[US Stocks] RB Global [RBA]: The world's largest auctioneer of reconstruction machinery and passenger vehicles | Thorough explanation of US stocks' Dividends and increasing dividend stocks | Moneyクリ MoneyX Securities' investment information and media useful for money.

In 2023, the company name was changed following the IAA acquisition.

RB Global [RBA] is the world's largest auction marketplace operator. It describes itself as a "global marketplace connecting sellers and buyers of commercial assets and vehicles" and operates auction venues and online marketplaces for industrial machinery such as used construction equipment, mining machinery, agricultural machinery, trucks, and passenger cars. Previously known as Ritchie Bros. Auctioneers, it transformed into "RB Global" in 2023 after the acquisition of IAA (Insurance Auto Auctions) (the ticker [RBA] remains unchanged).

The integration of IAA marked a significant turning point in the company's business model. Its predecessor, Ritchie Bros. Auctioneers, began with a live auction of industrial machinery held by the Ritchie brothers in 1958. The live auctions by the Ritchie brothers were characterized by being public auctions that did not require reservations or qualifications to participate, which was rare at the time and garnered a positive response, leading to consecutive successes. Expanding its business scope while covering various sectors of heavy equipment such as construction, agriculture, oil, and transportation machinery, it successfully went public on the New York Stock Exchange in 1998.

Since 2000, the company has promoted online operations and expanded its business through the operation of online marketplaces such as "IronPlanet", "Marketplace-E", and "Govplanet". It has become known as one of the world's leading heavy equipment auctioneers.

Expand business areas through acquisition

The company has a history of expanding its business through acquisitions. It began with the acquisition of the competing machinery auction company Fork Brothers (1999), followed by All Piece (2002), LeBlanc Auction (2004), Dennis (2006), Clark (2007), and Malterra (2009), acquiring companies that provide auction services for agricultural and construction machinery.

The acquisition of IronPlanet, which operates an online heavy equipment marketplace, was particularly noteworthy in 2017. The company started online bidding in 2002, but this acquisition led to a full-scale development of the online auction business, resulting in rapid growth. During the COVID-19 pandemic, the online auction marketplace allowed the company to maintain its performance. It can be said that the acquisition of IronPlanet was a very important turning point for the company.

A Crucial Turning Point: Expansion into the Passenger Car Sector with the IAA Acquisition

What is drawing as much attention as this IronPlanet acquisition is the acquisition of IAA in 2023. The acquisition amount is approximately $7.3 billion, the largest in the company's history (equivalent to 50.4% of total GTV of $13.9 billion). The acquisition of IAA, which operates an online auction service for used vehicles (general vehicles and passenger cars), has expanded the company's portfolio into the automotive market. This is evident from the composition ratio of the total GTV (transaction amount), where automotive transactions surged from 3.1% in fiscal year 2022 to 46.9% in fiscal year 2023, and further accounted for 52.0% in fiscal year 2024. There was no handling in the automotive sector before 2021, which indicates that the company has newly entered the automotive field through this acquisition.

On the other hand, the composition ratio of "CC&T (Construction, Commercial, Transportation = excavators, bulldozers, large trucks, and other heavy machinery and industrial machines)" remained over 70% from fiscal year 2019 to fiscal year 2022, but it shrank to 39.1% in fiscal year 2023 and 36.5% in fiscal year 2024. That said, the business remains robust, and recently, in March, it continued to strengthen its operations by acquiring JM Wood.

In the fiscal year 2024, the composition ratio of GTV is as follows: the original business "CC&T (Construction, Commerce, Transportation)" accounts for 36.5%, the newly added "Automobile" accounts for 52.0%, and "Others," which consists of specialized fields such as agriculture and energy industries, makes up 11.5%. It can be said that the acquisition of IAA has expanded the coverage area to passenger cars, resulting in a very comprehensive used transportation equipment auction marketplace.

The most comprehensive auction platform in the industry

The assets we handle range widely compared to competitors, including commercial trucks, construction machinery, passenger cars, and government surplus items. Competitors like Copart (CPRT) focus mainly on salvage vehicles, while Openlane (KAR) centers on end-of-lease vehicles. We provide a platform through live auction venues in 14 countries and online to over 170 countries.

The main sellers include construction companies, engineering companies, industrial machinery OEMs, automobile manufacturers and dealers, and insurance companies. For example, they have partnered with the three major equipment rental companies: United Rentals [URI], Sunbelt Rentals, and Herc Rentals, as well as the U.S. Defense Logistics Agency. I believe that the brand power, credibility, and the relationships that have developed over 70 years serve as a competitive advantage.

Buyers include construction companies, engineering firms, individual consumers, and used car dealers, and the company provides a wide range of services to connect and support these buyers and sellers.

We provide not only an auction platform but also develop businesses that complement the auction operations and enhance quality. This includes fundraising (RB Financial), delivery (VeriTread and RB Logistics), equipment data analysis and appraisal (Rouse Services), and the provision of equipment maintenance platforms (SmartEquip). From offering auction platforms to logistics and maintenance, we have a business structure that can provide a total asset lifecycle solution. Together with a wide-ranging asset portfolio, we are the industry's leading comprehensive auction platform company.

The main source of revenue is fee income

On the other hand, the company also has its own "inventory sales business" where it sells its own stock, but this currently accounts for about 20% of sales revenue, with the main source of income being "service revenue." Service revenue mainly consists of fees from sellers or consignees, fees from marketplace services, and fees from various services. For example, when an item is successfully bid on, a fee income of 15% is obtained from the seller.

In short, it is a fee income, and it is growing through the expansion of GTV (transaction amount) and the take rate (revenue ÷ GTV). GTV has expanded to about three times the level of fiscal 2019 in 2023 due to acquisition effects, and the take rate has risen from 17% to 21%. The increase in the take rate signifies an improvement in profitability. As a result, service revenue has expanded more than threefold. The fiscal year 2024, following the IAA acquisition, is also showing steady progress.

Overall Evaluation: Evaluating the strong business foundation and enhanced competitiveness, looking forward to further increases in stock prices.

Through the world's largest used heavy machinery auction platform, we have enjoyed strong demand for used heavy machinery, and our performance has remained steady over the years. The sales revenue has averaged 15% annually over the past 20 years and 24% over the past 10 years. In the last three years, the average annual growth rate has reached 43% due to the acquisition of IAA.

Between 2023 and 2032, the used construction machinery market is expected to grow at an average annual rate of 5.8%, while the used car market is projected to grow by 9%. Entry into the used car market may accelerate growth. The acquisition of IAA has expanded the asset portfolio to include passenger vehicles, making the company an auction platform with unparalleled total service capability in the industry.

The company has acquired approximately 29% market share in the vehicle auction market, but Copart, which also offers online vehicle auctions, has also secured 29%, making it a primary competitor. Prior to the IAA acquisition, the company operated in the heavy equipment market while Copart focused on the passenger car market, effectively keeping the markets separate. However, they are now competing in overlapping markets. While the company entered the automotive market through the IAA acquisition, Copart has also formed a capital partnership with Purple Wave, which operates an auction platform for construction and agricultural machinery, entering the RB Global side of the market in 2023. Currently, Copart is limited to logistics, storage, and ownership processes, giving it an advantage in total service provision that extends to the surrounding services of RB Global, but if Copart enhances its capabilities, it could become a formidable competitor.

The company provides shareholder returns through dividends. It has a record of increasing dividends for 21 consecutive years, with increases occurring at a pace of approximately 5% to 7%. The dividend payout ratio has about 60% of the capacity remaining. Although the dividend yield is low, in the case of this company, returns from stock price growth can be expected as it is a growth stock. Just as the acquisition of IronPlanet in 2017 accelerated the shift to online, the acquisition of IAA in 2023 can be seen as an important turning point, marking the start of a new growth phase.

[Figure 1] RB Global [RBA] Annual Dividend Trends Source: Created by the author from Bloomberg ※From 2004 to 2025, with 2025 being an estimated value (annualized based on the most recent quarterly results)

[Figure 2] Comparison of Stock Price Trends of RB Global [RBA] and S&P 500 Source: Created by the author based on Bloomberg *RB Global [RBA] stock price is based on the value of 1 as of March 31, 1998.