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Q2 2015 Earnings Review and Update
August 7, 2015
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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.
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Update from Ravi SaligramChief Executive Officer
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Reported - % Growth Organic - % GrowthVersus 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 basisForeign exchange had an impact on some operating lines
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5
Q2 auction volumes bolstered by many sectors
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Q2 Auction volumes (Lot count) Q2 2015 Incremental Lots per Customer sectorTotal 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.
Num
ber o
f Lots
Lot g
rowth per customer sector
Growth of lots from customer se
ctor
Growth from
prio
r Q2 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.
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Average GAP per lot
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• 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 $2500)
• Corresponding change in proportion of low and high value assets sold
Due to pricing and fee structures, RBA generates a higher revenue rate on the sale of small value items
Equipment pricing has softened from the peak in Q1 2015• Pricing trends are asset/sector dependent; some categories/regions performing far better than others• Late model small to mid-size construction assets continue to perform well• Strong demand for equipment supporting non-res construction activity (ie. dumptrucks)• Oil & Gas assets pricing has declined
Average GAP per lot declined 11% in Q2 2015 compared to Q2 2014
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11.5%
9.6%
4.2%
3.6%
8.7%
10.2%
13.1%
12.1%
11.0%
5.0%
4.8%
8.8%
11.2%
12.1%
12.2%
10.3%
5.0%
4.7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2010
2011
2012
2013
2014
YTD July 27 2015New1 Yr Old2 Yrs Old3 Yrs Old4 Yrs Old5 Yrs Old6 Yrs Old7 Yrs Old8 Yrs Old9 Yrs Old10 Yrs Old
3-5 yrs old: 23.7% of GAP¹
18.5% of GAP¹
3-5 yrs old: 35.8% of GAP¹
¹ Industrial auctions only. Excludes equipment over 10+ years and equipment with unknown ages.
New to 1 yr Old
6+ Yrs Old
Equipment sold in 3-5 year age range is growing
Age of Equipment sold¹
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Record quarterly revenue achieved in Q2 2015
Revenue fluctuates considerably between quarters due to seasonality and the number of auctions held in each period.
Revenue Rate fluctuations are due primarily to the performance of the Company’s underwritten contracts.
Quarterly revenue & revenue rate ($US millions)
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2012 2013 2014
Revenue Rate Revenue
11-12% annual revenue rate range
2015
$127
$92
$117
$102
$128
$106
$131
$99
$142
$102
$138
$116
$156
10.7%
12.0%11.5%
12.3%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
0
25
50
75
100
125
150
175
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
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11%
8% 19%
‐9%
10%
0%
5%
10%
15%
20%
25%
Total Volume Rate Total Organic Growth FX Impact Total Growth
Revenue growth bolstered from both volume and rate
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Breakdown of revenue growth, % attributable to itemQ2 2015 revenue compared to Q2 2014 revenue
~60% of the organic revenue growth was driven by increases in auction volumes~40% was driven by revenue rate improvement
Changes in foreign exchange had a negative impact on reported revenue growth
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Focus on underwritten business showing results
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• Strategic use of the strength of our balance sheet allows us to pursue larger underwritten transactions
• Smaller transactions are receiving more scrutiny
• Not a vehicle to ‘buy’ GAP
• Focus on improving the performance of underwritten business
RESULTS TO DATE: (First half of 2015)
• Improvement in underwritten commission rate of 225 bps compared to underwritten commission rate in first half of 2014
Disciplined approach to underwritten business is resulting in more consistent performance
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Strong revenue growth from Canada and US
Geographic breakdown of Q2 revenue$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.
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19%
6%
‐14%
13%10%
19% 19%
7%
17%
‐15%
30%
US Canada Europe Other RBA - All
Reported growthLocal currency growth
41%
41%
8%10%
USCanadaEuropeOther
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$32
$10
$22
$14
$30
$16
$30
$14
$39
$14
$33
$24
$46
0
5
10
15
20
25
30
35
40
45
50
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q2 2015 earnings increased 20% from Q2 2014
Record quarterly earnings driven by auction volumes, strong revenue rate, and revenues growth exceeding expense growthTax rate consistent with Q2 2014
2012 2013 2014 2015
Quarterly Adjusted Net Earnings¹($US millions)
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20% growth from year ago quarter
¹ Earnings attributable to Ritchie Bros. Incorporated. Excludes minority interest of Ritchie Bros. Financial Services.
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April/May auction highlights
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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)
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June auction highlights
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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
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EquipmentOne – Better Together strategy is taking hold
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E1 achieved 15% revenue growth compared to Q2 last year
$3.8
$0.4
-$2
-$1
$0
$1
$2
$3
$4
$5
Revenue EBITDA 4 quarter moving average 4 per. Mov. Avg. (EBITDA)
EquipmentOne Revenue and EBITDA($US millions)
Q2 2015 EBITDA was positive on a 12 month trailing and 4-quarter moving average basis for the first time
Q3 2014 Q4 2014 Q1 2015 Q2 2015
Revenue4-quarter moving average $ 3.2 $ 3.3 $ 3.4 $ 3.6
Trailing 12 months $ 12.7 $ 13.2 $ 13.7 $ 14.2
EBITDA4-quarter moving average $ (0.6) $ (0.4) $ (0.0) $ 0.2
Trailing 12 months $ (2.4) $ (1.6) $ (0.2) $ 0.8
EquipmentOne Revenue and EBITDA($US millions)
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Q2 EquipmentOne updates
US sales team training:19 of 22 complete
Enhanced user experience based on customer feedback
• Accelerated the launch of E1 products through US sales team; all US teams trained by year-end
• Learnings from initial pilots have been incorporated into the sales process/training
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Operational Results:
• Gross Transaction Value (GTV) from E1 in Q2 up 7% from Q2 last year• GTV of $111.6 million twelve months trailing June 2015
• Website traffic up 19% in Q2 2015 (average monthly user, three months trailing June 30)
• Updated website terminology to be more consistent with Ritchie Bros. language, as requested by customers
• Enhanced visual design to ease site navigation
Recent Initiatives:
Integrating E1 listings on rbauction.com searches
• Gives buyers a greater array of equipment in search results
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Ritchie Bros. Financial Services
Funded volume in first half of 2015 up 37% compared to same period last year• Growing # of RBFS sales professionals to
increase awareness of financial services with auction and E1 customers
Now offering equipment leasing through RBFS – through financing partners• Launched in Q2
• Currently available in the US and Canada
• Several leasing options can be applied for, including sale lease backs, traditional leases and variations of lease-to-own terms
RBFS applications and funded loans($US millions)
$444
$671
$0
$100
$200
$300
$400
$500
$600
$700
$800
H1 2014 H1 2015
Credit Applications
$92
$126
$0
$20
$40
$60
$80
$100
$120
$140
H1 2014 H1 2015
Funded Volume
LOANS • LEASING • STRUCTURED FINANCE • DEALER SOLUTIONS
51% 37%
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Capital Allocation & Dividend Increase Sharon Driscoll, Chief Financial Officer
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Capital allocation priorities
Consistently make use of cash on our balance sheet to facilitate underwritten transactions;The strength of our balance sheet is a competitive advantage.
Priority Discussion
1. Grow dividends with earnings Highly valued return of cash to shareholders
2. Hold fully-diluted shares flat Offset dilution from management stock options through share buybacks
3. Acquisitions Accelerate top-line growth and leverage the model
4. Share buy-backs Growth initiatives are a higher priority at this time
5. Pay down debt Only if better economic returns are not available
(1) Priorities for cash utilization after operating CAPEX needs have been met.19
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14% increase in quarterly dividend (additional 2 cents per quarter)
Growing our dividend alongside earnings; Committed to 55-60% dividend payout, based on earnings trailing 12 months
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$0.1
050 $0
.112
5
$0.1
125
$0.1
125
$0.1
125
$0.1
225
$0.1
225
$0.1
225
$0.1
225 $0
.130
0
$0.1
300
$0.1
300
$0.1
300
$0.1
400
$0.1
400
$0.1
400
$0.1
400
$0.1
600
$0.10
$0.11
$0.12
$0.13
$0.14
$0.15
$0.16
$0.17
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
Dividends declared($US cash dividends)
7.1% increase
8.9% increase
6.1% increase
7.7% increase
14.0% increase
Q2 2015 Performance Rob McLeod, Chief Business Development Officer
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$1,150
$673
$1,040
$865
$1,195
$849
$1,000
$845
$1,073
$790
$1,107
$855
$1,229
$887
$1,241
$956
$1,262
$4,212$4,313
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
$0
$250
$500
$750
$1,000
$1,250
$1,500
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Record Q2 and 12-month trailing
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12-months trailing GAP
Quarterly GAP
Quarterly Gross Auction Proceeds($US millions)
$4.31 Billion GAP on 12-month trailing basis
2011 2012 2013 2014 2015
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Income statement scorecard – Q2 2015
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3 months trailing ($US Millions except for EPS, %)
June 30, 2015 June 30, 2014 Better / (Worse)
GAP $1,262.2 $1,229.2 3%
Revenues $155.5 $141.8 10%
Revenue Rate 12.32% 11.54% 78 bps
Operating Income $62.4 $51.7 21%
Operating Income Margin 40.2% 36.5% 370 bps
Diluted EPS $0.43 $0.36 21%
Q2 2015 Income statement scorecard
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5.7%
3.8%
2%
-10%
-1%
0.5%
-15%
-10%
-5%
0%
5%
10%
15%
Other SG&Aexpenses
Travel, advertising &promotion
Building andFacilities
EmployeeCompensation
Other
Bonus
Share based compensation
Q2 2015 expense breakdown
Q2 2015 – SG&A growth breakdown(Percent change from Q2 2014, as reported)
Bonus compensation
Share based compensation
• Direct result of the improved performance over Q2 2014 and achievement of key performance metric targets.
• Primarily due to an increase in the fair value of our share units relative to share price (pricing)
• Increased grants (volume)
• Accelerated vesting of options and share units due to executive departures (timing)
10%
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Adjusted operating income (EBIT) and EBITDA margins
Q2 2015 generated the highest margins in over 4 years.
Seasonality influences our volume of business, and therefore revenue, flow-through and margins.
Strong margin growth
44.2%
47.1%
36.5%
40.2%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013 2014 2015
EBITDA Margin EBIT Margin 4-quarter moving average 4-quarter moving average
25
26
Impact of FX on our Q2 2015 performance
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$26M, 19 %
-$12M, -9%
$14M, 10%
0
5
10
15
20
25
30
35
Organic Growth FX effect Total Growth
in M
illio
ns
Revenue and FX
$11M, 12%
$8M, 9%$3M, 3%
0
5
10
15
20
25
30
Organic Growth FX effects Total Growth
in M
illio
ns
Expenses (DE, SG&A, D&A) and FX
$16M, 30%
-$5M, -10%
$11M, 21%
0
5
10
15
20
25
30
Organic Growth FX effect Total Growth
in M
illio
ns
Operating Income and FX
$132 M, 11 %
-$99M, -8%
$33 M, 3%
020406080100120140160
Organic Growth FX effect Total Growth
in M
illio
ns
GAP and FX
* Figures rounded to the million
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Income statement scorecard – First half of 2015
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6 months trailing ($US Millions except for EPS, %)
June 30, 2015 June 30, 2014 Better / (Worse)
GAP $2,217.7 $2,084.6 6%
Revenues $271.1 $240.4 13%
Revenue Rate 12.22% 11.53% 69 bps
Operating Income $92.1 $69.4 33%
Operating Income Margin 34.0% 28.9% 509 bps
Diluted EPS $0.65 $0.49 33%
H1 2015 Income statement scorecard
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Balance sheet scorecard
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12 months trailing ($US Millions except for percent figures)
June 30, 2015 June 30, 2014 Better / (Worse)
Operating free cash flow $220.3 $115.3 91%
Working Capital Intensity -23.9% -15.9% 806 bps
Capex Intensity 3.2% 6.9% 369 bps
RONA (Return on Net Assets) 24.9% 17.5% 738 bps
RONA excluding term loan reclassification 22.5% 17.5% 495 bps
Debt / Adjusted EBITDA 0.6x 0.9x 0.3x
Q2 2015 Balance sheet scorecard
Final CommentsRavi Saligram, Chief Executive Officer
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H1 2015 financial highlights
Performance in first half of the year demonstrates our commitment to execution and our agility in leveraging market opportunitiesForeign exchange remains a headwind
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Reported - % Growth Organic - % GrowthVersus H1 2014 Versus H1 2014
GAP 6% 14%
Revenue 13% 21%
Operating Profit 33% 41%
Diluted EPS 33% 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
Q&ARavi Saligram, Chief Executive OfficerSharon Driscoll, Chief Financial OfficerRob McLeod, Chief Business Development OfficerJim Barr, Group PresidentTerry Dolan, President – US and Latin AmericaRandy Wall, President – Canada
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RBA evergreen financial model
Above model reflects our aspiration on how the model should work in the next 5 to 7 years
Performance Metric Avg. Annual Growth Targets
• GAP Growth (%) High Single Digit to Low Double Digits
• Revenue Growth (%) (1) Mid Single Digit to High Single Digit
• SG&A Growth (%) Will grow slower than revenues
• Operating Income Margin (& EBITDA Margin) 50 bps +
• EPS Growth (%) (2) High Single Digit to Low Double Digits
• Net Capex Intensity (3) <10%
• OFCF (4) % of Net Earnings >100%
• RONA (5) Increase 50 bps +
• Dividend Payout Ratio 55% to 60%
• Net Debt / EBITDA <2.5X
(1) Includes Tuck In and Bolt On acquisitions(2) Variances may occur in certain years based on tax rate that is influenced by geographic revenue mix(3) Net Capital Spending as % of Revenue(4) Operating Free Cash Flow(5) Return on Net Assets
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0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
New
1 Yr O
ld
2 Yr
s Ol
d
3 Yr
s Old
4 Yr
s Ol
d
5 Yr
s Old
6 Yr
s Ol
d
7 Yr
s Old
8 Yr
s Ol
d
9 Yr
s Ol
d
10 Y
rs O
ld
20102011201220132014 YTD July 27 2015
Age of Equipment improvement
The age of equipment sold continues to improve and track as we expect.
¹ Industrial auctions only. Excludes equipment over 10+ years and equipment with unknown ages.
Age of Equipment sold¹
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