Good morning. My name is Mike, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Ritchie Bros. Auctioneers Second Quarter Results 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. I will now turn the call over to Jamie Kokoska, Director of IR. You may begin your conference.

Thank you, Mike. Good morning, everyone, and thanks for joining us on our fiscal second quarter 2016 results conference call. Discussing Ritchie Bros.' performance today are Ravi Saligram, Chief Executive Officer; and 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 of Canada; then Terry Dolan, President of U.S. and Latin America; as well as Doug Olive, SVP, Pricing and Valuations (sic) [SVP, Pricing]. 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 second quarter 2016 results were made available yesterday after market close. We encourage you to review our earnings release and Form 10-Q interim report, 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 to the most directly comparable GAAP financial measures and a reconciliation between the two, see our earnings release and Form 10-Q. 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 and rounded figures. I will now 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. Our second quarter was marked by modest GAP and revenue growth, but higher expenses than we recorded in the same quarter last year, which unfavorably affected operating profits and EPS. Notwithstanding this quarter's shortfalls, we remain absolutely committed to achieving our evergreen model in the long-term. I will outline some key actions we'll be undertaking in the second half of the year to improve performance towards the end of today's call. I'll review some of the high level performance figures and then I will discuss our operations and market environment. GAP for the second quarter increased 1% relative to Q2 last year, but as with recent quarters, foreign exchange translation muted some of this growth. On a constant currency basis, using the same foreign exchange rates as this period last year, GAP would have grown 3%. Revenue for the quarter increased 2% or 4% on a constant currency basis. Revenue increased more than GAP as a result of our higher revenue rate than the year ago period. As we discussed last quarter, our growing fee-based revenue streams, which are not associated with GAP are now supplementing our revenue rate. Expense growth during the quarter outpaced revenue growth causing margin compression and ultimately led to a 15% lower operating income year-over-year, or a 13% decline on a constant currency basis. Much of this quarter's expense increase was related for running a larger platform, important new strategic hires, a larger stock base to prepare us for scaling the business, and new operating expenses related to recent acquisitions. While we're not pleased with the expense growth we experienced during the third quarter, we believe cost investments were needed to better prepare our business for further growth and growing…

Thank you, Ravi, and good morning, everyone. As Ravi mentioned briefly at the start of today's call, our second quarter was marked with modest GAP and revenue growth, but increases to our overall cost base negatively impacted operating income with our operating income margin contracting 660 basis points to 33.8% during the quarter. Ultimately, this led to a 13% decline in EBITDA and a 12% decline in diluted earnings per share with diluted EPS of $0.37. Our revenue rate during the second quarter improved 13 basis points relative to the same quarter last year with the year-over-year improvement driven by fee-based revenue streams, not associated with GAP. In fact, 25 basis points of the quarter's revenue rate was generated by Mascus and Xcira, two businesses that were not on our platform a year ago. Weakness in equipment pricing in June did translate into lower than expected GAP growth and weaker performance on June's underwritten contracts, negatively impacting revenue rate and the resultant revenue growth for the quarter. We continued to believe that our core auction business will generate a revenue rate between 11% and 12% on an annual basis, and that our group revenue rate, including EquipmentOne and all fee-based revenue streams, to generate a revenue rate in excess of 12%. As with prior quarters, foreign exchange changes relative to the same period last year muted our reported growth. Sales volume increases led to 3% revenue growth, while rate improvements provided another percent, leading to 4% revenue growth on a constant currency basis. Factoring in the impact of translational foreign exchange, revenue growth fell to just 2% during the quarter. These foreign exchange impacts also contributed to a slightly larger proportion of revenue being generated from our U.S. operations, compared to Q2 last year. 43% of revenue was generated by…

Thank you, Sharon. We continue to stay focused on M&A as a way to accelerate growth in the long-term. Most recently, we announced the acquisition of Petrowsky Auctioneers on August 2, a business we believe will meaningfully grow our market presence in the Northeast United States, a region we have not historically been a market leader. We are pleased to welcome Sammy Piotrkowski and his entire team to Ritchie Bros. In 2015, Petrowsky Auctioneers built on their foundation of strong customer relationships, generated $50 million of gross auction proceeds. We believe that with the additional support the Ritchie Bros. platform will provide, the GAP contribution from this business could grow considerably. Subsequent to the end of second quarter, we also announced completion of our acquisition of the 49% minority interest in Ritchie Bros. Financial Services. While the operating results of this business were already fully consolidated within our financial results, we believe shareholders will now fully benefit from the earnings and growth potential of this business. In the last two years, we have diligently executed against our strategy to build a stronger platform for future growth. A multichannel approach and investments in digital initiatives are proving valuable to customers, with many large packages of equipment now being dispersed among sales channels to best suit the needs of equipment sellers. Our second quarter results clearly affected our first half performance, especially given how much large our second quarter is, seasonally compared to the first. GAP during the first half of the year grew 4%, relative to the first half of 2015, or 6% on a constant currency basis. And revenue grew 7% or 10% on a constant currency basis. Operating income declined 3% from the same period last year, or 2% removing the impact of foreign exchange. However diluted EPS attributable…

Your first question is from Nate Brochmann from William Blair.

Good morning, everyone, and thanks for taking the question.

Sure, Nate. Thank you. Good morning. How are you?

I am doing well. Thanks. So, Ravi, so, I mean clearly, this is, you know, a trait of the business where sometimes you get caught with pricing swings, and that's kind of always happened. And clearly you are taking the actions to kind of realign the SG&A after getting caught by surprise with that. But how do you think of the business kind of long-term in terms of doing the right things, in terms of doing all the investment and positioning the business with all the new channels versus kind of managing through these swings in the proper notion, because they're probably always going to come up over the course of history. And just wondering how we balance that a little bit? Thanks

Nate, great question and very perceptive comment. Look, this is a lumpy business. And I've said over and over again, this is a business for long-term investors than very short-term investors. The lumpiness sometimes goes your way and you have like it did in first quarter where there was jubilation, and second quarter where there's lot of disappointment. But I think we've to work through it and not sort of lose sight on the long-term, because in the long-term I very firmly believe, a; we have a fantastic operating model with great leverage, now that leverage works backwards too when you get it wrong. Two, I think, there is still a lot of growth prospects with the multiple channel. So we don't want to throw the baby out with the bath water, just because of a poor quarter. However, there is learnings from this quarter, which is that you do have to be careful of the investments you make – and our evergreen model, we were very committed to say grow operating expenses lower than revenue growth. So – and you can't always hope for revenue growth. So what we want to do over the next six months and it will take us some time to get our cost base right is, what are the things that we can live without, what are the things we absolutely have to live with. Some of the strategic investments we made, like getting a world-class CMO, a world-class CIO, those are all very important for the long-term health of the business. So, I think, it is just achieving the balance. And so first quarter we were surprised positively with the revenue growth. This time we've been negatively surprised by the cost. I think, over time we'll just get some more balance in, but I firmly believe that our strategic plan is intact. The moves we're making are absolutely right and we just need to stay focused on the long-term, while not just, sort of – we should take – this was a little bit of a wakeup call and we'll take the necessary actions.

Okay, great. Thanks. I think that's my one.

Thank you, Nick.

The next question is from Scott Schneeberger from Oppenheimer.

Thanks, Ravi. Could you elaborate on – you mentioned changing on – looking at the underwritten business, moving more towards forward indicator versus historical indicators? And just as a second part of the question, what were the asset classes most affected in the June pricing change impact? Thanks.

So I'll answer the first question, and I'll let Doug Olive answer the second. The quick thing is, our – we've got a lot of pricing history over 50 years and more recent 10 years. We have a real good sense. But most of the times when markets suddenly turn on you, and if we've made the deals a few months in advance, it can really cause some pain. So we're trying to work on trying to understand – and it's not easy in this business, but trying to get metrics which are more predictive about the future. So we've got analytics work underway that tie some factors so that we can get some – so whether it's in construction housing starts, non-res construction, et cetera, a whole model and we've got Frank Roth, who heads our strategic initiatives to do some work on that. So we're looking at some big data modeling to help us with it. It's going to be – it's not something that easy. Especially in volatile environments, but it's one way for us to at least better predict where sectors are going. I'll let Doug answer where some of the sectors we got affected on at risk in second quarter.

Thank you, Ravi. Good morning, Scott. Just to comment and just to add to some of the dialogue that's been said already. I mean, we did see an overall decline of pricing in the construction assets alone of about 6% in Q2. And on top of that, Scott, we did see quite an erosion of transportation assets, as there continues to be a glut of trucks entering the market. And so it's been transportation, construction, and we're still seeing a decline of pricing on oil and gas related equipment. And also anything tied to mining as well, Scott, we've also seen a further erosion. So it was a changing environment, a changing landscape. And we're aware of it, and we're watching it, and we're confident now, we're watching some pricing already into July, into Q3 already, where we've seen some stabilization of pricing, so we're confident moving forward.

I think Scott's question was which sector do we have at-risk deals, where we got hit. So...

Sure. Oil and gas sector and transportation sectors.

I think, the two, Scott, was really transportation, and one of the reasons transportation can be volatile is because if you have too many assets of the same type, so if you have 100 trucks, and the volume, and people know that there's 100, if the pricing starts falling, it can really have a boomerang effect on the whole portfolio. So one of the learnings for us, is we're learning more about the transportation sector is, you can't treat at-risk deals in transportation the same way you treat them in construction, where they're more unique assets in any particular portfolio. Whereas there's too many like assets in transportation, so we're learning from that and being more careful and judicious as we go forward. So this as we've been pushing transportation, perhaps there was just maybe too aggressive a push in portfolios on that.

Okay. Thanks for the color, guys.

The next question is from Sara O'Brien from RBC Capital Markets.

Hi, good morning.

Hi, Sara.

Ravi, just noticed in terms of the SG&A increase and cost of goods sale – cost of goods sold increase, a lot of it came from employee compensation, and not just related to the employee numbers, but actual comp per employee went up significantly. I'm just wondering if there was a change in the way base pay or overall pay is looked at from Ritchie's perspective, or were these sort of one offs related to signing bonuses for senior employees?

Sharon, do you have any view on that?

Yeah. There would have been some small sign-on components, but not material, Sara. The – I think, this is more reflective of having the full executive management team in place, and some of the regional management support teams, which would take some of the costs per employee up.

Okay. So...

So, Sara, there was several exec positions not there last quarter, last year's quarter or even the first quarter, which was President of the U.S. We did not have CMO, did not have CIO, et cetera. So that's partially reflective of it. We've not changed fundamentally, if anything, the changes we've made on comp levels are more performance-driven. So, I don't know, Sharon, if any of the mark-to-market affected that.

Yeah. So we did call it that mark-to-market was an impact of about $3.4 million on the quarter. That is a combination. It's primarily driven by the change in the stock price. Slightly, also just kind of added number of people that are on the LTI programs to better align our executives with shareholder interest. Those were somewhat offset because of the performance on the short-term incentive bonuses.

Okay. And maybe just related to that, if you can comment on employee turnovers, is that an issue that's causing additional cost, or are you – is it pretty in line with historical trends?

Yeah. I think the employee turnover is pretty much stable. I don't know if Todd is on the line, but I think, it's been around 15%, 16%, and we've not seen any sharp increase in it. So – and TM turnover actually is now stabilizing. It's come down. So that's not occurring.

Okay. Thanks.

The next question is from Bert Powell from BMO.

Thanks. Good morning. Ravi, just want to stay on the cost focus a little bit here. So you did indicate that there was a step-up in efforts to support some of the pricing volatility that you saw in the quarter, and there was a pretty big jump in your promo line, and I'm assuming with the transactions you did the quarter – in the quarter that the professional fees were also up there as well. So just wondering if you could give us a sense of how those behave going forward. Just trying to think about the operating leverage in the business heading into the end of the year. Can we get – and redefined operating leverage is kind of your EBITDA margin for lack of a better way to do it, can you get back to or above where you exited the year last year?

So, I'll take a shot at it, and then maybe Sharon can add to that. So if – we've got to separate out our core auctions versus things like Mascus and Xcira because those two have a – they're more fee streams, more stable, more predictable and there's a reason we've brought them on, so that one they're strategic enablers, the fact like Mascus gives you a lot of buyer base. So I think in our core auction business, I don't think anything has fundamentally changed on operating leverage. And what you're seeing is, we did – the company had been starved of the right type of management teams at a different levels. We've been going about upgrading the teams, and we also started decentralizing a bit. I think, what we're now is at an inflection point, where, hey, the wake-up call here is making sure that we've not gone too far on the investment side. And making sure that we protect ourselves when things – when the revenue growth doesn't come in. So – and we're going to undertake a very thorough review, in the meanwhile we've put the actions we have. But I fundamentally and very strongly believe that the operating leverage of this business is very much intact, and that's the beauty of the model. And what we need to do is tweaks on the cost front, and I think, we'll take some short-term actions just to make sure it doesn't accelerate from here. As far as the marketing is concerned, we're also within the marketing group looking for efficiencies, and saying, where do you redeploy cost to support the auction volumes directly, where are we spending, what is effective? So this is where some of the work that Becky and her team are doing on, how do you drive more digital marketing as opposed to your regular brochure oriented historic stuff? So I think, we'll find the right balance for that, I think, we went through – the other part of it is second quarter being the volume it is, and we had a lot of volume and we went out of the way to make sure we marketed to it. But the net of it is that I don't believe that there is anything fundamentally changed about the operating leverage of our model and what we need to do as a management team and we are fully committed to doing is to get that cost base back on track. And the investments are necessary for the long-term. So we want to be a bit careful of going too far. On the other hand, I think, we do want to get it back because we don't want inadvertently to give the wrong messages about the leverage of this very compelling model.

I think, Bert, I'll just add a couple of things. First, we're very encouraged with the pipeline that we are seeing on a few deals that we've secured for Q3 in particular, and so we will be marketing to be able to ensure there is sufficient demand for some of those critical packages that we will be selling in Q3. I'll also point out that in Q4 we did have a fairly significant surprise in the cost base last year related to the bonus plans, our change in bonus accrual methodology is attempted to – is an attempt to mitigate that and so we think that will be perhaps an easier cycling of costs for Q4.

Okay. That's very helpful. And just to be clear, when you talk about the package you're really talking about a mix shift away from small to larger to drive more efficiency, or just sort of relatively lower cost as a percentage of the GAP that you talk – you're referring to or just better at-risk pricing going into this quarter.

So, let me address that, and Doug can also maybe add to it. We're talking about – when we say larger packages, we talk about value – higher value dollars of the overall, doesn't mean it will not have a small set, because if it's a full dispersal. So, we secure a very large bankruptcy package which was an inventory deal which we've got slated for Columbus Ohio, it will be one of our very large at-risk deals and not as big as Wyoming, but really big. And we won that in a very strong competitive environment, but we made sure all the way from Terry, Doug, myself, all of us had really got into the deal. And so that's a sort of deal if it goes well can really hit the ball out of the park. Now, it can also go the other way. So I'm not saying that there's some out there, but we're confident we've done enough homework, and we're going to market that. So that's what Sharon meant by – and we've got similar to that, other things that in different parts of the globe we're working on. Maybe not to that size, but certainly for us, when we say large packages, anything, Doug would say, more than $5 million packages and so on. So – and that's the sweet spot of Ritchie Brothers. Doug, anything you want to comment on it?

I would agree, Ravi, just anything over $5 million in a mixed portfolio of assets that you know, they're not like assets. A mixed portfolio is a backing in the marketplace where you're going to sell a bunch of assets where there is some demand and you create demand by selling the amount of those types of assets in a certain marketplace.

Okay. That's very helpful.

Does that help?

It does. Yeah. It kind of – for sure it does, Ravi, absolutely. Thanks?

The next question is from Cherilyn Radbourne from TD Securities.

Hi, Cherilyn.

Thanks very much and good morning. Wanted to ask you a question on used equipment pricing. You comment that it declined suddenly in June, just curious was that post-Brexit or can you just elaborate a little bit more on what you think caused that?

It was not – because post-Brexit, it was June 23rd. And so – and while Brexit probably had a little bit of an impact on our Moerdijk auction, I think this was really more what we saw throughout the globe. It was an interesting one. It was not just contained to any particular country. Part of it, we ourselves had a lot of volume out there, and so we are market makers, so we put a lot of supply out there. And but it was pretty much – and one of the things that really took us a bit by surprise, our at-risk is very strong in Canada, in Australia, and even those countries, who are stalwarts at this took a bit of a beating. So this was global that we saw this and it was especially notable in the transportation side, where one, we had a lot of supply, but also the imbalance – there was a huge imbalance that suddenly got created. And sometimes you see that in this business. And it doesn't mean it's permanent. This is not one that we would describe as a permanent trend, because we have been very encouraged seeing things back up in July again, in most places. Doug or Randy, do you want to comment?

A bit of a Canadian perspective. We also got hit by the transportation swing, and you've got a large amount of assets that were pumped out into the marketplace after 2008, 2019, 2010, the OEMs were producing a record amount of trucks in 2011, 2012 and 2013. And those were the assets that are now starting to hit the used marketplace. And so there's a – there's still ample demand, however, supply has swung significantly higher than demand. So some of that was a little bit beyond where our pricing predictions were. A little bit of the remaining exuberance in Western Canada on the construction sector ran out of gas, where the amount of supply available on the market has now exceeded the amount of pricing and demand that we had seen in the past. So I think there's a bit of a catch-up issue going on even in the construction circles. That was tempered by relative strength in the eastern half of the country, however. And agriculture was – some ups and some downs, it was traditionally lumpy but actually it held its own relatively well in that space.

And Randy, I think just in the quarter, you had two big Edmonton auctions, one which was a record, so it – really towards June, when you had the June Edmonton auction, after such a record in the end of April. That also had some issues.

I mean, we had $350 million between two auctions alone in Edmonton, plus more in other areas within Alberta. And there was a sharp change in pricing experienced in June than there was just at the end of April. So it was quite a change.

Great. That's helpful color. Thank you.

The next question is from Ben Cherniavsky from Raymond James.

Good morning, guys.

Hi, Ben.

I know that it's not a big acquisition with Petrowsky, but it does strike me as somewhat unique in that these guys are on a reserved model. And that in your press release, you said you were going to run this as a separate brand. Can you talk about the rationale for acquiring a reserve platform, how you integrate that into your model, how you might scale it if it's a separate service, and how it doesn't conflict with the secret sauce of Ritchie being unreserved?

Good question, Ben. So, the rationale for buying Petrowsky was not because it was a reserved auction, and frankly the reserved portion based on due diligence is actually fairly small, and somewhere between 10% and 15% or so, and even that, we're going to make sure that it will be very transparent to customers. Because the reserve, we did not want that integrated, because for us, for the RBA, for RBA Ritchie Bros. auction brand, the unreserved model is absolutely sacrosanct and we will not let anything pollute that or change it because that's the heritage of this brand. What we wanted – the prime reason for us to get Petrowsky was that historically we have been weak in the New England area and in the Northeast and Sammy Petrowsky has done a very good job of wooing customers and building relationships. He has got a good brand equity with people, and so for us we felt that that would help bolster for us those – get those relationships, et cetera. We're going to study how, whether over time – because this has not been uncommon where we do buy a regional player, and then once it's fully unreserved, to really bring them into the fold. So we're going to study it to see how that will be and what's the appropriate time, whether the brand gets absorbed into RBA. But if it is, it has to be 100% unreserved. Until such time, we want to leave that. We want to understand what works in that region. But the key reason was not because they're running it, so it's very different from a Mascus, which is more part of our digital side or EquipmentOne. This is really about geographic thing for the core auction business and to leverage the relationships Sammy brings with customers.

So you're not contemplating building out a reserve platform as a separate kind of a service or auction channel?

Yes, that was not the strategy here, Ben. As we understand it better, we'll think about that. But that is really – that is not the rationale or the strategy. We believe that with the scale we have with RBA that for the live auction model, the unreserved works. So at this time – we'll better understand it if there is an opportunity. Clearly, we'll look into it, but that is not the prime reason for doing this.

But, I guess, it might be a poor metaphor, but if you take a sales guy, who has been selling Fords his whole life and then ask him to sell Mercedes, does that work? Like, is there a risk that the Petrowsky model had some strength in the region because it offered a reserved option, and when you or if you try to convert these guys who have been participating in that auction into the unreserved channel, they go elsewhere.

Yeah. Now, that's a great point, and that would have been a huge risk had 50% or more of their volume been from the reserves. Our due diligence indicates that's not the case. And in fact, Sammy is fully prepared to and confident that – and look, this is where the Ritchie Bros. infrastructure and our buyers, et cetera, will help provide. So I don't believe that to be an issue. And long-term, our view and our hope would be that we could convert this to the right unreserved model, if that's what we believe for the live auctions is the appropriate point. We're going to take our time and not do anything drastic overnight. But as I said, I'll just reiterate, I'm sorry I'm being a broken record, but we did not buy it for the reserved model, it was really because of the strength of relationships in a region where historically we've been weak.

Great. Thank you so much, Ravi.

Thank you, Ben. One more question, Jamie?

And...

We can do two more.

Okay. The next question is from John D'Angelo from Macquarie. John D'Angelo - Macquarie Capital (USA), Inc. Hey, guys, good morning and thanks for taking my questions.

Sure, John. John D'Angelo - Macquarie Capital (USA), Inc. So the underwritten business, a little bit of trouble in the quarter. Can you guys share with us how you guys priced that business? Is it whatever the seller agrees to or do you guys look at the level of used equipment values in pricing the stuff or do you guys look at the trend? Any color there would be appreciated.

Yeah, clearly, I'll just give a quick view of it. And then Doug can supplement it, or Randy. But this is our secret sauce. So, John, understanding that we don't want to reveal all of our trade secrets because this is one of our most important weapons, we do somewhere between $800 million to $1 billion a year, and this is something we are very good at. Yes, we had a difficult quarter, but we've also had now four quarters or five quarters where we have had huge improvements. But generally speaking, we have performance guarantees, which is the mainstay, as well as some inventory deals, our strong preference is for performance guarantees. And basically, we appraised the equipment, our people appraised because we are pretty good at equipment pricing and our sales people do it. But we have valuators under Doug's group who then provide their own view. Then we look at our models to see historically how it is. Then there's a negotiation with the seller because the seller wants to do it at a certain level, we want to do it at a certain level. We get to the right place in the middle. And assuming that we have good margins built-in for us, appropriate with the risk and that's how we go to market. A piece of color to say is that in the last 10 years, in aggregate, we have never ever lost money overall in our at-risk business and even in this quarter, while we suffered a little shortfall, our rate went down, clearly we still made money on the business. So, what we are always trying to do is minimize the losses. You will always have a few contracts that will lose, because if you don't, that means you didn't try to bring in enough. That's part of the game. So, we look at things called loss-to-win ratios, et cetera. Typically in good sound environments, this is a very attractive thing. Occasionally, you get caught out, when you didn't anticipate that the market would turn very sharply and even when we are conservative in our pricing, sometimes you can be caught out, which is what happened in the second quarter. Randy or Doug, do you think there's any other thing you want to add to what I've said?

I'd agree fully, Ravi. As we alluded to, some of the assets this quarter that we were surprised with were some of the transportation assets, where we had older packages that were stale inventory and when the market or pricing changes that quickly, that's – when you have like units, that's when you can see a quick erosion of value or revenues on packages such as that. This cycle, we certainly saw it as Randy also alluded to, it was worldwide effect. So it wasn't just regionalized to certain areas. It was everywhere, so it quickly turned. We've seen these cycles before, and we watch it very closely. And we're on top of it, and we're already as Ravi alluded to as well, we're already happy with the prices and returns we've seen in July and we've seen a more stable pricing environment so far.

Okay. One last question. John D'Angelo - Macquarie Capital (USA), Inc. Okay, great.

Thank you, John.

Thank you, guys. The last question is from John Healy from Northcoast Research.

Thank you.

Hello, John.

Ravi, I just wanted to maybe delve in a little bit on some of the competitive trends that you talked about, and maybe a little pick up there, is that from traditional competitors, is that from new channels? And kind of how is the form of that taking place, and I'm kind of trying to understand how you're responding there a little bit?

Sure, I think, look, we have competitors, regional competitors, national competitors, and then ones that we compete with overseas, so there's a plethora of competitors in this business. Some of them, the regional ones could be live auction competitors, then you have online competitors, a number of them that you'd be familiar with. And clearly, the online side is beginning – just the same trends we are seeing, it's gaining strength. And so there is for sure more competitive intensity, as well as for at risk contracts, et cetera. But definitely, different models where you don't have to move equipment versus our traditional side, which is why sometimes we're doing more offside auctions, et cetera, to respond to what we're seeing in the marketplace.

Thank you.

Okay. Let me conclude by saying, look, we were not happy, and we are disappointed with the second quarter results, but we are looking forward and not back. I don't want to let one quarter say it's a trend and that the model is broken. We in fact very much want to reassure investors that we are very confident of the model. My management team and I are very committed to get this back on track, and so hang in there with us. The results in July are a positive note. And we will start working on the cost issues. And I very firmly believe that the evergreen model was not just an academic piece of paper, but one that we're very committed to, and over time, we will get back on track. Thank you.

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