Ritchie Bros. Auctioneers Incorporated announced net earnings for the year ended Dec. 31, 2011, of $76.6 million, or $0.72 per diluted share, and adjusted net earnings of $73.6 million, or $0.69 per diluted share. This compares to net earnings of $65.7 million and adjusted net earnings of $64.9 million, or $0.61 per diluted share, for the year ended Dec. 31, 2010, representing a 13 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 2011 grew 11 percent to $396.1 million compared to $357.4 million for the same period in 2010. The company conducted 228 unreserved industrial auctions in 13 countries throughout North America, Europe, the Middle East, Central America and Australia during 2011.
Gross Auction Proceeds and Auction Revenues
For the year ended Dec. 31, 2011, gross auction proceeds were $3.7 billion, 13 percent higher than in 2010 and the highest gross auction proceeds in the company’s history. 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 10.66 percent during the year ended Dec. 31, 2011, compared to 10.90 percent in the year ended Dec. 31, 2010. The company’s revised fee structure, which came into effect on July 1, 2011, contributed $21.9 million to auction revenues for 2011. The Company’s at risk business, comprised of guarantee and purchase contracts, represented 36 percent of gross auction proceeds in 2011 (2010 - 24 percent).
The company achieved gross auction proceeds of $1.0 billion for the fourth quarter of 2011, representing a 30 percent increase compared to the fourth quarter of 2010. Auction revenues were $113.4 million for the fourth quarter of 2011, compared to $88.3 million for the fourth quarter of 2010, an increase of 28 percent. The company’s auction revenue rate was 10.91 percent for the fourth quarter of 2011 and 11.06 percent for the fourth quarter of 2010. The company’s revised fee structure contributed $12.9 million to auction revenues during the most recent quarter.
Summary Comments
“2011 was a successful year for Ritchie Bros. in the face of a challenging used equipment supply environment, and we achieved the targets that we set for the year” said Peter Blake, Ritchie Bros. CEO. “During 2011 we accomplished a number of significant milestones, including the highest gross auction proceeds and auction revenues in the company’s history and the successful launch of our new services, thanks to the tremendous team we have in place. 2011 was characterized by the ongoing tight supply of good quality late model used equipment, which resulted in a strong pricing environment and intense competition for this equipment. Our consignors reacted to this competition by increasing their preference for guarantee and purchase deals, contributing to an increase in our at risk business to 36 percent of gross auction proceeds for 2011.
“We have begun 2012 with a number of very successful auctions, and the strong pricing and competitive environments we saw in 2011 have so far continued into 2012. We remain confident in our ability to grow our business in 2012 and believe we are well positioned to capitalize on improving used equipment transaction velocity, which is driven in part by recent increases in the production of new equipment.”
New Services
The company launched a range of value-added services on July 1, 2011, including equipment financing and powertrain service warranties (in the United States and Canada) and insurance services (in Canada, the United States and Europe).
In addition, Ritchie Bros.’ revised administrative fee structure took effect on July 1, 2011. The new fee structure eliminated certain fees and expanded the scope of the company’s administrative fee charged to buyers to address the cost of providing the new and significantly enhanced buyer services offered at company auctions, as well as other high value buyer-focused initiatives launched in recent years.
Quarterly Dividend
The Company also announced on Jan. 20, 2012, the declaration of a quarterly cash dividend of $0.1125 per common share payable on March 9, 2012, to shareholders of record on Feb. 17, 2012. In 2011, the company paid approximately $46.2 million in regular cash dividends, a 7 percent increase over 2010.
Online Bidding Statistics
Ritchie Bros. sold more than $1.1 billion of equipment, trucks and other assets to online bidders during 2011, representing a 29 percent increase compared to 2010 (2010 — approximately $872 million) and a record for the company. Internet bidders comprised over 50 percent of the total bidder registrations at Ritchie Bros. industrial auctions during 2011.
Since launching its real-time online bidding service in 2002, the company has now sold more than $5.3 billion worth of trucks, equipment, and other assets to online bidders, confirming Ritchie Bros.’ position as the world’s largest seller of used equipment and trucks to online buyers.
Web Site Statistics
The Ritchie Bros. Web site (rbauction.com) attracted almost 4 million unique visitors in 2011, a 25 percent increase compared to last year, and they made more than 10 million visits to the Web site, 25 percent more than in 2010. Visits from non-English speakers increased by 22 percent compared to 2010.
The launch of the company’s detailed equipment information program on July 1, 2011, has increased time-on-site significantly. Web site users are spending on average 29 percent more time on the company’s Web site than before the launch of detailed equipment information. Additionally, the company launched a mobile version of rbauction.com in November 2011 to facilitate easier mobile internet usage for customers.
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 significant foreign exchange gains or losses resulting from financing activities that are not expected to recur, 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, please visit www.rbauction.com.
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