MILESTONES | What a difference 10 years makes. Since its founding in the fall of 1999 — and later its move to IPO status in February 2006 — Liquidity Services, Inc., has become a leading online auction marketplace for wholesale, surplus, and salvage assets. With a gross revenue of about $360 million, and pretax profits of roughly $25 million, the company’s forecast continues to look strong. “We’ve been able to execute our plan as a public company quite well,” says Bill Angrick, CEO of Liquidity Services, Inc. “We’ve tripled our gross revenue and more than tripled — almost quadrupled — our pretax profit. We’ve done this with zero debt and within the company 27 consecutive quarters of profitability.” On the eve of the company’s 10th year anniversary, Angrick weighs in on the company’s growth and what’s next.
ExecutiveBiz: How has the recession impacted your business model?
Bill Angrick: We’ve seen our transaction volume actually grow in the downturn. Sellers are looking to maximize value of surplus property and raise cash. On the buying side, our buyer base continues to grow. Our last quarter reported [that] our buyer base grew 22 percent over the prior year, our transaction volume grew 12 percent.
ExecutiveBiz: What demand are you seeing from states and counties?
Bill Angrick: We’ve processed over $900 million in federal, state and local government surplus sales since 2001, and we continue to add public sector sellers. We work with over 2,400 counties and state municipal sellers. In fact we grew that part of our business 13 percent year over for the nine months ended June 30. During the June quarter we added 187 new government agency sellers. The use of online auctions is a strategy that governments are adopting, to be more transparent and drive additional value for their taxpayer constituents.
ExecutiveBiz: What is your company doing to help retailers facing bankruptcy or store liquidations?
Bill Angrick: We’ve been selling store fixtures, equipment, and material-handling equipment and excess inventory from stores that are closed. In some cases warehouse and distribution centers might be downsized or closed to adapt to the current environment. We also regularly sell all returned merchandise that comes back to the stores (about 6 percent of everything sold by retailers is returned by customers).
ExecutiveBiz: What’s your biggest challenge in business today?
Bill Angrick: We’ve had the great fortune of aligning ourselves with a tremendous client base [including] federal agency clients and thousands of city and government clients. To execute on our value proposition of optimizing the financial returns of our clients— and to build our business from $350 million of gross merchandise volume to $1 billion-plus in three to five years — we’ve secured talent in many areas. In October 2007, we brought in a new chief information officer, Eric Dean. In September 2008 we recruited Cayce Roy to lead our commercial division. And Jim Rallo has built additional depth in our finance arena since early 2005.
ExecutiveBiz: How much of your business works with the federal government?
Bill Angrick: About 40 percent of our business is with commercial clients, principally big box retailers, department store chains, and online retailers. That business has grown most rapidly over the last three years. Slightly more than half of our business is US federal and local agency business. The balance is international; we have a commercial division based in the United Kingdom.
ExecutiveBiz: What will the company look like in three years?
Bill Angrick: We believe LSI will be a $1 billion-plus top-line company in three to five years. We expect our buyer base, which is the largest online marketplace for surplus goods, will continue to grow. The virtuous cycle created by bringing more supply into our marketplace further satisfies existing buyers and, in turn, makes it easier to attract new buyers and sellers as we gain scale and drive further innovation. This reinforcing growth cycle, is what will propel us to become a $1 billion plus organization.
ExecutiveBiz: What will your ratio of government-commercial clients be?
Bill Angrick: I expect the majority of our business in the United States — 60-70 percent — will become commercial in the next 3 to 5 years. That said, we will continue to serve public sector agencies. Public sector agencies increasingly are looking for the transparency brought by online auctions. This best practice is gaining a lot of attraction and we have a long-term committed team here addressing this need in the marketplace. The people driving the growth of our business are long-term focused, and owner oriented through our long-term equity incentive plan.
ExecutiveBiz: What types of employees do you seek?
Bill Angrick: The people that are attracted to LSI — and that we’ve recruited — expect to work in a collegial environment based on sharing of data, sharing of ideas, open communication … and straight talk — acknowledgement of our successes and also our failures. We’ve learned a tremendous amount from the ideas we put into motion that didn’t succeed initially but with that feedback we always refine our approach and ultimately drive success.
ExecutiveBiz: What’s your favorite restaurant in the DC area?
Bill Angrick: Smith & Wollensky. It’s just across the street from our headquarters and we’ve used them for our sales champion dinners, Board meetings and hosting clients and guests. They have comfortable, private dining areas as well as an outstanding sitting area outside that allows you to take in a little of that summer air when you’re not in the office.
ExecutiveBiz: Any last words on what what lays ahead?
Bill Angrick: We have the deepest management team confronting the best market opportunities than at any other time in our company history which gives me great confidence about achieving our goals over the next five years.
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