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 x No ¨

Indicate by check mark whether the ~~Registrant~~registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ ~~229.405~~232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

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):

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: ~~107,769,787~~108,984,083 common shares, without par value, outstanding as of May ~~9, 2018.~~8, 2019.

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

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

Ritchie Bros. Auctioneers Incorporated and its subsidiaries (collectively referred to as the “Company”) provide global asset management and disposition services, offering customers end-to-end solutions for buying and selling used industrial equipment and other durable assets through its unreserved live ~~unreserved~~on site auctions, online ~~reserved and unreserved~~ marketplaces, listing services, and private brokerage services. 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”).

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, ~~2017,~~2018, 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.

Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) using the full retrospective method, which included restating prior years for comparative amounts. This new accounting policy resulted in a change in the financial statement presentation only on the income statement, as described in Note 1(i) New and amended accounting standards in this Quarterly Report on Form 10-Q.

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 ~~good~~goods or services. A performance obligation is a promise in a contract to transfer a distinct good or service 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. 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.

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

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.

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 price of the property sold at auction. Fees are also charged to sellers for listing and inspecting equipment. Other ~~revenues~~revenue earned in the process of conducting the Company’s auctions include administrative, documentation, and advertising fees.

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

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 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 ~~revenues~~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 or with the counterparty in an auction guarantee risk and reward sharing arrangement. Additionally, in certain situations, commissions are shared with third parties who introduce the Company to consignors who sell property at auction.

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

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 and other ancillary service fees. Fees are recognized in the period in which the service is provided to the ~~customer~~.customer.

Underwritten commission contracts can take the form of inventory contracts. ~~Revenues~~Revenue related to inventory contracts ~~are~~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.

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

Costs of services are comprised of expenses incurred in direct relation to conducting auctions (“direct expenses”), earning online marketplace ~~revenues,~~revenue, and earning other fee ~~revenues.~~revenue. Direct expenses include direct labour, buildings and facilities charges, and travel, advertising and promotion costs.

Costs of services incurred to earn online marketplace ~~revenues~~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 ~~revenues~~revenue also include costs for the Company’s customer support, online marketplace operations, logistics, title and lien investigation ~~functions, and lease and operations costs related to the Company’s third-party data centers at which its websites are hosted.~~functions.

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

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

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

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.

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 Company also has a senior executive ~~PSU~~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 using~~date. PSUs vest based on the passage of time and achievement of performance criteria.

The Company also has a ~~binomial model.~~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 on and after 2017 in shares. The cost of RSUs granted is measured at the fair value 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.

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.

~~Any consideration paid on exercise of the stock options is credited to the common shares.~~ Dividend equivalents on the equity-classified PSUs and RSUs are recognized as a reduction to retained earnings over the service period.

The Company has three stock option compensation plans that provide for the ~~senior executive~~award of stock options to selected employees, directors and ~~employee PSU plans (described in note 17) are contingently redeemable in cash in the event of death~~officers of the ~~participant.~~Company. The ~~contingently redeemable portion~~cost of options granted is measured at the fair value of the ~~senior executive and employee PSU awards, which represents the amount that would be redeemable based on the conditions~~underlying option at the grant date using the Black-Scholes option pricing model. The fair value of ~~grant,~~options expected to ~~the extent attributable to prior service,~~vest under these plans is ~~recognized as temporary equity. The balance reported in temporary equity increases on the same basis as the related compensation expense~~expensed over the respective remaining service period of the ~~award,~~individual awards, on an accelerated recognition basis, with the corresponding increase to APIC recorded in equity. Upon exercise, any ~~excess~~consideration paid on exercise of the ~~temporary equity value over~~stock options and amounts fully amortized in APIC are credited to the amount recognized in compensation expense charged against retained earnings. In the event it becomes probable an award is going to become eligible for redemption by the holder, the award would be reclassified to a liability award.common shares.

The Company maintains other share unit compensation plans that vest over a period of up to ~~five~~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 ~~using~~based on the ~~volume weighted~~ average price of the Company’s common shares ~~for the twenty days~~ 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.~~16. 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.

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

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.

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”) assets and liabilities for assets leased with similar lease terms.

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 of services or Selling, general, and administrative (“SG&A”) expenses.

Finance lease ROU assets are included in property, plant and equipment, trade and other non-current, 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.

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

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 18). The significant elements of cost include the acquisition price of the inventory and make-ready costs to prepare the inventory for sale that are not selling ~~expenses.~~expenses and in-bound transportation costs. Write-downs to the carrying value of inventory are recorded in cost of inventory sold on the consolidated income statement.

Long-lived assets, comprised of property, plant and equipment 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~~third party appraisals. Significant estimates and judgments are applied in determining these cash flows and fair values.

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.

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.

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

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.

The primary impact of the adoption of ASU 2014-09 is the change in the presentation of revenue from inventory, ancillary service, and logistical services contracts on a gross basis as a principal versus net as an agent. This is due to the new standard ~~requiring an entity~~utilizing the “optional transition method”, which permits the Company to apply the new lease standard at the adoption date. As the optional transition method is being utilized, the Company’s reporting for the comparative periods presented in the financial statements in which it adopts Topic 842 will continue to be reported pursuant to Topic 840.

On adoption, the Company elected to utilize the package of practical expedients permitted within the new standard, which among other things, allows the Company to carryforward the historical lease classification. In addition, the Company elected to utilize the hindsight practical expedient to determine ~~whether~~ the ~~entity controls the specified good or service before transfer to the customer, with the entity being principal~~reasonably certain lease term for existing leases. While lease classification will remain unchanged, hindsight will result in ~~these transactions. Prior to adopting ASU 2014-09, an entity evaluated indicators to determine if it was a principal or agent. As~~generally longer accounting lease terms where the Company has determined that it ~~controls~~is reasonably certain to exercise certain renewal options and thereby increasing the ~~inventory~~useful lives of the corresponding leasehold improvements. The Company also elected not to recognize the lease assets and ~~provision~~liabilities for leases with an initial term of ~~ancillary~~12 months or less and ~~logistical services before transfer to its customers,~~will recognize those lease payments on a straight-line basis over the ~~Company concluded that it was acting as a principal rather than an agent. As a result of~~lease term.

On adoption of the new ~~accounting~~ standard ~~there~~the Company recognized ROU assets of $103,897,000 with a corresponding increase in operating lease liability. Offsetting the increase in ROU assets recognized was the reclassification of prepaid rent and deferred rent liabilities to ROU assets of $5,752,000. There was no impact on ~~the timing of recognition of revenue, operating income, net income,~~retained earnings or ~~on the consolidated balance sheet or consolidated statement of~~ cash flows.

~~Presenting revenue from inventory sale on a gross basis as a principal selling a tangible product versus net as an agent providing a service significantly changes the face~~The adoption of the ~~Company’s consolidated income statement in two primary ways:~~standard had no impact on our debt-covenant compliance under our current agreements.

~~The new presentation based on ASU 2014-09 results in an increase the amount of revenue reported but there is no change in the operating income compared to the prior presentation:~~

~~In February 2016, the FASB issued ASU 2016-02,~~~~Leases (Topic 842)~~, which 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. For short-term leases, defined as those with a term of 12 months or less, the lessee is permitted to make an accounting policy election not to recognize the lease assets and liabilities, and instead recognize the lease expense generally on a straight-line basis over the lease term. The accounting treatment under this election is consistent with current operating lease accounting. No extensive amendments were made to lessor accounting, but amendments of note include changes to the definition of initial direct costs and accounting for collectability uncertainties in a lease.

ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. Both lessees and lessors must apply ASU 2016-02 using a “modified retrospective transition”, which reflects the new guidance from the beginning of the earliest period presented in the financial statements. However, lessees and lessors can elect to apply certain practical expedients on transition.

Management continues to perform a detailed inventory and analysis of all the Company’s leases, of which there are approximately 480 operating and 115 finance leases for which the Company is a lessee at the reporting date. The most significant operating leases in terms of the amount of rental charges and duration of the contract are for various auction sites and offices located in North America, Europe, the Middle East, and Asia. However, in terms of the number of leases, the majority consist of leases for computer, automotive, and yard equipment.

The Company continues to evaluate the new guidance to determine the impact it will have on its consolidated financial statements. Under the expectation that the majority, if not all, of the operating leases will be brought onto the Company’s balance sheet on adoption of ASU 2016-02, management is currently investigating the functionality within the Company’s financial system to automate the lease accounting process and is evaluating alternative software solutions to facilitate adoption.

The adoption of ASU 2016-02 is expected to add complexity to the accounting for leases, as well as require extensive system and process changes to manage the large number of operating leases that the Company anticipates will be brought onto its balance sheet. As a result, management has determined that the Company will not early adopt ASU 2016-02, and will continue to evaluate the elections available to the Company involving the application of practical expedients on transition.

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. ~~Existing~~However, existing circumstances and assumptions about future developments ~~however,~~ may change due to market changes or ~~circumstance~~circumstances and such changes are reflected in the assumptions when they occur. Significant items subject to estimates include purchase price allocations, the carrying amounts of goodwill, the useful lives of long-lived assets, share based compensation, the determination of lease term and lease liabilities, deferred income taxes, reserves for tax uncertainties, and other contingencies.

The Company’s operations are both seasonal and event driven. Revenues tend to be the highest during the second and fourth calendar quarters. The Company generally conducts more live, on site auctions during these quarters than during the first and third calendar quarters. 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.

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

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 one reportable segment and other business activities that are not reportable as follows:

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

The Company‘s geographic breakdown of total revenue as determined by the revenue and location of assets, which represents property, plant and equipment is as follows:

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

Acquisition-related costs consist of operating expenses directly incurred as part of a business combination, due diligence and integration planning related to the IronPlanet acquisition, and continuing employment costs that are recognized separately from our business combinations.

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

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 March 31, ~~2018,~~2019, income tax expense was ~~$5,269,000,~~$6,639,000, compared to an income tax expense of ~~$7,315,000~~$5,269,000 for the same period in ~~2017.~~2018. Our effective tax rate was 27% in the first quarter of 2019, compared to 23% in the first quarter of 2018, compared to 41% in the first quarter of 2017. The effective tax rate decreased in the first quarter of 2018 compared to the first quarter of 2017 primarily due to a greater proportion of income taxed in jurisdictions with lower tax rates and partially offset by our estimated Base Erosion Anti-Abuse Tax (“BEAT”). Additionally, in 2017 a $2,290,000 expense relating to an increase in uncertain tax positions was recognized and an increase in annual non-deductible acquisition costs was estimated.

On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. The Tax Act makes broad and complex changes to the U.S. tax code that impacted our quarter ended March 31, 2018, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018 and (2) imposing BEAT - a tax on certain deductible payments from our U.S. subsidiary to any of its foreign-related parties.

On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. For the three months ended March 31, 2018, we have not made any adjustments to the provisional amounts recorded at December 31, 2017. Additional work is still necessary for a more detailed analysis of our deferred tax assets and liabilities, our historical foreign earnings subject to the one-time transition tax, and potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to tax expense in the corresponding quarter of 2018 when the analysis is complete.2018.

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.~~outstanding during the period. Diluted EPS attributable to stockholders was calculated by dividing the net income attributable to stockholders ~~after giving effect to outstanding dilutive stock options and PSUs~~ by the WA number of shares of common stock outstanding ~~adjusted for all~~if the potentially dilutive securities had been issued. Potentially dilutive securities include unvested PSUs, RSUs, and outstanding stock options. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share 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.

In respect of PSUs awarded, performance and market conditions, depending on their outcome at the end of the contingency period, can reduce the number of vested awards to nil or to a maximum of 200% of the number of outstanding PSUs. For the three months ended March 31, 2018, 13,528 share units to purchase common shares were outstanding but excluded from the calculation of diluted EPS attributable to stockholders as they were anti-dilutive (2017: nil). For the three months ended March 31, 2018, stock options to purchase 1,619,141 common shares were outstanding but excluded from the calculation of diluted EPS attributable to stockholders as they were anti-dilutive (2017: nil).

All assets and liabilities for which fair value is measured or disclosed in the ~~condensed~~ 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:

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 debt ~~and revolving loans~~ approximate their fair values due to their short terms to maturity. The carrying value of the term loans, before deduction of deferred debt issue costs, approximates ~~its~~their fair value as the interest rates on the loans were short-term in nature. The fair value of the senior unsecured notes is determined by reference to a quoted market price.

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

As at March 31, 2019, the Company’s assets held for sale consisted of five excess properties located in the United States. Management made the strategic decision to sell these properties to maximize the Company’s return on invested capital. The estimated sales proceeds are expected to be in excess of the current book value. The properties have been actively marketed for sale, and management expects the sales to be completed within 12 months of March 31, 2019. This property belongs to the A&M reportable segment.

(Tabular amounts expressed in ~~other non-current assets is a tax receivable amount~~thousands of ~~$13,419,000 (December 31, 2017: $12,851,000)~~United States dollars, except where noted)

Short-term debt at March 31, 2018 is comprised of drawings in different currencies on the Company’s committed revolving credit facilities and have a weighted average interest rate of 2.9% (December 31, 2017: 2.7%).

During the quarter, the ~~company~~Company made voluntary prepayments totalling ~~$25,000,000~~$10,000,000 (2018 - $25,000,000) on the term loan denominated in United States dollars. Prepayments are applied against future scheduled mandatory payments. The amount available pursuant to the term loan facility was only available to finance the acquisition of IronPlanet and will not be available for other corporate purposes upon repayment of amounts borrowed under that facility.

As at March 31, ~~2018,~~2019, the Company had ~~available~~unused committed revolving credit facilities aggregating ~~$655,600,000~~$485,366,000 of which ~~$651,761,000~~$480,962,000 is available until October 27, 2021.

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

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

The Company declared and paid the following dividends during the three months ended March 31, ~~2018~~2019 and ~~2017:~~2018:

Subsequent to March 31, ~~2018,~~2019, the Company’s Board of Directors declared a quarterly dividend of ~~$0.17~~$0.18 cents per common share, payable on June ~~20, 2018~~19, 2019 to stockholders of record on May ~~30, 2018.~~29, 2019. 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.

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

Foreign currency translation adjustments include intra-entity foreign currency transactions that are of a long-term investment nature, which generated a net ~~gains~~loss of ~~$2,138,000~~$855,000 for the three months ended March 31, ~~2018 (2017:~~2019 (2018: net gains of ~~$3,667,000)~~$2,138,000).

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

Stock option activity for the three months ended March 31, ~~2018~~2019 is presented below:

The fair value of the stock option grants is estimated on the date of the grant using the Black-Scholes option pricing model. The weighted average grant date fair value of options granted during the three months ended March 31, 2018 was $7.67.

The significant assumptions used to estimate the fair value of stock options granted during the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 are presented in the following table on a weighted average basis:

As at March 31, ~~2018,~~2019, the unrecognized stock-based compensation cost related to the non-vested stock options was ~~$10,976,000~~$9,530,000, which is expected to be recognized over a weighted average period of ~~2.5~~2.6 years.

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

Share unit activity for the three months ended March 31, ~~2018~~2019 is presented below:

As at March 31, 2018, the unrecognized share unit expense related to equity-classified PSUs was $13,656,668 which is expected to be recognized over a weighted average period of 2.2 years. The unrecognized share unit expense related to equity-classified RSUs was $5,696,935, which is expected to be recognized over a weighted average period of 2.8 years. The unrecognized share unit expense related to liability-classified RSUs was $30,024, which is expected to be recognized over a weighted average period of 0.6 years. There is no unrecognized share unit expense related to liability-classified DSUs as they vest immediately upon grant.

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 in 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.

The fair value of the equity-classified PSUs awarded in 2018 is estimated on modification date and on the date of grant using a Monte-Carlo simulation model as these awards are subject to market vesting conditions. The significant assumptions used to estimate the fair value of the equity-classified PSUs awarded during the three months ended March 31, 2018 are presented in the following table on a weighted average basis:

The fair value of the equity-classified PSUs awarded in 2019 is estimated based on the Company’s common share price at grant date, as these awards are not subject to market vesting conditions.

As at March 31, 2019, the unrecognized share unit expense related to equity-classified PSUs was $11,688,000, which is expected to be recognized over a weighted average period of 2.2 years.

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

As at March 31, 2019, the unrecognized share unit expense related to equity-classified RSUs was $4,386,000, which is expected to be recognized over a weighted average period of 1.8 years.

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

The Company has DSU plans that are cash-settled and ~~employee PSU plans (continued)~~not subject to market vesting conditions.

OnFair 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 no unrecognized share unit expense related to liability-classified DSUs as they vest immediately and are expensed upon grant.

As at March ~~1, 2018,~~31, 2019, the Company modified the market and performance vesting conditions for the PSUs. Concurrently, the employee PSU plan were reclassified to equity awards, based on the Company’s settlement intentions. The weighted average fair value of the PSU awards outstanding on the modification date was $31.35. The incremental compensation recognized ashad a ~~result of the vesting condition modification was $1,400,000. The~~total share unit liability ~~related to~~of $4,068,000 (December 31, 2018: $3,714,000) in respect of share units under the employee PSUs, representing the portion of the fair value attributable to past service, was $6,701,000, which was reclassified to equity on that date. No incremental compensation was recognized as a result of the employee PSU settlement modification. Because the employee PSUs are contingently redeemable in cash in the event of death of the participant, on the modification date, the Company reclassified $6,132,000 to temporary equity, representing the portion of the contingent redemption amount of the PSUs as if redeemable on March 1, 2018, to the extent attributable to prior service.DSU plans.

The ~~fair~~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 ~~equity-classified PSUs is estimated on modification date and~~employee‘s contributions, depending on the ~~date~~employee‘s length of ~~grant using a binomial model.~~ service with the Company.

The ~~significant assumptions used to estimate the fair value~~Company’s breakdown of ~~the equity-classified PSUs during~~lease expense for the three months ended March 31, ~~2018~~2019 is as follows:

The Company has entered into commercial leases for various auction sites and ~~2017~~offices located in North America, Europe, the Middle East and Asia. The majority of these leases are ~~presented~~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 ~~following table~~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.

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

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

At March 31, 2019 the Company has ROU assets relating to operating leases in the amount of $96,805,000.

At March 31, 2019 the weighted average ~~basis:~~remaining lease term for operating leases is 14.9 years and the weighted average discount rate is 4.1%.

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 March 31, 2019, the net carrying amount of computer and yard equipment and other assets under capital leases is $15,356,000 (December 31, 2018: $14,976,000), and is included in the total property, plant and equipment as disclosed on the consolidated balance sheets.

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

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

At March 31, 2019 the weighted average remaining lease term for finance leases is 3.3 years and the weighted average discount rate is 3.9%.

As at March 31, 2019, the total future minimum sublease payments expected to be received under non-cancellable subleases is $981,000.

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 the contract the performance period commenced in April 2018 and concludes in March 2020.

The Company has committed to purchase between 150,000 and 245,900 units of property 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 over the initial 12 month period relating to the purchase of inventory. At March 31, 2019, the Company has purchased $47,676,000 pursuant to the initial 12 month period of this contract which commenced in April 2018.

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.

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.

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

At March 31, ~~2018,~~2019, there were ~~$103,315,000~~$138,057,000 of assets guaranteed under contract, of which ~~87%~~83% is expected to be sold prior to ~~the end of~~ June 30, ~~2018,~~2019 with the remainder to be sold ~~prior to December 31, 2018~~by September 30, 2021 (December 31, ~~2017: $30,948,000~~2018: $41,461,000 of which ~~27%~~51% is expected to be sold prior to the end of March 31, ~~2018~~2019 with the remainder to be sold by ~~December~~May 31, ~~2018)~~2020).

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

On May 8, 2019, our Board of Directors authorized a share repurchase program for the repurchase of up to $100,000,000 worth of our common shares subject to Toronto Stock Exchange approval over the next 12 months.

On May 31, 2017 (the “IronPlanet Acquisition Date”), the Company acquired 100% of the issued and outstanding shares of IronPlanet for a total fair value consideration of $776,474,000. As at the acquisition date, cash consideration of $772,706,000, of which approximately $35,000,000 was placed in escrow, was paid to the former shareholders, vested option holders and warrant holders of IronPlanet. In addition to the cash consideration, non-cash consideration of $2,330,000 was issued attributable to the assumption of outstanding IronPlanet options, $1,771,000 was paid in cash and placed in escrow, related to customary closing adjustments, and $333,000 was related to settlement of intercompany payable transactions. Funds placed in escrow of $36,771,000 were released in March 2018.

IronPlanet is a leading online marketplace for selling and buying used equipment and other durable assets and an innovative participant in the multi–billion dollar used equipment market. The acquisition expands the breadth and depth of equipment disposition and management solutions the Company can offer its customers.

~~The acquisition was accounted for in accordance with ASC 805,~~~~Business Combinations~~. The assets acquired and liabilities assumed were recorded at their estimated fair values at the IronPlanet Acquisition Date. Goodwill of $568,137,000 was calculated as the fair value of consideration over the estimated fair value of the net assets acquired.

The amounts included in the IronPlanet 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 as of the IronPlanet Acquisition Date. 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 IronPlanet Acquisition Date, and is dependent upon finalization of income tax liabilities. Adjustments to the preliminary values during the measurement period will be recorded in the operating results of the reporting period in which the adjustments are determined. Changes to the amounts recorded as assets and liabilities will result in a corresponding adjustment to goodwill.

The main drivers generating goodwill are the anticipated synergies from (1) the Company's auction expertise and transactional capabilities to IronPlanet's existing customer base, (2) IronPlanet providing existing technology to the Company's current customer base, and (3) future growth from international expansion and new Caterpillar dealers. Other factors generating goodwill include the acquisition of IronPlanet's assembled work force and their associated technical expertise.

Expenses totalling $639,000 for legal fees, stock option compensation expense, and other acquisition-related costs are included in the consolidated income statement for the three months ended March 31, 2018 (2017: $7,691,000).

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, ~~2017,~~2018, which is available on our website atwww.rbauction.com, on EDGAR atwww.sec.gov, or on SEDAR atwww.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.

~~We make reference to various~~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 ~~throughout~~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 ~~discussion~~report are labeled as “non-GAAP measure” or designated as such with an asterisk (*). Please see pages 38-44 for explanations of why we use these non-GAAP measures and ~~analysis. These measures do not have a standardized meaning, and~~the reconciliation to the most comparable GAAP financial measures.

Beginning in the first quarter of 2019, we are ~~therefore unlikely~~no longer disclosing agency proceeds*. Please refer to ~~be comparable to similar measures presented by other companies.~~the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for more information.

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 and disposition of used industrial equipment and other durable assets, selling ~~$1.2~~$4.96 billion of used equipment and other assets during ~~the first quarter of~~ 2018. Our expertise, unprecedented global reach, market insight, and trusted portfolio of brands provide us with a unique position in the used equipment market. We ~~primarily~~ sell used equipment for our customers through live, unreserved auctions at 40 auction sites worldwide, ~~including in the United States, Canada, Australia, the United Arab Emirates, and the Netherlands,~~ which are also simulcast online to reach a global bidding ~~audience.~~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, including earthmoving equipment, 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.

~~On May 31, 2017, we acquired IronPlanet Holdings, Inc. (“IronPlanet”)~~We operate globally with locations in more than 13 countries, including the U.S., ~~a leading online marketplace for heavy equipment~~Canada, Australia, the United Arab Emirates, and other durable assets for $776.5 million (the “Acquisition”). IronPlanet’s complementary used equipment brand solutions, together with Marketplace-E, our online marketplace that supports reserved pricing, provide different value propositions to equipment ownersthe Netherlands, and allow us to meet the needs and preferences of a wide spectrum of equipment sellers and buyers. Upon the consummation of the Acquisition on May 31, 2017, we formed an alliance with Caterpillar Inc. (“Caterpillar”), pursuant to a Strategic Alliance and Remarketing Agreement (the “Alliance”). Under the Alliance, we became Caterpillar's preferred global partner for live on site and online auctions for used Caterpillar equipment.

~~In the past three years, we have also added a private brokerage service (Ritchie Bros. Private Treaty) and an online listing service (Mascus).~~

Through our unreserved live on site auctions, online marketplaces, and private brokerage services, we sell a broad range of used and unused equipment, including earthmoving equipment, truck trailers, government surplus, oil and gas equipment and other industrial assets. Construction and heavy machinery comprise the majority of the equipment sold through our multiple brand solutions. Customers selling equipment through our sales channels include end-users (such as construction companies), equipment dealers, original equipment manufacturers, and other equipment owners (such as rental companies and government bodies). Our customers participate in a variety of sectors, including heavy construction, transportation, agriculture, energy, and mining.employ more than 2,200 full time employees worldwide.

As part of our Auction and Marketplace (“A&M”) solutions, 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. ~~The tables below illustrate the various~~For a complete listing of channels and brand solutions available under our A&M segment, as well as our ~~other services.~~Other services segment, please refer to our Annual Report on Form 10-K for the year ended December 31, 2018, which is available on our website atwww.rbauction.com, on EDGAR atwww.sec.gov, or on SEDAR atwww.sedar.com.

As part of our A&M business, we offer sellers several contract options to meet their individual needs and sale objectives, ~~which include:~~including:

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, and appraisals.

~~Effective January 1, 2018, we adopted ASU 2014-09~~~~Revenue from Contracts with Customers (“Topic 606”)~~~~. Revenues on inventory sales and ancillary and logistical services are presented~~~~gross of the related expenses rather than net.~~ ~~Accordingly, in addition to total revenues, we have added a new metric to our disclosures called agency proceeds~~² ~~(non-GAAP measure), which presents revenues as previously reported and is calculated as total revenues under Topic 606 less the cost of inventory sold and ancillary and logistical service expenses.~~

~~The following table presents total revenues and agency proceeds (non-GAAP measure) results for the first quarter of 2018 and 2017, as well as reconciles those two measures:~~

Net income attributable to stockholders of $17.1 million improved 65% compared to $10.4 million for the same quarter in 2017. Diluted earnings per share (“EPS”) attributable to stockholders increased 60% to $0.16 versus $0.10 in the first quarter of 2017. Other key first quarter highlights included:

Total revenues increased $60.8 million, or 30%, in the first quarter of 2018 compared to the first quarter of 2017, primarily due to the Acquisition, an increase in the volume of inventory contracts in Canada and Europe, an increase in service revenues from our live on site auctions, and the partial harmonization of our transaction fees. Foreign exchange had a positive impact on total revenues in the first quarter of 2018.

The distribution of our revenues is determined by the location in which the sale occurred, or in the case of online sales, where the legal entity earning the revenues is incorporated. The following table presents our total revenues on a geographic basis:

The increase in total revenues in Canada and Europe in the first quarter of 2018 compared to the first quarter of 2017 was primarily due to an increase in revenue from inventory sales over the same comparative period. The increase in total revenues in the United States was primarily due to the Acquisition, partially offset by a decrease in revenue from inventory sales over the comparative period. The decrease in total revenues from other regions was primarily due to a decrease in revenue from inventory sales in the first quarter of 2018 compared to the first quarter of 2017.

Costs of services are comprised of expenses incurred in direct relation to conducting auctions (“direct expenses”), earning online marketplace revenues, and earning other fee revenues. Direct expenses include direct labour, buildings and facilities charges, and travel, advertising and promotion costs.

Costs of services increased $12.4 million or 51% in the first quarter of 2018 compared to the first quarter of 2017, primarily due to the Acquisition and the costs associated with the inspection and appraisal activities that support our online channels. The increase is also due to an increase in GTV at our live on site auctions over the comparative period and the growth of our ancillary business.

Cost of inventory sold consists of the initial purchase price of equipment and other assets purchased for resale. Cost of inventory sold increased $12.4 million, or 20%, in the first quarter of 2018 compared to the first quarter of 2017, primarily due to higher volume of inventory contracts.

SG&A expenses increased $26.9 million, or 38%, during the first quarter of 2018 compared to the first quarter of 2017, primarily due to the Acquisition, investment in talent to support new businesses and initiatives, and $4.6 million of share unit expenses in the first quarter of 2018 compared to $0.6 million in the first quarter of 2017. Foreign exchange had a negative impact on SG&A expenses in the first quarter of 2018.

~~The Acquisition drove increases in our employee compensation, audit fees, tax and legal consulting fees, and technology support costs. Our headcount~~⁶~~, including RBFS and Mascus but excluding Xcira, increased 26% over March 31, 2017, primarily due to the Acquisition and continued growth in the teams that support in our value-added services.~~

Of the $4.0 million increase in our share unit expenses in the first quarter of 2018 compared to the first quarter of 2017, $2.4 million related to mark-to-market costs driven by growth in our share price over the comparative period. In addition, the March 1, 2018 modification of certain performance factors related to our share units resulted in an incremental compensation cost of $1.4 million.

Acquisition-related costs consist of operating expenses directly incurred as part of a business combination, due diligence and integration planning – including those related to the Acquisition – and continuing employment costs that are recognized separately from our business combinations. Business combination, due diligence, and integration operating expenses include advisory, legal, accounting, valuation, and other professional or consulting fees, and travel and securities filing fees.

Acquisition-related costs decreased $7.0 million, or 81%, in the first quarter of 2018 compared to the first quarter of 2017 primarily due to costs associated with the Acquisition, which totaled $7.7 million in the first quarter of 2017 versus $0.6 million in the first quarter of 2018.

Operating income of $32.9 million increased $9.3 million or 39%, in the first quarter of 2018, compared to the first quarter of 2017. This increase was driven by higher total revenues and lower acquisition costs, partially offset by higher costs of services and SG&A expenses. Foreign exchange did not have a significant impact on operating income in the first quarter of 2018. As there were no adjusting items during the first quarter of 2018 or the first quarter of 2017, adjusted operating income⁷ ~~(non-GAAP measure) results were the same as operating income results.~~

Operating income margin, which is our operating income divided by revenues, increased 80 bps to 12.6% in the first quarter of 2018 compared to 11.8% in the first quarter of 2017. This increase is primarily due to the increase in operating income exceeding the increase in total revenues. Agency proceeds adjusted operating income rate⁸ ~~(non-GAAP measure) increased to 19.4% in the first quarter of 2018 compared to 19.0% in the first quarter of 2017.~~

Interest expense of $11.3 million increased $3.2 million or 39% in the first quarter of 2018, compared to the first quarter of 2017. This increase is primarily due to the additional indebtedness we incurred in 2016 to finance the Acquisition and an increase in short-term interest over the comparative period. As of March 31, 2018, our long-term debt was $780.3 million compared to $596.4 million as of March 31, 2017.

For the three months ended March 31, 2018, income tax expense was $5.3 million, compared to an income tax expense of $7.3 million for the same period in 2017. Our effective tax rate was 23% in the first quarter of 2018, compared to 41% in the first quarter of 2017. The effective tax rate decreased in the first quarter of 2018 compared to the first quarter of 2017 primarily due to a greater proportion of income taxed in jurisdictions with lower tax rates and partially offset by our estimated Base Erosion Anti-Abuse Tax (“BEAT”). Additionally, in 2017 a $2.3 million expense relating to an increase in uncertain tax positions was recognized and greater annual non-deductible acquisitions costs were estimated.

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.

Net income attributable to stockholders increased $6.8 million, or 65%, in the first quarter of 2018 compared to the first quarter of 2017. This increase was primarily due to stronger operating income and was partially offset by a higher interest expense. Adjusted net income attributable to stockholders⁹~~(non-GAAP measure) increased $4.5 million, or 35%, to $17.1 million in the first quarter of 2018 from $12.7 million in the first quarter of 2017.~~

Similarly, net income increased $6.8 million or 65% to $17.2 million in the first quarter of 2018 from $10.4 million in the first quarter of 2017. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)¹⁰ ~~(non-GAAP measure) increased $14.3 million, or 41%, to $49.6 million in the first quarter of 2018 from $35.3 million in the first quarter of 2017.~~

~~Net income margin increased 140 bps to 6.6% in the first quarter of 2018 from 5.2% in the first quarter of 2017. Agency proceeds adjusted EBITDA rate~~¹¹ ~~(non-GAAP measure) increased 90 bps to 29.2% in the first quarter of 2018 from 28.3% in the first quarter of 2017, as revenue growth outpaced expense growth.~~

Debt at March 31, 2018, represented 9.6 times net income as at and for the 12 months ended March 31, 2018. This compares to debt at March 31, 2017, which represented 8.4 times net income as at and for the 12 months ended March 31, 2017. The increase in this debt/net income multiplier was primarily due to higher debt balances in the first quarter of 2018 versus the first quarter of 2017, partially offset by higher net income over the comparative period. The increase in debt was primarily due to funding for the Acquisition. Adjusted net debt/adjusted EBITDA¹²~~(non-GAAP measure) was 2.5 times as at and for the 12 months ended March 31, 2018 compared to -0.6 times as at and for the 12 months ended March 31, 2017.~~

Diluted EPS attributable to stockholders increased 60% to $0.16 in the first quarter of 2018 from $0.10 in the first quarter of 2017. This increase is primarily due to the increase in net income attributable to stockholders. Diluted adjusted EPS attributable to stockholders¹³ ~~(non-GAAP measure) increased 33% to $0.16 in the first quarter of 2018 from $0.12 in the first quarter of 2017.~~

~~We believe that revenues are best understood by considering their relationship with GTV. The following table presents GTV by channel:~~

Overall, GTV increased $261.3 million, or 29%, in the first quarter of 2018 compared to the first quarter of 2017. This increase was primarily due to the Acquisition, the mix of equipment that came to market during the first quarter of 2018, and the strength of our Orlando auction in the first quarter of 2018 compared to first quarter of 2017. The increase was partially offset by the continuing equipment supply constraints, as well as the reduction in the number of live on site auctions and sale days over the comparative period.

The total number of industrial and agricultural lots sold at our live on site auctions decreased 7% to 83,300 lots in the first quarter of 2018 compared to 89,100 lots in first quarter of 2017. The decrease was primarily due to a reduction in number of industrial and agricultural live on site auctions from 61 in the first quarter of 2017 to 52 in the first quarter of 2018, as well as three fewer sales days over the same comparative period.

GTV generated at our live on site auctions increased 19% on a per-lot basis to $11,500 in the first quarter of 2018 compared to $9,700 in the first quarter of 2017. This increase was primarily due to a change in the mix of equipment at our auctions.

We saw strong price performance in construction assets in Canada, Europe, and Asia, as well as in vocational trucks in Canada. The effects of this price strengthening were partially offset by a softening of supply of various other types of equipment, including agricultural equipment in Canada and trailers and transport trucks in the United States.

We offer our customers the opportunity to use underwritten commission contracts to serve their disposition strategy needs, entering into such contracts where the risk/reward profile of the terms are agreeable. The volume of underwritten commission contracts decreased to 13% of our GTV in the first quarter of 2018 from 14% in the first quarter of 2017.

Our operations are both seasonal and event-driven. Total ~~revenues~~revenue and GTV ~~generated by our A&M segment~~ tend to be the highest during the second and fourth calendar quarters. We generally conduct more live on site auctions during these quarters than during the first and third calendar quarters. 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.

Our revenue is comprised of service revenue and inventory sales revenue. Service revenue from A&M ~~total~~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 ~~by geographical region are presented below:~~from our Other Services activities as 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 commission contract, guarantee contract, or an inventory contract at time of selling. Straight commission contracts and guarantee contracts will result in the commission being recognized as service revenue, while inventory contracts will result in the GTV 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 revenue and inventory sales revenue can have a significant impact on revenue growth percentages.

~~The increase in A&M total revenues in the first quarter of 2018~~Performance Overview

Net income attributable to stockholders increased 6% to $18.2 million compared to ~~the first quarter of 2017 was primarily due~~$17.1 million in Q1 2018. Diluted earnings per share (“EPS”) attributable to ~~the regional differences discussed below, an increase~~stockholders increased 6% to $0.17 per share in ~~equipment pricing, and the partial harmonization of our fees:~~Q1 2019 compared to $0.16 per share in Q1 2018.

As A&M total revenues are generated from transactional asset disposition services, we believe that these revenues are best understood by considering their relationship to GTV. The metric we use to measure that performance is A&M revenue rate, which is calculated as A&M total revenues divided by GTV.Auctions & Marketplaces segment results:

Total revenue increased 17% to $303.4 million primarily due to a 56% increase in inventory sales revenue, partially offset by a 2% decrease in service revenue.

Inventory sales revenue was $131.1 million in Q1 2019, an increase of 56% compared to $84.2 million, primarily due to an increase in volume of inventory sales contracts in the US and Europe. As a percent of GTV, our GTV from inventory sales revenue was 11.2% in Q1 2019, compared to 7.3% in Q1 2018.

The decline in service revenue resulted from a 9% decrease in commissions offset by a 7% increase in fees. Lower commissions were attributable to lower price realization on guarantee contracts as well as a decrease in the volume of straight commission contracts. The lower rates earned from guarantee contracts was partially due to softer price performance on specific assets in greater supply at the 2019 Orlando auction. Fee revenue increased 7% due to moderately higher GTV volume with an increased proportion of low value lots, online inspection fees and fees earned from RBFS.

Foreign exchange had an unfavourable impact on total revenue in Q1 2019 due to fluctuations in the Euro and Canadian exchange rate relative to the U.S. dollar.

For the three months ended March 31, 2019, income tax expense was $6.6 million, compared to an income tax expense of $5.3 million for the same period in 2018. Our effective tax rate was ~~20.0%~~26.8% in Q1 2019, compared to 23.4% in Q1 2018.

Net income attributable to stockholders increased $1.0 million, or 6%, from $17.1 million in Q1 2018 due to higher operating income coupled with lower net interest expenses. This increase was partially offset by an increase in the effective tax rate.

Diluted EPS attributable to stockholders increased 6% to $0.17 per share for Q1 2019 from $0.16 per share in Q1 2018.

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:

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 ~~19.9%~~equipment, impairment losses, and certain other items, which we refer to as ‘adjusting items’. There were no adjusting items in Q1 2019 or Q1 2018.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) (non-GAAP measure) increased $2.3 million, or 5%, to $51.9 million in Q1 2019 from $49.6 million in Q1 2018.

Debt at the end of Q1 2019, represented 5.8 times net income as at and for the 12 months ended March 31, 2019. This compares to debt at Q1 2018, which represented 9.6 times net income as at and for the 12 months ended March 31, 2018. The decrease in this debt/net income multiplier was primarily due to lower debt balances at March 31, 2019 compared to March 31, 2018, as a result of our voluntary and involuntary debt repayments. The adjusted net debt/adjusted EBITDA (non-GAAP measure) was 1.7 times as at and for the 12 months ended March 31, 2019 compared to 2.5 times as at and for the 12 months ended March 31, 2018.

We believe it is meaningful to consider revenue in relation to GTV. GTV by channel and by revenue type are presented below for the three months ended March 31, 2018 and 2017, respectively. This marginal increase was primarily due to the growth in A&M total revenues outpacing the growth in GTV over the comparative period. A&M agency proceeds rate (non-GAAP measure) was 13.5% and 12.9% for the three months ended March 31, 2018 and 2017, respectively.2019.

~~The following tables presents our agency proceeds (non-GAAP measure) and A&M agency proceeds rate (non-GAAP measure) results for~~Overall, GTV increased 1% to $1.2 billion in Q1 2019; excluding the ~~current quarter and each quarter over the last two years, as well as reconciles those metrics to A&M total revenues and A&M revenue rate, which are the most comparable GAAP measures in, or calculated~~impact of foreign exchange, GTV increased 3%. GTV from ~~our consolidated income statements:~~

The increase in A&M costs of services in the first quarter of 2018 compared to the first quarter of 2017 was primarily due to the Acquisition and the costs associated with the inspection activities that support our online channels. The increase is also due to the increase in our live on site auctions was flat partly due to the Q1 2018 Grande Prairie auction of $37 million that did not repeat in Q1 2019, offset by growth in live on site auctions in the US and Europe. Online marketplaces GTV ~~over the comparative period.~~

~~Cost of inventory sold increased $12.4 million, or 20%,~~posted consecutive quarter growth delivering a 9% increase in the first ~~quarter of 2018~~quarter.

GTV from inventory contracts increased 56%, while Service GTV decreased 3% compared to ~~the first quarter of 2017,~~Q1 2018. These changes were primarily due to higher ~~volume~~sourced inventory deals in US and in Europe.

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, increased to 16.5% in Q1 2019, compared to 12.9% in Q1 2018, primarily due to higher inventory contracts.

~~Segment SG&A expenses, which include~~Across all channels, 60% of total GTV was purchased by online buyers in Q1 2019 compared to 56% in Q1 2018. This increase in internet bidders and online buyers show that we continued to promote multi-channel participation at our ~~corporate head office support costs, are presented by nature below:~~auctions through Q1 2019.

The total number of industrial lots increased 6% to 86,250, and the total number of lots including agricultural lots increased 6% to 88,000 lots in Q1 2019, primarily due to an increase of smaller value lots sold in Q1 2019. Total live auctions, including agricultural, were 47 in Q1 2019 compared to 52 in Q1 2018.

We saw an increase in ~~A&M SG&A expenses in~~average GTV per industrial auction for the ~~first quarter of 2018~~12 months ended March 31, 2019 compared to the ~~first quarter~~12 months ended March 31, 2018. The increase was primarily driven by our site optimization strategy to close five on site auction locations across North America to focus on online sales and largers auctions, as announced at the end of ~~2017 was~~2017.

GTV on a per lot basis generated at our industrial live on site auctions decreased 4% to $11,000 in Q1 2019 compared to $11,500 in Q1 2018, primarily due to ~~the Acquisition, our investment~~an increase of smaller value lots sold in ~~talent, and higher share unit expenses, as discussed above. Foreign exchange had a negative impact on A&M SG&A expenses in the first quarter of 2018.~~Q1 2019.

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 ~~our~~ GTV. Revenue Producers¹⁴is a term used to describe our revenue-producing sales personnel. This definition is comprised of Regional Sales Managers and ~~Territorial~~Territory Managers.

Our Sales Force Productivity asfor the trailing 12-month GTV divided by the number of Revenue Producers at the reporting date. As a result of the timing and impact of the Acquisition on both GTV and the number of Revenue Producers, we updated our Sales Force Productivity measure calculations as at and for the 12-month periodsperiod ended March 31, ~~2018 and~~2019 was $11.6 million per Revenue Producer compared to $11.3 million per Revenue Producer for the trailing 12-month period ended March 31, ~~2017.~~2018.

~~Our updated~~ Sales Force Productivity ~~measure calculation as at and~~ for the 12-month period ended March 31, 2018 iswas calculated as the sum of the following two amounts:

GTV for the two months, pre-Acquisition, ended May 31, 2017, divided by the average number of Revenue Producers over the same two-month period; ~~and~~

~~GTV for the ten months, post-Acquisition, ended March 31, 2018, divided by the average number of Revenue Producers over the same ten-month period.~~

Under the revised calculation, our Sales Force Productivity as at and for the trailing 12-month period ended March 31, 2018 was $11.3 million per Revenue Producer, which was a decrease of $0.8 million per Revenue Producer compared to the 12-month period ended March 31, 2017. We believe the decrease is due to a combination of factors, including:

The acquisition of Revenue Producers from IronPlanet that had a lower Sales Force Productivity than Ritchie Bros. sales personnel, pre-Acquisition. IronPlanet’s Sales Force Productivity was $7.6 million per Revenue Producer for the 12-month trailing period ended May 31, 2017.

~~The constrained supply of used equipment in 2017. As discussed above, the mix of equipment negatively impacted GTV in the first quarter of 2018.~~

¹⁴

In our Annual Report on Form 10-K for the year ended December 31, 2017, the number of Revenue Producers should have been 431 instead of 455 as 24 Mascus sales personnel (seven Regional Sales Managers and 17 Territory Managers) were inadvertently included in the figure reported. Consequently, the Sales Force Productivity reported for the year ended December 31, 2017 should have been $11.2 million per Revenue Producer instead of $11.0 million per Revenue Producer.

~~Ritchie Bros.~~

The effect of the factors noted above in decreasing Sales Force Productivity were partially offset by strong price performance in construction assets in Canada, Europe, and Asia, as well as in vocational trucks in Canada.

~~Industrial live on site auction metrics~~

During the first quarter of 2018, we conducted 35 unreserved industrial live on site auctions at locations in North America, Europe, the Middle East, Australia, and Asia, compared to 41 during the first quarter of 2017.

~~Our key industrial live on site auction metrics~~¹⁵~~are shown below:~~

Three months ended March 31,
% Change
2018 2017 2018 over 2017
Bidder registrations 119,000 114,500 4 %
Consignments 10,750 11,350 (5 )%
Buyers 29,000 29,150 (1 )%
Lots 81,000 84,000 (4 )%

We saw decreases in all key industrial live on site auction metrics in the first quarter of 2018 compared to the first quarter of 2017, except for the number of bidder registrations. The decreases were primarily due to fewer auctions and sale days resulting from our North American site closures announced in 2017, auction calendar changes that shifted regularly scheduled first quarter auctions into the second quarter of 2018, and the effects of the continuing equipment supply shortage.

The increase in bidder registrations over the comparative period was the result of some new registration initiatives, which included providing certain IronPlanet customers with reciprocity for bidding at our live on site auctions through the creation of online bidding accounts, and providing ‘watchlist’ customers with weekly reminders of when items they are interested in are being sold through one of our channels.

~~Although our auctions vary in size, our average industrial live on site auction results on a trailing 12-month basis are described in the following table:~~

12 months ended March 31,
Change
2018 2017 2018 over 2017
GTV $ 15.9 million $ 16.4 million $ -0.5 million
Bidder registrations 2,405 2,319 4 %
Consignors 233 231 1 %
Lots 1,576 1,680 (6 )%

¹⁵

~~For a breakdown of these key industrial auction metrics by month, please refer to our website at~~~~www.rbauction.com~~~~. None of the information in our website is incorporated by reference into this document by this or any other reference.~~

~~Ritchie Bros.~~

We saw a decrease in the average GTV per industrial auction for the 12 months ended March 31, 2018 compared the 12 months ended March 31, 2017. We believe the decrease was primarily driven by constrained supply of used equipment, particularly in 2017, the impact on the mix and age of equipment that came to market, and our lower Sales Force Productivity over the comparative period.

~~Online bidding~~

Internet bidders comprised 69% of the total bidder registrations at our live on site auctions in the first three months of 2018 compared to 66% in the first three months of 2017. This increase in the level of internet bidders continues to demonstrate our ability to drive multi-channel participation at our auctions. Across all channels, 56% of total GTV was purchased by online bidders in the first quarter of 2018 compared to 50% in the first quarter of 2017.

~~Website metrics~~¹⁶

~~Our website at~~~~www.rbauction.com~~ ~~provides customers with the ability to bid electronically at our live on site auctions IronPlanet websites~~~~www.ironplanet.com~~,~~www.govplanet.com~~~~, and~~~~www.truckplanet.com~~, provide access to our online marketplaces. Traffic across all our websites increased 37% in the first quarter of 2018 compared to the first quarter of 2017 due to the Acquisition. Including the addition of IronPlanet, the number of average monthly users in the first quarter of 2018 increased 6% on a comparative basis.

~~Other services~~

(in U.S. $000's) Three months ended March 31,
$ Change % Change
2018 2017 2018 over 2017 2018 over
2017
Service revenues $ 27,611 $ 20,349 $ 7,262 36 %
Costs of services 15,209 11,753 3,456 29 %
SG&A expenses 4,468 3,464 1,004 29 %
Other services profit $ 7,934 $ 5,132 $ 2,802 55 %

~~Service revenues from other services grew $7.3 million, or 36%, in the first quarter of 2018 compared to the first quarter of 2017. This increase was primarily due to:~~

~~A $3.5 million, or 24%, increase in ancillary and logistical services revenue;~~

~~An additional $1.7 million in Asset Appraisal Services revenue due to the Acquisition;~~

~~A $1.4 million, or 43%, increase in RBFS revenue to $4.7 million in the first quarter of 2018 from $3.3 million in the first quarter of 2017;~~ and

~~A $0.7 million, or 30%, increase in Mascus revenue to $2.8 million in~~GTV for the ~~first quarter~~ten months following the Acquisition divided by the average number of ~~2018 from $2.2 million in~~Revenue Producers over the ~~first quarter of 2017.~~same ten-month period.

A&M revenue

Total A&M revenue was $274.5 million, an increase of $41.9 million, or 18%, from Q1 2018. The increase in total revenue was primarily due to the $46.9 million, or 56%, increase in inventory sales revenue, partially offset by a 3% decrease in service revenue.

A&M revenue by geographical region are presented below:

(in U.S $000's)	Three months ended March 31,
					% Change
	2019		2018		2019 over 2018
United States
Service revenue	$	102,975	$	103,206		(0	)%
Inventory sales revenue		67,944		19,498		248	%
A&M revenue- United States		170,919		122,704		39	%
Canada
Service revenue		19,768		21,726		(9	)%
Inventory sales revenue		3,785		37,161		(90	)%
A&M revenue- Canada		23,553		58,887		(60	)%
International
Service revenue		20,694		23,474		(12	)%
Inventory sales revenue		59,328		27,502		116	%
A&M revenue- International		80,022		50,976		57	%
Total
Service revenue		143,437		148,406		(3	)%
Inventory sales revenue		131,057		84,161		56	%
A&M total revenue		274,494		232,567		18	%

Changes in A&M segment revenue in Q1 2019 compared to Q1 2018 were primarily driven by:

• United States– 39% increase was due to a $48.4 million increase in inventory sales revenue. We strategicially accepted a large volume of inventory contracts to secure equipment supply for our 2019 Orlando auction, the largest auction ever hosted by Ritchie Bros. We also experienced revenue growth in our GovPlanet non-rolling stock program as the contract was launched in Q2 2018. Service revenue remains unchanged with lower volume of commission revenues and lower guarantee rate performance, offset by higher fees revenue.

• Canada– 60% decrease was primarily due to a $33.4 million decrease in inventory sales revenue, and a $2.0 million decrease in service revenue. There was higher inventory sales revenue in Q1 2018 compared to Q1 2019 primarily due to the dispersal of large oil and gas equipment from our Q1 2018 Grande Prairie auction of $37 million that did not repeat in Q1 2019. Service revenue decreased 9% primarily due to lower volume from our commission contracts.

• International– 57% increase was primarily due to a $31.8 million increase in inventory sales revenue, partially driven by macroeconomic conditions in parts of Europe and Asia creating a more favourable supply environment. This increase was offset by the $2.8 million decrease in service revenue caused by the change in revenue mix between service revenue and inventory sales revenue.

Ritchie Bros.

Costs of services

A&M costs of services decreased $0.6 million, or 3%, in Q1 2019 compared to Q1 2018, which was in-line with the change in GTV.

Cost of inventory sold

A&M cost of inventory sold increased $44.7 million, or 59%, in Q1 2019 compared to Q1 2018, in line with higher activity in inventory sales revenue. A contributing factor to the higher cost of inventory sold in the quarter resulted from discrete lower price performance on certain categories of equipment which was in greater supply at the February 2019 Orlando auction.

SG&A expenses

Our A&M segment SG&A expenses decreased $3.8 million, or 4%, in Q1 2019 compared to Q1 2018. The decrease was primarily due to higher share unit expenses in Q1 2018 related to mark-to-market costs driven by growth in the share price and incremental compensation cost resulting from the modification of certain performance factors. The decrease was partially offset by on-going incremental costs related to the GovPlanet non-rolling stock program.

Foreign exchange rates had a favourable impact on SG&A expenses in the quarter primarily due to fluctuations of the Euro and Canadian dollar exchange rate relative to the U.S. dollar.

Other Services Segment

(in U.S $000's)	Three months ended March 31,
					% Change
	2019		2018		2019 over 2018
Service revenue	$	28,935	$	27,611		5	%
Ancillary and logistical service expenses		13,759		14,580		(6	)%
Other costs of services		1,493		629		137	%
SG&A expenses		6,002		4,468		34	%
Other services profit	$	7,681	$	7,934		(3	)%

Revenue from other services increased $1.3 million, or 5%, in Q1 2019 compared to Q1 2018. This increase was primarily due to the increase in RBFS revenue of $1.5 million and RB Logistics of $1.5 million, offset by lower ancillary service revenue of $1.7 million. Ancillary service revenue decreased partially due to less ancillary services provided across our auction sites in the US.

Funded volume, which represents the amount of lending brokered by RBFS, increased ~~53%~~25% from ~~$62.2 million in the first quarter of 2017 to~~ $95.0 million in ~~the first quarter of~~Q1 2018 to $119.3 million in Q1 2019. RBFS segment revenue was $6.3 million in Q1 2019, a 32% increase compared to $4.7 million in Q1 2018. RBFS operating profit increased ~~$0.7 million or 47%~~32% over the same comparative period to ~~$2.2~~$2.9 million from ~~$1.5~~$2.2 million. Logistical services revenue grew primarily to support our European customers.

SG&A expenses in the other segment increased $1.5 million, or 34% primarily due to expenses incurred to support the growth of RBFS.

¹⁶

~~None of the information in our websites is incorporated by reference into this document by this or any other reference.~~

Other services profit decreased $0.3 million, or 3% primarily due to lower profits from our appraisal services, partially offset by the growth in RBFS.

~~Ritchie Bros.~~

Liquidity and Capital Resources

~~Working capital~~

(in U.S. $000's) March 31, December 31,
2018 2017 $ Change % Change
Cash and cash equivalents $ 278,944 $ 267,910 $ 11,034 4 %
Current restricted cash $ 62,414 $ 63,206 $ (792 ) (1 )%

Current assets $ 606,288 $ 508,487 $ 97,801 19 %
Current liabilities 491,339 388,455 102,884 26 %
Working capital $ 114,949 $ 120,032 $ (5,083 ) (4 )%

We ~~believe that working capital is a more meaningful measure of~~assess our liquidity ~~than~~based on our ability to generate cash ~~alone.~~to fund operating, investing, and financing activities. Our ~~working capital decreased during the three months ended March 31, 2018,~~liquidity is primarily ~~due to the~~affected by fluctuations in cash provided by operating activities, payment of dividends, voluntary repayments of ~~$18.2 million~~term debt, our net capital spending, and ~~voluntary prepayments totalling $25.0 million on the term loan denominated in United States dollars. This decrease was partially offset by the increase in operating income over the comparative period.~~significant acquisitions of businesses.

~~Cash flows~~

(in U.S. $000's) Three months ended March 31,
$ Change % Change
2018 2017 2018 over 2017 2018 over
2017
Cash provided by (used in):
Operating activities $ 67,238 $ 134,542 $ (67,304 ) (50 )%
Investing activities (13,206 ) (6,022 ) (7,184 ) 119 %
Financing activities (45,417 ) (15,065 ) (30,352 ) 201 %
Effect of changes in foreign currency rates 1,627 3,336 (1,709 ) (51 )%
Net increase in cash, cash equivalents, and restricted cash $ 10,242 $ 116,791 $ (106,549 ) (91 )%

Operating activities

continue to be the primary source of our cash, as well as borrowings from our revolving credit facilities to fund significant acquisitions and various business activities. 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 ~~underwritten~~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.

Ritchie Bros.

Cash flows

(in U.S $000's)	Three months ended March 31,
							% Change
	2019			2018			2019 over 2018
Cash provided by (used in):
Operating activities	$	71,903		$	67,238			7	%
Investing activities		(8,164	)		(13,206	)		(38	)%
Financing activities		(44,696	)		(45,417	)		(2	)%
Effect of changes in foreign currency rates		(1,376	)		1,627			(185	)%
Net increase in cash, cash equivalents, and restricted cash	$	17,667		$	10,242			72	%

Operating activities

Cash provided by operating activities increased $4.7 million in ~~the first quarter of 2018 of $67.2 million~~Q1 2019 compared to Q1 2018. This increase was ~~comprised of $17.2 million of net income, $24.8 million of non-cash expenses, and $25.3 million of cash generated by~~primarily due to changes in certain of our operating assets and ~~liabilities. Cash provided by operating activities~~liabilities and a $1.0 million increase in ~~the first quarter of 2017 of $134.5 million was comprised of $10.4 million in~~our net income ~~$12.1 million in non-cash expenses, and $112.0 million of cash generated by changes in operating assets and liabilities.~~

~~Net income in the first quarter of 2018 increased compared to the first quarter of 2017 due to stronger operating income, partially offset by a higher interest expense. Non-cash expenses increased~~ over the comparative ~~period primarily due to higher amortization expenses driven by the increase in intangible assets as a result of the Acquisition.~~

~~Ritchie Bros.~~

~~The decrease in cash generated by changes~~period. Changes in operating assets and liabilities generated $2.1 million more cash in Q1 2019 than Q1 2018, which included a $34.0 million increase in cash from changes in inventory, partially offset by changes in trade and other payables. Inventory changes consisted primarly of a reduction in inventory in the United States and Europe during Q1 2019. Changes in trade and other payables were driven by payment of annual bonus, interest on senior notes, as well as, the timing, size, and number of auctions over the comparative period, ~~was primarily due to more auction proceeds payable being settled in~~as well as the ~~United States in the first quarter~~volume of 2018 compared to the first quarter of 2017. This change was driven by increases in GTV, the number of auctions, and the number of sale days leading up to the first quarter of 2018 compared to the first quarter of 2017.our inventory contracts.

Investing activities

Net cash used in investing activities ~~increased $7.2~~decreased $5.0 million ~~during the first quarter of 2018~~in Q1 2019 compared to ~~the first quarter of 2017.~~Q1 2018. This ~~increase~~decrease is primarily due to our acquisition of Leake Auction Company ~~an Oklahoma-based collector car auctioneer, which~~in Q1 2018. Net capital spending was ~~announced on January 16,~~$8.2 million in Q1 2019 compared to $8.5 million in Q1 2018.

CAPEX intensity presents net capital spending, which excludes acquisition investments, as a percentage of total revenues. We believe that comparing CAPEX intensity on a trailing 12-month basis for different financial periods provides useful information as to the amount of capital expenditure that we require to generate revenues.

CAPEX intensity for the 12 months ended March 31, 2018 increased 80 bps compared to CAPEX intensity for the 12 months of 2017, primarily due to the net capital spending increase of 22% exceeding the total revenues decrease of 4% over the comparative period. The net capital spending increase was primarily due to an increase in the capitalization of costs of intangible assets under development. Significant software development projects over the 12-month period ended March 31, 2018 included systems integration following the Acquisition and other acquisitions, as well as enhanced functionality for our online marketplace sales channel.

~~The following table presents CAPEX intensity and agency proceeds CAPEX rate~~¹⁷ (non-GAAP measure) results for the trailing 12-month periods ended March 31, 2018 and 2017, as well as reconciled those metrics to property, plant and equipment additions, intangible asset additions, proceeds on disposition of property, plant and equipment, and total revenues, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements.

(in U.S. $ millions) 12 months ended March 31,
Change
2018 2017 2018 over 2017
Property, plant and equipment additions $ 11.5 $ 18.3 (37 )%
Intangible asset additions 30.0 19.5 54 %
Proceeds on disposition of property plant and equipment (4.5 ) (7.4 ) (39 )%
Net capital spending $ 37.0 $ 30.4 22 %

Total revenues 1,031.9 1,070.9 (4 )%
Less: cost of inventory sold (318.9 ) (465.2 ) (31 )%
Less:ancillary and logistical service expenses (57.2 ) (46.7 ) 22 %
Agency proceeds (non-GAAP measure) $ 655.8 $ 559.0 17 %

CAPEX intensity 3.6 % 2.8 % 80 bps
Agency proceeds CAPEX rate (non-GAAP measure) 5.6 % 5.4 % 20 bps

¹⁷

Agency proceeds CAPEX rate is a non-GAAP financial measure that we believe, when compared on a trailing 12-month basis to different financial periods provides useful information as to the amount of capital expenditure that we require to generate revenues. It is not a measure of liquidity. We calculate agency proceeds CAPEX rate by dividing net capital spending by agency proceeds (non-GAAP measure).

~~Ritchie Bros.~~

~~The decrease in cash provided by operating activities combined with the increase in net capital spending resulted in a decrease in operating free cash flow (“OFCF”)~~¹⁸(non-GAAP measure) of $74.0 million, or 64%, to $42.0 million in the 12 months ended March 31, 2018 from $116.0 million in the 12 months ended March 31, 2017, as this now includes three full quarters post-Acquisition.

Financing activities

Net cash used byin financing activities ~~increased $30.4~~decreased $0.7 million in ~~the first three months of 2018~~Q1 2019 compared to ~~the first three months~~Q1 2018. The primary uses of ~~2017.~~cash in financing activities in Q1 2019 were $23.4 million of net repayments of debt, including $10.0 million of voluntary term debt repayments, and $19.6 million of dividend payments. This ~~increase was primarily due~~compares to ~~voluntary prepayments totalling~~$30.7 million of net repayments of debt, including $25.0 million ~~on the~~of voluntary term ~~loan, as well as higher scheduled long-term~~ debt ~~payments.~~repayments, and $18.2 million of dividend payments in Q1 2018.

Dividend information

We declared and paid a regular cash dividend of $0.17 per common share for the ~~quarters~~quarter ended March 31, ~~2017,~~2018, and $0.18 per common share for the quarters ended June 30, ~~2017,~~2018, September 30, ~~2017,~~2018, and December 31, ~~2017.~~2018. We have declared, but not yet paid, a dividend of ~~$0.17~~$0.18 per common share for the quarter ended March 31, ~~2018.~~

~~Total dividend payments during the three months ended March 31, 2018 and 2017 were $18.2 million to stockholders.~~2019. 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 62.9% for the 12 months ended March 31, 2019 from 89.0% for the 12 months ended March 31, ~~2018 from 98.2% for the 12 months ended March 31, 2017.~~2018. This decrease is primarily due to the increase in net income attributable to stockholders over the comparative period. Our adjusted dividend payout ratio¹⁹ (non-GAAP measure) ~~increased~~decreased to 64.9% for the 12 months ended March 31, 2019 from 79.0% for the 12 months ended March 31, ~~2018 from 67.1% for the 12 months ended March 31, 2017.~~2018.

Return on average invested capital

Our return on average invested capital is calculated as net income attributable to stockholders divided by our average invested capital. We calculate average invested capital over a trailing 12-month period by adding the average long-term debt over that period to the average stockholders’ equity over that period.

Return on average invested capital ~~decreased 120~~increased 220 bps to 8.0% for the 12-month period ending March 31, 2019 from 5.8% for the 12-month period ending March 31, ~~2018 from 7.0% for the 12-month period ending March 31, 2017.~~2018. This ~~decrease~~increase is primarily due to ~~a $376.9 million, or 36%, increase in average invested capital over the comparative period, which was driven by the Acquisition and the associated debt, and partially offset by~~ an increase in net income attributable to ~~stockholders.~~

¹⁸

OFCF is a non-GAAP financial measure that we believe, 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 the performance metric, OFCF. OFCF is also an element of the performance criteria for certain annual short-term incentive awards we grant to our employees and officers. We calculate OFCF by subtracting net capital spending from cash provided by operating activities. OFCF is reconciled to the most directly comparable GAAP measures in our consolidated financial statements under “Non-GAAP Measures” below.

¹⁹

Adjusted dividend payout ratio is a non-GAAP financial measure. We believe that comparing the adjusted dividend payout ratio for different financial periods provides useful information about how well our net income supports our dividend payments. Adjusted dividend payout ratio is calculated by dividing dividends paid to stockholders by adjusted net income attributable to stockholders (non-GAAP measure). Adjusted dividend payout ratio is reconciled to the most directly comparable GAAP measures in our consolidated financial statements under “Non-GAAP Measures” below.

~~Ritchie Bros.~~

stockholders over the comparative period, partially offset by an increase in average stockholders’ equity and long-term debt. Return on invested capital (“ROIC”) ~~excluding escrowed debt~~²⁰(non-GAAP measure) ~~decreased 710~~increased 120 bps to ~~6.5%~~7.7% during the 12 months ended March 31, ~~2018~~2019 compared to ~~13.6%~~6.5% for the 12 months period ending March 31, ~~2017.~~2018.

~~Debt and credit facilities~~

At March 31, 2018, our short-term debt of $5.9 million consisted of borrowings under our committed revolving credit facilities and had a weighted average annual interest rate of 2.9%. This compares to current borrowings of $7.0 million at December 31, 2017 with a weighted average annual interest rate of 2.7%.

As at March 31, 2018, we had a total of $780.3 million long-term debt with a weighted average annual interest rate of 4.9%. This compares to long-term debt of $812.9 million as at December 31, 2017 with a weighted average annual interest rate of 4.8%.

Our five-year credit agreement with a syndicate of lenders (the “Credit Agreement”) allows prepayment of term loans in whole or in part at par. The Credit Agreement provided us with a term loan facility of up to $325.0 million (the “Term Loan Facility”). During the first quarter of 2018, we made voluntary prepayments of the term loan denominated in United States dollars totalling $25.0 million. These prepayments were applied to our next scheduled payments. The amount available pursuant to the Term Loan Facility was only available to finance the acquisition of IronPlanet and will not be available for other corporate purposes upon repayment of amounts borrowed under that facility.

~~As at March 31, 2018, we had available $646.8 million under our committed revolving credit facilities, pursuant to the Credit Agreement, which is available until October 27, 2021.~~

Future scheduled principal and interest payments (assuming no changes in short-term rates from current levels) over the next five years relating to our long-term debt outstanding at March 31, 2018 are as follows:

(in U.S. $000's) Scheduled payments by due period
In 2018 In 2019 In 2020 In 2021 In 2022 Thereafter
On long-term debt:
Principal $ 6,948 $ 13,896 $ 25,032 $ 250,150 $ - $ 500,000
Interest 22,608 38,745 38,024 35,107 26,875 67,188

~~Other credit facilities~~

As at March 31, 2018, we also had $10.0 million in credit facilities in certain foreign jurisdictions. Of these, $5.0 million were in a committed, revolving credit facility that was renewed on May 2, 2018 and now expires on October 27, 2021. The remaining $5.0 million was a demand facility that has no maturity date. As at March 31, 2018, we had available $8.8 million pursuant to these facilities.

²⁰

ROIC excluding escrowed debt is a non-GAAP financial measure that we believe, by comparing on a trailing 12-month basis for different financial periods provides useful information about the after-tax return generated by our investments by removing the impact of the issue of our senior secured notes (“Notes”), which were held in escrow at March 31, 2017. While the Notes were in escrow and not accessible by us, they were not contributing to the generation of net income. We believe that by adjusting debt to remove funds we do not have access to, we are providing more accurate information about the after-tax return generated by our investments. We calculate ROIC excluding escrowed debt as adjusted net income attributable to stockholders (non-GAAP measure) divided by adjusted average invested capital (non-GAAP measure). We calculate adjusted average invested capital (non-GAAP measure) as the adjusted average long-term debt (non-GAAP measure) and average stockholders’ equity over a trailing 12-month period. We calculate adjusted average long-term debt (non-GAAP measure) as the average of adjusted opening long-term debt (non-GAAP measure) and adjusted ending long-term debt (non-GAAP measure). Adjusted opening long-term debt (non-GAAP measure) and adjusted ending long-term debt (non-GAAP measure) are calculated as opening or ending long-term debt, as applicable, as reported in our consolidated financial statements reduced by long-term debt held in escrow. ROIC excluding escrowed debt is reconciled to the most directly comparable GAAP measures in our consolidated financial statements under “Non-GAAP Measures” below.

Ritchie Bros.

4537

Debt covenants

We were in compliance with all financial and other covenants applicable to our credit facilities at March 31, ~~2018.~~2019.

Share repurchase program

On May 8, 2019, our Board of Directors authorized a share repurchase program for the repurchase of up $100 million worth of our common shares (subject to the Toronto Stock Exchange ”TSX” approval) over the next 12 months.

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.

Critical Accounting Policies, ~~Judgements,~~Judgments, Estimates and Assumptions

Aside from the adoption of ~~Topic 606~~ASU 2016-02,Leases (Topic 842),discussed below, there were no material changes in our critical accounting policies, ~~judgements,~~judgments, estimates and assumptions from those disclosed in the following our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, 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, ~~2018,~~2019, we adopted Topic ~~606 using~~842, which requires lessees to recognize almost all leases, including operating leases, on the ~~full retrospective method. The primary impact~~balance sheet through a right-of-use asset and a corresponding lease liability. We utilized the optional transition approach, which permits us to apply the new lease standards at the adoption date.

On adoption of the ~~adoption~~new standard, we recognized a right-of-use asset relating to operating leases of ~~Topic 606 is~~$103,897,000 with a corresponding increase in operating lease liability. Offsetting the ~~change~~increase in the ~~presentation~~ROU asset recognized was the reclassification of ~~revenue earned~~a deferred rent liability from ~~inventory sales and ancillary and logistical services. These revenues are presented~~~~gross~~other non-current liability to ROU asset of ~~the related expenses rather than net.~~$5,752,000. There wasno impact on ~~the timing of revenues recognized, amount of operating income~~retained earnings or ~~net income, or on the consolidated balance sheet or consolidated statements of~~ cash ~~flows~~ ~~due to the adoption of Topic 606.~~flows.

The ~~following table presents our first quarter 2018 results and illustrates~~adoption of the standard had no impact on our ~~historical reported results of retrospectively adopting Topic 606:~~

(in U.S. $000's) Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017
Service revenues $ 176,016 $ 182,351 $ 145,938 $ 172,749 $ 123,379
Revenue from inventory sales 84,162 109,399 81,463 79,864 76,048
Total revenues 260,178 291,750 227,401 252,613 199,427
Costs of services 36,657 39,096 33,461 36,292 24,340
Cost of inventory sold 75,791 98,895 72,476 71,726 63,401

~~The following table reconciles revenues as previously reported to total revenues~~debt-covenant compliance under ~~Topic 606:~~

Prior to January 1,
2018 New Revenue Standard Adjustments On and after January 1,
2018
(in U.S. $000's) Revenues as previously
reported (a) Cost of inventory
sold¹ (b) Ancillary and logistical
service expenses² (c) Total revenues under
the new standard
(a)+(b)+(c)=(d)
Quarter ended:
December 31, 2017 $ 178,785 $ 98,895 $ 14,070 $ 291,750
September 30, 2017 141,047 72,476 13,878 227,401
June 30, 2017 166,186 71,726 14,701 252,613
March 31, 2017 124,499 63,401 11,527 199,427
Full year 2017 $ 610,517 $ 306,498 $ 54,176 $ 971,191

~~Ritchie Bros.~~

~~The following table reconciles costs of services as previously reported to costs of services under Topic 606:~~

Prior to January 1, 2018 New Revenue Standard
Adjustments On and after January 1, 2018
(in U.S. $000's) Costs of services (a) Ancillary and logistical service
expenses²(b) Costs of services under the
new standard (a) + (b) = (c)
Quarter ended:
December 31, 2017 $ 25,026 $ 14,070 $ 39,096
September 30, 2017 19,583 13,878 33,461
June 30, 2017 21,591 14,701 36,292
March 31, 2017 12,813 11,527 24,340
Full year 2017 $ 79,013 $ 54,176 $ 133,189

These amounts were historically disclosed under the Consolidated Financial Statement note entitled "Revenue" and are now presented on the face of our consolidated income statements. Second and third quarter 2017 amounts were restated in the fourth quarter of 2017 to conform with current presentation of certain government contracts.

~~Ancillary and logistical service expenses are now reported within costs of services under the Consolidated Financial Statement note entitled "Operating Expenses".~~

~~As noted above, we introduced the new performance metric, agency proceeds (non-GAAP measure), in response to the adoption of Topic 606. The following table presents~~ our ~~agency proceeds (non-GAAP measure) results for the~~ current ~~quarter and each quarter in 2017, as well as reconciles this measure to total revenues, which is the most directly comparable GAAP measure in our consolidated income statements:~~agreements.

(in U.S. $000's) Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017
Total revenues $ 260,178 $ 291,750 $ 227,401 $ 252,613 $ 199,427
Less: cost of inventory sold (75,791 ) (98,895 ) (72,476 ) (71,726 ) (63,401 )
Less: ancillary and logistical service expenses (14,580 ) (14,070 ) (13,878 ) (14,701 ) (11,527 )
Agency proceeds (non-GAAP measure) $ 169,807 $ 178,785 $ 141,047 $ 166,186 $ 124,499

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

~~Ritchie Bros.~~

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 ~~presents our agency proceeds (non-GAAP measure) and agency proceeds~~reconciles adjusted operating income ~~rate (non-GAAP measure) results for the three months ended March 31, 2018 and 2017, as well as reconciles those metrics~~ to ~~total revenues and~~ operating income, ~~margin,~~ which ~~are~~is the most directly comparable GAAP ~~measures~~measure in ~~or calculated from,~~ our consolidated income ~~statements:~~statements.

(in U.S. $000's) Three months ended March 31,
Change
2018 2017 2018 over 2017
Operating income $ 32,873 $ 23,597 39 %

Total revenues 260,178 199,427 30 %
Less: cost of inventory sold (75,791 ) (63,401 ) 20 %
Less: ancillary and logistical service expenses (14,580 ) (11,527 ) 26 %
Agency proceeds (non-GAAP measure) $ 169,807 $ 124,499 36 %

Operating income margin 12.6 % 11.8 % 80 bps
Agency proceeds adjusted operating income rate (non-GAAP measure) 19.4 % 19.0 % 40 bps

There were no adjusting items in Q1 2019 or in the comparative prior period.

(in U.S. $000's)	Three months ended March 31,
					% Change
	2019		2018		2019 over 2018
Operating income	$	33,588	$	32,873		2	%
Adjusted operating income*	$	33,588	$	32,873		2	%

(1)

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

Ritchie Bros.

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 ~~three months ended March 31, 2018~~relevant financial period and ~~2017.~~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 ~~presents our~~reconciles adjusted net income attributable to ~~stockholders (non-GAAP measure)~~stockholders* and diluted adjusted EPS attributable to ~~stockholders (non-GAAP measure) results for the three months ended March 31, 2018, and 2017, as well as reconciles those metrics~~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:~~

(in U.S. $000's, except share and Three months ended March 31,
per share data) Change
2018 2017 2018 over 2017
Net income attributable to stockholders $ 17,138 $ 10,377 65 %
Current income tax adjusting item:
Change in uncertain tax provision - 2,290 (100 )%
Adjusted net income attributable to stockholders (non-GAAP measure) $ 17,138 $ 12,667 35 %
Effect of dilutive securities $ - $ 27 (100 )%
Weighted average number of dilutive shares outstanding 108,643,897 107,788,949 1 %

Diluted EPS attributable to stockholders $ 0.16 $ 0.10 60 %
Diluted adjusted EPS attributable to stockholders (non-GAAP measure) $ 0.16 $ 0.12 33 %

statements.

There were no adjusting items ~~for~~in Q1 2019 or in the ~~three months ended March 31, 2018.~~comparative prior period.

(in U.S. $000's, except share and per share data)	Three months ended March 31,
					% Change
	2019		2018		2019 over 2018
Net income attributable to stockholders	$	18,164	$	17,138		6	%
Adjusted net income attributable to stockholders*	$	18,164	$	17,138		6	%
Weighted average number of dilutive shares outstanding		110,044,213		108,643,897		1	%
Diluted earnings per share attributable to stockholders	$	0.17	$	0.16		6	%
Diluted adjusted EPS attributable to Stockholders*	$	0.17	$	0.16		6	%

(1)

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

(2)

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*

~~The adjusting item for~~We believe adjusted EBITDA* provides useful information about the ~~three months ended March 31, 2017 was a $2.3 million (or $0.02 per diluted share) charge related to the change in uncertain tax provisions.~~growth or decline of our net income when compared between different financial periods.

~~Ritchie Bros.~~

The following table ~~presents our~~reconciles adjusted ~~EBITDA (non-GAAP measure) and agency proceeds adjusted EBITDA rate (non-GAAP measure) results for the three months ended March 31, 2018 and 2017, as well as reconciles those metrics~~EBITDA* to net income, ~~and net income margin,~~ which ~~are~~is the most directly comparable GAAP measures in, or calculated from, our consolidated income statements:

(in U.S. $000's) Three months ended March 31,
Change
2018 2017 2018 over 2017
Net income $ 17,207 $ 10,433 65 %
Add: depreciation and
amortization expenses 16,191 10,338 57 %
Add: interest expense 11,310 8,133 39 %
Less: interest income (392 ) (955 ) (59 )%
Add: income tax expense 5,269 7,315 (28 )%
Adjusted EBITDA (non-GAAP measure) 49,585 35,264 41 %

Total revenues 260,178 199,427 30 %
Less: cost of inventory sold (75,791 ) (63,401 ) 20 %
Less: ancillary and logistical service expenses (14,580 ) (11,527 ) 26 %
Agency proceeds (non-GAAP measure) $ 169,807 $ 124,499 36 %

Net income margin 6.6 % 5.2 % 140 bps
Agency proceeds adjusted EBITDA rate (non-GAAP measure) 29.2 % 28.3 % 90 bps

(in U.S. $000's)	Three months ended March 31,
							% Change
	2019			2018			2019 over 2018
Net income	$	18,172		$	17,207			6	%
Add: depreciation and amortization expenses		17,115			16,191			6	%
Add: interest expense		10,816			11,310			-4	%
Less: interest income		(855	)		(392	)		118	%
Add: income tax expense		6,639			5,269			26	%
Adjusted EBITDA*	$	51,887		$	49,585			5	%

~~There were no adjusting items for the three months ended March 31, 2018 and 2017.~~

(1)

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.

Ritchie Bros.

4939

~~The following table presents our~~Adjusted EBITDA* and Adjusted Net Debt/Adjusted EBITDA* Reconciliation

We believe that comparing adjusted net debt/adjusted ~~EBITDA (non-GAAP measures) results~~EBITDA* on a trailing 12-month basis for different financial periods provides useful information about the performance of our operations as atan indicator of the amount of time it would take us to settle both our short and ~~for the 12 months ended March 31, 2018~~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 discussed under “Liquidity and ~~2017, as well as~~Capital Resources”.

The following table reconciles ~~that metric~~adjusted EBITDA* and adjusted net debt*/adjusted EBITDA* to debt, cash and cash equivalents, net income, and debt as a multiple of net income, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements.

(in U.S. $ millions)	As at and for the 12 months ended March 31,									As at and for the 12 months ended March 31,
							Change									% Change
	2018			2017			2018 over 2017			2019			2018			2019 over 2018
Short-term debt	$	5.9		$	24.6			(76	)%	$	8.7		$	5.9			47	%
Long-term debt		780.3			596.4			31	%		703.3			780.3			-10	%
Debt		786.2			621.0			27	%		712.0			786.2			-9	%
Less: cash and cash equivalents		(278.9	)		(236.9	)		18	%		(266.5	)		(278.9	)		-4	%
Less: long-term debt in escrow		-			(495.9	)		(100	)%
Adjusted net debt (non-GAAP measure)		507.3			(111.8	)		554	%

Adjusted net debt											445.5			507.3			-12	%
Net income	$	82.1		$	74.0			11	%	$	122.5		$	82.1			49	%
Add: depreciation and amortization expenses		58.6			41.1			43	%		67.5			58.6			15	%
Add: interest expense		41.5			12.3			237	%		44.0			41.5			6	%
Less: interest income		(2.6	)		(2.3	)		13	%		(3.4	)		(2.6	)		31	%
Add: income tax expense		-			34.7			(100	)%		32.4			-			100	%
Pre-tax adjusting items:
Accelerated vesting of assumed options		4.8			-			100	%		-			4.8			-100	%
Acquisition and finance structure advisory		9.1			-			100	%		-			9.1			-100	%
Severance and retention		3.6			-			100	%		1.5			3.6			-58	%
Gain on sale of equity accounted for investment											(4.9	)		-			100	%
Impairment loss		8.9			28.2			(68	)%		-			8.9			-100	%
Debt extinguishment costs		-			6.8			(100	)%
Adjusted EBITDA (non-GAAP measure)	$	206.0		$	194.8			6	%

Adjusted EBITDA*										$	259.6		$	206.0			26	%
Debt/net income		9.6	x		8.4	x		14	%		5.8	x		9.6	x		(40	)%
Adjusted net debt/adjusted EBITDA (non-GAAP measure)		2.5	x		-0.6	x		517	%
Adjusted net debt/adjusted EBITDA											1.7	x		2.5	x		(32	)%

(1)

Please refer to page 44 for a summary of adjusting items during the trailing 12-months ended March 31, 2019 and March 31, 2018.

(2)

(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*.

Ritchie Bros.

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 and net capital spending, which are the most directly comparable GAAP measures in, or calculated from, our consolidated statements of cash flows:

(in U.S. $ millions)	12 months ended March 31,
							% Change
	2019			2018			2019 over 2018
Cash provided by operating activities	$	148.9		$	80.3			85	%
Property, plant and equipment additions		17.1			11.5			49	%
Intangible asset additions		24.7			30.0			-18	%
Proceeds on disposition of property plant and equipment		(9.8	)		(4.5	)		118	%
Net capital spending	$	32.0		$	37.0			-14	%
OFCF*	$	116.9		$	43.3			170	%

(1)

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

(2)

The comparative figures for cash provided by operating activities in Q1 2018 has been restated to conform with prior year presentation.

Ritchie Bros.

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 ~~12 months~~most directly comparable GAAP measures in, or calculated from, our consolidated financial statements:

(in U.S. $ millions)	12 months ended March 31,
							% Change
	2019			2018			2019 over 2018
Dividends paid to stockholders	$	77.0		$	72.8			6	%
Net income attributable to stockholders	$	122.5		$	81.8			50	%
Pre-tax adjusting items:
Accelerated vesting of assumed options		-			4.8			-100	%
Acquisition and finance structure advisory		-			9.1			-100	%
Severance and retention		1.5			3.6			-58	%
Impairment loss		-			8.9			-100	%
Gain on sale of equity accounted for investment		(4.9	)		-			100	%
Current income tax effect of adjusting items:
Acquisition and finance structure advisory		-			(2.4	)		100	%
Severance and retention		(0.4	)		(0.7	)		-43	%
Deferred income tax effect of adjusting items:
Severance and retention		-			(0.4	)		100	%
Impairment loss		-			(2.4	)		100	%
Deferred tax adjusting item:
Remeasurement of deferred taxes		-			(10.1	)		100	%
Adjusted net income attributable to stockholders*	$	118.7		$	92.2			29	%
Dividend payout ratio		62.9	%		89.0	%		-2610	bps
Adjusted dividend payout ratio*		64.9	%		79.0	%		-1410	bps

(1)

Please refer to page 44 for a summary of adjusting items during the trailing 12-months ended March 31, 2019 and March 31, 2018.

(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*.

Ritchie Bros.

Adjusted Net Income Attributable to Stockholders* and ROIC* Reconciliation

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

The following table reconciles adjusted net income attributable to stockholders* and ROIC* to net income attributable to stockholders, long-term debt, stockholders’ equity, return on average invested capital which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements:

(in U.S. $ millions)	As at and for the 12 months ended March 31,
							% Change
	2019			2018			2019 over 2018
Net income attributable to stockholders	$	122.5		$	81.8			50	%
Pre-tax adjusting items:
Accelerated vesting of assumed options		-			4.8			-100	%
Acquisition and finance structure advisory		-			9.1			-100	%
Severance and retention		1.5			3.6			-58	%
Impairment loss		-			8.9			-100	%
Gain on sale of equity accounted for investment		(4.9	)		-			100	%
Current income tax effect of adjusting items:
Acquisition and finance structure advisory		-			(2.4	)		100	%
Severance and retention		(0.4	)		(0.7	)		-43	%
Deferred income tax effect of adjusting items:		-			(0.4	)		100	%
Severance and retention		-			(2.4	)		100	%
Deferred tax adjusting item:
Remeasurement of deferred taxes		-			(10.1	)		100	%
Adjusted net income attributable to stockholders*	$	118.7		$	92.2			29	%
Opening long-term debt	$	780.3		$	596.4			31	%
Ending long-term debt		703.3			780.3			-10	%
Average long-term debt		741.8			688.4			8	%
Opening stockholders' equity	$	752.3		$	691.4			9	%
Ending stockholders' equity		828.1			752.3			10	%
Average stockholders' equity		790.2			721.9			9	%
Average invested capital	$	1,532.0		$	1,410.3			9	%
Return on average invested capital		8.0	%		5.8	%		220	bps
ROIC*		7.7	%		6.5	%		120	bps

(1)

Please refer to page 44 for a summary of adjusting items during the trailing 12-months ended March 31, 2019 and March 31, 2018.

(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.

Ritchie Bros.

Adjusting items during the trailing 12-months ended March 31, 2019 were:

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.

Recognized in the third quarter of 2018

$1.5 million ($1.1 million after tax, or $0.01 per diluted share) of severance and retention costs in a corporate reorganization that followed the Acquisition;

$4.9 million ($4.9 million after tax, or $0.04 per diluted share) due to gain on sale of an equity accounted for investment.

Recognized in the second quarter of 2018

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

Adjusting items during the trailing 12-months ended March 31, 2018 were:

Recognized in the first quarter of 2018

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

Recognized in the fourth quarter of 2017

$2.2 million ($1.6 million after tax, or $0.02 per diluted share) of severance and retention costs in a corporate reorganization that followed the Acquisition;

$10.1 million (or $0.10 per diluted share) benefit on remeasurement of deferred taxes due to the Tax Cuts and Jobs Act.

Recognized in the third quarter of 2017

There were no adjustment items recognized in the third quarter of 2017.

Recognized in the second quarter of 2017

$4.8 million ($4.8 million after tax, or $0.04 per diluted share) of stock option compensation expense related to the accelerated vesting of certain IronPlanet stock options assumed as part of the ~~Acquisition~~Acquisition;

$9.1 million ($6.6 million after tax, or $0.06 per diluted share) of acquisition and finance structure advisory ~~costs~~costs;

$~~3.6~~1.4 million ($~~2.5~~0.9 million after tax, or ~~$0.02~~$0.01 per diluted share) of severance and retention costs in a corporate reorganization that followed the ~~Acquisition~~Acquisition;

$8.9 million ($6.6 million after tax, or $0.06 per diluted share) impairment loss recognized on various technology ~~assets~~

~~The adjusting items for the 12 months ended March 31, 2017 were:~~

~~$28.2 million ($26.4 million after tax, or $0.25 per diluted share) impairment loss on the EquipmentOne reporting unit goodwill and customer relationships~~

~~$6.8 million ($5.0 million after tax, or $0.05 per diluted share) charge related to the early termination of pre-existing debt~~assets.

Ritchie Bros.

5044

The following table presents our A&M agency proceeds (non-GAAP measure) and A&M agency proceeds rate (non-GAAP measure) results for the three months ended March 31, 2018, and 2017, as well as reconciles those metrics to A&M total revenues and A&M revenue rate, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements:

(in U.S. $000's) Three months ended March 31,
Change
2018 2017 2018 over 2017
A&M total revenues $ 232,567 $ 179,078 30 %
Less: cost of inventory sold (75,791 ) (63,401 ) 20 %
A&M agency proceeds (non-GAAP measure) $ 156,776 $ 115,677 36 %

GTV 1,160,712 899,410 29 %

A&M revenue rate 20.0 % 19.9 % 10 bps
A&M agency proceeds rate (non-GAAP measure) 13.5 % 12.9 % 60 bps

The following table presents our OFCF (non-GAAP measure) results on a trailing 12-month basis ended March 31, 2018 and 2017, as well as reconciles that metric to cash provided by operating activities and net capital spending, which are the most directly comparable GAAP measures in, or calculated from, our consolidated statements of cash flows:

(in U.S. $ millions) 12 months ended March 31,
Change
2018 2017 2018 over 2017
Cash provided by operating activities $ 79.0 $ 146.4 (46 )%
Property, plant and equipment additions 11.5 18.3 (37 )%
Intangible asset additions 30.0 19.5 54 %
Proceeds on disposition of property plant and equipment (4.5 ) (7.4 ) (39 )%
Net capital spending $ 37.0 $ 30.4 22 %
OFCF (non-GAAP measure) $ 42.0 $ 116.0 (64 )%

~~Ritchie Bros.~~

The following table presents our adjusted net income attributable to stockholders (non-GAAP measure) and adjusted dividend payout ratio (non-GAAP measure) on a trailing 12-month basis ended March 31, 2018 and March 31, 2017, and reconciles those metrics 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:

(in U.S. $ millions) 12 months ended March 31,
Change
2018 2017 2018 over 2017
Dividends paid to stockholders $ 72.8 $ 71.5 2 %
Net income attributable to stockholders $ 81.8 $ 72.8 12 %
Pre-tax adjusting items:
Accelerated vesting of assumed options 4.8 - 100 %
Acquisition and finance structure advisory 9.1 - 100 %
Severance and retention 3.6 - 100 %
Impairment loss 8.9 28.2 (68 )%
Debt extinguishment costs - 6.8 (100 )%
Current income tax effect of adjusting items:
Acquisition and finance structure advisory (2.4 ) - 100 %
Severance and retention (0.7 ) - 100 %
Debt extinguishment costs - (1.8 ) (100 )%
Deferred income tax effect of adjusting items:
Severance and retention (0.4 ) - 100 %
Impairment loss (2.4 ) (1.8 ) 33 %
Current income tax adjusting item:
Change in uncertain tax provision - 2.3 (100 )%
Deferred tax adjusting item:
Remeasurement of deferred taxes (10.1 ) - 100 %
Adjusted net income attributable to stockholders (non-GAAP measure) $ 92.1 $ 106.5 (14 )%

Dividend payout ratio 89.0 % 98.2 % -920 bps
Adjusted dividend payout ratio (non-GAAP measure) 79.0 % 67.1 % 1190 bps

~~The adjusting items for the 12 months ended March 31, 2018 were:~~

~~$9.1 million ($6.6 million after tax, or $0.06 per diluted share) of acquisition and finance structure advisory costs~~

~~$3.6 million ($2.5 million after tax, or $0.02 per diluted share) of severance and retention costs in a corporate reorganization that followed the Acquisition~~

~~$8.9 million ($6.6 million after tax, or $0.06 per diluted share) impairment loss recognized on various technology assets~~

~~$10.1 million (or $0.10 per diluted share) benefit on remeasurement of deferred taxes due to the TCJA~~

~~Ritchie Bros.~~

~~The adjusting items for the 12 months ended March 31, 2017 were:~~

~~$28.2 million ($26.4 million after tax, or $0.25 per diluted share) impairment loss on the EquipmentOne reporting unit goodwill and customer relationships~~

~~$6.8 million ($5.0 million after tax, or $0.05 per diluted share) charge related to the early termination of pre-existing debt~~

~~$2.3 million (or $0.02 per diluted share) charge related to the change in uncertain tax provisions~~

The table on the following page presents our ROIC excluding escrowed debt (non-GAAP measure) results as at and for the 12-month period ended March 31, 2018 and 2017, and reconciles that metric to net income attributable to stockholders, long-term debt, stockholders’ equity, and return on average invested capital, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements:

~~Ritchie Bros.~~

(in U.S. $ millions) As at and for the 12 months ended March 31,
Change
2018 2017 2018 over 2017
Net income attributable to stockholders $ 81.8 $ 72.8 12 %
Pre-tax adjusting items:
Accelerated vesting of assumed options 4.8 - 100 %
Acquisition and finance structure advisory 9.1 - 100 %
Severance and retention 3.6 - 100 %
Impairment loss 8.9 28.2 (68 )%
Debt extinguishment costs - 6.8 (100 )%
Current income tax effect of adjusting items:
Acquisition and finance structure advisory (2.4 ) - 100 %
Severance and retention (0.7 ) - 100 %
Debt extinguishment costs - (1.8 ) (100 )%
Deferred income tax effect of adjusting items:
Severance and retention (0.4 ) - 100 %
Impairment loss (2.4 ) (1.8 ) 33 %
Current income tax adjusting item:
Change in uncertain tax provision - 2.3 (100 )%
Deferred tax adjusting item:
Remeasurement of deferred taxes (10.1 ) - 100 %
Adjusted net income attributable to stockholders (non-GAAP measure) $ 92.1 $ 106.5 (14 )%

Opening long-term debt $ 596.4 $ 102.3 483 %
Ending long-term debt 780.3 596.4 31 %
Less: long-term debt in escrow - (495.9 ) (100 )%
Adjusted ending long-term debt (non-GAAP measure) 780.3 100.5 676 %
Average long-term debt $ 688.4 $ 349.4 97 %
Adjusted average long-term debt (non-GAAP measure) 688.4 101.4 579 %

Opening stockholders' equity $ 691.4 $ 676.5 2 %
Ending stockholders' equity 752.3 691.4 9 %
Average stockholders' equity 721.9 684.0 6 %

Average invested capital $ 1,410.3 $ 1,033.4 36 %
Adjusted average invested capital (non-GAAP measure) 1,410.3 785.4 80 %

Return on average invested capital⁽¹⁾ 5.8 % 7.0 % -120 bps
ROIC excluding escrowed debt (non-GAAP measure)⁽²⁾ 6.5 % 13.6 % -710 bps

~~(1)~~

~~Calculated as net income attributable to stockholders divided by average invested capital.~~

~~(2)~~

~~Calculated as adjusted net income attributable to stockholders (non-GAAP measure) divided by adjusted average invested capital (non-GAAP measure).~~

~~Ritchie Bros.~~

~~The adjusting items for the 12 months ended March 31, 2018 were:~~

~~$9.1 million ($6.6 million after tax, or $0.06 per diluted share) of acquisition and finance structure advisory costs~~

~~$3.6 million ($2.5 million after tax, or $0.02 per diluted share) of severance and retention costs in a corporate reorganization that followed the Acquisition~~

~~$8.9 million ($6.6 million after tax, or $0.06 per diluted share) impairment loss recognized on various technology assets~~

~~$10.1 million (or $0.10 per diluted share) benefit on remeasurement of deferred taxes due to the TCJA~~

~~The adjusting items for the 12 months ended March 31, 2017 were:~~

~~$6.8 million ($5.0 million after tax, or $0.05 per diluted share) charge related to the early termination of pre-existing debt~~

~~$28.2 million ($26.4 million after tax, or $0.25 per diluted share) impairment loss on EquipmentOne reporting unit goodwill and customer relationships~~

~~$2.3 million (or $0.02 per diluted share) charge related to the change in uncertain tax provisions~~

ITEM 3:

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk during the three months ended March 31, ~~2018~~2019 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, which is available on our website atwww.rbauction.com, on EDGAR atwww.sec.gov, or on SEDAR atwww.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 March 31, ~~2018.~~2019. 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 March 31, 2019, the disclosure controls are 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 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.

~~Ritchie Bros.~~

The Company closed the IronPlanet Acquisition on May 31, 2017, and IronPlanet’s total assets and total revenues constituted 40% and 13%, respectively, of the Company’s consolidated total assets and revenues as shown on our consolidated financial statements as of and for the period ended March 31, 2018. As the Acquisition occurred in the second quarter of 2017, we excluded the internal control over financial reporting of IronPlanet from the scope of our assessment of the effectiveness of the Company’s disclosure controls and procedures. This exclusion is in accordance with the general guidance issued by the Staff of the Securities and Exchange Commission that an assessment of a recently-acquired business may be omitted from our scope in the year of acquisition, if specified conditions are satisfied.

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~~Effective January 1, 2019, the ~~participation~~Company adopted ASU 2016-02,Leases (Topic 842), and implemented certain accounting processes and internal controls over financial reporting to ensure we adequately evaluated our leases and appropriately assessed the impact of ~~the CEO~~Topic 842 on our financial statements and ~~CFO, concluded that there were~~disclosures. There have been no other changes in ~~the Company’s~~our internal control over financial reporting during the ~~quarter~~three months ended March 31, ~~2018~~2019 that ~~have~~ materially affected, or are reasonably likely to materially affect, ~~the Company’s~~ internal control over financial reporting.

Ritchie Bros.

5645

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, ~~2017,~~2018, which is available on our website atwww.rbauction.com, on EDGAR atwww.sec.gov, or on SEDAR atwww.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.

There were no material changes in risk factors during the three months ended March 31, ~~2018.~~2019.

ITEM 2:

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3:

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4:

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5:

OTHER INFORMATION

~~None.~~

None.

Ritchie Bros.

5746

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~~		~~Amended Executive Nonqualified Excess Plan Adoption~~
~~10.2~~		~~Employment Agreement between Ritchie Bros. Auctioneers (America) Inc. and Kieran Holm, dated March 29, 2017.~~
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.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

Ritchie Bros.

5847

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: May ~~10, 2018~~9, 2019	By:	/s/ Ravichandra K. Saligram
		Ravichandra K. Saligram
		Chief Executive Officer

Dated: May ~~10, 2018~~9, 2019	By:	/s/ Sharon R. Driscoll
		Sharon R. Driscoll
		Chief Financial Officer

Ritchie Bros.

5948

~~For the quarterly period ended March 31, 2018~~

OR

¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
~~For the transition period from______~~ to~~______~~

Canada		N/A
(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)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares	RBA	New York Stock Exchange

Three months ended March 31,	2018		2017		2019			2018

Net income	$	17,207	$	10,433	$	18,172		$	17,207
Other comprehensive income, net of income tax:
Other comprehensive income (loss), net of income tax:
Foreign currency translation adjustment		4,907		7,440		(1,634	)		4,907

Total comprehensive income	$	22,114	$	17,873	$	16,538		$	22,114

Total comprehensive income attributable to:
Stockholders		22,033		17,813	$	16,542		$	22,033
Non-controlling interests		81		60		(4	)		81
	$	22,114	$	17,873	$	16,538		$	22,114

	March 31,			December 31,
	2018			2017
Assets

Cash and cash equivalents	$	278,944		$	267,910
Restricted cash		62,414			63,206
Trade and other receivables		182,157			92,105
Inventory		34,350			38,238
Other current assets		30,657			27,026
Assets held for sale		251			584
Income taxes receivable		17,515			19,418
Total current assets		606,288			508,487

Property, plant and equipment		522,871			526,581
Equity-accounted investments		6,915			7,408
Other non-current assets		26,807			24,146
Intangible assets		259,052			261,094
Goodwill		674,097			670,922
Deferred tax assets		19,934			18,674
Total assets	$	2,115,964		$	2,017,312

Liabilities and Equity

Auction proceeds payable	$	303,416		$	199,245
Trade and other payables		170,777			164,553
Income taxes payable		2,021			732
Short-term debt		5,861			7,018
Current portion of long-term debt		9,264			16,907
Total current liabilities		491,339			388,455

Long-term debt		771,030			795,985
Other non-current liabilities		44,857			46,773
Deferred tax liabilities		34,712			32,334
Total liabilities		1,341,938			1,263,547

Contingencies
Contingently redeemable performance share units		16,576			9,014
Stockholders' equity:
Share capital:
Common stock; no par value, unlimited shares authorized, issued and outstanding shares: 107,471,895 (December 31, 2017: 107,269,783)		144,387			138,582
Additional paid-in capital		44,327			41,005
Retained earnings		601,205			602,609
Accumulated other comprehensive loss		(37,619	)		(42,514	)
Stockholders' equity		752,300			739,682
Non-controlling interest		5,150			5,069
Total shareholders' equity		757,450			744,751
Total liabilities and equity	$	2,115,964		$	2,017,312

	PART I – FINANCIAL INFORMATION

ITEM 1:	Consolidated Financial Statements	1
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2728
ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	5545
ITEM 4:	Controls and Procedures	5545

	PART II – OTHER INFORMATION

ITEM 1:	Legal Proceedings	5746
ITEM 1A:	Risk Factors	57
~~ITEM 2:~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	57
~~ITEM 5:~~	~~Other Information~~	5746
ITEM 6:	Exhibits	5847

	SIGNATURES

	Attributable to stockholders																		Contingently
					Additional						Accumulated			Non-					redeemable
	Common stock				paid-In						other			controlling					performance
	Number of				capital			Retained			comprehensive			interest		Total			share units
	shares		Amount		("APIC")			earnings			income (loss)			("NCI")		equity			("PSUs")
Balance, December 31, 2017		107,269,783	$	138,582	$	41,005		$	602,609		$	(42,514	)	$	5,069	$	744,751		$	9,014
Net income		-		-		-			17,138			-			69		17,207			-
Other comprehensive income		-		-		-			-			4,895			12		4,907			-
		-		-		-			17,138			4,895			81		22,114			-
Stock option exercises		202,112		5,805		(1,492	)		-			-			-		4,313			-
Stock option compensation expense		-		-		2,343			-			-			-		2,343			-
Modification of PSUs		-		-		703			(134	)		-			-		569			6,132
Equity-classified PSU expense		-		-		1,678			-			-			-		1,678			1,357
Equity-classified PSU dividend equivalents		-		-		90			(200	)		-			-		(110	)		110
Change in fair value of contingently redeemable PSUs		-		-		-			37			-			-		37			(37	)
Cash dividends paid		-		-		-			(18,245	)		-			-		(18,245	)		-

Balance, March 31, 2018		107,471,895	$	144,387	$	44,327		$	601,205		$	(37,619	)	$	5,150	$	757,450		$	16,576

Three months ended March 31, 2017
Consolidated income statement line item	As reported			New Revenue Standard Adjustment			Consolidated income statement line item	As Adjusted
				$	76,048		Revenue from inventory sales	$	76,048
Revenues	$	124,499			(1,120	)	Service revenues		123,379
					74,928		Total revenues		199,427
					(63,401	)	Cost of inventory sold		(63,401	)
Costs of services		(12,813	)		(11,527	)	Costs of services		(24,340	)
	$	111,686		$	-			$	111,686

	Three months ended March 31, 2018							Three months ended March 31, 2019
	A&M		Other		Consolidated			A&M		Other		Consolidated
Service revenues	$	148,405	$	27,611	$	176,016
Revenue from inventory sales		84,162		-		84,162
Total revenues		232,567		27,611		260,178
Service revenue								$	143,437	$	28,935	$	172,372
Inventory sales revenue									131,057		-		131,057
Total revenue								$	274,494	$	28,935	$	303,429
Costs of services		21,448		15,209		36,657			20,817		15,252		36,069
Cost of inventory sold		75,791		-		75,791			120,475		-		120,475
Selling, general and administrative expenses ("SG&A")		93,002		4,468		97,470
SG&A expenses									89,182		6,002		95,184
Segment profit	$	42,326	$	7,934	$	50,260		$	44,020	$	7,681	$	51,701
Acquisition-related costs						1,633							669
D&A expenses						16,191
Depreciation and amortization expenses ("D&A")													17,115
Gain on disposition of property, plant and equipment ("PPE")						(345	)						(149	)
Foreign exchange gain						(92	)
Foreign exchange loss													478
Operating income					$	32,873						$	33,588
Interest expense						(11,310	)						(10,816	)
Other income, net						913							2,039
Income tax expense						(5,269	)						(6,639	)
Net income					$	17,207						$	18,172

	United States		Canada		Europe		Other		Consolidated
Total revenues for the three months ended:
March 31, 2018	$	135,563	$	65,809	$	34,574	$	24,232	$	260,178
March 31, 2017		112,083		41,492		18,267		27,585		199,427

	Net income		WA				Three months ended
	attributable to		number		Per share		March 31, 2019
Three months ended March 31, 2018	stockholders		of shares		amount
							Net income		WA
							attributable to		number		Per share
							stockholders		of shares		amount
Basic		17,138		107,355,381	$	0.16	$	18,164		108,765,489	$	0.17
Effect of dilutive securities:
Share units		-		358,087		-		-		486,626		-
Stock options		-		930,429		-		-		792,098		-
Diluted		17,138		108,643,897	$	0.16	$	18,164		110,044,213	$	0.17

●	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.

		March 31, 2018				December 31, 2017
	Category	Carrying amount		Fair value		Carrying amount		Fair value
Fair values disclosed, recurring:
Cash and cash equivalents	Level 1	$	278,944	$	278,944	$	267,910	$	267,910
Restricted cash	Level 1		62,414		62,414		63,206		63,206
Short-term debt (note 14)	Level 2		5,861		5,861		7,018		7,018
Long-term debt (note 14)
Senior unsecured notes	Level 1		487,782		498,125		487,339		520,000
Term loans	Level 2		292,512		296,026		325,553		329,687

		March 31, 2019				December 31, 2018
	Category	Carrying amount		Fair value		Carrying amount		Fair value
Fair values disclosed:
Cash and cash equivalents	Level 1	$	266,491	$	266,491	$	237,744	$	237,744
Restricted cash	Level 1		56,743		56,743		67,823		67,823
Short-term debt	Level 2		8,687		8,687		19,896		19,896
Long-term debt
Senior unsecured notes	Level 1		489,579		510,938		489,136		487,813
Term loans	Level 2		213,758		215,879		222,162		224,582

Balance, December 31, 2018		15,051
Reclassified from property, plant and equipment		16,170
Balance, March 31, 2019	$	31,221

	March 31, 2019		December 31, 2018
Right-of-use assets	$	96,805	$	-
Tax receivable		13,234		12,705
Equity-accounted investments		4,235		4,010
Deferred debt issue costs		1,884		2,017
Other		10,921		10,663
	$	127,079	$	29,395

	Carrying amount
	March 31,			December 31,
	2019			2018
Short-term debt	$	8,687		$	19,896

Long-term debt:

Term loans:
Denominated in Canadian dollars, secured, bearing interest at a weighted average rate of 4.342%, due in monthly installments of interest only and quarterly installments of principal, maturing in October 2021		163,189			161,891
Denominated in United States dollars, secured, bearing interest at a weighted average rate of 4.606%, due in weekly installments of interest only and quarterly installments of principal, maturing in October 2021		52,690			62,690
Less: unamortized debt issue costs		(2,121	)		(2,419	)
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
Less: unamortized debt issue costs		(10,421	)		(10,864	)
Total long-term debt		703,337			711,298

Total debt	$	712,024		$	731,194

Long-term debt:
Current portion	$	15,648		$	13,126
Non-current portion		687,689			698,172
Total long-term debt		703,337		$	711,298

Balance, December 31, 2017	$	670,922
Additions		3,242
Foreign exchange movement		(67	)
Balance, March 31, 2018	$	674,097

	March 31, 2019		December 31, 2018
Operating lease liability	$	93,035	$	-
Tax payable		22,438		22,583
Finance lease liability		10,912		10,146
Other		2,820		9,251
	$	129,205	$	41,980

						WA
	Common			WA		remaining		Aggregate
	shares under			exercise		contractual		intrinsic
	option			price		life (in years)		value
Outstanding, December 31, 2017		4,459,744		$	24.29		7.5	$	17,649
Granted		889,169			32.16
Exercised		(202,112	)		21.34			$	2,215
Forfeited		(19,662	)		22.25
Outstanding, March 31, 2018		5,127,139		$	25.78		7.7	$	30,313
Exercisable, March 31, 2018		2,675,935		$	24.13		6.7	$	19,839

	Equity-classified awards									Liability-classified awards
	PSUs					RSUs				PSUs					RSUs				DSUs
				WA grant				WA grant					WA grant				WA grant				WA grant
				date fair				date fair					date fair				date fair				date fair
	Number			value		Number		value		Number			value		Number		value		Number		value

Outstanding, December 31, 2017		434,248		$	27.83		125,152	$	26.93		259,241		$	26.38		4,666	$	26.42		93,487	$	26.32
Granted		223,484			31.37		88,120		31.98		-			-		25		32.26		5,475		32.05
Transferred to (from) equity awards on modification		257,659			31.30		-		-		(257,659	)		26.38		-		-		-		-
Forfeited		(15,519	)		31.28		-		-		(1,582	)		26.45		-		-		-		-
Outstanding, March 31, 2018 (1)		899,872		$	30.87		213,272	$	29.02		-		$	-		4,691	$	26.45		98,962	$	26.64

Three months ended March 31,	2018
Risk free interest rate		1.9	%
Expected dividend yield		2.09	%
Expected lives of the PSUs		3 years
Expected volatility		31.1	%
Average expected volatility of comparable companies		34.1	%

Three months ended March 31, 2019
Operating lease cost	$	5,212
Finance lease cost
Amortization of leased assets		1,760
Interest on lease liabilities		155
Short-term lease cost		2,565
Sublease income		(154	)
	$	9,538

Remainder of 2019	$	11,555
2020		13,817
2021		10,925
2022		9,524
2023		7,792
Thereafter		85,876
Total future minimum lease payments	$	139,489
less: imputed interest		(35,804	)
Total operating lease liability	$	103,685
less: operating lease liability - current		(10,650	)
Total operating lease liability – non-current	$	93,035

As at March 31, 2019	Cost		Accumulated depreciation			Net book value
Computer equipment	$	11,291	$	(4,805	)	$	6,486
Yard and others		11,925		(3,055	)		8,870
	$	23,216	$	(7,860	)	$	15,356

As at December 31, 2018	Cost		Accumulated depreciation			Net book value
Computer equipment	$	9,428	$	(3,992	)	$	5,436
Yard and auto equipment		12,125		(2,585	)		9,540
	$	21,553	$	(6,577	)	$	14,976

Remainder of 2019	$	4,539
2020		5,157
2021		3,871
2022		2,314
2023		1,020
Thereafter		43
Total future minimum lease payments	$	16,944
less: imputed interest		(303	)
Total finance lease liability	$	16,641
less: finance lease liability - current		(5,729	)
Total finance lease liability – non-current	$	10,912

	May 31, 2017
Cash consideration paid to former equity holders	$	723,810
Settlement of IronPlanet's debt		36,313
Settlement of IronPlanet's transaction costs		12,583
Cash consideration paid on closing		772,706
Cash consideration paid related to closing adjustments		1,771
Less: cash and cash equivalents acquired		(95,626	)
Less: restricted cash acquired		(3,000	)
Acquisition of IronPlanet, net of cash acquired	$	675,851

Cash consideration paid on closing	$	772,706
Replacement stock option awards attributable to pre- combination services		4,926
Stock option compensation expense from accelerated vesting of awards attributable to post-combination services		(2,596	)
Cash consideration paid relating to closing adjustments		1,771
Settlement of pre-existing intercompany balances		(333	)
Purchase price	$	776,474

~~Channels~~	~~Brand Solutions~~	~~Description of Offering~~
~~Live On Site Auctions~~		n ~~Live unreserved on site with live simulcast online auctions~~
		n ~~Event-based sales of used construction and heavy equipment held in the Caterpillar dealer geographies~~
		n ~~Event-based sales of used energy equipment~~
~~Online Auctions and Marketplaces~~		n ~~Online marketplace for selling and buying used equipment~~
		n ~~Online marketplace offering multiple price and timing options~~
		n ~~Online marketplace for the sale of government and military assets~~
		n ~~Online truck and trailer marketplace~~
~~Brokerage Service~~		n ~~Confidential, negotiated sales~~

Financial overview	Three months ended March 31,
							$ Change			% Change
(in U.S. $000's, except EPS)	2018			2017			2018 over 2017			2018 over 2017
Service revenues	$	176,016		$	123,379		$	52,637			43	%
Revenue from inventory sales		84,162			76,048			8,114			11	%
Total revenues		260,178			199,427			60,751			30	%
Costs of services		36,657			24,340			12,317			51	%
Cost of inventory sold		75,791			63,401			12,390			20	%
Selling, general and administrative expenses		97,470			70,575			26,895			38	%
Acquisition-related costs		1,633			8,627			(6,994	)		(81	)%
Depreciation and amortization expenses		16,191			10,338			5,853			57	%
Gain on disposal of property, plant and equipment		(345	)		(721	)		376			(52	)%
Foreign exchange gain		(92	)		(730	)		638			(87	)%
Operating income		32,873			23,597			9,276			39	%
Operating income margin		12.6	%		11.8	%		n/a			80	bps
Interest expense		(11,310	)		(8,133	)		(3,177	)		39	%
Other income, net		913			2,284			(1,371	)		(60	)%
Income tax expense		5,269			7,315			(2,046	)		(28	)%
Net income attributable to stockholders		17,138			10,377			6,761			65	%
Diluted earnings per share attributable to stockholders	$	0.16		$	0.10		$	0.06			60	%
Effective tax rate		23	%		41	%		n/a			-1800	bps
GTV	$	1,160,712		$	899,410		$	261,302			29	%
Agency proceeds (non-GAAP measure)		169,807			124,499			45,308			36	%

Value of one local currency	Three months ended March 31,
					% Change
	2019		2018		2019 over 2018
Period-end exchange rate
Canadian dollar		0.7491		0.7761		(3	)%
Euro		1.1218		1.2300		(9	)%
Australian dollar		0.7096		0.7677		(8	)%
Average exchange rate
Canadian dollar		0.7524		0.7906		(5	)%
Euro		1.1355		1.2292		(8	)%
Australian dollar		0.7124		0.7861		(9	)%

(in U.S. $000's)	Q1 2018			Q4 2017			Q3 2017			Q2 2017			Q1 2017
A&M total revenues	$	232,567		$	262,628		$	202,718		$	226,372		$	179,078
Less: cost of inventory sold		(75,791	)		(98,895	)		(72,476	)		(71,726	)		(63,401	)
A&M agency proceeds (non-GAAP measure)		156,776			163,733			130,242			154,646			115,677

GTV	$	1,160,712		$	1,294,932		$	1,019,322		$	1,254,318		$	899,410

A&M revenue rate		20.0	%		20.3	%		19.9	%		18.0	%		19.9	%
A&M agency proceeds rate (non-GAAP measure)		13.5	%		12.6	%		12.8	%		12.3	%		12.9	%

(in U.S. $000's)	Q4 2016			Q3 2016			Q2 2016			Q1 2016
A&M total revenues	$	273,582		$	280,961		$	253,436		$	237,195
Less: cost of inventory sold		(136,984	)		(159,850	)		(104,978	)		(111,536	)
A&M agency proceeds (non-GAAP measure)		136,598			121,111			148,458			125,659

GTV	$	1,040,352		$	998,859		$	1,275,682		$	1,019,922

A&M revenue rate		26.3	%		28.1	%		19.9	%		23.3	%
A&M agency proceeds rate (non-GAAP measure)		13.1	%		12.1	%		11.6	%		12.3	%