EX-99.1 2 tm19178853_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1 – News Release 

 

Ritchie Bros. reports third quarter 2019 results

 

VANCOUVER, November 7, 2019– Ritchie Bros. Auctioneers Incorporated (NYSE & TSX: RBA, the “Company” or “Ritchie Bros.”) reported the following results for the three months ended September 30, 2019:

 

(All figures are presented in U.S. dollars)

 

Net income attributable to stockholders for Q3 2019 increased 9% to $25.3 million, diluted earnings per share (“EPS”) attributable to stockholders increased 10% to $0.23 from $0.21 per share, while diluted adjusted EPS attributed to stockholders (non-GAAP measure) increased 28% to $0.23 from $0.18 per share compared to the same period in 2018.

 

Consolidated results:

·Total revenue in Q3 2019 increased 18% to $289.8 million as compared to Q3 2018
oService revenue in Q3 2019 increased 11% to $178.6 million as compared to Q3 2018
oInventory sales revenue in Q3 2019 increased 32% to $111.2 million as compared to Q3 2018
·Total selling, general and administrative expenses (“SG&A”) in Q3 2019 increased 6% to $93.7 million as compared to Q3 2018
·Operating income in Q3 2019 increased 29% to $40.2 million as compared to Q3 2018
·Cash provided by operating activities was $309.1 million for the first nine months of 2019

 

Auctions & Marketplaces segment results:

·GTV1 in Q3 2019 increased 4% to $1.1 billion and increased 5% when excluding the impact of foreign exchange as compared to Q3 2018
·A&M total revenue in Q3 2019 increased 20% to $261.3 million as compared to Q3 2018
oService revenue in Q3 2019 increased 12% to $150.1 million as compared to Q3 2018
oInventory sales revenue in Q3 2019 increased 32% to $111.2 million as compared to Q3 2018

 

Other Services segment results:

·Other Services total revenue in Q3 2019 increased 6% to $28.5 million as compared to Q3 2018
·Ritchie Bros. Financial Services (“RBFS”) revenue in Q3 2019 increased 29% to $6.2 million as compared to Q3 2018

 

Other Company development:

·On August 8, 2019, the Board of Ritchie Bros. announced that Sharon Driscoll, Chief Financial Officer, and Karl Werner, President, International, have been named interim Co-Chief Executive Officers of the Company, in addition to their current roles effective October 1, 2019.

 

“Our positive earnings growth in the quarter was driven by solid GTV performance in our US region and global online GTV growth of 37%, highlighting the continued momentum and strength of our multichannel business model. Furthermore, we are pleased with our strong balance sheet and significant growth in our operating cash flow through the third quarter,” said Sharon Driscoll interim Co-Chief Executive Officer and Chief Financial Officer.

 

Karl Werner, interim Co-Chief Executive Officer and President of International, said, “We are encouraged by improvement in the overall equipment supply, with our sales teams doing a good job of securing volume to help offset some pockets of price deflation in the quarter. We remain focused on continued execution of our strategy and delivering exceptional service for our customers.”

 

 

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, if applicable, the reconciliation to the most comparable GAAP financial measures.

 

1 

 

 

Financial Overview

(Unaudited)

 

   Three months ended September 30,   Nine months ended September 30, 
           % Change           % Change 
(in U.S. $000's, except EPS)  2019   2018   2019 over
2018		   2019   2018   2019 over
2018		 
Service revenue:                              
Commissions  $90,928   $87,548    4%  $317,674   $313,539    1%
Fees   87,649    73,826    19%   267,881    238,197    12%
Total service revenue   178,577    161,374    11%   585,555    551,736    6%
Inventory sales revenue   111,219    83,972    32%   400,892    262,318    53%
Total revenue   289,796    245,346    18%   986,447    814,054    21%
Service revenue as a % of total revenue   61.6%   65.8%   (420) bps    59.4%   67.8%   (840) bps 
Inventory sales revenue as a % of total revenue   38.4%   34.2%   420 bps    40.6%   32.2%   840 bps 
Costs of services   36,382    33,053    10%   122,719    112,743    9%
Cost of inventory sold   102,410    74,341    38%   372,703    231,834    61%
Selling, general and administrative expenses   93,691    88,323    6%   286,589    287,052    (0)%
Operating expenses   249,636    214,152    17%   834,729    685,192    22%
Cost of inventory sold as a % of operating expenses   41.0%   34.7%   630 bps    44.6%   33.8%   1080 bps 
Operating income   40,160    31,194    29%   151,718    128,862    18%
Operating income margin   13.9%   12.7%   120 bps    15.4%   15.8%   (40) bps 
Net income attributable to stockholders   25,266    23,138    9%   97,466    85,993    13%
Adjusted net income attributable to stockholders (non-GAAP measure)   25,266    19,328    31%   97,466    82,183    19%
Diluted earnings per share attributable to stockholders  $0.23   $0.21    10%  $0.89   $0.79    13%
Diluted adjusted EPS attributable to stockholders (non-GAAP measure)  $0.23   $0.18    28%  $0.89   $0.75    19%
Effective tax rate   21.1%   17.2%   390 bps    22.8%   18.2%   460 bps 
                               
Total GTV   1,084,241    1,039,427    4%   3,756,679    3,626,551    4%
Service revenue as a % of total GTV- Rate   16.5%   15.5%   100 bps    15.6%   15.2%   40 bps 
Inventory sales revenue as a % of total GTV- Mix   10.3%   8.1%   220 bps    10.7%   7.2%   350 bps 

 

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Segment Overview

 

(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 

 

(in U.S $000's)  Three months ended September 30, 2018   Nine months ended September 30, 2018 
   A&M   Other   Consolidated   A&M   Other   Consolidated 
Service revenue  $134,604   $26,770   $161,374   $463,076   $88,660   $551,736 
Inventory sales revenue   83,972    -    83,972    262,318    -    262,318 
Total revenue   218,576    26,770    245,346    725,394    88,660    814,054 
Ancillary and logistical service expenses   -    11,682    11,682    -    46,242    46,242 
Other costs of services   20,059    1,312    21,371    62,888    3,613    66,501 
Cost of inventory sold   74,341    -    74,341    231,834    -    231,834 
SG&A expenses   83,542    4,781    88,323    272,503    14,549    287,052 
Segment profit  $40,634   $8,995   $49,629   $158,169   $24,256   $182,425 
Total GTV   1,039,427    N/A    N/A    3,626,551    N/A    N/A 
A&M service revenue as a % of total GTV- Rate   12.9%   N/A    N/A    12.8%   N/A    N/A 

 

Consolidated Performance Overview

 

GTV increased 4% to $1.1 billion and increased 5% when excluding the impact of foreign exchange. The increase was led by strong growth in online marketplaces of 37%, partially offset by live on site auction volume declining 3%. Despite a strong positive live GTV performance from the US region, overall live was down due to the calendar shift of the larger Moerdijk, Netherlands auction to Q2 2019, lower demand within the energy and the Canadian agriculture sectors, and softer performance at the Dubai, UAE auction from lower demand in the region.

 

Total revenue increased 18% to $289.8 million with Service revenue growth of 11% and Inventory sales revenue growth of 32%.

 

Service revenue growth of 11% was driven by commissions revenue increasing 4% and fee revenue increasing 19%. The increase in commissions revenue was in line with higher Service GTV, and due to strong performance in our US region, where the Company experienced volume growth through both live auctions and weekly featured online businesses, combined with strong growth in the Company’s global guarantee rates. The increase in fee revenue was driven primarily by the buyer fees harmonization, fee growth from higher GTV and RBFS fee revenue growth.

 

Inventory sales revenue increased 32% primarily due to higher inventory volumes at the US live auctions and GovPlanet business.

 

Costs of services increased 10% to $36.4 million. The increase was primarily in line with growth in services revenue, including incremental GovPlanet operating costs.

 

Cost of inventory increased 38% to $102.4 million, in line with the overall increase in inventory sales volume.

 

Selling, general and administrative (“SG&A”) expenses increased 6% to $93.7 million primarily due to higher year-over-year incentive compensation expenses on improved performance and to a lesser extent, on-going incremental GovPlanet costs, partially offset by the positive impact of foreign exchange fluctuations.

 

Ritchie Bros. 3

 

 

 

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 and Canadian dollar exchange rates relative to the U.S. dollar.

 

Net income attributable to stockholders increased 9% to $25.3 million. The increase was primarily due to higher operating income, partially offset by a non-recurring gain on sale of equity accounted investment recorded in Q3 2018 and higher taxes due to an increase in the effective tax rate. Adjusted net income attributed to stockholders (non-GAAP measure) increased 31%, to $25.3 million in Q3 2019 compared to $19.3 million in Q3 2018.

 

Primarily for the same reasons noted above, diluted EPS attributable to stockholders increased 10% to $0.23 per share compared to $0.21 per share in Q3 2018. Diluted adjusted EPS attributed to stockholders (non-GAAP measure) increased 28% to $0.23 in Q3 2019 compared to $0.18 in Q3 2018.

 

Dividend Information

 

Quarterly dividend

 

The Company declared on November 7, 2019, a quarterly cash dividend of $0.20 per common share payable on December 18, 2019 to shareholders of record on November 27, 2019.

 

Q3 2019 Earnings Conference Call

 

Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended September 30, 2019, at 8am Pacific time / 11 am Eastern time / 4pm GMT on November 8, 2019. The replay of the webcast will be available through December 8, 2019.

 

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.

 

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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 Q4 performance, 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 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, 2018, and the Company's Form 10-Q for the quarter ended September 30, 2018, 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.

 

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GTV and Selected Condensed Consolidated Financial Information

 

GTV and Condensed Consolidated Income Statements – Third Quarter

(Expressed in thousands of United States dollars, except share and per share amounts)

(Unaudited)

 

   Three months ended September 30, 2019   Nine months ended September 30, 2019 
           % Change           % Change 
   2019   2018   2019 over 2018   2019   2018   2019 over 2018 
GTV  $1,084,241   $1,039,427    4%  $3,756,679   $3,626,551    4%
Revenue:                              
Service revenue  $178,577   $161,374    11%  $585,555   $551,736    6%
Revenue from inventory sales   111,219    83,972    32%   400,892    262,318    53%
Total revenue   289,796    245,346    18%   986,447    814,054    21%
Operating expenses:                              
Costs of services   36,382    33,053    10%   122,719    112,743    9%
Cost of inventory sold   102,410    74,341    38%   372,703    231,834    61%
Selling, general and administration expenses   93,691    88,323    6%   286,589    287,052    0%
Acquisition-related costs   45    2,007    (98)%   752    5,039    (85)%
Depreciation and amortization expenses   17,692    16,723    6%   51,919    49,451    5%
Gain on disposition of property, plant and equipment   (821)   (342)   140%   (1,071)   (958)   12%
Foreign exchange loss   237    47    404%   1,118    31    3506%
Total operating expenses   249,636    214,152    17%   834,729    685,192    22%
Operating income   40,160    31,194    29%   151,718    128,862    18%
Interest expense   (10,090)   (10,473)   (4)%   (31,023)   (32,720)   (5)%
Other, net   1,962    7,182    (73)%   5,680    8,995    (37)%
Income before income taxes   32,032    27,903    15%   126,375    105,137    20%
Income tax expense   6,760    4,791    41%   28,800    19,091    51%
Net income  $25,272   $23,112    9%  $97,575   $86,046    13%
Net income (loss) attributable to:                              
Stockholders  $25,266   $23,138    9%  $97,466   $85,993    13%
Non-controlling interests   6    (26)   (123)%   109    53    106%
   $25,272   $23,112    9%  $97,575   $86,046    13%
Earnings per share attributable to stockholders:                                                                        
Basic  $0.23   $0.21    10%  $0.90   $0.80    13%
Diluted  $0.23   $0.21    10%  $0.89   $0.79    13%
Weighted average number of share outstanding:                              
Basic   108,003,390    108,365,427    0%   108,453,525    107,811,391    1%
Diluted   109,381,173    109,887,194    0%   109,634,195    109,133,378    0%

 

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Condensed Consolidated Balance Sheets

(Expressed in thousands of United States dollars, except share data)

(Unaudited)

 

   September 30,   December 31, 
   2019   2018 
Assets          
Cash and cash equivalents  $309,555   $237,744 
Restricted cash   141,832    67,823 
Trade and other receivables   249,925    129,257 
Inventory   53,092    113,294 
Other current assets   44,364    49,055 
Income taxes receivable   10,488    6,365 
Total current assets   809,256    603,538 
           
Property, plant and equipment   476,776    486,599 
Other non-current assets   148,375    29,395 
Intangible assets   234,249    245,622 
Goodwill   671,378    671,594 
Deferred tax assets   17,797    15,648 
Total assets  $2,357,831   $2,052,396 
           
Liabilities and Equity          
Auction proceeds payable  $453,278   $203,503 
Trade and other payables   166,796    201,255 
Income taxes payable   16,053    2,312 
Short-term debt   5,805    19,896 
Current portion of long-term debt   18,027    13,126 
Total current liabilities   659,959    440,092 
           
Long-term debt   671,301    698,172 
Other non-current liabilities   150,400    41,980 
Deferred tax liabilities   32,859    35,519 
Total liabilities   1,514,519    1,215,763 
           
Commitments          
Contingencies          
Contingently redeemable performance share units   -    923 
Stockholders' equity:          
Share capital:          
Common stock; no par value, unlimited shares authorized, issued and outstanding shares: 108,210,335 (December 31, 2018: 108,682,030)   159,773    181,780 
Additional paid-in capital   59,289    56,885 
Retained earnings   684,231    648,255 
Accumulated other comprehensive loss   (65,129)   (56,277)
Stockholders' equity   838,164    830,643 
Non-controlling interest   5,148    5,067 
Total stockholders' equity   843,312    835,710 
Total liabilities and equity  $2,357,831   $2,052,396 

 

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Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of United States dollars)

(Unaudited)

 

Nine months ended September 30,  2019   2018 
Cash provided by (used in):          
Operating activities:          
Net income  $97,575   $86,046 
Adjustments for items not affecting cash:          
Depreciation and amortization expenses   51,919    49,451 
Stock option compensation expense   4,852    6,711 
Equity-classified PSU expense   8,754    8,978 
Deferred income tax recovery   (4,760)   (3,774)
Unrealized foreign exchange (gain) loss   (129)   501 
Gain on disposition of property, plant and equipment   (1,071)   (958)
Amortization of debt issuance costs   2,701    3,032 
Gain on disposition of equity investment   -    (4,935)
Other, net   9,892    (3,678)
Net changes in operating assets and liabilities   139,372    (44,227)
Net cash provided by operating activities   309,105    97,147 
Investing activities:          
Property, plant and equipment additions   (6,915)   (13,394)
Intangible asset additions   (18,377)   (19,410)
Proceeds on disposition of property, plant and equipment   5,610    2,524 
Proceeds on disposal of equity investment   -    6,147 
Other, net   (1,000)   (4,674)
Net cash used in investing activities   (20,682)   (28,807)
Financing activities:          
Share repurchase   (42,012)   - 
Dividends paid to stockholders   (60,791)   (56,116)
Issuances of share capital   12,440    27,072 
Payment of withholding taxes on issuance of shares   (5,260)   (3,901)
Proceeds from short-term debt   10,519    6,949 
Repayment of short-term debt   (24,979)   (3,372)
Repayment of long-term debt   (29,022)   (58,825)
Repayment of finance lease obligations   (4,848)   (2,827)
Other, net   -    (1,176)
Net cash used in financing activities   (143,953)   (92,196)
Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash   1,350    (3,215)
Increase (decrease)   145,820    (27,071)
Beginning of period   305,567    331,116 
Cash, cash equivalents, and restricted cash, end of period  $451,387   $304,045 

 

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Selected Data

(Unaudited)

 

Industrial live on site auction metrics

 

   Three months ended September 30,   Nine months ended September 30, 
           % Change           % Change 
   2019   2018   2019 over
2018		   2019   2018   2019 over
2018		 
Number of auctions   46    45    2%   140    130    8%
Bidder registrations   165,500    123,000    35%   508,750    383,500    33%
Consignors   14,000    13,600    3%   43,000    39,050    10%
Buyers   34,800    31,400    11%   109,050    96,750    13%
Lots   98,400    89,000    11%   305,150    273,500    12%

 

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)  Three months ended September 30,   Nine months ended September 30, 
           % Change           % Change 
   2019   2018   2019 over
2018		   2019   2018   2019 over
2018		 
Net income attributable to stockholders  $25,266   $23,138    9%  $97,466   $85,993    13%
Pre-tax adjusting items:                              
Severance and retention   -    1,501    (100)%   -    1,501    (100)%
Gain on sale of equity accounted for investment   -    (4,935)   100%   -    (4,935)   100%
Current income tax effect of adjusting items:                              
Severance and retention   -    (376)   100%   -    (376)   100%
Adjusted net income attributable to stockholders*  $25,266   $19,328    31%  $97,466   $82,183    19%
Weighted average number of dilutive shares outstanding   109,381,173    109,887,194    0%   109,634,195    109,133,378    0%
Diluted earnings per share attributable to stockholders  $0.23   $0.21    10%  $0.89   $0.79    13%
Diluted adjusted EPS attributable to Stockholders*  $0.23   $0.18    28%  $0.89   $0.75    19%

 

(1)Please refer to page 11 for a summary of adjusting items for the three month and nine month ended September 30, 2019 and September 30, 2018.
(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.

 

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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 and debt/ net income, respectively, which are the most directly comparable GAAP measures in, or calculated from, the consolidated financial statements.

 

(in U.S. $ millions)  As at and for the 12 months ended September 30, 
           % Change 
   2019   2018   2019 over 2018 
Short-term debt  $5.8   $10.5    (45)%
Long-term debt   689.3    751.8    (8)%
Debt   695.1    762.3    (9)%
Less: cash and cash equivalents   (309.6)   (228.8)   35%
Adjusted net debt*   385.5    533.5    (28)%
Net income  $133.0   $122.9    8%
Add: depreciation and amortization expenses   69.1    65.1    6%
Add: interest expense   42.8    43.7    (2)%
Less: interest income   (3.3)   (2.7)   22%
Add: income tax expense   40.7    13.2    208%
Pre-tax adjusting items:               
Severance and retention   -    3.7    (100)%
Gain on sale of equity accounted for investment   -    (4.9)   100%
Adjusted EBITDA*  $282.3   $241.0    17%
Debt/net income   5.2x   6.2x   (16)%
Adjusted net debt*/adjusted EBITDA*   1.4x   2.2x   (36)%

 

(1)Please refer to page 11 for a summary of adjusting items during the trailing 12-months ended September 30, 2019 and September 30, 2018.
(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)  12 months ended September 30, 
           % Change 
   2019   2018   2019 over 2018 
Cash provided by operating activities  $356.2   $146.2    144%
Property, plant and equipment additions   10.4    16.1    (35)%
Intangible asset additions   25.1    27.5    (9)%
Proceeds on disposition of property plant and equipment   (13.7)   (4.0)   243%
Net capital spending  $21.8   $39.6    (45)%
OFCF*  $334.4   $106.6    214%

 

(1)OFCF* is calculated by subtracting net capital spending from cash provided by operating activities.

 

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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.

 

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 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.

 

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 IronPlanet acquisition;
·$10.1 million (or $0.10 per diluted share) benefit on remeasurement of deferred taxes due to the Tax Cuts and Jobs Act.

 

 

For further information, please contact:

Zaheed Mawani | Vice President, Investor Relations

Phone: 1.778.331.5219 | Email: zmawani@rbauction.com

 

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