Ritchie Bros. Auctioneers announced net earnings for the nine months ended Sept. 30, 2006, of $47.4 million, or $1.36 per diluted weighted average share, which is a record nine-month performance for the company.
Adjusted net earnings for the first three quarters of 2006, as described in detail below, were 31 percent higher than adjusted net earnings for the comparable period in 2005. Net earnings for the first nine months of 2006 would have been $46.3 million, or $1.33 per diluted share, had the results excluded the effect of an after-tax gain of $1.1 million recorded on the sale of property that was no longer being used in the company’s operations, which the company does not consider part of its normal operating results.
The company achieved net earnings of $39.4 million, or $1.13 per diluted share, in 2005; net earnings would have been $35.3 million, or $1.02 per diluted weighted average share, had they excluded after tax gains of $4.1 million recorded in 2005 on the sale of excess property.
Gross auction sales for the nine months ended Sept. 30 2006, were a record $1.98 billion, which is a 32 percent increase over the comparable period in 2005. This gross auction sales result is the highest ever nine-month performance in the company’s history. Auction revenue for the nine months ended Sept. 20, 2006, were $190.3 million, an increase of 25 percent compared to auction revenues for the comparable period in 2005. The company’s auction revenue rate (auction revenues as a percentage of gross auction sales) was 9.6 percent for the first nine months of 2006, compared to 10.16 percent in the equivalent period in 2005.
During the nine months ended Sept. 30, 2006, Ritchie Bros. held 124 unreserved industrial auctions at locations throughout North America, Europe, the Middle East, Australia, Asia and Mexico (2005 — 104 industrial auctions) and broke nine regional gross auction sales records, including the largest auction held in the company’s history in February in Orlando, Fla., which posted gross auction sales of more than $113 million.
The company also held 127 unreserved agricultural auctions during the nine months ended Sept. 30, 2006, generating gross auction sales of $117 million, which compares to 84 agricultural auctions with gross auction sales of $66 million in the comparable period in 2005.
The company had approximately 173,000 bidder registrations at its industrial auctions during the nine months ended Sept. 30, 2006, and those bidders purchased in excess of 170,000 lots that came from more than 23,000 industrial consignments.
The company’s rbauctionBid-Live Internet bidding system continued to play a positive role in the company’s live auctions, and in the first nine months of 2006 the company sold approximately $300 million worth of trucks and equipment to on-line buyers. The company has now sold in excess of $1 billion worth of assets using the rbauctionBid-Live system since its inception in 2002 and the system now has approximately 60,000 approved users. Internet bidders were buyer or runner-up bidder on more than 24 percent of the lots available for on-line bidding during the nine months ended Sept. 30, 2006.
While the company’s auctions varied in size over the trailing 12 months ended Sept. 30, 2006, the average Ritchie Bros. industrial auction during this period attracted more than 1,300 bidder registrations (12 months ended Sept. 30, 2005 — 1,300) and featured more than 1,300 lots (12 months ended Sept. 30, 2005 — 1,300) consigned by 179 consignors (12 months ended Sept. 30, 2005 — 181), generating average gross auction sales of approximately $14.1 million per auction (12 months ended Sept. 30, 2005 — $13.1 million).
Gross auction sales for the quarter ended Sept. 30, 2006, were $580.3 million, the largest third quarter gross auction sales in the company’s history. Auction revenues for the third quarter of 2006 were $55.7 million and the auction revenue rate was 9.6 percent. Net earnings were $9.7 million, or $0.28 per diluted share, for the quarter ended Sept. 30, 2006.
Peter Blake, the company’s CEO, commented: “We are very happy with our performance to date this year. We have come through a period of more rapid than expected gross auction sales growth and this tells us that we have been successful penetrating deeper into existing and new market segments, and that an increasing number of equipment owners are concluding that our unreserved auctions are the best way to buy and sell industrial assets.”
“We are starting to see some leveling of prices in our major markets from the aggressive pricing conditions that we experienced in recent quarters. In general, resale values for both late model and older equipment have moderated, as supply and demand have come more into balance than they have been for some time. We expect that these market dynamics will continue to be positive for us and will provide continued opportunities for us to grow our business as we work with equipment owners, using our unreserved auctions to create global marketplaces for industrial assets,” he added.
The company’s board of directors also announced the declaration of a quarterly cash dividend of 21 cents per common share payable on Dec. 15, 2006, to shareholders of record on Nov. 24, 2006.
Gross auction sales represent the aggregate selling prices of all items sold at auction and are not presented in the company’s consolidated financial statements; the comparable financial statement measure is auction revenues, consisting primarily of commissions earned on consigned equipment and net profit on the sale of equipment purchased by Ritchie Bros. and sold in the same manner as consigned equipment.
For more information, please visit www.rbauction.com.
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