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Ritchie Bros. reports third quarter 2019 results

VANCOUVER , Nov. 7, 2019 /CNW/ - 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
  • 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: 

  • GTV1 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


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

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SOURCE Ritchie Bros . Auctioneers


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