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on Ritchie Brothers Auctioneers (NYSE:RBA): Global Auctioneer of Industrial Equipment Ritchie Bros Home Page Background and History of Ritchie Brothers: Ritchie Brothers describes itself as "the world's leading auctioneer of industrial equipment" and reports having over 50 locations in 13 countries. It engages in the sale, through unreserved public auctions, of used industrial equipment including that used in the construction, transportation, mining, forestry, petroleum and agricultural industries. Based in British Columbia, RBA reports having over 250,000 customers from 160 countries in its proprietary database. In business for over 30 years, RBA's growth strategy involves attracting bidders to established auction locations, then extending its auctions into new areas of the world and establishing a local presence once sufficient interest has been developed. Over the last 20 years, RBA reports a compounded annual growth rate of 17%, with an average operating margin of about 35% and a net margin averaging about 22%. According to its Form 6K filed in November, 1998, RBA sold 3.3 million shares in a March 1998 IPO that netted $51.8 million for the company. The Prospectus is online at EDGAR. In all, about 15.9 million shares are outstanding. After the offering, all directors & officers as a group owned 46% of outstanding shares. 30% of the common shares are owned by Dave Ritchie, the CEO. The 15 beneficial owners of RBA's predecessor entities together owned about 79% (about 12.8 million) of the Common outstanding after the IPO, and entered a 'lock-up' agreement not to transfer or dispose of any of their shares. The lock-up lifts on the first anniversary of the IPO (March 1999) for one-third of their shares (about 4.25 million) and will be reduced by one-third on each of the first three anniversaries of the Offering. Recent financial results: In the first week of March, Ritchie reported year-end results for 1998, in which annual gross auction sales exceeded $1 billion for the first time in Ritchies' history, and revenues were just shy of US$95 million, 12% higher than in 1997, with $1.54 earned per diluted share. They closed their quarter with the largest sale in their history, $59 million of equipment sold in November at Rotterdam, where they reported 1,328 bidders from 58 countries. Their Rotterdam site joined new sites in Australia, Ilinois and California to bring their count of permanent sites fo 17, with offices in 14 countries.
Future Prospects and Market: On its corporate fact sheet, RBA says: "In times of economic uncertainty, equipment owners look to rationalize fleets and buyers become increasingly interested in high quality used equipment, stimulating both the demand and supply sides of the used equipment market. Research analysts estimate the global used equipment market to be about $100 billion (USD) annually." In its March 1998
prospectus, RBA
described the advantage of the size of its auctions with
a paragraph that captures the same principles as observed
in Network Economics: RBA's prospectus also described a suite of services that further enhance the attraction of its auctions. For consignors, Ritchie provides an equipment appraisal and proposals for alternative commission structures based upon a guaranteed minimum level of gross sale proceeds, or an outright purchase. Ritchie will take consignment of a customer's full equipment fleet plus ancillary assets such as inventories, parts, tools, attachments and construction materials, not just the most desirable items. Ritchie offers and arranges for onsite repair and refurbishment services and presentation advice to consignors. The prospectus also discloses that for bidders, Ritchie personnel do title searches on the equipment and warrant titles, as well as offer prior inspections and various bidder courtesy services, including third party financing, access to trucking and freight forwarding, vehicle registration and customs brokerage services at the auction site. Ritchie Bros. reports that in the fragmented sector of industrial equipment auctioneers, its is the only participant that conducts auctions on a global scale. According to its prospectus, "In calendar 1997, of the 42 companies that are followed by an industry source reporting auction results for the construction equipment segment of the industrial equipment auction industry, reported gross auction sales for Ritchie Bros. exceeded those of the other 41 reported companies combined and exceeded three times the gross auction sales of the next largest auctioneer. Although the Company is not relying on such industry source as an expert, the Company believes that the information provided is reliable." It also reported about 300 full-time and 300 recurring temporary employees as of December 1997. Approximately 17% of Ritchie Bros.' gross auction sales for its fiscal year ended April 30, 1997 represented purchases by bidders from countries outside of the country in which the auction was held, according to its prospectus. In 1999, RBA began broadcasting auctions live on the Internet and accepting online absentee bids of a minimum of $10,000. Ritchie Brothers is the subject of a message thread on Silicon Investor, and another message thread at Yahoo! Finance. Check there for breaking news and views. See the right side gutter for links. Do your own research before buying any security. The Net offers tremendous opportunities for those who can appreciate the "increasing returns" economics of networks, the power of community, and its opportunity to eliminate the costs of intermediaries and manual hand-offs in the distribution chain. Many have pointed to auctions as a service especially suitable for enhancment using the Net. This article will be archived at nnarc-rba.html and may be edited in the future. Check in with Net Nuggets from time to time. The information contained herein is believed to come from reliable sources, but no warranty of accuracy is expressed or implied. The author may own shares of the company profiled that were purchased on the open market and has never received or been offered any compensation from the company profiled or its employees, agents or affiliates. This article is for informational purposes only, is neither an offer to buy or sell a security and is not intended to constitute financial advice. If you have verifiable information about this company, its business plan or competitors, you are invited to share it via email with me. |
Net
Nuggets is a Sponsor of: Ritchie Brothers RBA at Yahoo Finance: Silicon Investor Discussion
Thread: Other Publicly-held Auction
Companies: Other Approaches: Click on the title or image to buy these now from Amazon: Henry Kulesza,
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