Q2 2024 RB Global Inc Earnings Call

Good morning, my name is Angela and I will be your conference operator today. At this time, I would like to welcome everyone to the RP Global second quarter call. All lines have been placed on mute to prevent any background noise.

Unknown Executive: At this time, I would like to welcome everyone to the RP Global second quarter call. All lines have been placed on mute to prevent any background noise. After the speakers you mark, there will be a question and answer session. If you'd like to have a question during this time, please press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, grab the pound key. Thank you.

Operator: At this time, I would like to welcome everyone to the RP Global Second Quarter 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 followed by the number one on your telephone keypad.

Sameer Rathod: I will now turn the call over to some of your Rathod's five presidents of investor relations and market intelligence to open the conference call.

Sameer Rathod: If you would like to withdraw your question, grasp the pound key. Thank you. I will now turn the call over to Sameer Rathod, Vice President of Investor Relations and Market Intelligence, to open the conference call. Mr. Rathod, you may begin.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now turn the call over to Sameer Rathod, Vice President of Investor Relations and Market Intelligence to open the conference call. Mr. Rathod, you may begin.

James Kessler: Mr. Rathod, you may begin. Hello and good morning. Thank you for joining us today to discuss our second quarter results. We've seen on the call our Jim Kessler, our Chief Executive Officer, and Eric Guerin, our Chief Financial Officer.

Sameer Rathod: Hello and good morning. Thank you for joining us today to discuss our second quarter results. With me on the call are Jim Kessler, our Chief Executive Officer, and Eric Guerin, our Chief Financial Officer.

Unknown Executive: The following discussion will include forward-looking statements, which can be identified by such words as expect, believe, estimate, anticipate, plan, intent, opportunity, and other expressions. Comments that are not a statement effect, including the block limited to projections of future earnings, revenue, growth transaction value, debt and other items, business and market trends, and expectations regarding the integration of IAA, including anticipated cost synergies, or considerate forward-looking and involved risk and uncertainties. The risk and uncertainty if that could cause actual results to differ significantly from such board-looking statements or details in our news release issues this morning, as well as our most recent quarterly report in annual report on forum 10K, which are available on the investor relations website, as well as at your MC there.

Speaker Change: The following discussion will include forward-looking statements, which can be identified by such words as expect, believe, estimate, anticipate, plan, intend, opportunity, and other expressions.

Speaker Change: Comments that are not a statement of fact, including but not limited to projections of future earnings,

Speaker Change: Revenue, Growth, Transaction Value, Debt, and Other Items.

Speaker Change: Business and market trends and expectations regarding the integration of IAA, including anticipated cost energies, are considered forward-looking and involve risk and uncertainties.

Speaker Change: The risk and uncertainties that could cause actual results to differ significantly from such board-looking statements are detailed in our news release issued this morning, as well as our most recent quarterly report and annual report on Form 10-K .

Speaker Change: which are available on the Investor Relations website, as well as Edgar and Cedar.

Unknown Executive: On this call, we will also discuss certain non-GAAP financial measures, including forward-looking, non-GAAP financial measures. With identification and non-GAAP financial measures, the most directly comparable GAAP financial measures in the political, reconciliation of the two, CR news release, forum 10-K, and forum 10-K 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 under-reliance on forward-looking non-GAAP financial measures.

Speaker Change: On this call, we will also discuss certain non-GAAP financial measures, including forward-looking non-GAAP financial measures.

Speaker Change: For the identification of non-GAAP financial measures, the most directly comparable GAAP financial measures, and the political reconciliation of the two, see our news release, Form 10-K and Form 10-Q posted on our website.

Speaker Change: 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.

Sameer Rathod: At this time, I'd like to turn the call over to Jim.

James Kessler: Thank you, Samir, and good morning to everyone. I am proud of our teammates as they continue to demonstrate an operational excellence and financial discipline to drive consistent, solid execution for our partners. This strong execution translated to 7% service revenue growth, and 11% adjusted EBITDA growth. We have now action approximately 110 million in call synergies, and we'll reach the full run rate well ahead of what we committed during the transaction. While we are pleased that we over-delivered on this commitment, we see expense optimization as an ongoing journey and will continually match the business for profitable growth.

Speaker Change: At this time, I'd like to turn the call over to Jim. Jim?

Jim Kessler: Thank you, Sameer, and good morning to everyone.

Jim Kessler: I am proud of our teammates as they continue demonstrating operational excellence and financial discipline to drive consistent, solid execution for our partners.

Jim Kessler: This strong execution translated to 7% service revenue growth and 11% adjusted EBITDA growth.

Speaker Change: We have now actioned approximately $110 million in cost synergies.

Speaker Change: And we'll reach the full run rate well ahead of what we committed during the transaction.

Speaker Change: While we are pleased that we over-delivered on this commitment, we see expense optimization as an ongoing journey and will continually manage the business for profitable growth.

James Kessler: Let's start by discussing trends in our commercial construction and transportation sector. The Equipment Consignment Market has normalized, following the surge we experienced post-pandemic. As business conditions continue to evolve, large fleet owners are evaluating their equipment disposal needs for the remainder of the year. The higher interest rate environment and the higher replacement costs are leading some customers within the region's business to postpone investments in new equipment. Reduce in their immediate need for a suite of transaction solutions for their used equipment. We are focused on driving sustainable growth by expanding our regional sales coverage within North America.

Speaker Change: Let's start by discussing trends in our commercial construction and transportation sector.

Speaker Change: As business conditions continue to evolve, large fleet owners are evaluating their equipment disposal needs for the remainder of the year.

Speaker Change: The higher interest rate environment and the higher replacement costs are leading some customers within the region's business.

Speaker Change: to postpone investments in new equipment.

Speaker Change: Reducing their immediate need for a suite of transaction solutions for their used equipment.

Speaker Change: We are focused on driving sustainable growth by expanding our regional sales coverage within North America.

James Kessler: In the second quarter, we actively recruit a new talent to strengthen the Ritchie Brothers brand to ensure we best serve our customers in the highest potential markets.

James Kessler: Now let's move to the automotive sector. Volume in the salvage industry continues to see secular growth due to higher repair costs and lower used vehicle prices, leading to an increase in a total loss ratio. In the second quarter, CCC Intelligence Solutions estimated the total loss ratio increased to approximately 20.7 percent compared to 19 percent in the same period last year. Our transparency program continues to gain traction with our partners as we set the industry standard for clear and definable performance. I am proud of the team and pleased that we consistently delivered exceptional performance to all our partners in the second quarter.

Unknown Executive: Volume in the salvage industry continues to see secular growth due to higher repair costs and lower used vehicle prices.

Speaker Change: Now let's move to the automotive sector.

Speaker Change: I am proud of the team and pleased that we consistently delivered exceptional performance to all our partners in the second quarter.

James Kessler: All key SLA metrics remain strong at a very high level and continue to improve compared to last year. We continuously improve our processes and invest in technology to drive premium price performance for our partners. In the second quarter, we also made significant progress in attracting new international buyers to our marketplace, achieving a record high percentage of vehicles sold to international buyers and our automotive sector. Our efforts resulted in automotive average selling prices remain an unchanged year-to-year app performing the industry which continues to experience the clients. This high performance and our commitment to trust and transparency translate it to a meaningful win in the third quarter.

Speaker Change: All key SLA metrics remain strong at very high level and continue to improve compared to last year.

Speaker Change: In this second quarter, we also made significant progress in attracting new international buyers to our marketplace.

Speaker Change: Achieving a record high percentage of vehicles sold to international buyers in our automotive sector.

Speaker Change: Our efforts resulted in automotive average selling prices remain unchanged year over year, outperforming the industry, which continues to experience declines.

Speaker Change: This high performance and our commitment to trust and transparency translated to a meaningful win in the third quarter.

James Kessler: One of our existing partners who previously split salvage volumes has selected us as their sole salvage provider in the US. We believe this win will add an estimated 40,000 salvage vehicles annually.

Speaker Change: has selected us as their sole sandwich provider in the U.S.

James Kessler: Our year-round dedication to CAT's preparedness ensures a rapid and seamless response when our customers need us the most. This was in full display with the last hurricane. Why the hurricane's impact was minor in terms of unit volumes or resource mobilization once again showcased the depth and breadth of our capabilities. In addition to dedicated CAT capacity, we have additional yard flexibility afforded by our NASCAR partnership combined with the network of Richie Brothers yards. In addition, our unique ability to tap resources across RV Global to process the surge in volumes we experience around a CAT event is key to our ability to exceed our commitments to our customers.

Speaker Change: This was in full display with the last hurricane. While the hurricane's impact was minor in terms of unit volumes, our resource mobilization once again showcased the depth and breadth of our capabilities.

Speaker Change: In addition to dedicated CAC capacity.

Speaker Change: We have additional yard flexibility afforded by our NASCAR partnership combined with the network of Ritchie Brothers Yards.

Speaker Change: In addition, our unique ability to tap resources across RVGlobal to process the surge in volumes we experience around a CAD event is key to our ability to exceed our commitments to our customers.

James Kessler: We have a significant and sustainable competitive advantage and handle on cat events.

Eric Guerin: I will now pass the call to Eric to review our financial performance and outlook.

Speaker Change: I will now pass the call to Eric to review our financial performance and outlook.

Eric Guerin: Thank you, Jim. Total GTV declined by 1%. Automotive GTV decreased by 4% due to lower unit violence on stable average selling crisis. The decline in unit violence due to the previously announced customer loss and the impact of a milder winter, partially offset by organic growth from existing customers.

Jim: Jim, total GTV declined by 1%, and automotive GTV decreased by 4% due to lower unit volumes on a stable average selling price.

Eric Guerin: The decline in unit volumes was due to the previously announced customer loss and the impact of a milder winter.

Eric Guerin: As Jim just noted, on a net basis, we believe we are gaining salvage market share sequentially here in the third quarter. ATV in the commercial construction and transportation sector increased by 9%, driven by an increase in lot volumes, partially offset by a decline in the average price per lot sold. The average price per lot sold declined primarily due to asset mix. As lot volume growth came from rental and transportation industries, where asset values are intrinsically at lower ASTs. We also continue to see pricing declined year over year on a mixed adjusted basis.

Eric Guerin: As Jim just noted, on a net basis, we believe we are gaining salvage market share sequentially here in the third quarter.

Eric Guerin: ATV in the commercial construction and transportation sector increased by nine percent.

Jim Kessler: The average price per lot sold declined primarily due to asset mix.

Jim Kessler: As lot volume growth came from rental and transportation industries, where asset values are intrinsically at lower ASPs.

Eric Guerin: We also continue to see pricing decline year-over-year on a mix-adjusted basis.

Eric Guerin: Excluding the impact of the Yellow Corporation bankruptcy, GTV growth in the commercial construction and transportation sector would have been approximately 4%. Moving to service revenue, service revenue increased by 7%, driven by our service revenue take rate, expanding approximately 140 basis points to 20.9%. Partially offset by a decline in GTV, a great expansion was driven by growth in our marketplace services and a higher average buyer fee rate. Moving to EBITDA, the contribution from the take rate expansion and higher inventory returns were partially offset by a decline in GTV. Our focus on operational excellence drove strong operating leverage, with operating expenses growing at a slower rate than the service revenue growth.

Eric Guerin: Excluding the impact of the Yellow Corporation bankruptcy, GTV growth in the commercial construction and transportation sector would have been approximately 4%.

Eric Guerin: Moving to service revenue. Service revenue increased by 7%, driven by our service revenue take rate, expanding approximately 140 basis points to 20.9%.

Eric Guerin: Partially offset by decline in GTV.

Eric Guerin: Take rate expansion was driven by growth in our marketplace services at a higher average buyer fee rate.

Eric Guerin: Moving to EBITDA, the contribution from the take rate expansion and higher inventory returns were partially offset by a decline in GTV.

Eric Guerin: Our focus on operational excellence through strong operating leverage, with operating expenses growing at a slower rate than the service revenue growth.

Eric Guerin: Resulting in a higher adjusted EBITDA compared to last year, we remain dedicated to efficiency, and you can measure our progress by seeing adjusted EBITDA as a percentage of GTV increasing to 8.4% compared to 7.4% the prior year. Adjusted earnings per share increased by 15%, primarily on strong operational performance and a lower net interest expense compared to last year. Our strong operational performance and continued debt paydown drove a two-tenths of a term decline in our adjusted net debt to traveling 12 months adjusted EBITDA, so approximately 1.8 times compared to the first quarter.

Eric Guerin: Resulting in a higher adjusted EBITDA compared to last year.

Eric Guerin: We remain dedicated to efficiency, and you can measure our progress by seeing adjusted EBITDA as a percentage of GTV increasing to 8.4% compared to 7.4% the prior year.

Eric Guerin: Adjusted earnings per share increased by 15%.

Eric Guerin: primarily on strong operational performance and a lower net interest expense compared to last year.

Eric Guerin: Our strong operational performance and continued debt pay down drove a two-tenths of a ton decline in our adjusted net debt to trailing 12-months adjusted EBITDA, so approximately 1.8 times compared to the first quarter.

Eric Guerin: Consistent with our capital allocation strategy, we plan on continuing to pay down, turn loan A for the remainder of the year.

Eric Guerin: Moving to the outlook, we are updating our full-year GTV guidance range to 0 to 2% from 1 to 4%. The reduction of guidance reflects the weaker than expected average selling crisis we are currently experiencing in a commercial construction and transportation sector. Despite these macro headwinds, we are increasing our full-year adjusted EBITDA guidance. from 1.22 to 1.2700 dollars due to strong operating leverage we drove in the second quarter and our continued commitment to cost efficiency.

Eric Guerin: The reduction of guidance reflects the weaker-than-expected average selling prices we are currently experiencing in the commercial construction and transportation sector.

Eric Guerin: Despite these macro headwinds, we are increasing our full-year adjusted EBITDA guidance range from $1.22 to $1.27 billion due to strong operating leverage we drove in the second quarter and our continued commitment to cost efficiency.

Unknown Executive: With that, let's open the call for questions.

Sabahat Khan: At this time, I would like to remind everyone that in order to ask a question, the first question comes from the line of Sabahat Khan with RBC Cuttle Markets. Please go ahead. Great. Thanks and good morning. If I can maybe just ask a question on that customer when you just announced, can you maybe just talk about, you know, maybe what are some of the metrics this customer looked at? Maybe anything on the RFP process and when you talk about splitting the business, you know, how much of, you may be able to give a quantify and how much was it with you versus the other major part in the industry.

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

Sabahat Khan: Great. Thanks and good morning. If I can maybe just ask a question on that customer Wynn you just announced. Can you maybe just talk about

Sabahat Khan: Any additional color you can share on that would be great. Thank you.

James Kessler: Yes, Jim.

James Kessler: Let me just first start by how proud I am of the team over the last year as Ritchie Brothers and IA have come together. And for the IA team to be really focused on our partners and over delivering on all the commitments that we have. And it's those commitments that won us this business. And look, we talked about before the life cycle of a salvage car, and it's all those SLA that we have to accomplish. Our partner saw what we were doing in that over commitment and boarded the rest of the business. And we're not going to get into any other details for this partner, but it's based on our over delivering, our transparency, and what we've delivered, and they were able to put both of us together head to head in a competition, and we got awarded the rest of the course.

Sabahat Khan: Yeah, it's Jim. Let me just first start by how proud I am of the team over the last year as Ritchie Brothers and IA has come together.

Eric Guerin: and over delivering on all the commitments that we have. And it's those commitments that won us this business. And look, we've talked about before the life cycle of a salvage car, and it's all those SLAs that we have to accomplish. And our partner saw what we were doing and that over commitment and awarded us the rest of the business.

Sabahat Khan: And we're not going to get into any other details for this partner, but it's based on our over delivering our transparency and what we've delivered. And they were able to put both of us together head to head in a competition and we got awarded the rest of the cars.

Sabahat Khan: Great. And then maybe just on the margin side, you know, a couple of quarters here of good progression on the margin side.

Sabahat Khan: And I think in the slide deck, you called out continued operating leverage. If you can maybe share some details on some of the operational changes you are making on the ground level that are contributing to this.

Speaker Change: In the slide deck, it's called Continued Operating Leverage. If you can maybe share some details on...

Sabahat Khan: And you know, just directly, maybe not getting into numbers, but just directly what you think about the potential margin upside and runway for more of the margin improvement over the next few years.

James Kessler: Yeah, let me start, and I'll pass it to Eric. As we discussed in past calls and as an executive team and leadership team, we're very focused on, you know, how do we expand the top line, then how do we expand margins, and how do we control cost as we do this. And that's never not going to be a focus for our be global, and those three line items are what we're always going to focus on and what we're going to concentrate on.

Sabahat Khan: Yeah, it's Jim. Let me start, then I'll pass it to Eric.

Jim Kessler: As an executive team and leadership team, we're very focused on

Jim Kessler: And that's never not going to be a focus for RB Global, and those three line items are

Eric Guerin: So I'm not going to get into details of exact numbers of what we expect that to be, but I'll pass it to Eric if he has any other color he wants that.

Eric Guerin: What we're always going to focus on and what we're going to concentrate on, so I'm not going to get into details of exact numbers of what we expect that to be, but I'll pass it to Eric if he has any other color he wants to add.

Eric Guerin: Thanks, Jim. Yeah, I agree with Jim's comment. It's just this continuous improvement, while always keeping in mind where Jim commented on the SLA performance, right?

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

Eric Guerin: We are never going to compromise on our performance to our partners, but we just want to be as efficient as we can within the business.

Unknown Executive: Okay, thank you. I'll pass one.

Speaker Change: Great, thank you. I'll pass the line.

Steven Hansen: Our next question comes from Steven Hansen from Raymond James. Your line is now open. Yeah, I get more of guys to thanks for the time.

Steven Hansen: Congrats on the contract win. Maybe this is a follow-up is, you know, what is your ability to violate our service loan performance into other contract wins over time. Is this sort of one of, as I've said, an important sort of step. But the other question we can use can be caught back in digital share over time that it's previously been seen.

James Kessler: Hey, hey, Steve. It's Jim.

James Kessler: Great question. Look, I'm not going to get into detail of something that I don't control. I don't control other carriers in their decision. What we do control is how we perform in over the liver on those commitments. And what I'm going to make sure we do is to make sure everyone in the industry is aware. There are our own performance and what we're delivering upon. And I think when people see what we're able to do, they can judge who your partner should be. I'm very confident based on how we perform and how consistently we're doing it.

James Kessler: And instead of action, this is turning into a habit of week over week, month over month, of how we're performing. And I think when insurance partners see this, they're going to have a choice to make. And I'm confident. And what we're doing, and we're able to drive for them, that we're going to be in the conversation. But again, I can't control the outcome that someone else's decision. But what we can control is to make sure they have a partner that is performing the best.

James Kessler: And at the highest level, I believe we're doing that right now.

Steven Hansen: That's helpful. And just to develop it, do you think that there's any. That's a good contribution to how much of it relates to operational performance on the ground. You know, the key metrics you have to talk about versus the actual price performance of the auction.

Unknown Executive: Look, I think it's a combination of everything. So I think every insurance partner looks at the net return. So I think you have to take into, you know, the equation, tow costs, cycle time, the ability to get a title as quickly as possible, the ASP. And what I'm really impressed by is our continued ability to drive ASP for our partners, especially when you look at the used card market of where that's heading.

James Kessler: Look, I think it's a combination of everything. So I think every insurance partner looks at the net returns. So I think you have to take into, you know, this, the equation. To cost cycle time, the ability to get a title is quickly as possible. The ASP and what I'm really impressed by is our continued ability and drive ASP for our partners, especially when you look at the use card market of where has that hidden. So I'm just, it's the whole equation. It gets down to net returns that I think is important to our partners. And that's what we're focused on.

Unknown Executive: So I'm just, it's the whole equation; it gets down to net returns that I think are important to our partners. And that's what we're focused on. It's not one segment or the other, the whole package that you have to be able to deliver. And I believe that's what we're delivering on right now.

James Kessler: It's not one segment or the other. It's the whole package that you have to be able to deliver. And I believe that's what we're delivering upon right now.

Krista Creason: Thank you. Our next question comes from Christa Creason from CIBC. Your line is now open. Hi, thanks for your question, and congrats on the quarter. I'm just wondering if maybe you can elaborate a little bit more on the commercial business and maybe if there's any specific areas that you're seeing. And if you think some of this is due to the uncertainty around the elect.

James Kessler: Yeah, look, I'll start and I'll pass it over to Sameer an error to add some color. Look, when we look back at every election, we see a similar cycle where people get apprehensive. Either that's by a new equipment, interest rates of what's going to happen in the market, so the election cycle, and I think we mentioned this in the past couple of calls, always has an effect in it. It's just a delay effect; just a matter of time of what happens. And for us, as we look at price and everything else, we're not shocked the way prices go in right now with where interest rates are and everything else.

Speaker Change: In this in the past couple of calls always has an effect and it's just a delay effect just a matter of time of what happens in and for US as we look at price and everything else. We're not shocked the way prices go into right now with where interest rates are and everything else and for US. There's a lot of indicators that are in our.

James Kessler: And for us, there's a lot of indicators that are in our favor, but as indicators, the hard part is to know when they're going to go in the time sequence. That's exactly no is a quarter, first quarter, second quarter of why it happens.

Favre: Favre, but as indicators the hard part is to know when theyre going to go in and the time sequence and I'd say exactly no is it fourth quarter first quarter second quarter of why it happens, but theres a lot of things in our favor right now that we just need to continue executing for our partners and listening to them and what they are.

Sameer Rathod: But there's a lot of things in our favor right now that we just need to continue to execute before our partners and listen to them and what they need and make sure we're able to go after it. Sameer or Eric, I'll pass it over to either one of you if you want to get a more color about the macro environment.

Speaker Change: Need and make sure we're able to go after it and Samir or Eric I'll pass it over to either one of you. If you want to give any more color about the macro environment.

Sameer Rathod: Hey Chris, that's Samar. Yeah, I wouldn't specifically call out any on market causing weakness. I think, you know, what we do here from our customers is perhaps the interest rate environment plus the higher cost of dealing with causing them to tap the brakes on purchasing you, which means, you know, in turn, they're not looking for dissolution services.

Favre: Hey, Chris that Samir yeah.

Samir: Specifically call out any end markets.

Samir: Causing weakness I think you know what we do hear from our customers that perhaps are.

Samir: The interest rate environment, plus the higher cost of newest causing them to tap the brakes on.

Samir: Purchasing new which means in turn they're not looking for disposition services, but I think probably smaller customers and the sensitivity around interest rates as what we would call out.

Krista Creason: So I think probably smaller customers and the sensitivity around interest rates is what we would call out. Okay, great.

Eric Guerin: Thanks. Maybe just on the cost energy side. Obviously, you're achieving them too much faster than anticipated.

James Kessler: Is it that you're achieving them faster, or you've found you found additional cost energies that maybe you didn't anticipate beforehand? Look at Jim. I would probably state it; it might be just a different philosophy of past CEOs to current CEO. And as you think about it, I think we have opportunity in our business, and when I look at the ability to grow and manage margins and manage expenses, I think we're very lucky that we're able to do all three. And I think as a RV global executive team, we're committed to managing all three of those levers, and we're not going to stop.

James Kessler: And we're constantly going to always look for ways to optimize the cost size of the business, but not to jeopardize the growth side of it. But we look at these things as a triangle that we need to manage each of the points, and we're going to continue to do so.

James Kessler: So I'm very optimistic of the future and what's in front of us. And when I think about all three of those points, each of those points is very important to us that we're going to constantly focus on as a leadership team. Great.

Unknown Executive: Thank you. I'll jump back in the queue.

Unknown Executive: Before we continue, again, if you'd like to ask a question, please press star and then one on your telephone keypad. That's star one on your telephone keypad.

Craig Kenison: Our next question comes from Craig Kenison from there. Your line is now. Good morning. Thanks for taking my question. I think you mentioned a milder winter, and I'm just wondering if you can shed any light on the overall number of accident claims or accident frequency. It feels like that metric was down, offsetting some of the strength in the total loss rate.

James Kessler: Yeah, and I'll start in Samir. I'll pass it to you as we go through this. And look, I think a mild winter affected everyone in the industry if it's collision or salvage as you kind of go through it. But I just want to remind the group, you know, when you look at our auto number and the carrier loss that we mentioned a year ago, it is a big reason for what you're seeing in our performance. This is the first quarter of that carrier being pretty much fully out of our comparison. So we have three quarters to go up against that.

James Kessler: And we did mention the new win, which will all set some of that starting in the fourth quarter as those cars start to come in. But again, our big thing: yes, there was a mild winter. It does have some effect, but for us, when you're looking at our numbers, the big indicator to keep in mind is that carrier loss that we had a year ago of why we're performing the way we are. And without that, it would be different, and we probably wouldn't be talking about a mild winter, anything like that.

Sameer Rathod: And to me or anything you want to add from from a macro environment.

Sameer Rathod: Yeah, Hank Craig, you know, we did look at it pretty closely.

Craig Kenison: It's hard to quantify how much is whether, as Jim indicated, you know, the bigger driver was obviously the customer loss. Okay, thanks.

Eric Guerin: And as you may progress on the balance sheet and wondering whether buybacks may be something that become part of the capital allocation decision. Yeah, this is Eric. We currently do not have an authorization in place for a buyback, but as noted in our last quarter capital allocation, our focus for the remainder of this year is around our turn Monet.

Eric Guerin: Pay down.

Unknown Executive: Great. Thank you.

Maxim Sytchev: Jim, comes from maximum site from in the F. Your line is now open. Hi, I'm Jim. Jim, where I can just put a question around the elasticity of the take rate. I'm wondering what you thought there and where I guess the biggest drivers have been is it around the legacy business where I am trying to put you that as well, just maybe any collar there in terms of how much I'm thinking about this over, you know, additional to me. Yeah, look, it's always the top thing to answer because when you think about take rate and keys and everything that goes into it, and there is a competitive environment that we're constantly looking at to make sure we're staying competitive and what we're charging.

James Kessler: And but when you look at what we've been able to accomplish this year, it's on both sides of the business; it's on the traditional Richie Brothers side and commercial and transportation and the auto side, traditionally what we call IA. So it's a reflection of both of being able to increase some of the fees on both sides of the business. Look, I'm very optimistic about what the future holds when I think about take rate and what we can do, especially with all the additional services that we're able to add to a transaction. But again, some of this is so hard when you're dealing in the competitive environment to know how competitors are going to react and what you're going to do, and we have a process in place that we look at on a very consistent basis.

James Kessler: And then we have a process in place where we make and decisions what do you do with those fees and everything else. But in general, optimistic about you know what the front of us and our ability to. You know, increase our financial profile in that regard.

Unknown Executive: you know, increase our financial profile in that regard.

James Kessler: Excellent, thanks. And then, so just one follow-up, in terms of IA and kind of your thought process around, kind of your dry driving ASP through, you know, international, you know, greater reach. I'm just wondering if you have any update on that strategy. Yeah, this is our highest quarter where we had international buyers. But the way I think about the marketplace is the way you get international buyers is the more run-in drive type of cars that you have. And again, we went through this definition of a run drive. It's not something that, you know, can actually roll or drive today, in some cases.

Speaker Change: The marketplace is the way you get international buyers is the more running dry type of cars that you have and again, we went through the definition of our brand drive it's not something that.

Speaker Change: Can actually roll or drives today in some cases, but the more run and drive. So you can get in more operationally that the team is focused and to get a car to meet that definition of a run and drive will allow more international buyers to participate in.

James Kessler: And, but the more run-in drives you can get and more operationally that the team is focused and to get a car to meet that definition of a run-in drive will allow more international buyers to participate in your offices. Because they can put some money in the car, get that car, get it overseas and sell it. And after they make our investment in the car. So for us, our focus is really the cars that are running drives and making sure all the international buyers are aware. We have leveraged the Richie Brothers Relationships International to make sure the IA side has the sport they need and especially having the presence that Richie did.

Speaker Change: Your auction just because they can put some money in the car get back or get it overseas and sell it and then after they.

Speaker Change: Our investment in the car so for US our focus is.

Speaker Change: The cars that are running drives and making sure all the international buyers are where we have leveraged the Ritchie brothers relationships International.

Speaker Change: To make sure the IAA side has the support they need and especially having the presence that Ritchie did and as we merged together, it's really important to this but again I think the biggest factor anytime youre thinking about international's what types of cars do they won and we offer those cars in the marketplace and then being able to show them trim.

James Kessler: And as we've merged together, it's really important to this. But again, I think the biggest factor, anytime you're thinking about, you know, international, is what type of cars do they want. And are we all from those cars in the marketplace and then being able to show them trim level data, all the details, why it's a run and drive, why they should invest in that car and how they can make money. It's really important.

James Kessler: We just had our buyers in for a weekly yearly summit, and a couple of weeks ago in Chicago, and got their feedback of what we should be thinking about for the future. But we're very happy where we're at right now in the international buyer side, very happy with our team execute our run and drive program that we have in place operationally.

Unknown Executive: Excellent, let's just mix.

Sabahat Khan: Our next question comes from Sabahat Khan from our busy capital markets; your line is network. Great, thanks. Just one quick follow-up. There's some headlines around whether events kind of small one throughout the US. Just wondering if we know any of those, you had an opportunity to sort of, you know, exhibit, you know, updated operations, handling of cat events and any feedback you might have got from insurance companies. That was one of the, one of the kind of lines of questions up on investors or the quarters of QSTP had any commentator.

James Kessler: Thank you. Yeah, it's Jim and all start, and the cat events were very small, and we've received positive feedback from the partners that we have that were affected in those events. But again, I would say they're just on the small end of it. But look, I'm encouraged every time, even though it's small. I see how our team has reacted. I see what our partners. The appreciation they have, to our reaction and what we're going to do. And the one thing that we're very prepared for this year is, no matter what size cat, and we're prepared.

James Kessler: We're ready to support our partners. And we have the real estate. We have the space. We have the people. We have everything in place, and the other thing that we have in place is the minute these cat events that reported in the transparency that we're doing on a poorly basis. We're going to also do for cats to make sure our partners are very aware of how we'll perform in and how quickly we're ready to react to their needs. So I know this might sound weird, and it's unfortunate for people that go through a cat event.

James Kessler: But if a cat event does happen, I'm very confident in our performance and our ability then to communicate that to our partners as we go through it.

Unknown Executive: Good, thanks very much for the call. Thank you.

Unknown Executive: We are now closing the question, answer session.

James Kessler: I'd now like to hand back over to James Kessler for a final little month. Thank you so much. And again, I just want to really show my appreciation to the RB Global team. If it's commercial construction, transportation, automotive side of our business, everyone has done a tremendous job of living up to our commitments to our customer and over deliver them those commitments. And my belief is that we continue to do that. That's really what is going to set us different than anyone else in this space. It's really the ability to do it consistently over and over when you make a commitment to deliver against that commitment.

James Kessler: And I just want to show my true appreciation to the RB Global team for their support and their ability to constantly do this over and over again. Thank you so much.

Unknown Executive: I want to thank everyone for joining us on the call today, and we look forward to talking to you very soon. Thank you so much.

Unknown Executive: Thank you for attending today's call. You may now go see next time.

Unknown Executive: Wonderful day.