SAN DIEGO–(BUSINESS WIRE)–Heritage
Global Inc. (OTCQB: HGBL, CSE: HGP) (“Heritage Global,” “HGI” or
“the Company”), a global diversified financial services and asset
trading company with industry-leading capabilities across corporate and
financial asset monetization, advisory, and valuation services, today
reported financial results for the first quarter ended March 31, 2019.
Heritage Global Chief Executive Officer Ross
Dove stated, “This quarter’s profitable results reinforce the
ongoing evolution of our business. Total revenue increased 13%
year-over-year, with higher asset sales offsetting lower services fees,
which were impacted by variability in the timing of transactions. As we
work and invest to grow, scale and build a diverse business, we also
continue to focus on disciplined expense management and overall
profitability.
“Looking ahead, we remain confident in our ability to generate
consistent and sustainable growth, reflecting the diversification we
have built across businesses, revenue streams, and geographies, and as
our newer, complimentary businesses continue to season. Furthermore, we
maintain ample flexibility to fund future growth – through both
strategic/complimentary acquisitions and joint ventures, as well as
organic growth – via our strong balance sheet and recently upsized
credit facility.
“As always, we remain focused on becoming a leading solutions provider
in monetizing assets across all classes and geographies, with an
overarching objective of continuing to build shareholder value.”
|
First Quarter 2019 Summary of Financial Results: |
||||||||
| ($ in thousands, except per share amounts) |
Quarter Ended
March 31, |
|||||||
| 2019 | 2018 | |||||||
| Revenue | ||||||||
| Services revenue(1) | $ | 4,408 | $ | 5,039 | ||||
| Asset sales(2) | 2,143 | 775 | ||||||
| Total revenue | 6,551 | 5,814 | ||||||
| Gross profit | 4,660 | 4,986 | ||||||
| Operating income | 659 | 1,405 | ||||||
| Net income | 612 | 1,289 | ||||||
| Net income per share – basic and diluted | $ | 0.02 | $ | 0.05 | ||||
| (Non-GAAP Financial Measures) (3) | ||||||||
| EBITDA | $ | 735 | $ | 1,489 | ||||
| Adjusted EBITDA | $ | 806 | $ | 1,550 | ||||
| (1) |
Services revenue represents revenue generated from activities in which Heritage Global acted as an agent by either brokering a transaction or providing some other fee-based service. |
|
| (2) |
Asset sales represent revenue generated from activities in which Heritage Global acted in a principal capacity, reselling previously purchased assets. |
|
| (3) |
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 2019 Highlights:
-
Total revenue grew 13% to $6.6 million, compared to the year ago level
of $5.8 million, as asset sales increased to $2.1 million from $0.8
million, offsetting a $0.6 million decrease in services revenue. -
Gross profit was $4.7 million compared to $5.0 million in the
prior-year quarter, largely reflecting the variability in size/timing
of asset liquidation transactions and sales. -
Operating income was $0.7 million versus $1.4 million in the first
quarter of 2018. The comparison between the first quarters was
negatively impacted by the completion of “contingent consideration”
acquisition payments to NLEX division management in 2018, which was
replaced by a conventional bonus structure in 2019, resulting in a
$0.3 million negative income statement variance. -
Net income was $0.6 million, or $0.02 per share, compared to $1.3
million, or $0.05 per share, in the prior year. -
EBITDA totaled $0.7 million versus $1.5 million in the prior year,
while Adjusted EBITDA (excluding non-cash stock-based compensation
expense) was $0.8 million compared to $1.6 million in the prior-year
quarter. -
Stockholders’ equity increased 9% to $8.3 million from $7.6 million at
December 31, 2018. -
In March 2019, the Company amended its revolving line of credit to
provide for aggregate loan capacity of up to $3.0 million.
Definitions and Disclosures Regarding non-GAAP Financial Information
Adjusted EBITDA reflects the standard definition of EBITDA (net
income/loss plus depreciation and amortization, interest and other
expense, and provision for income taxes), plus/minus stock-based
compensation. Management believes that the presentation of this non-GAAP
financial measure, when considered together with GAAP financial measures
and the reconciliation to the most directly comparable GAAP financial
measure, provides a more complete understanding of the factors and
trends affecting the Company than could be obtained absent these
disclosures. Management believes that Adjusted EBITDA is a useful
supplemental tool to evaluate the underlying operating performance of
the Company on an ongoing basis and make operating and strategic
decisions. The Company has disclosed this non-GAAP financial measure so
that investors have the same financial data that management uses, with
the intention of assisting investors to make comparisons to the
Company’s historical operating results and analyze its underlying
performance. The use of 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 cited in the tables at the end of this press release which
reconciles GAAP reported net income to EBITDA and Adjusted EBITDA for
the periods presented herein.
About Heritage Global Inc. (www.heritageglobalinc.com)
Heritage Global Inc. (OTCQB: HGBL, CSE: HGP) is a global diversified
financial services and asset trading company with industry-leading
capabilities across corporate and financial asset monetization,
advisory, and valuation services. Heritage Global focuses on
identifying, valuing, acquiring and monetizing underlying tangible and
intangible assets across twenty-eight 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. The forward-looking statements contained
in this communication are based on knowledge of the environment in which
the Company currently operates and are subject to change based on
various important factors, including variability in magnitude and timing
of asset liquidation transactions, the impact of changes in the U.S.
national and global economies, 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. | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (in thousands of US dollars, except share and per share amounts) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenues: | ||||||||
| Services revenue | $ | 4,408 | $ | 5,039 | ||||
| Asset sales | 2,143 | 775 | ||||||
| Total revenues | 6,551 | 5,814 | ||||||
| Operating costs and expenses: | ||||||||
| Cost of services revenue | 731 | 559 | ||||||
| Cost of asset sales | 1,160 | 269 | ||||||
| Selling, general and administrative | 3,925 | 3,497 | ||||||
| Depreciation and amortization | 76 | 84 | ||||||
| Total operating costs and expenses | 5,892 | 4,409 | ||||||
| Operating income | 659 | 1,405 | ||||||
| Interest expense and other expense, net | (23 | ) | (116 | ) | ||||
| Income before income tax expense | 636 | 1,289 | ||||||
| Income tax expense | 24 | — | ||||||
| Net income | $ | 612 | $ | 1,289 | ||||
| Weighted average common shares outstanding – basic | 28,653,278 | 28,480,148 | ||||||
| Weighted average common shares outstanding – diluted | 28,814,149 | 28,489,128 | ||||||
| Net income per share – basic | $ | 0.02 | $ | 0.05 | ||||
| Net income per share – diluted | $ | 0.02 | $ | 0.05 | ||||
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. CONSOLIDATED BALANCE SHEETS (In thousands of US dollars, except share and per share amounts) |
||||||||
| March 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | (unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,836 | $ | 4,268 | ||||
| Accounts receivable | 1,326 | 400 | ||||||
| Inventory – equipment | 1,526 | 2,405 | ||||||
| Other current assets | 670 | 607 | ||||||
| Total current assets | 5,358 | 7,680 | ||||||
| Property and equipment, net | 163 | 175 | ||||||
| Equity method investments | 2,767 | 2,767 | ||||||
| Right-of-use assets | 1,103 | — | ||||||
| Intangible assets, net | 3,568 | 3,627 | ||||||
| Goodwill | 6,158 | 6,158 | ||||||
| Other assets | 224 | 224 | ||||||
| Total assets | $ | 19,341 | $ | 20,631 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 5,577 | $ | 8,101 | ||||
| Current portion of debt | 1,184 | 1,178 | ||||||
| Current portion of lease liabilities | 534 | — | ||||||
| Other current liabilities | 549 | 892 | ||||||
| Total current liabilities | 7,844 | 10,171 | ||||||
| Non-current portion of debt | 340 | 438 | ||||||
| Non-current portion of lease liabilities | 628 | — | ||||||
| Other non-current liabilities | 1,662 | 1,838 | ||||||
| Deferred tax liabilities | 584 | 584 | ||||||
| Total liabilities | 11,058 | 13,031 | ||||||
| Stockholders’ equity: | ||||||||
|
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and
outstanding 569 Class N shares at March 31, 2019 and December 31, |
6 | 6 | ||||||
|
Common stock, $0.01 par value, authorized 300,000,000 shares; issued and
outstanding 29,253,278 shares at March 31, 2019 and 29,253,278 at December 31, 2018 |
293 | 293 | ||||||
| Additional paid-in capital | 284,822 | 284,751 | ||||||
| Accumulated deficit | (276,761 | ) | (277,373 | ) | ||||
| Accumulated other comprehensive loss | (77 | ) | (77 | ) | ||||
| Total stockholders’ equity | 8,307 | 7,600 | ||||||
| Total liabilities and stockholders’ equity | $ | 19,341 | $ | 20,631 | ||||
The notes contained in our Quarterly Report on Form 10-Q 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, | |||||||
| 2019 | 2018 | ||||||
| Net income | $ | 612 | $ | 1,289 | |||
| Add back: | |||||||
| Depreciation and amortization | 76 | 84 | |||||
| Interest and other expense, net | 23 | 116 | |||||
| Income tax expense | 24 | — | |||||
| EBITDA | 735 | 1,489 | |||||
| Management add back: | |||||||
| Stock based compensation | 71 | 61 | |||||
| Adjusted EBITDA | $ | 806 | $ | 1,550 | |||
The notes contained in our Quarterly Report on Form 10-Q are an integral
part of these consolidated financial statements.
Contacts
Scott West
Chief Financial Officer
Heritage Global Inc.
858/847-0656
Investor
Relations
[email protected]
858/242-4741
