Citi BID Conference Call: Proprietary Analysis on Sotheby’s Impressionist and Contemporary Sales & 2H12 Outlook With Artvest Partners(05/09/12)






  • Contemporary Evening Results = Nicely Within Estimate Range & Impressive vs. LY — $266.591mm vs. an adj. estimate range of $254.8-358.7 (unadjusted ex. buyers premiums $221.6-311.9mm).  Results are impressively +108% vs. LY’s $128.104mm sales and 81% of lots were sold (encouraging performance).
  • Stock Traded ~13% Off of March Peak of $40 But BID Stock Unlikely to Get a Free Pass on EPS We Believe: Citi’s View of Key Risk Factors Ahead of EPS — (1) We acknowledge 1Q & 3Q are smallest rev. qtrs but we remain cautions on potential for salaries, related costs, general, administrative cost deleverage given our view of revenue contraction of -16% or worse 1Q. (2) We model continued aggregate auction sales revenue contraction in 2Q given superb 1H11.  (3) Macro changes in the mood in Western Europe could have mixed implications given positive of incremental European supply & negative of increased economic volatility keeping customers at bay
  • Our Thoughts on the Call’s Tone — Mgmt likely to remain cautiously optimistic, highlight recent marquee sale results, highlight the competitive nature of the marketplace, acknowledge unchartered macroeconomic times, articulate the strong nature of the business model, and speak to global opportunity especially in Asia
  • Dial-In 1Q12 EPS on 5/10/12 — BID reports AMC ~4pm with conference call to follow at 4:45pm (888-371-8897 & 970-315-0479 #75311102).
  • Citi’s 1Q12 EPS Estimate — 1Q EPS estimate is $(0.15) based on -16.1% overall revenue contraction and key cost drivers salaries and related costs growing +0-1% vs. LY, and general and administrative expenses growing +1% vs. LY.
  • Incrementally Positive Takes from Citi’s Proprietary 5/9/12 Call on Auction Industry with Artvest LLC — (1) Art market has returned to its pre-crisis size at $64.9mm in 2011 vs. $62-$66 in 2007-2008 with strong potential to increase again in 2012; (2) Sotheby’s has become the most dominant player in NY for Impressionist/Modern; (3) China now the world’s largest consumer of art at 30% vs. US 29%. Replay: (404) 537-3406, #77659762, (5/9/12 – 5/16/12), ID#: 77659762.
  • Corporate Access: Oliver Chen & Kate McShane Host a Watch Collector & Industry Reception at Antiquorum Auctioneers in NYC with Michael Friedman, Horological Director and Watch Expert, Mon June 11th — Key topics will include watch collecting fundamentals and primer; watch valuation drivers; competitive positioning of brands including Rolex, Patek Philippe, Omega, and others; Q&A, and a special viewing of Auction sale lots for Antiquorum’s upcoming sale “Important Modern & Vintage Timepieces, Part 2” which will take place on June 12th.

Analyst Call 5-9-12

Citi and Artvest Presentation May 2012

Citi Report

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