RB GLOBAL INC

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 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.

Current wording

RB Global, Inc. and its subsidiaries (collectively referred to as “RB Global”, the “Company”, "our", "us", or “we”) (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 ("CC&T") sectors. 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

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.

Current wording

Our CC&T sector includes heavy equipment such as excavators, dozers, lift and material handling, vocational and commercial trucks and trailers. Our automotive sector includes all consumer automotive vehicles. 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.

Previous 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.

Current 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, of which approximately 67% are located in the United States.

Previous wording

We offer consignors several contract options to meet their individual needs and sale objectives on our onsite and online marketplaces for selling used equipment or vehicles, which include:

Current wording

We offer consignors several contract options to meet their individual needs and sale objectives for selling used equipment or vehicles, which include:

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 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.

Current wording

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

In our commercial construction and transportation sector, the need for transaction solutions following the surge experienced post-pandemic has normalized, impacting unit volume growth for large fleet owners. In addition, we have seen a normalization of supply chains, which continues to put pressure on asset prices within the sector. The higher interest rate environment, as well as higher cost of new assets, is driving some customers to delay replacing their existing assets which is contributing to lower need to transact equipment.

Current wording

In our CC&T sector, the need for transaction solutions following the surge experienced post-pandemic has normalized, and customers are increasingly delaying decisions over disposition of assets as they evaluate the current business conditions in face of an uncertain macro environment, negatively impacting unit volume growth for higher value assets. In addition, macro uncertainty in the construction and transportation end markets is putting pressure on asset prices within the sector. The higher interest rate environment, as well as higher cost of new assets, is driving some customers to delay replacing their existing assets which is contributing to a lower need to transact equipment.

Previous 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.

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 $1.4 billion.

Previous wording

We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, and make operating decisions. We believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our operational strategies.

Current wording

We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, and make operating decisions. We believe these key operating metrics are useful

Previous 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.

Current wording

Gross transaction value ("GTV"): 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

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.

Current wording

•Diluted earnings per share (“EPS”) available to common stockholders increased 20% to $0.36 earnings per share

Previous wording

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

Current wording

•Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") decreased 1% to $283.7 million

Previous wording

Total GTV decreased 1% to $4.1 billion in the second quarter of 2024, and increased 35% to $8.2 billion in the first six months of 2024 primarily due to the inclusion of GTV from the acquisition of IAA.

Current wording

Total GTV decreased 7% to $3.6 billion in the third quarter of 2024, and increased 19% to $11.8 billion in the first nine months of 2024.

Previous wording

The following table summarizes our total GTV by geography for the periods indicated:

Current wording

The following summarizes our total GTV by geography and by sector for the periods indicated:

Previous 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.

Current wording

The following table illustrates the breakdown of total lots sold by sector for the periods indicated:

Previous wording

Total revenue decreased 1% to $1.1 billion in the second quarter of 2024 due to a 21% decrease in inventory sales revenue, partially offset by a 7% increase in total service revenue.

Current wording

Total revenue decreased 4% to $981.8 million in the third quarter of 2024 primarily due to an 18% decrease in inventory sales revenue, partially offset by an 1% increase in total service revenue.

Previous wording

Total revenue increased 33% to $2.2 billion in the first six months of 2024 due to a 49% increase in service revenue, offset by a 4% decrease in inventory sales revenue.

Current wording

Total revenue increased 19% to $3.1 billion in the first nine months of 2024 due to a 29% increase in service revenue, partially offset by an 8% decrease in inventory sales revenue.

Previous wording

Service revenue is comprised of commissions earned on service GTV, buyer fees earned on total GTV, as well as revenues earned from our marketplace services. Commissions include revenue earned from consignors or sellers from the sale of assets from straight, fixed or guarantee commission contracts. Buyer fees include buyer fees earned from purchasers on the sale of inventory or consigned equipment. Marketplace services revenue includes fees earned from value-added services provided to customers such as refurbishment, parts procurement, data, transportation and logistics, inspection, appraisals, online listing, financing, title and liens processing, as well as other auction-related fees.

Current wording

Service revenue is comprised of transactional seller revenue, which mainly includes commissions earned on service GTV from our straight, fixed or guarantee commission contracts, transactional buyer revenue, which mainly includes buyer transaction fees earned on total GTV from purchasers on the sale of inventory or consigned equipment, and revenues earned from our marketplace services.

Previous 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%.

Current wording

In the third quarter of 2024, total service revenue increased 1%, with marketplace services revenue increasing 17%, transactional buyer revenue increasing 2%, primarily offset by transactional seller revenue decreasing 7%.

Previous wording

Marketplace services revenue increased 28% in the second quarter of 2024, primarily driven by higher fees earned from transportation services provided to a large consignor contract in the United States in our commercial construction and transportation sector, as well as from higher document fees from an increase in volume of titled assets sold.

Current wording

Marketplace services revenue increased 17% in the third quarter of 2024, primarily driven by higher fees earned from transportation services provided to a large consignor contract in the United States in our CC&T sector.

Previous wording

Buyer fees increased 4%, while total GTV decreased 1%, primarily from changes in our buyer fee structures implemented in early 2024 across all sectors, as well as from a higher proportion of low value lots sold in our commercial construction and transportation sector.

Current wording

Transactional buyer revenue increased 2%, while total GTV decreased 7%, primarily from higher buyer fee rate structures implemented in early 2024 across all sectors. We also saw an increase in buyer fees in our CC&T sector due to a higher proportion of low value lots sold.

Previous wording

Buyer fees increased 63%, higher than the 35% increase in total GTV, primarily driven by 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. We also saw higher buyer fees in our automotive and commercial construction and transportation sectors for the same reasons as discussed above.

Current wording

Transactional buyer revenue increased 38%, primarily driven by 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, transactional buyer revenue increased higher than the 19% increase in total GTV, primarily for the same reasons as discussed above.

Previous wording

Marketplace services revenue increased 42%, driven by an increase in fees from 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, we saw higher marketplace services revenue in our commercial construction and transportation sector, as discussed above.

Current wording

Marketplace services revenue increased 27%, mainly in our CC&T sector for the same reason as discussed above, as well as due to the increase in fees from 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.

Previous wording

In the second quarter of 2024, costs of services increased 21% to $348.8 million, primarily driven by higher prepaid consigned vehicle charges for vehicles sold in the current period due to a fair value adjustment made to the prepaid consigned vehicle charges on the opening balance sheet of IAA at acquisition in the prior year. We also incurred higher costs of services in connection with a large consignor contract in the transportation sector in the United States, which included higher costs to provide transportation services and higher payments to a third party as part of a profit-sharing arrangement. In addition, we saw an increase in employee compensation expenses primarily driven by higher employee benefit costs due to changes in our benefit plans and increased activity in inspections in our commercial construction and transportation sector.

Current wording

In the third quarter of 2024, costs of services increased 7% to $339.7 million, primarily due to higher costs of services in connection with a large consignor contract in the transportation sector in the United States, which included higher costs to provide transportation services and higher payments to a third party as part of a profit-sharing arrangement. In addition, we saw higher costs of services in our automotive sector as prior year included a benefit related to a fair value adjustment made on the opening balance sheet of IAA at acquisition, as well as due to higher employee compensation expense driven by higher employee benefit costs from changes made to our benefit plans. These increases were partially offset by lower tow costs driven by streamlined processes and improved efficiencies in our automotive sector.

Previous wording

For the first six months of 2024, costs of services increased 93% to $701.8 million, 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 prior year, as well as higher prepaid consigned vehicle charges for vehicles sold as discussed above. Cost of services also increased in our commercial construction and transportation sector due to the same reasons as discussed above.

Current wording

For the first nine months of 2024, costs of services increased 53% to $1.0 billion, 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 prior year. Cost of services also increased in our CC&T sector as a result of higher costs incurred in providing transportation services in a large consignor contract, as discussed above. We also saw higher prepaid consigned vehicle charges and employee benefit costs in our automotive sector, as discussed above.

Previous 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.

Current wording

In the third quarter of 2024, cost of inventory sold decreased 16% to $193.5 million, primarily in line with an 18% decrease in inventory sales revenue. Cost of inventory sold decreased at a lower rate than the decrease in inventory sales revenue mainly due to pricing pressure in both our automotive and CC&T sectors between time of purchase and time of sale.

Previous wording

For the first six months of 2024, cost of inventory sold decreased 5% to $419.3 million, primarily in line with the decrease in inventory sales revenue of 4%.

Current wording

For the first nine months of 2024, cost of inventory sold decreased 9% to $612.8 million, primarily in line with the decrease in inventory sales revenue of 8%.

Previous wording

In the second quarter of 2024, selling, general and administrative expenses increased 7% to $208.6 million, as a result of an accrual for a new digital services tax in Canada on certain in-scope revenues earned for the period from January 1, 2022 to June 30, 2024, higher employee compensation expense, primarily from higher share-based payments expense due to timing of grants and higher long-term performance-based incentive compensation, and higher technology and cloud costs as we continue to strategically modernize our operations and technology platforms through use of cloud environments. These increases were partially offset by lower short-term incentive-based compensation expense and other general and administrative costs due to strategic cost reduction initiatives.

Current wording

For the first nine months of 2024, selling, general and administrative expenses increased 7% to $584.5 million, 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 prior year. We also saw higher employee compensation expense, driven by higher share-based payments expense due to timing, and an increase in the size and fair value of grants. In addition, our costs increased due to a new digital services tax accrual in Canada on certain in-scope revenues which was retroactively applied to the period from January 1, 2022 to June 30, 2024, and higher consulting fees and legal costs. These increases were partially offset by lower short-term incentive-based compensation expense, lower travel, advertising, and promotional expenses, and lower costs due to our strategic cost reduction initiatives.

Previous wording

In the second quarter of 2024, acquisition-related and integration costs decreased 91% to $4.1 million primarily due to lower costs in connection with the acquisition of IAA on March 20, 2023. In the prior year, we recognized a net $16.3 million expense as settlement for the termination of a non-compete agreement bound by IAA prior to the acquisition. We also saw lower integration and severance costs as integration and restructuring activities are being completed.

Current wording

For the first nine months of 2024, acquisition-related and integration costs decreased 88% to $22.9 million, primarily given the significant investment banking, consulting, financing, legal and other acquisition-related costs incurred in the prior year to complete the acquisition of IAA on March 20, 2023. We have also incurred lower severance and integration costs as integration activities and restructuring is being completed. In addition, we recognized a net $16.3 million expense as settlement for the termination of a non-compete agreement bound by IAA prior to the acquisition in the prior year.

Previous 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.

Current wording

For the third quarter of 2024, operating income increased 5% to $153.4 million, driven by a decrease in selling, general and administrative expenses and acquisition-related and integration costs, partially offset by lower flow-through of revenue, as discussed above.

Previous wording

For the first six months of 2024, operating income increased 159% to $400.8 million, primarily driven by the inclusion of IAA operating income in the first quarter of 2024 for the full quarter compared to the 11-day stub period in the prior year, and the significant decrease in acquisition-related and integration costs, as discussed above. In addition, we saw higher flow-through of service revenue in the commercial construction and transportation sector, partially offset by higher depreciation and amortization driven by the acquisition of IAA and higher selling, general and administrative expenses, as discussed above.

Current wording

For the first nine months of 2024, operating income increased 84% to $554.2 million, primarily driven by the significant decrease in acquisition-related and integration costs and the inclusion of IAA operating income in the first quarter of 2024 for the full quarter compared to the 11-day stub period in the prior year. In addition, we saw a higher flow-through of service revenue, driven by the CC&T sector, partially offset by higher depreciation and amortization driven by the acquisition of IAA.

Previous wording

For the second quarter of 2024, income tax expense increased by 12% to $36.6 million and our effective tax rate decreased 260 bps to 24.8%, as compared to the second quarter of 2023. For the first six months of 2024, income tax expense increased 195% to $69.1 million, primarily due to the increase in net income before tax, and our effective tax rate decreased 450 bps to 24.0% as compared to the first six months of 2023.

Current wording

For the third quarter of 2024, income tax expense increased by 13% to $26.2 million, and our effective tax rate decreased 120 bps to 25.6%, as compared to the third quarter of 2023. For the first nine months of 2024, income tax expense increased 105% to $95.3 million, primarily due to the increase in net income before tax, and our effective tax rate decreased 310 bps to 24.5% as compared to the first nine months of 2023.

Previous wording

In the second quarter of 2024, total GTV decreased slightly year-over-year due to lower volumes in our automotive and other sectors, primarily offset by strength in our commercial construction and transportation sector. We saw lower lot volumes in our automotive sector, primarily driven by the previously announced shift in assignment volumes from a customer, partially offset by growth in our existing customer base. In addition, average selling prices in our automotive sector were flat year-over-year, which outpaced the industry. The strength in our commercial construction and transportation sector was driven by an increase in the volume of total lots sold, driven in part by our strategic accounts, partially offset by a lower average price per lot sold from asset mix and lower price realization. In Canada, we saw lower GTV from softer year-over year performances as a result of a shift in contract mix from a lower number of agricultural auction events, and an unfavorable foreign exchange impact. Partially offsetting these decreases, we saw higher volumes in the United States, primarily from strong execution by our strategic accounts and higher imports.

Current wording

In the third quarter of 2024, the effective tax rate decreased slightly year over year.

Previous wording

The decrease in the effective tax rate for the first six months of 2024 compared to the first six months of 2023 was primarily due to a decrease in non-deductible expenses. Partially offsetting this decrease was a lower tax deduction for PSU and RSU share unit expenses that exceeded the related compensation expense and a lower proportionate benefit related to Foreign-Derived Intangible Income.

Current wording

The decrease in the effective tax rate for the first nine months of 2024 compared to the first nine months of 2023 was primarily due to a decrease in non-deductible expenses. Partially offsetting this decrease was a lower proportionate benefit related to Foreign-Derived Intangible Income (“FDII”) and a lower tax deduction for PSU and RSU share unit expenses that exceeded the related compensation expense.

Previous 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.

Current wording

In the third quarter of 2024, net income attributable to controlling interests increased 20% to $76.1 million, primarily driven by higher operating income and lower interest expense in the current quarter due to lower long-term debt levels driven by repayments of principal.

Previous wording

For the first six months of 2024, net income attributable to controlling interests increased 272% to $218.5 million, primarily driven by an increase in operating income, offset by an increase in income tax expense, as discussed above, and higher interest expense due to an increase in long-term debt from funding the IAA acquisition on March 20, 2023.

Current wording

For the first nine months of 2024, net income attributable to controlling interests increased 141% to $294.6 million, primarily driven by higher operating income, as discussed above, partially offset by higher income tax expense and higher interest expense due to an increase in long-term debt from funding the IAA acquisition on March 20, 2023.

Previous 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.

Current wording

Diluted EPS available to common stockholders increased 20% to $0.36 per share for the third quarter of 2024, compared to $0.30 per share for the third quarter of 2023. The increase is primarily due to the increase in net income attributable to controlling interests, as discussed above, partially offset by the cumulative dividends and allocated earnings on Series A Senior Preferred Shares.

Previous 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.

Current wording

In the third 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 Canadian dollar relative to the U.S. dollar.

Previous wording

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

Current wording

Diluted adjusted EPS available to common stockholders decreased 1% to $0.71 per share in the third quarter of 2024.

Previous 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.

Current wording

The TLA Facility loans are subject to quarterly installments of 1.25% of principal, with the balance payable at maturity. During the nine months ended September 30, 2024, the Company repaid $350.0 million of principal on the USD TLA Facility. At September 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 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.

Current wording

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.