Earnings Call Transcript - RBA Q1 2026

Operator, Operator

Hello, everyone. Thank you for joining us, and welcome to RB Global's First Quarter 2026 Earnings Call. I would now like to hand the conference over to Sameer Rathod, CFA, Vice President, Investor Relations and Market Intelligence. Please go ahead.

Sameer Rathod, Vice President, Investor Relations and Market Intelligence

Hello, and good afternoon. Thank you for joining us today to discuss our first quarter 2026 results. On the call with me today are Jim Kessler, our Chief Executive Officer; and Eric Guerin, our Chief Financial Officer. The following discussion will include forward-looking statements, including projections of future earnings, business, and market trends. These statements should be considered in conjunction with the cautionary statements contained in our earnings release and periodic SEC reports. On this call, we will also discuss certain non-GAAP financial measures. For the identification of these measures, the most directly comparable GAAP financial measures and the applicable reconciliation, please see our earnings release and SEC filings. At this time, I'd like to turn the call over to our CEO, Jim Kessler. Jim?

James Kessler, Chief Executive Officer

Thanks, Sameer, and good afternoon to everyone joining the call. I want to recognize our teams for their continued strong performance, particularly against the backdrop of the complex macro environment. As always, we are focused on the factors within our control to ensure we consistently overdeliver on our commitments and remain a trusted partner to our customers. Our execution in these areas was evident in the first quarter as our growth strategy and operating model continue to demonstrate durability with adjusted EBITDA increasing 11% on a 13% increase in GTV. As we have discussed, expanding and diversifying our business into complementary growth areas is a strategic priority, and we are executing accordingly. In support of that strategy, we recently received HSR approval for the BigIron transaction, satisfying a key regulatory condition, and we now expect to close the transaction in the second quarter. Turning to the Commercial Construction and Transportation sector. Our growth strategy continued to deliver with GTV up 27% year-over-year. We are cautiously optimistic as customer feedback suggests early signs of improving confidence, supported by stabilizing used equipment values and continued activity in mega projects and civil infrastructure. At the same time, we believe that a portion of the quarter's volume growth reflects the early and uneven return of pent-up supply as sellers who deferred decisions in 2025 began to re-enter the market. Turning to the Automotive sector. We delivered another strong quarter despite navigating disruption among our market alliance partners and buyers in the Middle East. Our foremost priority remains the safety and well-being of our teammates in the region. Despite these headwinds, gross returns measured as the salvage values as a percentage of pre-accident cash value continue to expand, supporting approximately 10% year-over-year growth in U.S. insurance Average Selling Prices. We believe this performance underscores the resilience and breadth of our marketplace and reflects our continued progress in enhancing the buyer experience and optimizing the auction format for our sellers. Unit volumes increased 1% year-over-year, marking the fifth consecutive quarter of outperformance relative to the broader market. I am proud of our team's execution as we exceeded all service-level commitments again. Last quarter, we announced an agreement in principle with one of our largest partners, and I am pleased to report that it has now been fully executed. We remain confident in our goal of delivering net market-share gains in 2026, as our focus on driving tangible P&L value for our partners continues to resonate and differentiate our platform. Importantly, in a competitive market, we will remain selective in pursuing volumes. We are prioritizing partners that align with our culture and ensuring the value we've realized from our differentiated marketplace platform reflects the meaningful benefits it delivers to our customers. Our confidence in our goal of continued market share gains was further reinforced at our Industry Leadership Summit, which again achieved record attendance, highlighting our strong and growing partner engagement. Partners walked away excited and energized by our marketplace overall strategic direction, backed by our transparent, data-driven approach and continued innovation. I will now pass the call to Eric to review the financials and updated 2026 outlook.

Eric Guerin, Chief Financial Officer

Thanks, Jim. Total GTV increased by 13% to $4.3 billion in the first quarter. Automotive GTV increased by 7% in the quarter, driven primarily by higher average selling prices and a 1% increase in unit volumes. The average price per vehicle sold increased approximately 6% in the quarter, reflecting strength across both the salvage and remarketed vehicles. Unit-volume growth reflected continued new wins in the sector, though first quarter growth moderated partially due to changes in the auction calendar at the start of the year. In recent months, the inflation differential between automotive repair costs and used-vehicle prices has widened slightly, which continues to support an increase in the total-loss ratio. CCC Intelligent Solutions estimates the total loss frequency across all categories increased by 70 basis points to 23.6% compared to the prior year period. GTV in the Commercial Construction and Transportation sector increased 27%, driven by strength in both unit volumes and ASPs. First quarter results benefited from an outsized contribution related to the auction calendars of certain acquired businesses, which typically host their largest events early in the year. Excluding acquisitions, CC&T GTV increased approximately 16%. As market conditions continue to normalize, we are seeing early, but inconsistent signs of pent-up supply returning, which contributed to higher transaction activities during the quarter. Our ability to capture the growth is enabled by maintaining the industry's most comprehensive network of Territory Managers alongside the continued rollout of targeted programs designed to improve productivity and deepen customer engagement. The average price per lot sold increased due to improvements in the asset mix, while like-for-like pricing remained relatively flat year-over-year. Excluding the impact of our recent acquisitions, total GTV across all sectors increased 9%. We are seeing strong organic growth in the underlying business. Moving to Service Revenue. Service Revenue increased 5% in the quarter, driven by higher GTV partially offset by a decline in the service revenue take rate. The service revenue take rate declined 160 basis points year-over-year to 20.7%. A portion of this decline is optical, reflecting a larger mix of higher ASP assets when compared to the prior year. Under our regressive buyer fee schedule, higher-priced assets fall into lower percentage fee tiers, which can make the reported take rate lower. While the percentage rate is lower, higher ASP items are attractive from a total service revenue dollar perspective. There were additional impacts on the service revenue take rate from recent acquisitions and divestments. Adjusted EBITDA increased 11% in the quarter, driven by higher GTV volumes and increased contribution from inventory returns. These benefits were partially offset by lower service revenue take rate. Our continued focus on cost discipline supported strong profit flow-through, with adjusted EBITDA growth of 11%, outpacing service revenue growth of 5%. Adjusted earnings per share in the first quarter increased by 13%, primarily driven by a higher operating income and a lower net interest expense. Now turning to guidance. We are raising our 2026 outlook and now expect Gross Transaction Value to grow between 6% and 9% for the full year, with Adjusted EBITDA growth of approximately 8% at the midpoint. Note that our updated guidance does not reflect any impact from BigIron. Consistent with our strategy, we remain focused on growing Adjusted EBITDA at a faster rate than service revenue, and view 2026 as a year of volume-led growth. We are concentrating on the elements within our control, including advancing cost savings initiatives, deploying technology designed to enhance yard-level efficiency, and executing against our operating model to drive productivity and operating leverage. With that, let's open the call for questions.

Operator, Operator

Your first question comes from the line of Gary Prestopino with Barrington.

Gary Prestopino, Analyst, Barrington

Jim, Eric, Sameer. As I look back on my notes from last quarter, you had mentioned that there was a plethora of RFPs in the Auto sector that were in the pipeline. Did any of them come to market this quarter? And were there any wins that you could cite that you got from these RFPs that came to market? You said that you have a strong RFP pipeline, so I was just trying to get an idea of what basically came to market this quarter.

James Kessler, Chief Executive Officer

Gary, I do not recall talking about how many RFPs were out there. We typically don't. So I really don't have a comment on that question.

Operator, Operator

Your next question comes from the line of John Healy with Northcoast Research.

John Healy, Analyst, Northcoast Research

Jim, I wanted to ask — last couple of days, we've seen some earnings reports from auto insurers. I think GEICO in particular talked about some dramatic increases in claims frequency that hit the profit line for those guys. Can you talk to what you're seeing out of insurers as it relates to claim frequency? And given the recent strength in used-car prices, might it be likely or prudent to think that maybe total loss frequency may plateau in the near term? Just curious to get your thoughts on the puts and takes as they relate to the funnel of your business.

James Kessler, Chief Executive Officer

John, good question. I'll pass this over to Sameer, who handles a lot of this external information.

Sameer Rathod, Vice President, Investor Relations and Market Intelligence

John, in terms of how we view the market, I've looked at the data you're talking about in terms of used-car pricing increasing a little bit with some of the third-party data. The way we look at it internally is by looking at that inflation spread between cost of repair versus what the Census Bureau comes up with for used-car pricing inflation. Wholesale pricing tends to lead retail pricing slightly. At the moment, we're not noticing any dramatic shifts in terms of claim frequency, but we wouldn't comment specifically about any of our providers.

John Healy, Analyst, Northcoast Research

And then just a follow-up. There's a percentage of your vehicles that go to the Middle East, given the tensions and the war activity. Are cars able to get there right now in any capacity? And is that having any bleed-through impact yet on ASPs on the salvage side?

James Kessler, Chief Executive Officer

John, I'll start and Eric and Sameer feel free to jump in. We look at our whole market alliance and not just one specific segment. Based on what we're seeing in our whole alliance, any time you have a disruption like you do and when you have a conflict in the Middle East, it's going to affect that segment, but we believe we can manage the other segments. Eric gave our guidance, and we feel really confident in that. Based on that guidance, we remain optimistic about international and what it can be for us. Our main concern is the safety of our team, but we believe it's something we can manage within the business and within the guidance that we gave.

Operator, Operator

Your next question comes from the line of Steven Hansen with Raymond James.

Steven Hansen, Analyst, Raymond James

Really strong GTV performance in CC&T. Obviously, I think even ex-acquisition you said up 16%, if I caught that correctly. Just trying to square your comments around seeing pent-up supply returning to the market early on — do you see evidence that's going to continue through into the next quarter or two? How are the auctions in the calendar stacking up thus far in registration? I'm trying to get a sense for whether that's an upfront surge and then plateauing out or if it's going to continue through the balance of the year?

James Kessler, Chief Executive Officer

Steven, I'll start and Eric and Sameer feel free to jump in. I think one of the issues with the cycles that we face is just some lumpiness along with organic growth. We're focused on growing market share in each of the markets that we operate in CC&T. That's our focus. The one thing we can't control is when people decide to dispose of equipment, but when they're ready, our team is ready to handle it. We'll have a little bit of lumpiness, but we feel cautiously optimistic based on what we're seeing from our partners and what the future quarters look like for us.

Steven Hansen, Analyst, Raymond James

Just one follow-up on the M&A side. You've been active; you referenced the BigIron closing early. You also disclosed that you acquired Blackmon in the U.S. South, a smaller deal. Just trying to get a sense for why that was attractive and what the pipeline looks like?

James Kessler, Chief Executive Officer

For Blackmon, their main business is in Arkansas and a bit in Dallas. Arkansas wasn't a geography we had a presence in. They also had a sector in railroads that we found attractive and wanted to leverage with the acquisition. As for BigIron, ag is a very attractive sector in the U.S., something we've been doing for a number of years up in Canada. Those two things made each target attractive to us.

Operator, Operator

Your next question comes from the line of Craig Kennison with Baird.

Craig Kennison, Analyst, Baird

It might be for you, Sameer. I'm wondering if you can help us unpack volume trends for the automotive space. In particular, what was the headwind from the absence of catastrophes this quarter versus the same period last year? And what were the tailwinds from share gains and the total loss rate as it relates to your 1% growth rate overall?

James Kessler, Chief Executive Officer

Craig, I'll start and then pass it over to Sameer. We look at the business a bit longer term than quarter-to-quarter, but we feel really confident about the unit volume increase for the next couple of quarters. I'll pass over to Sameer for any additional color about headwinds and tailwinds.

Sameer Rathod, Vice President, Investor Relations and Market Intelligence

Yes, Craig, I think it's fair to say there are industry dynamics at play in terms of insurance and underinsurance. We reported 1% unit volume growth, and we feel comfortable saying that we are gaining share in the U.S. and globally.

Craig Kennison, Analyst, Baird

And maybe as a follow-up, could you comment on how we should think about your take rate evolving over time, especially when you include BigIron in results?

James Kessler, Chief Executive Officer

Craig, we run our business based on dollars and not a percentage. In attractive sectors like agriculture and especially when you get into a real estate component, that percentage is going to change. As we close this deal, Sameer and Eric will help you understand what it looks like, but we run this business focused on dollars and how we get that to flow through efficiently into our P&L, not by a percentage. I'll pass it over to Eric.

Eric Guerin, Chief Financial Officer

Craig, as Jim commented, when you get higher ASP performance, which we did, and with our regressive tiering on the buyer side, you get a lower reported take rate, but we like the dollars that flow through to our topline. We're focused on making sure we have the most efficient P&L. GSA and ag have different take rates, and we'll provide more detail in the ag space given farm, land, and similar items. Our focus is optimizing the P&L.

Operator, Operator

Your next question comes from the line of Sabahat Khan with RBC Capital Markets.

Sabahat Khan, Analyst, RBC Capital Markets

Given the performance through quarter one, can you dig into what you baked into the guidance in terms of puts and takes? Did the quarter go as expected and does the guidance increase reflect more confidence, or were there share shifts or other trends in the quarter that made you more confident to raise the guide? Trying to understand the qualitative and contrary puts and takes to the extent you can share.

Eric Guerin, Chief Financial Officer

Q1 was in line with our expectations and a little bit ahead, and that's highlighted in the guidance. There are headwinds such as fuel and some other costs, but we have those built into our guidance. On the automotive side, we're gaining share. We believe our 1% growth is continuing to capture share. In CC&T we also believe we're gaining share and have reflected both impacts in the updated guidance.

James Kessler, Chief Executive Officer

At a high level, Eric and I have heard from the team, and we are operating at a very high level across our business. We feel confident in the team's execution and that's why we're able to increase guidance.

Sabahat Khan, Analyst, RBC Capital Markets

On capital allocation and the M&A side: balance sheet is in good shape, you've announced a share buyback program. You've alluded to ag being of interest in the past. Broadly, are you targeting capabilities or regions in the U.S. or around the world for M&A? And where do buybacks rank in the preference order?

Eric Guerin, Chief Financial Officer

What we've done historically — J.M. Wood gave us a different region and capability with municipalities. Blackmon gave us a different region and access to rail. DLG in Australia gave us broader capabilities. Those are the types of opportunities we're looking at: new capabilities or new regions. We're excited about the opportunities, and we have ag with BigIron as another example.

James Kessler, Chief Executive Officer

What excites me is we have the ability to do all of the above. We can enter markets organically — for example, how we entered the salvage market in Australia — or via acquisition, as with IAA and Ritchie Bros. We evaluate whether the best return for investors comes from organic investment or M&A and choose the path that provides the best return. Our team has a strong playbook for both approaches and that's something I'm excited about for the future.

Operator, Operator

Your next question comes from the line of Jeff Lick with Stephens.

Jeffrey Lick, Analyst, Stephens

I was wondering just one point of clarification. The agreement that you talked about today, the auto agreement, is that the one that you talked about in the last call, which was not signed, but was an agreement in principle? Just a clarification there.

Craig Kennison, Analyst, Baird

Correct.

Jeffrey Lick, Analyst, Stephens

Okay, perfect. On the average insurance prices, I think you said they were up 10%. What's driving that? That's a bit of an acceleration over the last two quarters — I think it was 2.5% in Q3 and 7% in Q4. What's driving the acceleration? And as a quick follow-up, on the Middle East situation you referenced, did that have any impact on units?

Sameer Rathod, Vice President, Investor Relations and Market Intelligence

Yes, U.S. insurance ASPs were up 10%. This speaks to the strength of the marketplace. We've made a number of enhancements for the buyer on our website, including more detailed vehicle descriptions and optimizations to the auction format. A lot of this improvement is from those website enhancements and our continued efforts to bring more buyers onto our marketplace.

Jeffrey Lick, Analyst, Stephens

On the Middle East situation, what type of impact did that have on units, if anything?

Sameer Rathod, Vice President, Investor Relations and Market Intelligence

We're not quantifying the number of units. As you can imagine, we do have market alliance partners in that region that are being impacted.

James Kessler, Chief Executive Officer

Like I mentioned earlier, our market alliance is large and spans multiple countries. Based on what's going on, we believe we have a way to navigate this. We're hopeful the conflict ends sooner rather than later. For now, we believe we can manage this within our guidance.

Operator, Operator

Your next question comes from the line of Michael Feniger with Bank of America.

Michael Feniger, Analyst, Bank of America

Eric, SG&A was up about 4% year-over-year and cost of service was flat when GTV is up 11%. Can you talk about the performance in the quarter and what's sustainable? I heard you earlier talk about cost savings and yard efficiency. Did that show up in the quarter? Are those initiatives ongoing or more of a near-term event?

Eric Guerin, Chief Financial Officer

Thanks for the question. Creating operating leverage within this P&L is evergreen — we'll continue to look for opportunities across the business. It can be lumpy quarter-to-quarter; sometimes there's investment in SG&A ahead of volume. Our operations team has been focused on running the business as efficiently as possible, and those types of initiatives will continue moving forward. It's not a one-time event; it's the way we operate the business.

Michael Feniger, Analyst, Bank of America

Is there anything we should think about regarding towing costs, given higher fuel? If fuel stays elevated, do you pass that through or is it a headwind?

James Kessler, Chief Executive Officer

We've built fuel-related headwinds into our guidance. Some contracts allow us to pass fuel costs through, while others do not, in which case it's a headwind for the business. We'll continue to manage that as we move through the year.

Michael Feniger, Analyst, Bank of America

You talked about reserve auctions and pilots in Europe last quarter. Could that be adopted more broadly in the U.S., perhaps in the rental channel? It sounds like there are opportunities for share gains in CC&T.

James Kessler, Chief Executive Officer

We did our first pilot of the reserve/fixed-price auction in the first quarter and were pleased with how it went. We're continuing more of those auctions internationally. We think about it as fixed-price auctions rather than just reserve. It's a large serviceable addressable market. We play in a small part of it today, so there's upside. We'll do reserve auctions where that's how business is done in those markets, but it's not our expectation that we'd broadly convert unreserved markets to reserved formats where they currently operate another way.

Operator, Operator

Your next question comes from the line of Krista Friesen with CIBC.

Krista Friesen, Analyst, CIBC

Could you give a bit more color on how things are going in Australia? Any lessons learned for your land-and-expand strategy as you consider other countries?

James Kessler, Chief Executive Officer

We're happy with performance across many operational metrics in Australia, which are similar to what you see in the U.S., such as net returns and execution. ASPs in Australia are not as high as in the U.S., but they're within our projections and expectations. When considering other countries, we look for markets that operate similarly to Canada, Australia, and the U.K., where we can leverage our scale and playbook. We want countries with similar economic dynamics where a salvaged company entering the market can improve processes and workflows.

Krista Friesen, Analyst, CIBC

On the automotive side, are you seeing any irrational behavior from competitors in the marketplace when it comes to pricing?

James Kessler, Chief Executive Officer

We don't comment on competitors. We stay focused on what we can control and aim to operate in a rational marketplace.

Operator, Operator

Your next question comes from the line of John Gibson with BMO Capital Markets.

John Gibson, Analyst, BMO Capital Markets

On the CC&T side, are you seeing any more insourcing of used equipment sales by dealers? Your results suggest the opposite, but I'm just wondering what you're seeing, especially with some of the newer equipment coming onto the market.

James Kessler, Chief Executive Officer

At Ritchie Bros., we've seen every cycle you can imagine from dealers. I wouldn't say anything is materially different than what we've seen in the past.

Operator, Operator

Your next question comes from the line of Max Sytchev with NBCM.

Maxim Sytchev, Analyst, NBCM

Is it possible to quantify the pull-forward for CC&T in the quarter at all?

James Kessler, Chief Executive Officer

I'll pass this to Eric.

Eric Guerin, Chief Financial Officer

No, we can't quantify the pull-forward. It's more just timing of auction calendars. Early in the year, we had a number of storms and some things moved. Our goal is to optimize our marketplace for buyers and sellers. If things move across quarters, that's not our primary objective.

Maxim Sytchev, Analyst, NBCM

Because of policy uncertainty, there was some hesitancy to transact at some point. Do you feel buyers and sellers are ready to go now? How would you qualify that?

Eric Guerin, Chief Financial Officer

I would say we're cautiously optimistic, but I wouldn't straight-line Q1 performance for the full year. We've highlighted in guidance what we expect for full year performance, and you can use that as a reference point.

Maxim Sytchev, Analyst, NBCM

Can you qualify the DSC impact included and excluded from adjusted EBITDA?

Eric Guerin, Chief Financial Officer

We provided a reconciliation. Broadly, the impact was about $11 million, and we carved out almost half of that. It's disclosed in our financials.

Maxim Sytchev, Analyst, NBCM

Was there anything unusual around the very strong free cash flow and working capital efficiency in Q1?

Eric Guerin, Chief Financial Officer

No, nothing unusual.

Operator, Operator

There are no further questions at this time. I would now like to turn the call back to RB Global's CEO, Jim Kessler, for closing remarks. Please go ahead.

James Kessler, Chief Executive Officer

To close, I want to recognize the teams across RB Global for a strong start to 2026 and the execution discipline that delivered our first quarter results. As we move through the year, our priorities are straightforward: deepen our customer engagement, run the business efficiently, and keep investing in the platform capabilities that drive durable share gains and profitable growth. We appreciate your time today and your continued interest in RB Global. Have a good week and talk to you soon.

Operator, Operator

This concludes today's call. Thank you for attending. You may now disconnect.