Ritchie Bros. reports second quarter 2018 results
VANCOUVER, Aug. 9, 2018 /PRNewswire/ - Ritchie Bros. Auctioneers Incorporated (NYSE & TSX: RBA, the "Company" or "Ritchie Bros.") reported the following results for the three months ended June 30, 2018:
(All figures are presented in U.S. dollars)
Net income attributable to stockholders of $45.7 million improved 159% compared to $17.6 million for the same quarter in 2017. Diluted earnings per share ("EPS") attributable to stockholders increased 163% to $0.42 versus $0.16 in the second quarter of 2017, while diluted adjusted EPS attributable to stockholders(1) (non-GAAP measure) increased 27% to $0.42 from $0.33 in the same respective period. Other key second quarter highlights included:
Consolidated results:
-- Total revenues of $308.5 million increased 22% over the second quarter
of 2017
-- Total Company agency proceeds(2 )(non-GAAP measure) of $206.8 million
increased 24% from $166.2 million in the second quarter of 2017
-- Cash provided by operating activities of $107.9 million for the
six-month period ended June 30, 2018
-- Repayment of $27.3 million of long-term debt in the second quarter of
2018, and $56.6 million for the six months ended June 30, 2018
-- Increased quarterly cash dividend by 6% to $0.18 per share
Auctions & Marketplaces ("A&M") segment:
-- Gross Transaction Value ("GTV")(3 )of $1.4 billion increased 14% from
$1.3 billion in the second quarter of 2017
-- Total revenues of $274.3 million increased 21% from $226.4 million in
the second quarter of 2017
-- A&M agency proceeds(4) (non-GAAP measure) of $192.5 million increased
25% from $154.6 million in the second quarter of 2017
-- A&M revenue rate(5 )and A&M agency proceeds rate(6) (non-GAAP measure),
each improved 120 basis points ("bps") over the second quarter of 2017
"In the second quarter, we delivered strong double-digit revenue and agency proceeds growth on a combined company basis versus prior year through improved execution, positive price realization for our customers and increased A&M revenue rate. We had excellent performance in the US where we delivered strong live auction comps and achieved record quarterly online performance. Also, our US Strategic Accounts team drove strong growth through new customer acquisition. We also generated strong Services revenue growth with RB Financial Services up 42% and Mascus up 43% continuing their strong growth trajectory," said Ravi Saligram, Chief Executive Officer.
Saligram continued, "We were pleased with our earnings growth and our strong operating cash flows in the quarter. This allowed us to pay down $27 million of long-term debt in the quarter and increase the dividend. As we enter the second half, we are encouraged to see our sales teams gaining traction on leveraging our multi-channel solutions and offering the appropriate channel that best meets individual customer needs."
(1) Diluted adjusted EPS attributable
to stockholders is a non-GAAP
financial measure. The Company
believes that comparing diluted
adjusted EPS attributable to
stockholders for different
financial periods provides useful
information about the growth or
decline of its diluted EPS
attributable to stockholders for
the relevant financial period, and
eliminates the financial impact of
adjusting items the Company does
not consider to be part of its
normal operating results. Diluted
adjusted EPS attributable to
stockholders is calculated by
dividing adjusted net income
attributable to stockholders (non-
GAAP measure), net of the effect
of dilutive securities, by the
weighted average number of
dilutive shares outstanding.
Diluted adjusted EPS attributable
to stockholders is reconciled to
the most directly comparable GAAP
measures in the Company's
consolidated financial statements
under "Non-GAAP Measures".
(2) The Company's income statement
scorecard includes the non-GAAP
measure performance metric, agency
proceeds. Agency proceeds is also
an element of the performance
criteria for certain annual short-
term incentive awards the Company
grants to its employees and
officers. The Company calculates
agency proceeds by subtracting the
cost of inventory sold and
ancillary and logistical service
expenses from total revenues.
(3) GTV represents total proceeds from
all items sold at the Company's
live on site auctions and online
marketplaces. GTV is not a measure
of financial performance,
liquidity, or revenue, and is not
presented in the Company's
consolidated financial statements.
4 A&M agency proceeds is a non-GAAP
financial measure that provides
useful information about the
performance of the Company's A&M
contracts for different financial
periods. A&M agency proceeds is
calculated as A&M total revenues
less cost of inventory sold and is
reconciled to the most directly
comparable GAAP measures in the
Company's consolidated financial
statements under "Non-GAAP
Measures".
5 The Company believes A&M segment
total revenues are best understood
by considering their relationship
to GTV. The metric that the
Company uses to measure that
performance is A&M revenue rate,
which is calculated as A&M total
revenues divided by GTV.
6 A&M agency proceeds rate is a non-
GAAP financial measure that
provides useful information about
the performance of our operations
by comparing the margins we earn
on our contracts for different
financial periods. A&M agency
proceeds rate is calculated by
dividing A&M agency proceeds (non-
GAAP measure) by GTV. A&M agency
proceeds rate is reconciled to the
most directly comparable GAAP
measures in our consolidated
financial statements under "Non-
GAAP Measures".
Financial Overview
(Unaudited)
(in U.S. $000's, except EPS) Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
% Change % Change
-------- --------
2018 2017 2018 over 2018 2017 2018 over
2017 2017
---- ----
Service revenues $214,346 $172,749 24% $390,362 $296,128 32%
Revenue from inventory sales 94,184 79,864 18% 178,346 155,912 14%
---------------------------- ------ ------ --- ------- ------- ---
Total revenues 308,530 252,613 22% 568,708 452,040 26%
Costs of services 43,033 36,292 19% 79,690 60,632 31%
Cost of inventory sold 81,702 71,726 14% 157,493 135,127 17%
Selling, general and administrative expenses 101,259 74,377 36% 198,729 144,952 37%
Acquisition-related costs 1,399 22,948 (94%) 3,032 31,575 (90%)
Operating income 64,795 26,888 141% 97,668 50,485 93%
Adjusted operating income (non-
GAAP measure) 64,795 51,061 27% 97,668 74,658 31%
Net income attributable to stockholders 45,717 17,635 159% 62,855 28,012 124%
Adjusted net income attributable to
stockholders (non-GAAP measure) 45,717 36,436 25% 62,855 49,103 28%
Diluted earnings per share
attributable to stockholders $0.42 $0.16 163% $0.58 $0.26 123%
Diluted adjusted EPS attributable to
stockholders (non-GAAP measure) $0.42 $0.33 27% $0.58 $0.45 29%
------------------------------ ----- ----- --- ----- ----- ---
GTV $1,426,412 $1,254,318 14% $2,587,124 $2,153,728 20%
Agency proceeds (non-GAAP measure) $206,848 $166,186 24% $376,655 $290,685 30%
A&M revenue $274,251 $226,373 21% $506,818 $405,451 25%
A&M revenue rate 19.2% 18.0% 120 bps 19.6% 18.8% 80 bps
A&M agency proceeds (non-GAAP measure) $192,549 $154,647 25% $349,325 $270,324 29%
A&M agency proceeds rate (non-GAAP measure) 13.5% 12.3% 120 bps 13.5% 12.6% 90 bps
========================================== ==== ==== ======= ==== ==== ======
Effective January 1, 2018, the Company adopted ASU 2014-09 Revenue from Contracts with Customers ("Topic 606"). Revenues from inventory sales and ancillary and logistical service revenues are presented gross of the related expenses rather than net. Accordingly, in addition to total revenues, the Company has added a new metric to its disclosures called agency proceeds (non-GAAP measure), which presents revenues as previously reported and is calculated as total revenues under Topic 606 less the cost of inventory sold and ancillary and logistical service expenses. Prior periods presented have been restated to conform with this new revenue standard. For further details on Topic 606, refer to the Annual Report on Form 10-K for the year ended December 31, 2017 and the Quarterly Reports on Form 10-Q for the periods ended March 31, 2018 and June 30, 2018.
Results of operations - second quarter update
For the three months ended June 30, 2018
Consolidated Performance Highlights
Total revenues increased 22% to $308.5 million in a supply environment that continues to be constrained. Total revenue growth was driven by incremental volume from the acquisition of IronPlanet (the "Acquisition"). The second quarter included three full months of Acquisition volume versus one month of post-Acquisition activity in the second quarter last year. The increase was also due to positive performance of the Company's live on site auctions and online marketplaces driven by continued price realization, increase in sales of inventory, partial fee harmonization, and an increase in ancillary and logistical services. Foreign exchange had a positive impact on total revenues in the second quarter of 2018.
Agency proceeds (non-GAAP measure) improved 24% to $206.8 million versus $166.2 million in the second quarter of 2017 driven by growth in GTV and service revenues, which includes higher fee revenues related to the partial fee harmonization.
Costs of services increased 19% to $43.0 million in the second quarter. The increase was primarily due to the Acquisition, which included three months of costs associated with inspection and appraisal activities versus one month of costs in the second quarter last year. Increases were also driven by incremental costs supporting the growth within the Company's service revenues including ancillary and logistical services.
Selling, general and administrative ("SG&A") expenses increased $26.9 million, or 36% in the second quarter of 2018 compared to the second quarter of 2017. This increase is primarily due to the Acquisition, investment in talent to support growth of the Company's businesses and initiatives, higher incentive compensation driven by year-over-year performance and enhanced sales compensation plans, and an increase in professional fees.
Operating income increased 141% during the second quarter of 2018 to $64.8 million, compared to the second quarter of 2017. This increase is primarily driven from higher total revenues and lower acquisition-related costs, partially offset by higher costs of services, depreciation and amortization, and SG&A expenses. Adjusted operating income(7) (non-GAAP measure) increased 27% during the second quarter of 2018 compared to the second quarter of 2017, which excludes the impact of non-recurring acquisition-related costs, and an impairment loss recognized on various technology assets in the second quarter of 2017. There were no adjusting items in the second quarter of 2018.
Net income attributable to stockholders increased $28.1 million, or 159%, in the second quarter of 2018 compared to the second quarter of 2017. This improvement is primarily due to operating income growth, partially offset by higher income tax expense and interest expense. Adjusted net income attributed to stockholders(8) (non-GAAP measure) increased 25% during the second quarter of 2018.
Primarily for the same reasons noted above, diluted EPS attributable to stockholders improved 163% to $0.42 in the second quarter of 2018 compared to diluted EPS attributable to stockholders of $0.16 in the second quarter of 2017. Diluted adjusted EPS attributed to stockholders (non-GAAP measure) increased 27% during the second quarter of 2018.
7 Adjusted operating income is a non-
GAAP measure. The Company uses
income statement and balance sheet
performance scorecards to align
its operations with its strategic
priorities. The Company
concentrates on a limited number
of metrics to ensure focus and to
facilitate quarterly performance
discussions. The Company's income
statement scorecard includes the
performance metric, adjusted
operating income. The Company
believes that comparing adjusted
operating income for different
financial periods provides useful
information about the growth or
decline of operating income for
the relevant financial period. The
Company calculates adjusted
operating income by eliminating
from operating income the pre-tax
effects of significant non-
recurring items that it does not
consider to be part of its normal
operating results, such as
acquisition-related costs,
management reorganization costs,
severance, retention, gains/
losses on sale of certain
property, plant and equipment,
impairment losses, and certain
other items, which the Company
refers to as 'adjusting items'.
Adjusted operating income is
reconciled to the most directly
comparable GAAP measures in the
Company's consolidated financial
statements under "Non-GAAP
Measures".
8 Adjusted net income attributable to
stockholders is a non-GAAP
financial measure. The Company
believes that comparing adjusted
net income attributable to
stockholders for different
financial periods provides useful
information about the growth or
decline of its net income
attributable to stockholders for
the relevant financial period, and
eliminates the financial impact of
adjusting items. The Company does
not consider to be part of its
normal operating results. Adjusted
net income attributable to
stockholders represents net income
attributable to stockholders
excluding the effects of adjusting
items and is reconciled to the
most directly comparable GAAP
measures in the Company's
consolidated financial statements
under "Non-GAAP Measures".
Auctions & Marketplaces Segment Performance Highlights
GTV increased 14% to $1.4 billion in the second quarter compared to $1.3 billion in the second quarter of 2017. The increase is primarily attributable to the Acquisition, improved live and online auction performance, strong price performance and a higher-value equipment mix in both live and online auctions. The increase was partially offset by continuing equipment supply constraints, as well as the reduction in the number of live industrial on site auctions and sale days over the comparative period.
A&M total revenues increased 21% to $274.3 million in the second quarter compared to $226.4 million in the second quarter of 2017 led by incremental volume from the Acquisition, improved live and online auction performance, increased volume of inventory contracts, and the partial fee harmonization. A&M revenue rate for the second quarter was 19.2%; a 120-basis point increase over the same quarter last year.
A&M agency proceeds (non-GAAP measure) improved 25% to $192.5 million versus $154.6 million in the second quarter of 2017 driven by GTV and service revenues growth and higher fee revenues. The overall A&M agency proceeds rate (non-GAAP measure) improved 120 basis points to 13.5% from 12.3% in the second quarter of 2017.
Dividend Information
The Company declared on August 9, 2018, a quarterly cash dividend of $0.18 per common share payable on September 19, 2018 to shareholders of record on August 29, 2018.
Q2 2018 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended June 30, 2018, at 8am Pacific time / 11 am Eastern time / 4 pm GMT on August 10, 2018. The replay of the webcast will be available through September 7, 2018.
Conference call and webcast details are available at the following link:
https://investor.ritchiebros.com
About Ritchie Bros.
Established in 1958, Ritchie Bros. (NYSE and TSX: RBA) is a global asset management and disposition company, offering customers end-to-end solutions for buying and selling used heavy equipment, trucks and other assets. Operating in a multitude of sectors, including construction, transportation, agriculture, energy, oil and gas, mining, and forestry, the Company's selling channels include: Ritchie Bros. Auctioneers, the world's largest industrial auctioneer offering live on site auction events with online bidding; IronPlanet, an online marketplace with featured weekly auctions and providing its exclusive IronClad Assurance® equipment condition certification program; Marketplace-E, an online auction marketplace; Mascus, a leading European online equipment listing service; and Ritchie Bros. Private Treaty, offering privately negotiated sales. The Company also offers sector-specific solutions including GovPlanet, TruckPlanet, and Kruse Energy Auctioneers, plus equipment financing and leasing through Ritchie Bros. Financial Services. For more information about the unprecedented choice provided by Ritchie Bros., visit RitchieBros.com.
Forward-looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable U.S. and Canadian securities legislation (collectively, "forward-looking statements"), including, in particular, statements regarding future financial and operational results, including growth prospects and payment of dividends. Forward-looking statements are statements that are not historical facts and are generally, although not always, identified by words such as "expect", "plan", "anticipate", "project", "target", "potential", "schedule", "forecast", "budget", "estimate", "intend" or "believe" and similar expressions or their negative connotations, or statements that events or conditions "will", "would", "may", "could", "should" or "might" occur. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Forward-looking statements necessarily involve assumptions, risks and uncertainties, certain of which are beyond the Company's control, including the numerous factors that influence the supply of and demand for used equipment; economic and other conditions in local, regional and global sectors; the Company's ability to successfully integrate IronPlanet, and to receive the anticipated benefits of the Acquisition; and the risks and uncertainties set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, which is available on the SEC, SEDAR, and Company websites. The foregoing list is not exhaustive of the factors that may affect the Company's forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, and actual results may differ materially from those expressed in, or implied by, these forward-looking statements. Forward looking statements are made as of the date of this news release and the Company does not undertake any obligation to update the information contained herein unless required by applicable securities legislation. For the reasons set forth above, you should not place undue reliance on forward looking statements.
GTV and Selected Condensed Consolidated Financial Information
GTV and Condensed Consolidated Income Statements
(Expressed in thousands of United States dollars, except share and per share amounts)
(Unaudited)
(in U.S. $000's, except EPS) Three months ended June 30, 2018 Six months ended June 30, 2018
-------------------------------- ------------------------------
% Change % Change
-------- --------
2018 2017 2018 over 2018 2017 2018 over
2017 2017
---- ----
GTV $1,426,412 $1,254,318 14% $2,587,124 $2,153,728 20%
--- ---------- ---------- --- ---------- ---------- ---
Revenues:
Service revenues $214,346 $172,749 24% $390,362 $296,128 32%
Revenue from inventory sales 94,184 79,864 18% 178,346 155,912 14%
---------------------------- ------ ------ --- ------- ------- ---
Total revenues 308,530 252,613 22% 568,708 452,040 26%
-------------- ------- ------- --- ------- ------- ---
Operating expenses:
Costs of services 43,033 36,292 19% 79,690 60,632 31%
Cost of inventory sold 81,702 71,726 14% 157,493 135,127 17%
SG&A expenses 101,259 74,377 36% 198,729 144,952 37%
Acquisition-related costs 1,399 22,948 (94%) 3,032 31,575 (90%)
Depreciation and amortization expenses 16,537 11,872 39% 32,728 22,210 47%
Gain on disposition of property, plant and equipment (271) (308) (12%) (616) (1,029) (40%)
Impairment loss - 8,911 (100%) - 8,911 (100%)
Foreign exchange loss (gain) 76 (93) (182%) (16) (823) (98%)
--------------------------- --- --- ----- --- ---- ----
Total operating expenses 243,735 225,725 8% 471,040 401,555 17%
------------------------ ------- ------- --- ------- ------- ---
Operating income 64,795 26,888 141% 97,668 50,485 93%
---------------- ------ ------ --- ------ ------ ---
Interest expense (10,937) (8,620) 27% (22,247) (16,753) 33%
Other, net 900 3,470 (74%) 1,813 5,754 (68%)
---------- --- ----- ---- ----- ----- ----
Income before income taxes 54,758 21,738 152% 77,234 39,486 96%
Income tax expense 9,031 4,025 124% 14,300 11,340 26%
------------------ ----- ----- --- ------ ------ ---
Net income $45,727 $17,713 158% $62,934 $28,146 124%
========== ======= ======= === ======= ======= ===
Net income attributable to:
Stockholders $45,717 $17,635 159% $62,855 $28,012 124%
Non-controlling interests 10 78 (87%) 79 134 (41%)
------------------------- --- --- ---- --- --- ----
$45,727 $17,713 158% $62,934 $28,146 124%
------- ------- --- ------- ------- ---
Earnings per share attributable
to stockholders:
Basic $0.42 $0.16 163% $0.58 $0.26 123%
Diluted $0.42 $0.16 163% $0.58 $0.26 123%
------- ----- ----- --- ----- ----- ---
Weighted average number of share outstanding:
Basic 107,864,030 107,004,902 1% 107,610,679 106,928,672 1%
Diluted 109,019,708 108,238,660 1% 108,832,776 108,014,228 1%
======= =========== =========== === =========== =========== ===
Condensed Consolidated Balance Sheets
(Expressed in thousands of United States dollars, except share data)
(Unaudited)
June 30, December 31,
2018 2017
---- ----
Assets
Cash and cash equivalents $210,566 $267,910
Restricted cash 118,714 63,206
Trade and other receivables 188,993 92,105
Inventory 63,636 38,238
Other current assets 28,765 27,610
Income taxes receivable 12,988 19,418
----------------------- ------ ------
Total current assets 623,662 508,487
Property, plant and equipment 512,527 526,581
Equity-accounted investments 6,674 7,408
Other non-current assets 26,188 24,146
Intangible assets 253,036 261,094
Goodwill 672,909 670,922
Deferred tax assets 22,530 18,674
------------------- ------ ------
Total assets $2,117,526 $2,017,312
============ ========== ==========
Liabilities and Equity
Auction proceeds payable $324,505 $199,245
Trade and other payables 150,785 164,553
Income taxes payable 6,874 732
Short-term debt 4,056 7,018
Current portion of long-term debt 9,086 16,907
--------------------------------- ----- ------
Total current liabilities 495,306 388,455
Long-term debt 741,278 795,985
Other non-current liabilities 39,130 46,773
Deferred tax liabilities 37,348 32,334
------------------------ ------ ------
Total liabilities 1,313,062 1,263,547
----------------- --------- ---------
Contingencies
Contingently redeemable
performance
share units 12,965 9,014
Stockholders' equity:
Share capital:
Common stock; no par value,
unlimited shares
authorized, issued and
outstanding shares:
108,202,351 (December 31, 2017:
107,269,783) 166,898 138,582
Additional paid-
in capital 41,410 41,005
Retained
earnings 628,341 602,609
Accumulated
other
comprehensive
loss (50,280) (42,514)
-------------- ------- -------
Stockholders' equity 786,369 739,682
Non-controlling interest 5,130 5,069
------------------------ ----- -----
Total stockholders' equity 791,499 744,751
-------------------------- ------- -------
Total liabilities and equity $2,117,526 $2,017,312
============================ ========== ==========
Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Unaudited)
Six months ended June 30, 2018 2017
------------------------- ---- ----
Cash provided by (used in):
Operating activities:
Net income $62,934 $28,146
Adjustments for
items not
affecting cash:
Depreciation and amortization
expenses 32,728 22,210
Impairment loss - 8,911
Stock option compensation expense 4,483 8,076
Equity-classified PSU expense 6,261 2,045
Deferred income tax expense
(recovery) 922 (4,823)
Unrealized foreign exchange loss
(gain) 92 (1,487)
Amortization of debt issuance costs 2,073 1,057
Other, net (4,879) (1,820)
Net changes in
operating assets
and liabilities 3,244 53,692
----------------- ----- ------
Net cash provided by operating
activities 107,858 116,007
------------------------------ ------- -------
Investing activities:
Acquisition of
IronPlanet, net
of cash acquired - (674,080)
Property, plant
and equipment
additions (5,802) (4,274)
Intangible asset
additions (12,273) (10,124)
Proceeds on
disposition of
property, plant
and equipment 1,633 2,451
Other, net (4,674) -
---------- ------ ---
Net cash used in investing
activities (21,116) (686,027)
-------------------------- ------- --------
Financing activities:
Dividends paid to
stockholders (36,588) (36,348)
Dividends paid to
NCI - (41)
Issuances of
share capital 18,049 6,033
Payment of
withholding
taxes on
issuance of
shares (3,357) -
Proceeds from
short-term debt 308 6,850
Repayment of
short-term debt (3,372) (17,208)
Proceeds from
long-term debt - 325,000
Repayment of
long-term debt (56,555) (100,575)
Debt issue costs - (12,388)
Repayment of
finance lease
obligations (1,774) (858)
Other, net (1,176) (1,350)
---------- ------ ------
Net cash provided by (used in)
financing activities (84,465) 169,115
------------------------------ ------- -------
Effect of changes in foreign
currency rates on
cash, cash
equivalents, and
restricted cash (4,113) 10,310
----------------- ------ ------
Decrease (1,836) (390,595)
Beginning of
period 331,116 758,089
------------- ------- -------
Cash, cash equivalents, and
restricted cash, end of period $329,280 $367,494
=============================== ======== ========
A&M Segment Information
(Expressed in thousands of United States dollars)
(Unaudited)
(in U.S.
$000's) Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
% Change % Change
-------- --------
2018 2017 2018 over 2018 2017 2018 over
2017 2017
---- ----
Service
revenues $180,067 $146,509 23% $328,472 $249,539 32%
Revenue from
inventory
sales 94,184 79,864 18% 178,346 155,912 14%
------------ ------ ------ --- ------- ------- ---
Total revenues 274,251 226,373 21% 506,818 405,451 25%
Costs of
services 21,381 20,978 2% 42,829 33,565 28%
Cost of
inventory
sold 81,702 71,726 14% 157,493 135,127 17%
SG&A expenses 95,959 70,977 35% 188,961 138,088 37%
Impairment
loss - 8,911 (100%) - 8,911 (100%)
---------- --- ----- ----- --- ----- -----
A&M profit $75,209 $53,781 40% $117,535 $89,760 31%
========== ======= ======= === ======== ======= ===
Selected Data
(Unaudited)
Live industrial auction data
As at and for three months ended June As at and for the six months ended
30, June 30,
------------------------------------- ----------------------------------
% Change % Change
-------- --------
2018 2017 2018 over 2018 2017 2018 over
2017 2017
---- ----
Number of consignments at industrial auctions 14,700 16,700 (12%) 25,450 28,050 (9%)
Number of bidder registrations at industrial auctions 141,500 163,500 (13%) 260,500 278,000 (6%)
Number of buyers at industrial auctions 36,350 40,400 (10%) 65,350 69,550 (6%)
Number of lots at industrial auctions 103,500 108,000 (4%) 184,500 192,000 (4%)
------------------------------------- ------- ------- --- ------- ------- ---
Number of permanent operational sites 35 39 (10%) 35 39 (10%)
Number of regional operational sites 5 6 (17%) 5 6 (17%)
------------------------------------ --- --- ---- --- --- ----
Total auction sites 40 45 (11%) 40 45 (11%)
------------------- --- --- ---- --- --- ----
Number of industrial auctions 50 70 (29%) 85 111 (23%)
============================= === === ==== === === ====
Additional Topic 606 Information
The following table reconciles revenues as previously reported to total revenues under Topic 606:
Prior to January 1, 2018 New Revenue Standard Adjustments On and after January 1, 2018
------------------------ -------------------------------- ----------------------------
(in U.S. $000's) Revenues as previously Cost of inventory sold(1) Ancillary and logistical Total revenues under the
service expenses(2) (c)
reported (a) (b) new standard
(a)+(b)+(c)=(d)
--- --------------
Quarter ended:
December 31, 2017 $178,785 $98,895 $14,070 $291,750
September 30, 2017 141,047 72,476 13,878 227,401
June 30, 2017 166,186 71,726 14,701 252,613
March 31, 2017 124,499 63,401 11,527 199,427
-------------- ------- ------ ------ -------
Full year 2017 $610,517 $306,498 $54,176 $971,191
============== ======== ======== ======= ========
The following table reconciles cost of services as previously reported to cost of services under Topic 606:
Prior to January 1, 2018 New Revenue Standard On and after January 1, 2018
Adjustments
-----------
(in U.S. $000's) Costs of services (a) Ancillary and logistical service Costs of services under the new
expenses2 (b) standard (a) + (b) = (c)
--- ------------ -----------------------
Quarter ended:
December 31, 2017 $25,026 $14,070 $39,096
September 30, 2017 19,583 13,878 33,461
June 30, 2017 21,591 14,701 36,292
March 31, 2017 12,813 11,527 24,340
-------------- ------ ------ ------
Full year 2017 $79,013 $54,176 $133,189
============== ======= ======= ========
1. These amounts were historically
disclosed under the Consolidated
Financial Statement note
entitled "Revenue" and are now
presented on the face of the
Company's consolidated income
statements effective January 1,
2018. Second and third quarter
2017 amounts were restated in
the fourth quarter of 2017 to
conform with current
presentation of certain
government contracts.
2. Effective January 1, 2018,
ancillary and logistical service
expenses are now reported within
costs of services under the
Consolidated Financial Statement
note entitled "Operating
Expenses".
Non-GAAP Measures
This news release makes reference to various non-GAAP measures. These measures do not have a standardized meaning and are, therefore, unlikely to be comparable to similar measures presented by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with generally accepted accounting principles.
The following table presents the Company's agency proceeds (non-GAAP measure) and agency proceeds adjusted operating income rate (non-GAAP measure) results for the three and six months ended June 30, 2018 and 2017, as well as reconciles those metrics to total revenues and operating income margin, which are the most directly comparable GAAP measures in, or calculated from, the Company's consolidated income statements:
(in U.S. $000's) Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
% Change % Change
-------- --------
2018 2017 2018 over 2018 2017 2018 over
2017 2017
---- ----
Operating income $64,795 $26,888 141% $97,668 $50,485 93%
Pre-tax adjusting items:
Accelerated vesting of assumed
options - 4,752 (100%) - 4,752 (100%)
Acquisition and finance
structure advisory - 9,063 (100%) - 9,063 (100%)
Severance and retention - 1,447 (100%) - 1,447 (100%)
Impairment loss - 8,911 (100%) - 8,911 (100%)
--------------- --- ----- ----- --- ----- -----
Adjusted operating income
(non-GAAP measure) 64,795 51,061 27% 97,668 74,658 31%
----------------- ------ ------ --- ------ ------ ---
Total revenues 308,530 252,613 22% 568,708 452,040 26%
Less: cost of inventory sold (81,702) (71,726) 14% (157,493) (135,127) 17%
Less: ancillary and logistical
service
expenses (19,980) (14,701) 36% (34,560) (26,228) 32%
-------- ------- ------- --- ------- ------- ---
Agency proceeds (non-
GAAP measure) $206,848 $166,186 24% $376,655 $290,685 30%
--------------------- -------- -------- --- -------- -------- ---
Operating income margin 21.0% 10.6% 1040 bps 17.2% 11.2% 600 bps
Agency proceeds adjusted
operating
income rate (non-GAAP measure) 31.3% 30.7% 60 bps 25.9% 25.7% 20 bps
============================== ==== ==== ====== ==== ==== ======
Three months ended June 30, 2018 compared with three months ended June 30, 2017
There were no adjusting items for the three months ended June 30, 2018.
The adjusting items for the three months ended June 30, 2017 were:
-- $4.8 million ($4.8 million after tax, or $0.04 per diluted share) of
stock option compensation expense related to the accelerated vesting of
certain IronPlanet stock options assumed as part of the Acquisition
-- $9.1 million ($6.6 million after tax, or $0.06 per diluted share) of
acquisition and finance structure advisory costs
-- $1.4 million ($0.9 million after tax, or $0.01 per diluted share) of
severance and retention costs in a corporate reorganization that
followed the Acquisition
-- $8.9 million ($6.6 million after tax, or $0.06 per diluted share)
impairment loss recognized on various technology assets
Six months ended June 30, 2018 compared with six months ended June 30, 2017
There were no adjusting items for the six months ended June 30, 2018.
The adjusting items for the six months ended June 30, 2017 were all recognized in the second quarter of 2017 and are detailed above.
The following table presents the Company's adjusted net income attributable to stockholders (non-GAAP measure) and diluted adjusted EPS attributable to stockholders (non-GAAP measure) results for the three and six months ended June 30, 2018, and 2017, as well as reconciles those metrics to net income attributable to stockholders and diluted EPS attributable to stockholders, which are the most directly comparable GAAP measures in the Company's consolidated income statements:
(in U.S. $000's, except share and Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
per share data) % Change % Change
-------- --------
2018 2017 2018 over 2018 2017 2018 over
2017
2017
----
Net income attributable to stockholders $45,717 $17,635 159% $62,855 $28,012 124%
Pre-tax adjusting items:
Accelerated vesting of assumed options - 4,752 (100%) - 4,752 (100%)
Acquisition and finance structure advisory - 9,063 (100%) - 9,063 (100%)
Severance and retention - 1,447 (100%) - 1,447 (100%)
Impairment loss - 8,911 (100%) - 8,911 (100%)
Current income tax effect of adjusting
items:
Acquisition and finance structure advisory - (2,447) (100%) - (2,447) (100%)
Severance and retention - (564) (100%) - (564) (100%)
Impairment loss - (2,361) (100%) - (2,361) (100%)
Current income tax adjusting item:
Change in uncertain tax provision - - n/a - 2,290 (100%)
--------------------------------- --- --- --- --- ----- -----
Adjusted net income attributable to
stockholders (non-GAAP measure) $45,717 $36,436 25% $62,855 $49,103 28%
------------------------------ ------- ------- --- ------- ------- ---
Effect of dilutive securities $ - $(545) (100%) $ - $(176) (100%)
----------------------------- --- --- ----- ----- --- --- ----- -----
Weighted average number of
dilutive shares outstanding 109,019,708 108,238,660 1% 108,832,776 108,014,228 1%
--------------------------- ----------- ----------- --- ----------- ----------- ---
Diluted earnings per share
attributable to stockholders $0.42 $0.16 163% 0.58 0.26 123%
Diluted adjusted EPS attributable to
stockholders (non-GAAP measure) $0.42 $0.33 27% 0.58 0.45 29%
============================== ===== ===== === ==== ==== ===
Three months ended June 30, 2018 compared with three months ended June 30, 2017
There were no adjusting items for the three months ended June 30, 2018.
The adjusting items for the three months ended June 30, 2017 were:
-- $4.8 million ($4.8 million after tax, or $0.04 per diluted share) of
stock option compensation expense related to the accelerated vesting of
certain IronPlanet stock options assumed as part of the Acquisition
-- $9.1 million ($6.6 million after tax, or $0.06 per diluted share) of
acquisition and finance structure advisory costs
-- $1.4 million ($0.9 million after tax, or $0.01 per diluted share) of
severance and retention costs in a corporate reorganization that
followed the Acquisition
-- $8.9 million ($6.6 million after tax, or $0.06 per diluted share)
impairment loss recognized on various technology assets
Six months ended June 30, 2018 compared with six months ended June 30, 2017
There were no adjusting items for the six months ended June 30, 2018.
The adjusting items for the six months ended June 30, 2017 were:
Recognized in the second quarter of 2017
-- As detailed above.
Recognized in the first quarter of 2017
-- $2.3 million (or $0.02 per diluted share) charge related to the change
in uncertain tax provisions
The following table presents the Company's agency proceeds (non-GAAP measure) results for the three and six months ended June 30, 2018 and 2017, as well as reconciles that metric to total revenues, which is the most directly comparable GAAP measure in the Company's consolidated income statements:
(in U.S. $000's) Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
% Change % Change
-------- --------
2018 2017 2018 over 2018 2017 2018 over
2017
2017
----
Total revenues $308,530 $252,613 22% $568,708 $452,040 26%
Less: cost of
inventory
sold (81,702) (71,726) 14% (157,493) (135,127) 17%
Less:
ancillary and
logistical
service
expenses (19,980) (14,701) 36% (34,560) (26,228) 32%
-------- ------- ------- --- ------- ------- ---
Agency proceeds (non-GAAP
measure) $206,848 $166,186 24% $376,655 $290,685 30%
========================= ======== ======== === ======== ======== ===
The following table presents the Company's A&M agency proceeds (non-GAAP measure) and A&M agency proceeds rate (non-GAAP measure) results for the three and six months ended June 30, 2018, and 2017, as well as reconciles those metrics to A&M total revenues and A&M revenue rate, which are the most directly comparable GAAP measures in, ore calculated from, the Company's consolidated financial statements:
(in U.S. $000's) Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
% Change % Change
-------- --------
2018 2017 2018 over 2018 2017 2018 over
2017 2017
---- ----
A&M total revenues $274,251 $226,373 21% $506,818 $405,451 25%
Less: cost of inventory
sold (81,702) (71,726) 14% (157,493) (135,127) 17%
------------------------ ------- ------- --- -------- -------- ---
A&M agency proceeds
(non-GAAP measure) 192,549 154,647 25% 349,325 270,324 29%
------------------- ------- ------- --- ------- ------- ---
GTV $1,426,412 $1,254,318 14% $2,587,124 $2,153,728 20%
--- ---------- ---------- --- ---------- ---------- ---
A&M revenue rate 19.2% 18.0% 120 bps 19.6% 18.8% 80 bps
A&M agency proceeds
rate
(non-GAAP measure) 13.5% 12.3% 120 bps 13.5% 12.6% 90 bps
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SOURCE Ritchie Bros. Auctioneers
