Ritchie Bros. Auctioneers Incorporated reported the following results for the three months ended September 30, 2018. Net income attributable to stockholders of $23.1 million increased 125% compared to $10.3 million for the same quarter in 2017. Diluted earnings per share attributable to stockholders increased 133% to $0.21 versus $0.09 in the third quarter of 2017, while diluted adjusted EPS attributable to stockholders(1) (non-GAAP measure) which excludes a $4.9 million gain on sale of an equity accounted for investment and acquisition-related costs, increased 100% to $0.18 from $0.09 in the third quarter of 2017. Other key third quarter highlights included:
Consolidated results:
- Total revenues of $245.3 million increased 8% over the third quarter of 2017
- Total Company agency proceeds(2) (non-GAAP measure) of $159.3 million increased 13% from 141.0 million in the third quarter of 2017
- Total selling, general and administrative expenses ("SG&A") of $88.3 million increased 4% from $85.3 million in the third quarter of 2017
- Cash provided by operating activities of $97.1 million for the nine-month period ended September 30, 2018
Auctions & Marketplaces ("A&M") segment:
- Gross Transaction Value ("GTV")(3) of $1.0 billion up 2% over the third quarter of 2017
- Total revenues of $218.6 million increased 8% from $202.7 million in the third quarter of 2017
- A&M agency proceeds(4) (non-GAAP measure) of $144.2 million increased 11% from $130.2 million in the third quarter of 2017
- A&M revenue rate(5) of 21.0% and A&M agency proceeds rate6 (non-GAAP measure) of 13.9%, each improved 110 basis points ("bps") over the third quarter of 2017
"Our focus on new business and executing our multi-channel strategy in a tight supply environment resulted in strong revenue and agency proceeds growth with sequential improvement in our A&M revenue rate. The revenue growth coupled with disciplined expense management improved our operating leverage which contributed to doubling our diluted adjusted EPS to $0.18. Despite slightly lower live auction volumes due to fewer live and agricultural events versus last year, our online marketplaces channel showed a second straight quarter of solid momentum with 16% GTV growth in the quarter. We also continue to be pleased with our Services business performance delivering double digit revenue growth once again led by RBFS up 40% and Mascus up 15%," said Ravi Saligram, Chief Executive Officer.
Saligram continued "We are encouraged with the progress we are making as a combined company and our ability to grow both our top line and earnings together with strong cash flow in the quarter. Heading into the fourth quarter, our priorities remain focused on building momentum on our sales execution and fully leveraging our multi-channel offerings to deliver superior service to our existing customers and drive new customer acquisition."
1 Diluted adjusted EPS attributable to stockholders is a non-GAAP financial measure. The Company believes that comparing diluted adjusted EPS attributable to stockholders for different financial periods provides useful information about the growth or decline of its diluted EPS 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 its normal operating results. Diluted adjusted EPS attributable to stockholders is calculated by dividing adjusted net income attributable to stockholders (non-GAAP measure), net of the effect of dilutive securities, by the weighted average number of dilutive shares outstanding. Diluted adjusted EPS attributable to stockholders is reconciled to the most directly comparable GAAP measures in the Company's consolidated financial statements under "Non-GAAP Measures".
2 The Company's income statement scorecard includes the non-GAAP measure performance metric, agency proceeds. Agency proceeds is also an element of the performance criteria for certain annual short-term incentive awards the Company grants to its employees and officers. The Company calculates agency proceeds by subtracting the cost of inventory sold and ancillary and logistical service expenses from total revenues.
3 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.
4 A&M agency proceeds is a non-GAAP financial measure that provides useful information about the performance of the Company's A&M contracts for different financial periods. A&M agency proceeds is calculated as A&M total revenues less cost of inventory sold and is reconciled to the most directly comparable GAAP measures in the Company's consolidated financial statements under "Non-GAAP Measures".
5 The Company believes A&M segment total revenues are best understood by considering their relationship to GTV. The metric that the Company uses to measure that performance is A&M revenue rate, which is calculated as A&M total revenues divided by GTV.
6 A&M agency proceeds rate is a non-GAAP financial measure that provides useful information about the performance of our operations by comparing the margins we earn on our contracts for different financial periods. A&M agency proceeds rate is calculated by dividing A&M agency proceeds (non-GAAP measure) by GTV. A&M agency proceeds rate is reconciled to the most directly comparable GAAP measures in our consolidated financial statements under "Non-GAAP Measures".
