Earnings call transcript Q1 2023

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Operator

Welcome to the Liquidity Services, Inc.

First Quarter of Fiscal Year 2023 Financial Results Conference Call. My name is Gigi and I will be your operator 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,

be call and Chief the Vice and They today prepared after Celaya, are Chairman Services' President will Officer. Financial Liquidity Angrick, Chief for Executive remarks. Executive questions their Bill its On available Officer; Jorge and

as include discussion view forward-looking results differ responses materially. statements. Services and X, February following your questions Actual today, The Liquidity XXXX reflect to management's of and will may

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

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

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

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

presentation Liquidity Services,' to Bill turn Chairman over At the this now I time, CEO, Angrick. will and

Bill Angrick

macro and delivered of limited Jorge estate I'll will strong QX We which EBITDA call. business our welcome volume review QX our on next, morning, Good real of marketplace. the vehicles quarter during to the adjusted details and the transacted provide the Celaya earnings our in despite results performance our and challenges, segments, EPS and more quarter. and progress

our approximately during lower-than-expected estate our conversion abnormally GMV QX. of estimate softness million reduced resulted on QX. This category in with GMV rates vertical in government in the $XX real low combined during by that share alone We vehicle sales

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

resilience business cautious consumer and the headwinds, reflect results financial of QX challenged with macroeconomic when solid our business behavior. Our including

expansion, remains Our in strategic and market longer-term diversification priority growth. investing share

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

strong our trusted financial value business strength, segments and are share and our gain pipeline, positioned we additional With to for solutions marketplace our across long-term create shareholders. well market

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

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

used estimate will supply combined the by in is this being masked lower are the prior by impact vehicle versus million million progress GMV GovDeals However, in to that prices year. $XX headwinds $XX XX% with quarter. reduced currently pricing We XX% the market current to where lower vehicle

been marketplace BidXAssets new winning and adoption. successful acquired driving Our contracts digital has

However, the tax and higher volume real the programs in foreclosed part expectations, to with pace of rolling estate the of and interest has economy. and out below sales these associated slowing rates due been uncertainty new judicial

in the growth of quarter number continued each assets Our of number sold ongoing reflected GovDeals. in accounts is share new expansion the market and by

QX, sold, During assets of reflecting of the for GovDeals and sellers the marketplace. number our set number of we active new strength records

California of School the notable Nebraska several Philadelphia During QX, Public Sacramento, division, the Boston Estate and we Regional District, Reno, signed new Authority. Nevada Transit including state City of Real accounts, Schools,

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

sold the quarter, a helicopter Florida office for County, during we the shares Polk example, for million. For $X.X

of and this our later of expect rollout continue the We with progress new the this make also marketplace to functionality version new beta GovDeals year.

time. will modernized platform GMV and over lift materially recovery our rates GovDeals increase our expect GovDeals We

infrastructure federal as of our summary, our replenishment the size to In client the estate of five hold, grow acquisition, GovDeals years. three normalize, vehicle and over opportunity see real pace significantly we we continue the spending business cycles account takes next and to

Retail received environment the profit us the Margins an and year-over-year, save helped by and our pressured period. have well lower year have and been down customers respectively. XX% have by money our merchandise service as this GMV grow been offerings marketplace prior segment, In versus XX% to direct flexible segment traded to in in value inflationary

Current facilities. results remains investments we yet fully new the we notable with have and made pharmacy strong development business in have in new to distribution leverage reflect Our center housewares the interest that verticals. three

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

we Asset below during was Our the clients transactions but plan for direct QX, delivered segment Capital successfully Group the as for executed profit our high-value for across segment plan quarter or numerous globe. we on CAG

several manufacturing. we semiconductor capital grew sales strong in leads sectors, year biopharma automotive, the and trusted Indeed, most prior remain maker XX% for versus in market period, with industrial and inbound including our assets the interest QX

to than continue Conversion has been normal, plans clients climate. changes the assess operational of in enterprise economic global many of our leads as amidst slower executed their transactions to

been Our in broad of of the and different in the support industrial application global valued, capital ability demand global the to assets the supply we and regions variation asset increasingly transactions has sell given economy.

fabricated unique an renewable located to the by a the sold asset South sale our QX, to we high-pressure highlights buyer of create applications Steel in hydrocracker ability across was biodiesel completed Kobe of and Korea Japan. globe. marketplace and The during example, commerce reactor, European For unused the for

the environment. are help industrial solutions manage recessionary positioned to CAG well are cost a who manufacturers in through mode Our savings current

China, As attractive been limited COVID the have continue in which region, we recently. Asia growth opportunities Pacific loosen to have in restrictions

sellers, several also to upside contracts, opportunities growing Recent continues make progress signed wins Our fleet transacted heavy net potential. CAG revenue. new national and strong new with equipment category accounts include

services. market its segment profit grow equipment services our transaction of direct enhanced financing revenue and with maker more introduction Finally, categories, Machinio listings, and traffic continues to the self-directed and

business the current online to suited are our environment. digital convenience advertising macro believe customers, offers that Machinio savings We well storefront and solution and cost,

we solutions and grow our our in focused our create We've multiple to conclusion, the marketplace double five executing are In made will drivers and of sales, next time. of continued for core awareness the over three to value on to fixed shareholders business have to capacity. which the the by investments normalization years, we leverage chains technology and our supply be marketing, over plan in aided of operational

our debt, with us and business, million capital-efficient provides to Our plans. cash $XX strong cash financial in operating flow, ample execute flexibility zero

on to share and will deploy continue our acquisitions. We growth buybacks organic tuck-in initiatives, capital

our their sellers, the In thank we the members to closing, mission, dedication circular and power across Liquidity planet. Services to for benefit to our buyers team economy

Jorge quarter. the over turn to for more now I'll on details it

Jorge Celaya

Thank you, good morning, Bill, and everyone.

said, million type up last completing given continued volume, and or inventory $XX.X As in Bill same X% assets fiscal of key despite first expanding has supply available on respectively. climate in million disruptions share, with impacting $XX.X while the economic categories, the can for year, XXXX year million we $XXX.X timing focus $XXX.X of and in The revenue affect quarter market the million uncertain period. from GMV, sale global macroeconomic any and X% and quarter have chain challenges up to and in

GMV year, supply of for this by first revenue same segment on profit, our results, and and direct on quarter segment vehicles. down up last X% the comparing GovDeals quarter X% the mainly segment was Specifically, to impacted

GMV, direct XX% was retail up XX% segment in or up segment increases of and that market-driven to reflects on on XX% Our the revenue lower-value up profit mix products. RSCG current

income margins was favorable X%, segment and GAAP year. resulting international on segment of quarter fiscal quarter direct share in to revenue XX%. up in GAAP direct GMV $X was CAG net on Machinio the profit $X.XX, on Our first revenue, down XX% for profit down earnings last up was $X.XX XX% the was from due segment diluted and per same XX% on up while and down million, transactions.

in revenue, earnings up adjusted quarter million, $X.X for adjusted same marketing expansion, last growth. per $X.XX, Non-GAAP $X.X last investments year. and and $X.XX year, first market EBITDA longer-term diversification quarter GMV year-over-year in Non-GAAP and to sales was from planned the support quarter share the the million was offset the mainly by up partially this same and expenses and operations reflecting share technology from higher higher

of and million the cash $XX.X short-term We hold during $X.X quarter. million and investments equivalents in cash, repurchases share performed

We borrowing our under capacity facility. $XX credit and debt available zero million of have

range being experienced GMV headwinds fiscal reflects is quarter global currently with for consistent guidance Our the year across the and second the economy. same last period

is subside. customer of of trends The by with as uptick behavior and higher retail retail macroeconomic term the As products segments beginning see uncertainty. our expect vehicles expected, pricing in conditions returns mix GovDeals lower business and for response therefore, the we the impacted growth trends to would returns, Retail the supply seasonality activity. estate, of current inflation We, the long macro and to post-holiday from volume these yet and combined usual value real are in the in expect with in higher macro

mix and GMV are revenue guidance upcoming revenue range our anticipate current slightly a of percent direct fiscal the total second term, range products lower in in short quarter. of Our as expectations mid GMV the in reflecting profit overall a term, short a business profit the total consolidated to of as from XX% percent to currently segment We mix the contributing the our in of sold. reflected high

operations through on and headwinds stronger sales marketing share are emphasis remain, we in gains looking our to and positioned technology and investing. the macroeconomic stay and While for growth market longer-term continued

guidance year Management's for second of fiscal XXXX is follows. quarter the as

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

will we your And now take questions.

Operator

you. Thank

[Operator from first comes question of begin now the will Sutton line from Craig session. Hallum. We the question-and-answer George Our Instructions]

George Sutton

Thank What that drivers in later see and I little the for you. bit the you year. you the a that business Bill, that what will explain be for you boost normalization the could if wondered the are see? in detail you believe more

Bill Angrick

supply the that supply. intent operational truck I life to variety and budget our vehicle relate the government know reaching commercial components demand to there and customers fleets, describe market as I assets some across have buy extent limited that a safety, in enterprise and other fleets, market. of that parts call would and what fleet those to backlog think We is in electronic government

normalize help what owned So our a think through as assets of unfolds. asset clients. many has way refresh disposition been we for that will period their our make and cycle, hold The will longer that

I certain things think that market, the also construction that bucket marketplace. our normally affects such into as would other market, other feed truck utility, segments

real estate I business think has low had the conversion aberrationally rates.

has and real counties judicial Some the borrower certain to as by changes cities of normalize estate. going And look perhaps that public behavior policy on with that's normal at higher to and delaying jurisdictions think we of how rates. and sale related I interest

see reversion to is of going average we'll have estate what that a you're a below think sales we've average seen more sales lot real snapback, of sales. to I

GMV mean new companies million cost making are backfill million shortfall, quarterly solution. now the that as progress are fleet frankly, to We're viable at with XX backfilling which I the equipment growth. a with to doing XX million few mentioned, markets. in EBITDA. heavy -- diversification to and looking What high as commercial I and of we're end is, of dollars it at and XX low a National market we share the great markets marketplace, leasing our business us

good. the to leads CAG We transact with growth as our companies that. XXXX is question a XX% of And and inbound pretty I These exact are in timing continue this said, intent Fortune to expand reach. is of

very is where have basis and And a of we no liquidity. can the for take as we'd market different think create like one that to on a assets sustained that imperature like different as So business. relevant global can demand you pockets that else to of marketplace we I making see generate

utilization our of providers. market and and the but are and and other furniture a not prior traded consumers And services, share period, year there's service we block there. lot stronger retail still core XX% I high-end plus to Uber down did. Yes, growth the our segments, across have is that relative not they We think And of all equipment shabby. our we than continue segment. strength gaining GMV too they're fitness have in buying tackle of

we'll has market we think that the continue GMV quarter so the headwind announcing we're the And to short-term last I today. in dogged that overcome expand share,

George Sutton

You leads same up of you see in leads to -- conversion improve us the the your inbound slower, anticipate conversion? would doing by improvement? your mentioned token, that sort what what can of significantly. some CAG sense pretty some group, But frame give we you time of those to And what are

Bill Angrick

we're a is stay think provide allow lot to doing may and in dollar And flexible what facilities and services, multimillion in to data can or achieve affect market. I clients real-time decisions sure the marketplace. we value Well, that exit our transactions see are a making what they the of these market to clients'

the CFO that's cross we in the company that lot of seen haven't a delayed can on to market strategy but while, is solution market, trusted when control. is you role have make and But do in is we what decision-making of the ready. the decision-making. a And of asset. that's they're cement currents And as selling what of operational So the outside our our when the frankly, choice

has There's us. lot that's boiled. reshoring a opportunity been of Take activity, market, semiconductor for semicon and the movement, an manufacturing

covering when companies. very are manufacturing we're well. selling really that those decisions these A of actually by about then inbound think and lot so And leads lines, profound you

realize market. what a in they transactions secondary like to So of the providing the clients data making so we boardroom, that be available, want advisory lot were understand can precedent what businesses in doing

auction whether happen, a will just of these an course, and when, not transactions so And of of is matter a marketplace. question George, it's

give you guidance a quarter. at in We point have real-time the in We're earlier we the time.

and in development And a the as we new give us the increase increase best I that only we're have conviction have to business the really I on can gives see growth we around. XXXX, So, visibility CAG tell business at But XXXX, segment. fact awareness, hands what look can can you able now. we a pipeline that strong the our you that's

George Sutton

of superstar, me One an kind optical but for question final relative It's Machinio. to very small. little

lot today, provide--? a You're it your and Can real you discuss number there of on an certainly bigger to trying like business been looks of dramatically building business. grow much business with discussion a could participants, functionality just has the be and that effectively fairly overcapitalized

Bill Angrick

that's the three to trajectory. to a Machinio have growth business be very double always a good plan to going team We good the two and in next years and

Machinio continue While we've it it be That's path small see the may that a global to business. a build whole, more to we've relative than doubled business since began has reach. and to investing glide in that

an categories for We We have think for us. there. very the in We China. office market opportunity equipment inefficient has see is opened broker-dealer that

successful unique buyers. introduce in financial bidders We bidder that and the us see five bidders interested perform. for platform a and to told one we have the sell. or play asset to they're what advertising unhappy there's That capability opportunities in of to because market role every maker we have number a means exactly of averaged transactions that four We four

matching a So, we're available adjacency our auction platform demand with attack. from inventory natural is that that and beginning to buyer Machinio

Machinio improve to the tech which had our from In allow do needs that do to friction get financing directly ability something really accretive people up a lot so would addition, positive. those team, need we and the interaction there. is are more and our And without We've financing initially a of to buyers to be list partnerships equipment met. to on any standing reduce platform

XX double of rule So, is to drivers This of will again. allow business. high-margin there a lot that are a Machinio

business. a it's though its revenue to relative So, lower high-margin be might the even whole,

as think get there to business, So, and it to that the double overall the starts bottom-line I of material traction company. become we

George Sutton

Perfect. Thank you.

Operator

the Thank Gary you. Prestopino our from next from line of question comes Barrington Research

Gary Prestopino

I a the the and of Bill here. re-fleet. correct questions with and of year deals Jorge. really supply there the really car lack assume of good mention the is vehicle couple a supply morning it there's couldn't new a from last that fleets little more that assumption? issue there stems a that I side but kind issue. of did fact Is pricing Hey, Gov because lack a Bill, you on a mean build bit, out was would

Bill Angrick

when available the spot margin about -- think because is fulfilled their is That's whatever and demand market, selling is on it, in you retail. highest Barry get buyer rental too. supply last The fleet the dealers, taking at the and to

customers, police, more working just And there's waiting been allotted of the least medical, that's patiently efficient hard, sort last say, we're needs that at get know the that energy industry are fire, our of But fulfilled. line should to in to for there. is their and automotive fulfilled. bus money supply fill chip, a we to needs So, in line approved increasing get component chain. ton I Their capacity needs supply in utility fleets fleets, to is last

think that, free have there, and out is that And of bear a XXXX, we'll XXXX, marketplace. half up ultimately going of we'll the into the lot second in and be come to I to supply

we that different and That's probably So we observe with like the you service it. that's in data see different sectors, how providers. track, all

and a we So that tailwind. will headwind a – that, that normalize eventually is become know

Gary Prestopino

that to municipal to a cars here on money governments, the If Yeah. base of interest that assumption? local, they be the your correct going to the or pricing not available? All governments, Is allocated basis, right. the these are buy it going That's knowledge if as whatever, cars budget state have a rates. opinion sensitive they're sort they're

Bill Angrick

for with can worked use always over utility the XX tell of government there. entities you I years, Having been

Gary Prestopino

or you could on what's the side? into Maybe detail on in of bit estate on go should A real more going more GovDeals here. There be Great. coming Okay. couple the little questions if a I should estate environment, saying, be there know, conversions the repossessions whatever, are you're out sell, to with down. given but you're dealing more there don't real the –

So down? estate that what if conversions the real come happens to

Bill Angrick

when the or event ability has mortgage to payments. recover pay back taxing the tax So takes properties the the their place, to they owner

final we've through of see to We properties seen some those of as And sustainable. don't to borrowers get so delinquency lower-than-normal as rules. their borrowers subsidized sale a off going rate some that have and entities

And a in probably lot lot another of Institute a sort support programs, deferrals subsidization of debt had forth. where hold. put that let's – part and a that's say, of of on payments There's relief lot put up artificially. happening XXXX to and of kind you loan of, held XXXX larger example, and so effort market, was

that all in comes because think policy I XXXX, aren't normalize decisions. to those sustainable

for I you go X.X% of us? been cycle your more sold, that, process, some a normally of they're foreclosure will probably normal for items instead assets X%, in think assets It point, sale an rate be affect positively that and auction, meeting of at to to marketplace, listed that And were that that what and that means through will your – obligations. pulled to up of mean those of means back go the so of more that well, does so completion I and the some will think closing through GMV. sort queued instead like going were they've our

sell lot as we've March than few property not a share, county And goes every rooting and in a side on longitudinal have when process that, quarter. going more – which the what it's for directed by not other, if or seen currently visibility to like, that quarter the you what the the sale data that we're last we're to XXX says, in QX quarters properties our normalize we have the we you from driving have one

borrowers the a much interest other pieces feeling rates on willing are are would impact I whether in Journal Interest there's this now. had week have that fact little say squeeze. to a these are And is carry property. couple higher payments The bit the consumers the of a some around think rate thing of I

going So estate. to real that's influence more we probably think

been we the is Thus lastly, liquidity services online and trend winning kind little those these have of people resist of drive to of administer accountings includes sales, and that cases, And mission successful some some by contracts to And extent, the in a digital new may methods broader that and in phenomena. just government contracts. taken change. sales of a bureaucratic bit slow have secular rollout entities, adoption

you're an might city "No, these way say, in say, and have I going So occurred to call competition. XXX local want local moving sales people online that off-line a and and my or isn't don't for to certain years, "This buyer mayor good. council I'm

goes won of have delays in the And little there's year bit XX that type because so not metro of any a for contracts then that fruit some a that top us current of But rollouts. process and process. on political we've a lobbying bared

online. and we that's competitively and what of on incumbents part benefit the will makes change, dealing of But just decision Now that's through data operationalized, contracts the resist. is the are the you're have these pioneering go awards going certain with to go significant and to side when be you market ultimately that a with of bid because deal and sometimes is those

Gary Prestopino

Okay. of And substantially you. the down, quick I cash Number rest accounts like it know what down just back sequentially. going you fairly that balance stock, for two one, the but then some bought Thank Jorge? looks questions. was cash more

Jorge Celaya

and little at with but January. change we difference financial quarter the timing with happen very, frankly, have as where have we customers, on the just the falling banking, normally would few a with it the last our So our the in settlements in into had end holidays of that did very December, of days

then ended net a those say. two otherwise explains sheet, ended are which a -- that's then but don't to the on it So that and of right? buyback, part the why I'd or the the you little things, is different. nothing biggest million actually right, X.X But up whatever, -- unusual. the balance of customers up also it X, – yes, their payables there's some And So see,

Gary Prestopino

a for accruals would run G&A throughout range. XX%. finance $X is assume bonuses with that is to that of reversal be that And I it or something of $X.X number expense And the that that, the dealing then that lastly, for like continues it your rate the that? EBITDA if million in looks where year is QX is And to down to rest million, was was correct? good generation in about the something Okay. like

Jorge Celaya

first So unusual nothing no, anything. accruals there's part, in bonus to the or

So there's year the I on it's -- I be think just general, and expect would rest G&A, the well-managed G&A the of to in similar.

even the quite year-over-year and think I only than to on thing go growth a the first bit similar and tech dollar-wise is be marketing. that little to quarter. but a up the ops fiscal be the as sales our and still It right? all But steady up goes percentage go, more more will variable you – others

Gary Prestopino

Okay. Thank much. very you

Operator

you participating. today's Thank and you. Thank that call. for Ladies gentlemen, concludes

now may You disconnect.

Liquidity Services (LQDT) 2 Feb 232023 Q1 Earnings call transcript