RITCHIE BROS AUCTIONEERS INC [RBA] Filings

10-Q 1 rba-20220930x10q.htm 10-Q

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 September 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

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: 110,872,179 common shares, without par value, outstanding as of November 4, 2022.

Table of Contents

RITCHIE BROS. AUCTIONEERS INCORPORATED

FORM 10-Q

For the quarter ended September 30, 2022

INDEX


PART I – FINANCIAL INFORMATION
ITEM 1:	Consolidated Financial Statements	1
ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	57
ITEM 4:	Controls and Procedures	57

PART II – OTHER INFORMATION
ITEM 1:	Legal Proceedings	58
ITEM 1A:	Risk Factors	58
ITEM 2:	Unregistered Sales of Equity Securities and Use of Proceeds	60
ITEM 3:	Defaults Upon Senior Securities	60
ITEM 4:	Mine Safety Disclosures	60
ITEM 5:	Other Information	60
ITEM 6:	Exhibits	61

SIGNATURES		62

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Income Statements

(Expressed in thousands of U.S. dollars, except share and per share data)

(Unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue:
Service revenue	$	246,696	$	214,193	$	778,059	$	672,971
Inventory sales revenue		164,783		115,489		511,887		384,627
Total revenue		411,479		329,682		1,289,946		1,057,598

Operating expenses:
Costs of services		41,521		35,108		125,575		114,275
Cost of inventory sold		147,253		102,993		455,006		344,763
Selling, general and administrative		133,193		106,508		404,077		330,307
Acquisition-related costs		2,031		10,255		15,067		16,226
Depreciation and amortization		24,290		21,907		72,813		64,912
Foreign exchange (gain) loss		(430)		360		(752)		788
Total operating expenses		347,858		277,131		1,071,786		871,271
Gain on disposition of property, plant and equipment		333		1,068		170,499		1,311
Operating income		63,954		53,619		388,659		187,638

Interest expense		(9,199)		(8,807)		(48,348)		(26,620)
Change in fair value of derivatives, net		—		—		1,263		—
Other income, net		2,866		602		5,426		2,800
Income before income taxes		57,621		45,414		347,000		163,818

Income tax expense		14,697		13,057		72,564		42,541
Net income	$	42,924	$	32,357	$	274,436	$	121,277

Net income attributable to:
Stockholders	$	42,909	$	32,336	$	274,368	$	121,273
Non-controlling interests		15		21		68		4
Net income	$	42,924	$	32,357	$	274,436	$	121,277

Earnings per share attributable to stockholders:
Basic	$	0.39	$	0.29	$	2.48	$	1.10
Diluted	$	0.38	$	0.29	$	2.45	$	1.09

Weighted average number of shares outstanding:
Basic		110,838,237		110,410,172		110,750,021		110,233,851
Diluted		112,209,535		111,391,396		111,858,095		111,333,247

See accompanying notes to the condensed consolidated financial statements.


Ritchie Bros.	1

Table of Contents

Condensed Consolidated Statements of Comprehensive Income

(Expressed in thousands of U.S. dollars)

(Unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income	$	42,924	$	32,357	$	274,436	$	121,277
Other comprehensive income (loss), net of income tax:
Foreign currency translation adjustment		(30,515)		(8,859)		(54,457)		(17,751)
Total comprehensive income	$	12,409	$	23,498	$	219,979	$	103,526

Total comprehensive income (loss) attributable to:
Stockholders	$	12,420	$	23,487	$	219,969	$	103,546
Non-controlling interests		(11)		11		10		(20)
	$	12,409	$	23,498	$	219,979	$	103,526

See accompanying notes to the condensed consolidated financial statements.


Ritchie Bros.	2

Table of Contents

Condensed Consolidated Balance Sheets

(Expressed in thousands of U.S. dollars, except share data)

(Unaudited)


	September 30,		December 31,
	2022		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 (Note 22 and Note 23 respectively)
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

See accompanying notes to the condensed consolidated financial statements.


Ritchie Bros.	3

Table of Contents

Condensed Consolidated Statements of Changes in Equity

(Expressed in thousands of U.S. 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 September 30, 2022	shares	Amount		("APIC")		earnings		loss		("NCI")		equity

Balance, June 30, 2022	110,791,788	$	235,244	$	73,014	$	1,015,301	$	(79,883)	$	409	$	1,244,085
Net income	—		—		—		42,909		—		15		42,924
Other comprehensive loss	—		—		—		—		(30,489)		(26)		(30,515)
	—		—		—		42,909		(30,489)		(11)		12,409
Stock option exercises	75,511		3,536		(636)		—		—		—		2,900
Issuance of common stock related to vesting of share units	3,484		58		(198)		—		—		—		(140)
Share-based continuing employment costs related to business combinations	—		303		1,560		—		—		—		1,863
Stock option compensation expense			—		3,249								3,249
Equity-classified share units expense	—		—		4,766		—		—		—		4,766
Equity-classified share units divided equivalents	—		—		182		(182)		—		—		—
Cash dividends paid	—		—		—		(29,932)		—		—		(29,932)
Balance, September 30, 2022	110,870,783	$	239,141	$	81,937	$	1,028,096	$	(110,372)	$	398	$	1,239,200


Three months ended September 30, 2021

Balance, June 30, 2021	110,366,808	$	215,666	$	51,800	$	832,037	$	(43,173)	$	5,097	$	1,061,427
Net income	—		—		—		32,336		—		21		32,357
Other comprehensive loss	—		—		—		—		(8,849)		(10)		(8,859)
	—		—		—		32,336		(8,849)		11		23,498
Stock option exercises	100,703		3,942		(725)		—		—		—		3,217
Issuance of common stock related to vesting of share units	85		1		(7)		—		—		—		(6)
Acquisition of remaining interest in NCI	—		—		(672)		69		—		(4,692)		(5,295)
Share-based continuing employment costs related to business combinations	—		—		2,707		—		—		—		2,707
Stock option compensation expense	—		—		2,133		—		—		—		2,133
Equity-classified share units expense	—		—		2,283		—		—		—		2,283
Equity-classified share units dividend equivalents	—		—		76		(76)		—		—		—
Cash dividends paid	—		—		—		(27,607)		—		—		(27,607)
Balance, September 30, 2021	110,467,596	$	219,609	$	57,595	$	836,759	$	(52,022)	$	416	$	1,062,357


Ritchie Bros.	4

Table of Contents


	Attributable to stockholders
				Additional				Accumulated		Non-
	Common stock			paid-In				other		controlling
	Number of			capital		Retained		comprehensive		interest		Total
Nine months ended September 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	—		—		—		274,368		—		68		274,436
Other comprehensive loss	—		—		—		—		(54,399)		(58)		(54,457)
	—		—		—		274,368		(54,399)		10		219,979
Stock option exercises	155,694		7,090		(1,327)		—		—		—		5,763
Issuance of common stock related to vesting of share units	97,040		2,426		(6,143)		—		—		—		(3,717)
Share-based continuing employment costs related to business combinations			2,121		3,954		—		—		—		6,075
Stock option compensation expense			—		8,871		—		—		—		8,871
Equity-classified share units expense	—		—		16,450		—		—		—		16,450
Equity-classified share units dividend equivalents	—		—		597		(597)		—		—		—
Cash dividends paid	—		—		—		(85,284)		—		—		(85,284)
Balance, September 30, 2022	110,870,783	$	239,141	$	81,937	$	1,028,096	$	(110,372)	$	398	$	1,239,200

Nine months ended September 30, 2021

Balance, December 31, 2020	109,876,428	$	200,451	$	49,171	$	791,918	$	(34,295)	$	5,154	$	1,012,399
Net income	—		—		—		121,273		—		4		121,277
Other comprehensive loss	—		—		—		—		(17,727)		(24)		(17,751)
	—		—		—		121,273		(17,727)		(20)		103,526
Stock option exercises	411,856		17,099		(3,184)		—		—		—		13,915
Issuance of common stock related to vesting of share units	234,822		2,059		(11,384)		—		—		—		(9,325)
Acquisition of remaining interest in NCI	—		—		(672)		70		—		(4,614)		(5,216)
Share-based continuing employment costs related to business combinations	(55,510)		—		7,938		—		—		—		7,938
Stock option compensation expense	—		—		5,903

RITCHIE BROS AUCTIONEERS INC [RBA] Filings
10-Q	[2022-11-07]
10-Q	[2022-08-04]
10-Q	[2022-05-09]
10-K	[2022-02-17]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-10]
10-K	[2021-02-18]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-02-27]
10-Q	[2019-11-07]
10-Q	[2019-08-08]
10-Q	[2019-05-09]
10-K	[2019-02-28]
10-Q	[2018-11-08]
10-Q	[2018-08-09]
10-Q	[2018-05-10]
10-K	[2018-02-26]
10-Q	[2017-11-09]
10-Q	[2017-08-08]
10-Q	[2017-05-04]
10-K	[2017-02-21]
10-Q	[2016-11-09]
10-Q	[2016-08-08]
10-Q	[2016-05-09]
10-K	[2016-02-25]