Heritage Global Inc. (HGBL) research, news, and more from GeoInvesting

Company description

Fri, 19 Oct 2018 17:50:18 GMT

Heritage Global Inc., through its subsidiaries, engages in the asset liquidation business. It provides auction, appraisal, and asset advisory services; mergers and acquisitions advisory services for financially distressed businesses and properties; and accounts receivable brokerage services, as well as purchases and sells industrial machinery and equipment, real estate, inventories, accounts receivable, and distressed debts. The company also arranges traditional asset disposition services, such as commissions from online and Webcast auctions, liquidations, and negotiated sales; and offers equity method investment services, as well as monetization solutions. It serves oil and gas, mining, drilling, solar, construction, and rental equipment sectors. Heritage Global Inc. was formerly known as Counsel RB Capital Inc. and changed its name to Heritage Global Inc. in August 2013. The company was founded in 1983 and is headquartered in San Diego, California. Heritage Global Inc. is a subsidiary of Counsel Communications LLC.

Research

Sun, 11 Aug 2024 04:00:00 GMT

Heritage Global Inc. (NASDAQ:HGBL) announced Q2 2024 results:

Q2 sales of $12.0 million vs $13.0 million in the prior year and missed analyst estimates of $14.1 million
Q2 EPS of $0.07 vs $0.07 in the prior year and in line with analyst estimates of $0.07

“In a disappointing development on the specialty lending side, as noted above, our largest borrower continued to face challenges in the quarter and did not meet its minimum required payment amount. We are working closely with the borrower and our senior lenders in an effort to mitigate the default in an efficient and effective manner. The loans to this borrower are directly secured by tens of thousands of charged-off consumer loans and these consumer loans continue to produce significant monthly recoveries albeit not at the levels originally forecasted. Given all that we currently know, we believe that our existing credit loss reserve against these loans is a reasonable estimate.”

We have decided to remove HGBL from our model portfolios.

Research

Fri, 15 Mar 2024 16:10:21 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($3.00; $110.7M market cap) announced Q4 2023 results:

Q4 sales of $15.2 million vs $13.8 million in the prior year and in line with analyst estimates of $15.3 million
Q4 non-GAAP EPS of $0.13 vs $0.08 in the prior year and in line with analyst estimates of $0.07
Full year sales of $60.5 million vs $46.9 million in the prior year
Full year EPS of $0.33 vs $0.29 in the prior year

“2023 was the best year in our history, as demonstrated by our ability to achieve full-year 2023 operating income of $14.3 million. During the year, our business continued to capitalize on the macro-economic environment, where heightened economic pressures drove increased volumes in our Financial Asset and Industrial divisions.

Research

Fri, 12 Jan 2024 14:54:07 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.80; $103.3M market cap) has acquired a state of the art pharmaceutical plant to hopefully resell in the future.

"We're thrilled to announce the acquisition of this cutting-edge pharmaceutical plant. Teaming up with our synergistic JV partners, we're eager to re-market the facility, reinforcing our commitment to the pharma sector. This marks another exciting opportunity for Heritage Global Partners,"

Research

Sun, 12 Nov 2023 05:00:00 GMT

Heritage Global Inc. (NASDAQ:HGBL) a company that, through its subsidiaries, engages in the asset liquidation business announced Q3 2023 results:

Sales of $15.5 million vs $12.6 million in the prior year and ahead of analyst estimates of $13.3 million
Non-GAAP EPS of $0.07 vs $0.06 in the prior year and in line with analyst estimates of $0.07.

“We are focused on continuing the momentum we have built to date in 2023 to deliver a strong close to the year. We take a long-term view of our business and remain confident that with our solid foundation, industry leading team and longstanding partnerships, we are ideally suited to maximize the many opportunities we are seeing to drive continued growth as we expand our leadership position and market reach”

Shares of HGBL were down sharply (19%) after the company reported its Q3 earnings report, despite being in line with analyst estimates.

It appears that investors were hoping for more growth. As we stressed on many occasions, HGBL investors need to take a long-term view because quarterly financials can exhibit significant short term volatility or pauses in growth due to the company’s business model.

A good deal of this uncertainty stems from the company’s asset liquidation business, which has a lumpy revenue stream.

Ultimately, HGBL may have to build out its loan auction platform to provide more consistency. With that being said, the economic environment is ripe for HGBL to grow, and we think the stock’s decline is probably an overreaction. Shares are currently trading at a P/E of 10x on the third quarter earnings per share run rate. We do think that fair valuation for the stock, given the current business model, would be a P/E of between 10x and 15x.

Research

Fri, 11 Aug 2023 16:53:00 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.97; $110.2M market cap), a company that, through its subsidiaries, engages in the asset liquidation business announced Q2 2023 results:

Sales of $13.1 million vs $11.1 million in the prior year but below analyst estimates of $14.0 million
Non-GAAP EPS of $0.07 vs $0.07 in the prior year and in line with analyst estimates of $0.07.

“ As we have mentioned before, our auction business will vary from quarter to quarter, but our auction pipeline presently is robust and we are confident that we will continue to see substantial activity in our industrial assets division as we move through the balance of 2023.

“We are pleased with our performance to date this year and especially proud to have achieved record net operating income of $7.0 million for the first six months of 2023. As we move through the balance of the year, we are energized about building on the momentum created in the first half and believe we are ideally positioned to compete for and win the exciting opportunities we are seeing across the markets in which we operate,”

Research

Fri, 12 May 2023 14:33:44 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.97; $110.2M market cap), a company that, through its subsidiaries, engages in the asset liquidation business announced Q1 2023 results:

Sales of $16.6 million vs $9.3 million in the prior year and ahead of analyst estimates of $12.7 million
Non-GAAP EPS of $0.08 vs $0.02 in the prior year and comfortably higher than analyst estimates of $0.05.

“As we move through 2023, we expect to build upon the momentum demonstrated in the first quarter, leading to exciting prospects for our Company. We look forward to leveraging our proven business model, long standing customer and client relationships, and promising economic tailwinds to drive continued growth and profitability,”

As expressed in the conference call, it was really encouraging to see that the company was able to post these impressive numbers without one-time asset sales from its asset liquidation business.

Quote from conference call:

“This quarter's performance is even more significant than a record result for two main reasons. Not only did we achieve a record quarter, but we did so without real estate sales in our joint ventures as seen in the last 3 quarters of 2022. Although we continue to search for lucrative asset purchases that include a real estate component, this is evidence, even without real estate transactions, that we can continue to perform at a high level and grow profits in each of our segments. The second being the recent growth we have seen and the ability to deploy capital through our specialty lending segment.”

Recall, the company had pre-announced preliminary operating income guidance for the quarter in late April. With back to back quarters of $0.08 in EPS, the company is trading at a P/E of 9.2 on a run rate basis.

Research

Mon, 24 Apr 2023 16:15:06 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.96; $109.3M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced it will report its Q1 2023 results on May 11, 2023. However, the company provided some preliminary net operating income guidance.

“I am looking forward to reviewing the first quarter results with investors. We have already had a fantastic start to 2023 and anticipate reporting Net Operating Income that will meet or exceed our previous record of $3.6 million, achieved in the second quarter of last year. This reflects strength across all our operating segments and ongoing macro tailwinds,” said Ross Dove, Heritage Global Inc. CEO.

For reference, in Q2 2022, the company reported $0.07 EPS on $3.6 million of operating income. Assuming margin profile is similar, EPS of $0.07 or higher for Q1 will exceed current analyst estimates of $0.05 and be sequentially higher than Q4 2022.

Research

Fri, 10 Mar 2023 14:26:15 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.47; $91.2M market cap), a company that, through its subsidiaries, engages in the asset liquidation business announced Q4 2022 results:

Sales of $13.8 million vs $7.5 million in the prior year and ahead of analyst estimates of $11.0 million
Non-GAAP EPS of $0.08 vs $0.03 in the prior year and double analyst estimate of $0.04

“As we begin to move through 2023, we are energized by the opportunities we are seeing in the marketplace. Our Financial Assets business is extremely well positioned to benefit from the current economic landscape, where consumers are increasingly reliant on credit cards and installment loans to make day-to-day purchases. Predictably, as consumer debt grows, so does the volume of charged-off credit cards and loans being sold by financial institutions. Throughout 2022 and now as we begin 2023, the volume of charged off credit card accounts and non- performing loans has continued to grow and we are actively competing for and winning this brokerage business. Our Industrial Asset business also is seeing increased opportunities as many businesses scale down their operations and find themselves with surplus assets and equipment. In addition to providing an environmentally sound circular economy solution, our auctions also enable our partners to maximize their disposal efforts. In short, we are seeing promising economic tailwinds in both divisions, which we are focused on leveraging, in combination with our proven business model, strong client relationships and industry leadership, to continue driving long term operational success and profitability.”

The conference call was filled with bullish InfoArb, so we encourage you to read the full script here.

Notable excerpts below stress the increasing asset flow, management’s short and long-term visibility, and extremely bullish commentary on backlog and upcoming comps versus the same periods last year:

“And we anticipate that we'll continue to see increasing asset flow as we move through 2023. The current economic environment is producing encouraging tailwinds that, we believe, position both our divisions for continued financial success.”

“So let me go over why I'm very, very confident in the short term and the reasonably long term that we're going to achieve a lot of success. The reason that I'm confident is, right now, we've hit the sweet spot in the sectors that we are most prominent in and most successful in all at once. We simultaneously have growth across both industrial and financial.”

“So when I look at industrial and I look at financial, I say to myself, this is not an anomaly. We're in a growth period in a rock-solid company at the right place at the right time”.

“I have a pipeline that I can look at that is not always all year long. But I can tell you now, sitting here today, looking at the pipeline, that this quarter -- this is after a great record Q4. This quarter, we are off to a flying start for the year.

And when I say a flying start, I'm talking two, three times what we made in the same year last year. So if you look at this year's Q1 and you look at last year's Q1, when we're all done and we announce it, you're going to say, this company is flying high.”

“So we think we've hit the time of real operating leverage.”

“Well, so when Ross talks about 2x to 3x times last quarter, he's usually referring to operating income. And so that position that he's taken is absolutely a reasonable position based on what we're looking at right now.”

One takeaway we would like to point out, while the comments are tremendous, the 2x to 3x expectation over last year's Q1 2022 is coming off a small base (operating income was $875, EPS of $0.02). So, from a sequential standpoint, we think we can reasonably use Q4 2022 numbers as a basis for Q1 2023 numbers to be reported in a few months.

That said, it will be very strong year over year growth from Q1 last year, where the company reported sales of $9.4 million and EPS of $0.02. We recently added HGBL to our recently created Recession Proof Model Portfolio.

Research

Wed, 11 Jan 2023 21:10:47 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.56; $94.5M market cap), a company that, through its subsidiaries, engages in the asset liquidation business announced has reached a milestone of $100 million in funded financial portfolio acquisitions.

“Reaching the $100 million mark is an exciting milestone for us and demonstrates our ability to leverage the opportunities we’re seeing as the current economic environment continues to drive significant increases in charge-off volume. Over the years, we’ve developed strong client relationships as well as strategic lending partnerships, and these, coupled with the extensive experience and knowledge of our HGC management team, position us well in our goal to become a premier lender. As we celebrate this milestone, we also look forward to continuing to support our clients, and believe our achievement of the next $100 million in funding is just over the horizon,”

Despite the prior environment of pandemic-delayed deal flow, our ability to fund $100 million worth of acquisitions exceeded our internal goals and is a testament to the strength of our team and our client relationships. We are very proud of our clientele and grateful for the trust they have given Heritage Global Capital. Our borrower clients have exceeded collection forecasts as well as maintained solid financial stability and operations integrity. As record outstanding consumer credit continues to grow, HGC expects to see rapid growth as we enter 2023 and beyond.”

HGBL recently hit a new 52 week high of $2.86 coming off the heels of back to back strong quarters. The company benefits in recessionary times, so its auction services are in high demand as companies look to liquidate assets. Furthermore, their platform which allows lenders to sell off delinquent or high risk loans should also benefit as default risk increases.

HGBL fits into screens we created for recession proof and recession resistant stocks. They are being used to monitor companies that could possibly benefit or be totally or partially insulated from the impact of the recession. To be clear, one of the primary goals of the screen is to aid us in further categorizing stocks in our coverage universe to help us and you with the research process. Not all of the stocks will be timely selections, but at the very least, this focus will help increase our odds of success in a tough economic environment.

Research

Mon, 12 Dec 2022 14:43:07 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.58; $95.2M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced it has raised its full year 2022 net operating income to exceed $10.0 million from previously stated target of $9.0 million.

“2022 has been a record year for us as a resurgence in consumer spending has driven increased volumes and provided significant traction on both the brokerage and the lending sides of our business. Likewise, our Industrial Assets segment has benefited from strong demand and a robust auction calendar. As we move through the final weeks of 2022, we are optimistic about the market dynamics and opportunities we’re seeing, and as a result we are raising our target for full year 2022 net operating income to exceed $10.0 million, which substantially surpasses our best prior annual results of $6.1 million, achieved in 2020. We are energized by our operational execution to date in 2022 and look forward to a strong close to the year.”

Research

Fri, 11 Nov 2022 15:21:06 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.09; $76.9M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced Q3 2022 results:

Sales of $12.6 million vs $5.9 million in the prior year
EPS of $0.06 vs $0.01 in the prior year

“Our very strong third quarter results continued the momentum we have built throughout 2022 and were highlighted by a milestone achievement as all five of the Company’s revenue streams performed at or above our expectations. Strong demand and high volumes in both our Industrial and Financial Assets divisions combined to contribute to record net operating income and significantly improved profitability in the third quarter..

…“We are pleased with the very strong performance and the growth we have achieved from our diverse revenue streams to date in 2022. Our balanced business model provides a strong foundation for growth and that, coupled with economic tailwinds that benefit our businesses, point to what we believe will be a strong fourth quarter and 2023 for our Financial and Industrial Asset divisions.”

Guidance:

“We have driven strong results to date in 2022. With our visibility today, and our optimism around the opportunities we’re seeing in the marketplace, we are raising our target for full year 2022 net operating income to $9.0 million, which surpasses our best prior annual results of $6.1 million, achieved in 2020. With continued solid operational execution, we believe we are well positioned to generate continued growth and drive profitability.”

Research

Thu, 11 Aug 2022 04:00:00 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($1.80; $66.0M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced Q2 2022 results:

Sales of $11.1 million vs $5.2 million in the prior year
EPS of $0.07 vs $0.02 in the prior year
Non-GAAP EPS of $0.00 vs $0.00

“We’re very pleased with our strong first half 2022 results. Given our performance to date and the market opportunities we’re seeing, we reiterate our previously stated target of full year 2022 net operating income exceeding our best prior annual results of $6.1 million, which was achieved in 2020. We remain intent on leveraging our operational strengths with the favorable market conditions we’re experiencing to drive continued profitability.”

Conference call was very bullish, here are some excerpts:

“Overall, both financial and industrial are in full swing and full stride. We had a record Q2. We believe that is sustainable and that we're going to see a fantastic Q3 and a record-breaking year this year. We've basically given guidance that we believe this will be the best year in the history of the company. And I'm here today to tell you that I'm more and more positive, that is true, and more and more bullish on our future than I have been in any other time.”

“So it took about 6 or 9 months of growth in the volumes for us to hit stride. We've now hit stride where we're looking at a very strong Q3 and very strong Q4, not just because we've added some new clients, which we have, but because our recumbent clients now have more supply. And as they have more supply, more supply flows through our channels.”

On buybacks:

“As far as being more aggressive, I guess, the answer is, yes, our intention is to continue the buyback. When our Board approved the buyback program, they approved it for some longevity, not just for a very brief period of time. So it's an ongoing buyback program where we still have available capital allotted to the buyback. We'll follow the stock, and we'll make real-time decisions. But at this time, we still believe that there's real value in our stock, and we're still very bullish on our personal ownership of it as an entity.”

It is unclear how the market will value asset sale gains, although buying and selling distressed assets is a core piece of the company’s business strategy. Investors in the stock just need to accept this reality, a fact management continues to stress.

Research

Mon, 11 Jul 2022 16:16:55 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($1.64; $60.1M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced it expects to report strong net operating income of $3 to $4 million for Q2 2022.

“strong performance in both of the Company’s operating divisions as well as the final disposition of the Huntsville real estate assets associated with its joint venture partnership and the conclusion of that project”

Still, we need to wait on how much of the strong operating income results were derived from real estate asset sales, since it’s not a core part of the company‘s ongoing income generation.

Research

Fri, 13 May 2022 17:26:28 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($1.38; $50.4M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced Q1 2022 results:

Sales of $9.3 million vs $7.1 million in the prior year
EPS of $0.02 vs $0.03 in the prior year

“2022 is off to a solid start, and we are pleased to have delivered continued profitability and EBITDA of $1.0 million in the first quarter. With our visibility today we are increasingly optimistic about the balance of 2022. Our business model includes diverse revenue streams and we are extremely well positioned in both our Financial Assets Division and our Industrial Assets Division to capitalize on improving market dynamics. We are seeing a clear transition from headwind conditions to tailwind conditions, and we are moving aggressively to seize the opportunities being created in this more favorable environment.”

Guidance:

“As we continue through 2022, we expect accelerating tailwinds across all five of our business units. With that in mind and given what we are currently seeing in the marketplace, we are targeting full year 2022 net operating income exceeding our best prior annual results of $6.1 million, which was achieved in 2020. We are energized to execute on all fronts and to harness the opportunities we are seeing to drive growth and continued profitability.”

It should be noted that although the company expects two real estate transactions to contribute $2.5 million in net profit, it is unclear to us if the gain from these transactions is part of the net operating income guidance above.

Share Repurchase Program:

The board has authorized a $4 million repurchase program

“We believe our shares are currently undervalued and given Heritage’s unique position in the marketplace, consistent profitability, and encouraging near to long-term outlook, an opportunity exists to create value for our shareholders.”

Conference Call Highlights

“Q2 is going to beat Q1. And we think we're going to have sequential growth for the next couple of years because I don't -- in our opinion, consumer spending is going to stay fairly strong. And as it stays strong, the supply follow.”.

Research

Fri, 18 Mar 2022 14:42:00 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($1.38; $50.4M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced Q4 2021 results:

Sales of $7.5 million vs $8.3 million in the prior year
Non-GAAP EPS of $0.03 vs $0.07 in the prior year (Q4 2020 GAAP EPS was $0.17)

“We drove continued momentum in fourth quarter 2021, with sequential improvement across key financial metrics as compared to third quarter 2021. Fourth quarter operating income grew more than 160% to $1.4 million as compared to $0.5 million in the third quarter of 2021 and net income more than doubled to $1.0 million as compared to $0.5 million in third quarter 2021. It is important to note that while operating income was lower than the previous year, the fourth quarter of 2020 included $2.3 million in net profit related to our first completed real estate transaction from our Huntsville partnership holdings.

During fiscal 2022, we anticipate a significant uptick in the volume of non-performing loans coming to market, and we’re positioned to benefit from that volume.

At Heritage Global Capital, we continue to work with an active and growing group of borrowers, and our pipeline is strong. We’re pleased to have closed 2021 with another profitable quarter, and as the lending and spending landscape continues to improve, we expect to see continued momentum as we move through 2022.”

Research

Tue, 07 Dec 2021 17:08:18 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($1.57; $57.4M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, continues to see insider buying. On Friday, we mentioned that in the past month insiders have purchased 127,000 shares. Well,yesterday, another Form 4 filing crossed from CEO, Ross Dove, showing he purchased 30,701 shares at an average price of $1.63. This comes on the heels of his mid-November purchase of 57,342 shares at $1.74.

Research

Thu, 11 Nov 2021 18:04:09 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($1.88; $68.2M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced Q3 2021 results:

Sales of $5.9 million vs $7.5 million in the prior year
EPS of $0.01 vs $0.04 in the prior year

“Asset flow remained relatively low in the quarter on both sides of our business, resulting in performance that is below 2020 levels. That said, we reported encouraging sequential improvement in our Industrial Assets Division and remain well positioned with the Financial Assets Division for the expected increase in non-performing loans entering the market in 2022

Our Heritage Global Capital pipeline is robust, and our approved group of borrowers is strong. HGI achieved yet another profitable quarter and continues to improve our market position, which will benefit from rising asset flows, driving improved performance and profitability."

Research

Fri, 13 Aug 2021 17:37:01 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.05; $73.1M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced Q2 2021 results:

Sales of $5.1 million vs $6.1 million in the prior year
EPS of $0.02 vs EPS of $0.03 in the prior year

“This was a challenging quarter, characterized by limited asset flow volumes across both our financial and industrial businesses...

...Looking forward, with our visibility today, we are optimistic about asset flow through the balance of 2021, as after a long delay in financial assets coming to market, consumer borrowing is rising significantly and stimulus payments are tapering off, likely leading to the increase of non-performing loans. Our pipeline is robust, and we have also onboarded a strong borrower base for Heritage Global Capital. Furthermore, we expect increased industrial asset flow in the second half of 2021 as large, multi-national corporations look for sustainable lifecycle management as they retire and dispose of obsolete equipment…

We believe we are well-positioned to capitalize as the changing U.S. economy promotes a rising flow of assets in the marketplace. We remain confident in our ability to advance our leadership position and drive growth through the remainder of 2021.”

While the quarter was clearly a disappointment, we need to be reminded that the CEO stressed when he hosted his live virtual presentation on Geoinvesting in November 2020. He again stressed this point in the Q2 conference call:

“I'd like to thank everybody for listening. I've tried for the last 2 or 3 years to let everybody know that we don't view this as a 90-day business. We view this by the year, and I'm very comfortable that all of you that can look at it that way will see we had a lot of progress in the quarter that isn't always visible, but it will show over time is how the people inside here strongly feel.”

He also discusses why the quarter was so bad and why he thinks the business has bottomed:

“So you're going to see a much better Q3 and hopefully, by Q4, we really are pretty convinced back to normalized flows. So I think that it was not an easy 90 days, but I think it's 90 days we got through staying profitable. And at least in financial assets, we're very bullish on this year.”

Research

Fri, 14 May 2021 04:00:00 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($3.06; $109.2M market cap), a company that, through its subsidiaries, engages in the asset liquidation business, announced Q1 2021 results after yesterday’s market close:

Sales of $7.1 million vs $4.2 million in the prior year and vs est of $6.48 million
EPS of $0.03 vs. of $0.00 in the prior year and vs est of $0.04

We are going to check for any information that may have been conveyed in the conference call that was held shortly after the earnings was released to see we can glean anything more than what was only reported in the release.

“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.”

Research

Tue, 09 Mar 2021 05:00:00 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($3.08; $108.3M market cap), a company that, through its subsidiaries, engages in the asset liquidation business announced Q4 2020 results. Investors should note that the company pre announced its net operating profits for the quarter to be at least $1.6 million back in early January.

Sales of $8.3 million vs $5.5 million in the prior year and ahead of analyst estimates of $7.2 million
Non-GAAP EPS of $0.07 vs a loss of $0.04 in the prior year and slightly below analyst estimates of $0.08

“As we announced in January, we closed several large transactions at Heritage Global Partners during the fourth quarter, which significantly contributed to the strength of the quarter and enabled us to begin 2021 with significant momentum across our businesses. We are optimistic for our prospects as we have moved into 2021, and expect to see strong supply on the auction side of our business as the pandemic continues to drive the liquidation of industrial equipment and assets. Likewise, we anticipate increased demand for our financial asset services, as we expect to see an increase in the release of non-performing loans into the market this calendar year.”

We believe the stock can trade at a P/E of 20 to 25. Using current quarterly EPS as the run rate, this would imply a near term (6 to 12 months) price target of $5.60 to $7.00. However, we do believe the Company may be able to obtain a P/E well outside our assumption range if management can show consistency in its growth plan. Furthermore, we see a high possibility the company will consummate accretive acquisitions that could render analyst estimates to be conservative.

Research

Tue, 12 Jan 2021 19:35:26 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($2.84; $99.9M market cap), a company that, through its subsidiaries, engages in the asset liquidation business announced it expects net operating profits in Q4 2020 to nearly double from that of the $1.6 million in Q3 2020.

“We are very pleased with our strong preliminary fourth quarter operating results, which benefitted from the closing of several large transactions at Heritage Global Partners. Our business enters 2021 fundamentally strengthened with considerable momentum across our platform and I congratulate our team for their successful efforts in navigating the unprecedented challenges of 2020.”

In Q3 2020 the company reported $0.04 in EPS. The current analyst estimate for Q4 is $0.04. Given management's comments and taken into account the higher share count from the recent offering, it is our estimation that the company could report $0.06 to $0.07 in EPS for Q4.

You can see our recent fireside chat with CEO Ross Dove and CFO Scott West here.

Research

Tue, 10 Nov 2020 18:37:56 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($1.80; $63.3M market cap), a company that, through its subsidiaries, engages in the asset liquidation business. announced Q3 2020 results:

Sales of $7.5 million vs $6.6 million in the prior year
EPS of $0.04 vs $0.04 in the prior year

“Looking ahead, we believe rising demand for the re-commerce of used and surplus equipment bodes well for sustained near term performance and profitability of our industrial assets segment, while we expect accelerating volumes and revenue from the financial assets side of the business, driven by an expected step up in the release of nonperforming loans into the market in 2021.”

Research

Tue, 03 Nov 2020 17:03:58 GMT

**Calls To Action - FTDL, HGBL

After strong interviews with management, we are adding Firstime Design Limited (OTC:FTDL) ($8.70; $10.0M market cap) and Heritage Global Inc. (NASDAQ:HGBL) ($1.69; $59.4M market cap) to our disclosed longs list.

FTDL (Home Furnishing and Decor) - ecommerce shift boosting sales growth, reported 3 strong quarters in a row, strong bal sheet, deep value. See our recent earnings coverage here.
HGBL (asset purchases, liquidation and services ) - Insiders participated in recent offering, strong 2021 EPS estimates of $0.30 after adjusting for recent offerings, current economic environment bodes well for their business (asset liquidation) See our recent introductory note here that we wrote after attending an LD Micro Virtual Conference.

We are performing further due diligence on both companies. However, both look like they could end up being added to our Favorite Model Portfolio at some point in the future. We are currently working on an FTDL report and HGBL has agreed to participate in a live webcast interview session on GEO.

Research

Tue, 06 Oct 2020 16:33:36 GMT

Heritage Global Inc. (NASDAQ:HGBL) ($1.89; $67.6M market cap), through its subsidiaries, engages in the asset liquidation business. Maj had a chance to speak with HGBL CEO Ross Dove at the LD Micro conference in June 2019 and was quite impressed with the company’s story. The stock is up over 100% since that time and we think the business may be in a good position to thrive in what is a weak environment for many businesses. Heritage benefits when there is an increased supply of assets looking for the liquidation services they provide.

We are considering diving in and writing an RFT (Reasons for Tracking) on the story, but we’d at least like to highlight that today, a Form 4 caught our attention highlighting that the CEO participated in the recent public offering. The offering was for 4.75 million shares of the company at a price of $1.75. Mr. Dove added 28,750 shares to bring his total ownership to over 1.8 million shares or a 6.25% stake.

HGBL has strong 2021 analyst EPS estimates of $0.44 with sales estimated to grow at a 54% clip. Adjusting for the offering, we believe the EPS estimate will be around $0.37.A modest P/E of 10 would equate to a near term price target of $3.70.