UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______

Commission file number: 001-13425

Ritchie Bros. Auctioneers Incorporated

(Exact Name of Registrant as Specified in its Charter)

Canada	98-0626225
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
9500 Glenlyon Parkway
Burnaby, British Columbia, Canada	V5J 0C6
(Address of Principal Executive Offices)	(Zip Code)

(778) 331-5500

(Registrant’s Telephone Number, including Area Code)

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

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

Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	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. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ☐ No ⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: 110,371,456 common shares, without par value, outstanding as of August 4, 2021.

RITCHIE BROS. AUCTIONEERS INCORPORATED

FORM 10-Q

For the quarter ended June 30, 2021

INDEX

PART I – FINANCIAL INFORMATION
ITEM 1:	Consolidated Financial Statements	1
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	50
ITEM 4:	Controls and Procedures	50
PART II – OTHER INFORMATION
ITEM 1:	Legal Proceedings	52
ITEM 1A:	Risk Factors	52
ITEM 2:	Unregistered Sales of Equity Securities and Use of Proceeds	52
ITEM 3:	Defaults Upon Senior Securities	52
ITEM 4:	Mine Safety Disclosures	52
ITEM 5:	Other Information	52
ITEM 6:	Exhibits	53
SIGNATURES		54

PART I – FINANCIAL INFORMATION

ITEM 1:           CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Income Statements

(Expressed in thousands of United States dollars, except share and per share data)

(Unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenue:
Service revenue	$	252,748	$	234,139	$	458,778	$	417,262
Inventory sales revenue		143,613		154,911		269,138		245,043
Total revenue		396,361		389,050		727,916		662,305
Operating expenses:
Costs of services		39,042		39,448		75,069		78,803
Cost of inventory sold		131,023		143,134		241,770		224,719
Selling, general and administrative expenses		111,819		100,632		227,897		199,017
Acquisition-related costs		3,049		—		5,971		—
Depreciation and amortization expenses		21,935		17,857		43,005		37,150
Gain on disposition of property, plant and equipment		(175)		(1,213)		(243)		(1,260)
Foreign exchange loss		151		392		428		994
Total operating expenses		306,844		300,250		593,897		539,423
Operating income		89,517		88,800		134,019		122,882
Interest expense		(8,867)		(8,882)		(17,813)		(18,064)
Other income, net		1,196		857		2,198		4,434
Income before income taxes		81,846		80,775		118,404		109,252
Income tax expense		21,065		27,656		29,484		33,304
Net income	$	60,781	$	53,119	$	88,920	$	75,948
Net income attributable to:
Stockholders	$	60,749	$	53,043	$	88,937	$	75,851
Non-controlling interests		32		76		(17)		97
Net income	$	60,781	$	53,119	$	88,920	$	75,948
Earnings per share attributable to stockholders:
Basic	$	0.55	$	0.49	$	0.81	$	0.70
Diluted	$	0.55	$	0.49	$	0.80	$	0.69
Weighted average number of shares outstanding:
Basic		110,311,615		108,387,490		110,144,229		108,818,903
Diluted		111,334,184		109,323,343		111,302,711		109,903,808

See accompanying notes to the condensed consolidated financial statements.

Ritchie Bros. 1

Condensed Consolidated Statements of Comprehensive Income

(Expressed in thousands of United States dollars)

(Unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
	2021		2020		2021		2020
Net income	$	60,781	$	53,119	$	88,920	$	75,948
Other comprehensive income (loss), net of income tax:
Foreign currency translation adjustment		1,468		10,764		(8,892)		(5,105)
Total comprehensive income	$	62,249	$	63,883	$	80,028	$	70,843
Total comprehensive income (loss) attributable to:
Stockholders	$	62,215	$	63,795	$	80,059	$	70,743
Non-controlling interests		34		88		(31)		100
	$	62,249	$	63,883	$	80,028	$	70,843

See accompanying notes to the condensed consolidated financial statements.

Ritchie Bros. 2

Condensed Consolidated Balance Sheets

(Expressed in thousands of United States dollars, except share data)

(Unaudited)

	June 30,		December 31,
	2021		2020
Assets
Cash and cash equivalents	$	301,757	$	278,766
Restricted cash		140,966		28,129
Trade and other receivables		271,980		135,001
Less: allowance for credit losses		(5,348)		(5,467)
Inventory		85,930		86,278
Other current assets		27,776		27,274
Income taxes receivable		10,524		6,797
Total current assets		833,585		556,778
Property, plant and equipment		482,732		492,127
Other non-current assets		146,890		147,608
Intangible assets		292,444		300,948
Goodwill		838,798		840,610
Deferred tax assets		12,534		13,458
Total assets	$	2,606,983	$	2,351,529
Liabilities and Equity
Auction proceeds payable	$	445,090	$	214,254
Trade and other payables		221,738		243,786
Income taxes payable		4,240		17,032
Short-term debt		35,213		29,145
Current portion of long-term debt		10,657		10,360
Total current liabilities		716,938		514,577
Long-term debt		625,832		626,288
Other non-current liabilities		156,636		153,000
Deferred tax liabilities		46,150		45,265
Total liabilities		1,545,556		1,339,130
Commitments and Contingencies (Note 21 and Note 22 respectively)
Stockholders' equity:
Share capital:
Common stock; no par value, unlimited shares authorized, issued and outstanding shares: 110,366,808 (December 31, 2020: 109,876,428)		215,666		200,451
Additional paid-in capital		51,800		49,171
Retained earnings		832,037		791,918
Accumulated other comprehensive loss		(43,173)		(34,295)
Stockholders' equity		1,056,330		1,007,245
Non-controlling interest		5,097		5,154
Total stockholders' equity		1,061,427		1,012,399
Total liabilities and equity	$	2,606,983	$	2,351,529

See accompanying notes to the condensed consolidated financial statements.

Ritchie Bros. 3

Condensed Consolidated Statements of Changes in Equity

(Expressed in thousands of United States dollars, except where noted)

(Unaudited)

	Attributable to stockholders
				Additional				Accumulated		Non-
	Common stock			paid-In				other		controlling
	Number of			capital		Retained		comprehensive		interest		Total
Three months ended June 30, 2021	shares	Amount		("APIC")		earnings		loss		("NCI")		equity
Balance, March 31, 2021	110,253,056	$	210,765	$	43,612	$	795,781	$	(44,639)	$	5,089	$	1,010,608
Net income	—		—		—		60,749		—		32		60,781
Other comprehensive loss	—		—		—		—		1,466		2		1,468
	—		—		—		60,749		1,466		34		62,249
Stock option exercises	113,290		4,889		(910)		—		—		—		3,979
Issuance of common stock related to vesting of share units	462		12		(30)		—		—		—		(18)
Share-based continuing employment costs related to business combination	—		—		2,678		—		—		—		2,678
Stock option compensation expense	—		—		1,909		—		—		—		1,909
Equity-classified share units expense	—		—		4,404		—		—		—		4,404
Equity-classified share units dividend equivalents	—		—		137		(137)		—		—		—
Cash dividends paid	—		—		—		(24,356)		—		(26)		(24,382)
Balance, June 30, 2021	110,366,808	$	215,666	$	51,800	$	832,037	$	(43,173)	$	5,097	$	1,061,427
Three months ended June 30, 2020
Balance, March 31, 2020	108,198,739	$	153,801	$	46,147	$	714,816	$	(74,959)	$	5,166	$	844,971
Net income	—		—		—		53,043		—		76		53,119
Other comprehensive loss	—		—		—		—		10,752		12		10,764
	—		—		—		53,043		10,752		88		63,883
Stock option exercises	431,831		15,457		(3,086)		—		—		—		12,371
Issuance of common stock related to vesting of share units	(33)		(3)		(7)		—		—		—		(10)
Stock option compensation expense	—		—		1,543		—		—		—		1,543
Equity-classified share units expense	—		—		3,231		—		—		—		3,231
Equity-classified share units dividend equivalents	—		—		130		(130)		—		—		—
Cash dividends paid	—		—		—		(21,681)		—		—		(21,681)
Balance, June 30, 2020	108,630,537	$	169,255	$	47,958	$	746,048	$	(64,207)	$	5,254	$	904,308

Ritchie Bros. 4

Condensed Consolidated Statements of Changes in Equity

(Expressed in thousands of United States dollars, except where noted)

(Unaudited)

	Attributable to stockholders
				Additional				Accumulated		Non-
	Common stock			paid-In				other		controlling
	Number of			capital		Retained		comprehensive		interest		Total
Six months ended June 30, 2021	shares	Amount		("APIC")		earnings		loss		("NCI")		equity
Balance, December 31, 2020	109,876,428	$	200,451	$	49,171	$	791,918	$	(34,295)	$	5,154	$	1,012,399
Net income	—		—		—		88,937		—		(17)		88,920
Other comprehensive income (loss)	—		—		—		—		(8,878)		(14)		(8,892)
	—		—		—		88,937		(8,878)		(31)		80,028
Stock option exercises	311,153		13,157		(2,458)		—		—		—		10,699
Issuance (forfeiture) of common stock related to vesting of share units	234,737		2,058		(11,377)		—		—		—		(9,319)
Share-based continuing employment costs related to business combination	(55,510)		—		5,231		—		—		—		5,231
Stock option compensation expense	—		—		3,770		—		—		—		3,770
Equity-classified share units expense	—		—		7,182		—		—		—		7,182
Equity-classified share units dividend equivalents	—		—		281		(281)		—		—		—
Cash dividends paid	—		—		—		(48,537)		—		(26)		(48,563)
Balance, June 30, 2021	110,366,808	$	215,666	$	51,800	$	832,037	$	(43,173)	$	5,097	$	1,061,427
Six months ended June 30, 2020
Balance, December 31, 2019	109,337,781	$	194,771	$	52,110	$	714,051	$	(59,099)	$	5,154	$	906,987
Net income	—		—		—		75,851		—		97		75,948
Other comprehensive loss	—		—		—		—		(5,108)		3		(5,105)
	—		—		—		75,851		(5,108)		100		70,843
Stock option exercises	679,277		24,141		(4,716)		—		—		—		19,425
Issuance of common stock related to vesting of share units	138,791		3,513		(7,451)		—		—		—		(3,938)
Stock option compensation expense	—		—		2,730		—		—		—		2,730
Equity-classified share units expense	—		—		5,017		—		—		—		5,017
Equity-classified share units dividend equivalents	—		—		268		(268)		—		—		—
Cash dividends paid	—		—		—		(43,586)		—		—		(43,586)
Shares repurchased	(1,525,312)		(53,170)		—		—		—		—		(53,170)
Balance, June 30, 2020	108,630,537	$	169,255	$	47,958	$	746,048	$	(64,207)	$	5,254	$	904,308

See accompanying notes to the condensed consolidated financial statements.

Ritchie Bros. 5

Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of United States dollars)

(Unaudited)

Six months ended June 30,	2021		2020
Cash provided by (used in):
Operating activities:
Net income	$	88,920	$	75,948
Adjustments for items not affecting cash:
Depreciation and amortization expenses		43,005		37,150
Stock-based compensation expense		16,183		7,747
Deferred income tax expense		1,719		6,657
Unrealized foreign exchange loss		(65)		1,129
Gain on disposition of property, plant and equipment		(243)		(1,260)
Amortization of debt issuance costs		1,443		1,577
Amortization of right-of-use assets		6,280		6,318
Gain on contingent consideration from equity investment		—		(1,700)
Other, net		1,568		1,934
Net changes in operating assets and liabilities		52,577		62,824
Net cash provided by operating activities		211,387		198,324
Investing activities:
Acquisition of Rouse, net of cash acquired		728		—
Property, plant and equipment additions		(4,616)		(6,140)
Proceeds on disposition of property, plant and equipment		342		16,106
Intangible asset additions		(17,361)		(13,244)
Issuance of loans receivable		(2,622)		(2,985)
Repayment of loans receivable		226		203
Distribution from equity investment		—		4,212
Proceeds on contingent consideration from equity investment		—		1,700
Net cash used in investing activities		(23,303)		(148)
Financing activities:
Share repurchase		—		(53,170)
Dividends paid to stockholders		(48,537)		(43,586)
Dividends paid to NCI		(26)		—
Proceeds from exercise of options and share option plans		10,699		19,425
Payment of withholding taxes on issuance of shares		(9,155)		(3,321)
Net increase (decrease) in short-term debt		6,842		15,858
Repayment of long-term debt		(5,328)