Ritchie Bros. Auctioneers Inc. announced third quarter 2014 results for the three months ended Sept. 30, 2014. During the quarter, the company generated $102.2 million of revenue and adjusted net earnings (a non-GAAP measure) of $14.5 million, or $0.13 per diluted share. Reported (GAAP) net earnings for the third quarter were $9.3 million, or $0.09 per diluted share.
Adjusting items in the third quarter of 2014 are comprised of a $3.4 million gain ($2.9 million after-tax) from the sale of land in Grande Prairie, Canada; and an $8.1 million non-cash charge ($8.1 million after-tax) related to the impairment of real-estate assets in Narita, Japan.
"After completing my 100 day listening tour, it is clear that we have a solid business model with significant runway ahead of it," said Ravi Saligram, CEO. "I plan to get our organization laser focused on increasing shareholder value by reinvigorating revenue and earnings growth, optimizing our capital allocation and capital structure, and enhancing our ROIC."
For the three months ended Sept. 30, 2014:
- Gross auction proceeds (GAP) were $886.9 million, a 12% increase compared to the same quarter of 2013. EquipmentOne, the company's online equipment marketplace, contributed $23.2 million of gross transaction value to GAP in the third quarter of 2014 compared to $22.1 million in the third quarter of 2013.
- The revenue rate was 11.53%, lower than the record 13.4% achieved in the third quarter last year. The company's underwritten business, which is comprised of guarantee and inventory contracts, represented 30% of GAP in the third quarter of 2014, compared to 29% in the third quarter of 2013.
- Revenue was $102.2 million, 3% lower than the same quarter last year.
- Operating expenses for the quarter totaled $71.0 million, 2% higher than total operating expenses of $69.6 million in the third quarter last year.
- Adjusted net earnings were $14.5 million, 9% lower than $15.9 million of adjusted net earnings in the third quarter of 2013. Adjusting items, which have been removed from Q3 2014 adjusted net earnings, are: $3.4 million (or $2.9 million after-tax) from the gain on the sale of land in Grande Prairie, Canada; and $8.1 million (or $8.1 million after-tax) of impairment related to real-estate assets held in Narita, Japan (a non-cash charge).
- Net earnings were $9.3 million, 43% lower than $16.3 million of net earnings in third quarter of 2013.
- Earnings before interest, taxes, depreciation and amortization (EBITDA) was $31.2 million, 14% lower than EBITDA of $36.2 million in the third quarter of 2013. This decrease was due mostly to lower revenue.
- Working capital as of Sept. 30, 2014 was $121.7 million, an increase of 11% compared to working capital of $110.0 million as of December 31, 2013.
- Free cash flow, excluding changes in working capital, increased to $82.2 million during the nine months ended Sept. 30, 2014, compared to $60.4 million during the same period in 2013, representing a 36% increase.
- Capital expenditures for the first nine months were $30.3 million, compared to $40.9 million in the same period a year ago, representing a 26% decrease.
- Dividends paid during the first nine months of 2014 totaled $42.9 million, compared to $40.0 million during the same period last year.
- Ritchie Bros. sold approximately $1.2 billion of equipment, trucks and other assets to online buyers during the first nine months of 2014, a 16% increase compared to the same period of 2013.
Online buyers at Ritchie Bros. auctions and purchases made through the company's online equipment marketplace represented 41% of GAP during the first nine months of 2014. Internet bidders comprised more than 60% of the total bidder registrations at Ritchie Bros. industrial auctions in the first nine months of 2014.
The company surpassed $1 billion in year-to-date online sales by Sept. 12, 2014—nearly one month earlier than during 2013.
During the third quarter of 2014, Ritchie Bros. conducted 52 unreserved industrial auctions in 14 countries throughout North America, Europe, the Middle East and Australia.