RITCHIE BROS AUCTIONEERS INC, 10-K filed on 2/28/2019
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2018
Feb. 27, 2019
Jun. 30, 2018
Document And Entity Information [Abstract]      
Entity Registrant Name Ritchie Bros Auctioneers Inc    
Entity Central Index Key 0001046102    
Current Fiscal Year End Date --12-31    
Entity Filer Category Large Accelerated Filer    
Document Type 10-K    
Document Period End Date Dec. 31, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Amendment Flag false    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Public Float     $ 3,686,199,341
Entity Common Stock, Shares Outstanding   108,727,400  
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Small Business false    
v3.10.0.1
Consolidated Income Statements - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenues:      
Total revenues $ 1,170,026 $ 971,191 $ 1,126,977
Operating expenses:      
Selling, general and administrative expenses 382,676 323,270 283,529
Acquisition-related costs 5,093 38,272 11,829
Depreciation and amortization expenses 66,614 52,694 40,861
Gain on disposition of property, plant and equipment (2,731) (1,656) (1,282)
Impairment loss   8,911 28,243
Foreign exchange (gain) loss (212) 2,559 1,431
Total operating expenses 984,837 863,737 991,255
Operating income 185,189 107,454 135,722
Interest expense (44,527) (38,291) (5,564)
Debt extinguishment costs     (6,787)
Other income, net 11,850 8,231 7,123
Income before income taxes 152,512 77,394 130,494
Current income tax 24,767 19,356 40,341
Deferred income tax 6,239 (17,268) (3,359)
Income tax expense (recovery) 31,006 2,088 36,982
Net income 121,506 75,306 93,512
Net income attributable to:      
Stockholders 121,479 75,027 91,832
Non-controlling interests 27 279 1,680
Net income $ 121,506 $ 75,306 $ 93,512
Earnings per share attributable to stockholders:      
Basic $ 1.12 $ 0.70 $ 0.86
Diluted $ 1.11 $ 0.69 $ 0.85
Weighted average number of shares outstanding:      
Basic 108,063,349 107,044,348 106,630,323
Diluted 109,388,236 108,113,151 107,457,794
Service Revenues [Member]      
Revenues:      
Total revenues $ 749,515 $ 624,417 $ 555,843
Operating expenses:      
Direct expenses 159,058 133,189 113,296
Revenue from Inventory Sales [Member]      
Revenues:      
Total revenues 420,511 346,774 571,134
Operating expenses:      
Direct expenses $ 374,339 $ 306,498 $ 513,348
v3.10.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Consolidated Statements of Comprehensive Income [Abstract]      
Net income $ 121,506 $ 75,306 $ 93,512
Other comprehensive income (loss), net of income tax:      
Foreign currency translation adjustment (13,792) 24,670 (9,847)
Total comprehensive income 107,714 99,976 83,665
Total comprehensive income attributable to:      
Stockholders 107,716 99,639 81,839
Non-controlling interests (2) 337 1,826
Total comprehensive income $ 107,714 $ 99,976 $ 83,665
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Assets    
Cash and cash equivalents $ 237,744 $ 267,910
Restricted cash 67,823 63,206
Trade and other receivables 129,257 92,105
Inventory 113,294 38,238
Other current assets 49,055 27,610
Income taxes receivable 6,365 19,418
Total current assets 603,538 508,487
Property, plant and equipment 486,599 526,581
Other non-current assets 29,395 31,554
Intangible assets 245,622 261,094
Goodwill 671,594 670,922
Deferred tax assets 15,648 18,674
Total assets 2,052,396 2,017,312
Liabilities and Equity    
Auction proceeds payable 203,503 199,245
Trade and other payables 201,255 164,553
Income taxes payable 2,312 732
Short-term debt 19,896 7,018
Current portion of long-term debt 13,126 16,907
Total current liabilities 440,092 388,455
Long-term debt 698,172 795,985
Other non-current liabilities 41,980 46,773
Deferred tax liabilities 35,519 32,334
Total liabilities 1,215,763 1,263,547
Commitments
Contingencies
Contingently redeemable performance share units 923 9,014
Share capital:    
Common stock; no par value, unlimited shares authorized, issued and outstanding shares: 108,682,030 (December 31, 2017: 107,269,783) 181,780 138,582
Additional paid-in capital 56,885 41,005
Retained earnings 648,255 602,609
Accumulated other comprehensive loss (56,277) (42,514)
Stockholders' equity 830,643 739,682
Non-controlling interest 5,067 5,069
Total stockholders' equity 835,710 744,751
Total liabilities and equity $ 2,052,396 $ 2,017,312
v3.10.0.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Consolidated Balance Sheets [Abstract]    
Common stock, no par value
Common stock, Shares Authorized, Unlimited Unlimited Unlimited
Common stock, issued shares 108,682,030 107,269,783
Common stock, outstanding shares 108,682,030 107,269,783
v3.10.0.1
Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands
Common stock [Member]
Additional paid-in capital ("APIC") [Member]
Retained earnings [Member]
Accumulated other comprehensive loss [Member]
Non-controlling interest ("NCI") [Member]
Non-controlling interest [Member]
Contingently redeemable non-controlling interest [Member]
Contingently Redeemable Performance Share Units [Member]
Total
Balance at Dec. 31, 2015 $ 131,530 $ 27,728 $ 601,051 $ (57,133) $ 4,183 $ 24,785   $ 707,359
Balance, shares at Dec. 31, 2015 107,200,470              
Net income     91,832   346 1,334   92,178
Other comprehensive income (loss)       (9,993) (23) 169   (10,016)
Comprehensive income     91,832 (9,993) 323 1,503   82,162
Change in value of contingently redeemable NCI     (21,186)     21,186   (21,186)
Stock option exercises $ 30,670 (6,332)           24,338
Stock option exercises, shares 1,081,531              
Stock option tax adjustment   443           443
Stock option compensation expense   5,507           5,507
Modification of PSUs     (70)       $ 2,175 (70)
Equity-classified PSU expense   283         1,698 283
Equity-classified PSU dividend equivalents   9 (62)       42 (53)
Change in value of contingently redeemable PSUs     (35)       35 (35)
NCI acquired in a business combination         596     596
Acquisition of NCI         (226) (44,141)   (226)
Shares repurchased $ (36,726)             $ (36,726)
Shares repurchased, shares (1,460,000)             (1,460,000)
Cash dividends paid     (70,459)   (103) (3,333)   $ (70,562)
Balance at Dec. 31, 2016 $ 125,474 27,638 601,071 (67,126) 4,773   3,950 691,830
Balance, shares at Dec. 31, 2016 106,822,001              
Net income     75,027   279     75,306
Other comprehensive income (loss)       24,612 58     24,670
Comprehensive income     75,027 24,612 337     99,976
Stock option exercises $ 13,017 (3,081)           9,936
Stock option exercises, shares 444,571              
Stock option compensation expense   13,700           13,700
Assumption of stock options on acquisition of IronPlanet   2,330           2,330
Settlement of equity-classified PSUs $ 91           (172) 91
Settlement of equity-classified PSUs, shares 3,211              
Modification of PSUs     (382)       1,803 (382)
Equity-classified PSU expense   340         3,189 340
Equity-classified PSU dividend equivalents   78 (227)       149 (149)
Change in value of contingently redeemable PSUs     (95)       95 (95)
NCI acquired in a business combination
Acquisition of NCI
Shares repurchased, shares               0
Cash dividends paid     (72,785)   (41)     $ (72,826)
Balance at Dec. 31, 2017 $ 138,582 41,005 602,609 (42,514) 5,069   9,014 744,751
Balance, shares at Dec. 31, 2017 107,269,783              
Contingently redeemable Performance share units, Balance at Dec. 31, 2017               9,014
Net income     121,479   27     121,506
Other comprehensive income (loss)       (13,763) (29)     (13,792)
Comprehensive income     121,479 (13,763) (2)     107,714
Stock option exercises $ 37,308 (8,784)           28,524
Stock option exercises, shares 1,235,154              
Issuance of common stock related to vesting of share units $ 5,890 (1,662) (326)       (7,803) 3,902
Issuance of common stock related to vesting of share units, shares 177,093              
Stock option compensation expense   8,252           8,252
Modification of PSUs   12,365 958       (6,622) 13,323
Equity-classified PSU expense   5,384         5,872 5,384
Equity-classified PSU dividend equivalents   325 (678)       353 (353)
Change in value of contingently redeemable PSUs     (109)       109 (109)
Cash dividends paid     (75,678)         (75,678)
Balance at Dec. 31, 2018 $ 181,780 $ 56,885 $ 648,255 $ (56,277) $ 5,067   $ 923 $ 835,710
Balance, shares at Dec. 31, 2018 108,682,030              
v3.10.0.1
Consolidated Statements of Cash Flows - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Operating activities:      
Net income $ 121,506,000 $ 75,306,000 $ 93,512,000
Adjustments for items not affecting cash:      
Depreciation and amortization expenses 66,614,000 52,694,000 40,861,000
Impairment loss   8,911,000 28,243,000
Stock option compensation expense 8,252,000 13,700,000 5,507,000
Equity-classified PSU expense 11,256,000 3,529,000 1,981,000
Deferred income tax expense (recovery) 6,239,000 (17,268,000) (3,359,000)
Unrealized foreign exchange loss 951,000 254,000 1,947,000
Gain on disposition of property, plant and equipment (2,731,000) (1,656,000) (1,282,000)
Amortization of debt issuance costs 4,995,000 3,056,000 359,000
Gain on disposition of equity investment (4,935,000)    
Other, net (2,317,000) (1,237,000) (893,000)
Net changes in operating assets and liabilities (65,550,000) 10,279,000 10,682,000
Net cash provided by operating activities 144,280,000 147,568,000 177,558,000
Investing activities:      
Acquisition of contingently redeemable NCI     (41,092,000)
Acquisition of NCI     (226,000)
Property, plant and equipment additions (16,860,000) (10,812,000) (18,918,000)
Intangible asset additions (26,152,000) (28,584,000) (17,558,000)
Proceeds on disposition of property, plant and equipment 10,586,000 4,985,000 6,691,000
Proceeds on disposal of equity investment 6,147,000    
Other, net (4,674,000) (692,000) (248,000)
Net cash used in investing activities (30,953,000) (710,954,000) (116,862,000)
Financing activities:      
Dividends paid to stockholders (75,678,000) (72,785,000) (70,459,000)
Dividends paid to NCI   (41,000) (3,436,000)
Issuances of share capital 28,524,000 9,936,000 24,338,000
Share repurchase     (36,726,000)
Payment of withholding taxes on issuance of shares (3,901,000)    
Proceeds from short-term debt 19,715,000 6,971,000 67,584,000
Repayment of short-term debt (6,628,000) (24,479,000) (57,516,000)
Proceeds from long-term debt   325,000,000 647,091,000
Repayment of long-term debt (91,013,000) (108,985,000) (148,158,000)
Debt issue costs   (12,624,000) (10,644,000)
Debt extinguishment costs     (6,787,000)
Repayment of finance lease obligations (3,950,000) (2,322,000) (1,655,000)
Other, net (1,176,000) (1,408,000) 511,000
Net cash provided by (used in) financing activities (134,107,000) 119,263,000 404,143,000
Effect of changes in foreign currency rates on cash, cash equivalents, and restricted cash (4,769,000) 17,150,000 4,000
Increase (decrease) (25,549,000) (426,973,000) 464,843,000
Beginning of period 331,116,000 758,089,000 293,246,000
Cash, cash equivalents, and restricted cash, end of period $ 305,567,000 331,116,000 758,089,000
Iron Planet Holdings Inc. [Member]      
Investing activities:      
Acquisition, net of cash acquired   $ (675,851,000)  
Mascus International Holdings BV [Member]      
Investing activities:      
Acquisition, net of cash acquired     (28,123,000)
Petrowsky Auctioneers Inc. [Member]      
Investing activities:      
Acquisition of equity investments     (6,250,000)
Kramer Auctions Ltd. [Member]      
Investing activities:      
Acquisition of equity investments     $ (11,138,000)
v3.10.0.1
General Information
12 Months Ended
Dec. 31, 2018
General Information [Abstract]  
General Information

1.  General information

Ritchie Bros. Auctioneers Incorporated and its subsidiaries (collectively referred to as the “Company”) provide global asset management and disposition services, offering customers end-to-end solutions for buying and selling used industrial equipment and other durable assets through its unreserved live on site auctions, online marketplaces, listing services, and private brokerage services.  Ritchie Bros. Auctioneers Incorporated is a company incorporated in Canada under the Canada Business Corporations Act, whose shares are publicly traded on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”).



v3.10.0.1
Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Significant Accounting Policies [Abstract]  
Significant Accounting Policies

2.  Significant accounting policies

(a)

Basis of preparation

These financial statements have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) and the following accounting policies have been consistently applied in the preparation of the consolidated financial statements.



(b)

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned and non-wholly owned subsidiaries in which the Company has a controlling financial interest either through voting rights or means other than voting rights. All inter-company transactions and balances have been eliminated on consolidation. Where the Company’s ownership interest in a consolidated subsidiary is less than 100%, the non-controlling interests’ share of these non-wholly owned subsidiaries is reported in the Company’s consolidated balance sheets as a separate component of equity or within temporary equity. The non-controlling interests’ share of the net income of these non-wholly owned subsidiaries is reported in the Company’s consolidated income statements as a deduction from the Company’s net earnings to arrive at net income attributable to stockholders of the Company.



The Company consolidates variable interest entities (“VIEs”) if the Company has (a) the power to direct matters that most significantly impact the VIEs economic performance and (b) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.  For VIEs where the Company has shared power with unrelated parties, the Company uses the equity method of accounting to report their results.  The determination of the primary beneficiary involves judgment.



(c)

Revenue recognition

Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) using the full retrospective method, which included restating prior years for comparative amounts. This new accounting policy resulted in a change in the financial statement presentation only on the income statement, as described in Note 2(y) New and amended accounting standards in this Annual Report on Form 10-K.



Revenues are comprised of:

·

Service revenues, including the following:

i.

Revenue from auction and marketplace (“A&M”) activities, including commissions earned at our live auctions, online marketplaces, and private brokerage services where we act as an agent for consignors of equipment and other assets, and various auction-related fees, including listing and buyer transaction fees; and

2.  Significant accounting policies

(c)

Revenue recognition (continued)

ii.

Other services revenues, including revenues from listing services, refurbishment, logistical services, financing, appraisal fees and other ancillary service fees; and

·

Revenue from inventory sales as part of A&M activities

The Company recognizes revenue when control of the promised goods or services is transferred to our customers, or upon completion of the performance obligation, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For live event-based auctions or online auctions, revenue is recognized when the auction sale is complete and the Company has determined that the sale proceeds are collectible.  Revenue is measured at the fair value of the consideration received or receivable and is shown net of value-added tax and duties. 



Service revenues

Commissions from sales at the Company’s auctions represent the percentage earned by the Company on the gross proceeds from equipment and other assets sold at auction. The majority of the Company’s commissions are earned as a pre-negotiated fixed rate of the gross selling price. Other commissions from sales at the Company’s auctions are earned from underwritten commission contracts, when the Company guarantees a certain level of proceeds to a consignor. 



The Company accepts equipment and other assets on consignment stimulating buyer interest through professional marketing techniques, and matches sellers (also known as consignors) to buyers through the auction or private sale process.  Prior to offering an item for sale on its online marketplaces, the Company also performs inspections.



Following the sale of the item, the Company invoices the buyer for the purchase price of the asset, taxes, and, if applicable, the buyer transaction fee, collects payment from the buyer, and remits the proceeds to the seller, net of the seller commissions, applicable taxes, and applicable fees. Commissions are calculated as a percentage of the hammer price of the property sold at auction. Fees are also charged to sellers for listing and inspecting equipment. Other revenues earned in the process of conducting the Company’s auctions include administrative, documentation, and advertising fees.



On the fall of the auctioneer’s hammer, the highest bidder becomes legally obligated to pay the full purchase price, which is the hammer price of the property purchased and the seller is legally obligated to relinquish the property in exchange for the hammer price less any seller’s commissions. Commission and fee revenues are recognized on the date of the auction sale upon the fall of the auctioneer’s hammer. 



Under the standard terms and conditions of its auction sales, the Company is not obligated to pay a consignor for property that has not been paid for by the buyer, provided the property has not been released to the buyer. If the buyer defaults on its payment obligation, also referred to as a collapsed sale, the sale is cancelled in the period in which the determination is made, and the property is returned to the consignor or placed in a later event-based or online auction. Historically cancelled sales have not been material.



Online marketplace commission revenue is reduced by a provision for disputes, which is an estimate of disputed items that are expected to be settled at a cost to the Company, related to settlements of discrepancies under the Company’s equipment condition certification program. The equipment condition certification refers to a written inspection report provided to potential buyers that reflects the condition of a specific piece of equipment offered for sale, and includes ratings, comments, and photographs of the equipment following inspection by one of the Company’s equipment inspectors.



2.  Significant accounting policies

(c)   Revenue recognition (continued)

Service revenues (continued)

The equipment condition certification provides that a buyer may file a written dispute claim during an eligible dispute period for consideration and resolution at the sole determination of the Company if the purchased equipment is not substantially in the condition represented in the inspection report. Typically disputes under the equipment condition certification program are settled with minor repairs or additional services, such as washing or detailing the item; the estimated costs of such items or services are included in the provision for disputes.



Commission revenues are recorded net of commissions owed to third parties, which are principally the result of situations when the commission is shared with a consignor or with the counterparty in an auction guarantee risk and reward sharing arrangement. Additionally, in certain situations, commissions are shared with third parties who introduce the Company to consignors who sell property at auction.



Underwritten commission contracts can take the form of guarantee contracts. Guarantee contracts typically include a pre-negotiated percentage of the guaranteed gross proceeds plus a percentage of proceeds in excess of the guaranteed amount. If actual auction proceeds are less than the guaranteed amount, commission is reduced; if proceeds are sufficiently lower, the Company can incur a loss on the sale. Losses, if any, resulting from guarantee contracts are recorded in the period in which the relevant auction is completed. If a loss relating to a guarantee contract held at the period end to be sold after the period end is known or is probable and estimable at the financial statement reporting date, the loss is accrued in the financial statements for that period. The Company’s exposure from these guarantee contracts fluctuates over time. 



Other services revenue also includes fees for refurbishment, logistical services, financing, appraisal fees and other ancillary service fees. Fees are recognized in the period in which the service is provided to the customer.     



Revenue on inventory sales

Underwritten commission contracts can take the form of inventory contracts. Revenues related to inventory contracts are recognized in the period in which the sale is completed, title to the property passes to the purchaser and the Company has fulfilled any other obligations that may be relevant to the transaction. In its role as auctioneer, the Company auctions its inventory to equipment buyers through the auction process. Following the sale of the item, the Company invoices the buyer for the purchase price of the asset, taxes, and, if applicable, the buyer transaction fee, and collects payment from the buyer.

 

On the fall of the auctioneer’s hammer, the highest bidder becomes legally obligated to pay the full purchase price, which is the hammer price of the property purchased. Title to the property is transferred in exchange for the hammer price, and if applicable, the buyer transaction fee plus applicable taxes.



(d)

Costs of services

Costs of services are comprised of expenses incurred in direct relation to conducting auctions (“direct expenses”), earning online marketplace revenues, and earning other fee revenues. Direct expenses include direct labour, buildings and facilities charges, and travel, advertising and promotion costs.



Costs of services incurred to earn online marketplace revenues in addition to the costs listed above also include inspection costs. Inspections are generally performed at the seller’s physical location. The cost of inspections includes payroll costs and related benefits for the Company’s employees that perform and manage field inspection services, the related inspection report preparation and quality assurance costs, fees paid to contractors who perform field inspections, related travel and incidental costs for the Company’s inspection service organization, and office and occupancy costs for its inspection services personnel. Costs of earning online marketplace revenues also include costs for the Company’s customer support, online marketplace operations, logistics, title and lien investigation functions.



2.  Significant accounting policies (continued)

(d)

Costs of services (continued)

Costs of services incurred in earning other fee revenues include ancillary and logistical service expenses, direct labour (including commissions on sales), software maintenance fees, and materials. Costs of services exclude depreciation and amortization expenses.



(e)

Cost of inventory sold

Cost of inventory sold includes the purchase price of assets sold for the Company’s own account and is determined using a specific identification basis.



(f)

Share-based payments

The Company classifies a share-based payment award as an equity or liability payment based on the substantive terms of the award and any related arrangement.



Equity-classified share-based payments

Share unit plans

The Company has a senior executive performance share unit (“PSU”) plan and an employee PSU plan that provides for the award of PSUs to certain senior executives and employees, respectively, of the Company. The Company has the option to settle certain share unit awards in cash or shares and expects to settle them in shares. The cost of PSUs granted is measured at the fair value of the underlying PSUs at the grant date using a Monte-Carlo simulation model.  PSUs vest based on the passage of time and achievement of performance criteria. 



The Company also has a senior executive restricted share unit (“RSU”) plan and an employee RSU plan that provides for the award of RSUs to certain senior executives and employees, respectively, of the Company.  The Company has the option to settle certain share unit awards in cash or shares and expects to settle all grants on and after 2017 in shares.  The cost of RSUs granted is measured using the volume weighted average price of the Company’s common shares for the twenty days prior to the grant date.  RSUs vest based on the passage of time and include restrictions related to employment. 



This fair value of awards expected to vest under these plans is expensed over the respective remaining service period of the individual awards, on an accelerated recognition basis, with the corresponding increase to APIC recorded in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in earnings, such that the consolidated expense reflects the revised estimate, with a corresponding adjustment to equity. Dividend equivalents on the equity-classified PSUs and RSUs are recognized as a reduction to retained earnings over the service period.



At its August 2018 meeting, the Board of Directors resolved that, with respect to each of the RSU and PSU plans, there will no longer be a default in favour of cash settlement and, pursuant to the discretion granted under each plan, the Compensation Committee of the Board will determine whether to settle the awards in cash or in shares in the event of death of the participant. The Company intends to settle in shares. Prior to such resolution, the RSUs and PSUs awarded under the senior executive and employee PSU plans were intended to be settled in cash in the event of death of the participant, and as such, the contingently redeemable portion representing the amount that would be redeemable based on the conditions at the date of grant, to the extent attributable to prior service, was recognized as temporary equity. As a result of the resolution, that portion has been reclassified to additional paid in capital during the year.

2.  Significant accounting policies (continued)

(f)

Share-based payments (continued)

Stock option plans

The Company has three stock option compensation plans that provide for the award of stock options to selected employees, directors and officers of the Company. The cost of options granted is measured at the fair value of the underlying option at the grant date using the Black-Scholes option pricing model. The fair value of options expected to vest under these plans is expensed over the respective remaining service period of the individual awards, on an accelerated recognition basis, with the corresponding increase to APIC recorded in equity.  Upon exercise, any consideration paid on exercise of the stock options and amounts fully amortized in APIC are credited to the common shares.



Liability-classified share-based payments

The Company maintains other share unit compensation plans that vest over a period of up to three years after grant. Under those plans, the Company is either required or expects to settle vested awards on a cash basis or by providing cash to acquire shares on the open market on the employee’s behalf, where the settlement amount is determined using the volume weighted average price of the Company’s common shares for the twenty days prior to the vesting date or, in the case of deferred share unit (“DSU”) recipients, following cessation of service on the Board of Directors.



These awards are classified as liability awards, measured at fair value at the date of grant and re-measured at fair value at each reporting date up to and including the settlement date. The determination of the fair value of the share units under these plans is described in note 25. The fair value of the awards is expensed over the respective vesting period of the individual awards with recognition of a corresponding liability. Changes in fair value after vesting are recognized through compensation expense. Compensation expense reflects estimates of the number of instruments expected to vest.



The impact of forfeitures and fair value revisions, if any, are recognized in earnings such that the cumulative expense reflects the revisions, with a corresponding adjustment to the settlement liability. Liability-classified share unit liabilities due within 12 months of the reporting date are presented in trade and other payables while settlements due beyond 12 months of the reporting date are presented in other non-current liabilities. 



(g)

Fair value measurement

Fair value is the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company measures financial instruments or discloses select non-financial assets at fair value at each balance sheet date. Also, fair values of financial instruments measured at amortized cost are disclosed in note 13.



The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.



All assets and liabilities for which fair value is measured or disclosed in the financial statements at fair value are categorized within a fair value hierarchy, as disclosed in note 13, based on the lowest level input that is significant to the fair value measurement or disclosure. This fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).



For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.







2.  Significant accounting policies (continued)

(g)  Fair value measurement (continued)
For the purposes of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the assets or liability and the level of the fair value hierarchy as explained above. 



(h)

Foreign currency translation

The parent entity‘s presentation and functional currency is the United States dollar. The functional currency for each of the parent entity‘s subsidiaries is the currency of the primary economic environment in which the entity operates, which is usually the currency of the country of residency.



Accordingly, the financial statements of the Company‘s subsidiaries that are not denominated in United States dollars have been translated into United States dollars using the exchange rate at the end of each reporting period for asset and liability amounts and the monthly average exchange rate for amounts included in the determination of earnings. Any gains or losses 

from the translation of asset and liability amounts are included in foreign currency translation adjustment in accumulated other comprehensive income.



In preparing the financial statements of the individual subsidiaries, transactions in currencies other than the entity‘s functional currency are recognized at the rates of exchange prevailing at the dates of the transaction. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are retranslated at the rates prevailing at that date. Foreign currency differences arising on retranslation of monetary items are recognized in earnings.  Foreign currency translation adjustment includes intra-entity foreign currency transactions that are of a long-term investment nature of $9,602,000 for 2018 (2017: $18,129,000; 2016: $1,967,000).



(i)

Cash and cash equivalents

Cash and cash equivalents is comprised of cash on hand, deposits with financial institutions, and other short-term, highly liquid investments with original maturity of three months or less when acquired, that are readily convertible to known amounts of cash. 



(j)

Restricted cash

In certain jurisdictions, local laws require the Company to hold cash in segregated bank accounts, which are used to settle auction proceeds payable resulting from live on site auctions and online marketplace sales conducted in those regions. In addition, the Company also holds cash generated from its online marketplace sales in separate escrow accounts, for settlement of the respective online marketplace transactions as a part of its secured escrow service. Restricted cash balances also include funds held in accounts owned by the Company in support of short-term stand-by letters of credit to provide seller security.



During the period from December 21, 2016 through May 31, 2017, non-current restricted cash consisted of funds held in escrow pursuant to the offering of senior unsecured notes (note 22), which were only available when the Company received approval to acquire IronPlanet Holdings, Inc. (“IronPlanet”) and whose use was restricted to the funding of the IronPlanet acquisition (note 29). 



(k)

Trade and other receivables

Trade receivables principally include amounts due from customers as a result of live on site auction and online marketplace transactions. The recorded amount reflects the purchase price of the item sold, including the Company’s commission. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off experience and customer economic data.

The Company reviews the allowance for doubtful accounts regularly and past due balances are reviewed for collectability. Account balances are charged against the allowance when the Company believes that the receivable will not be recovered. 

2.  Significant accounting policies (continued)

(l)

Inventories

Inventory consists of equipment and other assets purchased for resale in an upcoming live on site auction or online marketplace event. The Company typically purchases inventory for resale through a competitive process where the consignor or vendor has determined this to be the preferred method of disposition through the auction process. In addition, certain jurisdictions require auctioneers to hold title to assets and facilitate title transfer on sale. Inventory is valued at the lower of cost and net realizable value where net realizable value represents the expected sale price upon disposition less make-ready costs and the costs of disposal and transportation. As part of its government business, the Company purchases inventory for resale as part of its commitment to purchase certain surplus government property (note 26). The significant elements of cost include the acquisition price of the inventory and make-ready costs to prepare the inventory for sale that are not selling expenses and in-bound transportation costs. Write-downs to the carrying value of inventory are recorded in cost of inventory sold on the consolidated income statement.

(m)

Equity-accounted investments

Investments in entities that the Company has the ability to exercise significant influence over, but not control, are accounted for using the equity method of accounting. Under the equity method of accounting, investments are stated at initial costs and are adjusted for subsequent additional investments and the Company’s share of earnings or losses and distributions. The Company evaluates its equity-accounted investments for impairment when events or circumstances indicate that the carrying value of such investments may have experienced an other-than-temporary decline in value below their carrying value. If the estimated fair value is less than the carrying value and is considered an other than temporary decline, the carrying value is written down to its estimated fair value and the resulting impairment is recorded in the consolidated income statement.



(n)

Property, plant and equipment

All property, plant and equipment are stated at cost less accumulated depreciation. Cost includes all expenditures that are directly attributable to the acquisition or development of the asset, net of any amounts received in relation to those assets, including scientific research and experimental development tax credits.



The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to working condition for their intended use, the costs of dismantling and removing items and restoring the site on which they are located (if applicable), and capitalized interest on qualifying assets. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.



All repairs and maintenance costs are charged to earnings during the financial period in which they are incurred. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of the item, and are recognized net within operating income on the income statement.



Depreciation is provided to charge the cost of the assets to operations over their estimated useful lives based on their usage as follows:



 

 

 

 



 

 

 

 

Asset

 

 

Rate / term

 

Land improvements

 

 

10% 

 

Buildings

 

 

15 - 30 years

 

Yard equipment

 

 

20 - 30%

 

Automotive equipment

 

 

30% 

 

Computer software and equipment

 

 

3 - 5 years

 

Office equipment

 

 

20% 

 

Leasehold improvements

 

 

Lease term

 

2.  Significant accounting policies (continued)

(n)

Property, plant and equipment (continued)

No depreciation is provided on freehold land or on assets in the course of construction or development. Depreciation of property, plant and equipment under capital leases is recorded in depreciation expense.



Legal obligations to retire and to restore property, plant and equipment and assets under operating leases are recorded at management‘s best estimate in the period in which they are incurred, if a reasonable estimate can be made, with a corresponding increase in asset carrying value. The liability is accreted to face value over the remaining estimated useful life of the asset. The Company does not have any significant asset retirement obligations.



(o)

Long-lived assets held for sale

Long-lived assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use are classified as assets held for sale. Immediately before classification as held for

sale, the assets, or components of a disposal group, are measured at carrying amount in accordance with the Company’s accounting policies. Thereafter, the assets, or disposal group, are measured at the lower of their carrying amount and fair value less cost to sell and are not depreciated. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognized in operating income on the income statement.



(p)

Intangible assets

Intangible assets are measured at cost less accumulated amortization and accumulated impairment losses. Cost includes all expenditures that are directly attributable to the acquisition or development of the asset, net of any amounts received in relation to those assets, including scientific research and experimental development tax credits. Costs of internally developed software are amortized on a straight-line basis over the remaining estimated economic life of the software product. Costs related to software incurred prior to establishing technological feasibility or the beginning of the application development stage of software are charged to operations as such costs are incurred.  Once technological feasibility is established or the application development stage has begun, directly attributable costs are capitalized until the software is available for use.



Amortization is recognized in net earnings on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful lives are:



 

 

 

 



 

 

 

 

Asset

Basis

 

Rate / term

 

Trade names and trademarks

Straight-line

 

3 - 15 years or indefinite-lived

 

Customer relationships

Straight-line

 

6 - 20 years

 

Software assets

Straight-line

 

3 - 7 years

 



Customer relationships includes relationships with buyers and sellers. 



(q)

Impairment of long-lived and indefinite-lived assets

Long-lived assets, comprised of property, plant and equipment and intangible assets subject to amortization, are assessed for impairment whenever events or circumstances indicate that their carrying value may not be recoverable. For the purpose of impairment testing, long-lived assets are grouped and tested for recoverability at the lowest level that generates independent cash flows.  An impairment loss is recognized when the carrying value of the assets or asset groups is greater

than the future projected undiscounted cash flows.  The impairment loss is calculated as the excess of the carrying value over the fair value of the asset or asset group. Fair value is based on valuation techniques or third party appraisals. Significant estimates and judgments are applied in determining these cash flows and fair values.

2.  Significant accounting policies (continued)

(q)

Impairment of long-lived and indefinite-lived assets (continued)

Indefinite-lived intangible assets are tested annually for impairment as of December 31, and between annual tests if indicators of potential impairment exist. The Company has the option of performing a qualitative assessment to first determine whether the quantitative impairment test is necessary. This involves an assessment of qualitative factors to determine the existence of events or circumstances that would indicate whether it is more likely than not that the carrying amount of the indefinite-lived intangible asset is less than its fair value. If the qualitative assessment indicates it is not more likely than not that the carrying amount is less than its fair value, a quantitative impairment test is not required. Where a quantitative impairment test is required, the procedure is to compare the indefinite-lived intangible asset’s fair value with its carrying amount. An impairment loss is recognized as the difference between the indefinite-lived intangible asset’s carrying amount and its fair value. 

(r)

Goodwill

Goodwill represents the excess of the purchase price of an acquired enterprise over the fair value assigned to the assets acquired and liabilities assumed in a business combination.



Goodwill is not amortized, but it is tested annually for impairment at the reporting unit level as of December 31, and between annual tests if indicators of potential impairment exist. The Company has the option of performing a qualitative assessment of a reporting unit to first determine whether the quantitative impairment test is necessary. This involves an assessment of qualitative factors to determine the existence of events or circumstances that would indicate whether it is

more likely than not that the carrying amount of the reporting unit to which goodwill belongs is less than its fair value. If the qualitative assessment indicates it is not more likely than not that the reporting unit’s carrying amount is less than its fair value, a quantitative impairment test is not required.

 

If a quantitative impairment test is required, the procedure is to identify potential impairment by comparing the reporting unit’s fair value with its carrying amount, including goodwill. The reporting unit’s fair value is determined using various valuation approaches and techniques that involve assumptions based on what the Company believes a hypothetical marketplace participant would use in estimating fair value on the measurement date. An impairment loss is recognized as the difference between the reporting unit’s carrying amount and its fair value. If the difference between the reporting unit’s carrying amount and fair value is greater than the amount of goodwill allocated to the reporting unit, the impairment loss is restricted by the amount of the goodwill allocated to the reporting unit. 



(s)

Deferred financing costs

Deferred financing costs represent the unamortized costs incurred on the issuance of the Company’s long-term debt. Amortization of deferred financing costs is provided on the effective interest rate method over the term of the facility. Deferred financing costs relating to the Company’s term debt are presented in the consolidated balance sheet as a direct reduction of the carrying amount of the long-term debt. Deferred financing costs relating to the Company’s revolving loans are presented on the balance sheet as a deferred charge.

(t)

Taxes

Income tax expense represents the sum of current tax expense and deferred tax expense.



Current tax

The current tax expense is based on taxable profit for the period and includes any adjustments to tax payable in respect of previous years. Taxable profit differs from income before income taxes as reported in the consolidated income statement because it excludes (i) items of income or expense that are taxable or deductible in other years and (ii) items that are never taxable or deductible. The Company‘s liability for current tax is calculated using tax rates that have been enacted by the balance sheet date.



2.  Significant accounting policies (continued)

(t)   Taxes (continued)
Deferred tax

Income taxes are accounted for using the asset and liability method. Deferred income tax assets and liabilities are based on temporary differences, which are differences between the accounting basis and the tax basis of the assets and liabilities and non-capital loss, capital loss, and tax credits carryforwards are measured using the enacted tax rates and laws expected to apply when these differences reverse. Deferred tax benefits, including non-capital loss, capital loss, and tax credits carryforwards, are recognized to the extent that realization of such benefits is considered more likely than not. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that enactment occurs. When realization of deferred income tax assets does not meet the more-likely-than-not criterion for recognition, a valuation allowance is provided.

Interest and penalties related to income taxes, including unrecognized tax benefits, are recorded in income tax expense in the income statement.



Liabilities for uncertain tax positions are recorded based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision

for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable, and deferred taxes in the period in which the facts that give rise to a revision become known.



(u)

Contingently redeemable non-controlling interest

Contingently redeemable equity instruments are initially recorded at their fair value on the date of issue within temporary equity on the balance sheet. When the equity instruments become redeemable or redemption is probable, the Company recognizes changes in the estimated redemption value immediately as they occur, and adjusts the carrying amount of the redeemable equity instrument to equal the estimated redemption value at the end of each reporting period. Changes to the carrying value are charged or credited to retained earnings attributable to stockholders on the balance sheet.



Redemption value determinations require high levels of judgment (“Level 3” on the fair value hierarchy) and are based on various valuation techniques, including market comparables and discounted cash flow projections.



(v)

Earnings per share

Basic earnings per share has been calculated by dividing net income attributable to stockholders by the weighted average number of common shares outstanding.  Diluted earnings per share has been calculated after giving effect to outstanding dilutive stock options calculated by adjusting the net income attributable to stockholders and the weighted average number of shares outstanding for all dilutive shares.

2.  Significant accounting policies (continued)

(w)

Defined contribution plans

The employees of the Company are members of retirement benefit plans to which the Company matches up to a specified percentage of employee contributions or, in certain jurisdictions, contributes a specified percentage of payroll costs as mandated by the local authorities. The only obligation of the Company with respect to the retirement benefit plans is to make the specified contributions.



(x)

Advertising costs

Advertising costs are expensed as incurred. Advertising expense is included in costs of services and selling, general and administrative (“SG&A”) expenses on the accompanying consolidated income statements.



(y)

New and amended accounting standards

(i)

Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606).   The Company implemented the new standard using a full retrospective method, in order to provide more useful comparative information to financial statement users. 



The primary impact of the adoption of ASU 2014-09 is the change in the presentation of revenue from inventory, ancillary service, and logistical services contracts on a gross basis as a principal versus net as an agent. This is due to the new standard requiring an entity to determine whether the entity controls the specified good or service before transfer to the customer, with the entity being principal in these transactions. Prior to adopting ASU 2014-09, an entity evaluated indicators to determine if it was a principal or agent. As the Company determined that it controls the inventory and provision of ancillary and logistical services before transfer to its customers, the Company concluded that it was acting as a principal rather than an agent.  As a result of adoption of the new accounting standard there was no impact on the timing of recognition of revenue, operating income, net income, or on the consolidated balance sheet or consolidated statement of cash flows.



Presenting revenue from inventory sales on a gross basis and presenting ancillary and logistical services revenues on a gross basis significantly changes the face of the Company’s consolidated income statement in two primary ways:

1)

Prior to the adoption of ASU 2014-09, all revenue from inventory sales were presented net of costs within service revenues on the income statement. With the adoption of ASU 2014-09, the Company has presented separately revenue from inventory sales and service revenue and accordingly service revenues exclude revenue from inventory sales and cost of inventory sold. Those amounts are now presented gross as separate line items on the face of the consolidated income statement; and

2)

Ancillary and logistical service revenues are presented within service revenues, now on a gross basis, with the related costs of services presented separately within costs of services.

2.  Significant accounting policies (continued)

(y)  New and amended accounting standards (continued)

Impact to reported results

The new presentation based on ASU 2014-09 results in an increase the amount of revenue reported but there is no change in the operating income compared to the prior presentation:



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

Year ended December 31, 2017

Consolidated income statement line item

As reported

 

New Revenue Standard Adjustment

 

Consolidated income statement line item

As Adjusted

Revenues

$

610,517 

 

$

13,900 

 

Service revenues

$

624,417 



 

 

 

 

346,774 

 

Revenue from inventory sales

 

346,774 



 

 

 

 

360,674 

 

Total revenues

 

971,191 

Costs of services

 

(79,013)

 

 

(54,176)

 

Costs of services

 

(133,189)



 

 

 

 

(306,498)

 

Cost of inventory sold

 

(306,498)



$

531,504 

 

$

 -

 

 

$

531,504 





 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

Year ended December 31, 2016

Consolidated income statement line item

As reported

 

New Revenue Standard Adjustment

 

Consolidated income statement line item

As Adjusted

Revenues

$

566,395 

 

$

(10,552)

 

Service revenues

$

555,843 



 

 

 

 

571,134 

 

Revenue from inventory sales

 

571,134 



 

 

 

 

560,582 

 

Total revenues

 

1,126,977 

Costs of services

 

(66,062)

 

 

(47,234)

 

Costs of services

 

(113,296)



 

 

 

 

(513,348)

 

Cost of inventory sold

 

(513,348)



$

500,333 

 

$

 -

 

Gross profit

$

500,333 



(ii)

 Effective January 1, 2018, the Company adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 identifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are applied retrospectively on the amendment date. The adoption of ASU 2016-15 resulted in the $1,302,000 Mascus contingent consideration paid in the second quarter of 2017 to be reclassified from operating to financing cash flows.



(z)

Recent accounting standards not yet adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize almost all leases, including operating leases, on the balance sheet through a right-of-use asset and a corresponding lease liability. For short-term leases, defined as those with a term of 12 months or less, the lessee is permitted to make an accounting policy election not to recognize the lease assets and liabilities, and instead recognize the lease expense generally on a straight-line basis over the lease term. The accounting treatment under this election is consistent with current operating lease accounting. No extensive amendments were made to lessor accounting, but amendments of note include changes to the definition of initial direct costs and accounting for collectability uncertainties in a lease.



2.  Significant accounting policies (continued)

(z)

Recent accounting standards not yet adopted (continued)

ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt the standard effective January 1, 2019. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides an “optional transition method”. The Company can transition to the new standard by using a “modified retrospective transition”, which reflects the new guidance from the beginning of the earliest period presented in the financial statements or the “optional transition method”, which permits the Company to apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. If the optional transition method is utilized, the Company’s reporting for the comparative periods presented in the financial statements in which it adopts Topic 842 will continue to be reported pursuant to Topic 840. The Company has determined that it will utilize the optional transition method on adoption.  



The Company will utilize the package of practical expedients permitted within the new standard, which among other things, allows the Company to carryforward the historical lease classification. In addition, the Company will elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. While lease classification will remain unchanged, hindsight will result in generally longer accounting lease terms and useful lives of the corresponding leasehold improvements. The Company will elect not to recognize the lease assets and liabilities for leases with an initial term of 12 months or less and will recognize those lease payments on a straight-line basis over the lease term.



The Company is currently completing the implementation of its lease accounting system. We continue to assess the accuracy and completeness of lease data and validate internal controls. We are finalizing our assessment of the potential impact of the standard and we expect a significant increase in total liabilities with an offsetting increase to the right-of-use asset relating to operating leases. The Company does not believe the standard will materially affect our consolidated net earnings. We do not expect the standard to impact our debt-covenant compliance under our current agreements.



v3.10.0.1
Significant Judgments, Estimates and Assumptions
12 Months Ended
Dec. 31, 2018
Significant Judgments, Estimates and Assumptions [Abstract]  
Significant Judgments, Estimates and Assumptions

3.  Significant judgments, estimates and assumptions

The preparation of financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.



Future differences arising between actual results and the judgments, estimates and assumptions made by the Company at the reporting date, or future changes to estimates and assumptions, could necessitate adjustments to the underlying reported amounts of assets, liabilities, revenues and expenses in future reporting periods.



Judgments, estimates and underlying assumptions are evaluated on an ongoing basis by management, and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. However, existing circumstances and assumptions about future developments may change due to market changes or circumstance and such changes are reflected in the assumptions when they occur. Significant items subject to estimates include purchase price allocations, the carrying amounts of goodwill, the useful lives of long-lived assets, share based compensation, deferred income taxes, reserves for tax uncertainties, and other contingencies.

v3.10.0.1
Segmented Information
12 Months Ended
Dec. 31, 2018
Segmented Information [Abstract]  
Segmented Information

4.  Segmented information

The Company’s principal business activity is the management and disposition of used industrial equipment and other durable assets. The Company’s operations are comprised of one reportable segment and other business activities that are not reportable as follows:

·

Auctions and Marketplaces – This is the Company’s only reportable segment, which consists of the Company’s live on site auctions, its online auctions and marketplaces, and its brokerage service;

·

Other includes the results of Ritchie Bros. Financial Services (“RBFS”), Mascus online services, and the results from various value-added services and make-ready activities, including the Company’s equipment refurbishment services, Asset Appraisal Services, and Ritchie Bros. Logistical Services.

4.  Segmented information (continued)



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Year ended December 31, 2018



A&M

 

Other

 

Consolidated

 

Service revenues

$

626,007 

 

$

123,508 

 

$

749,515 

 

Revenue from inventory sales

 

420,511 

 

 

 -

 

 

420,511 

 

Total revenues

$

1,046,518 

 

$

123,508 

 

$

1,170,026 

 

Costs of services

 

87,430 

 

 

71,628 

 

 

159,058 

 

Cost of inventory sold

 

374,339 

 

 

 -

 

 

374,339 

 

Selling, general and administrative

 

 

 

 

 

 

 

 

 

      expenses ("SG&A")

 

363,549 

 

 

19,127 

 

 

382,676 

 

Segment profit

$

221,200 

 

$

32,753 

 

$

253,953 

 

Acquisition-related costs

 

 

 

 

 

 

 

5,093 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

      expenses ("D&A")

 

 

 

 

 

 

 

66,614 

 

Gain on disposition of property, plant

 

 

 

 

 

 

 

 

 

      and equipment ("PPE")

 

 

 

 

 

 

 

(2,731)

 

Foreign exchange gain

 

 

 

 

 

 

 

(212)

 

Operating income

$

 

 

$

 

 

$

185,189 

 

Interest expense

 

 

 

 

 

 

 

(44,527)

 

Other income, net

 

 

 

 

 

 

 

11,850 

 

Income tax expense

 

 

 

 

 

 

 

(31,006)

 

Net income

$

 

 

$

 

 

$

121,506 

 

 

4.  Segmented information (continued)

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Year ended December 31, 2017



A&M

 

Other

 

Consolidated

 

Service revenues

$

524,023 

 

$

100,394 

 

$

624,417 

 

Revenue from inventory sales

 

346,774 

 

 

 -

 

 

346,774 

 

Total revenues

$

870,797 

 

$

100,394 

 

 

971,191 

 

Costs of services

 

75,685 

 

 

57,504 

 

 

133,189 

 

Cost of inventory sold

 

306,498 

 

 

 -

 

 

306,498 

 

SG&A expenses

 

308,873 

 

 

14,397 

 

 

323,270 

 

Impairment loss

 

8,911 

 

 

 -

 

 

8,911 

 

Segment profit

$

170,830 

 

$

28,493 

 

$

199,323 

 

Acquisition-related costs

 

 

 

 

 

 

 

38,272 

 

D&A expenses

 

 

 

 

 

 

 

52,694 

 

Gain on disposition of PPE

 

 

 

 

 

 

 

(1,656)

 

Foreign exchange loss

 

 

 

 

 

 

 

2,559 

 

Operating income

 

 

 

 

 

 

$

107,454 

 

Interest expense

 

 

 

 

 

 

 

(38,291)

 

Other income, net

 

 

 

 

 

 

 

8,231 

 

Income tax expense

 

 

 

 

 

 

 

(2,088)

 

Net income

 

 

 

 

 

 

$

75,306 

 

4.  Segmented information (continued)



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Year ended December 31, 2016



A&M

 

Other

 

Consolidated

 

Service revenues

$

474,040 

 

 

81,803 

 

$

555,843 

 

Revenue from inventory sales

 

571,134 

 

 

 -

 

 

571,134 

 

Total revenues

$

1,045,174 

 

$

81,803 

 

 

1,126,977 

 

Costs of services

 

65,248 

 

 

48,048 

 

 

113,296 

 

Cost of inventory sold

 

513,348 

 

 

 -

 

 

513,348 

 

SG&A expenses

 

272,317 

 

 

11,212 

 

 

283,529 

 

Impairment loss

 

28,243 

 

 

 -

 

 

28,243 

 

Segment profit

$

166,018 

 

$

22,543 

 

$

188,561 

 

Acquisition-related costs

 

 

 

 

 

 

 

11,829 

 

D&A expenses

 

 

 

 

 

 

 

40,861 

 

Gain on disposition of PPE

 

 

 

 

 

 

 

(1,282)

 

Foreign exchange loss

 

 

 

 

 

 

 

1,431 

 

Operating income

 

 

 

 

 

 

$

135,722 

 

Interest expense

 

 

 

 

 

 

 

(5,564)

 

Debt extinguishment costs

 

 

 

 

 

 

 

(6,787)

 

Other income, net

 

 

 

 

 

 

 

7,123 

 

Income tax expense

 

 

 

 

 

 

 

(36,982)

 

Net income

 

 

 

 

 

 

$

93,512 

 



























4.  Segmented information (continued)

The carrying value of goodwill of $651,359,000 has been allocated to A&M and $20,235,000 has been allocated to other. As in prior periods, the CODM does not evaluate the performance of its operating segments based on segment assets and liabilities, nor does the Company classify liabilities on a segmented basis.





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

As at December 31,

 

 

 

 

2018 

 

 

2017 

A&M

 

 

 

$

651,359 

 

$

649,770 

Other

 

 

 

 

20,235 

 

 

21,152 



 

 

 

$

671,594 

 

$

670,922 



The Company‘s geographic information as determined by the revenue and location of assets, which represents property, plant and equipment is as follows:





 

 

 

 

 

 

 

 

 

 



 

 

 

 

 



 

United
States

 

Canada

 

Europe

 

Other

 

Consolidated

Total revenues for the year ended:

 

 

 

 

 

 

 

 

 

 

December 31, 2018