Slide 1: Ritchie Bros. Q2 2019 Earnings Call
Columbus, OH ©O8TCHHCOOROCOOESES SES - MOVE | BUILD | GROW RITCHIE BROS. reer werrrurerrrrs: 2 a
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 US and Canadian securities legislation (collectively, “forward-looking statements”), in
Slide 3: Second Quarter Overview
Second Quarter Overview Ravi Saligram Chief Executive Officer 3
Slide 4: 2Q 2019 Highlights
2Q 2019 Highlights GROSS YTD Cashflow TRANSACTION TOTAL REVENUE DILUTED from VALUE (in millions) EPS Operations (in billions) (in millions) $1.5 +5% $393.2 +27% $0.49 +17% $160 +49% ▪ FX headwinds: on a constant currency basis, Gross Transaction Value +7% ▪ Live GTV +5% ; Online GTV +5% ▪ Marketplac
Slide 5: Auction Highlights
Auction Highlights Live Industrial Auctions Online Marketplaces ▪ 5% Live Industrial Auction growth ▪ 5% Online Marketplaces GTV growth led by MPE, GOV growth ▪ 35% of live industrial auctions posted year-on-year growth comps ▪ Across all channels, 63% of total GTV was purchased by online buyers in
Slide 6: Financial Review
Financial Review Sharon Driscoll Chief Financial Officer 6
Slide 7: Consolidated Performance
Consolidated Performance INVENTORY OPERATING SERVICE REVENUE TOTAL REVENUE NET INCOME REVENUE INCOME + 9% + 68% + 27% + 20% + 18% 158.6 393.2 54.0 78.0 234.6 214.3 45.7 64.8 308.5 94.2 2Q18 2Q19 2Q18 2Q19 2Q18 2Q19 2Q18 2Q19 2Q18 2Q19 • 8% increase in • Total inventory sales • Increase driven by bot
Slide 8: Auctions & Marketplaces - Service Revenue
Auctions & Marketplaces - Service Revenue Service Revenue Mix by Region ▪ Service revenue increased in line with GTV increase, higher commission and fee revenue 12% ▪ Commission revenue increased on higher GTV, higher guarantee and straight commission rates ▪ Fee revenue increased due to higher GTV,
Slide 9: Auctions & Marketplaces – Inventory Sales Revenue
Auctions & Marketplaces – Inventory Sales Revenue Inventory Sales A&M INVENTORY SALES REVENUE Revenue mix by region Inventory sales revenue $200 15.0% 11.8% 11.2% 10.6% increased 68% primarily $150 due to an increase in 8.1% 10.0% 36% $100 6.6% volume of inventory $158 $131 $159 5.0% sales contracts
Slide 10: SG&A Expenses
SG&A Expenses 2Q19 63.9 14.6 9.2 10.0 $97.7 2Q19 SG&A declined 4% from lower employee 2Q19 compensation costs, vs 2Q18 66.7 15.4 8.8 10.3 partially offset by 2Q18 $101.3 ongoing investments in Employee Compensation Buildings/Facilities/ Technology growth Travel/Adv/Promotion Professional Fees/Other
Slide 11: Balance Sheet & Liquidity Metrics
Balance Sheet & Liquidity Metrics 2019 Balance sheet and liquidity metrics (all unadjusted unless otherwise noted) Adjusted Net TTM Operating Debt/ TTM Return On Capex Spend Free Cash Flow Adjusted EBITDA Invested Capital (non-GAAP) (non-GAAP) (non-GAAP) 2Q19 2Q18 2019 Capex Range 2Q19 2Q18 2Q19 2Q1
Slide 12: Capital Allocation Priorities
Capital Allocation Priorities ▪ Continued investment in RBFS, GovPlanet Support Growth and ▪ Investment in MARS initiatives Base Business ▪ Required investments to support SAGE Debt Repayment ▪ Keep adjusted net debt/adjusted EBITDA ratio under 2X ▪ Maintain dividend payout ratio within evergreen ta
Slide 13: Strategic & Operational Overview
Strategic & Operational Overview Ravi Saligram Chief Executive Officer 13
Slide 14: Our strategy is to offer multiple solutions in multiple channels
Our strategy is to offer multiple solutions in multiple channels and penetrate all segments of the used equipment market…be more than auctions Protect, Penetrate, Partner ….not just auctions REVENUE GENERATION SEGMENTS UPSTREAM MIDSTREAM AUCTION Seller Segments OEM & Dealers / Rental / Brokerage / P
Slide 15: Transformation has created a business model founded on a strong transaction engine
Transformation has created a business model founded on a strong and growing transaction engine; supplemented by a solid service proposition Ritchie Bros. Live Financial Industrial Services Auction (RBFS) Channel Ritchie Bros. Asset Solutions Marketplace-E (RBAS) (MPE) Service engine Iron Planet GTV
Slide 16: Sources of Competitive Advantage
Sources of Competitive Advantage Cumulative OFCF 2H 2014 – 1H 2019 $731m Cash Engine Multi-Channel Network Effects Solutions; Platform Technology Generator Enabled High, Wide, Deep Data Customer Relationships Operating Leverage 16 CONFIDENTIAL
Slide 17: Network Effect
Network Effect The virtuous cycle of a growing and diverse ecosystem Gov IP Weekly Planet RBFS Featured Market RBAS place- E Live channel Product Selection Mascus Buyer + Customer Seller Enterprise experience Count Growth Traffic1 1Full year 2018 results 17 17 CONFIDENTIAL 17
Slide 18: Recap of Announcements
Recap of Announcements Announcement of Interim Co-Chief Executive Officers Sharon Driscoll, Chief Financial Officer, and Karl Werner, President, International, have been named interim Co-Chief Executive Officers of the Company effective October 1st. Executive Team Promotions: • Jeff Jeter who was re
Slide 19: Compelling growth drivers add to the strength of our base business
Compelling growth drivers add to the strength of our base business and contribute to the Evergreen model growth profile 1 Marketplace-E 2 SAGE (Sales Activity Generation Engine) Base Business 3 Ritchie Bros. Asset Solutions (RBAS) Live Auction & IP Weekly + 4 Ritchie Bros. Financial Services (RBFS)
Slide 20: Takeaways from Q2
Takeaways from Q2 Expense Discipline /Improved Strong Financial Performance across 1 Operating Leverage 2 the board SG&A -4% +7% GTV* / +27% Rev / +20% OI / +17% EPS Strong Balance Sheet / Cash Flow Strong online GTV performance Adjusted Net Debt to Adjusted EBITDA of 1.8x 3 4 from Marketplace-E & G
Slide 21: Q&A Members of the RBA Management Team
Q&A Members of the RBA Management Team 21
Slide 22: Appendix
Appendix 2 rb RITCHIEBROS.
Slide 23: 2Q19 and 3Q19 – Auction Calendar Notes
2Q19 and 3Q19 – Auction Calendar Notes 2Q19 Live Auction Notes 3Q19 Provisional Live Auction (Total Auctions = Live Industrial + Agriculture) Notes 2Q19 2Q18 + / - Q319 Q318 +/- Total Live Auctions 152 152 0 Industrial auctions 46 45 1 Non Recurring 2018 auctions Agricultural Auctions 10 23 -13 Nari
Slide 24: Appendix – Non GAAP Reconciliations
Appendix – Non GAAP Reconciliations 24
Slide 25: Appendix – Non GAAP Reconciliations
Appendix – Non GAAP Reconciliations 25
Slide 26: Appendix – Non GAAP Reconciliations
Appendix – Non GAAP Reconciliations 26