Ritchie Bros. Auctioneers Announces Third Quarter Results

Third quarter net earnings doubled compared to the same quarter last year

All dollar amounts are presented in U.S. dollar unless otherwise indicated.

VANCOUVER, Nov. 5, 2013 /PRNewswire/ - Ritchie Bros. Auctioneers Incorporated (NYSE and TSX: RBA, "Company"), the world's largest industrial auctioneer, announces net earnings for the quarter ended September 30, 2013 of $16.4 million, or $0.15 per diluted share. This compares to net earnings of $8.2 million, or $0.08 per diluted share for the quarter ended September 30, 2012, representing a 101% increase in net earnings.

The Company generated adjusted net earnings of $16.0 million, or $0.15 per diluted share in the third quarter of 2013. This compares to adjusted net earnings of $9.7 million, or $0.09 per diluted share in the same quarter last year, representing a 65% increase. Adjusted net earnings, a non-GAAP measure, excludes the after-tax effects of excess property sales and other non-recurring items.1

The Company's auction revenues for the third quarter of 2013 grew 15% to $105.8 million compared to $92.3 million for the same period in 2012.

For the nine months ended September 30, 2013 net earnings were $60.5 million, or $0.57 per diluted share, and adjusted net earnings were $60.1 million, or $0.56 per diluted share. This compares to net earnings of $57.4 million, or $0.54 per diluted share, and adjusted net earnings of $60.2 million, or $0.56 per diluted share, for the nine months ended September 30, 2012. This represents a 1% decrease in adjusted net earnings. The Company's auction revenues during the nine months ended September 30, 2013 grew 5% to $336.2 million compared to $320.8 million for the same period in 2012.

During the third quarter of 2013, the Company conducted 58 unreserved industrial auctions in 15 countries throughout North America, Central America, Europe, the Middle East, Asia and Australia.

Commenting on the performance of the Company, Peter Blake, CEO of Ritchie Bros. Auctioneers said:

"I am proud of our third quarter results and the great work of our teams worldwide. Our focus remains squarely on growing revenue. The strong performance of our underwritten business helped to bolster our Auction Revenue Rate to its highest level ever, driving meaningful revenue and earnings growth this quarter. We're also pleased with the progress of our new Territory Managers, who have been aided by ongoing training and new sales support tools. These developments, along with signals of a stronger market and supply environment reinforce our belief that the company is very well positioned for growth."

___________________________
1 Adjusted net earnings for Ritchie Bros. fiscal third quarter of 2013 does not include a deduction for $2.3 million of pre-tax expenses related to cost alignment initiatives implemented during the quarter.

Quarterly dividend

The Company also announces the declaration of a quarterly cash dividend of $0.13 per common share payable on December 13, 2013 to shareholders of record as of November 22, 2013.

Gross auction proceeds and auction revenues

Gross Auction Proceeds were $789.6 million during the third quarter of 2013, a 7% decrease compared to the same period in 2012. This decline was due primarily to the timing of auctions and a large one-time consignment that occurred in the comparable period last year. EquipmentOne and other online marketplaces contributed $20.1 million to Gross Auction Proceeds in the third quarter of 2013 compared to $20.5 million in the same period of 2012. Gross Auction Proceeds is a non-GAAP financial measure and is defined below.

For the nine months ended September 30, 2013, Gross Auction Proceeds was $2.7 billion, which is 7% lower than in the same period of 2012. EquipmentOne and other online marketplaces contributed $65.6 million to Gross Auction Proceeds in the nine months ended September 30, 2013 compared to $37.4 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 third quarter of 2013 was 13.40%, significantly higher than the 10.88% ARR achieved in the same period in 2012. The Company's ARR was 12.41% during the nine months ended September 30, 2013, compared to 11.03% in the same period in 2012. Revenue growth in both the three- and nine months ended September 30, 2013 was primarily due to an increased ARR. The improvement in ARR is consistent with our strategic focus on managing the performance of our 'at risk' (or underwritten) business. The Company's 'at risk' business, which is comprised of guarantee and purchase contracts, represented 29% of Gross Auction Proceeds in the third quarter 2013 as compared to 34% in the third quarter 2012. The 'at risk' business represented 26% of Gross Auction Proceeds for the nine months ended September 30, 2013, as compared to 33% in the same period of 2012.

Online bidding statistics

Ritchie Bros. sold over $987 million of equipment, trucks and other assets to online buyers during the first nine months of 2013, representing 36% of Gross Auction Proceeds. Internet bidders continued to comprise over 50% of the total bidder registrations at Ritchie Bros. industrial auctions in the third quarter of 2013.

Website statistics

The Ritchie Bros. website (rbauction.com), which is a gateway to our online bidding system and showcases upcoming auctions and equipment to be sold, attracted approximately 4.7 million unique visitors in the nine months ended September 30, 2013, a 15% increase compared to the same period in 2012.

Upcoming auctions

There are currently 55 unreserved auctions on the 2013 Ritchie Bros. auction calendar at rbauction.com, including auctions in North America, Central America, Europe and Australia.

Earnings Conference Call

Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended September 30, 2013, at 8:00 am Pacific Time / 11:00 am Eastern Time on November 5, 2013.

To listen to the conference call, please access the webcast at the following link: http://www.rbauction.com/investors

A replay will be available on the website shortly after the call.

Non-GAAP measures

The Company defines adjusted net earnings as financial statement net earnings excluding the after-tax effects of excess property sales and other non-recurring items. 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 eliminates the impact of items the Company does not consider to be part of its normal operating results.

Gross Auction Proceeds represents the total proceeds from all items sold by Ritchie Bros. 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.

About Ritchie Bros.

Established in 1958, Ritchie Bros. is the world's largest seller of used equipment for the construction, transportation, agricultural, material handling, energy, mining, forestry, marine and other industries. Ritchie Bros. solutions make it easy for the world's builders to buy and sell equipment with confidence, including the core business of unreserved public auctions and a secure online equipment marketplace. Ritchie Bros. Auctioneers® unreserved auctions are conducted live, with bidding on-site and online at rbauction.com. Ritchie Bros. Auctioneers conducts hundreds of unreserved public auctions each year, selling more equipment to on-site and online bidders than any other auction business in the world. The Ritchie Bros. EquipmentOne online marketplace can be accessed at EquipmentOne.com. Ritchie Bros. also offers a range of value-added services, including equipment financing available through Ritchie Bros. Financial Services (rbauctionfinance.com). Ritchie Bros. has operations in more than 25 countries, including 44 auction sites worldwide. Learn more at RitchieBros.com.

Forward-looking Statements

The discussion in this press release relating to future events or operating periods contains forward-looking statements that involve risks and uncertainties, including, in particular, statements regarding signals of a stronger market and supply environment; anticipated results for future periods; the anticipated revenue from and productivity of our sales force; and the impact of the Company's approach to underwritten contracts. These risks and uncertainties include: the numerous factors that influence the supply of and demand for used equipment; fluctuations in the market conditions and values of used equipment; seasonal and periodic variations in operating results; actions of competitors; the success of the Company's recent initiatives including Ritchie Bros. EquipmentOne; the growth potential in established and emerging markets; economic and other conditions in local, regional and global markets; and other risks and uncertainties as detailed from time to time in the Company's SEC and Canadian securities filings, including the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2012, available on the SEC, SEDAR and the Company's websites. Actual results may differ materially from those forward-looking statements. Forward-looking statements are made as of the date of this press release and the Company does not undertake any obligation to update the information contained herein unless required by applicable securities legislation.

           
Condensed Consolidated Interim Income Statements Three months ended   Three months ended
(Amounts in table and related footnotes are in USD September 30, 2013   September 30, 2012
thousands, except share and per share amounts) (unaudited)   (unaudited)
           
Gross auction proceeds $ 789,640    $ 848,536 
           
Auction revenues $ 105,800    $ 92,326 
Direct expenses   11,900      11,292 
    93,900      81,034 
           
Selling, general and administrative expenses:          
SG&A expenses excluding depreciation and amortization   57,687      55,354 
Depreciation and amortization   10,815      10,762 
    68,502      66,116 
           
Earnings from operations   25,398      14,918 
           
Other income (expense):          
Foreign exchange gain (loss)   (121)     (517)
Gain on disposition of property, plant and equipment   785     
Other income (expense)   756      (1,653)
    1,420      (2,166)
Finance income (costs):          
Finance income   730      455 
Finance costs   (1,915)     (1,984)
    (1,185)     (1,529)
           
Earnings before income taxes   25,633      11,223 
           
Income taxes   9,207      3,052 
           
Net earnings $ 16,426    $ 8,171 
           
Net earnings per share $ 0.15    $ 0.08 
Net earnings per share - diluted $ 0.15    $ 0.08 
           
Weighted average shares outstanding   106,823,223     106,454,695
Diluted weighted average shares outstanding   107,042,370     106,831,365
           
           
Net earnings $ 16,426    $ 8,171 
  After-tax loss (gain) on excess property (1,2)   (417)     1,511 
Adjusted net earnings $ 16,009    $ 9,682 
           
Adjusted net earnings per share $ 0.15    $ 0.09 
Adjusted net earnings per share - diluted $ 0.15    $ 0.09 
   
(1)      Net earnings for the three months ended September 30, 2013 included a gain of $677 ($417 after tax, or $0.00 per diluted share) recorded on the sale of excess land in Texas.
(2)      Net earnings for the three months ended September 30, 2012 included an impairment loss of $2,457 ($1,511 after tax, or $0.02 per diluted share) recorded against the Company's former permanent auction site that was held for sale in North Carolina.
           
             
Condensed Consolidated Income Statements Nine months ended   Nine months ended
(Amounts in table and related footnotes are in USD September 30, 2013   September 30, 2012
thousands, except share and per share amounts) (unaudited)   (unaudited)
           
Gross auction proceeds $ 2,707,935    $ 2,907,578 
           
Auction revenues $ 336,180    $ 320,815 
Direct expenses   36,812      36,916 
    299,368      283,899 
           
Selling, general and administrative expenses:          
SG&A expenses excluding depreciation and amortization   178,873      166,491 
Depreciation and amortization   31,854      30,500 
    210,727      196,991 
           
Earnings from operations   88,641      86,908 
           
Other income (expense):          
Foreign exchange gain (loss)   (74)     (691)
Gain (loss) on disposition of property, plant and equipment   904      (1,721)
Other income (expense)   1,585      (407)
    2,415      (2,819)
Finance income (costs):          
Finance income   2,062      1,698 
Finance costs   (5,776)     (5,082)
    (3,714)     (3,384)
           
Earnings before income taxes   87,342      80,705 
           
Income taxes   26,842      23,262 
           
Net earnings $ 60,500    $ 57,443 
           
Net earnings per share $ 0.57    $ 0.54 
Net earnings per share - diluted $ 0.57    $ 0.54 
           
Weighted average shares outstanding   106,726,533     106,442,819
Diluted weighted average shares outstanding   107,018,274     106,906,797
           
           
Net earnings $ 60,500    $ 57,443 
  After-tax loss (gain) on excess property (1,2,3)   (417)     2,708 
Adjusted net earnings $ 60,083    $ 60,151 
           
Adjusted net earnings per share $ 0.56    $ 0.57 
Adjusted net earnings per share - diluted $ 0.56    $ 0.56 
   
(1)      Net earnings for the nine months ended September 30, 2013 included a gain of $677 ($417 after tax, or $0.00 per diluted share) recorded on the sale of excess land in Texas.
(2)      Net earnings for the nine months ended September 30, 2012 included a loss of $1,946 ($1,197 after tax, or $0.01 per diluted share) recorded on the sale of the Company's former Olympia, Washington permanent auction site.
(3)      Net earnings for the nine months ended September 30, 2012 included an impairment loss of $2,457 ($1,511 after tax, or $0.02 per diluted share) recorded against the Company's former permanent auction site that was held for sale in North Carolina.
           
           
Selected Balance Sheet Data (USD thousands)   As at     As at
    September 30, 2013     December 31, 2012
    (unaudited)      
           
Current assets $ 463,639    $ 345,601 
Current liabilities   378,259      249,548 
Working capital $ 85,380    $ 96,053 
           
Total assets $ 1,237,820    $ 1,132,498 
Non-current borrowings $ 150,819    $ 200,746 
Total shareholders' equity $ 675,649    $ 656,531 
           
    Nine months ended     Nine months ended
Selected Operating Data (unaudited)   September 30, 2013     September 30, 2012
           
Auction revenues as percentage of gross auction proceeds   12.41%     10.57%
Number of consignments at industrial auctions   31,350     29,850
Number of bidder registrations at industrial auctions   295,500     268,500
Number of buyers at industrial auctions   74,300     68,900
Number of lots at industrial auctions   216,500     194,500
Number of permanent auction sites   39     39
Number of regional auction sites   5     5
Total auction sites   44     44
Number of industrial auctions   166     160
Number of territory managers and regional          
   sales managers ("revenue producers")   320     307
           
           

           
    Nine months ended     Nine months ended
Average Industrial Auction Data (unaudited)   September 30, 2013     September 30, 2012
           
Gross auction proceeds $ 14.9 million   $ 17.0 million
Bidder registrations   1,780     1,772
Consignors   189     196
Lots   1,304     1,338
            

 

SOURCE Ritchie Bros. Auctioneers



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