Ritchie Bros. Auctioneers Incorporated ( RBA) Q3 2010 Earnings Call Transcript November 2, 2010 11:00 am ET Executives Peter Blake – CEO Rob Mackay – President Jeremy Black – VP, Business Development and Corporate Secretary Bob Armstrong – COO Rob McLeod – CFO Analysts Bert Powell – BMO Capital Markets Scott Stember – Sidoti & Company Jamie Sullivan – RBC Capital Markets Hamzah Mazari – Credit Suisse Scott Schneeberger – Oppenheimer David Wells – Thompson Research Group Craig Kennison – Robert W. Baird & Company Gary Prestopino – Barrington Research Presentation Operator
These risks and uncertainties that may affect our performance significantly or could cause our actual, financial, and operating results to differ significantly from our forward-looking statements are detailed from time to time in our SEC, and Canadian Securities Filings, including our management’s discussion and analysis of financial conditions, and results of operations for the period ended September 30th, 2010 and subsequent quarters, which is available on the SEC, SEDAR, and company websites.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 would also like to note that during today’s call, we will talk about gross auction proceeds, which represents 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 are an important measure we use in comparing and assessing our operating performance, and 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 statements is auction revenues, which represent the revenues we earn in the course of conducting our auctions. Today, we plan to give you a quick recap of our recent strategic development process and some of the highlights of Q3 before opening the call to questions. Our prepared comments will take about 25 minutes. We are pleased to report that our third quarter represented the highest third quarter auction revenue performance in our history and reflected solid gross auction proceeds growth and a strong auction revenue rate. Although we are very pleased with our performance in the third quarter of this year, we are still seeing considerable uncertainty in our major marketplaces and the used equipment market has not yet returned to what we would consider a balanced state.
Rob Mackay is going to talk in a moment about our impressions of the current equipment landscape, but I will say that we remain cautious, because like many other participants, we continue to face challenging market conditions particularly in the United States, and we expect this will continue for the remainder of 2010. We believe we have increased our market share meaningfully during these many months of economic uncertainty and are therefore well positioned to capitalize once equipment transaction volumes stabilize.Many of you will have seen our press release this morning announcing our planned launch during 2011 of a number of strategic initiatives designed to build off our focus on people, places and processes to help grow and enhance our core business as well as make our auctions more appealing to a broader range of equipment owners. As we have gone through our extensive strategic planning process over the last number of months, we have been paying particular attention to the reasons why equipment owners do and do not take advantage of our auctions to manage their fleets. Our recent customer surveys have highlighted the fact that the vast majority of equipment owners do not even know who we are, never mind understanding the compelling value of our auctions. As a result, a major focus of our new initiatives will be to continue to extend the appeal of our auctions to equipment owners around the world. We aim to continue to make our auctions as compelling as possible by providing business solutions that enable equipment owners around the world to easily and confidently exchange their equipment. At the end of the day, we want to create as many reasons as possible for new and existing customers to participate in our auctions to ensure we continue to capture in increasing share of the large and fragmented equipment market.
Over the last five years, we have been on an accelerated CapEx program designed to expand our auctions site network and provide higher quality services to an increasing number of equipment owners in more markets around the world. In that time, we have invested roughly $370 million in our network and $50 million in our systems to provide the highest possible level of service for our customers. These investments and our focus on innovation have made our auctions more appealing to equipment owners as evidenced by the increase in bidder registrations at our auctions over the last few years, and by the increase in unique visitors to our Website, which Bob will highlight in a few minutes.Attracting bidders is an important first step in the evolution of customer and this is often their very first introduction to our auctions. If we can contain to attract an increasing number and diversity of bidders to our auctions, this will help grow our consignments and ultimately our net earnings. In response to extensive feedback received from our customers and to broaden and deepen our appeal to new customers and enhance the convenience and ease of our auctions, we intend to introduce some new features during 2011. One of the more significant changes will be a bundle of new services for bidders and buyers of equipment. This bundle services will include enhanced equipment information, a customer-financed program, and other value-added services designed to make our customers experience easier and instill even more confidence in the process. Providing enhanced equipment information will address a growing need among equipment buyers who is simply looking for more when buying used equipment. High on their list of needs is a high quality zoomable photographs to which we have already responded with the recent launch of our new 21-language Website. Read the rest of this transcript for free on seekingalpha.com