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Ritchie Bros. reports fourth quarter and 2019 annual results

Cision

VANCOUVER , Feb. 27, 2020 /PRNewswire/ - Ritchie Bros . Auctioneers Incorporated (NYSE & TSX: RBA, the "Company", " Ritchie Bros .", "we", "us", or "our") reports results for the fourth quarter and full year ended December 31 , 2019. 

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

Fourth quarter highlights
Net income attributable to stockholders for Q4 2019 increased 45% to $51.6 million , diluted earnings per share ("EPS") attributable to stockholders increased 47% to $0.47 from $0.32 per share, while diluted adjusted EPS attributable to stockholders (non-GAAP measure) increased 38% to $0.44 from $0.32 per share compared to the same period in 2018.

Consolidated results:

  • Total revenue in Q4 2019 decreased 7% to $332.2 million as compared to Q4 2018
    o Service revenue in Q4 2019 increased 10% to $218.5 million as compared to Q4 2018
    o Inventory sales revenue in Q4 2019 decreased 28% to $113.7 million as compared to Q4 2018
  • Total selling, general and administrative expenses ("SG&A") was $95.8 million compared to $95.6 million in Q4 2018
  • Operating income in Q4 2019 increased 27% to $71.5 million as compared to Q4 2018


Auctions & Marketplaces ("A&M") segment results:

  • GTV 1 in Q4 2019 increased 3.5% to $1.4 billion compared to Q4 2018
  • A&M total revenue in Q4 2019 decreased 7% to $298.0 million as compared to Q4 2018
    o Service revenue in Q4 2019 increased 13% to $184.2 million as compared to Q4 2018
    o Inventory sales revenue in Q4 2019 decreased 28% to $113.7 million as compared to Q4 2018


Other Company development:

  • The Company announced on December 16, 2019 that Ann Fandozzi will be joining the Company as its new Chief Executive Officer ("CEO"), and member of the Board of Directors, effective January 6, 2020 .


Full year highlights
Net income attributable to stockholders for 2019 increased 23% to $149.0 million compared to $121.5 million in 2018. Diluted earnings per share ("EPS") attributable to stockholders increased 23% to $1.36 from $1.11 per share, while diluted adjusted EPS attributable to stockholders (non-GAAP measure) increased 23% to $1.33 from $1.08 per share in 2018.

Consolidated results:

  • Total revenue increased 13% to $1.3 billion as compared to 2018
    o Service revenue increased 7% to $804.0 million as compared to 2018
    o Inventory sales revenue increased 22% to $514.6 million as compared to 2018
  • Total SG&A was $382.4 million in 2019 compared to $382.7 million in 2018
  • Operating income increased 21% to $223.2 million as compared to 2018
  • Cash provided by operating activities was $332.8 million for the year ended December 31, 2019
  • Declared quarterly dividends aggregating to $0.76 per common share in 2019


Auctions & Marketplaces segment results:

  • GTV increased 3.6% to $5.1 billion compared to 2018
  • A&M total revenue increased 14% to $1.2 billion as compared to 2018
    o Service revenue increased 8% to $678.8 million as compared to 2018
    o Inventory sales revenue increased 22% to $514.6 million as compared to 2018


____________________________


1 Gross Transaction Value ("GTV") represents total proceeds from all items sold at the Company's live on site auctions and online marketplaces. GTV is not a
measure of financial performance, liquidity, or revenue, and is not presented in the Company's consolidated financial statements.


The Company presents both GAAP and non-GAAP measures to provide investors with additional information. Providing these non-GAAP measures along with
GAAP measures allows for increased comparability of our ongoing performance from period to period. Non-GAAP financial measures referred to in this news
release are labeled as "non-GAAP measure" or designated as such with an asterisk (*). Please see page 9-11 for explanations of why the Company uses these
non-GAAP measures and, if applicable, the reconciliation to the most comparable GAAP financial measures.

 

"We are pleased with our strong fourth quarter delivering 47% reported earnings per share growth and 38% adjusted earnings per share growth. Our online marketplaces and US region both led the way with online delivering 16.4% GTV growth and the US posting double digit GTV growth."

"Through the dedication of our entire team we grew our full year GTV by 4%, with Total Revenue topping $1.3 billion and 23% growth in earnings per share. We generated strong operating cash flow for the year and are pleased with the overall strength of our balance sheet," said Ann Fandozzi , CEO of Ritchie Bros .

Fandozzi concluded, "I have been impressed and energized by the strength and the quality of our team. 2020 is poised to be another exciting year for Ritchie Bros . as we look to continue progressing our multichannel strategy and leveraging technology to drive more value for our customers."

Financial Overview
(Unaudited)



Three months ended December 31,

Year ended December 31,



% Change


% Change

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

2019

2018


2019 over 2018

2019

2018


2019 over 2018

Service revenue:













Commissions

$

114,107

$

106,621


7%

$

431,781

$

420,160


3%

Fees


104,362


91,158


14%


372,243


329,355


13%

Total service revenue


218,469


197,779


10%


804,024


749,515


7%

Inventory sales revenue


113,725


158,193


(28%)


514,617


420,511


22%

Total revenue


332,194


355,972


(7%)


1,318,641


1,170,026


13%

Service revenue as a % of total revenue


65.8%


55.6%


1020 bps


61.0%


64.1%


-310 bps

Inventory sales revenue as a % of total revenue


34.2%


44.4%


-1020 bps


39.0%


35.9%


310 bps

Costs of services


42,258


46,315


(9%)


164,977


159,058


4%

Cost of inventory sold


108,136


142,505


(24%)


480,839


374,339


28%

Selling, general and administrative expenses


95,800


95,624


0%


382,389


382,676


(0%)

Operating expenses


260,710


299,645


(13%)


1,095,439


984,837


11%

Cost of inventory sold as a % of operating expenses


41.5%


47.6%


-610 bps


43.9%


38.0%


590 bps

Operating income


71,484


56,327


27%


223,202


185,189


21%

Operating income margin


21.5%


15.8%


570 bps


16.9%


15.8%


110 bps

Net income attributable to stockholders


51,573


35,486


45%


149,039


121,479


23%

Adjusted net income attributable to stockholders*


48,183


35,486


36%


145,649


117,669


24%

Diluted earnings per share attributable to stockholders

$

0.47

$

0.32


47%

$

1.36

$

1.11


23%

Diluted adjusted EPS attributable to stockholders*

$

0.44

$

0.32


38%

$

1.33

$

1.08


23%

Effective tax rate


19.9%


25.2%


-530 bps


21.8%


20.3%


150 bps

Total GTV


1,383,908


1,337,614


3.5%


5,140,587


4,964,165


3.6%

Service revenue as a % of total GTV- Rate


15.8%


14.8%


100 bps


15.6%


15.1%


50 bps

Inventory sales revenue as a % of total GTV- Mix


8.2%


11.8%


-360 bps


10.0%


8.5%


150 bps

 

Segment Overview














(in U.S $000's)

Three months ended December 31, 2019

Year ended December 31, 2019


A&M

Other

Consolidated

A&M

Other

Consolidated

Service revenue

$

184,243

$

34,226

$

218,469

$

678,823

$

125,201

$

804,024

Inventory sales revenue


113,725


-


113,725


514,617


-


514,617

Total revenue


297,968


34,226


332,194


1,193,440


125,201


1,318,641

Ancillary and logistical service expenses


-


15,736


15,736


-


59,252


59,252

Other costs of services


25,022


1,500


26,522


99,821


5,904


105,725

Cost of inventory sold


108,136


-


108,136


480,839


-


480,839

SG&A expenses


89,230


6,570


95,800


358,016


24,373


382,389

Segment profit

$

75,580

$

10,420

$

86,000

$

254,764

$

35,672

$

290,436

Total GTV


1,383,908


N/A


N/A


5,140,587


N/A


N/A

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


13.3%


N/A


N/A


13.2%


N/A


N/A
















(in U.S $000's)

Three months ended December 31, 2018

Year ended December 31, 2018


A&M

Other

Consolidated

A&M

Other

Consolidated

Service revenue

$

162,931

$

34,848

$

197,779

$

626,007

$

123,508

$

749,515

Inventory sales revenue


158,193


-


158,193


420,511


-


420,511

Total revenue


321,124


34,848


355,972


1,046,518


123,508


1,170,026

Ancillary and logistical service expenses


-


20,334


20,334


-


66,576


66,576

Other costs of services


24,542


1,439


25,981


87,430


5,052


92,482

Cost of inventory sold


142,505


-


142,505


374,339


-


374,339

SG&A expenses


91,046


4,578


95,624


363,549


19,127


382,676

Segment profit

$

63,031

$

8,497

$

71,528

$

221,200

$

32,753

$

253,953

Total GTV


1,327,614


N/A


N/A


4,964,165


N/A


N/A

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


12.3%


N/A


N/A


12.6%


N/A


N/A

 

Consolidated Quarterly Performance Overview

GTV  increased 3.5% to $1.4 billion . The increase in GTV was driven by a 16% increase in online marketplaces and 1% growth in live on site industrial auctions. Online marketplaces growth was driven by strong performance from our Marketplace-E platform, our strategic accounts team, and GovPlanet. Our live industrial GTV improvement was led by our US region posting double-digit growth which was partially offset with softer performance in our International and Canadian regions.

Total revenue  decreased 7% to $332.2 million with a decrease in Inventory sales revenue of 28%, partially offset by an increase in Service revenue of 10%.

Service revenue  growth of 10% was driven by a 14% increase in fee revenue and a 7% improvement in commissions revenue. The increase in fees revenue was driven by the harmonization of buyer fees, and higher total GTV. The increase in commissions revenue was in line with overall GTV volume growth related to commissions contracts.

Inventory sales revenue  decreased 28% primarily due to the non-repeat of significant inventory contracts in International and Canada.  Inventory sales revenue as a percent of total GTV decreased to 8.2% in Q4 2019 from 11.8% in Q4 2018. 

Costs of services  decreased 9% to $42.3 million primarily driven by lower revenue in the RB Logistics business.

Cost of inventory  decreased 24% to $108.1 million , in line with the overall decrease in inventory sales volume and reflecting comparative softer rate performance in Canada and International compared to Q4 2018.

Selling, general and administrative ("SG&A") expenses increased slightly to $95.8 million due to additional headcount to support our growth initiatives and additional investments in the fourth quarter to support marketing efforts focused on generating buyer demand, offset by a $4.1 million share-based payment expense recovery related to the departure of our former CEO.

Net income attributable to stockholders   increased 45% to $51.6 million . The increase was primarily due to higher operating income combined with lower interest expense. Included in operating income is a foreign exchange gain of $4.1 million in Q4 2019 compared to $0.2 million in Q4 2018.   Adjusted net income attributable to stockholders  (non-GAAP measure) increased 36%, to $48.2 million in Q4 2019 compared to $35.5 million in Q4 2018.

Primarily for the same reasons noted above,  diluted EPS attributable to stockholders  increased 47% to $0.47 per share compared to $0.32 per share in Q4 2018. Diluted   adjusted EPS attributable to stockholders  (non-GAAP measure) increased 38% to $0.44 per share in Q4 2019 compared to $0.32 per share in Q4 2018.

Dividend Information
Quarterly dividend
The Company declared on January 24, 2020 , a quarterly cash dividend of $0.20 per common share payable on March 6, 2020 to shareholders of record on February 14, 2020 .

Management Announcement
The Company announced today the planned retirement of Todd Wohler , Chief Human Resources Officer ("CHRO"). Mr. Wohler will retire as CHRO, effective March 31, 2020 after five years with the Company. Mr. Wohler had intended to retire earlier but agreed to stay on during the CEO transition. The Company is grateful to him for his significant contributions as CHRO.

Related to the above, the Company is pleased to announce the appointment of Carmen Thiede as Chief Human Resources Officer, effective April 13, 2020 . Ms. Thiede brings significant experience to the Company gained during her impressive career in human resources leadership across diverse industries including automotive, financial and technological services at RBC, Ameriprise Financial Services, Regis Corporation and ABRA Auto Body & Glass. Ms. Thiede has a Master's Degree in Human Resources and Industrial Relations from the University of Minnesota - Carlson School of Management.

Q4 2019 Earnings Conference Call
Ritchie Bros . is hosting a conference call to discuss its financial results for the quarter ended December 31, 2019 , at 8:00 am Pacific time / 11:00 am Eastern time / 4:00 pm GMT on February 28 , 2020.  The replay of the webcast will be available through March 28, 2020 .

Conference call and webcast details are available at the following link:
https://investor.ritchiebros.com

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

Forward-looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable U.S. and Canadian securities legislation (collectively, "forward-looking statements"), including, in particular, statements regarding future financial and operational results, including Q4 performance, growth prospects and payment of dividends. Forward-looking statements are statements that are not historical facts and are generally, although not always, identified by words such as "expect", "plan", "anticipate", "project", "target", "potential", "schedule", "forecast", "budget", "estimate", "intend" or "believe" and similar expressions or their negative connotations, or statements that events or conditions "will", "would", "may", "could", "should" or "might" occur. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Forward-looking statements necessarily involve assumptions, risks and uncertainties, certain of which are beyond the Company's control, including the numerous factors that influence the supply of and demand for used equipment; economic and other conditions in local, regional and global sectors; the Company's ability to successfully integrate IronPlanet, and to receive the anticipated benefits of the IronPlanet acquisition; and the risks and uncertainties set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 , which are available on the SEC, SEDAR, and Company websites. The foregoing list is not exhaustive of the factors that may affect the Company's forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, and actual results may differ materially from those expressed in, or implied by, these forward-looking statements. Forward looking statements are made as of the date of this news release and the Company does not undertake any obligation to update the information contained herein unless required by applicable securities legislation. For the reasons set forth above, you should not place undue reliance on forward looking statements.


GTV and Consolidated Financial Information

GTV and Consolidated Income Statements Fourth Quarter
(Expressed in thousands of United States dollars, except share and per share amounts)
(Unaudited)












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

Three months ended December 31,

Year ended December 31,






% Change





% Change


 

2019

 

2018

2019 over
2018

 

2019

 

2018

2019 over
2018

GTV

$

1,383,908

$

1,337,614

3%

$

5,140,587

$

4,964,165

4%

Revenues:











Service revenues

$

218,469

$

197,779

10%

$

804,024

$

749,515

7%

Inventory sales revenue


113,725


158,193

(28%)


514,617


420,511

22%

Total revenues


332,194


355,972

(7%)


1,318,641


1,170,026

13%

Operating expenses:











Costs of services


42,258


46,315

(9%)


164,977


159,058

4%

Cost of inventory sold


108,136


142,505

(24%)


480,839


374,339

28%

Selling, general and administration expenses


95,800


95,624

0%


382,389


382,676

(0%)

Acquisition-related costs


25


54

(54%)


777


5,093

(85%)

Depreciation and amortization expenses


18,582


17,163

8%


70,501


66,614

6%

Gain on disposition of property, plant and equipment


(36)


(1,773)

(98%)


(1,107)


(2,731)

(59%)

Foreign exchange loss (gain)


(4,055)


(243)

1569%


(2,937)


(212)

1285%

Total operating expenses


260,710


299,645

(13%)


1,095,439


984,837

11%

Operating income


71,484


56,327

27%


223,202


185,189

21%

Interest expense


(10,254)


(11,807)

(13%)


(41,277)


(44,527)

(7%)

Other, net


3,158


2,855

11%


8,838


11,850

(25%)

Income before income taxes


64,388


47,375

36%


190,763


152,512

25%

Income tax expense


12,823


11,915

8%


41,623


31,006

34%

Net income

$

51,565

$

35,460

45%

$

149,140

$

121,506

23%

Net income (loss) attributable to:











Stockholders

$

51,573

$

35,486

45%

$

149,039

$

121,479

23%

Non-controlling interests


(8)


(26)

(69%)


101


27

274%


$

51,565

$

35,460

45%

$

149,140

$

121,506

23%

Earnings per share attributable to stockholders:











Basic

$

0.47

$

0.33

42%

$

1.37

$

1.12

22%

Diluted

$

0.47

$

0.32

47%

$

1.36

$

1.11

23%

Weighted average number of share outstanding:











Basic


108,609,481


108,649,637

(0%)


108,519,739


108,063,349

...