LQDT - Earnings call transcript Q4 2019 | Liquidity Services, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Fourth Quarter 2019 Liquidity Services Earnings Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question-and-answer session [Operator Instructions]. Please be advised that today's conference is being recorded.

to conference like speaker to would Ms. today, I hand over the your Now, Director Relations. of Senior Davis, Julie Investor

Julie Davis

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

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

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

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

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

certain will each with measures. During site. Web is discuss our call, which filings of non-GAAP this our release SEC, press financial our and in we In posted

disclosures additional measures, measures. find with including will GAAP measures these regarding comparable You of reconciliations non-GAAP these

also as of operating results. operating data superior of includes supplemental components also investors. volume a which merchandise GAAP should not and a certain and considered substitute use gross for we management certain is performance, supplemental believe data measure The be to useful We for operating or

time, I'd Angrick. to over Bill this At CEO, like to presentation turn our the

Bill Angrick

provide to welcome quarter QX and our provide on 'XX. earnings update and the details QX will morning, strategic performance Jorge outlook on and Good our initiatives, call. Julie. for you, an more Celaya Thank fiscal QX key our review as I'll

quarter consecutive and of of eighth results, with RISE our growth, GAAP revenue EBITDA our of quarter including second execution strategy quarter continued reflect GMV results our consecutive adjusted consecutive sixth organic QX improvement. solid of non-GAAP our growth, Our growth

operations Chain GovDeals in seller assets asset choice segments. Retail efficient Supply increased effective Our which and recovery, higher broader and services our more of from for promotion, sellers of a drives to an deliver strategy continues flow

in 'XX, results Our adjusted benefits over and prior Further, adjusted line million organizational XXXX top a fiscal QX line had the QX marked EBITDA enhanced operational from cash growth improvement and continued positive marketing fiscal year the past improved in fiscal reflecting our XX% over efforts. realignment bottom years. $XX.X 'XX flow in efficiencies, we operating two and EBITDA

Stepping growth. back and at of resume fiscal objective to looking organic the our year full was 'XX,

in people to investing sustain leadership, services While product, and these accomplish we market our objectives.

the of and grew of despite For $XXX year our $XX unwind million GMV loss full million programs. the we the full DoD contract XXXX, scrap DoD of to fiscal by the

first in Of XXXX GMV note, the fiscal was and GAAP year years. growth of consolidated six revenue

of EBITDA down For million, $X.X year DoD XXXX, wind by in partly adjusted top segments offset and expenses, we by line full the lower the sales by growth operations and increased driven contracts. all our

been stable $XX at at has 'XX. position end of million the XXXX relatively at $XX million fiscal cash fiscal year-end Our compared to QX

to We long-term continue zero debt. have

offering remain are by trajectory We this and committed our improvement continuous encouraged operations. product in our to and positive

retail our at and in buyer a and by grew strong participation existing our volumes chain segment, higher marketplace. take in supply within highlights of account segments. business in the XX% look GMV online we'll our Next, Canada, and both group retail U.S. year-over-year driven new

core with offerings. drive maximum business We continue them management recovery returns services and to reduce financial helping expand manufacturers marketplace supply costs our our chain retailers and and by with

goods of our GMV XX% Scan-n-Sell also to and software expand our quickly year-over-year in continue these and for grew smart decisions in dispose leverage more returned to Self-Directed apps areas value. maximum to customers over We make to data QX.

retailers service mobile devices providers. sell and and OEMs, manage to capabilities new launched also We've for

category. new this about excited are We

large year-over-year in 'XX, very which individual period comparative in includes QX strong quarter segment GovDeals the grew a some Our GMV fiscal X% asset despite sales.

share market and and our wins continued agencies we Phoenix-Mesa authority. Christi, in the Corpus XXX signed Texas Airport quarter, expand new Oakland, Gateway over However, including California, this to

markets reflects variety sellers in of service agency assets. the and convenience wide provides growth consistent the Our that value, government solution a our across GovDeal government

CAG down of wind biopharma industrial U.S. the and by with energy across segment the due declined XX% verticals. in was the prior-year This from to softness and of GMV in period Our our contract machinery markets. our vertical the international strength Scrap Americas and Department Defense our offset

use industrial solution growing buyer which self-directed our solutions, and gaining data e-commerce with we resonate and to clients' adoption in base leverage sellers, technology continues are of platform, Our our our analytics.

we modern, also mobile-first SMB equipment feedback, launched during on sales market QX. storefront our and offering continued online our storefront Based our to with roadmap which our with host their integration online to seamless product machinery customer product, provides classifieds We advance a marketplaces. customers used

launched 'XX of new customer aggregated also we testing our the deploying continuously We fiscal year as and marketplace, beta and during be new version features prioritize functionality on we'll feedback. based test

asset innovation and the make find every powerful using as we 'XX for will of our year to power marketplace year growth continued buy technology value. and and more buyers Fiscal to for easy Our a hands buyers it create put be sellers the and of available stack. sale marketing new into will unified services

our our order meet tech profitability, organization of expense Moving sales fiscal objectives continued competitive forward 'XX, to growth in time. position the have in our stack in we enhance prioritized RISE at and short-term over marketing to maximizing investment and

strategy guidance vertical we the our While full prior softness the offerings. expect our energy our international reflects fiscal trend for versus year growth general year response XXXX to and our QX to period, the RISE in and continue due to market's CAG,

driving focus controlling revenue by costs attractive and two, leverage recovery service channels; three, technology guided expertise, with and innovation technology and leverage improving the markets; through operating improves and following the innovation XXXX to investments productivity. asset that data services one, by increases growing domain be higher increasing recurring fiscal buyer addressable through our objectives; strategic four, net Our delivering platform, and by and experience; categories with and characteristics pricing expense marketplace will finally, flexible technology models and that volume year during offerings

for In as now driving for committed Jorge long-term to it customers closing, value our details remains we turn over I'll significant our our and creation on execute and strategy. RISE more on the Liquidity shareholders Services to quarter. innovation

Jorge Celaya

Thank and good morning. you, Bill,

reflecting fourth and GAAP business fiscal Machinio on I comment results. year range First, earnout quarter We GAAP based below XXXX of quarter EPS. XXXX select EPS on guidance the and year EBITDA the within will finished loss performance. for fiscal net GMV, the adjusted of were solid range, the and adjusted

strategy. our Our fourth quarter of execution ongoing reflected growth results RISE the

and RSCG and GovDeals to our GMV trends the offset positive business our scrap continued of As XXXX, adjusted fourth the by the and in commercial DoD in segment. reflect CAG quarter within were compared quarter to lumpiness wind-down segments, contract and within period the the EBITDA up the

expenses, Comparing was to GAAP one-time of higher, million quarter loss quarter reflecting quarter. Fourth EBITDA year-over-year net adjusted GMV fourth non-GAAP in quarter year. consecutive results the improved fourth the prior over Non-GAAP and XXXX, loss eighth $X.X for improved improved XX%. adjusted up X% was while net revenue the the

partly GMV year year new was from quarter GMV additional existing group solutions market. up the CAG reported activity new volume In and on the business in X% a by adoption of decrease driven energy sellers. from GMV accounts, service the fiscal and XXXX, fourth in quarter, of vertical $XXX.X client and from product sales activities in were was XX% existing seller efforts in scrap by the up XX% lower on of pipe the from the and development offset supply CAG fourth Results decline new ago DoD segment offerings. flows year-over-year our million. Retail contract consignment an we chain GovDeals' increase

of reported fiscal to segment revenue fourth increased We increased X% compared XXXX. increased revenue the year quarter year fourth and RCG our XX% GovDeals fiscal XXXX of of million. quarter $XX.X CAG X%,

quarter the up Excluding segment contracts, to year. same the CAG revenue compared DoD last XX% was

loss act loss net in new was and $X value year fiscal the acquisition in 'XX, year million fiscal of Our fiscal expenses, quarter the year of the restructuring a benefits XXXX tax XXXX fair business million adjustment in earn-out to impacted the in year from compared fourth fiscal by XXXX. through the changes $X.X GAAP

last of was improvement driven growth corporate functions $XXX,XXX, to business This fourth restructuring EBITDA net and $X.X XXXX, an XX% was by loss the top-line expenses. during the the a improvement lower a from in $X.X RSCG fourth expenses improvement due Adjusted And segments, quarter loss were by negative and and million million increase in quarter. million our year. of year marketing GovDeals our indirect prior in sales offset $X.X of closure loss our $X.X adjusted was a of million, from finally,

and surplus in business, trend contracts in and year to results, Turning solid in modest when GovDeals performance GMV our year energy growth our full growth sector. reflected CAG the reflecting and our the and the RSCG excluding DoD segments fiscal GMV the XXXX, scrap

GMV higher as deals growth XXXX $XXX.X was and respectively. XXXX of year Surplus million our or in consignment from contracts and up offset GovDeals million, $XX.X the RSCG segments, by activity DoD mostly year It our X% the fiscal XX% X% to and was from impact wind up last down fiscal Our compared CAG Scrap and year.

or DoD surplus fiscal segment from despite $XXX.X both year. the XXXX up periods CAG reported last our $X year in million prior and contracts year wind million, X% revenue down We of in our scrap

compared prior revenue was contracts, year. GMV the X% year fiscal and Excluding the XXXX DoD total up XX% was up to

million $XX.X prior a and fiscal to For of negative versus $X.X the in million Adjusted $X.X $XX.X XXXX, net to year loss $X.X prior a loss improved was over loss improved year. million net million. year the million negative a EBITDA $X.X million the GAAP adjusted

debt September balance have million. investment cash had At short-term a balance to XXXX, continue a $XX.X We and we free sheet. of XX,

Looking municipal offerings service solutions. our remain which growing experience XXXX, commercial executing continue adoption position We marketplace. fiscal aggregated enhancements commercial our serve sellers offerings focused self-service on better will our sellers, we buyers for of and our us flexible seller an and to will enhanced buyer growing our ahead marketplaces, focus new incremental year on believe and to strategy, we through government and and expanding new and buyer to RISE

results by year CAG will impacted be fiscal segment, first of as comparison in period. fiscal QX the quarter in nature reflected year Our our episodic strong XXXX the comparative XXXX

our We see municipal expect have continued Year-over-year, growth seen and the we year XXXX reflects pipeline trend comparison in an outlook the during on our quarter government first activity fiscal business. improved based quarter. in

seller Scan new We offerings. see we enhance and and and segment, service mobility our participation offerings, such as Sell our in new buyer in to improvements RSCG expect app service as

making are timelines. progress with to we our that sales a we offering, CAG service hard While predict have expect one-off overall strategy self sales potential new segments lumpiness go-to-market from on our adding in refined

the for fiscal guidance as follows. next Management's quarter is

year fiscal quarter XXXX the XXXX first fiscal range $XXX GAAP ranging $XXX XXXX per share first million of with loss GAAP a $X.X negative expect expected for year $X.XX The to a to negative corresponding from million. a QX per GMV to from for share. for $X.XX in to net negative of quarter negative million We range loss a is million $X.X

EBITDA non-GAAP guidance assumes approximately adjusted We million XXXX adjusted range range we that estimate from have negative diluted the negative loss for the QX outstanding weighted estimated per of to The $X.XX non-GAAP shares average $X.XX shares. in of for quarter per XXXX of $X.X $XXX,XXX. to of is million QX XX.X This negative negative for to share share.

now We questions. your will take

Operator

a Barrington go Prestopino question Gary with have line from we And Instructions] ahead. of the Please Research. [Operator

Gary Prestopino

be couple little the market -- GovDeals the where of we had consecutive a timing, could of in in you there? in quarter we competitively the teens' that you maybe have this are seeing it growth your in growth I or anything haven't first, that think quarters. last had kind that is second bit the terms of Could

Bill Angrick

the competitive varieties in-house different there think landscape solutions. and of offer marketplace for various I companies. No, the types Certainly, solutions to continues is

so is, organization. I fundamental previously timeframe, 'XX He tail was our Weiskircher, assumed named, the about. things came effectively did, you from at that recall brought And our XXXX the end role on CTO, President a gentlemen very we Steve GameStop, in excited we're We think may and one fiscal really in over 'XX. the also segment. CIO of acting of in fiscal of Gary, the that fiscal September the realigned we GovDeals new

factor Chief not huge make Commercial everything I for and Additionally, JD we're we think performance organized that the to difference, 'XX. doing. realignment for role, in our organization would role, is going occupied sales and that one around Daunt Officer GovDeals, just during organizational a GovDeals undoubtedly but And by fiscal be go-to-market

Gary Prestopino

cause in the -- comparison. the that with this strategy would fact go-to-market you that that coming had changed new growth did in, he that GMV So individual what change had besides with has the emulate What a to that tough not historically? we

Bill Angrick

said the role. the you sales is fiscal also during occupying Well, had that organization overseeing person 'XX, the I effectively what CIO

the growth not for organization, And that, important is sales driving fully I'm it's fusion for attention, in to process. created time, and So ideal dedicated sales the the function. that at saying of is continuity focus the sales what new the maximum year-over-year managing the role

We had to I up when segment we number is what at opportunity, that that of a unfilled And seeing optimistic, very be the think open were to actually we're growth Canada, a doing. And in that built. continue we're you we fiscal receptive very now move picking GovDeals as U.S. the the positions 'XX. are look and both into growth

Gary Prestopino

then the And 'XX sales maybe you're another if categorize in you investment fiscal you're sales, doing marketing in would investing as obviously the what year of side? then side, in and your doing on And categories level you investment there? what marketing we that versus to a force. where looking correct? sales that side at also Is are in you're had the we're adding But higher those

Bill Angrick

where of because we Well, the the like can expanding to tools continue organizations will sliver of control tools, enabled XXX we to there their platform those analytics allowing and offering. in Fortune getting make and the the is process. their in volume aggressive volume a of and manage areas, of a many in sell we're we products more our technology for and them efforts be couple market because investment offering focus self-directed service demand accounts we were taken feel We've are the Clearly, investments things.

excited very by we're that. So

management them offering, terms of the government in clients management support organization, be fully a that we have enabling the the marketplace will people headcount In geared sales tools be both adding will us act involved train them, touch types for we as And sales have hungry and lighter that's excited these offerings sellers and that role be a the inside also that commercial options, be are up a be managed will type the project to believe ask set but asset will help both that sales touch. organization that These are of lighter of the yes, to and providing and lower-fee those to for and in could verticals. to teams functions, to support.

driven facing One more aspects observed match I practice third-party there will promotion is creating to that stack, automated, We'll on best buyers is to and recovery are leveraging asset that algorithmic tech marketing the of terms our In on machine marketing product so approach our think with data tools transactions that have data two store behavior, large one we of increase the to based own that. buyer the side and their that sort the and rates. asset do sets.

view recovery areas, we're of And and that and specific this enable into enabling our for will learning more and build buyers sellers. support out. our do sales, group tech those stack, team the high machine in progress more to continued that the support Those Year, bid our that there marketing sellers, Heading by our sites Over making. further has to marketing volume and build capability are require things us and buy will becomes from that roles development two how we're testing team and to tech a click and is from capability. of customer beta the variety encouraged New time

to more deployment And moved, from a methodology. we've deployment waterfall Gary, of methodology agile

prioritization to we features that acutely winning can hearing those a make strategy. at is we're more weeks, of with customers now customers from and to and with of aligned our progress and most tying the features those releasing businesses much and cadence part a where every the allows key us we're be So two what of XXXX

to capabilities we'll excited have great to be and we're add stack, capacity. tell story that clients, the tech our growing delivering simplifying And our number a the the enhancing and message we and of So technologies people then to the marketing to prospects.

Operator

ahead. right, Instructions] from question we have Research. Prestopino, Barrington All [Operator Please Gary a go

Gary Prestopino

I and follow-ups I'll just then had two off. jump more

wound that fiscal and totally has the that's any effects going down not to of been have in terms 'XX? scrap GMV In contract,

Bill Angrick

The fiscal 'XX. the on fiscal basis, of but not business. fully the wind is down will There out a are contract That comparative -- from impact and wind-down drag will be removed right. contract of year-over-year scrap we the DoD legacy that

Gary Prestopino

When you're saying is there it GMV the drag profitability, on a but drag, -- drag is big Bill? there a on is

Bill Angrick

that remove with to realigned we've No, associated contract. direct costs

Gary Prestopino

that category, for I retail Was XX%. in Jorge, on -- on were board business the narrative you up just was also going whole then said s or the -- that And across company? through think self-directed your the you the

Jorge Celaya

board. the across That's

Gary Prestopino

share business Can of where is maybe now your with it us what you was... versus percentage self-directed

Bill Angrick

or offer volumes means every haven't that broken mix a GMV It's our deck, and solutions now to We conversation, I than But of clients believe half the disclosed what be you the a do. the control within believe Jorge And that portion per self-directed would some we capture self-directed. it is for that a of that segment in over And investor and then purchase tell more again, is have overall business se. us. deltas is have would various circumventing of business that we're out. world in I by what us GMV service. on aspects versus is helps model not want going, consignment our consignment team we in to now the able continuum added where

Gary Prestopino

you you're look at that I mean if metrics generating. your, the

metrics those are to if look you GMV, revenue, most in profit to profit to you -- dramatically… up gross revenue gross put to of profit gross at, QX, If GMV, pretty

Bill Angrick

And look two -- things over bit revenue. time. a in expand will on the higher in our self-directed That's that to going of profit tried the see that is higher bit of things indicate mix measurements. higher margin business every in you speaking, the so CAG generally to we it have our is solutions volume generates a if margin, hand, exactly. the a get you're business, issue. we GMV, or keep segment leverage overall deal it, a of that that purchase that for a consignment a gross deal percent we mind, But one then lumpy, obviously trend profit margin one Yes, principal to gross create -- one it's I When at less a of Yet as that business. within you dollar business particular

as self-directed let they we get weeks. is, noted that very little any the and it's But and one important just not little So revenue up you scale trend that more see and more the the there but but as you may hard go over time, on have we is eye we a a situation. tempered the to more relationship gauge, close I'll growth to revenue quarter speaking, need solutions, margins into generally as keep offsets than margin but on, the GMV have the a

Operator

showing call like the would you. not back to to queue. remarks. final questions turn Thank for the further I And I'm any in Julie any Davis

Julie Davis

you. Thank everyone call. today's in participation Thanks your for to

you This afternoon. reach have you a nice to If call. our Thank questions, additional out now and follow-up concludes please have me.

Operator

today's you for Thank you. conference. this Ladies gentlemen, participating. and Thank concludes

You may disconnect. now

Liquidity Services (LQDT) 10 Dec 192019 Q4 Earnings call transcript