Commercial vehicle marketplace RB Global’s revenue declined in the third quarter as commercial construction and transportation gross transaction values fell despite an increase in lots sold.
Still, auctions of bankrupt Yellow Corp.’s equipment helped minimize the decline of gross transaction values (GTV) for the commercial construction and transportation segment to 10% year over year, Chief Financial Officer Eric Guerin said during today’s earnings call.
“Asset mix headwinds stemmed from lot volume growth from rental and transportation industries, where asset values are intrinsically at lower average sales prices [ASPs],” he said. “Excluding the impact of the Yellow Corp. bankruptcy, GTV decline in the commercial construction and transportation sector would have been approximately 14%.”
STATE OF PLAY:
RB Global, parent company of equipment auctioneer Ritchie Bros., blamed the slowdown in the third quarter on customers adopting a “wait-and-see” approach to the auction market, RB Global CEO James Kessler said during the call.
“Historically, these wait-and-see moments are brief. However, they do cause headwinds in our marketplace for the supply of higher ASP assets,” he said. “The current environment, combined with the elevated volumes and prices we experienced last year due to the lingering impacts from COVID, has created difficult year-on-year comparisons that mask the underlying progress of our growth initiatives.
BY THE NUMBERS:
RB Global total revenue and sales revenue declined in Q3 as benefits from the Yellow auctions could not offset declining values for commercial construction, transportation and automotive units, according to today’s 10-Q filing with the Securities and Exchange Commission.
For the quarter ending Sept. 30, RB Global reported:
- Total revenue of $981.8 million, down 3.7% YoY;
- Inventory sales revenue of $201.9 million, down 17.9% YoY;
- Commercial construction and transportation GTV of $1.2 billion, down 10% YoY;
- Commercial construction and transportation lots sold of 103,100, up 19% YoY;
- Total GTV landed at $3.6 billion, down 6.5% YoY;
- Total lots sold reached 797,700, down 0.2% YoY;
- Total inventory rate fell 230 basis points to 4.2%.
NOTEWORTHY:
Despite the slowdown in Q3, RB Global maintained its forecast for GTVs to land between 0% and 2% growth in 2024, Guerin said.
“However, given the various puts and takes we see with the hurricane-related volumes and continued pressure on commercial construction and transportation ASPs, we think we will be at the lower end of the range,” he said.
As sales and values decline, RB Global continues to target organic growth initiatives, including increasing the North American workforce by 10%, Sameer Rathod, vice president of investor relations and market intelligence, said during the earnings call.
“Construction OEM sales are weaker and people are still assessing the outlook,” he said. “We’re focused on servicing our customers and partners best we can regardless of what happens, and remember, we are investing in organic growth initiatives to drive secular growth.”
MARKET REACTION: Shares of RB Global Inc. (NYSE: RBA) were up 2.82% or $2.52 from market open to $91.86 as of market close today. RB Global has a market capitalization of $16.5 billion.
