Good morning. Thank you all for joining us. My name is William Schallmeyer. I'm an account manager here at Three Part Advisors, and I have the pleasure of introducing to you guys, Liquidity Services, trading on Nasdaq under LQDT. And here representing the company today is Bill Angrick, the founder and CEO. Bill? Thank you, William. Good morning. Let me welcome you to Liquidity Services. We're a two-sided e-commerce marketplace platform that participates in a segment that we call the circular economy. Our business is a market leader with significant liquidity to help really everybody in the supply chain drive efficiencies from public sector clients, retail supply chain clients, and industrial supply chain clients. What's a circular economy? Well, sustainability has been a core pillar for our mission and vision since day one. Every asset on our marketplace was owned by its first producer. We extend the life of that asset by finding a home for the next buyer, and in doing so, we help corporate America, international manufacturers, every government entity to reduce waste and to increase the value of the item for the next owner. We help really entrepreneurs and small businesses access production, equipment, vehicles, construction assets, IT assets at very attractive prices to help sustain and grow their own business, which is a win-win value proposition. And since starting the business, which was frankly a niche, we've massively grown the business and have the most liquidity on our platform, we believe, anywhere in the world, with over 5 million buyers. And I mentioned in the one-on-one, you know, these are business buyers, so the working capital they have could consume $10 billion of GMV a year today without adding one more buyer. So we've got a terrific engine to help our clients monetize assets. We work with blue-chip household names all across the globe. We work with over 10,000 government entities, which have rigorous vetting and compliance requirements. So today, we're really the most trusted platform for clients to manage, value, and sell inventory and equipment. And our constituents are supply chain managers, CFOs, operational managers, sometimes chief marketing officers that are looking to manage the orderly disposition of inventory and equipment and do so in an efficient, transparent process. And we help. We're really an incubator for entrepreneurs in many ways because they're looking to save money and grow their own businesses. And I think there's just a shared appreciation for the sustainability of what we do in helping reduce landfill waste and the disposition and discarding of used equipment. We've been on a mission to continue to grow the size and scale of our marketplace and maximize value. We've increased share and volume on our platform, which helps all the participants in this ecosystem. We've expanded our services to help sellers use software to list and sell on our platform or provide fully managed services, depending on their needs. We've been able to grow this platform with relatively constant fixed costs, which is a benefit to, you know, our business model. Every industry is represented here. One of our featured marketplaces is AllSurplus. So if you go to AllSurplus, you'll see almost 1,000 product categories of equipment available for sale every day. It's a good example of the breadth and reach of a marketplace business model. On the buyer side, one thing we don't take for granted is buyers are sending us $10, $100,000, $1 million on individual asset purchases, and they're not gonna do that unless you have a trusted, compliant marketplace. So for every transaction, we allow the buyer to review the terms and conditions. If the item received does not match the seller's description, we will resolve that and refund the money to the buyer. And so that's the currency of the marketplace, is the trust we have with our buyers, and we've been able to scale the business to now almost $1.5 billion GMV run rate on our last quarterly results through this trusted, transparent philosophy with our buyers. You know, and, and again, ESG is almost like a marketing term. We haven't looked at our business to be a green-branded business. We just inherently believe that every asset can be productive, and by finding the right buyer, we can extend and grow the useful life of those assets. Huge market opportunity, very fragmented business. Looking at the fundamental industry drivers, you've got lots of used vehicle fleets, construction equipment. There was a rental company, I think, here just before. You know, there's a tremendous amount of value to be captured in this two-sided surplus equipment marketplace by providing great service and great recovery. And we are in three principal segments, which I'll get to. We've got e-commerce growth driving our retail supply chain industry segment. The volume of online purchases continues to grow, and as that grows, the volume of returned goods grows. The return rates for online purchases are as high as 30% in individual categories. So you have a big cost of doing business for e-commerce retailers, omni-channel retailers that have both an online and a physical presence, and we help reduce the supply chain costs and inconvenience for these clients to manage their returns flow. There's a lot of product obsolescence, both in the industrial market and the consumer markets. Whenever you're replacing current products with the next best product, well, you have a use case for our platform, whether it's IT equipment, vehicle equipment, production, and factory equipment. We're finding many willing buyers to take current or less than current technology through the platform, and our business model is fairly simple. When we started the business, we said: We're not gonna collect any fees from our sellers. We're gonna align our success with sellers successfully completing transactions, so we generally charge a commission on the share of the final sales value for completing these transactions, so we don't get paid until those transactions close. We're highly incentivized to get the buyers great execution on the platform and collect that fee when our sellers have success. Today, roughly 85% of our total GMV is under this consignment model, where we do not own the equipment. Sellers list on the platform. We market it to this five million pool of registered buyers, and then we drive great efficiency and collect the fees on those completed transactions, and that is allowing us to have recurring flows of assets. We typically have multiyear agreements with sellers to list on our platform. Those assets are exclusive to our platform, so when buyers come, they're getting very valuable inventory and equipment exclusive to the platform, which gives them more incentive to come back. And that, over time, is a very virtuous cycle. As we get higher recovery rates, sellers want to sell more. We're a one-stop shop for our sellers. Our business is very asset light. We drive a significant amount of free cash flow. So in our last quarter, you know, we're in the range of $4-$15 million of EBITDA. We generated $22 million of operating cash flow in the quarter. So we like the idea that we have almost negative working capital. We have a lot of float in this business. We collect the money from our buyers, we remit the proceeds to our sellers. So as we grow, we're not carrying receivables, we're not carrying a lot of inventory, and we're a technology-enabled platform, so we have low capital expenditures, and that's one of the virtues of the way we set up our business. And, you know, this is a business that's always growing, notwithstanding cyclicality or macroeconomic change. There's always someone that needs to monetize assets. So if consumer demand slows in your market, well, maybe you have idle equipment, and you want to monetize that. Come to AllSurplus. Maybe you have consistent returned goods, and you don't want that occupying space in your fulfillment center or your store operations. You want to liquidate that. You want to recover that cash and put it into your business. And so those are the continuous themes that you'll see in our marketplace. We grew strongly during the recession of 2008 and 2009. We don't feel any impact on the buyer demand for these assets, notwithstanding the big hike in interest rates. You know, our buyers are typically cash buyers and very happy to trade down and buy used to save money. There's a lot of opportunity to continue to grow through a high interest rate environment and through anything that would be considered either a mild recession or even a hard landing, and that's what we like about our business. Our GovDeals segment serves municipal government entities from states, counties, cities, and even the smallest little towns or villages. They all have things in common. They collect revenue, tax revenue, sales tax revenue, real estate property tax revenue, and they provide all of the services for its citizens: fire, medical, transportation services, utility services. Those are very capital-intensive undertakings. They have lots of vehicle fleets. They have equipment to maintain roads, bridges, sanitation, water, and so they're replacing that physical infrastructure every year in some portion. And then anything that's being upgraded, we take the used and provide it for the next owner on our marketplace. So it's a continuous flow of product. A lot of that is higher value, and more recently, we've expanded into the real estate vertical, so we're now selling online, next to the personal property assets, real estate. That can include tax foreclosed real estate, judicial foreclosed real estate, or government-owned real estate. So it's another example of the digital economy, the digital marketplace platform, becoming a one-stop shop for our clients. GovDeals just recorded an all-time record GMV of approximately $250 million GMV. We see lots of opportunity to make this a $1 billion-plus GMV business. This is a business that does have that trust factor, so if you're a state or local official and you're asking your peers: "How do you solve the problem for asset management and disposition? Are you using a physical auction? Are you having to ship items to other places and pay that transportation fee?" "Oh, no, we're using GovDeals." You just get your iPhone, you take the images, you upload it, and you can list it on a Monday and have it sold by Friday, and they'll collect the money for you, and they'll handle all the financial settlement, and you get the funds wired to you. So that's a smart way of managing your physical infrastructure and your asset disposition strategies, and there's no waste. We can make a market for everything from new, used, salvage, and scrap. We've sold scrap metal. We've sold base materials. We have over a thousand publicly funded colleges and universities selling all of their surplus on the platform. And because it's a consignment model and we're not having to touch these items, we make money on every item from, you know, an office conference room table to a helicopter, to an aircraft fleet. We've sold it all on GovDeals, and it's continued to expand both by asset class and geography throughout the US and into Canada now. So we're excited about what we can do to continue to grow the market share, but also continue to automate the process and use a lot of machine-driven recommendation engine type of tech to match the right buyer with every asset. And that's, I think, helping the business become more efficient over time. Our retail segment is dealing with this river of returns that continues to grow as you have the mix shift from physical, in-person retail to online retail. There's no signs of that abating. Yes, retail had to reset after the pandemic. People shifted spending from stay-at-home, high consumption of lawn and garden and household things to, you know, getting back out in the world, travel and meals, and, you know, retail has come off that peak, and the result is most retail businesses have had to reduce costs, reduce overhead, close excess warehouse capacity, be leaner. And when they're leaner, they rely more on specialized service providers like Liquidity Services to pick up the slack and help them drive more value for their supply chain and recover more value on the return goods flow, which is what we do. We've got the largest buyer base. We have eight distribution center hubs in North America to help shoulder the burden for these retail clients as they outsource this process. So we can take returns from client stores, we can take returns from client distribution centers, and we can also take returns directly from consumers into our marketplace. We'll then manifest and sell those in an online auction platform to recover maximum value for our clients. This business is growing its share quite briskly, and while there is a little shift in the mix of goods from where we were two years ago, it's still a very attractive business for us. In our Capital Assets Group or CAG segment, we're doing a lot of the things that are similar to our GovDeals business, except the clients are Fortune 500 industrial manufacturers. You know, the people that make everything that you see in your life, from consumer packaged goods, healthcare, biopharma equipment, energy supply chain clients, aerospace and transportation clients. And so they have equipment that is either being replaced with the next efficient model or it's idle, it's not being productively used. In either case, they want to monetize the asset. And again, this is a very transparent marketplace where the market-efficient price reveals itself through a competitive online auction. This is a more international business because many of our clients are multinational corporations, so they have manufacturing plants all around the world. So again, if you go to AllSurplus, you're gonna see many seller locations throughout the world, from North America, Europe, you know, Asia Pacific region. It's got a multilingual capability, multicurrency capability, so our buyers are everywhere in the world. It's a very good use of technology to bring the buying demand to the asset through this virtual exchange, versus someone having to go on a plane and travel to all of these locations to diligence and buy the asset. We've been doing this for over 20 years now, and you'd be amazed at the value per transaction that happens on this marketplace. You know, we've sold three, five, 10 million-dollar assets through this digital platform, where the diligence is done primarily through the platform without a lot of physical interaction. Because they're such specialized assets, people love the opportunity to buy in the used market because the time it would take for a manufacturer to produce the next new item, it could be over a year. The buyer gets the opportunity to take the asset, put it into productive use immediately in a spot transaction, which, as we've seen, all the supply chain disruptions over the last few years, very valuable part of this process for the buyer. Most of the CAG business is consignment, so we don't have an ownership position. The seller's listing the asset. We're getting paid a fee that will vary based on the level of project management that we do. This is a good use of the platform technology, very international. Another very international business, although it has a slightly different model, is the Machinio classifieds marketplace. What Machinio does is allow sellers to list everything in their supply chain that's used for an annual subscription. It's not a transactional marketplace, and why we got into the Machinio segment was we saw a lot of the used equipment dealers, some of whom buy in our platform, using this to find the best possible end user for the asset. So this is really an all-you-can-eat subscription. So if you have 50, 100, 500 assets, and you're a construction equipment dealer or a CNC machine tool dealer, and you have lots of used equipment, or you're a leasing company, and you're having trade-ins come in, and you wanna list them for sale, instead of using print publications or industry trade magazines, you can use Machinio, get those items listed, and the Machinio system is very good at its taxonomy and categorizing these assets and driving very good matching with buyers who have intent to buy and matching these, you know, long-tail searches. I want to make, model, year of equipment. I want it in this geography, and here's what I'm willing to pay. And we take that buyer query, match it with the people that meet that set of criteria, and then they can take it from there. And so what we like about Machinio is it's again the theme of very asset light, high margin, negative working capital. We collect these subscription fees upfront, so we have deferred revenue in this business, and it travels well. It's very international, so half the business is... I should say 45% of the business is North America, 45% Europe, and now a growing presence in the Asia Pacific region. We just added a sales office in Shanghai, and they're helping these very high volume number of used equipment owners in places like China list and sell on Machinio, and that market's bigger than the US and Europe combined. So there's a lot of opportunity to grow this business. Very high EBITDA margin business, and we like the data that we get off the Machinio platform on what is the listing price for used equipment across all these categories and what's the buyer signal relative to those prices, and that informs our auction platform. In terms of financial results, you know, we've continued to have steady, profitable growth, and our philosophy is we wanna be in a Rule of 40 type of business model, and we think of our growth... Of course, GMV is the sales value of what is transacted, and you wanna grow GMV, and we've been able to do that. Our run rate, you know, again, is approaching sort of the $1.4-$1.5 billion, which we're happy about. GAAP revenue is not something we provide guidance on, and the reason for that is GAAP revenue is a mix based on whether it's a consignment or purchase model arrangement. Under the consignment model, we only book the commission as GAAP revenue, so that could be anywhere from high single digits to 20-25%. Under the purchase model, we book 100% of the GMV as GAAP revenue. So there's a, there's a blend and a mix, and we don't dictate to our clients that you must do consignment or you must do purchase, so it's not something we really guide to. What we think about really is direct profit and EBITDA, because ultimately, we want to convert GMV to net revenue and operating cash flow, and EBITDA is a very close approximation for us on free cash flow. In some cases, it understates free cash flow, like the last quarter, and so the Rule of 40 for us is, let's grow our net revenue, which is our fees and commissions or our gross profit on purchase model transactions, in the mid-teens or better, and let's be in businesses where EBITDA as a percentage of net revenue or direct profit is 20% or better. That means it's asset light, it's tech-enabled, it's gonna give you great free cash flow characteristics, and so that's what we strive to do, and on a consistent basis, we've been able to do that over time and be very much in control of our destiny. We have almost $140 million of cash, zero debt, and we'll use that free cash flow to effect inorganic growth. We've had a couple tuck-ins over the last many years. We'll do targeted share repurchases, and we'll continue to fund the next wave of what we think are machine-driven innovations to match all of this data that we get from billions of dollars of transactions with buyers and what they want in the used equipment and retail returns market. Then here's just a commentary on the mix of consignment versus purchase. The vast majority is consignment, and again, we give clients choice. We don't want to dictate, but clients come to their own conclusion that if I just pay you the commission, I get most of the upside. So if you double the value of the used equipment from my local job or my local physical auction, I want to capture most of that upside, which consignment allows them to do. GovDeals is our largest segment by GMV, but you know, interestingly, the buyers that we attract to the platform are very agnostic. They're gonna buy from both government and industrial and commercial clients. They're looking for specific asset types, and we just have the benefit of leveraging different types of sellers on the same marketplace platform. And then there's a little reconciliation here. We do have some non-cash comp and adjustments, and that's really the overview. But Liquidity Services really is a story of growing by helping sellers have, you know, great success, allowing buyers to find value. And, you know, in any environment, buyers, especially business buyers, they wanna be more efficient. So anything they can save by sourcing assets on a marketplace, they're reinvesting to hire more people, grow their business. So we love the fact that we're helping grow the economy through passing on these savings. So I'll open it up to questions. Yes? Which one do you prefer, a moving economy or a really shitty economy? Well, look, we all prefer the former, right? Because we know we're letting CapEx flow, people are gonna be, you know, forward-thinking. But unlike a lot of people, we're not in any way concerned about a slowdown either, because there's a set of sellers and a set of use cases where if you need to raise capital, you're gonna monetize through our platform. So say you had to close a plant, say you had to trim 10% of your vehicle fleet, say you had to pay down some debt, all those things mean you're gonna sell assets, and we're the platform to sell the assets. So we've gone through what I would call the Great Recession, almost, you know, the financial meltdown of 2008, and our business grew, and we had a lot of cash transactions on our marketplace as people were quick to monetize assets. We're not intimidated at all. We're. I would say we're a counter-cyclical. There's always something that may be on the downslope that needs to monetize, but, you know, in these roaring economies, people are, you know, spending to upgrade everything, right? If you're spending money to upgrade IT assets, vehicle fleets, physical infrastructure, you know, we're getting all the used equipment, too, and that's where we probably are better positioned because of our government business. See, governments, more or less, are collecting a constant stream of revenue, and they're always using that money. It's kind of a use it or lose it mentality. So they're gonna be wanting to upgrade as much of their equipment that they're allowed under their policy. So that could be 10% of their fleet, it could be 20% of their fleet, and they're very consistent. Independent of what we might see on the private sector, they're doing a pretty consistent monetization. And now you have some federal spending and programs trying to work their way into the system to, you know, modernize airports, modernize roads and bridges, and that generally is a positive catalyst for our business on the supply side. Yeah, follow up. Yeah. What happens to all the crap that people return on Amazon and Walmart and things like that? Do sellers internally deal with that, or do they subcontract the guys like you? Yeah, and I think everyone in this room has probably returned something over the last year. You know, that's the lowest margin activity that these clients could deal with. If you think about where they wanna spend their time, it's selling the new product. It's investing in, you know, marketing and branding and, you know, getting that next season's products in the hands of consumers. So when something's been returned, first, the barcode on the box doesn't correspond necessarily to what's in the box, so someone has to validate that. This is low-margin stuff going into highly automated fulfillment centers. So if you go to any modern fulfillment center, it's narrow aisle, it's mechanized, so you don't have a lot of space for even human beings to go and pick and pull. So if you've got open boxes coming in, it's disaster, right? It's occupying very high value, high opportunity cost space. So they're typically looking to get that off of their balance sheet or their operational footprint to people like us, and so that's where we play, I think, a valuable synergistic role or even symbiotic role within retail supply chain. We focus only on the returns, so we can get economies of scale on it, and we're not having to displace higher margin things where they are. That's allowed us to give them a number of ways to solve it. We can take the product back from the consumer, so it doesn't even hit their supply chain. So when the consumer fills out the returns label, it could be a Liquidity Services address where the product comes. So that solves a physical flow issue, and then we can quickly sell it and recover money. Time to cash is another big issue, and so those are a couple of the ways that we help our clients on the retail side. Yes, sir, right here. How do you think about growth? Mm-hmm. I mean, is there room for growth in this space? When we think of growth, we think of it, the company generated A with a higher, you know, X number of people and go down, or are there groups out there that you would require? Sure, well, the core would be organic growth through an enterprise sales outreach. So when we're talking about Fortune 1000 companies, whether they're retailers or global manufacturers, we're typically gonna present them with a supply chain solution and something that would be programmatic and recurring and something they could roll out throughout their organizational footprint. And so being a best practice, having thousands of case studies, having data to support, you know, the pain points we solve, we're very successful at converting, you know, prospects into recurring clients that can roll something out throughout the organization. And again, in a lot of these companies, you know, you've got hundreds of locations that wanna use the same platform, so being able to present, you know, an online platform that could be shared across an organization internally on identifying where these assets reside, how to get them centralized, how to give them valuation data. Very helpful. So classic enterprise sales outreach, sticky recurring client relationships. And, you know, with regard to inorganic growth, I think we're very patient, frugal buyers. I mean, we've bought some businesses. Machinio was a great example. They were founded here in Chicago, as a matter of fact, and we liked their use of machine-driven process. We loved the data, and I think we acquired them as they were entering break even, five million of recurring revenue, and, you know, we've almost quadrupled that. And so it's a great use of cash, very complementary to what we're doing. We bought a business in January of this year called Sierra Auction, almost a thirty-year-old business focusing on Arizona, a mix of government clients and commercial clients. And they had made the transition from offline to online because of the pandemic, so they were bought in now to using, you know, a digital platform, and they had great relationships. And we said we could hire more enterprise salespeople and target this corridor of the country that is growing nicely. I mean, Arizona is getting a lot in migration from California, so there's more physical infrastructure being built, meaning more used equipment to be sold. So we plugged them in, and that business is exceeding forecast and is very complementary. Their clients now leverage the five million registered buyers that we have. We can expand, you know, and deepen those relationships and, you know, really accelerate growth in a part of the country that we think over the next three to five years will be growing. Right here. With the opportunity more contained clients or increasing your share within the client? Both. Absolutely. Where are we on the journey of total profit accelerated yield in five to 10 years? That's the core outlook. Mm-hmm. Well, like every compounding story in the history of business, you know, the next billion's easier to get than the first billion, you know, because you've just got momentum, and you've got proof points. And so, as I said, we see the business trending to a billion-dollar run rate in GMV business, and we know that the market opportunity is probably up to five billion of GMV when you factor in all the categories that we're looking at. And we've had to go from sort of the bottom of the food chain up within client relationships of, "Well, I don't know if my construction equipment will sell without someone coming to inspect." The guys always took it to the auction yard, and they painted the equipment, and they put new tires on. We've proven that you can get great recovery through the virtual platform now, so we're getting the higher value assets with clients we've had for over 10 years now. So we're moving up the value chain within client relationships, and we certainly are expanding market share. Over time, you know, we've made new features available that allow GovDeals to become more international. We have clients that are in the French-Canadian part, culturally, of Canada, and so we implemented some new features to grow that territory within GovDeals. We think there's opportunity both within accounts to further penetrate those relationships, get higher value assets on the platform, and then access more market share across, you know, both the U.S. and Canada. And I would say there's at least 60,000 municipal clients based on our tracking, and these could be anything from, like, the City of Chicago to a water district authority to a school system, and they're all very attractive targets for us. Question over here. I would say more recently, in some categories, the answer is yes. And there is a set of clients that have traditionally taken all of their, you know, off-lease assets. The big dealers, obviously, you know, you've got people like Cat that have a consistent flow of trade-ins, off-lease equipment that doesn't make it, you know, business sense for them to carry, and those have been put into the auction channel. Our business is a lower cost, more tech-enabled opportunity than the full-service auction house provides, and that's saving our clients money. And so our heavy equipment practice, as we call it, which is a lot of yellow iron construction equipment, on the commercial side, is growing rapidly, over 30% organic growth. And it's very similar to the GovDeals model. It's... You can be a self-directed player on the platform if you're willing to take our app and spend a little time capturing the images and equipment. Now, what's the upside for you? Instead of paying a 25% commission, you pay a 10% commission. And instead of having to pool your assets with another 30 sellers, you can sell on a daily marketplace business and get that asset into the hands of a buyer and collect the money within, you know, 7 or 10 days. So we think that's a growing area. We think that'll be showing up, you know, in the next few quarters as, you know, a much larger segment. It's 100% consignment, so. But, you know, we're starting from a very small base. I think Ritchie's, you know, $5 billion a quarter, probably, of GMV, and we're happy to take even 5% or 10% of that. That would make a huge impact on Liquidity Services. Last question, and then we're at time. What is the non-consignment, or how do you price that? Sure. Well, some clients for whether it, whether it's a Sarbanes-Oxley reason, an end-of-quarter, end-of-fiscal year tax reason, say, "We want a sale, we want an invoice," and we'll work back from what the buyers pay for those assets, build in our margin, and that's what we'll offer as a strike price for the people that want to use a purchase model. And you'll see that in the industrial capital asset group, and you'll see that in the Retail Supply Chain Group. But- What are the terms on that? In the Retail Supply Chain Group, to the extent that there is a recurring program, we would have pricing established by product category on a quarterly basis, and we'll be monitoring that very closely based on the recovery realized in the marketplace platform. For the CAG business, it's more episodic, and it's really limited to a specific negotiated transaction within a larger relationship. Thanks for your interest. Have a great conference.