RBA - Earnings call transcript Q3 2017

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Operator

Good morning. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ritchie Bros. Auctioneers Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After Thank you. turn I to the Mr. now over call will Zaheed the conference of call. Mawani, Investor Relations to open Mr. begin Mawani, conference. may you your

Zaheed Mawani

and not as rules SEC or as defined that risks cause risks and revenue, gross Sharon us discuss will the the Good the regulations. leadership us and auction following website Comments uncertainties. considered of today's by of them could will and today, Also portion Driscoll, team. investor.ritchiebros.com. Ravi remarks securities The differ earnings, Executive Q&A I'm forward-looking for websites, prepared for our that thank Chief other morning, morning joining for The a our our members are and by of from and in our be are other questions will to Q&A the the join joined and and well Relations operating detailed the significantly this statements on future and the the SEC statement SEC proceeds, of and open forward-looking available as forward-looking call third regarding our call, statements other will with Officer; Canadian and to quarter to with answer include Saligram, actual quarter discussion items filings, portion. our call fact, and projections our Chief results. including Ravi involve Canadian Investor results financial SEDAR you uncertainties Officer. the at leaders on are Sharon Financial

results non-GAAP is liquidity a in made from website as and available market our those are not or release EDGAR MD&A our presented well our Form of our third measure after may of yesterday of statements available call, definition industry. On report, by financial and used differ quarter certain this which performance, financial measures. you Our earnings to our we Our other operations and transaction revenue, and statement in were SEDAR. We review which on closed. is financial value encourage participants discuss not evening It XX-Q includes gross as will

GAAP the measures, a our For Form the XX-Q. and directly between reconciliation earnings comparable financial non-GAAP see measure two, release the financial most identification and of

Additionally was figures to the news our Presentation be live XXXX our site slides today. third from quarter through earnings complete our slides yesterday been unless released a or today's call otherwise reissued. incorrectly viewed are U.S. of in be now updated have correct downloaded The correct evening website. These discussed and can release All sites closed commentary and accompany listed closures. recorded on webcast the or indicated. dollars affected

or dollar full calculated have we the figures. now figures using While turn percent Chief Officer. may I'll billion million in in for Ravi? Executive all Ravi been changes discussion, over call to today's use our brevity unrounded Saligram,

Ravi Saligram

acquired Thank IronPlanet we although the have early combined you, I'll kick to we are of discuss stage and, to already company. integration, a the lot since then call been we a five Zaheed. going synopsis the in It's the over we're Sharon quick results. as and facing, months quarter's the challenges a what's off accomplished of call with Good turn well, everyone. morning,

E. about significant by Europe, particular, XX% upwards encouraged of and shown business Australia. prior in is and The Tampere, in and bullish we revenues already pleased which of and International it new Finland been the throughout Also very the I'm strength grew quarter International strong First, has growth with third the performance offering team launched launched Europe year. UAE. our of year have and we in the brand has last EquipmentOne been Marketplace Marketplace a auction European completed Australia Further, fusion month. has featured online-only and IronPlanet conducted Daily record in the a

Our solid sales foundation completed solid perseverance. a EquipmentOne our launch this and of has Marketplace trajectory. IronPlanet team I the it to high-double-digit thank has new provided offering just E. rate Year-to-date, on for and a for EquipmentOne really a buyer We've have on website. teams growth want experience their grown embraced is at a the

For RBA the the have now equipment IP, variety search and first choice result, our vast we on Marketplace time, same buyers. of the and E listings conveying to

the X,XXX-plus few A become sixth IronPlanet has have illustrate. today channels. IP XX,XXX generator shown me items. across Let is the be rbauction.com. to items, traffic would the all ago, largest At website same over it'd Pricing robust weeks time,

well Mascus becoming splendid a and Alliance start. amongst good extremely to RB double-digit for made and being true CAT company. by is IP our growth. teams. with the team is performing RBFS advantage strong is competitive progress camaraderie There are Our the with technology legacy and the off a technology delighted I'm

shortage challenge me key to growth the supply four One let Now highlight challenges. quickly by is in evidenced as major very and market Clearly a is our factor equipment restore North America. conditions. revenue profit

are users equipment keeping end First, longer. their

its weekly cultures extreme change and the lot our other bringing faster. we of help In can it difference particular, featured are of merger the we of proposition Second, and rental execution. by together third, execution used particularly two high. offerings OEM We four, selling business, learning legacy large value have teams and full The fleets rather sellers. better recognize the sales supply situation is in them tandem. buyers it supply, Bros. making that best created pains on integration have growing different with partial become are Ritchie than auction, shortage other's source of merger RBA in equipment they very we're Consequently, a of the in disburses. some our which and and underwritten one exacerbated initiatives affected encounters the utilizations And company. has working a finding are understand sell integration, the to each reps And improve the supporting live dealers how working some point proactively curve versus of difficult to in of somewhat IP to

very teams. grateful and the our for long-term I team are leadership the dedication Our our and this very employees about the is issue. thoughtful of of good of embracing for resilience, we their and company. change passion am proud But, and sensitive very loyalty tenacity, to

Our very the more leadership of to and, and getting regular them and operational of on create teams rhythm ever, our urgency. focused is transformative truly shareholder IronPlanet stabilizing cadence back is team will growth very believe am execution future a value. sense high a our Overall, that with acquisition I prospects optimistic than about and long-term

Sharon. Now, over to

Sharon Ruth Driscoll

everyone. and Ravi, you, good morning Thank

our the right in jump in performance and Let's discuss quarter.

was IronPlanet, the X% to of typically acquisition, the increase to of $X just for volume quarter what third Now primarily industry but quarter in including the billion three auction GTV offset consigned. a the consolidated by in full increased in in over sectors. by was months in is lots The lower higher lowest our equipment year. GTV expected decrease supply key overall the market Leading driven number partially utilization rates equipment and of our

also was due million nonrecurring the impacted of unfavorably XXXX. growth the to auction quarter lapping impact the Columbus, of very third in year-over-year Our Ohio large $XX

newly services On $XX.X and at-risk declined other RBFS. noted of on in primarily a rate increase increasing versus in was the our contracts versus to revenue forma or increased rate This rental prior real by performance reduced to increases in in rate favorable XX.XX% contracts versus revenues in X.X% due demand from acquisitions companies last our pro most forma high primarily impacted X% basis government our a revenue supply, value-added quarter, online the consolidated the and year. macro is year. primarily period statements, our as our services, XX climate. strong the and to including channels a due year. reported revenue environment. was volumes same account Our as million in basis, related strategic the the points and dealers last performance customers, financial This third this acquired spot growth bright our in Consolidated quarter revenues basis non-GTV low increase well Strong from pro

due But of for unusually in EPS share low an in $XX.X an delivered XXXX. due lower shareholders to removing of and the basis, stock EPS a certain account income Our of increased primarily operating additional annual compensation decreased an loss $XX.X the tax All-in, of in resulting in increase This tax quarter decline offset from Net on rate, to million the expenses the tax acquisition-related quarter of million costs. costs amortization impacted cost quarter operating compared attributable $X.XX earnings in for rate to tax the the for revised deductibility diluted to of the estimated on recorded in impact the The using growth compared estimated revenue of rate quarter losses interest share $X.XX shareholders a an income to adjusted diluted impairment of to million XX%. is approximately due of reported by earnings positively changes current for operating to per XXXX. effective EPS $XX.X estimates adjusted and and acquisition. in the in XXXX acquisition and option third to $X.XX the adjusted basis. insufficient QX amortization impact of $X.XX $X.X we per attributable primarily was million after the jurisdictions

costs the declined three to is On quarter. the in significantly expenses our did full basis of impact a up year-over-year favorable On quarter. synergies in of the like-for-like this operating operating IronPlanet from realized but were the including months basis, our expenses however, operating Turning consolidated year the operating expenses. to prior a due of inclusion our

we volumes revenue are margin our more in of compensation, coming including flex our the acquisition revenues, experiencing, technology GTV lower smallest go IronPlanet, and With our costs, with in quarter. costs as ability and fixed of Thus, the from this over quickly compression the combined nature company of is periods become down limited expenses is structure to cost we further facility in as has magnified our XX% operating our through employee quarter. currently costs

third XXXX, We evaluate on the of the completion incremental due are lead, to we business of in quarter and how businesses. we focused manage, all the our merger. changed operations primarily combined significantly In revenue of improving our flow-through

Ritchie category, refurbishment, to of Mascus in September is these as new will XXXX. Auctions be and services and reportable XX, have Services reported segment. appraisals, result segments changes, offerings. service a As our Marketplaces Financial Bros. other of we identified addition in logistical company's the the only operating and

and basis Auctions E, and acquisition. versus on and Auctions brokerage a the year is the Marketplaces' performance, including our was include and the offerings Marketplace Kruse prior to Treaty into Marketplaces our unreserved Ritchie auctions, featured Getting and weekly reported GTV Our Ritchie online CAT segment our TruckPlanet, completion services. Bros. network due up IronPlanet Energy Bros. live Private up X% GovPlanet, made auction segment auctions, of Auctions, of

in types GTV the to equipment of Our volume to contracts XX% in fewer of the third on which XX% pressure commission underwritten quarter price prior year, realization, of company from stronger pursue for the these driving opportunities due the primarily deals. to decreased in resulted used supply,

Turning revenue. International strong the performance. revenue Auctions to segment Marketplaces the to a increased X% reported and on Overall, growth due driven by acquisition basis, and

was delivered the XX% Our geographic International auction revenue robust performance by year, Europe driven live led our growth previous of Australia. which volume versus in primarily by business, and

down most was XXXX. Canada, market where business gas in dislocation from oil supply X% Canadian in cycling we the Western in over significantly are this and surge Our in

the live X% the productivity. September, That in due softness see did increased strongly lower said, expectations. combination we to offset of sales U.S. positive multiple by events driven and U.S. in some above finishing business online increases by momentum and Our macro with a merger,

rates pleased in ability XX.XX% further by to revenue our our our newly rate Marketplaces sector QX, points rate driven XX our at-risk Auction and and acquired to contracts improvements revenue strengthened online last in over segment by grow with channels, basis with coupled We mix. strong year are by from

with $X.X growing. continues RBFS Notably, third prior $XXX funded funded solid of up versus our the million million, volumes Our be a RBFS XX% business driver volume XX%. and annual up growth year and revenues to approximately quarter is

by increased customers new $X.X services. driven revenues Mascus other XX% million and Our to

balance Turning sheet to liquidity metrics. our and

was by increase earnings trailing acquisition-related additional year-over-year an free costs below spending. to including cash supply operating challenges, by of the basis This the acquisition. expenses incurred $XX.X related X.X% flow declined with revenue increased impact net XX-month the to CapEx our a of September we on Evergreen to and of interest driven XX%, from Long-term capital in technology interest is lower and of well level is of as million a at link weighted Our strengthen Model to of increased revenue platforms. of average ratio rate adjusted invest as X.X XXXX X.X% EBITDA adjusted annual of million has with our our debt to maximum X.X%. times. debt debt This begin taken XX, $XXX combined

quickly capital focused are quarter information top we reduce Although, to priority some quarter, our level, a to have we desired revenue XXXX possible. around this impacts as the repayment recognition debt business below In to as of are the standard. our metric for this over reports financial adoption provided X.X as on short-term from we allocation times the first our new potential

our While from presentation in a we do our reporting which the we indicates contracts presented today. current continue revenue net analysis significant of instead will agent to gross the finalize change basis an generated be impact, will service inventory and our which ancillary as contracts, be of on a purchase there

less cost will purposes, be we a calling agent the $X we for proceeds which gross as are agency that In $XX cost XXXX, Further, sold, proceeds commission be calculated the in purchased goods will will inventory will today. Historically, inventory million illustrate. reported in $XX $XX resulted Once of adopted example, of Therefore, value reflecting be be cost measure revenue an on earned at for full modeling $X of and at inventory the revenue me million. a approximation that Let of is inventory standard be non-GAAP package tentatively reported report net million, the $XX a and of sold introducing we package. current closest million at new that sold on revenues comparison million recorded million of the under total at our this agency new will recorded sales. revenue selling line.

this This due also reported add have of income. increase our performance of a This the the volatility change business standard. year-on-year will change to table our significant We retroactive and application with clear, in no the expected will to variability from significantly revenue to provided to that revenues to will change purchase operating form continue our activity. of we our commission, be straight whether is no to deals. proceeds of model, consignors' want needs be support inventory or purchase inventory the I guaranteed there business change that

accounting agency remain affect Model We revenue expect revenue programs, committed this revenue applicable. and how prior our compensation reviewing to Model our to Evergreen the and proceeds be change Evergreen definition to on will based metrics for of standard. we We will where in revenue-based the our existing substitute new our

call value. I'll long-term that and growth, we creating positioning the over reiterate, are Ravi. company to me Let for with profitability, shareholder And turn the

Ravi Saligram

you, Sharon. Thank

Overall, for of quarter, we've laid several we key as slightly quarter out on-track, As the milestones quarter, third you of integration if earmarked we've milestones first shared ahead, completed by activities well last fourth for for integration with plan and we're half planned our successfully as of not our as XXXX. the quarter.

few me of a milestones. these Let touch on briefly

Services We integrated to Financial into are pleased recently IronPlanet. Ritchie have Bros.

as the access to Now, RBFS we customers can of will have IronPlanet differentiators the customers continue solutions business. grow offer our solid our adding suite full to financing to we

Australia. for largest serve on-site experience force selection equipment now to to key the part marketplace full leverage or to very drive embrace to multi-channel our our IronPlanet offering We're solution are been a coming their of in has with Australia, of our our and online anywhere our multi-channel as needs. team bring true channels flexibility to sales we Additionally, customers one excited integration capabilities. sales together A and the

fully our product coming to forward our team overnight. take sales the and but contending supply to to learning create salesperson approach This appropriate our and, and and that right customers customers it's time in the trusted contact decline on the advisor teams legacy sell the point root relationship, the bigger and over somewhat our of solutions solution our the and can absolutely IP a issue process teams and our consequently, productivity from well. frontline first, one our macro affected not process force for order, for above Fundamentally core customers' we're needs for takes understand other second, way our our to culturally, is the build portfolio. in offer last and each quarter a discussed call, with. teams, integrated are the sales together But RB has we of we've As unified have

significantly In addition, the important reflective term, we pre-merger, revenue productivity IronPlanet Bros. recognize Ritchie that team. was of the combining the as IP sales model. Longer legacy opportunity below to the is legacy of the synergy it sales sales nature productivity saw to sales increase forces of

equipment Additionally, lead-times equipment fleets our utilization of volume high shortages. clearly softness of result has backlogs overall impacted been new large equipment strong rates, supply our business, by strategic accounts large and and with the being

am force in that our our manager we sales As territory turnover last on the vacancies call, to were we XX filled I and in last focused pleased say have referenced discussed earnings call.

the few no today vacancies our TM in review and I'll already that in have are we Importantly, a just with couple briefly the actions Canada. of U.S. in a flight teams.

using through on We and teams have multi-channel through sales and force. solution. have increase with confidence, on sales while sales required complemented sales existing also fully the acquisition featured reached the by base overlap, In The the We milestone. of after Daily we the close to on to merger with that was building solution everyone integration product. optimizing intensity combining platforms for the key move Marketplace we've focused which then and auction buyers on is our newly formed soft including late to around an E day, robust We've which the to and our as excitement stability, summary, one acceptable In the week. which the the segment focus organization October, brand EquipmentOne weekly our of is pricing auction negotiated marketplace, through who team of been momentum and a exceptional drive into have of pricing, Marketplace targeting capitalize primary another Marketplace opportunity a with our management we introduced formats and our actions E be the launch create offers equipment our laser share rigor an we we cross-selling Bros. driving multiple concept focus EquipmentOne control model. fixed new Ritchie minimum Daily and customer customers which Now, We're comprehensive combined sales increased of and Offer, days for where billion-plus since E. selling and a penetrate a are seven IronPlanet's hours upstream Marketplace selection sales is putting Marketplace will of development, Make on unreserved and minimum into our technology wallet. which training an sellers purchased incentives be Buy particular shortly XX increasing can offering $XXX for is and reservations is and large reserved especially pipeline of customer pricing across

with Assurance aspects creating transform two of financing sales structural a auction our tagline, listings embark approach housed customers. million also registered to ability IronPlanet There On, excited Our go-to-market control to are conveying of time on brand this leverage to E access Always on model in our benefit operational X.X instant the in through available multi-channel Terms, and in through while traffic all transformation. IronClad also efficiencies. telegraphs equipment through visitor RBFS. marketplace site. inspections will industry-leading bidders our Marketplace Marketplace journey at On We're marketplace and for the Customers enable the Your where it'll benefit any operations will increases million the one IronPlanet essence from E to be an robust to key $XXX online our from to

innovating our the is optimization second auction is first The and model. operations site

Let's optimization. start site with

this Investor in different strategic that closed our sites. we sites sold then, XXXX Since based time, and land and our WACC. that on have auction as at on classified Conference. may At return Panama, auction we China size recall a You discussed excess we initiative at

by were long-term come And However, our four selection we time expansive larger the Prince weighted continue GTV a areas Western the our bids one closing New Carolina; sales North Louis, however, and Hampshire; from of over make to George, in returns more based are to after that bidders. These customers strategic Albuquerque, review to these territory U.S. customers. it's winning feel They second, St. a and local of are capital, Missouri; of on that and auction specifically, remains today online analyzing average It two in British based unchanged absolutely sites, trends important bolder attracted Canada. closures and investment, move site coverage Mexico U.S., extremely half managers, Columbia RBA these on we New are is to Considering year-end. cost in in sold, five importance. Raleigh-Durham, a live and feature will that note, equipment. Manchester, serve events smaller this, on-site of in Canada in of key regions,

confident the able from site revenue our therefore, weekly auction. locations featured that IP to sites are, these transition We nearby we'll and be to

Bidding auction a me XXXX. simulcast to turn Mobile in had launched Let now our history XXXX. online added in long We of innovation. operations model. Virtual Ramp Ritchie Timed innovating bidding Auction Bros. And in XXXX. XXXX. in Lots has We introduced

customer-facing and Our in platform with journey stages sometime combination technology leading drivers will single transformative MARS marketing. technology multi-channel opportunity the us personalization, allow reduced core reporting such rolled XXXX. move real-time marketplaces out growth insights, calling to our of the this in sophisticated and We're Leveraging IronPlanet's a affords future in stands MARS, enable this as to to to initiative administration which continues. in We're the technology simulcast system. and the be and our development is Project simplify all for and operations spur of complexity, preliminary more expect innovation auctions footprint, medium-term. innovation Project us and data-driven Xcira's it customer-friendly data-driven

to calendar optimize the day Thursdays will for IronPlanet's institute as live exclusive steps and featured weekly our we're In our initiatives, addition to technology taking auction auction.

end to We're million CAT progress. our tracking and have committed. building teams the excited with XXXX run seven more million with update continue synergies synergies and that achieve Five in We by internationally. rate XX of run on both others cost the on to rate American our I'm you of to XX pace pleased We're CAT XXXX. to of deliver target we're agreements $XX signed the momentum dealer will in we'll $XX corporate dealers. North dealers say addition the with have our

great and our and program identification well also joint Telematics see with now for reporting. We progress Telematics continue integrating dealer into to a are portal

Narita, the have foundation support in the of early a American the sharing October. the we're rate facility opening service provided parts dealers is The on the rollout RB Japanese grow XXXX. the dealer. we building the major of promising. data to Japan of thousands grand our these value days their sale seems their CAT in CAT North leads sharing program collaboration ago in conducted that commenced auction our auction also in in was CAT Narita We excited customers the and connects and in few Through business. for supporting double a live solid network, which The the data $X.X to to GTV, generated largest-ever a Telematics, record and at the with volume a and conversion I'm approximately leads, significant. report We've Japan a million already

by is regaining institutional very priority are conclude that, committed to to momentum number and growth that And with questions analysts our we'd from their open best. me to and investors. the call stating one teams doing Let like our

you question that past you we please would to to questions. one please yourself follow-up. and Operator, with one ask open the limit calls, line As

Operator

Jefferies. from Volkmann Steven from comes question first Your

open. is line Your

Stephen Edward Volkmann

Hi. everybody. Good morning,

Ravi Saligram

Steve. morning, Good

Sharon Ruth Driscoll

morning. Good

Stephen Edward Volkmann

points can a kind if them Ravi, you little like we it wondering disaggregate somehow on I'm of two touched and bit. major seems

a end how much So out it your and you're growing to we, I to of tightness forth. growing them of give mentioned that to the end obviously, pains, the so then you weakness get top trying of attributable think have and line does trajectory kind that's I the you then how if you seeing beyond the might have portion? pain markets some called and the also to of thoughts that? But in relative fairly I'm long as something, documented. how is kind be figure if growing the well And you to view sort could the pains, And conditions to of much attributable take markets think just

Ravi Saligram

is the quantify, XX% the focus the And attributable confident and growing we positively or is curve of Great and XX% why mention really it. XX% there some other's XX% curve online, say, has so situation. that's just about RBA can Everyone EX some issue. very wanted and just external. us control, which models and it learning pains, the I be would It's what just that, tough I main, why absolutely is used the want I'll would to say, issue of that's why each the folks to ago. the execution live super-majority to don't will that about just to But a – and it's while people accountability to There's long supply why had time, the is I it's XX% rejection no I'm would question, legacy the really Steve. I'm execution which is external, And very because is of – say a have time learning excited. no to say, execution. organ I improve. wanted which I in take to over way IP – at optimizing need it the embraced would we over-blow be thing been the external to the on is issue, But situation we execution auction, I

Stephen Edward Volkmann

flat fourth and, which great. numbers, you of that cost guess, looked us Okay, saying then, the outlook, follow-on And the Sharon kind doesn't quick year-over-year is October the I structure point. gave fairly are you're at the fourth kind Thanks. this quarter for the Do fixed maybe much changing regarding for it you sound of have like words wisdom of any trends quarter?

Sharon Ruth Driscoll

October Yeah. performance. Again, that was sales, question. big affected of by Edmonton really so the I'd good a that was say driver that

of our that very fleets again, as look thoughts there're year the seeing we provided outlook repositioning certainly suppliers we certain are revenue end on last in think to we're we're still related deal we're call. of But now. active be for kind activity teams original think I certainly, our right their increased to the and, – some positives,

Ravi Saligram

So had – think to reported XX% like I'll a the first add, for half to XXXX, second we I half for something XX%... XX% the said of sorry, on I basis

Sharon Ruth Driscoll

XX% to XX%.

Ravi Saligram

a our ...and that more comment what it. larger we shift to day Jeter nowadays, as are still it, quarter, third are I three I do on activity you some bit seeing want are was confident or Jeff, Olive, because quarter Jeff that? Head lot fourth in some which over-egging he's on comment a talking times they we Pricing, in he is to seeing see and least packages. versus of momentum – And the Doug see are marketplace we good do less. Without positive. which in at dispersal little of want a and a

Jeff Jeter

Sure, right, think I solutions. our curve, the think issue all about in Ravi. our and Ravi think got as overall cross-selling And things is learning teams across certainly, one of I look, just substantial the today tightness. QX, we've Steve, get the up is of I a supply component respective to

really things, market across there's is all some So there do training to work see the one and there. I think, that you And clearly have we of activity the sectors. out in

deal size fleet seeing You're the same dispositions. just seen large haven't of and not level you

as So – we level of it's is low very a deal at QX. the size at look just

So, there is activity.

of our fairly that's large prior of our that's again, year. I it's think the at-risk versus total, percentage see – as dispersals. that a you down at significantly indicative just And can you not look as business

balance end by typically uptick things a think, the indicative are of individuals, bit we QX we have seen companies the dispersals little on I moving larger of their off of in One that, year. versus and users is, QX end QX sheet of and some them seeing is of the

got this seen we've some So that quarter we've nice upcoming. dispersals

a a have that's that at-risk year, three from change and pace of we're and that So deals, in – have probably next just bit QX. we times see business dialogue activity. Olive, that continues a kind there Ravi mentioned, that talking we little more a two how day when clearly of Doug of We'll QX. into to or and frequency didn't on is but kind

there. out very, still things, a very promising some So tight market but

Stephen Edward Volkmann

I'll on. much. so it Thanks pass Great.

Operator

from from question next Box Your comes Joe KeyBanc.

line Your is open.

Joe G. Box

guys. morning, good Hey,

Ravi Saligram

Good morning, Joe.

Joe G. Box

could normalize? on when expectation given last commentary So, potentially that, can that view market but just the your already think could I on if I'm curious up XXXX. by you on Ravi, was update loosen you've the I that us appreciate used potentially quarter some

Ravi Saligram

Yeah.

think, I'd I a Florida. And great track be there'd then, lot of in starting it's XXXX. also regard, on pick you've equipment dramatic But – since in question. a look, and good so up were out we Joe, that the Houston in and hurricanes had that hope a

et natural So that is cetera, contributing it's to more of utilization. again bit earthquake disaster, – Mexico, little with in all a the these

markets, go it's well. to You these rebuild as it's it's to contractor tough of just residential really not commercial – any find a to and

things. exacerbating -that's putting that's So

On OEM the think bit I start a the hand, more. other will production normalizing

I expect point, this I in to say probably things would at second So quarter XXXX. start improving

third versus out. seeing be interesting slightest the – And be For – is But sure, be pointed key half. things how it'll maybe had are second think to – quarter. I improvement as we we there see the go. quarter, will very fourth it'll Jeff If

you comment up And Now, Orlando can sign. bit, little maybe that a is Jeff, which is on positive for well building a us.

to So want Jeff, you just (XX:XX).

Jeff Jeter

Yeah.

So I'm I I things sorry. as think – one of the

Ravi Saligram

ahead. go No,

Jeff Jeter

market. I – half, things in are particularly the think individuals in there's be and in as of been lot of – will the of thinking about the the there's very, market year, robust I'm and advantage what taking has very pricing about fleet QX what and there next first One in a

a interest taking is question recovery becomes those advantage on it assets fleet. there lift replace then in, get obviously, a and and can the of price that of they can sold So they that lot of

to wanting the some Sellers being lift can and in take advantage price assured that replace market. balance aging of they the to of the fleet able it's be So fleet. go that

in our first new and So, that's and what what are impact see half of and happens an customers with lead-times I up and how at upon the OEMs we the the – balance equipment, the that's depending has on looking think year. what freeing

Joe G. Box

Understood.

Okay. And then...

Ravi Saligram

comment you're with... and on how quickly seeing (XX:XX) Orlando that

Jeff Jeter

building IronPlanet year, done years. most you Services events, – look, last Auction legacy Yeah. nicely. live couple know, Orlando the – of over as and Services last IronPlanet CAT is I CAT We've mean, Orlando of had Auction has

that with about. into to – which we're able be excited we'll very So this one auction combine year

working teams The nicely. building are QX. is that. Orlando we're on So focused very on same time, At the

working again Orlando are done, nicely, my the teams early But getting see. encouraged then to days QX balancing, from standpoint, fairly Orlando. So far thus building build again, rapidly and but is for what Orlando, with I

Joe G. Box

it. Got

a that more then if the the alleviating but restructuring us can structure? could XX%. cost the what understand Sharon, next can kind overall potentially I And terms market structure mean, Okay. I margin in year. And the what mean in color looking of for you of the fixed ultimately, is half like back the look on just tight-ish, could like to just help color. appreciate follow-up. of Thanks the

Sharon Ruth Driscoll

Yeah.

So, add-on Joe, through to models through fixed in they as our add a there had structure, really volume cost of that very drive drive flow-through the good revenue that, some we incremental we IronPlanet our business. incremental adds does cost traditionally business growth, The rate we've have. the the revenues nature technologies but of with minimal as live comes

In addition, incremental incurred. also help Inspection the come IronClad fees and Assurance with costs that does incremental Services that are their offset

flow-through – generate that the improvement levels driving the to that So margin think I we're as volume to of historic our on revenue revenue then focused more of have we're line. kind bottom that incremental falls we'll the of again,

Ravi Saligram

cited the the And that margin we've the on revenue whole EBITDA we're in definition to Model. still committed Evergreen target

Sharon Ruth Driscoll

Yeah exactly.

Joe G. Box

Thank you.

Operator

Your Cherniavsky question from comes James. Raymond from Ben next

open. is line Your

Ben Cherniavsky

Good morning, guys.

Ravi Saligram

Ben. Hello,

Sharon Ruth Driscoll

Hi, Ben.

Ben Cherniavsky

a the think Right. site in right step that's closings, Congratulations on direction. Ravi, I

Although not....

Ravi Saligram

to this have right deal decision. business have sites it. that It's – will Ben. and about we to But we're think with the – We people's always we But, it's stronger. But yeah, right lives in help the very the for appreciate make the decisions other you sensitive long-term. be get look, our business to that, only

the always And these take it's you for greater so, decisions. good,

Ben Cherniavsky

wasn't I'm easy it Yeah, sure, an one.

I I to on to I who... those sound why insensitive why – that. mean congratulations didn't think that's So offered that's up

Ravi Saligram

and didn't we no, I No, – take it that way, so.

Ben Cherniavsky

just can the – release, were cross-selling Prairie hunt. Bros. press those which integration elephants we you if was this fleet if a complete that an I took and would Ritchie the the that sales is Grande elaborate like, were guys was you that guys on auction Historically, the example – the say, force those wondering disposal. challenges,

or imagine a the comment maybe, wanted event pitch on some go Conversely, you'd guy around model, the rid happy. big who you'd them somewhere opportunity, how that imagine under case going sold pitch a everything manager customer make You'd everybody to fleet, scale, go this, generate convince of be – now to change just his to but pitch everything a find the Jeff between create instance? you IronPlanet might it have depends needs online. auction, needs his get can or to a and is through us same what, I make them And it, to now under in could in to I territory that, (XX:XX) that a walk for a like be to cross-selling the

Ravi Saligram

Tampere, chose don't give maybe where auction both deal big And we sense and go we Grande a can upcoming that. that a the is Prairie. in examples why you live then off-site Ben. talk route don't Jeff, that, Great, already mention Why few – Karl Finland equipment Brian about we sort of can are the of a and mention and you (XX:XX) Cowan QX, the auction to have which can actually doing you of, I

Jeff Jeter

It's Jeff Ben. hi, So, Yeah. Jeter.

package a mean I the a for And Minnesota right in to you liquidation. the a play, sale and and bit doing dispersal to there for play is got – to a December be it. alluded think place playbook. we're We've little of the time standup thoughtful X out what's us I one go Ben, to one-owner about So, a up large crane

that. open one-owner an are may to go may doesn't that's And have places $X sell house. an as it if may and And But can open good event. that, a, as frankly, quite reputation say, equipment, $X clean make of Thursday a had are easy. it. we a referenced, event. invite often smaller that's did other do and dispersals it million sell come IronPlanet, nice house view And online we we we weekly the as that you put we IP. have those stage There sense liquidation, an to to in Thursday time – just would million people there's what on – it in equipment, part We So standup that we event online market, to local well-maintained, at

the right making a finding So decision. thoughtful I – think is it

and cadence had sale give thing, QX, sale, example, in we've a finished IronPlanet week, of the we're motion waiting not Ben, I'll an good come the The our change, and just to out that the we've selling on immediately in and that think, which our soon we're other as going you very I difference has so this weekly consigning is next as event, forward auction. next Thursday we event for Houston

revenue have have still in geographic we and in that cadence And So, every of to every day. have four, front we'll equipment – the got consigning huge area we every day we we might to, be selling past, business opposed events the had drive have today there. our can changes today, of have we as five drove But week each to sell consignments and was and revenue we to a our customers and to part that's week, and of be be in that nothing every our event-driven.

and managers our it's channels comfortable So across all time. all capable selling of and getting strategic of our managers account territory the our

Ravi Saligram

live Tampere, with. a up It came because behavior change Karl, Jeff. great the that's – then let mention I a think as of (XX:XX) that team Thanks, can take you example. it auction Finland I'll example and you started over,

Karl William Werner

events the great took been the the and success market. platform that here market. demonstrate multi-channel is that and a move – the for event live was that in Ravi. we huge to of that IP Sure, where in platform example, historically to online few abilities And the new last a Finland onto opportunity we've doing entire weeks it

Ravi Saligram

size, not ever. one there, about, a of because IP the think not biggest it auction decision biggest this. let's I'm of and was I for monthly the to – that conscious team And think hey, was do by was the probably, the And if it mistaken, while if

Karl William Werner

GTV. of million €X.X around grossed We was. it Yeah,

Ravi Saligram

Canadian from the Great, Grande to great. example brought Brian, up. anything you. Thank Yeah. and perspective add that a Ben Prairie

was let all Ben they after in the unifying which a Ben, linked is, site. as me now thing legacy Brian's out, decision to did RB, past a force Anyway, – linked take site, just opposed maybe our the region particular close just – Okay, are one sales we the were salespeople, they're dropped off. this to to

at just saying, matter, have, but is why still they're in no also there site with the the it disposal, I clear very region. weekly. change was the They So nearby their which – doesn't because sites, is closures, not all

we I done decompress, go the event business so start our change auction on is soon as how and finish, think another because driven to auction behavioral working very adapt, biggest going to from a – are we're have to business. you the The of Whereas is as then selling bit one moment saying, we event take and people were next continuously. we're say, the that big we'd time, let auction. me the flow flow event weekly business look, little and auction is now the a

the people and business a of So next predictable, that there we there's who till lot also wait sell to and it don't want a equipment big bit to event. want the and the more want they out because smooth make

we salespeople in that's amazing, our on. – getting So we a I to and think the complementary these it have felt to and nature that's why just of what habit, brands work make was it's

Ben Cherniavsky

that's you. maybe If I in one trying last Thank item Ravi. squeeze housekeeping Okay, for could color, just helpful I'm Sharon. to...

Ravi Saligram

Sure.

Ben Cherniavsky

read some ...get the the parts. of quarter, better different of a moving

increases merit then that rate, in rate what just – quarter? what on the tax and certain could – future magnitude of a does was and the for what taxes or just that like, item exactly, it like recovery implications mean that in looks huge there that in it's you not I'm And mentioned was quantify You the SG&A, maybe represents. speak to on if tax clear that a your

Sharon Ruth Driscoll

Yeah.

of a address couple I'll in the So issues SG&A.

back on merit to in increase picked also the And of rebalancing up as change, for the some a of we have some would incentives but merger. it some reset have So, kind targets motivate based referenced were people half increases was not major of year. the again the

Ravi Saligram

the Which for salespeople. is primarily

Sharon Ruth Driscoll

Yeah. That's right.

Ben Cherniavsky

Okay.

Sharon Ruth Driscoll

$X all the about came have were rules, annual under more tax GAAP have was generated our lower changed U.S. you And to of recoveries think tax income in your revised estimates we again and issues, in they in into the quarter accounting jurisdictions of the it's – that with just respect those estimates to million it quarter, really I tax overall being regions. estimate tax and our jurisdiction was

related to And the deductibility of particularly QX. got particular around clarification also then so, and certain occurred we costs expenses, acquisition that in

in And forward. of current So, should slightly perhaps our my in a million rate kind XX% as that callout really did $X non-recurring. you I'm tax now, remarks I treat that that looking lower going range at

Ben Cherniavsky

guys. much, very Thanks

Operator

Your next question...

Ravi Saligram

also, You (XX:XX) Ben.

Operator

Your next from question comes Cherilyn from Radbourne TD Securities.

Your line open. is

Cherilyn Radbourne

tight seem issues growing parsing supply quarter two. definitive of Thanks you pains, in the versus the able to of and being between very good sort some the the Ravi, different very of separate morning. sort much, in in equipment

just confidence metrics I the of you're the properly and the you to if issues. could separating just progress you're So gives on two monitor those sales integration you the some that comment of that force using wondered that

Ravi Saligram

looking pipelines don't day, our the the that have how is is packages everything think, this at. I on of end at saying look I based give to Cherilyn, mislead I we you and Yeah market, want computer It the that we're or – view. seeing at-risk it's great that by the me at giving model the TMs, in we're

there's elements at it a I that, – of our So the look out when of is and verification the of issues all think independent there. now view supply of we lot is that it's –

the pipeline small is in, have from look all accountability their coming size Presidents, weekly look they monthly call it have confident. I as I'm it numbers through wanted because we standpoint. think and we go full a But SVPs. metrics the dispersals, of we at with a dispersals, deals, – we part. It's we we suffice take all to to say how just So are quite we at don't said, partial a a of lot with many competitive but But that look deals the those

that's what and sense good pretty a sense. have that me we So gives

Cherilyn Radbourne

that a is helpful. tight there's that's little doubt Okay, equipment very And it market.

rate my XX%. revenue for guidance was half for question, second to the XX% second Just the

clearly, So thoughts some yourselves surprise just forward? did offer bit QX. you looking quite QX Can you in and upside to the on a

Sharon Ruth Driscoll

Yeah.

between what with the or quarters, that have. information revenue of above XX clearly for we've I that rate, show four to think we last we And that provided also that, now marketplace auction We've the in been in sector that %. new information. XX% we've be provided segment historically said the would which does

of are perhaps a going And business – base reasonable XX really be that think, about basis. could by as revenue a online at could points – are driven rate to coming of basis that's GovPlanet very that I it's forward our the by increased kind performance. couple rates on was what a online, sustainable things, that historical those business strong adding strong and in our business have the come

our base So I by guidance sorry, think or you previous XX% can probably look at lift a – in basis that about business XX in points.

Cherilyn Radbourne

morning. time Okay. the Thank for you this

Sharon Ruth Driscoll

Thanks. Okay.

Operator

Your Bank from Feniger from comes question Michael of next America.

Your line is open.

Michael Feniger

Thank you.

reiterated actually revenue about XX% your up October you Just I X%. was that XX%, question. on guide to mean, of

strong ARR or expecting, one-time GTV think, are I quarter? double-digit should another Are in QX next strong there benefit and Private revenue big in quarter? So November, combination know thinking that guess, another big just a that a December really year, revenue rate growth pipeline we a a in had last in any (XX:XX) the – benefits is rebound the drive to about auction from be I it a you I fourth of Treaty.

Sharon Ruth Driscoll

performance of to are the in at-risk terms volume. business our or losses marketplace, certainly, business. rate get additional and like really the with proving We and volume challenges on in I'll start strong are kind Ravi create. let challenge percentage minimal rate, reduced I'll more of would pricing to our confident business help clearly new up to does GTV, But But We're to segment. performance our at-risk Marketplaces color. that experiencing supply that that Yeah. to add actually Auctions on no we channels our added the positive environment of affect the

our we're in our business in will we positive RBFS to also see guidance. accretive rate be that, business around to addition Mascus driving total, overall and very In where which the consolidated opportunity

on little probably the still rate. GTV on a for more little So just but optimistic a assumptions QX, I bit think cautious

Michael Feniger

Yeah. Okay.

Ravi Saligram

very last did think, have I deal big QX. we Private And a year in Treaty

And that as there the as also something not as that we mentioned lapping do will drivers, have the that. something we so, good in in GovPlanet, that is or And Sharon recognized. lapping be positive business. horizon instance, rates We all well. for positive And mix IP the have the great helps of ones, very horizon sort and but grows, are

Michael Feniger

sense. these that bigger the we're goes I think – we're cannibalizing some businesses of less makes that and guess picture, a older profitable auctions? equipment more also through these live starting these a with is asking and is it some of And closures. big more these or the I live kind profitable platform? core newer the risk new rate, driving cost? that move are this level these to and the If growing Ritchie more to is transactions mean, than site add channels of through longer does I showing I'm Yeah, term, there of having sites, Ritchie you newer channels, do profitable, guess, of closing

Ravi Saligram

having only could I felt that the intuitively, cost of one volume were that that things reverses I way we but the flow-through in more and structure third and model and Yeah, the us the get profitable lower the revenue not fixed mentioned bring issue, structure, an behaves you think Sharon getting. start regard. – combining because soft build, (XX:XX:XX) that critical But you mass overall margins the IP's with more and because quarter mass, speaking, that of critical generally that it's because think Their don't cost you that you and same the the quarter.

I do – positive, it's see big think, they cost, it to actually a recognize but like they charge are that. things we add actually – for I as and inspections while So

a revenue on a it business. So little least, profits. bit adds neutral it's at Actually, it's the –

will channel it going whether think don't that a we buyer's hey, further et IP's And, we things the whole regardless structure customer to also think goes, standpoint. down fees, RB's but harmonization, what long-term cetera, be certain lower only in because I make at, it concern and it's at the which look that are a there because we're I of anything, is should road? So from feel, at et buyer's of rates. if standpoint way should terms cetera, fees level are of look, which – we're than So look agnostic or our a enhancing little

are that the going to down at we road. So look

Michael Feniger

you. Thank Perfect.

Operator

Your Blair. next from Larry William question comes from De Maria

Your line is open.

Lawrence De Maria

and if Hi, wanted just little IP customers it's if changes they the me ask, and may just lost learning traditional curve customers or curious steps, as I like to the here. the it's that non-traditional transition. the we to quarter, not know maybe in need you you in take getting time? And in issue said the a a takes thanks relates be for I getting said but growing those it to pains, or the just if major

Ravi Saligram

making Yeah. being thing I'll about proactive learning of issue. And IP the selling ask Jeff that IP it's the you to who people we and are curve memory doing more institutional model. think using other we're comment. just I sure how is do are the

there's We models. of several other The that? they to to understand IP. want used I you think to – curve to time. who learning here. add – issue. we anything fundamental leverage is a very no there's have and I'm just to I it's confident also is RB issue salespeople both But It work a then Jeff, want for because went them don't nothing matter really thing

Jeff Jeter

organization, mean, I – I business individuals. was territory were Larry. to go Ravi. selling right I right as made with some a with right the territories one don't our have an And we service – the we and which now we we went conscious any customers. to agree coverage sales decision Yeah, it's a decision the decision quite of optimization Ravi full obviously, to make and changed And, sure extensive model. through roster there had mentioned, think

getting and in our curve. across learning importantly, more facing on speed a which and about well So overall up little be all concerned guys supply, channels. to concerned – to some there's the as having I'm improvement a patient coverage most about we're less selling as

Lawrence De Maria

Okay.

Ravi Saligram

anchor one I which the is, cultural of very the was best at ethos integration that and which the companies reiterate and which Larry, the us both one about one a just what's it's customer is to companies, do in lot ethos created Bros., the thing and – that is both Dave was really want all for helped the other both – customer. thing of Ritchie Ritchie customer the positive that terms about has companies

what's one So sure making care for right very passionate whether are they them. that the regardless, about customer I my the they our or of think take salespeople came IP thing RB, and from do

so I a guiding And that'll well that's think us take great light forward.

Lawrence De Maria

you. Thank Okay.

Ravi Saligram

so (XX:XX:XX) one last question, time. Zaheed, we're running out of

Zaheed Mawani

Yes.

Ravi Saligram

Thank you.

Lawrence De Maria

leads. them in mentioned of the on, Yeah. be giving I terms follow-up you'd just to Caterpillar, want some volumes,

(XX:XX:XX) words, them they're the from yet? any into if data is Just significant carried consignments turning other In curious working?

Ravi Saligram

Yeah.

terrific. is dealers will And a I just new we'll heading, they about think getting clearly, for become I cetera. the seeing flowing the don't our just reluctance, production on constrained start and of lot used that's to Once their also sort to rental it's dealers flow CAT et new feeling better, sort issues fleets, relationship been because because – so a trying get very equipment the is starts of they're of there as confident CAT equipment – buyers, own have of any that we're that. think, gets I'm CAT equipment. they've the look, had their bit the actually good And how that's of it where shows the anywhere relationship and directly the incredible. really taken there for will to deal build Alliance. Japan, this, years, we a in look, is, having go with were stuff the rental that Japan, whole we power was CAT like would that The coming levels, have fact, to dealer of inventory cease never on able get worked decision that on right CAT Karl, had there. And me, $X.X have to before. That the we'd Japan, place we sale – really start to A CAT the in didn't get major never the with the operations. us. happened million And, me

I with So think Zaheed... that,

Zaheed Mawani

one take to going question. we're Yeah, last

Ravi Saligram

question. last One

Lawrence De Maria

Thank you and good luck.

Zaheed Mawani

Thank you.

Operator

day from Scott of last Fromson from Your the CIBC. question comes

Your line is open.

Scott Fromson

you appreciate I much. question. very my Thanks taking

of M&A Has So integration it's competition XX% of the to light rental there recent challenges. in particularly XX% softness been from from Is it shortfall? has auction been business Who's companies, other increased capturing that activity? companies?

Ravi Saligram

go competitors. mergers, I have – local – And also I'll we look, – of a the think you bit through opportune. a of have and when lot little it's Jeff clearly, and whenever let you regional

or not So alone, it's it's in companies but mean XXX U.S. the whether onsite. it's one, business the just any like hundreds. online not there's I single there's auction person

on you eventually, own perspective? I year-end we'll approach the So, least them I on and – But there say, to they it very pricing hey, you picked a to listing Jeff, the is different on that. it up. can we'll of think else see because – it's service the are wanting it of now people it not think own or at do some their anything right situation and think my we put if think and they're have that they seeing phenomenon be strong lot that or I get do majority really was transacted, a of going we have is to as add wanted a the the goes. we see how beneficiary But did that of (XX:XX:XX) it

Jeff Jeter

Yeah.

they think of a CAT companies, territory and and going and that is equipment, a direct. certainly, you're sell very your the can but retail if your equipment whatever Rental you're going that to to you've to – dealer – it's look if it I utilization, move, high have Caterpillar they're choice you it lot sell over, to in trying you're turning opportunity equipment. first got used

can getting finance, captive if easily that equipment, you're the of some back repos, you're returns OEMs volume into lease are and financing that If distribution. go

the other Right? to else. through sell Ravi's key is, to one these bear auction. initiatives all and world. time And with the to of a Look, help can for upstream, growth some and buyer largest sell get the we've channels bring nobody our of sell base strategy help a just alternative moving to the that's upstream equipment lot kind moving us Marketplace like E of for visions and in and of to to So is And, buyer We to look, got channels. auction. us our base point, upstream global part customers is

Scott Fromson

So, it sales market the lost sounds integration can progresses regain like you're flattens. the and share confident curve you learning the as

Ravi Saligram

We confident. are extremely

Scott Fromson

Thank hear. what like to That's you. we

Ravi Saligram

very With have Onwards season. good that, a upwards. holiday much you. Thank thank and and you

Operator

call. concludes This today's conference

You may now disconnect.

RB Global (RBA) 10 Nov 172017 Q3 Earnings call transcript