RB GLOBAL INC. Q4 FY2024 earnings call

• Strategic Focus: Three key areas: premium price performance for transacted assets, growing enterprise partner base (including insurance in automotive and large fleet owners in CC&T), and driving growth with regional CC&P customers. - Technology and Investments: Launched rbauction.com on a modern tech stack, welcomed senior leaders (Eric as CFO, Steve Lewis as COO, Nancy King as CTO), and acquired Boom & Bucket. - Operational Commitment: Emphasized putting partners first, over-delivering commitments, and focusing on operational efficiency and excellence.

Automotive: Fourth quarter automotive GTV increased by 4% driven by a 7% increase in unit volumes, though average price per vehicle sold declined. Excluding catastrophe-related impacts, automotive GTV would have declined approximately 4% while unit volumes would have increased by approximately 1%. Commercial Construction and Transportation (CC&T): GTV decreased by 1% due to a decline in the average price per lot sold, partially offset by an 18% increase in lot volumes. The average price per lot sold declined due to asset mix and continued deflation in asset values; excluding the impact of the Yellow Corporation bankruptcy, the GTV decline in CC&T would have been approximately 2%. Service revenue: Increased by 8% due to a higher service revenue take rate and higher GTV, with the service take rate increasing approximately 110 basis points year-over-year to 21.3%. Adjusted EBITDA: Increased 13% on expansion in service revenue take rate, higher GTV, and higher contribution from inventory returns. Adjusted EBITDA as a percentage of GTV increased to 8.4% compared to 7.7% in the prior year.

• Full year gross transaction values expected to grow between 0% and 3% YOY, with Q1 2025 facing mid-single digit decline. - Full year adjusted EBITDA expected between $1.32 billion and $1.38 billion (1%-6% YOY growth). - Full year 2025 GAAP and adjusted tax rate expected between 25% and 28%. - Full year capital expenditures expected between $350 million and $400 million, a step-up from 2024.

• Macro environment uncertainty: Partners facing wait and see on tariffs, interest rates, and mega projects. - Unique event impacts: CC&T facing challenges from past events like Yellow Corp bankruptcy and COVID affecting GTV comparisons.

Q: Just a quick question on the market share gains that you described. I mean how do you feel about progressing that through the balance of '25?

A: Steven, Jim. Great question. I'm just going to stick to what's in our control. We're going to be very focused on providing the highest level of service to our partners. And more specifically, the team is very focused on, especially in this environment, how do we add value to our partners so they can see in their P&L. And that's what the team is really focused on. And we believe by staying focused on that, that's going to produce the outcome which we want as additional market share. But to fully answer your question, the one part of the equation is not in my control of when someone says yes. So what we're going to stay focused on is what is in our control and make sure we keep delivering value to our partners.

Q: Just on the GTV growth outlook, you mentioned, obviously Q1, a tough comp. Is there any help you can kind of give us between the split of auto which seems like you guys are gaining share versus the commercial transportation?

A: Yes. I'll start and Michael -- and then I'll pass it over to Eric to add any more color if he would like. Let me just start with automotive first. Just as a reminder, the carrier loss that we announced a little bit over a year ago. This is the last quarter that we have to do with that conversation. And then all other gains that we talked about start to kick in. So I think we feel really good about the trajectory of automotive of where it is. When we get into CC&T along with Yellow, I just want to remind the group -- and this really goes back to when COVID created very erratic supply chain and equipment wasn't getting produced and then a couple of years later, equipment got new equipment got produced and then there was a lot of disposal and with the very large strategic accounts we have, we got the benefit over a year ago, well, that disposal never going up against it. And I don't consider that -- I think about it like Yellow. It was really the COVID was a onetime event that happened. We got the benefit. So to me, when you really look over 2 years, you kind of get a normalized growth rate that you would expect for this sector. And that's what you will see. So that's why we're just calling it out because they're very unique things that have happened over that time period. And then when we start looking into the back half, it starts to look normal without those things. We still have Yellow that we have to deal with for the whole year but that starts to become less as you go out the year. Eric, is there anything you would like to add?

A: I think, Jim, you covered it.

Q: Jim, you mentioned in the CC&T business, kind of a wait and see market. And I think that was an appropriate description last quarter as well. Wondering what you see as a potential trigger to change the nature of this market so that transactions start to flow a little better?

A: Yes. Look, for us, we're constantly in communication with our partners. I think interest rates not really coming down further, where I think everyone would have hoped there would have been some more cuts which were there then attracted, okay, do I invest in new equipment going through it, wait and see with tariffs. I think some of our partners are waiting to see these mega projects, do they come to fruition, what's going to happen with the new administration. I think everyone has hope of what's going to happen. But like all this, we have to manage our balance sheet and our cash flow. And the great thing for our business, we realize we're not going to control their decision of when they make the decision to do dispositions. But again, we're going to add value, no matter if the data insights, if it's transportation services, inspections, appraisals, everything we can do to help them optimize their P&L and when they're ready for dispositions. And I think we showed it when COVID happened and all that new equipment came in, they had a disposal of equipment. I don't think there was anyone else with our scale that could have helped them in that time to manage premium price to get this through the auction channels that we have. So I think we've showed when someone is ready to make the decision, we're the right partner and to be able to help them with it. So that's what we stay focused on.