Q1 2022 Ritchie Bros Auctioneers Inc Earnings Call

May 10, 2022

Speaker 3: Good morning. My name is christna. ll will be your conference operator today at this time. I would like to welcome everyone to the richie brothers auctione. First quarter conference call.

Operator: Good morning. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ritchie Bros. Auctioneers Q1 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then two key. Thank you. I'll now turn the call over to Mr. Sameer Rathod, Vice President of Investor Relations and Market Intelligence, to open the conference call. Mr. Rathod, you may begin your conference.

Speaker 8: All lines have been placed on mute to prevent any background noise.

Speaker 8: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press Star than the number one on your telephone key pad.

Speaker 8: If you would like to withdraw your question, please press Star, then two key.

Speaker 9: Thank you. I'll now turn the call over to MR sammeir rethod, Vice President of Investor Relations and market intelligence, to open the conference call. Mr aththod, you may begin your conference.

Speaker 10: Hello and good morning and thank you for joining us on today's call to discuss our first quarter 2022 resultsjoining- me today, our and pandothe, our Chief Executive Officer. firster and sh and addressressco, our Chief Financial Officer. The following discussion will include forward-looking statements. thomments are not a statement of fact, including projections of future performance are considered. Forward looking involves risks and uncertainties. The risks and uncertainties that could cause our actual and operating results differ significantly from our. Forward-looking statements are detailed in our fsec and Canadian cur filing, available on our Investor Relations website, at Investor, at richardro com, as well as ad irand cedarfor. The identification of discussion of non-GAAP financial measures, the most directly comparable GAAP financial measures and the reconciliation between the two C presentation slides, earnings release and Form 10-K , all available on our website.

Sameer Rathod: Hello, and good morning, and thank you for joining us on today's call to discuss our Q1 2022 results. Joining me today are Ann Fandozzi, our Chief Executive Officer, and Sharon Driscoll, our Chief Financial Officer. The following discussion will include forward-looking statements. Comments that are not a statement of fact, including projections of future performance, are considered forward-looking, involve risks and uncertainties. The risks and uncertainties that could cause our actual and operating results to differ significantly from our forward-looking statements are detailed in our SEC and SEDAR filings, available on our investor relations website at investor.ritchiebros.com, as well as EDGAR and SEDAR. For the identification and discussion of non-GAAP financial measures, the most directly comparable GAAP financial measures and the reconciliation between the two, see our presentation slides, earnings release, and Form 10-K, all available on our website.

Speaker 11: I would now like to introduce.

Sameer Rathod: I would now like to introduce Ann Fandozzi. Ann?

Speaker 10: Cam fantasy N.

Speaker 12: Thank you Samir, and good morning to everyone joining our call today.

Ann Fandozzi: Thank you, Samir, and good morning to everyone joining our call today. We drove solid results in the first quarter with 13% GTV growth, 19% service revenue growth, and 54% growth in non-GAAP adjusted operating income. As the unprecedented supply environment continues to drive equipment constraints, these results are a testament to the entire Ritchie Brothers team coming together to serve our customers around the globe, and I see this quarter as early signs of our growth initiatives beginning to bear fruit. Our omni-channel platform is delivering strong outcomes for our customers, with bids per lot and used equipment pricing remaining very strong in the first quarter. We are excited to welcome customers back to our flagship Orlando event, which was a huge success. It was wonderful to celebrate with our customers and continue to drive great results for them.

Speaker 13: We drove solid results in the first quarter, with 13% gtd growth, 19% service revenue growth and 54% growth in non-GAAP adjusted operating income.

Speaker 14: As the unprecedented supply environment continues to drive equipment constraints.

Speaker 15: These results are a testament to the entire richie brothers team coming together to serve our customers around the globe.

Speaker 15: And I see this quarter as early signs of our growth initiatives beginning to bear fruit.

Speaker 16: Our omniichannel platform is delivering strong outcomes for our customers.

Speaker 17: With bids per lot and used equipment pricing remaining very strong in the first quarter.

Speaker 16: We are excited to welcome customers back to our flagship Orlando event, which was a huge success.

Speaker 15: It was wonderful to celebrate with our customers and continue to drive great results for them.

Speaker 18: We are fundamentally changing these types of events to focus more on in-person interactions, building even stronger relationship.

Ann Fandozzi: We are fundamentally changing these types of events to focus more on in-person interactions, building even stronger relationships, and creating an environment where our customers can engage with our entire ecosystem, helping them discover the new Ritchie Bros. and the large array of value-added services which can strengthen their business outcomes. Our transformational journey continues, and I look forward to what we learn together with our customers and how we evolve these events in 2022. Now moving to Euro Auctions. I was very disappointed by the decision taken by the CMA to refer the proposed acquisition to a phase 2 review and respectfully disagree with their very narrow definition of our collective market and resulting views. While we believe the proposed acquisition would have accelerated our strategy, we remain committed to forging ahead in our transformational journey to becoming the trusted global marketplace for insight services and transaction solutions.

Speaker 19: And creating an environment where our customers can engage with our entire ecosystem.

Speaker 15: Helping them discover the new richie brothers and the large array of value-added services which can strengthen their business outcome.

Speaker 15: Our transformational journey continues and I look forward to what we learn together with our customers and how we evolve these events in 2020 -two.

Speaker 12: Now moving to e option.

Speaker 17: I was very disappointed by the decision taken by the CMA to refer the proposed acquisition to a Phase I review and respectfully disagree with their very narrow definition of our collective market and resulting views.

Speaker 13: While we believe the proposed acquisition would have accelerated our strategy, we remain committed to forging ahead in our transformational journey to becoming detrusted global marketplace for insight, services and transaction solutions.

Speaker 13: That said, the transaction will automatically terminate on June twenty-eighth 2022 and we redeemed all the deal contingent notes on May fourth that were held in escrow at Park.

Ann Fandozzi: That said, the transaction will automatically terminate on June 28, 2022, and we redeemed all the deal contingent notes on May 4 that were held in escrow at PAR. We will continue to execute on growth, both through organic investments and key acquisitions, to accelerate our pace in achieving our transformation. Our vision is clear, and we want to give all of you the transparency on our journey. On a quarterly basis, there is a considerable amount of noise, especially in this environment, which is why we want to share our learnings as we go, so you all have the confidence that our strategy is working. To that end, we are hosting an investor event next week on May 18 in Fort Worth.

Speaker 15: We will continue to execute on growth, both through organic investments and key acquisitions, to accelerate our pace in achieving our transformation.

Speaker 15: Our vision is clear and we want to give all of you the transparency on our journey.

Speaker 15: On a quarterly basis. There is considerable amount of noise, especially in this environment, which is why we want to share our learnings as we go, So you all have the confidence that our strategy is working.

Speaker 15: To bed end. We are hosting an investor event next week on May teenth in fortwardth.

Speaker 15: I hope all of you have a chance to listen to the webcast or, if you are interested in attending in person and haven t already RSVP, please contact fam here.

Ann Fandozzi: I hope all of you have a chance to listen to the webcast, or if you are interested in attending in person and haven't already RSVP'd, please contact Sameer. We want to give everyone a more detailed view on the acquisitions we have made, showcase their technologies, and how the pieces fit with our marketplace vision. We will also have time to go into learnings from our accelerate growth initiatives, such as the local yard strategy and sales coverage model. It will be a great event. I hope all of you take the time to listen to our story. Moving to our inventory management system. We continue to make strong progress, and in Q1, we added more organizations to the system than all last year combined, with 103% sequential growth. The KPI we continue to focus on is the number of organizations.

Speaker 13: We want to give everyone a more detailed view on the acquisitions we have made, showcase their technologies and how the pieces fit with our marketplace vision.

Speaker 15: We will also have time to go into learnings from our accelerate growth initiatives, such as the local yard strategy and sales coverage model. It will be a great event. I hope all of you take the time to listen to our story.

Speaker 20: Moving to our inventory management system, we continue to make strong progress and in the first quarter we added more organizations to the system than all last year combined.

Speaker 18: With 103% sequential growth.

Speaker 13: At KPI, we continue to focus on as the number of organizations.

Speaker 17: So as we build out our marketplace functionality, we are able to have scale quickly through deeper and stronger relationships with our customers.

Ann Fandozzi: So as we build out our marketplace functionality, we are able to have scale quickly through deeper and stronger relationships with our customers. After Sharon discusses our financials, I will talk about our outlook, and then we will move to Q&A. And now, over to Sharon.

Speaker 13: After Sharon discusses our financials, I will talk about our outlook and then we will move to qa. And now over to Sharon.

Speaker 21: Thank you, lan. Let me add my welcome to everyone on this call.

Sharon Driscoll: Thank you, Anne. Let me add my welcome to everyone on this call. In Q1, GTV increased 13% with broad strength across all regions. We continue to see very strong contribution from our regional sales teams, somewhat offset by acute supply challenges in our strategic accounts group. Recall that our SAG team services large fleet owners, and these customers are the most impacted by new and used equipment tightness. We continue to see robust increases in mix-adjusted prices of equipment, offset by lower lot volumes and unfavorable mix. We are pleased with Q1 and see this as a very strong result, given OEMs are still facing challenges with production and delivery lead times, and overall supply of used equipment continues to be constrained. Both total reported revenue and service revenue increased 19% compared to last year.

Speaker 22: In the first quarter, cttv increased 13% with broad strength across all regions.

Speaker 23: We continue to see very strong contribution from our regional sales teams, somewhat offset by acute supply challenges in our strategic accounts group.

Speaker 24: Recall that our SAG team services large fleet owners, and these customers are the most impacted by new and used equipment tightness.

Speaker 23: We continue to see robust increases in mix-adjusted prices of equipment, offset by lower lot volumme and unfavorable mix.

Speaker 21: We are pleased with the first quarter and see this as a very strong result, given OEMs are still facing challenges with production and delivery lead times, and overall supply of used equipment continues to be constrained.

Speaker 20: Both total reported revenue and service revenue increased 19% compared to last year.

Speaker 22: On an organic basis. Excluding the impact from smart equiip, total service revenue increased approximately 17% and.

Sharon Driscoll: On an organic basis, excluding the impact from SmartEquip, total service revenue increased approximately 17%. Total service revenue continues to exceed total GTV growth in line with our Evergreen Model. Our other services segment continues to put up robust growth as well, increasing 29% in the quarter and up approximately 15% on an organic basis, excluding SmartEquip revenues. We continue to see strength in Ritchie Bros. Financial Services, growing 71% in the quarter. This growth was partially offset by lower ancillary revenues of logistics, refurbishments, and repair due to lower unit volumes and overall mix of equipment. Our non-GAAP adjusted operating income increased 54% on strong revenue performance, with flow-through to earnings partially offset by higher SG&A costs.

Speaker 22: Total service revenue continues to exceed total gtv growth, in line with our Evergreen model.

Speaker 16: Our other services segment continues to put up robust growth as well, increasing 29% in the quarter and up approximately 15% on an organic basis, excluding sartter Quip revenues.

Speaker 23: We continue to see strength in richie brother's financial services growing 71% in the quarter.

Speaker 22: This growth was partially offset by lower ancillary revenues of logistics with furbishments in repair due to lower unit volumes and overall mix of equipment.

Speaker 22: Our non-gaapage justed operating income increased 54% on strong revenue. Performance was flow through to earnings partially offset by higher SGNA cost.

Speaker 21: It is also important to note that the sale of a bolton yard was completed this quarter and we posted a pretax gain on this transaction of $169 million.

Sharon Driscoll: It is also important to note that the sale of our Bolton Yard was completed this quarter, and we posted a pretax gain on this transaction of $169 million. This gain, in combination with our very strong operational performance, drove our $1.60 reported diluted earnings per share number, generating the highest quarterly earnings results in the company's history. Turning to auctions and marketplaces, ANM service revenue increased 17%, and our take rate, or ANM service revenue as a percentage of total GTV, came in at a robust 13.9% for the quarter. Of note, our Canadian GTV saw strong growth, in part driven by a healthy contribution within our agriculture sector and our on-the-farm auction event. As we have noted in the past, inventory sales tend to be lumpy and driven by consignor preferences.

Speaker 21: This gain, in combination with our very strong operational performance, drove our dollar 60 reported diluted earnings per share number, generating the highest quarterly earnings results in the company's history.

Speaker 20: Turning to auctions and marketplaces, anm service revenue increased 17% and our take rate for anm service revenue as a percentage of total gtv came in at a robust 14% for the quarter.

Speaker 22: Of note. Our Canadian gtv saw strong growth, in part driven by a healthy contribution within our agriculture sector, and are on-the-farm option event.

Speaker 22: As we have noted in the past, inventory sales tend to be lumpy and driven by consigner preferences.

Speaker 21: And in the first quarter inventory sales increased 19%, with strength in the? U's partially offset by lower volumme in Canada.

Sharon Driscoll: In Q1, inventory sales increased 19%, with strength in the US partially offset by lower volumes in Canada. Inventory returns remained strong at 11.7%. Our sales teams are doing a great job finding equipment in this tough equipment supply environment, and overall, we are pleased with our revenue rate performance as both profit on inventory sales and service revenues improved versus prior year. Cost of services plus SG&A was up 9%, with total SG&A increasing 11% compared to last year. Note that cost of services, less the incremental contribution of SmartEquip, would have been roughly flat year-on-year. Total SG&A increased about 11%. However, this includes $5.4 million in share-based payments and $2.3 million in non-recurring advisory, legal, and restructuring costs.

Speaker 24: Inventory returns remains strong at 12%.

Speaker 25: Our sales teams are doing a great job finding equipment in the tough equipment supply environment and overall we are pleased with our revenue rate performance, as both profit on inventory sales and service revenues improved versus prior year.

Speaker 20: Cost of services plus sdna was up 9%.

Speaker 22: With total SGNA increasing 11% compared to last year.

Speaker 22: Note that cost of services L the incremental contribution of smartequiip, would have been roughly flat year-on-year.

Speaker 22: Total fgna increased about 11%. However, this includes five point four million in share-based payments and two point three million in nonrecurring advisory, legal and restructuring costs.

Speaker 21: Once you look at SGNA, Excluding these highlighted items, our core SGNA increased about 8%.

Sharon Driscoll: Once you look at SG&A, excluding these highlighted items, our core SG&A increased about 8%. This increase was primarily driven by investments to fuel our accelerate growth initiatives, such as our new sales coverage model and our new local yard strategy, as well as our partnership with Thoughtworks to advance our modern architecture initiative as we continue our journey to transform to a marketplace. We also saw a cost pickup in travel expenses as the team gets back on the road. We remain very diligent on costs, and we are making prudent investments that unlock the long-term potential of our strategic vision. We will continue to invest for organic growth, build out our technology architecture, which underpins our marketplace strategy, and highlight that we are not immune from current inflationary pressures.

Speaker 21: This increase was primarily driven by investments to fuel our accelerate growth initiatives, such as our new sales coverage model and our new local yard strategy.

Speaker 22: As well as our partnership with thoughtwork to advance our modern architecture initiative as we continue our journey to transform to a marketplace.

Speaker 20: We also saw a cost pickup in travel expenses as the team gets back on the road.

Speaker 24: We remain very diligent on costs and we are making prudent investments that unlock the long-term potential of our strategic vision.

Speaker 23: We will continue to invest for organic growth, builded out our technology architecture which underpinsned our marketplace strategy and highlight that we are not imune from current inflationary pressures.

Speaker 22: As such, we expect our fdna in the second quarter of 2022 X share based payment, onetime nonrecurring charges to be between 128 to $133 million.

Sharon Driscoll: As such, we expect our SG&A in Q2 2022, ex share-based payments, one-time non-recurring charges, to be between $128 to 133 million. Our cash flow remains very robust, with 12 trailing months operating free cash flow of $446 million, which is 193% of our non-GAAP adjusted net income, delivering well above our stated Evergreen Model target. At the end of the quarter, our adjusted net debt to trailing 12 months non-GAAP adjusted EBITDA reduced to 0.5 times, as we used proceeds received from the Bolton transaction to repay outstanding draws on our revolving credit facility. Subsequent to quarter end, on 4 May, we redeemed at par our deal contingent notes associated with the Euro Auctions transaction with accrued interest to that date.

Speaker 20: Our cash flow remains very robust, with 12 trailing month operating free cash flow of four hundred and forty-six million.

Speaker 22: Which is 193% of our non-GAAP adjusted net income, delivering well above our stated evergre model target.

Speaker 21: At the end of the quarter, our adjusted net debt to trailing 12 -month non-GAAP adjusted EBITDA reduced to zero-point prict ton.

Speaker 21: As we use proceeds received from the bolton transactions to repay outstanding draws on our revolving and credit facilities.

Speaker 23: And subsequent to quarter end. On may fourth we redeemed at car our deal contingent note associated with the euro auions transaction with accrued interest to that date.

Speaker 24: The modeling purposes. We currently project interest expense of $18 million in the second quarter, with a run rate of approximately 12 million starting in the third quarter of 2022, BAs on currently forecasted organic operating needs.

Sharon Driscoll: For modeling purposes, we currently project interest expense of $18 million in Q2, with a run rate of approximately $12 million starting in Q3 of 2022, based on currently forecasted organic operating needs. Overall, a very good quarter across all financial dimensions. With that, I will hand it back over to Anne.

Speaker 20: Overall a very good quarter across all financial dimensions, and with that I will hand back over to Anne.

Speaker 12: Thank you, Sharon. Now turning to our current trends and outlook. There's no change in our view here.

Ann Fandozzi: Thank you, Sharon. Now turning to our current trends and outlook, there is no change in our view here. The environment remains very tight for equipment for all the supply chain reasons which continue to persist. That said, we see this environment as a point in time and consider it outside of our control. Utilization levels are high, and equipment is being used and continues to age. This pent-up supply will certainly need disposition services in the future. Until that time, we are focused on growth in today's constrained environment by focusing on what we can control. With our teams providing the very best omni-channel solutions for our customers..., continuing to test, learn, and invest in growth initiatives, and executing on our vision to becoming the global trusted marketplace for insights, services, and transaction solutions. And with that, operator, please open the line for questions.

Speaker 15: The environment remains very tight for equipment for all the supply chain reasons which continue to persist.

Speaker 16: That said, we see this environment as a point in time and considerateit outside of our control.

Speaker 16: Utilization levels are high and equipment is being used and continues to age.

Speaker 16: This pent-up supply will certainly need disposition services in the future.

Speaker 13: Until that time, we are focused on growth in today's constrained environment by focing on what we can control.

Speaker 26: With our teams providing the very best omniichannel solutions for our customers.

Speaker 16: Continuing to test, learn and invest in growth initiatives.

Speaker 17: And executing on our vision to becoming the global trusted marketplace for insights, services and transaction solution.

Speaker 17: And with that operator. Please open the line for questions.

Speaker 9: Thank you, Ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press Star, followed by one under touchstone phone.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star, followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Gary Prestopino, Barrington Research. Gary, please go ahead.

Speaker 8: You will hear a three tonone prompt acknowledging your request and your questions will be pulled in the order they are received.

Speaker 8: Should you wish to decline from the Polling process, please press Star, followed by two.

Speaker 8: If you are using a speaker phone, Please lift a handset before pressing any keys.

Speaker 8: one moment. Please see your first question.

Speaker 3: Your first question comes from Gary pres subipino, barrington research. Gary, Please gu. Thank you, good morning ay.

Gary Prestopino: Hi. Thank you. Good morning. Hey, Ann, you mentioned that nothing's really changed out there with the inventory situation, with the new and used equipment coming through the channels.

Speaker 27: And you mentioned that nothing's really changed out there with the inventory situation, with the new and used equipment coming through the channels.

Speaker 3: Hi Gary. Yeah, So we're seeing a similar tightness. So I just want to make sure we peal the onion. When I say nothing is unchanged, I mean kind of the general supply environment out there. It's still tight and, you know, not a very clear end in sight, even though we obviously know there will be an end at some point when the my jam get getit up. That's a Star P? P to. You know, the initives our teams are taking on, both on the growth initiatiative side, the way we're executing in order to really, you know, make the most of the environment as it is, and you saw that in our financials.

Ann Fandozzi: Hi, Gary. Yep. So we're seeing a similar tightness, so I just want to make sure we peel the onion. When I say nothing is unchanged, I mean, kind of the general supply environment out there. It's still tight, and, you know, not a very clear end in sight, even though we obviously know there will be an end at some point, when the supply chain catches up. That's in stark contrast to, you know, the initiatives our teams are taking on, both on the growth initiative side, the way we're executing in order to really, you know, make the most of the environment as it is, and you saw that in our financials.

Speaker 28: Right So were you a little bit surprised at the growth of gtv in the quarter. I mean there was some shifting of an auction from Q.

Gary Prestopino: Right. So were you a little bit surprised at the growth of GTV in the quarter? I mean, you know, there was some shifting of an auction from Q2 to Q1 in Nova Scotia. I'm not sure how big that auction normally is. And then you had a new site that came up. I mean, that's just really indicative of strong market share gains, unless I'm reading it wrong.

Speaker 28: To the Q1 in Nova Scotia and that share how big that auction normally is. And then you had a new site that came up. I mean that's just really indicative of a strong market share gain. Almost I'm reading it wrong.

Speaker 20: You are reading it right here, So I would say, maybe surprised is not a word. I I think the trajectory that we've been on, if you guys take a step.

Ann Fandozzi: You are reading it right, Gary. So I would say, maybe surprised is not the word. I think the trajectory that we've been on, if you guys take a step, is up and to the right, unquestionably. You know, some quarters that shows up much stronger, some quarters like Q4, a little bit less, but still up and to the right. I think the notable trends, though, if you look over time, exactly, as you say, signify just a tremendous performance by this team in this environment. And again, we view that largely out of our control. The nice thing is that we're putting all of the pieces in place.

Speaker 17: Is up into the right, unquestionably. You know some quarters that shows up much stronger, some quarters like you for a little bit less, but still up into the right. I think the notable trend those, if you look over time, exactly as you say, signify just a tremendous performance by this team in this environment and again, we view that largely out of our control. The nice thing is that we're putting all of the pieces in place. They're already bearing fruit in this environment. So you can extrapolate that when the environment turns, the local yard, the feet on the Street, all of the investments we're making- you're seeing them in the's G N, A- are bearing through today and will bear that much more fruit as the environment turns.

Ann Fandozzi: They're already bearing fruit in this environment, so you can extrapolate that when the environment turns, the local yards, the feet on the street, all of the investments we're making, you're seeing them in the SG&A, are bearing fruit today and will bear that much more fruit as the environment turns.

Speaker 9: Thank you.

Gary Prestopino: Thank you.

Speaker 3: Thank you, Ladies and gentlemen, as a reminder, should you have a question, please press Star one undertouchstone phone.

Operator: Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star one on your touchtone phone. Your next question comes from Kevin Condon, Baird. Kevin, please go ahead.

Speaker 8: Your next question comes from Kevin conddon Baird. Kevin, Please go ahead.

Speaker 29: higood morning. thingss are taken. My question I wanted to ask- I think the filing mentioned some higher BU fee rates- implemented it in 2021 and early in 2022. I mean we saw some impact from that. Maybe when we looked at the strong service revenue relative to G TV growth, can that metric hold potentially, I guess increase, you know, as those fees are fully baked in Q2 and beyond?

[Analyst] (Baird): Hi, good morning. Thanks for taking my question. I wanted to ask, I think the filing mentioned some higher buy fee rates implemented in 2021 and early in 2022. I mean, we saw some impact from that, maybe when we looked at the strong service revenue relative to GTV growth. Can that metric hold or, you know, potentially, I guess, increase, you know, as those fees are fully baked in in Q2 and beyond?

Kevin Codon: Hi, good morning. Thanks for taking my question. I wanted to ask, I think the filing mentioned some higher buy fee rates implemented in 2021 and early in 2022. I mean, we saw some impact from that, maybe when we looked at the strong service revenue relative to GTV growth. Can that metric hold or, you know, potentially, I guess, increase, you know, as those fees are fully baked in in Q2 and beyond?

Speaker 3: Hi Kevin an. I want to make sure that I'm understanding. No question, there was an SGNA impact on kind of advisers to us when you think about Ma and all of the things we've been through. And then there is our service revenuue.

Ann Fandozzi: Hi, Kevin, it's Ann. I want to make sure that I'm understanding your question. There was an SG&A impact on kind of advisors to us when you think about M&A and all of the things we've been through, and then there is our service revenues, when-

Speaker 30: When you provide the insight to your Please.

[Analyst] (Baird): Yes.

Kevin Codon: Yes.

Ann Fandozzi: We provide the insights. Yep, please.

Speaker 31: Yes I think the filing- And just mentioned that you leved buyer fee for for your services which may be benefited service revenue relative to gtv.

[Analyst] (Baird): Yeah, I think the filing had just mentioned that you raised a buyer fee for your services, which maybe benefited service revenue relative to GTV. I want to say service revenue as a percentage of GTV was 17% in a quarter. Is that correct?

Kevin Codon: Yeah, I think the filing had just mentioned that you raised a buyer fee for your services, which maybe benefited service revenue relative to GTV. I want to say service revenue as a percentage of GTV was 17% in a quarter. Is that correct?

Speaker 29: I want to say service revenue. Was service revenue as a percentage of D TV with 17% in the quarter? Is that correct?

Speaker 15: That is correct. ok, got it. So I understand. Yeah, So when you think about when we perform our services, I'll start and then'alterate it over to share in. You know we charge how we- we're a marketplace right So large- we charge fees for inside services, you know, financial services and then obviously our transaction solutution services. When we think about that fee structure, we're always cognizant of the competitive landscape and we've talked about pricing before on these calls that you know, with something historically the company really didn't do much of, and now we're really looking at the competitive market and understanding kind of the services we provide. These of the you know what, what the market is charging for those services- number 1, number 2: there's a nuance of the fact that we have pricing tiers and share in has spoke about this before- And as the equipment prices higher, we have to adjust tiers. It shows us pricing, but we adjust tiers to make sure that we actually are' making less money for the same services we provide. So there's kind of a nuance of that. So there's really two sides of the way that we look at pricing: ensuring that you know that our tiers are staying as they're intending to be, as well as kind of a competitive marketplace position of that. So in fact we review it on a regular basises, with pricing doing what it's doing more than you know, more than once a year to ensure that we're competitive, both on up and on down. Just, you know, making sure that we're keeping pace with the market.

Ann Fandozzi: That is correct. Yep. Okay, got it. So I understand. Yep. So when you think about when we perform our services, I'll start, and then I'll turn it over to Sharon. You know, we charge how we-- we're a marketplace, right? So largely, we charge fees for insight services, you know, financial services, and then obviously our transaction solution services. When we think about that fee structure, we're always cognizant of the competitive landscape, and we've talked about pricing before on these calls that, you know, it's something historically the company really didn't do much of, and now we're really looking at the competitive market and understanding kind of the services we provide vis-à-vis, you know, what, what the market is charging for those services, number one.

Ann Fandozzi: Number two, there is a nuance of the fact that we have pricing tiers, and Sharon has spoke about this before. As the equipment price is higher, we have to adjust tiers. It shows us pricing, but we adjust tiers to make sure that we actually aren't making less money for the same services we provide. So there's kind of a nuance of that. So there's really two sides of the way that we look at pricing, ensuring that, you know, that our tiers are staying as they're intending to be, as well as kind of a competitive marketplace position of that.

Ann Fandozzi: So in fact, we review it on a regular basis, with pricing doing what it's doing more than, you know, more than once a year, to ensure that we're competitive both, on up and on down, just, you know, making sure that we're keeping pace with the market. Sharon, anything to add?

Speaker 17: sha an anything to add.

Speaker 32: I think only this is something that we do look at on a regular basis and I think the only impact this year that's a bit different than prior year. With prior year the increase was effective kind of in the March time plan and this year the fees changed effective January first. So that's why you end up with a bit of a double impact of the growth from the prior year fee change as well as the current year fees. But to echo and point, this is really just to reflect the service and value that we are driving, particularly for the buyers.

Sharon Driscoll: I think only this is something that we do look at on a regular basis, and I think the only impact this year that's a bit different than prior year was prior year, the increase was effective kind of in the March timeframe, and this year the fees changed effective 1 January. So that's why you end up with a bit of a double impact of the growth from the prior year fee change as well as the current year fees. But to echo Ann's point, this is really just to reflect the service and value that we are driving, particularly for the buyers.

Speaker 33: Okay that helps a lot would be with the timing insight there, Thank you. Mean if I could ask one quick follow-up on a few weeks ago you had a press release announcing that a European equipment financing firm selected in your asset solutions to ason that that evaluation. Just wanted to ask if that was one of the larger wins for our Bass so far. There are other examples you could point to. If the services potentially a proof of concept or just what, any more detail on what that agreement would look like in terms of the services provided or you know how you monetize it?

[Analyst] (Baird): Okay, that helps a lot with the timing insight there. Thank you. And then if I could ask one quick follow-up. A few weeks ago, you had a press release announcing that a European equipment financing firm had selected your asset solution to use in its asset valuation. Just wanted to ask if that was, you know, one of the larger wins for RBAS so far, if there are other examples you could point to, you know, if this serves as, you know, potentially a proof of concept, or, you know, just what any more detail on what that agreement would look like in terms of the services provided or, you know, how you monetize it?

Kevin Codon: Okay, that helps a lot with the timing insight there. Thank you. And then if I could ask one quick follow-up. A few weeks ago, you had a press release announcing that a European equipment financing firm had selected your asset solution to use in its asset valuation. Just wanted to ask if that was, you know, one of the larger wins for RBAS so far, if there are other examples you could point to, you know, if this serves as, you know, potentially a proof of concept, or, you know, just what any more detail on what that agreement would look like in terms of the services provided or, you know, how you monetize it?

Speaker 16: Yes Kevin. So when me start, and then I'm going to pass it over to Matt actuallyley, our Chief marketing Officer, we were so proud that again, when you start seeing the green shoots, whether it's the defeat on the Street initiative, whether it's the local yards, as we've been talking about, kind of our insight services, piece of our offering we are very, very proud of- that is starting to take hold as well. So with that Matt, you want to shed some light on it.

Ann Fandozzi: Yeah, Kevin, so let me start, and then I'm going to pass it over to Matt Ackley, our Chief Marketing Officer. We were so proud that, again, when you start seeing the green shoots, whether it's, you know, the Feet on the Street initiative, whether it's the local yards, as we've been talking about kind of our insight services, piece of our offering, we are very, very proud that that is starting to take hold as well. So with that, Matt, you want to shed some light on it?

Speaker 34: Sure this was a then mentioned insights. Our key part, our total offering- and this was this- was primarily a data deal with that European Bank. Many of the banks over there use our data to assess the quality of their portfolios. The there's some European regulations related to what happened in 2008, So it's kind of the way to think about. It is a tip of the spirit that if we're able to go in and offer our data, then we also are able to go in and provide other services on top of that based on our technology, such that if and when in the future they need to dispose of assets, they are on the platform, it's ready to go and it just becomes- suffice it to say, a click of the button and then some of those assets can flow into our transactional domains. But this particular deal was using the insights piece of our vass platform to build that initial relationship with the bank.

Matt Ackley: Sure, yeah. This was a, you know, as Ann mentioned, insights are a key part of our total offering, and this was primarily a data deal, with that European bank. Many of the banks over there use our data to assess the quality of their portfolios vis-a-vis, you know, there are some European regulations, related to what happened in 2008.

Matt Ackley: So it's kind of the way to think about it as a tip of the spear is that, you know, hey, if we're able to go in and offer our data, then we also are able to go in and provide other services on top of that based on our technology, such that if and when in the future, you know, they need to dispose of assets, you know, they are on the platform, it's ready to go, and it just becomes, you know, suffice it to say, a click of a button, and then some of those assets can flow into our transactional domains. But this particular deal was using the insights piece of our RBAS platform to build that initial relationship with the bank.

Speaker 3: Great thanks for the color, Thank you.

[Analyst] (Baird): Great. Thanks for the color there. Thank you.

Kevin Codon: Great. Thanks for the color there. Thank you.

Speaker 8: Thank you, Ladies and gentlemen, as a reminder, should you have a question, please press Star one on your touchstone phone.

Operator: Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star one on your touch tone phone. Your next question comes from Michael Doumet, Scotiabank. Michael, please go ahead.

Speaker 3: Your next question comes from Michael dme Scotia Bank. Michael, Please go ahead.

Speaker 35: higood morning everybody. Great quarter obviously. Just to go back to the fee increase, I'm just wondering how to think about it. You know whether that's essentially moving on. You know what we are seeing is stronger buyer demand here and thinking forward at some point you know a supply essentially catches up to demand. I'm wondering how we should think about the sustainability of the fee increase and maybe you know the thinking is to maybe the commission increases, maybe supply catches up versus demand.

Michael Doumet: Hey, good morning, everybody. Great quarter, obviously. Just to go back to the fee increase, I'm just wondering how to think about it, you know, and whether that's you essentially moving on, you know, what we are seeing as stronger buyer demand here. And thinking forward, at some point, you know, as supply essentially catches up to demand, I'm wondering how we should think about the sustainability of the fee increase and maybe, you know, the thinking as to maybe a commission increase, maybe supply catches up versus demand.

Speaker 13: Yeah Michael hy advan. ok, let me, let me shedlight, and this is why I think the way to think about the conversation is less about season fee increases and more about- I'll just take us back to the Evergreen model commitment we made to ourselves, to our investors, to all of you, and how that actually comes to.

Ann Fandozzi: Yeah, Michael. Hi, it's Ann. Okay, let me shed light, and this is why I think the way to think about this conversation is less about fees and fee increases and more about I'll just take us back to the Evergreen Model commitment we made to ourselves, to our investors, to all of you, and how that actually comes to be. So, when we rolled out the Evergreen Model, which, you know, was December 2020, and we kind of highlighted the transformation to the marketplace, we made the following commitments. We said: Look, GTV, as strong as Ritchie Bros. is, GTV has only grown very low single digits for quite some time. Our commitment is get that to grow middle single digits, high single digits, low double digits, kind of keep that pace going.

Speaker 36: So when we rolled out the Evergreen model, which you know was December 20- 20, and we kind of highlighted the transformation to the marketplace, we made the following commitments. We said: look gtv, as strong as richyou brothers is. gtv has only grown very low single digits for quite some time.

Speaker 37: Our commitment is get that to grow: middle single digits, high single digits, low double digits, kind of keep that pace going.

Speaker 15: We further committed to driving our services revenue significantly above the underlying gtv like, consistent with this marketplace vision that we would obviously offer services on the underlying gtv. That's how we make money. But we will also go above and beyond, dipping much further into the $3 billion of transactions, 9% of which occur outside of the auction channel. So we were very, very clear about that. So what you? What you will always see from us as we deliver right. So again just.

Ann Fandozzi: We further committed to driving our services revenue significantly above the underlying GTV, right? Consistent with this marketplace vision, that we would obviously offer services on the underlying GTV. That's how we make money. But we would also go above and beyond, dipping much further into the $300 billion of transactions, you know, 90% of which occur outside of the auction channel. So we were very, very clear about that. So what you, what you will always see from us as we deliver, right? So again, just as a reminder to everybody, it's not about one quarter, it's not about two quarters. It's about a constant drumbeat of up and to the right, as we drive this vision forward.

Speaker 17: As a reminder to everybody, it's not about one quarter, it's not abouttwo quarters, it's about a constant drum. Be up into the right as we drive this vision forward. And so you will constantly see services revenue outpacing and then the growth of that pace. This is what you're going to hold us to. Over time G t V is going to be growing much faster than it has before that. The services revenue will be growing faster still and it's going to come from, you know, lots of way. When you think about the fees that we charge for the underlying G t transactions again, think of those as marketplace based and as the market EV involall. Those fees will get in line. Our commitment however, is really the way to think about your modeling. You, the G t growth rate was low, single digit. Our commitment is mid than high, than double digit. The services revenue is a, is above G t and will continue to grow at a faster pace than G t v. kind of widing. Think about a packman. It's up to the right and then even steeper on the other side. That's really the way as you think about your modeling. It's less about a point of time and if any, you know again, we adjusted the tiers up because pricing is up. That would have only allowed us effectively to just kind of keep pace, if you will. But then there's you know kind kind of a market dynamic point of you to our pricing. That just the commitment remainance and we are FOC. We are later focused on driving growth, organic driving M A. if it accelerates our organic growth and then we can grow on it and then really evolving to the marketplace and the way that you guys will see that play out that the servic revenue growth rate will be significantly above the G t D growth rate. So I hope that kind of answers the kind of modeling side of it. I don't know if you, if there's something more specific as it relates to this steer share and you want to that.

Ann Fandozzi: You will constantly see services revenue outpacing, and then the growth of that pace; this is what you're going to hold us to over time. GTV is going to be growing much faster than it has before, but the services revenue will be growing faster still. And it's going to come from, you know, lots of ways. When you think about the fees that we charge for the underlying GTV transactions, again, think of those as marketplace based. And as the market ebbs and falls, those fees will get in line. Our commitment, however, is really the way to think about your modeling is the GTV growth rate was low single digits. Our commitment is mid, then high, then double digit. The services revenue is above GTV and will continue to grow at a faster pace than GTV, kind of widening.

Ann Fandozzi: Think about a Pac-Man. It's up to the right and then even steeper on the other side. That's really the way as you think about your modeling; it's less about a point in time and if any, you know, again, we adjusted the tiers up because pricing is up. That, that would have only allowed us effectively to just kind of keep pace, if you will. But then there's, you know, kind of a market dynamic point of view to our pricing. But just the commitment remains, and we are focused, we are laser focused on driving growth, organic, driving M&A, if it accelerates our organic growth, and then we can grow on it, and then really evolving to this marketplace.

Ann Fandozzi: The way that you guys will see that play out is that the services revenue growth rate will be significantly above the GTV growth rate. I hope that kind of answers the kind of modeling side of it. I don't know if there's something more specific as it relates to the tier, Sharon, you wanted to add?

Speaker 3: No I think that was fine.

Kari Taylor: No, I think that was fine.

Sharon Driscoll: No, I think that was fine.

Speaker 38: Yeah like that was great color and, you know, obviously great result the quarters. So I was helpful. As the second question around G t V in Canada that was up plus to 50% in the quarter. Obviously very nice. So I wondering if you can, you know, maybe break that down a little bit. For us it looks like there was a large contributions from you know shift in the calendar. Ag look like it go was pretty strong across the Board, including international. Just woning, how to think about the sustainability of the G TV there and to me for the balance of the year as well.

Michael Doumet: Yeah, look, that was great color and, you know, obviously great result in the quarter, so that was helpful. The second question's around GTV in Canada. That was up close to 50% in a quarter, obviously very nice. So wondering if you can, you know, maybe break that down a little bit for us. It looks like there was a large contribution from, you know, a shift in the calendar. Ag looked like it was pretty strong across the board, including international. So just wondering how to think about the sustainability of that GTV there, and maybe for the balance of the year as well.

Speaker 16: Yes So let me start, and then I'm going to turn it over to Kerry Taylor, our Chief revenue Officer.

Ann Fandozzi: Yeah. So let me start, and then I'm going to turn it over to Kari Taylor, our Chief Revenue Officer. Canada had a fundamental shift during COVID, and you saw it in our really ag business. And the fundamental shift was online and app, where historically, when we would have to do on-farm transactions, they would have to be large, large, in-person auctions. They would be at the mercy of weather, candidly. Canada are not known for its balmy weather in early months of the year. And so there was kind of a natural throttling of growth. Through COVID, our kind of leaning in and investment in our technology, we were able to shift those transactions, largely online, opening up the calendar for the Canada team, opening up the strength of those transactions and the resulting pricing.

Speaker 39: Canada had a fundamental shift during colvid and you saw it in our really ad business.

Speaker 15: And the fundamental shift was online and tell where. Historically, when we would have to do on farm transactions, they would have to be large, large in person, au. They would be at the mercy of weather and ably Canada and not known for balmy weather in early months of the year, and so there was kind of a natural throtling of growth. Through coed and and our kind of leaning in an investment in our technology, we were able to shift those transactions largely online, opening up the calendar for the Canada team, opening up the strength of those transactions and the resulting pricing. It has been incredible- and we see it very starting in Q1 in canada- lots and lots of things the thecanadian team is doing right. That is the most notable where the transition to online has just onlock that market in a way that we never could have the before. Let me pause here and carry anything to that.

Ann Fandozzi: It has been incredible, and you see it, very starkly in Q1 in Canada. Lots and lots of things the Canadian team is doing right. That is the most notable, where the transition to online has just unlocked that market, in a way that we never could have before. Let me pause here, and Kari, anything to add?

Speaker 40: Thanks San. I think also she. We're calling out the steady progress of our sales initiatives.

Kari Taylor: Thanks, Anne. I think also, we're calling out the steady progress of our sales initiatives, which is really both a combination of the new coverage model and local yards. An example of the local yards is just really strong growth out of Australia, driven by both frequency and having new geography to sell. I'll be going much more deeper into the discussion of sales coverage and local yards next week at Investor Week. Lots of learnings, things we're starting to scale, and even further tests we're taking on.

Speaker 41: Which is really both a combination of the new coverage model and local yards, and an example of the local yards is just really strong growth out of Australia, driven by both frequency and having new geography to sell. I'll be going much more deeper into the discussion of sales coverage and lo yard next week at Investor week. Lots of learnings, things were starting to scale and even further tests we're taking on.

Speaker 3: Thank you, careerry.

Ann Fandozzi: Thank you, Kari.

Speaker 9: Yes thanks to the answ guys really look, the growth initiatives are working here.

Michael Doumet: Yep, thanks for the answers, guys. Really looks like the growth initiatives are working here.

Speaker 9: Thank you. Your next question comes from seabatkhan. R B, C sabat. Please go ahead.

Operator: Thank you. Your next question comes from Sabahat Khan, RBC. Sabahat, please go ahead.

Speaker 42: All great thanks in the morning. I guessjust on one of the earlier comments around you where the growth could come from in the future, what your balance sheet, where it is that now and no longer pursuing your options, I guess. How are you thinking about capital location I maybe you can touch on, know the type of and you might be trinterested in at this point.

[Analyst] (RBC Capital Markets): All right, great. Thanks, and good morning. I guess just on the, one of the earlier comments around, you know, where the growth could come from in the future, with your balance sheet, where it is at now, and no longer pursuing your options, I guess, how are you thinking about capital allocation? And maybe if you can touch on, you know, the type of M&A you might be interested in, at this point.

Sabahat Khan: All right, great. Thanks, and good morning. I guess just on the, one of the earlier comments around, you know, where the growth could come from in the future, with your balance sheet, where it is at now, and no longer pursuing your options, I guess, how are you thinking about capital allocation? And maybe if you can touch on, you know, the type of M&A you might be interested in, at this point.

Speaker 16: Yes let me start, and then I'm going to turn it over to Sharon. So what we have set all along is that we're on a journey to transforming to a marketplace.

Ann Fandozzi: Yeah, let me start, and then I'm going to turn it over to Sharon. So, you know, what we have said all along is that, you know, we're on a journey to transforming to a marketplace. When we think of M&A, and we have a very robust pipeline, it is about a single word, which is acceleration. You know, is there, are there M&A targets out there that would accelerate our journey? If yes, then we click down, and this is just to share with you how we look at M&A. We then click down, and we say, "Look, there are two things that we need from any business that we would look to acquire." The first is, we need a healthy business.

Speaker 15: When we think of ea- and we have a very robust pipeline- it is about a single word, which is acceleration. You know is are there EA targets out there that would accelerate our journey? If yet, then we click down, and this is just a share with you how we look at EA. We then click down and we say look, there are two things that we need from any business that we would look to acquire. The first is we need a healthy business.

Speaker 15: We need a business that's strong, that we believe in the underlying growth potential of we love the management team. This is- we can certainly see it with rousees smart equiip. It needs to really need a very, very high hurdle for us to say okay, this is an interesting business.

Ann Fandozzi: We need a business that's strong, that we believe in the underlying growth potential of. We love the management team. This is, you know, we can certainly see it with Rouse and SmartEquip. It needs to really meet a very, very high hurdle for us to say, "Okay, this is an interesting business." On the other side, this is as it relates to accelerate. We need to ensure that there is an acceleration that that business and that team can provide to the broader ecosystem of Ritchie Brothers and really for where we're headed in the marketplace. So as an example, Rouse, very healthy business. You know, double-digit growth rates continuing. We can actually bolster those. That's great. On the other side, we're already seeing the benefit of Rouse, for example, with Ritchie Brothers Marketplace-E.

Speaker 18: On the other side- and this is doesn't relate to accelerate- we need to ensure that there is an acceleration that that business and that team can provide to the broader ecosystem of riching brothers and really for where we're headed in the marketplace. So, as an example, ral- very healthy business, you know the double digit growth rate continuing. We can actually bolster those. That's great. On the other side, we're already seeing the benefit of ral, for example with riching brothers marketplace e. So just as a reminder, that is a reserved option that we run the. It's not about whing a bunch of assets, it's about those assets transacting and we call that transaction ackillerate.

Ann Fandozzi: So just as a reminder, that is a reserved auction that we run. It's not about listing a bunch of assets, it's about those assets transacting, and we call that transaction a kill rate. We have applied the Rouse analytics, much like other Rouse customers, to our MPE functionality, driving the kill rate significantly higher than before the acquisition. And again, you see that in the flow through to our growth. So it's just an example of how we look at M&A. It has to be very, very strong businesses, and then they have to really deliver something for the Ritchie Brothers ecosystem today, like Rouse has done, or in the near future, like SmartEquip will do. So I will pause here saying we have a very robust M&A pipeline that kind of fits those trajectories.

Speaker 36: We have applied the rouse analytics much like other rouse customers.

Speaker 18: To our MP functionality, driving the killeryate significantly higher than before the acquisition, and again you see that in the flow through to our growth. So it's just an example of how we look at M A. it has to be very, very strong businesses and then they have to really deliver something for the riching brother ecosystem today, like rales has done, or in the near future, like smarta P? ple do, So I will. I will pause here saying we have a very robust mman, a pipeline that kind of fits those trajec es and, given our leverage ratio, we certainly have the optionality to pursue them as they as they come up, but chair in anything to add.

Ann Fandozzi: And, given our leverage ratio, we certainly have the optionality to pursue them as they come up. But Sharon, anything to add?

Speaker 32: Yes I think. I think what I would add is again, we were incredibly disappointed that we had to withdraw from the euro transaction, but really the big takeaway from that is the markets are so receptive that the credit markets and our bank partners have been so receptive to our growth ideas and the growth potential of this business. Our balance sheet is in fantastic shape shape. It's just poised to be able to support both organic and in organic opportunities that come our way. And so, although we're disappointed that we were not able to complete that transaction, as they and said, we are looking at alternate ways to be able to continue to deliver on our growth strategy and the markets are very supportive and we'll give us access to capital to think that.

Sharon Driscoll: Yeah, I think, I think what I would add is, you know, again, we were incredibly disappointed that we had to withdraw from the Euro transaction. But, you know, really the big takeaway from that is the markets are so receptive, that the credit markets, and our bank partners have been so receptive to our growth ideas and the growth potential of this business. Our balance sheet is in fantastic shape. It's just poised to be able to support both organic and inorganic opportunities that come our way. And so although we're disappointed that we were not able to complete that transaction, as Anne said, you know, we are looking at alternate ways to be able to continue to deliver on our growth strategy. And the markets are very supportive, and will give us access to capital to do that.

Speaker 3: Thanks for that color. If I could just may have one morefollowoff on the emmanence side, I guess. So your off is obviously a larger transactions added. You know similar type of capabilities which you have already. What was that from your perspective? Or one-up, given its geographic presence, or could your pipeline include other similar sort of option that's more, just tail up? We need more caping this geography or this type of or this channel that we're not in, or is it more things like a route we should expect going forward, maybe just things that in or more technology oriented?

[Analyst] (RBC Capital Markets): All right. Thanks for that color. And if I could just maybe have one more follow-up on the M&A side, I guess. So Euro Auctions is obviously a larger transaction, added, you know, similar type of capabilities to what you have already. What was that, from your perspective, a one-off, given its geographic presence, or could your pipeline include other similar sort of auction assets? More just, hey, look, we need more people in this geography or this type of, or this channel that we're not in. Or is it more things like Rouse we should expect going forward? Maybe just things that, you know, are more technology oriented.

Sabahat Khan: All right. Thanks for that color. And if I could just maybe have one more follow-up on the M&A side, I guess. So Euro Auctions is obviously a larger transaction, added, you know, similar type of capabilities to what you have already. What was that, from your perspective, a one-off, given its geographic presence, or could your pipeline include other similar sort of auction assets? More just, hey, look, we need more people in this geography or this type of, or this channel that we're not in. Or is it more things like Rouse we should expect going forward? Maybe just things that, you know, are more technology oriented.

Speaker 18: Yes So let me start, and then I'm going to turn it over to Jim kesler, our President and Chief Operating Officer. I think the question you're asking is very insightful, in that there's always an end to the acquisition.

Ann Fandozzi: Yeah. So let me start, and then I'm going to turn it over to Jim Kessler, our President and Chief Operating Officer. I think the question you're asking is very insightful in that there's always an and to the acquisition. So, on the surface, you know, Euro Auctions would give us a bigger footprint in Europe, obviously. And again, right, scale, all of the things that went with it, made a lot of sense. But the second part of it is equally important, and that is that it offers-- it offered us, kind of unique capabilities. And Euro Auctions functioned on a sourcing model, one we've learned from and, and, and we're gonna be taking forward. But it's important to understand that there's plenty of things to buy out there, but we're looking for that twofer every time.

Speaker 15: So on the surface, you know, your auctions would give us a bigger footprint in Europe obviously, and again, right scale, all of the things that went with it made a lot of sense. But the second part of it is equally important and that is that it offers. It offered us kind of unique capabilities and your auctions functions on a sourcing model when we've learned from and we're going to be taking forward. But it's important to understand that there's plenty of things to buy out there, but we're looking for that to for every time. We're looking for a very good business, but we're looking for something that will enhance our capabilities geographically selling model, So on and so forth. Let me pause here and turn it over to Jim.

Ann Fandozzi: We're looking for a very good business, but we're looking for something that will enhance our capabilities geographically, selling models, so on and so forth. Let me pause here and turn it over to Jim.

Speaker 43: And thank you so much. No, and I think it's a great question. So to and point and two parts: So definitely auions and auction transaction.s when there's opportunity, just like euro, in a certain area or region of a country, we definitely want to look at those and be opportunistic when we have the chance to do it. So 100% yes, there could be other auction players that fit the need that we have today. And then the second thing with the marketplace, when we look at the potential partner and think about ral marart, equip and richie brothers financial services, you know they're very complementary to an auction transaction, but the unique thing that the each have is an ability to generate revenue outside of that auction transaction. And think about Richard brothers financial services. So you know it works great when someone's buing a piece of equipment with us. But also there's a second and third betterder, and we might not have that equipment dispospose of it the time, but they're going to go out and find that equipment someone somewhere else and they can bring there lot. You know they're line a credit with them and by that a piece of equip and we're still finaningin that on their behalf. And the same thing with insights and parts and services and other things that we would look to buy inside of the marketplace. We will have a similar characteristic where they really complement what we do today inside of auction, but also we'll have an ability to generate a revenue stream outside of just richyour brothers at the same time. So that's kind of the path on right now.

Jim Kessler: Hey, Ann, thank you so much. No, and I think it's a great question. So to Ann's point, in two parts. So definitely, auctions and auction transactions, when there's opportunity, just like Euro in a certain area or region, of a country, we definitely want to look at those and be opportunistic when we have the chance to do it. So 100%, yes, there could be other auction players that fit the need that we have today. And then the second thing with the marketplace, when we look at a potential partner and, and think about Rouse, SmartEquip and Ritchie Bros. Financial Services, you know, they're very complementary to an auction transaction. But the unique thing that they each have is an ability to generate revenue outside of that auction transaction. And think about Ritchie Bros. Financial Services.

Jim Kessler: So, you know, it works great when someone's buying a piece of equipment with us, but also there's a second and third bidder, and we might not have that equipment to dispose of at the time, but they're gonna go out and find that equipment somewhere else, and they can bring their line of credit with them and buy that piece of equipment, and we're still financing that on their behalf. And the same thing with insights and parts and services and other things that we would look to buy inside of the marketplace will have a similar characteristic, where they really complement what we do today inside of auction, but also will have an ability to generate a revenue stream outside of just Ritchie Brothers at the same time. So that's kind of the path we're on right now.

Speaker 3: ok and then is the last one I just the I IM's, I guess- call that a pretty sizable increase in the number of organations signed up. I guess I you could talk about you know what drove. That is it just you know Snow balling ofeffect. Is there an area of the market that you weren't focusing on before? And then, just secondly, what are you hearing in terms of feedback from the folk that are signed out that you're bring to onto the platform, in terms of you know any changes they're suggesting, what's working there, what you might need to tweak over the next little while to get more folks sign up?

[Analyst] (RBC Capital Markets): Okay. And then just the last one on just the IMS. I guess you called it a pretty sizable increase in the number of organizations signed up. I guess maybe you could talk about, you know, what drove that. Is it just, you know, snowballing effect? Is there an area of the market that you weren't focusing on before? And then just secondly, what are you hearing in terms of feedback from the folks that are signed up, that you're bringing onto the platform in terms of, you know, any changes they're suggesting, what's working there, what you might need to tweak over the next little while to get more folks signed up?

Sabahat Khan: Okay. And then just the last one on just the IMS. I guess you called it a pretty sizable increase in the number of organizations signed up. I guess maybe you could talk about, you know, what drove that. Is it just, you know, snowballing effect? Is there an area of the market that you weren't focusing on before? And then just secondly, what are you hearing in terms of feedback from the folks that are signed up, that you're bringing onto the platform in terms of, you know, any changes they're suggesting, what's working there, what you might need to tweak over the next little while to get more folks signed up?

Speaker 16: Yes So you know.

Ann Fandozzi: Yeah. So, you know, that's. We're very proud of... So there's kind of the underlying business performance we're proud, but we're equally focused on driving the marketplace vision and making sure that the strategic initiatives are kind of keeping pace, if you will. Because our ultimate vision is this transformation to a marketplace, again, that should result in really incredible services, revenue growth, and flow growth. IMS is the linchpin. We have called it the gateway into the ecosystem. And right now, the way to think about it is, we're focused on organizations because that is the beginning of the stickiness cycle. And the single biggest benefit they're getting right now is the annual contract. So where before, the way that we went to market before IMS was kind of one auction at a time.

Speaker 15: That's we're very proud of. So there's kind of the underlying business performance we proud, but we're equly focused on driving the marketplace vision and making sure that the strategic initiatives are kind of keeping P, if you will, because our ultimate vision is this transformation to a marketplace again that should result in really incredible services, revenue growth and and's through I IM's is the Lynch p. we have called it the Gateway into the ecosystem and right now the way to think about it is we're focused on organization because that is the beginning of the stking a cycle and the single biggest benefit they re getting right now is that annual contract. So we're before the way that we weren't to market before I IM S.

Speaker 15: Was kind of one auction at a time, dealing with one seller for one auction, signing a contract or that auction. I IM's is completely pivoted that they are now annual contract and although the marketplace, we're still building out the functionality to take full advantage of it- which is why we're focused so much on the organizations- it sets the table for being able to transact than a regular basis and kind of having those customers in our ecosystem. So that has been the big, the single biggest benefit to I's, to both customers ourselves and ability to seamlessly continue to do business through through I's. The reason it's growing So fast is, you know, our sales organization really, with caring leadership, has taken to understand how much easier this makes our customers to do business us. The fact that it, that it sets up to out stickiness with our customers in the future, makes us that much easier to do business with. So it's just kind of the drum beat is continuing and growing on itselves and we're really really pleased 'sgoing.

Ann Fandozzi: Dealing with one seller for one auction, signing a contract for that auction. IMS has completely pivoted that. They are now annual contracts. And although the marketplace, we're still building out the functionality to take full advantage of it, which is why we're focused so much on the organizations, it sets the table for being able to transact on a regular basis and kind of having those customers in our ecosystem. So that has been the single biggest benefit to IMS, to both customers, ourselves, and ability to seamlessly continue to do business through IMS. The reason it's growing so fast is, you know, our sales organization really, with Kari's leadership, has understands how much easier this makes for customers to do business with us.

Ann Fandozzi: The fact that it, that it sets up the ultimate stickiness, with our customers in the future makes us that much easier to do business with. So it's just kind of the drumbeat is continuing and growing on itself, and we're really, really pleased with how it's, how it's going.

Speaker 3: Thank you, Thank you. There are no further questions at this time. Please proceed.

Operator: Thank you. Thank you. There are no further questions at this time. Please proceed.

Speaker 3: Thank you so much. ok, back to back to me. This is, and I just want to thank you all for taking your time this morning or this afternoon, depending on on what part of the world happen to be in. Just as a summary were, you know, really excited about the performance we were able to drive but, more than that, really excited about the fact that the initiatives that you guys have been hearing about us talk about for over a year now are starting to bear fruit. And, as a public service announcement, because the year would kill me, our Investor presentations for next week. Please join us virtually, Please join us in person, but we will be tell even more about our story and where all of this headed. But in the meantime, Thank you so much and hoping everybody out their stace and continues to stay healthy. Thank you.

Ann Fandozzi: Thank you so much. Okay, back to, back to me. This is Anne. I just want to thank you all for taking your time, this morning, or this afternoon, depending on what part of the world you happen to be in. Just as a summary, we're, you know, really excited about the performance we were able to drive, but more than that, really excited about the fact that the initiatives that you guys have been hearing about, us talk about for over a year now are starting to bear fruit. And as a public service announcement, because Sameer would kill me, our investor presentations are next week. Please join us virtually. Please join us in person. But we will be telling you even more about our story and where all of this is headed.

Ann Fandozzi: In the meantime, thank you so much, and hoping everybody out there stays and continues to stay healthy. Thank you.

Speaker 8: Thank you, Ladies and gentlemen. This concludes your conference call for today. We thank you for participating and ask' that you please disconnect your lines.

Operator: Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Q1 2022 Ritchie Bros Auctioneers Inc Earnings Call

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