Ritchie Bros. is a global asset management and disposition company, offering a buying and selling platform for used heavy equipment, trucks, and other assets to its customers. It is the world’s largest auctioneer of heavy equipment and trucks with USD $5.4 billion in Gross Transactional Value (GTV).
Ritchie Bros. is trusted worldwide for its fair and transparent dealings and leading customer service. Some of the most popular items that the company deals in are construction machinery, farm equipment, agricultural tractors, and cranes.
Ritchie Bros. operates through its multiple onsite and online selling platforms like Ritchie Bros Auctioneers, IronPlanet, Private Treaty, and Salvage Sale. The company has operations in more than 15 countries and has over 40 permanent auction sites in North America, Europe, the Middle East, Asia, and Australia.
Ritchie operates through a wide range of sales channels and sales formats. The company also offers sector-specific solutions through Ritchie Bros. Financial Services. It provides other services like shipping, insurance, warranties, refurbishing, free auction sales, etc. By GTV channels, Live on site auctions account for more than 80% of total GTV followed by Online marketplaces (~20%).
RBA is also available as a dual listed stock trading under RBA on the NYSE.
Key Investment Data
- Opportunity Score: 64
- Ticker: TSE:RBA
- Sector: Industrials
- Industry: Specialty Business Services
- Market Cap: 8.67B
- P/E: 37.69
- Dividend Yield: 1.63%
- Payout Ratio (TTM): 52.50%
- Canadian Dividend Aristocrat: YES
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only
- Dividend Growth Fit: 7/10
- Dividend Income Fit: 7/10
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Revenue Growth & Market Exposure
Over the last six decades of its existence, Ritchie Bros. has built a solid reputation as the most trusted equipment auction company in the world. As a result, the company enjoys deep customer relationships. Ritchie Bros. offers a wide range of used and unused equipment in construction, mining, transportation, agriculture, oil & gas, lifting and material handling, forestry, and other industries. It has successfully grown its gross transactional value to over USD $5 billion today, from just USD $462 million back in 1990.
Ritchie Bros. connects equipment buyers and sellers through a global network of auction facilities and online sales channels. The company has a growing digital presence and the COVID-19 pandemic has further increased the pace of digital adoption. Its sector-specific selling channels include GovPlanet, specializing in rolling and non-rolling government surplus, TruckPlanet, and Kruse Energy Auctioneers, as well as Ritchie Bros. Financial Services.
Ritchie Bros. provides multiple solutions for customers across many industries and offers to buy and sell solutions both online and onsite. The company is highly diversified by geographies, industries, and product solutions. Over the years, Ritchie Bros. has established itself as a one-stop-shop offering multiple disposition services and solutions to address its customer needs and render maximum value for them.
Richie Bros has compounded its revenue growth at more than 9% annually over the last decade. The company has delivered strong Q1 performance with GTV growth of 11% and total service revenue growth of 13%. It registered a 42% growth in bids per lot sold. Richie expects GTV growth in the high single digits to low teens and service revenue growth in the low double digits to high teens range over a 5-7 year period.
Ritchie Bros. is a Canadian Dividend Aristocrat and has compounded its dividend growth at 7.5% per annum over the last decade. Its most recent dividend hike was 4.7% in 2020. This dividend aristocrat has an annual dividend yield of 1.4% and a payout ratio of 55%. It has a target dividend payout ratio of 55%-60%.
Ritchie Bros. has been expanding both organically and through acquisitions. The company is witnessing growth not only in its core auction business but also across complementary solutions. The acquisition of IronPlanet back in 2017, solidified Ritchie Bros’ position as a multi-channel asset disposition company. Ritchie Bros. is experiencing solid growth in its online channel services. Caterpillar alliance and contracts through GovPlanet act as additional growth drivers for the company. It was awarded the support of the U.S. Department of Defense with new surplus term sale contracts in April 2021.
Ritchie Bros. has significant room for future growth with the company’s GTV accounting for a mere 1.5% of the estimated global used equipment market, which is worth $300 billion. The company has generated ~$900 million in cumulative operating FCF in 2016-2020 and returned $525 million to shareholders during that time. Ritchie’s operating free cash flow increased driven by the increased auctions and net income growth over the comparative period. It has no material debt maturities until October 2023 and has ~$460 million in unused available credit facilities at the last quarter-end.
Ritchie Bros. should continue to benefit from its growing multi-channel, trusted solutions that are transparent as well as convenient for its customers. Its unparalleled technology and data-driven asset management platform which is a fully integrated, cloud-based software allows clients to manage their equipment portfolio conveniently and connect them with the global buyer network.
In addition, the company has also launched Marketplace-E to scale up in the international markets and the management expects significant growth from it in the future. It will continue to optimize its online operating model to drive further efficiencies. A global scale, loyal client relationships, and deep industry insights are strong competitive advantages for Ritchie Bros.
Ritchie Bros. competes in a highly fragmented multi-billion dollar market, with many smaller competitors. As a result of advancements in technology, online competition has also emerged. Fuelled, a Calgary-based online marketplace for oil and gas equipment is a huge competitor for Ritchie Bros.
Ritchie also faces intense competition from traditional auctioneers such as Proxibid, Auctiontime, Machinery Auctioneers, Invaluable, LiveAuctioneers, NextLot, Bar None Auction, BidSpotter, Bidsquare, and Jeff Martin Auctioneers. The used equipment auction segment is estimated at $25 billion and Ritchie Bros. is the largest live auction company with a ~20% market share of the live auction space.
What started off as a family furniture store sixty years earlier, grew into the world’s largest industrial equipment auctioneer with a presence in more than 20 different countries. As the world’s most powerful equipment auction platform, Ritchie Bros. is in a good position to cater to the $300 billion global used equipment market through its global network and buyer marketing.
Ritchie Bros expects demand to recover driven by government stimulus programs and significant infrastructure funding injections. The company is focusing on growing its share of the auction segment and penetrating the upstream market. Ritchie’s investment in technology, asset management solutions, e-marketplaces, and customer-centric solutions should help it scale to new heights.