Ritchie Bros. Auctioneers
Summary
- Ritchie Bros. 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.
- The company help thousands of people around the world appraise, sell, inspect, buy, refurbish, ship and finance heavy equipment, trucks, and other assets every month.
- The company has global network, including 40 permanent auction sites around the world and operations in 15+ countries
- Ritchie Bros. recently acquired Euro Auctions and SmartEquip
Company Overview
Ritchie Bros. (NYSE:RBA, TSX:RBA) was founded in 1958 in Kelowna, British Columbia, Canada and is a world leader in asset management and disposition of used industrial equipment and other durable assets. The company's expertise, unprecedented global reach, market insight, and trusted portfolio of brands provide it with a unique position in the used equipment market. The company sell used equipment for its customers through live, unreserved auctions at 40 auction sites worldwide, which are also simulcast online to reach a global bidding audience and through its online marketplaces.1
Through its unreserved auctions, online marketplaces, and private brokerage services, the company sell a broad range of used and unused equipment, including earthmoving equipment, truck trailers, government surplus, oil and gas equipment and other industrial assets. Construction and heavy machinery comprise the majority of the equipment sold. Customers selling equipment through its sales channels include end users (such as construction companies), equipment dealers, original equipment manufacturers (“OEMs”) and other equipment owners (such as rental companies). The company's customers participate in a variety of sectors, including heavy construction, transportation, agriculture, energy, and mining. The company operate globally with locations in more than 12 countries, including the U.S., Canada, Australia, the United Arab Emirates, and the Netherlands, and employ more than 2,400 full time employees worldwide.
The company help its customers buy and sell a wide range of used and unused equipment for:
.
Construction
Mining
Transportation
Agriculture
Oil & gas
Lifting & material handling
Forestry & other industries
Global Network
With its global network, including 40 permanent auction sites around the world and operations in 15+ countries, Ritchie Bros. sells billions of dollars of heavy equipment and trucks each year via its multiple selling platforms including:
Ritchie Bros. Auctioneers
Unreserved public auctions with onsite and online bidding at 40 permanent auction sites & temporary locations
IronPlanet
Online marketplace with featured weekly auctions and providing the exclusive IronClad Assurance(R) equipment condition certification
Marketplace-E
A 24/7 online equipment marketplace offering more control over transactions with multiple price and timing options
Services
The company offer its equipment buyer and seller customers multiple distinct, complementary, multi-channel brand solutions that address the range oftheir needs. The company's global customer base has a variety of transaction options, breadth of services, and the widest selection of used equipmentavailable to them.
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Company History
Ritchie Bros. begins as a small family-run business in Kelowna, BC, Canada. The three Ritchie brothers—Ken, Dave, John—conduct their first unreserved auction.
https://www.rbauction.com/aboutus/history
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Recent Acquisitions
Acquisition of SmartEquip
On November 2, 2021, the company completed the acquisition of SmartEquip, a Delaware, United States corporation. SmartEquip has a multimanufacturer platform that provides customers with real-time service and diagnostic support, dynamically customized, via serial number, toeach asset in their fleet, and enables the electronic procurement of parts from original equipment manufacturers and their dealers. The company acquiredSmartEquip for a purchase price of $174 million. The company also issued 63,971 common shares valued at $4.4 million, to certain continuing employeessubject to their continuing employment over a three year vesting period from the date of acquisition.
https://fintel.io/doc/sec-ritchie-bros-auctioneers-inc-1046102-10k-2022-february-17-19040-7081
Acquisition of Euro Auctions
On August 9, 2021, the company entered into a Sale and Purchase Agreement (“SPA”) pursuant to which Ritchie Bros has agreed to purchase Euro AuctionsLimited, William Keys & Sons Holdings Limited, Equipment & Plant Services Ltd, and Equipment Sales Ltd. (collectively, “Euro Auctions”),each being a private limited company incorporated in Northern Ireland (the “Euro Auctions Acquisition”), for a purchase price of approximately£775 million (approximately $1.05 billion) in cash, to be paid on closing.
Founded in 1998, Euro Auctions conducts unreserved heavy equipment auctions with on site and online bidding under the brands Euro Auctionsand Yoder & Frey, and employs over 200 employees in 14 countries. Similar to Ritchie Bros., Euro Auctions also sells items through a timedauction format and a daily marketplace with Buy Now and Make Offer options.
Financial Highlights
Net income attributable to stockholders for 2021 decreased 11% to $151.9 million compared to $170.1 million in 2020. Diluted earnings per share (?EPS?) attributable to stockholders decreased 12% to $1.36 from $1.54 per share. Non-GAAP adjusted net income attributable to stockholders* increased 4% to $216.1 million in 2021 as compared to $208.7 million in 2020. Non-GAAP diluted adjusted EPS attributable to stockholders* increased 3% to $1.94 per share in 2021 as compared to $1.89 per share in 2020.
Total GTV increased 2% to $5.5 billion as compared to 2020. Total GTV decreased 0.4% in 2021 as compared to 2020, when excluding the impact of foreign exchange.
Total revenue increased 3% to $1.4 billion as compared to 2020, with total service revenue increasing by 5%, offset by a decrease in inventory sales revenue by 1%.
In 2021, total service revenue increased 5% with fees revenue increasing 7% and commissions revenue increasing 4%. Service revenues comprise of commissions which are earned on Service GTV, and Fees which are earned on total GTV as well as from its other services such as Ancillary Services, RBFS, Rouse, Mascus, RB Logistics, RB Asset Solutions and SmartEquip.
Net income attributable to stockholders decreased 11% to $151.9 million compared to $170.1 million in 2020. The decrease was primarily related to lower operating income and lower other income. The company also recognized a $1.2 million loss due to the change in the fair value of derivatives which are being used to manage its exposure to foreign currency exchange rate fluctuations on its purchase consideration for the acquisition of Euro Auctions. These decreases were partially offset by the decrease in the income tax expense driven by the lower effective tax rate.
Diluted EPS attributable to stockholders decreased 12% to $1.36 per share compared to $1.54 in 2020. This decrease was primarily due to the decrease in net income attributable to stockholder, combined with an increase in the weighted average number of dilutive shares outstanding over 2020.
Q1 2022 Results
Net income attributable to stockholders increased 532% to $178.1 million, compared to $28.2 million in Q1 2021, which includes a $169.1 million gain on property, plant and equipment for the sale of a property located in Bolton, Ontario. Diluted earnings per share (?EPS?) attributable to stockholders increased 540% to $1.60 per share in Q1 2022 as compared to $0.25 per share in Q1 2021. Non-GAAP diluted adjusted EPS attributable to stockholders* increased 44% to $0.46 per share in Q1 2022 compared to $0.32 per share in Q1 2021.
https://fintel.io/doc/sec-ritchie-bros-auctioneers-inc-1046102-10q-2022-may-09-19122-9241
Total GTV increased 13% to $1.4 billion in Q1 2022 and increased 14% when excluding the impact of foreign exchange.
Total revenue increased 19% to $393.9 million in Q1 2022, with total service revenue increasing by 19% and inventory sales revenue increasing by 19%.
In Q1 2022, total service revenue increased 19% with fees revenue increasing 26% and commissions revenue increasing 12%. Service revenues comprise commissions that are earned on Service GTV, and Fees which are earned on total GTV as well as from its other services such as Ancillary Services, RBFS, Rouse, Mascus, RB Logistics, RB Asset Solutions and SmartEquip.
Inventory sales revenue as a percentage of total GTV increased to 10.4% from 9.8% in Q1 2022.
For Q1 2022, operating income increased 423% or $188.3 million to $232.8 million, which included a gain of $169.1 million on property, plant and equipment from the sale of property located in Bolton, Ontario. The remaining increase was due to a 19% increase in revenue and a strong flow through to operating income, offset by a 15% increase in operating expenses. Operating expenses included higher cost of goods sold in line with higher inventory sales. Selling, general and administrative expenses also increased due to higher professional fees as a result of its IT strategy to build a new digital technology platform, higher travel, advertising and promotion costs from increased activity in global travel partly due to the return of its onsite Orlando event, higher marketing expenses to promote new initiatives, and higher buildings, facilities and technology costs as the company shift to cloud-based solutions to improve customer experiences. The company also incurred $9.6 million in acquisition-related costs for the proposed acquisition of Euro Auctions, and the completed acquisitions of SmartEquip and Rouse.
For Q1 2022, income tax expense increased by 330% to $36.2 million and its effective tax rate decreased 610 bps to 16.9% as compared to Q1 2021. The decrease in the effective tax rate for Q1 2022 was primarily due to the non-taxable gain portion on the sale of a parcel of land including all buildings in Bolton, Ontario. In addition, there was a decrease in the estimate of non-deductible expenses and a write-off of a deferred tax asset upon departure of a management employee of Rouse in 2021 which did not reoccur.
In Q1 2022, net income attributable to stockholders increased 532% to $178.1 million, which included a gain of $169.1 million on property, plant and equipment from the sale of property located in Bolton, Ontario. The remaining increase was primarily related to higher operating income, offset by a higher interest expense incurred on its senior notes held in escrow. In addition, the company saw an increase in income tax expense due to the sale of the Bolton property.
Diluted EPS attributable to stockholders increased 540% to $1.60 per share for Q1 2022, in line with net income.
Commenting on quarterly results Ann Fandozzi, CEO of Ritchie Bros said
https://s24.q4cdn.com/560830410/files/doc_financials/2022/q1/rba_Form_8K-(05.08.2022)-Newswire.pdf
“As the company continue to operate in this unprecedented tight supply environment, its strong growth in GTV and service revenue is a testament to the tenacity of its organization and early signs of its strategic growth initiatives bearing fruit. The company also activated more organizations in the first quarter of 2022 than all of last year combined with 103% quarter-over-quarter growth, helping it lay the foundation to its marketplace and create deeper and stronger relationships with its customers”,
Net income attributable to stockholders increased 532% to $178.1 million, compared to $28.2 million in Q1 2021, which includes a $169.1 million gain on property, plant and equipment for the sale of a property located in Bolton, Ontario. Diluted earnings per share (“EPS”) attributable to stockholders increased 540% to $1.60 per share in Q1 2022 as compared to $0.25 per share in Q1 2021. NonGAAP diluted adjusted EPS attributable to stockholders* increased 44% to $0.46 per share in Q1 2022 compared to $0.32 per share in Q1 2021.
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