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 2020 ended June
30, 2020. The Company's Q3-FY20 performance showed improving top
line trends in the second half of the quarter as businesses and
governments re-opened from government ordered closures due to the
COVID-19 pandemic which, combined with cost control measures,
generated positive GAAP Net Income, GAAP EPS and Adjusted EBITDA.
"Retailers, manufacturers and government
agencies embraced our safe and reliable solution to conduct
commerce, even under the most trying circumstances, during Q3-FY20
which foreshadows the long-term value that Liquidity Services will
have in the evolving economy and e-commerce space. In turn, we
continue to provide buyers around the globe convenient access to
the inventory and equipment they require to meet their business
needs. The investments we have made in our marketplace platform and
IT infrastructure the past few years has enabled our team to
deliver strong results for our sellers and buyers who are largely
seeking efficient, no-contact solutions," said Bill Angrick,
Chairman and CEO of Liquidity Services.
"Notwithstanding the volatile environment, we
delivered strong results during the quarter. Our top line results
were primarily impacted by the closing of the economy in the month
of April and then saw steady increases throughout the rest of the
quarter as both government agencies and corporations began to
welcome employees back to physical locations and sought to monetize
assets,” Angrick continued. “In light of this dynamic, and despite
a very tough start to the quarter, GMV in our Retail (RSCG) segment
grew 14%, GMV in our CAG segment declined 18% (excluding DoD
Scrap), and GMV in our GovDeals segment declined 36% compared to
the prior year. Our Machinio segment revenue increased 23% over the
prior year driven by our cost-effective lead generation solutions
for equipment sellers. In addition to the benefit from the
acceleration of our top line over the course of the quarter, our
bottom line results benefited from the actions we took in April to
conserve our resources, resulting in positive GAAP Net Income, GAAP
EPS and Adjusted EBITDA, as well as strong cash generation. These
results speak to the dedication and ingenuity of our entire team to
consistently deliver outstanding service and solutions in the
reverse supply chain, regardless of the circumstances."
During Q3-FY20, we further enhanced the features
and functionality of our new consolidated marketplace,
AllSurplus.com, which enables a low-touch solution to sell assets
online eliminating the need for live, in-person exchanges. Compared
to Q2FY20, our increased promotion of AllSurplus resulted in a 148%
increase in buyer registrations, a 119% increase in traffic, a 161%
increase in unique bidders, and a 65% increase in direct
transactions on the AllSurplus marketplace. We continue to see
early adoption of this new marketplace and its self-service model
as sellers have an increased desire to shift to primarily
cloud-based business processes. We believe our self-service
solution over time will be an attractive growth opportunity as
business sellers and buyers continue to adapt to social distancing
guidelines due to the pandemic. Moreover, by aggregating supply on
AllSurplus, we are providing buyers and sellers more opportunities
to quickly transact across a wide array of products, including
heavy equipment, energy and manufacturing equipment.
The company exited the quarter with a cash
position of $72.7 million and zero debt, an increase in cash of
$20.9 million from Q2FY20.
Evolving Response to COVID-19
PandemicLast quarter we announced several safety measures
and temporary cost control measures to protect both our employees
and our business during the COVID-19 global pandemic. While we are
still strictly abiding by all social distancing and safety measures
in keeping the current health-expert recommendations, the
performance of the company has enabled us to review and modify
selected cost control measures including:
- restoring full pay and providing back pay for all salary
reductions for our current permanent workforce;
- returning a portion of furloughed employees back to full-time
status, mainly in our sales department;
- resuming technology and marketing investments over the next
quarter.
Third Quarter Consolidated Operating and
Earnings ResultsThe Company reported Q3-FY20 GMV of $130.1
million, down from $168.1 million in the prior year’s comparable
period, including the completion of the DoD Scrap contract. 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-FY20
was $47.7 million, down from $56.9 million in the prior year. GMV
declined 22.6% and GAAP Revenue declined 16.1% compared to the
prior year, inclusive of the completion of the DoD Scrap contract.
GAAP Net Income for Q3-FY20 was $0.2 million, which resulted in
diluted earnings per share of $0.01 based on a weighted average of
33.8 million diluted shares outstanding, compared to GAAP Net Loss
of $4.6 million and negative $0.14 respectively, in the prior year.
Our Non-GAAP adjusted net income excludes stock compensation
expense, impairment and business realignment expenses, acquisition
costs, deferred revenue purchase accounting adjustments, fair value
adjustments to acquisition earn-outs, and the estimated impact of
income taxes on these Non-GAAP adjustments and non-recurring tax
adjustments. For Q3-FY20 our non-GAAP adjusted net income was $1.8
million or $0.05 adjusted diluted earnings per share, an increase
compared to the prior year period non-GAAP adjusted net loss of
$1.5 million and negative $0.05 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 $3.7
million, an increase from the same period last year of $0.2
million.
Q3-FY20 comparative year-over-year consolidated
financial results reflect the impact of government and business
closures resulting from the COVID-19 pandemic, completion of the
DoD Scrap contract, and reduced operating expenses. GMV in our RSCG
segment increased 14% compared to the prior year, despite the
slowing of seller activity in April, as retailers adjusted to
changes in consumer behavior and business buyers sought to meet an
increasing demand for discount goods from consumers. GMV in our
GovDeals segment decreased by 36%, which reflected the impact of
government facilities in the US and Canada being shut down
throughout April, thereby limiting seller volume on our marketplace
and preventing buyers from picking up assets. Our CAG segment GMV
declined 28%, including the impact of the wind down of our DoD
Scrap contract, as activity across verticals was significantly
reduced in the first part of the quarter related to COVID-19
business closures. Along with steady improvements in top line
performance in the months of May and June, the actions we took to
reduce operating expenses as a result of the COVID-19 pandemic
benefited Q3-FY20.
Third Quarter Segment Operating and
Earnings ResultsWe present operating results in four
reportable segments: GovDeals, RSCG, CAG and Machinio. Each segment
currently 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-FY20 segment results are as
follows (unaudited, in millions):
|
|
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
GovDeals1: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
57.9 |
|
|
$ |
90.9 |
|
|
$ |
214.3 |
|
|
$ |
244.6 |
|
|
Revenue |
|
$ |
6.0 |
|
|
$ |
9.3 |
|
|
$ |
21.9 |
|
|
$ |
24.6 |
|
|
Gross profit |
|
$ |
5.6 |
|
|
$ |
8.6 |
|
|
$ |
20.4 |
|
|
$ |
22.7 |
|
|
|
|
|
|
|
|
|
|
|
RSCG: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
45.0 |
|
|
$ |
39.6 |
|
|
$ |
129.2 |
|
|
$ |
116.9 |
|
|
Revenue |
|
$ |
33.6 |
|
|
$ |
31.3 |
|
|
$ |
101.5 |
|
|
$ |
94.8 |
|
|
Gross profit |
|
$ |
12.0 |
|
|
$ |
10.9 |
|
|
$ |
34.7 |
|
|
$ |
32.7 |
|
|
|
|
|
|
|
|
|
|
|
CAG2: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
27.2 |
|
|
$ |
37.7 |
|
|
$ |
79.5 |
|
|
$ |
120.1 |
|
|
Revenue |
|
$ |
6.4 |
|
|
$ |
14.9 |
|
|
$ |
21.4 |
|
|
$ |
44.1 |
|
|
Gross profit |
|
$ |
5.9 |
|
|
$ |
7.8 |
|
|
$ |
16.6 |
|
|
$ |
25.3 |
|
|
|
|
|
|
|
|
|
|
|
Machinio: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Revenue |
|
$ |
1.8 |
|
|
$ |
1.5 |
|
|
$ |
5.3 |
|
|
$ |
3.8 |
|
|
Gross profit |
|
$ |
1.7 |
|
|
$ |
1.4 |
|
|
$ |
5.1 |
|
|
$ |
3.5 |
|
|
|
|
|
|
|
|
|
|
|
Corporate
& Other3: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.5 |
|
|
Revenue |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.5 |
|
|
Gross profit |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.1 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
130.1 |
|
|
$ |
168.1 |
|
|
$ |
423.0 |
|
|
$ |
482.1 |
|
|
Revenue |
|
$ |
47.7 |
|
|
$ |
56.9 |
|
|
$ |
150.1 |
|
|
$ |
167.7 |
|
|
Gross profit |
|
$ |
25.2 |
|
|
$ |
28.6 |
|
|
$ |
76.8 |
|
|
$ |
84.2 |
|
1GovDeals consists of the state and municipal
government business. Through Q4 FY19 this includes commercial
self-directed GMV as part of our Auction Deals marketplace, which
beginning in Q1 FY20 is reflected in the CAG segment. 2CAG consists
of our energy and industrial commercial verticals, our DoD Scrap
contract, and beginning in Q1 FY20 commercial transactions within
our unified marketplace, which was previously referred to as
AuctionDeals.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 2020 Operational
Results
- Registered Buyers — At the end of
Q3-FY20, registered buyers totaled approximately 3,719,000,
representing a 2.5% increase over the approximately 3,627,000
registered buyers at the end of Q3-FY19.
- 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), decreased to approximately 420,000 in
Q3-FY20, a 20.5% decrease from the approximately 528,000 auction
participants in Q3-FY19.
- Completed Transactions — Completed
transactions decreased to approximately 134,000, a 16.3% decrease
for Q3-FY20 from the approximately 160,000 completed transactions
in Q3-FY19.
Business OutlookWhile we may
have some visibility for this next quarter and see positive top
line indicators, our current view of trends still depends on
numerous evolving factors, including whether a second wave of the
COVID-19 pandemic results in government and business closures.
Sequentially, our sales and marketing expenses are expected to
increase as we reinvigorate our investments and plan for continued
long-term growth, and we prioritize our marketplace enhancements
that drive growth and near-term return on investment. Despite the
broader economic downturn, our long-term positioning remains strong
as our self-service solutions and online platform provide valuable
benefits to sellers and buyers.
Notwithstanding current trends, the likelihood,
magnitude and timing of business developments across our segments
are difficult to predict given the current economic uncertainty,
unknown timing and overall impact of the global pandemic. We will
therefore not provide quarterly guidance.
In the longer term, we continue to be highly
focused on creating efficiencies and benefits for our sellers and
our buyers by focusing on platform services and support that will
deliver optimal liquidity in the reverse supply chain and further
enable our growth through an asset light, low-touch marketplace
solution. As e-commerce penetration continues to grow substantially
for both consumers and B2B, our online platform and cloud-based
solutions should become even more relevant and necessary for the
evolving global economy.
These forward-looking statements reflect the
trends and assumptions for Q4-FY20 compared to the prior year
comparable period and as an impact of the COVID-19 pandemic:
- steady results in our
GovDeals segment for the near-term as government facilities re-open
and sell through a backlog of surplus assets and seek efficient
solutions to fill a gap in revenue lost as a result of the
pandemic;
- steady performance in our RSCG
segment as retailers are seeking secondary channels to handle an
increase in excess assets. We anticipate a backlog of consumer
returns, seasonal items and shelf-pulls as retailers adjust to
shifting consumer preferences;
- increased opportunity in our CAG
segment as global COVID-19 pandemic restrictions are being
loosened;
- decrease in our cash position
compared to Q3FY20 as we make up for one-time deferrals in vendor
payments;
- increased adoption of our
self-service model, which proves to be the safest and most
effective transaction model during COVID-19, which could sustain
volumes of assets sold for certain industries;
- stable buyer demand yet we
anticipate lower average pricing for assets across our segments as
buyers take conservative approach to spending;
- overall reduced operating expenses
as we continue to operate with a reduced workforce and decreased
travel as we prioritize the safety of our employees; and
- we do not anticipate the
Coronavirus Aid, Relief, and Economic Security Act (the "CARES
Act") will have a material impact on our provision for income taxes
in the future.
While we remain confident in our long-term
strategy, the need for our services, and our liquidity position, we
are unable to accurately predict the extent to which the global
COVID-19 pandemic will impact our business operations, financial
performance and results of operations for our fourth quarter fiscal
year 2020.
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 income (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, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(Unaudited) |
Net income (loss) |
|
$ |
213 |
|
|
|
$ |
(4,649 |
) |
|
|
$ |
(9,221 |
) |
|
|
$ |
(14,033 |
) |
|
Interest and other income, net1 |
|
(156 |
) |
|
|
(368 |
) |
|
|
(489 |
) |
|
|
(976 |
) |
|
Provision for income taxes |
|
209 |
|
|
|
542 |
|
|
|
710 |
|
|
|
1,136 |
|
|
Depreciation and amortization |
|
1,567 |
|
|
|
1,206 |
|
|
|
4,716 |
|
|
|
3,575 |
|
|
EBITDA |
|
1,833 |
|
|
|
(3,269 |
) |
|
|
(4,284 |
) |
|
|
(10,298 |
) |
|
Stock compensation expense2 |
|
1,516 |
|
|
|
1,362 |
|
|
|
3,785 |
|
|
|
5,456 |
|
|
Acquisition costs and impairment of long-lived assets3 |
|
— |
|
|
|
52 |
|
|
|
5 |
|
|
|
171 |
|
|
Business realignment expenses3,4 |
|
328 |
|
|
|
1,055 |
|
|
|
328 |
|
|
|
1,095 |
|
|
Fair value adjustments to acquisition earn-outs3 |
|
— |
|
|
|
900 |
|
|
|
200 |
|
|
|
2,300 |
|
|
Deferred revenue purchase accounting adjustment |
|
— |
|
|
|
110 |
|
|
|
3 |
|
|
|
800 |
|
|
Adjusted EBITDA |
|
$ |
3,677 |
|
|
|
$ |
210 |
|
|
|
$ |
37 |
|
|
|
$ |
(476 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Represents Interest and other income, net, per
the Statement of Operations, excluding the non-service components
of net periodic pension (benefit) expense. 2 Excludes the impact of
forfeitures of stock awards by employees terminated by business
realignment actions, which is included in the business realignment
expenses line for the three and nine months ended June 30, 2019.
There were such no impacts for the three and nine months ended June
30, 2020.3 Acquisition costs, impairment of long-lived assets, fair
value adjustments to acquisition earn-outs, and business
realignment expenses are components of 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 10 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. There were no related impacts for the three and nine
months ended June 30, 2020.
Non-GAAP Adjusted Net Income (Loss) and Non-GAAP
Adjusted Basic and Diluted Earnings Per Share. Non-GAAP Adjusted
Net Income (Loss) is a supplemental non-GAAP financial measure and
is equal to net income (loss) plus stock compensation expense,
impairment and business realignment expenses, acquisition costs,
deferred revenue purchase accounting adjustments, fair value
adjustments to acquisition earn-outs, 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 Income (Loss). For Q3-FY20
the tax rate used to estimate the impact of income taxes on the
non-GAAP adjustments was 12.8% compared to 10.5% used for the
Q3-FY19 results. The 12.8% tax rate excludes the impact of the
charge to our U.S. valuation allowance.
|
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
(Dollars in thousands, except per share data) |
|
(Unaudited) |
Net income (loss) |
|
$ |
213 |
|
|
|
$ |
(4,649 |
) |
|
|
$ |
(9,221 |
) |
|
|
$ |
(14,033 |
) |
|
Stock compensation
expense |
|
1,516 |
|
|
|
1,362 |
|
|
|
3,785 |
|
|
|
5,456 |
|
|
Acquisition costs and
impairment of long-lived assets* |
|
— |
|
|
|
52 |
|
|
|
5 |
|
|
|
171 |
|
|
Business realignment
expenses* |
|
328 |
|
|
|
1,055 |
|
|
|
328 |
|
|
|
1,095 |
|
|
Fair value adjustment to
acquisition earn-outs* |
|
— |
|
|
|
900 |
|
|
|
200 |
|
|
|
2,300 |
|
|
Deferred revenue purchase
accounting adjustment |
|
— |
|
|
|
110 |
|
|
|
3 |
|
|
|
800 |
|
|
Income tax impact of
adjustments |
|
(236 |
) |
|
|
(365 |
) |
|
|
(553 |
) |
|
|
(1,031 |
) |
|
Adjusted net income
(loss) |
|
$ |
1,821 |
|
|
|
$ |
(1,535 |
) |
|
|
$ |
(5,453 |
) |
|
|
$ |
(5,242 |
) |
|
Adjusted basic income (loss) per
common share |
|
0.05 |
|
|
|
(0.05 |
) |
|
|
(0.16 |
) |
|
|
(0.16 |
) |
|
Adjusted diluted income (loss)
per common share |
|
0.05 |
|
|
|
(0.05 |
) |
|
|
(0.16 |
) |
|
|
(0.16 |
) |
|
Basic weighted average shares
outstanding |
|
33,695,936 |
|
|
|
33,164,750 |
|
|
|
33,621,740 |
|
|
|
32,986,040 |
|
|
Diluted weighted average shares
outstanding |
|
33,815,332 |
|
|
|
33,164,750 |
|
|
|
33,621,740 |
|
|
|
32,986,040 |
|
|
*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-FY20 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 (888) 771-4371 or (847)
585-4405 and providing conference ID 49857730. 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 5, 2021 at
1:30 p.m. ET. The replay 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.
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; anticipated
economic and operational impacts to the COVID-19 global pandemic,
especially if there is a rise in COVID-19 deaths that precipitates
re-closures or extended restrictions on international travel; the
migration of our retail marketplace to our core e-commerce
technology platform; 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 impact of
the coronavirus pandemic on our Company, our employees, our sellers
and buyers, and global supply chains; disruptions of transactions
due to the coronavirus pandemic, including the impact of such
disruptions on the Company’s ability to generate profits, stabilize
or grow GMV or accurately forecast transactions; disruptions in the
Company’s workforce as a results of the Company’s efforts to limit
of the impact of the coronavirus pandemic on the Company’s
operations and financial condition; 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 our 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; the success of
our AllSurplus marketplace, 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, 2019, and Quarterly
Report on Form 10-Q for the quarters ended December 31, 2019 and
March 31, 2020, 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
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
14,000 sellers worldwide. With over $8 billion in completed
transactions, and over 3.6 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 SubsidiariesUnaudited
Consolidated Balance Sheets(Dollars in
Thousands) |
|
June 30, 2020 |
|
September 30, 2019 |
|
(Unaudited) |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
72,729 |
|
|
|
$ |
36,497 |
|
|
Short-term investments |
— |
|
|
|
30,000 |
|
|
Accounts receivable, net of allowance for doubtful accounts of $357
and $291 |
5,159 |
|
|
|
6,704 |
|
|
Inventory, net |
7,415 |
|
|
|
5,843 |
|
|
Prepaid taxes and tax refund receivable |
3,081 |
|
|
|
2,531 |
|
|
Prepaid expenses and other current assets |
6,546 |
|
|
|
8,350 |
|
|
Total current assets |
94,930 |
|
|
|
89,925 |
|
|
Property and equipment, net of
accumulated depreciation of $13,678 and $10,566 |
18,500 |
|
|
|
18,846 |
|
|
Operating lease assets |
9,263 |
|
|
|
— |
|
|
Intangible assets, net |
5,086 |
|
|
|
6,043 |
|
|
Goodwill |
59,587 |
|
|
|
59,467 |
|
|
Deferred tax assets |
821 |
|
|
|
866 |
|
|
Other assets |
10,677 |
|
|
|
12,136 |
|
|
Total assets |
$ |
198,864 |
|
|
|
$ |
187,283 |
|
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
29,002 |
|
|
|
$ |
15,051 |
|
|
Accrued expenses and other current liabilities |
17,757 |
|
|
|
28,794 |
|
|
Current portion of operating lease liabilities |
4,127 |
|
|
|
— |
|
|
Distributions payable |
— |
|
|
|
1,675 |
|
|
Deferred revenue |
3,025 |
|
|
|
3,049 |
|
|
Payables to sellers |
26,325 |
|
|
|
20,253 |
|
|
Total current liabilities |
80,236 |
|
|
|
68,822 |
|
|
Operating lease liabilities |
5,908 |
|
|
|
— |
|
|
Deferred taxes and other
long-term liabilities |
2,482 |
|
|
|
2,286 |
|
|
Total liabilities |
88,626 |
|
|
|
71,108 |
|
|
Commitments and contingencies
(Note 11) |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.001 par value; 120,000,000 shares authorized;
34,021,773 shares issued and outstanding at June 30, 2020;
33,687,115 shares issued and outstanding at September 30, 2019 |
34 |
|
|
|
34 |
|
|
Additional paid-in capital |
246,016 |
|
|
|
242,686 |
|
|
Accumulated other comprehensive loss |
(8,019 |
) |
|
|
(7,973 |
) |
|
Accumulated deficit |
(127,793 |
) |
|
|
(118,572 |
) |
|
Total stockholders’ equity |
110,238 |
|
|
|
116,175 |
|
|
Total liabilities and
stockholders’ equity |
$ |
198,864 |
|
|
|
$ |
187,283 |
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity Services and SubsidiariesUnaudited
Consolidated Statements of Operations (Dollars in
Thousands, Except Per Share Data) |
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
(Unaudited) |
Revenue |
$ |
30,442 |
|
|
|
$ |
36,388 |
|
|
|
$ |
95,994 |
|
|
|
$ |
109,478 |
|
|
Fee revenue |
17,280 |
|
|
|
20,494 |
|
|
|
54,056 |
|
|
|
58,257 |
|
|
Total revenue |
47,722 |
|
|
|
56,882 |
|
|
|
150,050 |
|
|
|
167,735 |
|
|
Costs and expenses from
operations: |
|
|
|
|
|
|
|
Cost of goods sold (excludes depreciation and amortization) |
22,494 |
|
|
|
25,337 |
|
|
|
73,289 |
|
|
|
75,100 |
|
|
Seller distributions |
— |
|
|
|
2,994 |
|
|
|
— |
|
|
|
8,393 |
|
|
Technology and operations |
9,515 |
|
|
|
12,145 |
|
|
|
32,342 |
|
|
|
38,098 |
|
|
Sales and marketing |
7,412 |
|
|
|
8,771 |
|
|
|
27,126 |
|
|
|
26,887 |
|
|
General and administrative |
6,217 |
|
|
|
8,959 |
|
|
|
21,321 |
|
|
|
26,217 |
|
|
Depreciation and amortization |
1,567 |
|
|
|
1,206 |
|
|
|
4,716 |
|
|
|
3,575 |
|
|
Other operating expenses |
319 |
|
|
|
2,031 |
|
|
|
500 |
|
|
|
3,586 |
|
|
Total costs and expenses |
47,524 |
|
|
|
61,443 |
|
|
|
159,294 |
|
|
|
181,856 |
|
|
Income (loss) from
operations |
198 |
|
|
|
(4,561 |
) |
|
|
(9,244 |
) |
|
|
(14,121 |
) |
|
Interest and other income,
net |
(224 |
) |
|
|
(454 |
) |
|
|
(733 |
) |
|
|
(1,224 |
) |
|
Income (loss) before provision
for income taxes |
422 |
|
|
|
(4,107 |
) |
|
|
(8,511 |
) |
|
|
(12,897 |
) |
|
Provision for income taxes |
209 |
|
|
|
542 |
|
|
|
710 |
|
|
|
1,136 |
|
|
Net income (loss) |
$ |
213 |
|
|
|
$ |
(4,649 |
) |
|
|
$ |
(9,221 |
) |
|
|
$ |
(14,033 |
) |
|
Basic income (loss) per common
share |
$ |
0.01 |
|
|
|
$ |
(0.14 |
) |
|
|
$ |
(0.27 |
) |
|
|
$ |
(0.43 |
) |
|
Diluted income (loss) per common
share |
0.01 |
|
|
|
(0.14 |
) |
|
|
(0.27 |
) |
|
|
(0.43 |
) |
|
Basic weighted average shares
outstanding |
33,695,936 |
|
|
|
33,164,750 |
|
|
|
33,621,740 |
|
|
|
32,986,040 |
|
|
Diluted weighted average shares
outstanding |
33,815,332 |
|
|
|
33,164,750 |
|
|
|
33,621,740 |
|
|
|
32,986,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity Services and Subsidiaries Unaudited
Consolidated Statements of Cash Flows (Dollars in
Thousands) |
|
Nine Months Ended June 30, |
|
2020 |
|
2019 |
|
(Unaudited) |
Operating
activities |
|
|
|
Net loss |
$ |
(9,221 |
) |
|
|
$ |
(14,033 |
) |
|
Adjustments to reconcile net loss
to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
4,716 |
|
|
|
3,575 |
|
|
Stock compensation expense |
3,785 |
|
|
|
5,138 |
|
|
Provision for doubtful accounts |
131 |
|
|
|
184 |
|
|
Deferred tax provision |
228 |
|
|
|
81 |
|
|
Loss (gain) on disposal of property and equipment |
(29 |
) |
|
|
20 |
|
|
Change in fair value of earnout liability |
200 |
|
|
|
2,300 |
|
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
1,415 |
|
|
|
(1,056 |
) |
|
Inventory |
(1,572 |
) |
|
|
1,231 |
|
|
Prepaid and deferred taxes |
(551 |
) |
|
|
47 |
|
|
Prepaid expenses and other assets |
942 |
|
|
|
244 |
|
|
Operating lease assets and liabilities |
(165 |
) |
|
|
— |
|
|
Accounts payable |
13,951 |
|
|
|
(570 |
) |
|
Accrued expenses and other current liabilities |
(9,525 |
) |
|
|
(777 |
) |
|
Distributions payable |
(1,675 |
) |
|
|
(301 |
) |
|
Deferred revenue |
(23 |
) |
|
|
1,043 |
|
|
Payables to sellers |
6,072 |
|
|
|
(4,129 |
) |
|
Other liabilities |
522 |
|
|
|
(222 |
) |
|
Net cash provided by (used in)
operating activities |
9,201 |
|
|
|
(7,225 |
) |
|
Investing
activities |
|
|
|
Increase in intangibles |
(53 |
) |
|
|
(20 |
) |
|
Purchases of property and
equipment, including capitalized software |
(3,608 |
) |
|
|
(4,784 |
) |
|
Proceeds from sales of property
and equipment |
47 |
|
|
|
112 |
|
|
Proceeds from promissory
note |
2,553 |
|
|
|
— |
|
|
Purchases of short-term
investments |
(25,000 |
) |
|
|
(50,000 |
) |
|
Maturities of short-term
investments |
55,000 |
|
|
|
40,000 |
|
|
Net cash provided by (used in)
investing activities |
28,939 |
|
|
|
(14,692 |
) |
|
Financing
activities |
|
|
|
Payments of the principal portion
of finance lease liabilities |
(26 |
) |
|
|
— |
|
|
Taxes paid associated with net
settlement of stock compensation awards |
(564 |
) |
|
|
— |
|
|
Proceeds from exercise of stock
options |
36 |
|
|
|
129 |
|
|
Payment of earnout liability
related to business acquisition |
(1,200 |
) |
|
|
— |
|
|
Net cash (used in) provided by
financing activities |
(1,754 |
) |
|
|
129 |
|
|
Effect of exchange rate
differences on cash and cash equivalents |
(154 |
) |
|
|
(246 |
) |
|
Net increase (decrease) in cash
and cash equivalents |
36,232 |
|
|
|
(22,034 |
) |
|
Cash and cash equivalents at
beginning of period |
36,497 |
|
|
|
58,448 |
|
|
Cash and cash equivalents at end
of period |
$ |
72,729 |
|
|
|
$ |
36,414 |
|
|
Supplemental disclosure
of cash flow information |
|
|
|
Cash paid for income taxes,
net |
$ |
203 |
|
|
|
$ |
872 |
|
|
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