Julie Davis - Senior Director of Investor Relations William P. Angrick - Co-Founder, Chairman, Chief Executive Officer, President and Chief Executive Officer of DOD Surplus LLC Kathryn Ann Domino - Chief Accounting Officer James M. Rallo - Chief Financial Officer, Treasurer and President of Retail Supply Chain Group.

Shawn C. Milne - Janney Montgomery Scott LLC, Research Division Daniel Louis Kurnos - The Benchmark Company, LLC, Research Division Rohit Kulkarni - RBC Capital Markets, LLC, Research Division Jason Mitchell - BofA Merrill Lynch, Research Division Gary F. Prestopino - Barrington Research Associates, Inc., Research Division.

Good day, ladies and gentlemen, and welcome to the Q1 2015 Liquidity Services Earnings Conference Call. My name is Whitley, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms.

Julie Davis, Senior Director of Investor Relations. Please proceed..

Thank you, Whitley. Hello, and welcome to our first quarter fiscal year 2015 financial results conference call. Joining us today are Bill Angrick, our Chairman and Chief Executive Officer; Jim Rallo, our Chief Financial Officer and Treasurer; and Kathy Domino, 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, February 5, 2015, and we 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.

In 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..

Thanks, Julie. Good morning, and welcome to our Q1 earnings call. I'll begin the session by reviewing our Q1 performance and then provide an update on key strategic initiatives. Next, I will turn it over to Kathy Domino for more details on the quarter. Finally, Jim Rallo will provide our outlook for the current quarter.

Given the transition of our legacy businesses with DoD and Wal-Mart, we are pleased with our Q1 results, which were well above our guidance on both the top and bottom line, led by a strong quarter in our Commercial Capital Assets group which achieved record GMV and grew 36% over the prior year.

Our GovDeals business also logged strong year-over-year growth and market share gains. While top line growth was muted in our Retail Supply Chain group, this business benefited from improved operational efficiencies, improved results across virtually all key client programs and the growth of for liquidation.com marketplace.

During the quarter, our commercial sales team signed over 40 new clients and client programs demonstrating the strong market demand for our proven, scalable, reverse supply chain solution, which is the focus of our long-term growth strategy and investment program.

We remain focused on profitable growth and the steps we've taken to reset selective legacy programs while disruptive in the short-term are important to ensure proper returns on shareholder capital. During Q1, we generated cash flow from operating activities of $13.1 million, which was up 93% from the previous quarter.

Exiting Q1, our cash position has increased to $74.2 million, and we have a debt-free balance sheet, which provides a strong foundation to invest in our growth initiatives. During the balance of fiscal year 2015, we will continue to execute our Liquidity One transformation plan to drive long-term value for our clients, employees and shareholders.

We anticipate that the transition of legacy programs with key clients coupled with our heavy investment in IT, product development and marketing initiatives will dampen our growth and earnings results in the near term. Next, I would like to update you on key business trends and initiatives coming out of Q1.

First, we are still operating under the terms of our legacy DoD Surplus contract. There still remain a number of unresolved operational and contractual details related to phasing in the new surplus contracts, and we're working together with our agency partner to prioritize and resolve all open items.

We will continue to update shareholders as we conclude this phase of the process. We would remind investors that our DoD business has seen significant changes in the volume and mix of property we handle, which has reduced sales values. Accordingly, our near-term outlook is somewhat muted pending the stabilization of this part of our business.

Second, as we have discussed, the focus of our long-term growth strategy is on our commercial and municipal government business. By delivering better scale, service and results for clients in the global reverse supply chain, we continue to see growing demand from large U.S.

retailers, municipal agencies and blue-chip manufacturers in multiple regions, asset categories and service lines.

To capitalize on our market leadership, we will be relaunching the liquidity services brand in the commercial market during the current quarter to communicate a single brand message that explains our superior reach and unmatched expertise.

Positioning Liquidity Services as a single global enterprise with a wide range of services relevant to all of the verticals we serve will benefit our sales organization over time.

Trends in our Capital Asset business have improved, with record GMV and growth during Q1, we continue to penetrate existing accounts with more services in more locations around the globe, and we add new clients in many of the key industry verticals during the current quarter.

We continue to see positive results from our new global sales and marketing organization, which is working closely together to cross sell our full range of services in every region. Growth in our Asia Pacific region is particularly strong across all manufacturing verticals. Our Retail Supply Chain business is facing cross currents.

We've experienced declining year-over-year volumes with selected long-standing clients based on reduced retail sales in their core business, which is outside of our control. And we have reset our Jacobs Trading operations, which will mask growth in our retail Supply Chain business during fiscal year 2015.

However, we had a strong new business pipeline backed by our new capabilities in returns management, refurbishment and our new data warehouse reporting portal.

For example, we recently launched a new program for a premium consumer electronics manufacturer in 2 categories, TVs and high-end digital SLR cameras, by utilizing our refurbishment capabilities and multi-channel sales strategy. Additionally, on behalf of a top 20 U.S.

retailer, who historically had not had a sustainable remarketing program for store returns and shelf pulls, we leveraged our North American distribution center network and multi-channel sales approach to lower the client's logistics cost, avoid landfill fees and drive value for these secondary market products.

On the buyer side, during Q1, we saw improved buyer participation in our liquidation.com B2B marketplace, and we continue to expand our base of the international buyers, which provides clients with the ability to protect their brands and distribution channel relationships.

Our GovDeals municipal government business recorded solid growth in Q1, which we expect to continue throughout fiscal '15, driven by expansion with existing and new clients in the U.S. and Canada.

We are the market leader in this space and now serve approximately 30% of the largest cities and 40% of the largest states by population in the United States. With over 60,000 U.S. municipal agencies in our addressable market, we continue to invest in the growth of this part of our business.

Finally, we continue to execute on our Liquidity One transformation initiative. We must be patient as breakthrough results follows investment, not the other way around. Our vision is bold and long-term oriented. We are currently undertaking the largest investment in innovation in the history of our company and the reverse supply chain industry.

This investment program touches everything that we do and how we do it. Through our Liquidity One efforts, we are reviewing and enhancing our marketplaces, services, internal operations and supporting IT systems to deliver superior performance and results to our sellers, buyers and our internal team.

Additionally, our ability to scale and integrate partners and acquisitions will be radically improved through these effort. Quite simply, our Liquidity One initiative will enable Liquidity Services to deliver the most innovative, high-performance solution in our industry.

Our investment in innovation will deliver the most well-known and trusted brand to commercial sellers in the world, the largest buyer base in our industry with the most liquidity to transact surplus assets in multiple complementary sales channels, the most extensible and comprehensive data warehouse in our industry to inform strategic decisions for our internal team and clients, the most comprehensive services to support our clients and buyers wherever they are in the world to manage value and sell equipment and inventory and a vibrant ecosystem of global partners and complementary service providers who access our marketplace liquidity, data and the convenience of our tech platform to benefit their own businesses.

We're making progress every day, and we'll continue to advance our Liquidity One transformation efforts over the next 18 months to make our vision a reality.

This past quarter, our Liquidity team conducted extensive market research and convened multiple internal Liquidity One transformation workshops, with our functional subject matter experts to define a single set of best practices and processes for our customers and property management to inform our technical design.

We made significant progress in the rollout of our new data warehouse which provides significant value to our internal team and clients in the management valuation in sale of assets.

In some cases, we have invited our customers to partner with us and participate in our research and development efforts, so they can directly benefit from our innovations. During Q1, we also conducted an internal launch of our new brand message in anticipation of launching a new brand message externally in Q2.

We continue to upgrade and consolidate our infrastructure by closing a European data center and expanding service with an existing Tier 1 data center in the United States to provide improved performance.

We also expanded our distribution center network by adding space in our existing Las Vegas facility, and we've recently opened a new facility in North Carolina to service existing and new clients. In summary, we're making progress from the inside out, and this will ultimately unlock incredible value for our clients, buyers and shareholders.

We will continue to provide you updates as we implement our Liquidity One program. We are confident that we have the right team and strategic plan to delight customers and create a more diversified scalable business that creates continued growth and value for long-term owners. Now let me turn over to Kathy for more details on Q1 results..

one, a decrease in our retail commercial marketplaces, in part due to the termination of the Wal-Mart contract, as Bill previously discussed; and two, an increase in our technology and operation expenses, as previously discussed. Adjusted net income of $11.3 million, increased 8.5%.

Adjusted diluted earnings per share increased 18.7% to $0.38 based on approximately $29.9 million diluted weighted-average shares outstanding as a result of a tax benefit from a charge taken for impairment of goodwill and long-lived assets. We continue to have a strong debt-free balance sheet.

At December 31, 2014, we had a cash balance of $74.2 million, current assets of $186 million and total assets of $355.4 million with $91.8 million in working capital. Capital expenditures during the quarter were $1.6 million. We expect capital expenditures to be $8 million to $9 million for fiscal 2015.

I'll now turn it over to Jim for the outlook on the next quarter..

one, acquisition costs, including transaction costs and changes in earn out estimates and impairment of goodwill and long-lived assets and two, for stock-based composition costs which we estimate to be approximately $3.5 million to $4 million for the fiscal second quarter. The stock-based composition costs are consistent with fiscal year 2014.

We will now answer questions..

[Operator Instructions] Your first question comes from the line of Shawn Milne with Janney Capital Markets..

Jim, I wonder if you could help us out a little bit just in transitioning from the above expected numbers in the quarter in EBITDA to a pretty weak guidance in the following quarter.

How much is -- of the Wal-Mart change, if any, was in the December quarter, probably not, and if you could maybe help us just what that impact might be in the next quarter? And then I -- just on the DoD side, I understand there is still a lot of changes going on, but the surplus volume remains above where we thought.

So it sounds like none of that's -- none of those changes happened in the current quarter?.

No problem, Shawn. So I think, one, your first question on Wal-Mart. So the termination of the contract came in December. Obviously, we made that 8-K announcement. We obviously have inventory on hand for Wal-Mart. So there really was a little effect on the quarter, meaning the December quarter for Wal-Mart.

You'll see that tailing off this quarter and the next quarter as we sell our inventories. So there are -- there is a significant drop obviously related to that. We would expect to have all of that certainly done by the end of the fiscal year, probably by the end of the third quarter. As far as the DoD contract.

So we -- the DoD contract was in full operational mode as has been historically under the CV3 contract last quarter.

What we've seen at the beginning of the quarter and towards the very end of last quarter, was obviously, IronPlanet has got their trucks, which they are selling now, so they have removed the rolling stock flow from us and diverted to IronPlanet who as you know won that contract in the last RFP.

We're continuing to operate under the original surplus contract, also known as a CV3 contract, until notice by the Department of Defense. They have exercised their extensions, which run through February. To our knowledge, we haven't gotten any news recently.

We'll continue to assume that we're operating under that CV3 contract into the next quarter until we get further notice from the Department of Defense. Once we do, we will certainly file an 8-K and update shareholders and yourselves at that time.

So we do anticipate a fairly decent runoff in the Department of Defense business, simply because again, the trucks have been diverted to the other vendor..

Maybe just -- yes, go ahead, Bill..

Let me also add -- Shawn just a quick follow-up. Obviously, there is a stair step investment program here with Liquidity One, and we have a number of activities underway that [indiscernible] rollout of our new brand as we are able to move into the current in the balance of the year..

[indiscernible] and we haven't really seen the change in cost of goods sold yet on just the non-rolling stock piece as DoD.

I mean, is there a scenario here where in Q3 or Q4 you actually lose money?.

Well, the cost structure of DoD has a number of inputs. Certainly, the mix of the property affects return [indiscernible] rate of return. We've had a significant mix shift that is working its way through. [indiscernible] and number of inputs. Certainly, the mix of the property affects return -- growth rate of return.

We've had significant mix shift that is working its way through that has impacted returns. Once that's also -- once that's digested, we believe there is opportunity to improve the growth rate of return which will support expanded margins relative to where we've been in the last, say, 3 quarters.

Also, we have efficiency gains that we've targeted and are realizing in our commercial business, both on the capital assets side and retail supply chain side, which are enhancing margins notwithstanding any change in COGs.

The variability around the businesses is such that you have a wide range of scenarios, so you could have outside performance or you could have scenarios where you are operating at a below breakeven period for a certain amount of time. That's actually taken place in various investment phases of both our DoD and non-DoD business.

I think the target margins that we have in fiscal '16, fiscal '17, are all focused on profitable operations. We've had a number of resets of the businesses to ensure the appropriate returns on capital. We're very focused on free cash flow as much more -- as compared to GAAP results and I think the free cash flow results have been quite good.

So that'll be our continued focus, Shawn..

One of points Shawn, and I think you specifically obviously wanted to address the Wal-Mart and DoD changes. But you've got a significant seasonality change, as Bill commented in his earlier points, in our Capital Assets business.

So on the commercial side of the business, the 3/31 quarter, the first quarter of the calendar year, is a very low quarter for that business.

When I say a low, I mean almost nascent, because what happens is we work with a lot of companies that are 12/31 or calendar year companies, they move a lot of products before year end and then, what happens is there is sort of this lull at the beginning of their next fiscal year, which again, would be our March quarter and that starts to pick up as we go through the year.

That is a normal seasonality in that business. So as Bill indicated in his comments, we had very good performance in that business year-over-year and quarter-over-quarter into December quarter, but we're expecting a fairly large drop-off. So that's one of the larger drivers too of the decrease, not just the Department of Defense and Wal-Mart..

But just to be clear. We would not be in any way concerned if GAAP results were to demonstrate low performance to even a loss provided that our operating cash flows were on target in delivering the appropriate returns on capital during this transition phase.

Ultimately that's where we're targeting value creation, it’s getting strong returns on invested capital and we're taking the steps to deliver that. And I think that was on display in the current quarter..

Your next question comes from the line of Dan Kurnos with The Benchmark Company..

Just a quick follow-up on top line, not to belabor of point here, but just on the results from Q1.

You were saying, there was no -- there wasn’t any pull forward from your fiscal second quarter into Q1, it really just timing of the way things fell and sort of this lull in capital asset that should reaccelerate over the balance of the year, is that fair?.

That's correct. Yes, Dan. Yes, there was no pull into this -- into the December quarter from the March quarter now..

Okay, great. And then, Jim, you mentioned in your prepared remarks the streamlining of Go.

I just wonder if you could give us a sort of an update on how that's going, if you feel like you finally right-sized that business yet and sort of what your strategic plan is with it going forward?.

Sure. Well first off, Dan, we've fully integrated that business into the rest of our operations. So we don’t really look at it as a go on an individual basis. As Bill indicated under the Liquidity One transformation, yes, we're working on obviously all the marketplace integrations as well. But the performance of that business is strong.

Many of the new clients that we signed up have been on the -- in the manufacturing vertical. We again have streamlined that business as part of our realignment initiatives that we announced on October 1. So we're certainly pleased with the direction that we're heading in that vertical..

Notwithstanding that we have not launched a rebrand, notwithstanding that we are doing a bunch of internal integration efforts under Liquidity One. The sales leadership, the account management leadership is doing a terrific job in our capital assets group. It's one global P&L, the artifact around legacy marketplace brands is -- it's really gone away.

And so the cross-selling is happening in Americas and the Europe, Middle East and Africa and in Asia Pacific is what is enabling growth there.

So we're probably a little ahead of schedule on the CAG business growing, the way it's growing and when we're unburdened from a lot of this integration effort and have more focus on pure growth, which is our intent is to move into fiscal '16, fiscal '17, we think there is a huge global market.

They are embracing what we have to offer, which is a single global platform, multilingual, multicurrency with all the supporting services in the global marketplaces of buyers to create value for these clients.

So we're quite pleased with the performance of the Capital Assets business, and I think that's an area for a lot of value creation, as we move through our next year to 2 years..

It's helpful color.

Is there any concern though, in the energy vertical, with the fact that oil prices have come down so much and we're seeing pretty significant cutbacks in CapEx from a lot of the players in oil, that they could remain an impairment to you guys going forward?.

Sure. Well, first to put it in context. Assuming our entire business is energy, which it's not, it's a drop in the bucket of the global CapEx spend, the amount of property, plant and equipment that the energy market represents. We've been through this cycle before.

In the economic downtown in 2008, 2009, you had cross currents and the fact that we are in so many locations touching all parts of the energy supply chain, from exploration and production to downstream to refining and service providers, we are able to make markets independent of where the cycle is.

Certainly, on the one hand, lower investment drives lower purchases of new assets, but on the other end of that, it means that you have a lot of assets that are idle, which are not in production, which may need to be disposed of. So you can benefit from both ends of the market in our categories.

And so, I think, we're well positioned to handle these types of cycles..

Great. And then just last one for me. Just on the expense side. I know, Jim, it's kind of difficult to, sort of, predict the timings of these things. You are trying to help us the best you can.

But your OpEx was actually down sequentially despite calling for increased investments in tech and marketing and so just curious how we should think about the efficiencies balancing against increased expense as we go through this transition period?.

Sure, Dan. Well I think, as Bill indicated, we kicked off a lot of the work this quarter in the end of -- really the end of the last fiscal year, the September quarter. So we haven't got started on a lot of the development work yet that we are undertaking. That's going to rollout in -- as we've indicated, in the next 16 to 18 months.

So I think you'll start to see that spend to increase. You'll also see -- again, there'll be variability in that spend, which again, makes it a little more difficult to break multiple quarters out, again, from Bill and my comments. So I do expect to have increased spend in the next quarter..

Your next question comes from the line of Rohit Kulkarni of RBC Capital..

A couple of questions.

On the retail side of things, any color you can give on how the conversation with new or existing customers has changed after Wal-Mart? Any -- are you worried about any kind of negative network effect settling in within retail? And then, bigger picture, when you look across all the other verticals, energy, transportation, tech manufacturing industries, any specific vertical or early signs you're seeing of success of the Liquidity One or is that still very early in the game?.

Let me address the discussions regarding clients and the Wal-Mart legacy contract. Recall that Liquidity Services did not negotiate the contract that Jacobs Trading had with the client.

We acquired that business and as such acquired the legacy contract and we work in good faith with Wal-Mart to manage through the change in the operational conditions of the supply chain of the client and where we felt we needed to be able to manage and protect our operations and resources to deliver the best value to, not only Wal-Mart but our buyers and our shareholders.

Ultimately, in effect there was a mutual agreement that, that contract was obsolete, and in fact it didn't really map to the current property mix, the current operational footprint it needs and so we basically took a time out through the separation and settlement agreement that we ultimately agreed to recently.

And so our appetite to work together remains. We have current programs in the United States that we're working on. We have other collaboration opportunities, both in the U.S. and outside the U.S. that we're working on and so business continues. We have a global client portfolio, both in the retail and on the vendor side of the retail supply chain.

And we have had a large degree of interest in our marketplace, both our B2B and B2C distribution channels. This multichannel sales approach is unique and highly valued. Our U.S.

distribution network is in fact growing because of the demand for our services, including returns management, return-to-vendor services, refurbishing capabilities that led to few really interesting benchmark client wins.

There is an increased focus in the industry on formal request for proposals to look at not just one-off opportunities, but national, in some cases even global, strategically managed reverse supply chain programs for excess inventory and returns.

We believe our work over the last decade has helped to move the industry to having those, sort of, strategic comprehensive reviews of strategy. We are delighted to partner with Wal-Mart and other large U.S.

retailers and their vendor base, to find the best strategic comprehensive solutions to implement wholesale change and leverage our data through this data warehouse that we've developed, leverage our global liquidity and buyer base. We are able to move product outside of United States for a lot of these clients.

So if anything, the conversation -- the frequency and quality of the conversations has increased, and we are excited by the number of RFPs that are on the street because of the type of conversations we've been having for over 10 years in this sector. So we're very sanguine about what's going on in Retail Supply Chain.

I think, your second question related to Liquidity One investment. The investment is multi-pronged. It's really about building better process related to the customer experience so that they can seamlessly access our liquidity and data to grow their business.

It's about a better product, the marketplace product that our buyer sees when they log in, the market product that a seller sees when they're using our client reporting tools and accessing our services. And when you put those together, you drive innovative technology to support those activities.

And so we're all about innovation, we're all about reinventing the reverse supply chain, reimagining what's possible, taking those ideas to our clients and in several cases welcoming them in to the discussion and really welcoming them as a research and development partner to benefit directly from this R&D.

And that's what we do here, we invest a lot in the best product to ultimately drive innovation and growth. That's not something that's showing up in our current results. We believe that will be an impacting result as we move into fiscal '16 and beyond..

Yes, I'll just add. Well, it's the one area where we've seen efficiency is already on the global sales organization.

So as Bill discussed earlier, we have fully integrated the global sales team, we have seen efficiencies in that area, that's one of the areas where you're seeing efficiencies drive growth, and I think that was reflected in the December quarter results, particularly on the commercial capital asset vertical.

So we are pleased with the early results but we still have got a lot of work to do, again, over the next 16 to 18 months..

Your next question comes from the line of Nat Schindler with Bank of America Merrill Lynch..

This is Jason here for Nat. I just kind of have a question about your focus for the commercial business going forward. I mean, it seems like your capital asset side is doing quite a bit better than your retailer side.

Do you get stronger margins out of the capital asset side versus retailer? And then of the 40 clients you mentioned signing, were those primarily retailer clients or capital assets clients?.

Sure. Well, a couple of broad comments. The retail business has consolidated over the last 20 years. And so when you look at the types of programs and number of clients, I think you inherently, based on the industry structure, have fewer larger programs in retail business on the retail side.

However, on the vendor side, I think there is a much larger market in terms of number of accounts, number of situations, here there is a huge globalization of manufacturing, and so a lot of the clients that we've recently engaged with are offshore. They're not U.S. domiciled companies. They sell to U.S.

retailers, they need a presence and support with the reverse supply chain strategy in the United States, but they are outside of the United States. So I would say, more concentrated, fewer number of clients on the U.S. retail side but larger number on the vendors that feed the retail community on the manufacturing side.

The CAG business, ultimately the capital asset group business is supporting manufacturers who have property, plant and equipment to make things and they want to protect their brand, they want to protect their financial control, they want to have quick access to the buyer base wherever they are.

So that mix of clients may be slightly higher for "manufacturers" versus retailers; however, the manufacturer side has both an inventory link to retail supply chain as well as the equipment they use to make things and we are providing coverage and solutions on both.

With respect to margins, when we go back to the beginning of for our business, our pricing model is flexible and that the price that we have reflects the range of services we provide. And so with regard to clients, we will have some base level revenue sharing associated with a basic level of service.

And then as clients adopt to use more and more of our value-added services, those fees will be modified appropriately because we are delivering cost-savings and efficiencies to the clients which they appreciate and they will pay for that. So I think in both cases, you have a comparable pricing model menu services, comparable margins.

The one major difference is that we have a significant investment in fixed distribution center operations in our retail supply chain business. That presence has a higher level of fixed cost when you are ramping up facilities and I mentioned on the call we added a facility in North Carolina, roughly 400,000 square feet.

We added an annex to our Las Vegas facility because we have the demand for the services. So in the near term we'll be absorbing those fixed costs, which will, in effect, pressure margins but over time it's creating a much stickier high-value proposition to the client base.

The Capital Asset business is not as focused on fixed operational locations, it's much more of a sell-in-place model, and that's probably the biggest difference between the 2..

[Operator Instructions] Your next comes from the line of Gary Prestopino with Barrington Research..

Hey, Bill, just to be clear for myself.

The Liquidity One investment that you're making, when will that be completed, in fiscal '16 or fiscal '17?.

Largely completed through the end of fiscal '16. We'll be -- there is some potential follow-on work that could be realized in early fiscal '17, but a lot of the heavy lifting will be done by the end of fiscal '16..

Okay. And then, I seemed to recall, I have a number in my head that was mentioned from prior calls or discussions.

Are you spending an incremental of about $7 million per year to get this up and running, is that right?.

I mean, that -- it's roughly correct. We had, I believe, $14 million number over 2 years and if it's evenly distributed that would be $7 million a year. The actual spend maybe an uneven distribution curve. So we just need to be flexible in how we look at the guidance reflecting what was actually being spent..

Okay. And then, as you're doing a lot with your technology platform, data warehousing and all of that, but I think the key thing is you are integrating them under one brand.

But the various things that you are doing with Liquidity One, do you get them all completed and then roll it out or do you roll it out in stages as you complete each endeavor?.

It depends on what module we're talking about, relative to things like a uniform align brand message, well that's rolling out this current quarter and is not as dependent on introducing new technology.

There are other pieces that must be done in an integrated fashion and therefore, we would not be launching, let's say, a new buyer facing marketplace platform until all the modules are complete and fully integrated around customer management, property management, financial management systems, those 3 need to be fully integrated and supporting each other before we deliver the desired level of experience.

So pieces like that will be delayed. Another area that is making an impact today is our data warehouse system, which is very powerful. We have lots of data on asset values and inventory and equipment, in virtually every category that a client could have on the balance sheet.

So that's being used today by our sales organization, our operational teams and we're sharing that with clients and continue to improve it based on their feedback.

So depending upon the module, we'll try to bring it into play this year and then on some of the larger fundamental changes to -- for example, to marketplace platform, that will be shifted out to probably fiscal -- late fiscal '16..

There are no further questions in queue at this time. I'll now turn the call back over to Ms. Julie Davis for closing remarks. Please proceed..

Thank you for joining our call today. We'll now be available for any follow-up questions. Thank you and have a nice day..

Ladies and gentlemen, that conclude today's conference. Thank you for your participation. You may now disconnect. Have a great day..