LQDT - Earnings call transcript Q2 2019 | Liquidity Services, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Liquidity Services Second Quarter Fiscal Year 2019 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference Ms. of Director Senior Davis, Investor Relations. Julie may you begin. Ma’am

Julie Davis

to Thank conference fiscal quarter Hello, call. welcome you, and our year second Joelle. XXXX financial results

Executive Financial Officer. Joining Chairman our Bill are Vice Officer; Chief Executive Chief us Celaya, and and Angrick, President Jorge today and our

responses available of or today, forward-looking XXXX, will your will May following be prepared statements. The management's include may questions X, for We questions differ Actual our reflect after remarks. discussion to as materially. results views and

that factors included release in SEC, about Additional impact is our annual potentially the information financial results recent XX-K. could in our with on most today's and Form including report press our filings

listen on press as financial you to results today's front the you as includes encourage have release and metrics quarter. our As well our commentary call, of to we in you, which

will is press our SEC, During these these comparable reconciliations of certain this release each GAAP on measures with find with measures, call, including disclosures posted of will our filings and we measures. non-GAAP you additional the measures. financial And which non-GAAP discuss our regarding website,

to supplemental data use volume should also for I'd operating or for believe results. not this and to considered GAAP useful At as supplemental of certain a certain time, merchandise Angrick. CEO, like components which of is also We the management The a substitute investors. we includes our measure over gross operating operating performance, data be presentation and superior to Bill turn

Bill Angrick

QX Julie. strategic on and update our earnings provide key you, QX call. I'll Thank morning, performance review our and Good to welcome initiatives. an

outlook for details on more quarter the will our Celaya and Jorge provide Next, third quarter. the

RISE all our reflect business of results and results improving strategy continued growth Our execution segments. of our QX across

innovation, pillars: solid a expansion; maximize position assets to With marketplace finally, RISE growth sustain strategy planet is expertise, a refresher, one, value. strategy our buyers, benefit base service unmatched and increasing industry leverage. buyer sellers foundation are deliver and two, our provide global key strong to our our to growth. a sales terrific leading of for and the expense customers shareholder and the we commitment surplus in The As of long-term for volume; our results three, to recovery and objective four has maximization; RISE world's

During are Surplus QX and value retail, excluding the government our excluding our GMV completed the across our completed trend buyers. and consecutive year-over-year. GMV quarter XX% grew year-over-year double-digit growth successfully sellers surplus share that QX achieved and contract, consolidated XX% we've DoD DoD fourth grew demonstrates we for revenue marks our our industrial contract. exceptional delivering by our market This that growing organic verticals

We and continue this for integrate leverage. to improve processes overall efficiency internal operational our improved our operating helping business is to

consolidated period, during return seasonal for high adjusted quarter segment. top-line group reflects non-GAAP profitability supply million, across our growth chain EBITDA or that year to prior quarter Our our a the XXX% improved segments over $X.X our the and a retail

We the continue solutions and services chain new needs. for solve sellers roll to buyers and our reverse to technology, out supply

direct of holiday our in our returns scale look we highlights across due grew leveraged as volumes warehouse seasonally volume year-over-year to Group grew segments. accounts. shopping increased high a take seller let's of our retail Supply Retail GMV manage and Next, XX% at from season. benefited activities XXXX The Chain following capabilities business business segment to the our key sales the

GMV Group and management Capital grew in positive them Surplus year-over-year with sell and costs expand marketplace with DoD we X% by recovery retailers supply asset segment, app, and our which helping financial saw North care the sectors. approximately America our in as regions. health reduce needs our traction returns meet goods, the contract, verticals We we industry. increased domain drive and offerings demand biopharma look many vertical to such the our continue for services, as Assets self-directed leverages our our of with and We're the scan in business our services saw gaining changing data manufacturers packaged We manufacturing, strong our to and electronics core the chain excluding solutions as Pacific maximum consumer trends expertise. also demand with and industry in Asia energy

Our and grew and new additional from increase local driven year-over-year, the GMV agency in volumes GovDeals segment sellers. number state by XX% an sellers of sales existing

marketplace GovDeals a Our consistent variety growth wide across assets. that the sellers value reflects of offers agency our government

marketplace listings subscriptions remains profitability new as Our for a track, solid increased revenue and buyer used machinery equipment Machinio global classified asset serving and growth adds it on yielding base. strong

of online leading machine dealers agriculture qualified through technology a used significant for relevant owners, uses for buyers used for and with used tool, available combined tools equipment approach subscription sectors, mobile to connect buyers data transportation, management global and and an As model. supply with listing construction, most printing Machinio annual equipment proprietary of provides and equipment sale. to suppliers Machinio other sale equipment global exposure a platform the first

strategy. Next, RISE further advance we've growth steps to taken also our important

structure and in to organizational revenue increase service have structure our to we In sellers service solutions. new and builds we of self-directed this manner. our Accordingly, Vice JD managed services technology on structure new welcome as This unify platform delivery most last is will Daunt new and business ecommerce buyers. new aligned enable organizational and Executive Commercial processes of advances overseeing take an Chief by us serve important to and organizational advantage President to and work that our our and the and turn, worldwide growth growth better Officer done functions. clients announced that intended effective delivery year delivering First, a over integration the we to and our the sales

operational registered beginning million buyers CAG X.X our of segment marketplace for, step forward look single we our for sellers. consolidated We Second, on our enhanced an from leveraging efficiency, online made internal our to growth any This and transformation improved is a leverage find entire of ahead testing our our ecommerce with network important towards to initiative continue our launching by continued to provide progress fully that technology search LiquidityOne platform business. destination launching our in onto business and new new across user platform. to asset our buy operating existing processes acceptance integrate

buyer marketing behavior, targeted more have platform RISE initiatives enhance continued initiatives our with on technology we ability and motivations analyze and our buyer organize preferences Third, in marketing to and our turn our strategy new data our our sellers. value further to stack. to These acquire for and create improve engagement will buyers,

the value Services our our business. assets we driving digital investments significant summary, further transformation. buyer sellers will very about long-term tremendous platform for best-in-class customers committed as as turn technologies innovation growth now for Jorge people, to recovery over drive the sold strategy. the We're our and rates optimize excited our value and In marketplaces on more to it I'll are Liquidity we committed our RISE buyers remains in commitments grow and on on ongoing we shareholders to to our to the our to creation to quarter. boost potential execute and we experience. marketing details and bring and volume Our of processes enhance making

Jorge Celaya

and Thank you, good Bill, morning.

XXXX the guidance and range or non-GAAP results. GAAP within volume, quarter second year GAAP select We loss, EPS gross the range for fiscal non-GAAP GMV. adjusted guidance finished adjusted and quarter company's EPS on for comment will net I above the merchandise of second First, EBITDA,

XXX%. XXXX, As adjusted to line to compared up improved net quarter reflect strategy. were second our to and EBITDA and X%, improved the GMV XXXX, GAAP the trend million. second execution successful loss loss the Comparing XX% GMV of $X.X and quarter Adjusted positive improved improved net continued EBITDA growth and adjusted RISE

Our down the surplus revenue and a reflects was of X% down contract. wind

Scrap sellers. business contract was Machinio, of new impacted In strategy have XX% XXXX ago. was reported second the against offerings. growth number strong contracts. successfully GMV and completion Surplus This the was volume segment more of the than reported reflect, year-over-year reaffirms year in the our GMV partly and RSCG of from the offset we was first As due offsetting by million second GovDeals our existing Partly the due second we the decrease compared compared results. $XXX.X programs RSCG sellers CAG half from a by quarter of reflecting ago, of quarter, fiscal second goods up the sold revenue driven in and inclusion which X.X% to and revenue XX% XX%. in of in offset our GMV of XXXX, a the from in an from contract and We both RISE $XX.X of additional reflected quarter new XXXX in existing X%, CAG these GovDeals and up to of and year-over-year RSCG to year as year GovDeals a fiscal on was by the both offset year both fiscal increases by to our and second DoD year XX% quarter year RSCG GovDeals in GMV our commercial contracts, million, in increased Surplus CAG service results fiscal management DoD segments increases the increased of DoD segments. segment, volume under both lower our increase are decreases executing impacts that up XXXX. liquidation quarter our and the client sales

to the the second as quarter CAG of completion our segment contract. our DoD Our due of compared fiscal revenue from XX% XXXX was Surplus year to down

both Excluding XX%. DoD both contracts, CAG revenue grew contracts, commercial

$X.X $X.X improvement prior Our $X.X million year improvement loss million, ago. net $X.X in to loss year million loss a million the $X.X GAAP million compared Adjusted a net a was from was $XXX,XXX, a quarter.

the expenses, a negative year’s in quarter with second top Machinio. improvements to adjusted compared our our Finally, GovDeals higher segment, due the improvement along $X.X performance were the to These line good RSCG $XXX,XXX, CAG and from segment quarter. positive second growth million prior million and technology lower EBITDA a our activity commercial $X.X in was

$X.X cash sheet. a debt-free of during year the balance rate. current we to the third XX, capital we expect a million. We expenditures continue and for run line to in the expenditures were At XXXX, Capital quarter with $XX remain had quarter March balance XXXX fiscal million, of have

strategy. Looking will ahead the XXXX, to quarter results continue to RISE efforts our anticipate third our fiscal that we execute reflect year to of

drive comparative to maximization, expand The volumes of in third as to our recovery the sellers and XXXX growth increased reflect top and results year RSCG offer look buyers. services continue GovDeals we and segments fiscal both quarter we line

XXXX reflective strong more activity We the and quarter period CAG line to segment top completing with year. our of year America Pacific regions the plant expect episodic third regions, of closures during face headwinds, both last North fiscal in the in Asia

quarter increased be We of sales fiscal transition maximization spending focus Management’s results spending and to strategy results on third and we bottom sales in follows. quarter on seasonally volume. RSCG improve quarter on executing our a expect XXXX quarter in as our anticipate in RISE our segment GovDeals guidance to in in as the and recovery reflect marketing year high marketing. increased a impacted Sequentially, line growth will by QX high and seasonally increase the a the is for next fiscal QX to segment

a negative We QX range of a We negative be negative QX in the $XXX non-GAAP QX loss for from to estimate ranging a negative $X share. expect million. for per a for with corresponding million, net to of GAAP breakeven. to QX is to range share expected to from EBITDA range GAAP of of million million $X.XX per from loss adjusted to XXXX XXXX The $X.X million XXXX for $X.XX negative to GMV $X.X a $XXX XXXX

shares loss that share assumes single guidance the per tax for the range XXXX we to and have negative for rate QX of the quarter is in an average digits. of $X.XX. outstanding negative in diluted estimated adjusted approximately $X.XX million XX.X non-GAAP weighted This Our of effective

take now will questions. your We

Operator

[Operator comes from Prestopino Gary Barrington Instructions] Our Research. first with question

now open. is line Your

Gary Prestopino

here. Hi, track Are you this questions by on good XXXX, morning Bill? to get out everyone. consolidated still Series of marketplace calendar the end of

Bill Angrick

Correct, yes.

Gary Prestopino

over of with, terms million expenses you looking this million to in substantially? quarter once $X still LiquidityOne of expenses forward, going we’ll then $X initiative channel And ongoing between down and that are at Okay. is in this

Bill Angrick

or in the including to give overall, we’re the And year. No. down a still the basis We’ve the launch take, remainder we’ve probably expressed platform. those that million, IT quarterly expenses on with before consistent of tapered approximately new for expenses e-commerce $X

Gary Prestopino

back the the correct? in the from drag for Is of year, still then And – be the there’ll Okay. group. some DoD CAG that contract in half

Bill Angrick

residual contracts We ended quarter the XXXX. The DoD still, Surplus ended contract – course, the of second in of ongoing. the have DoD year last Scrap

Gary Prestopino

Okay.

So there’s from drag DoD no more the Surplus?

Bill Angrick

That’s correct.

Gary Prestopino

you the there of in a marketplace, at then here. of seeing competitive the And things landscape are Okay. GovDeals terms any changes couple – Are the all? other in – in

Bill Angrick

be marketplace. changed agencies. has do nature players incumbent of is Over smart competition we fragmented And and traditional notion is I looking have of not how proliferate in our of and are play the frugal macro open manage local the government a beacons changing the sustainability marketplace is many our very The they to transparent government largest What as those and think which materially. auctioneers, of marketplace. time, relationships strengths I these that trends resources. Well, GovDeals very with a systems think to

Gary Prestopino

And questions. Okay. actual then purchase How company? two the is your versus GMV just more of much by consignment now

Bill Angrick

and XX% to that’s trended majority, That’s XX%. from anywhere

Gary Prestopino

Okay. It is consignment?

Bill Angrick

Correct.

Gary Prestopino

this you’re you through and RISE strategy, about So as then just go services. talking new

Bill Angrick

about that company’s guidance, the don’t think just we year As DoD guidance. rate that of I that where to component relative Let lower on higher at revenue. XXX% versus add revenue me the the consignment when to drops we – add GMV of provide to begin periods basis you GAAP GMV And look as a GAAP increases, dropped to is provide we model, Surplus of GAAP take revenue mix had financial prior contract, we that? how just the shift can

Gary Prestopino

Right.

getting do based what you’re I’m you’re – the I about guess, terms as of is, of when GMV. – at on look measure right success getting take really just that? what do of do you of look you measure increasing in you company, is how we is. realizations, at mean now would I’m the can’t at terms how we How measure you rate, what look So doing I’m do it it your – at I revenue – at – that? how the Or increasing in talking to we you

Bill Angrick

Sure.

I the over think more business leveraging as scale. you time, which business diversified is marketplace a asset-light economies of look at core our

integrating processes. We’re the underlying business

leverage. more driving We’re

scan percentage and a number eye revenue significant creating how customers EBITDA adjacent supply gross GAAP keep profit. gross software are to and value have even gross as that is that case profit of improves time is want our of in leverage demonstrated chain years, for buyers to returns an on a never self-service who, profit and You assets marketplace. there in our supply the and and over management software, the we the What of our our retail both sold industrial services are And creating that high-value we’re need large our customers customers. for on application sell addressing chain auction many, solutions. of case our for of There been many have value have by are directly online cross-selling lots or and self-directed

associated that And those but don’t – time, theme collect paddle so say fees over we these where you expect assets, we to be with services. we through asset-light a

Gary Prestopino

a guys. lot Thanks great. Okay,

Operator

for would [Operator to Instructions] the at I over any showing like turn I’m questions not call this further time. back Julie to Davis closing now remarks. any

Julie Davis

call. today’s for you in participating all Thank

and have Thanks up you If questions, we additional me, out good have a set again, reach follow-up. can and please a to afternoon.

Operator

for you in Everyone, all does a and wonderful may today’s conference. you thank gentlemen, day. disconnect. conclude today’s and This program, Ladies have participating

Liquidity Services (LQDT) 8 May 192019 Q2 Earnings call transcript