RB (RBA) - 2024 Q1 - Quarterly Results

RB Global First Quarter 2024 Results Executive Summary & Outlook The company reports strong Q1 growth driven by the IAA acquisition, raises full-year guidance, and achieves its net leverage target early - CEO Jim Kessler attributed the solid start to the year to robust execution in the automotive sector[2] - The company raised its full-year Adjusted EBITDA guidance and met its net leverage target a year ahead of schedule[3] First Quarter 2024 Financial Highlights (YoY) | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | GTV | $4.1 billion | +115% | | Total revenue | $1.1 billion | +108% | | Service revenue | $849.1 million | +147% | | Inventory sales revenue | $215.6 million | +28% | | Net income available to common stockholders | $97.1 million | +384% | | Diluted EPS available to common stockholders | $0.53 | +289% | | Diluted adjusted EPS available to common stockholders | $0.90 | +58% | | Adjusted EBITDA | $331.0 million | +150% | Updated Full-Year 2024 Financial Outlook | Metric | Current Outlook | Prior Outlook | | :--- | :--- | :--- | | GTV growth | 1% to 4% | 1% to 4% | | Adjusted EBITDA | $1,200 to $1,260 million | $1,170 to $1,230 million | | Full year tax rate (GAAP and Adjusted) | 25% to 27% | 25% to 28% | | Capital expenditures | $275 to $325 million | $275 to $325 million | Q1 2024 Financial & Operational Performance (As-Reported) As-reported results show massive YoY growth due to the IAA acquisition, with the automotive sector being the primary driver Q1 2024 vs Q1 2023 Key Metrics | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | GTV | $4,077.4 M | $1,899.2 M | 115% | | Service revenue | $849.1 M | $343.6 M | 147% | | Service revenue take rate | 20.8% | 18.1% | 270bps | | Inventory sales revenue | $215.6 M | $168.8 M | 28% | | Net income (loss) | $107.4 M | $(28.2) M | 481% | | Adjusted EBITDA | $331.0 M | $132.6 M | 150% | | Diluted EPS | $0.53 | $(0.28) | 289% | | Diluted adjusted EPS | $0.90 | $0.57 | 58% | GTV by Sector (in millions) | Sector | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Automotive | $2,113.7 | $331.7 | 537% | | Commercial construction and transportation | $1,562.8 | $1,190.0 | 31% | | Other | $400.9 | $377.5 | 6% | | Total GTV | $4,077.4 | $1,899.2 | 115% | Lots Sold by Sector (in '000s) | Sector | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Automotive | 585.3 | 87.5 | 569% | | Commercial construction and transportation | 108.8 | 56.6 | 92% | | Other | 112.5 | 105.2 | 7% | | Total lots | 806.6 | 249.3 | 224% | Q1 2024 Supplemental Pro Forma Performance Pro forma results, including IAA in prior-year data, show 10% GTV growth led by the commercial and automotive sectors Supplemental Pro Forma Revenue Highlights (in millions) | Metric | Q1 2024 | Q1 2023 Pro Forma | % Change | | :--- | :--- | :--- | :--- | | GTV | $4,077.4 | $3,721.6 | 10% | | Service revenue | $849.1 | $745.0 | 14% | | Service revenue take rate | 20.8% | 20.0% | 80 bps | | Inventory sales revenue | $215.6 | $244.0 | (12)% | Supplemental Pro Forma GTV by Sector (in millions) | Sector | Q1 2024 | Q1 2023 Pro Forma | % Change | | :--- | :--- | :--- | :--- | | Automotive | $2,113.7 | $1,987.6 | 6% | | Commercial construction and transportation | $1,562.8 | $1,302.3 | 20% | | Other | $400.9 | $431.7 | (7)% | | Total GTV | $4,077.4 | $3,721.6 | 10% | Supplemental Pro Forma Lots Sold by Sector (in '000s) | Sector | Q1 2024 | Q1 2023 Pro Forma | % Change | | :--- | :--- | :--- | :--- | | Automotive | 585.3 | 568.4 | 3% | | Commercial construction and transportation | 108.8 | 73.8 | 47% | | Other | 112.5 | 119.1 | (6)% | | Total Lots | 806.6 | 761.3 | 6% | Detailed Financial Review Performance was driven by a 10% pro forma GTV increase and 14% service revenue growth, offset by a 12% drop in inventory sales revenue - GTV increased 10% year-over-year on a pro forma basis, with strength from the commercial construction and transportation sector and the automotive sector[19] - Pro forma service revenue increased 14% YoY, driven by higher GTV and an 80 basis point expansion in the service revenue take rate to 20.8%[19] - Pro forma inventory sales revenue decreased 12% YoY due to lower automotive and commercial construction/transportation revenue[19] - Net income available to common stockholders increased to $97.1 million, primarily due to higher operating income[19] Consolidated Financial Statements The Q1 2024 statements show significant revenue growth, a return to profitability, and improved operating cash flow Condensed Consolidated Income Statements Q1 2024 revenue grew 108% to $1.06 billion, with operating income turning positive to $198.9 million Q1 2024 Income Statement Highlights (in millions, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total revenue | $1,064.7 | $512.4 | | Operating income (loss) | $198.9 | $(24.9) | | Income (loss) before income taxes | $139.9 | $(37.5) | | Net income (loss) | $107.4 | $(28.2) | | Net income (loss) available to common stockholders | $97.1 | $(34.2) | | Diluted earnings (loss) per share | $0.53 | $(0.28) | Condensed Consolidated Balance Sheets The balance sheet remains stable with total assets of $12.05 billion, including $4.53 billion in goodwill Balance Sheet Summary (in millions) | Metric | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total current assets | $1,884.8 | $1,814.0 | | Goodwill | $4,528.8 | $4,537.0 | | Intangible assets, net | $2,853.8 | $2,914.1 | | Total assets | $12,045.2 | $12,037.4 | | Total current liabilities | $1,464.2 | $1,342.7 | | Long-term debt | $2,921.8 | $3,061.6 | | Total liabilities | $6,486.2 | $6,528.0 | | Total stockholders' equity | $5,068.6 | $5,019.0 | Condensed Consolidated Statements of Cash Flows Net cash from operations improved significantly to $124.8 million, while financing activities used $190.9 million Q1 2024 Cash Flow Summary (in millions) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $124.8 | $(57.3) | | Net cash used in investing activities | $(77.5) | $(2,823.0) | | Net cash (used in) provided by financing activities | $(190.9) | $2,958.5 | | (Decrease) Increase in Cash | $(150.5) | $81.1 | Non-GAAP Financial Measures & Reconciliations This section provides reconciliations for key non-GAAP measures, adjusting for acquisition costs and amortization - Beginning in Q1 2024, the company will no longer report non-GAAP adjusted operating income and non-GAAP operating free cash flow[32] Reconciliation of Operating Expenses Total operating expenses of $868.2 million were adjusted to $771.8 million after excluding non-recurring items Reconciliation of Operating Expenses for Q1 2024 (in millions) | Expense Category | As Reported | Adjustments | Adjusted | | :--- | :--- | :--- | :--- | | Cost of services | $353.0 | $2.1 | $355.1 | | Cost of inventory sold | $196.6 | $0.0 | $196.6 | | SG&A | $198.1 | $(15.4) | $182.0 | | Acquisition related and integration costs | $12.8 | $(12.8) | $0.0 | | Depreciation and amortization | $107.7 | $(69.6) | $38.1 | | Total operating expenses | $868.2 | $(96.4) | $771.8 | Adjusted Net Income and Diluted Adjusted EPS Reconciliation Adjusted net income increased 139% to $165.5 million, resulting in a Diluted Adjusted EPS of $0.90 Reconciliation to Adjusted Net Income (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income (loss) available to common stockholders (GAAP) | $97.1 | $(34.2) | | Amortization of acquired intangible assets | $69.6 | $16.6 | | Acquisition-related and integration costs | $12.8 | $126.2 | | Share-based payments expense | $13.3 | $6.7 | | Other adjustments, net | $(5.3) | $(49.1) | | Adjusted net income available to common stockholders (Non-GAAP) | $165.5 | $69.2 | Diluted Adjusted EPS | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.53 | $(0.28) | | Diluted adjusted EPS (Non-GAAP) | $0.90 | $0.57 | Adjusted EBITDA Reconciliation Adjusted EBITDA increased 150% YoY to $331.0 million, reconciled from GAAP net income of $107.4 million Reconciliation to Adjusted EBITDA (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income (loss) (GAAP) | $107.4 | $(28.2) | | Depreciation and amortization | $107.7 | $36.2 | | Interest expense | $63.9 | $20.9 | | Income tax expense (benefit) | $32.5 | $(9.3) | | Interest income | $(6.6) | $(6.3) | | EBITDA | $304.9 | $13.3 | | Other adjustments | $26.1 | $119.3 | | Adjusted EBITDA (Non-GAAP) | $331.0 | $132.6 | Adjusted Net Debt and Adjusted Net Debt/Adjusted EBITDA Reconciliation The adjusted net debt to TTM adjusted EBITDA ratio improved significantly from 5.4x to 2.0x YoY Adjusted Net Debt / Adjusted EBITDA (TTM) | Metric | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Adjusted net debt | $2,488.2 M | $2,675.7 M | | Adjusted EBITDA (TTM) | $1,231.5 M | $492.8 M | | Adjusted net debt/adjusted EBITDA | 2.0x | 5.4x | Shareholder Information The company declared a quarterly cash dividend and announced participation in upcoming investor conferences - The company declared a quarterly cash dividend of $0.27 per common share, payable on June 20, 2024[21] - Upcoming investor events in Q2 2024 include the RBC Canadian Industrials Conference, Jefferies Automotive Conference, and William Blair Growth Conference[22][24] Appendix This section defines key operating metrics and includes the forward-looking statements disclaimer Key Operating Metrics Key metrics used to evaluate business performance include GTV, service revenue take rate, and inventory return - Gross transaction value (GTV): Total proceeds from all items sold at the Company's auctions and online marketplaces[26] - Total service revenue take rate: Total service revenue divided by total GTV[27] - Inventory return: Inventory sales revenue less cost of inventory sold[27] Forward-looking Statements This section outlines forward-looking statements and associated risks detailed in the company's SEC filings - Forward-looking statements involve risks related to the IAA business combination, integration efforts, and the ability to realize anticipated synergies[24] - Other risks are detailed in the company's periodic reports filed with the SEC, including the Form 10-K for the fiscal year ended December 31, 2023[25]