PR Newswire | Nov 4, 2021 05:05PM EDT

11/04 16:05 CDT

Ritchie Bros. reports third quarter 2021 results VANCOUVER, BC, Nov. 4, 2021

VANCOUVER, BC, Nov. 4, 2021 /PRNewswire/ - Ritchie Bros. Auctioneers Incorporated (NYSE: RBA) (TSX: RBA) (the "Company", "Ritchie Bros.", "we", "us", or "our") reported the following results for the three months ended September 30, 2021.

(All figures are presented in U.S. dollars)

Net income attributable to stockholders decreased 29% to $32.3 million, compared to $45.4 million in Q3 2020. Diluted earnings per share ("EPS") attributable to stockholders decreased 29% to $0.29 per share in Q3 2021 compared to $0.41 per share in Q3 2020. Non-GAAP diluted adjusted EPS attributable to stockholders* decreased 10% to $0.44 per share in Q3 2021 compared to $0.49 per share in Q3 2020.

Beginning in the third quarter of 2021, we updated the calculation of our non-GAAP diluted adjusted EPS attributable to stockholders* to add-back share-based payments expense, all acquisition-related costs, amortization of acquired intangible assets, and gain or loss on disposition of property, plant and equipment. These adjustments have been applied retrospectively to all periods presented.

"We are pleased with the strong momentum in our growth initiatives with the addition of new satellite yard locations globally, the launch of Ritchie List in North America, and cumulative IMS activations increasing 141% compared to last quarter. We are also encouraged by the results from our new go to market sales coverage model that we tested in 2021 and will look to scale these learnings in coming quarters to unlock incremental GTV." said Ann Fandozzi, CEO of Ritchie Bros.

Fandozzi concluded "Year-on-year comparison masks the underlying strength of our business as the quarterly cadence of 2020 was abnormally impacted by COVID-related disruptions, most notably in the third quarter of 2020. We continue to leverage our Company's DNA to best service our customers in the face of an extremely tight equipment market in 2021, and note that we have grown GTV at 17% compared to the pre-pandemic baseline of Q3 2019. "

For the third quarter of 2021 as compared to the third quarter of 2020:

Consolidated results:

* Total revenue in Q3 2021 decreased 1% to $329.7 million * Service revenue in Q3 2021 decreased 4% to $214.2 million * Inventory sales revenue in Q3 2021 increased 6% to $115.5 million

* Total selling, general and administrative expenses ("SG&A") in Q3 2021 decreased 1% to $108.6 million * Operating income in Q3 2021 decreased 20% to $53.6 million * Non-GAAP adjusted operating income* decreased 11% in Q3 2021 to $75.1 million * Non-GAAP adjusted Earnings Before Interest, Taxes, Depreciation and Amortization* ("EBITDA) in Q3 2021 decreased 9% to $90.6 million * Net income in Q3 2021 decreased 29% to $32.4 million * Cash provided by operating activities was $304.1 million for the first nine months of 2021 * Cash on hand at the end of Q3 2021 was $468.4 million, of which $362.6 million was unrestricted

Auctions & Marketplaces segment results:

* GTV1 in Q3 2021 decreased 4% to $1.3 billion and decreased 5% when excluding the impact of foreign exchange * A&M total revenue in Q3 2021 decreased 1% to $293.8 million * Service revenue in Q3 2021 decreased 6% to $178.3 million * Inventory sales revenue in Q3 2021 increased 6% to $115.5 million

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^1 Gross Transaction Value ("GTV") represents total proceeds from all itemssold at the Company's auctions and online marketplaces. GTV is not a measure offinancial performance, liquidity, or revenue, and is not presented in theCompany's consolidated financial statements.

The Company presents both generally accepted accounting principles ("GAAP") andnon-GAAP measures to provide investors with additional information. Providingthese non-GAAP measures along with GAAP measures allows for increasedcomparability of our ongoing performance from period to period. Non-GAAPfinancial measures referred to in this news release are labeled as "non-GAAPmeasure" or designated as such with an asterisk (*). Please see pages 12-14 forexplanations of why the Company uses these non-GAAP measures and thereconciliation to the most comparable GAAP financial measures.

Other Services segment results:

* Other Services total revenue in Q3 2021 increased 6% to $35.8 million * RBFS revenue in Q3 2021 increased 55% to $11.3 million * Rouse revenue of $6.5 million was recognized in Q3 2021, which was its third full quarter since its acquisition on December 8, 2020

In addition, total number of organizations activated on our Business Inventory Management System ("IMS"), a gateway into our marketplace, increased by 141% as compared to Q2 2021.

Other Company development:

* On September 8, 2021, the Company appointed its Chief Operating Officer, James Kessler, to the additional role of President of the Company. * On October 6, 2021, Sharon Driscoll, the Company's Chief Financial Officer, announced that she intends to retire within two years. As part of an effective succession process, Ms. Driscoll will continue to serve as CFO until her successor has been appointed and will then assume a role as an Executive Vice President serving as an advisor to the Company.

Financial Overview(Unaudited)



(in U.S. $000's, except EPS and percentages) Three months ended September 30, Nine months ended September 30,

% Change % Change

2021 2020 2021 over2021 2020 2021 over 2020 2020

Service revenue:

Commissions $110,275 $112,762 (2)% $343,584 $331,711 4%

Fees 103,918 109,917 (5)% 329,387 308,230 7%

Total service revenue 214,193 222,679 (4)% 672,971 639,941 5%

Inventory sales revenue 115,489 108,863 6% 384,627 353,906 9%

Total revenue 329,682 331,542 (1)% 1,057,598 993,847 6%

Costs of services 33,038 39,223 (16)% 108,107 118,026 (8)%

Cost of inventory sold 102,993 96,253 7% 344,763 320,972 7%

Selling, general and administrative expenses 108,578 110,186 (1)% 336,475 309,203 9%

Operating expenses 276,063 264,158 5% 869,960 803,581 8%

Operating income 53,619 67,384 (20)% 187,638 190,266 (1)%

Operating income as a % of total revenue 16.3% 20.3% (400) bps 17.7% 19.1% (140) bps

Non-GAAP adjusted operating income* 75,055 84,588 (11)% 239,563 225,454 6%

Net income attributable to stockholders 32,336 45,387 (29)% 121,273 121,239 0%

Non-GAAP adjusted net income attributable to 49,276 54,592 (10)% 159,638 148,266 8% stockholders*

Diluted EPS attributable to stockholders $0.29 $0.41 (29)% $1.09 $1.10 (1)%

Non-GAAP diluted adjusted EPS attributable to $0.44 $0.49 (10)% $1.43 $1.35 6% stockholders*

Effective tax rate 28.8% 25.3% 350 bps 26.0% 28.6% (260) bps

Total GTV 1,270,258 1,321,379(4)% 4,072,439 3,962,3863%

Service GTV 1,154,769 1,212,516(5)% 3,687,812 3,608,4802%

Service revenue as a % of total GTV - Rate 16.9% 16.9% - bps 16.5% 16.2% 30 bps

Inventory GTV 115,489 108,863 6% 384,627 353,906 9%

Service revenue as a % of total revenue 65.0% 67.2% (220) bps 63.6% 64.4% (80) bps

Inventory sales revenue as a % of total revenue 35.0% 32.8% 220 bps 36.4% 35.6% 80 bps

Cost of inventory sold as a % of operating expenses 37.3% 36.4% 90 bps 39.6% 39.9% (30) bps

Service GTV as a % of total GTV - Mix 90.9% 91.8% (90) bps 90.6% 91.1% (50) bps

Inventory sales revenue as a % of total GTV - Mix 9.1% 8.2% 90 bps 9.4% 8.9% 50 bps

Segment Overview

(in U.S Three months ended September 30, 2021 Nine months ended September 30, 2021$000's)

A&M Other Consolidated A&M Other Consolidated

Service $ 178,344 35,849 $ 214,193 $ 560,573 112,398 $ 672,971revenue

Inventorysales 115,489 - 115,489 384,627 - 384,627revenue

Total 293,833 35,849 329,682 945,200 112,398 1,057,598revenue

Ancillaryandlogistical - 11,433 11,433 - 38,521 38,521serviceexpenses

Othercosts of 19,751 1,854 21,605 63,326 6,260 69,586services

Cost ofinventory 102,993 - 102,993 344,763 - 344,763sold

SG&A 96,194 12,384 108,578 301,956 34,519 336,475expenses

Segment $ 74,895 10,178 $ 85,073 $ 235,155 33,098 $ 268,253profit

Total GTV 1,270,258 N/A N/A 4,072,439 N/A N/A

A&Mservicerevenue as 14.0% N/A N/A 13.8% N/A N/A a % oftotal GTV-Rate



(in U.S Three months ended September 30, 2020Nine months ended $000's) September 30, 2020

A&M Other ConsolidatedA&M Other Consolidated

Service $188,949 $ 33,730 $ 222,679 $543,340 $96,601$ 639,941 revenue

Inventory sales 108,863 - 108,863 353,906 - 353,906 revenue

Total 297,812 33,730 331,542 897,246 96,601 993,847 revenue

Ancillary and logistical - 16,550 16,550 - 45,368 45,368 service expenses

Other costs of 21,733 940 22,673 69,018 3,640 72,658 services

Cost of inventory 96,253 - 96,253 320,972 - 320,972 sold

SG&A 103,933 6,253 110,186 290,077 19,126 309,203 expenses

Segment $75,893 $ 9,987 $ 85,880 217,179 28,467 245,646 profit

Total GTV 1,321,379 N/A N/A 3,962,386 N/A N/A

A&M service revenue as 14.3% N/A N/A 13.7% N/A N/A a % of total GTV- Rate

Q3 2021 Consolidated Performance Overview

In response to the COVID-19 pandemic, in March 2020, we transitioned all of our traditional live on site auctions to online bidding utilizing our existing online bidding technology and simultaneously ceased all public attendance at our live auction theaters. Our core online auction channels (IronPlanet.com, GovPlanet.com, Marketplace-E) continued to operate as usual.

Total GTV decreased 4% to $1.3 billion and decreased 5% when excluding the impact of foreign exchange in Q3 2021. GTV volume decreased primarily driven by an unfavourable supply environment across all regions, as well as auction calendar shifts of $34 million from the impact of the COVID-19 pandemic that were shifted from first half of 2020 into Q3 2020 that did not repeat in Q3 2021. These decreases were partially offset by the continued strong price performance experienced across all regions due to high demand for used equipment, predominantly in the construction and transportation sectors. Total GTV decreased in International driven by the auction shifts of (1) Moerdijk, Netherlands, (2) Polotitlan, Mexico and (3) Ocana, Spain auctions in Q3 2020 and lower volumes selling through our online channels driven by unfavourable supply environment, partially offset by positive year-over-year performances in Australia including a new agricultural event. Total GTV also decreased in Canada due to a tight supply market which led to an unfavourable year-over-year performance mainly in our Western region, partially offset by an increased volume from providing escrow services for private brokered transactions in RBFS. Total GTV volumes remained flat in the US despite a large dispersal of $99 million of pipeline construction equipment in a single-owner auction event in New Mexico and Texas, and higher volumes selling through our GovPlanet business from the new non-rolling and rolling stock contracts effective June 1, 2021. Offsetting these increases, the US saw lower supply from our US strategic accounts in the rental and finance sectors which had grown significantly in the prior year.

Total revenue decreased 1% to $329.7 million in Q3 2021, with total service revenue decreasing by 4%, offset by an increase in inventory sales revenue by 6%.

Service revenue decreased 4%, with fees revenue decreasing 5% and commissions revenue decreasing 2%. Fee revenue decreased 5% primarily due to lower fees on mix of lower proportion of small value lots across all regions, and lower fees from our Ancillary services as some sellers have elected to forgo paint or repair services driven by a strong market demand for used equipment and lower unit of volumes in the construction and transportation end markets. These decreases were partially offset by higher fee revenue from the acquisition of Rouse, and the continued growth in RBFS fee revenue. Fees revenue also increased due to the implementation of the revised global buyer fee structure on May 1, 2021 and the re-instatement of fees at the Canadian on-the-farm auctions which were waived in Q3 2020 as part of our COVID-19 pandemic response. Commissions revenue decreased 2%, partly due to the decrease in Service GTV of 5%, offset by higher rates performance in the US attributable to a lower volume of US strategic accounts, and stronger straight commission rate performance in our GovPlanet business driven by favourable mix of contracts.

Inventory sales revenueincreased 6% primarily in International, offset by the US and Canada. The improved year-over-year performance in our International region was driven by an increased activity in Australia combined with a new agricultural event. In addition, we saw increased volumes sold through our GovPlanet business as a result of the new non-rolling and rolling stock contracts effective June 1, 2021 and higher volumes due to the government shutdowns in the prior year in response to the COVID-19 pandemic. These increases were partially offset by lower inventory sales revenue in the US from an unfavourable supply environment and the non-repeat of several inventory contracts. Similarly, we saw lower volumes in Canada driven by a tight supply market.

Costs of services decreased 16% to $33.0 million. This decrease was primarily due to lower ancillary and logistical service expenses, in line with the decrease in ancillary fees as some sellers have elected to forgo paint or repair services driven by a strong market demand for used equipment and lower unit of volumes in the construction and transportation end markets. In addition, lower activity in line with lower GTV contributed to cost reductions in inspection and advertising expenses, partially offset by higher costs incurred to support the increased activity in our GovPlanet business and the inclusion of the third full quarter of costs of services from Rouse since acquisition.

Cost of inventory increased 7% to $103.0 million, primarily in line with higher inventory sales revenue. Cost of inventory sold increased at a higher rate than the increase of inventory sales revenue, indicating a slight increase in the revenue rates primarily in our US region.

Selling, general and administrative ("SG&A") expensesdecreased 1% to $108.6 million primarily due to the non-repeat of a prior year one-time $4.3 million severance costs related to the realignment of leadership to support the new global operations organization, and lower share based payments. These decreases were partially offset by higher wages, salaries and benefit expenses driven by higher headcount to support our growth initiatives and an unfavourable impact of foreign exchange fluctuation. We also saw higher building, facilities and technology costs incurred in our GovPlanet business as a result of the new non-rolling and rolling stock contracts effective June 1, 2021 and higher professional fees related to SOX compliance, consulting and legal.

Foreign exchange had a favourable impact on total revenue and an unfavourable impact on expenses. These impacts were primarily due to the fluctuations in the Canadian dollar, Australian dollar, and the Euro exchange rates relative to the U.S. dollar.

Net income attributable to stockholdersdecreased 29% to $32.3 million primarily related to lower operating income. Non-GAAP adjusted net income attributed to stockholders* decreased 10% to $49.3 million in Q3 2021 compared to $54.6 million in Q3 2020.

Primarily for the same reasons noted above, diluted EPS attributable to stockholders decreased 29% to $0.29 per share for Q3 2021 from $0.41 per share in Q3 2020. Non-GAAP diluted adjusted EPS attributable to stockholders* decreased 10% to $0.44 per share in Q3 2021.

Dividend Information

Quarterly dividendOn November 3, 2021, the Company declared a quarterly cash dividend of $0.25 per common share payable on December 15, 2021 to shareholders of record on November 24, 2021.

Q3 2021 Earnings Conference CallRitchie Bros. is hosting a conference call to discuss its financial results for the quarter ended September 30, 2021 at 8am Pacific time / 11am Eastern time / 3pm GMT on November 5, 2021. The replay of the webcast will be available through December 5, 2021.

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 world leader in asset management technologies and disposition of commercial assets. We offer 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(r) equipment condition certification; Marketplace-E, a controlled marketplace offering multiple price and timing options; Mascus, a leading European online equipment listing service; Rouse, a leader in market intelligence on sales and rental equipment data; and Ritchie Bros. Private Treaty, offering privately negotiated sales. Our suite of multichannel sales solutions also includes RB Asset Solutions, a complete end-to-end asset management and disposition system. We also offer 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 StatementsThis 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, and growth and value 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 acquired companies, and to receive the anticipated benefits of such acquisitions; and the risks and uncertainties set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and the Company's Form 10-Q for the quarter ended September 30, 2021, 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.

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 September 30, Nine months ended September 30,

% Change % Change

2021 2020 2021 over 2020 2021 2020 2020 over 2019

GTV $1,270,258 $1,321,379 (4)% $4,072,439 $3,962,386 3%

Revenues:

Service revenues $214,193 $222,679 (4)% $672,971 $639,941 5%

Inventory sales revenue 115,489 108,863 6% 384,627 353,906 9%

Total revenues 329,682 331,542 (1)% 1,057,598 993,847 6%

Operating expenses:

Costs of services 33,038 39,223 (16)% 108,107 118,026 (8)%

Cost of inventory sold 102,993 96,253 7% 344,763 320,972 7%

Selling, general and administration expenses 108,578 110,186 (1)% 336,475 309,203 9%

Acquisition-related costs 10,255 - 100% 16,226 - 100%

Depreciation and amortization expenses 21,907 18,436 19% 64,912 55,586 17%

Gain on disposition of property, plant and equipment (1,068) (276) 287% (1,311) (1,536) (15)%

Foreign exchange (gain) loss 360 336 7% 788 1,330 (41)%

Total operating expenses 276,063 264,158 5% 869,960 803,581 8%

Operating income 53,619 67,384 (20)% 187,638 190,266 (1)%

Interest expense (8,807) (8,737) 1% (26,620) (26,801) (1)%

Other income, net 602 2,280 (74)% 2,800 6,714 (58)%

Income before income taxes 45,414 60,927 (25)% 163,818 170,179 (4)%

Income tax expense 13,057 15,437 (15)% 42,541 48,741 (13)%

Net income $32,357 $45,490 (29)% $121,277 $121,438 (0)%

Net income attributable to:

Stockholders $32,336 $45,387 (29)% $121,273 $121,239 0%

Non-controlling interests 21 103 (80)% 4 199 (98)%

$32,357 $45,490 (29)% $121,277 $121,438 (0)%

Earnings per share attributable to stockholders:

Basic $0.29 $0.42 (31)% $1.10 $1.11 (1)%

Diluted $0.29 $0.41 (29)% $1.09 $1.10 (1)%

Weighted average number of share outstanding:

Basic 110,410,172 109,018,4691% 110,233,851 108,887,0261%

Diluted 111,391,396 110,369,7181% 111,333,247 110,060,7121%

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



September 30, 2021December 31, 2020



Assets

Cash and cash equivalents $362,612 $278,766

Restricted cash 105,742 28,129

Trade and other receivables 253,715 135,001

Less: allowance for credit losses (4,138) (5,467)

Inventory 64,201 86,278

Other current assets 31,796 27,274

Income taxes receivable 11,484 6,797

Total current assets 825,412 556,778



Property, plant and equipment 466,162 492,127

Other non-current assets 149,819 147,608

Intangible assets 285,148 300,948

Goodwill 837,708 840,610

Deferred tax assets 12,100 13,458

Total assets $2,576,349 $2,351,529



Liabilities and Equity

Auction proceeds payable $428,555 $214,254

Trade and other payables 228,939 243,786

Income taxes payable 5,033 17,032

Short-term debt 18,481 29,145

Current portion of long-term debt 1,172 10,360

Total current liabilities 682,180 514,577



Long-term debt 632,520 626,288

Other non-current liabilities 153,560 153,000

Deferred tax liabilities 45,732 45,265

Total liabilities 1,513,992 1,339,130



Commitments and Contingencies

Stockholders' equity:

Share capital:

Common stock; no par value, unlimited shares

authorized, issued and outstanding shares:

110,467,596 (December 31, 2020: 219,609 200,451 109,876,428)

Additional paid-in capital 57,595 49,171

Retained earnings 836,759 791,918

Accumulated other comprehensive loss (52,022) (34,295)

Stockholders' equity 1,061,941 1,007,245

Non-controlling interest 416 5,154

Total stockholders' equity 1,062,357 1,012,399

Total liabilities and equity $2,576,349 $2,351,529

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



Nine months ended September 30, 2021 2020

Cash provided by (used in):

Operating activities:

Net income $121,277 $121,438

Adjustments for items not affecting cash:

Depreciation and amortization expenses 64,912 55,586

Share-based payments expense 23,306 13,556

Deferred income tax expense 2,228 8,250

Unrealized foreign exchange (gain) loss (98) 2,049

Gain on disposition of property, plant and equipment (1,311) (1,536)

Amortization of debt issuance costs 2,155 2,375

Amortization of right-of-use assets 9,458 9,194

Gain on contingent consideration from equity - (1,700) investment

Other, net 2,253 2,427

Net changes in operating assets and liabilities 79,938 53,912

Net cash provided by operating activities 304,118 265,551

Investing activities:

Acquisition of Rouse, net of cash acquired 728 -

Property, plant and equipment additions (6,984) (9,865)

Proceeds on disposition of property, plant and 1,667 16,277 equipment

Intangible asset additions (25,601) (19,886)

Issuance of loans receivable (2,622) (2,985)

Repayment of loans receivable 436 355

Distribution from equity investment - 4,212

Proceeds on contingent consideration from equity - 1,700 investment

Net cash used in investing activities (32,376) (10,192)

Financing activities:

Share repurchase - (53,170)

Dividends paid to stockholders (76,144) (67,639)

Acquisition of remaining interest in NCI (5,556) -

Dividends paid to non-controlling interests (104) -

Proceeds from exercise of options and share option 13,915 40,194 plans

Payment of withholding taxes on issuance of shares (9,160) (3,870)

Net increase (decrease) in short-term debt (9,271) 13,442

Repayment of long-term debt (5,328) (11,134)

Debt issue costs (3,163) (2,038)

Repayment of finance lease obligations (8,445) (6,927)

Net cash used in financing activities (103,256) (91,142)

Effect of changes in foreign currency rates on cash, (7,027) 5,826 cash equivalents, and restricted cash

Increase 161,459 170,043

Beginning of period 306,895 420,256

Cash, cash equivalents, and restricted cash, end of $468,354 $590,299 period

Selected Data(Unaudited)

Total auction metrics

Three months ended Nine months ended September 30, September 30,

% Change % Change

2021 2020 2021 over 2020 2021 2020 2021 over 2020

Number ofauction sales 128 120 7% 461 433 6%days

Bids per lot 26 25 4% 27 24 13%sold *

Total lots 107,825 142,472 (24)% 372,290 392,234 (5)%sold *

* Management reviews industrial equipment auction metrics excluding GovPlanet;as a result, GovPlanet business metrics are excluded from these metrics

Non-GAAP Measures

This news release references 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 GAAP. Non-GAAP financial measures referred to in this report are labeled as "non-GAAP measure" or designated as such with an asterisk (*).

Non-GAAP Adjusted Operating Income* ReconciliationWe believe that non-GAAP adjusted operating income* provides useful information about the growth or decline of our operating income for the relevant financial period and eliminates the financial impact of adjusting items we do not consider to be part of our normal operating results.

Non-GAAP adjusting operating income* eliminates the financial impact of adjusting items which are significant recurring and non-recurring items that we do not consider to be part of our normal operating results, such as share-based payments expense, acquisition-related costs, amortization of acquired intangible assets, management reorganization costs, and certain other items, which the Company refers to as 'adjusting items'.

Beginning in the third quarter of 2021, we updated the calculation of non-GAAP adjusted operating income* to add-back share-based payments expense, all acquisition-related costs (including any share based continuing employment costs recognized in acquisition-related costs), amortization of acquired intangible assets, and gain or loss on disposition of property, plant and equipment. These adjustments have been applied retrospectively to all periods presented.

The following table reconciles non-GAAP adjusted operating income* to operating income, which is the most directly comparable GAAP measure in our consolidated income statements.



Three months ended September 30, Nine months ended September 30,

% Change % Change

(in U.S. $000's, except percentages) 2021 2020 2021 over 20202021 2020 2021 over 2020

Operating income $53,619 $67,384(20)% $187,638$190,266 (1)%

Share-based payments expense 5,627 8,568 (34)% 16,945 17,329 (2)%

Acquisition-related costs 10,255 - 100% 16,226 - 100%

Amortization of acquired intangible assets 6,622 4,993 33% 20,065 15,476 30%

Gain on disposition of property, plant and equipment (1,068) (276) 287% (1,311) (1,536) (15)%

Severance - 3,919 (100)% - 3,919 (100)%

Non-GAAP adjusted operating income* $75,055 $84,588(11)% $239,563$225,454 6%

(1) Please refer to pages 12-14 for a summary of adjusting items during the three and nine months ended September 30, 2021 and September 30, 2020.

(2) Non-GAAP adjusted operating income* represents operating income excluding the effects of adjusting items.

The following table reconciles non-GAAP adjusted operating income* to operating income on a quarterly basis, which is the most directly comparable GAAP measure in our consolidated income statements.



(in U.S. $000's, except percentages) Q3 2021Q2 2021Q1 2021Q4 2020Q3 2020Q2 2020Q1 2020Q4 2019Q3 2019

Operating income 53,619 89,517 44,502 72,894 67,384 88,800 34,082 71,484 40,160

Share-based payments expense 5,627 7,540 3,778 4,550 8,568 6,355 2,406 277 5,660

Acquisition-related costs 10,255 3,049 2,922 6,014 - - - 25 45

Amortization of acquired intangible assets 6,622 6,802 6,641 5,622 4,993 4,935 5,548 5,548 5,548

Gain on disposition of property, plant and equipment(1,068)(175) (68) (23) (276) (1,213)(47) (36) (821)

Severance - - - - 3,919 - - - -

Non-GAAP adjusted operating income* 75,055 106,73357,775 89,057 84,588 98,877 41,989 77,298 50,592

(1) Please refer to pages 12-14 for a summary of adjusting items for each quarter presented above.

(2) Non-GAAP adjusted operating income* represents operating income excluding the effects of adjusting items.

Non-GAAP Adjusted Net Income Attributable to Stockholders* and Non-GAAP Diluted Adjusted EPS Attributable to Stockholders* ReconciliationThe Company believes that non-GAAP 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. Non-GAAP diluted adjusted EPS attributable to stockholders* eliminates the financial impact of adjusting items which are after-tax effects of significant recurring and non-recurring items that the Company does not consider to be part of the normal operating results, such as share-based payments expense, acquisition-related costs, amortization of acquired intangible assets, management reorganization costs, and certain other items, which the Company refers to as 'adjusting items'.

Beginning in the third quarter of 2021, the Company updated the calculation of non-GAAP diluted adjusted EPS attributable to stockholders* to add-back share-based payments expense and all acquisition-related costs (including any share based continuing employment costs recognized in acquisition-related costs), amortization of acquired intangible assets, and gain or loss on disposition of property, plant and equipment. These adjustments have been applied retrospectively to all periods presented.

The following table reconciles non-GAAP adjusted net income attributable to stockholders* and non-GAAP 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 September 30, Nine months ended September 30,

% Change % Change

2021 2020 2021 over 20202021 2020 2021 over 2020

Net income attributable to stockholders $32,336 $45,387 (29)% $121,273 $121,239 0%

Share-based payments expense 5,627 8,568 (34)% 16,945 17,329 (2)%

Acquisition-related costs 10,255 - 100% 16,226 - 100%

Amortization of acquired intangible assets 6,622 4,993 33% 20,065 15,476 30%

Gain on disposition of property, plant and equipment (1,068) (276) 287% (1,311) (1,536) (15)%

Severance - 3,919 (100)% - 3,919 (100)%

Related tax effects of the above (4,496) (7,999) (44)% (13,560) (14,389) (6)%

Change in uncertain tax provision - tax effect - - -% - 6,228 (100)%

Non-GAAP adjusted net income attributable to stockholders* $49,276 $54,592 (10)% $159,638 $148,266 8%

Weighted average number of dilutive shares outstanding 111,391,396 110,369,7181% 111,333,247 110,060,7121%



Diluted earnings per share attributable to stockholders $0.29 $0.41 (29)% $1.09 $1.10 (1)%

Non-GAAP diluted adjusted EPS attributable to Stockholders* $0.44 $0.49 (10)% $1.43 $1.35 6%

(1) Please refer to pages 12-14 for a summary of adjusting items for the three and nine months ended September 30, 2021 and September 30, 2020.

Non-GAAP adjusted net income attributable to stockholders* represents net(2) income attributable to stockholders, excluding the effects of adjusting items.

Non-GAAP diluted adjusted EPS attributable to stockholders* is calculated(3) by dividing non-GAAP adjusted net income attributable to stockholders*, net of the effect of dilutive securities, by the weighted average number of dilutive shares outstanding.

The following table reconciles non-GAAP adjusted net income attributable to stockholders* and non-GAAP diluted adjusted EPS attributable to stockholders* to net income attributable to stockholders and diluted EPS attributable to stockholders on a quarterly basis, which is the most directly comparable GAAP measures in the consolidated income statements.

(in U.S. $000's, except share and per share data,

and percentages) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019

Net income attributable to stockholders 32,336 60,749 28,188 48,856 45,387 53,043 22,809 51,573 25,266

Share-based payments expense 5,627 7,540 3,778 4,550 8,568 6,355 2,406 277 5,660

Acquisition-related costs 10,255 3,049 2,922 6,014 - - - 25 45

Amortization of acquired intangible assets 6,622 6,802 6,641 5,622 4,993 4,935 5,548 5,548 5,548

Gain on disposition of property, plant and equipment (1,068) (175) (68) (23) (276) (1,213) (47) (36) (821)

Severance - - - - 3,919 - - - -

Related tax effects of the above (4,496) (3,598) (5,466) (6,154) (7,999) (4,068) (2,322) (2,846) (3,299)

Change in uncertain tax provision - tax effect - - - 1,527 - 6,228 - - -

Non-GAAP adjusted net income attributable to stockholders* 49,276 74,367 35,995 60,392 54,592 65,280 28,394 54,541 32,399

Weighted average number of dilutive shares outstanding 111,391,396111,334,184111,267,392110,310,984110,369,718109,323,343110,482,837109,759,123109,381,173



Diluted earnings per share attributable to stockholders 0.29 0.55 0.25 0.44 0.41 0.49 0.21 0.47 0.23

Non-GAAP diluted adjusted EPS attributable to Stockholders*0.44 0.67 0.32 0.55 0.49 0.60 0.26 0.50 0.30

(1) Please refer to pages 12-14 for a summary of adjusting items for each quarter presented above.

Non-GAAP adjusted net income attributable to stockholders* represents net(2) income attributable to stockholders, excluding the effects of adjusting items.

Non-GAAP diluted adjusted EPS attributable to stockholders* is calculated(3) by dividing non-GAAP adjusted net income attributable to stockholders*, net of the effect of dilutive securities, by the weighted average number of dilutive shares outstanding.

Non-GAAP Adjusted EBITDA*The Company believes non-GAAP adjusted EBITDA* provides useful information about the growth or decline of our net income when compared between different financial periods. The Company uses non-GAAP adjusted EBITDA as a key performance measure because we believe it facilitates operating performance comparisons from period to period.

Beginning in the third quarter of 2021, the Company updated the calculation of non-GAAP adjusted EBITDA* to add-back share-based payments expense and all acquisition-related costs (including any share based continuing employment costs recognized in acquisition-related costs), and gain or loss on disposition of property, plant and equipment. These adjustments have been applied retrospectively to all periods presented.

The following table reconciles non-GAAP adjusted EBITDA* to net income, which is the most directly comparable GAAP measure in, or calculated from, our consolidated income statements:



(in U.S. $000's, except percentages)Three months ended September 30, Nine months ended September 30,

% Change % Change

2021 2020 2021 over 20202021 2020 2021 o ver 2020

Net income $32,357 $45,490(29)% $121,277$121,438(0)%

Add: depreciation and amortization 21,907 18,43619% 64,912 55,586 17% expenses

Add: interest expense 8,807 8,737 1% 26,620 26,801 (1)%

Less: interest income (375) (510) (26)% (1,009) (1,775)(43)%

Add: income tax expense 13,057 15,437(15)% 42,541 48,741 (13)%

EBITDA 75,753 87,590(14)% 254,341 250,7911%

Share-based payments expense 5,627 8,568 (34)% 16,945 17,329 (2)%

Acquisition-related costs 10,255 - 100% 16,226 - 100%

Gain on disposition of property, (1,068) (276) 287% (1,311) (1,536)(15)% plant and equipment

Severance - 3,919 (100)% - 3,919 (100)%

Non-GAAP adjusted EBITDA* $90,567 $99,801(9)% $286,201$270,5036%

(1) Please refer to pages 12-14 for a summary of adjusting items during the three and nine months ended September 30, 2021 and September 30, 2020.

Non-GAAP adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, income tax expense, and(2) subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, and excluding the effects of any non-recurring or unusual adjusting items.

The following table reconciles non-GAAP adjusted EBITDA* to net income on a quarterly basis, which is the most directly comparable GAAP measures in the consolidated income statements.



(in U.S. $000's, except share and per share data,

and percentages) Q3 2021Q2 2021Q1 2021Q4 2020Q3 2020Q2 2020Q1 2020Q4 2019Q3 2019

Net income 32,357 60,781 28,139 48,920 45,490 53,119 22,829 51,565 25,272

Add: depreciation and amortization 21,907 21,935 21,071 19,335 18,436 17,857 19,293 18,582 17,692 expenses

Add: interest 8,807 8,867 8,946 8,767 8,737 8,882 9,182 10,254 10,090 expense

Less: interest (375) (332) (303) (563) (510) (393) (872) (1,367)(517) income

Add: income tax 13,057 21,065 8,419 16,789 15,437 27,656 5,648 12,823 6,760 expense

EBITDA 75,753 112,31666,272 93,248 87,590 107,12156,080 91,857 59,297

Share-based 5,627 7,540 3,778 4,553 8,568 6,355 2,406 277 5,660 payments expense

Acquisition-related10,255 3,049 2,922 6,014 - - - 25 45 costs

Gain on disposition of property, plant (1,068)(175) (68) (23) (276) (1,213)(47) (36) (821) and equipment

Severance - - - - 3,919 - - - -

Non-GAAP adjusted 90,567 122,73072,904 103,79299,801 112,26358,439 92,123 64,181 EBITDA*

(1) Please refer to pages 12-14 for a summary of adjusting items for each quarter presented above.

Non-GAAP adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, income tax expense, and(2) subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, and excluding the effects of any non-recurring or unusual adjusting items.

The following table reconciles non-GAAP adjusted EBITDA* to net income on an annual basis, which is the most directly comparable GAAP measures in the consolidated income statements.



Year ended December 31,

% Change

2020 over2019 over

(in U.S. $000's, except 2020 2019 2018 2019 2018 percentages)

Net income $170,358149,140121,50614% 23%

Add: depreciation and 74,921 70,501 66,614 6% 6% amortization expenses

Add: interest expense 35,568 41,277 44,527 (14)% (7)%

Less: interest income (2,338)(3,802)(2,888)(39)% 32%

Add: income tax expense 65,530 41,623 31,006 57% 34%

EBITDA 344,039298,739260,76515% 15%

Share-based payments expense 21,882 16,405 23,089 33% (29)%

Acquisition-related costs 6,014 777 5,093 674% (85)%

Gain on disposition of (1,559)(1,107)(2,731)41% (59)% property, plant and equipment

Severance 3,919 - - 100% -%

IronPlanet reorganization 1,501 -% (100)% costs

Gain on sale of equity - - (4,935)-% 4(100)% accounted for investment

Non-GAAP adjusted EBITDA* $374,295314,814282,78219% 11%

(1) Please refer to pages 12-14 for a summary of adjusting items for each year presented above.

Non-GAAP adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, income tax expense, and(2) subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, and excluding the effects of any non-recurring or unusual adjusting items.

Adjusting Items Non-GAAP Measures

Beginning of third quarter of 2021, the Company has begun adjusting for the following items that we do not consider to be part of our normal operating results. These have been applied retrospectively to all periods presented. The following describes the nature of these adjusting items recognized in each period.

* Share-based payments expense - includes stock option compensation expense, and compensation expense for equity classified share units, liability classified share units, and employer contributions related to our employee share purchase plan. * Amortization of acquired intangible assets - includes amortization of all intangible assets acquired primarily from the acquisitions of IronPlanet, Rouse and Mascus. * Gain or loss on disposition of property, plant and equipment - includes any gain or loss recognized for the difference between the sales proceeds and the carrying amount of the disposed property, plant and equipment.

The following are additional adjusting items by quarter which the Company does not consider to be part of its normal operating results.

Additional adjusting items by quarter were:

Recognized in the third quarter of 2021

* $10.3 million ($8.3 million after tax, or $0.07 per diluted share) of acquisition-related costs related to the acquisitions of Rouse, Euro Auctions and SmartEquip.

Recognized in the second quarter of 2021

* There were no adjusting items recognized in the second quarter of 2021.

Recognized in the first quarter of 2021

* There were no adjusting items recognized in the first quarter of 2021.

Recognized in the fourth quarter of 2020

* $5.2 million ($3.9 million after tax, or $0.04 per diluted share) of acquisition-related costs related to the acquisition of Rouse. * $1.5 million ($0.01 per diluted share) of current income tax expense recognized related to an unfavourable adjustment to reflect final regulations published in Q2 2020 regarding hybrid financing arrangements.

Recognized in the third quarter of 2020

* $4.3 million ($3.2 million after tax, or $0.03 per diluted share) of severance costs related to the realignment of leadership to support the new global operations organization, in line with strategic growth priorities led by the new CEO, of which $364,000 has been retrospectively recognized within share-based payments expense as an adjusting item.

Recognized in the second quarter of 2020

* $6.2 million ($0.06 per diluted share) tax expense related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements, of which $0.8 million relates to current income tax expense.

Recognized in the first quarter of 2020

* There were no adjusting 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, which has been included in share-based payments expense adjusting item retrospectively.

Recognized in the third quarter of 2019

* There were no adjusting 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.

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.

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SOURCE Ritchie Bros. Auctioneers