Ritchie Bros. reports second quarter 2020 results
VANCOUVER, BC, Aug. 6, 2020 /PRNewswire/ - Ritchie Bros. Auctioneers Incorporated (NYSE: RBA) (TSX: RBA) the "Company", "Ritchie Bros.", "we", "us", or "our") reported the following results for the three months ended June 30, 2020:
(All figures are presented in U.S. dollars)
Net income attributable to stockholders decreased 2% to $53.0 million, compared to $54.0 million in Q2 2019. Diluted earnings per share ("EPS") attributable to stockholders was flat at $0.49 per share in Q2 2020 compared to and Q2 2019. Diluted adjusted EPS* which excludes a $6.2 million income tax expense in Q2 2020 related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements, increased 10% to $0.54 per share in Q2 2020 compared to $0.49 per share in Q2 2019.
"I am proud to see the resilience, creativity and resolve demonstrated by our employees and customers. It is their perseverance and professionalism that has driven our strong second quarter results as we pivoted to 100% online auctions.", said Ann Fandozzi, Chief Executive Officer of Ritchie Bros.
Fandozzi continued, "We are encouraged by the strength of our business performance and the momentum we have exiting the second quarter. Our leading platform, global reach and the investments we've made in digital have served us well through these uncertain times. Market conditions continue to be strong and we remain focused on our priorities of maintaining the health and safety of our employees and customers, providing our customer with exceptional service, and preserving our strong financial position to the benefit of our shareholders."
Consolidated results:
-- Total revenue in Q2 2020 decreased 1% to $389.1 million as compared to
Q2 2019
-- Service revenue in Q2 2020 was $234.1 million, flat compared to Q2
2019
-- Inventory sales revenue in Q2 2020 decreased 2% to $154.9 million as
compared to Q2 2019
-- Total selling, general and administrative expenses ("SG&A") in Q2 2020
increased 3% to $100.6 million as compared to Q2 2019
-- Operating income in Q2 2020 increased 14% to $88.8 million as compared
to Q2 2019
-- Net income in Q2 2020 decreased 2% to $53.1 million as compared to Q2
2019
-- Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization*
("EBITDA") (non-GAAP measure) in Q2 2020 increased 12% to $107.1 million
as compared to Q2 2019
-- Cash provided by operating activities was $198.3 million for the first
half of 2020
-- Cash on hand at Q2 2020 was $538.0 million, of which $389.7 million was
unrestricted
Auctions & Marketplaces segment results:
-- GTV(1) in Q2 2020 was flat at $1.5 billion compared to Q2 2019
-- A&M total revenue in Q2 2020 decreased 1% to $354.6 million as compared
to Q2 2019
-- Service revenue in Q2 2020 decreased 1% to $199.6 million as
compared to Q2 2019
-- Inventory sales revenue in Q2 2020 decreased 2% to $154.9 million as
compared to Q2 2019
Other Services segment results:
-- Other Services total revenue in Q2 2020 increased 3% to $34.5 million as
compared to Q2 2019
-- RBFS revenue in Q2 2020 increased 5% to $8.5 million as compared to Q2
2019
Other Company developments:
-- On May 4, 2020, the Company announced the appointment of Jim Kessler as
Chief Operating Officer, effective May 11, 2020
-- Increased quarterly cash dividend by 10% to $0.22 per share
_________________________
(1) Gross Transaction Value ("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.
The Company presents both GAAP and non-GAAP measures to
provide investors with additional information.
Providing these non-GAAP measures along with GAAP
measures allows for increased comparability of our
ongoing performance from period to period. Non-GAAP
financial measures referred to in this news release are
labeled as "non-GAAP measure" or designated as such
with an asterisk (*). Please see page 9-11 for
explanations of why the Company uses these non-GAAP
measures and the reconciliation to the most comparable
GAAP financial measures.
Financial Overview
(Unaudited)
(in U.S. $000's, except EPS and percentages)
Three months ended June 30,
Six months ended June 30,
---
% Change % Change
2020 2019 2020 over 2020 2019 2020 over
2019 2019
Service revenue:
Commissions $
125,465 $
134,466 (7) $
218,950 $
226,746 (3)
% %
Fees 108,674 100,140 9 198,312 180,232 10
% %
---
Total service revenue 234,139 234,606 (0) 417,262 406,978 3
% %
Inventory sales revenue 154,911 158,616 (2) 245,043 289,673 (15)
% %
---
Total revenue 389,050 393,222 (1) 662,305 696,651 (5)
% %
Service revenue as a % of total revenue 60.2 59.7 50
bps 63.0 58.4
% % % % 460
bps
Inventory sales revenue as a % of total revenue 39.8 40.3 (50)
bps 37.0 41.6
% % % % (460)
bps
Costs of services 39,448 50,268 (22) 78,803 86,337 (9)
% %
Cost of inventory sold 143,134 149,818 (4) 224,719 270,293 (17)
% %
Selling, general and administrative expenses 100,632 97,714 3 199,017 192,898 3
% %
Operating expenses 300,250 315,252 (5) 539,423 585,093 (8)
% %
Cost of inventory sold as a % of operating expenses 47.7 47.5 20
bps 41.7 46.2
% % % % (450)
bps
Operating income 88,800 77,970 14 122,882 111,558 10
% %
Operating income margin 22.8 19.8 300
bps 18.6 16.0
% % % % 260
bps
Net income attributable to stockholders 53,043 54,036 (2) 75,851 72,200 5
% %
Diluted EPS to stockholders $
0.49 $
0.49
% $
0.69 $
0.66 5
%
Diluted adjusted EPS attributable to stockholders 0.54 0.49 10 0.75 0.66 14
% %
Effective tax rate 34.2 22.1 1210
bps 30.5 23.4
% % % % 710
bps
---
Total GTV 1,493,982 1,497,757 (0) 2,641,006 2,672,438 (1)
% %
Service revenue as a % of total GTV- Rate 15.7 15.7
bps 15.8 15.2
% % % % 60
bps
Inventory sales revenue as a % of total GTV- Mix 10.4 10.6 (20)
bps 9.3 10.8
% % % % (150)
bps
===
Segment Overview
(in U.S
$000's)
Three months ended June 30, 2020
Six months ended June 30, 2020
A&M
Other Consolidated
A&M
Other Consolidated
Service
revenue $
199,648 34,491 $
234,139 $
354,391 62,871 $
417,262
Inventory
sales
revenue 154,911 154,911 245,043 245,043
---
Total
revenue 354,559 34,491 389,050 599,434 62,871 662,305
Ancillary
and
logistical
service
expenses 16,060 16,060 28,818 28,818
Other costs
of
services 22,190 1,198 23,388 47,285 2,700 49,985
Cost of
inventory
sold 143,134 143,134 224,719 224,719
SG&A
expenses 94,559 6,073 100,632 186,144 12,873 199,017
---
Segment
profit $
94,676 11,160 $
105,836 $
141,286 18,480 $
159,766
===
Total GTV 1,493,982 N/A N/A 2,641,006 N/A N/A
A&M service
revenue as % %
a % of
total GTV-
Rate 13.4 N/A N/A 13.4 N/A N/A
===
(in U.S
$000's)
Three months ended June 30, 2019
Six months ended June 30, 2019
---
A&M Other Consolidated
A&M Other Consolidated
Service
revenue $
201,050 $
33,556 $
234,606 $
344,487 $
62,491 $
406,978
Inventory
sales
revenue 158,616 158,616 289,673 289,673
---
Total
revenue 359,666 33,556 393,222 634,160 62,491 696,651
Ancillary
and
logistical
service
expenses 16,472 16,472 30,231 30,231
Other costs
of
services 32,551 1,245 33,796 53,368 2,738 56,106
Cost of
inventory
sold 149,818 149,818 270,293 270,293
SG&A
expenses 91,466 6,248 97,714 180,648 12,250 192,898
---
Segment
profit $
85,831 $
9,591 $
95,422 129,851 17,272 147,123
===
Total GTV 1,497,757 N/A N/A 2,672,438 N/A N/A
A&M service
revenue as %
a % of
total GTV-
Rate 13.4 N/A N/A $
12.9
%
$ N/A N/A
===
Q2 2020 Consolidated Performance Overview
For Q2 2020, the Company was able to operate and serve our customers' equipment and immediate liquidity needs through our platform of auction technology solutions and online auction capabilities. In addition to running our IronPlanet weekly featured online auction, our online Marketplace-E solution and GovPlanet online auctions, we modified our live operations in March 2020 which transitioned all our traditional live on site industrial auctions to online bidding. In addition, as implemented in the first quarter, we are using our Time Auctioned Lots (TAL) solution for selected International and on-the-farm agriculture events.
GTV remained flat at $1.5 billion in Q2 2020 with significant variability by region where US and Canada had higher activity, but International was lower due to the severe impact of the COVID-19 pandemic in that region. Total GTV increased due to record online performance driven from strong execution by the US region and the US strategic accounts sales teams, year-over-year growth performance at our Fort Worth auction, and auction calendar shifts in response to COVID-19. These shifts included the addition of the Montreal, Canada and Los Angeles, US auctions from Q1 2020 to Q2 2020, which were partially offset by the postponement of the Polotitlan, Mexico, and Ocana, Spain auctions from Q2 2020 to Q3 2020. This increase was offset by the non-repeat of a large dispersal of pipeline equipment as part of the $94 million Columbus, Ohio auction held in June 2019, and lower International performance mainly due to the severe impact of the COVID-19 pandemic in this region. In addition, GTV related to government surplus contracts were lower due to government shutdowns in response to COVID-19.
Total revenue decreased 1% to $389.0 million in Q2 2020.
Service revenue was flat year-over-year at $234.1 million with commissions revenue lower by 7% on flat Service GTV primarily due to softer commission rate performance from a higher proportion of GTV sourced from strategic accounts, and lower rates from our government operations. Total fees were up 9% on flat total GTV driven primarily by the mix of small values lots, the harmonization of buyer fees and higher fees from services within our US operations, which was partially offset by fees waived for Canadian on-the-farm auctions as part of our COVID-19 pandemic response.
Inventory sales revenue decreased 2% primarily related to a non-recurring large dispersal of pipeline equipment as part of the $94 million Columbus, Ohio auction in June 2019, and selling through certain non-repeating large inventory deals from Europe and Asia in Q2 2019. We also earned lower inventory revenue through our government surplus contracts due to government shutdowns in response to COVID-19. This decrease was partially offset by strong year-over-year performance in the US and Canada regions.
Costs of services decreased 22% to $39.4 million. In response to the COVID-19 pandemic, we transitioned our live on site auctions to online bidding, utilized TAL solutions for selected International and on-the-farm agricultural events, and implemented travel restrictions. These operational changes resulted in significant temporary cost reductions in employee compensation and travel, advertising, and promotion expenses. In addition, we incurred lower net fees related to referral payments.
Cost of inventory decreased 4% to $143.1 million, primarily in line with lower activity in inventory sales revenue. Cost of inventory sold decreased at a higher rate than the decrease of inventory sales revenue, indicating an increase in the revenue margin. The margin also improved as a result of equipment sold at a lower price performance in the prior year within the International region, which was not repeated in Q2 2020.
Selling, general and administrative ("SG&A") expenses increased 3% to $100.6 million primarily due to higher incentive expense, including a one-time incentive accrual to employees who have been instrumental during the COVID-19 pandemic to continue keeping our operations running and servicing our customers. These increases were partially offset by lower SG&A expenses related to lower travel, advertising, and promotion costs as we implemented travel restrictions.
Foreign exchange had an unfavourable impact on total revenue and a favourable impact on expenses. These impacts were primarily due to the fluctuations in the Euro, Canadian dollar, and Australian dollar exchange rates relative to the U.S. dollar.
Net income attributable to stockholders decreased 2% to $53.0 million, primarily related to the increase in the effective tax rate, partially offset by a higher operating income and lower interest expense.
Primarily for the same reasons noted above, diluted EPS attributable to stockholders was flat at $0.49 per share for Q2 2020 and Q2 2019. Diluted adjusted EPS attributable to stockholders* increased 10% to $0.54 per share in Q2 2020, after adjusting for a $6.2 million income tax expense in Q2 2020 related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements.
Dividend Information
Quarterly dividend
On August 5, 2020, the Company declared a quarterly cash dividend of $0.22 per common share payable on September 16, 2020 to shareholders of record on August 26, 2020.
Share repurchase program
On August 5, 2020,the Company's board of directors authorized a share repurchase program for the repurchase of up to $100 million worth of common shares of the Company (subject to TSX approval) over the next 12 months. The share repurchases will primarily be used to offset dilution from options. The Company intends to make an application to the TSX for approval of a Normal Course Issuer Bid in August 2020.
Q2 2020 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended June 30, 2020 at 8am Pacific time / 11 am Eastern time / 3pm GMT on August 7, 2020. The replay of the webcast will be available through September 7, 2020.
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 number 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 offers live auction events with online bidding; IronPlanet, an online marketplace with featured weekly auctions and providing the exclusive IronClad Assurance® equipment condition certification; Marketplace-E, a controlled marketplace offering multiple price and timing options; Mascus, a leading European online equipment listing service; and Ritchie Bros. Private Treaty, offering privately negotiated sales. The company's suite of multichannel sales solutions also includes RB Asset Solutions, a complete end-to-end asset management and disposition system. Ritchie Bros. 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 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 future auctions and estimated GTV thereof, 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 duration and impact of the COVID-19 pandemic on the Company's operations, the operations of customers, and general economic conditions; 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 IronPlanet acquisition; and the risks and uncertainties set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and the Company's Form 10-Q for the quarter ended June 30, 2020, which are 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 - Second Quarter
(Expressed in thousands of United States dollars, except share, per share amounts and percentages)
(Unaudited)
(in U.S. $000's, except
EPS)
Three months ended June 30,
Six months ended June 30,
---
% Change % Change
2020 2019 2020 over 2019 2020 2019 2020 over 2019
GTV $
1,493,982 $
1,497,757 (0) $
2,641,006 $
2,672,438 (1)
% %
---
Revenues:
Service revenues $
234,139 $
234,606 (0) $
417,262 $
406,978 3
% %
Inventory sales revenue 154,911 158,616 (2) 245,043 289,673 (15)
% %
---
Total revenues 389,050 393,222 (1) 662,305 696,651 (5)
% %
---
Operating expenses:
Costs of services 39,448 50,268 (22) 78,803 86,337 (9)
% %
Cost of inventory sold 143,134 149,818 (4) 224,719 270,293 (17)
% %
Selling, general and
administration % %
expenses 100,632 97,714 3 199,017 192,898 3
Acquisition-related 38 (100) 707 (100)
costs % %
Depreciation and 17,857 17,112 4 37,150 34,227 9
amortization expenses % %
Gain on disposition of
property, plant and % %
equipment (1,213) (101) 1,101 (1,260) (250) 404
Foreign exchange loss 392 403 (3) 994 881 13
% %
---
Total operating 300,250 315,252 (5) 539,423 585,093 (8)
expenses % %
---
Operating income 88,800 77,970 14 122,882 111,558 10
% %
---
Interest expense (8,882) (10,117) (12) (18,064) (20,933) (14)
% %
Other income, net 857 1,679 (49) 4,434 3,718 19
% %
---
Income before income 80,775 69,532 16 109,252 94,343 16
taxes % %
Income tax expense 27,656 15,401 80 33,304 22,040 51
% %
---
Net income $
53,119 $
54,131 (2) $
75,948 $
72,303 5
% %
===
Net income attributable
to:
Stockholders $
53,043 $
54,036 (2) 75,851 $
72,200 5
% %
Non-controlling 76 95 (20) 97 103 (6)
interests % %
---
$
53,119 $
54,131 (2) 75,948 $
72,303 5
% %
Earnings per share
attributable to
stockholders:
Basic $
0.49 $
0.50 (2) 0.70 $
0.66 6
% %
Diluted $
0.49 $
0.49 (1) 0.69 $
0.66 5
% %
---
Weighted average number
of share outstanding:
Basic 108,387,490 108,707,708 (0) 108,818,903 108,725,871 0
% %
Diluted 109,323,343 109,942,768 (1) 109,903,808 109,982,763 (0)
% %
===
Condensed Consolidated Balance Sheets
(Expressed in thousands of United States dollars, except share data)
(Unaudited)
June 30, 2020 December 31, 2019
Assets
Cash and cash equivalents $
389,720 $
359,671
Restricted cash 148,293 60,585
Trade and other receivables 334,488 142,627
Less: allowance for credit
losses (4,559) (5,225)
Inventory 63,089 64,956
Other current assets 27,486 50,160
Income taxes receivable 3,937 6,810
---
Total current assets 962,454 679,584
Property, plant and equipment 475,936 484,482
Other non-current assets 131,326 145,679
Intangible assets 223,130 233,380
Goodwill 671,368 672,310
Deferred tax assets 14,299 13,995
---
Total assets $
2,478,513 $
2,229,430
===
Liabilities and Equity
Auction proceeds payable $
499,415 $
276,188
Trade and other payables 213,036 194,279
Income taxes payable 16,023 7,809
Short-term debt 21,980 4,705
Current portion of long-term
debt 17,588 18,277
---
Total current liabilities 768,042 501,258
Long-term debt 614,375 627,204
Other non-current liabilities 142,518 151,238
Deferred tax liabilities 49,270 42,743
---
Total liabilities 1,574,205 1,322,443
---
Commitments and Contingencies
Stockholders' equity:
Share capital:
Common stock; no par value,
unlimited shares
authorized, issued and
outstanding shares:
108,630,537 (December 31, 2019:
109,337,781) 169,255 194,771
Additional paid-in capital 47,958 52,110
Retained earnings 746,048 714,051
Accumulated other comprehensive
loss (64,207) (59,099)
---
Stockholders' equity 899,054 901,833
Non-controlling interest 5,254 5,154
---
Total stockholders' equity 904,308 906,987
---
Total liabilities and equity $
2,478,513 $
2,229,430
===
Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Unaudited)
Six months ended June 30, 2020 2019
---
Cash provided by (used in):
Operating activities:
Net income $
75,948 $
72,303
Adjustments for items not
affecting cash:
Depreciation and
amortization expenses 37,150 34,227
Stock option compensation
expense 2,730 3,199
Equity-classified share
unit expense 5,017 5,903
Deferred income tax expense 6,657 1,056
Unrealized foreign exchange
(gain) loss 1,129 (51)
Gain on disposition of
property, plant and
equipment (1,260) (250)
Amortization of debt
issuance costs 1,577 1,765
Amortization of right-of-
use assets 6,318 5,845
Gain on contingent
consideration from equity
investment (1,700)
Other, net 1,934 322
Net changes in operating
assets and liabilities 62,824 36,036
---
Net cash provided by
operating activities 198,324 160,355
---
Investing activities:
Property, plant and
equipment additions (6,140) (4,618)
Intangible asset additions (13,244) (12,175)
Proceeds on disposition of
property, plant and
equipment 16,106 583
Distribution from equity
investment 4,212
Proceeds on contingent
consideration from equity
investment 1,700
Other, net (2,782) (1,000)
---
Net cash used in investing
activities (148) (17,210)
---
Financing activities:
Share repurchase (53,170) (42,012)
Dividends paid to
stockholders (43,586) (39,160)
Issuances of share capital 19,425 4,124
Payment of withholding
taxes on issuance of
shares (3,321) (4,915)
Proceeds from short-term
debt 35,799 12,879
Repayment of short-term
debt (19,941) (24,985)
Repayment of long-term
debt (8,633) (14,514)
Repayment of finance lease
obligations (4,384) (2,937)
---
Net cash used in financing
activities (77,811) (111,520)
---
Effect of changes in
foreign currency rates on
cash, cash equivalents,
and restricted cash (2,608) 1,802
---
Increase 117,757 33,427
Beginning of period 420,256 305,567
---
Cash, cash equivalents, and
restricted cash, end of
period $
538,013 $
338,994
===
Selected Data
(Unaudited)
Industrial live on site auction metrics
Three months ended June 30, Six months ended June 30,
% Change % Change
2020 2019 2020 over 2019 2020 2019 2020 over 2019
Number of 51 59 (14) 81 94 (14)
auctions % %
Bidder 284,550 200,250 42 445,550 343,250 30
registrations % %
Consignors 14,400 17,450 (17) 25,350 29,000 (13)
% %
Buyers 44,350 43,500 2
% 74,250 74,250
%
Lots 114,700 120,500 (5) 197,050 206,750 (5)
% %
===
Non-GAAP Measures
This news release references to non-GAAP measures. Non-GAAP 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.
Adjusted Net Income Attributable to Stockholders* and Diluted Adjusted EPS Attributable to Stockholders* Reconciliation
The Company believes that adjusted net income attributable to stockholders* provides useful information about the growth or decline of the 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 the normal operating results. Diluted Adjusted EPS attributable to stockholders* eliminates the financial impact of adjusting items which are after-tax effects of significant non-recurring items that the Company does not consider to be part of the normal operating results, such as acquisition-related costs, management reorganization costs, and certain other items, which the Company refers to as 'adjusting items'.
The following table reconciles adjusted net income attributable to stockholders* and diluted adjusted EPS attributable to stockholders* to net income attributable to stockholders and diluted EPS attributable to stockholders, which are the most directly comparable GAAP measures in the consolidated income statements.
(in U.S. $000's,
except share and
per share data,
and percentages)
Three months ended June 30,
Six months ended June 30,
---
% Change % Change
2020 2019 2020 over 2019 2020 2019 2020 over 2019
Net income
attributable to % %
stockholders $
53,043 $
54,036 (2) $
75,851 $
72,200 5
Current income tax
adjusting item:
Change in uncertain 766 100 766 100
tax provision % %
---
Deferred tax
adjusting item:
Change in uncertain 5,462 100 5,462 100
tax provision % %
---
Adjusted net income
attributable to % %
stockholders* $
59,271 $
54,036 10 $
82,079 $
72,200 14
---
Weighted average
number of dilutive % %
shares outstanding 109,323,343 109,942,768 (1) 109,903,808 109,982,763 (0)
---
Diluted earnings
per share %
attributable to
stockholders $
0.49 $
0.49
% $
0.69 $
0.66 5
Diluted adjusted
EPS attributable % %
to Stockholders* $
0.54 $
0.49 10 $
0.75 $
0.66 14
===
(1) Please refer to page 11 for a
summary of adjusting items for the
three month and six months ended
June 30, 2020 and June 30, 2019.
Adjusted net income attributable to
stockholders* represents net
income attributable to
stockholders excluding the effects
(2) of adjusting items.
Diluted adjusted EPS attributable
to stockholders* is calculated by
dividing adjusted net income
attributable to stockholders*, net
of the effect of dilutive
securities, by the weighted
average number of dilutive shares
(3) outstanding.
Adjusted EBITDA*
The Company believes that adjusted EBITDA* provides useful information about the growth or decline of our net income when compared between different financial periods.
The following table reconciles adjusted EBITDA* to net income, which is the most directly comparable GAAP measures in, or calculated from, our consolidated income statements:
Three months ended June 30, Six months ended June 30,
% Change % Change
(in U.S. $000's,
except percentages) 2020 2019 2020 over 2019 2020 2019 2020 over 2019
---
Net income $
53,119 $
54,131 (2) $
75,948 $
72,303 5
% %
Add: depreciation
and amortization % %
expenses 17,857 17,112 4 37,150 34,227 9
Add: interest 8,882 10,117 (12) 18,064 20,933 (14)
expense % %
Less: interest (393) (1,063) (63) (1,063) (1,918) (45)
income % %
Add: income tax 27,656 15,401 80 33,304 22,040 51
expense % %
---
Adjusted EBITDA* $
107,121 $
95,698 12 $
163,403 $
147,585 11
% %
===
(1) Please refer to page 11 for a
summary of adjusting items
during the three and six
months ended June 30, 2020 and
June 30, 2019.
(2) Adjusted EBITDA* is calculated
by adding back depreciation
and amortization expenses,
interest expense, and income
tax expense, and subtracting
interest income from net
income excluding the pre-tax
effects of adjusting items.
Adjusted Net Debt* and Adjusted Net Debt/Adjusted EBITDA* Reconciliation
The Company believes that comparing adjusted net debt/adjusted EBITDA* on a trailing 12-month basis for different financial periods provides useful information about the performance of the Company's operations as an indicator of the amount of time it would take the Company to settle both the short and long-term debt. The Company does not consider this to be a measure of liquidity, which is the ability to settle only short-term obligations, but rather a measure of how well the Company funds liquidity.
The following table reconciles adjusted net debt* to debt, adjusted EBITDA* to net income, and adjusted net debt*/adjusted EBITDA* to debt/ net income, respectively, which are the most directly comparable GAAP measures in, or calculated from, our consolidated financial statements.
(in U.S. $millions,
except percentages) As at and for the 12 months ended June 30,
% Change
2020 2019 2020 over 2019
Short-term debt $
22.0 $
8.0 175
%
Long-term debt 632.0 704.9 (10)
%
---
Debt 654.0 712.9 (8)
%
Less: Cash and cash (389.7) (210.4) 85
equivalents %
---
Adjusted net debt* 264.3 502.5 (47)
%
---
Net income $
152.7 $
130.9 17
%
Add: depreciation and
amortization %
expenses 73.4 68.1 8
Add: interest expense 38.4 43.2 (11)
%
Less: interest income (3.1) (3.6) (14)
%
Add: income tax 52.9 38.7 37
expense %
Pre-tax adjusting
items:
Share-based payment (4.1) (100)
expense recovery %
Severance and 1.5 (100)
retention %
Gain on sale of
equity accounted for %
investment (4.9) (100)
---
Adjusted EBITDA* $
310.2 $
273.9 13
%
---
Debt/net income 4.3 x 5.4 x (20)
%
Adjusted net
debt*/adjusted %
EBITDA* 0.9 x 1.8 x (50)
===
(1) Please refer to page 11 for a
summary of adjusting items for the
trailing 12-months ended June 30,
2020 and June 30, 2019.
(2) Adjusted EBITDA* is calculated by
adding back depreciation and
amortization expenses, interest
expense, and income tax expense,
and subtracting interest income
from net income excluding the pre-
tax effects of adjusting items.
(3) Adjusted net debt* is calculated by
subtracting cash and cash
equivalents from short and long-
term debt.
(4) Adjusted net debt*/adjusted EBITDA*
is calculated by dividing adjusted
net debt* by adjusted EBITDA*.
Operating Free Cash Flow* ("OFCF") Reconciliation
The Company believes OFCF*, when compared on a trailing 12-month basis to different financial periods provides an effective measure of the cash generated by the business and provides useful information regarding cash flows remaining for discretionary return to stockholders, mergers and acquisitions, or debt reduction. The balance sheet scorecard includes OFCF* as a performance metric. OFCF* is also an element of the performance criteria for certain annual short-term and long-term incentive awards.
The following table reconciles OFCF* to cash provided by operating activities, which is the most directly comparable GAAP measure in, or calculated from, the consolidated statements of cash flows:
(in U.S.
$millions,
except
percentages) 12 months ended June 30,
% Change
2020 2019 2020 over 2019
Cash provided
by operating %
activities $
370.8 $
196.8 88
---
Property,
plant and %
equipment
additions 15.1 15.7 (4)
Intangible
asset %
additions 28.5 26.1 9
Proceeds on
disposition %
of property
plant and
equipment (21.5) (9.5) 126
---
Net capital $
22.1 $
32.3 (32)
spending %
---
OFCF* $
348.7 $
164.5 112
%
===
(1) OFCF* is calculated by subtracting net capital spending from cash provided by operating activities.
Adjusting items during the trailing 12-months ended June 30, 2020 were:
Recognized in the second quarter of 2020
-- $6.2 million ($0.06 per diluted share) in current and deferred income
tax expense related to an unfavourable adjustment to reflect final
regulations published regarding hybrid financing arrangements
Recognized in the first quarter of 2020
-- There were no adjustment items recognized in the first quarter of 2020.
Recognized in the fourth quarter of 2019
-- $4.1 million ($3.4 million after tax, or $0.03 per diluted share) in
share-based payment expense recovery related to the departure of our
former CEO.
Recognized in the third quarter of 2019
-- There were no adjustment items recognized in the third quarter of 2019.
Adjusting items during the trailing 12-months ended June 30, 2019 were:
Recognized in the second quarter of 2019
-- There were no adjustment items recognized in the second quarter of 2019.
Recognized in the first quarter of 2019
-- There were no adjustment items recognized in the first quarter of 2019.
Recognized in the fourth quarter of 2018
-- There were no adjustment items recognized in the fourth quarter of 2018.
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 IronPlanet acquisition;
-- $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.
View original content:http://www.prnewswire.com/news-releases/ritchie-bros-reports-second-quarter-2020-results-301107987.html
SOURCE Ritchie Bros. Auctioneers
