HGBL - Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, greetings, and welcome to the Heritage Global Inc.

First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Nesbett, with IMS Investor Relations.

John Nesbett

Thank you, and good afternoon, everyone.

Before we begin, I'd like to remind everyone that this conference call contains forward-looking statements based on current expectations and projections about future events and are subject to change based on various important factors. this risks, on assumptions, speak these of date these place should only of the reliance undue forward-looking of light uncertainties you and not as In call. statements, which

that For more our with Securities the affect expectations, Exchange please filings Commission. could and details see these factors on

Heritage Ross? I'd Now to to Officer, Executive the turn Chief like Mr. over call Global's Ross Dove.

Ross Dove

very next with million and year John. you, everyone, for feels well sale QX QX Good with in in positioned organic growth Ending to year close track $X.X and afternoon, lots strong already well now thank after large books a you, and very to a on Q Thank continue joining. and our solid and and bodes beyond. our the and QX. good NOI trajectory. We're quarter, for of first in also It pace this momentum just our

confident to the towards positive healthy the of now and on forward. see enough I'll enough QX are to results, over where the call that, and see driving pivot to nuts I M&A. With color see where for and market, Brian enough and We where afterwards some opportunities the I bolts drive strong I and add us a I turn

So And you I'll once Brian then joining. through in. will walk join again, for back the and quarter, thank you

Brian Cobb

Thank you, Ross.

results, to touch first divisional want overall I we dive into financial the Before on our highlights.

in operating increase prior in Assets increase year-over-year. The in $X.X XX% our recorded the was year of specialty division continued quarter which driven its of reported lending compared build the The XX% $X.X primarily in as income opportunities $XXX,XXX, to Financial to capitalizing and a approximately an period. XXXX on period, million macroeconomic our the momentum first in increased the of cards income nonperforming by Financial charged-off Assets volumes continued division first of to quarter million segment, drove division Our marketplace XXXX in operating XXXX, compared growth credit loans. pressure on the

investments sheet in nonperforming was receivable as As our of balance March investments. buyers and XXXX, $XX.X method XX, to portfolios on loans balance related equity million, our classified both notes of to as and charged-off total gross receivable

continues our division driver $X.X compared the main to segment Financial in brokerage million prior to Assets operating for million and year income of Our $X recorded in the quarter. be income

in year. In continue Industrial relationships upcoming the quality, during $XXX,XXX opportunities the quarter Assets was compared segment of $X.X and income of to the high the and seeing We mid-tier top strengthen our quarter a the strong division, operating to with million are buyers during pipeline existing in total XXXX. first

pipeline division sale to with sales quarter, a of current touch lastly, which through our partners. And activity venture with While of quarter. One This transparency XXXX. XXXX forward income on for as in December the We more and accounting large big providing months the the segment segment the turn brief estate the of lease. certain volume to move with exemplifies have fourth of equipment plant building, quarter late pharmaceutical I machinery our significantly venture segment-specific second partners, executed to end our seen joint statement big by acquired strong segment. want Missouri a XXXX. to our the to we in by win building item. we a strength close turning the disclosures In team and working operations our to we real added quarter our segment, later, auctions acquisition information conjunction and are the the relationships first XX-year on to the guidance, and the of is we for our auction we in accordance a another expect look for quick auctions on further within reporting X as in financials, with Only we XXXX, the or additional In new from didn't and expanding development along closed reporting before of auction first see see during auction joint shareholders. details sharing related

the Consolidated million of Now operating the $X.X income quarter turning first was in to to in first of $X.X quarter financial XXXX compared results. XXXX. the million

per quarter of period. to we compared the of Net quarter, per year $X.X income the $X.XX or For compared reported was net prior million million or income to XXXX. diluted million in of the adjusted $X.XX in first million diluted $X.X share $X.X $X.X EBITDA share

million strengthen with continues million. sheet $XX.X from XX, $XX working $XX of December capital at March Our XX, stockholders' of net of XXXX, equity to as balance million XXXX, up and

to in goals and forward, exciting in balance to we our continued and the the call see how turn Ross. drive about we M&A long-term I'll our continue I'm focus our of we'll drive that, organic Looking strategic evolved core over few increased acquisition. And broaden strong see are incredibly I'm with growth the we our a a be increasing on enthusiastic the of profitability, our through M&A opportunities to that while to to and confident company business. able achieve the years, segments With growth to number performance It's just space. back sheet, has this over business

Ross Dove

That good Brian. to was you, hear. Thank

of in and is going to me obvious the of open think our what competitors But of to sauce. completely up let unveil give marketplace, in the window let the we just a I'm a not and we Because try process growth. you kind we're some lot kind we where super give drapes you initiating. our of entirely drivers into have So see me already

becoming of a XX% assets. and side financial out have about far revenue the But going leveraging talk a you assets first databases half aggressive that lending lending to lending. literally lender. billion me know, more of our almost as industrial our business There's on let significant is balancing assets. into is our push So our $X and industrial captured be

So that's we're kind multiple of things one of doing. the

the about you to talk one. second me Let

we've finding monetize to this all financial that's both take We we're the data in this That we data-driven opportunities industrial, of lots recorded revenue. really way initiative in not what and it. to gaining data that a begun and revenue is year. see and have an should do monetize We of on

where look beverage, and the in in want one The in. in doing sectors primarily we third North a are great winning there hard Yes, also We're America. we're global to We're and biopharma. at is manufacturing focused we're XX in winning food pharma. there's geography we're sectors, but

that shareholders proud. at of So make we're our and growth looking and trying speed expanding our all up to

with just our takes existing company. this we going expertise in always and to growing both, an Some solid forward to at simply adding not require joining. going on because of some you to push will this require or questions, but all increase and us. of we together M&A thank Thank look think grow build necessarily We're organically for hard for we're too, going it you. and we're all M&A, component, engines to saying open always hearing We're we're guys put you we're buy our to of confidence. I and will appreciate the all now

Operator

comes Instructions] Capital. from Argento first [Operator Street question Our from Lake Mark

Mark Argento

than know are you you you're just touch -- accretive? opportunities, when specific criteria key to What bit -- to need from M&A of What be any you a looking Does are financial that it a immediately talked have more to you're about kind wanted criteria I little historically. I the -- perspective? at bit little a looking what fulfill?

Ross Dove

So it I'll first, Brian. take

really If What ALT to So we buy working phenomenally speak. originally somebody, out look it not fit, at a X an looking and looking can so is X we more well. today. was obviously, numbers at at all at out we is that equal our lot synergy. NLEX the mind of but acquisition pure well. worked we're don't is having being straight, that looking has the the culture just at looking something expands at look a offering importantly What and X,

there So also really both loans companies loans, types are basically fit not opportunities all table. that are loans sides into and are we consumer asset that estate of platform. are real will of think that financial our There the on other

On business Mark. growing also niche side, industries in can very into well, also we fit players industrial international the us specific our think there's And there our as are that platform.

kind of at once, lot and a bunch opportunities. looking at fronts we're potential seeing of a of So different we're

Mark Argento

any the of the terms In kind business impact Assets business, -- business seem the business, at charged-off pickup sounds there? are seeing in loan flattish. of Financial there Or of just [indiscernible] it [ is like activity, -- the lending looking -- kind brokered any kind are particular, looking We Any at ] the seasonality? be think to or that? higher-level well. you performing of Any

Ross Dove

didn't in We It QX. transactions any have is episodic growing. actually

good The clients. flow. QX new almost entirely is forward existing the we So there added forward-flow was news

year pick to you're goes by. the going it So see as up

we're we like So going And will some to have every it's going in forward. that actually the think spike X to episodic get going quarter-over-quarter or transactions some have, we year, of X a quarters. sequential do growth

and some we it's clients clients. going to we've organically because quarter those own, onboard the on So in more revenue see them. its don't it's also grow to that you going added grow And the from

in coming to sell. the giving product and see us they You QX as QX revenue start

Operator

of question Sutton And our next comes George from Craig-Hallum.

George Sutton

and clear So looks what the kind what achieved you so pharma of wondered through I if economics, opportunity just walk plant could first, we're there. you like that

Ross Dove

at Brian because to a you complicated recognition just the equipment is it's sell take then lease XX-year and on going revenue it the versus all place give little I'm that a you going when to how to sell once. do

the So Brian with auditors. qualified in probably working is more

this So question. get Brian, you

Brian Cobb

Yes.

Okay.

provided earnings extent haven't on the we any in release the -- transaction. the of So details on the

the X a through other with is or partnership partners. venture a working we're However, That joint accounting.

of that more it I'll the equipment. XX-year agree all we of and be and QX. lease venture. the a leave purchased with also, mention as accounted The we're different we our to although working there to for ways a of had point, XXXX, the and be has it with is lease, the machinery in the position. that back details could mentioned, the as provide at X sales-type now, it's buildings thing until that, that's auditors end lease think flow through joint we'll other that that I joint Ross And venture only anticipate And a team same we'll for. I in So the have expenses a management accounting, through couple

be could it to look transaction a So to. good

Ross Dove

language release, the accretive. To X from words, press the I'll lift highly lift some

George Sutton

Understand.

Okay.

starting coming of be providing from looking talked at auctions? would your to So perhaps Or an about buyers the to And you be industrial just capital I to buyers offering. be provide assets Ross, assets lending clear, of your you to would want auctions? you capital

Ross Dove

to we provide Capital, do retail provide So already our ALT actually At offerings. via financing. not to buyers financing the

where we aircraft a deal, money So aircraft that exists. it's lender actually asset-based asset-based marketplace basically money deal transportation to very, last from as lent the community. company, to to has now. lease an getting industries C, kind E The of moved did a F We seeing a more lots lot Series an your We're an of very year, money where hard difficult money. offers company. in of and difficult and get It's D getting venture venture get

more cautious of have So marketplace a skilled borrow growth banks on We're out lending. getting understand. we asset-based their little industrial to lot looking a bit It's the people as capital at underwriting. see are the And we that directly more are very a there's assets. assets there against in that lending, now

smart industrial every a when lender, looking business aggressively our substantial lending earlier at way think million quarter, So which line lending at always now take profits us of free having didn't kind strong, to when our and looking goal, basically those long-term you're and have we looking deals. We to credit as at we we're just our financial and into you're a at both didn't going safe, an book $XX of But X, George. it's the multimillion-dollar good, much more was capital. be to broaden move

George Sutton

understand. I

Okay. That's helpful.

in can see much some how of Most would it for of expectations charge-off of Lastly was the recently and terms numbers the players industry. we the in the seen impressive most kind and the me, you that they of of charge-off note all And summarized put out see a in them from frankly, potential that last year. may volume have very of year And on But argue perspective that you volumes give see. the remember just I kind same you there? part thing your of though latter saying the opportunity terms normalization. the them of this key

Ross Dove

Right.

that takes it it future, mature at then default, future it but So you once charge-off. becomes for has not tremendous past past, -- see When looking a charge-off, looking already us. yet not and at a of out available. at product become of then to time kind from the the that amount a our there the a comes there's to to And fall looking into

lot to a going a of year product this all that's it So available lot next there's obviously, into and rolling already of be coming year. of

charge-offs, So if front George. in the amount it there's sell-through does level a still lot of off on of of us,

Operator

[Operator And our questions, further no back the host. Instructions] seeing over turn to I'll call

Ross Dove

Ross. is you all talking curious or interested This a for our of We're being available, easy I thoughtful and get investors in talking very to investor. joining. we really or enjoy want hold thank a who's and to and to to anybody always future

we for available, day. we're So thank Everyone, all and you always great participating. a have

Operator

you attending. conference call. Thank today's for This concludes

Heritage Global (HGBL) 9 May 242024 Q1 Earnings call transcript