– Third quarter revenue of $127.0 million up 2% – Gross Merchandise
Volume (GMV) of $246.0 million up 7% – Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA) of $17.3 million
down 35% – Adjusted EPS of $0.31 down 31%
WASHINGTON–(BUSINESS WIRE)–Aug. 7, 2014–
Liquidity Services, Inc. (NASDAQ:LQDT; www.liquidityservicesinc.com)
today reported its financial results for its third quarter of fiscal
year 2014 (Q3-14) ended June 30, 2014. Liquidity Services, Inc. is a
global solutions provider in the reverse supply chain with the leading
marketplace for business surplus.
Liquidity Services, Inc. (Liquidity Services or the Company) reported
consolidated Q3-14 revenue of $127 million, an increase of approximately
2% from the prior year’s comparable period. Adjusted EBITDA, which
excludes stock based compensation and acquisition costs including
changes in acquisition earn out payment estimates, for Q3-14 was $17.3
million, a decrease of approximately 35% from the prior year’s
comparable period. Q3-14 GMV, the total sales volume of all merchandise
sold through the Company’s marketplaces, was $246.0 million, an increase
of 7% from the prior year’s comparable period.
Net income in Q3-14 was $18.4 million or $0.59 diluted earnings per
share. Adjusted net income, which excludes stock based compensation,
acquisition costs including changes in acquisition earn out payment
estimates and amortization of contract-related intangible assets
associated with the Jacobs Trading acquisition – net of tax, in Q3-14
was $9.4 million or $0.31 adjusted diluted earnings per share based on
30.9 million fully diluted shares outstanding, a decrease of
approximately 34% and 31%, respectively, from the prior year’s
comparable period. During Q3-14, the Company repurchased 2,834,412
shares of common stock expending $41.8 million as part of its previously
announced share repurchase program.
The Company recorded an $18.6 million credit, or income, in the
Acquisition Costs line item of its Statement of Operations, as a result
of reducing the estimate of the fair value of the earn out of its NESA
acquisition from $18.0 million (recorded at the acquisition), to zero as
of June 30, 2014. Upon review of the estimate as of June 30, 2014 and
based on revised projections, LSI determined that the operating results
of NESA are unlikely to achieve the performance required for the sellers
to receive the earn out payment and the Company reversed the earn out
liability. The change in estimate does not affect the Company’s
effective income tax rate.
“We reported solid GMV results for the quarter, which were near the high
end of our guidance led by growth in our retail supply chain vertical as
we added and grew client programs and processed delayed volumes from the
post-holiday returns season. As previously reported our Adjusted EBITDA
was below our expectations directly related to the cessation of sales of
certain rolling stock property under our current DoD surplus contract.
The remainder of our business performed as expected in the aggregate.
Our registered buyer base and transaction volume both grew well during
the quarter and we continued to expand our pipeline of new business with
blue chip companies in multiple regions, asset categories and service
lines, including sales, valuation and asset management. During the
quarter we continued to execute our Liquidity One strategy of
developing an integrated global business and marketplace platform to
create new capabilities and efficiencies to support our development of a
diversified, multi-billion dollar commercial business,” said Bill
Angrick, Chairman and CEO of Liquidity Services.
“As recently announced, the DoD has awarded Liquidity Services a new
contract to manage the receipt, storage, marketing and sale of all
useable non-rolling stock surplus property generated by DoD
installations in the United States and its territories with a term of up
to six years, including all options. The new surplus contract ensures
Liquidity Services will continue to serve as the primary channel for DoD
useable surplus property in key asset verticals which support the
Company’s commercial growth strategy, including: aerospace, boats and
marine, communications, field gear, heavy industrial equipment, machine
tools, material handling equipment, medical and dental, test and
measurement equipment, and technology assets. Based on recent trends, we
anticipate the DoD surplus program will have lower volumes and margins
over time and, accordingly, we are aggressively adjusting our operations
and business model to prepare for the phase in of the new DOD surplus
contract in FY15.
“The changing mix and volume of our DoD surplus program and our
continued heavy investment of IT, product development, marketing
resources, and management time, will dampen our short term growth and
earnings results as we build towards our future vision. We realize the
transformation process is not quick, easy or inexpensive and that during
this transition we will not be operating at full efficiency. However,
based on specific feedback from our clients, buyers and internal team,
we are very confident that these investments will result in a superior
customer experience and will enable us to aggressively pursue
efficiencies in our operations as we deliver our newly developed systems
and marketplace platforms. With a market leading commercial business
approaching $1 billion GMV in size, a growing roster of marquee client
relationships and a large addressable market that is ripe for
innovation, our strategic actions will result in a more diversified,
scalable business with more opportunities for growth and value creation
for our long term owners.”
Business Outlook
It is difficult for us to forecast the sales and margins of our business
while we are awaiting the final specifications and timing of the work we
will be performing under the new DoD surplus contract. In addition, the
volume and mix of property flow under our current DoD surplus contract
has been more volatile, recently requiring us to obtain additional
warehouse space and incur increased staffing and operational costs.
Lastly, as previously announced, the sales of selected rolling stock and
other assets under our current DoD surplus contract have ceased at the
request of the DLA pending further review of the impact of regulatory
rules, unrelated to our performance or conduct, on the DoD rolling stock
property stream. This development will adversely impact our financial
results for the fiscal fourth quarter and fiscal year 2014. Our
financial results for calendar year 2015 and beyond will not be impacted
by this decision because, as previously reported, we were not the high
bidder for the new DoD rolling stock contract which is expected to
commence in early calendar year 2015.
Although global economic conditions have improved, our overall outlook
remains cautious regarding our commercial capital assets business due to
volatility in capital spending patterns. In addition, our retail supply
chain business has seen significant changes in consumer spending habits,
which have been affected by continued weakness in the consumer goods
vertical, as a result of increases in payroll taxes, continued high
unemployment, and reduced innovation in the sector, resulting in
decreased spending and decreased pricing in the secondary market,
resulting in margin pressure. Lastly, we plan to increase investments in
our technology infrastructure and proprietary e-commerce marketplace
platform to support further expansion and integration of our existing
and recently acquired businesses. In the longer term, we expect our
business to continue to benefit from the following trends: (i) as
consumers trade down and seek greater value, we anticipate stronger
buyer demand for the surplus merchandise sold in our marketplaces; (ii)
as corporations and public sector agencies focus on reducing costs,
improving transparency, compliance and working capital flows by
outsourcing reverse supply chain activities, we expect our seller base
to increase; and (iii) as corporations and public sector agencies
increasingly prefer service providers with a proven track record,
innovative scalable solutions and the ability to make a strategic impact
in the reverse supply chain, we expect our seller base to increase.
The following forward looking statements reflect trends and assumptions
for the next quarter and FY 2014:
| (i) | stable commodity prices in our scrap business; | |
| (ii) |
stable average sales prices realized in our capital assets marketplaces; |
|
| (iii) |
improved margins in our GoIndustry marketplace as we continue to integrate the acquisition and complete our restructuring plans; |
|
| (iv) |
continued product flows (other than selected rolling stock and certain other assets) under the DoD Surplus contract under the existing terms; |
|
| (v) | an effective income tax rate of 37.3%; and | |
| (vi) |
improved operations and service levels in our retail goods marketplaces. |
GMV – We expect GMV for fiscal year 2014 to
range from $913 million to $938 million, which is a decrease from our
previous guidance range of $930 million to $975 million. We expect GMV
for Q4-14 to range from $205 million to $230 million.
Adjusted EBITDA – We expect Adjusted EBITDA
for fiscal year 2014 to range from $63 million to $66 million, which is
a decrease from our previous guidance range of $70 million to $80
million. We expect Adjusted EBITDA for Q4-14 to range from $9.0 million
to $12.0 million.
Adjusted Diluted EPS – We estimate Adjusted
Earnings Per Diluted Share for fiscal year 2014 to range from $1.00 to
$1.06, which is a decrease from our previous guidance range of $1.10 to
$1.27. In Q4-14, we estimate Adjusted Earnings Per Diluted Share to be
$0.13 to $0.19. This guidance assumes that we have an average fully
diluted number of shares outstanding for the year of 31.4 million, and
that we will not repurchase shares with the approximately $5.1 million
yet to be expended under the share repurchase program.
Our guidance adjusts EBITDA and Diluted EPS for (i) acquisition costs
including transaction costs and changes in earn out estimates; (ii)
amortization of contract related intangible assets of $33.3 million from
our acquisition of Jacobs Trading; and (iii) for stock based
compensation costs, which we estimate to be approximately $3.0 million
to $3.5 million for the fiscal fourth quarter. These stock based
compensation costs are consistent with fiscal year 2013.
Key Q3-14 Operating Metrics
Registered Buyers — At the end of Q3-14,
registered buyers totaled approximately 2,572,000, representing a 9%
increase over the approximately 2,360,000 registered buyers at the end
of Q3-13.
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 655,000 in Q3-14, an approximately 5%
increase over the approximately 623,000 auction participants in Q3-13.
Completed Transactions — Completed
transactions increased to approximately 147,000, an approximately 13%
increase for Q3-14 from the approximately 130,000 completed transactions
in Q3-13.
GMV and Revenue Mix — The table below
summarizes GMV and revenue by pricing model.
|
GMV Mix |
|||||
| Q3-14 | Q3-13 | ||||
| Profit-Sharing Model: | |||||
| Scrap Contract | 7.6% | 7.9% | |||
| Total Profit Sharing | 7.6% | 7.9% | |||
| Consignment Model: | |||||
| GovDeals | 20.1% | 19.8% | |||
| Commercial | 39.2% | 37.8% | |||
| Total Consignment | 59.3% | 57.6% | |||
| Purchase Model: | |||||
| Commercial | 19.1% | 20.5% | |||
| Surplus Contract | 14.0% | 14.0% | |||
| Total Purchase | 33.1% | 34.5% | |||
| Total | 100.0% | 100.0% | |||
|
Revenue Mix |
|||||
| Q3-14 | Q3-13 | ||||
| Profit-Sharing Model: | |||||
| Scrap Contract | 14.6% | 14.7% | |||
| Total Profit Sharing | 14.6% | 14.7% | |||
| Consignment Model: | |||||
| GovDeals | 4.1% | 3.8% | |||
| Commercial | 11.5% | 10.6% | |||
| Total Consignment | 15.6% | 14.4% | |||
| Purchase Model: | |||||
| Commercial | 37.2% | 39.7% | |||
| Surplus Contract | 27.2% | 25.9% | |||
| Total Purchase | 64.4% | 65.6% | |||
| Other | 5.4% | 5.3% | |||
| Total | 100.0% | 100.0% | |||
Liquidity Services, Inc.
Reconciliation
of GAAP to Non-GAAP Measures
EBITDA and Adjusted EBITDA. EBITDA
is a supplemental non-GAAP financial measure and is equal to net income
plus interest expense and other (income) expense, net; provision for
income taxes; amortization of contract intangibles; and depreciation and
amortization. Our definition of Adjusted EBITDA differs from EBITDA
because we further adjust EBITDA for stock based compensation expense,
and acquisition costs including changes in earn out estimates.
| Three Months | Nine Months | ||||||||||||||
| Ended June 30, | Ended June 30, | ||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||
| (Dollars In thousands) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Net income | $ | 18,373 | $ 11,288 | $ | 31,097 | $ | 30,695 | ||||||||
| Interest and other expense (income), net | 197 | 56 | 297 | (772 | ) | ||||||||||
| Provision for income taxes | 10,018 | 7,525 | 18,500 | 20,822 | |||||||||||
| Amortization of contract intangibles | 2,349 | 2,407 | 7,028 | 7,023 | |||||||||||
| Depreciation and amortization | 1,927 | 1,984 | 5,904 | 5,952 | |||||||||||
| EBITDA | 32,864 | 23,260 | 62,826 | 63,720 | |||||||||||
| Stock compensation expense | 2,950 | 2,927 | 9,517 | 10,229 | |||||||||||
| Acquisition costs and related fair value adjustments | (18,564 | ) | 239 | (18,384 | ) | 5,826 | |||||||||
| Adjusted EBITDA | $ | 17,250 | $26,426 | $ | 53,959 | $ | 79,775 | ||||||||
Adjusted Net Income and Adjusted Basic and Diluted
Earnings Per Share. Adjusted net income is a supplemental
non-GAAP financial measure and is equal to net income plus tax effected
stock compensation expense, amortization of contract-related intangible
assets associated with the Jacobs Trading acquisition and acquisition
costs including changes in earn out estimates. Adjusted basic and
diluted earnings per share are determined using Adjusted Net Income.
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||
| (Unaudited) (Dollars in thousands, except per share data) | ||||||||||||||
| Net income | $ | 18,373 | $ | 11,288 | $ | 31,097 | $ | 30,695 | ||||||
| Stock compensation expense (net of tax) | 1,909 | 1,756 | 5,967 | 6,137 | ||||||||||
| Amortization of contract intangibles (net of tax) | 1,176 | 1,090 | 3,417 | 3,269 | ||||||||||
| Acquisition costs (net of tax) | (12,014 | ) | 143 | (11,527 | ) | 3,496 | ||||||||
| Adjusted net income | $ | 9,444 | $ | 14,277 | $ | 28,954 | $ | 43,597 | ||||||
| Adjusted basic earnings per common share | $ | 0.31 | $ | 0.45 | $ | 0.91 | $ | 1.38 | ||||||
| Adjusted diluted earnings per common share | $ | 0.31 | $ | 0.44 | $ | 0.91 | $ | 1.34 | ||||||
| Basic weighted average shares outstanding | 30,937,394 | 31,651,061 | 31,770,490 | 31,565,109 | ||||||||||
| Diluted weighted average shares outstanding | 30,937,394 | 32,540,187 | 31,893,512 | 32,642,046 | ||||||||||
Conference Call
The Company will host a conference call to discuss the third quarter
2014 results at 10:30 a.m. Eastern Time today. Investors and other
interested parties may access the teleconference by dialing
800-510-9691or 617-614-3453 and providing the participant pass code
51101443. A live web cast of the conference call will be provided on the
Company’s investor relations website at www.liquidityservices.com/investors.
An archive of the web cast will be available on the Company’s website
until August 7, 2015 at 11:59 p.m. ET. An audio replay of the
teleconference will also be available until August 14, 2014 at 11:59
p.m. ET. To listen to the replay, dial 888-286-8010 or 617-801-6888 and
provide pass code 53826399. Both replays will be available starting at
2:30 p.m. ET on the day of the call.
Non-GAAP Measures
To supplement our consolidated financial statements presented in
accordance with 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 and Adjusted Earnings 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.
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 generally accepted accounting
principles, 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 Data
To 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 customer 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 generally accepted
accounting principles, but should not be considered a substitute for, or
superior to, GAAP results.
Forward-Looking Statements
This 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, plans to increase investments in technology
infrastructure and proprietary e-commerce marketplace platform, the
supply of inventory under the DoD Surplus Contract, and expected future
effective tax rates. 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. 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 a number of risks and uncertainties that could cause our
actual results to differ materially from the forward-looking statements
contained 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, our dependence on our
contracts with the DoD and Wal-Mart for a significant portion of our
revenue and profitability; our ability to successfully expand the supply
of merchandise available for sale on our online marketplaces; our
ability to attract and retain active professional buyers to purchase
this merchandise; the timing and success of upgrades to our technology
infrastructure; our ability to successfully complete the integration of
any acquired companies, including NESA and Go-Industry, into our
existing operations and our ability to realize any anticipated benefits
of these or other acquisitions; and our ability to recognize any
expected tax benefits as a result of closing our U.K. retail consumer
goods operations. There may be other factors of which we are currently
unaware or 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 Services, Inc.
Liquidity Services, Inc. (NASDAQ: LQDT) provides leading corporations,
public sector agencies and buying customers the world’s most
transparent, innovative and effective online marketplaces and integrated
services for surplus assets. On behalf of its clients, Liquidity
Services has completed the sale of over $4.9 billion of surplus,
returned and end-of-life assets, in over 500 product categories,
including consumer goods, capital assets and industrial equipment. The
Company is based in Washington, D.C. and has over 1,300 employees.
Additional information can be found at: http://www.liquidityservices.com.
| Liquidity Services, Inc. and Subsidiaries | |||||||
| Consolidated Balance Sheets | |||||||
| (Dollars in Thousands) | |||||||
| June 30, | September 30, | ||||||
| 2014 | 2013 | ||||||
| Assets | (Unaudited) | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 56,948 | $ | 95,109 | |||
|
Accounts receivable, net of allowance for doubtful accounts of $1,035 and $891 at June 30, 2014 and September 30, 2013, respectively |
24,307 | 24,050 | |||||
| Inventory | 69,389 | 29,261 | |||||
| Prepaid and deferred taxes | 12,941 | 11,243 | |||||
| Prepaid expenses and other current assets | 6,435 | 4,802 | |||||
| Total current assets | 170,020 | 164,465 | |||||
| Property and equipment, net | 12,601 | 10,380 | |||||
| Intangible assets, net | 19,472 | 28,205 | |||||
| Goodwill | 212,458 | 211,711 | |||||
| Other assets | 7,088 | 6,583 | |||||
| Total assets | $ | 421,639 | $ | 421,344 | |||
| Liabilities and stockholders’ equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 15,764 | $ | 16,539 | |||
| Accrued expenses and other current liabilities | 50,460 | 34,825 | |||||
| Profit-sharing distributions payable | 3,632 | 4,315 | |||||
| Customer payables | 31,715 | 29,497 | |||||
| Total current liabilities | 101,571 | 85,176 | |||||
| Acquisition earn out payables | — | 18,390 | |||||
| Deferred taxes and other long-term liabilities | 1,811 | 2,899 | |||||
| Total liabilities | 103,382 | 106,465 | |||||
| Stockholders’ equity: | |||||||
|
Common stock, $0.001 par value; 120,000,000 shares authorized; 32,596,680 shares issued and 29,633,702 shares outstanding at June 30, 2014; 31,811,764 shares issued and outstanding at September 30, 2013 |
28 | 31 | |||||
| Treasury stock | (44,870 | ) | — | ||||
| Additional paid-in capital | 223,939 | 206,861 | |||||
| Accumulated other comprehensive income | 594 | 518 | |||||
| Retained earnings | 138,566 | 107,469 | |||||
| Total stockholders’ equity | 318,257 | 314,879 | |||||
| Total liabilities and stockholders’ equity | $ | 421,639 | $ | 421,344 | |||
| Liquidity Services, Inc. and Subsidiaries | ||||||||||||||||
| Unaudited Consolidated Statements of Operations | ||||||||||||||||
| (Dollars in Thousands, Except Per Share Data) | ||||||||||||||||
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenue | $ | 100,307 | $ | 99,673 | $ | 296,697 | $ | 307,202 | ||||||||
| Fee revenue | 26,658 | 24,526 | 80,545 | 69,526 | ||||||||||||
| Total revenue | 126,965 | 124,199 | 377,242 | 376,728 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of goods sold (excluding amortization) | 54,537 | 49,977 | 156,520 | 147,045 | ||||||||||||
| Profit-sharing distributions | 8,254 | 8,649 | 26,683 | 27,002 | ||||||||||||
| Technology and operations | 27,420 | 21,851 | 82,111 | 66,800 | ||||||||||||
| Sales and marketing | 10,661 | 10,127 | 30,951 | 30,428 | ||||||||||||
| General and administrative | 11,793 | 10,096 | 36,535 | 35,907 | ||||||||||||
| Amortization of contract intangibles | 2,349 | 2,407 | 7,028 | 7,023 | ||||||||||||
| Depreciation and amortization | 1,927 | 1,984 | 5,904 | 5,952 | ||||||||||||
| Acquisition costs and related fair value adjustments | (18,564 | ) | 239 | (18,384 | ) | 5,826 | ||||||||||
| Total costs and expenses | 98,377 | 105,330 | 327,348 | 325,983 | ||||||||||||
| Income from operations | 28,588 | 18,869 | 49,894 | 50,745 | ||||||||||||
| Interest and other (expense) income, net | (197 | ) | (56 | ) | (297 | ) | 772 | |||||||||
| Income before provision for income taxes | 28,391 | 18,813 | 49,597 | 51,517 | ||||||||||||
| Provision for income taxes | (10,018 | ) | (7,525 | ) | (18,500 | ) | (20,822 | ) | ||||||||
| Net income | $ | 18,373 | $ | 11,288 | $ | 31,097 | $ | 30,695 | ||||||||
| Basic earnings per common share | $ | 0.59 | $ | 0.36 | $ | 0.98 | $ | 0.97 | ||||||||
| Diluted earnings per common share | $ | 0.59 | $ | 0.35 | $ | 0.98 | $ | 0.94 | ||||||||
| Basic weighted average shares outstanding | 30,937,394 | 31,651,061 | 31,770,490 | 31,565,109 | ||||||||||||
| Diluted weighted average shares outstanding | 30,937,394 | 32,540,187 | 31,893,512 | 32,642,046 | ||||||||||||
| Liquidity Services, Inc. and Subsidiaries | ||||||||||||||||
| Unaudited Consolidated Statements of Cash Flows | ||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Operating activities | ||||||||||||||||
| Net income | $ | 18,373 | $ | 11,288 | $ | 31,097 | $ | 30,695 | ||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
| Depreciation and amortization | 4,276 | 4,391 | 12,932 | 12,975 | ||||||||||||
| Gain on early extinguishment of debt |
– |
– |
– |
(1,000 | ) | |||||||||||
| (Gain) loss on earn out liability | (18,564 | ) | 91 | (18,390 | ) | 5,345 | ||||||||||
| Stock compensation expense | 2,950 | 2,927 | 9,517 | 10,229 | ||||||||||||
| (Benefit) provision for inventory allowance | (69 | ) | (376 | ) | 222 | (1,109 | ) | |||||||||
| Provision (benefit) for doubtful accounts | 53 | (136 | ) | 144 | (243 | ) | ||||||||||
| Incremental tax benefit from exercise of common stock options | (260 | ) | (698 | ) | (3,556 | ) | (6,074 | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | 2,695 | (4,461 | ) | (401 | ) | (6,352 | ) | |||||||||
| Inventory | 2,320 | (2,153 | ) | (40,350 | ) | (5,932 | ) | |||||||||
| Prepaid and deferred taxes | 6,052 | 4,442 | (1,698 | ) | (826 | ) | ||||||||||
| Prepaid expenses and other assets | 113 | 817 | 1,418 | 4,118 | ||||||||||||
| Accounts payable | (6,132 | ) | 1,518 | (774 | ) | 2,284 | ||||||||||
| Accrued expenses and other | (13,909 | ) | (2,589 | ) | 15,634 | (8,608 | ) | |||||||||
| Profit-sharing distributions payable | (1,020 | ) | (1,501 | ) | (683 | ) | (1,228 | ) | ||||||||
| Customer payables | (402 | ) | (6,812 | ) | 2,217 | (6,226 | ) | |||||||||
| Acquisition earn out payables |
– |
– |
– |
(11,422 | ) | |||||||||||
| Other liabilities | (438 | ) | (339 | ) | (2,234 | ) | 199 | |||||||||
| Net cash (used in) provided by operating activities | (3,962 | ) | 6,409 | 5,095 | 16,825 | |||||||||||
|
Investing activities |
||||||||||||||||
| Increase in goodwill and intangibles and cash paid for acquisitions | (39 | ) | (21 | ) | (39 | ) | (14,719 | ) | ||||||||
| Purchases of property and equipment | (1,544 | ) | (1,388 | ) | (6,494 | ) | (3,909 | ) | ||||||||
| Net cash used in investing activities | (1,583 | ) | (1,409 | ) | (6,533 | ) | (18,628 | ) | ||||||||
|
Financing activities |
||||||||||||||||
| Repurchases of common stock | (41,816 | ) |
– |
(44,873 | ) |
– |
||||||||||
| Repayment of notes payable |
– |
– |
– |
(39,000 | ) | |||||||||||
| Payment of acquisition contingent liabilities |
– |
– |
– |
(8,185 | ) | |||||||||||
| Proceeds from exercise of common stock options (net of tax) | 1,775 | 890 | 4,006 | 1,394 | ||||||||||||
| Incremental tax benefit from exercise of common stock options | 260 | 698 | 3,556 | 6,074 | ||||||||||||
| Net cash provided by (used in) financing activities | (39,781 | ) | 1,588 | (37,311 | ) | (39,717 | ) | |||||||||
| Effect of exchange rate differences | 508 | (459 | ) | 588 | 65 | |||||||||||
| Net increase (decrease) in cash and cash equivalents | (44,818 | ) | 6,129 | (38,161 | ) | (41,455 | ) | |||||||||
| Cash and cash equivalents at beginning of the period | 101,766 | 57,198 | 95,109 | 104,782 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 56,948 | $ | 63,327 | $ | 56,948 | $ | 63,327 | ||||||||
|
Supplemental disclosure of cash flow information |
||||||||||||||||
| Cash paid for income taxes | $ | 3,676 | $ | 1,728 | $ | 16,650 | $ | 12,221 | ||||||||
| Cash paid for interest |
– |
6 |
– |
2,029 | ||||||||||||
| Note payable issued in connection with acquisition |
– |
– |
– |
– |
||||||||||||
| Contingent purchase price accrued |
– |
– |
– |
18,050 | ||||||||||||
Source: Liquidity Services, Inc.
Liquidity Services, Inc.
Julie Davis, 202-467-6868 ext. 2234
Senior
Director, Investor Relations
[email protected]
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