Ritchie Bros. reports second quarter 2021 results

Rhea-AI Summary

Ritchie Bros. Auctioneers reported a 15% increase in net income to $60.7 million for Q2 2021, with diluted earnings per share rising to $0.55. Total revenue grew 2% to $396.4 million, driven by an 8% rise in service revenue despite a 7% decline in inventory sales revenue. Operating income slightly increased to $89.5 million, while SG&A expenses rose by 11% to $111.8 million. The company declared a quarterly dividend of $0.25 per share, marking a 14% increase. The performance benefited from strategic digital initiatives and improved GTV, although some inventory sales challenges were noted due to market conditions.

Positive

• Net income rose 15% to $60.7 million.
• Diluted EPS increased 12% to $0.55.
• Total revenue grew 2% to $396.4 million.
• Service revenue increased 8%, driven by a 14% rise in fees.
• Quarterly cash dividend raised by 14% to $0.25.

Negative

• Inventory sales revenue decreased 7% to $143.6 million.
• SG&A expenses rose 11%, impacting overall profitability.
• Operating income increased only slightly by 1%.

VANCOUVER, BC, Aug. 5, 2021 /PRNewswire/ - Ritchie Bros. Auctioneers Incorporated (NYSE: RBA) (TSX: RBA) (the "Company", "Ritchie Bros.", "we", "us", or "our") reported the following results for the three months ended June 30, 2021.

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

Net income attributable to stockholders increased 15% to $60.7 million, compared to $53.0 million in Q2 2020. Diluted earnings per share ("EPS") attributable to stockholders increased 12% to $0.55 per share in Q2 2021 compared to $0.49 per share in Q2 2020. Diluted adjusted EPS attributable to stockholders* increased 2% to $0.55 per share in Q2 2021 compared to $0.54 per share in Q2 2020.

"We grew our total service revenue by 8% in the quarter despite an unfavorable, albeit temporary, used equipment supply environment." said Ann Fandozzi, CEO of Ritchie Bros.

Fandozzi concluded " We continue to focus on our long-term strategy of providing insights, services, and transaction solutions to our customers. We are testing and learning more how to service our customers digitally, with Business Inventory Management System "IMS" activations increasing 34% sequentially compared to last quarter."

For the second quarter of 2021 as compared to the second quarter of 2020:

Consolidated results:

• Total revenue in Q2 2021 increased 2% to $396.4 million
• Service revenue in Q2 2021 increased 8% to $252.7 million
• Inventory sales revenue in Q2 2021 decreased 7% to $143.6 million
• Total selling, general and administrative expenses ("SG&A") in Q2 2021 increased 11% to $111.8 million
• Operating income in Q2 2021 increased 1% to $89.5 million
• Net income in Q2 2021 increased 14% to $60.8 million
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization* ("EBITDA") (non-GAAP measure) in Q2 2021 increased 5% to $112.3 million
• Cash provided by operating activities was $211.4 million for the first half of 2021

Auctions & Marketplaces segment results:

• GTV¹ in Q2 2021 increased 2% to $1.5 billion and decreased 3% when excluding the impact of foreign exchange
• A&M total revenue in Q2 2021 remained flat at $355.1 million
• Service revenue in Q2 2021 increased 6% to $211.5 million
• Inventory sales revenue in Q2 2021 decreased 7% to $143.6 million

Other Services segment results:

• Other Services total revenue in Q2 2021 increased 20% to $41.3 million
• RBFS revenue in Q2 2021 increased 39% to $11.8 million
• Rouse revenue of $6.2 million was recognized in Q2 2021, which was its second full quarter since its acquisition on December 8, 2020
• Total number of organizations activated on our IMS increased by 34%

Other Company development:

• Increased quarterly cash dividend by 14% to $0.25 per share

1 Gross Transaction Value ("GTV") 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.

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 9-10 for explanations of why the Company uses these non-GAAP measures and the reconciliation to the most comparable GAAP financial measures.

Financial Overview
(Unaudited)

(in U.S. $000's, except EPS and percentages)		Three months ended June 30,								Six months ended June 30,
							% Change									% Change
	2021			2020			2021 over 2020			2021			2020			2021 over 2020
Service revenue:
Commissions	$	129,334		$	125,465		3	%		$	233,309		$	218,950		7	%
Fees		123,414			108,674		14	%			225,469			198,312		14	%
Total service revenue		252,748			234,139		8	%			458,778			417,262		10	%
Inventory sales revenue		143,613			154,911		(7)	%			269,138			245,043		10	%
Total revenue		396,361			389,050		2	%			727,916			662,305		10	%
Costs of services		39,042			39,448		(1)	%			75,069			78,803		(5)	%
Cost of inventory sold		131,023			143,134		(8)	%			241,770			224,719		8	%
Selling, general and administrative expenses		111,819			100,632		11	%			227,897			199,017		15	%
Operating expenses		306,844			300,250		2	%			593,897			539,423		10	%
Operating income		89,517			88,800		1	%			134,019			122,882		9	%
Operating income as a % of total revenue		22.6	%		22.8	%	(20)	bps			18.4	%		18.6	%	(20)	bps
Net income attributable to stockholders		60,749			53,043		15	%			88,937			75,851		17	%
Adjusted net income attributable to stockholders*		60,749			59,271		2	%			88,937			82,079		8	%
Diluted EPS attributable to stockholders	$	0.55		$	0.49		12	%		$	0.80		$	0.69		16	%
Diluted adjusted EPS attributable to stockholders*	$	0.55		$	0.54		2	%		$	0.80		$	0.75		7	%
Effective tax rate		25.7	%		34.2	%	(850)	bps			24.9	%		30.5	%	(560)	bps
Total GTV		1,527,642			1,493,982		2	%			2,802,182			2,641,006		6	%
Service GTV		1,384,029			1,339,071		3	%			2,533,044			2,395,963		6	%
Service revenue as a % of total GTV - Rate		16.5	%		15.7	%	80	bps			16.4	%		15.8	%	60	bps
Inventory GTV		143,613			154,911		(7)	%			269,138			245,043		10	%
Service revenue as a % of total revenue		63.8	%		60.2	%	360	bps			63.0	%		63.0	%	—	bps
Inventory sales revenue as a % of total revenue		36.2	%		39.8	%	(360)	bps			37.0	%		37.0	%	—	bps
Cost of inventory sold as a % of operating expenses		42.7	%		47.7	%	(500)	bps			40.7	%		41.7	%	(100)	bps
Service GTV as a % of total GTV - Mix		90.6	%		89.6	%	100	bps			90.4	%		90.7	%	(30)	bps
Inventory sales revenue as a % of total GTV - Mix		9.4	%		10.4	%	(100)	bps			9.6	%		9.3	%	30	bps

Segment Overview

(in U.S $000's)	Three months ended June 30, 2021								Six months ended June 30, 2021
	A&M			Other		Consolidated			A&M			Other		Consolidated
Service revenue	$	211,475		41,273		$	252,748		$	382,230		76,548		$	458,778
Inventory sales revenue		143,613		—			143,613			269,138		—			269,138
Total revenue		355,088		41,273			396,361			651,368		76,548			727,916
Ancillary and logistical service expenses		—		14,819			14,819			—		27,088			27,088
Other costs of services		21,985		2,238			24,223			43,575		4,406			47,981
Cost of inventory sold		131,023		—			131,023			241,770		—			241,770
SG&A expenses		101,417		10,402			111,819			205,762		22,135			227,897
Segment profit	$	100,663		13,814		$	114,477		$	160,261		22,919		$	183,180
Total GTV		1,527,642		N/A			N/A			2,802,182		N/A			N/A
A&M service revenue as a % of total GTV- Rate		13.8	%	N/A			N/A			13.6	%	N/A			N/A

 

(in U.S $000's)	Three months ended June 30, 2020									Six months ended June 30, 2020
	A&M			Other			Consolidated			A&M			Other			Consolidated
Service revenue	$	199,648		$	34,491		$	234,139		$	354,391		$	62,871		$	417,262
Inventory sales revenue		154,911			—			154,911			245,043			—			245,043
Total revenue		354,559			34,491			389,050			599,434			62,871			662,305
Ancillary and logistical service expenses		—			16,060			16,060			—			28,818			28,818
Other costs of services		22,190			1,198			23,388			47,285			2,700			49,985
Cost of inventory sold		143,134			—			143,134			224,719			—			224,719
SG&A expenses		94,559			6,073			100,632			186,144			12,873			199,017
Segment profit	$	94,676		$	11,160		$	105,836			141,286			18,480			159,766
Total GTV		1,493,982			N/A			N/A			2,641,006			N/A			N/A
A&M service revenue as a % of total GTV- Rate		13.4	%		N/A			N/A			13.4	%		N/A			N/A

Q2 2021 Consolidated Performance Overview

In response to the COVID-19 pandemic, 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. 

Total GTV increased 2% to $1.5 billion and decreased 3% when excluding the impact of foreign exchange in Q2 2021. GTV volumes grew primarily in International and Canada, offset by lower volume in the US. All regions continued to experience very strong mix adjusted auction price performance due to high demand for used equipment, in part aided by our digital marketing efforts. However, despite higher mix adjusted pricing, we experienced headwinds due to negative mix impacts driven in part by older aged equipment in the transportation and construction sectors. This combined with auction calendar shifts of $52 million from the impact of the COVID-19 pandemic that were shifted from Q1 into Q2 2020 that did not repeat in Q2 2021 led to lower GTV. Total GTV increased in International driven by an improved economic climate, the benefit from the use of new satellite yards in France, Germany and Australia coupled with a favourable foreign exchange impact, partially offset by the auction shift of Caorso, Italy. Total GTV also increased in Canada which benefited from a favourable foreign exchange impact, higher performance at our Toronto auction, an increased volume from RBFS providing escrow services for private brokered transactions, offset by lower overall volumes in Edmonton and Grand Prairie as well as the shift of our Montreal auction. Total GTV volumes decreased in the US due to the shift of our Los Angeles auction, lower activity due to supply constraints mainly in our Fort Worth auction and Denver regional combined events and the non-repeat of a large supply contract. In addition, lower volumes in our US strategic accounts in the finance, original equipment manufacturer ("OEM") and transportation sectors also contributed to lower GTV, partially offset by positive online performance.

Total revenue increased 2% to $396.4 million in Q2 2021, with total service revenue increasing by 8%, offset by a decrease in  inventory sales revenue by 7%.

Service revenue increased 8% with fees revenue increasing 14% and commissions revenue increasing 3%. Fee revenue was up 14% mainly due to fee revenue from the acquisition of Rouse, and the continued growth in RBFS fee revenue. Fees revenue also increased due to the revised global buyer fee structure implemented on May 1, 2021 and the re-instatement of fees at the Canadian on-the-farm auctions which were waived in Q2 as part of our COVID-19 pandemic response. These increases were partially offset by lower ancillary revenue mainly due to lower fees earned on refurbishment, transportation and redeployment of assets in the US. Commissions revenue was up 3%, in line with the higher service GTV of 3%.

Inventory sales revenue decreased 7% representing a lower mix of volumes of inventory contracts, partially offset by higher pricing, primarily in the US and Canada. These decreases were partially offset by strong year-over-year performance in our International region primarily driven by increased sales in Australia, and in the Middle East benefiting from overall improved economic conditions from the recovery of the COVID-19 pandemic. In addition, we saw increased volumes sold through our GovPlanet business as a result of the new non-rolling and rolling stock contracts effective June 1, 2021 and higher volumes due to the government shutdowns in prior year in response to the COVID-19 pandemic.

Costs of services decreased 1% to $39.0 million. This decrease was primarily driven by lower activity in line with lower GTV in the US, lower ancillary and logistical service expenses, in line with the decrease in ancillary fees earned on refurbishment, transportation and redeployment of assets in the US. These decreases were partially offset by higher costs incurred to support the increased activity in our GovPlanet business, incremental costs to introduce the new satellite yards in Europe and the second full quarter of costs of services incurred from Rouse since acquisition.

Cost of inventory decreased 8% to $131.0 million, primarily in line with lower inventory sales revenue. Cost of inventory sold decreased at a higher rate than the decrease of inventory sales revenue, indicating a slight increase in the revenue rates primarily in our GovPlanet business and US region, partially offset by the International region.

Selling, general and administrative ("SG&A") expenses increased 11% to $111.8 million primarily due to an unfavourable impact of foreign exchange fluctuation, higher wages, salaries and benefit expenses driven by higher headcount to support our growth initiatives and a second full quarter of costs incurred from Rouse since acquisition. We also incurred higher travel, advertising and promotion expenses to promote our global digital marketing efforts, and increased travel activity due to the lifting of  border and quarantine restrictions. These increases were partially offset by lower short-term and long-term incentive costs including the non-repeat of a prior year one-time incentive accrual to employees during the COVID-19 pandemic.

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

Net income attributable to stockholders increased 15% to $60.7 million primarily related to the decrease in effective tax rate following a $6.2 million income tax expense recognized in Q2 2020 relating to an unfavourable adjustment to reflect final regulations published regarding hybrid financing arrangements, and slightly higher operating income. Adjusted net income attributed to stockholders* increased 2% to $60.7 million in Q2 2021 compared to $59.3 million in Q2 2020.

Primarily for the same reasons noted above, diluted EPS attributable to stockholders increased 12% to $0.55 per share for Q2 2021 from $0.49 per share in Q2 2020. Diluted adjusted EPS attributable to stockholders* increased 2% to $0.55 per share in Q2 2021.

Dividend Information

Quarterly dividend
On August 4, 2021, the Company declared a quarterly cash dividend of $0.25 per common share payable on September 15, 2021 to shareholders of record on August 25, 2021.

Q2 2021 Earnings Conference Call
Ritchie Bros. is hosting a conference call to discuss its financial results for the quarter ended June 30, 2021 at 8am Pacific time / 11 am Eastern time / 4pm GMT on August 6, 2021. The replay of the webcast will be available through September 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 and TSX: 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, 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; 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 and the Company's Form 10-Q for the quarter ended June 30, 2021, 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 – Second 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 June 30,							Six months ended June 30,
					% Change							% Change
		2021		2020	2021 over 2020				2021		2020	2020 over 2019
GTV	$	1,527,642	$	1,493,982	2	%		$	2,802,182	$	2,641,006	6	%
Revenues:
Service revenues	$	252,748	$	234,139	8	%		$	458,778	$	417,262	10	%
Inventory sales revenue		143,613		154,911	(7)	%			269,138		245,043	10	%
Total revenues		396,361		389,050	2	%			727,916		662,305	10	%
Operating expenses:
Costs of services		39,042		39,448	(1)	%			75,069		78,803	(5)	%
Cost of inventory sold		131,023		143,134	(8)	%			241,770		224,719	8	%
Selling, general and administration expenses		111,819		100,632	11	%			227,897		199,017	15	%
Acquisition-related costs		3,049		—	100	%			5,971		—	100	%
Depreciation and amortization expenses		21,935		17,857	23	%			43,005		37,150	16	%
Gain on disposition of property, plant and equipment		(175)		(1,213)	(86)	%			(243)		(1,260)	(81)	%
Foreign exchange (gain) loss		151		392	(61)	%			428		994	(57)	%
Total operating expenses		306,844		300,250	2	%			593,897		539,423	10	%
Operating income		89,517		88,800	1	%			134,019		122,882	9	%
Interest expense		(8,867)		(8,882)	(0)	%			(17,813)		(18,064)	(1)	%
Other income, net		1,196		857	40	%			2,198		4,434	(50)	%
Income before income taxes		81,846		80,775	1	%			118,404		109,252	8	%
Income tax expense		21,065		27,656	(24)	%			29,484		33,304	(11)	%
Net income	$	60,781	$	53,119	14	%		$	88,920	$	75,948	17	%
Net income attributable to:
Stockholders	$	60,749	$	53,043	15	%		$	88,937	$	75,851	17	%
Non-controlling interests		32		76	(58)	%			(17)		97	(118)	%
	$	60,781	$	53,119	14	%		$	88,920	$	75,948	17	%
Earnings per share attributable to stockholders:
Basic	$	0.55	$	0.49	12	%		$	0.81	$	0.70	16	%
Diluted	$	0.55	$	0.49	12	%		$	0.80	$	0.69	16	%
Weighted average number of share outstanding:
Basic		110,311,615		108,387,490	2	%			110,144,229		108,818,903	1	%
Diluted		111,334,184		109,323,343	2	%			111,302,711		109,903,808	1	%

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

	June 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	301,757	$	278,766
Restricted cash		140,966		28,129
Trade and other receivables		271,980		135,001
Less: allowance for credit losses		(5,348)		(5,467)
Inventory		85,930		86,278
Other current assets		27,776		27,274
Income taxes receivable		10,524		6,797
Total current assets		833,585		556,778
Property, plant and equipment		482,732		492,127
Other non-current assets		146,890		147,608
Intangible assets		292,444		300,948
Goodwill		838,798		840,610
Deferred tax assets		12,534		13,458
Total assets	$	2,606,983	$	2,351,529
Liabilities and Equity
Auction proceeds payable	$	445,090	$	214,254
Trade and other payables		221,738		243,786
Income taxes payable		4,240		17,032
Short-term debt		35,213		29,145
Current portion of long-term debt		10,657		10,360
Total current liabilities		716,938		514,577
Long-term debt		625,832		626,288
Other non-current liabilities		156,636		153,000
Deferred tax liabilities		46,150		45,265
Total liabilities		1,545,556		1,339,130
Commitments and Contingencies
Stockholders' equity:
Share capital:
Common stock; no par value, unlimited shares
authorized, issued and outstanding shares:
110,366,808 (December 31, 2020: 109,876,428)		215,666		200,451
Additional paid-in capital		51,800		49,171
Retained earnings		832,037		791,918
Accumulated other comprehensive loss		(43,173)		(34,295)
Stockholders' equity		1,056,330		1,007,245
Non-controlling interest		5,097		5,154
Total stockholders' equity		1,061,427		1,012,399
Total liabilities and equity	$	2,606,983	$	2,351,529

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

Six months ended June 30,	2021		2020
Cash provided by (used in):
Operating activities:
Net income	$	88,920	$	75,948
Adjustments for items not affecting cash:
Depreciation and amortization expenses		43,005		37,150
Stock-based compensation expense		16,183		7,747
Deferred income tax expense		1,719		6,657
Unrealized foreign exchange loss		(65)		1,129
Gain on disposition of property, plant and equipment		(243)		(1,260)
Amortization of debt issuance costs		1,443		1,577
Amortization of right-of-use assets		6,280		6,318
Gain on contingent consideration from equity investment		—		(1,700)
Other, net		1,568		1,934
Net changes in operating assets and liabilities		52,577		62,824
Net cash provided by operating activities		211,387		198,324
Investing activities:
Acquisition of Rouse, net of cash acquired		728		—
Property, plant and equipment additions		(4,616)		(6,140)
Proceeds on disposition of property, plant and equipment		342		16,106
Intangible asset additions		(17,361)		(13,244)
Issuance of loans receivable		(2,622)		(2,985)
Repayment of loans receivable		226		203
Distribution from equity investment		—		4,212
Proceeds on contingent consideration from equity investment		—		1,700
Net cash used in investing activities		(23,303)		(148)
Financing activities:
Share repurchase		—		(53,170)
Dividends paid to stockholders		(48,537)		(43,586)
Dividends paid to non-controlling interests		(26)		—
Proceeds from exercise of options and share option plans		10,699		19,425
Payment of withholding taxes on issuance of shares		(9,155)		(3,321)
Net increase (decrease) in short-term debt		6,842		15,858
Repayment of long-term debt		(5,328)		(8,633)
Repayment of finance lease obligations		(5,355)		(4,384)
Net cash used in financing activities		(50,860)		(77,811)
Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash		(1,396)		(2,608)
Increase		135,828		117,757
Beginning of period		306,895		420,256
Cash, cash equivalents, and restricted cash, end of period	$	442,723	$	538,013

Selected Data
(Unaudited)

Total auction metrics

	Three months ended June 30,					Six months ended June 30,
			% Change					% Change
	2021	2020	2021 over 2020			2021	2020	2021 over 2020
Number of auction sales days	240	226	6	%		333	313	6	%
Bids per lot sold *	27	25	9	%		28	23	19	%
Total lots sold *	148,206	148,957	(1)	%		263,035	249,754	5	%

* Management reviews industrial equipment auction metrics excluding GovPlanet; as a result GovPlanet business metrics are excluded from these metrics

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 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 June 30,							Six months ended June 30,
					% Change							% Change
	2021		2020		2021 over 2020			2021		2020		2021 over 2020
Net income attributable to stockholders	$	60,749	$	53,043	15	%		$	88,937	$	75,851	17	%
Current income tax adjusting item:
Change in uncertain tax provision		—		766	(100)	%			—		766	(100)	%
Deferred tax adjusting item:
Change in uncertain tax provision		—		5,462	(100)	%			—		5,462	(100)	%
Adjusted net income attributable to stockholders*	$	60,749	$	59,271	2	%		$	88,937	$	82,079	8	%
Weighted average number of dilutive shares outstanding		111,334,184		109,323,343	2	%			111,302,711		109,903,808	1	%
									0
Diluted earnings per share attributable to stockholders	$	0.55	$	0.49	12	%		$	0.80	$	0.69	16	%
Diluted adjusted EPS attributable to Stockholders*	$	0.55	$	0.54	2	%		$	0.80	$	0.75	7	%

(1)	Please refer to page 10 for a summary of adjusting items for the three and six months ended June 30, 2021 and June 30, 2020.
(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 June 30,							Six months ended June 30,
					% Change							% Change
	2021		2020		2021 over 2020			2021		2020		2021 over 2020
Net income	$	60,781	$	53,119	14	%		$	88,920	$	75,948	17	%
Add: depreciation and amortization expenses		21,935		17,857	23	%			43,005		37,150	16	%
Add: interest expense		8,867		8,882	(0)	%			17,813		18,064	(1)	%
Less: interest income		(332)		(393)	(16)	%			(634)		(1,063)	(40)	%
Add: income tax expense		21,065		27,656	(24)	%			29,484		33,304	(11)	%
Adjusted EBITDA*	$	112,316	$	107,121	5	%		$	178,588	$	163,403	9	%

(1)	Please refer to page 10 for a summary of adjusting items for the three and six months ended June 30, 2021 and June 30, 2020.
(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 during the trailing 12-months ended June 30, 2021 were:

Recognized in the second quarter of 2021

• There were no adjustment items recognized in the second quarter of 2021.

Recognized in the first quarter of 2021

• There were no adjustment items recognized in the first quarter of 2021.

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.

Adjusting items during the trailing 12-months ended June 30, 2020 were:

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.

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.

View original content:https://www.prnewswire.com/news-releases/ritchie-bros-reports-second-quarter-2021-results-301349688.html

SOURCE Ritchie Bros. Auctioneers

FAQ

What were Ritchie Bros. Q2 2021 net income results?

Ritchie Bros. reported a net income of $60.7 million for Q2 2021, a 15% increase compared to Q2 2020.

How did Ritchie Bros. perform in terms of diluted EPS in Q2 2021?

The diluted earnings per share (EPS) increased by 12% to $0.55 in Q2 2021.

What was the total revenue for Ritchie Bros. in Q2 2021?

The total revenue for Ritchie Bros. in Q2 2021 was $396.4 million, a 2% increase from the previous year.

What changes were made to Ritchie Bros. dividends in 2021?

Ritchie Bros. announced a 14% increase in its quarterly cash dividend to $0.25 per share, payable on September 15, 2021.

What were the key challenges faced by Ritchie Bros. in Q2 2021?

Ritchie Bros. faced a 7% decline in inventory sales revenue and an 11% increase in SG&A expenses.