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Ritchie Bros. Announces Its Second Quarter Results; Increases Dividend

Fri August 10, 2012 - National Edition
CEG


Ritchie Bros. sold over $669 million of equipment, trucks and other assets to online bidders during the first half of 2012, representing a 24 percent increase compared to the same period in 2011.
Ritchie Bros. sold over $669 million of equipment, trucks and other assets to online bidders during the first half of 2012, representing a 24 percent increase compared to the same period in 2011.

Ritchie Bros. Auctioneers Incorporated announced net earnings for the six months ended June 30, 2012 of $49.3 million, or $0.46 per diluted share, and adjusted net earnings of $50.5 million, or $0.47 per diluted share. This compares to net earnings of $43.3 million and adjusted net earnings of $40.3 million, or $0.41 per diluted share, for the six months ended June 30, 2011, representing a 25 percent increase in adjusted net earnings. Adjusted net earnings is a non-GAAP financial measure and is defined below. The company’s auction revenues for the first six months of 2012 grew 13 percent to $228.5 million compared to $203.0 million for the same period in 2011.

For the quarter ended June 30, 2012, net earnings were $31.3 million or $0.29 per diluted share and adjusted net earnings were $32.5 million or $0.30 per diluted share compared to net earnings and adjusted net earnings of $26.8 million or $0.25 per diluted share for the same period in 2011, representing a 17 percent increase in net earnings and a 21 percent increase in adjusted net earnings. The company’s auction revenues for the second quarter of 2012 grew 11 percent to $127.2 million compared to $114.5 million for the same period in 2011.

Quarterly Dividend

The Company also announced a 9 percent increase in its quarterly cash dividend. The quarterly cash dividend increases to $0.1225 per common share and is payable on Sept. 7, 2012, to shareholders of record as of Aug. 17, 2012.

Gross Auction Proceeds, Auction Revenues

For the six months ended June 30, 2012, gross auction proceeds were $2.1 billion, 3 percent higher than in the first half of 2011. Gross auction proceeds is a non-GAAP financial measure and is defined below. The company’s auction revenue rate (auction revenues as a percentage of gross auction proceeds) was 11.10 percent during the first six months of 2012 compared to 10.14 percent in the same period in 2011. The company’s revised fee structure, which came into effect on July 1, 2011, contributed $25.9 million to auction revenues for the first half of 2012. The company’s at risk business, comprised of guarantee and purchase contracts, represented 33% of gross auction proceeds in the first half of 2012 (2011: 36 percent).

For the three months ended June 30, 2012, gross auction proceeds were $1.2 billion, 4 percent higher than in the same period of 2011. The company’s auction revenue rate was 10.65 percent during the three months ended June 30, 2012, compared to 9.96 percent in the same period in 2011.

Summary Comments

“We are pleased to have achieved gross auction proceeds of over $2 billion and adjusted earnings growth of 25 percent for the first half of this year, both of which are testaments to the hard work and dedication of our employee team in the face of a challenging used equipment supply environment,” said Peter Blake, Ritchie Bros. CEO. “Although we experienced generally strong demand and good pricing for late model equipment at our auctions, values began to level off towards the end of the second quarter. In addition, competition for late model equipment remained intense during the second quarter. The combination of these market factors reduced the performance of our at risk business which negatively impacted our second quarter auction revenue rate.

“As we move into the third quarter we are seeing increased deliveries of new equipment, reducing original equipment manufacturers backlogs and making new equipment more readily available for end users. This is resulting in a more balanced used equipment supply and demand environment, which should stimulate the supply of used equipment for our auctions. As a result we remain confident in our ability to execute and achieve our 2012 plan. We are pleased to announce the increase in our dividend by 9 percent.”

Acquisition of AssetNation Inc.

On May 15, 2012, the company acquired AssetNation Inc., a leading online marketplace and solutions provider for surplus and salvage assets. The company recognized goodwill of approximately $40 million on the acquisition, and the results of AssetNation for the period May 16 to June 30, 2012, are included in the Ritchie Bros. consolidated results for the second quarter.

Online Bidding Statistics

Ritchie Bros. sold over $669 million of equipment, trucks and other assets to online bidders during the first half of 2012, representing a 24 percent increase compared to the same period in 2011 (first half of 2011: approximately $540 million). Internet bidders continued to comprise over 50 percent of the total bidder registrations at Ritchie Bros. industrial auctions during the first half of 2012. Since launching its real-time online bidding service in 2002, the company has now sold over $5.9 billion worth of trucks, equipment, and other assets to online bidders.

Web site Statistics

The Ritchie Bros. Web site (www.rbauction.com) attracted roughly 2.6 million unique visitors in the first half of 2012, a 30 percent increase compared to the same period in 2011.

Definitions of Non-GAAP Measures

The company defines adjusted net earnings as financial statement net earnings excluding the after-tax effects of excess property sales and other non recurring items, and has provided a reconciliation below. Adjusted net earnings is a non-GAAP financial measure that does not have a standardized meaning, and is therefore unlikely to be comparable to similar measures presented by other companies. The company believes that comparing adjusted net earnings for different financial periods provides more useful information about the growth or decline of its net earnings for the relevant financial period and identifies the impact of items which the company does not consider to be part of its normal operating results.

Gross auction proceeds represent the total proceeds from all items sold at Ritchie Bros. auctions. The company’s definition of gross auction proceeds may differ from those used by other participants in its industry. Gross auction proceeds is an important measure the company uses in comparing and assessing its operating performance. It is not a measure of the company’s financial performance, liquidity or revenue and is not presented in its consolidated financial statements.

The company believes that auction revenues, which is the most directly comparable measure in its consolidated income statements, and certain other line items, are best understood by considering their relationship to gross auction proceeds.

Auction revenues represent the revenues earned by Ritchie Bros. in the course of conducting its auctions, and consist primarily of commissions earned on consigned equipment and net profit on the sale of equipment purchased by the company and sold in the same manner as consigned equipment.

For more information, visit www.rbauction.com.