The global leader in used equipment sales Investor presentation - - PowerPoint PPT Presentation

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The global leader in used equipment sales

Investor presentation June 2014 – Q1/14 information

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Forward looking statements

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. All figures are in US dollars, unless otherwise noted.

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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

• f the auction at global market price
• Cater to the needs of heavy equipment owners

– Customers are from the construction, trucking, agricultural and resource sectors

• Minimal exposure to mining sector – mining equipment represented approx. 1% of

total gross auction proceeds in 2013

• 356 auctions; $3.8 billion in Gross Auction Proceeds during 2013

– Industry leader by wide margin, with only ~2% of global used equipment market share – Enormous growth opportunity; highly fragmented market

• Launched EquipmentOne online marketplace in 2013

Strong financial performance

• $467.4 million of revenue during fiscal 2013

– CAGR of 11.2% over last 10 years

• $90.0 million of adjusted net earnings during fiscal 2013

Publicly listed on the NYSE and TSX (as RBA)

• Market cap of approx. US$2.5 billion

RBA Auction - Circa 1958 RBA Auction - Now

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

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Global reach

110 locations in 25 countries

44 auction sites in 14 countries worldwide

• Approx. 55% 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 (transcends local market conditions)

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

by international demand for their machinery

• Buyers benefit from a global supply, with an ability to purchase and ship

equipment from weak economic regions to areas with stronger growth

48% 29% 14% 9% United States Canada Europe Other

REVENUE BY GEOGRAPHY

(2013 revenue breakdown)

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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AUCTION SITES

(Countries with permanent or regional auction sites)

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Global market opportunity

Company market research suggests an annual global used equipment market of $200 billion

• Based on annual transaction values; includes construction,

agricultural, forestry, and mining machinery

• RBA is the largest industrial auctioneer in the world – by a wide

margin, with only 2% of total used equipment market share

Approximately half of used equipment sellers would consider using an unreserved auction to sell equipment

• Means $100 billion addressable market for RBA’s core

auction solution

• Highly fragmented market

Half of used equipment sellers indicated a need for control

• f the price and process when selling used equipment
• Not suitable prospects for traditional RBA auction services
• Prime candidates for Ritchie Bros. EquipmentOne - our online

(non-auction) marketplace

GLOBAL USED EQUIPMENT MARKET

$100 billion: used equipment market using private treaty to sell (no intermediary) RBA market share ~2%

• f total $200 billion

used equipment market

• Approx. 50% of used

equipment sellers indicate they would consider unreserved auctions ($100 billion market) $200 billion total annual market

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(Annual transactions) $100 billion: used equipment market using an intermediary to sell

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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

• utright, 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.

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$3,815 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Growth of Gross Auction Proceeds (GAP)

US$3.8 billion of GAP produced during fiscal 2013 GAP: The aggregate dollar amount sold at our auctions.

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Includes transactions of AssetNation and EquipmentOne online marketplaces in 2012 and 2013

GROSS AUCTION PROCEEDS (US$ millions)

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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

1 2 3 4

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0% 2% 4% 6% 8% 10% 12% 14%

2010 2011 2012 2013 2014 YTD (April 26)

% OF GAP BY ASSET AGE

Age of equipment sold through RBA auctions

Equipment production levels in prior years is reflected in age of assets sold

• Drop in equipment production post financial crisis has impacted the age of assets available for sale.

Production has since returned to pre-crisis levels

• Other GAP influences remain strong: stable equipment pricing and growing number of Lots sold

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20,000 40,000 60,000 80,000 100,000 120,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Consignors Buyers 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Registrants Lots

Growing consignor and buyer base

5.8% CAGR in consignors

• ver last 10 years

5.9% CAGR in buyers

• ver last 10 years

8.1% CAGR in registrants

• ver last 10 years

5.6% CAGR in Lots

• ver last 10 years

CONSIGNOR & BUYER BASE

(Metrics are for industrial auctions only)

AUCTION REGISTRANTS & LOTS

(Metrics are for industrial auctions only)

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Growing our market presence

Recruiting additional sales people, known as Territory Managers (TMs), to generate new customer relationships

• 287 TMs globally, as of March 31, 2014
• Added 15 TMs in the first three months of 2014
• Expect to grow sales force between 5-10% per year

Best growth prospects are in our existing major markets

• Growing market share in the US is a key opportunity

– Still significantly less share than in Canada (RBA’s most mature market) – Small market share gains in the US could translate into meaningful GAP growth

• Recently built a replacement auction site in Manchester, New Hampshire, USA

Continue to pursue targeted geographic growth initiatives:

• Proven growth method:

1. Generate leads in new markets 2. Station a Territory Manager 3. Once business levels can support an auction site, we evaluate the opportunity

• Held our first auction in China in April 2013
• Held our first auction in Finland in September 2013

Inaugural auction in China

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Launch of EquipmentOne

Provides access to a larger share of the equipment market

• Research showed half of equipment resale market prefers private sales
• Buyers and sellers of private sales were not satisfied with existing online sales

platforms

• Provided a unique opportunity to launch a trusted, equipment-focused web

platform to facilitate private treaty equipment sales

• Our reputation, brand, expertise and data make us uniquely positioned to succeed

Certainty of sale Global market value Control of price Control of process BENEFITS OF UNRESERVED AUCTION BENEFITS OF EQUIPMENTONE

Commercially launched on April 8, 2013

• During 2013, EquipmentOne contributed $88.6 million to GAP
• Sales yield of 85% (% of listings that end in a transaction) during 2013
• Unique visitors to the EquipmentOne website continues to grow
• Usage continues to grow each month

Expected to be immaterial to RBA results in 2014

• Investments in the platform are still being made

EquipmentOne was designed to be complementary, not cannibalistic

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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A complementary solution, leveraging our strong brand

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• Sellers have control over price and process
• No obligation to sell for less than the asking price
• Self-serve
• eCommerce marketplace with listings
• Online only
• Competes with other online marketplaces, but

specializes in catering to equipment owners and their unique needs and preferences

• Provides access to equipment listings also posted
• n third party websites
• Sellers have certainty of sale & receive global

market value for their equipment

• Full service, no hassles
• Provides buyers with ability to inspect, test and

compare the equipment (physical site)

• Central marshalling of equipment means RBA takes

care, custody and control of the equipment being sold (provides peace of mind to buyers)

• Best of both worlds (onsite & online)

EquipmentOne vs. Unreserved auction

ONLINE MARKETPLACE TRADITIONAL UNRESERVED AUCTIONS 13

Secure, online marketplace where buyers & sellers negotiate, complete and settle their transactions

Financial Performance

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$89 $115 $80 $113 $101 $127 $92 $117 $102 $128 $106 $99 $99 $75 $85 $95 $105 $115 $125 $135 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Revenue growth

Revenue fluctuates considerably between quarters due to seasonality and the number of auctions held in each period.

QUARTERLY REVENUE ($US millions) ANNUAL REVENUE ($US millions)

Revenue growth:

11.2% CAGR over last 10 years 5.6% CAGR over last 5 years

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2011 2012 2013 $162 $182 $213 $261 $315 $355 $377 $357 $396 $438 $467 $467 $100 $200 $300 $400 $500 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 2014

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$14 $27 $7 $27 $18 $33 $10 $22 $14 $30 $16 $34 $14 $14 $5 $10 $15 $20 $25 $30 $35 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Earnings growth

Earnings fluctuate considerably between quarters due to seasonality and the number of auctions held in each period.

QUARTERLY ADJUSTED NET EARNINGS ($US millions) ANNUAL ADJUSTED NET EARNINGS ($US millions)

Earnings growth:

9.3% CAGR over last 10 years

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2011 2012 2013 $37 $37 $50 $56 $76 $85 $92 $52 $74 $83 $90 $90 $30 $40 $50 $60 $70 $80 $90 $100 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 2014

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Generating shareholder value

ADJUSTED DILUTED EPS¹ ($US) DIVIDENDS PAID PER SHARE¹ ($US)

Committed to building long-term shareholder value. 61% dividend payout

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¹ Adjusted for share splits. RBA share splits

• ccurred in 2008 (3-for-1) and 2004 (2-for-1).

Based on 2013 adjusted earnings. On August 8, 2013, RBA declared in increase in the quarterly dividend to $0.13 $0.36 $0.48 $0.54 $0.68 $0.81 $0.87 $0.61 $0.69 $0.77 $0.84 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY 2013 $0.12 $0.19 $0.26 $0.30 $0.34 $0.38 $0.41 $0.44 $0.47 $0.51 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

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Financial objectives

• EPS growth of at least 15% per year
• n average
• ROIC of at least 15%
• EBITDA margin of at least 40%

LONG-TERM OBJECTIVES GUIDANCE (Provided May 5, 2014)

• GAP generated during 2014 in the range of $3.9 - $4.1 billion
• ARR for 2014 in the range of 11.0 – 12.0%
• 2014 adjusted earnings before tax growth in “mid-single digits”
• ver 2013
• 2014 Capex less than $50 million

On-site bidding process Relationship-based business model

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2014 Strategic priorities

Aggressively grow our core auction business Significant Expansion of EquipmentOne Enhance our high-performance team

• Deliver record GAP and record revenues
• Grow bidder registrations
• Grow the sales team 5-10%
• Continue improving the productivity of our revenue producers
• Implement new performance management, development

and succession planning tools

• Grow transaction volume and revenue on EquipmentOne
• Grow web traffic on the EquipmentOne website
• Achieve EquipmentOne yield of +85%

Geelong, Australia site EquipmentOne.com

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

Dominant global player

• Global leader in industrial auctions
• Substantial growth opportunity
• Focused on capturing increased market share in the US and Canada
• Diligently expanding into new markets

Diversifying services to reach a broader customer base

• EquipmentOne commercially launched on April 8, 2013

Focused on basics of:

• EPS growth
• ROIC
• EBITDA margin

Summary

Moerdijk, Netherlands auction

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

www.youtube.com/ritchiebros

Appendices

• CEO profile – Ravi Saligram
• Our mission, strategy and values
• Why customers choose Ritchie Bros.
• Auction sites

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CEO profile: Ravi Saligram

On June 16, Ritchie Bros. announced that Ravi Saligram was named the company’s next CEO.

• It is expected that Ravi will assume the CEO role on July 7, 2014
• Ravi succeeds Peter Blake, who previously announced his intention to resign

Ravi is a proven leader and an experienced chief executive within the business services sector.

• He has a proven track record of driving revenue and profit growth at

customer-service focused organizations

• Most recently Ravi was CEO of OfficeMax, which merged with Office Depot in

November 2013

• Prior to OfficeMax, he held executive leadership positions at Intercontinental

Hotels Group, ARAMARK, and SG Johnson Wax

Ravi is a truly global leader

• He has held leadership roles based in the United States, South Korea, Hong

Kong and the UK

• His ability to implement global process standards within distinct markets

provided his past companies with increased efficiencies and enhanced levels

• f customer service

Ravi Saligram

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Our mission, strategy & values

Grow: Grow our core auction business Add: Add new business and information solutions Perform: Perform by building an inspired, high-performing and customer focused team

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Why customers choose Ritchie Bros.

• Greater global reach

= more buyers = fair market value

• Unreserved auctions = certainty of sale
• Bidder diversity
• Geographic
• End market
• End user buyers onsite and online
• Global platform allows commercial customers to

sell product into other markets

• Convenient, certain and rewarding
• Best selection of equipment
• Unreserved process is fair and transparent
• Certainty of title/ownership
• Bid onsite, online, or by proxy
• Inspect, test, compare through at auction yard
• Equipment is secure in RBA auction yards
• Ability to take immediate possession of purchased

machinery WHY SELLTHROUGH A RITCHIE BROS. UNRESERVED AUCTION? WHY BUY AT A RITCHIE BROS. UNRESERVED AUCTION? 24

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Auction sites

Can Canada da Vancouver, British Columbia international Head Office Tel: +1.778.331.5500 1 1 Edmonton, Alberta 2 2 Grande Prairie, Alberta 3 3 Chilliwack, British Columbia 4 4 Prince George, British Columbia 5 5 Truro, Nova Scotia 6 6 London, Ontario 7 7 Toronto, Ontario 8 8 Montréal, Québec 9 9 Regina, Saskatchewan 10 10 Saskatoon, Saskatchewan Un United States ited States Lincoln, Nebraska US Head Office Tel: +1.402.421.3631 11 11 Phoenix, Arizona 12 12 Los Angeles, California 13 13 Sacramento, California 14 14 Tipton, California 15 15 Denver, Colorado 16 16 Manchester, New Hampshire 17 17 Orlando, Florida 18 18 Atlanta, Georgia 19 19 Chicago, Illinois 20 20 North East, Maryland 21 21 Minneapolis, Minnesota 22 22 Kansas City, Missouri 23 23 St. Louis, Missouri 24 24 Raleigh-Durham, North Carolina 25 25 Albuquerque, New Mexico 26 26 Las Vegas, Nevada 27 27 Columbus, Ohio 28 28 Nashville, Tennessee 29 29 Fort Worth, Texas 30 30 Houston, Texas 31 31 Salt Lake City, Utah 32 32 Olympia, Washington Mexic Mexico 33 33 Polotitlán, Mexico Europ Europe Breda, Netherlands European Head Office Tel: +31.765.24.26.00 34 34 Moncofa, Spain 35 35 Ocaña, Spain 36 36 St Aubin sur Gaillon, France 37 37 Meppen, Germany 38 38 Caorso, Italy 39 39 Moerdijk, Netherlands 40 40 Donington Park, UK Middl Middle E e East st 41 41 Dubai, United Arab Emirates Asia Asia 42 42 Narita, Japan Australia Australia 43 43 Brisbane, Australia 44 44 Geelong, Australia

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Investor Questions: ir@rbauction.com | 1-778-331-5500