Ritchie Bros. Auctioneers Incorporated announced net earnings and adjusted net earnings for the three months ended March 31, 2010, of $12.8 million, or $0.12 per diluted share, which includes a $1.6 million, or $0.02 per diluted share, positive impact for a correction to accumulated depreciation. This compares to financial statement net earnings of $19.9 million, or $0.19 per diluted share, and adjusted net earnings of $19.2 million, or $0.18 per diluted share, for the first three months of 2009. Adjusted net earnings is a non-GAAP financial measure and is defined below.
In the first three months of 2010, the company conducted 40 industrial auctions in 12 countries throughout North America, Europe, the Middle East, Central America, Asia and Australia.
The company also announced the declaration of another quarterly cash dividend of $0.10 per common share payable on June 11, 2010, to shareholders of record on May 21, 2010.
Gross Auction Proceeds and Auction Revenues
For the three months ended March 31, 2010, gross auction proceeds were $729 million (excluding the results of the auction of Apoise — see below) and auction revenues were $83 million compared to $798 million and $84 million, respectively, in the first quarter of 2009. Gross auction proceeds is a non-GAAP financial measure and is described below. The company’s auction revenue rate (auction revenues as a percentage of gross auction proceeds) was 11.33 percent (or 10.75 percent including the results of the Apoise auction) for the first three months of 2010, compared to 10.48 percent for the first three months of 2009, mainly due to higher straight commission rates and fees earned as well as to the continuing strong performance of the company’s underwritten business.
On March 30, 2010, the company sold the megayacht Apoise on behalf of Dave Ritchie, co-founder of Ritchie Bros. Auctioneers, for more than $47 million at an unreserved public auction. The sale of Apoise broke the company’s record for the highest value auction lot ever sold. The Apoise auction accounted for approximately $0.7 million of net earnings after tax, or $0.01 per diluted share, for the quarter ended March 31, 2010.
Bidders, Buyers and Sellers
The company had approximately 77,000 bidder registrations at its industrial auctions in the first three months of 2010, of which more than 21,000 were successful buyers. In the first three months of 2009, the company had almost 74,000 bidder registrations, of which almost 21,000 were buyers.
In the first three months of 2010, Ritchie Bros. sold close to 62,000 lots on behalf of approximately 8,000 consignors. In the first three months of 2009, Ritchie Bros. sold close to 61,000 lots for approximately 7,000 consignors.
Average Ritchie Bros. Auction
The company’s auctions varied in size over the 12 months ended March 31, 2010, but the average Ritchie Bros. industrial auction attracted more than 1,700 bidders who competed for more than 1,400 lots consigned by 202 consignors. For the 12 months ended March 31, 2009, the average industrial auction attracted more than 1,500 bidders, who competed for almost 1,400 lots consigned by 187 consignors. The average gross auction proceeds per industrial auction for the 12 months ended March 31, 2010, was $17.9 million (12 months ended March 31, 2009 — $17.8 million).
Online Bidding Statistics
Ritchie Bros. sold more than $180 million worth of trucks, equipment, and other assets to online bidders during the first three months of 2010, representing an 11 percent increase compared to the first three months of 2009 (first three months of 2009 — over $166 million). More than 141,000 unique customers from more than 195 countries have now registered and received approval to bid online at Ritchie Bros. auctions (March 31, 2009 — more than 105,000 customers from more than 180 countries).
Internet bidders represented approximately 26 percent of the total registered bidders at Ritchie Bros. industrial auctions for the quarter ended March 31, 2010, and they were the buyer or runner up bidder on 42 percent of the lots offered online at these auctions (first three months of 2009 — 33 percent). Since launching its real-time online bidding service in 2002, the company has now sold almost $3.3 billion worth of trucks, equipment, and other assets to online bidders (March 31, 2009 — $2.6 billion) confirming Ritchie Bros.’ position as the largest seller in the world of used equipment and trucks to online buyers.
During the first quarter, Ritchie Bros. continued to demonstrate its commitment to innovation through the introduction of new applications. The company rolled out a new sales force automation tool to its sales representatives around the world. Also in the quarter, the company commenced deployment of its new timed auction system to ten auction sites, allowing the company to handle a high volume of lower value auction items as well as providing greater flexibility and convenience to its customers. The company will continue to roll out the timed auction system throughout the world in the remainder of the year.
Following the quarter, the company launched its new 21 language Web site. This powerful new Web site, launched at the Bauma trade show in Germany, has many new features that will benefit current and future customers and will facilitate the development of deeper relationships with them, according to the company.
“With lessons learned in 2009, we expected uncertain market conditions through much of the first quarter in 2010 and as anticipated, our first quarter gross auction proceeds declined relative to the first quarter of 2009. In spite of that decline, we achieved auction revenues that were generally consistent with the same period in 2009, reflecting our understanding of and our response to the current market environment. Additionally, our investments in our people, places and processes in the past few years have, as anticipated, increased our general and administrative and depreciation expense. These investments are a critical component of the company’s long term growth strategy,” said Peter Blake, Ritchie Bros. CEO.
“We continued to make great strides in executing our strategy in the first quarter of 2010 particularly in regards to our places and processes. We conducted grand openings at new auction facilities in Narita, Japan, Caorso, Italy, Vancouver, British Columbia, and Tipton, Calif. We also continued to demonstrate innovation with the implementation of our new, significantly more powerful Web site, the roll out of our timed auction system, and the deployment of our new sales force automation tool. Each of these innovations represent an important element of our strategy,” he added.
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 as defined above 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 statements of operations, and certain other line items, are best understood by considering its 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.