Sotheby’s held it’s first quarter earnings call this morning which had little of real interest as the company continues to go through a lull in both the broader market and as a result of its restructuring. CEO Tad Smith has previously been cautious predicting a few quarters of lackluster results but on the call this morning, in response to an analyst’s question, he sounded more bullish suggesting the pause in the company’s financial improvement would only be this traditionally slow quarter.

Here are some interesting points from the conference call script and press release:

• For the three months ended 31 March 2016, Sotheby’s reported Adjusted Diluted Loss Per Share* of ($0.35) on an Adjusted Net Loss* of ($22.3) million. In the same period in 2015, Sotheby’s reported Adjusted Diluted Earnings Per Share* of $0.11 on Adjusted Net Income* of $7.4 million. On an unadjusted GAAP basis, Sotheby’s reported a net loss of ($25.9) million, or ($0.41) per diluted share, for the first quarter of 2016 as compared to net income of $5.2 million, or $0.07 per diluted share, in the prior year. The comparison to the first quarter results of 2015 is significantly impacted by a 35% decrease in Net Auction Sales, which is the primary factor in a 33% decrease in auction commission revenues in the current period.
• On a positive note, we experienced an improvement in our Auction Commission Margin, to 15.4% from 15.0% a year ago. If you exclude the impact of the $22.5 million in net sales from the Taubman Collection in the first quarter, the margin improvement was even greater: from 15.0% last year to 16.2% this year. While much of this improvement is attributable to a shift in mix towards higher margin sales, part of this improvement can also be attributed to greater pricing discipline.
• While our Finance Segment experienced a slight decline in gross profit dollars versus last year, this was principally due to the greater leverage we have achieved with the dedicated credit facility for Sotheby’s Financial Services. The most important metrics for this business – a Finance Revenue Margin of 10.0% and a trailing twelve month Return on Equity of 16.3% – illustrate the advantages of our business model and our funding structure.
• we have purchased 8.0 million shares at an average price of approximately $24 per share for a total investment of $193 million. This represents approximately 12% of the shares that were outstanding at year-end.
• Since we plan to continue making open market purchases once the trading window opens, we thought it best to disclose to you that we’ve recently been advised by an outside investor that they may make purchases of our stock (whether through the open market, privately negotiated transactions, block trades or derivative transactions) to bring their holdings to at least 10% of the shares outstanding, and that they’ve filed the necessary documentation under the Hart-Scott-Rodino Act that would allow them to do so. Of course, they have no obligation to purchase stock and they could decide for any reason not to do so.