Feb 26, 2013
Executives
Peter James Blake - Chief Executive Officer and Director Robert K. Mackay - President Robert S.
Armstrong - Chief Strategic Development Officer Steven C. Simpson - Chief Sales Officer Robert A.
McLeod - Chief Financial Officer
Analysts
Yuri Lynk - Canaccord Genuity, Research Division Jamie Sullivan - RBC Capital Markets, LLC, Research Division Andrew Moussa - Crédit Suisse AG, Research Division Hamzah Mazari - Crédit Suisse AG, Research Division Neil Forster - Scotiabank Global Banking and Markets, Research Division Nathan Brochmann - William Blair & Company L.L.C., Research Division Scott L. Stember - Sidoti & Company, LLC Bert Powell - BMO Capital Markets Canada Chirag Patel - Jefferies & Company, Inc., Research Division Stephen E.
Volkmann - Jefferies & Company, Inc., Research Division Gary F. Prestopino - Barrington Research Associates, Inc., Research Division Scott A.
Schneeberger - Oppenheimer & Co. Inc., Research Division Craig R.
Kennison - Robert W. Baird & Co.
Incorporated, Research Division Ben Cherniavsky - Raymond James Ltd., Research Division
Operator
Good morning, my name is Candice, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ritchie Bros.
Auctioneers 2012 Year-end Earnings Conference Call. [Operator Instructions] Mr.
Peter Blake, you may begin your conference.
Peter James Blake
Thanks, Candice. Good morning, everyone.
I'm Peter Blake, CEO of Ritchie Bros. Thanks for joining us today on our 2012 year-end investor conference call.
With me in Vancouver are Rob Mackay, our President; Rob McLeod, our CFO; Bob Armstrong, our Chief Strategic Development Officer; and Steve Simpson, our Chief Sales Officer. Before we go on, I'd like to make a Safe Harbor statement.
The following discussion will include forward-looking statements. Comments that are not statements 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 from time to time in our securities filings, including our management's discussion and analysis to financial condition and the results of operations for the period ended December 31, 2012, which is available on the SEC, SEDAR and company website. Actual results may differ materially from those contemplated in the forward-looking statements.
We do not undertake any obligation to update the information contained in this call, which speaks only as of today's date. Also, during today's call, we will talk about gross auction proceeds or GAP, which represents the total proceeds from all items sold at our auctions.
Our definition of gross auction proceeds may differ from those used by other participants in our industry. GAP is not a measure of financial performance and is not presented in our financial statements.
The most directly comparable measure in our statements is auction revenues, which represent the revenues we earned from our auctions. The focus of our call today will be to review the highlights of our 2012 performance and to set the stage for 2013.
We will also give you some insight into what we see happening in the used equipment marketplace. While we did a lot of things right in 2012, including record GAP, opening new auction sites and laying the groundwork for Ritchie Bros.
EquipmentOne, looking back on the year, we asked ourselves if there was anything that we could have done differently, what would they have been? And for us, there are 2 answers.
One was hire more Territory Managers, and two was achieve better results in our at risk business. Having a full complement of highly productive Territory Managers is critical for us to deliver growth in GAP and auction revenues, and we did not hire enough of them in 2012.
With the result that we ended the year with 259 Territory Managers, which were short of our target. Secondly, the underperformance of our at risk business negatively impacted our auction revenues.
Together, we believe these 2 misses had a material impact on our bottom line. 2012 was a decent year for Ritchie Bros., but if we have performed better in these 2 areas, it would have been an excellent year.
We still achieved record gross auction proceeds of $3.9 billion for the year. We set a record with $1 billion in volume in our Canadian auction sites.
And we delivered pretax adjusted earnings growth of 17% when you exclude the incremental AssetNation acquisition cost. So while we are generally satisfied with the 2012 results, we know that we can and will do better in 2013, and we have taken a number of corrective actions for '13 to make that happen.
To date, we've had a handful of mainly U.S. auctions, including our big one in Orlando.
And as always, the mix of what we sell is not consistent year-over-year and auction to auction. We are seeing strength in the prices of used equipment and our auction -- or volumes are hitting our targets giving us confidence that our first quarter will meet and exceed our Q1 2012 GAP.
Before Bob and Steve outline our plans for 2013, Rob Mackay will update you on the used equipment market.
Robert K. Mackay
Good morning, everyone. In 2012, GAP in our largest market, United States, remained flat overall, with the strength in the Eastern and Central U.S.
making up for the weaknesses in the West. After years of negative economic news in the United States, we are noticing an increasing sense of optimism amongst our customers, and this has been reflected in the generally strong prices we have seen in the first auctions of the year.
Europe remains challenging in 2012, particularly in the North, although we made some important inroads in the region with the opening of our auction site in the U.K. While Southern Europe is still coping with their financial crisis, the need for our customers to create liquidity to move surplus assets has and will continue to generate good volumes for us.
Our business model and our unique global presence enable us to match local supply with global demand, an extremely valuable proposition for equipment owners, especially in countries where domestic demand has been shrinking. In 2012, we saw price increases in most categories of equipment in Q1.
That strong pricing trajectory continued into early Q2 then started to flatten later in the quarter. Q3 and Q4, the value of old equipment became choppy and tough to predict, but pricing for well-maintained, low-hour [ph] machines remained strong.
Mining equipment pricing became somewhat volatile later in the year as demand in the mining industry diminished. Price volatility in the second half was driven in part by renewed U.S.
political uncertainty about the election and a fiscal cliff solution, increased supply of equipment then available for sale and the reduced inventory -- the reduced equipment turnover for both new and used that caught dealers offguard. We are early in 2013 auction calendar with only a few auctions under our belt but have already seen changes in the pricing environment.
Prices are up over Q4 levels for many categories, particularly backhoes and telehandlers. This is sending a positive message to the industry.
This strong pricing, the anecdotal feedback from our customers, has us believing that there is a renewed sense of optimism in the equipment world, primarily in the U.S. where we have held most of our 2013 auctions to date.
We believe this is pointing to a solid year for the construction industry and good volumes and pricings at our auctions. At the very least, 2013 is looking to be a year with more tailwinds than headwinds for Ritchie Bros.
I'll now pass the call over to Bob, who will comment on our strategic goals for the year.
Robert S. Armstrong
Thanks, Rob. Good morning, everyone.
As Pete mentioned at the top of the call, we were generally satisfied with our performance in 2012. To ensure a better 2013, we have identified a finite number of primary goals for the year and have labeled them the big 3.
If we achieve success in these 3 areas, we believe 2013 will be a great year for Ritchie Bros. and that we will be well prepared to continue to deliver in the future.
Our first goal is to aggressively grow our core auction business with the focus on strengthening existing customer relationships and developing new ones. We will concentrate resources on high potential growth areas in new and existing markets, including holding our first auction in China and opening our newest auction site in Melbourne, Australia.
If we can hit GAP of $1 billion in Canada, then we should have no difficulty visualizing how we can take the business from $4 billion to $10 billion to $20 billion and beyond. These are exciting times for our core underserved auction business, and we will not let anything distract us from pursuing the tremendous growth potential we see in front of us.
The 2 key focus areas with respect to our core business are the performance of our at risk business and the size of our sales force. And Steve will address both of these in detail in a moment.
The second of our big 3 goals is to launch and grow our new online marketplace, Ritchie Bros. EquipmentOne.
We pride ourselves on being an innovative company and as our mission statement says, we are in the solutions business. We exist to help world's builders exchange equipment.
When we crafted our mission statement in 2010, we explicitly acknowledged that some of the world's builders have needs that are not met by our unreserved auctions. We also recognized that Ritchie Bros.
was uniquely positioned with our brand, our reputation, our experience and our expertise to create a solution to meet those needs. Ritchie Bros.
EquipmentOne is complementary to our flagship auction business and allows us to open up an entirely new segment of the equipment market. With the launch of Ritchie Bros.
EquipmentOne in January of 2013, we believe that we have doubled our addressable markets, created value for our shareholders, and created opportunities for our employees. The marketplace went live on January 2 and is currently in its initial launch phase.
The focus of this phase is to migrate legacy asset nation buyers and sellers onto EquipmentOne and to work with these customers to enhance the marketplace in preparation for the commercial launch in April. If you've not been to the website yet, I encourage you to take a look at it.
It's changing and evolving rapidly in response to feedback from our buyers and sellers as we get ready for our commercial launch. The third of our big 3 goals is to significantly enhance our sales team.
All members of the Ritchie Bros. team are important.
And in 2013, we'll be placing extra emphasis on the development of our sales team. Our key focus for 2013 is to hire, train and develop the Territory Managers we need in order to achieve our growth objectives.
We have also simplified the compensation structure for our sales leaders and Territory Managers and placed a renewed emphasis on arming our sales teams with the right tools. If we intend to hit our sales targets in 2013 and beyond, and we do, we need to focus on the growth and development of our sales team in 2013.
Now over to Steve, who will tell you about the 2 areas that we have a laser focus on in 2013 with respect to our core business.
Steven C. Simpson
Thanks, Bob. Good morning, everyone.
As Bob said, there are 2 main focus areas for us in 2013. We believe succeeding in these 2 areas is the key to delivering record revenues and achieving financial targets.
The first is the performance of our at risk business and the second is the size of our sales force. Overall, in 2012, 32% of our at risk business, which is within the range we communicated in previous conference calls.
As anticipated, our at risk volume fell in Q4 to 29%, reflecting a more familiar, competitive pricing environment that we noted on our last call. While we don't have the target level of at risk business, we look ahead to 2013, I expect our unwritten business will stay around the 30% plus or minus level.
The quantum of at risk business hasn't been our problem, it has been the performance, particularly as early as 2012. We gained more market intelligence through the third quarter and slightly tweaked our process for our risk proposals, which has resulted in better risk performance as demonstrated by our strong Q4 auction revenue rate of 11.7%.
We also have restructured and simplified the incentive compensation program for our TMs to ensure that they are focused on signing not just GAP but profitable GAP. Growing our revenues.
As we head into 2013, we are expecting better performance of our at risk business. So far, we are satisfied with the results of our at risk business in 2013.
With respect to our sales force, we ended the year with 259 TMs, which was only marginally higher than earlier in the year. This is not good enough when our business is all about customer relationships.
So another key focus for 2013 is to hire, train and develop the Territory Managers we need in order to achieve our growth objectives. We are looking to grow our sales force by at least 10% in 2013.
To move the needle in this area, we have beefed up our recruiting efforts with all our fields managers through interview training programs and revised the incentive compensation structure for our sales managers, so they can't earn a full bonus unless they have a full complement of highly productive TMs. So far, so good.
Our TM count currently sits at 270, so we are starting to make good progress since the start of the year. 2013 is off to a good start.
Our current deal flow [ph] is strong, our at risk performance has been solid in Q1, and we are doing well in our TM hiring plans. This positions us well to hit our revenue targets in 2013.
And now I'll pass it over to Rob McLeod.
Robert A. McLeod
Thanks, Steve, and good morning, everyone. I would like to highlight some of the key items from our press release that we issued this morning and our MD&A that's been filed as we speak.
Our 2012 auction revenues were $438 million, including approximately $26 million of incremental revenue from changes to our fee structure that took effect on July 1, 2011. Our total auction revenue rate for 2012 increased to 11.21% from 10.66% in 2011, which is mainly due to the full effects of the changes in the fee structure.
Our auction revenue rate in quarter 4 was 11.7% compared to 10.91% in quarter 4 of 2011. Our strong quarter 4, 2012 result was due to better at risk performance, which we attributed to steps taken to correct the slide we experienced in quarter 2 and quarter 3, as Steve had just discussed.
Selling, general and administrative expenses for 2012 included incremental acquisition and operating cost for AssetNation and $7.5 million in costs for our strategic initiatives, which were partially offset by positive foreign exchange effects of $3 million. As a result, comparable SG&A increased by 4.5% or $9 million, 2012 versus 2011.
This increase is primarily due to increases in personnel costs. Our quarter 4 SG&A increase reflects these same variables.
Our pretax adjusted earnings, after giving effects of incremental AssetNation acquisition cost, increased by 17% compared to 2011, in line with our guidance range of at least 15% growth. Finally, our working capital position is now in excess of $90 million, an increase of over 50% in the year.
We will continue to monitor our excess cash position with the view of not holding excess cash in the balance sheet. Through this year, we will review our capital structure, evaluating alternatives for deploying and returning capital appropriately.
Now on to our guidance. For 2013, we're guiding to GAP in the range of $4 billion to $4.4 billion, and our auction revenue rate guidance continues in the range of 11% to 11.75%.
We have a renewed focus on revenue as evidenced by our new sales compensation structure, and we are guiding to auction revenue in the range of $460 million to $500 million. Specifically for EquipmentOne, we are forecasting a neutral impact on EBITDA with new material impacts on revenue and expense line items.
Our long-term financial objectives remain the same, and we believe that our 2013 pretax adjusted earnings will grow by at least 15% compared to 2012. For 2013, we believe our EBITDA margin would be just below our 40% target, and we are not forecasting to achieve our 15% target for return on invested capital in 2013 but have a clear path on reaching this target in the near term.
Our CapEx for 2012 was $62 million. Looking ahead to 2013, we expect our CapEx will be approximately $60 million given projects currently in the pipeline.
Now back to Pete.
Peter James Blake
Okay. Thanks, Rob.
We believe we're entering into more familiar business environment within the equipment market and don't expect to face the same degree of headwinds that we have been dealing with in recent years. In 2013, we will focus on the big 3 of aggressively growing our core auction business, successfully launching Ritchie Bros.
EquipmentOne, and performing with a larger, better managed and better trained sales team. We are highlighting these areas because success in executing the big 3 will be the catalyst for us to have a great 2013.
Before we open the call to questions, I'd just like to give you guys a bit of guidance that we would be looking for 2 questions each from analysts, just to try to limit the number of questions, so that all the guys can get a shot at asking. We've had some feedback during the intervening period that a lot of guys tend to ask and ask and follow up and follow up.
So please limit your questions to 2 including the follow-ups. So Candice, you can open up the call, please.
Operator
[Operator Instructions] And your first question comes from Yuri Lynk with Canaccord Genuity.
Yuri Lynk - Canaccord Genuity, Research Division
Can you put a little bit more meat on the bone in terms of the plan to improve the at risk business in '13? And I guess my second question would be what are you assuming in your guidance in terms of headcount additions, Territory Manager additions for the year?
Robert K. Mackay
So, Yuri, Rob Mackay, I'll take the first part of that. Different levels of field management in our sales force have different responsibilities for the deal on risk deals based upon the size and the makeup of them.
And as we went through last year, we went back and evaluated after certain period of the year how some of them were doing, and assessed that we needed a little bit more focus from our evaluation group, and in some instances, higher than that, on different parts of our team, which we instituted later in the year. As a result of that, in Q4, we saw that the groups of people within our team that had to do a little adjustment on how they viewed some of these things, they came back into line where they understood and created better performance.
So it's an enhanced focus of different higher levels of management on different size deals that we will continue to carry on through 2013 and should affect the right change and continued return that we're expecting from that business.
Robert A. McLeod
Yuri, it's Rob McLeod this time. You're asking about guidance on headcount additions in 2013.
And in our script, we're talking about at least 10% growth in our TMs. In 2012, there was about 4% growth, so we're looking at ramping that up, and we put a number of things in place throughout the organization to help make that happen, so at least 10% growth.
Yuri Lynk - Canaccord Genuity, Research Division
But the GAP guidance of $4 billion to $4.4 billion assumes you're adding -- you're going from 259 to about 285, right?
Robert A. McLeod
Yes, yes. That's about 10% growth in headcount.
And there's always expectation of some productivity growth as well in tenured TMs.
Operator
And your next question comes from Jamie Sullivan with RBC.
Jamie Sullivan - RBC Capital Markets, LLC, Research Division
The commentary on 1Q sounds like you're pretty confident you're going to get some growth, so it seems like you're setting up for a big March. Maybe you can just put a little bit more detail on what gives you the confidence in that going forward?
Robert A. McLeod
Jimmy, it's Rob McLeod. The commentary was that where we're sitting right now and I think we've had 6 auctions so far, so we're only part way through the -- certainly part way through the quarter, and our commentary was that meeting and exceeding quarter 1, and so it's for GAAP.
So someone said early days, but that confidence is based on, I guess, the volatility -- I'm sorry, the volume of transactions that we're looking at, that are coming across our desks and hitting our sales teams, as well as commentary from customers, particularly in Orlando, of their confidence in the construction marketplace, and that confidence, we believe, would end up in additional or incremental transactions.
Robert K. Mackay
Jimmy, it's Bob. In a way, as you know, we go through our observations, checking with our field leaders to see what they're seeing.
And visibility improves as you get closer and closer to the end. We're sitting here with 1 month to go, and the latest feedback from our field has us feeling pretty good about the quarter.
Jamie Sullivan - RBC Capital Markets, LLC, Research Division
Okay, great. And then my second question would just be on -- so you changed some of the incentives around the risk business.
Sounds like you're focusing on now a little bit more maybe some conservatism discipline there. But you'd also maybe need to walk away from some deals as a result of that.
Just wondering kind of how you're thinking about the year in terms of if -- would you be willing to have GAP flat or even down to deliver more stable ARR in that environment? How should we think about that?
Robert K. Mackay
I think we could deal with this in 2 parts, Jamie. Rob here.
I'll deal with the first part with the at risk and its effect and [ph] the volume of it. We still will remain very aggressive on the right deals to have.
And the big deals, while we've got more opportunity to have diversity in the package and it adds stocks and create auctions, we will be as aggressive as we ever are on those things. The smaller type deal that could be very small numbered whether they're 6 in the same items or that sort of thing, is where we're affording the more focus and where we want to affect change in the at risk rate that we're earning on that.
So from the point of view of the renewed focus on the at-risk rate and the hindrance or effect of it on the overall GAP, I think it's somewhat immaterial.
Robert S. Armstrong
And, Jimmy, this is Bob. Just the focus for sure is on GAP, the focus is on auction revenue rate.
But at the end of the day, it's about revenue dollars. And so as we're evaluating the deals as they come across, it's really about incremental revenue dollars and where we're sitting, so that, that will go into the decision-making for aggressiveness, if you will, on deals.
Steven C. Simpson
And, Jamie, I just want to add something, Steve Simpson here. And I'm thinking there's probably a lot of people on the phone that are questioning our at risk appetite.
Make no mistake as far as we're concerned, when we're out there chasing the at risk business everyday, we're as aggressive as we ever were or more so on the great deals, the nice mix from the nice owners with a good gear and a good reputation, we're all over that stuff, and we'll continue to be. And our appetite on all the other deals is unchanged as well.
We're just being a little bit smarter about what we're doing and how we're chasing it and how we're getting the deals done, but there's no -- we've made some corrective actions on our at risk business, and it's working nicely as planned, and we're going to continue just doing that going forward. But we're not going to be able to get our numbers for the year and get to $4 billion, $4.4 billion if we're not out there chasing the business like we do every day, and that's what we're going to do.
Operator
And your next question comes from Hamzah Mazari with Crédit Suisse.
Andrew Moussa - Crédit Suisse AG, Research Division
It's actually Andrew here speaking on behalf of Hamzah. Maybe you can just talk to us about your strategy to leverage AssetNation platform and how investors think about your strategy to grow outside of the unreserved auction market.
Robert S. Armstrong
Sure, Andrew. It's Bob.
I think you guys know we bought AssetNation in May of last year. We launched Ritchie Bros.
EquipmentOne in January of this year. It's an initial launch phase.
We'll be making a lot more noise and then expanding it dramatically starting in April. And the vision has been pretty solid throughout.
Our goal in doing this is to try and double our addressable market, to provide a solution for all of the equipment owners whose needs are simply not met by the unreserved auctions. We see ample growth with the unreserved auctions.
In fact, our research tells us that at least half of the marketplace is ready, able and willing to embrace the unreserved auction model. And that's why Steven and his team out there are growing it and aggressively growing it.
We see that thing growing from today's -- and we guided at $4 billion to $4.4 billion this year. We see that thing moving onto $10 billion, $20 billion and beyond.
But there's another colossal piece of the marketplace that simply is not going to come to the auction market. These are the guys that are currently using Craigslist and eBay, and they park truck on the side of the road and put a "for sale" sign in the cab.
And for decades, Ritchie Bros. really hasn't been able to work with those folks.
We see an opportunity to launch a second solution and therefore give us a second growth engine, double our addressable market and move in to create value for an entirely different set of customers and different set of transactions. So that's the purpose here.
It's very much a complementary solution. It's extremely early days.
It's been out there for 7 weeks, so it's a bit early for me to start talking numbers and objectives and goals and all that kind of stuff, but I can tell you, we would not even be starting down this path if we didn't think it could be really, really big. We don't need a small distraction.
We're looking for a colossal second growth engine, so we believe we've got a huge opportunity here.
Hamzah Mazari - Crédit Suisse AG, Research Division
Great. And just a follow-up.
Are you guys continuing to see increased competition from brokers and dealers in the used equipment marketplace? Has it slowed relative to last quarter?
I mean, like what has to happen for competition to sort of die down?
Steven C. Simpson
Yes. It's Steve Simpson here again.
I don't really think we've seen any change in the competition from the auctioneers or the brokers and the dealers. I mean I think there certainly is a bit of a shortage of the real nice late-model gear with the right models on it or right hours on it if -- in the [indiscernible].
And also there's a bit more competition on that. But it's -- aside from that, it's business as usual.
Robert K. Mackay
I think, Andrew, what we have been seeing is the broker-dealer guys. Because the trajectory of pricing has changed, and we don't have necessarily the same sort of blue sky numbers that you tend to have to go and compete against when guys are thinking they're going to let the market bail them out of a bad deal.
So that sort of levels the playing field for us in respect of competitiveness on a deal. Sometimes it not always the number of guys on the deal, but it's usually it's the number on the deal if it's a competitive package of equipment.
So that creates a bit more familiarity for us, and we're pretty good at generating strong values because we've got such a global platform, and we can rely on that to probably outsell and outperform almost every other channel. But when the pricing and the competitive environment within the pricing marketplace is more stable, that allows us to be a bit more predictable and gives us a bit more confidence in delivering on good at risk rates.
Operator
And your next question comes from Neil Forster with Scotiabank.
Neil Forster - Scotiabank Global Banking and Markets, Research Division
So my first question is just I'm wondering if you can provide a little more color in terms of the changes you've made on the incentive side both in terms of the sales reps pursuing GAAP on a more profitable basis. And also on the Territory Managers, you guys mentioned on that side to have a full slate of efficient sales reps.
I'm wondering if you can just give us some more detail on that.
Steven C. Simpson
Sure, Neil. Steve Simpson here again.
So all of our Territory Managers now are all remunerator bonus based on revenue rather than GAP. So the focus of that from there is, as I've said to all the guys when made the change in this, this year is we've simplified the plan, we've made it crystal clear what they need to do to be successful.
And it's all about revenue. And as I said before in the guidance, GAP is wonderful and you have to have it in growth and it is essential, but at the end of the day, revenue pays the bills.
And so therefore, that's our focus going forward, and our guys need to recognize that because there are many opportunities, I think, where we are able to address the revenue on any given deal that we're working on. And I think we've kind of got a bit slack in that.
And with this new program, the guys are focused on it, and it's going to pay dividends in the end.
Peter James Blake
And, Neil, it's Bob here. I would just add one comment to Steve's.
We changed focus of the incentive comp fees, but we haven't changed the size of it. That's really important.
I think you used the word commission in there somewhere. And just to be clear for everybody, our standard sales guy probably has about 75% of his comp as base and 25% is incentive, roughly.
And we haven't changed that. What we have changed, as Steve said, is the calculation of that incentive fee is now simple, which it wasn't before, and it's focused on revenue rather than a variety of different factors, but it's still not a commission structures.
Robert K. Mackay
So that's on the TM side. On the manager's side, what we've done is sort of basically divided the comp for sales manager, his direct boss or TMs cost to be largely based on the contribution which is what they deliver, revenue minus their controllable cost.
But there's a component of this bonus that's also based on the number of productive TMs that he has on his neck [ph], and he's got a target for that. He needs to make sure that he has TMs underneath him that he's coaching and growing that are hitting their targets.
And if they're not, then that will adversely affect his income, too. So there's more a direct alignment between sort of the bottom line performance with the shareholders and the top line performance for each individual guys as it goes.
Neil Forster - Scotiabank Global Banking and Markets, Research Division
That's helpful. And my second question is on SG&A.
It came in a bit on the high side versus what I was expecting this quarter. Was there anything unusual in that number?
And what's a good level that we should expect moving forward?
Robert A. McLeod
Neil, it's, Rob. Yes, like I said in the comments, nothing necessarily unusual in quarter 4 -- or I guess unexpected from our point of view in quarter 4.
Definitely increased from last year's result of a full 3 months of AssetNation cost in there that's obviously wasn't there last year and they were building up through the purchase in May. And always there's a comp or an incentive comp component in quarter 4 when you're near the end of the year and you're finalizing your numbers.
And that may have a small tweak in there as well compared to prior quarters and quarter 4 being a big quarter. In addition, actually in quarter 4, there was a bit of a foreign exchange negative impact, not quite above $1 million that's increased SG&A quarter 4 this year versus last year, so it had kind of the opposite effect in quarter 4 versus the whole year.
Neil Forster - Scotiabank Global Banking and Markets, Research Division
So should we expect some moderation from the Q4 number looking into next year?
Robert A. McLeod
Our G&A isn't -- normally is not flat quarter-to-quarter-to-quarter through the year. Quarter 1 is usually a little bit, if you look back, usually a little bit higher just due to Social Security costs, other sales like our sales meeting happening at the beginning of the year, so that hits in quarter 1.
So quarter 1 is usually a little bit higher than the other quarters, particularly in relation to the volume of business because the GAAP in quarter 1 is a little bit lower. And so taking that quarter 4 and just pushing it all the way through each quarter isn't necessarily going to get you there.
But if you look at where we ended up in the latter half of 2012, because that would include all of your AssetNation costs. It will include all of our costs associated with our strategic initiatives that we initiated in 2012.
And so that would be probably your best bet for looking at 2013.
Operator
And your next question comes from Nate Brochmann with William Blair & Company.
Nathan Brochmann - William Blair & Company L.L.C., Research Division
I want to talk a little bit more on the Territory Manager hiring front. And I clearly understand that you changed the programs to make sure that you're encouraged to reach their numbers.
But looking back on it like over the last 1.5 years or so in terms of maybe why they didn't quite get to the level you wanted, what do you think was the biggest impediment there in terms of why that Territory Manager hiring was slower?
Robert A. McLeod
Nate, it's Rob again. Just my take on it is all about management focus.
We are a sales-driven organization, customer-service driven organization, and so sometimes that opportunity to interview somebody or pursue a candidate doesn't necessarily take a priority. So what we need to do is ensure that it is a priority for all of our sales leaders and all of our senior executives within the organization.
And that focus has been renewed and cemented latter part of 2012 here and for sure in 2013. And you see that by the addition of TMs secured early in 2013.
There were 270 so far.
Nathan Brochmann - William Blair & Company L.L.C., Research Division
And I also -- just in line with that, I also know, too, that you went through a calling period to some of the TMs that maybe didn't quite meet the new criteria of a more challenging environment or in terms of kind of their skill set. Do you feel that you have in place now the right profile going forward as you're hiring on these more TMs that they really truly fit what you need in today's organization?
Steven C. Simpson
Nate, Steve Simpson here again. Yes, I think we've definitely had some changes in our sales force, but as you mentioned, it was -- the market's been challenging the last couple of 3 years.
And so some of those people weeded themselves out, if you will. But are we happy with how we're placed today with the additions we've made?
Absolutely. And we've had a bunch of really, really great new hires recently that are -- we're running through our training net program as we speak.
And the future looks very bright, so we are pleased, and we're going to stay focused on it. And as Mr.
McLeod said, the guys that are -- all the managers now are focused on those -- hiring those quality sales guys. As if it was a $15 million deal.
And as you know, none of our guys walk away from $15 million deals too quickly. And it's a focus in their life though.
The awareness level is at an all-time high. Our expectations for the people we are hiring are at new higher levels, and it's all about quality, quality, quality, and that's what we're looking for with guys that can go out and turnover rocks and get deals done.
Peter James Blake
So I should also point out, Nate, that we -- the TTM program we started a few years back and now it's really coming into its own -- TTM stands for Trainee Territory Manager. Good young guys that we took off and we bring into the organization that they might not have as much experience as others, so we train them first.
And they usually go about a year until they graduate to TM status. And right now, there's about 21 of those TTMs that are in the mix that are not included in any of our numbers.
And that's just kind of like a trainee program to dip them in orange and get them focused. And Steve talks about quality, and we can find really high, high quality people that might not be exactly in line or dipped in the equipment experience that they need, and we can give them that.
So the program that we started, it's being expanded in terms of its support and the format by which would bring this people in and how we train them up. So we beefed up our HR side on the front end to find them in the recruiting side and we're way more actively and aggressively engaged.
It was a bit more of a passive effort in past years to see who lands. And typically, Territory Manager, you're going to get 200 or 300 resumes, and you've got to weed through those.
And sometimes the pass of the lot of resumes become almost a clog in the system, so we're actively out there looking for the right kind of people, either experienced or even if they're not, then there's a TTM program that we slide them into. So we're pretty optimistic we're on the right track, and it's just about, Rob said it today, management focus, and it's about execution.
And we know we do this. We're doing it right now and that causes us to have a fair bit of optimism about where we're headed here.
Operator
And your next question comes from Scott Stember with Sidoti & Company.
Scott L. Stember - Sidoti & Company, LLC
Could you talk about -- I know you guys said it was a little early to comment on expectations from EquipmentOne. But in the first 7 weeks, what has anecdotal commentary about any reaction from the new customer base that you're going after?
Robert S. Armstrong
Scott, it's Bob. Yes, the reason it's early is because we really haven't marketed or promoted it yet, so the volume -- the transaction volume is quite low.
So it's tough to predict as much as I'd like to. What we have seen is the migration of the existing or legacy AssetNation customers from several of their marketplaces.
We've moved them over to EquipmentOne, and that's -- he's busy transacting on there right now. And then we're getting good feedback from them.
Things they like, things they don't like, things that could be better, things they don't want to see anymore. And that's what we're enjoying, if you like, during the initial launch phase is the ability to make changes based on feedback from people who are actively using the site.
So it's been very successful in that sense. What is definitely too soon to talk about is trends of transactions or prices or anything.
The volume of transactions is low on purpose. We're in an initial launch phase, so that we can get ourselves ready for commercial launch.
It's working. It's great.
The transactions are there. Things are selling.
People are happy, but it's so small compared to where we think it's going to be that I'm not even internally making predictions based on this.
Scott L. Stember - Sidoti & Company, LLC
And last question. Can you talk about what the costs have been or relatively speaking for EquipmentOne and what will be continuing into 2013?
Robert S. Armstrong
So the cost of EquipmentOne, is that it?
Scott L. Stember - Sidoti & Company, LLC
Yes, the cost to get it up and running?
Robert S. Armstrong
So when we bought AssetNation, it was a profitable company. And what we've simply done is reinvest their EBITDA, if you like, into the development.
And so our guidance through the end of 2012 and it continues through 2013 is immaterial revenues and expenses and neutral impact in EBITDA because we're simply reinvesting what the business generates into the business. And that some of the guidance from last year, we're maintaining that now.
Operator
And your next question comes from Bert Powell of BMO Capital.
Bert Powell - BMO Capital Markets Canada
Steve, I'm wondering if you could just give us some commentary in terms of the equipment that is showing up at auction these days or what you're bidding on. What's the average age look and hours?
Because we talk about pricing, the pricing's always relative to kind of the same-store sales. But if the average age is going up, you would expect that the average price is going down.
Can you help me with that a little bit?
Steven C. Simpson
I mean, the age of the assets we are selling, I would say to you, is coming up somewhat. And given the lack of manufactured new stuff and the consumption by the buyers in '09 and '10, does that make sense as far as those items coming in with more hours than they typically would than guys holding on to them longer?
But generally speaking, we're starting to see more flow of the later -- the really, really late stuff with some more hour and some of the new stuff which is [indiscernible] some of our auction sales and where we seeing nice results on those. But the mix, I think, will continue to evolve and get back to sort of more normalized levels over the next couple of years.
But the age, the pricing, interesting enough, though, the some [ph] hours on it of very good quality from a very good home with good history is still bringing good money than some cases coming up. It's the more questionable stuff that has fallen off and we saw some of it this past week that didn't have a lot of history attached to it and the price was affected.
Bert Powell - BMO Capital Markets Canada
And just second question, Bob, just in terms of EquipmentOne and the commercial launch happening later on, is the fee structure that's in place today, is that what's contemplated at commercial launch or is that going to evolve as well?
Robert S. Armstrong
So the fee structures in place today -- think of this as going over the detail here. There's 2 types of fee structures, if you like.
There's the buy side and the sell side. The buy side, the fee structures are 10% buyers premium, and there is no intention to change that.
And then on the sales side, there's fees and stuff depending on the nature of services we're providing. And so we have -- right now, we're working with corporate accounts, and there's a fee of some sort they pay.
It's very different than the fee that an individual like Bert's Landscaping would pay. So April, you'll be able to come on and list your backhoe then there'll be a fee structure for you that's quite different than large corporate accounts because you'll be doing a fully self-service type model.
Bert Powell - BMO Capital Markets Canada
So the 10% fee for the seller is capped though, correct? Under the current structure, like there's a cap at $2,500?
Robert S. Armstrong
So there's 2 10%. Let me make it clear.
There's a 10% buyers premium. There's no cap on that.
And that's the vast majority of the revenue that EquipmentOne is and will generate. And then you're right, on the individual seller, if he -- if Bert's Landscaping listed a backhoe, the current structure is a $50 listing fee plus 10% on the first $2,500, so there's your cap.
So in other words, grand total of $50 plus $250 equals $300. That's the most you would pay under that structure.
Bert Powell - BMO Capital Markets Canada
But the buyer pays 10%.
Peter James Blake
The buyer gets 10% all the way.
Operator
And your next question comes from Steve Volkmann with Jefferies & Co.
Chirag Patel - Jefferies & Company, Inc., Research Division
Chirag Patel stepping in for Steve Volkmann here. Just one quick question on EquipmentOne as we go forward, and even in the fourth quarter, was there any revenue recognized from AssetNation in 4Q?
Robert S. Armstrong
Yes. It's Bob here.
Yes, in 2012 in Q4, all of the revenues of AssetNation for prelaunch of EquipmentOne were included in our auction revenues but they were immaterial.
Chirag Patel - Jefferies & Company, Inc., Research Division
Okay. And that will definitely have an impact of some sort on your auction revenue rate as we go forward.
Just there isn't going to be anything on the GAP side, so it'll just be revenue straight into that line. How is that going to impact your current guidance for the 11% to 11.75%?
I would assume that it would add a significant amount to that percentage going forward. Just $5 million will probably give you another 30 to 40 bps per quarter?
Robert S. Armstrong
No, not quite because while there isn't GAP, there's something we called GTV, gross transaction value. For the value of everything sold on EquipmentOne and other AssetNation marketplaces, it's called -- internally we call it GTV.
Right now, it's being included in GAP because it's immaterial. Perhaps down the road, we will break it out and disclose it separately.
But the addition of the AssetNation businesses and EquipmentOne has a positive impact on GAP, a positive impact on revenues, and then on, I guess, a total negative impact on expenses, an incremental effect on expenses. A lot of the line items are impacted and we're not expecting any material change to what is now called an auction revenue rate.
Stephen E. Volkmann - Jefferies & Company, Inc., Research Division
Okay, perfect. And then in that case, I just had one quick question on the additional headcount.
What's the additional cost associated with that as well in 2013?
Robert A. McLeod
Yes. Well, for sure, there's incremental cost because when you hire new sales person, they're -- you're paying them a salary, you're providing motor vehicle obviously depending on when you hire them in the year.
They have a pro-rated effect. But that's all -- obviously it's all anticipated.
We're very -- we have a very rigorous program of determining how many territory managers you hire, where we hire them, and in some sense, when we hire them as well. Obviously, if we find a great candidate, we will hire them, and we will create a position for them, maybe a few months earlier than we might have originally intended.
But for sure there's incremental costs to that, but the revenue generated from them is -- more than compensates for that.
Robert K. Mackay
It's all integrated into our guidance numbers, too.
Robert S. Armstrong
Yes.
Operator
Your next question comes from Gary Prestopino with Barrington Research.
Gary F. Prestopino - Barrington Research Associates, Inc., Research Division
Could you give us some idea embedded in your guidance what you think the U.S. market will do this year in terms of the percentage change?
I mean you said it was basically flat this year, I'm talking about GAAP. So what are you looking at from the U.S.
market this year for growth in terms of GAP? Can you give us that?
Robert S. Armstrong
Gary, it's Rob. No, generally we don't give that, that much.
Thanks for asking though. Not much detailed guidance.
But for sure, the U.S. is our biggest market.
It's half of our business more or less. And we're seeing, I guess, a little bit more constructive or realistic positive signs in the marketplace than we have in the last couple of years, so we're expecting growth in the U.S.
and we're expecting increased used equipment transactions in the marketplace. It's fair to say we've seen elevating demand in the United States for product relative to elsewhere in the world, so when we look at equipment -- especially in Orlando, equipment that's bought and where it goes to increasing demand in the United States, which has had a bit of a reverse in what we've seen in prior years where you've seen a rather lowest -- lower U.S.
dollar and lots of international demand, Canada, Australia, Europe or maybe South America. So interesting to watch that.
And it's supportive of some of the broader macro factors you can see, U.S. construction spending going up to $885 million range, $1 billion, annualized and how it starts up.
All the metrics are sort of moving in the right direction, and we're just saying anecdotally what we hear from our people that we talk to on the street and are digging post holes and putting up schools for a living. They're walking with a bit of a spring in their step relative to prior years.
Gary F. Prestopino - Barrington Research Associates, Inc., Research Division
And then just there's a lot of questions swirling around what you're doing with the at risk business. I mean, you said you're more focused on evaluation group, I guess, with your sales people.
Was the prior model where the -- possibly the salesperson had more leeway in structuring a deal and you may have taken that away from them now or just -- you're just having both entities work closely together or am I totally off base?
Robert K. Mackay
It's Rob here. It's not necessarily the salesman.
Each management level in the company from the regional level up to Steve and myself have eyes and ears on deals and are involved in specific levels of deal based on the size of it. So we've just done some adjustments to that.
And it's what resulted in some positive effects in Q4, and we're just going to hold the line on it as we go into 2013.
Robert A. McLeod
Gary, it's Rob McLeod. I guess, be aware that the market's changing all the time.
And as we're going through our business, we are -- we and the rest of the marketplace are chasing prices up, we're chasing prices down. And at some of those inflection points, we may get caught on a few deals just because the -- our ability to strictly anticipate when that inflection point happens.
And so having the intelligence in regards to what's happening in the marketplace and in pricing and in demand for particular types of equipment, that's really probably the biggest impact on our at-risk. And so I didn't want to leave -- have you leave with the impression that we can pull tools out of the toolbox and make every at risk deal fly through the roof.
Operator
And your next question comes from with Scott Schneeberger with Oppenheimer.
Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division
Can we spend just a minute on the Orlando auction. The GAP was a good bit lower than what it was in a record year last year.
Could you just kind of compare and contrast the 2 years on items sold -- the number of items sold, perhaps mix? Any color you care to share about auction revenue rate between the 2 years?
Just any incremental color on the compares?
Steven C. Simpson
Steve Simpson here. So the access or the GAP, if you will, from 2 sales, so this year, the lot count was down I think 500 [ph].
And I really -- I think some of the stuff that I think occurred as it relates to that. I mean, we've seen some increased activity in the market generally speaking in the southeast, just as localized in Florida.
I mean we were there all week, and there is a lot of stuff going on in Florida. They're building houses again and apartments and roadwork is going on.
And a lot of the assets we get from the -- for that sale do come from the local area, albeit it's not -- it's not on a regular basis you're getting stuff from all the Southeastern sometimes further apart. But with the increased activity in the U.S.
market, I think some of that tightened up a little bit. Generally speaking, we get a lot of assets in there from the rental companies, which this year that was down a little bit as well.
The rental guys are -- there's a level of assets that are engaged and active work in the field, they're at all-time highs so the quality of some of those assets were down for sure. And then some of the quantity of the higher-priced late, late model low-hour stuff was also down a little bit.
So that has some effect in it. But generally speaking, the swings in that Orlando sales, we were actually looking at the numbers yesterday for the last 5 years.
And that thing has peaks and valleys just like [indiscernible] does. I mean it's so hard to off and [indiscernible] any quarter or any given sale from any year.
And this year was a perfect example of that.
Robert A. McLeod
[indiscernible] particular trend in Orlando up or down. It's sometimes a bit choppy.
Really it's selling what's for sale. So as Steve said, the product that was available for sale primarily from the Southeast marketplace in the U.S.
It's active down there right now. And I don't know if you guys had a chance to get down to that marketplace and take a bit of a holiday.
But you're driving around road projects and delays in construction because a lot of stuff is happening down there. That is characteristic a little bit of our comments around what's going on in the United States today.
It's a little bit more active, more things going on. There's a little more -- particularly in the housing market, a little more activity.
We saw prices of things like telehandlers and backhoes, which are items that are used -- easily used in the housing construction market as being up. So those are all good signs, and I'd like to say gives us cause for optimism about where the U.S.
is coming out of its -- if it's past its low ebb.
Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division
I guess you mentioned on a previous question, you're seeing more U.S. purchasers as opposed to international.
Could you put any quantification on that this year versus prior years? And then along that same, to keep it to a second question 2 parts.
What is in guidance with regard to your -- the China entry, how much is that in -- how much should we model in out years for that to ramp?
Steven C. Simpson
It's Steve Simpson here. And I'll take the first part of the question, when you were talking about the U.S.
buyers. So I've been at most of the sales out of the gate here in the U.S.
And the U.S. activity from U.S.
buyers is definitely coming up. The confidence from those guys is noticeably different and better.
And the activity that we saw in Orlando and Phoenix and Houston and Las Vegas and Tipton. I mean, it was very positive.
And the confidence in the buyer is just talking everybody at all the sales, again, noticeably different. And it sure feels like those guys are focused on going forward.
There's more work out there, the pricing levels for some of the job is coming up. There's a lot more activity.
So it's as positive as I have seen it for 3-plus years for sure. And it feels like, but we said this before, it feels like this thing's going to get some legs and it's going to be -- it's going to flow through the year.
Robert A. McLeod
Scott, it's Rob, and I'll take your third question. Going into the China market is just like every other new jurisdiction that we go into.
We go into that marketplace with the brand-new product and unreserved auction, a truly unreserved auction, a Ritchie Bros. auction, where we are training the marketplace, both the buyers and the sellers, what that means and how it works and providing that level of transparency in the marketplace.
So it is a slow training process. Exactly the same as we went into Alberta or into Texas or into Holland.
And so we're not -- don't build a huge GAP profile for China auctions in 2013 from 2014 because by our history, it takes a while for us to train the marketplace and to build and to mend and cement those relationships with the customers to participate.
Operator
Your next question comes from Craig Kennison with Robert W. Baird.
Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division
On the 75-25 salary commission structure that you mentioned earlier, I know that's been part of your model for a while, but did you contemplate changing that mix as you changed some of the metrics that inform that compensations?
Steven C. Simpson
Steve Simpson here. We definitely contemplated that.
There was lots of discussion about it. We had -- we put together a committee of -- I think there was probably 80% sales guys and then there's a couple of guys from HR and some of the accounting guys in the room.
And we boxed it around for days deciding what made the most sense. And just to keep our guys focused as one team.
In the end, we decided it was not the right thing to do to change the balance. And if we took it too far to the other way where the guys are more focused on the bonus than they were their salary, we thought we'd lose some of the one team effect.
And so often our businesses is very spread out, and a lot of our customers have things going on all over the country or all over the world, and it takes multiple guys or multiple people, if you will, to get the deals done and do the things that we do. So we think the mix is right.
It's worked well for 50-some-odd years, and all we did was make some appropriate changes to focus it on revenue rather than GAP. And I think it's going to work out well.
It's been well received by the guys. I mean, they're excited about it.
They're excited about the clarity. And I think it's going to be a great year for everybody.
Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division
And with respect to EquipmentOne, it seems like you view it as an entirely separate platform. But to what extent do you see the sales force cross-selling those services to the same customers?
Robert A. McLeod
Sure, Craig. We've actually did give a very clear instructions to our sales force that they not be actively selling this products with one exception.
We have a group we call the strategic accounts group, which is a sales force that calls on the Fortune 500 type of companies that really require a full asset disposition management type program. So we have a sales force that calls on those people.
But the vast majority of EquipmentOne users are expected to be self-serve, not being called on by any sales people at all. And that means that the Ritchie Bros.
sales force will be selling the auctions. They are currently in Sydney calling on people whose needs are met by [indiscernible].
If they happen to stumble across a guy who's not in that category and they've had 4 meetings they still can't solve the problem, they can give the guy a brochure, but we do not expect or want our sales guys to be selling a suite. It is not model.
It's a very different model.
Operator
And your last question comes from Ben Cherniavsky with Raymond James.
Ben Cherniavsky - Raymond James Ltd., Research Division
So my 2 questions. On EquipmentOne, I can appreciate that you are seeing it as sort of earnings neutral this year.
But obviously, you didn't buy the business for it to be earnings neutral. So what can you tell us or when can you start telling us how you think this financially impacts your business as we think longer term?
Robert A. McLeod
Ben, it's Rob. I suspect that when we give guidance for next year, that'll be an appropriate time for us to tell you what we expect in terms of 2014, which my absolute expectation, if I'm still employed by Ritchie Bros., is positive earnings contribution.
It's just to give any guidance. So this time next year, you'll probably hear from us on that.
Ben Cherniavsky - Raymond James Ltd., Research Division
What about like a main topic? Obviously, when you bought the business and did some valuation on it, you had some idea what this thing might be able to do.
I mean what -- can you tell us what the opportunity is, the size, what the long-term potential is?
Robert A. McLeod
Yes. I like your question.
We would not have gone into this if we didn't think it could be huge. And it has the potential to be a $1 billion-plus marketplace.
But we don't know how fast it gets there, at what speed, but it has the potential to be there. If it didn't have the potential to do that, we wouldn't be here.
Ben Cherniavsky - Raymond James Ltd., Research Division
Okay, so that's helpful. So you think it could one day add as much as $1 billion?
Robert A. McLeod
Sure. Absolutely.
And that's GAP not revenue.
Ben Cherniavsky - Raymond James Ltd., Research Division
And if that counts as one question, well, my second one is that I think Rob made some comments about the G&A in the fourth quarter and some of it being impacted by AssetNation. And I'm just a little confused because I remember very vividly when you guys bought that business and there were quite a few questions about whether or not it was going to be a drag on your numbers.
And you felt very strongly it would be immaterial both to revenue and costs, and that it wouldn't be another one of those SG&A items that you'd have to sort of extract and manipulate, all the other sorts of things. So what's changed there?
Why did that end up being something now that you feel you need to pull out?
Robert A. McLeod
It was a onetime acquisition cost, which just like GAAP, generally accepted accounting principles GAAP, end up in G&A. So we're just identifying that, that's not a recurring item.
Robert K. Mackay
Well, the IFRS rules are really applying here now, right? [indiscernible] forgot that stuff.
Under IFRS, all transaction costs have to be expensed at the time the deal's done, Ben, so we hit that one big block in G&A. But your question was to Q4, I think, so Rob [indiscernible]
Ben Cherniavsky - Raymond James Ltd., Research Division
Yes, Q4 because Rob said it was one of the reasons why G&A was up in Q4.
Robert A. McLeod
Right.
Steven C. Simpson
Right. But also it's EBITDA neutral because we have revenue as well.
But when you isolate those individual line items, they had some impact. It's not a huge impact, but it has some impact for sure but on the bottom line as usual.
That's what we were guiding to.
Ben Cherniavsky - Raymond James Ltd., Research Division
No, I mean the question was very clearly about whether or not it was going to be another one of these G&A items that was going to start showing up. Because clearly a lot of people have been focused on G&A.
And I think rightfully so that it needs to be -- needs to get some operating leverage here. So I remember very clearly the discussion that -- the concern that when you bought this, it was going to be another one of these things we had to pull out.
And at the time, the message was it wasn't, but we can take the discussion offline if you want.
Robert K. Mackay
Yes, I think it's more highlighted I think in the filing that we did today, Ben, where there's a lift in Q4 '11 versus Q4 '12. And one of the change items in that is, of course, a line item impact of the G&A from AssetNation.
There's like 80-odd employees in that group, so you've got costs in 2012 Q4 that didn't occur in 2011 Q4. And I think that's what's Rob's comment is relative to the prior period.
Robert A. McLeod
And revenue as well.
Robert K. Mackay
And the revenue as well, yes.
Peter James Blake
Okay. Thanks, Candice.
And I appreciate everybody's attendance on the call today. We look forward to talking to you in Q1.
Thanks.
Operator
And this concludes today's conference call. You may now disconnect.