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 September 30, 2023, as compared to the applicable prior year
periods:
- Gross Merchandise Volume (GMV) of $315.6 million, up 11%, and
Revenue of $80.0 million, up 6%
- GAAP Net Income of $6.3 million1 and GAAP Diluted Earnings Per
Share (EPS) of $0.201
- Non-GAAP Adjusted EBITDA of $12.8 million, up $0.5 million, and
Non-GAAP Adjusted Diluted EPS of $0.26, up 37%
- Cash balances of $118.2 million2 with zero financial debt
"We concluded our fiscal year with strong fourth
quarter results, setting a new annual record for GMV at $1.2
billion and delivering our highest full-year Non-GAAP Adjusted
EBITDA performance since 2014. Across our segments, we are
continuing to design and deliver flexible service offerings that
are relevant to sellers, and continuing to drive buyer engagement
and demand for the assets listed on our marketplaces. Looking
forward to fiscal year 2024, we have launched our modernized
GovDeals marketplace, and are increasingly leveraging our Retail
Supply Chain Group's (RSCG) network of warehouses to offer consumer
goods for curbside pickup by extending our AllSurplus Deals
marketplace to additional locations. Our pipeline remains strong,
and we continue to see opportunities to drive growth and long-term
shareholder value through expanding our technology-enabled,
asset-light services," said Bill Angrick, Liquidity Services
CEO.
Recent Business Highlights
- Our GovDeals marketplace announced in August that it completed
$4 billion in cumulative auction sales, underscoring its unwavering
commitment to sustainable business practices and transparent
surplus asset sales.
- Our GovDeals marketplace launched its modernized feature set
designed to enhance the buyer experience and simplify the process
of discovering assets relevant to their interests and bidding on
our platform.
- Our RSCG segment launched a new retail industry benchmarking
survey of over 100 leading retail professionals to understand how
today's retailers handle their returns management, identify gaps in
reverse logistics procedures, and uncover opportunities for
improvement. The survey generated insights into how the industry
could boost recovery rates, improve sustainability, and reduce
overall supply chain costs.
- Our RSCG segment continued to expand its AllSurplus Deals
marketplace locations, leveraging its existing warehouses to offer
high-quality consumer goods for curbside pickup in Northeastern
Pennsylvania and Indianapolis.
- Our CAG segment also maintained strong new business pipeline
growth in the disposition of large complex engineering projects for
energy sector and industrial manufacturing clients around the
world.
Fourth Quarter Financial
Highlights
GMV for the fiscal fourth quarter of 2023 was
$315.6 million, an 11% increase from $283.3 million in the fourth
fiscal quarter of 2022.
- GMV in our GovDeals segment increased 14%, driven by increased
availability of vehicles which more than offset the broader market
trend of reduced per unit vehicle prices.
- GMV in our RSCG segment increased 18% and set a new quarterly
record, driven by new and expanding client programs under both the
purchase and consignment models.
- GMV in our CAG segment decreased 4%, as increases in its global
biopharma, energy and heavy equipment categories did not fully
offset the prior year's large international spot purchase
transactions.
Revenue for the fiscal fourth quarter of 2023
was $80.0 million, a 6% increase from $75.2 million in the fourth
fiscal quarter of 2022.
- Revenue in our GovDeals segment increased 13%, consistent with
its increase in GMV.
- Revenue in our RSCG segment increased 15%, a rate slightly
lower than the segment's GMV increase as large retailers have
expanded their use of our sell-in-place consignment solutions that
provide for a lower revenue take-rate but require a lower overall
costs to serve.
- Revenue in our CAG segment decreased 27% due to the prior
year's large international spot purchase transactions.
- Revenue in our Machinio segment increased 15% with continued
increases in subscriptions.
GAAP Net Income was $6.3 million, or $0.20 per
share, for the fiscal fourth quarter of 2023, a decrease from $8.3
million1, or $0.25 per share1, for the same quarter last year.
Non-GAAP Adjusted Net Income for the fiscal
fourth quarter of 2023 was $8.4 million, or $0.26 per share, an
increase from $6.4 million, or $0.19 per share last year.
Non-GAAP Adjusted EBITDA for the fiscal fourth
quarter of 2023 was $12.8 million, a $0.5 million increase from
$12.3 million in the fiscal fourth 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 $4.5 million, or $0.14 per
share, non-cash benefit from a reduction in the fair value of the
Bid4Assets earn-out liability. For further information, see Note
13, Fair Value Measurement, to our annual report on Form 10-K for
the year ended September 30, 2023.
2 Includes $110.3 million of Cash and cash equivalents and $7.9
million of Short-term investments.
Fourth Quarter Segment Financial
Results
We present operating results for our four
reportable segments: GovDeals, RSCG, CAG and Machinio. For further
information on our reportable segments, including Corporate and
elimination adjustments, see Note 16, Segment Information, to our
annual report on Form 10-K for the year ended September 30, 2023.
Segment direct profit is calculated as total revenue less cost of
goods sold (excluding depreciation and amortization).
Our Q4-FY23 segment results are as follows (unaudited, dollars
in thousands):
|
|
Three Months Ended September 30, |
Twelve Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
GovDeals: |
|
|
|
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
184,100 |
|
|
$ |
160,894 |
|
|
$ |
726,124 |
|
|
$ |
720,323 |
|
Total revenue |
|
$ |
16,054 |
|
|
$ |
14,223 |
|
|
$ |
62,010 |
|
|
$ |
59,352 |
|
Segment direct profit |
|
$ |
15,238 |
|
|
$ |
13,496 |
|
|
$ |
58,810 |
|
|
$ |
56,408 |
|
Segment direct profit as a percentage of total revenue |
|
|
94.9 |
% |
|
|
95.0 |
% |
|
|
94.8 |
% |
|
|
95.0 |
% |
RSCG: |
|
|
|
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
74,661 |
|
|
$ |
63,306 |
|
|
$ |
285,574 |
|
|
$ |
236,236 |
|
Total revenue |
|
$ |
49,561 |
|
|
$ |
43,218 |
|
|
$ |
200,218 |
|
|
$ |
166,100 |
|
Segment direct profit |
|
$ |
17,505 |
|
|
$ |
16,886 |
|
|
$ |
68,068 |
|
|
$ |
63,704 |
|
Segment direct profit as a percentage of total revenue |
|
|
35.3 |
% |
|
|
39.0 |
% |
|
|
34.0 |
% |
|
|
38.4 |
% |
CAG: |
|
|
|
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
56,814 |
|
|
$ |
59,139 |
|
|
$ |
191,333 |
|
|
$ |
188,813 |
|
Total revenue |
|
$ |
10,681 |
|
|
$ |
14,578 |
|
|
$ |
38,476 |
|
|
$ |
42,575 |
|
Segment direct profit |
|
$ |
8,749 |
|
|
$ |
8,044 |
|
|
$ |
32,215 |
|
|
$ |
29,120 |
|
Segment direct profit as a percentage of total revenue |
|
|
81.9 |
% |
|
|
55.0 |
% |
|
|
83.7 |
% |
|
|
68.4 |
% |
Machinio: |
|
|
|
|
|
|
|
|
|
|
|
|
GMV |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
Total revenue |
|
$ |
3,678 |
|
|
$ |
3,200 |
|
|
$ |
13,821 |
|
|
$ |
12,083 |
|
Segment direct profit |
|
$ |
3,499 |
|
|
$ |
3,048 |
|
|
$ |
13,110 |
|
|
$ |
11,471 |
|
Segment direct profit as a percentage of total revenue |
|
|
95.2 |
% |
|
|
95.2 |
% |
|
|
94.9 |
% |
|
|
94.9 |
% |
Consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
315,575 |
|
|
$ |
283,339 |
|
|
$ |
1,203,031 |
|
|
$ |
1,145,372 |
|
Total revenue |
|
$ |
79,957 |
|
|
$ |
75,202 |
|
|
$ |
314,462 |
|
|
$ |
280,050 |
|
Fourth Quarter Operational Metrics
- Registered Buyers — At the end of Q4-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 4.9
million registered buyers at the end of Q4-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 836,000 in Q4-FY23, an 8% increase from the
approximately 775,000 auction participants in Q4-FY22.
- Completed Transactions — Completed transactions, defined as the
number of auctions in a given period, were approximately 250,000 in
Q4-FY23, a 4% increase from the approximately 240,000 completed
transactions in Q4-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 first quarter 2024 guidance range for
GMV is expected to exceed the same quarter last year. This fiscal
first quarter GMV guidance range is also consistent with our
historical seasonal trends, where our fiscal first quarter results
typically decline sequentially compared to the fiscal fourth
quarter of the prior year. Consistent with prior year trends,
operating expenses increase in the fiscal first quarter while our
operating leverage typically improves during the second half of our
fiscal year.
For the fiscal first quarter, GovDeals is
expecting year-over-year growth that includes improved availability
of vehicles for sale while it faced headwinds in that category last
year. CAG is also expecting a solid year-over-year improvement in
GMV from selected global industrial projects, while revenue is
expected to increase at a lower rate than GMV as selected CAG
projects are being conducted with partner organizations this year.
The RSCG segment is currently receiving a higher volume of
lower-value products than last year, while the broader consumer
demand for retail goods has softened. This current dynamic in our
RSCG segment is reflected in our profit guidance ranges for this
fiscal first quarter of 2024.
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 segment 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,
market share gains and long-term growth.
For Q1-FY24 our guidance is as follows:
GMV - We expect GMV to range from $295 million to $325
million.
GAAP Net Income - We expect GAAP Net Income to range from $1.5
million to $4.0 million.
GAAP Diluted EPS - We expect GAAP Diluted EPS to range from
$0.05 to $0.12.
Non-GAAP Adjusted EBITDA -We expect Non-GAAP Adjusted EBITDA to
range from $7.0 million to $10.0 million.
Non-GAAP Adjusted Diluted EPS - We expect Non-GAAP Adjusted EPS
to range from $0.12 to $0.19.
Our Business Outlook includes forward-looking
statements which reflect these trends and assumptions for Q1-FY24
as compared to the prior year's period:
Potential Impacts to GMV, Revenue, Segment
Direct Profits, and ratios calculated using these metrics
- 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
broader changes in consumer sentiment and demand, 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 direct-to-consumer
marketplace;
- continued growth in our Machinio advertising subscription
service and acceptance of other Machinio service offerings;
Potential Impacts to Operating Expenses
- 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;
Potential Impacts to GAAP Net Income and EPS and
Non-GAAP Adjusted Net Income and Adjusted EPS
- our Q1-FY24 effective tax rate (ETR) is expected to range from
approximately 28% to 34% and our full fiscal year FY24 ETR is
expected to range from 26% to 32%. This range excludes any
potential impacts from legislative changes to U.S. corporate tax
rates that may be enacted; 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 expecting an increase in
cash paid for income taxes in FY24 as our remaining net operating
loss carryforward position is used; and
- our diluted weighted average number of shares outstanding is
expected to be approximately 32.0 million. As of September 30,
2023, we have $17.0 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 EndedSeptember 30, |
Twelve Months EndedSeptember 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income |
|
$ |
6,279 |
|
|
$ |
8,345 |
|
|
$ |
20,978 |
|
|
$ |
40,324 |
|
Interest and other (income)
expense, net(1) |
|
|
(1,161 |
) |
|
|
(88 |
) |
|
|
(2,859 |
) |
|
|
126 |
|
Provision for income taxes |
|
|
2,774 |
|
|
|
3,075 |
|
|
|
8,039 |
|
|
|
7,329 |
|
Depreciation and
amortization |
|
|
2,821 |
|
|
|
2,776 |
|
|
|
11,255 |
|
|
|
10,322 |
|
Non-GAAP EBITDA |
|
$ |
10,713 |
|
|
$ |
14,108 |
|
|
$ |
37,412 |
|
|
$ |
58,101 |
|
Stock compensation expense |
|
|
1,975 |
|
|
|
2,325 |
|
|
|
8,191 |
|
|
|
8,482 |
|
Acquisition costs and impairment
of goodwill and long-lived and other non-current assets(2) |
|
|
69 |
|
|
|
179 |
|
|
|
252 |
|
|
|
473 |
|
Business realignment
expenses(2,3) |
|
|
— |
|
|
|
191 |
|
|
|
— |
|
|
|
191 |
|
Fair value adjustments to
acquisition earn-outs |
|
|
— |
|
|
|
(4,500 |
) |
|
|
— |
|
|
|
(24,500 |
) |
Non-GAAP Adjusted EBITDA |
|
$ |
12,757 |
|
|
$ |
12,303 |
|
|
$ |
45,855 |
|
|
$ |
42,747 |
|
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 expenses, net on
the Consolidated Statements of Operations. 3 Business realignment
expenses include the amounts accounted for as exit costs under ASC
420, and the related impacts of business realignment actions
subject to other accounting guidance.
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 Non-GAAP Adjusted Net Income. For Q4-FY23, the tax rate used
to estimate the impact of income taxes on the non-GAAP adjustments
was 28% compared to 32% used for the Q4-FY22 results. These tax
rates exclude the impacts of the fair value adjustments to
acquisition 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 EndedSeptember 30, |
|
|
Twelve Months EndedSeptember 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income |
|
$ |
6,279 |
|
|
$ |
8,345 |
|
|
$ |
20,978 |
|
|
$ |
40,324 |
|
Stock compensation
expense |
|
|
1,975 |
|
|
|
2,325 |
|
|
|
8,191 |
|
|
|
8,482 |
|
Intangible asset
amortization |
|
|
846 |
|
|
|
1,005 |
|
|
|
3,791 |
|
|
|
3,740 |
|
Acquisition costs and
impairment of long-lived and other non-current assets* |
|
|
69 |
|
|
|
179 |
|
|
|
252 |
|
|
|
473 |
|
Business realignment
expenses |
|
|
— |
|
|
|
191 |
|
|
|
— |
|
|
|
191 |
|
Fair value adjustment of
acquisition earn-outs |
|
|
— |
|
|
|
(4,500 |
) |
|
|
— |
|
|
|
(24,500 |
) |
Income tax impact on the
adjustment items |
|
|
(801 |
) |
|
|
(1,173 |
) |
|
|
(3,389 |
) |
|
|
(4,085 |
) |
Non-GAAP Adjusted net
income |
|
$ |
8,368 |
|
|
$ |
6,372 |
|
|
$ |
29,823 |
|
|
$ |
24,625 |
|
Non-GAAP Adjusted basic
earnings per common share |
|
$ |
0.27 |
|
|
$ |
0.20 |
|
|
$ |
0.96 |
|
|
$ |
0.76 |
|
Non-GAAP Adjusted diluted
earnings per common share |
|
$ |
0.26 |
|
|
$ |
0.19 |
|
|
$ |
0.93 |
|
|
$ |
0.73 |
|
Basic weighted average shares
outstanding |
|
|
30,576,142 |
|
|
|
31,731,111 |
|
|
|
31,075,648 |
|
|
|
32,292,978 |
|
Diluted weighted average
shares outstanding |
|
|
31,749,902 |
|
|
|
33,072,803 |
|
|
|
32,074,561 |
|
|
|
33,719,424 |
|
* 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
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 December 7, 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 geopolitical events, including armed
conflicts in Ukraine, in and adjacent to Israel, and elsewhere; and
impacts from escalating interest rates and inflation on the
Company’s operations; the operations of customers, project size and
timing of auctions, operating costs, and general economic
conditions; 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, 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 other the risks and uncertainties set forth in the Company’s
Annual Report on Form 10-K for the year ended September 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) |
|
|
|
September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
110,281 |
|
|
|
$ |
96,122 |
|
Short-term investments |
|
|
7,891 |
|
|
|
|
1,819 |
|
Accounts receivable, net of allowance for doubtful accounts of
$1,424 and $449 |
|
|
7,848 |
|
|
|
|
11,792 |
|
Inventory, net |
|
|
11,116 |
|
|
|
|
11,679 |
|
Prepaid taxes and tax refund receivable |
|
|
1,783 |
|
|
|
|
1,631 |
|
Prepaid expenses and other current assets |
|
|
7,349 |
|
|
|
|
6,551 |
|
Total current assets |
|
|
146,268 |
|
|
|
|
129,594 |
|
Property and equipment, net |
|
|
17,156 |
|
|
|
|
19,094 |
|
Operating lease assets |
|
|
9,888 |
|
|
|
|
13,207 |
|
Intangible assets, net |
|
|
12,457 |
|
|
|
|
16,234 |
|
Goodwill |
|
|
89,388 |
|
|
|
|
88,910 |
|
Deferred tax assets |
|
|
7,050 |
|
|
|
|
13,628 |
|
Other assets |
|
|
6,762 |
|
|
|
|
7,437 |
|
Total assets |
|
$ |
288,970 |
|
|
|
$ |
288,104 |
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
39,115 |
|
|
|
$ |
41,982 |
|
Accrued expenses and other current liabilities |
|
|
23,809 |
|
|
|
|
23,304 |
|
Current portion of operating lease liabilities |
|
|
4,101 |
|
|
|
|
4,540 |
|
Deferred revenue |
|
|
4,701 |
|
|
|
|
4,439 |
|
Payables to sellers |
|
|
48,992 |
|
|
|
|
49,238 |
|
Total current liabilities |
|
|
120,718 |
|
|
|
|
123,503 |
|
Operating lease liabilities |
|
|
6,581 |
|
|
|
|
9,687 |
|
Other long-term liabilities |
|
|
137 |
|
|
|
|
378 |
|
Total liabilities |
|
|
127,436 |
|
|
|
|
133,568 |
|
Commitments and contingencies
(Note 15) |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Common stock, $0.001 par value;
120,000,000 shares authorized; 36,142,346 shares issued and
outstanding at September 30, 2023; 35,724,057 shares issued and
outstanding at September 30, 2022 |
|
|
36 |
|
|
|
|
36 |
|
Additional paid-in capital |
|
|
265,945 |
|
|
|
|
258,275 |
|
Treasury stock, at cost; 5,433,045 shares at September 30, 2023,
and 3,813,199 shares at September 30, 2022 |
|
|
(84,031 |
) |
|
|
|
(62,554 |
) |
Accumulated other comprehensive loss |
|
|
(10,457 |
) |
|
|
|
(10,285 |
) |
Accumulated deficit |
|
|
(9,958 |
) |
|
|
|
(30,936 |
) |
Total stockholders’ equity |
|
|
161,533 |
|
|
|
|
154,536 |
|
Total liabilities and
stockholders’ equity |
|
$ |
288,970 |
|
|
|
$ |
288,104 |
|
Liquidity Services and
SubsidiariesUnaudited Condensed Consolidated
Statements of Operations (Dollars in Thousands,
Except Per Share Data) |
|
|
|
Three Months EndedSeptember 30, |
|
|
Twelve Months EndedSeptember 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Purchase revenues |
|
$ |
43,373 |
|
|
$ |
42,162 |
|
|
$ |
172,089 |
|
|
$ |
151,271 |
|
Consignment and other fee
revenues |
|
|
36,584 |
|
|
|
33,040 |
|
|
|
142,373 |
|
|
|
128,779 |
|
Total revenue |
|
|
79,957 |
|
|
|
75,202 |
|
|
|
314,462 |
|
|
|
280,050 |
|
Costs and expenses from
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (excludes depreciation and amortization) |
|
|
34,982 |
|
|
|
33,745 |
|
|
|
142,322 |
|
|
|
119,407 |
|
Technology and operations |
|
|
13,655 |
|
|
|
13,949 |
|
|
|
57,078 |
|
|
|
55,522 |
|
Sales and marketing |
|
|
13,731 |
|
|
|
11,007 |
|
|
|
49,443 |
|
|
|
43,224 |
|
General and administrative |
|
|
6,832 |
|
|
|
6,610 |
|
|
|
28,074 |
|
|
|
28,282 |
|
Depreciation and amortization |
|
|
2,821 |
|
|
|
2,776 |
|
|
|
11,255 |
|
|
|
10,322 |
|
Fair value adjustment of acquisition earn-outs |
|
|
— |
|
|
|
(4,500 |
) |
|
|
— |
|
|
|
(24,500 |
) |
Other operating expenses, net |
|
|
58 |
|
|
|
370 |
|
|
|
186 |
|
|
|
388 |
|
Total costs and expenses |
|
|
72,079 |
|
|
|
63,957 |
|
|
|
288,358 |
|
|
|
232,645 |
|
Income from operations |
|
|
7,878 |
|
|
|
11,245 |
|
|
|
26,105 |
|
|
|
47,405 |
|
Interest and other income,
net |
|
|
(1,175 |
) |
|
|
(175 |
) |
|
|
(2,912 |
) |
|
|
(248 |
) |
Income before provision for
income taxes |
|
|
9,053 |
|
|
|
11,420 |
|
|
|
29,016 |
|
|
|
47,653 |
|
Provision (benefit) for income
taxes |
|
|
2,774 |
|
|
|
3,075 |
|
|
|
8,039 |
|
|
|
7,329 |
|
Net income |
|
$ |
6,279 |
|
|
$ |
8,345 |
|
|
$ |
20,978 |
|
|
$ |
40,324 |
|
Basic income per common
share |
|
$ |
0.21 |
|
|
$ |
0.26 |
|
|
$ |
0.68 |
|
|
$ |
1.25 |
|
Diluted income per common
share |
|
$ |
0.20 |
|
|
$ |
0.25 |
|
|
$ |
0.65 |
|
|
$ |
1.20 |
|
Basic weighted average shares
outstanding |
|
|
30,576,142 |
|
|
|
31,731,111 |
|
|
|
31,075,648 |
|
|
|
32,292,978 |
|
Diluted weighted average shares
outstanding |
|
|
31,749,902 |
|
|
|
33,072,803 |
|
|
|
32,074,561 |
|
|
|
33,719,424 |
|
Liquidity Services and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash
Flows (Dollars in Thousands) |
|
|
|
Year Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
Operating
activities |
|
|
|
|
|
|
Net income |
|
$ |
20,978 |
|
|
$ |
40,324 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
11,255 |
|
|
|
10,322 |
|
Change in fair value of earn-out liability |
|
|
— |
|
|
|
(24,500 |
) |
Stock compensation expense |
|
|
8,191 |
|
|
|
8,482 |
|
Inventory adjustment to net realizable value |
|
|
1,048 |
|
|
|
194 |
|
Provision for doubtful accounts |
|
|
1,390 |
|
|
|
136 |
|
Deferred tax expense (benefit) |
|
|
6,578 |
|
|
|
6,287 |
|
Impairment of long-lived and other non-current assets |
|
|
— |
|
|
|
31 |
|
(Gain) loss on disposal of property and equipment |
|
|
(36 |
) |
|
|
(14 |
) |
Gain on disposal of lease assets |
|
|
— |
|
|
|
(240 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
2,725 |
|
|
|
(6,290 |
) |
Inventory |
|
|
(479 |
) |
|
|
441 |
|
Prepaid taxes and tax refund receivable |
|
|
(152 |
) |
|
|
82 |
|
Prepaid expenses and other assets |
|
|
(1,166 |
) |
|
|
(1,805 |
) |
Operating lease assets and liabilities |
|
|
(228 |
) |
|
|
396 |
|
Accounts payable |
|
|
(2,889 |
) |
|
|
1,548 |
|
Accrued expenses and other current liabilities |
|
|
277 |
|
|
|
(2,653 |
) |
Deferred revenue |
|
|
262 |
|
|
|
(185 |
) |
Payables to sellers |
|
|
(581 |
) |
|
|
13,000 |
|
Other liabilities |
|
|
(157 |
) |
|
|
(723 |
) |
Net cash provided by operating
activities |
|
|
47,016 |
|
|
|
44,833 |
|
Investing
activities |
|
|
|
|
|
|
Purchases of property and
equipment, including capitalized software |
|
|
(5,386 |
) |
|
|
(8,121 |
) |
Purchase of short-term
investments |
|
|
(8,037 |
) |
|
|
(1,820 |
) |
Maturities of short-term
investments |
|
|
1,923 |
|
|
|
— |
|
Cash paid for business
acquisition, net of cash acquired |
|
|
— |
|
|
|
(11,164 |
) |
Other investing activities,
net |
|
|
68 |
|
|
|
21 |
|
Net cash used in investing
activities |
|
|
(11,432 |
) |
|
|
(21,084 |
) |
Financing
activities |
|
|
|
|
|
|
Payments of the principal portion
of finance lease liabilities |
|
|
(101 |
) |
|
|
(99 |
) |
Payments of debt issuance
costs |
|
|
— |
|
|
|
(91 |
) |
Proceeds from exercise of common
stock options, net of tax |
|
|
496 |
|
|
|
— |
|
Taxes paid associated with net
settlement of stock compensation awards |
|
|
(1,262 |
) |
|
|
(2,806 |
) |
Payment of earn-out liability
related to business acquisition |
|
|
— |
|
|
|
(3,500 |
) |
Common stock repurchases |
|
|
(21,198 |
) |
|
|
(25,447 |
) |
Net cash used in financing
activities |
|
|
(22,065 |
) |
|
|
(31,943 |
) |
Effect of exchange rate
differences on cash and cash equivalents |
|
|
640 |
|
|
|
(2,019 |
) |
Net increase (decrease) in cash
and cash equivalents |
|
|
14,159 |
|
|
|
(10,213 |
) |
Cash and cash equivalents at
beginning of year |
|
|
96,122 |
|
|
|
106,335 |
|
Cash and cash equivalents at end
of year |
|
$ |
110,281 |
|
|
$ |
96,122 |
|
Supplemental disclosure
of cash flow information |
|
|
|
|
|
|
Cash paid for income taxes,
net |
|
$ |
1,590 |
|
|
$ |
885 |
|
Non-cash: Common stock
surrendered in the exercise of stock options |
|
$ |
200 |
|
|
$ |
479 |
|
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