The Company generated $178.8 million of revenues, an increase of 22 percent compared to the same quarter last year.
Ritchie Bros. Auctioneers, Inc. reported results for the three months and full year ended December 31, 2017.
Fourth Quarter Highlights
The Company generated $178.8 million of revenues, an increase of 22 percent compared to the same quarter last year. Net income attributable to stockholders was $36.8 million compared to $27.9 million for the same quarter in 2016. Diluted earnings per share ("EPS") attributable to stockholders was $0.34 in the fourth quarter of 2017, which included a $10.1 million favorable impact of the recent U.S. tax reform and $3.1 million of acquisition-related costs. This compares to diluted EPS attributable to stockholders of $0.26 in the fourth quarter of 2016. Diluted adjusted EPS attributable to stockholders1 (non-GAAP measure), which excludes the $10.1 million impact of the U.S. tax reform and certain acquisition-related costs, decreased 13 percent to $0.26 in the fourth quarter of 2017 from $0.30 in the fourth quarter of 2016. Other key fourth quarter highlights included:
- Consolidated Revenue Rate2 was 13.81 percent compared to 14.11 percent in the fourth quarter of 2016;
- Auctions and Marketplaces ("A&M") segment revenues increased 20 percent; segment Revenue Rate2 decreased 49 basis points ("bps") to 12.64 percent from 13.13 percent in the fourth quarter of 2016;
- Revenue from other services of $15.1 million; an increase of 48 percent compared to the fourth quarter of 2016; and
- Gross Transaction Value ("GTV")2 of $1.3 billion, a 24 percent increase compared to the fourth quarter of 2016.
Full Year Highlights
Full year results were influenced by broad-based effects of unprecedented demand for infrastructure projects, high equipment utilization rates, and an overall equipment shortage principally in the United States and Canada, resulting in lower than expected full year GTV and revenue performance. On May 31, 2017, the Company acquired IronPlanet (the "Acquisition") for $776.5 million and undertook the complex integration work, which resulted in some temporary sales productivity decline.
The Company generated $610.5 million of revenues in 2017, an increase of 8 percent compared to $566.4 million in 2016, and $75.0 million of net income attributable to stockholders. Diluted EPS attributable to stockholders was $0.69, which included $38.3 million of acquisition-related costs and $38.3 million of interest expense. This compares to diluted EPS attributable to stockholders of $0.85 in 2016. Diluted adjusted EPS attributable to stockholders (non-GAAP measure) decreased 30 percent to $0.81 in 2017 from $1.15 in 2016.
Other key 2017 highlights included:
- Consolidated Revenue Rate of 13.66 percent compared to 13.07 percent in 2016;
- A&M segment revenues increased 6 percent; segment Revenue Rate increased 36 basis points to 12.63 percent from 12.27 percent in 2016;
- Revenues from other services of $46.2 million; an increase of 34 percent compared to 2016;
- Cash provided by operating activities of $146.3 million;
- Declared quarterly dividends aggregating to $0.68 per common share in 2017; and
- GTV of $4.5 billion, a 3 percent increase compared to 2016.
1. Diluted adjusted EPS attributable to stockholders is a non-GAAP financial measure. We believe that comparing diluted adjusted EPS attributable to stockholders for different financial periods provides useful information about the growth or decline of our diluted EPS attributable to stockholders for the relevant financial period, and eliminates the financial impact of adjusting items we do not consider to be part of our normal operating results. Diluted adjusted EPS attributable to stockholders is calculated by dividing adjusted net income attributable to stockholders (non-GAAP measure) (described in footnote 4), 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 our consolidated financial statements under "Non-GAAP Measures" below.
2. Gross Transaction Value ("GTV") represents the total proceeds from all items sold at the Company's auctions and online marketplaces. It is not a measure of financial performance, liquidity, or revenue, and is not presented in the Company's consolidated financial statements. Auctions and Marketplaces segment Revenue Rate is calculated as segment revenues divided by GTV. Consolidated Revenue Rate is calculated as total, consolidated revenues divided by GTV.
"In the fourth quarter, despite a continuation of supply constraints, we delivered GTV and revenue growth both on a reported and combined-company basis as our integration efforts started taking hold, the salesforce stabilized and our go to market execution improved", said Ravi Saligram, CEO of Ritchie Bros.
Saligram continued, "2017 as a whole was a historic year for Ritchie Bros. as we reshaped our future through the transformational acquisition of IronPlanet, a pivotal step in our evolution to become a truly diversified asset management and disposition company. Our full year financial results are a reflection of the unprecedented shortage of equipment supply, softness in Alberta's oil patch, and uncertainty caused by a significant delay in regulatory approvals that led to some salesforce turnover. However, we made meaningful progress on several fronts including solid revenue rate expansion over prior year, strong operating free cash flow, and excellent growth in EMEA, RBFS and Mascus. We are pleased to have completed our 2017 integration milestones and are on track to achieve our stated synergy targets.
Looking ahead, we are very excited about the future of Ritchie Bros. and our results in our record-breaking auction last week in Orlando are testimony to the power of the combined company's capabilities. We are encouraged by the results in the fourth quarter and our progress to-date in 2018 but remain balanced as we navigate continued tight supply in 2018."
For more information, visit www.rbauction.com.