Ritchie Bros. Auctioneers Incorporated has reported net income attributable to stockholders increased 24 percent to $28.2 million for the three months ended March 31, 2021, compared to $22.8 million in Q1 2020. Diluted earnings per share (EPS) attributable to stockholders increased 19 percent to $0.25 per share in Q1 2021 compared to $0.21 per share in Q1 2020.
The company’s 11 percent increase in gross transaction value (GTV) growth in the quarter was driven by solid underlying performance from all regions contributing to a 31 percent increase in operating income, Ritchie Bros. report. GTV represents total proceeds from all items sold at the Company's live on site 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.
“We continued to lead with innovation, flexing new digital capabilities to improve the buyer and seller experience, ultimately driving exceptional price realization for consignors during this continued period of heightened economic uncertainty,” says Ritchie Bros. CEO Ann Fandozzi.
Consolidated results:
- Total revenue in Q1 2021 increased 21 percent to $331.6 million as compared to Q1 2020
- Service revenue in Q1 2021 increased 13 percent to $206.0 million as compared to Q1 2020
- Inventory sales revenue in Q1 2021 increased 39 percent to $125.5 million as compared to Q1 2020
- Total selling, general and administrative expenses (SG&A) in Q1 2021 increased 18 percent to $116.1 million as compared to Q1 2020
- Operating income in Q1 2021 increased 31 percent to $44.5 million as compared to Q1 2020
- Net income in Q1 2021 increased 23 percent to $28.1 million as compared to Q1 2020
- Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (non-GAAP measure) in Q1 2021 increased 18 percent to $66.3 million as compared to Q1 2020
- Cash provided by operating activities was $180.7 million for Q1 2021
Auctions & Marketplaces segment results:
- GTV in Q1 2021 increased 11 percent to $1.3 billion and increased 8% when excluding the impact of foreign exchange as compared to Q1 2020
- A&M total revenue in Q1 2021 increased 21 percent to $296.3 million as compared to Q1 2020
- Service revenue in Q1 2021 increased 10 percent to $170.8 million as compared to Q1 2020
- Inventory sales revenue in Q1 2021 increased 39 percent to $125.5 million as compared to Q1 2020
Other Services segment results:
- Other Services total revenue in Q1 2021 increased 24 percent to $35.3 million as compared to Q1 2020
- RBFS revenue in Q1 2021 increased 27 percent to $9.2 million as compared to Q1 2020
- Rouse revenue of $5.6 million was recognized in Q1 2021, which was its first full quarter since its acquisition on December 8, 2020
In response to the COVID-19 pandemic, in March 2020, the company says it transitioned all of its traditional live on site auctions to online bidding utilizing its existing online bidding technology and simultaneously ceased all public attendance at live auction theaters. Ritchie Bros.’s core online auction channels (IronPlanet.com, GovPlanet.com, Marketplace-E) continued to operate as usual.
Total GTV increased 11 percent to $1.3 billion and increased 8 percent when excluding the impact of foreign exchange in Q1 2021. GTV volumes rose partly due to significant auction calendar shifts arising from auctions that were delayed due to COVID-19 in the prior year including Montreal, Canada, Los Angeles and Caorso, Italy, which were partially offset by lower volumes at the Las Vegas auction partly impacted by the non-repeat of a large North American trade show occurring at the same time, and the non-repeat of a collector car event.
In addition, all regions experienced very strong auction price performance due to high demand for used equipment, in part aided by digital marketing efforts. Total GTV increased primarily in Canada due to the shifting of the Montreal auction, and strong year-over-year performance at our Canadian agricultural auctions.
The International sales team also delivered positive year-over-year performance partly due to a soft prior quarter in Europe as a result of the direct impact of COVID-19. International also had an increase in the number of new auctions held as economic conditions improved and border restrictions were lifted and also benefited from the addition of satellite yards in France, the shifting of the Caorso auction back into Q1 2021, and a large private treaty deal in Australia. Total GTV also increased in the US primarily driven by strong price performance and increased volume from the combination of several regional auction events, the shifting of the Los Angeles auction, and higher volumes at the Fort Worth, Texas, auction. This increase was partially offset by lower performance at the Orlando, Fla., auction.
Total revenue increased 21 percent to $331.6 million in Q1 2021, with inventory revenue increasing significantly by 39 percent mainly as a result of a change in GTV mix, and total service revenue increased by 13 percent.
Service revenue increased 13 percent with fees revenue increasing 14 percent and commissions revenue increasing 11 percent. Fees revenue was up 14 percent in line with total GTV growth, the acquisition of Rouse and the continued growth in RBFS fee revenue. Commissions revenue was up 11 percent partially in line with higher services GTV of 9 percent, but also driven by improved rates and strong performances on guarantee commission contracts across all regions. We also had improved rates in the straight commission contracts within the GovPlanet business and in Canada. These increases were partially offset by softer straight commission rate performance from a higher proportion of GTV sourced from U.S. strategic accounts, the company reports.
Inventory sales revenue increased 39 percent representing higher inventory sales volume primarily driven by strong performance across all regions, most notably in International. Some of this positive year-over-year performance is a result of a soft prior quarter in Europe due to the direct impact of COVID-19. We also saw volume growth across various countries in Europe with new auctions and a large private treaty deal in Australia. We also had positive year-over-year improvement in the inventory sales margin rate performance in the US and Canada.
Costs of services decreased 8 percent to $36.0 million. In response to the COVID-19 pandemic, in prior year, we transitioned our traditional live on site auctions to online bidding, utilizing TAL solutions for selected International and on-the-farm agricultural events and implementing travel restrictions. These operational changes resulted in temporary cost reductions in travel, advertising, and promotion expenses. We also saw cost reductions in building, facilities and technology expenses resulting from the non-repeat of site preparation costs related to a collector car event in Q1 2020. In addition, we incurred lower ancillary and logistical service expenses, in line with the decrease in ancillary fees earned on redeployment of assets in the US. This decrease was partially offset by the first full quarter of costs of services incurred from Rouse since acquisition.
Cost of inventory increased 36 percent to $110.7 million, primarily in line with higher activity in inventory sales revenue. Cost of inventory sold increased at a lower rate than the increase of inventory sales revenue, indicating an increase in the revenue rates. The improved inventory revenue rates were primarily due to the achievement of positive rate performance across all of our regions with strong pricing.
Selling, general and administrative (SG&A) expenses increased 18 percent to $116.1 million primarily due to higher short-term and long-term incentive costs driven by strong performance, higher wages and salaries due to higher headcount to support our growth initiatives, higher severance costs, and a first full quarter of costs incurred from Rouse since acquisition. These increases were partially offset by lower travel, advertising, and promotion costs as we implemented travel restrictions.
Foreign exchange had a favorable impact on total revenue and an unfavorable 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 24 percent to $28.2 million primarily related to higher operating income, offset partly by the non-repeat of $1.7 million contingent consideration received related to the disposition of an equity investment in Q1 2020. Net income was also partially offset by the increase in the effective tax rate.
Primarily for the same reasons noted above, diluted EPS attributable to stockholders increased 19 percent to $0.25 per share for Q1 2021 from $0.21 per share in Q1 2020.
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