Sotheby's Reports Third Quarter and First Nine Months 2013 Financial Results
oThird Quarter Results Improve With Sizable Revenue Growth: Private Sale
Commissions Increase by 77%, Auction Commission Revenues Climb 16%
oNY Impressionist & Modern Art Sales of $348 Million, up 71% on the Prior
Year and Sotheby's Second Highest Total for the Category in Company
oOctober Hong Kong Sales up 105%, Highest Total by Any Global Art Business
NEW YORK, Nov. 11, 2013 (GLOBE NEWSWIRE) -- Sotheby's (NYSE:BID) today
reported financial results for the third quarter and first nine months ended
30 September 2013.
Sotheby's reported improved results in the third quarter of 2013 as compared
to one year ago, with sizable revenue growth due to an $11.3 million, or 77%,
increase in private sale commissions and a $6.6 million, or 16%, increase in
auction commission revenues, partially offset by an increase in operating
expenses. Third quarter net loss of ($30.1) million reflects a $2.4 million,
or 7%, improvement over the prior year.
Due to the seasonal nature of the art auction market, third quarter auction
sales have historically represented only approximately 7%-10% of annual
auction sales, resulting in a loss period for the Company. Third quarter
results are typically not indicative of expected full year results. Management
believes that investors should focus on results for six and twelve month
periods, which better reflect the auction market business cycle.
For the nine months ended 30 September 2013, net auction sales increased
$108.1 million (5%) to $2.4 billion and private sales increased $255.8 million
(37%) to nearly $1 billion, generating growth in both auction and private sale
commission revenues. Despite the improved third quarter results and the
year-to-date revenue growth, when compared to the first nine months of 2012,
income before taxes decreased $13.7 million (22%) to $48.8 million principally
due to the cost of strategic investments, as well as inflationary pressures
across most expense categories. For the first nine months of 2013, net income
decreased $2.9 million (7%) to $39.3 million and included a discrete net $6.8
million income tax benefit recognized in the second quarter of 2013.
"Our third quarter results have improved since a year ago, with sizable
revenue growth. Private sales, which continues to be an area of focus for
Sotheby's, contributed more than a third of auction and related revenues in
the third quarter – a significant shift from just a short time ago," said
Chairman, President and Chief Executive Officer Bill Ruprecht.
"We're very pleased to say the fourth quarter is off to a remarkable start,"
continued Ruprecht. "Our Hong Kong sales series brought a record $538 million
last month, a 105% increase over the previous year and a clear validation of
our strategic investments in this region of the world. Last week, our
Impressionist and Modern Art sales in New York achieved $348 million, up 71%
and the second-highest series total in this category in the Company's history.
"We have an outstanding calendar of sales to finish the year, with a $60
million Pink Diamond being offered in Geneva and our Contemporary Art sales in
New York with a pre-sale estimate of $368-515 million, both this week; a
$60-80 million motor car auction in association with RM Auctions next week;
the extremely rare Colonial-era Bay Psalm Book, which we expect will sell for
a record price during Thanksgiving week; and an amazing group of Norman
Rockwell paintings in our American Art sale and our highly anticipated Modern
and Contemporary Art sale in Beijing, both in December," said Ruprecht.
Since September, Sotheby's has been actively engaged in a review of its
capital allocation and financial policies. The Board of Directors has pledged
to share the results of that examination with shareholders in early 2014.
"The financial review we have undertaken goes beyond capital allocation, and
includes an in-depth examination of our strategy, business and cost
structure," said Patrick McClymont, Sotheby's Chief Financial Officer. "We are
committed to ensuring that our resources are appropriately allocated to the
most attractive opportunities for value creation.To that end, we are taking a
close look at both our current businesses and potential growth areas where we
can leverage our expertise and brand. The goal of this review is not only to
determine the right use of capital going forward, but also to identify new
opportunities to drive value for shareholders.
"From a growth perspective, Sotheby's has continued to invest in those areas
that best serve its clients, promote business expansion and enhance
shareholder value. These investments include significant and well-received
improvements to the Company's digital offerings and the development of
Sotheby's business in China and other emerging markets," continued McClymont.
"In addition to making strategic investments in Sotheby's future growth, we
remain committed to growing with discipline.As part of our annual planning
process, we are conducting a thorough review of our cost structure to identify
expense savings in 2014," concluded McClymont.
Based on the review thus far, the Company expects direct costs as a percentage
of net auction sales will decrease in 2014 and that material savings can be
achieved in areas of discretionary spending.Specific results of this review
will be announced in early 2014 alongside the results of the capital
allocation and financial policies review.
Ruprecht continued, "Sotheby's core philosophy continues to deliver for our
clients.Today's art collectors have a remarkable understanding not only of
quality, but also of value. The key to our success for nearly 300 years has
been matching our clients' discerning taste with the right combination of
fresh, unique and exquisite artwork and responsible estimates. In addition to
our expertise, our sustained commitment to clients is the key to best serving
them, our business and our shareholders."
"Demand and prices continue to be strong and this is an exciting time at
Sotheby's. The breadth and quality of our offerings as well as the results in
our global salesrooms, private galleries, retail wine and diamond, and finance
businesses are all encouraging. I continue to have great confidence in the art
market and the future of Sotheby's," concluded Ruprecht.
Fourth Quarter Sales To Date
Launching the fourth quarter were our record sales in Hong Kong in the first
week of October.After five days and sixteen auctions, Sotheby's realized $538
million in auction sales, the highest grand total ever achieved by a global
arts business operating in Asia and a 105% increase on the prior
year.Highlighting the sales were a Massive Ming Gilt-Bronze Figure of a
Seated Shakyamuni Buddha which brought the world auction record for a Chinese
Sculpture with $30.3 million; a 118.28 carat Oval D-Colour Flawless Diamond
which brought the world auction record for a white diamond with $30.6 million;
and Zeng Fanzhi's The Last Supper which brought the world auction record for
Contemporary Asian Art as well as the world auction record for a work by a
living Chinese artist with $23.1 million.
At Sotheby's London last month, our Contemporary Evening Sale totaled $34.3
million, with more than half the lots exceeding their high estimates. The top
lot, Glenn Brown's Sci-Fi Spectacular Ornamental Despair, sold for $5.7
million, more than 100 times the price paid for it in 2002. Earlier in the
evening, four fresh-to-market works from the celebrated collection of the late
Stanley J. Seeger sold for more than twice their estimates and were among the
highlights of the successful 20^th Century Italian Art sale.The three sales
achieved a combined total of $78.0 million.
Last week in New York, Sotheby's Impressionist and Modern Art sales brought a
total of $347.9 million, up 71% from the prior year, near the high end of the
pre-sale estimate and our second best total ever in the category.Highlighting
the sales was Alberto Giacometti's Grande tête mince which met its pre-sale
high estimate of $50 million.Works by Pablo Picasso brought exceptional
prices throughout the night, led by Tête de femme, his 1935 portrait of
Marie-Thérèse Walter that brought $39.9 million – well in excess of its $30
million high estimate.Global participation was evident throughout the sale
process, with works consigned from 13 countries sought after by participants
from 36 countries, representing both established and emerging markets.
Beginning on Wednesday, we look forward to our Contemporary Art sales here in
New York.The undisputed centerpiece of those offerings is Andy Warhol's
Silver Car Crash (Double Disaster).At over 8 by 13 feet, the monumental
painting is one of only four Car Crash works of this scale in the pivotal
Death and Disaster series which explored many of the key themes that defined
his artistic career and is considered to be one of the most provocative and
brilliant projects undertaken by any artist in the 1960s.This work is the
only one remaining in private hands and has a pre-sale estimate in excess of
$60 million.Also highlighting the sales is Willem de Kooning's Untitled V
which is a prime example from the watershed period from which de Kooning
returned to painting after a period in which he focused on sculpture.The
piece carries a pre-sale estimate of $25-35 million.The total sales series
has a combined pre-sale estimate of $368-515 million.
Also this week, Sotheby's will be offering the most valuable diamond ever to
come to auction in its Magnificent Jewels sale in Geneva.The Pink Star is a
59.6 carat Internally Flawless Fancy Pink Vivid Diamond and has a pre-sale
estimate in excess of $60 million.The Magnificent Jewels sale will comprise
over 370 lots, including iconic jewels, such as the "Walska Briolette Diamond"
brooch (pre-sale estimate in excess of $8 million), gems with important
provenance, impressive diamonds and gemstones, as well as fine period
creations signed by the world's most celebrated jewelers.The total sale
carries a pre-sale estimate of $123-167 million.
Art of the Automobile
Proudly presented by RM Auctions and Sotheby's, 'Art of the Automobile' is the
first major collector car auction to be held in Manhattan in over a decade.
With an emphasis on bespoke design and best of category examples from the
world's most admired automotive marques, the sale will feature one of the most
significant collections of motor cars offered in auction history. In total,
some 30 automobiles will go under the gavel next week at the 21 November
auction with a combined pre-sale estimate of $60-80 million.
Bay Psalm Book
In New York on 26 November, Sotheby's is proud to offer one of the finest
surviving copies of the Bay Psalm Book – the first book printed in what is now
the United States of America.The Congregationalist Puritans who emigrated to
Massachusetts Bay in search of religious freedom quickly set about to
translate and produce a version of the Book of Psalms that was a closer
paraphrase of the Hebrew original than the one they had carried from England.
The first edition of the resulting Bay Psalm Book was printed in Cambridge,
Massachusetts, in 1640, and Sotheby's will auction one of the 11 surviving
copies. The present example comes from the collection of the Old South Church
in the heart of Boston, Massachusetts – one of two remarkable copies presently
in its collection – and the proceeds of the sale will benefit the church's
mission and ministry in the Greater Boston area.The book carries a pre-sale
estimate of $15-30 million.
Timed to the height of Beijing's prime sale season, Sotheby's is excited to
hold an exciting series of arts events from 28 November to 1 December in
Beijing, including selling exhibitions and an educational
programme.Culminating the four day series is our auction of Modern and
Contemporary Chinese Art on 1 December.The sale will be led by Abstraction, a
1958 painting by Zao Wou-ki, one of the leading Chinese artists of his
generation.The work has a pre-sale estimate of $5.7-7.3 million and comes
from the collection of the Art Institute of Chicago.The total sale has a
pre-sale estimate of $20-27 million.
And on 4 December in New York, Sotheby's is excited to offer in its American
Art auction, an extraordinary selection of paintings by Norman Rockwell from
the family of Kenneth J. Stuart, Sr., the artist's longtime friend and art
editor at the Saturday Evening Post.The seven works are led by two icons of
Rockwell's extensive oeuvre – his masterpiece Saying Grace (pre-sale estimate
of $15-20 million) and The Gossips (pre-sale estimate of $6-9 million).The
collection has descended in Stuart's family to the present owners, and is
estimated to achieve more than $24 million.The American Art sale has a
combined pre-sale estimate of $43-62 million.
Old Master Paintings
Turning to London, also on 4 December, Sotheby's will present two of the most
important works by Canaletto to come to market in recent times.Painted
between 1738 and 1742, at the height of the artist's career, these majestic
canvases depict two of Canaletto's most celebrated Venetian subjects: the
Rialto Bridge over the Grand Canal and St. Mark's Square.Coming from HSBC's
Corporate Art Collection, the two works will be offered as a pair in our Old
Master Paintings sale with a pre-sale estimate of $13-19 million.The total
sale series has a pre-sale estimate of $56-84 million.
All Sotheby's Press Releases and SEC filings are available on our web site at
www.sothebys.com.An outline of the conference call will be available at
Sotheby's will host a conference call at 4:45 PM EST on 11 November 2013, to
discuss its third quarter and first nine months 2013 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 68780657.
The conference call will also be accessible via webcast on the Investor
Relations section of the Sotheby's web site at
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 success of our risk reduction and margin improvement efforts, 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.
Financial Table Follows
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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)
and France (2001), and the first international fine art auction house in China
(2012). Today, Sotheby's presents auctions in eight 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, as
well as 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).
*Estimates do not include buyer's premium and prices achieved include the
hammer price plus buyer's premium.
Images are available upon request
All catalogues are available online at www.sothebys.com or through Sotheby's
Catalogue iPad App.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of dollars, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2013 2012 2013 2012
Auction and related $76,929 $59,711 $466,047 $447,272
Finance revenues 5,164 4,572 15,658 12,727
Dealer revenues 23,491 1,815 26,696 11,887
License fee revenues 1,902 2,046 5,178 4,539
Other revenues 378 317 898 944
Total revenues 107,864 68,461 514,477 477,369
Direct costs of 7,279 4,225 46,988 38,924
Dealer cost of sales 22,417 2,553 27,115 11,624
Marketing expenses 5,057 3,500 15,603 12,508
Salaries and related 61,971 53,447 203,931 194,549
administrative 40,576 37,980 128,958 116,753
Depreciation and 4,925 4,690 14,242 13,244
Restructuring charges, -- (25) -- (3)
Total expenses 142,225 106,370 436,837 387,599
Operating (loss) (34,361) (37,909) 77,640 89,770
Interest income 431 280 2,258 1,102
Interest expense (8,912) (10,390) (33,564) (30,682)
Other income 982 1,596 2,513 2,391
(Loss) income before (41,860) (46,423) 48,847 62,581
Equity in earnings of
investees, net of 31 17 19 194
Income tax (benefit) (11,698) (13,841) 9,613 20,574
Net (loss) income $(30,131) $(32,565) $39,253 $42,201
Basic (loss) earnings
per share - Sotheby's $(0.44) $(0.48) $0.58 $0.62
earningsper share - $(0.44) $(0.48) $0.57 $0.61
Weighted average basic 68,361 67,771 68,206 67,661
diluted shares 68,361 67,771 68,957 68,494
Cash dividends paid $0.10 $0.08 $0.10 $0.24
per common share
CONTACT: New York
+1 212 606 7176
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