Good morning. My name is Lindsey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ritchie Bros. Auctioneers Fourth Quarter and Fiscal 2015 Earnings 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. Ms. Jamie Kokoska, Director of IR, you may begin your conference.

Thank you, Lindsey. Good morning, everyone, and thanks for joining us on our fiscal fourth quarter and full year 2015 results conference call. Discussing Ritchie Bros.' performance today are Ravi Saligram, Chief Executive Officer, Sharon Driscoll, Chief Financial Officer. Joining them for the Q&A session following the formal remarks will be Jim Barr, Group President; Randy Wall, President, Canada; Terry Dolan, President of U.S. and Latin America; and Doug Olive, SVP of Pricing and Valuations. 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 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 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 fourth quarter 2015 results were made available yesterday after market close. We encourage you to review our earnings release and Form 10-K annual report that 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 measure for the identification of non-GAAP financial measures as well as the most directly comparable GAAP financial measure and a reconciliation between the two, please see our earnings release and our annual report on Form 10-K, which are available on our website. 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 using full unrounded figures. And now, I'll turn the call over to Ravi Saligram, Chief Executive Officer.

Thank you, Jamie, and thanks to everyone for joining us on our earnings call today. We achieved a lot during the fourth quarter of 2015 to help propel further growth. This included the closing our acquisition, over 75% stake in Xcira, the world leading online auction technology provider. And much of the work that went into our recently announced acquisition of Mascus, one of the world's leading used equipment listing services. We also held many record breaking auctions during the fourth quarter, including two back-to-back record breaking sales in Edmonton. Our operating performance during the fourth quarter reflected some of the headwinds we expected, which we messaged you on our third quarter call. Foreign exchange translation continued to have a negative effect on our GAP and revenue lines as a greater proportion of our business was conducted outside the United States. As well as we expected the fourth quarter was a particularly difficult GAP comp, especially for the U.S. As the GAP growth achieved in the fourth quarter 2014 was not reflective of our current strategy of primarily pursuing GAP that is profitable. As an illustration, our teams decided to pass on at least $50 million of deals of oil and gas specific assets because we believed based on our valuations we would incur significant losses. These deals were picked up by some competitors who seem to be interested in just bolstering GAP. Equipment pricing also experienced some softening in the fourth quarter this year, relative to used equipment values in the fourth quarter last year when pricing was near its peak. Much of this was already discussed, when we pre-released our preliminary GAP results for 2015 at the end of December. As you learn then on a reported basis, GAP declined 9%, while on an organic basis using the…

Thank you, Ravi, and good morning, everyone. As you're all aware, our financial statements and disclosures for fourth quarter and full year 2015 results are now in accordance with U.S. GAAP. As previously mentioned, this transition from IFRS to U.S. GAAP has occurred as a result of Ritchie Bros. now being considered a domestic filer by the U.S. Securities and Exchange Commission, rather than being considered a foreign private issuer as we were before. As a result of this change, our Q1 through Q3 financial statements have also been refiled for 2015. I want to take a moment now to walk you through some of the key changes you will see in our financial reporting as a result of these accounting changes. Differences in accounting for income tax expense and income tax assets have resulted in the following changes. Deferred tax adjustments that increased 2014 total asset base by approximately $9 million. Difference in the accounting treatment in tax of U.S. option exercises and quarterly tax rate calculations have affected quarterly after-tax results. A lot of the adjustments in the presentation of financial statements relate to what I refer to as geography changes of lines on the P&L and balance sheet. The most notable being the operating income presentation, where operating income now includes gains and losses on disposal of property assets, asset impairments and foreign exchange, which were previously presented below the operating income line under IFRS. Disclosure requirements as a domestic filer require more robust disclosure on non-GAAP measures and two of our current scorecard metrics, RONA and working capital intensity do not meet the standard of an improved non-GAAP measure. So, have been excluded from the 10-K, but will continue to be reported on news releases and in investor presentation materials. New information presented on the face…

Thank you, Sharon. As we start 2016, I want to take a moment to review some of the macro influences on our business, as well as some of the key opportunities we see for our company in the year ahead. Like all global companies, external factors outside of our control can have a bearing positively or negatively on our business. There are three key macro factors our team here is watching, with expectation that changes in these could help shape our forecast and strategy. First, as we saw in 2015, fluctuations in currencies can and do have an impact on our reported results, versus our local currency performance. Consequently, we believe it is important to look at our financial metrics on an organic basis based on constant currency to better understand the true operational health of the business, as well the relative purchasing power of our equipment bidders and buyers plays an important role in their decision to participate in international auctions. Second, inventory levels of dealers and brokers as well as production levels can create opportunities or headwinds for us. For example, we're watching the U.S. Ag sector closely as inventory levels and leasing buybacks are creating excess equipment in the dealer broker channel. We expect there will be a lot of opportunity to capture this business. And third, construction activity in our key markets can help drive ongoing sustained demand and churn for used equipment in many of the regions we operate in. News, such as infrastructure spending commitments in Canada and the passing of the U.S. highways bill are positive indicators for the construction sector, which comprises the largest portion of our customer base, which leads me to key opportunities we see for our business in 2016 and beyond. In the construction space, we continue to receive…

Your first question comes from the line of Sara O'Brien with RBC Capital. Your line is open.

Hi. Good morning.

Hi, Sara.

Maybe if you could comment on in Q4 results, the underwritten contracts in Q4 that were less as a percentage of overall volume. Is that because it was a concerted effort to not underwrite certain contracts or was it the result of those contracts that delivered lower GAP than expected?

I think probably a little bit of both, Sara, partly I think pricing as I said there was softening in Q4. So, that did have some impact. But there was also I think the year before, we – our strategy took place, took shape in January this year. Q4 of last year especially in the U.S. it was all about just chasing GAP, and so there was a lot of GAP. But there was a lot of deals as well where we were kind of a little bit on the old mentality of driving for market share, some deals that my friend Doug Olive would call dumb deals. And I think, we were a lot more judicious this year as I mentioned in prepared remarks that we walked away from $50 million worth of oil and gas specific deals, which we just felt would lose us money. So – and even with that, when market conditions tighten, there is an issue of that. I think the Mexico and Panama, we really had some packages that went south, they were tier three equipment, so you couldn't even get buyers from the U.S. So, I think – but we didn't say okay, now let's try to reduce volume in Q4 on underwritten business. The underwritten business is really a factor of opportunities out there, and if they are good we'll take them. So you will have variations quarter-to-quarter, year-to-year. We're always on the lookout for good deals and if they're good deals, we'll go after them.

Okay. And then, maybe just continuing on the foreign exchange impact, the actual transaction impact. So, you talked about Mexico and Panama seeing lower volumes of international buyers, what are you seeing now in – so far in Q1 in terms of your foreign markets, both in terms of supply of equipment and also those participating in the auction to buy the U.S. dollar based equipment?

I think, Orlando, we were pleasantly surprised that it was as strong as it was. It's tough to extrapolate on that because Orlando is such a big mega auction. But we saw a lot of people from Latin America, we saw lot of Colombians and the fact that international buyers were about 23% of the GAP was promising. We also saw, if you look at 2015 as a whole, we did see an uptick of American buyers buying in Canada. So, that was – but we would – we're going to continue to market that, so that it actually becomes an opportunity because we think there is a lot of good deals for American buyers to buy in Canada. So, I think, it's – the Mexico thing, Sara, was slightly different, it's not your typical international buyer, because this was Tier 3 equipment, which really couldn't have been brought into the U.S. So, Mexico gets a little bit because it's a fairly niche sort of things, and when the economies are growing well, you have a lot of Latin American buyers. That didn't happen because all the Latin American – and in Mexico we transact in U.S. dollars. So, as – it would have been as if they were buying in U.S. – in the U.S., but – so since all the currencies have been hit in Latin America that caused a little depression, if you will.

Okay. I just wondered if you'd expect that there will be fewer international buyers from overseas looking at U.S. denominated equipment now or if so far the trend is that they're still coming in as buyers?

It's too early for us to tell just given the number of auctions we have had, Sara. I would just take some encouragement from Orlando results at this point, but what I would say is we are stepping up our efforts to continue to market to international buyers, and I think that really – that was a big force in Orlando. So, that's something that we're going to continue to drive at, but clearly that has not been – 2015 certainly that was a bit of a headwind.

Okay. Thank you.

Our next question comes from the line of Nate Brochmann with William Blair. Your line is now open.

Good morning, everyone.

Hi, Nate.

So, Sharon, you kind of ran through those additional cost in the fourth quarter, and I appreciate the additional color there, and probably a little bit of mis-modeling on our part. Could you kind of go through a little bit in terms of kind of what might be a little bit of the temporary cost versus maybe what's ongoing? And then secondarily with that Ravi, if you could talk a little bit more, obviously you still there are doing a great job in terms of driving the revenue growth beyond the SG&A, but now as we kind of have a solid footing and we're going after some more of these kind of "growth" investments, whether that GAP might be little bit closer than what we had seen in maybe the first half of 2015 in terms of that SG&A relative to the revenue growth.

Okay. Thanks. Nate, I think in terms of clearly some of the costs that are not ongoing would be the $500,000 related to the transaction activity in the fourth quarter. In addition to the bonus incentive amounts, it really was kind of fourth quarter bore almost the full brunt of the annual performance of that incentives in 2015, so I would moderate that amount. The IT investment you should consider that as an ongoing cost related to deployments of IT technology.

So, Nate, just a little color, let me add to what Sharon said. The IT thing was – it was fairly – it was not something – this is salesforce.com and as we rolled it out to the entire country or around the world, it used to be a capitalized cost. Now, we have to – because it's been rolled out, it becomes an expense, so this was undertaking, which hopefully the positives we'll see is that improved sales force productivity, et cetera, so that's sort of one point. The point on – as we do M&A clearly, you will continue to have some transaction expense. So, the whole bonus side, Sharon and I are going to look at in 2016, how do we try to smooth this out and so recognized for many years, this company had not had significant – we had not made our targets in five years, six years. And this year, was the first time we went well above our targets based on our annual numbers and we had accrued at the target rate for the first three quarters and given how the overall year performance came out, we had to bump up the accrual in fourth quarter. So, now that we have a bit more of an operational rhythm and understanding, we're going to get better at that. Having said that the overall headline on SG&A, Sharon and I are very committed to expense control, SG&A control, especially given we're looking at 2016 where it is, as we've said, they are headwinds. And so, we don't want to get ourselves ahead of spending and we are putting controls in place. So, but our whole focus on SG&A is that the full year, rather than quarter-by-quarter, because of so many variances that occur. That the full year, we're absolutely committed and dedicated to make sure SG&A grows slower than revenue growth.

Okay. Thanks for that. And then my second question, Ravi, I appreciate to all the kind of puts and takes in terms of some of the different piece of equipment in terms of pricing and end markets, in terms of what's doing well and what's not maybe, and I definitely appreciate like the overall industry color. I was wondering if you could just share with us a little bit of the cadence that you're hearing out of your customer base, obviously, there is probably little bit of pricing weakness relatively speaking in Canada versus the U.S., but particularly, coming out of Orlando, and I know, it's a one big event, but just if you could share with us like a little bit of the cadence that you're hearing in terms of the comfort level with your customers underlying businesses, whether they think that pricing is kind of moving slower or whether stabilizing, and I'm saying that in a general tone, if you could share that with us I'd appreciate that?

Sure. I will do a headline, and then I'm going have Randy, if – I think, he is on the call and he is seeing it live at Edmonton. And in general, Nate, just a quick thing, we did see good pricing in Canada overall in 2015. Canada held up better than most places, it's just the currency hits that we encountered. But the quick comment on Orlando is that pricing was actually quite solid and it was better than we expected. Randy, why don't you comment on Edmonton, and then Doug, if you just want to give some comments on pricing, and then I'll also talk a little bit about customers. And Terry you can then comeback and just say how are things in the U.S.?

Very good, Ravi. Thank you. What we are seeing here these last two and then today and the third day in Edmonton are very encouraging. We've got tremendous participation, we're now over 12,500 bidders registered for this event. We've seen very solid participation across Canada, in particular Western Canada and other provinces, and a fair amount of activity coming up from United States as well as overseas. And I think, this is a continuation of a theme that we've shared with you over the recent quarters and that is the repurposing of assets, yes, that may be coming out of the energy sector. But you can still lift and dig and transport goods and services and dirt with these same machines and have them repurposed elsewhere, so we're seeing a lot of that activity. And generally the sentiment is, again, consistent with last year is not doom and gloom, people are less busy without question in this marketplace, but it's historically cyclical and folks here have been making rational business decisions already for 18 months as they look forward in their book of business. And so, there is not real angst, there is people making informed decisions and we're seeing solid participation spreading from different sectors of the asset base and industries, as well as geographies.

Doug, any comments on what you're hearing from around the world?

Yeah. Thank you. I would support Randy's comments and just say that in Orlando, lot of the takeaways from customers who were there on the bidding or buying side were saying that our prices were solid and it was a successful sales. And again, to Randy's comments that the assets that can be utilized over several different sectors are being done and for sure the headwinds we've seen on the assets that can't be refurbished such as oil and gas or mining assets, those are the ones that are facing some headwinds, but general construction assets for sure, there's solid pricing thus far through Q1.

Terry, what are you hearing from customers in the U.S.?

Yeah. I mean, Ravi, we're just coming off of the great sale that we had down in Orlando. And again I think just by the encouragement of the crowd, the size of crowd, the number of bidders participating online and on site and drove pretty strong pricing for Orlando. We're very happy with it. And again, I think we're kind of repeating ourselves, the oil and gas stuff, mining equipment we are seeing some pressures there. But the general construction, transportation products, we are seeing strong results and the customers seem encouraged.

So, I would say, the final comment I would say is that the reason why we are not sort of downbeat and pessimistic is because of the resilience of the construction industry. I think I mentioned in my prepared remarks about the whole construction industry, excluding utilities, et cetera, being up 10% and I also saw another study from Wells Fargo about construction optimism index and it was still well above 100, I think about 130 or so this year, which just came out today or a few days ago. And when I talk to customers, I am actually, everyone I talk to because I've been looking for, gee, is it doom and gloom, and at least in North America, in the U.S. and Canada, we're clearly seeing there are lot of projects going on. And given that's our sweet spot, given that the bulk of our business is in construction, I take heart from that, and the fact that our teams have been quite smart about repurposing those assets into construction, I think that's where one of our strengths has been.

Thanks for that, Ravi. Very, very helpful. Appreciate that.

Thanks, Nate.

Our next question comes from the line of Stephen Volkmann with Jefferies. Your line is now open.

Thank you. Good morning. Just a real quick follow up on that last concept. I don't know if you're willing to sort of ballpark your estimate of how much of your volume is in these resource sensitive areas, whether it be ag or mining or oil and gas?

Yes. Steve, good morning. Look, I think we've always talked about, our oil and gas specific assets are less than 5%. I think they are more like 2% or 3% of our total GAP on an annual basis. So that is not something that – because we are quite careful. But opportunistically we look at stuff, because at the end of the day, we're in the dislocation business. And we don't apologize for it, because that's the strength of this company is looking at opportunities and being able to make money on that. So if they're oil and gas assets that can be repurposed or even specific oil and gas assets that owners want to get rid of and we think we can make a great deal, we'll not walk away from it. However, the core of this business, what keeps driving this the majority is really construction. Transportation now is becoming a real meaningful number with I think over 20% of our GAP. You saw I think in my numbers, I talked about the 30% increase or so in the year. So transportation is becoming a solid sector for us. Ag, the strength is in Canada today. It was not in the U.S. In the U.S. we used 2015 as a year to really start getting our ducks in a row for 2016. So I think we're well positioned. So those are going to be some of the drive category for us in the near-term. And I think just given the dislocation beginning to happen in ag, I think we're in the right place and right time in the U.S. Transportation, I think, compared to the 18 months ago when I joined, our expertise has improved significantly. So I'd say we've got a well balanced portfolio on sectors. At the same time, we've also got to look at the channels, because as I said, this is $360 billion marketplace, and there are lot of people who – there are different types of customers who really like more control. They don't like the unreserved auction, and now we're beginning to have solutions for them. So I think our strategy of diversification is beginning to take some hold, and when you look at it from a long-term, this business you've got to look at it as a marathon and look at the long-term. I really am confident that that's why we keep harping back to the evergreen model and coming back to that. Look there will be quarterly variations. Last year in the first quarter we had a great quarter. We had Wyoming auction. It was fantastic. We had a record Orlando revenue auction, because there were some great military packages. But this is a lumpy business. Timing will change. And so this year it may be in a different quarter. So I just think we need to recognize that and really look at it from a longer-term perspective.

Okay, great. And then just wanted to follow-up also on this underwritten business, if I may? You said that you had passed on $50 million or something of business because it wasn't economic for you. And that's good to hear that that discipline is there, but it sort of made me wonder if some of your competitors, if you're seeing sort of almost like ARR pricing pressure on underwritten business, are they willing to do this stuff cheaper than you are, and therefore, you may end up passing on more in the future? And I guess, I'm just trying to figure out how that all flows into the kind of overall growth rate. Should we expect a lower rate of underwritten business in 2016 maybe versus 2015 just directionally or what are your thoughts on that?

So, I'll just give you conceptually and then I'll have Doug comment a bit on the $50 million packages. If it is great equipment and if it's strategic for us to build straight commissioned business, if it's a good magnet, we are not going to just sit by idly and let competitors take it away from us. There's no question, we're a premium price brand. On the other hand, we drive the best pricing out there. We create great values. So if we need to be competitive, we will be. I've signed many deals where just because it's very important for us to get the deal, to build our auctions. So it's a balance. To me it is about GAP and rate. It can't just be about rate, because there is no point in getting a 100% rate on 0% business. So we'll be very judicious, and say if there are deals that are worth having, Ritchie Bros. will not give it away to the competition. On the other hand, if there are deals knowingly that we will lose money and there is no point because it's desperation assets, I'd rather have someone else lose money on it. So that's philosophically what I would say. Doug, do you want to comment on some of those oil and gas deals we walked away from?

Yes. I would agree, Ravi. And some of the deals we walked away from, I mean there will be more opportunities this year. We see there's still headwinds in that sector. There will be more opportunities, and we're going to look at each and every deal individually to make sure that there is a net benefit at the end for us, as Ravi alluded to. The deals we did walk away from, we did watch very closely and saw that some of our competitors probably had some pain points throughout the process. So with the assets we've sold thus far this year in that space, we see we've actually delivered very good value to the consigners that have opted to sell with us and I feel that that will continue throughout the Q1 and Q2.

So let me make one last point on that, which is Steve is, for us I feel this is one of our biggest competitive advantages, which is the underwritten business. We do close to a $1 billion of it. No one else, I think all our competitors put together cannot come up close to it. So we're not going to walk away from our – this company's DNA is based on deal making. We have some of the best deal makers in the world and we are not walking away from that competency. On the other hand, we're going be smart about it and smarter. So when we realize that because there are different levels of competencies and the markets may not be used to this model, so in Mexico and Panama, we just said, look, the competency is not there and also the pricing cannot be supported. And in the main that's not so critical for us, but in the U.S., in Canada, look our Canadian team, many quarters over the years has done 50% of their GAP comes from at-risk. And I say, bravo, keep doing more. So that would be kind of an overall view there.

Great. That's very helpful. I appreciate it.

And your next question comes from the line of John Healy with Northcoast Research. Your line is now open.

Thank you. Congrats on a solid close to the year, guys. Ravi, I wanted to ask a question about the auction rate as we head to 2016. I know it's somewhat of an unpredictable metric. But as you think about used equipment values falling in that kind environment, does it make it more difficult for you to get rates or hold rates when you negotiate the fees for the sellers? Just kind of conceptually what are your folks telling you, and how do you expect kind of that trend on the base business as we go through 2016?

Randy or Terry, since you're in the (1:04:43) and Doug just give some thoughts about that.

Sure. This is Randy. You know what, it really has to do with the level of understanding of the market dynamics and expectation level of customers. And at some times, expectations of ourselves and of the customers operating in the markets are informed and aligned, and in that case, your margins tend to be more predictable. Sometimes what isn't as predictable is the behavior of your competition and continuing to make wise decisions along the way, is crucial, not just in the face of the competition, but also our intelligence in terms of where we see the marketplace headed. So I think there is always dynamics in our business even when times are good that cause us perhaps at times to be just as challenged or more than when the markets are softening in terms of rates and competitive behavior. So for different reasons I see margin issues being fairly similar as in other markets.

Okay. Great. And then...

Doug, (1:06:01) or Terry.

Yes. So, Ravi, it's Terry. So what I would say is, again, we take a very disciplined approach to how we're looking at the assets and the pricing. We have a number of different views, and then we do work very closely with the customer to understand (1:06:19) we've got to manage the expectations in reality of where the pricing will fall, but I think it's through that trusted relationship that we're able to build. And we'll still see some pressures from it, but we are taking also more disciplined approach from how our competition approaches it. We've got to continue to show the value of what Ritchie Bros. can bring.

Sure, that make sense.

Doug, any thoughts?

And...

Go ahead.

I wanted to ask a little bit on the M&A front. I was hoping you could give us a little bit more color on the Mascus acquisition, kind of what made you really excited specifically about that transaction and from an expectation standpoint as we move to 2016, maybe how the pipeline looks for deals. Is this profile of the kind of normal deal that we should expect you guys to be pursuing? And just any sort of update you could give us on that process.

Jim, why don't you talk about the first piece?

Sure. So when we were looking – as you know, we're on journey to be become and continue to be the world's leading asset disposition and asset management company on a multichannel basis. So when we have the opportunity to look at adding another channel for our customers, we kind a looked at, look, we love our core business. It is our fuel for engine, but not all sellers can use that engine every single time. Sometimes they want a little more control, which we give them in Mascus and EquipmentOne and sometimes they're willing to do a little bit more of the work themselves. So this channel kind of fits nicely in that multichannel array where we can let customers come in. And we believe this will give additional value to our current customers. And we also think it will be a great entry point for customers that haven't worked with us before. So I think what got us excited about, first and foremost, was equipment sellers. So we had 6,300 customers on Mascus who are sellers of equipment. We have not been touching all of those in the past. So it's new seller base for us. 360,000 items for sale at any particular time, so equipment sellers. A large audience of buyers, we have 3.2 million sessions a month across all those countries and one of the hardest things to do with any online business is to build up an audience, and we got an instant audience there, so we're excited about that. Third, I'd say it's technology. We have a pan-European network of all these websites in 42 countries and 58 languages, and there's also 800 instances of dealer intranet portal technology that gives us a stickier base into the customer base over there, which we'll also like to bring to the United States and offer our customers there the technology. Then I'd say talent is the next thing, good people, multilingual telesales people, great sales and tech teams, great customer service across that, so that talent was very, very important to our network. And then, as I said, finally a new channel of sort of a related profitable adjacent channel that could live under our brand family and can really help us overall. So that's what we saw in it. We are very excited about the ability to connect it with our other channels and to give our customers more ways to transact in the Ritchie Bros. Family of Companies.

So to me, this will help us also strengthen our European business just with the synergies between these two channels and Europe and Asia compared to U.S. and Canada, the affinity for unreserved auctions is less and this allows us to do a lot of things and access to customers as Jim said. So, we are quite excited about that. The second thing I think Jim mentioned is these tools, this business, their businesses as much, we're as excited about the advertising and listing side and we think there is great opportunities for them, because they're very strong in Europe to bring that into the U.S. Secondly, their tools, their business tools. I think with OEMs, with dealers, with general contractors, we can really drive those tools to take our customer relationships to the next level. So, that's about Mascus. About other deals, look we've been working away. The way these deals come about is when there is willing – we've got a strategy. There's got to be a willing seller and then we've got to get the relationship and then get it done. So, it takes a matter of time. I would, yeah, there is great focus on also trying to find deals in the core business. We would love to enhance our expertise in whether it's agriculture, transportation or construction. Because even in the U.S. there are many regions where we could – they have local players who are quite strong that we would like to try and bring in, our particular sectors in construction. So, we're going to continue to look at where those opportunities are. And if there is a geography, which has huge potential but we don't want to go in de novo to build something small. But if there is a player with huge scale, we would certainly look at that as well.

Great. Thank you, guys.

Okay. We probably will do one or two more questions and then wrap up the call. Next please.

Our next question comes from the line of Cherilyn Radbourne with TD Securities. Your line is now open.

Thanks very much, and good morning. So Europe was an...

Good morning, Cherilyn.

Europe was an area that you found a little bit tougher in 2015 and Q4. I wonder if you could just speak in a bit more detail about the dynamics in that geography from a price and a volume standpoint?

Sure, Cherilyn, sorry, I mispronounced your name, I apologize. Europe is – we've had great strength in countries like Spain and Italy, and those markets have not been doing macro-economically. The other thing is just general infrastructure, it's mature regions, the infrastructure projects have not been as prevalent other than some place in Eastern Europe, which has sort of fallen off a bit. But we are beginning to see signs in certain places that things are coming back a bit. Long-term, you still think that this is a very important market, by the way we had a great year in France and we think there is a lot of potential in France and especially in agriculture and so we are pushing on that front. Germany is a huge market, but it's not a very unreserved auction friendly market, because Germans are very structured and this sort of unreserved auction doesn't go with the ethos and that's why things like Mascus and stuff will help us develop better. The UK is a very competitive market but we are making inroads in the UK and we are quite pleased to see how we are growing. So I think it is new channels in Europe are probably as important as anything for us.

Great. That's helpful color. Just a quick second question. Can you help us think about the impact at Xcira and Mascus on the revenue rate in 2016?

Sharon, do you want to...

Okay.

...take that?

Yeah. So, Cherilyn, you are right to note that those two businesses do come with revenue without GAP, so they will be – they will assist the revenue rate, albeit they are still not really large factors and so until we kind of develop them further, those kind of businesses in addition to the growth we're seeing in RBFS will be kind of positive tailwinds to revenue rate that will help somewhat offset perhaps some of the headwinds we're seeing on pricing in certain sectors.

Okay. Thank you. That's my two.

Thank you, Cherilyn. Last question.

And our last question comes from the line of Craig Kennison with Baird. Your line is now open.

Great. Thanks for taking my question as well. Just looking at the number of revenue producers and territory managers, looks like that number has trended down on a year-over-year basis. Why would that be lower and what should we expect as you look ahead?

Yeah. We want to keep that TM level at least in the normal 300 (1:15:42) or grow it but grow it smartly. The fourth quarter usually we do see some dips. And so, we had – I guess towards the end of the year you'll always have some voluntary, some involuntary. And what happens is, overall in this business our turnover is about somewhere between 15% and 18% on TM turnover, which compared to – given this industry and given how tough this business is, we think actually it's a decent rate, but that's something we want to keep working on because – and there is no, we are not trying to reduce because the feet on the street are very critical and we want to keep pushing that. Usually towards the end of the year, you do see some people leaving and the full intent is to rehire our feet on the street, the GMs, because they are most critical asset for us to bring GAP home, so.

And as a follow-up, has there been any change in the level of seasoning of that group, the number of people that have at least one year experience, I imagine they are more productive for example?

Usually what we see is in this business, when turnover occurs, it's mostly sort of three years and below because that's when they're really building relationships and this business is a long-term one. And so, I'd say those levels are more or less what we've been seeing, but as I said earlier, that is something especially Terry is focusing on in the U.S. because, every time we lose some experience, be it one year or be it three years, some institutional memory goes out of the door and so Todd, my Head of HR, is working very closely with the BU heads to look at what do we do to reduce this. We're looking at competencies so that we're selecting better people the first time, who are a better fit for this business. So, this is a very critical priority for us.

Thank you for taking the question.

Thank you very much everybody, and I appreciate all your questions. Thank you, onwards and upwards.

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