Liquidity Services determined apparent high bidder for non-rolling
stock surplus contract; withdraws from bidding for rolling stock surplus
WASHINGTON–(BUSINESS WIRE)–Apr. 3, 2014–
Liquidity Services, Inc. (NASDAQ: LQDT), a global solutions provider in
the reverse supply chain with leading online marketplaces for surplus
assets, today announced the preliminary results of the live auction
bidding events held by the U.S. Defense Logistics Agency (DLA) on April
1-2, 2014 to purchase, manage and sell surplus assets of the U.S.
Department of Defense (DoD).
As announced on April 1, 2014, the Company remains the apparent high
bidder for the non-rolling stock surplus contract with a bid equal to
4.35% of the DoD’s original acquisition value (OAV). The non-rolling
stock surplus contract has a base term of two years with four one-year
Following the bidding event on April 2, 2014 for the DoD rolling stock
contract, Liquidity Services announced that it withdrew from the live
auction bidding for this contract. Bidding reached a level that
Liquidity Services determined would be economically unsustainable under
the terms of the new contract, jeopardizing the high level of service it
has historically provided the agency client. Final contract awards are
subject to a protest period and a pre-award survey by the DoD regarding
the bidder’s ability to satisfactorily perform the work in accordance
with their technical proposal submitted in step-one of the solicitation.
“Liquidity Services’ longstanding philosophy is to focus on
opportunities that leverage our strengths to provide value to our
clients and which deliver attractive returns on our effort and
investment,” said Bill Angrick, Chairman and Chief Executive Officer of
Liquidity Services. “We are excited with the prospect of continuing our
14 year relationship with the DLA to sell surplus non-rolling stock
assets which builds on our experience selling over 240 million surplus
items for the DoD since 2001.”
Because the contracting process is not complete, the Company cannot at
this time provide a revised forecast on future financial results.
However, based on the unofficial April 1-2 bid results, the price for
the non-rolling stock contract is expected to increase from 1.8% to
4.35% of OAV, resulting in significantly higher Cost of Goods Sold
(COGS) in fiscal year 2015 and beyond. Additionally, the Company expects
to cease the sale of DoD rolling stock under the new contract, which has
historically accounted for approximately 30-35% of the overall GMV for
the current DoD surplus contract, resulting in lower GMV in future
periods. Together, this will require a material reset of the Company’s
EBITDA forecast in fiscal year 2015.
Liquidity Services will continue to operate its existing DoD surplus
contract to sell all useable surplus assets of the DoD, including
rolling stock and non-rolling stock assets, for the base term ending
December 2014, with two additional one-month renewal options. As such,
the Company expects the April 1-2 bid results will not affect fiscal
year 2014 results.
About Liquidity Services, Inc.
Liquidity Services, Inc. (NASDAQ: LQDT) provides leading corporations,
public sector agencies, and buying customers the world’s most
transparent, innovative, and effective online marketplaces and
integrated services for surplus assets. On behalf of its clients,
Liquidity Services has completed the sale of over $4.4 billion of
surplus, returned, and end-of-life assets in over 500 product
categories, including consumer goods, capital assets, and industrial
equipment. The company is based in Washington, D.C. and has more than
1,300 employees. Additional information can be found at: http://www.liquidityservices.com.
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 and expected future effective tax rates. 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. 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 a number of risks and uncertainties that could cause our
actual results to differ materially from the forward-looking statements
contained 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, our dependence on our
contracts with the DoD and Wal-Mart for a significant portion of our
revenue and profitability; our ability to successfully expand the supply
of merchandise available for sale on our online marketplaces; our
ability to attract and retain active professional buyers to purchase
this merchandise; the timing and success of upgrades to our technology
infrastructure; our ability to successfully complete the integration of
any acquired companies, including NESA and Go-Industry, into our
existing operations and our ability to realize any anticipated benefits
of these or other acquisitions; and our ability to recognize any
expected tax benefits as a result of closing our U.K. retail consumer
goods operations. There may be other factors of which we are currently
unaware or 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.
Source: Liquidity Services, Inc.
Liquidity Services, Inc.
Senior Director, Investor