Q3 2024 RB Global Inc Earnings Call

Janine: Thank you for standing by. My name is Janine and I will be your conference operator for today.

Thank you for standing by my name is genuine and I'll be your conference operator for today at this time I would like to welcome everyone to the RMB Global third quarter earnings call. All lines have been placed on mute to prevent any background.

Janine: At this time, I would like to welcome everyone to the RB Global Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise.

Janine: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star followed by the number one on your touchstone. To withdraw your question, please press star followed by the number one again.

Okay.

After todays presentation, there will be an opportunity to ask questions.

That's a question you May press star followed by the number one and you touched on what do.

Speaker Change: To withdraw your question. Please press star followed by the number one again I would now like to turn the conference over to Samir right that Vice President of Investor Relations and market Intelligence. Please go ahead.

Sameer Rathod: I would now like to turn the conference over to Sameer Rathod, Vice President of Investor Relations and Market Intelligence. Please go ahead.

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

Samir Right: Hello, and good morning, Thank you for joining us today to discuss our third quarter results, Jim Kessler, Our Chief Executive Officer, and Eric <unk>, Our Chief Financial Officer are with me on the call.

Sameer Rathod: The following discussion will include forward-looking statements, which can be identified by such words as expect, believe, estimate, anticipate, plan, intend, opportunity, and similar expressions. Comments that are not a statement of fact, including but not limited to projections of future earnings, revenue, gross transaction value, debt, potential partnerships, and other items, and business and market trends, are considered forward-looking and involve risk and uncertainty.

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

Samir Right: Comments that are not a statement of fact, including but not limited to projections of future earnings revenue gross transaction value that potential partnerships and other items and business and market trends are considered forward looking and involve risks and uncertainties.

Sameer Rathod: The risk and uncertainties that could cause actual results to differ significantly from such forward-looking statements are detailed in our news release issued this morning, as well as our most recent quarterly report and annual report on Form 10-K, which are available on the Investor Relations website and Edgar and On this call, we will also discuss certain non-GAAP financial measures, including forward-looking non-GAAP financial measures. For the identification of non-GAAP financial measures, the most directly comparable GAAP financial measures, and the applicable reconciliation of the two, see our news release, Form 10-K, Form 10-Q, posted on our website.

Samir Right: The risks and uncertainties that could cause actual results to differ significantly from such forward looking statements are detailed in our news release issued this morning.

As our most recent quarterly report and annual report on Form 10-K, which are available on the investors relations website.

Speaker Change: Edgar and SEDAR.

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

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

Sameer Rathod: We are unable to present quantitative reconciliation of forward-looking non-GAAP financial measures, as management cannot predict all necessary components. Investors are cautioned not to place undue reliance on forward-looking non-GAAP financial measures.

Speaker Change: We are unable to prevent quantitative reconciliation of forward looking non-GAAP financial measures as management cannot predict all necessary components investors are cautioned not to place undue reliance on forward looking non-GAAP financial measures at this time I'd like to turn the call over to Jim Kessler Ken.

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

Jim Kessler: Thanks Sameer and good morning to everyone joining the call. I want to begin by expressing my gratitude to our exceptional team for consistently over delivering on our commitments and delivering outstanding results to our partners and customers. RB Global's third quarter highlights our commitment to disciplined execution with adjusted EBITDA declining less than 1% in the face of a 7% decline in gross transactional value. As previously discussed, GTV was driven by challenging comps in our commercial construction and transportation sector and the impacts of previously announced customer loss in our automotive sector. Let's first discuss the commercial construction and transportation sector.

Jim Kessler: Thanks, Samir and good morning to everyone joining the call.

Jim Kessler: I want to begin by expressing my gratitude to our exceptional team for consistently over delivering on our commitments and delivering outstanding results to our partners and customers.

Jim Kessler: RMB Globals third quarter highlights our commitment to disciplined execution with adjusted EBITDA declining less than 1% in the face of a 7% decline in gross transactional value.

Jim Kessler: As previously discussed <unk> was driven by challenging comps in our commercial construction and transportation sector and the impacts of previously announced customer loss in our automotive sector.

Jim Kessler: Let's first discuss the commercial construction and transportation sector as mentioned in prior quarters partners and customers continue to evaluate business conditions in the face of macro uncertainty and have adopted a wait and see approach to their equipment disposition needs.

Jim Kessler: As mentioned in prior quarters, partners and customers continue to evaluate business conditions in the face of macro uncertainty and have adopted a wait and see approach to their equipment disposition needs. Historically, these wait-and-see moments are brief, however, they do cause headwinds in our marketplace for the supply of higher ASP assets. The current environment, combined with the elevated volumes and prices we experienced last year due to the lingering impacts from COVID, has created difficult year-on-year comparisons that mask the underlying progress of our growth initiative. We believe the best view of the business trajectory is to compare to 2022, or a two-year stack, with construction and transportation GTV increasing approximately 10% in this timeframe.

Jim Kessler: Historically, these wait and see moments of breed. However, they do cause headwinds in our marketplace for the supply of higher ASP assets.

Karen environment combined with the elevated volumes and prices as we experienced last year due to the lingering impacts from Covid has created difficult year on year comparisons that masked the underlying progress of our growth initiatives.

Jim Kessler: We believe the best view of the business trajectory is to compare to 2022 or a two year stacked with construction and transportation GTD, increasing approximately 10% in this timeframe.

Jim Kessler: Typically, the wait and see periods are short in nature, given that the market either accepts the slowdown, and partners execute a deep leading strategy, or partners gain confidence that there will be a reacceleration and start purchasing new equipment, which stimulates the trading cycle and drives decisions on aged equipment. In either scenario, we are the ideal partner to help our customers navigate their fleet management needs. We continue to focus on driving sustainable growth and have expanded our North American sales organization by approximately 10% year-over-year on a net-based As productivity continues to ramp up these investments, we believe we'll be in a solid position to capitalize when the broader macro environment resolves lower or higher.

Jim Kessler: Typically the way you'll see periods are short in nature.

Jim Kessler: In that the market either accepts this slowdown.

Jim Kessler: Partners execute at leading strategy or partners gain confidence that there will be a reacceleration and start purchasing new equipment.

Jim Kessler: Which stimulates the trade in cycle and drives decisions on aged equipment in either scenario. We are the ideal partner to help our customers navigate their fleet management needs.

Jim Kessler: We continue to focus on driving sustainable growth and have expanded our north American sales organization by approximately 10% year over year on a net basis as productivity continues to ramp up. These investments. We believe we'll be in a solid position to capitalize when the broader.

Jim Kessler: <unk> environment resolves lower or higher.

Jim Kessler: We understand our partners' challenges and are dedicated to supporting them through these complex times.

We understand our partners challenges and are dedicated to supporting them through these complex times.

Jim Kessler: Now let's move to the automotive sector. Our teammates' year-round dedication to CAD preparedness ensured a rapid and seamless response to the recent hurricanes. Our thoughts are with those affected by these devastating storms, and as a proud member of these communities, RV Global remains dedicated to helping where we live and work. We supported local charities in the most impacted areas, providing relief to those most affected. Additionally, Ritchie Brothers played a critical role in aiding Duke Energy's power restoration efforts in Florida by providing space for over 4,000 line workers and their equipment at our Orlando yard. The strategic location allowed for quick mobilization to restore power to central Florida once the hurricanes passed.

Jim Kessler: Now, let's move to the automotive sector.

Speaker Change: Our teammates year round dedication to cat preparedness.

Speaker Change: Short of rapid and seamless response to the recent hurricanes, our thoughts are with those affected by these devastating storms and as a proud member of these communities are being global remain dedicated to help and where we live and work.

Speaker Change: We supported local charities in the most impacted areas providing relief to those most affected.

Speaker Change: Italy Ritchie brothers played a critical role in aiding Duke Energy's power restoration efforts in Florida.

Speaker Change: Providing space for over 4000 line workers and their equipment at our Orlando yard.

The strategic location layout for quick mobilization to restore power to central Florida. Once the Hurricanes passed we are grateful for the heroic efforts of everyone involved and help them bring these communities back.

Jim Kessler: We are grateful for the heroic efforts of everyone involved in helping bring these communities back. I was incredibly proud to witness our team's dedication firsthand during my recent visit to Florida. Through our Trust and Transparency Program, we have collaborated closely with our partners, working side-by-side, and communicating in real time during these CAT events. I have personally received several emails from our partners, and they were very pleased with our agility and excellence in execution. IAEA has several strategic advantages in responding to CAD events. Insuring we can over deliver our commitment. One advantage lies in our one team all-in culture that enables a flexible and adaptable response from our teammates.

Speaker Change: I was incredibly proud to witness our team's dedication firsthand during my recent visit to Florida.

Speaker Change: Through our trust and transparency program, we have collaborated closely with our partners working side by side and communicate in real time during these cat events I.

Speaker Change: I have personally received several emails from our partners and they were very pleased with our agility and excellence in execution.

Speaker Change: IAA has several strategic advantages and responded to cat events.

Speaker Change: Ensuring we can over deliver our commitments.

Speaker Change: One advantage lies in our one team all a culture that enables a flexible and adaptable response from our teammates.

Jim Kessler: For these hurricanes, approximately 15% of our response team comprise Ritchie Brothers team members, supporting recovery and vehicle inspection efforts. Additionally, we have the strategic option to utilize our Ritchie Brothers Orlando yard as additional capacity. However, thanks to our ample existing cat capacity in the region, we confidently managed operations without needing to exercise this option. Our carrier partners are also harnessing the power of our IAA inspection services to accelerate total loss decision making. At the core of this service is our exclusive IAA vehicle score, a cutting edge machine vision AI that analyzes vehicle images to quantify damage, a capability unmatched in a salvage industry.

Speaker Change: Are these hurricanes approximately 15% of our response team comprised of Ritchie brothers team members supporting recovery NBL car inspection efforts.

Speaker Change: Additionally, we have the strategic option to utilize our Ritchie brothers Orlando yard as additional capacity. However, thanks to our ample existing cat capacity in the region, we constantly managed operations without needing to exercise this option.

Speaker Change: Our carrier partners are also are harnessing the power of our IAA inspection services to accelerate total loss decision making at.

Speaker Change: At the core of this service is our exclusive IAA the Alco score.

Speaker Change: Cutting edge machine vision, AI that analyzes vehicle images to quantify damage.

Capability unmatched and established industry.

Jim Kessler: Complimenting this is IAA Field Call Value, an AI-driven tool that enables field call value estimates, all hydrated by our large and growing data set. Our technology further assesses flood-damaged vehicles, capturing critical details like waterline levels and matt wetness. Our mission is to streamline the virtual adjustment process, making it faster, more straightforward, and more accurate. Thanks to our investment in technology and innovation, our partners have significantly reduced upstream assignment cycle times by over a week during Hurricane Helene. We continue to drive premium price performance for our partners by continuously improving our process and technology. In the third quarter, we continue to make progress in attracting new international buyers to our marketplace, achieving a record high percentage of vehicles sold to international buyers in the automotive sector.

Speaker Change: Complementing this is IAA vehicle value and AI driven tool that enables the whole coal value estimates all hydrate by our large and growing dataset.

Speaker Change: Our technology further assesses flood damaged vehicles, capturing critical details like borderline levels and Matt Wetness.

Speaker Change: Mission is to streamline the virtual adjustment process, making it faster more straightforward and more accurate.

Speaker Change: To our investment in technology and innovation are partners have significantly reduced upstream assignment cycle times by over a week during hurricane Helane.

We continue to drive premium price performance for our partners by continuously improving our processing technology.

Speaker Change: In the third quarter, we continued to make progress in attracting new international buyers through our marketplace, achieving a record high percentage of the local salt and national buyers in the automotive sector.

Jim Kessler: Our efforts resulted in average selling prices of salvaged U.S. insurance vehicles increasing by 1% year over year, which continues to be an industry-leading outcome. Our exceptional performance and commitment to trust and transparency is resonating with our partners. We believe we will gain a salvaged market share here in the fourth quarter. A key element of our international automotive salvage growth strategy is to enter new markets with partners that provide immediate scale.

Speaker Change: Our efforts resulted in average selling prices of salvage U S insurance vehicles, increasing by 1% year over year, which continues to be an industry leader in outcome.

Speaker Change: Our exceptional performance and commitment to trust and transparency is resonating with our partners. We believe we are again at salvage market share here in the fourth quarter.

Speaker Change: A key element of our international automotive salvage growth strategy is to enter new markets with partners that provide immediate scale.

Jim Kessler: We're excited to announce that we have been selected by some court group, a leading insurance provider in the Australian market as their sole salvage provider. We expect to execute a multi-year contract and start supporting our partner in the late first quarter or early second quarter of 2025. After we finalize contract terms and some court group obtains final approval of those terms from its board, we anticipated that this partnership could provide up to 65,000 units annually once we are fully operational. We plan to accommodate this volume by strategically blending new Greenfield locations and utilizing existing Ritchie Brothers locations and third-party yards.

We're excited to announce that we have been selected by some court group, a leading insurance provider in the Australian market as there are sold salvage provider.

Speaker Change: We expect to execute a multi year contract and start supported in our partner in the late first quarter early second quarter of 2025. After we finalized contract terms and Suncorp group obtained final approval of those terms from its board we anticipated that this partnership could.

Speaker Change: Provide up to 65000 units annually. Once we are fully operational we plan to accommodate this volume by strategically blendon, new greenfield locations and utilizing existing Ritchie brothers locations in third party yards.

Jim Kessler: We were selected for this partnership for three key reasons. First, the Ritchie Brothers' strong, existing, and expanding presence in Australia, along with our strong brand reputation, served as the cornerstone in earning our partners' confidence and our ability to over-deliver on our commitments. Second, IAA is widely recognized as a premier global brand in salvage solutions. And third, IAA's cutting-edge, industry-leading digital technology for processing vehicles, combined with our unmatched suite of auxiliary services, set us apart.

We were selected for this partnership for three key reasons first.

Speaker Change: The Ritchie brothers strong existing and expanded presence in Australia.

Along with our strong brand reputation served as the cornerstone and earning our partners confidence in our ability to over deliver on our commitments.

Speaker Change: IAA is widely recognized as a premier global brand and salvage solutions and third Ias cutting edge industry leader in digital technology for processing vehicles combined with our unmatched suite of axillary serve as that set us apart.

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

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

Eric: Thank you Jim.

Eric Guerin: Before we start, I'd like to highlight that we've updated our disaggregated revenue presentation to enhance clarity and provide investors with a more transparent view of how management evaluates business performance. Total GTV declined by 7%, automotive GTV decreased by 1%, driven by stable unit volume and a 1% drop in average price for vehicles sold. Notably, this 1% outpaced the broader industry's more significant downturn. unit volumes remain stable as growth from existing partners offset headwinds from the previously announced customer loss. As Jim noted, on a net basis, we believe we are continuing to gain market share in the salvage industry sequentially here in the fourth quarter.

Eric: Before we start I'd like to highlight that we've updated our disaggregated revenue presentation to enhance clarity and provide investors with a more transparent view of how management evaluates business performance.

Eric: Total <unk> declined by 7%.

Eric: Automotive and <unk> decreased by 1% driven by stable unit volume and a 1% drop in average price per vehicle sold.

Eric: Notably this 1% outpaced the broader industry is more significant downturn.

Eric: Unit volumes remained stable as growth from existing partners to offset headwinds from the previously announced got slow loss.

Speaker Change: As Jim noted on a net basis. We believe we are continuing to gain market share in the salvage industry sequentially here in the fourth quarter.

Eric Guerin: Overall volume in the salvage industry continues to see secular growth due to higher repair costs and lower used vehicle prices, leading to an increase in the total loss ratio. In the third quarter, DCC Intelligent Solutions estimated that the total loss ratio increased nearly 180 basis points to approximately 21.7%, compared to 19.9% in the same period last year. GTV in the commercial construction and transportation sector decreased by 10%. driven by a decline in the average price per lot sold, partially offset by a 19% growth in lot volumes. Average price per lot sold declined due to both asset mix and continued deflation in asset values.

Speaker Change: Overall volume in the salvage industry continues to see secular growth due to higher repair costs and lower used vehicle prices, leading to an increase in the total loss ratio in.

Speaker Change: In the third quarter <unk> intelligence solutions estimated that the total loss ratio increased nearly 180 basis points to approximately 21, 7%.

Speaker Change: To 19, 9% in the same period last year.

Speaker Change: <unk> in the commercial construction and transportation sector decreased by 10%.

Speaker Change: Driven by a decline in the average price per lot sold partially offset by a 19% growth in lock volumes.

17% growth in lot volumes

Eric Guerin: Asset mix headwinds stem from lot volume growth from rental and transportation industries, where asset values are intrinsically at lower ASPs.

Eric Guerin: Excluding the impact of the Yellow Corporation bankruptcy, GTB decline in the commercial construction and transportation sector would have been approximately 14%.

Eric Guerin: Moving to service revenue. Service revenue increased by 1%, driven by our service revenue take rate expanding approximately 150 basis points to 21.5%. Partially offset by a decline in GTV, service revenue take rate expansion was driven by growth in our marketplace services and a higher average buyer fee rate.

Eric Guerin: Moving to adjusted EBITDA. Adjusted EBITDA declined due to lower levels of GTV and lower inventory returns, partially offset by an expansion in our service revenue take rate.

Speaker Change: Moving to adjusted EBITDA, adjusted EBITDA declined due to lower levels of <unk> and lower inventory returns.

Speaker Change: Partially offset by an expansion in our service revenue take rate.

Eric Guerin: As we anticipated certain headwinds this quarter, we took decisive action by launching a targeted discretionary cost reduction initiative. This was in addition to our ongoing strategic focus on operational efficiency. Through these efforts, adjusted EBITDA declined by 1% in the face of a 7% decline in GTV. We remain dedicated to efficiency and disciplined execution.

Speaker Change: As we anticipated certain headwinds this quarter, we took decisive action by launching a targeted discretionary cost reduction initiatives.

Speaker Change: This was in addition to our ongoing strategic focus on operational efficiency.

Speaker Change: Through these efforts adjusted EBITDA declined by 1% in the face of a 7% decline in GTA V.

Speaker Change: We remain dedicated to efficiency and disciplined execution. However.

Eric Guerin: However, we are not sacrificing any investments in strategic areas that position us for long-term growth. You can measure our progress by seeing adjusted EBITDA as a percentage of GTV increasing to 7.8% compared to 7.4% the prior year. Adjusted earnings per share decreased by 1% on a slightly higher adjusted tax rate. Our solid operational performance and continued debt pay down for over one-tenth of a turn decline in our adjusted net debt to trailing 12 months adjusted EBITDA to approximately 1.7 times compared to the second quarter. Consistent with our capital allocation strategies, we plan to continue paying down Term Loan A for the remainder of the year.

Speaker Change: However, we are not sacrificing any investments in strategic areas that position us for long term growth.

Speaker Change: Can measure our progress by seeing adjusted EBITDA as a percentage of GTT increased seven 8% compared to seven 4% the prior year.

Adjusted earnings per share decreased by 1% on a slightly higher adjusted tax rate.

Speaker Change: Our solid operational performance and continued debt paydown drove a 110th of the churn decline in our adjusted net debt to trailing 12 months adjusted EBITDA to approximately one seven times compared to the second quarter.

Speaker Change: Consistent with our capital allocation strategy, we plan to continue paying down term loan for the remainder of the year.

Eric Guerin: Moving to the outlook, we maintain our full-year GTV guidance range from zero to two percent. However, given the various puts and takes we see with the hurricane-related volumes and continued pressure on commercial construction and transportation ASPs, we think we will be at the lower end of the range.

Speaker Change: Moving to the outlook.

Speaker Change: Maintain our full year <unk> guidance range from zero to 2%. However, given the various puts and takes we see with the hurricane related volumes and continued pressure on commercial construction and transportation Asps. We think we'll be at the lower end of the range.

Eric Guerin: For Adjusted EBITDA, we are increasing the lower end of the guidance range to $1.235 billion from $1.22 billion due to the solid third quarter results and continued attention to cost efficiency. Please note that our guidance incorporates incremental operating expenses incurred in the fourth quarter associated with the recent hurricane.

Speaker Change: For adjusted EBITDA, we are increasing the lower end of the guidance range to 123 5 billion from one point to $2 billion.

Speaker Change: The solid third quarter results and continued attention to cost efficiency.

Speaker Change: Please note that our guidance incorporates incremental operating expenses incurred in the fourth quarter associated with the recent hurricanes.

Janine: With that, let's open the call for questions. Ladies and gentlemen, we will now begin the question and answer session. I would like to remind everyone for one question, one follow-up. Should you have a question, press star followed by the 1 on your touchtone phone and you will hear a prompt that your hand has been raised. Should you wish to withdraw, please press star followed by the number 1 again.

Speaker Change: With that let's open the call for questions.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session I would like to remind everyone. For one question. One follow up should you have a question press star followed by the one and you touched on phone and you will hear profits or have you seen me should you wish to withdraw please press star followed by the number.

Janine: If you are using a speakerphone, kindly lift the handset before pressing it.

Speaker Change: One again.

Speaker Change: Are you seeing a speaker phone.

Speaker Change: The handset before pressing.

Sabahat Khan: Our first question comes from the line of Sabahat Khan from RBC. Please go ahead.

Speaker Change: Our first question comes from the line.

Speaker Change: <unk> Khan from RBC. Please go ahead.

Sabahat Khan: Great. Thanks and good morning.

Speaker Change: Great Thanks, and good morning.

Jim Kessler: Could you maybe, I guess, given where we are sort of in the macro, you know, some of the trends that you have in each of your segments, can you just maybe share some perspectives on what yours, particularly on the commercial side, what you're seeing into 2025, any early perspectives? I know you shared some thoughts on customers being a bit cautious, but, you know, what do you expect maybe over the medium term instead, in terms of disposition activity, given the, maybe the views that some of your larger partners may have on the outlook?

Could you maybe I guess, given where we are sort of in the macro.

Speaker Change: Some of the trends that you have in each of your segments can you just maybe share some perspectives on what yours, particularly on the commercial side, what youre seeing into 2025 any early perspective, I know you shared some thoughts on.

Speaker Change: Customers being a bit cautious, but what do you expect maybe over the medium term instead in terms of disposition activity.

Speaker Change: Given the maybe the view that some of your larger partners may have on the outlook. Thanks.

Jim Kessler: Now, great question. And I'll just give you a very high level that I'm going to pass it to Sameer, since he is our resident expert, as we think about, you know, everything outlook and customers. But look, for us, our main focus is As we talk to our partners, how do we help them deliver in whatever economic environment we're in? So our team is really focused on the situation we currently have this quarter, next quarter, listening to what their needs are, and how do we support that and add as much value to their P&L as we can.

Speaker Change: No great question and I'll, just give you a very high level, and then I'm going to pass it to Samir since he is our resident expert as we think about.

Speaker Change: Everything outlook and customers, but look for us our main focus is.

Speaker Change: As we talk to our partners, how do we help them deliver in whatever economic environment. We're in so our team is really focused on.

Speaker Change: The situation. We currently have this quarter next quarter.

Samir Right: Listening to what their needs are and how do we support that and add as much value to their P&L as we can and Samir I'll pass it to you just for some outlook.

Sameer Rathod: And Sameer, I'll pass it to you just for some outlook. Yeah. Hey, Sabah. I think overall, you know, we're not seeing anything different compared to what you hear from other companies. Obviously, you know, construction, OEM sales are weaker. People are still assessing the outlook. I think from our perspective, again, like Jim said, we're focused on servicing our customers and partners best we can, regardless of what happens. And remember, we are investing in organic growth initiatives to drive secular growth. And so Jim did mention that we grew the North America sales force by about 10%.

Samir Right: Yes.

Samir Right: I think overall, we're not.

Samir Right: Not seeing anything different compared to what you hear from other companies obviously.

Samir Right: Construction OEM sales.

Samir Right: Our weaker people are still assessing the outlook.

Speaker Change: I think from our perspective again like Jim said, we're focused on servicing our customers and partners that we can regardless of what happens and remember we are investing in organic growth initiatives to drive secular growth and so Jim did mention that we grew the North America sales force by about 10%.

Sabahat Khan: Great.

Jim Kessler: You know, maybe at a high level, if you can just maybe talk through, I know you've got a number of initiatives going on efficiency and things like that.

Speaker Change: Okay great.

Speaker Change: Maybe at a high level. If you can just maybe talk through I know, you've got a number of initiatives going on efficiencies and things like that.

Jim Kessler: As we kind of look ahead to the next years, if you can just talk about where you are on the margin improvement journey, maybe milestones we should keep an eye on or big buckets of You know, margin improvement opportunities that you think, you know, we should see come through over the next year. Yet really nothing. We're not going to get very specific items, but just go back to the comments we've been making for the past quarter.

Speaker Change: As you kind of look ahead to the next year is if you can just talk about where you are on the margin improvement journey, maybe milestones should keep an eye on or big bucket. So.

Speaker Change: Margin improvement opportunities that you think we should see come through over the next few years. Thanks.

Speaker Change: Yes, really nothing we're not going to give very specific items, but just go back to the comments, we've been making for the past quarter for us as we think about our business. We're very focused on three things how do we grow the top line, how do we expand margins and how do we do this at the most effective structure that we can and how do we optimize that.

Jim Kessler: For us, as we think about our business, we're very focused on three things. How do we grow the top line? How do we expand margins? And how do we do this at the most effective structure that we can? And how do we optimize the business? So for us, this isn't a one or two quarter thing, this is a journey that we're always going to focus on those three things. And optimizing our business and getting as much flow through was just a very critical item in our in our journey.

Speaker Change: Business so for US this isn't a one or two quarter thing. This is a journey that we're always going to focus on those three things and optimizing our business and getting as much flow through was just a very critical item in our in our journey and it's something that we're always going to focus on.

Sabahat Khan: And it's something that we're always going to focus Thanks very much.

Speaker Change: Thanks very much.

Krista Friesen: Our next question comes from the line of Krista Friesen from CIBC.

Speaker Change: Our next question comes from the line of Christmas season.

Krista Friesen: Please go ahead. It sounds like things are obviously progressing quite well on the IAEA side, especially with your announcement on the call.

Speaker Change: Please go ahead.

Speaker Change: It sounds like things are obviously progressing quite well on the <unk>.

Speaker Change: Side, especially with.

Speaker Change: With your announcement on the call.

Jim Kessler: Can you just speak to some of the core KPIs of the business and how far are we away from where you'd like those to get? Yeah, so so Jim, so I'll jump in.

Speaker Change: Can you just speak to some of the core kpis of the business and.

Speaker Change: How far away from where you'd like those to get to.

Jim Kessler: Yes, so Jim so I'll jump in so.

Jim Kessler: So I think we're, you know, 18 months into the acquisition. I am very proud from the KPI standpoint of where we're at. And we call it SLAs, our strategic agreements with our partners. We are hitting industry lead in numbers, and we have done it consistently for about 12 months. I truly believe we are driving more value to our partners than anyone else, and I believe our partners are seeing that in the share that we have gained. But just to answer your first question, really what we focus on is advanced storage charges, cycle time, how quickly can you get a title, gross returns, and then ultimately that will calculate a net return for our partners.

Speaker Change: I think we're 18 months into the acquisition.

Speaker Change: I am very proud from the Kpis standpoint of where we're at and we call. It SL as our strategic agreements with our partners, we are hitting industry, leading numbers and we have done it consistently for about 12 months now.

Speaker Change: I truly believe we are driving more value to our partners than anyone else and I believe our partners are seeing that in the share that we have gains.

Speaker Change: But just to answer your first question really what we focus on is advanced storage charges.

Speaker Change: Cycle time, how quickly can you get a title growth.

Speaker Change: Returns and then ultimately that will calculated net return for our partners and they are really the four buckets and theres other underlying pieces like buyer base and how do you grow it that's normal in the marketplace, but they are really the buckets that we look at in the buckets that were driving and I believe we're at the very top end of that range and our focus right now is.

Jim Kessler: And they're really the four buckets, and there's other underlying pieces like buyer base and how do you grow it that's normal in the marketplace, but they're really the buckets that we look at and the buckets that we're driving. And I believe we're at the very top end of that range, and our focus right now is consistently over delivering on those items, which I believe we are doing for our partners.

Speaker Change: Distantly over delivering on those items, which I believe we are doing it for our partners.

Krista Friesen: Thank you.

Speaker Change: That's great. Thank you and maybe just one follow up.

Krista Friesen: Maybe just one follow up. You spoke to your capital allocation priorities for the remainder of the year. But as we look out to 2025, how are you thinking about capital allocation at that point?

Speaker Change: Spoke to your capital allocation priorities for the remainder of the year, but as we look out to 2025.

Speaker Change: Or are you thinking about capital allocation at that point or are you, maybe focusing a little bit more on some tuck in M&A or what are your thoughts there.

Jim Kessler: Are you maybe focusing a little bit more on some talk in M&A or what are your thoughts? Yeah, so thank you for the question. For the remainder of 2024, our focus is on the Term Loan A pay down. As we laid out a couple of quarters ago, our capital allocation framework, we will continue to focus on investing in the business, both from technology and from our real estate footprint. We will maintain paying down on our Term Loan A, and then we are always looking at M&A and our M&A funnel. So, we'll continue to look at tuck-in opportunities for the business where it makes sense for it.

Speaker Change: Yes, so for thank.

Speaker Change: Thank you for the question for the remainder of 2024, our focus is on the term loan a paydown as we laid out a couple of quarters ago, our capital allocation framework.

Speaker Change: We will continue to focus on investing in in the business, both from technology and from our real estate footprint.

Speaker Change: We will maintain paying down on our term loan a and then we are always looking at M&A and our M&A funnel. So we'll continue to look at tuck in opportunities for the business, where it where it makes sense for us.

Krista Friesen: Congrats on the quarter. I'll jump back on the queue.

Okay.

Speaker Change: Congrats on the quarter I will jump back on the queue.

Janine: Thank you.

Speaker Change: Thank you.

Speaker Change: Okay.

Gary Prestopino: Our next question comes from the line of Gary Prestopino from Barrington.

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

Gary Prestopino: Please go ahead.

Gary Prestopino: Good morning, Jim, Eric, and Sameer. Two questions.

Speaker Change: Okay.

Speaker Change: Good morning, Jim Eric and Samir two questions first of all Eric It looked like there was an absolute decline in SG&A.

Eric Guerin: First of all, Eric, it looked like there was an absolute decline in SG&A year over year of about $26 million. Is that a function of what you talked about where you went into a mode of, you know, we really got to control expenses this quarter, or is there just something in last year's numbers that jacked them up and made the comparison?

Year over year of about $26 million.

Speaker Change: Is that a function of what you talked about where you went into a mode of.

Speaker Change: Got a control expenses this quarter orders there were there just some something in last year's numbers that Jack them up and made the comparisons easier.

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

Speaker Change: Hey, Gary how are you, yes, theres a couple of components of that as Jim and I have been articulating since I've gotten here is we are focused on operating efficiency. So that is going to continue to be a focus also in the third quarter. We did focus on some more discretionary.

Speaker Change: Pending as we knew there were some headwinds on the <unk> side as I articulated in my prepared remarks, so those are real initiatives that year.

Speaker Change: Year over year are changes there is a piece of it.

Speaker Change: Year over year.

Speaker Change: I won't give an exact percentage, but it's not the majority of it that would be related to.

Speaker Change: Bonus attainment right when you look year over year.

Eric Guerin: But overall, it's really the initiatives that we've put in place to focus on operating efficiencies for the business.

Speaker Change: But overall, it's really the initiatives that we've put in place to.

Speaker Change: Focus on operating efficiencies for the business.

Gary Prestopino: Okay, and then my second question deals with the new business with Suncorp in Australia.

Speaker Change: Okay and then my second question deals with the new business with Suncorp.

Speaker Change: Australia.

Eric Guerin: Did you maybe say how did that come to you? I wasn't, you know, was that kind of maybe a cross sell between what you're doing on the heavy equipment side that you were able to, you know, get this contract because you don't have any operations in Australia right now on the salvage side. And was it put out as an RFP or was it just, this is just a sole negotiation with you?

Speaker Change: Could you maybe say how did that come to you I wasn't was.

Speaker Change: Was that kind of maybe a cross sell between what youre doing on the heavy equipment side.

Speaker Change: You were able to.

Speaker Change: Get this contract because you don't have any operations in Australia right now on the salvage side.

Speaker Change: And wasn't put out as an RFP or.

Speaker Change: This is just the sole negotiation with you.

Eric Guerin: Look, I would just say from a Suncorp standpoint, they manage their business like, you know, any of the insurance carriers in the US. So it was kind of a normal RFP process that they go through. And we were known from our Ritchie Brothers side of the business over in Australia, which is a big marketplace for us.

Speaker Change: Look I would just say from a suncor standpoint.

Speaker Change: They manage through a business like.

Speaker Change: Any of the insurance carriers in the U S. So it was kind of a normal RFP process that they go through and we were known from our Ritchie brothers side of the business over in Australia, which is a big marketplace for us.

Eric Guerin: And the great thing about Australia, they operate their business very similar to how we operate in Canada. So IA of Canada and the tools and the technology and everything that was built. So as the RFP came together, it became very obvious that we had a tool that not only Suncorp, but I think all insurance partners in Australia will have an interest in. And I'm very happy that the team was able to get awarded the contract.

Speaker Change: The great thing about Australia, they operate their business very similar to how we operate in Canada, So IEM candidate and the tools and the technology and everything that was built so as the RFP came together it became very obvious that we had a tool.

Speaker Change: Not only suncorp, but I think all insurance partners in Australia will have an interest in.

Speaker Change: And I'm very happy that the team was able to get awarded the contract.

Gary Prestopino: Okay, thank you.

Speaker Change: Okay. Thank you.

Craig Kennison: comes from the line of Craig Kennison from Baird.

Speaker Change: Comes from the line of Craig Kennison from Baird. Please go ahead.

Craig Kennison: Please go ahead. Hey, good morning. Thanks for taking my question.

Craig Kennison: Hey, good morning, Thanks for taking my question I believe you mentioned an increase of 10% in your territory manager base I'm wondering if you can just comment.

Craig Kennison: I believe you mentioned an increase of 10% in your territory manager base. I'm wondering if you can just comment.

Craig Kennison: And then sort of the productivity curves for the typical salesperson and when we might expect that to translate into.

Jim Kessler: The Productivity Curve for the typical salesperson and when we might expect that to translate into GTV.

Speaker Change: G televisions.

Speaker Change: Yes.

Jim Kessler: Yeah, so so it's Jim. The first thing, the 10%, as we think about the increase in salespeople, we're constantly going to be looking for, you know, do we have holes in our model? Are we not in conversations with certain partners because we just don't have feet in the street to have it on the regional side of the business? And we constantly look at that map and where should we add someone where there's equipment. We don't get into the very detail of exactly the curve, but for us, one of the best investments we can make is on the salesperson side.

Speaker Change: Yes, so Jim.

Jim Kessler: The first thing that 10% as we think about the the increase in salespeople, we're constantly going to be looking for.

Jim Kessler: Do we have holes in our model are we not in conversations with certain partners. Because we just don't have feet on the street the habit on the regional side of the business and we constantly look at that map and where should we add someone where there's equipment, we don't get into the very detail of exactly at the curve, but for US one of the best.

Jim Kessler: The investments we can make it.

Jim Kessler: Is on the salesperson side, it's a very clear you pay X and salary you know how much GTD they can generate and when we hired the right.

Jim Kessler: It's a very clear you pay X in salary, you know how much GTV they can generate. And when we hire the right person with the right personality, that happens pretty quickly. And it's going to be something that we constantly invest in. And also on the other side, when you don't make the right hire, it's also something that you can manage pretty quickly too and get the right person into that position.

Jim Kessler: Person with the right personality that happens pretty quickly and it's going to be something that we constantly invest in and also on the other side. When you don't make the right hire. It's also something that you Couldnt you can manage pretty quickly too and get the right person into that position.

Craig Kennison: Thanks, Jim.

Jim Kessler: And then a while back, I think you had invested more in inside sales and sort of change the territory manager model. Could you provide an update? Current Inside-Outside Model Yeah, yeah. So we still have both in our model. And the one thing that's apparent in the region side of the business, it's a very much, you know, high touch type of business. There are some customers, you know, as different age groups and progress in their careers that, you know, prefer a self service model, which we have built with our technology and having the inside sales team for support.

Speaker Change: Thanks, Jim and then a while back I think you had invested more in inside sales and sort of changed that territory manager model because you provide an update on the current inside outside model.

Speaker Change: Yes, yes, so we still have those.

Speaker Change: In our model.

Speaker Change: One thing that's apparent in the region side of the business.

Speaker Change: Very much high touch type of business there are some customers.

As.

Speaker Change: Different age groups and progress in their careers that.

Speaker Change: Prefer self service model, which we have built with our technology and having the insight sales team for support but there is still a demographic that is out there that controls a lot of the market share that still prefers a high touch.

Jim Kessler: But there's still a demographic that is out there that controls a lot of the market share that still prefers a high touch. And so we're constantly investing in the future. But the one thing in this industry, it takes a while for it to change, right. And so we want to make sure as it transforms, we have the right technology and the right infrastructure in place. But we do realize this is a high touch type of environment.

Speaker Change: So we're constantly investing in the future but.

Speaker Change: The one thing in this industry.

Speaker Change: It takes a while for it to change right and so we want to make sure. We're as it transforms we have the right technology and the right infrastructure in place, but we do realize this is a high touch type of environment.

Speaker Change: Thank you.

Blake Greenhalgh: Our next question comes from the line of Blake Greenhalgh from B of A. Please go ahead.

Thank you. Our next question comes from the line of Blake Lean Hodge from Bofa. Please go ahead.

Blake Greenhalgh: Hey guys. Yeah, now that we're past the election, just looking back at Trump's first term, there's tightness in the used equipment channel in 2017. So just wanted to get a sense of what you guys are thinking about for his second term in terms of similarities.

Speaker Change: Hey, guys, Yeah, now that we're past the election, just looking back at Trump's first term there is tightness in the used equipment channel in 2017, so try to get a sense of what you guys are thinking about for a second term in terms of similarities and differences.

Jim Kessler: Yeah, look, it's Jim. I wish I could answer that question, right? I'd probably be doing a different job if I could answer it that accurately of what's going to happen. But I think in some of our comments that you can see, we believe a lot of the macro trends are in our favor of what's going on when you look across and have been, you know, what happened in the election. I think that's just another thing that ultimately is in our favor and for our industry. So, but we're not going to comment on any kind of speculation that we really can't control.

Speaker Change: Yes.

Jim Kessler: It's Jim.

Jim Kessler: I wish I could answer that question right I'd, probably be doing a different job if I can answer that accurately of what's going to happen.

Jim Kessler: But I think in some of our comments.

Jim Kessler: You can see we believe a lot of the macro trends are in our favor.

What's going on when you look across.

Jim Kessler: And have been.

Jim Kessler: What happened in the election I think that's just another thing that ultimately.

It is in our favor and for our industry. So.

Jim Kessler: But we're not going to comment on any kind of speculation that we really can't control.

Blake Greenhalgh: That's fair.

Blake Greenhalgh: And then second question, just any sense of CapEx in 25?

Speaker Change: That's fair and then second question, just any sense of Capex and 25, it seems like you guys.

Eric Guerin: Seems like you guys are sort of stabilizing and starting to win some business in IAA. So could we see a step up or trying to get volunteers? Yeah, so we're still going through our 2025 budgeting process, but there will be some investment related to the Suncorp deal that we just announced today.

Speaker Change: Sort of stabilizing and starting to win some business in IAA, So could we see a step up or.

Speaker Change: Not to get thoughts there.

Speaker Change: Yes, so we're still going through our 2025 budgeting process, but there will be.

Speaker Change: Some investment related to the Suncorp deal that we just.

Jim Kessler: So we'll go through the capital allocation process and we'll come out with guidance on our Q4 call. The only thing I would add on top of that with Eric is, just as a reminder, in the U.S. we have capacity from the IEA side. Unfortunately, we had to announce a loss last year, so we do have capacity. So to Eric's point, Australia, of course, going into a new market, you'll see that. But when you think about U.S. and Canada and gaining market share, just keep in the back of your mind the capacity that was lost that we want to fill back up before we have to get into new capital.

<unk> today, So we'll go through the capital allocation.

Speaker Change: <unk> process, and we'll come out with guidance on our Q4 call.

Speaker Change: Great. Thanks.

Speaker Change: The thing I would add on top of that with Eric and it's just as a reminder, in the U S. We have capacity from.

Speaker Change: From the IAA side.

Speaker Change: Unfortunately, we had to announce a loss last year.

Speaker Change: So we do have capacity so to Eric's point, Australia of course going into a new market you.

Speaker Change: Youll see that but when you think about U S and Canada and gain in market share.

Speaker Change: Just keep in the back of your mind the capacity that was loss that we want to sell back up before we have to get into new capital.

Speaker Change: Thanks.

Maxim Sytchev: Thank you. Our next question comes from the line of Maxim Sytchev from MDF.

Speaker Change: Thank you. Our next question comes from the line of Maxim <unk> from MBS. Please go ahead.

Maxim Sytchev: Please go ahead.

Maxim Sytchev: All right, good morning, gentlemen. Hello. Yes, hi, Gary. Yep, you're good. Okay, perfect. Thank you.

Speaker Change: Hi, good morning, gentlemen.

Speaker Change: Hello.

Speaker Change: Yes, Hi can you hear me.

Speaker Change: Yes.

Speaker Change: Okay perfect. Thank you.

Jim Kessler: Do you mind maybe commenting a little bit on take rate because that metric continues to trend higher?

Speaker Change: Would you mind, maybe commenting a little bit on take rate against that natural continues to trend higher how should we be thinking about this over the medium term. Thanks.

Jim Kessler: How should they think about this over the medium term? Yeah, so I'll start and then Eric, if you want to chime in with anything. Look, we have a process where we evaluate take rate and it goes with a bunch of things, inflation, competition, everything that goes through. So we're going to make sure we're in a very competitive position as we think about it. We have an annual process that we make an evaluation of what should we do with it and we're going to continue that. We look at it on a very consistent basis to see what's happening in the market and what is competition doing.

Speaker Change: Yes, so I'll start and then Eric if you if you want to chime in with anything look we have a process, where we evaluate take rate and it goes with a bunch of things inflation competition everything that goes through so we're going to make sure. We're in a very competitive position as we think about it.

Speaker Change: We have an annual process that we make an evaluation of what should we do with it and we're going to continue that we look at it on a <unk>.

Speaker Change: Consistent basis to see what's happening in the market and what is competition doing and again look I just wanted to go back to our three priorities, we want to grow GTD, we want to expand margins and we want to do it as efficiently as possible and take rate plays a role in that and it's something that we constantly evaluate.

Jim Kessler: And again, look, I just want to go back to our three priorities. We want to grow GTV, we want to expand margins and we want to do it as efficiently as possible and take rate plays a role in that. And it's something that we constantly evaluate. And, you know, some of it, you know, we have to look at other people of what decisions they're making and that could influence what we decide to do in the future. But we're very happy where we're at at this moment. And it's something that we're constantly going to look at.

Speaker Change: And.

Speaker Change: Some of it we have to look at other people of what decisions they are making and that could influence what we decided to do in the future, but we're very happy where we're at at this moment and it's something that we're constantly going to look at.

Jim Kessler: Great. And is there any comment or call you can provide on, you know, sort of market share dynamic in North America right now?

Speaker Change: Great and is there.

Any comment or color you can provide on.

Speaker Change: Sort of market share dynamic in North America.

Jim Kessler: Now Jim benches.

Jim Kessler: Look, we're not going to comment specifically on market share. I think you can see from our notes that we believe we're gaining share. And that's probably the comment that that we're going to make our focus. for market sharing. This applies to both sides of our business. When we think about Ritchie Brothers and IAA, what our value is, is what the value we can drive to our partners and what they can see in their P&L. And we feel like as long as we're over-delivering our commitments and we're driving that value in partnership with them, that's going to be good for us and ultimately help us grow into the future.

Speaker Change: Look we're not going to comment specifically on market share I think you can see from our notes that we believe we are gaining share and thats, probably the comment that that we're going to make our focus.

Speaker Change: For market share and this applies to both sides of our business and when we think about Ritchie brothers in IAA, what our value is what the value we can drive to our partners and what they can see their P&L and we feel like as long as we're over delivering on our commitments and we're driving that value and in partnership with them.

Speaker Change: Is going to be good for us and ultimately help us grow into the future, but what we're focused on is what we can control and what we can control is how do we drive value for our partners and that's what we're laser focused on at RMB global.

Jim Kessler: But what we're focused on is what we can control. And what we can control is how do we drive value for our partners. And that's what we're laser focused on at RB Global.

Maxim Sytchev: Okay, that's great.

Maxim Sytchev: That's it for me. Thank you so much.

Speaker Change: Okay. That's perfect. That's it from me. Thank you so much.

John Healy: Our next question comes from the line of John Healy from Northern Coast. Please go ahead.

Speaker Change: Our next question comes from the line of John <unk>.

Yes.

Speaker Change: Yeah.

John Healy: Thanks for taking my question, guys. Jim, I know you just answered the question about market share, but I have to try this one. You know, last quarter, you talked about kind of the win that you had, kind of, you know, second, you know, and I think the second tier of the market this quarter, you're talking about Suncor.

Speaker Change: Thanks for taking my question guys. Jim I know you just answered the question about market share, but I.

Speaker Change: I have to try this one.

Speaker Change: Last quarter, you talked about kind of the win that you had kind of.

Speaker Change: Second.

Speaker Change: I think the second tier of the market this quarter Youre talking about Suncor alright.

Jim Kessler: Are there other things that, you know, particularly in North America that, you know, whether they're pilots or whether they're tests or, you know, just. Unknown Executive, Gary Prestopino, Sameer Rathod, Lawrence Maria, James Kessler, Sameer Rathod. No, I love the different ways everyone asks the same question. So so we definitely appreciate it. Look, what gives me confidence is after 18 months and talking to our all of our partners and understanding their needs. What we're driving for our partners right now, and look, we talked about it, ASPs being up 1%. When you multiply 1% over the number of cars that exist in the salvage industry, that is a very big number that has a lot of zeros behind it.

Speaker Change: Or is there other things, particularly in North America.

Speaker Change: Whether theyre pilots or whether their test.

Speaker Change: Just.

Speaker Change: Things along that line that give you confidence that you can.

Speaker Change: Have more trophies on the on the case next year.

Speaker Change: I just have to ask that.

Speaker Change: I think investors do care.

Speaker Change: Announcing.

Speaker Change: There is a hope that you guys will give more color on.

Speaker Change: Other things that youre working on or momentum that's in the marketplace.

Speaker Change: Curious if there are other.

Speaker Change: Pass through pilots underway.

Can you be confident that you can gain further share into next year. Thanks.

Speaker Change: I love the different ways, everyone asked the same question. So so we definitely appreciate it.

Speaker Change: Look what gives me confidence is after 18 months and talking to all of our partners and understanding their needs.

Speaker Change: What we're driving for our partners right now and look we talked about at Asps being up 1% when you multiply 1% over the number of cars that exist in the salvage industry that is a very big number and that has a lot of zeros behind it.

Jim Kessler: and as long as we're focused on those, there's always going to be a pilot, someone that wants to test something and do something. What we're trying to announce and give insight to, you know, because people get to make their choice, right? As you do a pilot, you get it, you don't, that doesn't dictate it. But what we know for future market share value, if I'm driving the four key things that, you know, our partners want for net returns on the IEA side, and also there's some similarities to the Ritchie Brothers side, as you think about gross returns and everything else that our partners need, and helping them drive their business.

Speaker Change: And as long as we're focused on those there is always going to be a pilot someone that wants to test something and do something what were trying to announce and give insight too.

Speaker Change: Because people get to make their choice right as you do a pilot you get it you don't that doesn't dictate it but what we know for future market share value if I'm driving the four key things that.

Speaker Change: Our partners one for net returns on the IAA side and also there are some similarities to the Ritchie brothers side as you think about gross returns and everything else that our partners need and helping them drive their business.

Jim Kessler: We're laser focused on communicating with our partners and people that we do business with, people that we don't do business with, of the value that we're driving and the potential that it could equate so they can see it in their P&L. And we're not just saying numbers to say numbers. We want to be able to say, this is the number you're going to see and pick whatever millions of dollars that is in this component. And you're going to see your total loss ratio in your P&L. If you're a public company, EPS, whatever it is, you're going to see that drive through.

Speaker Change: We're laser focused on communicating with our partners and people that we do business with people that we don't do business with of the value that we're driving and the potential that it could equate. So they can see it in their P&L and we're not just saying numbers to say numbers, we want to be able to say this is the number youre going to see and pick whatever millions of dollar.

That is in this component and Youre going to see your total loss ratio in European Al. If you are a public company EPS whenever it is youre going to see that drive through and I think it's all good business people, they're looking for partners that can do that and I believe we're showing that right now and that's what gives me confidence in the future we're going to have market share.

Jim Kessler: And I think it's all good business people. They're looking for partners that can do that. And I believe we're showing that right now. And that's what gives me confidence in the future of we're going to have market share. There's always going to be opportunities to do pilots, but ultimately you have to show, can you drive value for my business? And I believe we're doing that right now for our existing partners.

Speaker Change: There is always going to be opportunities to do pilots, but ultimately you have to show can you drive value for my business and I believe we're doing that right now for our existing partners.

Jim Kessler: And I think it creates interest in partners that we're not doing business with today.

Speaker Change: I think it creates interest in partners that were not doing business with today.

John Healy: I appreciate that.

I appreciate that and then just two follow up questions. Just on 74, as you kind of what that business.

Jim Kessler: And then just a few follow up questions. Just on Suncor, as you kind of put that business in action next year, are there any like big upfront costs that, you know, might dilute the margin contribution to that business next year? And then also on the Salesforce ad, the 10%, how long until those folks typically become productive? Thank No, no, good question.

Speaker Change: And action next year are there any like big upfront costs that might dilute the margin contribution of that business next year and then also on the sales force adds and 10% how long until those folks typically be unproductive.

Speaker Change: No. Good question, So I'll start and then I'll, let Eric chime in on any of the upfront costs or anything.

Jim Kessler: So I'll start and then I'll let Eric chime in on any of the upfront costs or anything with the Australia entry into the market. But really, when I think about international, just in general, we have a playbook of, you know, technology, tools, process that we can bring to the salvage market. And what we built over the last year is, okay, what is that playbook? And that helped us present it as we're going through the RFP process. And what I love about entering into Australia, we already have a footprint, we already have a support team, think about market and buyer demand that kind of already exists.

Speaker Change: With the Australia entry into the market, but really when I think about international just in general we have a playbook of technology tools process that we can bring to the salvage market and what we built over the last year is okay, what does that playbook and that helped us.

<unk>.

Speaker Change: As youre going through the RFP process, and what I love about any entered into Australia. We already have a footprint. We already have a support team think about market in buyer demand that kind of already exists so entering into a market where Ritchie brothers already has a support presence is a great thing now you sold to different buyers, sometimes so you have to.

Eric Guerin: So entering into a market where Ritchie Brothers already has a support presence is a great thing. Now you still have two different buyers sometimes. So you have to drive demand and all that stuff. So I'm really happy. But what I'm most excited about is we have a playbook instead of theory.

Speaker Change: Drive demand and all that stuff, so I'm really happy with what I'm. Most excited about is we have the playbook. Instead. It theory. This is going to put execution against it in actual which gets me excited about other market potentials.

Jim Kessler: This is going to put execution against it in actual, which gets me excited about other market potentials that we have into the future.

That we had into the future then Erik if you want to answer the capital then I can come back and talk about the sales productivity.

Eric Guerin: Then, Eric, if you want to answer the capital, then I can come back and talk about the sales productivity. Yeah, no problem. So on the EBITDA, it will not have a significant or material impact on margin.

Erik: Yeah, no problem so on the on the.

EBITDA it will not have a significant or material impact on our margin I think on the real estate side like we've said in the past we will evaluate what's the right real estate footprint for for that business and some of that may be purchased some of that may be leased but we'll we'll put that through our decision tree and as.

Eric Guerin: I think on the real estate side, like we've said in the past, we will evaluate what's the right real estate footprint for that business. And some of that may be purchased, some of that may be leased, but we'll put that through our decision tree. And as we evaluate that, that may have impact on our capital spend from a real estate perspective.

Erik: We evaluate that.

Erik: That may have impact on our capital spend from a real estate perspective.

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

Erik: And then from the sales productivity look I'm not going to get into specific numbers, but you can kind of think about what is an average salary.

Erik:

Erik: A typical TM and look at it GTD number and look at our take rate and it doesn't take a lot of equipment to be able to breakeven pretty quickly for a territory manager.

Erik: But we're not going again to specifics.

Erik: Of what those numbers are but you can kind of use some basic averages and look what we have and you can see it doesn't take you a lot of months to figure out when breakeven takes place for ATM.

Janine: Again, should you have a question?

Erik: When should you have any questions on this.

John Gibson: Sandy Francis-Starr followed by the number Our next question comes from the line of John Gibson from BMO Capital Markets. Please go ahead.

Erik: Followed by the number one.

Speaker Change: Question comes from the line John Gibson from BMO capital markets. Please go home.

John Gibson: Morning, and thanks for taking my questions. Just start off wondering about the modest bump to 2024 guidance. Is this a function of improving margins and take rates that we've seen? Or are you starting to see some higher volume from the recent CAD events here in Q4?

Speaker Change: Good morning, and thanks for taking my questions just a startup wondering about the modest bump to 2020 guidance as is.

Speaker Change: And are improving margins and take rates. So we have seen or are you starting to see some higher volumes from the recent cat events here in Q4.

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

Speaker Change: Yes, when we look at the margin as I indicated in my prepared remarks, we knew that Q3 was going to be a little bit more of a challenge. So we took the initiative around some additional discretionary spend reduction and thats going to continue into into <unk>.

Speaker Change: Q4, and then when I looked at the Q3 performance.

Speaker Change: We did a little bit better on the EBITDA line and I wanted to make sure we captured that in our full year guidance with one quarter.

Speaker Change: <unk>, so we feel.

Speaker Change: Feel really good about tightening that range.

Eric Guerin: And I'll give just a little bit of color just around CAD events. CAD events are one of those weird things where, you know, from a top line, it's a good thing. But depending on how big the CAD events are, from a profitability EBITDA standpoint, you know, it really depends on your model and how do you operate in it. So this was a decent sized CAD event for us. And I'm very happy of how the team handled it and how we performed for our partners. And I've received multiple emails about it. But I wouldn't think about a CAD event, it helps you on the top line, but I wouldn't think about it as a, you know, a normal, profitable type of event.

Speaker Change: Okay.

And I'll give just a little bit of color just around cat events.

Speaker Change: Events.

Speaker Change: Cat events or one of those weird things where from a top line. It's a good thing, but dependent on how big the cat events are.

Speaker Change: From a profitability EBITDA standpoint.

Speaker Change: It really depends on your model and how do you operate in it. So this was a decent sized cat event for us.

Speaker Change: And I'm very happy of how the team handled it and how we performed.

Speaker Change: For our partners and I have received multiple E mails about it but I wouldn't think about a cat event. It helps you on the topline, but I wanted to think about it as a.

Speaker Change: A normal profitable type of event.

Eric Guerin: And, you know, especially not compared to, you know, the daily selling of salad meals.

Speaker Change: Especially not compared to the daily settlement of salvage vehicles.

Eric Guerin: A lot of thanks. And then based on your CapEx guidance for the year, it implies a pretty big spend here in Q4. Wondering if we can see that come down a bit for the year? And then more specifically, where's the majority of your capital going? Is it toward land purchases or more investing in technology and services? Yeah, we don't we don't provide this specific split on technology versus land and we will flex it like we talked about earlier. We put the properties through our strategic kind of decision tree. And if we have to flex and spend a little bit more on property, we'll do that.

Speaker Change: Got it thanks, and then based on your Capex guidance for the year implies a pretty big spend here in Q4 wondering if we could see that come down a bit for the year.

Speaker Change: And then more specifically, whereas the majority of your capital going towards land purchases are more investing in technology and services.

Speaker Change: Yes.

Speaker Change: Yes, we don't we don't provide the specific.

Speaker Change: Split on technology versus land and we will flex it like we talked about earlier, we put the properties through our strategic kind of decision tree and if we have to flex and spend a little bit more on property will do that and then the same on our technology roadmap. So it is pretty robust and ever.

Eric Guerin: And then the same on our technology roadmap. So it is pretty robust and evergreen process. We go through the through the year to answer your question on Q4. We're maintaining our current guidance and we'll see how the year progresses to make sure we're within that range.

Speaker Change: Green process, we go through the through the year to answer your question on Q4, we're maintaining our current guidance and we'll see how the year progresses to make sure.

Speaker Change: We are within that within that range.

John Gibson: I appreciate the responses and I'll turn it back. Thanks. Yeah, no problem. Yeah, thank you.

Speaker Change: Got it I appreciate the responses and I'll turn it back thanks.

Speaker Change: Yes. Thank you.

Jim Kessler: Thank you. That concludes our Q&A session, as I'd like to turn the pullover back to Jim Kessler for final closing comments. Thank you so much.

Speaker Change: Thank you.

Speaker Change: That concludes our Q&A session.

Speaker Change: Turning to follow their vaccine King with Roth for final question.

Speaker Change: Thank you so much first off I, just want to make sure going through the first large cat events since since ive been over on the IAA side.

Jim Kessler: First off, I just want to make sure, you know, going through the first large CAT event since I've been over on the IEA side, and for the Ritchie Brothers side, I want to thank all of our 8,000 teammates for all their efforts. And I've been unbelievably impressed how consistently we're over delivering on our commitments to our partners, which I believe is ultimately the thing that we need to do to be able to accomplish, you know, growing our market expanding margins and operating efficiently. So I want to thank everyone for all your hard work. And, you know, secondly, thank everyone for taking the time on the call today.

Speaker Change: And for the Ritchie brothers side I wanted to thank all of our 8000 teammates for all their efforts and I have been unbelievably impressed how consistently we are over delivering on our commitments to our partners, which I believe is ultimately.

Speaker Change: The thing that we need to do to be able to accomplish growing our market and expanded margins and operating efficiently. So I want to thank everyone for all your hard work and.

Speaker Change: Secondly, thank everyone for taking the time on the call today.

Jim Kessler: I really want to make sure everyone hears how excited we are about the future potential that the whole management team and everyone here at RB Global sees in front of us. And just wanted to thank you one more time and everyone have a great day and hope you enjoy the weekend. Thank you so much.

Speaker Change: Really want to make sure everyone hears how excited we are about the future potential that the whole management team and everyone here at RBC global season in front of US and just wanted to thank you one more time and everyone have a great day and hope you enjoy the weekend. Thank you so much.

Janine: That concludes our conference call for today, you may now disconnect. Great.

Speaker Change: Our conference call for today, we will now disconnect.

Speaker Change: Great.

Janine: Please wait, the conference will begin shortly.

Speaker Change: Please wait the conference will begin shortly.

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