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News Breaks
April 3, 2014
11:04 EDTLQDTLiquidity Services continues slide, confirms withdrawal from DoD auction
Shares of surplus and salvage asset marketplace operator Liquidity Services (LQDT) are sliding again after the company confirmed it's withdrawal from auction bidding for a U.S. Department of Defense contract and said it will need to reset its adjusted earnings expectations. WHAT'S NEW: Liquidity Services announced that it will reset its outlook for earnings before interest, taxes, depreciation, and amortization, or EBITDA, for fiscal year 2015 after withdrawing from the bidding process for one defense contract and due to higher costs for another. Liquidity said that it remains the high bidder for a contract to purchase, manage and sell non-rolling stock surplus assets for the DoD with a bid equal to 4.35% of the department's original acquisition value, which is up from 1.8% previously. The company also confirmed it withdrew from an auction for a rolling stock contract due to the fact that bidding reached a level that it determined would be "economically unsustainable." The company said that if it agreed to the contract, the result would be significantly higher costs of goods sold in FY15 and beyond. Liquidity Services said it will continue to operate its current DoD surplus contract to sell all usable surplus assets including rolling stock and non-rolling stock assets for a base term ending in December, with two additional one-month renewal options. Accordingly, the company expects the bid results from the last two days to not affect its results for fiscal year 2014. ANALYST OPINION: Following today's news, Liquidity Services was downgraded to Neutral from Outperform at RW Baird, which cited the "unfavorable" auction results. The firm lowered its price target for shares to $19 from $30. Baird analyst Colin Sebastian said the firm is lowering its FY15 EBITDA estimate by $40M and sees few near-term positive catalysts outside of potential short covering on the stock. WHAT'S NOTABLE: Yesterday, Liquidity Services shares were down after the company announced that it was the highest bidder for the DoD non-rolling stock surplus contract. Baird stated in a separate note yesterday that Liquidity's high bid for the non-rolling liquidation contract was "quite a bit" higher than the firm had anticipated. The firm said then that its Outperform rating was under review pending the full contract results. PRICE ACTION: During morning trading, shares of Liquidity Services fell $2.85, or 13.66%, to $18.01. The stock had declined about 6.7% yesterday and over the last month shares have lost over 18.5%.
News For LQDT From The Last 14 Days
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July 28, 2014
15:00 EDTLQDTIronPlanet awarded contract for DoD rolling stock surplus
IronPlanet announced that it was awarded the U.S. Defense Logistics Agency contract to manage and sell rolling stock surplus assets of the U.S. Department of Defense. The DLA issued the final contract award to IronPlanet on July 25, pursuant to a competitive bid process that was held on April 1. Bids for the Surplus Contract were based on a percentage of the sales price of the items that bidders will share with the DLA. IronPlanet estimates $50M-$70M of rolling stock annually, and its bid was equal to 75.29% revenue share to the DLA. The Surplus Contract has a base term of two years with four one-year renewal options. Following the bid process, Liquidity Services (LQDT) filed a bid protest with the Government Accountability Office. This protest and supplemental protests filed were denied by the GAO on July 23. Rolling stock includes surplus trucks, trailers, generators, wheel loaders, cranes, crawler tractors, and other equipment. While Surplus Contract volume will begin to flow to IronPlanet in the third quarter of 2014, the contract is scheduled to fully commence late 2014 into 2015. “We are very pleased and excited to be officially awarded this contract, and to partner with the Defense Logistics Agency. We have already begun moving forward leveraging our existing infrastructure and resources to build the dedicated capabilities necessary to maximize the returns for the U.S. Department of Defense, and ultimately the U.S. taxpayer, in selling their surplus rolling stock assets,” said Greg Owens, CEO, IronPlanet.

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