Good day, and welcome, everyone, to the RB Global Third Quarter 2025 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Sameer Rathod. Please go ahead.

Hello, and good afternoon. Thank you for joining us today to discuss our Third Quarter results. Jim Kessler, our Chief Executive Officer; and Eric Guerin, our Chief Financial Officer, are on the call with me today. 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 non-GAAP financial measures, the most directly comparable GAAP financial measures and the applicable reconciliation of the 2, see our earnings release and periodic SEC reports. At this time, I would like to turn the call over to our CEO, Jim Kessler. Jim?

Thanks, Sameer, and good afternoon to everyone joining the call. To begin, I want to acknowledge the disciplined execution and commitment of our teammates. Their performance underpins our ability to consistently overdeliver on our operational and financial commitments, while advancing our strategic priorities that position us for long-term shareholder value creation. Our disciplined execution was evident again in the quarter, with adjusted EBITDA increasing 16% on a 7% increase in gross transactional value. Starting with the automotive sector, our momentum continued and unit volume increasing by 9% year-over-year. This marks the third consecutive quarter we have outpaced the market, achieving solid year-over-year gains and market share. On the back of this robust performance, we are pleased to announce a significant expansion of our partnership with the U.S. General Services Administration or GSA, where we expect to provide disposition services to approximately 35,000 remarketed vehicles on an annualized run rate basis. We have just started receiving vehicles and expect to reach full run rate in the second quarter of 2026. Over the past 5 years, we have supported GSA with new vehicle marshaling, preparing and delivering vehicles for use, while providing care, custody and control of fleet returns across our national network. Under the new award, our scope extends to remarket and fleet return vehicles through our marketplace, creating a true end-to-end solution. For GSA, this eliminates redundant handoffs and third-party transport from our yards, delivering meaningful cost savings and operational simplicity. This competitive win underscores the strength of our platform and the unmatched value we deliver to our customers and partners. Specifically, we believe there are 3 key reasons we secured this new award: first, the breadth and depth of our marketplace and buyer base, which drives superior liquidity and pricing; second, the scale and proximity of our U.S. physical…

Thanks, Jim. Total GTV increased by 7%. Automotive GTV increased by 6%, driven by a 9% increase in unit volumes, partially offset by a decline in the average price per vehicle sold. Unit volume growth was driven by year-over-year increases in market share across salvage and remarketed vehicles as well as by organic growth from existing partners. U.S. insurance ASP increased approximately 2.5%. However, the average price per lot sold declined in automotive, primarily because of a higher proportion of remarketed vehicles were transacted compared to the prior year. In the third quarter, the macro environment remained favorable for salvage volumes, primarily due to the persistent inflation gap between vehicle repair costs and used vehicle values. This dynamic continues to drive an increase in the total loss ratio with CCC Intelligent Solutions estimating the total loss frequency across all categories rose by nearly 70 basis points to 22.6%, up from 21.9% in the same period last year. TTV in the commercial construction and transportation sector increased by 9%, driven by a higher average price per lot sold, partially offset by a 15% decline in lot volumes. Excluding the impact of the Yellow Corporation bankruptcy, unit volumes would have increased approximately 2% year-over-year. 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. As Jim noted, excluding the impact of the Yellow Corporation bankruptcy from the prior period, the increase in GTV for the commercial construction and transportation sector would have been approximately 14%. Moving to service revenue. Service revenue increased 8% on higher GTV and a higher service revenue take rate. The service revenue take rate increased approximately 20 basis points year-over-year…

[Operator Instructions] We'll take our first question from Sabahat Khan at RBC Capital Markets.

Just I guess starting off with the last comments there by Eric Guerin, the full year guidance, can you maybe just give us the set up on how you view both segments heading into the tail end of the year? Obviously, good performance here in Q3 relative to what the Street was expecting. But just curious kind of some of the puts and takes that you're seeing into the tail end of this year that led to this nudge up in guidance.

Yes. So actually, the guidance, we tightened the range on GTV. So we didn't nudge it up. If you recall last quarter, I said 0% to 3%, but guided to the lower end of the range. So with one quarter left, I've just tightened that range to 0% to 1% on GTV. Was that your question you were referring...

So it was more on the EBITDA side on just like relative -- the Street expectations, the magnitude of the guide up on EBITDA versus maybe the outperformance, yes. Sorry, just to clarify.

Yes. Yes, thank you. On the EBITDA side, we had strong performance in Q3, but was in line with what we were expecting. However, we did outperform a little bit with the operating model that we put in place, as I described, we have some savings on a run rate basis, that will be $25 million, but we do have some savings that will occur in the fourth quarter of this year, and I've incorporated some of that savings into the guide that I just described in my prepared remarks.

Great. And then just for my follow-up, I guess you can maybe shed some color on this agreement with the GSA. I guess it looks like from your material about 35,000 vehicle addition. Maybe if you can just walk us through what were you doing for them before sort of on the vehicle front on volume? And then should we assume the economics on these remarketed vehicles are similar to what you would collect on 35,000 vehicles if these were added on the salvage side.

Yes. I'll start the conversation then pass to Eric to jump in. So I think as I mentioned in my comments, kind of think about we would take care of custody controls. So when they needed a car delivered it would show up to our site, we would get the car ready kind of think basic marshaling type of activities to make sure, it had a title, is ready to go, is clean. What this really adds to us is the disposition service that we were not doing for them. So we're really excited about to have the whole package in this agreement. And from the financial standpoint, I will pass it to Eric.

Yes. So on the financial side, the model is a little bit different. But what I can say is that the ASPs will be accretive to our ASPs in the salvage space. There are some other services to Jim's comment that we'll be providing that will be revenue generating, but it's a little bit different model than the salvage model.

We'll take our next question from Steve Hansen at Raymond James.

Another small strategic tuck-in here in Western Australia, which is encouraging. That marks sort of the second acquisition you made in the space here in the recent year or so. What is the -- just maybe if you could just clarify on exactly what you're getting out of this deal, are there some additional white space specifically about that market that's the most appealing. And then more broadly is how do you view the broader landscape in other jurisdictions or even in the same jurisdictions here from a pipeline perspective.

First, I'll start. Really excited about what the pipeline opportunity is across the globe here in the U.S. and international. We've been doing business in Canada for a long period of time, but we've been really more on the eastern side of Australia. So for us, this opens up the Western part of Australia, which gets us really excited. So more of a geography type of play as we think about being able to service all of Australia. And the team that we pick up, we're really excited about. They match really well from a culture standpoint of how Ritchie Bros. operates in Australia. So it really gives us the chance to service all of Australia instead of the eastern part of the business.

That's very helpful. And just to follow up on some of the earlier commentary about volume and market share, particularly on the auto side. How do you feel about that opportunity for market share gains going forward. I think we've all been talking about and looking for evidence around that market share gain pattern, your reported results seems just that. But from a contract standpoint, do you have anything that you're working on and/or that you see visibility on that would help you grow domestic market share further or faster? Or should we just wait and see as a result, sort of trickle through? I mean what can you tell us at this point?

Look, I'm going to go back to comments that I've probably said each quarter when the same question has come up. Our focus is really on what we can control. And what we can control is how we perform, and hopefully, you can see from the SLAs that I mentioned in my comments, when you're performing at this high 99% compliance level I believe the industry is noticing it. I believe the industry is appreciating and what we're bringing to the table. So it makes me very optimistic about what our future is, but we're not going to get into any kind of deals that aren't done or things that we can't talk about at this point. But based on our performance, we're really optimistic and we're really excited to compete in the space.

Next, we'll move to Krista Friesen at CIBC.

Maybe just back on the GTV growth. Pretty solid growth in the CC&T division. I appreciate some of this is likely due to J.M. Wood. But I was just wondering if you can break it down a bit more for us or quantify what was J.M. Wood versus organic?

Yes. I'll pass this over to Eric.

Yes. So on GTV, J.M. Wood actually does go across CC&T and a little bit in automotive. So I can tell you at a high level to our overall growth, it was about a 2% tailwind to our overall GTV.

Okay. Great. And then maybe just on the geographic split, it looks like Canada and International continue to kind of be the drivers here. Is that changing at all as we get into Q4 here? Or are you hearing any changes from your customers in the U.S.?

Yes. I'm not sure of the comment between Canada and International that you're referencing, but we saw growth across all the areas that we've done business in.

[Operator Instructions] We'll go next to Craig Kennison at Baird.

Eric, could I ask you just to explain the motivation behind narrowing that range in Q4? Obviously, you have one quarter left, but you took the top end down. Any factors that played a role in a slightly more conservative outlook?

Yes. As we got through the third quarter, again, if you remember on Q2, I had a good indication of what the forecast looked like, but we could have had some additional movement in the back half of the year. And that's why I did keep the range at 0% to 3%, but indicated towards the lower end. And now with pretty much 3 months left in the year now, in fact, 2 months left in the year, I wanted to make sure I could provide a more pointed guide, and that's why I tightened the range to 0% to 1%.

Yes. And Craig, just one thing I would add to Eric's comment is just as a reminder, last fourth quarter, we had a significant cat event that flew through to GTV. And I think Eric has shared what that number is. And at this point, we know the likelihood of any cat event happening and to help offset that isn't going to happen, unless something odd happens historically, that hasn't happened before. So kind of just keep that in mind as you think about looking at the numbers as we tighten the range, we are going up against a significant onetime event that happened last year that's not going to happen this year.

Yes. And then as a follow-up, a bigger picture question on your automotive business. I recognize it's primarily a salvage based business, but we're getting a lot of calls from clients and investors who are more concerned about the adjacent used car space and that ecosystem. There have been some disappointments there and some subprime credit issues as well. Just can you clarify for all of us on the call, to what extent you're even exposed to any of those concerns on, I would say, that non-salvage whole car ecosystem?

Yes. Just as a reminder, when we talk about our whole car business, again, think about cars that are whole cars, but are slightly damaged. It's very complementary to the salvage business and the buyer base that we have. And we're not really upstream in cars over a significant dollar amount like $15,000 and above. So we really have no exposure. We're really more into cars that I would call the whole cars, but slightly damaged is the majority of where we play. So think about a car that's less than $5,000 in that range. So we don't have any of the exposure. And anything that we go upstream is sort of like the GSA contract where you're -- there's a normal cycle of cars that come in, you're not dependent on the broader economic environment.

And Craig, I'd also add that on our whole car space, we do benefit a little bit from sub-prime because we do have a repossession business. So it's not necessarily a direct negative is what I would say.

We'll go next to Gary Prestopino at Barrington.

Yes. Just a couple of questions here. I just want to be clear, this GSA contract is for whole cars, not any damaged cars. Are they really cars that are -- have got heavy mileage, heavy usage on and that it would appeal to your buyer base?

Correct. These cars are going to go through a life cycle for and the people using the cars, right, which then at the end of the day would be cars that our buyer base would be very interested in.

So would they be more or less buy here, pay here dealers or exported overseas?

I think it's a combination. I don't think we're going to get into specific of who's going to buy cars, but it will be a combination.

Okay. And then just any comments on the yellow iron sector. We really make too many comments on that on your narrative. Are you still seeing signers holding on to their equipment?

Look, I think the way I would say, and I'll pass it over to Sameer or Eric to jump in. I think we're still in an uncertain period of time where with tariffs every time you turn around, something else is being said and something is being stopped and going with steel, everything like that. I would also just say interest rates and what's going to happen as the Fed made their comments that they're not sure about that there's going to be another cut. Any of those things from an uncertain period of time just creates uncertainty and I think our partners are trying to figure it out. And again, what we stay focused on, on this side is I think we're in a great spot when the dam kind of opens up and disposition services need to happen. But again, what we're trying to do is add value to our partners to make sure we're able to help them get value in their P&L and get them the recovery they need when they need it.

And we'll take a follow-up from Steven Hansen at Raymond James.

I just want to go back to the new operating model, just quickly, if I may. And I think you've articulated $25 million in run rate savings by the second quarter '26. It sounds like the line of sight on that savings is pretty clear, but just maybe any comments around sort of the pace of the rollout and what ultimately -- what milestones you'd be looking for to make sure you hit that $25 million mark and whether there's potential upside?

So what I would just say real quick about the operating model just to make sure we're clear. This was not a cost cutting exercise that, that came out of the model. The model was really making sure role clarity focus for the organization. And as the company grows through acquisition, unfortunately, you create certain layers in the company that you might not need as you operate more efficiently and get clarity and focus. So for us, this wasn't just a cost cutting exercise, it was -- we want to be efficient. We want to create clarity. We want to create focus on the organization. And the one thing that was important for me is at some departments, we would have 8 levels of management in the organization and we really got that down to 4 or 5. So we have a good line of sight when we talk about numbers of transition periods who rolls off, when they roll off, all that kind of stuff. But again, this was not about that. And we do -- we would have plans as we think about what do we want to invest in and create a better return, all that kind of stuff, and I'll pass, if Eric wants to add any other color to my comments.

Yes. I think to Jim's point, we have full line of sight to the $25 million. It started obviously at the top with Jim's leadership team, and we continue to roll the operating model through the full organization. And again, it's not about cost reduction. It's about how do we get closer to the customer and make sure we are meeting our expectations and our partners' expectations.

Very helpful. And one last one, if I squeeze it in. Just Jim, back on your M&A commentary referencing the global landscape. I think in the past, you've referenced the appeal of some of the specialty narrower auctions and [ again ] has been raised in the past. Are those still avenues that you would like to pursue? Or is it going to be more of the J.M. Woods of the world and the latest one that we've seen here in Western Australia.

No. I think there's 2 things that we're very interested in. One is a geography if that helps us fill out where we're currently doing business. But we definitely still like anyone that adds a vertical and expertise that we can take and scale across our network. So I would say they are the 2 things as we think about opportunities that kind of fit the profile of something that we would look at.

And that concludes our Q&A session. I will now turn the conference back over to Jim Kessler for closing remarks.

Thank you so much. In closing, I would like to thank the incredible RB Global team worldwide. The disciplined execution, hard work and dedication of our teammates continue to drive our strong performance and fuel the momentum we have in our business. I'm excited about the opportunities we have ahead of us and look forward to continue to over deliver on our commitments, while advancing our strategic priorities that position us for long-term shareholder value creation. Thank you for your continued support and interest in RB Global, and we look forward to talking to you next time. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.