Liquidity Services (NASDAQ:LQDT; www.liquidityservices.com), a
leading global commerce company powering the circular economy,
today announced the following financial results as of the quarter
ended June 30, 2023, as compared to the applicable prior year
periods:
- Gross Merchandise Volume (GMV) of $334.0 million, up 3%, and
Revenue of $80.8 million, up 16%
- GAAP Net Income of $6.5 million1 and GAAP Diluted Earnings Per
Share (EPS) of $0.211
- Non-GAAP Adjusted EBITDA of $13.3 million, up $1.5 million, and
Non-GAAP Adjusted Diluted EPS of $0.28, up $0.07
- Cash balances of $105.9 million2 with zero financial debt; $4.2
million of share repurchases during the quarter
"We achieved record GMV during the quarter
driven by strong execution for our clients and market share gains
from our investments in sales and marketing. Our outstanding buyer
participation and flexible service offerings continue to attract
more sellers and drive better seller recovery, which, in turn,
powers our growth. Our Retail Supply Chain Group (RSCG) experienced
strong organic growth with new and existing sellers utilizing our
marketplace channels, including Liquidation.com and AllSurplus
Deals. Our core GovDeals marketplace experienced record customer
and transaction activity during the quarter; however, our GovDeals
overall segment results were slowed by lower real estate sales in
our acquired Bid4Assets marketplace due in part to low U.S.
foreclosure levels. Our overall business fundamentals remain strong
and we are focused on driving continued growth by providing
exceptional service to our clients and delivering enhanced
liquidity and asset breadth through our marketplace platform," said
Bill Angrick, Liquidity Services CEO.
Third Quarter Financial
Highlights
GMV for the fiscal third quarter of 2023 was
$334.0 million, a 3% increase from $325.0 million in the third
fiscal quarter of 2022.
- GMV in our RSCG segment increased 20%, driven by new and
expanding client programs and improving recovery rates due in part
to our buyer marketing efforts.
- GMV in our CAG segment increased 14%, led by its global
industrial and heavy equipment categories.
- GMV in our GovDeals segment decreased 4%, driven by lower
volumes of foreclosed real estate properties available for auction,
partially offset by record marketplace activity for personal
property, including the numbers of sellers and assets sold, and the
improved availability of vehicles.
Revenue for the fiscal third quarter of 2023 was
$80.8 million, a 16% increase from $69.9 million in the third
fiscal quarter of 2022.
- Revenue in our RSCG segment increased 20%, as increased volumes
of recurring product flows were higher in several purchase model
programs. This increased purchase model mix and was the primary
driver of the lower segment direct profit margin percentage, which
was partially offset by improving recovery rates.
- Revenue in our CAG segment increased 15%, consistent with its
increase in GMV.
- Revenue in our Machinio segment increased 14% with continued
increases in subscriptions.
- Revenue in our GovDeals segment increased 4%, as volumes
increased in key categories and pricing improvements benefited the
results, despite lower GMV from lower take-rate foreclosed real
estate sales.
GAAP Net Income was $6.5 million, or $0.21 per
share, for the fiscal third quarter of 2023, a decrease from $16.4
million1, or $0.50 per share1, for the same quarter last year.
Non-GAAP Adjusted Net Income for the fiscal
third quarter of 2023 was $8.8 million, or $0.28 per share, an
increase from $7.1 million, or $0.21 per share last year.
Non-GAAP Adjusted EBITDA for the fiscal third
quarter of 2023 was $13.3 million, a $1.5 million increase from
$11.9 million in the fiscal third quarter of 2022, reflecting
increased GMV and revenue results, partially offset by
year-over-year increases in sales, marketing, technology and
operations expenses to support market share expansion,
diversification and longer-term growth.
1 The prior year results included an $11.5 million, or $0.35 per
share, non-cash benefit from a reduction in the fair value of the
Bid4Assets earn-out liability. For further information, see Note
11, Fair Value Measurement, to our quarterly report on Form 10-Q
for the period ended June 30, 2023.
2 Includes $98.1 million of Cash and cash equivalents and $7.7
million of Short-term investments.
Third Quarter Segment Financial
Results
We present operating results in four reportable
segments: GovDeals, RSCG, CAG and Machinio. For further information
on our reportable segments, including Corporate and elimination
adjustments, see Note 14, Segment Information, to our quarterly
report on Form 10-Q for the period ended June 30, 2023. Segment
direct profit, previously referred to as segment gross profit,
continues to be calculated as total revenue less cost of goods sold
(excluding depreciation and amortization).
Our Q3-FY23 segment results are as follows (unaudited, in
thousands):
|
Three Months Ended June 30, |
|
|
Nine Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
GovDeals: |
|
|
|
|
|
|
|
|
|
|
|
GMV |
$ |
213,052 |
|
|
$ |
222,238 |
|
|
$ |
542,025 |
|
|
$ |
559,429 |
|
Total revenue |
$ |
17,270 |
|
|
$ |
16,587 |
|
|
$ |
45,956 |
|
|
$ |
45,130 |
|
Segment direct profit |
$ |
16,389 |
|
|
$ |
15,765 |
|
|
$ |
43,572 |
|
|
$ |
42,913 |
|
% of Total revenue |
|
95 |
% |
|
|
95 |
% |
|
|
95 |
% |
|
|
95 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
RSCG: |
|
|
|
|
|
|
|
|
|
|
|
GMV |
$ |
72,677 |
|
|
$ |
60,476 |
|
|
$ |
210,913 |
|
|
$ |
172,930 |
|
Total revenue |
$ |
50,971 |
|
|
$ |
42,374 |
|
|
$ |
150,657 |
|
|
$ |
122,883 |
|
Segment direct profit |
$ |
17,876 |
|
|
$ |
15,942 |
|
|
$ |
50,562 |
|
|
$ |
46,818 |
|
% of Total revenue |
|
35 |
% |
|
|
38 |
% |
|
|
34 |
% |
|
|
38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
CAG: |
|
|
|
|
|
|
|
|
|
|
|
GMV |
$ |
48,229 |
|
|
$ |
42,292 |
|
|
$ |
134,518 |
|
|
$ |
129,674 |
|
Total revenue |
$ |
8,985 |
|
|
$ |
7,796 |
|
|
$ |
27,795 |
|
|
$ |
27,996 |
|
Segment direct profit |
$ |
7,938 |
|
|
$ |
6,271 |
|
|
$ |
23,466 |
|
|
$ |
21,076 |
|
% of Total revenue |
|
88 |
% |
|
|
80 |
% |
|
|
84 |
% |
|
|
75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Machinio: |
|
|
|
|
|
|
|
|
|
|
|
GMV |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Total revenue |
$ |
3,559 |
|
|
$ |
3,124 |
|
|
$ |
10,144 |
|
|
$ |
8,883 |
|
Segment direct profit |
$ |
3,381 |
|
|
$ |
2,971 |
|
|
$ |
9,611 |
|
|
$ |
8,424 |
|
% of Total revenue |
|
95 |
% |
|
|
95 |
% |
|
|
95 |
% |
|
|
95 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
|
|
|
|
GMV |
$ |
333,958 |
|
|
$ |
325,006 |
|
|
$ |
887,456 |
|
|
$ |
862,033 |
|
Total revenue |
$ |
80,770 |
|
|
$ |
69,866 |
|
|
$ |
234,505 |
|
|
$ |
204,848 |
|
Third Quarter Operational Metrics
- Registered Buyers — At the end of Q3-FY23, registered buyers,
defined as the aggregate number of persons or entities who have
registered on one of our marketplaces, totaled approximately 5.1
million, representing a 5% increase over the approximately 4.8
million registered buyers at the end of Q3-FY22.
- Auction Participants — Auction participants, defined as
registered buyers who have bid in an auction during the period (a
registered buyer who bids in more than one auction is counted as an
auction participant in each auction in which he or she bids), was
approximately 924,000 in Q3-FY23, a 5% increase from the
approximately 884,000 auction participants in Q3-FY22.
- Completed Transactions — Completed transactions, defined as the
number of auctions in a given period, were approximately 252,000 in
Q3-FY23, consistent with the approximately 253,000 completed
transactions in Q3-FY22.
Business Outlook
Our expertise in diverse sectors, our strong
buyer base across numerous asset categories, and our global reach
are continuing to provide advantages as our clients navigate
economic change and look to us for valuable
solutions.
Our fiscal fourth quarter 2023 guidance range is
expected to be above last year for GMV and adjusted EPS, and
consistent with last year for adjusted EBITDA. Our fiscal fourth
quarter follows our seasonally high fiscal third quarter, and our
GMV outlook reflects this seasonality and expected growth over the
prior year period. Core activity remains strong, while the
availability and market pricing of used vehicles may fluctuate and
the availability of foreclosed real estate is expected to remain a
headwind. GovDeals is coming off its seasonal peak this past fiscal
third quarter yet is expected to benefit from our continued efforts
to expand our seller base and marketplace margins. The GovDeals
Bid4Assets real estate activity has declined year-over-year given
recent foreclosure trends and delays in converting prospects and
selected contract awards to operational programs. The RSCG segment
expects to continue to benefit from its business development
efforts to grow its portfolio of programs for the sale of recurring
product flows from new and existing clients. RSCG top line growth
may decline slightly from the third quarter growth rate due to
elevated spot liquidations supply from clients in the prior year
period. RSCG segment direct profit as a percent of revenue is
anticipated to improve sequentially this coming fiscal fourth
quarter compared to our last two quarters. In the fiscal fourth
quarter last year, CAG completed large purchase transactions with
international clients that may hamper year-over-year comparisons,
provided, however, that CAG currently has a strong pipeline of new
projects across a number of verticals.
We currently anticipate our consolidated revenue
as a percentage of GMV to remain in the mid twenty percent range,
reflecting our anticipated mix of business and marketplace asset
categories. We expect our direct profits as a percentage of total
revenues to be in a range similar to the same quarter last year. We
anticipate continued investment in our sales and technology
initiatives in support of our marketplace enhancements and
long-term growth.
For Q4-FY23 our guidance is as follows:
GMV - We expect GMV to range from $290 million to $315
million.
GAAP Net Income - We expect GAAP Net Income to range from $4.0
million to $6.5 million.
GAAP Diluted EPS - We expect GAAP Diluted EPS to range from
$0.13 to $0.20.
Non-GAAP Adjusted EBITDA -We expect Non-GAAP Adjusted EBITDA to
range from $10.0 million to $13.0 million.
Non-GAAP Adjusted Diluted EPS - We expect Non-GAAP Adjusted EPS
to range from $0.19 to $0.27.
Our Business Outlook includes forward-looking
statements which reflect these trends and assumptions for Q4-FY23
as compared to the prior year's period:
- continued R&D spending to support omni-channel behavioral
marketing, analytics, and buyer/seller payment optimization;
- spending in business development activities to capture market
opportunities, targeting efficient payback periods;
- a longer-term trend of continued mix shift to the consignment
model, which may lower revenue as a percent of GMV but can improve
segment direct profit as a percentage of revenue;
- variability in the inventory product mix handled by our RSCG
segment, which can cause a change in revenues and/or segment direct
profit as a percentage of revenue, including variability from
changes in consumer sentiment, retailers increasing product flows
to us on an episodic basis to solve capacity constraints at
retailer warehouse or distribution centers and retailers decreasing
product flows as they solve capacity constraints and return more
product to store shelves or fulfillment centers;
- as growth in the foreclosed real estate category within the
GovDeals segment occurs, take rates as a percentage of GMV are
expected to become lower without significantly affecting segment
direct profit as a percentage of revenue. GMV from real estate
transactions can be subject to significant variability due to
changes that include postponements or cancellations of scheduled or
expected auction events, the value of properties to be included in
the auction event, and the value of the properties that may be
withdrawn due to the property holder curing their delinquency or
taking other legal actions to delay the sale of their
property;
- continued variability in project size and timing within our CAG
segment;
- continued growth and expansion resulting from the continuing
acceleration of broader market adoption of the digital economy,
particularly in our GovDeals and RSCG seller accounts and programs,
including the execution by RSCG on its business plans for
AllSurplus Deals and its expanded distribution network;
- continued growth in our Machinio advertising subscription
service and acceptance of other Machinio service offerings;
- successful integration of Bid4Assets and execution by
Bid4Assets on planned real estate auction activity and its business
plan, including efforts underway with local and state governments
to advance legislation that allows for online auctions for
foreclosed and tax foreclosed real estate;
- our annual FY23 effective tax rate (ETR) is expected to range
from approximately 25% to 31%. This range excludes any potential
impacts from legislative changes to U.S. corporate tax rates that
may be enacted during Q4-FY23; and potential impacts from items
that have limited visibility and can be highly variable, including
effects of stock compensation due to participant exercise activity
and changes in our stock price. We are not expecting a substantial
increase to cash paid for income taxes due to our continued net
operating loss carryforward position; and
- our diluted weighted average number of shares outstanding is
expected to be approximately 32.0 million. As of June 30, 2023, we
have $1.8 million in remaining authorization to repurchase shares
of our common stock.
Reconciliation of GAAP to Non-GAAP Measures
Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA.
Non-GAAP EBITDA is a supplemental non-GAAP financial measure and is
equal to net income plus interest and other (income) expense, net;
provision for income taxes; and depreciation and amortization. Our
definition of Non-GAAP Adjusted EBITDA differs from Non-GAAP EBITDA
because we further adjust Non-GAAP EBITDA for stock compensation
expense, acquisition costs such as transaction expenses and changes
in earn-out estimates, business realignment expenses, and goodwill,
long-lived and other non-current asset impairment. A reconciliation
of Net Income to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA is as
follows:
|
Three Months Ended June 30, |
|
|
Nine Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income |
$ |
6,487 |
|
|
$ |
16,408 |
|
|
$ |
14,698 |
|
|
$ |
31,979 |
|
Interest and other (income)
expense, net1 |
|
(761 |
) |
|
|
196 |
|
|
|
(1,698 |
) |
|
|
214 |
|
Provision for income
taxes |
|
2,543 |
|
|
|
2,183 |
|
|
|
5,265 |
|
|
|
4,254 |
|
Depreciation and
amortization |
|
2,866 |
|
|
|
2,641 |
|
|
|
8,433 |
|
|
|
7,546 |
|
Non-GAAP EBITDA |
$ |
11,135 |
|
|
$ |
21,428 |
|
|
$ |
26,698 |
|
|
$ |
43,993 |
|
Stock compensation
expense |
|
2,195 |
|
|
|
1,884 |
|
|
|
6,216 |
|
|
|
6,156 |
|
Acquisition costs and
impairment of long-lived and other non-current assets2 |
|
— |
|
|
|
43 |
|
|
|
183 |
|
|
|
295 |
|
Fair value adjustment of
acquisition earn-outs |
|
— |
|
|
|
(11,500 |
) |
|
|
— |
|
|
|
(20,000 |
) |
Non-GAAP Adjusted EBITDA |
$ |
13,330 |
|
|
$ |
11,855 |
|
|
$ |
33,097 |
|
|
$ |
30,444 |
|
1 Interest and other (income) expense, net, per
the Consolidated Statements of Operations, excluding the
non-service components of net periodic pension (benefit).2
Acquisition costs and impairment of long-lived and other
non-current assets are included in Other operating (income)
expenses, net on the Consolidated Statements of Operations.
Non-GAAP Adjusted Net Income and Non-GAAP
Adjusted Basic and Diluted Earnings Per Share. Non-GAAP Adjusted
Net Income is a supplemental non-GAAP financial measure and is
equal to Net Income plus stock compensation expense, acquisition
related costs such as transaction expenses and changes in earn-out
estimates, amortization of intangible assets, business realignment
expenses, goodwill, long-lived and other non-current asset
impairments, and the estimated impact of income taxes on these
non-GAAP adjustments as well as non-recurring tax adjustments.
Non-GAAP Adjusted Basic and Diluted Income Per Share are determined
using Adjusted Net Income. For Q3-FY23 the tax rate used to
estimate the impact of income taxes on the non-GAAP adjustments was
27% compared to 26% used for the Q3-FY22 results. These tax rates
exclude the impacts of the charge to our U.S. valuation allowance
and the fair value adjustments to earn-out liabilities. A
reconciliation of Net Income to Non-GAAP Adjusted Net Income and
Non-GAAP Adjusted Basic and Diluted Income Per Share is as
follows:
|
Three Months Ended June 30, |
|
|
Nine Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income |
$ |
6,487 |
|
|
$ |
16,408 |
|
|
$ |
14,698 |
|
|
$ |
31,979 |
|
Stock compensation
expense |
|
2,195 |
|
|
|
1,884 |
|
|
|
6,216 |
|
|
|
6,156 |
|
Intangible asset
amortization |
|
981 |
|
|
|
984 |
|
|
|
2,945 |
|
|
|
2,735 |
|
Acquisition costs and
impairment of long-lived and other non-current assets* |
|
— |
|
|
|
43 |
|
|
|
183 |
|
|
|
295 |
|
Fair value adjustment of
acquisition earn-outs |
|
— |
|
|
|
(11,500 |
) |
|
|
— |
|
|
|
(20,000 |
) |
Income tax impact on the
adjustment items |
|
(857 |
) |
|
|
(763 |
) |
|
|
(2,523 |
) |
|
|
(2,406 |
) |
Non-GAAP Adjusted net
income |
$ |
8,806 |
|
|
$ |
7,056 |
|
|
$ |
21,519 |
|
|
$ |
18,759 |
|
Non-GAAP Adjusted basic
earnings per common share |
$ |
0.29 |
|
|
$ |
0.22 |
|
|
$ |
0.69 |
|
|
$ |
0.58 |
|
Non-GAAP Adjusted diluted
earnings per common share |
$ |
0.28 |
|
|
$ |
0.21 |
|
|
$ |
0.67 |
|
|
$ |
0.55 |
|
Basic weighted average shares
outstanding |
|
30,605,963 |
|
|
|
31,908,864 |
|
|
|
31,243,979 |
|
|
|
32,482,326 |
|
Diluted weighted average
shares outstanding |
|
31,513,488 |
|
|
|
33,078,568 |
|
|
|
32,193,239 |
|
|
|
34,013,233 |
|
* Acquisition related costs and impairment of
long-lived and other non-current assets, which are excluded from
Non-GAAP Adjusted Net Income, are included in Other operating
(income) expenses, net on the Consolidated Statements of
Operations.
Conference Call Details
The Company will host a conference call to discuss these results
at 10:30 a.m. Eastern Time today. Investors and other interested
parties may access the teleconference by registering here to
receive the dial-in number and unique conference pin. A live
listen-only webcast of the conference call will be provided on the
Company's investor relations website at
https://investors.liquidityservices.com. An archive of the web cast
will be available on the Company's website until August 3, 2024 at
11:59 p.m. Eastern Time. The replay will be available starting at
1:30 p.m. Eastern Time on the day of the call.
Non-GAAP Measures
To supplement our consolidated financial
statements presented in accordance with generally accepted
accounting principles (GAAP), we use certain non-GAAP measures of
certain components of financial performance. These non-GAAP
measures include earnings before interest, taxes, depreciation and
amortization (EBITDA), Adjusted EBITDA, Adjusted Net Income (Loss)
and Adjusted Earnings (Loss) per Share. These non-GAAP measures are
provided to enhance investors’ overall understanding of our current
financial performance and prospects for the future. We use EBITDA
and Adjusted EBITDA: (a) as measurements of operating performance
because they assist us in comparing our operating performance on a
consistent basis as they do not reflect the impact of items not
directly resulting from our core operations; (b) for planning
purposes, including the preparation of our internal annual
operating budget; (c) to allocate resources to enhance the
financial performance of our business; (d) to evaluate the
effectiveness of our operational strategies; and (e) to evaluate
our capacity to fund capital expenditures and expand our business.
Adjusted Earnings (Loss) per Share is the result of our Adjusted
Net Income (Loss) and diluted shares outstanding.
We prepare Non-GAAP Adjusted EBITDA by
eliminating from Non-GAAP EBITDA the impact of items that we do not
consider indicative of our core operating performance. You are
encouraged to evaluate these adjustments and the reasons we
consider them appropriate for supplemental analysis. As an
analytical tool, Non-GAAP Adjusted EBITDA is subject to all of the
limitations applicable to Non-GAAP EBITDA. Our presentation of
Non-GAAP Adjusted EBITDA should not be construed as an implication
that our future results will be unaffected by unusual or
non-recurring items.
We believe these non-GAAP measures provide
useful information to both management and investors by excluding
certain expenses that may not be indicative of our core operating
measures. In addition, because we have historically reported
certain non-GAAP measures to investors, we believe the inclusion of
non-GAAP measures provides consistency in our financial reporting.
These measures should be considered in addition to financial
information prepared in accordance with GAAP, but should not be
considered a substitute for, or superior to, GAAP results. A
reconciliation of all historical non-GAAP measures included in this
press release, to the most directly comparable GAAP measures, may
be found in the financial tables included in this press
release.
We do not quantitatively reconcile our guidance
ranges for our non-GAAP measures to their most comparable GAAP
measures in the Business Outlook section of this press release. The
guidance ranges for our GAAP and non-GAAP financial measures
reflect our assessment of potential sources of variability in our
financial results and are informed by our evaluation of multiple
scenarios, many of which have interactive effects across several
financial statement line items. Providing guidance for individual
reconciling items between our non-GAAP financial measures and the
comparable GAAP measures would imply a degree of precision and
certainty in those reconciling items that is not a consistent
reflection of our scenario-based process to prepare our guidance
ranges. To the extent that a material change affecting the
individual reconciling items between the Company’s forward-looking
non-GAAP and comparable GAAP financial measures is anticipated, the
Company has provided qualitative commentary in the Business Outlook
section of this press release for your consideration. However, as
the impact of such factors cannot be predicted with a reasonable
degree of certainty or precision, a quantitative reconciliation is
not available without unreasonable effort.
Supplemental Operating Data
To supplement our consolidated financial
statements presented in accordance with GAAP, we use certain
supplemental operating data as a measure of certain components of
operating performance. We review GMV because it provides a measure
of the volume of goods being sold in our marketplaces and thus the
activity of those marketplaces. GMV and our other supplemental
operating data, including registered buyers, auction participants
and completed transactions, also provide a means to evaluate the
effectiveness of investments that we have made and continue to make
in the areas of seller and buyer support, value-added services,
product development, sales and marketing and operations. Therefore,
we believe this supplemental operating data provides useful
information to both management and investors. In addition, because
we have historically reported certain supplemental operating data
to investors, we believe the inclusion of this supplemental
operating data provides consistency in our financial reporting.
This data should be considered in addition to financial information
prepared in accordance with GAAP, but should not be considered a
substitute for, or superior to, GAAP results.
Forward-Looking Statements
This document contains forward-looking
statements made pursuant to the Private Securities Litigation
Reform Act of 1995. These statements are only predictions. The
outcome of the events described in these forward-looking statements
is subject to known and unknown risks, uncertainties and other
factors that may cause our actual results, levels of activity,
performance or achievements to differ materially from any future
results, levels of activity, performance or achievements expressed
or implied by these forward-looking statements. These statements
include, but are not limited to, statements regarding the Company’s
business outlook; expected future results; expected future
effective tax rates; and trends and assumptions about future
periods. You can identify forward-looking statements by terminology
such as “may,” “will,” “should,” “could,” “would,” “expects,”
“intends,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “potential,” “continues” or the negative of these terms
or other comparable terminology. Our business is subject to a
number of risks and uncertainties, and our past performance is no
guarantee of our performance in future periods. Although we believe
that the expectations reflected in the forward-looking statements
are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements.
There are several risks and uncertainties that
could cause our actual results to differ materially from the
forward-looking statements in this document. Important factors that
could cause our actual results to differ materially from those
expressed as forward-looking statements are set forth in our
filings with the SEC from time to time, and include, among others:
changes in political, business and economic conditions; the
duration and impact of shortages in supply of used vehicles, the
continuing impacts of the COVID-19 pandemic globally and their
impact on the ability to conduct cross-border transactions, the
Russian invasion of Ukraine, and inflation on the Company’s
operations, the operations of customers, project size and timing of
auctions, operating costs, and general economic conditions; adverse
developments affecting the financial services industry, including
events or concerns involving liquidity, defaults, or
non-performance by financial institutions; retail clients investing
in their warehouse operations capacity to handle higher volumes of
online returns resulting in retailers sending the Company a reduced
volume of returns merchandise or sending us a product mix lower in
value due to the removal of high value returns; the numerous
factors that influence the supply of and demand for used
merchandise, equipment and surplus assets; the Company’s need to
manage the attraction of sellers and buyers in a broad range of
asset categories with varying degrees of maturity and in many
geographies; economic and other conditions in local, regional and
global sectors; the Company’s ability to integrate acquired
companies, including its most recent acquisitions of Machinio Corp.
and Bid4Assets, Inc., and execute on anticipated business plans
such as the efforts underway with local and state governments to
advance legislation that allows for online auctions for foreclosed
and tax foreclosed real estate; the Company’s need to successfully
react to the increasing importance of mobile commerce and the
increasing environmental and social impact aspects of e-commerce in
an increasingly competitive environment for our business, including
not only risks of disintermediation of our e-commerce services by
our competitors but also by our buyers and sellers; the Company’s
ability to timely upgrade and develop our technology systems,
infrastructure and marketing and customer service capabilities at
reasonable cost while maintaining site stability and performance
and adding new products and features; the Company’s ability to
attract, retain and develop the skilled employees that we need to
support our business; and the risks and uncertainties set forth in
the Company’s Annual Report on Form 10-K for the year ended
September 30, 2022 and Quarterly Report on Form 10-Q for the
quarter ended June 30, 2023, which are available on the SEC and
Company websites. There may be other factors of which we are
currently unaware or which we deem immaterial that may cause our
actual results to differ materially from the forward-looking
statements.
All forward-looking statements attributable to
us or persons acting on our behalf apply only as of the date of
this document and are expressly qualified in their entirety by the
cautionary statements included in this document. Except as may be
required by law, we undertake no obligation to publicly update or
revise any forward-looking statement to reflect events or
circumstances occurring after the date of this document or to
reflect the occurrence of unanticipated events.
About Liquidity Services
Liquidity Services (NASDAQ:LQDT) operates the
world's largest B2B e-commerce marketplace platform for surplus
assets with over $10 billion in completed transactions to more than
five million qualified buyers and 15,000 corporate and government
sellers worldwide. The company supports its clients' sustainability
efforts by helping them extend the life of assets, prevent
unnecessary waste and carbon emissions, and reduce the number of
products headed to landfills.
Contact:Investor
Relationsinvestorrelations@liquidityservicesinc.com
Liquidity Services and SubsidiariesUnaudited
Condensed Consolidated Balance Sheets(Dollars in Thousands,
Except Par Value) |
|
|
|
June 30, 2023 |
|
|
September 30, 2022 |
|
|
|
(Unaudited) |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
98,147 |
|
|
$ |
96,122 |
|
Short-term investments |
|
|
7,715 |
|
|
|
1,819 |
|
Accounts receivable, net of allowance for doubtful accounts of $555
and $449 |
|
|
6,257 |
|
|
|
11,792 |
|
Inventory, net |
|
|
12,541 |
|
|
|
11,679 |
|
Prepaid taxes and tax refund receivable |
|
|
1,766 |
|
|
|
1,631 |
|
Prepaid expenses and other current assets |
|
|
8,476 |
|
|
|
6,551 |
|
Total current assets |
|
|
134,902 |
|
|
|
129,594 |
|
Property and equipment, net |
|
|
17,570 |
|
|
|
19,094 |
|
Operating lease assets |
|
|
10,305 |
|
|
|
13,207 |
|
Intangible assets, net |
|
|
13,298 |
|
|
|
16,234 |
|
Goodwill |
|
|
89,616 |
|
|
|
88,910 |
|
Deferred tax assets |
|
|
9,072 |
|
|
|
13,628 |
|
Other assets |
|
|
8,264 |
|
|
|
7,437 |
|
Total assets |
|
$ |
283,027 |
|
|
$ |
288,104 |
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
44,606 |
|
|
$ |
41,982 |
|
Accrued expenses and other current liabilities |
|
|
20,538 |
|
|
|
23,304 |
|
Current portion of operating lease liabilities |
|
|
4,279 |
|
|
|
4,540 |
|
Deferred revenue |
|
|
4,700 |
|
|
|
4,439 |
|
Payables to sellers |
|
|
46,071 |
|
|
|
49,238 |
|
Total current liabilities |
|
|
120,194 |
|
|
|
123,503 |
|
Operating lease liabilities |
|
|
6,843 |
|
|
|
9,687 |
|
Other long-term liabilities |
|
|
181 |
|
|
|
378 |
|
Total liabilities |
|
|
127,218 |
|
|
|
133,568 |
|
Commitments and contingencies
(Note 13) |
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Common stock, $0.001 par value;
120,000,000 shares authorized; 36,115,562 shares issued and
outstanding at June 30, 2023; 35,724,057 shares issued and
outstanding at September 30, 2022 |
|
|
36 |
|
|
|
36 |
|
Additional paid-in capital |
|
|
264,162 |
|
|
|
258,275 |
|
Treasury stock, at cost; 5,432,546 shares at June 30, 2023, and
3,813,199 shares at September 30, 2022 |
|
|
(84,027 |
) |
|
|
(62,554 |
) |
Accumulated other comprehensive loss |
|
|
(8,124 |
) |
|
|
(10,285 |
) |
Accumulated deficit |
|
|
(16,238 |
) |
|
|
(30,936 |
) |
Total stockholders’ equity |
|
|
155,809 |
|
|
|
154,536 |
|
Total liabilities and
stockholders’ equity |
|
$ |
283,027 |
|
|
$ |
288,104 |
|
Liquidity Services and SubsidiariesUnaudited
Condensed Consolidated Statements of Operations (Dollars in
Thousands, Except Per Share Data) |
|
|
|
Three Months Ended June 30, |
|
|
Nine Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Purchase revenues |
|
$ |
42,809 |
|
|
$ |
35,507 |
|
|
$ |
128,715 |
|
|
$ |
109,109 |
|
Consignment and other fee
revenues |
|
|
37,961 |
|
|
|
34,359 |
|
|
$ |
105,790 |
|
|
|
95,739 |
|
Total revenue |
|
|
80,770 |
|
|
|
69,866 |
|
|
|
234,505 |
|
|
|
204,848 |
|
Costs and expenses from
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (excludes depreciation and amortization) |
|
|
35,201 |
|
|
|
28,932 |
|
|
|
107,340 |
|
|
|
85,662 |
|
Technology and operations |
|
|
13,927 |
|
|
|
13,782 |
|
|
|
43,423 |
|
|
|
41,573 |
|
Sales and marketing |
|
|
13,068 |
|
|
|
10,900 |
|
|
|
35,712 |
|
|
|
32,217 |
|
General and administrative |
|
|
7,454 |
|
|
|
6,389 |
|
|
|
21,243 |
|
|
|
21,672 |
|
Depreciation and amortization |
|
|
2,866 |
|
|
|
2,641 |
|
|
|
8,433 |
|
|
|
7,546 |
|
Fair value adjustment of acquisition earn-outs |
|
|
— |
|
|
|
(11,500 |
) |
|
|
— |
|
|
|
(20,000 |
) |
Other operating (income) expenses, net |
|
|
(1 |
) |
|
|
27 |
|
|
|
128 |
|
|
|
18 |
|
Total costs and expenses |
|
|
72,515 |
|
|
|
51,171 |
|
|
|
216,279 |
|
|
|
168,688 |
|
Income from operations |
|
|
8,255 |
|
|
|
18,695 |
|
|
|
18,226 |
|
|
|
36,160 |
|
Interest and other (income)
expense, net |
|
|
(775 |
) |
|
|
104 |
|
|
|
(1,737 |
) |
|
|
(73 |
) |
Income before provision for
income taxes |
|
|
9,030 |
|
|
|
18,591 |
|
|
|
19,963 |
|
|
|
36,233 |
|
Provision for income taxes |
|
|
2,543 |
|
|
|
2,183 |
|
|
|
5,265 |
|
|
|
4,254 |
|
Net income |
|
$ |
6,487 |
|
|
$ |
16,408 |
|
|
$ |
14,698 |
|
|
$ |
31,979 |
|
Basic income per common
share |
|
$ |
0.21 |
|
|
$ |
0.51 |
|
|
$ |
0.47 |
|
|
$ |
0.98 |
|
Diluted income per common
share |
|
$ |
0.21 |
|
|
$ |
0.50 |
|
|
$ |
0.46 |
|
|
$ |
0.94 |
|
Basic weighted average shares
outstanding |
|
|
30,605,963 |
|
|
|
31,908,864 |
|
|
|
31,243,979 |
|
|
|
32,482,326 |
|
Diluted weighted average shares
outstanding |
|
|
31,513,488 |
|
|
|
33,078,568 |
|
|
|
32,193,239 |
|
|
|
34,013,233 |
|
Liquidity Services and Subsidiaries Unaudited
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands) |
|
|
|
Nine Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
Operating
activities |
|
|
|
|
|
|
Net income |
|
$ |
14,698 |
|
|
$ |
31,979 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
8,433 |
|
|
|
7,546 |
|
Stock compensation expense |
|
|
6,023 |
|
|
|
6,156 |
|
Inventory adjustment to net realizable value |
|
|
859 |
|
|
|
98 |
|
Provision for doubtful accounts |
|
|
519 |
|
|
|
68 |
|
Deferred tax expense |
|
|
4,556 |
|
|
|
3,410 |
|
Impairment of long-lived and other non-current assets |
|
|
— |
|
|
|
31 |
|
Gain on disposal of property and equipment |
|
|
(60 |
) |
|
|
(29 |
) |
Gain on termination of lease |
|
|
— |
|
|
|
(240 |
) |
Change in fair value of earn-out liability |
|
|
— |
|
|
|
(20,000 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
5,209 |
|
|
|
(2,215 |
) |
Inventory |
|
|
(1,636 |
) |
|
|
(1,985 |
) |
Prepaid taxes and tax refund receivable |
|
|
(135 |
) |
|
|
224 |
|
Prepaid expenses and other assets |
|
|
(2,117 |
) |
|
|
(2,788 |
) |
Operating lease assets and liabilities |
|
|
(207 |
) |
|
|
451 |
|
Accounts payable |
|
|
2,496 |
|
|
|
6,635 |
|
Accrued expenses and other current liabilities |
|
|
(2,762 |
) |
|
|
(5,955 |
) |
Deferred revenue |
|
|
261 |
|
|
|
296 |
|
Payables to sellers |
|
|
(3,653 |
) |
|
|
8,233 |
|
Other liabilities |
|
|
(128 |
) |
|
|
(778 |
) |
Net cash provided by operating
activities |
|
|
32,356 |
|
|
|
31,137 |
|
Investing
activities |
|
|
|
|
|
|
Cash paid for business
acquisitions, net of cash acquired |
|
|
— |
|
|
|
(11,164 |
) |
Purchases of property and
equipment, including capitalized software |
|
|
(3,905 |
) |
|
|
(6,292 |
) |
Purchase of short-term
investments |
|
|
(5,603 |
) |
|
|
— |
|
Other investing activities,
net |
|
|
58 |
|
|
|
23 |
|
Net cash used in investing
activities |
|
|
(9,450 |
) |
|
|
(17,433 |
) |
Financing
activities |
|
|
|
|
|
|
Common stock repurchases |
|
|
(21,198 |
) |
|
|
(25,447 |
) |
Taxes paid associated with net
settlement of stock compensation awards |
|
|
(1,060 |
) |
|
|
(1,901 |
) |
Payments of the principal portion
of finance lease liabilities |
|
|
(75 |
) |
|
|
(75 |
) |
Payment for debt issuance
cost |
|
|
— |
|
|
|
(91 |
) |
Proceeds from exercise of stock
options, net of tax |
|
|
496 |
|
|
|
— |
|
Payment of earn-out liability
related to business acquisition |
|
|
— |
|
|
|
(3,500 |
) |
Net cash used in financing
activities |
|
|
(21,837 |
) |
|
|
(31,014 |
) |
Effect of exchange rate
differences on cash and cash equivalents |
|
|
956 |
|
|
|
(739 |
) |
Net increase (decrease) in cash
and cash equivalents |
|
|
2,025 |
|
|
|
(18,049 |
) |
Cash and cash equivalents at
beginning of period |
|
|
96,122 |
|
|
|
106,335 |
|
Cash and cash equivalents at end
of period |
|
$ |
98,147 |
|
|
|
88,286 |
|
Supplemental disclosure
of cash flow information |
|
|
|
|
|
|
Cash paid for income taxes,
net |
|
$ |
975 |
|
|
$ |
592 |
|
Non-cash: Common stock
surrendered in the exercise of stock options |
|
|
191 |
|
|
|
100 |
|
Non-cash: Earn-out liability
for acquisition activity |
|
|
— |
|
|
|
4,500 |
|
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