Ritchie Bros. Auctioneers Incorporated (RBA)

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Ritchie Bros. Auctioneers Incorporated (RBA)

Q2 2008 Earnings Call

August 8, 2008 11:00 am ET


Peter James Blake - Chief Executive Officer, Director

Robert K. Mackay - President

Robert A. McLeod - Chief Financial Officer

Robert S. Armstrong - Chief Operating Officer


Ben Cherniavsky - Raymond James

Bert Powell - BMO Nesbitt Burns

Craig R. Kennison - Robert W. Baird & Co., Inc.

Gary Prestopino - Barrington Research

[David Russell] - Citigroup



Welcome to the Ritchie Bros. Auctioneers 2008 second quarter earnings conference call. (Operator Instructions) I would now like to turn the conference over to Peter Blake.

Peter James Blake

Thanks for joining us on the Ritchie Bros. investor conference call for the quarter and six months ended June 30, 2008. I’m Peter Blake, CEO of Ritchie Bros., and with me on the call today are Bob Armstrong our Chief Operating Officer, Rob Mackay our President, and Rob McLeod our CFO. Jeremy Black who would normally participate in this call but he and his wife have added a second child to their family this week so he’s taking off some well-deserved time.

Today we’ll be talking about our financial results for the three and six months ended June 30, 2008. Our presentation should take about 20 or 25 minutes and then we’ll open the call for questions.

Before we start I’d like to make a Safe Harbor statement. The following discussion will include forward-looking statements as defined by SEC and Canadian rules and regulations. Comments that are not statements of fact are considered forward-looking and involve risks and uncertainties. These include statements about our projected future results of operations and financial performance, growth and other strategic initiatives, property development plans, and other matters. The risks and uncertainties include the numerous factors that influence the supply of and demand for used equipment, fluctuations in the market values of used equipment, seasonal and periodic variations in operating results, actions of competitors, conditions in local and regional markets, and other risks and uncertainties as detailed from time to time in our SEC and Canadian Securities filings including our management’s discussion and analysis of financial condition and results of operations for the three and six months ended June 30, 2008 which was filed this morning and is available on the SEC and SEDAR & Company web sites. Actual results may differ materially from those contemplated in the forward-looking statements. We do not undertake any obligation to update the information contained in this call which speaks only as of today’s date.

I’d also like to note that during the call today we will be talking about gross auction proceeds which represent the total proceeds from all items sold at our auctions. Our definition of gross auction proceeds may differ from those used by other participants in our industry. Gross auction proceeds is an important measure we use in comparing and assessing our operating performance. It is not a measure of financial performance, liquidity or revenue and is not presented in our statement of operations. The most directly comparable measure in our financial statement is auction revenues which represent the revenues we earn in the course of conducting our auctions.

We’re now about halfway through 2008. We’ve just completed our first billion dollar quarter selling almost $1.2 billion worth of equipment at a record number of auctions, almost 170 auctions around the world this quarter. I’m pleased to report that in the first six months of 2008 we achieved gross auction proceeds growth of 18%, auction revenues growth of 21%, and adjusted earnings growth of 25% over the first six months of 2007. We delivered record earnings per share in both the second quarter and for the first half of 2008.

In the second quarter we also set many new company records. We sold $250 million of trucks and equipment during one week in June making this our biggest week ever. We were all flat out that week and it was a great test to affirm our ability and capacity to manage our future growth. In June we conducted our largest Australian auction ever, our first ever two-day event there, which generated $52 million in gross auction proceeds. We set regional gross auction proceeds records at our auction sites in Atlanta, Georgia, Northeast Maryland, Corso, Italy, and Albuquerque, New Mexico. We sold $231 million of equipment to online bidders bringing our total Internet sales since introducing online bidding in 2002 to more than $2.1 billion.

Our business is growing in every way and becoming increasingly scalable. We’re conducting more auctions, our auctions are getting bigger, and we’re serving more buyers and sellers. Consider the following statistics:

In the 12 months ended June 30, 2008 an average industrial auction generated $17.8 million in gross auction proceeds up from $15.9 million in the 12 months ended June 30, 2007. An average agricultural auction in the same period generated $900,000 in proceeds compared to $700,000 in 07.

In the first half of 2008 we sold 15,000 fewer industrial lots but generated $300 million more in auction proceeds than we did in the first half of 2007 which is extremely positive. The higher the value of the iron we sell, the better use we are making of our auction sites, our systems and our people.

We had more than 140,000 bidder registrations during the first half of this year, an increase of 11,000 over the first half of 2007. Just over a quarter of our customers registered to bid online using our real-time Internet bidding service.

For the 12 month period ended June 30, 2008 we generated a total EPS of $0.82 a share versus $0.61 in the comparative 2007 period. That’s 34% growth over 2007. And while we can’t expect returns like this every year, it does demonstrate our well established ability to grow when the market is relatively soft.

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