Q3 2021 Liquidity Services Inc Earnings Call

August 5, 2021

[music].

Welcome to the liquidity services, Inc. Third quarter fiscal year 2021 financial results Conference call.

My name is James and I'll be your operator for todays call. Please.

Please note that this conference call is being recorded.

At this time all participants are in a listen only mode. Later, we will conduct the question and answer session on.

On the call today are bill angry liquidity services, Chairman and Chief Executive Officer, and Jorge Celaya, Its executive Vice President and Chief Financial Officer.

This will be available they will be available for questions. After their prepared remarks.

The following discussion and responses to your questions reflect the liquidity services management's views as of today August 5.2021 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 and 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 and front of you, which includes liquidity services financial results as well as metrics and commentary on the quarter.

During this call liquidity services management will discuss certain non-GAAP financial measures.

And its press release and filings with the SEC each of which is posted on its website you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures.

Liquidity services management will 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.

The 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 presentation over to liquidity services CEO Bill angry.

Good morning, and welcome to our Q3 earnings call I'll review, our Q3 performance and provide an update on key strategic initiatives.

Next Jorge Celaya will provide more details on the quarter.

We're grateful for our team's efforts to safely deliver outstanding results for our customers during the quarter.

Our pioneering ecommerce marketplace solutions.

The new.

Power that $100 billion plus circular economy.

And our triple bottom line, which benefits businesses.

Communities.

And the environment.

And we achieved this through our safe and effective.

The resale and redeployment of surplus assets are.

A reduction of waste.

And by creating markets for items that would otherwise be landfilled.

During the quarter, we enabled a growing number of large enterprises small businesses and government entities across the world to realize meaningful financial benefits.

And advance the.

Sustainability programs.

Our Q3 results reflect continued strong growth across each of our segments.

And by our scalable marketplace platform.

Software and expert services.

As we continue to expand the volume and breadth of assets transacted on our marketplace platform.

We are attracting more buyers collecting more data to drive higher recovery value for sellers, and then turn attracting more sellers.

This technology enabled liquidity services flywheel effect is of very attractive feature of our 2 sided marketplace business model.

And is responsible for generating.

61, $5 million of operating cash flow and $45 million of adjusted EBITDA over the last 12 months through Q3.

<unk> and our Gov deals segment grew 152% over the prior year's comparable comparable quarter, driven by the increasing adoption of our digital marketplace solution by government agencies.

The traditional sales methods used for a broader array of assets, including the vehicles heavy equipment and real estate.

<unk> and our retail supply chain group segment grew 36% over the prior year's comparable quarter.

As large and SMB retail sellers expanded their use of our digital marketplaces and reverse supply chain solutions to capitalize on the secular growth of E Commerce.

<unk> and our capital assets group segment increased 37%.

Over the prior year's comparable quarter, driven by customer adoption of our online platform for the sale of heavy equipment energy and Biopharma assets, and North America, and strong consignment sales events and Asia Pacific.

Our machinery segment grew revenue by 38% over the prior year's comparable quarter as.

And as the equipment owners and dealers continue to demonstrate strong engagement.

With our digital marketing.

And inventory management solutions.

Our newest marketplace all surplus dot com also continued to thrive.

As new buyer of registrations on the platform grew nearly 150% from a year ago fueling strong GMB growth and price realization for sellers and key asset categories, such as transportation construction real estate consumer goods and Biopharma.

We exited.

And the quarter with $120.112 million of cash and zero debt and.

And we continue to look for intelligent uses of cash including organic growth initiatives to further penetrate large untapped opportunities and our existing markets.

Share repurchases and tuck in acquisitions.

Similar to the rule of 40, we have established a framework.

For profitable growth to guide our investment decisions.

On achieving and attractive growth and gross profit.

Paired with an acceptable non-GAAP adjusted EBITDA margin.

The margin as a percentage of gross profit.

For the trailing 12 months through Q3.

Our gross profit, which is a proxy for net revenues.

And is up 35% over the prior year.

And our non-GAAP adjusted EBITDA margin as a percentage of gross profit is 28%.

Based on our current momentum.

Anticipate continuing to use this framework to strategically balance.

The investment opportunities as.

As we optimize our technology and.

And services for the long term.

In closing we thank our team members across liquidity services for their dedication.

So our mission is the world's largest <unk> e-commerce marketplace for business and government surplus.

And we're very excited to continue to create value for our customers.

And shareholders I.

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

Thank you Bill and good morning.

We ended the quarter above guidance on all metrics with continued strength of activity across all of our businesses and trim.

Contributing to the better and expected results.

We completed the third quarter of fiscal year, 2021, with <unk> of $244.7 million and 88% increase from $131 million and the same quarter last year.

Revenue for the third quarter was $69.7 million, a 46% increase compared to the same quarter last year, while net income for this third quarter was $8.4 million, resulting in diluted earnings per share of <unk> 24 shops.

Non-GAAP adjusted EBITDA was $13.3 million.

Or 19, 1% of revenue.

A $9.7 million of improvement year over year for the fiscal third quarter ending June 30 of 2021.

Compared to last year, our volumes are up and our gross margin is up which combined with our cost.

Control over operating expenses yielded all true, resulting and the solid bottom line results.

We are proud of the accomplishments since we began our transformation.

And that has positioned us well the benefit from the accelerated rise and E Commerce <unk> activity.

We feel poised to further optimize.

Our technology and services as we look ahead to executing on our growth initiatives.

Registered buyers are now at almost $4 million with.

And with auction participation up 47% this quarter.

Which is typically 1 of our seasonally high quarters.

And compared favorably to the pandemic low third quarter last year.

And while completed transactions were up 38% quarter over quarter.

The third quarter of fiscal year 2021, comparative year over year consolidated financial results.

<unk> demonstrated the impact of our multi year business transformation and investments and technology are having on our businesses.

We are driving operating leverage from our platform and diverse service offerings.

Allowing us to capitalize on the market opportunity presented by the increasing demand for sustainable E Commerce solutions by large enterprises small businesses and government entities.

We continue to see growing interest and the consignment model, which includes self directed solutions.

And its impact continues to show and our improved gross profit margins as a percent of revenue, which increased to 59% this quarter from 53% last year.

Our margins also benefited from the mix of products sold and asset recovery rates achieved partly.

Fluids by favorable macroeconomic trends and certain asset categories, such as transportation.

Our bottom line results reflect the overall increase and topline volumes.

The benefits to gross profit margin and leverage and our operating expenses.

The prior year comparable period included significant negative top line impact.

From the initial COVID-19 related economic restrictions.

Specifically comparing these third quarter results to the same quarter last year, our Gulf deal segment was up 152% on <unk> and 143% of revenue.

Our retail <unk> segment was up 36% on GMB and up 31% on our revenue and our CAG segment <unk> was up 37% and up 33% of revenue machining of revenue was up 38%.

And Simon GNP activity grew proportionately faster than our purchase offerings of the seller clients.

We have a debt free balance sheet and ended the quarter with $112.7 million and cash.

$25.1 million from last quarter.

We have $15 million and remaining authorization to perform additional share repurchases.

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 emphasizing platform services that deliver optimal liquidity for our customers further enabled by our technology based marketplace solutions.

Our fourth quarter of fiscal year, 2020.1 guidance range is above our results for the same period last year.

Reflecting anticipated increases and transaction volumes and the accelerated market adoption of the online economy that is creating strong demand for our services from both new and existing customers.

The COVID-19 restrictions last year.

<unk>, the general macro trend towards greater E Commerce online transacting.

Last year's fiscal year fourth quarter did include processing of seller backlog that accumulated during the earlier stage of the pandemic and more than offset what would typically have been a seasonally low fourth quarter.

While we expect the resumption of seasonal trends and our results.

The fourth quarter of fiscal year, 'twenty, 1 being sequentially slightly below Q3, we anticipate year over year growth to continue during the upcoming fiscal fourth quarter.

In addition, as part of our Q4 of fiscal year 'twenty, 1 guidance. The positive macroeconomic factors that have favorably increase recovery rates and certain asset categories. Since Q4 of fiscal year 'twenty are expected to continue even as our expanding volume drive growth.

Management's guidance for Q4 of fiscal year 'twenty, 1 is as follows we.

We expect <unk> to range from $225 million to $240 million and GAAP net income is expected in the range of $5.5 million to $8.5 million with a corresponding GAAP diluted earnings per share ranging from 15.

The 24 per share we.

We estimate non-GAAP adjusted EBITDA to range from $10 million to $12 million.

Non-GAAP adjusted diluted earnings per share is estimated in the range of 20 to 28 per share.

This guidance assumes that we have approximately $35.6 million.

Diluted weighted average shares outstanding during the fourth quarter of fiscal year 2021.

Thank you and we will now take questions.

[laughter].

Thank you.

Begin our question and answer session. If you have a question. Please press star 1 on your phone.

If you wish to be removed from the question queue. You May press the pound sign of the hash key.

And if youre using a speakerphone and you may need to pick up the handset first before pressing the numbers.

Once again, if you have a question. Please press star 1 on your phone.

Our first question comes from Gary Presto P&L of Barrington Research.

Good morning, everyone.

Bill a couple of things here.

In terms of.

It gives me driving returns and increasing returns.

Should we look at your increase in gross profit.

As maybe a proxy for what you've done to the company over time to position it to drive higher returns and the market.

Absolutely I think the gross profit.

Dollars.

Which approximate net revenues and substance for us because it is net of cost of services or any product.

<unk>, which is only about 15% of our GMB.

And as derived directly from revenue sharing commission arrangements with our sellers and so as we sell.

For more more value we drive.

Higher.

The proceeds for our sellers and higher commission revenues for liquidity services and.

Thats certainly reflecting the gross profit we also benefit from penetrating higher value asset categories, and we commented that.

More and more of our corporate and government clients are seeing our platform.

Which is effectively all of surplus dot com as a 1 stop platform for all assets, including construction equipment trucks.

Trucks vehicles cars and.

And those higher value assets are.

Fundamentally higher margin because.

We're.

Putting more dollars through every completed transaction and I just think there is.

And ongoing continuous.

The improvement.

Ethos within how we manage the marketplace.

We're becoming better at matching.

Prospective buyers.

The existing registered buyers with the right assets.

And we harvest quite of bit of information about <unk>.

Browsing and buying and bidding history, and we make those correlations of but a new buyer would be interested based on prior patterns of.

Legacy buyers and the better matching means more auction participation, which drives higher recovery. So for all of those reasons.

And we agree with your statement.

Okay and then.

Is there any way that.

You can factor out what the catch up and GMB and Q4 was last year. So we can get more of the normalized growth rate for GM. The.

Versus the guidance, you've given I mean, I went back and looked and I think it was in Q4 of 19, I think you did $158 million of DMV.

And because usually seasonally you do have a step down here so.

I'm just trying to get an idea of.

And what the more normalized growth would be.

So Gary this is Jorge so.

The best way I think to look at it for you to look at it as 2.

Let's look at our.

2019 numbers.

And but then also you can see the drop.

Last years.

Numbers in the third quarter, where our <unk> drop through of 130.

From what would have been a higher typical run rate that you would have seen sequentially. The 2 prior quarters. So when you see that that drop you get a sense of.

What what was the COVID-19 drops so so to speak.

And as we have indicated most of that.

From a backlog perspective was cut off.

Up in the fourth quarter of 2020.

Where we had.

197, or so and dnb and.

The fourth quarter of last year so despite.

Having that high fourth quarter last year of 100 and excuse.

And if we got the number of about 197 and GMB.

Last year.

Our guidance.

It's still sequentially well above last year's number.

And I think that is depicted of the.

The more general momentum that we're trying to indicate about our fundamental business and Mac.

The macroeconomic trends and what we do.

Gary just to add on.

We have of framework we described.

And where we're focused on sustaining.

Sustaining profitable growth, we believe the market very attractive existing market for.

Commercial retail supply chain and government.

It allows us to drive.

20% topline growth and 20% EBITDA margin so.

Those combined.

Similar to the notion of the rule of 44.

Very attractive and sustainable.

Growth businesses, and we pointed out that.

We like 2 points of gross profit as a proxy for net revenue because it neutralizes any differences for GAAP accounting on and.

Consignment and purchase versus purchase model GMP and that number.

It has been.

Up 35% over the year over year of the prior 12 months trailing 12 months of period. So that gives you a sense of.

Sort of the normalization of growth.

Right and I'm, just getting a lot of questions here is the wide the stock's down and the only thing that I can think of is that.

To some the guidance for <unk> is not showing the kind of growth that they wanted and trying to.

Get and understanding of.

And what the catch up was in Q4, but I think if you use the baseline Q4 number you can see there is there is a tremendous amount of growth from dnb.

The quarter to quarter there.

And as Bill indicated Gary.

1 of the reasons, we commented on the trailing 12 months because of kind of normalizes these quarter to quarter things, we remind everyone that the fourth quarter is typically you go back.

As many years as you want to go back you are only going to find.

The couple of occasions, where that has not been the case for the fourth quarter sequentially dropped slightly and.

And Thats what were indicating the.

At this time that we think the seasonal trend.

We will be that.

And that.

Not it does not necessarily have any bearing.

And on.

On the.

And what goes beyond that right. So.

And you're exactly right.

When you compare this quarter, we just finished to the same quarter last year the.

The same quarter last year.

And was unusually low of the fourth quarter of last year, which we're now giving guidance the compare to <unk>.

<unk> had a lot of that catch up it was unusually high.

But when you see the trends over the last 12 months.

And your metric right pick your growth and pick your cash pick your profitability metric fixture margin.

The Guinea metric.

And I think it tells the story of where we are today.

Okay. Thank you.

Once again and if you have a question. Please press star 1.

And it would appear we have no more questions.

Thank you James Thank you everybody.

Thank you ladies and gentlemen, this concludes today's conference. Thank you for participating.

You may now disconnect.

[music].

Welcome to the liquidity services, Inc. Third quarter fiscal year 2021 financial results Conference call. My name is James and I'll be your operator for today's call.

Please note that this conference call is being recorded.

At this time all participants are in a listen only mode. Later, we will conduct the question and answer session on.

On the call today are bill angry liquidity services, Chairman and Chief Executive Officer, and Jorge Celaya, Its executive Vice President and Chief Financial Officer the.

And this will be available they will 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 August 5.2021 and will include forward looking statements.

Actual results may differ materially.

As you listen to today's call. Please have the press release and front of you, which includes liquidity services financial results as well as metrics and commentary on the quarter.

During this call liquidity services management will discuss certain non-GAAP financial measures.

And at the press release and filings with the SEC each of which is posted on its website you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures.

Liquidity services management will also use certain supplemental operating data as the measure of certain components of operating performance, which they also believe is useful for management and investors.

The 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 presentation over liquidity services CEO Bill angry.

Good morning, and welcome to our Q3 earnings call I'll review, our Q3 performance and provide an update on key strategic initiatives.

Net Jorge Celaya and will provide more details on the quarter.

We're grateful for our team's efforts to safely deliver outstanding results for our customers during the quarter.

Our pioneering ecommerce marketplace solutions.

Continue.

Power, the $100 billion plus circular economy.

And our triple bottom line, which benefits businesses.

Communities.

And the environment.

And we achieved this through our safe and effective.

The resale and redeployment of surplus assets a.

The reduction of waste.

And by creating markets for items that would otherwise be landfilled.

During the quarter, we enabled a growing number of large enterprises and small businesses and government entities across the world to realize meaningful financial benefits.

And advance.

Sustainability programs.

Our Q3 results reflect and.

<unk> strong growth across each of our segments.

And by our scalable marketplace platform.

Software and the expert services.

As we continue to expand the volume and breadth of assets transacted on our marketplace platform.

We are attracting more buyers and collecting more data to drive higher recovery value for sellers, and then turn and attracting more sellers.

This technology enabled liquidity services flywheel effect is of very attractive feature of our 2 sided marketplace business model.

And is responsible for generating.

61, $5 million of operating cash flow and $45 million of adjusted EBITDA.

Over the last 12 months through Q3.

<unk> and our Gov deals segment grew 152% over the prior year's comparable comparable quarter driven by the.

The increasing adoption of our digital marketplace solution by government agencies.

The traditional sales methods used for a broader array of assets, including the vehicles heavier.

Heavy equipment and real estate.

<unk> and our retail supply chain group segment grew 36% over the prior year's comparable quarter as large and SMB retail sellers expanded their use of our digital marketplaces and reverse supply chain solutions to capitalize on the secular growth of E Commerce.

<unk> and our capital assets group segment increased 37%.

Over the prior year's comparable quarter, driven by customer adoption of our online platform for the sale of heavy equipment.

Energy and Biopharma assets, and North America, and strong consignment sales events and Asia Pacific.

Our machinery segment grew revenue by 38% over the prior year's comparable quarter as the equipment owners and dealers continue to demonstrate strong engagement.

With our digital marketing.

And inventory management solutions.

Our newest marketplace all of surplus Dot Com also continued to thrive.

And as new buyer of registrations on the platform grew nearly 150% from a year ago fueling strong GMB growth and price realization for sellers and key asset categories, such as transportation construction real estate and consumer goods and Biopharma.

We exited the quarter with $120 million to $112 million of cash and zero debt.

And we continue to look for intelligent uses of cash income.

<unk> organic growth initiatives to further penetrate large untapped opportunities and our existing markets.

Share repurchases and tuck in acquisitions.

Similar to the rule of 40, we have established a framework for.

For profitable growth the guide our investment decisions.

Based on achieving and attractive growth and gross profit.

Paired with an acceptable non-GAAP adjusted EBITDA.

Margin as a percentage of gross profit.

For the trailing 12 months through Q3.

Our gross profit, which is a proxy for net revenues.

Is up 35% over the prior year.

And our non-GAAP adjusted EBITDA margin as a percentage of gross profit is 28%.

Based on our current momentum.

Anticipate continuing to use this framework the strategically balance.

The investment opportunities as.

As we optimize our technology and.

And services for the long term.

In closing we thank our team members across liquidity services for their dedication.

So our mission is the world's largest <unk> e-commerce marketplace for business and government surplus.

And we're very excited to continue to create value for our customers.

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

Thank you Bill and good morning.

We ended the quarter above guidance on all metrics with continued strength of activity across all our businesses and trip.

Contributing to the better and expected results.

We completed the third quarter of fiscal year, 2021, with <unk> of $244.7 million and.

And 88% increase from $131 million and the same quarter last year.

Non-GAAP adjusted EBITDA was $13.3 million.

Or 19, 1% of revenue.

The $9.7 million improvement year over year for the fiscal third quarter ending June 30 of 2021.

Compared to last year, our volumes are up and our gross margin is up which combined with our cost.

Control over operating expenses yielded all true, resulting and the solid bottom line results.

We are proud of the accomplishments since we began our transformation.

That has positioned us well the benefit from the accelerated rise and E Commerce <unk> activity.

We feel poised to further optimize.

Our technology and services as we look ahead to executing on our growth initiatives.

Registered buyers are now at almost $4 million with auction participation up 47% this quarter.

Which is typically 1 of our seasonally high quarters.

And compared favorably to the pandemic low third quarter last year.

While completed transactions were up 38% quarter over quarter.

The third quarter of fiscal year 2021, comparative year over year consolidated financial results.

Demonstrated the impact our multi year business transformation and investments and technology are having on our businesses.

We are driving operating leverage from our platform and diverse service offerings.

Allowing us to capitalize on the market opportunity presented by the increasing demand for sustainable E Commerce solutions by large enterprises small businesses and government entities.

We continue to see growing interest and the consignment model, which includes the self directed solutions.

And its impact continues to show in our improved gross profit margins as a percent of revenue, which increased to 59% this quarter from 53% last year.

Our margins also benefited from the mix of products sold and.

The asset recovery rates achieved partly influenced by favorable macroeconomic trends and certain asset categories such as transportation.

Our bottom line results reflect the overall increase and topline volumes of <unk>.

And if it's 2 gross profit margin and leverage and our operating expenses.

The prior year comparable period included significant negative top line impact.

From the initial COVID-19 related economic restrictions.

Specifically comparing these third quarter results to the same quarter last year, our golf deal segment was up 152% on <unk> and 143% on the revenue.

Our retail <unk> segment was up 36% on GMB and up 31% on our revenue and our CAG segment <unk> was up 37% and up 33% of revenue machining of revenue was up 38%.

And Simon GMB activity grew proportionately faster than our purchase offerings of the seller clients.

We have a debt free balance sheet and ended the quarter with $112.7 million and cash.

Up $25.1 million from last quarter.

We have $15 million and remaining authorization to perform additional share repurchases.

We continue to see a strong pipeline expanding customer relationships and other indicators of pause.

The positive performance going forward.

And we believe we are well positioned to create value by emphasizing platform services that deliver optimal liquidity for our customers further enabled by our technology based marketplace solutions.

Our fourth quarter of fiscal year, 2020.1 guidance range is above our results for the same period last year.

The COVID-19 restrictions last year and accelerated the general macro trends towards greater E Commerce online and transacting.

Last year's fiscal year fourth quarter did include processing of seller backlog the accumulated during the earlier stage of the pandemic and more than offset what would typically have been a seasonally low fourth quarter.

While we expect the resumption of seasonal trends and our results.

And with fourth quarter of fiscal year, 'twenty, 1 being sequentially slightly below Q3, we anticipate year over year growth to continue during the upcoming fiscal fourth quarter.

Management's guidance for Q4 of fiscal year 'twenty..1 is as follows we expect <unk> to range from $225 million to $240 million.

GAAP net income is expected in the range of $5.5 million to $8.5 million with a corresponding GAAP diluted earnings per share ranging from 15.

The 24 per share we.

We estimate non-GAAP adjusted EBITDA to range from $10 million to $12 million.

Non-GAAP adjusted diluted earnings per share is estimated in the range of 20% to 28 per share.

This guidance assumes that we have approximately $35.6 million.

Diluted weighted average shares outstanding during the fourth quarter of fiscal year 2021.

Thank you and we will now take questions.

Thank you.

Begin our question and answer session. If you have the question. Please press star 1 on your phone.

And you wish to be removed from the question queue. You May press the pound sign of the hash key.

And if youre using a speakerphone you may need to pick up the handset first before pressing the numbers.

Once again, if you have a question. Please press star 1 on your phone.

Our first question comes from Gary Presto P&L of Barrington Research.

Good morning, everyone.

Bill a couple of things here.

In terms of.

Gives me driving returns increase and returns.

As we look at your increase in gross profit.

As maybe a proxy for what you've done to the company over time to position it to drive higher returns and the market.

Absolutely I think the gross profit.

Dollars, which approximate net revenues and substance for us because it is net of cost of services or any product.

<unk>, which is only about 15% of the GMB.

Thats derived directly from revenue sharing commission arrangements with our sellers and so as we sell.

For more and more value we drive higher.

The proceeds for our sellers and higher commission revenues for liquidity services and.

And that's certainly reflecting the gross profit we also benefit from penetrating higher value asset categories, and we commented that.

More and more of our corporate and government clients are seeing our platform.

Which is effectively all of surplus dot com as a 1 stop platform for all assets, including construction equipment trucks.

Trucks vehicles cars and.

And those higher value assets on.

And the mentally higher margin because.

We're.

Putting more dollars through every complete the transaction and I just think there is.

And ongoing continuous.

The improvement.

Ethos within how we manage the marketplace.

Were becoming better at matching.

Prospective buyers.

The existing registered buyers with the right assets.

And we harvest quite of bit of information about.

Browsing and buying and billing history, and we make those correlations of what a new buyer would be interested and based on prior patterns of leg.

The legacy buyers and the better matching means more auction participation, which drives higher recovery. So all of those reasons.

And we agree with your statement.

Okay and then.

Is there any way that.

You can factor out what the catch up and GMB and Q4 was last year. So we can get more of the normalized growth rate for GM. The.

Versus the guidance, you've given I mean, I went back and looked and I think it was in Q4 of 19, I think you did $158 million of DMV.

And because usually seasonally you do have a step down here so.

And.

I'm just trying to get an idea of.

And what the more normalized growth would be.

So Gary this is Jorge so.

The best way I think to look at it for you to look at it as 2.

Let's look at our.

2019 numbers.

And but then also you can see the drop.

In the last years.

Numbers in the third quarter, where our <unk> dropped to 130.

From what would have been a higher typical run rate that you would have seen sequentially. The 2 prior quarters. So when you see that that drop you get a sense of.

What what was the Covid dropped so so to speak.

As we have indicated most of that.

From a backlog perspective, what cutoff.

And in the fourth quarter of 2020.

Where we had close to.

197, or so and dnb and.

And the fourth quarter of last year.

Despite.

Having that high fourth quarter last year of 100 net.

And we've got the number of about 197 and Dnb.

Last year.

Our guidance.

It's still sequentially well above last year's number.

And I think that is depicted of the.

The more general momentum that we're trying to indicate about our fundamental business and macroeconomic trends and what we do.

Gary just to add on.

We have of framework, we described where.

Where we're focused on sustaining.

Sustaining profitable growth, we believe the market very attractive existing market for.

Commercial retail supply chain and government.

It allows us to drive.

20% topline growth and 20% EBITDA margin so.

Those.

Similar to the notion of the rule of 44.

Very attractive.

Growth businesses, and we pointed out that.

We like 2 points of gross profit as a proxy for net revenue because it neutralizes any differences or GAAP accounting on <unk> and.

Consignment and purchase versus purchase model GMP and to that number.

It has been.

Up 35% over the year over year of the prior 12 month trailing 12 month period. So that gives you a sense of.

Sort of the normalization of growth.

Right and I'm, just getting a lot of questions here is the wide the stock's down and the only thing that I can think of is that.

To some the guidance for <unk> is not showing the kind of growth that they wanted and trying to.

And understanding of.

And what the catch up was in Q4, but I think if you use the baseline Q4 number you can see there is there is a tremendous amount of growth of the GMB.

The quarter to quarter there.

And as Bill indicated Gary.

1 of the reasons, we commented on the trailing 12 months because it kind of normalizes these quarter to quarter things, we remind everyone that the fourth quarter is typically you go back.

Many years as you want to go back you are only going to find.

The couple of occasions, where that has not been the case for the fourth quarter sequentially dropped slightly and.

And Thats what were indicating the.

Net.

At this time that that we think the seasonal trend.

And we will be that.

And that.

It has not does not necessarily have any bearing.

And on.

On.

And what goes beyond that right so right.

And you're exactly right.

When you compare this quarter, we just finished to the same quarter last year.

The same quarter last year.

Was unusually low of the fourth quarter of last year, which we're now giving guidance the compared to.

Had a lot of the catch up it was unusually high.

But when you see the trends over the last 12 months and pick your metric right pick your growth and pick your cash pick your profitability metric fixture margin.

The Guinea metric.

And I think it tells.

The story of where we are today.

Thank you.

Yes.

Once again and if you have a question. Please press star 1.

And it would appear we have no more questions.

Thank you James Thank you everybody.

Thank you ladies and gentlemen, this concludes today's conference. Thank you for participating.

You may now disconnect.

Q3 2021 Liquidity Services Inc Earnings Call

Request a DemoDemo

LQDT

Liquidity Services

Earnings