Liquidity Services, Inc. (NASDAQ:LQDT) Q4 2017 Earnings Conference Call Transcript

Dec 05, 2017 • 05:00 pm ET

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Liquidity Services, Inc. (NASDAQ:LQDT) Q4 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter Full Year 2017 Liquidity Services Earnings Conference Call. At this time, all participants are in a listen-only mode, and later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) And as a reminder, this conference is being recorded.

I would like to introduce your host for today's conference, Ms. Julie Davis, Senior Director of Investor Relations. Ma'am, you may begin.

Executive
Julie Davis

Thank you, Amanda. Hello, and welcome to our fourth quarter and fiscal year 2017 financial results conference call. Joining us today are Bill Angrick, our Chairman and Chief Executive Officer; Jorge Celaya, our Chief Financial Officer; and Mike Sweeney, our Chief Accounting Officer. We will be available for questions after our prepared remarks.

(Forward-Looking Cautionary Statements)

At this time, I'd like to turn the presentation over to our CEO, Bill Angrick.

Executive
William P. Angrick

Thank you, Julie. Good evening, and welcome to our Q4 earnings call. I'll review our Q4 performance and provide an update on key strategic initiatives and today's developments regarding our DoD Surplus Contract recompete. Next, Mike Sweeney will provide more details on the quarter and full year results. Finally, Jorge Celaya will provide our outlook for the current quarter.

Although our Q4 and fiscal '17 consolidated results were mixed, we are pleased with the performance of our state and local government marketplace, our GovDeals segment and our retail supply chain marketplace, our RSCG segment. Our GovDeals marketplace reported year-over-year GMV growth of 15.8% in Q4 and 17.5% in fiscal '17. We signed over 300 new agency sellers during Q4, including the state of Ohio; city of Boston; Orange County, Florida; and Lake County, Illinois. And we continue to expand the geographic reach of this marketplace throughout the United States. During Q4, GovDeals completed over 54,000 auctions for client agencies ranging from vehicles, heavy equipment, helicopters and airplanes.

Our RSCG segment continued to grow the top line organically, with GMV up 18.4% year-over-year in Q4 and up 11% year-over-year in full year fiscal '17. Of note, we have increased adoption of our consignment model with many clients, which results in lower capital requirements and higher margins on GAAP revenues. Our Liquidation.com marketplace saw strong performance and buyer participation, GMV per completed transaction and overall site conversion. Our RSCG team continues to expand our Returns Management offering to solve the needs of both retailers and manufacturers. We're developing new capabilities to expand our work in the processing, handling, refurbishing and sale of product returns, which is well suited to the rapid growth of online retailing, which is fueling higher product returns industry-wide. We'd expanded our sales team and recently signed new multiyear Returns Management service contracts with both retailers and manufacturers. Our sales pipeline remains strong, and we expect the business to grow organically during fiscal year '18.

Our Capital Assets Group, or CAG, segment business reported -- or realized unexpected headwinds in Q4 due to seller project delays across all verticals as well as