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Ritchie Bros. Announces Second Quarter Results, Increases Dividend

Mon August 09, 2010 - National Edition
CEG



Ritchie Bros. Auctioneers Inc. announced Aug. 6 net earnings for the six months ending June 30, 2010, of $38.9 million, or $0.37 per diluted share, and adjusted net earnings of $38.2 million, or $0.36 per diluted share.

This compares to financial statement net earnings of $58.7 million, or $0.56 per diluted share, and adjusted net earnings of $58.1 million, or $0.55 per diluted share, for the first half of 2009.

“There is a lot of uncertainty in equipment markets right now, and Ritchie Bros. unfortunately is not immune,” said Ritchie Bros. CEO Peter Blake.

“Our growth in the second half of the year will not reach the levels we had expected at the beginning of this year, which is substantially being driven by market dynamics in the United States, our largest market. Equipment owner and creditor actions that we have experienced in previous down cycles have not yet materialized.

“Low interest rates, lack of confidence in the firmness of the pricing environment, and lack of urgency on the part of creditors to react and liquidate assets as they have in past down cycles have all contributed to this effect, which is significantly impacting our ability to generate consignments to sell at our U.S. auctions.”

In the first half of 2010, the company conducted 105 industrial auctions in 15 countries throughout North America, Europe, the Middle East, Central America, Asia and Australia.

Quarterly Dividend

The company also announced a quarterly cash dividend of $0.105 per common share payable on Sept. 10, 2010, to shareholders of record on Aug. 20, 2010. This represents a 5 percent increase over the company’s previous quarterly dividend.

Gross Auction

Proceeds, Auction Revenues

For the six months ending June 30, 2010, gross auction proceeds were $1.7 billion and auction revenues were $186.8 million compared to $1.9 billion and $204.1 million, respectively, in the first half of 2009.

The company’s auction revenue rate (auction revenues as a percentage of gross auction proceeds) was 10.81 percent for the first six months of 2010, compared to 10.70 percent for the first six months of 2009, mainly due to the continuing strong performance of the company’s at risk business.

The company achieved gross auction proceeds of $951.6 million for the second quarter of 2010, representing a 14 percent decrease compared to the second quarter of 2009. Auction revenues were $103.3 million for the three months ended June 30, 2010, compared to $120.5 million for the second quarter of 2009, a decrease of 14 percent. The company’s auction revenue rate was 10.86 percent for each of the second quarter of 2010 and 2009.

Net Earnings for

the Quarter

Net earnings for the three months ended June 30, 2010, were $26.1 million, or $0.25 per diluted share, compared to net earnings for the three months ended June 30, 2009 of $38.8 million, or $0.37 per diluted share. Adjusted net earnings for the three months ended June 30, 2010, were $25.4 million, or $0.24 per diluted share, which represented a 35 percent decrease over the adjusted net earnings for the three months ended June 30, 2009, of $38.8 million, or $0.37 per diluted share.

Bidders, Buyers, Sellers

The company had approximately 167,000 bidder registrations at its industrial auctions in the first half of 2010, of which more than 48,000 were successful buyers.

In the first half of 2009, the company had more than 177,000 bidder registrations, of which almost 51,000 were buyers.

In the first half of 2010, Ritchie Bros. sold close to 145,000 lots on behalf of approximately 20,000 consignors.

In the first half of 2009, Ritchie Bros. sold more than 148,000 lots for more than 18,000 consignors.

Average Ritchie Bros. Auction

The company’s auctions varied in size over the 12 months ending June 30, 2010, but the average Ritchie Bros. industrial auction attracted more than 1,500 bidders who competed for more than 1,300 lots consigned by 187 consignors.

For the 12 months ending June 30, 2009, the average industrial auction attracted almost 1,700 bidders, who competed for more than 1,400 lots consigned by 185 consignors.

The average gross auction proceeds per industrial auction for the 12 months ending June 30, 2010 was $15.1 million (12 months ending June 30, 2009 — $17.6 million).

Online Bidding

Statistics

Ritchie Bros. sold more than $430 million worth of trucks, equipment, and other assets to online bidders during the first half of 2010, compared to almost $425 million in the first half of 2009.

The company currently has registered online users of its website from 159 countries. Internet bidders represented approximately 25 percent of the total registered bidders at Ritchie Bros. industrial auctions for the six months ending June 30, 2010, and they were the buyer or runner up bidder on 38 percent of the lots offered online at these auctions (first six months of 2009 — 34 percent).

Since launching its real-time online bidding service in 2002, the company has sold almost $3.6 billion worth of trucks, equipment, and other assets to online bidders (June 30, 2009 — almost $2.7 billion) confirming Ritchie Bros.’ position as the largest seller in the world of used equipment and trucks to online buyers.

Summary Comments

“In spite of the challenges we are facing in some of our markets, our business model is very much intact and we are pleased with our operational execution to date in 2010. We expect equipment market conditions will improve as the economy returns to a more balanced state, which we believe will allow us to resume our historic growth,” said Blake.

“We have a solid team in place and our investments in places and processes position us well for future growth. We continue to believe that although we are experiencing a challenging environment in the U.S., our long-term growth strategy is sound.”

For more information, please visit www.rbauction.com.