Sotheby’s, which has gone through major board changes in the last six months has reported a 127% Increase in First Quarter 2015 Adjusted Operating Income* to $22.2 Million First Quarter 2015 Adjusted Net Income* of $7.4 Million. Increase from First Quarter with a 2014 Adjusted Net Loss* of ($3.0) Million
The three months ending 31 March 2015, Sotheby’s reported Adjusted Operating Income* of $22.2 million, an increase of $12.4 million (127%) over the prior year, principally due to an 8% increase in auction commission revenues, attributable to improved auction commission margins, and 3% growth in Net Auction Sales. The improvement in auction commission margin is primarily due to the change in the buyer’s premium rate structure enacted on 1 February 2015 and a lower level of buyer’s premium shared with consignors. The comparison of first quarter Adjusted Operating Income* versus the prior year also benefits from the continued growth of Sotheby’s Financial Services loan portfolio, as well as a lower level of professional fees.
Sotheby’s first quarter 2015 Adjusted Net Income* is $7.4 million, a $10.4 million improvement versus the ($3.0) million Adjusted Net Loss* reported in the prior year. This improvement is largely due to the factors discussed above, as well as a $3.1 million income tax charge, recorded in the prior year quarter related to the enactment of new legislation in New York State.
Their adjusted Diluted Earnings (Loss) per Share* in the first quarter of 2015 is $0.11 versus ($0.04) in the first quarter of 2014. Including charges associated with the CEO transition, prior year shareholder activism, and restructuring, operating income, net income (loss) attributable to Sotheby’s and diluted earnings (loss) per share are $18.4 million, $5.2 million and $0.07, respectively, for the first quarter of 2015, and $4.1 million, ($6.1) million and ($0.09), respectively, for the first quarter of 2014.
President and Chief Executive Officer Tad Smith said, “Our Company delivered significant profit growth in the quarter as compared to last year through strong sales in Old Masters, Impressionist & Modern and Contemporary Art. These successes highlight the depth and breadth of Sotheby’s expertise. We are off to a good start in 2015.”
Adjusted Operating Income, Adjusted Net Income (Loss), and Adjusted Diluted Earnings (Loss) Per Share are non-GAAP financial measures. Adjusted Operating Income is defined as operating income excluding CEO separation and transition costs, restructuring charges (net), and special charges associated with shareholder activism. Adjusted Net Income (Loss) is defined as net income excluding after-tax CEO separation and transition costs, restructuring charges (net), and special charges associated with shareholder activism. Adjusted Diluted Earnings (Loss) Per Share is defined as diluted earnings (loss) per share excluding the per share impact of CEO separation and transition costs, restructuring charges (net), and special charges associated with shareholder activism. See Appendix B for a reconciliation of these non-GAAP financial measures to the most comparable measure reported in accordance with GAAP.
The results contain 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.