Heritage Global Inc. Announces 2021 First Quarter Results

May 13, 2021 04:15 PM Eastern Daylight Time

SAN DIEGO–(BUSINESS WIRE)–Heritage Global Inc. (NASDAQ: HGBL) (“Heritage Global,” “HGI” or “the Company”), an asset services company specializing in financial and industrial asset transactions, today reported financial results for the first quarter ended March 31, 2021.

Heritage Global Chief Executive Officer Ross Dove commented, “2021 is off to a strong start with significantly improved operating income, net income and adjusted EBITDA. While the economy continues to reopen and recover, we are seeing continued momentum in our auction business, with clients in this segment seeking to liquidate industrial equipment and assets to improve their financial position as they prepare to fully re-engage their operations. As we move through 2021, we expect to see an increase in the release of non-performing loans into the market, which we expect will favorably impact demand for our financial asset services. We’re pleased to have delivered strong performance in the first quarter and with the opportunities we’re seeing in the markets in which we operate, we remain energized and optimistic about growing our leadership position and prospects through the balance of the year.”

First Quarter 2021 Summary of Financial Results:

($ in thousands, except per share amounts)

Quarter Ended

March 31,

2021

2020

Operating income

$

1,046

$

94

Net income

$

1,032

$

38

Net income per share – diluted

$

0.03

$

0.00

(Non-GAAP Financial Measures) (1)

EBITDA

$

1,137

$

184

Adjusted EBITDA

$

1,480

$

259

(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.

First Quarter 2021 Highlights:

  • The Company achieved operating income of $1.0 million as compared to an operating income of $0.1 million in the first quarter of 2020.
  • Net income increased to $1.0 million, or $0.03 diluted earnings per share, for the first quarter of 2021, as compared to $38,000 or $0.00 diluted earnings per share in the first quarter of 2020.
  • EBITDA totaled $1.1 million versus EBITDA of $0.2 million in the first quarter of 2020, while Adjusted EBITDA (excluding non-cash stock-based compensation and severance expense) was $1.5 million compared to $0.3 million in the prior-year quarter.
  • Heritage Global maintains a strong balance sheet, with stockholders’ equity of $30.9 million as of March 31, 2021, compared to $29.9 million as of December 31, 2020, and cash of $15.9 million.

First Quarter 2021 Conference Call

Management will host a webcast and conference call on Thursday May 13, 2021 at 5:00 pm ET to discuss financial results for the first quarter 2021. Analysts and investors may participate via conference call, using the following dial-in information:

  • 1-877-300-8521 (Domestic)
  • 1-412-317-6026 (International)

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 at least 15 minutes prior to the scheduled start time in order to register.

A replay of the call will also be available on the Company’s website approximately two hours after the live call through May 27, 2021. To access the replay, dial 844-512-2921 (domestic) or 412-317-6671 (international). The replay pin number is 10156281. The replay can also be accessed on the Investor Relations section of the Company’s website.

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 and any goodwill impairments. 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).

About Heritage Global Inc. 
Heritage Global Inc. (NASDAQ: HGBL) is an asset services company specializing in financial and industrial asset transactions. The company provides a full suite of services including market making, acquisitions, dispositions, valuations and secured lending. We focus on identifying, valuing, acquiring and monetizing underlying tangible and intangible assets across more than twenty-five global sectors. The company acts as an adviser, as well as a principal, acquiring or brokering turnkey manufacturing facilities, surplus industrial machinery and equipment, industrial inventories, accounts receivable portfolios, intellectual property, and entire business enterprises.

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 impact of changes in the U.S. national and global economies, and interest rate and foreign exchange rate sensitivity, as well as other factors beyond the Company’s control. Unless required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. For more details on factors that could affect these expectations, please see our filings with the Securities and Exchange Commission.

-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 March 31,

2021

2020

Revenues:

Services revenue

$

5,030

$

4,088

Asset sales

2,071

156

Total revenues

7,101

4,244

Operating costs and expenses:

Cost of services revenue

1,175

551

Cost of asset sales

820

38

Selling, general and administrative

3,969

3,472

Depreciation and amortization

91

90

Total operating costs and expenses

6,055

4,151

Earnings of equity method investments

1

Operating income

1,046

94

Interest and other expense, net

3

(27)

Income before income tax expense

1,049

67

Income tax expense

17

29

Net income

$

1,032

$

38

Weighted average common shares outstanding – basic

34,788,016

28,751,689

Weighted average common shares outstanding – diluted

37,533,065

30,200,114

Net income per share – basic

$

0.03

$

0.00

Net income per share – diluted

$

0.03

$

0.00

The notes contained in our Quarterly Report on Form 10-Q are an integral part of these consolidated financial statements.

-balance sheets follow-

HERITAGE GLOBAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars, except share amounts)

March 31, 2021

December 31, 2020

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

15,852

$

23,385

Accounts receivable

2,297

1,496

Current portion of notes receivable, net

2,036

1,338

Inventory – equipment

91

235

Other current assets

447

498

Total current assets

20,723

26,952

Non-current portion of notes receivable, net

1,565

748

Equity method investments

2,402

2,402

Right-of-use assets

830

963

Property and equipment, net

132

130

Intangible assets, net

3,056

3,123

Goodwill

5,585

5,585

Deferred tax assets

4,450

4,402

Other assets

246

250

Total assets

$

38,989

$

44,555

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

7,202

$

13,609

Current portion of lease liabilities

301

380

Total current liabilities

7,503

13,989

Non-current portion of lease liabilities

564

623

Total liabilities

8,067

14,612

Stockholders’ equity:

Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 568 shares of Series N as of March 31, 2021 and December 31, 2020

6

6

Common stock, $0.01 par value, authorized 300,000,000 shares; issued

and outstanding 35,647,477 shares as of March 31, 2021 and 35,281,183 as of December 31, 2020

357

353

Additional paid-in capital

293,343

293,400

Accumulated deficit

(262,784)

(263,816)

Total stockholders’ equity

30,922

29,943

Total liabilities and stockholders’ equity

$

38,989

$

44,555

The accompanying notes are an integral part of these consolidated financial statements.

– 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 March 31,

2021

2020

Net income

$

1,032

$

38

Add back:

Depreciation and amortization

91

90

Interest and other expense, net

(3

)

27

Income tax expense (benefit)

17

29

EBITDA

1,137

184

Management add back:

Stock based compensation

143

75

West Separation Agreement

200

Adjusted EBITDA

$

1,480

$

259

The notes contained in our Quarterly Report on Form 10-Q are an integral part of these consolidated financial statements.

Contact
John Nesbett/Jennifer Belodeau
IMS Investor Relations
203/972.9200
[email protected]