Sotheby’s Strong Second Quarter 2017 Results Boosts Share Price

Sotheby’s have reported their financial results for the second quarter and six months ending June 30, 2017. Last week shares soared ahead of the announcement.

Tad Smith, Sotheby’s CEO, said, “We are absolutely delighted with the many things going on inside Sotheby’s to position us strongly for the future.”

For the three months ended June 30, 2017, Sotheby’s reported net income of $76.9 million, representing a $12.1 million (14%) decrease when compared to the same period in the prior year, as a higher level of Agency commissions and fees and a lower effective income tax rate are more than offset by a higher level of indirect expenses. Although second quarter net income decreased by 14%, diluted earnings per share decreased by only 6%, from $1.52 to $1.43, due to a lower number of common stock shares outstanding as a result of our share repurchase program.  Total revenues for the second quarter of 2017 are up 5% from $298.7 million to $314.9 million, largely due to increased inventory sales from the prior period.
Contemporary art has again taken the lions’ share at Sotheby’s. It a 37 percent improvement in contemporary art sales, to $701.4 million, as might have been expected after the $98 million hammer price for Jean-Michel Basquiat‘s Untitledcanvas at its May auctions in New York. (Sotheby’s provides only hammer totals for net sales in the specific sectors of the business, but overall totals include the buyer’s premium.) Still, the contemporary total only represents a $30 million increase on 2015.
For the six months ended June 30, 2017, Sotheby’s reported net income of $65.6 million, or $1.21 per diluted share, representing a $2.5 million (4%) or $0.18 per diluted share (17%) improvement when compared to the same period in the prior year.  After excluding certain charges in the current and prior periods, Adjusted Net Income* decreased $2.8 million (4%), from $68.9 million to $66.1 million, as a $21.5 million (6%) increase in Agency commissions and fees was offset by a higher level of indirect expenses and a $3.4 million (11%) decrease in revenues from Sotheby’s Financial Services, our art financing company.  Despite this decrease in Adjusted Net Income*, Adjusted Diluted EPS* increased $0.09 (8%) from $1.13 to $1.22, as a result of the significant level of common stock repurchases made over the last 18 months.  During this period, we have reduced the number of shares outstanding from 65.8 million to 52.7 million shares (20%).  Total revenues for the first half of 2017 are up 24% from $405.2 million to $502.4 million, largely due to a significant increase in inventory sales over the period.
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 10 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 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 the collection advisory services of its subsidiary, Art Agency, Partners.  Sotheby’s presents private sale opportunities in more than 70 categories, including S|2, the gallery arm of Sotheby’s Global Fine Art Division, and two retail businesses, Sotheby’s Diamonds and Sotheby’s Wine. Sotheby’s has a global network of 80 offices in 40 countries and is the oldest company listed on the New York Stock Exchange (BID).

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