Q2 2023 RB Global Inc Earnings Call

August 3, 2023

Operator: Good afternoon. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the RB Global Second Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star two. Thank you. I will 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.

Speaker 1: Good afternoon, my name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to the RB Global's second quarter conference call. All lines have been placed on mute to prevent any background noise. After this, because remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question.

Good afternoon, My name is Chris and I'll be your conference operator today at this time I would like to welcome everyone to the RBC Global second 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.

If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad.

If he would like to withdraw your question. Please press star two.

Thank you I will now turn the call over to Mr. Samir Rethought, Vice President of Investor Relations and market intelligence to open the conference call. Mr. Mythology, you may begin your conference.

Speaker 1: Thank you. I will now turn the call over to Mr. Samir Rathod, Vice President of Investor Relations and Market Intelligence to Open the Conference Call. Mr. Rathod, you may begin your conference.

Speaker 2: Hello and good afternoon to everyone. Thank you for joining me and Jim Kester, our chief executive officer on today's call. The following discussion will include board looking statement which can be identified by words such as expect, believe, estimate, anticipate, plan, intent, opportunity in similar expressions.

Hello, and good afternoon to everyone. Thank you for joining me are Jim <unk>, Our Chief Executive Officer on today's call.

Sameer Rathod: Hello, and good afternoon to everyone. Thank you for joining me and Jim Kessler, our Chief Executive Officer, 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 transaction value, debt, and other items, business and market trends, and expectations regarding integration of IAA, including the anticipated cost synergies, are considered forward-looking and involve risk 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 form 10-K, which are available on the investor relations website and at EDGAR and SEDAR.

Following discussion will include forward looking statements, which can be identified by words, such as expect believe estimate anticipate plan intend opportunities and similar expression comment.

Speaker 2: Comments that are not a statement of fact, including the not limited to projections of future earnings, revenue, gross transaction value, debt, and other items, business and market trends. And expectations regarding integration of IAA, including the anticipated cost energies, are considered for looking and involved with skin uncertainties.

Comments that are not a statement of fact, including but not limited to projections of future earnings revenue gross transaction value and other items business and market trends and expectations regarding the integration of <unk>, including the anticipated cost synergies are considered forward looking and involve risk and uncertainties.

Speaker 2: The risk and uncertainty that could cause actual results to differ significantly from such forward-looking statements or details in our use release issued this afternoon, as well as our most recent quarterly reports in annual form at 10K, which are available on the investor relations website and at your encedre. On this call, we will also discuss certain non- GAAP financial measures, including forward-looking non- GAAP financial measures.

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 So Paulo.

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And SEDAR com.

Sameer Rathod: 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 the investor presentation 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. All figures discussed on today's call are in US dollars, unless otherwise indicated. At this time, I would like to turn the call over to Jim. Jim?

On this call. We will also discuss certain non-GAAP financial measures, including forward looking non-GAAP financial measures.

Speaker 2: or the identification of non-gapline antilemasures, the most directly comparable gap-line antilemasures, and the applicable reconciliation of the two, T.R.U.'s release, Form 10K, Form 10Q, and the Investor presentation coasted on our web.

What are the identification of non-GAAP financial measures. The most directly comparable GAAP financial measure and applicable reconciliation of that you see our news release Form 10-K Form 10-Q, and the investor presentation constitute on our website.

Speaker 2: We are unable to present quantitative reconciliation of board looking non- GAAP financial measures. As management cannot predict all necessary components of such measures. Investors are cautioned not to place undue reliance on board looking non- GAAP financial measures.

Unable to represent quantitative reconciliation of forward looking non-GAAP financial measures that management cannot predict all necessary components of.

Such measure investors are cautioned not to place undue reliance on forward looking non-GAAP financial measures.

Speaker 2: All figures discussed on today's call are US dollars unless otherwise indicated.

All figures discussed on today's call are U S dollar unless otherwise indicated at.

Speaker 2: At this time, I would like to turn the call over to Jim. Jim? Thank you, Samir, and good afternoon to everyone. As you saw from the release as she today, there was strong momentum across the cum.

At this time I would like to turn the call over to Jim Jim.

Thank you Samir and good afternoon to everyone. As you saw from the release issued today there is strong momentum across the company.

Jim Kessler: Thank you, Sameer, and good afternoon to everyone. As you saw from the release issued today, there is strong momentum across the company. The increase in GTV and our expectations for continued GTV growth demonstrate our customers' enthusiasm for RB Global Solutions and Services offerings. The IAA integration is progressing well. We are realizing our targeted cost savings and are seeing positive results from numerous operating and service initiatives, which pave the way towards the expected revenue growth from the combination. Sameer and I look forward to talking more about our results and progress, but first, I want to acknowledge the leadership changes we announced yesterday.

Speaker 3: The increase in GTV and our expectations for continued GTV growth demonstrate our customers' enthusiasm for RB Global Solutions and Services offers.

The increase in GTD and our expectations for continued GTD growth demonstrate our customers' enthusiasm for RV global solutions and services offerings.

The IAA integration is progressing well we are realizing our targeted cost savings and are seeing positive results from numerous operating and service initiatives, which pave the way towards the expected revenue growth from the combination.

Speaker 3: The IAA integrations progress well. We are realizing our targeted cost savings and are seeing positive results from numerous operating and service initiatives which paved the way towards the expected revenue growth from the combination.

Speaker 3: Samir and I look forward to talking more about our results and progress. But first, I want to acknowledge the leadership changes we announced yesterday.

Samir and I look forward to talking more about our results and progress, but first I want to acknowledge the leadership changes we announced yesterday.

Jim Kessler: When I joined Ritchie Brothers in 2020 as co-COO, the mandate for the management team was clear: redefine the operating model, build a differentiated, digitally enabled, omni-channel marketplace, recruit best-in-class talent, and establish a culture that inspires excellence in how we operate and serve our customers. I am extremely proud of our execution in all of these areas and the company's transformation in such a short amount of time. Working with Ann Fandozzi at Ritchie Brothers during this period and at prior companies has been a meaningful part of my career. I have great respect for Ann, and I am honored to pick up the baton and succeed her as CEO.

When I joined Ritchie brothers on 2020, Ico CLO the mandate for the management team was clear redefine the operating model build a differentiated digitally enabled omnichannel marketplace.

Speaker 3: When I joined Richie Brothers in 2020, at COO, the main date for the managing team was clear. Redefine the operator model. Build a different, inshated, digitally enabled Omni-channel marketplace.

Speaker 3: Recruit Festing Clifton in a status of culture that inspires excellence and how we operate and serve our customers.

Recruit best in class talent and establish the culture that inspires excellence in how we operate and serve our customers.

Speaker 3: I'm extremely proud of our execution all these areas and the company's transformation in such a short amount of time.

I'm extremely proud of our execution all of these areas and the Companys transformation in such a short amount of time.

Speaker 3: Working with Amphandosia and Richard Brothers during this period and that prior company has been a meaningful part of my career. I have great respect for Anne and I am honored to pick up the baton and succeed her at T.E.A.

Working with anchor handlers, yet Ritchie brothers during this period in a prior company has been a meaningful part of my career I have great respect for Ann and I am honored to pick up the baton and succeed her etsy.

Yes.

Since completing the IAA acquisition I've been leading the integration and have been working closely with the organization to ensure our customers now the compelling value proposition, we provide and that they can depend on this team to deliver when it consistent basis.

Speaker 3: Since completing the IAA acquisition, I have been leading the integration and have been working closely with the organization to ensure customers know the compelling value proposition we provide and that they can depend on this team to deliver on a consistent basis.

Jim Kessler: Since completing the IAA acquisition, I have been leading the integration and have been working closely with the organization to ensure our customers know the compelling value proposition we provide and that they can depend on this team to deliver on a consistent basis. I have talked directly with many of our insurance customers. They know we are committed to being a strong partner to them. Before joining RB Global, I was COO at ABRA Auto Body and Glass. We successfully merged two of the leading collision repair providers to create the market leader in the $47 billion collision repair industry. We have an outstanding team and platform at RB Global, and I am enthusiastic about replicating the success through the integration we have underway. Our Q2 results make clear that we are on the right path forward.

Speaker 3: I have talked directly with many of our insurance customers. They know we are committed to being a strong partner to them.

I have talked directly with many of our insurance customers.

No we are committed to being a strong partner to that.

Speaker 3: Before joining RB Global, I was COO at Aber on a body in Glac.

Before joining the army global I was CFO at ever auto body and Glenn.

Speaker 3: We successfully merged two of the leading collision repair providers to create the market leader in the 47 billion collision repair industry.

We successfully merged two of the leading collision repair providers to create the market leader in the 47 billion collision repair industry.

Speaker 3: We have an outstanding team and platform at RB Global. And I am enthusiastic about replicating the success through the integration we have underway.

We have an outstanding team and platform at Army Global and I am enthusiastic about replicating the success through the integration we have underway.

Our second quarter results make clear that we are on the right path forward.

Speaker 3: Our second quarter results make clear that we are in the right path forward.

Jim Kessler: The strength and effectiveness of our long-term strategy and marketplace platforms continued to produce double-digit growth in GTV on a constant currency pro forma combined basis in the quarter. GTV growth was driven across our verticals and geographies. Strong execution enabled solid flow-through and supported double-digit adjusted EBITDA growth on a combined basis. We are observing an increase in supply availability within the construction and transportation sector as supply chains gradually improve for our trusted OEM partners. As always, our focus remains on driving strong execution on every aspect of our business that is within our control, with the goal of driving profitable growth, irrespective of broader macroeconomic conditions. While delivering on the synergy commitments, we are also continuing to invest in our workforce and technology to ensure the reliable execution of our growth initiatives.

The strength and effectiveness of our long term strategy and marketplace platforms continued to produce double digit growth in GTA, one at constant currency pro forma combined basis in the quarter.

Speaker 3: The strength and effectiveness of our long-term strategy and marketplace platforms continue to produce double-digit growth in GTV on a constant currency-proformed combined basis in the board.

Speaker 3: GTV Growth was driven across our verticals and geoger.

GTD growth was driven across our verticals and geographies strong execution enabled solid flow through and supported double digit adjusted EBITDA growth on a combined basis.

Speaker 3: Strong execution enabled solid flow through and supported double digit adjusted EBITDA growth on a combined base.

Speaker 3: We are observing an increase in supply availability within the construction and transportation sector. As supply chains gradually improve for our trusted OEM partners, as always, our focus remains on driving strong execution on every aspect of our business that is within our control. With the goal of driving profitable growth, irrespective of broader macroeconomic conditions.

We are observing an increase in supply availability within the construction and transportation sector, our supply chains gradually improve for our trusted OEM partners as always our focus remains on driving strong execution on every aspect of our business that is within our control with the goal of <unk>.

Driving profitable growth irrespective of broader macroeconomic condition.

Speaker 3: While delivering on the Synergy Commitment, we are also continuing to invest in our workforce and technology to ensure the reliable execution of our growth initiatives.

While delivering on the synergy commitments. We are also continuing to invest in our workforce and technology to ensure the reliable execution of our growth initiatives.

Jim Kessler: This will allow for consistent performance in the presence of headwinds and robust growth in periods of tailwinds. The second quarter exemplified the resilience of our strategy as we continue to shift from growth driven by pricing to growth driven by unit volumes. This transition demonstrates our ability to adapt and capitalize on market dynamics, positioning us for continued success. During Q2, we achieved a significant milestone in our marketplace transformation journey by successfully piloting in our Modern Checkout Microservice. The response from customers was overwhelmingly positive, as they enjoyed the convenience of online payments and the ability to complete a transaction digitally. As a reminder, this is a key building block of the services attachment strategy as long-term back-office efficiencies, which will be executed in the next 12 to 24 months.

Speaker 3: This will allow for consistent performance in the presence of headwinds and robust growth in periods of tailwinds.

This will allow for consistent performance in the presence of headwinds and robust growth in periods of tailwind.

The second quarter exemplifies the resilience of our strategy as we continue to ship from growth driven by pricing to growth driven by unit volume.

Speaker 3: Second quarter exemplified the resilience of our strategy as we continue to shift from growth driven by prison to growth driven by univomile.

Speaker 3: This transition demonstrates our ability to adapt and capitalize on market dynamics. Position us for continued success.

This transition demonstrates our ability to adapt and capitalize on market dynamics positioning us for continued success.

During the second quarter, we achieved a significant milestone in our marketplace transformation journey by successfully piloted in our modern checkout micro server.

Speaker 3: To run the second quarter, we achieved a significant milestone in our marketplace transformation journey. By successfully piling in our modern checkout microservice.

Speaker 3: The response from customers was overwhelmingly positive, as they enjoyed the convenience of online payments and the ability to complete a transaction digital.

The response from customers was overwhelmingly positive as they enjoyed the convenience of online payments and the ability to complete a transaction digitally.

Speaker 3: As a reminder, this is a key built-in block of the services attachment strategy and long-term back office efficiencies, which will be executed in the next 12 to 24 months.

As a reminder, this is a key building block of the services attachment strategy.

As long term back office efficiencies, which will be executed in the next 12 to 24 months.

Speaker 3: This strategic approach aims to provide customers with a diverse range of marketplace services throughout the transaction process, enhancing their overall experience.

Jim Kessler: This strategic approach aims to provide customers with a diverse range of marketplace services throughout the transaction process, enhancing their overall experience. In the automotive sector, the growth in unit volumes was driven substantially by our existing customer portfolio. This growth was partially offset by cycling over the volumes lost from the previously announced single large customer. The industry continues to see the total loss ratio recover, increasingly to approximately 18.4% from 17.1% in the same period last year. Recall that the total loss ratio is the number of vehicles deemed salvaged as a percent of total accidents, and it has historically been influenced by used car values. Used automotive prices continue to trend lower, while repair costs remain elevated, making it more economical to deem a car a total loss after an accident.

This strategic approach aims to provide customers with a diverse range of marketplace services throughout the transaction process enhancing the overall experience.

In the automotive sector the growth in unit volumes was driven substantially by our existing customer portfolio.

Speaker 3: In the automotive sector, the growth in unit volumes was driven substantially by our existing customer portfolio.

Speaker 3: This growth was partially all set by sigloin over the volume's loss from the previously announced single large press.

This growth was partially offset by cycling over the volumes lost from the previously announced single large customer.

Speaker 3: The industry continues to see the total loss ratio recover. Increasingly to approximately 18.4% from 17.1% in the same period last-

The industry continues to see the total loss ratio recover increasingly to approximately 18, 4% from 17, 1% in the same period last year recall that the total loss ratio is the number of vehicles being salvaged as a percent of total accidents and then it's just.

Speaker 3: Recall that the total loss ratio is the number of vehicles deemed salvaged at a percent of total accidents. And it has historically been influenced by use card value.

Shortly been influenced by used car values used automotive prices continued to trend lower why repair costs remain elevated making it more economical to deem a car a total loss after an accident.

Speaker 3: Used automotive prices continue to trend lower. Why repair costs remain elevated. Make it more economical to deem a car or total loss after an accident.

Speaker 3: The IAA acquisition has been closed now for a full quarter. Our integration efforts to date reinforce our confidence in IAA's long-term business process.

The IAA acquisition has been closed now for a full quarter.

Jim Kessler: The IAA acquisition has been closed now for a full quarter. Our integration efforts to date reinforce our confidence in IAA's long-term business prospects. As we suspected during diligence and now have confirmed, we have identified areas where the customer experience can be enhanced. We are committed to providing exceptional service to our insurance customers, and we are deploying fresh, more innovative thinking to ensure we can deliver on this commitment. One aspect of this effort is to identify key priorities and execute consistently on the process that we control. Although we are still in the early stages, we are encouraged by the willingness of insurance industry stakeholders to collaborate. We aim to significantly enhance the customer experience, deliver better outcomes, and raise the competitive benchmark globally, which we believe will result in substantial growth for IAA.

Our integration efforts to date reinforce our confidence in <unk> long term business prospects.

Speaker 3: As we suspected door indulgence and now have confirmed, we have identified areas where the customer experience can be enhanced.

We suspect it during diligence and now have confirmed we have identified areas, where the customer experience can be enhanced we are committed to providing exceptional service to our insurance customers and we are deploying fresh more innovative thinking to assure we can deliver on this commitment.

Speaker 3: We are committed to provide an exceptional service to our insurance customers. And we are deploying fresh, more innovative thinking to sure we can deliver on this commitment.

One aspect of this effort is to identify key priorities and execute consistently on a process that we control.

Speaker 3: One aspect of this effort is to identify key priorities and execute consistently on the process that we control.

Speaker 3: Although we are still in our early stages, we are encouraged by the willingness of insurance industry stakeholders to collaborate.

Though we are still in the early stages, we are encouraged by the willingness of insurance industry stakeholders to collaborate.

We aim to significantly enhance the customer experience deliver better outcomes and raised the competitive benchmark globally, which we believe will result in substantial growth for IAA.

Speaker 3: We aim to significantly enhance the customer experience, deliver better outcomes, and raise the competitive benchmark globally, which we believe will result in substantial growth for IAA.

Speaker 3: We are excited by the progress the team has made in our first floor quarter as RB Global to bring the Richie Brothers and IA business together. The collective team is displaying remarkable collaboration, embracing our shared vision, and starting to combine their expertise to benefit our customers.

We are excited by the progress the team has made in our first four quarter as RV global to bring that Ritchie brothers and E business together.

Jim Kessler: We are excited by the progress the team has made in our first full quarter as RB Global to bring the Ritchie Brothers and IAA business together. The collective team is displaying remarkable collaboration, embracing our shared vision, and starting to combine their expertise to benefit our customers. One example of this is that we're actively preparing our Ritchie Brothers team members to support the processing of salvaged vehicles for insurance companies during cat events. Ritchie Brothers has expertise in large event-focused operations, which we have honed over the past 60 years. In our normal course of business, we have a proven track record of mobilizing resources across North America to process significant episodic volumes quickly and efficiently.

The collective team as displaying remarkable collaboration embracing our shared vision and starting to combine their expertise to benefit our customers.

One example of this is that we're actively preparing a ritchie brothers team members.

Speaker 3: One example of this is that we were actively preparing our Richie Brothers team members to support the process and up-stallage vehicles for insurance companies during event.

Toward the processing of salvaged vehicles for insurance companies Doron cat events.

Speaker 3: Richie Brothers has expertise in a large event focused operations, which we have honed over the past 60 years.

Ritchie brothers has expertise and large event focused operations, which we have honed over the past 60 years in our normal course of business. We have a proven track record of mobilizing resources across North America to process significant episodic volumes quickly and efficiently.

Speaker 3: In our normal course of business, we have approved and tracked record of mobile eyes and resources across North America to process significant episodic volumes quickly and efficient.

Speaker 3: We will soon be able to deploy flexible RB labor and yard capacity and apply the same successful approach to managing cat events for IAAA. Further strengthen and archaic ability to serve in our customer needs.

Jim Kessler: We will soon be able to deploy flexible RB labor and yard capacity, and apply the same successful approach to managing cat events for IAA, further strengthening our capabilities in serving our customer needs. During Q2, we also successfully negotiated an early termination of the royalty and non-compete agreement in the whole car space that was inherited as part of the IAA acquisition. By removing this restriction, we can now fully leverage our capabilities and expertise to better serve our customers and strengthen our competitive position in the industry. Additionally, we continue to optimize our organizational structure by streamlining operation and combining roles. For the quarter, we realized $7 million in actual cost synergies and have already actioned a total of $36 million in annual run rate cost synergies since the close of the transaction through 30 June.

We will soon be able to deploy flexible RB labor and yard capacity imply the same successful approach to managing cat events for IEA further strengthening our capabilities in serving our customer needs.

During the second quarter. We also successfully negotiated an early termination of the royalty and noncompete agreement in the whole car space that was inherited as part of the IAA acquisition by.

Speaker 3: During the second quarter, we also successfully negotiated an early termination of the royalty and non-computer agreement in the whole car space that was inherited as part of the IAA acquisition.

Speaker 3: By removing this restriction, we can now fully leverage our capabilities and expertise to better serve our customers and strengthen our competitive position in the industry. Additionally, we continue to optimize our organizational structure by streamline and operation and combine and roll.

By removing this restriction, we can now fully leverage our capabilities and expertise to better serve our customers and strengthen our competitive position in the industry. Additionally, we continue to optimize our organizational structure by streamlining operations and combining rolls.

Speaker 3: For the quarter, we realize 7 million in actual cost synergies and have already actioned a total 36 million in annual run rate cost synergies since the close of the transaction through June 30.

For the quarter, we realized $7 million in actual cost synergies and have already actually a total of $36 million in annual run rate cost synergies since the close of the transaction through June 30.

Jim Kessler: Based on our progress, we continue to expect to deliver at least $100 million to $120 million of annual run rate synergies by the end of 2025. Our strong performance and progress on our integration activities also reinforce our confidence in our ability to capture the revenue growth opportunities from our combined platform. This promising start sets the stage for future growth and positions us as a leader in the industry. We are focused on continuing to advance the integration of IAA to unlock the full value of our combined platform for the benefit of our shareholders, customers, and employees. With that, I will now hand the call to Sameer to discuss our financial results for the second quarter and to provide some additional outlook and commentary.

Speaker 3: Based on our progress, we continue to expect to deliver at least 100 million to 120 million of annual run rate synergies by the end of 2025.

Based on our progress we continue to expect to deliver at least $100 million to $120 million of annual run rate synergies by the end of 2025.

Speaker 3: Our strong performance and progress when our integration activities also reinforce our confidence and our ability to capture the revenue growth opportunities from our combined flat.

Our strong performance and progress on our integration activities also reinforce our confidence in our ability to capture the revenue growth opportunities from our combined platform.

Speaker 3: This promising start set the stage for future growth and positions us as a leader in the industry.

This promising start sets the stage for future growth and positions us as a leader in the industry.

We are focused on continuing to advance the integration of IEA to unlock the full value of our combined platform for the benefit of our shareholders customers and employees with that I will now hand, the call to Samir to discuss our financial results for the second quarter and to provide some additional outlook and commentary.

Speaker 3: We are focused on continuing to advance the integration of IEA to unlock the full value of our combined platform for the benefit of our shareholders, customers, and employees. With that, I will now hand the call to Tamir to discuss our financial results for the second quarter and to provide some additional outlook in commentary.

Speaker 2: Thank you, Jim. Before we jump into detail, let me first explain that certain euro over year comparison, such as with GTV and revenue, refer to the comparison to the pro forma combined results of Richie Brothers and INA for the prior period.

Sameer Rathod: Thank you, Jim. Before we jump into details, let me first explain that certain year-over-year comparisons, such as for GTV and revenue, refer to the comparison to the pro forma combined results of Ritchie Brothers and IAA for the prior period. So let me start with GTV. GTV increased 9%, driven by strength in commercial, construction, and transportation, as well as a rebound in the automotive sector. When you exclude the negative impact of foreign exchange, GTV increased 10% on a constant currency basis. GTV for construction and transportation increased 15%, driven by an increase in unit volumes, partially offset by lower prices and unfavorable mix. Although asset mix continues to be a headwind.... Sequentially, we are starting to see some steady improvements.

Thank you Jim before we jump into details, let me first explain that certain Europe over year comparison.

Such as for GTP and revenue referred to the comparison to the pro forma combined results of Ritchie brothers and I put the prior period.

Speaker 2: So let me start with GTV. GTV increased 9% given by strength in commercial construction and transportation, as well as a rebound in the automotive sector. When you exclude the negative impact of one exchange, GTV increased 10% on a constant current debate.

So let me start with GTD GTD increased 9% driven by strength in commercial construction and transportation as well as the rebound in the automotive sector. When you exclude the negative impact of foreign exchange GTD increased 10% on a constant currency basis.

Speaker 2: GTD for construction and transportation increased 15% driven by an increase in unit volumes, partially offset by lower prices and unfavorable met.

<unk> deeper construction transportation increased 15% driven by an increase in unit volumes, partially offset by lower prices and unfavorable mix.

Speaker 2: Although asset mix continues to be a headwind, sequentially we are starting to see some federal proofs.

Asset mix continues to be a headwind sequentially, we are starting to see some steady improvement.

Sameer Rathod: As it relates to automotive GTV, it increased 5%, driven by a rebound in unit volumes on a flat average price per lot. We expect GTV growth in Q3 to be low to mid-single-digit year-over-year on a combined basis. The reason being seasonality, the timing of certain auctions, and the impact of several large disposals of high-value assets in Q3 of the prior year. Moving to service revenue. Service revenue increased 15%, with our service revenue take rate expanding 100 basis points to 19.5%. Service revenue increased due to higher GTV and higher average service revenue take rate. The increase in the average take rate was driven by growth in buyer fees and an increase in our marketplace service revenue.

As it relates to the automotive GTT GTD it increased 5% driven by a rebound in unit volumes on a flat average price per lot.

Speaker 2: As it relates to automotive GTB, it increased 5% driven by a rebound unit volume on a flat average bike per lock.

We expect GDP growth in the third quarter to be low to mid single digits year over year on a combined basis. The reason being seasonality the timing of certain auction the impact of several large disposal of high value assets in the third quarter of the prior year.

Speaker 2: We expect GTV growth in the third quarter to be low to mid-single digit year over year on a combined basis. The reason being seasonality, the timing of certain auction, the impact of several large disposals of high-value assets in the third quarter of the prior year.

Moving to service revenue.

Speaker 2: Service revenue increased 15% with our service revenue cake rate expanding 100 basis points to 19.5%.

<unk> revenue increased 15% with our service revenue take rate expanding 100 basis points to 19, 5%.

Speaker 2: Service revenue increased due to higher GTV and higher average service revenue take rate. The increase in the average take rate was driven by growth in buyer feed and an increase in our marketplace service revenue. This was partially off by lower average tradition rate, which was due to a higher mix of construction and transportation assets so response strategic accounts.

Service revenue increased due to higher GTD and higher average service revenue take rate the increase in the average take rate with driven by growth in buyer fees and an increase in our marketplace service revenue. This was partially offset by lower average commission rate, which was due to a higher mix of construction and transportation.

Sameer Rathod: This was partially offset by lower average commission rates, which was due to a higher mix of construction and transportation assets sourced from strategic accounts. We expect the trend of lower average commission take rates to continue in coming quarters due to the expected continued growth of GTV sourced from strategic accounts. For marketplace services, we saw a rebound in revenue from ancillary services, as well as robust growth from SmartEquip and Rouse. Ritchie Bros. Financial Services, however, continues to experience headwinds because of tighter credit standards, higher interest rates, and lower average pricing. Moving to inventory. Inventory revenue declined 1% as declines in the automotive sector were partially offset by increases in the commercial construction transportation sector. The inventory rate for the quarter contracted 710 basis points year-over-year to approximately 3%.

Asset source code strategic account.

Speaker 2: We expect the trend of lower average commission take rates that continue in coming quarters due to the expected continued growth of GTV source from strategic account.

We expect the trend of lower average commission take rate to continue in coming quarters due to the expected continued growth of GTD sourced from strategic accounts.

Speaker 2: For marketplace services, we saw readown and revenue from ancillary services, as well as real-cost growth from SmartClip and VAP.

Our marketplace services, we saw a rebound in revenue from ancillary services as well as robust growth from smart equipped in Dallas.

Speaker 2: Rischy Gowder's financial services, however, continues to experience headwinds because of tighter credit standards, higher interest rates, and lower average pricing.

Ritchie Brothers financial services, However continues to experience headwinds because of tighter credit standards higher interest rates and lower average pricing.

Moving to inventory.

Speaker 2: Inventory revenue to climb 1% has declined in the automotive sector where partially off-step by increases or the commercial construction transportation.

Inventory revenue declined 1% as declines in the automotive sector were partially offset by increases in the commercial construction transportation sector.

Speaker 2: The inventory rate for the quarter of contracted 710 basis points year-of-year to approximately 3%.

Inventory rate for the quarter contracted 710 basis points year over year to approximately 3%.

Speaker 2: The decrease in inventory rate can be primarily attributed to the performance of a few strategically competitive large deals in our construction and transportation sector. We're pricing the client at a faster pace than originally anticipated.

Sameer Rathod: The decrease in inventory rate can be primarily attributed to the performance of a few strategically competitive large deals in our construction and transportation sector, where pricing declined at a faster pace than originally anticipated. It is important to note that inventory purchases represent only a portion of our overall at-risk business and a small percent of our total GTV, with the impact of guaranteed contracts embedded within our commission revenue. Also, we generate significant revenue from buyer fees on at-risk transactions. If you add the straight commission on guaranteed deals, the inventory return on inventory purchases, and the buyer fees on both, the combined fee and return in the quarter was 13% of total at-risk GTV. As we have noted previously, we expect increased competition for at-risk deals in our commercial construction and transportation sector. Turning to earnings.

The decrease in inventory rate can be primarily attributed to the performance of a few strategically competitive large deals in our construction and transportation sector, where pricing declined at a faster pace than originally anticipated.

Speaker 2: It is important to note that inventory purchases represent only a portion of our overall at-risk business in a small percent of our total GTV with the impact of guaranteed contracts embedded within our permission revenue. Also, we generate significant revenue from buyer fees on at-risk transactions.

It is important to note that inventory purchases represent only a portion of our overall at risk business and a small percent of our total GTD with the impact of guaranteed contracts embedded within our commission revenue.

Also we generate significant revenue per buyer fees contactless transactions.

Speaker 2: If you have the straight commission on Guaranteed deals, the inventory returns on inventory purchases and the buyer fees on both, the combined fee and return in the quarter was 13% of total happiness GTV.

You add the straight commission on guaranteed deals the inventory return on inventory purchases and the buyer fees on both the combined fee in return in the quarter was 13% of total at BSG television.

Speaker 2: As we have noted previously, we expect increased competition for at-list deals to obtain our commercial construction and transportation factor.

As we have noted previously we expect increased competition for Atlas deals in our commercial construction and transportation sector.

Turning to earnings.

Speaker 2: Adjusted EBADI increased 13% when compared to the combined adjustment EBADI of IAA and Richie Brothers for the year-go period, as we saw strong losses.

Sameer Rathod: Adjusted EBITDA increased 13% when compared to the combined adjusted EBITDA of IAA and Ritchie Brothers for the year-ago period, as we saw strong flow-through. Overall, IAA is performing better than our initial expectations, and although tow and fuel costs are higher year over year, these costs are now trending slightly lower sequentially. As discussed last quarter, we continue to refine the preliminary purchase accounting related to the IAA acquisition. During the second quarter, as part of our purchase accounting valuation analysis, we further revised IAA's long-lived assets and leases to fair value. As a result, additional fair value adjustments were recorded. The net impact of these adjustments, together with the harmonization of depreciation policies, resulted in an incremental $7 million in depreciation expense and $1 million in lease expense, with the latter of which being included in cost of services.

Adjusted EBITDA increased 13% when compared to the combined adjusted EBITDA of IAA and Ritchie brothers for the year ago period, as we saw strong flow through.

Speaker 2: Overall, IAA is performing better than our initial expectations. And although toll and fuel costs are higher year over year, these costs are now spending slightly lower the crunch.

Overall, IAA is performing better than our initial expectations and although tow and fuel costs are higher year over year. These costs are now trending slightly lower sequentially.

As discussed last quarter, we continue to refine the preliminary purchase accounting related to the IAA acquisition.

Speaker 2: As discussed last quarter, we continue to refine the preliminary purchase accounting related to the IAA acquisition. During the second quarter, as part of our purchase accounting valuation analysis, we further revised IAA's long-lived assets and resources to fair value.

The second quarter as part of our purchase accounting valuation analysis, we further revised IAA for long lived assets and leases to fair value.

Speaker 2: As a result, additional fair value adjustments were reported. The net impact of these adjustments together with the harmonization of depreciation policies resulted in an incremental $7 million in depreciation expense and $1 million in lease expense.

As a result of additional fair value adjustments were recorded.

The net impact of these adjustments together with the harmonization of depreciation policies resulted in an incremental $7 million in depreciation expense and $1 million in lease expense.

With the latter of which being included in cost of services <unk>.

Speaker 2: with a ladder of which being including cost of service.

Sameer Rathod: Consistent with our treatment of the prepaid vehicle charges we discussed last quarter, we are adjusting these non-cash purchase accounting impacts as part of our non-GAAP measures. As we continue to work on finalizing purchase accounting, we may identify other fair value adjustments, which may have an impact on our financial statements in the future. SG&A, excluding share-based payments and other adjusting items in the quarter, was $181 million. Looking ahead to the third quarter, we currently expect SG&A to be between $185 and 200 million, exclusive of share-based payments and other adjusting items. Next slide. During the second quarter, we better optimized treasury and cash management function of our combined company. This allows us to better deploy cash and prioritize debt reduction.

Speaker 2: Consistent with our treatment of the prepaid vehicle charges we discussed last quarter, we are adjusting these non-tash purchase accounting impacts as part of our non-gap measure.

Consistent with our treatment of the prepaid vehicle charges, we discussed last quarter. We are adjusting these noncash purchase accounting impacts as part of our non-GAAP measures.

As we continue to work on finalizing purchase accounting, we may identify other fair value adjustments, which may have an impact on our financial statements in the future.

Speaker 2: As we continue to work on finalizing purchase accounting, we may identify other fair value adjustments, which may have an impact on our financial statements in the future.

Speaker 2: As Q&A, excluding share-based payments and other adjusting items in the quarter, was $181 million. In looking ahead to the third quarter, we currently expect As Q&A to be between $185 and $200 million exclusive of share-based payments and other adjusting items.

SG&A, excluding share based payments and other adjusting items in the quarter was $181 million and looking ahead to the third quarter. We currently expect SG&A to be between $185 and $200 million exclusive of share based payments and other adjusting items.

Next slide.

Speaker 2: During the second quarter, we better optimize the closure and cash management function of our combined company. This allows us to better deploy cash from prioritize debt reduction.

During the second quarter, we better optimize treasury and cash management function of our combined company. This allows us to better deploy cash will prioritize debt reduction.

Speaker 2: As a result of these efforts, we are delighted to announce that we successfully pay down approximately a hundred and three million of debt during the quarter.

Sameer Rathod: As a result of these efforts, we are delighted to announce that we successfully paid down approximately $103 million of debt during the quarter. As of 30 June, our adjusted net debt was approximately $2.7 billion. Adjusted net debt to reported trailing twelve-month adjusted EBITDA was approximately 4.1x. More relevant to many of you, our adjusted net debt to trailing twelve-month combined adjusted EBITDA was 2.6x. And we remain focused on deleveraging to approximately 2x by the end of Q1 2025. Regarding cash flow from operations, cash used in operating activities is lower in the first half of 2023 compared to the comparable period last year, for primarily two reasons. First, the timing and size of auctions drove higher net working capital balances compared to the prior year.

As a result of these efforts we are delighted to announce that we successfully paid down approximately $118 billion of debt during the quarter.

As of June 30, our adjusted net debt was approximately $2 7 billion.

Speaker 2: As of June 30th, our adjusted net debt was approximately $2.7 billion.

Speaker 2: Adjusted net debt to reported trailing 12 month adjusted Eva dollars approximately 4.1 times.

Adjusted net debt to reported trailing 12 months adjusted EBITDA was approximately four one times.

Speaker 2: More relevant to many of you are adjusted net to clearly 12 months combined adjusting the DAW with 2.6 times.

More relevant to many of you are adjusted net debt to trailing 12 months combined adjusted EBITDA was two six times.

And we remain focused on deleveraging to approximately two times by the end of the first quarter of 2025.

Speaker 2: And we remain focused on the leveraging to possibly two times by the end of the first quarter of 2025.

Regarding cash flow from operations cash used in operating activities is lower in the first half of 2023 compared to the comparable period last year, primarily two reasons first the timing and size of auctions drove higher net working capital balances compared to the prior year second we paid higher cash taxes, mainly around.

Speaker 2: Regarding cash flow from operations, cash use and offering activity is lower in the first path of 2023 compared to the comparable period at last year for primarily two weeks.

Speaker 2: First, the timing and size of auctions for a higher networking capital balances compared to the prior year. Second, we paid higher cash taxes, mainly arising from the sale of the Bolton proper.

Sameer Rathod: Second, we paid higher cash taxes, mainly arising from the sale of the Bolton property. Moving to CapEx. As we have previously highlighted, we anticipate that our capital expenditures will be higher in 2023 and 2024 when compared to 2022 on a combined basis. This is a result of a deliberate decision to increase investment in capitalized software aimed to accelerate our marketplace technology's development. Additionally, there is an increase in CapEx related to realignment of the real estate portfolio. Recall that we previously sold the Bolton facility for a $169 million pre-tax gain in Q1 2020, with plans of investing the proceeds into additional yards. We still anticipate CapEx to be between $275 million and $290 million on a reported basis in 2023.

I think from the sale of the Bolton property move.

Speaker 2: Moving back to CAP-X, as we have previously highlighted, we anticipate that our capital expenditures will be higher in 2023 and 2024 when compared to 2022 on a combined basis. This is a result of a deliberate decision to increase investment in capitalized software in to accelerate our marketplace technology development.

Moving to Capex as we have previously highlighted we anticipate that our capital expenditures will be higher in 2023, and 2024 when compared to 2022 on a combined basis.

This is a result of a deliberate decision to increase investment in capitalized software aimed to accelerate our marketplace technologies develop it. Additionally.

Speaker 2: Additionally, there is an increase in capital aid to realignment of the real estate portfolio. Recall that we previously sold the Bolton facility for $169 million pre-tasking in the first quarter of 2020 with plans of investing the proceeds into additional yachts.

Additionally, there is an increase in capex related to realignment of the real estate portfolio recall that we previously sold the bolting facility for $169 million pre tax gain in the first quarter of 2020 with plans of investing the proceeds into additional yards.

We still anticipate capex to be between $275 million and $290 million on a reported basis in 2023 that said, we continue to evaluate our approach to capital transactions, particularly has.

Speaker 2: We still anticipate cap acts to be between $275,290,000, on a reported basis in 2023. That said, we continue to evaluate our approach to capital transactions, particularly as the economics associated with sales, sales, lease factor and transaction.

Sameer Rathod: That said, we continue to evaluate our approach to capital transactions, particularly as the economics associated with sales leaseback transactions. As interest rates have increased, we are reviewing transactions to evaluate the benefit of purchasing certain properties versus the previous approach of long-term sales leasebacks taken by IAA. Now back to Jim.

Cannot mix associated with sales.

Sale leaseback process transactions.

Speaker 2: As Interstate has increased, we'll review transactions to evaluate the benefit of purchasing certain properties versus the previous approach of long-term sales these facts taken by IAA. Now back to Jim.

As interest rates have increased we are reviewing transactions to evaluate the benefits of purchasing certain properties versus the previous approach of long term sales leasebacks taken by eye now back to Jim.

Speaker 3: I want to thank our incredible team for the relentless focus on execution and dedication to our come.

I want to thank our incredible team for their relentless focus on execution and dedication to our company.

Jim Kessler: I want to thank our incredible team for their relentless focus on execution and dedication to our company. With IAA, we have an even brighter future ahead, and as CEO, I am committed to ensuring that we unlock further value for our shareholders and customers. Operator, you can now open the call for questions.

Speaker 3: With IAA, we have an even brighter future ahead and a CEO . I am committed to ensuring that we unlock further value for our shareholders and customers. Operator, you can now open.

With IAA, we have an even brighter future ahead, and as CEO I am committed to ensuring that we unlock further value for our shareholders and customers. Operator, you can now open the call for questions.

Speaker 1: Thank you ladies and gentlemen. We will now begin the question and answer session. Should you have a question? Please press star followed by one on your touch tone phone.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by one on your touch tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Steve Hansen, Raymond James. Steve, please go ahead.

Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone.

Speaker 1: You will hear a three-tone prompt acknowledging your request and your questions will be pulled in the order they are received.

We'll hear three tone prompt acknowledging your request and your questions will be pulled in the order they are received.

Should you wish to decline from the polling process. Please press star followed by two.

Speaker 1: Should you wish to decline from the polling process, please press star followed by two. If you are using a speaker phone, please lift a hand.

If you are using a speaker phone please lift the handset before pressing any keys.

Speaker 1: Your first question comes from Steve Hansen, Raymond James. Steve, please go ahead.

Your first question comes from Steve Hansen, Raymond James Steve. Please go ahead.

Yeah. Good morning, Thanks for your time Jimmy.

Steve Hansen: Yeah, good morning, everyone. Thanks for the time. Jim, you, good remarks to begin the call here earlier. I just wanted to follow up and just, just sort of gauge your commitment or conviction in the synergy opportunities, particularly on the revenue side, under, under the sort of the change in leadership that's unfolded in the past couple of days. One, one of the pushbacks, of course, is that, you know, Ann carried these relationships quite closely, and was really front and center on the market share recapture strategy. I just wanted to get your perspective on how you feel you'll be able to navigate those challenges.

Speaker 4: Jim, you, good remarks to begin the call here earlier. I just wanted to follow up and just engage your commitment or conviction in the synergy opportunities, particularly on the revenue side, under the sort of the change in leadership that's done for them in the past couple days. One of the pushback of the course is that, and carried these relationships quite closely, and was really front and center on the market share, recapture strategy. I just want to give you a perspective on how you feel you'll be able to navigate those challenges.

Jimmy Good remarks to begin the call to your earlier I just wanted to follow up and just to sort of gauge your commitment your conviction in the synergy opportunities, particularly on the revenue side.

I'm, just sort of a change of leadership that unfold in the past couple days one of the pushback of course is dead and carried these relationships quite closely.

And was really front and center on the market share.

Recapture strategy just wanted your perspective on how you feel youll be able to navigate those challenges.

Speaker 3: I'm very excited about the revenue synergies that we presented. I'm probably one and I am fully committed to delivering the range that and originally proposed. As I've been going through the last 90 days and you go through due diligence in 90 days of actually being in the company, it has even further excited me about that range and that we can achieve it, especially the cost and the revenue.

No I'm very excited about the revenue synergies that we presented.

Jim Kessler: No, I'm very excited about the revenue synergies that we presented early on, and I am fully committed to delivering the range that Ann originally proposed. And as I've been going through the last 90 days, and you go through due diligence and 90 days of actually being in the company, it has even further excited me about that range and that we can achieve it, especially the cost and the revenue synergies.

One and I am fully committed to deliver in the range that and originally proposed and as I've been going through the last 90 days and you go through due diligence and 90 days are actually being in the company. It has even further excited me about that range and that we can achieve especially the cost and the revenue.

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Great. That's helpful. Thanks, and then maybe just one quick follow up is around the negotiated agreement that you have the termination of the agreement.

Steve Hansen: Great. That's helpful. Thanks. Maybe just one quick follow-up is around the negotiated agreement that you've, the termination of the agreement, on the wholesale cars. Can you maybe just give us some broader perspective on what you think that means, with that termination in hand now, and what it'll mean for your business going forward?

Speaker 4: Great, that's helpful, thanks. And then maybe just one quick follow up is around the negotiated agreement, the termination of the agreement on the whole, all those cars. Can we just give us some broader perspective on what you think that means with that termination and the end now, what will mean for your business going forward?

On the whole wholesale cars can you maybe just give us some broader perspective on what you think that means.

With that information in hand, now what it will mean for your business going forward.

One of the main areas when we think about the revenue synergies I break it down into three components the market share gain on a salvage side the whole car space and international growth and our number two whole car. This just allows us to start to scale and progress of our business and it was always part of our plan to do this just helps us to go a little bit.

Jim Kessler: You know, one of the main areas when we think about the revenue synergies, I break it down into three components: the market share gain on the Salvage side, the Whole Car space, and international growth. And our number two, Whole Car, this just allows us to start to scale and progress our business, and it was always part of our plan to do. This just helps us to go a little bit quicker and be a little bit more efficient about it.

Speaker 3: One of the main areas when we think about the revenue synergies, I break it down into three components. The market share gain on a salvage side, the whole car space and international group. And our number two whole car, this just allows us to start the scale and progress our business. And it was always part of our plan to do. This just helps us to go a little bit quicker and be a little more efficient about it. Thank you.

<unk> and be a little bit more efficient about it.

Okay.

Okay. Thanks for the time I'll get back in the queue.

Steve Hansen: Okay, thank you for the time. I'll jump back in the queue.

Speaker 1: Thank you. Thank you. Ladies and gentlemen, as a reminder, we ask that you limit yourself to one question and one follow up before rejoining.

Jim Kessler: Thank you.

Thank you.

Operator: Thank you. Ladies and gentlemen, as a reminder, we ask that you limit yourself to one question and one follow-up before rejoining the queue. Your next question comes from Michael Doumet, Scotiabank. Michael, please go ahead.

Ladies and gentlemen, as a reminder, we ask that you limit yourself to one question and one follow up before rejoining the queue. Your next question comes from Michael Dumais Scotiabank. Michael. Please go ahead.

Speaker 1: Your next question comes from Michael Dume, Scotia Bank. Michael, please go ahead.

Hey, good afternoon, guys, Jim Firstly, congrats on the new role.

Michael Doumet: Hey, good afternoon, guys. Jim, firstly, congrats on the new role. You know, you have several years' experience in the auto collision repair business, so surely you understand what insurance wants. So when you think about the ability to enhance IAA's competitiveness, you know, whether that's measured by the number of buyers, net return, speed to payment, how do you think, you know, you can take that business to the next level, and how are you progressing those goals?

Speaker 5: Hey, good afternoon guys. Jim first click Ruffman role. You know, you have several years in experience in the auto collision repair business. So surely you understand what insurance wants. So when you think about the ability to enhance IA's competitiveness, you know, whether that's measured by the number of buyers, you never turn, speed to payment, how do you think, you know, you can take that business to the next level and how are you progressing to those goals?

You have several years of experience in the auto collision repair business, so surely understand what insurance wides.

So when you think about the ability to enhance competitiveness.

Whether that's measured by the number of buyers net return speed to payment how do you think.

You can take that business to the next level and how are you progressing those goals.

Yes, great question and thank you Michael so over the last 90 days I've met with all the top insurance carrier partners along with.

Jim Kessler: Yeah, no, great question, and, and thank you, Michael. So over the last 90 days, I, I've met with all the top insurance carrier partners, along with a lot of the regional players in this. And the consistent thing, and, and this was very similar in the collision world, that I keep hearing is what's in our contract, the commitment and the ability to deliver consistently every day at every branch, those SLAs and that commitment, which ultimately give you everything that you talked about, right? And there's really big three components that I'm laser focused on delivering to our insurance partners. When we get assigned a car, picking it up as quickly as possible, so it helps to stop advanced charges.

Speaker 3: Yep, no, great question and thank you Michael. So over the last 90 days, I've met with all the top insurance carrier partners along with a lot of the regional players in this.

A lot of the regional players and there's and the consistent thing and this was very similar in the equation world that I keep hearing is what's in our contract the commitment and the ability to deliver consistently every day in every branch.

Speaker 3: And the consistent thing, and this was very similar in the collision of world, that I keep hearing is what's in our contract, the commitment and the ability to deliver consistently every day and every branch.

Speaker 3: those SLAs in that commitment, which ultimately give you everything that you talked about, right? And there's really big, three components that I'm laser focused on, delivering.

Dose escalation that commitment, which ultimately give you everything that you talked about right.

And Theres really big three components that I'm laser focused on delivering to our insurance partners. When we get assigned the car picking it up as quickly as possible. So it helps stop advanced charges. When we have that car in our possession how to process. It get inspected how to get the title and get it ready for sale as quickly as possible.

Speaker 3: to our insurance partners. When we get assigned the car, pick it up as quickly as possible, so it helps stop the vans charges. When we have that car in our possession, how to process it, get inspected, how to get the total and get it ready for sale, as quickly as possible, and then getting the best gross return and that to your point, the best buyer marketplace, which I am very confident between RB and IAA that we can build. And ultimately, doing those three things are gonna give us the best net return for our partners, but what I have heard from them is control what's in your control and do it consistently every day at every branch or cross all of your partners.

Jim Kessler: When we have that car in our possession, how to process it, get inspected, how to get the title, and get it ready for sale as quickly as possible, and then getting the best gross return. And that, to your point, the best buyer marketplace, which I am very confident, between RB and IAA, that we can build. And ultimately, doing those three things are going to give us the best net return for our partners. But what I have heard from them is control what's in your control and do it consistently every day at every branch across all of your partners. And that's what the team right now, from integration and how we're building IAA, we're building it from that approach.

And then getting the best gross return in that to your point, the best buyer marketplace, which I am very confident between RB and IAA that we can build and ultimately doing those three things are going to give us the best net return for our partners, but what I have heard from Matt is control what's in your control and do it consistently every.

David every brands across all of your partners and that's what the team right now from integration and how we're building IEA. We're building there from that approach.

Speaker 3: And that's what the team right now from integration and how we're building IAA, we're building it from that.

That's really interesting thanks for that and maybe an unrelated question or follow up I wonder.

Michael Doumet: That's really interesting. Thanks for that. Maybe on a unrelated question or follow-up, I wonder, first, actually, nice to see the operating leverage back in the business. I wonder if you can comment on what I think I heard is the expected sequential increase in SG&A in Q3 versus Q2, despite, you know, the higher cost synergies and presumably the lower seasonality in the quarter. Just trying to get a sense for that, please.

Speaker 4: That's really interesting things for that. And maybe on an unrelated question or follow up. I wonder, so first, actually, nicely see the operating leverage back in the business. I wonder if you can comment on what I think I heard is the expected sequential increase in S-GNA, keep three versus Q-T despite the higher cost synergies and presumably the lower seasonality in the quarter, just trying to get a sense for that, please.

So first actually nice to see the operating leverage back in the business I Wonder if you can comment on what I think I heard as the expected sequential increase in SG&A in Q3 versus Q2 despite.

The higher cost synergies and presumably the lower seasonality in the quarter, just trying to get a sense for that please.

Yeah, Hey, Michael It's S America, Eric Yes, we are expecting higher SG&A.

Sameer Rathod: ... Yeah. Hey, Michael, it's Sameer here. Yeah, we are expecting higher SG&A in Q3 compared to Q2. Part of this is just continued investment in both people and technology to so we're able to consistently drive GTV on the top line.

Speaker 2: Yeah, hey, Michael. It's Samir here. Yeah, we are expecting higher S-GNA in the third quarter, compared to the second quarter. Part of this is just continued investment in those people and technology. So we're able to consistently drive GTV on the top line.

In the third quarter compared to the second quarter part of this is just continued investment in both people and technology. So we're able to consistently drive GTD on the topline.

Perfect Alright. Thanks.

John Healy: Perfect. All right, thanks.

Thank you thank.

Speaker 1: Thank you. Thank you. Your next question comes from sub hat con RBC capital markets. Sub hat please go ahead.

Jim Kessler: Thank you.

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

Thank you. Your next question comes from <unk> Khan RBC capital markets.

Please go ahead.

Speaker 4: Great thanks. Just I guess a bigger picture question, I guess, for you, Jim. You know, you're in the operational seat, kind of running the operations, and now you've got the CEO title. Maybe we just kind of walk us through how you're thinking about still being involved in the integration while taking on some of the new sort of the CEO responsibility, just kind of how you're gonna split your time. You know, that's something you might get. Somebody else to be a bit more involved with. Just walk us through, sort of, you're gonna split your time and your priorities going forward.

Great. Thanks, just I guess, a bigger picture question I guess for you Jim you know during the operational C kind of running the operations now you've got the CEO title, maybe just kind of walk us through how youre thinking about still being involved in the integration while taking on some of the new sort of the CEO responsibilities just kind of how you split your.

Sabahat Khan: Great, thanks. Just, I guess, a bigger picture question, I guess, for you, Jim. You know, you were in the operational seat, kind of, running the operations, now you've got the CEO title. Maybe just, kind of, walk us through how you're thinking about still being involved in the integration while taking on some of the new sort of the CEO responsibilities. Just, kind of, how you're gonna split your time. You know, is that something you might get, you know, somebody else to be a bit more involved with? Just walk us through sort of how you're gonna split your time and your priorities going forward.

Time, and or is that something you might get.

Somebody else to be a bit more involved with just walk us through sort of how you guys for your time and your priorities going forward.

Yes, you got it great question. So just then I think the first thing I need to do is just clarify.

Speaker 3: Yep, you got a great question. So just them, I think the first thing I need to do is just clarify.

Jim Kessler: Yep, you got it. Great question. So just, I think the first thing I need to do is just clarify my role, before going into the CEO role. So as president and COO, I had the revenue team, the operational team, the services team, the procurement team, the real estate team. Pretty much 80% to 85% of the company reported up through me. So the revenue-facing team was completely under my direction as we're going through this, so it just wasn't the operational team. And then next, just to answer your question around integration, I think it's probably important if I explain how we're set up for integration, and this is something that's very similar that I used when ABRA and Caliber Collision, which was about a $4 billion integration from a revenue standpoint, coming together.

Speaker 3: My role before going into the CEO role. So as president and COO, I had the revenue team, the operational team, the services team, the procurement team, the real estate team, pretty much 80 to 85% of the company reported up through me. So the revenue facing team was completely under, under my direction as we're going through this. So it just wasn't the operational team.

My role.

Before going into the CEO role as President and CLO I had the revenue team the operational team the services team the procurement team that real estate team pretty much 80% to 85% of the company reported up through me. So the revenue patient team was completely.

Under under my direction as we go through this whole just wasn't the operational team.

Speaker 3: And then next just to answer your question around integration, I think it's probably important if I explain how we're set up for integration. And this is something that's very similar that I use.

And then next just to answer your question around integration I think it's probably important if I explain how we're set up for integration and this is something that's very similar that I used when Aberdeen caliber collision, which was about a $4 billion integration from a revenue standpoint coming together the way the integration team.

Speaker 3: When Aber and Caliburre Collision, which was about a $4 billion integration from a revenue standpoint coming together.

Jim Kessler: The way the integration team is set up is there's a steering committee, which is made up of myself, Carmen Thiede, who is our head of integration, and then a couple senior leaders from IAA and Ritchie Bros. make up the steering committee. And then, along with that, we have a project management third party that we use to help project manage all this, and then below them, based on whatever activity it is, and it could be finance, procurement, whatever it might be, there are subcommittees that manage all the tasks that need to be get done. So from my time, I still plan to be part of that steering committee, which no matter if it was president, COO, or CEO, being part of it. But really, that committee is the one driving all the results that I discussed during the call.

Speaker 3: The way the integration team is set up is there's a Steer and Committee, which is made up myself, Carmen TD, who was our head of integration, and then a couple senior leaders from IAA and Richie Brothers make up the Steer and Committee.

Set up is there is a steering committee, which is made up myself Carmen TD, who is our head of integration and then a couple of senior leaders from IAA and Ritchie Brothers makeup the steering Committee and then along with that we have a project management third party that we use to help project manage all of this and then below them.

Speaker 3: And then along with that, we have a project management third party that we used to help project manage all this and then below them.

Speaker 3: based on whatever activity it is, and it could be finance procurement, whatever it might be, there's subcommittees that manage all the tasks that need to be get done.

Based on whatever activity it is and it could be finance procurement whatever it might be their subcommittees that manage all the tasks that need to be get done. So from my time I still plan to be part of that CRM Committee, which no matter. If it was president COO or CEO and being part of it but really that committee is the one.

Speaker 3: So for my time, I still plan to be part of that steering committee, which no matter if it was President COO or CEO , I'm being part of it. But really, that committee is the one drive and all the results that I discussed during the call. And that committee, no matter what the organization is going through, they're executing every day against the plans that we've already put together. But at a high level, that's how the integration team is set up.

Driving all the results that I discussed.

During the call and that committee no matter, what the organization is going through and Theyre executing everyday against the plans that we've already put together, but at a high level. That's how the integration team is set up.

Jim Kessler: And that committee, no matter what the organization is going through, they're executing every day against the plans that we've already put together. But at a high level, that's how the integration team is set up.

Okay, Great and then just a housekeeping question I think last quarter, you guys called out 15 million of synergies.

Speaker 4: Great. And then just to help keep in question, I think last quarter you guys called out 15 million of synergies. I think in your commentaries slide that it said realize seven and then action 36 in total and you'll lies if you can maybe just Kind of bridge us to what that 36 represents on top of that 22 And then or does the 36 maybe include some of this whole car oil piece want to get understanding of no where we are on with like what this 36 represents

Sabahat Khan: Okay, great. And then just a, just a housekeeping question. I think last quarter you guys called out $15 million of synergies. I think, you know, commentary in the slide deck, it said, "Realized 7, and then actioned 36 in total, annualized." If you can maybe just, kind of, bridge us to what that 36 represents on top of that 22. And then or does the 36 maybe include some of this whole car royalty? Just want to get an understanding of, you know, where we are on with, like, what this 36 represents.

I think in your commentary on slide deck. It said realized that Ben and then action 36 in total annualized if you can maybe just.

Kind of bridge us to what that 36 represents on top of that 22.

And then or does it 36, maybe include some of the whole car royalty just wanted to get an understanding of where we are and what they like what the 36 represents.

Yes, it's all about hey, its samir.

Speaker 2: Yeah, I thought I had some here. So, you know, I think the two key numbers, you need to understand is the realized cost energies in the quarter, that's the actual impact we had in the quarter, and then total action. So, you know, we've actually certain things, but you wouldn't necessarily see that impact in the quarter. So the comparable numbers, I think, I don't have it at my fingertips, but we've action 36 million in annualized one-way cost energies as of June .

Sameer Rathod: Yeah, Sabahat. Hey, it's Sameer. So, you know, I think the two key numbers you need to understand is the realized cost synergies in the quarter. That's the actual impact we it had in the quarter, and then total actioned. So, you know, we've actioned certain things, but you wouldn't necessarily see that impact in the quarter. The comparable numbers, I think, I don't have it at my fingertips, but we've actioned $36 million in annualized run rate cost synergies, as of 30 June. And then the synergies we have actioned in, you know, in the 11 days post-close, I think we said it was $15 million. We realized $7 million of those in Q2. But we can discuss this more off-point if you have additional questions.

So I think the two key numbers you need to understand is the realized cost synergies in the quarter that the actual impact it had in the quarter and then total action. So we've actually certain things that you wouldn't necessarily see that impact in the quarter. So the comparable numbers I think.

I don't have it at my fingertips, but we've actually 36 million in annualized run rate cost synergies.

As of June 30.

Speaker 2: And then the synergies we had actioned in, you know, in the 11 days post-closed, I think we set up 15. We realized seven million of those in the second quarter. But we can discuss this for a point if you have additional questions. Oh, no, that makes sense. I just want to understand what the run rate number was. So is that 36? So I just didn't know what the seven was. So that makes sense.

And then the synergies we had action.

11 days post close.

We said it was 15, we realized $7 million a dose in the second quarter, but we can discuss this last night if you have additional questions.

Sabahat Khan: Oh, no, that makes sense. I just ... Okay, so I just wanted to understand what the run rate number was, so it's that 36. So I just, I just didn't know what the 7 was, so that makes sense.

No that makes sense. Okay. So just wanted to understand what the run rate number was so is that 36. So I just didn't know what the seven one so that makes sense.

Yeah, you got it.

Sameer Rathod: Yeah, you got it.

Thank you. Your next question comes from John Healy Northcoast Research John Please go ahead.

Operator: Thank you. Your next question comes from John Healy, North Coast Research. John, please go ahead.

Speaker 1: Thank you. Your next question comes from John Healey North Coast Research. John , please go ahead.

Speaker 6: That makes things like question. If you're no one to ask, it's about kind of items learned since you've been in the seat, post message, since the deal's closed, that he had met with most of the insurance companies both large and regional.

John Healy: Thanks for taking my question. Jim, I wanted to ask just about kind of, items learned, since you've been in the seat, you know, since the deal's closed. So you'd met with most of the insurance companies, both large and regional. Is there an item or two that they're telling you, "Hey, this is what you can do if you really want to win market share back?" Like, what's the vibe and what's the feedback been about... You know, I'm sure you're asking, how can we do more business with you? What are the insurers telling you, and have you seen any sort of change in the competitive dynamics, over the last 90 days or so, and any facets of the business on the, salvage side?

Thanks for taking my question.

Jim I wanted to ask just about kind of items learn.

Thank you had been in the seat.

Yes.

Since the deals closed.

But most of the insurance companies, both large and regional is there an item or two that they're telling you hey. This is what you can do if you really want to win market share back.

Speaker 6: Is there an item or two that they're telling you, hey, this is what you can do if you really want to win market share back? What's the vibe and what's the feedback bin about? I'm sure you're asking, how can we do more business with you? What are the insurers telling you? And have you seen any sort of change in the competitive dynamics over the last 90 days or so and then a faster than the business on the salvage site?

Okay.

What's the vibe and what's the feedback been about I'm sure you are asking.

How can we do more business with you what are the insurers telling you and have you seen any sort of change in the competitive dynamics.

Last 90 days or so any facet of the business that delta.

Salvage side.

Yes, so great question and I'm, probably just going to go back to a comment I made a couple of questions ago. The one thing the insurance group has been amazing and Luckily having relationships with them from before installation as I'm going through excellent questions and learning the business.

Jim Kessler: Yeah, no, so great question, and I'm probably just gonna go back to a comment I made, a couple of questions ago. The one thing, the insurance group has been amazing, and luckily, having relationships with them from before in Collision, as I'm going through asking questions and learning the business, they've been unbelievable at doing whiteboarding sessions and really providing me with a lot of information to make sure what we're executing against is what they really need. And one of the largest insurance carriers, their comment to me is: We need you to control what's in your control and execute against that every single day and be consistent across all the branches. So as an example, as we kind of think about all the processes, and I laid it out, three of them.

Speaker 3: Yep, so great question. And I'm probably just going to go back to a comment I made a couple of questions to go. The one thing that insurance group has been amazed and then luckily have them relationships with them from before inclusion, as I'm going through asking questions and learning the business.

Speaker 3: They've been unbelievable at doing whiteboard in sessions and Really providing me with a lot of information to make sure what we're executing against is what they really need

They've been unbelievable at doing whiteboard sessions and.

Really provided me with a lot of information to make sure what we're executing against is what they really need.

Speaker 3: And one of the largest insurance carriers, their comment to me is we need you to control what's in your control and execute against that every single day and be consistent across all the branches. So as an example,

And one of the largest insurance carriers their comment to me is we need you to control what's in your control and execute against that every single day and be consistent across all the branches. So as an example, as we kind of think about all the processes and I laid it out three of them are cars assigned get it.

Speaker 3: as we kind of think about all the processes and I laid it out three of them.

Jim Kessler: The car is assigned, get it to our yard as quickly as possible, stop those storage charges, rental car fees, all that kind of stuff. When we have the car, process your titles as efficiently as you can, inspect it, get the pictures up, have the most robust buyer base, so we can get the highest gross return, which all that will translate into a net realized value that they're going to be happy with. But control what's in your control, and I need you to operationally execute consistently across the board. And then, of course, when a Cat happens, our response time and how we take care of their customer, they want that done, you know, and they want dedicated capacity, and they want that done quickly, succinctly, and efficiently.

Speaker 3: Get it to our yard as quickly as possible. Stop those storage charges, rental car fees, all that kind of stuff. When we have the car, process your toydles official as you can, and inspect it, get the pictures up.

Two our yard as quickly as possible stop those storage charges rental car fees all of that kind of stuff. When we have the car process. Your titles efficiently as you can expect to get the pictures up had the most robust buyer base. So we can get the highest gross return, which all that will translate into a net realized value that theyre going to be happier.

Speaker 3: have the most robust fire base so we can get the highest roast return which all that will translate into

Speaker 3: and net realize the value that they're gonna be happy with, but control what's in your control when I meet you to...

But control what's in your control and I need you, but operationally execute consistently across the board and then of course, when a cat happens our response time and how we take care of their customer and they want that done any one dedicated capacity and they want that done quickly.

Speaker 3: operationally execute consistently across the board. And then of course, when a cat happens...

Speaker 3: our response time and how we take care of their customer.

Speaker 3: They want that done, you know, and they want dedicated capacity and they want that done quickly, to simply and efficiently. And they're the things that I'm focused on when I think about IAA and where do we need to improve and how do we do that. And my whole goal in the sustained when I was in collision, I got the same speech from the St. insurance carer partners of how do you execute it. So when they refer and you get that volume, they have confidence that you're in a deliverer.

Lean efficiently.

Jim Kessler: They're the things that I'm focused on when I think about IAA and where do we need to improve and how do we do that. My whole goal, and it's the same when I was in collision, I got the same speech from the same insurance carrier partners of how do you execute it, so when they refer and you get that volume, they have confidence that you're going to deliver. For the IAA team, that is our-- we're going to execute against that. I know it sounds really basic and simple, but I truly believe when you're the most consistent and you drive the best results, when it's time for those RFQs and time to think about where does your business go, that's how you're going to win.

And there are the things that I'm focused on when I think about IAA, and where do we need to improve and how do we do that.

And my whole goal and the sustained when I was in collision I got the same speech from the same insurance carrier partners of how do you execute it so when they refer and you get that volume they have confidence that youre going to deliver.

Speaker 3: So for the IA team, that is our, we're gonna execute against that. I know it sounds really basic and simple.

So for the IAA team that needs are going to execute against that I know it sounds really basic and simple, but I truly believe when youre. The most consistent and you drive the best results. When it's time for those RF queues in time to think about where does your business scale and thats, how youre going to win and we're always going to be an innovative partner for them. So we're constantly going to be.

Speaker 3: But I truly believe when you're the most consistent and you drive the best results, when it's time for those RFQs and time to think about where there's your business go, that's how you're gonna win. And we're always gonna be an innovative partner for them.

Jim Kessler: We're always going to be an innovative partner for them, so we're constantly going to be looking at technology, how do we get better, and how do we get more efficient.

Speaker 3: So we're constantly going to be looking at technology, how do we get better, and how do we get more efficient.

At technology, how do we get better and how we get more efficient.

Speaker 6: And just follow up on some competition if you've seen anything change there and then just lastly you guys mentioned strategic accounts Maybe pressure and take rates a bit. Is that with manufacturers or is that with the rental channel?

Great and just.

John Healy: Great. And just to follow up on competition, if you've seen anything change there. And then just lastly, you guys mentioned strategic accounts, maybe pressure and take rates a bit. Is that with manufacturers or is that with the rental channel? Thanks.

To follow up on competition, if you've seen anything change there and then just lastly, you guys mentioned strategic accounts, maybe pressure on take rates a bit.

With manufacturers or is that what the rental channel.

Speaker 3: I'll do the first question and I'll pass the second one over to Simir. So, from a competition and specifically from IAA side, no major changes that we have seen in the market, of course, like every, when you have a competitor, you keep track of what's going on, especially from the feed side and anything operationally someone's doing. But I think from the IAA side, innovation and the way we're thinking about the business is slightly different than a traditional salvage business.

I'll do the first question and I'll pass the second one over to Sameer, So from a competition and specifically from <unk> side.

Jim Kessler: I'll do the first question, and I'll pass the second one over to Samir. So from a competition and specifically from IAA side, no major changes that we have seen in the market. Of course, when you have a competitor, you keep track of what's going on, especially from the fee side and anything operationally someone's doing. But I think from the IAA side, the innovation and the way we're thinking about the business is slightly different, you know, than a traditional salvage business. So my main focus on one is how do we improve daily and be consistent, and then the innovation coming behind it of how to reimagine the way the industry is working. And I'll pass the second question over to Samir.

Jim Kessler: I'll do the first question, and I'll pass the second one over to Sameer. So from a competition and specifically from IAA side, no major changes that we have seen in the market. Of course, when you have a competitor, you keep track of what's going on, especially from the fee side and anything operationally someone's doing. But I think from the IAA side, the innovation and the way we're thinking about the business is slightly different, you know, than a traditional salvage business. So my main focus on one is how do we improve daily and be consistent, and then the innovation coming behind it of how to reimagine the way the industry is working. And I'll pass the second question over to Samir.

No major changes that we have seen in the market of course like every when you have a competitor you keep track of what's going on especially from the fee side and anything operationally someone's doing.

But I think from the IAA side innovation in the way, we're thinking about the business and is slightly different than a traditional salvage business. So my main focus on is how do we improve daily be consistent and then innovation coming behind it how to re imagine the way the industry is working and I'll pass the second question over to Samir.

Speaker 3: So my main focus on one is how do we improve the L&B consistent and then the innovation coming behind to the pattern re-imagined the way the industry is working and I'll pass the second question over.

<unk>.

Speaker 2: Hey John , I think your specific question was on where we're seeing pressure on our inventory rate or could you just elaborate a little bit?

Sameer Rathod: Hey, John, I think your specific question was on where we're seeing pressure on our inventory rate, or could you just elaborate a little bit?

Hey, John I think your specific question was on.

Where we're seeing pressure on our inventory right or.

Could you just elaborate a little bit.

John Healy: Yeah. No, no, you, you'd mentioned strategic accounts were starting to pick up, and I, I thought you'd mentioned that it was going to impact the take rates a bit. So I was just wondering?

And I know you'd mentioned strategic accounts were starting to pick up on it I thought you had mentioned that it was going to impact the take rates are bad. So I was just wondering.

Sameer Rathod: Oh, yeah. No, I got it. Yeah, so the larger strategic accounts, you know, the average commission take rate is lower compared to the regions business. So it's a mixed issue in terms of if we're sourcing more GTV from strategic accounts, you would naturally see, you know, a slight headwind in terms of the commission take rate. But clearly, you know, we look at the take rate, but also commission dollars. This is very accretive to commission dollars. So yeah.

Yeah, No I got it.

Yes, so the larger strategic accounts.

The average commission take rate is lower compared to the region's business. So it's a mix issue in terms of if we're sourcing more GTD.

From strategic accounts, you would naturally see.

A slight headwind in terms of the commission take rate, but clearly we look at the take rate, but also commission dollars. This is very accretive to commission dollars.

Yes.

Thanks, guys.

John Healy: Thanks, good.

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

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

Hey, guys. Thanks for taking my questions. Just first question like given the management departures just looking to understand.

Michael Feniger: Hey, guys. Thanks for taking my questions. Just first question, like, given the management departures, just looking to understand and get comfortable around the core Ritchie business and the integration. In the S4, I think the base case was still RBA EBITDA in the $440 to $450 million range by the end of the year. IAA EBITDA, I think $575 million. Where is RBA EBITDA in the first half? Where's IAA EBITDA in the first half relative to those expectations? I believe you said IAA is coming in ahead of expectations. So just trying to get a sense of where we're coming in for RBA EBITDA and IAA EBITDA by the end of the year.

Comfortable around our core Ritchie business and and the integration and the S. Four I think the base case was still RBA EBITDA in the $4 4400 $50 million range by the end of the year IEA EBITDA I think $575 million.

RBA EBITDA in the first half, whereas IAA EBITDA in the first half relative to those expectations. I believe you said Ias coming in ahead of expectations. So just trying to get a sense of where we're coming in for RBA EBITDA and EBITDA by the end of the year.

Hey, Michael.

Sameer Rathod: Hey, Michael, it's Sameer. You know, I think the S-4 was obviously written last year or what have you. I think, you know, the general comment we made was IAA is performing better than we had expected. You know, I would note that IAA was accretive already in Q1, you know, a little bit, but it's already accretive, which is ahead of what we thought.

Sameer I think.

The <unk> was obviously.

Britain last year or what have you I think the general comment we made with IAA is performing.

Better than we had expected.

I would note that IAA was accretive already in the first quarter.

A little bit, but it's already accretive which is ahead of what we thought.

Okay, and accretive accretive to adjusted earnings per share.

Michael Feniger: Okay. And-

Sameer Rathod: accretive, accretive to adjusted earnings per share.

Understood understood.

Michael Feniger: Understood. Last quarter, there was some concern around, you know, the flow-through for core Ritchie. I think EBITDA was up 3% on a double-digit service revenue growth. In Q2, it looks like Ritchie, the GTV in its markets was up 15%. I... What was the core Ritchie EBITDA up, now that we know the IAA is coming in? It seems like better than expected?

Last quarter, there was some concern around.

The floating for core Richie I think EBITDA was up 3% on a double digit service revenue growth in Q2, it looks like Richie the GTD.

And its markets was up 15% what was the core Richie EBITDA up.

Now that we know the Ias coming in it seems like better than expected.

Yes, I mean, we don't look at the business like that I mean, as you know has you do execute cost synergies when combined teams.

Sameer Rathod: Yeah, I mean, we don't look at the business like that. I mean, as you know, as you, as you execute cost synergies and combine teams, it becomes a big attribution issue. I think the, the way we've laid it out in the presentation makes it very clear that the combined entity grew 13% compared to, you know, the individual EBITDA that we had laid out. And you, you can see the reconciliation in, in the slide deck.

It becomes a big attribution issue I think the way we've laid it out in the presentation. It makes it very clear that the combined entity grew.

13% compared to.

The individual EBITDA that we had laid out and you can see the reconciliation in the slide deck.

Thank you and maybe just lastly, a follow up.

Michael Feniger: Thank you. And maybe just lastly, to follow up. I'm—forgive me if I'm missing this. It's just, the flow-through getting better is... If EBITDA was up 13%, service revenue growth, I think, was up 15% on a pro forma basis. Just why, what am I missing? Why wouldn't EBITDA be growing at a faster pace than what you're seeing on the service, service growth side?

Forgive me if I if I'm missing this is just.

The flow through getting better is it.

EBIT was up 13% service revenue growth I think was up 15% on a pro forma basis, just why what am I missing why wouldnt EBITDA would be growing at a faster pace than what youre seeing on the service surface growth side.

Great question, Michael I think.

Sameer Rathod: Great question, Michael. I think, you know, you heard in the prepared remarks that we continue to invest in both technology and people to drive consistent growth. And so, you know, if you look at our SG&A, we came in at $181 million. But, you know, that explains some of the delta. I'm happy to discuss it in more detail offline.

You heard in the prepared remarks that we continue to invest in both technology and people to drive consistent growth.

Yeah.

And so if you look at our SG&A, we came in at $181 million.

But that explains some of the Delta I'm happy to discuss it in more detail offline.

Michael Feniger: Perfect. Thank you, everyone.

Perfect. Thank you everyone.

Thank you. Your next question comes from Gary <unk> Barrington Research Gary. Please go ahead.

Sameer Rathod: Thank you.

Operator: Your next question comes from Gary Prestopino, Barrington Research. Gary, please go ahead.

Gary Prestopino: Hey, good afternoon, everyone, and best of luck to you, Jim, in your new endeavors. Couple of questions here. First of all, have you initiated a program here to start buying the leased facilities of insurance auto? And if you have, how many have you done so far, and what would be your goal over a 24-month period?

Hey, good afternoon, everyone and best of luck to you Jim in your new endeavors.

Okay.

Couple of questions here first of all.

Have you initiated a program here to start flying to lease facilities.

Insurance auto and if you have how many have you done so far and what would be your goal over a 24 month period.

Jim Kessler: Yeah, Gary. So I, I don't think we're going to comment on the strategy, but as you can imagine, just from an integration schedule, and I talked about the subcommittees that we have, and this is definitely one of the items on our subcommittee to make sure we have the most optimal the way we're going to allocate our capital.

Yes, Gary So I don't think we're going to comment on one.

The strategy, but as you can imagine just from an integration schedule and I talked about the subcommittees that we had and this is definitely one of the items on our subcommittee to make sure. We had the most optimal the way we're going to allocate our capital.

Okay and then.

Gary Prestopino: Okay. And then could you maybe talk a little bit about this modern checkout service that you're employing now? I mean, how does it differ from what you were doing in the past, and to the benefit of the client?

Could you maybe talk a little bit about.

This modern checkout service that you're you're employing now.

How does it differ from what you were doing in the past.

And to the benefit of the client.

Yeah no.

Jim Kessler: Yeah, no, this is going to probably sound pretty simple as I describe it, but this is on the RB side, and we used it. The pilot was in our Sacramento auction when we did it, but everything was completely digital. If you're-- everyone's probably used to it in the checkout, right? When you won the auction, you were able to pay for it through a credit card, an ACH, a wire. It was all digital. You put your account numbers in, and the transaction happens immediately. They were also able to get their invoice immediately, right?

And this is going to probably sound pretty simple.

As I describe it but this is on the RV side and we used at the pilot was in our Sacramento auction. When we did it but everything was completely digital so everyone's probably used to it in the checkout right. So when when you won the auction and you were able to pay for it through a credit card and ACTH a wire.

All digital you put your account numbers and the transaction happens immediately and they were also able to get their invoice immediately right. So the minute they want it pretty much within minutes Theyre Invoiced got created and they saw and they were able to paper, which means they're able to pick up.

Jim Kessler: So the minute they won it, pretty much, within minutes, their invoice got created, and they saw it, and they were able to pay for it, which means they're able to pick up, whatever they want at auction, pretty much that day. And then, in turn, what happens is, digitally, the seller is able to get their settlement, and they can see what's going to happen pretty much seamlessly, and they know exactly what day that money's going to be transferred into their account. And digitally, we have what account that money's going to be transferred into. So it's all done systematically. Everything happens immediately. Everyone knows what's going on in the transaction. Now, in the past, we might be sending checks to some vendors. It could be wires, it could, you know, you were sending a paper statement, you know.

Whenever they want at auction and pretty much that day and then in turn what happens is digitally the seller is able to get their settlement and they can see what's going to happen pretty much seamlessly and they know exactly what date that money is going to be transferred into their account and digitally we have one account that money is going to be transferred into.

So it's all done systematically everything happens immediately everyone knows what's going on in the transaction now in the past we might be sending checks to some vendors that could be wires. It could you presented in a paper statement, but.

Jim Kessler: But, you know, the Modern Checkout is stuff that is around in a lot of industries, and it's something that was new for us to get modernized.

The modern.

Checkout is stuff that is around and a lot of industries and it's something that was new for us to get modernized.

Okay, and then just lastly on the whole car side since this noncompete has been negotiated away.

Gary Prestopino: Okay. And then just lastly, on the whole car side, since this non-compete has been negotiated away, what would you say would be your target on the whole car side? Are you going to be looking at a whole plethora of vehicles to sell that are drivable? Or are you going to be focusing on maybe the 10 to 15-year-old vehicles that you know used to be the domain of the wholesaler?

What what would you say would be your target on the whole car side are you going to be looking at a whole plethora of.

Vehicles to sell letter drivable or are you going to be focusing on maybe the 10 to 15 year old.

Vehicles that.

We used to be the domain of the wholesaler.

No great question look the one thing that I'll, just bring you back to without giving too. Many specifics is we believe the whole car is a large opportunity and one that we're really excited about to go after we're in this space today with <unk>.

Jim Kessler: Nope. Great question. Look, the one thing that I'll just bring you back to, without giving too many specifics, is we believe the Whole Car is a large opportunity and one that we're really excited about to go after. We're in this space today with, you know, companies that donate cars and do all that kind of stuff. So, we just see a huge opportunity. This is one of the big pillars as we think about revenue synergies that we're going after. I'm really excited about it, and I'm just happy that the team now has any chains that were connected to this are lifted, and they're able to now, how do we scale this business and how do we grow it efficiently and profitably?

Companies that donate cars and do all that kind of stuff. So and we just see a huge opportunity. This is one of the big pillars. As we think about revenue synergies that we're going after I'm really excited about it and I'm just happy that the team now has any change that we're connected to this are lifted and they're able to now how do we scale this business and how do we.

Grow it efficiently and profitably.

Okay. Thank you.

Gary Prestopino: Thank you.

Thank you. Your next question comes from Maxim <unk> with National Bank Financial Maxim. Please go ahead.

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

Hi, good afternoon gentlemen.

Maxim Sytchev: Hi, good afternoon, gentlemen, and Jim, congrats on the appointment.

Jim Congrats on the appointment.

Jim Kessler: Thank you.

Thank you.

Maxim Sytchev: The first question I had, so when we kind of delved into, you know, the whole salvage space, one of the feedbacks we're getting is it's actually a fairly, you know, manual sort of processing dynamic between when, you know, car gets totaled to sort of it getting to an auction. Where do you, Jim, see sort of the lowest hanging fruit from your perspective in terms of sort of process improvement that you can envision maybe over the next nine to 12 months, if it's possible? Thanks.

First question I had so what are we kind of dealt into.

The whole salvage space one of the feedback we're getting is it's actually a fairly manual sort of processing dynamic between when targets total too.

Sort of is getting to an auction.

Do you just see sort of that.

Lowest hanging fruit from your perspective in terms of process improvement that you can envision maybe over the next nine to 12 months of its possible yes.

Jim Kessler: Yeah, this -- I'm actually going to give you one that's probably a lot sooner than that. And one of the ones... And this gets back to talking to insurance carriers and one of our large partners, making sure we focus on what we can control and how can we improve the process, that is in our control. So one of the areas that we're constantly being asked for, when that car gets in an accident, how much information do we need to be able to provide a value back to the insurance carrier so they can make a decision, what's going to happen to that car?

This I'm actually going to give you one thats, probably a lot sooner than that and one of the ones and this gets back to talking to insurance carriers and one of our large partners.

Making sure we focus on what we control and how can we improve the process and that is in our control. So one of the areas that we're constantly being asked for.

When that car gets in an accident how much information do we need to be able to provide a value back to the insurance carrier. So they can make a decision and what's going to happen to that car. So they want to know.

Jim Kessler: So they want to know, you know, if I can give you the least amount of information or if I give you one picture or four pictures, how accurate can you predict what that value is going to be at auction? And can you get me that accurate data, and how does that process work? And we've been using AI at, you know, IAA to be able to figure this out. And so we're meeting with a lot of insurance carriers just around that accuracy of that value. Look, then at the end of the day, there's gonna be a lot of conversations around when that car gets in an accident, a lot of pilots around how to get that car to the right spot? Is it a repairable car? Is it a total car?

If I can give you the least amount of information or if I gave you one pitch or four pitchers how accurate can you predict what that value is going to be at auction and can you get me that accurate data and how does that process work.

And we've been using AI.

At IAA to be able to to figure this out and so we're meeting with a lot of insurance carriers just around the accuracy of that value look then at the end of the day, there's going to be a lot of conversations around when that car gets in an accident and a lot of pilots around of how how to get that parts of the bright spot is that a repairable car is of the total car get it to the right.

Jim Kessler: Get it to the right yard, 'cause the minute you get it into the storage network, it's just gonna add cost. But the one thing I've been asked specifically from the insurance carriers, help them make sure they have the right value of what they can get at auction for this car. And that's what we're gonna be laser focused on, to help them get that from us. Right. Is there some like legacy capability in Rouse that maybe can be sort of leveraged in terms of kind of like- No, I love... Look, I love the way you're thinking. It's all around data and AI.

Guard because the minute you get it into the storage network, it's just going to add cost, but the one thing I've been asked specifically from the insurance carrier's help them make sure. They have the right value of what they can get at auction for this car and that's what we're going to be laser focused on to help them get that from us.

Is there some.

Like legacy capability and routes that maybe can be sort of leverage in terms of kind of like as well.

Ill.

Look I love the way Youre thinking, it's all around data and AI and the great thing and I don't know if its so much of Brouse technology, but it's the data scientists that we have in the organization and they exist in both IAA in Ritchie brothers that we're going to leverage to be able to do this silicon when I think about AI and pictures and everything.

Jim Kessler: The great thing, and I don't know if it's so much of Rouse technology, but it's the data scientists that we have in the organization, and they exist in both IAA and Ritchie Bros., that we're gonna leverage to be able to do this. Look, when I think about AI, and pictures and everything else, there are partners out there that I've dealt with before, and collision companies that do AI. We're gonna be looking at—you know, I don't wanna recreate a wheel for something and recreate something for IAA. I wanna be great at what we're here for, and I wanna partner with people that already have the technology, but we are gonna use our data science test to make sure we have the best data going back to our partners. Mm-hmm. Okay, excellent.

Alastair partners out there that I've dealt with before and collision companies that do AI. So we're going to be looking at look I don't want to recreate the wheel for something and recreate something for IAA I want to be great at what we're here for and I want to partner with people that already have the technology, but we are going to use our data science and test to make sure.

We have the best data going back to our partners.

Maxim Sytchev: Mm-hmm. Okay, excellent. And then just a quick one for Sameer, if I may: How should we think about non-cash working capital in the back half of the year?

Mhm, Okay excellent and then just quickly if I may how should we think about noncash working capital in the back half of the year.

Jim Kessler: And then just a quick one for Sameer, if I may: How should we think about non-cash working capital in the back half of the year?

Sameer Rathod: Thanks, Max, for the question. I don't think we're providing any specific guidance on the working cap changes in the back half. As you can imagine, some of this depends on exactly when auctions hit, when they hit late in the quarter, last day, you know, inventory purchases. But I can kind of help you think about that more offline.

Thanks, Bob for the question.

We are providing any specific guidance on the working cap changes in the back half as you can imagine some of this depends on exactly when auctions hit when they hit late in the quarter last day inventory purchases, but I can kind of help you think about that more offline.

Jim Kessler: Okay, fair enough. Thank you so much.

Maxim Sytchev: Okay, fair enough. Thank you so much.

Okay fair enough. Thank you so much.

Thank you. Your next question comes from Kevin Condon Baird. Kevin. Please go ahead.

Sameer Rathod: Thank you.

Operator: Thank you. Your next question comes from Kevin Condon, Baird. Kevin, please go ahead.

Hi, Thanks for taking my question I wanted to ask you about the service revenue take rate of 19, 5% in the quarter I believe the pro forma number for Q1 was 20%.

Kevin Condon: Hi, thanks for taking my question. I wanted to ask about the service revenue take rate of 19.5% in a quarter. I believe the pro forma number for Q1 was 20%. So the 50 basis point delta there, I know you talked about strategic accounts coming in at lower commissions, but you also mentioned buy fees moving higher. I was just wondering if those were the two major factors impacting that service revenue take rate, and if it's fair for us, for the takeaway, to be that that lower commission is more than offsetting any higher fee?

So the 50 basis point Delta there I know you talked about strategic accounts coming in at lower commissions, but you also mentioned biases moving higher.

Just wondering if those are the two.

Major factors impacting that service revenue take rate and if it's fair for us for the takeaway.

To be that that lower commission is more than offsetting any higher fee.

Okay.

Yes, hi, thanks for the question in terms of the take rate.

Sameer Rathod: Yeah. Hi, thanks for the question. In terms of the take rate, you know, I think we, we provided you all the numbers on a pro forma combined basis, so you can kind of see the individual take rate on a pro forma combined basis, Q1 to Q2. I can help you through that offline. I think, longer term, you know, we continue to expect our take rate to increase. Here in the near term, of course, we've noted that our commission take rates, you know, we'll see some headwinds just given that we're sourcing more GTV from large strategic accounts.

I think we provided you all the numbers on a pro forma combined basis. So you can kind of see the individual take rate on a pro forma combined basis Q1 to Q2.

I can help you through that offline I think.

Longer term, we continue to expect our take rate to increase here in the near term of course, we have noted that our commission take rate.

We'll see.

Some headwinds just given that we're sourcing more G television from large strategic accounts.

Kevin Condon: Okay. And then I think, just on that cost of service related to that service revenue, I think it came in at about 35, 36% of your service revenue in the quarter. Is that a right kind of range as we go forward here with IAA in the fold? Or, you know, anything unique in the quarter? Understand that might fluctuate with volumes and auction timing, but just anything else to be aware of on that line?

Okay, and then I think just on that cost of service related related to that service revenue I think it came in at about 35, 36% of your service revenue in the quarter is that a right kind of range as we go forward here with <unk> in the fold or any.

Anything unique in the quarter.

I understand that might fluctuate with volumes and auction timing, but just anything else to be aware of on that one.

Yeah, I think when modeling cost of service as a percentage of service revenue.

Sameer Rathod: Yeah, I think, you know, when modeling cost of service, as a percent of service revenue, you know, there is some seasonality you have to consider in the back half. Some of this will be driven by processing higher unit volumes and things like that. But we can kind of drill into it more offline if you'd like.

There is some seasonality you have to consider in the back half. Some of this will be driven by processing higher unit volumes and things like that but.

But.

We can we can kind of drill into it more offline if you'd like.

Kevin Condon: That's good. Thank you.

Okay. Thank you.

Thank you. Your next question comes from Larry de Maria William Blair. Larry. Please go ahead.

Operator: Thank you. Your next question comes from Larry De Maria, William Blair. Larry, please go ahead.

Jim Kessler: Hey, thanks. Good afternoon, everybody. Look, everybody's obviously curious on this, but it hasn't really come up yet. Can you take us through the timing, the process that occurred with respect to the leadership change? Obviously, you know, there's a board member with a short tenure on the comp committee who resigned recently, implies this was not abrupt. The decision to make, you know, Jim permanent CEO and on the board immediately, obviously implied the board didn't make a rash decision. So can you just tell us, you know, how long has this been going on, and, you know, have the relationship with the board, you know, deteriorated over time? So any, you know, incremental color, 'cause certainly everybody on the call is curious.

Larry De Maria (William B: Hey, thanks. Good afternoon, everybody. Look, everybody's obviously curious on this, but it hasn't really come up yet. Can you take us through the timing, the process that occurred with respect to the leadership change? Obviously, you know, there's a board member with a short tenure on the comp committee who resigned recently, implies this was not abrupt. The decision to make, you know, Jim permanent CEO and on the board immediately, obviously implied the board didn't make a rash decision. So can you just tell us, you know, how long has this been going on, and, you know, have the relationship with the board, you know, deteriorated over time? So any, you know, incremental color, 'cause certainly everybody on the call is curious.

Hey, Thanks, good afternoon everybody.

Look everybody is obviously curious on this but it hasn't really come up yet.

Take us through the timing process occurred with respect to leadership change. Obviously, there is a board member with a short tenure on the comp Committee resigned recently applied this was not a problem.

This should make Jim permanent CEO and on the board immediately.

Obviously implied the board did make a rash decision. So can you just tell us how long that's been going on.

The relationship with the board deteriorate over time, so any incremental color because certainly everybody in the call I'm curious.

No completely understand.

Jim Kessler: No, completely understand, and I, I'm sure you can understand, a lot of conversations I'm not privy to, so I can't really speculate on how it happened. Look, I can just tell you at the end of the day, at a high level, there was definitely a divergent view on what Ann believed she needed to be CEO, and, you know, the board, what they believed was in the best interest of the company and shareholders at the end of the day. I really don't have true insight into all the timing and all those conversations that were happening to be able to comment about it. Okay. Thank you for that. Now also, Sameer, I believe there was a dyssynergy on whole cars, whole cars specifically built in to, you know, the IAA pitch.

I'm sure you can understand a lot of conversations I'm not privy to so I can't really speculate on.

How it happened and look I can just tell you at the end of the day at a high level. There was definitely a divergent view what <unk> believes she needed to be CEO .

And the board what they believed it was in the best interest of the company and shareholders at the end of the day, but I really don't have true insight into all the time in all.

All of those conversations that were happening to be able to comment about it.

Larry De Maria (William B: Okay. Thank you for that. Now also, Sameer, I believe there was a dyssynergy on whole cars, whole cars specifically built in to, you know, the IAA pitch. Can you confirm, like, what that was and maybe the timing? I know you talked a little bit about it earlier, the timing of, you know, capturing that business, if there was a specific dis-synergy built into the outlook.

Okay. Thank you.

For that.

Also Sameer I believe there was a dis synergy on whole course of the whole course, specifically built in to the IAA pitch can you confirm what that was and maybe the timing I know you talked a little bit about it earlier the timing of capturing that business. If there was a specific dis synergy built into the outlook.

Jim Kessler: Can you confirm, like, what that was and maybe the timing? I know you talked a little bit about it earlier, the timing of, you know, capturing that business, if there was a specific dis-synergy built into the outlook.

Yes, I don't think we specifically quantified or disclosed what the dis synergy.

Sameer Rathod: Yeah, I don't think we specifically quantified or disclosed what the dis-synergy was when we originally talked about the transaction, but it was fully baked into the ranges that we had provided. So I wouldn't say there was anything different here.

Was when we originally talked about the transaction.

But it was fully baked into.

The ranges that we have provided so I wouldn't say there is anything different tier.

Okay. Thank you take it offline.

Jim Kessler: Okay. Thank you. Take it offline.

Larry De Maria (William B: Okay. Thank you. Take it offline.

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

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

All right everyone. Thank you so much for taking the time and I just want to reiterate how excited I am about the future of the combined company.

Jim Kessler: All right. Everyone, thank you so much for taking the time, and I just want to reiterate how excited I am about the future of the combined company. I can't wait for our next quarter call. Thank you so much.

And I can't wait for our next quarter call. 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.

Operator: 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.

Okay.

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