Ritchie Bros. The global loader in used equipment sales · 2013-12-30 · 3 Ritchie Bros. Overview...
Transcript of Ritchie Bros. The global loader in used equipment sales · 2013-12-30 · 3 Ritchie Bros. Overview...
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The global leader in used equipment salesInvestor presentation
December 2013 – Q3/13 information
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Forward looking statements
This presentation contains forward-looking statements.
Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions. Actual results may differ materially from those expressed herein. Additional information concerning factors that could affect the Company’s actual results is included in the Company’s filings with securities regulators. The Company undertakes no obligation to update publicly any forward-looking statements except as required by securities legislation.
All figures are in US dollars, unless otherwise noted.
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Ritchie Bros. Overview
The trusted source for buying and selling industrial equipment• Global leader for industrial auctions; unreserved process
– No minimum bid/reserved price. No buy-backs.– Ensures the sale of goods on the day of the auction at global market price
• Cater to the needs of heavy equipment owners– RBA auctions are focused on the sale of used heavy machinery– Customers are from the construction, trucking, agricultural and resource sectors
• Minimal exposure to mining sector – mining equipment represented less than 1% of total gross auction proceeds in 2012
• 356 auctions; $3.8 billion in Gross Auction Proceeds during 2013– Industry leader by wide margin, with only ~2% of global used equipment market share– Enormous growth opportunity; highly fragmented market
• Launched EquipmentOne online marketplace in 2013
Strong financial performance• $438 million of revenue during fiscal 2012
– CAGR of 12.6% over last 10 years
• $79.5 million of net earnings during fiscal 2012
Publicly listed on the NYSE and TSX (as RBA)• Market cap of approx. US$2.3 billion
RBA Auction - Circa 1958
RBA Auction - Now
Ritchie Bros. has a strong heritage –selling used equipment since 1958
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Global reach110 locations in 25 countries44 auction sites in 14 countries worldwide• Approx. 55% of auction purchases are made by bidders from outside the
region of the auction• Allows RBA to effectively transfer equipment between regions experiencing
different economic cycles (transcends local market conditions)• Consignors benefit from global market pricing for their equipment, generated
by international demand for their machinery• Buyers benefit from a global supply, with an ability to purchase and ship
equipment from weak economic regions to areas with stronger growth
48%
28%
14%
10%United States
Canada
Europe
Other
REVENUE BY GEOGRAPHY(2012 revenue breakdown)
Ritchie Bros.’ online bidding allows customers from around the world to bid on equipment at any of our auctions.• Real-time information from live auctions
available online to registered bidders
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AUCTION SITES(Countries with permanent or regional auction sites)
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Global market opportunity
Company market research suggests an annual global used equipment market of $200 billion
• Based on annual transaction values; includes construction, agricultural, forestry, and mining machinery
• RBA is the largest industrial auctioneer in the world – by a wide margin, with only 2% of total used equipment market share
Approximately half of used equipment sellers would consider using an unreserved auction to sell equipment
• Means $100 billion addressable market for RBA’s core auction solution
• Highly fragmented market
Half of used equipment sellers indicated a need for control of the price and process when selling used equipment
• Not suitable prospects for traditional RBA auction services• Prime candidates for Ritchie Bros. EquipmentOne - our online
(non-auction) marketplace
GLOBAL USED EQUIPMENT MARKET$100 billion: used equipment market using private treaty to sell (no intermediary)
RBA market share ~2% of total $200 billion used equipment market
Approx. 50% of used equipment sellers indicate they would consider unreserved auctions ($100 billion market)
$200 billion total annual
market
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(Annual transactions)
$100 billion: used equipment market using an intermediary to sell
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Unreserved auction revenue modelFour main revenue streams support Ritchie Bros.’ unreserved auction business:
Unreserved Auction
Straight Commission
Guaranteed Proceeds (underwritten transaction)
Inventory (underwritten transaction)
Consignors contract to sell their equipment through one of Ritchie Bros. unreserved auctions. A pre-determined percentage of the selling price is provided to RBA as commission.
Consignors are guaranteed to receive a pre-determined amount for their equipment, regardless of the final selling price at the auction. A stepped commission fee is negotiated, accounting for the additional risk being assumed by RBA. (Also known as an ‘at risk’ transaction)
On rare occasions, Ritchie Bros. may choose to purchase equipment outright, obtaining title of the piece to sell at an upcoming auction.
TRANSACTION TYPE REVENUE
Straight Commission fee (% of auction proceeds)
Stepped commission fee (x% of guaranteed proceeds; x+y% for proceeds above guaranteed amount)
Gains on sale
Sellers (Consignors)
Buyers Admin Fees & Value-added Services (VAS) Admin fees and fees from value-added service activities
RBA provides many services to assist with the purchase of equipment, including financing , inspection services, painting etc.
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$3,8
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Growth of Gross Auction Proceeds (GAP)
US$3.8 billion of GAP produced during fiscal 2013
GAP:The aggregate dollar amount sold at our auctions.
7 Includes transactions of AssetNation and EquipmentOne online marketplaces in 2012 and 2013
GROSS AUCTION PROCEEDS (US$ millions)
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Four influences on GAP
The pricing environment• A strong pricing environment will enhance market values of equipment sold at auctions• Stable or increasing pricing environment provides consignors with more confidence to
sell equipment through unreserved auctions
The mix of categories of assets sold • RBA sells a wide variety of industrial and agricultural equipment and other products.
There is no consistency to the mix of assets sold, as it varies at each auction held due to regional, seasonal and cyclical factors.
• The proportion of higher-valued items sold at each auction relative to smaller goods impacts the auction proceeds generated
The mix of equipment age• Newer equipment generally has a higher market value compared to older machinery
The number of Lots consigned• Each sale generates proceeds. Increasing the number of Lots sold can bolster gross
auction proceeds
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Registrants Lots
Growing consignor and buyer base
5.8% CAGR in consignors over last 10 years
5.9% CAGR in buyers over last 10 years
8.1% CAGR in registrants over last 10 years
5.6% CAGR in Lots over last 10 years
CONSIGNOR & BUYER BASE (Metrics are for industrial auctions only)
AUCTION REGISTRANTS & LOTS(Metrics are for industrial auctions only)
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Launch of EquipmentOne
Provides access to a larger share of the equipment market• Research showed half of equipment resale market prefers private sales• Buyers and sellers of private sales were not satisfied with existing online sales
platforms• Provided a unique opportunity to launch a trusted, equipment-focused web
platform to facilitate private treaty equipment sales• Our reputation, brand, expertise and data make us uniquely positioned to succeed
Certainty of saleGlobal market value
Control of priceControl of process
BENEFITS OF UNRESERVED AUCTION
BENEFITS OF EQUIPMENTONECommercially launched on April 8, 2013• During the first half of 2013, over $29 million of sales were transacted¹• Unique visitors to the EquipmentOne website continues to grow
• Usage continues to grow each month
Expected to be immaterial to RBA results for next two years• Investments in the platform are still being made
EquipmentOne was designed to be complementary, not cannibalistic
Customers of EquipmentOne value having control over the process and price, more than the guarantee of sale. They prefer a negotiated price, over global market value.
¹ Transactions completed on EquipmentOne only (does not include transactions on other online marketplaces owned by Ritchie Bros.)
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A complementary solution, leveraging our strong brand
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• Sellers have control over price and process
• No obligation to sell for less than the asking price
• Self-serve
• eCommerce marketplace with listings
• Online only
• Competes with other online marketplaces, but specializes in catering to equipment owners and their unique needs and preferences
• Provides access to equipment listings also posted on third party websites
• Sellers have certainty of sale & receive global market value for their equipment
• Full service, no hassles
• Provides buyers with ability to inspect, test and compare the equipment (physical site)
• Central marshalling of equipment means RBA takes care, custody and control of the equipment being sold (provides peace of mind to buyers)
• Best of both worlds (onsite & online)
EquipmentOne vs. Unreserved auction
ONLINE MARKETPLACE TRADITIONAL UNRESERVED AUCTIONS
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Secure, online marketplace where buyers & sellers negotiate, complete and settle their transactions
Financial Performance
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Revenue & earnings growthANNUAL REVENUE (US$ millions) Revenue growth:
12.6% CAGR over last 10 years
6.8% CAGR over last 5 years
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$162$182
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$377$357
$396$438
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ANNUAL ADJUSTED NET EARNINGS (US$ millions) Earnings growth:
11.5% CAGR over last 10 years
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$50$56
$76$85
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Generating shareholder valueADJUSTED DILUTED EPS¹ (US$)
DIVIDENDS PAID PER SHARE¹ (US$)
Committed to building long-term shareholder value.
61% dividend payout
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$0.123
$0.193
$0.260$0.300
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$0.410$0.435
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FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012¹ Adjusted for share splits. RBA share splits occurred in 2008 (3-for-1) and 2004 (2-for-1).
Based on 2012. On August 8, 2013, RBA declared in increase in the quarterly dividend to $0.13
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Sources and uses of cash – 5 year summary
$544,514
$64,652
$382,864$23,437 $2,701 $59,420
$515,663
$201,821
$215,063
$1,535
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Proceeds fromborrowings
Issuance of sharecapital
Other financingactivities
Acquisitions Other capitalexpenditures
Repayment of debt Dividends toshareholders
Effect of changes inforeign currency
39.5% of cash from operations returned to shareholders over last 5 years
Dividend payout ratio has increased from 42% in 2008 to 61% in 2012
SUMMARY OF CASH USE (December 2007 to December 2012, US$’000)
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Financial objectives
• EPS growth of at least 15% per year on average
• ROIC of at least 15%
• EBITDA margin of at least 40%
LONG-TERM OBJECTIVESGUIDANCE (Provided November 5, 2013)
• GAP generated during 2013 in the range of $3.6 – 3.8 billion• ARR for Q4/13 in the range of 11.5 – 12.0%• Revenue expectations for 2013 of $440 to $465 million• 2013 adjusted earnings before tax growth “in the mid single digits”
compared to 2012
On-site bidding process Relationship-based business model
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2013 Strategic priorities - completed
Aggressively grow our core auction business
Launch and grow our new online marketplace: EquipmentOne
Enhance our high-performance sales team
• Focus on high growth potential opportunities in existing and new markets
• Hold our first auction in China• Improve our At-Risk performance
• Hire more Territory Managers• Provide more and better training to Regional Sales Managers• Introduce better sales tools and processes• New sales compensation plan
• Launch the initial phase of EquipmentOne• Complete the commercial launch of EquipmentOne• Grow sales volume through our online marketplaces
Geelong, Australia site
EquipmentOne.com
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Focused on generating long-term shareholder value through continued earnings and dividend growth.
Dominant global player• Global leader in industrial auctions• Substantial growth opportunity• Focused on capturing increased market share in the US and Canada• Diligently expanding into new markets
Diversifying services to reach a broader customer base• EquipmentOne commercially launched on April 8, 2013
Focused on basics of: • EPS growth • ROIC• EBITDA margin
Summary
Moerdijk, Netherlands auction
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Learn more about Ritchie Bros. auctions through our online videos:
www.youtube.com/ritchiebros
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Investor Questions: [email protected] | 1-778-331-5500