Slide 1: Q4 and 2016 Earnings Review and Update
rl RITCHIE BROS. Q4 and 2016 Earnings Review and Update RBA February 21, 2016 RAR ry aa (=)
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): $4.3 bil in 2016
Gross auction proceeds (GAP): $4.3 bil in 2016 Fourth quarter GAP affected by action timing differences and used equipment pricing (relative to year ago quarter). Quarterly Gross Auction Proceeds ($US millions) $1,500 - r $4,600 $1,250 - 1335 94,400 ee r $4,200 $1,000 | + $4,000 $750 - + $3,800 $500
Slide 5: Total revenue grew 10%, pre-existing business revenue grew 5% in 2016
Total revenue grew 10%, pre-existing’ business revenue grew 5% in 2016 The strength of our core business lines continues to generate meaningful growth * Underwritten rate went up nearly 100 bps and straight commission increased slightly * RBFS revenue grew 30% from 2015 Revenue from new business lin
Slide 6: Impact of FX on our 2016 annual performance: Not significant
Impact of FX on our 2016 annual performance: Not significant GAP and FX: 2016 vs. 2015 Revenue and FX: 2016 vs. 2015 200 70 9 $57.3M, 11% $145.6M, 3% 0 Yd $50.5M, 10% 2 5° -$6.8M, -1% $87.2M, 2% = 40 -$58.4M, -1% & 3 50 20 10 o4 | ' 1 o+ + + Organic Growth FX effect Total Growth Organic Growth FX ef
Slide 7: 2016 financial summary
2016 financial summary Strong reported revenue growth of 10% Adjusted operating income and diluted EPS roughly in line with prior year Adjusted figures remove the impact of non-recurring items (such as E1 write down and debt extinguishment costs) Adjusted figures still include the impact of $11.8 mi
Slide 8: Reconciliation of 2016 US GAAP, Adjusted and Comparable figures
Reconciliation of 2016 US GAAP, Adjusted and Comparable figures 2016 US GAAP Adjusted Comparable (SUS Millions except for EPS, %) (Non-GAAP) (Non-GAAP) Revenues $566.4 $566.4 $566.4 Costs of services, excluding Depreciation & Amortization 66.1 66.1 66.1 Selling, general and administrative expenses 2
Slide 9: Clarifying our 2016 results
Clarifying our 2016 results US GAAP (REPORTED) Includes full impact of E1 write down, debt extinguishment costs and acquisition-related costs ADJUSTED (NON-GAAP) Excludes impact of E1 writedown and debt extinguishment costs; still includes impact of acquisition-related costs and interest on bonds CO
Slide 10: Comparing 2016 to 2015 results
Comparing 2016 to 2015 results US GAAP (REPORTED) Includes full impact of E1 write down, debt ADJUSTED (NON-GAAP) Excludes impact of E1 write down and debt COMPARABLE (NON-GAAP) Excludes impact of all the E1 write down, debt extinguishment costs and acquisition-related costs extinguishment; still in
Slide 11: 2016 Comparable figure financial summary
2016 Comparable figure financial summary We delivered solid performance in 2016 on a comparable basis Comparable figures exclude non-recurring and acquisition-related items 2016 Comparable Performance’ Comparable % Growth (US$ millions, except % and EPS) Versus 2035 GAP $4,334.8 R 2% Revenue $566.4
Slide 12:
Slide 13: 2016 Key Accomplishments
2016 Key Accomplishments Delivered solid financial performance and met key Evergreen Model targets ¢ Significant improvement in Underwritten Rate * Strong Canadian and Australian performance Achieved 49.4% TSR return in 2016 Announced acquisition of IronPlanet and launched Integration Planning commi
Slide 14: 2016 Sales Highlights
2016 Sales Highlights Denver, Colorado — March 17-18, 2016 US$46+ million of GAP LARGEST EVER DENVER AUCTION Tipton, California —- August 17, 2016 US$21+ million of GAP LARGEST EVER TIPTON AUCTION Columbus, Ohio - September 28-29, 2016 US$76+ million of GAP LARGEST EVER COLUMBUS AUCTION , LARGEST EV
Slide 15: Canada continued to drive growth, on an absolute dollar basis
Canada continued to drive growth, on an absolute dollar basis Australia had a great year, Private Treaty is becoming meaningful US growth was below our targets, given opportunity we believe exists there * TM turnover in this region negatively affected productivity in H1 2016 * International bidders
Slide 16: Industrial auction operational metrics demonstrate health of business
Industrial auction operational metrics demonstrate health of business 2016 Operational metrics were strong Lot and consignor numbers grew more than 12% during 2016; buyers grew 11.9% All are new records for RBA Consignors Lots Registered bidders Buyers 65,000 5 455,000 > 412.4% 605,000 + 828A, 165,0
Slide 17: Online bidding continues to be an important option for buyers
Online bidding continues to be an important option for buyers During 2016, 53% of buyers purchased their assets through online transactions * Up from 50% in 2015 and 47% in 2014 Online & on site transactions continue to converge: Q4 stats * During Q4 2016, 47% of GAP was transacted through online bi
Slide 18: Investments in mobile technology are gaining traction
Investments in mobile technology are gaining traction Mobile bidding app was officially launched on July 11, 2016 Monthly Average Users Inthe 5 months since its launch: 12,000 11,281 * 22,290 users from 132 countries 10,000 * 11,000+ active monthly , 1136 * 4.5 Star rating on Apple App Store; 4.4 st
Slide 19: Detailed operating performance of “Other” sales channels
Detailed operating performance of “Other” sales channels EquipmentOne and Mascus reported as “Other” business segment Both are considered to be online only service models, to facilitate the sale of equipment * Segment produced $24 million of revenue in 2016 ¢ Both E1 and Mascus were profitable in 20
Slide 20: Ritchie Bros. Financial Services
Ritchie Bros. Financial Services During 2016, RBFS revenue grew 30% to $12.8 million RBFS contributed $0.04 to diluted EPS attributable to shareholders during 2016° Q4 2016 RBFS metrics Full year 2016 RBFS metrics ($US millions) ($US millions) Credit Applications Funded Volume Credit Applications Fu
Slide 21: Q4 2016 Performance
Q4 2016 Performance Sharon Driscoll, Chief Financial Officer rl RITCHIE BROS.
Slide 22: Q4 2016 highlights
Q4 2016 highlights Edmonton, Alberta: December 8-9, 2016 CA$66+ million of GAP (US$50+ million) Fort Worth, Texas: November 30—December 1, 2016 US$40+ million of GAP Houston, Texas: November 9-10, 2016 US$43+ million of GAP Edmonton, Alberta: October 25-28, 2016 CA$129+ million of GAP (US$96+ millio
Slide 23: Q4 GAP impacted by auction timing
Q4 GAP impacted by auction timing Auction timing impacted Q4 GAP results Auction timing difference will cause * Reported Q4 2016 GAP declined 8% compared to Q4 monthly or quarterly volatility 2015 * Montreal and Columbus auctions occurred in Q3 this Cumulative GAP growth 2036 (USS’o00) year (rather
Slide 24: Equipment pricing impacts
Equipment pricing impacts Equipment pricing has held relatively flat compared to Q3; down ~5% from Qg last year Construction assets continued to meet or exceed our pricing expectations in Q4 * Onaverage, hydraulic excavators saw a 10% price increase from Q2 at US auctions (flat at Canadian auctions)
Slide 25: Industrial auction operational metrics demonstrate health of business
Industrial auction operational metrics demonstrate health of business Q4 Operational metrics were strong, given auction timing differences relative to Qy last year’ As a reminder, two large auctions (Columbus and Montreal) were held in Q3 this year, but Q4 in 2015 Comparable metrics were therefore a
Slide 26: Equipment distributor sector provided most lot growth in Q4
Equipment distributor (sales/rental/leasing) sector provided most lot growth in Q4 Industrial auction volumes increased 3.5% to 104,500 lots during Q4 2016° Lots consigned by customers in the Sales/Rental/Leasing, Finance/Insurance and Light Construction sectors drove most of the Lot growth during t
Slide 27: RBA Core Auction volumes continue to grow
RBA Core Auction volumes continue to grow Lower value lots were a larger proportion of lots sold during Q4 2016, relative to the same quarter last year * This trend is due in part to lower overall pricing relative to year-ago periods and growth of Timed Auction Lots Proportion of low value lots* (le
Slide 28: Reconciliation of Q4 US GAAP, Adjusted and Comparable figures
Reconciliation of Q4 US GAAP, Adjusted and Comparable figures Q4 2016 US GAAP Adjusted Comparable (SUS Millions except for EPS, %) (Non-GAAP) (Non-GAAP) Revenues $146.8 $146.8 $146.8 Costs of services, excluding Depreciation & Amortization 16.2 16.2 16.2 Selling, general and administrative expenses
Slide 29: Income statement summary — Q4 2016
Income statement summary — Q4 2016 Comparable results exhibit strong underlying operating results Q4 2016 Income statement summary 3 months trailing December 31, 2016 December 31, 2015 Better / (SUS Millions except for EPS, %) (Worse) GAP $1,040.4 $1,135.4 (8%) Revenues $146.8 $135.5 8% Revenue Rate
Slide 30: Q4 Revenue growth due to strong revenue rate on core auction and revenues
Q4 Revenue growth due to strong revenue rate on core auction and revenues from new businesses/new channels Volume declined in Q4 by ~8% but more than offset by commission and fee-based revenue growth FX changes in FX had very little impact on our Qq results But impacted annual results given earlier
Slide 31: Revenue rate strength from both commission and fee improvement
Revenue rate strength from both commission and fee improvement Revenue rate was 218 bps higher than same quarter last year All revenue streams generated higher revenue rates; Private Treaty transactions added meaningful contribution to overall rate Q4 2016 Revenue Rate components 16% 4 ™ Mascus Reve
Slide 32: Underwritten business performed well in Q4
Underwritten business performed well in Q4 Proportion of underwritten business declined in Q4 2016, relative to Q4 in prior years Underwritten revenue rate improved 516 bps relative to Q4 2015 * Underwritten contract performance at auctions in Grande Prairie, Edmonton, Montreal, and Houston supporte
Slide 33: Higher Q4 SG&A relative to comparable quarter last year
Higher Q4 SG&A relative to comparable quarter last year Reported SG&A expenses grew 10.3%; 2% growth purely due to new business lines * Total employee comp expenses increased 10% as a result of an 8% net increase in headcount and new exec roles + Also include separation agreement payment to departed
Slide 34: Acquisition-related cost definition update
Acquisition-related cost definition update Acquisition-related costs now include deferred compensation related to earn-outs associated with each acquisition. Prior period acquisition-related costs have been reclassified and presented separately from SG&A expenses to conform with current quarter’s pr
Slide 35: Q4 adjusted net income impacted by acquisition-related costs
Q4 adjusted net income impacted by acquisition-related costs Q4 2016 adjusted net income improved 5% relative to Q4 2015 Excluding impairment charges AND acquisition related costs, ‘comparative’ net income grew 16% Adding back $4.6 million of costs . ° 1 Quarterly Adjusted Net Income attributable to
Slide 36: Balance sheet and liquidity metrics - Q4 2016
Balance sheet and liquidity metrics - Q4 2016 Q4 2016 Balance sheet and liquidity metrics (All unadjusted unless otherwise noted) 12 months trailing December 31, December 31, Better / (Worse) (SUS Millions except for percent figures) 2016 2015 Operating Free Cash Flow (non-GAAP) $147.8 $182.3 (19%)
Slide 37: Completed $500 million senior notes offering in December
Completed $500 million senior notes offering in December 2016 Proceeds to be used to partially fund IronPlanet transaction: * Proceeds will be held in escrow until time of transaction close * — Interest will be paid to bond holders during escrow period (pre-paid 3 months of bond interest) Financing
Slide 38: Capital allocation priorities - before/after IP acquisition
Capital allocation priorities - before/after IP acquisition BEFORE IRONPLANET ACQUISITION ANNOUNCEMENT AFTER IRONPLANET ACQUISITION CLOSES PRIORITY DISCUSSION PRIORITY DISCUSSION 1 Grow dividends Highly valued return of cash to Grow dividends Highly valued return of cash to with earnings shareholder
Slide 39: RITCHIE BROS.
RITCHIE BROS.
Slide 40: Operational updates
Operational updates U.S. & LatAm President * Ravi assumed Acting U.S. and Latin America President role * Rob Whitsit continues as Acting Chief Sales Officer (US); permanent successor will be named pending lronPlanet closing Canada President * Randy Wall intends to retire during Q2 2017 * Internal ca
Slide 41: Update on IronPlanet acquisition
Update on IronPlanet acquisition IRON US regulatory review is still in process * Department of Justice is currently reviewing; provided a second request for information in December * Expect the process to be completed by the end of the second quarter * Continue to be confident about the merits of ou
Slide 42: 2017 Auction Activity - to date
2017 Auction Activity - to date Phoenix, Arizona: February 9, 2017 * Pricing significantly higher than expectations * 9% of GAP went to Mexico based buyers Donington Park, UK — February 14, 2017 * — Revenues grew from comparable sale last year * Pricing relatively stable Houston, Texas — February 15
Slide 43: Macro trends & future quarter considerations
Macro trends & future quarter considerations Q1 considerations: * Softening of equipment supply; Equipment pricing so far in Q1 is stronger than anticipated * Qu 2017 auction calendar to more closely resemble Qi 2014, without the large one-time sales that have occurred in Q1 in the previous two year
Slide 44: 2017 CEO priorities
2017 CEO priorities 1. Continue driving the organization to achieve Evergreen Targets in 2017 * Laser focused on executing against business priorities and monitoring KPIs 2. Customer-centricity/Innovation * — Enable front-line employees to become trusted advisors, who can confidently provide a full
Slide 45: RITCHIE BROS.
RITCHIE BROS.
Slide 46: 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 47: 75% ownership / 100% ownership
75% ownership 100% ownership
Slide 48: IronPlanet overview
• • • • • • • • • • • • • • • • (1) Gross Merchandise Value – total value of assets sold through IronPlanet sales channels. (2) Trailing 12 months June 30, 2016
Slide 49: IronPlanet transaction terms and synergies
• • • • • • • • • • • • • • • (1) Consists of US$740 million in cash plus approximately $18.5 million assumption of unvested equity interests, subject to standard closing adjustments (2) Inclusive of $100 million NPV of tax synergies and $20 million in run-rate cost synergies. Based on current tax e
Slide 50: IronPlanet Adjusted EBITDA reconciliation
lronPlanet Adjusted EBITDA reconciliation IRON TTM Sept. 30, 2016 performance information onPianet standalone EBITDA reconciliation 4» months ended for IronPlanet was disclosed in the November ESO 30, 2016 8-K filing, coinciding with our bond Net (loss) Income $(28.6) marketing Depreciation and amor
Slide 51: Evergreen model financial footnotes
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 Invested Capital.
Slide 52: Age of equipment sold improving from past years
Age of equipment sold improving from past years Age of Equipment sold at Ritchie Bros. Auctions’ 4 3-5 yrs old: 29.4% of GAP* 2016 ee 9.2% New to 1yr old | 2Yrs Old 2015 Oe 4.6% m3 Yrs Old 7 18.5% of GAP* m4 Yrs Old 6+ Yrs Old 2013 BBB 50% 103% a] 2010 = rr ne "Industrial auctions only. Excludes equ
Slide 53: Growth of other auctions/channels shrinking Orlando’s importance
Growth of other auctions/channels shrinking Orlando’s importance Impact of Orlando auction on full year performance has diminished in recent years Not a bellwether of annual performance Orlando as % of annual GAP $5,000 6.0% 5.3% $4,500 0% $4,000 5 $3,500 3,5 0% $3,000 $2,500 3.0% $2,000 2.0% $1,500
Slide 54: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following tables present our adjusted operating income (non-GAAP measure) and adjusted operating income margin (non-GAAP measure) results for the years ended December 31, 2016, 2015, and 2014. as well as reconcile those metrics to operating income, revenues, a
Slide 55: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following table presents our 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 re
Slide 56: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Year ended December 31. Change (in U.S. $ thousands, except share and 2016 over 2015 over per share data) 2016 2015 2014 2015 2014 Net income attributable to stockholders 91,832 $ 136.214 $ 90.981 (33)% 50% Pre-tax adjusting items: Management reorganization - - 5,
Slide 57: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following tables present our adjusted EBITDA (non-GAAP measure) and adjusted EBITDA margin (non-GAAP measure) results for the years ended December 31. 2016, 2015. and 2014. as well as reconcile those metrics to net income (loss), revenues, and net income margi
Slide 58: 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 years ended December 31, 2016, 2015, and 2014, as well as reconciles that metric to debt, net income, and debt as a multiple of net income, which are the m
Slide 59: 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 60: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following table presents our adjusted net income attributable to stockholders (non-GAAP measure) and adjusted dividend payout ratio (non-GAAP measure) results on a trailing 12-month basis. and reconciles those metrics to dividends paid to stockholders, net inc
Slide 61: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following tables present adjusted operating income (non-GAAP measure) and adjusted operating income margin (non-GAAP measure) results for the three months ended December 31, 2016 and 2015, and the years ended December 31, 2016, 2015. and 2014. respectively, as
Slide 62: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures The following tables present 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 December 31, 2016 and 2015, and the years ended December 31
Slide 63: 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 years ended December 31, 2016, 2015. and 2014, and reconciles that metric to working capital, trade and other receivables. inventory, advances against auction contr