UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~September 30, 2020~~March 31, 2021

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number: 001-13425

Ritchie Bros. Auctioneers Incorporated

(Exact Name of Registrant as Specified in its Charter)


Canada		98-0626225
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9500 Glenlyon Parkway
Burnaby, British Columbia, Canada		V5J 0C6
(Address of Principal Executive Offices)		(Zip Code)

(778) 331-5500

(Registrant’s Telephone Number, including Area Code)

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

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

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

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

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

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

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

Yes ☐ No ⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: ~~109,400,129~~110,280,611 common shares, without par value, outstanding as of ~~November 4, 2020.~~May 7, 2021.

Table of Contents

RITCHIE BROS. AUCTIONEERS INCORPORATED

FORM 10-Q

For the quarter ended ~~September 30, 2020~~March 31, 2021

INDEX

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Income Statements

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

(Unaudited)


	Three months ended				Nine months ended				Three months ended
	September 30,				September 30,				March 31,
	2020		2019		2020		2019		2021		2020
Revenue:
Service revenue	$	222,679	$	178,577	$	639,941	$	585,555	$	206,030	$	183,123
Inventory sales revenue		108,863		111,219		353,906		400,892		125,525		90,132
Total revenue		331,542		289,796		993,847		986,447		331,555		273,255

Operating expenses:
Costs of services		39,223		36,382		118,026		122,719		36,027		39,355
Cost of inventory sold		96,253		102,410		320,972		372,703		110,747		81,585
Selling, general and administrative expenses		110,186		93,691		309,203		286,589		116,078		98,385
Acquisition-related costs		—		45		—		752		2,922		—
Depreciation and amortization expenses		18,436		17,692		55,586		51,919		21,070		19,293
Gain on disposition of property, plant and equipment		(276)		(821)		(1,536)		(1,071)		(68)		(47)
Foreign exchange loss		336		237		1,330		1,118		277		602
Total operating expenses		264,158		249,636		803,581		834,729		287,053		239,173
Operating income		67,384		40,160		190,266		151,718		44,502		34,082

Interest expense		(8,737)		(10,090)		(26,801)		(31,023)		(8,946)		(9,182)
Other income, net		2,280		1,962		6,714		5,680		1,002		3,577
Income before income taxes		60,927		32,032		170,179		126,375		36,558		28,477

Income tax expense		15,437		6,760		48,741		28,800		8,419		5,648
Net income	$	45,490	$	25,272	$	121,438	$	97,575	$	28,139	$	22,829

Net income attributable to:
Stockholders	$	45,387	$	25,266	$	121,239	$	97,466	$	28,188	$	22,809
Non-controlling interests		103		6		199		109		(49)		20
Net income	$	45,490	$	25,272	$	121,438	$	97,575	$	28,139	$	22,829

Earnings per share attributable to stockholders:
Basic	$	0.42	$	0.23	$	1.11	$	0.90	$	0.26	$	0.21
Diluted	$	0.41	$	0.23	$	1.10	$	0.89	$	0.25	$	0.21

Weighted average number of shares outstanding:
Basic		109,018,469		108,003,390		108,887,026		108,453,525		109,972,997		109,248,880
Diluted		110,369,718		109,381,173		110,060,712		109,634,195		111,267,392		110,482,837

See accompanying notes to the condensed consolidated financial statements.


Ritchie Bros.	1

Table of Contents

Condensed Consolidated Statements of Comprehensive Income

(Expressed in thousands of United States dollars)

(Unaudited)


	Three months ended				Nine months ended				Three months ended
	September 30,				September 30,				March 31,
	2020		2019		2020		2019		2021		2020
Net income	$	45,490	$	25,272	$	121,438	$	97,575	$	28,139	$	22,829
Other comprehensive income (loss), net of income tax:
Other comprehensive loss, net of income tax:
Foreign currency translation adjustment		12,549		(9,703)		7,445		(8,880)		(10,360)		(15,868)
Total comprehensive income	$	58,039	$	15,569	$	128,883	$	88,695	$	17,779	$	6,961

Total comprehensive income attributable to:
Total comprehensive income (loss) attributable to:
Stockholders	$	57,910	$	15,586	$	128,654	$	88,614	$	17,844	$	6,949
Non-controlling interests		129		(17)		229		81		(65)		12
	$	58,039	$	15,569	$	128,883	$	88,695	$	17,779	$	6,961

See accompanying notes to the condensed consolidated financial statements.


Ritchie Bros.	2

Table of Contents

Condensed Consolidated Balance Sheets

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

(Unaudited)


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Assets

Cash and cash equivalents	$	470,285	$	359,671	$	294,380	$	278,766
Restricted cash		120,014		60,585		147,240		28,129
Trade and other receivables		333,110		142,627		294,291		135,001
Less: allowance for credit losses		(4,635)		(5,225)		(5,576)		(5,467)
Inventory		62,101		64,956		72,314		86,278
Other current assets		26,279		50,160		32,802		27,274
Income taxes receivable		5,619		6,810		8,224		6,797
Total current assets		1,012,773		679,584		843,675		556,778

Property, plant and equipment		481,047		484,482		483,981		492,127
Other non-current assets		134,973		145,679		148,882		147,608
Intangible assets		220,791		233,380		296,480		300,948
Goodwill		672,746		672,310		840,632		840,610
Deferred tax assets		15,659		13,995		13,044		13,458
Total assets	$	2,537,989	$	2,229,430	$	2,626,694	$	2,351,529

Liabilities and Equity

Auction proceeds payable	$	496,936	$	276,188	$	517,521	$	214,254
Trade and other payables		215,110		194,279		227,679		243,786
Income taxes payable		11,241		7,809		3,215		17,032
Short-term debt		20,285		4,705		25,933		29,145
Current portion of long-term debt		9,926		18,277		10,517		10,360
Total current liabilities		753,498		501,258		784,865		514,577

Long-term debt		622,635		627,204		626,202		626,288
Other non-current liabilities		144,677		151,238		159,266		153,000
Deferred tax liabilities		52,312		42,743		45,753		45,265
Total liabilities		1,573,122		1,322,443		1,616,086		1,339,130

Commitments and Contingencies (Note 19 and Note 20 respectively)
Commitments and Contingencies (Note 21 and Note 22 respectively)
Stockholders' equity:
Share capital:
Common stock; 0 par value, unlimited shares authorized, issued and outstanding shares: 109,381,891 (December 31, 2019: 109,337,781)		195,727		194,771
Common stock; 0 par value, unlimited shares authorized, issued and outstanding shares: 110,253,056 (December 31, 2020: 109,876,428)						210,765		200,451
Additional paid-in capital		48,253		52,110		43,612		49,171
Retained earnings		767,188		714,051		795,781		791,918
Accumulated other comprehensive loss		(51,684)		(59,099)		(44,639)		(34,295)
Stockholders' equity		959,484		901,833		1,005,519		1,007,245
Non-controlling interest		5,383		5,154		5,089		5,154
Total stockholders' equity		964,867		906,987		1,010,608		1,012,399
Total liabilities and equity	$	2,537,989	$	2,229,430	$	2,626,694	$	2,351,529

See accompanying notes to the condensed consolidated financial statements.


Ritchie Bros.	3

Table of Contents

Condensed Consolidated Statements of Changes in Equity

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

(Unaudited)

Attributable to stockholders




Contingently

Additional

Accumulated

Non-

redeemable

Common stock

paid-In

other

controlling

performance

Number of

capital

Retained

comprehensive

interest

Total

share units
Three months ended September 30, 2020

shares

Amount

("APIC")

earnings

loss

("NCI")

equity

("PSUs")

Balance, June 30, 2020

108,630,537

$
169,255

$
47,958

$
746,048

$
(64,207)

$
5,254

$
904,308

—
Net income

—

—

—

45,387

—

103

45,490

—
Other comprehensive income (loss)

—

—

—

—

12,523

26

12,549

—

—

—

—

45,387

12,523

129

58,039

—
Stock option exercises

751,268

26,470

(5,701)

—

—

—

20,769

—
Issuance of common stock related to vesting of share units

86

2

(7)

—

—

—

(5)

—
Stock option compensation expense

—

—

1,671

—

—

—

1,671

—
Equity-classified share units expense

—

—

4,138

—

—

—

4,138

—
Equity-classified share units dividend equivalents

—

—

194

(194)

—

—

—

—
Cash dividends paid

—

—

—

(24,053)

—

—

(24,053)

—
Balance, September 30, 2020

109,381,891

$
195,727

$
48,253

$
767,188

$
(51,684)

$
5,383

$
964,867

—

Three months ended September 30, 2019

















Balance, June 30, 2019

107,836,674

$
150,585

$
54,633

$
680,915

$
(55,449)

$
5,165

$
835,849

1,049
Net income

—

—

—

25,266

—

6

25,272

—
Other comprehensive income (loss)

—

—

—

—

(9,680)

(23)

(9,703)

—

—

—

—

25,266

(9,680)

(17)

15,569

—
Stock option exercises

363,217

8,451

(135)

—

—

—

8,316

—
Issuance of common stock related to vesting of share units

10,444

737

—

1

—

—

738

(1,083)
Stock option compensation expense

—

—

1,653

—

—

—

1,653

—
Equity-classified share units expense

—

—

2,830

—

—

—

2,830

21
Equity-classified share units dividend equivalents

—

—

308

(320)

—

—

(12)

13
Cash dividends paid

—

—

—

(21,631)

—

—

(21,631)

—
Balance, September 30, 2019

108,210,335

$
159,773

$
59,289

$
684,231

$
(65,129)

$
5,148

$
843,312

—


	Attributable to stockholders
				Additional				Accumulated		Non-
	Common stock			paid-In				other		controlling
	Number of			capital		Retained		comprehensive		interest		Total
Three months ended March 31, 2021	shares	Amount		("APIC")		earnings		loss		("NCI")		equity

Balance, December 31, 2020	109,876,428	$	200,451	$	49,171	$	791,918	$	(34,295)	$	5,154	$	1,012,399
Net income	—		—		—		28,188		—		(49)		28,139
Other comprehensive loss	—		—		—		—		(10,344)		(16)		(10,360)
	—		—		—		28,188		(10,344)		(65)		17,779
Stock option exercises	197,863		8,268		(1,549)		—		—		—		6,719
Issuance of common stock related to vesting of share units	234,275		2,046		(11,347)		—		—		—		(9,301)
Issuance (forfeiture) of common stock related to business combination	(55,510)		—		—		—		—		—		—
Share-based continuing employment costs related to business combination	—		—		2,553		—		—		—		2,553
Stock option compensation expense	—		—		1,861		—		—		—		1,861
Equity-classified share units expense	—		—		2,779		—		—		—		2,779
Equity-classified share units dividend equivalents	—		—		144		(144)		—		—		—
Cash dividends paid	—		—		—		(24,181)		—		—		(24,181)
Balance, March 31, 2021	110,253,056	$	210,765	$	43,612	$	795,781	$	(44,639)	$	5,089	$	1,010,608

Three months ended March 31, 2020

Balance, December 31, 2019	109,337,781	$	194,771	$	52,110	$	714,051	$	(59,099)	$	5,154	$	906,987
Net income	—		—		—		22,809		—		20		22,829
Other comprehensive loss	—		—		—		—		(15,860)		(8)		(15,868)
	—		—		—		22,809		(15,860)		12		6,961
Stock option exercises	247,446		8,684		(1,630)		—		—		—		7,054
Issuance of common stock related to vesting of share units	138,824		3,516		(7,445)		—		—		—		(3,929)
Stock option compensation expense	—		—		1,187		—		—		—		1,187
Equity-classified share units expense	—		—		1,786		—		—		—		1,786
Equity-classified share units dividend equivalents	—		—		139		(139)		—		—		—
Change in fair value of contingently redeemable PSUs	—		—		—		—		—		—		—
Cash dividends paid	—		—		—		(21,905)		—		—		(21,905)
Shares repurchased	(1,525,312)		(53,170)		—		—		—		—		(53,170)
Balance, March 31, 2020	108,198,739	$	153,801	$	46,147	$	714,816	$	(74,959)	$	5,166	$	844,971


~~Ritchie Bros.~~	4

~~Table of Contents~~

~~Condensed Consolidated Statements of Changes in Equity~~

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

~~(Unaudited)~~

Attributable to stockholders



Contingently

Additional

Accumulated

Non-

redeemable

Common stock

paid-In

other

controlling

performance

Number of

capital

Retained

comprehensive

interest

Total

share units
Nine months ended September 30, 2020

shares

Amount

("APIC")

earnings

loss

("NCI")

equity

("PSUs")

Balance, December 31, 2019

109,337,781

$
194,771

$
52,110

$
714,051

$
(59,099)

$
5,154

$
906,987

$
—
Net income

—

—

—

121,239

—

199

121,438

—
Other comprehensive income (loss)

—

—

—

—

7,415

30

7,445

—

—

—

—

121,239

7,415

229

128,883

—
Stock option exercises

1,430,545

50,611

(10,417)

—

—

—

40,194

—
Issuance of common stock related to vesting of share units

138,877

3,515

(7,459)

—

—

—

(3,944)

—
Stock option compensation expense

—

—

4,401

—

—

—

4,401

—
Equity-classified share units expense

—

—

9,155

—

—

—

9,155

—
Equity-classified share units dividend equivalents

—

—

463

(463)

—

—

—

—
Cash dividends paid

—

—

—

(67,639)

—

—

(67,639)

—
Shares repurchased

(1,525,312)

(53,170)

—

—

—

—

(53,170)

—
Balance, September 30, 2020

109,381,891

$
195,727

$
48,253

$
767,188

$
(51,684)

$
5,383

$
964,867

$
—

Nine months ended September 30, 2019

















Balance, December 31, 2018

108,682,030

$
181,780

$
56,885

$
648,255

$
(56,277)

$
5,067

$
835,710

$
923
Net income

—

—

—

97,466

—

109

97,575

—
Other comprehensive loss

—

—

—

—

(8,852)

(28)

(8,880)

—

—

—

—

97,466

(8,852)

81

88,695

—
Stock option exercises

544,576

14,119

(1,679)

—

—

—

12,440

—
Issuance of common stock related to vesting of share units

207,403

5,886

(10,064)

1

—

—

(4,177)

(1,083)
Stock option compensation expense

—

—

4,852

—

—

—

4,852

—
Equity-classified share units expense

—

—

8,640

—

—

—

8,640

114
Equity-classified share units dividend equivalents

—

—

655

(700)

—

—

(45)

46
Cash dividends paid

—

—

—

(60,791)

—

—

(60,791)

—
Shares repurchased

(1,223,674)

(42,012)

—

—

—

—

(42,012)

—
Balance, September 30, 2019

108,210,335

$
159,773

$
59,289

$
684,231

$
(65,129)

$
5,148

$
843,312

$
—

~~See accompanying notes to the condensed consolidated financial statements.~~


Ritchie Bros.	54

Table of Contents

Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of United States dollars)

(Unaudited)


Nine months ended September 30,	2020		2019
Three months ended March 31,					2021		2020
Cash provided by (used in):
Operating activities:
Net income	$	121,438	$	97,575	$	28,139	$	22,829
Adjustments for items not affecting cash:
Depreciation and amortization expenses		55,586		51,919		21,070		19,293
Stock option compensation expense		4,401		4,852
Equity-classified share unit expense		9,155		8,754
Deferred income tax expense (recovery)		8,250		(4,760)
Unrealized foreign exchange (gain) loss		2,049		(129)
Stock-based compensation expense						7,193		2,973
Deferred income tax expense						963		1,331
Unrealized foreign exchange loss						459		782
Gain on disposition of property, plant and equipment		(1,536)		(1,071)		(68)		(47)
Amortization of debt issuance costs		2,375		2,701		720		756
Amortization of right-of-use assets		9,194		8,867		3,172		3,343
Gain on contingent consideration from equity investment		(1,700)		—		—		(1,700)
Other, net		2,427		1,025		1,184		1,282
Net changes in operating assets and liabilities		53,912		139,372		117,855		(46,710)
Net cash provided by operating activities		265,551		309,105		180,687		4,132
Investing activities:
Property, plant and equipment additions		(9,865)		(6,915)		(1,556)		(3,495)
Proceeds on disposition of property, plant and equipment						66		333
Intangible asset additions		(19,886)		(18,377)		(8,769)		(7,220)
Proceeds on disposition of property, plant and equipment		16,277		5,610
Issuance of loans receivable						—		(2,984)
Repayment of loans receivable						224		180
Distribution from equity investment		4,212		—		—		4,212
Proceeds on contingent consideration from equity investment		1,700		—		—		1,700
Other, net		(2,630)		(1,000)
Net cash used in investing activities		(10,192)		(20,682)		(10,035)		(7,274)
Financing activities:
Share repurchase		(53,170)		(42,012)		—		(53,170)
Dividends paid to stockholders		(67,639)		(60,791)		(24,181)		(21,905)
Issuances of share capital		40,194		12,440
Proceeds from exercise of options and share option plans						6,719		7,054
Payment of withholding taxes on issuance of shares		(3,870)		(5,260)		(7,542)		(2,984)
Proceeds from short-term debt		35,799		10,519
Repayment of short-term debt		(22,357)		(24,979)
Net increase (decrease) in short-term debt						(2,886)		29,069
Repayment of long-term debt		(11,134)		(29,022)		(2,626)		(4,236)
Debt issue costs		(2,038)		—
Repayment of finance lease obligations		(6,927)		(4,848)		(2,629)		(2,189)
Net cash used in financing activities		(91,142)		(143,953)		(33,145)		(48,361)
Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash		5,826		1,350		(2,782)		(12,828)
Increase		170,043		145,820
Increase (decrease)						134,725		(64,331)
Beginning of period		420,256		305,567		306,895		420,256
Cash, cash equivalents, and restricted cash, end of period	$	590,299	$	451,387	$	441,620	$	355,925

See accompanying notes to the condensed consolidated financial statements.


Ritchie Bros.	65

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

1. ~~Summary of significant accounting policies~~General information

Ritchie Bros. Auctioneers Incorporated and its subsidiaries (collectively referred to as the “Company”) provide ~~global asset management~~a marketplace for insights, services and ~~disposition services, offering~~transaction solutions for commercial assets. The Company offers its customers end-to-end transaction solutions for ~~buying and selling~~ used ~~industrial equipment~~commercial and other durable assets through its ~~unreserved live on site~~omnichannel platform, which includes auctions, online marketplaces, listing services, and private brokerage services. The Company also offers a wide array of value-added services connected to commercial assets as well as asset management software and data as a service solutions to help customers make more accurate and reliable business decisions. Ritchie Bros. Auctioneers Incorporated is a company incorporated in Canada under the Canada Business Corporations Act, whose shares are publicly traded on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”).

2. Significant accounting policies

(a) Basis of preparation

These unaudited condensed consolidated interim financial statements have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”). They include the accounts of Ritchie Bros. Auctioneers Incorporated and its subsidiaries from their respective dates of formation or acquisition. All significant intercompany balances and transactions have been eliminated.

Certain information and footnote disclosure required by US GAAP for complete annual financial statements have been omitted and, therefore, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, ~~2019,~~2020, included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly, in all material respects, the Company’s consolidated financial position, results of operations, cash flows and changes in equity for the interim periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the world. The extent of the impact of the COVID-19 pandemic on the operational and financial performance of the Company, including the ability to execute on business strategies and initiatives, will depend on future developments, including the duration and spread of the pandemic, time of mass vaccine distribution, and any related restrictions placed by ~~oversight bodies and~~ respective global governments as well as supply and demand impacts driven by the Company’s consignor and buyer base and our ability to move equipment to and from our auction sites, all of which are uncertain and cannot be easily predicted. Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of COVID-19 on its business operations, results of operations, cash flows or financial performance.

(b) Revenue recognition

Revenues are comprised of:

●	Service revenue, including the following:

Revenue from auction and marketplace (“A&M”) activities, including commissions earned at our live and online bidding auctions, online marketplaces, and private brokerage services where we act as an agent for consignors of equipment and other assets, and various auction-related fees, including listing and buyer transaction fees; and

ii.

Other services revenue, including revenue from listing services, refurbishment, logistical services, financing, ~~appraisal fees~~appraisals, data subscriptions, and other ancillary service fees; and

●	Inventory sales revenue as part of A&M activities


Ritchie Bros.	6

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

2. Significant accounting policies (continued)

(b) Revenue recognition (continued)

The Company recognizes revenue when control of the promised goods or services is transferred to our customers, or upon completion of the performance obligation, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct good or service, or a series of distinct goods or services, to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The transaction price is reduced by estimates of variable consideration such as volume rebates and discounts. All estimates, which are evaluated at each reporting period, are based on the Company’s historical experience, anticipated volumes, and best judgment. For ~~live event-based auctions or online~~ auctions, revenue is recognized when the auction sale is complete and the Company has determined that the sale proceeds are collectible. Revenue is measured at the fair value of the consideration received or receivable and is shown net of value-added tax and duties.

Service ~~revenue~~revenues

Commissions from sales at the Company’s auctions represent the percentage earned by the Company on the gross proceeds from equipment and other assets sold at auction. The majority of the Company’s commissions are earned as a pre-negotiated fixed rate of the gross selling price. Other commissions from sales at the Company’s auctions are earned from underwritten commission contracts, when the Company guarantees a certain level of proceeds to a consignor.


~~Ritchie Bros.~~	7

~~Table of Contents~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Tabular amounts expressed in thousands of United States dollars, except where noted)~~

~~(Unaudited)~~

~~1. Summary of significant accounting policies (continued)~~

The Company accepts equipment and other assets on consignment stimulating buyer interest through professional marketing techniques and matches sellers (also known as consignors) to buyers through the auction or private sale process. Prior to offering an item for sale on its online marketplaces, the Company also performs inspections.

Following the sale of the item, the Company invoices the buyer for the purchase price of the asset, taxes, and, if applicable, the buyer transaction fee, collects payment from the buyer, and remits the proceeds to the seller, net of the seller commissions, applicable taxes, and applicable fees. Commissions are calculated as a percentage of the ~~hammer~~winning bid price of the property sold at auction. Fees are also charged to sellers for listing and inspecting equipment. Other revenue earned in the process of conducting the Company’s auctions include administrative, documentation, and advertising fees.

OnWith the ~~fall~~final acceptance of the ~~auctioneer’s hammer,~~winning bid, the highest bidder becomes legally obligated to pay the full purchase price, which is the ~~hammer price~~winning bid of the property purchased and the seller is legally obligated to relinquish the property in exchange for the ~~hammer~~winning bid price less any seller’s commissions. Commission and fee revenue are recognized on the date of the auction sale upon the ~~fall~~final acceptance of the ~~auctioneer’s hammer.~~winning bid.

Under the standard terms and conditions of its auction sales, the Company is not obligated to pay a consignor for property that has not been paid for by the buyer, provided the property has not been released to the buyer. If the buyer defaults on its payment obligation, also referred to as a collapsed sale, the sale is cancelled in the period in which the determination is made, and the property is returned to the consignor or placed in a later event-based or online auction. Historically, service revenues on cancelled sales have not been material.

Online marketplace commission revenue is reduced by a provision for disputes, which is an estimate of disputed items that are expected to be settled at a cost to the Company, related to settlements of discrepancies under the Company’s equipment condition certification program. The equipment condition certification refers to a written inspection report provided to potential buyers that reflects the condition of a specific piece of equipment offered for sale, and includes ratings, comments, and photographs of the equipment following inspection by one of the Company’s equipment inspectors.

The equipment condition certification provides that a buyer may file a written dispute claim during an eligible dispute period for consideration and resolution at the sole determination of the Company if the purchased equipment is not substantially in the condition represented in the inspection report. Typically disputes under the equipment condition certification program are settled with minor repairs or additional services, such as washing or detailing the item; the estimated costs of such items or services are included in the provision for disputes.

Commission revenue are recorded net of commissions owed to third parties, which are principally the result of situations when the commission is shared with a consignor in an auction guarantee risk and reward sharing arrangement.


Ritchie Bros.	7

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

2. Significant accounting policies (continued)

Service revenues (continued)

Underwritten commission contracts can take the form of guarantee contracts. Guarantee contracts typically include a pre-negotiated percentage of the guaranteed gross proceeds plus a percentage of proceeds in excess of the guaranteed amount. If actual auction proceeds are less than the guaranteed amount, commission is reduced; if proceeds are sufficiently lower, the Company can

incur a loss on the sale. Losses, if any, resulting from guarantee contracts are recorded in the period in which the relevant auction is completed. If a loss relating to a guarantee contract held at the period end to be sold after the period end is known or is probable and estimable at the financial statement reporting date, the loss is accrued in the financial statements for that period. The Company’s exposure from these guarantee contracts fluctuates over time.

Other services revenue also includes fees for refurbishment, logistical services, financing, ~~appraisal fees~~appraisals, data subscriptions and other ancillary service fees. Fees are recognized in the period in which the service is provided or the product is delivered to the customer.


~~Ritchie Bros.~~	8

~~Table of Contents~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Tabular amounts expressed in thousands of United States dollars, except where noted)~~

~~(Unaudited)~~

~~1. Summary of significant accounting policies (continued)~~

Inventory sales revenue

Underwritten commission contracts can take the form of inventory contracts. Revenue related to inventory contracts is recognized in the period in which the sale is completed, title to the property passes to the purchaser and the Company has fulfilled any other obligations that may be relevant to the transaction. In its role as auctioneer, the Company auctions its inventory to equipment buyers through the auction process. Following the sale of the item, the Company invoices the buyer for the purchase price of the asset, taxes, and, if applicable, the buyer transaction fee, and collects payment from the buyer.

OnWith the ~~fall~~final acceptance of the ~~auctioneer’s hammer,~~winning bid, the highest bidder becomes legally obligated to pay the full purchase price, which is the ~~hammer~~winning bid price of the property purchased. Title to the property is transferred in exchange for the ~~hammer~~winning bid price, and if applicable, the buyer transaction fee plus applicable taxes.

Costs of services incurred in earning A&M revenues are comprised of expenses incurred in direct relation to conducting auctions (“direct expenses”), earning online marketplace revenue, and earning other fee revenue. Direct expenses include direct labour, buildings and facilities charges, travel, advertising and promotion costs and fees paid to unrelated third parties who introduce the Company to equipment sellers who sell property at the Company’s auctions and marketplaces. Costs of services to operate our online marketplace revenue excludes hosting costs where we leverage a shared infrastructure that supports both our internal technology requirements and external sales to our customers.

Costs of services incurred to earn online marketplace revenue in addition to the costs listed above also include inspection costs. Inspections are generally performed at the seller’s physical location. The cost of inspections includes payroll costs and related benefits for the Company’s employees that perform and manage field inspection services, the related inspection report preparation and quality assurance costs, fees paid to contractors who perform field inspections, related travel and incidental costs for the Company’s inspection service organization, and office and occupancy costs for its inspection services personnel. Costs of earning online marketplace revenue also include costs for the Company’s customer support, online marketplace operations, logistics, title and lien investigation functions.

Costs of services incurred in earning other fee revenue include ancillary and logistical service expenses, direct labour (including commissions on sales), cloud infrastructure and hosting costs, software maintenance fees, and materials. Costs of services exclude depreciation and amortization expenses.

(d) Cost of inventory sold

Cost of inventory sold includes the purchase price of assets sold for the Company’s own account and is determined using a specific identification basis.

(e) Share-based payments

The Company classifies a share-based payment award as an equity or liability payment based on the substantive terms of the award and any related arrangement.


Ritchie Bros.	8

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

2. Significant accounting policies (continued)

(e) Share-based payments (continued)

Equity-classified share-based payments

The cost of equity-settled share-based payment arrangements is recorded based on the estimated fair-value at the grant date and charged to earnings over the vesting period.

Share unit plans

The Company has a senior executive performance share unit (“PSU”) plan and an employee PSU plan that provides for the award of PSUs to certain senior executives and employees, respectively, of the Company. The Company has the option to settle certain share unit awards in cash or shares and expects to settle them in shares. The cost of PSUs granted is measured at the fair value of the underlying PSUs at the grant date. PSUs vest based on the passage of time and achievement of performance criteria.

The Company also has a senior executive restricted share unit (“RSU”) plan and an employee RSU plan that provides for the award of RSUs to certain senior executives and employees, respectively, of the Company. The Company has the option to settle certain share unit awards in cash or shares and expects to settle ~~all grants~~them in shares. The cost of RSUs granted is measured at the fair value of the underlying RSUs based on the fair value of the Company’s common shares at the grant date. RSUs vest based on the passage of time and include restrictions related to employment.


~~Ritchie Bros.~~	9

~~Table of Contents~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Tabular amounts expressed in thousands of United States dollars, except where noted)~~

~~(Unaudited)~~

~~1. Summary of significant accounting policies (continued)~~

~~The~~This fair value of awards expected to vest under these plans is expensed over the respective remaining service period of the individual awards, on an accelerated recognition basis, with the corresponding increase to APIC recorded in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in earnings, such that the consolidated expense reflects the revised estimate, with a corresponding adjustment to equity. Dividend equivalents on the equity-classified PSUs and RSUs are recognized as a reduction to retained earnings over the service period.

Stock option plans

The Company has three stock option compensation plans that provide for the award of stock options to selected employees, directors and officers of the Company. The cost of options granted is measured at the fair value of the underlying option at the grant date using the Black-Scholes option pricing model. The fair value of options expected to vest under these plans is expensed over the respective remaining service period of the individual awards, on an accelerated recognition basis, with the corresponding increase to APIC recorded in equity. Upon exercise, any consideration paid on exercise of the stock options and amounts fully amortized in APIC are credited to the common shares.

Liability-classified share-based payments

The Company maintains other share unit compensation plans that vest over a period of up to three years after grant. Under those plans, the Company is either required or expects to settle vested awards on a cash basis or by providing cash to acquire shares on the open market on the employee’s behalf, where the settlement amount is determined based on the average price of the Company’s common shares prior to the vesting date or, in the case of deferred share unit (“DSU”) recipients, following cessation of service on the Board of Directors.

These awards are classified as liability awards, measured at fair value at the date of grant and re-measured at fair value at each reporting date up to and including the settlement date. The determination of the fair value of the share units under these plans is described in note ~~17.~~19. The fair value of the awards is expensed over the respective vesting period of the individual awards with recognition of a corresponding liability. Changes in fair value after vesting are recognized through compensation expense. Compensation expense reflects estimates of the number of instruments expected to vest.

The impact of forfeitures and fair value revisions, if any, are recognized in earnings such that the cumulative expense reflects the revisions, with a corresponding adjustment to the settlement liability. Liability-classified share unit liabilities due within 12 months of the reporting date are presented in trade and other payables while settlements due beyond 12 months of the reporting date are presented in other non-current liabilities.


Ritchie Bros.	9

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

2. Significant accounting policies (continued)

(f) Leases

The Company determines if an arrangement is a lease at inception. The Company may have lease agreements with lease and non-lease components, which are generally accounted for separately. Additionally, for certain vehicle and equipment leases, management applies a portfolio approach to account for the right-of-use ~~(“ROU”~~("ROU") assets and liabilities for assets leased with similar lease terms.

Operating leases

Operating leases are included in other non-current assets, trade and other payables, and other non-current liabilities in our consolidated balance sheets if the initial lease term is greater than 12 months. For leases with an initial term of 12 months or less the Company recognizes those lease payments on a straight-line basis over the lease term.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, management uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Management uses the implicit rate when readily determinable. The Company includes lease payments for renewal or termination options in its determination of lease term, ROU asset, and lease liability when it is reasonably certain that the Company will exercise these options. Lease expense for lease payments is recognized on a straight-line basis over the lease term and are included in ~~Costs~~costs of services ~~or Selling,~~and selling, general and administrative (“("SG~~&A”~~&A") expenses.


~~Ritchie Bros.~~	10

~~Table of Contents~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Tabular amounts expressed in thousands of United States dollars, except where noted)~~

~~(Unaudited)~~

~~1. Summary of significant accounting policies (continued)~~

Finance leases

Finance lease ROU assets and liabilities are included in property, plant and equipment, trade and other payables, and other non-current liabilities in our consolidated balance sheets.

Finance lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, management uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Management uses the implicit rate when readily determinable. The Company includes lease payments for renewal, purchase options, or termination options in its determination of lease term, ROU asset, and lease liability when it is reasonably certain that the Company will exercise these options. Finance lease ROU assets are generally amortized over the lease term and are included in depreciation expense. The interest on the finance lease liabilities is included in interest expense.

(g) Inventories

Inventory consists of equipment and other assets purchased for resale in an upcoming live on site auction or online marketplace event. The Company typically purchases 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. In addition, certain jurisdictions require auctioneers to hold title to assets and facilitate title transfer on sale. Inventory is valued 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. As part of its government business, the Company purchases inventory for resale as part of its commitment to purchase certain surplus government property (note ~~19)~~21). The significant elements of cost include the acquisition price, in-bound transportation costs of the inventory, and make-ready costs to prepare the inventory for sale that are not selling ~~expenses and in-bound transportation costs.~~expenses. Write-downs to the carrying value of inventory are recorded in cost of inventory sold on the consolidated income statement.

(h) Impairment of long-lived and indefinite-lived assets

Long-lived assets, comprised of property, plant and equipment, ROU assets, and intangible assets subject to amortization, are assessed for impairment whenever events or circumstances indicate that their carrying value 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. An impairment loss is recognized when the carrying value of the assets or asset groups is greater than the future projected undiscounted cash flows. The impairment loss is calculated as the excess of the carrying value over the fair value of the asset or asset group. Fair value is based on valuation techniques or third party appraisals. Significant estimates and judgments are applied in determining these cash flows and fair values.


Ritchie Bros.	10

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

2. Significant accounting policies (continued)

(h) Impairment of long-lived and indefinite-lived assets (continued)

Indefinite-lived intangible assets are tested annually for impairment as of December 31, and between annual tests if indicators of potential impairment exist. The Company has the option of performing a qualitative assessment to first determine whether the quantitative impairment test is necessary. This involves an assessment of qualitative factors to determine the existence of events or circumstances that would indicate whether it is more likely than not that the carrying amount of the indefinite-lived intangible asset is less than its fair value. If the qualitative assessment indicates it is not more likely than not that the carrying amount is less than its fair value, a quantitative impairment test is not required. Where a quantitative impairment test is required, the procedure is to compare the indefinite-lived intangible asset’s fair value with its carrying amount. An impairment loss is recognized as the difference between the indefinite-lived intangible asset’s carrying amount and its fair value.

(i) Goodwill

Goodwill represents the excess of the purchase price of an acquired enterprise over the fair value assigned to the assets acquired and liabilities assumed in a business combination.

Goodwill is not amortized, but it is tested annually for impairment at the reporting unit level as of December 31, and between annual tests if indicators of potential impairment exist. The Company has the option of performing a qualitative assessment of a reporting unit to first determine whether the quantitative impairment test is necessary. This involves an assessment of qualitative factors to determine the existence of events or circumstances that would indicate whether it is more likely than not that the carrying amount of the reporting unit to which goodwill belongs is less than its fair value. If the qualitative assessment indicates it is not more likely than not that the reporting unit’s carrying amount is less than its fair value, a quantitative impairment test is not required.


~~Ritchie Bros.~~	11

~~Table of Contents~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Tabular amounts expressed in thousands of United States dollars, except where noted)~~

~~(Unaudited)~~

~~1. Summary of significant accounting policies (continued)~~

If a quantitative impairment test is required, the procedure is to identify potential impairment by comparing the reporting unit’s fair value with its carrying amount, including goodwill. The reporting unit’s fair value is determined using various valuation approaches and techniques that involve assumptions based on what the Company believes a hypothetical marketplace participant would use in estimating fair value on the measurement date. An impairment loss is recognized as the difference between the reporting unit’s carrying amount and its fair value. If the difference between the reporting unit’s carrying amount and fair value is greater than the amount of goodwill allocated to the reporting unit, the impairment loss is restricted by the amount of the goodwill allocated to the reporting unit.

(j) Business combinations

Business combinations are accounted for using the acquisition method. The purchase price is determined based on the fair value of the assets transferred, liabilities incurred, and equity interest issued, after considering any transactions that are separate from the business combination. The Company allocates the aggregate of the fair value of the purchase consideration transferred to the tangible and intangible assets acquired and the liabilities assumed on the basis of their fair values at the date of acquisition, with any excess recorded as goodwill. The fair value determinations require judgment and may involve the use of significant estimates and assumptions, especially with respect to intangible assets and contingent liabilities. The purchase price allocation may be provisional during a measurement period of up to one year to provide reasonable time to obtain the information necessary to identify and measure the assets acquired and liabilities assumed. Any such measurement period adjustments are recognized to the assets and liabilities assumed, with the corresponding offset to goodwill, in the period in which the adjustment amounts are determined. Acquisition-related costs associated with the acquisition are expensed as incurred.


Ritchie Bros.	11

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

2. Significant accounting policies (continued)

(k) New and amended accounting standards

~~Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326),~~ ~~Measurement of Credit Losses on Financial Instruments~~. The new standard 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.” In applying the new standard, the Company has adopted the loss rate methodology to estimate historical losses on trade receivables. The historical data is adjusted to account for forecasted changes in the macroeconomic environment in order to calculate the current expected credit loss. The Company’s adoption of ASC 326 did not result in a material change in the carrying values of the Company’s financial assets on the transition date. Periods prior to January 1, 2020 that are presented for comparative purposes have not been adjusted.

~~In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848),~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~. The update provides “optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.” The amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company’s use of LIBOR is applicable on short term drawings on the committed revolving credit facilities in certain jurisdictions. If applicable, the Company will use the optional expedients available when reference rate changes occur.

~~Effective January 1, 2020, the Company 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 update aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service agreement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. 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.

In March 2020, the FASB issued an update to ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reformon Financial Reporting which addresses the effects of reference rate reform on financial reporting. ASU 2020-04 is effective for all entities as of March 12, 2020 through to December 31, 2022. If elected, and if certain criteria are met, this ASU requires less accounting analysis and recognition for modifications related to reference rate reform. The update issued provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications, hedging relationships, derivatives and other transactions affected by the reference rate reform that reference LIBOR or another reference rate expected to be discontinued.

It was announced in March 2021 that LIBOR rates are expected to cease to be published as early as December 31, 2021 and as late as June 30, 2023 depending on the jurisdiction and the term of the rate. As a result, we have assessed the impact of the expected reference rate reform on our consolidated financial statements. Currently, the Company has one contract, the Credit Agreement (see Note 16) that references LIBOR. Our Credit Agreement was modified on August 14, 2020 which included the addition of LIBOR-successor rate language related to the reference rate reform. The Credit Agreement’s modified reference rate reform language does not specify the LIBOR-successor rates to be used, however, it does allow the parties to agree on a successor rate once LIBOR ceases being published, without the requirement for the contract to be modified. As a result, 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. However, if applicable, the Company will use the optional expedients available when reference rate changes occur.

2.3. Significant judgments, estimates and assumptions

The preparation of financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

Future differences arising between actual results and the judgments, estimates and assumptions made by the Company at the reporting date, or future changes to estimates and assumptions, could necessitate adjustments to the underlying reported amounts of assets, liabilities, revenues and expenses in future reporting periods.

Judgments, estimates and underlying assumptions are evaluated on an ongoing basis by management and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. However, existing circumstances and assumptions about future developments may change due to market changes or circumstances and such changes are reflected in the assumptions when they occur. Significant items subject to estimates include ~~purchase price allocations,~~ the ~~carrying~~recoverable amounts of goodwill and indefinite-lived intangible assets, the useful lives of long-lived assets ~~share based~~and finite-lived intangible assets, share-based compensation, share-based continuing employment costs, the determination of lease term and lease liabilities, deferred income taxes, reserves for tax uncertainties, and other contingencies. Accounting for business combinations requires estimates with respect to the fair value of the assets acquired and liabilities assumed. Such estimates of fair value may require valuation methods which use significant estimates and assumptions. At the acquisition of Rouse Services LLC (“Rouse”), we estimated the fair value of the intangible assets acquired, using a valuation method, which required management to make estimates with respect to expected future cash flows and growth rates, gross margins, attrition rates, royalty rates, discount rates, terminal value, and forecast period. The Company based these estimates on historical and anticipated results, industry trends, economic analysis, and various other assumptions that it believes are reasonable, including assumptions as to future events.

As of ~~September 30, 2020,~~March 31, 2021, the Company performed a qualitative assessment of the A&M, ~~reporting unit~~Rouse, and ~~the~~ Mascus reporting ~~unit with consideration of the current global economic downturn as a result of COVID-19~~units and the Company concluded there were no indicators of impairment.


Ritchie Bros.	12

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

3.4. Seasonality

The Company’s operations are both seasonal and event driven. ~~Historically, revenues~~Revenues tend to be the highest during the second and fourth calendar ~~quarters. The~~quarters as the Company generally conducts more ~~live, on site~~ auctions during these ~~quarters than~~quarters. Volumes tend to also be lower during the ~~first~~third quarter as supply of used equipment is lower as it is actively being used and ~~third calendar quarters.~~not available for sale. Late December through mid-February and mid-July through August are traditionally less active periods. ~~Online volumes are similarly affected as supply of used equipment is lower in the third quarter as it is actively being used and not available for sale.~~

The restrictions imposed and effects of the overall economic environment as a result of the COVID-19 pandemic may continue to impact these trends.

~~4. Segmented information~~5. Business combinations

The Company’s principal business activity is the management and disposition of used industrial equipment and other durable assets. The Company’s operations are comprised of 1 reportable segment and other business activities that are not reportable as follows:

●	Auctions and Marketplaces – This is the Company’s only reportable segment, which consists of the Company’s live on site auctions, its online auctions and marketplaces, and its brokerage service;

●	Other includes the results of Ritchie Bros. Financial Services (“RBFS”), Mascus online services, and the results from various value-added services and make-ready activities, including the Company’s equipment refurbishment services, asset appraisal services, and Ritchie Bros. Logistical Services.

Three months ended September 30, 2020

Nine months ended September 30, 2020


A&M

Other

Consolidated

A&M

Other

Consolidated

Service revenue

$
188,949

$
33,730

$
222,679

$
543,340

$
96,601

$
639,941

Inventory sales revenue

108,863

—

108,863

353,906

—

353,906

Total revenue

$
297,812

$
33,730

$
331,542

$
897,246

$
96,601

$
993,847

Costs of services

21,733

17,490

39,223

69,018

49,008

118,026

Cost of inventory sold

96,253

—

96,253

320,972

—

320,972

Selling, general and administrative expenses ("SG&A")

103,933

6,253

110,186

290,077

19,126

309,203

Segment profit

$
75,893

$
9,987

$
85,880

$
217,179

$
28,467

$
245,646

Depreciation and amortization expenses ("D&A")





18,436





55,586

Gain on disposition of property, plant and equipment ("PPE")





(276)





(1,536)

Foreign exchange loss





336





1,330

Operating income





$
67,384





$
190,266

Interest expense





(8,737)





(26,801)

Other income, net





2,280





6,714

Income tax expense





(15,437)





(48,741)

Net income





$
45,490





$
121,438

Rouse acquisition

On December 8, 2020, the Company acquired all of the issued and outstanding units of Rouse for a total purchase price of $251,724,000. The Company paid cash consideration of $250,265,000, of which $2,169,000 was placed in escrow.

Rouse is a leading provider of construction equipment market data intelligence and performance benchmarking solutions. Rouse provides appraisals to asset backed lenders, market intelligence and software to rental companies, contractors and dealers to optimize the used equipment sales process, and comparisons of rental rates, utilization, and other key performance metrics to industry benchmarks for rental companies and dealers. The combination of Rouse with the Company is expected to enhance the data analytics and service offerings available to customers.

The acquisition was accounted for in accordance with ASC 805, Business Combinations. The following table summarizes the fair value of consideration transferred at the date of acquisition, as well as our preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed.


	December 8, 2020
Cash consideration paid on closing	$	250,265
Equity consideration paid for pre-combination services		1,459
Purchase price	$	251,724

Rouse purchase price allocation


	December 8, 2020
Purchase price	$	251,724

Assets acquired:
Cash and cash equivalents	$	226
Trade and other receivables		4,601
Other current assets		159
Property, plant and equipment		1,171
Other non-current assets		3,741
Deferred tax assets		7,584
Intangible assets		79,300

Liabilities assumed:
Trade and other payables		7,307
Other non-current liabilities		3,188
Deferred tax liabilities		936

Fair value of identifiable net assets acquired		85,351
Goodwill acquired on acquisition	$	166,373


Ritchie Bros.	13

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

5. Business combinations (continued)

Rouse purchase price allocation (continued)

The following table summarizes the fair values of the identifiable intangible assets acquired:


	Fair value		Weighted average
Asset	at acquisition		amortization period
Customer relationships		71,000	15 years
Software and technology assets		7,500	4 years
Trade names and trademarks	$	800	2 years
Total	$	79,300	13.8 years

The amounts included in the Rouse provisional purchase price allocation are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed at the date of the acquisition. The final determination of the fair values of certain assets and liabilities will be completed within the measurement period of up to one year from the acquisition date and will be finalized upon the determination of closing working capital. During the quarter ended March 31, 2021 the Company recorded an adjustment, which was not significant, to increase the liabilities assumed and increase the goodwill acquired on acquisition. Additional adjustments to the preliminary values during the measurement period may impact the amounts recorded as assets and liabilities with a corresponding adjustment to goodwill, and will be recognized in the period in which the adjustments are determined.

Goodwill

Goodwill has been preliminarily assigned and allocated to “Other” for segmented information purposes and is based on an analysis of the fair value of net assets acquired. Goodwill relates to benefits expected from the acquisition of Rouse’s business, its assembled workforce and associated technical expertise, as well as anticipated synergies from the Company’s auction expertise and transactional capabilities to Rouse’s existing customer base. The transaction is considered a taxable business combination and all of the goodwill is deductible for tax purposes.

Transactions recognized separately from the acquisition of assets and assumption of liabilities

At the date of acquisition, the Company issued 312,193 common shares to certain previous unitholders of Rouse in return for their continuing employment service. The common shares are expected to vest at various vesting dates over a three-year period from the date of acquisition as continuing employment services are provided to the Company. At the date of acquisition, the Company estimated that it will recognize a total fair value of $20,735,000 share-based continuing employment costs in acquisition-related costs over the vesting period, with an increase to additional paid-in capital, subject to continuing employment of those individuals. As and when the common shares vest, the Company will recognize the fair value of the issued common shares from additional paid-in capital to share capital.

During the quarter ended March 31, 2021, one of the previous unitholders of Rouse, who became an employee of the Company after the acquisition, terminated their employment contract which resulted in the forfeiture of 55,510 shares as no vesting conditions had been achieved and reversal of share based continuing employment costs of $98,000. As a result, as at March 31, 2021, the number of common shares expected to vest is 256,683 and the total unrecognized fair value of the share-based continuing employment costs expected to be recognized is $14,576,000 (Note 18).

During the quarter ended March 31, 2021, the Company recorded $2,922,000 acquisition-related costs for legal, advisory, integration and other professional fees, which included $2,553,000 of share-based continuing employment costs.


Ritchie Bros.	14

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

4.6. Segmented information ~~(continued)~~

Three months ended September 30, 2019

Nine months ended September 30, 2019


A&M

Other

Consolidated

A&M

Other

Consolidated

Service revenue

$
150,093

$
28,484

$
178,577

$
494,580

$
90,975

$
585,555

Inventory sales revenue

111,219

—

111,219

400,892

—

400,892

Total revenue

261,312

28,484

289,796

$
895,472

$
90,975

$
986,447

Costs of services

21,431

14,951

36,382

74,799

47,920

122,719

Cost of inventory sold

102,410

—

102,410

372,703

—

372,703

SG&A expenses

88,138

5,553

93,691

268,786

17,803

286,589

Segment profit

$
49,333

7,980

57,313

$
179,184

$
25,252

$
204,436

Acquisition-related costs



45





752

D&A expenses



17,692





51,919

Gain on disposition of PPE

(821)





(1,071)

Foreign exchange loss

237





1,118

Operating income

40,160





$
151,718

Interest expense



(10,090)





(31,023)

Other income, net



1,962





5,680

Income tax expense





(6,760)





(28,800)

Net income





25,272





$
97,575

The Company’s ~~geographic breakdown~~principal business activity is the management and disposition of ~~total revenue is~~used industrial equipment and other durable assets. The Company’s operations are comprised of 1 reportable segment and other business activities that are not reportable as follows:

United



States

Canada

Europe

Other

Consolidated
Total revenue for the three months ended:















September 30, 2020

$
177,883

$
58,059

$
41,891

$
53,709

$
331,542
September 30, 2019

156,380

56,129

34,522

42,765

289,796
Total revenue for the nine months ended:

September 30, 2020

$
573,001

$
191,692

$
115,659

$
113,495

$
993,847
September 30, 2019

552,186

178,069

136,590

119,602

986,447

●	Auctions and Marketplaces – This is the Company’s only reportable segment, which consists of the Company’s live on site auctions, its online auctions and marketplaces, and its brokerage service;

●

Other includes the results of Rouse, Ritchie Bros. Financial Services (“RBFS”), Mascus online services, and the results from various value-added services and make-ready activities, including the Company’s equipment refurbishment services, Asset Appraisal Services, and Ritchie Bros. Logistical Services (“RB Logistics”).


	Three months ended March 31, 2021
	A&M		Other		Consolidated
Service revenue	$	170,755	$	35,275	$	206,030
Inventory sales revenue		125,525		—		125,525
Total revenue	$	296,280	$	35,275	$	331,555
Costs of services		21,590		14,437		36,027
Cost of inventory sold		110,747		—		110,747
Selling, general and administrative expenses ("SG&A")		104,345		11,733		116,078
Segment profit	$	59,598	$	9,105	$	68,703
Acquisition-related costs						2,922
Depreciation and amortization expenses ("D&A")						21,070
Gain on disposition of property, plant and equipment ("PPE")						(68)
Foreign exchange loss						277
Operating income					$	44,502
Interest expense						(8,946)
Other income, net						1,002
Income tax expense						(8,419)
Net income					$	28,139


	Three months ended March 31, 2020
	A&M		Other		Consolidated
Service revenue	$	154,743	$	28,380	$	183,123
Inventory sales revenue		90,132		—		90,132
Total revenue		244,875		28,380		273,255
Costs of services		25,095		14,260		39,355
Cost of inventory sold		81,585		—		81,585
SG&A expenses		91,585		6,800		98,385
Segment profit	$	46,610		7,320		53,930
Acquisition-related costs						—
D&A expenses						19,293
Gain on disposition of PPE						(47)
Foreign exchange loss						602
Operating income						34,082
Interest expense						(9,182)
Other income, net						3,577
Income tax expense						(5,648)
Net income						22,829

~~5. Revenue~~

The Chief operating decision maker “CODM” does not evaluate the performance of the Company’s ~~revenue breakdown is as follows:~~

Three months ended

Nine months ended


September 30,

September 30,

2020

2019

2020

2019

Service revenue:












Commissions

$
112,762

$
90,928

$
331,711

$
317,674

Fees

109,917

87,649

308,230

267,881

222,679

178,577

639,941

585,555

Inventory sales revenue

108,863

111,219

353,906

400,892

$
331,542

$
289,796

$
993,847

$
986,447


~~Ritchie Bros.~~	14

~~Table~~operating segments or assess allocation of ~~Contents~~

~~Notes to~~resources based on segment assets and liabilities, nor does the ~~Condensed Consolidated Financial Statements~~

~~(Tabular amounts expressed in thousands of United States dollars, except where noted)~~

~~(Unaudited)~~

~~6. Operating expenses~~

~~Costs of services~~

Three months ended

Nine months ended

September 30,

September 30,


2020

2019

2020

2019

Ancillary and logistical service expenses

$
16,550

$
13,285

$
45,368

$
43,516

Employee compensation expenses

11,442

11,555

35,057

37,268

Buildings, facilities and technology expenses

1,653

1,655

7,768

5,961

Travel, advertising and promotion expenses

4,782

5,765

17,518

24,440

Other costs of services

4,796

4,122

12,315

11,534

$
39,223

$
36,382

$
118,026

$
122,719

~~SG&A expenses~~

Three months ended

Nine months ended

September 30,

September 30,


2020

2019

2020

2019

Employee compensation expenses

$
78,430

$
60,680

$
211,732

$
186,033

Buildings, facilities and technology expenses

15,901

14,569

46,108

45,066

Travel, advertising and promotion expenses

5,479

10,033

20,565

28,400

Professional fees

4,546

3,685

13,570

11,915

Other SG&A expenses

5,830

4,724

17,228

15,175

$
110,186

$
93,691

$
309,203

$
286,589

~~Depreciation and amortization expenses~~

Three months ended

Nine months ended

September 30,

September 30,


2020

2019

2020

2019

Depreciation expense

$
7,705

$
7,305

$
23,278

$
21,630

Amortization expense

10,731

10,387

32,308

30,289

$
18,436

$
17,692

$
55,586

$
51,919

Company classify liabilities on a segmented basis.


Ritchie Bros.	15

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

6. Segmented information (continued)

The Company’s geographic breakdown of total revenue is as follows:


	United
	States		Canada		Europe		Other		Consolidated
Total revenue for the three months ended:
March 31, 2021	$	207,414	$	48,478	$	47,176	$	28,487	$	331,555
March 31, 2020		190,530		35,643		26,338		20,744		273,255

7. Revenue

The Company’s revenue from the rendering of services is as follows:


	Three months ended
	March 31,
	2021		2020
Service revenue:
Commissions	$	103,975	$	93,484
Fees		102,055		89,639
		206,030		183,123
Inventory sales revenue		125,525		90,132
	$	331,555	$	273,255

8. Operating expenses

Costs of services


	Three months ended
	March 31,
	2021		2020
Ancillary and logistical service expenses	$	12,269	$	12,758
Employee compensation expenses		12,691		12,304
Buildings, facilities and technology expenses		2,701		4,039
Travel, advertising and promotion expenses		4,518		6,575
Other costs of services		3,848		3,679
	$	36,027	$	39,355

SG&A expenses


	Three months ended
	March 31,
	2021		2020
Wages, salaries and benefits	$	78,796	$	60,088
Share-based compensation expense		3,778		2,407
Buildings, facilities and technology expenses		17,343		15,591
Travel, advertising and promotion expenses		5,162		10,269
Professional fees		5,032		4,447
Other SG&A expenses		5,967		5,583
	$	116,078	$	98,385

Depreciation and amortization expenses


	Three months ended
	March 31,
	2021		2020
Depreciation expense	$	7,837	$	8,037
Amortization expense		13,233		11,256
	$	21,070	$	19,293


Ritchie Bros.	16

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)


Ritchie Bros.	17

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

9. Income taxes

At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year. The estimate reflects, among other items, management’s best estimate of operating results. It does not include the estimated impact of foreign exchange rates or unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes.

For the three months ended ~~September 30, 2020,~~March 31, 2021, income tax expense was ~~$15,437,000,~~$8,419,000, compared to an income tax expense of ~~$6,760,000~~$5,648,000 for the same period in ~~2019.~~2020. The effective tax rate was ~~25%~~23% in the ~~third~~first quarter of ~~2020,~~2021, compared to 21%20% in the ~~third~~first quarter of ~~2019.~~2020.

The effective tax rate increased in the three months ended ~~September 30, 2020~~March 31, 2021 compared to the three months ended ~~September 30, 2019~~March 31, 2020 primarily due to a higher estimate of non-deductible expenses, an increased proportion of income taxed in jurisdictions with higher tax rates, and write off of a ~~greater income~~deferred tax ~~expense related to increases in tax uncertainties in 2020 compared to 2019, and~~asset upon departure of a ~~higher estimate~~management employee of ~~non-deductible expenses.~~Rouse. The higher estimate of non-deductible expenses are primarily due to final regulations published on April 8, 2020 by the United States Department of Treasury and the Internal Revenue Service (“IRS”) that clarified income tax benefits related to hybrid financing arrangements would not be deductible (“Hybrid Interest”).

For the nine months ended September 30, 2020, income tax expense was $48,741,000, compared to an income tax expense of $28,800,000 for the same period in 2019. The effective tax rate was 29% for the nine months ended September 30, 2020, compared to 23% for the nine months ended September 30, 2019.

The effective tax rate increased in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 primarily due to Hybrid Interest benefits that are no longer deductible as of January 1, 2019. The Company had recorded approximately $6,228,000 in Hybrid Interest benefits in the twelve months ended December 31, 2019. In addition, there was greater income tax expense related to increases in tax uncertainties in 2020 than in 2019, and a greater proportion of income taxed in jurisdictions with higher tax rates. Partially offsetting these increases was a higher tax deduction for PSU and RSU share unit expenses, which were settled in the ~~reduced impact of~~quarter, that exceeded the ~~US tax reform.~~related compensation expense.

8.10. Earnings per share attributable to stockholders

Basic earnings per share (“EPS”) attributable to stockholders was calculated by dividing the net income attributable to stockholders by the weighted average (“WA”) number of common shares outstanding during the period. Diluted EPS attributable to stockholders was calculated by dividing the net income attributable to stockholders by the WAweighted average number of shares of common stock outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include unvested PSUs, unvested RSUs, and outstanding stock options. The dilutive effect of potentially dilutive securities is reflected in diluted EPS by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities.


	Three months ended					Nine months ended					Net income		WA	Per
	September 30, 2020					September 30, 2020					attributable to		number	share
	Net income		WA	Per		Net income		WA	Per
	attributable to		number	share		attributable to		number	share
	stockholders		of shares	amount		stockholders		of shares	amount
Three months ended March 31, 2021											stockholders		of shares	amount
Basic	$	45,387	109,018,469	$	0.42	$	121,239	108,887,026	$	1.11	$	28,188	109,972,997	$	0.26
Effect of dilutive securities:
Share units		—	548,859		—		—	519,915		—		—	579,133		—
Stock options		—	802,390		(0.01)		—	653,771		(0.01)		—	715,262		(0.01)
Diluted	$	45,387	110,369,718	$	0.41	$	121,239	110,060,712	$	1.10	$	28,188	111,267,392	$	0.25


	Net income		WA	Per
	attributable to		number	share
Three months ended March 31, 2020	stockholders		of shares	amount
Basic	$	22,809	109,248,880	$	0.21
Effect of dilutive securities:
Share units		—	586,074		—
Stock options		—	647,883		—
Diluted	$	22,809	110,482,837	$	0.21


Ritchie Bros.	1618

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

~~8. Earnings per share attributable to stockholders (continued)~~

Three months ended

Nine months ended

September 30, 2019

September 30, 2019

Net income

WA

Per

Net income

WA

Per

attributable to

number

share

attributable to

number

share


stockholders

of shares

amount

stockholders

of shares

amount
Basic

25,266

108,003,390

0.23

$
97,466

108,453,525

$
0.90
Effect of dilutive securities:

Share units

—

481,268

—

—

430,175

—
Stock options

—

896,515

—

—

750,495

(0.01)
Diluted

$
25,266

109,381,173

$
0.23

$
97,466

109,634,195

$
0.89

9.11. Supplemental cash flow information


Nine months ended September 30,	2020		2019
Three months ended March 31,					2021		2020
Trade and other receivables	$	(185,899)	$	(123,667)	$	(160,435)	$	(113,115)
Inventory		3,938		58,791		12,420		1,297
Advances against auction contracts		6,566		4,528		(1,085)		4,923
Prepaid expenses and deposits		2,184		309		(2,569)		(597)
Income taxes receivable		1,191		(4,123)		(1,624)		(1,217)
Auction proceeds payable		213,596		248,587		304,261		72,687
Trade and other payables		20,675		(48,882)		(16,623)		(3,138)
Income taxes payable		4,179		14,050		(13,720)		(5,030)
Operating lease obligation		(8,809)		(10,762)		(2,274)		(2,310)
Other		(3,709)		541		(496)		(210)
Net changes in operating assets and liabilities	$	53,912	$	139,372	$	117,855	$	(46,710)


Nine months ended September 30,	2020		2019
Three months ended March 31,					2021		2020
Interest paid, net of interest capitalized	$	31,173	$	34,955	$	14,914	$	15,171
Interest received		1,775		2,491		303		778
Net income taxes paid		32,750		23,193		23,681		12,442

Non-cash purchase of property, plant and equipment under finance lease		8,431		10,747		2,084		3,502
Non-cash right of use assets obtained (reassessed) in exchange for new lease obligations		595		28,121		6,234		(1,001)


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Cash and cash equivalents	$	470,285	$	359,671	$	294,380	$	278,766
Restricted cash		120,014		60,585		147,240		28,129
Cash, cash equivalents, and restricted cash	$	590,299	$	420,256	$	441,620	$	306,895

~~10.~~

12. Fair value measurement

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement or disclosure:

●	Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at measurement date;

●	Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and

●	Level 3: Unobservable inputs for the asset or liability.


Ritchie Bros.	1719

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

~~10.~~12. Fair value measurement (continued)


		September 30, 2020				December 31, 2019					March 31, 2021				December 31, 2020
		Carrying				Carrying					Carrying				Carrying
	Category	amount		Fair value		amount		Fair value		Category	amount		Fair value		amount		Fair value
Fair values disclosed:
Cash and cash equivalents	Level 1	$	470,285	$	470,285	$	359,671	$	359,671	Level 1	$	294,380	$	294,380	$	278,766	$	278,766
Restricted cash	Level 1		120,014		120,014		60,585		60,585	Level 1		147,240		147,240		28,129		28,129
Loan receivables										Level 2		5,658		6,238		5,798		6,438
Short-term debt	Level 2		20,285		20,285		4,705		4,705	Level 2		25,933		25,933		29,145		29,145
Long-term debt
Senior unsecured notes	Level 1		492,281		515,000		490,933		520,625	Level 1		493,177		513,450		492,734		514,219
Term loan	Level 2		96,330		96,782		154,548		155,355	Level 2		96,734		97,279		97,812		98,420
Long-term revolver loan	Level 2		43,950		44,251		—		—	Level 2		46,808		46,882		46,102		46,184

The carrying value of the Company’s cash and cash equivalents, restricted cash, trade and other receivables, advances against auction contracts, auction proceeds payable, trade and other payables, and ~~short term~~short-term debt approximate their fair values due to their short terms to maturity. The fair value of the loan receivables is determined by estimating discounted cash flows using market rates. The carrying value of the term loan and long-term revolver loan, before deduction of deferred debt issue costs, approximates their fair ~~values~~value as the interest ~~rate~~rates on the loans isare short-term in nature. The fair value of the senior unsecured notes is determined by reference to a quoted market price.

~~11.~~13. Trade receivables

Trade receivables are generally secured by the equipment that they relate to as it is Company policy that equipment is not released until payment has been collected. The following table presents the activity in the allowance for expected credit losses for the period ended ~~September 30, 2020:~~March 31, 2021:


~~Opening balance at January 1,~~Balance, December 31, 2020		~~(5,225)~~(5,467)
Current period provision		~~(2,507)~~(501)
~~Write-off~~Write-offs charged against the allowance		~~3,097~~392
Balance, ~~September 30, 2020~~March 31, 2021	$	~~(4,635)~~(5,576)

~~12.~~14. Other current assets

September 30,

December 31,

2020

2019
Advances against auction contracts

$
6,442

$
12,925
Assets held for sale

—

15,051
Prepaid expenses and deposits

19,837

22,184

$
26,279

$
50,160


~~Assets held for sale~~
~~Balance, December 31, 2019~~		~~15,051~~
~~Reclassified from (to) property, plant and equipment~~		~~(6,888)~~
~~Disposal~~		~~(8,163)~~
~~Balance, September 30, 2020~~	$	—

During the nine months ended September 30, 2020, the Company sold excess auction site acreage in the United States. The Company also sold the property that was reclassified to property, plant and equipment during the first quarter of 2020. The sale of the two properties resulted in combined proceeds of $15,555,000 and a combined pre-tax gain of $1,090,000.


	March 31,		December 31,
	2021		2020
Advances against auction contracts	$	7,396	$	6,487
Prepaid expenses and deposits		25,406		20,787
	$	32,802	$	27,274


Ritchie Bros.	1820

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

~~13.~~15. Other non-current assets


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Right-of-use assets	$	106,710	$	116,209	$	119,958	$	116,503
Tax receivable		11,306		11,792		10,842		11,050
Equity-accounted investments		—		4,276
Loans receivable						4,569		4,870
Deferred debt issue costs		2,465		1,403		2,065		2,263
Other		14,492		11,999		11,448		12,922
	$	134,973	$	145,679	$	148,882	$	147,608

~~During the three months ended~~Loans receivable

As at March 31, ~~2020,~~2021, the Company ~~received~~held one non-recourse financing lending arrangement, with a ~~final distribution~~term of four years, which is fully collateralized and secured by certain equipment. In the event of default, the Company is obligated to take possession of the equipment under the agreements to recover its ~~equity-accounted investments~~loans receivable balance. The loans receivable balance of such financing lending arrangement as at March 31, 2021 was $5,658,000 of which $1,089,000 is recorded in ~~the Cura Classis entities.~~other current assets (December 31, 2020: $5,797,000, of which $927,000 was recorded in other current assets). The ~~transaction did~~expected credit loss allowance is not ~~result in a significant gain or loss.~~significant.

~~14.~~16. Debt


	Carrying amount				Carrying amount
	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Short-term debt	$	20,285	$	4,705	$	25,933	$	29,145

Long-term debt:

Term loan and long-term revolver loan:
Term loan denominated in Canadian dollars, secured, bearing interest at a weighted average rate of 2.509%, due in monthly installments of interest only and quarterly installments of principal, maturing in October 2023		96,782		155,355
Long-term revolver loan denominated in Canadian dollars, secured, bearing interest at a weighted average rate of 2.509%, due in monthly installments of interest only, maturing in October 2023		44,251		—
Term loan denominated in Canadian dollars, secured, bearing interest at a weighted average rate of 2.68%, due in monthly installments of interest only and quarterly installments of principal, maturing in October 2023						97,279		98,420
Long-term revolver loan denominated in Canadian dollars, secured, bearing interest at a weighted average rate of 2.68%, due in monthly installments of interest only, maturing in October 2023						46,882		46,184
Less: unamortized debt issue costs		(753)		(807)		(619)		(690)
Senior unsecured notes:
Bearing interest at 5.375% due in semi-annual installments, with the full amount of principal due in January 2025		500,000		500,000		500,000		500,000
Less: unamortized debt issue costs		(7,719)		(9,067)		(6,823)		(7,266)
Total long-term debt		632,561		645,481		636,719		636,648

Total debt	$	652,846	$	650,186	$	662,652	$	665,793

Long-term debt:
Current portion	$	9,926	$	18,277	$	10,517	$	10,360
Non-current portion		622,635		627,204		626,202		626,288
Total long-term debt	$	632,561	$	645,481	$	636,719	$	636,648

Short-term debt

Short-term debt is comprised of drawings in different currencies on the Company’s committed revolving credit facilities and has a weighted average interest rate of 2.5% (December 31, 2020: 2.3%).


Ritchie Bros.	21

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

16. Debt (continued)

Long-term debt

a)	Term loan and long-term revolver loan

On August 14, 2020, the Company entered into an amendment of the Credit Agreement dated October 27, 2016, totaling US$630.0 million with a syndicate of lenders comprising:

(1)

Multicurrency revolving facilities of up to US$530 Million (the “Revolving Facilities”), and,

(2)

A delayed-draw term loan facility of up to US$100 Million (the “Delayed-Draw Facility” and together with the Revolving Facilities, the “Facilities”).

The amendment, among other things, (i) extended the maturity date of the Facilities from October 27, 2021 to October 27, 2023, (ii) increased the applicable margin for base rate loans and LIBOR loans by 0.50% at each pricing tier level, (iii) increased the applicable percentage per annum used to calculate the commitment fee in respect of the unused commitments under the Revolving Facilities by 0.10% at each pricing tier level, and (iv) increased the aggregate amount available under the Revolving Facilities from $490.0 million

b)
~~Ritchie Bros.~~	19 Senior unsecured notes

~~Table~~On December 21, 2016, the Company completed the offering of ~~Contents~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Tabular amounts expressed in thousands of United States dollars, except where noted)~~

~~(Unaudited)~~

~~to $530.0 million. Immediately prior to the amendment, the~~$500,000,000 aggregate principal amount ~~outstanding under~~of 5.375% senior unsecured notes due January 15, 2025 (the “Notes”). Interest on the ~~Delayed-Draw Facility was $141.0 million. In connection with~~Notes is payable semi-annually. The Notes are jointly and severally guaranteed on an unsecured basis, subject to certain exceptions, by certain of the ~~amendment, the Company prepaid $41.0 million~~Company’s subsidiaries. IronPlanet, Rouse, and certain of such amount with the proceeds from a borrowing under the Revolving Facilities. The Delayed-Draw Facility will continue to amortize in equal quarterly installments in an annual amount of 10%, with the balance payable at maturity.

~~The Company incurred debt issue costs of $2,038,000~~their respective subsidiaries were added as additional guarantors in connection with the ~~amendment. At September 30, 2020, the Company had unamortized deferred debt issue costs relating to the Credit Agreement~~acquisitions of ~~$3,218,000.~~IronPlanet and Rouse, respectively.

Short-term debt is comprised of drawings in different currencies on the Company’s committed revolving credit facilities, and for the three months ended September 30, 2020, have a weighted average interest rate of 2.4% (December 31, 2019: 2.3%).

As at ~~September 30, 2020,~~March 31, 2021, the Company had unused committed revolving credit facilities aggregating ~~$469,407,000~~$461,115,000 of which ~~$464,996,000~~$456,115,000 is available until October 27, 2023 subject to certain covenant restrictions. The Company was in compliance with all financial and other covenants applicable to the credit facilities at ~~September 30, 2020.~~March 31, 2021.

~~15.~~17. Other non-current liabilities


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Operating lease liability	$	103,244	$	111,322	$	116,342	$	112,818
Tax payable		21,240		20,232		19,888		19,706
Finance lease liability		17,079		16,336		16,624		17,109
Other		3,114		3,348		6,412		3,367
	$	144,677	$	151,238	$	159,266	$	153,000

~~16. Equity and dividends~~

~~Share capital~~

~~Preferred stock~~

~~Unlimited number of senior preferred shares, without par value, issuable in series.~~

~~Unlimited number of junior preferred shares, without par value, issuable in series.~~

~~All issued shares are fully paid. NaN preferred shares have been issued.~~

~~Share repurchase~~

There were 0 share repurchases made during the three months ended September 30, 2020 (three months ended September 30, 2019: NaN). There were 1,525,312 common shares repurchased for $53,170,000 during the nine months ended September 30, 2020 (nine months ended September 30, 2019: 1,223,674 common shares repurchased for $42,012,000).

On August 5, 2020, the Board of Directors approved a share repurchase program for the repurchase of up to $100.0 million worth of the Company’s common shares, approved by the Toronto Stock Exchange, over a period of 12 months, ending August 23, 2021.


Ritchie Bros.	2022

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

18. Equity and dividends

Share capital

Common stock

Unlimited number of common shares, without par value.

Preferred stock

Unlimited number of senior preferred shares, without par value, issuable in series.

Unlimited number of junior preferred shares, without par value, issuable in series.

All issued shares are fully paid. NaN preferred shares have been issued.

Shares issued for business combination

In connection with the acquisition of Rouse, the Company issued 312,193 common shares on December 8, 2020. These shares were issued to certain previous unitholders and employees of Rouse, and their vesting is subject to continuing employment with the Company over a three year period from the acquisition date. The fair value of these common shares was $71.09 based on the fair market value of the Company’s common shares on the date of acquisition. During the quarter ended March 31, 2021, 55,510 common shares were forfeited.

As at March 31, 2021, the unrecognized share-based continuing employment costs were $14,576,000, (March 31, 2020: $nil), which is expected to be recognized over a weighted average period of 1.8 years. As at March 31, 2021, the number of common shares which had not yet vested was 256,683.

Share repurchase

There were no common shares repurchased during the three months ended March 31, 2021 (three months ended March 31, 2020: 1,525,312 common shares repurchased for $53,170,000).

Dividends

Declared and paid

The Company declared and paid the following dividends during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:

Dividend



Total


Declaration date

per share

Record date

dividends

Payment date

Nine months ended September 30, 2020:










Fourth quarter 2019

January 24, 2020

$
0.2000

February 14, 2020

$
21,905

March 6, 2020
First quarter 2020

May 6, 2020

0.2000

May 27, 2020

21,681

June 17, 2020
Second quarter 2020

August 5, 2020

0.2200

August 26, 2020

24,053

September 16, 2020

Nine months ended September 30, 2019:










Fourth quarter 2018

January 25, 2019

$
0.1800

February 15, 2019

$
19,568

March 8, 2019
First quarter of 2019

May 8, 2019

0.1800

May 29, 2019

19,592

June 19, 2019
Second quarter of 2019

August 8, 2019

0.2000

August 28, 2019

21,631

September 18, 2019

Dividend

Total

Declaration date

per share

Record date

dividends

Payment date

Fourth quarter 2020

January 22, 2021

0.2200

February 12, 2021

24,181

March 5, 2021

Fourth quarter 2019

January 24, 2020

0.2000

February 14, 2020

21,905

March 6, 2020

Declared and undistributed

Subsequent to ~~September 30, 2020,~~March 31, 2021, the Company’s Board of Directors declared a quarterly dividend of $0.22 cents per common share, payable on ~~December~~June 16, ~~2020~~2021 to stockholders of record on ~~November 25, 2020.~~May 26, 2021. This dividend payable has not been recognized as a liability in the financial statements. The payment of this dividend will not have any tax consequences for the Company.

Foreign currency translation reserve

Foreign currency translation adjustments within other comprehensive income include intra-entity foreign currency transactions that are of a long-term investment nature, which generated a net ~~gain~~loss of ~~$5,634,000~~ ~~and~~ ~~$3,300,000~~$3,654,000 for the three ~~and nine~~ months ended ~~September 30, 2020 (2019:~~March 31, 2021 (2020: net loss of ~~$4,623,000 and $2,971,000)~~$7,492,000).


Ritchie Bros.	2123

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

~~17.~~19. Share-based payments

Share-based payments consist of the following compensation costs:

Three months ended

Nine months ended

September 30,

September 30,


2020

2019

2020

2019

Stock option compensation expense:









SG&A expenses

$
1,671

$
1,653

$
4,401

$
4,852

Share unit expense:







Equity-classified share units

4,138

2,851

9,155

8,754

Liability-classified share units

2,123

589

1,938

829

Employee share purchase plan - employer contributions

636

567

1,835

1,692

$
8,568

$
5,660

$
17,329

$
16,127

~~Share unit expense and employer contributions to the employee share purchase plan are recognized in SG&A expenses.~~


	Three months ended
	March 31,
	2021		2020
SG&A expenses:
Stock option compensation expense	$	1,861	$	1,187
Equity-classified share units		3,153		1,786
Liability-classified share units		(1,915)		(1,156)
Employee share purchase plan - employer contributions		679		590
		3,778		2,407
Acquisition-related costs:
Share-based continuing employment costs		2,553		—
		2,553		—
	$	6,331	$	2,407

Stock option plans

The Company has three stock option plans that provide for the award of stock options to selected employees, directors, and officers of the Company: a) Amended and Restated Stock Option Plan, b) IronPlanet 1999 Stock Plan, and c) IronPlanet 2015 Stock Plan.

Stock option activity for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 is presented below:


				WA							WA
	Common	WA		remaining		Aggregate		Common	WA		remaining		Aggregate
	shares under	exercise		contractual		intrinsic		shares under	exercise		contractual		intrinsic
	option	price		life (in years)		value		option	price		life (in years)		value
Outstanding, December 31, 2019	2,797,189	$	29.05		7.1	$	38,874
Outstanding, December 31, 2020								1,985,754	$	34.95		7.7	$	68,717
Granted	816,227		41.74					684,761		54.83
Exercised	(1,430,545)		28.10				31,798	(197,863)		33.96				4,538
Forfeited	(55,567)		33.53					(6,533)		35.39
Expired	(2,064)		20.74
Outstanding, September 30, 2020	2,125,240		34.46		7.8		52,688
Exercisable, September 30, 2020	801,352	$	28.28		6.3	$	24,820
Outstanding, March 31, 2021								2,466,119		40.54		8.0		44,460
Exercisable, March 31, 2021								1,046,861	$	31.27		6.3	$	28,557

The significant assumptions used to estimate the fair value of stock options granted during the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ are presented in the following table on a weighted average basis:


Nine months ended September 30,	2020		2019
Three months ended March 31,					2021		2020
Risk free interest rate	0.7	%	2.5	%	0.5	%	0.8	%
Expected dividend yield	1.96	%	2.06	%	1.66	%	2.02	%
Expected lives of the stock options	5	years	5	years	4	years	5	years
Expected volatility	27.9	%	26.8	%	32.3	%	27.3	%

As at March 31, 2021, the unrecognized stock-based compensation cost related to the non-vested stock options was $11,000,000, which is expected to be recognized over a weighted average period of 2.7 years.


Ritchie Bros.	2224

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

~~17.~~19. Share-based payments (continued)

~~Stock option plans (continued)~~

As at September 30, 2020, the unrecognized stock-based compensation cost related to the non-vested stock options was $5,796,000, which is expected to be recognized over a weighted average period of 2.3 years.

Share unit plans

Share unit activity for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 is presented below:


	Equity-classified awards						Liability-classified awards				Equity-classified awards						Liability-classified awards
	PSUs			RSUs			DSUs				PSUs			RSUs			DSUs
		WA grant			WA grant				WA grant			WA grant			WA grant				WA grant
		date fair			date fair				date fair			date fair			date fair				date fair
	Number	value		Number	value			Number	value		Number	value		Number	value			Number	value
Outstanding, December 31, 2019	428,724	$	32.89	237,420	$	29.72	$	118,368	$	29.64
Outstanding, December 31, 2020											542,676	$	38.09	134,937	$	39.14	$	137,514	$	32.06
Granted	300,595		42.00	26,610		40.52		15,427		43.29	137,848		56.81	28,560		56.45		4,525		52.08
Vested and settled	(156,238)		31.94	(7,911)		36.23		—		—	(161,248)		31.14	(87,409)		33.14		—		—
Forfeited	(29,863)		36.39	(48,243)		27.85		—		—	(10,750)		48.54	(4,089)		64.32		—		—
Outstanding, September 30, 2020	543,218	$	38.01	207,876	$	31.29	$	133,795	$	31.21
Outstanding, March 31, 2021											508,526	$	45.14	71,999	$	51.87	$	142,039	$	32.70

~~PSUs~~The total market value of liability-classified share units vested and released during the quarter ended March 31, 2021 was $NaN (December 31, 2020: $NaN).

Senior executive and employee PSU plans

The Company grants PSUs under a senior executive PSU plan and an employee PSU plan (the “PSU Plans”). Under the PSU Plans, the number of PSUs that vest is conditional upon specified market, service, and/or performance vesting conditions being met. The PSU Plans allow the Company to choose whether to settle the awards in cash or in shares. The Company intends to settle inby issuance of shares. With respect to settling in shares, the Company has the option to either (i) arrange for the purchase shares on the open market on the employee’s behalf based on the cash value that otherwise would be delivered, or (ii) to issue a number of shares equal to the number of units that vest.

Fair values of PSUs are estimated on grant date using the 20-day volume weighted average price of the Company's common shares listed on the New York Stock Exchange.

As at ~~September 30, 2020~~March 31, 2021 the unrecognized share unit expense related to equity-classified PSUs was ~~$12,485,000,~~$15,976,000, which is expected to be recognized over a weighted average period of ~~2.1~~2.3 years.

RSUs

The Company has RSU plans that are equity-settled and not subject to market vesting conditions.

Fair values of RSUs are estimated on grant date using the 20-day volume weighted average price of the Company's common shares listed on the New York Stock Exchange.

As at ~~September 30, 2020,~~March 31, 2021, the unrecognized share unit expense related to equity-classified RSUs was ~~$1,272,000,~~$2,818,000, which is expected to be recognized over a weighted average period of ~~1.2~~1.8 years.

DSUs

The Company has DSU plans that are cash-settled and not subject to market vesting conditions.

Fair values of DSUs are estimated on grant date and at each reporting date. DSUs are granted under the DSU plan to members of the Board of Directors. There is 0 unrecognized share unit expense related to liability-classified DSUs as they vest immediately and are expensed upon grant.

As at ~~September 30, 2020,~~March 31, 2021, the Company had a total share unit liability of ~~$7,685,000~~$7,900,000 (December 31, ~~2019: $5,130,000)~~2020: $9,597,000) in respect of share units under the DSU plans.


Ritchie Bros.	25

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

19. Share-based payments (continued)

Employee share purchase plan

The Company has an employee share purchase plan that allows all employees that have completed two months of service to contribute funds to purchase common shares at the current market value at the time of share purchase. Employees may contribute up to 4% of their salary. The Company will match between 50% and 100% of the employee’s contributions, depending on the employee’s length of service with the Company.


~~Ritchie Bros.~~	23

~~Table of Contents~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Tabular amounts expressed in thousands of United States dollars, except where noted)~~

~~(Unaudited)~~

~~18.~~20. Leases

The Company’s breakdown of lease expense is as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Three months ended March 31,									2021		2020
Operating lease cost	$	4,310	$	4,096	$	12,780	$	13,379	$	4,600	$	4,501
Finance lease cost
Amortization of leased assets		2,355		2,103		6,664		5,555		2,588		2,114
Interest on lease liabilities		219		211		680		565		221		233
Short-term lease cost		2,115		1,889		7,146		6,964		2,661		2,880
Sublease income		(110)		(150)		(406)		(447)		(15)		(148)
	$	8,889	$	8,149	$	26,864	$	26,016	$	10,055	$	9,580

Operating leases

The Company has entered into commercial leases for various auction sites and offices located in North America, Europe, the Middle East, Australia and Asia. The majority of these leases are non-cancellable. The Company also has further operating leases for computer equipment, certain motor vehicles and small office equipment where it is not in the best interest of the Company to purchase these assets.

The majority of the Company’s operating leases have a fixed term with a remaining life between one month and 20 years, with renewal options included in the contracts. The leases have varying contract terms, escalation clauses and renewal options. Generally, there are no restrictions placed upon the lessee by entering into these leases, other than restrictions on use of property, sub-letting and alterations. At the inception of a lease, the Company determines whether it is reasonably certain to exercise a renewal option and includes the options in the determination of the lease term and the lease liability where it is reasonably certain to exercise the option. If the Company’s intention is to exercise an option subsequent to the commencement of the lease, the Company will re-assess the lease term. The Company has included certain renewal options in its operating lease liabilities for key property leases for locations that have strategic importance to the Company such as its Corporate Head Office. The Company has not included any purchase options available within its operating lease portfolio in its determination of its operating lease liability.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:


Remainder of 2020	$	3,457
2021		13,755
Remainder of 2021			$	12,478
2022		12,366		14,843
2023		10,730		12,784
2024		8,891		10,769
2025				10,647
Thereafter		104,956		107,826
Total future minimum lease payments	$	154,155	$	169,347
less: imputed interest		(41,088)		(41,586)
Total operating lease liability	$	113,067	$	127,761
less: operating lease liability - current		(9,823)		(11,419)
Total operating lease liability - non-current	$	103,244	$	116,342

At ~~September 30, 2020~~March 31, 2021 the weighted average remaining lease term for operating leases is ~~15.4~~14.6 years and the weighted average discount rate is ~~4.2%~~3.9%.


Ritchie Bros.	2426

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

~~18.~~20. Leases (continued)

Finance leases

The Company has entered into finance lease arrangements for certain vehicles, computer and yard equipment and office furniture. The majority of the leases have a fixed term with a remaining life of one month to six years with renewal options included in the contracts. In certain of these leases, the Company has the option to purchase the leased asset at fair market value or a stated residual value at the end of the lease term. For certain leases such as vehicle leases the Company has included renewal options in the determination of its lease liabilities. ~~The Company has not included any purchase options available within its finance lease portfolio in its determination of the finance lease liability.~~

As at ~~September 30, 2020,~~March 31, 2021, the net carrying amount of computer and yard equipment and other assets under capital leases is ~~$24,834,000~~$25,222,000 (December 31, ~~2019: $23,258,000)~~2020: $25,649,000), and is included in the total property, plant and equipment as disclosed on the consolidated balance sheets.

Accumulated

Net book
As at September 30, 2020

Cost

depreciation

value
Computer equipment

$
14,385

$
(7,568)

$
6,817
Yard and others

27,288

(9,271)

18,017

$
41,673

$
(16,839)

$
24,834

Assets recorded under finance leases are as follows:


			Accumulated		Net book				Accumulated		Net book
As at December 31, 2019	Cost		depreciation		value
As at March 31, 2021							Cost		depreciation		value
Computer equipment	$	15,314	$	(7,832)	$	7,482	$	16,161	$	(7,936)	$	8,225
Yard and others		21,525		(5,749)		15,776		29,275		(12,278)		16,997
	$	36,839	$	(13,581)	$	23,258	$	45,436	$	(20,214)	$	25,222


			Accumulated		Net book
As at December 31, 2020	Cost		depreciation		value
Computer equipment	$	16,597	$	(8,317)	$	8,280
Yard and others		28,234		(10,865)		17,369
	$	44,831	$	(19,182)	$	25,649

The future aggregate minimum lease payments under non-cancellable finance leases are as follows:


Remainder of 2020	$	2,498
2021		9,083
Remainder of 2021			$	7,702
2022		7,198		8,545
2023		5,084		6,272
2024		2,796		3,759
2025				821
Thereafter		469		24
Total future minimum lease payments	$	27,128	$	27,123
less: imputed interest		(1,504)		(1,243)
Total finance lease liability	$	25,624	$	25,880
less: finance lease liability - current		(8,545)		(9,256)
Total finance lease liability - non-current	$	17,079	$	16,624

At ~~September 30, 2020~~March 31, 2021 the weighted average remaining lease term for finance leases is ~~3.4~~3.1 years and the weighted average discount rate is ~~3.8%~~3.7%.

~~Subleases~~

~~As at September 30, 2020, the total future minimum sublease payments expected to be received under non-cancellable subleases is $81,000.~~


Ritchie Bros.	2527

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Tabular amounts expressed in thousands of United States dollars, except where noted)

(Unaudited)

~~19.~~21. Commitments

Commitment for inventory purchase

~~The~~In December 2017, the Company entered into a two-year non-rolling stock surplus contract with the U.S. Government Defense Logistics Agency (the “DLA”) ~~in December 2017 with~~, the ~~option to extend for up to four-years. Pursuant to~~term of which has been extended until June 1, 2021 at which point the contract will terminate. Under this contract, the ~~original performance period commenced in April 2018 and concluded in March 2020. The Company has exercised its option for one year, extending the performance period to March 2021.~~

~~The~~ Company has committed to purchase between 150,000 and 245,900 ~~units of property~~assets with an expected minimum value of $11,104,000 and up to $51,028,000 annually to the extent that goods are available from the DLA. ~~At September 30, 2020,~~As at March 31, 2021, the Company has purchased ~~$9,278,000~~$28,355,000 pursuant to the 12-month period of this contract which commenced in April 2020.

On April 1, 2021, the DLA awarded two new contracts to the Company. The new contracts (one for the Eastern portion of the United States and one for the Western portion of the United States) cover both surplus non-rolling and rolling stock. Both contracts commence on June 1, 2021 and have a base term of two years with 3 one year renewal options. During the first two years of the new contracts, the Company is committed to purchase on a combined basis up to either: (i) 600,000 assets, or (ii) assets with an expected minimum value of up to $77,000,000; whichever is less.

~~20.~~22. Contingencies

Legal and other claims

The Company is subject to legal and other claims that arise in the ordinary course of its business. Management does not believe that the results of these claims will have a material effect on the Company’s consolidated balance sheet or consolidated income statement.

Guarantee contracts

In the normal course of business, the Company will in certain situations guarantee to a consignor a minimum level of proceeds in connection with the sale at auction of that consignor’s equipment.

At ~~September 30, 2020,~~March 31, 2021, there were ~~$75,897,000~~$56,257,000 of assets guaranteed under contract, of which ~~85%~~83% is expected to be sold prior to ~~December 31, 2020,~~June 30, 2021, with the remainder to be sold by ~~September 30,~~December 31, 2021 (December 31, ~~2019: $63,612,000~~2020: $22,773,000 of which ~~39%~~23% was expected to be sold prior to the end of March 31, ~~2020~~2021 with the remainder to be sold by ~~June 30, 2020)~~December 31, 2021).

The outstanding guarantee amounts are undiscounted and before estimated proceeds from sale at auction.

~~21.~~23. Subsequent ~~event~~Events

On ~~October 28, 2020,~~April 30, 2021, the Company entered into a ~~definitive~~non-binding letter of intent (“LOI”) to purchase approximately 104.5 acres of land in Canada for the purpose of relocating an existing auction site. A purchase agreement to acquire Rouse Services, a privately held company that provides data intelligence and performance benchmarking solutions. Its subscription-based revenue is generated by three Data-as-a-service (DaaS) solutions: rental analytics, equipment sales support, and fleet appraisals.

has not yet been executed.Under the terms of the transaction, Ritchie Bros. will acquire 100% of the equity of Rouse Services LLC for approximately $275 million, comprised of approximately $250 million in cash and $25 million in common stock of Ritchie Bros., subject to adjustment. Completion of the acquisition is subject to customary closing conditions, including, among other conditions, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.


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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

Forward-looking statements may appear throughout this report, including the following section “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Forward-looking statements are typically identified by such words as “aim”, “anticipate”, “believe”, “could”, “continue”, “estimate”, “expect”, “intend”, “may”, “ongoing”, “plan”, “potential”, “predict”, “will”, “should”, “would”, “could”, “likely”, “generally”, “future”, “long-term”, or the negative of these terms, and similar expressions intended to identify forward-looking statements. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially.

While we have not described all potential risks related to our business and owning our common shares, the important factors discussed in “Part II, Item 1A: Risk Factors” of this Quarterly Report on Form 10-Q and in “Part I, Item 1A: Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, which is available on our website at www.rbauction.com, on EDGAR at www.sec.gov, or on SEDAR at www.sedar.com, are among those that we consider may affect our performance materially or could cause our actual financial and operational results to differ significantly from our expectations. Except as required by applicable securities law and regulations of relevant securities exchanges, we do not intend to update publicly any forward-looking statements, even if our expectations have been affected by new information, future events or other developments.

We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles (“US GAAP”). Except for Gross Transaction Value (“GTV”)¹, 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 (*). Please see pages ~~43-48~~42-47 for explanations of why we use these non-GAAP measures and the reconciliation to the most comparable GAAP financial measures.

Overview

Ritchie Bros. Auctioneers Incorporated (“Ritchie Bros.”, the “Company”, “we”, or “us”) (NYSE & TSX: RBA) was founded in 1958 in Kelowna, British Columbia, Canada and is a world leader in asset management technologies and disposition of ~~used industrial equipment and other durable~~commercial assets, selling ~~$5.14~~$5.41 billion of used equipment and other assets during ~~2019.~~2020. Our expertise, unprecedented global reach, market insight, and trusted portfolio of brands provide us with a unique position in the used equipment market. We sell used equipment for our customers through live, unreserved auctions at over 40 auction sites worldwide, which are also simulcast online to reach a global bidding audience and through our online marketplaces.

Through our unreserved auctions, online marketplaces, and private brokerage services, we sell a broad range of used and unused ~~equipment,~~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.

We also provide our customers with a wide array of other services aligned with our growth strategy to create a global marketplace for used equipment services and solutions. Our other services include equipment financing, asset appraisals and inspections, online equipment listing, logistical services, and ancillary services such as equipment refurbishment. Additionally, we offer our customers asset technology solutions to manage the end to end disposition process of their assets and provide market data intelligence to make more accurate and reliable business decisions.

¹GTV represents total proceeds from all items sold at our auctions and online marketplaces. GTV is not a measure of financial performance, liquidity, or revenue, and is not presented in our consolidated financial statements.


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We operate globally with locations in more than 12 countries, including the U.S., Canada, Australia, the United Arab Emirates, and the Netherlands, and employ more than ~~2,500~~2,600 full time employees worldwide.

¹GTV represents total proceeds from all items sold at our live on site auctions and online marketplaces. GTV is not a measure of financial performance, liquidity, or revenue, and is not presented in our consolidated financial statements.


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~~Proposed Acquisition of Rouse Services~~

~~On October 28, 2020, we entered into a definitive agreement to acquire Rouse Services, a privately held~~company that provides data intelligence and performance benchmarking solutions to help customers make better decisions. Its subscription-based revenue is generated by three Data-as-a-service (DaaS) solutions: rental analytics, equipment sales support, and fleet appraisals.

Under the terms of the transaction, we will acquire 100% of the equity of Rouse Services LLC for approximately $275 million, comprised of approximately $250 million in cash and $25 million in our common stock, subject to adjustment. Completion of the acquisition is subject to customary closing conditions, including, among other conditions, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Impact of COVID-19 to our Business

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the ~~world.~~world with new variants of the virus recently emerging. The COVID-19 pandemic has resulted in significant global economic disruption and has materially impacted ~~a number of~~several countries and regions in which we operate, including the United States, Canada, Europe, the Middle East, Australia and Asia. It has resulted in travel restrictions, economic uncertainty, and business slowdowns or shutdowns in affected areas and has negatively disrupted global manufacturing and workforce participation, including our own.

~~During~~Our ability during the ~~third quarter, many regions continued to lift lockdown policies and eased border restrictions, improving our ability~~COVID-19 pandemic to move equipment to and from our auction ~~sites. Notwithstanding, our European region continued to experience some constraints by the cross-border quarantine requirements making equipment transport challenging~~sites, and ~~consequently impacting our overall auction volumes. Our North America region also lifted lockdown policies which positively impacted our businesses but unlike Europe and~~across borders, varies regionally with Asia ~~the dependency to move equipment across country borders within Canada~~ and the ~~US was~~Middle East continuing to be negatively impacted as regional governments continue to enforce travel restrictions and quarantine requirements. Despite other regions having various levels of travel restrictions, it has not ~~as large a factor in~~materially impacted our ability to operate ~~our business.~~and move equipment.

Our top priority ~~with regard to~~regarding the COVID-19 pandemic remains the health and welfare of our employees, customers, suppliers and others with whom we partner to run our business activities. We are strictly enforcing all local government and jurisdictional safety guidelines, and, in some instances, ~~the Company is~~we are applying additional over-and-above safety measures. In the first quarter of 2020, we implemented our business continuity plans and instructed employees at many of our offices across the globe (including our corporate headquarters) to work from home on a temporary basis and implemented travel restrictions. These work-from-home orders and travel restrictions ~~continued~~introduced in March 2020 continue to be ~~observed~~enforced in 2021.

Since the beginning of the COVID-19 pandemic, and ~~were enforced throughout~~during the ~~third quarter.~~

~~For the third~~first quarter ~~the Company was~~of 2021, we continue to be able to operate and serve our customers’ equipment and immediate liquidity needs through our platform of auction technology solutions and online auction capabilities. In addition to running our IronPlanet weekly featured online auction, our online Marketplace-E solution and our GovPlanet online auctions, we modified our ~~live~~ operations in March 2020 to transition all of our traditional live ~~onsite~~on site industrial auctions and events to online bidding. Buyers are still able to visit our ~~live~~ auction sites in advance of the ~~virtual~~ auctions to conduct inspections and pick up equipment post auction, but we are ~~restricting attendance at~~no longer holding live auction events in our ~~live~~ theatres. We are enforcing rigid guidelines for equipment drop off, buyer inspections and post auction pickup of equipment to ensure the highest regard for the safety of our employees and customers. In addition, aswe have implemented ~~in the first quarter, we are using our~~ Time Auctioned Lots (TAL) solution for selected ~~events.~~events since Q1 2020.

We have taken and actively ~~taken~~continue to take steps to be prudent on expenses and other cash ~~outflows.~~outflows since the start of the COVID-19 pandemic, while taking steps to maximize our positive cash flows while still investing for future growth. Our priority is to support our employees, and we are actively monitoring the situation and changing dynamics in each of our respective regions and adjusting our operations as necessary. To this date, layoffs or furlough activities related to the COVID-19 pandemic have been limited in scope. As at the end of the ~~third~~first quarter, we held a solid balance sheet and strong liquidity position. As of ~~September 30, 2020,~~March 31, 2021, we have ~~$470.3~~$294.4 million of unrestricted cash and ~~$469.4~~$461.1 million of unused committed capacity under our long term revolving credit ~~facility. With respect to the announced Rouse acquisition, we are well positioned financially to close on the transaction and we have prudently taken steps to maximize positive cash flow and~~facilities. We have also developed comprehensive contingency plans should the COVID-19 pandemic have a prolonged adverse impact on our business impeding our ability to generate revenue. ~~Additionally, in the third quarter we amended and extended our credit facilities totaling US$630.0 million to expire in October 2023.~~

The extent of the ongoing impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our business strategies and initiatives, will depend on future developments, including the duration and spread of the pandemic, time of mass vaccine distribution, and any related restrictions placed by respective global governments, as well as supply and demand impacts driven by our consignor and buyer base, all of which are uncertain and cannot be easily predicted. Although at the time of this filing, we continue ~~operating~~to operate our ~~modified live site operations~~auctions in all ~~of the jurisdictions in which we operate,~~regions, there is no assurance that our operations could not be impacted in the future. If we were to be subject to government orders or other restrictions on the operation of our business, we may be required to limit our operations at, or temporarily close, certain live site locations in the future. Any such limitations or closures could have an adverse impact on our ability to service our customers and on our business, and results of operations.


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We are actively monitoring the ~~situation~~impact COVID-19 is having in the world and remain ready to take additional actions based on any new governmental guidance or recommendations. We ~~are continuously reviewing~~continue to review and ~~assessing~~assess the pandemic’s impacts on our customers, our suppliers and our business so that we can ~~seek to~~ address the effect on our business and service our customers. It is unknown how long the pandemic will last, how many people are ultimately going to be affected by it, and the long-term implications to local or global economies. Equally, it is still not easily discernable ~~at this time~~ to understand the real effects of the COVID-19 pandemic on equipment supply, buyer demand, and potential pricing volatility, ~~nor~~or the potential impact on our buyers’ ability to pay or secure financing. Additionally, there is a level of uncertainty onover the impact the COVID-19 pandemic may have on our third party vendors, partners and the service providers with whom we currently do business with today. Their ability to partner with us may be temporarily or permanently constrained and for some, the business terms under which they continue to partner with us could change as they manage their business through these unprecedented times. As such, given the ongoing nature of ~~this situation,~~ the ~~Company cannot~~COVID-19 pandemic, we are not able to reasonably


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estimate the future impacts ~~of the COVID-19 pandemic~~ on our business operations, results of operations, cash flows, financial performance or ~~the~~our ability to pay dividends.

Service Offerings

We offer our equipment seller and buyer customers multiple distinct, complementary, multi-channel brand solutions that address the range of their needs. Our global customer base has a variety of transaction options, breadth of services, and the widest selection of used equipment available to them. For a complete listing of channels and brand solutions available under our Auctions & Marketplace ("A&M") segment, as well as our Other Services segment, please refer to our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, which is available on our website at www.rbauction.com, on EDGAR at www.sec.gov, or on SEDAR at www.sedar.com.

Contract options

We offer consignors several contract options to meet their individual needs and sale objectives. Through our A&M business, options include:

●	Straight commission contracts, where the consignor receives the gross proceeds from the sale less a pre-negotiated commission rate;

●	Guarantee contracts, where the consignor receives a guaranteed minimum amount plus an additional amount if proceeds exceed a specified level; and

●	Inventory contracts, where we purchase, take custody, and hold used equipment and other assets before they are resold in the ordinary course of business.

We collectively refer to guarantee and inventory contracts as underwritten or “at-risk” contracts.

Value-added services

We also provide a wide array of value-added services to make the process of selling and buying equipment convenient for our customers, including repair and refurbishment services, financial services through Ritchie Bros. Financial Services (“RBFS”), logistical services through RB Logistics, end to end asset management and ~~appraisals.~~disposition services through RB Asset Solutions, as well as other services such as appraisals, insights, data intelligence and performance benchmarking solutions.

Seasonality

Our GTV and associated A&M segment revenues are affected by the seasonal nature of our business. GTV and A&M segment revenues tend to increase during the second and fourth calendar quarters, during which time we generally conduct more business than in the first and third calendar quarters. Given the operating leverage inherent in our business model, the second and fourth quarter also tend to produce higher operating margins, given the higher volume and revenue generated in those quarters.

The restrictions imposed and effects of the overall economic environment as a result of the COVID-19 pandemic may continue to impact these trends.

Revenue Mix Fluctuations

Our revenue is comprised of service revenue and inventory sales revenue. Service revenue from A&M segment activities include commissions earned at our ~~live~~ auctions, online marketplaces, and private brokerage services, and various auction-related fees, including listing and buyer transaction fees. We also recognize revenues from our Other ~~Services activities~~Segment as fees within service revenue. Inventory sales revenue is recognized as part of our A&M activities and relates to revenues earned through our inventory contracts.

Inventory sales revenue can fluctuate significantly, as it changes based on whether our customers sell using a straight or guarantee commission contract, or an inventory contract at time of selling. Straight or guarantee commission contracts will result in the commission being recognized as service revenue, while inventory contracts will result in the gross transaction value of the equipment sold being recorded as inventory sales revenue with the related cost recognized in cost of inventory sold. As a result, a change in the revenue mix between service revenues and revenue from inventory sales can have a significant impact on revenue growth percentages.


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Performance Overview

Net income attributable to stockholders increased ~~80%~~24% to ~~$45.4~~$28.2 million, compared to ~~$25.3~~$22.8 million in ~~Q3 2019.~~Q1 2020. Diluted earnings per share (“EPS”) attributable to stockholders increased ~~78%~~19% to ~~$0.41~~$0.25 per share in ~~Q3 2020~~Q1 2021 as compared to ~~Q3 2019. Diluted adjusted EPS attributable to stockholders* which excludes $4.3 million of severance costs ($3.2 million net of tax), increased 91% to $0.44~~$0.21 per share ~~at Q3 2020 as compared to Q3 2019.~~in Q1 2020.

Consolidated results:

●	Total revenue in ~~Q3 2020~~Q1 2021 increased ~~14%~~21% to ~~$331.5~~$331.6 million as compared to ~~Q3 2019~~Q1 2020

Service revenue in ~~Q3 2020~~Q1 2021 increased ~~25%~~13% to ~~$222.7~~$206.0 million as compared to ~~Q3 2019~~Q1 2020

Inventory sales revenue in ~~Q3 2020 decreased 2%~~Q1 2021 increased 39% to ~~$108.9~~$125.5 million as compared to ~~Q3 2019~~Q1 2020

●	Total selling, general and administrative expenses (“SG&A”) in ~~Q3 2020~~Q1 2021 increased 18% to ~~$110.2~~$116.1 million as compared to ~~Q3 2019~~Q1 2020

●	Operating income in ~~Q3 2020~~Q1 2021 increased ~~68%~~31% to ~~$67.4~~$44.5 million as compared to ~~Q3 2019~~Q1 2020

●	Net income in ~~Q3 2020~~Q1 2021 increased ~~80%~~23% to ~~$45.5~~$28.1 million as compared to ~~Q3 2019~~Q1 2020

●	Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization* (“EBITDA”) (non-GAAP measure) in ~~Q3 2020~~Q1 2021 increased ~~55%~~18% to ~~$91.9~~$66.3 million as compared to ~~Q3 2019~~Q1 2020

●	Cash provided by operating activities was ~~$265.6~~$180.7 million for the first ~~nine~~three months of ~~2020~~2021

●	Cash on hand at ~~Q3 2020~~Q1 2021 was ~~$590.3~~$441.6 million, of which ~~$470.3~~$294.4 million was unrestricted

Auctions & Marketplaces segment results:

●	GTV in ~~Q3 2020~~Q1 2021 increased ~~22%~~11% to $1.3 billion and increased 8% when excluding the impact of foreign exchange compared to ~~Q3 2019~~Q1 2020

●	A&M total revenue in ~~Q3 2020~~Q1 2021 increased ~~14%~~21% to ~~$297.8~~$296.3 million as compared to ~~Q3 2019~~Q1 2020

Service revenue in ~~Q3 2020~~Q1 2021 increased ~~26%~~10% to ~~$188.9~~$170.8 million as compared to ~~Q3 2019~~Q1 2020

Inventory sales revenue in ~~Q3 2020 decreased 2%~~Q1 2021 increased 39% to ~~$108.9~~$125.5 million as compared to ~~Q3 2019~~Q1 2020

Other Services segment results:

●	Other Services total revenue in ~~Q3 2020~~Q1 2021 increased ~~18%~~24% to ~~$33.7~~$35.3 million as compared to ~~Q3 2019~~Q1 2020

●

RBFS revenue in ~~Q3 2020~~Q1 2021 increased ~~19%~~27% to ~~$7.3~~$9.2 million as compared to ~~Q3 2019~~Q1 2020

Rouse revenue of $5.6 million was recognized in Q1 2021, which was its first full quarter since its acquisition on December 8, 2020

Other Company developments:

●	In Q3 2020, our Board of Directors authorized a share repurchase program for the repurchase of up to $100 million of our common shares over the next 12 months, which was approved by the Toronto Stock Exchange

●	On ~~August 10, 2020,~~March 11, 2021, the Company announced that it was awarded the ~~appointment~~support of ~~Kevin Geisner~~the U.S. Department of Defense with new surplus term sale contracts as ~~Chief Strategy Officer~~

●	~~On August 14, 2020,~~ the Company ~~amended~~was declared the apparent high bidder for two new East and ~~extended its credit facilities totaling US$630.0 million with a syndicate of lenders~~

●

~~On October 28, 2020,~~West contracts, covering the consolidated surplus rolling stock and non- rolling stock assets. These contracts were formally awarded to the Company ~~entered into a definitive agreement to acquire Rouse Services, a privately heldcompany that provides data intelligence~~on April 1, 2021 and ~~performance benchmarking for approximately $275 million~~commence on June 1, 2021.


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Results of Operations

Financial overview


	Three months ended September 30,									Nine months ended September 30,									Three months ended March 31,
							% Change									% Change									% Change
(in U.S. $000's, except EPS and percentages)	2020			2019			2020 over 2019			2020			2019			2020 over 2019			2021			2020			2021 over 2020
Service revenue:
Commissions	$	112,762		$	90,928			24	%	$	331,711		$	317,674			4	%	$	103,975		$	93,484			11	%
Fees		109,917			87,649			25	%		308,230			267,881			15	%		102,055			89,639			14	%
Total service revenue		222,679			178,577			25	%		639,941			585,555			9	%		206,030			183,123			13	%
Inventory sales revenue		108,863			111,219			(2)	%		353,906			400,892			(12)	%		125,525			90,132			39	%
Total revenue		331,542			289,796			14	%		993,847			986,447			1	%		331,555			273,255			21	%
Service revenue as a % of total revenue		67.2	%		61.6	%		560	bps		64.4	%		59.4	%		500	bps
Inventory sales revenue as a % of total revenue		32.8	%		38.4	%		(560)	bps		35.6	%		40.6	%		(500)	bps
Costs of services		39,223			36,382			8	%		118,026			122,719			(4)	%		36,027			39,355			(8)	%
Cost of inventory sold		96,253			102,410			(6)	%		320,972			372,703			(14)	%		110,747			81,585			36	%
Selling, general and administrative expenses		110,186			93,691			18	%		309,203			286,589			8	%		116,078			98,385			18	%
Operating expenses		264,158			249,636			6	%		803,581			834,729			(4)	%		287,053			239,173			20	%
Cost of inventory sold as a % of operating expenses		36.4	%		41.0	%		(460)	bps		39.9	%		44.6	%		(470)	bps
Operating income		67,384			40,160			68	%		190,266			151,718			25	%		44,502			34,082			31	%
Operating income margin		20.3	%		13.9	%		640	bps		19.1	%		15.4	%		370	bps
Operating income as a % of total revenue																				13.4	%		12.5	%		90	bps
Net income attributable to stockholders		45,387			25,266			80	%		121,239			97,466			24	%		28,188			22,809			24	%
Adjusted net income attributable to stockholders*		48,605			25,266			92	%		130,685			97,466			34	%		28,188			22,809			24	%
Diluted earnings per share attributable to stockholders	$	0.41		$	0.23			78	%	$	1.10		$	0.89			24	%	$	0.25		$	0.21			19	%
Diluted adjusted EPS attributable to stockholders*	$	0.44		$	0.23			91	%	$	1.19		$	0.89			34	%	$	0.25		$	0.21			19	%
Effective tax rate		25.3	%		21.1	%		420	bps		28.6	%		22.8	%		580	bps		23.0	%		19.8	%		320	bps

Total GTV		1,321,379			1,084,241			22	%		3,962,386			3,756,679			5	%		1,274,539			1,147,025			11	%
Service GTV		1,212,516			973,022			25	%		3,608,480			3,355,787			8	%		1,149,014			1,056,893			9	%
Service revenue as a % of total GTV																				16.2	%		16.0	%		20	bps
Inventory GTV																				125,525			90,132			39	%

Service revenue as a % of total revenue																				62.1	%		67.0	%		(490)	bps
Inventory sales revenue as a % of total revenue																				37.9	%		33.0	%		490	bps
Cost of inventory sold as a % of operating expenses																				38.6	%		34.1	%		450	bps
Service GTV as a % of total GTV - Mix		91.8	%		89.7	%		210	bps		91.1	%		89.3	%		180	bps		90.2	%		92.1	%		(190)	bps
Service revenue as a % of total GTV- Rate		16.9	%		16.5	%		40	bps		16.2	%		15.6	%		60	bps
Inventory GTV		108,863			111,219			(2)	%		353,906			400,892			(12)	%
Inventory sales revenue as a % of total GTV-Mix		8.2	%		10.3	%		(210)	bps		8.9	%		10.7	%		(180)	bps
Inventory sales revenue as a % of total GTV - Mix																				9.8	%		7.9	%		190	bps

Total GTV

Total GTV increased 11% to $1.3 billion and increased 8% when excluding the impact of foreign exchange in Q1 2021. GTV volumes rose partly due to significant auction calendar shifts from the delay in auctions in prior year from the impact of COVID-19 which included (1) Montreal, Canada, (2) Los Angeles, US and (3) Caorso, Italy, which were offset by lower volumes at the Las Vegas, US auction partly impacted by the non-repeat of a large North American trade show occurring at the same time, and the non-repeat of a collector car event. In addition, all regions experienced very strong auction price performance due to high demand for used equipment, in part aided by our digital marketing efforts. In Canada, we saw strong results in the Canadian agricultural market, and in the US we benefited from combining several regional events. We also saw positive year-over-year performance in International as a result of a soft prior quarter in Europe due to the direct impact of COVID-19 and early benefits from the use of new test satellite yards in France, Germany and Australia. These were partially offset by lower volumes realized at the Orlando, US auction due to a dynamic supply environment.

Total revenue

Total revenue increased ~~14%~~21% to ~~$331.5~~$331.6 million in ~~Q3 2020~~Q1 2021, with inventory sales revenue increasing significantly by 39% mainly as a result of a change in GTV mix, and ~~increased 1% to $993.8 million for the first nine months of 2020.~~total service revenue increasing by 13%.

Service Revenue

In ~~Q3 2020,~~Q1 2021, total service revenue increased ~~25%~~13% with fees revenue increasing 14% and commissions revenue increasing ~~24% and fees revenue increasing 25%~~11%. 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~~other services such as Ancillary Services, RBFS, Rouse, Mascus, RB Logistics and ~~Ancillary Services.~~RB Asset Solutions.

In ~~Q3 2020,~~Q1 2021, Service GTV increased ~~25%~~9% to ~~$1.2~~$1.1 billion with increases across all regions, most notably in ~~the US~~Canada and ~~Canada.~~International. The increase in ~~the US~~Canada Service GTV was primarily due to strong execution by the US strategic accounts and regional sales teams driving year-over-year positive growth at both our live and online auctions, with strong performance at our Fort Worth auction. In Canada, Service GTV increased mainly due to positive year-over-year performance at Canadian live auctions. Also, the quarter benefited from auction calendar movement, which resulted in the shifting of the ~~Toronto~~Montreal auction and Lethbridge auctions to Q3 2020, partially offset by shifting the Grand Prairie auction from Q3 2020 to Q4 2020. The International sales team delivered higher Service GTV as earlier lockdown measures lifted and border restrictions eased in Europe.

~~In Q3 2020, fees revenue was up 25% driven by higher fees from total GTV which was up 22%. We also had positive~~strong year-over-year performance in Ancillary as we earned more fees from refurbishing and transporting sellers’ equipment driven by greater GTV activity in the US. Fees also grew due to RBFS as well as higher buyer fees on more favorable mix. Commissions revenue increased 24%, primarily in line with the increase in Service GTV.

~~For the first nine months of 2020, total service revenue increased 9% to $639.9 million.~~


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~~For~~at our Canadian agricultural auctions driven by an increase in the ~~first nine months~~number of ~~2020,~~auctions held. In International, Service GTV grew as a result of the addition of an auction event in the Netherlands which included GTV sold from a satellite yard in Germany, the shifting of the Caorso auction and a new auction held in France where new test satellite yards created some positive momentum. In US, Service GTV increased ~~8% with increases in~~driven by strong price performance and increased volumes as a result of the combination of several regional auction events, the shifting of the Los Angeles auction, and higher volumes at the Fort Worth, US ~~and Canada offsetting lower performance in International. Service GTV in the US and Canada increased for the same reasons discussed above.~~auction. This increase was ~~partially~~primarily offset by a lower performance at the Orlando auction, lower volumes at our Las Vegas auction and the non-repeat of ~~the Columbus, Ohio auction in June 2019 and lower GTV in the Orlando live auction. International, mainly in Europe, was lower due to the impact of the COVID-19 pandemic.~~a collector car event.

~~For the first nine months of 2020, fee~~

In Q1 2021, fees revenue increased ~~15%~~14%, ~~partially related~~primarily due to the increase in total GTV of 5%11%. The remaining increase ~~was driven by higher~~in fees revenue ~~from~~was due to the ~~full harmonization of buyer fees and change~~growth in our ~~GTV mix resulting~~services in ~~improved buyer fee rate performance. We also recognized higher~~the Other Segment ~~fees and~~as a result of the acquisition of Rouse on December 8, 2020, an increase in fees from higher funded volumes in RBFS, and higher online listing fees. The increase in fees ~~driven by greater online volume. This increase~~ was partially offset by ~~lower RB Logistics~~the type of asset mix in the US with fewer sales of collector cars, small value lots, and titled lots.

In Q1 2021, commissions revenue increased 11%, largely driven by the increase in Service GTV of 9%. The remaining increase in commission revenue was driven by improved rates and strong performances on guarantee commission contracts across all regions, but most notably in the US, and in particular in the construction and transportation sectors. We also saw improved rates in the straight commission contracts within the GovPlanet business and higher straight commission revenue earned ~~due to lower activity~~on low value assets sold in ~~the International region during the first nine months of 2020. Commissions revenue increased 4% on Services GTV growth of 8%, with~~Canada.These increases were partially offset by softer straight commission rate performance ~~due to~~from a higher proportion of GTV sourced from US strategic accounts. ~~This decrease was partially offset by improved guarantee rate performance in the US.~~

Inventory Sales Revenue

Inventory sales revenue as a ~~percent~~percentage of total GTV ~~decreased~~increased in Q1 2021 to ~~8.2%~~9.8% from ~~10.3%~~7.9% in ~~Q3 2020 and to 8.9% from 10.7% in the first nine months of~~Q1 2020.

In ~~Q3 2020,~~Q1 2021, inventory sales revenue ~~decreased 2% representing lower~~increased 39%, predominantly in International and the US. Some of this positive year-over-year performance is a result of a soft prior quarter in Europe due to the direct impact of COVID-19. In Europe, there was a significant increase in the volume of inventory contracts as a result of improved economic conditions and climate which has increased our ability to move equipment across borders, attract more customers, and hold several new auctions in the period compared to Q1 2020. International inventory sales ~~volume. The lower~~revenue also grew in Australia from a large private treaty deal and higher overall activity. In the US, the inventory sales revenue increase was mainly driven by a higher volume ~~was offset by strong~~of inventory packages in the construction sector at our Fort Worth, Texas auction and positive year-over-year improvement in ~~the~~both inventory ~~sales margin~~volume and the rate performance in the US and Canada. The decrease in the inventory volume was attributable to lower government surplus contracts in the US due to COVID-19 related government shutdowns and the shift of the Canadian Grand Prairie auction to Q4 2020. Partially offsetting these decreases was positive volume growth in International as border restrictions eased in Europe during Q3 2020 together with large private treaty deals in Australia.selling through our GovPlanet business.

~~For the first nine months of 2020, inventory sales~~Foreign currency fluctuation also had a favourable impact on our revenue ~~decreased 12%~~ primarily ~~related to lower inventory sales revenue in the International~~ due to the ~~severe impact~~appreciation of the ~~COVID-19 pandemic in this region~~Euro, Canadian dollar and ~~selling through certain non-repeating large inventory deals from Europe and Asia in Q3 2019. In addition, there was a non-recurring large dispersal of pipeline equipment as part of~~ the ~~$94 million Columbus, Ohio auction in June 2019, as well as a drop in revenue from our government surplus contracts due to government shutdowns in response~~Australian dollar relative to the ~~COVID-19 pandemic. Inventory revenue was impacted by the auction calendar shifts discussed above. This decrease was partially offset by strong year-over-year performance in the US and Canada.~~U.S. dollar.

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 includes inventory and guarantee contracts ~~decreased to 15.4%~~remained flat at 15% in ~~Q3 2020,~~Q1 2021 compared to ~~17.8% in Q3 2019. For the first nine months of 2020, our underwritten contracts were 18.7% compared to 19.9% in the prior period.~~Q1 2020.

Operating Income

For ~~Q3 2020,~~Q1 2021, operating income increased ~~68%~~31% or ~~$27.2~~$10.4 million to ~~$67.4~~$44.5 million, primarily related to ~~the $41.7 million~~a 21% increase in revenue and a strong flow through to operating ~~income. For~~income combined with a 20% increase in total operating expenses. Operating expenses included severance costs relating to the ~~first nine months~~ongoing operations of ~~2020, operating income increased 25% or $38.6 million to $190.3 million, mainly due to lower operating expenses~~the business, as well as acquisition related costs incurred ~~during this period.~~for the acquisition of Rouse.

Income tax expense and effective tax rate

At the end of each interim period, we estimate the effective tax rate expected to be applicable for the full fiscal year. The estimate reflects, among other items, management’s best estimate of operating results. It does not include the estimated impact of foreign exchange rates or unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes.

For ~~Q3 2020,~~Q1 2021, income tax expense increased ~~128%~~by 49% to ~~$15.4~~$8.4 million and our effective tax rate increased ~~423~~320 bps to ~~25.3%~~23.0% as compared to Q3 2019. For the nine months ended September 30, 2020, income tax expense increased 69% to $48.7 million and our effective tax rate increased 585 bps to 28.6% as compared to the nine months ended September 30, 2019.

Q1 2020. The increase in the effective tax ~~rates~~rate for ~~Q3 2020 as compared to Q3 2019~~Q1 2021 was primarily due to a higher estimate of non-deductible expenses, an increased proportion of income taxed in jurisdictions with higher tax rates, and write off of a ~~greater income~~deferred tax ~~expense related to increases in tax uncertainties in 2020 than in 2019, and~~asset upon departure of a ~~higher estimate~~previous unitholder of ~~non-deductible expenses.~~Rouse who became an employee of the Company after acquisition. The higher estimate of non-deductible expenses isare primarily due to final regulations published on April 8, 2020 by the United States Department of Treasury and the


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Internal Revenue Service (“IRS”) that clarified income tax benefits related to hybrid financing arrangements would not be deductible (“Hybrid Interest”).


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The increase in the effective tax rate for the nine months ended September 30, 2020 was primarily due to Hybrid Interest benefits that are no longer deductible as of January 1, 2019. We had recorded approximately $6,228,000 in Hybrid Interest benefits in the twelve months ended December 31, 2019. In addition, there was greater income tax expense related to increases in tax uncertainties in 2020 than in 2019, and a greater proportion of income taxed in jurisdictions with higher tax rates. Partially offsetting these increases was a higher tax deduction for PSU and RSU share unit expenses, which were settled in the ~~reduced impact of~~quarter, that exceeded the ~~US tax reform.~~related compensation expense.

Net income

In ~~Q3 2020,~~Q1 2021, net income attributable to stockholders increased ~~80%~~24% to ~~$45.4~~$28.2 million, primarily related to ~~the~~ higher operating income, ~~lower interest expense, and~~offset partly by the non-repeat of $1.7 million contingent consideration received related to the disposition of an equity investment in Q1 2020. Net income was also partially offset by the increase in the effective tax rate as discussed above. ~~For the first nine months of 2020, net income attributable to stockholders increased 24% to $121.2 million, primarily for the same reasons noted above.~~

Diluted EPS

Diluted EPS attributable to stockholders increased ~~78%~~19% to ~~$0.41~~$0.25 per share for ~~Q3 2020 and increased 24% to $1.10~~Q1 2021 from $0.21 per share ~~for the first nine months of~~in Q1 2020.

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:


											% Change
					% Change						2021 over
Value of one local currency to U.S dollar	2020		2019		2020 over 2019		2021		2020		2020
Period-end exchange rate
Canadian dollar		0.7514		0.7551	(0)	%		0.7961		0.7097	12	%
Euro		1.1732		1.0900	8	%		1.1726		1.1025	6	%
Australian dollar		0.7171		0.6751	6	%		0.7595		0.6118	24	%

Average exchange rate -Three months ended September 30,
Average exchange rate -Three months ended March 31,
Canadian dollar		0.7506		0.7572	(1)	%		0.7896		0.7453	6	%
Euro		1.1686		1.1116	5	%		1.2059		1.1031	9	%
Australian dollar		0.7148		0.6851	4	%		0.7728		0.6575	18	%

Average exchange rate -Nine months ended September 30,
Canadian dollar		0.7391		0.7524	(2)	%
Euro		1.1242		1.1236	0	%
Australian dollar		0.6764		0.6990	(3)	%

For ~~Q3 2020,~~Q1 2021, foreign exchange had a favourable impact on total revenue and an unfavourable impact on expenses. These impacts were primarily due to the fluctuations in the ~~Euro~~Australian dollar, Canadian dollar, and ~~Australian dollar~~the Euro exchange rates relative to the U.S. dollar. For the first nine months of 2020, foreign exchange had an unfavourable impact on total revenue and a favourable impact on expenses. These impacts were mainly due to the fluctuations in the Canadian and Australian dollar exchanges rates relative to the U.S. dollar.

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 non-recurring items that we do not consider to be part of our normal operating results, such as acquisition-related costs, management reorganization costs, severance, retention, gains/losses on sale of an equity accounted for investment, plant and equipment, impairment losses, and certain other items, which we refer to as ‘adjusting items’. ~~In Q3 2020 we~~ excluded $4.3 million ($3.2 million net of tax) 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. There were no adjusting items in ~~Q3 2019.~~Q1 2021 or Q1 2020.

Adjusted net income attributed to stockholders (non-GAAP measure) increased ~~92%~~24% to ~~$48.6~~$28.2 million in ~~Q3 2020 and increased 34% to $130.7~~Q1 2021 from $22.8 million ~~for the first nine months of~~in Q1 2020.

Diluted Adjusted EPS attributable to stockholders (non-GAAP measure) increased ~~91%~~19% to ~~$0.44~~$0.25 per share in ~~Q3 2020 and increased 34% to $1.19~~Q1 2021 from $0.21 per share in Q1 2020.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (non-GAAP measure) increased 18% to $66.3 million in Q1 2021 from $56.1 million in Q1 2020.

Debt at the end of Q1 2021, represented 3.8 times net income as at and for the ~~first nine~~12 months ofended March 31, 2021. This compares to debt at Q1 2020, which represented 4.3 times net income as at and for the 12 months ended March 31, 2020. The decrease in this debt/net income multiplier was primarily due to higher operating income driving higher net income as at March 31, 2021 compared to March 31, 2020. The adjusted net debt/adjusted EBITDA (non-GAAP measure) was 1.0 times as at and for the 12 months ended March 31, 2021 compared to 1.3 times as at and for the 12 months ended March 31, 2020.


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Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (non-GAAP measure) increased 55% to $91.9 million in Q3 2020 and increased 23% to $255.1 million for the first nine months of 2020.

Debt at the end of Q3 2020, represented 3.8 times net income as at and for the 12 months ended September 30, 2020. This compares to debt at Q3 2019, which represented 5.2 times net income as at and for the 12 months ended September 30, 2019. The decrease in this debt/net income multiplier was primarily due to higher cash and cash equivalents balance and also lower debt balances at September 30, 2020 compared to September 30, 2019, as a result of our voluntary and mandatory debt repayments. The adjusted net debt/adjusted EBITDA (non-GAAP measure) was 0.5 times as at and for the 12 months ended September 30, 2020 compared to 1.4 times as at and for the 12 months ended September 30, 2019.

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 in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.


	Three months ended September 30, 2020						Nine months ended September 30, 2020						Three months ended March 31, 2021
(in U.S $000's)	A&M		Other		Consolidated		A&M		Other		Consolidated		A&M		Other		Consolidated
Service revenue	$	188,949	$	33,730	$	222,679	$	543,340	$	96,601	$	639,941	$	170,755	$	35,275	$	206,030
Inventory sales revenue		108,863		—		108,863		353,906		—		353,906		125,525		—		125,525
Total revenue		297,812		33,730		331,542		897,246		96,601		993,847		296,280		35,275		331,555
Ancillary and logistical service expenses		—		16,550		16,550		—		45,368		45,368		—		12,269		12,269
Other costs of services		21,733		940		22,673		69,018		3,640		72,658		21,590		2,168		23,758
Cost of inventory sold		96,253		—		96,253		320,972		—		320,972		110,747		—		110,747
SG&A expenses		103,933		6,253		110,186		290,077		19,126		309,203		104,345		11,733		116,078
Segment profit		75,893		9,987		85,880	$	217,179	$	28,467	$	245,646		59,598		9,105		68,703


	Three months ended September 30, 2019						Nine months ended September 30, 2019						Three months ended March 31, 2020
(in U.S $000's)	A&M		Other		Consolidated		A&M		Other		Consolidated		A&M		Other		Consolidated
Service revenue	$	150,093	$	28,484	$	178,577	$	494,580	$	90,975	$	585,555	$	154,743	$	28,380	$	183,123
Inventory sales revenue		111,219		—		111,219		400,892		—		400,892		90,132		—		90,132
Total revenue		261,312		28,484		289,796		895,472		90,975		986,447		244,875		28,380		273,255
Ancillary and logistical service expenses		—		13,285		13,285		—		43,516		43,516		—		12,758		12,758
Other costs of services		21,431		1,666		23,097		74,799		4,404		79,203		25,095		1,502		26,597
Cost of inventory sold		102,410		—		102,410		372,703		—		372,703		81,585		—		81,585
SG&A expenses		88,138		5,553		93,691		268,786		17,803		286,589		91,585		6,800		98,385
Segment profit		49,333		7,980		57,313	$	179,184	$	25,252	$	204,436		46,610		7,320		53,930

Auctions and Marketplaces Segment

Results of A&M segment operations are presented below for the comparative reporting periods.


	Three months ended September 30,								Nine months ended September 30,								Three months ended March 31,
							% Change								% Change								% Change
							2020 over								2020 over								2021 over
(in U.S. $000's, except percentages)	2020			2019			2019		2020			2019			2019		2021			2020			2020
Service revenue	$	188,949		$	150,093		26	%	$	543,340		$	494,580		10	%	$	170,755		$	154,743		10	%
Inventory sales revenue		108,863			111,219		(2)	%		353,906			400,892		(12)	%		125,525			90,132		39	%
Total revenue		297,812			261,312		14	%		897,246			895,472		0	%		296,280			244,875		21	%
A&M service revenue as a % of total A&M revenue		63.4	%		57.4	%	600	bps		60.6	%		55.2	%	540	bps		57.6	%		63.2	%	(560)	bps
Inventory sales revenue as a % of total A&M revenue		36.6	%		42.6	%	(600)	bps		39.4	%		44.8	%	(540)	bps		42.4	%		36.8	%	560	bps
Costs of services		21,733			21,431		1	%		69,018			74,799		(8)	%		21,590			25,095		(14)	%
Cost of inventory sold		96,253			102,410		(6)	%		320,972			372,703		(14)	%		110,747			81,585		36	%
SG&A expenses		103,933			88,138		18	%		290,077			268,786		8	%		104,345			91,585		14	%
A&M segment expenses	$	221,919		$	211,979		5	%	$	680,067		$	716,288		(5)	%	$	236,682		$	198,265		19	%
Cost of inventory sold as a % of A&M expenses		43.4	%		48.3	%	(490)	bps		47.2	%		52.0	%	(480)	bps		46.8	%		41.1	%	570	bps
A&M segment profit	$	75,893		$	49,333		54	%	$	217,179		$	179,184		21	%	$	59,598		$	46,610		28	%
Total GTV		1,321,379			1,084,241		22	%		3,962,386			3,756,679		5	%		1,274,539			1,147,025		11	%
A&M service revenue as a % of total GTV- Rate		14.3	%		13.8	%	50	bps		13.7	%		13.2	%	50	bps		13.4	%		13.5	%	(10)	bps


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Gross Transaction Value

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

To facilitate the live 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 Time Auctioned Lots (TAL) solutions for selected International and on-the-farm agriculture events.

GTV recognized through online bidding at live on site auctions and TAL have been counted towards the Live on site auction metrics. The percentage of live GTV dollars that transacted on TAL rose to 30% in Q3 2020, up from 10% in the prior year, and increased to 25%, up from 8% in the first nine months of 2020.

~~We believe it is meaningful to consider revenue in relation to GTV. GTV by channel and by revenue type are presented below for the comparative reporting period.~~

~~GTV by Channel~~

Three months ended September 30,

Nine months ended September 30,

% Change

% Change

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

2020

2019

2020 over 2019

2020

2019

2020 over 2019

Live on site auctions

$
971,904

$
825,294

18
%

$
3,062,963

$
3,058,087

0
%
Percentage of total

73.6
%

76.1
%

77.3
%

81.4
%

Online marketplaces including featured ⁽¹⁾and other ⁽²⁾

349,475

258,947

35
%

899,423

698,592

29
%
Percentage of total

26.4
%

23.9
%

22.7
%

18.6
%

GTV

$
1,321,379

$
1,084,241

22
%

$
3,962,386

$
3,756,679

5
%

Percentage of total GTV purchased by online buyers

Live on site auctions

100
%

58
%
4200
bps

86
%

53
%
3300
bps
Online marketplaces including featured⁽¹⁾ and other⁽²⁾

100
%

100
%
0
bps

100
%

100
%
0
bps
Total GTV

100
%

68
%
3200
bps

89
%

62
%
2700
bps

~~(1)~~

~~This represents GTV from IronPlanet’s Weekly Featured Auction, which operates under an unreserved auction model.~~

~~(2)~~

~~This includes GTV from Marketplace-E.~~

~~GTV increased 22% to $1.3 billion in Q3 2020 and increased 5% to $4.0 billion for the first nine months of 2020.~~

For Q3 2020, live on site GTV increased 18% to $971.9 million. The 18% increase in GTV was primarily due to strong execution of the US strategic accounts and regional sales teams, strong year-over-year growth performance across regions as earlier lockdown measures lifted and border restrictions eased particularly in the International region, and live auction calendar shifts as discussed below. Partially offsetting these increases, Australia switched their selling platform from Live to Online, which transferred GTV to the online channel.

Due to the COVID-19 pandemic, we postponed our (1) Caorso, Italy, (2) Ocana, Spain, and (3) Polotitlan, Mexico auctions from the first half of 2020 to Q3 2020. We also had some auction calendar shifts in Canada, unrelated to the COVID-19 pandemic, where we shifted the Toronto and Lethbridge into Q3 2020, offset by a Grand Prairie auction that will be held in Q4 2020.

For the first nine months of 2020, live on site GTV was flat at $3.1 billion. This was primarily driven by strong execution of the US strategic accounts and regional sales teams, and positive year-over-year growth performance in US and Canada, offset by Australia switching their selling platform from Live to Online and softness in the International region due to the COVID-19 pandemic.

For Q3 2020, online marketplace GTV increased 35% primarily due to increased online performance driven from strong execution by the US strategic accounts and regional sales teams, and the shift of our Australia live on site auctions to our online platform. This increase was partially offset by lower volume in International Marketplace-E.

~~For the first nine months of 2020, online marketplaces GTV increased 29% for the same reasons discussed above.~~


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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.

GTV by Geography


	Three months ended March 31,
			% Change
(in U.S. $000's)	2021	2020	2021 over 2020
Total GTV by Geography
United States	881,653	862,442	2	%
Canada	210,611	149,311	41	%
International	182,275	135,272	35	%
Total GTV	1,274,539	1,147,025	11	%

Service GTV by Geography
United States	815,316	805,494	1	%
Canada	200,896	141,116	42	%
International	132,802	110,283	20	%
Total Service GTV¹	1,149,014	1,056,893	9	%

¹ Service GTV is calculated as total GTV less inventory sales revenue

GTV by Sector

The following pie charts illustrate the breakdown of total GTV by sector for Q1 2021 compared to Q1 2020.

The construction sector includes heavy equipment such as trucks, excavators, cranes and dozers. 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 Q1 2021, there was no significant change in the GTV by sector compared to Q1 2020.


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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.

Number of auction sales days. We define auction sales days as the number of auction days per auction event. Each day an auction is held is an auction sales day. An auction can have multiple auction sales days.

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.

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”.


	Three months ended March 31,
			% Change
	2021	2020	2021 over 2020
Number of auction sales days	93	87	7	%
Bids per lot sold	27	19	42	%
Total lots sold	116,259	100,805	15	%

In Q1 2021, we held six additional auction sales days compared to Q1 2020 which contributed to the increase in total GTV and revenue. The total number of bids per lot sold increased 42% to 27 representing an increase in bidding participations and demand from buyers which also contributed to strong pricing realization in the quarter, particularly in the US. The total lots sold also increased 15% to 116,259 mainly in Canada driven by an increase in the number of agricultural auctions held.

Online bidding

Across all channels, 100% of total GTV was purchased by online buyers in ~~Q3 2020~~Q1 2021 compared to ~~68%~~75% in ~~Q3 2019. For the first nine months of 2020, GTV from online buyers was 89% compared to 62% in the comparable prior year period.~~Q1 2020. The increase in internet bidders and online buyers is a direct impact of the COVID-19 pandemic as we pivoted to 100% online bidding at our traditional live on site auctions where onsite attendance was not permitted. ~~Prior to the COVID-19 pandemic restrictions, 67% of total GTV was purchased by online buyers.~~

~~Industrial Live On Site Metrics~~

~~Total industrial live on site auction metrics~~

Three months ended September 30,

Nine months ended September 30,

% Change

% Change


2020

2019

2020 over 2019


2020

2019

2020 over 2019


Number of auctions

42

46

(9)
%

123

140

(12)
%

Bidder registrations

231,500

165,500

40
%

677,100

508,750

33
%

Consignors

15,100

14,000

8
%

40,450

43,000

(6)
%

Buyers

40,000

34,800

15
%

114,250

109,050

5
%

Lots

115,350

98,400

17
%

312,450

305,150

2
%

In Q3 2020, we held four fewer industrial live on site auctions, yet our GTV from live on site auctions increased 18%, primarily due to regional combined auctions in the US. For the first nine months of 2020, we held 12% or 17 less live on site auctions.

In Q3 2020, the total number of industrial lots increased 17% to 115,350 and the total number of lots including agricultural lots increased 17% to 116,750. For the first nine months of 2020, total number of industrial lots increased 2% to 312,450 and the total number of lots including agricultural lots increased 1% to 329,900 lots.

GTV on a per lot basis generated at our industrial live on site auctions decreased 1% to $8,150 in Q3 2020 compared to $8,300 in Q3 2019. For the first nine months of 2020, the GTV on a per lot basis generated at our industrial live on site auctions decreased 1.5% to $9,390 compared to $9,500 in the prior year.

~~12 months average metrics per industrial live on site auction~~

12 months ended September 30,

% Change

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

2020

2019

2020 over 2019


GTV

$
22.5 million

$
20.4 million

$
10
%

Bidder registrations

5,090

3,525

44
%

Consignors

318

300

6
%

Lots

2,429

2,118

15
%

~~For the 12 months ended September 30, 2020, we saw a 10% increase in average GTV per industrial auction compared to the prior~~ ~~year period, and a 44% increase in average bidder registration per auction representing higher demand from buyers.~~

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 trailing 12-month period ended ~~September 30, 2020~~March 31, 2021 was ~~$13.0~~$13.5 million per Revenue Producer compared to ~~$11.9~~$12.1 million per Revenue Producer for the trailing 12-month period ended ~~September 30, 2019.~~March 31, 2020.


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A&M revenue

Total A&M revenue increased ~~14%~~21% to ~~$297.8~~$296.3 million in ~~Q3 2020 and remained flat at $897.2 million for the first nine months of 2020.~~Q1 2021.

A&M revenue by geographical region are presented below:


	Three months ended September 30,					Nine months ended September 30,					Three months ended March 31,
			% Change						% Change				% Change
(in U.S. $000's)	2020	2019	2020 over 2019			2020		2019	2020 over 2019
(in U.S. $000's, except percentages)											2021	2020	2021 over 2020
A&M Revenue by Geography
United States
Service revenue	121,810	95,172	28	%	$	357,944	$	308,769	16	%	122,911	120,339	2	%
Inventory sales revenue	40,399	48,600	(17)	%		169,543		204,332	(17)	%	66,337	56,948	16	%
A&M revenue- United States	162,209	143,772	13	%		527,487		513,101	3	%	189,248	177,287	7	%
Canada
Service revenue	40,591	33,793	20	%		126,508		119,313	6	%	28,037	18,560	51	%
Inventory sales revenue	7,725	13,493	(43)	%		35,046		30,651	14	%	9,715	8,195	19	%
A&M revenue- Canada	48,316	47,286	2	%		161,554		149,964	8	%	37,752	26,755	41	%
International
Service revenue	26,548	21,128	26	%		58,888		66,498	(11)	%	19,807	15,844	25	%
Inventory sales revenue	60,739	49,126	24	%		149,317		165,909	(10)	%	49,473	24,989	98	%
A&M revenue- International	87,287	70,254	24	%		208,205		232,407	(10)	%	69,280	40,833	70	%
Total
Service revenue	188,949	150,093	26	%		543,340		494,580	10	%	170,755	154,743	10	%
Inventory sales revenue	108,863	111,219	(2)	%		353,906		400,892	(12)	%	125,525	90,132	39	%
A&M total revenue	297,812	261,312	14	%		897,246		895,472	0	%	296,280	244,875	21	%

United States

In ~~Q3 2020,~~Q1 2021, service revenue increased ~~28%~~2% primarily due to anthe 1% increase in ~~commission revenue driven by a higher volume on~~ Service GTV growth, with strong execution from the US strategic accounts and regional sales teams, and higher rates on our guarantee contracts. Service revenue in the US also increased due to fees earned from higher total GTV and anGTV. This increase ~~in listing fees on greater online volume.~~

In Q3 2020, inventory sales revenue decreased 17% resulting from lower inventory earned from government surplus contracts due to the COVID-19 pandemic government shutdowns, which ceased certain shipments of surplus contract inventories.

For the first nine months of 2020, service revenue increased 16% primarily due to higher fees revenue earned on total GTV, harmonization of buyer fees, change in our GTV mix resulting in improved buyer fee rate performance, and other auction service fees earnedwas mainly driven by higher ~~GTV. The increase~~commissions from strong pricing on guarantee contracts as well as improved rates on straight commission contracts in ~~commissions is largely driven by higher volumes on Service GTV~~the GovPlanet business, and higher ~~rates earned on our guarantee contracts. This increase was~~online listing fees. These were partially offset by softer straight commission rate performance from a higher proportion of GTV sourced from US strategic ~~accounts. Inventory sales revenue decreased 17% due to~~accounts, lower fees from the ~~non-recurring large dispersal of pipeline equipment as part of the $94 million Columbus, Ohio auction in June 2019, and~~non-repeating collector car event, lower ~~inventory revenue earned through our government surplus contracts as discussed above.~~

~~Canada~~

~~In Q3 2020, service revenue increased 20% primarily due to higher commissions and~~ fees ~~revenue~~ driven by ~~higher total GTV. Canada also earned higher fees revenue due to~~ a ~~greater~~lower proportion of small value ~~lots. Inventory~~lots, and lower document and search fees as a result of decline in the total number of titled lots sold.

In Q1 2021, inventory sales revenue ~~decreased 43%~~increased 16% resulting from a higher volume of inventory contracts at our Fort Worth auction and a higher volume of inventory with improved rate performance selling through our GovPlanet business.

Canada

In Q1 2021, service revenue increased 51% primarily due to the ~~shift~~42% increase in Service GTV. The increase in service revenue was also due to higher straight commission revenue earned on the sale of ~~Grand Prairie~~low value assets, and the re-instatement of fees waived in Q1 2020 at the Canadian on-the-farm auctions as part of our COVID-19 pandemic response.

Inventory sales revenue also increased 19% primarily due to two large new deals in the construction sector with strong rate performances and the shifting of our Montreal auction ~~from Q3 2020 to Q4 2020.~~back into Q1 2021 which had significant inventory contracts.

~~For the first nine months of 2020,~~

International

In Q1 2021, service revenue increased 6%25% primarily due to the ~~full harmonization~~20% increase in Service GTV. Some of ~~buyer~~this positive year-over-year performance is a result of a soft prior quarter in Europe due to the direct impact of COVID-19. The increase in service revenue was also due to higher fees ~~fees earned on higher~~driven by the increase in total GTV volume by 35% and improved rate performance on a relatively higher ~~commissions revenue driven by Service GTV growth.~~ volume of guarantee commission contracts.

Inventory sales revenue increased ~~14% to $35.0 million primarily due to year-over-year growth performance at our Western Canada auctions, partially offset by the Grand Prairie auction shift as discussed above.~~

~~International~~

~~In Q3 2020, service revenue increased 26% primarily due to higher fees and commissions revenue~~98% driven by ~~services GTV growth and a change in our GTV mix resulting in improved buyer fee rate performance. Inventory sales revenue increased 24% driven by large private treaty deals closed in Australia and~~very strong performance at our ~~Maltby~~auctions across various countries in Europe driving higher volumes of inventory contracts. The increase was further driven by the addition of new auctions and ~~Dubai auctions as~~a large private treaty deal in Australia. International also benefited significantly from improved economic conditions and the lift of border restrictions ~~eased in Q3 2020, partially offset by the non-repeat~~(which were imposed as a result of ~~the 2019 Narita auction.~~COVID-19) enabling us to move equipment more easily between countries and grow our business.


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For the first nine months of 2020, service revenue decreased 11% with lower commissions earned on lower GTV, partially offset by higher fees revenue as a result of the buyer fee harmonization. Inventory sales revenue decreased 10% due to the unfavourable performance as this region was severely impacted by thee COVID-19 pandemic, and the non-repeat of supply contracts in Europe and Asia that were garnered in a more favourable supply environment in the first nine months of 2019.

Costs of services

A&M costs of services ~~increased 1%~~decreased 14% to ~~$21.7~~$21.6 million in ~~Q3 2020~~Q1 2021 compared to ~~Q3 2019.~~Q1 2020. This ~~increase is~~decrease was primarily driven by ~~the 22% increase in total GTV, offset by significant~~ cost reductions in ~~employee compensation, and~~ travel, advertising and promotion expenses as a result of our response to the COVID-19 pandemic. Our response included transitioning our traditional live on site auctions to online ~~bidding, utilizing TAL solutions for selected International and on-the-farm agricultural events,~~ and implementing travel restrictions.

For the first nine months of 2020, A&M costs of services decreased 8% to $69.0 million for the same reasons noted above. In addition, the decrease was partially offset by additional facilities costs incurred to support our Q1 2020 Leake auction and expenses incurred to support our government surplus contracts. We also ~~incurred lower net fees related~~saw cost reductions in building, facilities and technology expenses as a result of the non-repeat of site preparation costs relating to ~~referral payments.~~a collector car event in Q1 2020.

Cost of inventory sold

A&M cost of inventory sold ~~decreased 6%~~increased 36% to ~~$96.3~~$110.7 million in ~~Q3 2020~~Q1 2021 compared to ~~Q3 2019,~~Q1 2020 primarily in line with ~~lower~~higher activity in inventory sales revenue. Cost of inventory sold ~~decreased~~increased at a ~~higher~~lower rate than the ~~decrease of~~increase in inventory sales revenue, indicating an increase in the revenue ~~margin.~~rates. The ~~margin~~ improved ~~due to rate improvement in US and Canada.~~

~~For the first nine months~~inventory revenue rates were primarily a result of ~~2020, A&M cost of inventory sold decreased 14% to $321.0 million due to the reasons noted above, and we also had rate improvement in International during this period.~~strong auction price realization across all regions.

SG&A expenses

A&M SG&A expenses increased ~~18%~~14% to ~~$103.9~~$104.3 million in ~~Q3 2020~~Q1 2021 compared to ~~Q3 2019.~~Q1 2020. The increase was primarily due to ~~$8.8 million~~ higher short-term and long-term incentive ~~expenses~~costs driven by strong performance, higher wages, salaries and benefits expenses due to higher headcount to support our growth initiatives, and ~~a one-time $4.3 million~~higher 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.~~costs. These increases were partially offset by ~~lower SG&A expenses related to~~ lower travel, advertising, and promotion costs as we implemented travel restrictions.

~~For the first nine months of 2020, A&M segment SG&A expenses increased 8% to $290.1 million primarily due to the same reasons noted above.~~

Other Services Segment

Results of Other Services segment operations are presented below for the comparative reporting periods.


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
					% Change						% Change						% Change
(in U.S. $000's)	2020		2019		2020 over 2019		2020		2019		2020 over 2019
(in U.S. $000's, except percentages)													2021		2020		2021 over 2020
Service revenue	$	33,730	$	28,484	18	%	$	96,601	$	90,975	6	%	$	35,275	$	28,380	24	%
Ancillary and logistical service expenses		16,550		13,285	25	%		45,368		43,516	4	%		12,269		12,758	(4)	%
Other costs of services		940		1,666	(44)	%		3,640		4,404	(17)	%		2,168		1,502	44	%
SG&A expenses		6,253		5,553	13	%		19,126		17,803	7	%		11,733		6,800	73	%
Other services profit	$	9,987	$	7,980	25	%	$	28,467	$	25,252	13	%	$	9,105	$	7,320	24	%

In ~~Q3 2020,~~Q1 2021, Other Services revenue increased ~~18%~~24% to ~~$33.7~~$35.3 million primarily due to anthe increase in ~~Ancillary~~ revenue from Rouse of ~~$4.7 million and RBFS revenue of $1.1 million. In the first nine months of 2020, Other Services revenue increased 6% to $96.6 million due to higher revenue in Ancillary of $5.5~~$5.6 million, and RBFS of ~~$2.6 million. This increase was partially~~$1.9 million, offset by lower ancillary revenue ~~from RB Logistics~~ of ~~$2.6~~$1.6 million ~~caused by lower inventory sales in Europe requiring logistics.~~

~~Ancillary revenue was higher~~mainly due to lower fees earned on ~~refurbishing~~redeployment of assets in the US.

Rouse was acquired on December 8, 2020 and ~~transporting sellers’ equipment driven by higher GTV activity.~~this is the first full quarter of revenue recognized since acquisition.

RBFS revenue increased ~~19%~~27% in ~~Q3 2020,~~Q1 2021, driven by an increase in funded volume and ~~the~~improved rate ofon fees earned from facilitating financing arrangements. In ~~Q3 2020,~~Q1 2021, our funded volume, which represents the amount of lending brokered by RBFS, increased ~~11%~~26% to ~~$117.0~~$147.2 million due to a larger sales team driving an increase in ~~Q3 2020, and increased 12% when excluding~~ the ~~impact~~number of ~~foreign exchange. In the first nine months of 2020, our funded volume increased 1% to $374.5 million, and increased 3% when excluding the impact of foreign exchange. Credit~~


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~~Table of Contents~~

~~approvals were tightened by lenders in Q3 2020~~credit applications compared to ~~Q3 2019~~Q1 2020. RBFS also benefited from a favourable impact due to ~~the economic uncertainties during the COVID-19 pandemic.~~exchange rates.

In ~~Q3 2020,~~Q1 2021, Other Services profit increased ~~25%~~24% to ~~$10.0~~$9.1 million driven by our ~~Ancillary,~~Rouse, RBFS, and Mascus ~~and RBFS~~ operations. In the first nine months of 2020, Other Services profit increased 13% to $28.5 million primarily due to the same reasons noted above. The lower revenue from RB Logistics resulted in a similar magnitude decrease in logistical service expenses.

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 August 14, 2020.

In ~~the first nine months of 2020,~~Q1 2021, our operational liquidity was not materially impacted by the COVID-19 pandemic. Today we believe that our existing working capital and availability under our credit facilities are sufficient to satisfy our present operating requirements and contractual obligations. With ~~the~~ 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 including mergers and acquisitions.


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We assess our liquidity based on our ability to generate cash 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, ~~voluntary repayments of term debt,~~ share repurchases, our net capital spending¹, and ~~significant acquisitions~~voluntary repayments of ~~businesses.~~term debt.

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.

Cash flows

Our cash, cash equivalents, and restricted cash was $590.3 million at September 30, 2020, a 31% increase over the $451.4 million balance at September 30, 2019. The $24.2 million of cash generated over the comparative period is detailed in the following table:


	Nine months ended September 30,						Three months ended March 31,
					% Change						% Change
(in U.S. $000's)	2020		2019		2020 over 2019
											2021 over
(in U.S. $000's, except percentages)							2021		2020		2021 over 2020
Cash provided by (used in):		��
Operating activities	$	265,551	$	309,105	(14)	%	$	180,687	$	4,132	4,273	%
Investing activities		(10,192)		(20,682)	(51)	%		(10,035)		(7,274)	38	%
Financing activities		(91,142)		(143,953)	(37)	%		(33,145)		(48,361)	(31)	%
Effect of changes in foreign currency rates		5,826		1,350	332	%		(2,782)		(12,828)	(78)	%
Net increase in cash, cash equivalents, and restricted cash	$	170,043	$	145,820	17	%	$	134,725	$	(64,331)	(309)	%

Net cash provided by operating activities ~~decreased $43.6~~increased $176.6 million in the first ~~nine~~three months of ~~2020.~~2021. This ~~decrease~~increase was primarily due to a net ~~negative~~positive impact in our operating assets and liabilities ~~partially offset by~~and an increase in our net income over the comparative period. We saw net ~~negative~~positive cash flows from changes in our operating assets and liabilities primarily driven by the timing, size, and number of auctions ~~and changes in inventory levels~~ over the comparative period. AtA large percentage of our GTV was sold in the ~~end~~last 10 days of ~~2018, we saw particularly high~~Q1 2021, whereas Q1 2020 was negatively impacted by the delay of the Los Angeles and Montreal auctions due to COVID-19. Changes in inventory levels also generated net positive cash flows with increased turnover and fewer purchases of inventory ~~in Europe, which turned~~ over in the ~~first nine months of 2019.~~comparative period. These cash ~~outflows~~inflows were partially offset by a net ~~positive~~negative movement in our ~~trade and other~~ payables related to ~~the timing of employee compensation~~larger bonus and income tax payments ~~as well as the timing of payments related to our GovPlanet business.~~

Net cash used in investing activities decreased $10.5 million in the first nine months of 2020. This decrease was primarily due to $10.7 million more net proceeds on disposal of property, plant and equipment over the comparative period, which included $15.5 million on the sale of land in the United States, as well as $4.2 million on the distribution of equity investments in the first nine months of 2020. This increase was partially offset by a $4.4 million increase in property, plant and equipment and intangible asset additions over the comparative period.

Net cash used in ~~financing~~investing activities ~~decreased $52.8~~increased $2.8 million in the first ~~nine~~three months of ~~2020.~~2021. This ~~decrease~~increase was ~~driven by a $27.9 million increase in net proceeds from short-term debt draws,~~ primarily due to ~~fund inventory purchases in Australia. In addition, we raised $27.8 million~~ more cash inflows from equity investments during the comparative period, including $4.2 million of proceeds on the distribution of equity investments and $1.7 million of proceeds on contingent consideration from equity investments in Q1 2020. The comparative period cash inflows were partially offset the issuance of ~~share capital related to stock option exercises~~$3.0 million of loans receivable under our non-recourse financing lending arrangements in Q1 2020. There were no similar transactions in Q1 2021.

Net cash used in financing activities decreased $15.2 million in the first ~~nine~~three months of 2021. The primary driver of the change was that we did not do any share repurchases in Q1 2021, whereas we spent $53.2 million in the prior year. Partially offsetting this change was a decrease in draws on our short-term debt of $32.0 million and an increase of $4.6 million in withholding tax payments on the issuance of shares.

Dividend information

We declared and paid a regular cash dividend of $0.20 per common share for the quarter ended March 31, 2020. We declared a dividend of $0.22 per common share for the quarter ended June 30, 2020, ~~over~~September 30, 2020, and December 31, 2020. We have declared, but not yet paid, a dividend of $0.22 per common share for the quarter ended March 31, 2021. All dividends that we pay are “eligible dividends” for Canadian income tax purposes unless indicated otherwise.

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.


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comparative period in 2019. Further, we had $17.9 million fewer repayments of long-term debt, primarily due to $20.0 million of voluntary term loan repayments in the first nine months of 2019 compared to no voluntary debt repayments in the first nine months of 2020. Partially offsetting this was an increase of $11.2 million in share repurchases in the first nine months of 2020 versus the first nine months of 2019.

~~Dividend information~~

We declared and paid a regular cash dividend of $0.20 per common share for the quarter ended September 30, 2019, December 31, 2019, and March 31, 2020. We declared a dividend of $0.22 per common share for the quarter ended June 30, 2020. We have declared, but not yet paid, a dividend of $0.22 per common share for the quarter ended September 30, 2020. All dividends that we pay are “eligible dividends” for Canadian income tax purposes unless indicated otherwise.

Our dividend payout ratio, which we calculate as dividends paid to stockholders divided by net income attributable to stockholders, decreased to 51.7% for the 12 months ended September 30, 2020 from 60.5% for the 12 months ended September 30, 2019. This decrease is primarily due to the increase in net income attributable to stockholders over the comparative period. Our adjusted dividend payout ratio (non-GAAP measure) decreased to 50.0% for the 12 months ended September 30, 2020 from 60.5% for the 12 months ended September 30, 2019.

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 increased ~~250~~110 bps to ~~11.1%~~11.3% for the 12-month period ending ~~September 30, 2020~~March 31, 2021 from ~~8.6%~~10.2% for the 12-month period ending ~~September 30, 2019.~~March 31, 2020. This increase is primarily due to an increase in net income attributable to stockholders over the comparative period. Return on invested capital (“ROIC”) (non-GAAP measure) increased ~~290~~220 bps to ~~11.5%~~12.2% during the 12 months ended ~~September 30, 2020~~March 31, 2021 compared to ~~8.6%~~10.0% for the 12 months period ending ~~September 30, 2019.~~March 31, 2020.

Credit facilities

On August 14, 2020, we entered into the amended ~~the~~and extended Credit Agreement. The Credit Agreement ~~dated~~matures on October 27, ~~2016,~~2023 and provides credit facilities totaling US$630.0 million with a syndicate of lenders comprising:

(1)

Multicurrency revolving facilities of up to US$530 Million (the “Revolving Facilities”), and,

(2)

A delayed-draw term loan facility of up to US$100 Million (the “Delayed-Draw Facility” and together with the Revolving Facilities, the “Facilities”).

The amendments, among other things, (i) extended the maturity date of the Facilities from October 27, 2021 to October 27, 2023, (ii) increased the applicable margin for base rate loans and LIBOR loans by 0.50% at each pricing tier level, (iii) increased the applicable percentage per annum used to calculate the commitment fee in respect of the unused commitments under the Revolving Facilities by 0.10% at each pricing tier level, and (iv) increased the aggregate amount available under the Revolving Facilities from $490.0 million to $530.0 million.

Credit facilities at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were as follows:


(in U.S. $000's, except percentages)	September 30, 2020		December 31, 2019		% Change		March 31, 2021		December 31, 2020		% Change
Committed			.
Term loan facility	$	96,782	$	155,355	(38)	%	$	97,279	$	98,420	(1)	%
Revolving credit facilities		540,000		500,000	8	%		540,000		540,000	—	%
Total credit facilities	$	636,782	$	655,355	(3)	%	$	637,279	$	638,420	(0)	%
Unused
Revolving credit facilities		469,407		489,937	(4)	%		461,115		455,124	1	%
Total credit facilities unused	$	469,407	$	489,937	(4)	%	$	461,115	$	455,124	1	%


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Debt covenants

We were in compliance with all financial and other covenants applicable to our credit facilities at ~~September 30, 2020.~~March 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 a consolidated leverage ratio covenant and a consolidated interest coverage ratio covenant. 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 the COVID-19 pandemic on our business and evaluate courses of action to maintain current levels of liquidity and compliance with our debt covenants.

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 Q1, 2020, we repurchased 1,525,312 common shares for $53,170,000 as part of this program until it ended on May 8, 2020.

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. No share repurchases were made during the three months ended ~~September 30, 2020.~~March 31, 2021.

~~Off-Balance Sheet Arrangements~~Non-GAAP Measures

~~We have no off-balance sheet arrangements~~As part of management’s non-GAAP measures, we may eliminate the financial impact of adjusting items which are after-tax effects of significant non-recurring items that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, financial performance, liquidity, capital expenditures or capital resources.

~~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~~do not consider to be ~~applied~~part of our normal operating results, such as acquisition-related costs, management reorganization costs, severance, retention, gains/losses on sale of an equity accounted for investment, plant and equipment, impairment losses, and certain other items, which we refer to as ‘adjusting items’. There were no adjusting items in Q1 2021 or Q1 2020.

Adjusted net income attributed to stockholders (non-GAAP measure) increased 24% to $28.2 million in Q1 2021 from $22.8 million in Q1 2020.

Diluted Adjusted EPS attributable to stockholders (non-GAAP measure) increased 19% to $0.25 per share in Q1 2021 from $0.21 per share in Q1 2020.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (non-GAAP measure) increased 18% to $66.3 million in Q1 2021 from $56.1 million in Q1 2020.

Debt at the ~~assumptions on~~end of Q1 2021, represented 3.8 times net income as at and for the 12 months ended March 31, 2021. This compares to debt at Q1 2020, which represented 4.3 times net income as at and for the 12 months ended March 31, 2020. The decrease in this debt/net income multiplier was primarily due to ~~base accounting estimates. In reaching such decisions, we apply judgments based on our understanding~~higher operating income driving higher net income as at March 31, 2021 compared to March 31, 2020. The adjusted net debt/adjusted EBITDA (non-GAAP measure) was 1.0 times as at and ~~analysis of~~for the ~~relevant circumstances~~12 months ended March 31, 2021 compared to 1.3 times as at and historical experience. The COVID-19 pandemic resulted in significant global economic disruption, which can cause a greater degree of uncertainty around our long-term cash projections. As a result, we have further evaluated our judgments and estimates, particularly infor the ~~following areas:~~12 months ended March 31, 2020.

●	~~Recoverability of goodwill;~~

●

Ritchie Bros.

~~Recoverability of long-lived and indefinite-lived assets;~~

●	~~Recoverability of trade and other receivables; and~~

●	~~Valuation of inventories.~~ 35

Table of Contents

Segment Performance

We provide our customers with a wide array of services. The following ~~discussion~~table presents a breakdown 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~~results between the A&M segment and ~~Supplementary Data” presented~~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 in our Annual Report on Form 10-K for the year ended December 31, 2020.


	Three months ended March 31, 2021
(in U.S $000's)	A&M		Other		Consolidated
Service revenue	$	170,755	$	35,275	$	206,030
Inventory sales revenue		125,525		—		125,525
Total revenue		296,280		35,275		331,555
Ancillary and logistical service expenses		—		12,269		12,269
Other costs of services		21,590		2,168		23,758
Cost of inventory sold		110,747		—		110,747
SG&A expenses		104,345		11,733		116,078
Segment profit		59,598		9,105		68,703


	Three months ended March 31, 2020
(in U.S $000's)	A&M		Other		Consolidated
Service revenue	$	154,743	$	28,380	$	183,123
Inventory sales revenue		90,132		—		90,132
Total revenue		244,875		28,380		273,255
Ancillary and logistical service expenses		—		12,758		12,758
Other costs of services		25,095		1,502		26,597
Cost of inventory sold		81,585		—		81,585
SG&A expenses		91,585		6,800		98,385
Segment profit		46,610		7,320		53,930

Auctions and Marketplaces Segment

Results of A&M segment operations are presented below for the comparative reporting periods.


	Three months ended March 31,
							% Change
							2021 over
(in U.S. $000's, except percentages)	2021			2020			2020
Service revenue	$	170,755		$	154,743		10	%
Inventory sales revenue		125,525			90,132		39	%
Total revenue		296,280			244,875		21	%
A&M service revenue as a % of total A&M revenue		57.6	%		63.2	%	(560)	bps
Inventory sales revenue as a % of total A&M revenue		42.4	%		36.8	%	560	bps
Costs of services		21,590			25,095		(14)	%
Cost of inventory sold		110,747			81,585		36	%
SG&A expenses		104,345			91,585		14	%
A&M segment expenses	$	236,682		$	198,265		19	%
Cost of inventory sold as a % of A&M expenses		46.8	%		41.1	%	570	bps
A&M segment profit	$	59,598		$	46,610		28	%
Total GTV		1,274,539			1,147,025		11	%
A&M service revenue as a % of total GTV- Rate		13.4	%		13.5	%	(10)	bps

Gross Transaction Value

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


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GTV by Geography


	Three months ended March 31,
			% Change
(in U.S. $000's)	2021	2020	2021 over 2020
Total GTV by Geography
United States	881,653	862,442	2	%
Canada	210,611	149,311	41	%
International	182,275	135,272	35	%
Total GTV	1,274,539	1,147,025	11	%

Service GTV by Geography
United States	815,316	805,494	1	%
Canada	200,896	141,116	42	%
International	132,802	110,283	20	%
Total Service GTV¹	1,149,014	1,056,893	9	%

¹ Service GTV is calculated as total GTV less inventory sales revenue

GTV by Sector

The following pie charts illustrate the breakdown of total GTV by sector for Q1 2021 compared to Q1 2020.

In Q1 2021, there was no significant change in the GTV by sector compared to Q1 2020.


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Total auction metrics


	Three months ended March 31,
			% Change
	2021	2020	2021 over 2020
Number of auction sales days	93	87	7	%
Bids per lot sold	27	19	42	%
Total lots sold	116,259	100,805	15	%

In Q1 2021, we held six additional auction sales days compared to Q1 2020 which ~~summarize~~contributed to the ~~accounting policies~~increase in total GTV and ~~methods~~revenue. The total number of bids per lot sold increased 42% to 27 representing an increase in bidding participations and demand from buyers which also contributed to strong pricing realization in the quarter, particularly in the US. The total lots sold also increased 15% to 116,259 mainly in Canada driven by an increase in the number of agricultural auctions held.

Online bidding

Across all channels, 100% of total GTV was purchased by online buyers in Q1 2021 compared to 75% in Q1 2020. The increase in internet bidders and online buyers is a direct impact of the COVID-19 pandemic as we pivoted to 100% online bidding at our traditional live on site auctions where onsite attendance was not permitted.

Productivity

Our Sales Force Productivity for the trailing 12-month period ended March 31, 2021 was $13.5 million per Revenue Producer compared to $12.1 million per Revenue Producer for the trailing 12-month period ended March 31, 2020.


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A&M revenue

Total A&M revenue increased 21% to $296.3 million in Q1 2021.

A&M revenue by geographical region are presented below:


	Three months ended March 31,
			% Change
(in U.S. $000's, except percentages)	2021	2020	2021 over 2020
A&M Revenue by Geography
United States
Service revenue	122,911	120,339	2	%
Inventory sales revenue	66,337	56,948	16	%
A&M revenue- United States	189,248	177,287	7	%
Canada
Service revenue	28,037	18,560	51	%
Inventory sales revenue	9,715	8,195	19	%
A&M revenue- Canada	37,752	26,755	41	%
International
Service revenue	19,807	15,844	25	%
Inventory sales revenue	49,473	24,989	98	%
A&M revenue- International	69,280	40,833	70	%
Total
Service revenue	170,755	154,743	10	%
Inventory sales revenue	125,525	90,132	39	%
A&M total revenue	296,280	244,875	21	%

United States

In Q1 2021, service revenue increased 2% primarily due to the 1% increase in Service GTV. This increase was mainly driven by higher commissions from strong pricing on guarantee contracts as well as improved rates on straight commission contracts in the GovPlanet business, and higher online listing fees. These were partially offset by softer straight commission rate performance from a higher proportion of GTV sourced from US strategic accounts, lower fees from the non-repeating collector car event, lower fees driven by a lower proportion of small value lots, and lower document and search fees as a result of decline in the total number of titled lots sold.

In Q1 2021, inventory sales revenue increased 16% resulting from a higher volume of inventory contracts at our Fort Worth auction and a higher volume of inventory with improved rate performance selling through our GovPlanet business.

Canada

In Q1 2021, service revenue increased 51% primarily due to the 42% increase in Service GTV. The increase in service revenue was also due to higher straight commission revenue earned on the sale of low value assets, and the re-instatement of fees waived in Q1 2020 at the Canadian on-the-farm auctions as part of our COVID-19 pandemic response.

Inventory sales revenue also increased 19% primarily due to two large new deals in the construction sector with strong rate performances and the shifting of our Montreal auction back into Q1 2021 which had significant inventory contracts.

International

In Q1 2021, service revenue increased 25% primarily due to the 20% increase in Service GTV. Some of this positive year-over-year performance is a result of a soft prior quarter in Europe due to the direct impact of COVID-19. The increase in service revenue was also due to higher fees driven by the increase in total GTV volume by 35% and improved rate performance on a relatively higher volume of guarantee commission contracts.

Inventory sales revenue increased 98% driven by very strong performance at our auctions across various countries in Europe driving higher volumes of inventory contracts. The increase was further driven by the addition of new auctions and a large private treaty deal in Australia. International also benefited significantly from improved economic conditions and the lift of border restrictions (which were imposed as a result of COVID-19) enabling us to move equipment more easily between countries and grow our business.


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Costs of services

A&M costs of services decreased 14% to $21.6 million in Q1 2021 compared to Q1 2020. This decrease was primarily driven by cost reductions in travel, advertising and promotion expenses as a result of our response to the COVID-19 pandemic. Our response included transitioning our traditional live on site auctions online and implementing travel restrictions. We also saw cost reductions in building, facilities and technology expenses as a result of the non-repeat of site preparation costs relating to a collector car event in Q1 2020.

Cost of inventory sold

A&M cost of inventory sold increased 36% to $110.7 million in Q1 2021 compared to Q1 2020 primarily in line with higher activity in inventory sales revenue. Cost of inventory sold increased at a lower rate than the increase in inventory sales revenue, indicating an increase in the revenue rates. The improved inventory revenue rates were primarily a result of strong auction price realization across all regions.

SG&A expenses

A&M SG&A expenses increased 14% to $104.3 million in Q1 2021 compared to Q1 2020. The increase was primarily due to higher short-term and long-term incentive costs driven by strong performance, higher wages, salaries and benefits expenses due to higher headcount to support our growth initiatives, and higher severance costs. These increases were partially offset by lower travel, advertising, and promotion costs as we implemented travel restrictions.

Other Services Segment

Results of Other Services segment operations are presented below for the comparative reporting periods.


	Three months ended March 31,
					% Change
(in U.S. $000's, except percentages)	2021		2020		2021 over 2020
Service revenue	$	35,275	$	28,380	24	%
Ancillary and logistical service expenses		12,269		12,758	(4)	%
Other costs of services		2,168		1,502	44	%
SG&A expenses		11,733		6,800	73	%
Other services profit	$	9,105	$	7,320	24	%

In Q1 2021, Other Services revenue increased 24% to $35.3 million primarily due to the increase in revenue from Rouse of $5.6 million, and RBFS of $1.9 million, offset by lower ancillary revenue of $1.6 million mainly due to lower fees earned on redeployment of assets in the US.

Rouse was acquired on December 8, 2020 and this is the first full quarter of revenue recognized since acquisition.

RBFS revenue increased 27% in Q1 2021, driven by an increase in funded volume and improved rate on fees earned from facilitating financing arrangements. In Q1 2021, our funded volume, which represents the amount of lending brokered by RBFS, increased 26% to $147.2 million due to a larger sales team driving an increase in the number of credit applications compared to Q1 2020. RBFS also benefited from a favourable impact due to exchange rates.

In Q1 2021, Other Services profit increased 24% to $9.1 million driven by our Rouse, RBFS, and Mascus operations.

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 August 14, 2020.

In Q1 2021, our operational liquidity was not materially impacted by the COVID-19 pandemic. Today we believe that our existing working capital and availability under our credit facilities are sufficient to satisfy our present operating requirements and contractual obligations. 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 including mergers and acquisitions.


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We assess our liquidity based on our ability to generate cash 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 term debt.

Cash flows


	Three months ended March 31,
					% Change
					2021 over
(in U.S. $000's, except percentages)	2021		2020		2021 over 2020
Cash provided by (used in):
Operating activities	$	180,687	$	4,132	4,273	%
Investing activities		(10,035)		(7,274)	38	%
Financing activities		(33,145)		(48,361)	(31)	%
Effect of changes in foreign currency rates		(2,782)		(12,828)	(78)	%
Net increase in cash, cash equivalents, and restricted cash	$	134,725	$	(64,331)	(309)	%

Net cash provided by operating activities increased $176.6 million in the first three months of 2021. This increase was primarily due to a net positive impact in our operating assets and liabilities and an increase in our net income over the comparative period. We saw net positive cash flows from changes in our operating assets and liabilities primarily driven by the timing, size, and number of auctions over the comparative period. A large percentage of our GTV was sold in the last 10 days of Q1 2021, whereas Q1 2020 was negatively impacted by the delay of the Los Angeles and Montreal auctions due to COVID-19. Changes in inventory levels also generated net positive cash flows with increased turnover and fewer purchases of inventory over the comparative period. These cash inflows were partially offset by a net negative movement in our payables related to larger bonus and income tax payments over the comparative period.

Net cash 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~~investing activities increased $2.8 million in the ~~preparation~~first three months of 2021. This increase was primarily due to more cash inflows from equity investments during the comparative period, including $4.2 million of proceeds on the distribution of equity investments and ~~presentation~~$1.7 million of proceeds on contingent consideration from equity investments in Q1 2020. The comparative period cash inflows were partially offset the issuance of $3.0 million of loans receivable under our ~~consolidated financial statements than other policies~~non-recourse financing lending arrangements in Q1 2020. There were no similar transactions in Q1 2021.

Net cash used in financing activities decreased $15.2 million in the first three months of 2021. The primary driver of the change was that we did not do any share repurchases in Q1 2021, whereas we spent $53.2 million in the prior year. Partially offsetting this change was a decrease in draws on our short-term debt of $32.0 million and ~~estimates. Actual amounts could differ materially from those estimated by us at~~an increase of $4.6 million in withholding tax payments on the ~~time our consolidated financial statements are prepared.~~issuance of shares.

~~Recoverability of goodwill~~Dividend information

We ~~perform impairment tests on goodwill~~declared and ~~indefinite-lived intangible assets on an annual basis in accordance with US GAAP, or more frequently if events or changes in circumstances indicate~~paid a regular cash dividend of $0.20 per common share for the quarter ended March 31, 2020. We declared a dividend of $0.22 per common share for the quarter ended June 30, 2020, September 30, 2020, and December 31, 2020. We have declared, but not yet paid, a dividend of $0.22 per common share for the quarter ended March 31, 2021. All dividends that ~~those assets might be impaired. Goodwill is tested~~we pay are “eligible dividends” 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 at the same level as our operating segments for A&M and Mascus.Canadian income tax purposes unless indicated otherwise.

~~In accordance with Accounting Standards Update (“ASU”) 2017-04,~~ ~~Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”),~~ we begin with a qualitative assessment to determine whether a quantitative impairment test is necessary. If we determine, after performing an assessment based on the qualitative factors, that the fair value of the

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.


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~~reporting unit~~Return on average invested capital

Our return on average invested capital is ~~more likely than not less than~~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 ~~carrying amount, or~~average long-term debt over that ~~a fair value of~~period to the ~~reporting unit substantially~~average stockholders’ equity over that period.

Return on average invested capital increased 110 bps to 11.3% for the 12-month period ending March 31, 2021 from 10.2% for the 12-month period ending March 31, 2020. This increase is primarily due to an increase in ~~excess of~~net income attributable to stockholders over the ~~carrying amount cannot be assured, then a quantitative impairment test would be performed. The quantitative test for impairment requires management~~comparative period. Return on invested capital (“ROIC”) (non-GAAP measure) increased 220 bps to ~~make judgments relating to future cash flows, growth rates and economic and market conditions. These evaluations are based on determining~~12.2% during the fair value of a reporting unit or asset using a valuation method such as discounted cash flow or a relative, market-based approach. Historically, our reporting units have generated sufficient returns to recover the cost of goodwill.

~~A&M reporting unit~~

~~For the nine~~12 months ended ~~September 30,~~March 31, 2021 compared to 10.0% for the 12 months period ending March 31, 2020.

Credit facilities

On August 14, 2020, we ~~performed~~entered into the amended and extended Credit Agreement. The Credit Agreement matures on October 27, 2023 and provides credit facilities totaling US$630.0 million with a ~~qualitative assessment~~syndicate of ~~the A&M reporting unit~~lenders comprising:

(1)

Multicurrency revolving facilities of up to US$530 Million (the “Revolving Facilities”), and,

(2)

A delayed-draw term loan facility of up to US$100 Million (the “Delayed-Draw Facility” and together with the Revolving Facilities, the “Facilities”).

Credit facilities at March 31, 2021 and December 31, 2020 were as follows:


(in U.S. $000's, except percentages)	March 31, 2021		December 31, 2020		% Change
Committed
Term loan facility	$	97,279	$	98,420	(1)	%
Revolving credit facilities		540,000		540,000	—	%
Total credit facilities	$	637,279	$	638,420	(0)	%
Unused
Revolving credit facilities		461,115		455,124	1	%
Total credit facilities unused	$	461,115	$	455,124	1	%

Debt covenants

We were in compliance with ~~consideration of the current global economic downturn~~all financial and other covenants applicable to our credit facilities at March 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 a consolidated leverage ratio covenant and a consolidated interest coverage ratio covenant. In the ~~COVID-19 pandemic~~event of sustained deterioration of global markets and economies, we ~~concluded there were no indicators of impairment that existed.~~

~~Mascus reporting unit~~

~~For~~expect the ~~nine months ended September 30, 2020, we performed a qualitative assessment of~~covenants pertaining to our leverage ratio would be the ~~Mascus reporting unit with consideration of~~most restrictive to our ability to access funding under our credit agreement. We continue to assess the ~~current global economic downturn as a result of the COVID-19 pandemic and we concluded there were no indicators of impairment that existed.~~

~~Recoverability of long-lived and indefinite-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. As a result of the COVID-19 pandemic, we reviewed for any events or changes in circumstances that indicate the carrying amount of our long-lived assets may not be recoverable. Our assessment concluded that despite the economic impact of the COVID-19 pandemic ~~we believe the carrying amounts of our long-lived assets are recoverable as at September 30, 2020.~~

Indefinite-lived intangible assets are tested at least annually for impairment, and between annual tests if indicators of potential impairment exist. Amid the COVID-19 pandemic, we determined there are potential indicators of impairment and prepared an assessment of qualitative factors to determine the existence of events or circumstances that would indicate whether it is more likely than not that the carrying amount of the indefinite-lived intangible asset is less than its fair value. Based on our ~~qualitative assessment, we determined there were no indicators~~business and evaluate courses of ~~impairment~~action to maintain current levels of liquidity and compliance with our ~~indefinite-lived intangible assets at September 30, 2020.~~

~~Recoverability of trade receivables~~

Our trade receivables are generally secured by the equipment, and we determined the COVID-19 pandemic did not have a significant impact on our allowance for expected credit losses. Refer to Note 11 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 live on site auction or online marketplace event. 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 nine months ended September 30, 2020, we reviewed our inventories balance to ensure that it is recorded at the lower of cost and net realizable value. Specific consideration was given to the impact on the net realizable value of our inventories balance given the global economic downturn triggered by the COVID-19 pandemic.

~~Adoption of New Standards~~

~~Topic 326~~

Effective January 1, 2020, we adopted Topic 326, 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.

debt covenants.


~~Ritchie Bros.~~		42

Share repurchase program

~~Table~~On May 8, 2019, our Board of ~~Contents~~

~~Topic 848~~

~~Effective January 1,~~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 Q1, 2020, we ~~adopted Topic 848,~~ ~~Facilitation~~repurchased 1,525,312 common shares for $53,170,000 as part of this program until it ended on May 8, 2020.

On August 5, 2020, our Board of Directors authorized a share repurchase program for the ~~Effects~~repurchase of ~~Reference Rate Reform on Financial Reporting~~, which provides relief for companies preparing for discontinuation of reference rates such as LIBOR. This guidance is effective immediately and can be applied until December 31, 2022. Our use of LIBOR is applicable on short term drawings on the committed revolving credit facilities in certain jurisdictions. If applicable, we will use the optional expedients available when reference rate changes occur.

~~Topic 842~~

~~Effective January 1, 2019, we adopted ASU No. 2016-02,~~ ~~Leases (Topic 842)~~~~. Refer~~up to ~~Note 18 of the financial statements, Leases, for a discussion~~$100.0 million worth 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~~common shares, approved by the Toronto Stock Exchange, over a ~~Cloud Computing Arrangement That Is a Service Contract~~ ~~on a prospective basis. The adoption~~period of ~~ASU 2018-15 on January 1, 2020 using~~12 months, ending August 23, 2021. No share repurchases were made during the ~~prospective transition approach did not result in a material impact to the consolidated financial statements.~~

~~For a discussion of our new and amended accounting standards refer to Note 1 of the financial statements, Summary of significant accounting policies.~~three months ended March 31, 2021.

Non-GAAP Measures

Adjusted net income attributed to stockholders (non-GAAP measure) increased 24% to $28.2 million in Q1 2021 from $22.8 million in Q1 2020.

Diluted Adjusted EPS attributable to stockholders (non-GAAP measure) increased 19% to $0.25 per share in Q1 2021 from $0.21 per share in Q1 2020.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (non-GAAP measure) increased 18% to $66.3 million in Q1 2021 from $56.1 million in Q1 2020.

Debt at the end of Q1 2021, represented 3.8 times net income as at and for the 12 months ended March 31, 2021. This compares to debt at Q1 2020, which represented 4.3 times net income as at and for the 12 months ended March 31, 2020. The decrease in this debt/net income multiplier was primarily due to higher operating income driving higher net income as at March 31, 2021 compared to March 31, 2020. The adjusted net debt/adjusted EBITDA (non-GAAP measure) was 1.0 times as at and for the 12 months ended March 31, 2021 compared to 1.3 times as at and for the 12 months ended March 31, 2020.


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Segment Performance


	Three months ended March 31, 2021
(in U.S $000's)	A&M		Other		Consolidated
Service revenue	$	170,755	$	35,275	$	206,030
Inventory sales revenue		125,525		—		125,525
Total revenue		296,280		35,275		331,555
Ancillary and logistical service expenses		—		12,269		12,269
Other costs of services		21,590		2,168		23,758
Cost of inventory sold		110,747		—		110,747
SG&A expenses		104,345		11,733		116,078
Segment profit		59,598		9,105		68,703


	Three months ended March 31, 2020
(in U.S $000's)	A&M		Other		Consolidated
Service revenue	$	154,743	$	28,380	$	183,123
Inventory sales revenue		90,132		—		90,132
Total revenue		244,875		28,380		273,255
Ancillary and logistical service expenses		—		12,758		12,758
Other costs of services		25,095		1,502		26,597
Cost of inventory sold		81,585		—		81,585
SG&A expenses		91,585		6,800		98,385
Segment profit		46,610		7,320		53,930

Auctions and Marketplaces Segment

Results of A&M segment operations are presented below for the comparative reporting periods.


	Three months ended March 31,
							% Change
							2021 over
(in U.S. $000's, except percentages)	2021			2020			2020
Service revenue	$	170,755		$	154,743		10	%
Inventory sales revenue		125,525			90,132		39	%
Total revenue		296,280			244,875		21	%
A&M service revenue as a % of total A&M revenue		57.6	%		63.2	%	(560)	bps
Inventory sales revenue as a % of total A&M revenue		42.4	%		36.8	%	560	bps
Costs of services		21,590			25,095		(14)	%
Cost of inventory sold		110,747			81,585		36	%
SG&A expenses		104,345			91,585		14	%
A&M segment expenses	$	236,682		$	198,265		19	%
Cost of inventory sold as a % of A&M expenses		46.8	%		41.1	%	570	bps
A&M segment profit	$	59,598		$	46,610		28	%
Total GTV		1,274,539			1,147,025		11	%
A&M service revenue as a % of total GTV- Rate		13.4	%		13.5	%	(10)	bps

Gross Transaction Value


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GTV by Geography


	Three months ended March 31,
			% Change
(in U.S. $000's)	2021	2020	2021 over 2020
Total GTV by Geography
United States	881,653	862,442	2	%
Canada	210,611	149,311	41	%
International	182,275	135,272	35	%
Total GTV	1,274,539	1,147,025	11	%

Service GTV by Geography
United States	815,316	805,494	1	%
Canada	200,896	141,116	42	%
International	132,802	110,283	20	%
Total Service GTV¹	1,149,014	1,056,893	9	%

¹ Service GTV is calculated as total GTV less inventory sales revenue

GTV by Sector

The following pie charts illustrate the breakdown of total GTV by sector for Q1 2021 compared to Q1 2020.

In Q1 2021, there was no significant change in the GTV by sector compared to Q1 2020.


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Total auction metrics


	Three months ended March 31,
			% Change
	2021	2020	2021 over 2020
Number of auction sales days	93	87	7	%
Bids per lot sold	27	19	42	%
Total lots sold	116,259	100,805	15	%

Online bidding

Productivity


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A&M revenue

Total A&M revenue increased 21% to $296.3 million in Q1 2021.

A&M revenue by geographical region are presented below:


	Three months ended March 31,
			% Change
(in U.S. $000's, except percentages)	2021	2020	2021 over 2020
A&M Revenue by Geography
United States
Service revenue	122,911	120,339	2	%
Inventory sales revenue	66,337	56,948	16	%
A&M revenue- United States	189,248	177,287	7	%
Canada
Service revenue	28,037	18,560	51	%
Inventory sales revenue	9,715	8,195	19	%
A&M revenue- Canada	37,752	26,755	41	%
International
Service revenue	19,807	15,844	25	%
Inventory sales revenue	49,473	24,989	98	%
A&M revenue- International	69,280	40,833	70	%
Total
Service revenue	170,755	154,743	10	%
Inventory sales revenue	125,525	90,132	39	%
A&M total revenue	296,280	244,875	21	%

United States

Canada

Inventory sales revenue also increased 19% primarily due to two large new deals in the construction sector with strong rate performances and the shifting of our Montreal auction back into Q1 2021 which had significant inventory contracts.

International


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Costs of services

Cost of inventory sold

SG&A expenses

Other Services Segment

Results of Other Services segment operations are presented below for the comparative reporting periods.


	Three months ended March 31,
					% Change
(in U.S. $000's, except percentages)	2021		2020		2021 over 2020
Service revenue	$	35,275	$	28,380	24	%
Ancillary and logistical service expenses		12,269		12,758	(4)	%
Other costs of services		2,168		1,502	44	%
SG&A expenses		11,733		6,800	73	%
Other services profit	$	9,105	$	7,320	24	%

Rouse was acquired on December 8, 2020 and this is the first full quarter of revenue recognized since acquisition.

In Q1 2021, Other Services profit increased 24% to $9.1 million driven by our Rouse, RBFS, and Mascus operations.

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 August 14, 2020.


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We assess our liquidity based on our ability to generate cash 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 term debt.

Cash flows


	Three months ended March 31,
					% Change
					2021 over
(in U.S. $000's, except percentages)	2021		2020		2021 over 2020
Cash provided by (used in):
Operating activities	$	180,687	$	4,132	4,273	%
Investing activities		(10,035)		(7,274)	38	%
Financing activities		(33,145)		(48,361)	(31)	%
Effect of changes in foreign currency rates		(2,782)		(12,828)	(78)	%
Net increase in cash, cash equivalents, and restricted cash	$	134,725	$	(64,331)	(309)	%

Net cash used in investing activities increased $2.8 million in the first three months of 2021. This increase was primarily due to more cash inflows from equity investments during the comparative period, including $4.2 million of proceeds on the distribution of equity investments and $1.7 million of proceeds on contingent consideration from equity investments in Q1 2020. The comparative period cash inflows were partially offset the issuance of $3.0 million of loans receivable under our non-recourse financing lending arrangements in Q1 2020. There were no similar transactions in Q1 2021.

Net cash used in financing activities decreased $15.2 million in the first three months of 2021. The primary driver of the change was that we did not do any share repurchases in Q1 2021, whereas we spent $53.2 million in the prior year. Partially offsetting this change was a decrease in draws on our short-term debt of $32.0 million and an increase of $4.6 million in withholding tax payments on the issuance of shares.

Dividend information

We declared and paid a regular cash dividend of $0.20 per common share for the quarter ended March 31, 2020. We declared a dividend of $0.22 per common share for the quarter ended June 30, 2020, September 30, 2020, and December 31, 2020. We have declared, but not yet paid, a dividend of $0.22 per common share for the quarter ended March 31, 2021. All dividends that we pay are “eligible dividends” for Canadian income tax purposes unless indicated otherwise.

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.


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Return on average invested capital

Return on average invested capital increased 110 bps to 11.3% for the 12-month period ending March 31, 2021 from 10.2% for the 12-month period ending March 31, 2020. This increase is primarily due to an increase in net income attributable to stockholders over the comparative period. Return on invested capital (“ROIC”) (non-GAAP measure) increased 220 bps to 12.2% during the 12 months ended March 31, 2021 compared to 10.0% for the 12 months period ending March 31, 2020.

Credit facilities

On August 14, 2020, we entered into the amended and extended Credit Agreement. The Credit Agreement matures on October 27, 2023 and provides credit facilities totaling US$630.0 million with a syndicate of lenders comprising:

(1)

Multicurrency revolving facilities of up to US$530 Million (the “Revolving Facilities”), and,

(2)

A delayed-draw term loan facility of up to US$100 Million (the “Delayed-Draw Facility” and together with the Revolving Facilities, the “Facilities”).

Credit facilities at March 31, 2021 and December 31, 2020 were as follows:


(in U.S. $000's, except percentages)	March 31, 2021		December 31, 2020		% Change
Committed
Term loan facility	$	97,279	$	98,420	(1)	%
Revolving credit facilities		540,000		540,000	—	%
Total credit facilities	$	637,279	$	638,420	(0)	%
Unused
Revolving credit facilities		461,115		455,124	1	%
Total credit facilities unused	$	461,115	$	455,124	1	%

Debt covenants

We were in compliance with all financial and other covenants applicable to our credit facilities at March 31, 2021. Our debt covenants did not change as a result of amending our Credit Agreement.

Share repurchase program

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, financial performance, liquidity, capital expenditures or capital resources.


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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 which takes into consideration the impact of COVID-19 pandemic related circumstances. As of March 31, 2021, there were no material changes in our critical accounting policies, judgments, estimates and assumptions from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, or in the notes to our consolidated financial statements included in “Part I, Item 1: Consolidated Financial Statements” in this Quarterly Report on Form 10-Q.

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.

For a discussion of our new and amended accounting standards refer to Note 2 of the financial statements, Summary of significant accounting policies.

Non-GAAP Measures

We reference various non-GAAP measures throughout this Quarterly Report on Form 10-Q. 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 (*).

Adjusted Operating Income* Reconciliation

Adjusting operating income* eliminates the financial impact of adjusting items which are significant non-recurring items that we do not consider to be part of our normal operating results, such as acquisition-related costs, management reorganization costs, and certain other items, which we refer to as ‘adjusting items’.

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

There were no adjusting items in Q1 2021 or in the comparative prior period.


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
					% Change						% Change						% Change
(in U.S. $000's, except percentages)	2020		2019		2020 over 2019		2020		2019		2020 over 2019		2021		2020		2021 over 2020
Operating income	$	67,384	$	40,160	68	%	$	190,266	$	151,718	25	%	$	44,502	$	34,082	31	%
Pre-tax adjusting items:
Severance		4,283		—	100	%		4,283		—	100	%
Adjusted operating income*	$	71,667	$	40,160	78	%	$	194,549	$	151,718	28	%	$	44,502	$	34,082	31	%

(1)	Please refer to page 4847 for a summary of adjusting items during the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019.~~March 31, 2020.

(2)	Adjusted operating income* represents operating income excluding the effects of adjusting items.


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Adjusted Net Income Attributable to Stockholders* and Diluted Adjusted EPS Attributable to Stockholders* Reconciliation

We believe that 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. Diluted Adjusted EPS attributable to stockholders* eliminates the financial impact of adjusting items which are after-tax effects of significant non-recurring items that we do not consider to be part of our normal operating results, such as acquisition-related costs, management reorganization costs, and certain other items, which we refer to as ‘adjusting items’.

The following table reconciles adjusted net income attributable to stockholders* and diluted adjusted EPS attributable to stockholders* to net income attributable to stockholders and diluted EPS attributable to stockholders, which are the most directly comparable GAAP measures in our consolidated income statements.

Three months ended September 30,

Nine months ended September 30,

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



% Change



% Change

and percentages)

2020

2019

2020 over 2019


2020

2019

2020 over 2019


Net income attributable to stockholders

$
45,387

$
25,266

80
%

$
121,239

$
97,466

24
%

Pre-tax adjusting items:













Severance

4,283

—

100
%

4,283

—

100
%

Current income tax effect of adjusting items:









Severance

(1,065)

—

(100)
%

(1,065)

—

(100)
%

Current income tax adjusting item:













Change in uncertain tax provision

—

—

—
%

766

—

100
%

Deferred tax adjusting item:













Change in uncertain tax provision

—

—

—
%

5,462

—

100
%

Adjusted net income attributable to stockholders*

$
48,605

$
25,266

92
%

$
130,685

$
97,466

34
%

Weighted average number of dilutive shares outstanding

110,369,718

109,381,173

1
%

110,060,712

109,634,195

0
%

Diluted earnings per share attributable to stockholders

$
0.41

$
0.23

78
%

$
1.10

$
0.89

24
%

Diluted adjusted EPS attributable to Stockholders*

$
0.44

$
0.23

91
%

$
1.19

$
0.89

34
%


	Three months ended March 31,
					% Change
(in U.S. $000's, except share and
per share data, and percentages)	2021		2020		2021 over 2020
Net income attributable to stockholders	$	28,188	$	22,809	24	%
Adjusted net income attributable to stockholders*	$	28,188	$	22,809	24	%
Weighted average number of dilutive shares outstanding		111,267,392		110,482,837	1	%

Diluted earnings per share attributable to stockholders	$	0.25	$	0.21	19	%
Diluted adjusted EPS attributable to Stockholders*	$	0.25	$	0.21	19	%

(1)	Please refer to page 4847 for a summary of adjusting items during the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019.~~March 31, 2020.

(2)	Adjusted net income attributable to stockholders* represents net income attributable to stockholders excluding the effects of adjusting items.

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

Adjusted EBITDA*

We believe adjusted EBITDA* provides useful information about the growth or decline of our net income when compared between different financial periods.

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


													Three months ended March 31,
	Three months ended September 30,						Nine months ended September 30,										% Change
					% Change						% Change						2021 over
(in U.S. $000's, except percentages)	2020		2019		2020 over 2019		2020		2019		2020 over 2019		2021		2020		2020
Net income	$	45,490	$	25,272	80	%	$	121,438	$	97,575	24	%	$	28,139	$	22,829	23	%
Add: depreciation and amortization expenses		18,436		17,692	4	%		55,586		51,919	7	%		21,070		19,293	9	%
Add: interest expense		8,737		10,090	(13)	%		26,801		31,023	(14)	%		8,946		9,182	(3)	%
Less: interest income		(510)		(517)	(1)	%		(1,775)		(2,435)	(27)	%		(303)		(873)	(65)	%
Add: income tax expense		15,437		6,760	128	%		48,741		28,800	69	%		8,419		5,648	49	%
Pre-tax adjusting items:
Severance		4,283		—	100	%		4,283		—	100	%
Adjusted EBITDA*	$	91,873	$	59,297	55	%	$	255,074	$	206,882	23	%	$	66,271	$	56,079	18	%

(1)	Please refer to page 4847 for a summary of adjusting items during the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019.~~March 31, 2020.

(2)	Adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, and income tax expense, and subtracting interest income from net income excluding the pre-tax effects of adjusting items.


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Adjusted Net Debt* and Adjusted Net Debt/Adjusted EBITDA* Reconciliation

We believe that comparing adjusted net debt/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 adjusted net debt* to debt, adjusted EBITDA* to net income, and adjusted net debt*/ adjusted EBITDA* to debt/ net income, respectively, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements.


	As at and for the 12 months ended September 30,								As at and for the 12 months ended March 31,
							% Change								% Change
(in U.S. $millions, except percentages)	2020			2019			2020 over 2019		2021			2020			2021 over 2020
Short-term debt	$	20.3		$	5.8		250	%	$	25.9		$	33.1		(22)	%
Long-term debt		632.6			689.3		(8)	%		636.7			630.5		1	%
Debt		652.9			695.1		(6)	%		662.6			663.6		(0)	%
Less: Cash and cash equivalents		(470.3)			(309.6)		52	%		(294.4)			(290.1)		1	%
Adjusted net debt*		182.6			385.5		(53)	%		368.2			373.5		(1)	%
Net income	$	173.0		$	133.0		30	%	$	175.7		$	153.8		14	%
Add: depreciation and amortization expenses		74.2			69.1		7	%		76.7			72.7		6	%
Add: interest expense		37.1			42.8		(13)	%		35.3			39.6		(11)	%
Less: interest income		(3.1)			(3.3)		(6)	%		(1.8)			(3.8)		(53)	%
Add: income tax expense		61.6			40.7		51	%		68.3			40.6		68	%
Pre-tax adjusting items:
Share-based payment expense recovery		(4.1)			—		(100)	%		—			(4.1)		(100)	%
Acquisition-related costs										5.2			—		100	%
Severance		4.3			—		100	%		4.3			—		100	%
Adjusted EBITDA*	$	343.0		$	282.3		22	%	$	363.7		$	298.8		22	%
Debt/net income		3.8	x		5.2	x	(27)	%		3.8	x		4.3	x	(12)	%
Adjusted net debt/adjusted EBITDA		0.5	x		1.4	x	(64)	%		1.0	x		1.3	x	(23)	%

(1)	Please refer to page 4847 for a summary of adjusting items during the trailing 12-months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019.~~March 31, 2020.

(2)	Adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, and income tax expense, and subtracting interest income from net income excluding the pre-tax effects of adjusting items.

(3)	Adjusted net debt* is calculated by subtracting cash and cash equivalents from short and long-term debt.

(4)	Adjusted net debt/adjusted EBITDA is calculated by dividing adjusted net debt* by adjusted EBITDA*.

Operating Free Cash Flow* (“OFCF”) Reconciliation

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:


	12 months ended September 30,							12 months ended March 31,
					% Change							% Change
(in U.S. $ millions, except percentages)	2020		2019		2020 over 2019			2021		2020		2021 over 2020
Cash provided by operating activities	$	289.2	$	356.2		(19)	%	$	436.6	$	265.0		65	%
Property, plant and equipment additions		16.5		10.4		59	%		12.3		14.3		(14)	%
Intangible asset additions		28.9		25.1		15	%		30.4		29.0		5	%
Proceeds on disposition of property plant and equipment		(16.6)		(13.7)		21	%		(16.1)		(6.0)		168	%
Net capital spending	$	28.8	$	21.8		32	%	$	26.6	$	37.3		(29)	%
OFCF*	$	260.4	$	334.4		(22)	%	$	410.0	$	227.7		80	%

(1)	OFCF* is calculated by subtracting net capital spending from cash provided by operating activities.


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Adjusted Net Income Attributable to Stockholders* and Adjusted Dividend Payout Ratio* Reconciliation

We believe that 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. We believe that disclosing our adjusted dividend payout ratio* for different financial periods provides useful information about how well our net income supports our dividend payments.

The following table reconciles adjusted net income attributable to stockholders* and adjusted dividend payout ratio* to net income attributable to stockholders, and dividend payout ratio, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements:


	12 months ended September 30,									12 months ended March 31,
							%Change									% Change
(in U.S. $millions, except percentages)	2020			2019			2020 over 2019			2021			2020			2021 over 2020
Dividends paid to stockholders	$	89.4		$	80.4			11	%	$	94.0		$	84.9			11	%
Net income attributable to stockholders	$	172.8		$	133.0			30	%	$	175.5		$	153.7			14	%
Pre-tax adjusting items:
Share-based payment expense recovery		(4.1)			—			(100)	%		—			(4.1)			(100)	%
Acquisition-related costs											5.2			—			100	%
Severance		4.3			—			100	%		4.3			—			100	%
Current income tax effect of adjusting items:
Acquisition-related costs											(1.3)			—			(100)	%
Severance		(1.1)			—			(100)	%		(1.1)			—			(100)	%
Deferred income tax effect of adjusting items:
Share-based payment expense recovery		0.7			—			100	%		—			0.7			(100)	%
Current income tax adjusting item:
Change in uncertain tax provision		0.8			—			100	%		2.3			—			100	%
Deferred tax adjusting item:
Change in uncertain tax provisions		5.5			—			100	%		5.5			—			100	%
Adjusted net income attributable to stockholders*	$	178.9		$	133.0			35	%	$	190.4		$	150.3			27	%
Dividend payout ratio		51.7	%		60.5	%		(880)	bps		53.6	%		55.2	%		(160)	bps
Adjusted dividend payout ratio*		50.0	%		60.5	%		(1050)	bps		49.4	%		56.5	%		(710)	bps

(1)	Please refer to page 4847 for a summary of adjusting items during the trailing 12-months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019.~~March 31, 2020.

(2)	Adjusted net income attributable to stockholders* represents net income attributable to stockholders excluding the effects of adjusting items.

(3)	Adjusted dividend payout ratio* is calculated by dividing dividends paid to stockholders by adjusted net income attributable to stockholders*.


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Adjusted Net Income Attributable to Stockholders* and ROIC* Reconciliation

We believe that comparing ~~ROIC~~ROIC* on a trailing 12-month basis for different financial periods, provides useful information about the after-tax return generated by our investments.

The following table reconciles 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:


										As at and for the 12 months ended March 31,
	As at and for the 12 months ended September 30,
																% Change
(in U.S. $millions, except percentages)	2020			2019			2020 over 2019			2021			2020			2021 over 2020
Net income attributable to stockholders	$	172.8		$	133.0			30	%	$	175.5		$	153.7			14	%
Pre-tax adjusting items:
Share-based payment expense recovery		(4.1)			—			(100)	%		—			(4.1)			(100)	%
Acquisition-related costs											5.2			—			100	%
Severance		4.3			—			100	%		4.3			—			100	%
Current income tax effect of adjusting items:
Acquisition-related costs											(1.3)			—			(100)	%
Severance		(1.1)			—			(100)	%		(1.1)			—			(100)	%
Deferred income tax effect of adjusting items:
Share-based payment expense recovery		0.7			—			0	%		—			0.7			(100)	%
Current income tax adjusting item:
Change in uncertain tax provision		0.8			—			100	%		2.3			—			100	%
Deferred tax adjusting item:
Change in uncertain tax provisions		5.5			—			100	%		5.5			—			100	%
Adjusted net income attributable to stockholders*	$	178.9		$	133.0			35	%	$	190.4		$	150.3			27	%
Opening long-term debt	$	689.3		$	751.8			(8)	%	$	630.5		$	703.3			(10)	%
Ending long-term debt		632.6			689.3			(8)	%		636.7			630.5			1	%
Average long-term debt		661.0			720.6			(8)	%		633.6			666.9			(5)	%
Opening stockholders' equity	$	838.2		$	815.5			3	%	$	839.8		$	828.1			1	%
Ending stockholders' equity		959.5			838.2			14	%		1,005.5			839.8			20	%
Average stockholders' equity		898.9			826.9			9	%		922.7			834.0			11	%
Average invested capital	$	1,559.9		$	1,547.5			1	%	$	1,556.3		$	1,500.9			4	%

Return on average invested capital		11.1	%		8.6	%		250	bps		11.3	%		10.2	%		110	bps
ROIC*		11.5	%		8.6	%		290	bps		12.2	%		10.0	%		220	bps

(1)	Please refer to page 4847 for a summary of adjusting items during the trailing 12-months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019.~~March 31, 2020.

(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’ equity over a trailing 12-month period.

(3)	ROIC* is calculated as adjusted net income attributable to stockholders* divided by average invested capital.

(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.


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Adjusting items during the trailing 12-months ended ~~September 30,~~March 31, 2021 were:

Recognized in the first quarter of 2021

●

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

Recognized in the fourth quarter of 2020 ~~were:~~

●

$5.2 million ($3.9 million after tax, or $0.04 per diluted share) of acquisition-related costs related to the acquisition of Rouse.

●

$1.5 million ($0.01 per diluted share) of current income tax expense recognized related to an unfavourable adjustment to reflect final regulations published in Q2 2020 regarding hybrid financing arrangements.

Recognized in the third quarter of 2020

●

$4.3 million ($3.2 million after tax, or $0.03 per diluted share) of severance costs related to the realignment of leadership to support the new global operations organization, in line with strategic growth priorities led by the new CEO.

Recognized in the second quarter of 2020

●

$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.

Adjusting items during the trailing 12-months ended March 31, 2020 were:

Recognized in the first quarter of 2020

●

There were no adjustment items recognized in the first quarter of 2020.

Recognized in the fourth quarter of 2019

●

$4.1 million ($3.4 million after tax, or $0.03 per diluted share) in share-based payment expense recovery related to the departure ofour former CEO.

~~Adjusting items during the trailing 12-months ended September 30, 2019 were:~~

Recognized in the third quarter of 2019

●

There were no adjustment items recognized in the third quarter of 2019.

Recognized in the second quarter of 2019

●

There were no adjustment items recognized in the second quarter of 2019.

~~Recognized in the first quarter of 2019~~

●

~~There were no adjustment items recognized in the first quarter of 2019.~~

~~Recognized in the fourth quarter of 2018~~

●

~~There were no adjustment items recognized in the fourth quarter of 2018.~~


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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 from those disclosed in Item 7A in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, which is available on our website at www.rbauction.com, on EDGAR at www.sec.gov, or on SEDAR at www.sedar.com.

ITEM 4: CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Management of the Company, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), have evaluated the effectiveness of the Company’s disclosure controls and procedures as at ~~September 30, 2020.~~March 31, 2021. The term “disclosure controls and procedures” means controls and other procedures established by the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Based upon their evaluation of the Company’s disclosure controls and procedures, the CEO and the CFO concluded that, as at ~~September 30, 2020,~~March 31, 2021, as a result of the material weaknesses described in Item 9A of the Form 10-K filed with the SEC on February 18, 2021 not having been remediated by the first quarter of 2021, the disclosure controls are not effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and are not effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

The Company completed the acquisition of Rouse on December 8, 2020 and Rouse’s total assets and revenues constituted 10.0% and 1.7%, respectively, of the Company’s total assets and revenues as shown in its consolidated financial statements as of and for the three month period ended March 31, 2021. As the acquisition occurred in the fourth quarter of 2020, the Company excluded Rouse from the scope of its assessment over the effectiveness of its internal control over financial reporting. This exclusion is in accordance with the guidance issued by the Staff of the Securities and Exchange Commission that an assessment of a recently acquired business may be omitted from its scope in the year of acquisition, if specified conditions are satisfied.

Remediation Plan and Status of Material Weaknesses in Internal Control Over Financial Reporting

As previously disclosed in the Company’s Annual Report on Form 10-K filed with the SEC for the year ending December 31, 2020, the Company identified a material weakness over the review of the recording of manual journal entries in one of its geographies; specifically, controls were not operating effectively to ensure that journal entries were prepared with appropriate supporting documentation. Additionally, the Company identified a material weakness over the completeness and accuracy of key reports used in the performance of controls to address the occurrence and measurement of revenue.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The Company is committed to maintaining a strong internal control environment. In order to address the material weaknesses in internal control over financial reporting noted above, management with oversight and direction from the Audit Committee and the Board of Directors, is developing a remediation plan. We have taken the following remediation steps:

created a working group tasked with performing a comprehensive root-cause analysis of the control deficiencies contributing to the material weaknesses to determine corrective actions;

implemented additional monitoring controls over the controls impacted; and


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identified a third-party advisor to assist with the remediation plan and continuous control improvement initiatives. We expect to execute a signed engagement with this advisor in May 2021.

As we continue to develop and implement our remediation plan, additional remediation steps will be identified and adopted. We have also performed additional post-closing procedures and financial statement analysis whilst our disclosure controls and procedures are not effective.

We will consider the material weaknesses remediated after the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively.

The Company, including its CEO and CFO, does not expect that its internal controls and procedures will prevent or detect all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Changes in Internal Control over Financial Reporting

Management, with the participation of the CEO and CFO, concluded that there were no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2020~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

We are continuing to take steps to remediate the material weaknesses in our internal control over financial ~~reporting.~~reporting, as discussed above.


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PART II – OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

We have no material legal proceedings pending, other than ordinary routine litigation incidental to the business, and we do not know of any material proceedings contemplated by governmental authorities.

ITEM 1A: RISK FACTORS

Our business is subject to a number of risks and uncertainties, and our past performance is no guarantee of our performance in future periods. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risks and uncertainties discussed in “Part I, Item 1A: Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, which is available on our website at www.rbauction.com, on EDGAR at www.sec.gov, or on SEDAR at www.sedar.com, before purchasing our common shares. Our business could also be affected by additional risks not currently known to us or that we currently deem to be immaterial. If any of the risks actually occur, our business, financial condition and results of operations could materially suffer. As a result, the trading price of our common shares could decline, and you may lose all or part of your investment.

~~Except as set out below, there~~There were no material changes in risk factors during the three months ~~or nine months~~ ended ~~September 30, 2020.~~

~~Our business operations, results of operations, cash flows and financial performance may be affected by the recent COVID-19 pandemic.~~

An outbreak of a novel strain of coronavirus (COVID-19) has occurred, including in all of the countries in which we operate. National, state, provincial and local governments have responded to the COVID-19 pandemic in a variety of ways, including, without limitation, by declaring states of emergency, restricting people from gathering in groups or interacting within a certain physical distance (i.e., social distancing), and in certain cases, ordering businesses to close or limit operations or people to stay at home.

The COVID-19 pandemic has caused certain disruptions to our business and operations and could cause further material disruptions to our business and operations in the future as a result of, among other things, quarantines, worker absenteeism as a result of illness or other factors, social distancing measures and other travel, health-related, business or other restrictions. For similar reasons, the COVID-19 pandemic has also adversely impacted, and may continue to adversely impact, the businesses and needs of our customers. Depending on the extent and duration of all of the above-described effects on our business and operations and the business and operations of our customers, our costs could increase, including our costs to address the health and safety of personnel, our ability to source assets to sell may be adversely impacted, our ability to transport and/or sell the assets that we source may be adversely impacted, our ability to service certain customers could be adversely impacted, and our ability to transfer ownership to the assets that we do sell could be adversely impacted. As a result of the foregoing, our business operations, results of operations, cash flows and financial performance could be materially adversely affected.

Although we have been permitted to continue to operate our auction sites in most of the jurisdictions in which we operate, including in jurisdictions that have mandated the closure of certain businesses, we have had to either forbid customer access altogether or limit the number of customers that are able to access our auction sites; in each case leading to online-only bidding for our live auctions. There is no assurance that we will be permitted to operate under every future government order or other restriction and in every location. If we were to be subject to government orders or other restrictions on the operation of our business, we may be required to limit our operations at, or close, certain auction sites and office locations in the future. Any limitations on, or closures of, our auction sites or our customers’ sites could have a material adverse impact on our ability to carry out auctions or facilitate online sales, allow customers or our inspection teams to inspect assets or allow customers to retrieve purchased assets. Any such limitations or closures could have a material adverse impact on our business operations, results of operations, cash flows and financial performance.


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Any sustained disruption in the capital markets from the COVID-19 pandemic could negatively impact our ability to raise capital. As of the end of our third fiscal quarter of 2020 we have a strong balance sheet and do not anticipate the need to raise capital. However, we cannot predict when the macro-economic disruption stemming from the COVID-19 pandemic will ebb or when the economy will return to pre-COVID-19 pandemic levels, if at all. If the macro-economic disruption continues for prolonged periods we may need to raise capital and capital may not be available on acceptable terms, or at all. The impact of the COVID-19 pandemic on economic activity, and its effect on our sales force and our customers are uncertain at this time and could have a material adverse effect on our results, especially to the extent these effects persist or exacerbate over an extended period of time. Additionally, any such impact could also result in financial and/or operational constraints for our service providers, buyers of the assets sold through our sales channel, as well as other counterparties, thereby increasing the risk that such counterparties default on their obligations to us.

~~The acquisition of Rouse Services LLC (“Rouse”) is subject to a number of conditions and may not be completed on the terms or timeline currently contemplated, or at all.~~

The completion of the acquisition of Rouse is subject to certain conditions, including, among other things: (a) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (b) no governmental authority shall have enacted, issued, promulgated, enforced or entered any order which is in effect and has the effect of making the acquisition of Rouse illegal, otherwise restraining or prohibiting consummation of the acquisition or causing any portion of the acquisition to be rescinded following completion thereof, and (c) the shares to be issued in connection with the acquisition shall have been (i) conditionally approved for listing by the Toronto Stock Exchange, and (ii) approved for listing by the New York Stock Exchange.

We cannot assure you that the acquisition will be consummated on the terms or timeline currently contemplated, or at all. Many of the conditions to completion of the acquisition are not within our control, and we cannot predict when or if these conditions will be satisfied. The failure to meet all of the required conditions could delay the completion of the acquisition for a significant period of time or prevent it from occurring. Any delay in completing the acquisition could cause us not to realize some or all of the benefits that it expects to achieve if the acquisition is successfully completed within its expected timeframe.

~~We may not realize the anticipated benefits of, and synergies from, the acquisition of Rouse and may become responsible for certain liabilities and integration costs.~~

Business acquisitions involve the integration of new businesses that have previously operated independently from us. The integration of our operations with those of Rouse is expected to result in financial and operational benefits. There can be no assurance, however, regarding when or the extent to which we will be able to realize these and other benefits. Integration may also be difficult, unpredictable and subject to delay and may divert the attention of management to integration matters. We may have difficulties integrating information systems, assimilating corporate cultures or retaining key Rouse employees. Difficulties associated with the integration of acquired businesses could have a material adverse effect on our business, financial condition and results of operations.

In addition, in connection with the acquisition of Rouse, we have assumed certain potential liabilities, some of which may not be covered by indemnification obligations of Rouse or third parties. To the extent we do not identify such liabilities or to the extent indemnifications obtained from third parties are insufficient to cover such liabilities, these liabilities could have a material adverse effect on our business, financial condition and results of operations.March 31, 2021.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4: MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5: OTHER INFORMATION

None.


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ITEM 6: EXHIBITS

Exhibits

The exhibits listed in below are filed as part of this Quarterly Report on Form 10-Q and incorporated herein by reference.


Exhibit
Number		Document


~~10.1~~		Third Amendment to Credit Agreement, dated as of August 14, 2020, among the Company, certain of its subsidiaries, each as a borrower and/or a guarantor, the lenders party thereto and Bank of America, N.A., as administrative agent, U.S. swing line lender and letter of credit issuer (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 17, 2020)
~~10.2~~ ~~10.3~~		~~Employment Agreement between Ritchie Bros. Auctioneers (Canada) Ltd. and Kevin Geisner, dated August 4, 2020~~ Membership Interest Purchase Agreement dated October 28, 2020 among the Company, Ritchie Bros. Auctioneers (America) Inc., Rouse Services LLC (“Rouse”), the members of Rouse, and Scott Rouse, in his capacity as seller representative
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Interactive Data Files Pursuant to Rule 405 of Regulation S-T , for the Company’s Quarterly Report on Form 10-Q for the ~~three and nine months~~quarter ended ~~September 30, 2020,~~March 31, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Income Statements; (ii) Condensed Consolidated Balance Sheets; (iii) Condensed Consolidated Statements of Changes in Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to the Condensed Consolidated Financial Statements
104		Cover page from the Company’s Quarterly Report on Form 10-Q for the ~~three and nine months~~quarter ended ~~September 30, 2020,~~March 31, 2021, formatted in Inline XBRL and contained in Exhibit 101


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	RITCHIE BROS. AUCTIONEERS INCORPORATED


Dated: ~~November 5, 2020~~May 10, 2021	By:	/s/ Ann Fandozzi
		Ann Fandozzi
		Chief Executive Officer

Dated: ~~November 5, 2020~~May 10, 2021	By:	/s/ Sharon R. Driscoll
		Sharon R. Driscoll
		Chief Financial Officer


Ritchie Bros.	53


PART I – FINANCIAL INFORMATION
ITEM 1:	Consolidated Financial Statements	1
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2729
ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	49
ITEM 4:	Controls and Procedures	49

PART II – OTHER INFORMATION
ITEM 1:	Legal Proceedings	5051
ITEM 1A:	Risk Factors	5051
ITEM 2:	Unregistered Sales of Equity Securities and Use of Proceeds	51
ITEM 3:	Defaults Upon Senior Securities	51
ITEM 4:	Mine Safety Disclosures	51
ITEM 5:	Other Information	51
ITEM 6:	Exhibits	52

SIGNATURES		53


	Attributable to stockholders													Contingently
				Additional				Accumulated		Non-				redeemable
	Common stock			paid-In				other		controlling				performance
	Number of			capital		Retained		comprehensive		interest		Total		share units
Three months ended September 30, 2020	shares	Amount		("APIC")		earnings		loss		("NCI")		equity		("PSUs")

Balance, June 30, 2020	108,630,537	$	169,255	$	47,958	$	746,048	$	(64,207)	$	5,254	$	904,308		—
Net income	—		—		—		45,387		—		103		45,490		—
Other comprehensive income (loss)	—		—		—		—		12,523		26		12,549		—
	—		—		—		45,387		12,523		129		58,039		—
Stock option exercises	751,268		26,470		(5,701)		—		—		—		20,769		—
Issuance of common stock related to vesting of share units	86		2		(7)		—		—		—		(5)		—
Stock option compensation expense	—		—		1,671		—		—		—		1,671		—
Equity-classified share units expense	—		—		4,138		—		—		—		4,138		—
Equity-classified share units dividend equivalents	—		—		194		(194)		—		—		—		—
Cash dividends paid	—		—		—		(24,053)		—		—		(24,053)		—
Balance, September 30, 2020	109,381,891	$	195,727	$	48,253	$	767,188	$	(51,684)	$	5,383	$	964,867		—

Three months ended September 30, 2019

Balance, June 30, 2019	107,836,674	$	150,585	$	54,633	$	680,915	$	(55,449)	$	5,165	$	835,849		1,049
Net income	—		—		—		25,266		—		6		25,272		—
Other comprehensive income (loss)	—		—		—		—		(9,680)		(23)		(9,703)		—
	—		—		—		25,266		(9,680)		(17)		15,569		—
Stock option exercises	363,217		8,451		(135)		—		—		—		8,316		—
Issuance of common stock related to vesting of share units	10,444		737		—		1		—		—		738		(1,083)
Stock option compensation expense	—		—		1,653		—		—		—		1,653		—
Equity-classified share units expense	—		—		2,830		—		—		—		2,830		21
Equity-classified share units dividend equivalents	—		—		308		(320)		—		—		(12)		13
Cash dividends paid	—		—		—		(21,631)		—		—		(21,631)		—
Balance, September 30, 2019	108,210,335	$	159,773	$	59,289	$	684,231	$	(65,129)	$	5,148	$	843,312		—


	Three months ended					Nine months ended
	September 30, 2019					September 30, 2019
	Net income		WA	Per		Net income		WA	Per
	attributable to		number	share		attributable to		number	share
	stockholders		of shares	amount		stockholders		of shares	amount
Basic		25,266	108,003,390		0.23	$	97,466	108,453,525	$	0.90
Effect of dilutive securities:
Share units		—	481,268		—		—	430,175		—
Stock options		—	896,515		—		—	750,495		(0.01)
Diluted	$	25,266	109,381,173	$	0.23	$	97,466	109,634,195	$	0.89


			Accumulated		Net book
As at September 30, 2020	Cost		depreciation		value
Computer equipment	$	14,385	$	(7,568)	$	6,817
Yard and others		27,288		(9,271)		18,017
	$	41,673	$	(16,839)	$	24,834


	Three months ended September 30,						Nine months ended September 30,
(in U.S. $000's, except share and per share data,					% Change						% Change
and percentages)	2020		2019		2020 over 2019		2020		2019		2020 over 2019
Net income attributable to stockholders	$	45,387	$	25,266	80	%	$	121,239	$	97,466	24	%
Pre-tax adjusting items:
Severance		4,283		—	100	%		4,283		—	100	%
Current income tax effect of adjusting items:
Severance		(1,065)		—	(100)	%		(1,065)		—	(100)	%
Current income tax adjusting item:
Change in uncertain tax provision		—		—	—	%		766		—	100	%
Deferred tax adjusting item:
Change in uncertain tax provision		—		—	—	%		5,462		—	100	%
Adjusted net income attributable to stockholders*	$	48,605	$	25,266	92	%	$	130,685	$	97,466	34	%
Weighted average number of dilutive shares outstanding		110,369,718		109,381,173	1	%		110,060,712		109,634,195	0	%

Diluted earnings per share attributable to stockholders	$	0.41	$	0.23	78	%	$	1.10	$	0.89	24	%
Diluted adjusted EPS attributable to Stockholders*	$	0.44	$	0.23	91	%	$	1.19	$	0.89	34	%