Ritchie Bros. Auctioneers Inc., announces net earnings for the year ended Dec. 31, 2012 of $79.5 million, or $0.74 per diluted share, and adjusted net earnings of $82.6 million, or $0.77 per diluted share. This compares to net earnings of $76.6 million, or $0.72 per diluted share, and adjusted net earnings of $73.6 million, or $0.69 per diluted share, for the year ended Dec. 31, 2011, representing a 12% increase in adjusted net earnings. Adjusted net earnings is a non-IFRS financial measure and is defined below. Excluding the acquisition and operational costs related to AssetNation, the growth in the company's adjusted net earnings would have been 17% in 2012. The company's auction revenues for the year ended Dec. 31, 2012 grew 11% to $438.0 million compared to $396.1 million for the same period in 2011. All dollar amounts in this release are presented in U.S. dollars.
For the three months ended Dec. 31, 2012 net earnings were $22.1 million or $0.21 per diluted share and adjusted net earnings were $22.4 million or $0.21 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 16% decrease in adjusted net earnings.
Gross auction proceeds and auction revenues
For the year ended Dec. 31, 2012, gross auction proceeds were a record $3.9 billion, 5% higher than in 2011. Gross auction proceeds is a non-IFRS financial measure and is defined below. The Company's auction revenue rate (auction revenues as a percentage of gross auction proceeds) was 11.21% during the year ended Dec. 31, 2012 compared to 10.66% in 2011. The company's at risk business, which is comprised of guarantee and purchase contracts, represented 32% of gross auction proceeds in 2012 (2011: 36%).
For the three months ended Dec. 31, 2012, gross auction proceeds were $1.0 billion, 4% lower than the same period in 2011. The company's auction revenue rate was 11.71% during the three months ended Dec. 31, 2012 compared to 10.91% in the same period in 2011.
Summary comments
"2012 was another year of volatility in the used equipment market. During the year, we saw competition remain strong, used equipment prices rise then flatten, and ultimately the supply and demand for used equipment became more balanced ," said Peter Blake, Ritchie Bros. CEO. "Our at-risk business experienced wide variations in performance but, for the year, it performed within our expectations. We reached some great milestones during the year, beyond achieving the highest ever gross auction proceeds of $3.9 billion, which included significant gains in our online presence with over 5 million unique visitors to our website, $1.3 billion in sales to internet bidders at our auctions and over $1 billion of volume at our Canada auctions. These all contributed to another growth year in gross auction proceeds. We felt 2012, even with adjusted net earnings growth of 17% excluding costs associated with AssetNation, was not an optimal year. If we had executed we would have had an even strong year. This has focused us on executing specific strategies in 2013.
Mr. Blake continued: "Looking forward to 2013, we remain committed to our strategic pillars Grow-Add-Perform which will help us focus on executing our 2013 plan. We believe the used equipment marketplace has evolved into a more familiar environment with improving prospects for growth over the long term. We have made significant strategic investments in our infrastructure, people and processes and now it is about execution to ensure we continue to be the trusted source for the world's builders to easily and confidently exchange equipment."
EquipmentOne
As previously announced on Jan. 22, 2013, the company launched a new online equipment marketplace called Richie Bros. EquipmentOne. Complementary to the company's flagship unreserved auction business, Ritchie Bros. EquipmentOne is a secure online marketplace for equipment and materials. Buyers and sellers can use Ritchie Bros. EquipmentOne to negotiate, complete and settle their transactions in a safe and transparent environment. Core marketplace functionality has now been released and enhancements are being made on an ongoing basis; the next major release and full commercial launch is scheduled for the second quarter of 2013.
Quarterly Dividend
The company also announced on Jan. 21, 2013 the declaration of a quarterly dividend of $0.1225 per common share payable on March 8, 2013 to shareholders of record on Feb. 15, 2013. In 2012, the company paid approximately $50 million in regular cash dividends, an 8% increase over 2011.
Online bidding statistics
Ritchie Bros. sold over $1.3 billion of equipment, trucks and other assets to online buyers during 2012, representing an 18% increase from 2011 and more than any other auction company in the world. Internet bidders continued to comprise over 60% of the total bidder registrations at Ritchie Bros. industrial auctions in 2012.
Website statistics
The Ritchie Bros. website attracted roughly 5.6 million unique visitors in 2012, a 40% increase compared to 2011.
Definitions of non-IFRS 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, and has provided a reconciliation below. Adjusted net earnings is a non-IFRS 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 represent the total proceeds from all items sold at Ritchie Bros. auctions. 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.
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