RB Global (RBA) 9 May 242024 Q1 Earnings call transcript

Good afternoon. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ritchie Bros. Auctioneers First Quarter Conference Call. [Operator Instructions] I'll now turn the call over to Mr. of call. and President open Intelligence Vice conference the Rathod, Investor Market Relations to Sameer Mr. may your you Rathod, begin conference.

that With believe, call Hello revenue, can statements, and Comments Chief Financial trends including discuss other and risks words expressions. results. Officer. The to such considered joining not value, Executive be us on similar a estimate, to, good afternoon. of Guerin, as fact, and will opportunity, such and and Thank uncertainties. intend, and identified of are but integration our you Officer; are the forward-looking and projections following first by IAA, our Kessler, discussion are statement plan, and which Jim market today debt regarding for business items, anticipate, of Eric gross including today me expect, involve limited expectations our synergies not anticipated the Chief future quarter earnings, forward-looking transaction include cost

The forward-looking SEDAR. our results risks issued as and uncertainties most on significantly well Form news and report website XX-K, as available are on recent this and on in statements from are which release afternoon annual our Relations actual and our differ to report detailed quarterly Investor that EDGAR could cause such

On including discuss this call, measures. certain we will measures, non-GAAP forward-looking also financial non-GAAP financial

Form the and identification of XX-K of reconciliation applicable the and posted comparable directly release, X, website. measures Form the For our financial non-GAAP financial most on measures, GAAP see news our the XX-Q

Investors not place a measures. forward-looking all components financial as on predict measures unable cautioned non-GAAP necessary to non-GAAP to present measures. such management We reconciliation quantitative reliance financial forward-looking of are undue of cannot are

I'd turn Jim. Jim? time, to over the this call to like At

everyone. and good afternoon Thank you, Sameer, to

to team XX% Team our to a the off the are All-In am year they and our of dedication growth. This directly forma our gross quarter with reflects on continue One customers. solid to performance over transactional strong proud GTV pro combined value commitments of growth as I driving delivering start first basis. on a our We culture to

Furthermore, the strong our earnings of and continuous an drive into growth per translate XX%. efficiency share throughout on adjusted improvement focus operational organization

discussing by The in strong. construction remains consignment sector. and equipment market transportation start Let's commercial trends our

a surge beginning experienced see post equipment the supply within following business carefully we cadence specifically conditions. However, normalization of rental of Strategic their accounts, the are for of vertical to we dispositions evaluating the year pandemic. the the rest they as access are

investments leading interest and the environment, priority, Within to customers the postpone transaction costs, equipment, is share region's reducing sales solutions. their need replacement immediate some coverage. the higher expanding business, in the election U.S. growth our top rate algorithm our by higher a new are and upcoming executing market Growing we're for

to right Bros. growth opportunities. and the In the new talent ensure actively we coverage quarter, first Ritchie have to we the we identified brand have where the strengthen recruited most significant

Our omnichannel and platform for key presence and our power yellow digital corporation The demonstrates us of how versatility the in the differentiator, partners. our partner physical choice. making platform over-deliver of we bankruptcy remain a

on their marketplace to moving locations RB of assets a We by efforts complemented the to utilizing our priced broader competitively [indiscernible], service services. logistical Global transportation source platform

and of savings and meant by equipment. of cost yellow's care, transportation control our XX% were acquisition bolstered their enabling Our one locations, that XXX within extensive of Global locations network assets of RB miles seamless IAA custody of

had IAA of and were quarter, trucks the yards. trailers Global locations, we as X,XXX RB end approximately satellite storage which the flexed At at

incremental execute yards a eliminate these short-term storage. ability leases potential to flex expenses for Our to

of to partners. To be with transaction, effectively capacity our clear, in service more yards even all have enough this than we our

optimize is strategic year. bulk with sales late potential platform's being omnichannel deployed realization. last began full price to Our We

auctions. various regions we As directing continue, yellow across dedicated assets channels hosting those are and and

ensures approach are the the dynamic best of matching we assets these buyers. supply constantly with This

our robust services All all testament ability cater to of business with sizes to of of to and offering marketplace's transaction is this a a solutions.

Global, Moving been to customers' XXst and which partners attendance culture, exceeding attracted the shattered commitment and automotive served Summit premier Global's RB Industry event introduce insurance, a expectations across performance. platform new and team, our under robust as have records. consistent sectors. through We hosted There sector. potential fleet IAA's North RB a Leadership America's unwavering This our to to remarketing leadership

want IAA who share we As key positive overwhelmingly Advisory team [indiscernible] transparency, maintain build trust partnerships dynamic our actionable and summit. partners session based long-term of with grow an conjunction It in we and the the Council to short- partnerships our was the long-lasting similar and items. those between and insurance feedback an in hosted with and values on inaugural exchange leadership

keep initiatives excited to going, tackle the partnerships. on solidify and We're industry-wide conversation these our

any improvements this measure program use our now misconceptions. framework and out also laid to games We service agreement the of launching accurate level the and communicate event industry dispelling performance partner transparency our highlight We our performance by to a and our quarterly.

operational feedback positive. been our The partners, our have about especially improvements from data-driven very

operational Speaking improvement to program that first the meaningful continues the am of improvements, continuous drive I proud SLA improvements quarter. our of pleased team in and

meet strong ability at and approximately measure customers' XX%. and measure internal [indiscernible] on-time to an XX% performance our process [indiscernible] of compliance that pickup was vehicle demands to of Our our approximately our internal performance, continues [indiscernible] our be

also driven new relationships continue make historical We excellent Bros. Europe. to leveraging international strides Ritchie automotive by our IAA in partially to marketplace, attracting buyers in

investment industry-leading process to X.X% drive the climate year-over-year. automotive on quarter, buyers an in hit improvement sold price our ASPs first the international and In an to advancements, selling higher These with continue average of vehicles technology high. focus all-time with in percentage continuous combined

strong performance been on for algorithm share themselves. the has growth and continuous results lever critical unlock because industry consistent focused our this improvement in We're in a market to speak

us partners forward quarters. coming clear share translate propels built in momentum and trust, on focus shift, will culture on market collaboration gains results. optimistic the noticing positive exceptional delivering it we're are the Our This transparency, consistently transform into and

I will to pass call to the Eric financial performance review and our Now outlook.

Jim. you, Thank

ratio. price. to and higher into XX.X% rebound for X.X% drove period in a comparison average ratio existing forma the GTV the a customer Total the the Before period. in first the In we that approximately as prior increased higher to compared volumes a XX%. benefit note same the total loss portfolio volumes the selling to and results the the The XX.X% year IAA salvage to unit refer increased quarter, by continues unit for [indiscernible] that increased Ritchie benefited X%, year-over-year Jim Automotive to from industry year. jump details, estimated in from and pro loss last of by growth comparisons please Bros. revenue GTV combined GTV as noted,

quarter, the in the and in of sector announced The sold. previously increased customer GTV organic commercial partially increases by full impact volumes, transportation average XX%, growth. partially we and Note price in the that customer see per will offset lot construction driven [indiscernible] the volumes. loss by in on loss starting second declines unit GTV offset

transportation, that The lower XX%. average values impact volume to of continued GTV the growth at pricing mix due and on basis. an commercial Note price in asset would transportation was apples-to-apples intrinsically rental been are lot sold per approximately came bankruptcy, ASPs excluding growth in the and and construction decline or declines asset in from yellow assets as lot have

driven structure. revenue to was revenue. to revenue. revenue XX with a our increased fee in points service approximately Service revenue our by growth expanding basis ancillary revenue take to higher revenue Marketplace service services by XX%, growth fee XX.X%. and growth increased GTV, average rate auction-related Service in service a and buyer Moving due rate marketplace higher higher

think grow have values note Historically, deflation swings volumes have GTV in demonstrated As our marketplace. been about that revenue we price in revenue allowed inflation. us seen asset values, you and asset rate unit inflation to it is take to model essential above growth and our and broader move service in has opposite resilient to directions. economic expansion be to

Inventory surplus due The sectors. construction quarter to points and revenue rate strength automotive, the offset revenue XXX transportation partially for X.X%. government business. commercial in with Inventory to from contracted and XX%, approximately construction our the lower declined inventory transportation year-over-year lower basis by rate was and commercial automotive contributions

our to in transportation the previously at-risk As and noted, sector. competitive for deals we environment expect construction commercial remain

Turning net shares. interest higher on impact performance IAA operational strong the the the full per share and and higher earnings Adjusted of quarter of XX% count, earnings. senior by expense share the preferred increased inclusion, to A impact partially offset Series

value. accomplishment the out At net approximately for the trailing to of year to execute. our strength We our our ahead a wanted shareholder ability our and debt deploying lay our principles the adjusted maximize nearly XX-month end comes EBITDA capital commitment the to of to strategy showcasing adjusted This to schedule, Xx. over-deliver, of guided first was quarter,

flex priorities. said, you term, a could to walk the Term on see the Xx. Loan leverage we around me pay near Let continuing through target the either way our our for of of year. down period We That plan for net remainder A time. In we

We CapEx will XXXX guidance. and not our continue in invest business to changing strategically are the

we company vision. unlock grown And continue the has and as Historically, opportunities accelerate help to to strategic through acquisitions. our will advance, we monitor us growth

focused capital. the is and our shareholders and in principally we expectations. executing core returns This XXXX, Delivery a in demonstrates returning recent For superior integrating approach for and driving excess our are returns believe on to we principle, confidence acquisitions. exceeding

we customers can financial consistently over-deliver Our on our commitments. strength our assures

Moving to outlook. the

as guidance in GTV GTV with broadly the our first growth year aligned full our reiterating are expectations. We quarter

see equipment transportation As our Jim we are noted starting construction normalization in supply of sector. a in his remarks, and to

loss full Additionally, beginning we of the customer previously see will second the announced the in quarter. impact

billion operational first year-over-year first we $X.XX guidance also are flow-through excellence. adjusted to based We're moderate our the our $X.X factors, Given continued That in GTV from tax year guidance increasing we said, our compared rate billion X remainder anticipate these will strong and the rate top to tax growth reflect the the to to that the considerably lower-than-expected EBITDA for line tightening on quarter. quarter. the of

open let's call questions. that, the With for

Instructions] Sabahat from [Operator RBC question Your Markets. Khan, Capital first comes

Great.

results through expected just EBITDA maybe on the details the cadence increase $XX around increase, of guess can the So and guidance of for to the you rest you a line. more the how year bit walk million I QX of the and sort into sort of account of settled the the sort taking just

be more outlook to any commentary you great. would addition in just Just color provided the

question. Thank you the for Yes.

QX our remarks, with pretty the came I in prepared much As expectations. line in in mentioned

the our flow the movement was out. So were we on of forecast based where and guidance $XX seeing year million

increase So with tied to the was expecting was we the guidance were performance. line what QX again, and in of that

thinking then you color allocation you? just are levels below talk and the you're some opportunities is about how one a in leverage philosophy about leverage it little the here, capital at maybe at preference you indicating provide organic is the early. think sort on directionally front year today, of of with the Xx where sort business have that And you of I mix? the bit levels, And look of the you you of ratio between for what the comfortable these versus that as a Can

Yes.

for So the comfortable Xx is us.

the I little a remarks, flex to sides prepared on probably As that we said are X. going in both of bit

the year A on to focus the Loan Our pay in remainder is and to down Term business. for invest of continue the

our in continue that. footprint to as and going investment we're we evaluate our technology So

So our priorities. are those

And the noted year. but done. IAA we'll acquisitions, focus to and well, integrating we've that's not focus look really on acquisitions continue our It's as to at I as other this

space. to continue in we'll So focus that

Raymond comes Steve Your James. Hansen, from question next

best Jim, to of back here. for can broader you of a you've performance you ASP versus referenced what sense just go a on give on been to maybe upside a further quarter. Congrats you're to just just the the outperform in we're auto things the bit seeing think doing some the the unpack where performance getting great But basis. I think little the and us I that wanted indices? you

thing. Look, I will. one I it's Yes, don't think

first We to our buyers, trim that. So that give hard and But from But more achieve important can ASP The tactics and we one for right? is improvement. a areas to information, and level focused were they know something all when technology that ASP question data partners go to buyers like we're a very we've We the auto through implement you I'll the whole a heard of the higher where on. one we the is our team it's basic added just give did they're applying. a them We on -- one. the the release deem side. can we've press

we we we as have data, can. So sure tactics, trying our auction channels, for think buyers maintain from ASPs many things different about we trim different to we're make data level

has the performance the at been described then described And mean the as your visibility consistent in sounds on saving due? over with time. terms or to of think consistent like high event. like The come I potential and your a discussions this on any partners of in I that gains fruition to you now, recent some sounds coming color that is of basis. when I market it sort you But share path SLA XXs might on it relatively mean, any these contracts timing

And went to over of look, to had stick I I'm going question. when this Great last kind quarter question. what we

the an organization, focused look, to control a going to And hit coming and about partners, against And I'm of quarterly just U-shape is we're at that on focused that's partners, right QBRs for and control. to expectation my realist, I the we're comfortable control. with is But deliver getting X each As feedback continue expect we we're with and we But I down good our from that in we're happen am -- then on our when in our year companies over our And delivering and extremely commitments we be us what's we're what's our do this to now. talked being our is as them. stay very we consistent a and we're we our together. how anniversary where as path important consistent partners. And in our going what what's things SLAs.

Scotiabank. Next comes from question Michael Doumet,

just guidance, understand the you're for calling And assumption guidance. very the I the back and circling balance of GTV the if the conservative. the effectively dynamic midpoint on loss, use it with does the I Maybe of because little but obviously, the feel through to trying X the year growth EBITDA mean commercial I growth. to understand side just customer

effectively comps the Just second negative half? expectation for the is in

this want the carrier at Look, remind as the we very of half everyone, the of our or cars announced the into out side that loss Those point to network second thing obvious auto year quarter. with in that back start going I are of experience just we we're I'll they're the to year. last small of are this

when couldn't get of and going held this new is and we aware to pandemic on hit get thing what's in an our what equipment So of when auto everyone And to happen. the obvious industrial construction longer, you the into come already said the to side on then and of they remarks, the equipment start side, people equipment, in.

sectors we year, last transportation. really rental us influx an So got of rental came certain that equipment, and to

pent-up had just is we year that equipment and which not still where place all So in the year, came when be. us place great as It's go against, half the to have go up of the we partners believe for heavy of back everything are back to it's the our were year, a a to a you half we that going pandemic normalize we ago in. the and into comp the

what set the we're to that's guidance. using So

at base? you this I SG&A, you've How cost. I quarters of look, then trend And more it there Or depending do want costs? the here? whether Or course or has to its more you you run on support either maybe just cost If here. with to maybe several the flat do a look been rationalization flipping mean, is lower on more much for way, can kind volumes Understood. on can

a me a philosophy leadership Yes. that by we answer And let just team. as just that from have

extended what never core to our Vice day. part effectively what Presidents efficiently. do of or our directors, stop are It's team. managing business We going and our leadership we this every of It's

of margin what That never expansion. SG&A is to And right? It we culture. going building the that how this management. do to optimize to So in goes goes business, stop we're we are

to So we're stop. just never going

to So I as We're an to really going sure don't possible. [indiscernible] be have answer look diligent stop. of constantly efficient we're and as make

question next comes Sytchev, Maxim Bank from National Your Financial.

difficulty the and be context the and most will Jim, for any of where you, regarding mean size or And of that? given do question what need potential just the the to IAA, of I financially? may. are accretive, it sort completing your the strategically transactions I one whether thoughts if

financial them, the profile about of each to love we future. now, focused right? it's the on about do margin talked all we're that right And verticals great and as very that look, of Look, this. the leadership we we're outlook the verticals a Eric have, we in think the we question. as a the again, that we have, team business want So in what And and

we future, about think there future, right now, But know us if we As think we with to M&A. we about nice sure the the that on right, driving map, holes fit there are make as that's have. are would business where places in that we're the want the we certain

to now, We're fits on always opportunistic that's profitable and running going and of efficiently, running effective we're focus effectively running us. we're our focused where for is now. in and company, what and very it a right be But right this business so

question Raymond comes from next Steve Hansen, Your James.

thing The improvement. Just was interesting quick the it's I know a saw one follow-up. the you nice of mean a on that rate high struck basis, on how sustainability sequential we inventory a about the sort me competitive down sequential rate? year-over-year, that as the still But as single-digit improvement. being do of I broader that in feel you landscape. but business described

the the have depending deal the a we're grow where in on against. We're make who the if to don't, go competitive share, U.S., look, it's favor, deals competing that going decisions Well, go of sometimes been same back data. that is Yes. to to guidance the Look, quarter quarter. each we're best different giving they a to use data international, we your Canada, best right? it's And we've in just time to I and think after market, this sometimes

we [indiscernible] to competitive we're said make think, compete very I confident when best we're the position see and end, that be like still But and you I where where what kind think a that going to there's But we any be these to we're is guidance quarter and a tools best the this deals where place and and look, the analytic of decisions that that. of it's middle look in going times have we can So think at. data for successful to expecting. place it's saw that low historical I the you

There this proceed. Please further time. at are no questions

want Global hard team work. and over-delivering call. thank so you And and hard everyone's RB our so you to All your foremost, thank you and on to in confidence Thank commitment for Thank I I much. just the everyone we right. RB for forward you Hey, dedication, next to to this first customers those work, much your want time. look to on Thank for talking commitments. the

for Thank and today. please that call conference and Ladies participating, lines. concludes you. you We your ask this gentlemen, thank you disconnect for your