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Ritchie Bros. Auctioneers Incorporated (NYSE:RBA)

Q1 2010 Earnings Call

May 4, 2010 11:00 a.m. ET

Executives

Peter Blake - CEO

Rob Mackay - President

Jeremy Black - Vice President, Business Development

Rob McLeod - CFO

Bob Armstrong - Chief Operating Officer

Analysts

Bert Powell - BMO Capital

David Wells - Thompson Research Group

Scott Stember - Sidoti & Company

Ben Cherniavsky - Raymond James

Craig Kennison - Robert W. Baird

Gary Prestopino - Barrington Research

Mike Marburg - Ramsey

Cyrus de Weck - QVT

Operator

Good morning. My name is Tracy and I will be your conference operator today. At this time I would like to welcome everyone to the Ritchie Brothers Auctioneers 2010 Q1 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks will be a question and answer session. (Operator Instructions).

Thank you. Mr. Peter Blake, you may begin your conference.

Peter Blake

Thanks, Tracy. Good morning, everyone and thanks for joining us today on the Ritchie Brothers Auctioneers investor conference call for the quarter ended March 31, 2010. I'm Peter Blake, CEO of Ritchie Brothers. I'm joined by Bob Armstrong, our Chief Operating Officer, Rob Mackay, our President, Rob McLeod, our CFO and Jeremy Black, our VP of Business Development and Corporate Secretary.

Before we get into the details of what's happening so far in 2010, I'd like to make a Safe Harbor statement. The following discussion will include forward looking statements as defined by SEC and Canadian rules and regulations. Comments that are not statements of fact are considered forward-looking and involve risks and uncertainties.

These risks and uncertainties are detailed from time to time in our SEC and Canadian securities filings, including our management's discussion and analysis of financial condition and results of operations for the period ended March 31, 2010 which will be filed this morning and is available on the SEC, SEDAR and company websites. 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 we'll speak only as of today's date.

We started seeing many signs of improvement at our auctions in the first quarter of 2010, signs that have provided us a measure of optimism for an economic recovery. However, we remain cautious on the outlook in several of our major markets, including the U.S. and Europe. Our GAAP for the quarter came in at $730 million, which is within the expected range we discussed on our last call.

We had anticipated the uncertain market conditions from 2009 to continue into the first part of Q1 and that’s exactly what we experienced. Right now we are optimistic that auction values and customer optimism are showing signs of sustained improvement and we are still expecting accelerating growth from our continued improving economies through the year.

Our caution stems from lingering uncertainty in economic and construction activity levels in the U.S. and Europe. Before I continue, I should point out that all of our comments today about gross auction proceeds; auction revenues and auction revenue rate exclude the $47 million in gross auction proceeds and $850,000 in auction revenues from the auction of the yacht Apoise in March 2010.

This was by far the largest single item we have ever sold and it was an exciting auction. However due to its unique nature we are excluding the results from our discussions so as not to skew our performance metrics for the quarter. It may seem disappointing to some that our adjusted net earnings for the first quarter were down $0.07, compared to the first quarter of 2009. Yet we anticipated this erosion and executed pretty much on plan for our first quarter.

The decline in earnings in Q1 was mainly due to our continued investments in our people, auction sites and systems and processes in preparation for targeted future growth. As many of you have heard us say in the past, we do not manage the business for a single quarter. We invest capital and build our team for longer-term results.

Recall that our sales force grew 14% last year. We grew an additional net 4% in the first quarter of this year and this, combined with overall FX changes have had a meaningful impact on our G&A. We will talk in more detail in a few minutes about our G&A and earnings guidance but let me assure you that our Q1 results were in line with our plan and we remain on track for the flat earnings that we forecasted on our last call.

Given the uncertainty and fragility of the global used equipment market and to ensure that we aren't caught flat-footed if things take a turn for the worse, we have taken a number of proactive steps to slow the growth in our G&A for the balance of 2010. Until we see a little more sustained certainty in the market, we intend to be extra vigilant about our operating costs growth.

We had some very exciting developments in the quarter that I would like to highlight before we start addressing some of the questions we might expect you have. We made significant steps forward in continuing implementation of our sales force automation tool, launching our new powerful industry leading website and commencing the rollout of our new timed auction system.

Each of these innovations has the potential to have a highly positive impact on our business. Our sales force automation tool has been very well received by our team and we are already seeing signs of the benefit this tool will have on our productivity. Our new website was launched two weeks ago and the feedback we have received to date has been very favorable.

The new site addresses what our customers have told us is most important when buying equipment online, more detailed high-resolution zoomable photographs and better ability to compare multiple units. Our customer focus groups and other research indicated that these features rank much higher than written inspection reports in terms of importance.

Almost 90% of our customers said they prefer to trust their own judgment rather than rely on third-party inspection reports. Another important aspect of the new site is that we have a full features in 21 languages, which makes it significantly more appealing to a much broader range of customers. This is particularly critical, considering the growth of developing economies is expected to outpace that of developed economies in the near term.

In 2009, we had more than 2.8 million purely unique visitors to our website, which represents growth of 23% over 2008. Now with our new website, we believe it will prove to be a very powerful tool for gathering market intelligence and for generating leads, particularly because the vast majority of these visitors are not yet part of our customer database.

Our new website is allowing us to extract much more information about and develop richer relationships with these customers. Our timed auction system is a computerized auction process that enables bidders to place bids online from kiosks at the auction site or through their own computers, blackberries, iPhones, or other PDAs.

The new system has been rolled out so far in nine of our auction sites with 21 more to follow, and we are selling many of the lower value items such as buckets, equipment attachments and other more consumer oriented items using this system. Our bidders like the system, because it allows internet bidder participation and is much more convenient and flexible, allowing them to place bids on their own schedule rather than having to wait around at the auction for lower-value items to be sold.

Consignors like the system because it has resulted in overall higher proceeds. These lower value items are now receiving more bids because of the convenience factor. And we like the timed auction system because it generates greater efficiencies and lower costs and allows us to focus our efforts where we can add the most value, the sale of higher value equipment items.

A number of our auction sites that have enjoyed the benefits of the new system have been able to eliminate entire auction days, which is a tremendous win for controlling operating costs and improving the customer experience. So in all we are very positive about the benefits we are already seeing from our recently introduced innovations.

Rob Mackay, can you offer some commentary on the global used equipment market.

Rob Mackay

Thanks, Pete. You may recall in our past calls, our comments about the unique environment experience in 2009, particularly in the U.S. and spreading into Europe in the latter part of the year. The uniquely synchronized global downturn of 2009 resulted in many customers choosing to park their idle equipment rather than sell it at reduced market values or for less than the value of the associated debt.

We talked about the state of paralysis in the U.S. market and similar circumstances spreading into the European market as well. While there have been promising signs of improvement at our auctions to date in 2010, many owners have remained on the sidelines and quite frankly it may be too soon to say if the used equipment market is truly out of the woods yet.

As demand has picked up somewhat, we are pleased to see that equipment values at our auctions have continued the upward trend that we mentioned in our last call and we continue to see consistently higher auction values across most categories of equipment, particularly for later model, low-hour gear.

The increased demand for equipment in most domestic markets has been intensified by a marked increase in interest from international buyers. We have noticed with the weaker U.S. dollar, foreign bidders have become more active at U.S. auctions on any product line that has local parts and service support in their home markets.

Specific equipment categories with increased recent interest in recent sales include motor graders, which are often destined to the Middle East and Asia and hydraulic excavators which our Asian customers are snapping up in greater numbers than we've seen in many years. Our new website greatly enhances the ability of those bidders with limited English abilities to interact with us and bid on equipment at auctions around the globe.

Uncertainty in the market continues to exist with many customers in the U.S. and Europe. While supply is tightening on low-hour, late-model used equipment, other product remains in the hands of the owners who are still reluctant to sell the equipment until equipment values improve more or there are other signs of a sustained recovery in the economy.

It's still a curious market and we remain cautious about the sustainability, particularly because there's not yet been a material uptick in the volume of available work in the U.S., which is what typically drives confidence amongst contractors, dealers and the banks. We have started to benefit from the recent optimism and increased auction values and are comfortable that the longer it carries on, the more positive the impact should be on the confidence of our customer base. However at this point in time, the second half of 2010 is still somewhat cloudy.

Jeremy, do you want to talk about what it means for our gross auction proceeds guidance for the year?

Jeremy Black

Thanks, Rob. While we remain focused on flat adjusted earnings in 2010 in light of the challenging conditions with which we are faced, we also know that GAAP is an important metric for the investor community. It is important for us as well, but we do want to emphasize again that adjusted earnings is one of our more important metrics and in the current environment, auction revenues is very important as well.

With that said, I can tell you that we have reevaluated our GAAP target for 2010, and after much back and forth with our sales team, we are reducing our expectations for GAAP for 2010 and now believe a realistic target to be in a range of $3.9 billion for the year, which is still an 11.7% increase over 2009 GAAP.

As Rob just talked about, the recovery is still shaky and we are expecting 2010 to be another unusual year. Our ability to predict the market in the face of the many uncertain variables at play is challenging, as it continues to be for many organizations these days. After our last call, we had a number of people express concern about the aggressiveness of our $4 billion GAAP target for the year. As a result, we want to discuss some of the key drivers that we expect to help us as we aim for GAAP growth in 2010.

One is the 14% growth of our sales force in 2009. This is a key driver of our gross auction proceeds growth and these new sales reps will help us increase GAAP in 2010. A second lever is increasing equipment values. As Rob described, we're seeing improvement in auction values so far in 2010. And a third contributor is currency.

If the geographic distribution of our GAAP in 2010 is roughly consistent with 2009 and the Canadian and Australian dollars in particular remain strong relative to the U.S. dollar, the currency impact alone would provide a roughly $100 million increase in our GAAP. And while it is always possible we may come in with GAAP below our target range, we are confident about our ability to deliver our 2010 earnings target outlined earlier.

We are projecting Q2 gross auction proceeds to come in somewhere in the $1 billion range. This means we are expecting a meaningful acceleration of our growth during the second half of the year, which is not unlike what we have already heard from a number of other public companies recently.

It is reassuring to see that our recent auctions in Q2 have pretty consistently outperformed our expected GAAP numbers, and we recently held our largest ever sales in Salt Lake City and Albuquerque. This gives us some confidence for the rest of the year, but our crystal ball remains murky in this uncertain environment.

Rob McLeod

Good morning. It's Rob McLeod. I'm here to add that the dynamics between gross auction proceeds and our auction revenue rate that we experienced in 2009 and talked about in the last call has continued to play out in 2010. We have continued to be successful in managing our at-risk business in the current opaque environment by understanding the competitive pressures on getting a deal done. Those competitive pressures include other sales channels as well as debt levels.

As a result, our auction revenue rate came in at 11.33% for the quarter, significantly above our expected range. Our auction revenue rate also benefited from a slightly stronger straight commission rate and higher fees. So although GAAP contracted during the quarter compared to quarter one last year, we were able to achieve essentially flat auction revenues.

If the market continues to improve, we expect those competitive pressures to intensify and so it is important to acknowledge the inverse relationship between gross auction proceeds and our auction revenue rate. It is perhaps more important in 2010 than it has been in the past to give some color around our auction revenue expectation.

We believe we can achieve auction revenue growth in the 10% to 15% range in 2010. But we still can't be certain what portion will come from GAAP growth and what portion will come from achieving an above-trend auction revenue rate. At the end of the day, what we're saying is that we have more confidence around our auction revenues and earnings guidance for 2010 than we do around our GAAP target.

I'm sure many of you are thinking that it's about time we increase our revenue rate guidance based on our above-trend experience over the last five quarters. We now believe that our auction revenue rate for 2010 will be above our expected range of 9.75% to 10.25%. But do not expect this well above-trend rate to be sustainable over the long term.

Bob Armstrong

Bob Armstrong here and I'd like to briefly talk about our CapEx plans. We are still on track to spend roughly $100 million in 2010, and most of this spend relates to projects that are nearing completion. But we are looking closely at the timing of new projects in 2011 and future years.

Investments in our auction site network and business systems are very important to sustain efficient and profitable growth over the long-term but we are mindful of the impact of these investments on our earnings and our return on invested capital. We are expecting slower-than usual earnings growth, which is prompting us to follow a more prudent approach with our investments.

We are working on sustaining and enhancing our return on invested capital in the near term by working to deploy capital in an optimal manner and we are not curtailing auction site development projects but we are looking at more long term leases with purchase options and other creative ways to tie up property over the long term without necessarily tying up a large amount of capital.

Fortunately we have plenty of capacity in our network, thanks to investments made in recent years. On future conference calls, once we have solidified our 2011 CapEx plans, we will provide you with more specific information about our planned investment levels. In addition to looking for ways to optimize our capital investments, we have been looking long and hard at our operating plan for 2010 and have implemented contingency plans to minimize our G&A growth.

We've implemented a number of cost control initiatives and delayed non-sales hires. Although we have trimmed costs and curtailed new spending in many areas, we have maintained our commitment to areas that we see as crucial to our long term growth and where we need to support the investments made in recent years so we can obtain full benefit.

We are very focused on adjusted earnings growth and we are taking difficult but necessary steps to better match the timing of some expenditures to the growth of our revenues. An example of what I'm talking about is our recently implemented systems, the Oracle ERP system, sales force automation, [fame], our new website, and our new timed auction system.

Each of these initiatives is an important foundational step for the future growth and is critical to our ability to grow GAAP to $10 billion and beyond and they need to be supported and maintained from day one. We do not want to jeopardize the success of these strategic investments. So support for them continues as planned while other less strategic areas are being reviewed with an eye to managing our expenditure levels.

Jeremy Black

It's Jeremy again. We should probably talk briefly about the expected impact of currency in the near term. In light of recent developments in Europe, the meaningful drop in the value of the euro relative to the U.S. dollar will have a direct impact on certain components of our income statement.

For example, if the value of the euro continues to fall, our European GAAP will be translated into U.S. dollars for reporting purposes at a lower rate than planned. However, our European overhead from our administrative office in the Netherlands and soon to be five auction sites in Europe will also be translated as a lower rate, meaning lower G&A. Our Canadian dollar FX forecast is looking pretty good as the Canadian dollar is currently trending as expected.

Rob McLeod

This is Rob McLeod again. I might add that there is a similar foreign exchange impact on direct expenses, depreciation and G&A. Exchange rate changes from quarter one 2009 to quarter one 2010 alone resulted in a $3.8 million increase in G&A in the first quarter of this year and that accounts for nearly 10% of the increase in quarter one 2010 G&A compared to quarter one last year. The balance of the increase was mainly due to higher headcount and higher expenses related to our new facilities.

As we mentioned in our last call, we're looking at significant depreciation expense growth in 2010, compared to last year, primarily as a result of our recent investment in systems and auction facilities. However, it will not be as large as the 40% we predicted, in part because of an error correction recorded in quarter one related to the classification of assets out of depreciable categories and into non-depreciable categories.

The effect of this correction was that our depreciation expense in quarter one was reduced by $2.7 million, reflecting excess depreciation expense taken in prior years. This adjustment, plus the fact that a depreciation expense for the remainder of the year will be lower than originally expected, means that our depreciation growth should be in the range of 25% for the year.

Peter Blake

Okay. Thanks, Rob. I'm going to conclude our prepared comments so we can field some of your questions. Let me briefly recap some of the main points we covered today.

While the recent equipment pricing trends we've experienced in Q1 are encouraging, we remain cautious around the economic environment and outlook for the balance of 2010. As such, we are anticipating that GAAP will likely be in a range of $3.9 billion for the year, being an 11.7% increase over 2009, with an expected auction revenue rate above the high end of our traditional 9.75% to 10.25% range.

We are laser focused on driving adjusted earnings per share and are taking the steps necessary to match the timing of G&A growth, capital projects and revenue growth. We are still expecting flat adjusted earnings for 2010 and believe this should drive free cash flow for the year.

We're working hard to make the right investment decisions to set our company up for success over the long-term. Our strategy is very sound, our people are very engaged and our business model remains very well positioned for continued future growth. We look forward to sharing more information with you in early August about the rest of Q2 and the balance of 2010. But in the meantime we're going to stay busy. Tracy, can you please open the call for questions?

Question-and-Answer Session

Operator

(Operator Instructions). And your first question comes from the line of Bert Powell from BMO Capital. Your line is open.

Bert Powell - BMO Capital

Rob, what's the total depreciation adjustment that we should expect this year for the restatement. Maybe it's not the right way to categorize it?

Rob Mackay

Yeah, the correction from prior year's depreciation was $2.7 million that was booked in quarter one. And then for the balance of the year, it's about $1 million lower than it might have been otherwise.

Bert Powell - BMO Capital

Per quarter or absolute for the rest of the year?

Rob Mackay

Total. Four quarters.

Bert Powell - BMO Capital

Okay, total. And just looking at the ARR, this is one of the first quarters I recall where you haven't emphasized the underwritten business the overriding contributor, that the straight commission and the fee business were much higher. I'm wondering if you could just give us a little bit more color on what's going on there.

Rob McLeod

It's Rob McLeod. I guess we can emphasize the performance of our at-risk business because it's similar to last year in quarter one. And so the at-risk business is still performing really well and so that for sure is the main driver of the higher rate compared to our expected range. But in quarter one this year, we did see a slight uptick in our straight commission rate and our fee revenue. But the majority of the above-range rate is due to the performance of the at-risk business for sure, and it continues to be.

Bert Powell - BMO Capital

Okay. So when you talk about competition coming back into the market, are you referring to more the dealers, brokers, other auction companies? Can you just maybe help us understand that a little bit?

Rob Mackay

Rob Mackay here. The competition is slowly coming back into the market from all sorts of those folks that you mentioned. Right now the uncertainty in the market is still holding some of them at bay, if you will, or they prefer to take less risky deals or pursue less risky business. We've seen a marked increase in pricing but the sustainability of it is a big question in most people's minds. So there's dealers out there today and there's end users out there today that are chasing the late-model, low-hour equipment. That is what's pushing the price up and it's making deals that comprise that sort of asset more competitive.

Bert Powell - BMO Capital

So is it likely then, that the average age at the auctions is now going to start to tick up, given that the short end of the curve is becoming more competitive?

Rob Mackay

I wouldn't say it would tick up. The supply of the late-model, low-hour stuff is diminishing. Hence, the more competitive nature on it by all the forces in the marketplace. So there may or may not be more of it into our sales depending up on who we're competing with.

Peter Blake

It's Pete here, Bert. You can see the reaction of the OEMs that are out there that some of the guys are taking steps forward to ramp up production in some of the key equipment categories. So they're trying to react to this shortage of later-model, low-hour equipment. But there's still lots of stuff out there and lots of stuff that's kind of still sitting. Even though the market has turned somewhat in terms of pricing, there's still a level of uncertainty.

I know we mentioned that about the impact of the lack of clarity longer term, and the less than high comfort level with particularly guys in the U.S. about where the jobs are coming from. Lots of those sustainability and infrastructure type jobs are being let. But they're usually big jobs. They're usually highly competitive. Instead of having four or five bidders, there's 10 or 12 or 15 bidders on them. So there's an awful lot of things that are happening in the marketplace that are not usual, I guess is the best way to put it.

Bert Powell - BMO Capital

So your view is still very much, it's the uncertainty and not the competition as we move into the tight environment, that people are still staying on the sidelines?

Peter Blake

Yeah, it's probably a combination of those two, I think.

Rob Mackay

The longer the certainty remains in the market, or prices remain constant and the confidence level returns back to the contractor and dealer base that they see a future vision of work ahead of them, then the competitive nature of the market will increase. But as it is right now, people are still uncertain as to whether pricing is going to stay where it is, because lots of the market, predominantly in the U.S. is not seeing any increased volume of work coming up.

Operator

Your next question comes from the line of David Wells from Thompson Research Group. Your line is open.

David Wells - Thompson Research Group

First off, can we talk a little bit about the first quarter in terms of the number of auctions that happened in the quarter, look to be up for about eight auctions from last year? Any thinking about what drove that? And then maybe secondly, can you provide us with a clean comp number as you look at the 32 auctions you had in Q1'09 versus that same bucket in Q1'10?

Rob Mackay

I guess from our side that a number of auctions may go up or down in a quarter depending upon the business that’s available out in the marketplace. We have scheduled auction sales all of our permanent sites at any given quarter, and as opportunities arise in the marketplace for off-site sales that are traditionally not at our full time or permanent auction sites, we'll take those deals on and take those auctions on as they come to us.

So in Q1, we had a number of situations where customers had a sufficient mask that they were more interested in selling it where it sits; in their own yard or in a location that wasn't one of our permanent sites. So that dynamic is driven by what's available in the marketplace and if there's more off-site sales available, we'll go do them.

David Wells - Thompson Research Group

In your mind then, does that create an additional headwind from Q2 or were these auctions that would have typically been scheduled in Q2 that got pulled forward into Q1?

Bob Armstrong

David, its Bob Armstrong. It's an interesting question because one of the few things that we can actually count is the number of auctions. But I agree with Rob Mackay. It's really not something we track that closely, other than we count them. But for sure, there's nothing in there that suggests a headwind or a tailwind or anything else. It just happens to be when auctions were held. I'm not aware of any substantial movement of auctions from Q1 to Q2 or Q2 to Q1. We move our schedule all the time just as Rob said, based on when and where the equipment is available. But I don't recall there being any swaps around during the quarter.

Peter Blake

It's Peter here. The one thing I will point out is that the more offsite sales that we have, the proportionally higher cost then have on off-site sale. But we also get some tremendous benefit because proportionally higher number of new customers who maybe have never heard of us before, we get into new areas and it allows us to expose the channel and the selling process and our name and brand to those customer. So as Rob said, we're happy to do these things. In fact, in the long run it's a great benefit for us to do the off-site sales because it helps us penetrate more of the market.

David Wells - Thompson Research Group

In terms of your outlook for the second half of the year, could you talk about some of the macro drivers that you're assuming? We continue to see the [AV] be pretty soft. Are you anticipating that as we get into the second half of the year, late summer, that as seasonal projects that have come out begin to wrap up to some extent, do you anticipate some equipment becoming available from that kind of a slow down as we go into the third and fourth quarter or any kind of color on that would be helpful.

Peter Blake

Any kind of color would be helpful for everyone but we mentioned in our prepared comments, there is a level of uncertainty out there, primarily stemming from the lack of work that is available to many of the contractors, particularly in the United States. Canada seems to be chugging along very well. Europe is probably somewhere in between the U.S. and Canada. But for the most part we're looking to continue the penetration of thousands and thousands of new people we're seeing coming to the auction. The question that we really have a hard time answering is how predictable is market going to be and react to economic environment in the second half.

You see a lot of the OEMs that came out and their first quarter results are proportionally significantly lower than their full year. You'll see the same thing with us and looking at it, talking to our guys in the field. We do analysis up and down and sideways to get a feel for where things are, and the further you go out, the murkier it becomes.

We're getting interesting noise from our guys saying the prices are up, it's great, the guys are very much more optimistic, there is more buying, non-domestic buying that we're seeing at the auctions, Asia, Middle East and some of the product going overseas to these developing economies that are consuming more product, which is great, and again, for us it translates into a lot of positives, particularly with the 21 language website just recently being launched. So we're going see good benefit from that, but it's murkier than we're normally used to and that's why we have an element of caution around it.

Rob McLeod

Rob here again. One of the things we're in constant dialog with is some of our bigger customers and we're quite focused on what their CapEx is for the year. These big guys are out buying fleet every year and some of them obviously buy millions and millions of dollars of fleet every year and their used equipment becomes product that we have available to us.

In the early part of the year, most of these large companies, their CapEx was limited and as the year goes on and they see more work on the horizon, they will see some CapEx become available to them to go out and purchase new equipment and release some of the old stuff that they've been running for 2,000 or 3,000 hours more than they typically would. And that whole effect by more work, more confidence in the market, spirals down to the midsize contractor and so on and so on. But, we're still uncertain as to whether that confidence and that amount of work is coming to the market later on in the year.

Operator

Your next question comes from the line of Scott Stember from Stember & Company. Your line is open.

Scott Stember - Sidoti & Company

Can you talk about the things that you guys have control over? You talked about, you've increased your sales force by 14% and you expect to see some benefit. Can you talk about what you've seen so far, any metrics that you're looking that suggests that you guys should start to take some share in the next couple quarters?

Rob McLeod

You mentioned one of the ones that I would have quoted, which is our sales force and its within our control and we're really pleased with how that grew last year, 14%. It's already up again 4% so far this year. We need to do that. That’s one of the key drivers for GAAP.

Our auction site expansion plans are on track. That's also within our control. We've added a significant amount of capacity over the last year and a half, two years and that's awesome for our ability to service our customers all around the world. Our customer count is up dramatically. Registered bidders, consignors, participants on our website, a number of internet bidders, all the metrics that we can look at to talk about participation in our auctions, have all been increasingly meaningful in the last while and that's extremely positive to us.

The one that hasn't gone up as much as we'd like would be the total GAAP. But as we just discussed we think that's on its way. All these metrics are the ones that drive that metric. I guess the final one would be equipment pricing. We saw that sliding down for an extended period of time, probably for full two years.

And starting at the beginning of this year, we watched equipment prices starting to head back up, which not only helps in terms of the total volume or value of what's sold at auction, but it provides a lot of comfort and confidence to our potential consignors. So there's a shopping list of some of the metrics that we watch and they're all sending positive signals to us. That's why we're cautious, but feeling pretty good.

Scott Stember - Sidoti & Company

Related to the customer count that you talked about, could you share how much it's up?

Rob McLeod

Yes. For the first quarter of this year, bidders at industrial auctions was 76,500. Last year, first quarter, it was just under 74,000. The number that became buyers was about 21,500 versus a little under 21,000 last time. Consignments went from 6,800 to 7,900. So all heading in the right direction and the website, trying to recall the script but we're up like 25%.

Peter Blake

23%. We didn't do quarter one 2010 numbers on that Scott, but overall 2.8 million unique visited. And it's important to understand how you measure the website traffic, because there's a lot of gray data out there. What we do is measure the IP address from which a hit or a visit comes from and these are 2.8 million unique IP addresses. So they're different computers that are hitting our website over that period of 2009.

It's a meaningful increase over the '08 period. So we're winning the battle and we're starting to get more and more awareness out there and the big thesis, part of the big picture, you've got this massively large market, $100 billion plus market and if we're doing $3.5 million, then how do we get the rest of it?

Well, a lot of it, and we did some customer information, poking and prodding last year and learned that many of the customers that are out there that are private selling don't see the industrial channel and don't even know who we are. So as big as we think we are, there's lots of market out there that really has no idea what we do and who we are. So we're working on raising awareness and brand and all of those things from a marketing perspective.

Scott Stember - Sidoti & Company

And a last question about the credit environment. Have you seen any impact on your business? I know in the past you've said that your customers were able to readily get credit. But with the credit markets easing, have you seen any positives there?

Rob McLeod

I'll repeat the question, because Rob Mackay is going to answer it. The question Rob was were there any credit issues? Are customers still able to get financing?

Rob Mackay

As far as we've seen, we've had no negative effect from the customers. They're not coming to us and saying before the auction they can't buy because they don't have credit available to them. So, nothing material that we've seen.

Peter Blake

And interesting, we were still continuing to have finance companies coming to us looking for access to our customers. So on the other side of the equation, the supply side, I think speak from experience that we have finance companies who would like us to give them access to our customers. They have money they want to lend to our people. So that dynamic appears to be playing out just as it did in the last couple of years.

Operator

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

Ben Cherniavsky - Raymond James

Things I wanted to discuss have been touched on. But if I could just go back for more clarity on the auction revenue rate, because in the last quarter, the last call, correct me if I'm wrong but I think you guys talked about trying to drive your GAAP a little higher by getting more aggressive with the underwritten business in the light of some stability on equipment pricing. And I'm just curious how that unfolded in the quarter relative to your expectations. I would have thought that the auction revenue rate would have come down to reflect a more aggressive approach to underwriting equipment to get that business into the yard?

Rob Mackay

Ben, Rob here. As we were fortunate in managing the risk business on the way down, the market has been somewhat kind to us on the way up. And we have been getting more aggressive on the underwritten business that we're pursuing, both because the customers in some instances are pushing us to it, because they see an increasing market value. In some instances it's the competitive nature of other people in the marketplace.

So we have been getting more aggressive on deals that are out there and with the rise in the equipment prices, we've been fortunate that the business that we're writing at risk has been delivering us the right results or the anticipated results with the increase in pricing. So we've had a few little bumps in the road as we've gone along but nothing that's out of the normal course of our business and we've been more on the success side than not. So the underwritten business has done quite well in an increasing market.

Peter Blake

It's Pete here, Keep in mind too that the last time we spoke to you guys was early March and we're still peeling away from [Orlando] results and people are still sitting back and waiting to see if this is a real market in terms of the pricing adjustments and increasing values that we were seeing. So as we gain more confidence in that, we'll step up a little bit more, probably a little bit ahead of the curve to make sure that you're as aggressive as you can to attract that iron.

So that really has only transpired in the last month or six weeks or so. So you're not going to see a meaningful impact of that in the first quarter results for sure because a lot of these guys, even if they were to price a deal and get hard and fast on some deals in early March, they wouldn't come to market until April anyway.

Rob Mackay

We've had the experience today in our sale in the Middle East and we had a beautiful package of equipment over there that we got quite aggressive on and the results of it were last night, day two out of a three-day sale. And the purchasing power and the attendance by the Indian market at that auction was quite significant and the bidding of individual Indian buyers against each other has resulted in some very favorable numbers on a package of equipment that we took some significant risk on.

Ben Cherniavsky - Raymond James

So what was the mix in the quarter of underwritten business?

Rob McLeod

17% of the volume was underwritten.

Ben Cherniavsky - Raymond James

So that's quite low, is it not?

Rob McLeod

Yes. Actually it's pretty similar to quarter one last year.

Ben Cherniavsky - Raymond James

Okay. And again, I apologize if I missed this but you did mention some initiatives or some intent to manage the SG&A a little more closely. Could you quantify that or even maybe just speak more specifically about some of the initiatives you're focused on?

Bob Armstrong

It's Bob. With the initiatives [broadened] across the company, we've got initiatives in the field as well as at our administrative offices, looking primarily at non-sale situations. So for example, one of the untouchables was the hires of new territory managers and territory manager trainees because that's just fundamental. But for sure there are a number of less strategic initiatives that we always have underway and it's the right thing to do at a time like this. All companies would make a similar call if you delay those initiatives. You prioritize.

Ben Cherniavsky - Raymond James

What would they be though, for example?

Bob Armstrong

Well, we never announce who they were but I think (inaudible) what they're longer going to be. But I can tell you some of the ones that are preserved are things like our sales force automation and our fame which is the field asset information management. But some of those things then, its not they're just slowing down things you've never heard of in the first place because they were sitting on the back burner and every year a number of them make their way out to the front of the stove and at a time like this we dial them back. We have no choice but to do this.

Ben Cherniavsky - Raymond James

So these are more reductions you were planning to put into place to pursue growth opportunities rather than a cutback of existing costs?

Rob McLeod

There probably are some that will look like cutbacks in existing costs because we had money being spent on things that had longer term deliverables and we're just saying we don't need to spend that money right now.

Ben Cherniavsky - Raymond James

And I'm sorry; did you quantify that in any way?

Rob McLeod

I tried not to. I don’t want to be [silly] about it but to put a number on it would be misleading at this stage. I don't have a firm number because we haven't saved the money yet.

Peter Blake

Ben, its Pete here. It's probably fair to say that it's a combined effort of both administrative office and field operations and proportionately higher on the administrative office side than in the field.

Ben Cherniavsky - Raymond James

But we would still expect that assuming the current currency environment, you're still going to see the SG&A line increase this year, I would assume, if not for over any other reason then the training initiatives you spoke of which you remain committed to plus currency factors.

Jeremy Black

It's Jeremy here. As you know, we don't give specific guidance on the G&A line but we have talked about it generally increasing as a result of our investments. Really we reiterated our guidance of flat earnings for the year, which is what's most important.

Operator

Your next question comes from the line of Craig Kennison from Robert W. Baird. Your line is open.

Craig Kennison - Robert W. Baird

Some of my questions have been addressed, but maybe I'll follow up on the sales force. You've made a number of new hires. Could you quantify in any way, what you expect the impact to be or how well those sales people are ramping, relative to your past experience when you hire new sales reps. In other words, you're providing these sales people with additional tools that may help them be more productive. Does that give you more confidence that this sales force will ramp as quickly or even better than past sales forces?

Rob Mackay

It's Rob here. Each year when we add to our sales force, people come in to it with different calibers of sales experience and have TTMs, or territory manager trainees, and we have TM4s which are the older, gray, experienced guys and each one of them sort of hits at the ground at a different velocity and gets into their marketplace adapting to what we do.

One of the positive tools that we have out there now is our sales force automation, which provides any than new sales person joining Ritchie Brothers with a database of his customers that are new to Ritchie Brothers or have done business with Ritchie Brothers and he's able to classify them into A, B or C categories, depending on their consignment volumes, where they live. He can go into a town and visit one customer and then look on his [SFA] tool and see anybody else on his database that lives in that town and able to make sales calls right away, as opposed to an antiquated system that we had before. So, each one of those guys will achieve a different level of productivity when they join the company in the first year. But each one of them is strengthened by some of the tools that we have out there today.

Craig Kennison - Robert W. Baird

And then secondly, I'd like to pursue a better understanding of your timed auction systems. First of all, is there any impact at all on the auction revenue rate as you move to that platform? And second, could you maybe give us a case study that would help us understand how your direct expenses may drop as you layer in that particular service?

Bob Armstrong

Sure, it's Bob. On the auction revenue rate no, I wouldn't expect much of an impact there. The items that are sold are still being sold for the same commission rate. However, prices have been noticeably higher on average and so as a result you might have more auction revenue dollars. But let's be honest, this is a fairly large number of lower value lots and so the total impact on dollars is relatively small on the revenue side.

From a Ritchie Brothers financial statement's point of view, the bigger impact is on the expense side. So I'll talk about that for a second. You suggest a case study. Live example, we just had an auction last week in Edmonton. It was a 5,400 lot sale and we did it in three days. A sale of that size would more logically have taken four days for us to do but we did 1,000 of those lots using the timed auction lots system. 1,000 lots is close to a full day of selling for us.

So we didn't do it in four days. We did it in three days, and there's a significant savings to that. We had a sale in Los Angeles several months ago that was a one day shorter than it would have been. It would have normally been a two day sale. They did it in one day, because 1,000 lots in that sale were taken out and handled by the timed auction lot system.

And then in a number of our other sales, where they haven't changed the number of days, they've change the staffing dramatically because rather than having multiple rings, multiple auctioneers and crews of bid catchers working to sell lots simultaneously, instead of having two groups like that, we only need one because 1,000 lots are being pulled out and sold with the timed auction system.

And in all of those cases, whether you save a ring or save a day, we can staff for the auction differently, either send less people to the auction or send them home earlier. And you get a big win there right away in terms of staffing costs just literally out of pockets. But to the extent that you have territory managers who no longer need to be physically in Los Angeles, or Edmonton, or somewhere else; in other words, they can be back home in their territory, that's a day of them with customers producing revenue in theory. And that's a huge opportunity for us.

So we have two direct cost savings in travel and accommodation and contracts and all that kind of stuff as well as a revenue opportunity by leaving our territory managers back in the field. And truthfully, one of the most precious resources we have, is the number of days a territory manager has and a number of our initiatives in the last year have been designed to maximize the number of days our territory managers can work with their customers rather than dealing with other parts of our business. And timed auction lot is one of the better tools for that.

Craig Kennison - Robert W. Baird

Last question, just on your direct expenses. It appears they jumped about 20% despite a decline in GAAP of maybe 9%. Is there something to that metric? Did it include the Apoise? Is that the deviation that we're seeing?

Rob McLeod

It's Rob McLeod. Depending on what number you're looking at, it generally doesn't include Apoise and Apoise wouldn't have moved a deal on that the metric. Part of that for sure was the number of off site auctions we had and auctions we had in frontier markets. So first auction in Japan, auction in India, in Panama, in Turkey. Those auctions are relatively more expensive to run than an auction at a permanent auction site in Edmonton or Fort Worth. And so that's the majority of the up tick in the direct expense rate and dollars that relates to those offsite and frontier markets.

Peter Blake

It's Pete here. As our guide in the Middle East pointed out when Rob was talking to him this morning about the market for cranes in the Middle East, those Indian buyers were exposed to the channel through our Indian operations. So it really is a global marketplace. You get comfort with the Indian buyers coming to the Indian auction. They hear about us, they want to come over to Dubai. And pretty soon there's a whole new level of demand that's been exposed to the channel and been exposed through our channel to allow consignors to realize better proceeds by having a broader global audience and all that is linked with this frontier market investment.

So for us not to do an Indian auction or Turkish auction or Panamanian auction, this is part of the longer term, bigger picture industry. So we're willing to take a bit of a punt on the first, go out and spend a bit more money in these front tier markets to keep penetrating the marketplace because it has an impact on the global operations and the long term prospects for our company.

Operator

Your next question comes from the line of Gary Prestopino from Barrington Research. Your line is open.

Gary Prestopino - Barrington Research

Most of the questions have been answered but I just want to make sure. Jeremy, you said you're looking at about $1 billion worth of GAAP in Q2?

Jeremy Black

Yeah, that's right, Gary.

Gary Prestopino - Barrington Research

And your GAAP guidance does include the sale of the yacht, right?

Jeremy Black

The GAAP guidance does not include the sale of the yacht.

Gary Prestopino - Barrington Research

Okay. And maybe for Rob, you mentioned that prices started to get a little bit stronger throughout Q1. Could you maybe give us an overall quantification how much higher the price has moved from the beginning of the quarter to end of the quarter and then relative to where they were last year at this time, where are they now?

Rob McLeod

Sure. We started out Q1 with a couple sales on the West Coast in Phoenix and Vegas and we saw a marked increase in pricing over what we had seen in Q4 of last year. The marked increase would have been anywhere from 5% to 15% depending up on categories. Some at the lower end some exceeded 15%.

We then jumped over to Orlando, which traditionally is the big event the year. It's a significant attraction for overseas bidders, typically has higher prices year-over-year than some of our other sales we see in the increase. So we saw strong prices on the West Coast. We went over to Orlando and we saw just as strong, if not stronger pricing there and the trend continued all the way through Q1.

We didn't see a change upward or downward through the quarter and compared to last year's fourth quarter, I'd say we're anywhere from 5% to 15% up. The smaller stuff, like loader back, skid steers, the run-of-the-mill equipment that didn't see as much as a downturn maybe in the 5% to 8% range up.

Other things like motor scrapers that last year we could have been selling for $200,000 we have seen them sell for $300,000 this year. So that's a significant increase in a specific category, but small quantum of items that are sold vis-à-vis the run-of-the-mill loader back. So it's quite a wide variation but I would say in general, it's fair to say there's a 5% to 15% increase across the board.

Operator

Your next question comes from the line of Mike Marburg from Ramsey. Your line is open.

Mike Marburg - Ramsey

Hi, guys. Wanted to ask about because that’s where started to focus on a little bit more just to get a sense of what's going on. So you mentioned that you didn't notice any meaningful change in the number of auctions from Q1 to Q2 but the auction days are going down from 91 to 79. And as a result of that, in the first quarter, you're GAAP per day declined by 17% year-over-year.

So it was down by 17%. So to hit your guidance for the second quarter, the GAAP per day has to go up by 5%. So have you seen that in the first? You've had a month of auctions; you've had a couple big ones. Have you seen the GAAP per day increasing meaningfully versus the first quarter?

Bob Armstrong

It's Bob Armstrong. GAAP per day is actually something that we're actually trying to improve by reducing the number of days. So you're probably going to see auction days changing because we're trying to. [Tel] is a good example. Every time we have success with [Tel], you'll see the number of days going down. It's more efficient for an auction site if they have the ability to do it in one day instead of two days. That's way more cost effective. So they're trying to do that.

We'd rather have three rings on one day than one ring per day over three days. So it's an operational efficiency move on our part as best as we can to reduce the number of auction days. It's also a strategic initiative of ours, because we're going to run out of calendar days. There's only 365 of those and by the time we get to $10 billion in sales, we'll need to have quite a different approach or else we'll be having have 20 auctions a day on some days and that's not something we have in our plans. So it's interesting to talk about auction days. You're talking about it in a way quite differently than we do. Our goal is to get rid of them, minimize them, get them down as low as possible. So I suspect, that will be a metric that will drive you crazy if you keep watching it.

Mike Marburg - Ramsey

No, no, I think it's a good thing but the reality is in the first quarter your GAAP per day, your revenues per day was down 17%. So it's good that in the second quarter you're doing a lot fewer days but the reality is because you're doing a lot fewer days and the guidance that you've given, your GAAP per day has to go up 5%. So my question is, are you seeing a meaningful shift in your GAAP per day in the first month of this year, given the results that you've already reported? You reported one auction.

Bob Armstrong

Meaning the first month of this quarter?

Mike Marburg - Ramsey

Of this quarter, yeah.

Bob Armstrong

I can't speak to that, because that's obviously not disclosable information at this stage. But you've got a number of our auctions in the frontier markets that we spoke of a minute ago that are significantly smaller than we would have at say an auction in Edmonton that we had last week. It was a huge auction. I apologize, I was speaking the number of days and you asked about GAAP per day.

GAAP per day is driven largely by what is it we're selling, for who, where, why and when and you could easily have the number of auctions that are generating $2 million, $3 million, $4 million, $5 million total GAAP for the auction. We do those happily. Those are offsite sales that break into new markets. We do them to service our customers. We had a lot of those in the first quarter, and we'll have them whenever we need to. So that will definitely throw that number you're looking at in the direction you're hoping it doesn't go, but it doesn't bother us.

Jeremy Black

It's Jeremy Black here. I might add that just for comparison purposes, Q1 last year we had one off-site sale. Q1 this year we had seven. That's going to have a material impact. As Bob said, those are typically a smaller average size. That's going to have a material impact on your GAAP per day which, by the way is not a metric that we track.

Mike Marburg - Ramsey

That's interesting. So in the back of the year to hit your guidance your GAAP is going to have to go up by about 35%. In the first half of the year your guidance with the GAAP is down 10%. So it's going to go from negative 10% to plus 35%. Do you anticipate that with the continuing trend in the second quarter of 10% to 12% fewer auction days, are you going to keep having fewer auction days because of the online system and expect that to deliver 35% more GAAP year-over-year?

Jeremy Black

Mike, it's Jeremy again. When we develop our guidance for the year we don't actually have a variable in there that measures the number of days. It really truly is the total GAAP we can do at each of our auction sites, regardless of how many days it takes.

Peter Blake

Tracy, we probably have time for one more question and then we'll get underway here. So if there's one in the queue, we'll take it now.

Operator

And your final question comes from the line of Cyrus de Weck from QVT. Your line is open.

Cyrus de Weck - QVT

I just had a couple questions, because I'm a little bit confused about a few things. Sometimes we hear two different things on this call. And I guess firstly more of a technical question, at the beginning of the call, when you talked about GAAP guidance, you mentioned that FX would lead to $100 million higher than expected GAAP. But later on the call you mentioned the Canadian dollar rate was in line with your forecast and the euro was lower. So I'm just trying to square up those two statements and try to understand why one place you're going backwards and in another place on this call you're going forwards.

Jeremy Black

Sure, Cyrus. Jeremy Black here. When we talked about the impact of the Canadian dollar, $100 million in incremental GAAP, that's looking at last year's volume, gross auction proceeds translated at this year's rates. So the rates in effect this year would have a $100 million impact. When we talked about the euro, you look at the euro this year versus the average euro exchange rate last year, that's the impact that we talked about.

Cyrus de Weck - QVT

So net, it's going to be $100 million higher in your forecast?

Jeremy Black

That's correct.

Cyrus de Weck - QVT

Then beyond that, maybe looking towards Q2 and a little bit beyond, we've seen a trend in your sales where it seems to be that your GAAP for items seems to be going down and in the past, we've seen a fair bit of reasonable stability in your cost SG&A per item. Are we going to see a certain amount of operating de-leverage this year and how are you trying to combat that given where the auction revenue rate is?

Bob Armstrong

It's Bob Armstrong. It's hard for us to predict with certainty where we think the operating leverage or de-leverage might come in. There's two numbers that drive it. One is the GAAP and the other is the G&A. We've talked about GAAP and we've talked about G&A and now we just do our best and see where it comes in. By our plan, we're expecting our GAAP to come in, in the range of $3.9 billion for the year and we talked earlier about our focus on G&A. There may well be leverage this year or de-leverage depending on where those numbers come in.

Cyrus de Weck - QVT

Okay. But, for example, your most recent auction in Edmonton, your average U.S. dollar per lot was down, what, 38%. I'm assuming on that kind of a move, that's an operational de-leverage.

Peter Blake

That's a mix issue. It's Pete here, Cyrus. The mix in Edmonton, it's a good example, a good illustration. I think we were $90 odd million last year on fewer items. It happened over two very significant complete dispersals of very large items for sale at the auction last year that didn't occur this year. So while they had a number of, I think there were 690 different consignors in the auction for more items than they sold last year. Lots of [onsiees, twosies], lots of little things that all added up.

Actually I spoke to our guys at Edmonton the other day and I said hey, you guys had a tremendous penetration. If you take out the significant impact from last year's two major complete dispersals of big, big fleets and put that on the sideline for a second, because those don't recur this year and compare it to what you were able to achieve this year, you guys actually did a terrific job at growing your business and penetrating the market. So you have to be very careful when you analyze dollar of GAAP per item because the mix changes at every auction and that Edmonton example that you brought up is a perfect one to try to understand that concept.

Rob McLeod

Dubai is a good example. We had, they too compete in our three-day auction in Dubai and you'll see the GAAP per item in that sale go north of probably where it was last year because of the impact of this big transaction that we were involved with where we saw some very attractive pricing come off and penetrate more of that geographic marketplace in the subcontinent that we spoke to earlier.

Cyrus de Weck - QVT

And given you're going up against, in Q2 you targeted about a 1 million of GAAP dollars. Given you're going up against some of the largest de-fleeting probably seen in the last couple decades by the leasing companies, how do you see GAAP developing? I think the Edmonton auction is a great example of the boost last year's Q2 got. Do you feel there is enough business out there in still de-fleeting to do that you can catch up to what was very good wins from the back last year?

Rob McLeod

It's Rob here. We believe so. There's still a lot of de-fleeting out there that's idle. Lots of customers are coming to sales looking at the pricing, quite intrigued by the increased levels over the last year. And then two weeks later they're scratching their head wondering what the next sale is going to be like because the amount of work that's out there and the confidence in the market for many of their peers or their competitive contractors is such that they're all looking at each other, wondering who's going to get the work.

Very competitive on the jobs. As Pete mentioned earlier, there's 10 or 12 bidders on jobs where historically there has been two or three. So as that phenomenon wears on through the year and if significant amounts of work don't come out there, these guys still have to de-fleet, because they're sitting there with idle equipment still which kind of plays into our value proposition for consignors.

They have to be able to access those Indian buyers and Middle East buyers and Japanese buyers all over the map so to the extent we can create that marketplace that attracts the eyeballs and the money from those marketplaces, the developing economies where the demand really is, that's where those sellers need to put their iron and we can do it through us.

So it becomes a very attractive selling proposition for our sales guys to be able to go in and talk to those. Maybe of those 10 or 15 guys that normally would bid a job, two or three of them say we're done here or we're going to sit on the sidelines for a while, we're going to trim down our fleet. And they need to access that global market. So, especially again with that 21 language website that we've got now in play, those are really, really significant value propositions that we throw in front of consignors that lend well to our business.

Cyrus de Weck - QVT

Okay. Do you feel that you've actually spent shareholders' money wisely given; I've heard the term website about 50 times on this call. Yet, $440 million has been spent and a lot of it on physical plants and expansion and you're looking at flat EPS growth.

Peter Blake

Yeah, that's a great question; go straight to return on capital and how you're doing that. This was a number of, probably two or three years, even more back, we said to the market listen, we're going to accelerate our capital expenditure program for a period of a few years and get these things in place.

We know that as an example when you put a Japan auction site in place, your not going to get immediate return on capital in the first year but as a long-term strategy we still have this very fundamental long term view of the business and we think like owners because we all are owners and most of our wealth as management sits in the stock price and we're required compensation wise to go and buy stock every year.

So all those things add up to us to say, is this a smart thing to do with shareholder money today. The nice thing about when we make an investment is we're investing in assets that tend to appreciate in value. So when you go out and buy land, as an example in the second quarter when we sold our Houston property -- we'll end up reporting that in Q2 -- we typically resale the assets that we no longer need in the utilization for earning income in the business at values that are greater than what we bought them for.

So it's a unique model in that you're investing capital but that capital is appreciating in value, in fair value over the period and generating income at the same time, too. So is it a smart use of shareholder capital? I'm a shareholder. I think it's a damn smart use of shareholder capital. And you can ask our board the same thing and we go through quite a rigorous process to put something in front of them to look at long term returns on capital and rates. Is that a smart investment? No? Yes? And we apply a tremendous amount of rigor just to get it to the board table before we present it to a series of various investors and very smart people who look at that very critically and make sure we're making the right call in the long term.

And I hope you got the message as well in the call that we're looking at this deployment of capital and this is the smart, right time to be deploying the level of capital that we had originally planned to perhaps a year ago and the answer is maybe we should trim that back right now.

So we're looking at that and we'll give you carry-on guidance in the future calls to let you know what we're planning for 2011 and beyond. Much of the 2010 CapEx we've got in the [hopper] is completing projects that are underway that are just wrapping up. So I really applaud the question. It's a very good question. We spend a lot of time talking about return on capital here at the company, and we just want to make sure that we're doing the right thing for all of us, us being the shareholders.

So with that, we'll conclude our comments. Thank you very much for your attendance and participation. And Tracy, you can close the call. Thanks.

Operator

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

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Source: Ritchie Bros. Auctioneers Incorporated Q1 2010 Earnings Call Transcript

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