# RB GLOBAL INC. (RBA) FY 2021 MD&A Verbatim Item 7 Management's Discussion and Analysis from RB GLOBAL INC.'s 10-K for fiscal year 2021. SEC filing source: https://www.sec.gov/Archives/edgar/data/1046102/000155837022001365/rba-20211231x10k.htm Accession: 0001558370-22-001365 Filing date: 2022-02-17 Report date: 2021-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/RBA/ All MD&A years: /company/RBA/mda/ Next year: /company/RBA/mda/fy2022/ (FY 2022) ITEM 7:         MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ About Us 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® 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; SmartEquip, an innovative technology platform offering equipment lifecycle support and part procurement; 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. ​ Through our unreserved on site and online bidding auctions, online marketplaces, and private brokerage services, we sell a broad range of used and unused commercial assets, including earthmoving equipment, truck tractors, truck trailers, government surplus, oil and gas equipment and other industrial assets. Construction and heavy machinery comprise the majority of the equipment sold. Customers selling equipment through our sales channels include end-users (such as construction companies), equipment dealers, original equipment manufacturers (“OEMs”), and other equipment owners (such as rental companies). Our customers participate in a variety of sectors, including heavy construction, transportation, agriculture, energy, and mining. Overview This section of the Form 10-K generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions of 2019 items and year-to-year comparisons between 2020 and 2019 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. This discussion and analysis should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and the consolidated financial statements and the notes thereto included in “Part II, Item 8. Financial Statements and Supplementary Data” presented in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those expressed or implied in any forward-looking statements due to various factors, including those set forth under “Part I, Item 1A: Risk Factors” in this Annual Report on Form 10-K. The date of this discussion is as of February 17, 2022. We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“US GAAP”). Except for GTV, which is a measure of operational performance and not a measure of financial performance, liquidity, or revenue, the amounts discussed below are based on our consolidated financial statements. Unless indicated otherwise, all tabular dollar amounts, including related footnotes, presented below are expressed in thousands of United States (“U.S.”) dollars. In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with US GAAP. Certain of these data are considered “non-GAAP financial measures” under the SEC rules. The definitions and reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable US GAAP financial measures are included either with the first use thereof or in the Non-GAAP Measures section within the MD&A. Non-GAAP financial measures referred to in this report are labeled as “non-GAAP measure” or designated as such with an asterisk (*). ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","36"]] [[/GREPCENT_TABLE]] ​ Table of Contents Performance Overview Net income attributable to stockholders for 2021 decreased 11% to $151.9 million compared to $170.1 million in 2020. Diluted earnings per share (“EPS”) attributable to stockholders decreased 12% to $1.36 from $1.54 per share. Non-GAAP adjusted net income attributable to stockholders* increased 4% to $216.1 million in 2021 as compared to $208.7 million in 2020. Non-GAAP diluted adjusted EPS attributable to stockholders* increased 3% to $1.94 per share in 2021 as compared to $1.89 per share in 2020. In 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 (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. We have also adjusted for certain non-recurring advisory, legal and restructuring costs and the change in fair value of derivatives. These adjustments in 2021 have been applied retrospectively to all periods presented, as applicable. ​ For the year ended December 31, 2021 as compared to the year ended December 31, 2020: Consolidated results: [[GREPCENT_TABLE]] [["","\u25cf","Total revenue increased 3% to $1.4 billion"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","Service revenue increased 5% to $917.8 million"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","Inventory sales revenue decreased 1% to $499.2 million"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Operating income decreased 9% to $240.1 million"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Non-GAAP adjusted operating income* increased 3% to $323.5 million"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Net income decreased 11% to $151.9 million"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Non-GAAP adjusted Earnings Before Interest, Taxes, Depreciation and Amortization* (\u201cEBITDA\u201d) increased 3% to $385.3 million"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Cash provided by operating activities was $317.6 million for the year ended December 31, 2021"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Cash on hand was $1.4 billion, of which $326 million was unrestricted and $933.5 million was restricted relating to our two senior notes entered into in December 2021 to finance the proposed Euro Auctions Acquisition, and the remainder is restricted for use"]] [[/GREPCENT_TABLE]] Auctions & Marketplaces segment results: [[GREPCENT_TABLE]] [["","\u25cf","GTV increased 2% to $5.5 billion and decreased 0.4% when excluding the impact of foreign exchange"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","A&M total revenue increased 1% to $1.3 billion"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","Service revenue increased 3% to $759.4 million"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","Inventory sales revenue decreased 1% to $499.2 million"]] [[/GREPCENT_TABLE]] Other Services segment results: [[GREPCENT_TABLE]] [["","\u25cf","Other Services total revenue increased 20% to $158.4 million"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","RBFS revenue increased 46% to $47.0 million"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","Rouse revenue of $26.4 million was recognized in 2021, which was its full year since its acquisition on December 8, 2020"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","SmartEquip revenue of $2.9 million was recognized in Q4 2021, which was its first two months since its acquisition on November 2, 2021"]] [[/GREPCENT_TABLE]] ​ Operational highlights In 2021, the organization focused on the needs of our customers while keeping the health and safety of all our stakeholders a top priority. We continue to execute against our growth strategy of becoming the trusted global marketplace for insights, services, and transaction solutions for commercial assets. Ritchie Bros continues to focus on the customer and despite the ongoing COVID-19 and the economic uncertainties, we are executing on factors that we can control to drive strong operational results and profitable growth: [[GREPCENT_TABLE]] [["\u25cf","GTV from Marketplace-E, our online reserved format, increased 20% year-over-year driven by continued strong North America adoption of the platform."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","We held a hybrid-style global auction event in Orlando, Florida, selling in excess of US$191 million. The six-day sale was a spectacular success, as we sold more than 12,000 items in six days for US$191+ million, making it the largest-ever 100% online equipment auction."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","37"]] [[/GREPCENT_TABLE]] ​ Table of Contents [[GREPCENT_TABLE]] [["\u25cf","In March 2021, we conducted our largest Texas auction ever, attracting 76% more bidders from 79 countries year over year and achieving US$95 million in GTV surpassing our previous Texas sales record, set in June 2020, by 17 %"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","In May 2021, we conducted 71 farm auctions to disperse farm retirement equipment across Western Canada, attracting more than 160,000 bidders, generating over $1.6 million online equipment views and over CA$104 million of GTV."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","In August 2021, Ritchie Bros. conducted its largest-ever, single-owner auction for Barrilleaux Inc., an oilfield pipeline construction company based in New Mexico and Texas and sold in excess of US $99 million of pipeline construction equipment in less than two days."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","In 2021, we won the two new East and West contracts, covering the consolidated surplus rolling stock and surplus non-rolling stock assets for the U.S. Department of Defense."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Ritchie Bros. Inspection Services and its 400+ team members completed more than 600,000 equipment inspections in 2021, taking over 15 million photos and analyzing hundreds of thousands of oil samples in its in-house fluid analysis lab."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Ritchie Bros. Financial Services (RBFS) total funded volume hit $747.8 million, increasing 43% year over year, driven by investments in the team in 2020 and strategic efforts over sales activities in 2021 leading to enhanced lender alignment."]] [[/GREPCENT_TABLE]] We accelerated our journey against many of our strategic pillars by completing the acquisition of SmartEquip, a leading parts and service technology company in November of 2021 for a purchase price of $173 million which furthers our goal of providing the best experience for our customers. We also entered into a SPA agreement to acquire Europe's leading plant and machinery auction house, Euro Auctions, for an enterprise value of £775 million (approximately US$1.08 billion). In addition to the acquisition, we took several steps to advance our new growth strategy in 2021 highlighted below: Customer Experience [[GREPCENT_TABLE]] [["\u25cf","Improved digital experience with more comprehensive video inspections, upgraded mobile platform, launched new concierges virtual yard walks and equipment demos, and implemented RitchieID which enables single customer identity across all Ritchie Bros. digital properties"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Launched Ritchie List to give our customers more ways to bring their equipment to market. RitchieList.com is an easy-to-use equipment listing service which offers our customers a suite of a la carte services to make private selling more efficient and safe, including a secure transaction management service, complete with invoicing."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Simplified contracts for sellers to focus on a better experience"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Improved customer call center wait times by launching call back feature and improved routing"]] [[/GREPCENT_TABLE]] ​ Best Employee Experience [[GREPCENT_TABLE]] [["\u25cf","Launched enhanced safety programs for field employees to make sure employees return home every day the way they came to work"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Created training experience for members in the Sale organization and leadership development program for international teams"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Launched Pride (LGBTQ+) and Serve (Military Veterans) Employee Resource Group and Diverse Voices, a Ritchie Bros. Podcast for employees"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Drove employee engagement by crowdsourcing ESG Social Giving Initiatives"]] [[/GREPCENT_TABLE]] ​ Modern Architecture [[GREPCENT_TABLE]] [["\u25cf","Launched cloud-based inspection microservice to enable scalable growth"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Began improving Iron Planet experiences for customers by starting a migration of our systems and platforms to the cloud"]] [[/GREPCENT_TABLE]] ​ Inventory Management System [[GREPCENT_TABLE]] [["\u25cf","Launched business version of our inventory management system (\u201cIMS\u201d), which offers our customers end-to-end asset management and disposition services, data analytics, dashboards, branded e-commerce sites and multiple external sales channels to help our customers achieve optimal returns"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Organizations activated on IMS grew at a ~83% compounded average quarterly growth rate in 2021 using Q1 2021 as the base"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Improved digital experience by adding a number of customer centric features"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Improved backend systems and processes to enable faster growth"]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","38"]] [[/GREPCENT_TABLE]] ​ Table of Contents [[GREPCENT_TABLE]] [["\u25cf","Increased use of IMS for transactional workflow"]] [[/GREPCENT_TABLE]] ​ Accelerate growth: Test, learn and scale [[GREPCENT_TABLE]] [["\u25cf","Scaled Local Satellite Yards with 18 new locations in 2021"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","Successfully implemented new sales coverage model in Texas by disaggregating territory manager role into Account Manager, Business Development Manager, and Inside Territory Manager"]] [[/GREPCENT_TABLE]] ​ While focusing on growth and our strategic initiatives, we continued to make progress on our Environmental, Social, and Governance (ESG) mission. Our choice of expansion through local satellite yards is ensuring we continue to enable the circular economy on a local basis by growth in a low-cost and environmentally friendly way. We have made significant progress against our goals to enhance our employee experience in the areas of diversity, equity and inclusion (DE&I) and community. We have several new active employee-led groups driving initiatives, and also made strides on female representation at the senior leadership level. ​ ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","39"]] [[/GREPCENT_TABLE]] ​ Table of Contents Results of Operations ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change","\u200b"],["(in U.S. $000's, except EPS and percentages)","","\u200b","2021","","2020","","2019","","2021 over 2020","","2020 over 2019"],["Service revenue:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Commissions","\u200b","\u200b","$","469,718","\u200b","$","452,882","\u200b","$","431,781","\u200b","\u200b","4","%","\u200b","5","%"],["Fees","\u200b","\u200b","\u200b","448,041","\u200b","\u200b","418,714","\u200b","\u200b","372,243","\u200b","\u200b","7","%","\u200b","12","%"],["Total service revenue","\u200b","\u200b","\u200b","917,759","\u200b","\u200b","871,596","\u200b","\u200b","804,024","\u200b","\u200b","5","%","\u200b","8","%"],["Inventory sales revenue","\u200b","\u200b","\u200b","499,212","\u200b","\u200b","505,664","\u200b","\u200b","514,617","\u200b","\u200b","(1)","%","\u200b","(2)","%"],["Total revenue","\u200b","\u200b","\u200b","1,416,971","\u200b","\u200b","1,377,260","\u200b","\u200b","1,318,641","\u200b","\u200b","3","%","\u200b","4","%"],["Costs of services","\u200b","\u200b","","146,862","\u200b","","157,296","\u200b","","164,977","\u200b","","(7)","%","","(5)","%"],["Cost of inventory sold","\u200b","\u200b","","447,921","\u200b","","458,293","\u200b","","480,839","\u200b","","(2)","%","","(5)","%"],["Selling, general and administrative expenses","\u200b","\u200b","","464,599","\u200b","","417,523","\u200b","","382,389","\u200b","","11","%","","9","%"],["Total operating expenses","\u200b","\u200b","\u200b","1,176,824","\u200b","\u200b","1,114,100","\u200b","\u200b","1,095,439","\u200b","\u200b","6","%","\u200b","2","%"],["Operating income","\u200b","\u200b","","240,147","\u200b","","263,160","\u200b","","223,202","\u200b","","(9)","%","","18","%"],["Operating income as a % of total revenue","\u200b","\u200b","\u200b","16.9","%","\u200b","19.1","%","\u200b","16.9","%","\u200b","(220)","bps","\u200b","220","bps"],["Non-GAAP adjusted operating income*","\u200b","\u200b","\u200b","323,471","\u200b","\u200b","314,514","\u200b","\u200b","259,915","\u200b","\u200b","3","%","","21","%"],["Non-GAAP adjusted operating income* as a % of total revenue","\u200b","\u200b","\u200b","22.8","%","\u200b","22.8","%","\u200b","19.7","%","\u200b","\u2014","bps","\u200b","310","bps"],["Net income attributable to stockholders","\u200b","\u200b","","151,868","\u200b","","170,095","\u200b","","149,039","\u200b","","(11)","%","","14","%"],["Non-GAAP adjusted net income attributable to stockholders*","\u200b","\u200b","","216,106","\u200b","","208,660","\u200b","","173,969","\u200b","","4","%","","20","%"],["Diluted earnings per share attributable to stockholders","\u200b","\u200b","$","1.36","\u200b","$","1.54","\u200b","$","1.36","\u200b","\u200b","(12)","%","","13","%"],["Non-GAAP diluted adjusted EPS attributable to stockholders*","\u200b","\u200b","$","1.94","\u200b","$","1.89","\u200b","$","1.59","\u200b","\u200b","3","%","","19","%"],["Effective tax rate","\u200b","\u200b","","26.0","%","","27.8","%","","21.8","%","","(180)","bps","","600","bps"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total GTV","\u200b","\u200b","\u200b","5,533,931","\u200b","\u200b","5,411,218","\u200b","\u200b","5,140,587","\u200b","\u200b","2","%","\u200b","5","%"],["Service GTV","\u200b","\u200b","\u200b","5,034,719","\u200b","\u200b","4,905,554","\u200b","\u200b","4,625,970","\u200b","\u200b","3","%","\u200b","6","%"],["Service revenue as a % of total GTV","\u200b","\u200b","\u200b","16.6","%","\u200b","16.1","%","\u200b","15.6","%","\u200b","50","bps","\u200b","50","bps"],["Inventory GTV","\u200b","\u200b","\u200b","499,212","\u200b","\u200b","505,664","\u200b","\u200b","514,617","\u200b","\u200b","(1)","%","\u200b","(2)","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Service revenue as a % of total revenue","\u200b","\u200b","\u200b","64.8","%","\u200b","63.3","%","\u200b","61.0","%","\u200b","150","bps","\u200b","230","bps"],["Inventory sales revenue as a % of total revenue","\u200b","\u200b","","35.2","%","","36.7","%","","39.0","%","","(150)","bps","","(230)","bps"],["Cost of inventory sold as a % of operating expenses","\u200b","\u200b","","38.1","%","","41.1","%","","43.9","%","","(300)","bps","","(280)","bps"],["Service GTV as a % of total GTV - Mix","\u200b","\u200b","\u200b","91.0","%","\u200b","90.7","%","\u200b","90.0","%","\u200b","30","bps","\u200b","70","bps"],["Inventory sales revenue as a % of total GTV - Mix","\u200b","\u200b","\u200b","9.0","%","\u200b","9.3","%","\u200b","10.0","%","\u200b","(30)","bps","\u200b","(70)","bps"]] [[/GREPCENT_TABLE]] ​ Total GTV Total GTV increased 2% to $5.5 billion as compared to 2020. Total GTV decreased 0.4% in 2021 as compared to 2020, when excluding the impact of foreign exchange. ​ In 2021, GTV increased primarily in International and Canada, while remaining flat in the US. GTV volume increased primarily due to strong price performance across all regions as a result of high demand for used equipment, predominantly in the construction and transportation sectors, and these increases were partially offset by an unfavorable tight supply environment which impacted all regions. In International, GTV volume increases were driven by the lifting of border restrictions, improved economic climate and higher activity in Australia with new auctions, higher number of private treaty deals and a new agricultural event. We also saw strong performance in France with the growth of local satellite yards, partially offset by lower volume in Europe due to supply constraints. In Canada, we saw an increase in volumes across several auctions, most notably within the Canadian agricultural market with the shift to online driving a higher number of events and a larger buyer base. In addition, we saw a strong performance in Toronto throughout the year due to unprecedented demand. Canada also benefited from significant volume increases in RBFS from providing escrow services for private brokered transactions. These increases were partially offset by softer year-over-year performances across our Western region due to supply chain constraints. In the US, we saw strong performances by our US regional sales team and also GovPlanet. US region performance was strong with a $99.0 million pipeline construction equipment event in New Mexico and Texas as well as a $35.0 million construction event in Alabama, partially offset by lower year-over-year performances in our Fort Worth, Orlando, and Las Vegas auctions and our regional combined events. GovPlanet saw higher volumes with the new non-rolling and rolling stock contracts effective June 1, 2021. However, offsetting these increases, total US GTV was flat with lower volume in our US strategic accounts sales team and also the non-repeat of a collector car event. US strategic accounts were down mainly in the finance, OEM and ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","40"]] [[/GREPCENT_TABLE]] ​ Table of Contents rental sectors as high asset utilization, supply chain challenges and new inventory availability have continued to impact disposition volumes. ​ Total revenue Total revenue increased 3% to $1.4 billion as compared to 2020, with total service revenue increasing by 5%, offset by a decrease in inventory sales revenue by 1%. Foreign currency fluctuation also had a favourable impact on our revenue primarily due to the appreciation of the Canadian dollar, the Euro and the Australian dollar relative to the US dollar. ​ Service Revenue In 2021, total service revenue increased 5% with fees revenue increasing 7% and commissions revenue increasing 4%. Service revenues comprise of commissions which are earned on Service GTV, and Fees which are earned on total GTV as well as from our other services such as Ancillary Services, RBFS, Rouse, Mascus, RB Logistics, RB Asset Solutions and SmartEquip. ​ Service GTV increased 3% driven by positive results across all regions due to the continued strong pricing despite the unfavourable supply environment. In Canada, positive year-over-year performances in our Canadian agricultural market and Toronto auction, and an increase in escrow services provided by our RBFS business contributed to higher Service GTV, which was partially offset by softer performances in our Western region. International saw higher service GTV as a result of increased activity in Australia combined with a new agricultural event, and higher activity in Europe, most notably in France with the growth of local satellite yards, and as well as due to the improved market economic conditions and the ease of restrictions from the gradual recovery of COVID-19, despite the supply constraints. In the US, Service GTV remained relatively flat. We saw large dispersals of $99.0 million pipeline construction equipment and a $35.0 million construction event in Alabama, however, these increases were offset by overall softer performances most notably in Fort Worth, Orlando and Las Vegas due to the tight supply environment. In addition, the non-repeat of a collector car event also contributed to lower volume. Fees revenue increased 7%, mainly due to fee revenue earned from Rouse which was acquired in early December 2020, higher fees driven by higher funded volumes in RBFS, and higher buyer fees in line with higher GTV of 2%. Buyer fees increased in part due to an increase in buyer fees implemented earlier in the year, as well as from the re-instatement of fees at the Canadian on-the-farm auctions at the beginning of the year. These increases were partially offset by lower fees on mix of lower proportion of small value lots across all regions, most notably in the US, 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. We also saw lower listing fees in line with lower online volumes, and lower document fees due to decline in the total number of titled lots sold. The non-repeat of a collector car event in the US also contributed to lower fee revenue. ​ Commissions revenue increased 4%, largely driven by the increase in Service GTV of 3%. The remaining increase in commission revenue was driven by improved rates on guarantee contracts in the US driven by strong pricing performance. We also saw stronger straight commission rate performance in our GovPlanet business driven by favourable mix of contracts and a lower proportion of GTV sourced from our US strategic accounts. ​ Inventory Sales Revenue Inventory sales revenue as a percent of total GTV decreased to 9% from 9.3% in 2020. In 2021, inventory sales revenue decreased 1% primarily in Canada and the US due to lower mix of inventory contracts, offset by International. In Canada, we had a large inventory package dispersal of pipeline equipment in Grand Prairie which did not repeat and lower inventory volumes in Edmonton. In the US, we saw lower inventory volumes in Fort Worth and Orlando, partially offset by higher GovPlanet volume following the government shut down in response to COVID-19 in prior year. These decreases were offset by strong year-over-year performance in International mainly driven by higher activity including increased number of private treaty transactions in Australia, and across various countries in Europe due to the overall improved economic conditions and the addition of several new auctions. ​ ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","41"]] [[/GREPCENT_TABLE]] ​ Table of Contents Underwritten Contracts We offer our customers the opportunity to use underwritten commission contracts to serve their disposition strategy needs, entering into such contracts where the risk and reward profile of the terms are agreeable. Our underwritten contracts, which include inventory and guarantee contracts, decreased to 18% in 2021, compared to 20% 2020 primarily due to decreased GTV signed with guarantee contracts. ​ Operating income Operating income decreased 9% to $240.1 million compared to $263.2 million in 2020. This decrease was primarily due to the 6% increase in total operating expenses to support our growth initiatives, partially offset by a 5% increase in service revenue in 2021. Operating expenses included higher selling and general administrative expenses due to increases in our employee wages, salaries and benefits, and higher buildings, facilities and technology costs. We also saw higher non-recurring advisory, legal and restructuring costs in the fourth quarter of 2021. In addition, we incurred $30.2 million in acquisition-related costs for the acquisitions of Euro Auctions, SmartEquip and Rouse. We also began amortizing the acquired intangible assets from Rouse and SmartEquip in 2021. In terms of ongoing operations, cost of services was lower, partially offset by a lower flow through from inventory sales. Income tax expense and effective tax rate We recorded an income tax expense of $53.4 million in 2021 compared to $65.5 million in 2020. Our effective tax rate was 26.0% compared to 27.8% in 2020. The decrease in the effective tax rate over the comparative period was primarily due to a decrease in the estimate of non-deductible expenses, lower income taxes related to tax uncertainties, and higher tax deduction for share unit expenses in excess of compensation expense. Partially offsetting this decrease was a higher estimate of income taxed in jurisdictions with higher tax rates and lower deduction for stock options exercised. ​ On April 8, 2020, the United States Department of Treasury and the Internal Revenue Service (“IRS”) clarified income tax benefits related to hybrid financing arrangements would not be deductible (“Hybrid Interest”). The lower estimate of non-deductible expenses is primarily due to the net income tax benefits of approximately $7.8 million in the twelve months ended December 31, 2019 which were no longer deductible and accordingly were reversed in 2020. ​ Net income Net income attributable to stockholders decreased 11% to $151.9 million compared to $170.1 million in 2020. The decrease was primarily related to lower operating income and lower other income. We also recognized a $1.2 million loss due to the change in the fair value of derivatives which are being used to manage our exposure to foreign currency exchange rate fluctuations on our purchase consideration for the acquisition of Euro Auctions. These decreases were partially offset by the decrease in the income tax expense driven by the lower effective tax rate. Diluted EPS Diluted EPS attributable to stockholders decreased 12% to $1.36 per share compared to $1.54 in 2020. This decrease was primarily due to the decrease in net income attributable to stockholder, combined with an increase in the weighted average number of dilutive shares outstanding over 2020. ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","42"]] [[/GREPCENT_TABLE]] ​ Table of Contents U.S. dollar exchange rate comparison We conduct global operations in many different currencies, with our presentation currency being the U.S dollar. The following table presents the variance in select foreign exchange rates over the comparative reporting periods: [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","% Change"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","2021 over","","2020 over"],["Value of one local currency to U.S dollar","","2021","","2020","","2019","","2020","\u200b","2019","\u200b"],["Period-end exchange rate","","\u200b","","","\u200b","","","\u200b","","","","","","\u200b"],["Canadian dollar","\u200b","\u200b","0.7846","\u200b","\u200b","0.7843","\u200b","\u200b","0.7656","","0","%","2","%"],["Euro","\u200b","","1.1322","\u200b","","1.2296","\u200b","","1.1202","","(8)","%","10","%"],["Australian dollar","\u200b","\u200b","0.7250","\u200b","\u200b","0.7689","\u200b","\u200b","0.7002","\u200b","(6)","%","10","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Average exchange rate -Year ended December 31,","\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b","","\u200b","","\u200b","\u200b"],["Canadian dollar","\u200b","\u200b","0.7977","\u200b","\u200b","0.7462","\u200b","\u200b","0.7537","","7","%","(1)","%"],["Euro","\u200b","\u200b","1.1834","\u200b","","1.1413","\u200b","","1.1195","","4","%","2","%"],["Australian dollar","\u200b","\u200b","0.7514","\u200b","\u200b","0.6901","\u200b","\u200b","0.6951","\u200b","9","%","(1)","%"]] [[/GREPCENT_TABLE]] ​ In 2021, approximately 45% of our revenues and 47% of our operating expenses were denominated in currencies other than the U.S. dollar, compared to 43% and 48%, respectively, in 2020. ​ We recognized $0.8 million in foreign exchange losses in 2021 and $1.6 million of losses in 2020. Foreign exchange had a favourable impact on total revenue and an unfavourable impact on expenses. These impacts were mainly due to the fluctuations in the Canadian dollar, the Euro and the Australian dollar exchanges rates relative to the U.S. dollar during the year. Non-GAAP Measures As part of management’s non-GAAP measures, we may eliminate the financial impact of adjusting items which are after-tax effects of significant recurring and non-recurring items that we do not consider to be part of our normal operating results. In 2021, we updated our calculation of non-GAAP measures and included the impact of 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 of disposition of property, plant and equipment. We have also adjusted for certain non-recurring advisory, legal and restructuring costs and the change in fair value of derivatives. These adjustments in 2021 have been applied retrospectively to all periods presented, as applicable. ​ Non-GAAP adjusted net income attributable to stockholders* increased 4%, to $216.1 million compared to $208.7 million in 2020. Non-GAAP diluted adjusted EPS attributable to stockholders* increased 3% to $1.94 per share compared to $1.89 per share in 2020. Non-GAAP adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)* increased 3% to $385.3 million compared to $374.3 million in 2020. Debt at December 31, 2021 represented 11.5 times net income for 2021, compared to debt at December 31, 2020, which represented 3.9 times net income for 2020. The increase in this debt/net income multiplier was primarily due to higher debt balances and higher operating expense mainly due to an increase in acquisition-related costs on the acquisitions of Rouse, Euro Auctions and SmartEquip for the year ended December 31, 2021 compared to December 31, 2020. The non-GAAP adjusted net debt/non-GAAP adjusted EBITDA* was 1.3 times at December 31, 2021 compared to 1.0 times at December 31, 2020. The increase in non-GAAP adjusted net debt/non-GAAP adjusted EBITDA* was primarily due to higher non-GAAP adjusted net debt* balance at December 31, 2021, partially offset by a 3% increase in non-GAAP adjusted EBITDA* compared to the prior year. ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","43"]] [[/GREPCENT_TABLE]] ​ Table of Contents Segment Performance We provide our customers with a wide array of services. The following table presents a breakdown of our consolidated results between the A&M segment and Other services segment. A complete listing of channels and brand solutions under the A&M segment, as well as our Other services segment, is available under Item 1 of this Annual Report. ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Year ended December 31, 2021","\u200b","Year ended December 31, 2020","\u200b","Year ended December 31, 2019"],["(in U.S $000's)","","\u200b","A&M","","Other","","Consolidated","","A&M","","Other","","Consolidated","","A&M","","Other","","Consolidated"],["Service revenue","\u200b","\u200b","$","759,303","\u200b","$","158,456","\u200b","$","917,759","\u200b","$","740,043","\u200b","\u200b","131,553","\u200b","$","871,596","\u200b","$","678,823","","$","125,201","","$","804,024"],["Inventory sales revenue","\u200b","\u200b","\u200b","499,212","\u200b","\u200b","\u2014","\u200b","\u200b","499,212","\u200b","\u200b","505,664","\u200b","\u200b","\u2014","\u200b","\u200b","505,664","\u200b","\u200b","514,617","\u200b","\u200b","\u2014","\u200b","\u200b","514,617"],["Total revenue","\u200b","\u200b","\u200b","1,258,515","\u200b","\u200b","158,456","\u200b","\u200b","1,416,971","\u200b","\u200b","1,245,707","\u200b","\u200b","131,553","\u200b","\u200b","1,377,260","\u200b","\u200b","1,193,440","\u200b","\u200b","125,201","\u200b","\u200b","1,318,641"],["Ancillary and logistical service expenses","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","52,301","\u200b","\u200b","52,301","\u200b","\u200b","\u2014","\u200b","\u200b","59,982","\u200b","\u200b","59,982","\u200b","\u200b","\u2014","\u200b","\u200b","59,252","\u200b","\u200b","59,252"],["Other costs of services","\u200b","\u200b","\u200b","85,415","\u200b","\u200b","9,146","\u200b","\u200b","94,561","\u200b","\u200b","92,195","\u200b","\u200b","5,119","\u200b","\u200b","97,314","\u200b","\u200b","99,821","\u200b","\u200b","5,904","\u200b","\u200b","105,725"],["Cost of inventory sold","\u200b","\u200b","","447,921","\u200b","","\u2014","\u200b","","447,921","\u200b","","458,293","\u200b","","\u2014","\u200b","","458,293","\u200b","","480,839","","\u200b","\u2014","","\u200b","480,839"],["SG&A expenses","\u200b","\u200b","","414,287","\u200b","","50,312","\u200b","","464,599","\u200b","","388,442","\u200b","","29,081","\u200b","","417,523","\u200b","","358,016","","\u200b","24,373","","\u200b","382,389"],["Segment profit","\u200b","\u200b","\u200b","310,892","\u200b","\u200b","46,697","\u200b","\u200b","357,589","\u200b","\u200b","306,777","\u200b","\u200b","37,371","\u200b","\u200b","344,148","\u200b","\u200b","254,764","\u200b","\u200b","35,672","\u200b","\u200b","290,436"]] [[/GREPCENT_TABLE]] ​ Auctions and Marketplaces segment Results of A&M segment operations are presented below for the comparative reporting periods. ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Year ended December 31,","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change","\u200b"],["\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","2021 over","","2020 over","\u200b"],["(in U.S. $000's, except percentages)","\u200b","\u200b","2021","","2020","","2019","\u200b","2020","\u200b","2019","\u200b"],["Service revenue","","\u200b","$","759,303","\u200b","$","740,043","\u200b","$","678,823","\u200b","3","%","9","%"],["Inventory sales revenue","","\u200b","\u200b","499,212","\u200b","\u200b","505,664","\u200b","\u200b","514,617","\u200b","(1)","%","(2)","%"],["Total revenue","\u200b","\u200b","\u200b","1,258,515","\u200b","\u200b","1,245,707","\u200b","\u200b","1,193,440","\u200b","1","%","4","%"],["A&M service revenue as a % of total A&M revenue","\u200b","\u200b","\u200b","60.3","%","\u200b","59.4","%","\u200b","56.9","%","90","bps","250","bps"],["Inventory sales revenue as a % of total A&M revenue","\u200b","\u200b","\u200b","39.7","%","\u200b","40.6","%","\u200b","43.1","%","(90)","bps","(250)","bps"],["Costs of services","\u200b","\u200b","\u200b","85,415","\u200b","\u200b","92,195","\u200b","\u200b","99,821","\u200b","(7)","%","(8)","%"],["Cost of inventory sold","\u200b","\u200b","\u200b","447,921","\u200b","\u200b","458,293","\u200b","\u200b","480,839","\u200b","(2)","%","(5)","%"],["SG&A expenses","\u200b","\u200b","\u200b","414,287","\u200b","\u200b","388,442","\u200b","\u200b","358,016","\u200b","7","%","8","%"],["A&M segment expenses","\u200b","\u200b","\u200b","947,623","\u200b","\u200b","938,930","\u200b","\u200b","938,676","\u200b","1","%","0","%"],["Cost of inventory sold as a % of A&M expenses","\u200b","\u200b","\u200b","47.3","%","\u200b","48.8","%","\u200b","51.2","%","(150)","bps","(240)","bps"],["A&M segment profit","\u200b","\u200b","\u200b","310,892","\u200b","\u200b","306,777","\u200b","\u200b","254,764","\u200b","1","%","20","%"],["Total GTV","\u200b","\u200b","\u200b","5,533,931","\u200b","\u200b","5,411,218","\u200b","\u200b","5,140,587","\u200b","2","%","5","%"],["A&M service revenue as a % of total GTV- Rate","","\u200b","\u200b","13.7","%","\u200b","13.7","%","\u200b","13.2","%","-","bps","50","bps"]] [[/GREPCENT_TABLE]] ​ Gross Transaction Value In response to COVID-19, in March 2020, we transitioned all our traditional on site auctions to online bidding utilizing our existing online bidding technology and simultaneously ceased almost all public attendance at our live auction theaters. Our core online auction channels (IronPlanet.com, GovPlanet.com, Marketplace-E) continued to operate as usual. ​ To facilitate the auction process transition to a virtual platform and under strict safety guidelines, we enabled equipment drop off at our physical yards prior to the online event, with buyers able to conduct inspections pre-auction and collect equipment post auction. In addition, where auctioneers were not able to attend a physical site, we used Timed Auctioned Lots (TAL) solutions for selected International and on-the-farm agriculture events. We believe it is meaningful to consider revenue in relation to GTV. Total GTV and Service GTV by geographical regions, as well as GTV by sector, are presented below for the comparative reporting period. ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","44"]] [[/GREPCENT_TABLE]] ​ Table of Contents GTV by Geography [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","2021 over","","2020 over","\u200b"],["(in U.S. $000's)","","\u200b","2021","","2020","","2019","","2020","\u200b","2019"],["Total GTV by Geography","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["United States","$","\u200b","3,230,708","","3,235,548","\u200b","3,027,459","\u200b","(0)","%","7","%"],["Canada","\u200b","\u200b","1,441,929","","1,392,249","\u200b","1,254,857","\u200b","4","%","11","%"],["International","\u200b","\u200b","861,294","","783,421","\u200b","858,271","\u200b","10","%","(9)","%"],["Total GTV","\u200b","\u200b","5,533,931","\u200b","5,411,218","\u200b","5,140,587","\u200b","2","%","5","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Service GTV by Geography","\u200b"],["United States","\u200b","\u200b","3,029,661","\u200b","3,017,404","\u200b","2,756,843","\u200b","0","%","9","%"],["Canada","\u200b","\u200b","1,410,252","\u200b","1,307,992","\u200b","1,214,223","\u200b","8","%","8","%"],["International","\u200b","\u200b","594,806","\u200b","580,158","\u200b","654,904","\u200b","3","%","(11)","%"],["Total Service GTV1","\u200b","\u200b","5,034,719","\u200b","4,905,554","\u200b","4,625,970","\u200b","3","%","6","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["1 Service GTV is calculated as total GTV less inventory sales revenue","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]] [[/GREPCENT_TABLE]] ​ GTV by Sector ​ The following pie charts illustrate the breakdown of total GTV by sector for the year ended December 31, 2021, December 31, 2020, and December 31, 2019. ​ The construction sector includes heavy equipment such as trucks, excavators, cranes and dozers. The transportation sector includes vehicles, buses, trailers and trucks that are used for transport. The other sector primarily includes equipment sold in the agricultural, forestry and energy industries. In 2021, total GTV mix compared to 2020 decreased by 2% in the construction sector and remained flat in the transportation sector. ​ ​ Total Auction Metrics We review a number of metrics including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Bids per lot sold. Each bid is completed electronically through our real-time online bidding system. A “lot” is defined as a single asset to be sold, or a group of assets bundled for sale as one unit. This metric calculates the total number of bids received for a lot divided by the total number of lots sold. ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","45"]] [[/GREPCENT_TABLE]] ​ Table of Contents Total lots sold. We define a lot as a single asset to be sold, or a group of assets bundled for sale as one unit. Low value assets are sometimes bundled into a single lot, collectively referred to as “small value lots”. ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","For the year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change"],["\u200b","","\u200b","2021","","2020","","2019","","2021 over 2020","","2020 over 2019"],["Bids per lot sold *","","\u200b","28","","24","","18","","17","%","33","%"],["Total lots sold *","","\u200b","493,371","","543,342","","506,510","","(9)","%","7","%"]] [[/GREPCENT_TABLE]] ​ * Management reviews industrial equipment auction metrics excluding GovPlanet; as a result, GovPlanet business metrics are excluded from these metrics ​ The number of bids per lot sold increased 17% to 28 in 2021 driven by a higher demand for used equipment from buyers in a tight supply market, as well as due to our increased marketing efforts and higher online activity. ​ The total lots sold decreased 9% to 493,371 in 2021 primarily impacted by the tight supply market, and the shift to a lower proportion of small value lots sold across all regions, partially offset by higher average selling prices. ​ Online bidding Across all channels, 100% of total GTV was purchased by online buyers compared to 94% in 2020. The increase in internet bidders and online buyers is a direct impact of COVID-19, as we pivoted to 100% online bidding from our traditional on site auctions where on site attendance was not permitted. We will continue to monitor the evolving impact of COVID-19 going forward and consider when a transition back to some measure of in-person attendance at our on site auction events is safe. Productivity The majority of our business continues to be generated by our A&M segment operations. Sales Force Productivity within this segment is an operational statistic that we believe provides a gauge of the effectiveness of our Revenue Producers in increasing GTV. Revenue Producers is a term used to describe our revenue-producing sales personnel. This definition is comprised of Regional Sales Managers and Territory Managers. Our Sales Force Productivity for the year ended December 31, 2021 increased 6.3% to $14.2 million per Revenue Producer as compared to $13.4 million per Revenue Producer in 2020, primarily as a result of a decrease in the number of Revenue Producers combined with the increase in GTV. ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","46"]] [[/GREPCENT_TABLE]] ​ Table of Contents A&M revenue Total A&M revenue increased 1% to $1.3 billion as compared to 2020. A&M revenue by geographical region are presented below: [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change"],["(in U.S. $000's, except percentages)","","\u200b","2021","","2020","","2019","","2021 over 2020","2020 over 2019"],["A&M Revenue by Geography","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["United States","\u200b","\u200b","\u200b","","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Service revenue","","\u200b","473,064","","475,482","\u200b","419,164","","(1)","%","13","%"],["Inventory sales revenue","","\u200b","201,047","","218,144","\u200b","270,616","","(8)","%","(19)","%"],["A&M revenue- United States","","\u200b","674,111","","693,626","\u200b","689,780","","(3)","%","1","%"],["Canada","","\u200b","","","","\u200b","","","","","","\u200b"],["Service revenue","","\u200b","193,722","","179,397","\u200b","167,389","","8","%","7","%"],["Inventory sales revenue","","\u200b","31,677","","84,257","\u200b","40,634","","(62)","%","107","%"],["A&M revenue- Canada","","\u200b","225,399","","263,654","\u200b","208,023","","(15)","%","27","%"],["International","","\u200b","","","","\u200b","","","","","","\u200b"],["Service revenue","","\u200b","92,517","","85,164","\u200b","92,270","","9","%","(8)","%"],["Inventory sales revenue","","\u200b","266,488","","203,263","\u200b","203,367","","31","%","(0)","%"],["A&M revenue- International","","\u200b","359,005","","288,427","\u200b","295,637","","24","%","(2)","%"],["Total","","\u200b","","","","\u200b","","","","","","\u200b"],["Service revenue","","\u200b","759,303","","740,043","\u200b","678,823","","3","%","9","%"],["Inventory sales revenue","","\u200b","499,212","","505,664","\u200b","514,617","","(1)","%","(2)","%"],["A&M total revenue","","\u200b","1,258,515","","1,245,707","\u200b","1,193,440","","1","%","4","%"]] [[/GREPCENT_TABLE]] ​ United States Service revenue remained flat, in line with Service GTV. The decrease was primarily due to lower fees on a lower proportion of small value lots, lower listing fees driven by lower online volumes and lower document fees driven by a decline in the total number of titled lots sold. These decreases were offset by an increase in buyer fees implemented earlier in the year. We saw positive rate performances in our guarantee contracts driven by strong pricing and positive rate performances in our GovPlanet business due to favourable mix and in our straight commission contracts driven by a lower proportion of GTV sourced from strategic accounts. ​ Inventory sales revenue decreased 8% primarily due to lower volumes of inventory contracts sourced at our combined regional events, and at several of our other auctions, but primarily in Fort Worth and Orlando. These decreases were partially offset by higher 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 COVID-19. Canada Service revenue increased 8% in line with the 8% increase in Service GTV. The increase in fees was primarily due to the re-instatement of fees waived at the Canadian on-the-farm auctions in 2020 as part of our COVID-19 response, and higher buyer fees implemented earlier in the year. These increases were offset by softer rates in GTV contributed by RBFS from facilitating financing arrangements. Inventory sales revenue decreased 62%, primarily due the non-repeat of a large inventory package dispersal of pipeline equipment in Grand Prairie, and lower mix of inventory contracts contributing to lower year-over-year performances in our Western region, mainly in Edmonton. ​ International Service revenue increased 9%, partly due to the 3% increase in Service GTV. The remaining increase was due to the higher buyer fees implemented earlier in the year and a higher buyer fee structure on higher volumes sold in Australia. ​ Inventory sales revenue increased 31%, primarily driven by positive year-over-year performance from higher volumes of inventory contracts sourced in Australia with new auctions and a new agricultural event. We also saw higher private treaty deals in Australia, strong performances at our auctions in Europe with the addition of several new auctions and local satellite yards, and higher inventory volumes from the improved economic conditions from the gradual recovery of COVID-19 in Australia, Europe and the Middle East. ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","47"]] [[/GREPCENT_TABLE]] ​ Table of Contents Costs of services A&M cost of services decreased 7% to $85.4 million primarily driven by cost savings in travel, advertising and promotion expense primarily in Q1 2021 as a result of lower activity at our on site auctions with 100% online bidding and increased utilization of TAL solutions. We also saw cost savings in employee compensation costs from lower activity at our on site auctions and cost reductions in building, facilities and technology expenses primarily due to the non-repeat of costs relating to a collector car event in Q1 2020. These decreases were partially offset by higher employee compensation expenses in our GovPlanet and Xcira businesses to support our growth strategy, as well as an unfavourable foreign exchange impact. Cost of inventory sold A&M cost of inventory sold decreased 2% to $447.9 million, primarily in line with the 1% decrease in inventory sales revenue. SG&A expenses A&M segment SG&A expenses increased 7% to $414.3 million which reflects an unfavourable foreign exchange impact as well as higher wages, salaries and benefit expenses driven by higher headcount to accelerate our growth initiatives and our transformational journey to a trusted global marketplace. Theses increases were partially offset by the non-repeat of a one-time severance of $4.3 million related to realignment of leadership in 2020 and lower short term incentive expenses driven by a softer performance and the non-repeat of a COVID-19 incentive benefit. Building, facilities and technology costs also increased primarily in our GovPlanet business as a result of the new non-rolling and rolling stock contracts effective June 1, 2021 and due to higher licensing and subscription technology expenses as we shift to cloud-based solutions to improve customer experience. ​ Other Services Segment Results of Other Services segment operations are presented below for the comparative reporting periods. [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change"],["(in U.S. $000's, except percentages)","","\u200b","2021","","2020","","2019","","2021 over 2020","","2020 over 2019"],["Service revenue","\u200b","\u200b","$","158,456","\u200b","$","131,553","\u200b","$","125,201","","20","%","5","%"],["Ancillary and logistical service expenses","\u200b","\u200b","","52,301","\u200b","","59,982","\u200b","","59,252","","(13)","%","1","%"],["Other costs of services","\u200b","\u200b","","9,146","\u200b","","5,119","\u200b","","5,904","","79","%","(13)","%"],["SG&A expenses","\u200b","\u200b","","50,312","\u200b","","29,081","\u200b","","24,373","","73","%","19","%"],["Other services profit","\u200b","\u200b","$","46,697","\u200b","$","37,371","\u200b","$","35,672","","25","%","5","%"]] [[/GREPCENT_TABLE]] ​ Other Services revenue increased 20% to $158.5 million due to the increase in revenue from Rouse of $24.5 million, higher RBFS revenues of $14.8 million, $2.9 million of higher revenues from the acquisition of SmartEquip on November 2, 2021, and higher revenues in Mascus and RB Logistics. These increases were partially offset by lower ancillary revenue of $14.6 million as some sellers have elected to forgo paint or repair services, and lower fees earned on redeployment of assets in the US. We also saw lower revenues of $3.1 million in our asset appraisal services. Ancillary and logistical service expenses decreased 13% to $52.3 million, in line with lower ancillary revenues. Other costs of services increased 79% to $9.1 million mainly due to the inclusion of Rouse as this is the full year of costs recognized since acquisition and due to the inclusion of SmartEquip which was acquired on November 2, 2021. SG&A expense increased 73% to $50.3 million primarily in wages, salaries and benefits expenses in line with the growth in our RBFS business and the inclusion of Rouse and SmartEquip. RBFS revenue increased 46% driven by higher funded volume and improved rate on fees earned from facilitating financing arrangements as well as the growth in our PurchaseSafe service to provide escrow services to private brokered transactions. Some of the positive performance in RBFS also benefited from the favourable impact of foreign exchange fluctuation, as well as from a larger dedicated sales team driving increased volumes compared to 2020. Funded volume, which represents the amount of lending brokered by RBFS, increased 43% to $747.6 million, and increased 33% when excluding the impact of foreign exchange. Other Services profit increased 25% to $46.7 million driven by our Rouse and RBFS operations, offset by less profits on lower ancillary services and asset appraisal services. ​ Additionally, in the first quarter of 2021, we launched a business version of our inventory management system (“IMS”), which offers our customers end-to-end asset management and disposition services, data analytics, dashboards, branded e-commerce sites and ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","48"]] [[/GREPCENT_TABLE]] ​ Table of Contents multiple external sales channels to help our customers achieve optimal returns. We continue to grow the number of organizations activated on IMS. In 2021, the compounded average quarterly growth rate for organizations activated on our IMS was ~83% using Q1 2021 as the base. ​ As we evolve to a marketplace, we also facilitate retail and peer-to-peer auction events and equipment sale transactions via our online technology in exchange for hosting fees. In 2021, customers that used this service disposed of $142.8 million of assets, which is an increase of 67% as compared to prior year. ​ Share repurchase program On May 8, 2019, our Board of Directors authorized a share repurchase program for the repurchase of up to $100 million worth of our common shares, approved by the Toronto Stock Exchange, over a total period of 12 months. In 2020, we repurchased 1,525,312 common shares for $53,170,000 as part of this program until it ended on May 8, 2020 as follows: [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Issuer purchases of equity securities"],["\u200b","","\u200b","","\u200b","\u200b","","\u200b","","(d) Maximum"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","(c) Total number of","\u200b","approximate dollar"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","shares purchased as","\u200b","value of shares that"],["\u200b","\u200b","(a) Total number of shares","\u200b","(b) Average price paid","\u200b","part of publicly","\u200b","may yet be purchased"],["\u200b","\u200b","purchased","\u200b","per share","\u200b","announced program","\u200b","under the program"],["March 5-23, 2020","","1,525,312","\u200b","$","34.85","","1,525,312","\u200b","$","N/A"]] [[/GREPCENT_TABLE]] ​ On August 5, 2020, our Board of Directors authorized a share repurchase program for the repurchase of up to $100.0 million worth of our common shares, approved by the Toronto Stock Exchange, over a period of 12 months, ending August 23, 2021. We did not repurchase any shares in 2020 or in 2021 as a part of this program. ​ ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","49"]] [[/GREPCENT_TABLE]] ​ Table of Contents Liquidity and Capital Resources Our principal sources of liquidity are our cash provided by operating activities and borrowings from our revolving credit facilities, which we renewed on September 21, 2021. In addition, we have senior notes currently being held in escrow to fund the Euro Auctions Acquisition. In 2021, our operational liquidity was not materially impacted by COVID-19. We believe that our existing working capital, availability under our credit facilities, and senior notes held in escrow are sufficient to satisfy our present operating requirements and contractual obligations. Our material short-term cash requirements include (a) inventory purchases, (b) capital expenditures for intangible assets and property, plant and equipment, (c) payment of quarterly dividends on an as-declared basis, (d) settlement of contracts with consignors and other suppliers, (e) personnel expenditures, with a majority of bonuses paid annually in the first quarter following each fiscal period, (f) income tax payments, primarily paid in quarterly instalments, (g) lease payments, and (h) principal payments on short-term and current portions of long-term debt, and (i) interest payments related to our current debt obligations. Note 26 of our consolidated financial statements details our commitments for expenditures on property, plant and equipment and intangible assets, as well as our commitment for inventory purchases under two-year contracts. Other long-term cash requirements include long-term debt principal repayments, which are listed according to maturity date in Note 21 of our consolidated financial statements, as well as interest payments related to our non-current debt obligations. We are also committed under various letters of credit and provide certain guarantees in the normal course of business. The Euro Auctions Acquisition funding will constitute a material cash requirement upon closing, as could the funding of any future share repurchases or mergers and acquisitions. ​ With future uncertainty due to COVID-19, we will continue to evaluate the nature and extent of any impacts to our liquidity as events unfold. Our future growth strategies continue to include but are not limited to the development of our A&M, RBFS, Rouse, and Mascus operating segments, as well as other growth opportunities such as mergers and acquisitions, including the Euro Auctions Acquisition. The execution of these growth strategies may affect our financing needs and ability to make payments on our debt, fund our other liquidity needs and make planned capital expenditures. Upon sale of our Bolton, Ontario property we intend to relocate to a replacement auction site in Amaranth, Ontario. The proceeds of the sale will be used to largely repay debt while the replacement property will be funded from cashflow from ongoing operations. If we were to consider further acquisitions to deliver on our strategic growth drivers, we may seek financing through equity markets or additional debt markets. The sale of equity securities may result in dilution to our shareholders. Issuances of preferred equity securities could provide for rights, preferences or privileges senior to those of our common stock. Further, this additional capital may not be available on reasonable terms, or at all. ​ We assess our liquidity based on our ability to generate cash and secure credit to fund operating, investing, and financing activities. Our liquidity is primarily affected by fluctuations in cash provided by operating activities, significant acquisitions of businesses, payment of dividends, share repurchases, our net capital spending1, and voluntary repayments of our Delayed-Draw Term Loan Facility (“DDTL Facility”). We believe our principal sources of liquidity, combined with the senior notes held in escrow, the new upsized DDTL Facility of $205.0 million, and approximately $170.0 million ($210.0 million CAD) of anticipated proceeds on the sale of our Bolton, Ontario, property are sufficient to fund our current operating activities and future growth strategies, including the proposed acquisition of Euro Auctions. ​ Cash provided by operating activities can fluctuate significantly from period to period due to factors such as differences in the timing, size and number of auctions during the period, the volume of our inventory contracts, the timing of the receipt of auction proceeds from buyers and of the payment of net amounts due to consignors, as well as the location of the auction with respect to restrictions on the use of cash generated therein. ​ ​ ​ ​ ​ ​ ​ [[GREPCENT_TABLE]] [["1","We calculate net capital spending as property, plant and equipment additions plus intangible asset additions less proceeds on disposition of property, plant and equipment."]] [[/GREPCENT_TABLE]] ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","50"]] [[/GREPCENT_TABLE]] ​ Table of Contents As previously discussed, we have agreed pursuant to the SPA (subject to anti-trust and other customary closing conditions) to purchase Euro Auctions for £775.0 million (approximately $1.05 billion). On September 21, 2021, we amended our existing Credit Agreement, increasing our DDTL Facility to $295.0 million, of which $205.0 million remains undrawn at December 31, 2021 and is available to fund the acquisition of Euro Auctions. On December 21, 2021, we issued $933.0 million of new senior notes into escrow, which are also available to fund the Euro Auctions Acquisition. Consequently, we cancelled the commitments entered into in Q3 for the senior secured revolving facility, senior secured term loan facility and the senior unsecured bridge facility from Goldman Sachs Bank USA. The Company intends to fund the Euro Auctions Acquisition GBP purchase price by using proceeds from a GBP term loan draw, as well as the issuances of the new senior notes, which are denominated in US and Canadian dollars. Since a significant portion of the funding must be converted to GBP to pay for Euro Auctions, the Company is exposed to foreign currency risk. To mitigate a portion of this risk, the Company entered into GBP/USD and GBP/CAD deal contingent forward foreign exchange contracts, which are described in Note 4 of the consolidated financial statements. ​ Cash flows [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","2021 over","\u200b","\u200b","2020 over","\u200b"],["(in U.S. $000's, except percentages)","\u200b","2021","","2020","","2019","","2020","","","2019","\u200b"],["Cash provided by (used in):","\u200b","\u200b","","","\u200b","","","","","","","","","\u200b"],["Operating activities","\u200b","$","317,586","\u200b","$","257,872","\u200b","332,793","\u200b","23","%","\u200b","(23)","%"],["Investing activities","\u200b","","(214,066)","\u200b","","(276,722)","\u200b","(36,057)","\u200b","(23)","%","\u200b","667","%"],["Financing activities","\u200b","","960,908","\u200b","","(111,461)","\u200b","(187,218)","\u200b","(962)","%","\u200b","(40)","%"],["Effect of changes in foreign currency rates","\u200b","","(8,871)","\u200b","","16,950","\u200b","5,171","\u200b","(152)","%","\u200b","228","%"],["Net increase in cash, cash equivalents, and restricted cash","\u200b","$","1,055,557","\u200b","$","(113,361)","\u200b","114,689","\u200b","(1,031)","%","\u200b","(199)","%"]] [[/GREPCENT_TABLE]] ​ Net cash provided by operating activities increased $59.7 million in 2021 mainly due to higher net cash inflow from the change in operating assets and liabilities. This change arose primarily from a cash inflow driven by higher auction proceeds payable related to the timing, size, and number of auctions with higher GTV in the month of December 2021 versus December 2020, as well as net inflows from inventory with lower investments in Australia and higher sales in Europe. These increases were partially offset by negative cash flows driven by larger bonus payments and the timing of payments related to local payroll, consumption and income taxes over the comparative period, as well as the prepayment of one quarter’s interest on the senior notes held in escrow. ​ Net cash used in investing activities decreased $62.7 million in 2021. This decrease was primarily due to the $171.0 million cash outflows for the November 2, 2021 SmartEquip acquisition being less than the $250.0 million cash outflows for the December 8, 2020 Rouse acquisition. Partially offsetting this change was lower cash proceeds from land sales and equity investments in 2021 compared to 2020. In the comparative period, these inflows included $15.5 million of net proceeds on the sale of land in the United States, $4.2 million of proceeds on the distribution of equity investments, and $1.7 million of proceeds on contingent consideration from equity investments. ​ Net cash provided by financing activities increased $1.1 billion in 2021. This increase was primarily due to the following changes over the comparative period: [[GREPCENT_TABLE]] [["","\u25cf","$933.5 million net proceeds from long-term debt from the December 21, 2021 issuance senior notes held in escrow to fund the Euro Auctions Acquisition;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","$137.5 million net proceeds from long-term debt from draws on our revolving credit facility to fund the SmartEquip acquisition in November 2021; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","No share repurchases in 2021, whereas we spent $53.2 million on share repurchases in Q1 2020."]] [[/GREPCENT_TABLE]] ​ Partially offsetting this change was a $27.9 million decrease in cash generated from the issuance of share capital on exercise of stock options and $12.1 million more dividends paid to shareholders over the comparative period. ​ Working capital Working capital is calculated as total current assets less total current liabilities. Working capital at December 31, 2021 was $173.8 million, an increase of $131.6 million compared to 2020. The increase in working capital is primarily attributed to $317.6 million in cash provided from operations related to net income after adjusting for items not affecting cash and net changes in operating assets and liabilities. This increase was partially offset by $103.8 million of cash outflows for the payment of dividends and $43.5 million of intangible asset and property, plant and equipment purchases. ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","51"]] [[/GREPCENT_TABLE]] ​ Table of Contents Dividend information We declared and paid a regular cash dividend of $0.22 per common share for the quarters ended September 30, 2020, December 31, 2020, and March 31, 2021. We declared and paid regular cash dividends of $0.25 per common share for the quarter ended June 30, 2021 and September 30, 2021. We have declared, but not yet paid, a dividend of $0.25 per common share for the quarter ended December 31, 2021. All dividends that we pay are “eligible dividends” for Canadian income tax purposes unless indicated otherwise. ​ Return on average invested capital Our return on average invested capital is calculated as net income attributable to stockholders divided by our average invested capital. We calculate average invested capital over a trailing 12-month period by adding the average long-term debt over that period to the average stockholders’ equity over that period. Return on average invested capital decreased 390 bps to 6.8% in 2021 from 10.7% in 2020. This decrease is primarily due to a $630.4 million, or 40%, increase in average invested capital over the comparative period, which was driven by the senior notes issued into escrow on December 21, 2021 and revolving credit facility draws to fund SmartEquip in November 2021. Also contributing to this change is a $18.2 million decrease net income attributable to stockholders over the comparative period. Return on invested capital (“ROIC”) excluding escrowed debt (non-GAAP measure) decreased 100 bps to 12.3% in 2021 from 13.3% in 2020. Credit facilities On August 14, 2020, we entered into an amendment of the Credit Agreement dated October 27, 2016 totaling US$630.0 million with a syndicate of lenders comprising: [[GREPCENT_TABLE]] [["","(1)","Multicurrency revolving facilities of up to US$530.0 million (the \u201cRevolving Facilities\u201d); and,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","(2)","A delayed-draw term loan facility of up to US$100.0 million (the \u201cDDTL Facility\u201d and together with the Revolving Facilities, the \u201cFacilities\u201d)."]] [[/GREPCENT_TABLE]] ​ On September 21, 2021, we entered into another amendment of the Credit Agreement (“September 2021 Amendment”). The September 2021 Amendment, among other things, (i) extended the maturity date of the Facilities from October 27, 2023 to September 21, 2026, (ii) increased the total size of the Facilities provided under the Credit Agreement to up to $1.045 billion, including $295.0 million of commitments under the DDTL Facility, (iii) reduced the applicable margin for base rate loans and LIBOR loans at each pricing tier level, (iv) reduced the applicable percentage per annum used to calculate the commitment fee in respect of the unused commitments under the Revolving Facilities at each pricing tier level and (v) included customary provisions to provide for the eventual replacement of LIBOR as a benchmark interest rate. ​ Immediately prior to the September 2021 Amendment, the aggregate principal amount outstanding under the DDTL Facility was $90.0 million ($118.9 million CAD). In connection with the amendment, we refinanced that amount with the proceeds from a borrowing under the DDTL Facility. There are no mandatory principal repayments of borrowings under the DDTL Facility until the remaining $205.0 million is drawn. Once the DDTL Facility is fully drawn, borrowings are subject to mandatory principal repayments at an annual amortization rate of 5%, payable in quarterly installments, with the balance payable at maturity. ​ Credit facilities at December 31, 2021 and 2020 were as follows: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["(in U.S. $000's, except percentages)","","December 31, 2021","","December 31, 2020","","% Change"],["Committed","","\u200b","","","\u200b","","","","\u200b"],["DDTL Facility","\u200b","$","298,284","\u200b","$","98,420","","203","%"],["Revolving credit facilities","\u200b","","750,000","\u200b","","530,000","","42","%"],["Uncommitted","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Revolving credit facilities","\u200b","\u200b","10,000","\u200b","\u200b","10,000","\u200b","\u2014","%"],["Total credit facilities","\u200b","$","1,048,284","\u200b","$","628,420","","67","%"],["Unused","\u200b","","","\u200b","","","","","\u200b"],["DDTL Facility","\u200b","$","205,000","\u200b","$","\u2014","","0","%"],["Revolving credit facilities","\u200b","","525,581","\u200b","","455,124","","15","%"],["Total credit facilities unused","\u200b","$","730,581","\u200b","$","455,124","","61","%"]] [[/GREPCENT_TABLE]] ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","52"]] [[/GREPCENT_TABLE]] ​ Table of Contents Revolving credit facilities At December 31, 2021, of the $760.0 million in revolving credit facilities, $750.0 million relates to our syndicated credit facility and $10.0 million relates to credit facilities in certain foreign jurisdictions. On December 31, 2021, we had $525.6 million of unused revolving credit facilities, which consisted of: [[GREPCENT_TABLE]] [["\u25cf","$515.6 million under our Credit Agreement that expires on October 27, 2023;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","$5.0 million under a foreign credit facility that expires on October 27, 2023; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","$5.0 million under a foreign demand credit facility that has no maturity date."]] [[/GREPCENT_TABLE]] ​ Term loan facility We did not make any voluntary prepayments to our drawn term loan in 2021. During 2020, we made voluntary prepayments totaling $62.7 million on the drawn term loan denominated in U.S. dollars. Prepayments are applied against future scheduled mandatory payments. The term loan currently drawn from the DDTL Facility was only available to finance the IronPlanet acquisition and is not available for other corporate purposes upon repayment of those borrowed amounts. We intend to use the undrawn $205.0 million available under the DDTL Facility to partially finance the Euro Auctions Acquisition and any related fees and expenses. Senior unsecured notes ​ 2016 Notes At December 31, 2021, we had senior unsecured notes (the “2016 Notes”) outstanding that expire on January 15, 2025 for an aggregate principal amount of $500.0 million, bearing an interest rate of 5.375% per annum. The proceeds of the offering of the 2016 Notes were used to finance the IronPlanet acquisition. The 2016 Notes are jointly and severally guaranteed on an unsecured basis, subject to certain exceptions, by each of our subsidiaries that is a borrower or guarantees indebtedness under the Credit Agreement. 2021 Notes On December 21, 2021, we completed the offering of two series of senior notes: (i) $600.0 million aggregate principal amount of 4.750% senior notes due December 15, 2031 (the “2021 USD Notes”) and (ii) $425.0 million Canadian dollar aggregate principal amount of 4.950% due December 15, 2029 ( the “2021 CAD Notes”, and together with the 2021 USD Notes, the “2021 Notes”). ​ The gross proceeds from the offering together with certain additional amounts including prepaid interest were placed into escrow accounts and will be held in escrow until the completion of the Euro Auctions Acquisition. If the Euro Auctions Acquisition is not consummated on or before September 30, 2022 or the SPA is terminated prior to such date, we will redeem all of the outstanding 2021 Notes at a redemption price equal to 100% of the original offering price of the 2021 Notes, plus accrued and unpaid interest. Once out of escrow, interest on the 2021 Notes is payable semi-annually. ​ We intend to use the net proceeds from the offering of the 2021 Notes to partially fund the consideration payable of the Euro Auctions Acquisition and any related fees and expenses. Until completion of the Euro Auctions Acquisition, the 2021 Notes are secured only by the amounts deposited into certain escrow accounts established in connection with the issuance of the 2021 Notes. Upon consummation of the proposed Euro Auctions Acquisition, the 2021 Notes will be, jointly and severally, fully and unconditionally guaranteed, on a senior unsecured basis, subject to certain exceptions, by each of our subsidiaries that is a borrower or guarantees indebtedness under our Credit Agreement and 2016 Notes. Euro Auctions, and its respective subsidiaries that become a borrower or guarantor under the Credit Agreement are expected to become guarantors following the consummation of the Euro Auctions Acquisition. ​ Debt covenants We were in compliance with all financial and other covenants applicable to our credit facilities at December 31, 2021. Our debt covenants did not change as a result of amending our Credit Agreement. Our ability to borrow under our syndicated revolving credit facility is subject to compliance with financial covenants of a consolidated leverage ratio and a consolidated interest coverage ratio. In the event of sustained deterioration of global markets and economies, we expect the covenants pertaining to our leverage ratio would be the most restrictive to our ability to access funding under our Credit Agreement. We continue to assess the impact of COVID-19 on our business and evaluate courses of action to maintain current levels of liquidity and compliance with our debt covenants. ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","53"]] [[/GREPCENT_TABLE]] ​ Table of Contents The Credit Agreement contains certain covenants that could limit the ability of the Company and certain of its subsidiaries to, among other things and subject to certain significant exceptions: (i) incur, assume or guarantee additional indebtedness; (ii) declare or pay dividends or make other distributions with respect to, or purchase or otherwise acquire or retire for value, equity interests; (iii) make loans, advances or other investments; (iv) incur liens; (v) sell or otherwise dispose of assets; and (vi) enter into transactions with affiliates. The Credit Agreement also provides for certain events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the Credit Agreement to be declared immediately due and payable. Our senior notes were issued pursuant to indentures, dated December 21, 2016 and December 21, 2021, with U.S. Bank National Association as trustee, and in the case of the 2021 CAD Notes with TSX Trust Company as Canadian co-trustee. The indentures contain covenants that limit our ability, and the ability of certain of our subsidiaries to, among other things and subject to certain significant exceptions: (i) incur, assume or guarantee additional indebtedness; (ii) declare or pay dividends or make other distributions with respect to, or purchase or otherwise acquire or retire for value, equity interests; (iii) make any principal payment on, or redeem or repurchase, subordinated debt; (iv) make loans, advances or other investments; (v) incur liens; (vi) sell or otherwise dispose of assets; and (vii) enter into transactions with affiliates. The indentures also provide for certain events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes under the applicable indenture to be declared immediately due and payable. ​ ​ ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","54"]] [[/GREPCENT_TABLE]] ​ Table of Contents Critical Accounting Policies, Judgments, Estimates and Assumptions In preparing our consolidated financial statements in conformity with US GAAP, we must make decisions that impact the reported amounts and related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgments based on our understanding and analysis of the relevant circumstances and historical experience. COVID-19 resulted in significant global economic disruption, which can cause a greater degree of uncertainty around our long-term cash projections. As COVID-19 continues to develop, we may make changes to these estimates and judgments over time, which could result in meaningful impacts to our financial statements in future periods. ​ The following discussion of critical accounting policies and estimates is intended to supplement the significant accounting policies presented in the notes to our consolidated financial statements included in “Part II, Item 8: Financial Statements and Supplementary Data” presented in this Annual Report on Form 10-K, which summarize the accounting policies and methods used in the preparation of those consolidated financial statements. The policies and the estimates discussed below are included here because they require more significant judgments and estimates in the preparation and presentation of our consolidated financial statements than other policies and estimates. Actual amounts could differ materially from those estimated by us at the time our consolidated financial statements are prepared. Business combinations Accounting for business combinations requires management to make significant estimates and assumptions, particularly for the valuation of intangible assets. The fair value of intangible assets are based upon widely-accepted valuation techniques, including discounted cash flows, multi period excess earnings method, and relief from royalty method, depending on the nature of the assets acquired or liabilities assumed. Inherent in each valuation technique are critical assumptions, including future cash flows and growth rates, gross margins, attrition rates, royalty rates, discount rates, and terminal value and forecast period assumptions. The discount rates used to discount expected cash flows to present values are typically derived from a weighted average cost of capital analysis and adjusted to reflect inherent risks. Unanticipated events and circumstances may occur that could affect either the accuracy or validity of such assumptions, estimates or actual results. We also issue common shares in return for continuing employment services from certain previous unitholders or shareholders which are measured at the fair value on acquisition date and amortized to acquisition-related costs until restrictions lapse and the common shares have vested. ​ Goodwill Goodwill is not amortized, but it is tested annually for impairment as of December 31, or more frequently if events or changes in circumstances indicate that those assets might be impaired. Goodwill is tested for impairment at a reporting unit level, which is at the same level or one level below an operating segment. We determined our reporting units to be A&M, Mascus, Rouse and SmartEquip. ​ We have the option of performing a qualitative assessment of a reporting unit to determine whether a quantitative impairment test is necessary. A qualitative assessment involves evaluating factors to determine the existence of events or circumstances that would indicate whether it is more likely than not that the fair value of the reporting unit to which goodwill belongs is less than its carrying amount. If the qualitative assessment indicates that the fair value of the reporting unit is more likely than not less than the carrying amount, then a quantitative impairment test would be performed. If a quantitative impairment test is required, the process is to identify potential impairment by comparing the reporting unit’s fair value with its carrying amount. The reporting unit’s fair value is determined using various valuation methodologies based on an income approach or a market approach. In determining the reporting unit’s fair value, management is required to make judgments and assumptions relating to future cash flows, growth rates and economic and market conditions. Historically, our reporting units have generated sufficient returns to recover the cost of goodwill. ​ A&M reporting unit goodwill For the year ended December 31, 2021, we performed a qualitative assessment of the A&M reporting unit and we concluded there were no indicators of impairment that existed. ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","55"]] [[/GREPCENT_TABLE]] ​ Table of Contents Mascus reporting unit goodwill For the year ended December 31, 2021, we performed a quantitative assessment of the Mascus reporting unit using an income approach based on discounted cash flows. The fair value of the Mascus reporting unit was measured based on the present value of the cash flows that we expect the reporting unit to generate. In determining our future cash flows, we estimated an annual revenue growth rate ranging between 6% to 10% and an operating margin ranging between 57% to 62% from 2022 to 2026. We estimated a discount rate of 15.5% reflecting the risk premium on this reporting unit, and a terminal growth rate of 3.5% for the period beyond five years. As the fair value of the Mascus reporting unit was greater than its carrying amount, we concluded that Mascus goodwill was not impaired at December 31, 2021. Rouse reporting unit goodwill For the year ended December 31, 2021, we performed a quantitative assessment of the Rouse reporting unit using an income approach based on discounted cash flows. The fair value of the Rouse reporting unit was measured based on the present value of the cash flows that we expect the reporting unit to generate. In determining our future cash flows, we estimated an annual revenue growth rate ranging between 4% to 14% and an operating margin ranging between 40% to 51% from 2022 to 2031. We estimated a discount rate of 11% reflecting the risk premium on this reporting unit, and a terminal growth rate of 3.5% for the period beyond five years. As the fair value of the Rouse reporting unit was greater than its carrying amount, we concluded that Rouse goodwill was not impaired at December 31, 2021. SmartEquip reporting unit goodwill For the year ended December 31, 2021, we performed a qualitative assessment of the SmartEquip reporting unit and concluded there were no indicators of impairment that existed. There were no events and circumstances that occurred between the acquisition date and December 31, 2021 that indicated any potential of impairment. ​ Indefinite-lived intangible assets Indefinite-lived intangible assets are tested at least annually for impairment, and between annual tests if indicators of potential impairment exist. To test our indefinite-lived intangible assets for impairment we first perform a qualitative assessment to determine if it is more likely than not that the carrying amount of our indefinite-lived intangible assets exceeds its fair value. If it is, a quantitative assessment is required. Based on our qualitative assessment, we determined there were no potential indicators of impairment of our indefinite-lived intangible assets at December 31, 2021. Long-lived assets We test long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the purpose of impairment testing, long-lived assets are grouped and tested for recoverability at the lowest level that generates independent cash flows. Our assessment concluded that the carrying amounts of our long-lived assets are recoverable as at December 31, 2021. Recoverability of trade receivables Our trade receivables are generally secured by the equipment. Refer to Note 13 of the financial statements, Trade Receivables, regarding the activity in the allowance for expected credit losses. ​ Valuation of inventories Inventory consists of equipment and other assets purchased for resale in an upcoming on site auction or online marketplace events. We typically purchase inventory for resale through a competitive process where the consignor or vendor has determined this to be the preferred method of disposition through the auction process. We value our Inventory at the lower of cost and net realizable value where net realizable value represents the expected sale price upon disposition less make-ready costs and the costs of disposal and transportation. For the year ended December 31, 2021, we reviewed our Inventory to ensure that it is recorded at the lower of cost and net realizable value. Refer to Note 14 of the financial statements, Inventory, regarding the activity in inventory write-downs. Share-based compensation We measure the fair value of equity-classified share units as of the grant date. We calculate the fair value of stock options on the grant date using the Black-Scholes option pricing model. We calculate the fair value of share units without market conditions on the grant date based on the Company’s share price. We determine the fair value of share units with market conditions using the Monte Carlo simulation model. The fair value of awards expected to vest is expensed over the respective remaining service period, with the ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","56"]] [[/GREPCENT_TABLE]] ​ Table of Contents corresponding increase to APIC recorded in equity. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate may require determination of the most appropriate inputs to the valuation model, including the expected life of the share units or stock options, volatility and dividend yield, as well as making assumptions about them. Accounting for income taxes Income taxes are accounted for using the asset and liability method. Deferred income tax assets and liabilities are based on temporary differences (differences between the accounting basis and the tax basis of the assets and liabilities) and non-capital loss, capital loss, and tax credit carry-forwards. These are measured using the enacted tax rates and laws expected to apply when these differences reverse. Deferred tax benefits, including non-capital loss, capital loss, and tax credits carry-forwards, are recognized to the extent that realization of such benefits is considered more likely than not. Liabilities for uncertain tax positions are recorded based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. We regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes. We also continually assess the likelihood and amount of potential adjustments and adjust the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. Adoption of New Standards Topic 805 Effective October 1, 2021, we have early adopted ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The update primarily addresses the accounting for contract assets and contract liabilities from revenue contracts with customers acquired in a business combination. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. We have applied the amendments to the SmartEquip acquisition, which was completed on November 2, 2021. ​ Topic 326 Effective January 1, 2020, we adopted Topic 326, Measurement of Credit Losses on Financial Instruments, which replaces the ‘incurred loss methodology’ credit impairment model with a new forward-looking methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of the standard had no material effect on the carrying values of our financial assets on the transition date. Periods prior to January 1, 2020 that are presented for comparative purposes have not been adjusted. Topic 848 Effective January 1, 2020, we adopted Topic 848, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and in March 2020, the FASB issued an update to the standard. The standard provides relief for companies preparing for the discontinuation of reference rates such as LIBOR. This guidance is effective March 12, 2020 through to December 31, 2022. The adoption of the ASU and the recent updates have not and are not expected to have a material impact on our consolidated financial statements. Topic 842 Effective January 1, 2019, we adopted ASU No. 2016-02, Leases (Topic 842). Refer to Note 25 of the financial statements, Leases, for a discussion of our lease accounting. Other In addition, effective January 1, 2020, we adopted ASU 2018-15, Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40), Customer’s Accounting for implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract on a prospective basis. The adoption of ASU 2018-15 on January 1, 2020 using the prospective transition approach did not result in a material impact to the consolidated financial statements. ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","57"]] [[/GREPCENT_TABLE]] ​ Table of Contents For a discussion of our new and amended accounting standards refer to Note 2 of the financial statements, Summary of significant accounting policies. Recent Accounting Pronouncements Recent accounting pronouncements that significantly impact our accounting policies or the presentation of our consolidated financial position or performance have been disclosed in the notes to our consolidated financial statements included in “Part II, Item 8: Financial Statements and Supplementary Data” presented elsewhere in this Annual Report on Form 10-K. ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","58"]] [[/GREPCENT_TABLE]] ​ Table of Contents Non-GAAP Measures We reference various non-GAAP measures throughout this Annual Report on Form 10-K. These 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. 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* Reconciliation We 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. ​ 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 we refer to as ‘adjusting items’. ​ In 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. We have also adjusted for certain non-recurring advisory, legal and restructuring costs and the change in fair value of derivatives. These adjustments in 2021 have been applied retrospectively to all periods presented, as applicable. ​ 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. [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change"],["\u200b","","\u200b","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","2021 over","","2020 over"],["(in U.S. $000's, except percentages)","","\u200b","2021","","2020","","2019","","2020","","2019"],["Operating income","\u200b","\u200b","$","240,147","\u200b","$","263,160","\u200b","$","223,202","","(9)","%","18","%"],["Share-based payments expense","\u200b","\u200b","\u200b","23,106","\u200b","\u200b","21,882","\u200b","\u200b","16,405","\u200b","6","%","33","%"],["Acquisition-related costs","\u200b","\u200b","\u200b","30,197","\u200b","\u200b","6,014","\u200b","\u200b","777","\u200b","402","%","674","%"],["Amortization of acquired intangible assets","\u200b","\u200b","\u200b","27,960","\u200b","\u200b","21,098","\u200b","\u200b","20,638","\u200b","33","%","2","%"],["Gain on disposition of property, plant and equipment","\u200b","\u200b","\u200b","(1,436)","\u200b","\u200b","(1,559)","\u200b","\u200b","(1,107)","\u200b","(8)","%","41","%"],["Non-recurring advisory, legal and restructuring costs","\u200b","\u200b","\u200b","3,497","\u200b","\u200b","3,919","\u200b","\u200b","\u2014","\u200b","(11)","%","100","%"],["Non-GAAP adjusted operating income*","\u200b","\u200b","$","323,471","\u200b","$","314,514","\u200b","$","259,915","","3","%","21","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Please refer to pages 65-66 for a summary of adjusting items during the years ended December 31, 2021, 2020, and 2019."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Non-GAAP adjusted operating income* represents operating income excluding the effects of adjusting items."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","Non-recurring advisory, legal and restructuring costs include $1.4 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $1.6 million of SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, and $0.5 million of advisory costs relating to a cybersecurity incident detected in Q4 2021. In addition, we have reclassified severance costs incurred in 2020 as non-recurring advisory, legal and restructuring costs."]] [[/GREPCENT_TABLE]] ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","59"]] [[/GREPCENT_TABLE]] ​ Table of Contents Non-GAAP Adjusted Net Income Attributable to Stockholders* and Non-GAAP Diluted Adjusted EPS Attributable to Stockholders* Reconciliation We believe that non-GAAP adjusted net income attributable to stockholders* provides useful information about the growth or decline of our net income attributable to stockholders 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 diluted Adjusted EPS attributable to stockholders* eliminates the financial impact of adjusting items which are after-tax effects of significant non-recurring or 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 we refer to as ‘adjusting items’. In 2021, we 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. We have also adjusted for certain non-recurring advisory, legal and restructuring costs and the change in fair value of derivatives. These adjustments in 2021 have been applied retrospectively to all periods presented, as applicable. ​ 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 our consolidated income statements. [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","% Change"],["(in U.S. $000's, except share and","","\u200b","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","2021 over","","2020 over","\u200b"],["per share data, and percentages)","","\u200b","2021","","2020","","2019","","2020","","2019","\u200b"],["Net income attributable to stockholders","\u200b","\u200b","$","151,868","\u200b","$","170,095","\u200b","$","149,039","","\u200b","(11)","%","14","%"],["Share-based payments expense","\u200b","\u200b","\u200b","23,106","\u200b","\u200b","21,882","\u200b","\u200b","16,405","\u200b","\u200b","6","%","33","%"],["Acquisition-related costs","\u200b","\u200b","\u200b","30,197","\u200b","\u200b","6,014","\u200b","\u200b","777","\u200b","\u200b","402","%","674","%"],["Amortization of acquired intangible assets","\u200b","\u200b","\u200b","27,960","\u200b","\u200b","21,098","\u200b","\u200b","20,638","\u200b","\u200b","33","%","2","%"],["Gain on disposition of property, plant and equipment","\u200b","\u200b","\u200b","(1,436)","\u200b","\u200b","(1,559)","\u200b","\u200b","(1,107)","\u200b","\u200b","(8)","%","41","%"],["Change in fair value of derivatives","\u200b","\u200b","","1,248","\u200b","","\u2014","\u200b","","\u2014","","\u200b","100","%","\u2014","%"],["Non-recurring advisory, legal and restructuring costs","\u200b","\u200b","","3,497","\u200b","","3,919","\u200b","","\u2014","","\u200b","(11)","%","100","%"],["Related tax effects of the above","\u200b","\u200b","\u200b","(20,334)","\u200b","\u200b","(20,544)","\u200b","\u200b","(11,783)","\u200b","\u200b","(1)","%","74","%"],["Change in uncertain tax provision - tax effect","\u200b","\u200b","","\u2014","\u200b","","7,755","\u200b","","\u2014","","\u200b","(100)","%","100","%"],["Non-GAAP adjusted net income attributable to stockholders*","\u200b","\u200b","$","216,106","\u200b","$","208,660","\u200b","$","173,969","\u200b","\u200b","4","%","20","%"],["Weighted average number of dilutive shares outstanding","\u200b","\u200b","","111,406,830","\u200b","","110,310,984","\u200b","","109,759,123","\u200b","","1","%","1","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Diluted earnings per share attributable to stockholders","\u200b","\u200b","$","1.36","\u200b","$","1.54","\u200b","$","1.36","\u200b","\u200b","(12)","%","13","%"],["Non-GAAP diluted adjusted EPS attributable to Stockholders*","\u200b","\u200b","$","1.94","\u200b","$","1.89","\u200b","$","1.59","\u200b","\u200b","3","%","19","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Please refer to pages 65-66 for a summary of adjusting items during the years ended December 31, 2021, 2020, and 2019."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Non-GAAP adjusted net income attributable to stockholders* represents net income attributable to stockholders excluding the effects of adjusting items."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","Non-GAAP diluted adjusted EPS attributable to stockholders* is calculated 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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(4)","Non-recurring advisory, legal and restructuring costs include $1.4 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $1.6 million of SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, and $0.5 million of advisory costs relating to a cybersecurity incident detected in Q4 2021. In addition, we have reclassified severance costs incurred in 2020 as non-recurring advisory, legal and restructuring costs."]] [[/GREPCENT_TABLE]] ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","60"]] [[/GREPCENT_TABLE]] ​ Table of Contents Non-GAAP Adjusted EBITDA* We believe non-GAAP adjusted EBITDA* provides useful information about the growth or decline of our net income when compared between different financial periods. We use non-GAAP adjusted EBITDA as a key performance measure because we believe it facilitates operating performance comparisons from period to period. In 2021, we 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. We have also adjusted for certain non-recurring advisory, legal and restructuring costs and the change in fair value of derivatives. These adjustments in 2021 have been applied retrospectively to all periods presented, as applicable. ​ 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: [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","% Change"],["\u200b","","\u200b","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","2021 over","","2020 over","\u200b"],["(in U.S. $000's, except percentages)","","\u200b","2021","","2020","","2019","","2020","","2019","\u200b"],["Net income","\u200b","\u200b","$","151,854","\u200b","$","170,358","\u200b","$","149,140","\u200b","\u200b","(11)","%","14","%"],["Add: depreciation and amortization expenses","\u200b","\u200b","","87,889","\u200b","","74,921","\u200b","","70,501","\u200b","","17","%","6","%"],["Add: interest expense","\u200b","\u200b","","36,993","\u200b","","35,568","\u200b","","41,277","\u200b","","4","%","(14)","%"],["Less: interest income","\u200b","\u200b","","(1,402)","\u200b","","(2,338)","\u200b","","(3,802)","\u200b","","(40)","%","(39)","%"],["Add: income tax expense","\u200b","\u200b","","53,378","\u200b","","65,530","\u200b","","41,623","\u200b","","(19)","%","57","%"],["EBITDA","\u200b","\u200b","","328,712","\u200b","","344,039","\u200b","","298,739","\u200b","","(4)","%","15","%"],["Share-based payments expense","\u200b","\u200b","\u200b","23,106","\u200b","\u200b","21,882","\u200b","\u200b","16,405","\u200b","\u200b","6","%","33","%"],["Acquisition-related costs","\u200b","\u200b","","30,197","\u200b","","6,014","\u200b","","777","\u200b","","402","%","674","%"],["Gain on disposition of property, plant and equipment","\u200b","\u200b","\u200b","(1,436)","\u200b","\u200b","(1,559)","\u200b","\u200b","(1,107)","\u200b","\u200b","(8)","%","41","%"],["Change in fair value of derivatives","\u200b","\u200b","","1,248","\u200b","","\u2014","\u200b","","\u2014","\u200b","","100","%","\u2014","%"],["Non-recurring advisory, legal and restructuring costs","\u200b","\u200b","\u200b","3,497","\u200b","\u200b","3,919","\u200b","\u200b","\u2014","\u200b","\u200b","(11)","%","100","%"],["Non-GAAP adjusted EBITDA*","\u200b","\u200b","$","385,324","\u200b","$","374,295","\u200b","$","314,814","\u200b","\u200b","3","%","19","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Please refer to pages 65-66 for a summary of adjusting items during the years ended December 31, 2021, 2020, and 2019."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Non-GAAP adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, income tax expense, and 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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","Non-recurring advisory, legal and restructuring costs include $1.4 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $1.6 million of SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, and $0.5 million of advisory costs relating to a cybersecurity incident detected in Q4 2021. In addition, we have reclassified severance costs incurred in 2020 as non-recurring advisory, legal and restructuring costs."]] [[/GREPCENT_TABLE]] ​ ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","61"]] [[/GREPCENT_TABLE]] ​ Table of Contents Non-GAAP Adjusted Net Debt* and Non-GAAP Adjusted Net Debt*/Non-GAAP Adjusted EBITDA* Reconciliation We believe that comparing non-GAAP adjusted net debt*/non-GAAP adjusted EBITDA* on a trailing 12-month basis for different financial periods provides useful information about the performance of our operations as an indicator of the amount of time it would take us to settle both our short and long-term debt. We do not consider this to be a measure of our liquidity, which is our ability to settle only short-term obligations, but rather a measure of how well we fund liquidity. Measures of liquidity are noted under “Liquidity and Capital Resources”. ​ The following table reconciles non-GAAP adjusted net debt* to debt, non-GAAP adjusted EBITDA* to net income, and non-GAAP adjusted net debt*/non-GAAP adjusted EBITDA* to debt/ net income, respectively, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements. ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change"],["(in U.S. $millions, except percentages)","\u200b","2021","\u200b","2020","\u200b","2019","\u200b","2021 over 2020","\u200b","2020 over 2019"],["Short-term debt","\u200b","$","6.1","","$","29.1","","$","4.7","","(79)","%","519","%"],["Long-term debt","\u200b","","1,737.4","\u200b","","636.7","\u200b","","645.5","","173","%","(1)","%"],["Debt","\u200b","","1,743.5","\u200b","","665.8","\u200b","","650.2","","162","%","2","%"],["Less: long-term term in escrow","\u200b","\u200b","(933.5)","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u2014","%","\u2014","%"],["Less: Cash and cash equivalents","\u200b","","(326.1)","\u200b","","(278.8)","\u200b","","(359.7)","","17","%","(22)","%"],["Non-GAAP adjusted net debt*","\u200b","","483.9","\u200b","","387.0","\u200b","","290.5","","25","%","33","%"],["Net income","\u200b","$","151.9","\u200b","$","170.4","\u200b","$","149.1","","(11)","%","14","%"],["Add: depreciation and amortization expenses","\u200b","","87.9","\u200b","","74.9","\u200b","","70.5","","17","%","6","%"],["Add: interest expense","\u200b","","37.0","\u200b","","35.6","\u200b","","41.3","","4","%","(14)","%"],["Less: interest income","\u200b","","(1.4)","\u200b","","(2.3)","\u200b","","(3.8)","","(40)","%","(39)","%"],["Add: income tax expense","\u200b","","53.4","\u200b","","65.5","\u200b","","41.6","","(19)","%","57","%"],["EBITDA","\u200b","","328.8","\u200b","","344.1","\u200b","","298.7","","(4)","%","15","%"],["Share-based payments expense","\u200b","","23.1","\u200b","","21.9","\u200b","","16.4","","6","%","34","%"],["Acquisition-related costs","\u200b","","30.2","\u200b","","6.0","\u200b","","0.8","","402","%","674","%"],["Gain on disposition of property, plant and equipment","\u200b","\u200b","(1.4)","\u200b","\u200b","(1.6)","\u200b","\u200b","(1.1)","\u200b","(10)","%","41","%"],["Change in fair value of derivatives","\u200b","\u200b","1.2","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","100","%","\u2014","%"],["Non-recurring advisory, legal and restructuring costs","\u200b","","3.5","\u200b","","3.9","\u200b","","\u2014","","(11)","%","\u2014","%"],["Non-GAAP adjusted EBITDA*","\u200b","$","385.4","\u200b","$","374.3","\u200b","$","314.8","","3","%","19","%"],["Debt/net income","\u200b","","11.5","x","","3.9","x","","4.4","x","194","%","(11)","%"],["Non-GAAP adjusted net debt*/Non-GAAP adjusted EBITDA*","\u200b","","1.3","x","","1.0","x","","0.9","x","21","%","12","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Please refer to pages 65-66 for a summary of adjusting items during the years ended December 31, 2021, 2020, and 2019."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Non-GAAP adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, income tax expense, and subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, gain/ loss on disposition of property, plant and equipment, terminated and ongoing transaction costs, and excluding the effects of any non-recurring or unusual adjusting items."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","Non-GAAP adjusted net debt* is calculated by subtracting cash and cash equivalents from short and long-term debt."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(4)","Non-GAAP adjusted net debt*/Non-GAAP adjusted EBITDA* is calculated by dividing non-GAAP adjusted net debt* by non-GAAP adjusted EBITDA*."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(5)","Non-recurring advisory, legal and restructuring costs include $1.4 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $1.6 million of SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, and $0.5 million of advisory costs relating to a cybersecurity incident detected in Q4 2021. In addition, we have reclassified severance costs incurred in 2020 as non-recurring advisory, legal and restructuring costs."]] [[/GREPCENT_TABLE]] ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","62"]] [[/GREPCENT_TABLE]] ​ Table of Contents Operating Free Cash Flow* (“OFCF”) Reconciliation We believe OFCF*, when compared on a trailing 12-month basis to different financial periods provides an effective measure of the cash generated by our business and provides useful information regarding cash flows remaining for discretionary return to stockholders, mergers and acquisitions, or debt reduction. Our 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, our consolidated statements of cash flows: ​ [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","% Change"],["(in U.S. $ millions, except percentages)","\u200b","2021","","2020","","2019","","2020 over 2019","","2020 over 2019","\u200b"],["Cash provided by operating activities","\u200b","$","317.6","\u200b","$","257.9","\u200b","$","332.8","\u200b","\u200b","23","%","(23)","%"],["Property, plant and equipment additions","\u200b","","9.8","\u200b","","14.3","\u200b","","13.6","\u200b","","(31)","%","5","%"],["Intangible asset additions","\u200b","","33.7","\u200b","","28.9","\u200b","","27.4","\u200b","","17","%","5","%"],["Proceeds on disposition of property plant and equipment","\u200b","","(1.9)","\u200b","","(16.4)","\u200b","","(5.9)","\u200b","","(88)","%","178","%"],["Net capital spending","\u200b","$","41.6","\u200b","$","26.8","\u200b","$","35.1","\u200b","\u200b","55","%","(24)","%"],["OFCF*","\u200b","$","276.0","\u200b","$","231.1","\u200b","$","297.7","\u200b","\u200b","19","%","(22)","%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","OFCF* is calculated by subtracting net capital spending from cash provided by operating activities."]] [[/GREPCENT_TABLE]] ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","63"]] [[/GREPCENT_TABLE]] ​ Table of Contents Non-GAAP Adjusted Net Income Attributable to Stockholders* and ROIC* Reconciliation We believe that comparing ROIC* on a trailing 12-month basis for different financial periods, provides useful information about the after-tax return generated by our investments. In 2021, we 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 in 2021 have been applied retrospectively to all periods presented. We have also adjusted for certain non-recurring advisory, legal and restructuring costs and the change in fair value of derivatives. The following table reconciles non-GAAP adjusted net income attributable to stockholders* and ROIC* to net income attributable to stockholders and return on average invested capital which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements: [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year ended December 31,"],["\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","% Change"],["\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","2021 over","","2020 over","\u200b"],["(in U.S. $millions, except percentages)","\u200b","2021","","2020","","2019","","2020","","2019","\u200b"],["Net income attributable to stockholders","\u200b","$","151.9","\u200b","$","170.0","\u200b","$","149.0","\u200b","\u200b","(11)","%","14","%"],["Share-based payments expense","\u200b","","23.1","\u200b","","21.9","\u200b","","16.4","\u200b","","6","%","33","%"],["Acquisition-related costs","\u200b","","30.2","\u200b","","6.0","\u200b","","0.8","\u200b","","402","%","674","%"],["Amortization of acquired intangible assets","\u200b","\u200b","28.0","\u200b","\u200b","21.1","\u200b","\u200b","20.6","\u200b","\u200b","33","%","2","%"],["Gain on disposition of property, plant and equipment","\u200b","\u200b","(1.4)","\u200b","\u200b","(1.6)","\u200b","\u200b","(1.1)","\u200b","\u200b","(10)","%","41","%"],["Change in fair value of derivatives","\u200b","","1.2","\u200b","","\u2014","\u200b","","\u2014","\u200b","","100","%","\u2014","%"],["Non-recurring advisory, legal and restructuring costs","\u200b","","3.5","\u200b","","3.9","\u200b","","\u2014","\u200b","","(10)","%","100.0","%"],["Related tax effects of the above","\u200b","","(20.3)","\u200b","","(20.5)","\u200b","","(11.8)","\u200b","","(1)","%","74","%"],["Change in uncertain tax provision - tax effect","\u200b","","\u2014","\u200b","","7.8","\u200b","","\u2014","\u200b","","(100)","%","100","%"],["Non-GAAP adjusted net income attributable to stockholders*","\u200b","$","216.2","\u200b","$","211.5","\u200b","$","176.9","\u200b","\u200b","2","%","20","%"],["Opening long-term debt","\u200b","$","636.7","\u200b","$","645.5","\u200b","$","711.3","\u200b","\u200b","(1)","%","(9)","%"],["Ending long-term debt","\u200b","","1,737.4","\u200b","","636.7","\u200b","","645.5","\u200b","\u200b","173","%","(1)","%"],["Less: long-term debt in escrow","\u200b","\u200b","933.5","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","100","%","\u2014","%"],["Non-GAAP adjusted ending long-term debt*","\u200b","\u200b","803.9","\u200b","\u200b","636.7","\u200b","\u200b","645.5","\u200b","\u200b","26","%","(1)","%"],["Average long-term debt","\u200b","\u200b","1,187.1","\u200b","\u200b","641.1","\u200b","\u200b","678.4","\u200b","\u200b","85","%","(5)","%"],["Non-GAAP adjusted average long-term debt*","\u200b","\u200b","720.3","\u200b","\u200b","641.1","\u200b","\u200b","678.4","\u200b","\u200b","12","%","(5)","%"],["Opening stockholders' equity","\u200b","$","1,007.2","\u200b","$","901.8","\u200b","$","830.6","\u200b","\u200b","12","%","9","%"],["Ending stockholders' equity","\u200b","","1,070.7","\u200b","","1,007.2","\u200b","","901.8","\u200b","\u200b","6","%","12","%"],["Average stockholders' equity","\u200b","","1,039.0","\u200b","","954.5","\u200b","","866.2","\u200b","\u200b","9","%","10","%"],["Average invested capital","\u200b","$","2,226.1","\u200b","$","1,595.6","\u200b","$","1,544.6","\u200b","\u200b","40","%","3","%"],["Non-GAAP adjusted average invested capital","\u200b","\u200b","1,759.3","\u200b","\u200b","1,595.6","\u200b","\u200b","1,544.6","\u200b","\u200b","10","%","3","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Return on average invested capital","\u200b","","6.8","%","","10.7","%","","9.6","%","\u200b","(390)","bps","110","bps"],["Non-GAAP ROIC*","\u200b","","9.7","%","","13.3","%","","11.5","%","\u200b","(360)","bps","180","bps"],["Non-GAAP ROIC* excluding escrowed debt","\u200b","\u200b","12.3","%","\u200b","13.3","%","\u200b","11.5","%","\u200b","(100)","bps","180","bps"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Please refer to pages 65-66 for a summary of adjusting items for the years ended December 31, 2021, 2020, and 2019."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Return on average invested capital is calculated as net income attributable to stockholders divided by average invested capital. We calculate average invested capital as the average long-term debt and average stockholders\u2019 equity over a trailing 12-month period."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","ROIC* is calculated as non-GAAP adjusted net income attributable to stockholders* divided by average invested capital."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(4)","The adoption of Leases (Topic 842) requires lessees to recognize almost all leases, including operating leases, on the balance sheet through a right-of-use asset and a corresponding lease liability. The lease liability is not included in the calculation of debt."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(5)","Non-recurring advisory, legal and restructuring costs include $1.4 million of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $1.6 million of SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, and $0.5 million of advisory costs relating to a cybersecurity incident detected in Q4 2021. In addition, we have reclassified severance costs incurred in 2020 as non-recurring advisory, legal and restructuring costs."]] [[/GREPCENT_TABLE]] ​ ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","64"]] [[/GREPCENT_TABLE]] ​ Table of Contents Adjusting Items Non-GAAP Measures In 2021, we began adjusting for the following items that we do not consider to be part of our normal operating results. These adjustments in 2021 have been applied retrospectively to all periods presented. The following describes the nature of these adjusting items recognized: [[GREPCENT_TABLE]] [["","\u25cf","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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Amortization of acquired intangible assets \u2013 includes amortization of all intangible assets acquired primarily from the acquisitions of IronPlanet, Rouse and Mascus."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Gain or loss on disposition of property, plant and equipment \u2013 includes any gain or loss recognized for the difference between the sales proceeds and the carrying amount of the disposed property, plant and equipment."]] [[/GREPCENT_TABLE]] The following are additional adjusting items during the year which we do not consider to be part of our normal operating results. Additional adjusting items for the year ended December 31, 2021: Recognized in the fourth quarter of 2021 [[GREPCENT_TABLE]] [["\u25cf","$14.0 million ($11.6 million after tax, or $0.10 per diluted share) of acquisition-related costs related to the acquisitions of Rouse, and SmartEquip and the proposed acquisition of Euro Auctions."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","$1.2 million ($1.1 million after tax, or $0.01 per diluted share) loss due to the change in fair value of derivatives to manage our exposure to foreign currency exchange rate fluctuations on the purchase consideration for the proposed acquisition of Euro Auctions."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","$2.6 million ($1.9 million after tax, or $0.01 per diluted share) of non-recurring advisory, legal and restructuring costs which include $1.4 million ($1.0 million after tax, or $0.01 per diluted share) of terminated and ongoing transaction and legal costs relating to mergers and acquisition activity, $0.7 million ($0.5 million after tax, or $0.00 per diluted share) of SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, and $0.5 million ($0.4 million after tax, or $0.00 per diluted share) of advisory costs relating to a cybersecurity incident detected in Q4 2021."]] [[/GREPCENT_TABLE]] ​ Recognized in the third quarter of 2021 [[GREPCENT_TABLE]] [["\u25cf","$10.3 million ($8.3 million after tax, or $0.07 per diluted share) of acquisition-related costs related to the acquisitions of Rouse, and SmartEquip and proposed acquisition of Euro Auctions."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","$0.7 million ($0.5 million after tax, or $0.00 per diluted share) of non-recurring advisory, legal and restructuring costs related to SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, which has been retrospectively applied to Q3 2021."]] [[/GREPCENT_TABLE]] ​ Recognized in the second quarter of 2021 [[GREPCENT_TABLE]] [["\u25cf","$0.2 million ($0.2 million after tax, or $0.00 per diluted share) of non-recurring advisory, legal and restructuring costs related to SOX remediation costs relating to our efforts to remediate the material weaknesses identified in 2020, which has been retrospectively applied to Q2 2021."]] [[/GREPCENT_TABLE]] ​ Recognized in the first quarter of 2021 [[GREPCENT_TABLE]] [["\u25cf","There were no adjustment items recognized in the first quarter of 2021."]] [[/GREPCENT_TABLE]] ​ ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","65"]] [[/GREPCENT_TABLE]] ​ Table of Contents Adjusting items for the year ended December 31, 2020: ​ Recognized in the fourth quarter of 2020 [[GREPCENT_TABLE]] [["\u25cf","$5.2 million ($3.9 million after tax, or $0.04 per diluted share) of acquisition-related costs related to the acquisition of Rouse."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u25cf","$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."]] [[/GREPCENT_TABLE]] ​ Recognized in the third quarter of 2020 [[GREPCENT_TABLE]] [["\u25cf","$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. These severance costs were reclassified to non-recurring advisory, legal and restructuring costs in 2021."]] [[/GREPCENT_TABLE]] Recognized in the second quarter of 2020 [[GREPCENT_TABLE]] [["\u25cf","$6.2 million ($0.06 per diluted share) in current and deferred income tax expense related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements."]] [[/GREPCENT_TABLE]] Recognized in the first quarter of 2020 [[GREPCENT_TABLE]] [["\u25cf","There were no adjustment items recognized in the first quarter of 2020."]] [[/GREPCENT_TABLE]] Adjusting items for the year ended December 31, 2019: Recognized in the fourth quarter of 2019 [[GREPCENT_TABLE]] [["\u25cf","$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."]] [[/GREPCENT_TABLE]] Recognized in the third quarter of 2019 [[GREPCENT_TABLE]] [["\u25cf","There were no adjustment items recognized in the third quarter of 2019."]] [[/GREPCENT_TABLE]] Recognized in the second quarter of 2019 [[GREPCENT_TABLE]] [["\u25cf","There were no adjustment items recognized in the second quarter of 2019."]] [[/GREPCENT_TABLE]] Recognized in the first quarter of 2019 [[GREPCENT_TABLE]] [["\u25cf","There were no adjustment items recognized in the first quarter of 2019."]] [[/GREPCENT_TABLE]] ​ ​ ​ [[GREPCENT_TABLE]] [["\u200b"],["Ritchie Bros.","66"]] [[/GREPCENT_TABLE]] ​ Table of Contents