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What changed in RB GLOBAL INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of RB GLOBAL INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+636 added−518 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-21)

Top changes in RB GLOBAL INC.'s 2023 10-K

636 paragraphs added · 518 removed · 262 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMachine Learning also supports important strategic and operational decisions such as site expansion, testing marketplace performance, and experimentation with improved formats. ​ ​ ​ ​ Ritchie Bros. 10 ​ Table of Contents Our People ​ Human Capital At December 31, 2022, we employed approximately 2,800 full-time employees (up 3.7% from 2021) and 1,400 part-time employees (down 12.5%) worldwide, representing approximately 67% and 33%, respectively, of our global workforce.
Biggest changeSocial Human Capital With the completion of the acquisition of IAA on March 20, 2023, we now employ approximately 7,900 full-time employees (up 182% from approximately 2,800 in 2022) and 1,700 part-time employees (up 21% from 1,400 in 2022) worldwide, representing approximately 82% and 18%, respectively, of our global workforce at December 31, 2023.
As a result, a change in the revenue mix between service revenues and revenue from inventory sales can have a significant impact on revenue growth percentages. Governmental Regulations and Environmental Laws Our operations are subject to a variety of federal, provincial, state and local laws, rules, and regulations throughout the world.
As a result, a change in the revenue mix between service revenue and revenue from inventory sales can have a significant impact on our revenue growth percentages. Governmental Regulations and Environmental Laws Our operations are subject to a variety of federal, provincial, state and local laws, rules, and regulations throughout the world.
We engage our customers to optimize the use and efficiency of equipment, to re-use, refurbish and recycle before disposition, as extending the life of heavy equipment is core to our business model. In turn, we believe this reduces waste and lessens the need to extract natural resources to produce equipment.
We engage our customers to optimize the use and efficiency of equipment, to re-use, refurbish and recycle before disposition, as extending the life of heavy equipment and vehicles is core to our business model. In turn, we believe this reduces waste and lessens the need to extract natural resources to produce equipment.
We believe that, among other things, laws, rules, and regulations related to the following list of items affect our business: ● Imports and exports of equipment. Particularly, there are restrictions in the U.S. and Europe that may affect the ability of equipment owners to transport certain equipment between specified jurisdictions.
We believe that, among other things, laws, rules, and regulations related to the following list of items affect our business: • Imports and exports of commercial assets. Particularly, there are restrictions in the U.S. and Europe that may affect the ability of equipment owners to transport certain equipment between specified jurisdictions.
In addition to the other services listed in the table below, we also provide the following value-added services to our customers: ● conducting title searches, where registries are commercially available, to ensure equipment is sold free and clear of all liens and encumbrances (if we are not able to deliver clear title, we provide a full refund up to the purchase price to the buyer); ● making equipment available for inspection, testing, and comparison by prospective buyers; ● displaying high-quality, zoomable photographs of equipment on our website; ● providing 360-degree video inspection technology to increase buyer confidence in equipment being purchased; ● providing industry-leading professional equipment inspections and reports; ● providing free detailed equipment information on our website for most equipment; ● providing access to insurance and powertrain warranty products; ● providing access to commercial transportation companies and customs brokerages through our logistical services; ● handling all pre-auction marketing, as well as collection and disbursement of proceeds; ● providing equipment sales and rental data intelligence and performance benchmarking solutions; and ● providing an innovative technology platform that supports customers' management of the equipment lifecycle and integrates parts procurement with both original equipment manufacturers and dealers.
In addition to the services listed in the table above, we also provide the following value-added services to our customers: • Conducting title searches, where registries are commercially available, to help ensure equipment sold through RB Global is free and clear of all liens and encumbrances (if we are not able to deliver clear title, we provide a full refund up to the purchase price to the buyer); • Making equipment available for inspection, testing, and comparison by prospective buyers; • Displaying high-quality, zoomable photographs of equipment on our website; • Providing 360-degree video inspection technology to increase buyer confidence in equipment being purchased; • Providing industry-leading professional equipment inspections and reports; • Providing free detailed equipment information on our website for most equipment; • Providing access to commercial transportation companies and customs brokerages through our logistical services; • Handling all pre-auction marketing, as well as collection and disbursement of proceeds; • Providing equipment sales and rental data intelligence and performance benchmarking solutions; and • Providing an innovative technology platform that supports customers' management of the equipment lifecycle and integrates parts procurement with both original equipment manufacturers and dealers.
Our 2022 completion rate for the safety onboarding program was 93.4% (2021: 98%). ​ We also have a risk management process to support our safety orientation programs and our health and safety commitment which ensures that our employees are exposed to the lowest possible level of risk.
Our 2023 completion rate for the safety onboarding program was 93.2% (2022: 93.4%). We also have a risk management process to support our safety orientation programs and our health and safety commitment, which ensures that our employees are exposed to the lowest possible level of risk.
Our technology capabilities are delivering choices for our customers in the form of multiple channels for buyers and sellers, meeting customer’s asset management needs through information-rich software solutions and leveraging our rich data repository to drive strong sales and improved pricing decisions.
Our technology capabilities also deliver choices for our customers in the form of multiple channels for buyers and sellers, meeting customer’s asset management needs through information-rich software solutions and leveraging our rich data repository to drive strong sales and improved pricing decisions.
Additional information related to Ritchie Bros. is also available on SEDAR at www.sedar.com. ​ As a Canada Business Corporations Act (“CBCA”) company with our principal place of business in Canada, U.S. civil liabilities may not be enforceable against us. Please see “Item 1A.
Additional information related to RB Global, Inc. is also available on SEDAR at www.sedar.com. As a Canada Business Corporations Act (“CBCA”) company with our principal place of business in Canada, U.S. civil liabilities may not be enforceable against us. Please see “Part I, Item 1A.
With the exception of our CEO, our Board of Directors consists of elected independent individuals and are selected in accordance with our Director Selection Guidelines to promote diversity. ​ Oversight of our ESG enterprise strategy is provided by the Nominating and Corporate Governance Committee, while our ESG Steering Committee provides strategic direction and oversight of ESG across key business functions.
With the exception of our CEO, our Board of Directors consists of elected independent members. Oversight of our ESG enterprise strategy is provided by the Nominating and Corporate Governance Committee, while our ESG Steering Committee provides strategic direction and oversight of ESG across key business functions.
We collectively refer to guarantee and inventory contracts as underwritten or “at-risk” contracts. In 2022, our underwritten business accounted for approximately 19% of our GTV, compared to 18% in 2021 and 20% in 2020. Value-added services We also provide a wide array of value-added services to make the process of selling and buying equipment convenient for our customers.
We collectively refer to guarantee and inventory contracts as underwritten or “at-risk” contracts. Other value-added services We also provide a wide array of value-added services to make the process of selling and buying equipment and vehicles convenient for our customers.
Approximately 36% of our full-time employees are women and 64% are men, consistent with 2021. ​ ​ Ritchie Bros. 12 ​ Table of Contents ​ ​ In 2022 and beyond, we will continue to measure and analyze recruitment efforts and strive to increase the number of candidates and hires from underrepresented groups.
Approximately 44% of our full-time employees are women and 56% are men (2022: 36% women and 64% men). Gender Representation We will continue to measure and analyze our recruitment efforts and strive to increase the number of candidates and hires from underrepresented groups.
We own or hold the rights to use valuable intellectual property such as trademarks, service marks, domain names and tradenames. We protect our intellectual property in Canada, the U.S., and internationally through federal, provincial, state, and common law rights, including registration of certain trademark and service marks for many of our brands, including our core brands.
We protect our intellectual property in Canada, the U.S., and internationally through federal, provincial, state, and common law rights, including registration of certain trademark and service marks for many of our brands, including our core brands. We also have secured patents for inventions and have registered our domain names.
These laws often impose liability without regard to whether the owner or lessee or other person knew of, or was responsible for, the presence of such hazardous or toxic substances. ● Worker health and safety, privacy of customer information, and the use, storage, discharge, and disposal of environmentally sensitive materials.
These laws often impose liability without regard to whether the owner or lessee or other person knew of, or was responsible for, the presence of such hazardous or toxic substances. • Worker health and safety, privacy of customer information, and the use, storage, discharge, and disposal of environmentally sensitive materials. • The acquisition and sale of totaled and recovered theft vehicles are regulated by state or other local motor vehicle departments in each of the locations in which we operate.
Available Information We file with the SEC reports on Form 10-K, Form 10-Q, Form 8-K, proxy materials and other filings required under the Exchange Act.
Available Information We file with the SEC reports on Form 10-K, Form 10-Q, Form 8-K, proxy materials and other filings required under the Exchange Act. Investors may access any materials we file with the SEC through the EDGAR database on the SEC’s website at www.sec.gov.
We also have secured patents for inventions and have registered our domain names. ​ We rely on contractual restrictions and rights to protect certain of our proprietary rights in products and services. Effective protection of our intellectual property can be expensive to maintain and may require litigation.
We rely on contractual restrictions and rights to protect certain of our proprietary rights in products and services. Effective protection of our intellectual property can be expensive to maintain and may require litigation. We must protect our intellectual property rights and other proprietary rights in many jurisdictions throughout the world.
Straight or guarantee commission contracts will result in the commission being recognized as service revenue, while inventory contracts will result in the gross transaction value of the equipment sold being recorded as inventory sales revenue with the related cost recognized in cost of inventory sold.
Completed straight commission, fixed commission or guarantee commission contracts result in the commission being recognized as service revenue based on a percentage of gross transaction value or based on a fixed value, while completed inventory contracts result in the full GTV of the assets sold being recorded as inventory sales revenue.
Our annual TRIR goal is to meet or do better by being below the industrial average. TRIR for 2022 was 1.14 (2021: 1.38), which was below the industrial average. Every region within our organization also has a Safety Steering team that provides feedback on our safety journey and assists in identifying issues or concerns that may arise.
TRIR for 2023, inclusive of IAA's TRIR post acquisition and excluding the impact of COVID-19 reportable incidences, was 1.05 (2022: 1.14), which was below the industrial average. Every region within our organization also has a Safety Steering team that provides feedback on our safety journey and assists in identifying issues or concerns that may arise.
We have also established an ESG Working Group for the implementation of ESG initiatives across the organization. ​ We will continue to integrate ESG across our teams and are working to dedicate additional roles to ESG to provide support and momentum behind our ESG programs. ​ The Role of Technology Implementing a modern architecture on which we can scale and grow profitably is a core strategic pillar for Ritchie Bros.
We will continue to integrate ESG across our teams and are working to dedicate additional roles to ESG to provide support and momentum behind our ESG programs. RB Global, Inc. 12 Table of Contents The Role of Technology Building a modern architecture on which we can scale and grow profitably is a core element of our growth strategy.
As a result, we conducted six new hire bootcamp workshops. ​ ​ Ritchie Bros. 11 ​ Table of Contents We continue to look for ways to create on the-job learning opportunities so that our employees feel invested and engaged. Employees are involved in strategic initiatives and finding ways to better serve our customers and each other.
We continue to look for ways to create on the-job learning opportunities so that our employees feel invested and engaged. Employees are involved in strategic initiatives and finding ways to better serve our customers and each other. Health & Safety Safety is a top priority at RB Global and core to who we are.
Our risk management process begins with an annual review of all incidents from the prior year to identify trends to see if we need to address findings through changes in our policies and procedures. Daily, our employees conduct either a field level hazard assessment or complete a risk identification card to identify risks relating to the performance of their roles.
Our risk management process begins with an annual review of all incidents from the prior year to identify trends and assess whether we need to address findings through changes in our policies and procedures.
We also periodically hire contractors as needed to support our auctions, various businesses, and other projects. ​ Of our total full-time employees, 966 people work locally in the field to support our global auction operations (2021: 950) and 421 people are focused on sales and solutions for our customers (2021: 394). ​ Development and Engagement We believe that our people are our greatest asset and that engaged employees are paramount to the health and success of our business.
We also periodically hire contractors as needed to support our auctions, various businesses, and other projects. Of our total full-time employees, 4,484 people work onsite at our auction sites to support our global operations and solution services (2022: 966) and 504 employees are focused on sales and solutions for our customers (2022: 421).
We invest in a variety of training, development and engagement practices to deliver on our growth agenda and create more leaders. In 2022, we invested $1.4 million in employee development (2021: $1.7 million) and $0.6 million in development for sales employees (2021: $1.3 million) .
Development and Engagement We believe that our people are our greatest asset and that engaged employees are paramount to the health and success of our business. We invest in a variety of training, development and engagement practices to deliver on our growth agenda and create more leaders. In 2023, RB Global invested $1.7 million in employee development (2022: $2.0 million).
Each newsletter ends with a reminder that employees can raise comments and ask questions directly to our CEO via email. ​ During 2022, we achieved the following objectives to strengthen the development and engagement of our people: ​ 1.
Each newsletter ends with a reminder that employees can raise comments and ask questions directly to our leaders via email.
This is reflected in our Code of Business Conduct and Ethics which is delivered through annual training to our employees, and supported by our third-party Ethics Hotline.
Governance We believe in doing the right thing for everyone involved in our business and seek to do business with third parties who follow the same core values. This is reflected in our Code of Business Conduct and Ethics, which is delivered through annual training to our employees and supported by our third-party Ethics Hotline.
As a result, we encourage investors, the media, and others interested in Ritchie Bros. to review the information that we post on these social media channels.
The information that we post on our LinkedIn page could be deemed to be material information. As a result, we encourage investors, the media, and others interested in RB Global, Inc. to review the information that we post on our LinkedIn page.
These channels may be updated from time to time on Ritchie Bros.’s investor relations website. ​ We are providing these website addresses solely for the information of investors, and the information on or accessible through our websites and social media channels is not incorporated by reference in this Annual Report on Form 10-K. ​ Also available for investors in the Governance section of our investor relations website are the Code of Business Conduct and Ethics for our directors, officers and employees (“Code of Conduct”), Board Mandate, Audit Committee Charter, Nominating and Corporate Governance Committee Charter, Compensation Committee Charter, Corporate Governance Guidelines, Diversity Policy, Shareholder Engagement Policy, Articles and Bylaws, Majority Voting Policy and Board Chair Role and Description.
Also available for investors in the Governance section of our investor relations website are the Code of Business Conduct and Ethics for our directors, officers and employees (“Code of Conduct”), Board Mandate, Audit Committee Charter, Nominating and Corporate Governance Committee Charter, Compensation Committee Charter, Corporate Governance Guidelines, Diversity Policy, Shareholder Engagement Policy, Articles and Bylaws, and Board Chair Role and Description.
However, climate change initiatives and changing laws and regulations governing the environment may affect the supply of, the demand for, and the market values of equipment in the future. ​ We support the transition to a low-carbon world through enabling a circular economy of vehicles and equipment and through our efforts to manage our greenhouse gas emissions.
However, climate change initiatives and changing laws and regulations governing the environment may affect the supply of, the demand for, and the market values of equipment in the future.
Modern Architecture - We are transitioning to a modern architecture based in the cloud and comprised of microservices that allow us to create a single presence for our customers across all of our solutions. A modern architecture will allow flexibility and agility to enable scalable growth for us, our customers, and our partners.
We also continue to invest in technology to improve our team members' work environment and experience. • Modern Architecture - We are transitioning to modern technology, based in the cloud, that allows us to create a single presence for our customers across all of our solutions.
We encourage open and honest dialogue and are committed to robust communications from management to employees and creating channels for them to give feedback, as well as fixing processes and technology to improve the work environment for the benefit of both customers and employees.
We encourage open and honest dialogue and are committed to robust communications from management to employees and creating channels for sharing feedback.
Health & Safety Our objective is to keep our people healthy and safe – to send everyone home, every day, the way they came to work. ​ All new employees are required to complete a safety onboarding training that captures our health and safety programs, our policy statement and provides an overview of our global Employee Health and Safety (“EHS”) policies and expectations.
The EHSS team is responsible for introducing operational updates to support our commitment to maintaining the highest level of environmental, health and safety standards. All new employees are required to complete a safety onboarding training that captures our health and safety programs, our policy statement and provides an overview of our global Employee Health and Safety (“EHS”) policies and expectations.
Investors may access any materials we file with the SEC through the EDGAR database on the SEC’s website at www.sec.gov. ​ ​ Ritchie Bros. 16 ​ Table of Contents In addition, investors and others should note that we announce material financial information using our company website (www.ritchiebros.com) and investor relations website (https://investor.ritchiebros.com), which host our SEC filings, press releases, public conference calls, and webcasts.
In addition, investors and others should note that we announce material financial information using our company website (https://rbglobal.com) and investor relations website (https://investor.rbglobal.com), which host our SEC filings, press releases, public conference calls, and webcasts. Information about RB Global, Inc., its business, and its results of operations may also be announced by posts on LinkedIn (https://www.linkedin.com/company/rb-global-inc).
We also improved yard lanes and optimized the equipment delivery and loadout schedules to minimize equipment movement and idling. ​ We continue our commitment to environmental management by ensuring availability of treatment systems to manage wastewater, a recycling system to promote waste management and air filtration systems when necessary.
We continue our commitment to environmental management by ensuring availability of treatment systems to manage wastewater, a recycling system to promote waste management and air filtration systems when necessary. We also promote environmentally conscious facilities including vehicle electrification and electric vehicle charging stations at our sites and corporate offices.
These risk identification cards are monitored by our yard managers and/or our regional operations managers and corrective actions are taken to ensure that the risk is reduced or eliminated. During 2022 we had over 17,000 (2021: 14,000) risk identification cards completed by our staff. We also conduct annual online safety training with employees who perform certain operational tasks.
These assessments are monitored by our yard managers and/or our regional operations managers and corrective action is taken to help ensure that the risk is reduced or eliminated. During 2023 we had over 19,000 (2022: 17,000) risk identification cards completed by our employees. This process has helped us lower incident rates and reinforce incident prevention practices.
Our success in health and safety relies on everyone taking an active role in the development and implementation of our programs, participating in training and providing feedback on our progress in our safety journey. ​ Diversity & Inclusion We aspire to have a culture that fosters respect, inclusion and opportunity for growth for all, where everyone feels like they belong.
Our success in health and safety relies on everyone taking an active role in the development and implementation of our programs, participating in training and providing feedback on our progress in our safety journey. Diversity, Equity, Inclusion & Belonging Our success is not based on any one individual.
Risk Factors—U.S. civil liabilities may not be enforceable against us, our directors, or our officers,” which is incorporated into this Item 1 by this reference. ​ ​ ​ Ritchie Bros. 17 ​ Table of Contents
Risk Factors — U.S. civil liabilities may not be enforceable against us, our directors, or our officers.
We also updated our ESG governance structure and identified individuals to advance and integrate our ESG objectives. ​ Environmental The Company is regulated by federal, state and international environmental laws governing the protection of the environment, health and safety, the use, transport and disposal of hazardous substances and control of emissions including greenhouse gases into the environment.
Environmental The Company is regulated by federal, state and international environmental laws governing the protection of the environment, health and safety, the use, transport and disposal of hazardous substances and control of emissions including greenhouse gases into the environment. Compliance with these existing laws has not had a material impact on our capital expenditures, earnings or global competitive position.
For a discussion of the risks involved with intellectual property litigation and enforcement of our intellectual property rights, see the related information in “Part I, Item 1A: Risk Factors” of this Annual Report on Form 10-K. ​ Competition Competition Overview The global used equipment market is highly fragmented with total annual global used equipment volumes estimated at more than $300.0 billion.
In addition, we may, from time to time, be subject to intellectual property claims, including allegations of infringement, which can be costly to defend. For a discussion of the risks involved with intellectual property litigation and enforcement of our intellectual property rights, see the related information in “Part I, Item 1A: Risk Factors” of this Annual Report on Form 10-K.
Our objective is to continue to engage in efforts to maintain community giving as our employees are passionate about having a meaningful impact in their communities. ​ In 2021, we developed a community giving framework centered around supporting local economies and people in the communities in which we operate.
Community Giving RB Global has been rooted in community since our founding over 60 years ago and we are committed to use our global scale and success to give back to our local communities. Our objective is to continue to engage in efforts to maintain community giving as our employees are passionate about having a meaningful impact in their communities.
Representation of women at our most senior executive leadership level is at 33% (2021: 40%). We also continue to maintain strong representation of women at the Board of Directors level with four (out of nine) Board members being women, representing 44% (2021: 50%) of the Board.
Gender Diversity and Equality Representation of women at our most senior executive leadership level is at 10% (2022: 33%), with 1 out of 10 members of our Executive Leadership Team being women. Representation of women at the Board of Directors level is at 18% (2022: 44%), with 2 out of 11 Board members being women.
The ERG also participated in and celebrated Pride month. ​ The SERVE ERG embraces our proud community of military service members and Veteran colleagues by building awareness and providing resources to past or present military service members and their families.
SERVE embraces our proud community of military service members and veterans, including those who have family or others close to them who have served or are serving, by building awareness and providing support to past or present military service members and their families.
We continue to strive to create the best workplace for all employees and to create a place where they want to build a career.
Central to this is investing in technology to develop new products and services and to make it easier for customers to interact with us and make the best business decisions. • Best Teammate Experience - We strive to create the best workplace for all employees and create a place where they want to build a career.
We continue to invest in technology to further transition to a modern cloud-based architecture driven by microservices that allows for agility, flexibility and scalability of our solutions. We remain focused on technology enablement to transform the way we compete, the way we work and the way we leverage technology to drive future growth.
The role of technology in our business continues to evolve and becomes increasingly more important as our sellers and buyers adopt mobile and online channels to complete their transactions and fulfill their business needs. We continue to invest in technology to transition to a modern cloud-based architecture driven by microservices that allows for agility, flexibility and scalability of our solutions.
The transaction is expected to diversify our customer base by providing the Company with a significant presence in the vehicle remarketing vertical that has strong industry fundamentals with proven secular growth.
We expect that the acquisition of IAA will accelerate our journey to become the trusted global marketplace for transaction solutions, insights, and services as well as diversify our customer base by providing us with a significant presence in the automotive sector, an industry with strong fundamentals and proven secular growth.
All full-time employees are encouraged to have development plans that focus on functional and career growth. We provide all our employees access to instructor-led courses, as well as a library of over 3,000 online courses, videos, books, and resources for ongoing personal, functional, and professional growth.
All full-time employees are encouraged to have development plans that focus on functional and career growth. We have curated tools and resources and developed training programs to provide our leaders and employees with the skills to grow successfully.
Rouse’s business model is built upon an extensive data ecosystem, proprietary analytics and Data Science techniques, and trusted customer relationships rooted in service and confidentiality. We continue to invest in data science to deliver asset value predictions, generate user leads, prioritize marketing investments, interpret price trends and more.
Our business model is built upon an extensive data ecosystem, proprietary analytics, data science techniques, and trusted customer relationships rooted in service and confidentiality. • Global presence - we achieve exceptional agility with our extensive global network of 354 locations, enabling us to be closer in proximity to our customers.
Proprietary algorithmic asset pricing is used internally to set target values and optimize marketplace operations and externally to provide users of Ritchie Bros. Asset Solutions with instant asset values on inventory. The monthly Ritchie Bros. Used Equipment Market Trends Summary report features our proprietary use of Machine Learning to provide Mix-Adjusted Price Indexes for core asset groups around the globe.
Proprietary algorithmic asset pricing is used internally to set target values and optimize marketplace operations and externally to provide our customers with real-time asset values.
IAA stockholders will receive $12.80 in cash and 0.5252 common shares of the Company for each share of IAA common stock they own. Accordingly, the Company will (i) issue approximately 70.3 million shares of its common stock to the stockholders of IAA and (ii) pay to the stockholders of IAA approximately $1.7 billion in cash consideration.
As part of the acquisition, pursuant to the terms of an Agreement and Plan of Merger and Reorganization with IAA, 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”).
During 2022, we invested in developing our baseline inventory of our Scope 1 and 2 greenhouse gas emissions and have a target of completing our Scope 3 inventory in 2023 to allow us to set reduction targets in 2024 and in the future.
To support our reporting and further meaningful action, we developed a baseline carbon inventory of Scopes 1 and 2 in 2022 and completed our Scope 3 inventory in 2023 using recognized standards such as the Greenhouse Gas ("GHG") protocol.
We will start, as always, with our customers and our partners, and make sure we are building what they need. Service Offerings We offer our equipment buyer and seller customers multiple distinct, complementary, multi-channel brand solutions that address the range of their needs.
Service Offerings We offer our customers multiple distinct, complementary, multi-channel brand solutions that address the range of their buying and selling needs for commercial assets, vehicles and other types of assets. Our global customer base has a variety of transaction options, breadth of services, and the widest selection of used equipment and vehicles available to them.
Additionally, in 2022, managers at our sites were also required to complete a series of online courses as part of their professional development. In 2022, we had a completion rate of over 94% (2021: 94.5%). ​ We also measure our Total Recordable Injury Rate (“TRIR”) which measures the number of reportable incidences per 100 full-time workers during the year.
We measure our Total Recordable Injury Rate (“TRIR”), which is the number of reportable incidences per 100 full-time workers during the year. Our annual TRIR goal is to meet or do better by being below the industrial average.
Based on the world’s largest used equipment transaction dataset, we provide data products that allow customers to analyze market dynamics and value assets. Additionally, Rouse Services is the leading provider of rental metrics benchmarks and equipment valuations to lenders, rental companies, contractors and dealers.
In addition, our Rouse Services business and brand is the leading provider of construction equipment rental metrics, benchmarks, and construction equipment valuations to lenders, RB Global, Inc. 5 Table of Contents rental companies, contractors, and dealers.
We are also providing our customers with leading tools and capabilities to deliver full life-cycle asset management for used equipment. Data Privacy and Security As the role of technology and data in our business expands, so too does the importance of cybersecurity. We take protecting our customers, employees, brand, systems and data very seriously.
We provide our customers with leading tools and capabilities to deliver full life-cycle asset management for used equipment and vehicles. Revenue Mix Fluctuations Our revenue is comprised of service revenue and inventory sales revenue.
We see significant growth opportunities ahead by becoming the trusted global marketplace for insights, services, and transaction solutions for commercial assets and vehicles . This represents not a shift, but an expansion of our transaction solutions for which we are already well known.
Growth Strategy We see significant opportunities to grow our business profitably by leveraging our existing platform and industry presence to become the trusted global marketplace for transaction solutions, insights, and services for commercial assets and vehicles. We excel at partnering with customers who share our commitment to building trusted relationships.
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ITEM 1: BUSINESS Company Overview Ritchie Bros. Auctioneers Incorporated (“Ritchie Bros.”, the “Company”, “we”, or “us”) (NYSE & TSX: RBA) was founded in 1958 in Kelowna, British Columbia, Canada and is a world leader in asset management and disposition technologies for commercial assets, used equipment and other assets.
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ITEM 1: BUSINESS Company Overview RB Global, Inc. and its subsidiaries (collectively referred to as the “RB Global”, the “Company”, “we”, or “us”) (NYSE & TSX: RBA) is a leading global marketplace that connects sellers and buyers of commercial assets and vehicles. Through our omnichannel platform we facilitate transactions for customers in primarily the automotive, construction, and commercial transportation sectors.
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Our expertise, unprecedented global reach, market insights, and trusted portfolio of brands provide us with a unique position within the used equipment market. Through our unreserved auctions, online marketplaces, listings, and private brokerage services, we sell a broad range of primarily used commercial and industrial assets, as well as government surplus.
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We also serve customers in the agriculture, energy, and natural resources sectors, as well as government entities. Our customers primarily include automotive insurance companies, as well as end users, dealers, fleet owners, and original equipment manufacturers (“OEMs”) of commercial assets and vehicles.
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Construction and commercial transportation assets comprise the majority of the equipment sold by GTV dollar value, though we sell a wide variety of assets. Customers selling equipment through our sales channels include end users (such as construction companies), equipment dealers, original equipment manufacturers (“OEMs”) and other equipment owners (such as rental companies).
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We also provide our customers value-added marketplace services, technology solutions for vehicle merchandising, platforms for lifecycle management of assets, and a market data intelligence platform to help customers make more informed business decisions. We have a global presence, primarily with operations in the United States, Canada and across Europe, and employ more than 7,900 full-time employees worldwide.
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Our customers participate in a variety of sectors, including construction, commercial transportation, agriculture, energy, and natural resources. We also provide our customers with a wide array of value-added services aligned with our growth strategy to create a global marketplace for used equipment services and solutions.
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The Company changed its name from Ritchie Bros. Auctioneers Incorporated to RB Global, Inc. and moved its global headquarters to Westchester, Illinois, United States from Burnaby, British Columbia, Canada after the close of the acquisition of IAA in the first quarter of 2023.
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Our other services include equipment financing, asset appraisals and inspections, online equipment listings, logistical services, and ancillary services such as equipment refurbishment. We offer our customers asset technology solutions to manage the end-to-end disposition process of their assets and provide market data intelligence to make more accurate and reliable business decisions.
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Business Combinations On March 20, 2023, we completed the acquisition of IAA, a leading global digital marketplace connecting vehicle buyers and sellers with operations throughout the United States, Canada, and the United Kingdom.
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Additionally, we offer our customers an innovative technology platform that supports equipment lifecycle management and parts procurement integration with both original equipment manufacturers and dealers, as well as a software as a service platform for end-to-end parts procurement, and access to digital catalogs and diagrams.
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IAA facilitates the marketing and sale of total loss, damaged and low-value vehicles for a full spectrum of sellers, including insurance companies, dealerships, fleet lease and rental car companies and charitable organizations. Additionally, IAA serves a global buyer base with vehicles, vehicle rebuild requirements, replacement part inventory or scrap demand.
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We operate globally with locations in 13 countries, including the U.S., Canada, Australia, the United Arab Emirates, and the Netherlands, and maintain a presence in 42 countries where customers can sell from their own yards. We employ more than 2,800 full-time employees worldwide.
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As such, we paid approximately $1.7 billion in cash consideration and issued 70.3 million shares of our common stock to complete the acquisition. In addition, we repaid approximately $1.2 billion of IAA’s net debt and $500.0 million principal amount of its senior notes, and therefore acquired IAA debt free.
Removed
Proposed Acquisition of IAA On November 7, 2022, the Company entered into an Agreement and Plan of Merger and Reorganization, which was subsequently amended on January 22, 2023 (the “Merger Agreement”), pursuant to which it agreed to acquire IAA, Inc., a leading global digital marketplace connecting vehicle buyers and sellers.
Added
Additionally, our management team has experience in the automotive and insurance ecosystem, which we expect will improve and shape our customers' experiences. With enhanced scale and an expanded addressable market, we expect to be able to drive additional GTV growth through our platforms and auction sites, and consistently over-deliver on the commitments we make to our customers.
Removed
In addition, the Company will repay approximately $1.2 billion of IAA’s net debt.
Added
On January 3, 2023, we also acquired a 75% controlling interest in VeriTread LLC ("VeriTread") for a total purchase price of $32.4 million. VeriTread is a transportation technology company in the United States that provides an online marketplace solution for open deck transport, connecting shippers and service providers.
Removed
The acquisition of IAA is expected to close in the first half of 2023, subject to the satisfaction of various conditions, including, among other things, (1) the approval of the issuance of our common shares by the affirmative vote of a majority of the votes cast by holders of our outstanding common shares, (2) the adoption of the Merger Agreement by holders of a majority of the outstanding shares of IAA’s common stock, and (3) other customary closing conditions. ​ The Company plans to fund the proposed acquisition of IAA through a combination of cash, borrowings under its credit facilities and proceeds from the sale of debt securities.
Added
The acquisition of VeriTread is also aligned with our growth strategy and we expect to benefit from anticipated synergies from applying their transportation platform, network of carriers, equipment database and services to our customer base.
Removed
In connection with the Merger Agreement, the Company entered into a debt commitment letter with certain financial institutions that committed to provide, subject to certain terms and conditions, the bridge loan facility in an aggregate principal amount of up to $2.8 billion and a backstop senior secured revolving credit facility in an aggregate principal amount of up to $750.0 million.
Added
Further information regarding the business combinations are described in "Part II, Item 8: Financial Statements and Supplementary Data - Note 4 Business Combinations." Macroeconomic Conditions Various macroeconomic factors can impact the behaviors of our customers, our business and our operating results, including inflation, interest rate volatility and foreign currency fluctuations. • Inflation - We continue to experience inflationary pressures on our business through elevated operating costs. • Interest rates - Interest rate volatility may impact our customers' preferences around disposal services and their ability to finance equipment or other assets.
Removed
On December 9, 2022, the Company subsequently closed an amendment to its existing credit agreement with a syndicate of lenders pursuant to which, among other things, the Company obtained (a) amendments to the facility to specifically permit the proposed acquisition of IAA (b) commitments for a term loan A facility in an aggregate principal amount of up to $1.8 billion to be used to finance the proposed IAA acquisition and (c) the ability to borrow up to $200.0 million of the revolving facility on a limited conditionality basis to finance the proposed IAA acquisition.
Added
We are also exposed to interest rate volatility on approximately $1.7 billion of our long-term debt that has floating rates. RB Global, Inc. 4 Table of Contents • Foreign currency - Foreign currency fluctuations may impact our global customers ability to buy and sell assets on our marketplace impacting our ability to generate revenue.
Removed
The amendment allowed the Company to permanently terminate the backstop senior revolving credit commitments and reduce the senior secured bridge facility commitments by the amount of the term loan A facility and the amount of the existing term loans under the existing credit agreement. ​ ​ Ritchie Bros. 4 ​ Table of Contents On January 23, 2023, the Company announced that it expects to approve the payment of a one-time special dividend to the Company’s shareholders in the amount of $1.08 per share, contingent upon the completion of the merger and consent of the TSX.
Added
Additionally, foreign currency fluctuations could impact our financial results given that we earn revenue and operate globally across multiple countries and in different currencies.
Removed
IAA stockholders will not be entitled to receive the special dividend with respect to any of the Company’s common shares received as consideration. We will not pay the special dividend if the Merger Agreement is terminated or if the merger is not completed.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

86 edited+118 added−33 removed115 unchanged
Biggest changeOur business and results of operations would be particularly harmed if we were to lose access to or the functionality of our internet systems for any reason, especially if such loss of service prevented internet bidders from effectively participating in one of our auctions. ​ Consumer behavior is rapidly changing, and if we are unable to successfully adapt to consumer preferences and develop and maintain a relevant and reliable inventory management and multichannel disposition experience for our customers, our financial performance and brand image could be adversely affected. ​ Our business continues to evolve into a one-stop inventory management and multichannel disposition company where customers can buy, sell, or list equipment, when, how, and where they choose- both onsite and online, and manage their existing fleets and/or inventory using our online inventory management tools.
Biggest changeOur business continues to evolve into a one-stop inventory management and multichannel disposition company where customers can buy, sell, or list equipment, when, how, and where they choose- both onsite and online, and manage their existing fleets and/or inventory using our online inventory management tools.
For example, our customers may accidentally disclose their passwords, use insecure passwords, or store them on a device that is lost or stolen, providing bad actors with access to a customer’s account and the possible means to redirect customer payments.
For example, our customers may accidentally disclose their passwords, use insecure passwords, or store them on a device that is lost or stolen, providing bad actors with access to a customer’s account with us and the possible means to redirect customer payments.
If in the future any of these parties could change their data sharing policies and terms of use, including by making them more restrictive, terminating or not renewing agreements, or, if customers revoke their consent, any of which could result in the loss of, or significant impairment to, our ability to collect and provide useful data or related services to our customers.
Any of these parties could change their data sharing policies and terms of use, including by making them more restrictive, terminating or not renewing agreements, or, customers could revoke their consent, any of which could result in the loss of, or significant impairment to, our ability to collect and provide useful data or related services to our customers.
Certain global conditions may affect our ability to conduct successful events. ​ Like most businesses with global operations, we are subject to the risk of certain global or regional adverse conditions, such as pandemics or other disease outbreaks, including COVID-19, or natural disasters including extreme weather or other events, such as hurricanes, tornadoes, earthquakes, forest fires or floods that could hinder our ability to conduct our scheduled auctions, restrict our customers’ travel patterns or their desire to attend auctions or impact our online operations, including disrupting the internet or mobile networks or one or more of our service providers.
Like most businesses with global operations, we are subject to the risk of certain global or regional adverse conditions, such as pandemics or other disease outbreaks, including COVID-19, or natural disasters including extreme weather or other events, such as hurricanes, tornadoes, earthquakes, forest fires or floods that could hinder our ability to conduct our scheduled auctions, restrict our customers’ travel patterns or their desire to attend auctions or impact our online operations, including disrupting the internet or mobile networks or one or more of our service providers.
Unauthorized parties have in the past, and may also in the future, attempt to gain access to our and our providers’ primary and backup systems or facilities through various means, including hacking into IT systems or facilities, fraud, trickery or other means of deceiving our and their employees or contractors.
Unauthorized parties have and may in the future attempt to gain access to our and our providers’ primary and backup systems or facilities through various means, including hacking into IT systems or facilities, fraud, trickery or other means of deceiving our and their employees or contractors.
The Canada Revenue Agency (“CRA”) has been conducting audits for our 2014, 2015, 2017, 2018 and 2019 taxation years. On February 13, 2023, the CRA issued a proposal letter to Ritchie Bros.
The Canada Revenue Agency (“CRA”) has been conducting audits for our 2014, 2015, 2018, 2019 and 2020 taxation years. On February 13, 2023, the CRA issued a proposal letter to Ritchie Bros.
Other risks inherent in doing business internationally include, but are not limited to the following: (a) trade barriers, trade regulations, currency controls, import or export regulations, and other restrictions on doing business freely; (b) local labor, environmental, tax, and other laws and regulations, and the potential for adverse changes in such laws and regulations or the interpretations thereof; (c) difficulties in staffing and managing foreign operations; (d) economic, political, social or labor instability or unrest; (e) terrorism, war, hostage-taking, or military repression; (f) corruption; (g) expropriation and nationalization, or difficulties in enforcing or protecting our property rights, including with respect to intellectual property; (h) increased exposure to high rates of inflation; and (i) unpredictability as to litigation in foreign jurisdictions and enforcement of local laws.
Other risks inherent in doing business internationally include, but are not limited to the following: (a) trade barriers, trade regulations, currency controls, import or export regulations, and other restrictions on doing business freely; (b) local labor, environmental, tax, and other laws and regulations, and the potential for adverse changes in such laws and regulations or the interpretations thereof; (c) difficulties in staffing and managing foreign operations; (d) economic, political, social or labor instability or unrest; (e) terrorism, war, hostage-taking, or military repression; (f) corruption; (g) expropriation and nationalization, or difficulties in enforcing or protecting RB Global, Inc. 25 Table of Contents our property rights, including with respect to intellectual property; (h) increased exposure to high rates of inflation; and (i) unpredictability as to litigation in foreign jurisdictions and enforcement of local laws.
We cannot guarantee that: any of our present or future intellectual property rights will not lapse or be invalidated, circumvented, challenged or abandoned; our ​ ​ Ritchie Bros. 30 ​ Table of Contents intellectual property rights will provide competitive advantages to us; our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; any of our pending or future patent applications will be issued or have the coverage originally sought; or our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak.
We cannot guarantee that: any of our present or future intellectual property rights will not lapse or be invalidated, circumvented, challenged or abandoned; our intellectual property rights will provide competitive advantages to us; our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; any of our pending or future patent applications will be issued or have the coverage originally sought; or our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak.
Further, users on our platforms could have vulnerabilities on their own devices that are entirely unrelated to our systems and platforms but could mistakenly attribute their own vulnerabilities to us.
Further, users of our services could have vulnerabilities on their own devices that are entirely unrelated to our systems and platforms but could mistakenly attribute their own vulnerabilities to us.
In addition, if we are found to have breached any such laws or regulations, we may be subject to enforcement actions that require us to change our practices, products and services, which may negatively impact our revenue, as well as expose us to liability through new or higher potential penalties and fines for non-compliance, civil and criminal penalties, and litigation for alleged violations, as well as adverse publicity that could cause our customers to lose trust in us and negatively impact our reputation and business in a manner that harms our financial position.
In addition, if we are found to have breached any such laws or regulations, we may be subject to enforcement actions that require us to change our practices, products and services, which may negatively impact our revenue, as well as expose us to liability through new or higher potential penalties and fines for non-compliance, civil and criminal penalties, and litigation for RB Global, Inc. 27 Table of Contents alleged violations, as well as adverse publicity that could cause our customers to lose trust in us and negatively impact our reputation and business in a manner that harms our financial position.
The availability and performance of our technology infrastructure, including our websites, is critical to our business and continued growth. ​ The satisfactory performance, reliability and availability of our websites, online bidding service, auction management systems, enterprise resource planning system, transaction processing systems, network infrastructure and customer relationship management system are important to our reputation, our business and our continued growth.
The availability and performance of our information technology ("IT") systems and infrastructure is critical to our business and continued growth. The satisfactory performance, reliability and availability of our websites, online bidding service, auction management systems, enterprise resource planning systems, transaction processing systems, network infrastructure and customer relationship management systems are important to our reputation, our business and our continued growth.
Each of the DLA contracts obliges the Company to purchase rolling and non- ​ ​ Ritchie Bros. 20 ​ Table of Contents rolling stock assets in an amount and of a type over which we have limited ability to control. In many cases, the type of assets purchased are not what we typically sell through any of our other channels.
Each of the DLA contracts obliges the Company to purchase rolling and non-rolling stock assets in an amount and of a type over which we have limited ability to control. In many cases, the type of assets purchased are not what we typically sell through any of our other channels.
If we incur any additional ​ ​ Ritchie Bros. 29 ​ Table of Contents indebtedness that has the same priority as the Notes and the guarantees thereof, the holders of that indebtedness will be entitled to share ratably with the holders of the Notes and the guarantees thereof in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of the Company.
If we incur any additional indebtedness that has the same priority as the Notes and the guarantees thereof, the holders of that indebtedness will be entitled to share ratably with the holders of the Notes and the guarantees thereof in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of the Company.
These third parties could also interpret our data collection and use policies or practices as being inconsistent with their policies or business objectives, or lose confidence in our data protection and privacy practices, which could result in the loss of our ability to ​ ​ Ritchie Bros. 21 ​ Table of Contents collect this data.
These third parties could also interpret our data collection and use policies or practices as being inconsistent with their policies or business objectives, or lose confidence in our data protection and privacy practices, which could result in the loss of our ability to collect this data.
There can be no assurances that our GTV and revenues will be maintained or grow at a more rapid rate than our fixed costs. ​ ​ Ritchie Bros. 26 ​ Table of Contents Part of our long-term growth strategy includes growth through acquisitions, which poses a number of risks.
There can be no assurances that our GTV and revenues will be maintained or grow at a more rapid rate than our fixed costs. Part of our long-term growth strategy includes growth through acquisitions, which poses a number of risks.
We may also not be able to improve our systems and controls as a result of increased costs, technological challenges, or lack of qualified employees. A large component of our selling, general and administrative expenses is considered fixed costs that we will incur regardless of any GTV growth.
We may also not be able to improve our systems and controls as a result of RB Global, Inc. 26 Table of Contents increased costs, technological challenges, or lack of qualified employees. A large component of our selling, general and administrative expenses is considered fixed costs that we will incur regardless of any GTV growth.
We are governed by the CBCA and our principal place of business is in Canada. Many of our directors and officers reside outside of the United States, and all or a substantial portion of their assets, as well as a substantial portion of our assets, are located outside the ​ ​ Ritchie Bros. 32 ​ Table of Contents United States.
We are governed by the CBCA and our principal place of business is in Canada. Many of our directors and officers reside outside of the United States, and all or a substantial portion of their assets, as well as a substantial portion of our assets, are located outside the United States.
Under some environmental laws, an owner, operator or lessee of, or other person involved in, real estate may be liable for the costs of removal or remediation of hazardous or toxic substances located on or in, or emanating from, the real estate, and related costs of investigation and property damage.
RB Global, Inc. 23 Table of Contents Under some environmental laws, an owner, operator or lessee of, or other person involved in, real estate may be liable for the costs of removal or remediation of hazardous or toxic substances located on or in, or emanating from, the real estate, and related costs of investigation and property damage.
As a result of this evolution, increasingly we interact with our customers across a variety of different channels, including live auction, online, through mobile technologies, including the Ritchie Bros. mobile app, social media, and inventory management systems.
As a result of this evolution, increasingly we interact with our customers RB Global, Inc. 21 Table of Contents across a variety of different channels, including live auction, online, through mobile technologies, including the Ritchie Bros. mobile app, social media, and inventory management systems.
We cannot guarantee that our business will generate sufficient cash flow from our operations or that future borrowings will be available to us in an amount sufficient to enable us to make payments of our debt, fund other liquidity needs and make planned capital expenditures.
We cannot guarantee that our business will generate sufficient cash flow from our operations or that future borrowings will be available to us in an amount sufficient to enable us to make payments of our debt, de-lever in the time frame expected or at all, fund other liquidity needs and make planned capital expenditures.
We protect our proprietary technology through a combination of trade secrets, third-party confidentiality and nondisclosure agreements, additional contractual restrictions on disclosure and use, and patent, copyright, and trademark laws. We are the registered owners of many Internet domain names internationally.
We regard our proprietary technologies and intellectual property as integral to our success. We protect our proprietary technology through a combination of trade secrets, third-party confidentiality and nondisclosure agreements, additional contractual restrictions on disclosure and use, and patent, copyright, and trademark laws. We are the registered owners of many Internet domain names internationally.
We are governed by the corporate laws of Canada which in some cases have a different effect on shareholders than the corporate laws of Delaware.
RB Global, Inc. 31 Table of Contents We are governed by the corporate laws of Canada which in some cases have a different effect on shareholders than the corporate laws of Delaware.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the Corruption of Foreign Public Officials Act, or the CFPOA, and similar laws associated with our activities outside of the U.S. could subject us to penalties and other adverse consequences. ​ We are subject to the FCPA, the CFPOA, the U.S. domestic bribery statute contained in 18 U.S.C. §201, the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the Corruption of Foreign Public Officials Act, or the CFPOA, and similar laws associated with our activities outside of the U.S. could subject us to penalties and other adverse consequences.
We are pursuing a long-term growth strategy that may include acquisitions and developing and enhancing an appropriate sales strategy, which requires upfront investment with no guarantee of long-term returns. ​ We continue to pursue a long-term growth strategy, including developing and enhancing an appropriate sales strategy, that contemplates upfront investments, including (i) investments in emerging markets that may not generate profitable growth in the near term, (ii) adding new business and information solutions, and (iii) developing our people.
We continue to pursue a long-term growth strategy, including developing and enhancing an appropriate sales strategy, that contemplates upfront investments, including (i) investments in emerging markets that may not generate profitable growth in the near term, (ii) adding new business and information solutions, and (iii) developing our people.
Any failure to comply with covenants in the instruments governing our debt could result in an event of default which, if not cured or waived, would have a material adverse effect on us. ​ Significant costs have been incurred and are expected to be incurred in connection with the consummation and integration of the acquisition of IAA. ​ We expect to incur one-time costs in connection with integrating our operations, products and personnel with those of IAA, in addition to costs related directly to completing the acquisition.
Any failure to comply with covenants in the instruments governing our debt could result in an event of default which, if not cured or waived, would have a material adverse effect on us. Significant costs have been incurred and are expected to be incurred in connection with the consummation and integration of the acquisition of IAA.
Privacy concerns and our compliance with current and evolving domestic or foreign laws and regulations regarding the processing of personal information and other data may increase our costs, impact our marketing efforts, or decrease adoption and use of our products and services, and our failure to comply with those laws and regulations may expose us to liability and reputational harm. ​ Governments around the world continue to propose and adopt new, or modify existing, laws and regulations addressing data privacy, data protection, data sovereignty and the processing of data, generally.
Privacy concerns and our compliance with current and evolving domestic or foreign laws and regulations regarding the processing of personal information and other data may increase our costs, impact our marketing efforts, or decrease adoption and use of our products and services, and our failure to comply with those laws and regulations may expose us to liability and reputational harm.
Travel Act, the USA PATRIOT Act, the United Kingdom Bribery Act of 2010, or the U.K. Bribery Act, and similar other anti-corruption, anti-bribery and anti-money laundering laws in countries in which we conduct activities or facilitate the buying and selling of equipment, including the EU.
Bribery Act, and similar other anti-corruption, anti-bribery and anti-money laundering laws in countries in which we conduct activities or facilitate the buying and selling of equipment, including the EU.
These risks inherent in our international operations increase our costs of doing business internationally and may result in a material adverse effect on our operations or profitability. ​ ​ Ritchie Bros. 25 ​ Table of Contents Our business operations may be subject to a number of federal and local laws, rules and regulations governing international trade, including export control regulations. ​ Our business operations may be subject to a number of federal and local laws, rules and regulations, including the Export Administration Regulations, or EAR, maintained by the U.S.
These risks inherent in our international operations increase our costs of doing business internationally and may result in a material adverse effect on our operations or profitability. Our business operations may be subject to a number of federal and local laws, rules and regulations governing international trade, including export control regulations.
There can be no assurance that confidentiality, non-solicitation, non-competition or similar agreements signed by our former directors, officers, or employees will be effective in preventing a loss of business.
There can be no assurance that confidentiality, non-solicitation, non-competition or similar agreements signed by our former directors, officers, or employees will be effective in preventing a loss of business. Failure to maintain safe sites could materially affect our business and reputation.
We currently rely on both our own proprietary technology and licensed on-premise systems, as well as third-party cloud computing platform providers located in the United States and other countries.
We currently rely on our own proprietary systems, licensed on-premise systems, and third-party cloud computing applications and infrastructure located in the United States and other countries.
If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.
If new indebtedness is added to our current debt levels, the related risks that we now face could intensify. Our debt instruments have restrictive covenants that could limit our financial flexibility.
The indentures governing the 2016 Notes contain covenants that limit our ability in certain circumstances to: incur additional indebtedness (including guarantees thereof); incur or create liens on their assets securing indebtedness; make certain restricted payments; make certain investments; dispose of certain assets; allow certain restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us; engage in certain transactions with affiliates; and consolidate, amalgamate or merge with or into other companies. ​ Our failure to comply with these covenants could result in an event of default that, if not cured or waived, could result in the acceleration of substantially all of our funded debt.
The indentures governing the 2023 Notes contain covenants that limit our ability in certain circumstances to: incur additional indebtedness (including guarantees thereof); incur or create liens on their assets securing indebtedness; make certain restricted payments; make certain investments; dispose of certain assets; allow certain restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us; engage in certain transactions with affiliates; and consolidate, amalgamate or merge with or into other companies.
Existing and future laws and regulations may impede the growth of the internet, e-commerce or other services, and increase the cost of doing business, including providing online auction services.
Existing and future laws and regulations may impede the growth of digital commerce or other services, in particular online marketplace services, and increase the cost of doing business, including providing online disposition services.
Government regulation of the Internet and e-commerce is evolving, and unfavorable changes in this or other regulations could substantially harm our business and results of operations. We are subject to federal, provincial, state and local laws, rules and regulations governing the internet and e-commerce.
Government regulation of the digital landscape is evolving, and unfavorable regulations could substantially harm our business and results of operations. We are subject to federal, provincial, state and local laws, rules and regulations governing digital commerce and online services.
It is not always clear how existing laws governing issues such as property ownership, digital, sales and similar taxes, libel, and personal privacy apply to the Internet and e-commerce. Changes to laws, rules and regulations and unfavorable resolution of these issues may harm our business and results of operations.
It is not always clear how existing laws governing issues such as property transfers, digital, sales and similar taxes, intellectual property rights, and user privacy and data protection apply to digital commerce and online services. Changes to laws, rules and regulations and unfavorable resolution of these issues may harm our business and results of operations.
To the extent that climate change causes rising sea levels, increased intensity of weather, and increased frequency of extreme precipitation and flooding, the risks noted above may increase. ​ ​ Ritchie Bros. 28 ​ Table of Contents Financial Risk Factors ​ Ineffective internal control over financial reporting could result in errors in our financial statements, reduce investor confidence, and adversely impact our stock price. ​ As a public company, we are required to furnish a report by management on the effectiveness of our internal control over financial reporting.
To the extent that climate change causes rising sea levels, increased intensity of weather, and increased frequency of extreme precipitation and flooding, the risks noted above may increase. Financial Risk Factors Ineffective internal control over financial reporting could result in errors in our financial statements, reduce investor confidence, and adversely impact our stock price.
If competitors are able to use our technology or develop proprietary technology similar to ours or competing technologies, our ability to compete effectively and our growth prospects could be adversely affected.
If competitors are able to use our technology or develop proprietary technology similar to ours or competing technologies, our ability to compete effectively and our growth prospects could be adversely affected. Risk Related to Our Industry Competition could result in reductions in our future revenues and profitability.
In this uncertain and shifting regulatory and trust climate, even the perception that the privacy and security of personal information are not satisfactorily addressed or do not meet regulatory requirements could result in adverse publicity and reputation loss. ​ Our business continuity plan may not operate effectively in the event of a significant interruption of our business. ​ We have implemented a formal business continuity plan covering most significant aspects of our business that would take effect in the event of a significant interruption to our business, or the loss of key systems as a result of a natural or other disaster.
In this uncertain and shifting regulatory and trust climate, even the perception that the privacy and security of personal information are not satisfactorily addressed or do not meet regulatory requirements could result in adverse publicity and reputation loss. Our business continuity plan may not operate effectively in the event of a significant interruption of our business.
We compete for potential purchasers and sellers of equipment with other auction companies and with non-auction competitors such as equipment manufacturers, distributors and dealers, equipment rental companies, and other online marketplaces.
The global used equipment market, including the auction segment of that market, is highly fragmented. We compete for potential purchasers and sellers of equipment with other auction companies and with non-auction competitors such as equipment manufacturers, distributors and dealers, equipment rental companies, and other online marketplaces.
For example, it could: (a) limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; (b) require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, dividends and other corporate purposes; (c) increase our vulnerability to general adverse economic or industry conditions; (d) expose us to the risk of increased interest rates for any borrowings at variable rates of interest; (e) limit our flexibility in planning for and reacting to changes in our industry; and (f) place us at a competitive disadvantage compared to businesses in our industry that have less debt. ​ Additionally, our debt agreements, including any agreements that we may enter into in connection with the proposed acquisition of IAA, may contain a number of covenants that impose operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests.
For example, it could: ● Limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; ● Require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, dividends and other corporate purposes; ● Increase our vulnerability to general adverse economic or industry conditions; ● Expose us to the risk of increased interest rates for any borrowings at variable rates of interest; ● Limit our flexibility in planning for and reacting to changes in our industry; and ● Place us at a competitive disadvantage compared to businesses in our industry that have less debt.
In addition, engine emission standards in some jurisdictions limit the operation of certain trucks and equipment in those markets. ​ ​ Ritchie Bros. 23 ​ Table of Contents These restrictions, or the adoption of more stringent environmental laws, including laws enacted in response to climate change, could inhibit materially the ability of customers to ship equipment to or from our auction sites, reducing our GTV and harming our business, financial condition and results of operations.
These restrictions, or the adoption of more stringent environmental laws, including laws enacted in response to climate change, could inhibit materially the ability of customers to ship equipment to or from our auction sites, reducing our GTV and harming our business, financial condition and results of operations.
Income and commodity tax amounts, including tax expense, may be materially different than expected, and there is a trend by global tax collection authorities towards the adoption of more aggressive laws, regulations, interpretations and audit practices. ​ Our global operations are subject to tax interpretations, regulations, and legislation in the numerous jurisdictions in which we operate, all of which are subject to continual change.
Income and commodity tax amounts, including tax expense, may be materially different than expected, and there is a trend by global tax collection authorities towards the adoption of more aggressive laws, regulations, interpretations and audit practices.
We could be subject to damages, financial penalties, denial of export privileges, incarceration of our employees, other restrictions on our operations, and reputational harm. Further, any action on the part of the U.S.
If we were to violate applicable export control or sanctions, we could be subject to administrative or criminal penalties ,which in certain circumstances, could be material. We could be subject to damages, financial penalties, denial of export privileges, incarceration of our employees, other restrictions on our operations, and reputational harm. Further, any action on the part of the U.S.
The technology and systems we rely on may experience service interruptions or degradation because of hardware or software defects or malfunctions, denial of service or ransomware attacks and other cybersecurity events, human error and natural events beyond our control. Some of our systems are not fully redundant, and our recovery planning may not be sufficient for all possible disruptions.
The systems and infrastructure we rely on may experience service interruptions or degradation because of hardware or software defects or malfunctions, denial of service or ransomware attacks and other cybersecurity events, human error and natural events beyond our control.
New competitors with greater financial and other resources and/or different business models/strategies may enter the equipment auction market in the future. Additionally, existing or future competitors may succeed in entering and establishing successful operations in ​ ​ Ritchie Bros. 31 ​ Table of Contents new geographic markets prior to our entry into those markets.
New competitors with greater financial and other resources and/or different business models/strategies may enter the equipment auction market in the future. Additionally, existing or future competitors may succeed in entering and establishing successful operations in new geographic markets prior to our entry into those markets. They may also compete against us through internet-based services and other combined service offerings.
Failure to maintain safe sites could materially affect our business and reputation. ​ Our employees and customers are often in close proximity with mechanized equipment, moving vehicles and chemical and other industrial substances.
Our employees and customers are often in close proximity with mechanized equipment, moving vehicles and chemical and other industrial substances.
If our selling model becomes undesirable or we are not successful in adding services complementary to our existing selling model and business, we may not be successful increasing market penetration over the long-term, which could prevent us from achieving our long-term earnings growth targets. ​ Decreases in the supply of, demand for, or market values of used equipment, could harm our business. ​ Our revenues could decrease if there is significant erosion in the supply of, demand for, or market values of used equipment, which could adversely affect our financial condition and results of operations.
If our selling model becomes undesirable or we are not successful in adding services complementary to our existing selling model and business, we may not be successful increasing market penetration over the long-term, which could prevent us from achieving our long-term earnings growth targets.
The degree to which we are currently leveraged and will be leveraged following the completion of the acquisition of IAA could have important consequences for shareholders.
The degree to which we are currently leveraged could have important consequences for shareholders.
One example of these restrictions is environmental certification requirements in the United States, which prevent non-certified equipment from entering into commerce in the United States.
One example of these restrictions is environmental certification requirements in the United States, which prevent non-certified equipment from entering into commerce in the United States. In addition, engine emission standards in some jurisdictions limit the operation of certain trucks and equipment in those markets.
Maintaining a positive reputation is key to our ability to attract and maintain customers, investors and employees. Damage to our reputation could cause significant harm to our business.
Damage to our reputation could harm our business. One of our founding principles is that we operate a fair and transparent business, and consistently act with integrity. Maintaining a positive reputation is key to our ability to attract and maintain customers, investors and employees. Damage to our reputation could cause significant harm to our business.
As the malicious tools and techniques used to breach, obtain unauthorized access to or impair IT systems and devices and the data processed thereby become more sophisticated and change frequently, the risk of a cybersecurity event increases, given that we may not be able to anticipate these malicious tools and techniques or to implement adequate preventative and protective measures.
The malicious tools and techniques used to obtain unauthorized access to or impair IT systems and devices and the data processed thereby evolve frequently in terms of attack vectors and sophistication and we may not be able to anticipate these vectors or to timely implement adequate preventative and protective measures.
If our ability, or the ability of our third party service partners, cloud computing platform providers or third party data center hosting facilities, to safeguard the reliability, integrity and confidentiality of our and their information technology systems is compromised, if unauthorized access is obtained to our systems or customers’, suppliers', counterparties' and employees' confidential information, or if authorized access is blocked or disabled, we may incur significant reputational harm, legal exposure, or a negative financial impact. ​ We rely on information technology (“IT”) resources to manage and operate our business, including maintaining proprietary databases containing sensitive and confidential information about our customers, suppliers, counterparties and employees (which may include personal information and credit information) and utilizing approved third-party technology providers to support the management and operation of IT systems and infrastructure.
If our ability, or the ability of our third party service partners, cloud computing providers or third party data center hosting facilities, to safeguard the reliability, integrity and confidentiality of our and their information technology systems is compromised, if unauthorized access is obtained to our systems or customers’, suppliers', counterparties' and employees' confidential information, or if authorized access is blocked or disabled, we may incur material reputational harm, legal exposure, or a negative financial impact.
The results of operations of our foreign subsidiaries are translated from local currency into U.S. dollars for financial reporting purposes. If the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated revenues or expenses will result in increased U.S. dollar denominated revenues and expenses.
If the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated revenues or expenses will result in increased U.S. dollar denominated revenues and expenses.
If we were liable for a significant number of fraudulent transactions or unable to accept payment cards, our results of operations would be materially and adversely affected. ​ Although we implement, maintain and adjust information security measures to mitigate our risks with respect to IT-related cybersecurity incidents, there can be no assurance that these measures will ensure that our operations are not disrupted, that we will prevent an attack from occurring in the future, or that our internal controls, for instance relating to user access management, will perform as intended to prevent unauthorized access to our systems and data.
The information security measures we implement, maintain and follow that are designed to mitigate our risks with respect to IT-related cybersecurity incidents do not guarantee that our operations will not be disrupted, that we will prevent an attack from occurring in the future, or that our internal controls, for instance relating to user access management, will perform as intended to prevent unauthorized access to our systems and data.
Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not generate sufficient funds to service our debt and meet our business needs, such as funding working capital or the expansion of our operations.
We may not generate sufficient funds to service our debt and meet our business needs, such as funding working capital or the expansion of our operations.
On an expected combined company basis, we expect that together with IAA, we would have approximately $3.4 billion of indebtedness, excluding $709.8 million of undrawn commitments under our revolving credit facility. Our ability to make payments on our debt, fund our other liquidity needs and make planned capital expenditures will depend on our ability to generate cash in the future.
As of December 31, 2023, our Company and its subsidiaries, including IAA, had approximately $3.1 billion of indebtedness, excluding $724.7 million undrawn commitments under our revolving credit facility. Our ability to make payments on our debt, fund our other liquidity needs and make planned capital expenditures will depend on our ability to generate cash in the future.
The timing concerning the monetization of deferred income tax amounts is uncertain, as they are dependent on our future earnings and other events.
The timing concerning the monetization of deferred income tax amounts is uncertain, as they are dependent on our future earnings and other events. Our deferred income tax amounts are valued based upon enacted income tax rates in effect at the time, which can be changed by governments in the future.
There can be no assurance that impacts from these incidents will not be material or significant in the future. ​ In addition, our limited control over our customers may affect the security and integrity of our IT systems and create financial or legal exposure.
In addition, our limited control over our customers may affect the security and integrity of our IT systems and create financial or legal exposure.
Harm to our reputation could arise in a number of ways, including, but not limited to, employee conduct which is not aligned with our Code of Business Conduct and Ethics (and associated Company policies around behavioural expectations) or our Company’s core values, safety incidents, failure to maintain customer service standards, loss of trust in the fairness of our sales processes, and other technology or compliance failures. ​ We may incur losses as a result of our guarantee and inventory contracts and advances to consignors. ​ Our most common type of auction contract is a straight commission contract, under which we earn a pre-negotiated, fixed commission rate on the gross sales price of the consigned equipment at auction.
Harm to our reputation could arise in a number of ways, including, but not limited to, employee conduct which is not aligned with our Code of Business Conduct and Ethics (and associated Company policies around RB Global, Inc. 20 Table of Contents behavioral expectations) or our Company’s core values, safety incidents, failure to maintain customer service standards, loss of trust in the fairness of our sales processes, and other technology or compliance failures.
Integration may also be difficult, unpredictable and subject to delay because of possible company culture conflicts and different opinions on future business development. We may be required to integrate or, in some cases, replace, numerous systems, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll and regulatory compliance, many of which may be dissimilar.
We may be required to integrate or, in some cases, replace, numerous systems, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll and regulatory compliance, many of which may be dissimilar. Difficulties associated with the integration of acquired businesses could have a material adverse effect on our business.
Although we report our financial results in U.S. dollars, a significant portion of our revenues and expenses are generated outside the U.S., primarily in currencies other than the U.S. dollar. In particular, a significant portion of our revenues are earned, and expenses incurred, in the Canadian dollar and the Euro.
We conduct business in many countries around the world and intend to continue to expand our presence in international markets, including emerging markets. Although we report our financial results in U.S. dollars, a significant portion of our revenues and expenses are generated outside the U.S., primarily in currencies other than the U.S. dollar.
This assessment is required to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting identified by our management.
As a public company, we are required to furnish a report by management on the effectiveness of our internal control over financial reporting. This assessment is required to include disclosure of any material weaknesses identified by our management in our internal RB Global, Inc. 28 Table of Contents control over financial reporting identified by our management.
These regulations and laws may cover taxation, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts, and other communications, consumer protection, broadband residential internet access and the characteristics and quality of services.
These regulations and laws may cover taxation, tariffs, user privacy, data protection, machine learning and automated decision making, pricing, content, intellectual property rights, electronic contracts, digital marketing communications, consumer protection, and the characteristics and quality of our disposition services.
Our debt instruments have restrictive covenants that could limit our financial flexibility. ​ The terms of the Credit Agreement and the 2016 Notes indenture contain financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests.
The terms of the Credit Agreement and the 2023 Notes indentures contain financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our ability to borrow under our Credit Agreement is subject to compliance with a consolidated leverage ratio covenant and a consolidated interest coverage ratio covenant.
As a result, these requirements and other potential self-regulatory standards and industry codes of conduct could require us to take on more onerous obligations in our contracts, restrict our ability to store, transfer and otherwise process data or, in some cases, impact our ability to offer certain services in certain locations, to deploy our software or data solutions, to market to current and prospective customers, or to derive insights from customers’ online activity and data globally. ​ ​ ​ Ritchie Bros. 27 ​ Table of Contents We believe that laws and regulations in the United States, Canada, the United Kingdom, Australia the European Union and in other jurisdictions will be increasingly restrictive in the field of data privacy and protection and will in turn result in an increase in regulatory burdens for us to address to continue meeting our customers’ expectations, in particular in relation to the sharing of personal information with third parties, the use of machine learning and big data, and the tracking of online activities for advertising.
We believe that laws and regulations in the United States, Canada, the United Kingdom, Australia the European Union and in other jurisdictions will be increasingly restrictive in the field of data privacy and protection and will in turn result in an increase in regulatory burdens for us to address to continue meeting our customers’ expectations, in particular in relation to the sharing of personal information with third parties, the use of machine learning and big data, and the tracking of online activities for advertising.
Any breach of our IT systems may have a material adverse impact on our business, the assessment of the performance of our internal control environment, results of operations, reputation, stock price and our ability to access capital markets, and may also be deemed to contribute to a material weakness in internal controls over financial reporting. ​ ​ ​ Ritchie Bros. 22 ​ Table of Contents Security events, hacking or other malicious or surreptitious activity (or the perception that such activities have occurred), could damage our reputation, cause a loss of confidence in the security of our services and thereby a loss of customers, and expose us to a risk of loss, governmental investigations and enforcement actions or litigation and possible liability for damages.
Security events, hacking or other malicious or surreptitious activity (or the perception that such activities have occurred), could damage our reputation, cause a loss of confidence in the security of our services and thereby a loss of customers, and expose us to a risk of loss, governmental investigations and enforcement actions or litigation and possible liability for damages.
Further, breaches experienced by other companies may also be leveraged against us and sophisticated actors can mask their attacks, making them increasingly difficult to identify and prevent.
Further, breaches experienced by other companies may also be leveraged against us and RB Global, Inc. 22 Table of Contents sophisticated actors can mask their attacks, making them increasingly difficult to identify and prevent. There can be no assurance that impacts from these incidents will not be material or significant in the future.
Our insurance policies may not be adequate to reimburse us for losses caused by security breaches, and we may not be able to fully collect, if at all, under these insurance policies. ​ Our future expenses may increase significantly and our operations and ability to expand may be limited as a result of licenses, laws and regulations governing auction sites, environmental protection, international trade and other matters. ​ A variety of federal, provincial, state and local laws, rules and regulations throughout the world apply to our business, relating to, among other things, tax and accounting rules, the auction business, imports and exports of equipment, property ownership laws, licensing, worker safety, privacy and security of customer information, land use and the use, storage, discharge and disposal of environmentally sensitive materials.
A variety of federal, provincial, state and local laws, rules and regulations throughout the world apply to our business, relating to, among other things, tax and accounting rules, the auction business, imports and exports of equipment, property ownership laws, licensing, worker safety, privacy and security of customer information, land use and the use, storage, discharge and disposal of environmentally sensitive materials.
Although we expect the elimination of duplicative costs, as well as the realization of other efficiencies ​ ​ Ritchie Bros. 19 ​ Table of Contents related to the integration of our operations with IAA, may offset incremental transaction and transaction-related costs over time, this net benefit may not be achieved in the near term or to the extent anticipated. ​ Risk Related to Our Business ​ We may not realize the anticipated benefits of, and synergies from, acquisitions and may become responsible for certain liabilities and integration costs as a result. ​ We have acquired, and may continue to acquire, businesses that have previously operated independently from us.
Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the two businesses may offset incremental transaction and transaction-related costs over time, this net benefit may not be achieved in the near term, to the extent anticipated or at all.
As such, in addition to tax risk from a financial perspective, our activities may expose us to reputational risk.
As such, in addition to tax risk from a financial perspective, our activities may expose us to reputational risk. Our substantial international operations expose us to additional risks that could harm our business, including foreign exchange rate fluctuations that could harm our results of operations.
Difficulties associated with the integration of acquired businesses could have a material adverse effect on our business. ​ In addition, in connection with acquisitions, we have assumed, and may assume in connection with future acquisitions, certain potential liabilities.
In addition, in connection with acquisitions, we have assumed, and may assume in connection with future acquisitions, certain potential liabilities. To the extent such liabilities are not identified by us or to the extent indemnifications obtained from third parties are insufficient to cover such liabilities, these liabilities could have a material adverse effect on our business.
The integration of our operations with those of acquired businesses, including IAA, is intended to result in financial and operational benefits, including certain tax and run-rate synergies. There can be no assurance, however, regarding when or the extent to which we will be able to realize these and other benefits.
We have acquired, and may continue to acquire, businesses that have previously operated independently from us. The integration of our operations with those of acquired businesses, including IAA, is intended to result in financial and operational benefits, including certain tax and run-rate synergies.
Although we have policies restricting the access to the personal and confidential information we store, there is a risk that these policies may not be effective in all cases. Ransomware attacks are becoming increasingly prevalent and severe, and can lead to significant interruptions in our operations, loss of data and income, reputational loss, and diversion of funds.
Ransomware attacks are becoming increasingly prevalent and severe, and can lead to significant interruptions in our operations, loss of data and income, reputational loss, and diversion of funds.
Our deferred income tax amounts are valued based upon enacted income tax rates in effect at the time, which can be changed by governments in the future. ​ ​ Ritchie Bros. 24 ​ Table of Contents The audit and review activities of tax authorities affect the ultimate determination of the actual amounts of commodity taxes payable or receivable, income taxes payable or receivable, deferred income tax assets and liabilities, and income tax expense.
The audit and review activities of tax authorities affect the ultimate determination of the actual amounts of commodity taxes payable or receivable, income taxes payable or receivable, deferred income tax assets and liabilities, and income tax expense.
In addition, responding to any enforcement action may result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.
In addition, responding to any enforcement action may result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. We are pursuing a long-term growth strategy that may include acquisitions and developing and enhancing an appropriate sales strategy, which requires upfront investment with no guarantee of long-term returns.
They may also compete against us through internet-based services and other combined service offerings. If commission rates decline, or if our strategy to compete against our many competitors is not effective, our revenues, market share, financial condition and results of operations may be adversely impacted.
RB Global, Inc. 30 Table of Contents If commission rates decline, or if our strategy to compete against our many competitors is not effective, our revenues, market share, financial condition and results of operations may be adversely impacted. We may be susceptible to loss of business if competing selling models become more appealing to customers.
Further, licensed hardware, software and cloud computing platforms may not continue to be available at reasonable prices, on commercially reasonable terms or at all.
Some of our systems are not fully redundant, and our recovery planning may not be sufficient for all possible disruptions. Further, the access to and use of needed hardware and software, including cloud computing resources, may not continue to be available at reasonable prices, on commercially reasonable terms or at all.
We may experience difficulties in integrating our operations with those of IAA and realizing the expected benefits of the acquisition. The success of the proposed acquisition of IAA, if completed, will depend in part on our ability to realize the anticipated business opportunities and cost synergies from combining with IAA in an efficient and effective manner.
We may be unable to realize the anticipated cost synergies and other opportunities expected from the acquisition of IAA, which could adversely affect our business, financial condition and results of operations. The success of our acquisition of IAA will depend, in part, on our ability to realize the anticipated cost synergies from combining the respective businesses of the two companies.
These laws and regulations restrict us from providing services to, or otherwise engaging in direct or indirect transactions or dealings with, certain countries, territories, governments, and persons. We have implemented procedures designed to maintain compliance with these laws, including monitoring, on an automatic and manual basis, the identity and location of potential sellers and buyers.
We have implemented procedures designed to maintain compliance with these laws, including monitoring, on an automatic and manual basis, the identity and location of potential sellers and buyers. We can offer no assurances that these procedures will always be effective.
We are also required to have our independent registered public accounting firm issue an opinion on the effectiveness of our internal control over financial reporting on an annual basis. ​ As previously reported, during the fiscal year ended December 31, 2020, we identified two material weaknesses in our internal control over financial reporting.
We are also required to have our independent registered public accounting firm issue an opinion on the effectiveness of our internal control over financial reporting on an annual basis. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2: PROPERTIES ​ We own and lease various properties in Canada, the United States and 10 other countries globally. We use the properties as auction sites, storage warehouses, and as executive and administrative offices. Our corporate headquarters are located in Burnaby, Canada, and are held through a lease that expires in May 2030.
Biggest changeITEM 2: PROPERTIES We own and lease various properties globally, primarily in the United States, Canada, United Kingdom, and Australia. We use the properties for our operations, primarily as auction sites and for storage purposes, and as administrative offices, which support our various businesses and brands.
In 2022, many of our employees continued to work remotely . The longer-term strategy with respect to our administrative offices and auction sites will reflect on-going review of business and customer needs, as well as consider employee preferences. ​
RB Global, Inc. 33 Table of Contents In 2023, many of our employees continued to work remotely . The longer-term strategy with respect to our administrative offices and auction sites will reflect on-going review of business and customer needs, as well as consider employee preferences.
Removed
We also lease the following other properties which support our businesses: ● A European head office in Breda, Netherlands; ● IronPlanet’s head office in Pleasanton, United States; ● Rouse’s head office in Los Angeles, United States; ● SmartEquip’s head office in Connecticut, United States; ● An administrative office in Fort Worth, United States; and ● Two warehouses supporting GovPlanet operations in Las Vegas and Chambersburg, United States. ​ We also own an administrative office in Lincoln, Nebraska, United States.
Added
After the acquisition of IAA on March 20, 2023, we changed our headquarters from Burnaby, Canada to Westchester, Illinois, United States, which is held through a lease until 2027. We also lease other administrative offices in the United States, Canada and the Netherlands. In total, we lease approximately 639,000 square feet of administrative office space.
Removed
International Network of Auction Sites ​ We generally attempt to establish our auction sites in industrial areas close to major cities. Our auction sites benefit consignors who prefer to drop off their equipment on premise, where we offer “care, custody and control”.
Added
We own and lease operating facilities primarily in the United States.
Removed
Our auction sites also allow buyers to come in advance of the onsite auction and physically inspect the equipment they plan to bid on.
Added
The table below sets forth a summary of our owned and leased properties for operations, by region and acreage, at December 31, 2023: Location Number of Locations Owned Acreage Leased Acreage United States 242 3,052 6,356 Canada 29 871 353 International 35 748 283 Total 306 4,671 6,992 In addition, we lease two warehouses in the United States to support our GovPlanet operations.
Removed
Although we lease some auction sites, we have historically preferred to purchase land and construct purpose-built facilities once we have established a base of business and determined that a region can generate sufficient financial returns to justify the investment.
Added
To support our customers and our operations in catastrophe events, we also hold agreements that give us the option to lease specific properties within certain timeframes, should a catastrophic weather event occur close to these locations. The total acreage for these agreements is approximately 1,600 acres.
Removed
We currently have over 40 locations in our auction site network that are either owned or leased as of the date of this Annual Report on Form 10-K.
Added
We generally attempt to establish locations that store commercial assets and vehicles in industrial areas close to major cities.
Removed
We have 22 local satellite yards (4 were added in 2022 compared to 18 added in 2021) globally to reduce transportation barriers for our customers and increase their accessibility to our auctions and online marketplaces. We also have 28 GovPlanet yards and 2 GovPlanet warehouses in the United States, which are used for servicing our US military agreements.
Added
Some of our locations are auction sites, and our proximity benefits our sellers who prefer to drop off their assets on the premises where we offer “care, custody and control", and also benefits our buyers who prefer to inspect and interact with the assets prior to bidding.
Removed
In March 2022, we completed the sale and leaseback of our Bolton property, a parcel of land including all buildings, in Bolton, Ontario, Canada.
Added
In addition, we expect that our wide network of auction sites, and their proximity to major cities, helps enhance our services in the automotive sector by improving our agility to respond during catastrophic events while reducing our incremental costs. We believe that our administrative offices and operating facilities are adequate and suitable to conduct our operations.
Removed
We intend to lease the Bolton property for our auction operations until mid-2024 when we expect to have completed ​ ​ Ritchie Bros. 33 ​ Table of Contents the acquisition and development of a replacement property located in Ontario, Canada. In September 2022, we also completed the purchase of an auction site in Maltby, United Kingdom.
Added
We regularly evaluate our capacity in all our markets and where appropriate, seek to increase capacity through the acquisition of additional land and facilities. Capacity at our facilities varies from period to period and by region as a result of various factors, including natural disasters.
Removed
The general location and ownership of our auction site network properties and our yards used in our A&M segment are set forth below: ​ ​ ​ ​ ​ ​ ​ ​ Location Number of Auction Sites ​ Owned Acreage ​ Leased Acreage Main auction sites ​ ​ ​ ​ ​ ​ United States 20 ​ 1,747 210 Canada 10 ​ 672 117 Europe 6 ​ 325 — Australia ​ 2 ​ 82 ​ — Other 3 ​ 341 44 Total ​ 41 ​ 3,167 ​ 371 ​ ​ ​ ​ ​ ​ ​ Local satellite yards ​ ​ ​ ​ ​ ​ United States 11 ​ 113 107 Canada 3 ​ — 26 Europe 3 ​ — 14 Australia 5 ​ — 17 Total ​ 22 ​ 113 ​ 164 ​ ​ ​ ​ ​ ​ ​ GovPlanet yards ​ ​ ​ ​ ​ ​ United States 28 ​ — 259 Total ​ 28 ​ — ​ 259 ​ We believe that our administrative offices and auction sites are adequate and suitable to conduct our operations.
Added
ITEM 3: LEGAL PROCEEDINGS We have no material legal proceedings pending, other than ordinary routine litigation incidental to the business, and we do not know of any material proceedings contemplated by governmental authorities.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFinancial information about our equity and share-based payments is set forth in our consolidated financial statement footnotes 24 “Equity and dividends” and 25 “Share-based payments” in “Part II, Item 8: “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Market Information Our common shares, without par value, are issued in registered form.
Biggest changeFinancial information about our equity and share-based payments is set forth in our consolidated financial statements in "Part II, Item 8: Financial Statements and Supplementary Data - Note 23 Temporary Equity, Stockholders' Equity and Dividends and Item 8: Financial Statements and Supplementary Data - Note 24 Share-based Payments" of this Annual Report on Form 10-K.
This summary is restricted to beneficial owners of common shares each of whom, at all material times for the purposes of the Canadian Tax Act and the Convention, (i) is resident solely in the U.S., (ii) is entitled to the full benefits of the Convention, (iii) holds all common shares as capital property, (iii) holds no common shares that are “taxable Canadian property” (within the meaning of the Canadian Tax Act), (iv) deals at arm’s length with and is not affiliated with Ritchie Bros., (v) does not and is not deemed to use or hold any common shares in a business carried on in Canada, and (vi) is not an "authorized foreign bank" (as defined in the Canadian Tax Act) or an insurer that carries on business in Canada and elsewhere (each such holder, a “U.S.
This summary is restricted to beneficial owners of common shares each of whom, at all material times for the purposes of the Canadian Tax Act and the Convention, (i) is resident solely in the U.S., (ii) is entitled to the full benefits of the Convention, (iii) holds all common shares as capital property, (iv) holds no common shares that are “taxable Canadian property” (within the meaning of the Canadian Tax Act), (v) deals at arm’s length with and is not affiliated with RB Global, (vi) does not and is not deemed to use or hold any common shares in a business carried on in Canada, and (vii) is not an "authorized foreign bank" (as defined in the Canadian Tax Act) or an insurer that carries on business in Canada and elsewhere (each such holder, a “U.S.
Resident Holders whose shares may be taxable Canadian property should consult their own tax advisors Dividends on Common Shares Dividends paid or credited, or deemed to be paid or credited, on common shares to a U.S. Resident Holder will generally be subject to Canadian withholding tax.
Resident Holders whose common shares may be taxable Canadian property should consult their own tax advisers Dividends on Common Shares Dividends paid or credited, or deemed to be paid or credited, on common shares to a U.S. Resident Holder will generally be subject to Canadian withholding tax.
This amount reflects 100% of target numbers of PSUs granted and includes dividend equivalent rights credited in connection with such PSUs. Under the PSU Plans, the number of PSUs that vest is conditional upon specified market, service, and/or performance vesting conditions being met.
This amount reflects 100% of target numbers of PSUs granted and includes dividend equivalent rights credited in connection with such PSUs. Under the Plan, the number of PSUs that vest is conditional upon specified market, service, and/or performance vesting conditions being met.
Resident Holder does not deal at arm’s length, or any partnership in which the holder or persons with whom the holder did not deal at arm’s length holds a membership interest directly or indirectly through one or more partnerships, alone or in any combination, owned 25% or more of the issued shares of any class or series of our share capital; and (ii) more than 50% of the fair market value of such common share was derived directly or indirectly from, or from any combination of, real or immovable property situated in Canada, “Canadian resource properties” (as defined in the Canadian Tax Act), “timber resource properties” (as defined in the Canadian Tax Act), or options in respect of, interests in or civil law rights in, such properties, whether or not such properties exist.
Resident Holder did not deal at arm’s length holds a membership interest directly or indirectly through one or more partnerships, alone or in any combination, owned 25% or more of the issued shares of any class or series of our share capital; and (ii) more than 50% of the fair market value of such common share was derived directly or indirectly from, or from any combination of, real or immovable property situated in Canada, “Canadian resource properties” (as defined in the Canadian Tax Act), “timber resource properties” (as defined in the Canadian Tax Act), or options in respect of, interests in or civil law rights in, such properties, whether or not such properties exist.
There are no limitations under the laws of Canada or in our organizational documents on the right of foreigners to hold or vote our common shares, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of control of Ritchie Bros. by a “non-Canadian”.
There are no limitations under the laws of Canada or in our organizational documents on the right of foreigners to hold or vote our common shares, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of control of RB Global by a “non-Canadian”.
Accordingly, holders of common shares should consult their own tax advisers with respect to their individual circumstances. ​ ​ Ritchie Bros. 37 ​ Table of Contents Disposition of Common Shares A U.S. Resident Holder will not be subject to tax under the Canadian Tax Act in respect of any capital gain realized by such U.S.
Accordingly, holders of common shares should consult their own tax advisers with respect to their individual circumstances. Disposition of Common Shares A U.S. Resident Holder will not be subject to tax under the Canadian Tax Act in respect of any capital gain realized by such U.S.
Because Ritchie Bros. Auctioneers Incorporated is a holding company with no material assets other than the shares of its subsidiaries, our ability to pay dividends on our common shares depends on the income and cash flow of our subsidiaries. No financing agreements to which our subsidiaries are party currently restrict those subsidiaries from paying dividends.
Because RB Global Inc. is a holding company with no material assets other than the shares of its subsidiaries, our ability to pay dividends on our common shares depends on the income and cash flow of our subsidiaries. No financing agreements to which our subsidiaries are party currently restrict those subsidiaries from paying dividends.
Resident Holder who is a beneficial owner of a dividend will generally be subject to Canadian withholding tax at the rate of 15% of the gross amount of such dividend, unless the beneficial owner is a company which owns (or is deemed under the Convention to own) at least 10% of the voting shares of Ritchie Bros. at that time, in which case the rate of Canadian withholding tax is generally reduced to 5%.
Resident Holder who is a beneficial owner of a dividend will generally be subject to Canadian withholding tax at the rate of 15% of the gross amount of such dividend, unless the beneficial owner is a company which owns (or is deemed under the Convention to RB Global, Inc. 38 Table of Contents own) at least 10% of the voting shares of RB Global at that time, in which case the rate of Canadian withholding tax is generally reduced to 5%.
Comparison of Cumulative Return The following graph compares the cumulative return on a $100 investment in our common shares over the last five fiscal years beginning December 31, 2017 through December 31, 2022, to that of the cumulative return on a $100 investment in the Russell Global Index (“Russell 2000”), the S&P / TSX Composite Index (“S&P/TSX”) and the Dow Jones Industrial Average Index (“DJIA”) for the same period.
RB Global, Inc. 35 Table of Contents Comparison of Cumulative Return The following graph compares the cumulative return on a $100 investment in our common shares over the last five fiscal years beginning December 31, 2018 through December 31, 2023, to that of the cumulative return on a $100 investment in the Russell Global Index (“Russell 2000”), the S&P / TSX Composite Index (“S&P/TSX”) and the Dow Jones Industrial Average Index (“DJIA”) for the same period.
For the PSUs with market conditions granted in 2021 and 2022 under the PSU Plans, the market vesting condition is based on the total stockholder return performance of the Company relative to the performance of the S&P 500 index members at the date of grant.
For the August 2021 and June 2022 PSUs with market conditions, the market vesting condition is based on the total stockholder return performance of the Company relative to the performance of the S&P 500 index members at the date of grant.
Resident Holder”). Certain U.S.-resident entities that are fiscally transparent for U.S. federal income tax purposes (including limited liability companies) may not be regarded by the Canada Revenue Agency (“CRA”) as entitled to the benefits of the Convention.
Resident Holder”). RB Global, Inc. 37 Table of Contents Certain U.S.-resident entities that are fiscally transparent for U.S. federal income tax purposes (including limited liability companies) may not be regarded by the CRA as entitled to the benefits of the Convention.
Share units granted under our PSU plans with no market vesting conditions are based on the achievement of specific performance measures and can result in participants earning between 0% and 200% of the target number of PSUs granted.
Share units granted under our Plan with no market vesting conditions are based on the achievement of specific performance measures and can result in participants earning between 0% and 200% of the target number of PSUs granted. Further, we have the option to choose whether to settle these PSUs without market vesting conditions in cash or in shares.
Resident Holder, any one or more persons with whom the U.S.
Resident Holder, any one or more persons with whom the U.S. Resident Holder does not deal at arm’s length, or any partnership in which the U.S. Resident Holder or persons with whom the U.S.
The transfer agent for the shares is Computershare Trust Company of Canada, 100 University Avenue, 9 th Floor, Toronto, Ontario M5J 2Y1. Our common shares trade on the NYSE and on the TSX under the symbol “RBA”.
Market Information Our common shares, without par value, are issued in registered form. The transfer agent for the shares is Computershare Trust Company of Canada, 100 University Avenue, 9 th Floor, Toronto, Ontario M5J 2Y1.
PSUs with market conditions can result in participants earning between 0% and 300% of the target number granted. There were no market vesting conditions for the share units granted under the PSU Plans in 2019 and 2020.
The August 2021 and June 2022 PSUs with market conditions can result in participants earning between 0% and 300% of the target number granted.
On February 21, 2023, there were 625 holders of record of our common shares that do not include the shareholders for whom shares are held in a nominee or street name. Dividend Policy We currently pay a regular quarterly cash dividend of $0.27 per common share.
Our common shares trade on the NYSE and on the TSX under the symbol “RBA.” On February 28, 2024, there were 1,177 holders of record of our common shares that do not include the shareholders for whom shares are held in a nominee or street name.
(2) Weighted average exercise price does not include the effect of our outstanding share units. The remaining term of our stock options is 6.5 years.
For further discussion on the PSUs granted under our Plans, refer to "Part II, Item 8: Financial Statements and Supplementary Data - Note 24 Share-based Payments". (2) Weighted average exercise price does not include the effect of our outstanding share units. The remaining term of our stock options is 5.5 years.
There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to U.S.
There are no laws in Canada or exchange restrictions affecting the remittance of dividends and other payments to U.S. Resident Holders (as defined below) of our common shares, other than withholding tax.
Removed
Special Dividend On January 23, 2023, we announced that our Board of Directors expects to approve the payment of a one-time special dividend to our shareholders in the amount of $1.08 per share, contingent upon the closing of the merger with IAA.
Added
The Series A Senior Preferred Shares of the Company are not listed on any exchange and there is no established public trading market for the Series A Senior Preferred Shares.
Removed
The special dividend will be payable to holders of record of our common shares as of a record date prior to the effective time to be determined with the consent of the TSX and only if the merger is completed.
Added
Holders of the Series A Senior Preferred Shares are entitled to vote together with the common shares on an as-converted basis on all matters permitted by applicable law, subject to certain exceptions to enable compliance with applicable antitrust law.
Removed
Our shareholders will only be eligible to receive the special dividend if they own their common shares through the record date determined for the special dividend, which we will publicly announce following determination. IAA stockholders will not be entitled to receive the special dividend with respect to any of our common shares received as consideration in the merger.
Added
As of February 27, 2024, each holder of Series A Senior Preferred Shares would be entitled to 0.0139696 vote per Series A Senior Preferred Share held.
Removed
We will not pay the special dividend if the merger agreement is terminated or the merger is otherwise not completed for any reason.
Added
Series A Senior Preferred Shares represent, as of February 27, 2024, 6,775,252 votes, which is the number of common shares into which the Series A Senior Preferred Shares could be converted as of February 27, 2024. Such number of votes represents approximately 3.6% of the voting rights attached to the Company’s securities as of February 27, 2024.
Removed
This graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. ​ ​ Ritchie Bros. 35 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company / index 2017 2018 2019 2020 2021 2022 RBA (NYSE) ​ $ 100.0 ​ $ 111.1 ​ $ 148.8 ​ $ 244.9 ​ $ 218.8 ​ $ 210.3 Russell 2000 ​ $ 100.0 ​ $ 88.1 ​ $ 110.6 ​ $ 132.6 ​ $ 152.3 ​ $ 121.1 S&P/TSX ​ $ 100.0 ​ $ 90.6 ​ $ 111.3 ​ $ 117.5 ​ $ 147.1 ​ $ 138.6 DJIA ​ $ 100.0 ​ $ 96.1 ​ $ 120.5 ​ $ 132.2 ​ $ 159.9 ​ $ 148.9 ​ Securities Authorized for Issuance under Equity Compensation Plans ​ The following table sets forth information about the Company’s equity compensation plans at December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities remaining ​ ​ Number of securities to be issued ​ Weighted average exercise ​ available for future issuance under ​ ​ upon exercise of options, ​ price of outstanding options, ​ equity compensation plans (excluding ​ ​ warrants and rights ​ warrants and rights ​ securities reflected in column (a)) Plan Category ​ (a) ​ (b) ​ I Equity compensation plans approved by security holders 4,682,264 (1) ​ $ 59.77 (2) ​ 5,299,246 (3) ​ Equity compensation plans not approved by security holders — ​ — ​ — ​ Total 4,682,264 ​ $ 59.77 ​ 5,299,246 ​ (1) Reflects our Stock Option Plan, the IronPlanet Stock Plans, PSUs granted under the Executive PSU Plan and the Employee PSU Plan, and equity-classified RSUs.
Added
In the event of a take-over bid for the common shares, a holder of Series A Senior Preferred Shares may participate in such take-over bid by exercising the conversion rights attached to such Series A Senior Preferred Shares.
Removed
Further, we have the option to choose whether to settle these PSUs without market vesting conditions in ​ ​ Ritchie Bros. 36 ​ Table of Contents cash or in shares. For further discussion on the PSUs granted under our Plans, refer to Note 25 of the consolidated financial statements, Share-based Payments.
Added
Each outstanding Series A Senior Preferred Share shall be convertible into common shares at the option of the holder, subject to the terms and conditions contained in the articles of the Company.
Removed
(3) Consists of: (a) 3,919,069 common shares available for issuance under the Stock Option Plan; (b) no common shares are available for issuance under the IronPlanet Stock Plans; (c) 778,551 common shares that we may elect to issue upon settlement of our PSUs granted under the PSU Plans; and (d) 601,626 common shares that we may elect to issue upon settlement of our RSUs granted under the RSU Plans. ​ Exchange Controls Canada has no system of exchange controls.
Added
Under certain circumstances prescribed under the articles of the Company, a holder of Series A Senior Preferred Shares may also have the right to require the Company to redeem all or any portion of such holder’s Series A Senior Preferred Shares for cash in the event of a take-over bid.
Removed
Resident Holders (as defined below) of our common shares, except as discussed in “Certain Canadian Federal Income Tax Considerations for U.S. Residents” below.
Added
Dividend Policy We currently pay a regular quarterly cash dividend of $0.27 per common share.
Added
This graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Added
Company / index 2018 2019 2020 2021 2022 2023 RBA (NYSE) $ 100.0 $ 133.9 $ 220.5 $ 197.0 $ 189.3 $ 227.5 Russell 2000 $ 100.0 $ 125.5 $ 150.5 $ 172.7 $ 137.4 $ 160.6 S&P/TSX $ 100.0 $ 122.9 $ 129.8 $ 162.4 $ 153.1 $ 171.2 DJIA $ 100.0 $ 125.3 $ 137.5 $ 166.3 $ 154.9 $ 180.0 RB Global, Inc. 36 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The following table sets forth information about the Company’s equity compensation plans at December 31, 2023.
Added
Plan Category Number of securities to be issued upon exercise of options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 4,341,109 (1) $ 59.89 (2) 11,331,020 (3) Equity compensation plans not approved by security holders — — — Total 4,341,109 $ 59.89 11,331,020 _____________________________________________________ (1) Reflects our 2023 Share Incentive Plan, which was approved by the Company's shareholders on May 8, 2023, as well as equity awards granted under our previous plans until expiration or settlement.
Added
For the August 2023 PSUs with market conditions, the market vesting condition is based on the total stockholder return performance of the Company relative to the performance of the Russell 3000 index members at the date of grant. The August 2023 PSUs with market conditions can result in participants earning between 0% and 200% of the target number granted.
Added
(3) Consists of 8,511,523 common shares available for issuance under the 2023 Share Incentive Plan and 2,819,497 common shares available for issuance under the 2023 ESPP. Exchange Controls Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

90 edited+151 added−120 removed10 unchanged
Biggest changeThe lease liability is not included in the calculation of debt. ​ ​ Ritchie Bros. 66 ​ Table of Contents Adjusting items for the year ended December 31, 2022: Recognized in the fourth quarter of 2022 ● $9.1 million share-based payments expense. ● $22.2 million of acquisition-related costs primarily relating to the proposed acquisition of IAA, and the share-based continuing employment costs for the acquisitions of Rouse and SmartEquip. ● $8.2 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet, SmartEquip, and Rouse. ● $0.9 million loss on disposition of property, plant and equipment and related costs includes a $1.3 million non-cash cost in the quarter relating to the adjustment made to recognize the Bolton property sale proceeds at fair value when calculating the $169.0 million gain on the Bolton property in the first quarter of 2022, partially offset by $0.3 million gain on disposition of property, plant and equipment in the quarter. ● $0.2 million of non-recurring advisory, legal and restructuring costs relating to retention costs in connection with the restructuring of our information technology team during the year. ​ Recognized in the third quarter of 2022 ● $8.8 million share-based payments expense. ● $2.0 million of acquisition-related costs primarily relating to the share-based continuing employment costs for the acquisitions of Rouse and SmartEquip. ● $8.2 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet, SmartEquip, and Rouse. ● $0.9 million loss on disposition of property, plant and equipment and related costs includes a $1.3 million non-cash cost in the quarter relating to the adjustment made to recognize the Bolton property sale proceeds at fair value when calculating the $169.0 million gain on the Bolton property in the first quarter of 2022, partially offset by $0.3 million gain on disposition of property, plant and equipment in the quarter. ● $1.5 million of non-recurring advisory, legal and restructuring costs, which include $1.1 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $0.3 million of severance and retention costs in connection with the restructuring of our information technology team during the first quarter of 2022, driven by our strategy to build a new digital technology platform , and $0.1 million of advisory costs relating to a cybersecurity incident detected in the fourth quarter of 2021. ​ Recognized in the second quarter of 2022 ● $13.6 million share-based payments expense. ● $3.4 million of acquisition-related costs related to the proposed acquisition of Euro Auctions and the completed acquisitions of SmartEquip and Rouse. ● $8.4 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet, SmartEquip, and Rouse. ● $1.2 million loss on disposition of property, plant and equipment and related costs includes a $1.3 million non-cash cost in the quarter relating to the adjustment made to recognize the Bolton property sale proceeds at fair value when calculating the $169.0 million gain on the Bolton property in the first quarter of 2022, and $0.1 million gain on disposition of property, plant and equipment in the quarter. ● $9.7 million loss on redemption of the 2021 Notes and certain related interest expense includes (a) $4.8 million of loss on redemption of the 2021 Notes due to a difference between the reacquisition price of the 2021 Notes and the net carrying amount of the extinguished debt (primarily the write off of the unamortized debt issuance costs), (b) $0.7 million of deferred debt issuance costs written off due to the expiry of the undrawn $205.0 million DDTL Facility in the quarter, and (c) non-recurring interest expense of $4.2 million incurred in the quarter relating to the 2021 Notes, which were redeemed as a result of the discontinued Euro Auctions acquisition in April 2022. ● $1.1 million of non-recurring advisory, legal and restructuring costs, which include $0.6 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $0.3 million of severance and retention costs in connection with the restructuring of our information technology team driven by our strategy to build a new digital technology platform , and $0.2 million of advisory costs relating to a cybersecurity incident detected in the fourth quarter of 2021. ​ ​ ​ ​ Ritchie Bros. 67 ​ Table of Contents Recognized in the first quarter of 2022 ● $5.4 million share-based payments expense. ● $8.5 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet, SmartEquip, and Rouse. ● $169.8 million gain recognized on the disposition of property, plant and equipment of which $169.1 million related to the sale of a property located in Bolton, Ontario. ● $9.6 million of acquisition-related costs related to the proposed acquisition of Euro Auctions and the completed acquisitions of SmartEquip and Rouse. ● $1.3 million gain due to the change in fair value of derivatives to manage our exposure to foreign currency exchange rate fluctuations on the purchase consideration for the proposed acquisition of Euro Auctions. ● $2.3 million of non-recurring advisory, legal and restructuring costs, which include $0.9 million related to severance and retention costs in connection with the restructuring of our information technology team driven by our strategy to build a new digital technology platform, $0.5 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $0.4 million of SOX remediation costs, and $0.6 million of advisory costs relating to a cybersecurity incident detected in the fourth quarter of 2021. ​ Adjusting items for the year ended December 31, 2021: ​ Recognized in the fourth quarter of 2021 ● $6.2 million share-based payments expense. ● $7.9 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet, SmartEquip, and Rouse. ● $14.0 million of acquisition-related costs related to the proposed acquisition of Euro Auctions and the completed acquisitions of SmartEquip and Rouse. ● $0.1 million gain recognized on the disposition of property, plant and equipment. ● $1.3 million loss due to the change in fair value of derivatives to manage our exposure to foreign currency exchange rate fluctuations on the purchase consideration for the proposed acquisition of Euro Auctions. ● $2.6 million of non-recurring advisory, legal and restructuring costs, which include $1.4 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $0.7 million of SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, and $0.5 million of advisory costs relating to a cybersecurity incident detected in the fourth quarter of 2021. ​ Recognized in the third quarter of 2021 ● $5.6 million share-based payments expense. ● $6.6 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet and Rouse. ● $10.3 million of acquisition-related costs related to the acquisitions of Rouse, and SmartEqui p and proposed acquisition of Euro Auctions. ● $1.1 million gain recognized on the sale of a property in Denver, Colorado. ● $0.7 million of non-recurring advisory, legal and restructuring costs related to SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020 , which has been retrospectively applied to the third quarter of 2021. ​ Recognized in the second quarter of 2021 ● $7.5 million share-based payments expense. ● $6.8 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet and Rouse. ● $3.0 million of acquisition-related costs related to the acquisition of Rouse. ● $0.2 million gain recognized on the disposition of property, plant and equipment. ● $0.2 million of non-recurring advisory, legal and restructuring costs related to SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020 , which has been retrospectively applied to the second quarter of 2021. ​ Recognized in the first quarter of 2021 ● $3.8 million share-based payments expense. ● $6.6 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet and Rouse. ● $2.9 million of acquisition-related costs related to the acquisition of Rouse. ​ ​ ​ ​ Ritchie Bros. 68 ​ Table of Contents Adjusting items for the year ended December 31, 2020: Recognized in the fourth quarter of 2020 ● $4.6 million share-based payments expense. ● $5.6 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet and Rouse. ● $6.0 million of acquisition-related costs related to the acquisition of Rouse. ● $1.5 million of current income tax expense recognized related to an unfavourable adjustment to reflect final regulations published in the second quarter of 2020 regarding hybrid financing arrangements. ​ Recognized in the third quarter of 2020 ● $8.6 million share-based payments expense. ● $5.0 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet. ● $0.3 million gain recognized on the disposition of property, plant and equipment. ● $3.9 million of severance costs, recognized in non-recurring advisory, legal and restructuring costs, related to the realignment of leadership to support the new global operations organization, in line with strategic growth priorities led by the new CEO.
Biggest changeRecognized in the second quarter of 2022 • $13.6 million share-based payments expense. • $3.4 million of acquisition-related and integration costs related to the terminated acquisition of Euro Auctions and the completed acquisitions of SmartEquip and Rouse. • $8.4 million amortization of acquired intangible assets primarily from the acquisitions of IronPlanet, SmartEquip, and Rouse. • $1.2 million gain on disposition of property, plant and equipment and related costs includes a $1.3 million non-cash cost in the quarter relating to the adjustment made to recognize the Bolton property sale proceeds at fair value when calculating the $169.1 million gain on the Bolton property in the first quarter of 2022, and $0.1 million gain on disposition of property, plant and equipment in the quarter. • $9.7 million loss on redemption of the 2021 Notes and certain related interest expense includes (a) $4.8 million of loss on redemption of the 2021 Notes due to a difference between the reacquisition price of the 2021 Notes and the net carrying amount of the extinguished debt (primarily the write off of the unamortized debt issuance costs), (b) $0.7 million of deferred debt issuance costs written off due to the expiry of the undrawn $205.0 million DDTL Facility in the quarter, and (c) interest expense of $4.2 million incurred in the quarter relating to the 2021 Notes, which were redeemed as a result of the terminated Euro Auctions acquisition in April 2022. • $1.1 million of other advisory, legal and restructuring costs, which include $0.6 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $0.3 million of severance and retention costs in connection with the restructuring of our information technology team driven by our strategy to build a new digital technology platform, and $0.2 million of advisory costs relating to a cybersecurity incident detected in the fourth quarter of 2021.
In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with US GAAP. Certain of these data are considered “non-GAAP financial measures” under the SEC rules.
In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our consolidated financial statements prepared in accordance with US GAAP. Certain of these data are considered “non-GAAP financial measures” under the SEC rules.
Adjusted Operating Income Reconciliation We believe that adjusted operating income provides useful information about the growth or decline of our operating income for the relevant financial period and eliminates the financial impact of adjusting items we do not consider to be part of our normal operating results.
Adjusted Operating Income Reconciliation We believe that adjusted operating income provides useful information about the growth or decline of our operating income for the relevant financial period and eliminates the financial impact of adjusting items that we do not consider to be part of our normal operating results.
Except for GTV, which is a measure of operational performance and not a measure of financial performance, liquidity, or revenue, the amounts discussed below are based on our consolidated financial statements. Unless indicated otherwise, all tabular dollar amounts, including related footnotes, presented below are expressed in thousands of United States (“U.S.”) dollars.
Except for GTV, which is a measure of operational performance and not a measure of financial performance, liquidity, or revenue, the amounts discussed below are based on our consolidated financial statements. Unless indicated otherwise, all tabular dollar amounts, including related footnotes, presented below are expressed in millions of United States (“U.S.”) dollars.
As the fair value of the Rouse reporting unit was greater than its carrying amount, we concluded that Rouse goodwill was not impaired at December 31, 2022. An increase of one percentage to the discount rate used would not have resulted in goodwill impairment.
As the fair value of the Rouse reporting unit was greater than its carrying amount, we concluded that Rouse goodwill was not impaired at December 31, 2023. An increase of one percentage to the discount rate used would not have resulted in goodwill impairment.
Under the terms of the September 2021 Amendment, mandatory principal repayments began in the third quarter of 2022 and are subject to an annual amortization rate of 5%, payable in quarterly installments, with the balance payable at maturity. The remaining $205.0 million commitments under the DDTL Facility was not drawn and accordingly expired on June 28, 2022.
Under the terms of the September 2021 amendment, mandatory principal repayments began in the third quarter of 2022 and were subject to an annual amortization rate of 5%, payable in quarterly installments, with the balance payable at maturity. The remaining $205.0 million commitment under the DDTL Facility was not drawn and accordingly expired on June 28, 2022.
SmartEquip reporting unit goodwill For the year ended December 31, 2022, we performed a quantitative assessment of the SmartEquip reporting unit using an income approach based on discounted cash flows. The fair value of the SmartEquip reporting unit was measured based on the present value of the cash flows that we expect the reporting unit to generate.
SmartEquip reporting unit goodwill For the year ended December 31, 2023, we performed a quantitative assessment of the SmartEquip reporting unit using an income approach based on future estimated discounted cash flows. The fair value of the SmartEquip reporting unit was measured based on the present value of the cash flows that we expect the reporting unit to generate.
These impacts were mainly due to the fluctuations in the Euro, Australian dollar and the Canadian dollar exchanges rates relative to the U.S. dollar during the year. ​ ​ Ritchie Bros. 45 ​ Table of Contents Key Operating Metrics We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, and make operating decisions.
These impacts were mainly due to the fluctuations in the Euro, Australian dollar and the Canadian dollar exchanges rates relative to the U.S. dollar during the year. Key Operating Metrics We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, and make operating decisions.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
A qualitative assessment involves evaluating factors to determine the existence of events or circumstances that would indicate whether it is more likely than not that the fair value of the reporting unit to which goodwill belongs is less than its carrying amount.
This involves an assessment of qualitative factors to determine the existence of events or circumstances that would indicate whether it is more likely than not that the fair value of the reporting unit to which goodwill belongs is less than its carrying value.
The issuance of equity securities may result in dilution to our shareholders. Issuance of preferred equity securities could provide for rights, preferences or privileges senior to those of our common stock. Further, this additional capital may not be available on reasonable terms, or at all.
Issuance of preferred equity securities could provide for rights, preferences or privileges senior to those of our common stock. Further, this additional capital may not be available on reasonable terms, or at all.
ROIC is now calculated as reported return divided by average invested capital. Reported return is defined as net income attributable to stockholders excluding the impact of net interest expense, tax effected at the Company’s adjusted annualized effective tax rate.
Reported return is defined as net income available to common stockholders, excluding the impact of net interest expense and tax effected at the Company’s adjusted annualized effective tax rate. Adjusted ROIC is calculated as adjusted return divided by adjusted average invested capital.
Rouse reporting unit goodwill For the year ended December 31, 2022, we performed a quantitative assessment of the Rouse reporting unit using an income approach based on discounted cash flows. The fair value of the Rouse reporting unit was measured based on the present value of the cash flows that we expect the reporting unit to generate.
IAA reporting unit goodwill For the year ended December 31, 2023, we performed a quantitative assessment of the IAA reporting unit using an income approach based on future estimated discounted cash flows. The fair value of the IAA reporting unit was measured based on the present value of the cash flows that we expect the reporting unit to generate.
Based on our qualitative assessment, we determined there were no potential indicators of impairment of our indefinite-lived intangible assets at December 31, 2022. Long-lived Assets We test long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
If it is, a quantitative assessment is required. Based on our qualitative assessment, we determined there were no potential indicators of impairment of our indefinite-lived intangible assets at December 31, 2023. Long-lived Assets We test long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
We estimated a discount rate of 20% reflecting the risk premium on this reporting unit, including company specific risk, on this reporting unit, and a terminal growth rate of 3% for the period beyond ten years, based on our view of the cash flows and using market comparatives.
Based on a weighted average cost of capital analysis, we estimated a discount rate of 14.5% reflecting the risk premium on this reporting unit, including company specific risk, and a terminal growth rate of 3% for the period beyond ten years based on our view of the cash flows and using market comparatives.
The following table reconciles OFCF to cash provided by operating activities, which is the most directly comparable GAAP measure in, or calculated from, our consolidated statements of cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change (in U.S. dollars in millions, except percentages) ​ 2022 2021 2020 2022 over 2021 2021 over 2020 ​ Cash provided by operating activities ​ $ 463.1 ​ $ 317.6 ​ $ 257.9 ​ ​ 46 % 23 % Property, plant and equipment additions ​ 32.0 ​ 9.8 ​ 14.3 ​ 227 % (31) % Intangible asset additions ​ 40.0 ​ 33.7 ​ 28.9 ​ 19 % 17 % Proceeds on disposition of property plant and equipment ​ (165.5) ​ (1.9) ​ (16.4) ​ 8611 % (88) % Net capital spending ​ $ (93.5) ​ $ 41.6 ​ $ 26.8 ​ ​ (325) % 55 % OFCF ​ $ 556.6 ​ $ 276.0 ​ $ 231.1 ​ ​ 102 % 19 % (1) OFCF is calculated by subtracting net capital spending from cash provided by operating activities. ​ ​ ​ Ritchie Bros. 64 ​ Table of Contents Adjusted Return and Adjusted ROIC Reconciliation We believe that comparing adjusted ROIC on a trailing twelve-month basis for different financial periods provides useful information about the after-tax return generated by our investments.
The following table reconciles OFCF to cash provided by operating activities, which is the most directly comparable GAAP measure in, or calculated from, our consolidated statements of cash flows: Year ended December 31, % Change (in U.S. dollars in millions, except percentages) 2023 2022 2021 2023 over 2022 2022 over 2021 Cash provided by operating activities $ 544.0 $ 463.1 $ 317.6 17 % 46 % Property, plant and equipment additions (227.9) (32.0) (9.8) 612 % 227 % Intangible asset additions (118.3) (40.0) (33.7) 196 % 19 % Proceeds on disposition of property plant and equipment 32.6 165.5 1.9 (80) % 8611 % Net capital (spending) proceeds $ (313.6) $ 93.5 $ (41.6) (435) % (325) % OFCF $ 230.4 $ 556.6 $ 276.0 (59) % 102 % Adjusted Return and Adjusted ROIC Reconciliation We believe that comparing adjusted ROIC on a trailing twelve-month basis for different financial periods provides useful information about the after-tax return generated by our investments.
For the purpose of impairment testing, long-lived assets are grouped and tested for recoverability at the lowest level that generates independent cash flows. Our assessment concluded that the carrying amounts of our long-lived assets are recoverable at December 31, 2022. Recoverability of Trade Receivables Our trade receivables are generally secured by the equipment.
For the purpose of impairment testing, long-lived assets are grouped and tested for recoverability at the lowest level that generates independent cash flows. Our assessment concluded that the carrying amounts of our long-lived assets are recoverable at December 31, 2023.
(2) Adjusted operating income represents operating income excluding the effects of adjusting items. ​ ​ ​ Ritchie Bros. 60 ​ Table of Contents Adjusted Net Income Attributable to Stockholders and Diluted Adjusted EPS Attributable to Stockholders Reconciliation We believe that adjusted net income attributable to stockholders provides useful information about the growth or decline of our net income attributable to stockholders for the relevant financial period and eliminates the financial impact of adjusting items we do not consider to be part of our normal operating results.
Adjusted Net Income Attributable to Common Stockholders and Diluted Adjusted EPS Attributable to Common Stockholders Reconciliation We believe that adjusted net income available to common stockholders provides useful information about the growth or decline of our net income available to common stockholders for the relevant financial period and eliminates the financial impact of adjusting items we do not consider to be part of our normal operating results.
(4) Adjusted net debt/Adjusted EBITDA is calculated by dividing adjusted net debt by adjusted EBITDA. ​ ​ ​ Ritchie Bros. 63 ​ Table of Contents Operating Free Cash Flow (“OFCF”) Reconciliation We believe OFCF, when compared on a trailing twelve-month basis to different financial periods provides an effective measure of the cash generated by our business and provides useful information regarding cash flows remaining for discretionary return to stockholders, mergers and acquisitions, or debt reduction.
RB Global, Inc. 57 Table of Contents Operating Free Cash Flow (“OFCF”) Reconciliation We believe OFCF, when compared on a trailing twelve-month basis to different financial periods, provides an effective measure of the cash generated by our business and provides useful information regarding cash flows remaining for discretionary return to stockholders, mergers and acquisitions, or debt reduction.
We estimated a discount rate of 16% reflecting the risk premium, including company specific risk, on this reporting unit, and a terminal growth rate of 4% for the period beyond ten years, based on our best estimate of the cash flows and using market comparatives.
Based on a weighted average cost of capital analysis we estimated a discount rate of 10.25% reflecting the risk premium, including company specific risk, on this reporting unit, and a terminal growth rate of 3% for the period beyond ten years, based on our best estimate of the cash flows and using market comparatives.
In reaching such decisions, we apply judgments based on our understanding and analysis of the relevant circumstances and historical experience. ​ The following discussion of critical accounting policies and estimates is intended to supplement the significant accounting policies presented in the notes to our consolidated financial statements included in “Part II, Item 8: Financial Statements and Supplementary Data” presented in this Annual Report on Form 10-K, which summarize the accounting policies and methods used in the preparation of those consolidated financial statements.
The following discussion of critical accounting policies and estimates is intended to supplement the significant accounting policies presented in the notes to our consolidated financial statements included in “Part II, Item 8: Financial Statements and Supplementary Data” presented in this Annual Report on Form 10-K, which summarize the accounting policies and methods used in the preparation of those consolidated financial statements.
Mascus reporting unit goodwill For the year ended December 31, 2022, we performed a qualitative assessment of the Mascus reporting unit and we concluded there were no indicators of impairment that existed.
Ritchie Bros. reporting unit goodwill For the year ended December 31, 2023, we performed a qualitative assessment of the Ritchie Bros. reporting unit and we concluded there were no indicators of impairment.
(4) Leases (Topic 842) requires lessees to recognize almost all leases, including operating leases, on the balance sheet through a right-of-use asset and a corresponding lease liability.
(4) ASC 842 Leases requires lessees to recognize almost all leases, including operating leases, on the balance sheet through a right-of-use asset and a corresponding lease liability. The lease liability is not included in the calculation of debt.
(3) Adjusted net debt is calculated by subtracting cash and cash equivalents from short and long-term debt.
(3) Adjusted net debt is calculated by subtracting cash and cash equivalents from short and long-term debt and long-term debt in escrow. (4) Adjusted net debt/Adjusted EBITDA is calculated by dividing adjusted net debt by adjusted EBITDA.
On December 31, 2022, we had $719.8 million of unused revolving credit facilities, which consisted of: ● $709.8 million under our Credit Agreement that expires on September 21, 2026; ● $5.0 million under a foreign credit facility that expires on October 27, 2023; and ● $5.0 million under a foreign demand credit facility that has no maturity date. ​ Term Loan Facility The amendment to the Credit Agreement made in September 2021 (i) extended the maturity date of the Facilities from October 27, 2023 to September 21, 2026, (ii) increased the total size of the Facilities provided under the Credit Agreement to up to $1.0 billion, including $295.0 million of commitments under the DDTL Facility, (iii) reduced the applicable margin for base rate loans and LIBOR loans at each pricing tier level, (iv) reduced the applicable percentage per annum used to calculate the commitment fee in respect of the unused commitments under the Facilities at each pricing tier level, and (v) included customary provisions to provide for the eventual replacement of LIBOR as a benchmark interest rate. ​ In connection with the September 2021 Amendment, the Company refinanced $90.0 million with the proceeds from a borrowing under the DDTL Facility.
Term Loan Facility The amendment to the Credit Agreement made in September 2021 (i) extended the maturity date of the Facilities from October 27, 2023 to September 21, 2026, (ii) increased the total size of the Facilities provided under the Credit Agreement to up to $1.045 billion, including $295.0 million of commitments under the DDTL Facility, (iii) reduced the applicable margin for base rate loans and LIBOR loans at each pricing tier level, (iv) reduced the applicable percentage per annum used to calculate the commitment fee in respect of the unused commitments under the Facilities at each pricing tier level, and (v) included customary provisions to provide for the eventual replacement of LIBOR as a benchmark interest rate.
In the event of sustained deterioration of global markets and economies, we expect the covenants pertaining to our leverage ratio would be the most restrictive to our ability to access funding under our Credit Agreement.
In the event of sustained deterioration of global markets and economies, we expect the covenants pertaining to our leverage ratio would be the most restrictive to our ability to access funding under our Credit Agreement. We continue to evaluate courses of action to maintain current levels of liquidity and compliance with our debt covenants.
GTV is not a measure of financial performance, liquidity, or revenue, and is not presented in the Company’s consolidated financial statements. ​ Inventory return : Inventory sales revenue less cost of inventory sold. ​ Inventory rate : Inventory return divided by inventory sales revenue. ​ Inventory management system activations : Number of organizations activated on IMS.
GTV is not a measure of financial performance, liquidity, or revenue, and is not presented in the Company’s consolidated financial statements. Total service revenue take rate : Total service revenue divided by total GTV. Inventory return : Inventory sales revenue less cost of inventory sold. Inventory rate : Inventory return divided by inventory sales revenue.
Our balance sheet scorecard includes OFCF as a performance metric. OFCF is also an element of the performance criteria for certain annual short-term and long-term incentive awards.
OFCF is calculated by subtracting net capital spending from cash provided by operating activities. Our balance sheet scorecard includes OFCF as a performance metric. OFCF is also an element of the performance criteria for certain annual short-term and long-term incentive awards.
To test our indefinite-lived intangible assets for impairment we first perform a qualitative assessment to determine if it is more likely than not that the carrying amount of our indefinite-lived intangible assets exceeds its fair value. If it is, a quantitative assessment is required.
Indefinite-lived Intangible Assets Indefinite-lived intangible assets are tested at least annually for impairment, and between annual tests if indicators of potential impairment exist. To test our indefinite-lived intangible assets for impairment, we first perform a qualitative assessment to determine if it is more likely than not that the carrying amount of our indefinite-lived intangible assets exceeds its fair value.
(2) Adjusted net income attributable to stockholders represents net income attributable to stockholders excluding the effects of adjusting items.
(2) Adjusted operating income represents operating income excluding the effects of adjusting items.
The following table presents the variance in select foreign exchange rates over the comparative reporting periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 over ​ 2021 over Value of one local currency to U.S. dollar 2022 2021 2020 2021 ​ 2020 ​ Period-end exchange rate - December 31, ​ ​ ​ ​ Canadian dollar ​ ​ 0.7378 ​ ​ 0.7846 ​ ​ 0.7843 (6) % 0 % Euro ​ 1.0661 ​ 1.1322 ​ 1.2296 (6) % (8) % Australian dollar ​ ​ 0.6765 ​ ​ 0.7250 ​ ​ 0.7689 ​ (7) % (6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average exchange rate - Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ Canadian dollar ​ ​ 0.7690 ​ ​ 0.7977 ​ ​ 0.7462 (4) % 7 % Euro ​ ​ 1.0543 ​ 1.1834 ​ 1.1413 (11) % 4 % Australian dollar ​ ​ 0.6949 ​ ​ 0.7514 ​ ​ 0.6901 ​ (8) % 9 % ​ In 2022, approximately 42% of our revenues and 34% of our operating expenses were denominated in currencies other than the U.S. dollar, compared to 45% and 47%, respectively, in 2021. ​ We recognized $1.0 million in foreign exchange gains in 2022 and $0.8 million of losses in 2021.
The following table presents the variance in select foreign exchange rates over the comparative reporting periods: % Change Value of one local currency to U.S. dollar 2023 2022 2021 2023 over 2022 2022 over 2021 Period-end exchange rate - December 31, Canadian dollar 0.7558 0.7378 0.7846 2 % (6) % Euro 1.1067 1.0661 1.1322 4 % (6) % British pound sterling 1.2734 1.2054 1.3497 6 % (11) % Australian dollar 0.6826 0.6765 0.7250 1 % (7) % Average exchange rate - Year ended December 31, Canadian dollar 0.7411 0.7690 0.7977 (4) % (4) % Euro 1.0820 1.0543 1.1834 3 % (11) % British pound sterling 1.2434 1.2376 1.3757 — % (10) % Australian dollar 0.6645 0.6949 0.7514 (4) % (8) % In 2023, approximately 29% of our revenues and 30% of our operating expenses were denominated in currencies other than the U.S. dollar, compared to 42% and 34%, respectively, in 2022.
Our ability to borrow under our syndicated revolving credit facility is subject to compliance with financial covenants of a consolidated leverage ratio and a consolidated interest coverage ratio.
Debt Covenants We were in compliance with all financial and other covenants applicable to our credit facilities at December 31, 2023. Our ability to borrow under our syndicated revolving credit facility is subject to compliance with financial covenants of a consolidated leverage ratio and a consolidated interest coverage ratio.
Adjusted return is defined as reported return, updated as noted above, and adjusted for items that we do not consider to be part of our normal operating results, tax effected at the applicable tax rate.
Adjusted return is defined as reported return, adjusted for items that we do not consider to be part of our normal operating results, and tax effected at the applicable tax rate. Adjusted average invested capital is calculated as average invested capital but excludes any long-term debt in escrow.
We did not make any voluntary prepayments to our drawn DDTL in 2022. ​ Senior Unsecured Notes At December 31, 2022, we had senior unsecured notes (the “2016 Notes”) outstanding that expire on January 15, 2025 for an aggregate principal amount of $500.0 million, bearing an interest rate of 5.375% per annum.
Senior Secured and Unsecured Notes At December 31, 2022, we had senior unsecured notes (the “2016 Notes”) outstanding that were to expire on January 15, 2025 for an aggregate principal amount of $500.0 million, bearing an interest rate of 5.375% per annum. The proceeds of the offering of the 2016 Notes were used to finance the IronPlanet acquisition.
GovPlanet business metrics are excluded from this metric as management reviews industrial equipment auction metrics excluding GovPlanet. ​ Total lots sold : A single asset to be sold, or a group of assets bundled for sale as one unit. Low value assets are sometimes bundled into a single lot, collectively referred to as “small value lots”.
Total lots sold : A single asset to be sold, or a group of assets bundled for sale as one unit. Low value assets are sometimes bundled into a single lot, collectively referred to as “small value lots.” Historically, we reported total lots sold excluding lots sold in our GovPlanet business.
Recent Accounting Pronouncements Recent accounting pronouncements that significantly impact our accounting policies or the presentation of our consolidated financial position or performance have been disclosed in the notes to our consolidated financial statements included in “Part II, Item 8: Financial Statements and Supplementary Data” presented elsewhere in this Annual Report on Form 10-K. ​ ​ ​ Ritchie Bros. 59 ​ Table of Contents Non-GAAP Measures We reference various non-GAAP measures throughout this Annual Report on Form 10-K.
Recent Accounting Pronouncements Recent accounting pronouncements that significantly impact our accounting policies or the presentation of our consolidated financial position or performance have been disclosed in the notes to our consolidated financial statements included in "Part II, Item 8: Financial Statements and Supplementary Data - Note 2 Significant Accounting Policies" of this Annual Report on Form 10-K.
An increase of one percentage to the discount rate used would not have resulted in goodwill impairment. ​ In the quantitative assessments performed, if estimates for future cash flows, which are driven by reporting units’ ability to generate revenue growth were to decline, the overall reporting units’ fair value would decrease, resulting in potential goodwill impairment charges.
In the quantitative assessments performed, if estimates for future cash flows, which are driven by reporting units’ ability to generate revenue growth were to decline, the overall reporting units’ fair value would decrease, resulting in potential goodwill impairment charges. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions.
Accordingly, the Company will no longer report adjusted ROIC excluding escrowed debt as one of our non-GAAP measures as previously labeled. ​ ​ ​ ​ Ritchie Bros. 65 ​ Table of Contents The following table reconciles adjusted return and adjusted ROIC to net income attributable to stockholders and adjusted average invested capital to average invested capital, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2022 over 2021 over ​ (in U.S. dollars in millions, except percentages) ​ 2022 2021 2020 2021 2020 ​ Net income attributable to stockholders ​ $ 319.7 ​ $ 151.9 ​ $ 170.0 ​ ​ 110 % (11) % Add: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ 57.9 ​ ​ 37.0 ​ ​ 35.6 ​ ​ 56 % 4 % Interest income ​ ​ (7.0) ​ ​ (1.4) ​ ​ (2.3) ​ ​ 400 % (39) % Interest, net ​ ​ 50.9 ​ ​ 35.6 ​ ​ 33.3 ​ ​ 43 % 7 % Tax on interest, net ​ ​ (12.7) ​ ​ (9.1) ​ ​ (9.1) ​ ​ 40 % — % Reported return ​ $ 357.9 ​ $ 178.4 ​ $ 194.2 ​ ​ 101 % (8) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Add: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share-based payments expense ​ 37.0 ​ 23.1 ​ 21.9 ​ 60 % 5 % Acquisition-related costs ​ 37.3 ​ 30.2 ​ 6.0 ​ 24 % 403 % Amortization of acquired intangible assets ​ ​ 33.4 ​ ​ 28.0 ​ ​ 21.1 ​ ​ 19 % 33 % Loss (gain) on disposition of property, plant and equipment and related costs ​ ​ (166.9) ​ ​ (1.4) ​ ​ (1.6) ​ ​ 11,821 % (13) % Change in fair value of derivatives ​ (1.3) ​ 1.2 ​ — ​ (208) % 100 % Non-recurring advisory, legal and restructuring costs ​ 5.1 ​ 3.5 ​ 3.9 ​ 46 % (10) % Related tax effects of the above ​ (4.0) ​ (20.3) ​ (20.5) ​ (80) % (1) % Change in uncertain tax provision - tax effect ​ — ​ — ​ 7.8 ​ — % (100) % Adjusted return ​ $ 298.5 ​ $ 242.7 ​ $ 232.7 ​ ​ 23 % 4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term debt - opening balance ​ $ 6.1 ​ $ 29.1 ​ $ 4.7 ​ ​ (79) % 519 % Short-term debt - ending balance ​ ​ 29.1 ​ ​ 6.1 ​ ​ 29.1 ​ ​ 377 % (79) % Average short-term debt ​ ​ 17.6 ​ ​ 17.6 ​ ​ 16.9 ​ ​ — % 4 % Long-term debt - opening balance ​ ​ 1,737.4 ​ ​ 636.7 ​ ​ 645.5 ​ ​ 173 % (1) % Less: long-term debt in escrow ​ ​ (933.5) ​ ​ — ​ ​ — ​ ​ (100) % — % Adjusted opening long-term debt ​ ​ 803.9 ​ ​ 636.7 ​ ​ 645.5 ​ ​ 26 % (1) % Long-term debt - ending balance ​ 581.5 ​ 1,737.4 ​ 636.7 ​ ​ (67) % 173 % Less: long-term debt in escrow ​ ​ — ​ ​ (933.5) ​ ​ — ​ ​ (100) % (100) % Adjusted ending long-term debt ​ ​ 581.5 ​ ​ 803.9 ​ ​ 636.7 ​ ​ (28) % 26 % Average long-term debt ​ ​ 1,159.5 ​ ​ 1,187.1 ​ ​ 641.1 ​ ​ (2) % 85 % Adjusted average long-term debt ​ ​ 692.7 ​ ​ 720.3 ​ ​ 641.1 ​ ​ (4) % 12 % Stockholders' equity - opening balance ​ ​ 1,070.7 ​ ​ 1,007.2 ​ ​ 901.8 ​ ​ 6 % 12 % Stockholders' equity - ending balance ​ 1,289.6 ​ 1,070.7 ​ 1,007.2 ​ ​ 20 % 6 % Average stockholders' equity ​ 1,180.2 ​ 1,039.0 ​ 954.5 ​ ​ 14 % 9 % Average invested capital ​ $ 2,357.3 ​ $ 2,243.7 ​ $ 1,612.5 ​ ​ 5 % 39 % Adjusted average invested capital ​ $ 1,890.5 ​ $ 1,776.9 ​ $ 1,612.5 ​ ​ 6 % 10 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ROIC ​ 15.2 % 8.0 % 12.0 % ​ 720 bps (400) bps Adjusted ROIC ​ 15.8 % 13.7 % 14.4 % ​ 210 bps (70) bps (1) Please refer to pages 67-69 for a summary of adjusting items for the years ended December 31, 2022, 2021, and 2020.
The following table reconciles adjusted return and adjusted ROIC to net income available to common stockholders and adjusted average invested capital to average invested capital, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements: RB Global, Inc. 58 Table of Contents Year ended December 31, % Change (in U.S. dollars in millions, except percentages) 2023 2022 2021 2023 over 2022 2022 over 2021 Net income (loss) attributable to controlling interests $ 206.5 $ 319.7 $ 151.9 (35) % 110 % Add: Interest expense 213.8 57.9 37.0 269 % 56 % Interest income (22.0) (7.0) (1.4) 214 % 400 % Interest, net 191.8 50.9 35.6 277 % 43 % Tax on interest, net (46.0) (12.7) (9.1) 262 % 40 % Reported return $ 352.3 $ 357.9 $ 178.4 (2) % 101 % Add: Share-based payments expense 45.5 37.0 23.1 23 % 60 % Acquisition-related and integration costs 216.1 37.3 30.2 479 % 24 % Amortization of acquired intangible assets 226.2 33.4 28.0 577 % 19 % (Gain) on disposition of property, plant and equipment and related costs (0.8) (166.9) (1.4) (100) % 11821 % Change in fair value of derivatives — (1.3) 1.2 (100) % (208) % Remeasurements in connection with business combinations (2.9) — — (100) % — % Prepaid consigned vehicle charges (67.0) — — (100) % — % Other advisory, legal and restructuring costs 2.0 5.1 3.5 (61) % 46 % Executive transition costs 12.0 — — 100 % — % Related tax effects of the above (95.8) (4.0) (20.3) 2295 % (80) % Adjusted return $ 687.6 $ 298.5 $ 242.7 130 % 23 % Short-term debt - opening balance $ 29.1 $ 6.1 $ 29.1 377 % (79) % Short-term debt - ending balance 13.7 29.1 6.1 (53) % 377 % Average short-term debt 21.4 17.6 17.6 22 % — % Long-term debt - opening balance 581.5 1,737.4 636.7 (67) % 173 % Less: long-term debt in escrow — (933.5) — (100) % (100) % Adjusted opening long-term debt 581.5 803.9 636.7 (28) % 26 % Long-term debt - ending balance 3,075.8 581.5 1,737.4 429 % (67) % Less: long-term debt in escrow — — (933.5) — % (100) % Adjusted ending long-term debt 3,075.8 581.5 803.9 429 % (28) % Average long-term debt 1,828.7 1,159.5 1,187.1 58 % (2) % Adjusted average long-term debt 1,828.7 692.7 720.3 164 % (4) % Preferred equity - opening balance — — — — % — % Preferred equity - ending balance 482.0 — — 100 % — % Average preferred equity 241.0 — — 100 % — % Stockholders' equity - opening balance 1,289.6 1,070.7 1,007.2 20 % 6 % Stockholders' equity - ending balance 5,016.7 1,289.6 1,070.7 289 % 20 % Average stockholders' equity 3,153.2 1,180.2 1,039.0 167 % 14 % Average invested capital $ 5,244.3 $ 2,357.3 $ 2,243.7 122 % 5 % Adjusted average invested capital $ 5,244.3 $ 1,890.5 $ 1,776.9 177 % 6 % ROIC 6.7 % 15.2 % 8.0 % (850) bps 720 bps Adjusted ROIC 13.1 % 15.8 % 13.7 % (270) bps 210 bps RB Global, Inc. 59 Table of Contents _____________________________________________________ (1) Please refer to pages 60 - 63 for a summary of adjusting items for the years ended December 31, 2023, 2022, and 2021.
In addition, if the Merger Agreement is terminated in certain circumstances, we or IAA, as applicable, would be required to pay the other a termination fee of $189.0 million. ​ In connection with the proposed acquisition of IAA, the Company also entered into a debt commitment letter with certain financial institutions that committed to provide, subject to certain terms and conditions, a bridge loan facility in an aggregate principal amount of up to $2.8 billion and a backstop senior secured revolving credit facility in an aggregate principal amount of up to $750.0 million.
In connection with the IAA acquisition, the Company entered into a debt commitment letter with certain financial institutions that committed to provide, subject to its terms and conditions, a bridge loan facility in an aggregate principal amount of up to $2.8 billion and a backstop revolving facility in an aggregate principal amount of up to $750.0 million.
If the qualitative assessment indicates that the fair value of the reporting unit is more likely than not less than the carrying amount, then a quantitative impairment test would be performed. If a quantitative impairment test is required, the process is to identify potential impairment by comparing the reporting unit’s fair value with its carrying amount.
If the qualitative assessment indicates it is not more likely than not that the reporting unit’s fair value is less than its carrying value, a quantitative impairment test is not required.
As the fair value of the SmartEquip reporting unit was greater than its carrying amount, we concluded that SmartEquip goodwill was not impaired at December 31, 2022.
As the fair value of the SmartEquip reporting unit was greater than its carrying amount, we concluded that SmartEquip goodwill was not impaired at December 31, 2023. An increase of one percentage to the discount rate used would not have resulted in goodwill impairment.
Measures of liquidity are noted under “Liquidity and Capital Resources”. ​ The following table reconciles adjusted net debt to debt, adjusted EBITDA to net income, and adjusted net debt/ adjusted EBITDA to debt/ net income, respectively, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change (in U.S. dollars in millions, except percentages) ​ 2022 ​ 2021 ​ 2020 ​ 2022 over 2021 ​ 2021 over 2020 Short-term debt ​ $ 29.1 $ 6.1 $ 29.1 377 % (79) % Long-term debt ​ 581.5 ​ 1,737.4 ​ 636.7 (67) % 173 % Debt ​ 610.6 ​ 1,743.5 ​ 665.8 (65) % 162 % Less: long-term debt in escrow ​ ​ — ​ ​ (933.5) ​ ​ — ​ (100) % 100 % Less: cash and cash equivalents ​ (494.3) ​ (326.1) ​ (278.8) 52 % 17 % Adjusted net debt ​ 116.3 ​ 483.9 ​ 387.0 (76) % 25 % Net income ​ $ 319.8 ​ $ 151.9 ​ $ 170.4 111 % (11) % Add: depreciation and amortization ​ 97.2 ​ 87.9 ​ 74.9 11 % 17 % Add: interest expense ​ 57.9 ​ 37.0 ​ 35.6 56 % 4 % Less: interest income ​ (7.0) ​ (1.4) ​ (2.3) 400 % (39) % Add: income tax expense ​ 86.2 ​ 53.4 ​ 65.5 61 % (18) % EBITDA ​ 554.0 ​ 328.8 ​ 344.1 69 % (4) % Share-based payments expense ​ 37.0 ​ 23.1 ​ 21.9 60 % 5 % Acquisition-related costs ​ 37.3 ​ 30.2 ​ 6.0 24 % 403 % Loss (gain) on disposition of property, plant and equipment and related costs ​ ​ (166.9) ​ ​ (1.4) ​ ​ (1.6) ​ 11,821 % (13) % Change in fair value of derivatives ​ ​ (1.3) ​ ​ 1.2 ​ ​ — ​ (208) % 100 % Non-recurring advisory, legal and restructuring costs ​ 5.1 ​ 3.5 ​ 3.9 46 % (10) % Adjusted EBITDA ​ $ 465.2 ​ $ 385.4 ​ $ 374.3 21 % 3 % Debt/net income ​ 1.9 x 11.5 x 3.9 x (83) % 195 % Adjusted net debt/adjusted EBITDA ​ 0.3 x 1.3 x 1.0 x (77) % 30 % (1) Please refer to pages 67-69 for a summary of adjusting items during the years ended December 31, 2022, 2021, and 2020.
Year ended December 31, % Change (in U.S. dollars in millions, except percentages) 2023 2022 2021 2023 over 2022 2022 over 2021 Short-term debt $ 13.7 $ 29.1 $ 6.1 (53) % 377 % Long-term debt 3,075.8 581.5 1,737.4 429 % (67) % Debt 3,089.5 610.6 1,743.5 406 % (65) % Less: long-term debt in escrow — — (933.5) — % (100) % Less: cash and cash equivalents (576.2) (494.3) (326.1) 17 % 52 % Adjusted net debt 2,513.3 116.3 483.9 2061 % (76) % Net income $ 206.0 $ 319.8 $ 151.9 (36) % 111 % Add: depreciation and amortization 352.2 97.1 87.9 263 % 10 % Add: interest expense 213.8 57.9 37.0 269 % 56 % Less: interest income (22.0) (7.0) (1.4) 214 % 400 % Add: income tax expense 76.4 86.2 53.4 (11) % 61 % EBITDA 826.4 554.0 328.8 49 % 68 % Share-based payments expense 45.5 37.0 23.1 23 % 60 % Acquisition-related and integration costs 216.1 37.3 30.2 479 % 24 % (Gain) on disposition of property, plant and equipment and related costs (0.8) (166.9) (1.4) (100) % 11821 % Remeasurements in connection with business combinations (1.4) — — (100) % — % Change in fair value of derivatives — (1.3) 1.2 (100) % (208) % Prepaid consigned vehicle charges (67.0) — — (100) % — % Other advisory, legal and restructuring costs 2.0 5.1 3.5 (61) % 46 % Executive transition costs 12.0 — — 100 % — % Adjusted EBITDA $ 1,032.8 $ 465.2 $ 385.4 122 % 21 % Debt/net income 15.0 x 1.9 x 11.5 x 689 % (83) % Adjusted net debt/adjusted EBITDA 2.4 x 0.3 x 1.3 x 700 % (77) % _____________________________________________________ (1) Please refer to pages 60 - 63 for a summary of adjusting items during the years ended December 31, 2023, 2022, and 2021.
Overview This section of the Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of the Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Historically, our reporting units have generated sufficient returns to recover the cost of goodwill. ​ A&M reporting unit goodwill For the year ended December 31, 2022, we performed a qualitative assessment of the A&M reporting unit and we concluded there were no indicators of impairment that existed.
Listings Services reporting unit goodwill For the year ended December 31, 2023 we performed a qualitative assessment of the Listings Services reporting unit and we concluded there were no indicators of impairment.
Adjusted ROIC is a measure used by management to determine how productively the Company uses its long-term capital to gauge investment decisions. ​ Previously, we calculated ROIC as net income attributable to stockholders divided by average invested capital. During the quarter ended September 30, 2022, we updated our calculation of ROIC to better align to industry standards.
Adjusted ROIC is a measure used by management to determine how productively the Company uses its long-term capital to gauge investment decisions. ROIC is calculated as the reported return divided by average invested capital.
The definitions and reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable US GAAP financial measures are included either with the first use thereof or in the “Non-GAAP Measures” section within “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. ​ ​ ​ Ritchie Bros. 39 ​ Table of Contents Performance Overview Net income attributable to stockholders for 2022 increased 110% to $319.7 million compared to $151.9 million in 2021.
The definitions and reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable US GAAP financial measures are included either with the first use thereof or in the “Non-GAAP Measures” section within “Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Overview Established in 1958, RB Global, Inc., formerly known as Ritchie Bros.
In determining our future cash flows, we estimated an annual revenue growth rate ranging between 3% to 37% and an operating margin ranging between 19% to 62% from 2023 to 2032, based on our best estimate of the reporting units’ growth trajectory.
In estimating the Rouse reporting unit's future cash flows, we estimated annual revenue growth rates of 3% to 20% and operating margins of 40% to 49% from 2024 to 2033, based on our best estimate of the reporting units’ growth trajectory.
Diluted earnings per share (“EPS”) attributable to stockholders increased 110% to $2.86 from $1.36 per share. Adjusted net income attributable to stockholders increased 25% to $269.9 million in 2022 as compared to $216.1 million in 2021. Diluted adjusted EPS attributable to stockholders increased 24% to $2.41 per share in 2022 as compared to $1.94 per share in 2021.
Diluted earnings per share (“EPS”) available to stockholders decreased 64% to $1.04 from $2.86 per share. Diluted adjusted EPS available to stockholders increased 24% to $2.99 per share in 2023 as compared to $2.41 per share in 2022.
These increases were partially offset by a favourable impact of foreign exchange. ​ Income Tax Expense and Effective Tax Rate We recorded an income tax expense of $86.2 million in 2022 compared to $53.4 million in 2021. Our effective tax rate was 21.2% compared to 26.0% in 2021.
Income Tax Expense and Effective Tax Rate We recorded an income tax expense of $76.4 million in 2023, compared to $86.2 million in 2022. Our effective tax rate was 27.1%, compared to 21.2% in 2022.
Adjusted net income attributable to stockholders increased 25%, to $269.9 million compared to $216.1 million in 2021. Diluted adjusted EPS attributable to stockholders increased 24% to $2.41 per share compared to $1.94 per share in 2021. Adjusted EBITDA increased 21% to $465.2 million compared to $385.3 million in 2021.
Adjusted net income available to common stockholders increased 86%, to $502.2 million, compared to $269.9 million in 2022. Diluted adjusted EPS available to common stockholders increased 24% to $2.99 per share, compared to $2.41 per share in 2022. Adjusted EBITDA increased 122% to $1.0 billion, compared to $465.2 million in 2022. U.S.
Recognized in the first quarter of 2020 ● $2.4 million share-based payments expense. ● $5.5 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet. ​ ​ ​ ​ Ritchie Bros. 69 ​ Table of Contents
Recognized in the first quarter of 2021 • $3.8 million share-based payments expense. • $6.6 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet and Rouse. • $2.9 million of acquisition-related costs related to the acquisition of Rouse.
Our short-term cash requirements include (i) payment of quarterly dividends to common shareholders on an as-declared basis, (ii) settlement of contracts with consignors and other suppliers, (iii) personnel expenditures, with a majority of bonuses paid annually in the first quarter following each fiscal year, (iv) income tax payments, primarily paid in quarterly installments, (v) payments on short-term debt, (vi) payment of amounts committed under certain service agreements to build our modern IT architecture and (vii) purchase price cash consideration and acquisition-related costs related to our acquisitions. ​ In January 2023, we acquired approximately 10.0 million units of VeriTread, LLC (“VeriTread”) for approximately $28 million of cash consideration, funded from existing cash on hand, and as a result, we now hold approximately a 75% investment in VeriTread. ​ We believe that our existing working capital and availability under our credit facilities are sufficient to satisfy our present operating requirements and contractual obligations.
Our short-term cash requirements include (i) payment of quarterly dividends to common shareholders on an as-declared basis, and payment of participating dividends and preferential dividends to holders of Series A Senior Preferred Shares, (ii) settlement of contracts with consignors and other suppliers, (iii) personnel expenditures, with a majority of bonuses paid annually in the first quarter following each fiscal year, (iv) income tax payments, primarily paid in quarterly installments, (v) payments on short-term debt and long-term debt, (vi) payment of amounts committed under certain service agreements to build our modern IT architecture, (vii) payments on our operating and finance lease obligations, (viii) other capital expenditures and working capital needs, and (ix) advances against our auction contracts, as well as advance charges paid on a seller's behalf.
We declared and paid regular cash dividends of $0.27 per common share for the quarter ended June 30, 2022 and September 30, 2022. We have declared, but not yet paid, a dividend of $0.27 per common share for the quarter ended December 31, 2022.
We have declared, but not yet paid, a dividend of $0.27 per common share for the quarter ended December 31, 2023. All dividends that we pay are “eligible dividends” for Canadian income tax purposes unless indicated otherwise.
Adjusted operating income enhances our ability to evaluate and understand ongoing operations, underlying business profitability, and facilitate the allocation of resources. ​ Adjusted operating income eliminates the financial impact of adjusting items from operating income, which are significant recurring and non-recurring items that we do not consider to be part of our normal operating results, such as share-based payments expense, acquisition-related costs, amortization of acquired intangible assets, management reorganization costs, and certain other items, which we refer to as “adjusting items”. ​ In 2021, we updated the calculation of adjusted operating income to add-back share-based payments expense, all acquisition-related costs (including any share based continuing employment costs recognized in acquisition-related costs), amortization of acquired intangible assets, and gain or loss on disposition of property, plant and equipment.
Adjusted operating income eliminates the financial impact of adjusting items from operating income, which are significant items that we do not consider to be part of our normal operating results, such as share-based payments expense, acquisition-related and integration costs, amortization of acquired intangible assets, gain on disposition of property, plant and equipment and related costs, prepaid consigned vehicle charges, executive transition costs, and certain other items, which we refer to as “adjusting items.” The following table reconciles adjusted operating income to operating income, which is the most directly comparable GAAP measure in our consolidated financial statements.
For more information on our leases, see Note 26 in our consolidated financial statements. ​ We assess our liquidity based on our ability to generate cash and secure credit to fund operating, investing, and financing activities.
Cash provided by operating activities can fluctuate significantly from period to period. We assess our liquidity based on our ability to generate cash and secure credit to fund operating, investing, and financing activities.
These measures do not have a standardized meaning and are, therefore, unlikely to be comparable to similar measures presented by other companies.
Non-GAAP Measures We reference various non-GAAP measures throughout this Annual Report on Form 10-K. These measures do not have a standardized RB Global, Inc. 53 Table of Contents meaning and are, therefore, unlikely to be comparable to similar measures presented by other companies.
On December 21, 2021, we completed the offering of two series of senior notes: (i) $600.0 million aggregate principal amount of 4.750% senior notes due December 15, 2031 and (ii) $425.0 million Canadian dollar aggregate principal amount of 4.950% due December 15, 2029 (together the “2021 Notes”).
On March 15, 2023, to finance the acquisition of IAA, we completed the offering of two series of senior notes: (i) $550.0 million aggregate principal amount of 6.750% senior secured notes due March 15, 2028 and (ii) $800.0 million aggregate principal amount of 7.750% senior unsecured notes due March 15, 2031 (together the “2023 Notes”).
(3) Diluted adjusted EPS attributable to stockholders is calculated by dividing adjusted net income attributable to stockholders, net of the effect of dilutive securities, by the weighted average number of dilutive shares outstanding. ​ ​ ​ Ritchie Bros. 61 ​ Table of Contents Adjusted EBITDA We believe adjusted EBITDA provides useful information about the growth or decline of our net income when compared between different financial periods.
RB Global, Inc. 55 Table of Contents Adjusted EBITDA We believe adjusted EBITDA provides useful information about the growth or decline of our net income when compared between different financial periods.
These severance costs were reclassified to non-recurring advisory, legal and restructuring costs in 2021. ​ Recognized in the second quarter of 2020 ● $6.4 million share-based payments expense. ● $4.9 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet. ● $1.2 million gain recognized on the sales of property in Manchester, New Hampshire and in St.
Recognized in the second quarter of 2021 • $7.5 million share-based payments expense. • $6.8 million amortization of acquired intangible assets primarily from the acquisitions of Iron Planet and Rouse. • $3.0 million of acquisition-related costs related to the acquisition of Rouse. • $0.2 million gain recognized on the disposition of property, plant and equipment. • $0.2 million of non-recurring advisory, legal and restructuring costs related to SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, which has been retrospectively applied to the second quarter of 2021.
In 2021, we updated the calculation of adjusted EBITDA to add-back certain adjustments that have been applied retrospectively to all periods presented, as applicable (refer to adjusted operating income reconciliation above). ​ The following table reconciles adjusted EBITDA to net income, which is the most directly comparable GAAP measure in, or calculated from, our consolidated financial statements: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ ​ ​ ​ ​ ​ ​ ​ 2022 over 2021 over ​ (in U.S. dollars $000's, except percentages) ​ 2022 2021 2020 2021 2020 ​ Net income ​ $ 319,758 ​ $ 151,854 ​ $ 170,358 ​ ​ 111 % (11) % Add: depreciation and amortization ​ 97,155 ​ 87,889 ​ 74,921 ​ 11 % 17 % Add: interest expense ​ 57,880 ​ 36,993 ​ 35,568 ​ 56 % 4 % Less: interest income ​ (6,971) ​ (1,402) ​ (2,338) ​ 397 % (40) % Add: income tax expense ​ 86,230 ​ 53,378 ​ 65,530 ​ 62 % (19) % EBITDA ​ 554,052 ​ 328,712 ​ 344,039 ​ 69 % (4) % Share-based payments expense ​ ​ 36,961 ​ ​ 23,106 ​ ​ 21,882 ​ ​ 60 % 6 % Acquisition-related costs ​ 37,261 ​ 30,197 ​ 6,014 ​ 23 % 402 % Loss (gain) on disposition of property, plant and equipment and related costs ​ ​ (166,857) ​ ​ (1,436) ​ ​ (1,559) ​ ​ 11,520 % (8) % Change in fair value of derivatives ​ (1,263) ​ 1,248 ​ — ​ (201) % 100 % Non-recurring advisory, legal and restructuring costs ​ ​ 5,061 ​ ​ 3,497 ​ ​ 3,919 ​ ​ 45 % (11) % Adjusted EBITDA ​ $ 465,215 ​ $ 385,324 ​ $ 374,295 ​ ​ 21 % 3 % (1) Please refer to pages 67-69 for a summary of adjusting items during the years ended December 31, 2022, 2021, and 2020.
The following table reconciles adjusted EBITDA to net income, which is the most directly comparable GAAP measure in, or calculated from, our consolidated financial statements: Year ended December 31, % Change (in U.S. dollars in millions, except percentages) 2023 2022 2021 2023 over 2022 2022 over 2021 Net income $ 206.0 $ 319.8 $ 151.9 (36) % 111 % Add: depreciation and amortization 352.2 97.2 87.9 262 % 11 % Add: interest expense 213.8 57.9 37.0 269 % 56 % Less: interest income (22.0) (7.0) (1.4) 214 % 400 % Add: income tax expense 76.4 86.2 53.4 (11) % 61 % EBITDA 826.4 554.1 328.8 49 % 69 % Share-based payments expense 45.5 37.0 23.1 23 % 60 % Acquisition-related and integration costs 216.1 37.3 30.2 479 % 24 % (Gain) on disposition of property, plant and equipment and related costs (0.8) (166.9) (1.4) (100) % 11821 % Remeasurements in connection with business combinations (1.4) — — (100) % — % Prepaid consigned vehicle charges (67.0) — — (100) % — % Change in fair value of derivatives — (1.3) 1.2 (100) % (208) % Other advisory, legal and restructuring costs 2.0 5.0 3.5 (60) % 43 % Executive transition costs 12.0 — — 100 % — % Adjusted EBITDA $ 1,032.8 $ 465.2 $ 385.4 122 % 21 % _____________________________________________________ (1) Please refer to pages 60 - 63 for a summary of adjusting items during the years ended December 31, 2023, 2022, and 2021.
Inherent in each valuation technique are critical assumptions, including future cash flows and growth rates, gross margins, attrition rates, royalty rates, discount rates, and terminal value and forecast period assumptions. The discount rates used to discount expected cash flows to present values are typically derived from a weighted average cost of capital analysis and adjusted to reflect inherent risks.
The discount rates used to discount expected cash flows to RB Global, Inc. 51 Table of Contents present values were derived from a weighted average cost of capital analysis and adjusted to reflect inherent risks.
As a result, there can be no assurance that the estimates and assumptions made for purposes of impairment tests will prove to be an accurate prediction of the future. ​ Indefinite-lived Intangible Assets Indefinite-lived intangible assets are tested at least annually for impairment, and between annual tests if indicators of potential impairment exist.
As a result, there can be no assurance that the estimates and assumptions made for purposes of impairment tests will prove to be an accurate prediction of the future. If a quantitative impairment test is required, the procedure is to identify potential impairment by comparing the reporting unit’s fair value with its carrying amount, including goodwill.
Working capital at December 31, 2022 was $167.8 million, a decrease of $6.0 million compared to 2021. ​ Dividend Information We declared and paid a regular cash dividend of $0.25 per common share for the quarters ended September 30, 2021, December 31, 2021, and March 31, 2022.
We also incurred higher debt issuance costs in connection with the financing of the TLA Facility and the 2023 Notes compared to prior year. Dividend Information We declared and paid a regular cash dividend of $0.27 per common share for the quarters ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022.
The decrease in the effective tax rate over the comparative period was primarily due to the non-taxable gain portion of the sale of the Bolton property and a lower estimate of non-deductible expenses.
The increase in the effective tax rate over the comparative period was primarily attributable to the non-taxable portion of the gain on sale of the Bolton property in 2022 that did not recur in 2023, and an increase in non-deductible expense RB Global, Inc. 43 Table of Contents in the current period.
Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 over ​ ​ 2021 over ​ (in U.S. dollars $000's, except percentages) ​ 2022 2021 2020 2021 2020 ​ Cash provided by (used in): ​ ​ ​ ​ Operating activities ​ $ 463,055 ​ $ 317,586 $ 257,872 ​ 46 % ​ 23 % Investing activities ​ 77,332 ​ (214,066) ​ (276,722) ​ (136) % ​ (23) % Financing activities ​ (1,258,122) ​ 960,908 ​ (111,461) ​ (231) % ​ (962) % Effect of changes in foreign currency rates ​ (18,771) ​ (8,871) ​ 16,950 ​ 112 % ​ (152) % Net (decrease) increase in cash, cash equivalents, and restricted cash ​ $ (736,506) ​ $ 1,055,557 $ (113,361) ​ (170) % ​ (1,031) % ​ Net cash provided by operating activities increased by $145.5 million during 2022, mainly due to higher cash inflows from the change in operating assets and liabilities and by an increase in our net income.
Cash Flows Year ended December 31, % Change (in U.S. dollars in millions, except percentages) 2023 2022 2021 2023 over 2022 2022 over 2021 Cash provided by (used in): Operating activities $ 544.0 $ 463.1 $ 317.6 17 % 46 % Investing activities (3,108.3) 77.2 (214.1) (4,126) % (136) % Financing activities 2,676.2 (1,258.1) 960.9 (313) % (231) % Effect of changes in foreign currency rates 10.1 (18.8) (8.8) (154) % 114 % Net increase (decrease) in cash, cash equivalents, and restricted cash $ 122.0 $ (736.6) $ 1,055.6 (117) % (170) % Net cash provided by operating activities was $544.0 million in 2023, as compared to net cash provided by operating activities of $463.1 million in 2022.
Goodwill is tested for impairment at a reporting unit level, which is at the same level or one level below an operating segment. We determined our reporting units to be A&M, Mascus, Rouse and SmartEquip. ​ We have the option of performing a qualitative assessment of a reporting unit to determine whether a quantitative impairment test is necessary.
We have the option of performing a qualitative assessment of a reporting unit to determine whether a quantitative impairment test is necessary.
In determining our future cash flows, we estimated an annual revenue growth rate ​ ​ Ritchie Bros. 57 ​ Table of Contents ranging between 4% to 30%, an operating margin ranging between 31% to 50% from 2023 to 2032, based on our best estimate of the reporting units’ growth trajectory.
In estimating the SmartEquip reporting unit's future cash flows, we estimated annual revenue growth rates of 3% to 20% and operating margins of 40% to 50% from 2024 to 2033, based on our best estimate of the reporting units’ growth trajectory.
Diluted adjusted EPS attributable to stockholders eliminates the financial impact of adjusting items from net income attributable to stockholders that we do not consider to be part of our normal operating results, such as share-based payments expense, acquisition-related costs, amortization of acquired intangible assets, management reorganization costs, and certain other items, which we refer to as “adjusting items”. ​ In 2021, we updated the calculation of diluted adjusted EPS attributable to stockholders to add-back certain adjustments that have been applied retrospectively to all periods presented, as applicable (refer to adjusted operating income reconciliation above). ​ The following table reconciles adjusted net income attributable to stockholders and diluted adjusted EPS attributable to stockholders to net income attributable to stockholders and diluted EPS attributable to stockholders, which are the most directly comparable GAAP measures in our consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in U.S. dollars $000's, except share and per share data, and percentages) ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 over 2021 over ​ ​ ​ ​ 2022 2021 2020 2021 2020 ​ Net income attributable to stockholders ​ ​ $ 319,657 ​ $ 151,868 ​ $ 170,095 ​ 110 % (11) % Share-based payments expense ​ ​ ​ 36,961 ​ ​ 23,106 ​ ​ 21,882 ​ ​ 60 % 6 % Acquisition-related costs ​ ​ ​ 37,261 ​ ​ 30,197 ​ ​ 6,014 ​ ​ 23 % 402 % Amortization of acquired intangible assets ​ ​ ​ 33,387 ​ ​ 27,960 ​ ​ 21,098 ​ ​ 19 % 33 % Loss (gain) on disposition of property, plant and equipment and related costs ​ ​ ​ (166,857) ​ ​ (1,436) ​ ​ (1,559) ​ ​ 11,520 % (8) % Loss on redemption of the 2021 Notes and certain related interest expense ​ ​ ​ 9,664 ​ ​ — ​ ​ — ​ ​ 100 % — % Change in fair value of derivatives ​ ​ (1,263) ​ 1,248 ​ — ​ (201) % 100 % Non-recurring advisory, legal and restructuring costs ​ ​ 5,061 ​ 3,497 ​ 3,919 ​ 45 % (11) % Related tax effects of the above ​ ​ ​ (3,952) ​ ​ (20,334) ​ ​ (20,544) ​ ​ (81) % (1) % Change in uncertain tax provision - tax effect ​ ​ — ​ — ​ 7,755 ​ — % (100) % Adjusted net income attributable to stockholders ​ ​ $ 269,919 ​ $ 216,106 ​ $ 208,660 ​ ​ 25 % 4 % Weighted average number of dilutive shares outstanding ​ ​ 111,886,025 ​ 111,406,830 ​ 110,310,984 ​ 0 % 1 % Diluted earnings per share attributable to stockholders ​ ​ $ 2.86 ​ $ 1.36 ​ $ 1.54 ​ ​ 110 % (12) % Diluted adjusted earnings per share attributable to stockholders ​ ​ $ 2.41 ​ $ 1.94 ​ $ 1.89 ​ ​ 24 % 3 % (1) Please refer to pages 67-69 for a summary of adjusting items during the years ended December 31, 2022, 2021, and 2020.
Year ended December 31, % Change (in U.S. dollars in millions, except share, per share data, and percentages) 2023 2022 2021 2023 over 2022 2022 over 2021 Net income available to common stockholders $ 174.9 $ 319.7 $ 151.9 (45) % 110 % Share-based payments expense 45.5 37.0 23.1 23 % 60 % Acquisition-related and integration costs 216.1 37.3 30.2 479 % 24 % Amortization of acquired intangible assets 226.2 33.4 28.0 577 % 19 % (Gain) on disposition of property, plant and equipment and related costs (0.8) (166.9) (1.5) (100) % 11027 % Prepaid consigned vehicle charges (67.0) — — (100) % — % Loss on redemption of the 2016 and 2021 Notes and certain related interest expense 3.3 9.7 — (66) % 100 % Change in fair value of derivatives — (1.3) 1.2 (100) % (208) % Other advisory, legal and restructuring costs 2.0 5.0 3.5 (60) % 43 % Executive transition costs 12.0 — — 100 % — % Related tax effects of the above (95.8) (4.0) (20.3) 2295 % (80) % Remeasurements in connection with business combinations (2.9) — — (100) % — % Related allocation of the above to participating securities (11.3) — — (100) % — % Adjusted net income available to common stockholders $ 502.2 $ 269.9 $ 216.1 86 % 25 % Weighted average number of dilutive shares outstanding 168,203,981 111,886,025 111,406,830 50 % — % Diluted earnings per share available to common stockholders $ 1.04 $ 2.86 $ 1.36 (64) % 110 % Diluted adjusted earnings per share available to common stockholders $ 2.99 $ 2.41 $ 1.94 24 % 24 % _____________________________________________________ (1) Please refer to pages 60 - 63 for a summary of adjusting items during the years ended December 31, 2023, 2022, and 2021.
(2) Adjusted EBITDA is calculated by adding back depreciation and amortization, interest expense, income tax expense, and subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, loss (gain) on disposition of property, plant and equipment, change in fair value of derivatives, non-recurring advisory, legal and restructuring costs which includes terminated and ongoing transaction costs, and excluding the effects of any non-recurring or unusual adjusting items. ​ ​ ​ ​ Ritchie Bros. 62 ​ Table of Contents Adjusted Net Debt and Adjusted Net Debt/ Adjusted EBITDA Reconciliation We believe that comparing adjusted net debt/adjusted EBITDA on a trailing twelve-month basis for different financial periods provides useful information about the performance of our operations as an indicator of the amount of time it would take us to settle both our short and long-term debt.
RB Global, Inc. 56 Table of Contents Adjusted Net Debt and Adjusted Net Debt/ Adjusted EBITDA Reconciliation We believe that comparing adjusted net debt/adjusted EBITDA on a trailing twelve-month basis for different financial periods provides useful information about the performance of our operations as an indicator of the amount of time it would take us to settle both our short and long-term debt.
Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates.
Critical Accounting Policies, Judgments, Estimates and Assumptions In preparing our consolidated financial statements in conformity with US GAAP, we must make decisions that impact the reported amounts and related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates.
GovPlanet business metrics are excluded from this metric as management reviews industrial equipment auction metrics excluding GovPlanet. ​ ​ ​ Ritchie Bros. 46 ​ Table of Contents Non-GAAP Measures As part of management’s non-GAAP measures, we may eliminate the financial impact of certain items that we do not consider to be part of our normal operating results.
Non-GAAP Measures As part of management’s non-GAAP measures, we may eliminate the financial impact of certain items that we do not consider to be part of our normal operating results. Adjusted operating income increased 127% to $905.3 million, compared to $399.4 million in 2022.
On December 9, 2022, the Company subsequently closed an amendment to its existing credit agreement with a syndicate of lenders. The amendment allowed the Company to terminate the backstop commitments and replaced an additional $1.8 billion of bridge commitments with new term loan A facility commitment.
The Company subsequently amended the terms of its Credit Agreement, which, among other things, permitted the acquisition of IAA and served to terminate the backstop commitments (including the revolving backstop facility and $88.9 million of bridge commitments that served as a backstop for its existing term loans under the credit agreement) and replaced an additional $1.8 billion of bridge commitments with the TLA Facility.
The proposed acquisition of IAA is expected to close in the first half of 2023. IAA is a leading global digital marketplace connecting vehicle buyers and sellers. The proposed acquisition will diversify our customer base by providing the Company with a significant presence in the vehicle remarketing vertical that has strong industry fundamentals with proven secular growth.
We believe t he acquisition of IAA will accelerate our journey to become the trusted global marketplace for insights, services and transaction solutions, as well as diversify our customer base by providing us with a significant presence in the automotive vertical, an industry with strong fundamentals and proven secular growth.
Unanticipated events and circumstances may occur that could affect either the accuracy or validity of such assumptions, estimates or actual results.
As a result, during the measurement period, we may record adjustments to the purchase price allocation. In addition, unanticipated market or macroeconomic events and circumstances may occur that could affect the accuracy or validity of the estimates and assumptions.
We expect that our net income attributable to common stockholders will decrease as a result of the cumulative dividends rights of the senior preferred shares and the rights of the senior preferred shares to participate in the allocation of undistributed earnings with common shares and the senior preferred shares.
Under this method, earnings are allocated to holders of common stock and holders of Series A Senior Preferred Shares based on dividends declared and their respective participation rights in undistributed earnings. As a result, our net income available to common stockholders is lower by the cumulative dividends and allocated earnings to Series A Senior Preferred shareholders.
The increase was primarily due to the inclusion of a gain of $169.1 million on property, plant and equipment from the sale of the Bolton property. The increase was also due to higher operating income and a lower effective tax rate as discussed above, partially offset by higher interest expense from our 2021 Notes, which included a loss on redemption.
The decrease was primarily due to higher interest expense from higher debt to fund the acquisition of IAA and a rise in interest rates, partially offset by higher interest income, also due to a rise in interest rates, and lower income tax expense, as discussed above.
We have applied the amendments to the SmartEquip acquisition, which was completed on November 2, 2021. ​ For a discussion of our new and amended accounting standards refer to Note 2 of the consolidated financial statements, Significant Accounting Policies.
Adoption of New Standards For a discussion of our new and amended accounting standards refer to "Part II, Item 8: Financial Statements and Supplementary Data - Note 2 Significant Accounting Policies" of this Annual Report on Form 10-K.
We plan to fund the cash portion of the proposed IAA acquisition through a combination of (i) cash from the balance sheet, (ii) borrowings under certain credit facilities, (iii) the proceeds from the sale of debt securities or for any combination for the foregoing. ​ If we were to consider further acquisitions to deliver on our strategic growth drivers, we may seek financing through equity markets or additional debt markets.
Book overdrafts are recognized on our consolidated balance sheet within trade and other liabilities. If we were to consider further acquisitions to deliver on our strategic growth drivers, we may seek financing through equity markets or additional debt markets. The issuance of additional equity securities may result in dilution to our shareholders.
Diluted EPS Diluted EPS attributable to stockholders increased 110% to $2.86 per share compared to $1.36 in 2021. This increase was primarily due to the increase in net income attributable to stockholders as discussed above, combined with an increase in the weighted average number of dilutive shares outstanding over 2021. U.S.
Diluted EPS Diluted EPS available to stockholders decreased 64% to $1.04 per share compared to $2.86 in 2022, primarily due to the increase in the number of shares issued for the acquisition of IAA and by the decrease in net income as described above.
The deferral of cash tax relating to the taxable gain portion of the sale of our Bolton property combined with higher taxable income and lower income tax payments as a result of timing of installments further contributed to cash inflows.
We also saw higher tax payments relating to the timing of installments paid, as well as higher taxable income, and taxes paid in 2023 for the gain on the sale of the Bolton property. As a result of the inclusion of IAA, we also saw higher outflows relating to prepaid consigned vehicle charges.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased on our exposures to foreign currency transactions at December 31, 2022, and assuming all other variables remain constant, a 10% appreciation or depreciation of the Canadian dollar and Euro against the U.S. dollar would result in an increase/decrease of approximately $34.7 million in our consolidated comprehensive income, of which $35.2 million relates to our foreign currency translation adjustment and is offset by $0.5 million to our net income.
Biggest changeBased on our exposures to foreign currency transactions at December 31, 2023 , and assuming all other variables remain constant, a 10% change in the Canadian dollar, GBP and Euro against the U.S. dollar would result in a foreign currency translation adjustment of approximately $113.0 million in our consolidated comprehensive income.
Interest Rate Risk Loans under our syndicated and foreign credit facilities bear interest, at our option, at a rate equal to either a base rate (or Canadian prime rate for certain Canadian dollar borrowings) or floating rate customarily used by the syndicate and depending on the borrowing currency, including LIBOR, SOFR, SONIA, €STR, EURIBOR, and TIBOR.
Interest Rate Risk Loans under our syndicated and foreign credit facility bear interest, at our option, at a rate equal to either a base rate (or Canadian prime rate for certain Canadian dollar borrowings) or floating rate customarily used by the syndicate and depending on the borrowing currency, including SOFR, SONIA, €STR, EURIBOR, and TIBOR.
Based on the amount owing at December 31, 2022, and assuming all other variables remain constant, a change in the interest rate by 100 bps would result in an increase/decrease of approximately $1.1 million in the pre-tax interest we accrue per annum.
Based on the amount owing at December 31, 2023, and assuming all other variables remain constant, a change in the interest rate by 100 bps would result in an increase/decrease of approximately $17.7 million in the pre-tax interest we accrue per annum.
In either case, an applicable margin is added to the rate. At December 31, 2022, we had a total of $114.6 million in loans (facilities drawn and term loans) bearing floating rates of interest, as compared to $319.1 million at December 31, 2021.
In either case, an applicable margin is added to the rate. At December 31, 2023, we had a total of $1.8 billion in loans (facilities drawn and term loans) bearing floating rates of interest, as compared to $114.6 million at December 31, 2022.
We continue to monitor our exposure to interest rate risk, and while we have not adopted a long-term hedging strategy to protect against interest rate fluctuations associated with our variable rate debt, we may consider hedging specific borrowings if we deem it appropriate in the future. ​ ​ ​ ​ Ritchie Bros. 70 ​ Table of Contents
We continue to monitor our exposure to interest rate risk, and while we have not adopted a long-term hedging strategy to protect against interest rate fluctuations associated with our variable rate debt, we may consider hedging specific borrowings if we deem it appropriate in the future. RB Global, Inc. 63 Table of Contents
The proportion of revenues denominated in currencies other than the U.S. dollar in a given period will differ from the annual proportion for the year ended December 31, 2022, which was 42%, depending on the size and location of auctions held during the period.
The proportion of revenues denominated in currencies other than the U.S. dollar in a given period will differ from the annual proportion for the year ended December 31, 2023, which was 29%, and depends on the size and location of auctions held during the period.
On an annual basis, we expect fluctuations in revenues and operating expenses to largely offset and generally act as a natural hedge against exposure to fluctuations in the value of the U.S. dollar. During 2022, we recorded a foreign currency translation adjustment of $29.2 million, compared to $21.7 million in 2021.
On an annual basis, we expect fluctuations in revenues and operating expenses to largely offset and generally act as a natural hedge against exposure to fluctuations in the value of the U.S. dollar. During 2023, we recorded a foreign currency translation adjustment increase of $41.1 million, compared to a decrease of $29.1 million in 2022.
We enter into forward contracts to protect against foreign currency exchange rate risks related to certain intercompany balances denominated in currencies other than the U.S. dollar.
We also have foreign exchange rate risk related to our intercompany balances denominated in various currencies other than the U.S dollar. However, we enter into forward contracts to protect against such foreign currency exchange rate risks.
Our foreign currency translation adjustment arises from the translation of our net assets denominated in currencies other than the U.S. dollar to the U.S. dollar for reporting purposes.
Our foreign currency translation adjustment, which is recorded as a component of consolidated comprehensive income, arises from the translation of our net assets denominated in currencies other than the U.S. dollar to the U.S. dollar for reporting purposes.
We cannot accurately predict the future effects of foreign currency fluctuations on our financial condition or results of operations, nor quantify their effects on the macroeconomic environment.
As a result, we are exposed to currency fluctuations and exchange rate risk. We cannot accurately predict the future effects of foreign currency fluctuations on our financial condition or results of operations, nor quantify their effects on the macroeconomic environment.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency Exchange Rate Risk We conduct operations in local currencies in countries around the world, but we use the U.S. dollar as our presentation currency. As a result, we are exposed to currency fluctuations and exchange rate risk.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency Exchange Rate Risk We conduct operations in local currencies in countries around the world and the functional currency of our subsidiaries outside of the United States is generally the applicable local currency. Our consolidated financial statements are presented in U.S. dollars.
At December 31, 2022, fixed rate debt (the 2016 Notes) represents 82% of our long-term debt and bears interest at a fixed rate of 5.375% per annum (2021: 91% of our long-term debt bearing interest at fixed rates between 4.750% and 5.375% per annum).
At December 31, 2023, fixed rate debt (the 2023 Secured Notes, and the 2023 Unsecured Notes) represents 44% of our long-term debt and bears interest at a fixed rate of 6.750% per annum for the 2023 Secured Notes and 7.750% per annum for the 2023 Unsecured Notes.
Removed
The proportion of fixed-to-floating debt is anticipated to change upon consummation of the IAA merger and the related funding of the $1.8 billion of new Term Loan A commitments, which are floating rate, and from the issuance of any debt securities and/or additional debt financing required to complete the proposed acquisition of IAA.
Added
As such, after consideration of the effect of foreign exchange contracts in place at December 31, 2023, a 10% foreign currency exchange rate change would not have a significant impact on our net income.

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