Liquidity Services (NASDAQ:LQDT; www.liquidityservices.com), a
leading global commerce company powering the circular economy,
today announced its financial results for the quarter ended March
31, 2024, as compared to the corresponding prior year quarter:
- Gross Merchandise Volume (GMV) of $319.4 million, up 13%, and
Revenue of $91.5 million, up 12%
- GAAP Net Income of $5.7 million, up 35%, and GAAP Diluted
Earnings Per Share (EPS) of $0.18, up 38%
- Non-GAAP Adjusted EBITDA of $12.1 million, up $2.2 million, and
Non-GAAP Adjusted EPS of $0.27, up $0.07
- Cash balances of $117.0 million1 with zero financial debt
"Our marketplace platform and services continue
to delight customers, fueling double digit organic revenue and GMV
growth year-over-year. We are pleased that our balanced investments
in sales, operations and platform automation are being rewarded
across our diversified segments with market share expansion and
record buyer participation on our platform. Our Retail Supply Chain
Group (RSCG) segment set a new quarterly GMV record, powered in
part by the rapidly accelerating growth of our AllSurplus Deals
direct-to-consumer sales channel, which grew its GMV by over 60%
sequentially. Our CAG segment continues to grow its recurring heavy
equipment seller base and completed high value transactions in its
automotive and energy categories. Our Machinio segment achieved
record revenue and paying customer counts driven by improvements to
its online classifieds marketplace which efficiently matches buyers
and sellers of used equipment around the globe. We are also very
excited to welcome Sierra Auction to Liquidity Services and we are
now leveraging its market leading position in the southwest U.S. to
cross-sell its offerings to our government and commercial clients.
We remain enthusiastic about our strategy and the strength of our
business model as we generated $34.8 million in operating cash flow
during the quarter, which was used in part to fund our Sierra
acquisition and share repurchase program. We have a robust business
development pipeline and continue to pursue strategic opportunities
in each segment of the circular economy to drive shareholder value
and provide outstanding service to our customers across the global
supply chain," said Bill Angrick, Liquidity Services, CEO.
Second Quarter Financial
Highlights
GMV for the fiscal second quarter of 2024 was
$319.4 million, a 13% increase from $282.7 million in the second
fiscal quarter of 2023.
- GMV in our CAG segment increased 29%, driven by consignment
sales in our industrial and heavy equipment categories, including
completion of certain sales delayed from the prior quarter and
large international spot purchase transactions.
- GMV in our GovDeals segment increased 11%, driven by increased
availability of vehicles and a record number of sellers with active
listings on the platform.
- GMV in our RSCG segment increased 9%, reflecting an increase in
sell-in-place consignment solutions and purchase programs,
partially offset by a lower value product mix in certain
full-service consignment and purchase programs.
- Consignment sales represented 83% of consolidated GMV for the
second fiscal quarter of 2024.
Revenue for the fiscal second quarter of 2024
was $91.5 million, a 12% increase from $81.5 million in the second
fiscal quarter of 2023.
- Revenue in our CAG segment increased 30%, consistent with its
increase in GMV.
- Revenue in our GovDeals segment increased 22%, reflecting the
increase in overall GMV, paired with a higher blended revenue
take-rate due to an expansion of service offerings to new,
higher-volume sellers.
- Revenue in our Machinio segment increased 21% due to increased
subscriptions and pricing for its Machinio Advertising and Machinio
System products.
- Revenue in our RSCG segment increased 6%, reflecting the
increase in overall GMV partially offset by a lower value product
mix in selected programs.
The changes in our profitability metrics reflect
our increased top-line performance and resulted in:
- GAAP Net Income was $5.7 million, or $0.18 per share, for the
fiscal second quarter of 2024, an increase from $4.2 million, or
$0.13 per share, for the same quarter last year.
- Non-GAAP Adjusted Net Income for the fiscal second quarter of
2024 was $8.4 million, or $0.27 per share, an increase from $6.4
million, or $0.20 per share for the same quarter last year.
- Non-GAAP Adjusted EBITDA for the fiscal second quarter of 2024
was $12.1 million, a $2.2 million increase from $9.9 million in the
same quarter last year.
1 Includes $108.6 million of Cash and cash
equivalents and $8.4 million of Short-term investments.
Second 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 14, Segment Information, to our
quarterly report on Form 10-Q for the period ended March 31, 2024.
Segment direct profit is calculated as total revenue less cost of
goods sold (excluding depreciation and amortization).
Our Q2-FY24 segment results are as follows
(unaudited, dollars in thousands):
|
Three Months Ended March 31, |
|
|
Six Months Ended March 31, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
GovDeals: |
|
|
|
|
|
|
|
|
|
|
|
GMV |
$ |
186,226 |
|
|
$ |
167,851 |
|
|
$ |
376,634 |
|
|
$ |
328,973 |
|
Total revenue |
$ |
18,374 |
|
|
$ |
15,079 |
|
|
$ |
34,274 |
|
|
$ |
28,686 |
|
Segment direct profit |
$ |
17,209 |
|
|
$ |
14,291 |
|
|
$ |
32,266 |
|
|
$ |
27,183 |
|
%
of Total revenue |
|
94 |
% |
|
|
95 |
% |
|
|
94 |
% |
|
|
95 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
RSCG: |
|
|
|
|
|
|
|
|
|
|
|
GMV |
$ |
79,634 |
|
|
$ |
73,338 |
|
|
$ |
146,196 |
|
|
$ |
138,235 |
|
Total revenue |
$ |
56,813 |
|
|
$ |
53,672 |
|
|
$ |
100,535 |
|
|
$ |
99,687 |
|
Segment direct profit |
$ |
17,001 |
|
|
$ |
16,675 |
|
|
$ |
31,113 |
|
|
$ |
32,686 |
|
%
of Total revenue |
|
30 |
% |
|
|
31 |
% |
|
|
31 |
% |
|
|
33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
CAG: |
|
|
|
|
|
|
|
|
|
|
|
GMV |
$ |
53,511 |
|
|
$ |
41,534 |
|
|
$ |
102,406 |
|
|
$ |
86,290 |
|
Total revenue |
$ |
12,280 |
|
|
$ |
9,418 |
|
|
$ |
20,114 |
|
|
$ |
18,810 |
|
Segment direct profit |
$ |
9,238 |
|
|
$ |
7,026 |
|
|
$ |
16,180 |
|
|
$ |
15,528 |
|
%
of Total revenue |
|
75 |
% |
|
|
75 |
% |
|
|
80 |
% |
|
|
83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Machinio: |
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
$ |
4,002 |
|
|
$ |
3,301 |
|
|
$ |
7,888 |
|
|
$ |
6,584 |
|
Segment direct profit |
$ |
3,800 |
|
|
$ |
3,110 |
|
|
$ |
7,504 |
|
|
$ |
6,230 |
|
%
of Total revenue |
|
95 |
% |
|
|
94 |
% |
|
|
95 |
% |
|
|
95 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
|
|
|
|
GMV |
$ |
319,371 |
|
|
$ |
282,723 |
|
|
$ |
625,236 |
|
|
$ |
553,498 |
|
Total revenue |
$ |
91,453 |
|
|
$ |
81,453 |
|
|
$ |
162,778 |
|
|
$ |
153,736 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Operational
Metrics
- Registered Buyers — At the end of Q2-FY24, registered buyers,
defined as the aggregate number of persons or entities who have
registered on one of our marketplaces, totaled approximately 5.3
million, representing a 6% increase over the approximately 5.0
million registered buyers at the end of Q2-FY23.
- 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 1,139,000 in Q2-FY24, a 43% increase from the
approximately 797,000 auction participants in Q2-FY23.
- Completed Transactions — Completed transactions, defined as the
number of auctions in a given period, were approximately 300,000 in
Q2-FY24, a 44% increase from the approximately 209,000 completed
transactions in Q2-FY23.
Third Quarter Business
Outlook
We continue to expect double digit consolidated
GMV growth at the mid-point of our guidance range, led by CAG's
energy and industrial categories and the continued growth of CAG’s
recurring heavy equipment sellers. Our fiscal third quarter 2024
outlook reflects the seasonally high activity at GovDeals, with
year-over-year GMV growth expected to continue despite the
potential for softer used vehicle market prices than last year.
GovDeals revenue is expected to grow at a faster year-over-year
rate than GMV due to expansion of more full-service consignment
offerings since the acquisition of Sierra Auction in January 2024.
Our Machinio subscription-based business is also anticipated to
continue to grow revenue by double digits.
Our RSCG segment expects to sustain similar
volumes to this past fiscal second quarter’s record RSCG GMV.
AllSurplus Deals, our Retail consumer curbside pick-up marketplace,
is expected to sustain strong year-over-year growth this coming
quarter. Our Retail segment continues to experience an inflow of
lower value product mix that has dampened direct margins compared
to last year and is expected to result in fiscal third quarter
margins similar to this past fiscal second quarter.
Operating expenses year-over-year will be up
similar to this past fiscal second quarter that included the effect
of the Sierra Auction acquisition, continued investment in the
expansion of AllSurplus Deals, sales and technology in support of
marketplace enhancements and market share gains for longer-term
growth.
We are anticipating our consolidated revenue as
a percentage of GMV to reflect our growing consignment mix and
remain in the low-to-mid twenty percentage range. We currently
expect our segment direct profits as a percent of total revenue to
be in the low-to-mid fifty percent range. Both ratios can vary
based on our mix, including asset categories in any given
period.
Our Q3-FY24 guidance is as follows:
GMV - We expect GMV to range from $350 million to
$385 million.
GAAP Net Income - We expect GAAP Net Income to
range from $3.5 million to $6.5 million.
GAAP Diluted EPS - We expect GAAP Diluted EPS to
range from $0.11 to $0.21.
Non-GAAP Adjusted EBITDA -We expect Non-GAAP
Adjusted EBITDA to range from $10.5 million to $13.5 million.
Non-GAAP Adjusted Diluted EPS - We expect Non-GAAP
Adjusted EPS to range from $0.20 to $0.28.
Our Business Outlook includes forward-looking
statements which reflect the following trends and assumptions for
Q3-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 could
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;
- real estate transactions in our GovDeals segment can be subject
to significant variability due to changes that include
postponements or cancellations of scheduled or expected auction
events and the value of properties to be included in the auction
event;
- 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 Q3-FY24 effective tax rate (ETR) is expected to range from
approximately 25% to 31% 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 the second half of 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 31.5 to 32.0 million. As of March 31,
2024, we have $8.0 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, 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 March 31, |
|
|
Six Months Ended March 31, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net income |
$ |
5,709 |
|
|
$ |
4,245 |
|
|
$ |
7,617 |
|
|
$ |
8,211 |
|
Interest and
other income, net1 |
|
(771 |
) |
|
|
(634 |
) |
|
|
(1,912 |
) |
|
|
(937 |
) |
Provision
for income taxes |
|
1,487 |
|
|
|
1,573 |
|
|
|
2,369 |
|
|
|
2,723 |
|
Depreciation
and amortization |
|
3,195 |
|
|
|
2,803 |
|
|
|
6,098 |
|
|
|
5,567 |
|
Non-GAAP
EBITDA |
$ |
9,620 |
|
|
$ |
7,987 |
|
|
$ |
14,172 |
|
|
$ |
15,564 |
|
Stock
compensation expense |
|
2,343 |
|
|
|
1,939 |
|
|
|
4,592 |
|
|
|
4,020 |
|
Acquisition
costs and impairment of long-lived and other non-current
assets2 |
|
125 |
|
|
|
— |
|
|
|
577 |
|
|
|
184 |
|
Non-GAAP
Adjusted EBITDA |
$ |
12,088 |
|
|
$ |
9,926 |
|
|
$ |
19,341 |
|
|
$ |
19,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Interest and other (income) expense, net, per
the Consolidated Statements of Operations, excluding the
non-service components of net periodic pension cost (benefit). 2
Acquisition costs and impairment of long-lived and other
non-current assets are included in Other operating expenses
(income), 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 Non-GAAP Adjusted Net Income. For Q2-FY24 and Q2-FY23, the
tax rates used to estimate the impact of income taxes on the
non-GAAP adjustments was 24% and 26%, respectively, based upon the
GAAP effective tax rates for each period. 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 March 31, |
|
|
Six Months Ended March 31, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net income |
$ |
5,709 |
|
|
$ |
4,245 |
|
|
$ |
7,617 |
|
|
$ |
8,211 |
|
Stock
compensation expense |
|
2,343 |
|
|
|
1,939 |
|
|
|
4,592 |
|
|
|
4,020 |
|
Intangible
asset amortization |
|
1,084 |
|
|
|
981 |
|
|
|
1,929 |
|
|
|
1,963 |
|
Acquisition
costs and impairment of long-lived and other non-current
assets* |
|
125 |
|
|
|
— |
|
|
|
577 |
|
|
|
184 |
|
Income tax
impact on the adjustment items |
|
(842 |
) |
|
|
(759 |
) |
|
|
(1,682 |
) |
|
|
(1,603 |
) |
Non-GAAP
Adjusted net income |
$ |
8,419 |
|
|
$ |
6,406 |
|
|
$ |
13,033 |
|
|
$ |
12,775 |
|
Non-GAAP
Adjusted basic earnings per common share |
$ |
0.28 |
|
|
$ |
0.20 |
|
|
$ |
0.43 |
|
|
$ |
0.40 |
|
Non-GAAP
Adjusted diluted earnings per common share |
$ |
0.27 |
|
|
$ |
0.20 |
|
|
$ |
0.41 |
|
|
$ |
0.39 |
|
Basic
weighted average shares outstanding |
|
30,498,127 |
|
|
|
31,305,214 |
|
|
|
30,552,094 |
|
|
|
31,562,988 |
|
Diluted
weighted average shares outstanding |
|
31,459,066 |
|
|
|
32,124,188 |
|
|
|
31,677,685 |
|
|
|
32,544,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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 (income), 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 May 9, 2025 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:
our ability to source sufficient assets from sellers to attract and
retain active professional buyers; our 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; our 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 to allow our
operations to grow in both size and scope; our ability to attract,
retain and develop the skilled employees that we need to support
our business; 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; system interruptions that
could affect our websites or our transaction systems and impair the
services we provide to our sellers and buyers; our ability to
maintain the privacy and security of personal and business
information amidst multiplying threat landscapes and in compliance
with privacy and data protection regulations globally; the numerous
factors that influence the supply of and demand for used
merchandise, equipment and surplus assets; political, business,
economic and other conditions in local, regional and global
sectors; the operations of customers, project size and timing of
auctions, operating costs, and general economic conditions; our
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 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 our operations; the
numerous government regulations of e-commerce and other services,
competition, and restrictive governmental actions; the supply of,
demand for or market values of surplus assets, such as shortages in
supply of used vehicles; 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, and our subsequent quarterly reports, all
of 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 Relations
investorrelations@liquidityservicesinc.com
Liquidity Services and
Subsidiaries Unaudited Condensed Consolidated
Balance Sheets (Dollars in Thousands, Except Par
Value)
|
|
March 31, 2024 |
|
|
September 30, 2023 |
|
|
|
(Unaudited) |
|
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
108,634 |
|
|
$ |
110,281 |
|
Short-term
investments |
|
|
8,400 |
|
|
|
7,891 |
|
Accounts
receivable, net of allowance for doubtful accounts of $2,094 and
$1,424 |
|
|
9,552 |
|
|
|
7,848 |
|
Inventory,
net |
|
|
15,398 |
|
|
|
11,116 |
|
Prepaid
taxes and tax refund receivable |
|
|
1,488 |
|
|
|
1,783 |
|
Prepaid
expenses and other current assets |
|
|
7,966 |
|
|
|
7,349 |
|
Total current assets |
|
|
151,438 |
|
|
|
146,268 |
|
Property and
equipment, net |
|
|
17,055 |
|
|
|
17,156 |
|
Operating
lease assets |
|
|
9,429 |
|
|
|
9,888 |
|
Intangible
assets, net |
|
|
15,937 |
|
|
|
12,457 |
|
Goodwill |
|
|
97,555 |
|
|
|
89,388 |
|
Deferred tax
assets |
|
|
5,268 |
|
|
|
7,050 |
|
Other
assets |
|
|
6,969 |
|
|
|
6,762 |
|
Total
assets |
|
$ |
303,651 |
|
|
$ |
288,970 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
48,410 |
|
|
$ |
39,115 |
|
Accrued
expenses and other current liabilities |
|
|
23,718 |
|
|
|
23,809 |
|
Current
portion of operating lease liabilities |
|
|
4,331 |
|
|
|
4,101 |
|
Deferred
revenue |
|
|
4,865 |
|
|
|
4,701 |
|
Payables to
sellers |
|
|
51,842 |
|
|
|
48,992 |
|
Total current liabilities |
|
|
133,166 |
|
|
|
120,718 |
|
Operating
lease liabilities |
|
|
6,453 |
|
|
|
6,581 |
|
Other
long-term liabilities |
|
|
107 |
|
|
|
137 |
|
Total
liabilities |
|
|
139,726 |
|
|
|
127,436 |
|
Commitments
and contingencies (Note 13) |
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Common
stock, $0.001 par value; 120,000,000 shares authorized; 36,476,363
shares issued and outstanding at March 31, 2024; 36,142,346 shares
issued and outstanding at September 30, 2023 |
|
|
36 |
|
|
|
36 |
|
Additional
paid-in capital |
|
|
269,297 |
|
|
|
265,945 |
|
Treasury
stock, at cost; 5,975,690 shares at March 31, 2024, and 5,433,045
shares at September 30, 2023 |
|
|
(93,109 |
) |
|
|
(84,031 |
) |
Accumulated
other comprehensive loss |
|
|
(9,957 |
) |
|
|
(10,457 |
) |
Accumulated
deficit |
|
|
(2,342 |
) |
|
|
(9,958 |
) |
Total stockholders’ equity |
|
|
163,925 |
|
|
|
161,533 |
|
Total
liabilities and stockholders’ equity |
|
$ |
303,651 |
|
|
$ |
288,970 |
|
|
|
|
|
|
|
|
|
|
Liquidity Services and
Subsidiaries Unaudited Condensed Consolidated
Statements of Operations (Dollars in Thousands,
Except Per Share Data)
|
|
Three Months Ended March 31, |
|
|
Six Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Purchase revenues |
|
$ |
53,105 |
|
|
$ |
47,273 |
|
|
$ |
89,330 |
|
|
$ |
85,907 |
|
Consignment
and other fee revenues |
|
|
38,348 |
|
|
|
34,180 |
|
|
$ |
73,448 |
|
|
|
67,829 |
|
Total revenue |
|
|
91,453 |
|
|
|
81,453 |
|
|
|
162,778 |
|
|
|
153,736 |
|
Costs and
expenses from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (excludes depreciation and amortization) |
|
|
44,222 |
|
|
|
40,366 |
|
|
|
75,748 |
|
|
|
72,139 |
|
Technology and operations |
|
|
15,526 |
|
|
|
14,791 |
|
|
|
29,764 |
|
|
|
29,495 |
|
Sales and marketing |
|
|
14,195 |
|
|
|
11,854 |
|
|
|
27,176 |
|
|
|
22,644 |
|
General and administrative |
|
|
7,658 |
|
|
|
6,404 |
|
|
|
15,242 |
|
|
|
13,789 |
|
Depreciation and amortization |
|
|
3,195 |
|
|
|
2,803 |
|
|
|
6,098 |
|
|
|
5,567 |
|
Other operating expenses (income), net |
|
|
62 |
|
|
|
(11 |
) |
|
|
507 |
|
|
|
129 |
|
Total costs and expenses |
|
|
84,858 |
|
|
|
76,207 |
|
|
|
154,535 |
|
|
|
143,763 |
|
Income from
operations |
|
|
6,595 |
|
|
|
5,246 |
|
|
|
8,243 |
|
|
|
9,973 |
|
Interest and
other income, net |
|
|
(601 |
) |
|
|
(572 |
) |
|
|
(1,743 |
) |
|
|
(961 |
) |
Income
before provision for income taxes |
|
|
7,196 |
|
|
|
5,818 |
|
|
|
9,986 |
|
|
|
10,934 |
|
Provision
for income taxes |
|
|
1,487 |
|
|
|
1,573 |
|
|
|
2,369 |
|
|
|
2,723 |
|
Net
income |
|
$ |
5,709 |
|
|
$ |
4,245 |
|
|
$ |
7,617 |
|
|
$ |
8,211 |
|
Basic income
per common share |
|
$ |
0.19 |
|
|
$ |
0.14 |
|
|
$ |
0.25 |
|
|
$ |
0.26 |
|
Diluted
income per common share |
|
$ |
0.18 |
|
|
$ |
0.13 |
|
|
$ |
0.24 |
|
|
$ |
0.25 |
|
Basic
weighted average shares outstanding |
|
|
30,498,127 |
|
|
|
31,305,214 |
|
|
|
30,552,094 |
|
|
|
31,562,988 |
|
Diluted
weighted average shares outstanding |
|
|
31,459,066 |
|
|
|
32,124,188 |
|
|
|
31,677,685 |
|
|
|
32,544,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity Services and
Subsidiaries Unaudited Condensed Consolidated
Statements of Cash Flows (Dollars in
Thousands)
|
|
Six Months
Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
Operating activities |
|
|
|
|
|
|
Net income |
|
$ |
7,617 |
|
|
$ |
8,211 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
6,098 |
|
|
|
5,567 |
|
Stock compensation expense |
|
|
4,592 |
|
|
|
3,882 |
|
Inventory adjustment to net realizable value |
|
|
163 |
|
|
|
847 |
|
Provision for doubtful accounts |
|
|
673 |
|
|
|
194 |
|
Deferred tax expense |
|
|
1,782 |
|
|
|
2,524 |
|
Gain on disposal of property and equipment |
|
|
(24 |
) |
|
|
(55 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(1,993 |
) |
|
|
5,801 |
|
Inventory |
|
|
(4,409 |
) |
|
|
(4,438 |
) |
Prepaid taxes and tax refund receivable |
|
|
296 |
|
|
|
(363 |
) |
Prepaid expenses and other assets |
|
|
(859 |
) |
|
|
310 |
|
Operating lease assets and liabilities |
|
|
288 |
|
|
|
(155 |
) |
Accounts payable |
|
|
9,079 |
|
|
|
902 |
|
Accrued expenses and other current liabilities |
|
|
(179 |
) |
|
|
1,461 |
|
Deferred revenue |
|
|
164 |
|
|
|
90 |
|
Payables to sellers |
|
|
2,685 |
|
|
|
(2,314 |
) |
Other liabilities |
|
|
— |
|
|
|
(129 |
) |
Net cash
provided by operating activities |
|
|
25,973 |
|
|
|
22,335 |
|
Investing activities |
|
|
|
|
|
|
Cash paid
for business acquisitions, net of cash acquired |
|
|
(13,265 |
) |
|
|
— |
|
Purchases of
property and equipment, including capitalized software |
|
|
(4,108 |
) |
|
|
(2,711 |
) |
Purchase of
short-term investments |
|
|
(2,264 |
) |
|
|
(3,696 |
) |
Maturities
of short-term investments |
|
|
1,986 |
|
|
|
— |
|
Other
investing activities, net |
|
|
60 |
|
|
|
51 |
|
Net cash
used in investing activities |
|
|
(17,591 |
) |
|
|
(6,356 |
) |
Financing activities |
|
|
|
|
|
|
Common stock
repurchases |
|
|
(9,047 |
) |
|
|
(16,963 |
) |
Taxes paid
associated with net settlement of stock compensation awards |
|
|
(1,366 |
) |
|
|
(736 |
) |
Payments of
the principal portion of finance lease liabilities |
|
|
(56 |
) |
|
|
(50 |
) |
Proceeds
from exercise of stock options, net of tax |
|
|
127 |
|
|
|
496 |
|
Net cash
used in financing activities |
|
|
(10,342 |
) |
|
|
(17,253 |
) |
Effect of
exchange rate differences on cash and cash equivalents |
|
|
313 |
|
|
|
735 |
|
Net decrease
in cash and cash equivalents |
|
|
(1,647 |
) |
|
|
(539 |
) |
Cash and
cash equivalents at beginning of period |
|
|
110,281 |
|
|
|
96,122 |
|
Cash and
cash equivalents at end of period |
|
$ |
108,634 |
|
|
$ |
95,583 |
|
Supplemental disclosure of cash flow
information |
|
|
|
|
|
|
Cash paid
for income taxes, net |
|
$ |
470 |
|
|
$ |
539 |
|
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