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Ritchie Bros. reports third quarter 2019 results

PR Newswire - Thu Nov 7, 4:15PM CST

VANCOUVER , Nov. 7, 2019 /PRNewswire/ - Ritchie Bros . Auctioneers Incorporated (NYSE & TSX: RBA, the "Company" or " Ritchie Bros .") reported the following results for the three months ended September 30, 2019 :

Ritchie Bros. Auctioneers (CNW Group/Ritchie Bros. Auctioneers)

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

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

Consolidated results:

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

Auctions & Marketplaces segment results: 

  • GTV 1 in Q3 2019 increased 4% to $1.1 billion and increased 5% when excluding the impact of foreign exchange as compared to Q3 2018
  • A&M total revenue in Q3 2019 increased 20% to $261.3 million as compared to Q3 2018
    • Service revenue in Q3 2019 increased 12% to $150.1 million as compared to Q3 2018
    • Inventory sales revenue in Q3 2019 increased 32% to $111.2 million as compared to Q3 2018

Other Services segment results:

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

Other Company development:

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

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

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

_______________________________

1  Gross Transaction Value ("GTV") represents total proceeds from all items sold at the Company's live on site auctions and online marketplaces. GTV is not a

measure of financial performance, liquidity, or revenue, and is not presented in the Company's consolidated financial statements.



The Company presents both GAAP and non-GAAP measures to provide investors with additional information. Providing these non-GAAP measures along with

GAAP measures allows for increased comparability of our ongoing performance from period to period. Non-GAAP financial measures referred to in this news

release are labeled as "non-GAAP measure" or designated as such with an asterisk (*). Please see page 9-11 for explanations of why the Company uses these

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

 

Financial Overview

(Unaudited)







Three months ended September 30,

Nine months ended September 30,











% Change









% Change

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



2019



2018

2019 over

2018



2019



2018

2019 over

2018

Service revenue:





















Commissions

$

90,928

$

87,548

4%

$

317,674

$

313,539

1%

Fees



87,649



73,826

19%



267,881



238,197

12%

Total service revenue



178,577



161,374

11%



585,555



551,736

6%

Inventory sales revenue



111,219



83,972

32%



400,892



262,318

53%

Total revenue



289,796



245,346

18%



986,447



814,054

21%

Service revenue as a % of total revenue



61.6%



65.8%

(420) bps



59.4%



67.8%

(840) bps

Inventory sales revenue as a % of total revenue



38.4%



34.2%

420 bps



40.6%



32.2%

840 bps

Costs of services



36,382



33,053

10%



122,719



112,743

9%

Cost of inventory sold



102,410



74,341

38%



372,703



231,834

61%

Selling, general and administrative expenses



93,691



88,323

6%



286,589



287,052

(0%)

Operating expenses



249,636



214,152

17%



834,729



685,192

22%

Cost of inventory sold as a % of operating expenses



41.0%



34.7%

630 bps



44.6%



33.8%

1080 bps

Operating income



40,160



31,194

29%



151,718



128,862

18%

Operating income margin



13.9%



12.7%

120 bps



15.4%



15.8%

(40) bps

Net income attributable to stockholders



25,266



23,138

9%



97,466



85,993

13%

Adjusted net income attributable to stockholders





















(non-GAAP measure)



25,266



19,328

31%



97,466



82,183

19%

Diluted earnings per share attributable to stockholders

$

0.23

$

0.21

10%

$

0.89

$

0.79

13%

Diluted adjusted EPS attributable to stockholders





















(non-GAAP measure)

$

0.23

$

0.18

28%

$

0.89

$

0.75

19%

Effective tax rate



21.1%



17.2%

390 bps



22.8%



18.2%

460 bps























Total GTV



1,084,241



1,039,427

4%



3,756,679



3,626,551

4%

Service revenue as a % of total GTV- Rate



16.5%



15.5%

100 bps



15.6%



15.2%

40 bps

Inventory sales revenue as a % of total GTV- Mix



10.3%



8.1%

220 bps



10.7%



7.2%

350 bps

 

Segment Overview



























(in U.S $000's)

Three months ended September 30, 2019

Nine months ended September 30, 2019





A&M



Other



Consolidated



A&M



Other



Consolidated

Service revenue

$

150,093

$

28,484

$

178,577

$

494,580

$

90,975

$

585,555

Inventory sales revenue



111,219



-



111,219



400,892



-



400,892

Total revenue



261,312



28,484



289,796



895,472



90,975



986,447

Ancillary and logistical service expenses



-



13,285



13,285



-



43,516



43,516

Other costs of services



21,431



1,666



23,097



74,799



4,404



79,203

Cost of inventory sold



102,410



-



102,410



372,703



-



372,703

SG&A expenses



88,138



5,553



93,691



268,786



17,803



286,589

Segment profit

$

49,333

$

7,980

$

57,313

$

179,184

$

25,252

$

204,436

Total GTV



1,084,241



N/A



N/A



3,756,679



N/A



N/A

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



13.8%



N/A



N/A



13.2%



N/A



N/A



























(in U.S $000's)

Three months ended September 30, 2018

Nine months ended September 30, 2018





A&M



Other



Consolidated



A&M



Other



Consolidated

Service revenue

$

134,604

$

26,770

$

161,374

$

463,076

$

88,660

$

551,736

Inventory sales revenue



83,972



-



83,972



262,318



-



262,318

Total revenue



218,576



26,770



245,346



725,394



88,660



814,054

Ancillary and logistical service expenses



-



11,682



11,682



-



46,242



46,242

Other costs of services



20,059



1,312



21,371



62,888



3,613



66,501

Cost of inventory sold



74,341



-



74,341



231,834



-



231,834

SG&A expenses



83,542



4,781



88,323



272,503



14,549



287,052

Segment profit

$

40,634

$

8,995

$

49,629

$

158,169

$

24,256

$

182,425

Total GTV



1,039,427



N/A



N/A



3,626,551



N/A



N/A

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



12.9%



N/A



N/A



12.8%



N/A



N/A

 

Consolidated Performance Overview

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

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

Service revenue  growth of 11% was driven by commissions revenue increasing 4% and fee revenue increasing 19%. The increase in commissions revenue was in line with higher Service GTV of 2%, and due to strong performance in our US region, where the Company experienced volume growth through both live auctions and weekly featured online businesses, combined with strong growth in the Company's global guarantee rates. The increase in fee revenue was driven primarily by the buyer fees harmonization, fee growth from higher GTV and RBFS fee revenue growth.

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

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

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

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

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



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

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

Dividend Information

Quarterly dividend

The Company declared on November 6, 2019 , a quarterly cash dividend of $0.20 per common share payable on December 18, 2019 to shareholders of record on November 27, 2019 .

Q3 2019 Earnings Conference Call

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

Conference call and webcast details are available at the following link:

https://investor.ritchiebros.com

About Ritchie Bros .

Established in 1958, Ritchie Bros . (NYSE and TSX: RBA) is a global asset management and disposition company, offering customers end-to-end solutions for buying and selling used heavy equipment, trucks and other assets. Operating in a number of sectors, including construction, transportation, agriculture, energy, oil and gas, mining, and forestry, the company's selling channels include: Ritchie Bros .   Auctioneers, the world's largest industrial auctioneer offers live auction events with online bidding; IronPlanet, an online marketplace with featured weekly auctions and providing the exclusive IronClad Assurance® equipment condition certification; Marketplace-E , a controlled marketplace offering multiple price and timing options; Mascus , a leading European online equipment listing service; and Ritchie Bros . Private Treaty, offering privately negotiated sales. The company's suite of multichannel sales solutions also includes RB Asset Solutions, a complete end-to-end asset management and disposition system. Ritchie Bros . also offers sector-specific solutions including GovPlanet, TruckPlanet,  and Kruse Energy Auctioneers , plus equipment financing and leasing through Ritchie Bros . Financial   Services. For more information about Ritchie Bros ., visit RitchieBros.com.

Forward-looking Statements

This news release contains forward-looking statements and forward-looking information within the meaning of applicable U.S. and Canadian securities legislation (collectively, "forward-looking statements"), including, in particular, statements regarding future financial and operational results, including Q4 performance, growth prospects and payment of dividends. Forward-looking statements are statements that are not historical facts and are generally, although not always, identified by words such as "expect", "plan", "anticipate", "project", "target", "potential", "schedule", "forecast", "budget", "estimate", "intend" or "believe" and similar expressions or their negative connotations, or statements that events or conditions "will", "would", "may", "could", "should" or "might" occur. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Forward-looking statements necessarily involve assumptions, risks and uncertainties, certain of which are beyond the Company's control, including the numerous factors that influence the supply of and demand for used equipment; economic and other conditions in local, regional and global sectors; the Company's ability to successfully integrate IronPlanet, and to receive the anticipated benefits of the IronPlanet acquisition; and the risks and uncertainties set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and the Company's Form 10-Q for the quarter ended September 30, 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.

GTV and Selected Condensed Consolidated Financial Information

GTV and Condensed Consolidated Income Statements – Third Quarter

















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















(Unaudited)





















































Three months ended September 30, 2019

Nine months ended September 30, 2019













% Change











% Change





2019



2018



2019 over

2018



2019



2018



2019 over

2018

GTV

$

1,084,241

$

1,039,427



4%

$

3,756,679

$

3,626,551



4%

Revenue:

























Service revenue

$

178,577

$

161,374



11%

$

585,555

$

551,736



6%

Revenue from inventory sales



111,219



83,972



32%



400,892



262,318



53%

Total revenue



289,796



245,346



18%



986,447



814,054



21%

Operating expenses:

























Costs of services



36,382



33,053



10%



122,719



112,743



9%

Cost of inventory sold



102,410



74,341



38%



372,703



231,834



61%

Selling, general and administration expenses



93,691



88,323



6%



286,589



287,052



0%

Acquisition-related costs



45



2,007



(98)%



752



5,039



(85)%

Depreciation and amortization expenses



17,692



16,723



6%



51,919



49,451



5%

Gain on disposition of property, plant and equipment



(821)



(342)



140%



(1,071)



(958)



12%

Foreign exchange loss



237



47



404%



1,118



31



3506%

Total operating expenses



249,636



214,152



17%



834,729



685,192



22%

Operating income



40,160



31,194



29%



151,718



128,862



18%

Interest expense



(10,090)



(10,473)



(4)%



(31,023)



(32,720)



(5)%

Other, net



1,962



7,182



(73)%



5,680



8,995



(37)%

Income before income taxes



32,032



27,903



15%



126,375



105,137



20%

Income tax expense



6,760



4,791



41%



28,800



19,091



51%

Net income

$

25,272

$

23,112



9%

$

97,575

$

86,046



13%

Net income (loss) attributable to:

























Stockholders

$

25,266

$

23,138



9%

$

97,466

$

85,993



13%

Non-controlling interests



6



(26)



(123)%



109



53



106%



$

25,272

$

23,112



9%

$

97,575

$

86,046



13%

Earnings per share attributable

























to stockholders:

























Basic

$

0.23

$

0.21



10%

$

0.90

$

0.80



13%

Diluted

$

0.23

$

0.21



10%

$

0.89

$

0.79



13%

Weighted average number of share outstanding:

























Basic



108,003,390



108,365,427



0%



108,453,525



107,811,391



1%

Diluted



109,381,173



109,887,194



0%



109,634,195



109,133,378



0%

 

Condensed Consolidated Balance Sheets

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

(Unaudited)











September 30,

December 31,



2019

2018

Assets









Cash and cash equivalents

$

309,555

$

237,744

Restricted cash



141,832



67,823

Trade and other receivables



249,925



129,257

Inventory



53,092



113,294

Other current assets



44,364



49,055

Income taxes receivable



10,488



6,365

Total current assets



809,256



603,538











Property, plant and equipment



476,776



486,599

Other non-current assets



148,375



29,395

Intangible assets



234,249



245,622

Goodwill



671,378



671,594

Deferred tax assets



17,797



15,648

Total assets

$

2,357,831

$

2,052,396











Liabilities and Equity









Auction proceeds payable

$

453,278

$

203,503

Trade and other payables



166,796



201,255

Income taxes payable



16,053



2,312

Short-term debt



5,805



19,896

Current portion of long-term debt



18,027



13,126

Total current liabilities



659,959



440,092











Long-term debt



671,301



698,172

Other non-current liabilities



150,400



41,980

Deferred tax liabilities



32,859



35,519

Total liabilities



1,514,519



1,215,763











Commitments









Contingencies









Contingently redeemable performance share units



-



923

Stockholders' equity:









Share capital:









Common stock; no par value, unlimited shares









authorized, issued and outstanding shares:









108,210,335 (December 31, 2018: 108,682,030)



159,773



181,780

Additional paid-in capital



59,289



56,885

Retained earnings



684,231



648,255

Accumulated other comprehensive loss



(65,129)



(56,277)

Stockholders' equity



838,164



830,643

Non-controlling interest



5,148



5,067

Total stockholders' equity



843,312



835,710

Total liabilities and equity

$

2,357,831

$

2,052,396

 

Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of United States dollars)

(Unaudited)













Nine months ended September 30,



2019



2018

Cash provided by (used in):









Operating activities:









Net income

$

97,575

$

86,046

Adjustments for items not affecting cash:









Depreciation and amortization expenses



51,919



49,451

Stock option compensation expense



4,852



6,711

Equity-classified PSU expense



8,754



8,978

Deferred income tax recovery



(4,760)



(3,774)

Unrealized foreign exchange (gain) loss



(129)



501

Gain on disposition of property, plant and equipment



(1,071)



(958)

Amortization of debt issuance costs



2,701



3,032

Gain on disposition of equity investment



-



(4,935)

Other, net



9,892



(3,678)

Net changes in operating assets and liabilities



139,372



(44,227)

Net cash provided by operating activities



309,105



97,147

Investing activities:









Property, plant and equipment additions



(6,915)



(13,394)

Intangible asset additions



(18,377)



(19,410)

Proceeds on disposition of property, plant and equipment



5,610



2,524

Proceeds on disposal of equity investment



-



6,147

Other, net



(1,000)



(4,674)

Net cash used in investing activities



(20,682)



(28,807)

Financing activities:









Share repurchase



(42,012)



-

Dividends paid to stockholders



(60,791)



(56,116)

Issuances of share capital



12,440



27,072

Payment of withholding taxes on issuance of shares



(5,260)



(3,901)

Proceeds from short-term debt



10,519



6,949

Repayment of short-term debt



(24,979)



(3,372)

Repayment of long-term debt



(29,022)



(58,825)

Repayment of finance lease obligations



(4,848)



(2,827)

Other, net



-



(1,176)

Net cash used in financing activities



(143,953)



(92,196)

Effect of changes in foreign currency rates on









cash, cash equivalents, and restricted cash



1,350



(3,215)

Increase (decrease)



145,820



(27,071)

Beginning of period



305,567



331,116

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

$

451,387

$

304,045

 

Selected Data

(Unaudited)

Industrial live on site auction metrics





























Three months ended September 30,

Nine months ended September 30,













% Change











% Change



2019

2018



2019 over

2018

2019

2018



2019 over

2018

Number of auctions



46



45



2%



140



130



8%

Bidder registrations



165,500



123,000



35%



508,750



383,500



33%

Consignors



14,000



13,600



3%



43,000



39,050



10%

Buyers



34,800



31,400



11%



109,050



96,750



13%

Lots



98,400



89,000



11%



305,150



273,500



12%

 

Non-GAAP Measures

This news release references to non-GAAP measures. Non-GAAP measures do not have a standardized meaning and are, therefore, unlikely to be comparable to similar measures presented by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with generally accepted accounting principles.

Adjusted Net Income Attributable to Stockholders* and Diluted Adjusted EPS Attributable to Stockholders* Reconciliation

The Company believes that adjusted net income attributable to stockholders* provides useful information about the growth or decline of the net income attributable to stockholders for the relevant financial period and eliminates the financial impact of adjusting items the Company does not consider to be part of the normal operating results. Diluted Adjusted EPS attributable to stockholders* eliminates the financial impact of adjusting items which are after-tax effects of significant non-recurring items that the Company does not consider to be part of the normal operating results, such as acquisition-related costs, management reorganization costs, and certain other items, which the Company refers to as 'adjusting items'.

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



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

Three months ended September 30,

Nine months ended September 30,













% Change









% Change



2019

2018



2019 over

2018

2019

2018

2019 over

2018

Net income attributable to stockholders

$

25,266

$

23,138



9%

$

97,466

$

85,993

13%

Pre-tax adjusting items:























Severance and retention



-



1,501



(100)%



-



1,501

(100)%

Gain on sale of equity accounted for investment



-



(4,935)



100%



-



(4,935)

100%

Current income tax effect of adjusting items:























Severance and retention



-



(376)



100%



-



(376)

100%

Adjusted net income attributable to stockholders*

$

25,266

$

19,328



31%

$

97,466

$

82,183

19%

Weighted average number of dilutive shares

outstanding



109,381,173



109,887,194



0%



109,634,195



109,133,378

0%

Diluted earnings per share attributable to stockholders

$

0.23

$

0.21



10%

$

0.89

$

0.79

13%

Diluted adjusted EPS attributable to Stockholders*

$

0.23

$

0.18



28%

$

0.89

$

0.75

19%



(1)

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

(2)

Adjusted net income attributable to stockholders* represents net income attributable to stockholders excluding the effects of adjusting items.

(3)

Diluted adjusted EPS attributable to stockholders* is calculated by dividing adjusted net income attributable to stockholders*, net of the effect of dilutive

securities, by the  weighted average number of dilutive shares outstanding.

 

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)

As at and for the 12 months ended September 30,













% Change



2019

2018



2019 over 2018

Short-term debt

$

5.8

$

10.5



(45)%

Long-term debt



689.3



751.8



(8)%

Debt



695.1



762.3



(9)%

Less: cash and cash equivalents



(309.6)



(228.8)



35%

Adjusted net debt*



385.5



533.5



(28)%

Net income

$

133.0

$

122.9



8%

Add: depreciation and amortization expenses



69.1



65.1



6%

Add: interest expense



42.8



43.7



(2)%

Less: interest income



(3.3)



(2.7)



22%

Add: income tax expense



40.7



13.2



208%

Pre-tax adjusting items:













Severance and retention



-



3.7



(100)%

Gain on sale of equity accounted for investment



-



(4.9)



100%

Adjusted EBITDA*

$

282.3

$

241.0



17%

Debt/net income



5.2x



6.2x



(16%)

Adjusted net debt*/adjusted EBITDA*



1.4x



2.2x



(36%)















(1)

Please refer to page 11 for a summary of adjusting items during the trailing 12-months ended September 30, 2019 and September 30, 2018.

(2)

Adjusted EBITDA* is calculated by adding back depreciation and amortization expenses, interest expense, and income tax expense, and subtracting interest

income from net income excluding the pre-tax effects of adjusting items.

(3)

Adjusted net debt* is calculated by subtracting cash and cash equivalents from short and long-term debt.

(4)

Adjusted net debt*/adjusted EBITDA* is calculated by dividing adjusted net debt* by adjusted EBITDA*.

 

Operating Free Cash Flow* ("OFCF") Reconciliation

The Company believes OFCF*, when compared on a trailing 12-month basis to different financial periods provides an effective measure of the cash generated by the business and provides useful information regarding cash flows remaining for discretionary return to stockholders, mergers and acquisitions, or debt reduction. The balance sheet scorecard includes OFCF* as a performance metric. OFCF* is also an element of the performance criteria for certain annual short-term and long-term incentive awards.

The following table reconciles OFCF* to cash provided by operating activities, which is the most directly comparable GAAP measure in, or calculated from, the consolidated statements of cash flows:















(in U.S. $ millions)

12 months ended September 30,













% Change



2019

2018



2019 over 2018

Cash provided by operating activities

$

356.2

$

146.2



144%

Property, plant and equipment additions



10.4



16.1



(35)%

Intangible asset additions



25.1



27.5



(9)%

Proceeds on disposition of property plant and equipment



(13.7)



(4.0)



243%

Net capital spending

$

21.8

$

39.6



(45)%

OFCF*

$

334.4

$

106.6



214%















(1)

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

 

Adjusting items during the trailing 12-months ended September 30, 2019 were:

Recognized in the third quarter of 2019

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

Recognized in the second quarter of 2019

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

Recognized in the first quarter of 2019

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

Recognized in the fourth quarter of 2018

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

Adjusting items during the trailing 12-months ended September 30, 2018 were:

Recognized in the third quarter of 2018

  • $1.5 million ( $1.1 million after tax, or $0.01 per diluted share) of severance and retention costs in a corporate reorganization that followed the IronPlanet acquisition;
  • $4.9 million ( $4.9 million after tax, or $0.04 per diluted share) due to gain on sale of an equity accounted for investment.

Recognized in the second quarter of 2018

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

Recognized in the first quarter of 2018

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

Recognized in the fourth quarter of 2017

  • $2.2 million ( $1.6 million after tax, or $0.02 per diluted share) of severance and retention costs in a corporate reorganization that followed the IronPlanet acquisition;
  • $10.1 million (or $0.10 per diluted share) benefit on remeasurement of deferred taxes due to the Tax Cuts and Jobs Act.

Cision View original content to download multimedia: http://www.prnewswire.com/news-releases/ritchie-bros-reports-third-quarter-2019-results-300954237.html

SOURCE Ritchie Bros . Auctioneers

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