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Liquidity Services crashes following EPS miss, soft guidance

  • In addition to missing FQ4 EPS estimates (while beating revenue forecasts), Liquidity Services (LQDT -18.2%) is guiding for FQ1 EPS of $0.20-$0.24 (below a $0.43 consensus) and FY14 EPS of $1.60-$1.76 (below a $1.90 consensus).
  • FY14 gross merchandise volume (GMV) is expected to be in a range of $1B-$1.075B, up from FY13's $973.3M. But adjusted EBITDA is only expected to be in a range of $100M-$108M after totaling $104.6M in FY13.
  • Liquidity says it remains concerned about macro conditions, and that its retail business has been affected by "significant changes in consumer spending habits in certain categories, such as electronics." The salvage auction site also says it's ramping tech infrastructure investments.
  • FQ4 GMV was $250.5M, +4% Y/Y and above guidance of $200M-$225M. Liquidity ended FY13 with 2.42M registered buyers, up 11% Y/Y. Auction participants rose 17% to 2.46M, and completed transactions 6% to 530K.
  • Hedge fund manager Chad Kusserow is defending Liquidity. He thinks the company's FY14 guidance implies free cash flow of $3/share, which translates into a 13%+ FCF yield.
  • Benchmark cut its PT ahead of earnings, citing concerns about the profit impact of a more competitive DoD surplus asset contract bidding process.
  • FQ4 results, PR
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