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Ritchie Bros. reports first quarter 2021 results

05/10/2021

VANCOUVER, BC, May 10, 2021 /CNW/ - Ritchie Bros. Auctioneers Incorporated  (NYSE: RBA) (TSX: RBA) (the "Company", "Ritchie Bros.", "we", "us", or "our") reported the following results for the three months ended March 31, 2021.

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

Net income attributable to stockholders increased 24% to $28.2 million, compared to $22.8 million in Q1 2020. Diluted earnings per share ("EPS") attributable to stockholders increased 19% to $0.25 per share in Q1 2021 compared to $0.21 per share in Q1 2020.

"Our 11% increase in GTV growth in the quarter was driven by solid underlying performance from all regions contributing to a 31% increase in operating income."

"We continued to lead with innovation; flexing new digital capabilities to improve the buyer and seller experience, ultimately driving exceptional price realization for consignors during this continued period of heightened economic uncertainty," said Ann Fandozzi, CEO of Ritchie Bros.

Consolidated results:

  • Total revenue in Q1 2021 increased 21% to $331.6 million as compared to Q1 2020
    • Service revenue in Q1 2021 increased 13% to $206.0 million as compared to Q1 2020
    • Inventory sales revenue in Q1 2021 increased 39% to $125.5 million as compared to Q1 2020
  • Total selling, general and administrative expenses ("SG&A") in Q1 2021 increased 18% to $116.1 million as compared to Q1 2020
  • Operating income in Q1 2021 increased 31% to $44.5 million as compared to Q1 2020
  • Net income in Q1 2021 increased 23% to $28.1 million as compared to Q1 2020
  • Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization* ("EBITDA") (non-GAAP measure) in Q1 2021 increased 18% to $66.3 million as compared to Q1 2020
  • Cash provided by operating activities was $180.7 million for Q1 2021

Auctions & Marketplaces segment results:

  • GTV1 in Q1 2021 increased 11% to $1.3 billion and increased 8% when excluding the impact of foreign exchange as compared to Q1 2020
  • A&M total revenue in Q1 2021 increased 21% to $296.3 million as compared to Q1 2020
    • Service revenue in Q1 2021 increased 10% to $170.8 million as compared to Q1 2020
    • Inventory sales revenue in Q1 2021 increased 39% to $125.5 million as compared to Q1 2020

Other Services segment results:

  • Other Services total revenue in Q1 2021 increased 24% to $35.3 million as compared to Q1 2020
    • RBFS revenue in Q1 2021 increased 27% to $9.2 million as compared to Q1 2020
    • Rouse revenue of $5.6 million was recognized in Q1 2021, which was its first full quarter since its acquisition on December 8, 2020

Other Company development:

  • On March 11, 2021, the Company announced that it was awarded the support of the U.S. Department of Defense with new surplus term sale contracts as the Company was declared the apparent high bidder for two new East and West contracts, covering the consolidated surplus rolling stock and non- rolling stock assets. These contracts were formally awarded to the Company on April 1, 2021 and commence on June 1, 2021.

 

______________________________


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 9-10 for explanations of why the Company uses these non-GAAP measures and the reconciliation to the most comparable GAAP financial measures.

 

Financial Overview
(Unaudited)

(in U.S. $000's, except EPS and percentages)

Three months ended March 31, 








% Change


2021


2020


2021 over
2020

Service revenue:









Commissions

$

103,975


$

93,484


11

%

Fees


102,055



89,639


14

%

Total service revenue


206,030



183,123


13

%

Inventory sales revenue


125,525



90,132


39

%

Total revenue


331,555



273,255


21

%

Costs of services


36,027



39,355


(8)

%

Cost of inventory sold


110,747



81,585


36

%

Selling, general and administrative expenses


116,078



98,385


18

%

Operating expenses


287,053



239,173


20

%

Operating income


44,502



34,082


31

%

Operating income as a % of total revenue


13.4

%


12.5

%

90

bps

Net income attributable to stockholders


28,188



22,809


24

%

Diluted EPS attributable to stockholders

$

0.25


$

0.21


19

%

Effective tax rate


23.0

%


19.8

%

320

bps

Total GTV


1,274,539



1,147,025


11

%

Service GTV


1,149,014



1,056,893


9

%

Service revenue as a % of total GTV - Rate


16.2

%


16.0

%

20

bps

Inventory GTV


125,525



90,132


39

%

Service revenue as a % of total revenue


62.1

%


67.0

%

(490)

bps

Inventory sales revenue as a % of total revenue


37.9

%


33.0

%

490

bps

Cost of inventory sold as a % of operating expenses


38.6

%


34.1

%

450

bps

Service GTV as a % of total GTV - Mix


90.2

%


92.1

%

(190)

bps

Inventory sales revenue as a % of total GTV - Mix


9.8

%


7.9

%

190

bps

Segment Overview









(in U.S $000's)


Three months ended March 31, 2021



A&M



Other

Consolidated

Service revenue

$

170,755



35,275

$

206,030

Inventory sales revenue


125,525




125,525

Total revenue


296,280



35,275


331,555

Ancillary and logistical service expenses




12,269


12,269

Other costs of services


21,590



2,168


23,758

Cost of inventory sold


110,747




110,747

SG&A expenses


104,345



11,733


116,078

Segment profit

$

59,598



9,105

$

68,703

Total GTV


1,274,539



N/A


N/A

A&M service revenue as a % of total GTV- Rate


13.4

%


N/A


N/A









(in U.S $000's)

Three months ended March 31, 2020



A&M



Other

Consolidated

Service revenue

$

154,743


$

28,380

$

183,123

Inventory sales revenue


90,132




90,132

Total revenue


244,875



28,380


273,255

Ancillary and logistical service expenses




12,758


12,758

Other costs of services


25,095



1,502


26,597

Cost of inventory sold


81,585




81,585

SG&A expenses


91,585



6,800


98,385

Segment profit

$

46,610


$

7,320

$

53,930

Total GTV


1,147,025



N/A


N/A

A&M service revenue as a % of total GTV- Rate


13.5

%


N/A


N/A

Q1 2021 Consolidated Performance Overview

In response to the COVID-19 pandemic, in March 2020, we transitioned all our traditional live on site auctions to online bidding utilizing our existing online bidding technology and simultaneously ceased all public attendance at our live auction theaters. Our core online auction channels (IronPlanet.com, GovPlanet.com, Marketplace-E) continued to operate as usual. 

Total GTV increased 11% to $1.3 billion and increased 8% when excluding the impact of foreign exchange in Q1 2021. GTV volumes rose partly due to significant auction calendar shifts arising from auctions that were delayed due to COVID-19 in the prior year including (1) Montreal, Canada, (2) Los Angeles, US and (3) Caorso, Italy, which were partially offset by lower volumes at the Las Vegas, US auction partly impacted by the non-repeat of a large North American trade show occurring at the same time, and the non-repeat of a collector car event. In addition, all regions experienced very strong auction price performance due to high demand for used equipment, in part aided by our digital marketing efforts. Total GTV increased primarily in Canada due to the shifting of the Montreal auction, and strong year-over-year performance at our Canadian agricultural auctions. The International sales team also delivered positive year-over-year performance partly due to a soft prior quarter in Europe as a result of the direct impact of COVID-19. International also had an increase in the number of new auctions held as economic conditions improved and border restrictions were lifted and also benefited from the addition of satellite yards in France, the shifting of the Caorso auction back into Q1 2021, and a large private treaty deal in Australia. Total GTV also increased in the US primarily driven by strong price performance and increased volume from the combination of several regional auction events, the shifting of the Los Angeles auction, and higher volumes at the Fort Worth, US auction. This increase was partially offset by lower performance at the Orlando, US auction.

Total revenue increased 21% to $331.6 million in Q1 2021, with inventory revenue increasing significantly by 39% mainly as a result of a change in GTV mix, and total service revenue increased by 13%.

Service revenue increased 13% with fees revenue increasing 14% and commissions revenue increasing 11%. Fees revenue was up 14% in line with total GTV growth, the acquisition of Rouse, and the continued growth in RBFS fee revenue. Commissions revenue was up 11% partially in line with higher services GTV of 9%, but also driven by improved rates and strong performances on guarantee commission contracts across all regions. We also had improved rates in the straight commission contracts within the GovPlanet business and in Canada. These increases were partially offset by softer straight commission rate performance from a higher proportion of GTV sourced from US strategic accounts.

Inventory sales revenue increased 39% representing higher inventory sales volume primarily driven by strong performance across all regions, most notably in International. Some of this positive year-over-year performance is a result of a soft prior quarter in Europe due to the direct impact of COVID-19. We also saw volume growth across various countries in Europe with new auctions and a large private treaty deal in Australia. We also had positive year-over-year improvement in the inventory sales margin rate performance in the US and Canada. 

Costs of services decreased 8% to $36.0 million. In response to the COVID-19 pandemic, in prior year, we transitioned our traditional live on site auctions to online bidding, utilizing TAL solutions for selected International and on-the-farm agricultural events and implementing travel restrictions. These operational changes resulted in temporary cost reductions in travel, advertising, and promotion expenses. We also saw cost reductions in building, facilities and technology expenses resulting from the non-repeat of site preparation costs related to a collector car event in Q1 2020. In addition, we incurred lower ancillary and logistical service expenses, in line with the decrease in ancillary fees earned on redeployment of assets in the US. This decrease was partially offset by the first full quarter of costs of services incurred from Rouse since acquisition.

Cost of inventory increased 36% to $110.7 million, primarily in line with higher activity in inventory sales revenue. Cost of inventory sold increased at a lower rate than the increase of inventory sales revenue, indicating an increase in the revenue rates. The improved inventory revenue rates were primarily due to the achievement of positive rate performance across all of our regions with strong pricing.

Selling, general and administrative ("SG&A") expenses increased 18% to $116.1 million primarily due to higher short-term and long-term incentive costs driven by strong performance, higher wages and salaries due to higher headcount to support our growth initiatives, higher severance costs, and a first full quarter of costs incurred from Rouse since acquisition. These increases were partially offset by lower travel, advertising, and promotion costs as we implemented travel restrictions.

Foreign exchange had a favourable impact on total revenue and an unfavourable impact on expenses. These impacts were primarily due to the fluctuations in the Australian dollar, Canadian dollar, and the Euro exchange rates relative to the U.S. dollar.

Net income attributable to stockholders increased 24% to $28.2 million primarily related to higher operating income, offset partly by the non-repeat of $1.7 million contingent consideration received related to the disposition of an equity investment in Q1 2020. Net income was also partially offset by the increase in the effective tax rate.  

Primarily for the same reasons noted above, diluted EPS attributable to stockholders increased 19% to $0.25 per share for Q1 2021 from $0.21 per share in Q1 2020.

Dividend Information

Quarterly dividend
On May 7, 2021, the Company declared a quarterly cash dividend of $0.22 per common share payable on June 16, 2021 to shareholders of record on May 26, 2021.

Q1 2021 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended March 31, 2021 at 8am Pacific time / 11 am Eastern time / 4pm GMT on May 11, 2021. The replay of the webcast will be available through June 11, 2021.

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 world leader in asset management technologies and disposition of commercial assets. We offer 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; Rouse, a leader in market intelligence on sales and rental equipment data; and Ritchie Bros. Private Treaty, offering privately negotiated sales. Our suite of multichannel sales solutions also includes RB Asset Solutions, a complete end-to-end asset management and disposition system. We also offer 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 and value prospects and payment of dividends, and the expected benefits of the Rouse acquisition. 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 acquired companies, and to receive the anticipated benefits of such acquisitions; and the risks and uncertainties set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and the Company's Form 10-Q for the quarter ended March 31, 2021, which are available on the SEC, SEDAR, and Company websites. The foregoing list is not exhaustive of the factors that may affect the Company's forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, and actual results may differ materially from those expressed in, or implied by, these forward-looking statements. Forward looking statements are made as of the date of this news release and the Company does not undertake any obligation to update the information contained herein unless required by applicable securities legislation. For the reasons set forth above, you should not place undue reliance on forward looking statements.

GTV and Selected Condensed Consolidated Financial Information

GTV and Condensed Consolidated Income Statements – First 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 March 31, 






% Change



2021


2020

2021 over 2020

GTV

$

1,274,539

$

1,147,025

11

%

Revenues:







Service revenues

$

206,030

$

183,123

13

%

Inventory sales revenue


125,525


90,132

39

%

Total revenues


331,555


273,255

21

%

Operating expenses:







Costs of services


36,027


39,355

(8)

%

Cost of inventory sold


110,747


81,585

36

%

Selling, general and administration expenses


116,078


98,385

18

%

Acquisition-related costs


2,922


100

%

Depreciation and amortization expenses


21,070


19,293

9

%

Gain on disposition of property, plant and equipment


(68)


(47)

45

%

Foreign exchange (gain) loss


277


602

(54)

%

Total operating expenses


287,053


239,173

20

%

Operating income


44,502


34,082

31

%

Interest expense


(8,946)


(9,182)

(3)

%

Other income, net


1,002


3,577

(72)

%

Income before income taxes


36,558


28,477

28

%

Income tax expense


8,419


5,648

49

%

Net income

$

28,139

$

22,829

23

%

Net income attributable to:







Stockholders

$

28,188

$

22,809

24

%

Non-controlling interests


(49)


20

(345)

%


$

28,139

$

22,829

23

%

Earnings per share attributable to stockholders:







Basic

$

0.26

$

0.21

24

%

Diluted

$

0.25

$

0.21

19

%

Weighted average number of share outstanding:







Basic


109,972,997


109,248,880

1

%

Diluted


111,267,392


110,482,837

1

%

Condensed Consolidated Balance Sheets
(Expressed in thousands of United States dollars, except share data)
(Unaudited)







March 31, 2021

December 31, 2020






Assets





Cash and cash equivalents

$

294,380

$

278,766

Restricted cash


147,240


28,129

Trade and other receivables


294,291


135,001

Less: allowance for credit losses


(5,576)


(5,467)

Inventory


72,314


86,278

Other current assets


32,802


27,274

Income taxes receivable


8,224


6,797

Total current assets


843,675


556,778






Property, plant and equipment


483,981


492,127

Other non-current assets


148,882


147,608

Intangible assets


296,480


300,948

Goodwill


840,632


840,610

Deferred tax assets


13,044


13,458

Total assets

$

2,626,694

$

2,351,529






Liabilities and Equity





Auction proceeds payable

$

517,521

$

214,254

Trade and other payables


227,679


243,786

Income taxes payable


3,215


17,032

Short-term debt


25,933


29,145

Current portion of long-term debt


10,517


10,360

Total current liabilities


784,865


514,577






Long-term debt


626,202


626,288

Other non-current liabilities


159,266


153,000

Deferred tax liabilities


45,753


45,265

Total liabilities


1,616,086


1,339,130






Commitments and Contingencies





Stockholders' equity:





Share capital:





Common stock; no par value, unlimited shares





authorized, issued and outstanding shares:





110,253,056 (December 31, 2020: 109,876,428)


210,765


200,451

Additional paid-in capital


43,612


49,171

Retained earnings


795,781


791,918

Accumulated other comprehensive loss


(44,639)


(34,295)

Stockholders' equity


1,005,519


1,007,245

Non-controlling interest


5,089


5,154

Total stockholders' equity


1,010,608


1,012,399

Total liabilities and equity

$

2,626,694

$

2,351,529

Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Unaudited)






Three months ended March 31,

2021

2020

Cash provided by (used in):





Operating activities:





Net income

$

28,139

$

22,829

Adjustments for items not affecting cash:





Depreciation and amortization expenses


21,070


19,293

Stock-based compensation expense


7,193


2,973

Deferred income tax expense


963


1,331

Unrealized foreign exchange loss


459


782

Gain on disposition of property, plant and equipment


(68)


(47)

Amortization of debt issuance costs


720


756

Amortization of right-of-use assets


3,172


3,343

Gain on contingent consideration from equity investment



(1,700)

Other, net


1,184


1,282

Net changes in operating assets and liabilities


117,855


(46,710)

Net cash provided by operating activities


180,687


4,132

Investing activities:





Property, plant and equipment additions


(1,556)


(3,495)

Proceeds on disposition of property, plant and equipment


66


333

Intangible asset additions


(8,769)


(7,220)

Issuance of loans receivable



(2,984)

Repayment of loans receivable


224


180

Distribution from equity investment



4,212

Proceeds on contingent consideration from equity investment



1,700

Net cash used in investing activities


(10,035)


(7,274)

Financing activities:





Share repurchase



(53,170)

Dividends paid to stockholders


(24,181)


(21,905)

Proceeds from exercise of options and share option plans


6,719


7,054

Payment of withholding taxes on issuance of shares


(7,542)


(2,984)

Net increase (decrease) in short-term debt


(2,886)


29,069

Repayment of long-term debt


(2,626)


(4,236)

Repayment of finance lease obligations


(2,629)


(2,189)

Net cash used in financing activities


(33,145)


(48,361)

Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash


(2,782)


(12,828)

Increase


134,725


(64,331)

Beginning of period


306,895


420,256

Cash, cash equivalents, and restricted cash, end of period

$

441,620

$

355,925

Selected Data
(Unaudited)

Total auction metrics







Three months ended March 31, 




% Change


2021

2020

2021 over 2020

Number of auction sales days

93

87

7

%

Bids per lot sold

27

19

42

%

Total lots sold

116,259

100,805

15

%

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. Non-GAAP financial measures referred to in this report are labeled as "non-GAAP measure" or designated as such with an asterisk (*).

Adjusted EBITDA*
The Company believes that adjusted EBITDA* provides useful information about the growth or decline of our net income when compared between different financial periods.

The following table reconciles adjusted EBITDA* to net income, which is the most directly comparable GAAP measures in, or calculated from, our consolidated income statements:








(in U.S. $000's, except percentages)

Three months ended March 31, 






% Change


2021

2020

2021 over 2020

Net income

$

28,139

$

22,829

23

%

Add: depreciation and amortization expenses


21,070


19,293

9

%

Add: interest expense


8,946


9,182

(3)

%

Less: interest income


(303)


(873)

(65)

%

Add: income tax expense


8,419


5,648

49

%

Adjusted EBITDA*

$

66,271

$

56,079

18

%



(1)

Please refer to page 10 for a summary of adjusting items for the three months and year ended March 31, 2021 and March 31, 2020.

(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.

Adjusting items during the trailing 12-months ended March 31, 2021 were:

Recognized in the first quarter of 2021

  • There were no adjustment items recognized in the first quarter of 2021.

Recognized in the fourth quarter of 2020

  • $5.2 million ($3.9 million after tax, or $0.04 per diluted share) of acquisition-related costs related to the acquisition of Rouse.
  • $1.5 million ($0.01 per diluted share) of current income tax expense recognized related to an unfavourable adjustment to reflect final regulations published in Q2 2020 regarding hybrid financing arrangements.

Recognized in the third quarter of 2020

  • $4.3 million ($3.2 million after tax, or $0.03 per diluted share) of severance costs related to the realignment of leadership to support the new global operations organization, in line with strategic growth priorities led by the new CEO.

Recognized in the second quarter of 2020

  • $6.2 million ($0.06 per diluted share) in current and deferred income tax expense related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements.

Adjusting items during the trailing 12-months ended March 31, 2020 were:

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.

Recognized in the second quarter of 2019

  • There were no adjustment items recognized in the second quarter of 2019.

Cision View original content:http://www.prnewswire.com/news-releases/ritchie-bros-reports-first-quarter-2021-results-301287748.html

SOURCE Ritchie Bros. Auctioneers

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