Ritchie Bros. sells 93,000 items in Q1 2016 – 28% increase over Q1 2015
After a relatively small year-over-year increase in lot count in Q4 2015 (1%), Ritchie Bros. saw a 28% increase in lots sold in Q1 2016 compared to Q1 2015. From Jan 1 – Mar 31, 2016, we sold 93,000 equipment items and trucks for 11,300 consignors—an increase of more than 21,000 incremental lots.
Growth in heavy and light construction business
“A large portion of our lot growth in Q1 2016 came from customers in both the heavy and light construction industries,” said Ravi Saligram, CEO, Ritchie Bros. during the Q1 2016 earnings call. “Combined, these construction segments provided 3,780 of the incremental lots that came to our auctions in the first quarter.”
Ravi adds, “It should also be noted that the sales, leasing and rental channels also provided just over 3,000 more lots in the first quarter of this year than last year. Some of this growth is coming from rental companies or dealer rental business that have been downsizing due to softness in demand, especially in the oil patch.”
A much smaller portion of the increase in incremental lots came from customers in the agriculture, oil & gas, and mining sectors.
Strong growth in transportation and agriculture
Regarding asset category, not customer sector, the number of construction, transportation and agricultural assets has grown meaningfully relative to prior first quarters, especially transportation:
- 47% increase in transportation assets
- 32% growth in agriculture assets
- 16% growth in construction assets
“Our efforts to diversify into agriculture and transportation are beginning to yield positive results,” said Ravi during the investor call.
Younger equipment coming to auction
Of note, the age of equipment coming to Ritchie Bros. auctions so far in 2016 is trending younger. The proportion of equipment sold within the 3-5 year range is the highest it’s been since 2011 (making up approx. 29% of gross auction proceeds).
Uptick in used equipment pricing in early 2016
“Early in Q1 we saw a bit of an uptick in used equipment values compared to what we saw in Q4 and even Q3 2015,” said Doug Olive, Senior Vice President, Pricing, Ritchie Bros. during the Q1 2016 earnings call. “We aren’t yet back to the levels we saw early on in Q1 and Q2 of 2015. There’s still some pressure on certain oil & gas and mining-related assets, while smaller assets that are tied to construction spend and housing and residential spend are performing very well. We are optimistic; throughout Q1 and as we move into Q2 it looks like the pricing levels are holding.”
Buyers from many sectors and regions bolster pricing
Ritchie Bros. credits its coverage across multiple sectors and geographies as a key element to the current strength for its used equipment pricing.
“Assets have always moved from weaker areas to stronger areas and from weaker industries to stronger industries,” said Randy Wall, President (Canada), Ritchie Bros. during the Q1 2016 earnings call. “That’s no different today, we are just getting better and better at reaching those other sectors and geographies. Our bidder counts are significantly up and we continue to see new buyers all the time. In fact, we recently set a new company record with 16,700 bidders at our April Edmonton auction. Our multi-channel, multi-sector approach helps create stability and support for used equipment pricing.”
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Mobile app will enable equipment search and bidding by phone
Approximately half of all Ritchie Bros. buyers now participate online. During Q1 2016, we attracted a record number of bidder registrations and sold approximately $449 million of assets to online buyers—an increase of 11% over Q1 2015 and 44% of total sales for the quarter.
Understanding the importance of online options for buyers, Ritchie Bros. has been hard at work building a mobile application for its customers. The new mobile app will allow customers to search for equipment and bid at live Ritchie Bros. auctions via their smartphone.
“We are currently beta testing the app at our auctions with select customers and had our first smartphone transaction at a recent Sacramento auction,” said Ravi. “Following progressive stages of testing with customers and device types we plan to make iOS and android versions available to all customers late in the second quarter or early third quarter. We can’t wait to bring the power of Ritchie Bros. technology and our events into the hands of any customer with a mobile phone.”
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