RB Global's Q3 2025: Contradictions Emerge on Growth Guidance, Commercial Segment Behavior, Automotive Tariff Impacts, and GTV Growth Expectations

Guidance:

• Full-year 2025 gross transaction value (GTV) growth expected to be 0%–1%.
• Raising full-year 2025 adjusted EBITDA guidance to $1.35B–$1.38B.
• Guidance excludes any CAT-related GTV contribution due to unpredictability (Q4 2024 CAT ~ $169M automotive GTV).
• Expect to realize > $25M total run-rate savings by Q2 2026 from the new operating model.
• Expect lower adjusted tax rates going forward due to captured tax deductions.

Business Commentary:

* Automotive Sector Performance and Market Share Gains: - RB Global's automotive sector achieved a 9% increase in unit volume year-over-year, outperforming the market and solidifying its market share gains. - This growth was driven by disciplined execution, operational efficiency, and a robust marketplace with superior liquidity and pricing. -

• Growth in Commercial, Construction, and Transportation Sector:
• The commercial, construction, and transportation sector experienced 14% year-over-year GTV growth, excluding the impact of the Yellow Corporation bankruptcy.
• Growth was attributed to strategic M&A, territory manager optimization, and productivity initiatives to drive growth and efficiency.

• Expansion in Remarketed Vehicles Partnership with GSA:

• RB Global expanded its partnership with the US General Services Administration (GSA) to provide disposition services for approximately 35,000 remarketed vehicles annually.

• This expansion was due to the strength of the platform, breadth of marketplace, scale of physical footprint, and proven execution, leading to cost savings and operational simplification for GSA.

• Operational Efficiency and Cost Savings:

• The company's new transformative operating model is expected to generate over $25 million in total run rate savings by the second quarter of 2026.
• The model aims to unlock sustainable growth, drive long-term value, and enhance efficiency through role clarity and focus on customer needs.

• Financial Performance and Guidance:

• Adjusted EBITDA increased by 16%, driven by GTV growth, expanded service revenue take rate, and higher inventory returns.
• The company raised its full-year 2025 adjusted EBITDA guidance range to $1.35 billion-$1.38 billion, reflecting continued operational discipline and efficiency gains.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted operational and financial execution: GTV +7% and adjusted EBITDA +16% in the quarter; raised full-year adjusted EBITDA guide to $1.35B–$1.38B; secured GSA remarketing contract for ~35,000 vehicles; SLAs at 99.7%/99.8%; expect >$25M run-rate savings by Q2 2026.

Q&A:

• Question from Sabahat Khan (RBC Capital Markets): Can you give the setup on how you view both segments heading into the tail end of the year and the puts/takes that led to the nudge-up in guidance?
  Response: GTV guidance was tightened to 0%–1% (not increased); adjusted EBITDA guide was raised due to operational improvements and realized savings from the new operating model, including some Q4 savings and expected ~$25M run-rate benefit.

• Question from Sabahat Khan (RBC Capital Markets): On the GSA agreement: what services were you providing before and should we assume economics on these remarketed vehicles are similar to salvage?
  Response: Previously provided marshaling/custody; new contract adds disposition/remarketing services — a different, revenue-generating model that will be accretive to automotive ASPs versus pure salvage.

• Question from Steve Hansen (Raymond James): What exactly are you getting from the Western Australia deal beyond white space and how appealing is that market; what's the broader pipeline?
  Response: The acquisition fills out Western Australia, adding local sales expertise and relationships to enable service across all Australia; it fits the pipeline focus on geographic expansion and targeted tuck-ins.

• Question from Steve Hansen (Raymond James): How do you view the opportunity for continued automotive market share gains and do you have visibility on contracts that will drive further share?
  Response: Management emphasized outperforming via execution: high SLAs (~99%+) and improved operations drive market-share gains; they are optimistic but declined to disclose specific pending deals.

• Question from Krista Friesen (CIBC): Can you quantify JM Wood contribution versus organic to GTV?
  Response: JM Wood contributed roughly a 2% tailwind to overall GTV (across CC&T and some automotive).

• Question from Krista Friesen (CIBC): Any change in geographic mix—Canada/international versus U.S.—heading into Q4?
  Response: Management reported growth across all geographies where they operate; no specific change in mix called out for Q4.

• Question from Craig Kennison (Baird): Why did you narrow the GTV range (top end down) for Q4?
  Response: With one quarter left management increased visibility and tightened GTV to 0%–1%; they also noted the prior-year Q4 included a significant CAT event (~$169M GTV) that is unlikely to repeat.

• Question from Craig Kennison (Baird): Are you exposed to risks in the broader used-car/subprime ecosystem?
  Response: Exposure is limited: whole-car business focuses on lower-value slightly damaged vehicles (generally below higher-ticket used-car segments), and repossession activity can even benefit from subprime dynamics.

• Question from Gary Prestopino (Barrington Research): Is the GSA contract for whole cars and will they appeal to your buyer base (e.g., buy-here-pay-here dealers or exports)?
  Response: Yes—these are whole-life fleet vehicles attractive to RB's buyer base; buyers are expected to be a mix of domestic dealers and exporters.

• Question from Gary Prestopino (Barrington Research): Any update on the yellow iron sector—are owners still holding equipment?
  Response: The sector remains uncertain due to tariffs, steel issues and interest-rate uncertainty; customers are cautious, and RB is positioned to capture value when disposition demand resumes.

• Question from Steve Hansen (Raymond James): On the new operating model and $25M run-rate savings, what's the rollout pace, milestones, and upside potential?
  Response: The operating model focuses on clarity and efficiency (not just cuts); management has line of sight to the >$25M run-rate savings by Q2 2026 via role consolidations and phased transitions, with flexibility to reallocate savings to growth investments.

• Question from Steve Hansen (Raymond James): Regarding M&A, will you pursue specialty/narrow auctions or more deals like JM Wood?
  Response: M&A priorities are geographic fills and acquisitions that add vertical expertise which can be scaled—both specialty verticals and geographic tuck-ins fit the strategy.

Contradiction Point 1

Growth Guidance and Market Outlook

It involves changes in financial guidance and market outlook, which are critical for investor expectations and strategic planning.

What is the current status of both segments as the year ends, in light of the revised guidance? - Sabahat Khan(RBC Capital Markets)

2025Q3: The guidance for GTV was tightened to 0%-1%. We did not push it up, but we wanted to provide a more pointed guide. - Jim Kessler(CEO)

Based on H1 performance, is there room to increase EBITDA within full-year guidance? - Sabahat Khan(RBC Capital Markets)

2025Q2: Eric is confident in the current guidance, showing acceleration in growth in the second half. - Eric Guerin(CFO)

Contradiction Point 2

Market Share and Customer Behavior in the Commercial Segment

It highlights differing perspectives on the market share growth and customer behavior in the Commercial segment, which could impact strategic decision-making and investor confidence.

Can you outline the current setup for both segments as we approach year-end, considering the updated guidance? - Sabahat Khan (RBC Capital Markets)

2025Q3: Customers are uncertain now due to higher interest rates and tariff impacts. They are optimistic about potential mega projects but cautious about investing. - Jim Kessler(CEO)

How are customers in the Commercial segment positioned regarding recent macroeconomic uncertainties? - Sabahat Khan (RBC Capital Markets)

2025Q1: Customers are uncertain now due to higher interest rates and tariff impacts. They are optimistic about potential mega projects but cautious about investing. - Jim Kessler(CEO)

Contradiction Point 3

Impact of Tariffs and Pricing on the Automotive Sector

It involves differing views on the impact of tariffs and pricing on the automotive sector, which can influence financial forecasts and strategic decisions.

How do you see market share growth moving forward in the automotive sector? - Steve Hansen (Raymond James)

2025Q3: The back half is looking better than the first half, and we are guiding to GTV growth of 0%-1% in the second half of the year. - Eric Guerin(CFO)

How will tariffs and pricing affect the automotive sector? - Michael Feniger (Bank of America)

2025Q1: The impact of tariffs on pricing is uncertain. - Sameer Rathod(VP, Investor Relations & Market Intelligence)

Contradiction Point 4

GTV Growth and Segment Performance Expectations

It involves the company's expectations for GTV growth and segment performance, which are critical for investor understanding of business performance and growth prospects.

Can you outline the current setup for both segments as we approach year-end, given the updated guidance? - Sabahat Khan(RBC Capital Markets)

2025Q3: We had a solid Q3 performance. GTV grew by 1.4% and 1.1% in our auto and CC&T segments, respectively. Given the improved market environment, we now expect full-year GTV growth in the range of 0% to 1%. - Jim Kessler(CEO)

Could you break down the GTV growth outlook for the auto and CC&T segments? - Michael Feniger(Bank of America)

2024Q4: Automotive is gaining share, while CC&T faces a tough comp due to Yellow's bankruptcy. Normalizing growth in CC&T would be expected without these unique events. We expect full-year GTV growth between 0% and 3%. - Jim Kessler(CEO)