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Liquidity Services, Inc. (LQDT) Q1 2024 Earnings Call Transcript

Liquidity Services, Inc. (LQDT)

Q1 2024 Results Conference Call

Company Participants

Bill Angrick - Chairman & Chief Executive Officer

Jorge Celaya - Executive Vice President & Chief Financial Officer

Conference Call Participants

Gary Prestopino - Barrington Research

George Sutton - Craig-Hallum

Presentation

Operator

Welcome to the Liquidity Services Inc. First Quarter Fiscal Year 2024 Financial Results Conference Call. My name is Norma, and I'll be your operator for today's call. Please note that this conference call is being recorded. [Operator Instructions] On the call today are Bill Angrick, Liquidity Services' Chairman and Chief Executive Officer; Jorge Celaya, Executive Vice President and Chief Financial Officer. They'll be available for questions after their prepared remarks.

The following discussion and responses to your questions reflect Liquidity Services management's views as of today, February 8, 2024, and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact the financial results is included in today's press release and in filings with the SEC, including the most recent annual report on Form 10-K.

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

During the call, Liquidity Services management will discuss certain non-GAAP financial measures, in its press release and filings with the SEC, one of which is posted on its website, and you will find additional disclosures regarding these non-GAAP measures, including the reconciliations of the measures with the comparable GAAP measures as available.

Liquidity Services management also use certain supplemental operating data as a measure of certain components of operating performance, which they also believe is useful for management and investors. This supplemental operating data includes gross merchandise volume and should not be considered a substitute for or superior to GAAP results.

At this time, I'll turn the conference over to your -- the presentation over to Liquidity Services Chairman and Chief Executive Officer, Bill Angrick.

Bill Angrick

Good morning. and welcome to our Q1 earnings call. I'll review our Q1 performance and the progress of our business segments. And next, Jorge Celaya will provide more details in the quarter.

We recorded 13% organic growth in consolidated GMV this quarter, led by our GovDeals segment, which benefited from strong bidder engagement on our modernized govdeals.com marketplace platform. Additionally, we recorded strong subscriber growth in our Machinio segment as customers continue to be delighted by our Machinio System, dealer management software solutions, which deliver outstanding ROI by automating and improving asset management, marketing and sales activities.

Of note, Machinio was selected by XCMG E-Commerce, an Asia-based multinational corporation to facilitate the sale of more than 6,000 refurbished construction machinery assets as part of their reconditioned machine refurbishment program to remarket and extend the life of these assets. This is just one recent example of our successful expansion into the Asia Pacific region, which more than doubles the addressable market for our Machinio segment.

Growth and profitability in our RSCG and CAG segments were impacted during Q1 by an inferior mix of product and delays in selected international sales events at quarter end, respectively. However, we are seeing an improvement in our RSCG product mix as we enter the seasonally high fiscal second quarter, and most of the delayed projects in our CAG segment are expected to close during the fiscal second quarter, resulting in the resumption of year-over-year growth.

We continue to provide strong liquidity for our sellers across all segments as the number of auction participants on our platform grew by 14% year-over-year during Q1, and the number of completed transactions grew 12% year-over-year. We continue to invest in our multichannel buyer base to drive higher recovery including expanding our AllSurplus Deals marketplace, which provides consumers direct access to value price merchandise and expands addressable market in the retail supply chain.

We are pleased to report that we have successfully rolled out our AllSurplus Deals marketplace offering in 5 markets, and we are setting new records for completed transactions, revenue and profitability week-over-week in this channel as we move through the current quarter.

In support of our long-term strategy, we continue to expand our market share in our GovDeals and CAG segments through the acquisition of Sierra Auction, which strengthens and accelerates our position as the leading online platform for the sale of vehicles, equipment and surplus assets for government and commercial fleet sellers.

In summary, we remain the trusted provider of choice for commercial and government claims in the circular economy and continue to deliver outstanding value for our customers as companies of all sizes and industries seek to better manage their assets, inventories and supply chains to drive efficiencies, they are turning to the Liquidity Services platform. We intend to capitalize on our strong buyer base and business pipeline across our segments to deliver improved growth and profitability in our current fiscal second quarter.

In parallel, we continue to make multiyear investments to expand our market share and enhance our platform's capabilities to drive long-term growth for Liquidity Services shareholders. Our results will benefit from these investments and our expanded operational capacity.

Our capital-efficient business with strong operating cash flow, approximately $107 million in cash with zero debt provides us ample financial flexibility to execute our plans. We thank all of our team members across Liquidity Services for their dedication to our mission to power the circular economy to benefit sellers, buyers and the planet....

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