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: February 27, 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	
 
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 February 27, 2020, Ritchie Bros. Auctioneers Incorporated (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 2019. 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
On February 27, 2020, the Company announced the planned retirement of Todd Wohler, Chief Human Resources Officer. Wohler will retire, effective March 31, 2020.
 
Item 9.01 Financial Statements and Exhibits
 
(d) Exhibits
 
Exhibit Number	 	Description	
	
99.1	 	News release, dated February 27, 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: February 27, 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 February 27, 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 fourth quarter and 2019 annual results
 
VANCOUVER, February 27, 2020 – Ritchie Bros. Auctioneers Incorporated (NYSE & TSX: RBA, the “Company”, “Ritchie Bros.”, “we”, “us”, or “our”) reports results for the fourth quarter and full year ended December 31, 2019.
 
(All figures are presented in U.S. dollars)
Fourth quarter highlights
 
Net income attributable to stockholders for Q4 2019 increased 45% to $51.6 million, diluted earnings per share (“EPS”) attributable to stockholders increased 47% to $0.47 from $0.32 per share, while diluted adjusted EPS attributable to stockholders (non-GAAP measure) increased 38% to $0.44 from $0.32 per share compared to the same period in 2018.
 
Consolidated results:
	·	Total revenue in Q4 2019 decreased 7% to $332.2 million as compared to Q4 2018	
	o	Service revenue in Q4 2019 increased 10% to $218.5 million as compared to Q4 2018	
	o	Inventory sales revenue in Q4 2019 decreased 28% to $113.7 million as compared to Q4 2018	

	·	Total selling, general and administrative expenses (“SG&A”) was $95.8 million compared to $95.6 million in Q4 2018	

	·	Operating income in Q4 2019 increased 27% to $71.5 million as compared to Q4 2018	
 
Auctions & Marketplaces (“A&M”) segment results:
	·	GTV1 in Q4 2019 increased 3.5% to $1.4 billion compared to Q4 2018	
	·	A&M total revenue in Q4 2019 decreased 7% to $298.0 million as compared to Q4 2018	
	o	Service revenue in Q4 2019 increased 13% to $184.2 million as compared to Q4 2018	
	o	Inventory sales revenue in Q4 2019 decreased 28% to $113.7 million as compared to Q4 2018	
 
Other Company development:
	·	The Company announced on December 16, 2019 that Ann Fandozzi will be joining the Company as its new Chief Executive Officer (“CEO”), and member of the Board of Directors, effective January 6, 2020.	
 
Full year highlights
Net income attributable to stockholders for 2019 increased 23% to $149.0 million compared to $121.5 million in 2018. Diluted earnings per share (“EPS”) attributable to stockholders increased 23% to $1.36 from $1.11 per share, while diluted adjusted EPS attributable to stockholders (non-GAAP measure) increased 23% to $1.33 from $1.08 per share in 2018.
 
Consolidated results:
	·	Total revenue increased 13% to $1.3 billion as compared to 2018	
o    Service revenue increased 7% to $804.0 million as compared to 2018
o    Inventory sales revenue increased 22% to $514.6 million as compared to 2018
	·	Total SG&A was $382.4 million in 2019 compared to $382.7 million in 2018	
	·	Operating income increased 21% to $223.2 million as compared to 2018	
	·	Cash provided by operating activities was $332.8 million for the year ended December 31, 2019	
	·	Declared quarterly dividends aggregating to $0.76 per common share in 2019	
 
Auctions & Marketplaces segment results:
 
	·	GTV increased 3.6% to $5.1 billion compared to 2018	
	·	A&M total revenue increased 14% to $1.2 billion as compared to 2018	
	o	Service revenue increased 8% to $678.8 million as compared to 2018	
	o	Inventory sales revenue increased 22% to $514.6 million as compared to 2018	

 
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, if applicable, the reconciliation to the most comparable GAAP financial measures.

Ritchie Bros.	 	 	1	

 
 
“We are pleased with our strong fourth quarter delivering 47% reported earnings per share growth and 38% adjusted earnings per share growth. Our online marketplaces and US region both led the way with online delivering 16.4% GTV growth and the US posting double digit GTV growth.”
 
“Through the dedication of our entire team we grew our full year GTV by 4%, with Total Revenue topping $1.3 billion and 23% growth in earnings per share. We generated strong operating cash flow for the year and are pleased with the overall strength of our balance sheet,“ said Ann Fandozzi, CEO of Ritchie Bros.
 
Fandozzi concluded, “I have been impressed and energized by the strength and the quality of our team. 2020 is poised to be another exciting year for Ritchie Bros. as we look to continue progressing our multichannel strategy and leveraging technology to drive more value for our customers."
 
Financial Overview
(Unaudited)
 
 	 	Three months ended December 31,	 	 	Year ended December 31,	 	
 	 	 	 	 	 	 	 	% Change	 	 	 	 	 	 	 	 	% Change	 	
(in U.S. $000's, except EPS)	 	2019	 	 	2018	 	 	2019 over 2018	 	 	2019	 	 	2018	 	 	2019 over 2018	 	
Service revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Commissions	 	$	114,107	 	 	$	106,621	 	 	 	7	%	 	$	431,781	 	 	$	420,160	 	 	 	3	%	
Fees	 	 	104,362	 	 	 	91,158	 	 	 	14	%	 	 	372,243	 	 	 	329,355	 	 	 	13	%	
Total service revenue	 	 	218,469	 	 	 	197,779	 	 	 	10	%	 	 	804,024	 	 	 	749,515	 	 	 	7	%	
Inventory sales revenue	 	 	113,725	 	 	 	158,193	 	 	 	(28	)%	 	 	514,617	 	 	 	420,511	 	 	 	22	%	
Total revenue	 	 	332,194	 	 	 	355,972	 	 	 	(7	)%	 	 	1,318,641	 	 	 	1,170,026	 	 	 	13	%	
Service revenue as a % of total revenue	 	 	65.8	%	 	 	55.6	%	 	 	1020 bps	 	 	 	61.0	%	 	 	64.1	%	 	 	-310 bps	 	
Inventory sales revenue as a % of total revenue	 	 	34.2	%	 	 	44.4	%	 	 	-1020 bps	 	 	 	39.0	%	 	 	35.9	%	 	 	310 bps	 	
Costs of services	 	 	42,258	 	 	 	46,315	 	 	 	(9	)%	 	 	164,977	 	 	 	159,058	 	 	 	4	%	
Cost of inventory sold	 	 	108,136	 	 	 	142,505	 	 	 	(24	)%	 	 	480,839	 	 	 	374,339	 	 	 	28	%	
Selling, general and administrative expenses	 	 	95,800	 	 	 	95,624	 	 	 	0	%	 	 	382,389	 	 	 	382,676	 	 	 	(0	)%	
Operating expenses	 	 	260,710	 	 	 	299,645	 	 	 	(13	)%	 	 	1,095,439	 	 	 	984,837	 	 	 	11	%	
Cost of inventory sold as a % of operating expenses	 	 	41.5	%	 	 	47.6	%	 	 	-610 bps	 	 	 	43.9	%	 	 	38.0	%	 	 	590 bps	 	
Operating income	 	 	71,484	 	 	 	56,327	 	 	 	27	%	 	 	223,202	 	 	 	185,189	 	 	 	21	%	
Operating income margin	 	 	21.5	%	 	 	15.8	%	 	 	570 bps	 	 	 	16.9	%	 	 	15.8	%	 	 	110 bps	 	
Net income attributable to stockholders	 	 	51,573	 	 	 	35,486	 	 	 	45	%	 	 	149,039	 	 	 	121,479	 	 	 	23	%	
Adjusted net income attributable to stockholders*	 	 	48,183	 	 	 	35,486	 	 	 	36	%	 	 	145,649	 	 	 	117,669	 	 	 	24	%	
Diluted earnings per share attributable to stockholders	 	$	0.47	 	 	$	0.32	 	 	 	47	%	 	$	1.36	 	 	$	1.11	 	 	 	23	%	
Diluted adjusted EPS attributable to stockholders*	 	$	0.44	 	 	$	0.32	 	 	 	38	%	 	$	1.33	 	 	$	1.08	 	 	 	23	%	
Effective tax rate	 	 	19.9	%	 	 	25.2	%	 	 	-530 bps	 	 	 	21.8	%	 	 	20.3	%	 	 	150 bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total GTV	 	 	1,383,908	 	 	 	1,337,614	 	 	 	3.5	%	 	 	5,140,587	 	 	 	4,964,165	 	 	 	3.6	%	
Service revenue as a % of total GTV- Rate	 	 	15.8	%	 	 	14.8	%	 	 	100 bps	 	 	 	15.6	%	 	 	15.1	%	 	 	50 bps	 	
Inventory sales revenue as a % of total GTV- Mix	 	 	8.2	%	 	 	11.8	%	 	 	-360 bps	 	 	 	10.0	%	 	 	8.5	%	 	 	150 bps	 	

 

 

 
 
Ritchie Bros.	 	 	2	

 
 
Segment Overview
 
(in U.S $000's)	 	Three months ended December 31, 2019	 	 	Year ended December 31, 2019	 	
 	 	A&M	 	 	Other	 	 	Consolidated	 	 	A&M	 	 	Other	 	 	Consolidated	 	
Service revenue	 	$	184,243	 	 	$	34,226	 	 	$	218,469	 	 	$	678,823	 	 	$	125,201	 	 	$	804,024	 	
Inventory sales revenue	 	 	113,725	 	 	 	-	 	 	 	113,725	 	 	 	514,617	 	 	 	-	 	 	 	514,617	 	
Total revenue	 	 	297,968	 	 	 	34,226	 	 	 	332,194	 	 	 	1,193,440	 	 	 	125,201	 	 	 	1,318,641	 	
Ancillary and logistical service expenses	 	 	-	 	 	 	15,736	 	 	 	15,736	 	 	 	-	 	 	 	59,252	 	 	 	59,252	 	
Other costs of services	 	 	25,022	 	 	 	1,500	 	 	 	26,522	 	 	 	99,821	 	 	 	5,904	 	 	 	105,725	 	
Cost of inventory sold	 	 	108,136	 	 	 	-	 	 	 	108,136	 	 	 	480,839	 	 	 	-	 	 	 	480,839	 	
SG&A expenses	 	 	89,230	 	 	 	6,570	 	 	 	95,800	 	 	 	358,016	 	 	 	24,373	 	 	 	382,389	 	
Segment profit	 	$	75,580	 	 	$	10,420	 	 	$	86,000	 	 	$	254,764	 	 	$	35,672	 	 	$	290,436	 	
Total GTV	 	 	1,383,908	 	 	 	N/A	 	 	 	N/A	 	 	 	5,140,587	 	 	 	N/A	 	 	 	N/A	 	
A&M service revenue as a % of total GTV- Rate	 	 	13.3	%	 	 	N/A	 	 	 	N/A	 	 	 	13.2	%	 	 	N/A	 	 	 	N/A	 	
 
(in U.S $000's)	 	Three months ended December 31, 2018	 	 	Year ended December 31, 2018	 	
 	 	A&M	 	 	Other	 	 	Consolidated	 	 	A&M	 	 	Other	 	 	Consolidated	 	
Service revenue	 	$	162,931	 	 	$	34,848	 	 	$	197,779	 	 	$	626,007	 	 	$	123,508	 	 	$	749,515	 	
Inventory sales revenue	 	 	158,193	 	 	 	-	 	 	 	158,193	 	 	 	420,511	 	 	 	-	 	 	 	420,511	 	
Total revenue	 	 	321,124	 	 	 	34,848	 	 	 	355,972	 	 	 	1,046,518	 	 	 	123,508	 	 	 	1,170,026	 	
Ancillary and logistical service expenses	 	 	-	 	 	 	20,334	 	 	 	20,334	 	 	 	-	 	 	 	66,576	 	 	 	66,576	 	
Other costs of services	 	 	24,542	 	 	 	1,439	 	 	 	25,981	 	 	 	87,430	 	 	 	5,052	 	 	 	92,482	 	
Cost of inventory sold	 	 	142,505	 	 	 	-	 	 	 	142,505	 	 	 	374,339	 	 	 	-	 	 	 	374,339	 	
SG&A expenses	 	 	91,046	 	 	 	4,578	 	 	 	95,624	 	 	 	363,549	 	 	 	19,127	 	 	 	382,676	 	
Segment profit	 	$	63,031	 	 	$	8,497	 	 	$	71,528	 	 	$	221,200	 	 	$	32,753	 	 	$	253,953	 	
Total GTV	 	 	1,327,614	 	 	 	N/A	 	 	 	N/A	 	 	 	4,964,165	 	 	 	N/A	 	 	 	N/A	 	
A&M service revenue as a % of total GTV- Rate	 	 	12.3	%	 	 	N/A	 	 	 	N/A	 	 	 	12.6	%	 	 	N/A	 	 	 	N/A	 	
 
Consolidated Quarterly Performance Overview
 
GTV increased 3.5% to $1.4 billion. The increase in GTV was driven by a 16% increase in online marketplaces and 1% growth in live on site industrial auctions. Online marketplaces growth was driven by strong performance from our Marketplace-E platform, our strategic accounts team, and GovPlanet. Our live industrial GTV improvement was led by our US region posting double-digit growth which was partially offset with softer performance in our International and Canadian regions.
 
Total revenue decreased 7% to $332.2 million with a decrease in Inventory sales revenue of 28%, partially offset by an increase in Service revenue of 10%.

Service revenue growth of 10% was driven by a 14% increase in fee revenue and a 7% improvement in commissions revenue. The increase in fees revenue was driven by the harmonization of buyer fees, and higher total GTV. The increase in commissions revenue was in line with overall GTV volume growth related to commissions contracts.
 
Inventory sales revenue decreased 28% primarily due to the non-repeat of significant inventory contracts in International and Canada. Inventory sales revenue as a percent of total GTV decreased to 8.2% in Q4 2019 from 11.8% in Q4 2018.
 
Costs of services decreased 9% to $42.3 million primarily driven by lower revenue in the RB Logistics business.
 
Cost of inventory decreased 24% to $108.1 million, in line with the overall decrease in inventory sales volume and reflecting comparative softer rate performance in Canada and International compared to Q4 2018.
 
Selling, general and administrative (“SG&A”) expenses increased slightly to $95.8 million due to additional headcount to support our growth initiatives and additional investments in the fourth quarter to support marketing efforts focused on generating buyer demand, offset by a $4.1 million share-based payment expense recovery related to the departure of our former CEO.

 
Ritchie Bros.	 	 	3	

 

Net income attributable to stockholders increased 45% to $51.6 million. The increase was primarily due to higher operating income combined with lower interest expense. Included in operating income is a foreign exchange gain of $4.1 million in Q4 2019 compared to $0.2 million in Q4 2018.  Adjusted net income attributable to stockholders (non-GAAP measure) increased 36%, to $48.2 million in Q4 2019 compared to $35.5 million in Q4 2018.
 
Primarily for the same reasons noted above, diluted EPS attributable to stockholders increased 47% to $0.47 per share compared to $0.32 per share in Q4 2018. Diluted adjusted EPS attributable to stockholders (non-GAAP measure) increased 38% to $0.44 per share in Q4 2019 compared to $0.32 per share in Q4 2018.
 
Dividend Information
Quarterly dividend
The Company declared on January 24, 2020, a quarterly cash dividend of $0.20 per common share payable on March 6, 2020 to shareholders of record on February 14, 2020.
 
Management Announcement
The Company announced today the planned retirement of Todd Wohler, Chief Human Resources Officer (“CHRO”). Mr. Wohler will retire as CHRO, effective March 31, 2020 after five years with the Company. Mr. Wohler had intended to retire earlier but agreed to stay on during the CEO transition. The Company is grateful to him for his significant contributions as CHRO.
 
Related to the above, the Company is pleased to announce the appointment of Carmen Thiede as Chief Human Resources Officer, effective April 13, 2020. Ms. Thiede brings significant experience to the Company gained during her impressive career in human resources leadership across diverse industries including automotive, financial and technological services at RBC, Ameriprise Financial Services, Regis Corporation and ABRA Auto Body & Glass. Ms. Thiede has a Master’s Degree in Human Resources and Industrial Relations from the University of Minnesota - Carlson School of Management.
 
Q4 2019 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended December 31, 2019, at 8:00 am Pacific time / 11:00 am Eastern time / 4:00 pm GMT on February 28, 2020. The replay of the webcast will be available through March 28, 2020.
 
Conference call and webcast details are available at the following link:
https://investor.ritchiebros.com
 
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.

 

 
 
Ritchie Bros.	 	 	4	

 

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 Q4 performance, 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 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, 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 Consolidated Financial Information
 
GTV and Consolidated Income Statements – Fourth Quarter
(Expressed in thousands of United States dollars, except share and per share amounts)
(Unaudited)
 
(in U.S. $000's, except EPS)	 	Three months ended December 31,	 	 	Year ended December 31,	 	
 	 	 	 	 	 	 	 	% Change	 	 	 	 	 	 	 	 	% Change	 	
 	 	2019	 	 	2018	 	 	2019 over 2018	 	 	2019	 	 	2018	 	 	2019 over 2018	 	
GTV	 	$	1,383,908	 	 	$	1,337,614	 	 	 	3	%	 	$	5,140,587	 	 	$	4,964,165	 	 	 	4	%	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Service revenues	 	$	218,469	 	 	$	197,779	 	 	 	10	%	 	$	804,024	 	 	$	749,515	 	 	 	7	%	
Inventory sales revenue	 	 	113,725	 	 	 	158,193	 	 	 	(28	)%	 	 	514,617	 	 	 	420,511	 	 	 	22	%	
Total revenues	 	 	332,194	 	 	 	355,972	 	 	 	(7	)%	 	 	1,318,641	 	 	 	1,170,026	 	 	 	13	%	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Costs of services	 	 	42,258	 	 	 	46,315	 	 	 	(9	)%	 	 	164,977	 	 	 	159,058	 	 	 	4	%	
Cost of inventory sold	 	 	108,136	 	 	 	142,505	 	 	 	(24	)%	 	 	480,839	 	 	 	374,339	 	 	 	28	%	
Selling, general and administration expenses	 	 	95,800	 	 	 	95,624	 	 	 	0	%	 	 	382,389	 	 	 	382,676	 	 	 	(0	)%	
Acquisition-related costs	 	 	25	 	 	 	54	 	 	 	(54	)%	 	 	777	 	 	 	5,093	 	 	 	(85	)%	
Depreciation and amortization expenses	 	 	18,582	 	 	 	17,163	 	 	 	8	%	 	 	70,501	 	 	 	66,614	 	 	 	6	%	
Gain on disposition of property, plant and equipment	 	 	(36	)	 	 	(1,773	)	 	 	(98	)%	 	 	(1,107	)	 	 	(2,731	)	 	 	(59	)%	
Foreign exchange loss (gain)	 	 	(4,055	)	 	 	(243	)	 	 	1569	%	 	 	(2,937	)	 	 	(212	)	 	 	1285	%	
Total operating expenses	 	 	260,710	 	 	 	299,645	 	 	 	(13	)%	 	 	1,095,439	 	 	 	984,837	 	 	 	11	%	
Operating income	 	 	71,484	 	 	 	56,327	 	 	 	27	%	 	 	223,202	 	 	 	185,189	 	 	 	21	%	
Interest expense	 	 	(10,254	)	 	 	(11,807	)	 	 	(13	)%	 	 	(41,277	)	 	 	(44,527	)	 	 	(7	)%	
Other, net	 	 	3,158	 	 	 	2,855	 	 	 	11	%	 	 	8,838	 	 	 	11,850	 	 	 	(25	)%	
Income before income taxes	 	 	64,388	 	 	 	47,375	 	 	 	36	%	 	 	190,763	 	 	 	152,512	 	 	 	25	%	
Income tax expense	 	 	12,823	 	 	 	11,915	 	 	 	8	%	 	 	41,623	 	 	 	31,006	 	 	 	34	%	
Net income	 	$	51,565	 	 	$	35,460	 	 	 	45	%	 	$	149,140	 	 	$	121,506	 	 	 	23	%	
Net income (loss) attributable to:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stockholders	 	$	51,573	 	 	$	35,486	 	 	 	45	%	 	$	149,039	 	 	$	121,479	 	 	 	23	%	
Non-controlling interests	 	 	(8	)	 	 	(26	)	 	 	(69	)%	 	 	101	 	 	 	27	 	 	 	274	%	
 	 	$	51,565	 	 	$	35,460	 	 	 	45	%	 	$	149,140	 	 	$	121,506	 	 	 	23	%	
Earnings per share attributable to stockholders:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.47	 	 	$	0.33	 	 	 	42	%	 	$	1.37	 	 	$	1.12	 	 	 	22	%	
Diluted	 	$	0.47	 	 	$	0.32	 	 	 	47	%	 	$	1.36	 	 	$	1.11	 	 	 	23	%	
Weighted average number of share outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	108,609,481	 	 	 	108,649,637	 	 	 	(0	)%	 	 	108,519,739	 	 	 	108,063,349	 	 	 	0	%	
Diluted	 	 	110,194,557	 	 	 	109,983,224	 	 	 	0	%	 	 	109,759,123	 	 	 	109,388,236	 	 	 	0	%	
 
Ritchie Bros.	6	

 
 
Consolidated Balance Sheets
(Expressed in thousands of United States dollars, except share data)
(Unaudited)
 
As at December 31,	 	2019	 	 	2018	 	
Assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	359,671	 	 	$	237,744	 	
Restricted cash	 	 	60,585	 	 	 	67,823	 	
Trade and other receivables	 	 	137,402	 	 	 	129,257	 	
Inventory	 	 	64,956	 	 	 	113,294	 	
Other current assets	 	 	50,160	 	 	 	49,055	 	
Income taxes receivable	 	 	6,810	 	 	 	6,365	 	
Total current assets	 	 	679,584	 	 	 	603,538	 	
 	 	 	 	 	 	 	 	 	
Property, plant and equipment	 	 	484,482	 	 	 	486,599	 	
Other non-current assets	 	 	145,679	 	 	 	29,395	 	
Intangible assets	 	 	233,380	 	 	 	245,622	 	
Goodwill	 	 	672,310	 	 	 	671,594	 	
Deferred tax assets	 	 	13,995	 	 	 	15,648	 	
Total assets	 	$	2,229,430	 	 	$	2,052,396	 	
 	 	 	 	 	 	 	 	 	
Liabilities and Equity	 	 	 	 	 	 	 	 	
Auction proceeds payable	 	$	276,188	 	 	$	203,503	 	
Trade and other payables	 	 	194,279	 	 	 	201,255	 	
Income taxes payable	 	 	7,809	 	 	 	2,312	 	
Short-term debt	 	 	4,705	 	 	 	19,896	 	
Current portion of long-term debt	 	 	18,277	 	 	 	13,126	 	
Total current liabilities	 	 	501,258	 	 	 	440,092	 	
 	 	 	 	 	 	 	 	 	
Long-term debt	 	 	627,204	 	 	 	698,172	 	
Other non-current liabilities	 	 	151,238	 	 	 	41,980	 	
Deferred tax liabilities	 	 	42,743	 	 	 	35,519	 	
Total liabilities	 	 	1,322,443	 	 	 	1,215,763	 	
 	 	 	 	 	 	 	 	 	
Commitments	 	 	 	 	 	 	 	 	
Contingencies	 	 	 	 	 	 	 	 	
Contingently redeemable performance share units	 	 	-	 	 	 	923	 	
Stockholders' equity:	 	 	 	 	 	 	 	 	
Share capital:	 	 	 	 	 	 	 	 	
Common stock; no par value, unlimited shares authorized, issued and outstanding shares: 109,337,781 (December 31, 2018: 108,682,030)	 	 	194,771	 	 	 	181,780	 	
Additional paid-in capital	 	 	52,110	 	 	 	56,885	 	
Retained earnings	 	 	714,051	 	 	 	648,255	 	
Accumulated other comprehensive loss	 	 	(59,099	)	 	 	(56,277	)	
Stockholders' equity	 	 	901,833	 	 	 	830,643	 	
Non-controlling interest	 	 	5,154	 	 	 	5,067	 	
Total stockholders' equity	 	 	906,987	 	 	 	835,710	 	
Total liabilities and equity	 	$	2,229,430	 	 	$	2,052,396	 	
 
Ritchie Bros.	7	

 
 
Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Unaudited)
 
Year ended December 31,	 	2019	 	 	2018	 	 	2017	 	
Cash provided by (used in):	 	 	 	 	 	 	 	 	 	 	 	 	
Operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	149,140	 	 	$	121,506	 	 	$	75,306	 	
Adjustments for items not affecting cash:	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization expenses	 	 	70,501	 	 	 	66,614	 	 	 	52,694	 	
Impairment loss	 	 	-	 	 	 	-	 	 	 	8,911	 	
Stock option compensation expense	 	 	4,697	 	 	 	8,252	 	 	 	13,700	 	
Equity-classified share units expense	 	 	8,047	 	 	 	11,256	 	 	 	3,529	 	
Deferred income tax expense (recovery)	 	 	8,826	 	 	 	6,239	 	 	 	(17,268	)	
Unrealized foreign exchange (gain) loss	 	 	(3,058	)	 	 	951	 	 	 	254	 	
Gain on disposition of property, plant and equipment	 	 	(1,107	)	 	 	(2,731	)	 	 	(1,656	)	
Amortization of debt issuance costs	 	 	4,086	 	 	 	4,995	 	 	 	3,056	 	
Gain on disposition of equity investment	 	 	-	 	 	 	(4,935	)	 	 	-	 	
Amoritzation of right-of-use assets	 	 	12,280	 	 	 	-	 	 	 	-	 	
Other, net	 	 	2,779	 	 	 	(2,317	)	 	 	(1,237	)	
Net changes in operating assets and liabilities	 	 	76,602	 	 	 	(65,550	)	 	 	10,279	 	
Net cash provided by operating activities	 	 	332,793	 	 	 	144,280	 	 	 	147,568	 	
Investing activities:	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisition of IronPlanet, net of cash acquired	 	 	-	 	 	 	-	 	 	 	(675,851	)	
Property, plant and equipment additions	 	 	(13,589	)	 	 	(16,860	)	 	 	(10,812	)	
Intangible asset additions	 	 	(27,415	)	 	 	(26,152	)	 	 	(28,584	)	
Proceeds on disposition of property, plant and equipment	 	 	5,929	 	 	 	10,586	 	 	 	4,985	 	
Proceeds on disposal of equity investment	 	 	-	 	 	 	6,147	 	 	 	-	 	
Other, net	 	 	(982	)	 	 	(4,674	)	 	 	(692	)	
Net cash used in investing activities	 	 	(36,057	)	 	 	(30,953	)	 	 	(710,954	)	
Financing activities:	 	 	 	 	 	 	 	 	 	 	 	 	
Share repurchase	 	 	(42,012	)	 	 	-	 	 	 	-	 	
Dividends paid to stockholders	 	 	(82,535	)	 	 	(75,678	)	 	 	(72,785	)	
Dividends paid to NCI	 	 	-	 	 	 	-	 	 	 	(41	)	
Issuances of share capital	 	 	41,094	 	 	 	28,524	 	 	 	9,936	 	
Payment of withholding taxes on issuance of shares	 	 	(5,260	)	 	 	(3,901	)	 	 	-	 	
Proceeds from short-term debt	 	 	13,169	 	 	 	19,715	 	 	 	6,971	 	
Repayment of short-term debt	 	 	(28,684	)	 	 	(6,628	)	 	 	(24,479	)	
Proceeds from long-term debt	 	 	-	 	 	 	-	 	 	 	325,000	 	
Repayment of long-term debt	 	 	(76,282	)	 	 	(91,013	)	 	 	(108,985	)	
Debt issue costs	 	 	-	 	 	 	-	 	 	 	(12,624	)	
Repayment of finance lease obligations	 	 	(6,708	)	 	 	(3,950	)	 	 	(2,322	)	
Other, net	 	 	-	 	 	 	(1,176	)	 	 	(1,408	)	
Net cash provided by (used in) financing activities	 	 	(187,218	)	 	 	(134,107	)	 	 	119,263	 	
Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash	 	 	5,171	 	 	 	(4,769	)	 	 	17,150	 	
Increase (decrease)	 	 	114,689	 	 	 	(25,549	)	 	 	(426,973	)	
Beginning of period	 	 	305,567	 	 	 	331,116	 	 	 	758,089	 	
Cash, cash equivalents, and restricted cash, end of period	 	$	420,256	 	 	$	305,567	 	 	$	331,116	 	

Ritchie Bros.	8	

 
 
Selected Data
(Unaudited)
 
Live industrial auction data
 
 	 	Three months ended December 31	 	 	Year ended December 31,	 	
 	 	 	 	 	 	 	 	% Change	 	 	 	 	 	 	 	 	% Change	 	
 	 	2019	 	 	2018	 	 	2019 over 2018	 	 	2019	 	 	2018	 	 	2019 over 2018	 	
Number of auctions	 	 	54	 	 	 	53	 	 	 	2	%	 	 	194	 	 	 	183	 	 	 	6	%	
Bidder registrations	 	 	223,800	 	 	 	171,500	 	 	 	30	%	 	 	732,550	 	 	 	555,000	 	 	 	32	%	
Consignors	 	 	15,850	 	 	 	14,900	 	 	 	6	%	 	 	58,850	 	 	 	53,950	 	 	 	9	%	
Buyers	 	 	44,350	 	 	 	38,500	 	 	 	15	%	 	 	153,400	 	 	 	135,250	 	 	 	13	%	
Lots	 	 	117,650	 	 	 	103,500	 	 	 	14	%	 	 	422,800	 	 	 	377,000	 	 	 	12	%	
 
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)	 	Three months ended December 31	 	 	Year ended December 31,	 	
 	 	 	 	 	 	 	 	% Change	 	 	 	 	 	 	 	 	% Change	 	
 	 	2019	 	 	2018	 	 	2019 over 2018	 	 	2019	 	 	2018	 	 	2019 over 2018	 	
Net income attributable to stockholders	 	$	51,573	 	 	$	35,486	 	 	 	45	%	 	$	149,039	 	 	$	121,479	 	 	 	23	%	
Pre-tax adjusting items:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Share-based payment expense recovery	 	 	(4,078	)	 	 	-	 	 	 	-100	%	 	 	(4,078	)	 	 	-	 	 	 	-100	%	
Deferred income tax effect of adjusting items:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Share-based payment expense recovery	 	 	688	 	 	 	-	 	 	 	100	%	 	 	688	 	 	 	-	 	 	 	100	%	
Adjusted net income attributable to stockholders*	 	$	48,183	 	 	$	35,486	 	 	 	36	%	 	$	145,649	 	 	$	117,669	 	 	 	24	%	
Weighted average number of dilutive shares outstanding	 	 	110,194,557	 	 	 	109,983,224	 	 	 	0	%	 	 	109,759,123	 	 	 	109,388,236	 	 	 	0	%	
Diluted earnings per share attributable to stockholders	 	$	0.47	 	 	$	0.32	 	 	 	47	%	 	$	1.36	 	 	$	1.11	 	 	 	23	%	
Diluted adjusted EPS attributable to stockholders*	 	$	0.44	 	 	$	0.32	 	 	 	38	%	 	$	1.33	 	 	$	1.08	 	 	 	23	%	
 
(1) Please refer to page 11 for a summary of adjusting items for the three month and year ended Decembre 31, 2019, and 2018.
(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 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)	 	Year ended December 31,	 	
 	 	 	 	 	 	 	 	% Change	 	
 	 	2019	 	 	2018	 	 	2019 over 2018	 	
Short-term debt	 	$	4.7	 	 	$	19.9	 	 	 	-76	%	
Long-term debt	 	 	645.5	 	 	 	711.3	 	 	 	-9	%	
Debt	 	 	650.2	 	 	 	731.2	 	 	 	-11	%	
Less: cash and cash equivalents	 	 	(359.7	)	 	 	(237.7	)	 	 	51	%	
Adjusted net debt*	 	 	290.5	 	 	 	493.5	 	 	 	-41	%	
Net income	 	$	149.1	 	 	$	121.5	 	 	 	23	%	
Add: depreciation and amortization expenses	 	 	70.5	 	 	 	66.6	 	 	 	6	%	
Add: interest expense	 	 	41.3	 	 	 	44.5	 	 	 	-7	%	
Less: interest income	 	 	(3.8	)	 	 	(2.9	)	 	 	31	%	
Add: income tax expense	 	 	41.6	 	 	 	31.0	 	 	 	34	%	
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*	 	$	294.6	 	 	$	257.3	 	 	 	14	%	
Debt/net income	 	 	4.4	x	 	 	6	x	 	 	(16	)%	
Adjusted net debt*/adjusted EBITDA*	 	 	1	x	 	 	1.9	x	 	 	(36	)%	
 
	(1)	Please refer to page 11 for a summary of adjusting items for the year ended December 31, 2019, and 2018.	
	(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*.	
 
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)	 	Year ended December 31, 2019	 	
 	 	 	 	 	 	 	 	% Change	 	
 	 	2019	 	 	2018	 	 	2019 over 2018	 	
Cash provided by operating activities	 	$	332.8	 	 	$	144.3	 	 	 	131	%	
Property, plant and equipment additions	 	 	13.6	 	 	 	16.9	 	 	 	-20	%	
Intangible asset additions	 	 	27.4	 	 	 	26.1	 	 	 	5	%	
Proceeds on disposition of property plant and equipment	 	 	(5.9	)	 	 	(10.6	)	 	 	-44	%	
Net capital spending	 	$	35.1	 	 	$	32.4	 	 	 	8	%	
OFCF*	 	$	297.7	 	 	$	111.9	 	 	 	166	%	
 
	(1)	OFCF* is calculated by subtracting net capital spending from cash provided by operating activities.	

Ritchie Bros.	10	

 
 
Adjusting items for the year ended December 31, 2019:

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.	
 
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.	
 
Adjusting items for the year ended December 31, 2018:
 
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.	
 
Recognized in the second quarter of 2018
	·	There were no adjustment items recognized in the second quarter of 2018.	
 
Recognized in the first quarter of 2018
	·	There were no adjustment items recognized in the first quarter of 2018.	
 
For further information, please contact:
Zaheed Mawani
Vice President, Investor Relations
Phone: 1.778.331.5219
Email: zmawani@rbauction.com
 
Ritchie Bros.	11