RB GLOBAL INC

Previous wording

Forward-looking statements may appear throughout this Quarterly Report on Form 10-Q, including the following section “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Forward-looking statements are typically identified by such words as “aim”, “anticipate”, “believe”, “could”, “continue”, “estimate”, “expect”, “intend”, “may”, “ongoing”, “plan”, “potential”, “predict”, “will”, “should”, “would”, “could”, “likely”, “generally”, “future”, “long-term”, or the negative of these terms, and similar expressions intended to identify forward-looking statements. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially, and may include, among others, statements relating to:

Current wording

Forward-looking statements may appear throughout this Quarterly Report on Form 10-Q, including the following section “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Forward-looking statements are typically identified by such words as “aim”, “anticipate”, “believe”, “could”, “confident”, “continue”, “estimate”, “expect”, “intend”, “may”, “remain”, “ongoing”, “plan”, “potential”, “predict”, “will”, “should”, “would”, “could”, “likely”, “generally”, “future”, “long-term”, or the negative of these terms, and similar expressions intended to identify forward-looking statements. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially, and may include, among others, statements relating to:

Previous wording

In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. GAAP. Certain of these data are considered “non-GAAP financial measures” under the SEC rules. The definitions of and reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable U.S. GAAP financial measures are included either with the first use thereof or in the Non-GAAP Measures section within this document (refer to pages 32-37).

Current wording

In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. GAAP. Certain of these data are considered “non-GAAP financial measures” under the SEC rules. The definitions of and reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable U.S. GAAP financial measures are included either with the first use thereof or in the Non-GAAP Measures section within this document (refer to pages 34-40).

Previous wording

RB Global, Inc. and its subsidiaries (collectively referred to as “RB Global”, the “Company”, “we”, or “us”) (NYSE & TSX: RBA) is a leading global marketplace that connects sellers and buyers of commercial assets and vehicles. Through our omnichannel platform we facilitate transactions for customers in primarily the automotive, construction, and commercial transportation sectors. We also serve customers in the agriculture, energy, and natural resources sectors, as well as government entities. Our customers primarily include automotive insurance companies, as well as end users, dealers, fleet owners, and original equipment manufacturers (“OEMs”)

Current wording

RB Global, Inc. and its subsidiaries (collectively referred to as “RB Global”, the “Company”, “we”, or “us”) (NYSE & TSX: RBA) is a leading global marketplace that connects sellers and buyers of commercial assets and vehicles. Through our omnichannel platform we facilitate transactions for customers primarily in our automotive and commercial construction and transportation sectors. We also serve customers in the agriculture, energy, and natural resources sectors, as well as government entities. Our customers primarily include automotive insurance companies, as well as end users, dealers, fleet owners, and original equipment manufacturers (“OEMs”) of commercial assets and vehicles. We also provide our customers value-added marketplace services, technology solutions for vehicle merchandising, platforms for lifecycle management of assets, and a market data intelligence platform to help customers make more informed business decisions.

Previous wording

We have a global presence, primarily with operations in the United States, Canada and across Europe, and employ more than 7,900 full-time employees worldwide.

Current wording

We have a global presence, primarily with operations in the United States, Canada and across Europe, and employ more than 7,700 full-time employees worldwide.

Previous wording

Certain macroeconomic conditions and trends have impacted our business and operating costs. Trends that drove the strong consignment market for commercial assets and vehicles equipment have started to normalize. We continue to experience inflationary pressures on our business through elevated operating costs, and we are also exposed to interest rate volatility on our variable rate long-term debt totaling approximately $1.6 billion. Continued interest rate volatility may also impact our customers' preferences around disposal services and their ability to finance equipment or other assets.

Current wording

We also see an increase in competitive pressures across all geographies and sectors, continue to experience inflationary pressures on our business through elevated operating costs, and are exposed to interest rate volatility on our variable rate long-term debt totaling approximately $1.5 billion.

Previous wording

We also provide a wide array of value-added services to make the process of selling and buying equipment and vehicles convenient for our customers, including refurbishment services such as repair, paint and make-ready services, and parts services to connect equipment owners with parts manufacturers, inspection and appraisals, financial services through Ritchie Bros. Financial Services (“RBFS”) and loan payoff services through IAA, end-to-end transportation and logistics services, as well as other services such as insights, data intelligence, performance benchmarking solutions, and title and liens processing. We offer equipment listing services under the RitchieList brand in North America and Mascus brand in Europe to make private selling more efficient and safer for customers, including a secure transaction management service, complete with invoicing. We also provide an innovative technology platform that supports customers' vehicle merchandising, manages the asset life cycle and integrates procurement with both original equipment manufacturers (“OEM”) and dealers.

Current wording

We also provide a wide array of value-added services to make the process of selling and buying equipment and vehicles convenient for our customers, including refurbishment services such as repair, paint and make-ready services, and parts services to connect equipment owners with parts manufacturers, inspection and appraisals, financial services through Ritchie Bros. Financial Services and loan payoff services through IAA, end-to-end transportation and logistics services, as well as other services such as insights, data intelligence, performance benchmarking solutions, and title and liens processing. We offer equipment listing services under the RitchieList brand in North America and Mascus brand in Europe to make private selling more efficient and safer for customers, including a secure transaction management service, complete with invoicing. We also provide an innovative technology platform that supports customers' vehicle merchandising, manages the asset life cycle and integrates procurement with both OEM and dealers.

Previous wording

Our revenue is comprised of service revenue and inventory sales revenue. Service revenue includes: (1) commissions where a pre-negotiated commission or fixed fee is earned from our consignors or sellers, (2) buyer fees earned at our auctions, online marketplaces, and private brokerage services, and (3) marketplace services fees earned from various services provided to buyers and sellers, which include ancillary, parts procurement, data, towing, logistics, inspection, appraisal, online listing, financing and title and liens processing services, as well as auction-related services such as documentation and title search services. Inventory sales revenue

Current wording

Our revenue is comprised of service revenue and inventory sales revenue. Service revenue includes: (1) commissions where a pre-negotiated commission or fixed fee is earned from our consignors or sellers, (2) buyer fees earned at our auctions, online marketplaces and private brokerage services, and (3) marketplace services fees earned from various services provided to buyers and sellers, which include ancillary, parts procurement, data, towing, logistics, inspection, appraisal, online listing, financing and title and liens processing services, as well as auction-related services such as documentation and title search services. Inventory sales revenue relates to revenue earned through our inventory contracts and is recognized at the GTV of the assets sold, with the related cost recognized in cost of inventory sold.

Previous wording

Net income (loss) available to common stockholders for the first quarter of 2024 increased 384% to $97.1 million in income, from a $34.2 million loss for the first quarter of 2023. Diluted earnings (loss) per share (“EPS”) available to common stockholders increased 289% to $0.53 earnings per share in the first quarter of 2024, from $0.28 loss per share in the first quarter of 2023. Diluted adjusted EPS available to common stockholders increased 58% to $0.90 per share in the first quarter of 2024 compared to $0.57 per share in the first quarter of 2023.

Current wording

Net income available to common stockholders for the second quarter of 2024 increased 30% to $100.7 million, compared to $77.4 million for the second quarter of 2023. Diluted earnings per share (“EPS”) available to common stockholders increased 29% to $0.54 earnings per share in the second quarter of 2024, as compared to $0.42 per share in the second quarter of 2023. Diluted adjusted EPS available to common stockholders increased 15% to $0.94 per share in the second quarter of 2024 compared to $0.82 per share in the second quarter of 2023.

Previous wording

•Adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") increased 150% to $331.0 million

Current wording

•Adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") increased 11% to $342.0 million

Previous wording

The following table summarizes key components of our results of operations for the periods indicated. The financial results for the three-month period ended March 31, 2023 include the financial results of IAA for the 11-day period since its acquisition on March 20, 2023.

Current wording

The following table summarizes key components of our results of operations for the periods indicated. The financial results include IAA from its acquisition on March 20, 2023.

Previous wording

In the first quarter of 2024, total GTV increased year-over-year, primarily driven by the inclusion of GTV from IAA, since its acquisition March 20, 2023, for a full quarter compared to an 11-day period in the prior year. IAA contributed $2.0 billion of the total GTV increase in the quarter generating strong volumes in the automotive sector primarily across North America. Excluding IAA, the increase in total GTV was mainly driven by higher lot volumes from our strategic accounts team, most notably in the United States, partially offset by lower price per lot sold due to the asset mix and lower price realization. In the United States, we saw higher total GTV from strong execution by our strategic accounts and from favorable performances year-over-year at our auction events, which included significant volume this quarter from a large consignor contract in the transportation sector following its bankruptcy. In Canada, we also saw stronger year-over-year performances at our auction events driven by a higher volume of imports from the United States and Europe, and in International, favorable year-over-year performances were primarily driven by a larger scale auction event held in Europe.

Current wording

For the first six months of 2024, total GTV increased year-over-year, mainly due to the inclusion of IAA in the first quarter of 2024 for the full quarter compared to the 11-day stub period in the first quarter of 2023. In addition, the increase in total GTV was driven by higher volumes in our commercial construction and transportation sector, mainly in the United States, as discussed above. We also saw stronger year-over-year performances in Canada driven by a higher volume of imports, and in International due to a large-scale auction event held in Europe in the first quarter of 2024. These increases were partially offset by lower volumes in our automotive sector mainly in the United States due to the reasons discussed above, and from a milder winter in the first quarter of 2023.

Previous wording

In the first quarter of 2024, total service revenue increased 147%, with buyer fees increasing 257%, commissions revenue increasing 74%, and marketplace services revenue increasing 65%.

Current wording

In the second quarter of 2024, total service revenue increased 7%, with marketplace services revenue increasing 28%, buyer fees increasing 4%, and commissions revenue increasing 1%.

Previous wording

Commissions revenue increased 74%, less than the 123% increase in service GTV, mainly due to the inclusion of IAA as IAA earns lower commission rates on service GTV through its fixed fee commission contracts with its consignors. IAA contributed $77.8 million, or 80%, of the increase in commissions revenue. Excluding IAA, we saw softer straight commission rate performances in the United States as a result of an increase in volumes sold by our strategic accounts team.

Current wording

Commissions revenue increased 27%, less than the 39% increase in service GTV, primarily due to the inclusion of IAA in the first quarter of 2024 for the full quarter compared to the 11-day stub period in the first quarter of 2023 as IAA earns lower commission rates on service GTV through its fixed fee commission contracts with its consignors.

Previous wording

In the first quarter of 2024, cost of inventory sold increased 30% to $196.6 million, primarily in line with a 28% increase in inventory sales revenue. Cost of inventory sold increased at a higher rate than the increase in sales revenue mainly driven by softer performance on our inventory contracts in North America, partially offset by higher inventory rates on assets sold through our GovPlanet business.

Current wording

In the second quarter of 2024, cost of inventory sold decreased 24% to $222.7 million, primarily in line with a 21% decrease in inventory sales revenue. Cost of inventory sold decreased at a higher rate than the decrease in inventory sales revenue primarily due to better performance, mainly across all sectors in North America.

Previous wording

In the first quarter of 2024, selling, general and administrative expenses increased 34% to $198.1 million, mainly due to the inclusion of IAA for a full quarter, which contributed 75% of the increase, and primarily relates to employee compensation expenses, technology costs and professional fees. Excluding IAA, the remaining increase was primarily driven by higher employee compensation expenses, mainly from higher share-based payments expense due to timing and increase in the fair value of stock awards granted, as well as higher employee benefit costs due to changes in our benefit plans as part of the IAA integration. We also saw wages and salaries increase, primarily from investments in our sales coverage teams and business operations to grow our market share. Technology costs were also higher in the current quarter as we continue to modernize our operations and technology platforms through use of cloud environments. These increases were partially offset by lower travel, advertising and promotion costs primarily due to lower activity and attendance at conferences and events, as well as due to timing.

Current wording

higher employee compensation expense driven by higher share-based payments due to timing, higher long-term performance-based incentive compensation and an increase in the fair value of grants, higher employee benefit costs due to changes implemented in our plans, and an increase in wages and salaries primarily from investments in our sales coverage teams and business operations to grow our market share. In addition, our costs increased due to a new digital services tax accrual in Canada, higher technology and cloud costs, for the same reasons as discussed above, as well as higher legal and professional expenses for certain strategic initiatives. These increases were partially offset by lower travel, advertising and promotional expenses, lower short-term incentive-based compensation expense, and lower other general and administrative costs due to strategic cost reduction initiatives.

Previous wording

In the first quarter of 2024, acquisition-related and integration costs decreased 90% to $12.8 million, primarily given the non-repeat of significant acquisition-related costs, including investment banking and consulting costs, as well as financing fees and legal costs, incurred in early 2023 to effect the acquisition of IAA on March 20, 2023. In addition, we saw higher severance costs in the prior year due to the integration restructuring activities across functions from the IAA acquisition.

Current wording

For the first six months of 2024, acquisition-related and integration costs decreased 90% to $16.9 million, primarily given the significant financing, legal, investment banking, advisory, and consulting costs incurred in the prior year to complete the acquisition of IAA on March 20, 2023, as well as for the same reasons as discussed above.

Previous wording

For the first quarter of 2024, operating income increased 899% to $198.9 million from a loss of $24.9 million, primarily driven by the decrease in significant acquisition-related and integration costs as discussed above. In addition, the increase in operating income is

Current wording

For the second quarter of 2024, operating income increased 12% to $201.9 million, mainly driven by a decrease in acquisition-related and integration costs, partially offset by an increase in selling, general and administrative expenses, as discussed above.

Previous wording

Income Tax Expense (Benefit) and Effective Tax Rate

Current wording

Income Tax Expense and Effective Tax Rate

Previous wording

In the first quarter of 2024, net income attributable to controlling interests increased 481% to $107.4 million from a loss of $28.1 million, primarily driven by an increase in operating income, partially offset by higher interest expense in the current quarter due to timing of our debt financing to fund the acquisition of IAA, higher debt levels from the acquisition and a rise in interest rates. We also incurred higher income tax expense, as discussed above.

Current wording

In the second quarter of 2024, net income attributable to controlling interests increased 28% to $111.1 million, primarily driven by an increase in operating income and lower interest expense in the current quarter due to lower long-term debt levels driven by repayments of principal. These increases were partially offset by higher income tax expense as discussed above.

Previous wording

Diluted EPS available to common stockholders increased 289% to $0.53 per share for the first quarter of 2024, compared to a $0.28 loss per share for the first quarter of 2023. The increase was primarily due to the increase in net income attributable to controlling interests as discussed above, partially offset by an increase in the number of shares issued for the acquisition of IAA.

Current wording

Diluted EPS available to common stockholders increased 29% to $0.54 per share for the second quarter of 2024, compared to $0.42 per share for the second quarter of 2023. The increase is primarily due to the increase in net income attributable to controlling interests as discussed above.

Previous wording

We conduct global operations in many different currencies, with our presentation currency being the U.S. dollar. The following table presents the variance in select foreign exchange rates over the comparative reporting periods:

Current wording

We conduct global operations in various currencies, with our presentation currency being the U.S. dollar. The following table presents the variance in select foreign exchange rates over the comparative reporting periods:

Previous wording

In the first quarter of 2024, foreign exchange had an unfavorable impact on total revenue and a favorable impact on expenses when compared to the prior year quarter. These impacts were primarily due to the fluctuations in the British pound sterling, Canadian dollar, the Euro and the Australian dollar exchange rates relative to the U.S. dollar.

Current wording

In the second quarter of 2024, foreign exchange had a unfavorable impact on total revenue and an favorable impact on expenses when compared to the prior year quarter. These impacts were primarily due to the fluctuations in the Canadian dollar relative to the U.S. dollar.

Previous wording

Diluted adjusted EPS available to common stockholders increased 58% to $0.90 per share in the first quarter of 2024.

Current wording

Diluted adjusted EPS available to common stockholders increased 15% to $0.94 per share in the second quarter of 2024.

Previous wording

Refer to the non-GAAP measures section below on pages 32-37 for further information.

Current wording

Refer to the non-GAAP measures section below on pages 34-40 for further information.

Previous wording

Gross transaction value: Represents total proceeds from all items sold at the Company’s auctions and online marketplaces. GTV is not a measure of financial performance, liquidity, or revenue, and is not presented in the Company’s consolidated financial statements.

Current wording

Gross transaction value: Represents total proceeds from all items sold on our auctions and online marketplaces, third-party online marketplaces, private brokerage services and other disposition channels. GTV is not a measure of financial performance, liquidity, or revenue, and is not presented in the Company’s consolidated financial statements.

Previous wording

The following table illustrates the breakdown of total GTV by sector for the first quarter of 2024 compared to the same period in 2023.

Current wording

The following table illustrates the breakdown of total GTV by sector for the second quarter of 2024 compared to the same period in 2023.

Previous wording

The automotive sector includes all consumer automotive vehicles. The commercial construction and transportation sector includes heavy equipment such as excavators, dozers, lift and material handling, vocational and commercial trucks and trailers. The other sector primarily includes assets and equipment sold in the agricultural, forestry and energy industries, and government surplus assets, as well as smaller consumer recreational transportation items. All sectors include salvage and non-salvage transactions.

Current wording

Our automotive sector includes all consumer automotive vehicles. Our commercial construction and transportation sector includes heavy equipment such as excavators, dozers, lift and material handling, vocational and commercial trucks and trailers. The other sector primarily includes assets and equipment in the agricultural, forestry and energy industries, government surplus assets, smaller consumer recreational transportation items and parts sold in our vehicle dismantling business. All sectors include salvage and non-salvage transactions. Scrapped items disposed of in our disposition channels are excluded from GTV and our total lots sold metric.

Previous wording

In the first quarter of 2024, total GTV compared to the first quarter of 2023 increased by 537% in the automotive sector, due to the inclusion of IAA for a full quarter. GTV increased by 31% in the commercial construction and transportation sector, mainly in the United States, primarily driven by an increase in lot volumes predominantly from our strategic accounts, partially offset by lower

Current wording

In the second quarter of 2024, total GTV compared to the second quarter of 2023 decreased by 4% in our automotive sector, primarily due to a shift in assignment volumes from a customer in the United States. GTV increased by 9% in our commercial construction and transportation sector, mainly in the United States, primarily driven by an increase in lot volumes predominantly from our strategic accounts and imports, partially offset by lower average selling prices and an unfavorable asset mix. GTV decreased 14% in our other sector primarily from decreased sales of marine, aircraft and rail assets.

Previous wording

The following table illustrates the breakdown of total lots sold by sector for the first quarter of 2024, compared to the same period in 2023.

Current wording

The following table illustrates the breakdown of total lots sold by sector for the second quarter of 2024, compared to the same period in 2023.

Previous wording

In the first quarter of 2024, the total lots sold compared to the first quarter of 2023 increased by 569% in the automotive sector due to the inclusion of lots sold from IAA for a full quarter. Total lots sold increased by 92% in the commercial construction and transportation sector, mainly driven by a higher proportion of low value lots in the United States, as well as from the inclusion of IAA. Total lots sold increased 7% in the other sector primarily from the inclusion of IAA for a full quarter, driven by an increase in the sale of motorcycles.

Current wording

In the second quarter of 2024, the total lots sold compared to the second quarter of 2023 decreased by 4% in our automotive sector mainly in the United States due to a shift in assignment volumes from a customer. Total lots sold increased by 40% in our commercial construction and transportation sector, mainly driven by a higher proportion of low value lots in the United States.

Previous wording

The TLA Facility loans are subject to quarterly installments of 1.25% of principal, with the balance payable at maturity. During the three months ended March 31, 2024, the Company repaid $150.0 million of principal on the USD TLA Facility. As of March 31, 2024, there are no mandatory principal repayments remaining on the USD TLA Facility until maturity of the debt. We continue to seek opportunities to prepay our debt.

Current wording

The TLA Facility loans are subject to quarterly installments of 1.25% of principal, with the balance payable at maturity. During the six months ended June 30, 2024, the Company repaid $250.0 million of principal on the USD TLA Facility. As of June 30, 2024, there are no mandatory principal repayments remaining on the USD TLA Facility until maturity of the debt. We continue to seek opportunities to prepay our debt.

Previous wording

At March 31, 2024, the Company also had $550.0 million aggregate principal amount of 6.750% senior secured notes due March 15, 2028 and (ii) $800.0 million aggregate principal amount of 7.750% senior unsecured notes due March 15, 2031 (collectively, the "2023 Notes"). These 2023 Notes were used, along with the USD TLA Facility, to fund the acquisition of IAA, and accrue interest to

Current wording

At June 30, 2024, the Company also had $550.0 million aggregate principal amount of 6.750% senior secured notes due March 15, 2028 (the "Secured Notes"), and (ii) $800.0 million aggregate principal amount of 7.750% senior unsecured notes due March 15, 2031 (the "Unsecured Notes") (collectively, the "Notes"). These Notes were used, along with the USD TLA Facility, to fund the acquisition of IAA, and accrue interest to be paid in cash semi-annually in arrears. The Secured Notes are jointly and severally guaranteed on a senior secured basis and the Unsecured Notes are jointly and severally guaranteed on a senior unsecured basis by certain of the Company’s subsidiaries.

Previous wording

Credit facilities at March 31, 2024 and December 31, 2023 were as follows:

Current wording

The below were our committed and uncommitted revolving credit facilities at June 30, 2024 and December 31, 2023:

Previous wording

Our short-term cash requirements include (i) payment of quarterly dividends to common shareholders on an as-declared basis, and payment of participating dividends and preferential dividends to preferred equity holders, (ii) settlement of contracts with consignors and other suppliers, (iii) personnel expenditures, with a majority of bonuses paid annually in the first quarter following each fiscal year, (iv) income tax payments, primarily paid in quarterly installments, (v) payments on short-term and long-term debt, (vi) payment of amounts committed under certain service agreements to build our modern IT architecture, (vii) payments on our operating and finance lease obligations, (viii) other capital expenditures and working capital needs, and (ix) advances. In the current interest rate environment, the Company intends to continue to evaluate and pursue the most financially beneficial arrangements to fund future capital expenditures, which may include lease agreements or cash purchases.

Current wording

Our short-term cash requirements include (i) payment of quarterly dividends to common shareholders on an as-declared basis, and payment of participating dividends and preferential dividends to preferred equity holders, (ii) settlement of contracts with consignors and other suppliers, (iii) personnel expenditures, with a majority of short-term incentive compensation paid annually in the first quarter following each fiscal year, (iv) income tax payments, primarily paid in quarterly installments, (v) payments on short-term and long-term debt, (vi) payment of amounts committed under certain service agreements to build our modern IT architecture, (vii) payments on our operating and finance lease obligations, (viii) other capital expenditures and working capital needs, and (ix) advances. In the current interest rate environment, the Company intends to continue to evaluate and pursue the most financially beneficial arrangements to fund future capital expenditures, which may include lease agreements or cash purchases.

Previous wording

Our long-term cash requirements include scheduled principal repayments of long-term debt on the TLA Facility of $1.6 billion and the 2023 Notes of $1.4 billion, repayment of any drawn funds under our revolving credit facilities, as well as scheduled repayments of operating and finance lease obligations relating to the Company’s commercial leases for various auctions sites, branches and offices, operating leases for computer equipment, software, motor vehicles and small office equipment, and finance lease arrangements for certain vehicles, computers, yard equipment, fixtures, and office furniture. For more information on our debt and leases, see "Item 1 – Financial Statements: Note 14 Debt" and "Item 1 – Financial Statements: Note 17 Leases," respectively, in our consolidated financial statements, as well as our audited consolidated financial statements for the year ended December 31, 2023.

Current wording

Our long-term cash requirements include scheduled principal repayments of long-term debt on the TLA Facility of $1.5 billion and the Notes of $1.4 billion, repayment of any drawn funds under our revolving credit facilities, as well as scheduled repayments of operating and finance lease obligations relating to the Company’s commercial leases for various auctions sites, branches and offices, operating leases for computer equipment, software, motor vehicles and small office equipment, and finance lease arrangements for certain vehicles, computers, yard equipment, fixtures, and office furniture. For more information on our debt and leases, see "Item 1 – Financial Statements: Note 14 Debt" and "Item 1 – Financial Statements: Note 17 Leases," respectively, in our consolidated financial statements, as well as our audited consolidated financial statements for the year ended December 31, 2023.

Previous wording

Cash provided by operating activities can fluctuate significantly from period to period. We assess our liquidity based on our ability to generate cash and secure credit to fund operating, investing, and financing activities. Our liquidity is primarily affected by fluctuations in cash provided by operating activities, significant acquisitions of businesses, payment of dividends, our net capital spending 1, and repayments of debt. We are also committed under various letters of credit and provide certain guarantees in the normal course of business. We believe our principal sources of liquidity, which include cash flow from operations and our unused capacity under our revolving credit facilities of $717.8 million, is sufficient to fund our current and planned operating activities.

Current wording

Cash provided by operating activities can fluctuate significantly from period to period. We assess our liquidity based on our ability to generate cash and secure credit to fund operating, investing, and financing activities. Our liquidity is primarily affected by fluctuations in cash provided by operating activities, significant acquisitions of businesses, payment of dividends, our net capital spending 1, and repayments of debt. We are also committed under various letters of credit and provide certain guarantees in the normal course of business. We believe our principal sources of liquidity, which include cash flow from operations and our unused capacity under our revolving credit facilities of $711.8 million, is sufficient to fund our current and planned operating activities.

Previous wording

Net cash provided by operating activities was $124.8 million in the first three months of 2024, as compared to net cash used in operating activities of $57.3 million in the first three months of 2023. Net cash provided by operating activities increased $182.1 million mainly due to net cash generated by higher net income from the inclusion of IAA income from operations for the full quarter and lower acquisition-related and integration costs, partially offset by higher interest expense and a decrease from the net change in operating assets and liabilities of $55.0 million. The increase in cash outflow from operating assets and liabilities was primarily driven by the timing, size and number of auctions, lower book overdrafts, and higher interest payments on our debt in the current quarter. Further net cash outflows were from higher operating lease payments and incentive-based employee compensation payments from the inclusion of IAA. The above increases in outflows were partially offset by lower tax payments due to the timing of tax installments, as well as the non-repeat of taxes paid in 2023 for the taxable gain portion on the sale of the Bolton property. In addition, we also saw lower cash outflows mainly due to timing of payments for certain large inventory packages in the prior year, prepaid consigned vehicle charges with the inclusion of IAA, and payments for trade and other payables.

Current wording

Net cash provided by operating activities was $462.1 million in the first six months of 2024, as compared to net cash provided by operating activities of $49.9 million in the first six months of 2023. Net cash provided by operating activities increased $412.2 million mainly due to net cash generated by higher net income from the inclusion of IAA income from operations for a full quarter in the first quarter of 2024 compared to the 11-day stub period in the prior year. We also saw lower acquisition-related and integration costs and lower cash outflow from the net change in operating assets and liabilities of $136.2 million, partially offset by higher interest expense. The lower cash outflow from operating assets and liabilities was primarily due to lower tax payments due to the non-repeat of taxes paid in 2023 for the taxable gain portion on the sale of the Bolton property, and lower tax prepayments compared to the prior year. We also saw lower cash outflows driven by prepaid consigned vehicle charges with the inclusion of IAA and timing of inventory purchases. In addition, we saw lower cash outflows in the current year from a decrease in volumes in our automotive sector, timing of collection of advances and payments from customers, receipt of reimbursable leasehold improvements from lessors, and from the timing of sales tax remittances in Canada. The above decreases in cash outflows were partially offset by lower book overdrafts, higher incentive-based employee compensation payments from the inclusion of IAA, higher interest payments on our debt, higher operating lease payments, and the timing, size and number of auctions.

Previous wording

Net cash used in investing activities was $77.5 million in the first three months of 2024, as compared to net cash used in investing activities of $2.8 billion in the first three months of 2023. The decrease is primarily due to cash used in the prior quarter to fund the acquisitions of IAA and VeriTread.

Current wording

Net cash used in investing activities was $131.7 million in the first six months of 2024, as compared to net cash used in investing activities of $2.9 billion in the first six months of 2023. The decrease is primarily due to cash used in the prior period to fund the acquisitions of IAA and VeriTread.

Previous wording

Net cash used in financing activities was $190.9 million in the first three months of 2024, as compared to net cash provided by financing activities of $3.0 billion in the first three months of 2023. The change is primarily driven by higher cash inflows in the prior quarter, as we raised $3.1 billion in debt to fund the acquisition of IAA through the TLA Facility and the 2023 Notes, net of debt issuance costs, and received $496.9 million in net proceeds from the issuance of the Series A Senior Preferred Shares and common stock. These decreases in cash inflows were partially offset by a $150.0 million principal debt repayment made on our USD TLA Facility during the quarter, as compared to the redemption of our 2016 Notes of $500.0 million in 2023. We also saw $101.1 million in lower dividends paid to common stockholders in the current quarter primarily due to the payment of a one-time special dividend in connection with the IAA acquisition in the first three months of 2023. In addition, we received higher proceeds from the exercise of stock options driven by a higher share price.

Current wording

Net cash used in financing activities was $322.4 million in the first six months of 2024, as compared to net cash provided by financing activities of $2.8 billion in the first six months of 2023. The change is primarily driven by higher cash inflows in the prior period, as we raised $3.1 billion in debt to fund the acquisition of IAA through the TLA Facility and the Notes, net of debt issuance costs, and received $496.9 million in net proceeds from the issuance of the Series A Senior Preferred Shares and common stock. We also repaid $600.0 million of long-term debt in the first half of 2023, for the redemption of our 2016 Notes and repayment of $100.0 million of debt on our USD TLA Facility, as compared to $250.0 million repayment on our USD TLA Facility in the current period. We also saw $100.6 million in lower dividends paid to common stockholders in the current period primarily due to the payment of a one-time special dividend in connection with the IAA acquisition in the prior year. In addition, we received higher proceeds from the exercise of stock options in the current year, driven by a higher share price.

Previous wording

We declared a dividend of $0.27 per common share for each of the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023. We have declared, but not yet paid, a dividend of $0.27 per common share for the quarter ended March 31, 2024. All dividends that we pay are “eligible dividends” for Canadian income tax purposes unless indicated otherwise.

Current wording

We declared a dividend of $0.27 per common share for each of the quarters ended March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023. We have declared, but not yet paid, a dividend of $0.29 per common share for the quarter ended June 30, 2024. All dividends that we pay are “eligible dividends” for Canadian income tax purposes unless indicated otherwise.