Good day. My name is Chris, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the RB Global Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. I’ll now turn the call over to Mr. Sameer Rathod, Vice President of Investor Relations and Market Intelligence to open the conference call. Mr. Rathod, you may begin your conference.

Hello, and good afternoon to everyone. Thank you for joining me and our Chief Executive Officer, Jim Kessler, on today's call. The following discussion will include forward-looking statements, which can be identified by words such as expect, believe, estimate, anticipate, plan, intend, opportunity, and similar expressions. Comments that are not a statement of fact, including, but not limited to, projections of future earnings, revenue, gross transactional value, debt, and other items, business and market trends and expectations regarding the integration of IAA, including anticipated cost synergies are considered forward-looking and involve risks and uncertainties. The risks and uncertainties that could cause actual results to differ significantly from such forward-looking statements are detailed in our news release issued this afternoon as well as our most recent quarterly report and annual report on Form 10-K, which are available on the Investor Relations website as well as EDGAR and SEDAR. On this call, we will also discuss certain non-GAAP financial measures, including forward-looking non-GAAP financial measures. For the identification of non-GAAP financial measures, the most directly comparable GAAP financial measures and the applicable reconciliation of the two, see our news release, Form 10-K, Form 10-Q, and investor presentation posted on our website. We are unable to present a quantitative reconciliation of forward-looking non-GAAP financial measures as management cannot predict all necessary components of such measures. Investors are cautioned not to place undue reliance on forward-looking non-GAAP financial measures. All figures discussed on today's call are in U.S. dollars unless otherwise indicated. At this time, I would like to turn the call over to Jim.

Thank you, Sameer, and good afternoon to everyone. Our marketplace platform and growth initiatives showcased their strength and effectiveness again in the third quarter as we achieved 17% growth in gross transactional value on a pro forma combined basis. GTV growth across all our verticals reflects our teammates' dedication to being trusted partners to our customers. Our focus on cost and execution drove strong flow-through resulting in robust adjusted EBITDA growth. We continue to make significant strides in integrating IAA. During the third quarter, we brought together our global senior field leadership team for a two-day session. This meeting served as a platform to emphasize our foundational values of being one team, all in, all about the customer, and easy to do business with. I was excited and energized to see how the teams came together, learned from each other, and how eager everyone was to drive our shared vision of success as one cohesive team. It is this one cohesive team of over 8,000 members that works hard every day to drive successful outcomes for our customers. To us, success for our customers comes from consistency. Consistency of over-delivering on our commitments, consistency of being proactive with our customers, and consistency of driving the best outcomes for the transactions they entrust us with. This consistency continues to build trust with our customers and ultimately positions us to unlock more market share in all of the sectors we service. We have taken quick, decisive steps to improve consistency in our automotive sector. This journey's first step was in the second quarter when we streamlined the senior leadership team. The new structure made it easier for our customers to partner with us as we transitioned management of service level agreements or SLAs to a holistic customer-based approach departing from the prior segmented by SLA approach, which caused a lack of accountability. We are now implementing new business processes to measure our SLAs in real-time, and I personally scrutinize our progress against our commitments weekly. If needed, I actively involve myself in addressing any potential concerns. Through this process, we have also delineated critical responsibilities held by our team members, whether various tasks should be owned at the branch level or how to ensure corporate support for success in the field. We are looking to implement permanent solutions and not temporary fixes where customers have inconsistent experiences. We are also implementing tech improvements and prudently investing to give our teammates the tools they need to drive consistency for our customers. I am delighted to say that we have already seen an uptick in our SLA performance, with one example being improved on-time vehicle pickup. We will also implement a new incentive structure for our branch managers at the start of next year, so they are better aligned with the performance they are responsible for driving. We are happy with our SLA performance recently and have made substantial strides since closing. Despite these recent improvements, one customer has notified us that they intend to shift all their assignments away from us by the end of the year. This customer accounted for approximately 4% of total GTV and approximately 5% of total unit volumes annually. I am disappointed that we were not given a chance to continue our partnership, especially considering our demonstrated ability to exceed SLAs in recent months. We will continue to over-deliver on our commitments to all of our partners like we did in the past quarter and continue to do so in the current quarter. Beyond this, our proactive approach has not gone unnoticed by many of our partners, especially regarding catastrophic events. This year, we have had CAT events ranging from wildfires in Hawaii to hailstorms in Texas to floods in New York. And of course, there was Hurricane Idalia, where I and other leadership team members went to Florida, a state where we have more than 1,500 acres available for CAT storage. Although the impact of these events was relatively small compared to a major hurricane, our ability to mobilize our resources across multiple geographies, including internal tow capacity in some regions within overlapping time frames, allowed us to showcase the breadth and depth of our capabilities. Overall, we have a sustainable competitive advantage when responding to CAT events stemming from our combined company footprint, the flexibility afforded by our partnership with NASCAR, and our ability to pull teammates from across RB Global to process CAT volumes with remarkable efficiency. Moving to the construction and transportation sector. Within this sector, our enduring robust and trusted partnerships have consistently placed us in the prime position as the preferred disposition partner in the industry. This quarter, we saw strong contributions from both our strategic account groups and our regional business. Supply chains in the construction space continued to normalize, enabling end users to obtain new equipment as they purchase new equipment, which powers the trade-in cycle ultimately leading to the need for disposition services. On the transportation side, there continues to be stress in the industry, accelerating the need for liquidity solutions for our customers. Our recent illustration of this was the Yellow Corporation bankruptcy, which involved a highly competitive bidding process. This unique advantage of having IAA and RB yards at our disposal allowed us to demonstrate that 90% of yellow assets were within a 100-mile radius of any RB Global location, a distinction no other bidder could claim. The combined fiscal footprint not only redefines industry standards but also reinforces our commitment to serving our large enterprise customers precisely where they desire and in the manner that best suits their unique needs. To be clear, even with this transaction, we have more than enough capacity at our yards to effectively service all our customers. We are dedicated to optimizing price realization, and our globally leading buyer base provides our customers with unparalleled depth and breadth of liquidity. Like any other transaction, we intend to harness the analytical capabilities of Rouse and leverage our pricing teams to identify the most effective format, location, and channel to drive the best outcomes. We currently anticipate it will take three to four quarters to work through the bulk of the yellow consignment. The combination of yards, our marketplace liquidity, and our size allowed us to win the trust of this customer and showcases our ability to handle transactions of any size. We never take our customers' trust for granted and are committed to continually enhancing their experience. Moving to integration. We realized $12 million in actual cost synergies in the quarter and have actioned a total of $51 million in annual run rate cost synergies since the close of the transaction. Based on our progress, we expect to deliver at least $100 million to $120 million of annual run rate synergies by the end of 2025. As part of our integration efforts, we evaluated our land strategy, including the decision between leasing and owning. In discussions with our valued partners, it became evident that land ownership is not a requisite for meeting our service level agreements or securing market share. We maintain a surplus of land capacity across our asset classes, allowing us to accommodate our operational requirements easily. However, our capital allocation strategy is guided by financial prudence. We will strategically and opportunistically purchase property in regions susceptible to CAT events or where the market opportunity makes strong financial performance sense for us to make this investment. Given these considerations, we are increasing our 2023 net capital expenditure outlook to approximately $310 million. Let me now hand the call to Sameer to discuss our financial results for the third quarter.

Thank you, Jim. Before we jump into details, please note that year-over-year comparisons for GTV and revenue refer to the comparison to the pro forma combined results of Ritchie Bros. and IAA for the prior year period. Total GTV increased 17%, with strengthened volumes across all sectors. Automotive GTV increased 11%, benefiting from the higher unit volume and higher average selling prices. The existing customer portfolio drove the growth in unit volumes as the salvage industry continues to benefit from a rebound in the total loss ratio. In the third quarter, CCC indicated that the loss ratio increased approximately to 19% compared to 17.5% in the same period last year. Recall that the total loss ratio is the number of vehicles deemed total loss as a percent of total accidents. Used automotive prices continue to trend lower year-over-year, with repair cost inflation remaining elevated, creating a fertile environment to deem a car a total loss after an accident. GTV in the commercial construction and transportation sector increased 22%, driven by increases in lot volumes, partially offset by a decline in average price per lot sold. Part of the average price per lot sold decline was due to mix as lot volume growth came from rental and transportation customers where asset values are intrinsically lower compared to traditional yellow iron construction assets. Additionally, we continue to observe declines in price year-over-year on an apples-to-apples basis. Moving to service revenue. Service revenue increased by 20%, with our service revenue take rate expanding approximately 60 basis points. Service revenue increased due to GTV growth and a higher average service revenue take rate. The increase in average take rate was driven by a higher average buyer fee rate and growth in our micro place services revenue, partially offset by lower commission rates. That lower average commission rate was driven by a higher mix of construction and transportation assets sourced from our strategic accounts and lower realized rates on guaranteed commission contracts. We expect the lower average commission rate trend to continue in the coming quarters. Moving to inventory. Inventory declined 7% with lower revenue contribution from the automotive and commercial construction and transportation sectors. The inventory rates for the quarter contracted 220 basis points year-over-year to approximately 6.5%. The decrease in inventory rate can be primarily attributed to the performance of a few large deals in our construction and transportation sector where pricing declined faster than initially anticipated between the purchase date and the sales date. As previously noted, we expect the environment for at-risk deals to remain competitive in our commercial construction and transportation sector. Turning to earnings. Adjusted EBITDA increased 32% compared to the combined adjusted EBITDA of IAA and Ritchie Bros. for the year-ago period. The strength resulted from solid flow-through from strong GTV and service revenue growth combined with disciplined cost management. Additionally, SG&A exclusive of non-recurring payments and other adjusting items was $179 million, which came in below the low end of the range we communicated last quarter. Adjusted earnings per share increased 36% on strong operational performance, partially offset by higher share count, higher interest expense, and the impact of the Series A senior preferred shares. Looking ahead to the fourth quarter, we expect the adjusted effective tax rate to be between 23% and 26%, corresponding to a GAAP tax rate of 23% to 25%. At the end of the third quarter, our adjusted net debt to trailing twelve months adjusted EBITDA was 3.2x. Adjusted net debt to trailing twelve months combined adjusted EBITDA was 2.4x, down approximately 2% compared to last quarter. We remain focused on deleveraging to approximately 2x by the end of the first quarter of 2025. In the fourth quarter, we expect interest expense to be between $65 million to $69 million. I will now return the call to Jim to discuss the outlook for the fourth quarter and closing remarks.

Thank you, Sameer. Looking ahead to the fourth quarter, I wanted to lay out our current thoughts. We expect GTV growth to be between high single digits and low teens year-over-year on a combined basis. Note that this anticipates an approximately 200 basis point headwind due to cycling over CAT-related GTV in our automotive sector from last year. Regarding the cost of service, tow and fuel costs continue to trend higher due to the rebound in diesel prices. Additionally, we continue to experience inflation in our labor costs and an acceleration in rent expenses associated with leased property. Turning to SG&A. We expect SG&A to be between $180 million and $190 million exclusive of share-based payments and any other adjustment items. Thank you again for your interest in RB Global. I hope you can hear how excited we are as one team, all in, and I want to thank our team for their focus on execution and dedication to our customers. With that, operator, you can now open the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from Michael Doumet, Scotiabank. Michael, please go ahead.

Hey. Good evening, guys.

Hi. How are you, Michael?

Very good. So I mean, I think everyone is going to circle around this with different questions, but I understand customers, particularly if I can make decisions based on different variables. So the question is, how can you come away feeling like the loss was customer-specific rather than potentially a leading indicator?

Hey, Michael. It's Jim. Thank you for your question. Look, for me, our main focus when we came into IAA and looked at their performance was really thinking about how do you turn it around? In my mind, I never thought about this as a V-shaped type of recovery; I always thought about this as a U-shaped type of curve of what we're going to have to deal with. To be able to make this U-shape happen, what I feel really great about is the progress that we've already made on the SLAs and the commitments to our customers, which are well ahead of where I thought we would be at this point. Unfortunately, the timing of when those changes started to happen and the decision that a carrier had to make just didn't line up. What makes me feel really good is the progress we've already made and continue to make going into the current quarter. That gives me optimism as we think about slowing down the market share decline, flattening it, and then ultimately growing it.

Okay. Perfect. And just to maybe expand on that a little bit. So the 4% of GTV headwind, can you walk us down from there to maybe gross profitable EBITDA? Just trying to think about the operating leverage.

Yeah. Hey, Michael. I think you have enough historical information to get to that number. We're not necessarily guiding to a gross profit or adjusted EBITDA range associated with the loss. As you can imagine, we've improved the efficiency of both organizations through the transaction. Jim, do you want to talk about the cost savings?

Yeah. No, look, I think as you can see, reaffirming where we're at with the cost synergies, I'm really comfortable with the range that we gave. To Sameer's point, we wanted to make sure you had the GTV guidance, and I think there's probably enough information to get down to the levels that he was talking about.

Okay. Those are my two. I’ll leave it there, guys.

Thank you.

Thank you. Your next question comes from Craig Kennison, Baird. Craig, please go ahead.

Yeah. Hey. Thanks for taking my questions as well. Circling back to this insurance topic. Can you just confirm that is a different insurance carrier than the one that’s impacted results in recent quarters?

I think we can confirm that, yes.

And then, Jim, I guess I'd just ask, were you surprised by this decision? And if so, should investors be concerned that IAA and that team didn't see this change coming?

Look, as I mentioned before in the previous question, I always thought this was going to be a U-shape. When we did our due diligence in IAA, we knew about market share losses and we knew what we needed to do to slow that market share loss down, then flatten it out, and bring it back up. So again, I'm not surprised. Would I have loved for this decision not to have happened and to have more time with the performance that we're seeing right now, and had nine months of the current performance instead of three? I would, but look, timing is everything. We never thought this was going to be a V-shape. This was always envisioned as a U-shape.

Thanks. And then just on the new incentives for your territory and branch managers starting next year. Could you give us a sense for what those KPIs might be and the kind of impact you think it may have on your business?

Look, I think it's just keeping the company in sync with our SLAs that we make for our partners and the commitments we made in those contracts. Think about the previous regional-level KPIs, but these are now very specific around the commitments that each branch has to deliver compared to the SLAs we've agreed to.

Okay. Thank you.

Thank you. Your next question comes from Steve Hansen, Raymond James. Steve, please go ahead.

Good afternoon. Thank you for the time. Can you perhaps speak to the cadence of the expected yellow dispositions? I know you are after a couple of quarters, but do you expect it to be evenly paced in the first quarter, or how do you think about that pattern?

Yes. Hey, Steven. That's a good question. I think some of this will be market-dependent on how to best optimize price. We’ve already actively mobilized resources against this, but at a high level, as we've said, it will take us through the four quarters to get through the bulk of the disposition.

Okay. That's helpful. And then if I’m just going to circle back on the carrier that made the decision. Can you maybe just speak to the rest of the portfolio and any expected renewals that are coming up over the upcoming time frame? Are there any milestones we should be mindful of as we move through the next two to three quarters?

Look, I wouldn’t anticipate any surprises. But like everything, every insurance carrier has a different cadence for when their contract comes up and whatever is going on in the environment. However, I can assure you that there are no active RFQs that we’re dealing with right now.

Okay. That’s helpful. I appreciate your time.

Thank you. Your next question comes from Sabahat Khan, RBC Capital Markets. Sabahat, please go ahead.

Great. Thanks and good afternoon. I guess just on Yellow. Based on your view of the channels that you might utilize to disperse that equipment, how should we think about the take rate on that disposition relative to maybe the company average? Because we've seen some numbers on the number of units, the value that Yellow held up, but I'm just curious what you think about the take rate based on the mix of channels.

Hey, Sabahat. It's Sameer. As you can imagine, this is a complicated, multifaceted deal that will depend on the percent of assets that are actually transacted via strategic bulk sales. That said, for a deal of this size, the total take rate is lower than our current average, much like how we've spoken about strategic accounts more broadly. However, it is very accretive to profit dollars, and we're happy with how this transaction is structured.

Okay. Great. And then just on the same topic regarding the customer. As you look out to '24, can you provide us some perspective on how the year might look like with the exit of this customer? Also, do you have a cadence of how this customer will be leaving your numbers? Will it happen all at once at the beginning of the year? Or will it happen gradually throughout the year?

Hey, Sabahat. So we're not going to talk about 2024 just yet. But the way the contract is structured, they have indicated that they'll curtail assignments by the end of this year. Typically, there's a cycle time associated with the inventory we currently have on our books; therefore, most of the impact would happen in the first quarter, and you won’t see a clean run rate until the second quarter of 2024.

Okay. Sounds good.

Thank you. Your next question comes from Maxim Sytchev from National Bank Financial. Maxim, please go ahead.

Hi. Good evening, gentlemen.

Hi. How are you?

Good. I was wondering if you could comment on the lower magnitude of hurricane activity and how that impacted the auto business in the quarter. I presume it was margin accretive, but if you could quantify that, it would be helpful too. Thanks.

Yeah, so Maxim, you mean from last year since there was really nothing this year?

Exactly, yes. I just want to gauge the impact going forward.

Yeah, I'm not sure if we've quantified what the CAT impact in terms of GTV was in the third quarter last year. Let me take that away, and I’ll get back to you on that.

But maybe just directionally, so more activity is negative to margin, and less activity is better for margin. Is that how we should think about this?

No. For last year, the CAT event was accretive to EBITDA. With the level of volume, it wasn't negative for IAA. So I would think about it as it was accretive to last year's numbers, and without any CAT events this year, it would be less than $100 million, but definitely accretive from an EBITDA standpoint.

Okay. Thank you. And then just going back to the CapEx expectations. What is that really going to generate for you guys in terms of returns? Should we expect this bump to $300 million to start moderating by when and how much? Any color you can give there would be helpful.

Yeah. No. As we described in the script, these investments are made for strategic reasons. Sometimes we're able to purchase land below market value since our leases are up. We're not going to quantify the exact impact; it would show up in our costs for service next year. But we don't have a real outlook for 2024 CapEx yet. However, we'll provide you with more color on that next quarter.

Sorry, just to clarify. So cost of service will go down on a prospective basis?

Yeah. I mean, when you buy property, you're reducing your rent expense. But at the levels we're doing, we're not providing any specific numbers around the exact dollar savings or the margin impact. But where you would see it is in the cost of service.

Okay. That’s helpful. Thanks a lot.

Thank you. Your next question comes from Michael Feniger, Bank of America. Michael, please go ahead.

Hey, everyone. Thanks for taking my question. Just one, Jim, you've discussed earlier around the V shape versus the U shape. And your goal is to kind of slow down the market share, flatten it out, and grow it. Just curious, given this customer loss, do you feel you need to invest more to achieve that U-shape? I understand you're not giving specifics on 2024, but with your assessment and taking over, do you think you'll need increased CapEx or more investment in the business to achieve that U-shape? Just curious how you're thinking about that.

Yeah. So, and Sameer will jump in, but just at a high level, for our partners on the auto side, what we need to achieve is operational consistency against our commitments that we've made to them. Very little CapEx will have to be invested to do that; this is all around execution, consistency, clarity, and accountability at the field level. I don't expect to have to raise capital to invest to be able to do that. I think as we contemplate real estate and the financial decisions around lease versus ownership, those will be financial decisions that we make that are best for the company. But the two are disconnected from having to go out and get business from our auto partners. Sameer, do you have anything to add?

Yeah. No, I think you hit it, Jim. Michael, at a high level, purchasing land and having land is not a prerequisite for meeting our SLAs. The capital intensity to improve consistency is relatively minor; the purchases we are making are financial decisions, just lease versus own considerations and so forth.

Fair enough. And just lastly, curious about what you've seen in terms of used equipment values in late October, and even in early November. Is there anything that changed noticeably regarding the auto side or the construction and transportation side as we finish off the year? If there's anything you've noticed through the quarter and until now, I’d appreciate it.

Yeah, Michael. Great question. If you think about the month of October, used equipment pricing year-over-year for construction in the U.S. was down about 6%, and transportation was down 19%. We're still above 2019 levels by a healthy amount, but I wouldn't say there was a step function change in the month of October.

Perfect. Thank you.

Thank you. Your next question comes from Steve Hansen, Raymond James. Steve, please go ahead.

Thanks a lot, guys. I'm not sure if it was covered. I might have missed it earlier in the remarks, but can you perhaps speak to some of your efforts thus far on the whole car market and the aftermath agreement that you laid out last quarter or two?

Yeah. So, Steve, just as we discussed probably a couple of months ago, we're very early on in our strategy planning for it. We're in the early phases of execution against that, so from a number standpoint, there’s nothing from the past quarter that you're going to see. It's more something for 2024 than anything that's going to help 2023.

Thank you. There are no further questions at this time. Please proceed.

All right. Everyone, thank you for taking the time. We really appreciate it, and we look forward to catching up with everyone. Thank you so much.

Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.