The global leader in used equipment sales Investor presentation November 4, 2014 – Q3/14 information 1
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. 2 2
Ritchie Bros. overview The trusted source for buying and selling industrial equipment Ritchie Bros. has a strong heritage – selling used equipment since 1958 • 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 and resource sectors • Minimal exposure to mining sector – mining equipment represented approx. 1% of total gross auction proceeds in 2013 RBA Auction - Circa 1958 • 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) RBA Auction - Now • Market cap of approx. US$2.6 billion 3 3
Global reach 110 locations in 25 countries Ritchie Bros.’ online bidding allows 44 auction sites in 14 countries worldwide customers from around the world to bid on equipment at any of our auctions. • Approx. 55% of auction purchases are made by bidders from outside the • Real-time information from live auctions region of the auction available online to registered bidders • 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 AUCTION SITES REVENUE BY GEOGRAPHY (Countries with permanent or regional auction sites) (2013 revenue breakdown) 9% United States 14% Canada 48% Europe Other 29% 4 4
Global market opportunity Company market research suggests an annual global used GLOBAL USED EQUIPMENT MARKET equipment market of $200 billion (Annual transactions) $100 billion: used equipment market • Based on annual transaction values; includes construction, using private treaty to agricultural, forestry, and mining machinery sell (no intermediary) • RBA is the largest industrial auctioneer in the world – by a wide RBA market share ~2% margin, with only 2% of total used equipment market share of total $200 billion $200 billion used equipment market total annual Approximately half of used equipment sellers would market $100 billion: used equipment market consider using an unreserved auction to sell equipment using an intermediary to sell • Means $100 billion addressable market for RBA’s core auction solution Approx. 50% of used equipment sellers • Highly fragmented market indicate they would consider unreserved auctions ($100 billion Half of used equipment sellers indicated a need for control market) of the price and process when selling used equipment • Not suitable prospects for traditional RBA auction services • Prime candidates for Ritchie Bros. EquipmentOne - our online (non-auction) marketplace 5 5
Unreserved auction revenue model Four main revenue streams support Ritchie Bros.’ unreserved auction business: Unreserved Auction TRANSACTION TYPE REVENUE Sellers Straight Commission Straight Commission (Consignors) Consignors contract to sell their equipment through one of Ritchie fee (% of auction Bros. unreserved auctions. A pre-determined percentage of the proceeds) selling price is provided to RBA as commission. Guaranteed Proceeds (underwritten transaction) Stepped commission Consignors are guaranteed to receive a pre-determined amount for fee (x% of guaranteed their equipment, regardless of the final selling price at the auction. A proceeds; x+y% for stepped commission fee is negotiated, accounting for the additional proceeds above risk being assumed by RBA. (Also known as an ‘at risk’ transaction) guaranteed amount) Inventory (underwritten transaction) Gains on sale On rare occasions, Ritchie Bros. may choose to purchase equipment outright, obtaining title of the piece to sell at an upcoming auction. Buyers Admin Fees & Value-added Services (VAS) Admin fees and fees from value-added service RBA provides many services to assist with the purchase of equipment, activities including financing , inspection services, painting etc. 6 6
Growth of Gross Auction Proceeds (GAP) GROSS AUCTION PROCEEDS (US$ millions) $4,500 $3,815 US$3.8 billion of $4,000 GAP produced during fiscal 2013 $3,500 GAP: The aggregate $3,000 dollar amount sold through our multiple $2,500 solutions $2,000 $1,500 $1,000 $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 7 7 Includes transactions of AssetNation and EquipmentOne online marketplaces in 2012 and 2013
Four external influences on GAP 1 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 2 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 3 The mix of equipment age • Newer equipment generally has a higher market value compared to older machinery 4 The number of Lots consigned • Each sale generates proceeds. Increasing the number of Lots sold can bolster gross auction proceeds 8 8
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 % OF GAP BY ASSET AGE 14% 12% 10% 8% 6% 4% 2% 0% 2010 2011 2012 2013 2014 YTD (Oct. 31) Excludes assets with unknown age and those over 10 years. 9 9
Growing consignor and buyer base CONSIGNOR & BUYER BASE AUCTION REGISTRANTS & LOTS (Metrics are for industrial auctions only) (Metrics are for industrial auctions only) 120,000 450,000 5.9% CAGR in buyers 8.1% CAGR in registrants over last 10 years over last 10 years 400,000 100,000 350,000 80,000 300,000 250,000 5.6% CAGR in Lots over last 10 years 60,000 5.8% CAGR in consignors 200,000 over last 10 years 40,000 150,000 100,000 20,000 50,000 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Consignors Buyers Registrants Lots 10 10
Growing our market presence Recruiting additional sales people, known as Territory Managers (TMs), to generate new customer relationships • 296 TMs globally, as of September 30, 2014 • Added more than 24 TMs since the January 1, 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) Inaugural auction in China – Small market share gains in the US could translate into meaningful GAP growth 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 11 11
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