Liquidity Services, Inc. (NASDAQ:LQDT; www.liquidityservicesinc.com) today reported its financial results for its third quarter of fiscal year 2014 (Q3-14) ended June 30, 2014. Liquidity Services, Inc. is a global solutions provider in the reverse supply chain with the leading marketplace for business surplus.
Liquidity Services, Inc. (Liquidity Services or the Company) reported consolidated Q3-14 revenue of $127 million, an increase of approximately 2% from the prior year’s comparable period. Adjusted EBITDA, which excludes stock based compensation and acquisition costs including changes in acquisition earn out payment estimates, for Q3-14 was $17.3 million, a decrease of approximately 35% from the prior year’s comparable period. Q3-14 GMV, the total sales volume of all merchandise sold through the Company’s marketplaces, was $246.0 million, an increase of 7% from the prior year’s comparable period.
Net income in Q3-14 was $18.4 million or $0.59 diluted earnings per share. Adjusted net income, which excludes stock based compensation, acquisition costs including changes in acquisition earn out payment estimates and amortization of contract-related intangible assets associated with the Jacobs Trading acquisition – net of tax, in Q3-14 was $9.4 million or $0.31 adjusted diluted earnings per share based on 30.9 million fully diluted shares outstanding, a decrease of approximately 34% and 31%, respectively, from the prior year’s comparable period. During Q3-14, the Company repurchased 2,834,412 shares of common stock expending $41.8 million as part of its previously announced share repurchase program.
The Company recorded an $18.6 million credit, or income, in the Acquisition Costs line item of its Statement of Operations, as a result of reducing the estimate of the fair value of the earn out of its NESA acquisition from $18.0 million (recorded at the acquisition), to zero as of June 30, 2014. Upon review of the estimate as of June 30, 2014 and based on revised projections, LSI determined that the operating results of NESA are unlikely to achieve the performance required for the sellers to receive the earn out payment and the Company reversed the earn out liability. The change in estimate does not affect the Company’s effective income tax rate.
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