investor overview presentation...this presentation contains non-gaap financial measures. for a...

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A global leader in used equipment salesInvestor overview presentation

August 2016

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Forward looking statements and non-GAAP measures

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.

This presentation contains non-GAAP financial measures.

For a discussion of non-GAAP measures and the most directly comparable GAAP financial measures, see the Appendix to this presentation as well as our earnings releases, our Form 10-Q interim report and 10-K annual report, which are available at: investor.ritchiebros.com

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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Ritchie Bros. overview

The trusted source for buying and selling industrial equipment• Global leader for industrial auctions; unreserved process

– No minimum bid/reserved price. No buy-backs. – Ensures the sale of goods on the day of the auction at global market price

• Cater to the needs of heavy equipment owners– Customers are from the construction, trucking, agricultural & resource sectors

• 345 auctions; $4.25 billion in Gross Auction Proceeds during 2015– Industry leader by wide margin; Enormous growth opportunity, with a highly

fragmented market

• Provide multichannel sales solutions to expand the breadth of services available to equipment sellers:– EquipmentOne launched in 2013– Mascus (equipment sales listing service) acquired in 2016

Strong financial performance • $515.9 million of revenue during fiscal 2015• $121.1 million of adjusted net income¹ during fiscal 2015

Publicly listed on the NYSE and TSX (as RBA)• Market cap of approx. US$3.8 billion

RBA Auction - Circa 1958

RBA Auction - Now

Ritchie Bros. has a strong heritage –selling used equipment since 1958

3 ¹ Net Income attributable to stockholders

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32%

50%

10%7%

Canada

United States

Europe

Other

Global reach44 auction sites in 14 countries worldwide• More than half of auction purchases are made by bidders from

outside the region of the auction

• Allows RBA to effectively transfer equipment between regions experiencing different economic cycles

• Consignors benefit from global market pricing for their equipment, generated by international demand

• Buyers benefit from a global supply, with an ability to purchase and ship equipment from weak economic regions to areas with stronger growth

32%

47%

12%9%

CanadaUnited StatesEuropeOther

2015 Regional breakdown of revenue(Revenue breakdown - % of 2015 total)

Ritchie Bros.’ online bidding allows customers from around the world to bid on equipment at any of our auctions.

• Real-time information from live auctions available online to registered bidders

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$481 Mil

2014 Revenue breakdown - % of 2014 total

$516 Mil

US comprised a greater proportion of revenue in 2015 relative to 2014.

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Global equipment market size is $360 billion

Ritchie Bros. is a global leader in used equipment sales, with $4.2 billion of equipment sold in 2014However, this represents only 1.2% of a highly fragmented global used equipment exchange market

The US market alone represents over $50 billion, 7x Canada – a key market for growth

Mining

Oil & Gas

Transportation

Agriculture

Construction

Source: Internal estimates; based on historical OEM unit sales, estimates of fleet turnover, and average selling prices at RB auctions. Allocation by geography based on sector GDP.

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Mining

Oil & Gas

Transportation

Agriculture

Construction

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0

100,000

200,000

300,000

400,000

500,000

600,000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Registrants

Lots

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2005

2006

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2008

2009

2010

2011

2012

2013

2014

2015

Consignors

Buyers

Growing seller and buyer base

5.0% CAGR in consignments over last 10 years

6.4% CAGR in buyers over last 10 years

8.2% CAGR in registrants over last 10 years

5.2% CAGR in Lots over last 10 years

Consignments & buyer base (Metrics are for industrial auctions only)

Auction registrants & lots(Metrics are for industrial auctions only)

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Growth of Gross Auction Proceeds (GAP)

US$4.25 billion of GAP produced during fiscal 2015

GAP:The aggregate dollar amount transacted through Ritchie Bros. Auctioneers and EquipmentOne

7 Includes transactions of AssetNation and EquipmentOne online marketplaces in 2012 - 2015

Gross Auction Proceeds (US$ millions)

4,245

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

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Four external influences on GAP

The pricing environment• A strong pricing environment will enhance market values of equipment sold at auctions• Stable or increasing pricing environment provides consignors with more confidence to

sell equipment through unreserved auctions

The mix of categories of assets sold • RBA sells a wide variety of industrial and agricultural equipment and other products.

There is no consistency to the mix of assets sold, as it varies at each auction held due to regional, seasonal and cyclical factors.

• The proportion of higher-valued items sold at each auction relative to smaller goods impacts the auction proceeds generated

The mix of equipment age• Newer equipment generally has a higher market value compared to older machinery

The number of Lots consigned• Each sale generates proceeds. Increasing the number of Lots sold can bolster gross

auction proceeds

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Unreserved auction revenue model

Four main revenue streams support Ritchie Bros.’ unreserved auction business:

Unreserved Auction

Straight Commission

Guaranteed Proceeds (underwritten transaction)

Inventory (underwritten transaction)

Consignors contract to sell their equipment through one of Ritchie Bros. unreserved auctions. A pre-determined percentage of the selling price is provided to RBA as commission.

Consignors are guaranteed to receive a pre-determined amount for their equipment, regardless of the final selling price at the auction. A stepped commission fee is negotiated, accounting for the additional risk being assumed by RBA. (Also known as an ‘at risk’ transaction)

On rare occasions, Ritchie Bros. may choose to purchase equipment outright, obtaining title of the piece to sell at an upcoming auction.

TRANSACTION TYPE REVENUE

Straight Commission fee (% of auction proceeds)

Stepped commission fee (x% of guaranteed proceeds; x+y% for proceeds above guaranteed amount)

Gains on sale

Sellers (Consignors)

Buyers Admin Fees & Value-added Services (VAS) Admin fees and fees from value-added service activities

RBA provides many services to assist with the purchase of equipment, including financing , inspection services, painting etc.

9 Revenue from other business lines supplement our revenue: EquipmentOne buyer and seller fees; Xcira revenue; Mascus revenue

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54%

46%

0%

10%

20%

30%

40%

50%

60%

70%

Q1 2012 Q 2 Q 3 Q 4 Q1 2013 Q 2 Q 3 Q 4 Q1 2014 Q 2 Q 3 Q 4 Q1 2015 Q 2 Q 3 Q 4 Q1 2016 Q2

Online

Onsite

Q2 2016: First time more than half of GAP sold online

Online purchases comprised 51% of GAP in Q2 2016, the first time more than half of GAP was generated by online buyers.• Online transactions growing due to changing customer preferences, greater participation from non-

local bidders, the introduction of the Ritchie Bros. app, and growth of E1 • Sold approx. $650 million of assets through online transactions (incl. E1) during Q2 2016, an increase

of 11% from Q2 2015 • 54% of buyers during Q2 2016 participated in our auctions online

*Industrial auction data10

Percent of buyers: # of buyers, on site or online

54% of total # of buyers were online(51% of total GAP was sold online)

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Investing in our digital capabilities

Public launch of Ritchie Bros. App has been highly successful• Officially launched in App stores July 11, 2016• Early reviews in App stores are all 5-stars, demonstrating strong user endorsement• Including the beta testing period in Q1 and Q2 (prior to public launch), the app has

accumulated:• 68 successful winning bids• US$1.35 million of GAP

• Increased promotion of the App (and smartphone enabled bidding) will occur in coming months

Creation of Enterprise Sales Solution direct user portals for key EquipmentOne accounts launched earlier this year• Flexible, end-to-end solution that allows companies to better control asset management • Product includes data integrations, automated process workflows, remarketing solutions,

public and private (e.g. dealer to dealer networks, internal corporate redeployment sites) disposition channels, and detailed reporting capabilities.

• New customers include one of the world’s largest transportation OEM’s and a leading energy companies; interest in the product is aggressively growing

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Growing our breadth of services through acquisitions

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Since November 2015 we have deployed $90 million of capital to grow our sales channels and bolster our core business• During Q3 2016 (to date) we have announced the acquisition of the remaining 49% stake of Ritchie

Bros. Financial Services, a minority investment in Machinio, and the purchase of Petrowsky Auctioneers

• Continue to evaluate M&A opportunities that could be strategically important and/or accretive to GAP and earnings

Q4 2015 Q1 2016 Q3 2016 (to date)

(75% stake)

(Minority interest)

Recent M&A Activity:

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Growing our sales platform

Ritchie Bros. offers four main sales channels to equipment ownersBusiness units are supported through Ritchie Bros. ownership of Xcira (online auction technology provider) and Ritchie Bros. Financial Services (financial solutions partner for equipment buyers).

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75% ownership

100% ownershipIntegrated technology platform

Financial intermediary capitalizing on captive customer base to provide an alternative source of capital

Integrated onsite/online auction network¹

Online marketplace

Online listing service

Brokerage channel for highly specialized assets

¹ Includes Petrowsky Auctioneers

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Multichannel solutions:

• Offers sellers more control over the sales price, time and purchaser; opens up opportunities for RBA to bid on RFPs

• During 2015, EquipmentOne contributed approx. $120 million of GTV (Gross Transaction Value) to GAP; up 13% from 2014

• Operates primarily in the United States; expanded into Canada in Q1 2016

• Website traffic up 11% in 2015, compared to 2014 (average monthly user)

Commercially launched in 2013

Customers of EquipmentOne value having control over the process and price, more than the guarantee of sale. They prefer a negotiated price, over global market value.

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The launch of EquipmentOne provided customers with another sales solution – an online equipment marketplace

The seller journey: sellers choose methods based upon needed degree of controlOur vision is to position appropriate solutions at each point of seller journey and connect them

High

Cont

rol t

o Se

ller

LowEffort for Seller

Control over:PriceTime

LocationBuyer

Low

High

Uncertain CertainSome Certainty of Sale

Result: Transacting anyhow, anytime, anywhere

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Multichannel solutions:

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• Acquired during Q1 2016• Provides equipment sellers with a turn-key suite of business tools

and software solutions catering to the needs of OEMs, dealers and large equipment fleet owners– Generates sticky customer relationships

• Mascus generates 3.2 million monthly website visits• Business currently has 360,000+ listings of equipment and other assets for sale• Financial terms: €24.0 million (US$26.6 million)

– Additional cash consideration, totaling no more that €3.4 million (US$3.8 million) may be paid contingent upon certain operating performance targets being achieved over the next 3 years

• Expected to be marginally accretive to RBA’s performance immediately• Performance of Mascus is fully consolidated into RBA’s financial reports

Mascus is a leading global online equipment sales listing serviceGrows our service offering, to offer additional sales solutions to equipment sellers.Expands our buyer audience. Established a large presence in Europe.

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Strategic Roadmap

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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

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.

(1) Priorities for cash utilization after operating CAPEX needs have been met.17

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Performance Metric Avg. Annual Growth Targets 2015 performance

• GAP Growth (%) High Single Digit to Low Double Digits +8% (organic)

• Revenue Growth (%) (1) Mid Single Digit to High Single Digit +16% (organic)

• SG&A Growth (%) Will grow slower than revenues +12% (organic, excl. D&A)

• Operating Income Margin 50 bps + +360 bps

• EPS Growth (%) (2) High Single Digit to Low Double Digits +22% (adjusted)

• Net Capex Intensity (3) <10% 2.8% (abnormally low)

• OFCF (4) % of Net Earnings >100% 150%

• RONA (5) Increase 50 bps + +910 bps (excl. current portion of long term debt)

• Dividend Payout Ratio 55% to 60% * 53%(*announced 6.3% increase to dividend Aug 8, 2016)

• Net Debt / EBITDA <2.5X 0.5x

RBA’s evergreen financial model

Above model reflects our aspiration on how the model should work in the next 5 to 7 years

(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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Declared 6.3% increase in quarterly cash dividend

Growing our dividend alongside earnings; announced a 1 cent increase to quarterly cash dividend on August 8, 2016Committed to 55-60% dividend payout, based on earnings trailing 12 months

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Dividends declared ($US cash dividends)

7.1% increase

8.9% increase

6.1% increase

7.7% increase

6.3% increase

14.0% increase

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Allocating Cash to growth initiatives & shareholder returns

Use of Cash – H1 2016(US$ mil)

$71 million spent on returning cash to shareholders

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$28 million spent on growth initiatives

$210.8

$166.5

$37.6$1.4

$77.9$18.1 $0.3 $28.3

$36.7

$34,2

$70.8

$15.0 $6.0

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

Cash balanceDec. 31, 2015

Cashgenerated

fromoperatingactivities

Cash fromnon-operating

activities(sale of land)

Proceeds fromborrowings

Issuance ofshare capital

Otherfinancingactivities

Acquisitions Sharerepurchases

Dividendspaid to

shareholders

Repayment ofdebt

Other capitalexpendituresand financing

costs

Effect ofchanges in

foreigncurrency

Cash balance- June 30,

2016

H1 and Q2 2016 financial performance

For six and three months ended June 30, 2016.

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Reported - % Growth Constant Currency - % GrowthVersus H1 2015 Versus H1 2015

GAP 4% 6%

Revenue 7% 10%

Operating Income (3)% (2)%

Diluted EPS 2% n/a

Operating Free Cash Flow (12 month rolling)

(63)% n/a

RONA excl. term loan reclass(12 month rolling)

260 bps n/a

ROIC(12 month rolling)

60 bpsn/a

H1 2016 financial highlights

While Q1 generated solid results, first half results for 2016 were proportionately impacted by larger Q2 Foreign exchange continues to have an impact on quarterly comparators

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attributable to stockholders

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Reported - % Growth Constant Currency - % GrowthVersus Q2 2015 Versus Q2 2015

GAP 1% 3%

Revenue 2% 4%

Operating Income (15)% (13)%

Diluted EPS (12)% n/a


(63)% n/a

RONA excl. term loan reclass(12 month rolling)

260 bps n/a

ROIC(12 month rolling)

60 bpsn/a

Q2 2016 financial highlightsRevenue grew modestly on a tough comp versus prior year; maintained strong revenue rate• Costs of Services and SG&A increased disproportionately on account of new businesses, headcount investment in

strategic initiatives, and increased auction volumes; • Cash flow declined due to timing issues, but company remains a strong cash generator

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Income statement scorecard – Q2 2016

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3 months trailing ($US Millions except for EPS, %)

June 30, 2016 June 30, 2015 Better / (Worse)

GAP $1,275.7 $1,262.2 1%

Revenues $158.8 $155.5 2%

Revenue Rate 12.45% 12.32% 13 bps

Operating Income $53.6 $62.8 (15)%

Operating Income Margin 33.8% 40.4% (660) bps

EBITDA $64.7 $74.7 (13)%

Diluted EPS $0.37 $0.42 (12)%

Q2 2016 Income statement scorecard

GAP and Revenue Rate increased modestly; Op income and EPS impacted by lower margins than in Q2 2015


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Balance sheet scorecard – Q2 2016

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12 months trailing ($US Millions except for percent figures)

June 30, 2016 June 30, 2015 Better / (Worse)

Operating Free Cash Flow $81.6 $218.1 (63)%

Working Capital Intensity -19.8% -23.9% (410) bps

Capex Intensity 3.6% 3.2% (40) bps

ROIC (Return on Invested Capital) 15.1% 14.5% 60 bps

RONA (Return on Net Assets) 25.4% 25.3% 10 bps

RONA excluding term loan reclassification 25.4% 22.8% 260 bps

Debt / Adjusted EBITDA 0.6x 0.6x no change

Q2 2016 Balance sheet scorecard

2015 financial performance

All figures for twelve months ended December 31, 2015

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Very strong results in 2015

Performance during 2015 demonstrates our commitment to execution, our strategy is gaining traction, and our agility in leveraging market opportunitiesForeign exchange remains a headwind

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2015 Reported - % Growth 2015 Organic - % GrowthVersus 2014 Versus 2014

GAP 1% 8%

Revenue 7% 16%

Adjusted Operating Income 20% 46%

Diluted Adjusted EPS 22% n/a


28% n/a

RONA (12 month rolling)

1100 bps n/a

RONA excluding effects of term loan reclassification

910 bps n/a


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Income statement scorecard – 2015

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12 months trailing ($US Millions except for EPS, %)

Dec. 31, 2015 Dec. 31, 2014 Better / (Worse)

GAP $4,247.6 $4,212.6 1%

Revenues $515.9 $481.1 7%

Revenue Rate 12.14% 11.42% 72 bps

Adjusted Operating Income $166.5 $138.2 20%

Adjusted Operating Income Margin 32.3% 28.7% 360 bps

Diluted EPS $1.27 $0.85 50%

Diluted Adjusted EPS $1.13 $0.93 22%

Full year 2015 Income statement scorecard

Increased Diluted EPS by 50% versus last year – through GAP growth, revenue rate improvement, expense control, excess land sales and tax planning strategies



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Balance sheet scorecard – 2015

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12 months trailing ($US Millions except for percent figures)

Dec. 31, 2015 Dec. 31, 2014 Better / (Worse)

Operating free cash flow $182.2 $141.8 28%

Working Capital Intensity -3.2% -2.3% 90 bps

Capex Intensity 2.8% 6.2% 340 bps

ROIC (Return on Invested Capital) 15.1% 12.0% 310 bps

RONA (Return on Net Assets) 25.7% 14.7% 1100 bps

RONA excluding term loan reclassification 23.8% 14.7% 910 bps

Debt / Adjusted EBITDA 0.5x 0.6x 0.1x

2015 Balance sheet scorecard

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Focused on generating long-term shareholder value through continued earnings and dividend growth.

A global leader in industrial auctions• Substantial growth opportunity• Focused on growth in the US and in key sectors

Diversifying services to meet broader customer needs• Sales solutions: Ritchie Bros. Auctioneers, EquipmentOne, Mascus• Complementary services: Ritchie Bros. Financial Services, Logistical Services• Supportive business unit: Xcira (online auction technology solutions)

Focused on basics of: • EPS growth • Return on Net Assets• EBITDA margin• Operating free cash flow

Summary

Moerdijk, Netherlands auction

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Learn more about Ritchie Bros. auctions through our online videos:

www.youtube.com/ritchiebros

AppendicesAge of equipment sold trendsGlobal auction site network

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11.5%

9.6%

4.2%

3.6%

8.7%

10.9%

8.6%

13.1%

12.1%

11.0%

5.0%

4.8%

8.7%

10.6%

11.2%

12.1%

12.2%

10.3%

5.0%

4.6%

9.7%

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

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

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.

Age of equipment sold improving from past years

Age of Equipment sold at Ritchie Bros. Auctions¹

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3-5 yrs old: 28.9% of GAP¹

6+ Yrs Old

New to 1 yr Old

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Auction sites

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Investor Questions: [email protected] | 1-778-331-5500

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US GAAP Reconciliation of 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

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Reconciliation of Non-GAAP Measures

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investor overview presentation...this presentation contains non-gaap financial measures. for a...

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