Ritchie Bros. Auctioneers Announce Q2 Results and Increases Dividend
Ritchie Bros. Auctioneers Incorporated (NYSE and TSX: RBA), the world’s largest auctioneer of industrial equipment, announces net earnings for the six months ended June 30, 2012 of $49.3 million, or $0.46 per diluted share, and adjusted net earnings of $50.5 million, or $0.47 per diluted share. This compares to net earnings of $43.3 million and adjusted net earnings of $40.3 million, or $0.41 per diluted share, for the six months ended June 30, 2011, representing a 25% increase in adjusted net earnings. Adjusted net earnings is a non-GAAP financial measure and is defined below. The Company’s auction revenues for the first six months of 2012 grew 13% to $228.5 million compared to $203.0 million for the same period in 2011. All dollar amounts in this release are presented in U.S. dollars.
For the quarter ended June 30, 2012 net earnings were $31.3 million or $0.29 per diluted share and adjusted net earnings were $32.5 million or $0.30 per diluted share compared to net earnings and adjusted net earnings of $26.8 million or $0.25 per diluted share for the same period in 2011, representing a 17% increase in net earnings and a 21% increase in adjusted net earnings. The Company’s auction revenues for the second quarter of 2012 grew 11% to $127.2 million compared to $114.5 million for the same period in 2011.
The Company also announces a 9% increase in its quarterly cash dividend. The quarterly cash dividend increases to $0.1225 per common share and is payable on September 7, 2012 to shareholders of record as of August 17, 2012.
Gross auction proceeds and auction revenues
For the six months ended June 30, 2012, gross auction proceeds were $2.1 billion, 3% higher than in the first half of 2011. Gross auction proceeds is a non-GAAP financial measure and is defined below. The Company’s auction revenue rate (auction revenues as a percentage of gross auction proceeds) was 11.10% during the first six months of 2012 compared to 10.14% in the same period in 2011. The Company’s revised fee structure, which came into effect on July 1, 2011, contributed $25.9 million to auction revenues for the first half of 2012. The Company’s at risk business, comprised of guarantee and purchase contracts, represented 33% of gross auction proceeds in the first half of 2012 (2011: 36%).
For the three months ended June 30, 2012, gross auction proceeds were $1.2 billion, 4% higher than in the same period of 2011. The Company’s auction revenue rate was 10.65% during the three months endedJune 30, 2012 compared to 9.96% in the same period in 2011.
“We are pleased to have achieved gross auction proceeds of over $2 billion and adjusted earnings growth of 25% for the first half of this year, both of which are testaments to the hard work and dedication of our employee team in the face of a challenging used equipment supply environment,” said Peter Blake, Ritchie Bros. CEO. “Although we experienced generally strong demand and good pricing for late model equipment at our auctions, values began to level off towards the end of the second quarter. In addition, competition for late model equipment remained intense during the second quarter. The combination of these market factors reduced the performance of our at risk business which negatively impacted our second quarter auction revenue rate.”
Mr. Blake continued: “As we move into the third quarter we are seeing increased deliveries of new equipment, reducing original equipment manufacturers backlogs and making new equipment more readily available for end users. This is resulting in a more balanced used equipment supply and demand environment, which should stimulate the supply of used equipment for our auctions. As a result we remain confident in our ability to execute and achieve our 2012 plan. We are pleased to announce the increase in our dividend by 9%.”
Acquisition of AssetNation Inc.
On May 15, 2012 the Company acquired AssetNation, Inc., a leading online marketplace and solutions provider for surplus and salvage assets. The Company recognized goodwill of approximately $40 million on the acquisition, and the results of AssetNation for the period May 16 – June 30, 2012 are included in the Ritchie Bros. consolidated results for the second quarter.
Online bidding statistics
Ritchie Bros. sold over $669 million of equipment, trucks and other assets to online bidders during the first half of 2012, representing a 24% increase compared to the same period in 2011 (first half of 2011: approximately $540 million). Internet bidders continued to comprise over 50% of the total bidder registrations at Ritchie Bros. industrial auctions during the first half of 2012. Since launching its real-time online bidding service in 2002, the Company has now sold over $5.9 billion worth of trucks, equipment, and other assets to online bidders, confirming Ritchie Bros.’ position as the world’s largest seller of used equipment and trucks to online buyers.
The Ritchie Bros. website (www.rbauction.com) attracted roughly 2.6 million unique visitors in the first half of 2012, a 30% increase compared to the same period in 2011.