Ritchie Bros. reports third quarter 2020 results
VANCOUVER, BC, Nov. 5, 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 September 30, 2020:
(All figures are presented in U.S. dollars)
Net income attributable to stockholders increased 80% to $45.4 million, compared to $25.3 million in Q3 2019. Diluted earnings per share ("EPS") attributable to stockholders increased 78% to $0.41 per share in Q3 2020 as compared to Q3 2019. Diluted adjusted EPS attributable to stockholders* which excludes $4.3 million of severance costs ($3.2 million net of tax), increased 91% to $0.44 per share at Q3 2020 as compared to Q3 2019.
"We saw a strong contribution to GTV growth across all geographic regions and channels and are pleased by the growth demonstrated in the third quarter. Ritchie Bros.' omnichannel platform continues to drive best in class customer experiences and solid price performance. While 100% of transactions have moved online, we continue to leverage all the tools in our digital and technology tool box as well as our physical sites for care, custody and control," said Ann Fandozzi, Chief Executive Officer of Ritchie Bros.
Fandozzi continued, "Our priorities have not changed, we continue to focus on the health and safety of our employees and customers and preserving our strong financial position to benefit our shareholders, customers and employees as the pandemic continues to unfold."
Consolidated results:
-- Total revenue in Q3 2020 increased 14% to $331.5 million as compared to
Q3 2019
-- Service revenue in Q3 2020 increased 25% to $222.7 million as
compared to Q3 2019
-- Inventory sales revenue in Q3 2020 decreased 2% to $108.9 million as
compared to Q3 2019
-- Total selling, general and administrative expenses ("SG&A") in Q3 2020
increased 18% to $110.2 million as compared to Q3 2019
-- Operating income in Q3 2020 increased 68% to $67.4 million as compared
to Q3 2019
-- Net income in Q3 2020 increased 80% to $45.5 million as compared to Q3
2019
-- Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization*
("EBITDA") (non-GAAP measure) in Q3 2020 increased 55% to $91.9 million
as compared to Q3 2019
-- Cash provided by operating activities was $265.6 million for the first
nine months of 2020
-- Cash on hand at Q3 2020 was $590.3 million, of which $470.3 million was
unrestricted
Auctions & Marketplaces segment results:
-- GTV(1) in Q3 2020 increased 22% to $1.3 billion as compared to Q3 2019
-- A&M total revenue in Q3 2020 increased 14% to $297.8 million as compared
to Q3 2019
-- Service revenue in Q3 2020 increased 26% to $188.9 million as
compared to Q3 2019
-- Inventory sales revenue in Q3 2020 decreased 2% to $108.9 million as
compared to Q3 2019
Other Services segment results:
-- Other Services total revenue in Q3 2020 increased 18% to $33.7 million
as compared to Q3 2019
-- RBFS revenue in Q3 2020 increased 19% to $7.3 million as compared to Q3
2019
_____________________________________________
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.
Other Company developments:
-- In Q3 2020, our Board of Directors authorized a share repurchase program
for the repurchase of up to $100 million of our common shares over the
next 12 months, which was approved by the Toronto Stock Exchange
-- On August 10, 2020, the Company announced the appointment of Kevin
Geisner as Chief Strategy Officer
-- On August 14, 2020, the Company amended and extended its credit
facilities totaling US$630.0 million with a syndicate of lenders
-- On October 28, 2020, the Company entered into a definitive agreement to
acquire Rouse Services, a privately held company that provides data
intelligence and performance benchmarking for approximately $275
million. Completion of the acquisition is subject to customary closing
conditions, including, among other conditions, the expiration or
termination of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Financial Overview
(Unaudited)
(in U.S. $000's, except EPS and percentages)
Three months ended September 30,
Nine months ended September 30,
---
% Change % Change
2020 2019 2020 over 2020 2019 2020 over
2019 2019
Service revenue:
Commissions $
112,762 $
90,928 24 $
331,711 $
317,674 4
% %
Fees 109,917 87,649 25 308,230 267,881 15
% %
---
Total service revenue 222,679 178,577 25 639,941 585,555 9
% %
Inventory sales revenue 108,863 111,219 (2)
%
% 353,906 400,892 (12)
---
Total revenue 331,542 289,796 14 993,847 986,447 1
% %
Service revenue as a % of total revenue 67.2 61.6 560
bps 64.4 59.4
% % % % 500 bps
Inventory sales revenue as a % of total revenue 32.8 38.4 (560)
bps 35.6 40.6
% % % % (500) bps
Costs of services 39,223 36,382 8 118,026 122,719 (4)
% %
Cost of inventory sold 96,253 102,410 (6)
%
% 320,972 372,703 (14)
Selling, general and administrative expenses 110,186 93,691 18 309,203 286,589 8
% %
Operating expenses 264,158 249,636 6 803,581 834,729 (4)
% %
Cost of inventory sold as a % of operating expenses 36.4 41.0 (460)
bps 39.9 44.6
% % % % (470) bps
Operating income 67,384 40,160 68 190,266 151,718 25
% %
Operating income margin 20.3 13.9 640
bps 19.1 15.4
% % % % 370 bps
Net income attributable to stockholders 45,387 25,266 80 121,239 97,466 24
% %
Diluted EPS attributable to stockholders $
0.41 $
0.23 78 $
1.10 $
0.89 24
% %
Diluted adjusted EPS attributable to stockholders* 0.44 0.23 91 1.19 0.89 34
% %
Effective tax rate 25.3 21.1 420
bps 28.6 22.8
% % % % 580 bps
===
Total GTV 1,321,379 1,084,241 22 3,962,386 3,756,679 5
% %
Service GTV 1,212,516 973,022 25 3,608,480 3,355,787 8
% %
Service GTV as a % of total GTV - Mix 91.8 89.7 210
bps 91.1 89.3
% % % % 180 bps
Service revenue as a % of total GTV- Rate 16.9 16.5 40
bps 16.2 15.6
% % % % 60 bps
Inventory GTV 108,863 111,219 (2)
%
% 353,906 400,892 (12)
Inventory sales revenue as a % of total GTV- Mix 8.2 10.3 (210)
bps 8.9 10.7
% % % % (180) bps
===
Segment Overview
(in U.S $000's) Three months ended September 30, 2020 Nine months ended September 30, 2020
A&M
Other Consolidated
A&M
Other Consolidated
Service revenue $
188,949 33,730 $
222,679 $
543,340 96,601 $
639,941
Inventory sales revenue 108,863 108,863 353,906 353,906
---
Total revenue 297,812 33,730 331,542 897,246 96,601 993,847
Ancillary and logistical service expenses 16,550 16,550 45,368 45,368
Other costs of services 21,733 940 22,673 69,018 3,640 72,658
Cost of inventory sold 96,253 96,253 320,972 320,972
SG&A expenses 103,933 6,253 110,186 290,077 19,126 309,203
---
Segment profit $
75,893 9,987 $
85,880 $
217,179 28,467 $
245,646
===
Total GTV 1,321,379 N/A N/A 3,962,386 N/A N/A
A&M service revenue as a % of total GTV- Rate 14.3 N/A N/A 13.7
% % N/A N/A
===
(in U.S $000's) Three months ended September 30, 2019
Nine months ended September 30, 2019
---
A&M Other Consolidated
A&M Other Consolidated
Service revenue $
150,093 $
28,484 $
178,577 $
494,580 $
90,975 $
585,555
Inventory sales revenue 111,219 111,219 400,892 400,892
---
Total revenue 261,312 28,484 289,796 895,472 90,975 986,447
Ancillary and logistical service expenses 13,285 13,285 43,516 43,516
Other costs of services 21,431 1,666 23,097 74,799 4,404 79,203
Cost of inventory sold 102,410 102,410 372,703 372,703
SG&A expenses 88,138 5,553 93,691 268,786 17,803 286,589
---
Segment profit $
49,333 $
7,980 $
57,313 179,184 25,252 204,436
===
Total GTV 1,084,241 N/A N/A 3,756,679 N/A N/A
A&M service revenue as a % of total GTV- Rate 13.8 N/A N/A 13.2
% % N/A N/A
===
Q3 2020 Consolidated Performance Overview
In response to COVID-19 pandemic, beginning in March 2020, the Company transitioned all our traditional live on site auctions to online bidding utilizing our existing online bidding technology and simultaneously ceased all public attendance at our live action theaters. Our core online auction channels (IronPlanet.com, GovPlanet.com, Marketplace-E) continued to operate as usual.
GTV increased 22% to $1.3 billion in Q3 2020 with total GTV increasing across all our regions. The increase was primarily in the US due to strong execution of the strategic accounts and regional sales teams driving year-over-year positive growth at both our live and online auctions. The International sales team also delivered higher GTV results as earlier lockdown measures lifted and border restrictions eased in Europe, as well as a higher level of private treaty deals in Australia. Total GTV increased in Canada mainly due to positive year-over-year live auction performance, and auction calendar shifts.
Total revenue increased 14% to $331.5 million in Q3 2020.
Service revenue increased 25% with commissions revenue increasing 24% and fees revenue increasing 25%. Fees revenue was up 25% driven by higher fees from total GTV which was up 22%. We also had positive performance in Ancillary as we earned more fees from refurbishing and transporting sellers' equipment driven by greater GTV activity in the US. Fees also grew due to RBFS as well as higher buyer fees on more favorable mix. Commissions revenue increased 24%, primarily in line with the increase in Service GTV.
Inventory sales revenue decreased 2% representing lower inventory sales volume. The lower sales volume was offset by strong year-over-year improvement in the inventory sales margin rate performance in the US and Canada. The decrease in the inventory volume was attributable to lower government surplus contracts in the US due to COVID-19 related government shutdowns and the shift of the Canadian Grand Prairie auction to Q4 2020. Partially offsetting these decreases was positive volume growth in International as border restrictions eased in Europe during Q3 2020 together with large private treaty deals in Australia.
Costs of services increased 8% to $39.2 million primarily driven by the 25% increase in Service GTV, offset by significant cost reductions in employee compensation, and travel, advertising and promotion as a result of our response to the COVID-19 pandemic. Our response included transitioning our live on site auctions to online bidding, utilizing TAL solutions for selected International and on-the-farm agricultural events, and implementing travel restrictions. We also incurred higher ancillary and logistical service expenses, in line with the increase in ancillary fees earned from refurbishing and transporting sellers' equipment driven by higher GTV volume in the US.
Cost of inventory decreased 6% to $96.3 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 improved due to rate improvement in US and Canada.
Selling, general and administrative ("SG&A") expenses increased 18% to $110.2 million primarily due to $8.8 million higher short-term and long-term incentive expenses driven by strong performance, higher headcount to support our growth initiatives, and a one-time $4.3 million severance costs related to the realignment of leadership to support the new global operations organization, in line with strategic growth priorities led by the new CEO. 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 a favourable impact on total revenue and an unfavourable impact on expenses. These impacts were primarily due to the fluctuations in the Euro and Australian dollar exchange rates relative to the U.S. dollar.
Net income attributable to stockholders increased 80% to $45.4 million, primarily related to the higher operating income, lower interest expense, and partially offset by the increase in the effective tax rate.
Primarily for the same reasons noted above, diluted EPS attributable to stockholders increased 78% to $0.41 per share for Q3 2020 from $0.23 per share in Q3 2019. Diluted adjusted EPS attributable to stockholders* increased 91% to $0.44 per share in Q3 2020, after excluding $4.3 million of severance costs ($3.2 million net of tax).
Dividend Information
Quarterly dividend
On November 4, 2020, the Company declared a quarterly cash dividend of $0.22 per common share payable on December 16, 2020 to shareholders of record on November 25, 2020.
Q3 2020 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended September 30, 2020 at 8am Pacific time / 11 am Eastern time / 3pm GMT on November 6, 2020. The replay of the webcast will be available through December 6, 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, and the ability of the Company to satisfy the Rouse acquisition agreement conditions and consummate the transaction. 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 September 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 - Third 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 September 30,
Nine months ended September 30,
---
% Change % Change
2020 2019 2020 over 2019 2020 2019 2020 over 2019
GTV $
1,321,379 $
1,084,241 22 $
3,962,386 $
3,756,679 5
% %
---
Revenues:
Service revenues $
222,679 $
178,577 25 $
639,941 $
585,555 9
% %
Inventory sales revenue 108,863 111,219 (2) 353,906 400,892 (12)
% %
---
Total revenues 331,542 289,796 14 993,847 986,447 1
% %
---
Operating expenses:
Costs of services 39,223 36,382 8 118,026 122,719 (4)
% %
Cost of inventory sold 96,253 102,410 (6) 320,972 372,703 (14)
% %
Selling, general and administration expenses 110,186 93,691 18 309,203 286,589 8
% %
Acquisition-related costs 45 (100) 752 (100)
% %
Depreciation and amortization expenses 18,436 17,692 4 55,586 51,919 7
% %
Gain on disposition of property, plant and equipment (276) (821) (66) (1,536) (1,071) 43
% %
Foreign exchange loss 336 237 42 1,330 1,118 19
% %
---
Total operating expenses 264,158 249,636 6 803,581 834,729 (4)
% %
---
Operating income 67,384 40,160 68 190,266 151,718 25
% %
---
Interest expense (8,737) (10,090) (13) (26,801) (31,023) (14)
% %
Other income, net 2,280 1,962 16 6,714 5,680 18
% %
---
Income before income taxes 60,927 32,032 90 170,179 126,375 35
% %
Income tax expense 15,437 6,760 128 48,741 28,800 69
% %
---
Net income $
45,490 $
25,272 80 $
121,438 $
97,575 24
% %
===
Net income attributable to:
Stockholders $
45,387 $
25,266 80 121,239 $
97,466 24
% %
Non-controlling interests 103 6 1,617 199 109 83
% %
---
$
45,490 $
25,272 80 121,438 $
97,575 24
% %
Earnings per share attributable to stockholders:
Basic $
0.42 $
0.23 83 1.11 $
0.90 23
% %
Diluted $
0.41 $
0.23 78 1.10 $
0.89 24
% %
---
Weighted average number of share outstanding:
Basic 109,018,469 108,003,390 1 108,887,026 108,453,525 0
% %
Diluted 110,369,718 109,381,173 1 110,060,712 109,634,195 0
% %
===
Condensed Consolidated Balance Sheets
(Expressed in thousands of United States dollars, except share data)
(Unaudited)
September 30, 2020 December 31, 2019
Assets
Cash and cash equivalents $
470,285 $
359,671
Restricted cash 120,014 60,585
Trade and other receivables 333,110 142,627
Less: allowance for credit
losses (4,635) (5,225)
Inventory 62,101 64,956
Other current assets 26,279 50,160
Income taxes receivable 5,619 6,810
---
Total current assets 1,012,773 679,584
Property, plant and equipment 481,047 484,482
Other non-current assets 134,973 145,679
Intangible assets 220,791 233,380
Goodwill 672,746 672,310
Deferred tax assets 15,659 13,995
---
Total assets $
2,537,989 $
2,229,430
===
Liabilities and Equity
Auction proceeds payable $
496,936 $
276,188
Trade and other payables 215,110 194,279
Income taxes payable 11,241 7,809
Short-term debt 20,285 4,705
Current portion of long-term
debt 9,926 18,277
---
Total current liabilities 753,498 501,258
Long-term debt 622,635 627,204
Other non-current liabilities 144,677 151,238
Deferred tax liabilities 52,312 42,743
---
Total liabilities 1,573,122 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) 195,727 194,771
Additional paid-in capital 48,253 52,110
Retained earnings 767,188 714,051
Accumulated other comprehensive
loss (51,684) (59,099)
---
Stockholders' equity 959,484 901,833
Non-controlling interest 5,383 5,154
---
Total stockholders' equity 964,867 906,987
---
Total liabilities and equity $
2,537,989 $
2,229,430
===
Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Unaudited)
Nine months ended September
30, 2020 2019
---
Cash provided by (used in):
Operating activities:
Net income $
121,438 $
97,575
Adjustments for items not
affecting cash:
Depreciation and
amortization expenses 55,586 51,919
Stock option compensation
expense 4,401 4,852
Equity-classified share
unit expense 9,155 8,754
Deferred income tax expense 8,250 (4,760)
Unrealized foreign exchange
(gain) loss 2,049 (129)
Gain on disposition of
property, plant and
equipment (1,536) (1,071)
Amortization of debt
issuance costs 2,375 2,701
Amortization of right-of-
use assets 9,194
Gain on contingent
consideration from equity
investment (1,700)
Other, net 2,427 9,892
Net changes in operating
assets and liabilities 53,912 139,372
---
Net cash provided by
operating activities 265,551 309,105
---
Investing activities:
Property, plant and
equipment additions (9,865) (6,915)
Intangible asset additions (19,886) (18,377)
Proceeds on disposition of
property, plant and
equipment 16,277 5,610
Distribution from equity
investment 4,212
Proceeds on contingent
consideration from equity
investment 1,700
Other, net (2,630) (1,000)
---
Net cash used in investing
activities (10,192) (20,682)
---
Financing activities:
Share repurchase (53,170) (42,012)
Dividends paid to
stockholders (67,639) (60,791)
Issuances of share capital 40,194 12,440
Payment of withholding taxes
on issuance of shares (3,870) (5,260)
Proceeds from short-term
debt 35,799 10,519
Repayment of short-term
debt (22,357) (24,979)
Repayment of long-term debt (11,134) (29,022)
Debt issue costs (2,038)
Repayment of finance lease
obligations (6,927) (4,848)
---
Net cash used in financing
activities (91,142) (143,953)
---
Effect of changes in foreign
currency rates on cash,
cash equivalents, and
restricted cash 5,826 1,350
---
Increase 170,043 145,820
Beginning of period 420,256 305,567
---
Cash, cash equivalents, and
restricted cash, end of
period $
590,299 $
451,387
===
Selected Data
(Unaudited)
Industrial live on site auction metrics
Three months ended September 30, Nine months ended September 30,
% Change % Change
2020 2019 2020 over 2019 2020 2019 2020 over 2019
Number of 42 46 (9) 123 140 (12)
auctions % %
Bidder 231,500 165,500 40 677,100 508,750 33
registrations % %
Consignors 15,100 14,000 8 40,450 43,000 (6)
% %
Buyers 40,000 34,800 15 114,250 109,050 5
% %
Lots 115,350 98,400 17 312,450 305,150 2
% %
===
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 September 30,
Nine months ended September 30,
% Change % Change
2020 2019 2020 over 2019 2020 2019 2020 over 2019
Net income attributable to stockholders $
45,387 $
25,266 80 $
121,239 $
97,466 24
% %
Pre-tax adjusting items:
Severance 4,283 100 4,283 100
% %
Current income tax effect of adjusting items:
Severance (1,065) (100) (1,065) (100)
% %
Current income tax adjusting item:
Change in uncertain tax provision
% 766 100
%
Deferred tax adjusting item:
Change in uncertain tax provision
% 5,462 100
%
---
Adjusted net income attributable to stockholders* $
48,605 $
25,266 92 $
130,685 $
97,466 34
% %
---
Weighted average number of dilutive shares outstanding 110,369,718 109,381,173 1 110,060,712 109,634,195 0
% %
---
Diluted earnings per share attributable to stockholders $
0.41 $
0.23 78 $
1.10 $
0.89 24
% %
Diluted adjusted EPS attributable to Stockholders* $
0.44 $
0.23 91 $
1.19 $
0.89 34
% %
===
(1) Please refer to page 11 for a
summary of adjusting items for the
three and nine months ended
September 30, 2020 and September
30, 2019.
(2) Adjusted net income attributable to
stockholders* represents net
income attributable to
stockholders excluding the effects
of adjusting items.
(3) 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
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:
(in U.S. $000's, except percentages) Three months ended September 30, Nine months ended September 30,
% Change % Change
2020 2019 2020 over 2019 2020 2019 2020 over 2019
Net income $
45,490 $
25,272 80 $
121,438 $
97,575 24
% %
Add: depreciation and amortization expenses 18,436 17,692 4 55,586 51,919 7
% %
Add: interest expense 8,737 10,090 (13) 26,801 31,023 (14)
% %
Less: interest income (510) (517) (1) (1,775) (2,435) (27)
% %
Add: income tax expense 15,437 6,760 128 48,741 28,800 69
% %
Pre-tax adjusting items:
Severance 4,283 100 4,283 100
% %
---
Adjusted EBITDA* $
91,873 $
59,297 55 $
255,074 $
206,882 23
% %
===
(1) Please refer to page 11 for a
summary of adjusting items
during the three and nine
months ended September 30,
2020 and September 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 September 30,
% Change
2020 2019 2020 over 2019
Short-term debt $
20.3 $
5.8 250
%
Long-term debt 632.6 689.3 (8)
%
---
Debt 652.9 695.1 (6)
%
Less: Cash and cash (470.3) (309.6) 52
equivalents %
---
Adjusted net debt* 182.6 385.5 (53)
%
---
Net income $
173.0 $
133.0 30
%
Add: depreciation and
amortization %
expenses 74.2 69.1 7
Add: interest expense 37.1 42.8 (13)
%
Less: interest income (3.1) (3.3) (6)
%
Add: income tax 61.6 40.7 51
expense %
Pre-tax adjusting
items:
Share-based payment (4.1) (100)
expense recovery %
Severance 4.3 100
%
---
Adjusted EBITDA* $
343.0 $
282.3 22
%
---
Debt/net income 3.8 x 5.2 x (27)
%
Adjusted net
debt*/adjusted %
EBITDA* 0.5 x 1.4 x (64)
===
(1) Please refer to page 11 for a
summary of adjusting items for the
trailing 12-months ended September
30, 2020 and September 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 September 30,
% Change
2020 2019 2020 over 2019
Cash
provided %
by
operating
activities $
289.2 $
356.2 (19)
---
Property,
plant %
and
equipment
additions 16.5 10.4 59
Intangible
asset %
additions 28.9 25.1 15
Proceeds
on %
disposition
of
property
plant
and
equipment (16.6) (13.7) 21
---
Net
capital %
spending $
28.8 $
21.8 32
---
OFCF* $
260.4 $
334.4 (22)
%
===
(1) OFCF* is calculated by
subtracting net capital
spending from cash provided
by operating activities.
Adjusting items during the trailing 12-months ended September 30, 2020 were:
Recognized in the third quarter of 2020
-- $4.3 million ($3.2 million after tax, or $0.03 per diluted share) of
severance costs related to the realignment of leadership to support the
new global operations organization, in line with strategic growth
priorities led by the new CEO.
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.
Adjusting items during the trailing 12-months ended September 30, 2019 were:
Recognized in the third quarter of 2019
-- There were no adjustment items recognized in the third quarter of 2019.
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.
View original content:http://www.prnewswire.com/news-releases/ritchie-bros-reports-third-quarter-2020-results-301167409.html
SOURCE Ritchie Bros. Auctioneers
