A global leader in used equipment sales

Transcription

1 A global leader in used equipment sales Investor overview presentation 1 August 2016 Jefferies Conference

2 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. 2 2

3 Ritchie Bros. overview The trusted source for buying and selling industrial equipment Global leader for industrial auctions Ensures the sale of goods on the day of the auction at global market price Ritchie Bros. has a strong heritage selling used equipment since 1958 Cater to the needs of heavy equipment owners Customers from the construction, trucking, agricultural & resource sectors 345 auctions; $4.25 billion in Gross Auction Proceeds during 2015 Industry leader by wide margin Provide multichannel sales solutions to expand the breadth of services available to equipment sellers EquipmentOne launched in 2013; Mascus acquired in 2016 RBA Auction - Circa 1958 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$3.5 billion RBA Auction - Now 3 3 ¹ Net Income attributable to stockholders

4 Very strong results in 2015 Performance during 2015 demonstrates our commitment to execution, our strategy is gaining traction, and our agility in leveraging market opportunities Foreign exchange was a headwind 2015 Reported - % Growth 2015 Organic - % Growth Versus 2014 Versus 2014 GAP 1% 8% Revenue 7% 16% Adjusted Operating Income 20% 46% DilutedAdjustedEPS attributable to stockholders 22% n/a Operating Free Cash Flow (12 month rolling) RONA (12 month rolling) RONA excluding effects of term loan reclassification 28% n/a 1100 bps n/a 910 bps n/a 4 4

5 Growth of Gross Auction Proceeds (GAP) Gross Auction Proceeds (US$ millions) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 4,245 US$4.25 billion of GAP produced during fiscal 2015 GAP: The aggregate dollar amount transacted through Ritchie Bros. Auctioneers and EquipmentOne $1,500 $1,000 $500 $ Includes transactions of AssetNation and EquipmentOne online marketplaces in

6 Growing seller and buyer base Consignments & buyer base (Metrics are for industrial auctions only) Auction registrants & lots (Metrics are for industrial auctions only) 140, ,000 Consignors Buyers 6.4% CAGR in buyers over last 10 years 600, ,000 Registrants Lots 8.2% CAGR in registrants over last 10 years 100,000 80, , % CAGR in Lots over last 10 years 300,000 60,000 40, % CAGR in consignments over last 10 years 200,000 20, ,

7 Strategic Roadmap Objective: grow revenue & earnings, drive cash flow, improve RONA 7

8 Multichannel solutions: The seller journey: sellers choose methods based upon needed degree of control Our vision is to position appropriate solutions at each point of seller journey and connect them Uncertain Some Certainty of Sale Certain High Control to Seller Control over: Price Time Location Buyer Low High Effort for Seller Low Result: Transacting anyhow, anytime, anywhere 8 8

9 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 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 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 9 9

10 First time majority 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 nonlocal 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 Q % of buyers during Q participated in our auctions online Percent of buyers: # of buyers, on site or online 70% 60% 50% 40% 30% 20% 10% 54% of total # of buyers were online (51% of total GAP was sold online) 54% 46% Online Onsite 0% Q Q 2 Q 3 Q 4 Q Q 2 Q 3 Q 4 Q Q 2 Q 3 Q 4 Q Q 2 Q 3 Q 4 Q Q *Industrial auction data

11 H 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 Reported - % Growth Constant Currency - % Growth Versus H Versus H GAP 4% 6% Revenue 7% 10% Operating Income (3)% (2)% Diluted EPS attributable to stockholders 2% n/a Operating Free Cash Flow (12 month rolling) RONA excl. term loan reclass (12 month rolling) ROIC (12 month rolling) (63)% n/a 260 bps n/a 60 bps n/a 11 11

12 Capital allocation priorities 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 Consistently make use of cash on our balance sheet to facilitate underwritten transactions; The strength of our balance sheet is a competitive advantage *Priorities for cash utilization after operating CAPEX needs have been met.

13 Increased quarterly cash dividend by 6.3% Growing our dividend alongside earnings; announced a 1 cent increase to quarterly cash dividend Committed to 55-60% dividend payout, based on earnings trailing 12 months Dividends declared ($US cash dividends) % increase 6.3% increase % increase 8.9% increase 6.1% increase 7.7% increase 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 Q3/15 Q4/15 Q1/16 Q2/16 13

14 Allocating Cash to growth initiatives & shareholder returns Use of Cash H (US$ mil) $400,000 $28 million spent on growth initiatives $71 million spent on returning cash to shareholders $350,000 $77.9 $18.1 $0.3 $28.3 $36.7 $300,000 $250,000 $210.8 $37.6 $1.4 $34,2 $70.8 $200,000 $15.0 $6.0 $166.5 $150,000 $100,000 $50,000 $0 Cash balance Dec. 31, 2015 Cash generated from operating activities Cash from non-operating activities (sale of land) Proceeds from borrowings Issuance of share capital Other financing activities Acquisitions Share repurchases Dividends Repayment of paid to debt shareholders Other capital expenditures and financing costs Effect of changes in foreign currency Cash balance - June 30,

15 Acquisition activity has increased Since November 2015 we have deployed $90 million of capital to grow our sales channels and bolster our core business Subsequent to Q we 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 Recent M&A Activity: Q Q Q (to date) (75% stake) (Minority interest) 15 15

16 RBA s evergreen financial model Performance Metric Avg. Annual Growth Targets 2015 performance GAP Growth (%) High Single Digit to Low Double Digits Revenue Growth (%) (1) Mid Single Digit to High Single Digit +8% (organic) +16% (organic) SG&A Growth (%) Will grow slower than revenues +12% (organic, excl. D&A) Operating Income Margin 50 bps 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 bps Dividend Payout Ratio 55% to 60% * 53% Net Debt / EBITDA <2.5X 0.5x (excl. current portion of long term debt) (*announced 6.3% increase to dividend Aug 8, 2016) 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

17 Appendix Q Financial Performance Ritchie Bros. Family of Brands 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 17

18 Q financial highlights Revenue 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 Reported - % Growth Constant Currency - % Growth Versus Q Versus Q GAP 1% 3% Revenue 2% 4% Operating Income (15)% (13)% Diluted EPS attributable to stockholders (12)% n/a 18 Operating Free Cash Flow (12 month rolling) RONA excl. term loan reclass (12 month rolling) ROIC (12 month rolling) 18 (63)% n/a 260 bps n/a 60 bps n/a

19 Ritchie Bros. Family of Brands Ritchie Bros. offers four main sales channels to equipment owners Business units are supported through Ritchie Bros. ownership of Xcira (online auction technology provider) and Ritchie Bros. Financial Services (financial solutions partner for equipment buyers). 75% ownership 100% ownership Integrated technology platform Integrated onsite/online auction network¹ Online marketplace Online listing service Financial intermediary capitalizing on captive customer base to provide an alternative source of capital Brokerage channel for highly specialized assets ¹ Includes Petrowsky Auctioneers

20 Reconciliation of Non-GAAP Measures 20 20

21 Reconciliation of Non-GAAP Measures 21 21

22 Reconciliation of Non-GAAP Measures 22 22

23 Reconciliation of Non-GAAP Measures 23 23

24 Reconciliation of Non-GAAP Measures 24 24

25 Reconciliation of Non-GAAP Measures 25 25

26 Reconciliation of Non-GAAP Measures 26 26

27 27 Reconciliation of Non-GAAP Measures

28 28 Reconciliation of Non-GAAP Measures

29 29 Reconciliation of Non-GAAP Measures