SAN DIEGO--(BUSINESS WIRE)--Heritage Global Inc. (OTCQB:HGBL, CSE:HGP), a leader in distressed and surplus capital assets valuations and transactions, today reported financial results for the first quarter ended March 31, 2015 as summarized below.
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Summary Financial Data
(unaudited) |
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| ($ in thousands, except per share amounts) |
Three months ended
March 31, |
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| 2015 | 2014 | ||||||||||||||||
| Asset liquidation revenue(1) | $ | 3,645 | $ | 1,985 | |||||||||||||
| Earnings (loss) of asset liquidation investments(2) | 34 | (30 | ) | ||||||||||||||
| Operating loss | (433 | ) | (777 | ) | |||||||||||||
| Net loss | (587 | ) | (25,571 | ) | |||||||||||||
| Net loss per share – basic and diluted | $ | (0.02 | ) | $ | (0.91 | ) | |||||||||||
| (1) Represents revenue generated from activities where Heritage Global acted in a principal capacity or had majority interest in a transaction. |
| (2) Represents equity income from activities where Heritage Global acted as a member of a syndicate in a transaction. |
First Quarter 2015 Financial Results Summary & Highlights:
- Asset liquidation revenue increased by approximately 84% to $3.6 million, compared to the year ago first quarter level of $2.0 million.
- Combined Asset liquidation revenue and Earnings of asset liquidation investments net of Asset liquidation expense increased by approximately 78% to $2.6 million, compared to $1.5 million in the year ago first quarter. The increase reflects $962,000 of net asset liquidation revenue from National Loan Exchange Inc. (NLEX), which Heritage Global acquired in the second quarter of 2014.
- Heritage Global successfully completed a number of global online sales. Some of the Company’s largest auctions during the quarter included the former assets of Western Digital, lab R&D and processing equipment no longer required by Amgen, fleet equipment (trucks, tractors and trailers) and the former manufacturing assets of the “world’s largest beverage company.”
- The Company’s Operating loss was $433,000, compared to an Operating loss of $777,000 in the prior year period.
- Total operating costs and expenses increased by $1.4 million, largely due to expenses related to the NLEX operations.
- Net loss for the period was $587,000, or ($0.02) per common share. This compares to a net loss of $25.6 million, or ($0.91) per common share in the prior year period. In the first quarter of 2014 the Company set up a valuation allowance, amounting to approximately $24.7 million, against its deferred income tax assets. The deferred income tax assets represent the future tax benefits of loss carryforwards from prior years. The allowance was a one-time, non-cash item.
Heritage Global Chief Executive Officer Ross Dove stated, “We continue to generate solid top-line revenue growth as total asset liquidation revenue increased by 84%, driven by our asset liquidation and advisory business as well as contributions from National Loan Exchange. Looking ahead, we believe that our platform of innovative global asset solutions, combined with our industry-wide reputation for delivering exceptional service to a growing base of global clients, will remain important factors in helping us generate sustainable operating growth over the long-term.”
“We are encouraged by the progress we have made over the past several years towards building Heritage Global Inc. into a leading provider of global asset solutions and services through our Heritage Global Partners, Heritage Global Partners Europe, Heritage Global Valuations, Heritage Equity Partners and National Loan Exchange operating units. We remain confident about the prospects for future growth and are committed to our goal of enhancing long-term shareholder value as we move through 2015 and beyond.”
Other Recent Key Corporate Events:
On May 6, 2015, the Company’s Board of Directors announced new senior level appointments aimed at establishing Heritage Global as an independent organization for its next phase of innovation and growth.
- Mr. Ross Dove was appointed Chief Executive Officer of the Company, succeeding Mr. Allan Silber. Mr. Silber will continue in his role as Chairman of the Board and will continue to provide strategic counsel to Heritage Global.
- Mr. Kirk Dove was appointed President and Chief Operating Officer of the Company.
- Mr. Scott West was appointed as the new Chief Financial Officer of the Company, succeeding Mr. Stephen Weintraub.
- Mr. James Sklar was appointed Executive Vice President, General Counsel and Secretary of the Company.
- The Board of Directors appointed Ross Dove and Morris Perlis to serve as Class I Directors on the Board of Heritage Global Inc.
About Heritage Global Inc. (www.heritageglobalinc.com)
Heritage Global Inc. (OTCQB: HGBL, CSE: HGP) is a value-driven, innovative leader in corporate and financial asset liquidation transactions, valuations and advisory services. Heritage Global focuses on identifying, valuing, acquiring and monetizing underlying tangible and intangible assets in twenty-eight global manufacturing and technology sectors. Heritage Global specializes both in acting as an adviser, as well as acquiring or brokering turnkey manufacturing facilities, surplus industrial machinery and equipment, industrial inventories, accounts receivable portfolios, related intellectual property, and entire business enterprises.
Forward-Looking Statements
The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, other than statements of historical facts, which address the Company's expectations, should be considered as forward-looking statements. Such statements are based on knowledge of the environment in which the Company currently operates, but because of the factors listed herein, as well as other factors beyond the Company's control, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that may cause actual results to differ from anticipated results include, but are not limited to, obtaining necessary approvals and other risks detailed from time to time in the Company's securities and other regulatory filings.
-financial tables follow-
| HERITAGE GLOBAL INC. | |||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
| AND COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| (in thousands of US dollars, except share and per share amounts) | |||||||||||||||||||
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Three Months Ended
March 31, |
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| 2015 | 2014 | ||||||||||||||||||
| Revenue: | |||||||||||||||||||
| Asset liquidation | |||||||||||||||||||
| Commissions and other | $ | 2, | 812 | $ | 1,010 | ||||||||||||||
| Asset sales | 833 | 975 | |||||||||||||||||
| Total revenue | 3, | 645 | 1,985 | ||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||
| Asset liquidation | 1, | 030 | 465 | ||||||||||||||||
| Patent licensing and maintenance | 38 | 11 | |||||||||||||||||
| Selling, general and administrative, including expenses paid to related parties | 2, | 885 | 2,138 | ||||||||||||||||
| Depreciation and amortization | 159 | 118 | |||||||||||||||||
| Total operating costs and expenses | 4, | 112 | 2,732 | ||||||||||||||||
| ( | 467 | ) |
(747 |
) |
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| Earnings (loss) of asset liquidation investments | 34 |
(30 |
) |
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| Operating loss | ( | 433 | ) |
(777 |
) |
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| Other income (expenses): | |||||||||||||||||||
| Earnings of other equity method investments | 5 | 11 | |||||||||||||||||
| Interest expense – third party | ( | 134 | ) |
(71 |
) |
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| Interest expense – related party | (22 | ) |
(67 |
) |
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| Total other expenses | ( | 151 | ) |
(127 |
) |
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| Loss before income tax expense | ( | 584 | ) |
(904 |
) |
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| Income tax expense | 3 | 24,667 | |||||||||||||||||
| Net loss | ( | 587 | ) |
(25,571 |
) |
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| Other comprehensive loss: | |||||||||||||||||||
| Currency translation adjustment (net of tax of $0) | (30 | ) |
(6 |
) |
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| Comprehensive loss | $ | ( | 617 | ) | $ |
(25,577 |
) |
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| Weighted average common shares outstanding – basic and diluted (in thousands) | 28, | 167 | 28,167 | ||||||||||||||||
| Net loss per share – basic and diluted | $ | (0 | .02 | ) | $ |
(0.91 |
) |
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The notes contained in our Quarterly Report on Form 10-Q are an integral part of these condensed consolidated financial statements.
-balance sheets follow-
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HERITAGE GLOBAL INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(unaudited) |
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(in thousands of US dollars, except share and per share amounts) |
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March 31, |
December 31, |
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| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 3, | 810 | $ | 3,633 | |||||||||||
| Amounts receivable (net of allowance for doubtful accounts of $31; 2014 - $31) | 742 | 3,043 | ||||||||||||||
| Deposits | 2 | 173 | ||||||||||||||
| Inventory – equipment | 519 | 139 | ||||||||||||||
| Other current assets | 512 | 586 | ||||||||||||||
| Income taxes receivable | 10 | 1 | ||||||||||||||
| Total current assets | 5, | 595 | 7,575 | |||||||||||||
| Non-current assets: | ||||||||||||||||
| Inventory – real estate | 6, | 508 | 6,508 | |||||||||||||
| Asset liquidation investments | 801 | 978 | ||||||||||||||
| Other equity-method investments | 21 | 156 | ||||||||||||||
| Property, plant and equipment, net | 143 | 150 | ||||||||||||||
| Identifiable intangible assets, net | 7, | 505 | 7,657 | |||||||||||||
| Goodwill | 8, | 846 | 8,846 | |||||||||||||
| Total assets | $ | 29, | 419 | $ | 31,870 | |||||||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | 6, | 522 | $ | 7,131 | |||||||||||
| Debt payable to third parties | 2, | 617 | 539 | |||||||||||||
| Debt payable to a related party | 2, | 053 | 2,985 | |||||||||||||
| Contingent consideration | 803 | 803 | ||||||||||||||
| Total current liabilities | 11, | 995 | 11,458 | |||||||||||||
| Non-current liabilities: | ||||||||||||||||
| Debt payable to third parties | -- | 2,580 | ||||||||||||||
| Contingent consideration | 3, | 484 | 3,395 | |||||||||||||
| Deferred tax liabilities | 960 | 960 | ||||||||||||||
| Total liabilities | 16, | 439 | 18,393 | |||||||||||||
| Commitments and contingencies | ||||||||||||||||
| Stockholders’ equity: | ||||||||||||||||
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Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and |
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outstanding 575 Class N shares at March 31, 2015 and December 31, 2014, |
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liquidation preference of $575 at March 31, 2015 and December 31, 2014 |
6 | 6 | ||||||||||||||
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Common stock, $0.01 par value, authorized 300,000,000 shares; issued and |
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outstanding 28,167,408 shares at March 31, 2015 and December 31, 2014 |
282 | 282 | ||||||||||||||
| Additional paid-in capital | 283, | 811 | 283,691 | |||||||||||||
| Accumulated deficit | (271, | 055 | ) | (270,468 | ) | |||||||||||
| Accumulated other comprehensive loss | (64 | ) | (34 | ) | ||||||||||||
| Total stockholders’ equity | 12, | 980 | 13,477 | |||||||||||||
| Total liabilities and stockholders’ equity | $ | 29, | 419 | $ | 31,870 | |||||||||||
The notes contained in our Quarterly Report on Form 10-Q are an integral part of these condensed consolidated financial statements.
