Global Asset Disposition Platform Trading at a Discount to Intrinsic Value

RB Global, Inc. is the world's largest marketplace for used industrial equipment, vehicles, and other assets, operating through three primary segments:

• Ritchie Bros. (Equipment Auctions): The legacy business operates live and online auctions for construction, agricultural, and transportation equipment. Revenue is generated through commissions on GTV, buyer fees, and value-added services. The segment serves equipment owners, dealers, and rental companies globally.
• IAA (Insurance Auto Auctions): Acquired in 2023, IAA is a leading marketplace for total-loss, salvage, and recovered-theft vehicles, primarily serving insurance companies. Revenue comes from seller commissions and buyer fees. IAA processes millions of vehicles annually through its network of 200+ facilities.
• Rouse Services and Other: Provides data analytics, valuation tools, and subscription services to equipment owners and lenders. This high-margin segment generates recurring revenue and enhances the core marketplace's price discovery capabilities.

How it makes money: The company earns transaction fees (commissions and buyer premiums) on GTV, subscription fees for data services, and ancillary revenue from logistics, financing referrals, and inspection services. The model is scalable—incremental GTV flows through at high incremental margins.

Customers: Equipment owners (construction, agriculture, transportation), equipment dealers, rental companies, insurance carriers, fleet operators, and financial institutions. No single customer represents a material concentration risk.

Scale: With a $14.5B market cap, 185.2M shares outstanding, and operations spanning 200+ countries, RB Global is the undisputed leader in its niche. Annual GTV exceeds $10B, with the majority now transacted online.

Near-term (12-18 months):

• IAA synergy realization: Management targets $250M+ in run-rate synergies; each $50M increment adds roughly $0.20 to EPS.
• Used equipment pricing stabilization: Rouse indices suggest pricing has bottomed; a rebound would drive higher GTV and commissions.
• Online penetration: Currently ~70% of GTV is online; shifting more transactions online reduces costs and expands margins.
• Insurance salvage volumes: Total-loss frequency remains elevated post-pandemic, supporting IAA volumes even as used vehicle values normalize.

Medium-term (3-5 years):

• International expansion: Ritchie Bros. has significant runway in Latin America, Asia, and the Middle East, where equipment auction markets remain fragmented.
• Data monetization: Rouse Services and pricing indices represent a nascent but high-margin revenue stream that could scale to $200M+ annually.
• Adjacent verticals: Expansion into industrial machinery, energy equipment, and government surplus auctions.
• Capital allocation: Deleveraging below 3.0x net debt/EBITDA would enable increased buybacks, accretive at current valuations.

Narrative: The step-change in revenue from FY2022 to FY2023 reflects the IAA acquisition, which roughly doubled the revenue base. Gross margins compressed initially due to IAA's lower-margin profile but are recovering as synergies phase in. EBITDA margin expansion from 28% to a projected 38% by FY2026 is the key earnings driver, powered by cost synergies, real estate consolidation, and operating leverage on incremental GTV. EPS growth of ~20% annually is achievable even with modest GTV growth, as margin expansion and debt reduction amplify bottom-line results. Free cash flow conversion should improve as capex normalizes post-integration.

Market Size/TAM: The global used equipment and vehicle auction market is estimated at $300B+ in annual transaction value, with the U.S. insurance salvage market alone representing roughly $10B in GTV. Online penetration is accelerating, and RB Global is well-positioned to capture share.

Competitive Positioning: RB Global operates a duopoly in insurance salvage (with Copart) and holds a leading position in industrial equipment auctions. The company's competitive advantages include:

• Unmatched global scale and liquidity
• Proprietary data and pricing indices
• Diversified revenue across multiple verticals
• Strong buyer/seller network effects

Named Comparables:

• Copart (CPRT): Direct competitor in insurance salvage; trades at higher multiples due to superior margins and growth.
• eBay (EBAY): Broader marketplace platform with some overlap in vehicle and industrial categories.
• Kar Auction Services (KAR): Competitor in vehicle remarketing, though less diversified.
• Herc Holdings (HRI): Equipment rental company that provides a cyclical read-through for used equipment demand.

DCF Discussion: Using a weighted average cost of capital of approximately 8.5% (reflecting the low beta of 0.52 and investment-grade credit profile) and a terminal growth rate of 3.0%, a discounted cash flow analysis yields an intrinsic value range of $95–$110 per share. Key assumptions include 6-8% annual GTV growth, EBITDA margins expanding to 38%, and FCF conversion improving to 80%+ of net income. At $78.56, the stock trades at a 20-30% discount to DCF fair value.

Comparable Company Multiples:

RBA trades at a discount to Copart—its closest comparable—despite comparable network effects and a more diversified revenue base. The discount reflects integration risk and cyclical concerns, both of which appear overdone at current levels.

• Cyclical Demand Risk: Construction and transportation equipment demand is tied to economic activity; a recession could reduce GTV and commission revenue.
• IAA Integration Execution: Failure to realize projected synergies or unexpected integration costs could pressure margins and delay EPS accretion.
• Insurance Salvage Volume Risk: Declining total-loss frequency (due to improved vehicle safety) or insurer insourcing could reduce IAA volumes.
• Competitive Pressure: Copart and other competitors could aggressively price to gain share, compressing industry margins.
• Regulatory and Litigation Risk: Auction operations are subject to environmental, transportation, and consumer protection regulations; adverse outcomes could increase costs.
• High Short Interest: While a squeeze is possible, sustained bearish positioning could pressure the stock if operational results disappoint.