequentially. At the end of the quarter, 45% or 32% of our dealerships were from zero to five years old, 23% or 16% were from five years to 10 years old and the remaining 74 dealerships were 10 years old or older. Our 10-year plus lots produced 31.3 units sold per month per lot for the quarter compared to 30.7 for the prior year, that's a 2% increase or about 0.6 units per month for dealership. Our 23 lots in five year to 10-year category produced 28.7 compared to 28.2, so 1.8% increase and the lots less than five years of age had productivity of 25.1 compared to 23.8 for the first quarter of last year, about 5% increase. Sequentially, the 10-year plus dealerships were up 2.1 units per month or 7% from 29.2. Well our competition is still intense, it was nice to see the sales volume increases at our older dealership for the quarter. Our average selling price increased a little over 5% compared to the prior year, but decreased 0.4% sequentially. The increase from the prior year relates primarily to our new 12-month service contract. Also we did increase the pricing for our Payment Protection Plan product just a little bit and we did see a slight increase in overall selling prices for the quarter. As always, we will focus on basic transportation needs and we know that we compete more effectively at the lower price points. We're hopeful that, decreasing wholesale prices, while paying for them in the short-term for credit losses may give us an opportunity to buy a little better car for around the same money as we move forward. We will continue to target flat to slightly increasing overall sales prices in our efforts to keep our payments affordable. Our down payment percentage was 6.6% compared to 6.9% for the prior year or down around $28 per transaction. Higher down payments do contribute to better credit results in the future. Collections as a percentage of average finance receivables was 14% basically flat with a 14.1% last year. Our average initial contract term was up 28.2 months compared to 27.2 months for the prior year, but down slightly from the fourth quarter's 28.3. While we will always work hard to keeping the term length down and customer equity up to help customer success rates. We're also focused on affordability of the payment, in light of competitive landscape. We remain very aware of the downsized with longer terms, but we are committed to trying to balance this against the competition. Our weighted average contract term for the entire portfolio including modifications was 30.4 months, which was up from 29.6 at this time last year and up from 30.2 months sequentially. Weighted average age of the portfolio was 8.3 months at the end of the quarter compared to 8.4 months at this time last year. For competitive reasons, our term lengths may continue to increase sum into the future, but we're committed to minimizing increases. As a point of reference in July, 2012 the point where we really recognized that the competitive landscape had changed significantly. Our average originating contract term was 26.6 months and with modifications, the term was a little over 28 months. So we continue to fight the battle on keeping our terms down and continue to try to educate the consumer on the benefits of our offering compared to offerings with longer terms. We don't think that the additional term length over the last few years has had a major factor on our increased credit losses. Interest income was up $1.2 million for the quarter, due to the $36 million increase in finance receivables. For the first quarter, our gross profit margin percentage was 41.2% of sales, that's down from 41.5% sequentially and down from 42.3% for the prior year quarter. We will continue to work hard at reducing vehicle related expenses, but the high level of repositioning activity is also having a negative effect on margins as the number of cars, we have to handle and processes increased. As a result, both the volume of wholesale and the prices we're receiving are having a negative effect on overall gross margin percentages. Also we're carrying more inventory to support higher sales levels, but there is obviously a gross margin cost associated with doing this. Our goal is to balance affordability for our customers with appropriate gross margin percentages to enhance customer success rates. We do expect gross margin percentages to remain under pressure over the near-term. For the quarter, SG&A as a percentage of sales was 18.1% compared to 18.4%, a $2.3 million increase in overall SG&A dollars compared to the prior year quarter. Related primary to higher payroll cost and other incremental costs, related to new lot openings, the growth of younger dealerships and infrastructure cost to support the growth. Additionally, we did incur around $600,000 in GPS expenses for the quarter. And we ended the quarter with over 80% of our accounts having the product. We continue to work on operational efficiencies, with the product and we have seen some recent improvements. We're aggressively managing our expenses and we continue to expect some longer term SG&A leveraging overtime, as we grow our revenues. It's always hard to pin point on quarter-to-quarter basis, in with our collections challenges that maybe a little harder in the short-term. For the quarter, net charge off as a percentage of average finance receivables was 7.8% that's up from 6.3% and flat with the fourth quarter 7.8%. The increase for the quarter related to higher frequency of losses and to a lesser but significant extent and increase from severity. The higher severity of losses resulted from lower wholesales values at repo. Our wholesale value recovery rates continue to come under pressure. Our recovery rates now have fallen below what we saw at the low point during 2010. The big difference between now and 2010 or was that back in 2010 the frequency of losses were very low. So at this point, we are seeing lower recovery rates and very high frequency of losses as compared to 2010, where the severity was high, but the frequency was also very low. Losses were up significantly for the quarter both compared to the prior year quarter and sequentially, as Hank mentioned. While we did see several of our older dealerships with credit losses at very low levels. Unfortunately, we saw many older dealerships with very high loss levels. Competitive pressures both at the point of sales and default point continue to be high. But we believe that most of our reported results were related to internal issues, as Hank mentioned. Principal collections as a percentage of average financial receivables for the quarter was 14% down slightly from 14.1%. A slight decrease in principal collected between periods primarily resulted from the longer average term and slightly higher contract modifications, offset by lower delinquencies and a higher level of early pay-offs another indicator that, the competitive environment remains intense. Also average percentage of AR current for the quarter was relatively flat, but we finished the quarter much higher. Once again, our accounts over 30 days past due are at 3.8% compared to 5.8% at the beginning of the quarter and 4.7% at this time last year and also at July 31, 2013 the 30 plus percentage was 5.4%, so the 3.8% at the end of this quarter is very good by historical standards. Also delinquencies in our three day to 29-day past due bucket was 13.2% at the end of the quarter, that's compared to 15.3%, at April 30 and that's compared to 15.8% at the end of our first quarter, last year. Credit losses on the income statement was 27.7% compared to 24.6% for the prior year. Based on the fact that 74 of our older dealerships saw the biggest increases and the credit losses overall. Now once again, several older dealerships had very low losses, but we had some very high at the same time. These loss also carried higher percentage of the excess [ph] delinquencies into the quarter and we're not successful saving accounts especially in that 30 plus bucket as we expected. Our expectations were the losses will be elevated, but that the older dealerships would have more success in helping delinquent accounts succeed. The negative effect on credit losses from just the shifting of age of our dealerships was only around 17 basis points for the quarter. We are very disappointed in our credit results and will stay focused on cash on cash returns and capital deployment. As mentioned in our press release, we have several years and lot of money and time on infrastructure, to efficiently support a larger customer base in need of good solid affordable transportation and excellent service after the sale. With our current results, we're certainly not seeing the benefit from these investments. As Hank mentioned, we do have specific plans in place to improve our credit results. We'll have to work hard on maintaining sales volumes as we try to better deal structures and minimize losses. We will continue with our good solid expense management and helping as many customers as possible succeed. If losses were to continue with these elevated levels, we may be in a position to after raise our credit loss reserve during this fiscal year. The fact that we have lowered the 30 plus delinquencies by almost $8 million during the quarter and should obviously provide a positive. At the end of July, our total debt was $105 million that's up $2.7 million from the end of the fiscal year. During the quarter, we did repurchase 46,000 shares for $2.3 million. Our current debt to equity ratio is 45.3% and our debt to finance receivables ratio was down from the end of the year to 24.6%. We did have $38 million an additional availability under our revolving credit facilities at the end of July. So now I'll turn it back over to Hank.
Thanks, Jeff. We have recently opened two new locations Albany, Georgia and Waldo [ph] Missouri. We do have several projects in the works and if they stay on own track. We should have three more opening within the second quarter. We are disappointed with our results for the quarter. But we are not deterred. We have opened almost 50 stores in the past five years and the majority of which of have done very well and you can't have that level of growth without a few bumps in the road. We have great shared vision of the company, we are building and an extremely capable and dedicated team to get us here. We have a solid plan in place to correct our shortcomings and we will work it intensely. When we fall short of making mistake, we gained valuable experience that makes us better provided the course that we learned from it, in this recent quarter. Had gotten our attention drawn intently to exactly, where it needs to be and I fully expect, we will better for it. So that concludes our prepared remarks and we would now like to move onto your questions. So operator.
Thank you. At this time, the management will now answer questions from the callers. I will like to reiterate that my earlier comments regarding forward-looking statements apply both to the management prepared remarks and to anything that may come up during the Q&A. [Operator Instructions] And our first question comes from the line of Elizabeth Suzuki from Bank of America. Please go ahead.
Given that you entered the quarter with only 3.8% accounts over 30 days past due, which is I think the lowest levels since April 2011. Are you pretty confident that charge offs is a percent of receivables, should at least come down somewhat sequentially?
Well, based on our experience that is typically the case. So that is we are counting on, but we're not definitely not resting on it. We're kind of using this as a building point. So but yes, but that is our expectation.
Okay, great. And do you think the market got incrementally more competitive in the quarter because last quarter it sounded like it might be starting to get more rational, but that seems to maybe not have been the case?
I wouldn't say there was any significant change in this quarter over the prior.
Okay, thanks and just one more quick one. Has the CFPB oversight of non-bank auto lenders resulted in changes to your reporting requirements because I think in the press release you noted that there were some distractions really to policy changes. So I'm just wondering, if you could elaborate on that and whether it's CFPB related?
Part of our compliance investment over the couple of years is been in anticipation of being a larger participant. There have been some policy changes, nothing significant. Nothing that really changes our collection practices at all. It just relates to formalizing from some things that have been in place. There have been a few tweaks and a few processes and procedures changed, as a result. But we've been anticipating this and working in this direction for a while. But we certainly have had to formalize some things and do a better job documenting and getting more consistency in the lot level operations in anticipation of being a larger participant.
And our next question is from David Scharf from JMP Securities. Your line is now open.
The changes in policies and just some of the operational issues that impacted collections. Can you expand a maybe a little more specifically? It was pretty telling that only about in your view I guess about 25%, 30% of stores you know accounted for the bulk of the losses. Can you maybe get a little more granular sort of reviewing perhaps, the top three policy and process factors that impacted losses this quarter and that give you comfort that these are more primarily company specific operational issues and not broader?
Yes, I would tell you there are few things. One and we talked about it somewhat on our last call, certainly with the addition of the GPS and as we said it's early on for us. The GPS device is not to be a reposition tool per se. Although, obviously in the tail end it has prevent with losing of cars, but really our intent was to use it more so on the front end. So that we're able to be sure to contact the customer when was one or two payments behind versus finally laying hands on them, when they're multiple payments behind? We felt like that would give us an opportunity to work with them better and how that was integrated and used. It was a change particularly for some of our managers that have been around a lot of time because we've had a set standard process that we follow and so that changed a little bit and I think as I've had mentioned before feel like that also let to the fact that, we had an increase as we entered the past year. I think people were taking more chances and we had some a bit of pile up on our collections with the idea that we are going to take more chances, let some go a little further. So I think that was a big change. Additionally, we've talked a bit about the fact that we changed all of our operational software and when I say all of it, I do mean all of it. We have a system that those are inventory management or sales process handles our payments, also handles all of the collections. So the look and feel of where they get information in order to - for account reps to work with the delinquency list. It has a total different look to it and there was an adjustment to that. Additionally, this past year we did tighten up some of our compliance with regard to collections and while it didn't radically change the process. We did put in more strict limitations on the number of calls that could be made to a customer times and places, where they could be contacted. We also put other restrictions on the contacting of references. So all of things had an impact and it was a big change.
David, we did also centralized a number of non-core administrative type processes that had some collection aspects to them. So there were some changes with some things that we took on more centrally, that did affect have the lots operated.
Got it and as you think about some of the changes that require little more training in adjustment period particularly the software ERP interfaces and some of the new maybe refined collection practices. Is this something that you probably elevates or weighs on collections patterns maybe for a couple more quarters. I mean, not to the extent of this past quarter, but I mean do you have a sense for kind of corporate wide, how long it takes for the system to kind of absorb all these changes internally?
Well as I mentioned, we actually saw great improvement during the quarter. So I hope that we are past all that. We knew going through this that we would have some pain and as everyone knows, retraining can sometimes be more challenging than training. And so and again, many of our folks that are around many, many years. So there was a lot of changes to adapt to, but as was mentioned our over 30s into this past quarter lower than they have in past few years, even so. We like, we think we're past the biggest hurdle for that.
Got it and that's helpful and then just lastly, sort of following up on the last question just regarding competition and alike. As we think about kind of vehicle price and obviously this customer being so focused on maintaining an affordable monthly payment. Vehicle price I guess is, up about 5% year-over-year. First just in terms of clarification is that primarily the new service contract that's embedded in the average retail price?
Yes, that's the increase for the year is related to the new service contract and also we tweak the pricing a little bit on the PPP product and then just a little bit of sales pricing increase. It's down a little bit sequentially, but for the year most of that related to the add on product.
Got it and just from a behavioral standpoint and sort of the, for maybe the top tier of your customer, the ones most susceptible to be lost to traditional and direct lenders? Is there a sense that they're looking for a more expensive car, trying to find a way to afford a more expensive vehicle. Just trying to get a sense for how stretch they may be and whether another round of lower gas prices is impacting their behavior?
Well, we do know with the loosening of the credit and all the availability that's been out there few years. It has given some of our customers an opportunity to go to a new car store wherein years passed, they haven't necessarily. So it's been an opportunity for them to probably buy a later model car and with the long-term, that are availed some of those probably even get a lower payment. However and this is just anecdotal but just talking with one of our managers been around many years. Yesterday, the sales were up considerably and this was one of our stores that have excellent losses. So they're actually beginning to feel like a lot, some of those folks are coming back. We've been talking about this additional competition for a while now. It really began three years ago. It's been that long. And so if it's bright side and well this is for sure and again this is just anecdotal with one particular manager anyway beginning to indicate that, maybe some of these customers have cycled through some of that process already and are coming back, so.
Got it. Just one last question on gross margins as well. I mean not to try to pin you down at too granular level. But second quarter in a row with, the margin was under 42%, where we've usually seen it. Just based on kind of wholesale values the amount of inventory are key thing, what you're getting at repo, should we expect the full year gross margin probably to come in below 42 is that a safe bet.
Yes, at this point. I think that would be a safe bet. We'd love to see some improvements there, but we're not optimistic at this point that we're getting any benefit from wholesale values and we still have some challenges on the repair side. So I would say, we're going to be a little lower than we've historically been.
Got it very helpful. Thanks very much.
And our next question is from the line of John Rowan from Janney Montgomery Scott. Your line is now open.
I just want to follow-up one of the last questions about used car prices. Obviously, I understand that part of credit problems are driven by system changes in other words more localized than certain dealerships. But the fact that you're getting lesser of recovery in the wholesale market, that would be a broader market issue. Can you talk about the recovery rates and other model have built on around 30% recovery rate? Where are you trending now, what types of cars are seeing losses? I mean, I've seen various reports saying that smaller entry level cars where we're seeing the most pricing pressure and certainly well above depreciation rates. And I just want to understand kind of the dynamic as to why if that's the case and why we're sitting and again it goes back to maybe gas prices or there is a big supply increase in those types of cars. I just want to understand what's driving that?
Yes, we're talking about a wholesale car with a value of around $2,000. So this, the fact that even scrap prices are down has some effect on that really low end car and it is, a little more focused on the basic cars the SUV's and trucks carry a higher value. But we are down in the mid 20s on recovery rates and that percentage was well above 30% back in the fourth quarter, third quarter, fourth quarter of 2012. It's hard to know, where that's going and it certainly has had a big negative effect. But when you look at the increased credit losses for the quarter over 80% of our increase relates to frequency and under 20% relates to severity. So it is a big deal, it is something that we're trying to offset with higher down payments and better structures on the front end and trying to be more efficient, when we do have to repo a car and wholesale it off, trying to make sure we're maximizing values there. But it is a $1,800 to $2,000 a car. So it's not going to follow, maybe some trends that you're going to see at those higher price points.
And when you talk about scrap values. I mean, what we're talking about metal prices?
Basically, yes. There is a point where these cars are just, were scrapped and that's basically that's a really low end, but I think we're receiving several hundred dollars less per car down, at that scrap level now, than we were a few years ago.
I mean, your frequency is default. I mean, my understanding is that it's been, I know you said it before in the 40% or above 40% range. Off that 40%, what percent goes scrap and what sold wholesale could be resold somewhere else. I just want to understand kind of where the baseline is for, how sensitive your severity of losses to actual commodity or metal prices?
It's not changed - I wouldn't say the percentage of scrap versus wholesale has changed. I'm not sure over the years.
But what is the breakout roughly?
I don't know, maybe 20% scrap, 80% would go through the wholesale process and that probably hadn't changed much over the last few years.
Okay and then just lastly, I guess the software issues. Where there any, when you look at the stores. The third of stores that contributed to most of the credit problems, was there any type of geographical concentration or was it really scattered about or I was just trying to look for any type of trend there?
A little of both, we saw some elevated in various areas. However, there was a little bit of concentration in Texas and Oklahoma.
And do you think in Texas or maybe it's relating to the oil industry. I mean, how much I mean workers I'm just trying to understand if there is something other than just a software change?
Software was not the main thing and just to clear this is one of many distractions we had. But now I think it's more managerial execution frankly.
Okay, thank you very much.
And our next question is from the line of John Hecht from Jefferies. Your line is now open.
Actually most of my questions have been asked. I guess this is a little bit of more of a tag on to the prior questions from John. You did give some geographic kind of context with respect to maybe some concentrational [ph] losses, but if you kind of review the troubled accounts are there any characteristics you can take out from this? Is it maybe a higher risk customer from an underwriting perspective, is there any other geographical correlations or is it just sort of across the board sloppiness in some ways?
I would say it's more the latter. Yes, unfortunately. And I think the good news is, we can do something about that. As I said, this is not excuse any of it, but we have to control it as we grow it. But we have opened 50 stores in the past five years. And that spread us a little bit and also mean [ph] in the process, we're bringing new people through GM, through our middle ranks, area managers and such. And so we have to do a better job of training these folks and we are again, point to the fact, we did see great success this past quarter. But it was a bit of a clean-up from the rise in collections. I'd say, if you see any trends again one of the things that is the factor that is the competition. There are so many alternatives out there, I think some of the motivation to work it little harder to try and make something work, has declined a bit. I think when people can go tell someone else, so just gave one back and still qualify for some credit. I think that's a problem with the system. But I think that most of the stores are experiencing that.
Okay, that's good color and then, historically. Not all the time that you guys had a little bit of credit pick up. But sometimes you would kind of rain in sales, just to kind of make sure that you had the capacity to deal with their issues and I'm not hearing that this time, so is it something you think you'll continue to see good as we through these credit issues. You'd still observe, good same store sales increases or might you kind of rain things a little bit as you work through this.
Yes, we definitely will, whether it's going to be we're really going to have to tighten up on those, that where we see the higher losses and again, when we have a number of stores that have such low losses. I think our quest is to really push more sales where we're most effective and we will have some areas where we're going to have to tighten up a bit. Yes, we will definitely tighten up some. So there is a potential, at volumes but we also see a good number of stores, where we feel like we have the potential to still increase sales for some offset there and that's our plan, that's our intention. But volumes could be impacted.
Okay and then last question. Jeff, you mentioned that if this persists you may have to increase the ALL [ph] level, can you - what's the kind of tenor of that. I mean if you got three or four quarters before you have to reconsider it and what kind of magnitude might we think about there?
Well we've had, two pretty high charge off quarters in a row. But then we never, it's been a while since we've ended a quarter as low on delinquencies as we are right now. So we really too early in the quarter to know, how that's going to roll out, but if we don't see some good solid reductions in losses pretty soon here. We're going to have to look at, of course that's always a non-cash charge to the reserve, but we're going to have to look at something theoretically as early as this next quarter end and certainly as get into the end of the third quarter and on into the fourth. We may depending on how losses come in, we may have to look at an adjustment at that point and it's hard to say what that range might be, but it would certainly be something above 23.8% we have out there now, but I don't have a specific number, we're really waiting to see how this lower delinquencies are going to play out in the current quarter and then maybe on into the next quarter.
And our next question is from the line of Bill Armstrong from CL King & Associates. Your line is now open.
In addition, I guess to the maybe your collection personnel not following protocols as tightly as they should in terms of how, on Day X make a call, Day Y make a call. Are they having any increase in difficulty in actually locating the customers whether it be through systems glitches or maybe the customers themselves or maybe more transient than they were in years past. Anything along that front?
No and it's not necessarily anything that just happened, but we'll go back and say, we talked about the software effect, the bulk of the stores actually didn't get rolled out until about February or so. So this is right before when we rolled in, as we were rolling in two or fourth quarter. So as lot of that changed and then we feel like, we saw the rise in collections during the fourth quarter. Actually, I think now with the vast majority of our accounts now have the GPS actually locating has become better. But prior to that, it was getting worse because now people primarily use cell phones virtually everyone does and those seem to change more frequently, we lost numbers and yes people still move, that's always been with us. But we used to be, we used to utilize in years pass. Contacting references and so forth and to locate people and we have tightened up on that. So even though we haven't seen the benefit of the GPS product yet. Obviously the timing of it is good because if we had not done that, with some of the restrictions we've imposed on ourselves now, we would have a lot more difficulty locating some, but not just here recently I would say it's actually getting better. And again, I think the results in this recent quarters speak to that.
And I guess just trying to reconcile whether these issues are mostly company specific, which means they're kind of within your control to improve or whether it's more macro driven. The fact that you're considering raising your allocation and relatively near future, would seem to indicate that you're little concerned and maybe even with the improved practices and improved execution, you still might not be able to reduce the losses enough, which would indicate maybe there is more of macroeconomic issue going on, is that fair to say?
Well obviously, the discussion about raising, is based on the past couple of quarters experience, was two in row, with higher than expected. And as Jeff mentioned earlier and again, it doesn't account for the bulk of the increase. It's a small part of it, but we do feel like these wholesale prices, we try to get the best we can but that is a bit out of our control. However, we feel strongly that most of this increase is a result of we got off on our standard collection practices and had to make some changes to that. And we do feel like again, in this past quarter we got most of that fixed and so, we are expecting to see our losses go down, but just talk to raising the reserve strictly just to a result of the past couple of quarters provided that they go down as we believe they will with the lower delinquencies, we should be okay.
We're just, as Hank mentioned earlier. We really started seeing a big shift in the competition and the landscape about three years ago. So we've been seeing increased losses for an extended period of time now. Our expectations have been all along, that we're going to get some relief at some point. And now that we've seen a couple of high quarters in a row, we just got to be a realistic on what is the new norm, we love for those losses to come back down. But we're not seeing a huge reduction in competition maybe some anecdotal examples here and there. But then you see the earnings releases of some of the indirect lenders being up. Significantly on their volumes and picking up market share, so there is still a lot of competition, it is very intense out there and we've been in this for two to three years now and we're not quite sure where it all settles down.
Okay, got it. Thank you very much.
And we have a question from the line of Gene Mostad [ph] from US Capital. Please go ahead.
I just like to ask you on your buyback, how much of you got left on that?
There is about 800,000 shares still out on that.
Good and do you plan on increasing that another, the share?
No, I think that's going to be I think last year about 400,000 shares last year. So we should be in good shape there.
Good and then, my next question. Hank, would be if you could elaborate a little bit on why you all are not paying up dividend?
Well we've had this conversation I guess a few times and we feel like that, our buyback program does serve a long-term shareholders well and that's our decision well at the guidance goes for our Board of Directors we feel like that's proper path for us to take.
Well, I mean you got the shares down so low now, another 800,000 shares. How many would be outstanding?
We'd be at less than 800,000.
Right, well that's not much float in here. And I would just like to you all to consider dividend. Some of us been waiting many years and that would sure be a nice payback for us. Thank you all very much.
And we have a question from the line of Jeffrey Matthews from Ram Partners. Please go ahead.
Hi, thank you. Can you hear me?
My question is about the change in your collection policies or how you follow-up with customers? It sounds like you eased some of those actions and I'm wondering, did you do that in response to the competition, did you do it in response to what you're thinking might come down the road from the Feds or the Consumer Protection Bureau or did you do it because of your enhanced growth rate in the stores or was it because of the technology you implemented?
Yes, I would say it's a combination of several things. Obviously, collection practices are kind of in greater scrutiny and we want to be above approach in everything that we do and anywhere, where we felt like, in any area that could be in question, we’ve addressed it and certainly with the additional of GPS now that we've added over the past couple of years, we felt like we were in a position to put some more restriction on ourselves with again with the number of calls and so forth. So I would say it's a combination of things.
Got it, okay. Thanks very much.
And I'm not showing any further questions. You may proceed with any final remarks.
All right, well again. We thank you all for joining us today and clearly, we know what area of the business we need to focus on. We're pleased with our sales, not happy with our losses. We are pleased with the collection results we've had in the past quarter with regard to getting our delinquencies down better shape than they've been in a very long time. But we do have much work to do and hope to bring you all some better results soon. Thank you.
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program and you may all disconnect. Have a wonderful day, everyone.