RB Global Earnings: Board Taps COO to Lead the Company Forward Following CEO’s Departure

In its early earnings announcement on Aug. 2, RB Global RBA shared its CEO, Ann Fandozzi, would be departing. The company’s stock traded down approximately 4% on Aug. 2. The two sides could not come to an agreement with respect to compensation. According to the company’s press release, the former CEO was looking for more front-load compensation that would have brought forward five years of equity compensation. The board contends the compensation structure would have been beyond peer group compensation benchmarks.

In place of the former CEO, the board has promoted president and COO, Jim Kessler, as CEO. Kessler joined the company in 2020 and has been integral to the Ritchie story since. The new CEO was also deeply involved in the due diligence process for the IAA acquisition. This gives us confidence the IAA integration will continue to progress. The other leadership update was the departure of CFO, Eric Jacobs. Based on media reports, Mr. Jacobs’ exit was pushed by the board. The company will conduct a search for the next CFO. In the meantime, Megan Cash looks to be leading the finance group until a permanent name is announced.

The leadership changes come at critical time for the company, as it’s integrating the IAA acquisition and working to transition its business to be more digitally focused. Nonetheless, we think the business has strong competitive advantages that will allow it to benefit for years to come. We maintain our narrow moat rating for RB Global based upon network effects.

Turning to the quarter, RB Global reported solid earnings, but we elected to reduce our fair value estimate by $1 to $57 (down to CAD 76 from CAD 78 previously). The change is mostly attributable to us tightening up and lowering our 2023 sales and margin estimates. IAA’s number are coming in slightly below what we had expected previously. The company’s stock was up approximately 1% in intraday trading on Aug. 3.