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Ritchie Bros Auctioneers Inc RBA

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Morningstar’s Analysis

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Ritchie Brothers’ Virtual Auction Model Maintains Sales Growth; Shares Remain Slightly Overvalued

Analyst Note

| Brian Bernard, CFA, CPA |

Ritchie Brothers Auctioneers posted a tougher quarter but ended fiscal 2020 with positive total revenue growth of 4% year over year. This was driven by revenue from service contracts, which grew 8% compared with 2019 and composed about 63% of total sales for the year. Gross transaction value (GTV) reached $5.4 billion for 2020, a 5% increase compared with 2019. Headwinds included border restrictions in the firm’s European markets that limited its ability to transport equipment, ultimately hindering auction volumes. Furthermore, near-term macroeconomic uncertainty led to conservatism among consigners that adopted a “wait and see” mentality that persisted year-round, exacerbating an already tight used equipment market. It appears this trend will likely persist for at least the first half of 2021. 

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Company Profile

Business Description

British Columbia-based Ritchie Bros. operates the world's leading marketplace for heavy equipment. Started in 1958 as a live auctioneer of industrial equipment, it has greatly expanded its operations to include the sale of construction, agricultural, oilfield, and transportation equipment in a variety of venues. It now operates 40 live auction sites in 13 countries, along with online marketplaces, including IronPlanet, Marketplace-E, and GovPlanet. Its agricultural auctions are frequently much smaller venues and can include liquidations of single farms. In 2019, the company held 337 auctions, selling over $5 billion worth of equipment.

Contact
9500 Glenlyon Parkway
Burnaby, BC, V5J 0C6, Canada
T +1 778 331-5500
Sector Industrials
Industry Specialty Business Services
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 2,600

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