LQDT - Earnings call transcript Q2 2022 | Liquidity Services, Inc.

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Operator

Welcome to Liquidity Services Inc.

Second Quarter of Fiscal Year 2022 Financial Results Conference Call. My name is James and I will be your operator for today’s call. Please note that this conference call is being recorded. [Operator Instructions] On the call today are Bill Angrick, Liquidity Services’ Chairman and Chief Executive Officer and Jorge Celaya, its Executive Vice President and Chief Financial Officer. for their available remarks. be will questions prepared after They include questions responses Services May The will and your X, statements. reflect and today, following discussion of to Liquidity as management’s XXXX forward-looking view differ materially. Actual results may

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

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

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

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

Bill Angrick

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

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

and another we generational transformation trusted and interested and reach. chains investments GMV are with of leading set as long-term our More service Our platforms, quarterly are flexible this supply rewarded business innovation people, we their and digital models marketplace government our been worldwide record. products the in organizations transformation and have

by buyers was We QX XX% our periods of and growth, resilient This with uneven growth. in economy all-time very challenges key of contraction driving objective grew help annualized display the to economic respond GMV supply to QX billion and to record to and leadership in operations, in annual as year-over-year during is on economic them chain million, $X.X provide expansion. of continued every platform our sellers global inflation marketplace continued GMV business tools Our both of and GMV. we of circular $XXX sector the and quarter an closer consecutive us plus seventh is economy our in relevance to and approximately XX% our attribute

estate to acquisitions During consignment become GMV more digital increased the XX% rates assets array of strong for buyer and XX% during real GovDeals’ capital continues a property account model asset-light from this year. as And the real equipment heavy traditional also new up our bid marketplace this agencies addressable inclusion personal pricing solutions over of including efficient real marketplace for choose our are sales reflects estate. in journey, The estate as as we increase GMV QX $X methods of sector. Together, making progress leader represents more GovDeals over driven and record business segment. last GMV billion in by in QX model, terrific broader for assets, due total our our XX% utilized marketplace performance. categories macroeconomic and vehicles, a to online higher selected recovery acquired the factors and an

returned we resulted QX chain our principally a in in was and Our which retail year-over-year More shifted in flat group year supply ago shift end value as prior selected sold lower a consumer during of the year are with from segment consumption economy. the programs, period broadly, mix marketplace a due out-of-home pleased being the to reopening versus goods consumption the to stay-at-home sign expectation new above omnichannel throughout Arizona Phoenix, in reflected are customers. This deliver trending group centers continues our share more as distribution convenience market new North to retail two our value expand our our the and and e-commerce chain Pittston, which segment for as within activity in we America. activity with our and and new account with is retailers business acquisition supply Pennsylvania,

of with full grow XXXX. in International was Paper, QX verticals many sales sales industrial in by in clients, Waters strong more segment mandates in Global strong biopharma recover activity to Semi. U.S. Performance restrictions the QX. and GMV Our and or capital half China. due year due TC the CAG was group including Energy, equipment, business new year-over-year, year development asset segment our principally was we our to heavy COVID-related to and XX% CAG for selected flat signed with And Steel, expect second Corporation, postponement energy in in delayed ON of XXXX the

Machinio our continue dealers period inventory solutions QX classifieds XX% with engagement and as equipment used segment marketplace the revenue in to capital owners and year management over digital increased Finally, strong for our assets. demonstrate prior

our improved a for organizations core highlighted report Our is corporate new Services This the are integrate we sustainability recently planet business, in intelligently environment. Liquidity mission buyers how who of appreciate loyal into on unlocking and building helping on the of XXXX value ESG initiatives efficiency better increased future stewardship through website. sellers, and report issued available value their customers highlights our creating

surplus Our for goals help clients. our management meet don’t they savings profits clients our generate and just solutions sustainability cost

Value Services with global animal XXX Excellence example, leader received from Liquidity an over a nutrition, and worldwide. award facilities As and in during human QX, ADM, the

in our resonating Indeed, key with program goals and savings. process. important by ADM's customers, underutilized our of value client the expenditure benefits is redeployment through management attract positively avoidance circular asset sustainability surplus not cost capital to also economy to created was million asset our and $XX sales, but program and and efforts surplus team reuse talent, inventory the process, to it also supporting proposition mission business only This environment our enablers and in plan. Our incremental leveraging enabling clients’ top over value able streamlined impact assets, the our execute

development, These in incremental the QX our approximately marketing year-over-year by value. shareholder we As grew directly in principally tied headcount business next operations. take are share and market of leg at we of and technology, investments long-term to aim capturing our XX% delivering growth, areas

with resonating value Our proposition buyers. also mission is and

the our QX, registered nearly their platform which superior of provides on million, our number XX% year-over-year assets. seller’s of sale X.X buyers the to execution for grew During

During platform QX, and completed were up of the auction the on marketplace. and participants respectively, XX% liquidity number our our reflecting XX% transactions growing in

equipment a attractive becomes consumers inflation and very be more issue to economy, alike and to global affecting source the inventory. As pervasive our has a in proven marketplace channel valuable enterprises

and drive associated the digital and supply platform chain investments a in is company have dollar the continued we growth long-term of share benefit Our transformation market to expansion trends the made multibillion planned marketplace to to secular our customers. GMV result in

through trends, for Our the remarketing needs goal obsolescence drives role as in growth reducing redeployment the sector which business, large Liquidity enterprises and waste product in online generation commerce, of smart plays increasing organizations growing and asset of economy. in vital and shared marketplace of of a level businesses our dedication several customers returns, high our provide evaluate for more profitable Services product solving intelligent macro the small on their now our navigating more markets, our the growth including adopt to every the will economy of existing global strategies to in team next technologies to With mission, a In both and to we penetrate quarter. turn service. acquisitions. repurchases further details and Liquidity I of to members a power opportunities it thank initiatives continues the organic Services share across including closing, tuck-in circular Jorge uses over cash,

Jorge Celaya

morning. Good

technology and our for in including efforts or first initiatives, Our assets reach, include contributions diversify GovDeals quarter, our sales retail operating our incremental segment second in its real and our investments progresses. continued integration also the to our sales, the geographic of our as capacity results segment, growth strong marketing reflect from base resources growing groups, Consistent in quarter results new deals and client all-surplus bid performance estate and vertical RSCG channels. expanding from with

with was in chains completed As the million global new experience turbulence the of XXXX year. this same year and a in XX% an $XXX.X we in $X to have basis. same a GMV a for GMV continue growth was in compared million be exceeded first XX% of fiscal to million, We quarter last $XXX.X the supply increase throughout consignment trailing quarter the last year. remainder we GMV fiscal fiscal near-term, GMV, up expect quarter of second XX-month our the the $XX.X transactions driver record quarter quarterly Revenue billion to on from year.

value-added within for $XX steady Net as while of clients. long-term $X.X most services a this our remains percent offer in $X.XX. proportion strategy per earnings million resulting the $X.XX involves share including diluted highlighted, seller to seeking million of recent previously gain other and profit to Gross a to As options of has growth an market expected range. This second than earn-out expected includes our or GMV flows growth earn-out the consignment sales purchase GMV and was at certain are consignment, revenue quarter fall of a and ratio in share originally estate activity and higher of as per The higher of of a liability revenue from lowering bid for in fair percent reduction continuing non-cash value percentage of the period. our now assets of grow auction revenue outside income despite GMV to share causing market as increases. lower effect real sales, the

expected segments and the EBITDA down third continuing assets million macro gross are payments demand reflecting the adjusted year, ourselves earn-out quarter of investments to slightly expected the not across fiscal performance meet our until first also position share from growth long-term profits million for remaining the We $X.X anticipate initial the paying in half was market $X.X Non-GAAP last quarter trends. The XXXX. earn-out from year for of the our targets. in same bid while anticipated GMV by to $XXX,XXX planned for achievements

are by We during outstanding $XX.X platform million efforts. million And shares market sales $XX tailored million. to in repurchases versus continue our cash, share XX-month cash hold capability was quarter also resulting investments lower to and in driven flow transform our year. trailing performed the our our $XX.X in operating last Our technology

We zero financial debt. have

entered credit. a us agreement quarter, flexibility the line During that we the of million credit into of $XX provides facility a with

segment comparing for GovDeals bid and for revenue, assets. second quarter. on quarter results Last including this year, up our same the Specifically, XX% was on XX% to GMV segment

and its was seasonally XX% expand X% and the be year. on will revenue, CAG’s sales. if revenue. segment for based GovDeals and continues assets specific as heightened its quarter continues project or bid again sales by boosted shifts on some down the deal tightening on recent In for up Our global the China. GMV also up in focus demand our and asset estate Retail delayed as And successfully scale GMV operational its remains on half on supply to pipeline the opportunities. X% strong, chain period, into retail also CAG given was base and additional executing resources endowed, from challenges pipeline transforming high revenue reflecting Machinio on and will and even bid services second partner real occur to diversifying acquisition our into on seller of buyer further fourth segment may supply, including up to and product benefit on of investments was with RSCG X% customers. so, to the and X% this investments Europe quarter in diversified continues third executing

period mix at XXXX related used and guidance strong range last at the quarter favorable RSCG above is year. year, vehicles of year’s rates for the Our despite year GovDeals more for take last same and fiscal prices third supply GMV market of last

decline GMV slower the sales GMV revenue sales model purchase business, a faster a integrate from model this is growing shift. in than percentage and strategic as the revenue consignment as resulting sales of we estate growth to from percentage real As under expected grow our business

expected guidance for gross XXXX period below range. consolidated the our remain last same of recent Our fiscal margins similar year, quarter to to is profit the despite year third profit

to for $X.X from along outlook the annual goal. mix year retail our quarter company costs higher initiatives, across sales, longer-term changes overall RSCG costs the with technology and Our billion marketing, flows operation towards segments related or and supply compared our growth reflects product drive the growth last increased and wide to GMV

fiscal and As due approximately to our trends, third tax to a This negative XXXX, effective year year a higher to on the of for XXXX as follows. mix significant in reminder, rate of to year-over-year will we of no for have our be profits tax the the fiscal third valuation profitability impact quarter our year XXXX, is allowance strong effective comparable year is last fourth cash fiscal have share. as and level year rate quarter tax quarter depending a factors. fiscal increase income our ‘XX earnings year corresponding compared will paid XX% guidance XXXX. XX% fiscal net result to expected taxes per Yet the in in of reversing of of for Management other income

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

We take will your now questions.

Operator

first from Barrington Instructions] Prestopino [Operator you. Gary Thank from And questions Research. our

Gary Prestopino

morning, of good series Whole everyone. here. questions Hi,

did First was Bill, the of organic growth GMV you the all, what have for quarter? in

Bill Angrick

looking for close you’re to bid If XX%. upper still assets to the the in teens mid at we’re piece,

Gary Prestopino

without for bid like assets. right? bid or for That’s Or Okay. that’s like, you, assets,

Bill Angrick

Correct.

Gary Prestopino

profitable not fact whatever touch know, that And being on processing or less going then people talk You whatever, locked maybe the in more might RS are bit the it a little alright. is CG in Okay, that you’re have is what you. returned because there what and about and shift and you the in could their houses, segment? points big of items ticket down is more to less

Bill Angrick

travel That’s travel right. do renovation spending or you’ve buying building or supply ticket with that in entertainment, chain home, And shifted entertainment trends And seen pervasively tools. retail instead to have garden and high in we out-of-the-home call staycation the and people that have at major maybe of to noted experiences. loan equipment in-home and a

come that activity have strong reverse been people purchase supply shifting very the know, other you have in chain, down we of average original categories. so size, has And think, order just the I into dollars and

Gary Prestopino

Okay.

know, and continuing, really basis I alright. So be that the probably signing really throughout new that on function want will clients going And Cause or there out of you you change you? a in to Correct. unless, year. to more this new built mean, facility Pennsylvania, products would, that existing that a nothing’s with process is comparable the try was clients through

Bill Angrick

on were density population underwriting of The high close more omni-channel existing selling closer who initial on the to expansion channel based centers, clients was the online.

relationships, great there. picked a business we’re it’s we’ve So but example of, for penetrating these up since new

our we’re a in Gary plan and So significant a is making cocooning what I that major of leader being sale helping management business. need lot latter for clients with items. us a ticket offset and of XXXX, circumstances good online progress for growing and in where would for think traction space, the think of set the agree the the of sort the, news spent activity a unique There with everyone is getting high dollars of returns pervasive lot new many was of XXXX I we’re part growth with

Gary Prestopino

questions. Okay. let I somebody go. And I’ll have further else then some

Operator

Actually, so no Gary, please. have questioners, we further

Gary Prestopino

I you Okay. it. That’s that. got for fine. Thank

saying of So growth then think back the did half out sales some away? Bill, or and the mean that there go that CAG in in you were you’re you that Does but China canceled canceled? that, segment mentioned that pushed when with expect all they of the they projects, mean COVID I were coming back year. Does

Bill Angrick

Delayed. Deferred.

Gary Prestopino

Okay.

in come So the into next like the months? they’ll you feel, feel X fold you

Bill Angrick

Yes.

Gary Prestopino

Alright. Okay.

expansion growth those up of So head the to on that was personnel your, your and and activities, support additions, sales activities? then marketing your majority are which XX%, count,

Bill Angrick

sales product demand we we’re success is we’re Three which services, Yes. and the supporting building a programs. Machinio, noted marketing like function. generation, that function areas effort areas sales having technology development our self-directed with In great more out

in like sell in the we’re we’re consignment another ways equipment real the continuing of so us. and bright seeing is model And heavy easier make and which spot areas heavy transact for it list provide estate. and to self-directed people good very to adoption very, for equipment capital category, Overall, assets, to

Gary Prestopino

Okay.

a any it expense there? So, broken we Jorge, QX see then the within revenues. I is we as levels or the say of stay other that or more it for down look percentage have for as those the, way. kind basically levels Would reason in at total of will line, those don’t the of rest hold year absolute less

Jorge Celaya

so growth sales line Pennsylvania and part we of in the our Gary, Ops, the also the all deals, each of absolute headcount. in that moderately, surplus facility will grow in would operations marketing also jump quarter because But Phoenix have our growth tech is that, location, I say. dollars in and headcount and

certainly each point, flat. actual operating Our gross just increase, I as dollars of quarter. the this but should profit I outgrow don’t see our see expense up slightly

Gary Prestopino

Okay. And then just lastly…

Jorge Celaya

Variable expense.

Gary Prestopino

that your purchase there just on the the then that Is are of that with And revenue. you a spread lastly, fee basis on product. other generation sold Okay. there, goods number there for reflective of what cost do just in is is deal expenses or

Jorge Celaya

That it, you’ll worth we at going the basically XX-K take through probably details, peek the, but see that’s them the but at can not call. this quick on the, other it’s a

Gary Prestopino

fine. guys. can wanted to that’s than just Appreciate cause you, idea seems some your Alright. growth. no, fine. want myself. higher I to it. to that at I get it get, And But fee-based look be That’s revenue I running just Thank

Bill Angrick

thank Okay, you, Gary.

Gary Prestopino

Bye-bye.

Operator

questions. more have we And no

Bill Angrick

conclude Operator, call. the you can

Operator

you you, Okay. participating. today’s Thank ladies concludes And Thank for thank you. this conference. and gentlemen,

disconnect. may now You

Liquidity Services (LQDT) 8 May 222022 Q2 Earnings call transcript