LQDT - Earnings call transcript Q3 2022 | Liquidity Services, Inc.

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Operator

Welcome to the Liquidity Services Third Quarter of Fiscal Year 2022 Financial Results Conference Call. My name is Vanessa and I will be your operator for today’s call.

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. They will be available for questions after the prepared remarks. The following discussion and responses to your questions reflect Liquidity Services management’s views as of today, August 4, 2022 and will not – it will include forward-looking statements. materially. differ may results Actual

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

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

components use SEC, financial each call, regarding supplemental During the and investors. operating This considered which not find filings management measures Services is turn non-GAAP Liquidity performance, in of as they as with which measure I measures certain Services certain and will to time, volume its believe of supplemental comparable a the Liquidity and reconciliations on this CEO, results. for operating with these posted GAAP available. superior data discuss the will of is presentation Angrick. you also merchandise including its useful should a measures release management press Services will over gross Liquidity Bill these the non-GAAP to website, of operating GAAP for measures, or At disclosures be additional this management substitute includes certain data also

Bill Angrick

welcome QX the and quarter. our performance morning will to I more our call. on details Good and QX Celaya will review earnings provide next, Jorge

our customers chain fraught them platform marketplace still challenges. continued help important supply team and and Our for a efficiencies to supply economic volatile chain navigate unique with environment inflationary deliver

billion economy. to in the from highlights excellent excited strategic A opportunity lies We few expand plan, ahead circular progress $XXX key are and about our leadership executing market the our very making that in QX. we’re

billion towards scale our to in our $X.X continue we GMV. First, annualized of objective business

a million, leading as to platform growth. company annual record global activity During powering grew eighth the to market growth quarter of XX% leadership plus circular the The our our is our GMV our due GMV XX% consecutive economy. $XXX QX, and year-over-year we by on commerce

manufacturers and monetize with solutions more Our never to and been speed, have agencies assets excellent government are helping reliability recovery. and smartly retailers, manage relevant and underutilized

used every business, our economy, energy, and prosper and an opportunity be turn, business communities. healthcare save money, environment, in are their our to free expansion, from reduce grow and both own major most a manner, as in In money industry capital up we even save solutions and inflationary their best the periods construction businesses waste. of can space make and Our positive businesses actively buyers, transportation, provide of and in can entrepreneurs, impact one this that are constant whom cyclical In to economic retail, small described in a on contraction. inflation vertical

Secondly, we our network continue effect. grow to

a during increase type on expanded increase and the saw year-over-year fight QX, trusted they XX% the platform manner, number on the of helps buyers, a number Services and buy we in inventory and number can on completed volume participants our stay platform. in valuable find increase and auction Liquidity that them in assets know Buyers As a the XX% competitive. platforms, XX% of year-over-year in inflation equipment our and transactions year-over-year of transparent which registered of and we a

arrive. We Fortune the items to to equipment from use lower Our source their quickly items needed them to source XXXX government meet buyers quickly range waiting more small on our enable who newly to cost businesses at and needs. platforms and agencies, manufactured to than corporations operational

our the our role planet. circular economy to new by need reinforces in resources energy obviating manufacture natural and the this goods, saves for Finally, which

adoption strong of consignment we model. Next, our see continue to

experience, it strongly under our aligns in on incentives period. XX% from in model Liquidity up bring and year the in transacted GMV realized our we the the of consignment our to we believe by turn, the ongoing and because user Services enhanced and our prior an model of investments, the to in Liquidity sellers assets maximize XX% our growing Through to technology sellers QX, between platforms We are our shareholders. value able marketing During market. increase value was buyer the Services base, pricing consignment

California strong during We breadth our have equipment. also of expand including sales QX. using several real sales real categories, continued made number and platform, gains several high-value in high-profile construction government-sponsored and to We’ve estate energy to asset from Florida estate, including the

several were announced. local less gain the past increased alternatives. X online, transparency, play communities. to sellers fleet the taxpayer GMV real view during billion multinational the our energy as It reduced their opportunity. by of In with model and more and sales large as estate real with traction and in share to one the our than a online vertical, continues sell continue we annual recorded government years faster online large online sales recently cycle, process accelerate continues equipment owners. continue construction legacy deliver In our money the sales as equipment energy strongest and and QX, is $X vertical, We moving sales expensive we we demonstrated able expect to this gain to estate growth companies, solution costs, the By energy quarters administrative to to

during construction fiscal over XX% equipment XXXX. to business We expect organically commercial by our year grow

to products Next, by we services. new and introducing innovate continue

our services, For this growth segment. drive organic solutions example, which segment, in helped year-over-year equipment financing, our in together Machinio such categories as in XX% related more and we’ve advertising expanded

developed and platform allows for LSI This our to We also list on speed marketplace business better them our and between its outcomes have self-directed solutions. continue of directly assets greater to and achieve retail, expansion industrial customers selling accuracy. sellers with Liquidity Services our major help to asset-light integrations technology platforms government and

XXX,XXX transportation to and and new square-foot to a facility with best return cube of sustainability and for carbon management also reductions. costs response, their to the allow goods. us and footprint center In Kentucky shelf we their our Another This distribution handling example, and to through shelf-full hold bottom clients financial high on clients’ customer challenges many enhance retail objectives opened our reduce in supply came chain will meet storage, handle clients sale how returns inventory. lines their

continue debt. very and Finally, a million in strong cash capital-efficient zero $XX cash to with over business operate operating flow, we

will turn over the our and We for quarter. order to to to for to and the dedication profits, Liquidity deploy our acquisitions. to capital Services share continue members reinvest more initiatives, benefit economy Jorge closing, tuck-in our thank sellers, and across mission it the I’ll now on in their buybacks our power circular details planet. growth we buyers organic In team

Jorge Celaya

morning. Good

our diversification our growing sell, by base low-touch client and and continued to offerings. product categories advance strategic service our have we asset-light initiatives We while expanding

fiscal same with quarter GMV, the was we our completed potentially of will While the XX% last quarter fiscal volatile environment of may year. current up another quarter in service offerings year. We $XX.X challenges from they expect GMV sellers to navigate flexible our same an million in period. Revenue last that XXXX to $XXX year for as record. present macroeconomic buyers advantage to to the the consistent million be $XXX.X new this some clients, and our quarterly third the was third million, quarter

over and to As consignment touch higher while lower-touch offer option strategy of lowering the previously X seller of proportion to growth of our long-term over in a our growth and share of GMV XX% our sales, ratio consistent has in time, consignment continuing our overall revenue reflected seeking with our value-added consignment has percent full-service clients. purchase and highlighted, is involved The quarters long-term consecutive market services lower and year-over-year growth. and higher effect as market GMV as despite strategy of other increases and

estate of retail goods lower some the and also segment XX% faster up proportion segment on quarter same GMV reducing greater its shift on began ratio. the And return to higher value on reflecting sales. inclusion average take RSCG real on revenue GMV, segment this which rate GMV as year, bid volumes. and comparing year, results to inventory faster our we for revenue, quarter a growing to revenue see down with Specifically GovDeals in to on XX% volumes growth the for this assets was of consignment see was X% last GMV the has X% we asset GMV excess the The

was GMV increase during Our Machinio revenue, in was XX% up X% revenue, reflecting sales a strength quarter, its down XX% segment in year-over-year on and on partner its organizations. CAG continuing up with on the business. subscription conducted

reflecting than million in tax marketing earnings center the remains the outside debt the than anticipated diluted that the bid million its we income period. higher flow. transaction was We in from effect hold zero $XX.X million activity for adjusted tax and includes vehicle during delays resilience as are million, client borrowing for during $XX.X GovDeals, accommodate from EBITDA includes which net The the XXXX. our GAAP and value effective increased this $X.X expected of in strong in U.S. rate credit earnings repurchases The expenses of of of sales earn-out segment While retail under and some $XX.X originally an GMV cash the resulting experienced and base. business position. rate expected of as earn-out down quarter third quarter. and to encouraged we million performed GAAP assets fair demand $X.XX and their additional in $XX flows cash of a quarter was lower gain share the expansion of record available CAG volumes operating for share non-cash technology fall the year, of per XXXX network distribution in last continues facility. more income diversified net operations, reduction profitability and for our share to business higher maintain tax per now capacity effective NOL by GovDeals generate assets the are quarter and our includes for we $X.XX strategy million, share diversification or same auction Non-GAAP liability, within cash to bid quarter in We and have at $XX.X and neutral in and volumes and the per

trailing operating $XX.X $XX.X EBITDA generated over million on million period. a flows to basis, XX-month which have the of adjusted We cash compares of same

GAAP Our $XX.X was income million. the net for period same

for we GMV as guidance anticipating the growth exceeds fourth prior quarter year the GMV segments. are Our across our year-over-year

business, XX% relative international expect their This, profitability CAG traditional changes a services. and off through lower needs for seller range. estate neutral our and in in energy real assets should as the share, QX near-term ranging GAAP pricing. containing we from impact per in to may time of diluted remains Primarily $XX Retail non-GAAP flight shares category, we result some XX its to with this million to offset place sold. help total million in for sales a partner, in is a the prior as GMV EBITDA retirement focused supply and income with valuation production, sales, range offering value to guidance is year quarter would long-term of of volumes. within turn, to also response and We We vehicle income to with in in range fully rate strength would $X.X industrial agency last the coming expect allowance channels higher impacting our Many diluted clients for share. compared in operating inventory $X.XX for have year increase to response seasonally the in the asset diluted flows, – its industry between the net released managing improved low yet and issues third hence, earnings to distribution to growth general Albeit, year. range share sentiment. expected fiscal million prospects, per an expansion our can heavy our and to in addition a does non-GAAP is to ratio headwind The quarter of vehicle of resulting and range this We year retail earlier accounts, the be expected fleet year. CAG. government significant operations, volumes expects sector complete $X.X percent rate consistent returned are transaction improved GAAP non-GAAP XXXX diversifying year delay used clients in adjusted with profit more as $X.XX were response $XX extend rate and fiscal and guidance higher higher from higher expects will energy estimated on year a GovDeals to tax for our of Management’s GovDeals’ that to and energy technology, XX% is potential The due weighted chain assesses cash effective growth which, tax year, growing product our are this GMV non-GAAP handling last sellers services net expected of excess this from for also in and vehicles solutions effect ‘XX. with as million. see per to guidance undertaken million revenue of expense equipment assumes expected lines touch adjusted tax While GMV last follows: QX of our GAAP the ranges that estimate along tailored expenses continued network top flows result million. higher Non-GAAP despite new the beyond in and increases million bid sell marketing products GAAP results. year year, of high sector EPS business reduces tax to potential and U.S. to EPS in average in the last to consumer pricing its $X.XX the deferred $XXX earnings as million and touch CAG share. which corresponding sector to XX.X to $X.XX its outstanding year fourth continued our for the per elevated purchase $XXX recent

We will questions. your now take

Operator

from And our we George first Thank with Sutton Craig-Hallum. question have Instructions] [Operator you.

George Sutton

Thank guys. you,

retail context this as I wanted at inflation, opportunities understand look your all look you government see uncertainties supply you we course, look putting today, vehicle for we inventory So retirements, exactly to increasing as levels terms exist very positive at excluding which the supply in bit little impact make at are generically market I’m generically, But drivers the I and those they when rising I to a them. on of just want then, chain sure in opportunities business. the of side.

Bill Angrick

the has question. and for supply Certainly, challenges grown chain thanks supply the to George, side retail relative issues.

but terms we supply investments directly to marketplace both manage sell we the correlated and inventory. not the are announced have space in of for participants and return assistance, where shelf-pulled managed that to asking chain So the provide fully retail services goods, only

financial upon in directly investing with for connect integration our between asked Additionally, because And opportunity our or be through inventory clients marketplace do cube costs, from to clients systems sell size management the we able other. one have to in the have been technology the and depending APIs goods our handling the clients’ might to locations their platform.

the away clients reset a consumer because have us experiences. and I with of think back-to-school with for, we to we think personal speaking, value new ways, how diversified in-store, continued But e-commerce, seasons, share we set And there consumer that that they with for move multiple accounts. yet let’s we’re retail, asked can is our would was we and we down work QX, business a macro gain have because and balance shopping, that’s a few wallet across feel, out So of industry vertical, favorable what saw purchased And provided handled well solid. point the have being a very positioned moving this in through next more view sheets we goods bit in the is and again, there to that in I of sort little we are travel, to us. benefit. very holiday, well they in like of drivers everybody or the online my in and from, broadly was trade trend say, whether out-of-the-home at as

It’s a It’s no immediately inflation, only entrepreneurs businesses, and Services stretch less look there on that’s their agencies high-value not our Regarding Liquidity and buyers equipment. expensive. to is marketplace can corporations operations. who that for That’s their true at dollar. to major question deploy also that as way micro government for They access small and buy available. money save businesses, in true platform

of virtuous network very terms that And effect. the find be so we in to

sell on they that people have our We platform. the something, need platform. turn they buy may They around, on

strong business the our strength I are those, of model. So macro think, and reinforce trends

George Sutton

Just the curious impressive XX% very understand in in of majority participants, flywheel concept, number bringing onto numbers, Where you’re just investing how effect on a transactions, increase give because network impressive spending you in big increase are seeing more follow-up flash seller XX% your the you’re auction you the a I’m us spend? and the completed don’t on sellers platform? of help Obviously, vast buyers.

Bill Angrick

Sure.

technology. combination along is to we real points industry of on further, and connect verticals to industry is energy verticals solutions, as we many that pain expertise help side, traditional breaking classic the our best and construction, domain awareness, with capital supply being And And estate, process creating organization this to like your think the continue that a digital-first in solution. nudge in of out we’ve and capacity human the build chain, analog sold to down all that people Liquidity with champion of capital enterprise our people a specific are along clients’ an that’s sales those say, able human retail the context added I let’s assets get started that like understand supply ago, chain. solutions, high-value years verticals, of, sort Services practice our and that’s transportation

when using at versus in XX% the we’re coming our marketing. ‘XX technology, as forums, are that well best side looking finding sort a we as of generation at that marketing study industry And large us, generation about looking published to they to organization. So following the Liquidity is feeds enterprise when very prior the enterprise the Services out And sales into for learn online, they the lead practice, to our people funnel information headcount of their about added that in association demand year. we back roughly getting adept fiscal of material, house, have sales portion case are

with inside account-based who but we already with, been adept business at account. can agencies using also go companies penetrate in have deeper that very very are and technologies doing further We government cases, to multinational marketing some large

business think companies have capture and so business that segments. but potential And very are perhaps powerful And we to all find I the opportunity. market in doing with, ways to geographies in not are with already all latent techniques we those two not

George Sutton

it. Got

more I Just if question, one could.

have interesting Pennsylvania of what have seen trend velocity some of kind seen How can Mississippi, you auction Can online. taking certain are generally terms like that in markets We seeing? in entire their move opinion? legislation in just be Oklahoma, about and we that cities talk business counties your you significant

Bill Angrick

I savings, terms a cost of up are way in to to what at opportunity. the virtually the a analysis, of you can big that infrastructure what’s publish I on at with store agency, defines contribute benefit to space municipality ability what data what footprint the are of the accelerate think to discussion realize every or cusp what value what’s both it’s to the cycle, set data freeing be the the best for way And think used most savings sold, to we idle lot carbon of And assets. sales the cost smart can city. for, that in to a of the within heart assets manage the the government sustainable practices provide city of looking defines we

people be area more many I to to the that country the migration think you might great be there’s country, in and be efficient. it’s work this or find Their no during another. of question challenged from base of one to has need more ways anywhere parts to live tax opportunities efficient,

state with having that decision makers and local the we level. So are at conversation

We’re $X think, we’ve in And side, that there to are and billion first-of-their-kind on we also the can decisions see obviously that formulating success is had to legislators. we for we sector that, demonstrate on is value jurisdictions. and sales, we strongly something billion I think turn $X that’s policy of GMV and opportunity. a up laws believe into allow a real number legislation books advancing the what that creating online public opening And something

the the providing a we’re level. in are I a like well and And to a you this on time, also think how of clients migration to GMV queue e-vehicles that from solutions they combustion and I and is as entrenched service I what services, the track reduce making our providing to the influencing this estate, clients underutilized the over of $X to that at just is billion world real take way opportunity. best-in-class ours their engine that think we are smart marketplace manage like that, curve, When that We the into industrial and be corporate think of get from pain on taking – throughout certain that ahead another for means look at take who assets next see things And policymakers middle transition. the right manage is, the to marketplaces look a and to all business. of there feed can equipment organizations throughout

benefit and roads, think, way at generation we to people but sustainability worked society, with goals, upgrade to modernize looking money facilities, facilities, also I that through clearly how need manage energy, sale now are power spend the and think to the will bridges, back infrastructure with help to Congress, treatment combined more require desire do legacy through people I then build that’s be facilities, water better assets. and citizens a its legislation of the So combined efficient

to look forward we So that.

George Sutton

Perfect. Appreciate it.

Operator

Thank you.

is with from Barrington Research. Gary Prestopino Our question next

Gary Prestopino

good Hey, have everyone. questions. I morning several

there Was kind income statement, accrual your looks of Jorge, on an happen? expense that caused a to First XX% some like year-over-year, of there that down reversal G&A correct on was it I all, almost if am of the that.

Jorge Celaya

for end of the that here Yes, some comp, for reversal to our some get there of year, now is year. closer are Gary, the expectations variable the – given what as the we our

Gary Prestopino

went guess this investment terms up year, you kind am as you we another Okay. through through where general, to cycle. of the where Bill, get current That’s spending that of that kind big where Are facilities I in have scale GMV physical you what spending put platform is going fine. in you you another to can I be cycle? business with warehouses wanted and need grow in technology, then, to without to you GMV? you of this two asking And

Bill Angrick

Well, we are has us see billion. think what $X.X the see is and at infrastructure I investments making billion run-rate center path with stated track consignment our commented was $X.X we massive model around call, on on distribution the And goal been the with don’t growth, was we glide we embraced. space. Where and

of a are to needs. doing support client are We lot sales, to tech we integration self-directed but responding

could physical that the certainly infrastructure us GMV, billion by a and of that’s billion to from have let’s annual sales, $X take find facilities. another I platform platform today for say, take to continuing selling those of Clients we use high-value possession up about that our $X.X asset function thought categories of directly those being us to so very where drive think of their asset-light, smartly through don’t the assets locations. on to have have we

that invited we’ve integration. So

value-added that’s think integration sticky a I process. really

market-friendly and rules what the with is involved and we’re making So disposal that open that’s cases, our in regulations legislative transparent studies of think case and making in know formulate as who performance they the are Services, associations the to we’re serve, of context the they access we have process about. when of people industries policy, really some thinking past in about Liquidity that and industry asset sustainability, think about this sure to displayed

Gary Prestopino

the just Retail you going a understand there that, gross talk a the are it’s then in retail that is the been CAG are of percentage but lastly, little that is but down. looks wondering, high prices buyers down profit bit to do auctioning escalated things it well. am you’re issues selling? segment to – chain, items going that, for And a down about that’s revenue, indicative And segment side, you’re actual pulling model your as maybe more some stuff I would And back talking down was seem Okay. would percentage as side, a that your CAG in assets. costs on with continue like are for having if that as Because is and like that of that and can less GMV, you just so, consignment of I the supply value-added the paying you it the about – come moving

that comment a bit, could you So please? little on

Bill Angrick

platform profit pricing that in take in like And is that’s that some Machinio, cases, release, mentioned our direction. I of with seen GAAP that how going, think onsite revenue. vast world And shift a providing we the is is looking the to as technology high the GovDeals, in solutions, consignment can overall And for of Sure. margin I GAAP terms to model, clients that margin interacting the the at with shift model mix Well, in catalyst as time that have of for marketplace. integration, we our of But what over in clients we majority are like revenue. gross don’t earnings and aligned press managed solutions the center to are realized very the assets And we’re we we Group, in high fully we you the business see getting marketplace, value-added when incentive percentage sales clients double will the percentage going is. be provide value value the trend pay clear. towards lines our consignment that. the distribution in If businesses you mix in upside. table are And Assets in such segment where If Capital that’s services, want and truly business. really dealing the a very

business percentage results that delivering on and – focused certain both over overall totally mix we’re use So both. again, time, clients has of a we have And shrunk self-directed purchase the of result. but as model does business, retail have that the a that and consolidated

that’s So was and sold has into There mix I distracted last and do being QX we seasonal own over for months. of are season travel people think changed pragnostic to that. probably the as other the the and get a little our things. XX that get with goods commentary industry-wide, print And

lower-value So goods I permanent. some there are necessarily don’t we think year that’s were where a relative to ago.

and going physically in where to people months, take continues going online to of convenience to up are We the bet years. are going be and and next advantage it services sales you share to were of going If XX, of over next store XX, to the to mall? Are think online? into department will the they shopping on latter think think delivery chain XX be in expanded total going availability it’s we grow. go be to and they the the the X We

we value there. So well to are positioned capture

Gary Prestopino

Okay, thank you.

Operator

you. thank And

We further our conference. question-and-answer Ladies you gentlemen, We disconnect. thank and may your you This for have questions. concludes this concludes now no you. participation Thank session. our and

Liquidity Services (LQDT) 8 Aug 222022 Q3 Earnings call transcript