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Q2 2015 Earnings Review and Update - Ritchie Bros. Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 2015 earnings increased 20% from Q2 2014 Record quarterly earnings driven by auction volumes,

Aug 12, 2020

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  • 1

    Q2 2015 Earnings Review and Update

    August 7, 2015

  • 2

    Forward looking statements

    This presentation contains forward-looking statements.

    Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions. Actual results may differ materially from those expressed herein. Additional information concerning factors that could affect the Company’s actual results is included in the Company’s filings with securities regulators. The Company undertakes no obligation to update publicly any forward-looking statements except as required by securities legislation.

    All figures are in US dollars, unless otherwise noted.

    While rounding may occur in performance numbers for presentation purposes, percent change figures are calculated using full, unrounded numbers.

    2

  • Update from Ravi Saligram Chief Executive Officer

  • 4

    Reported - % Growth Organic - % Growth Versus Q2 2014 Versus Q2 2014

    GAP 3% 11%

    Revenue 10% 19%

    Operating Profit 21% 30%

    Diluted EPS 21% n/a

    Operating Free Cash Flow (12 month rolling)

    91% n/a

    RONA (12 month rolling)

    738 bps n/a

    RONA excluding effects of term loan reclassification

    495 bps n/a

    Q2 2015 financial highlights

    Strong growth compared to Q2 2014, both on a constant currency (organic) basis and a reported basis Foreign exchange had an impact on some operating lines

    4

  • 5

    Q2 auction volumes bolstered by many sectors

    5

    Q2 Auction volumes (Lot count) Q2 2015 Incremental Lots per Customer sector Total lots sold per quarter Lot growth per customer (seller) sector, compared to Q2 2014¹

    15% increase in auction volume (lots sold) compared to Q2 last year Increase largely due to more assets from customers in the heavy and light construction sectors.

    N um

    be r o

    f L ot s

    Lo t g

    ro w th  p er  c us to m er  s ec to r

    G ro w th  o f l ot s f ro m  c us to m er  se

    ct or

    G ro w th  fr om

     p rio

    r Q 2 81,000 

    84,500  85,500  83,500 

    96,000 

    4%

    1%

    ‐2%

    15%

    ‐5%

    20%

    520 

    998  618  732 

    1,023 

    3,823 

    31%

    69%

    113%

    16% 15% 24%

    0%

    120%

    ¹ Selected customer sectors. Does not include all sectors equipment came from.

  • 6

    Average GAP per lot

    6

    • Due largely to FX translation of GAP (7% decline in Avg. GAP per lot) and an increase in small value lots • 21% increase in small value lots (less than $2500)

    • Corresponding change in proportion of low and high value assets sold

    Due to pricing and fee structures, RBA generates a higher revenue rate on the sale of small value items

    Equipment pricing has softened from the peak in Q1 2015 • Pricing trends are asset/sector dependent; some categories/regions performing far better than others • Late model small to mid-size construction assets continue to perform well • Strong demand for equipment supporting non-res construction activity (ie. dumptrucks) • Oil & Gas assets pricing has declined

    Average GAP per lot declined 11% in Q2 2015 compared to Q2 2014

  • 7

    11.5%

    9.6%

    4.2%

    3.6%

    8.7%

    10.2%

    13.1%

    12.1%

    11.0%

    5.0%

    4.8%

    8.8%

    11.2%

    12.1%

    12.2%

    10.3%

    5.0%

    4.7%

    0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

    2010

    2011

    2012

    2013

    2014

    YTD July 27 2015 New 1 Yr Old 2 Yrs Old 3 Yrs Old 4 Yrs Old 5 Yrs Old 6 Yrs Old 7 Yrs Old 8 Yrs Old 9 Yrs Old 10 Yrs Old

    3-5 yrs old: 23.7% of GAP¹

    18.5% of GAP¹

    3-5 yrs old: 35.8% of GAP¹

    ¹ Industrial auctions only. Excludes equipment over 10+ years and equipment with unknown ages.

    New to 1 yr Old

    6+ Yrs Old

    Equipment sold in 3-5 year age range is growing

    Age of Equipment sold¹

    7

  • 8

    Record quarterly revenue achieved in Q2 2015

    Revenue fluctuates considerably between quarters due to seasonality and the number of auctions held in each period.

    Revenue Rate fluctuations are due primarily to the performance of the Company’s underwritten contracts.

    Quarterly revenue & revenue rate ($US millions)

    8

    2012 2013 2014

    Revenue Rate Revenue

    11-12% annual revenue rate range

    2015

    $1 27

    $9 2

    $1 17

    $1 02

    $1 28

    $1 06

    $1 31

    $9 9

    $1 42

    $1 02

    $1 38

    $1 16

    $1 56

    10.7%

    12.0% 11.5%

    12.3%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    10.0%

    12.0%

    14.0%

    16.0%

    0

    25

    50

    75

    100

    125

    150

    175

    Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

  • 9

    11%

    8% 19%

    ‐9%

    10%

    0%

    5%

    10%

    15%

    20%

    25%

    Total Volume Rate Total Organic Growth FX Impact Total Growth

    Revenue growth bolstered from both volume and rate

    9

    Breakdown of revenue growth, % attributable to item Q2 2015 revenue compared to Q2 2014 revenue

    ~60% of the organic revenue growth was driven by increases in auction volumes ~40% was driven by revenue rate improvement

    Changes in foreign exchange had a negative impact on reported revenue growth

  • 10

    Focus on underwritten business showing results

    10

    • Strategic use of the strength of our balance sheet allows us to pursue larger underwritten transactions

    • Smaller transactions are receiving more scrutiny

    • Not a vehicle to ‘buy’ GAP

    • Focus on improving the performance of underwritten business

    RESULTS TO DATE: (First half of 2015)

    • Improvement in underwritten commission rate of 225 bps compared to underwritten commission rate in first half of 2014

    Disciplined approach to underwritten business is resulting in more consistent performance

  • 11

    Strong revenue growth from Canada and US

    Geographic breakdown of Q2 revenue $US revenue

    Q2 Revenue growth rates $US reported growth; local currency

    Strong revenue growth in the US and Canada in local currency; FX translation muted reported growth in Canada and Europe.

    11

    19%

    6%

    ‐14%

    13% 10%

    19% 19%

    7%

    17%

    ‐15%

    30%

    US Canada Europe Other RBA - All

    Reported growth Local currency growth

    41%

    41%

    8% 10%

    US Canada Europe Other

  • 12

    $3 2

    $1 0

    $2 2

    $1 4

    $3 0

    $1 6

    $3 0

    $1 4

    $3 9

    $1 4

    $3 3

    $2 4

    $4 6

    0

    5

    10

    15

    20

    25

    30

    35

    40

    45

    50

    Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

    Q2 2015 earnings increased 20% from Q2 2014

    Record quarterly earnings driven by auction volumes, strong revenue rate, and revenues growth exceeding expense growth Tax rate consistent with Q2 2014

    2012 2013 2014 2015

    Quarterly Adjusted Net Earnings¹ ($US millions)

    12

    20% growth from year ago quarter

    ¹ Earnings attributable to Ritchie Bros. Incorporated. Excludes minority interest of Ritchie Bros. Financial Services.

  • 13

    April/May auction highlights

    13

    Edmonton auction: April 28 – May 1, 2015 • Most revenue ever generated by a single auction in RBA history • CA$215+ million of GAP (US$177+ million) CANADIAN RECORD • 89% sold to buyers within Canada; 51% sold within Alberta • 14,000+ bidders from over 55 countries; 3,200+ buyers COMPANY RECORDS • 7,700+ lots sold CANADIAN RECORD

    Houston, TX: April 15 – 16, 2015 • US$57+ million of GAP • US$28+ million sold to online bidders (49% of sales)

    Fort Worth, TX: May 6, 2015 • US$50+ million of GAP • 3,900+ lots sold SITE RECORD

    Moerdijk, Netherlands: April 23 – 24, 2015 • €16+ million of GAP (US$18 million)

  • 14

    June auction highlights

    14

    Edmonton auction: June 9 – 11, 2015 • CA$96+ million of GAP (US$78+ million) • 90% sold to buyers within Canada; 57% sold to buyers in Alberta • 6,950+ registered bidders; 5,800+ lots sold

    Denver auction: June 11 – 12, 2015 • US$40+ million of GAP SITE RECORD • US$17+ million sold to online bidders SITE RECORD • 2,400 lots sold SITE RECORD

    Australia auctions: Brisbane – June 23; Geelong – June 25 • AUD$52+ million of GAP combined (US$40+ million)

    Dubai auction: June 2 – 3, 2015 • US$33+ million of GAP

    Ocana, Spain: June 16 – 17, 2015 • €17+ million of GAP (US$19+ million)

    June auctions generated over $560 million in GAP

  • 15

    EquipmentOne – Better Together strategy is taking hold

    15

    E1 achieved 15% revenue growth compared to Q2 last year

    $3.8 

    $0.4 

    -$2

    -$1

    $0

    $1

    $

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