“We remain focused on executing our long term growth strategy to achieve $2 billion in GMV by fiscal year 2016. Fundamentally, we are confident in our competitive position and our ability to achieve attractive organic growth over the next several years driven by our strong client service and continued investments in innovation. However, in the short term, results have been less predictable and pressured due to significant integration efforts and the timing of new large commercial programs coming on line,” continued Angrick.

Business Outlook

While general economic conditions have improved, our overall outlook remains cautious due to the volatility in the macro environment. The retail vertical of our business has seen significant changes in consumer spending habits in certain categories, such as electronics, which has been affected by increases in payroll taxes, continued high unemployment, and reduced innovation in the sector resulting in decreased spending. Additionally, we plan to further invest in our technology infrastructure and innovation for our proprietary e-commerce marketplaces to support further expansion and integration of our existing and recently acquired businesses. In the longer term, we expect our business to continue to benefit from the following trends: (i) as consumers trade down and seek greater value, we anticipate stronger buyer demand for the surplus merchandise sold in our marketplaces, (ii) as corporations and public sector agencies focus on reducing costs, improving transparency and working capital flows by outsourcing reverse supply chain activities, we expect our seller base to increase, and (iii) as corporations and public sector agencies increasingly prefer service providers with a proven track record, innovative technology solutions and demonstrated financial strength, we expect our seller base to increase.

The following forward looking statements reflect trends and assumptions for the next quarter:
     
(i) stable commodity prices in our scrap business;
(ii) stable average sales prices realized in our capital assets marketplaces;
(iii) improved margins in our GoIndustry marketplace as we continue to integrate the acquisition and complete our restructuring plans;
(iv) continued lower than prior year product flows from existing client programs in our retail goods marketplaces, particularly in our consumer electronics vertical;
(v) an effective income tax rate of 40%; and
(vi) improved operations and service levels in our retail goods marketplaces.
 

Our Scrap Contract with the Department of Defense (DoD) includes an incentive feature, which can increase the amount of profit sharing distribution we receive from 23% up to 25%. Payments under this incentive feature are based on the amount of scrap we sell for the DoD to small businesses during the preceding 12 months as of June 30 th of each year. We are eligible to receive this incentive in each year of the term of the Scrap Contract. We earned approximately $1,265,000 under this incentive feature for the 12 months ended June 30, 2013, and we recorded this amount in the quarter ended June 30, 2013.

GMV – We expect GMV for fiscal year 2013 to range from $925 million to $950 million. We expect GMV for Q4-13 to range from $200 million to $225 million.

Adjusted EBITDA – We expect Adjusted EBITDA for fiscal year 2013 to range from $104 million to $106 million. We expect Adjusted EBITDA for Q4-13 to range from $24.0 million to $26.0 million.

Adjusted Diluted EPS – We estimate Adjusted Earnings Per Diluted Share for fiscal year 2013 to range from $1.72 to $1.76. In Q4-13, we estimate Adjusted Earnings Per Diluted Share to be $0.39 to $0.43. This guidance assumes that we have an average fully diluted number of shares outstanding for the year of 32.7 million, and that we will not repurchase shares with the approximately $18.1 million yet to be expended under the share repurchase program.

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 $3.0 million to $3.5 million for Q4-13.

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