RBA 10-K & 10-Q changes, risk factors and insider trading

RiskRisks Related to Our Business

Our business depends on suppliers of damaged, total loss and low-value vehicles. Our vehicle suppliers include insurance companies, used-vehicle dealers, rental car and fleet lease companies, auto lenders and charitable organizations, among others. We have established long-term relationships with virtually all of the major automobile insurance companies. During fiscal 2024,year 2025, approximately 22%23% of our consolidated revenues were associated with vehicles supplied by the Company's three largest supplier customers. Our agreements with insurance company suppliers are generally subject to cancellation by either party upon 30 to 90 days’ notice. There can be no assurance that our existing agreements will not be canceled or that we will be able to enter into future agreements on favorable terms with these suppliers. We work to develop strong relationships with our suppliers to better understand their needs. From time to time, however, we may experience the loss of suppliers or a reduction in volume from suppliers, including top vehicle suppliers. If we lose one or more of our significant suppliers, or if one or more of our large suppliers were to significantly reduce volume for any reason or favor competitors or new entrants, we may not be successful in replacing such business and our profitability and operating results could be materially adversely affected.

In addition, some of the facilities on which we operate are impacted by significant recognized environmental concerns and pollution conditions. IAA has incurred, and we may in the future incur, expenditures relating to compliance and risk mitigation efforts, releases of hazardous materials, investigative, remedial or corrective actions, claims by third parties and other environmental issues, and such expenditures, individually or in the aggregate, could be significant. Federal and state environmental authorities arehave currently investigatinginvestigated IAA’s role in contributing to contamination at the Lower Duwamish Waterway Superfund Site in Seattle, Washington and the role of one of IAA’s subsidiaries in contributing to the Pyrite Canyon Plume in Jurupa Valley, California. Our potential liability at these sites cannot be estimated at this time.

Macroeconomic factors, including high fuel prices, high labor costs, inflationinflation, tariffs and changes in used car prices, may have an adverse effect on our revenues and operating results.

Macroeconomic factors that affect oil prices and the vehicle and commodity markets can have adverse effects on our revenue and operating results. Significant increases in the cost of fuel, whether due to inflationary pressurespressures, including as a result of tariffs, or otherwise, could lead to a reduction in miles driven per car and a reduction in accident rates. A material reduction in accident rates, whether due to a reduction in miles driven or other factors, could reduce our vehicle assignment volumes, which in turn, could have a material adverse impact on our revenues. In addition, significant increases in the cost of fuel have resulted and could continue to result in an increase in the prices charged to us by our independent subhaulers and trucking fleet operators. Further, we have recently experienced labor shortages, which have resulted in an increase in associated costs, such as increased overtime to meet demand and increased wages to attract and retain employees. If these conditions or other inflationary pressurespressures, including as a result of tariffs, continue, our costs for towing and branch labor may continue to rise. To the extent we are unable to pass these costs on to our customers, the increase in prices charged by our independent subhaulers and trucking fleet operators and the increase in labor costs could negatively impact our profitability.

Extreme weather or other events, such as hurricanes, tornadoes, earthquakes, forest fires, floods, global pandemics or other health crises, terrorist attacks or war, may adversely affect the overall economic environment, the markets in which we compete, and our operations and profitability. These events, which may increase in frequency and magnitude as a result of climateclimate- change,and weather-related changes, may impact our physical auction facilities, causing a material increase in costs, or delays or cancellation of auction sales, which could have a material adverse impact on our revenues and profitability. In some instances, for example with the severe storm in September 2022 known as “Hurricane Ian”, these events may result in a sharp influx in the available supply of damaged and total loss vehicles and there can be no assurance that our business will have sufficient resources to handle such extreme increases in supply. Our failure to meet our customers’ demands in such situations could negatively affect our relationships with such customers and result in a loss of future business, which would adversely affect our operating results and financial condition. In addition, revenues generated as a result of the total loss of vehicles associated with such a catastrophe are typically recognized subsequent to the incurrence of incremental costs and such revenues may not be sufficient to offset the costs incurred.

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,J.M. Wood, 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. 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. Difficulties associated with the integration of acquired businesses could have a material adverse effect on our business.

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. 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,apps, social media, and inventory management systems. Our customers are increasingly using tablets and mobile phones to make purchases online and to get detailed equipment information for assets that they own or are interested in purchasing. Our customers also engage with us online, including through social media, by providing feedback and public commentary about all aspects of our business. Consumer shoppingShopping patterns are rapidly changing, and our success depends on our ability to anticipate and implement innovations in customer experience and logistics in order to appeal to customers who increasingly rely on multiple channels to meet their equipment management and disposition needs. Our ability to provide a high quality and efficient customer experience is also dependent on external factors over which we may have little or no control, including, without limitation, the reliability and performance of the equipment sold in our marketplaces and the performance of third-party carriers who transport purchased equipment on behalf of buyers. If for any reason we are unable to implement our inventory management, data solutions, bidding tools and other multichannel initiatives, provide a convenient and consistent experience for our customers across all channels, or provide our customers the services they want, when and where they want them at a compelling value proposition, then our financial performance and brand image could be adversely affected.

If our ability, or the ability of our third partythird-party service partners, cloud computing providers or third partythird-party data center hosting facilities, to safeguard the reliability, integrity and confidentiality of our and their IT 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 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. We continue to integrate and align security measures and internal controls across our operating businesses. These businesses are at varying stages of maturity, which presents challenges in standardizing security measures across the organization. Inconsistent or incomplete alignment of security measures could lead to vulnerabilities, compliance risks, or operational disruptions. Gaps or delays in our ongoing efforts to align these measures could impact the effectiveness of our overall security posture and expose us to potential security breaches. 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 controlscontrol over financial reporting.

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,ownership, licensing, data intelligence, worker safety, privacy and security of customer information, land use and the use, storage, discharge and disposal of environmentally sensitive materials. Complying with revisions to laws, rules and regulations could result in an increase in expenses and a deterioration of our financial performance. Monitoring of, and compliance with, applicable laws, rules and regulations may be difficult, time-consuming and costly. Failure to comply with applicable laws, rules and regulations could result in substantial liability to us, reputational harm, suspension or cessation of some or all of our operations, restrictions on our ability to expand at present locations or into new locations, requirements for the acquisition of additional equipment or other significant expenses or restrictions. Those laws, rules or regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations.

These restrictions, or the adoption of more stringent environmental laws, including laws enacted in response to climateclimate- change,and weather-related risks, 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.

The growth and performance of our business depends to a significant extent on the efforts and abilities of our employees. Many of our key employees have extensive experience with our business. These employees have knowledge and an understanding of our company and industry that cannot be readily duplicated. The loss of any key personnel, or the inability to replace any lost personnel with equally trained personnel, could impair our ability to execute our business plan and growth strategy, cause us to lose customers and reduce our revenues. In addition, the success of our strategic initiatives to expand our business to complimentarycomplementary service offerings will require new competencies in many positions, and our management and employees will have to adapt and learn new skills and capabilities. To the extent they are unable or unwilling to make these transformational changes or we are unable to attract new employees who are able to do so, we may be unable to realize the full benefits of our strategic initiatives. We do not maintain key person insurance on the lives of any of our executive officers or other key personnel. As a result, we would have no way to cover the financial loss if we were to lose the services of such employees. This uncertainty may adversely affect our ability to attract and retain key employees.

There is no assurance that taxes will be payable as anticipated or that the amount or timing of receipt or use of the tax-related assets will be as currently expected. Our experience indicates that taxation authorities are increasing the frequency and depth of audits and reviews. The Canada Revenue Agency (“CRA”) has been conducting audits for our 2014, 2015, 20202020, 2021 and 20212023 taxation years.

WeThird-party claims, litigation, regulatory proceedings or government investigations to which we are regularly subject toor general litigation and other claims,in which we become involved, regardless of their merit, could have an adverse effect on our business and results of operations.

WeFrom aretime to time we may be subject to generalthird-party litigationclaims, lawsuits, regulatory proceedings or government investigations into whether our business practices comport with applicable law, which may include claims with respect to intellectual property, antitrust, breach of contract, employment, mergers and acquisitions and other claims that arise in the ordinary course of our business.matters. The merit, outcome and impact of such litigationclaims, proceedings or investigations cannot be predicted with certainty, but regardless of the merit or outcome, these claims, proceedings or investigations can have an adverse impact on us because of legal costs, diversion of management resourcesresources, negative publicity and other factors. While the results of these claimsclaims, proceedings or investigations have not historically had a material effect on us, we may not be able to defend ourselves adequately against these claimsclaims, proceedings or investigations in the future,future. andIf theseany claims or proceedings mayare havedecided against us or if a materialsettlement adverserequires impactus onto pay a large monetary amount or take other action that materially restricts or impedes our operations, our profitability could be significantly reduced and our financial condition or results of operations.operations could be materially affected. Additionally, the outcome of a proceeding may differ materially from the Company's best estimate.

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, 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. If any of these conditions were to occur, we may not be able to generate sufficient equipment consignments to sustain our business or to attract enough bidders to our auctions to achieve world fair market values for the items we sell. This could harm our financial condition and results of operations. To the extent that climateclimate- changeand causesweather-related changes cause rising sea levels, increased intensity of weather, and increased frequency of extreme precipitation and flooding, the risks noted above may increase.

•$1.3$1.0 billion under an amended credit agreement (the "“Credit Agreement"”) entered into in December 20222016 with a syndicate of lenders; and

•$550.0 million aggregate principal amount of 6.750%6.75% senior secured notes due March 15, 2028, and $800.0 million aggregate principal amount of 7.750%7.75% senior unsecured notes due March 15, 2031 (togethertogether, the "“Notes"”) There are no current drawings under our foreign credit facilities,; and we can borrow an additional $705.9 million under the Credit Agreement.

In addition, price competition and the availability of equipment directly affect the supply of, demand for, and market value of used equipment. ClimateClimate- changeand weather-related initiatives, including significant changes to engine emission standards applicable to equipment, may also adversely affect the supply of demand for our market values of equipment.

This section ofdiscusses the2025 Formresults 10-Kcompared generally discusseswith 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.results. Discussions of 20222024 itemsresults andcompared year-to-year comparisons betweenwith 2023 and 2022results that are not included in this Form 10-Kherein 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, 2023. This discussion and analysis should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and the consolidated financial statements and the notes thereto included in “Part II, Item 8. Financial Statements and Supplementary Data” presented in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks and uncertainties.2024.

Our actualActual results could differ materially from those expressed or implied in any forward-looking statements due to various factors, including those set forth under “Part I, Item 1A: Risk Factors” in this Annual Report on Form 10-K.

OurSectors discussed below are organized by asset class and include automotive, commercial, construction and transportation (“CC&T”), and other. Automotive includes automobiles, including passenger vehicles and buses. CC&T sector includes heavy equipment suchneeded asfor excavators,earth dozers,moving, lift and material handling, as well as vocational and commercial trucks and trailers. Our automotive sector includes all consumer automotive vehicles. The other sectorOther primarily includes assets and equipment in the agricultural, forestry and energy industries, government surplus assets, smaller consumer recreational transportation items and parts sold in our vehicle dismantling business.business Alluntil sectorsJune include21, 2025, the date of its deconsolidation in connection with the LKQ SYNETIQ transaction described in Part II, Item 8: Financial Statements and Supplementary Data - Note 4 Loss on Deconsolidation and Recognition of Equity Method Investment. Each respective sector includes salvage and non-salvage transactions.

Gross Transaction Value (“GTV”): Represents total proceeds from all items sold on our auctions and online marketplaces, third-party online marketplaces, private brokerage services and other disposition channels. GTV is not a measure of financial performance, liquidity, or revenue, and is not presented in the Company’s consolidated financial statements.

Total lots sold: A single asset to be sold,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.”

◦•Service revenue increased 23%4% to $3.4$3.5 billion.

◦•Inventory sales revenue decreasedincreased 3%18% to $920.6$1.1 million.billion.

•Through our continuous improvement program, we consistently delivered exceptional performance, as measured against our service level agreements, to our automotive insurance company customers. We also drove industry leading average selling prices for our partners, enabled by investment in technology and attracting record-high engagement from international buyers. These advancements and ongoing transparency initiatives have reinforced our leadership in salvage vehicles, resulting in significant partnership wins in the United States and in Australia.

•InDuring 2024,2025, we continued to invest in the development of our technology, particularlyincluding the implementation by Ritchie Bros. in the United States of a new digital payments platform. This platform that replaces outdated manual processes and legacy technologysystems with a modern financial backboneinfrastructure, expanding the range of services available to offer our buyers and partnerspartners, increasedenabling choice in our services, including self-serveself-service access to critical financial tools, and provideenhancing ourthe overall experience for both buyers and sellers the best in-class experience.sellers.

•During the year, in our automotive sector, weIAA continued to expand ourits international customer base with new market alliances in Oman in the MiddleUnited EastArab Emirates, Panama, Azerbaijan, and in Lithuania in Eastern Europe. These market alliances will help us connect with a base of new buyers and broaden our market share.Guatemala.

The following summarizestables ourpresents total GTV by geography and by sector for the periods indicated:

The following table illustrates the breakdown ofpresents total lots sold by sector for the periods indicated (thousands of lots sold):

Cost of inventory sold decreasedincreased 3% to $863.8 million, primarily19%, in line with the decreaseincrease in inventory sales revenue of 3%.18%. Inventory rate declined 90 bps to 5.3%, attributable to unfavorable asset mix.

For a complete overview of our business, refer to Part I, Item 1: Business of our Annual Report on Form 10-K for the year ended December 31, 2025. The Company completed the acquisitions of BigIron Auction Company ("BigIron") and Blackmon Auctions ("Blackmon") during the second quarter of 2026.

For the firstsecond quarter of 2026, as compared to the firstsecond quarter of 2025:

Various macroeconomic conditions and trends, including inflationary pressures, actual or potential tariffs, and volatility in interest rates, affect our business, GTV, and operating costs. Our GTV ismay be further influenced by unit volume growth and changes in average selling prices, which in part are driven by prevailing market conditions.

Industry volumes are influenced by a broad range of factors, including macroeconomic conditions, demographic trends, government initiatives, infrastructure investment, ongoing investment in food and infrastructurefarm investment.productivity, and commodity prices. Structural shifts in the market—market, such as the expansion of data centers, increased manufacturing activity, and re‑shoring efforts—efforts, also play a significant role in shaping demand. During the first quarter of 2026, weWe continued to observe early indications of improving seller confidence,confidence in select end markets, supported by stabilizing values for used equipment, a more favorable interest rate environment,equipment and continued strength in large-scale construction projects, including civil infrastructure and mega projects. WeHowever, alsocustomer believedecision-making thatbecame amore portiondeliberate ofduring the quarter'ssecond volume growth reflects the release of pent-up supply,quarter as sellersuncertainty deferred decisions throughout 2025.increased.

Industry unit volume growth is influenced by both the total number of accidents and the proportion of those accidents classified as total losses. Accident frequency is primarily driven by the number of vehicles in operation and aggregate miles traveled. A substantial percentage of these accidents are insured, and insurer involvement plays an important role in determining whether a vehicle is deemed a total loss. At the same time, underinsured accidents cancontinue to create headwinds for industry volumes, as insufficient coverage may delay or reduce total‑loss designations and thereby limit the flow of vehicles into salvage channels.

Total‑loss determinations are shaped by several factors, including used vehicle pricing, vehicle age, design complexity, technology content, and repair costs. In the firstsecond quarter of 2026, the inflation differential between automotive repair costs and used vehicle prices expanded and remainsremained positive. This dynamic supports a higher percentage of total‑loss determinations relative to overall accidents, creating a favorable environment for salvage activity despite the moderating effectimpact of underinsured incidents.

•On MarchMay 4,15, 2026, the Company enteredcompleted intoits a definitive agreement to acquire 100%acquisition of the equity interest in Big Iron Auction Company (“BigIron”),BigIron, a U.S.-based online marketplace for agricultural equipment, land, and livestock, for approximately $350.0 million, subject to customary purchase price adjustments.livestock. The acquisition is expected to accelerate the Company’s strategic expansion into the U.S. agriculture sector. On April 21, 2026, the U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The acquisition is subject to other customary closing conditions and is expected to close in the second quarter of 2026.

•On April 13, 2026, the Company acquired the business assets of Blackmon Auctions (“Blackmon”),Blackmon, a U.S.-based auction provider serving the construction, transportation, agriculture, and real estate sectors. The acquisition is expected to strengthen the Company’s presence and expand its footprint in the south central U.S. Blackmon conducts both live and online auctions and processed more than $60 million of GTV in 2025.

GTV increased 13%11% in the second quarter of 2026 and 12% in the first quartersix months of 2026, drivenprimarily bydue organicto growthstrong acrossperformance allin regionsthe Automotive and sectorsHE&T andsectors, supported by the inclusion of the results of J.M. Wood Auction Co., Inc. ("J.M. Wood"), andacquired in the third quarter of 2025, Smith Broughton Pty Ltd ("“Smith Broughton"”), followingacquired their acquisitions byin the Companyfourth onquarter Julyof 14, 20252025, and NovemberBigIron, 28,acquired 2025,in respectively.the second quarter of 2026.

Automotive sector GTV increased 7%13% in the second quarter of 2026 and 10% in the first quartersix months of 2026, primarily due to an increaseincreases in average price per lot sold from favorable pricing across all regions and internationalunit volume, driven by market share gains,gains and organic growth in the United States and International regions. These increases were partially offset by lower unit volumes due to timing and the non-repeat of prior year catastrophic events in the United States.Canada.

Transactional seller revenue increased 11%5% in the first quartersix months of 2026, primarily due to the inclusion of the J.M. Wood and BigIron, Automotive and HE&T service GTV growth in the CC&T and Automotive sectors, as discussed above,growth, and a higher HE&T average seller commission rate in the CC&T sector due to a favorable contract mix.mix, partially offset by the impact of Automotive price incentives tied to transaction volumes.

Transactional buyer revenue increased 4%9% in the second quarter of 2026 and 6% in the first quartersix months of 20262026, driven by higher volumes,Automotive GTV and higher HE&T GTV, due to the inclusion of J.M. Wood and BigIron, partially offset by lower average buyer fee rate due to asset mix and acquired businesses contributing at a lower rate.rates.

Inventory sales revenue increased 32%28% in the second quarter of 2026 and 30% in the first quartersix months of 2026, primarily due to higher CCHE&T inventory sales driven by higher unit volumes,volumes partiallyand duecontract tomix, and the inclusion of J.M. Wood,Wood and higherSmith average price per lot sold.Broughton. These increases were partially offset by lower Automotive inventory sales.

Costs of services increased 1%4% in the first quartersix months of 2026,2026 primarilyfor duethe toreasons higherdiscussed employee compensation costs and increased property costs, driven by increased operating lease expense related to growth in operations. These increases wereabove, partially offset by the recovery of accrued Canadian Digital Services Tax ("DST") relating to the period of July 1, 2024 to March 26, 2026, recorded in the first quarter of 2026 following its repeal on March 26, 2026. Note that DST incurred post-July 1, 2024 was previously recorded within cost of services, while the retrospectively enacted portion, relating to the period of January 1, 2022 to June 30, 2024, was previously recorded within selling, general and administrative.

Inventory rate increased 80bps180bps to 9.0%5.9% in the second quarter of 2026 and 140bps to 7.4% in the first quartersix months of 2026, primarily due to favorable pricing in the CCHE&T sector in theall United States and Canada.regions.

Selling, general and administrative expenses increaseddecreased 4%5% in the firstsecond quarter of 2026, primarily due to increasesdecreases in employee compensation costs, travel,including advertisingshare-based payment expense, and promotionlower costs,professional fees driven by the non-recurrence of the debt refinancing and certain other strategic initiatives which occurred in the inclusionsecond quarter of J.M. Wood and Smith Broughton. Employee compensation costs increased primarily due to higher short-term incentive compensation. Travel, advertising and promotion costs increased primarily due to industry event costs.2025. These increasesdecreases were partially offset by the recoveryinclusion of accruedrecently DST,acquired ascompanies, discussedincreased above.travel, advertising and promotion costs associated with industry events, and increased software license costs.

Acquisition-related and integration costs increased 100%185% in the second quarter of 2026 and 140% for the first quartersix months of 2026, primarily due to costsexpense recognized over the requisite service periods for acquisition-related deferred payment arrangements, associated with the acquisitionacquisitions of J.M. Wood.Wood and BigIron.

Operating income increased 15%19% in the second quarter of 2026 and 17% in the first quartersix months of 2026, primarily duedriven toby higher flow-through offrom service revenuerevenue, and highincreased inventory return, asthe discussednon-recurrence above.of the loss on deconsolidation associated with the LKQ SYNETIQ transaction recognized in the second quarter of 2025, and lower selling, general and administrative expenses. These increases were partially offset by the increase inhigher depreciation and amortization expense as a result of intangible asset additions, along with the increase in selling, general, and administrative expenses, as discussed above.expense.

Net income available to common stockholders increased 21%33% in the second quarter of 2026 and 27% in the first quartersix months of 2026, primarily due to higher operating income,income as discussed above, and lower interest expense due to lower outstanding principal and lower variable interest rates.expense. These increases arewere partially offset by an increase in income tax expense, as discussed above.expense.

Foreign exchange did not have a material impact on our results of operations in the firstsecond quarter of 2026, when compared to the corresponding period in the prior year quarter.year.

Our liquidity is primarily affected by fluctuations in cash flow from operations, significant acquisitions, dividend payments, capital spending, common share repurchases, and repayments of debt. We are also committed under various letters of credit and provide certain guarantees in the normal course of business.

We believe our principal sources of liquidity, which include cash and cash equivalents, cash flow from operations, and unused capacity under our revolving credit facilities of $1.0$700.5 billionmillion (discussed in further detail below), are sufficient to fund our current and planned operating activities. In the current interest rate environment, we will continue to evaluate and pursue the most financially beneficial arrangements to fund future capital expenditures, which may include lease agreements or cash purchases.

Our most significant short-term cash requirements include, among others, (i) dividend payments, (ii) settlements with consignors, (iii) employee compensation, with the majority of annual short-term incentive compensation paid annually in the first quarter, (iv) income tax installments, (v) scheduled debt repayments and interest payments, (vi) committed information technology and other capital expenditures, (vii) lease and equipment financing obligation payments, and (viii) other working capital requirements. We may also repurchase common shares pursuant to our common stock repurchase program.

Our ability to borrow under the Credit Agreement is subject to compliance with financial covenants, including a consolidated leverage ratio and a consolidated interest coverage ratio. We were in compliance with all financial and other covenants applicable to our debt agreements at MarchJune 31,30, 2026. In the event of a 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 ourthe Credit Agreement. We continue tocontinually evaluate courses of action to maintain current levels of liquidity and compliance with our debt covenants.

If we were to consider further acquisitions to deliver on our strategic growth drivers, we may seek financing through the equity or debt markets. The issuance of additional equity securities may result in dilution to existing shareholders. Issuance of preferred equity securities could provide for rights, preferences or privileges senior to those of our common stock.shares. Further, this additional capital may not be available on reasonable terms, or at all.

The increasedecrease in net cash provided by operating activities was primarily due to higheran net income from operations and a favorableunfavorable net change in operating assets and liabilities.liabilities, partially offset by higher net income. The favorableunfavorable net change in operating assets and liabilities was primarily due to the timing and size of auctions and settlement of accrued liabilities, including the final arbitration ruling to the former-CEO. These unfavorable net changes were partially offset by the timing of book overdrafts, income tax installment payments and inventorybook sales and purchases,overdrafts, and the non-repeat of the deposit paid to the CRA in the first quarter of 2025. These changes were partially offset by the settlement of accrued liabilities, including the final arbitration ruling to the former-CEO, the timing of auction settlements, and the timing and size of auctions.

The decreaseincrease in net cash used in investing activities was primarily due to decreasedthe loanacquisitions issuances.of BigIron and Blackmon, net of cash received.

The increase in net cash provided by financing activities was primarily due to anhigher increaseborrowings inunder short-termour revolvingCredit facilityAgreement, borrowings,including reflectinga short-termborrowing liquidityof requirements$300.0 inmillion certainto countries,fund the acquisition of BigIron, partially offset by the$150.0 acquisitionmillion of therepurchases VeriTreadand non-controllingretirements interests.of common stock.

We declared and paid a dividend of $0.31 per common share during the three months ended MarchJune 31,30, 2026. We declared, but have not yet paid, a dividend of $0.31$0.33 per common share subsequent to MarchJune 31,30, 2026. All dividends that we pay are “eligible dividends” for Canadian income tax purposespurposes, unless indicatedotherwise otherwise.indicated.

At MarchJune 31,30, 2026, there were no material changes to our critical accounting policies, judgments, estimates and assumptions from those disclosed in Part I, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2025.