Q4 2021 Liquidity Services Inc Earnings Call
Welcome to the liquidity services, Inc, fourth quarter and fiscal year 2021 financial results Conference call. My name is Johnny 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 a question and answer session.
The call today are bill Anchoret liquidity services, Chairman and Chief Executive Officer.
And Jorge Celaya, its executive Vice President and Chief Financial Officer, 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 December nine 2021, and one called 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 filings with the SEC, including our most recent annual report on Form 10-K.
As you listen to today's call. Please have the press release in front of you which includes like put it they look at 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.
Quiddity service management also use certain supplemental operating data as a measure of certain components of operating performance, which they also believe is useful for management and investors. 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 will turn the presentation over to liquidity services C E O Bell angry.
Good morning.
And welcome to our Q4 earnings call.
I'll review, our Q4 performance and provide an update on key strategic initiatives next Jorge Celaya will provide more details on the quarter.
We are grateful for our team's efforts to safely deliver outstanding results for our customers during the quarter liquidity services recorded.
Outstanding growth during fiscal year 2021.
Driven by strong demand from both new and existing customers for our E Commerce marketplace solutions, which continued to power the $100 billion circular economy.
Benefiting businesses Society.
Andy environment.
During the fourth quarter, we enabled a growing number of large enterprises small businesses and government entities across the world to realize meaningful financial benefits in.
And advance their sustainability programs.
Q4, GNP was up 24% year over year, representing our fifth consecutive quarter of 20% plus annual GMB growth.
Reflecting on our fiscal year 2021, we.
We are pleased with the consistent execution of our team.
In support of our mission.
A better future for surplus.
As we closed fiscal year, 'twenty, one with $886 $7 million in G. M D.
43% year over year and.
And delivered excellent growth across all our segments.
Resulting in strong profitability and cash flow generation.
For the full year fiscal 'twenty, one our transaction volume was up 27% year over year and the number of our auction participants was up 20% year over year, reflecting the strength of our global buyer base and convenience of our digital solutions.
During fiscal year 'twenty, one the power of our asset light business model was on display as we generated over $65 million of operating cash flow repurchased $31 million of our stock and ended the year with $106 million of cash and zero debt.
Our business is that the intersection.
Of several powerful market forces, which will benefit our business for years to come as we lead the digital transformation of the $100 billion circular economy.
These macro trends include.
The growth of online commerce, which drives more product returns.
The world's increasing focus on sustainability, which encourages the redeployment and sale of used assets.
And finally, the massive disruption.
In global supply chains, driven by product innovation.
And changes in cross border trading relationships, which requires strategies.
Exists.
Legacy assets.
Earlier this year.
We established an objective.
Of achieving $1 billion of annualized GMB.
I am pleased to report.
We expect to achieve that run rate milestone and our current December quarter.
Given our progress.
We have established a new.
Near term objective.
Of scaling to one $5 billion in annualized <unk>.
And accordingly.
We are aggressively investing in our people.
Products and technology to achieve this new target.
While these growth investments will pressure our near term earnings.
We expect to realize strong year over year growth.
For the full year fiscal 'twenty, two and beyond.
Looking forward to fiscal year 'twenty, two we are making several strategic investments.
To expand and scale.
The solutions, we offer to large enterprises.
Small businesses and government agencies across the world.
And our Gov deals segment of.
Our recent acquisition of bid for assets.
Strengthens and expands our penetration of the $2 billion, plus government real estate market opportunity and doubles, besides liquidity services' overall public sector market opportunity.
Our new Northern Pennsylvania distribution Center.
Expands our footprint in the high density northeast corridor.
To accommodate the growing number of returns and unsold items generated from our clients.
And as a natural extension of our e-commerce marketplace and logistics infrastructure.
Finally.
The strong customer adoption of our all surplus marketplace and machining digital marketing and inventory management solutions within the construction vehicle fleet and industrial asset verticals.
Allows us to continue to invest in the expansion.
Of our sales and marketing capacity.
In these areas during fiscal year 'twenty two.
Well they are profitable.
Growing business, we continue to look for intelligent uses.
Of our cash.
Including organic growth initiatives to further penetrate large untapped opportunities in our existing markets.
Share repurchases.
And tuck in acquisitions.
In closing we thank our team members across liquidity services for their dedication to our mission.
As the leading global Commerce company, providing trusted marketplace platforms that power the circular economy.
And we are excited.
Continuing to create value for our customers and our shareholders.
I'll now turn it over to Jorge for more details on the quarter.
Yeah.
Thank you Bill.
We have been very pleased with our results for the year, our growth and profitability.
In fiscal year 2021, we saw our business model gain.
Gain operating leverage as we scale up with higher G. M D volumes across our business segments and marketplaces.
We closed the fiscal year, ending September 32021, with $886 $7 million in <unk> up 43%.
Over the prior year growth that was diversified.
Across all our segments.
Resulting in increased profitability and strong cash generation.
Non-GAAP adjusted EBITDA.
Was $42 9 billion.
Cash from operations was $65 4 million and we closed the year with $106 3 million in cash and a debt free balance sheet.
After completing $31 1 billion in share repurchases during the year, including 15 billion in share buyback during the fourth quarter.
We have received a new authorization to expand a repurchase of an additional $20 million and shares.
We completed the fourth quarter of fiscal year, 2021, with <unk> $244 4 million.
A 24% year over year increase from $196 $9 million in the prior year's comparable period.
Revenue for the fourth quarter was $73 million, a 26% increase.
Compared to the same quarter last year, while net income for this fourth quarter was $32 8 million.
Resulting in diluted earnings per share of 93.
Which included a $24 $6 million or <unk> 77 per share benefit from the release of our valuation allowance on U S deferred tax assets.
Non-GAAP adjusted EBITDA was $11 4 million, a $2 4 million dollar improvement.
Specifically comparing these fourth quarter results to the same quarter last year.
Our Gov deals segment was up 20% on GSV and revenue.
Our retail <unk> segment was up 10% on G M B and up 16% on revenue.
And our CAG segment <unk> was up 60%.
And up 69% on revenue.
<unk> revenue was up 47%.
For the quarter registered buyers are now over $4 million with auction participation up 9% of the completed transactions up 44% over the same quarter last year.
We continue to focus on driving growth and diversifying.
Our service offerings and growing our client base, we are making investments targeting market opportunities across our segments.
And our Gov deal segments.
Our acquisition of bid for assets on November one.
Broadens, our government real estate auction solutions.
We also see potential long term opportunities to grow in categories, such as equipment from government sellers as infrastructure projects take hold across the U S.
In our retail segment, we launched all surplus deals a direct to consumer marketplace for retail surplus.
We opened a new distribution center to address customer demand in the northeast U S for our full service solutions.
In our CAG segment, we see growing demand for heavy equipment.
Vehicles, and industrial manufacturing equipment across the globe.
Leading to elevated recovery rates.
Our first quarter of fiscal year 2022 guidance range for G. M. B is above the same period last year with anticipated increases in transaction volumes across our segments.
Sustained positive macroeconomic factors that are favorably influence recovery rates in key categories.
As we enter.
A traditionally seasonally low physical first quarter.
With the continued strength of our consignment model across our segments.
And there's a bid for assets and other government real estate grows as a category within the Gov deals segment.
We expect that revenue as a percent of G. M D will.
We will move towards the low end of our typical revenue to <unk> ratio.
Our profit guidance for fiscal first quarter of 2022.
Up to below the same period last year, reflecting increased costs related to growing the capacity of our sales marketing product development and technology teams incremental.
<unk> investment in our technology platform and higher market, driven labor costs, all supporting future growth.
Operating leverage is expected to improve throughout fiscal year 2022, as we continue to grow G. M D.
We anticipate a year over year decline in gross profit margins in this first quarter of fiscal year 2022, due to some product flow mix changes this quarter in our retail segment.
Additionally, as a result of reversing our tax valuation allowance this past quarter.
Due to our strong return to profitability and forward looking trends.
Our effective tax rate is expected to increase starting this first quarter of fiscal year, 'twenty, two leading to approximately 18% to 20%.
From four 5% for 2021.
This one excluding the effect of the valuation allowance reversal itself.
This higher effective tax rate will have no corresponding increase in cash paid for income taxes for 2022.
But we'll of course have negative year over year comparable impact to our 2022 net income and earnings per share.
Our fiscal first quarter guidance does include expected results from bidding for assets as part of our Gov deals segment.
Which contributes to a portion of the overall increase in <unk> relative to the same period last year.
We expect the existing Gov deals business G. M D to continue to grow at a rate consistent with recent trends contributing this fiscal first quarter to the majority of the expected year over year growth for the golf deal segment G. M D.
We are planning for a convergence.
Of existing Gov deals real estate activity and bid for assets to drive <unk> growth in the real estate category going forward and for the results of bid for assets to grow throughout 2022 and be accretive to our full year 2022 financial results. This excluding any potential <unk>.
In fact from changes in the fair value of the earn out liability associated with the transaction that will be re measured at the end of.
Each quarter during 2022.
Management's guidance for the first quarter of fiscal year 'twenty. Two is as follows we expect <unk> to range from 230 million to $260 million.
GAAP net income is expected in the range of 1 million to $4 million with a corresponding GAAP diluted earnings per share ranging from <unk> to 11 cents per share.
We estimate non-GAAP adjusted EBITDA to range from 6 million to $9 million.
Non-GAAP adjusted diluted earnings per share is estimated in the range of eight to 17 cents per share.
The GAAP and non-GAAP EPS.
EPS guidance assumes we have approximately $35 6 billion fully diluted weighted average shares outstanding during the first quarter of fiscal year 2022.
We will now take your questions.
Thank you we will now begin the question and answer session. If you have a question. Please press Star then one on your Touchtone phone if you wish to be removed from the queue. Please press the pound sign are the hash key.
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 then one on your Touchtone phone.
And we have a question from Gary <unk> from Barrington Research. Please go ahead.
Hey, good morning, Bill Jorge.
Couple of questions here and I apologize I got bumped off the call. So maybe you already talked a little bit more about this but.
In terms of some of these investments that you're making next year or for this fiscal year.
Could you maybe kind of quantify.
What youre doing on the investment side.
And how long is it will just continue as you scale to $1 5 billion of G. M D and the reason I'm asking this as we went through this big ramp up in expenses with the liquidity one transformation basic.
Basically thought it was a lot of these increased expenses were behind us and now.
We're going through another.
A segment of the company's growth with increased expenses for that growth.
Gary Bill. Thank you for your question.
We've had stair step growth.
<unk> the history of the company and each is typically.
Coupled with.
Some capacity that we'd like to.
Deploy in areas, such as technology and product development. These are not to be equated with what we did for liquidity one.
Our natural healthy expansion in the capacity of our.
Sales and marketing and product development teams to meet customer demand.
We do have to Frontload. These expenses, given where we think the market opportunity is.
And I expect this to be.
Fiscal 'twenty two.
Uh huh.
Timeline and not sort of evergreen.
Multiyear.
Forklift upgrade and expenses dishes.
Consistent with our business plan.
Looked at the opportunity in each of our segments and we believe.
$1 5 billion GMT pursue goal is as is very reasonable.
And consistent with growth in our current markets.
The adjacent online real estate opportunity.
So this will be a fiscal 'twenty two.
Expansion effort.
We'll be accompanied with a corresponding GMP growth.
As Jorge mentioned in his remarks, we believe that we will be leveraging these costs throughout the year and driving flow through to the bottom line. This week as we approach mid point of the year.
These are the things we're excited about because they.
They directly.
Spun too.
Customer needs for example, our Pennsylvania distribution Center operation.
Very high population density.
They can't buy commerce order flow and returns flow so by making this upfront investment we expect to get a lot of traction with retail supply chain clients operating in the northeast part of the United States.
Another example is our continued expansion of our sales and.
Let's say <unk>.
Demand generation activities with.
I value categories, such as construction vehicle fleets.
You know industrial assets. These.
These are assets that typically would be moved to yards and uploaded and sold over the.
The quarter sales cycles, we're allowing these clients to sell them in place.
And get great recovery values, and so we want to expand that business based on the traction that we're getting there.
Other areas include Kantar.
Continuing to you know.
Create mobile friendly experiences for our bidders and buyers. We've had you know significant adoption of our platform.
During the last year.
Year and a half as more people are looking online as their primary way of conducting commerce and.
We're all surplus platforms become more responsive.
So those mobile buyers and.
We're continuing to make make a lot of progress there.
Jorge anything you'd like to add.
Sure Gary.
One way to look at.
The numbers is the guidance that we gave for Q1.
If you pick two of the investments that we're making.
We're not expecting these investments to begin let's say.
Here in the first fiscal quarter.
October through December quarter, we don't expect those investments to.
Materially grow as the year progresses.
Theres going to be growth due to variable expense given our expected growth throughout the year, but.
This investment has gone up generally speaking stay pretty consistent sequentially throughout the year.
Which means you can kind of gauge what we're thinking about in terms of investments.
Given this quarter's guidance and then what we're saying is that youre going to just see hopefully the topline.
Growing throughout the year and leveraging.
The investments investments that we got started.
This quarter that we're in now.
Okay, I'll, let somebody else go.
As a reminder, if you have a question. Please press Star then one on your Touchtone phone.
Okay.
And we have Gerry on the line. Please go ahead.
Yeah, I guess I'll keep asking a couple of questions.
Can you maybe bill is it possible as you look on your results for fiscal 'twenty one.
Do you guys parse it out in terms of.
What was your organic growth versus adding new logos.
You know across across the company's business segments.
Yeah.
Well, so the retention of customers.
It's a.
Very strong part of our growth.
This year end.
I would think that.
If you're if you start to parse bye.
Categories.
That's been.
The principal driver for organic growth for fiscal 'twenty two.
Now when you deliver strong results it creates tension in those segments.
Our companies and we have continued to expand in all categories retail supply chain is a great example, omnichannel is the only place to be and that creates more product flows and complexity.
Or how how customers interact with both retailers and the store operations. So we've we've been be.
Best practice on.
On the channel companies to manage.
The returns flow and can extract the maximum value and that's attracted.
A lot of interest and so we've signed.
The number of new clients, there, but I'd say the majority of the growth has come from you know continuing to penetrate more locations more categories for existing customers.
The same.
That would be the case for our Gov deals business I think we've been very successful.
And alerting existing clients too.
How we can monetize even their highest value assets and we're getting.
More flow.
Call it the high value.
Vehicle construction industrial equipment, even specialty items like aircraft and.
You know things that they might have traditionally taken to a.
Physical sale.
That's very healthy for us machines.
Is a very strong organic growth story around customer retention and average revenue per user.
Lending north.
But again these are.
<unk> markets, where we're providing digital solutions and you know theres a secular.
Adoption of digital over analog so we're always going to have.
Resources deployed to continuing to acquire new customers.
I think the base and the foundation of our business is that we have attached our marketplaces to very large.
Uh huh.
Numbers of existing customers, who in their own right.
To grow so that's a that's a good place for us to be.
Have you or can you, possibly given the.
What you've done with the liquidity transformation.
And put the new technology platform in new markets et cetera value added services.
What kind of lift are you seeing in your returns on on GMT for your customers.
We have seen.
Uh huh.
10% to 30% improvement.
On an apples to apples basis.
Of.
Net recovery rates realized.
You know that has been.
Not not unsurprisingly.
As more buyers.
Have come into the marketplace, you know driving competitive execution of our sales programs.
Let's open the eyes of a lot of our of.
Customers then.
Health prospects become customers.
We've also reduced a lot of transportation costs, as we're able to sell assets in place versus having them move from point a to point b as part of the sales program.
So.
We are leaning into continuing to provide the best recovery you know the best buyer customer experience a lot of buyers.
Our shopping multiple categories with us they might have initially come in about ideas will matter looking at other equipment.
Ancillary.
The items that they can fold into their supply chain or their business model. So I think what what's great for US is that we have a one stop solution for sellers and buyers and if you look at the breadth of categories on.
All surplus I mean, that's really it.
A tremendous amount of value that a buyer can.
Capture from working with our marketplace and setting up their purchasing criteria and getting automatic alerts for what they're interested in.
So I think that's been great. The other thing I would say is.
But the global the global rebalancing.
<unk> change is something that's been a.
Catalysts for the growth of our industrial capital assets group business, that's a business that Gary grew over 60% organically in the last quarter. So we're solving supply chain issues for sellers and buyers who want to rebalance where these assets are maybe capture some value for legacy assets and read.
Deploying to new technologies everyone's read about you don't see changes happening in the.
The electrification of vehicles.
Potentially you know industrial trucks and other cargo asset categories, you've got major changes in aerospace happening globally.
And that ripples through the manufacturing supply chain, which is C.
The customer base for our capital assets group segment, and we're giving clients proactive solutions to.
Reset their capex programs recover value from from maybe.
Maybe assets and plant equipment, they don't feel they'll need in the next five to five to seven years and we can do this at all.
In line with with Great execution. So that's another area of growth for us.
Okay. Thank you and then Jorge.
I don't know if you guys made this public but what was the did you make public what the G M B a.
Bid for assets produced.
On a trailing 12 month basis, when you bought it.
No and.
And it's gonna be.
As we indicated in our remarks.
Yeah.
Put together reported with Gov deals for obvious reasons right, we're leveraging both the existing real estate activity.
And Gov deals.
And we're leveraging and reverse the bid process real estate business so as.
As we go forward. These things are going to converge so reporting them together, but for this particular.
Particular quarter coming up.
You mentioned that I don't know if it was when you dropped off that I mentioned.
That.
Still going into this first quarter Gov deals.
Is the majority of the growth there going on.
Sustain their growth trends year over year growth trends. So we're in good shape.
And the bid processes.
Incremental.
To that Hum.
Minority of the growth.
Okay and then.
And then lastly, what were you saying about.
Revenue to G. M D. It it it will continue to track down.
In fiscal 'twenty two.
Yeah, I've mentioned this before where I've tried it yet because we don't guide to revenue for obvious reasons because of our different right.
Pricing models, so, but as you look at our general trend.
In in mix of business Youre going to see.
Maybe revenue growing slightly lower than <unk> simply because of.
Of the mix of it.
Product and therefore the ratio.
Revenue for G M B will be slightly lower I mentioned in the.
High Twenty's right, 27% to 30% rate in general and I think at least as we go forward, it's gonna be trending towards the lower end of that range. I don't think it's a wholesale change that it's going to be below that range. So you know them.
My thinking is it's on the lower end of that range just for your modeling purposes, if you like.
You said revenue to G. M V is going to be what.
Lower than what.
The lower end of the range that I've always.
That I've always given where I mentioned that the ratio is 27% to 30% right we've talked about high twenties.
I'd rather be on the on the lower end of that.
Just because of okay.
And do you have the.
A breakdown of the G N V and consignment and the GMB and purchase for Q4.
Andy.
I don't have it right at my Fingertips, Gary I apologize it'll come we'll be posting that like today on our website, but it hasn't materially changed it filled.
Solid where it's been in the 85% or so I believe.
Okay. Thanks, a lot guys.
No problem. Thank you Gary.
Okay.
We have no further questions at this time, thank you ladies and gentlemen that concludes today's call. Thank you for participating you may now disconnect.
Okay.
[music].
[music].
[music].
Welcome to the liquidity services, Inc, fourth quarter and fiscal year 2021 financial results Conference call. My name is Jenny 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 a question and answer session.
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.
We'll be available for questions after their prepared remarks.
The following discussion and responses to your questions reflect liquidity services management's views as of today December nine 2021, and one called forward looking statements actual results may differ materially additional information about factors that could potentially impact the financial results is included in today.
<unk> press release and filings with the SEC.
Putting in the most recent annual report on Form 10-K.
As you listen to today's call. Please have the press release in front of you, which includes liquidity liquidity 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 service management also use certain supplemental operating data as a measure of certain components of operating performance, which they also believe is useful for management and investors. This up.
Onto operating data includes gross merchandise volume and should not be considered a substitute for or superior to GAAP results. At this time I will turn the presentation over to liquidity services C E O Bill angry.
Good morning, and welcome to our Q4 earnings call.
I'll review, our Q4 performance and provide an update on key strategic initiatives next Jorge Celaya will provide more details on the quarter.
We are grateful for our team's efforts to safely deliver outstanding results for our customers during the quarter.
Liquidity services recorded outstanding growth during fiscal year 2021.
Driven by strong demand from both new and existing customers for our E Commerce marketplace solutions, which continued to power the $100 billion circular economy.
Benefiting businesses Society.
And the environment.
During the fourth quarter, we enabled a growing number of large enterprises small businesses and government entities across the world to realize meaningful financial benefits.
And advance their sustainability programs.
Q4, GNP was up 24% year over year, representing our fifth consecutive quarter of 20% plus annual GNP growth.
Reflecting on our fiscal year 2021.
We are pleased with the consistent execution of our team.
In support of our mission.
Build a better future for surplus as we closed fiscal year 'twenty, one with $886 $7 million in G. M D.
Up 43% year over year and.
And delivered excellent growth across all our segments.
Resulting in strong profitability and cash flow generation.
For the full year fiscal 'twenty, one our transaction volume was up 27% year over year and the number of our auction participants was up 20% year over year, reflecting the strength of our global buyer base and convenience of our digital solutions.
During fiscal year 'twenty, one the power of our asset light business model was on display as we generated over $65 million of operating cash flow repurchased $31 million of our stock and ended the year with $106 million of cash and zero debt.
Our business is that the intersection.
Of several powerful market forces, which will benefit our business for years to come as we lead the digital transformation of the $100 billion circular economy.
These macro trends include.
The growth of online commerce, which drives more product returns.
The world's increasing focus on sustainability, which encourages the redeployment and sale of used assets.
And finally, the massive disruption.
In global supply chains, driven by product innovation.
And changes in cross border trading relationships, which requires strategies.
Zip.
Legacy assets.
Earlier this year.
We established an objective.
Of achieving $1 billion of annualized GMB.
I am pleased to report that.
We expect to achieve that run rate milestone and our current December quarter.
Given our progress.
We have established a new.
Near term objective.
Of scaling to one $5 billion in annualized JMP.
And accordingly, we are aggressively investing in our people.
Products and technology to achieve this new target.
While these growth investments will pressure our near term earnings.
We expect to realize strong year over year growth.
For the full year fiscal 'twenty, two and beyond.
Looking forward to fiscal year 'twenty, two we are making several strategic investments.
To expand and scale.
The solutions, we offer to large enterprises.
Small businesses and government agencies across the world.
And our Gov deals segment.
Our recent acquisition of bid for assets string.
Strengthens and expands our penetration of the $2 billion, plus government real estate market opportunity and doubles, besides liquidity services' overall public sector market opportunity.
Our new Northern Pennsylvania distribution Center <unk>.
Expands our footprint in the high density northeast corridor to accommodate the growing number of returns and unsold items generated from our clients.
And as a natural extension of our e-commerce marketplace and logistics infrastructure.
Finally.
The strong customer adoption of our all surplus marketplace and machining digital marketing and inventory management solutions within the construction vehicle fleet and industrial asset verticals.
Allows us to continue to invest in the expansion.
Of our sales and marketing capacity.
In these areas during fiscal year 'twenty two.
With a profitable.
Growing business, we continue to look for intelligent uses.
Of our cash.
Including organic growth initiatives to further penetrate large untapped opportunities in our existing markets.
Share repurchases.
And tuck in acquisitions.
In closing we thank our team members across liquidity services for their dedication to our mission.
As the leading global Commerce company provide.
Providing trusted marketplace platforms that power the circular economy.
And we are excited.
To create value for our customers and our shareholders.
I'll now turn it over to Jorge for more details on the quarter.
Okay.
Thank you Bill.
We have been very pleased with our results for the year, our growth and profitability.
In fiscal year 2021 we saw our business model gain.
Can gain operating leverage as we scale up with higher G. M D volumes across our business segments and marketplaces.
We closed the fiscal year, ending September 32021, with $886 $7 million in G M B up 43%.
Over the prior year growth that was diversified.
Across all our segments.
Resulting in increased profitability and strong cash generation.
Non-GAAP adjusted EBITDA.
Was $42 9 billion.
Cash from operations was $65 $4 million and we closed the year with $106 3 million in cash and a debt free balance sheet.
After completing $31 $1 billion in share repurchases during the year, including 15 billion in share buybacks during the fourth quarter.
We have received a new authorization to expand a repurchase of an additional $20 million and shares.
We completed the fourth quarter of fiscal year, 2021, with <unk> $244 4 million, a 24% year over year increase from $196 $9 million in the prior year's comparable period.
Revenue for the fourth quarter was $78 $3 million, a 26% increase compared to the same quarter last year, while net income for this fourth quarter was $32 $8 million, resulting in diluted earnings per share of 93.
Which included a $24 $6 million or <unk> 77 per share benefit from the release of our valuation allowance on U S deferred tax assets.
Non-GAAP adjusted EBITDA was $11 $4 million, a $2 4 million dollar improvement.
Specifically comparing these fourth quarter results to the same quarter last year.
Our Gov deals segment was up 20% on GSV and revenue.
Our retail <unk> segment was up 10% on G M B and up 16% on revenue.
And our CAG segment <unk> was up 60%.
And up 69% on revenue.
<unk> revenue was up 47%.
For the quarter registered buyers are now over $4 million with auction participation up 9% of the completed transaction up 44% over the same quarter last year.
We continue to focus on driving growth and diversifying.
Our service offerings and growing our client base, we are making investments targeting market opportunities across our segments.
And our Gov deal segments.
Our acquisition of bid for assets on November one.
Broadens, our government real estate auction solutions.
We also see potential long term opportunities to grow in categories, such as equipment from government sellers as infrastructure projects take hold across the U S.
In our retail segment, we launched all surplus deals a direct to consumer marketplace for retail surplus.
We opened a new distribution center to address customer demand in the northeast U S for our full service solutions.
In our CAG segment, we see growing demand for heavy equipment.
Chemicals, and industrial manufacturing equipment across the globe.
Leading to elevated recovery rates.
Our first quarter of fiscal year, 2022 guidance range for G. M. B is above the same period last year with anticipated increases in transaction volumes across our segments.
Sustained positive macroeconomic factors that are favorably influence recovery rates in key categories.
Even as we enter.
A traditionally seasonally low physical first quarter.
With the.
<unk> strength of our consignment model across our segments.
And there's a bid for assets and other government real estate grows as a category within the Gov deals segment.
We expect that revenue as a percent of G. M D.
We will move towards the low end of our typical revenue to <unk> ratio.
Our profit guidance for fiscal first quarter of 2022 is up two below the same period last year, reflecting increased costs related to growing the capacity of our sales marketing product development and technology teams incremental.
Investments in our technology platform and higher market, driven labor costs, all supporting future growth.
Operating leverage is expected to improve throughout fiscal year 2022, as we continue to grow G. M D.
We anticipate a year over year decline in gross profit margins in this first quarter of fiscal year 2022, due to some product flow mix changes this quarter in our retail segment.
Additionally, as a result of reversing our tax valuation allowance this past quarter.
Due to our strong return to profitability and forward looking trends.
Our effective tax rate is expected to increase starting this first quarter of fiscal year, 'twenty, two leading to approximately 18% to 20%.
From four 5% for 2021.
This one excluding the effect of the valuation allowance reversal itself.
This higher effective tax rate will have no corresponding increase in cash paid for income taxes for 2022, but will of course have negative year over year comparable impact to our 2022 net income and earnings per share.
Our fiscal first quarter guidance does include expected results from bidding for assets as part of our Gov deals segment.
Which contributes to a portion of the overall increase in <unk> relative to the same period last year.
We expect the existing Gov deals business G. M. B to continue to grow at a rate consistent with recent trends contributing this fiscal first quarter to the majority of the expected year over year growth for the golf deal segment a G N V.
We are planning for a convergence.
Existing Gov deals real estate activity and bid for assets to drive <unk> growth in the real estate category going forward and for the results of bid for assets to grow throughout 2022 and be accretive to our full year 2022 financial results. This excluding any potential <unk>.
<unk> from changes in the fair value of the earn out liability associated with the transaction that will be re measured at the end of.
Each quarter during 2022.
Management's guidance for the first quarter of fiscal year 'twenty. Two is as follows we expect <unk> to range from 230 millions of $260 million.
GAAP net income is expected in the range of 1 million to $4 million with a corresponding GAAP diluted earnings per share ranging from three to 11 cents.
For sure.
We estimate non-GAAP adjusted EBITDA to range from 6 million to $9 million.
Non-GAAP adjusted diluted earnings per share is estimated in the range of eight to 17 cents per share.
The GAAP and non-GAAP EPS.
EPS guidance assumes we have approximately $35 6 billion fully diluted weighted average shares outstanding during the first quarter of fiscal year 2022.
We will now take your questions.
Thank you we will now begin the question and answer session. If you have a question. Please press Star then one on your Touchtone phone if they wish to be removed from the queue. Please press the pound sign are the hash key.
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Once again, if you have a question. Please press Star then one on your Touchtone phone.
And we have a question from Gary <unk> from Barrington Research. Please go ahead.
Hey, good morning, Bill right.
Couple of questions here and I apologize I got bumped off the call. So maybe you already talked a little bit more about this but in terms of some of these investments that you're making next year or for this fiscal year.
Could you maybe kind of quantify.
What youre doing on the investment side and and how long is it will discontinue as you scale to $1 5 billion of G. M D and the reason I'm asking just as we went through this big ramp up in expenses with the liquidity one transformation.
Basically thought it was a lot of these increased expenses were behind us and now.
We're going through another.
Uh huh.
Segment of the company's growth with increased expenses for that growth.
Gary Bill. Thank you for your question.
We've had stair step growth cycles in the history of the company and each is typically.
Coupled with yeah.
You have some capacity that we'd like to.
Deploy in areas, such as technology and product development.
These are not to be equated with what we did for liquidity. One these are natural healthy expansion in the capacity of our.
Our sales and marketing and product development teams to meet customer demand and you know we do have to Frontload. These expenses, given where we think the market opportunity is and.
And I expect this to be a fiscal 'twenty two.
Uh huh.
Timeline and not sort of evergreen multi.
Multiyear.
Forklift upgrade and expenses dishes.
Consistent with our business plan.
Looked at the opportunity in each of our segments and we believe.
Our $1 5 billion dollar G M be perceived goal is as is very reasonable.
And consistent with growth in our current markets.
You know the adjacent online real estate opportunity.
And so this will be a fiscal 'twenty two.
Expansion effort.
It will be accompanied with a corresponding GMP growth and as Jorge mentioned in his remarks, we believe that we'll be leveraging these costs throughout the year and driving flow through to the bottom line. This week as we approach mid point of the year.
These are the things we're excited about because they directly respond to.
Customer needs for example, our Pennsylvania distribution Center operation.
That's very high population density.
With this I can't buy commerce order flow and and returns flow. So by making this upfront investment we expect to get a lot of traction with retail supply chain clients operating in the northeast part of the United States.
Examples of our continued expansion of our sales and.
Let's say.
Demand generation activities with high value categories, such as construction vehicle fleets.
<unk>.
You know industrial assets. These are assets that typically would be moved to yards and uploaded and sold over the.
Quarter sales cycles, we're allowing these clients to sell them in place.
And get great recovery values, and so we want to expand that business based on the traction that we're getting there.
Other areas include continuing.
Continuing to you know.
Create mobile friendly experiences for our bidders and buyers. We've had you know significant adoption of our platform.
You know during the last year.
Year and a half as more people are looking online as their primary way of conducting commerce and you know are all surplus platforms become more responsive.
So those mobile buyers and.
To make make a lot of progress there.
Jorge anything you'd like that.
Sure Gary and then.
One way to look at.
The numbers is the guidance that we gave for Q1.
If you pick the of the investments that we're making.
We're not expecting these investments to begin let's say.
During the first fiscal quarter.
October through December quarter, we don't expect those investments to.
Materially grow as the year progresses.
There's going to be growth due to variable expense given our expected growth throughout the year, but.
This investment is going on generally speaking stay pretty consistent sequentially throughout the year.
Which means you can kind of gauge what we're thinking about in terms of investments given.
Given this quarter's guidance and then what we're saying is that youre going to just see hopefully the top line.
Growing throughout the year and leveraging.
The investments investments that we got started.
This quarter that we're in now.
Okay, I'll, let somebody else go.
As a reminder, if you have a question. Please press Star then one on your Touchtone phone.
Okay.
Yeah, we have Gerry on the line. Please go ahead.
Yeah, I guess I'll keep asking a couple of questions.
Can you maybe bill is it possible as you look on your results for fiscal 'twenty one is.
Do you guys parse it out in terms of.
What was your organic growth versus adding new logos.
You know across across the company's business segments.
Yeah.
Well, so the retention of customers.
Eh.
Very strong part of our growth.
Here and I would think that.
If you're if you start to parse but.
Categories.
That's been.
The principal driver for organic growth for fiscal 'twenty two.
Now when you deliver strong results you know it creates tension in those segments from your peer companies in.
We have continued to expand in all categories retail supply chain is a great example, omnichannel is the only place to be and that creates more product flows and complexity.
Sure.
How customers interact with both retailers and in store operations. So we've we've been be.
Best practice for Omnichannel companies to manage.
The returns flow and extract the maximum value and thats attracted.
A lot of interest and so we've signed you know a healthy number of new clients, there, but I'd say the majority of the growth has come from you know continuing to penetrate more locations more categories for existing customers.
You know the same.
Would be the case for our Gov deals business I think we've been very successful.
And alerting existing clients to.
How we can monetize even their highest value assets and we're getting.
You know more flow.
Call. It you know the.
High value.
Vehicle construction industrial equipment, you know, even specialty items like aircraft and.
You know things that they might have traditionally taken to a physical sale.
So that's very healthy for us machining is.
Is a very strong organic growth story around customer retention and average revenue per user trending north.
But again these are.
Vast markets, where we're providing digital solutions and you know that.
As a secular.
Adoption of digital over analog so you know we're always going to have.
Resources deployed to continuing to acquire new customers, but I think the base and the foundation of our business is that we have attached our marketplaces to very large.
Uh huh.
Numbers of existing customers, who in their own right continue to grow so that's a that's a good place for us to be.
Have you or can you, possibly given the.
What you've done with the liquidity transformation.
And you know put the new technology platform in new markets et cetera value added services.
What kind of lift are you seeing in your returns on on G. M D for your customers.
We have seen.
Uh huh.
10% to 30% improvement.
On an apples to apples basis.
Of.
Net recovery rates realized.
You know that has been.
Not not unsurprising as more buyers.
Have come into the marketplace driving competitive execution of our sales programs.
And it's opened the eyes of a lot of our.
Of our customers.
Help prospects become customers.
We've also reduced a lot of transportation costs, as we're able to sell assets in place versus having them move from point a to point b as part of the sales program.
So.
We are leaning in to continuing to provide the best recovery you know the best buyer customer experience a lot of buyers are are shopping multiple categories with us they might have initially come in about a vehicle now they're looking at other equipment.
Ancillary.
The items that they can fold into their supply chain or their business model. So I think what what's great for US is that we have a one stop solution for sellers and buyers and if you look at the breadth of categories and all surplus I mean, that's really it.
A tremendous amount of value that a buyer can capture.
Capture from you know working with our marketplace and setting up their purchasing criteria and getting automatic alerts for what they're interested in.
So I think that's been great. The other thing I would say is.
But the global the global rebalancing of supply change is something that's been a.
Catalysts for the growth of our industrial capital assets group business. That's that that's a business that Gary grew over 60% organically in the last quarter. So we're solving supply chain issues for sellers and buyers who want to rebalance where these assets are maybe capture some value for legacy assets and read.
Deploying to new technologies everyone's read about you don't see changes happening in the.
The electrification of vehicles and potentially you know industrial trucks and other cargo asset categories, you've got major changes in aerospace.
<unk> globally and that ripples through the manufacturing supply chain, which is the the customer base for our capital assets group segment, and we're giving clients proactive solutions to reset.
A reset their capex programs recover value from trim.
Maybe assets and plant equipment, they don't feel they'll need in the next five to five to seven years and we can do this at all.
You know online with with great execution. So that's another area of growth for us.
Okay. Thank you and then Jorge.
I don't know if you guys made this public but what was the did you make public what the G M B.
That bid for assets are produced.
On a trailing 12 month basis, when you bought it.
No and <unk>.
And it's gonna be you know as we indicated in our remarks.
Put together.
And reported with Gov deals for obvious reasons right, we're leveraging both the existing real estate activities.
Gov deals.
And we're leveraging and reverse the bid process real estate business so as.
As we go forward these things are going to converge.
So reporting them together, but for this particular.
Particular quarter coming up.
You mentioned that I don't know if it was when you dropped off that I mentioned.
That.
Still going into this first quarter Gov deals.
Is the majority of the growth there going on.
Sustain their growth trends year over year growth trends.
We're in good shape and the bid processes.
Incremental.
To that Hum.
The minority of the growth rate.
Okay, and then lap.
And then lastly, what were you saying about.
Revenue to G M D.
It will continue to track down.
In the in our fiscal 'twenty two.
I've mentioned this before where I've tried it yet because we don't guide the revenue for obvious reasons because of our different right different pricing models.
So, but as you look at our general trend.
In in mix of business Youre going to see.
Maybe revenue growing slightly lower than GMP simply because of.
Of the mix of.
Product and therefore the ratio.
Robin it's a G M b will be slightly lower I mentioned in the high.
High Twenty's right, 27% to 30% rate in general and I think at least as we go forward, it's going to be trending towards the lower end of that range. I don't think it's a wholesale change that it's going to be below that range. So.
My thinking is it's on the lower end of that range just for your modeling purposes, if you like.
Women, you said revenue to G. M V is going to be what.
Lower than what I had.
The lower end of the range that I've always.
That I've always given where I mentioned that the ratio is 27% to 30% right we've talked about high twenties.
I'd rather be on the on the lower end of that.
Just because of okay.
And do you have the.
A breakdown of the G N V and consignment and the G M D and purchase for Q4.
Andy.
Yeah.
I don't have it right at my Fingertips, Gary I apologize it'll come we'll be posting that like today on our website, but it hasn't materially changed it filled.
Solid where it's been in the 85% or so I believe.
Okay. Thanks, a lot guys.
No problem. Thank you Gary.
Okay.
We have no further questions at this time, thank you ladies and gentlemen that concludes today's call. Thank you for participating you may now disconnect.