Ritchie Bros. Auctioneers Incorporated announced net earnings and adjusted net earnings for the quarter ended June 30, 2013, of $30.0 million, or $0.28 per diluted share, compared to net earnings of $31.3 million, or $0.29 per diluted share, representing a 4 percent decrease in net earnings, and adjusted net earnings of $32.5 million, or $0.30 per diluted share, for the same period in 2012, representing a 7 percent decrease in adjusted net earnings. The company’s auction revenues for the second quarter of 2013 grew 1 percent to $128.3 million compared to $127.2 million for the same period in 2012.
For the six months ended June 30, 2013, net earnings and adjusted net earnings were $44.1 million, or $0.41 per diluted share. This compares to net earnings of $49.3 million, or $0.46 per diluted share, and adjusted net earnings of $50.5 million, or $0.47 per diluted share, for the six months ended June 30, 2012, representing an 11 percent decrease in adjusted net earnings. The company’s auction revenues during the first six months of 2013 grew 1 percent to $230.4 million compared to $228.5 million for the same period in 2012.
During the second quarter of 2013, the company conducted 72 unreserved industrial auctions in 14 countries throughout North America, Central America, Europe, the Middle East and Australia.
Commenting on the performance of the company, Peter Blake, CEO of Ritchie Bros. Auctioneers said:
“While we were pleased with our strong revenue rate performance in the quarter, our gross auction proceeds are down year over year as our business continues to contend with a reduced supply of used equipment within the three to five year age bracket — a traditionally strong segment of our auction business. We expect this supply shortage will dissipate in the future as larger inventories of newer machinery become available for resale. Although this macro challenge has created headwinds for our business, we are focusing on what we can control and executing strategies to drive our growth.
“Our continued recruitment of new territory managers has significantly expanded the size of our sales force, and we expect the productivity of our new TMs will improve as they gain experience, build customer relationships and benefit from targeted training. In addition, our disciplined approach to purchase and guaranteed consignment contracts, our ’at risk’ business, continued to bring positive results, leading to another near-record auction revenue rate for the second quarter. We are not pleased with the company’s lack of gross auction proceeds growth and the resulting performance through the first half of the year and have taken steps to better align our costs with our current revenue levels. These steps included reorganizing some administration departments and our teams associated with capital infrastructure and also rationalizing some operational procedures. We continue to make progress in growing our sales force and delivering solid results from our ’at risk’ business, and we believe the full impact of those strategies will be demonstrated in our future performance.”
The company also announced a 6 percent increase in its quarterly cash dividend. The quarterly cash dividend increases to $0.1300 per common share payable on Sept. 13, 2013, to shareholders of record on Aug. 23, 2013.
Gross Auction Proceeds and Auction Revenues
Gross auction proceeds were $1.1 billion during the second quarter of 2013, a 10 percent decrease compared to the same period in 2012. This decline is primarily attributable to the increased average age of items sold at auctions, largely as a result of the OEM production decrease during the recent recession which has reduced the supply of lesser aged equipment. In addition, the lower productivity of territory managers due to the lower average tenure of the territory manager group should improve as they gain further experience and training. EquipmentOne and other online marketplaces contributed gross auction proceeds of $26.8 million in the second quarter of 2013 compared to $16.9 million in the same period of 2012. Gross auction proceeds is a non-GAAP financial measure.
For the six months ended June 30, 2013, gross auction proceeds was $1.9 billion which is 7 percent lower than in the first half of 2012. EquipmentOne and other online marketplaces contributed gross auction proceeds of $45.5 million in the six months ended June 30, 2013, compared to $16.9 million in the same period of 2012.
The company’s auction revenue rate (“ARR”, or auction revenues as a percentage of gross auction proceeds) during the second quarter of 2013 was 11.96 percent, significantly higher than the 10.65 percent ARR achieved in the same period in 2012. The company’s ARR was 12.01 percent during the six months ended June 30, 2013, compared to 11.10 percent in the same period in 2012. The higher ARR combined with lower GAP, resulted in nearly generally flat overall revenue growth over 2012. These increases in the ARR are consistent with the company’s strategic focus on managing the performance of “at risk” business. The company’s “at risk” business, which is comprised of guarantee and purchase contracts, represented 24 percent of gross auction proceeds in the first half of 2013 as compared to 33 percent in the same period of 2012.
Online Bidding Statistics
Ritchie Bros. sold more than $720 million of equipment, trucks and other assets to online buyers during the first half of 2013, representing 38 percent of GAP. Internet bidders continued to comprise over 50 percent of the total bidder registrations at Ritchie Bros. industrial auctions in the second quarter of 2013.
Web Site Statistics
The Ritchie Bros. Web site (rbauction.com), which is a gateway to its online bidding system and showcases upcoming auctions and equipment to be sold, attracted approximately 3.5 million unique visitors in the first half of 2013, a 35 percent increase compared to the same period in 2012.
There are currently 76 unreserved auctions on the 2013 Ritchie Bros. auction calendar at rbauction.com, including auctions in North America, Central America, Europe and Australia.
For more information, please visit www.rbauction.com.