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Ritchie Bros. reports third quarter 2021 results

11/04/2021

VANCOUVER, BC, Nov. 4, 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 September 30, 2021.

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

Net income attributable to stockholders decreased 29% to $32.3 million, compared to $45.4 million in Q3 2020. Diluted earnings per share ("EPS") attributable to stockholders decreased 29% to $0.29 per share in Q3 2021 compared to $0.41 per share in Q3 2020. Non-GAAP diluted adjusted EPS attributable to stockholders* decreased 10% to $0.44 per share in Q3 2021 compared to $0.49 per share in Q3 2020.

Beginning in the third quarter of 2021, we updated the calculation of our non-GAAP diluted adjusted EPS attributable to stockholders* to add-back share-based payments expense, all acquisition-related costs, amortization of acquired intangible assets, and gain or loss on disposition of property, plant and equipment. These adjustments have been applied retrospectively to all periods presented.

"We are pleased with the strong momentum in our growth initiatives with the addition of new satellite yard locations globally, the launch of Ritchie List in North America, and cumulative IMS activations increasing 141% compared to last quarter. We are also encouraged by the results from our new go to market sales coverage model that we tested in 2021 and will look to scale these learnings in coming quarters to unlock incremental GTV." said Ann Fandozzi, CEO of Ritchie Bros.

Fandozzi concluded "Year-on-year comparison masks the underlying strength of our business as the quarterly cadence of 2020 was abnormally impacted by COVID-related disruptions, most notably in the third quarter of 2020. We continue to leverage our Company's DNA to best service our customers in the face of an extremely tight equipment market in 2021, and note that we have grown GTV at 17% compared to the pre-pandemic baseline of Q3 2019. "

For the third quarter of 2021 as compared to the third quarter of 2020:

Consolidated results:

  • Total revenue in Q3 2021 decreased 1% to $329.7 million
    • Service revenue in Q3 2021 decreased 4% to $214.2 million
    • Inventory sales revenue in Q3 2021 increased 6% to $115.5 million
  • Total selling, general and administrative expenses ("SG&A") in Q3 2021 decreased 1% to $108.6 million
  • Operating income in Q3 2021 decreased 20% to $53.6 million
  • Non-GAAP adjusted operating income* decreased 11% in Q3 2021 to $75.1 million
  • Non-GAAP adjusted Earnings Before Interest, Taxes, Depreciation and Amortization* ("EBITDA) in Q3 2021 decreased 9% to $90.6 million
  • Net income in Q3 2021 decreased 29% to $32.4 million
  • Cash provided by operating activities was $304.1 million for the first nine months of 2021
  • Cash on hand at the end of Q3 2021 was $468.4 million, of which $362.6 million was unrestricted

Auctions & Marketplaces segment results:

  • GTV1 in Q3 2021 decreased 4% to $1.3 billion and decreased 5% when excluding the impact of foreign exchange
    • A&M total revenue in Q3 2021 decreased 1% to $293.8 million
    • Service revenue in Q3 2021 decreased 6% to $178.3 million
    • Inventory sales revenue in Q3 2021 increased 6% to $115.5 million

________________________________

1  Gross Transaction Value ("GTV") represents total proceeds from all items sold at the Company's 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 generally accepted accounting principles ("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 pages 12-14 for explanations of why the Company uses these non-GAAP measures and the reconciliation to the most comparable GAAP financial measures.

Other Services segment results:

  • Other Services total revenue in Q3 2021 increased 6% to $35.8 million
    • RBFS revenue in Q3 2021 increased 55% to $11.3 million
    • Rouse revenue of $6.5 million was recognized in Q3 2021, which was its third full quarter since its acquisition on December 8, 2020

In addition, total number of organizations activated on our Business Inventory Management System ("IMS"), a gateway into our marketplace, increased by 141% as compared to Q2 2021.

Other Company development:

  • On September 8, 2021, the Company appointed its Chief Operating Officer, James Kessler, to the additional role of President of the Company.
  • On October 6, 2021, Sharon Driscoll, the Company's Chief Financial Officer, announced that she intends to retire within two years. As part of an effective succession process, Ms. Driscoll will continue to serve as CFO until her successor has been appointed and will then assume a role as an Executive Vice President serving as an advisor to the Company.

Financial Overview
(Unaudited)















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

Three months ended September 30, 

 

Nine months ended September 30, 







% Change






% Change


2021

2020


2021 over
2020


2021

2020


2021 over
2020

Service revenue:














Commissions

$

110,275

$

112,762


(2)%


$

343,584

$

331,711


4%

Fees


103,918


109,917


(5)%



329,387


308,230


7%

Total service revenue


214,193


222,679


(4)%



672,971


639,941


5%

Inventory sales revenue


115,489


108,863


6%



384,627


353,906


9%

Total revenue


329,682


331,542


(1)%



1,057,598


993,847


6%

Costs of services


33,038


39,223


(16)%



108,107


118,026


(8)%

Cost of inventory sold


102,993


96,253


7%



344,763


320,972


7%

Selling, general and administrative expenses


108,578


110,186


(1)%



336,475


309,203


9%

Operating expenses


276,063


264,158


5%



869,960


803,581


8%

Operating income


53,619


67,384


(20)%



187,638


190,266


(1)%

Operating income as a % of total revenue


16.3%


20.3%


(400) bps



17.7%


19.1%


(140) bps

Non-GAAP adjusted operating income*


75,055


84,588


(11)%



239,563


225,454


6%

Net income attributable to stockholders


32,336


45,387


(29)%



121,273


121,239


0%

Non-GAAP adjusted net income attributable to
stockholders*


49,276


54,592


(10)%



159,638


148,266


8%

Diluted EPS attributable to stockholders

$

0.29

$

0.41


(29)%


$

1.09

$

1.10


(1)%

Non-GAAP diluted adjusted EPS attributable to
stockholders*

$

0.44

$

0.49


(10)%


$

1.43

$

1.35


6%

Effective tax rate


28.8%


25.3%


350 bps



26.0%


28.6%


(260) bps

Total GTV


1,270,258


1,321,379


(4)%



4,072,439


3,962,386


3%

Service GTV


1,154,769


1,212,516


(5)%



3,687,812


3,608,480


2%

Service revenue as a % of total GTV - Rate


16.9%


16.9%


bps



16.5%


16.2%


30 bps

Inventory GTV


115,489


108,863


6%



384,627


353,906


9%

Service revenue as a % of total revenue


65.0%


67.2%


(220) bps



63.6%


64.4%


(80) bps

Inventory sales revenue as a % of total revenue


35.0%


32.8%


220 bps



36.4%


35.6%


80 bps

Cost of inventory sold as a % of operating expenses


37.3%


36.4%


90 bps



39.6%


39.9%


(30) bps

Service GTV as a % of total GTV - Mix


90.9%


91.8%


(90) bps



90.6%


91.1%


(50) bps

Inventory sales revenue as a % of total GTV - Mix


9.1%


8.2%


90 bps



9.4%


8.9%


50 bps

Segment Overview













(in U.S $000's)

Three months ended September 30, 2021


Nine months ended September 30, 2021


A&M

Other

Consolidated


A&M

Other

Consolidated

Service revenue

$

178,344

35,849

$

214,193


$

560,573

112,398

$

672,971

Inventory sales revenue


115,489


115,489



384,627


384,627

Total revenue


293,833

35,849


329,682



945,200

112,398


1,057,598

Ancillary and logistical service expenses


11,433


11,433



38,521


38,521

Other costs of services


19,751

1,854


21,605



63,326

6,260


69,586

Cost of inventory sold


102,993


102,993



344,763


344,763

SG&A expenses


96,194

12,384


108,578



301,956

34,519


336,475

Segment profit

$

74,895

10,178

$

85,073


$

235,155

33,098

$

268,253

Total GTV


1,270,258

N/A 


N/A 



4,072,439

N/A 


N/A 

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


14.0%

N/A 


N/A 



13.8%

N/A 


N/A 

 



(in U.S $000's)

Three months ended September 30, 2020


Nine months ended September 30, 2020


A&M

Other

Consolidated


A&M

Other

Consolidated

Service revenue

$

188,949

$

33,730

$

222,679


$

543,340

$

96,601

$

639,941

Inventory sales revenue


108,863



108,863



353,906



353,906

Total revenue


297,812


33,730


331,542



897,246


96,601


993,847

Ancillary and logistical service expenses



16,550


16,550




45,368


45,368

Other costs of services


21,733


940


22,673



69,018


3,640


72,658

Cost of inventory sold


96,253



96,253



320,972



320,972

SG&A expenses


103,933


6,253


110,186



290,077


19,126


309,203

Segment profit

$

75,893

$

9,987

$

85,880



217,179


28,467


245,646

Total GTV


1,321,379


N/A 


N/A 



3,962,386


N/A 


N/A 

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


14.3%


N/A 


N/A 



13.7%


N/A 


N/A 

Q3 2021 Consolidated Performance Overview

In response to the COVID-19 pandemic, in March 2020, we transitioned all of 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 decreased 4% to $1.3 billion and decreased 5% when excluding the impact of foreign exchange in Q3 2021. GTV volume decreased primarily driven by an unfavourable supply environment across all regions, as well as auction calendar shifts of $34 million from the impact of the COVID-19 pandemic that were shifted from first half of 2020 into Q3 2020 that did not repeat in Q3 2021. These decreases were partially offset by the continued strong price performance experienced across all regions due to high demand for used equipment, predominantly in the construction and transportation sectors. Total GTV decreased in International driven by the auction shifts of (1) Moerdijk, Netherlands, (2) Polotitlan, Mexico and (3) Ocana, Spain auctions in Q3 2020 and lower volumes selling through our online channels driven by unfavourable supply environment, partially offset by positive year-over-year performances in Australia including a new agricultural event. Total GTV also decreased in Canada due to a tight supply market which led to an unfavourable year-over-year performance mainly in our Western region, partially offset by an increased volume from providing escrow services for private brokered transactions in RBFS. Total GTV volumes remained flat in the US despite a large dispersal of $99 million of pipeline construction equipment in a single-owner auction event in New Mexico and Texas, and higher volumes selling through our GovPlanet business from the new non-rolling and rolling stock contracts effective June 1, 2021. Offsetting these increases, the US saw lower supply from our US strategic accounts in the rental and finance sectors which had grown significantly in the prior year. 

Total revenue decreased 1% to $329.7 million in Q3 2021, with total service revenue decreasing by 4%, offset by an increase in  inventory sales revenue by 6%.

Service revenue decreased 4%, with fees revenue decreasing 5% and commissions revenue decreasing 2%. Fee revenue decreased 5% primarily due to lower fees on mix of lower proportion of small value lots across all regions, and lower fees from our Ancillary services as some sellers have elected to forgo paint or repair services driven by a strong market demand for used equipment and lower unit of volumes in the construction and transportation end markets. These decreases were partially offset by higher fee revenue from the acquisition of Rouse, and the continued growth in RBFS fee revenue. Fees revenue also increased due to the implementation of the revised global buyer fee structure on May 1, 2021 and the re-instatement of fees at the Canadian on-the-farm auctions which were waived in Q3 2020 as part of our COVID-19 pandemic response. Commissions revenue decreased 2%, partly due to the decrease in Service GTV of 5%, offset by higher rates performance in the US attributable to a lower volume of US strategic accounts, and stronger straight commission rate performance in our GovPlanet business driven by favourable mix of contracts.

Inventory sales revenue increased 6% primarily in International, offset by the US and Canada. The improved year-over-year performance in our International region was driven by an increased activity in Australia combined with a new agricultural event. In addition, we saw increased volumes sold through our GovPlanet business as a result of the new non-rolling and rolling stock contracts effective June 1, 2021 and higher volumes due to the government shutdowns in the prior year in response to the COVID-19 pandemic. These increases were partially offset by lower inventory sales revenue in the US from an unfavourable supply environment and the non-repeat of several inventory contracts. Similarly, we saw lower volumes in Canada driven by a tight supply market.

Costs of services decreased 16% to $33.0 million. This decrease was primarily due to lower ancillary and logistical service expenses, in line with the decrease in ancillary fees as some sellers have elected to forgo paint or repair services driven by a strong market demand for used equipment and lower unit of volumes in the construction and transportation end markets. In addition, lower activity in line with lower GTV contributed to cost reductions in inspection and advertising expenses, partially offset by higher costs incurred to support the increased activity in our GovPlanet business and the inclusion of the third full quarter of costs of services from Rouse since acquisition.

Cost of inventory increased 7% to $103.0 million, primarily in line with higher inventory sales revenue. Cost of inventory sold increased at a higher rate than the increase of inventory sales revenue, indicating a slight increase in the revenue rates primarily in our US region.

Selling, general and administrative ("SG&A") expenses decreased 1% to $108.6 million primarily due to the non-repeat of a prior year one-time $4.3 million severance costs related to the realignment of leadership to support the new global operations organization, and lower share based payments. These decreases were partially offset by higher wages, salaries and benefit expenses driven by higher headcount to support our growth initiatives and an unfavourable impact of foreign exchange fluctuation. We also saw higher building, facilities and technology costs incurred in our GovPlanet business as a result of the new non-rolling and rolling stock contracts effective June 1, 2021 and higher professional fees related to SOX compliance, consulting and legal.

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 Canadian dollar, Australian dollar, and the Euro exchange rates relative to the U.S. dollar.

Net income attributable to stockholders decreased 29% to $32.3 million primarily related to lower operating income. Non-GAAP adjusted net income attributed to stockholders* decreased 10% to $49.3 million in Q3 2021 compared to $54.6 million in Q3 2020.

Primarily for the same reasons noted above, diluted EPS attributable to stockholders decreased 29% to $0.29 per share for Q3 2021 from $0.41 per share in Q3 2020. Non-GAAP diluted adjusted EPS attributable to stockholders* decreased 10% to $0.44 per share in Q3 2021.

Dividend Information

Quarterly dividend
On November 3, 2021, the Company declared a quarterly cash dividend of $0.25 per common share payable on December 15, 2021 to shareholders of record on November 24, 2021.

Q3 2021 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended September 30, 2021 at 8am Pacific time / 11am Eastern time / 3pm GMT on November 5, 2021. The replay of the webcast will be available through December 5, 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, and growth and value 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 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 September 30, 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 – 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 September 30, 


Nine months ended September 30, 






% Change






% Change



2021


2020

2021 over 2020



2021


2020

2020 over 2019

GTV

$

1,270,258

$

1,321,379

(4)%


$

4,072,439

$

3,962,386

3%

Revenues:












Service revenues

$

214,193

$

222,679

(4)%


$

672,971

$

639,941

5%

Inventory sales revenue


115,489


108,863

6%



384,627


353,906

9%

Total revenues


329,682


331,542

(1)%



1,057,598


993,847

6%

Operating expenses:












Costs of services


33,038


39,223

(16)%



108,107


118,026

(8)%

Cost of inventory sold


102,993


96,253

7%



344,763


320,972

7%

Selling, general and administration expenses


108,578


110,186

(1)%



336,475


309,203

9%

Acquisition-related costs


10,255


100%



16,226


100%

Depreciation and amortization expenses


21,907


18,436

19%



64,912


55,586

17%

Gain on disposition of property, plant and equipment


(1,068)


(276)

287%



(1,311)


(1,536)

(15)%

Foreign exchange (gain) loss


360


336

7%



788


1,330

(41)%

Total operating expenses


276,063


264,158

5%



869,960


803,581

8%

Operating income


53,619


67,384

(20)%



187,638


190,266

(1)%

Interest expense


(8,807)


(8,737)

1%



(26,620)


(26,801)

(1)%

Other income, net


602


2,280

(74)%



2,800


6,714

(58)%

Income before income taxes


45,414


60,927

(25)%



163,818


170,179

(4)%

Income tax expense


13,057


15,437

(15)%



42,541


48,741

(13)%

Net income

$

32,357

$

45,490

(29)%


$

121,277

$

121,438

(0)%

Net income attributable to:












Stockholders

$

32,336

$

45,387

(29)%


$

121,273

$

121,239

0%

Non-controlling interests


21


103

(80)%



4


199

(98)%


$

32,357

$

45,490

(29)%


$

121,277

$

121,438

(0)%

Earnings per share attributable to stockholders:












Basic

$

0.29

$

0.42

(31)%


$

1.10

$

1.11

(1)%

Diluted

$

0.29

$

0.41

(29)%


$

1.09

$

1.10

(1)%

Weighted average number of share outstanding:












Basic


110,410,172


109,018,469

1%



110,233,851


108,887,026

1%

Diluted


111,391,396


110,369,718

1%



111,333,247


110,060,712

1%

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








September 30, 2021


December 31, 2020







Assets






Cash and cash equivalents

$

362,612


$

278,766

Restricted cash


105,742



28,129

Trade and other receivables


253,715



135,001

Less: allowance for credit losses


(4,138)



(5,467)

Inventory


64,201



86,278

Other current assets


31,796



27,274

Income taxes receivable


11,484



6,797

Total current assets


825,412



556,778







Property, plant and equipment


466,162



492,127

Other non-current assets


149,819



147,608

Intangible assets


285,148



300,948

Goodwill


837,708



840,610

Deferred tax assets


12,100



13,458

Total assets

$

2,576,349


$

2,351,529







Liabilities and Equity






Auction proceeds payable

$

428,555


$

214,254

Trade and other payables


228,939



243,786

Income taxes payable


5,033



17,032

Short-term debt


18,481



29,145

Current portion of long-term debt


1,172



10,360

Total current liabilities


682,180



514,577







Long-term debt


632,520



626,288

Other non-current liabilities


153,560



153,000

Deferred tax liabilities


45,732



45,265

Total liabilities


1,513,992



1,339,130







Commitments and Contingencies






Stockholders' equity:






Share capital:






Common stock; no par value, unlimited shares






authorized, issued and outstanding shares:






110,467,596  (December 31, 2020: 109,876,428)


219,609



200,451

Additional paid-in capital


57,595



49,171

Retained earnings


836,759



791,918

Accumulated other comprehensive loss


(52,022)



(34,295)

Stockholders' equity


1,061,941



1,007,245

Non-controlling interest


416



5,154

Total stockholders' equity


1,062,357



1,012,399

Total liabilities and equity

$

2,576,349


$

2,351,529

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








Nine months ended September 30,


2021


2020

Cash provided by (used in):







Operating activities:







Net income


$

121,277


$

121,438

Adjustments for items not affecting cash:







Depreciation and amortization expenses



64,912



55,586

Share-based payments expense



23,306



13,556

Deferred income tax expense



2,228



8,250

Unrealized foreign exchange (gain) loss



(98)



2,049

Gain on disposition of property, plant and equipment



(1,311)



(1,536)

Amortization of debt issuance costs



2,155



2,375

Amortization of right-of-use assets



9,458



9,194

Gain on contingent consideration from equity investment





(1,700)

Other, net



2,253



2,427

Net changes in operating assets and liabilities



79,938



53,912

Net cash provided by operating activities



304,118



265,551

Investing activities:







Acquisition of Rouse, net of cash acquired



728



Property, plant and equipment additions



(6,984)



(9,865)

Proceeds on disposition of property, plant and equipment



1,667



16,277

Intangible asset additions



(25,601)



(19,886)

Issuance of loans receivable



(2,622)



(2,985)

Repayment of loans receivable



436



355

Distribution from equity investment





4,212

Proceeds on contingent consideration from equity investment





1,700

Net cash used in investing activities



(32,376)



(10,192)

Financing activities:







Share repurchase





(53,170)

Dividends paid to stockholders



(76,144)



(67,639)

Acquisition of remaining interest in NCI



(5,556)



Dividends paid to non-controlling interests



(104)



Proceeds from exercise of options and share option plans



13,915



40,194

Payment of withholding taxes on issuance of shares



(9,160)



(3,870)

Net increase (decrease) in short-term debt



(9,271)



13,442

Repayment of long-term debt



(5,328)



(11,134)

Debt issue costs



(3,163)



(2,038)

Repayment of finance lease obligations



(8,445)



(6,927)

Net cash used in financing activities



(103,256)



(91,142)

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



(7,027)



5,826

Increase



161,459



170,043

Beginning of period



306,895



420,256

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


$

468,354


$

590,299

Selected Data
(Unaudited)

Total auction metrics




Three months ended September 30, 


Nine months ended September 30, 




% Change




 

% Change


2021

2020

2021 over 2020


2021

2020

2021 over 2020

Number of auction sales days

128

120

7%


461

433

6%

Bids per lot sold *

26

25

4%


27

24

13%

Total lots sold *

107,825

142,472

(24)%


372,290

392,234

(5)%


* Management reviews industrial equipment auction metrics excluding GovPlanet; as a result, GovPlanet business metrics are excluded from these metrics

Non-GAAP Measures

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

Non-GAAP Adjusted Operating Income* Reconciliation
We believe that non-GAAP adjusted operating income* provides useful information about the growth or decline of our operating income for the relevant financial period and eliminates the financial impact of adjusting items we do not consider to be part of our normal operating results.

Non-GAAP adjusting operating income* eliminates the financial impact of adjusting items which are significant recurring and non-recurring items that we do not consider to be part of our normal operating results, such as share-based payments expense, acquisition-related costs, amortization of acquired intangible assets, management reorganization costs, and certain other items, which the Company refers to as 'adjusting items'.

Beginning in the third quarter of 2021, we updated the calculation of non-GAAP adjusted operating income* to add-back share-based payments expense, all acquisition-related costs (including any share based continuing employment costs recognized in acquisition-related costs), amortization of acquired intangible assets, and gain or loss on disposition of property, plant and equipment. These adjustments have been applied retrospectively to all periods presented.

The following table reconciles non-GAAP adjusted operating income* to operating income, which is the most directly comparable GAAP measure in our consolidated income statements.














Three months ended September 30, 




Nine months ended September 30, 






% Change






% Change

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

2021

2020

2021 over 2020


2021

2020

2021 over 2020

Operating income

$

53,619

$

67,384

(20)%


$

187,638

$

190,266

(1)%

Share-based payments expense


5,627


8,568

(34)%



16,945


17,329

(2)%

Acquisition-related costs


10,255


100%



16,226


100%

Amortization of acquired intangible assets


6,622


4,993

33%



20,065


15,476

30%

Gain on disposition of property, plant and equipment


(1,068)


(276)

287%



(1,311)


(1,536)

(15)%

Severance



3,919

(100)%




3,919

(100)%

Non-GAAP adjusted operating income*

$

75,055

$

84,588

(11)%


$

239,563

$

225,454

6%



(1)

Please refer to pages 12-14 for a summary of adjusting items during the three and nine months ended September 30, 2021 and September 30, 2020.

(2)

Non-GAAP adjusted operating income* represents operating income excluding the effects of adjusting items.

The following table reconciles non-GAAP adjusted operating income* to operating income on a quarterly basis, which is the most directly comparable GAAP measure in our consolidated income statements.











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

Q3 2021

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Q4 2019

Q3 2019

Operating income

53,619

89,517

44,502

72,894

67,384

88,800

34,082

71,484

40,160

Share-based payments expense

5,627

7,540

3,778

4,550

8,568

6,355

2,406

277

5,660

Acquisition-related costs

10,255

3,049

2,922

6,014

25

45

Amortization of acquired intangible assets

6,622

6,802

6,641

5,622

4,993

4,935

5,548

5,548

5,548

Gain on disposition of property, plant and equipment

(1,068)

(175)

(68)

(23)

(276)

(1,213)

(47)

(36)

(821)

Severance

3,919

Non-GAAP adjusted operating income*

75,055

106,733

57,775

89,057

84,588

98,877

41,989

77,298

50,592



(1)

Please refer to pages 12-14 for a summary of adjusting items for each quarter presented above.

(2)

Non-GAAP adjusted operating income* represents operating income excluding the effects of adjusting items.

Non-GAAP Adjusted Net Income Attributable to Stockholders* and Non-GAAP Diluted Adjusted EPS Attributable to Stockholders* Reconciliation
The Company believes that non-GAAP 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. Non-GAAP diluted adjusted EPS attributable to stockholders* eliminates the financial impact of adjusting items which are after-tax effects of significant recurring and non-recurring items that the Company does not consider to be part of the normal operating results, such as share-based payments expense, acquisition-related costs, amortization of acquired intangible assets, management reorganization costs, and certain other items, which the Company refers to as 'adjusting items'.

Beginning in the third quarter of 2021, the Company updated the calculation of non-GAAP diluted adjusted EPS attributable to stockholders* to add-back share-based payments expense and all acquisition-related costs (including any share based continuing employment costs recognized in acquisition-related costs), amortization of acquired intangible assets, and gain or loss on disposition of property, plant and equipment. These adjustments have been applied retrospectively to all periods presented.

The following table reconciles non-GAAP adjusted net income attributable to stockholders* and non-GAAP diluted adjusted EPS attributable to stockholders* to net income attributable to stockholders and diluted EPS attributable to stockholders, which are the most directly comparable GAAP measures in the consolidated income statements.













(in U.S. $000's, except share and per share data, and percentages)

Three months ended September 30, 


Nine months ended September 30, 






% Change






% Change


2021

2020

2021 over 2020


2021

2020

2021 over 2020

Net income attributable to stockholders

$

32,336

$

45,387

(29)%


$

121,273

$

121,239

0%

Share-based payments expense


5,627


8,568

(34)%



16,945


17,329

(2)%

Acquisition-related costs


10,255


100%



16,226


100%

Amortization of acquired intangible assets


6,622


4,993

33%



20,065


15,476

30%

Gain on disposition of property, plant and equipment


(1,068)


(276)

287%



(1,311)


(1,536)

(15)%

Severance



3,919

(100)%




3,919

(100)%

Related tax effects of the above


(4,496)


(7,999)

(44)%



(13,560)


(14,389)

(6)%

Change in uncertain tax provision - tax effect



—%




6,228

(100)%

Non-GAAP adjusted net income attributable to stockholders*

$

49,276

$

54,592

(10)%


$

159,638

$

148,266

8%

Weighted average number of dilutive shares outstanding


111,391,396


110,369,718

1%



111,333,247


110,060,712

1%













Diluted earnings per share attributable to stockholders

$

0.29

$

0.41

(29)%


$

1.09

$

1.10

(1)%

Non-GAAP diluted adjusted EPS attributable to Stockholders*

$

0.44

$

0.49

(10)%


$

1.43

$

1.35

6%



(1)

Please refer to pages 12-14 for a summary of adjusting items for the three and nine months ended September 30, 2021 and September 30, 2020.

(2)

Non-GAAP adjusted net income attributable to stockholders* represents net income attributable to stockholders, excluding the effects of adjusting items.

(3)

Non-GAAP diluted adjusted EPS attributable to stockholders* is calculated by dividing non-GAAP adjusted net income attributable to stockholders*, net of the effect of dilutive securities, by the weighted average number of dilutive shares outstanding.

The following table reconciles non-GAAP adjusted net income attributable to stockholders* and non-GAAP diluted adjusted EPS attributable to stockholders* to net income attributable to stockholders and diluted EPS attributable to stockholders on a quarterly basis, which is the most directly comparable GAAP measures in the consolidated income statements.

(in U.S. $000's, except share and per share data,

and percentages)

Q3 2021

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Q4 2019

Q3 2019

Net income attributable to stockholders

32,336

60,749

28,188

48,856

45,387

53,043

22,809

51,573

25,266

Share-based payments expense

5,627

7,540

3,778

4,550

8,568

6,355

2,406

277

5,660

Acquisition-related costs

10,255

3,049

2,922

6,014

25

45

Amortization of acquired intangible assets

6,622

6,802

6,641

5,622

4,993

4,935

5,548

5,548

5,548

Gain on disposition of property, plant and equipment

(1,068)

(175)

(68)

(23)

(276)

(1,213)

(47)

(36)

(821)

Severance

3,919

Related tax effects of the above

(4,496)

(3,598)

(5,466)

(6,154)

(7,999)

(4,068)

(2,322)

(2,846)

(3,299)

Change in uncertain tax provision - tax effect

1,527

6,228

Non-GAAP adjusted net income attributable to stockholders*

49,276

74,367

35,995

60,392

54,592

65,280

28,394

54,541

32,399

Weighted average number of dilutive shares outstanding

111,391,396

111,334,184

111,267,392

110,310,984

110,369,718

109,323,343

110,482,837

109,759,123

109,381,173











Diluted earnings per share attributable to stockholders

0.29

0.55

0.25

0.44

0.41

0.49

0.21

0.47

0.23

Non-GAAP diluted adjusted EPS attributable to Stockholders*

0.44

0.67

0.32

0.55

0.49

0.60

0.26

0.50

0.30



(1)

Please refer to pages 12-14 for a summary of adjusting items for each quarter presented above.

(2)

Non-GAAP adjusted net income attributable to stockholders* represents net income attributable to stockholders, excluding the effects of adjusting items.

(3)

Non-GAAP diluted adjusted EPS attributable to stockholders* is calculated by dividing non-GAAP adjusted net income attributable to stockholders*, net of the effect of dilutive securities, by the weighted average number of dilutive shares outstanding.

Non-GAAP Adjusted EBITDA*
The Company believes non-GAAP adjusted EBITDA* provides useful information about the growth or decline of our net income when compared between different financial periods. The Company uses non-GAAP adjusted EBITDA as a key performance measure because we believe it facilitates operating performance comparisons from period to period.

Beginning in the third quarter of 2021, the Company updated the calculation of non-GAAP adjusted EBITDA* to add-back share-based payments expense and all acquisition-related costs (including any share based continuing employment costs recognized in acquisition-related costs), and gain or loss on disposition of property, plant and equipment. These adjustments have been applied retrospectively to all periods presented.

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





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

Three months ended September 30, 


Nine months ended September 30, 






% Change






% Change


2021

2020

2021 over 2020


2021

2020

2021 o ver 2020

Net income

$

32,357

$

45,490

(29)%


$

121,277

$

121,438

(0)%

Add: depreciation and amortization expenses


21,907


18,436

19%



64,912


55,586

17%

Add: interest expense


8,807


8,737

1%



26,620


26,801

(1)%

Less: interest income


(375)


(510)

(26)%



(1,009)


(1,775)

(43)%

Add: income tax expense


13,057


15,437

(15)%



42,541


48,741

(13)%

EBITDA


75,753


87,590

(14)%



254,341


250,791

1%

Share-based payments expense


5,627


8,568

(34)%



16,945


17,329

(2)%

Acquisition-related costs


10,255


100%



16,226


100%

Gain on disposition of property, plant and equipment


(1,068)


(276)

287%



(1,311)


(1,536)

(15)%

Severance



3,919

(100)%




3,919

(100)%

Non-GAAP adjusted EBITDA*

$

90,567

$

99,801

(9)%


$

286,201

$

270,503

6%



(1)

Please refer to pages 12-14 for a summary of adjusting items during the three and nine months ended September 30, 2021 and September 30, 2020.

(2)

Non-GAAP adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, income tax expense, and subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, and excluding the effects of any non-recurring or unusual adjusting items.

The following table reconciles non-GAAP adjusted EBITDA* to net income on a quarterly basis, which is the most directly comparable GAAP measures in the consolidated income statements.











(in U.S. $000's, except share and per share data,










and percentages)

Q3 2021

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Q4 2019

Q3 2019

Net income

32,357

60,781

28,139

48,920

45,490

53,119

22,829

51,565

25,272

Add: depreciation and amortization expenses

21,907

21,935

21,071

19,335

18,436

17,857

19,293

18,582

17,692

Add: interest expense

8,807

8,867

8,946

8,767

8,737

8,882

9,182

10,254

10,090

Less: interest income

(375)

(332)

(303)

(563)

(510)

(393)

(872)

(1,367)

(517)

Add: income tax expense

13,057

21,065

8,419

16,789

15,437

27,656

5,648

12,823

6,760

EBITDA

75,753

112,316

66,272

93,248

87,590

107,121

56,080

91,857

59,297

Share-based payments expense

5,627

7,540

3,778

4,553

8,568

6,355

2,406

277

5,660

Acquisition-related costs

10,255

3,049

2,922

6,014

25

45

Gain on disposition of property, plant and equipment

(1,068)

(175)

(68)

(23)

(276)

(1,213)

(47)

(36)

(821)

Severance

3,919

Non-GAAP adjusted EBITDA*

90,567

122,730

72,904

103,792

99,801

112,263

58,439

92,123

64,181



(1)

Please refer to pages 12-14 for a summary of adjusting items for each quarter presented above.

(2)

Non-GAAP adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, income tax expense, and subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, and excluding the effects of any non-recurring or unusual adjusting items.

The following table reconciles non-GAAP adjusted EBITDA* to net income on an annual basis, which is the most directly comparable GAAP measures in the consolidated income statements.








Year ended December 31,






% Change



2020 over

2019 over

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

2020

2019

2018

2019

2018

Net income

$

170,358

149,140

121,506

14%

23%

Add: depreciation and amortization expenses


74,921

70,501

66,614

6%

6%

Add: interest expense


35,568

41,277

44,527

(14)%

(7)%

Less: interest income


(2,338)

(3,802)

(2,888)

(39)%

32%

Add: income tax expense


65,530

41,623

31,006

57%

34%

EBITDA


344,039

298,739

260,765

15%

15%

Share-based payments expense


21,882

16,405

23,089

33%

(29)%

Acquisition-related costs


6,014

777

5,093

674%

(85)%

Gain on disposition of property, plant and equipment


(1,559)

(1,107)

(2,731)

41%

(59)%

Severance


3,919

100%

—%

IronPlanet reorganization costs




1,501

—%

(100)%

Gain on sale of equity accounted for investment


(4,935)

—%

4(100)%

Non-GAAP adjusted EBITDA*

$

374,295

314,814

282,782

19%

11%



(1)

Please refer to pages 12-14 for a summary of adjusting items for each year presented above.

(2)

Non-GAAP adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, income tax expense, and subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, and excluding the effects of any non-recurring or unusual adjusting items.

Adjusting Items Non-GAAP Measures

Beginning of third quarter of 2021, the Company has begun adjusting for the following items that we do not consider to be part of our  normal operating results. These have been applied retrospectively to all periods presented. The following describes the nature of these adjusting items recognized in each period.

  • Share-based payments expense - includes stock option compensation expense, and compensation expense for equity classified share units, liability classified share units, and employer contributions related to our employee share purchase plan.

  • Amortization of acquired intangible assets – includes amortization of all intangible assets acquired primarily from the acquisitions of IronPlanet, Rouse and Mascus.

  • Gain or loss on disposition of property, plant and equipment – includes any gain or loss recognized for the difference between the sales proceeds and the carrying amount of the disposed property, plant and equipment.

The following are additional adjusting items by quarter which the Company does not consider to be part of its normal operating results.

Additional adjusting items by quarter were:

Recognized in the third quarter of 2021

  • $10.3 million ($8.3 million after tax, or $0.07 per diluted share) of acquisition-related costs related to the acquisitions of Rouse, Euro Auctions and SmartEquip.

Recognized in the second quarter of 2021

  • There were no adjusting items recognized in the second quarter of 2021.

Recognized in the first quarter of 2021

  • There were no adjusting 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, of which $364,000 has been retrospectively recognized within share-based payments expense as an adjusting item.

Recognized in the second quarter of 2020

  • $6.2 million ($0.06 per diluted share) tax expense related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements, of which $0.8 million relates to current income tax expense.

Recognized in the first quarter of 2020

  • There were no adjusting 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, which has been included in share-based payments expense adjusting item retrospectively.

Recognized in the third quarter of 2019

  • There were no adjusting items recognized in the third quarter of 2019.

Recognized in the second quarter of 2019

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

Recognized in the first quarter of 2019

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

Recognized in the fourth quarter of 2018

  • There were no adjustment items recognized in the fourth quarter of 2018.

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.

Cision View original content:https://www.prnewswire.com/news-releases/ritchie-bros-reports-third-quarter-2021-results-301417112.html

SOURCE Ritchie Bros. Auctioneers

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