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Industrial equipment auctioneer Ritchie Bros. Auctioneers earnings for the six months ended June 30, 2011 were $43.3 million, or $0.41 per diluted share, and adjusted net earnings of $40.3 million, or $0.38 per diluted share, the company announced on Aug. 5.
This compares to net earnings of $38.8 million and adjusted net earnings of $38.0 million, or $0.36 per diluted share, for the six months ended June 30, 2010, representing a 6% 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 2011 grew 9 percent to $203.0 million compared to $186.8 million for the same period in 2010. The Company conducted 105 unreserved industrial auctions in 13 countries throughout North America, Europe, the Middle East, Central America and Australia during the first half of 2011. All dollar amounts in this release are presented in U.S. dollars.
Gross auction proceeds and auction revenues
For the six months ended June 30, 2011, gross auction proceeds were $2.0 billion, 16 percent higher than the first half of 2010 and the largest first half gross auction proceeds in the company’s history.
Gross auction proceeds is a non-GAAP financial measure and is described below. The company’s auction revenue rate (auction revenues as a percentage of gross auction proceeds) was 10.14 percent during the first six months of 2011 compared to 10.81 percent in the first half of 2010. The Company’s at risk business comprised of guarantee and purchase contracts, represented 36 percent of gross auction proceeds in the first half of 2011.
The Company achieved gross auction proceeds of $1.1 billion for the second quarter of 2011, representing a 21 percent increase compared to the second quarter of 2010. Auction revenues were $114.5 million for the three months ended June 30, 2011, compared to $103.3 million for the second quarter of 2010, an increase of 11 percent. The company’s auction revenue rate was 9.96 percent for the second quarter of 2011 and 10.86 percent for the second quarter of 2010.
The Company also announces a 7 percent increase to its quarterly cash dividend. The quarterly cash dividend of $0.1125 per common share is payable on Sept. 9, 2011 to shareholders of record on August 19, 2011.
Net earnings for the quarter
Net earnings and adjusted net earnings for the quarter ended June 30, 2011 were $26.8 million, or $0.25 per diluted share, compared to net earnings for the three months ended June 30, 2010 of $26.1 million and adjusted net earnings of $25.3 million, or $0.24 per diluted share.
Online bidding statistics
Ritchie Bros. sold more than $540 million of equipment, trucks and other assets to online bidders during the first half of 2011, representing a 26 percent increase compared to the same period in 2010 (2010 – $430 million). Internet bidders comprised approximately 50% of the total bidder registrations at Ritchie Bros. industrial auctions in the first half of 2011.
Since launching its real-time online bidding service in 2002, the company has now sold almost $4.7 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.
There was a 20 percent increase in the number of unique visitors to rbauction.com for the six months ended June 30, 2011 compared to the same period in 2010. More than 2.0 million unique visitors made 23.3 million equipment searches during the six months ended June 30, 2011 compared to 1.7 million unique visitors and 15.6 million searches, respectively, in the same period in 2010.
The company launched a range of value-added services for its customers in the USA and Canada on July 1, 2011, with many of these services also available at other auctions around the world.
These value added services include the Detailed Equipment Information program, Insurance Services and Powertrain Service Warranty.
In addition, the company launched a new financial services company, Ritchie Bros. Financial Services (RBFS), which provides financing options for customers who purchase equipment at Ritchie Bros. auctions. RBFS currently has five lenders signed up in the United States and seven lenders signed up in Canada to participate in the financing program.
The company expects to complete the roll out of these services to its remaining auction locations around the world in 2012. The company’s value-added services are designed to extend the appeal of its auctions, enhancing the company’s ability to retain existing customers and attract new customers. In addition, Ritchie Bros.’ revised administrative fee structure took effect on July 1, 2011 and the company continues to anticipate a positive impact on its net earnings as a result of these initiatives.
“We are very pleased to have achieved a new company record for gross auction proceeds of $2 Billion for the first half of 2011,” said Peter Blake, CEO, Ritchie Bros. Auctioneers. “Our strong first half results reflect successful execution of our strategy, including the use of our strong balance sheet to secure consignments to our auctions.
“The used equipment market became more balanced during the period and more equipment owners chose our unreserved auctions to access the global marketplace. We are still seeing uncertainty in some of the jurisdictions in which we operate, and competition for late model used equipment remains intense. This is partly reflected in our auction revenue rate, which was lower in the first half of 2011 than in the prior year.”
Blake says the change is a result of the performance of the company’s at risk business — as anticipated, it returned to a more sustainable performance relative to 2010.
“At 36 percent of our gross auction proceeds for the six months ended June 30, 2011, our at risk business increasingly became a tool that allowed us to compete effectively against alternative channels for the sale of late model equipment, which continues to be scarce.”
Mr. Blake continued: “On July 1 we successfully launched a number of new services designed to make our auctions easier and help our customers bid with more confidence, which we expect will make our auctions more appealing to a broader range of equipment owners. We also implemented our revised fee structure,” Blake said. “We have a number of auctions under our belt since the launch and have already received a lot of positive feedback from our customers and we are pleased with our customers’ response to our new services and understanding and acceptance of the fee changes.”