Rb Global, Inc. · TSX:RBA
Rb Global — Ritchie Bros. Auctioneers — Q1 2017 Earnings Presentation
35 slides from Rb Global's earnings presentation, May 5, 2017
Slide 1: Q1 2017 Earnings Review and Update
rl RITCHIE BROS. Q1 2017 Earnings Review and Update RBA M 52 REAR TT ay 5, 2017 NYSE [sca aki)
Slide 2: Forward looking statements and non-GAAP measures
Forward looking statements and non-GAAP measures Caution Regarding Forward-Looking Statements This presentation contains forward-looking statements and forward-looking information within the meaning of applicable U.S. and Canadian securities legislation (collectively, “forward-looking statements”),
Slide 3: Update from Ravi Saligram
Update from Ravi Saligram Chief Executive Officer rl RITCHIE BROS.
Slide 4: Gross auction proceeds (GAP): $900 mil in Q1 2017
Gross auction proceeds (GAP): $900 mil in Q1 2017 Western Canada was primary driver of GAP declines as Oil and Gas dispersals have receded; rest of world is performing well. First quarter GAP affected by large one-time auctions in comparable quarters in Q1 2016 & 2015 As a reminder, a US$46 mil auct
Slide 5: Canada was the largest driver of declines; US and Europe generated solid revenue growth
Canada was the largest driver of declines; US and Europe generated solid revenue growth and revenue contribution US revenue contribution grew 4% from same quarter . last year grew 4 q Geographic breakdown of Q1 2017 revenue astyea $US revenue, as reported by geography (all business lines) Fewer auct
Slide 6: Q1 2017 US GAAP financial summary
Q1 2017 US GAAP financial summary Reported Q1 2017 results impacted by acquisition-related costs, one-time tax adjustment Reported results include $8.6 million of acquisition-related costs, a $2.3 million one-time tax adjustment and $6.7 million of interest paid on bonds held in escrow (to fund Iron
Slide 7: Q1 2017 Comparable figure financial summary
Q1 2017 Comparable figure financial summary First quarter results lower than very strong comparable period last year. Comparable figures exclude $2.3 million of non-recurring items, $8.6 million of acquisition-related costs, and $6.7 million of interest paid on bonds held in escrow (prior to tax imp
Slide 8: Clarifying our Q1 2017 results
Clarifying our Q1 2017 results US GAAP (REPORTED) Includes full impact of acquisition-related costs and non- recurring items ADJUSTED (NON-GAAP) Includes full impact of acquisition-related costs and interest on bonds in escrow, excludes non-recurring items COMPARABLE (NON-GAAP) Excludes impact of no
Slide 9: Online vs Onsite
80% 70% 60% 50% 40% Online 30% Onsite 20% 10% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2012 2013 2014 2015 2016 2017
Slide 10: Ritchie Bros. mobile app: Q1 2017 user metrics
Ritchie Bros. mobile app: Q1 2017 user metrics Mobile App bidders purchased more than $1 million of assets ina single day, on April 26th Wayfinding map launched successfully in Orlando — to great customer reviews 4.5 star rating Apple App Store 4.2 Star rating Google Play ¢ Over 20,000 monthly activ
Slide 11: Diversification strategy continues to take hold
Diversification strategy continues to take hold EquipmentOne delivering strong growth; Mascus performing well EquipmentOne and Mascus reported as “Other” business segment * Segment produced $6.7 million of revenue in Qi 2017 * Contributed $63k to EBIT * EquipmentOne GTV grew 63% to $38.6 million fro
Slide 12: Q1 2017 highlights
Qi 2017 highlights Houston, Texas: February 15-16, 2017 US$42+ million of GAP Orlando, Florida: February 20-24, 2017 US$188+ million of GAP SITE RECORD NUMBER OF BIDDERS (MORE THAN 10,400) SITE RECORD NUMBER OF SELLERS (MORE THAN 1000) Las Vegas, Nevada: March 9-10, 2017 US$35+ million of GAP Edmont
Slide 13: Equipment pricing impacts
Equipment pricing impacts Equipment pricing in construction has been strong since beginning of 2017 Construction assets continued to perform well * Onaverage, 3-6 year old hydraulic excavators saw a 4% price increase from Qg at US auctions (as high as 15% increase at Canadian auctions) * — Later mod
Slide 14: Industrial auction metrics were impacted by strong comparable Q1 2016
Industrial auction metrics were impacted by strong comparable Q1 2016 and volume declines in western Canada Q1 2017 auction calendar was more similar to that of Q1 2014° ¢ Asareminder, a US$46 mil auction was held in Grande Prairie in Q1 2016 and a US$54 mil auction in Casper, WY in Qi 2015 - these
Slide 15: Light construction lots up; Heavy construction and Transportation lots down
Light construction lots up; Heavy construction and Transportation lots down Industrial auction volumes declined 9.7% to 84,000 lots during Q1 2017' Lots consigned by customers in the Light Construction and Finance/Insurance sectors drove most of the Lot growth during the first quarter. Q1 Auction vo
Slide 16: Underwritten business performed well in Q1; lower volume
Underwritten business performed well in Q1; lower volume Proportion of underwritten business declined in Q1 2017, relative to past quarters * Underwritten volume was very low in the US due to supply constraints Underwritten revenue rate improved 417 bps relative to Q1 2016 ¢ Underwritten contract pe
Slide 17: Q1 2017 Financial Performance
Q1 2017 Financial Performance Sharon Driscoll, Chief Financial Officer rl RITCHIE BROS.
Slide 18: Growth in revenue rate not enough to completely offset revenue decline from lower volumes
Growth in revenue rate not enough to completely offset revenue decline from lower volumes Volume declined in Q1 by ~11%; rate improve offset volume difference by 6% Foreign Exchange changes compared to year ago quarter added ~1% decline in reported revenue Breakdown of revenue growth/decline, % attr
Slide 19: Reconciliation of Q1 2017 US GAAP, Adjusted and Comparable figures
Reconciliation of Q1 2017 US GAAP, Adjusted and Comparable figures Q1 2017 US GAAP Adjusted Comparable (SUS Millions except for EPS, %) (Non-GAAP) (Non-GAAP) Revenues $124.5 $124.5 $124.5 Costs of services, excluding Depreciation & Amortization 12.8 12.8 12.8 Selling, general and administrative expe
Slide 20: Revenue rate strength from new business lines and fee improvement
Revenue rate strength from new business lines and fee improvement Revenue rate was 90 bps higher than same quarter last year Contributions from new business lines and greater fee-based revenue supported a record first-quarter revenue rate of 13.8% Qi 2017 Revenue Rate components 16% 7 14% + 12% + 10
Slide 21: Disciplined cost control; 1% increase in opex
Disciplined cost control; 1% increase in opex” Cost control remains a priority throughout the organization * Costs of Services, excluding depreciation and amortization declined 16% * Selling, General and Administrative expenses grew 5% from year ago quarter * Collectively, opex’ grew just 1% Costs o
Slide 22: Q1 adjusted net income impacted by acquisition-related costs
Q1 adjusted net income impacted by acquisition-related costs Q1 2017 adjusted net income declined 57% relative to Q1 2016 Excluding acquisition related costs and bond interest held in escrow, ‘comparative’ net income attributable to stockholders was $24.2 million — a decline of 20% from comparable A
Slide 23: Balance sheet and liquidity metrics - Q1 2017
Balance sheet and liquidity metrics - Q1 2017 Q1 2017 Balance sheet and liquidity metrics (All unadjusted unless otherwise noted) 12 months trailing March 31, 2017 March 31, 2016 —_ Better / (Worse) (SUS Millions except for percent figures) Operating Free Cash Flow (non-GAAP) $116.0 $202.0 (43%) Wor
Slide 24: Capital allocation priorities - before/after IP acquisition
Capital allocation priorities - before/after IP acquisition BEFORE IRONPLANET ACQUISITION ANNOUNCEMENT PRIORITY 1 Grow dividends with earnings 2 = Hold fully-diluted shares flat 3 Acquisitions 4 Share buy-backs 5 Pay down debt DISCUSSION Highly valued return of cash to shareholders Offset dilution f
Slide 25: RITCHIE BROS.
RITCHIE BROS.
Slide 26: Update on IronPlanet acquisition
Update on IronPlanet acquisition IRON US regulatory review is still in process Department of Justice is continuing with their review following second request for information in December Continue to strongly believe in the merits of our case; customers will benefit from transaction Integration Planni
Slide 27: Macro trends & future quarter considerations
Macro trends & future quarter considerations Q2 comp considerations: April 2017 GAP + April 2017 GAP was $354 million * A10.4% decline from April 2016 * Removing impact of foreign exchange, constant currency GAP * Equipment supply remains constricted with OEM production still backlogged for some pro
Slide 28: RITCHIE BROS.
RITCHIE BROS.
Slide 29: Non-GAAP Measures
Non-GAAP Measures The following tables reconcile non-GAAP measures referred to in this presentation to the most directly comparable GAAP measure reflected in the Company’s financial statements RITCHIE BROS.
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following table presents adjusted net income attributable to stockholders (non-GAAP measure) and diluted adjusted EPS attributable to stockholders (non- GAAP measure) results for the three months ended March 31, 2017 and 2016, as well as reconciles those metri
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following table presents our adjusted EBITDA (non-GAAP measure) and adjusted EBITDA margin (non-GAAP measure) results for the three months ended March 31, 2017 and 2016, as well as reconciles those metrics to net income, revenues, and net income margin. which
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following table presents our adjusted debt/adjusted EBITDA (non-GAAP measures) results as at and for the 12 months ended March 31, 2017 and 2016, as well as reconciles that metric to debt, net income, and debt as a multiple of net income. which are the most di
Slide 33: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following table presents ROIC (non-GAAP measure) and ROIC excluding escrowed debt (non-GAAP measure) results on a trailing 12-month basis, and reconciles those metrics to net income attributable to stockholders, long-term debt, stockholders’ equity, and retum
Slide 34: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following table presents our OFCF (non-GAAP measure) results on a trailing 12-month basis, and reconciles that metric to cash provided by operating activities and net capital spending. which are the most directly comparable GAAP measures in our consolidated st
Slide 35: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following table presents working capital intensity (non-GAAP measure) results as at and for the 12 months ended March 31, 2017 and 2016, and reconciles that metric to working capital, trade and other receivables. inventory, advances against auction contracts,
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