| Exhibit 99.1 – News Release |
Ritchie Bros. reports second quarter 2020 results
VANCOUVER, August 6, 2020– Ritchie Bros. Auctioneers Incorporated (NYSE & 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 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 |
| o | Service revenue in Q2 2020 was $234.1 million, flat compared to Q2 2019 |
| o | 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:
| ● | GTV1 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 |
| o | Service revenue in Q2 2020 decreased 1% to $199.6 million as compared to Q2 2019 |
| o | 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.
| 1 |
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 2019 | | 2020 |
| 2019 |
| 2020 over 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 |
Ritchie Bros. | 2 |
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.
Ritchie Bros. | 3 |
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
Ritchie Bros. | 4 |
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.
Ritchie Bros. | 5 |
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 costs | |
| — | |
| 38 |
| (100) | % | | | — | | | 707 | | (100) | % |
Depreciation and amortization expenses | |
| 17,857 | |
| 17,112 |
| 4 | % | | | 37,150 | | | 34,227 | | 9 | % |
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 expenses | |
| 300,250 | |
| 315,252 |
| (5) | % | | | 539,423 | | | 585,093 | | (8) | % |
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 taxes | |
| 80,775 | |
| 69,532 |
| 16 | % | | | 109,252 | |
| 94,343 |
| 16 | % |
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 interests | |
| 76 | |
| 95 |
| (20) | % | | | 97 | |
| 103 |
| (6) | % |
| | $ | 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) | % |
Ritchie Bros. | 6 |
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 |
Ritchie Bros. | 7 |
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 |
Ritchie Bros. | 8 |
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 auctions |
| 51 |
| 59 |
| (14) | % | | 81 |
| 94 | | (14) | % |
Bidder registrations |
| 284,550 |
| 200,250 |
| 42 | % | | 445,550 |
| 343,250 | | 30 | % |
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 tax provision | |
| 766 | |
| — | | 100 | % | |
| 766 | |
| — | | 100 | % | |
Deferred tax adjusting item: | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Change in uncertain tax provision | |
| 5,462 | |
| — | | 100 | % | |
| 5,462 | |
| — | | 100 | % | |
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.
(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.
Ritchie Bros. | 9 |
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 expense | |
| 8,882 | |
| 10,117 |
| (12) | % | |
| 18,064 | |
| 20,933 |
| (14) | % | |
Less: interest income | |
| (393) | |
| (1,063) |
| (63) | % | |
| (1,063) | |
| (1,918) |
| (45) | % | |
Add: income tax expense | |
| 27,656 | |
| 15,401 |
| 80 | % | |
| 33,304 | |
| 22,040 |
| 51 | % | |
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 equivalents | |
| (389.7) | |
| (210.4) |
| 85 | % |
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 expense | |
| 52.9 | |
| 38.7 |
| 37 | % |
Pre-tax adjusting items: | |
|
| |
|
|
|
|
|
Share-based payment expense recovery | |
| (4.1) | |
| — |
| (100) | % |
Severance and retention | |
| — | |
| 1.5 |
| (100) | % |
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*.
Ritchie Bros. | 10 |
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 spending | | $ | 22.1 | | $ | 32.3 |
| (32) | % |
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. |
For further information, please contact:
Zaheed Mawani | Vice President, Investor Relations
Phone: 1.778.331.5219 | Email: zmawani@rbauction.com
Ritchie Bros. | 11 |