LQDT - Earnings call transcript Q3 2020 | Liquidity Services, Inc.

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

Operator

Welcome to the Q3 2020 Liquidity Services Conference Call. My name is Karen, and I will be your operator for today's call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. the to turn Davis. now will call Julie over I Julie, begin. you may

Julie Davis

to Hello, Conference Quarter Karen. you, our Call. and Results Thank financial welcome Third XXXX Fiscal Year

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

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

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

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

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

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

William Angrick

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

while and team's of in continue June to to the sellers value quarter during quarter. our Celaya volatile one our will Jorge to deliver provide Next, during adapt effective the the history, manner. and details in on periods efforts safe quickly buyers most a of we We're and proud very our more collaborate

months. from away the the compressed online Years Without the digital of past have traditional a have question, a are solutions. in consumer great positioned to in digital few pandemic, Sellers have platform liquidity are and behavior of post-pandemic shift witnessing customers we meet and online a stable, services seeking well solutions investments world. We been during years needs adoption to solutions the few infrastructure into efficient, no made of reliable buyers our scalable. extremely are largely that and contact marketplace technology

technology our and safety, conduct evolving In space. We strong our our services the in safe and are role embraced Q liquidity in sellers and economy convenience. increasing share and will government have proven that and agencies and solutions market essential manufacturers, the foreshadows retailers, context, execution, as result during to embrace services ecommerce this commerce

are unique environment, Notwithstanding more delivered the results fielding volatile all quarter. during June inbound of strong our the of We capabilities. because our inquiries segments across we

that our assets. the to retail XX% declined year, monetize GMV year-over-year our segments. and the to prior XX%, business grew in reflecting in declined compared Govdeals in on CAG GMV and government Our remainder topline employees month results then as economy began quarter by to And both were the the of in of locations corporations impacted we the in back of sought steady various and segment XX% closures our segment primarily increases GMV the degrees had our saw segment agencies welcome the facility physical to closing and April.

in economic an segment lead generation many Machinio uncertain XX% sellers, for our marketing customers budgets stretch looking by equipment small whom are year-over-year, cost-effective driven environment. to their increased solutions Our revenue of business

together office the as solutions cash digital April entire well the EBITDA service helped drive of and upgrade flow and reflect took and outstanding resources. to benefited dedication These conserve These of during historical team positive marketing, results generation. our to circumstances. results deliver GAAP the bottom-line net as Our in the actions ingenuity back our and services, consistently income, supply our strong reverse adjusted our EPS and in the previous business to regardless our realignment organizational from to initiatives quarter functions, key centralized ecommerce, investments we GAAP chain

new During such allsurplus.com, QX, we biopharma, which in continued goods, sale assets consumer equipment, construction, nearly to and industrial XX,XXX enhance features key consolidated transportation. our marketplace for categories now as energy,

provides needs. that live assets sell solution We the in-person have they our for enable equipment exchanges. marketplace to the added new In convenient inventory which and globe access need require meet to their self-service platform eliminates features business low-touch buyers online, around turn, the a to

our all and filtered an in navigation, have machine higher sellers, experience our that recommendation of platform. able along investments is with buyer new assets higher witnessed well-skilled are recovery individuals businesses buy better our creation marketplace and experience improved the world from also in We've for sell the buyers. platform conveniently to sparking mobile driven using resulted for throughout who Our tools, a and our participation

was this year, direct U.S. XXX% unique AllSurplus in increase buyers parts and increase pandemic XX% these increase sellers QX of registrations, many attractive promotion marketplace. XXX% on XXX% a to in buyers a traffic, access increased for to the the in our had Compared transactions the bidders, buyer a appetite in in early resulted of increase a AllSurplus has the in Asia For as in classes than of in particularly more to buyers example, asset our

adapt and We continue to self-service our processes this believe the new early over distancing business and attractive services. due as cloud-based be desire time to to its adoption shift an continue primarily pandemic. marketplace self-service solution business social and an to as of We sellers growth increased opportunity, see will guidelines buyers to to model have sellers

forecast and are is to on financial not and impact U.S. and in will difficult and for evolve business guidance. thus, QX closures, forward, their public the us abroad it we providing activity how facility policy economic and Looking very actions government

monetize However, assets activity to have seek safely an seen on have we our in these reliably. and economy facilities as platform, and as the organizations increase marketplace reopened, seller

through to retailer fully our services. Our and marketplace and self-directed retail both to continue expects segment support our needs managed omnichannel online

secular and positioned way, of during while or marketplace a returns continue closures we the address and of equipment selling needed and chain sales facility provide solutions business to well globally buyers base. positive the will traditional from pandemic inventory expect we long-standing require supply create needs travel term, in address excess or accumulation We our more and conditions the cycle. equipment restrictions our across by to are normal the the segment, caused online any of sellers will our value-priced will support industrial are reverse comprehensive retailers numerous needs growth the industries the retail a logistics in to for CAG short liquidity seller demand our future high-value reputation the a from for headwind for with need the maker market to believe and In

expanded as new AllSurplus will transportation. solution construction new and and areas self-directed our Our also support business provide in growth such low-touch the on long-term CAG of

enable environment. the the improving to of agency the global solve challenges pandemic. experienced and the as no turn quarter. positioned has we are us across clients online In to current and ingenuity relaxed restrictions, segment operate sale and strong Govdeals advance ideally of of is the public details buyers we a for you, And our serve. platform a positioned sector efficient evolving the closing, our solve to with it well impacts Our to management strength weather team needs and Thank I'll sellers the of more proven over and momentum contact in to have and respect the efficient, there the of business is to now environment more and of industries the will governments Jorge record track model our Govdeals' on in desire equipment.

Jorge Celaya

thank Good morning, you, Bill. and

Our with environment business uncertainty. by third in light disruption especially COVID-XX pandemic year fiscal strong, quarter were and XXXX ongoing of the the of volatile created results economic

quarter as to from lows third the improving trends topline reopen. Our as began quarter showed business April and performance in the unfolded governments

our are also manage in swiftly with to We on progressed. such through needs, with execute as their the the topline combined of purpose our our business helping on and with quarter customers an a results challenging focus environment, resulting pleased improving ability

through the with GAAP services market in adjusted solid GAAP EBITDA. pandemic. and income, reception our We the ability platform positive include this generated customers the our net results service during to most are to to EPS, our positive We offer required that support pleased and offerings

third resulted quarter million EBITDA of of and $XXX,XXX $X.X fiscal revenue income net in GAAP XXXX $XXX.X year adjusted million, Our GMV, million. of of $XX.X

our in segment, during Despite onset in retailers the RSCG reopen. X, of to was results down conclusion quarter the restrictions. XX% businesses focused resources solid close in impact in As in driven clients, of in essential despite segment. global as our was within DoD compared growing and on the buyer the GMV in Govdeals April Three, segment government and retail May goods. and COVID-XX revenue by exceptionally our to and growth online continued and low traditional in goods and by reflected, and forced closures accounts CAG again to a of Activity this the third ordered down as revenue COVID-XX essential online GMV CAG for year, as business activity contract our providing growth of existing June travel year were seller impacts facilities These to customers reflecting both government segments fiscal began demand XXXX strong the initially spending and XX%. our our increased consumers on cautionary pandemic. scrap retailers and in volumes one, our pandemic, and result of X, Machinio

last GMV of was last specifically, XX% pandemic of XX% quarter down and solid DoD performance Excluding difficult More our the in a conclusions conditions. scrap revenue GMV retail year X% services revenue. XXXX segment on and up liquidity was RSCG our the consolidated compared down X% to third on up for year, fiscal year, contract

down revenue. tax XX% GMV was down revenue. contract, down Yet up XX%, Our GMV scrap and was the segment XX% while the XX% on CAG and and down XX% in revenue, revenue Govdeals XX% down and of segment segment was DoD was our XX% excluding Machinio on GMV

third of year for quarter income was GAAP As $XXX,XXX $X.X million. improvement XXXX, fiscal our of net compared to the an

million, adjusted million. Our EBITDA by $X.X improving $X.X was

fourth and We payments. and in cash quarter. with quarter balance vendor sheet control in to the measures some quarter last have to We taken upcoming $XX.X cash, deferred anticipate the million million related quarter ended third $XX.X compared a payments other the making up in do debt-free

sellers, reliably the own pandemic customers. of impact new the to COVID-XX continue to our and monitoring deliver our closely existing operations, our while on economy, we buyers our our are We and on services

some to restored priority or full X, full quarter technology we and As address status, base announced to demand; took client back to sales cautiously last we an One, resuming quarter. update are a employees we portion to full-time all mainly during the and X, investments. we un-furloughed organization for returned actions furloughed of this our pay in recently employees; marketing

the Looking end year global on currently. within pandemic down the the notwithstanding ahead, of based during trends typically remain the the quarter, what marketplaces COVID-XX about of be our a seasonally fourth optimistic would fourth trends own our and fiscal uncertainty surrounding and quarter we last this quarter XXXX

and the difficult is of segments of our overall current timing timing, pandemic. given predict global However, uncertainty, these likelihood, events and unknown across magnitude, impact the economic the to

your guidance. We provide quarterly you, we take questions. will, not and Thank therefore, will now

Operator

[Operator Instructions].

question Baird. Colin first our have We from Sebastian from

Colin Sebastian

in was to you on buyers, AllSurplus way sites? seeing how bit then the levels shouldn't legacy the relative more expect the promoting talk particularly coming quarters? happening I changes that was structural shift if what seeing, to returns a clearly the with and hoping dynamic in an see, of side or activity BXC hopefully benefits liquidations? could little you're you're that And about among a that higher you on broadly, more also Curious in drive ecommerce accretive that's we're

William Angrick

ball categories. desirable just just have but coming the online driving property the a we have made, the crystal almost have that combination seen in marketplaces, marketplace. investments transparency public perfect is respond for we X,XXX mentioned is lots buyers in broadly. record from assets sector and that That's what platform. Would a not of we've supply AllSurplus well-maintained necessarily participation transactional we're buyers available the in didn't providing confidence companies, participate one increasing downturn? we better BXB at navigation. we in This sale I Fortune XX,XXX how our And Fortune have point, they agencies. on convenience. And to XXX, We're a from embracing property highly would First sell. was historical the We're these in ours,

adoption. mobile We a have seeing design. into responsive mobile shift We're big

relevant have that buyers We tools without allow more their machine driven now interest. listings having see recommendation to declare to

into have all the So to really frugal the a And improved needs. to marketplace. penetration buyers, serve the that combination buyers, of we capital they their interest of buyer They the and come perfectly and side. of our has positioned are are

been the X years. years you about secular shopping. happens to collapsing benefit so that X know, online positioned of quarters, adoption as or retail. it Well, X we're another You probably many we've online to shift just from in And for that comment into X of

our surge technology, question, And services, returns us buyer in volume online the be our our and increasing know-how to without marketplace and need the from in the benefit in share and our well marketplace. how see of our to very in reverse that make footprint So supply base, ultimately monetized our positioned we tracked, managed, will reflected chain. the that's shopping

in getting, a the the And I reliable of for think, most credit been supply we're have solution lot We March. reverse since chain that.

regard. term, that the just not we're but in the enthusiastic So long-term trend about very short

Colin Sebastian

Angrick William

William Angrick

a V recovery be would statement. Yes. fair

as I they done require rethink there had to post-pandemic is going solution think contact. that in-person facilities effective themes. the they couple were an environment doesn't One point how is and to safe to it a work ideally the way. suited in reopened key a government our because is the And get are of

events We pickup a reaching for live payment, obviously, have in and or digital very base without large shipment solutions activity. for buyer make managing ready native physical

So clients and of the solution to be the new the continued the agencies, quarter. are since end flocking both accounts strong of really type that and offer, the have we lines trend to government current

Operator

Prestopino next question And Gary from we do have Research. Barrington our from

Gary Prestopino

side your on retail ecommerce? the Bill, return business of most is

William Angrick

is. Yes, it

Gary Prestopino

particularly without able been coming been, ascertain this, maybe It's a of side more to that can have you as as out that we're rhetorical but much spending in side. I do I able going companies really OpEx an and from in or technology just that's Okay. that. quarter benefited of good you're that from that decrease of that, growth, one on some driven But driven pretty the would some to questions actually. first hearing some - there. less. the of had a of on of is, And there. of terms of what's explain and guess of more you marketing to a pandemic have going of do hearing you all, restore lot pandemic lot and the Because question, the kind kind absolute by by would it your we're out spending, the whole well, with the We're

William Angrick

through $X that of that record. we're a without new assumptions America, going I and The We have at share physically think booking business virtual done, to all do And exchange. all a with Services these work we're in ever We've over society to to that things we way world Corporate how see tremendous there's can no productive for they quantity and is clients. able to Gary, question transactions. ways general WebEx, had first. a largely track yet, that's more environment. known looking virtual that in done that a of be on are a is completed testing plus something, the because we've got through billion historical Liquidity We're

with We to have our of and every a and minute results can clients, day. that at lot our fingertips our go performance past online every they see share of

positioned world, and a So important. we're virtual to that well sell in is

a in why does go assumption of get a it test on plane hotel. so stay and And did we your ever

in so clients The best we're shows projects case the us way. some other area our right? trade a different filling marketing but bring you through to that see studies practice creative are is gone, all void to allow And that

sort We a really estate been have never business. real of heavy

are to returns. retail channel a can there's extra impinges you space if because centers where retailer highly space. provide a supply imagine that like coveted they manufacturer distribution And backlog quarters, or the retailers of that Our couple for chain in on really

outside So very of that we're asset-light is an asset But for us. a that, business.

we haven't a of with really had or to industrial deal government. So for lot storage

salaries, has to tools furloughs, in we restore automation for many of theme. we're and some think did certainly idea and that That's of while been activities. holiday I And looking our had labor-intensive which we the some digital restored. temporary a the replace

us. think to Honestly, the to I investment automation, and continuing who and are make is we're marketing, our we've area supplement principally people going and of aware for in yet, discussed lean lot more we're that there opportunity sales to take a our these into an that virtually working of know themes are we going of which even people services. don't

organization. seller going our marketing in So sales we're facing to in invest

Gary Prestopino

And clear little then marketplace all in terms of that? to is AllSurplus of Or with a self-service. And marketplaces of incorrect that a I with be for - buyer? is it's a seller may It's up confused. entry want that your I am AllSurplus. system. something a just cloud-based mostly a or But point aggregates I a

William Angrick

of government all envelopes It industrial Yes. the assets.

of more although consumer goods It number of retail the self-service of AllSurplus, that's enveloping to than of this the coming supply folks going fuel high-value in plus really the And equipment new that our lots see that from in there, that's a direct have of to discovered You'll is inventory for in growth AllSurplus clients. of all too. continue environment, and we're AllSurplus. something we have current importance

Gary Prestopino

your So you GMV on X to areas? does the AllSurplus? where are start I other would point still eventually it get bucket Or reporting guess, you going it to in

William Angrick

Well, business a brand, AllSurplus not is a unit.

important that's So an I distinction. think

they are. our will as So segments continue

Operator

We from Sebastian next have Colin question Baird. from our

Colin Sebastian

a just Bill, follow-ups. couple of

any business, where as reopen I also from Any from stores have? to standpoint? an liquidations merchandise in I you reopen, you issue that do capacity side from the capacity, on centers, see ecommerce whatever is the locations supply self-serve, know of have moving that then On about pandemic the And might be there's stores just BXC as what you're the And from or or more channel? there? part we to the outside but wonder a reopened, related need status fulfillment current side the if concerned of concerns stores overstocks of then upswing or towards

William Angrick

the fulfillment of supply for a our an and essential that us and that chain centers So operate deemed the was point the on in shutdown, Colin, centers, buyers and fulfillment continuously and is for depths we the we are service important value even sellers. business the

accommodate we So use relative centers. continue the our for we or to space continuity we're that we've And for that. fulfillment need have in operations of to demand of issues surge not any and think, to in I surge flex our the acquire storage in had can centers. inventory going And any to see, fulfillment

As far of you're as Maxx A transacted. merchandise example, different reopening, channels. goes gets big see that players, overstock the in going apparel. traditional certainly, lot that T.J. like lot a do and apparel lot merchandise brick-and-mortar market, of to stores a for seasonal overstock to The the

of sort with the pulls of we're presented our online their and go X up Chapter level. what's that focus. are shelf stores help That's stores down, or wheelhouse, we're retailers We're from us, a of fit of not for in sort and overstock happening is for inventory at an straddle solve out as in of focused in of a less sales, very We are omnichannel that would wind burden in recurring of of to that we returns needing standing store they ourselves not deemed embedding can doing be opportunities something the purchase items. coming one-off and physical opportunity start they type clients our be have I to to mean and are backdrop do and seasonal how and I existence. flows sort But overstock. more interested buys shelf returns interested big pulls. store of think needs

overall in marketplace we leveraging the will. hands set you centers reduce or to So burden quickly our turn that if that self-service the reduce their transportation off our by clients value can programs chain, marketplace cost and and touches, up inventory to direct take the fulfillment the

an So that's for opportunity us.

Colin Sebastian

see private on on your So positioning on how that are happening would broader private alternatives Are the liquidations that liquidations? helpful. competitive see to site approach you thoughts Do Any or more mean, be the you way that that, changing? of have marketplace I is of might kind do you online a a with happy basis, offering?

William Angrick

a somebody I And think move truckloads not so fee is very know are some more those solutions that's They'll clients I What of from structure items. more solutions. our help that comprehensive point sustainable. think they homogeneous somewhat we solutions. of experience do with want

not able could just truckloads, So to it container be truckloads, case, we're provide the even solutions pallet, loads. for but self-directed

lot much very the goods thing full And having a both providers logistics And category good have that in broader clients. all the and solution. of important for It's and buyers performing that goods, buyer headache to We all of base stop smaller for buyer and of learned client. also very is once and is for we've a sizes types condition sort big a range one-stop is absorb stop moving, base there if type. the expansive - that a it's those for downturn challenge and valuable

step to logistical valued. is us for menu ability services the of so through issues other our in and highly And handle

So clients them that. continuum, But scalable midsized the a provide the end have if of a enterprises what offering are you Many just want durable, and one to want more we'll that. self-service solution more who is, see small at solution, tech-enabled of for clients. than the

to value-added You provide have additional services.

manage full all to of depth issues storage be condition able to move and goods and liquidity and and types. have range broader large base that of You lot buyer the have logistics to

Operator

We next do from Prestopino Gary from have our Research. question Barrington

Gary Prestopino

that address that occurred the increase I that address the for some me? have you Yes. maybe there in wanted there Could things something. or may delayed payments down don't some Jorge, think and for just you of because I of you were write recall have able know buildup or wasn't to I it just discussed, the said cash I kind you kind quarter. I to in cash

Jorge Celaya

a Sure, Gary. quarter. Regardless of strong cash-generating any anomalies, had deferred any payments we or

got cash our is reason for some will outflows in CapEx. payments is take good some quarter, cash some if history, other That the that time, here good of And said, correlation that a for vendor and maximizing did this our less April, strong is some deferrals As generation place over that you a good in we we cash, EBITDA particular in some of having not said speaking, had in time, payments of quarter, that lot right, the temporary and terms, you one timeframe. to any we pandemic, And generation. the it adjusted that like I've like was look quarter over June very quarter. adjusted people at of a our deferred did think, has past generation. during I generally May, cash EBITDA fact work we compensation a but example fourth included cash the had hard our the But positive that, compensations on good that know, the

scalable consignment, what self-service, self-service a that on includes generate and very is the cash very course, leverageable We're see a model especially inventory, heavy when of that, not some profitably. have greater business environment, to we a company. topline asset a as one said, of have lot. as Our type is We ability Bill growth. when to a - it's profitable consignment, move And just light. growing we very the in because pretty but growth mix way investment we we business it's a of that is will, cash-generating has up not do which We're strong lends itself we

was a good think exceptions, view. cash some from a that of of quarter our point it very I still So regardless of

Gary Prestopino

deals pay back Okay. pay restoring with deferred And reductions? really that full and comp salary for the the providing

Jorge Celaya

correct. that's Yes,

Operator

that showing there I'm in queue. no are questions And more

Julie Davis

in Great. call. Thank participation you all for today's your

can additional to have feel If Thank set do afternoon. reach have afterwards and good something free out and you, me we to any up. please a you follow-up, get

Operator

This ladies you, gentlemen. you for Thank and Thank concludes conference. today's participating.

disconnect. now may You

Liquidity Services (LQDT) 9 Aug 202020 Q3 Earnings call transcript