Liquidity Services Inc 8-K, filed Jan 20, 2023
Liquidity Services Inc (LQDT)
About this 8-K
Liquidity Services Inc filed this 8-K on January 20, 2023, reporting on events of January 18, 2023.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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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:
Securities registered pursuant to Section 12(b) of the Act:
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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. ☐
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Entry into Amended and Restated Executive Employment Agreements
On January 18, 2023, Liquidity Services, Inc. (the “Company”) entered into an Amended and Restated Executive Employment Agreement (each, an “Employment Agreement”) with each of the following executive officers of the Company: William P. Angrick, III, Chairman and Chief Executive Officer; Jorge A. Celaya, Executive Vice President and Chief Financial Officer; John P. Daunt, Executive Vice President and Chief Commercial Officer; Novelette Murray, Chief Human Resources Officer; Mark A. Shaffer, Chief Legal Officer and Corporate Secretary; and Steven J. Weiskircher, SVP and Chief Technology Officer. The new Employment Agreements were the result of a periodic review by the Compensation Committee of the Company’s executive employment and severance practices and benchmarking of those practices against market and peer practices to ensure competitiveness of the Company in attracting and retaining executive talent. Further, the changes ensure that the Company’s employment and severance arrangements with its similarly situated executives are consistent, which had not been the case under the Company’s prior arrangements with its executive officers. The Employment Agreement amends and restates, and replaces and supersedes, the prior employment agreements between the Company and each of the foregoing executive officers in all respects, each of which was attached as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022 filed with the Securities and Exchange Commission on December 8, 2022.
Each Employment Agreement provides that the executive’s employment will continue until terminated by either party pursuant to the terms of the Employment Agreement. The Employment Agreement also provides for an annual base salary for the executive ($435,000 for Mr. Angrick, $404,175 for Mr. Celaya, $383,959 for Mr. Daunt, $379,990 for Mr. Weiskircher, $354,768 for Mr. Shaffer and $320,643 for Ms. Murray), which was approved by the Compensation Committee and which amounts may be increased but not decreased without the executive’s consent. The Employment Agreement also provides for an annual incentive bonus with a target of 50% (for Mr. Weiskircher, Mr. Shaffer and Ms. Murray), 80% (for Mr. Celaya and Mr. Daunt) or 150% (for Mr. Angrick) based upon the achievement of certain targets, deliverables or goals as set by our Chairman and Chief Executive Officer and approved by the Compensation Committee. In addition, each executive is eligible to receive an annual equity award as determined by the Compensation Committee.
If the executive’s employment is terminated due to the executive’s death, the executive’s estate will receive the executive’s base salary through the next full calendar month and all other accrued but unpaid amounts owed to the executive through his, her or their date of death. If the executive’s employment is terminated due to disability, the executive is entitled to an amount equal to 25% of the executive’s base salary for the fiscal year in which the termination takes place. The Employment Agreement further provides that if the executive’s employment with the Company is terminated by the Company other than for “cause,” (as defined in the Employment Agreement) disability or death, or the executive resigns for “good reason” (as defined in the Employment Agreement), the executive will be eligible to receive: (1) the executive’s base salary and all other accrued but unpaid amounts owed to the executive through the date of termination, (2) a lump-sum severance package equal to 12 months of the executive’s base salary, plus the amount of the executive’s annual target bonus opportunity for the fiscal year in which the termination occurs, and (3) a lump sum payment reflecting 12 months of the total premium required to maintain coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), less 12 months of the executive’s monthly premium contribution in effect immediately prior to termination. The term “good reason” has the same meaning across all Executive Agreements except that, in the case of Mr. Celaya, “good reason” also includes a change in his reporting line to someone other than the Company’s Chief Executive Officer, consistent with his prior employment agreement with the Company.
The foregoing description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1.
Entry into Change in Control Agreements
On January 13, 2023, the Company also entered into a Change in Control Agreement (each, a “CIC Agreement”) with each of Mr. Angrick, Mr. Celaya, Mr. Daunt, Mr. Weiskircher, Mr. Shaffer and Ms. Murray. The new CIC Agreements were also the result of the Compensation Committee’s periodic review of executive severance practices as described above, and standardized approach of the CIC Agreements ensures that the Company’s arrangements with its similarly situated executives upon a change in control are generally consistent, which consistency had not been the case prior to the changes.
The CIC Agreement entities each executive to receive certain benefits upon a change in control. For purposes of the CIC Agreement, the definition of a "change in control" is consistent with the exisiting definitions of "Corporate Transaction" as defined in the Company's Third Amended and Restated Long-Term Incentive Plan, as amended (the "Plan"), which Plan has been previously approved by shareholders of the Company. Specifically, a "change in control" means (1) the dissolution or liqudation of the surviving entity, (2) the sale of substanially all of the assets of the Company, or (3) any transaction which results in any person or entity (other than persons who are stockholders or affiliates of the Company immediately prior to the transaction) owning 50% or more of the combined voting power of all the classes of stock of the Company. The term "good reason" also has the meaning provided in the Equity Plan.
In order to receive the enhanced severance benefits provided under the CIC Agreement, the Company must experience a change in control and the executive must subsequently be terminated by the Company without “cause” or resign for “good reason” within twelve months of the change in control. This is known as a “double trigger” change in control arrangement and is consistent with the Plan and the Company’s prior executive employment agreements that contained a change in control provision. If the executive’s employment is terminated by the Company without cause or the executive resigns for good reason within one year following the change in control, the executive will be eligible to receive: (1) a lump sum payment equal to 1.5 times (or in the case of the CEO, 2 times) the sum of (a) the executive’s base salary and (b) the executive’s target bonus for the fiscal year in which the change in control took place; (2) a lump sum payment equal to the executive’s annual target bonus opportunity for the fiscal year in which the change in control took place, prorated based on the number of months worked; and (3) a lump sum payment reflecting 12 months of the total premium required to maintain coverage under COBRA, less 12 months of the executive’s monthly premium contribution in effect immediately prior to termination.
The foregoing description of the CIC Agreement is qualified in its entirety by reference to the full text of the CIC Agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.2.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit No. |
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Description |
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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.
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LIQUIDITY SERVICES, INC. |
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(Registrant) |
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Date: January 20, 2023 |
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/s/ Mark A. Shaffer |
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Name: |
Mark A. Shaffer |
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Title: |
Chief Legal Officer and |
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AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the date of signature of the last party to sign (the “Effective Date”), by and between Liquidity Services, Inc., a Delaware corporation (the “Company”), and _____________ (the “Executive”). Terms used herein with initial capitalization are defined in Section 11 (Definitions) below.
WHEREAS, the Executive is already employed by the Company and the Company wishes to continue to employ the Executive;
WHEREAS, the Executive is a key employee who is expected to continue to make major contributions to the profitability, growth and financial strength of the Company and its subsidiaries and affiliates; and
WHEREAS, the Executive is willing to render services on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and conditions herein, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:
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“Affiliate” means as to a specified Person any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person.
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“Accrued Benefits” shall mean the sum of the following:
“Agreement” means this Amended and Restated Executive Employment Agreement.
“Base Salary” is defined in Section 5(a) above.
“Beneficial Owner” means a beneficial owner within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
“Cause” means the Executive shall have:
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“Confidentiality & Non-Compete Agreement” means that certain Employee Agreement Regarding Confidentiality, Intellectual Property, and Competitive Activities, dated as of the date hereof, by and between the Executive and the Company.
“Company” means Liquidity Services, Inc. and its successors and assigns.
“Date of Termination” means (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated because of the Executive’s Disability, 30 days after Notice of Termination; or (iii) if the Executive’s employment is otherwise terminated by the Company or by the Executive, the date specified in the Notice of Termination.
“Disability” means the Executive’s inability to perform all of the Executive’s duties hereunder by reason of illness, physical or mental disability or other similar incapacity, as determined by a competent medical doctor appointed by the Board after a complete and thorough medical examination and evaluation, which inability shall continue for more than three consecutive months or for such shorter periods that when aggregated exceed six (6) months in any twelve (12) month period.
“Effective Date” means the date as of which this Agreement is executed as set out above.
“Employment Period” is defined in Section 2 above.
“Good Reason” means:
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provided that Executive is not entitled to assert that her, his or their termination is for Good Reason unless the Executive gives the Company written notice of the event or events that are the basis for such claim within ninety (90) days after the event or events occur, describing such claim in reasonably sufficient detail to allow the Company to address the event or events and a period of not less than thirty (30) days after to cure the alleged condition, the Company fails to cure such event or events within 30 days of such written notice, and Executive must actually terminate Executive’s employment within 90 days of the initial existence of such event or events.
“Indemnification Agreement” dated as of the date hereof by and between the Executive and the Company.
“Notice of Termination” is defined in Section 7.2 above.
“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the day and year first hereinabove written.
LIQUIDITY SERVICES, INC.
By:
Name:
Title:
Date:
EXECUTIVE
Date:
Signature Page to Amended and Restated Executive Employment Agreement |
SCHEDULE 1 TO AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
CERTAIN TERMS OF EMPLOYMENT
All capitalized but undefined terms in this Schedule shall have the meaning ascribed to them in the Agreement.
Name:
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Base Salary:
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Target Cash Incentive Opportunity as a Percentage of Base Salary:
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SCHEDULE 2 TO AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
FORM OF RELEASE AGREEMENT
This release (the “Release”) is entered into by Liquidity Services, Inc. (the “Company”) and _____________ (“Executive”) pursuant to the Amended and Restated Executive Employment Agreement by and between the Company and Executive, effective as of ___________ (the “Employment Agreement”). This is the Release referenced in Section 8(f) of the Employment Agreement. Capitalized terms used herein but not defined herein shall have the meaning ascribed to such terms in the Employment Agreement.
In exchange for and as a condition of receiving the payments and benefits set forth in Section 8 of the Employment Agreement, the parties agree as follows:
Executive hereby represents and warrants that (s)he has not filed or reported any claims or complaints in any forum and that (s)he has not assigned to any third party or filed with any agency or court any claim released by this Section, except for any claims, reports or information filed with or provided to the Securities and Exchange Commission (the “SEC”) or other government agency or court confidentially pursuant to Section 21F of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Executive is not waiving any claim for workers’ compensation, although Executive acknowledges (s)he has not sustained a work-related injury or illness and has no intent to file a claim against the Company as a result of any work-related injury or illness sustained in the course of her, his or their employment with the Company. Nothing in this Release prohibits Executive from filing a charge with the Equal Employment Opportunity Commission, National Labor Relations Board or a comparable state or local administrative agency related to Executive’s employment or separation of employment. Executive does forever waive Executive’s right to recover or receive any monetary damages, attorneys’ fees, back pay, reinstatement or injunctive relief from the Released Parties relating to any matter whatsoever up to the date of this Agreement. However, nothing in this Release (i) prohibits, limits or restricts, or shall be construed to prohibit, limit or restrict, Executive from exercising any legally protected whistleblower rights (including pursuant to Section 21F of the Exchange Act and the rules and regulations thereunder), without notice to or consent from the Company, or (ii) to the extent required by law, prohibits or shall be construed to prohibit Executive from receiving a reward from the SEC or other applicable government agency pursuant to Section 21F of the Exchange Act or other applicable whistleblower or other law or regulation in connection therewith.
1542. GENERAL RELEASE - CLAIMS EXTINGUISHED.
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HER, HIS OR THEIR SETTLEMENT WITH THE DEBTOR.
Executive agrees that this waiver is an essential and material term of this Release, without which this document would not have been executed. For all purposes of this Release, the term “creditor” as used and referred to in Section 1542 of the California Civil Code means and includes Executive
(a) The Company hereby advises Executive and Executive acknowledges that Executive has been so advised, to consult with an attorney before executing this Release.
(b) Executive acknowledges that, before entering into this Release, Executive had twenty-one (21) calendar days after receipt of this Release (the “Consideration Period”) to consider this Release before signing it. Executive and the Company agree that no changes to this Release will re-start the Consideration Period. If Executive signs this Release, the date on which (s)he signs the Release shall be the “Execution Date.” In the event Executive executes and returns this Release prior to the end of the Consideration Period, (s)he acknowledges that Executive’s decision to do so was voluntary and that (s)he had the opportunity to consider this Release for the entire Consideration Period. If Executive works from West Virginia, Executive acknowledges receipt of the toll-free West Virginia State Bar Association phone number 1-866-989-8227.
(c) The Parties agree that this Release will not become effective until seven (7) calendar days (or, if Executive works from the State of Minnesota fifteen (15) calendar days) after the Execution Date and that Executive may, within seven (7) calendar days (or, if Executive works from the State of Minnesota fifteen (15) calendar days) after the Execution Date, revoke the Release in its entirety by providing written notice to the Company’s Chief Human Resources Officer. If written notice of revocation is not received by the Company by the 8th day (or, if Executive works from the State of Minnesota by the sixteenth (16) calendar day) after the execution of this Release, this Release will become effective and enforceable on that day (the “Effective Date”).
[Signature Page Follows]
Executive represents and agrees that he has fully read and understands the meaning of this Release and is voluntarily entering into this Release with the intention of giving up all claims against the Released Parties.
EXECUTIVE LIQUIDITY SERVICES, INC.
By:
Name:
Title:
Date: Date:
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (“Agreement”), dated as of the date of signature of the last party to sign, by and between Liquidity Services, Inc., a Delaware corporation (the “Company”), and _______________ (the “Employee”).
WHEREAS, the Company wishes to employ the Employee or, if the Employee is already employed by the Company, the Company wishes to continue to employ the Employee;
WHEREAS, the Company desires to set forth the general terms of the Employee’s employment with the Company in connection with a Change in Control (as defined below);
WHEREAS, the Company and the Employee entered into the following agreements: the Amended and Restated Executive Employment Agreement, dated as of the date hereof (the “Employment Agreement”), the Indemnification Agreement, dated as of the date hereof (the “Indemnification Agreement”), and the Employee Agreement Regarding Confidentiality, Intellectual Property and Competitive Activities, dated as of the date hereof (the “Confidentiality & Non-Compete Agreement”);
WHEREAS, the Employee is a key employee who is expected to make, or continue to make, major contributions to the profitability, growth and financial strength of the Company and its Subsidiaries (as that term is hereafter defined);
WHEREAS, the Company recognizes that, as is the case for most publicly held companies, the possibility of a Change in Control (as that term is hereafter defined) exists;
WHEREAS, the Company desires to assure itself and its Subsidiaries of both present and future continuity of management in the event of a Change in Control and desires to establish certain minimum compensation rights for key employees, including the Employee, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that key employees are not practically disabled from discharging their duties upon a Change in Control; and
WHEREAS, the Employee is willing to render services on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and conditions herein, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:
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The payments to be made under this Section 6(a) shall be payable and shall start being provided within sixty (60) calendar days following the Date of Termination, provided all conditions to payment have been satisfied. If such sixty (60) day period begins in one calendar year and ends in the following calendar year, the Employee shall not have the right to designate the calendar year of payment of any lump sum amount.
In addition to the above payments, all outstanding shares of Restricted Stock shall be deemed to have vested, all Stock Units shall be deemed to have vested and the shares of Stock underlying such Stock Units shall be delivered to Employee, and all Options and SARs outstanding shall become immediately exercisable and shall remain exercisable until the earlier of one (1) year following such termination or the expiration date of such Option or SAR. The terms Restricted Stock, Stock Units, Stock, Options and SARs shall have the meanings provided for them in the Equity Plan.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first above written.
EMPLOYEE LIQUIDITY SERVICES, INC.
By:
Name:
Title:
Date: Date:
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EXHIBIT A TO CHANGE IN CONTROL AGREEMENT
FORM OF RELEASE AGREEMENT
This release (the “Release”) is entered into by Liquidity Services, Inc. (the “Company”) and _______ (“Employee”) pursuant to the Change in Control Agreement between the Company and Employee, effective as of _______________ (the “CIC Agreement”). This is the Release referenced in Section 6(b) of the CIC Agreement.
In exchange for and as a condition of receiving the payments and benefits set forth in Section 6(a) of the CIC Agreement, the parties agree as follows:
1. Release and Covenant Not To Sue. Employee, on behalf of Employee’s self and Employee’s heirs, administrators, executors, and assigns, forever releases the Company and its subsidiaries and each of the Company’s and its subsidiaries’ successors, assigns, predecessors, affiliates, divisions, directors, officers, shareholders, employees, representatives, agents, counsel, and insurers, and any persons acting with them (collectively “Released Parties”) from, and covenants not to bring suit or otherwise institute legal proceedings against any of them arising in whole or in part from, all claims that Employee now has or may have or that Employee may hereafter have of any nature whatsoever, that arose out of or are related to any matter occurring prior to the Effective Date (as defined below), be they common law or statutory, legal or equitable, in contract or tort, including but not limited to: (a) all claims arising out of or in any way relating to Employee’s employment with or separation of employment from the Company or its affiliates; (b) all claims for compensation or benefits, including salary, commissions, bonuses, vacation pay, expense reimbursements, severance pay, fringe benefits, stock options, restricted stock units or any other ownership interests in the Company or its affiliates, including, without limitation, any claims arising under any employment agreement between the Company and Employee or the CIC Agreement; (c) all claims for breach of under any employment agreement between the Company and Employee or the CIC Agreement or other breach of contract, wrongful termination, breach of the implied covenant of good faith and fair dealing or breach of any policy, plan or practice; (d) all tort claims, including claims for fraud, defamation, invasion of privacy and emotional distress; (e) all other common law claims; and (f) all claims (including claims for discrimination, harassment, retaliation, attorney’s fees, expenses or otherwise) that were or could have been asserted by Employee or on Employee’s behalf in any federal, state, or local court, commission, or agency, or under any federal, state, local, employment, services or other law, regulation, ordinance, constitutional provision, executive order or other source of law, including without limitation under any of the following laws, as amended from time to time: (i) the Age Discrimination in Employment Act of 1967, as amended; (ii) Title VII of the Civil Rights Act of 1964, as amended; (iii) the Civil Rights Act of 1991, as amended; (iv) Sections 1981 through 1988 of Title 42 of the United States Code, as amended; (v) the Employee Retirement Income Security Act of 1974, as amended; (vi) the Immigration Reform Control Act, as amended; (vii) the Americans with Disabilities Act of 1990, as amended; (viii) the National Labor Relations Act, as amended; (ix) the Occupational Safety and Health Act, as amended; (x) the Fair Labor Standards Act; (xi) New York Human Rights Law; (xii) the West Virginia Human Rights Act; (xiii) Massachusetts Wage Act; (xiv) S.D. Codified Laws § 20-7-11; (xv) N.D. Cent. Code § 9-13-02; (xvi) any state or federal, state or local anti-discrimination law, (xvii) any state or federal, state or local wage and hour, overage or payment law; (xviii) any other local, state or federal law,
regulation or ordinance in the United States of America and in any jurisdiction anywhere in the world; (xix) any public policy, contract, tort, or common law claim; (g) any allegation for costs, fees, or other expenses including attorneys’ fees incurred in the matters referenced herein; and (h) any and all claims the Employee may have arising as the result of any alleged breach of contract, compensation, incentive, bonus or commission plan or agreement with any Released Party (collectively, the “Released Claims”). This Release does not waive any claims in respect of (A) rights to indemnification and to be held harmless and be defended by the Company pursuant to its charter and bylaws and/or any indemnification agreement between Executive and any of the Released Parties, to the extent that Employee is entitled thereto, (B) directors or officers insurance rights to which Employee, to the extent that Employee is entitled thereto, (C) rights that Executive has in his capacity as a securityholder of any of the Released Parties, (D) rights under this Release, to the extent that Executive is entitled thereto, (E) rights under this CIC Agreement, including rights under Section 6(a) of the CIC Agreement for which this Release is required, to the extent that Executive is entitled thereto, (H) rights to any vested benefits under any long-term equity incentive compensation plan, annual incentive plan or other employee plan or benefit or arrangement of, or sponsored by, any of the Released Parties, or (I) rights that cannot be waived by law.
Employee hereby represents and warrants that (s)he has not filed or reported any claims or complaints in any forum and that (s)he has not assigned to any third party or filed with any agency or court any claim released by this Section, except for any claims, reports or information filed with or provided to the Securities and Exchange Commission (the “SEC”) or other government agency or court confidentially pursuant to Section 21F of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Employee is not waiving any claim for workers’ compensation, although Employee acknowledges (s)he has not sustained a work-related injury or illness and has no intent to file a claim against the Company as a result of any work-related injury or illness sustained in the course of her, his, or their employment with the Company. Nothing in this Release prohibits Employee from filing a charge with the Equal Employment Opportunity Commission, National Labor Relations Board or a comparable state or local administrative agency related to Employee’s employment or separation of employment. Employee does forever waive Employee’s right to recover or receive any monetary damages, attorneys’ fees, back pay, reinstatement or injunctive relief from the Released Parties relating to any matter whatsoever up to the date of this Agreement. However, nothing in this Release (i) prohibits, limits or restricts, or shall be construed to prohibit, limit or restrict, Employee from exercising any legally protected whistleblower rights (including pursuant to Section 21F of the Exchange Act and the rules and regulations thereunder), without notice to or consent from the Company, or (ii) to the extent required by law, prohibits or shall be construed to prohibit Employee from receiving a reward from the SEC or other applicable government agency pursuant to Section 21F of the Exchange Act or other applicable whistleblower or other law or regulation in connection therewith.
Wavier of Unknown Claims. If and to the extent Employee is a resident of California or California law may apply to this Agreement, Employee understands and expressly agrees that this Agreement extends to all claims of every nature and kind whatsoever, known and unknown, suspected or unsuspected, past or present, which the Employee has or may have against the
Released Parties, and the Employee hereby knowingly waives any and all rights and protections under Section 1542 of the California Civil Code, which states:
1542. GENERAL RELEASE - CLAIMS EXTINGUISHED.
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HER, HIS OR THEIR SETTLEMENT WITH THE DEBTOR.
Employee agrees that this waiver is an essential and material term of this Release, without which this document would not have been executed. For all purposes of this Release, the term “creditor” as used and referred to in Section 1542 of the California Civil Code means and includes Employee
2. Consideration of Agreement by Employee.
(a) The Company hereby advises Employee and Employee acknowledges that Employee has been so advised, to consult with an attorney before executing this Release.
(b) Employee acknowledges that, before entering into this Release, Employee had twenty-one (21) calendar days after receipt of this Release (the “Consideration Period”) to consider this Release before signing it. Employee and the Company agree that no changes to this Release will re-start the Consideration Period. If Employee signs this Release, the date on which (s)he signs the Release shall be the “Execution Date.” In the event Employee executes and returns this Release prior to the end of the Consideration Period, (s)he acknowledges that Employee’s decision to do so was voluntary and that (s)he had the opportunity to consider this Release for the entire Consideration Period. If Employee works from West Virginia, Employee acknowledges receipt of the toll-free West Virginia State Bar Association phone number 1-866-989-8227.
(c) The Parties agree that this Release will not become effective until seven (7) calendar days (or, if Employee works from the State of Minnesota fifteen (15) calendar days) after the Execution Date and that Employee may, within seven (7) calendar days (or, if Employee works from the State of Minnesota fifteen (15) calendar days) after the Execution Date, revoke the Release in its entirety by providing written notice to the Chief Executive Officer at the Company. If written notice of revocation is not received by the Company by the 8th day (or, if Employee works from the State of Minnesota by the sixteenth (16) calendar day) after the execution of this Release, this Release will become effective and enforceable on that day (the “Effective Date”).
[Signature Page Follows]
Employee represents and agrees that he has fully read and understands the meaning of this Release and is voluntarily entering into this Release with the intention of giving up all claims against the Released Parties.
EMPLOYEE LIQUIDITY SERVICES, INC.
By:
Name:
Title:
Date: Date:
Exhibit 99.1
LIQUIDITY SERVICES ANNOUNCES FOURTH QUARTER FISCAL YEAR 2022 FINANCIAL RESULTS
Bethesda, MD - December 8, 2022 - 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 September 30, 2022 as compared to the applicable prior year periods:
“We delivered strong EPS and Non-GAAP Adjusted EBITDA results during the quarter, reflecting our efficient business model and diversified client portfolio, despite macro challenges which limited the supply of vehicles in our marketplace. For our full fiscal year 2022, we generated a record number of auction participants and completed transactions on our platform, showcasing the strength of our buyer liquidity in a recessionary environment. In addition, our team continued to advance our strategic and operational objectives, including record customer additions and asset sales activity in our GovDeals segment, growth and diversification of our Retail segment, continued global expansion of our CAG and Machinio segments, expansion of our new real estate vertical, and continued improvement in our data driven sales and marketing capabilities. For the full fiscal year 2022, our progress generated a record $1.1 billion of GMV, up 29% over last year, GAAP Net Income of $40.3 million1, and $42.7 million of Non-GAAP Adjusted EBITDA; and we also grew our registered buyer base to a record 4.9 million reflecting strong interest in our circular economy platform during this inflationary environment.
"As we commence fiscal year 2023, we remain focused on expanding our position with commercial and government clients as the most trusted marketplace to manage, value and sell surplus assets in the circular economy. Despite near term headwinds which have limited supply in high value categories such as vehicles, we have a strong pipeline and continue to see opportunities to reach $1.5 billion in annualized GMV and expand our technology-enabled, asset-light services to drive long-term shareholder value,” said Bill Angrick, Liquidity Services CEO.
Fiscal Fourth Quarter Business Highlights
Fiscal Fourth Quarter Financial Highlights
GMV for the fiscal fourth quarter of 2022 was $283.3 million, a 16% increase from $244.4 million in the fiscal fourth quarter of 2021.
Revenue for the fiscal fourth quarter of 2022 was $75.2 million, a 7% increase from $70.3 million in the fiscal fourth quarter of 2021.
GAAP Net Income was $8.3 million1, or $0.25 per share1, for the fiscal fourth quarter of 2022, a decrease from $32.8 million2, or $0.932 per share, for the same quarter last year which included non-cash benefits to net income.
Non-GAAP Adjusted Net Income for the fiscal fourth quarter of 2022 was $6.4 million, or $0.19 per share, a decrease from $9.5 million, or $0.27 per share last year, primarily driven by the increase in our effective tax rate following the release of our valuation allowance on U.S. deferred tax assets in Q4-FY21, reflective of our improved profitability.
Non-GAAP Adjusted EBITDA for the fiscal fourth quarter of 2022 was $12.3 million, a $0.9 million increase from $11.4 million in the fiscal fourth quarter of 2021, primarily due to increased revenues and reduced variable compensation expenses, partially offset by increased operations, sales, and technology expenses to support longer-term growth.
On December 6, 2022, the Company's Board of Directors authorized a new share repurchase program of up to $8.4 million of the Company’s common stock, to expire on December 31, 2024. This authorization is in addition to the $6.6 million remaining under the May 13, 2022 authorization to repurchase up to $12.0 million shares through June 30, 2024. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and the existence of alternative investment opportunities. The repurchase program will be executed consistent with the Company's capital allocation strategy of prioritizing investment to grow the business over the long term.
Fourth Quarter Segment Operating Results
We present operating results in four reportable segments: GovDeals, RSCG, CAG and Machinio. Segment gross profit is calculated as total revenue less cost of goods sold (excludes depreciation and amortization).
Our Q4-FY22 segment results are as follows (unaudited, in millions):
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Three Months Ended September 30, |
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Twelve Months Ended September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
GovDeals: |
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GMV |
$ |
160.9 |
|
$ |
134.1 |
|
$ |
720.3 |
|
$ |
498.7 |
Total revenue |
$ |
14.2 |
|
$ |
13.1 |
|
$ |
59.4 |
|
$ |
49.6 |
Segment gross |
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profit |
$ |
13.5 |
|
$ |
12.5 |
|
$ |
56.4 |
|
$ |
47.0 |
% of Total revenue |
|
95 % |
|
|
95 % |
|
|
95 % |
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|
95 % |
RSCG: |
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GMV |
$ |
63.3 |
|
$ |
57.7 |
|
$ |
236.2 |
|
$ |
229.3 |
Total revenue |
$ |
43.2 |
|
$ |
40.7 |
|
$ |
166.1 |
|
$ |
158.8 |
Segment gross |
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profit |
$ |
16.9 |
|
$ |
16.2 |
|
$ |
63.7 |
|
$ |
64.6 |
% of Total revenue |
|
39 % |
|
|
40 % |
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|
38 % |
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|
41 % |
CAG: |
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GMV |
$ |
59.1 |
|
$ |
52.5 |
|
$ |
188.8 |
|
$ |
158.7 |
Total revenue |
$ |
14.6 |
|
$ |
13.8 |
|
$ |
42.6 |
|
$ |
39.6 |
Segment gross |
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|
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profit |
$ |
8.0 |
|
$ |
8.9 |
|
$ |
29.1 |
|
$ |
29.3 |
% of Total revenue |
|
55 % |
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|
64 % |
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|
68 % |
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|
74 % |
Machinio: |
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GMV |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
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Total revenue |
$ |
3.2 |
|
$ |
2.7 |
|
$ |
12.1 |
|
$ |
9.6 |
Segment gross |
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|
|
|
|
|
|
|
|
|
|
profit |
$ |
3.0 |
|
$ |
2.5 |
|
$ |
11.5 |
|
$ |
9.0 |
% of Total revenue |
|
94 % |
|
|
93 % |
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|
95 % |
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|
94 % |
Consolidated: |
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GMV |
$ |
283.3 |
|
$ |
244.4 |
|
$ |
1,145.4 |
|
$ |
886.7 |
Revenue |
$ |
75.2 |
|
$ |
70.3 |
|
$ |
280.1 |
|
$ |
257.5 |
Additional Fourth Quarter 2022 Operational Results
Business Outlook
The uncertain economic business climate and global supply chain disruptions can impact volume and timing of assets made available for sale in any period. Notwithstanding such volatility, our expertise in diverse sectors, buyer base across numerous asset categories, and global reach are continuing to provide advantages as our clients navigate this macroeconomic environment.
Our Q1-FY23 guidance range for GMV is above the same period last year, with year-over-year growth expected across our segments. Relative to Q4-FY22, GovDeals' GMV may experience a decline sequentially, as the fiscal first quarter has been seasonally lower historically and its real estate initiative led by the acquisition of Bid4Assets experiences extended timelines for growth as it is dependent on legislative and other client-specific regulatory progress over which we have limited control. We also expect CAG's GMV to decline sequentially, based on lower projected international spot purchase transaction activity. Periods containing more significant spot purchase transactions can cause our ratio of revenue to GMV to fluctuate upwards. GovDeals is expected to continue to drive adoption of digital marketplace solutions for government agencies for a broader array of assets, including vehicles, heavy equipment and real estate, which will be partly offset by the anticipated decline in the volume and pricing of used vehicles made available for sale, including ongoing disruption of new vehicle production impacting timelines for the retirement of government agency vehicle fleets. Our RSCG segment expects to continue to diversify its seller base and be a key resource for retailers and their vendors to manage an inflationary environment, shifting consumer demand and changing product mix. Our profit guidance for Q1-FY23 reflects year-over-year top line growth and an increasing proportion of consignment transactions, with slightly higher sales, technology and operations expense expected to support longer-term growth across our segments.
Our Business Outlook includes forward-looking statements which reflect the following trends and assumptions for Q1-FY23 as compared to the prior year's period:
For Q1-FY23 our guidance is as follows:
GMV - We expect GMV to range from $265 million to $295 million.
GAAP Net Income - We expect GAAP Net Income to range from $1.0 million to $4.0 million.
GAAP Diluted EPS - We expect GAAP Diluted Earnings Per Share to range from $0.03 to $0.12.
Non-GAAP Adjusted EBITDA -We expect Non-GAAP Adjusted EBITDA to range from $7.0 million to $10.0 million.
Non-GAAP Adjusted Diluted EPS - We expect Non-GAAP Adjusted Earnings Per Diluted Share to range from $0.09 to $0.18.
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) expenses, net; provision for (benefit from) 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, deferred revenue purchase accounting adjustments, and goodwill, long-lived and other asset impairment. A reconciliation of Net Income to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA is as follows:
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Three Months Ended September 30, |
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Twelve Months Ended September 30, |
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2022 |
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|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
(Unaudited) |
|
|
||||
Net income |
$ |
8,345 |
|
$ |
32,755 |
|
$ |
40,324 |
|
$ |
50,949 |
Interest and other (income) expenses, net1 |
|
(88) |
|
|
115 |
|
|
126 |
|
|
(76) |
Provision for (benefit from) income taxes |
|
3,075 |
|
|
(24,503) |
|
|
7,329 |
|
|
(23,370) |
Depreciation and amortization |
|
2,776 |
|
|
1,723 |
|
|
10,322 |
|
|
6,969 |
Non-GAAP EBITDA |
$ |
14,108 |
|
$ |
10,090 |
|
$ |
58,101 |
|
$ |
34,472 |
Stock compensation expense |
|
2,325 |
|
|
1,154 |
|
|
8,482 |
|
|
6,947 |
Acquisition costs and impairment of long-lived and |
|
|
|
|
|
|
|
|
|
|
|
other assets2 |
|
179 |
|
|
125 |
|
|
473 |
|
|
1,464 |
Fair value adjustments to acquisition earn-outs |
|
(4,500) |
|
|
— |
|
(24,500) |
|
|
— |
|
Business realignment expenses3 |
|
191 |
|
|
— |
|
191 |
|
|
5 |
|
Non-GAAP Adjusted EBITDA |
$ |
12,303 |
|
$ |
11,369 |
|
$ |
42,747 |
|
$ |
42,888 |
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|
|
|
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|
2Acquisition costs and impairment of long-lived and other assets are included in Other operating expenses, net on the Consolidated Statements of Operations.
3Business realignment expenses include the amounts accounted for as exit costs under ASC 420, and the related impacts of business realignment actions subject to other accounting guidance.
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, amortization of intangible assets, acquisition related costs such as transaction expenses and changes in earn-out estimates, business realignment expenses, deferred revenue purchase accounting adjustments, goodwill, long-lived and other 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 Q4-FY22 the tax rate used to estimate the impact of income taxes on the non-GAAP adjustments was 32% compared to 16% used for the Q4-FY21 results, except no impact of income taxes was applied to the fair value adjustments to earn-out liabilities as it is not subject to income taxation. 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, with the prior year results recast to reflect the previously announced change in the Company's calculation method to adjustment for the amortization of intangible assets:
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Three Months Ended September 30, |
|
Twelve Months Ended September 30, |
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2022 |
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|
2021 |
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|
2022 |
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|
2021 |
|
|
|
|
|
|
(Unaudited) |
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|
||||
(Dollars in thousands, except per share data) |
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|
|
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(recast)** |
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|
|
|
(recast)** |
|
|
Net income |
$ |
8,345 |
|
$ |
32,755 |
|
$ |
40,324 |
|
$ |
50,949 |
|
Stock compensation expense |
|
2,325 |
|
|
1,154 |
|
|
8,482 |
|
|
6,947 |
|
Intangible asset amortization expense* |
|
1,005 |
|
|
334 |
|
|
3,740 |
|
|
1,341 |
|
Acquisition costs and impairment of long-lived and other |
|
|
|
|
|
|
|
|
|
|
|
|
non-current assets** |
|
179 |
|
|
125 |
|
|
473 |
|
|
1,464 |
|
Change in valuation allowance*** |
|
— |
|
(24,567) |
|
|
— |
|
(24,567) |
|
||
Fair value adjustments to acquisition earn-outs |
|
(4,500) |
|
|
— |
|
(24,500) |
|
|
— |
|
|
Business realignment expenses |
|
191 |
|
|
— |
|
191 |
|
|
5 |
|
|
Income tax impact of adjustments |
|
(1,173) |
|
|
(263) |
|
|
(4,085) |
|
|
(1,590) |
|
Non-GAAP Adjusted net income |
$ |
6,372 |
|
$ |
9,538 |
|
$ |
24,625 |
|
$ |
34,549 |
|
Adjusted basic income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.20 |
|
$ |
0.29 |
|
$ |
0.76 |
|
$ |
1.04 |
|
|
Adjusted diluted income per common share |
$ |
0.19 |
|
$ |
0.27 |
|
$ |
0.73 |
|
$ |
0.99 |
|
Basic weighted average shares outstanding |
|
31,731,111 |
|
|
33,297,879 |
|
|
32,292,978 |
|
|
33,333,557 |
|
Diluted weighted average shares outstanding |
|
33,072,803 |
|
|
35,294,326 |
|
|
33,719,424 |
|
|
35,024,108 |
|
**Acquisition related costs, impairment of long-lived and other assets, and business realignment expenses, which are excluded from Non-GAAP Adjusted Net Income, are included in Other operating expenses, net on the Statements of Operations.
Q4-FY22 Conference Call
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 http://investors.liquidityservices.com. An archive of the web cast will be available on the Company's website until December 8, 2023 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 and Adjusted Earnings per Share. These non-GAAP measures are provided to enhance investors’ overall understanding of our current financial performance and prospects for the future. We use EBITDA and Adjusted EBITDA: (a) as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis as they do not reflect the impact of items not directly resulting from our core operations; (b) for planning purposes, including the preparation of our internal annual operating budget; (c) to allocate resources to enhance the financial performance of our business; (d) to evaluate the effectiveness of our operational strategies; and (e) to evaluate our capacity to fund capital expenditures and expand our business. Adjusted Earnings per Share is the result of our Adjusted Net Income 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.
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 the COVID-19 pandemic, 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; 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 that is 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 different geographies; economic and other conditions in local, regional and global sectors; the Company’s ability to successfully integrate acquired companies, including its most recent acquisitions of Machinio Corp. and Bid4Assets, Inc., and successfully execute on anticipated business plans such as the efforts that are 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, 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.
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 4.9 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
Liquidity Services and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(Dollars in Thousands, Except Par Value)
|
|
September 30, |
|
|
||
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|
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
96,122 |
|
$ |
106,335 |
|
Short-term investments |
|
1,819 |
|
|
— |
|
Accounts receivable, net of allowance for doubtful accounts of $449 and $490 |
|
11,792 |
|
|
5,866 |
|
Inventory, net |
|
11,679 |
|
|
12,468 |
|
Prepaid taxes and tax refund receivable |
|
1,631 |
|
|
1,713 |
|
Prepaid expenses and other current assets |
|
6,551 |
|
|
5,460 |
|
Total current assets |
|
129,594 |
|
|
131,842 |
|
Property and equipment, net |
|
19,094 |
|
|
17,634 |
|
Operating lease assets |
|
13,207 |
|
|
13,478 |
|
Intangible assets, net |
|
16,234 |
|
|
3,453 |
|
Goodwill |
|
88,910 |
|
|
59,872 |
|
Deferred tax assets |
|
13,628 |
|
|
23,822 |
|
Other assets |
|
7,437 |
|
|
5,475 |
|
Total assets |
$ |
288,104 |
|
$ |
255,576 |
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
$ |
41,982 |
|
$ |
40,611 |
|
Accrued expenses and other current liabilities |
|
23,304 |
|
|
25,975 |
|
Current portion of operating lease liabilities |
|
4,540 |
|
|
4,250 |
|
Deferred revenue |
|
4,439 |
|
|
4,624 |
|
Payables to sellers |
|
49,238 |
|
|
33,713 |
|
Total current liabilities |
|
123,503 |
|
|
109,173 |
|
Operating lease liabilities |
|
9,687 |
|
|
10,098 |
|
Other long-term liabilities |
|
378 |
|
|
1,290 |
|
Total liabilities |
|
133,568 |
|
|
120,561 |
|
Commitments and contingencies (Note 15) |
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
Common stock, $0.001 par value; 120,000,000 shares authorized; 35,724,057 shares issued and |
|
|
|
|
|
|
outstanding at September 30, 2022; 35,457,095 shares issued and outstanding at September 30, |
|
36 |
|
|
35 |
|
2021 |
|
|
|
|
||
Additional paid-in capital |
|
258,275 |
|
|
252,017 |
|
Treasury stock, at cost; 3,813,199 shares at September 30, 2022, and 2,222,083 shares at |
|
|
|
|
|
|
September 30, 2021 |
|
(62,554) |
|
|
(36,628) |
|
Accumulated other comprehensive loss |
|
(10,285) |
|
|
(9,011) |
|
Accumulated deficit |
|
(30,936) |
|
|
(71,398) |
|
Total stockholders' equity |
|
154,536 |
|
|
135,015 |
|
Total liabilities and stockholders' equity |
$ |
288,104 |
|
$ |
255,576 |
|
|
|
|
|
|
|
|
Liquidity Services and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(Dollars in Thousands, Except Per Share Data)
|
|
Three Months Ended September 30, |
|
Year Ended September 30, |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Purchase revenues |
$ |
42,162 |
|
$ |
41,249 |
|
$ |
151,271 |
|
$ |
146,151 |
Consignment and other fee revenues |
|
33,040 |
|
|
29,078 |
|
|
128,779 |
|
|
111,380 |
Total revenues |
|
75,202 |
|
|
70,327 |
|
|
280,050 |
|
|
257,531 |
Costs and expenses from operations: |
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (excludes depreciation and amortization) |
|
33,745 |
|
|
30,177 |
|
|
119,407 |
|
|
107,678 |
Technology and operations |
|
13,949 |
|
|
12,721 |
|
|
55,522 |
|
|
47,673 |
Sales and marketing |
|
11,007 |
|
|
9,956 |
|
|
43,224 |
|
|
37,635 |
General and administrative |
|
6,610 |
|
|
7,360 |
|
|
28,282 |
|
|
28,938 |
Depreciation and amortization |
|
2,776 |
|
|
1,723 |
|
|
10,322 |
|
|
6,969 |
Fair value adjustment of acquisition earn-outs |
|
(4,500) |
|
|
— |
|
(24,500) |
|
|
— |
|
Other operating expenses, net |
|
370 |
|
|
80 |
|
|
388 |
|
|
1,470 |
Total costs and expenses |
|
63,957 |
|
|
62,017 |
|
|
232,645 |
|
|
230,363 |
Income from operations |
|
11,245 |
|
|
8,310 |
|
|
47,405 |
|
|
27,168 |
Interest and other income, net |
|
(175) |
|
|
58 |
|
|
(248) |
|
|
(411) |
Income before income taxes |
|
11,420 |
|
|
8,252 |
|
|
47,653 |
|
|
27,579 |
Provision (benefit) for income taxes |
|
3,075 |
|
|
(24,503) |
|
|
7,329 |
|
|
(23,370) |
Net income |
$ |
8,345 |
|
$ |
32,755 |
|
$ |
40,324 |
|
$ |
50,949 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share |
$ |
0.26 |
|
$ |
0.98 |
|
$ |
1.25 |
|
$ |
1.53 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per common share |
$ |
0.25 |
|
$ |
0.93 |
|
$ |
1.20 |
|
$ |
1.45 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
31,731,111 |
|
|
33,297,879 |
|
|
32,292,978 |
|
|
33,333,557 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding |
|
33,072,803 |
|
|
35,294,326 |
|
|
33,719,424 |
|
|
35,024,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity Services and Subsidiaries |
|
|
|
|||
Unaudited Condensed Consolidated Statements of Cash Flows |
|
||||||
|
(Dollars in Thousands) |
|
|
|
|
|
|
|
|
|
Year Ended September 30, |
|
|||
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
Operating activities |
|
|
|
|
|
|
|
Net income |
$ |
40,324 |
|
$ |
50,949 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
||
Depreciation and amortization |
|
|
10,322 |
|
|
6,969 |
|
Change in fair value of earn-out liability |
|
|
(24,500) |
|
|
— |
|
Stock compensation expense |
|
|
8,482 |
|
|
6,947 |
|
Inventory adjustment to net realizable value |
|
|
194 |
|
|
174 |
|
Provision for doubtful accounts |
|
|
136 |
|
|
297 |
|
Deferred tax expense (benefit) |
|
|
6,287 |
|
|
(24,510) |
|
Impairment of long-lived and other non-current assets |
|
|
31 |
|
|
1,338 |
|
(Gain) loss on disposal of property and equipment |
|
|
(14) |
|
|
80 |
|
Gain on disposal of lease assets |
|
|
(240) |
|
|
(23) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
|
(6,290) |
|
|
(843) |
|
Inventory |
|
|
441 |
|
|
(7,035) |
|
Prepaid taxes and tax refund receivable |
|
|
82 |
|
|
(61) |
|
Prepaid expenses and other assets |
|
|
(1,805) |
|
|
(2,022) |
|
Operating lease assets and liabilities |
|
|
396 |
|
|
(79) |
|
Accounts payable |
|
|
1,548 |
|
|
18,554 |
|
Accrued expenses and other current liabilities |
|
|
(2,653) |
|
|
6,060 |
|
Deferred revenue |
|
|
(185) |
|
|
1,369 |
|
Payables to sellers |
|
|
13,000 |
|
|
7,543 |
|
Other liabilities |
|
|
(723) |
|
|
(290) |
|
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
44,833 |
|
|
65,417 |
|
|
Investing activities |
|
|
|
|
|
|
|
Purchases of property and equipment, including capitalized software |
|
|
(8,121) |
|
|
(5,419) |
|
Proceeds from note receivable |
|
|
— |
|
4,343 |
|
|
Purchase of short-term investments |
|
|
(1,820) |
|
|
— |
|
Cash paid for business acquisition, net of cash acquired |
|
|
(11,164) |
|
|
— |
|
Other investing activities, net |
|
|
21 |
|
|
72 |
|
Net cash used in investing activities |
|
|
|
|
|
|
|
|
|
(21,084) |
|
|
(1,004) |
|
|
Financing activities |
|
|
|
|
|
|
|
Payments of the principal portion of finance lease liabilities |
|
|
(99) |
|
|
(42) |
|
Payments of debt issuance costs |
|
|
(91) |
|
|
— |
|
Proceeds from exercise of common stock options, net of tax |
|
|
— |
|
445 |
|
|
Taxes paid associated with net settlement of stock compensation awards |
(2,806) |
|
|
(3,915) |
|
||
Payment of earn-out liability related to business acquisition |
|
|
(3,500) |
|
|
— |
|
Common stock repurchases |
|
|
(25,447) |
|
|
(31,143) |
|
Net cash used in financing activities |
|
|
|
|
|
|
|
|
|
(31,943) |
|
|
(34,655) |
|
|
Effect of exchange rate differences on cash and cash equivalents |
|
|
(2,019) |
|
|
541 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
|
|
|
|
(10,213) |
|
|
30,299 |
|
|
Cash and cash equivalents at beginning of year |
|
|
106,335 |
|
|
76,036 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
$ |
96,122 |
|
$ |
106,335 |
|
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes, net |
|
|
885 |
|
|
1,442 |
|
Non-cash: Common stock surrendered in the exercise of stock options |
|
|
479 |
|
|
1,502 |
|