Thank you for standing by. My name is Janine, and I will be your conference operator for today. At this time, I would like to welcome everyone to the RB Global Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Sameer Rathod, Vice President of Investor Relations and Market Intelligence. Please go ahead.

Hello, and good morning. Thank you for joining us today to discuss our third quarter results. Jim Kessler, our Chief Executive Officer; and Eric Guerin, our Chief Financial Officer, are with me on the call. The following discussion will include forward-looking statements, which can be identified by such words 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 transaction value, debt, potential partnerships and other items, and business and market trends 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 and 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 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. 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 Kessler. Jim?

Thanks, Sameer, and good morning to everyone joining the call. I want to begin by expressing my gratitude to our exceptional team for consistently overdelivering on our commitments and delivering outstanding results to our partners and customers. RB Global's third quarter highlights our commitment to disciplined execution with adjusted EBITDA declining less than 1% in the face of a 7% decline in gross transaction value. As previously discussed, GTV was driven by challenging comps in our commercial construction and transportation sector and the impacts of previously announced customer loss in our automotive sector. Let's first discuss the commercial construction and transportation sector. As mentioned in prior quarters, partners and customers continue to evaluate business conditions in the face of macro uncertainty and have adopted a wait-and-see approach to their equipment disposition needs. Historically, these wait-and-see moments are brief. However, they do cause headwinds in our marketplace for the supply of higher ASP assets. The current environment, combined with the elevated volumes and prices we experienced last year due to the lingering impacts from COVID, has created difficult year-on-year comparisons that mask the underlying progress of our growth initiatives. We believe the best view of the business trajectory is to compare to 2022 or a 2-year stack with construction and transportation GTV increasing approximately 10% in this time frame. Typically, the wait-and-see periods are short in nature, given that the market either accepts the slowdown and partners execute a de-fleeting strategy or partners gain confidence that there will be a reacceleration and start purchasing new equipment, which stimulates the trade-in cycle and drives decisions on aged equipment. In either scenario, we are the ideal partner to help our customers navigate their fleet management needs. We continue to focus on driving sustainable growth and have expanded our North American sales organization by approximately 10% year-over-year on a net basis. As productivity continues to ramp up these investments, we believe we'll be in a solid position to capitalize when the broader macro environment resolves either lower or higher. We understand our partners' challenges and are dedicated to supporting them through these complex times. Now let's move to the automotive sector. Our teammates' year-round dedication to catastrophe preparedness ensured a rapid and seamless response to the recent hurricanes. Our thoughts are with those affected by these devastating storms. As a proud member of these communities, RB Global remains dedicated to helping where we live and work. We supported local charities in the most impacted areas, providing relief to those most affected. Additionally, Ritchie Bros. played a critical role in aiding Duke's Energy's power restoration efforts in Florida, by providing space for over 4,000 line workers and their equipment at our Orlando yard. The strategic location allowed for quick mobilization to restore power to Central Florida once the hurricanes passed. We are grateful for the heroic efforts of everyone involved and helped them bring these communities back. I was incredibly proud to witness our team's dedication firsthand during my recent visit to Florida. Through our trust and transparency program, we have collaborated closely with our partners, working side-by-side and communicated in real time during these catastrophic events. I have personally received several emails from our partners, and they were very pleased with our agility and excellence in execution. IAA had several strategic advantages in responding to catastrophic events, ensuring we could overdeliver on our commitments. One advantage lies in our one team, all-in culture that enables a flexible and adaptable response from our teammates. For these hurricanes, approximately 15% of our response team comprised Ritchie Bros. team members, supporting recovery and vehicle inspection efforts. Additionally, we have the strategic option to utilize our Ritchie Bros. Orlando yard as additional capacity. However, thanks to our ample existing capacity in the region, we confidently managed operations without needing to exercise this option. Our carrier partners are also harnessing the power of our IAA inspection services to accelerate total loss decision-making. At the core of this service is our exclusive IAA vehicle score, a cutting-edge machine vision AI that analyzes vehicle images to quantify damage, a capability unmatched in the salvage industry. Complementing this is IAA vehicle value, an AI-driven tool that enables vehicle value estimates, all powered by our large and growing data set. Our technology further assesses flood-damaged vehicles, capturing critical details like waterline levels and mat wetness. Our mission is to streamline the virtual adjustment process, making it faster, more straightforward and more accurate. Thanks to our investment in technology and innovation, partners have significantly reduced upstream assignment cycle times by over a week during Hurricane Helane. We continue to drive premium price performance for our partners by continuously improving our process and technology. In the third quarter, we continued to make progress in attracting new international buyers to our marketplace, achieving a record high percentage of vehicles sold to national buyers in the automotive sector. Our efforts resulted in average selling prices of salvage U.S. insurance vehicles increasing by 1% year-over-year, which continues to be an industry-leading outcome. Our exceptional performance and commitment to trust and transparency is resonating with our partners. We believe we are gaining a salvage market share here in the fourth quarter. A key element of our international automotive salvage growth strategy is to enter new markets with partners that provide immediate scale. We're excited to announce that we have been selected by Suncorp Group, a leading insurance provider in the Australian market as their sole salvage provider. We expect to execute on the multiyear contract and start supporting our partner in the late first quarter or early second quarter of 2025. After we finalize contract terms and Suncorp Group obtains final approval of those terms from its Board, we anticipate that this partnership could provide up to 65,000 units annually once we are fully operational. We plan to accommodate this volume by strategically blending new greenfield locations and utilizing existing Ritchie Bros. locations and third-party yards. We were selected for this partnership for three key reasons. First, the Ritchie Bros. strong existing and expanding presence in Australia, along with our strong brand reputation, served as the cornerstone in earning our partners' confidence in our ability to overdeliver on our commitments. Second, IAA is widely recognized as a premier global brand in salvage solutions. And third, IAA's cutting-edge industry-leading digital technology for processing vehicles, combined with our unmatched suite of auxiliary services, sets us apart. I will now pass the call to Eric to review our financial performance and outlook.

Thank you, Jim. Before we start, I'd like to highlight that we've updated our disaggregated revenue presentation to enhance clarity and provide investors with a more transparent view of how management evaluates business performance. Total GTV declined by 7%. Automotive GTV decreased by 1%, driven by stable unit volume and a 1% drop in average price per vehicle sold. Notably, this 1% outpaced the broader industry's more significant downturn. Unit volumes remained stable as growth from existing partners offset headwinds from the previously announced customer loss. As Jim noted, on a net basis, we believe we are continuing to gain market share in the salvage industry sequentially here in the fourth quarter. Overall 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 third quarter, GTV Intelligent Solutions estimated that the total loss ratio increased nearly 180 basis points to approximately 21.7%, compared to 19.9% in the same period last year. GTV in the commercial construction and transportation sector decreased by 10%, driven by a decline in the average price per lot sold, partially offset by a 19% growth in lot volumes. Average price per lot sold declined due to both asset mix and continued deflation in asset values. Asset mix headwinds stemmed from lot volume growth from rental and transportation industries, where asset values are intrinsically at lower ASPs. Excluding the impact of the Yellow Corporation bankruptcy, GTV decline in the commercial construction and transportation sector would have been approximately 14%. Moving to service revenue, service revenue increased by 1%, driven by our service revenue take rate expanding approximately 150 basis points to 21.5%, partially offset by a decline in GTV. Service revenue take rate expansion was driven by growth in our marketplace services and a higher average buyer fee rate. Moving to adjusted EBITDA, adjusted EBITDA declined due to lower levels of GTV and lower inventory returns, partially offset by an expansion in our service revenue take rate. As we anticipated certain headwinds this quarter, we took decisive action by launching a targeted discretionary cost reduction initiative. This was in addition to our ongoing strategic focus on operational efficiency. Through these efforts, adjusted EBITDA declined by 1% in the face of a 7% decline in GTV. We remain dedicated to efficiency and disciplined execution. However, we are not sacrificing any investments in strategic areas that position us for long-term growth. You can measure our progress by seeing adjusted EBITDA as a percentage of GTV increasing to 7.8%, compared to 7.4% in the prior year. Adjusted earnings per share decreased by 1% on a slightly higher adjusted tax rate. Our solid operational performance and continued debt paydown drove a one-tenth of a turn decline in our adjusted net debt to trailing 12 months adjusted EBITDA to approximately 1.7x compared to the second quarter. Consistent with our capital allocation strategy, we plan to continue paying down Term Loan A for the remainder of the year. Moving to the outlook, we maintain our full year GTV guidance range from 0% to 2%. However, given the various puts and takes we see with the hurricane-related volumes and continued pressure on commercial construction and transportation ASPs, we think we will be at the lower end of the range. For adjusted EBITDA, we are increasing the lower end of the guidance range to $1.235 billion from $1.22 billion, due to the solid third quarter results and continued attention to cost efficiency. Please note that our guidance incorporates incremental operating expenses incurred in the fourth quarter associated with the recent hurricanes. With that, let's open the call for questions.

The first question comes from Sabahat Khan from RBC. Please go ahead.

Thank you, and good morning. Given the current macro environment and trends in your segments, could you share your insights, particularly on the commercial side, regarding your expectations for 2025? I understand you've mentioned that customers are being somewhat cautious, but what do you anticipate in the medium term for disposition activity, considering the perspectives of your larger partners on the outlook?

Great question. I'll provide a high-level overview and then pass it to Sameer, as he is the expert when it comes to our customer outlook. Our main focus is to assist our partners in delivering results in any economic environment. Our team is dedicated to understanding the current situation this quarter and next, listening to their needs, and finding ways to support them while adding value to their profit and loss. Sameer, I'll hand it over to you for some insights.

Yes. Sabahat, I think overall, we're not seeing anything different compared to what you hear from other companies. Obviously, construction OEM sales are weaker; people are still assessing the outlook. I think from our perspective, again, like Jim said, we're focused on servicing our customers and partners best we can regardless of what happens. And remember, we are investing in organic growth initiatives to drive secular growth. And so, Jim did mention that we grew the North America sales force by about 10%.

Sure. At a high level, can you discuss the various initiatives you have in place for improving efficiencies? As we look forward to the next year, could you share your progress on margin improvement, including any significant milestones or key areas of margin enhancement that you anticipate will materialize in the coming years?

We are not going to provide very specific details, but I encourage you to refer back to our comments from the past quarter. As we consider our business, we are focused on three main objectives: driving revenue growth, expanding margins, and doing so with the most effective structure while optimizing the business. This is not a short-term focus; it is a continuous journey where we will always prioritize these three areas. Optimizing our operations and enhancing flow-through is a crucial aspect of our journey, and it will remain a key focus for us moving forward.

Our next question comes from the line of Krista Friesen from CIBC. Please go ahead.

It sounds like things are obviously progressing quite well on the IAA side, especially with your announcement on the call. Can you just speak to some of the core KPIs of the business? And how far are we away from where you'd like those to get to?

Yes. So it's Jim. So I'll jump in. So I think we're 18 months into the acquisition. I am very proud from the KPI standpoint of where we're at, and we call it SLAs, our strategic agreements with our partners. We are hitting industry-leading numbers, and we have done it consistently for about 12 months now. I truly believe we are driving more value to our partners than anyone else, and I believe our partners are seeing that and the share that we have gained. But just to answer your first question, really, what we focus on is advanced storage charges, cycle time, how quickly can you get a title, gross returns, and then ultimately, that will calculate a net return for our partners. And those are really the four buckets, and there are other underlying pieces like buyer base and how do you grow it, that's normal in the marketplace, but they're really the buckets that we look at and the buckets that we're driving. I believe we're at the very top end of that range, and our focus right now is consistently overdelivering on those items, which I believe we are doing for our partners.

And maybe just one follow-up. You spoke to your capital allocation priorities for the remainder of the year. But as we look out to 2025, how are you thinking about capital allocation at that point? Or are you maybe focusing a little bit more on some tuck-in M&A? Or what are your thoughts there?

Thank you for the question. For the remainder of 2024, our focus is on paying down the Term Loan A. As mentioned a couple of quarters ago, our capital allocation strategy will continue to emphasize investing in the business, both in technology and our real estate footprint. We will keep paying down the Term Loan A, and we are also considering M&A opportunities. We will continue to explore tuck-in opportunities for the business where it makes sense for us.

Our next question comes from the line of Gary Prestopino from Barrington. Please go ahead.

I have two questions. First, Eric, it seems there was a decline in SG&A year-over-year of about $26 million. Is this a result of your efforts to control expenses this quarter, or was there something in last year's numbers that inflated them, making comparisons easier?

Gary. There are a couple of components to that. As Jim and I have been articulating since I've gotten here, we are focused on operating efficiency. So that is going to continue to be a focus. Also, in the third quarter, we did focus on some more discretionary spending as we knew there were some headwinds on the GTV side, as I articulated in my prepared remarks. So those are real initiatives that year-over-year are changes. There is a piece of it year-over-year. I won't give an exact percentage, but it's not the majority of it. That would be related to bonus attainment, right, when you look year-over-year. But overall, it's really the initiatives that we've put in place to focus on operating efficiencies for the business.

Okay. My second question is about the new business with Suncorp in Australia. Could you explain how that came about? Was it a cross-sell related to your work in heavy equipment that led to this contract? Since you currently don't have operations in Australia on the salvage side, was this process initiated through a request for proposals, or was it a direct negotiation with you?

Look, I would just say from a Suncorp standpoint, they managed their business like any of the insurance carriers in the U.S. So it was kind of a normal RFP process that they go through. We were known from our Ritchie Bros. side of the business over in Australia, which is a big marketplace for us. The great thing about Australia is they operate their business very similarly to how we operate in Canada. So as the RFP came together, it became very obvious that we had a tool that not only Suncorp, but I think all insurance partners in Australia will have an interest in. I'm very happy that the team was able to get awarded the contract.

Our next question comes from the line of Craig Kennison from Baird. Please go ahead.

I believe you mentioned an increase of 10% in your territory manager base. I'm wondering if you can just comment on sort of the productivity curve for the typical salesperson and when we might expect that to translate into GTV?

Yes. So it's Jim. The first thing, the 10%, as we think about the increase in salespeople, we're constantly going to be looking for, do we have holes in our model? Are we not in conversations with certain partners because we just don't have feet on the street to have it on the regional side of the business? And we constantly look at that map and where should we add someone where there's equipment. We don't get into the very detail of exactly the curve. But for us, one of the best investments we can make is on the salesperson side. It's very clear you pay x in salary. You know how much GTV they can generate. When we hire the right person with the right personality, that happens pretty quickly. It's going to be something that we constantly invest in. And also, on the other side, when you don't make the right hire, it's also something that you can manage pretty quickly too and get the right person into that position.

And then a while back, I think you had invested more in inside sales and sort of changed the territory manager model. Could you provide an update on the current inside, outside model?

Yes, yes. So we still have both in our model. The one thing that's apparent in the region side of the business is it's a very much high-touch type of business. There are some customers of different ages and progress in their careers that prefer a self-service model, which we have built with our technology and having the inside sales team for support. But there's still a demographic out there that controls a lot of the market share that still prefers a high touch. So we're constantly investing in the future. But the one thing in this industry, it takes a while for it to change, right? So we want to make sure as it transforms, we have the right technology and the right infrastructure in place. But we do realize this is a high-touch type of environment.

Our next question comes from the line of Michael Feniger from BoA. Please go ahead.

Now that we're past the election, just looking back to Trump's first term, there's tightness in the used equipment channel in 2017. So, just wanted to get a sense of what you guys are thinking about for a second term in terms of similarities and differences?

Yes, it's Jim. I wish I could answer that question accurately, but if I could, I would likely be in a different job. However, I believe that many of the macro trends are favorable for us, especially considering the outcomes of the election. This adds another positive element for our industry. That said, we won't comment on any speculation that we cannot control.

That's fair. And then second question, just any sense of CapEx in '25? It seems like you guys are sort of stabilizing and starting to win some business in IAA. So could we see a step up? Or just trying to get thoughts there.

Yes. So we're still going through our 2025 budgeting process, but there will be some investment related to the Suncorp deal that we just announced today. So we'll go through the capital allocation process, and we'll come out with guidance on our Q4 call.

I would like to remind everyone that in the U.S., we have capacity from the IAA side. Unfortunately, we had to report a loss last year, but we do have that capacity. Regarding Eric's point about Australia entering a new market, you will see that. However, when considering the U.S. and Canada and our efforts to gain market share, remember the lost capacity that we want to recover before we venture into new capital investments.

Our next question comes from the line of Maxim Sytchev from MDS. Please go ahead.

Would you mind maybe commenting a little bit on take rate because that metric continues to trend higher. How should we think about this over the medium term?

Yes. So I'll start and then Eric, if you want to chime in with anything. Look, we have a process where we evaluate take rate and it goes with a bunch of things, inflation, competition, everything that goes through. So we're going to make sure we're in a very competitive position as we think about it. We have an annual process that we make an evaluation of what should we do with it, and we're going to continue that. We look at it on a very consistent basis to see what's happening in the market and what is competition doing. And again, look, I just want to go back to our three priorities. We want to grow GTV. We want to expand margins, and we want to do it as efficiently as possible and take rate plays a role in that. And it's something that we constantly evaluate. Some of it, we have to look at other people of what decisions they're making and that could influence what we decide to do in the future, but we're very happy where we're at at this moment, and it's something that we're constantly going to look at.

And is there any comment or color you can provide on sort of market share dynamic in North America right now, Jim by chance?

Look, we're not going to comment specifically on market share. I think you can see from our notes that we believe we're gaining share, and that's probably the comment that we're going to make. Our focus for market share applies to both sides of our business. And when we think about Ritchie Bros. and IAA, what our value is, is what the value we can drive to our partners and what they can see in their P&L. We feel that as long as we're overdelivering our commitments and driving that value in partnership with them, that's going to be good for us and ultimately help us grow into the future. But what we're focused on is what we can control. And what we can control is how do we drive value for our partners. And that's what we're laser-focused on at RB Global.

Our next question comes from the line of John Healy from Northcoast. Please go ahead.

Jim, I know you just answered the question about market share, but I have to try this one. Last quarter, you talked about kind of the win that you had kind of second tier of the market. This quarter, you're talking about Suncorp. Are there other things, particularly in North America that whether they're pilots or whether they're tests or just things along that line that give you confidence that you can have more trophies on the case next year? I just have to ask that. I think investors do care, and as you announce things, I think there's a hope that you guys will give more color on other things that you're working on or momentum that's in the marketplace. So just curious if there are other kind of tests or pilots underway that give you confidence that you can gain further share into next year?

No, I appreciate the different ways everyone asks the same question. What gives me confidence is my experience over the past 18 months talking to our partners and understanding their needs. For instance, we've noted a 1% increase in average selling prices. When you apply that 1% to the number of vehicles in the salvage industry, it represents a substantial amount, with many zeros. As long as we remain focused on these aspects, there will always be opportunities for pilots. What we're trying to communicate is the value of our efforts and the potential impact they can have on our partners' financial statements. We want to clearly provide numbers that indicate how these efforts could translate into millions of dollars and affect their loss ratios or earnings per share if they're a public company. Good businesspeople seek partners capable of delivering that kind of value, and I believe we are demonstrating that, which reinforces my confidence in our future market share. While there will always be chances for pilots, it's crucial to show that we can add value to our partners' businesses. I believe we are currently accomplishing that for our existing partners, which may also attract interest from those we aren't currently working with.

I appreciate that. And then just two follow-up questions. Just on Suncorp, as you kind of put that business in action next year. Are there any big upfront costs that might dilute to margin contribution to that business next year? And then also on the sales force adds to 10%, how long until those folks typically become productive?

No, good question. So I'll start, and then I'll let Eric chime in on any of the upfront cost or anything with the Australia entry into the market. But really, when I think about international, just in general, we have a playbook of technology tools and processes that we can bring to the salvage market. What we've built over the last year is, okay, what is that playbook, and that helped us present it as we're going through the RFP process. What I love about entering into Australia is we already have a footprint, and we already have a support team, think about market and buyer demand that kind of already exists. So entering into a market where Ritchie Bros. already has a support presence is a great thing. Now you still look to different buyers sometimes, so you have to drive demand and all that stuff. So I'm really happy with that. I'm most excited about is we have a playbook, instead of theory, this is going to put execution against it in actual, which gets me excited about other market potentials that we have into the future. Then Eric, if you want to answer the capital, then I can come back and talk about the sales productivity.

Yes, no problem. So on the EBITDA, it will not have a significant or material impact on margin. I think on the real estate side, like we've said in the past, we will evaluate what's the right real estate footprint for that business. Some of that may be purchased, some of that may be leased, but we'll put that through our decision tree. As we evaluate that, that may have an impact on our capital spend from a real estate perspective.

And then from the sales productivity, look, I'm not going to get into specific numbers, but you can kind of think about what is an average salary of a typical TM, look at a GTV number and look at our take rate. It doesn't take a lot of equipment to be able to break even pretty quickly for a Territory Manager. But we're not going to get into specifics of what those numbers are, but you can kind of use some basic averages and look what we have, and you can see it doesn't take you a lot of months to figure out when breakeven takes place for a TM.

Our next question comes from John Gibson from BMO Capital Markets. Please go ahead.

To begin with, I'm curious about the slight increase in the 2024 guidance. Is this attributed to the improvement in margins and take rates we've observed, or are you beginning to see an increase in volumes from the recent catastrophic events in Q4?

Yes. When we look at the margin, as I indicated in my prepared remarks, we knew that Q3 was going to be a little bit more of a challenge. We took the initiative around some additional discretionary spend reduction, and that's going to continue into Q4. When I looked at the Q3 performance, we did a little bit better on the EBITDA line, and I wanted to make sure we capture that in our full-year guidance with one quarter remaining. So we feel really good about tightening that range.

And I'll give just a little bit of color just around cat events. Cat events are one of those weird things where from a top line, it's a good thing, but depending on how big the cat events are from a profitability EBITDA standpoint, it really depends on your model and how do you operate in it. This was a decent-sized cat event for us. I'm very happy with how the team handled it and how we performed for our partners, and I've received multiple emails about it. But I wouldn't think about a cat event, it helps you on the top line, but I would not think about it as a normal profitable type of event, especially not compared to the daily stone of salvage vehicles.

Got it. And then based on your CapEx guidance for the year, it implies a pretty big spend here in Q4. Wondering if we can see that come down a bit for the year. And then more specifically, where is the majority of your capital going? Is it towards land purchases or more investing in technology and services?

Yes. We don't provide the specific split on technology versus land, and we will flex it like we talked about earlier. We put the properties through our strategic kind of decision tree. If we have to flex and spend a little bit more on property, we'll do that and then the same on our technology road map. It is a pretty robust and evergreen process we go through the year. To answer your question on Q4, we're maintaining our current guidance, and we'll see how the year progresses to make sure we're within that range.

That concludes our Q&A session. I would like to turn the call back over to James Kessler for final closing comments.

Thank you so much. First off, I just want to make sure going through the first large cat events since I've been over on the IAA side. For the Ritchie Bros. side, I want to thank all of our 8,000 teammates for all their efforts, and I've been unbelievably impressed how consistently we're overdelivering on our commitments to our partners, which I believe is ultimately the thing that we need to do to be able to accomplish growing our market, expand the margins, and operate efficiently. So I want to thank everyone for all your hard work. And secondly, thank everyone for taking the time on the call today. I really want to make sure everyone hears how excited we are about the future potential that the whole management team and everyone here at RB Global sees in front of us. Just wanted to thank you one more time. And everyone, have a great day, and hope you enjoy the weekend. Thank you so much.

This concludes our conference call for today. You may now disconnect.