RB Global Inc T.RBA

RBC

[retiredcf]

May 7, 2024

RB Global Inc.
Strong Edmonton auction results are a positive early data point for Q2

NYSE: RBA | USD 71.88 | Outperform | Price Target USD 93.00

Sentiment: Positive

Event: RB Global announced the results for its April 29 – May 3 Edmonton auction today. The auction generated a Canadian record GTV of ~C$250 million, which was +11% YoY. The # of lots sold at the auction (at ~14,500) was +21% YoY, while average pricing (GTV/lot) was -8% YoY. See Exhibit 1 below for detailed metrics on the company's April/May Edmonton auctions since 2021.

Our view – a positive data point for Q2 2024: The trend of increasing GTV being driven by volume (partially offset by a decline in average pricing) has been playing out for multiple quarters now (see our Orlando auction note here for additional perspective), which we believe is reflective of normalizing equipment availability (following COVID-related supply chain disruptions) amidst an uncertain macro backdrop. Looking ahead, we believe an improvement in new equipment availability could result in a (continued) increase in used equipment transacting through the "legacy" RB Global platforms. While this may coincide with lower prices (recall that the "legacy" RB Global business has attractive countercyclical characteristics that provide stability through the cycle, whereby a decline in pricing usually coincides with an increase in supply of equipment transacting through the company's channels), we note that the "legacy" RB Global business has historically performed well when transaction volumes increase as the company has typically been able to cross-sell high-margin ancillary services on the greater volume transacting through the company's channels.

RB Global will report Q1 2024 results after market close on May 9, 2024, which we expect will provide investors with additional perspective on the above-noted industry trends.