RB GLOBAL INC. [RBA] Filings

10-Q 1 rba-20240630.htm 10-Q rba-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024

OR

o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______

Commission file number: 001-13425

RB Global, Inc.



(Exact Name of Registrant as Specified in its Charter)

Canada						98-0626225
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

Two Westbrook Corporate Center, Suite 500,
Westchester, Illinois, USA						60154
(Address of Principal Executive Offices)						(Zip Code)

(708) 492-7000

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares	RBA	New York Stock Exchange
Common Share Purchase Rights	N/A	New York Stock Exchange

Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: 184,254,005 common shares, without par value, outstanding as of July 31, 2024.

Table of Contents

RB GLOBAL, INC.

FORM 10-Q

INDEX


PART I – FINANCIAL INFORMATION
ITEM 1:	Condensed Consolidated Financial Statements:	1
	Condensed Consolidated Income Statements	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Balance Shee ts	3
	Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	7
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	40
ITEM 4:	Controls and Procedures	41

PART II – OTHER INFORMATION
ITEM 1:	Legal Proceedings	42
ITEM 1A:	Risk Factors	42
ITEM 2:	Unregistered Sales of Equity Securities and Use of Proceeds	42
ITEM 3:	Defaults Upon Senior Securities	42
ITEM 4:	Mine Safety Disclosures	42
ITEM 5:	Other Information	42
ITEM 6:	Exhibits	43

SIGNATURES		44

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidated Income Statements (Expressed in millions of U.S. dollars, except share and per share data) (Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Revenue:
Service revenue	$	859.1	$	806.1	$	1,708.2	$	1,149.6
Inventory sales revenue	237.0		300.4		452.6		469.3
Total revenue	1,096.1		1,106.5		2,160.8		1,618.9

Operating expenses:
Costs of services	348.8		287.3		701.8		363.7
Cost of inventory sold	222.7		291.9		419.3		443.4
Selling, general and administrative	208.6		194.5		406.7		342.7
Acquisition-related and integration costs	4.1		46.3		16.9		172.5
Depreciation and amortization	110.3		109.6		218.0		145.8
Total operating expenses	894.5		929.6		1,762.7		1,468.1
Gain on disposition of property, plant and equipment	0.3		2.7		2.7		3.9
Operating income	201.9		179.6		400.8		154.7

Interest expense	(59.9)		(65.0)		(123.8)		(85.9)
Interest income	6.8		5.0		13.4		11.3
Other income (loss), net	(0.2)		0.2		(1.0)		2.6
Foreign exchange loss	(1.0)		(0.4)		(1.9)		(0.7)
Income before income taxes	147.6		119.4		287.5		82.0

Income tax expense	36.6		32.6		69.1		23.4
Net income	$	111.0	$	86.8	$	218.4	$	58.6

Net income attributable to:
Controlling interests	$	111.1	$	86.9	$	218.5	$	58.8

Redeemable non-controlling interests	(0.1)		(0.1)		(0.1)		(0.2)
Net income	$	111.0	$	86.8	$	218.4	$	58.6

Net income attributable to controlling interests	111.1		86.9		218.5		58.8
Cumulative dividends on Series A Senior Preferred Shares	(6.7)		(6.7)		(13.4)		(10.9)
Allocated earnings to Series A Senior Preferred Shares	(3.7)		(2.8)		(7.3)		(3.7)
Net income available to common stockholders	$	100.7	$	77.4	$	197.8	$	44.2

Earnings per share available to common stockholders:
Basic	$	0.55	$	0.43	$	1.08	$	0.29
Diluted	$	0.54	$	0.42	$	1.07	$	0.29

Weighted average number of shares outstanding:
Basic	183,887,145		181,860,026		183,473,233		151,343,397
Diluted	184,912,584		182,810,399		184,746,818		152,404,830

See accompanying notes to the condensed consolidated financial statements.


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Condensed Consolidated Statements of Comprehensive Income (Expressed in millions of U.S. dollars) (Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Net income	$	111.0	$	86.8	$	218.4	$	58.6
Other comprehensive income (loss), net of income tax:
Foreign currency translation adjustment	(10.5)		17.9		(35.5)		33.0
Comprehensive income	$	100.5	$	104.7	$	182.9	$	91.6

Comprehensive income attributable to:
Controlling interests	$	100.6	$	104.8	$	183.0	$	91.8
Redeemable non-controlling interests	(0.1)		(0.1)		(0.1)		(0.2)
Comprehensive income	$	100.5	$	104.7	$	182.9	$	91.6

See accompanying notes to the condensed consolidated financial statements.


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Condensed Consolidated Balance Sheets (Expressed in millions of U.S. dollars, except share data) (Unaudited)


	June 30, 2024		December 31, 2023
Assets

Cash and cash equivalents	$	599.5	$	576.2
Restricted cash	146.1		171.7
Trade and other receivables, net of allowance for credit losses of $8.7 and $6.4, respectively	911.8		731.5
Prepaid consigned vehicle charges	57.2		66.9
Inventory	145.9		166.5
Other current assets	82.9		91.2
Income taxes receivable	22.2		10.0
Total current assets	1,965.6		1,814.0

Property, plant and equipment, net	1,230.9		1,200.9
Operating lease right-of-use assets	1,455.2		1,475.5
Other non-current assets	92.6		85.6
Intangible assets, net	2,791.5		2,914.1
Goodwill	4,526.4		4,537.0
Deferred tax assets	16.7		10.3
Total assets	$	12,078.9	$	12,037.4

Liabilities, Temporary Equity and Stockholders' Equity

Auction proceeds payable	$	651.0	$	502.5
Trade and other liabilities	709.1		685.8
Current operating lease liabilities	115.2		118.0
Income taxes payable	8.7		8.5
Short-term debt	29.9		13.7
Current portion of long-term debt	4.3		14.2
Total current liabilities	1,518.2		1,342.7

Long-term operating lease liabilities	1,345.4		1,354.3
Long-term debt	2,822.6		3,061.6
Other non-current liabilities	87.6		86.7
Deferred tax liabilities	657.2		682.7
Total liabilities	6,431.0		6,528.0

Temporary equity:
Series A Senior Preferred Shares; shares authorized, issued and outstanding: 485,000,000 (December 31, 2023: 485,000,000)	482.0		482.0
Redeemable non-controlling interest	8.3		8.4

Stockholders' equity:
Senior preferred and junior preferred stock, unlimited shares authorized; shares issued and outstanding, other than Series A Senior Preferred Shares: nil (December 31, 2023: nil)	—		—
Common stock, no par value, unlimited shares authorized; shares issued and outstanding: 184,238,275 (December 31, 2023: 182,843,942)	4,132.7		4,054.2
Additional paid-in capital	81.9		88.0
Retained earnings	1,020.2		918.5
Accumulated other comprehensive loss	(79.5)		(44.0)
Stockholders' equity	5,155.3		5,016.7
Non-controlling interests	2.3		2.3
Total stockholders' equity	5,157.6		5,019.0
Total liabilities, temporary equity and stockholders' equity	$	12,078.9	$	12,037.4

See accompanying notes to the condensed consolidated financial statements.


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Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Expressed in millions of U.S. dollars, except where noted) (Unaudited)


				Redeemable non- controlling interest		Attributable to common stockholders									Non- controlling interest		Total stockholders' equity
	Senior A Senior Preferred Shares					Common stock			Additional paid-In capital		Retained earnings		Accumulated other comprehensive loss
	Number of shares	Amount				Number of shares	Amount
Three months ended June 30, 2024
Balance, March 31, 2024	485,000,000	$	482.0	$	8.4	183,610,424	$	4,094.5	$	73.1	$	967.7	$	(69.0)	$	2.3	$	5,068.6
Net income	—	—		(0.1)		—	—		—		111.1		—		—		111.1
Other comprehensive loss	—	—		—		—	—		—		—		(10.5)		—		(10.5)
	—	—		(0.1)		—	—		—		111.1		(10.5)		—		100.6
Stock option exercises	—	—		—		352,048	21.0		(4.3)		—		—		—		16.7
Issuance of common stock related to vesting of share units	—	—		—		23,173	0.9		(1.9)		—		—		—		(1.0)
Issuance of common stock related to ESPP	—	—		—		257,051	16.3		(3.2)		—		—		—		13.1
Share-based continuing employment costs related to business combinations	—	—		—		(4,421)	—		(0.2)		—		—		—		(0.2)
Share-based payments expense	—	—		—		—	—		17.9		—		—		—		17.9
Equity-classified share units dividend equivalents	—	—		—		—	—		0.5		(0.5)		—		—		—
Participating dividends on Series A Senior Preferred Shares	—	—		—		—	—		—		(1.8)		—		—		(1.8)
Preferred dividends on Series A Senior Preferred Shares	—	—		—		—	—		—		(6.7)		—		—		(6.7)
Dividends paid to common stockholders	—	—		—		—	—		—		(49.6)		—		—		(49.6)
Balance, June 30, 2024	485,000,000	$	482.0	$	8.3	184,238,275	$	4,132.7	$	81.9	$	1,020.2	$	(79.5)	$	2.3	$	5,157.6

Three months ended June 30, 2023
Balance, March 31, 2023	485,000,000	$	482.0	$	8.8	181,788,431	$	3,984.5	$	88.8	$	858.2	$	(70.0)	$	2.3	$	4,863.8
Net income	—	—		(0.1)		—	—		—		86.9		—		—		86.9
Other comprehensive income	—	—		—		—	—		—		—		17.9		—		17.9
	—	—		(0.1)		—	—		—		86.9		17.9		—		104.8
Stock option exercises	—	—		—		81,797	4.0		(0.8)		—		—		—		3.2
Issuance of common stock related to vesting of share units	—	—		—		113,748	6.3		(11.1)		—		—		—		(4.8)
Share-based continuing employment costs related to business combinations	—	—		—		—	0.3		0.5		—		—		—		0.8
Share-based payments expense	—	—		—		—	—		11.9		—		—		—		11.9
Equity-classified share units dividend equivalents	—	—		—		—	—		0.4		(0.4)		—		—		—
Participating dividends on Series A Senior Preferred Shares	—	—		—		—	—		—		(1.8)		—		—		(1.8)
Preferential dividends on Series A Senior Preferred Shares	—	—		—		—	—		—		(6.7)		—		—		(6.7)
Dividends paid to common stockholders	—	—		—		—	—		—		(49.1)		—		—		(49.1)
Balance, June 30, 2023	485,000,000	$	482.0	$	8.7	181,983,976	$	3,995.1	$	89.7	$	887.1	$	(52.1)	$	2.3	$	4,922.1


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				Redeemable non- controlling interest		Attributable to common stockholders									Non- controlling interest		Total stockholders' equity
	Senior A Senior Preferred Shares					Common stock			Additional paid-In capital		Retained earnings		Accumulated other comprehensive loss
	Number of shares	Amount				Number of shares	Amount
Six months ended June 30, 2024
Balance, December 31, 2023	485,000,000	$	482.0	$	8.4	182,843,942	$	4,054.2	$	88.0	$	918.5	$	(44.0)	$	2.3	$	5,019.0
Net income	—	—		(0.1)		—	—		—		218.5		—		—		218.5
Other comprehensive loss	—	—		—		—	—		—		—		(35.5)		—		(35.5)
	—	—		(0.1)		—	—		—		218.5		(35.5)		—		183.0
Stock option exercises	—	—		—		862,758	49.1		(10.3)		—		—		—		38.8
Issuance of common stock related to vesting of share units	—	—		—		278,945	13.1		(25.3)		—		—		—		(12.2)
Issuance of common stock related to ESPP	—	—		—		257,051	16.3		(3.2)		—		—		—		13.1
Share-based continuing employment costs related to business combinations	—	—		—		(4,421)	—		(0.2)		—		—		—		(0.2)
Share-based payments expense	—	—		—		—	—		32.0		—		—		—		32.0
Equity-classified share units dividend equivalents	—	—		—		—	—		0.9		(0.9)		—		—		—
Participating dividends on Series A Senior Preferred Shares	—	—		—		—	—		—		(3.6)		—		—		(3.6)
Preferential dividends on Series A Senior Preferred Shares	—	—		—		—	—		—		(13.4)		—		—		(13.4)
Dividends paid to common stockholders	—	—		—		—	—		—		(98.9)		—		—		(98.9)
Balance, June 30, 2024	485,000,000	$	482.0	$	8.3	184,238,275	$	4,132.7	$	81.9	$	1,020.2	$	(79.5)	$	2.3	$	5,157.6

Six months ended June 30, 2023
Balance, December 31, 2022	—	$	—	$	—	110,881,363	$	246.3	$	85.3	$	1,043.2	$	(85.1)	$	0.5	$	1,290.2
Net income	—	—		(0.2)		—	—		—		58.8		—		—		58.8
Other comprehensive income	—	—		—		—	—		—		—		33.0		—		33.0
	—	—		(0.2)		—	—		—		58.8		33.0		—		91.8
Stock option exercises	—	—		—		101,074	4.9		(0.9)		—		—		—		4.0
Issuance of common stock related to vesting of share units	—	—		—		410,653	15.1		(32.3)		—		—		—		(17.2)
Issuance of common stock related to business combination	—	—		—		70,339,723	3,713.2		—		—		—		—		3,713.2
Share-based continuing employment costs related to business combinations	—	—		—		—	0.6		1.0		—		—		—		1.6
Replacement of share-based awards in business combination	—	—		—		—	—		13.1		—		—		—		13.1
Share-based payments expense	—	—		—		—	—		22.6		—		—		—		22.6
Equity-classified share units dividend equivalents	—	—		—		—	—		0.9		(0.9)		—		—		—
Non-controlling interest acquired in business combination	—	—		8.9		—	—		—		—		—		1.8		1.8
Issuance of Series A Senior Preferred Shares and common stock, net of issuance costs	485,000,000	482.0		—		251,163	15.0		—		—		—		—		15.0
Participating dividends on Series A Senior Preferred Shares	—	—		—		—	—		—		(3.6)		—		—		(3.6)
Preferential dividends on Series A Senior Preferred Shares	—	—		—		—	—		—		(10.9)		—		—		(10.9)
Dividends paid to common stockholders	—	—		—		—	—		—		(199.5)		—		—		(199.5)
Balance, June 30, 2023	485,000,000	$	482.0	$	8.7	181,983,976	$	3,995.1	$	89.7	$	887.1	$	(52.1)	$	2.3	$	4,922.1

See accompanying notes to the condensed consolidated financial statements.


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Condensed Consolidated Statements of Cash Flows (Expressed in millions of U.S. dollars) (Unaudited)


Six months ended June 30,	2024		2023
Cash provided by (used in):
Operating activities:
Net income	$	218.4	$	58.6
Adjustments for items not affecting cash:
Depreciation and amortization	218.0		145.8
Share-based payments expense	35.1		25.0
Deferred income tax benefit	(31.0)		(18.2)
Unrealized foreign exchange loss	0.4		6.8
Gain on disposition of property, plant and equipment	(2.7)		(3.9)
Allowance for expected credit losses	4.9		—
Loss on redemption of Notes	—		3.3
Gain on remeasurement of investment upon acquisition	—		(1.4)
Amortization of debt issuance costs	6.7		4.6
Amortization of right-of-use assets	75.8		37.9
Other, net	9.6		0.7
Net changes in operating assets and liabilities	(73.1)		(209.3)
Net cash provided by operating activities	462.1		49.9
Investing activities:
Acquisition of IAA, net of cash acquired	—		(2,755.2)
Acquisition of VeriTread, net of cash acquired	—		(24.7)
Property, plant and equipment additions	(73.9)		(92.2)
Proceeds on disposition of property, plant and equipment	1.0		31.1
Intangible asset additions	(56.2)		(44.9)
Repayment of loans receivable	4.0		1.6
Issuance of loans receivable	(5.5)		(7.7)
Other	(1.1)		(0.5)
Net cash used in investing activities	(131.7)		(2,892.5)
Financing activities:
Issuance of Series A Senior Preferred Shares and common stock, net of issuance costs	—		496.9
Dividends paid to common stockholders	(98.9)		(199.5)
Dividends paid to Series A Senior Preferred shareholders	(17.0)		(13.4)
Proceeds from exercise of options and share option plans	51.9		4.0
Payment of withholding taxes on issuance of shares	(11.2)		(14.5)
Net increase (decrease) in short-term debt	16.2		(11.5)
Proceeds from long-term debt	—		3,175.0
Repayment of long-term debt	(252.2)		(602.2)
Payment of debt issue costs	—		(41.6)
Repayment of finance lease and equipment financing obligations	(12.9)		(9.0)
Proceeds from equipment financing obligations	1.7		—
Net cash (used in) provided by financing activities	(322.4)		2,784.2
Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash	(10.3)		5.8
Net decrease in cash, cash equivalents, and restricted cash	(2.3)		(52.6)
Cash, cash equivalents, and restricted cash, beginning of period	747.9		625.9
Cash, cash equivalents, and restricted cash, end of period	$	745.6	$	573.3

See accompanying notes to the condensed consolidated financial statements.


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Notes to the Condensed Consolidated Financial Statements (Unaudited)

1. Description of Business and Basis of Preparation

Description of Business

RB Global, Inc. and its subsidiaries (collectively referred to as the “Company”, “RB Global”, “we”, “us”, or “our”) is a leading, omnichannel marketplace that provides value-added insights, services and transaction solutions for buyers and sellers of commercial assets and vehicles worldwide. The Company has auction sites in 13 countries and a digital platform to serve customers in more than 170 countries across a variety of asset classes, including automotive, commercial transportation, construction, government surplus, lifting and material handling, energy, mining and agriculture.

The Company's marketplace brands include Ritchie Bros., the world's largest auctioneer of commercial assets and vehicles offering online bidding, and IAA, a leading global digital marketplace connecting vehicle buyers and sellers. RB Global's portfolio of brands also includes Rouse Services, which provides a complete end-to-end asset management, data-driven intelligence and performance benchmarking system, SmartEquip, an innovative technology platform that supports customers' management of the equipment lifecycle and integrates parts procurement with both original equipment manufacturers and dealers, and VeriTread, an online marketplace for heavy haul transport.

RB Global, Inc. is a company incorporated in Canada under the Canada Business Corporations Act, whose shares are publicly traded on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange (“TSX”).

Basis of Preparation

These unaudited condensed consolidated interim financial statements have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”). They include the accounts of RB Global, Inc. and its subsidiaries from their respective dates of formation, acquisition, or control. All significant intercompany balances and transactions have been eliminated.

Certain information and footnote disclosure required by US GAAP for complete annual financial statements have been omitted and, therefore, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023, included in the Company’s 2023 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated interim financial statements follow the same accounting policies and methods of application as the Company's most recent annual audited consolidated financial statements. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly, in all material respects, the Company’s consolidated financial position, results of operations, cash flows, and changes in temporary equity and stockholders' equity for the interim periods presented. The preparation of financial statements in conformity with US GAAP requires management to make judgments, estimates, and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Unless otherwise indicated, all amounts in the following tables are in millions except share and per share amounts.

2. Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which will require enhanced annual disclosures regarding rate reconciliations and expanded disclosures of income taxes paid information. The amendments are effective for the Company for fiscal year 2025, with early adoption permitted.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which will require enhanced disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"). The amendments are effective for the Company for fiscal year 2024 and for interim periods within fiscal year 2025, with early adoption permitted.


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2. Recent Accounting Pronouncements (continued)

The Company is currently evaluating the impact of the adoption of the above ASUs on its consolidated financial statements and related disclosures.

3. Business Combinations

(a)IAA Acquisition

On March 20, 2023, the Company completed its acquisition of IAA, Inc. ("IAA") for a total purchase price of approximately $6.6 billion. The Company acquired IAA to create a leading omnichannel marketplace for vehicle buyers and sellers. IAA stockholders received $12.80 per share in cash and 0.5252 shares of the Company for each share of IAA common stock they owned (the “Exchange Ratio”). As such, the Company paid $1.7 billion in cash consideration and issued 70.3 million shares of its common stock. In addition, the Company repaid $1.2 billion of IAA’s net debt, which included all outstanding borrowings and unpaid fees under IAA’s credit agreement and $500.0 million principal amount of IAA senior notes, at a redemption price equal to 102.75% of the principal amount plus accrued and unpaid interest. IAA’s outstanding equity awards were also cancelled and exchanged into equivalent outstanding equity awards relating to the Company’s common stock, based on the equity award exchange ratio of 0.763139.

The acquisition was accounted for in accordance with ASC 805, Business Combinations. The following table summarizes the final allocation of the purchase price to the fair value of assets acquired and liabilities assumed:


Purchase price (cash: $1,714.2 million; fair value of common shares issued: $3,712.9 million; repayment of net debt: $1,157.1 million; reimbursement of costs: $48.8 million; and fair value of exchanged equity awards: $13.1 million)	$	6,646.1

Assets acquired
Cash and cash equivalents	166.6
Trade and other receivables	497.3

Inventory	57.1
Other current assets	28.0
Income taxes receivable	0.6
Property, plant and equipment	618.5
Operating lease right-of-use assets	1,289.7
Other non-current assets	34.8
Intangible assets	2,712.1

Liabilities assumed
Auction proceeds payable	60.7
Trade and other liabilities	257.0
Current operating lease liability	77.5
Income taxes payable	3.5
Long-term operating lease liability	1,192.7
Other non-current liabilities	24.3
Deferred tax liabilities	689.5

Fair value of identifiable net assets acquired	3,099.5
Goodwill acquired on acquisition	$	3,546.6


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3. Business Combinations (Continued)

The following table summarizes the final fair values of the identifiable intangible assets acquired:


Asset	Fair value at acquisition		Weighted average amortization period
Customer relationships	$	2,293.5	15 years
Developed technology	245.2		4 years
Trade names and trademarks	166.6		5 years
Software under development	6.8		—
Total	$	2,712.1	13.4 years

Goodwill relates to synergies expected to be achieved from the operations of the combined company, the assembled workforce of IAA, and intangible assets that do not qualify for separate recognition. Expected synergies include both increased revenue opportunities and the cost savings from the planned integration of platform infrastructure, facilities, personnel, and systems. The transaction is considered a non-taxable business combination and the goodwill is not deductible for tax purposes.

(b)VeriTread Acquisition

On January 3, 2023, the Company acquired 8,889,766 units of VeriTread, for $25.1 million cash consideration from its existing unitholders and acquired another 1,056,338 units through an investment of $3.0 million cash. As a result, the Company increased its investment in VeriTread to 75% and obtained control of VeriTread pursuant to an amended operating agreement on January 18, 2023. Immediately prior to the acquisition, the Company owned 11% of VeriTread, with an acquisition date fair value of $4.3 million based on the per unit purchase price, and therefore, upon remeasurement of its previously held interest, the Company recorded a gain of $1.4 million in other income, net at acquisition. VeriTread is a transportation technology company that provides an online marketplace solution for open deck transport, connecting shippers and service providers.

Concurrently, the Company entered into a put/call agreement with one of the minority unitholders of VeriTread for its remaining units, another 21% ownership interest. Pursuant to this agreement, the minority unitholder has rights, in certain circumstances, to put or sell its remaining units of VeriTread to the Company, subject to VeriTread achieving certain performance targets at a predetermined value or fair value, depending on the timing and targets achieved. The Company also has the right to call or purchase the remaining units of the minority unitholder upon achievement of certain integration milestones at fair value. The redeemable non-controlling interest is classified in temporary equity on the interim condensed consolidated balance sheet. On the acquisition date the Company determined that redemption of the redeemable non-controlling interest was probable. An additional non-controlling interest of 4% held in VeriTread is classified within equity as that interest does not contain put/call options.


Purchase price (cash: $28.1 million; and fair value of previously held equity interest: $4.3 million)	$	32.4

Fair value of identifiable net assets acquired	17.9
Redeemable non-controlling interest	(8.9)
Non-controlling interest	(1.8)

Goodwill acquired on acquisition	$	25.2

The final fair value of identifiable net assets acquired consists of cash and cash equivalents of $3.4 million, trade and other receivables and other current assets of $0.9 million, trade and other liabilities of $1.1 million, and identifiable intangible assets of $14.7 million as summarized in the following table:


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3. Business Combinations (Continued)

Asset

Fair value
at acquisition

Weighted average
amortization period

Customer relationships

7.2

5 years

Software and technology assets

7.1

7 years

Trade names and trademarks

0.4

2 years

Total

14.7

5.9 years

Goodwill relates to benefits expected from the acquisition of VeriTread’s business, its assembled workforce and associated technical expertise, as well as anticipated synergies from applying VeriTread’s transportation platform, network of transport carriers, equipment database and services to the Company’s customer base. This acquisition is expected to accelerate the Company’s marketplace strategy, which brings services, insights, and transaction solutions together to improve the overall customer experience. The transaction is considered a non-taxable business combination and the goodwill is not deductible for tax purposes.

4. Segment Information

The Company has one operating and reportable segment which reflects the manner in which the CODM, the Company's Chief Executive Officer, reviews and assesses the performance of the business and allocates resources. The CODM does not evaluate the performance of the Company or allocate resources at any level below the consolidated level or based on the Company's assets and liabilities.

The following table summarizes revenue by geographic area based on the location of the underlying auction activity or rendering of services:


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
United States	$	767.5	$	754.3	$	1,558.7	$	1,114.4
Canada	193.3		188.3		335.7		256.6
Europe	76.5		91.8		163.6		142.5
Australia	34.2		46.2		61.8		65.3
Other	24.6		25.9		41.0		40.1
Total revenue	$	1,096.1	$	1,106.5	$	2,160.8	$	1,618.9

5. Revenue

The following table summarizes the Company's revenue from the rendering of services and the sale of inventory:


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Commissions	$	236.3	$	233.3	$	463.7	$	363.8
Buyer fees	485.2		465.1		987.9		604.6
Marketplace services revenue	137.6		107.7		256.6		181.2
Total service revenue	859.1		806.1		1,708.2		1,149.6

Inventory sales revenue	237.0		300.4		452.6		469.3
Total revenue	$	1,096.1	$	1,106.5	$	2,160.8	$	1,618.9

Commissions are earned from consignors on the sale of consigned assets from live and online auctions, through online marketplaces, and through private brokerage services. Buyer fees are fees earned from the purchasers of consigned assets and inventory. Marketplace services revenue includes fees earned from services provided to customers such as refurbishment, parts procurement, data,


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5. Revenue (continued)

transportation and logistics, inspection, appraisal, listings, financing, and title and liens processing, as well as other auction-related fees.

During the three and six months ended June 30, 2024, approximately 21% and 22%, respectively, of consolidated revenues were associated with vehicles supplied by the Company's three largest provider customers.

6. Operating Expenses

Acquisition-Related and Integration Costs

Acquisition-related and integration costs consist of operating expenses incurred in connection with business combinations, such as due diligence, advisory, legal, integration, severance, acceleration of share-based payments expense, and share-based continuing employment costs. Integration costs primarily include expenses incurred with third-parties to support integration activities to achieve cost synergies and integration goals relating to recent acquisitions.

The following table summarizes acquisition-related and integration costs by significant acquisition and nature:


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
IAA acquisition
Financing	$	—	$	—	$	—	$	30.0
Severance	2.5		8.7		7.7		22.7
Integration	1.6		12.0		7.0		17.1
Acceleration of share-based payments expense	—		0.9		0.9		5.9
Legal	—		2.6		—		12.1
Investment banking, consulting and other acquisition-related costs	—		2.7		1.1		64.3
Settlement of pre-existing contractual arrangement	—		16.3		—		16.3
	4.1		43.2		16.7		168.4
Other acquisitions	—		3.1		0.2		4.1
Total acquisition-related and integration costs	$	4.1	$	46.3	$	16.9	$	172.5

Depreciation and Amortization


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Depreciation	$	25.3	$	25.5	$	50.2	$	37.0
Amortization	85.0		84.1		167.8		108.8
	$	110.3	$	109.6	$	218.0	$	145.8

7. Income Taxes

Income tax expense for interim periods is based upon an estimate of the annual effective tax rate, adjusted for the effects of any significant and infrequent or unusual items required to be recognized discretely within the current interim period. The estimated income tax expense reflects, among other items, management’s best estimate of operating results. It does not include the estimated impact of foreign exchange rate fluctuations or unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes.

The Company's effective tax rate was 24.8% for the three months ended June 30, 2024 and 24.0% for the six months ended June 30, 2024. The variance from the statutory federal and provincial tax rate in British Columbia, Canada of 27.0% relates primarily to a higher estimate of income taxed in jurisdictions with lower tax rates.


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7. Income Taxes (continued)

The Canada Revenue Agency (“CRA”) has been conducting audits of the Company’s 2014, 2015, 2018, and 2020 taxation years. If the CRA challenges the manner in which the Company has filed its tax returns and reported its income with respect to any of the audits, the Company will have the option to appeal any such decision. While the Company believes it is, and has been, in full compliance with Canadian tax laws and expects to vigorously contest any proposed assessments or any notice of assessments or reassessments received from the CRA, the Company is unable to predict the ultimate outcome of these audits and the final disposition of any appeals pertaining to such audits. If the CRA makes an adverse determination and the Company is unsuccessful in appealing such determination reflected in any assessment or reassessment, then the Company could incur additional income taxes, penalties, and interest, which could have a material negative effect on its operations.

On February 13, 2023, the CRA issued a proposal letter to Ritchie Bros. Auctioneers (International) Ltd. asserting that one of its Luxembourg subsidiaries was a resident in Canada from 2010 through 2015 and that its worldwide income should be subject to Canadian income taxation. The Luxembourg subsidiary was in operation from 2010 until 2020. In the event that the CRA issues a notice of assessment or reassessment, the Company expects to vigorously contest such notice as the Company disagrees with the assertion regarding Canadian residency. In the event that a court of competent jurisdiction makes a final determination that the income of the Luxembourg subsidiary for 2010 through 2015 was subject to Canadian income tax laws, the Company may ultimately be liable for additional total Canadian federal and provincial income tax of approximately $26.0 million - $30.0 million, exclusive of interest and penalties, for the period specified in the proposal letter. The CRA may also challenge the manner in which the Company has filed its tax returns and reported its income with respect to 2016 to 2020 taxation years and may assert that the income of the Luxembourg subsidiary was subject to Canadian income tax because the Luxembourg subsidiary was also resident in Canada during these years. The Company could then incur additional income taxes, penalties and interest which could have a material negative effect on its operations.

The Company replied to the CRA’s proposal letter on June 12, 2023, and is awaiting a response. This matter with the CRA could take numerous years to be ultimately resolved.

8. Earnings Per Share Available to Common Stockholders

Basic earnings per share ("EPS") available to common stockholders has been calculated by dividing the net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS available to common stockholders was calculated by dividing the net income available to common stockholders by the weighted average number of shares of common stock outstanding, if the potentially dilutive securities had been issued.

Potentially dilutive securities include unvested performance based restricted share units ("PSUs"), unvested restricted share units ("RSUs"), outstanding stock options and stock committed under the Employee Stock Purchase Plan ("ESPP"). The dilutive effect of potentially dilutive securities is reflected in diluted EPS by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities.


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Net income available to common stockholders	$	100.7	$	77.4	$	197.8	$	44.2

Denominator:
Basic weighted average shares outstanding	183,887,145		181,860,026		183,473,233		151,343,397
Weighted average effect of dilutive securities:
Share units	434,999		460,400		630,431		545,905
Stock options and ESPP	590,440		489,973		643,154		515,528
Diluted weighted average shares outstanding	184,912,584		182,810,399		184,746,818		152,404,830

Earnings per share available to common stockholders:
Basic	$	0.55	$	0.43	$	1.08	$	0.29
Diluted	$	0.54	$	0.42	$	1.07	$	0.29


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9. Supplemental Cash Flow Information

Net Changes in Operating Assets and Liabilities


Six months ended June 30,	2024		2023
Trade and other receivables	$	(192.1)	$	(204.7)
Prepaid consigned vehicle charges	9.5		(47.1)
Inventory	9.9		(19.1)
Advances against auction contracts	12.6		(4.6)
Prepaid expenses and deposits	(6.0)		0.1
Income taxes receivable	(12.4)		(39.4)
Auction proceeds payable	154.8		118.2
Trade and other liabilities	20.0		79.6
Income taxes payable	0.1		(40.9)
Operating lease obligations	(60.7)		(43.8)
Other	(8.8)		(7.6)
Net changes in operating assets and liabilities	$	(73.1)	$	(209.3)

Other Supplemental Cash Flow Information


Six months ended June 30,	2024		2023
Interest paid, net of interest capitalized	$	120.4	$	61.7
Interest received	13.4		11.3
Net income taxes paid	113.1		122.5

Non-cash purchase of property, plant and equipment under finance lease	15.7		7.9
Non-cash operating right of use assets obtained in exchange for new lease obligations	66.3		52.2

10. Fair Value Measurement

The following table summarizes the fair values and carrying amounts of the Company's financial instruments that are required to be recorded or disclosed at fair value on a recurring basis:


		June 30, 2024				December 31, 2023
	Category	Carrying amount		Fair value		Carrying amount		Fair value
Loans receivable	Level 2	$	39.5	$	39.5	$	37.7	$	37.6
Derivative financial assets	Level 2	0.1		0.1		0.4		0.4

Contingent consideration liability	Level 3	5.4		5.4		5.2		5.2
Long-term debt
Secured Notes	Level 1	544.0		559.3		543.2		565.1
Unsecured Notes	Level 1	790.2		837.0		789.5		848.0
Term loans	Level 2	1,492.7		1,503.2		1,743.1		1,758.1

The fair value of the loans receivable with a maturity date greater than one year are determined by estimating discounted cash flows using market rates. The fair value of the derivative financial assets, which consist of forward currency contracts, are determined using observable inputs, including foreign currency spot exchange rates and forward pricing curves, and considers the credit risk of the Company and its counterparties. The fair value of the contingent consideration liability, which relates to IAA's acquisition of Marisat, Inc. in 2021, is determined using certain unobservable inputs, including the likelihood of the achievement of volume targets. The fair values of the Secured Notes and Unsecured Notes are determined by reference to a quoted market price traded in an over-the-counter broker market. The carrying values of the term loans, before deduction of deferred debt issuance costs, approximate their fair values as the interest rates on the loans are short-term in nature.


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11. Derivative Financial Instruments

The Company enters into forward currency contracts from time to time to manage its exposure to foreign currency exchange rate fluctuations recognized by its subsidiaries on certain monetary loan receivables and significant intercompany balances. The unrealized gain (loss) on forward currency contracts recognized within foreign exchange loss is as follows:


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Unrealized gain (loss) on forward currency contracts	$	—	$	0.3	$	(0.3)	$	(0.1)

The total gross notional amount of forward currency contracts as of June 30, 2024 is $43.5 million (December 31, 2023: $33.9 million).

12. Trade and Other Receivables


	June 30, 2024		December 31, 2023
Advanced charges receivable	$	310.7	$	374.7
Trade accounts receivable	562.6		315.8
Consumption taxes receivable	20.0		21.1
Loans receivable	22.3		21.8