Ritchie Bros. Sees Earnings Decline 11% in First Half 2013

Ritchie Bros. Auctioneers Inc., a leading global industrial auctioneer, 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% 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% decrease in adjusted net earnings. The company's auction revenues for the second quarter of 2013 grew 1% 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% decrease in adjusted net earnings. The company's auction revenues during the first six months of 2013 grew 1% 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."

The company also announces a 6% increase in its quarterly cash dividend. The quarterly cash dividend increases to $0.1300 per common share payable on September 13, 2013 to shareholders of record on August 23, 2013.

Gross auction proceeds and auction revenues

Gross Auction Proceeds were $1.1 billion during the second quarter of 2013, a 10% decrease compared to the same period in 2012. This decline is primarily attributable to the increased average age of items sold at our auctions, largely as a result of the OEM production decrease during the recent recession which has reduced the supply of lesser aged equipment. 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.

For the six months ended June 30, 2013, Gross Auction Proceeds was $1.9 billion which is 7% 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%, significantly higher than the 10.65% ARR achieved in the same period in 2012. The company's ARR was 12.01% during the six months ended June 30, 2013 compared to 11.10% in the same period in 2012. The higher ARR combined with lower GAP, resulted in nearly generally flat overall revenue growth over 2012. The company's 'at risk' business, which is comprised of guarantee and purchase contracts, represented 24% of Gross Auction Proceeds in the first half of 2013 as compared to 33% in the same period of 2012.

Website statistics

Ritchie Bros. sold over $720 million of equipment, trucks and other assets to online buyers during the first half of 2013, representing 38% of GAP. Internet bidders continued to comprise over 50% of the total bidder registrations at Ritchie Bros. industrial auctions in the second quarter of 2013.

The Ritchie Bros. website (rbauction.com) attracted approximately 3.5 million unique visitors in the first half of 2013, a 35% increase compared to the same period in 2012.

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