RB Global, Inc. (RBA) Q3 2014 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to Ritchie Bros. Q3 2014 Earnings Conference Call. [Operator Instructions] I would like to remind everyone that this call is being recorded on Tuesday, November 4, 2014. I would now like to turn the conference over to your host. Please go ahead.

Thank you, Chris, good morning, everyone, and thanks for joining us on our fiscal third quarter 2014 earnings conference call. Discussing Ritchie Bros. performance today are Ravi Saligram, Chief Executive Officer; and Rob McLeod, Chief Financial Officer. The following discussion will include forward-looking statements as defined by SEC and Canadian rules and regulations. Comments that are not a statement of fact, including projections of future earnings, revenue, gross auction proceeds and other items such as our potential addressable market, are considered forward-looking statements and involve risks and uncertainties. The risks and uncertainties that could cause our actual, financial and operating results to differ significantly from our forward-looking statements are detailed in our SEC and Canadian Securities filings available on the SEC and SEDAR websites as well as rbauction.com. Our definition of gross auction proceeds may differ from those used by other participants in our industry. It is not a measure of financial performance, liquidity or revenue and is not presented in our statement of operations. Our third quarter results were made available earlier this morning. We encourage you to review our earnings release, MD&A and financial statements, which are available on rbauction.com and will be available on EDGAR and SEDAR shortly. I'll now turn the call over to Ravi Saligram, Chief Executive Officer.

Thanks, Jamie, and thanks to everyone, for joining us on our earnings call today. As you're all aware, I've spent a better portion of my time since starting at Ritchie Bros., hearing from all stakeholders of the company, including our employees, customers both large and small, past partners, and of course, shareholders and prospective investors. It has been a very informative and productive process and has provided me with very valuable feedback and insights about what's working at Ritchie Bros. and where there are opportunities to improve. I'll first discuss key learnings from my 100 day listening tour and initial analysis of the company, as well as some of my overarching priorities for the company. I will then discuss our near-term focus and some high-level components of our longer-term strategy. Ritchie Bros. has many outstanding capabilities and qualities. These are things that we do exceptionally well, we're absolutely committed to, and we will reinforce going forward. Most importantly, we have an outstanding core auction business with a value proposition that our customers embrace and appreciate. The quality of the service we offer differentiates us and is recognized by our customer base. It is a solid model and one that continues to have significant run rate ahead of it. We have exceptional operational competencies, particularly as it relates to the integration of our physical auction sites and Internet bidding. Our brand reputation is strong with both existing consignors and buyers where we do business, and especially strong in Western Canada. We have truly loyal customers. Our sales teams have unrelenting conviction in our auction model and have developed deep trusted and long-standing relationships with many of our customers. They view us as a trusted adviser when they're transacting an equipment and also as a window into current equipment demand and pricing trends. Our vast amount of data from auction sales, global bidding, sales inquiries, website traffic and EquipmentOne provides us with a unique ability to track pricing and sector trends, market data, regional global demand and customer analytics. Our strong balance sheet provides us with opportunities to leverage underwritten contracts, to grow our market share and meet the needs of our customers. And our remarkable employees, who I see as one of our most outstanding assets with their passion and pride for our company and our services, their dedication to our business models and customers and their willingness to work long, hard hours in the field. These aspects of the company reinforce my initial impressions of Ritchie Bros. and why I decided to join this business. Now as in most companies, there are also opportunities for improvement, and a great deal of my time has been spent identifying and analyzing aspects of the company that could benefit from further attention, capabilities and [indiscernible] insights. First, the company had developed organization silos with limited interaction between departments and functions at times, and a strict structure that often meant decisions about the business, were being made too far from the field and regions we operate. Our focus had become more internal than external, and we lacked general management accountability. Our structure was overly centralized, not allowing us to be agile and nimble. The new structure announced this morning will address these issues through leaders with a strong general management focus and increase the sense of urgency and cohesiveness of our teams. Second, we also need to better integrate and update some of our legacy information systems, which the company has already begun doing. This is absolutely critical to capitalize on real-time data and review the platform on which our market insight, financial analysis and productivity tracking will be based. Real-time information will also be fundamental in our ability to better optimize the consistent performance of our underwritten contracts, which I see as another key opportunity for the company. Data, or more appropriately, the insights we can generate from our data can also be better leveraged to better understand our customer base and the unique needs and preferences of customers in specific segments, sectors and regions. Next, we need to invest in skill sets that create more analytical rigor to explain cause and effect. An example of this would be to cogently explain why Alberta is better developed than Texas for Ritchie, which then allows us to take appropriate actions in Texas to realize its full potential. Third, and perhaps the most strategic opportunity, is to have a renewed and more intense focus on the performance of EquipmentOne. As I have delved into this business, it is clear that EquipmentOne has significant long-term potential. Unfortunately, we have not executed against this opportunity in an optimal manner. We plan to create an environment, which will foster appropriate integration of EquipmentOne on an emotional level within the organization given our long history and passionate focus on the unreserved model. At a company-wide level, I strongly believe that the EquipmentOne model, which allows for greater customer control, is indeed a compatible offering with our historic unreserved option models. Based on occasion, needs and equipment type, a customer may prefer one model versus another. We have proven this already with our strategic accounts team. They sell both EquipmentOne and auction services to the same customer. The customer may prefer EquipmentOne, in cases where they wish to have more control or one of these 4 factors: price, the location, timing or the buyer base. At other times, the customer may want liquidity, the certainty of disposition without any hassle and turn to the Ritchie auction model. Ultimately, having both models helps us more fully address multiple customer needs and selling occasions. We will take concrete steps in 2015 to further integrate EquipmentOne with the rest of the company to accelerate its growth. The fourth relates to focusing the organization or shareholder value creation. We have a terrific culture focused on customer service and our people are highly, highly responsive to our customers. We've also had a very successful history as a private, family-oriented, founder-led company. A lot of positives from this era remain in our culture today even as a public company, which is great to see. However, my team and I will work on proactively evolving the culture where driving shareholder value is not seen as being mutually exclusive with an employee focus and our customer focus. Next, we intend to retain all the positives of our culture, including customer intimacy and caring for our employees, while making shareholder value our strong overarching focus. A new organization structure, with general managers the helm will help us achieve the appropriate balance in creating a win-win across all 3 constituents: shareholders, customers and employees. After evaluating and analyzing many components of the company and our historical performance, we will focus on 3 strategic pillars to enhance shareholder value. First, reintegrating growth. By this, I mean, revenue growth and earnings growth, not just GAAP growth. We believe there are 4 drivers of growth: geographic, sector, services and channels; each driven organically and potentially through acquisitions. Our #1, #2 and #3 geographic priority are all the same. It is the U.S. market. This will be our strong focus given its size and potential. Sector-wise, we're already strong in construction. Our aim is to continue to expand our penetration and transportation and agriculture as our key priority structure -- sectors. Finally, we'll continue to better understand the oil and gas sector to sharpen our go-to-market strategy. Services and channels at this time refer to Ritchie Bros. financial services and EquipmentOne, respectively. We need to scale these opportunities. The second pillar is to enhance shareholder value. The second pillar to enhance shareholder value is optimizing our capital allocation and structure. These activities will include justifying or rationalizing real estate assets, reviewing capital structure in depth and looking at ways to supplement total shareholder return and drive better Return On Net Assets or RONA. We will put a lot more emphasis on being stringent on new site openings, ensuring that they will drive strong ROI. Coming from a multiunit background, be it hotels, retail stores or cafes, I'm a big believer in carefully analyzing individual site economics and taking the appropriate action to improve site returns. I plan to implement these operating disciplines at Ritchie. And our third pillar, we'll be looking at driving efficiencies in the company through improved productivity in both our sales and support functions and cost containment. Please understand, we may need to make the appropriate investments in the right structure, the right teams and the right systems in the short term to be able to get our overheads down in the medium and long term. Now I'll discuss what this means for us over the short term and for our long-term strategy. Over the next several months, I have 4 key priorities for the company to improve execution of our current model and lay the building blocks to start bringing to light [indiscernible]. These 4 priorities are: first, ensuring we have the best leadership team in place to align executive competencies with the current and future needs of the company, and put in place regional leaders who bring a general management focus and can deliver strong results focused not only on the P&L but also cash flow and balance sheet measures; second, ensuring we have the right organizational structure in place to enable future growth in terms of the appropriate line and functional resources in the field, and to improve our analytical framework to better segment our customers and convert data into insights to strengthen our value proposition; third, creating a strong performance culture at all levels and align the company using a clear set of performance metrics and appropriate reward and recognition systems. I'm committed to ensuring clear and complete accountability in driving growth, profit and cash flow and putting in place appropriate performance and performance-based compensation systems; and finally, in the fourth, driving improved performance of EquipmentOne and integrating it in the optimal manner into the Ritchie system. As a first step, we've announced several important executive changes with immediate effect. First, we are very pleased to welcome Jim Barr to Ritchie Bros. as Group President, Emerging Businesses, Brand Innovation and Technology Services. Jim starts today. Mr. Barr will now oversee EquipmentOne, Ritchie Bros. Financial Services and the company's marketing and information technology departments. He will also be responsible for developing new revenue channels through complementary product and services. I had the distinct pleasure of working with Jim at OfficeMax, and he is clearly one of the best digital and omni-channel professionals I've ever met. There, he led the development of the digital and omni-channel transformational growth strategy, which turned digital services into a growth engine for OfficeMax. Prior to this, Jim was President of Online at Sears and an executive at Microsoft, where amongst other accomplishments he launched and led several of the company's marketplaces, including shopping, auctions and classifieds. Jim clearly has an extensive background in driving growth of digital strategies and online marketplaces, and I believe his experience and expertise will help Ritchie Bros. execute focused strategies that will drive better performance from EquipmentOne and other businesses. I will also place marketing and IT under Jim to help us leverage the immense amount of equipment and customer data to create powerful insights to strengthen our value proposition and evolves us over time to become a knowledge-based company. Also announced today were some structural changes to implement a more regionalized and decentralized organization, which will allow us to be more responsive and agile as a company. This will help us to better meet customer needs and foster an increase sense of urgency within the organization. Three regional heads were named to assume full responsibility of regional performance. Randy Wall has been named President of our Canadian business. Many of you know Randy as a longtime executive of the firm, who has extensive business and experience across many aspects of our company. Jeroen Rijk has been named Senior Vice President of -- and Managing Director of our European operations. Jeroen was instrumental in growing Ritchie Bros. presence and management team in southern Europe and has over 19 years' experience with the company. And Kieran Holm has been named Vice President and Managing Director of our Asia-Pacific operations, which includes Japan, China, Southern Asia and Australia. Kieran is most recently a Vice President of Sales in the United States and also held marketing and operations roles during his 10 years with the company. He received his MBA in Tokyo and is very familiar with the Japanese business culture. Karl Werner has been appointed Chief Operating Support and Development Officer and Interim Managing Director for the Middle East. In his primary role as Chief Operations Foreign Development Officer, he's been strategically focused on global operational excellence, driving operational innovations and overseeing online operations. Specifically, Karl will be responsible for developing and implementing company-wide operational processes, metrics and standards; ensuring that our operational competencies remain a distinct competitive advantage, and promoting the use of operational best practices globally while ensuring global consistency in the customer experience; and finally, supporting the regional business leaders to improve RONA, Return On Net Assets. We will be initiating a search for the President of our U.S. and Latin America business. At this time, Latin America is primarily Mexico and Panama for us, and I want to stay focused on these. So as we initiate the search, I will take direct responsibility for this business and be the acting President of U.S. and Latin America. We have put in place regional business leaders who will have a strong general management focus to drive sustainable, profitable growth as well as cash flow in the core auction business. I believe this organizational structure is fundamental to increasing accountability across our company, building cohesiveness across different functional teams and increasing our responsiveness to customer needs. Let me highlight a few other changes. As part of the new organizational structure and priorities for the company, the corporate CFO role will be expanded to place more emphasis on capital allocation and will also oversee the company's legal, internal audit and risk management activities. In this context, Rob McLeod, current CFO, will transition to a new role as CFO, Americas, in 2015 and will be responsible for the financial functions in Canada, U.S. and Latin America. Rob will play a critically important role in partnering with an externally hired President of the U.S. and Latin America to unlock the full potential of the key U.S. market. His vast knowledge of operations and financial matters of the company will add tremendous value to this strategically important position. We will initiate a search for the new corporate CFO shortly, and until that transition takes place, Rob will continue as Corporate CFO. Steve Simpson has been appointed Chief Sales Officer, global key accounts, where he will focus on securing large special situation contracts and driving incremental business development. Steve will manage a senior focus team dedicated to the business development and will also oversee our pricing and appraisals department. Regrettably, we also announced this morning that Bob Armstrong will be leaving the firm by the end of the year. Bob has been and remains a steadfast supporter of Ritchie Bros. Over his 18 years with the company, he has held many executive leadership roles including CFO, COO and most recently, Chief Strategic Development Officer. He played an absolutely instrumental role in Ritchie Bros. growth over the years, and we would like to thank him for his many, many valuable contributions to the success of the company. He will be missed, and we all wish him well in his future endeavors. Andrew Muller, Chief People Officer, will also be leaving the company in mid-November to pursue other opportunities. Andrew made significant contributions to Ritchie Bros. over his 3 years here, with a focus on process improvements, accelerating sales force hiring and training a few sales managers. We wish him well in his future endeavors. We have initiated a search for a new Chief Human Resources Officer, and we believe we will have someone in place in the next several weeks. This is clearly a lot of change to the company. But I believe the changes and appointments we have made today will best position our leadership team and business for the next phase of Ritchie Bros. evolution. A new leadership structure, with this clear lines of accountability and performance focus will be foundational in driving further growth through disciplined execution. So what does this all mean for our longer term vision? I'll discuss high level strategies now. But, we'll be in a much better position to drive details of our strategic roadmap in our upcoming Investor and Analyst Day on January 12 in New York. Ultimately, my long-term goal is to evolve Ritchie Bros. from being primarily an auction company into a trusted asset disposition company. The unreserved auction model will always be a core service offering for our business, and there remains significant growth potential for this channel alone. But it would be irresponsible for us not to explore other channels and services that will uniquely position for offer as a result of our market position, market data and operational competencies. I'll bucket our long-term focus areas into 4 buckets. First, Ritchie Bros. will become more data driven, using our deep analytics to drive marketing and sales initiatives. Second, we intend to reintegrate growth to both a renewed focus on revenue drivers and cost containment. We'll specifically be looking at ways to improve the performance of certain auction sites or rationalizing our investments in these regions. We will also be looking at ways to expand some of our go-to-market strategies and services. Third, we will actively pursue a growth strategy through organic and strategically important acquisitions. This will involve tuck-in acquisitions that bolster our market share in key or new segments of our market, or bolt on additions to drive our core auction capabilities. We will establish clear acquisition criteria that ensure a strong fit with our strategy, improve long-term profit and returns and become accretive in a reasonable period of time. And fourth, we'll become better stewards of capital and we'll be focused on improving return on net assets. Our plan on developing specific strategies and policies in the future to best optimize our capital allocation and structure. More importantly, for those of you on today's call, I want to emphasize that there is a renewed and steadfast focus on shareholder value and generating the kinds of returns we know this company is capable of. And with that overview, I'll now pass the call on to Rob, to discuss our third quarter performance.

Thank you, Ravi. I'll take a few minutes to discuss our earnings results and then I'll provide an update on our operations and I'll end with our outlook. As you saw from our September auction metrics disclosure, we achieved record third quarter GAAP this year of $887 million. This is 12% higher than Q3 last year. We were also very pleased to have hit over $4 billion in gross auction proceeds for the 4 quarters trailing Q3 this year. This is the first time Ritchie Bros. has achieved over $4 billion and a new milestone for the company. Net earnings attributable to shareholders during the third quarter were $9.3 million or $0.09 per diluted share, a 43% decrease from the same quarter last year. As discussed in this morning's press release, this includes $5.1 million of net charges attributable to land sales and real estate asset write downs. Specifically, there was a $3.4 million pretax gain on the sale of our former auction site in Grand Prairie, Alberta and an $8.1 million noncash impairment charge on our land and building in Narita, Japan. We conducted a strategy and auction site performance review in Q3 related to our Japan auction site, which indicated that these assets were impaired. As a result of this and other indicators, we recognized an impairment loss in quarter 3 to record the assets at their recoverable amounts. At this point in time, we have not made a final decision about the future of these assets. On an adjusted basis, excluding these 2 real estate items, the company generated $14.5 million of net adjusted earnings or $0.13 per diluted share, a 9% decrease compared to $15.9 million of adjusted net earnings in the third quarter last year. The decrease in year-over-year adjusted earnings was due primarily to the higher than normal revenue rate we achieved in Q3 last year, resulting from a few unique, very profitable fields in that period. As we discussed at the time, we do not expect to achieve a similar revenue rate this year. The revenue rate during the third quarter of 2014 was 11.5%, which is in line with historic norms and within our guided range. As a result, the $102.2 million of revenue Ritchie Bros. generated during the quarter was 3% lower than the $105.8 million generated in Q3 last year. Underwritten contracts comprised 30% of GAAP during the third quarter, slightly higher than the 29% in the same quarter last year. Operating expenses, which include direct expenses and SG&A, but exclude depreciation and amortization, were $71 million for the third quarter, 2% higher than the same quarter last year. Within this, sales and marketing expenses increased 3% as a result of our larger sales team, while expenses related to operational and administrative activities increased 2%. Earnings before interests, taxes, depreciation and amortization for the third quarter were $31.2 million compared to $36.2 million in quarter 3 2013. EquipmentOne had a negative contribution to EBITDA of $700,000. The effective tax rate during the quarter was 39.6%, higher than the 35.9% in the third quarter last year. This increase is due to the impairment charge we booked this quarter for real estate assets in Japan, which we did not record any tax benefit or recovery on. Internally, we continue to model a normalized annual tax rate in the range of 30%. On an adjusted basis, our tax rate for the third quarter was 28.4%, lower than last quarter's result of a higher proportion of revenue generated lower tax jurisdictions. Specifically, the larger proportion of revenue was generated in Canada, Australia and the Middle East during the quarter compared to last year, and a lower proportion was generated in United States, which is the highest tax region we operate in. The shift was due to the combination of factors including auction timing, strong results from some of our Canadian auction site and several off-site auctions that occurred outside of the United States and Canada. Changes in the foreign exchange rates, and more specifically, the weaker Canadian dollar, did have a slight impact on some line items this quarter compared to quarter 3 last year. Gross auction proceeds for the quarter would have been $13 million or 1.5% higher using the same exchange rate as of third quarter 2013. Similarly, net earnings would have been 0.5% higher. As I've spoken about before, fluctuations in exchange rates tend to have only a marginal impact on our net earnings. Our balance sheet continues to remain strong with $121.7 million in working capital as of September 30, 2014. During the first 9 months of 2014, we generated $82.2 million of free cash flow excluding changes in working capital and paid out $42.9 million of dividends. Turning to our operational performance. We added 4 new net Territory Managers during the quarter for a total of 296 Territory Managers as of September 30. This is an 8% increase compared to September 30 last year. These new positions have all been added to our North American sales team. Our recruitment pipeline continues to be robust and in fact, we've hired 5 additional TMs since the end of December, bringing our TM count above 300 for the first time in company history. In terms of sales force productivity, we continue to believe -- be pleased with how our newly recruited TMs are ramping up. The training and development and initiatives we've implemented are reducing the average time it takes a new TM to achieve productivity. We believe this contributed to our retention of revenue producers and increase sales force productivity to $11.2 million per revenue producer for the rolling 12-months ended September 30, 2014. This compares to $10.8 million for the rolling 12 months ended September 30, 2013. We measure sales force productivity simply as a rolling 12-month GAAP per revenue producer. As of the end of October, 40% of TMs in our sales force had less than 2 years of experience with Ritchie Bros. This is unchanged from the end of Q2 and reflects the ongoing recruitment and growth of our sales team. As TM recruiting remains a key focus of the company, it will continue to slightly dilute the average tenure of our sales force, even as the experience of previously hired TMs increases. Pricing for used equipment continues to be fairly stable as it was in the second quarter but at stronger levels compared to last year. In the ag sector, there's a lot of product on the market, yet prices are still meeting expectations. Like construction assets are still performing well and North American markets are still an area of strength for such assets as skid steers, loader backhoe wheel loaders. Larger assets such as excavators, have been well supported. For transportation assets, heavy spec trucks, low mileage class 8 trucks, have been doing well in most areas of North America. The price of oil has recently created a level of caution with some participants in the marketplace, and we will continue to watch the markets over the next few months to see if there are any certainties or trends established. The age of used equipment population that we sell continues to improve. On a trailing 4 quarter basis, the average age of assets as of September 30 was 11.07 years, down from a peak of 11.25 years for the 4 quarters trailing March 31. This is the second consecutive quarter we've seen the average age decline and a measure that confirms the headwinds we faced from an aging equipment population are now dissipating. I'll now comment briefly on our expectations for the remainder of 2014. In reviewing our forecast for the fourth quarter, we are narrowing our guidance for 2014 gross auction proceeds to be in the range of $4.1 billion. We've seen significant and sustained GAAP growth the past several months and believe our pipeline of asset continues to be strong. But we recognized that the fourth quarter GAAP comparisons are going to be more difficult as we achieve strong GAAP growth in the fourth quarter of last year. As Ravi discussed earlier, there have been some leadership changes that will result in restructuring charges being booked in the fourth quarter. The impact of these charges is expected to have an impact on quarter 4 reported earnings and will weigh on 2014 pretax earnings growth. On an adjusted basis, excluding restructuring charges and other adjusting items, we still believe the company will generate mid-single digit pretax earnings growth for 2014. We do expect several million dollars of restructuring charges to be booked in the fourth quarter related to the reorganization and executive departures. As some of these charges are still being determined, we aren't able to confirm a more precise figure for you at this time. We forecast total capital expenditures to come in between $40 million and $45 million for 2014, down slightly from the $45 million to $50 million we guided to earlier this year. And with that overview of our quarter 3 performance, I'll now pass the call back over to Ravi for closing remarks.

Thank you, Rob. I now have been at Ritchie Bros. for over 4 months. And every city I go to, and every auction site, I've been welcomed by an immensely proud team of Ritchie Bros. employees. Across our platform, our team recognizes what makes Ritchie, a true leader in our space and fervently believes in the same values instilled by Dave Ritchie years ago in putting the customer first and doing what's right. The contract here is strong and resilient. But what impressed me most, in fact, most surprisingly, was the openness to change and evolution of the firm. In fact, our upper-middle management, be they regional sales managers or regional operating managers or marketing managers, they are hungry for change. They are winners and want to win. In all my interactions and as recently indicated by an internal staff survey we conducted, our employees expect and desire ongoing growth, development and progress at the company, and this gives me absolute confidence that our teams will better execute strategies going forward. I look forward to discussing our long-term strategy with you in detail on January 12. In closing,. I want to take this opportunity to personally thank every customer, shareholder and prospective investor I've met who shared candidly back to me about our business. Your opinions and suggestions have been highly valuable and have been heard, and have provided me with many different perspectives of how to shape our strategy going forward. I'd also like to thank all Ritchie Bros. employees for their ongoing commitment and openness to change. Your feedback and insights will continue to be instrumental as we embark on the next phase of Ritchie Bros. evolution. There are tremendous opportunities ahead for our company, and I look forward to sharing our progress with you in the coming months and years. With that, I'd like to open the line for questions from analysts and our institutional investors. [Operator Instructions] As a reminder, details about our long-term strategic road map will be made available on our January 12 Investor and Analyst Day in New York. I will do my best to answer questions about these high-level focus areas today, but please understand that it may be difficult for me to discuss some activities at detail -- in detail at this time. Operator, Chris?

[Operator Instructions] Your first question is from Nate Brochmann, William Blair. Nathan Brochmann - William Blair & Company L.L.C., Research Division: I just wanted to talk a little bit, and I know, like you like said, a lot of this is early, but one of the interesting things is Ritchie Bros. does have this strong culture as you alluded to and maybe it was directed at certain things and needs to be a little bit redirected at some others and certainly sounds like the shakeup is kind of a little bit of the way to go. But how do you approach, and how do you think that you'll approach it going forward in terms of retaining that culture while moving forward in some of these new areas?

Nate, thank you for that. Look, I think our culture is a terrific culture and very much fits with my leadership style and values. I love the passion of our employees. To me, when we have done our internal surveys in the field, the level of engagement and commitment of our employees is off the chart. And that is something I want to preserve, build on and use as a great strength. So the key is the one most -- biggest ingredients for our people is they want to win. And we have 45 years of growth, earnings growth, revenue growth, our market cap went up, and the last 5 years have been stagnant. And our people want to be winners. So I think, I have spoken either one-on-one or in groups to more than 200 of our employees. And we did a [indiscernible] survey with more than 700 people in our group and they really want to find how we evolve the culture, how we evolve our strategies, because the world is not sitting still. The world is changing and we need to evolve things. And they're ready. Our employees are greatest asset. They want to take the challenge. They need someone, and the executive team is going to be really critical here that we as a team need to lay out the direction, provide the concrete steps and allow them to execute. They are hungry for change. They want to drive it. But look, we're not going to throw the baby out with the bath water. Our biggest strength is our positive culture. And I am the guardian of the culture as is my team, and we will do everything not only to preserve it but foster it and evolve it to a great new level. Nathan Brochmann - William Blair & Company L.L.C., Research Division: That makes sense. Just a second one, and I won't ask any specific details because I'm sure we'll hear about that in January, but do you have kind of in the back of your head a rough timeline already developed in terms of obviously, we are going to have a little bit of some upfront overhead costs before we get some of these initiatives really rocking and rolling to produce some positive results. But do you have a time frame in terms of when that might be that initial ramp period? And over what period some of these new initiatives will evolve? Or is it a little bit too early for that?

Nate, let me give you my first attempt at that. Look, let's be specific about -- the real win here is going to be the 3 things that I talked about. How do we reintegrate growth and revenues and earnings? So -- and how do we improve and increase cash flow? Our cash flow characteristics, my God, given the other companies have worked, this is amazing where you actually have in some places. It's just the capital characteristics where you produce more cash flow than your net income. It's just terrific. So I think we need to keep driving that. And I think that's what our shareholders see as a positive, and getting our entire general management structure focused not just on the P&L but cash flow. The second is improving our capital allocation, and making sure we get that ROIT or RONA. RONA is an easier thing to explain for our business operators, and how do you get that? And third piece is efficiency. And the efficiency has 2 components. One is, the whole aspect of sales productivity. Rob mentioned how we've improved this year on a 12-month basis. But on a 5-year basis, our productivity can still be improved. We've been adding sales people, but I want us to really have that pay off. The last one is cost containment. Look, the first step is not, in this company, to me, I don't believe and I've worked in companies like my previous one, where it was all about cost, cost, cost, but sailing our way to prosperity is not the unlocking key here to shareholder value, but I'm very cognizant over the last 5 years, that our overhead, the SG&A, has grown faster than revenues. And we can't let that to continue go on forever. But in the short term, we need to make the appropriate investments. And our IT systems, we have some really poor legacy systems. And once we get better systems, automatically, we don't need to do so many things manually. So I think it will be able -- over a period of time. But I'm very cognizant of it and we'll take the next 3 steps over time to get that. But my first focus really is on earnings -- revenue and earnings growth, on really capital allocation, capital structure and then the efficiency, primarily focused on sales productivity.

Your next question is from Bert Powell, BMO Capital Markets.

Ravi, a lot of stuff done in fairly short order here and a lot to digest. I want to go to a comment you made with respect to organizational silos and that being a driver for you for moving to more of a decentralized approach, and one of the things you said in the press release was, meet local customer needs. Was this change really driven off of customers saying it's frustrating to deal with Ritchie Bros.? Or were not being -- they're not being responsive? Or is this more an internal driver for this kind of change?

It is very much an internal driver. Our customers hear, but to me, the customers have spoken to everything we see. The customers who actually transact with us, be they consignors, be they buyers, their loyalties is off the charts. And this is a highly brand loyal business for those stuff we have. The issue we have is really in the future, how do we become more customer-centric? We are very strong in customer service. But I see that there is a continuum of where customer service goes beyond being customer-centric and capitalizing on that great brand loyalty we have. But many of our customers, either current or people that are not today transacting with us, have different occasions, different needs. And so it's how do you take a more outside-in where we are tailoring our offerings. But I think the silos are really an issue internally. Our customers think that our people are hugely responsive. And that doesn't manifest itself. Our issues are more about creating a better connection between a headquarters and field. I think our field people are hugely dedicated. Their engagement levels are fantastic. But I think, over time, we have become a bit more bureaucratic and we've lost that connection. And I think I want us to be, ultimately: Our business is all about what happens. Our product is the auctions today. Our product is what happens on our website at EquipmentOne. How do we get our management to really feel the pulse of the customer every day versus sitting in an ivory tower? And hence, the regional focus is, the closer you are to the action and where you are sensing it, meeting with customers and driving the business, having the fire on your belly to drive that, that's what I want to see.

Okay. Second question I wanted ask was on M&A. Do you -- are there things where you think you need to spend capital today to get to where you want to go in the future? And I'm thinking of things along the lines of feeding into your commentary around analytics. Or is that something that's just in the future when we think about different channels, and supporting those channels, we would look at M&A? So I want to differentiate between what's gating today to achieve your objectives versus what is going to be kind of more future-perspective M&A to support the strategy.

Bert, my view -- and I'll have a better view on this when we speak in January, but I'll give you sort of a first impression. My first impression would be utilizing capital that really accelerates our current core business model. And look, as I mentioned, we have strengthened the construction sector. But we actually have a lot of opportunity in transportation, a lot of opportunity in oil and gas, a lot of opportunity in the ag business. And there are other a lot of regional and local companies that make you beachheads. And this is not foreign to Ritchie. In Canada, for instance, way back when we bought All Peace, and that really gave us a great leg in agricultural business from which we have built that foundation. In the U.S., we bought Forke Brothers, and that gave us a great foundation. So we need beachheads in new sectors that are still within our core wheelhouse, and that's where I see greater opportunities in the short term. So rather than something which is really futuristic, I would have more of a near-term focus on the core, which allows us to be a catalyst to trigger growth that we can build and bring all our core resources and sales force against as opposed to something which is very distant in the future.

Your next question is from Yuri Lynk, Canaccord Genuity.

[Audio Gap] the context of improving return on invested capital, and you...

Yuri, sorry, I think we've missed your few words. Would you mind repeating it, please? Sorry.

Yes. Just when you think about improving return on invested capital, I'm just wondering how you think about the current 44 permanent auction sites and specifically some of the individual sites in Europe, in the Middle East and Asia, and then more broadly, your idea of owning all of this real estate versus potentially leasing it.

Yes. Yuri, thanks for that. Look, I think this is clearly one of the key focus areas given my experience in multi-unit businesses. We have to be very granular about site-by-site returns, site-by-site economics and start really getting into it. We need to -- we are going to start putting in a framework on how we look at that, because we have some great sites that perform extremely well, such as Edmonton. And where we didn't put a lot of capital, we invest at the right time, and then we've built up the business, so it gives you tremendous ROI. On the other hand, we have got some sites like Atlanta, which are not giving us the kind of returns that we want to, even though we've been there for some time. So one of the clear mandates for each of our presence, and then that will be cascaded down to a lower level, is to improve those returns on those assets. And we are going to be very open-minded to a view that not every site has to be owned. And as we go forward, we are going to look at leases in fact in the U.K, in Donington. One of the reasons why that site very has a strong return is because we have done at a lease. Other things, we are going to be open-minded to: In Edmonton, for instance, it's public knowledge. We have put up certain amount of excess land, which is quite valuable near the airport, up for sale, because we've done a very good review. And it's very important to preserve that. That's such a flagship site. So we've kept what we need for the site. But when we've kept land, rather than thinking that we are in the real estate business, we've made a very critical decision. And that was sort of in limbo when I joined. I personally went to Edmonton and met with the teams. And Rob and I went there with Karl, and we've spent a lot of time understanding it. And then we made a decision, let us sell the piece of land which is very attractive to developers. So that is now up for sale, that piece, but we've got enough to keep us going for the future. So we are going to be making tough decisions on what's needed, and not every model. In the future, we're going to be very open-minded if it should be a lease. And the key is that we have to first prove that demand exists, build up the demand before we rush to build a site. So when I look at Japan, for instance, in retrospect, I am not sure that we should have gone and built that site. We built it -- it can't be, build it and they'll come. That doesn't work in that business. We've first got to get them to come, and this is the history. We used to do sales as off-site in tents. I went to Tuscaloosa for an off-site sale, which was so impressive that we pulled it off and had a magnificent sale. So we've got to start proving that first before we say, "Let's just go build sites." And the reason why this regional structure with general management focus is going to work is that every president and the people below are going to be held accountable for driving [indiscernible]. It is not a blank check. So hope that answers your question.

It did. Very helpful. And second, why the U.S. market? You were very clear in your prepared remarks that this was going to be the focus geography. I mean, beyond the obvious that you've already got a network established there and similar culture, I mean, anything else you can share with us as to why you're so clear on that being the best opportunity for growth over, say, a South America or Europe or another region?

Yuri, I think, great question. So one of the things that in my listening to the constant question I heard from our investors, and they always use the old telegraphic example of Texas versus Alberta; and the whole GDP, when you do the ratios, the U.S. -- any U.S. business, regardless of its sector, the view is it should be anywhere from 4x are 10x the size of Canada. So to me, it was fairly curious that for us, it was maybe kind of 1.3x, 1.4x U.S. versus Canada. Clearly, we've done an amazingly great job in Canada. So I had a team actually start doing an analysis of Texas versus Alberta. We have just initiated the analysis. We had a preliminary look at it. And it was very clear that some of the things that are coming out because at first, some of the views are, "Hey, there is greater competition in the U.S. versus Canada," which is true, "Alberta is better developed versus Texas, " et cetera. But I think, as we have sort of started getting into it, we've actually found some critical factors that are being employed in Canada that have not been in Texas, for instance, in Alberta versus Texas, Alberta, our ag business is far more developed. How we deploy [indiscernible] business is far more developed. We -- so I think, as we have got granular, I will talk more about this on Investor Day, I think that there is a lot of potential. Just I think the U.S. market has a lot of potential. We have the sites. We have the footprint. We have the people. We just need to improve our productivity. But I think we've also, unlike Canada where we have developed the brand and built the awareness, we don't have that sort of brand recognition and awareness, especially some of these bigger areas. And we're trying to quantify that. We've launched an awareness study and the segmentation study to better understand this. So I think, to me, the opportunity is palpable. And just -- when we look at a microcosm Texas versus Alberta, I think Texas, there is a lot more opportunity that we can drive. So that's like -- and so then the second question is: why not South America? Look, clearly, those emerging markets, such as Brazil, et cetera, or India in Asia, or China have potential. I am an internationalist. I've lived in 6 countries. But international is always more glamorous than it seems. I have been a country manager or a regional president, an international president. First, you need to have the capabilities; and second, you have to have a lot of patience. And China takes a long time to make money. We are here in the business making money, and right next door of the Canada is the U.S. When there's tremendous opportunities to issue or focusing your resources and prioritizing where you're going to put your dollars. So to me, when it's right here, I would rather get the U.S. right first, "Hey, we've got things in China, it doesn't mean we are ignoring the rest of the world." But to me, the U.S. is first. I think there is lot of opportunity in the U.K. that we need to drive; Germany. But those are places we need to get right first before we worry about the rest of the world.

Your next question is from Craig Kennison, Robert W Baird. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: First, maybe you could address how much leverage you might be willing to take on the balance sheet, given your strong cash flow.

Craig, I think, I would prefer to defer that question to January. I'm not trying to duck it. We are very cognizant that we have a strong balance sheet. We're very cognizant that we need to figure out ways of optimizing it. And as I've said in my remarks, we will declare a clear -- a crystal-clear capital structure policy, which will include a specific answer to your question. Today, we are not prepared to deal with that. But it is very much on our radar. And in January, you'll have your answer. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: Okay, I'm sure I can wait till January. And then also, could you address what high-level changes you are making to the compensation structure? You mentioned some changes there as well.

Okay. Craig, let me just go back to your first question for a second. I was not trying to be in any way minimize your issue or -- but rather than giving you a half-baked answer right now, I think it's important because that's so important for us that we need to think it through. As you can see, I've been somewhat busy in the last 4 months in trying to get, first, the people issues sorted out. And I very much intend to give you and our shareholders a very specific answer to that. So I'm not trying to minimize your comment or be flippant about it, but I think it's better for us to give you a very well-thought-out answer, which is clear in January. So let me go back to your question on compensation issues. At this point, I do feel that, look, whether it's our executive compensation or our sales force compensation, as I've looked at it, my first blush is it's quite complicated. It's not as easy to understand. It is also not unifying against critical performance metrics. So once I -- as I have a new CHRO in place, this is something a priority for us to get right and [indiscernible] to that is to make sure that the compensation drives the behaviors that we want to drive. We are also getting -- we are doing work on sales force productivity and finding out what are the right incentive measures to drive. So this is an issue which is work in progress, but clearly one that we want to tackle. And at least, I'll have a further update on it. Whether I'll be -- we'll be would be able to actually get everything sorted out for 2015, I am not sure, because this takes time. And when we do it, again, it takes time to cascade all of this. But it is definitely an important area for me to -- for us to address.

Your next question is from Ben Cherniavsky, Raymond James.

Well, it sounds like you've been busy and you've learned a lot in your 100 days. So well done. I mean, we've talked before and you're pretty familiar with my view. So it sounds to me like you've sort of come into alignment with at least what I think some of the issues have been. I'm curious, though, with respect to what you're doing with the management structure and your design to decentralize decisions and those sorts of things, which I agree I think are important and were probably lacking, I think, in terms of the culture having been too centralized over time, but how do you balance what you've done with trying to prevent sort of too much -- maybe too much management? I mean, I look at it and I -- it looks to me like you've put a whole new layer of mid-management into the business where, at the same time, you're trying to avoid the increase in overhead and SG&A. So this sounds like you're laying some foundations. You're making some investments. But it will presumably cost you some money upfront. And if that is the case, can you help us understand what the near-term implications might be to SG&A and earnings that might be helpful just to sort of set that stage for that as you look to 2015 presumably being a bit of a transition year?

Yes, Ben, it's -- first of all, thank you and everyone else, all our investors and shareholders and analysts who provided me with their perspectives. To me -- look, on the whole overhead side. And to me, the structure, if you have the right leaders, and you have the right structure and the right strategy, and we start getting focused execution, I think we'll start making good progress. This is sort of the first step. And I felt that's a very important step to take. This is -- I view this as a marathon, not a sprint. And so they will be steps along the way that we will look at all issues. I think I've mentioned earlier on that we need to make certain investments so that the payoff is longer term. I completely get that our overheads, our SG&A has grown up in the past. And I am cognizant of it. We are doing this very deliberately. I can't give you visibility today only because it's work in progress. But I wanted to galvanize the organization to get ourselves going on the 3 strategic pillars I talked about. And without this, all the organization and executives at the helm, I felt we couldn't drive it. So we can't give you a specific answer to guide you on 2015, but that's going to be work in progress and we will have better, a little bit more informed view by the time we get together in January. So -- but, look, I think this -- I feel confident -- and I am not a big believer in layers and layers of management. I believe in flat organizations. But it's getting the right form right leaders, it's much better to get -- fewer heavy hitters at the top who really are great leaders, who inspire organizations and drive things, than having multiple layers. So you are seeing the first step. We need to let this play out.

But is it reasonable then to assume -- I mean, there's no reason why this would not increase your admin and management costs for next year, correct?

In the short term, Ben, it may. And so we are going to work that. But this -- to me, this is a longer-term win here, some short-term investment to get the longer-term payoff. But we're not talking hockey stick where you've got to wait many years. So this is very much a short-term investment. But I don't want to get into the logic of what you're saying is fine. But at this point, I'm not trying to get into guidance for 2015.

But you will help us -- when you get better understanding of that, you will help us with some numbers there?

Indeed. Indeed.

Okay, I will look forward to that. So many other questions, but I guess I'll just keep it to the 2, as you've requested. The decision in the write-down you've taken in Japan, and then you've moved someone over there. And you've talked yourself about the glamour of international markets versus the ability to execute and so forth. I mean, Japan being probably one of the most glaring examples of where you just didn't get the traction off your investment -- of course, it's easier to get your return on assets up, if you write the assets down; but I mean, why wouldn't you just maybe walked away from a yard like that? Or is that something that maybe not Japan per se it only comes to mind because of the write-down, but sounds to me like you still -- that still may be in the cards that you're willing to get smaller in some cases in order to drive the focus and the returns higher?

Hey, Ben. It's Rob. Yes, the write-down in Japan was really based on a review of our activities there and the recognition that we really need a new strategy in Japan, and that strategy in Japan may or may not include those assets and how we utilize them. And that's one of the reasons why having a new leader in Asia, in Kieran, although be based in Japan, he is also looking after Southeast Asia, Australia and China because he has the familiarity with Japan. So that -- the strategy for Japan is still in progress, but it's a recognition that it's likely a different strategy for Japan than what it has been before.

And what would that be if it's different?

I mean, it couldn't be a -- depending on if you want to use the assets in Japan or not, originally, Japan was a -- just like China, originally it was an export market only. We didn't actually hold auctions there. We could hold auctions in a different format than we are holding them right now. We could look at, potentially, joint ventures in there. There is many different options. And as I say, the strategy hasn't been finalized.

What about just walking away from it for the time being?

Walking away from...

Yes, I mean, just clarify what you've done with the write-down of these assets. I'm not sure if I totally understand what -- you haven't sold them.

Correct.

So what did the write-down? What triggered the write-down?

Sorry. Yes, what triggered the write-down was our review in quarter 3 of the performance of the site and the assets as well as the strategic review. And the conclusion of the strategic review is the current strategy, the current operation isn't performing as it needs to be; and therefore, we need to change our strategy; and therefore, is there an impairment in those assets.

So, Ben, let me just add some color, which is less about the write-down but we are trying to take this. So the reason for the appointment of Kieran is really an Asia-Pacific agreement. And we could have based him in China. We could have based him in Singapore. But really, to me, the fact that we've got -- yes, he has got the capabilities of understanding that market. We need to come to a view on where we are going to be in Japan. Now just because I've said the U.S. is #1 priority, it doesn't mean we wish away the rest of the world. And because we are -- We are there in many places. We've got assets. We've got to be deliberate. We -- if -- we are going to look at Japan with a very cynical view of what is the future there. And once we decide what the future is, we'll come to the appropriate conclusions. But this is, I think, sending someone as knowledgeable about the marketplace and understanding how the dynamics are there will help us get through whatever is the right and appropriate future strategy for Japan as well as for Asia Pacific. But I think that it's just -- to me, the write-down is the first-step of facing reality there of where we are, and we will continue on that path.

No, I appreciate that. And I agree that you don't want to, by focusing on the U.S, walk away from the rest of the world. But at the same time, I don't think you can take on the whole world and be focused and impactful. And so I'm just wondering how your strategy evolves as to where exactly you want to focus your energies and your resources. And Japan just seemed to me to be one of those that wasn't working so, but -- listen we can continue that debate offline. It sounds like it's a strategy in evolution still.

I think, Ben, the comment is: look, at this point, when I talk about the U.S. is our #1 focus, or looking at U.K. or Germany, I want us to focus on our existing geographies as opposed to go on a worldwide spree of putting flags on maps. That is very clear. Second, where we do have sites, where we do have resources, like we have a very successful Australian company, we need to continue to build on that. We have got an emerging thing in China. When I talk about priorities, though, lot of my time and our resources of management team is not going to be spent in talking a lot of our China. Instead, I think we are going to focus more on the U.S. But it doesn't mean we can wish away everything and just put all your eggs in one basket. We have to drive as much for the short team as for the long term.

Your next question is from Scott Schneeberger, Oppenheimer. Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division: The -- have 2 questions. I'll ask them quick. The first is, Ravi, what's your take on the competitive landscape in your first few months? And how that's going to affect your decisions going forward?

So, Scott, thank you. Look, I think, like any business, we've got to -- to me, the beauty of the Ritchie model, if you just define it as just auctions and unreserved, and there's a real moat around it. And given that we do $4 billion-plus-or-so in GAAP, and you look at a lot of our competitors, they're 1/10 of that; and so clearly, our operational competency is all the infrastructure we've built helps us and that's the beauty of this model. Having said that, and based on my 35 years of experience, you never, never underestimate competition and never get complacent. And so to me, the other part of it is, given all the opportunities, you're [indiscernible] direct competitors as well. Whether it's online, whether it is classified, whether it is dealers who have their own sales force, there are a lot of occasions. So the question is, where do you want to focus? So the key for us is: not getting complacent, making sure we are in touch with the changes going on in the marketplace and evolving our model and our channels. That's why I said it is about geographies, it's about sectors, it's about channels, and services. So those are the 4 revenue drivers. And competition is different if you think about those in each area. So on one hand, we may be very strong in construction. But while we may be selling a lot of trucks in the transportation side, we know there are other competitors who have a good reputation there. So we need to keep addressing that. So I never take competition lightly, but I'm also very pleased that we have a solid foundation and a moat in our cash flow characteristic, which allows us of the drivers to -- for instance, our balance sheet helps us with underwritten business, which I think plays to gives us competitive advantage. Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division: Great. And then, Rob, on -- just addressing Slide 9, you've touched a little bit of average age of assets sold. The curve looks a little bit different this year than recent years. Could you just address what you see through those 2 leads there?

Yes, it's a slightly different less busy slide than the one that we had before. But it tells the same story, and that story is that the average of age what we're selling is getting slightly younger, which is good and which is what we expected, and also that we didn't expect it to change from a headwind to a tailwind right away. So that's in our comments where we say that the headwind is dissipating. So it is what we are -- it's a same story as what we were talking about, just slightly different format.

Your next question is from Neil Frohnapple, Longbow.

Ravi, you talk about driving improved performance at EquipmentOne through greater integration with the core auction business. Can you just provide some more color on what this could look like? Do you plan on rolling out training to all of your current territory managers? Will you look to hire a separate sales force? I mean, could you just elaborate on those comments a little bit?

Sure, I'll give you a quick color and then we'll talk more in January. To me, the first place that it starts is emotional integration. But we've had a very passionate culture, which has -- there has been a lot of fervor about our unreserved model. So EquipmentOne -- and it's not the fact that it's online, but it's where there's more control for our customers was sort of quite the opposite of what Ritchie has built its reputation on. And when we bought it, I think -- regrettably, I think we did execute in a manner where we brought the rest of the organization along and emotionally integrated this. So forget about physical integration, even emotional prospect. Because the unreserved model, as I've now met with a lot of salespeople and our customers, is a difficult model, because you are telling someone to really give up control. What you are assuring is certainty of sale. And we've sold against all other models. And our salespeople have become brilliant at this and I completely salute them and applaud them. So when we bring in a new model, which is atypical [ph] to what we do. There is definitely a case of [indiscernible]. So what we've got to do -- and the interesting thing as I mentioned in my prepared remarks, as we have sold it through our strategic accounts team, really the segmentation of customers here is as much based on occasion and need, and the same customer may need both models, and our customers are saying, "Guys, this is not a betrayal -- E-ONE is not a betrayal of your unreserved model." And there are many times they can coexist. So I think it's starting with creating, changing the paradigms. What I'm delighted is as I've talked to our salespeople and as I go into the balance of the organization, they want it. They are ready for it. And they're asking for it. And we kind of have kept it separate. So what we need to do is find the right way of integrating it. Now we can't just sort of completely unleash it and have ways where our core business gets affected. So we are going to launch a series of pilots on how different regions on different models, and we'll have a, I think, a little bit more color on this. So -- but the first start is, "Hey, that EquipmentOne is a viable force to get our people to say that it really Ritchie now has 2 models and facing that reality and then just going forward with it." So I am quite bullish that we can execute, really, Ritchie now has 2 models, and so it's now a matter for the leadership team to figure out the right way to do it.

Great. And then can you provide some color on what we can specifically expect at the Investor and Analyst Day on January? I mean, clearly, you'll probably provide more color around some of the strategic pillars you've laid out today. But will you provide an update on capital allocation and capital structure? And should we expect you guys to provide initial 2015 guidance then?

For sure, we are going to talk to you about capital allocation and capital structure and give some views and some policies, because we've already started work on that and thinking that through. And by that time, we should be ready to do that. In terms of 2015 guidance, Rob, do think we'll be ready? I will defer that to you.

High-level guidance, yes, would be available.

Jamie, one more question.

Your next and last question is from Ross Gilardi, Bank of America.

Ravi, just as a follow-up to that last question. I mean, obviously, you've accomplished a lot in a short period of time. But you've only got a couple of months to the Investor Day, and now you're conducting a search for a new CFO. So just so we have our expectations set properly, is there any realistic way you're going to be in a position to quantify your return on capital structure and capital allocation target in January? Or should we expect these to be softer financial targets for the next 12 months until you get a new CFO fully up and running?

Ross, I think that's a great comment. What I would like to do is, just to moderate, and we will have strategically -- and look, Rob and I are working extremely well and we've been chatting with the board already about these issues. So we can definitely give you, I think, a conceptual view and a policy. I don't know how well we can quantify numbers to you in terms of the greater beyond. But definitely, you'll get a sense for how do we want to optimize our balance sheet, how do we want to look at capital structure. Some of the questions asked, I think Yuri asked, "Hey, what sort of debt-to-EBITDA ratio would we consider looking at?" Those sorts of issues, I think we would like to -- I think we'll at least have a point a view on that so as you start getting a sense from where we plan to go versus where we are today.

Okay. That's helpful. And then just my last question. It's just more on kind of current trends and what you're seeing. So the reaffirmation of your GAAP guidance implies a big deceleration in GAAP in the fourth quarter. I mean, would you characterize that as more of an auction timing issue? Are you seeing deceleration in the market? And kind of related to that. I mean, used construction equipment prices remain very strong, and I'm very interested to get your best explanation of what's driving that. I mean, are you seeing smaller rental companies or other buyers buying more used Tier 3 equipment at your auctions in lieu of buying more expensive Tier 4 product. Anything around that topic would be really helpful.

Rob?

Hey, Ross, the guidance in the range of $4.1 billion of GAAP for the full year obviously reflects our belief of what's going to happen in quarter 4. It's, of course, we're being -- we only have so much visibility there we're just -- and our visibility to the biggest selling period in the quarter, which is the first couple of weeks of December. And we had quarter 4 less year, which was the beginning of the accelerated growth in GAAP. And so that's been taken into account as well. But so far, we're tracking well in quarter 4 compared to quarter 4 last year. So we're optimistic at that in the range of $4.1 billion. And on equipment pricing, yes, we would agree that the equipment pricing is probably pretty stable compared to quarter 2 of this year. But as we've mentioned before, pricing is up quarter 2, quarter 3 this year versus last year. And that is -- presumably reflects the demand in the marketplace because it's no longer the issue of out of sync supply and demand on new equipment driving up used equipment pricing, so it is literally the demand in the marketplace for that used equipment.

Okay. Just related to that, just lastly. I mean, are you seeing anything interesting with equipment flows vis-à-vis kind of Tier 3 versus the new Tier 4 equipment, from a buyer or seller standpoint?

We don't see any -- well, we don't have any information that would indicate a trend on that, but also we are not necessarily always privy to the motivation of our consignors or really of our buyers of why they're transacting. Perhaps, some of the motivations may be that transition from Tier 3 to Tier 4, but it's not a clear trend.

Steve, did you have any color at all on that last comment?

No, Ravi. Rob nailed it for sure. I mean, there is -- the amount of Tier 4 stuff we're seeing is very limited, and lots of questions in the eyes of the sellers and the buyers in the marketplace. But unfortunately, we just haven't had enough of it for anything to look like a trend yet. So I'm sure there's stuff in the future. But right now, as Rob commented, it is what it is.

Okay. So I think, at this point, I'd like to conclude our conference, and we look forward to meeting you all in January. Again, to manage expectations, this is -- we're going to give high-level direction of where we are, but on each of the 3 pillars that we talked about, so at least you start getting a sense for how are we aiming to drive shareholder value and color on each one of these. And as we keep working this, I feel very good about the direction we are in, and we will try to add a little bit more color when we meet in person. Thank you very much indeed in onwards and upwards.