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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number: 001-13425

Graphic

Ritchie Bros. Auctioneers Incorporated

(Exact Name of Registrant as Specified in its Charter)

Canada

 

98-0626225

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

9500 Glenlyon Parkway

 

 

Burnaby, British Columbia, Canada

 

V5J 0C6

(Address of Principal Executive Offices)

 

(Zip Code)

(778) 331-5500

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common shares

RBA

New York Stock Exchange

Common Share Purchase Rights

N/A

New York Stock Exchange

Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: 110,809,591 common shares, without par value, outstanding as of August 3, 2022.

PART I – FINANCIAL INFORMATION

ITEM 1:           CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Income Statements

(Expressed in thousands of United States dollars, except share and per share data)

(Unaudited)

Three months ended

Six months ended

June 30, 

June 30, 

    

2022

    

2021

    

2022

    

2021

Revenue:

  

  

  

  

Service revenue

$

286,502

$

252,748

$

531,363

$

458,778

Inventory sales revenue

 

198,044

 

143,613

 

347,104

 

269,138

Total revenue

 

484,546

 

396,361

 

878,467

 

727,916

Operating expenses:

 

  

 

  

 

  

 

  

Costs of services

 

45,039

 

41,301

 

84,054

 

79,167

Cost of inventory sold

 

176,171

 

131,023

 

307,753

 

241,770

Selling, general and administrative

 

144,277

 

109,560

 

270,883

 

223,799

Acquisition-related costs

 

3,399

 

3,049

 

13,036

 

5,971

Depreciation and amortization

 

24,298

 

21,935

 

48,523

 

43,005

Foreign exchange loss (gain)

 

(158)

 

151

 

(322)

 

428

Total operating expenses

 

393,026

 

307,019

 

723,927

 

594,140

Gain on disposition of property, plant and equipment

 

347

 

175

170,167

243

Operating income

 

91,867

 

89,517

 

324,707

 

134,019

Interest expense

 

(18,463)

 

(8,867)

 

(39,149)

 

(17,813)

Change in fair value of derivatives, net

 

 

 

1,263

 

Other income, net

 

1,639

 

1,196

 

2,559

 

2,198

Income before income taxes

 

75,043

 

81,846

 

289,380

 

118,404

Income tax expense

21,632

21,065

57,868

29,484

Net income

$

53,411

$

60,781

$

231,512

$

88,920

Net income (loss) attributable to:

 

  

 

  

 

  

 

  

Stockholders

$

53,365

$

60,749

$

231,459

$

88,937

Non-controlling interests

 

46

 

32

 

53

 

(17)

Net income

$

53,411

$

60,781

$

231,512

$

88,920

Earnings per share attributable to stockholders:

 

  

 

  

 

  

 

  

Basic

$

0.48

$

0.55

$

2.09

$

0.81

Diluted

$

0.48

$

0.55

$

2.07

$

0.80

Weighted average number of shares outstanding:

 

  

 

  

 

  

 

  

Basic

 

110,760,339

 

110,311,615

 

110,705,182

 

110,144,229

Diluted

 

111,705,102

 

111,334,184

 

111,681,644

 

111,302,711

See accompanying notes to the condensed consolidated financial statements.

Ritchie Bros.

1

Condensed Consolidated Statements of Comprehensive Income

(Expressed in thousands of United States dollars)

(Unaudited)

Three months ended

Six months ended

    

June 30, 

June 30, 

2022

    

2021

    

2022

    

2021

Net income

$

53,411

$

60,781

$

231,512

$

88,920

Other comprehensive income (loss), net of income tax:

 

 

  

 

  

 

  

Foreign currency translation adjustment

 

(22,775)

 

1,468

 

(23,942)

 

(8,892)

Total comprehensive income

$

30,636

$

62,249

$

207,570

$

80,028

Total comprehensive income (loss) attributable to:

 

  

 

  

 

  

 

  

Stockholders

$

30,612

$

62,215

$

207,549

$

80,059

Non-controlling interests

 

24

 

34

 

21

 

(31)

$

30,636

$

62,249

$

207,570

$

80,028

See accompanying notes to the condensed consolidated financial statements.

Ritchie Bros.

2

Condensed Consolidated Balance Sheets

(Expressed in thousands of United States dollars, except share data)

(Unaudited)

June 30, 

December 31, 

    

2022

    

2021

Assets

Cash and cash equivalents

$

367,289

$

326,113

Restricted cash

 

164,371

 

102,875

Trade and other receivables

 

295,241

 

150,895

Less: allowance for credit losses

(3,763)

(4,396)

Inventory

 

124,964

 

102,494

Other current assets

 

36,212

 

64,346

Income taxes receivable

 

12,525

 

19,895

Total current assets

 

996,839

 

762,222

Restricted cash

933,464

Property, plant and equipment

 

442,743

 

449,087

Other non-current assets

 

168,360

 

142,504

Intangible assets

 

332,615

 

350,516

Goodwill

 

945,950

 

947,715

Deferred tax assets

 

7,458

 

7,406

Total assets

$

2,893,965

$

3,592,914

Liabilities and Equity

 

  

 

  

Auction proceeds payable

$

493,688

$

292,789

Trade and other liabilities

 

254,514

 

280,308

Income taxes payable

 

31,362

 

5,677

Short-term debt

 

8,637

 

6,147

Current portion of long-term debt

 

4,617

 

3,498

Total current liabilities

 

792,818

 

588,419

Long-term debt

 

639,755

 

1,733,940

Other non-current liabilities

 

155,911

 

147,260

Deferred tax liabilities

 

61,396

 

52,232

Total liabilities

 

1,649,880

 

2,521,851

Commitments and Contingencies (Note 22 and Note 23 respectively)

 

Stockholders' equity:

 

  

 

  

Share capital:

 

  

 

  

Common stock; no par value, unlimited shares authorized, issued and outstanding shares: 110,791,788 (December 31, 2021: 110,618,049)

 

235,244

 

227,504

Additional paid-in capital

 

73,014

 

59,535

Retained earnings

 

1,015,301

 

839,609

Accumulated other comprehensive loss

 

(79,883)

 

(55,973)

Stockholders' equity

 

1,243,676

 

1,070,675

Non-controlling interest

 

409

 

388

Total stockholders' equity

 

1,244,085

 

1,071,063

Total liabilities and equity

$

2,893,965

$

3,592,914

See accompanying notes to the condensed consolidated financial statements.

Ritchie Bros.

3

Condensed Consolidated Statements of Changes in Equity

(Expressed in thousands of United States dollars, except where noted)

(Unaudited)

Attributable to stockholders

 

    

    

Additional

Accumulated

Non-

Common stock

paid-In

other

controlling

Number of

capital

Retained

comprehensive

interest

Total

Three months ended June 30, 2022

    

shares

    

Amount

    

("APIC")

    

earnings

    

loss

    

("NCI")

    

equity

    

Balance, March 31, 2022

110,735,243

$

231,064

$

61,123

$

989,923

$

(57,130)

$

385

$

1,225,365

Net income

 

 

 

53,365

 

 

46

 

53,411

Other comprehensive loss

 

 

 

 

(22,753)

 

(22)

 

(22,775)

 

 

 

53,365

 

(22,753)

 

24

 

30,636

Stock option exercises

55,935

 

2,347

 

(471)

 

 

 

 

1,876

Issuance of common stock related to vesting of share units

610

 

14

 

(43)

 

 

 

 

(29)

Share-based continuing employment costs related to business combinations

 

1,819

 

261

 

 

 

 

2,080

Stock option compensation expense

3,056

3,056

Equity-classified share units expense

8,794

 

 

 

8,794

Equity-classified share units divided equivalents

294

(294)

 

 

 

Cash dividends paid

 

 

 

(27,693)

 

 

 

(27,693)

Balance, June 30, 2022

110,791,788

$

235,244

$

73,014

$

1,015,301

$

(79,883)

$

409

$

1,244,085

Three months ended June 30, 2021

  

 

  

 

  

 

  

 

  

 

  

 

  

Balance, March 31, 2021

110,253,056

$

210,765

$

43,612

$

795,781

$

(44,639)

$

5,089

$

1,010,608

Net income

 

 

 

 

60,749

 

 

32

 

60,781

Other comprehensive income

 

 

 

 

 

1,466

 

2

 

1,468

 

 

 

 

60,749

 

1,466

 

34

 

62,249

Stock option exercises

 

113,290

4,889

(910)

 

 

3,979

Issuance of common stock related to vesting of share units

 

462

12

(30)

 

 

(18)

Share-based continuing employment costs related to business combinations

2,678

 

2,678

Stock option compensation expense

 

1,909

 

 

1,909

Equity-classified share units expense

 

 

4,404

 

 

4,404

Equity-classified share units dividend equivalents

 

 

 

137

 

(137)

 

 

 

Cash dividends paid

 

 

(24,356)

 

(26)

(24,382)

Balance, June 30, 2021

 

110,366,808

$

215,666

$

51,800

$

832,037

$

(43,173)

$

5,097

$

1,061,427

Ritchie Bros.

4

    

Attributable to stockholders

    

    

Additional

Accumulated

Non-

Common stock

paid-In

other

controlling

Number of

capital

Retained

comprehensive

interest

Total

Six months ended June 30, 2022

    

shares

    

Amount

    

("APIC")

    

earnings

    

loss

    

("NCI")

    

equity

    

Balance, December 31, 2021

110,618,049

$

227,504

$

59,535

$

839,609

$

(55,973)

$

388

$

1,071,063

Net income

 

 

 

231,459

 

 

53

 

231,512

Other comprehensive loss

 

 

 

 

(23,910)

 

(32)

 

(23,942)

 

 

 

231,459

 

(23,910)

 

21

 

207,570

Stock option exercises

80,183

 

3,554

 

(692)

 

 

 

 

2,862

Issuance of common stock related to vesting of share units

93,556

 

2,367

 

(5,945)

 

 

 

 

(3,578)

Share-based continuing employment costs related to business combinations

1,819

2,394

 

 

4,213

Stock option compensation expense

5,623

 

 

5,623

Equity-classified share units expense

 

 

11,684

 

 

 

 

11,684

Equity-classified share units dividend equivalents

 

 

415

 

(415)

 

 

 

Cash dividends paid

 

 

 

(55,352)

 

 

 

(55,352)

Balance, June 30, 2022

110,791,788

$

235,244

$

73,014

$

1,015,301

$

(79,883)

$

409

$

1,244,085

Six months ended June 30, 2021

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Balance, December 31, 2020

 

109,876,428

$

200,451

$

49,171

$

791,918

$

(34,295)

$

5,154

$

1,012,399

Net income

 

 

 

 

88,937

 

 

(17)

 

88,920

Other comprehensive income

 

 

 

 

 

(8,878)

 

(14)

 

(8,892)

 

 

 

 

88,937

 

(8,878)

 

(31)

 

80,028

Stock option exercises

 

311,153

13,157

(2,458)

 

 

10,699

Issuance (forfeiture) of common stock related to vesting of share units

 

234,737

2,058

(11,377)

 

 

(9,319)

Forfeiture of common stock related to business combinations

 

(55,510)

 

 

 

Share-based continuing employment costs related to business combinations

 

5,231

 

5,231

Stock option compensation expense

 

 

3,770

 

 

3,770

Equity-classified share units expense

 

7,182

 

 

7,182

Equity-classified share units dividend equivalents

 

 

281

 

(281)

 

 

 

Cash dividends paid

 

(48,537)

 

(26)

(48,563)

Balance, June 30, 2021

 

110,366,808

$

215,666

$

51,800

$

832,037

$

(43,173)

$

5,097

$

1,061,427