Ritchie Bros. reports fourth quarter and 2020 annual results

VANCOUVER, BC, Feb. 18, 2021 /CNW/ - Ritchie Bros. Auctioneers Incorporated (NYSE: RBA) (TSX: RBA), (the "Company", "Ritchie Bros.", "we", "us", or "our") reported the following results for the fourth quarter and full year ended December 31, 2020.

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

Fourth quarter highlights
Net income attributable to stockholders decreased 5% to $48.9 million, compared to $51.6 million in Q4 2019. Adjusted net income attributable to stockholders*(non-GAAP measures), which excludes $5.2 million of acquisition-related costs ($3.9 million net of tax) related to the acquisition of Rouse Services LLC ("Rouse"), and $1.5 million current income tax expense related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements, increased 13% to $54.3 million as compared to $48.2 million in Q4 2019. Diluted earnings per share ("EPS") attributable to stockholders decreased 6% to $0.44 per share in Q4 2020 compared to $0.47 per share in Q4 2019. Diluted adjusted EPS attributable to stockholders*(non-GAAP measures) which excludes adjusting items, increased 11% to $0.49 per share at Q4 2020 compared to $0.44 per share in Q4 2019.

Consolidated results:

• Total revenue in Q4 2020 increased 15% to $383.4 million as compared to Q4 2019
• Service revenue in Q4 2020 increased 6% to $231.7 million as compared to Q4 2019
• Inventory sales revenue in Q4 2020 increased 33% to $151.8 million as compared to Q4 2019
• Total selling, general and administrative expenses ("SG&A") in Q4 2020 increased 13% to $108.3 million as compared to Q4 2019
• Operating income in Q4 2020 increased 2% to $72.9 million as compared to Q4 2019
• Adjusted operating income*(non-GAAP measures) in Q4 2020 increased 16% to $78.1 million as compared to Q4 2019
• Net income in Q4 2020 decreased 5% to $48.9 million as compared to Q4 2019
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization* ("EBITDA") (non-GAAP measure) in Q4 2020 increased 12% to $98.5 million as compared to Q4 2019
• Cash provided by operating activities was $257.9 million for 2020

Auctions & Marketplaces segment results:

• GTV¹ in Q4 2020 increased 5% to $1.4 billion as compared to Q4 2019
• A&M total revenue in Q4 2020 increased 17% to $348.5 million as compared to Q4 2019
• Service revenue in Q4 2020 increased 7% to $196.7 million as compared to Q4 2019
• Inventory sales revenue in Q4 2020 increased 33% to $151.8 million as compared to Q4 2019

Other Services segment results:

• Other Services total revenue in Q4 2020 increased 2% to $35.0 million as compared to Q4 2019
• RBFS revenue in Q4 2020 increased 10% to $9.1 million as compared to Q4 2019

Other Company development

• On December 8, 2020, the Company acquired Rouse, a privately held company that provides data intelligence and performance benchmarking solutions for a fair value of approximately $275 million  

_____________________

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 the reconciliation to the most comparable GAAP financial measures.

Full year highlights
Net income attributable to stockholders for 2020 increased 14% to $170.1 million compared to $149.0 million in 2019. Adjusted net income attributable to stockholders* (non-GAAP measure), which excludes $7.8 million income tax expense related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements, $5.2 million of acquisition-related costs ($3.9 million net of tax) related to the acquisition of Rouse, and $4.3 million ($3.2 million net of tax) of severance costs, increased 27% to $185.0 million in 2020 as compared to $145.6 million in 2019. Diluted earnings per share ("EPS") attributable to stockholders increased 13% to $1.54 from $1.36 per share. Diluted adjusted EPS attributable to stockholders* (non-GAAP measure), which excludes adjusting items, increased 26% to $1.68 per share in 2020 as compared to $1.33 per share in 2019.

Consolidated results:

• Total revenue increased 4% to $1.4 billion as compared to 2019
• Service revenue increased 8% to $871.6 million as compared to 2019
• Inventory sales revenue decreased 2% to $505.7 million as compared to 2019
• Total SG&A increased 9% to $417.5 million in 2020 as compared to 2019
• Operating income increased 18% to $263.2 million as compared to 2019
• Net income increased 14% to $170.4 million as compared to 2019
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization* ("EBITDA")(non-GAAP measure) increased 20% to $353.5 million as compared to 2019
• Cash provided by operating activities was $257.9 million for the year ended December 31, 2020

Auctions & Marketplaces segment results:

• GTV increased 5% to $5.4 billion compared to 2019
• A&M total revenue increased 4% to $1.2 billion as compared to 2019
• Service revenue increased 9% to $740.0 million as compared to 2019
• Inventory sales revenue decreased 2% to $505.7 million as compared to 2019

Other Services segment results:

• Other Services total revenue increased 5% to $131.6 million as compared to 2019
• RBFS revenue increased 12% to $32.2 million as compared to 2019

"We delivered a solid fourth quarter with a 5% increase in GTV contributing to an 18% growth in operating income for the full year."

"2020 was an unprecedented year as the COVID-19 pandemic had a devastating impact on public health while creating global economic uncertainty. I am proud of the technology driven innovations our teams implemented to help customers leverage our Omni-channel platform while keeping our health protocols a top priority," said Ann Fandozzi, CEO of Ritchie Bros.

Fandozzi concluded "Uncertainty in the fourth quarter, driven by new COVID shut-downs and turbulent US election, resulted in consigners taking a wait and see approach. We continue to focus on things that drive long term value: innovating and leveraging technology to enhance customer experience, optimizing operating cost and driving execution against our strategic pillars."

Financial Overview
(Unaudited)

(in U.S. $000's, except EPS and percentages)		Three months ended December 31,										Year ended December 31,
									% Change										% Change
		2020			2019				2020 over 2019			2020			2019				2020 over 2019
Service revenue:
Commissions		$	121,170		$	114,107			6	%		$	452,882		$	431,781			5	%
Fees			110,485			104,362			6	%			418,714			372,243			12	%
Total service revenue			231,655			218,469			6	%			871,596			804,024			8	%
Inventory sales revenue			151,758			113,725			33	%			505,664			514,617			(2)	%
Total revenue			383,413			332,194			15	%			1,377,260			1,318,641			4	%
Costs of services			39,270			42,258			(7)	%			157,296			164,977			(5)	%
Cost of inventory sold			137,322			108,136			27	%			458,293			480,839			(5)	%
Selling, general and administrative expenses			108,318			95,800			13	%			417,523			382,389			9	%
Operating expenses			310,521			260,710			19	%			1,114,100			1,095,439			2	%
Operating income			72,892			71,484			2	%			263,160			223,202			18	%
Operating income as a % of total revenue			19.0	%		21.5	%		(250)	bps			19.1	%		16.9	%		220	bps
Net income attributable to stockholders			48,857			51,573			(5)	%			170,095			149,039			14	%
Adjusted net income attributable to stockholders*			54,268			48,183			13	%			184,952			145,649			27	%
Diluted EPS attributable to stockholders		$	0.44		$	0.47			(6)	%		$	1.54		$	1.36			13	%
Diluted adjusted EPS attributable to stockholders*		$	0.49		$	0.44			11	%		$	1.68		$	1.33			26	%
Effective tax rate			25.6	%		19.9	%		570	bps			27.8	%		21.8	%		600	bps
Total GTV			1,448,832			1,383,908			5	%			5,411,218			5,140,587			5	%
Service GTV			1,297,074			1,270,183			2	%			4,905,554			4,625,970			6	%
Service revenue as a % of total GTV- Rate			16.0	%		15.8	%		20	bps			16.1	%		15.6	%		50	bps
Inventory GTV			151,758			113,725			33	%			505,664			514,617			(2)	%
Service revenue as a % of total revenue			60.4	%		65.8	%		(540)	bps			63.3	%		61.0	%		230	bps
Inventory sales revenue as a % of total revenue			39.6	%		34.2	%		540	bps			36.7	%		39.0	%		(230)	bps
Cost of inventory sold as a % of operating expenses			44.2	%		41.5	%		270	bps			41.1	%		43.9	%		(280)	bps
Service GTV as a % of total GTV - Mix			89.5	%		91.8	%		(230)	bps			90.7	%		90.0	%		70	bps
Inventory sales revenue as a % of total GTV- Mix			10.5	%		8.2	%		230	bps			9.3	%		10.0	%		(70)	bps

Segment Overview

(in U.S $000's)	Three months ended December 31, 2020								Year ended December 31, 2020
	A&M			Other		Consolidated			A&M			Other		Consolidated
Service revenue	$	196,703		34,952		$	231,655		$	740,043		131,553		$	871,596
Inventory sales revenue		151,758		—			151,758			505,664		—			505,664
Total revenue		348,461		34,952			383,413			1,245,707		131,553			1,377,260
Ancillary and logistical service expenses		—		14,614			14,614			—		59,982			59,982
Other costs of services		23,177		1,479			24,656			92,195		5,119			97,314
Cost of inventory sold		137,322		—			137,322			458,293		—			458,293
SG&A expenses		98,365		9,954			108,319			388,442		29,081			417,523
Segment profit	$	89,597		8,905		$	98,502		$	306,777		37,371		$	344,148
Total GTV		1,448,832		N/A			N/A			5,411,218		N/A			N/A
A&M service revenue as a % of total GTV- Rate		13.6	%	N/A			N/A			13.7	%	N/A			N/A

(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

Q4 2020 Consolidated Performance Overview

In response to COVID-19 pandemic, beginning in March 2020, we transitioned all 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.

GTV increased 5% to $1.4 billion in Q4 2020. The increase was primarily in Canada due to a large dispersal of pipeline equipment at our Q4 2020 Grand Prairie auction, as well as holding three net new auctions compared to Q4 2019. The International sales team also delivered positive year-over-year results at our St. Aubin, France, and Caorso, Italy on site auctions, offset by lower online performance in Europe as well as the non-repeat of our Narita auction, which was cancelled due to the COVID-19 pandemic. We had lower year-over-year performance in our US live auctions, primarily due softer equipment supply, election uncertainty, and COVID fatigue, partially offset by positive growth on our online channel due to strong sales execution by our US strategic accounts team.

Total revenue increased 15% to $383.4 million in Q4 2020.

Service revenue increased 6% with both commissions revenue and fees revenue increasing 6%. Fees revenue was up 6% driven by higher fees from total GTV growth of 5% and improved buyer fee rate performance driven by our online fee structure in Australia,  incremental revenue of Rouse, higher online listing inspection fees in line with increased online GTV, and the continued growth in RBFS fee revenue. This increase was partially offset by lower ancillary fees from refurbishing and transporting sellers' equipment driven by lower volume in the US. Commission revenue increased 6% driven by higher volume of guarantee contracts and rate improvement in both US and Canada.

Inventory sales revenue increased 33% representing higher inventory sales volume primarily driven by strong performance in our Canada region due to a large dispersal of pipeline equipment in our Q4 2020 Grand Prairie auction. In addition, our International region also experienced strong growth in Australia and Europe. This was partially offset by the non-repeat of larger inventory contracts in the US.

Costs of services decreased 7% to $39.3 million. In response to the COVID-19 pandemic, we transitioned our live on site auctions to online bidding, utilizing TAL solutions for selected International and on-the-farm agricultural events and implementing travel restrictions. These operational changes resulted in temporary cost reductions in travel, advertising, and promotion expenses, and employee compensation. In addition, we incurred lower ancillary and logistical service expenses, in line with the decrease in ancillary fees earned from refurbishing and transporting sellers' equipment driven by lower volume in the US. This was partially offset by higher cost of services incurred to support new government contracts. 

Cost of inventory increased 27% to $137.3 million, in line with the overall increase in inventory GTV. Cost of inventory sold increased at a lower rate than the increase of inventory sales revenue, indicating an increase in the inventory revenue rate of return. The inventory rate of return improved mainly due to the achievement of strong rate performance across all regions.

Selling, general and administrative ("SG&A") expenses increased 13% to $108.3 million primarily due to higher headcount to support our growth initiatives and higher short-term incentive expense driven by strong performance. In addition, in Q4 2019, we recognized a recovery of $4.1 million of share-based payment expense related to the departure of our former CEO, which is non-recurring. These increases were partially offset by lower SG&A expenses related to lower travel, advertising, and promotion costs as we implemented travel restrictions.

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

Net income attributable to stockholders decreased 5% to $48.9 million. The decrease is partially due to $5.2 million of acquisition-related costs incurred in 2020 related to the acquisition of Rouse, $1.5 million current income tax expense related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements, and recovery of $4.1 million of share-based payment expense recognized in 2019 related to the departure of our former CEO, which are all non-recurring. An increase in the effective tax rate, partially offset by lower interest expense and higher operating income, also contributed to the decrease in net income attributable to stockholders.

Primarily for the same reasons noted above, diluted EPS attributable to stockholders decreased 6% to $0.44 per share for Q4 2020 from $0.47 per share in Q4 2019. Diluted adjusted EPS attributable to stockholders* increased 11% to $0.49 per share in Q4 2020, after excluding $5.2 million of acquisition-related costs ($3.9 million net of tax) and $1.5 million income tax expense in Q4 2020.

Dividend Information

Quarterly dividend
On January 22, 2021, the Company declared a quarterly cash dividend of $0.22 per common share payable on March 5, 2021 to shareholders of record on February 12, 2021.

Q4 2020 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended December 31, 2020 at 8am Pacific time / 11 am Eastern time / 4pm GMT on February 19, 2021. The replay of the webcast will be available through March 6, 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 andTSX: 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, growth and value prospects and payment of dividends, and the expected benefits of the Rouse acquisition. 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, 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 – Fourth 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 December 31,									Year ended December 31,
							% Change									% Change
		2020			2019		2020 over 2019				2020			2019		2020 over 2019
GTV	$	1,448,832		$	1,383,908		5	%		$	5,411,218		$	5,140,587		5	%
Revenues:
Service revenues	$	231,655		$	218,469		6	%		$	871,596		$	804,024		8	%
Inventory sales revenue		151,758			113,725		33	%			505,664			514,617		(2)	%
Total revenues		383,413			332,194		15	%			1,377,260			1,318,641		4	%
Operating expenses:
Costs of services		39,270			42,258		(7)	%			157,296			164,977		(5)	%
Cost of inventory sold		137,322			108,136		27	%			458,293			480,839		(5)	%
Selling, general and administration expenses		108,318			95,800		13	%			417,523			382,389		9	%
Acquisition-related costs		6,014			25		23,956	%			6,014			777		674	%
Depreciation and amortization expenses		19,337			18,582		4	%			74,921			70,501		6	%
Gain on disposition of property, plant and equipment		(22)			(36)		(39)	%			(1,559)			(1,107)		41	%
Foreign exchange (gain) loss		282			(4,055)		(107)	%			1,612			(2,937)		(155)	%
Total operating expenses		310,521			260,710		19	%			1,114,100			1,095,439		2	%
Operating income		72,892			71,484		2	%			263,160			223,202		18	%
Interest expense		(8,767)			(10,254)		(15)	%			(35,568)			(41,277)		(14)	%
Other income, net		1,583			3,158		(50)	%			8,296			8,838		(6)	%
Income before income taxes		65,708			64,388		2	%			235,888			190,763		24	%
Income tax expense		16,789			12,823		31	%			65,530			41,623		57	%
Net income	$	48,919		$	51,565		(5)	%		$	170,358		$	149,140		14	%
Net income attributable to:
Stockholders	$	48,856		$	51,573		(5)	%			170,095		$	149,039		14	%
Non-controlling interests		63			(8)		(888)	%			263			101		160	%
	$	48,919		$	51,565		(5)	%			170,358		$	149,140		14	%
Earnings per share attributable to stockholders:
Basic	$	0.45		$	0.47		(4)	%			1.56		$	1.37		14	%
Diluted	$	0.44		$	0.47		(6)	%			1.54		$	1.36		13	%
Weighted average number of share outstanding:
Basic		109,553,256			108,609,481		1	%			109,054,493			108,519,739		0	%
Diluted		111,058,161			110,194,557		1	%			110,310,984			109,759,123		1	%

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

Year ended December 31,	2020		2019
Assets
Cash and cash equivalents	$	278,766	$	359,671
Restricted cash		28,129		60,585
Trade and other receivables		135,001		142,627
Less: allowance for credit losses		(5,467)		(5,225)
Inventory		86,278		64,956
Other current assets		27,274		50,160
Income taxes receivable		6,797		6,810
Total current assets		556,778		679,584
Property, plant and equipment		492,127		484,482
Other non-current assets		147,608		145,679
Intangible assets		300,948		233,380
Goodwill		840,610		672,310
Deferred tax assets		13,458		13,995
Total assets	$	2,351,529	$	2,229,430
Liabilities and Equity
Auction proceeds payable	$	214,254	$	276,188
Trade and other payables		243,786		194,279
Income taxes payable		17,032		7,809
Short-term debt		29,145		4,705
Current portion of long-term debt		10,360		18,277
Total current liabilities		514,577		501,258
Long-term debt		626,288		627,204
Other non-current liabilities		153,000		151,238
Deferred tax liabilities		45,265		42,743
Total liabilities		1,339,130		1,322,443
Commitments and Contingencies
Stockholders' equity:
Share capital:
Common stock; no par value, unlimited shares
authorized, issued and outstanding shares:
109,876,428 (December 31, 2019: 109,337,781)		200,451		194,771
Additional paid-in capital		49,171		52,110
Retained earnings		791,918		714,051
Accumulated other comprehensive loss		(34,295)		(59,099)
Stockholders' equity		1,007,245		901,833
Non-controlling interest		5,154		5,154
Total stockholders' equity		1,012,399		906,987
Total liabilities and equity	$	2,351,529	$	2,229,430

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

Year ended December 31,	2020		2019		2018
Cash provided by (used in):
Operating activities:
Net income	$	170,358	$	149,140	$	121,506
Adjustments for items not affecting cash:
Depreciation and amortization expenses		74,921		70,501		66,614
Impairment loss		—		—		—
Stock option compensation expense		5,853		4,697		8,252
Equity-classified share unit expense		9,897		8,047		11,256
Share-based continuing employment costs		802		—		—
Deferred income tax expense		9,152		8,826		6,239
Unrealized foreign exchange (gain) loss		2,453		(3,058)		951
Gain on disposition of property, plant and equipment		(1,559)		(1,107)		(2,731)
Amortization of debt issuance costs		3,123		4,086		4,995
Gain on disposition of equity investment		—				(4,935)
Amortization of right-of-use assets		12,240		12,280		—
Gain on contingent consideration from equity investment		(1,700)		—		—
Other, net		1,466		2,779		(2,317)
Net changes in operating assets and liabilities		(29,134)		76,602		(65,550)
Net cash provided by operating activities		257,872		332,793		144,280
Investing activities:
Acquisition of Rouse, net of cash acquired		(250,039)		—		—
Property, plant and equipment additions		(14,263)		(13,589)		(16,860)
Proceeds on disposition of property, plant and equipment		16,385		5,929		10,586
Intangible asset additions		(28,873)		(27,415)		(26,152)
Issuance of loans receivable		(9,071)		—		—
Repayment of loans receivable		3,227		—		—
Distribution from equity investment		4,212		—		—
Proceeds on contingent consideration from equity investment		1,700		—		6,147
Other, net		—		(982)		(4,674)
Net cash used in investing activities		(276,722)		(36,057)		(30,953)
Financing activities:
Share repurchase		(53,170)		(42,012)		—
Dividends paid to stockholders		(91,737)		(82,535)		(75,678)
Dividends paid to NCI		(320)		—		—
Proceeds from exercise of options and share option plans		44,128		41,094		28,524
Payment of withholding taxes on issuance of shares		(6,656)		(5,260)		(3,901)
Proceeds from short-term debt		50,799		13,169		19,715
Repayment of short-term debt		(29,368)		(28,684)		(6,628)
Repayment of long-term debt		(13,711)		(76,282)		(91,013)
Debt issue costs		(2,038)		—		—
Repayment of finance lease obligations		(9,388)		(6,708)		(3,950)
Other, net		—		—		(1,176)
Net cash used in financing activities		(111,461)		(187,218)		(134,107)
Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash		16,950		5,171		(4,769)
Increase		(113,361)		114,689		(25,549)
Beginning of period		420,256		305,567		331,116
Cash, cash equivalents, and restricted cash, end of period	$	306,895	$	420,256	$	305,567

Selected Data
(Unaudited)

Industrial live on site auction metrics

	Three months ended December 31,							Year ended December 31,
					% Change							% Change
	2020		2019		2020 over 2019			2020		2019		2020 over 2019
Number of auctions	45		54		(17)	%		168		194		(13)	%
Bidder registrations	279,950		223,800		25	%		957,050		732,550		31	%
Consignors	14,950		15,850		(6)	%		55,400		58,850		(6)	%
Buyers	43,000		44,350		(3)	%		157,250		153,400		3	%
Lots	116,950		117,650		(1)	%		429,400		422,800		2	%

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

Adjusted Operating Income* Reconciliation
The Company believes that adjusting operating income* eliminates the financial impact of adjusting items which are significant non-recurring items that we do not consider to be part of our normal operating results, such as acquisition-related costs, management reorganization costs, and certain other items, which we refer to as 'adjusting items'. The Company believes that comparing adjusted operating income* for different financial periods provides useful information about the growth or decline of our operating income for the relevant financial period.

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

		Three months ended December 31,									Year ended December 31,
								% Change									% Change
								2020 over									2020 over
(in U.S. $000's, except percentages)		2020			2019			2020 over 2019			2020			2019			2020 over 2019
Operating income		$	72,892		$	71,484		2	%		$	263,160		$	223,202		18	%
Pre-tax adjusting items:
Share-based payment recovery			—			(4,078)		(100)	%			—			(4,078)		(100)	%
Acquisition-related costs			5,213			—		100	%			5,213			—		100	%
Severance			—			—		—	%			4,283			—		100	%
Adjusted operating income*		$	78,105		$	67,406		16	%		$	272,656		$	219,124		24	%

(1)	Please refer to page 12 for a summary of adjusting items for the three months and year ended December 31, 2020 and 2019.
(2)	Adjusted operating income* represents operating income excluding the effects of adjusting items.

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, and percentages)		Three months ended December 31,									Year ended December 31,
								% Change									% Change
		2020			2019			2020 over 2019			2020			2019			2020 over 2019
Net income attributable to stockholders		$	48,857		$	51,573		(5)	%		$	170,095		$	149,039		14	%
Pre-tax adjusting items:
Acquisition-related costs			5,213					100	%			5,213					100	%
Share-based payment recovery			—			(4,078)		(100)	%			—			(4,078)		(100)	%
Severance			—			—		—	%			4,283			—		100	%
Current income tax effect of adjusting items:
Acquisition-related costs			(1,329)			—		(100)	%			(1,329)					(100)	%
Severance			—			—		—	%			(1,065)			—		(100)	%
Deferred income tax effect of adjusting items:
Share-based payment recovery			—			688		(100)	%			—			688		(100)	%
Current income tax adjusting item:
Change in uncertain tax provision			1,527			—		100	%			2,293			—		100	%
Deferred tax adjusting item:
Change in uncertain tax provision			—			—		—	%			5,462			—		100	%
Adjusted net income attributable to stockholders*		$	54,268		$	48,183		13	%		$	184,952		$	145,649		27	%
Weighted average number of dilutive shares outstanding			111,058,161			110,194,557		1	%			110,310,984			109,759,123		1	%
Diluted earnings per share attributable to stockholders		$	0.44		$	0.47		(6)	%		$	1.54		$	1.36		13	%
Diluted adjusted EPS attributable to Stockholders*		$	0.49		$	0.44		11	%		$	1.68		$	1.33		26	%

(1)	Please refer to page 12 for a summary of adjusting items for the three months and year ended December 31, 2020 and 2019
(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 EBITDA*
The Company believes that adjusted EBITDA* provides useful information about the growth or decline of our net income when compared between different financial periods.

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

(in U.S. $000's, except percentages)		Three months ended December 31,									Year ended December 31,
								% Change									% Change
		2020			2019			2020 over 2019			2020			2019			2020 over 2019
Net income		$	48,920		$	51,565		(5)	%		$	170,358		$	149,140		14	%
Add: depreciation and amortization expenses			19,337			18,582		4	%			74,921			70,501		6	%
Add: interest expense			8,767			10,254		(15)	%			35,568			41,277		(14)	%
Less: interest income			(563)			(1,367)		(59)	%			(2,338)			(3,802)		(39)	%
Add: income tax expense			16,789			12,823		31	%			65,530			41,623		57	%
Pre-tax adjusting items:
Share-based payment recovery			—			(4,078)		(100)	%			—			(4,078)		(100)	%
Acquisition-related costs			5,213			—		100	%			5,213			—		100	%
Severance			—			—		—	%			4,283			—		100	%
Adjusted EBITDA*		$	98,463		$	87,779		12	%		$	353,535		$	294,661		20	%

(1)	Please refer to page 12 for a summary of adjusting items for the three months and year ended December 31, 2020 and 2019.
(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.

Adjusting items for the year ended December 31, 2020:

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.

Recognized in the second quarter of 2020

• $6.2 million ($0.06 per diluted share) in current and deferred income tax expense related to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements.

Recognized in the first quarter of 2020

• There were no adjustment items recognized in the first quarter of 2020.

Adjusting items for the year ended December 31, 2019:

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.

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.

https://www.ritchiebros.com/

SOURCE Ritchie Bros. Auctioneers

Sameer Rathod | Vice President, Investor Relations and Market Intelligence, Phone: [phone] | Email: [email protected]

Related Links

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