February 27, 2018 Forward looking statements and non-GAAP measures - - PowerPoint PPT Presentation
February 27, 2018 Forward looking statements and non-GAAP measures - - PowerPoint PPT Presentation
February 27, 2018 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
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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”), including, in particular, statements regarding the benefits and synergies of the IronPlanet transaction, future
- pportunities for the combined businesses of Ritchie Bros. and IronPlanet, future financial and operational results and any other statements regarding events or
developments that Ritchie Bros. believes or anticipates will or may occur in the future. Forward-looking statements are statements that are not historical facts and are generally, although not always, identified by words such as “expect”, “plan, “anticipate”, “project”, “target”, “potential”, “schedule”, “forecast”, “budget”, “estimate”, “intend” or “believe” and similar expressions or their negative connotations, or statements that events or conditions “will”, “would”, “may”, “could”, “should” or “might” occur. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Forward-looking statements necessarily involve assumptions, risks and uncertainties, certain of which are beyond Ritchie Bros.’ control, including risks and uncertainties related to: general economic conditions and conditions affecting the industries in which Ritchie Bros operates; Ritchie Bros.’ ability to successfully integrate IronPlanet's; the ability to realize anticipated growth, synergies and cost savings in the IronPlanet transaction; the maintenance of important business relationships; our ability to commercialize new platform solutions and offerings; deterioration of or instability in the economy, the markets we serve or the financial markets generally; as well as the risks and uncertainties set forth in Ritchie Bros.’ Annual Report on Form 10-K for the year ended December 31, 2018, which is available on the SEC, SEDAR, and Ritchie Bros.’ website. The foregoing list is not exhaustive of the factors that may affect Ritchie Bros.’ forward-looking
- statements. There can be no assurance that forward-looking statements will prove to be accurate, and actual results may differ materially from those expressed in,
- r implied by, these forward-looking statements. Forward-looking statements are made as of the date of this presentation and Ritchie Bros. does not undertake
any obligation to update the information contained herein unless required by applicable securities legislation. For the reasons set forth above, you should not place undue reliance on forward-looking statements. This presentation contains certain 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 release and our Form 10-Q interim report, which are available at: investor.ritchiebros.com. These non-GAAP financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understand and assessing our financial condition and results. Therefore, these measures should not be considered in isolation or as alternatives to measures of profitability, liquidity or other performance under GAAP. These measures may not be comparable to similarly-titled measures used by other companies. This presentation also includes certain forward-looking non-GAAP financial measures. We are unable to present a quantitative reconciliation of this forward- looking non-GAAP financial information because management cannot reliably predict all of the necessary components of such measures. Accordingly, investors are cautioned not to place undue reliance on this information. All figures are in US dollars, unless otherwise noted.
Opening R g Remarks
Ravi Saligram, Chief Executive Officer
4
A Day in the Life at Ritchie Bros.
December 6, 2018
- Approximately 295,000 unique users
visited RB properties around the globe
- Users generated approximately
390,000 sessions
- 54% on mobile devices / 43%
- riginated outside of the
Americas /48% between the ages of 25 and 44 Over a million followers on social media….
Generating Network Effects and moving beyond just auctions….
Avg. 5 MM website users per month generating 580 MM page views
8.5 million total bids up 16%
59% of total GTV across all channels purchased by
- nline buyers
5
Fourth Q Qua uarter B Busi usines ess s & & Financial R Revi view
Sharon Driscoll, Chief Financial Officer
6
- Higher r
reve venue f from inventory s sales in US a and Europe
- Higher f
fee r reve venue associ ciat ated ed with p partia ial f l fee e harmon
- nization
- n
- Growth i
in other er s ser ervices ces Reve venue l led b by R RBFS
Q4 Consolidated Financial Performance
GRO ROSS TRA RANSACTIO ION VA VALUE (GTV) ADJUSTED TED OPE PERA RATIN ING INCO COME
(non-GAAP AAP)
TOTA TAL REVENUES ES AGENCY CY PROCEED EEDS
(non-GAAP AAP)
4Q18 18 4Q17 17
$1, $1,338 338 $1, $1,295 295
4Q18 18 4Q17 17 $356 $356 $292 $292 4Q18 18 4Q17 17 $56. $56.3 $42. $42.2 4Q18 18 4Q17 17
$19 $193 $17 $179
- Agency proc
- ceeds g
grow
- wth
- Dis
isci ciplin lined ed e expense e man anag agem ement
- Lower
er acquis isit itio ion c costs v vs. 2017 17
- 14% O
Onlin line g e growth l led b by strength i in Canada and Internat atio ional al
- Modest L
Live auction
- n
grow
- wth; 2
23 f fewer industrial a auctions
- Stron
- ng live a
auction
- n c
com
- mp
grow
- wth; 70% o
- f auctions
posted ed year ar o
- n y
year ar posit itiv ive c e comps
- All figures unadjusted unless otherwise noted. (In $US Millions except EPS)
+3% % +22% 22% +8% % +33% 33%
DILUTED TED ADJUSTED TED EPS PS
(non-GAAP AAP)
4Q18 18 4Q17 17
$0. $0.32 $0. $0.26
- Hig
igher er o
- per
erat atin ing inco come o e offset et b by h higher er tax r rate in 4Q18 v Q18 vs. prio ior y year ar
+23% 23%
- GTV g
grow
- wth a
and h higher
- nlin
line v e volu lumes es
- Higher f
fee r reve venue associ ciat ated ed with p partia ial f l fee e harmon
- nization
- n
- Grow
- wth i
in other ser ervices ces reve venue
7
Fourth Quarter A&M Segment – Agency Proceeds
- Ag
Agency proceeds g s growth o
- f 8%
8% driven b by GTV, s strong o
- nline a
auction p performance, p partially o
- ffse
set b by so some i inventory r rate so softness ss in the U U.S .S.
- Au
Auctions a s and M Marketplaces Ag s Agency P Proceeds r s rate ( (non-GAAP) i increased 80 80 basi sis p s points t s to 13. 13.4% 4% o
- ver 4Q
4Q17 17 d due to continued o
- verall
market p price p performance a and c contributions f s from p partial f fee h harmonization
$178,785 $193,133
A&M Agency Proceeds
4Q17 4Q18
+8 +8%
In US$,(000)
13.1% 12.6% 13.4%
A&M Agency Proceeds Rate %
8
Fourth Quarter - Other Services
$4.6 $7.0
RBFS FS Reven enue
4Q17 4Q18
In Millions USD
$90.5 $122.0
RBFS FS Fund nded ed V Volum lume
4Q17 4Q18
In Millions USD
$3.0 $3.1
Mascus Reven enue
4Q17 4Q18
In Millions USD
- Other S
Services es R Rev even enues es i improved ed 2 20%
- RBFS Revenue gr
growth o
- f 50%
50%
- RBFS F
Funded V Volume improved 3 35%
- Ma
Mascus revenue gr growth o
- f 3%
3%
9
$132,079 $141,939
4Q17 4Q18
$92,983 $95,624
4Q17 4Q18
$39,096 $46,315
4Q17 4Q18
Fourth Quarter - Costs of Services / SG&A
- 4Q18 T
Total R Reven enue g e growt wth of 2 22% / Agency Proceed eds g growt wth o
- f 8% outpacing S
SG&A g growt wth o
- f 3%
- 4Q
4Q18 18 SG&A G&A l leverage – roug ughly hly 2 200 basis is p poin int r rate i impr provem ement ( (SG&A a A as a % of Agen ency P Proceeds ds) v
- vs. 4
4Q17
- Cos
- sts of
- f Se
Services i increased 18% Costs of S Servic ices es a and S d SG&A E Expen penses es (in $
$ US Th Thousands)
SG&A A Expe pens nses es (as a a % of A Agency Procee eeds)
+18% +3% +7%
Cos
- sts of
- f Se
Services SG&A G&A Combined ed 2017 & 2017 & 2018 2018 (RB+IP) Combin bined C d Compa pany 4Q 4Q17 17 52% 52% 1Q 1Q18 18 57% 57% 2Q 2Q18 18 49% 49% 3Q 3Q18 18 55% 55% 4Q 4Q18 18 50% 50%
Reported C d Costs o
- f S
Servi vices o
- f
$46.3MM i includes ancillary a and logistical s servi vice e expens nses of $20.3MM When ancillary a and logistical s service expen enses es a are r rem emoved from
- m C
Cos
- sts o
- f
Services, t the n e net et amount i is s $2 $26.0MM, which r repr present nts 1 13% o
- f A
Agency Proc
- cee
eeds a and a a 4% i increa ease e over er 4Q17
10
Balance Sheet & Liquidity Metrics
Ope peratin ing Free C ee Cash F Flow (no non-GAAP) TTM Ag Agency cy Proceed eeds C Capex Rat ate (no non-GAAP) Adjus usted N Net Debt bt/ Adj djusted d EBIT ITDA (no non-GAAP) TTM Re Return O On Invested C d Capital (no non-GAAP)
4Q18 18 4Q17 17
$112M $112MM $113M $113MM
4Q18 18 4Q17 17
4. 4.4% 4% 5. 5.6% 6%
4Q18 18 4Q17 17
1. 1.9X 9X 2. 2.9X 9X
4Q18 18 4Q17 17
7. 7.6% 6% 6. 6.2% 2%
2018 B 8 Balance s e shee eet a and l nd liqu quidity m met etrics ( s (all u una nadjusted ed u unl nless ess other herwise n se noted ed)
11
2019 Financial Focus
Capital Allocation Cash Flow Management Revenue Recognition (ASU-2014) Operating Leverage
- Continued expense
management - focus on managing expense growth at a lower rate than revenues
- Invest resources in high
growth opportunity channels
- Continued focus on cash
flow generation and
- ptimization / Working
Capital efficiency
- Efficient GovPlanet
inventory management
- Supporting
International growth / inventory purchases
- At-Risk deal
management
- Priority on debt repayment;
and maintaining leverage ratio below 2X
- Continue to invest in IT and
back office efficiency projects, site maintenance expenditures only
- Return cash through ongoing
dividends / growing dividends with earnings
- Maintain financial flexibility
for tuck-in M&A opportunity / Share repurchases
- Discontinue use of Agency
Proceeds beginning in 1Q2019; will now report Total Revenues only
- No change to current
business operating fundamentals – only change to financial reporting
- Evergreen metrics impact
review underway; and any necessary adjustments to be introduced in 1Q2019
12
Strateg egic & Oper & Operational U Upd pdate
Ravi Saligram, Chief Executive Officer
13
2018 Full Year Consolidated Financial Performance
GRO ROSS TRA RANSACTIO ION VA VALUE (GTV) TOTA TAL REVENUES ES AGENCY CY PROCEED EEDS
(non-GAAP AAP)
2018 2018 2017 2017
$4, $4,964 964 $4, $4,468 468
2018 2018 2017 2017 $1,170 170 $971 $971 2018 2018 2017 2017
$72 $729 $61 $611
- All figures unadjusted unless otherwise noted. (In $US Millions except EPS)
Adjus usted EPS PS
(non-GAAP AAP)
2018 2018 2017 2017
$1. $1.08 $0. $0.81
Repo ported d EPS PS
2018 2018 2017 2017
$1. $1.11 $0. $0.69
11% Reported 3% Like for Like 20% Reported 19% Reported 10.5% Like for
Like
61% 33%
2H Agency Proceeds +10% 2H SG&A +3%
14
2018 – Growth Drivers
Strategic Accounts growth up YoY US West Region growth up YoY GTV growth 44% Revenue Growth 41% Funded Volume Growth 390 bps YoY improvement in penetration to addressable GTV 21% Revenue Growth Our Online Channel had a Banner Year
2016 IP Standalone 2018 RBA
Online volume
- f $829 million
significantly exceeded IP standalone pure
- nline volume in
2016
$829MM
93 MORA’s signed Contributing to volume growth in International Significant Services Growth Additional Growth Drivers Operationalized NRS Contract; Significant investment to fuel future growth; Acquired more new users in 2018 than RB & IP Global Growth International
Excludes Live Events
Alliance
Strategic Accounts acquired 181 new accounts for $100MM in GTV
US Canada Major Inventory deals driving strong European GTV growth Strong MPE growth
+
Other Services Revenue is 12% of Total Revenues
15
Grow Auction Business Penetrate Upstream
2018 – Solid Progress Against our Strategic Objectives
- Live auction GTV growth with >65% auctions delivering
comp growth
- Sales productivity positively inflecting in 2018
- Canadian Agriculture business improving
- Launched Marketplace-E – scaling well with
International markets adopting quickly and early momentum in Canada
- Leveraging Marketplace-E to facilitate events in
markets where RBA does not have physical presence e.g. Brazil.
- Launched Ritchie Bros. Asset Solutions in 4Q2018;
the full service asset disposition solution for OEM’s, OEM Dealers and other large enterprises
In addition to our growth drivers….we made very good strides on our strategic objectives
88% 12%
2017*
Live Onsite Online Marketplaces
83% 17%
2018*
Live Onsite Online Marketplaces
GTV Mix – Live vs Online
- Supply Remained Tight but Demand Increased
- Unique Listing Sellers -2%
- Bids +16% / Bids Per Item+15%
* Reported GTV
16
Improve Customer Experience & Operational Efficiencies
2018 – Solid Progress Against our Strategic Objectives
- Integrated listings launched across RB and IP
- Digital & Sales Ops. managed more assets through IP
Admin System than ever before
- Inspections in H2 higher than any prior year in IP
history
- Built data lake connecting RB and IP customer data
- Moved Mascus + IP back office functions to Oracle
In addition to our growth drivers….we made very good strides our strategic objectives
- MARS Platform delivery is well
underway; modules successfully tested in several auctions in 2018
- Re-Launched RitchieSpecs.com
Added 4,000 specs
- Investments to promote mobile
investments are driving incremental adoption – FY18 73% YoY increase in GTV purchased through the mobile app.
17
2018 Evergreen Model Metrics Review
1 - Constant Currency basis; 2 - Comparable basis; 3 – Adjusted basis
Description Target 2015/2016 Combined 2017 2018
Agency Proceeds Growth Rate High single digit to low teens 8.5%, 13.5%1 7.8% 19.4% [10.5% LFL] EPS Growth Rate Low double digits to mid teens 16%2
- 30%3
33%3 Agency Proceeds Capex Rate <8.5% 4.1% 5.6% 4.4% OFCF as a % of Net Income >100% 135%2 129.1%3 95.1%3 ROIC 15% by 2021 15.3% 6.2% 7.6% Dividend Payout Ratio 55% - 60% 55%3 83%3 64%3 Net Debt to EBITDA <2.5x 0.55X3 2.9X3 1.9X3 Agency Proceeds Adjusted EBITDA Rate 40% by 2019
- run rate basis
39.2%3 31.4%3 35.3%3
Evergreen Model
(Average annual expectation over a 5 to 7 year period)
18
Creating Value
11.56% 32.76%
- 4.38%
32.23%
- 11.08%
22.08%
- 11.01%
18.30%
2018 2015-2018 RBA S&P 500 MidCap 400 Russell 2000
Total Return* 1 Year (2018) & 3 Year (2015-2018) Cumulative Operating Free Cash Flow 2014-2018 Cumulative Cash Returned to Shareholders 2014-2018
58 122 193 266 341 47 84 84 84 2014 2015 2016 2017 2018 Cumulative Shares Repurchased Cumulative Dividends Paid 119 302 450 563 675 2014 2015 2016 2017 2018 Cumulative Operating Free Cash Flow
*Total Return Data obtained from FactSet
19
Early look into 2019 Auction Highlights
Tipt pton, C CA US US$23 mi million
5% gr growth
Large gest T t Tipton, C CA aucti tion e ever
Hous uston, T TX US US$46 mi million
12% 12% gr growth
Setti ting m g multi tiple s site r records
Total Gross Transactional Value
$297 Million
7% growth A new Company Record
- Amount sold to online bidders – US$146+
million *new company record
- Total registered bidders (in person and
- nline) – 15,900+ *new site record
- Registered online bidders – 11,300+ *new
site record
- Total lots sold – 13,350+ *new company
record
- Number of sellers – 1,150+ *new site record
Edm dmont nton, A , AB CAD$6 $69 m 9 million
15% 15% gr growth
Focus on Safety: Proud to drive record results with no safety incidents
20
2019 Trends & Insights – Q1/1H Considerations
- Pricing momentum gradually moderating in Construction but strong in Transportation
- Monitoring pressure on rates and will pivot accordingly using deep data expertise;
underwritten; mix
- Age of Equipment
- Macro uncertainties. Brexit, Trade Issues, Tariffs etc.…
- Fewer selling days in 1Q19 vs 1Q18
- End user projects/contracts healthy but not as robust as 2018
- Supply constraints appear to be easing and 2019 is expected to be better than 2018
- Early GTV momentum in 2019 with Orlando, Houston and Tipton auctions
- Will look to capitalize on high activity sectors where projects wind down to
completion
- Stalemate/uncertainty on major infrastructure projects and pending elections in
Canada could release additional inventory
- Pricing continues to be strong in Transportation
TAILWINDS HEADWINDS OTHER CONSIDERATIONS
- Q1 2018 Grande Prairie auction not re-occurring in 2019 totaling
approximately $37 million in GTV
- Higher Effective Tax Rate in 2019
21
2019 Executional Priorities
Multi-channel New Customer Acquisition Scale Marketplace-E Grow our Government business profitably Key Set of Reference Accounts for RB Asset Solutions Efficient operations and improved customer service 1 2 4 5 3
Keep SG&A growth significantly lower than Agency Proceeds growth to drive incremental flow-through
22
Q&A
Members of the RBA Management Team
23
Appendix
24
Reconciliation of non-GAAP measures
25
Reconciliation of non-GAAP measures
26
Reconciliation of non-GAAP measures
27
Reconciliation of non-GAAP measures
28
Reconciliation of non-GAAP measures
29
Reconciliation of non-GAAP measures
30
Reconciliation of non-GAAP measures
31
Reconciliation of non-GAAP measures
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Topic 606 – Supplementary Schedule
20 2018 18 2017 017 2016 016 GTV 4,964 4,468 4,335 Straig ight c commissio issions % s % t total G l GTV 84% 4% 84 84% 75 75% Guarante tee c contr tracts ts % % to tota tal G GTV 9% 9% 8% 8% 12 12% Inve vento tory c contr tracts ts % % to tota tal G GTV 8% 8% 8% 8% 13 13% Agency Proceeds 729 611 566 Service Revenues 750 624 556 Inventory Revenues 421 347 571 Total Revenues 1,170 971 1,127 Ser ervices es R Rev evenues es % % T Total R Reven enues 64 64% 64 64% 49 49% Inventory R Reven enues % % T Total R Rev evenues es 36 36% 36 36% 51% 1%
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Ritchie Bros. Equipment Segment Mix: 2018 GTV
Notes: Equipment segments assigned by primary use of equipment make models. Oil and Gas, for example, has a significant component of equipment primarily classified in Construction not in the Oil and Gas segment.
Construction 57% Transportation 17% Agriculture, 9% Oil & Gas, 2% GovPlanet, 1% Other, 13% Equipment Segment Mix: 2018 GTV (USD)