Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - RITCHIE BROS AUCTIONEERS INC | tm209505d1_8k.htm |
 | Exhibit 99.1 – News Release |
Ritchie Bros. reports fourth quarter and 2019 annual results
VANCOUVER, February 27, 2020 – Ritchie Bros. Auctioneers Incorporated (NYSE & TSX: RBA, the “Company”, “Ritchie Bros.”, “we”, “us”, or “our”) reports results for the fourth quarter and full year ended December 31, 2019.
(All figures are presented in U.S. dollars)
Fourth quarter highlights
Net income attributable to stockholders for Q4 2019 increased 45% to $51.6 million, diluted earnings per share (“EPS”) attributable to stockholders increased 47% to $0.47 from $0.32 per share, while diluted adjusted EPS attributable to stockholders (non-GAAP measure) increased 38% to $0.44 from $0.32 per share compared to the same period in 2018.
Consolidated results:
| · | Total revenue in Q4 2019 decreased 7% to $332.2 million as compared to Q4 2018 |
| o | Service revenue in Q4 2019 increased 10% to $218.5 million as compared to Q4 2018 |
| o | Inventory sales revenue in Q4 2019 decreased 28% to $113.7 million as compared to Q4 2018 |
| · | Total selling, general and administrative expenses (“SG&A”) was $95.8 million compared to $95.6 million in Q4 2018 |
| · | Operating income in Q4 2019 increased 27% to $71.5 million as compared to Q4 2018 |
Auctions & Marketplaces (“A&M”) segment results:
| · | GTV1 in Q4 2019 increased 3.5% to $1.4 billion compared to Q4 2018 |
| · | A&M total revenue in Q4 2019 decreased 7% to $298.0 million as compared to Q4 2018 |
| o | Service revenue in Q4 2019 increased 13% to $184.2 million as compared to Q4 2018 |
| o | Inventory sales revenue in Q4 2019 decreased 28% to $113.7 million as compared to Q4 2018 |
Other Company development:
| · | The Company announced on December 16, 2019 that Ann Fandozzi will be joining the Company as its new Chief Executive Officer (“CEO”), and member of the Board of Directors, effective January 6, 2020. |
Full year highlights
Net income attributable to stockholders for 2019 increased 23% to $149.0 million compared to $121.5 million in 2018. Diluted earnings per share (“EPS”) attributable to stockholders increased 23% to $1.36 from $1.11 per share, while diluted adjusted EPS attributable to stockholders (non-GAAP measure) increased 23% to $1.33 from $1.08 per share in 2018.
Consolidated results:
| · | Total revenue increased 13% to $1.3 billion as compared to 2018 |
o Service revenue increased 7% to $804.0 million as compared to 2018
o Inventory sales revenue increased 22% to $514.6 million as compared to 2018
| · | Total SG&A was $382.4 million in 2019 compared to $382.7 million in 2018 |
| · | Operating income increased 21% to $223.2 million as compared to 2018 |
| · | Cash provided by operating activities was $332.8 million for the year ended December 31, 2019 |
| · | Declared quarterly dividends aggregating to $0.76 per common share in 2019 |
Auctions & Marketplaces segment results:
| · | GTV increased 3.6% to $5.1 billion compared to 2018 |
| · | A&M total revenue increased 14% to $1.2 billion as compared to 2018 |
| o | Service revenue increased 8% to $678.8 million as compared to 2018 |
| o | Inventory sales revenue increased 22% to $514.6 million as compared to 2018 |
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.
| Ritchie Bros. | 1 |
“We are pleased with our strong fourth quarter delivering 47% reported earnings per share growth and 38% adjusted earnings per share growth. Our online marketplaces and US region both led the way with online delivering 16.4% GTV growth and the US posting double digit GTV growth.”
“Through the dedication of our entire team we grew our full year GTV by 4%, with Total Revenue topping $1.3 billion and 23% growth in earnings per share. We generated strong operating cash flow for the year and are pleased with the overall strength of our balance sheet,“ said Ann Fandozzi, CEO of Ritchie Bros.
Fandozzi concluded, “I have been impressed and energized by the strength and the quality of our team. 2020 is poised to be another exciting year for Ritchie Bros. as we look to continue progressing our multichannel strategy and leveraging technology to drive more value for our customers."
Financial Overview
(Unaudited)
| Three months ended December 31, | Year ended December 31, | |||||||||||||||||||||||
| % Change | % Change | |||||||||||||||||||||||
| (in U.S. $000's, except EPS) | 2019 | 2018 | 2019 over 2018 | 2019 | 2018 | 2019 over 2018 | ||||||||||||||||||
| Service revenue: | ||||||||||||||||||||||||
| Commissions | $ | 114,107 | $ | 106,621 | 7 | % | $ | 431,781 | $ | 420,160 | 3 | % | ||||||||||||
| Fees | 104,362 | 91,158 | 14 | % | 372,243 | 329,355 | 13 | % | ||||||||||||||||
| Total service revenue | 218,469 | 197,779 | 10 | % | 804,024 | 749,515 | 7 | % | ||||||||||||||||
| Inventory sales revenue | 113,725 | 158,193 | (28 | )% | 514,617 | 420,511 | 22 | % | ||||||||||||||||
| Total revenue | 332,194 | 355,972 | (7 | )% | 1,318,641 | 1,170,026 | 13 | % | ||||||||||||||||
| Service revenue as a % of total revenue | 65.8 | % | 55.6 | % | 1020 bps | 61.0 | % | 64.1 | % | -310 bps | ||||||||||||||
| Inventory sales revenue as a % of total revenue | 34.2 | % | 44.4 | % | -1020 bps | 39.0 | % | 35.9 | % | 310 bps | ||||||||||||||
| Costs of services | 42,258 | 46,315 | (9 | )% | 164,977 | 159,058 | 4 | % | ||||||||||||||||
| Cost of inventory sold | 108,136 | 142,505 | (24 | )% | 480,839 | 374,339 | 28 | % | ||||||||||||||||
| Selling, general and administrative expenses | 95,800 | 95,624 | 0 | % | 382,389 | 382,676 | (0 | )% | ||||||||||||||||
| Operating expenses | 260,710 | 299,645 | (13 | )% | 1,095,439 | 984,837 | 11 | % | ||||||||||||||||
| Cost of inventory sold as a % of operating expenses | 41.5 | % | 47.6 | % | -610 bps | 43.9 | % | 38.0 | % | 590 bps | ||||||||||||||
| Operating income | 71,484 | 56,327 | 27 | % | 223,202 | 185,189 | 21 | % | ||||||||||||||||
| Operating income margin | 21.5 | % | 15.8 | % | 570 bps | 16.9 | % | 15.8 | % | 110 bps | ||||||||||||||
| Net income attributable to stockholders | 51,573 | 35,486 | 45 | % | 149,039 | 121,479 | 23 | % | ||||||||||||||||
| Adjusted net income attributable to stockholders* | 48,183 | 35,486 | 36 | % | 145,649 | 117,669 | 24 | % | ||||||||||||||||
| Diluted earnings per share attributable to stockholders | $ | 0.47 | $ | 0.32 | 47 | % | $ | 1.36 | $ | 1.11 | 23 | % | ||||||||||||
| Diluted adjusted EPS attributable to stockholders* | $ | 0.44 | $ | 0.32 | 38 | % | $ | 1.33 | $ | 1.08 | 23 | % | ||||||||||||
| Effective tax rate | 19.9 | % | 25.2 | % | -530 bps | 21.8 | % | 20.3 | % | 150 bps | ||||||||||||||
| Total GTV | 1,383,908 | 1,337,614 | 3.5 | % | 5,140,587 | 4,964,165 | 3.6 | % | ||||||||||||||||
| Service revenue as a % of total GTV- Rate | 15.8 | % | 14.8 | % | 100 bps | 15.6 | % | 15.1 | % | 50 bps | ||||||||||||||
| Inventory sales revenue as a % of total GTV- Mix | 8.2 | % | 11.8 | % | -360 bps | 10.0 | % | 8.5 | % | 150 bps | ||||||||||||||
| Ritchie Bros. | 2 |
Segment Overview
| (in U.S $000's) | Three months ended December 31, 2019 | Year ended December 31, 2019 | ||||||||||||||||||||||
| A&M | Other | Consolidated | A&M | Other | Consolidated | |||||||||||||||||||
| Service revenue | $ | 184,243 | $ | 34,226 | $ | 218,469 | $ | 678,823 | $ | 125,201 | $ | 804,024 | ||||||||||||
| Inventory sales revenue | 113,725 | - | 113,725 | 514,617 | - | 514,617 | ||||||||||||||||||
| Total revenue | 297,968 | 34,226 | 332,194 | 1,193,440 | 125,201 | 1,318,641 | ||||||||||||||||||
| Ancillary and logistical service expenses | - | 15,736 | 15,736 | - | 59,252 | 59,252 | ||||||||||||||||||
| Other costs of services | 25,022 | 1,500 | 26,522 | 99,821 | 5,904 | 105,725 | ||||||||||||||||||
| Cost of inventory sold | 108,136 | - | 108,136 | 480,839 | - | 480,839 | ||||||||||||||||||
| SG&A expenses | 89,230 | 6,570 | 95,800 | 358,016 | 24,373 | 382,389 | ||||||||||||||||||
| Segment profit | $ | 75,580 | $ | 10,420 | $ | 86,000 | $ | 254,764 | $ | 35,672 | $ | 290,436 | ||||||||||||
| Total GTV | 1,383,908 | N/A | N/A | 5,140,587 | N/A | N/A | ||||||||||||||||||
| A&M service revenue as a % of total GTV- Rate | 13.3 | % | N/A | N/A | 13.2 | % | N/A | N/A | ||||||||||||||||
| (in U.S $000's) | Three months ended December 31, 2018 | Year ended December 31, 2018 | ||||||||||||||||||||||
| A&M | Other | Consolidated | A&M | Other | Consolidated | |||||||||||||||||||
| Service revenue | $ | 162,931 | $ | 34,848 | $ | 197,779 | $ | 626,007 | $ | 123,508 | $ | 749,515 | ||||||||||||
| Inventory sales revenue | 158,193 | - | 158,193 | 420,511 | - | 420,511 | ||||||||||||||||||
| Total revenue | 321,124 | 34,848 | 355,972 | 1,046,518 | 123,508 | 1,170,026 | ||||||||||||||||||
| Ancillary and logistical service expenses | - | 20,334 | 20,334 | - | 66,576 | 66,576 | ||||||||||||||||||
| Other costs of services | 24,542 | 1,439 | 25,981 | 87,430 | 5,052 | 92,482 | ||||||||||||||||||
| Cost of inventory sold | 142,505 | - | 142,505 | 374,339 | - | 374,339 | ||||||||||||||||||
| SG&A expenses | 91,046 | 4,578 | 95,624 | 363,549 | 19,127 | 382,676 | ||||||||||||||||||
| Segment profit | $ | 63,031 | $ | 8,497 | $ | 71,528 | $ | 221,200 | $ | 32,753 | $ | 253,953 | ||||||||||||
| Total GTV | 1,327,614 | N/A | N/A | 4,964,165 | N/A | N/A | ||||||||||||||||||
| A&M service revenue as a % of total GTV- Rate | 12.3 | % | N/A | N/A | 12.6 | % | N/A | N/A | ||||||||||||||||
Consolidated Quarterly Performance Overview
GTV increased 3.5% to $1.4 billion. The increase in GTV was driven by a 16% increase in online marketplaces and 1% growth in live on site industrial auctions. Online marketplaces growth was driven by strong performance from our Marketplace-E platform, our strategic accounts team, and GovPlanet. Our live industrial GTV improvement was led by our US region posting double-digit growth which was partially offset with softer performance in our International and Canadian regions.
Total revenue decreased 7% to $332.2 million with a decrease in Inventory sales revenue of 28%, partially offset by an increase in Service revenue of 10%.
Service revenue growth of 10% was driven by a 14% increase in fee revenue and a 7% improvement in commissions revenue. The
increase in fees revenue was driven by the harmonization of buyer fees, and higher total GTV. The increase in commissions revenue
was in line with overall GTV volume growth related to commissions contracts.
Inventory sales revenue decreased 28% primarily due to the non-repeat of significant inventory contracts in International and Canada. Inventory sales revenue as a percent of total GTV decreased to 8.2% in Q4 2019 from 11.8% in Q4 2018.
Costs of services decreased 9% to $42.3 million primarily driven by lower revenue in the RB Logistics business.
Cost of inventory decreased 24% to $108.1 million, in line with the overall decrease in inventory sales volume and reflecting comparative softer rate performance in Canada and International compared to Q4 2018.
Selling, general and administrative (“SG&A”) expenses increased slightly to $95.8 million due to additional headcount to support our growth initiatives and additional investments in the fourth quarter to support marketing efforts focused on generating buyer demand, offset by a $4.1 million share-based payment expense recovery related to the departure of our former CEO.
| Ritchie Bros. | 3 |
Net income attributable to stockholders increased 45% to $51.6 million. The increase was primarily due to higher operating income combined with lower interest expense. Included in operating income is a foreign exchange gain of $4.1 million in Q4 2019 compared to $0.2 million in Q4 2018. Adjusted net income attributable to stockholders (non-GAAP measure) increased 36%, to $48.2 million in Q4 2019 compared to $35.5 million in Q4 2018.
Primarily for the same reasons noted above, diluted EPS attributable to stockholders increased 47% to $0.47 per share compared to $0.32 per share in Q4 2018. Diluted adjusted EPS attributable to stockholders (non-GAAP measure) increased 38% to $0.44 per share in Q4 2019 compared to $0.32 per share in Q4 2018.
Dividend Information
Quarterly dividend
The Company declared on January 24, 2020, a quarterly cash dividend of $0.20 per common share payable on March 6, 2020 to shareholders of record on February 14, 2020.
Management Announcement
The Company announced today the planned retirement of Todd Wohler, Chief Human Resources Officer (“CHRO”). Mr. Wohler will retire as CHRO, effective March 31, 2020 after five years with the Company. Mr. Wohler had intended to retire earlier but agreed to stay on during the CEO transition. The Company is grateful to him for his significant contributions as CHRO.
Related to the above, the Company is pleased to announce the appointment of Carmen Thiede as Chief Human Resources Officer, effective April 13, 2020. Ms. Thiede brings significant experience to the Company gained during her impressive career in human resources leadership across diverse industries including automotive, financial and technological services at RBC, Ameriprise Financial Services, Regis Corporation and ABRA Auto Body & Glass. Ms. Thiede has a Master’s Degree in Human Resources and Industrial Relations from the University of Minnesota - Carlson School of Management.
Q4 2019 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended December 31, 2019, at 8:00 am Pacific time / 11:00 am Eastern time / 4:00 pm GMT on February 28, 2020. The replay of the webcast will be available through March 28, 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.
| Ritchie Bros. | 4 |
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, 2019, 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 Consolidated Financial Information
GTV and Consolidated Income Statements – Fourth Quarter
(Expressed in thousands of United States dollars, except share and per share amounts)
(Unaudited)
| (in U.S. $000's, except EPS) | Three months ended December 31, | Year ended December 31, | ||||||||||||||||||||||
| % Change | % Change | |||||||||||||||||||||||
| 2019 | 2018 | 2019 over 2018 | 2019 | 2018 | 2019 over 2018 | |||||||||||||||||||
| GTV | $ | 1,383,908 | $ | 1,337,614 | 3 | % | $ | 5,140,587 | $ | 4,964,165 | 4 | % | ||||||||||||
| Revenues: | ||||||||||||||||||||||||
| Service revenues | $ | 218,469 | $ | 197,779 | 10 | % | $ | 804,024 | $ | 749,515 | 7 | % | ||||||||||||
| Inventory sales revenue | 113,725 | 158,193 | (28 | )% | 514,617 | 420,511 | 22 | % | ||||||||||||||||
| Total revenues | 332,194 | 355,972 | (7 | )% | 1,318,641 | 1,170,026 | 13 | % | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Costs of services | 42,258 | 46,315 | (9 | )% | 164,977 | 159,058 | 4 | % | ||||||||||||||||
| Cost of inventory sold | 108,136 | 142,505 | (24 | )% | 480,839 | 374,339 | 28 | % | ||||||||||||||||
| Selling, general and administration expenses | 95,800 | 95,624 | 0 | % | 382,389 | 382,676 | (0 | )% | ||||||||||||||||
| Acquisition-related costs | 25 | 54 | (54 | )% | 777 | 5,093 | (85 | )% | ||||||||||||||||
| Depreciation and amortization expenses | 18,582 | 17,163 | 8 | % | 70,501 | 66,614 | 6 | % | ||||||||||||||||
| Gain on disposition of property, plant and equipment | (36 | ) | (1,773 | ) | (98 | )% | (1,107 | ) | (2,731 | ) | (59 | )% | ||||||||||||
| Foreign exchange loss (gain) | (4,055 | ) | (243 | ) | 1569 | % | (2,937 | ) | (212 | ) | 1285 | % | ||||||||||||
| Total operating expenses | 260,710 | 299,645 | (13 | )% | 1,095,439 | 984,837 | 11 | % | ||||||||||||||||
| Operating income | 71,484 | 56,327 | 27 | % | 223,202 | 185,189 | 21 | % | ||||||||||||||||
| Interest expense | (10,254 | ) | (11,807 | ) | (13 | )% | (41,277 | ) | (44,527 | ) | (7 | )% | ||||||||||||
| Other, net | 3,158 | 2,855 | 11 | % | 8,838 | 11,850 | (25 | )% | ||||||||||||||||
| Income before income taxes | 64,388 | 47,375 | 36 | % | 190,763 | 152,512 | 25 | % | ||||||||||||||||
| Income tax expense | 12,823 | 11,915 | 8 | % | 41,623 | 31,006 | 34 | % | ||||||||||||||||
| Net income | $ | 51,565 | $ | 35,460 | 45 | % | $ | 149,140 | $ | 121,506 | 23 | % | ||||||||||||
| Net income (loss) attributable to: | ||||||||||||||||||||||||
| Stockholders | $ | 51,573 | $ | 35,486 | 45 | % | $ | 149,039 | $ | 121,479 | 23 | % | ||||||||||||
| Non-controlling interests | (8 | ) | (26 | ) | (69 | )% | 101 | 27 | 274 | % | ||||||||||||||
| $ | 51,565 | $ | 35,460 | 45 | % | $ | 149,140 | $ | 121,506 | 23 | % | |||||||||||||
| Earnings per share attributable to stockholders: | ||||||||||||||||||||||||
| Basic | $ | 0.47 | $ | 0.33 | 42 | % | $ | 1.37 | $ | 1.12 | 22 | % | ||||||||||||
| Diluted | $ | 0.47 | $ | 0.32 | 47 | % | $ | 1.36 | $ | 1.11 | 23 | % | ||||||||||||
| Weighted average number of share outstanding: | ||||||||||||||||||||||||
| Basic | 108,609,481 | 108,649,637 | (0 | )% | 108,519,739 | 108,063,349 | 0 | % | ||||||||||||||||
| Diluted | 110,194,557 | 109,983,224 | 0 | % | 109,759,123 | 109,388,236 | 0 | % | ||||||||||||||||
| Ritchie Bros. | 6 |
Consolidated Balance Sheets
(Expressed in thousands of United States dollars, except share data)
(Unaudited)
| As at December 31, | 2019 | 2018 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 359,671 | $ | 237,744 | ||||
| Restricted cash | 60,585 | 67,823 | ||||||
| Trade and other receivables | 137,402 | 129,257 | ||||||
| Inventory | 64,956 | 113,294 | ||||||
| Other current assets | 50,160 | 49,055 | ||||||
| Income taxes receivable | 6,810 | 6,365 | ||||||
| Total current assets | 679,584 | 603,538 | ||||||
| Property, plant and equipment | 484,482 | 486,599 | ||||||
| Other non-current assets | 145,679 | 29,395 | ||||||
| Intangible assets | 233,380 | 245,622 | ||||||
| Goodwill | 672,310 | 671,594 | ||||||
| Deferred tax assets | 13,995 | 15,648 | ||||||
| Total assets | $ | 2,229,430 | $ | 2,052,396 | ||||
| Liabilities and Equity | ||||||||
| Auction proceeds payable | $ | 276,188 | $ | 203,503 | ||||
| Trade and other payables | 194,279 | 201,255 | ||||||
| Income taxes payable | 7,809 | 2,312 | ||||||
| Short-term debt | 4,705 | 19,896 | ||||||
| Current portion of long-term debt | 18,277 | 13,126 | ||||||
| Total current liabilities | 501,258 | 440,092 | ||||||
| Long-term debt | 627,204 | 698,172 | ||||||
| Other non-current liabilities | 151,238 | 41,980 | ||||||
| Deferred tax liabilities | 42,743 | 35,519 | ||||||
| Total liabilities | 1,322,443 | 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: 109,337,781 (December 31, 2018: 108,682,030) | 194,771 | 181,780 | ||||||
| Additional paid-in capital | 52,110 | 56,885 | ||||||
| Retained earnings | 714,051 | 648,255 | ||||||
| Accumulated other comprehensive loss | (59,099 | ) | (56,277 | ) | ||||
| Stockholders' equity | 901,833 | 830,643 | ||||||
| Non-controlling interest | 5,154 | 5,067 | ||||||
| Total stockholders' equity | 906,987 | 835,710 | ||||||
| Total liabilities and equity | $ | 2,229,430 | $ | 2,052,396 | ||||
| Ritchie Bros. | 7 |
Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Unaudited)
| Year ended December 31, | 2019 | 2018 | 2017 | |||||||||
| Cash provided by (used in): | ||||||||||||
| Operating activities: | ||||||||||||
| Net income | $ | 149,140 | $ | 121,506 | $ | 75,306 | ||||||
| Adjustments for items not affecting cash: | ||||||||||||
| Depreciation and amortization expenses | 70,501 | 66,614 | 52,694 | |||||||||
| Impairment loss | - | - | 8,911 | |||||||||
| Stock option compensation expense | 4,697 | 8,252 | 13,700 | |||||||||
| Equity-classified share units expense | 8,047 | 11,256 | 3,529 | |||||||||
| Deferred income tax expense (recovery) | 8,826 | 6,239 | (17,268 | ) | ||||||||
| Unrealized foreign exchange (gain) loss | (3,058 | ) | 951 | 254 | ||||||||
| Gain on disposition of property, plant and equipment | (1,107 | ) | (2,731 | ) | (1,656 | ) | ||||||
| Amortization of debt issuance costs | 4,086 | 4,995 | 3,056 | |||||||||
| Gain on disposition of equity investment | - | (4,935 | ) | - | ||||||||
| Amoritzation of right-of-use assets | 12,280 | - | - | |||||||||
| Other, net | 2,779 | (2,317 | ) | (1,237 | ) | |||||||
| Net changes in operating assets and liabilities | 76,602 | (65,550 | ) | 10,279 | ||||||||
| Net cash provided by operating activities | 332,793 | 144,280 | 147,568 | |||||||||
| Investing activities: | ||||||||||||
| Acquisition of IronPlanet, net of cash acquired | - | - | (675,851 | ) | ||||||||
| Property, plant and equipment additions | (13,589 | ) | (16,860 | ) | (10,812 | ) | ||||||
| Intangible asset additions | (27,415 | ) | (26,152 | ) | (28,584 | ) | ||||||
| Proceeds on disposition of property, plant and equipment | 5,929 | 10,586 | 4,985 | |||||||||
| Proceeds on disposal of equity investment | - | 6,147 | - | |||||||||
| Other, net | (982 | ) | (4,674 | ) | (692 | ) | ||||||
| Net cash used in investing activities | (36,057 | ) | (30,953 | ) | (710,954 | ) | ||||||
| Financing activities: | ||||||||||||
| Share repurchase | (42,012 | ) | - | - | ||||||||
| Dividends paid to stockholders | (82,535 | ) | (75,678 | ) | (72,785 | ) | ||||||
| Dividends paid to NCI | - | - | (41 | ) | ||||||||
| Issuances of share capital | 41,094 | 28,524 | 9,936 | |||||||||
| Payment of withholding taxes on issuance of shares | (5,260 | ) | (3,901 | ) | - | |||||||
| Proceeds from short-term debt | 13,169 | 19,715 | 6,971 | |||||||||
| Repayment of short-term debt | (28,684 | ) | (6,628 | ) | (24,479 | ) | ||||||
| Proceeds from long-term debt | - | - | 325,000 | |||||||||
| Repayment of long-term debt | (76,282 | ) | (91,013 | ) | (108,985 | ) | ||||||
| Debt issue costs | - | - | (12,624 | ) | ||||||||
| Repayment of finance lease obligations | (6,708 | ) | (3,950 | ) | (2,322 | ) | ||||||
| Other, net | - | (1,176 | ) | (1,408 | ) | |||||||
| Net cash provided by (used in) financing activities | (187,218 | ) | (134,107 | ) | 119,263 | |||||||
| Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash | 5,171 | (4,769 | ) | 17,150 | ||||||||
| Increase (decrease) | 114,689 | (25,549 | ) | (426,973 | ) | |||||||
| Beginning of period | 305,567 | 331,116 | 758,089 | |||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 420,256 | $ | 305,567 | $ | 331,116 | ||||||
| Ritchie Bros. | 8 |
Selected Data
(Unaudited)
Live industrial auction data
| Three months ended December 31 | Year ended December 31, | |||||||||||||||||||||||
| % Change | % Change | |||||||||||||||||||||||
| 2019 | 2018 | 2019 over 2018 | 2019 | 2018 | 2019 over 2018 | |||||||||||||||||||
| Number of auctions | 54 | 53 | 2 | % | 194 | 183 | 6 | % | ||||||||||||||||
| Bidder registrations | 223,800 | 171,500 | 30 | % | 732,550 | 555,000 | 32 | % | ||||||||||||||||
| Consignors | 15,850 | 14,900 | 6 | % | 58,850 | 53,950 | 9 | % | ||||||||||||||||
| Buyers | 44,350 | 38,500 | 15 | % | 153,400 | 135,250 | 13 | % | ||||||||||||||||
| Lots | 117,650 | 103,500 | 14 | % | 422,800 | 377,000 | 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 December 31 | Year ended December 31, | ||||||||||||||||||||||
| % Change | % Change | |||||||||||||||||||||||
| 2019 | 2018 | 2019 over 2018 | 2019 | 2018 | 2019 over 2018 | |||||||||||||||||||
| Net income attributable to stockholders | $ | 51,573 | $ | 35,486 | 45 | % | $ | 149,039 | $ | 121,479 | 23 | % | ||||||||||||
| Pre-tax adjusting items: | ||||||||||||||||||||||||
| Share-based payment expense recovery | (4,078 | ) | - | -100 | % | (4,078 | ) | - | -100 | % | ||||||||||||||
| Deferred income tax effect of adjusting items: | ||||||||||||||||||||||||
| Share-based payment expense recovery | 688 | - | 100 | % | 688 | - | 100 | % | ||||||||||||||||
| Adjusted net income attributable to stockholders* | $ | 48,183 | $ | 35,486 | 36 | % | $ | 145,649 | $ | 117,669 | 24 | % | ||||||||||||
| Weighted average number of dilutive shares outstanding | 110,194,557 | 109,983,224 | 0 | % | 109,759,123 | 109,388,236 | 0 | % | ||||||||||||||||
| Diluted earnings per share attributable to stockholders | $ | 0.47 | $ | 0.32 | 47 | % | $ | 1.36 | $ | 1.11 | 23 | % | ||||||||||||
| Diluted adjusted EPS attributable to stockholders* | $ | 0.44 | $ | 0.32 | 38 | % | $ | 1.33 | $ | 1.08 | 23 | % | ||||||||||||
(1) Please refer to page 11 for a summary of adjusting items for the three month and year ended Decembre 31, 2019, and 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.
| Ritchie Bros. | 9 |
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) | Year ended December 31, | |||||||||||
| % Change | ||||||||||||
| 2019 | 2018 | 2019 over 2018 | ||||||||||
| Short-term debt | $ | 4.7 | $ | 19.9 | -76 | % | ||||||
| Long-term debt | 645.5 | 711.3 | -9 | % | ||||||||
| Debt | 650.2 | 731.2 | -11 | % | ||||||||
| Less: cash and cash equivalents | (359.7 | ) | (237.7 | ) | 51 | % | ||||||
| Adjusted net debt* | 290.5 | 493.5 | -41 | % | ||||||||
| Net income | $ | 149.1 | $ | 121.5 | 23 | % | ||||||
| Add: depreciation and amortization expenses | 70.5 | 66.6 | 6 | % | ||||||||
| Add: interest expense | 41.3 | 44.5 | -7 | % | ||||||||
| Less: interest income | (3.8 | ) | (2.9 | ) | 31 | % | ||||||
| Add: income tax expense | 41.6 | 31.0 | 34 | % | ||||||||
| 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* | $ | 294.6 | $ | 257.3 | 14 | % | ||||||
| Debt/net income | 4.4 | x | 6 | x | (16 | )% | ||||||
| Adjusted net debt*/adjusted EBITDA* | 1 | x | 1.9 | x | (36 | )% | ||||||
| (1) | Please refer to page 11 for a summary of adjusting items for the year ended December 31, 2019, and 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) | Year ended December 31, 2019 | |||||||||||
| % Change | ||||||||||||
| 2019 | 2018 | 2019 over 2018 | ||||||||||
| Cash provided by operating activities | $ | 332.8 | $ | 144.3 | 131 | % | ||||||
| Property, plant and equipment additions | 13.6 | 16.9 | -20 | % | ||||||||
| Intangible asset additions | 27.4 | 26.1 | 5 | % | ||||||||
| Proceeds on disposition of property plant and equipment | (5.9 | ) | (10.6 | ) | -44 | % | ||||||
| Net capital spending | $ | 35.1 | $ | 32.4 | 8 | % | ||||||
| OFCF* | $ | 297.7 | $ | 111.9 | 166 | % | ||||||
| (1) | OFCF* is calculated by subtracting net capital spending from cash provided by operating activities. |
| Ritchie Bros. | 10 |
Adjusting items for the year ended December 31, 2019:
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. |
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. |
Adjusting items for the year ended December 31, 2018:
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. |
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. |
For further information, please contact:
Zaheed Mawani
Vice President, Investor Relations
Phone: 1.778.331.5219
Email: zmawani@rbauction.com
| Ritchie Bros. | 11 |