Liquidity Services (NASDAQ: LQDT; www.liquidityservices.com), a
global solution provider in the reverse supply chain with the
world’s largest marketplace for business surplus, today announced
financial results for the third quarter fiscal year 2019 ended June
30, 2019. The Company's Q3-FY19 performance was within the guidance
range for GAAP Net Loss, GAAP EPS, and Gross Merchandise Volume
(GMV) and exceeded our guidance range for Non-GAAP Adjusted EBITDA
and Non-GAAP Adjusted EPS.
"The continued execution of our RISE strategy,
focused on recovery maximization, increasing sales, service
expansion and expense leverage, delivered another solid quarter as
Q3-FY19 marked our fifth consecutive quarter of organic GMV
year-over-year growth. During Q3-FY19, we generated GAAP Net
Loss of $4.6 million, a $0.9 million decrease from the prior year's
quarter. We generated Non-GAAP Adjusted EBITDA of $0.2 million,
above our guidance and our second sequential quarter of positive
Non-GAAP Adjusted EBITDA. These improvements were driven by higher
volumes within our GovDeals and Retail Supply Chain Group (RSCG)
segments, combined with more effective merchandising which drove
higher recovery on asset sales and lower operating expenses. As
previously announced, we are winding down our Scrap contract within
the Capital Assets Group (CAG) segment which will affect
comparative results going forward. Our RSCG segment GMV grew 18%
during the quarter driven by higher volumes within existing and new
accounts and strong buyer participation in our retail marketplace.
Our GovDeals segment GMV grew 6%, despite a strong comparative
period in Q3-FY18. These results were partly offset by our CAG
segment GMV which declined 14% from the prior year period because
of a change in mix of lower value assets within our Scrap Contract
with the U.S. Department of Defense and a strong prior year
comparative quarter," said Bill Angrick, Chairman and CEO of
Liquidity Services.
Today, we also announced the deployment of our
new core e-commerce technology platform, which combined with our
reorganization announced last quarter, marks the completion of our
LiquidityOne strategic initiative. As we announced earlier in 2019,
the retail supply transaction volume, which has a unique set of
services, remains part of our future integration plans. We continue
to focus on our marketing technology stack to support our
consolidated marketplace launch.
Benefits of our core e-commerce platform include:
- a new global taxonomy to classify and present assets for sale
consistently across our businesses;
- a new mobile responsive design with enhanced usability and
speed;
- improved search and navigation by industry vertical, location
and other parameters;
- a new My Account tool to manage transaction activity; and
- multilingual and multi-currency capabilities to support
cross-border commerce.
With this deployment and new organization in
place, we have unified our marketing, customer service, sales and
operations teams. Our completed LiquidityOne strategic initiative
empowers the continuous improvement of our e‑commerce technology
platform and our marketing and data analytics capabilities going
forward.
This includes the integration of a data driven
product recommendation engine, omni-channel behavioral marketing
and predictive analytics. Additionally, we are now able to provide
a unified set of common services ranging from self-directed to
fully-managed services. We believe our commitment to our RISE
strategy will fuel continued growth and enhanced financial leverage
in our business over the long term, which, in turn, will create
value for our shareholders.
We are also pleased to announce the appointment
of Steven Weiskircher as our new Chief Technology Officer based in
our Bethesda, MD headquarters. Most recently, Mr. Weiskircher
served as Vice President, Omnichannel, Marketing, and Digital
Technology Delivery for GameStop (NYSE:GME). Previously, he served
as the CIO and interim General Manager for ThinkGeek, an online
retailer for pop-culture apparel and collectibles and as CIO for
Fanatics, a high growth online retailer of sports apparel. Mr.
Weiskircher holds a B.S. in Mechanical Engineering from Virginia
Tech and an M.S. in Management Information Systems from University
of Virginia’s McIntire School of Commerce. Mr. Weiskircher also
served as a Captain in the US Army Signal Corps.
“Steve is a terrific addition to our leadership
team and possesses strong business acumen, outstanding leadership
experience and an impressive understanding of e-commerce technology
with significant expertise in the marketing technology stack,
mobile apps and supporting high growth, billion-dollar scale
e-commerce businesses. This appointment supports the continued
execution of our RISE strategy as we continue to enhance our
marketplace over time, while adapting to new opportunities to serve
our sellers and buyers,” said Bill Angrick, Chairman and CEO of
Liquidity Services.
Third Quarter Consolidated Operating and
Earnings ResultsThe Company reported Q3-FY19 GMV of $168.1
million, up from $163.6 million in the prior year’s comparable
period. GMV is an operating measure of the total sales value of all
merchandise sold by us or our sellers through our marketplaces and
other channels during a given period of time. GAAP Revenue for
Q3-FY19 was $56.9 million, up from $50.6 million in the prior
period. GMV was up 3% and GAAP Revenue was up 12% compared to the
prior year. GAAP Net Loss for Q3-FY19 was $4.6 million, which
resulted in a diluted loss per share of $0.14 based on a weighted
average of 33.2 million diluted shares outstanding, compared to
GAAP Net Loss of $3.7 million and $0.12 respectively, in the prior
period. Non-GAAP adjusted net loss, which excludes stock
compensation expense, impairment and business realignment expenses,
acquisition costs, deferred revenue purchase accounting
adjustments, and the estimated impact of income taxes on these
Non-GAAP adjustments and non-recurring tax adjustments, was $1.5
million or $0.05 adjusted diluted loss per share, an improvement in
Non-GAAP adjusted net loss compared to the prior period of $2.3
million and $0.07 adjusted diluted loss per share.
Non-GAAP Adjusted EBITDA, which excludes
stock-based compensation expense, acquisition costs such as
transaction expenses and changes in earn-out estimates, business
realignment expense, deferred revenue purchase accounting
adjustments, and goodwill and long-lived asset impairment, was
$0.21 million, an improvement from a loss in the same period last
year of $0.23 million, representing a $0.44 million
improvement.
Q3-FY19 comparative year-over-year consolidated financial
results reflect double-digit GMV growth in our RSCG segment, as we
grew volumes and programs with existing and new seller accounts,
and GMV growth in our GovDeals segment as we added new sellers.
Excluding our DoD Scrap contract, our commercial activity in the
CAG segment declined 12% as compared to a strong performance in our
European and Asia Pacific regions in the comparative quarter. We
also incurred lower expenses due to the closure of our IronDirect
business and benefits from restructuring our CAG segment, corporate
functions and other organizational changes.
Q3 Quarter Segment Operating and Earnings
ResultsWe present operating results in four reportable
segments: GovDeals, CAG, RSCG, and Machinio. Our reportable
segments constitute approximately 99% of our revenue, and each
offers separately branded marketplaces to enable sellers to achieve
channel marketing objectives to reach buyers. Across our segments,
we offer our sellers various pricing and transaction models and a
suite of services, and our revenues vary depending upon the pricing
models employed and the level of service selected by sellers.
Our Q3-FY19 segment results are as
follows (unaudited, in millions):
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
GovDeals1: |
|
|
|
|
|
|
|
GMV |
$ |
90.9 |
|
|
$ |
85.4 |
|
|
$ |
244.6 |
|
|
$ |
226.0 |
Revenue |
$ |
9.3 |
|
|
$ |
8.4 |
|
|
$ |
24.6 |
|
|
$ |
22.6 |
Gross profit |
$ |
8.6 |
|
|
$ |
7.8 |
|
|
$ |
22.7 |
|
|
$ |
20.9 |
|
|
|
|
|
|
|
|
CAG2: |
|
|
|
|
|
|
|
GMV |
$ |
37.7 |
|
|
$ |
43.8 |
|
|
$ |
120.1 |
|
|
$ |
144.0 |
Revenue |
$ |
14.9 |
|
|
$ |
15.0 |
|
|
$ |
44.1 |
|
|
$ |
72.2 |
Gross profit |
$ |
7.8 |
|
|
$ |
9.9 |
|
|
$ |
25.3 |
|
|
$ |
40.0 |
|
|
|
|
|
|
|
|
RSCG: |
|
|
|
|
|
|
|
GMV |
$ |
39.6 |
|
|
$ |
33.6 |
|
|
$ |
116.9 |
|
|
$ |
97.9 |
Revenue |
$ |
31.3 |
|
|
$ |
26.3 |
|
|
$ |
94.7 |
|
|
$ |
73.7 |
Gross profit |
$ |
10.9 |
|
|
$ |
9.3 |
|
|
$ |
32.7 |
|
|
$ |
24.6 |
|
|
|
|
|
|
|
|
Machinio: |
|
|
|
|
|
|
|
GMV |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
Revenue |
$ |
1.5 |
|
|
$ |
— |
|
|
$ |
3.8 |
|
|
$ |
— |
Gross profit |
$ |
1.4 |
|
|
$ |
— |
|
|
$ |
3.5 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
Corporate &
Other3: |
|
|
|
|
|
|
|
GMV |
$ |
— |
|
|
$ |
0.8 |
|
|
$ |
0.5 |
|
|
$ |
3.3 |
Revenue |
$ |
— |
|
|
$ |
0.8 |
|
|
$ |
0.5 |
|
|
$ |
3.3 |
Gross profit |
$ |
— |
|
|
$ |
0.1 |
|
|
$ |
0.1 |
|
|
$ |
(0.7 |
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
GMV |
$ |
168.1 |
|
|
$ |
163.6 |
|
|
$ |
482.1 |
|
|
$ |
471.1 |
Revenue |
$ |
56.9 |
|
|
$ |
50.6 |
|
|
$ |
167.7 |
|
|
$ |
171.8 |
Gross profit |
$ |
28.6 |
|
|
$ |
27.1 |
|
|
$ |
84.2 |
|
|
$ |
84.9 |
1GovDeals consists of the state and municipal
government business and the AuctionDeals self-directed marketplace
for commercial sellers.2CAG consists of our energy and industrial
commercial verticals, our DoD Surplus contract (included in FY18
results), and our DoD Scrap contract.3Corporate & Other
primarily consists of the Company's former IronDirect operating
segment, which was wound-down in January 2019, and is not
individually significant, and elimination adjustments.
Additional Third Quarter 2019 Operational
Results
- Registered Buyers — At the end of Q3-FY19, registered buyers
totaled approximately 3,627,000, representing a 10.7% increase over
the approximately 3,275,000 registered buyers at the end of
Q3-FY18.
- 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),
increased to approximately 528,000 in Q3-FY19, a 3.1% increase from
the approximately 512,000 auction participants in
Q3-FY18.
- Completed Transactions — Completed transactions increased to
approximately 160,000, a 10.3% increase for Q3-FY19 from the
approximately 145,000 completed transactions in Q3-FY18.
Business OutlookWe anticipate that we will
continue to drive year-over-year GMV growth in Q4-FY19 through
recovery maximization, increased volumes and service expansion
across our RSCG and GovDeals segments. We expect our CAG segment
GMV to face headwinds in Q4-FY19 when compared to last year's
comparative period which had strong activity within key seller
accounts in its commercial business in North America and as we wind
down the Scrap contract. We expect our Adjusted EBITDA will
continue to show growth when compared to the same quarter last
year, despite higher overall sales and marketing expense as we
benefit from our focus on our RISE growth strategy.
These forward-looking statements reflect the
trends and assumptions for Q4-FY19 compared to the prior year
comparable period:
- continued spending as we prepare for the launch of a new
consolidated marketplace and for the implementation of tools for
data-driven product recommendation, omni-channel behavioral
marketing and predictive analytics;
- benefits from restructuring and business realignment activities
to streamline our organizational processes;
- variability in project size and timing within our CAG
segment;
- declining volumes as we wind down the DoD Scrap contract in our
CAG segment;
- continued growth in our GovDeals segment;
- continued growth in our RSCG segment; and
- variability in our GMV to Revenue ratio based on mix of pricing
model and adoption of service fee model.
For Q4-FY19 our guidance is as follows:
GMV - We expect GMV for Q4-FY19 to range from
$150 million to $170 million.
GAAP Net Loss - We expect GAAP Net Loss for
Q4-FY19 to range from $(4.8) million to $(2.3) million.
GAAP Diluted EPS - We expect GAAP Diluted Loss
Per Share for Q4-FY19 to range from $(0.15) to $(0.07).
Non-GAAP Adjusted EBITDA - We expect non-GAAP
Adjusted EBITDA for Q4-FY19 to range from $(1.5) million to $0.5
million.
Non-GAAP Adjusted Diluted EPS - We expect
non-GAAP Adjusted Loss Per Diluted Share for Q4-FY19 to range from
$(0.11) to $(0.04).
This guidance assumes a diluted weighted average
number of shares outstanding for the quarter of 33.2 million and
that we will not repurchase shares during the quarter with the
approximately $10.1 million available under the share repurchase
program.
Liquidity
ServicesReconciliation 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 loss plus interest and other expense,
net; provision (benefit) 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-based compensation expense, acquisition costs such as
transaction expenses and changes in earn-out estimates, business
realignment expense, deferred revenue purchase accounting
adjustments, and goodwill and long-lived asset impairment.
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
(In thousands) (Unaudited) |
Net loss |
$ |
(4,649 |
) |
|
$ |
(3,705 |
) |
|
$ |
(14,033 |
) |
|
$ |
(10,572 |
) |
Interest and other income,
net1 |
(368 |
) |
|
(47 |
) |
|
(976 |
) |
|
(776 |
) |
Provision (benefit) for income
taxes |
542 |
|
|
612 |
|
|
1,136 |
|
|
(3,824 |
) |
Depreciation and
amortization |
1,206 |
|
|
1,020 |
|
|
3,575 |
|
|
3,375 |
|
EBITDA |
(3,269 |
) |
|
(2,120 |
) |
|
(10,298 |
) |
|
(11,797 |
) |
Stock compensation expense2 |
1,362 |
|
|
1,436 |
|
|
5,456 |
|
|
4,134 |
|
Acquisition costs and impairment
of long-lived assets3 |
52 |
|
|
204 |
|
|
171 |
|
|
204 |
|
Business realignment
expenses4 |
1,055 |
|
|
249 |
|
|
1,095 |
|
|
2,073 |
|
Fair value adjustments to
acquisition earn-outs3 |
900 |
|
|
— |
|
|
2,300 |
|
|
— |
|
Deferred revenue purchase
accounting adjustment |
110 |
|
|
— |
|
|
800 |
|
|
— |
|
Adjusted EBITDA |
$ |
210 |
|
|
$ |
(231 |
) |
|
$ |
(476 |
) |
|
$ |
(5,386 |
) |
1 Interest and other income, net excludes non-services pension and
other post-retirement benefit expense. |
2 Excludes the impact of forfeitures of stock awards by employees
terminated by business realignment actions. That impact is included
in the business realignment expenses line. |
3 Acquisition costs and impairment of long-lived assets, and fair
value adjustments to acquisition earn-outs, which are excluded from
Adjusted EBITDA, are included in Other operating expenses on the
Statements of Operations. |
4 Business realignment expense includes the amounts accounted for
as exit costs under ASC 420 as described in Note 11 to the
Consolidated Financial Statements, and the related impacts of
business realignment actions subject to other accounting
guidance. Those related impacts were $317 thousand for the
three and nine months ended June 30, 2019, primarily due to
forfeitures of stock awards by terminated employees. No
related impacts were associated with the other periods
presented. |
|
Non-GAAP Adjusted Net Loss and Non-GAAP Adjusted Basic and
Diluted Earnings Per Share. Non-GAAP Adjusted Net Loss is a
supplemental non-GAAP financial measure and is equal to net loss
plus stock compensation expense, impairment and business
realignment expenses, acquisition costs, deferred revenue purchase
accounting adjustments, and the estimated impact of income taxes on
these non-GAAP adjustments and non-recurring tax adjustments.
Adjusted basic and diluted loss per share are determined using
Non-GAAP Adjusted Net Loss. For Q3-FY19 the tax rate used to
estimate the impact of income taxes on the non-GAAP adjustments was
10.5% compared to 23.7% used for the Q3-FY18 results. The 10.5% tax
rate excludes the impact of the charge to our U.S. valuation
allowance.
|
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
(Unaudited)(Dollars in thousands, except per share data) |
Net loss |
$ |
(4,649 |
) |
|
$ |
(3,705 |
) |
|
$ |
(14,033 |
) |
|
$ |
(10,572 |
) |
Stock compensation
expense |
1,362 |
|
|
1,436 |
|
|
5,456 |
|
|
4,134 |
|
Acquisition costs and
impairment of long-lived assets* |
52 |
|
|
204 |
|
|
171 |
|
|
204 |
|
Business realignment
expenses* |
1,055 |
|
|
249 |
|
|
1,095 |
|
|
2,073 |
|
Fair value adjustment to
acquisition earn-outs* |
900 |
|
|
— |
|
|
2,300 |
|
|
— |
|
Deferred revenue purchase
accounting adjustment |
110 |
|
|
— |
|
|
800 |
|
|
— |
|
Income tax impact of
adjustments |
(365 |
) |
|
(448 |
) |
|
(1,031 |
) |
|
(1,519 |
) |
Income tax impact of tax law
change |
— |
|
|
— |
|
|
— |
|
|
(5,169 |
) |
Adjusted net loss |
$ |
(1,535 |
) |
|
$ |
(2,264 |
) |
|
$ |
(5,242 |
) |
|
$ |
(10,849 |
) |
Adjusted basic loss per common
share |
$ |
(0.05 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.34 |
) |
Adjusted diluted loss per
common share |
$ |
(0.05 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.34 |
) |
Basic weighted average shares
outstanding |
33,164,750 |
|
|
32,104,368 |
|
|
32,986,040 |
|
|
31,984,222 |
|
Diluted weighted average
shares outstanding |
33,164,750 |
|
|
32,104,368 |
|
|
32,986,040 |
|
|
31,984,222 |
|
|
*Acquisition
costs and impairment of long-lived assets, business realignment
expenses, and fair value adjustments to acquisition earn-outs,
which are excluded from Adjusted EBITDA, are included in Other
operating expenses on the Statements of Operations. |
|
Q3-FY19 Conference CallThe Company will host a
conference call to discuss this quarter's results at 10:30 a.m.
Eastern Time today. Investors and other interested parties may
access the teleconference by dialing (844) 795-4614 or (661)
378-9639 and providing conference identification number 1744968. A
live web cast of the conference call will be provided on the
Company's investor relations website at
http://investors.liquidityservices.com. An archive of the web cast
will be available on the Company's website until August 1, 2020 at
11:59 p.m. ET. An audio replay of the teleconference will also be
available until August 15, 2019 at 11:59 p.m. ET. To listen to the
replay, dial (855) 859-2056 or (404) 537-3406 and provide
conference identification number 1744968. Both replays will be
available starting at 1:30 p.m. ET 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 Loss and
Adjusted Earnings 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 EPS is the result of our adjusted net loss and diluted
shares outstanding.
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 are not providing a reconciliation of our
guidance for Non-GAAP Adjusted EBITDA and Non-GAAP Adjusted EBITDA
EPS to our guidance for GAAP Net Loss and GAAP Diluted EPS,
respectively, because this reconciliation would require us to make
projections regarding the amount of stock-based compensation
expense and benefit for income taxes, which are reconciling items
between GAAP Net Loss and Adjusted EBITDA, as well as the impact of
foreign currency fluctuations. These items will impact net income
and are out of our control and/or cannot be reasonably predicted
due to their high variability and complexity, and inherent
uncertainty. For example, equity compensation expense would be
difficult to predict because it depends on our future hiring and
retention needs, as well as the future fair market value of our
common stock, all of which are subject to constant change. As a
result, the reconciliation is not possible without unreasonable
efforts. In addition, we believe such reconciliations could imply a
degree of precision that might be confusing or misleading to
investors. The actual effect of the reconciling items that we
exclude from Adjusted EBITDA, when determined, may be significant
to the calculation of GAAP Net Loss. As a result, there can
be no assurance that such reconciling items will not materially
affect our future GAAP Net Loss or GAAP Diluted EPS.
Supplemental Operating DataTo
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 StatementsThis
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 and RISE
strategy; the launch of a new consolidated marketplace on our core
e-commerce technology platform; the migration of our retail
marketplace to our core e-commerce technology platform; expected
benefits of the LiquidityOne transformation initiative; 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. 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, regional or general economic downturn or crisis and any
conditions that affect e-commerce growth or cross-border trade; the
company's need to successfully react to the increasing importance
of mobile commerce; digital marketing and data analytics; our
dependence on our contract with Amazon for a significant portion of
our inventory; variability in business-related to mix, timing, and
volume of supply; speed of recovery following natural disasters and
severe weather; intense competition in our lines of business; our
ability to successfully expand the supply of merchandise available
for sale on our online marketplaces; our ability to attract and
retain active professional buyers to purchase this merchandise; the
timing and success of upgrades to our technology infrastructure;
our ability to successfully integrate the Machinio operations with
our business and realize the anticipated benefits; our management
reorganization and our ability to retain key employees; business
realignment costs related to severance and relocation of offices
and facilities; our ability to attract and retain key employees;
our ability to raise additional capital as and when required; our
ability to timely upgrade and develop its technology systems,
infrastructure and customer service capabilities at reasonable cost
while maintaining site stability and performance and adding new
products and features; our ability to enhance and improve our newly
launched e‑commerce technology platform and support services
provided on this platform in a timely manner, our ability to price
services to meet market demand; our reliance on third-party
technology, such as Microsoft Azure cloud computing services and
Oracle Fusion for enterprise resource planning and disruption to
these cloud services or our ability to continue to license these
cloud services to run our business or our ability to successfully
configure these services to our business needs could expose us to
performance claims as well as cause significant harm to our brand
and reputation, which could impact our future sales; and the
success of our RISE strategy, including the success of the launch
of our anticipated consolidated marketplace, the implementation of
the marketing-tech-enhanced improvements to this marketplace and
the realization of anticipated benefits from these actions; and the
risks and uncertainties set forth in the Company's Annual Report on
Form 10-K for the year ended September 30, 2018, which is 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 ServicesLiquidity
Services (NASDAQ: LQDT) operates a network of leading e-commerce
marketplaces that enable buyers and sellers to transact in an
efficient, automated environment offering over 500 product
categories. The Company employs innovative e-commerce marketplace
solutions to manage, value and sell inventory and equipment for
business and government sellers. Our superior service, unmatched
scale and ability to deliver results enable us to forge trusted,
long-term relationships with over 12,000 sellers worldwide. With
over $8 billion in completed transactions, and over 3.5 million
buyers in almost 200 countries and territories, we are the proven
leader in delivering smart commerce solutions. Visit us at
LiquidityServices.com.
Contact:Julie DavisSenior Director, Investor
Relations202.467.6868 ext.
2234julie.davis@liquidityservices.com
|
Liquidity Services and Subsidiaries |
Consolidated Balance Sheets |
(Dollars in Thousands) |
|
|
June 30, 2019 |
|
September 30, 2018 |
|
|
|
(Unaudited) |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
36,414 |
|
|
$ |
58,448 |
|
Short-term investments |
30,000 |
|
|
20,000 |
|
Accounts receivable, net of allowance for doubtful accounts of $347
and $337 at June 30, 2019 and September 30, 2018, respectively |
5,742 |
|
|
4,870 |
|
Inventory, net |
8,891 |
|
|
10,122 |
|
Prepaid taxes and tax refund receivable |
1,673 |
|
|
1,727 |
|
Prepaid expenses and other current assets |
8,129 |
|
|
7,816 |
|
Total current assets |
90,849 |
|
|
102,983 |
|
Property and equipment, net of
accumulated depreciation of $13,254 and $11,078 at June 30, 2019
and September 30, 2018, respectively |
18,589 |
|
|
16,610 |
|
Intangible assets, net |
6,377 |
|
|
7,366 |
|
Goodwill |
59,685 |
|
|
59,819 |
|
Deferred tax assets |
869 |
|
|
930 |
|
Other assets |
14,299 |
|
|
14,124 |
|
Total assets |
$ |
190,668 |
|
|
$ |
201,832 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
13,289 |
|
|
$ |
13,859 |
|
Accrued expenses and other current liabilities |
24,390 |
|
|
21,373 |
|
Distributions payable |
1,827 |
|
|
2,128 |
|
Deferred revenue |
3,185 |
|
|
2,142 |
|
Payables to sellers |
24,840 |
|
|
28,969 |
|
Total current liabilities |
67,531 |
|
|
68,471 |
|
Deferred taxes and other
long-term liabilities |
2,024 |
|
|
3,707 |
|
Total liabilities |
69,555 |
|
|
72,178 |
|
Commitments and contingencies
(Note 12) |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.001 par value; 120,000,000 shares authorized;
33,498,078 shares issued and outstanding at June 30, 2019;
32,774,118 shares issued and outstanding at September 30, 2018 |
33 |
|
|
33 |
|
Additional paid-in capital |
241,361 |
|
|
236,115 |
|
Accumulated other comprehensive loss |
(6,933 |
) |
|
(6,449 |
) |
Accumulated deficit |
(113,348 |
) |
|
(100,045 |
) |
Total stockholders’ equity |
121,113 |
|
|
129,654 |
|
Total liabilities and
stockholders’ equity |
$ |
190,668 |
|
|
$ |
201,832 |
|
|
|
Liquidity Services and Subsidiaries |
Unaudited Consolidated Statements of
Operations |
(Dollars in Thousands, Except Per Share Data) |
|
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
(Unaudited) |
Revenue |
$ |
36,388 |
|
|
$ |
32,080 |
|
|
$ |
109,478 |
|
|
$ |
115,464 |
|
Fee revenue |
20,494 |
|
|
18,489 |
|
|
58,257 |
|
|
56,345 |
|
Total revenue |
56,882 |
|
|
50,569 |
|
|
167,735 |
|
|
171,809 |
|
Costs and expenses from
operations: |
|
|
|
|
|
|
|
Cost of goods sold (exclusive of depreciation and
amortization) |
25,337 |
|
|
19,489 |
|
|
75,100 |
|
|
75,847 |
|
Seller distributions |
2,994 |
|
|
3,936 |
|
|
8,393 |
|
|
11,107 |
|
Technology and operations |
12,145 |
|
|
13,663 |
|
|
38,098 |
|
|
47,718 |
|
Sales and marketing |
8,771 |
|
|
8,386 |
|
|
26,887 |
|
|
24,921 |
|
General and administrative |
8,959 |
|
|
6,847 |
|
|
26,217 |
|
|
22,056 |
|
Depreciation and amortization |
1,206 |
|
|
1,020 |
|
|
3,575 |
|
|
3,375 |
|
Other operating expenses |
2,031 |
|
|
452 |
|
|
3,586 |
|
|
2,222 |
|
Total costs and expenses |
61,443 |
|
|
53,793 |
|
|
181,856 |
|
|
187,246 |
|
Loss from operations |
(4,561 |
) |
|
(3,224 |
) |
|
(14,121 |
) |
|
(15,437 |
) |
Interest and other income,
net |
(454 |
) |
|
(131 |
) |
|
(1,224 |
) |
|
(1,041 |
) |
Loss before provision (benefit)
for income taxes |
(4,107 |
) |
|
(3,093 |
) |
|
(12,897 |
) |
|
(14,396 |
) |
Provision (benefit) for income
taxes |
542 |
|
|
612 |
|
|
1,136 |
|
|
(3,824 |
) |
Net loss |
$ |
(4,649 |
) |
|
$ |
(3,705 |
) |
|
$ |
(14,033 |
) |
|
$ |
(10,572 |
) |
Basic and diluted loss per common
share |
$ |
(0.14 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.33 |
) |
Basic and diluted weighted
average shares outstanding |
33,164,750 |
|
|
32,104,368 |
|
|
32,986,040 |
|
|
31,984,222 |
|
|
|
Liquidity Services and Subsidiaries |
Unaudited Consolidated Statements of Cash
Flows |
(Dollars in Thousands) |
|
|
Nine Months Ended June 30, |
|
2019 |
|
2018 |
|
|
|
(Unaudited) |
Operating
activities |
|
|
|
Net loss |
$ |
(14,033 |
) |
|
$ |
(10,572 |
) |
Adjustments to reconcile net loss
to net cash (used in) provided by operating activities: |
|
|
|
Depreciation and amortization |
3,575 |
|
|
3,375 |
|
Stock compensation expense |
5,138 |
|
|
4,134 |
|
Provision for inventory allowance |
— |
|
|
2,092 |
|
Provision for doubtful accounts |
184 |
|
|
191 |
|
Deferred tax provision (benefit) |
81 |
|
|
(4,814 |
) |
Gain on disposal of property and equipment |
20 |
|
|
(489 |
) |
Change in fair value of financial instruments |
— |
|
|
90 |
|
Change in fair value of earnout liability |
2,300 |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
(1,056 |
) |
|
5,551 |
|
Inventory |
1,231 |
|
|
5,847 |
|
Prepaid and deferred taxes |
47 |
|
|
197 |
|
Prepaid expenses and other assets |
244 |
|
|
1,938 |
|
Accounts payable |
(570 |
) |
|
3,165 |
|
Accrued expenses and other current liabilities |
(777 |
) |
|
(12,149 |
) |
Distributions payable |
(301 |
) |
|
(842 |
) |
Deferred revenue |
1,043 |
|
|
— |
|
Payables to sellers |
(4,129 |
) |
|
4,542 |
|
Other liabilities |
(222 |
) |
|
(664 |
) |
Net cash (used in) provided by
operating activities |
(7,225 |
) |
|
1,592 |
|
Investing
activities |
|
|
|
Increase in intangibles |
(20 |
) |
|
(23 |
) |
Purchases of property and
equipment, including capitalized software |
(4,784 |
) |
|
(2,697 |
) |
Proceeds from sales of property
and equipment |
112 |
|
|
828 |
|
Purchases of short-term
investments |
(50,000 |
) |
|
(10,000 |
) |
Maturities of short-term
investments |
40,000 |
|
|
— |
|
Net cash used in investing
activities |
(14,692 |
) |
|
(11,892 |
) |
Financing
activities |
|
|
|
Proceeds from exercise of common
stock options |
129 |
|
|
12 |
|
Net cash provided by financing
activities |
129 |
|
|
12 |
|
Effect of exchange rate
differences on cash and cash equivalents |
(246 |
) |
|
(649 |
) |
Net (decrease) increase in cash
and cash equivalents |
(22,034 |
) |
|
(10,937 |
) |
Cash and cash equivalents at
beginning of period |
58,448 |
|
|
94,348 |
|
Cash and cash equivalents at end
of period |
$ |
36,414 |
|
|
$ |
83,411 |
|
Supplemental disclosure
of cash flow information |
|
|
|
Cash paid for income taxes,
net |
$ |
872 |
|
|
$ |
800 |
|
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