Liquidity Services (NASDAQ: LQDT; www.liquidityservices.com), the
world’s largest B2B e-commerce marketplace for business and
government surplus, today announced financial results for the
second quarter fiscal year 2021 ended March 31, 2021. The Company's
Q2-FY21 performance delivered strong year-over-year gains in GMV,
Revenue, GAAP Net Income, GAAP Diluted EPS, Non-GAAP Adjusted
EBITDA and Non-GAAP Adjusted Diluted EPS.
"Our business delivered strong results across
all segments in Q2-FY21 and continues to benefit from strong
momentum and customer adoption of our solutions, resulting in our
third consecutive quarter of substantial year-over-year growth. Our
e-commerce marketplace solutions continue to power the circular
economy which benefits businesses, society, and the environment.
Large enterprises, small businesses and government entities are
increasingly turning to Liquidity Services as they seek safe and
effective strategies for maximizing the value of surplus assets and
delivering on their sustainability initiatives. Broader market
adoption of the online economy continues to drive strong demand for
our online platform and services from both new and existing
customers. Our Q2-FY21 results demonstrate that our RISE strategy
has positioned us well to address customer needs against these
broader market trends and capture increased transaction volumes,"
said Bill Angrick, Chairman and CEO of Liquidity Services. "As the
world seeks to be a better steward of the environment, we look
forward to continuing to work closely with our customers and
stakeholders on our mission to build a better future for
surplus.
“GMV in our GovDeals segment grew a record 44%
over the prior year’s comparable quarter, as more government
agencies utilized our digital platform and transacted higher
volumes across a larger breadth of key categories, including
transportation and real estate, and our growing buyer base and
automated asset promotion tools drove higher realized values
through our marketplace. GMV in our Retail Supply Chain Group
(RSCG) segment grew 32% over the prior year’s comparable quarter,
as large and SMB retail sellers utilized our platform to capitalize
on secular growth in online retail and we expanded our capacity to
serve the resulting higher transaction volumes on our marketplace.
GMV in our Capital Assets Group (CAG) segment increased 65%
year-over-year driven by continued growth of our industrial and
heavy equipment categories, and increased use of our consignment
model internationally. Our Machinio segment grew revenue by 31%
year-over-year as equipment owners and dealers continue to embrace
our digital marketing solutions to acquire buyers at lower costs
when compared to traditional marketing channels.
"Our newest marketplace, AllSurplus.com, also
continues to gain traction as new buyer registrations grew nearly
four-fold from a year ago and we continue to see strong buyer
activity and GMV growth in key asset categories such as
transportation, construction, real estate, consumer goods and
biopharma.
"Our results validate the investments we have
made to develop a scalable marketplace platform and align our
business services to the needs of buyers, sellers, and the planet,"
concluded Angrick.
The Company completed $12.0 million in share
repurchases during Q2-FY21, using the $2.0 million share repurchase
authorization that remained from Q1-FY21 and completed the entire
$10.0 million share repurchase authorization announced on March 8,
2021. The Company exited the quarter with a cash position of $87.6
million, a $9.8 million increase from Q1-FY21, and zero debt.
On May 3, 2021, the Company's Board of Directors
authorized a new share repurchase program of up to $15.0 million of
the Company’s common stock, to expire on June 30, 2023. The timing
and actual number of shares repurchased will depend on a variety of
factors, including price, general business and market conditions,
and the existence of alternative investment opportunities. The
repurchase program will be executed consistent with the Company's
capital allocation strategy of prioritizing investment to grow the
business over the long term.
Second Quarter Consolidated Operating
and Earnings ResultsThe Company reported Q2-FY21 GMV of
$207.3 million, a 44% increase from $144.3 million in the prior
year’s comparable period, which included the initial headwinds from
the COVID-19 pandemic. GMV is an operating measure of the total
sales value of all merchandise sold by us or our sellers through
our marketplaces and other channels during a given period of time.
Revenue for Q2-FY21 was $61.8 million, a 17% increase from $52.8
million in the prior year. Gross Profit for Q2-FY21 was $35.4
million, a 35% increase from $26.2 million in the prior year. GAAP
Net Income (Loss) for Q2-FY21 was $5.3 million, which resulted in
diluted earnings (loss) per share of $0.15 based on a weighted
average of 35.6 million diluted shares outstanding, compared to
$(4.2) million and $(0.13), respectively, in the prior year.
Non-GAAP Adjusted Net Income (Loss) was $6.8 million or $0.19
adjusted diluted earnings (loss) per share, an improvement from
$(3.2) million and $(0.10), respectively, in the prior period.
Non-GAAP Adjusted EBITDA was $9.4 million, a $10.9 million increase
from $(1.6) million in the same period last year.
Q2-FY21 comparative year-over-year consolidated
financial results reflect increased volumes across all of our
segments, as businesses and government agencies continued to
embrace our safe and effective e-commerce solutions. Our
full-service and self-service consignment model increased to 82% of
our total GMV, up from 75% in Q2-FY20. This mix shift and improved
margins from higher recovery rates on assets sold drove a 35%
improvement in gross profit and our gross profit margin as a
percentage of revenue increased from 50% in Q2-FY20 to 57% in
Q2-FY21. Our increased profitability, including increased GAAP Net
Income of $9.5 million and Non-GAAP Adjusted EBITDA of $10.9
million, reflects our overall growth across our segments and
reduced operating expenses related to our re-aligned organizational
structure, including efficiencies in our CAG segment and corporate
functions.
Second Quarter Segment Operating and
Earnings ResultsWe present operating results in four
reportable segments: GovDeals, RSCG, CAG and Machinio. Each offers
separately branded marketplaces to enable sellers to achieve
channel marketing objectives to reach buyers. Across our segments,
we offer our sellers various pricing and transaction models and a
suite of services, and our revenues vary depending upon the pricing
models employed and the level of service selected by sellers.
Segment gross profit is calculated as total revenue less cost of
goods sold (excludes depreciation and amortization).
Our Q2-FY21 segment results are as follows (unaudited,
in millions):
|
|
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
GovDeals: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
110.9 |
|
|
$ |
77.2 |
|
|
$ |
218.5 |
|
|
$ |
156.3 |
|
|
Revenue |
|
$ |
11.0 |
|
|
$ |
7.8 |
|
|
$ |
21.8 |
|
|
$ |
15.8 |
|
|
Gross profit |
|
$ |
10.4 |
|
|
$ |
7.3 |
|
|
$ |
20.6 |
|
|
$ |
14.7 |
|
|
|
|
|
|
|
|
|
|
|
RSCG: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
58.6 |
|
|
$ |
44.3 |
|
|
$ |
110.3 |
|
|
$ |
84.2 |
|
|
Revenue |
|
$ |
39.1 |
|
|
$ |
36.3 |
|
|
$ |
74.0 |
|
|
$ |
68.0 |
|
|
Gross profit |
|
$ |
15.9 |
|
|
$ |
12.4 |
|
|
$ |
30.6 |
|
|
$ |
22.7 |
|
|
|
|
|
|
|
|
|
|
|
CAG: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
37.8 |
|
|
$ |
22.8 |
|
|
$ |
68.8 |
|
|
$ |
52.4 |
|
|
Revenue |
|
$ |
9.5 |
|
|
$ |
7.0 |
|
|
$ |
17.4 |
|
|
$ |
15.0 |
|
|
Gross profit |
|
$ |
7.0 |
|
|
$ |
4.9 |
|
|
$ |
13.3 |
|
|
$ |
10.7 |
|
|
|
|
|
|
|
|
|
|
|
Machinio: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Revenue |
|
$ |
2.2 |
|
|
$ |
1.7 |
|
|
$ |
4.4 |
|
|
$ |
3.6 |
|
|
Gross profit |
|
$ |
2.1 |
|
|
$ |
1.6 |
|
|
$ |
4.1 |
|
|
$ |
3.4 |
|
|
|
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
|
|
GMV |
|
$ |
207.3 |
|
|
$ |
144.3 |
|
|
$ |
397.7 |
|
|
$ |
292.9 |
|
|
Revenue |
|
$ |
61.8 |
|
|
$ |
52.8 |
|
|
$ |
117.5 |
|
|
$ |
102.3 |
|
|
Gross profit |
|
$ |
35.4 |
|
|
$ |
26.2 |
|
|
$ |
68.6 |
|
|
$ |
51.5 |
|
Additional Second Quarter 2021 Operational
Results
- Registered Buyers — At the end of
Q2-FY21, registered buyers totaled approximately 3,888,000,
representing a 5.8% increase over the approximately 3,675,000
registered buyers at the end of Q2-FY20.
- Auction Participants — Auction
participants, defined as registered buyers who have bid in an
auction during the period (a registered buyer who bids in more than
one auction is counted as an auction participant in each auction in
which he or she bids), increased to approximately 561,000 in
Q2-FY21, a 14.5% increase from the approximately 490,000 auction
participants in Q2-FY20.
- Completed Transactions — Completed
transactions increased to approximately 174,000 in Q2-FY21, an
16.0% increase from the approximately 150,000 completed
transactions in Q2-FY20.
Business Outlook
Financial results for Q3-FY21 are expected to
improve year-over-year. We continue to see a strong pipeline,
expanding customer relationships and other indicators of positive
performance going forward and we believe we are well-positioned to
create value by focusing on platform services that deliver optimal
liquidity in the reverse supply chain and further enable our growth
through asset light, low-touch marketplace solutions. As secular
demand for e-commerce continues to grow, our online platform and
cloud-based solutions should become even more relevant and
necessary for the evolving global economy.
Our Q3-FY21 guidance range is above our results
for the same period last year, reflecting anticipated increases in
transaction volumes from the accelerated market adoption of the
online economy that is creating strong demand for our services from
both new and existing customers seeking to expand their use of our
platform. Last year's Q3-FY20 results also reflected the most
significant economic restrictions at the onset of the COVID-19
pandemic that caused seller backlog accumulations and created
substantial transaction delays. In addition, as part of our Q3-FY21
guidance, the positive macroeconomic factors that have favorably
increased recovery rates in certain asset categories since Q4-FY20
are expected to continue even as our expanding volumes will
continue to drive the majority of our growth.
The following forward-looking statements reflect the following
trends and assumptions for Q3-FY21:
- continued spending for the implementation of tools enabling
omni-channel behavioral marketing, expanded analytics, and
buyer/seller payment optimization;
- increased spending in business development activities to
capture the market opportunity;
- stabilized macroeconomic factors that most directly influence
the recovery rates of our most significant asset categories;
- marketplace seasonality converging back to historical
trends;
- continued mix shift to consignment pricing model which will
lower revenue as a percent of GMV but improve gross profit
margins;
- continued variability in project size and timing within our CAG
segment, especially as COVID-19 continues to impact the global
economy and cross-border transactions;
- continued growth and expansion resulting from the continuing
acceleration of broader market adoption of the online economy,
particularly in our GovDeals and RSCG seller accounts and programs;
and
- continued growth in Machinio subscription activity.
For Q3-FY21 our guidance is as follows:
GMV - We expect GMV for Q3-FY21 to range from $220 million
to $230 million.
GAAP Net Income - We expect GAAP Net Income for Q3-FY21 to range
from $4.5 million to $6.5 million.
GAAP Diluted EPS - We expect GAAP Diluted Earnings Per Share for
Q3-FY21 to range from $0.13 to $0.18.
Non-GAAP Adjusted EBITDA -We expect Non-GAAP Adjusted EBITDA for
Q3-FY21 to range from $8.0 million to $10.0 million.
Non-GAAP Adjusted Diluted EPS - We expect Non-GAAP Adjusted
Earnings Per Diluted Share for Q3-FY21 to range from $0.17 to
$0.21. This guidance assumes that our diluted weighted average
number of shares outstanding for the quarter will be
35.5 million. On May 3, 2021, the Company's Board of Directors
authorized the repurchase of up to an additional $15 million of the
Company's outstanding shares of common stock through June 30,
2023.
Liquidity
ServicesReconciliation of GAAP to Non-GAAP
Measures
Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA. Non-GAAP EBITDA is
a supplemental non-GAAP financial measure and is equal to net
income (loss) plus interest and other income, net; provision for
income taxes; and depreciation and amortization. Our definition of
Non-GAAP Adjusted EBITDA differs from Non-GAAP EBITDA because we
further adjust Non-GAAP EBITDA for stock compensation expense,
acquisition costs such as transaction expenses and changes in
earn-out estimates, business realignment expenses, deferred revenue
purchase accounting adjustments, and goodwill and long-lived asset
impairment. A reconciliation of Net Income (Loss) to EBITDA and
Adjusted EBITDA is as follows:
|
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
(Unaudited) |
Net income (loss) |
|
$ |
5,260 |
|
|
$ |
(4,238 |
) |
|
$ |
9,775 |
|
|
$ |
(9,434 |
) |
Interest and other income, net1 |
|
69 |
|
|
(167 |
) |
|
(34 |
) |
|
(332 |
) |
Provision for income taxes |
|
407 |
|
|
43 |
|
|
704 |
|
|
501 |
|
Depreciation and amortization |
|
1,670 |
|
|
1,577 |
|
|
3,541 |
|
|
3,149 |
|
EBITDA |
|
$ |
7,406 |
|
|
$ |
(2,785 |
) |
|
$ |
13,986 |
|
|
$ |
(6,116 |
) |
Stock compensation expense |
|
1,761 |
|
|
1,231 |
|
|
3,990 |
|
|
2,270 |
|
Acquisition costs and impairment of long-lived assets2 |
|
203 |
|
|
— |
|
|
203 |
|
|
5 |
|
Business realignment expenses2,3 |
|
— |
|
|
— |
|
|
5 |
|
|
— |
|
Fair value adjustments to acquisition earn-outs2 |
|
— |
|
|
— |
|
|
— |
|
|
200 |
|
Deferred revenue purchase accounting adjustment |
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
Adjusted EBITDA |
|
$ |
9,370 |
|
|
$ |
(1,554 |
) |
|
$ |
18,184 |
|
|
$ |
(3,638 |
) |
1 Interest and other income, net, per the
Consolidated Statement of Operations, excluding the non-service
components of net periodic pension (benefit).2 Acquisition costs
and impairment of goodwill and long-lived assets, and fair value
adjustments to acquisition earn-outs are included in Other
operating expenses (income) on the Consolidated Statements of
Operations.3 Business realignment expense includes the amounts
accounted for as exit costs under ASC 420 as described in Note 11
to the Consolidated Financial Statements, and the related impacts
of business realignment actions subject to other accounting
guidance. There were no related impacts for the three and six
months ended March 31, 2021 and 2020.
Non-GAAP Adjusted Net Income (Loss) and Non-GAAP
Adjusted Basic and Diluted Earnings (Loss) Per Share. Non-GAAP
Adjusted Net Income (Loss) is a supplemental non-GAAP financial
measure and is equal to net income (loss) plus stock compensation
expense, acquisition costs such as transaction expenses and changes
in earn-out estimates, business realignment expenses, deferred
revenue purchase accounting adjustments, goodwill and long-lived
asset impairment, and the estimated impact of income taxes on these
non-GAAP adjustments as well as non-recurring tax adjustments.
Non-GAAP Adjusted Basic and Diluted Income (Loss) Per Share are
determined using Adjusted Net Income (Loss). For Q2-FY21 the tax
rate used to estimate the impact of income taxes on the non-GAAP
adjustments was 21.6% compared to 17.9% used for the Q2-FY20
results. These tax rates exclude the impact of the charge to our
U.S. valuation allowance. A reconciliation of Net Income (Loss) to
Adjusted Net Income (Loss) and Adjusted Basic and Diluted Income
(Loss) Per Share is as follows:
|
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
(Dollars in thousands, except per share data) |
|
(Unaudited) |
Net income (loss) |
|
$ |
5,260 |
|
|
|
$ |
(4,238 |
) |
|
|
$ |
9,775 |
|
|
|
$ |
(9,434 |
) |
|
Stock compensation
expense |
|
1,761 |
|
|
|
1,231 |
|
|
|
3,990 |
|
|
|
2,270 |
|
|
Acquisition costs and
impairment of long-lived assets* |
|
203 |
|
|
|
— |
|
|
|
203 |
|
|
|
5 |
|
|
Business realignment
expenses* |
|
— |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
|
Fair value adjustment to
acquisition earn-outs* |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
200 |
|
|
Deferred revenue purchase
accounting adjustment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
Income tax impact of
adjustments |
|
(424 |
) |
|
|
(220 |
) |
|
|
(907 |
) |
|
|
(444 |
) |
|
Adjusted net income
(loss) |
|
$ |
6,800 |
|
|
|
$ |
(3,227 |
) |
|
|
$ |
13,066 |
|
|
|
$ |
(7,400 |
) |
|
Adjusted basic income (loss) per
common share |
|
$ |
0.20 |
|
|
|
$ |
(0.10 |
) |
|
|
$ |
0.39 |
|
|
|
$ |
(0.22 |
) |
|
Adjusted diluted income (loss)
per common share |
|
$ |
0.19 |
|
|
|
$ |
(0.10 |
) |
|
|
$ |
0.37 |
|
|
|
$ |
(0.22 |
) |
|
Basic weighted average shares
outstanding |
|
33,491,395 |
|
|
|
33,624,889 |
|
|
|
33,332,417 |
|
|
|
33,584,844 |
|
|
Diluted weighted average shares
outstanding |
|
35,559,747 |
|
|
|
33,624,889 |
|
|
|
34,914,549 |
|
|
|
33,584,844 |
|
|
*Acquisition costs and impairment of long-lived
assets, business realignment expenses, and fair value adjustments
to acquisition earn-outs, which are excluded from Adjusted Net
Income (Loss), are included in Other operating expenses (income) on
the Statements of Operations.
Q2-FY21 Conference CallThe Company will host a
conference call to discuss this quarter's results at 10:30 a.m.
Eastern Time today. Investors and other interested parties may
access the teleconference by dialing (888) 771-4371 or (847)
585-4405 and providing conference ID 50121689. A live web cast of
the conference call will be provided on the Company's investor
relations website at http://investors.liquidityservices.com. An
archive of the web cast will be available on the Company's website
until May 6, 2022 at 11:59 p.m. Eastern Time. The replay will be
available starting at 1:30 p.m. ET on the day of the call.
Non-GAAP Measures
To supplement our consolidated financial
statements presented in accordance with generally accepted
accounting principles (GAAP), we use certain non-GAAP measures of
certain components of financial performance. These non-GAAP
measures include earnings before interest, taxes, depreciation and
amortization (EBITDA), Adjusted EBITDA, Adjusted Net Income (Loss)
and Adjusted Earnings (Loss) per Share. These non-GAAP measures are
provided to enhance investors’ overall understanding of our current
financial performance and prospects for the future. We use EBITDA
and Adjusted EBITDA: (a) as measurements of operating performance
because they assist us in comparing our operating performance on a
consistent basis as they do not reflect the impact of items not
directly resulting from our core operations; (b) for planning
purposes, including the preparation of our internal annual
operating budget; (c) to allocate resources to enhance the
financial performance of our business; (d) to evaluate the
effectiveness of our operational strategies; and (e) to evaluate
our capacity to fund capital expenditures and expand our business.
Adjusted Earnings (Loss) per Share is the result of our Adjusted
Net Income (Loss) and diluted shares outstanding.
We believe these non-GAAP measures provide useful information to
both management and investors by excluding certain expenses that
may not be indicative of our core operating measures. In addition,
because we have historically reported certain non-GAAP measures to
investors, we believe the inclusion of non-GAAP measures provides
consistency in our financial reporting. These measures should be
considered in addition to financial information prepared in
accordance with GAAP, but should not be considered a substitute
for, or superior to, GAAP results. A reconciliation of all
historical non-GAAP measures included in this press release, to the
most directly comparable GAAP measures, may be found in the
financial tables included in this press release.
Supplemental Operating DataTo
supplement our consolidated financial statements presented in
accordance with GAAP, we use certain supplemental operating data as
a measure of certain components of operating performance. We review
GMV because it provides a measure of the volume of goods being sold
in our marketplaces and thus the activity of those marketplaces.
GMV and our other supplemental operating data, including registered
buyers, auction participants and completed transactions, also
provide a means to evaluate the effectiveness of investments that
we have made and continue to make in the areas of seller and buyer
support, value-added services, product development, sales and
marketing and operations. Therefore, we believe this supplemental
operating data provides useful information to both management and
investors. In addition, because we have historically reported
certain supplemental operating data to investors, we believe the
inclusion of this supplemental operating data provides consistency
in our financial reporting. This data should be considered in
addition to financial information prepared in accordance with GAAP,
but should not be considered a substitute for, or superior to, GAAP
results.
Forward-Looking StatementsThis
document contains forward-looking statements made pursuant to the
Private Securities Litigation Reform Act of 1995. These statements
are only predictions. The outcome of the events described in these
forward-looking statements is subject to known and unknown risks,
uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to differ
materially from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking
statements. These statements include, but are not limited to,
statements regarding the Company’s business outlook; expected
future results; expected future effective tax rates; and trends and
assumptions about future periods. You can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “could,”
“would,” “expects,” “intends,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential,” “continues” or the negative
of these terms or other comparable terminology. Our business is
subject to a number of risks and uncertainties, and our past
performance is no guarantee of our performance in future periods.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or
achievements.
There are several risks and uncertainties that
could cause our actual results to differ materially from the
forward-looking statements in this document. Important factors that
could cause our actual results to differ materially from those
expressed as forward-looking statements are set forth in our
filings with the SEC from time to time, and include, among others,
potential changes in political, business and economic conditions;
the duration of the COVID-19 pandemic and the effects of COVID-19
on our business and operations and on the general economy,
including effects on our sellers and customers, any regional or
general economic downturn or crisis and any conditions that affect
e-commerce growth or cross-border trade; the Company’s ability to
realize expected growth opportunities in heavy equipment and real
estate asset categories; increases in the supply of new vehicles
and silicon chips that might disrupt favorable recovery trends; the
Company’s need to manage attracting buyers to a broad range of
asset categories with varying degrees of maturity and in many
different geographies; the ability to successfully intermediate
payments on our marketplace platform; the Company’s need to
successfully react to the increasing importance of mobile commerce
and the increasing environmental and social impact aspects of
e-commerce in an increasingly competitive environment for our
business, including not only risks of disintermediation of our
e-commerce services by our competitors but also by our buyers and
sellers; the impact of the COVID-19 pandemic on our Company, our
employees, our sellers and buyers, and global supply chains;
disruptions of cross-border transactions due to COVID-19 pandemic
restrictions on travel and shipping, including the impact of such
disruptions on the Company’s ability to generate profits, grow GMV
or accurately forecast transactions; the Company’s ability to
timely upgrade and develop our technology systems, infrastructure
and marketing and customer service capabilities at reasonable cost
while maintaining site stability and performance and adding new
products and features; the Company’s ability to attract, retain and
develop the skilled employees that we need to support our business;
the Company’s ability to integrate, manage and grow businesses that
have been acquired or may be acquired in the future; and the risks
and uncertainties set forth in the Company’s Annual Report on Form
10-K for the year ended September 30, 2020, which is available on
the SEC and Company websites. There may be other factors of which
we are currently unaware or which we deem immaterial that may cause
our actual results to differ materially from the forward-looking
statements.
All forward-looking statements attributable to us or persons
acting on our behalf apply only as of the date of this document and
are expressly qualified in their entirety by the cautionary
statements included in this document. Except as may be required by
law, we undertake no obligation to publicly update or revise any
forward-looking statement to reflect events or circumstances
occurring after the date of this document or to reflect the
occurrence of unanticipated events.
About Liquidity
ServicesLiquidity Services (NASDAQ:LQDT) operates the
world’s largest B2B e-commerce marketplace platform for surplus
assets with over $8.5 billion of completed transactions, more than
3.8 million registered buyers and 15,000 corporate and government
sellers. Our e-commerce marketplace solutions continue to power the
circular economy which benefits businesses, society, and the
environment through the safe and effective resale and redeployment
of surplus assets; reducing waste, carbon emissions and
transportation costs; and by creating markets for items that would
otherwise be landfilled. Through our vital mission of Building a
Better Future For Surplus we’ve played an integral role in many of
our clients’ zero-waste initiatives and worked with corporations,
federal and municipal government agencies to pioneer some of the
largest green initiatives to date, deferring billions of pounds of
surplus assets from landfills.
Contact:Investor
Relations800-310-4604investorrelations@liquidityservicesinc.com
Liquidity Services and
SubsidiariesUnaudited Consolidated Balance
Sheets(Dollars in Thousands, Except Par
Value)
|
March 31, 2021 |
|
September 30, 2020 |
|
|
|
(Unaudited) |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
87,613 |
|
|
$ |
76,036 |
|
|
Accounts receivable, net of allowance for doubtful accounts of $569
and $389 |
5,731 |
|
|
5,322 |
|
|
Inventory, net |
13,124 |
|
|
5,607 |
|
|
Prepaid taxes and tax refund receivable |
1,594 |
|
|
1,652 |
|
|
Prepaid expenses and other current assets |
6,843 |
|
|
5,962 |
|
|
Total current assets |
114,905 |
|
|
94,579 |
|
|
Property and equipment, net of
accumulated depreciation of $16,554 and $14,555 |
17,341 |
|
|
17,843 |
|
|
Operating lease assets |
12,596 |
|
|
10,561 |
|
|
Intangible assets, net |
4,110 |
|
|
4,758 |
|
|
Goodwill |
59,986 |
|
|
59,839 |
|
|
Deferred tax assets |
777 |
|
|
806 |
|
|
Other assets |
7,868 |
|
|
8,248 |
|
|
Total assets |
$ |
217,583 |
|
|
$ |
196,634 |
|
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
36,904 |
|
|
$ |
21,957 |
|
|
Accrued expenses and other current liabilities |
21,727 |
|
|
19,124 |
|
|
Current portion of operating lease liabilities |
4,058 |
|
|
3,818 |
|
|
Deferred revenue |
4,172 |
|
|
3,255 |
|
|
Payables to sellers |
31,552 |
|
|
26,170 |
|
|
Total current liabilities |
98,413 |
|
|
74,324 |
|
|
Operating lease liabilities |
9,421 |
|
|
7,499 |
|
|
Other long-term liabilities |
2,811 |
|
|
2,996 |
|
|
Total liabilities |
110,645 |
|
|
84,819 |
|
|
Commitments and contingencies
(Note 12) |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.001 par value; 120,000,000 shares authorized;
35,115,307 sharesissued and outstanding at March 31, 2021;
34,082,406 shares issued and outstanding atSeptember 30, 2020 |
35 |
|
|
34 |
|
|
Additional paid-in capital |
249,866 |
|
|
247,892 |
|
|
Treasury stock, at cost; 1,587,199 shares at March 31, 2021 and
547,508 shares atSeptember 30, 2020 |
(21,628 |
) |
|
(3,983 |
) |
|
Accumulated other comprehensive loss |
(8,763 |
) |
|
(9,782 |
) |
|
Accumulated deficit |
(112,572 |
) |
|
(122,346 |
) |
|
Total stockholders’ equity |
$ |
106,938 |
|
|
$ |
111,815 |
|
|
Total liabilities and
stockholders’ equity |
$ |
217,583 |
|
|
$ |
196,634 |
|
|
Liquidity Services and
SubsidiariesUnaudited Consolidated Statements of
Operations (Dollars in Thousands, Except Per Share
Data)
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
Revenue |
$ |
35,968 |
|
|
|
$ |
35,203 |
|
|
|
$ |
67,040 |
|
|
|
$ |
65,552 |
|
|
Fee revenue |
25,818 |
|
|
|
17,621 |
|
|
|
50,498 |
|
|
|
36,776 |
|
|
Total revenue |
61,786 |
|
|
|
52,824 |
|
|
|
117,538 |
|
|
|
102,328 |
|
|
Costs and expenses from
operations: |
|
|
|
|
|
|
|
Cost of goods sold (excludes depreciation and amortization) |
26,385 |
|
|
|
26,619 |
|
|
|
48,958 |
|
|
|
50,795 |
|
|
Technology and operations |
12,085 |
|
|
|
11,586 |
|
|
|
22,644 |
|
|
|
22,827 |
|
|
Sales and marketing |
8,910 |
|
|
|
10,109 |
|
|
|
18,018 |
|
|
|
19,714 |
|
|
General and administrative |
6,892 |
|
|
|
7,397 |
|
|
|
13,902 |
|
|
|
15,104 |
|
|
Depreciation and amortization |
1,670 |
|
|
|
1,577 |
|
|
|
3,541 |
|
|
|
3,149 |
|
|
Other operating expenses (income) |
206 |
|
|
|
(12 |
) |
|
|
210 |
|
|
|
181 |
|
|
Total costs and expenses |
56,148 |
|
|
|
57,276 |
|
|
|
107,273 |
|
|
|
111,770 |
|
|
Income (loss) from
operations |
5,638 |
|
|
|
(4,452 |
) |
|
|
10,265 |
|
|
|
(9,442 |
) |
|
Interest and other income,
net |
(29 |
) |
|
|
(257 |
) |
|
|
(214 |
) |
|
|
(509 |
) |
|
Income (loss) before provision
for income taxes |
5,667 |
|
|
|
(4,195 |
) |
|
|
10,479 |
|
|
|
(8,933 |
) |
|
Provision for income taxes |
407 |
|
|
|
43 |
|
|
|
704 |
|
|
|
501 |
|
|
Net income (loss) |
$ |
5,260 |
|
|
|
$ |
(4,238 |
) |
|
|
$ |
9,775 |
|
|
|
$ |
(9,434 |
) |
|
Basic income (loss) per common
share |
$ |
0.16 |
|
|
|
$ |
(0.13 |
) |
|
|
$ |
0.29 |
|
|
|
$ |
(0.28 |
) |
|
Diluted income (loss) per common
share |
$ |
0.15 |
|
|
|
$ |
(0.13 |
) |
|
|
$ |
0.28 |
|
|
|
$ |
(0.28 |
) |
|
Basic weighted average shares
outstanding |
33,491,395 |
|
|
|
33,624,889 |
|
|
|
33,332,417 |
|
|
|
33,584,844 |
|
|
Diluted weighted average shares
outstanding |
35,559,747 |
|
|
|
33,624,889 |
|
|
|
34,914,549 |
|
|
|
33,584,844 |
|
|
Liquidity Services and
Subsidiaries Unaudited Consolidated Statements of
Cash Flows (Dollars in Thousands)
|
Six Months Ended March 31, |
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
Operating
activities |
|
|
|
Net income (loss) |
$ |
9,775 |
|
|
|
$ |
(9,434 |
) |
|
Adjustments to reconcile net loss
to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
3,541 |
|
|
|
3,149 |
|
|
Stock compensation expense |
3,990 |
|
|
|
2,270 |
|
|
Provision for doubtful accounts |
175 |
|
|
|
66 |
|
|
Deferred tax provision |
64 |
|
|
|
362 |
|
|
Loss (gain) on disposal of property and equipment |
44 |
|
|
|
(25 |
) |
|
Change in fair value of earnout liability |
— |
|
|
|
200 |
|
|
Impairment of long-lived assets |
203 |
|
|
|
— |
|
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
(594 |
) |
|
|
666 |
|
|
Inventory |
(7,517 |
) |
|
|
(2,648 |
) |
|
Prepaid and deferred taxes |
57 |
|
|
|
(869 |
) |
|
Prepaid expenses and other assets |
(1,358 |
) |
|
|
2,337 |
|
|
Operating lease assets and liabilities |
(52 |
) |
|
|
(174 |
) |
|
Accounts payable |
14,947 |
|
|
|
4,116 |
|
|
Accrued expenses and other current liabilities |
2,003 |
|
|
|
(10,060 |
) |
|
Distributions payable |
— |
|
|
|
(1,675 |
) |
|
Deferred revenue |
916 |
|
|
|
(88 |
) |
|
Payables to sellers |
5,383 |
|
|
|
1,113 |
|
|
Other liabilities |
(262 |
) |
|
|
(1,443 |
) |
|
Net cash provided by (used in)
operating activities |
31,315 |
|
|
|
(12,137 |
) |
|
Investing
activities |
|
|
|
Increase in intangibles |
(21 |
) |
|
|
(48 |
) |
|
Purchases of property and
equipment, including capitalized software |
(2,418 |
) |
|
|
(2,834 |
) |
|
Proceeds from sales of property
and equipment |
35 |
|
|
|
36 |
|
|
Proceeds from promissory
note |
824 |
|
|
|
2,554 |
|
|
Purchases of short-term
investments |
— |
|
|
|
(25,000 |
) |
|
Maturities of short-term
investments |
— |
|
|
|
45,000 |
|
|
Net cash (used in) provided by
investing activities |
(1,580 |
) |
|
|
19,708 |
|
|
Financing
activities |
|
|
|
Payments of the principal portion
of finance lease liabilities |
(17 |
) |
|
|
(17 |
) |
|
Taxes paid associated with net
settlement of stock compensation awards |
(3,202 |
) |
|
|
(558 |
) |
|
Proceeds from exercise of stock
options |
351 |
|
|
|
34 |
|
|
Payment of earnout liability
related to business acquisition |
— |
|
|
|
(1,200 |
) |
|
Common stock repurchased |
(16,143 |
) |
|
|
— |
|
|
Net cash used in financing
activities |
(19,011 |
) |
|
|
(1,741 |
) |
|
Effect of exchange rate
differences on cash and cash equivalents |
853 |
|
|
|
(511 |
) |
|
Net increase in cash and cash
equivalents |
11,577 |
|
|
|
5,319 |
|
|
Cash and cash equivalents at
beginning of period |
76,036 |
|
|
|
36,497 |
|
|
Cash and cash equivalents at end
of period |
$ |
87,613 |
|
|
|
$ |
41,816 |
|
|
Supplemental disclosure
of cash flow information |
|
|
|
Cash paid for income taxes,
net |
$ |
508 |
|
|
|
$ |
177 |
|
|
Non-cash: Common stock
surrendered in the exercise of stock options |
$ |
1,502 |
|
|
|
$ |
— |
|
|
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