Good morning. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ritchie Bros. Auctioneers Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I will now turn the call over to Mr. Zaheed Mawani, of Investor Relations to open the conference call. Mr. Mawani, you may begin your conference.

Good morning, and thank you for joining us on today's call to discuss our third quarter results. I'm joined this morning by Ravi Saligram, our Chief Executive Officer; and Sharon Driscoll, our Chief Financial Officer. Also with us today, for the Q&A portion of the call, will be other members of the leadership team. Ravi and Sharon will open the call with prepared remarks regarding the quarter and the other leaders will join them to answer questions for the Q&A portion. The following discussion will include forward-looking statements as defined by the SEC and Canadian rules and regulations. Comments that are not a statement of fact, including projections of future earnings, revenue, gross auction proceeds, or other items are considered forward-looking 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 our Investor Relations website at investor.ritchiebros.com. Our definition of gross transaction value 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 yesterday evening after market closed. We encourage you to review our earnings release and Form 10-Q report, which includes our MD&A and financial statements which are available on our website as well as EDGAR and SEDAR. On this call, we will discuss certain non-GAAP financial measures. For the identification of non-GAAP financial measures, the most directly comparable GAAP financial measure and a reconciliation between the two, see our earnings release and Form 10-Q. Additionally our third quarter of 2017 earnings news released yesterday evening incorrectly listed the affected site closures. The correct sites to be closed have now been updated and a complete and correct release was reissued. Presentation slides accompany our commentary today. These slides can be viewed through the live or recorded webcast or downloaded from our website. All figures discussed on today's call are in U.S. dollars unless otherwise indicated. While we may use million or billion dollar figures for brevity in today's discussion, all percent changes have been calculated in using full unrounded figures. I'll now turn the call over to Ravi Saligram, our Chief Executive Officer. Ravi?

Thank you, Zaheed. Good morning, everyone. I'll kick off the call with a quick synopsis of what's going well, the challenges we are facing, and then turn the call over to Sharon to discuss the quarter's results. It's been five months since we acquired IronPlanet and, although we're in the early stage of integration, we have accomplished a lot already as a combined company. First, I'm very pleased and encouraged by the performance of our International business which grew third quarter revenues 42% upwards of prior year with significant strength in Europe and Australia. Europe, in particular, has shown strong growth throughout the year. Also the International team is bullish about the IronPlanet brand and it has already been launched in Australia and the UAE. Further, we conducted a record European online-only featured auction in Tampere, Finland last month. The fusion of EquipmentOne and Daily Marketplace has been completed and we have launched a new offering Marketplace E. Our sales teams have really embraced this offering and it is on a solid growth trajectory. I want to thank our EquipmentOne team for their perseverance. Year-to-date, EquipmentOne has grown at a high-double-digit rate and has provided a solid foundation for the launch of Marketplace E. We've just completed a new buyer experience on the IronPlanet website. For the first time, we now have IP, Marketplace E and RBA listings on the same search result, conveying the vast variety and choice of equipment to our buyers. Let me illustrate. A few weeks ago, the IP website would have shown 6,000-plus items, today it'd be over 50,000 items. At the same time, IronPlanet has become the sixth largest traffic generator to rbauction.com. Pricing is robust across all channels. Our CAT Alliance is off to a splendid start. Mascus and RBFS are performing extremely…

Thank you, Ravi, and good morning everyone. Let's jump right in and discuss our performance in the quarter. Now including three full months of IronPlanet, our consolidated GTV for the third quarter increased 2% to just over $1 billion in what is typically our lowest volume quarter of the year. The increase in GTV was primarily driven by the acquisition, but was partially offset by expected lower overall equipment supply in the market and higher equipment utilization rates in key industry sectors. Leading to a decrease in the number of auction lots consigned. Our year-over-year growth was also unfavorably impacted due to the impact of lapping the very large $76 million nonrecurring Columbus, Ohio auction in the third quarter of 2016. Our consolidated revenues increased $12.2 million or 9% on a reported basis versus the prior year. This increase was primarily due to the acquisitions and increases in revenue from other value-added services including RBFS. On a pro forma basis, as noted in our financial statements, our third quarter pro forma revenues declined 8.3% versus last year. Consolidated revenue rate was a real bright spot in the quarter, increasing 94 basis points to 13.84% versus the same period last year. This increase in rate is primarily due to strong performance in our at-risk contracts in this low supply, high demand environment. Strong revenue rate performance of the government contracts and our newly acquired online channels and growth in our non-GTV related services, as well reduced volumes from our strategic account customers, primarily dealers and rental companies most impacted by the favorable macro climate. Our operating income increased $14.6 million compared to $2.3 million in the third quarter of 2016 on a reported basis. But decreased $13.6 million on an adjusted basis, after removing the impact of the impairment losses recorded…

Thank you, Sharon. As we shared with you last quarter, we've laid out key integration milestones by quarter and for the first half of 2018. Overall, we're on-track, if not slightly ahead, of our integration plan as we've successfully completed the activities planned for third quarter, as well as several of our milestones earmarked for fourth quarter. Let me briefly touch on a few of these milestones. We are pleased to have recently integrated Ritchie Bros. Financial Services into IronPlanet. Now, IronPlanet customers will have access to the full suite of financing solutions adding to the differentiators we can offer our customers as we continue to grow our solid RBFS business. Additionally, we are very excited to bring the IronPlanet marketplace to Australia. We're now offering the largest selection of equipment anywhere in Australia, and a true multi-channel experience with full flexibility for our customers to leverage our on-site or online channels to serve their needs. A key part of our integration has been our sales force coming together as one team to embrace and drive our multi-channel solution sales capabilities. As we discussed on our last call, we've integrated our sales team to create a unified sales force in order, first, for our customers to have one point of contact and build the relationship, and second, for our salesperson to fully understand the customers' needs and offer the appropriate product solution from our core portfolio. This trusted advisor approach is absolutely the right way forward for our customers and our frontline teams, but it's not a process that can take root overnight. Fundamentally and culturally, the teams are coming together well. But the process of our legacy RB and IP teams learning to sell each other solutions takes time and, consequently, has somewhat affected our productivity decline in the…

Your first question comes from Steven Volkmann from Jefferies. Your line is open.

Hi. Good morning, everybody.

Good morning, Steve.

Good morning.

Ravi, it seems like you kind of touched on two major points and I'm wondering if we can somehow disaggregate them a little bit. So we, obviously, have some tightness in the end markets and so forth. And I think that's fairly well documented. But then you also mentioned something, I think you called them growing pains, and I'm trying to figure out if you have a view as to how much of the kind of the top line weakness that you're seeing is attributable to the end markets conditions and how much might be attributable to the growing pain portion? And then if you could just give your thoughts relative to sort of the trajectory of the growing pains, how long does it take to kind of get beyond that?

Great question, Steve. And while it's tough to quantify, I'll say the super-majority is really attributable to the supply situation. And I just wanted us to take accountability of some of the execution and that's why I wanted to mention it. I would say, in the main, 80% to 85% would be the external situation and about 15% or so would be some of the growing pains, and which is why I'm very confident that, over time, that execution will improve. But really – and that's why we need to focus on what we can control, which is optimizing the execution. But I would say, I don't want to over-blow the execution thing because it's just – the RBA legacy folks have been used to the live auction, the IP people online, it is just a learning curve issue. There's no – there is absolutely positively no issue organ rejection the way we had at E1 long time ago. Everyone has embraced each other's models and I'm very excited. It's just a learning curve issue, which is why I say, it is about 80% external, 85% external.

Okay, great. Thanks. And maybe the quick follow-on for Sharon then, you gave us the October numbers, which looked kind of flat year-over-year and, I guess, you're saying that the cost structure is fairly fixed at this point. Do you have any words of wisdom regarding kind of the fourth quarter outlook, it doesn't sound like trends are changing much for the fourth quarter?

Yeah. Again, good question. I'd say that October was really affected by the Edmonton sales, so that was a big driver of that performance. I think we're still on our original thoughts related to revenue kind of outlook that we provided in last call. But again, we're – there're some positives, we're seeing certainly increased deal activity as we think certain suppliers look to be repositioning their fleets for the end of the year and, certainly, our teams are very active right now.

So I I'll add, I think we had said for the first half on a reported basis something like 10% to – sorry, for the second half of 2017, 10% to 13%...

10% to 13%.

...and we still are confident of that or at least as we see it. I want Jeff Jeter to comment a bit on what he's seeing in the marketplace in fourth quarter, because I do see a little shift in momentum which is more positive. Without over-egging it, we are seeing some good dispersal activity and some larger packages. And Doug Olive, our Head of Pricing, and he are – nowadays, they are talking three times a day versus third quarter which was a lot less. Jeff, do you want to comment on that?

Sure, Ravi. Steve, I think one of the things as I think about Q3, and I think Ravi is right, look, a substantial component of our issue today is just the overall supply tightness. And certainly, we've got to get our respective teams up the learning curve, cross-selling across in all solutions. So we clearly have some training and work to do there. And one of the things, I think, you see in the market is that there's activity out there really across all sectors. You're just not seeing the same level of deal size and you haven't seen large fleet dispositions. So the size of deal is just – it's at a very low level as we look at Q3. So, there is activity. I think as you look at our at-risk business as a percentage of our total, you can see that that's down fairly significantly versus prior year. And again, that's indicative of – it's just not the large dispersals. One of the things that, I think, we have seen a little bit of uptick on in Q4 and typically is indicative of Q4 versus Q3 is, we are seeing some end users and larger dispersals individuals, companies moving them off of their balance sheet by the end of the year. So we've seen some nice dispersals this quarter that we've got upcoming. So that's a little bit of a change from Q3. We'll have to see how that continues into next year, but there is clearly more activity. Doug Olive, that Ravi just mentioned, when we – we're talking probably two or three times a day on at-risk business and deals, and we didn't kind of have that that kind of a dialogue pace and frequency in Q3. So some promising things, but still a very, very tight market out there.

Great. Thanks so much. I'll pass it on.

Your next question comes from Joe Box from KeyBanc. Your line is open.

Hey, good morning, guys.

Good morning, Joe.

So, Ravi, I think last quarter the expectation was that the used market could potentially loosen up by 2018. I appreciate you've already given some commentary on that, but I'm just curious if you can update us on your view on when that potentially could normalize?

Yeah. I think, Joe, great question. And look, it's – we were on a good track and I'd hope that there'd be a dramatic pick up starting in 2018. But since then, you've also had the hurricanes in Houston and so a lot of equipment out in that regard, Florida. So it's – with all of these natural disaster, the earthquake in Mexico, et cetera, again that is contributing a little bit more to utilization. You go to any of these markets, it's tough to find a contractor to rebuild and it's not just commercial – it's really residential as well. So that's putting -that's exacerbating things. On the other hand, I think the OEM production will start normalizing a bit more. So at this point, I would say I expect probably second quarter things to start improving in 2018. For sure, maybe second half. But I think there will be – it'll be very – the key is fourth quarter. If we had – we are seeing the slightest improvement versus third quarter, as Jeff pointed out. And it'll be interesting to see how things go. Now, Orlando is building up well for us. And Jeff, maybe you can comment on that a little bit, which is a positive sign. So Jeff, you want to just (40:22).

Yeah. So one of the things I think as I – I'm sorry.

No, go ahead.

One of the things as I – I'm in the market and think about next year, in Q1 particularly in the first half, there are a lot of – there's fleet and there's individuals thinking about taking advantage of what will be and what has been very, very robust pricing in the market. So there is a lot of interest in, obviously, taking advantage of that price lift and the recovery they can get on those assets sold and then it becomes a question of can they replace that fleet. So it's the balance of some aging fleet in the market. Sellers wanting to take advantage of the price lift and being able to be assured that they can go replace that fleet. So, that's the balance and that's what our customers are looking at and depending upon the OEMs and how – what happens with lead-times and freeing up new equipment, I think has an impact on what we see in the first half of the year.

Understood. Okay. And then...

(41:41) quickly comment on Orlando and how you're seeing that with...

Yeah. I mean, Orlando – look, Orlando is building nicely. We've had – last year, as most of you know, IronPlanet has done live CAT Auction Services events, legacy IronPlanet and CAT Auction Services over the last couple of years. So we'll be able to combine that with – into one auction this year which we're very excited about. So Orlando is building nicely. The teams are very focused on that. At the same time, we're working on Q4. So again, from my standpoint, the teams are balancing, getting Q4 done, and then working rapidly to build Orlando. But Orlando is building nicely, again fairly early days for Orlando, but thus far encouraged with what I see.

Got it. Okay. And then in terms of just a follow-up. Sharon, I can appreciate the color. Thanks for the color on the fixed cost structure looking more like 75%. I mean, can you just help us understand what the restructuring could look like if the market is kind of tight-ish, but potentially alleviating in the back half of next year. And ultimately, what that could mean to the overall margin structure?

Yeah. So, Joe, traditionally we've had a very good flow-through rate of our business as we drive incremental revenues in our live business. The add-on of the IronPlanet models does add some fixed nature to the cost structure, but with revenue growth, there really comes minimal incremental cost adds as we drive volume through that, through the technologies that they have. In addition, their Inspection Services and IronClad Assurance does come with incremental fees that also help offset the incremental costs that are incurred. So I think that we're – again, we're focused on driving the revenue volume to generate the incremental flow-through that then we'll have kind of more of our historic levels of margin improvement as that revenue falls to the bottom line.

And we're still committed to the EBITDA margin target on the whole revenue definition that we've cited in the Evergreen Model.

Yeah exactly.

Thank you.

Your next question comes from Ben Cherniavsky from Raymond James. Your line is open.

Good morning, guys.

Hello, Ben.

Hi, Ben.

Right. Congratulations on site closings, Ravi, I think that's a step in the right direction. Although not....

It's – yeah, appreciate that, Ben. But, look, it's the right business decision. But we always have to be – we deal with people's lives and we're very sensitive about it. But you have to make the right decisions for the business in the long-term. We think that this will only help our other sites to get stronger. And so, for the greater good, it's always you take these decisions.

Yeah, I'm sure, it wasn't an easy one. So that's why I think – that's why I offered up congratulations on that. I didn't mean to sound insensitive to those who...

No, no, we – and I didn't take it that way, so.

I was wondering just if you can elaborate on the sales force integration and the cross-selling challenges, if we took an example like, say, this Grande Prairie auction that you guys press release, which is a complete fleet disposal. Historically, those were the – that was – those were the elephants that the Ritchie Bros. guys would hunt. You'd go find a guy who wanted to get rid of his fleet, you'd convince them them (46:02) that everything needs to go to the auction, create a big event around it, generate some scale, and make everybody happy. Conversely, maybe, Jeff can comment on this, but I imagine under the IronPlanet model, you'd make the same pitch that everything needs to be sold online. And now I imagine the pitch is going to be – it depends or somewhere in between or what, could you just walk us through how a territory manager might now have to change his pitch to a customer under a cross-selling opportunity, in a case like that, for instance?

Great, Ben. And we actually have a few examples already of that. Why don't I – Jeff, why don't you give a sense of that, both sort of, you can maybe mention the upcoming off-site auction which is a big deal that we are doing in Q4, where we chose to go the live auction route and the Cowan (47:07) equipment and then Karl can mention Tampere, Finland and Brian you can talk about Grande Prairie.

So, hi, Ben. It's Jeff Jeter. Yeah. So, Ben, I think – I mean you alluded to a little bit to it. We've got to be thoughtful about the play, what's the right play out of the playbook. And there is a time and a place for us to go standup a one-owner dispersal sale and we're doing one December 5 up in Minnesota for a large crane package liquidation. So there's time and places to do that. There are other dispersals that are smaller that, quite frankly, it doesn't make sense to go standup an event. And we can put those online and sell it on a Thursday event just as easy. And that's – as you referenced, that's what we did at IP. And often in IronPlanet, we may have an open house – if we had a, say, $2 million to $5 million one-owner liquidation, nice clean equipment, well-maintained, good reputation in the local market, we may have an open house. We may stage that equipment, invite people to come view it. But we would sell it online as part of a weekly Thursday event. So I think it is finding the right – making a thoughtful decision. The other thing, Ben, I think, that has to change, and I'll give you an example, so we've just finished our Houston sale, which we've had a very good sale this week, and the difference in our selling cadence and motion going forward is as soon as we come out of that event, we're not waiting on the next event in Q1, we're immediately consigning for the next IronPlanet Thursday weekly auction. So, today we have – we can sell every week as opposed to, in the past, we might have had four, five events in each geographic area and that drove the cadence of our revenue and consignments was event-driven. And today, we'll still have that and that's a huge part of our business and nothing changes there. But we have to be selling every week, we have to be in front of our customers every day and we got to be consigning equipment to drive revenue every day. So it's getting our territory managers and our strategic account managers capable and comfortable selling across all of our channels all of the time.

Thanks, Jeff. Karl, can you mention the Tampere, Finland example. It started as a live auction and then – I'll let you take it over, because I think that's a great example of behavior change that (50:30) team came up with.

Sure, Ravi. Finland is a great example, where historically we've been doing live events in that market. And we took the opportunity to demonstrate the online abilities of the new multi-channel platform and move that entire event onto that – to the IP platform and it was a huge success here in the last few weeks for that market.

And that was a conscious decision by the team to think about, hey, while it was – and because of the size, let's do this. And it was I think probably, if I'm not mistaken, if not the biggest monthly auction for IP there, one of the biggest ever.

Yeah, it was. We grossed around €3.5 million of GTV.

Yeah. Great, great. Thank you. Brian, anything to add from a Canadian perspective and the Grande Prairie example that Ben brought up. Okay, maybe Ben – Brian's dropped off. Anyway, let me just close this thing out, which is, Ben, one decision we did take after unifying the sales force was in the past our salespeople, legacy RB, were linked to a site, now they are just all – they're linked to the region as opposed to a particular site. So it doesn't matter, which is why with the site closures, I was very clear saying, there is no change because they're all still in the region. They just have, at their disposal, not – nearby sites, but also the weekly. I think the biggest behavioral change that we're working on is our people are very adapt, because we were event driven going from one auction to another and how to – as soon as a big auction finish, we'd say, let me take a little bit of time, decompress, then go to the next auction. Whereas now we're saying, look, we have event business and flow business. The flow business is the weekly auction and so the moment the event is done you start selling continuously. So that we also make the business a bit more smooth and predictable, because there's a lot of people out there who want the equipment and want to sell it and they don't want to wait till the next big event. So I think that's why we felt the complementary nature of these brands was amazing, and it's just getting our salespeople in – to make it a habit, and that's what we have to work on.

Okay, that's helpful color, Ravi. Thank you. If I could squeeze in one last housekeeping item maybe for Sharon. I'm just trying to...

Sure.

...get a better read of the quarter, some of the different moving parts. You mentioned merit increases in SG&A, if you could maybe just quantify that or speak to what that represents. And then on the tax rate, it's just – I'm not clear exactly, like, there was a huge recovery it looks like in your taxes on a certain item and that – what does that mean for future tax rate implications and what was the magnitude of that in the quarter?

Yeah. So I'll address a couple of issues in the SG&A. So, some of the merit increases referenced were kind of rebalancing based on the merger. And again it was not a major change, but also would have picked up some increase in incentives as we have reset some targets to motivate people for the back half of the year.

Which is primarily for the salespeople.

Yeah. That's right.

Okay.

And with respect to the tax issues, again it's – I think it was about $4 million of overall tax recoveries that came into the quarter, they really just were revised estimates under U.S. GAAP accounting rules, you have to estimate your annual tax in all jurisdictions and we have changed our estimates in the quarter and more of our income was being generated in those lower tax jurisdiction regions. And so, and then also we got clarification around particular deductibility of certain expenses, particularly related to the acquisition costs that occurred in Q2. So, you should treat that $4 million as a non-recurring. And I did callout in my remarks that really I'm looking at our current tax rate in kind of that 20% range now, perhaps slightly lower going forward.

Thanks very much, guys.

Your next question...

You also, (55:24) Ben.

Your next question comes from Cherilyn Radbourne from TD Securities. Your line is open.

Thanks very much, and good morning. Ravi, in sort of parsing the different issues in the quarter between sort of tight equipment supply versus some of the growing pains, you seem very definitive in being able to separate the two. So I wondered if you could just comment on some of the metrics you're using to monitor the integration of the sales force and that progress that just gives you the confidence that you're properly separating those two issues.

Yeah I think, Cherilyn, it's – at end of the day, I don't want to give or mislead you by saying I have this great computer model that is giving me the view. It is based on everything we're seeing in the market, how our TMs, the pipelines that we're looking at and the at-risk packages that we look at. So when we look at all of the elements of that, our view is that it is – and I think it's now – there's a lot of independent verification of the supply issues out there. So we think it is a small part. But we wanted to take accountability as I said, but I'm quite confident. It's just because we look at a lot of numbers and we don't go through all those metrics from a competitive standpoint. But suffice it to say we look at how many deals are coming in, the size of the deals, full dispersals, partial dispersals, we look – we have a monthly pipeline call with all the Presidents, they have that weekly with their SVPs. So we have a pretty good sense and that's what gives me that sense.

Okay, that's helpful. And there's little doubt that it is a very tight equipment market. Just for my second question, the revenue rate guidance for the second half was 12% to 13%. So clearly, you did surprise yourselves to the upside quite a bit in Q3. Can you just offer some thoughts on Q4 and looking forward?

Yeah. I think we provided with the information that we now have. We've also provided the auction marketplace revenue rate, which would be new information. And that clearly does show that, for the last four quarters, we've been above what we've historically said in that sector or in that segment of between 11% to 12 %. I think, it's – perhaps reasonable that that could – kind of our base business could be increased by about 50 basis points going forward on a sustainable basis. And that's really driven by a couple of things, as the online business and the GovPlanet business have come online, those are coming in at a very strong revenue rates that are adding to what was our historical strong rate performance. So I think you can probably look at a lift in that base business in our previous guidance by about 50% – or sorry, 50 basis points.

Okay. Thank you for the time this morning.

Okay. Thanks.

Your next question comes from Michael Feniger from Bank of America. Your line is open.

Thank you. Just actually on that question. I mean, you reiterated your revenue guide of about 10% to 13%, October was up 1%. So are we expecting, I guess, another big auction revenue rate in the fourth quarter? I know that last year, I think, Q4 had a big benefit from a Private Treaty. Are there any one-time benefits you should be thinking about in the pipeline or is it just a combination of a strong – another strong ARR (59:32) and a rebound in GTV in November, December to really drive that double-digit revenue growth next quarter?

Yeah. I'll start and I'll let Ravi kind of add additional color. But clearly the volume challenges really affect the GTV, our performance on rate, we are more confident that with strong pricing environment that that supply challenge does help to create. We're experiencing minimal to no losses or reduced performance on our at-risk business. We would like to get our at-risk business actually up in terms of percentage of volume. But certainly, the new added channels to our business are proving positive to rate in the marketplace, Auctions and Marketplaces segment. In addition to that, we're very positive around where we see opportunity in driving our RBFS business and our Mascus business in total, which will also be accretive to the overall consolidated rate guidance. So I think probably just still a little cautious on the GTV assumptions for Q4, but a little bit more optimistic on rate.

Okay. Yeah.

And I think, last year we did have a very big Private Treaty deal in Q4. And so, we will be lapping that. And there is not sort of something lapping in the horizon or something in the horizon that we have recognized. We do have positive drivers, as Sharon mentioned all the ones, but IP rates are also positive and GovPlanet, for instance, very good great business. And as that grows, that helps the mix as well.

Yeah, that makes sense. And with these new businesses that are growing and showing bigger – driving the rate, does it also add a level of cost? I mean, I guess big picture, and this kind of goes to the site closures. If Ritchie is closing some of these live sites, and we're starting to move equipment more through these newer channels, is there a risk that we're cannibalizing some of the core profitable live auctions? I guess, I'm asking longer term, do you think Ritchie is more profitable or less profitable, having more of these transactions through these newer channels than the older platform?

Yeah, intuitively, I don't think that it's an issue, because the – I think Sharon only mentioned the fixed cost structure and that reverses soft (01:02:19) quarter and third quarter. But generally speaking, and one of the things we felt that the volume that you could bring because IP's margins overall were lower because of that cost structure, but not having the revenue with us combining and you get critical mass, the more critical mass you build, the more profitable and flow-through that you start getting. Their model behaves the same way in that regard. So I think, it's – I actually see it as a big positive, and recognize things like inspections are actually they – while they do add to cost, but we charge for that. So it's – at the least, it's a revenue neutral business. Actually, it adds a little bit on profits. So I don't think that that should be a concern because the whole structure is we're channel agnostic because we feel, regardless of which way it goes, whether it's from a customer standpoint or our standpoint. And, look, long-term we're also going to look at, hey, are there things in terms of buyer's fees, et cetera, what level of harmonization, et cetera, should we look at down the road? So – but I think and which will only make it further enhancing if anything, RB's buyer's fees are a little lower than IP's at certain rates. So we are going to look at that down the road.

Perfect. Thank you.

Your next question comes from Larry De Maria from William Blair. Your line is open. Lawrence De Maria - William Blair & Co. LLC: Hi, and thanks for getting me in here. I just wanted to ask, as it relates to those growing pains, I know you said it's not the major issue in the quarter, but curious if the traditional customers or the non-traditional maybe IP customers that they may be getting a little lost in the transition. And if we need to take steps, the changes or if it's just like you said a learning curve and just takes time?

Yeah. I'll ask Jeff to comment. I just think it's the learning curve issue. And the other thing we're doing is making sure we are being more proactive about using IP people who are selling IP and the institutional memory of how you do that model. The other thing is we also have several salespeople who used to work for RB and then went to IP. We want to leverage them because they understand both models. But I really think it's a learning curve issue. I don't – I'm very confident there's nothing – there's no fundamental issue here. It is just a matter of time. Jeff, you want to add anything to that?

Yeah, Larry. I agree with Ravi. I mean, it's – I don't think any – we made a conscious decision to go with one selling organization, which was the right business decision and the right decision to service our customers. And, obviously, there were some territories changed and we went through quite an extensive territory optimization to make sure we had the right coverage model. And as Ravi mentioned, we now have a full roster of sales individuals. So there's a learning curve. I'm less concerned about coverage and more concerned about facing some improvement in the overall supply, which we're having to be a little patient as well as – and most importantly, getting our guys up to speed on selling across all channels. Lawrence De Maria - William Blair & Co. LLC: Okay.

Larry, one other – I just want to reiterate one thing which is, the one thing that was very positive about both companies which has helped us a lot in terms of the integration is the cultural ethos of both companies, which was that the customer is the anchor and both companies really – and Dave Ritchie created that ethos at Ritchie Bros., it's all about the customer and do what's best for the customer. So I think the one thing that our salespeople regardless, whether they came from my IP or RB, are very passionate about making sure they take care of the customer and do what's right for them. And so I think that's a great guiding light that'll take us well forward. Lawrence De Maria - William Blair & Co. LLC: Okay. Thank you.

(01:06:56) one last question, Zaheed, so we're running out of time.

Yes.

Thank you. Lawrence De Maria - William Blair & Co. LLC: Yeah. I just want to follow-up on, in terms of the volumes, mentioned Caterpillar, you'd be giving them some leads. Just curious if they're turning into any significant consignments from them yet? In other words, the data carried (01:07:11) is working?

Yeah. I think, look, clearly, the CAT dealers have been a bit constrained on their own equipment because that's they've also had the issues of getting new equipment. And as that gets better, we're very confident we'll start seeing the flow of that. And I'm actually feeling good about how that's heading, our relationship is terrific. I don't think there is sort of any sort of reluctance, it's just CAT – a lot of the CAT dealers will become buyers, so used – because they're just trying to for their rental fleets, et cetera. Once the new equipment production starts flowing and they get to the right inventory levels, that rental stuff will really start coming to us. The Japan, look, we were there for years, and we didn't go anywhere in Japan, in fact, had taken a decision that we'd cease operations. And, Karl, on the – having worked directly with me on the whole CAT deal was able to really build the relationship with the major CAT dealer there. A place like Japan, where we have never get this, to get it $9.5 million sale is, to me, incredible. That shows the power of the CAT Alliance. And that would never have happened before. So I think with that, Zaheed...

Yeah, we're going to take one last question.

One last question. Lawrence De Maria - William Blair & Co. LLC: Thank you and good luck.

Thank you.

Your last question of the day comes from Scott Fromson from CIBC. Your line is open.

Thanks very much. I appreciate you taking my question. So it's 15% to 20% of the softness has been from integration challenges. Who's capturing that business shortfall? Is it other auction companies? Has there been increased competition from rental companies, particularly in light of recent M&A activity?

I think the – and I'll let also Jeff – look, we have a lot of local and regional competitors. And clearly, whenever you have a little bit of – when you go through mergers, it's opportune. So it's not one, it's not any single person but there's hundreds. I mean the U.S. alone, there's like 200 companies just in the auction business whether it's online or onsite. So, some of them have picked that up. But I think a lot of it – really the phenomenon we are seeing is the majority of it is that people wanting to do it on their own right now because they see a very strong pricing situation and say, hey, I can do it on my own or at least they think they're going to put that on the listing service and see how it goes. But eventually, I think as we approach the year-end and if it's not transacted, we think we'll get – we'll be the beneficiary of that. Jeff, was there anything else you wanted to add or did you have a different perspective? (01:10:17)

Yeah. I think a lot of – if you're a Caterpillar dealer and you've got used equipment that you're trying to move, your first choice is going – and if it's CAT equipment, you're going to look to sell it in your territory and you can sell it direct. Rental companies, certainly, very high utilization, but whatever they're turning over, they have the opportunity to retail that equipment. If you're some of the captive finance, OEMs that are financing equipment, if you're getting lease returns and repos, that volume can easily go back into distribution. So to Ravi's point, a lot of the equipment that's moving is just moving through other channels. And, look, one of our key kind of growth initiatives and visions is, for us to get upstream, and for us to help sell upstream to auction. Look, we've got the largest buyer base in the world. Right? We can bring to bear a global buyer base like nobody else. And part of our strategy with Marketplace E and some alternative channels is to help these customers sell all the time and sell upstream to auction.

So, it sounds like you're confident you can regain the lost market share as the sales integration progresses and the learning curve flattens.

We are extremely confident.

That's what we like to hear. Thank you.

Thank you. Onwards and upwards. With that, thank you very much and have a good holiday season.

This concludes today's conference call. You may now disconnect.