Ritchie Bros. Auctioneers Incorporated (NYSE and TSX: RBA, "the Company"), the world's largest industrial auctioneer, sold approximately $4.33 billion of equipment through 356 unreserved auctions and its online equipment marketplace during 2016. This is a new annual record for the Company, and represents a 2% increase in gross auction proceeds (GAP) compared to 2015.
"During 2016 we made strategic investments and acquisitions to better position our business for future growth, including the addition of an equipment sales listing offering, obtaining full ownership of Ritchie Bros. Financial Services, key bolt-on acquisitions to bolster our strength in certain regions and sectors, and the announcement of our impending acquisition of IronPlanet. All of these initiatives have built a stronger platform for our customers and shareholders as we expand our service offering and the solutions we provide equipment sellers.
"Mr. Saligram continued: "The two percent GAP growth we recorded this year was negatively affected by lower equipment values relative to last year, though lot volume, buyers, consignors and registered bidders all grew substantially from 2015, indicating strong operational growth. Lot volumes grew nearly 13%, the number of buyers and consignors grew by 12%, and the number of registered bidders grew by 8%. Regionally, our Canadian business led growth, and achieved yet another record year."
During the fourth quarter of 2016, the Company generated gross auction proceeds of $1.0 billion, a decrease of 9% compared to the fourth quarter GAP achieved last year. On a constant currency¹ basis, GAP declined 8.5% during the fourth quarter of 2016 compared to the fourth quarter of 2015. As previously discussed on Ritchie Bros.' Q3 2016 earnings call, auction timing differences did affect the quarter, with both the fall Montreal and Columbus auctions of 2016 occurring in the third quarter this year, rather than in the fourth quarter as they did in 2015.
Ritchie Bros. conducted its final unreserved auction of 2016 on Wednesday, December 21 in St. Louis, Missouri. The Company plans to release its full audited financial results for 2016 before market open on February 20, 2017.
1 To provide investors with a better understanding of organic growth, which removes the impact of foreign exchange rate changes relative to the prior year, we have broken out both reported (FX impacted) GAP growth and organic (FX normalized) GAP growth results. Ritchie Bros. defines constant currency growth as an improvement in current year performance compared to prior year performance, where current year performance is measured using foreign exchange Rates consistent with those of the comparative year ago period. The Company believes that using organic growth information is important in evaluating the operational health of the business.
Ritchie Bros. sold approximately US$2.1 billion of equipment and trucks in the United States during 2016 – unchanged from US$2.1 billion in 2015. Certain regions of the US generated strong performance, including:
- A 58% increase in GAP sold in Ohio
- A 50% increase in GAP sold in Las Vegas
- A 34% increase in GAP sold in Minnesota
- A 23% increase in GAP sold in Arizona
A number of Company records were broken in the US this year, including:
- On March 17 – 18, 2016, Ritchie Bros. sold more than US$46 million of equipment and trucks at its largest-ever Denver, Colorado auction. The two-day auction also set new Denver site records for attendance (5,950+ bidders) and items sold (3,950+).
- On August 17, 2016, Ritchie Bros. sold US$21 million of assets at its Tipton, California auction. This was the largest-ever auction held at the Tipton auction site.
- On September 28-29, 2016, the Company held its largest ever two-day auction in the United States, at its Columbus, Ohio auction site. More than US$76 million of assets were sold at this auction, including US$61 million on the auction's first day – the largest single day Ritchie Bros. has ever achieved at an auction in the U.S.
Largest year ever in Canada
Ritchie Bros. sold more than CA$1.7 billion (US$1.3+ billion) of equipment and trucks in Canada during 2016 – a 6% increase from 2015, and a new record for the Company's Canadian operations. A number of other Company records were broken in Canada this year, including:
- On March 14 -15, 2016, Ritchie Bros. held its largest-ever Grande Prairie, Alberta auction, selling more than CA$62 million (US$46+ million) of equipment on behalf of 250+ consignors. The two-day auction attracted 7,150+ registered bidders, which was also a new site record.
- On March 30, 2016, Ritchie Bros. held its largest-ever 'on-the-farm' offsite agricultural auction, selling more than CA$24 million (US$19+ million) of equipment and real estate from a consignor's farm in Bonanza, Alberta.
- The first ever 5-day auction in Canada, held in Edmonton, AB, April 26 – 30, 2016. This massive CA$240+ million (US$191+ million) auction was Ritchie Bros.' largest auction ever held in Canada, and the second largest in the Company's history. The sale attracted more than 16,700 bidders from 55 countries, and sold over 10,200+ lots. 84% of the assets sold in this auction went to Canadian buyers, including 46% sold to buyers within the province of Alberta.
- On July 21-22, 2016, Ritchie Bros. held its first two-day Lethbridge, AB auction, selling CA$24+ million (US$18+ million) of equipment and other assets – a new record for the site.
- On September 28-29, 2016, Ritchie Bros. sold more than CA$39 million (US$30+ million) of equipment and other assets at its auction in Toronto, ON. This was largest auction ever held at the Toronto auction site, and the second time in 2016 the site set new sales records.
International participation at auctions
International bidders are an important element of Ritchie Bros. auctions, as they generate global market pricing. During 2016, approximately 16% of GAP was generated by international buyers (successful bidders located outside the country of the sale), consistent with 16% in 2015. Approximately 9% of GAP generated in the United States was sold to international buyers, consistent again with 9% in 2015.
Ritchie Bros. attracted record online bidder registrations and sold approximately $2.1 billion of equipment, trucks and other assets to online buyers at Ritchie Bros. auctions and EquipmentOne customers in 2016, a 10% increase over 2015 and the highest amount ever sold online by the Company in one year.
EquipmentOne sells approx. $137+ million in Gross Transaction Value in 2016
EquipmentOne, the Company's online equipment marketplace, has generated more than US$137 million in Gross Transaction Value (GTV) so far this year, representing 17%+ growth over last year.
Ritchie Bros. Financial Services finances over $285 million in 2016
Ritchie Bros. Financial Services (RBFS) provided over US$285 million of financing to equipment buyers so far this year, a new record for this growing business and a 28.6% increase in financing activity compared to 2015. RBFS works with select lending partners to find financing solutions for customers purchasing equipment, including loans and lease-to-own programs. RBFS does not utilize Company capital in its financing activities. During 2016, Ritchie Bros. purchased the minority interest of RBFS, and now owns 100% of the business.
Executive and Board changes during 2016
Several important executive and board changes were announced during the year, including the appointment of Marianne Marck as Chief Information Officer, and Becky Alseth as Chief Marketing Officer. The Company also welcomed Sarah Raiss as a director on the board.
US$107.2 million return to shareholders
Ritchie Bros. increased its quarterly cash dividend by 6% in August 2016 to $0.17 per share, and paid shareholders $70.5 million in total dividends during 2016. During the year, Ritchie Bros. also repurchased and cancelled 1.46 million shares, for a total cost of $36.7 million.
Corporate development activities
During 2016, Ritchie Bros. completed and announced several important acquisitions, to reach new customer segments and cater to a broader set of customer needs.
- On February 19, 2016, the Company announced its acquisition of Mascus – one of the world's leading online equipment listing services, adding to Ritchie Bros. menu of sales solutions for equipment sellers.
- On July 12, 2016, Ritchie Bros. acquired the minority interest of Ritchie Bros. Financial Services, providing the Company with 100% ownership of its equipment finance brokerage business.
- Also on July 12, 2016, Ritchie Bros. announced that it has made a strategic minority investment in Machinio – a global search engine for finding, buying and selling equipment.
- On August 2, 2016, the Company acquired Petrowsky Auctioneers, an industrial auctioneer with a strong presence in the New England region of the U.S.
- On August 29, 2016, Ritchie Bros. announced its impending acquisition of IronPlanet – a leading online marketplace for used heavy equipment, for $758.5 million.
- On November 15, 2016, the Company acquired Kramer Auctions, a boutique agricultural auctioneer that caters to the needs of farming communities in Canada's prairie provinces.