0001235468false00012354682023-05-042023-05-04

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 04, 2023

 

 

 

 

 

 

 

Liquidity Services, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			0-51813	52-2209244
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
6931 Arlington Road Suite 200
Bethesda, Maryland				20814
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 202 4676868

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		LQDT		The Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition.

On May 4, 2023, Liquidity Services, Inc. (the “Company”) announced its financial results for the quarter ended March 31, 2023. The full text of the press release (the “Press Release”) issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in the Press Release shall be considered “furnished” pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, nor shall it be deemed incorporated by reference into any of the Company’s reports or filings with the Securities and Exchange Commission, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing.
 

Item 9.01 Financial Statements and Exhibits.

 

99.1	Press Release of Liquidity Services, Inc., dated May 4, 2023, announcing financial results for the quarter ended March 31, 2023.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			LIQUIDITY SERVICES, INC.
			(Registrant)
Date:	May 4, 2023	By:	/s/ Mark A. Shaffer
			Mark A. Shaffer
			Chief Legal Officer and Corporate Secretary

 

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Exhibit 99.1

LIQUIDITY SERVICES ANNOUNCES SECOND QUARTER FISCAL YEAR 2023 FINANCIAL RESULTS

 

Bethesda, MD - May 4, 2023 - Liquidity Services (NASDAQ:LQDT; www.liquidityservices.com), a leading global commerce company powering the circular economy, today announced the following financial results as of the quarter ended March 31, 2023, as compared to the applicable prior year periods:

 

 

"Our strong Q2 financial results demonstrate that we continue to deliver strong value for our customers and shareholders. We continued to grow our business in a challenging economic environment and set new records in Q2 for quarterly GMV in our Retail Supply Chain Group (RSCG) segment and the number of sellers and assets sold in our GovDeals segment. Despite some persistent macro-headwinds, we continue to expand the reach and relevance of our marketplaces with improving vehicle metrics and continued strong buyer demand. Our resilient business model continues to deliver strong free cash flow and we have continued to repurchase shares as we see opportunity in our long-term prospects for growth and profitability," said Bill Angrick, Liquidity Services CEO.

 

Recent Business Highlights

 

 

Second Quarter Financial Highlights

 

GMV for the second fiscal quarter of 2023 was $282.7 million, a 2% increase from $276.9 million in the second fiscal quarter of 2022.

 

Revenue for the second fiscal quarter of 2023 was $81.5 million, a 19% increase from $68.3 million in the second fiscal quarter of 2022.

GAAP Net Income was $4.2 million, or $0.13 per share, for the fiscal second quarter of 2023, a decrease from $12.0 million1, or $0.35 per share1, for the same quarter last year.

 

Non-GAAP Adjusted Net Income for the fiscal second quarter of 2023 was $6.4 million, or $0.20 per share, an increase from $5.8 million, or $0.17 per share last year.

 

Non-GAAP Adjusted EBITDA for the fiscal second quarter of 2023 was $9.9 million, a $0.7 million increase from $9.2 million in the fiscal second quarter of 2022, reflecting increased GMV and revenue results, partially offset by year-over-year increases in operations, sales, and technology expenses to support market share expansion, diversification and longer-term growth.

 

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1 The prior year results included an $8.5 million, or $0.25 per share, non-cash benefit from a reduction in the fair value of the Bid4Assets earn-out liability. For further information, see Note 11, Fair Value Measurement, to our quarterly report on Form 10-Q for the period ended March 31, 2023.

 

2 Includes $95.6 million of Cash and cash equivalents and $5.6 million of Short-term investments.

 

 

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Second Quarter Segment Financial Results

We present operating results in four reportable segments: GovDeals, RSCG, CAG and Machinio. Segment direct profit, previously referred to as segment gross profit, continues to be calculated as total revenue less cost of goods sold (excluding depreciation and amortization).

Our Q2-FY23 segment results are as follows (unaudited, in millions):

 

	Three Months Ended March 31,								Six Months Ended March 31,
	2023				2022				2023				2022
GovDeals:
GMV	$	167.9			$	180.3			$	329.0			$	337.2
Total revenue	$	15.1			$	14.6			$	28.7			$	28.5
Segment direct profit	$	14.3			$	13.9			$	27.2			$	27.1
% of Total revenue		95	%			95	%			95	%			95	%
RSCG:
GMV	$	73.3			$	59.1			$	138.2			$	112.5
Total revenue	$	53.7			$	41.8			$	99.7			$	80.5
Segment direct profit	$	16.7			$	16.6			$	32.7			$	30.9
% of Total revenue		31	%			40	%			33	%			38	%
CAG:
GMV	$	41.5			$	37.5			$	86.3			$	87.4
Total revenue	$	9.4			$	9.0			$	18.8			$	20.2
Segment direct profit	$	7.0			$	6.1			$	15.5			$	14.8
% of Total revenue		75	%			68	%			83	%			73	%
Machinio:
GMV	$	—			$	—			$	—			$	—
Total revenue	$	3.3			$	2.9			$	6.6			$	5.7
Segment direct profit	$	3.1			$	2.7			$	6.2			$	5.4
% of Total revenue		94	%			95	%			95	%			95	%
Consolidated:
GMV	$	282.7			$	276.9			$	553.5			$	537.0
Total revenue	$	81.5			$	68.3			$	153.7			$	135.0

 

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Second Quarter Operational Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Business Outlook

Our expertise in diverse sectors, a strong buyer base across numerous asset categories, and global reach are continuing to provide advantages as our clients navigate economic change and look to us for valuable solutions.

Our fiscal third quarter 2023 guidance range is expected to be consistent with the same period last year. The GMV outlook reflects expected growth over the prior year period in most of our segments. Core results remain strong, despite some continued headwinds across the global economy, including the availability of used vehicles and foreclosed real estate. While RSCG will be coming off its seasonal peak this past fiscal second quarter, which featured a higher proportion of purchase transactions with a higher proportion of lower value products for sale, it is expecting solid year-over-year fiscal third quarter growth in GMV and revenue. The RSCG segment direct profit margin as a percent of revenue is expected to improve sequentially this coming fiscal third quarter compared to our second quarter, mainly from changes in the mix of products anticipated for sale. GovDeals is expected to experience a seasonal peak in its personal property categories, yet we expect its total segment GMV, inclusive of Bid4Assets, to be challenged by real estate foreclosure headwinds. CAG expects to deliver year-over-year growth led by heavy equipment, industrial sales, and projects in EMEA, many of which have been delayed from prior quarters.

We currently anticipate our consolidated revenue as a percentage of GMV in the mid twenty percent range, reflecting our mix of business and expected products sold, with our segments' direct profits in total as a percentage of total revenues similar to the same quarter last year. We anticipate continuing to invest in our sales and technology initiatives in support of long-term growth.

For Q3-FY23 our guidance is as follows:

GMV - We expect GMV to range from $300 million to $330 million.

GAAP Net Income - We expect GAAP Net Income to range from $3.0 million to $5.5 million.

GAAP Diluted EPS - We expect GAAP Diluted EPS to range from $0.09 to $0.16.

Non-GAAP Adjusted EBITDA -We expect Non-GAAP Adjusted EBITDA to range from $10.0 million to $13.0 million.

Non-GAAP Adjusted Diluted EPS - We expect Non-GAAP Adjusted EPS to range from $0.16 to $0.24.

Our Business Outlook includes forward-looking statements which reflect these trends and assumptions for Q3-FY23 as compared to the prior year's period:

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Reconciliation 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 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, and goodwill, long-lived and other non-current asset impairment. A reconciliation of Net Income to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA is as follows:

 

	Three Months Ended March 31,								Six Months Ended March 31,
	2023				2022				2023				2022
Net income	$	4,245			$	11,970			$	8,211			$	15,572
Interest and other income, net1		(634	)			51				(937	)			18
Provision for income taxes		1,573				1,059				2,723				2,071
Depreciation and amortization		2,803				2,603				5,567				4,906
Non-GAAP EBITDA	$	7,987			$	15,683			$	15,564			$	22,567
Stock compensation expense		1,939				1,992				4,020				4,272
Acquisition costs and impairment of long-lived and other non-current assets2		—				40				184				252
Fair value adjustments to acquisition earn-outs		—				(8,500	)			—				(8,500	)
Non-GAAP Adjusted EBITDA	$	9,926			$	9,215			$	19,768			$	18,591

 

1 Interest and other income, net, per the Consolidated Statements of Operations, excluding the non-service components of net periodic pension (benefit).

2 Acquisition costs and impairment of long-lived and other non-current assets are included in Other operating (income) expenses, net on the Consolidated Statements of Operations.

 

 

 

 

 

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Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Basic and Diluted Earnings Per Share. Non-GAAP Adjusted Net Income is a supplemental non-GAAP financial measure and is equal to Net Income plus stock compensation expense, acquisition related costs such as transaction expenses and changes in earn-out estimates, amortization of intangible assets, business realignment expenses, goodwill, long-lived and other non-current asset impairments, 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 Per Share are determined using Adjusted Net Income. For Q2-FY23 the tax rate used to estimate the impact of income taxes on the non-GAAP adjustments was 26% compared to 23% used for the Q2-FY22 results. These tax rates exclude the impacts of the charge to our U.S. valuation allowance and the fair value adjustments to earn-out liabilities. A reconciliation of Net Income to Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Basic and Diluted Income Per Share is as follows:

 

	Three Months Ended March 31,								Six Months Ended March 31,
	2023				2022				2023				2022
Net income	$	4,245			$	11,970			$	8,211			$	15,572
Stock compensation expense		1,939				1,992				4,020				4,272
Intangible asset amortization		981				984				1,963				1,751
Acquisition costs and impairment of long-lived and other non-current assets*		—				40				184				252
Fair value adjustments to acquisition earn-outs		—				(8,500	)			—				(8,500	)
Income tax impact on the adjustment items		(759	)			(684	)			(1,603	)			(1,425	)
Non-GAAP Adjusted net income	$	6,406			$	5,802			$	12,775			$	11,922
Non-GAAP Adjusted basic earnings per common share	$	0.20			$	0.18			$	0.40			$	0.36
Non-GAAP Adjusted diluted earnings per common share	$	0.20			$	0.17			$	0.39			$	0.35
Basic weighted average shares outstanding		31,305,214				32,561,903				31,562,988				32,769,057
Diluted weighted average shares outstanding		32,124,188				34,004,568				32,544,953				34,382,149

 

* Acquisition related costs and impairment of long-lived and other non-current assets, which are excluded from Non-GAAP Adjusted Net Income, are included in Other operating (income) expenses, net on the Consolidated Statements of Operations.

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Conference Call Details

The 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 registering here to receive the dial-in number and unique conference pin. A live web cast of the conference call will be provided on the Company's investor relations website at https://investors.liquidityservices.com. An archive of the web cast will be available on the Company's website until May 4, 2024 at 11:59 p.m. Eastern Time. The replay will be available starting at 1:30 p.m. Eastern Time 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 prepare Non-GAAP Adjusted EBITDA by eliminating from Non-GAAP EBITDA the impact of items that we do not consider indicative of our core operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. As an analytical tool, Non-GAAP Adjusted EBITDA is subject to all of the limitations applicable to Non-GAAP EBITDA. Our presentation of Non-GAAP Adjusted EBITDA should not be construed as an implication that our future results will be unaffected by unusual or non-recurring items.

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.

We do not quantitatively reconcile our guidance ranges for our non-GAAP measures to their most comparable GAAP measures in the Business Outlook section of this press release. The guidance ranges for our GAAP and non-GAAP financial measures reflect our assessment of potential sources of variability in our financial results and are informed by our evaluation of multiple scenarios, many of which have interactive effects across several financial statement line items. Providing guidance for individual reconciling items between our non-GAAP financial measures and the comparable GAAP measures would imply a degree of precision and certainty in those reconciling items that is not a consistent reflection of our scenario-based process to prepare our guidance ranges. To the extent that a material change affecting the individual reconciling items between the Company’s forward-looking non-GAAP and comparable GAAP financial measures is anticipated, the Company has provided qualitative commentary in the Business Outlook section of this press release for your consideration. However, as the impact of such factors cannot be predicted with a reasonable degree of certainty or precision, a quantitative reconciliation is not available without unreasonable effort.

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 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.

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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; 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: changes in political, business and economic conditions; the duration and impact of shortages in supply of used vehicles, the continuing impacts of the COVID-19 pandemic globally and their impact on the ability to conduct cross-border transactions, the Russian invasion of Ukraine, and inflation on the Company’s operations, the operations of customers, project size and timing of auctions, operating costs, and general economic conditions; adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults, or non-performance by financial institutions; retail clients investing in their warehouse operations capacity to handle higher volumes of online returns resulting in retailers sending the Company a reduced volume of returns merchandise or sending us a product mix lower in value due to the removal of high value returns; the numerous factors that influence the supply of and demand for used merchandise, equipment and surplus assets; the Company’s need to manage the attraction of sellers and buyers in a broad range of asset categories with varying degrees of maturity and in many geographies; economic and other conditions in local, regional and global sectors; the Company’s ability to integrate acquired companies, including its most recent acquisitions of Machinio Corp. and Bid4Assets, Inc., and execute on anticipated business plans such as the efforts underway with local and state governments to advance legislation that allows for online auctions for foreclosed and tax foreclosed real estate; 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 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; and the risks and uncertainties set forth in the Company’s Annual Report on Form 10-K for the year ended September 30, 2022 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, which are 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.

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About Liquidity Services

Liquidity Services (NASDAQ:LQDT) operates the world’s largest B2B e-commerce marketplace platform for surplus assets with over $10 billion of completed transactions, to more than 5 million qualified buyers worldwide and 15,000 corporate and government sellers. It supports its clients' sustainability efforts by helping them extend the life of assets, prevent unnecessary waste and carbon emissions, and defer products from landfills.

 

 

Contact:

Investor Relations

investorrelations@liquidityservicesinc.com

 

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Liquidity Services and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(Dollars in Thousands, Except Par Value)

 

		March 31, 2023				September 30, 2022
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	95,583			$	96,122
Short-term investments			5,615				1,819
Accounts receivable, net of allowance for doubtful accounts of $313 and $449			5,960				11,792
Inventory, net			15,290				11,679
Prepaid taxes and tax refund receivable			1,994				1,631
Prepaid expenses and other current assets			6,135				6,551
Total current assets			130,577				129,594
Property and equipment, net			18,245				19,094
Operating lease assets			11,414				13,207
Intangible assets, net			14,274				16,234
Goodwill			89,464				88,910
Deferred tax assets			11,104				13,628
Other assets			8,019				7,437
Total assets		$	283,097			$	288,104
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	42,915			$	41,982
Accrued expenses and other current liabilities			24,755				23,304
Current portion of operating lease liabilities			4,505				4,540
Deferred revenue			4,530				4,439
Payables to sellers			47,342				49,238
Total current liabilities			124,047				123,503
Operating lease liabilities			7,776				9,687
Other long-term liabilities			200				378
Total liabilities			132,023				133,568
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.001 par value; 120,000,000 shares authorized; 36,049,719 shares issued and outstanding at March 31, 2023; 35,724,057 shares issued and outstanding at September 30, 2022			36				36
Additional paid-in capital			262,118				258,275
Treasury stock, at cost; 5,096,341 shares at March 31, 2023, and 3,813,199 shares at September 30, 2022			(79,586	)			(62,554	)
Accumulated other comprehensive loss			(8,769	)			(10,285	)
Accumulated deficit			(22,725	)			(30,936	)
Total stockholders’ equity			151,074				154,536
Total liabilities and stockholders’ equity		$	283,097			$	288,104

 

 

 

 

 

 

 

 

 

 

 

 

 

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Liquidity Services and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(Dollars in Thousands, Except Per Share Data)

 

		Three Months Ended March 31,								Six Months Ended March 31,
		2023				2022				2023				2022
Purchase revenues		$	47,273			$	37,384			$	85,907			$	73,602
Consignment and other fee revenues			34,180				30,891				67,829				61,381
Total revenue			81,453				68,275				153,736				134,983
Costs and expenses from operations:
Cost of goods sold (excludes depreciation and amortization)			40,366				28,968				72,139				56,730
Technology and operations			14,791				13,872				29,495				27,790
Sales and marketing			11,854				11,273				22,644				21,317
General and administrative			6,404				7,053				13,789				15,284
Depreciation and amortization			2,803				2,603				5,567				4,906
Fair value adjustment of acquisition earn-outs			—				(8,500	)			—				(8,500	)
Other operating (income) expenses, net			(11	)			23				129				(10	)
Total costs and expenses			76,207				55,292				143,763				117,517
Income from operations			5,246				12,983				9,973				17,466
Interest and other income, net			(572	)			(46	)			(961	)			(177	)
Income before provision for income taxes			5,818				13,029				10,934				17,643
Provision for income taxes			1,573				1,059				2,723				2,071
Net income		$	4,245			$	11,970			$	8,211			$	15,572
Basic income per common share		$	0.14			$	0.37			$	0.26			$	0.48
Diluted income per common share		$	0.13			$	0.35			$	0.25			$	0.45
Basic weighted average shares outstanding			31,305,214				32,561,903				31,562,988				32,769,057
Diluted weighted average shares outstanding			32,124,188				34,004,568				32,544,953				34,382,149

 

 

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Liquidity Services and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(Dollars in Thousands)

 

		Six Months Ended March 31,
		2023				2022
Operating activities
Net income		$	8,211			$	15,572
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			5,567				4,906
Stock compensation expense			3,882				4,272
Inventory adjustment to net realizable value			847				98
Provision for doubtful accounts			194				11
Deferred tax expense			2,524				1,590
Impairment of long-lived and other non-current assets			—				31
Gain on disposal of property and equipment			(55	)			(13	)
Gain on termination of lease			—				(240	)
Change in fair value of earn-out liability			—				(8,500	)
Changes in operating assets and liabilities:
Accounts receivable			5,801				(637	)
Inventory			(4,438	)			(709	)
Prepaid taxes and tax refund receivable			(363	)			(3	)
Prepaid expenses and other assets			310				(1,230	)
Operating lease assets and liabilities			(155	)			422
Accounts payable			902				393
Accrued expenses and other current liabilities			1,461				(8,121	)
Deferred revenue			90				442
Payables to sellers			(2,314	)			7,149
Other liabilities			(129	)			(806	)
Net cash provided by operating activities			22,335				14,627
Investing activities
Cash paid for business acquisitions, net of cash acquired			—				(11,164	)
Purchases of property and equipment, including capitalized software			(2,711	)			(3,572	)
Purchase of short-term investments			(3,696	)			—
Other investing activities, net			51				9
Net cash used in investing activities			(6,356	)			(14,727	)
Financing activities
Common stock repurchases			(16,963	)			(19,998	)
Taxes paid associated with net settlement of stock compensation awards			(736	)			(1,809	)
Payments of the principal portion of finance lease liabilities			(50	)			(51	)
Payment for debt issuance cost			—				(91	)
Proceeds from exercise of stock options, net of tax			496				—
Net cash used in financing activities			(17,253	)			(21,949	)
Effect of exchange rate differences on cash and cash equivalents			735				(22	)
Net decrease in cash and cash equivalents			(539	)			(22,071	)
Cash and cash equivalents at beginning of period			96,122				106,335
Cash and cash equivalents at end of period		$	95,583				84,264
Supplemental disclosure of cash flow information
Cash paid (received) for income taxes, net		$	539			$	350
Non-cash: Common stock surrendered in the exercise of stock options			18				100
Non-cash: Earn-out liability for acquisition activity			—				19,500

 

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