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Ritchie Bros. Gross Auction Proceeds Topped $3 Billion; 17 Percent Increase

Tue March 18, 2008 - National Edition
Construction Equipment Guide

Ritchie Bros. Auctioneers Incorporated achieved net earnings of $76 million, or $2.17 per diluted weighted average share, for the year ended Dec. 31, 2007, representing growth of 33 percent over 2006 net earnings of $57.2 million, or $1.64 per diluted weighted average share.

The company achieved gross auction proceeds of $3.19 billion for 2007, 17 percent higher than gross auction proceeds in 2006 and an all-time record for the company. Record auction revenues of $315.2 million for 2007 were 21 percent higher than in 2006.

The company’s auction revenue rate (auction revenues as a percentage of gross auction proceeds) was 9.89 percent in 2007, compared to 9.59 percent in 2006. Net earnings in 2007 increased over 2006 primarily as a result of higher gross auction proceeds and a stronger auction revenue rate.

Ritchie Bros. conducted 183 industrial auctions in 13 countries throughout North America, Europe, the Middle East, Asia and Australia in 2007. The company set 19 regional gross auction proceeds records during the year, including the largest auction held in the company’s history in February 2007 at the company’s permanent auction site in Orlando, Fla., with gross auction proceeds of $172 million.

The company also held 177 unreserved agricultural auctions during 2007, generating gross auction proceeds of $131.9 million.

The company had a record of more than 254,000 bidder registrations at its unreserved industrial auctions in 2007, of which approximately 80,000 were successful buyers. In 2006, the company had more than 241,000 bidder registrations, of which approximately 74,000 were buyers.

Ritchie Bros. worked with a record number of truck, equipment and other asset sellers in 2007, selling approximately 265,000 lots on behalf of almost 35,000 consignors. In 2006, Ritchie Bros. sold approximately 240,000 lots for more than 32,000 consignors.

The company’s auctions varied greatly in size in 2007, but the average Ritchie Bros. industrial auction attracted almost 1,400 bidders who competed for more than 1,400 lots consigned by 191 consignors. The average gross auction proceeds per industrial auction for 2007 was more than $16 million (2006 — approximately $14 million).

The company’s rbauctionBid-Live internet bidding service also set records in 2007, with more than $600 million worth of trucks, equipment, and real estate being sold to nearly 13,000 customers from 79 countries in 2007. This is an increase of more than 35 percent compared to last year’s online gross auction proceeds.

More than 77,000 customers from 170 countries have now registered and received approval to use rbauctionBid-Live. Internet bidders represented approximately 27 percent of the total registered bidders at Ritchie Bros. industrial auctions in 2007, and they were the buyer or runner up bidder on 28 percent of the lots offered online at these auctions.

The company has now sold in excess of $1.5 billion of industrial and agricultural assets over the internet.

Peter Blake, the company’s CEO, remarked: “2007 was a great year for Ritchie Bros., and we could not have accomplished such strong results without the unparalleled contributions of all the men and women on the Ritchie Bros. team. We are focused on creating value for our customers and we do this by using unreserved auctions to create a global marketplace. We are the proud custodians of a highly scalable and efficient business model with 50 years of reputation and history behind us. We are expanding successfully all over the world, and yet, despite all the success we enjoyed in 2007 and our growth in recent years, we still think we are just scratching the surface.”

“We believe we have big growth opportunities in front of us. As a result, we are continuing to take steps to position our business for sustainable long-term growth by hiring more great people, expanding our international network of auction sites and investing in process improvement initiatives.“

For the quarter ended Dec. 31, 2007, gross auction proceeds were $873.3 million and auction revenues were $83.3 million. The auction revenue rate was 9.53 percent. Net earnings for the quarter were $17.0 million, or $0.48 per diluted weighted average share, compared to $9.8 million, or $0.28 per diluted share, in 2006.

The company also announced that its board of directors has approved a three-for-one stock split for its common shares, subject to the approval of the company’s shareholders at the Annual and Special Meeting of Shareholders, scheduled to be held on April 11, 2008.

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 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.

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