LQDT - Earnings call transcript Q4 2021 | Liquidity Services, Inc.

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Operator

Welcome to the Liquidity Services, Inc. Fourth Quarter and Fiscal Year 2021 Financial Results Conference Call. My name is Jenny. I will be your operator for today's call. Please note that this conference call is being recorded. Officer. call Executive Bill its Officer; President Chief the Chairman Liquidity Executive On and Chief and and Financial Instructions] today Angrick, are Services' Vice [Operator Jorge Celaya, their They prepared will for be questions remarks. available after The following questions Services forward-looking XXXX, views management's statements. X, to of December will reflect today, Liquidity as and and discussion responses your include results differ Actual may materially.

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

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

filings will certain of Services this each measures. its with which Liquidity is During posted and site. non-GAAP the discuss call, on SEC, In management financial Web release its press

You reconciliations additional also components Liquidity supplemental including of a these of GAAP believe non-GAAP management measure these operating also presentation will measures time, measures. disclosures Services which merchandise they comparable will and to certain management operating gross data performance, GAAP use as Services with find is regarding data of measures certain includes or be and At substitute should supplemental CEO, not results. Bill this operating Angrick. for investors. considered the superior Liquidity This turn a useful over volume, to for I

Bill Angrick

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

the more on provide quarter. will Celaya details Jorge Next,

by circular from Solutions, to We new quarter. results Services businesses, during for the Liquidity which efforts customers XXXX, and fiscal growth the benefiting are for our society, Marketplace strong $XXX safely power E-commerce both for grateful recorded environment. our during demand the billion continue existing team's driven customers economy, to and our outstanding outstanding deliver year

we the was Reflecting our XX% sustainability we and our enabled year-over-year, QX of GMV fifth build with XXXX, our excellent consecutive meaningful to government for up businesses, small fiscal a of and execution XX% segments, million are closed 'XX quarter, and large up plus entities programs. XX% During benefits resulting and year in and on strong our profitability advance mission future to our growth. year-over-year, year generation. surplus GMV, number growth growing their across pleased with support GMV enterprises, as fiscal the $XXX.X quarter of world of cash a across flow realize we consistent fourth the better team all in financial representing delivered annual

was number reflecting of convenience 'XX, buyer transaction was auction our fiscal participants XX% full-year of and the our up the volume year-over-year, solutions. our digital the base For XX% strength of and up year-over-year, global our

our 'XX, model over the generated of $XXX and of year was flow, $XX our with display repurchased as stock, cash $XX fiscal power During million million and the on ended we of million asset-light cash operating debt. of year business zero

commerce, in rate we changes $X massive in innovation focus of Our our billion legacy driven in GMV. sale These product supply we established intersection the economy. at include that milestone will the assets. annualized strategies product world's and of online billion $XXX the relationships, by which growth objective the market the disruption years exit several of which on lead powerful which report digital of we current to of drives which redeployment business circular trends The come as business encourages the expect finally, global Earlier achieving to used more sustainability, to returns. run macro an is I'm And transformation for of pleased assets. increasing border chains, and quarter. our requires to December achieve cross forces, year, benefit that trading this

investing annualized have progress, to GMV, our in scaling products, in of people, target. new this to new are billion $X.X aggressively achieve objective we near-term technology and we established a our and Given accordingly,

the our 'XX growth strong pressure investments expect near-term to for growth year-over-year these realize will and we fiscal beyond. full-year earnings, While

segment, GovDeals real-estate solutions market Looking expand public of and forward opportunity, Liquidity penetration our to the expands to the the to acquisition businesses, recent offer government doubles enterprises, and our large billion of fiscal $X year Services' small plus BidXAssets overall the across our and of government 'XX, strengthens we we several agencies sector strategic market size are scale world. opportunity. making and In investments

footprint a corridor items our natural growing unsold northeast to Our the clients, and Pennsylvania in e-commerce and from of our logistics the accommodate is extension returns and infrastructure. marketplace Distribution New Northern Center number expands of generated high-density our

our Finally, further our of strong construction, look marketing to more management growth our continue our and that we opportunities leading liquidity intelligent fiscal I'll Machinio, now capacity the to areas power over in during details it sales as profitable the to our customer asset for these continue continue on growing team for solutions customers In to expansion vehicle mission quarter. Jorge 'XX. tuck-in and existing fleet With penetrate inventory of markets, in of services are us the untapped share to and and global company, to and large circular allows commerce industrial marketing a digital in for our platforms adoption and economy, business, create invest the across and excited thank we our the trusted turn cash, our verticals marketplace, organic for to we year the members value including their initiatives acquisitions. marketplace providing uses repurchases, AllSurplus closing, dedication shareholders. within to

Jorge Celaya

Thank you, Bill.

share scale across million Cash generation. the cash can was million for adjusted and results We million in leverage profitability very XXXX, closed repurchases growth million. GMV, $XXX.X we with up after million in as over our higher free with In fourth that in in saw GMV strong was and year model cash pleased we million the the sheet been balance year, with prior resulting and up year, EBITDA during the year September $XX.X growth gain We segments, XX% our our Non-GAAP XX, $XXX.X buybacks have $XX volumes our and ending segments we our operating the fiscal and profitability. marketplaces. fiscal business XXXX year including the business quarter. year, with $XX.X diversified across completing during debt a share was operations all increased in $XX.X from closed

per million, received to fourth last XXXX to improvement, benefit quarter increase million, same additional for the last expand prior the quarter year net of in We new valuation share from GMV million was shares. $XX.X our have which resulting year-over-year million, was a million period. $X.X adjusted quarter release on same of year's per results income in quarter for million a $XX.X deferred was for the share of EBITDA this of year, a $X.XX, $XX.X fourth million while these the XX% us tax authorization Non-GAAP repurchase million, We Revenue quarter $XX.X the fourth earnings comparable in increase specifically fiscal $XX a compared allowance from year. the fourth completed XX% or $X.XX $XXX.X assets. quarter with $XXX.X comparing a included diluted the an

up revenue. Our XX% segment was and GMV on GovDeals

XX% CAG GMV retail In XX% revenue Our segment, up was on on revenue. XX%. up XX% revenue. segment XX% and and was GMV Machinio's up our RSCG was up up on

the participation For X% up the same up with are year. over over last and registered buyers XX% completed quarter quarter now million auction transactions X

our and on growing and continue driving We client growth focus offerings base. to diversifying service our

investments are solutions. government making our auction segments. segments, of November our real-estate our Xst market We our targeting BidXAssets across In GovDeals opportunities on acquisition broadens

to the opened in categories, to grow We segment, for potential we surplus, demand infrastructure also globe, in U.S. In retail segment, vehicles deal, manufacturing the across U.S. as solutions. direct-to-consumer we a new sellers, see In leading government to such industrial for our AllSurplus hold recovery CAG opportunities demand we across long-term Northeast full-service take for elevated launched equipment distribution and and the see a heavy our customer equipment center growing Retail rates. from our equipment, as address marketplace projects

GMV XXXX factors and in enter of period traditionally year macroeconomic in fiscal our sustain quarter have first above volumes first the key increases across segments as quarter. seasonally guidance fiscal low range recovery same that rates influenced even we for last positive transaction categories with is favorably anticipated Our a year

With within GMV the segments, real-estate a segment, and our of GMV percent grows model will GovDeals category of our the revenue ratio. of other as the government as and towards a revenue move across BidXAssets consignment to low-end continued we typical as strength expect that our

anticipate increased Our as supporting related changes costs to technology in quarter same development profit our the quarter and decline higher teams. market-driven a year reflecting capacity to growing improve labor throughout profit platform technology Operating our XXXX all growth. XXXX to marketing, expected investment guidance future gross to to product grow is of fiscal for last this product fiscal We first of costs, in fiscal sales, we segments. period year our this below and Incremental XXXX continue leverage up quarter mix flow retail GMV. in some margins year of first due in is year-over-year the

return our trends. quarter, valuation past and allowance profitability result tax Additionally, a our of to this reversing to as due strong forward-looking

and approximately is quarter XX% for tax effective XXXX valuation reversal of effect increase XX% rate Our XXXX, one expected X.X% first from to the this of the year-over-year to but higher excluding corresponding comparable allowance fiscal year cash this for to itself. starting have toward paid course for rate net increase will income income no in earnings per effective share. XXXX, tax will have negative taxes XXXX impacts This of

relative BidXAssets year. our a in the Our GMV which fiscal include effective first same results period to overall contributes part last quarter GovDeals of portion as the of segment, guidance does to increase from

business segment for at year-over-year to fiscal trends first to with expect the this the GMV, We growth GovDeals rate of continue grow expected recent the majority existing contributing consistent the GovDeals quarter GMV. to a

from results to be planning fiscal throughout our and quarter impact real-estate drive a and earn-out forward full-year changes 'XX BidXAssets of results. is financial be any associated quarter and value accretive liability BidXAssets re-measured XXXX will fair that to XXXX. are in to XXXX real-estate GovDeals end growth for guidance the transaction We for of of activities of GMV in each category the This the follows. a potential existing the for going year convergence as excluding at of with Management's during the the first grow

estimated $X guidance year to non-GAAP XXXX. per diluted million GAAP million in million range from net range in million earnings GAAP non-GAAP with ranging a to is to the adjusted from The million We share. the earnings EPS diluted estimate corresponding fiscal weighted million, $XXX outstanding is $XXX of million. $X.XX we XX.X non-GAAP share. per and expect We from assumes diluted $X.XX first adjusted share range $X EBITDA approximately have $X GAAP during shares the fully to income GMV range $X.XX per average of to per share of $X quarter to to expected $X.XX

now will your We take questions.

Operator

Thank you.

begin now the And from [Operator will We question go Research. have Instructions] from Gary Prestopino ahead. a Barrington we question-and-answer session. Please

Gary Prestopino

off apologize, morning, Jorge. Hey, here, popped and of good Couple I I the call. Bill, questions got

And So, maybe billion more lot kind behind another quantify GMV? for I'm was expenses maybe of in or of terms this through investment on thought with of this that big Liquidity already going we're as little were these this. you're One a growth. bit the could for with about how went year, this you continue asking the But expenses talked this of you segment know, side? you company's you're fiscal expenses scale long increased and you of increased transformation, some a making that year growth doing ramp through is And the reason basically the now will the $X.X up next us, we it investments of what in to

Bill Angrick

And One, is. customer development, sort to healthy not equated marketing, our are of have our natural growth given our growth forklift expansions consistent coupled of think capacity thank of development typically real be to step and and teams such stair markets, This in meet Liquidity your opportunity pursuit Gary, and We've in not consistent business upgrade that in believe areas and product you question. estate expenses, with we technology be the company, evergreen our to demand. did each where each billion these with cycles $X.X history had And we'd to do expect with we Bill, the is like deploy is reasonable timeline, in the product a opportunity. what online is and very GMV looked plan. in of sales this are some and I multiyear for as fiscal to in 'XX and the expenses. these these capacity for we frontload We've at opportunity the current with the adjacent goal segments, market we

It we we effort. through approach leveraging excited expansion where as for year, and that 'XX Jorge flow we'll directly significant flow. fiscal a the about remarks, these to customer costs GMV driving are our center population growth. density, be we're to of the be that's return will believe will accompanied this very so, bottom And as throughout these line be things in needs, year. Pennsylvania corresponding buying And mentioned they and And with operation, midpoint the his high order commerce example, distribution because respond flow

this making We're uploaded cycles. a and assets. get allowing by with that expansion These examples, clients categories say great over sales are chain would place activities demand of high investment, to our continued and other moved of assets quarter them So, and upfront with expect of to to sell these clients In the be let's values. generation Northeast the value get such operating supply our we fleets sales recovery traction the yards retail sold United in construction in lot States. typically vehicle part as and industrial

year we as those expand of adoption to so, our buyers, progress on we're And significant lot surplus platform and bidders had make and looking as the that our traction to experiences platforms of more to more continuing want Other during that areas mobile to And commerce, continuing online half, friendly last responsive buyers. getting a primary all and include, we're people mobile for are the there. our their create a there. based become we've business conducting of way

Gary Prestopino

add? you'd like to anything Jorge,

Jorge Celaya

year what is we investment see, throughout speaking the what you're to we're pretty can stay gauge means But year. throughout now. guidance. we're look thinking way going in December started which October investments that consistent don't about is investments, expect saying in we're the is, this for expected you we variable year we materially generally the this throughout going this the and line one sequentially be going to of of investments the the given is our quarter given there's growth gave that the then here not as that numbers to we're begin grow let's we're to at depictive and making, the that investments Gary, to those expense, due quarter, growing that the then in top hopefully of And guidance this growth fiscal to, Sure, progresses, first these quarter, that got leveraging year, terms quarter's the QX expecting say, just kind investments to

Gary Prestopino

Okay, I'll let somebody else go.

Operator

the have [Operator Instructions] We Gary on line, please go ahead.

Gary Prestopino

build I'll across growth on guess maybe couple Can possible the segments? a asking do look out Yes, of I for keep new of it what questions. logos your guys versus terms parse results in you you 'XX, was organic company's you your as a business fiscal adding

Bill Angrick

categories, that, growth was our a and part of parse so 'XX. to Well, the of customers start year, very fiscal retention for by would growth I think strong this organic driver for that's you if principal been

peer retail in tension chain more creates be place both it results, how continued product is supply strong have and interact and categories, those example, companies. complexity for a deliver in customers segments to we omnichannel expand only great to that the you and all creates when And operations. flows store Now, the with retailers is from your

interest. omnichannel lot that's the So, we've practice returns and flow attracted a for companies value of been best extract the maximum to and the manage

for of the more existing healthy But from clients The growth business; been sale. can of for it alerting think number call a be the signed equipment, very value our more industrial GovDeals And they come case high there. we're we've construction, even monetize to so, I'd the getting customers. have how I same And of say to value penetrate items and categories vehicle, majority new would continuing things has we've flow we highest taken their the even physical and traditionally successful more aircraft assets. to like specialty clients existing locations, might that a

adoption digital story growth markets anyhow north. again, very is these are per us. where digital that's But average healthy strong for and is trending over retention and So, user, Machinio secular providing customer of we're very this organic analog. solutions revenue vast around

we're I own the to So, base continuing large deployed business continue numbers always is the to foundation think that existing But new who customers and very have grow. of customers. to right, our we've attached to in our resources acquire to of marketplaces going their

So, that's a to good place be. for us

Gary Prestopino

or you value what cetera, new markets, what Have can and for the you've new platform lift are technology services, put added liquidity your on of kind you given your -- the customers? the in done possibly returns seeing GMV with in et you transformation

Bill Angrick

of apples lot into We surprising competitive net more to realized. recovery of an also our as been of to our prospects to of assets buyers we're has program. opened basis And lot improvements to become from driving We've as not the eyes have place the on Point the sales come a part as And of able apples seen help XX% it's customers sales Point of having XX% B and have customers. reduced in a A execution rates programs. to that versus marketplace, move transportation sell costs

ancillary So, are provide looking supply model. their categories we experience, with into now buyer and come are us, the can in customer leaning continuing chain fold they're lot recovery, best their they best bought business vehicle a a items of multiple the initially have that at might or buyers shopping other the they equipment, to into

you breadth I alerts we their purchasing mean, and of think capture can interested on criteria in. a a our that and buyer have for and marketplace there's what stop they're surplus, what up I And categories that value working from tremendous sellers buyers. automatic getting a for amount setting really what's all for great look the if of So, one is solution us at with

great. So, I that's been think

global that's the over the of something the that quarter. in our say The Gary supply organically of is business global, I industrial that's XX% a been thing catalyst for Assets business, would other Capital chains rebalancing a growth Group last the is

base solving and to about the So, are, trucks and categories, Group supply where recover chain you've we're great aerospace, customer from programs, for redeploy new CapEx Assets assets and five this the asset and is ripples want execution. assets value Everyone's they'll legacy supply capture with Capital potentially seven And proactive who changes years. And our and manufacturing reset of vehicles in changes other electrification assets to value in happening through solutions for clients we're cargo maybe sellers they next rebalance these that issues to their the plant the which see are chain, technologies. feel for read globally. maybe don't can all giving major buyers equipment, and do got some we online into happening segment. And need industrial

So, area that's for of another growth us.

Gary Prestopino

but Okay, trailing And BidXAssets that GMV guys you -- the if know bought was you. what with I thank public, on made it? produced XX you don't when the basis Jorge, then, month this did make you public a

Jorge Celaya

to right? our reasons, No, in we BidXAssets reported the going leveraging We're put real for as GovDeals. obvious business. be with GovDeals estate And existing in leveraging and we're and remarks it's activities real estate together indicated both the in reverse

we going as forward, to these are go So, things converge.

this to sustain still together, first going the them year-over-year mentioned growth that particular if I reporting they're growth trends, mentioned up, trends. and majority I for their quarter, was growth it into of when GovDeals is this quarter but you know I off, but dropped going don't coming So, the

So, And process is we're to the incremental and of growth. shape. the minority the that in bid good

Gary Prestopino

revenue down to to fiscal you And Okay. track saying GMV? about what lastly, 'XX? were continue in will It then

Jorge Celaya

the I've different mentioned our we to because reasons where for because I've don't -- tried know, guide Yes, obvious revenue get before of this you

Gary Prestopino

Right.

Jorge Celaya

-- models. different pricing

look simply general GMV mix business, revenue So, but you slightly you're because mix of lower growing of of our going trends the maybe as at to see in products. than

wholesale that XX% go forward, the end to So, to and range. XX%. be slightly I XXs, think change lower. trending that don't we of it's Right, I general, it's a going be therefore, range. GMV towards I've in mentioned the of revenue that be least to to right, the ratio will lower it's high below think, as at going in

is, end modelling of like. So, my the purposes, thinking lower you range, it's on if for that your just

Gary Prestopino

wait. Wait,

to GMV You be said to going is revenue what?

Jorge Celaya

about that that At end the we've where high always given this mentioned, the I've XXs. to the lower ratio XX% of XX%, I've range is right, talked

Gary Prestopino

Right.

Jorge Celaya

going on lower that. be It's of end to the

-- of because Just

Gary Prestopino

Okay. breakdown the the GMV and And the handy? of do consignment you for GMV QX have and on purchase

Jorge Celaya

Gary. I we'll I our so it's materially now still hasn't solid don't come, right where be apologize. XX% it believe. on that Web changed. posting fingertips, clearly have It's right site, it at It'll I but today like or my

Gary Prestopino

Okay. Thanks a guys. lot,

Jorge Celaya

Thank problem. No you, Gary.

Gary Prestopino

Okay.

Operator

ladies Thank at We this you, today's concludes call. questions have further and gentlemen. time. for no That participating. Thank you

may You now disconnect.

Liquidity Services (LQDT) 9 Dec 212021 Q4 Earnings call transcript