Sotheby's Q3 2007 Earnings Call Transcript

Sotheby's Inc. (BID)

Q3 2007 Earnings Call

November 9, 2007 9:00 am ET

Executives

William Ruprecht – President and Chief Executive Officer

William Sheridan – Chief Financial Officer

Analysts

George Sutton - Craig-Hallum Capital Group LLC

Kristine Koerber - JMP Securities

Rommel Dionisio - Wedbush Morgan Securities Inc.

Jody Kane - Sidoti & Company LLC.

Kieran Mahone - Audi Asset Management

Sandy Colen - Apex Capital

Scott Miller - TSW

Presentation

Operator

Welcome to the Sotheby's third quarter and first nine months of 2007 earnings conference call. (Operator Instructions).

GAAP refers to Generally Accepted Accounting Principles in the United States of America. In this earnings call, financial measures are presented in accordance with GAAP and also on a non-GAAP basis when significant. The Company excludes the impact of changes in foreign currency exchange rates when comparing current year results to the prior year.

Consequently such period-to-period comparisons are provided on a constant dollar basis by eliminating the impact of changes in foreign currency exchange rates since the prior year. Management believes that excluding the impact of significant changes in foreign currency exchange rates when comparing current year results to the prior year provides a more meaningful discussion and analysis of fluctuations in the Company's operating results.

Management also utilizes this non-GAAP financial measure when analyzing its operating results. Reconciliations of these non-GAAP financial measures used in this earnings call to the comparable GAAP amounts are provided as applicable in Appendix B of the Company's earnings press release for the quarter ended September 30, 2007, which is available via the Investor Relations section of the Company's website at www.sothebys.com.

During the course of this call, the Company may make projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that such projections and statements are only predictions and involve risks and uncertainties resulting in the possibility that the actual events or performance will differ materially from such predictions.

We refer you to the documents the Company files periodically with the Securities and Exchange Commission, specifically the Company's most recently filed Form 10-Q and 10-K. These documents identify important factors that could cause the actual results to differ materially from those contained in the projections or forward-looking statements.

At this time it is my pleasure to introduce Bill Ruprecht, President and Chief Executive Officer, and Bill Sheridan, Chief Financial Officer. Mr. Ruprecht, please go ahead.

William Ruprecht

Good morning. Joining me today is Bill Sheridan as is our practice. Today we announced our best nine month results in the company’s history. We are reporting first nine month total revenues of $572 million, which is a 42% increase from the prior period figure, and income from continuing operations of $110.7 million, which is 191% increase from the prior period. Diluted EPS for the first nine months of 2007 was $1.69, more than double the prior period figure of $0.62.

Included in these numbers is the loss from our guarantee book from the Impressionist sales which took place earlier this week. More recently auction sales in September and October combined were $673 million, which is a 40% increase on those same two-month sales in 2006.

Results of our Impressionist and Modern auctions this week fell below our presale expectations. They were profitable, however, and achieved our third-highest total ever for the category, totaling $331.5 million and a double-digit increase on last year's total. We had strong London contemporary sales and record-breaking Hong Kong sales last month as well.

It is important to note that because of the seasonal nature of the art market the third quarter has been historically a lost period for Sotheby's, and is typically not indicative of full-year results. We recommend investors focus on results for six-month periods which reflect the auction market business cycle.

I would also add that looking at the results of Wednesday's Impressionist evening sale as a barometer of our business provides a pretty incomplete picture of the overall art markets in which we operate, particularly in China, in Europe and in Russia.

Yesterday, for instance, we had a Chinese works of art sale in London, which more than doubled its presale estimate. Bill Sheridan, take over and take them through the P&L and balance sheet issues.

William Sheridan

Thank you, Bill, and good morning to everyone. I would like to walk through our P&L, which is page eight of the press release, as well as remind people that on page nine of the earnings release we have a GAAP to non-GAAP reconciliation.

Our overall results, we had a loss from continuing operations for the third quarter of 2007 of $20.9 million or $0.33 per diluted share. This compared to $30.4 million or $0.49 per diluted share in the prior year. The $9.5 million or 31% improvement is largely due to a 48% increase in total revenues during the period.

Despite the favorable results for the quarter when compared to the prior year, the Company did incur losses on certain auction guarantees in this week's Impressionist and Modern Art sale. The pretax $14.6 million in losses was reflected in the Company's third quarter financial results because these guarantees were outstanding as of September 30.

Income from continuing operations for the first nine months of 2007 was $110.7 million or $1.69 per diluted share, compared to $38 million or $0.62 per diluted share for the prior year Excluding the impairment charge relating to the Noortman Master Paintings, the insurance recovery from the policy covering Robert Noortman, and the gain from the sale of our Sussex property in the United Kingdom in the first quarter of 2000, income from continuing operations for the first nine months of 2007 would have been $102.4 million or $1.56 per diluted share, a $64 million or 169% improvement for the first nine months compared to 2006.

Looking at total revenues, for the third quarter, total revenues increased $27.7 million or 48% to $85.1 million when compared to the same period in prior year. This improvement is primarily due to a $15.8 million or 38% increase in auction commission revenues due to a 41% increase in net auction shares during the period.

In addition, of $14.9 million increase in private commission sales were recorded due to a 485% increase in private sales to $200 million in the quarter. Very strong results in the private sales line so far year-to-date.

This overall improvement in the third quarter revenue was offset by the pretax loss of $14.6 million in auction guarantees losses. These were recorded as contra to revenues.

For the first nine months of 2007, operating revenues were $572 million, a $170 million or 42% improvement from the prior nine month period, primarily due to a 40% increase in auction commission revenues.

In the first nine months of 2007, our auction guarantee position provided a significant increase in auction commission revenues. These improvements were offset by a $24.4 million decline in principal activity revenues related to guarantees, which included losses incurred this week in the Impressionist sale. In addition, in the first nine months of 2007, we had significant upside benefit related to guarantees.

Moving to the direct cost of services line in the income statement, for the quarter and first nine months ended September 30, direct cost of services increased $1.5 million or 15% and $12.8 million or 28% respectively. This is consistent with a significant increase in the volume of business.

Turning to sellers and related costs, salaries increased $9.5 million or 21% to $55 million in the third quarter of 2007 and $35 million or 22% to $195 million for the first nine months. The foreign exchange impact on the salary line was approximately 4% of the total increase.

Full-time salaries increased $3.2 million or 12% in the third quarter and 14% to $93 million in the first nine months, principally due to strategic headcount additions, as well as the new packet of limited salary increases. Stock compensation expense also rose $2.3 million in the third quarter and $10.1 million in the first nine months due to restricted stocks awarded last February.

Turning to G&A, general and administrative costs, for the three and nine months ended September 30, G&A expenses increased $6.3 million or 19% and $25.9 million or 27% when compared to the prior year. The FX expense was 3% for the quarter and 4% for the first nine months. These increases were comprised of 22% and $11.3 million in professional fees, largely due to increased legal fees related to the legal matters surrounding our York Avenue premises, as well as higher tax fees for outsourcing costs. We had $1 million for the quarter and $3.5 million for nine months for client goodwill gestures, authenticity claims and other litigation matters. Travel and entertainment costs were up 23% for the nine months or $3.7 million.

Looking at net interest expense, we had substantial improvement in this area as it declined $3.7 million or 53% for the third quarter and $11 million or 50% for the nine months due to the significant liquidity in the business from the strong operating results.

Turning to earnings per share, overall third quarter 2007 diluted loss per share from continuing operations was $0.33 a share, an improvement of $0.16 from $0.49 in the third quarter of 2006. For the nine months, diluted earnings per share was $1.69, a $1.07 or 173% increase from the prior year.

Again, the third quarter results were negatively impacted by the pretax loss of $14.6 million related to auction guarantees for the New York Impressionist sales this week.

Bill, I will turn things back over to you at this point.

William Ruprecht

Since we last spoke to you in August, we have continued to experience generally strong sales around the world. Again, just so that we make sure we are giving you clarity on this, we held our Impressionist and Modern sales this week, which did not meet our expectations. Sales were profitable and brought the third-highest totals in the Company's history. And again, our third quarter results included a net after-tax loss of about $10 million related to the guaranteed property in those sales, which again took place this week.

Sotheby's achieved the highest price of the week with Gauguin's Tahitian picture, Te Poipoi, which sold for $39.2 million, just about at the low estimate of $40 million. We sold 10 lots for more than $10 million, interestingly versus seven lots in the spring season at Sotheby's in New York. We sold 49 lots for over $1 million. We took on minimal inventory in this sale, save the Van Gogh from Wednesday night, which is a wonderful painting and something on which we have both received a number of offers and are pleased to invest in.

Last month Asia Week in Hong Kong achieved its highest total ever in a series of sales. The nine sales brought just over $200 million, which is a 46% higher total than last year and well above our highest presale estimate of $173 million. Our Asian contemporary art sale there brought $42.5 million and well above its highest presale estimate of $28 million.

Also, last month Sotheby's London held a very successful series of contemporary art auctions in conjunction with the increasingly popular Frieze Art Fair. Those sales brought about $135 million, near the high-end of our presale estimate and 111% above the prior year series.

As Bill flagged, our private sales have been really quite successful, particularly in the quarter when we sold the Rostropovich collection privately to a Russian industrialist for an undisclosed sum, and that property was repatriated to Russia.

As you look forward, for the remainder of the quarter, next week we're holding our contemporary sales here in New York, which have presale estimates of just under $300 million. Three highlights include two remarkable Francis Bacon pictures, Bullfight and Self-Portrait. And Jeff Koons’ Hanging Heart illustrated today in the New York Times. On each of those we have had quite significant presale interest at this point.

In London, on November 26 to 27, our Russian art sales are estimated to bring $50 to $75 million. Highlights of the evening are Goncharova's Bluebells estimated at $6 to $10 million, and Popova's Still life with Tray, which is expected to bring between $3 and $5 million.

We have got a superb American painting sale in New York coming up at the end of November where Winslow Homer's watercolor Fishergirls is estimated to bring between $4 and $6 million. We have got Wyeth, Rockwell, Potthast and Prendergast - pictures of very strong quality in that sale, which is got a presale estimate of just over $45 million.

We're selling the Magna Carta here in New York in December. This manuscript from 1297, the original charter that enshrined the rights of man into English law, and is one of fewer than 20 examples in existence. Its presale estimate is $20 to $30 million.

On December 5, in our New York Antiquities Sale, we will be selling one of the most extraordinary masterworks from the dawn of civilization, the Guennol Lioness. This figure of a carved lioness was made approximately 5000 years ago in Mesopotamia and has a presale estimate of $14 to $18 million.

By next week we will have largely cleared our guarantee portfolio, and we currently expect those activities will generate a profit in 2007 as they have in each of the past 17 years. As always, we continue to assess our guarantee approach and strategy on a regular basis. These first nine months results were extraordinary and the best in our company's history. We remain encouraged by 2007 auction sales results to-date, which are up about 40%, as well as by the level of consignments for the remainder of the year. And we are hopeful that the market will continue to be fruitful and profitable through the remainder of the fall season and beyond.

Those conclude our remarks, and I anticipate you will have a few questions. So we will turn it over to our moderator, Michael.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from George Sutton - Craig-Hallum Capital Group LLC.

George Sutton - Craig-Hallum Capital Group LLC

The first question I had was a simple accounting question with respect to the $14.6 million. Bill, you had mentioned that was a contra revenue treatment in the quarter?

William Sheridan

Yes, within our breakout in MD&A and our 10-Q will be filed early this afternoon, we break out the various components of revenues, and typically we record a revenue for principal gain. This quarter, with the loss on these Impressionist guarantees, that will be negative.

George Sutton - Craig-Hallum Capital Group LLC

And I don't believe in the past you have ever called out any changes like this in a sale that occurred after the quarter. Has there been history of doing this?

William Sheridan

No, and the accounting rules, FASB 5, dictated the guaranteed contracts were outstanding at September 30, and prior to issuing the financial statements today, the event occurred on Wednesday night where the guarantees did incur losses. So it is a type one subsequent event for your accounting geeks like me. So it was recorded as of September 30.

George Sutton - Craig-Hallum Capital Group LLC

Okay. Bill Ruprecht, I appreciate your thoughts on your views. You said the sale the other night was an incomplete view of the auction market. How much of a factor do you think it was that it was a US location? It occurred the day of a very weak stock market. Obviously estimates were important as David Norman had said, versus just a change in the cycle or demand. I'm just curious if you could break it down for us like that.

William Ruprecht

I will do my best. Auctions by their very nature are unpredictable. And they are unpredictable with upside and downside, and that's why people put things in auction to realize what is not entirely certain in these events.

I don't think that the financial markets that day helped us one little bit. I do not think we can attribute it entirely to the economic environment of that day. I think that some of our estimates were ambitious and informed by the great successes we have had in the Impressionist and Modern sales earlier in the year.

I think during that sale event, which opened on some very, very strong prices and world records in fact, we then came to a Vincent Van Gogh picture, which much to our surprise did not sell. Three people had traveled to New York to buy that picture, and we expected it to sell, and I think that colored the mood of that evening and rattled any number of participants on that night as to what the market was like or felt like.

I cannot attribute a lot more certainty to why individuals behaved the way they did on that night other than that. These are assets which, as I indicated, George, with the Van Gogh, it is a terrific picture and one which we've got a great deal of confidence in, which is why we did not sell it that night for a level below what we thought its value was.

We took a different approach on other pictures very purposely because in our assessment of the night and of that market at that time, we felt we were doing the right thing and have recognized and put behind us in the third quarter some significant net losses which totaled about $10 million on an after-tax basis.

Nevertheless, every day is different. I feel pretty good about overall where we are. I say again that our guaranteed book we currently expect to continue to be profitable this year. Those sales were profitable in the Impressionist marketplace, and my crystal ball is imperfect, George, and I am professionally pretty cautious.

I can only tell you that, as I said and referenced earlier, we had a remarkable sale yesterday in the Chinese Works of Art sale in London. We have had a very significant level of interest in the stars of our upcoming contemporary sale, and we will all be a lot smarter when those sales are over.

George Sutton - Craig-Hallum Capital Group LLC

Bill, that was the best color you have ever provided on a call, so I appreciate it.

Operator

Your next question comes from Kristine Koerber - JMP Securities.

Kristine Koerber - JMP Securities

First of all, just try to provide us with a little more color on the buyers the other night at the Impressionist auction. I know your competitors saw a large majority of Americans buying. Is that what you saw the other night?

William Ruprecht

No. I don't do an awful lot of geographic distribution of buyers; an awful lot of significant bidders get very nervous when you reveal their geography because they feel as if it is prejudicial to their anonymity. So while I want to be responsive, I think it is fair to say that the patterns of buyers were not significantly different from what we have experienced in the past. I did not see a meaningful new trend there.

Kristine Koerber - JMP Securities

Fair enough. Looking at the guarantees, can you just walk us through how you guarantee, in looking at the guarantees relative to ranges? Because I know a number of the lots sold below the estimated range. Do you guarantee below the range? I mean how that works.

Also, looking at next week's auction, hopefully you will do well with the guaranteed lots. But if you don't, how would those lots be booked? Would they be booked in the fourth quarter or what happens?

William Ruprecht

I think in the first instance you said, what did you do in terms of guarantees this week, and do you have individual guarantees below ranges, at ranges or above ranges?

We never have and never will on a lot-by-lot basis make disclosures about what the individual transactional specifics are in spite of this suggestion today by the Wall Street Journal that that is appropriate. That is prejudicial to sellers' interests and not something that we anticipate.

Overall we disclose on a quarterly basis what the presale estimates are, what the presale guarantee totals are, and we create an accounting which reflects that at the end of every quarter. As Bill shared and indicated, because the guarantees were outstanding at the end of the quarter, we booked the losses to the quarter in spite of those being events which took place in November.

Now for the fourth quarter subsequent events, subsequent to the filing of our third quarter, in the fourth quarter any further activity in terms of profit and/or loss in principle positions, as well as the rest of the activity in the quarter, will be booked to the fourth quarter, which will be released in the first quarter of '08.

Operator

Your next question comes from Rommel Dionisio - Wedbush Morgan Securities Inc..

Rommel Dionisio - Wedbush Morgan Securities Inc.

Could you just walk us through in a little bit more detail the process by which presale estimates are made by department? Is there some sort of pervasive management committee internally that makes some assumptions about the overall state of the art market, or are they done independently department by department?

In other words, if one department is somewhat overzealous, I don't know that they make a habit of it, but just for once they are somewhat overzealous in their estimates, are they completely independent of others so that the others just don't make the same assumptions about the overall market but rather just look at their own department? Could you just walk us through how that works?

William Ruprecht

I think it is fair to say that the 17-year history we have of generating profits in managing a guarantee portfolio would suggest that we are not a bunch of individual systems, but just the opposite in fact. And that overall, decisions and recommendations--given the volume of money involved--are scrutinized by an increasingly broad committee of senior staff, which includes myself, Bill Sheridan, the head of our Finance business, and above certain levels, the executive committee of the Board of Directors of this Company.

So it is our job to try to understand the exuberance or the conservatism of different members of staff and appreciate their appetite to do business, all of which are measured at the end of the day on a profit basis rather than on a sales basis.

So I understand your question. Do you have somebody or other in-house who is inappropriately zealous? I think the short answer is no. Anytime you take principle risks, anytime you invest, you have to be prepared to take losses. If you're not prepared to take losses in these kinds of businesses, you're not going to be prepared to make a profit.

So over periods of time that we continue to look at this, we have demonstrated and we continue to feel confident about our ability to generate profits through a guarantee portfolio. And, as I said, we continue currently to make a profit in 2007, and it is our expectation that that will be the case going forward.

Rommel Dionisio - Wedbush Morgan Securities Inc.

Just one quick follow-up if I may. In the last 72 hours, you and Christie's brought something in the neighborhood of $1 billion worth of art in one category to market, and that is unprecedented. Do you think that that was at all a factor, just too much supply at one point in time? I mean there is only so many billionaires in the world collecting Impressionist art.

William Ruprecht

You know, high tech is a wonderful thing, and I don't think that it is ever entirely certain as to what all the elements were that combined in this particular circumstance to stress the marketplace. And I don't think that it is an irrelevant statement. But I think the fact that we sold ten pieces for more than $10 million this fall rather than seven in the spring suggests that there's plenty of demand for really high quality works of art in the marketplace properly estimated. That is a formula that I continue to believe in and continue to believe in the demand side of the business and that people will continue to receive those kinds of objects properly presented well and with vigorous appetite to own them.

Operator

Your next question comes from Jody Kane - Sidoti & Company LLC.

Jody Kane - Sidoti & Company LLC.

Can you tell us what you expect the shares outstanding to be for the fourth quarter and the full year?

William Sheridan

That will be in our Form 10-Q that is filed this afternoon. I don't have the number here. We highlight that in the 10-Q.

Jody Kane - Sidoti & Company LLC.

How about the tax rate?

William Sheridan

It depends on what country we make the earnings in. It has hovered between 31% to 34%. I don't expect any dramatic changes from that.

Jody Kane - Sidoti & Company LLC.

The dealer revenue seems to be higher for three-quarters in a row now - even four quarters. Is that something we should be looking at staying consistent, and has that changed, or should it be coming down?

William Sheridan

The dealer revenue, it is what sales close in a period. And last year we did not have Noortman Master Painting until June, so the first half of the year did not include revenues from the Noortman's operations.

Jody Kane - Sidoti & Company LLC.

Was the majority of that selling Noortman's inventory?

William Ruprecht

It is Noortman inventory sales. It is Sotheby's Ventures where Sotheby's directly buys art assets and sells them.

Jody Kane - Sidoti & Company LLC.

So I take it going forward it is probably going to stay in that range as opposed to the sort of $1 million range that it was before; or the $15 million --

William Ruprecht

It should be in higher levels than it was in '06.

Jody Kane - Sidoti & Company LLC.

Do you think the same people that are buying the Impressionist art, are the same ones going to be looking at the Contemporary art in the next week, or is it a different kind of buyer?

William Ruprecht

There is some crossover in almost all of our markets. I think the reality in this as a business is that there are a relatively small number of people on any given evening who are particularly influential in the outcome of a sale result. And I have said it before, auctions and markets by their very nature are unpredictable, and if Mr. Jones has had a great week in the financial markets by shorting or hedging a position; or a Mr. Smith has had a great week through the sale of his company, I simply cannot anticipate their impact on what takes place next Tuesday or Wednesday night at Sotheby's or Christie's.

But when you have a couple of people in any one of these markets that at any given time may be very significant players and outcomes, all I can do is highlight for you. I cannot give you better color or direction on that.

Jody Kane - Sidoti & Company LLC.

Reading a couple of articles from collectors who have said that prices have gotten high: is that just a handful of people saying that, or would you say more people are saying that the prices are still feasible? Or, is there a general consensus that prices are climbing up?

William Ruprecht

I need you to ask that question in one sentence. I'm not sure I understand it.

Jody Kane - Sidoti & Company LLC.

Would you say that the majority of collectors are starting to think that prices are getting too high?

William Ruprecht

Well, as I said yesterday, we had a presale auction estimate in a Chinese Works of Art sale that was more than doubled. In September and October through yesterday our sales were up 32% from prior period. I don't think that is a statement or a series of facts which are very well aligned with the statement that people are reluctant to buy works of art or think that they have become overvalued. I think in periods of potential inflation and volatility with lots of different kinds of assets, hard assets are actually something or other that an awful lot of people gravitate towards.

So, we will see. I think that when you operate in markets as ours--which in many cases individual collecting areas only trade 5 to 10 days a year--it is very, very difficult to be very knowing and definitive about what collector psychology is, except over long periods of time.

What we can say at this point is that over quite a number of years the demand for significant works of art has been growing. The buyer base has been growing, and the number of people on a global basis who have a very strong appetite to own great works of art has been appreciating. The wealth centers and the quality and concentration of wealth at the top end of the economic pyramid is not something or other that we see abating anytime soon. In fact, works of art remain very relevant and important to a large percentage of the people at the very top of the economic pyramid.

Operator

Our next question is coming from Kieran Mahone, Audi Asset Management.

Kieran Mahone - Audi Asset Management

My first question is with regards to finance. I'm sure you have got details of your own financial services. But over the last couple of years, do you believe that finance has become a significant part of how your buyers are paying for this art? Do you have any details or light you can shed, be they individuals or dealers just how much maybe credit might be an issue at the moment?

William Sheridan

To be clear, we do not lend to buyers.

Kieran Mahone - Audi Asset Management

I'm not talking about your financial services. I'm talking about them borrowing off somebody else potentially.

William Sheridan

We would not know that information. We do the appropriate anti-money laundering checks to make sure we know who the buyer is and what type of business. We do when someone wants to buy we pre-clear them from a credit standpoint, talk to their bankers, make sure they have sufficient liquid assets to purchase it. We do not get into their personal loan borrowing position.

Kieran Mahone - Audi Asset Management

So you have no anecdotal information to just tell us whether in actual fact they were borrowing that money off the bank in other words? You do not know.

William Sheridan

We do not deal in anecdotal --

William Ruprecht

I don't think there is any anecdotal information which I'm aware of which supports a broad pattern that you're suggesting.

Kieran Mahone - Audi Asset Management

Can you give us any likely timing on the outcome of your property litigation or when those negotiations might be brought to a conclusion?

And my final question is on activities as principal. I think you broke even on activities as principal in the first half. But am I right in thinking you said that you still, despite the recent losses, expect that segment to be profitable for the full year.

William Sheridan

First, on the building, it is a legal matter currently in remediation process, and all we can say will be in our Form 10-Q that we file this afternoon, and we hope to get it resolved as quickly as possible.

Kieran Mahone - Audi Asset Management

But it is in arbitration? There is no date given for a conclusion of arbitration?

William Ruprecht

It has not quite proceeded to arbitration yet, but we clearly want to get this moved forward and get this behind us.

As far as principal activities, I don't know where you viewed this as a breakeven proposition in the first half. As we said in our six-month 10-Q, we had significant revenues associated with our principal or guaranteed position. So it was extremely helpful to our first half revenues and earnings.

Operator

Our next question is coming from Sandy Colen - Apex Capital.

Sandy Colen - Apex Capital

Yes, I had a follow-up question on the guarantees. Regarding the pre-tax loss of $14.6 million related to guarantees, was that loss incurred on paintings sold below the guaranteed amounts Wednesday night, or does it also include write-downs on paintings guaranteed but not yet sold, such as the Van Gogh?

William Ruprecht

It is principally paintings that we sold below the guarantee that were crystallized the night of the sale.

Sandy Colen - Apex Capital

Okay. Any color on post-sale activity? I think you made a comment at a press conference following the evening that you were sort of besieged by interested buyers in some of the paintings that did not sell.

William Ruprecht

I think we have had a significant number of inquiries and events. I cannot detail for you transactions that are post-sale at this point. I think it is fair to say that what I articulated before about the offering of that Van Gogh did rattle some people that were in that room, and after that people took a deep breath and I think were prepared to look pretty soberly at any number of pictures and express interest in owning those things. So I don't think that there has been a transforming shift in that or overall the markets in which we operate in.

Operator

Our next question is coming from Scott Miller - TSW.

Scott Miller - TSW

I just wanted to ask about the presale estimate for next week's contemporary event. Has the estimate range on that changed at all from your prior expectation?

William Ruprecht

No, those are numbers which are in almost every case printed in catalogs which were published about a month ago.

Scott Miller - TSW

A month ago you said?

William Ruprecht

Yes, about a month ago. And so those are just short of $300 million in terms of presale estimate.

William Sheridan

The details are on our investor relations website.

Operator

Your next question comes from George Sutton – Craig-Hallum Capital Group LLC.

George Sutton - Craig-Hallum Capital Group LLC

The day sale that occurred yesterday did come in a little bit below the range. Can you just discuss any surprise you might have seen there given the fact those are lower-priced items?

William Ruprecht

You're talking about the Part 2 Impressionist sale, George?

George Sutton - Craig-Hallum Capital Group LLC

Yes.

William Ruprecht

That was the largest Impressionist Part 2 sale in our company's history. It did about $63 million in net sales. We had swept together quite a lot of property. I think it was about $65 or $68 million presale or something like that. We sold about three-quarters of the material, and it was a highly profitable event. So in aggregate I can only characterize it as a piece of business I would be really happy to have any day of the year.

George Sutton - Craig-Hallum Capital Group LLC

The irony is, having followed this for a long time, obviously those types of sizes used to be the evening sale sizes. Interesting perspective.

William Ruprecht

I think you can also say that those sorts of events are very often on a profit and contribution basis, close to or as significant as some of the most glamorous sale events that to some extent you can view as couture versus ready-to-wear in other worlds because there is a lot less exotic financial work going on. There is less hysteria surrounding the property collecting, and they are much more consistent and predictable events.

Operator

Gentlemen, I have no further questions, so please continue with any closing comments.

William Ruprecht

Thank you very much for your ongoing interest in Sotheby's, and we will look forward to seeing you in the galleries or in future investor calls.

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