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

Hello, and good morning. Thank you for joining us today to discuss our second quarter results. With me on the call are Jim Kessler, our Chief Executive Officer; and Eric Guerin, our Chief Financial Officer. The following discussion will include forward-looking statements, which can be identified by such words as expect, believe, estimate, anticipate, plan, intend, opportunity and other expressions. Comments that are not a statement of fact, including but not limited to projections of future earnings, revenue, growth transaction 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 morning 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, SEDAR news release, Form 10-K and Form 10-Q posted on our website. We are unable to present 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. At this time, I'd like to turn the call over to Jim. Jim?

Thank you, Sameer and good morning to everyone. I am proud of our teammates as they continue demonstrating operational excellence and financial discipline to drive consistent, solid execution for our partners. This strong execution translated to 7% service revenue growth and 11% adjusted EBITDA growth. We have now actioned approximately $110 million in cost synergies and will reach the full run rate well ahead of what we committed during the transaction. While we are pleased that we over delivered on this commitment, we see expense optimization as an ongoing journey and will continually manage the business for profitable growth. Let's start by discussing trends in our commercial construction and transportation sector. The equipment consignment market has normalized following the surge we experienced post pandemic. As business conditions continue to evolve, large fleet owners are evaluating their equipment disposal needs for the remainder of the year. The higher interest rate environment and the higher replacement costs are leading some customers within the region's business to postpone investments in new equipment, reducing their immediate need for our suite of transaction solutions for their used equipment. We are focused on driving sustainable growth by expanding our regional sales coverage within North America. In the second quarter, we actively recruited new talent to strengthen the Ritchie Bros. brand to ensure we best serve our customers in the highest potential markets. Now let us move to the Automotive sector. Volume in the Salvage industry continues to see secular growth due to higher repair costs and lower used vehicle prices, leading to an increase in the total loss ratio. In the second quarter, CCC Intelligent Solutions estimated the total loss ratio increased to approximately 20.7% compared to 19% in the same period last year. Our transparency program continues to gain traction with our partners, as we set the industry standard for clear and definable performance. I am proud of the team and pleased that we consistently delivered exceptional performance to all our partners in the second quarter. All key SLA metrics remain strong at a very high level and continue to improve compared to later. We continuously improve our processes and invest in technology to drive premium price performance for our partners. In the second quarter, we also made significant progress in attracting new international buyers to our marketplace, achieving a record high percentage of vehicles sold to international buyers in our automotive sector. Our efforts resulted in automotive average selling prices remaining unchanged year-over-year, outperforming the industry, which continues to experience declines. This high performance and our commitment to trust and transparency translated to a meaningful win in the third quarter. One of our existing partners who previously split salvage volumes has selected us as their sole salvage provider in the US. We believe this win will add an estimated 40,000 salvage vehicles annually. Our year-round dedication to Cat preparedness ensures a rapid and seamless response when our customers need us the most. This was in full display with the last hurricane. While the hurricane's impact was minor, in terms of unit volumes, our resource mobilization once again showcased the depth and breadth of our capabilities. In addition to dedicated Cat capacity, we have additional yard flexibility afforded by our NASCAR partnership, combined with the network of Ritchie Bros. yards. In addition, our unique ability to tap resources across RB Global to process the surge in volumes we experienced around a Cat event, is key to our ability to exceed our commitments to our customers. We have a significant and sustainable competitive advantage in handling Cat events. I will now pass the call to Eric to review our financial performance and outlook.

Thank you, Jim. Total GTV declined by 1%. Automotive GTV decreased by 4% due to lower unit volumes on stable average selling prices. The decline in unit volumes was due to the previously announced customer loss and the impact of a milder winter partially offset by organic growth from existing customers. As Jim just noted, on a net basis, we believe we are gaining salvage market share sequentially here in the third quarter. GTV in the commercial construction and transportation sector increased by 9%, driven by an increase in lot volumes, partially offset by a decline in the average price per lot sold. The average price per lot sold declined primarily due to asset mix as lot volume growth came from rental and transportation industries, where asset values are intrinsically at lower ASPs. We also continue to see pricing decline year-over-year on a mix adjusted basis. Excluding the impact of the Yellow Corporation bankruptcy, GTV growth in the commercial construction and transportation sector would have been approximately 4%. Moving to service revenue. Service revenue increased by 7%, driven by our service revenue take rate expanding approximately 140 basis points to 20.9%, partially offset by a decline in GTV. Take rate expansion was driven by growth in our marketplace services and a higher average buyer fee rate. Moving to EBITDA. The contribution from the take rate expansion and higher inventory returns were partially offset by a decline in GTV. Our focus on operational excellence drove strong operating leverage with operating expenses growing at a slower rate than the service revenue growth, resulting in a higher adjusted EBITDA compared to last year. We remain dedicated to efficiency, and you can measure our progress by seeing adjusted EBITDA as a percentage of GTV increasing to 8.4% compared to 7.4% in the prior year. Adjusted earnings per share increased by 15%, primarily on strong operational performance and a lower net interest expense compared to last year. Our strong operational performance and continued debt paydown drove a decline in our adjusted net debt to trailing 12 months adjusted EBITDA to approximately 1.8 times compared to the first quarter. Consistent with our capital allocation strategy, we plan on continuing to pay down Term Loan A for the remainder of the year. Moving to the outlook. We are updating our full year GTV guidance range to 0% to 2% from 1% to 4%. The reduction of guidance reflects the weaker-than-expected average selling prices we are currently experiencing in the commercial construction and transportation sector. Despite these macro headwinds, we are increasing our full year adjusted EBITDA guidance range to $1.22 billion to $1.27 billion due to strong operating leverage we drove in the second quarter and our continued commitment to cost efficiency. With that, I'd like to open the call for questions.

Your first question comes from the line of Sabahat Khan with RBC Capital Markets. Please go ahead.

Great. Thanks and good morning. Could you share some insights on the customer win you just announced? Specifically, what metrics did this customer consider? Could you provide details on the RFP process? Additionally, when discussing the division of business, how much of the market can you quantify? How did your share compare with the other major player in the industry? Any further information you can provide would be appreciated. Thank you.

Yes, it's Jim. Let me just first start by how proud I am of the team over the last year as Ritchie Bros. and IAA has come together, and for the IAA team to be really focused on our partners and over delivering on all the commitments that we have and it's those commitments that won us this business. And look, we've talked about before the life cycle of a salvage car, and it is all those SLAs that we have to accomplish. And our partner saw what we were doing and that overcommitment and awarded the rest of the business. And we are not going to get into any other details for this partner, but it's based on our over delivering, our transparency and what we've delivered, and they were able to put both of us together head-to-head in a competition, and we got awarded the rest of the cars.

Great. And then maybe just on the margin side, a couple of quarters here of good progression on the margin side. And I think on the slide deck, you called out continued operating leverage. If you can maybe share some details on some of the operational changes you are making on the ground level that are contributing to this? And just directionally, maybe not getting into numbers, but just directionally what you think about the potential margin upside and runway for more of the margin improvement over the next few years? Thanks.

Yes. It's Jim. Let me start and I'll pass it to Eric. As we discussed in past calls, as an executive team and leadership team, we are very focused on how do we expand the top-line, then how do we expand margins and how do we control costs as we do this. And that's never not going to be a focus for RB Global. And those three line items are what we're always going to focus on and what we're going to concentrate on. So I'm not going to get into details of exact numbers of what we expect that to be. But I'll pass it to Eric if he has any other color if he wants to add.

Thanks, Jim. Yes, I agree with Jim's comment. It is just this continuous improvement while always keeping in mind where Jim commented on the SLA performance, right we are never going to compromise on our performance to our partners, but we just want to be as efficient as we can within the business.

Great. Thank you. I’ll pass the line.

Our next question comes from Steven Hansen from Raymond James. Your line is now open.

Good morning, everyone. Thank you for your time, and congratulations on securing the contract. As a follow-up, how capable are you of translating our service level performance into additional contract wins in the future? This is clearly an important first step, but the key question is whether you can regain market share that has previously been lost.

Hey, Steve, it's Jim. Great question. Look, I'm not going to get into detail of something that I don't control. I don't control other carriers in their decision. What we do control is how we perform and over deliver on those commitments. And what I'm going to make sure we do is to make sure everyone in the industry is aware of our outperformance and what we are delivering upon. And I think when people see what we are able to do, they can judge who their partners should be. I'm very confident based on how we are performing and how consistently we're doing it. And instead of action, this is turning into a habit of week-over-week, month-over-month of how we're performing. And I think when insurance partners see this, they are going to have a choice to make, and I'm confident in what we're doing, and what we're able to drive for them that we're going to be in the conversation. But again, I can't control the outcome. That's someone else's decision. But what we can control is to make sure they have a partner that is performing the best and at the highest level, and I believe we are doing that right now.

That's helpful. And just a quick follow-up. Do you think there is any attribution of the win to operational performance on the ground, the key metrics you often talked about, versus the actual price performance of the option?

I believe it's a combination of various factors. Every insurance partner evaluates the net return, which takes into account costs, cycle time, the speed of obtaining a title, and the average selling price. I'm particularly impressed by our ongoing ability to enhance average selling prices for our partners, especially in light of the current trends in the used car market. It's an integrated approach; what's crucial for our partners is the net returns, and that's where our focus lies. It's not just about one aspect; it's about delivering the complete package, and I think we are successfully doing that right now.

Thanks for the color. I will pass the line. Thanks.

Our next question comes from Krista Friesen from CIBC. Your line is now open.

Hi, thanks for taking my question. And congrats on the quarter. I was just wondering if maybe you can elaborate a little bit more on the commercial business and maybe if there is any specific areas that you are seeing weaknesses and if you think some of this is due to the uncertainty around the election.

Yes. Look, I'll start and I'll pass it over to Sameer and Eric to add some color. Look, when we look back at every election, we see a similar cycle where people get apprehensive, either that's buying new equipment, interest rates and what's going to happen in the market. So the election cycle, and I think we mentioned this in the past couple of calls, always has an effect and it is just a delay effect, just a matter of time of what happens. And for us, as we look at price and everything else, we are not shocked the way price is going right now with where interest rates are and everything else. And for us, there is a lot of indicators that are in our favor. But as indicators, the hard part is to know when they are going to go in that time sequence to exactly know is it fourth quarter, first quarter, second quarter, why it happens. But there is a lot of things in our favor right now that we just need to continue executing for our partners and listening to them and what they need and make sure we are able to go after it. And Sameer or Eric, I'll pass it over to either one of you, if you want to give any more color about the macro environment.

Krista, it is Sameer. Yes, I wouldn't specifically call out any end-market causing weakness. I think what we do hear from our customers is perhaps the interest rate environment plus the higher cost of new is causing them to tap the brakes on purchasing new, which means in turn, they're not looking for disposition services. So I'd say, probably smaller customers and the sensitivity around interest rates is what we would call out.

It's Jim. I would say there might be a different philosophy between past and current CEOs. I believe we have opportunities in our business. When I consider our ability to grow, manage margins, and control expenses, I feel fortunate that we can do all three. As RB Global and as an executive team, we are dedicated to managing these three areas, and we won't relent. We will always seek ways to optimize costs without compromising growth. We view these aspects as interconnected, and we will keep focusing on them. I am very optimistic about the future and what lies ahead. Each of these areas is crucial, and we will continuously prioritize them as a leadership team.

Great. Thank you. I’ll jump back in the queue.

Our next question comes from Craig Kennison from Baird. Your line is now open.

Hey, good morning. Thanks for taking my question. I think you mentioned a milder winter, and I'm just wondering if you can shed any light on the overall number of accident claims or accident frequency. It feels like that metric was down, offsetting some of the strength in the total loss rate.

Yes. And I'll start and Sameer, I'll pass it to you as we go through this. And look I think a mild winter affected everyone in the industry, if it is a collision or salvage as you kind of go through it. I just want to remind the group, when you look at our auto number, the carrier loss that we mentioned a year ago, is a big reason for what you are seeing in our performance. This is the first quarter of that carrier being pretty much fully out of our comparison. So we have three quarters to go up against that. We did mention the new win, which will offset some of that starting – in the fourth quarter as those cars start to come in. But again, our big thing, yes there was a mild winter. It does have some effect. But for us, when you are looking at our numbers, the big indicator to keep in mind is that carrier loss that we had a year ago of why we're performing the way we are. And without that, it would be different, and we probably wouldn't be talking about a mild winter or anything like that. And Sameer, anything you want to add from a macro environment?

Yes. Hey, Craig, we did look at it pretty closely. It is hard to quantify how much is weather. As Jim indicated, the bigger driver was obviously the customer loss.

Okay. Thanks. And as you make progress on the balance sheet, I'm wondering whether buybacks may be something that become part of the capital allocation decision?

Yes, this is Eric. We currently do not have an authorization in place for a buyback. But as noted in our last quarter, capital allocation. Our focus for the remainder of this year is around our term loan A paydown.

Great. Thank you.

Our next question comes from Maxim Sytchev from NBF. Your line is now open.

Hi, good morning gentlemen. Just a quick question around the elasticity of the take rate. Wondering what are your thoughts there? And where I guess the biggest drivers have been is it around the legacy business or IAA is starting to push it as well? Just maybe any color there in terms of how we should be thinking about this over potentially in the medium term? Thanks.

Yes. Look, it's always a tough thing to answer because when you think about take rate and fees and everything that goes into it, there is a competitive environment that we are constantly looking at to make sure we are staying competitive and what we're charging. But when you look at what we've been able to accomplish this year, it's on both sides of the business, it is on the traditional Ritchie Bros. side and commercial train and the auto side, traditionally what we call IAA. So it's a reflection of both of being able to increase some of the fees on both sides of the business. Look, I'm very optimistic about what the future holds when I think about take rate and what we can do, especially with all the additional services that we're able to add a transaction. But again, some of this is so hard when you're dealing in a competitive environment to know how competitors are going to react and what you're going to do and we have a process in place that we look at it on a very consistent basis. And then we have a process in place where we make decisions of what to do with those fees and everything else. But in general, I'm optimistic about what's in front of us and our ability to increase our financial profile in that regard.

Okay. Excellent. And then so just one follow-up. In terms of IAA and kind of your thought process around driving ASP through international greater reach, I'm just wondering if you have any update on that strategy? Thanks.

Yes, this was our strongest quarter for international buyers. I believe that attracting international buyers hinges on having more cars that are operational and considered "run and drive." We discussed what qualifies as a run and drive; sometimes, it may not be a vehicle that currently rolls or drives. The goal is to increase the number of operational cars that fit this definition, which in turn will enable more international buyers to engage in our auctions. They can invest in a car, ship it overseas, and then sell it after making their investment. Our focus remains on ensuring we have sufficient run and drive vehicles, while leveraging our relationships with Ritchie Bros. to support the IAA side. This collaboration, especially post-merger, is vital. Importantly, we need to understand the types of cars international buyers are looking for and ensure we offer those in our marketplace. Providing detailed information about the cars, such as trim levels and reasons why they are worth investing in, is crucial. A few weeks ago, we had our buyers at an annual summit in Chicago, where we gathered valuable feedback on future considerations. Overall, we are pleased with our current position regarding international buyers and satisfied with our team's execution of the run and drive program.

Okay, excellent. That’s it for me. Thanks so much.

Great. Just one quick follow-up. There were some headlines around weather events kind of small ones throughout the US. Just wondering if in any of those, you had an opportunity to sort of exhibit updated operations, handling of cat events and any feedback you might have gone from insurance companies. That was one of the kind of the lines of questions we got from investors over the quarter. So curious if you had any commentary there. Thank you.

Yes, it's Jim. I'll start. The cat events were very small. We've had received positive feedback from the partners that we have that were affected in those events. But again, I would say they're just on the small end of it. But look, I'm encouraged every time, even though it's small, I see how our team has reacted. I see what our partners, the appreciation they have to our reaction and what we're going to do. And the one thing that we're very prepared for this year is no matter what size cat, we are prepared. We're ready to support our partners, and we have the real estate, we have the space. We have the people, we have everything in place. And the other thing that we have in place is the minute these cat events are reported and the transparency that we're doing on a quarterly basis. We are going to also do for cats to make sure our partners are very aware of how we are performing and how quickly we're ready to react to their needs. So I know this might sound weird, and it's unfortunate for people that go through a cat event. But if a cat event does happen, I'm very confident in our performance and our ability then to communicate that to our partners as we go through it.

Thank you. We are now closing the question-and-answer session. I'd now like to hand back over to James Kessler for final remark.

Thank you so much. And again, I just want to really show my appreciation to the RB Global team. If it’s commercial construction, transportation, the automotive side of our business, everyone has done a tremendous job of living up to our commitments to our customer and over deliver on those commitments. And my belief is, as we continue to do that, that is really what is going to set us different than anyone else in this space. It is really the ability to do it consistently over and over when you make a commitment to deliver against that commitment. And I just want to show my true appreciation to the RB global team for their support and their ability to constantly do this over and over again. Thank you so much. I want to thank everyone for joining us on the call today, and we look forward to talking to you very soon. Thank you so much.

Thank you for attending today's call. You may now disconnect. Have a wonderful day.