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Item 5. Market for Registrant’s Common Equity

2021-12-09 compared with 2020-12-08 · 4 added, 132 removed, 20 unchanged (87% of the section changed)

14 unchanged sentences

Issuer Purchases of Equity Securities

The following table presents information about our repurchases of common stock that were made through open market transactions during the three months ended September 30, 2020 (in millions, except share and per share amounts):

The following table presents information about our repurchases of common stock that were made during the three months ended September 30, 2021 (in millions, except share and per share amounts):

Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as a Part of a Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1)

3 unchanged sentences

Total 634,884 634,884

Selected Financial Data.

You should read the following selected consolidated financial data together with our consolidated financial statements and the related notes, and with "Management's Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere in this Annual Report on Form 10-K.

The consolidated statement of operations data for the years ended September 30, 2020, 2019 and 2018 and the consolidated balance sheet data as of September 30, 2020 and 2019 are derived from, and are qualified by reference to, our consolidated financial statements that are included in this Annual Report on Form 10-K.

The consolidated statement of operations data for the years ended September 30, 2017 and 2016, and the consolidated balance sheet data as of September 30, 2018, 2017 and 2016 are derived from our audited consolidated financial statements that are not included in this Annual Report on Form 10-K, adjusted for the retrospective adoption of new accounting standards as applicable.

Year ended September 30,

2016 2017 2018 2019 2020

(dollars in thousands, except per share data)

Consolidated Statement of Operations Data:

Revenue $ 233,828 $ 188,570 $ 149,677 $ 147,889 $ 127,580

Fee revenue 82,626 81,445 74,837 78,636 78,360

Total revenue 316,454 270,015 224,514 226,525 205,940

Costs and expenses:

Cost of goods sold 143,127 126,227 100,087 102,414 96,016

Seller distributions 11,214 19,298 14,715 10,831 —

Technology and operations 93,405 82,988 60,786 51,594 42,158

Sales and marketing 37,570 35,211 33,703 36,703 35,629

General and administrative (7)

39,969 36,079 30,493 34,249 29,166

Depreciation and amortization 6,502 5,796 4,599 5,091 6,290

Acquisition costs and impairment of goodwill and long-lived assets 19,037 1,009 467 102 5

Other operating expenses — 3,651 1,392 5,049 573

Total costs and expenses 350,824 310,259 246,242 246,033 209,837

Loss from operations (34,370) (40,244) (21,728) (19,508) (3,897)

Interest and other income, net (7)

(1,469) (606) (785) (1,448) (924)

Loss before provision for income taxes (32,901) (39,638) (20,943) (18,060) (2,973)

Provision (benefit) for income taxes 27,025 (451) (9,328) 1,200 801

Net loss $ (59,926) $ (39,187) $ (11,615) $ (19,260) $ (3,774)

Basic earnings per common share $ (1.96) $ (1.25) $ (0.36) $ (0.58) $ (0.11)

Diluted earnings per common share $ (1.96) $ (1.25) $ (0.36) $ (0.58) $ (0.11)

Basic weighted average shares outstanding 30,638,163 31,402,921 32,095,491 33,062,976 33,612,263

Diluted weighted average shares outstanding 30,638,163 31,402,921 32,095,491 33,062,976 33,612,263

Non-GAAP Financial Measures:

$ (27,616) $ (34,204) $ (16,794) $ (14,070) $ 2,740

Adjusted EBITDA (1)

3,668 (21,595) (7,334) (1,249) 9,013

Supplemental Operating Data:

Gross merchandise volume (2)

$ 642,078 $ 629,330 $ 626,406 $ 639,876 $ 619,850

Completed transactions (3)

600,000 576,000 567,000 607,000 553,000

Total registered buyers (4)

2,986,000 3,171,000 3,357,000 3,580,000 3,772,000

Total auction participants (5)

2,417,000 2,290,000 2,079,000 2,085,000 1,899,000

As of September 30,

2016 2017 2018 2019 2020

(in thousands)

Consolidated Balance Sheet Data

Cash, cash equivalents and short-term investments $ 134,513 $ 94,348 $ 78,448 $ 66,497 $ 76,036

Working capital (6)

99,424 68,166 34,512 21,103 20,255

Total assets (8)

260,109 215,229 201,832 187,283 196,634

Total liabilities (8)

97,498 82,593 72,178 71,108 84,819

Total stockholders' equity 162,611 132,636 129,654 116,175 111,815

_______________________________________________________________________________

(1) EBITDA and Adjusted EBITDA are supplemental non-GAAP financial measures.

GAAP means generally accepted accounting principles in the United States.

EBITDA is equal to net loss plus interest and other income, net;

provision (benefit) for income taxes;

and depreciation and amortization.

Our definition of Adjusted EBITDA differs from EBITDA because we further adjust EBITDA for stock-based compensation expense, acquisition costs such as transaction expenses and changes in earn-out estimates, business realignment expense, deferred revenue purchase accounting adjustments, and goodwill and long-lived asset impairment.

For a description of our use of EBITDA and Adjusted EBITDA and a reconciliation of these non-GAAP financial measures to net loss, see the discussion and related table below.

(2) Gross merchandise volume is the total sales value of all merchandise sold by us or our sellers through our marketplaces or by us through other channels during a given period of time.

(3) Completed transactions represent the number of transactions in a given period from which we have recorded revenue.

(4) Total registered buyers as of a given date represent the aggregate number of persons or entities who have registered on one of our marketplaces.

(5) For each auction we manage, the number of auction participants represents the total number of registered buyers who have bid one or more times on that auction, and total auction participants for a given period is the sum of the auction participants in each auction conducted during that period.

(6) Working capital is defined as current assets minus current liabilities.

(7) On October 1, 2018, the Company adopted ASU 2017-17, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, and retrospectively reclassified the components of net periodic benefit other than the service cost component from General and administrative, a component of loss from operations, to Interest and other income, net, which is outside of loss from operations.

This retrospective reclassification was made in our prior year audited financial statements covering the years ended September 30, 2019, 2018 and 2017.

The impact for the year ended September 30, 2016 was $252 thousand.

(8) On October 1, 2019, the Company adopted ASC 842, Leases , using the modified retrospective transition method.

Prior periods have not been restated.

Upon adoption, the Company recognized $11.3 million of operating lease assets and $12.2 million of operating lease liabilities.

See Note 2 to the Consolidated Financial Statements for further details.

We believe non-GAAP financial measures, such as EBITDA and Adjusted EBITDA, are useful to an investor in evaluating our performance for the following reasons:

Depreciation and amortization expense relates to property and equipment, and intangible assets.

Both of these expenses are non-cash charges that have significantly fluctuated over the past five years.

As a result, we believe that adding back these non-cash charges to net income is useful in evaluating the operating performance of our business on a consistent basis from year to year.

As a result of varying federal and state income tax rates, we believe that presenting a financial measure that adjusts net income for provision for income taxes is useful to investors when evaluating the operating performance of our business on a consistent basis from year to year.

The authoritative guidance for stock-based compensation requires all share-based payments to employees, including grants of employee stock options, restricted stock and stock appreciation rights to be recognized in the income statement based on their estimated fair values.

We believe adjusting net income for this stock-based compensation expense is useful to investors when evaluating the operating performance of our business on a consistent basis from year to year.

We believe adjusting net income for acquisition and disposition related transaction expenses and changes in contingent consideration is useful to investors when evaluating the operating performance of our business on a consistent basis from year to year.

We believe adjusting net income for business realignment expense is useful to investors when evaluating the operating performance of our business on a consistent basis from year-to-year, as these expenses are outside our ordinary course of business.

We believe isolating non-cash charges, such as amortization and depreciation, and other items, such as impairment costs incurred outside our ordinary course of business, provides additional information about our cost structure, and, over time, helps track our performance.

We believe EBITDA and Adjusted EBITDA are important indicators of our operational strength and the performance of our business because they provide a link between profitability and operating cash flow.

We also believe that analysts and investors use EBITDA and Adjusted EBITDA as supplemental measures to evaluate the overall operating performance of companies in our industry.

Our management uses EBITDA and Adjusted EBITDA:

as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis by removing the impact of items not directly resulting from our core operations;

for planning purposes, including the preparation of our internal annual operating budget;

to allocate resources to enhance the financial performance of our business;

to evaluate the effectiveness of our operational strategies;

to evaluate our capacity to fund capital expenditures and expand our business.

EBITDA and Adjusted EBITDA as calculated by us are not necessarily comparable to similarly titled measures used by other companies.

In addition, EBITDA and Adjusted EBITDA:

(a) do not represent net income or cash flows from operating activities as defined by GAAP;

(b) are not necessarily indicative of cash available to fund our cash flow needs;

and (c) should not be considered as alternatives to net loss, loss from operations, cash provided by (used in) operating activities or our other financial information as determined under GAAP.

We prepare Adjusted EBITDA by adjusting EBITDA to eliminate the impact of items that we do not consider indicative of our core operating performance.

You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis.

As an analytical tool, adjusted EBITDA is subject to all of the limitations applicable to EBITDA.

Our presentation of Adjusted EBITDA should not be construed as an implication that our future results will be unaffected by unusual or non-recurring items.

The table below reconciles income from continuing operations to EBITDA and Adjusted EBITDA for the periods presented:

Year ended September 30,

2016 2017 2018 2019 2020

(in thousands)

Net loss $ (59,926) $ (39,187) $ (11,615) $ (19,260) $ (3,774)

Interest and other income, net (1)

(1,217) (362) (450) (1,101) (577)

Provision (benefit) for income taxes 27,025 (451) (9,328) 1,200 801

Depreciation and amortization 6,502 5,796 4,599 5,091 6,290

EBITDA (27,616) (34,204) (16,794) (14,070) 2,740

Stock compensation expense (2)

12,247 7,377 6,597 6,823 5,660

Acquisition costs and impairment of goodwill and long-lived assets (3)

19,037 1,009 467 102 5

Business realignment expenses (4)

— 4,223 1,942 1,578 405

Fair value adjustment to acquisition earn-out liability (3)

— — — 3,500 200

Deferred revenue purchase accounting adjustment — — 454 818 3

Adjusted EBITDA $ 3,668 $ (21,595) $ (7,334) $ (1,249) $ 9,013

(1) Interest expense and other income, net excludes non-services pension and other postretirement benefit expense.

(2) Excludes the impact of forfeitures of stock awards by employees terminated by business realignment actions.

That impact is included in the business realignment expense line.

(3) Acquisition costs and impairment of long-lived assets, and fair value adjustments to acquisition earn-out liability are included in Other operating expenses on the Statements of Operations.

(4) Business realignment expense includes the amounts accounted for as exit costs under ASC 420 as described in Note 15 to the Consolidated Financial Statements, and the related impacts of business realignment actions subject to other accounting guidance.

Those related impacts were $317 thousand for the year ended September 30, 2019, due to forfeitures of stock awards by terminated employees.

No related impacts were associated with the other periods presented.

(1) At the beginning of the fourth quarter of fiscal 2021, there was $15 million available for share repurchases under our May 3, 2021 share repurchase program expiring June 30, 2023.

During the fourth quarter fiscal year 2021, repurchased $15 million of shared and had no remaining authorization under the May 3, 2021 share repurchase program.

On December 6, 2021, the Company's Board of Directors authorized the repurchase of up to $20 million of the Company's outstanding shares of common stock through December 31, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity