TSX:RBA - Post Discussion
Post by
retiredcf on Feb 27, 2024 12:47pm
RBC Report
February 27, 2024
RB Global Inc.
Orlando auction results reflect higher YoY GTV
NYSE: RBA | USD 77.13 | Outperform | Price Target USD 93.00
Sentiment: Positive
Event: RB Global announced the results for its February 2024 Orlando auction, the company’s largest auction of the year. The Orlando auction generated a GTV of US$258+ million, which was +5.7% YoY. The # of lots sold at the auction (at ~16,500) was +24.1% YoY, while average pricing (GTV/lot) was -14.8% YoY. See Exhibit 1 below for detailed metrics from the company's February Orlando auctions since 2020.
Our view – a positive data point for Q1 2024: The results from the February 2024 Orlando auction highlight higher YoY GTV (+5.7% YoY), which reflected a higher # of lots (+24.1% YoY) being partially offset by lower pricing (-14.8% YoY). Based on commentary from our covered companies and their peers, we believe we are now past the period of tight equipment availability, with the current period being more reflective of improved new equipment supply amidst an uncertain macro backdrop. We believe this could result in a (continued) increase in used equipment transacting through the "legacy" RB Global platforms (which are largely exposed to the commercial construction and transportation sector).
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.
Recall that RB Global reported strong Q4 results last week, reflecting good results from both the “legacy” RB Global business and the acquired IAA business. Looking ahead, the company's 2024 guidance points to GTV growth of +1%-4% (vs. +9.7% YoY in 2023 on a pro-forma basis), with RB Global calling out strength in the commercial construction and transportation sector (which we believe is supported by today's Orlando auction results).
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