Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 11:00 am ET

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Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Your first question comes from Cherilyn Radbourne of TD Securities. your line is open.

Analyst
Cherilyn Radbourne

Thanks very much, and good morning. I wanted to ask about what feels like an ongoing shift to lower value lots just curious whether that's principally the influence of GovPlanet? Or whether that's a trend that you're also seeing across the live auctions and online marketplaces?

Executive
Sharon R. Driscoll

Cherilyn it's Sharon. I'll take that. So certainly GovPlanet is an impact that is a channel that has very low kind of item prices. So that's very similar to our tower auctions at our live events. But we equally are still seeing the age of equipment is still tending to kind of the lower -- not later models but it's not in our sweet spot the way we would like it to be. So that is also having an effect. So it is being seen in our live events as well. And as we again continue to expand our capabilities in that small sector and in transportation we do start to see downward pressure on our average sale price per lot.

Analyst
Cherilyn Radbourne

And how do you feel about that strategically? Because I understand that lower value items attract higher fees and that's positive for the revenue rate. But I assume that there's also more competition to sell lower value items versus higher value items?

Executive
Karl Werner

Cheril This is Karl. We get a lot of those in packages of equipment. So mix constantly changes. It's a balance for us. And we don't see -- the competition is mainly on the large packages and those are just a component of those.

Analyst
Cherilyn Radbourne

Okay. Fair enough. And then just on SG&A you had some nice leverage there this quarter. Just wondering whether there was anything we should be mindful of as we model like lower stock-based compensation or anything of that nature?

Executive
Sharon R. Driscoll

So no we were very pleased with the discipline that the teams showed in their SG&A spending. It's clearly things like travel and promotional costs were very well-managed in the quarter. The compensation expense is the primary driver of what you're seeing in Q3 is really related to variable based performance where we are seeing strong performance in our financial results compared to where we were last year. So it's -- I don't think there's anything particularly unusual for you to be considering. I do probably just would call out that there is currently a positive foreign exchange impact on our SG&A as we translate our international and Canadian offices into U.S. dollar currencies.

Analyst
Cherilyn Radbourne

Thank you. Those are my questions.

Operator
Operator

Your next question comes from Derek Spronck of RBC Capital Markets. Your line is open.

Analyst
Derek Spronck

Okay, thank you for taking my questions. It was another quarter of pretty high inventory sales. Do you think this is going to be more of the trend going forward here? And the margins seem to be a little bit more compressed than it has been historically. Is that correct? And if so are there any levers that