Good day, ladies and gentlemen, and welcome to the Fourth Quarter Full Year 2017 Liquidity Services Earnings Conference Call. At this time, all participants are in a listen-only mode and later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] And as a reminder, this conference is being recorded. I would like to introduce your host for today's conference Ms. Julie Davis, Senior Director of Investor Relations. Ma'am, you may begin.

Thank you, Amanda. Hello, and welcome to our fourth quarter and fiscal year 2017 financial results conference call. Joining us today are Bill Angrick, our Chairman and Chief Executive Officer; Jorge Celaya, our Chief Financial Officer; and Mike Sweeney, our Chief Accounting Officer. We will be available for questions after our prepared remarks. The following discussion or responses to your questions reflect management's views as of today, December 05, 2017, 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, we encourage you to 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, we will discuss certain non-GAAP financial measures and our press release and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. We also use certain supplemental operating data as a measure of certain components of operating performance, which we also believe is useful for management and investors. The supplemental operating data includes gross merchandise volume and should not be considered a substitute for or superior to GAAP results. At this time, I'd like to turn the presentation over to our CEO, Bill Angrick.

Thank you, Julie. Good evening, and welcome to our Q4 earnings call. I'll review our Q4 performance and provide an update on key strategic initiatives and today's developments regarding our DoD Surplus contract re-compete. Next, Mike Sweeney will provide more details on the quarter and full year results. Finally, Jorge Celaya, will provide our outlook for the current quarter. Although our Q4 and fiscal '17 consolidated results were mixed, we are pleased with the performance of our state and local government marketplace, our GovDeal segment and our retail supply chain marketplace our RSCG segment. Our GovDeal marketplace reported year-over-year GMV growth of 15.8% in Q4 and 17.5% in fiscal '17. We signed over 300 new agency sellers during Q4, including the State of Ohio, City of Boston, Orange County, Florida and Lake County, Illinois and we continue to expand the geographic reach of this marketplace throughout the United States. During Q4, GovDeals completed over 54,000 auctions for client agencies ranging from vehicles, heavy equipment, helicopters and airplanes. Our RSCG segment continued to grow the topline organically with GMV up 18.4% year-over-year in Q4 and up 11% year-over-year in full-year fiscal '17. Of note, we've increased adoption of our consignment model with many clients, which results in lower capital requirements and higher margins on GAAP revenues. Our Liquidation.com marketplace saw strong performance in buyer participation, GMV per completed transaction and overall site conversion. Our RSCG team continues to expand our returns management offering, to solve the needs of both retailers and manufacturers. We're developing new capabilities to expand our work in the processing, handling, refurbishing and sale of product returns, which is well-suited to the rapid growth of online retailing, which is fueling higher product returns industrywide. We've expanded our sales team and recently signed new multiyear returns management service contracts…

Thanks Bill. We finished the fourth quarter of fiscal '17 below the company's guidance range for GAAP net loss, GAAP diluted EPS and non-GAAP EPS. Results were within the guidance range for GMV and non-GAAP adjusted EBITDA. Next, I'll comment on our fourth quarter and fiscal year results with comparison to the prior year. GMV for the fourth quarter decreased 8.9% or $14.1 million to $145 million. GMV for the fiscal year decreased 2% or $12.7 million to $629.3 million. Fourth quarter GMV decreases of $26.5 million in our Capital Assets Group or CAG segment were probably offset by increases of $9.6 million in our GovDeal segment and $4.7 million in our Retail Supply Chain Group or RSCG segment. The CAG decreases related to delays in plant closings in our industrial verticals as well as the impact of Hurricane Harvey on our energy vertical, lower volume in our surplus contracts and the shift to lower value commodity sold within our scrap contract. Revenue for the fourth quarter decreased 21.8% or $17.2 million to $61.4 and decreased for the full year by 14.7% or $46.4 million to $270 million. The change for the quarter was primarily driven by decreases in our CAG segment from the GMV drivers just noted plus lower fee revenue on our surplus contracts. Revenue also declined from exiting certain truck center operations and from a nonrecurring reclassification in our RSCG segment that occurred in the prior year fourth quarter. These decreases were partially offset by a $1.3 million revenue increase in our GovDeal segment related to growth in existing and new seller accounts. Cost of goods sold for the fourth quarter decreased $8 million or 21.7% to $29 million and decreased for the fiscal year $16.9 million or 11.8% to $126.2 million. The fourth quarter decrease matched…

Thank you, Mike. Good afternoon. Looking ahead to 2018, we will remain focused on growing our commercial and municipal government marketplace and completing the initial goal lines of our e-commerce platform on to our remaining marketplaces, which in turn will position us to improve and expand service offerings for our sellers and buyer base. During 2018 our self-service capabilities are expected to expand at a more rapid pace beyond municipal government sellers as those commercial marketplaces result service go live. Overall, with our future consolidated marketplace, we will begin to also further facilitate and expand on our 3.2 million registered buyer base access our products that both we and our sellers sell on our platforms across our industry verticals to self-service and full-service capability. Our ability to expand demand of products sold on our marketplaces is expected to improve results for us and for those selling on our platforms. We expect our results in 2018 to reflect improvements across the commercial and municipal government businesses as we continue to benefit from; one, the continued growth in our retail and GovDeal segment and the return to topline growth for the commercial capital assets business. Two, improvements in our commercial capital assets segments; energy and industrial verticals following realignment efforts in this fourth quarter. Three, streamlining of our technology and corporate support functions to be more efficient and four, our transition earlier in 2017, restructuring the truck center business and the restructuring and realignment of our IronDirect business for the drop ship model. The various restructuring and realignment efforts during 2017 are expected to generate an annualized benefit during 2018 of approximately $8 million to $10 million. 2017 also reflected the negative impact of $3 million in inventory reserves related to IronDirect that we would not anticipate in 2018. These benefits in…

[Operator instructions] And our first question comes from the line of Colin Sebastian of Baird. Your line is open.

Thanks very much everybody. I guess first off with the Capital Assets Group obviously, a number of moving parts there, but as the largest contributor to profitability, I wonder if you would be able to put a finer point on where you think or where you see profit trends from that segment specifically as we look into the first part of fiscal '18? And related to that with the DoD contracts, I know you said you would provide more detail on the next call, but it would be helpful if you could perhaps characterize the proper profile of that segment for this year and how you'd expect that to change for the year ahead once the new contract terms are fully rolled out?

I'll give you a quick overview of the CAG business. The pipeline of business is improving. We've had a number of engagements signed in the last few months. We've also seen an increasing amount of activity at yearend as people approach tax selling and other quarter-end catalyst for sales. I think one of the things that has driven that CAG business has been execution in a cross-border manner where we can tap buyers in markets like China for sellers who have assets outside of that region. So, I think Colin, we're going to see sequential improvement in profitability in our commercial capital assets business. We've also noted that the energy supply chain is strengthening. We've seen some recovery in commodity prices there that has had a favorable impact on asset pricing. We had a couple nice pipe sales in the current quarter. We expect that to continue in fiscal '18. The other thing I'd point out on our capital assets business is higher average value per transactions. It's a more efficient business. So, as we move more volume, we have a lot of operating leverage in that business. From the very early days the DoD business was always designed to be a profitable business. It's a very mature business. It's also a business that's very, very customized. It's a highly unique business. I would say the reporting requirements, the technology and regulatory requirements, the property management requirements are all very unique and specific to the DoD. And the other side of the coin is that it's got a lot of complexity and as we noted in an 8-K, not too long ago, the contract became increasingly complex as a variety of new systems were introduced by the DLA as property and mix changed and became more of a struggle for…

Okay. That's helpful. And in terms of the scale or the operating leverage in the business overall, related to that I wonder Bill, your comfort level with the sales organization in terms of being in a good position with the go-to-market strategy to that Fortune 1000 client base and with the messaging around LiquidityOne, the platform now that you have some experience with that under your belts?

We think clients are really excited about the reporting capabilities, the self-service capabilities of the new platform. And I was the client in the energy pass not too long ago and they were very eager to do a lot of their work on their own accessing our data warehouse being able to manipulate information and get more reporting. The great thing about a new product is we're in an agile world now. So, we can take feedback and create value in a very short turnaround time. We're now doing nearly weekly releases on the new platform. So that type of cadence opens up a lot of opportunity to take client ideas, bounce them back and then prioritize and get those releases into production. So, we're excited about the ability to use this as a data management platform, the ability to target and reach our buyers with use of that data, the ability to drive mobile use of our platform and as we proceed with additional go lives, we'll be in a position to aggregate more and more of our property in a single marketplace experience which as you know drives that virtuous cycle. So fiscal '18 will probably be the most dramatic product release cycle for us that we've ever had.

And then lastly, one quick clarification as to when the new AuctionDeals site is launching? Has that launched or is that in the process of being launched, if you could provide any more details on the expectations, that ramp of that site?

If you were to look at it today, we have a beta site that really hasn't been marketed or promoted is active. We have active sellers and buyers on the platform. It is not the product that will be available. As we turn the page on December into early January, you will see the AuctionDeals platform go live in the January timeframe. So that will reflect the functionality and features of our LiquidityOne Platform and will supersede this beta site that we have that's been used to get feedback from sellers and buyers.

Thank you.

Thank you. [Operator instructions] And at this time, I am showing no further questions. I'd like to turn the conference back over to Ms. Julie Davis for any closing remarks.

Thank you. Thanks to everyone for joining our call today. We will now be available for any follow-up questions. Have a good evening.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the programs. You may now disconnect. Everyone, have a great day.