Liquidity Services, Inc. (NASDAQ:LQDT), a global solutions provider in the reverse supply chain with the leading marketplace for business surplus, today announced that its sales of selected rolling stock and other assets under its Surplus Contract with the U.S. Defense Logistics Agency (DLA) have ceased at the request of DLA pending further review of the impact of regulatory rules, unrelated to the Company’s performance or conduct, on the DLA rolling stock property stream. This action has resulted in the cancellation of selected sales during the June quarter as well as future sales of selected assets. Liquidity Services anticipates these developments will adversely impact its financial results for its fiscal third quarter ended June 30, 2014 and for its fiscal year 2014. The Company’s preliminary third quarter results are subject to change as the Company is still in the process of finalizing the financial results for the quarter.
For the third quarter of fiscal year 2014 ending June 30, 2014, the Company now estimates its preliminary unaudited financial results to be as follows:
- Total Gross Merchandise Volume (GMV) is expected to be within its guidance range of $225 million to $250 million.
- Adjusted EBITDA is expected to be approximately 10-20% below its guidance range of $18.0 million to $21.0 million
- Adjusted Earnings per Diluted Share is expected to be approximately 10-20% below its guidance range of $0.28 to $0.34.
The Company plans to report its unaudited financial results for the third quarter on August 7, 2014, and at that time will provide updated guidance on the impact to its fiscal year 2014 financial results.
Our guidance adjusts EBITDA and Diluted EPS for: (i) acquisition costs including transaction costs and changes in earn out estimates; (ii) amortization of contract related intangible assets of $33.3 million from our acquisition of Jacobs Trading; and (iii) for stock based compensation costs, which we estimate to be approximately $3.5 million to $4.0 million per quarter for fiscal year 2014. These stock based compensation costs are consistent with fiscal year 2013.