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
Analyst
Derek Spronck

you can pull to maybe change that dynamic?

Executive
Sharon R. Driscoll

Sure. So I'll tackle that. We're somewhat agnostic to the form at which our contracts are written. And it really is up to consignor demand in terms of whether or not we take something as a straight commission a guaranteed commission contract or an inventory position. The things that will cause inventory to fluctuate positively will be increases in insolvency transactions increases in our international business because those are the areas that really where you do need to take title to the assets to basically complete those transactions. So I think unfortunately this is the new accounting standard. So you see the variability which is why we've been recommending that from a revenue standpoint the performance of our service revenue line is more indicative of our overall growth and health of our business.

On the margin query we do earn fees and other service revenues and those don't show up in that pure gross profit measure that you're really seeing on the face of the statements. Overall we go back to our overall at-risk performance. We are very much in line with our historical levels and clearly on our expectations with respect to both performance of inventory contracts and our guarantee contracts. So we're very pleased particularly in light of -- right now what we're seeing is a very fluid and dynamic pricing environment. Our teams have done a very good job of ensuring they're looking forward to where prices are going to be as we price out those at-risk contracts.

Analyst
Derek Spronck

Okay. No that makes sense Sharon. And just one more for myself if I could and then I'll turn it over. There's been obviously multiple different areas and segments that are delivering growth. Are there any particular areas or segments that you are most optimistic about in terms of providing growth in the next one to two years?

Executive
Sharon R. Driscoll

So I think we're very encouraged with what we see in the U.S. and that really has been a tailwind for us for the last few years were just related to equipment supply. So I'd say that that -- clearly what we're seeing in the quarter and the discussions that the U.S. team and the sales teams are having with their customers give us some degree of comfort that the current trend may not continue at that rate but it actually looks like those tailwinds to supply have really abated. So we are quite keen on the progress that the U.S. team has made. And in addition are the 2 key drivers of performance being our SAGE sales kind of effectiveness program and Marketplace-E we're really pleased with how we're seeing that particularly the U.S. team adopting those concepts to provide better value to our consignors as well as sales force.

Analyst
Derek Spronck

Okay, thanks

Operator
Operator

again, if you would like to ask a question, press star then the number one on your telephone keypad. [Operator Instructions] Your next question comes from Ben Cherniavsky of Raymond