- Earnings call transcript Q4 2022

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Operator

Welcome to the Liquidity Services, Inc. Fourth Quarter of Fiscal Year 2022 Financial Results Conference Call. My name is Carmen and I will be your host for today's call. Please note that this conference call is being recorded. At this time, all participants are in a listen-only mode. a conduct will we question-and-answer session. Later,

discussion The of be reflect call Actual and Chief the as Vice responses and They to today after Celaya, December are Chairman results forward-looking statements. X, XXXX Services' may President their will Officer. Financial Liquidity Liquidity following Angrick, your management's materially. Services prepared and remarks. include Chief for Executive differ view Executive today, questions questions Bill its On and available Officer; will Jorge and

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

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

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

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

Bill Angrick

quarter performance results our next, delivered limited efficient and model and progress during the our review challenges, of This vehicles our portfolio. more details We the on and of business despite and EPS which strong welcome diversified Jorge reflects in to our QX marketplace. provide EBITDA I'll macro adjusted supply client morning, call. the the Good will earnings our business, and quarter. performance QX

environment XX% XX% recessionary buyers as number and of grew buyer the and strength respectively. our the was QX, of and on auction year-over-year, liquidity a platform During registered our participants display on

by year replacement reduced with on the the million that number outstanding for our lower fiscal during record lack cycles fleet our a our of our government abnormally We our during estimate platform, GMV GMV This resulted of auction than full real $XX and generated transactions vertical sales conversion customers' For vehicles participants XXXX, on combined which sellers. provided estate the quarter. results completed in we share rates expected low in QX. for of

we trends our currently normalize we these While boost these are business and XXXX. to expect headwinds, as move through

our full fiscal our and For team. of of proud year we're execution focus the XXXX,

million billion advance $XX.X and net strategic year, the income to objectives, GMV, of a million up into non-GAAP adjusted over which $XX.X of continue EBITDA. our record GAAP translated We operational prior $X.X XX% and

We also this in registered interest base our a circular our during million to strong platform environment. grew buyer reflecting inflationary record economy X.X

surplus sell As we the and GMV annualized commercial to we have billion focused $X.X enabled long-term asset-light and pipeline in expand headwinds technology mindshare to marketplace clients we opportunities Despite in services on as with our circular XXXX, and a value. supply, see near reach business shareholder term to continue in vehicle our and strong drive position the economy. trusted to assets manage remain fiscal and expanding most commence year government value

categories to reach they volatile continuing navigate diverse across numerous asset are provide in clients global environment. buyer strong and advantages macro this as for our expertise Our current sectors, base

of our at the look closer we segments and expansion. progress a take each driving market Let's are how of share

customers on growth the progress marketplace. its in segment GovDeals activity is making excellent Our in of expanding

current the and the percentages mid vehicle quarter in to high-single despite of number grow the supply. new number each We digit of sold accounts continue to of assets lower headwinds

these for records new set metrics we fact, during QX. In

continue to asset value GovDeals sales, progress our make their including for solution one highest we assets. all relationships as a Additionally, customer stop penetrating

received, GMV a the future expect net platform and improvement introduction fiscal and assets marketplace over our of launching shared modernized version was bidders with also more and promoter GovDeals since in respectively. our seller and our example, committed our our For well number increase next platform will of customer XX%, time. per our GovDeals' 'XX, relentless driven GovDeals on score. our and lift select in seller the We're recovery a we'll of rates XXXX. was GovDeals This The materially have in GovDeals GMV to resulting increase of generation sold in of be the grown and marketplace QX we extremely times X bodes and data XX% per beta new features well for

deals, marketplace chain vehicle of inventory the flexible the the by customers replenishment returns see Whilst have center onto both our normalize, our spending In have and goods. held and client and clients and some network a omnichannel programs diversify the pace well in continue offer hold to early GovDeals and compelling the service shelf-pulled returned we customers next portfolio sale continued opportunity cycles to received offerings reduce grow three several of solutions, we pipeline significantly grow size have and the we segment. new sectors, takes been self-directed federal fully holiday of to costs and acquisition, big business to have five pharmacy business our managed our over which our has to As infrastructure Retail utilize strong business box, the as Retail account new segment, our in leveraging supply won years. distribution

a has customers by as embrace to Our in merchandise market continue return growth of online Retail the secular volume retail. strong opportunity driven segment large

to or season Retail Federation, $XXX retailers about billion during merchandise the according XX% National of sold the to example, expect For returned. shopping be holiday

on particular, facilities. early and in new still costs. help the value-added segment fully their Current clients that Retail distribution leveraging we have we they in center by been Our made reduce customers supply as highly reflect three prized investments our our services, are chain results have

segment further retail as improve we productivity operational added margins capacity expect drive to and leverage this gains. We

maker Our in role play a CAG global value to the trusted for chain. high market industrial a supply segment equipment continues the of

to support financial broad been we ability cross-border and for the application industrial among Our sell. and demand settlements increasingly assets counterparties given valued the has transactions

for China, ultimately in a For auction multiple Europe countries, recent biopharma Fortune of for including we XX% bidders example, sold. XX assets XXX from from in XXX assets over the XX clients, bidders had were where

mode, best energy, and and Our biopharma execution. in our new have recessionary are our companies in in well global to CAG reach environment. are savings sellers we We through critical with verticals, the who major companies the help to particular, the areas. was current cost automotive positioned growth Indeed, in manage anticipate a landed solutions industrial getting these mandates

attractive in As limited the growth COVID APAC recently. have been China, loosen which have region, restrictions in opportunities we

Finally, equipment consignment plan our heavy ahead vertical and finished and has upside sellers, CAG fleet for year-over-year revenue. contract, of equipment opportunities heavy in XXXX fiscal the We grew signed category net strong new XX% our potential. year transacted new

Machinio recessionary storefronts that cost scale more services are such nicely segment coverage well to equipment and in a our environment. business to savings We digital offers continues Finally, with as advertising and customers categories Machinio believe solution convenience expanded our financing. suited and related

to directly to We have sellers. marketplace liquidity also smaller Machinio customers to dealer we're equipment recently their auction for based valuable launched the customers list offering and on Machinio self-directed services unlock for a transaction

and and share plans. million to debt, repurchase create of we've China ample to and and operational cash deploy for strong a executing plan made believe three chains significant We've continue efficient the us million for will our storefront more continued and marketplace on to marketplace our leverage for details economy the on capacity across normalization benefit mission our enhance our growth in years, is to are investments opened to In buybacks our the members circular value to a with be share sales, provides $XX the to focused planet. Moreover, our tuck-in over over In execute time. quarter. Jorge the acquisitions. team by classifieds in we Services cash the China and of our office business aided initiatives, Finally, fixed time. double capital I'll zero our We've capacity. and over increased dedication platform drivers $XX in multiple flexibility capital Machinio on power sales and shareholders with which to to buyers our the thank our core to our marketing, there and growth Machinio sellers, brand to branding Liquidity in their over technology organic a awareness will authorized new we market opportunity and we've conclusion, in flow, now for five the operating supply we next business closing, it turn

Jorge Celaya

with quarter $XXX.X $XX.X XXXX and of Good CAG Revenue quarter in XX% was our a last volume completed last the quarter in morning. same million the quarter high purchase fourth same was by $XXX.X up fiscal from transaction includes which $XX.X year this million for completion We year GMV, fiscal in from fourth the X% the million of year. million, up segment.

trend, where a for slower consignment, lower cause rate of at This real impacted transactions in percent growth GMV to period revenue a percent of our revenue reminder, in and can GMV. the trend As model purchase occur. in of our higher be the growth any estate as reverse business a will including ratio sector than grow higher

our year, X% quarter segment for this GovDeals up and results GMV revenue, XX% segment quarter last was BidXAssets. same on to comparing Specifically including on fourth the

for on sales And million XX% are on was up Our GAAP X% this X% with and in $X.XX. the up EPS non-cash fourth of real the shift XX%. revenue BidXAssets in variable compensation. in adjusted on revenue for to EBITDA rate revenue. of tax gain value Machinio earn-out quarter up due period. outside conducted Non-GAAP GAAP revenue, and earnings in expense and quarter million effective higher a higher approximately partly XX% The quarter and $X.XX, expectation total up last earn-out fair of Retail was segment operations other the and of partner same gross income a CAG This to expense GAAP fourth our close GMV. year quarter non-taxable XX% was cash of as the on purchase hold adjusted tax RSCG on was net increased estimates profit and Non-GAAP in segment an the was timing organizations per reflected by to in reflecting the quarter $X.X to up asset cash, offset stock-based increase reduced flows lower GMV margin including resulting adjusted that variable $XX.X net quarter $X.XX fourth income. to per GMV of million, the sales year, $X.X fiscal year reflecting XX% its year the the fully a and diluted was XXXX. reduction up investments. from versus continued and compared or This We gain impact technology unfavorable net income of activity $X.XX XXXX $XX.X out share earn-out ago. compensation last the the short-term was mix estate for for share on primarily was in liability the includes equivalents average million, of year segment from CAG of this expenses

million flows performed $XX.X on million of trailing basis. We of have generated a operating repurchases share XX cash month $XX.X and

transactions uncertainty zero hesitation In the any itself as debt can macroeconomic and borrowing available our lends current surplus to the of term, experience million results in predictability and our by buyers period. of near credit quarterly given timing sellers have assets the capacity in We $XX environment under for facility. in

the of economic better global short-term. clarity visibility anticipate growth challenges unfold, As having we direction would the in severity or over on

in strategic model we company, business and confident our direction. a As are

cash remained Our results in of these turbulent and during times. even profitability have solid terms revenue,

of the same range pricing year-over-year expected Our sequentially fiscal decline in is fiscal we with year the sale. volume improvements year and may a is a Despite of of this quarter our factor into headwinds year expect to on as sequentially, this quarter. XXXX for above vehicle next first of of also dampening seller 'XX. in given both expected volume year seasonal fiscal fourth completed of across activity, quarter buyer transaction Relative and seasonality first last sales fiscal segments. to experience GMV sequentially that from a is growth sales fourth resulting vehicles period used 'XX in constraints the decline are GovDeals' last CAG lower year-over-year guidance quarter new for GMV purchase GovDeals and experiencing on continued vehicles availability volume also GMV during going

and transitioning However, product gain diversify our equipment sees categories. CAG both heavy of Overall, and base, segments. opportunities Retail in to The remain share flows assets segment terms GovDeals the robust. sellers to seller in continue its expects market across to company

higher of line across fiscal first growth and to Our growth expense for top increased reflects inclusive during and expected sales year-over-year support costs the segments. guidance of operations with year XXXX technology profit quarter XXXX our labor

We first quarter rate fiscal during expect is tax our will of the year guidance effective remain year for 'XX approximately as follows. XX%. overall at that XXXX Management fiscal

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

We questions. will your now take

Operator

Thank you. [Operator we Instructions] Prestopino Gary And with Barrington have Research.

question please. Your

Gary Prestopino

coming the transaction potential rates it be Hi. price? side higher conversion flow sellers $XX Bill. Is less being was GMV than together of thought where things post a -- and completion? going or not and on estate real you then of the lower Hey, and real about an upon vehicle was of GMV one, agreed you function Good by through I talked estate. or hit million, everyone. buyers here. headwinds you to potential the sellers the that Couple Number being mentioned rates on on morning, mean,

Bill Angrick

to of Regarding the COVID made residual consumer to due government what in positions with defer have the XXXX, and therefore, happen. their vertical, recessionary observed, comment sales of back estate some we've will which some to sales estate on the local highlighting people share part to advocacy, sales. policies that likely to normalize or current is friendly to policy that We real counties reverse forbearance allow think Gary, in pressures these defer current get real giving is decisions is and,

a owners. the it's have by spread them to pay-off a bid individual issue. to people where policy not allow sales or It's So held position ask become really back the borrowers

have haven't somewhat government there think The in and is, real awarded other good note backlog implemented and that been yet, able have have to pipeline business. we area a contracts a been would thing I just very agencies the estate have been how that been process of I we their and has

that will We've books a XXXX said a have vehicles So again, been significant backlogged for logjam with part wide. backlog have us, do to of backlog our had industry the a least commercial larger this visibility There X picture they government is our in is for estate have on things, give think million wide OEMs out their in clients, vertical. how According there traction in phenomenon. vehicles actual GMV been well-known real down. to clients. and orders fleet will the working us we more at agency, The municipal that is conversations and clear is that these us industry

and So that it of a they fulfill just gives demand. have vehicles, for the that owners, they're sense order rate you money produced magnitude not the commercial vehicles, being the at of their they the want the agencies it's

think some we'll to benefit so headwind that And flips as it. we tailwind at a point, a from from

Gary Prestopino

this there? could that GovDeals next is planning business? And generation little a product in launch that new, you you Okay. it's talk new guess, different bit What the then, a I out about for website

Bill Angrick

the it's same artificial design it's decade, level thing. our see platform. the we at improve it's think taxonomy and there's front to and not We and and have marketplace would really improved, right search marketing buyers the data we place the it's in to responsive improve the the about Yeah. important for is And GovDeals putting quickly. going I tools going our about front guide functionality realized, participation being it's a and because to our intelligence beta meaningful of question, largely better it already, AllSurplus a like think therefore, experience, assets about experience user everything purchase AllSurplus end to in driven one-to-one it's has is but there, things a and the on intact there equal, a and end it's hands you No, the the think test path we've got for feedback. as over been leverage lot that's all on customers GMV marketplace. a great phenomenal ultimate we of The user good-sized very sell in to our And

new that net site those doubled, more As have rare. the which for I mentioned, used our score promoter than is

we path sell and the bidding on XXXX, it's for just to in unfolds assets government the GovDeals. our we improve activity purchase will pricing the think that improve for as going So clients to realized and

Gary Prestopino

let Okay. somebody Thanks. I'll else go.

Operator

next One moment Sutton Please Craig-Hallum. the from comes proceed. line our question, for of please. with it George And

George Sutton

Bill, you. segment, you curious, scenario in view? for ideal what see is I'm economic your at success retail as to your the look you Thank there

Bill Angrick

Well, economy. holiday in online be more system think that's as we I to for want the online, growth secular terms online We retail. as NRF area one, returned, because more data, going is the the catalyst among return a of so business, And in our the -- in have $XXX a in that you macro to sold over noted, season. billion and the robust the the that's well-entrenched of that think habits sales consumers growth that's trends,

So that's good a thing.

the thing side. of kind hunting environments bargain think I good the buyer are on

bit of recession, deals. we when around ripple buyers little for are looking a have a So

been has very So our be money noted save our as to on they're active, metrics. base going looking I and buyer to

a think positive. I that's

stock October in probably to are balancing the of emails we all themselves, got retailers wanting good deals think for kind of have terms sales. and retailers holiday and In I

So of they a Friday concepts those pulled in earlier year. forward Black lot the

holding maybe as to out get So to continuing e-commerce reverse platforms. see But they the they I in think think looking through chain, invest to and inventory are retailers that be their of holiday liquidated. you convenience were normalization continuing some have going in our be flows omnichannel I into experiences, you're supply going of invest otherwise would to season, to core

that the consumers think more Bank have America they -- out the I still that pre-pandemic. data says of savings than consumer had came

up. consumer it holding seems is So like the

And net goods, how for that's for environment. behavior we that's XXXX the have think buying goods retail I spending we have from the better -- commented, the their experiences. the positive we on shifted more us, ultimately, of helpful course during think George, to services and buying people

their I going that of retail think and have and strong resources, a that year to if something We competitive reliant more their a of crystal at will hollow advantage. landing services that's corporate sales the we they in have spending on to where frugal continue We'd to see So be base were in normalize savings to and the facilities our people value-added bargain in behavior Liquidity their cut affected a And recession earlier to don't buyer activity. they'll some as to feel a landing. ball, are like commented But discretionary or continue and in very the normalize little that's environment, like more And out see is like to consumer Services offer. Fed in soft have I XXXX.So costs early to the even the I going XXXX. we retailers tightens same-store large soft that have harsher. would reverse

there. think So well positioned we're we

George Sutton

hypothetical potentially up could admittedly not a business? scenario a suggestion, in it's Looking at for do end would a scenario very what supply your that the just making side, which liquidating, Carvana, prediction of vehicles

Bill Angrick

Specifically in category? vehicle the

George Sutton

sudden from that of whole of a lot supply would vehicles market what you? perspective, all is there If for do additional Correct. a on the a

Bill Angrick

utilize can and If a are dealerships. wholesale cases, Well, tell not new many are first I create we've that's marketplace we for with thing -- unsold, Liquidity. automotive vehicles for channel that had conversations time a automotive these in our yeah, platform dealers for who well, to you the sitting good wholesale looking,

class we know, as sell, their lot you to be and to of our monetized, for the present looking Liquidity vehicles anyone we the another that market asset an marketplaces avenue balance vehicle used and is sheet So asset industry. in manage in for a that

George Sutton

you I you know us question, in with a being Got year it you. And little walk this text, of and mindshare throwaway that that a expanding plans. a expand last marketing Could bit the mentioned you're focus. planning customers if Give was of simply don't to your sense through but how a mindshare? line

Bill Angrick

think, in will, organizations them government targeted these our we've do, communications that awareness the we've brand if transactions large we that team Well, generate. and case many corporate studies, we've the actual in the invested bring to Sure. receipts, work you very campaigns I corporate cases, the to completed. with the expanding clients, recovery that done, on

retailers, compliance page communication and government to created of so makers decision and or it oversight influencers manufacturers, global ours, necessarily And then global the through digitally, to case CFO's to of delivered you that's more. be landing its office, but office and targeted have the learn deliver the content might you and that study supply be might very and operations, clients direct chain, delivered may not agencies that allow a within

we're for relevant data and making delivering, that biopharma on gives have energy insights in those activity that also areas. the specific in automotive, example, I We think market industry you

where you're raise if we really some period think amount balance CFO, our in monetize back of have can to So sheet maybe capital I know a helpful what to pull to spending. it's of I

been think well that's I received.

a We in of thought also as associations. and leader a industry speaker have government number presence

of arrangements cooperative as directly a national have efforts. result these We

shared scalable communications, through clients, awards, do traditional through lot we a are awards those corporate format. digital our insights George, So our excellence a and of delivering of marketing release that data way vendor many a we sustainability activities recognition have are press with just linking happening, really with the of more and and marketplace in through through of

George Sutton

of this my objective, There spending existing dollars This more simply of anything. sounds data for leveraging be needing this. seems none expensive. final was just your for so and than So just this question, Jorge's walk relative achieve into no to to more office to clear, to

Bill Angrick

headcount Yeah. associated operationalizing and we've accounted That's the for. ideas, already with fair his

George Sutton

Perfect. Thanks, guys.

Operator

you. moment next Gary our with Barrington for proceed. Please One Prestopino Thank Research. from question,

Gary Prestopino

Hi.

of through another on you were initiatives? more up of I said, thought -- put investment were Just going really last sales, more that power picking last of X% up last a technology a to couple about et questions Is kind having I your you technology process. behind spending in that mean, on over terms add people, year, cetera. year. mean, your sales

back of it If reversal the XX%. the were earn-out, up expenses overall you looks like out your about

sales just 'XX? to that fiscal I an see as want So be idea OpEx expect go to more or maybe we in get the in of can excess would of expenses an equilibrium even we forward, growth

Bill Angrick

we of in you're staff and fiscal operational the in investments took a 'XX. terms correct, In expanding step-up capacity,

function market feel we penetrated, in essentially will the many both I having is demand but the in team facilities and government new period the XXXX. month not segment mentioned, we insights, We see Retail attracting of XX and support that the a And have organizations, commercial period regions the same like to our new market. and e-commerce and clients that that's access we're also an funded in helpful still in we under in it platform, know team coverage. Gary, our sales country. growth the over in step We of three in to terms the

in under a and with like for migration of Florida, revenues, has which an penetrated therefore, flush municipal us. area huge Southeast population, areas So terms region, that's that's had

GovDeals areas. technologies that I of within leveraging to So spend, don't that are to already other But we've in continue find the we ways And growth talked of places to will we of moderate. serve -- going we're Services. rate when to those about monetization, deployed terms Liquidity

now us So a that's massive the look costs. an And of when you it's terms time at not the in it's amount in technology interesting undertaking marketplace. of for talent

in You've had massive tech world. the layoffs big of many

engineering direct looking prudent our or outbound structurally increases can hires see acquisitive but in great step we get So be any if we're always hires, and major through don't we talent spending. function to

Gary Prestopino

that. appreciate I you. Thank Okay.

Operator

Thank you This time. ladies any for Thank And participating you. this gentlemen. you not further questions and disconnect. and today's showing at you, now Thank may call. I'm concludes

Liquidity Services (LQDT) 8 Dec 222022 Q4 Earnings call transcript