Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) Q3 2017 Earnings Conference Call - Final Transcript

Nov 10, 2017 • 11:00 am ET


Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) Q3 2017 Earnings Conference Call - Final Transcript


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Ravi Saligram

challenges we are facing, and then turn the call over to Sharon to discuss the quarter's results. It's been five months since we acquired IronPlanet and although we're in the early stage of integration, we have accomplished a lot already as a combined company. First, I'm very pleased and encouraged by the performance of our International business which grew third quarter revenues 42% upwards of prior year with significant strength in Europe and Australia. Europe, in particular, has shown strong growth throughout the year. Also the International team is bullish about the IronPlanet brand and it has already been launched in Australia and the UAE.

Further, we conducted a record European online-only featured auction in Tampere, Finland last month. The fusion of EquipmentOne and Daily Marketplace has been completed and we have launched our new offering Marketplace-E. Our sales teams have really embraced this offering and it is on a solid growth trajectory. I want to thank our EquipmentOne team for their perseverance. Year-to-date, EquipmentOne has grown at a high-double-digit rate and has provided a solid foundation for the launch of Marketplace-E. We've just completed a new buyer experience on the IronPlanet website. For the first time, we now have IP, Marketplace-E and RBA listings on the same search result, conveying the vast variety and choice of equipment to our buyers.

Let me illustrate. A few weeks ago, the IP website would have shown 6,000 plus items, today it'd be over 50,000 items. At the same time, IronPlanet has become the sixth largest traffic generator to rbauction.com. Pricing is robust across all channels. Our CAT Alliance is off to a splendid start. Mascus and RBFS are performing extremely well with strong double-digit growth. I'm delighted with the progress being made by our technology team and technology is becoming a true competitive advantage for the company. There is good camaraderie amongst the legacy RB and IP teams.

Now let me quickly highlight our challenges. One key challenge is to restore revenue and profit growth in North America. Clearly, the equipment supply shortage is a very major factor as evidenced by four market conditions. First, end users are keeping their equipment longer. Second, rental utilizations are very high. And third, some OEM dealers have become buyers of used equipment rather than sellers. And four, we're finding it difficult to source underwritten business, particularly large fleets and full and partial disburses.

The supply situation is exacerbated by some of the growing pains running counters in a merger integration, which has somewhat affected execution. Consequently, we are working on supporting ourselves teams to improve execution in setting each others offerings and making the learning curve faster. In particular, we are proactively working with our legacy Ritchie Bros. reps to help them better understand the value proposition of the IP weekly featured auction, its point of difference versus RBA Live and how best they can sell it in tandem.

We recognize that the extreme shortage of supply, merger integration, the bringing together of two different