Ritchie Bros. Auctioneers Incorporated has reported its results for the three months ended March 31, 2016 (all figures in U.S. dollars).
During the first quarter, the company generated $131.9 million of revenue, a 14% increase compared to revenues of $115.6 million in the first quarter last year, and net income attributable to stockholders for the first quarter of $29.4 million, a 24% increase compared to $23.8 million in the same period last year. Diluted earnings per share ("EPS") attributable to stockholders were $0.27, a 23% increase compared to $0.22 in the same quarter last year.
"I'm proud of the efforts of the entire Ritchie Bros. team during the first quarter, as we increased GAP by 7% and revenues by 14% compared to the first quarter last year, a significant achievement in light of tough comps. Most of our geographies contributed to this strong performance ‒ most notably Canada, Australia, the Middle East and Mexico. We also experienced growth in all of our key sectors including construction, transportation and agriculture," said Ravi Saligram, CEO, Ritchie Bros. "Our strategy of diversifying into new sectors, geographies, channels and services is working to drive value for customers and shareholders. We're pleased that our EPS for Q1 2016 grew 23% versus prior year."
Gross Auction Proceeds were $1,019.9 million for the first quarter of 2016, a 7% increase compared to the first quarter of 2015, and the first time more than $1 billion of assets were sold by Ritchie Bros. during the first quarter. EquipmentOne, the Company's online equipment marketplace, contributed $23.7 million of gross transaction value ("GTV")4 to GAP in the first quarter of 2016 compared to $21.8 million in the first quarter of 2015. First quarter 2016 GAP would have been $21.5 million higher, resulting in a 9% increase over first quarter 2015, if foreign exchange rates had remained consistent with those in 2015. This adverse effect on GAP is primarily due to the declining value of the Canadian dollar and the Euro relative to the U.S. dollar.
Revenue increased 14% during the first quarter of 2016 to $131.9 million, compared to $115.6 million in the first quarter of 2015, primarily due to higher GAP and Revenue Rate over the same comparative period. First quarter 2016 revenues would have been $3.0 million higher, resulting in a 17% increase over first quarter 2015, if foreign exchange rates had remained consistent with those in the same period in 2015.
The Revenue Rate was 12.94% in the first quarter of 2016, compared to 12.10% in the first quarter of 2015. The increase in the Revenue Rate is primarily due to the performance of the Company's straight commission contracts, combined with an increase in fee revenue, which is not directly linked to GAP. During the first quarter of 2016, the Company continued to actively pursue the use of underwritten commission contracts from a strategic perspective, entering into such contracts only when the risk/reward profile of the terms were agreeable. The volume of underwritten commission contracts decreased to 23% of GAP in the first quarter of 2016 from 32% in the first quarter of 2015, primarily due to the underwritten contracts associated with the Casper, Wyoming, offsite auction that was held on March 25, 2015. Straight commission contracts continue to account for the majority of GAP.
Adjusted Operating Income increased 19% during the first quarter of 2016 to $39.2 million, compared to $33.0 million in the first quarter of 2015. This increase was primarily due to the GAP and revenue increases over the same comparative period, partially offset by increases in selling, general and administrative ("SG&A") expenses and costs of services, and a decrease in foreign exchange gains. If foreign exchange rates had remained consistent with those in 2015, organic operating income would have been $38.7 million, resulting in a 17% increase over the first quarter of 2015. Foreign exchange gains that occurred in both the first quarter of 2016 and 2015 are now reported in operating income, per US GAAP.
Adjusted Operating Income Margin was 29.7% for the first quarter of 2016, 120 basis points higher than 28.5% for the same period last year, primarily due to the increase in revenues and Adjusted Operating Income noted above.
Diluted Adjusted EPS attributable to stockholders for the first quarter of 2016 was $0.27 per diluted share, a 23% increase compared to the first quarter of 2015. The increase in the first quarter of 2016 compared to the same period in 2015 was primarily due to the increase in GAP and Adjusted Operating Income.
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