Heritage Global Inc. Reports Third Quarter 2024 Results
Heritage Global (NASDAQ: HGBL) reported its Q3 2024 financial results, showing a decline in performance compared to the same period in 2023. Operating income decreased to $1.5 million from $2.8 million, while net income fell to $1.1 million ($0.03 per diluted share) from $2.0 million ($0.05 per diluted share). The company strengthened its balance sheet, increasing stockholders' equity to $66.1 million and net working capital to $16.2 million. The Board approved an increase in share repurchase authorization to $6.0 million, with $4.1 million remaining. The industrial segment experienced lower revenue due to fewer large auctions, while the financial assets division performed as expected.
Heritage Global (NASDAQ: HGBL) ha riportato i risultati finanziari del terzo trimestre 2024, evidenziando un calo delle performance rispetto allo stesso periodo del 2023. Il reddito operativo è sceso a 1,5 milioni di dollari rispetto ai 2,8 milioni di dollari, mentre l'utile netto è diminuito a 1,1 milioni di dollari (0,03 dollari per azione diluita) rispetto ai 2,0 milioni di dollari (0,05 dollari per azione diluita). L'azienda ha rafforzato il proprio bilancio, aumentando il capitale netto degli azionisti a 66,1 milioni di dollari e il capitale circolante netto a 16,2 milioni di dollari. Il Consiglio ha approvato un incremento dell'autorizzazione al riacquisto di azioni a 6,0 milioni di dollari, con 4,1 milioni di dollari rimanenti. Il segmento industriale ha registrato ricavi inferiori a causa di un numero ridotto di aste importanti, mentre la divisione dei beni finanziari ha performato come previsto.
Heritage Global (NASDAQ: HGBL) ha informado sus resultados financieros del tercer trimestre de 2024, mostrando una disminución en el desempeño en comparación con el mismo período de 2023. Los ingresos operativos cayeron a 1,5 millones de dólares desde 2,8 millones de dólares, mientras que el ingreso neto descendió a 1,1 millones de dólares (0,03 dólares por acción diluida) desde 2,0 millones de dólares (0,05 dólares por acción diluida). La compañía fortaleció su balance, aumentando el capital contable de los accionistas a 66,1 millones de dólares y el capital de trabajo neto a 16,2 millones de dólares. La Junta aprobó un aumento en la autorización de recompra de acciones a 6,0 millones de dólares, con 4,1 millones de dólares restantes. El segmento industrial experimentó menores ingresos debido a menos subastas importantes, mientras que la división de activos financieros se desempeñó como se esperaba.
Heritage Global (NASDAQ: HGBL)는 2024년 3분기 재무 결과를 발표했으며, 2023년 같은 기간에 비해 성과가 감소했음을 보여주었습니다. 운영 수익은 280만 달러에서 150만 달러로 감소하였고, 순이익은 200만 달러(희석 주당 0.05 달러)에서 110만 달러(희석 주당 0.03 달러)로 하락했습니다. 회사는 재무 상태를 강화하여 주주 자본을 6610만 달러, 순운전자본을 1620만 달러로 증가시켰습니다. 이사회는 600만 달러의 자사주 매입 승인을 증가시켰으며, 잔여 금액은 410만 달러입니다. 산업 부문은 큰 경매가 줄어들어 수익이 감소했으며, 재무 자산 부문은 예상대로 성과를 냈습니다.
Heritage Global (NASDAQ: HGBL) a reporté ses résultats financiers du troisième trimestre 2024, montrant un déclin de la performance par rapport à la même période en 2023. Le revenu opérationnel a diminué à 1,5 million de dollars, contre 2,8 millions de dollars, tandis que le bénéfice net est tombé à 1,1 million de dollars (0,03 dollar par action diluée) contre 2,0 millions de dollars (0,05 dollar par action diluée). L'entreprise a renforcé son bilan, augmentant les capitaux propres des actionnaires à 66,1 millions de dollars et le fonds de roulement net à 16,2 millions de dollars. Le Conseil a approuvé une augmentation de l'autorisation de rachat d'actions à 6,0 millions de dollars, avec 4,1 millions de dollars restants. Le secteur industriel a connu une baisse des revenus en raison de moins de grandes enchères, tandis que la division des actifs financiers a performé comme prévu.
Heritage Global (NASDAQ: HGBL) hat die Finanzzahlen für das dritte Quartal 2024 veröffentlicht, die einen Rückgang der Leistung im Vergleich zum gleichen Zeitraum im Jahr 2023 zeigen. Das Betriebsergebnis sank auf 1,5 Millionen Dollar von 2,8 Millionen Dollar, während der Nettogewinn auf 1,1 Millionen Dollar (0,03 Dollar pro verwässerter Aktie) von 2,0 Millionen Dollar (0,05 Dollar pro verwässerter Aktie) fiel. Das Unternehmen hat seine Bilanz gestärkt und das Eigenkapital der Aktionäre auf 66,1 Millionen Dollar und das Nettoumlaufvermögen auf 16,2 Millionen Dollar erhöht. Der Vorstand genehmigte eine Erhöhung der Genehmigung zum Aktienrückkauf auf 6,0 Millionen Dollar, wobei noch 4,1 Millionen Dollar verbleiben. Der Industriesektor erlebte einen Rückgang der Einnahmen aufgrund weniger großer Auktionen, während die Finanzanlagenabteilung wie erwartet abschnitt.
- Stockholders' equity increased to $66.1M from $61.1M
- Net working capital improved to $16.2M from $11.6M
- Secured new contracts with Fortune 100 clients
- Board approved increased share repurchase program to $6.0M
- Operating income declined 46.6% to $1.5M from $2.8M YoY
- Net income decreased 44.9% to $1.1M from $2.0M YoY
- Diluted EPS dropped to $0.03 from $0.05 YoY
- Lower than expected industrial segment revenue
- Largest borrower in default and non-accrual status
Insights
Heritage Global's Q3 2024 results show significant headwinds, with
Despite challenges, the balance sheet strengthened with stockholders' equity increasing to
The market context reveals both challenges and opportunities. High consumer spending coupled with elevated delinquency rates creates a favorable environment for financial asset transactions. However, the company's strategic pivot away from lending toward industrial assets and brokerage indicates risk management concerns. The increased M&A opportunities and market consolidation potential could provide growth catalysts, though execution will be critical.
The stock repurchase activity (601,449 shares) reflects management's view that shares are undervalued, yet the declining financial performance and strategic repositioning suggest near-term volatility. The secured high-profile bankruptcy cases and new Fortune 100 relationships provide a foundation for future revenue streams, potentially offsetting current headwinds.
Third Quarter and First Nine Months 2024 Summary of Financial Results (unaudited):
($ in thousands, except per share amounts) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||
|
2024 |
|
|
2023 |
|
2024 |
|
|
2023 |
|
Operating income |
$ |
1,479 |
|
$ |
2,769 |
$ |
7,581 |
|
$ |
9,764 |
Net income |
$ |
1,089 |
|
$ |
1,977 |
$ |
5,385 |
|
$ |
7,585 |
Net income per share – diluted |
$ |
0.03 |
|
$ |
0.05 |
$ |
0.14 |
|
$ |
0.20 |
|
|
|
|
|
|
|
||||
(Non-GAAP Financial Measures) (1) |
|
|
|
|
|
|
||||
EBITDA |
$ |
1,631 |
|
$ |
2,901 |
$ |
8,021 |
|
$ |
10,137 |
Adjusted EBITDA |
$ |
1,914 |
|
$ |
3,076 |
$ |
8,822 |
|
$ |
10,719 |
(1) EBITDA and Adjusted EBITDA are commonly used non-GAAP financial measures utilized by management as a supplemental tool to evaluate the underlying operating performance of the Company on an ongoing basis and should be considered together with Heritage Global’s GAAP financial measures. Definitions and disclosures regarding non-GAAP financial information including reconciliations are included at the end of the press release.
Third Quarter 2024 Review:
-
The Company recorded operating income of
$1.5 million $2.8 million -
EBITDA totaled
$1.6 million $2.9 million $1.9 million $3.1 million -
Net income totaled
$1.1 million $0.03 $2.0 million $0.05 -
The Company strengthened its balance sheet by increasing stockholders’ equity to
$66.1 million $61.1 million $16.2 million $11.6 million -
On September 13, 2024 the Company's Board of Directors approved an amendment to the repurchase program which increased the authorized aggregate amount of common shares the Company may repurchase to an aggregate of
$6.0 million $4.1 million
Heritage Global Chief Executive Officer Ross Dove commented, “Our third quarter results reflected lower than expected revenue in our industrial segment primarily due to the absence of the larger auctions we typically see. Despite the quarter’s result, our business development efforts were strong as we were selected to manage two prominent bankruptcy cases and added several notable Fortune 100 corporate clients, including one of the top five largest companies by market cap. Additionally, we have been engaged to run an auction project for a preeminent aerospace company slated to take place in 2025. These types of engagements illustrate the strong brand recognition and the excellent reputation our Company has within the industry.”
“The performance in the financial assets side of the business was consistent with our expectations. Consumer spending remains near all-time highs and with this dynamic alongside elevated delinquency rates, we expect the amount of charge-offs available for sale to remain robust. At NLEX, we continue to capture the opportunities presented by the current market landscape to drive growth and continued profitability.
“As we move through the balance of 2024, we are focused on executing on our strategic priorities and delivering continued profitability. We remain confident in Heritage Global’s long-term value proposition and look forward to the opportunities ahead. On the M&A front, I am encouraged by the ongoing increase in potential opportunities and receptivity to our initial inquiries. Our team is well positioned for significant progress as consolidation activity appears to be escalating in the markets we serve.”
Heritage Global Chief Financial Officer Brian Cobb commented, “As previously announced, Heritage Global Capital's largest borrower was placed into a default and non-accrual status in the second quarter of 2024. With our visibility today, the Company does not currently intend to make any significant structural changes to its lending business. While the market for debt buyers is attractive, we will conservatively manage the portfolio to gain a higher concentration of performing loans and to limit the consolidated Company’s potential exposure to lending risk. Concurrently, we plan to utilize our strong cash position, continued profitability, and potential financing capabilities to invest more heavily in our industrial asset division and brokerage segment strategic initiatives, while repurchasing shares opportunistically.”
Third Quarter Conference Call
Management will host a webcast and conference call on Thursday, November 7, 2024, at 5:00 p.m. ET to discuss financial results for the third quarter of 2024. Analysts and investors may participate via conference call, using the following dial-in information:
- 1-800-717-1738 (Domestic)
- 1-646-307-1865 (International)
- Conference ID: 59480
To access the webcast, individuals can use this link. The conference call will also be available in the Investor Relations section of the Company’s website. To listen to a live broadcast, go to the site or click on the webcast link at least 10 minutes prior to the scheduled start time in order to register.
Replay
A replay of the call will be available approximately three hours after the call ends through November 21, 2024. To access the replay, dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The replay pin number is 1159480. A webcast replay can also be accessed on the Investor Relations section of the Company’s website.
About Heritage Global Inc. (“HG”)
Heritage Global Inc. (NASDAQ: HGBL) values and monetizes industrial & financial assets by providing acquisition, disposition, valuation, and lending services for surplus and distressed assets. This aids in facilitating the circular economy by diverting useful industrial assets from landfills and operating an ethical supply chain by overseeing post-sale account activity of financial assets. Specialties consist of acting as an adviser, in addition to acquiring or brokering turnkey manufacturing facilities, surplus industrial machinery and equipment, industrial inventories, real estate, and charged-off account receivable portfolios through its two business units: Industrial Assets and Financial Assets.
Definitions and Disclosures Regarding non-GAAP Financial Information
The Company defines EBITDA as net income/loss plus depreciation and amortization, interest and other expense, and provision for income taxes. Adjusted EBITDA reflects EBITDA adjusted further to eliminate the effects of stock-based compensation. Management uses EBITDA and Adjusted EBITDA in assessing the Company’s results, evaluating the Company’s performance and in reaching operating and strategic decisions. Management believes that the presentation of EBITDA and Adjusted EBITDA, when considered together with our GAAP financial statements and the reconciliation to the most directly comparable GAAP financial measure, is useful in providing investors a more complete understanding of the factors and trends affecting the underlying performance of the Company on a historical and ongoing basis. The Company’s use of EBITDA and Adjusted EBITDA is not meant to be, and should not be, considered in isolation or as a substitute for, or superior to, any GAAP financial measure. You should carefully evaluate the financial information, below, which reconciles our GAAP reported net income to EBITDA and Adjusted EBITDA for the periods presented (in thousands).
Forward-Looking Statements
This communication includes forward-looking statements based on our current expectations and projections about future events. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. While the Company believes the forward-looking statements contained in this communication are accurate, these forward-looking statements represent the Company’s beliefs only as of the date of this communication, and there are a number of factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements, including variability in magnitude and timing of asset liquidation transactions, the collectability of the charged off receivables that secure our loan portfolio, the impact of changes in the
-financial tables follow-
HERITAGE GLOBAL INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands of US dollars, except share and per share amounts) (unaudited) |
||||||||||||||||
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Services revenue |
|
$ |
8,063 |
|
|
$ |
9,985 |
|
|
$ |
25,527 |
|
|
$ |
30,040 |
|
Asset sales |
|
|
2,347 |
|
|
|
5,566 |
|
|
|
9,067 |
|
|
|
15,221 |
|
Total revenues |
|
|
10,410 |
|
|
|
15,551 |
|
|
|
34,594 |
|
|
|
45,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of services revenue |
|
|
1,735 |
|
|
|
2,423 |
|
|
|
4,665 |
|
|
|
6,570 |
|
Cost of asset sales |
|
|
1,458 |
|
|
|
3,413 |
|
|
|
6,140 |
|
|
|
9,683 |
|
Selling, general and administrative |
|
|
5,686 |
|
|
|
6,806 |
|
|
|
18,390 |
|
|
|
19,546 |
|
Depreciation and amortization |
|
|
152 |
|
|
|
132 |
|
|
|
440 |
|
|
|
373 |
|
Total operating costs and expenses |
|
|
9,031 |
|
|
|
12,774 |
|
|
|
29,635 |
|
|
|
36,172 |
|
Earnings of equity method investments |
|
|
100 |
|
|
|
(8 |
) |
|
|
2,622 |
|
|
|
675 |
|
Operating income |
|
|
1,479 |
|
|
|
2,769 |
|
|
|
7,581 |
|
|
|
9,764 |
|
Interest income (expense), net |
|
|
17 |
|
|
|
(56 |
) |
|
|
(183 |
) |
|
|
(225 |
) |
Income before income tax expense |
|
|
1,496 |
|
|
|
2,713 |
|
|
|
7,398 |
|
|
|
9,539 |
|
Income tax expense |
|
|
407 |
|
|
|
736 |
|
|
|
2,013 |
|
|
|
1,954 |
|
Net income |
|
$ |
1,089 |
|
|
$ |
1,977 |
|
|
$ |
5,385 |
|
|
$ |
7,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding – basic |
|
|
36,576,931 |
|
|
|
36,742,018 |
|
|
|
36,641,820 |
|
|
|
36,675,838 |
|
Weighted average common shares outstanding – diluted |
|
|
37,189,029 |
|
|
|
37,647,321 |
|
|
|
37,292,200 |
|
|
|
37,605,363 |
|
Net income per share – basic |
|
$ |
0.03 |
|
|
$ |
0.05 |
|
|
$ |
0.15 |
|
|
$ |
0.21 |
|
Net income per share – diluted |
|
$ |
0.03 |
|
|
$ |
0.05 |
|
|
$ |
0.14 |
|
|
$ |
0.20 |
|
HERITAGE GLOBAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of US dollars, except share and per share amounts) |
||||||||
|
|
|
|
|
|
|
||
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
ASSETS |
|
(unaudited) |
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
26,571 |
|
|
$ |
12,279 |
|
Accounts receivable (net of allowance for credit losses of |
|
|
877 |
|
|
|
1,910 |
|
Current portion of notes receivable (net of allowance for credit losses of |
|
|
3,959 |
|
|
|
6,581 |
|
Inventory – equipment |
|
|
4,721 |
|
|
|
5,074 |
|
Other current assets |
|
|
833 |
|
|
|
448 |
|
Total current assets |
|
|
36,961 |
|
|
|
26,292 |
|
Non-current portion of notes receivable, net |
|
|
7,337 |
|
|
|
10,890 |
|
Equity method investments |
|
|
21,447 |
|
|
|
21,361 |
|
Right-of-use assets |
|
|
2,381 |
|
|
|
2,539 |
|
Property and equipment, net |
|
|
1,692 |
|
|
|
1,705 |
|
Intangible assets, net |
|
|
3,460 |
|
|
|
3,753 |
|
Goodwill |
|
|
7,446 |
|
|
|
7,446 |
|
Deferred tax assets |
|
|
7,740 |
|
|
|
9,115 |
|
Other assets |
|
|
64 |
|
|
|
67 |
|
Total assets |
|
$ |
88,528 |
|
|
$ |
83,168 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable and accrued liabilities |
|
$ |
6,268 |
|
|
$ |
7,237 |
|
Payables to sellers |
|
|
13,125 |
|
|
|
4,975 |
|
Current portion of third party debt |
|
|
525 |
|
|
|
1,733 |
|
Current portion of lease liabilities |
|
|
802 |
|
|
|
789 |
|
Total current liabilities |
|
|
20,720 |
|
|
|
14,734 |
|
Non-current portion of third party debt |
|
|
— |
|
|
|
5,495 |
|
Non-current portion of lease liabilities |
|
|
1,681 |
|
|
|
1,859 |
|
Total liabilities |
|
|
22,401 |
|
|
|
22,088 |
|
|
|
|
|
|
|
|
||
Stockholders’ equity: |
|
|
|
|
|
|
||
Preferred stock, |
|
|
6 |
|
|
|
6 |
|
Common stock, |
|
|
373 |
|
|
|
372 |
|
Additional paid-in capital |
|
|
295,241 |
|
|
|
294,522 |
|
Accumulated deficit |
|
|
(227,641 |
) |
|
|
(233,026 |
) |
Treasury stock at cost, 997,624 and 396,175 shares as of September 30, 2024 and December 31, 2023, respectively |
|
|
(1,852 |
) |
|
|
(794 |
) |
Total stockholders’ equity |
|
|
66,127 |
|
|
|
61,080 |
|
Total liabilities and stockholders’ equity |
|
$ |
88,528 |
|
|
$ |
83,168 |
|
– EBITDA and Adjusted EBITDA (non-GAAP measures) reconciliation follows –
HERITAGE GLOBAL INC. Reconciliation of EBITDA and Adjusted EBITDA (Non-GAAP Measures) (In thousands of US dollars) (unaudited) |
||||||||||||||||
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net income |
|
$ |
1,089 |
|
|
$ |
1,977 |
|
|
$ |
5,385 |
|
|
$ |
7,585 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
152 |
|
|
|
132 |
|
|
|
440 |
|
|
|
373 |
|
Interest expense, net |
|
|
(17 |
) |
|
|
56 |
|
|
|
183 |
|
|
|
225 |
|
Income tax expense |
|
|
407 |
|
|
|
736 |
|
|
|
2,013 |
|
|
|
1,954 |
|
EBITDA |
|
|
1,631 |
|
|
|
2,901 |
|
|
|
8,021 |
|
|
|
10,137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Management add back: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock based compensation |
|
|
283 |
|
|
|
175 |
|
|
801 |
|
|
582 |
|
||
Adjusted EBITDA |
|
$ |
1,914 |
|
|
$ |
3,076 |
|
|
$ |
8,822 |
|
|
$ |
10,719 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20241107487059/en/
Investor Relations:
John Nesbett/Jennifer Belodeau
IMS Investor Relations
203/972.9200
InvestorRelations@hginc.com
Source: Heritage Global Inc.
FAQ
What was Heritage Global's (HGBL) Q3 2024 earnings per share?
How much did Heritage Global's (HGBL) operating income decrease in Q3 2024?
How many shares did Heritage Global (HGBL) repurchase in Q3 2024?
What was Heritage Global's (HGBL) stockholders' equity as of September 30, 2024?
