Shares of Sotheby's (BID) climbed over 12% in morning trading after the auctioneer's quarterly results beat analysts' estimates.

EARNINGS: This morning, Sotheby's reported second quarter adjusted earnings per share of $1.51 on revenue of $298.67M, handily beating estimates calling for $1.05 and $291.22M, respectively. However, net auction sales declined 16% from the year-ago period, reflecting a comparable decline in the global art market.

EXECUTIVE COMMENTARY: President and CEO Tad Smith said that "While we would certainly prefer to see a stronger art market, we are pleased with the progress we have been making on our strategic initiatives and the beneficial changes to our team and organization." CFO Mike Goss noted that "Given the pronounced seasonality of the art auction market, we believe investors should focus on six month results versus prior periods, rather than merely a single quarter. The comparison of quarterly results can be skewed by changes in the timing of when auctions occur, such as the summer Contemporary sales in London." Goss continued, "Looking at the first six months of this year, investors will have a realistic view of the current market, but they will also see our improved auction commission margins, meaningful cost control and the impact of our ongoing share repurchase program."

On the quarterly earnings conference call, Sotheby's said the third quarter is expected to be "very weak." The company said it is focusing on "more judicious use of guarantees" and said it is hedging guarantees "aggressively." Additionally, executives noted that the resolution of the U.S. presidential election will be a "positive catalyst."

WHAT'S NOTABLE: In late July, Taikang Life Insurance disclosed a 13.52% stake in Sotheby's and said it may seek future director nominations. Tad Smith was named as Sotheby's CEO in March 2015, succeeding William Ruprecht, amid calls from activist shareholder Dan Loeb, the founder of Third Point, for a leadership change.

PRICE ACTION: Sotheby's is up 12.5% to $36.30 in morning trading.