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Robust service revenue growth of 15% outpaces strong 7% growth in GTV
VANCOUVER, BC, Nov. 7, 2022 /PRNewswire/ - Ritchie Bros. Auctioneers Incorporated (NYSE: RBA) (TSX: RBA), (the "Company", "Ritchie Bros.", "we", "us", or "our") reported the following results for the third quarter, for the three months ended September 30, 2022.
(All figures are presented in U.S. dollars)
"I am proud of the efforts our teams have made across the organization to deliver strong financial performance in what continues to be an uncertain environment while also enhancing the customer experience through our growth strategies and making progress on our marketplace technology," said Ann Fandozzi, CEO of Ritchie Bros.
In addition, Eric Jacobs, CFO of Ritchie Bros. added, "we are pleased with our continued strong financial performance in the quarter with our double digit service revenue, earnings per share and adjusted earnings per share growth."
Third Quarter Financial and Business Metric Highlights1:
_____________________________ | |
1 | For information regarding Ritchie Bros. use and definition of this measure, see "Key Operating Metrics" and "Non-GAAP Measures" sections in this press release |
Financial and Operational Highlights
Three months ended September 30, | ||||||||||
% Change | ||||||||||
(in U.S. dollars $000's, except EPS and percentages) | 2022 | 2021 | 2022 over 2021 | |||||||
GTV | $ | 1,358,242 | $ | 1,270,258 | 7 | % | ||||
Service revenue | 246,696 | 214,193 | 15 | % | ||||||
Service revenue as a % of total GTV | 18.2 | % | 16.9 | % | 130 | bps | ||||
Inventory sales revenue | 164,783 | 115,489 | 43 | % | ||||||
Inventory return | 17,530 | 12,496 | 40 | % | ||||||
Inventory rate | 10.6 | % | 10.8 | % | (20) | bps | ||||
Net income attributable to stockholders | 42,909 | 32,336 | 33 | % | ||||||
Adjusted EBITDA | 102,544 | 91,247 | 12 | % | ||||||
Diluted earnings per share attributable to stockholders | $ | 0.38 | $ | 0.29 | 31 | % | ||||
Diluted adjusted earnings per share attributable to stockholders | $ | 0.53 | $ | 0.45 | 18 | % |
GTV by Geography
Three months ended September 30, | ||||||||||
% Change | ||||||||||
(in U.S. dollars $000's, except percentages) | 2022 | 2021 | 2022 over 2021 | |||||||
United States | $ | 855,491 | $ | 798,725 | 7 | % | ||||
Canada | 314,872 | 266,574 | 18 | % | ||||||
International | 187,879 | 204,959 | (8) | % | ||||||
Total GTV | $ | 1,358,242 | $ | 1,270,258 | 7 | % |
For the third quarter:
_____________________________ | |
1 | For information regarding Ritchie Bros. use and definition of this measure, see "Key Operating Metrics" and "Non-GAAP Measures" sections in this press release |
Result by Segments
Three months ended September 30, 2022 | ||||||||
(in U.S. dollars $000's, except percentages) | A&M | Other | Consolidated | |||||
Commissions | $ | 108,238 | — | $ | 108,238 | |||
Fees | 85,689 | 52,769 | 138,458 | |||||
Total service revenue | 193,927 | 52,769 | 246,696 | |||||
Inventory sales revenue | 164,783 | — | 164,783 | |||||
Total revenue | 358,710 | 52,769 | 411,479 | |||||
Ancillary and logistical service expenses | — | 14,417 | 14,417 | |||||
Other costs of services | 24,601 | 2,503 | 27,104 | |||||
Cost of inventory sold | 147,253 | — | 147,253 | |||||
Selling, general and administrative | 116,337 | 16,856 | 133,193 | |||||
Segment profit | $ | 70,519 | 18,993 | $ | 89,512 | |||
Total GTV | 1,358,242 | N/A | N/A | |||||
A&M service revenue as a % of total GTV- Rate | 14.3 | % | N/A | N/A |
Three months ended September 30, 2021 | ||||||||||
(in U.S. dollars $000's, except percentages) | A&M | Other | Consolidated | |||||||
Commissions | $ | 110,275 | $ | — | $ | 110,275 | ||||
Fees | 68,607 | 35,311 | 103,918 | |||||||
Total service revenue | 178,882 | 35,311 | 214,193 | |||||||
Inventory sales revenue | 115,489 | — | 115,489 | |||||||
Total revenue | 294,371 | 35,311 | 329,682 | |||||||
Ancillary and logistical service expenses | — | 11,433 | 11,433 | |||||||
Other costs of services | 22,728 | 947 | 23,675 | |||||||
Cost of inventory sold | 102,993 | — | 102,993 | |||||||
Selling, general and administrative | 94,203 | 12,305 | 106,508 | |||||||
Segment profit | $ | 74,447 | $ | 10,626 | $ | 85,073 | ||||
Total GTV | 1,270,258 | N/A | N/A | |||||||
A&M service revenue as a % of total GTV- Rate | 14.1 | % | N/A | N/A |
Auctions & Marketplace segment results:
Other Services segment results:
Dividend Information
Quarterly dividend
On November 2, 2022, the Company declared a quarterly cash dividend of $0.27 per common share, payable on December 14, 2022 to stockholders of record on November 23, 2022.
Third Quarter 2022 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended September 30, 2022 at 5am Pacific time / 8am Eastern time / 1pm GMT on November 7, 2022. The replay of the webcast will be available through December 7, 2022.
Conference call and webcast details are available at the following link:
https://investor.ritchiebros.com
About Ritchie Bros.
Established in 1958, Ritchie Bros. (NYSE and TSX: RBA) 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. Operating in a number of sectors, including construction, commercial transportation, agriculture, energy, mining, and forestry, the company's selling channels include: Ritchie Bros. Auctioneers, the world's largest industrial auctioneer offering live auction events with online bidding; IronPlanet, an online marketplace with weekly featured auctions and providing the exclusive IronClad Assurance® equipment condition certification; Marketplace-E, a controlled marketplace offering multiple price and timing options; Ritchie List, a self-serve listing service for North America; Mascus, a leading European online equipment listing service; Ritchie Bros. Private Treaty, offering privately negotiated sales; and sector-specific solutions GovPlanet, TruckPlanet, and Ritchie Bros. Energy. The Company's suite of solutions also includes Ritchie Bros. Asset Solutions and Rouse Services LLC, which together provides a complete end-to-end asset management, data-driven intelligence and performance benchmarking system; SmartEquip, an innovative technology platform that supports customers' management of the equipment lifecycle and integrates parts procurement with both OEMs and dealers; 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 and growth and value prospects and payment of dividends. 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, including inflation, rising interest rates and foreign exchange rate fluctuation; 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, 2021 and our subsequent quarterly reports on Form 10-Q, 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.
Key Operating Metrics
We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, and make operating decisions. We believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our operational strategies.
We define our key operating metrics as follows:
Gross Transaction Value: Represents total proceeds from all items sold at the Company's 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.
Inventory return: Inventory sales revenue less cost of inventory sold.
Inventory rate: Inventory return divided by inventory sales revenue.
Inventory Management System activations: Number of organizations activated on IMS. An organization is considered activated on IMS when a customer has signed an annual multi-channel contract and has an IMS instance setup to allow for equipment to be directed to one of our transaction solutions digitally.
Bids per lots sold: Each bid is completed electronically through our real-time online bidding system. A lot is defined as a single asset to be sold, or a group of assets bundled for sale as one unit. This metric calculates the total number of bids received for a lot divided by the total number of lots sold. This metric excludes GovPlanet transactions.
Total lots sold: A single asset to be sold, or a group of assets bundled for sale as one unit. Low value assets are sometimes bundled into a single lot, collectively referred to as "small value lots". This metric excludes GovPlanet transactions.
GTV and Selected Condensed Consolidated Financial Information
GTV and Condensed Consolidated Income Statements – Third Quarter
(in U.S. dollars $000's, except share, per share amounts and percentages)
(Unaudited)
Three months ended September 30, | ||||||||||
% Change | ||||||||||
2022 | 2021 | 2022 over 2021 | ||||||||
GTV | $ | 1,358,242 | $ | 1,270,258 | 7 | % | ||||
Revenue: | ||||||||||
Service revenue | $ | 246,696 | $ | 214,193 | 15 | % | ||||
Inventory sales revenue | 164,783 | 115,489 | 43 | % | ||||||
Total revenue | 411,479 | 329,682 | 25 | % | ||||||
Operating expenses: | ||||||||||
Costs of services | 41,521 | 35,108 | 18 | % | ||||||
Cost of inventory sold | 147,253 | 102,993 | 43 | % | ||||||
Selling, general and administrative | 133,193 | 106,508 | 25 | % | ||||||
Acquisition-related costs | 2,031 | 10,255 | (80) | % | ||||||
Depreciation and amortization | 24,290 | 21,907 | 11 | % | ||||||
Foreign exchange (gain) loss | (430) | 360 | (219) | % | ||||||
Total operating expenses | 347,858 | 277,131 | 26 | % | ||||||
Gain on disposition of property, plant and equipment | 333 | 1,068 | (69) | % | ||||||
Operating income | 63,954 | 53,619 | 19 | % | ||||||
Interest expense | (9,199) | (8,807) | 4 | % | ||||||
Change in fair value of derivatives, net | — | — | — | % | ||||||
Other income, net | 2,866 | 602 | 376 | % | ||||||
Income before income taxes | 57,621 | 45,414 | 27 | % | ||||||
Income tax expense | 14,697 | 13,057 | 13 | % | ||||||
Net income | $ | 42,924 | $ | 32,357 | 33 | % | ||||
Net income attributable to: | ||||||||||
Stockholders | $ | 42,909 | $ | 32,336 | 33 | % | ||||
Non-controlling interests | 15 | 21 | (29) | % | ||||||
Net income | $ | 42,924 | $ | 32,357 | 33 | % | ||||
Earnings per share attributable to stockholders: | ||||||||||
Basic | $ | 0.39 | $ | 0.29 | 34 | % | ||||
Diluted | $ | 0.38 | $ | 0.29 | 31 | % | ||||
Weighted average number of share outstanding: | ||||||||||
Basic | 110,838,237 | 110,410,172 | 0 | % | ||||||
Diluted | 112,209,535 | 111,391,396 | 1 | % |
Condensed Consolidated Balance Sheets
(in U.S. dollars $000's, except share data)
(Unaudited)
September 30, 2022 | December 31, 2021 | |||||
Assets | ||||||
Cash and cash equivalents | $ | 438,771 | $ | 326,113 | ||
Restricted cash | 76,303 | 102,875 | ||||
Trade and other receivables | 307,409 | 150,895 | ||||
Less: allowance for credit losses | (3,963) | (4,396) | ||||
Inventory | 101,302 | 102,494 | ||||
Other current assets | 27,512 | 64,346 | ||||
Income taxes receivable | 6,523 | 19,895 | ||||
Total current assets | 953,857 | 762,222 | ||||
Restricted cash | — | 933,464 | ||||
Property, plant and equipment | 444,538 | 449,087 | ||||
Other non-current assets | 147,900 | 142,504 | ||||
Intangible assets | 323,228 | 350,516 | ||||
Goodwill | 946,770 | 947,715 | ||||
Deferred tax assets | 6,281 | 7,406 | ||||
Total assets | $ | 2,822,574 | $ | 3,592,914 | ||
Liabilities and Equity | ||||||
Auction proceeds payable | $ | 441,439 | $ | 292,789 | ||
Trade and other liabilities | 266,139 | 280,308 | ||||
Income taxes payable | 38,678 | 5,677 | ||||
Short-term debt | 1,630 | 6,147 | ||||
Current portion of long-term debt | 4,296 | 3,498 | ||||
Total current liabilities | 752,182 | 588,419 | ||||
Long-term debt | 633,048 | 1,733,940 | ||||
Other non-current liabilities | 137,228 | 147,260 | ||||
Deferred tax liabilities | 60,916 | 52,232 | ||||
Total liabilities | 1,583,374 | 2,521,851 | ||||
Commitments and Contingencies | ||||||
Stockholders' equity: | ||||||
Share capital: | ||||||
Common stock; no par value, unlimited shares authorized, issued and | ||||||
outstanding shares: 110,870,783 (December 31, 2021: 110,618,049) | 239,141 | 227,504 | ||||
Additional paid-in capital | 81,937 | 59,535 | ||||
Retained earnings | 1,028,096 | 839,609 | ||||
Accumulated other comprehensive loss | (110,372) | (55,973) | ||||
Stockholders' equity | 1,238,802 | 1,070,675 | ||||
Non-controlling interest | 398 | 388 | ||||
Total stockholders' equity | 1,239,200 | 1,071,063 | ||||
Total liabilities and equity | $ | 2,822,574 | $ | 3,592,914 |
Condensed Consolidated Statements of Cash Flows
(in U.S. dollars $000's)
(Unaudited)
Nine months ended September 30, | ||||||
2022 | 2021 | |||||
Cash provided by (used in): | ||||||
Operating activities: | ||||||
Net income | $ | 274,436 | $ | 121,277 | ||
Adjustments for items not affecting cash: | ||||||
Depreciation and amortization | 72,813 | 64,912 | ||||
Share-based payments expense | 31,396 | 23,306 | ||||
Deferred income tax expense | 7,887 | 2,228 | ||||
Unrealized foreign exchange (gain) loss | (5,340) | (98) | ||||
Gain on disposition of property, plant and equipment | (170,499) | (1,311) | ||||
Loss on redemption of the 2021 Notes | 4,792 | — | ||||
Amortization of debt issuance costs | 3,104 | 2,155 | ||||
Amortization of right-of-use assets | 13,929 | 9,458 | ||||
Change in fair value of derivatives | (1,263) | — | ||||
Other, net | 2,824 | 2,253 | ||||
Net changes in operating assets and liabilities | 29,827 | 79,938 | ||||
Net cash provided by operating activities | 263,906 | 304,118 | ||||
Investing activities: | ||||||
Acquisitions, net of cash acquired | (63) | 728 | ||||
Property, plant and equipment additions | (26,279) | (6,984) | ||||
Proceeds on disposition of property, plant and equipment | 165,190 | 1,667 | ||||
Intangible asset additions | (28,225) | (25,601) | ||||
Issuance of loans receivable | (7,027) | (2,622) | ||||
Repayment of loans receivable | 4,744 | 436 | ||||
Net cash provided by (used in) investing activities | 108,340 | (32,376) | ||||
Financing activities: | ||||||
Dividends paid to stockholders | (85,284) | (76,144) | ||||
Acquisition of remaining interest in NCI | — | (5,556) | ||||
Dividends paid to NCI | — | (104) | ||||
Proceeds from exercise of options and share option plans | 5,763 | 13,915 | ||||
Payment of withholding taxes on issuance of shares | (3,860) | (9,160) | ||||
Net increase (decrease) in short-term debt | (4,176) | (9,271) | ||||
Repayment of long-term debt | (1,094,926) | (5,328) | ||||
Debt issue costs | (3,644) | (3,163) | ||||
Repayment of finance lease obligations | (7,877) | (8,445) | ||||
Net cash used in financing activities | (1,194,004) | (103,256) | ||||
Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash | (25,620) | (7,027) | ||||
(Decrease) Increase | (847,378) | 161,459 | ||||
Beginning of period | 1,362,452 | 306,895 | ||||
Cash, cash equivalents, and restricted cash, end of period | $ | 515,074 | $ | 468,354 |
Non-GAAP Measures
This news release references 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 US GAAP.
Adjusted Operating Income Reconciliation
The Company believes that adjusted operating income provides useful information about the growth or decline of its operating income 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. Adjusted operating income enhances the Company's ability to evaluate and understand ongoing operations, underlying business profitability, and facilitate the allocation of resources.
Adjusting operating income eliminates the financial impact of adjusting items from operating income, which are significant recurring and non-recurring items that the Company does not consider to be part of its normal operating results, such as share-based payments expense, acquisition-related costs, amortization of acquired intangible assets, management reorganization costs, and certain other items, which the Company refers to as "adjusting items".
In 2021, the Company updated the calculation of adjusted operating income to add-back share-based payments expense, all acquisition-related costs (including any share-based continuing employment costs recognized in acquisition-related costs), amortization of acquired intangible assets, and gain or loss on disposition of property, plant and equipment. The Company has also adjusted for certain non-recurring advisory, legal and restructuring costs. These adjustments in 2021 have been applied retrospectively to all periods presented, as applicable.
The following table reconciles adjusted operating income to operating income, which is the most directly comparable GAAP measure in the consolidated financial statements.
Three months ended September 30, | |||||||||
% Change | |||||||||
(in U.S. dollars $000's, except percentages) | 2022 | 2021 | 2022 over 2021 | ||||||
Operating income | $ | 63,954 | $ | 53,619 | 19 | % | |||
Share-based payments expense | 8,806 | 5,627 | 56 | % | |||||
Acquisition-related costs | 2,031 | 10,255 | (80) | % | |||||
Amortization of acquired intangible assets | 8,227 | 6,622 | 24 | % | |||||
Loss (Gain) on disposition of property, plant and equipment and related costs | 930 | (1,068) | (187) | % | |||||
Non-recurring advisory, legal and restructuring costs | 1,494 | 680 | 120 | % | |||||
Adjusted operating income | $ | 85,442 | $ | 75,735 | 13 | % |
(1) | Please refer to pages 13-14 for a summary of adjusting items during the three months ended September 30, 2022 and September 30, 2021. |
(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 from net income attributable to stockholders that the Company does not consider to be part of the normal operating results, such as share-based payments expense, acquisition-related costs, amortization of acquired intangible assets, management reorganization costs, and certain other items, which the Company refers to as "adjusting items".
In 2021, the Company updated the calculation of diluted adjusted EPS attributable to stockholders to add-back certain adjustments that have been applied retrospectively to all periods presented, as applicable (refer to adjusted operating income reconciliation above).
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 financial statements.
Three months ended September 30, | ||||||||||
% Change | ||||||||||
(in U.S. dollars $000's, except share and per share data, and percentages) | 2022 | 2021 | 2022 over 2021 | |||||||
Net income attributable to stockholders | $ | 42,909 | $ | 32,336 | 33 | % | ||||
Share-based payments expense | 8,806 | 5,627 | 56 | % | ||||||
Acquisition-related costs | 2,031 | 10,255 | (80) | % | ||||||
Amortization of acquired intangible assets | 8,227 | 6,622 | 24 | % | ||||||
Loss (Gain) on disposition of property, plant and equipment and related costs | 930 | (1,068) | (187) | % | ||||||
Non-recurring advisory, legal and restructuring costs | 1,494 | 680 | 120 | % | ||||||
Related tax effects of the above | (4,544) | (4,672) | (3) | % | ||||||
Adjusted net income attributable to stockholders | $ | 59,853 | $ | 49,780 | 20 | % | ||||
Weighted average number of dilutive shares outstanding | 112,209,535 | 111,391,396 | 1 | % | ||||||
Diluted earnings per share attributable to stockholders | $ | 0.38 | $ | 0.29 | 31 | % | ||||
Diluted adjusted earnings per share attributable to Stockholders | $ | 0.53 | $ | 0.45 | 18 | % |
(1) | Please refer to pages 13-14 for a summary of adjusting items for the three months ended September 30, 2022 and September 30, 2021. |
(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 adjusted EBITDA provides useful information about the growth or decline of its net income when compared between different financial periods. The Company uses adjusted EBITDA as a key performance measure because the Company believes it facilitates operating performance comparisons from period to period and provides management with the ability to monitor its controllable incremental revenues and costs.
In 2021, the Company updated the calculation of adjusted EBITDA to add-back certain adjustments that have been applied retrospectively to all periods presented, as applicable (refer to adjusted operating income reconciliation above).
The following table reconciles adjusted EBITDA to net income, which is the most directly comparable GAAP measure in, or calculated from, the consolidated financial statements:
Three months ended September 30, | |||||||||
% Change | |||||||||
(in U.S. dollars $000's, except percentages) | 2022 | 2021 | 2022 over 2021 | ||||||
Net income | $ | 42,924 | $ | 32,357 | 33 | % | |||
Add: depreciation and amortization | 24,290 | 21,907 | 11 | % | |||||
Add: interest expense | 9,199 | 8,807 | 4 | % | |||||
Less: interest income | (1,827) | (375) | 387 | % | |||||
Add: income tax expense | 14,697 | 13,057 | 13 | % | |||||
EBITDA | 89,283 | 75,753 | 18 | % | |||||
Share-based payments expense | 8,806 | 5,627 | 56 | % | |||||
Acquisition-related costs | 2,031 | 10,255 | (80) | % | |||||
Loss (Gain) on disposition of property, plant and equipment and related costs | 930 | (1,068) | (187) | % | |||||
Non-recurring advisory, legal and restructuring costs | 1,494 | 680 | 120 | % | |||||
Adjusted EBITDA | $ | 102,544 | $ | 91,247 | 12 | % |
(1) | Please refer to pages 13-14 for a summary of adjusting items during the three months ended September 30, 2022 and September 30, 2021. |
(2) | Adjusted EBITDA is calculated by adding back depreciation and amortization, interest expense, income tax expense, and subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, loss (gain) on disposition of property, plant and equipment, terminated and ongoing transaction costs, and excluding the effects of any non-recurring or unusual adjusting items. |
Adjusted Net Debt and Adjusted Net Debt/Adjusted EBITDA Reconciliation
The Company believes that comparing adjusted net debt/adjusted EBITDA on a trailing 12‑month basis for different financial periods provides useful information about the performance of its operations as an indicator of the amount of time it would take to settle both the Company's short and long-term debt. The Company does not consider this to be a measure of its liquidity, which is its ability to settle only short-term obligations, but rather a measure of how well it funds liquidity. Measures of liquidity are noted under "Liquidity and Capital Resources".
The following table reconciles adjusted net debt to debt, adjusted EBITDA to net income, and adjusted net debt/ adjusted EBITDA to debt/ net income, respectively, which are the most directly comparable GAAP measures in, or calculated from, its consolidated financial statements.
As at and for the twelve months ended September 30, | |||||||||
% Change | |||||||||
(in U.S. dollars $millions, except percentages) | 2022 | 2021 | 2022 over 2021 | ||||||
Short-term debt | $ | 1.6 | $ | 18.5 | (91) | % | |||
Long-term debt | 637.3 | 633.7 | 1 | % | |||||
Debt | 638.9 | 652.2 | (2) | % | |||||
Less: cash and cash equivalents | (438.8) | (362.6) | 21 | % | |||||
Adjusted net debt | 200.1 | 289.6 | (31) | % | |||||
Net income | $ | 305.0 | $ | 170.2 | 79 | % | |||
Add: depreciation and amortization | 95.8 | 84.3 | 14 | % | |||||
Add: interest expense | 58.7 | 35.4 | 66 | % | |||||
Less: interest income | (3.6) | (1.6) | 125 | % | |||||
Add: income tax expense | 83.4 | 59.3 | 41 | % | |||||
EBITDA | 539.3 | 347.6 | 55 | % | |||||
Share-based payments expense | 34.0 | 21.5 | 58 | % | |||||
Acquisition-related costs | 29.0 | 22.2 | 31 | % | |||||
Loss (Gain) on disposition of property, plant and equipment and related costs | (167.9) | (1.3) | 12815 | % | |||||
Non-recurring advisory, legal and restructuring costs | 7.5 | 0.9 | 733 | % | |||||
Adjusted EBITDA | $ | 441.9 | $ | 390.9 | 13 | % | |||
Debt/net income | 2.1 | x | 3.8 | x | (45) | % | |||
Adjusted net debt/adjusted EBITDA | 0.5 | x | 0.7 | x | (29) | % |
(1) | Please refer to pages 13-14 for a summary of adjusting items during the trailing 12‑months ended September 30, 2022 and September 30, 2021. |
(2) | Adjusted EBITDA is calculated by adding back depreciation and amortization, interest expense, income tax expense, and subtracting interest income from net income, as well as adding back share-based payments expense, acquisition-related costs, loss (gain) on disposition of property, plant and equipment, terminated and ongoing transaction costs, and excluding the effects of any non-recurring or unusual adjusting items. |
(3) | Adjusted net debt is calculated by subtracting cash and cash equivalents from short and long-term debt. |
(4) | Adjusted net debt/Adjusted EBITDA is calculated by dividing adjusted net debt by adjusted EBITDA. |
Adjusting Items Non-GAAP Measures
In 2021, the Company began adjusting for share-based payment expenses, amortization of acquired intangible assets and all gains or losses on disposition of property, plant and equipment, which the Company did not consider to be part of its normal operating results. These adjustments in 2021 have been applied retrospectively to all periods presented.
Adjusting items during the trailing twelve months ended September 30, 2022 were:
Recognized in the third quarter of 2022Recognized in the second quarter of 2022
Recognized in the first quarter of 2022
Recognized in the fourth quarter of 2021
Adjusting items during the trailing twelve months ended September 30, 2021 were:
Recognized in the third quarter of 2021
Recognized in the second quarter of 2021
Recognized in the first quarter of 2021
Recognized in the fourth quarter of 2020
View original content: https://www.prnewswire.com/news-releases/ritchie-bros-reports-third-quarter-2022-results-301669818.html
SOURCE Ritchie Bros. Auctioneers