Liquidity Services, Inc.

Welcome to the Liquidity Services second quarter of fiscal year 2026 financial results conference call. My name is Daniel, and I will be your operator for today's call. Please note that this conference call is being recorded. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I will now turn the call over to Michael Patrick, Liquidity Services Vice President and Controller.

Good morning. On the call today are Bill Engrick, our Chairman and Chief Executive Officer, and Jorge Celaya, our Executive Vice President and Chief Financial Officer. They will be available for questions after their prepared remarks. The following discussion and responses to your questions reflect management's views as of today, May 7, 2026, and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and in our filings with the SEC, including our most recent annual report on Form 10-K. As you listen to today's call, please have our press release in front of you, which includes our financial results as well as metrics and commentary on the quarter. During this call, management will discuss certain non-GAAP financial measures. In our press release and in our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP measures, including the reconciliations of these measures with their most comparable GAAP measures as available. Management also uses certain supplemental operating data as a measure of certain components of operating performance, which we also believe is useful for management and investors. This supplemental operating data includes gross merchandise volume and should not be considered a substitute for or superior to GAAP results. At this time, I will turn the presentation over to our Chairman and CEO, Bill Angrich.

Thank you and good morning. Against the backdrop of global tariffs, weather disruptions, and geopolitical tensions, I'm pleased to report that liquidity services continue to grow its market share and create value for customers and shareholders during our March quarter. Our second quarter results were fueled by our broad industry coverage, robust buyer liquidity, and improved operating leverage, which drove an 18% year-over-year increase in our consolidated direct profit and a 37% year-over-year increase in our consolidated adjusted EBITDA. Our asset-like business model continued to generate strong operating cash flow in excess of adjusted EBITDA, and we ended the quarter with $204 million in cash and zero financial debt. We expect to allocate capital to high-quality internal growth initiatives, complementary acquisitions, and targeted share repurchases. Our diversified marketplace portfolio continues to show strength in uncertain times, and our performance reflects the disciplined execution across each segment of our business. Our RSCG segment continues to leverage our enormous data flows, analytics, and domain expertise to dynamically match increased product flows with the right buyer channels to improve recovery and drive meaningful operating leverage. Our retail segment GMV and direct profit were up 10% and 29% year-over-year, respectively, as higher consignment flows in our retail segment were driven by several top 20 retail accounts following the peak holiday return season. Our D2C marketplace retail rush more than doubled its GMV sequentially during Q2 and continues to establish new records on a month-over-month basis. Geographically, we've continued to grow our retail buyer and seller base in Canada, Mexico, and Brazil, and expect these markets to be fertile ground for our ROCG marketplace. In GovDeals, the impact of significant winter weather events resulted in lower than expected GMB growth of 5%. However, GovDeals segment direct profit grew 12% year-over-year, And we set a number of new records in Q2 for GovDeals, reflecting the strong position of our market-leading business, including a record number of new accounts signed, which is up 30% year-over-year, a record number of unique sellers in a single quarter, too, and a record number of unique bidders in a single month. Yes, we continue to see significant expansion opportunities in the $3 billion GMB public sector personal property market, as the majority of large cities and counties still use some form of high-cost, full-service takeaway auctions. Our lower-cost, flexible solution provides clients a superior net recovery, and we're very excited about the growth opportunity to continue to bring value to these government agency clients. Q2 GMV in our CAG segment increased 3 percent, and direct profit increased 11 percent year-over-year, driven by growth in high-margin consignment flows within our CAG industrial client base and our continued strength in heavy equipment categories with recurring sellers. we have continued to grow our CAG buyer base as segment unique bidders grew 36% year over year. The outlook for CAG is quite good as we have a record backlog of new business from existing and new clients with particular strength in energy, biopharma, and heavy equipment. Machinio continued its strong trajectory With 8% revenue growth and is approaching $20 million of annual recurring revenue with 90% plus direct profit margins, reflecting the successful transformation of Machinio into a valued solutions provider of digital commerce offerings to equipment dealers, including lead generation, hosted websites, inventory management, customer management and marketing tools, and service quote pricing and related financing. Machinio's expansion into the marine industry vertical is going exceptionally well. We have more than doubled the number of new marine customers and revenues sequentially in Q2. Across liquidity services, we continue to use technology software, and data analytics to optimize recovery and operations. For example, we continue to enhance our inventory scanning, classification, image quality, and asset descriptions to maximize recovery. We have also leveraged AI tools to improve seller asset management, valuations, and customer service. Our marketplace continues to scale in size and engagement. We now serve 6.3 million registered buyers, an increase of 8% year-over-year, with 983,000 auction participants during the last quarter and 280,000 completed transactions, each demonstrating the growing relevance and liquidity of our platform. Looking forward, we are a well-differentiated marketplace in the $100-plus billion circular economy with outstanding liquidity in every major asset category. Our scaled technology-driven platform, which is now approaching $1.8 billion GMV run rate, brings transparency and efficiency as the market leader for sellers and buyers in every segment of the economy. We will continue to create value by growing supply and demand within our existing and new asset categories, geographies, and service areas such as auction software and our machinio dealer service offerings. Thank you for your confidence and continued support. We're well positioned to build on our early momentum in fiscal 26 and deliver another year of profitable growth. Now I'll turn it over to Jorge for more details on the quarter.