Ritchie Bros. reports third quarter 2018 results
VANCOUVER, Nov. 8, 2018 /PRNewswire/ - Ritchie Bros. Auctioneers Incorporated (NYSE & TSX: RBA, the "Company" or "Ritchie Bros.") reported the following results for the three months ended September 30, 2018:
(All figures are presented in U.S. dollars)
Net income attributable to stockholders of $23.1 million increased 125% compared to $10.3 million for the same quarter in 2017. Diluted earnings per share ("EPS") attributable to stockholders increased 133% to $0.21 versus $0.09 in the third quarter of 2017, while diluted adjusted EPS attributable to stockholders(1) (non-GAAP measure) which excludes a $4.9 million gain on sale of an equity accounted for investment and acquisition-related costs, increased 100% to $0.18 from $0.09 in the third quarter of 2017. Other key third quarter highlights included:
Consolidated results:
-- Total revenues of $245.3 million increased 8% over the third quarter of
2017
-- Total Company agency proceeds(2 )(non-GAAP measure) of $159.3 million
increased 13% from 141.0 million in the third quarter of 2017
-- Total selling, general and administrative expenses ("SG&A") of $88.3
million increased 4% from $85.3 million in the third quarter of 2017
-- Cash provided by operating activities of $97.1 million for the
nine-month period ended September 30, 2018
Auctions & Marketplaces ("A&M") segment:
-- Gross Transaction Value ("GTV")(3 )of $1.0 billion up 2% over the third
quarter of 2017
-- Total revenues of $218.6 million increased 8% from $202.7 million in the
third quarter of 2017
-- A&M agency proceeds(4) (non-GAAP measure) of $144.2 million increased
11% from $130.2 million in the third quarter of 2017
-- A&M revenue rate(5 )of 21.0% and A&M agency proceeds rate(6) (non-GAAP
measure) of 13.9%, each improved 110 basis points ("bps") over the third
quarter of 2017
"Our focus on new business and executing our multi-channel strategy in a tight supply environment resulted in strong revenue and agency proceeds growth with sequential improvement in our A&M revenue rate. The revenue growth coupled with disciplined expense management improved our operating leverage which contributed to doubling our diluted adjusted EPS to $0.18. Despite slightly lower live auction volumes due to fewer live and agricultural events versus last year, our online marketplaces channel showed a second straight quarter of solid momentum with 16% GTV growth in the quarter. We also continue to be pleased with our Services business performance delivering double digit revenue growth once again led by RBFS up 40% and Mascus up 15%," said Ravi Saligram, Chief Executive Officer.
Saligram continued "We are encouraged with the progress we are making as a combined company and our ability to grow both our top line and earnings together with strong cash flow in the quarter. Heading into the fourth quarter, our priorities remain focused on building momentum on our sales execution and fully leveraging our multi-channel offerings to deliver superior service to our existing customers and drive new customer acquisition."
(
)
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 September 30,
Nine months ended September 30,
% Change
% Change
2018 2017
2018 over 2018 2017
2018 over
2017 2017
Service revenues $
161,374 $
145,938 11% $
551,736 $
442,066 25%
Revenue from inventory sales 83,972 81,463 3% 262,318 237,375 11%
---
Total revenues 245,346 227,401 8% 814,054 679,441 20%
Costs of services 33,053 33,461 (1%) 112,743 94,093 20%
Cost of inventory sold 74,341 72,476 3% 231,834 207,603 12%
Selling, general and administrative expenses 88,323 85,335 4% 287,052 230,287 25%
Acquisition-related costs 2,007 3,587 (44%) 5,039 35,162 (86%)
Operating income 31,194 16,931 84% 128,862 67,416 91%
Adjusted operating income (non-
GAAP measure) 32,695 16,931 93% 130,363 91,589 42%
Net income attributable to stockholders 23,138 10,261 125% 85,993 38,273 125%
Adjusted net income attributable to
stockholders (non-GAAP measure) 19,328 10,261 88% 82,183 59,364 38%
Diluted earnings per share
attributable to stockholders $
0.21 $
0.09 133% $
0.79 $
0.35 125%
Diluted adjusted EPS attributable to
stockholders (non-GAAP measure) $
0.18 $
0.09 100% $
0.75 $
0.55 36%
---
GTV $
1,039,427 $
1,019,322 2% $
3,626,551 $
3,173,050 14%
Agency proceeds (non-GAAP measure) $
159,323 $
141,047 13% $
535,978 $
431,732 24%
A&M revenue $
218,576 $
202,718 8% $
725,394 $
608,169 19%
A&M revenue rate 21.0% 19.9%
110 bps 20.0% 19.2%
80 bps
A&M agency proceeds (non-GAAP measure) $
144,235 $
130,242 11% $
493,560 $
400,566 23%
A&M agency proceeds rate (non-GAAP measure) 13.9% 12.8%
110 bps 13.6% 12.6%
100 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, June 30, 2018 and September 30, 2018.
Results of operations - third quarter update
For the three months ended September 30, 2018
Consolidated Performance Highlights
Total revenues increased 8% to $245.3 million driven by higher fee revenues, inventory sales performance in Europe, GTV growth and strong RBFS growth partially offset by a reduction in the year-over-year number of live on site auctions. Foreign exchange also had a negative impact on total revenues in the third quarter of 2018.
Agency proceeds (non-GAAP measure) improved 13% to $159.3 million versus $141.0 million in the third 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 decreased 1% to $33.1 million in the third quarter partially due to the lower number of live on site auctions versus the previous year.
Selling, general and administrative ("SG&A") expenses increased $3.0 million, or 4% primarily due to incremental overhead costs incurred to support the Company's GovPlanet's non-rolling stock contract with the Defense Logistics Agency and higher share unit expense. These increases were partially offset by the favorable impact of foreign exchange during the comparative period.
Operating income increased $14.3 million, or 84%, driven by higher total service revenues mainly from higher fee revenues and auction revenue growth partially offset by higher SG&A, depreciation and amortization, and cost of inventory sold. Foreign exchange had a negative impact on operating income in the third quarter of 2018. Adjusted operating income(7) (non-GAAP measure) increased 93% during the third quarter of 2018 compared to the third quarter of 2017, which excluded the impact of $1.5 million of non-recurring acquisition-related severance costs.
Net income attributable to stockholders increased $12.9 million, or 125%, primarily due to the increase in operating income and a $4.9 million gain on sale of an equity accounted for investment, partially offset by higher income taxes in the third quarter of 2018 compared to an income tax recovery in the third quarter of 2017. Adjusted net income attributed to stockholders(8) (non-GAAP measure) increased $9.0 million, or 88%, to $19.3 million in the third quarter of 2018 from $10.3 million in the third quarter of 2017.
Primarily for the same reasons noted above, diluted EPS attributable to stockholders increased 133% to $0.21 per share in the third quarter of 2018 from $0.09 per share in the third quarter of 2017. Diluted adjusted EPS attributed to stockholders (non-GAAP measure) increased 100% to $0.18 in the third quarter of 2018 from $0.09 in the third quarter of 2017.
__________________
7 Adjusted operating income is a non-GAAP
measure. We use income statement and
balance sheet performance scorecards to
align our operations with our strategic
priorities. We concentrate on a limited
number of metrics to ensure focus and to
facilitate quarterly performance
discussions. Our income statement
scorecard includes the performance metric,
adjusted operating income. We believe 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. We calculate
adjusted operating income by eliminating
adjusting items from operating income.
Adjusted operating income is reconciled to
the most directly comparable GAAP measures
in our consolidated financial statements
under "Non-GAAP Measures" below.
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 $20.1 million, or 2%, compared to the third quarter of 2017, led by a 16% increase in online auction volumes partially offset by a 0.7% decrease in live on site auctions. The decrease in live on site auctions was primarily due to significantly lower year-over-year GTV from agricultural auctions and the decrease in the number of live industrial on site auctions and sale days over the comparative period.
A&M total revenues increased 8% to $218.6 million in the third quarter compared to $202.7 million in the third quarter of 2017. The increase is primarily due to higher fee revenues and revenue from inventory sales mainly in our European operations, growth in auction volumes, and strong performance from Kruse Energy Auctioneers operations. These increases were partially offset by a reduction in the year over year number of live on site auctions. Foreign exchange also had a negative impact on total revenue in the third quarter of 2018.
A&M agency proceeds (non-GAAP measure) improved 11% to $144.2 million versus $130.2 million in the third quarter of 2017. The overall A&M agency proceeds rate (non-GAAP measure) improved 110 basis points to 13.9% from 12.8% in the third quarter of 2017.
Dividend Information
The Company declares a quarterly cash dividend of $0.18 per common share payable on December 19, 2018 to shareholders of record on November 28, 2018.
Q3 2018 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended September 30, 2018, at 8am Pacific time / 11 am Eastern time / 4 pm GMT on November 9, 2018. The replay of the webcast will be available through December 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 September 30,
Nine months ended September 30,
% Change
% Change
2018 2017
2018 over 2018 2017
2018 over
2017 2017
GTV $
1,039,427 $
1,019,322 2% $
3,626,551 $
3,173,050 14%
---
Revenues:
Service revenues $
161,374 $
145,938 11% $
551,736 $
442,066 25%
Revenue from inventory sales 83,972 81,463 3% 262,318 237,375 11%
---
Total revenues 245,346 227,401 8% 814,054 679,441 20%
---
Operating expenses:
Costs of services 33,053 33,461 (1%) 112,743 94,093 20%
Cost of inventory sold 74,341 72,476 3% 231,834 207,603 12%
SG&A expenses 88,323 85,335 4% 287,052 230,287 25%
Acquisition-related costs 2,007 3,587 (44%) 5,039 35,162 (86%)
Depreciation and amortization expenses 16,723 14,837 13% 49,451 37,047 33%
Gain on disposition of property, plant and equipment (342) (42) 714% (958) (1,071) (11%)
Impairment loss 8,911 (100%)
Foreign exchange loss (gain) 47 816 (94%) 31 (7) 543%
---
Total operating expenses 214,152 210,470 2% 685,192 612,025 12%
---
Operating income 31,194 16,931 84% 128,862 67,416 91%
---
Interest expense (10,473) (10,558) (1%) (32,720) (27,311) 20%
Other, net 7,182 592 1113% 8,995 6,346 42%
---
Income before income taxes 27,903 6,965 301% 105,137 46,451 126%
Income tax expense (recovery) 4,791 (3,358) (243%) 19,091 7,982 139%
---
Net income $
23,112 $
10,323 124% $
86,046 $
38,469 124%
===
Net income (loss) attributable to:
Stockholders $
23,138 $
10,261 125% $
85,993 $
38,273 125%
Non-controlling interests (26) 62 (142%) 53 196 (73%)
---
$
23,112 $
10,323 124% $
86,046 $
38,469 124%
Earnings per share attributable
to stockholders:
Basic $
0.21 $
0.10 110% $
0.80 $
0.36 122%
Diluted $
0.21 $
0.09 133% $
0.79 $
0.35 125%
---
Weighted average number of share outstanding:
Basic 108,365,427 107,120,618 1% 107,811,391 106,993,358 1%
Diluted 109,887,194 108,178,303 2% 109,133,378 108,069,624 1%
===
Condensed Consolidated Balance Sheets
(Expressed in thousands of United States dollars, except share data)
(Unaudited)
September 30, December 31,
2018 2017
Assets
Cash and cash equivalents $
228,764 $
267,910
Restricted cash 75,281 63,206
Trade and other receivables 247,972 92,105
Inventory 84,789 38,238
Other current assets 40,236 27,610
Income taxes receivable 8,589 19,418
---
Total current assets 685,631 508,487
Property, plant and equipment 504,738 526,581
Equity-accounted investments 4,206 7,408
Other non-current assets 26,549 24,146
Intangible assets 251,422 261,094
Goodwill 673,191 670,922
Deferred tax assets 23,729 18,674
---
Total assets $
2,169,466 $
2,017,312
===
Liabilities and Equity
Auction proceeds payable $
325,985 $
199,245
Trade and other payables 179,659 164,553
Income taxes payable 6,999 732
Short-term debt 10,532 7,018
Current portion of long-term debt 11,556 16,907
---
Total current liabilities 534,731 388,455
Long-term debt 740,222 795,985
Other non-current liabilities 39,436 46,773
Deferred tax liabilities 33,601 32,334
---
Total liabilities 1,347,990 1,263,547
---
Commitments
Contingencies
Contingently redeemable performance
share units 864 9,014
Stockholders' equity:
Share capital:
Common stock; no par value, unlimited shares
authorized, issued and outstanding shares:
108,601,417 (December 31, 2017: 107,269,783) 179,348 138,582
Additional paid-in capital 53,941 41,005
Retained earnings 632,496 602,609
Accumulated other comprehensive loss (50,273) (42,514)
---
Stockholders' equity 815,512 739,682
Non-controlling interest 5,100 5,069
---
Total stockholders' equity 820,612 744,751
---
Total liabilities and equity $
2,169,466 $
2,017,312
===
Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Unaudited)
Nine months ended September 30, 2018 2017
---
Cash provided by (used in):
Operating activities:
Net income $
86,046 $
38,469
Adjustments for items not affecting cash:
Depreciation and amortization expenses 49,451 37,047
Impairment loss 8,911
Stock option compensation expense 6,711 10,996
Equity-classified PSU expense 8,978 1,871
Deferred income tax expense (recovery) (3,774) (9,583)
Unrealized foreign exchange loss (gain) 501 (1,011)
Amortization of debt issuance costs 3,032 2,058
Gain on disposition of equity investment (4,935)
Other, net (4,636) (2,090)
Net changes in operating assets and liabilities (44,227) 11,849
---
Net cash provided by operating activities 97,147 98,517
---
Investing activities:
Acquisition of IronPlanet, net of cash acquired (675,851)
Property, plant and equipment additions (13,394) (8,086)
Intangible asset additions (19,410) (20,482)
Proceeds on disposition of property, plant and equipment 2,524 3,487
Proceeds on disposal of equity investment 6,147
Other, net (4,674) (667)
---
Net cash used in investing activities (28,807) (701,599)
---
Financing activities:
Dividends paid to stockholders (56,116) (54,558)
Dividends paid to NCI (41)
Issuances of share capital 27,072 7,934
Payment of withholding taxes on issuance of shares (3,901)
Proceeds from short-term debt 6,949 6,850
Repayment of short-term debt (3,372) (22,793)
Proceeds from long-term debt 325,000
Repayment of long-term debt (58,825) (104,729)
Debt issue costs (12,624)
Repayment of finance lease obligations (2,827) (1,565)
Other, net (1,176) (1,431)
---
Net cash provided by (used in) financing activities (92,196) 142,043
---
Effect of changes in foreign currency rates on
cash, cash equivalents, and restricted cash (3,215) 17,270
---
Decrease (27,071) (443,769)
Beginning of period 331,116 758,089
---
Cash, cash equivalents, and restricted cash, end of period $
304,045 $
314,320
===
A&M Segment Information
(Expressed in thousands of United States dollars)
(Unaudited)
(in U.S. $000's) Three months ended September 30,
Nine months ended September 30,
% Change
% Change
2018 2017
2018 over 2018 2017
2018 over
2017 2017
Service revenues $
134,604 $
121,255 11% $
463,076 $
370,794 25%
Revenue from inventory sales 83,972 81,463 3% 262,318 237,375 11%
---
Total revenues 218,576 202,718 8% 725,394 608,169 19%
Costs of services 20,059 18,381 9% 62,888 51,946 21%
Cost of inventory sold 74,341 72,476 3% 231,834 207,603 12%
SG&A expenses 83,542 81,736 2% 272,503 219,824 24%
Impairment loss 8,911 (100%)
---
A&M profit $
40,634 $
30,125 35% $
158,169 $
119,885 32%
===
Selected Data
(Unaudited)
Live industrial auction data
As at and for three months ended As at and for the nine months
September 30, ended September 30,
% Change
% Change
2018 2017
2018 over 2018 2017
2018 over
2017 2017
Number of consignments at industrial auctions 13,600 13,900 (2%) 39,050 41,950 (7%)
Number of bidder registrations at industrial auctions 123,000 126,000 (2%) 383,500 404,000 (5%)
Number of buyers at industrial auctions 31,400 31,100 1% 96,750 100,650 (4%)
Number of lots at industrial auctions 89,000 84,000 6% 273,500 276,000 (1%)
---
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 45 58 (22%) 130 169 (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
On and after January 1,
Adjustments 2018
(in U.S. $000's)
Revenues as previously
Cost of inventory sold(1)
Ancillary and logistical
Total revenues under the
reported (a) (b) service expenses(2) (c) 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,
Adjustments 2018
(in U.S. $000's)
Costs of services (a)
Ancillary and logistical
Costs of services under the new
service 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 nine months ended September 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 September 30,
Nine months ended September 30,
% Change
% Change
2018 2017
2018 over 2018 2017
2018 over
2017 2017
Operating income $
31,194 $
16,931 84% $
128,862 $
67,416 91%
Pre-tax adjusting
items:
Accelerated vesting of
assumed options 4,752 (100%)
Acquisition and finance
structure advisory 9,063 (100%)
Severance and retention 1,501 100% 1,501 1,447 4%
Impairment loss 8,911 (100%)
---
Adjusted operating
income
(non-GAAP measure) 32,695 16,931 93% 130,363 91,589 42%
---
Total revenues 245,346 227,401 8% 814,054 679,441 20%
Less: cost of inventory
sold (74,341) (72,476) 3% (231,834) (207,603) 12%
Less: ancillary and
logistical service
expenses (11,682) (13,878) (16%) (46,242) (40,106) 15%
---
Agency proceeds (non-
GAAP measure) $
159,323 $
141,047 13% $
535,978 $
431,732 24%
---
Operating income margin 12.7% 7.4%
530 bps 15.8% 9.9%
590 bps
Agency proceeds
adjusted operating
income rate (non-GAAP
measure) 20.5% 12.0%
850 bps 24.3% 21.2%
310 bps
===
(1) Please refer to page 15 for a
summary of adjusting items
during the trailing
12-months ended September
30, 2018 and September 30,
2017.
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 nine months ended September 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 September 30,
Nine months ended September 30,
per share data)
% Change
% Change
2018 2017
2018 over 2018 2017
2018 over
2017 2017
Net income attributable to stockholders $
23,138 $
10,261 125% $
85,993 $
38,273 125%
Pre-tax adjusting items:
Accelerated vesting of assumed options 4,752 (100%)
Acquisition and finance structure advisory 9,063 (100%)
Severance and retention 1,501 100% 1,501 1,447 4%
Gain on sale of equity accounted for investment (4,935) 100% (4,935) 100%
Impairment loss 8,911 (100%)
Current income tax effect of adjusting items:
Acquisition and finance structure advisory (2,447) (100%)
Severance and retention (376) 100% (376) (564) (33%)
Deferred income tax effect of adjusting items:
Impairment loss (2,361) (100%)
Current income tax adjusting item:
Change in uncertain tax provision 2,290 (100%)
---
Adjusted net income attributable to
stockholders (non-GAAP measure) $
19,328 $
10,261 88% $
82,183 $
59,364 38%
---
Effect of dilutive securities
$
$
$ $
(50) (100%)
---
Weighted average number of
dilutive shares outstanding 109,887,194 108,178,303 2% 109,133,378 108,069,624 1%
---
Diluted earnings per share attributable to stockholders $
0.21 $
0.09 133% 0.79 0.35 126%
Diluted adjusted EPS attributable to
stockholders (non-GAAP measure) $
0.18 $
0.09 100% 0.75 0.55 36%
===
Please refer to page 15 for a
summary of adjusting items
during the trailing
12-months ended September
30, 2018 and September 30,
(1) 2017.
The following table presents the Company's agency proceeds (non-GAAP measure) results for the three and nine months ended September 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 September 30,
Nine months ended September 30,
% Change
% Change
2018 2017
2018 over 2018 2017
2018 over
2017 2017
Total revenues $
245,346 $
227,401 8% $
814,054 $
679,441 20%
Less: cost of inventory
sold (74,341) (72,476) 3% (231,834) (207,603) 12%
Less: ancillary and
logistical service
expenses (11,682) (13,878) (16%) (46,242) (40,106) 15%
---
Agency proceeds (non-
GAAP measure) $
159,323 $
141,047 13% $
535,978 $
431,732 24%
===
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 nine months ended September 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, or calculated from, the Company's consolidated financial statements:
(in U.S. $000's)
Three months ended September 30,
Nine months ended September 30,
% Change
% Change
2018 2017
2018 over 2018 2017
2018 over
2017 2017
A&M total
revenues $
218,576 $
202,718 8% $
725,394 $
608,169 19%
Less: cost of
inventory sold (74,341) (72,476) 3% (231,834) (207,603) 12%
---
A&M agency
proceeds (non-
GAAP measure) 144,235 130,242 11% 493,560 400,566 23%
---
GTV $
1,039,427 $
1,019,322 2% $
3,626,551 $
3,173,050 14%
---
A&M revenue rate 21.0% 19.9%
110 bps 20.0% 19.2%
80 bps
A&M agency
proceeds rate
(non-GAAP
measure) 13.9% 12.8%
110 bps 13.6% 12.6%
100 bps
===
The adjusting items during the trailing 12-months ended September 30, 2018 were:
Recognized in the third quarter of 2018
-- $1.5 million ($1.1 million after tax, or $0.01 per diluted share) of
severance and retention costs in a corporate reorganization that
followed the Acquisition; and
-- $4.9 million ($4.9 million after tax, or $0.04 per diluted share) due to
gain on sale of an equity accounted for investment.
Recognized in the second quarter of 2018
There were no adjustment items recognized in the second quarter of 2018.
Recognized in the first quarter of 2018
There were no adjustment items recognized in the first quarter of 2018.
Recognized in the fourth quarter of 2017
-- $2.2 million ($1.6 million after tax, or $0.02 per diluted share) of
severance and retention costs in a corporate reorganization that
followed the Acquisition; and
-- $10.1 million (or $0.10 per diluted share) benefit on remeasurement of
deferred taxes due to the Tax Cuts and Jobs Act.
The adjusting items during the trailing 12-months ended September 30, 2017 were:
Recognized in the third quarter of 2017
There were no adjustment items recognized in the third quarter of 2017.
Recognized in the second quarter of 2017
-- $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; and
-- $8.9 million ($6.6 million after tax, or $0.06 per diluted share)
impairment loss recognized on various technology assets.
Recognized in the first quarter of 2017
-- $2.3 million ($2.3 million after tax, or $0.02 per diluted share) charge
related to the change in uncertain tax provisions.
Recognized in the fourth quarter of 2016
-- $6.8 million ($5.0 million after tax, or $0.05 per diluted share) charge
related to the early termination of pre-existing debt.
View original content:http://www.prnewswire.com/news-releases/ritchie-bros-reports-third-quarter-2018-results-300747045.html
SOURCE Ritchie Bros. Auctioneers
