LQDT - Earnings call transcript Q1 2020 | Liquidity Services, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the First Quarter 2020 Liquidity Services Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Julie Davis, Senior Director of Investor Relations. Ma’am. ahead, go Please

Julie Davis

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

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

after for We remarks. prepared questions be our will available

of forward-looking The discussion statements. may materially. as Actual to X, XXXX, reflect management's your results following February questions and responses views or today will include differ

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

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

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

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

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

Bill Angrick

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

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

Group, is below the Assets while expanded gross our expectations. our quarter, our segments performed Capital Supply our of Chain their total and Machinio During representing performed majority business of GovDeals share, our well XX% Group Retail profit, first

the growth consumer we our GMV our segment, and year retail to second GMV to quarter goods Our grew marking over buyers. manufacturers of continue as deliver RSCG value year-over-year double-digit significant period, XX% tenth consecutive prior and

as clients signed and and GovDeals York, agency XXX in California, Minnesota, share GMV New over grew new we of segment added X% core Oregon, we market Our Texas.

the over year Our Machinio prior period. XX% revenue segment grew

we of machine to and construction commercial solutions our the As equipment, including equipment, and and trucks agricultural for sale expand tools, data-driven biopharma continue marketing assets. industrial

to for benefit from the our greater self-directed solutions availability and positive of improve regions. and our this will segment buyers. CAG in reduced our solutions to that and solutions and segment business process impacted year to the have sales, and area self-directed the in are our migrating commercial our believe have first platform our our CAG sellers. to wind-down registered sellers customers We industrial response We CAG million access marketplace and aggregated had our costs of and was the scrap and the flexibility of of recognized working our by fully-managed the as of timing versus more increasing need DoD control the power over the period declined our prior the existing CAG We're early go-to market in segment. X.X transform our Our Pacific softness Americas Asia the verticals XX% GMV diligently the be their contract offering energy from of new to and in of

reflected now which expect sales and clients Many of have within events, superior includes new XXXX. version assignments CAG with year sales activities destination near is course our NetworkIntl.com listings leverage, our and to of we've our these all from business during a multimillion marketplaces, more are of experience. to our service can projects predict sales, marketplace, realignment CAG we bid-on strong continue recovery in asset cross-border sellers term, We related industrial In a support the fiscal a find to pipeline that in the activated from guidance. expansion which in our transact QX our of the of marketplace strategy Buyers and these consolidates is difficult single to our user all buy focused unified on are which RISE beta maximization, which and assets CAG expense Go-Dove.com. increasing

consolidation, we our As the help market efficiencies anticipate we gaining we our new enhance in solution complete their as for can capabilities a own platform marketing and this and industry value verticals, marketplace buyers. These will that operational and businesses deliver value sellers us and grow our accessing who by services chain with and our grow liquidity for using the other platform players and affiliating of will

made our multiple opportunities geographies. leverage grow data-driven fiscal XXXX recurring investments direct investments. platform, to growth services multiple We intelligence marketplace the services, asset-light of domain We these the tools in and and to improved with of anticipate in year remainder revenue are the through marketing verticals a result as by characteristics we've excited expertise

increases and year during by guided objectives. will recovery technology Two, In following fiscal with XXXX be in channels. that growing experience. improving flexible One, operating offerings through models innovation and seller the summary, productivity. four, improves and markets. and increasing by and recurring net that with And our investments buyer through by technology service driving higher volume services addressable leverage delivering asset the strategic pricing expertise, our controlling marketplace characteristics attractive costs data technology revenue and innovation Three, our categories platform, expense domain that leverage

for Jorge on it quarter. more the to I'll over now turn details

Jorge Celaya

Thank Bill. you,

year on finished first guidance comment our range We quarter all first fiscal First, of for the will of fiscal year metrics. I XXXX results. quarter within select XXXX

wind GMV down to of the and including impact quarter first contract scrap Scrap segment. XXXX, adjusted sales of of declined X% down marketing compared our to EBITDA was wind and the contract. first DoD the the were X% quarter Compared GMV planned lower DoD revenue the and fiscal expenses. of in fiscal down our year of impact the on CAG increases As in and down year The volumes XXXX, of

in the again DoD from The year-over-year, contract first quarter and results net non-GAAP the X% including GAAP results loss Scrap resulted declined year. prior increased EBITDA XX% adjusted the

DoD and of by verticals. year-over-year including mainly slower XX% the marketplace with GovDeals current our were seller reported the contract the million; by driven partially ramp-up from Auction These down year. $XXX.X CAG segment Deals CAG in diversification impacted the last in year. segment the we in XXXX base. the GMV Group Deals of up GMV the of Supply of Chain improvements the expansion volumes excluding In new now from Retail X% this relationships up GMV These XX% energy our quarter was are included commercial quarter, and our industrial activity self-directed seller clients our offset and by was the first in wind marketplace fiscal year business of Auction first our GMV Scrap of decrease

the XXXX Scrap XX%. the impact segment GovDeals contract, Excluding of quarter of first of quarter compared fiscal including X%, the year increased wind this contract. fiscal Scrap down increased declined XX% again revenue RSCG the million. segment X% to $XX.X year the of revenue reported XXXX and first increased CAG DoD CAG DoD our We of

X.X%. contract, revenue quarter year. to up to XX% in DoD the was Normalizing compared year, compared segment the for down last same was last GovDeals Excluding CAG change auction the deals

$X.X of GAAP Our of first year million $X first XXXX fiscal a to quarter loss quarter net the million loss was compared XXXX. in year fiscal

from million increase in $X.X year. an loss net last Adjusted loss $X.X million, was

to loss lower DoD first These million. year in CAG the the top of including of in the activity from and marketing and going contract down expenses sales quarter forward. negative period support EBITDA planned $X.X line $X.X impacted Finally, a wind same in our the million, growth segment, was adjusted top by last declines were a a our increase decline Scrap line

million XXXX, XX, quarter We in and compared used cash have At in $XX.X short-term In the had to quarter, year. continue a incurred balance cash operations December we to balance $XX.X we the a of sheet. investment debt-free first same last million. increase a

to in settlement the assets The increase in from the XXXX sold attributable audit DoD tax seller mainly Final a fiscal and for Scrap improved of year of of with performance industrial be coming payments a expected financial compensation to deposit distributions a quarters. the year-end year sector contract, associated to XXXX. in purchase payments completion the sales fiscal was compared higher

Our subject a seasonally year natural tends payments to quarter our on working cash first receipts variations, timing and to capital low quarter. depending be of accounts are and the fiscal

million acquisition in earn we changes the out fiscal working our in quarter requirements payment XXXX, that upcoming the year expect fiscal be paid will of Machinio capital $X this year second than in do unusual Other not quarter. second currently

quarter enhancements and our ahead of our marketplaces, second commercial year adoption Looking on the increased marketplace to new of commercial of self-directed technology and remains continued focus solution. unified municipal our our and growing adoption higher fiscal government XXXX,

models. our grow We flexible our the segments top higher demonstrate recovery GovDeals service and continue as we RSCG value will line expect to rates offer and sellers through that we GMV

will segment from second CAG our anticipate We down XXXX's year fiscal quarter. be

legacy will continue auctions marketplace. industrial begin and grow segment CAG will cross-list to marketing from We of and and unified also marketplaces new and cross-market We the our equipment. our Machinio believe heavy our expand sale our across data-driven we solutions as to

We sales data capabilities, marketing marketplace, new driven tools on will unified user enhanced continue expand to our and experience.

fiscal loss $XXX next the of GAAP year expected from for negative million of non-GAAP $XXX,XXX. quarter million second the the ranging range million, EBITDA for is $XX.X XXXX from loss to as $X.X negative a the to the of in negative GAAP for million. quarter with $X.X negative year for we for negative GMV guidance a range expect a quarter per adjusted of a XXXX XXXX, to the quarter share. fiscal range fiscal million management's The a year $XXX $X.XX year fiscal is positive to second of from fiscal XXXX follows: to second A corresponding $X.XX share We estimate second per a net net to quarter

for negative weighted estimated that shares of of quarter million of outstanding the we adjusted have approximately XX.X This loss share average to negative shares. non-GAAP $X.XX. fiscal diluted per in A $X.XX range the a for quarter XXXX is guidance second year assumes

you now take any we will questions. Thank and

Operator

comes Colin question [Operator first Instructions] Our Sebastian of from Baird.

Your open. line is now

Colin Sebastian

you. thank Well,

and key the regarding part through in I the guess, return you First off, And the with year-over-year GMV guess, factors when I that the driving Bill, slowdown talk sequential of do of How year, that? as important can for improvement? expectation growth question, you a offering the is capital have part in into visibility the in directed to about self- assets. much stabilizes sense, the how same this

Bill Angrick

seasonally business the strengthens we and time frame. June March the through move So as

performer, consecutive the demonstrated I quarters of GMV been have double-digit consistent growth. has segment think a we retail that strong XX

is the think environment macro online for retail. for well, the to expand shift market tailwind retail and for mix outlook continue a that I is business certainly to the favorable perform share to

more applied share this opportunity they dense quarter account up the the over expansion territories. a the existing done GMV some originated strategy. and good been There's and Regarding resources existing in accounts. to southeast areas, to the Midwest. continue And coverage to offer are management of provide with another agency lot Recall, of but sales to solid business, team of business grow of Coast and new GovDeals We've East and the to out work the continue market XXX lift refine more appropriate territories. fairly those

So growth better more rate applied Equally, to States which move as we grow mature we've to our that, of improve United coverage large Canada. we've in the continue XXXX. should metros market, and Western added fiscal in capacity and through

that New of signed Texas, California, and large a equipment the feeding target-rich which We current in managing have think of for experienced very York, some quarters I of that. in in We our environments with high-value the GMV expanded all a emblematic lot and assets. pretty is network expansion Oregon transportation in Caltrans marketplace. we

So are important I things. those think

delivering user is the driving to adding I strong upon the in depending The mobile to we're interface path to a other and our design that experience. and buyer facing thing better marketplace capabilities And better at traffic. our we're responsive XX% say mobile marketplaces updates. of merchandising through by participation mobile We're purchase offering XX%, would a

less going predictable. So episodic and CAG had those the project, to growth of of has another cadence positive GovDeals our I where projects think be history within timing segment. a that's is for improving

trade We going we complexity. days large multimillion the lot XX visibility to Those visibility, activities clients. a what's queue And with tariff cross-border are XX with to our in see of certainly current and projects of with auction those realignment dollar with about good out. have issues timing the dollar, more regard

China, predict throw Beyond to conduct Asia. affects to issue that, inside difficult and you in of only much it's that buyer's of in business willingness And more from not China. potentially outside coronavirus travel assets but

sales year, something we And need pipeline. so look to healthy to but we that the is have full very that when at CAG a we monitor continue just

think CAG. within type current And bit quarter, next becomes -- needle-mover within what projects the drop, quarter or with where difficult that's when visibility I -- some our of fall projects. in the they these little are they more a of

driving scale to broader attract allowing of unified is I more us through think the strategy business. more self-directed of our economies marketplace

just Internet fixed That to negotiated our their empowers a without have It's price may offer been with The is with manage more sale and whether traditionally used who platform. reserve, own. can client, the an control This an client auction bring volume where the channel, reserve, in their a their place, make corporate now it's can the that tool sellers They stay the entire by circumvented our offering. the self-directed volume now client buyers. sale, one the platform. of or it's assets corporate on our own to timing auction has process a whether methodology of not

that. to capture our in touched commission GMV. willing asset, also it's for used are marketplace exchange we our segment the will self-management. our a where another clients in both growing tapping which legacy part think them clients. more traditionally we work competitive exchange, for which ultimately In in value for and So clients, directions, leveraging are of catalyst up that interested offer we that we've is to regular share, our capital going of do And these we've our introduced base, do in Many believe that's all of buyer market commercial the show them some of of more we and a market rate. That's discussion; not of to

Colin Sebastian

that. clarify So to just

Now Or the is a to there new the are those self-directed typically incremental client existing effort? from clients? base conversion self-directed

Bill Angrick

network we examples wait And It our who their is regular on network; equipment sales basis. do each uploading and year through own, own us are own would few those self-directed else our a both. marketplace clients typically on their buyer everything both. more their now using is or handle dealer had with of a It at tool sellers large looking to

create recurring go where many more and place So flow of of fully the us have is we work do that service, for helping been will clients from the into business them. strategy traditionally their managed these

So that's the current client base.

load in sale successful And few it seven complete what as on assets that And a like UK a their business be and days. evangelize that gradual underway. within transition's will examples. or showcase doing we're own transformation and we -- the We a had a five client within

a So the wouldn't it's type us platform. global us is very of that a a self-directed activity for of exciting geography have in platform because showing client who the with of thought different traditional as scale

ways, many self-directed. for of eBay to in us with as business-to-business think So an respect

equipment services we facing we side out And bring Although it's lot we green some for commercial shoots to regard With rude natural and of construction customer we buyer service, more new in and vertical the complementary provide us a see sellers. sold vertical, onto fraud, high-cut government buyer the transportation our a of the volume business, the construction to collect a significant for prevent commercial area the volume the we self-directed protect on platform. to and money, sellers.

your categories light-duty I the very for strong agricultural tool how trucks, So high-value trucks, using the as of have we Colin, updates think transportation, construction buyers in year, see of because we those categories are equipment, successful commercial new move self-directed we today. these you'll on equipment, clients like a our through some heavy-duty set with

Colin Sebastian

comment Okay. there's headcount And think then, and hiring. around I a

additional for already of I thinking accomplished? tailwinds that, these some benefit that you about have? are what be costs from And layered to you profitability, Thanks. And potential related the or revenue to how of those have guess, of of thinking the much – year going progressing that – guess, be through So and is through curious we I step-up against those you should as that year? incremental – I'm

Bill Angrick

progression the think quarter. the June will I continue through

all business fiscal achieve about a as September and Our exit the to is leverage is XX XXXX, we which focus as we talked things profitability guidance and quarter.

function, aware We're Commercial a I Officer very of the marketing with creating additional, through the scale and on process a in Chief about of resources And covering the driving from sales opportunity our the marketplace. of driving economies call we're unification it, investment sales process. organization, appropriate this sales So acutely really, sales that perspective. we is mean, automation. ROI have

And the driving more is quarter. And another on marketing that's investment important continues the of supply through automation, underway more for matching machine technology I base. that's think and June area stack, the of buyer that with us,

a as think, and XXXX. in is As we focus us more we important efficiencies drive and maturity exit ultimately, goal profitability very areas, I fiscal get have those we for

Colin Sebastian

last the thinking buyers Okay. churn how And up marketplace, new – respect as out time then about worth frame learnings and beta? you what's for to and are move me. potential The And legacy key the over pointing the to with unified site? any there anything rates sellers capitalize

Bill Angrick

Well, logical business, for too. the is evolving, think place it's Sure. I a

there is And and have, of the over obviously that's experience. there's that of economies We categories through a of tech overlap, type terms coming single between industrial user of such GovDeals, housing insights, single platform equipment with XX% overlap asset in our with of a high clients. scale a in the degree

filtering by continue among the on like buyer significant, in that there'll more recommendation to type retention experience. of side, grow a be believe more and engine we opportunity buyer navigation equipment, indexable much the a So that in system not cross-fertilize to having but base inventory improved

mobile experience, opportunity recovery money, items the obvious for a more through marketplace in an experience. engage better with better it's lift desktop us, for even quickly to And supply buyers of terms allowing selling in through rate, the

the that opportunity to we base buyer so value. think going by there's to be bringing penetrate that further And

seamless community. use that seller in tools, the migration managers. have On continuing the the with fairly seller side, They're login is relationship we for the same manner a organized to same

needs, about support. So give supply, them find analytics continuing it's to the really to solve their available ways penetrate

think only one the in our the in to of and analytics we highly not as verticals marketplace, of happening, around invest we marketing in I areas will believe we valued but industry serve. that more be continue broadly the what's

we on investment categories, equipment. broader it a entire construction, biopharma much agriculture, And industry our be perspective in with Machinio, whether have

the about and and cycle our and assets And these able reports insight-driven have an be with will sell to volume very that what to and how what are upbeat do. of we're package sellers tools we're type analytics that customers the going time to so buyers worth, is, provide asset industry allow these can engagement to on we further propel improve

Colin Sebastian

very Okay, you much. thank

Operator

would Thank you. to I call remarks. this session. question-and-answer does Julie the turn any over for to And closing now conclude our like Davis back

Julie Davis

our call joining for you Thank today.

If you free please call. Thank feel This and to concludes afternoon. questions, now nice have reach out. additional have you, our a

Operator

Well, participating. for gentlemen, you ladies and thank

You may now disconnect.

Liquidity Services (LQDT) 6 Feb 202020 Q1 Earnings call transcript