Q4 2025 RB Global Earnings Call

Operator: Hello, everyone. Thank you for joining us, and welcome to the RB Global Q4 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Sameer Rathod, Vice President, Investor Relations and Market Intelligence. Please go ahead.

Speaker #1: Hello, everyone. Thank you for joining us, and welcome to the RB Global Q4 2025 Earnings Call. After today's prepared remarks, we will host a question-and-answer session.

Speaker #1: If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to Sameer Rathod, Vice President, Investor Relations and Market Intelligence.

Speaker #1: Please go ahead.

Speaker #2: Hello and good afternoon. Thank you for joining us today to discuss our full-year and fourth-quarter 2025 results. On the call with me today are Jim Kessler, our Chief Executive Officer, and Eric Guerin, our Chief Financial Officer.

Sameer Rathod: Hello, and good afternoon. Thank you for joining us today to discuss our full year and fourth quarter 2025 results. On the call with me today are Jim Kessler, our Chief Executive Officer, and Eric Guerin, our Chief Financial Officer. The following discussion will include forward-looking statements, including projections of future earnings, business, and market trends. These statements should be considered in conjunction with the cautionary statements contained in our earnings release and periodic SEC report. On this call, we will also discuss certain non-GAAP financial measures. For the identification of these measures, the most directly comparable GAAP financial measures, and the applicable reconciliation, please see our earnings release and SEC filings. At this time, I'd like to turn the call over to our CEO, Jim Kessler. Jim?

Speaker #2: The following discussion will include forward-looking statements, including projections of future earnings, business, and market trends. These statements should be considered in conjunction with the cautionary statements contained in our earnings release and periodic SEC reports.

Speaker #2: On this call, we will also discuss certain non-GAAP financial measures. For the identification of these measures, the most directly comparable GAAP financial measures, and the applicable reconciliation, please see our earnings release and SEC filings.

Speaker #2: At this time, I'd like to turn the call over to our CEO, Jim Kessler. Jim?

Speaker #3: Thanks, Sameer. And good afternoon to everyone joining the call. 2025 was a year of discipline, execution, and deliberate strategic progress at RB Global. Across the organization, our teams advanced initiatives that are designed to strengthen our competitive standing and expand our partner relationships, and position the company for durable, long-term growth and shareholder value creation.

Jim Kessler: Thanks, Sameer, and good afternoon to everyone joining the call. 2025 was a year of disciplined execution and deliberate strategic progress at RB Global. Across the organization, our teams advanced initiatives that are designed to strengthen our competitive standing, expand our partner relationships, and position the company for durable long-term growth and shareholder value creation. That discipline was evident again in Q4. Adjusted EBITDA increased 10% on a 4% increase in gross transaction value, reflecting continued operating leverage, strong execution, and tight cost management, even as we made intentional choices to support future growth. Before diving into the details, I want to clearly frame how we are approaching growth and profitability. Over the past year, we have been highly disciplined and selective in the contract we've signed and deals we've executed.

Speaker #3: That discipline was evident again in the fourth quarter—adjusted EBITDA increased 10% on a 4% increase in gross transaction value, reflecting continued operating leverage, strong execution, and tight cost management even as we made intentional choices to support future growth.

Speaker #3: Before diving into the details, I want to clearly frame how we are approaching growth and profitability. Over the past year, we have been highly disciplined and selective in the contracts we signed and deals we've executed.

Speaker #3: We are prioritizing scale, longevity, and strategic positioning, with a clear focus on expanding market share, increasing partner stickiness, and enhancing lifetime value. Turning to the automotive sector, we delivered another solid quarter, with unit volumes increasing 8% year over year, excluding the impact of CAAT volumes in 2024.

Jim Kessler: We are prioritizing scale, longevity, and strategic positioning with a clear focus on expanding market share, increasing partner stickiness, and enhancing lifetime value. Turning to the automotive sector, we delivered another solid quarter, with unit volumes increasing 8% year-over-year, excluding the impact of CAT volumes in 2024. This marks the fourth consecutive quarter in which we have outpaced the market. I am proud that our team continued to deliver at a very high level and exceeded all of our service level commitments in the fourth quarter, even as volumes grew meaningfully, underscoring the operational strength of our platform. Within the last 12 months, we've had several wins for our business. As part of these successes, we have signed a new multiyear agreement with one of our two largest partners, while reaching an agreement in principle with the other.

Speaker #3: This marks the fourth consecutive quarter in which we have outpaced the market. I am proud that our team continued to deliver at a very high level and exceeded all of our service-level commitments in the fourth quarter.

Speaker #3: Even as volumes grew meaningfully, underscoring the operational strength of our platform. Within the last 12 months, we've had several wins for our business. As part of these successes, we have signed a new multi-year agreement with one of our two largest partners, while reaching an agreement in principle with the other.

Speaker #3: These agreements help to provide long-term visibility into expected volumes and deepen our strategic alignment with those customers and the industry. These renewals reinforce the trust our partners place in RB Global and reflect the exceptional service, quality, and execution we consistently deliver at scale.

Jim Kessler: These agreements help to provide long-term visibility into expected volumes and deepen our strategic alignment with those customers and the industry. These renewals reinforce the trust of our partners placed in RB Global and reflect the exceptional service, quality, and execution we consistently deliver on at scale. Gross returns or salvage values as a percentage of pre-accident cash values continue to expand, supporting approximately 7% year-over-year growth in the US insurance average selling price. This reflects ongoing improvements on the buying experience. During the quarter, we introduced new features that indicate when an item is guaranteed to sell, which we believe will increase buyer confidence and drive stronger pricing. We also enhanced our website to deliver more localized content and support, making it easier for customers worldwide to bid and buy seamlessly.

Speaker #3: Gross returns, or salvage values as a percentage of pre-accident cash values, continue to expand, supporting approximately 7% year-over-year growth in the U.S.

Speaker #3: Ensures average selling price. This reflects ongoing improvements to the buying experience. During the quarter, we introduced new features that indicate when an item is guaranteed to sell.

Speaker #3: We believe this will increase buyer confidence and drive stronger pricing. We also enhanced our website to deliver more localized content and support, making it easier for customers worldwide to bid and buy seamlessly.

Speaker #3: Looking ahead to the next few years, we are energized by the strength of the request-for-proposals pipeline, with a significant portion expected to come from prospective partners with whom we currently have no business.

Jim Kessler: Looking ahead to the next few years, we are energized by the strength of the request for proposals pipeline, with a significant portion expected to come from prospective partners with whom we currently have no business. Even modest penetration into these partners could represent meaningful incremental market share opportunities for RB Global. Many of these organizations will be joining us again at our upcoming Industry Leadership Summit in Florida, providing a valuable forum to deepen engagement and showcase the differentiated value of our platform. We are expecting a record number of attendees this year, and we believe their participation reflects the trust our insurance partners place in RB Global to enhance their profitability. The more effectively we communicate and demonstrate our value proposition upstream of the transaction, the better positioned we should be to capture additional market share.

Speaker #3: Even modest penetrations into these partners could represent meaningful incremental market share opportunities for RB Global. Many of these organizations will be joining us again at our upcoming industry leadership summit in Florida.

Speaker #3: Providing a valuable forum to deepen engagement and showcase the differentiated value of our platform. We are expecting a record number of attendees this year, and we believe their participation reflects the trust our insurance partners place in RB Global to enhance their profitability.

Speaker #3: The more effectively we communicate and demonstrate our value proposition upstream of the transaction, the better positioned we should be to capture additional market share.

Speaker #3: In automotive, this means enabling our partners to optimize the vehicle towing to the most appropriate destination, whether that is one of our yards or a repair facility.

Jim Kessler: In automotive, this means enabling our partners to optimize the vehicle towing to the most appropriate destination, whether that is one of our yards or a repair facility. Across the industry, $ billions are lost annually due to inefficient vehicle routing after an accident. In 2026, we plan to provide another innovative tool to help address this gap with the upstream rollout of IAA Total Loss Predictor, designed to enable dynamic vehicle routing and is expected to deliver meaningful cost savings and operational efficiencies for our partners. While this initiative will take time to scale, we view it as a foundational capability that will strengthen partner economics and increase our long-term stickiness. Turning to the commercial construction and transportation sector, our growth strategy continued to deliver, with GTV increasing 10% year-over-year, excluding the impact of Yellow Corporation bankruptcy.

Speaker #3: Across the industry, billions of dollars are lost annually due to inefficient vehicle routing after an accident. In 2026, we plan to provide another innovative tool to help address this gap with the upstream rollout of IAA Total Loss Predictor.

Speaker #3: Designed to enable dynamic vehicle routing and expected to deliver meaningful cost savings and operational efficiencies for our partners. While this initiative will take time to scale, we view it as a foundational capability that will strengthen partner economics and increase our long-term stickiness.

Speaker #3: Turning to the commercial construction and transportation sector, our growth strategy continued to deliver, with GTV increasing 10% year over year, excluding the impact of the Yellow Corporation bankruptcy.

Speaker #3: We remain cautiously optimistic, as seller confidence shows early signs of improvement—supported by stabilizing used equipment values, lower interest rates, and continued strength in mega projects and civil infrastructure.

Jim Kessler: We remain cautiously optimistic as seller confidence shows early signs of improvement, supported by stabilizing used equipment values, lower interest rates, and continued strength in mega projects and civil infrastructure. Our strategic initiatives are laying the foundation for sustained long-term growth. A key element of the strategy is to seek to offer solutions for every customer's disposition need. In response to growing customer demand, we are expanding our international channels by launching a new reserved auction format on rbauction.com. Reserved auctions are designed to provide sellers greater control over price realization by guaranteeing minimum value thresholds while maintaining flexibility to optimize liquidity. This format helps to enable sellers to manage time to liquidity, and if liquidity is wanted sooner, assets can be transitioned into our unreserved channel. As we look toward 2026, we are also focused on continuing to improve our territory manager productivity.

Speaker #3: Our strategic initiatives are laying the foundation for sustained long-term growth. A key element of the strategy is to seek to offer solutions for every customer's disposition need.

Speaker #3: In response to growing customer demand, we are expanding our international channels by launching a new reserved auction format on RBAuction.com. Reserved auctions are designed to provide sellers greater control over price realization by guaranteeing minimum value thresholds, while maintaining flexibility to optimize liquidity.

Speaker #3: This format helps to enable sellers to manage time to liquidity, and if liquidity is wanted sooner, assets can be transitioned into our unreserved channel.

Speaker #3: As we look toward 2026, we are also focused on continuing to improve our territory manager productivity. We recently launched AI-enabled role planning, essentially a flight simulator for customer conversations.

Jim Kessler: We recently launched AI-enabled role playing, essentially a flight simulator for customer conversations. Territory managers, whether new or tenured, can now practice value messaging and channel and product knowledge with an AI consigner, receive immediate scoring and coaching, and track team-level progress. This capability is expected to provide a scalable, cost-efficient way to standardize best practices, accelerate new hire ramp, and enhance conversation. I will now pass the call to Eric to review the financials and provide our 2026 outlook.

Speaker #3: Territory managers, whether new or tenured, can now practice value messaging and channel and product knowledge with an AI consignor. Receive immediate scoring and coaching, and track team-level progress.

Speaker #3: This capability is expected to provide a scalable, cost-efficient way to standardize best practices and accelerate new hire ramp, and enhance conversation. I will now pass the call to Eric to review the financials and provide our 2026 outlook.

Speaker #2: Thanks, Jim. Total GTV increased by 4% in the fourth quarter. Automotive GTV increased 3% in the quarter, driven by a 2% rise in unit volumes. Excluding the impact of catastrophic activity in the fourth quarter of 2024, GTV and unit volumes grew approximately 12% and 8%, respectively.

Eric J. Guerin: Thanks, Jim. Total GTV increased by 4% in Q4. Automotive GTV increased 3% in the quarter, driven by a 2% rise in unit volumes. Excluding the impact of catastrophic activity in Q4 of 2024, GTV and unit volumes grew approximately 12% and 8%, respectively. Unit volume growth reflected continued new wins in the sector, as well as organic growth from existing partners. Throughout 2025, the inflation differential between automotive repair costs and used vehicle pricing continued to narrow, though it remained positive in Q4. This dynamic continues to support an increase in the total loss ratio, with CCC Intelligent Solutions estimating the total loss frequency across all categories increased by 10 basis points to 24.2% compared to the prior year period.

Speaker #2: Unit volume growth reflected continued new wins in the sector, as well as organic growth from existing partners. Throughout 2025, the inflation differential between automotive repair costs and used vehicle pricing continued to narrow.

Speaker #2: Though it remained positive in the fourth quarter, this dynamic continues to support an increase in the total loss ratio, with CCC Intelligent Solutions estimating the total loss frequency across all categories increased by 10 basis points to 24.2% compared to the prior year period.

Speaker #2: It is important to note that last year's ratio was elevated due to various catastrophic events, making the year-over-year comparison more challenging. The average price per vehicle sold increased approximately 1% in the quarter.

Eric J. Guerin: It is important to note that the last year's ratio was elevated due to various catastrophic events, making the year-over-year comparison more challenging. The average price per vehicle sold increased approximately 1% in the quarter, or roughly 4%, excluding catastrophic impacts, driven by continued strength in US insurance vehicles, partially offset by a higher mix of remarketed vehicles compared to the prior year period. GTV in the commercial construction and transportation sector increased 9%. Excluding the impact of Yellow Corporation bankruptcy, GTV and unit volumes grew approximately 10% and 9%, respectively. The average price per lot sold increased primarily due to improvements in the asset mix. The favorable mix reflects the decline in lot volumes from the rental and transportation sectors, where assets typically carry lower average selling prices.

Speaker #2: For roughly 4%, excluding catastrophic impacts. Driven by continued strength in U.S. insurance vehicles, partially offset by a higher mix of remarketed vehicles compared to the prior-year period.

Speaker #2: GTV in the commercial construction and transportation sector increased 9%. Excluding the impact of the Yellow Corporation bankruptcy, GTV and unit volumes grew approximately 10% and 9%, respectively.

Speaker #2: The average price per lot sold increased primarily due to improvements in the asset mix. The favorable mix reflects a decline in lot volumes from the rental and transportation sectors, where assets typically carry lower average selling prices.

Speaker #2: For the full year, total GTV increased 2%, driven by new wins in our automotive sector, partially offset by cyclical pressure in our CCNT sector.

Eric J. Guerin: For the full year, total GTV increased 2%, driven by new wins in our automotive sector, partially offset by cyclical pressure in our CC&T sector. Moving to service revenue. Service revenue increased 5% in the quarter, driven by a higher GTV and a modest increase in service revenue take rate. The service revenue take rate increased by approximately 10 basis points year-over-year to 21.4%, primarily due to a higher average buyer fee rate. For the full year, service revenue increased 4%, reflecting similar dynamics. Adjusted EBITDA increased 10% in the quarter. Growth was driven by a higher GTV and take rate expansion, partially offset by a lower inventory return. Our team remains focused on managing our cost structure to maximize profit flow-through. This discipline, combined with our continued emphasis on operating efficiency, drove solid improvements in the quarter.

Speaker #2: Moving to service revenue, service revenue increased 5% in the quarter, driven by a higher GTV and a modest increase in service revenue take rate.

Speaker #2: The service revenue take rate increased by approximately 10 basis points year over year, to 21.4%, primarily due to a higher average buyer fee rate.

Speaker #2: For the full year, service revenue increased 4%, reflecting similar dynamics. Adjusted EBITDA increased 10% in the quarter. Growth was driven by a higher GTV and take rate expansion, partially offset by a lower inventory return.

Speaker #2: Our team remains focused on managing our cost structure to maximize profit flow-through. This discipline, combined with our continued emphasis on operating efficiency, drove solid improvements in the quarter.

Speaker #2: Adjusted EBITDA as a percent of GTV expanded to 8.9%, up from 8.4% in the prior year. Full-year adjusted EBITDA increased 7% on GTV growth, expansion in the service revenue take rate, and higher inventory returns.

Eric J. Guerin: Adjusted EBITDA as a percent of GTV expanded to 8.9%, up from 8.4% in the prior year. Full year adjusted EBITDA increased 7% on GTV growth, expansion in the service revenue take rate, and higher inventory returns. Adjusted earnings per share in the fourth quarter and full year increased by 17% and 15% respectively, driven by a higher operating income, a lower net interest expense, and a lower adjusted tax rate. Our adjusted and GAAP tax rates came in below prior guidance due to additional discrete tax deductions captured in our 2024 US federal tax return. Moving to our outlook for 2026. We expect full year gross transaction value to grow between 5% and 8%, as we expect to continue to gain market share in 2026 across our sectors.

Speaker #2: Adjusted earnings per share in the fourth quarter and full year increased by 17% and 15%, respectively, driven by higher operating income, lower net interest expense, and a lower adjusted tax rate.

Speaker #2: Our adjusted and gap tax rates came in below prior guidance due to additional discrete tax deductions captured in our 2024 U.S. federal tax return.

Speaker #2: Moving to our outlook for 2026, we expect full-year gross transaction value to grow between 5% and 8%, as we expect to continue to gain market share in 2026 across our sectors.

Speaker #2: We expect full-year adjusted EBITDA between $1.47 billion and $1.53 billion, representing approximately 7% growth at the midpoint. Consistent with our strategy, we remain focused on growing service revenue and view 2026 as a year of expected volume-led growth.

Eric J. Guerin: We expect full-year Adjusted EBITDA between $1.47 and 1.53 billion, representing approximately 7% growth at the midpoint. Consistent with our strategy, we remain focused on growing service revenue and view 2026 as a year of expected volume-led growth. We will continue to execute the operational excellence program with the goal of efficiently translating incremental volume into EBITDA growth. As such, we remain focused on what is in our control, advancing cost savings initiatives, deploying technology that improves yard-level efficiency, and executing against our operating model to drive productivity and operating leverage. Moving to CapEx. We currently expect full-year capital expenditures, which includes TPNE net of proceeds and additions to intangible assets, to be between $350 and 400 million.

Speaker #2: We will continue to execute the operational excellence program with the goal of efficiently translating incremental volume into EBITDA growth. As such, we remain focused on what is in our control: advancing cost savings initiatives, deploying technology that improves yard-level efficiency, and executing against our operating model to drive productivity and operating leverage.

Speaker #2: Moving to CapEx, we currently expect full-year capital expenditures, which include TP&E net of proceeds and additions to intangible assets, to be between $350 million and $400 million.

Speaker #2: We also expect our full-year 2026 GAAP and adjusted tax rate to be between 23% and 25%. With that, let's open the call for questions.

Eric J. Guerin: We also expect our full year 2026 GAAP and adjusted tax rate to be between 23% and 25%. With that, let's open the call for questions.

Operator: We will now begin the question and answer session. We ask that you please keep your questions limited to one preliminary question and one follow-up question. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Sabahat Khan with RBC Capital Markets. Your line is open. Please go ahead.

Speaker #1: We will now begin the question and answer session. We ask that you please keep your questions limited to one preliminary question and one follow-up question.

Speaker #1: If you would like to ask a question, please press *1 on your telephone keypad. To withdraw your question, press *1 again. Please pick up your handset when asking a question.

Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Sabahat Khan with RBC Capital Markets.

Speaker #1: Your line is open. Please go ahead.

Speaker #2: Thanks, and good afternoon. Just the first question on the 2026 guidance and the commentary that you shared around market share capture. Can you just maybe elaborate on, are those just the annualization?

Sabahat Khan: Thanks, and good afternoon. Just the first question on the 2026 guidance and the commentary that you shared around market share capture. Can you just maybe elaborate on, are those just the annualization? Are those comments around the annualization of wins you've already announced on the IAA side? Is that expected gains that maybe you haven't announced publicly? Maybe you can just shed some light on sort of the market share commentary reflected in your 2026 outlook. Thank you.

Speaker #2: Are those comments around the annualization of wins you’ve already announced on the IA side? Is that expected gains that maybe you haven’t announced publicly?

Speaker #2: Maybe you can just shed some light on the market share commentary reflected in your 2026 outlook. Thank you.

Speaker #3: Yeah, thanks for the question. As Jim had mentioned in his prepared remarks, we've signed with one of our large carriers and have reached agreement in principle, so that— including all of the information that we have in front of us today— is included in my guidance.

Eric J. Guerin: Yeah, thanks, thanks for the question. As Jim had mentioned in his prepared remarks, we've signed with one of our large carriers and have reached agreement in principle. So that is including all of the information that we have in front of us today is included in my guidance. So that would include, yes, run rate year-over-year and any additional terms that we've agreed to.

Speaker #3: So that would include, yes, run rate, year-over-year, and any additional terms that we've had agreement to.

Speaker #2: Great. And then just, I guess, on the sort of the flow-through of the GTV to revenue, if you can maybe just talk through—I know the GSA went from last year, had a different take rate structure—but maybe you can just help us think through how we should think about this 5% to 8% GTV flow-through to revenue, and sort of are able to just comment directionally on how that could shake out for the rest of the year and all past line next.

Sabahat Khan: Great. Then, just I guess on the sort of the flow through of the GTV to revenue, you can maybe just talk through. I know the GSA win from last year had a different take rate structure, but maybe you can just help us think through how we should think about this 5 to 8% GTV flow through to revenue, and are you able to just comment directionally on how that could shake out for the rest of the year, and I'll pass the line next?

Speaker #3: Yeah, I think what we're going to see is a little bit of pressure on the take rate, but we're really happy with the unit economics that we described with the GSA contract—I think, Australia.

Eric J. Guerin: Yeah, I think what we're gonna see is a little bit of pressure on the take rate, but we're really happy with the unit economics that we described with the GSA contract. I think Australia, we're really happy how that's progressing, but that profile is a little bit different. So as I said, in my prepared remarks, we're really focused on making sure that the unit economics fit into our model and driving volume. So we may see a little bit of pressure on the take rate percentage, but again, from a unit perspective, we are very pleased with the direction we're going in 2026.

Speaker #3: We're really happy with how that's progressing, but that profile is a little bit different. So, as I said in my prepared remarks, we're really focused on making sure that the unit economics fit into our model and driving volume.

Speaker #3: So we may see a little bit of pressure on the take rate percentage, but again, from a unit perspective, we are very pleased with the direction we're going in 2026.

Sabahat Khan: Thank you.

Speaker #3: You're welcome.

Eric J. Guerin: You're welcome.

Speaker #1: Your next question comes from the line of Gary Prestapino with Barrington. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Gary Prestopino with Barrington. Your line is now open. Please go ahead.

Gary Prestopino: Thank you. Good afternoon, everyone. Hey, Jim, a couple of questions here. In the CC&T sector, you said you're seeing early signs of improvement. Could you maybe give us some idea, a little more granularity on that comment?

Speaker #2: All right. Thank you. Good afternoon, everyone. Hey Jim, a couple of questions here. In the CCT sector, you said you're seeing early signs of improvement.

Speaker #2: Could you maybe give us some idea—a little more granularity on that comment?

Speaker #3: Yeah, look, I'll just start with this: this is still hard to decipher. We're in such a unique environment with tariffs and interest rates and everything that has been going on externally, but we are starting to see our partners talking in a different manner than they have in the past, which gets us excited about what it could mean in the future.

Jim Kessler: Yeah, look, I'll just start with, this is still hard to decipher. We're in such a unique environment, with tariffs and interest rates and everything that has been going on externally. But we are starting to see our partners talk in a different manner than they have in the past, what gets us excited about what it could mean in the future. But we're still in early stages to really know, are we getting back to a normalized cycle, that we haven't had since five years ago? But we're starting to hear different conversations than what we had over the last two years, and you can kind of see in Q3 and Q4, some momentum going in our favor.

Speaker #3: But we're still in the early stages to really know—are we getting back to a normalized cycle? That we haven't had since five years ago.

Speaker #3: But we're starting to hear different conversations than what we had over the last two years, and you can kind of see in the third and fourth quarter some momentum going in our favor.

Speaker #2: Okay, thank you. And then, second question was on the salvage side. You talked about how you're rolling out a new product or service—a total loss predictor.

Gary Prestopino: ... Okay, thank you. And then, second question was on the, salvage side. You talked about, you're rolling out a new product or service, a total loss predictor. Could you maybe elaborate a little bit on that?

Speaker #2: Could you maybe elaborate a little bit on that?

Jim Kessler: Yeah. The one thing that we've been working with our partners, and we call it the ultimate, you know, way to get efficient is if you think about a car gets in an accident, and at the scene of the accident, the ability to be able to get that car to either a repair facility or a salvage yard, using our predictor, which is in the high 90s of being able to do it with a four-corner picture of a car. If you do that, you cut out a lot of expense: storage, rental car fees, everything else that goes along with it. So that's where our partners are focused, and that's where we're using AI to really help us innovate in this area.

Speaker #3: Yeah, the one thing that we've been working with our partners—and we call it the ultimate way to get efficient—is if you think about a car getting in an accident and, at the scene of the accident, the ability to be able to get that car to either a repair facility or a salvage yard using our predictor, which is in the high 90s of being able to do it with a four-corner picture of a car. If you do that, you cut out a lot of expense.

Speaker #3: Storage, rental car fees, everything else that goes along with it. So that's where our partners are focused, and that's where we are, and we're using AI to really help us innovate in this area.

Speaker #3: And at this point, we've tested the predictor multiple times, and with multiple different partners, and we feel really confident that we have a product that we can use to really add value to our partners.

Jim Kessler: At this point, we've tested the predictor multiple times and multiple different partners, and we feel really confident that we have a product that we can use to really add value to our partners.

Speaker #2: So, at the point of an accident, your predictor can say, 'Okay, this car is totaled'?

Gary Prestopino: So at the point of an accident, your predictor can say, "Okay, this car is totaled?

Speaker #3: Yeah, the great thing is, look, you got it. At the point of an accident, we can do it. Also, if it goes to a collision center by mistake, we could do it at the collision center, and they don't have to do a tear down, right, which takes away value for the car.

Jim Kessler: Yeah, the great thing is... Look, you got it. At the point of an accident, we can do it. Also, if it goes to a collision center by mistake, we could do it at the collision center, and they don't have to do a tear down, right? Which takes away value for the car. We can do it there, we could do it at a storage yard. So the great thing is, it's constantly can be used in multiple different areas, but the, the place where you get the most value is at scene of accident.

Speaker #3: We can do it there. We could do it at a storage yard. So, the great thing is it can constantly be used in multiple different areas, but the place where you get the most value is at the scene of an accident.

Speaker #2: Okay. Thank you very much.

Gary Prestopino: Okay, thank you very much.

Speaker #1: Your next question comes from Krista Friesen of CIBC. Your line is now open. Please go ahead.

Operator: Your next question comes from Krista Friesen of CIBC. Your line is now open. Please go ahead.

Speaker #4: Hi, thanks for taking my question, and congrats on the quarter. Maybe just to follow up on the last question as an example: so you've developed this AI internally.

Krista Friesen: Hi, thanks for taking my question, and congrats on the quarter. Maybe just to follow up on the last question as an example. So you've, you've developed this AI internally. Are you seeing maybe your, your customers, the insurance companies, develop this sort of AI as well, or even just new entrants into the business? But I guess kind of more broadly, I'm just trying to get at what you're seeing in terms of AI from competitors or, and/or clients. Thank you.

Speaker #4: Are you seeing maybe your customers, the insurance companies, develop this sort of AI as well? Or even just new entrants into the business? And I guess, kind of more broadly, I'm just trying to get at what you're seeing in terms of AI from competitors and/or clients.

Speaker #4: Thank you.

Speaker #3: Yeah, look, I think the one thing, when you think about the range of insurance carriers—from the number one in terms of how many people they have underinsured to a smaller insurance carrier—everyone has a different capability of where they invest capital.

Jim Kessler: Yeah, look, I think the one thing, when you think about the range of insurance carriers from, you know, the number one in terms of, you know, how many people they have underinsured to a smaller insurance carrier, everyone has a different capability of where they invest capital and where they have a need, right? So you might have some of the biggest insurance carriers that wanna build their own tech, and what we would do is plug into that, right? They need to know to be able to do the calculation, what is the auction value, and we can easily plug in through APIs to their technology. And think about medium-sized to smaller carriers that are looking for an end-to-end solution, we can provide that whole solution for them. So I think there's going to be a different range of how people, you know, partner.

Speaker #3: And where they have a need, right? So you might have some of the biggest insurance carriers that want to build their own tech, and what we would do is plug into that, right?

Speaker #3: They need to know, to be able to do the calculation, what is the auction value? And we can easily plug in through APIs to their technology.

Speaker #3: And think about medium-sized to smaller carriers that are looking for an end-to-end solution. We can provide that whole solution for them. So, I think there's going to be a different range of how people partner.

Speaker #3: I can see us with a lot of different third parties, towers, right, that necessarily might not be under our control. That could be a third party that an insurance carrier uses, where we plug into their APIs.

Jim Kessler: I can see us with a lot of different third parties, towers, right? That necessarily might not be, you know, under our control. That could be a third party that an insurance carrier uses, where we plug into their APIs. So what we're really focused on is, we know there is a big effort, for our partners to be able to reduce advanced charges, and how do we play a role in that? In some cases, that could be our technology. In other cases, we're plugging in an API and providing a piece of the puzzle that they need to be able to make that correct decision. So we're open to all the above, and what we're really trying to do is listen to our partners and what are their needs, and how do we plug in and add value, when we can.

Speaker #3: So what we're really focused on is, we know there is a big effort for our partners to be able to reduce advanced charges, and how do we play a role in that.

Speaker #3: In some cases, that could be our technology. In other cases, we're plugging in an API and providing a piece of the puzzle that they need to be able to make that correct decision.

Speaker #3: So we're open to all the above. And what we're really trying to do is listen to our partners and what are their needs, and how do we plug in and add value?

Speaker #3: When we can.

Speaker #4: Thanks, that's really great color. And then maybe just my follow-up, just on the CapEx guide—are you able to give us maybe a little bit more of a breakdown as to how much is going into these investments on the kind of ancillary services versus your other calls on capital?

Krista Friesen: Thanks. That's really great color. And then maybe just my follow-up, just on the CapEx guide. Are you able to give us maybe a little bit more of a breakdown as to maybe what-- how much is going into these investments on the kind of ancillary services versus your other calls on capital? Thank you.

Speaker #4: Thank you.

Speaker #3: Yeah, I think the breakdown I can share is what we've typically spent, and I think this is about the mix for '26: it's about a third on technology-related, and two-thirds related to traditional PP&E, whether that be land or other types of physical assets that we'd be acquiring.

Eric J. Guerin: Yeah, I think the breakdown I can share is what we've typically spent, and I think this is about the mix for 26, is about, you know, 1/3 on technology related and 1/3, and 2/3 related to traditional PP&E, whether that be land or other types of physical assets that we'd be acquiring. So it's a 2/3, 1/3 mix on capital.

Speaker #3: So, it's a two-thirds, one-third mix on capital.

Speaker #4: Thank you.

Krista Friesen: Thank you.

Speaker #3: You're welcome.

Eric J. Guerin: You're welcome.

Speaker #1: Your next question comes from Stephen Hansen with Raymond James. Your line is now open. Please go ahead.

Operator: Your next question comes from Steven Hansen with Raymond James. Your line is now open. Please go ahead.

Speaker #2: Yeah, thanks for the time, guys. Appreciate it. Just a point of clarification first: the new multi-year contract that you described in the MOU—just to clarify, those are renewals and not incremental volume from existing customers?

Steven Hansen: Yeah, thanks for the time, guys. Appreciate it. Just a point of clarification first, the new multiyear contract you described in the MOU, just to clarify, those are renewals and not incremental volume from existing customers? Or do you anticipate growing scope with those contract renewals?

Speaker #2: Or do you anticipate growing scope with those contract renewals?

Speaker #3: Yeah, let me start, and Eric, feel free to jump in. So, they are renewals. And look, I'm not going to get into specific contracts, but I'm just going to reiterate what Eric said in the beginning.

Jim Kessler: Yeah, then let me start, and Eric, feel free to jump in. So they are renewals. And look, I'm not going to get into specific contracts, but I'm just going to reiterate what Eric said in the beginning. Our expectation is that we're going to be able to continue to gain share in that, which means our expectation is that we're going to get incremental cars as we proceed, going through it. Eric, do you have any?

Speaker #3: Our expectation is that we're going to be able to continue to gain share in that, which means our expectation is that we're going to get incremental cars as we proceed.

Speaker #3: Going through what, Eric? Do you have any?

Speaker #5: No, I think that's where we are. Our expectation is we will gain incremental share related to the volume and contracts that we're working through.

Eric J. Guerin: No, I think that's, that's where we are. Our expectation is we will gain an incremental share related to the volume and contracts that we're working through.

Speaker #3: Yep. And Stephen, just to make sure we're clear, we think we're well positioned to grow faster than the market in '26. It's probably the easiest way of saying it.

Jim Kessler: Yep, and Steven, just to make sure we're clear, you know, we think we're well positioned to grow faster than the market in 2026, is probably the easiest way of saying it.

Speaker #2: Okay, that's fair. That's actually quite helpful. I just want to circle back as a follow-up here on the cost to serve and the services gross margin.

Steven Hansen: ... Okay, that's fair. That's actually quite helpful. Just wanna circle back as a follow-up here on the cost to serve and the services gross margin, quite an improvement in the period. Do you wanna maybe just give us a sense for what's driving some of that and how you feel like your cost structure has evolved here recently? I know you took a ton of costs out through the back half of last year, but just kinda get a sense for how we should expect that going forward. Thanks.

Speaker #2: Quite an improvement in the period. Do you want to maybe just give us a sense for what's driving some of that, and how you feel like your cost structure has evolved here recently?

Speaker #2: I know you took a ton of costs out through the back half of last year, but just trying to get a sense for how we should expect that going forward.

Speaker #2: Thanks.

Speaker #3: Yeah, I think what I would point to is, Jim and I have been really focused and clear on our expectation that the business is going to continue to create operating leverage, and that is where we continue to focus.

Eric J. Guerin: Yeah, I think what I would point to is Jim and I have been really focused and clear on our expectation is that the business is gonna continue to create operating leverage, and that is where we continue to focus. So whether that be in the ops model that we described earlier in 2025, whether that be in how do we become more efficient in our yards, we'll just continue where we can improve on SG&A, and how do we ramp our sales reps faster or our territory managers faster, as Jim described in his prepared remarks, we capture GTV sooner. So we just continue to look for opportunities to optimize across the full P&L, and that is just our ongoing operations. It's not a project. It doesn't have an end.

Speaker #3: So, whether that be in the ops model that we described earlier in 2025, whether that be in how we become more efficient in our yards, we'll just continue where we can improve on SG&A, and how we ramp our sales reps faster or our territory managers faster, as Jim described in his prepared remarks.

Speaker #3: We capture GTV sooner, so we just continue to look for opportunities to optimize across the full P&L. And that is just our ongoing operations.

Speaker #3: It's not a project. It doesn't have an end. It's really evergreen. And that's just how we approach the business. And I think, just to make sure for the group that we're being very clear on something, that we're never going to stop. As long as this management team is in place, we are going to be looking for ways to consistently grow our top line.

Eric J. Guerin: It's really evergreen, and that's just how we approach the business.

Jim Kessler: I think just to make sure for the group that we're being very clear of something that we're never gonna stop as long as this management team is in place. We are gonna be looking for ways to consistently grow our top line. We are gonna be looking at how do we drive incremental margins to our business, and how do we do it in the most efficient way when you think about SG&A and expenses, and how we manage that? Like, that process is never gonna stop, right? So we're constantly gonna strive to over-deliver on what I just mentioned. And then, of course, as we think about capital, we wanna make sure we get the highest return we can if we're spending capital on anything.

Speaker #3: We are going to be looking at how we drive incremental margins to our business and how we do it in the most efficient way when you think about SG&A and expenses, and how we manage that.

Speaker #3: That process is never going to stop, right? So we're constantly going to strive to over-deliver on what I just mentioned. And then, of course, as we think about capital, we want to make sure we get the highest return we can if we're spending capital on anything.

Speaker #3: And I think the great thing is, over the last two years, for Eric and I in the leadership team, we built this culture. And now it's starting to get ingrained in everything we do.

Jim Kessler: And I think the great thing is, over the last two years, for Eric and I and the leadership team, we've built this culture, and now it's starting to get ingrained in everything we do. But I just wanna make sure these aren't one-time things, right? These are things of a focus, a philosophy, and a culture that we've built that's starting to really get ingrained inside the organization.

Speaker #3: But I just want to make sure these aren't one-time things, right? These are things of focus, of philosophy, and a culture that we've built.

Speaker #3: That's starting to really get ingrained inside the organization.

Speaker #2: Appreciate the color. Thanks.

Steven Hansen: Appreciate the color. Thanks.

Speaker #1: Your next question comes from Michael Feniger with Bank of America. Your line is now open. Please go ahead.

Operator: Your next question comes from Michael Feniger with Bank of America. Your line is now open. Please go ahead.

Speaker #6: Thanks, guys. Thanks for taking my questions. You guys generated nearly $1 billion of cash from ops this year. You touched on the CapEx side of how you're thinking 2026.

Michael Feniger: Thanks, guys. Thanks for taking my questions. You know, you guys generated nearly $1 billion of cash from ops this year. You touched on the CapEx side of how you're thinking 2026. Just curious, Eric, if there's anything we should be aware of in terms of the conversion rate for, for cash flow from EBITDA this year. And I know you talked about, you know, in terms of how you're thinking about allocating capital for the best returns. I'm just kind of curious how you guys are thinking about with the volatility in the shares at times, you know, if, if there's a share repurchase program or, or maybe a more formal program around that, given some of the volatility there, and that you guys have this favorable outlook in the next few years of, of share gains and a good backdrop.

Speaker #6: Just curious, Eric, if there's anything we should be aware of in terms of the conversion rate for cash flow from EBITDA this year? And I know you talked about, in terms of how you're thinking about allocating capital for the best returns.

Speaker #6: I'm just kind of curious how you guys are thinking about the volatility in the shares at times. If there's a share repurchase program, or maybe a more formal program around that, given some of the volatility there, and that you guys have this favorable outlook in the next few years of share gains and a good backdrop.

Speaker #5: Yeah, thanks for the question. As you know, we are continually looking at our capital allocation strategy. We'll continue to look at opportunities, from paying down our debt—which we've continued to do.

Eric J. Guerin: Yeah, thanks for the question. As you know, we ongoing look at our capital allocation strategy. We'll continue to look at opportunities from paying down our debt, which we've continued to do. I think we ended the quarter at 1.4 times net debt to Adjusted EBITDA, invest in the business as you described on capital, look at tuck-in acquisitions and opportunities there, like we've done with the Smith Broughton that we just closed and some of the J.M. Wood that we did early in the year. So we'll continue to do that and focus on dividends as well. We also look at, as you're alluding to, you know, what's the right time to have an authorization in place, and we review that with the board on a quarterly basis.

Speaker #5: I think we ended the quarter at 1.4 times net debt to adjusted EBITDA. Invest in the business, as you described, on capital; look at tuck-in acquisitions and opportunities there, like we've done with the Smith Broughton that we just closed.

Speaker #5: And some of the JM Wood that we did early in the year. So we'll continue to do that and focus on dividends as well.

Speaker #5: We also look at, as you were alluding to, what's the right time to have an authorization in place? And we review that with the board on a quarterly basis.

Speaker #5: And at the appropriate time, when that makes sense, we'll continue to evaluate that. And if it does make sense, we would put that in place to deploy that capital in a way.

Eric J. Guerin: At the appropriate time, when that makes sense, you know, we'll, we'll continue to evaluate that, and if it does make sense, we would put that in place to deploy that capital in a way.

Michael Feniger: Jim, thank you. Jim, I'm kind of curious, when you think of autonomous vehicles, this is becoming more and more in the conversation. Just how do you guys think big picture about autonomous vehicles when you think of, you know, the dynamics of the market, when you think of salvage, your own competitive moat and some of your physical assets? I'm just kind of curious if you can touch on that, as it seems like every couple of quarters, we hear more about autonomous vehicles being part of the auto market.

Speaker #6: And thank you. And Jim, I'm kind of curious, when you think of autonomous vehicles, is this becoming more and more in the conversation? Just how do you guys think, big picture, about autonomous vehicles when you think of the dynamics in the market, when it comes to salvage, your own competitive moat, and some of your physical assets?

Speaker #6: Just kind of curious if you can touch on that, as it seems like every couple of quarters we hear more about autonomous vehicles being part of the auto market.

Speaker #3: Yeah, no, no. It's a great question. And look, I just want to start to remind everyone of my background. So, I've been either in rideshare or collision, salvage.

Jim Kessler: Yeah, no, no, it, it's a great question. And look, I just wanna start to remind everyone with my background. So, you know, I've been either in rideshare, collision, salvage, so I have been probably for over 10 years dealing with this similar question in different markets. So, you know, look, we don't see any near-term risk. Long-term safety features such as ADAS, autonomous vehicles, you know, it, look, it could reduce collision rates and vehicle ownership, but it's too early to speculate on, you know, first and second-order impacts. What's certain today is there are over 600 million vehicles on the road in between North America and Europe, and I look at it, we are well positioned to remain a critical player in a salvaged vehicle market when I think about this.

Speaker #3: So I have been probably for over 10 years dealing with this similar question. In different markets. So look, we don't see any near-term risk.

Speaker #3: Long-term safety features such as ADAS, autonomous vehicles, look, it could reduce collision rates and vehicle ownership. But it's too early to speculate on first and second-order impacts.

Speaker #3: What's certain today is there are over 600 million vehicles on the road between North America and Europe. And I look at it, we are well positioned to remain a critical player in the salvage vehicle market when I think about this.

Jim Kessler: So that's really how I look at it. And look, I've been, you know, this question has been coming up for over 10 years.

Speaker #3: So that's really how I look at it. And look, I've been this question has been coming up for over 10 years. And I think we just stated our position.

Michael Feniger: Mm-hmm.

Jim Kessler: You know, I think we just stated our position.

Speaker #6: Great, and just lastly, just to squeeze one more in—I mean, you guys reported 4% GTV growth and 10% EBITDA growth, so we all saw the flow-through there.

Michael Feniger: Great. And just lastly, just to squeeze one more in. I mean, you guys reported 4% GTV growth and 10% EBITDA growth, so we all saw the flow through there. And just to understand the puts and takes, I know you guys walked through this, you know, you guys are investing for growth. You know, in a normal environment, is it 50 to 60% flow through the right sense on an auction basis? Is 2026 maybe a bigger increase in investment for you guys, for the long term, or is that just going to kind of be a continual thing in 2026, 2027? Just kind of trying to get a sense of the investments and how we should think about the flow through there. Thanks, everyone.

Speaker #6: And just to understand the puts and takes—I know you guys walked through this. You guys are investing for growth. In a normal environment, is a 50% to 60% flow-through the right sense on an auction basis?

Speaker #6: Is '26' maybe a bigger increase in investment for you guys for the long term, or is that just going to be a continual thing in '26, '27? Just kind of trying to get a sense of the investments and how we should think about the flow-through there.

Speaker #6: Thanks, everyone.

Speaker #3: Yeah, yeah. So let me just start with philosophy first, right? And I'll let Eric speak to numbers. So he'll handle that part. But look, whatever our flow-through is, the one commitment I have as a management team, we're never going to stop asking how do we improve it.

Jim Kessler: Yeah, yeah. So, so let me just start with philosophy first, right? And I'll let Eric speak to numbers. So, so, you know, you know, he'll handle that part. But look, whatever our flow through is, the one commitment I have as a management team, we're never going to stop how do we improve it? Like, nothing's ever going to be good enough, and I'm never going to put a limit on what it could be, right? Obviously, there's one number that's the highest number it could ever be, right? Which is 100. But look, the way I look at this, our job as a management team is how do we constantly improve that and continue to grow it. And it, look, as the world evolves, it's constantly going to evolve what strategies we use of how do we do it.

Speaker #3: Nothing's ever going to be good enough, and I'm never going to put a limit on what it could be, right? Obviously, there's one number that's the highest number it could ever be, right?

Speaker #3: Which is 100. But look, the way I look at this, our job as a management team is: how do we constantly improve that and continue to grow it?

Speaker #3: And look, as the world evolves, it's constantly going to evolve what strategies we use of how do we do it. But for me, in my team, our philosophy is it's never good enough, right?

Jim Kessler: But for me and my team, our philosophy is it's never good enough, right? We're constantly looking for ways, and I'll let Eric speak to actual numbers at this point.

Speaker #3: We're constantly looking for ways. And I'll let Eric speak to actual numbers at this point.

Speaker #5: Yeah, yeah. I think the way I would look at it is as Jim described. Look, we're going to continue to look to optimize the P&L, but we're also going to make sure that we are looking at it long term.

Eric J. Guerin: Yeah. I think the way I would look at it is, as Jim described, look, we're going to continue to look to optimize the PNL, but we're also going to make sure that we are looking at it long term. So there are opportunities, as we go into 2026, that we will make some investments in the business, and then the flow through will be a little bit later in the year. I would give you an example of Australia, like we said, in 2025, right? We do the investment a little ahead of time, and then you start to see the flow through. So I would say longer term, I'm fully aligned, obviously, with Jim, that we will optimize the PNL, but we will not do things that are short-sighted, that will impact our customer experience or not enable us to grow.

Speaker #5: So there are opportunities as we go into 26 that we will make some investments in the business. And then the flow-through will be a little bit later in the year.

Speaker #5: I would give you an example of our Australia, like we said, in '25, right? We do the investment a little ahead of time, and then you start to see the flow-through.

Speaker #5: So I would say longer term, I'm fully aligned, obviously, with Jim that we will optimize the P&L, but we will not do things that are short-sided that will impact our customer experience or not enable us to grow.

Speaker #5: So I think that's what you're seeing a little bit in 26 as we're doing some of these investments. And we'll continue to focus on driving top-line growth and making the P&L as efficient as possible.

Eric J. Guerin: So I think that's what you're seeing a little bit in 26, as we're doing some of these investments. And we'll continue to focus on driving top-line growth and making the PNL as efficient as possible.

Speaker #6: Thank you.

Michael Feniger: Thank you.

Speaker #5: You're welcome.

Eric J. Guerin: You're welcome.

Speaker #1: Your next question comes from the line of Maxim Sitchev with NBCM. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of Maxim Sytchev with NBCM. Your line is now open. Please go ahead.

Speaker #7: Hi, but that's from Gilliman. Jim, I was wondering if you don't mind me just commenting a little bit more around the repair versus scrap.

Maxim Sytchev: Hi, good afternoon, gentlemen. Jim, I was wondering if you don't mind me just commenting a little bit more around the repair versus scrap. Maybe not the debate, but any puts and takes there, especially as used cars inflation appears to slow down. Maybe any commentary there would be super helpful. Thanks.

Speaker #7: Maybe not a debate, but any puts and takes there, especially as used cars inflation appears to slow down? Maybe any commentary—that would be super helpful.

Speaker #7: Thanks.

Speaker #3: Yeah, look, Max, you just want to clarify. Look, I'm not going to speak to the collision space and repairable space. I think that's up to someone else to do.

Jim Kessler: Yeah, yeah. Look, Max, do you just want to clarify? Look, I'm not going to speak to the, to the collision space and repairable space. I think that's up to someone else to do. But just, just give me a little bit more on color that you would want on our space specifically, and happy to give it.

Speaker #3: But just give me a little bit more on color that you would want on our space specifically and happy to give it.

Maxim Sytchev: No, just in terms of sort of the overall trends, I mean, we discussed this in the past around, you know, the weight of vehicles, et cetera.

Speaker #7: No, just in terms of sort of the overall trends, I mean, we discussed this in the past around the weight of vehicles, etc. So it doesn't seem there's to be any incremental changes from that perspective, right?

Jim Kessler: Yeah.

Maxim Sytchev: So it doesn't seem there's been any incremental changes from that perspective, right?

Speaker #3: No, no, no. I'll pass that to Sameer.

Jim Kessler: No, no, no. I'll pass that to Sameer.

Speaker #5: Yeah, hey, Max, great question. I think if you look at the recent data, as Eric noted in his prepared remarks, that spread between cost of repair inflation versus used car vehicles was narrowing throughout 2025.

Eric J. Guerin: Yeah. Hey, Max, great question. I think if you look at the recent data, as Eric noted in his prepared remarks, that spread between cost of repair inflation versus used car vehicles was narrowing throughout 2025. But I think if I look at the most recent data, that started to go the other way, which we see favorable for the Total Loss Ratio to expand. I think in terms of longer-term drivers of, you know, salvage, I think we've discussed, you know, the average vehicle is getting heavier. There's dynamics around that, amongst other things that could, you know, continue to drive that loss ratio higher. So I would say no changes structurally, if anything, incrementally looking a little better.

Speaker #5: But I think if I look at the most recent data, that started to go the other way, which we see favorable for the total loss ratio to expand.

Speaker #5: I think in terms of longer-term drivers of salvage, I think we've discussed the average vehicle is getting heavier. There's dynamics around that. Amongst other things that could continue to drive that loss ratio higher.

Speaker #5: So I would say no changes. Structurally, if anything, incrementally looking a little better.

Speaker #6: Okay, great. Thank you. And then just in terms of the reserved auction channel for international buyers and sellers, Jim, do you mind maybe commenting in terms of how big of an opportunity that could be down the line?

Maxim Sytchev: Okay, great. Thank you. And then, just in terms of the reserved auction channel for international buyers and sellers, Jim, do you mind maybe commenting in terms of how big of an opportunity that could be down the line?

Jim Kessler: Yeah, yeah, look, when we look at certain countries, you know, one of the disadvantages on the Ritchie side that we have, and I'll, I'll take Germany and the Nordics specifically, they typically operate in a reserve model. You know, we're typically an unreserved model, so it limits our ability to go out and get market share. So what I'm really happy with, we're really giving the tools to our territory managers now to go out and really press to get market share. But it's a country-by-country thing of culture and what they're used to and how they go to market. But look, some of the biggest countries in Europe, in the Nordics and Germany, you know, typically operate in this reserve model.

Speaker #3: Yeah, look, when we look at certain countries, one of the disadvantages on the Richie side that we have and I'll take Germany and the Nordics specifically.

Speaker #3: They typically operate in a reserve model. And we're typically an unreserved model. So it limits our ability to go out and get market share.

Speaker #3: So what I'm really happy with, we're really given the tools to our territory managers now to go out and really press to get market share.

Speaker #3: But it's a country-by-country thing of culture and what they're used to and how they go to market. But look, some of the biggest countries in Europe, in the Nordics and Germany, typically operate in this reserve model.

Jim Kessler: And look, as we, you know, go into different cultures and countries, you know, it's easier for a consignor and a seller to get used to a reserve model with a little bit of a backstop and then jump into an unreserved model. So, we're just really happy to be able to now give our territory managers everything they need to compete.

Speaker #3: And look, as we go into different cultures and countries, it's easier for a consignor and a seller to get used to a reserve model with a little bit of a backstop and then jump into an unreserved model.

Speaker #3: So, we're just really happy to be able to now give our territory managers everything they need to compete.

Speaker #6: Okay, absolutely. Makes sense. Thank you so much.

Maxim Sytchev: Okay, absolutely, makes sense. Thank you so much.

Speaker #1: Your next question comes from John Gibson with BMO Capital Markets. Your line is now open. Please go ahead.

Operator: Your next question comes from John Gibson with BMO Capital Markets. Your line is now open. Please go ahead.

Speaker #8: Thanks for sneaking me in here. Just wondering, what did you see for total volumes across the auto salvage business for you and your peers?

John Gibson: Thanks for sneaking me in here. Just wondering, what did you see for total volumes across the auto salvage business for you and your peers, particularly given the lack of cat events in 2025? And then what is your outlook for total salvage volumes that's incorporated into your 2026 expectations?

Speaker #8: Particularly given the lack of CAD events in 2025. And then, what is your outlook for total salvage volumes that's incorporated into your 2026 expectations?

Speaker #5: Yeah, we haven't we don't break down our guide to that level of detail. I think from our perspective, our point of view is we are going to continue to gain share and grow faster than the market.

Eric J. Guerin: Yeah, we haven't. We don't break down our guide to that level of detail. I think, from our perspective, our point of view is we are going to continue to gain share and grow faster than the market, and I think that was in Jim's prepared remarks as well as mine. So that's our outlook from a salvage perspective.

Speaker #5: And I think that was in Jim's prepared remarks as well as mine. So that's our outlook from a salvage perspective. Yeah, John, I would just add if you look at our financials, we give you total unit volumes in automotive.

Sameer Rathod: ... Yeah, John, I would just add, if you look at our financials, we give you total unit volumes in automotive, so that gives you some sense. So we don't provide disclosure beyond that.

Speaker #5: So that gives you some sense. So we don't provide disclosure beyond that.

John Gibson: Okay, great. Appreciate it. Congrats on the quarter. Turn it back.

Speaker #8: Okay, great. Appreciate it. Congrats on the quarter. Turn it back.

Sameer Rathod: Thank you.

Speaker #3: Thank you.

Speaker #1: Your next question comes from the line of John Healy with North Coast Research. Your line is now open. Please go ahead.

Operator: Your next question comes from the line of John Healy with North Coast Research. Your line is now open. Please go ahead.

Speaker #3: Thanks for taking my question. Kind of wanted to go in reverse a little bit. We were talking AI earlier in the call. I think this time last week was probably when the marketplace stocks started getting people concerned that they could be AI casualties.

John Healy: Thanks for taking my question. Kind of wanted to go in reverse a little bit. We were talking AI earlier in the call. I think this time last week was probably when the marketplace stocks started getting people concerned that they could be AI casualties. So, Jim, I'd just love to get your thoughts just high level. Do you see AI as more of a friend or a foe to the business? Obviously, there will be positives, there will be negatives, I'm sure. But could you just get to maybe a, you know, an overarching view, how you and the board are thinking about it?

Speaker #3: So Jim, I'd just love to get your thoughts just high-level. Do you see AI as more of a friend or a foe to the business?

Speaker #3: Obviously, there will be positives. There will be negatives, I'm sure. But could you just get to maybe an overarching view how you and the board are thinking about it?

John Healy: What kind of safeguards or, you know, evolution you're making maybe beyond just some of the tools that insurers can use to ultimately, expedite their decision, to total out or, or repair a vehicle? Thanks.

Speaker #3: What kind of safeguards or evolution are you making, maybe beyond just some of the tools that insurers can use to ultimately expedite their decision to total out or repair a vehicle?

Speaker #3: Thanks, and great question. Happy to do it. Look, when I think about AI, I think our advantage is really built on scaled and trusted execution that AI can't really easily replicate.

Jim Kessler: Yeah, great, great question and happy to do it. Look, when I think about, you know, AI, I think our advantage is really built on scaled and trusted execution that AI can't really easily replicate. Our physical infrastructure, you know, the embedded workflows that we have with each and every partner, you know, the full scale of the transaction ecosystem that we've built over 70 years, the data that we have, that is our priority data, you know, all working together to drive this experience of bringing buyers and sellers together and the outcomes that we produce for our partners. I think it's just gonna be really hard for AI alone to, you know, be able to disrupt that. But look, you know, we've long viewed technology as an enabler for us.

Speaker #3: Our physical infrastructure, the embedded workflows that we have with each and every partner, the full scale of the transaction ecosystem that we've built over 70 years, the data that we have that is our priority data all working together to drive this experience of bringing buyers and sellers together and the outcomes that we produce for our partners.

Speaker #3: I think it's just going to be really hard for AI alone to be able to disrupt that. But look, we've long viewed technology as an enabler for us.

Jim Kessler: We use innovation to improve our customer experience, how we add value, increase productivity, for our teams. You know, it's really helping us drive operational efficiencies, right? Where we don't have to add a person every single time. We do believe AI will change how work gets done, and but it won't change, like, who ultimately wins in this space, right? But look, we think there's good that comes with AI, but when we think about our business getting disrupted, we think we have a lot of things, like I already mentioned, that enable us to, you know, use AI as an enabler and not affect our business.

Speaker #3: We use innovation to improve our customer experience, how we add value, increase productivity for our teams. It's really helping us drive operational efficiencies, right, where we don't have to add a person every single time.

Speaker #3: We do believe AI will change how work gets done, but it won't change who ultimately wins in this space, right? But look, we think there's good that comes with AI.

Speaker #3: But when we think about our business getting disrupted, we think we have a lot of things, like I already mentioned, that enable us to use AI as an enabler and not affect our business.

Speaker #6: Great. And just one follow-up question to that. When I think about the assets of the salvage side in particular, as well as the CC&C business, I mean, to me, the biggest assets are your real estate, your brand, and just the reach of your customer knowing you.

John Healy: Great. And just one follow-up question to that. When I think about the assets of the salvage side in particular, as well as the CC&T business, I mean, to me, the biggest assets are your real estate, your brand, and just the reach of your customer knowing you. So, when you look at AI, you know, the piece that I think I get most curious about is real estate. You know, does this evolution have the potential to change the way cycle times work in the industry? And do you think either business has vulnerability to it from a real estate standpoint, meaning that you would potentially need less real estate going forward? And does that maybe open the door to competition?

Speaker #6: So when you look at AI, the piece that I think I get most curious about is real estate. Does this evolution have the potential to change the way cycle times work in the industry?

Speaker #6: And do you think either business has vulnerability to it from a real estate standpoint, meaning that you would potentially need less real estate going forward?

Speaker #6: And does that maybe open the door to competition? So, we'd just love to get your thoughts on AI and the angle of real estate as well.

John Healy: So we'd just love to get your thoughts on AI and the angle of real estate as well. Thanks.

Speaker #6: Thanks.

Speaker #5: Well, yeah, John, look, I'll just give you an example. I am down here in Orlando this week for our big event. We have 200 acres that is completely full with equipment right now that we've had to inspect, take care of, manage.

Jim Kessler: Well, yeah, John, look, I'll just give you an example. I am down here in Orlando this week for our big event. We have 200 acres that is completely full with equipment right now that we've had to inspect, take care of, manage. We have people walking our yards to look at this equipment. They're about to spend a ton of money, on this equipment, $200,000, $400,000. I don't think AI is gonna be able to disrupt that as we go, but I do think AI can help us turn inventory quicker, in our sites, which we're using today to do that. If you look at the IAA side, we've actually opened up some capacity that we can use for other productive things and how we monetize the business.

Speaker #5: We have people walking our yards to look at this equipment. They're about to spend a ton of money on this equipment—$200,000, $400,000. I don't think AI is going to be able to disrupt that as we go.

Speaker #5: But I do think AI can help us turn inventory quicker. In our sites, which we constantly which we're using today to do that, if you look at the IEA side, we've actually opened up some capacity that we can use for other productive things and how we monetize the business.

Jim Kessler: So we're gonna use it to become more efficient. But look, when I'm sitting here in Orlando today, it's hard for me to get my mind wrapped around how AI is gonna disrupt what I'm looking at, right now.

Speaker #5: So we're going to use it to become more efficient. But look, when I'm sitting here in Orlando today, it's hard for me to get my mind wrapped around how AI is going to disrupt what I'm looking at right now.

Speaker #6: Great. Thank you for that.

John Healy: Great. Thank you for that.

Operator: There are no further questions at this time. I will now turn the call back to Jim Kessler for closing remarks.

Speaker #1: There are no further questions at this time. I will now turn the call back to Jim Kessler for closing remarks.

Speaker #5: Thank you so much. Just in closing, I want to thank our RB Global team around the world for their discipline, execution, and ongoing commitment, which continues to drive our performance and momentum.

Jim Kessler: Thank you so much. Just in closing, I want to thank our RB Global team around the world, for their disciplined execution and ongoing commitment, which continue to drive our performance and momentum. We are well positioned for the opportunities ahead and remain focused on executing our strategy, delivering on our commitments, and creating long-term value, shareholder value. Thank you for your continued support and interest in RB Global, and talk to everyone soon.

Speaker #5: We are well positioned for the opportunities ahead and remain focused on executing our strategy, delivering on our commitments, and creating long-term value, shareholder value.

Speaker #5: Thank you for your continued support and interest in RB Global and talk to everyone soon.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.