UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: August 6, 2020

Ritchie Bros. Auctioneers Incorporated
(Exact Name of Registrant as Specified in Its Charter)

Canada	    	001-13425	    	98-0626225	
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification)	

9500 Glenlyon Parkway, Burnaby, British Columbia, Canada V5J0C6
(Address of principal executive offices) (Zip Code)

(778) 331-5500
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
		
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)	
		
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))	
		
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))	

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered	
Common shares	RBA	New York Stock Exchange	
Common Share Purchase Rights	N/A	New York Stock Exchange	

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On August 6, 2020, Ritchie Bros. Auctioneers Incorporated (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report.

In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01 Other Events

On August 6, 2020, Ritchie Bros. Auctioneers Incorporated announced that its board of directors declared a quarterly cash dividend of $0.22 per common share, payable on September 16, 2020 to shareholders of record on August 26, 2020.

On August 6, 2020, the Company announced that its board of directors has authorized a share repurchase program for the repurchase of up to $100 million worth of common shares of the Company (subject to the Toronto Stock Exchange “TSX” approval) over the next 12 months.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	    	Description	
99.1	 	News release, dated August 6, 2020 issued by Ritchie Bros. Auctioneers Incorporated	
101	 	Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document	
104	 	The Cover Page from this Current Report on Form 8-K, formatted as Inline XBRL	

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 6, 2020	Ritchie Bros. Auctioneers Incorporated	
			
	By:	/s/ Darren Watt	
		Darren Watt	
		General Counsel & Corporate Secretary	

EXHIBIT INDEX

Exhibit Number	    	Description	
99.1		News release, dated August 6, 2020 issued by Ritchie Bros. Auctioneers Incorporated	
101		Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document	
104		The Cover Page from this Current Report on Form 8-K, formatted as Inline XBRL	

		
	Exhibit 99.1 – News Release	

Ritchie Bros. reports second quarter 2020 results
VANCOUVER, August 6, 2020– Ritchie Bros. Auctioneers Incorporated (NYSE & TSX: RBA, the “Company”, “Ritchie Bros.”, “we”, “us”, or “our”) reported the following results for the three months ended June 30, 2020:
(All figures are presented in U.S. dollars)
Net income attributable to stockholders decreased 2% to $53.0 million, compared to $54.0 million in Q2 2019. Diluted earnings per share (“EPS”) attributable to stockholders was flat at $0.49 per share in Q2 2020 and Q2 2019. Diluted adjusted EPS* which excludes a $6.2 million income tax expense in Q2 2020 related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements, increased 10% to $0.54 per share in Q2 2020 compared to $0.49 per share in Q2 2019.

“I am proud to see the resilience, creativity and resolve demonstrated by our employees and customers. It is their perseverance and professionalism that has driven our strong second quarter results as we pivoted to 100% online auctions,” said Ann Fandozzi, Chief Executive Officer of Ritchie Bros. 
 
Fandozzi continued, “We are encouraged by the strength of our business performance and the momentum we have exiting the second quarter. Our leading platform, global reach and the investments we’ve made in digital have served us well through these uncertain times. Market conditions continue to be strong and we remain focused on our priorities of maintaining the health and safety of our employees and customers, providing our customer with exceptional service, and preserving our strong financial position to the benefit of our shareholders.” 

Consolidated results:
●	Total revenue in Q2 2020 decreased 1% to $389.1 million as compared to Q2 2019	
	o	Service revenue in Q2 2020 was $234.1 million, flat compared to Q2 2019	
	o	Inventory sales revenue in Q2 2020 decreased 2% to $154.9 million as compared to Q2 2019	
●	Total selling, general and administrative expenses (“SG&A”) in Q2 2020 increased 3% to $100.6 million as compared to Q2 2019	
●	Operating income in Q2 2020 increased 14% to $88.8 million as compared to Q2 2019	
●	Net income in Q2 2020 decreased 2% to $53.1 million as compared to Q2 2019	
●	Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization* (“EBITDA”) (non-GAAP measure) in Q2 2020 increased 12% to $107.1 million as compared to Q2 2019	
●	Cash provided by operating activities was $198.3 million for the first half of 2020	
●	Cash on hand at Q2 2020 was $538.0 million, of which $389.7 million was unrestricted	

Auctions & Marketplaces segment results:
●	GTV1 in Q2 2020 was flat at $1.5 billion compared to Q2 2019	
●	A&M total revenue in Q2 2020 decreased 1% to $354.6 million as compared to Q2 2019	
	o	Service revenue in Q2 2020 decreased 1% to $199.6 million as compared to Q2 2019	
	o	Inventory sales revenue in Q2 2020 decreased 2% to $154.9 million as compared to Q2 2019	

Other Services segment results:
●	Other Services total revenue in Q2 2020 increased 3% to $34.5 million as compared to Q2 2019	
●	RBFS revenue in Q2 2020 increased 5% to $8.5 million as compared to Q2 2019	

Other Company developments:
●	On May 4, 2020, the Company announced the appointment of Jim Kessler as Chief Operating Officer, effective May 11, 2020	
●	Increased quarterly cash dividend by 10% to $0.22 per share	

1 Gross Transaction Value (“GTV”) represents total proceeds from all items sold at the Company’s live on site auctions and online marketplaces. GTV is not a measure of financial performance, liquidity, or revenue, and is not presented in the Company’s consolidated financial statements.

The Company presents both GAAP and non-GAAP measures to provide investors with additional information. Providing these non-GAAP measures along with GAAP measures allows for increased comparability of our ongoing performance from period to period. Non-GAAP financial measures referred to in this news release are labeled as “non-GAAP measure” or designated as such with an asterisk (*). Please see page 9-11 for explanations of why the Company uses these non-GAAP measures and the reconciliation to the most comparable GAAP financial measures.

	 1	

Financial Overview
(Unaudited)

(in U.S. $000's, except EPS and percentages)		Three months ended June 30, 		Six months ended June 30, 	
								% Change								% Change	
	    	2020	    	2019	    	2020 over 2019		2020	    	2019	    	2020 over 2019	
Service revenue:	 		  	 		  	 	  				  	 		  	 	  		
Commissions		$	125,465		$	134,466	 	(7)	%		$	218,950		$	226,746	 	(3)	%	
Fees		 	108,674		 	100,140	 	9	%		 	198,312		 	180,232	 	10	%	
Total service revenue		 	234,139		 	234,606	 	(0)	%		 	417,262		 	406,978	 	3	%	
Inventory sales revenue		 	154,911		 	158,616	 	(2)	%		 	245,043		 	289,673	 	(15)	%	
Total revenue		 	389,050		 	393,222	 	(1)	%		 	662,305		 	696,651	 	(5)	%	
Service revenue as a % of total revenue		 	60.2	%  	 	59.7	%  	50	bps		 	63.0	%  	 	58.4	%  	460	bps	
Inventory sales revenue as a % of total revenue		 	39.8	%  	 	40.3	%  	(50)	bps		 	37.0	%  	 	41.6	%  	(460)	bps	
Costs of services		 	39,448		 	50,268	 	(22)	%		 	78,803		 	86,337	 	(9)	%	
Cost of inventory sold		 	143,134		 	149,818	 	(4)	%		 	224,719		 	270,293	 	(17)	%	
Selling, general and administrative expenses		 	100,632		 	97,714	 	3	%		 	199,017		 	192,898	 	3	%	
Operating expenses		 	300,250		 	315,252	 	(5)	%		 	539,423		 	585,093	 	(8)	%	
Cost of inventory sold as a % of operating expenses		 	47.7	%  	 	47.5	%  	20	bps		 	41.7	%  	 	46.2	%  	(450)	bps	
Operating income		 	88,800		 	77,970	 	14	%		 	122,882		 	111,558	 	10	%	
Operating income margin		 	22.8	%  	 	19.8	%  	300	bps		 	18.6	%  	 	16.0	%  	260	bps	
Net income attributable to stockholders		 	53,043		 	54,036	 	(2)	%		 	75,851		 	72,200	 	5	%	
Diluted EPS to stockholders		$	0.49		$	0.49	 	—	%		$	0.69		$	0.66	 	5	%	
Diluted adjusted EPS attributable to stockholders			0.54			0.49		10	%			0.75			0.66		14	%	
Effective tax rate		 	34.2	%  	 	22.1	%  	1210	bps		 	30.5	%  	 	23.4	%  	710	bps	
Total GTV		 	1,493,982		 	1,497,757	 	(0)	%		 	2,641,006		 	2,672,438	 	(1)	%	
Service revenue as a % of total GTV- Rate		 	15.7	%  	 	15.7	%  	—	bps		 	15.8	%  	 	15.2	%  	60	bps	
Inventory sales revenue as a % of total GTV- Mix		 	10.4	%  	 	10.6	%  	(20)	bps		 	9.3	%  	 	10.8	%  	(150)	bps	

		
Ritchie Bros.	 2	

Segment Overview

(in U.S $000's)		Three months ended June 30, 2020	 	Six months ended June 30, 2020	
	    	A&M	    	Other	    	Consolidated	 	A&M	    	Other	    	Consolidated	
Service revenue		$	199,648	 	34,491		$	234,139		$	354,391	 	62,871		$	417,262	
Inventory sales revenue		 	154,911	 	—		 	154,911		 	245,043	 	—		 	245,043	
Total revenue		 	354,559	 	34,491		 	389,050		 	599,434	 	62,871		 	662,305	
Ancillary and logistical service expenses		 	—		16,060		 	16,060		 	—		28,818		 	28,818	
Other costs of services		 	22,190		1,198		 	23,388		 	47,285		2,700		 	49,985	
Cost of inventory sold		 	143,134		—		 	143,134		 	224,719		—		 	224,719	
SG&A expenses		 	94,559		6,073		 	100,632		 	186,144		12,873		 	199,017	
Segment profit		$	94,676		11,160		$	105,836		$	141,286		18,480		$	159,766	
Total GTV		 	1,493,982	 	N/A		 	N/A		 	2,641,006	 	N/A		 	N/A	
A&M service revenue as a % of total GTV- Rate		 	13.4	%  	N/A		 	N/A		 	13.4	%  	N/A		 	N/A	

(in U.S $000's)		Three months ended June 30, 2019	 	Six months ended June 30, 2019	
	    	A&M	    	Other	    	Consolidated	 	A&M	    	Other	    	Consolidated	
Service revenue		$	201,050		$	33,556		$	234,606	 	$	344,487		$	62,491		$	406,978	
Inventory sales revenue	 		158,616	 		—	 		158,616			289,673			—			289,673	
Total revenue	 		359,666	 		33,556	 		393,222			634,160			62,491			696,651	
Ancillary and logistical service expenses	 		—	 		16,472	 		16,472			—			30,231			30,231	
Other costs of services	 		32,551	 		1,245	 		33,796			53,368			2,738			56,106	
Cost of inventory sold	 		149,818	 		—	 		149,818		 	270,293		 	—		 	270,293	
SG&A expenses	 		91,466	 		6,248	 		97,714		 	180,648		 	12,250		 	192,898	
Segment profit		$	85,831		$	9,591		$	95,422		 	129,851		 	17,272		 	147,123	
Total GTV		 	1,497,757		 	N/A		 	N/A		 	2,672,438		 	N/A		 	N/A	
A&M service revenue as a % of total GTV- Rate		 	13.4	%  	 	N/A		 	N/A		$	12.9%		$	N/A		 	N/A	

Q2 2020 Consolidated Performance Overview
For Q2 2020, the Company was able to operate and serve our customers’ equipment and immediate liquidity needs through our platform of auction technology solutions and online auction capabilities. In addition to running our IronPlanet weekly featured online auction, our online Marketplace-E solution and GovPlanet online auctions, we modified our live operations in March 2020 which transitioned all our traditional live on site industrial auctions to online bidding. In addition, as implemented in the first quarter, we are using our Time Auctioned Lots (TAL) solution for selected International and on-the-farm agriculture events.
GTV remained flat at $1.5 billion in Q2 2020 with significant variability by region where US and Canada had higher activity, but International was lower due to the severe impact of the COVID-19 pandemic in that region. Total GTV increased due to record online performance driven from strong execution by the US region and the US strategic accounts sales teams, year-over-year growth performance at our Fort Worth auction, and auction calendar shifts in response to COVID-19. These shifts included the addition of the Montreal, Canada and Los Angeles, US auctions from Q1 2020 to Q2 2020, which were partially offset by the postponement of the Polotitlan, Mexico, and Ocana, Spain auctions from Q2 2020 to Q3 2020. This increase was offset by the non-repeat of a large dispersal of pipeline equipment as part of the $94 million Columbus, Ohio auction held in June 2019, and lower International performance mainly due to the severe impact of the COVID-19 pandemic in this region. In addition, GTV related to government surplus contracts were lower due to government shutdowns in response to COVID-19.
Total revenue decreased 1% to $389.0 million in Q2 2020.

Service revenue was flat year-over-year at $234.1 million with commissions revenue lower by 7% on flat Service GTV primarily due to softer commission rate performance from a higher proportion of GTV sourced from strategic accounts, and lower rates from our government operations. Total fees were up 9% on flat total GTV driven primarily by the mix of small values lots, the harmonization of buyer fees and higher fees from services within our US operations, which was partially offset by fees waived for Canadian on-the-farm auctions as part of our COVID-19 pandemic response.
Inventory sales revenue decreased 2% primarily related to a non-recurring large dispersal of pipeline equipment as part of the $94 million Columbus, Ohio auction in June 2019, and selling through certain non-repeating large inventory deals from Europe and Asia in Q2 2019. We also earned lower inventory revenue through our government surplus contracts due to government shutdowns in response to COVID-19. This decrease was partially offset by strong year-over-year performance in the US and Canada regions.

		
Ritchie Bros.	 3	

Costs of services decreased 22% to $39.4 million. In response to the COVID-19 pandemic, we transitioned our live on site auctions to online bidding, utilized TAL solutions for selected International and on-the-farm agricultural events, and implemented travel restrictions. These operational changes resulted in significant temporary cost reductions in employee compensation and travel, advertising, and promotion expenses. In addition, we incurred lower net fees related to referral payments.
Cost of inventory decreased 4% to $143.1 million, primarily in line with lower activity in inventory sales revenue. Cost of inventory sold decreased at a higher rate than the decrease of inventory sales revenue, indicating an increase in the revenue margin. The margin also improved as a result of equipment sold at a lower price performance in the prior year within the International region, which was not repeated in Q2 2020.

Selling, general and administrative (“SG&A”) expenses increased 3% to $100.6 million primarily due to higher incentive expense, including a one-time incentive accrual to employees who have been instrumental during the COVID-19 pandemic to continue keeping our operations running and servicing our customers. These increases were partially offset by lower SG&A expenses related to lower travel, advertising, and promotion costs as we implemented travel restrictions.

Foreign exchange had an unfavourable impact on total revenue and a favourable impact on expenses. These impacts were primarily due to the fluctuations in the Euro, Canadian dollar, and Australian dollar exchange rates relative to the U.S. dollar.
Net income attributable to stockholders decreased 2% to $53.0 million, primarily related to the increase in the effective tax rate, partially offset by a higher operating income and lower interest expense.
Primarily for the same reasons noted above, diluted EPS attributable to stockholders was flat at $0.49 per share for Q2 2020 and Q2 2019. Diluted adjusted EPS attributable to stockholders* increased 10% to $0.54 per share in Q2 2020, after adjusting for a $6.2 million income tax expense in Q2 2020 related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements.

Dividend Information
Quarterly dividend
On August 5, 2020, the Company declared a quarterly cash dividend of $0.22 per common share payable on September 16, 2020 to shareholders of record on August 26, 2020.

Share repurchase program
On August 5, 2020, the Company’s board of directors authorized a share repurchase program for the repurchase of up to $100 million worth of common shares of the Company (subject to TSX approval) over the next 12 months. The share repurchases will primarily be used to offset dilution from options. The Company intends to make an application to the TSX for approval of a Normal Course Issuer Bid in August 2020.

Q2 2020 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended June 30, 2020 at 8am Pacific time / 11 am Eastern time / 3pm GMT on August 7, 2020. The replay of the webcast will be available through September 7, 2020.

Conference call and webcast details are available at the following link:
https://investor.ritchiebros.com

		
Ritchie Bros.	 4	

About Ritchie Bros.
Established in 1958, Ritchie Bros. (NYSE and TSX: RBA) is a global asset management and disposition company, offering customers end-to-end solutions for buying and selling used heavy equipment, trucks and other assets. Operating in a number of sectors, including construction, transportation, agriculture, energy, oil and gas, mining, and forestry, the company’s selling channels include: Ritchie Bros. Auctioneers, the world’s largest industrial auctioneer offers live auction events with online bidding; IronPlanet, an online marketplace with featured weekly auctions and providing the exclusive IronClad Assurance® equipment condition certification; Marketplace-E, a controlled marketplace offering multiple price and timing options; Mascus, a leading European online equipment listing service; and Ritchie Bros. Private Treaty, offering privately negotiated sales. The company’s suite of multichannel sales solutions also includes RB Asset Solutions, a complete end-to-end asset management and disposition system. Ritchie Bros. also offers sector-specific solutions including GovPlanet, TruckPlanet, and Kruse Energy Auctioneers, plus equipment financing and leasing through Ritchie Bros. Financial Services. For more information about Ritchie Bros., visit RitchieBros.com.
Forward-looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable U.S. and Canadian securities legislation (collectively, “forward-looking statements”), including, in particular, statements regarding future financial and operational results, including future auctions and estimated GTV thereof, growth prospects and payment of dividends. 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 the Company’s control, including the duration and impact of the COVID-19 pandemic on the Company’s operations, the operations of customers, and general economic conditions; the numerous factors that influence the supply of and demand for used equipment; economic and other conditions in local, regional and global sectors; the Company’s ability to successfully integrate IronPlanet, and to receive the anticipated benefits of the IronPlanet acquisition; and the risks and uncertainties set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s Form 10-Q for the quarter ended June 30, 2020, which are available on the SEC, SEDAR, and Company websites. The foregoing list is not exhaustive of the factors that may affect the Company’s 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, or implied by, these forward-looking statements. Forward looking statements are made as of the date of this news release and the Company 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.

		
Ritchie Bros.	 5	

GTV and Selected Condensed Consolidated Financial Information
GTV and Condensed Consolidated Income Statements – Second Quarter
(Expressed in thousands of United States dollars, except share, per share amounts and percentages)
(Unaudited)

(in U.S. $000's, except EPS)		Three months ended June 30, 		Six months ended June 30, 	
	    			    	  		    	% Change				    	  		    	% Change	
			2020			2019		2020 over 2019			2020			2019		2020 over 2019	
GTV		$	1,493,982		$	1,497,757	 	(0)	%		$	2,641,006		$	2,672,438	 	(1)	%	
Revenues:		 	  		 	  	 	  											
Service revenues		$	234,139		$	234,606	 	(0)	%		$	417,262		$	406,978		3	%	
Inventory sales revenue		 	154,911		 	158,616	 	(2)	%			245,043		 	289,673		(15)	%	
Total revenues		 	389,050		 	393,222	 	(1)	%			662,305		 	696,651		(5)	%	
Operating expenses:		 	  		 	  	 	  									  		
Costs of services		 	39,448		 	50,268	 	(22)	%			78,803			86,337		(9)	%	
Cost of inventory sold		 	143,134		 	149,818	 	(4)	%			224,719			270,293		(17)	%	
Selling, general and administration expenses		 	100,632		 	97,714	 	3	%			199,017			192,898		3	%	
Acquisition-related costs		 	—		 	38	 	(100)	%			—			707		(100)	%	
Depreciation and amortization expenses		 	17,857		 	17,112	 	4	%			37,150			34,227		9	%	
Gain on disposition of property, plant and equipment		 	(1,213)		 	(101)	 	1,101	%			(1,260)			(250)		404	%	
Foreign exchange loss		 	392		 	403	 	(3)	%			994			881		13	%	
Total operating expenses		 	300,250		 	315,252	 	(5)	%			539,423			585,093		(8)	%	
Operating income		 	88,800		 	77,970	 	14	%			122,882			111,558		10	%	
Interest expense		 	(8,882)		 	(10,117)	 	(12)	%			(18,064)		 	(20,933)		(14)	%	
Other income, net		 	857		 	1,679	 	(49)	%			4,434		 	3,718		19	%	
Income before income taxes		 	80,775		 	69,532	 	16	%			109,252		 	94,343	 	16	%	
Income tax expense		 	27,656		 	15,401	 	80	%			33,304			22,040		51	%	
Net income		$	53,119		$	54,131	 	(2)	%		$	75,948		$	72,303	 	5	%	
Net income attributable to:		 	  		 	  	 	  						 		 	  		
Stockholders		$	53,043		$	54,036	 	(2)	%			75,851		$	72,200	 	5	%	
Non-controlling interests		 	76		 	95	 	(20)	%			97		 	103	 	(6)	%	
		$	53,119		$	54,131	 	(2)	%			75,948		$	72,303	 	5	%	
Earnings per share attributable to stockholders:		 	  		 	  	 	  						 		 	  		
Basic		$	0.49		$	0.50	 	(2)	%			0.70		$	0.66	 	6	%	
Diluted		$	0.49		$	0.49	 	(1)	%			0.69		$	0.66	 	5	%	
Weighted average number of share outstanding:		 	  		 	  	 	  						 		 	  		
Basic		 	108,387,490		 	108,707,708	 	(0)	%			108,818,903		 	108,725,871	 	0	%	
Diluted		 	109,323,343		 	109,942,768	 	(1)	%			109,903,808		 	109,982,763	 	(0)	%	

		
Ritchie Bros.	 6	

Condensed Consolidated Balance Sheets
(Expressed in thousands of United States dollars, except share data)
(Unaudited)

	    	June 30, 2020	    	December 31, 2019	
							
Assets	 		  	 		  	
Cash and cash equivalents		$	389,720		$	359,671	
Restricted cash		 	148,293		 	60,585	
Trade and other receivables		 	334,488		 	142,627	
Less: allowance for credit losses		 	(4,559)		 	(5,225)	
Inventory		 	63,089		 	64,956	
Other current assets		 	27,486		 	50,160	
Income taxes receivable		 	3,937		 	6,810	
Total current assets		 	962,454		 	679,584	
							
Property, plant and equipment		 	475,936		 	484,482	
Other non-current assets		 	131,326		 	145,679	
Intangible assets		 	223,130		 	233,380	
Goodwill		 	671,368		 	672,310	
Deferred tax assets		 	14,299		 	13,995	
Total assets		$	2,478,513		$	2,229,430	
							
Liabilities and Equity		 			 	  	
Auction proceeds payable		$	499,415		$	276,188	
Trade and other payables		 	213,036		 	194,279	
Income taxes payable		 	16,023		 	7,809	
Short-term debt		 	21,980		 	4,705	
Current portion of long-term debt		 	17,588		 	18,277	
Total current liabilities		 	768,042		 	501,258	
							
Long-term debt		 	614,375		 	627,204	
Other non-current liabilities		 	142,518		 	151,238	
Deferred tax liabilities		 	49,270		 	42,743	
Total liabilities		 	1,574,205		 	1,322,443	
							
Commitments and Contingencies		 	  		 	  	
Stockholders' equity:		 	  		 	  	
Share capital:		 	  		 	  	
Common stock; no par value, unlimited shares		 			 	  	
authorized, issued and outstanding shares:		 			 	  	
108,630,537 (December 31, 2019: 109,337,781)		 	169,255		 	194,771	
Additional paid-in capital		 	47,958		 	52,110	
Retained earnings		 	746,048		 	714,051	
Accumulated other comprehensive loss		 	(64,207)		 	(59,099)	
Stockholders' equity		 	899,054		 	901,833	
Non-controlling interest		 	5,254		 	5,154	
Total stockholders' equity		 	904,308		 	906,987	
Total liabilities and equity		$	2,478,513		$	2,229,430	

		
Ritchie Bros.	 7	

Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Unaudited)

Six months ended June 30,	    	2020	    	2019	
Cash provided by (used in):	 		  	 		  	
Operating activities:	 		  	 		  	
Net income		$	75,948		$	72,303	
Adjustments for items not affecting cash:		 			 	  	
Depreciation and amortization expenses		 	37,150		 	34,227	
Stock option compensation expense		 	2,730		 	3,199	
Equity-classified share unit expense		 	5,017		 	5,903	
Deferred income tax expense		 	6,657		 	1,056	
Unrealized foreign exchange (gain) loss		 	1,129		 	(51)	
Gain on disposition of property, plant and equipment		 	(1,260)		 	(250)	
Amortization of debt issuance costs		 	1,577		 	1,765	
Amortization of right-of-use assets		 	6,318		 	5,845	
Gain on contingent consideration from equity investment		 	(1,700)		 	—	
Other, net		 	1,934		 	322	
Net changes in operating assets and liabilities		 	62,824		 	36,036	
Net cash provided by operating activities		 	198,324			160,355	
Investing activities:		 	  		 	  	
Property, plant and equipment additions		 	(6,140)		 	(4,618)	
Intangible asset additions		 	(13,244)		 	(12,175)	
Proceeds on disposition of property, plant and equipment		 	16,106		 	583	
Distribution from equity investment		 	4,212		 	—	
Proceeds on contingent consideration from equity investment		 	1,700		 	—	
Other, net		 	(2,782)		 	(1,000)	
Net cash used in investing activities		 	(148)		 	(17,210)	
Financing activities:		 	  		 	  	
Share repurchase		 	(53,170)		 	(42,012)	
Dividends paid to stockholders		 	(43,586)		 	(39,160)	
Issuances of share capital		 	19,425		 	4,124	
Payment of withholding taxes on issuance of shares		 	(3,321)		 	(4,915)	
Proceeds from short-term debt		 	35,799		 	12,879	
Repayment of short-term debt		 	(19,941)		 	(24,985)	
Repayment of long-term debt		 	(8,633)		 	(14,514)	
Repayment of finance lease obligations		 	(4,384)		 	(2,937)	
Net cash used in financing activities		 	(77,811)		 	(111,520)	
Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash		 	(2,608)		 	1,802	
Increase		 	117,757		 	33,427	
Beginning of period		 	420,256		 	305,567	
Cash, cash equivalents, and restricted cash, end of period		$	538,013		$	338,994	

		
Ritchie Bros.	 8	

Selected Data
(Unaudited)
Industrial live on site auction metrics

		Three months ended June 30, 		Six months ended June 30, 	
	    		    		    	% Change						% Change	
	 	2020	 	2019	 	2020 over 2019		2020	    	2019	    	2020 over 2019	
Number of auctions	 	51	 	59	 	(14)	%		81	 	94		(14)	%	
Bidder registrations	 	284,550	 	200,250	 	42	%		445,550	 	343,250		30	%	
Consignors	 	14,400	 	17,450	 	(17)	%		25,350	 	29,000		(13)	%	
Buyers	 	44,350	 	43,500	 	2	%		74,250	 	74,250		—	%	
Lots	 	114,700	 	120,500	 	(5)	%		197,050	 	206,750		(5)	%	

Non-GAAP Measures
This news release references to non-GAAP measures. Non-GAAP measures do not have a standardized meaning and are, therefore, unlikely to be comparable to similar measures presented by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with generally accepted accounting principles.
Adjusted Net Income Attributable to Stockholders* and Diluted Adjusted EPS Attributable to Stockholders* Reconciliation 
The Company believes that adjusted net income attributable to stockholders* provides useful information about the growth or decline of the net income attributable to stockholders for the relevant financial period and eliminates the financial impact of adjusting items the Company does not consider to be part of the normal operating results. Diluted Adjusted EPS attributable to stockholders* eliminates the financial impact of adjusting items which are after-tax effects of significant non-recurring items that the Company does not consider to be part of the normal operating results, such as acquisition-related costs, management reorganization costs, and certain other items, which the Company refers to as ‘adjusting items’.

The following table reconciles adjusted net income attributable to stockholders* and diluted adjusted EPS attributable to stockholders* to net income attributable to stockholders and diluted EPS attributable to stockholders, which are the most directly comparable GAAP measures in the consolidated income statements.

(in U.S. $000's, except share and per share data, and percentages)		Three months ended June 30, 		Six months ended June 30, 		
					  			% Change					  			% Change		
	    	2020	    	2019		2020 over 2019		2020	    	2019		2020 over 2019		
Net income attributable to stockholders		$	53,043		$	54,036		(2)	%  		$	75,851		$	72,200		5	%		
Current income tax adjusting item:		 	  		 	  		  	 		 	  		 	  		  	 		
Change in uncertain tax provision		 	766		 	—		100	%  		 	766		 	—		100	%  		
Deferred tax adjusting item:		 	  		 	  		  	 		 	  		 	  		  	 		
Change in uncertain tax provision		 	5,462		 	—		100	%  		 	5,462		 	—		100	%  		
Adjusted net income attributable to stockholders*		$	59,271		$	54,036		10	%  		$	82,079		$	72,200		14	%		
Weighted average number of dilutive shares outstanding		 	109,323,343		 	109,942,768	 	(1)	%  		 	109,903,808		 	109,982,763	 	(0)	%		
Diluted earnings per share attributable to stockholders		$	0.49		$	0.49		—	%  		$	0.69		$	0.66		5	%		
Diluted adjusted EPS attributable to Stockholders*		$	0.54		$	0.49		10	%  		$	0.75		$	0.66		14	%		

(1) Please refer to page 11 for a summary of adjusting items for the three month and six months ended June 30, 2020 and June 30, 2019.
(2) Adjusted net income attributable to stockholders* represents net income attributable to stockholders excluding the effects of adjusting items.
(3) Diluted adjusted EPS attributable to stockholders* is calculated by dividing adjusted net income attributable to stockholders*, net of the effect of dilutive securities, by the weighted average number of dilutive shares outstanding.

		
Ritchie Bros.	 9	

Adjusted EBITDA*
The Company believes that adjusted EBITDA* provides useful information about the growth or decline of our net income when compared between different financial periods.
The following table reconciles adjusted EBITDA* to net income, which is the most directly comparable GAAP measures in, or calculated from, our consolidated income statements:

		Three months ended June 30, 			Six months ended June 30, 			
					  			% Change					  			% Change		
(in U.S. $000's, except percentages)	    	2020	    	2019		2020 over 2019		2020	    	2019		2020 over 2019		
Net income		$	53,119		$	54,131		(2)	%  		$	75,948		$	72,303		5	%		
Add: depreciation and amortization expenses		 	17,857		 	17,112	 	4	%  		 	37,150		 	34,227	 	9	%		
Add: interest expense		 	8,882		 	10,117	 	(12)	%  		 	18,064		 	20,933	 	(14)	%		
Less: interest income		 	(393)		 	(1,063)	 	(63)	%  		 	(1,063)		 	(1,918)	 	(45)	%		
Add: income tax expense		 	27,656		 	15,401	 	80	%  		 	33,304		 	22,040	 	51	%		
Adjusted EBITDA*		$	107,121		$	95,698		12	%  		$	163,403		$	147,585		11	%		

(1)	Please refer to page 11 for a summary of adjusting items during the three and six months ended June 30, 2020 and June 30, 2019.	
(2)	Adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, and income tax expense, and subtracting interest income from net income excluding the pre-tax effects of adjusting items.	

Adjusted Net Debt* and Adjusted Net Debt/Adjusted EBITDA* Reconciliation
The Company believes that comparing adjusted net debt/adjusted EBITDA* on a trailing 12-month basis for different financial periods provides useful information about the performance of the Company’s operations as an indicator of the amount of time it would take the Company to settle both the short and long-term debt. The Company does not consider this to be a measure of liquidity, which is the ability to settle only short-term obligations, but rather a measure of how well the Company funds liquidity.
The following table reconciles adjusted net debt* to debt, adjusted EBITDA* to net income, and adjusted net debt*/adjusted EBITDA* to debt/ net income, respectively, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements.

(in U.S. $millions, except percentages)		As at and for the 12 months ended June 30, 	
	    	  		    	  		    	% Change	
			2020			2019		2020 over 2019	
Short-term debt		$	22.0		$	8.0	 	175	%	
Long-term debt		 	632.0		 	704.9	 	(10)	%	
Debt		 	654.0		 	712.9	 	(8)	%	
Less: Cash and cash equivalents		 	(389.7)		 	(210.4)	 	85	%	
Adjusted net debt*		 	264.3		 	502.5	 	(47)	%	
Net income		$	152.7		$	130.9	 	17	%	
Add: depreciation and amortization expenses		 	73.4		 	68.1	 	8	%	
Add: interest expense		 	38.4		 	43.2	 	(11)	%	
Less: interest income		 	(3.1)		 	(3.6)	 	(14)	%	
Add: income tax expense		 	52.9		 	38.7	 	37	%	
Pre-tax adjusting items:		 	  		 	  	 	  	 	
Share-based payment expense recovery		 	(4.1)		 	—	 	(100)	%	
Severance and retention		 	—		 	1.5	 	(100)	%	
Gain on sale of equity accounted for investment		 	—		 	(4.9)	 	(100)	%	
Adjusted EBITDA*		$	310.2		$	273.9	 	13	%	
Debt/net income		 	4.3	x	 	5.4	x	(20)	%	
Adjusted net debt*/adjusted EBITDA*		 	0.9	x	 	1.8	x	(50)	%	

(1)   Please refer to page 11 for a summary of adjusting items for the trailing 12-months ended June 30, 2020 and June 30, 2019.
(2)   Adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, and income tax expense, and subtracting interest income from net income excluding the pre-tax effects of adjusting items.
(3)   Adjusted net debt* is calculated by subtracting cash and cash equivalents from short and long-term debt.
(4)   Adjusted net debt*/adjusted EBITDA* is calculated by dividing adjusted net debt* by adjusted EBITDA*.

		
Ritchie Bros.	 10	

Operating Free Cash Flow* (“OFCF”) Reconciliation
The Company believes OFCF*, when compared on a trailing 12-month basis to different financial periods provides an effective measure of the cash generated by the business and provides useful information regarding cash flows remaining for discretionary return to stockholders, mergers and acquisitions, or debt reduction. The balance sheet scorecard includes OFCF* as a performance metric. OFCF* is also an element of the performance criteria for certain annual short-term and long-term incentive awards.
The following table reconciles OFCF* to cash provided by operating activities, which is the most directly comparable GAAP measure in, or calculated from, the consolidated statements of cash flows:

(in U.S. $millions, except percentages)		12 months ended June 30, 	
	    			    	  		    	% Change	
			2020			2019		2020 over 2019	
Cash provided by operating activities		$	370.8		$	196.8	 	88	%	
Property, plant and equipment additions		 	15.1		 	15.7	 	(4)	%	
Intangible asset additions		 	28.5		 	26.1	 	9	%	
Proceeds on disposition of property plant and equipment		 	(21.5)		 	(9.5)	 	126	%	
Net capital spending		$	22.1		$	32.3	 	(32)	%	
OFCF*		$	348.7		$	164.5	 	112	%	

(1)   OFCF* is calculated by subtracting net capital spending from cash provided by operating activities.
Adjusting items during the trailing 12-months ended June 30, 2020 were:
Recognized in the second quarter of 2020
	●	$6.2 million ($0.06 per diluted share) in current and deferred income tax expense related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements	

Recognized in the first quarter of 2020
	●	There were no adjustment items recognized in the first quarter of 2020.	

Recognized in the fourth quarter of 2019
	●	$4.1 million ($3.4 million after tax, or $0.03 per diluted share) in share-based payment expense recovery related to the departure of our former CEO.	

Recognized in the third quarter of 2019
	●	There were no adjustment items recognized in the third quarter of 2019.	

Adjusting items during the trailing 12-months ended June 30, 2019 were:
Recognized in the second quarter of 2019
	●	There were no adjustment items recognized in the second quarter of 2019.	

Recognized in the first quarter of 2019
	●	There were no adjustment items recognized in the first quarter of 2019.	

Recognized in the fourth quarter of 2018
	●	There were no adjustment items recognized in the fourth quarter of 2018.	

Recognized in the third quarter of 2018
	●	$1.5 million ($1.1 million after tax, or $0.01 per diluted share) of severance and retention costs in a corporate reorganization that followed the IronPlanet acquisition;	
	●	$4.9 million ($4.9 million after tax, or $0.04 per diluted share) due to gain on sale of an equity accounted for investment.	

For further information, please contact:
Zaheed Mawani | Vice President, Investor Relations
Phone: 1.778.331.5219 | Email: zmawani@rbauction.com

Ritchie Bros.	 11