RB Global, Inc.

Good morning, my name is Pam and I will be your conference operator today. At this time, I'd like to welcome everyone to the Ritchie Brothers Auctioneers fourth quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. Thank you. I would now like to turn the conference call over to Mr. Samir Rathod, Vice President of Investor Relations and Market Intelligence, to open the conference call. Mr. Rathod, you may begin your conference.

Hello and good morning, and thank you for joining us on today's call to discuss our fourth quarter 2021 results. Joining me today are Anne Fandosi, our Chief Executive Officer, Sharon Griscoll, our Chief Financial Officer, as well as other members of the management team who will be available for the Q&A portion of this call. The following discussion will include forward-looking statements, comments that are not a statement of fact, including projections of future earnings, revenue, gross transaction value, and other items are considered forward-looking that involves risks and uncertainties. The risks and uncertainties that could cause our actual operating results to differ significantly from our forward-looking statements are detailed in our SEC and Canadian securities filings available on our investor relations website at investor.richardgross.com. We encourage you to review our earnings release and Form 10-K, which are available on our website, as well as Edgar and Cedar. On this call, we will discuss certain non-GAAP financial measures. For the identification of non-GAAP financial measures, the most directly comparable GAAP financial measures, and a reconciliation between the two, see our earnings release and Form 10-K. Presentation slides accompany our commentary today. These slides can be viewed through our live or recorded webcast or downloaded from our website. All figures discussed on today's calls are U.S. dollars, unless otherwise indicated. I will now turn the call over to Anne Fandosi.

Thank you, Samir, and good morning to everyone joining our call today. As we all know, 2021 was another unprecedented year due to the direct and indirect impacts of COVID-19 affecting our employees, our customers, and our trusted partners. I would like to start the call once again by thanking our remarkable employees who continue to manage through this environment to deliver for our customers day in and day out. For the full year, we drove solid results, both strategically and operationally. Despite an unprecedented tight supply environment, we grew GTV 2% for the year and services revenue by 5%. With services revenue growth outpacing GTV growth, consistent with our evergreen model commitments. At the same time, we continued our transformational journey to becoming a trusted global marketplace for insights, services, and transaction solutions through organic investments and key acquisitions, which accelerate our pace in achieving our ultimate vision. As we gained confidence through our test and learn approach, we continue to invest in key initiatives like satellite yards and go-to-market coverage models. These investments naturally come with a cost, and despite the top-line pressures due to the tight supply environment, in 2021, we grew non-gap-adjusted operating income 3% for the full year. Our omni-channel platform is just delivering strong outcomes for our customers, with bids per lot and used equipment pricing remaining very strong in the fourth quarter. Recall, we went completely online at the start of the pandemic. However, something we have heard our customers consistently tell us throughout the pandemic has been that they missed the social connection of a live event. To that end, we are excited to welcome back customers next week to our flagship Orlando event. We, of course, will remain diligent and vigilant with our COVID protocols and masking. That said, Orlando will be an amazing way to celebrate our customers and deepen our longstanding relationships. Turning to our M&A of the past year, I am pleased to note that Rouse continues to perform well and is driving benefits for the broader Ritchie Brothers ecosystem. I also want to give everyone an update on Euroauctions. The CMA review process is ongoing and on track. and we are using this time to put detailed integration plans in place to allow us to begin executing on our vision immediately after close. We are also very pleased that we decided to complete our Euro auctions debt offering in the fourth quarter in advance of close, but also in advance of some of the unfavorable moves we are now seeing in interest rates and in spreads. After seeing pretty incredible KPIs, In our early satellite yard test, specifically in attracting new customers with a much lower cost-to-serve model, we continued to scale that initiative, with 23 local satellite yards having come online by the end of the fourth quarter globally. Clearly, investments such as this are made ahead of their corresponding revenue, and our confidence cements each day that local satellite yards are a key component of our organic growth plans moving forward. Moving to our inventory management system, we continue to make strong progress with 89% growth sequentially compared to last quarter in the cumulative number of organizations that have activated on the platform. The KPI we are focused on is the number of organizations So as we build out our marketplace functionality, we are able to have scale quickly. To that end, we are migrating our entire transactional workflow into IMS. Our go-to-market strategy is that if you want to transact with Ritchie Brothers, you have to use IMS. This is an excellent way to get customers into our ecosystem to begin interacting with our various services. As we work towards a modern technology architecture, needed to enable our marketplace at scale, we are focusing on driving organic growth from the portfolio services that Ritchie Brothers offers to our customers today. A great example here is Ritchie Brothers Financial Services. You have heard Sharon talk about the investment and headcount we have made over the last couple of quarters, and we are now seeing that model hit its stride with revenue growing 61% in the fourth quarter and 46% for the full year. an outstanding result. What is most exciting here is that we are driving this growth even before realizing the full vision of a modern architecture-enabled marketplace, giving us even more confidence of what the services revenue growth will look like at scale. Earlier this week, we put out a press release regarding our partnership with ThoughtWorks. I am very excited about what we are going to be able to achieve together. ThoughtWorks has helped several other large global companies do exactly what we are trying to do in terms of a modern architecture. This partnership is about accelerating our transformation and ThoughtWorks bringing their expertise to help build the foundational pieces of modern architecture with us. After Sharon discusses our financials, I will talk about our strategic pillars and outlook, and then we will move to Q&A.