Sotheby’s (NYSE:BID) today reported financial results for the third
quarter and nine months ended 30 September 2015.
President and Chief Executive Officer Tad Smith said, “We are
proud of our auction sale results in the categories of
Impressionist, Modern and Contemporary Art, which are on track to
achieve record levels for the year. In just three days last
week, our auctions achieved $780 million, led by the first two
sales from the collection of Sotheby’s former Chairman, Alfred
Taubman. I’m pleased to say that we are also making good
progress on our strategic objectives for future growth.”
In the third quarter of 2015, Sotheby’s reported a reduced third
quarter 2015 net loss of ($17.9) million, or ($0.26) per diluted
share, an improvement of $9.8 million (35%) compared with a net
loss of ($27.7) million, or ($0.40) per diluted share, in the same
period of the prior year.
On an adjusted basis, Sotheby’s third quarter 2015 Adjusted Net
Loss* decreased $2.6 million (13%) to ($17.9) million, or ($0.26)
per diluted share, from ($20.6) million, or ($0.30) per diluted
share, in the prior year. The improvement in Adjusted Net
Loss* is primarily attributable to the completion of a number of
profitable inventory sales in the period and improved results for
Sotheby’s Finance segment partially offset by lower auction
commission revenues.
These same factors increased total third quarter 2015 revenues
by $43.8 million (46%) to $138.0 million, compared with third
quarter revenues a year ago of $94.2 million. While Net
Auction Sales increased $48.0 million (15%) as a result of a change
in the timing of the evening sale of Contemporary Art in London,
third quarter auction commission revenues decreased, principally
due to significantly weaker sales results in higher margin
categories such as Old Master Paintings, Asian Art, and
Jewelry.
For the nine months ended 30 September 2015, total revenues
increased $38.8 million (7%) to $625.7 million compared with the
prior year largely due to higher inventory sales and Finance
segment revenues. Sotheby’s reported year to date net income
of $54.9 million, or $0.79 per diluted share, an increase of $11.1
million (25%) compared with net income of $43.8 million, or $0.61
per diluted share, in the same period last year. Adjusted Net
Income* for the period decreased $1.7 million (3%) to $62.5
million, or $0.90 per diluted share, from $64.3 million, or $0.91
per diluted share, a year ago.
Non-GAAP Financial Measures
* Adjusted Net (Loss) Income and Adjusted Diluted (Loss)
Earnings Per Share are non-GAAP financial measures. See
Appendix B for a reconciliation of these non-GAAP financial
measures to the most comparable measures reported in accordance
with GAAP.
Forward-Looking Statements
This release contains certain “forward-looking statements” (as
such term is defined in the Securities and Exchange Act of 1934, as
amended) relating to future events and the financial performance of
the Company. Such statements are only predictions and involve
risks and uncertainties, resulting in the possibility that the
actual events or performances will differ materially from such
predictions. Major factors, which the Company believes could
cause the actual results to differ materially from the predicted
results in the “forward-looking statements” include, but are not
limited to, the overall strength of the international economy and
financial markets, political conditions in various nations,
competition with other auctioneers and art dealers, the amount of
quality property being consigned to art auction houses and the
marketability at auction of such property. Please refer to
our most recently filed Form 10-Q (and/or 10-K) for a complete list
of Risk Factors.
Investor Relations Information
All Sotheby’s Press Releases and SEC filings are available on
our web site at www.sothebys.com. An outline of the
conference call as well as an accompanying slide presentation will
be available at http://investor.shareholder.com/bid/events.cfm.
Sotheby’s will host a conference call at 9:00 AM EST on 9
November 2015, to discuss its third quarter 2015 financial
results. Please dial 888-371-8897 and for callers outside the
United States, Puerto Rico and Canada, please dial 1-970-315-0479,
approximately 15 minutes before the scheduled start of the
call. The call reservation number is 59490093.
The conference call will also be accessible via
webcast on the Investor Relations section of the Sotheby’s web site
at http://investor.shareholder.com/bid/events.cfm.
About Sotheby’s
Sotheby’s has been uniting collectors with world-class works of
art since 1744. Sotheby’s became the first international
auction house when it expanded from London to New York (1955), the
first to conduct sales in Hong Kong (1973), India (1992) and France
(2001), and the first international fine art auction house in China
(2012). Today, Sotheby’s presents auctions in nine different
salesrooms, including New York, London, Hong Kong and Paris, and
Sotheby’s BidNow program allows visitors to view all auctions live
online and place bids in real-time from anywhere in the
world. Sotheby’s offers collectors the resources of Sotheby’s
Financial Services, the world’s only full-service art financing
company, as well as private sale opportunities in more than 70
categories, including S|2, the gallery arm of Sotheby’s
Contemporary Art department, and two retail businesses, Sotheby’s
Diamonds and Sotheby’s Wine. Sotheby’s has a global network
of 90 offices in 40 countries and is the oldest company listed on
the New York Stock Exchange (BID).
FOR MORE NEWS FROM SOTHEBY'S
Visit: www.sothebys.com/en/news-video.htmlFollow:
www.twitter.com/sothebysJoin: www.facebook.com/sothebys &
www.weibo.com/sothebyshongkongWatch: www.youtube.com/sothebys
Images are available upon
request All catalogues are available online at
www.sothebys.com or through Sotheby’s Catalogue iPad App.
| APPENDIX A |
|
SOTHEBY’S |
| CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
(UNAUDITED) |
| (Thousands of
dollars, except per share data) |
|
|
| |
|
Three Months Ended |
|
Nine Months Ended |
| |
|
September 30,2015 |
|
September 30,2014 |
|
September 30,2015 |
|
September 30,2014 |
| Revenues: |
|
|
|
|
|
|
|
|
| Agency commissions and fees |
|
$ |
69,222 |
|
|
$ |
76,229 |
|
|
$ |
507,481 |
|
|
$ |
515,544 |
|
| Inventory sales |
|
53,226 |
|
|
6,273 |
|
|
73,214 |
|
|
41,007 |
|
| Finance |
|
12,933 |
|
|
8,917 |
|
|
37,590 |
|
|
22,739 |
|
| License fees |
|
2,539 |
|
|
2,376 |
|
|
6,981 |
|
|
6,535 |
|
| Other |
|
72 |
|
|
406 |
|
|
407 |
|
|
1,004 |
|
| Total revenues |
|
137,992 |
|
|
94,201 |
|
|
625,673 |
|
|
586,829 |
|
| Expenses: |
|
|
|
|
|
|
|
|
| Agency direct costs |
|
8,156 |
|
|
6,002 |
|
|
52,725 |
|
|
48,056 |
|
| Cost of inventory sales |
|
43,678 |
|
|
7,999 |
|
|
72,380 |
|
|
40,019 |
|
| Cost of Finance Revenues |
|
4,282 |
|
|
2,634 |
|
|
11,544 |
|
|
5,368 |
|
| Marketing |
|
3,767 |
|
|
3,076 |
|
|
12,575 |
|
|
10,773 |
|
| Salaries and related |
|
56,897 |
|
|
58,888 |
|
|
228,009 |
|
|
222,477 |
|
| General and administrative |
|
38,124 |
|
|
37,798 |
|
|
117,584 |
|
|
113,340 |
|
| Depreciation and amortization |
|
4,881 |
|
|
5,157 |
|
|
14,444 |
|
|
15,370 |
|
| CEO separation and transition
costs |
|
— |
|
|
— |
|
|
4,232 |
|
|
— |
|
| Restructuring charges (net) |
|
(86 |
) |
|
14,285 |
|
|
(975 |
) |
|
14,285 |
|
| Special Charges (net) |
|
— |
|
|
(4,169 |
) |
|
— |
|
|
20,088 |
|
| Total expenses |
|
159,699 |
|
|
131,670 |
|
|
512,518 |
|
|
489,776 |
|
| Operating (loss) income |
|
(21,707 |
) |
|
(37,469 |
) |
|
113,155 |
|
|
97,053 |
|
| Interest income |
|
479 |
|
|
621 |
|
|
1,238 |
|
|
1,439 |
|
| Interest expense |
|
(7,438 |
) |
|
(8,757 |
) |
|
(25,173 |
) |
|
(26,308 |
) |
| Other (expense)
income |
|
(2,116 |
) |
|
1,438 |
|
|
(3,830 |
) |
|
690 |
|
| (Loss) income before taxes |
|
(30,782 |
) |
|
(44,167 |
) |
|
85,390 |
|
|
72,874 |
|
| Equity in earnings of
investees |
|
2,827 |
|
|
296 |
|
|
5,953 |
|
|
680 |
|
| Income tax (benefit)
expense |
|
(10,078 |
) |
|
(16,173 |
) |
|
36,635 |
|
|
29,502 |
|
| Net (loss) income |
|
(17,877 |
) |
|
(27,698 |
) |
|
54,708 |
|
|
44,052 |
|
| Less: Net income (loss)
attributable to noncontrolling interest |
|
17 |
|
|
28 |
|
|
(172 |
) |
|
260 |
|
| Net (loss) income
attributable to Sotheby's |
|
$ |
(17,894 |
) |
|
$ |
(27,726 |
) |
|
$ |
54,880 |
|
|
$ |
43,792 |
|
| Basic (loss) earnings
per share - Sotheby’s common shareholders |
|
$ |
(0.26 |
) |
|
$ |
(0.40 |
) |
|
$ |
0.79 |
|
|
$ |
0.62 |
|
| Diluted (loss) earnings
per share - Sotheby’s common shareholders |
|
$ |
(0.26 |
) |
|
$ |
(0.40 |
) |
|
$ |
0.79 |
|
|
$ |
0.61 |
|
| Weighted average basic
shares outstanding |
|
67,946 |
|
|
68,990 |
|
|
68,789 |
|
|
69,024 |
|
| Weighted average
diluted shares outstanding |
|
67,946 |
|
|
68,990 |
|
|
69,358 |
|
|
69,572 |
|
| Cash dividends declared
per common share |
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.30 |
|
|
$ |
4.64 |
|
APPENDIX B
USE OF NON-GAAP FINANCIAL MEASURES
GAAP refers to generally accepted accounting principles in the
United States of America. Included in this presentation are
financial measures presented in accordance with GAAP and also on a
non-GAAP basis. Adjusted Net (Loss) Income and Adjusted Diluted
(Loss) Earnings Per Share are supplemental financial measures that
are not required by or presented in accordance with GAAP. Sotheby's
definition of these non-GAAP financial measures is provided in the
following paragraphs.
Adjusted Net (Loss) Income is defined as net (loss) income
attributable to Sotheby's, excluding after-tax CEO separation and
transition costs, leadership transition severance costs,
restructuring charges (net), and special charges (net). Adjusted
Diluted (Loss) Earnings Per Share is defined as diluted (loss)
earnings per share excluding the per share impact of CEO separation
and transition costs, leadership transition severance costs,
restructuring charges (net), and special charges (net).
Adjusted Net (Loss) Income and Adjusted Diluted (Loss) Earnings
Per Share are important supplemental measures used by the Board of
Directors and management in their financial and operational
decision making processes, for internal reporting, and as part of
Sotheby’s forecasting and budgeting processes as they provide
helpful measures of Sotheby’s core operations. These measures allow
the Board of Directors and management to view operating trends,
perform analytical comparisons, and benchmark performance between
periods. Management also believes that these measures may be used
by securities analysts, investors, financial institutions, and
other interested parties in their evaluation of Sotheby's.
Management cautions users of Sotheby's financial statements that
amounts presented in accordance with its definitions of these
non-GAAP financial measures may not be comparable to similar
measures disclosed by other companies because not all companies and
analysts calculate such measures in the same manner.
A reconciliation of each of these non-GAAP financial measures to
the most comparable measure reported in accordance with GAAP is
presented in the following tables (in thousands of dollars, except
per share data):
| |
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
| |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| Net (loss) income
attributable to Sotheby's |
|
$ |
(17,894 |
) |
|
$ |
(27,726 |
) |
|
$ |
54,880 |
|
|
$ |
43,792 |
|
| Add: CEO separation and
transition costs, net of tax |
|
— |
|
|
— |
|
|
2,564 |
|
|
— |
|
| Add: Leadership
transition severance costs, net tax |
|
— |
|
|
— |
|
|
5,758 |
|
|
— |
|
| Add: Restructuring
charges (net), net of tax |
|
(49 |
) |
|
9,428 |
|
|
(661 |
) |
|
9,428 |
|
| Add: Special charges
(net), net of tax |
|
— |
|
|
(2,293 |
) |
|
— |
|
|
11,048 |
|
| Adjusted Net (Loss) Income |
|
$ |
(17,943 |
) |
|
$ |
(20,591 |
) |
|
$ |
62,541 |
|
|
$ |
64,268 |
|
| Variance versus prior period -
$ |
|
$ |
2,648 |
|
|
|
|
$ |
(1,727 |
) |
|
|
| Variance versus prior period -
% |
|
13 |
% |
|
|
|
(3 |
%) |
|
|
| |
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember
30, |
| |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| Diluted (loss) earnings
per share |
|
$ |
(0.26 |
) |
|
$ |
(0.40 |
) |
|
$ |
0.79 |
|
|
$ |
0.61 |
|
| Add: CEO separation and
transition costs, per share |
|
— |
|
|
— |
|
|
0.04 |
|
|
— |
|
| Add: Leadership
transition severance costs, per share |
|
— |
|
|
— |
|
|
0.08 |
|
|
— |
|
| Add: Restructuring
charges (net), per share |
|
— |
|
|
0.13 |
|
|
(0.01 |
) |
|
0.14 |
|
| Add: Special charges
(net), per share |
|
— |
|
|
(0.03 |
) |
|
— |
|
|
0.16 |
|
| Adjusted Diluted (Loss) Earnings
Per Share |
|
$ |
(0.26 |
) |
|
$ |
(0.30 |
) |
|
$ |
0.90 |
|
|
$ |
0.91 |
|
| Variance versus prior period -
$ |
|
$ |
0.04 |
|
|
|
|
$ |
(0.01 |
) |
|
|
| Variance versus prior period -
% |
|
13 |
% |
|
|
|
(1 |
%) |
|
|
New York | Lauren Gioia | Jennifer Park | Lauren.Gioia@Sothebys.com | Jennifer.Park@Sothebys.com | +1 212 606 7176
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