SAN DIEGO--(BUSINESS WIRE)--Heritage Global Inc. (OTCQB: HGBL, CSE: HGP), a leader in distressed and surplus corporate and financial asset valuations and transactions, today reported financial results for the second quarter ended June 30, 2015 as summarized below.
|
Summary Financial Data |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
|
Three months ended |
Six months ended |
|||||||||||||||
| ($ in thousands, except per share amounts) |
June 30, |
June 30, |
||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Asset liquidation revenue(1) | $ | 2,958 | $ | 2,811 | $ | 6,603 | $ | 4,796 | ||||||||
| Earnings (loss) of asset liquidation investments(2) | 105 | 18 | 139 | (12 | ) | |||||||||||
| Operating loss | (669 | ) | (469 | ) | (1,102 | ) | (1,246 | ) | ||||||||
| Net loss | (693 | ) | (584 | ) | (1,280 | ) | (26,155 | ) | ||||||||
| Net loss per share – basic and diluted | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.93 | ) | ||||
| (1) | Represents revenue generated from activities where Heritage Global acted in a principal capacity or brokered a transaction. | |
| (2) | Represents equity income from investments by Heritage Global in joint ventures that conduct asset liquidation transactions. | |
Second Quarter 2015 Financial Results Summary & Highlights:
- Asset liquidation revenue increased by approximately 5% to $3.0 million, compared to the year ago second quarter level of $2.8 million.
- Combined Asset liquidation revenue and Earnings of asset liquidation investments net of Asset liquidation expense increased by approximately 10% to $2.5 million, compared to $2.3 million in the year ago second quarter. The increase reflects the timing of certain asset liquidation transactions as well as $1.2 million of net asset liquidation revenue from National Loan Exchange Inc. (NLEX), which Heritage Global acquired late 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 a national leader in mattress manufacturing and the biopharma lab R&D and processing equipment no longer required by Amgen, Aptuit and Pfizer.
- Heritage Equity Partners provided investment banking services to Mallygirl in its sale to Beauty Visions by identifying another potential buyer and conducting a competitive bidding process that resulted in a 43% increase in the purchase price for the cosmetics company.
- The Company’s operating loss was $0.7 million, compared to an operating loss of $0.5 million in the prior year period.
- Total operating costs and expenses increased by $0.4 million, largely due to expenses related to NLEX operations.
- Net loss for the period was $0.7 million, or a loss of $0.02 per common share. This compares to a net loss of $0.6 million, or a loss of $0.02 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 non-recurring, non-cash item.
Heritage Global Chief Executive Officer Ross Dove stated, “Top-line revenue growth of 38% year to date highlights the ongoing success across Heritage Global’s asset liquidation, valuation and advisory services businesses. In line with our stated objectives, we continued to focus on building our organization into a leading provider of diversified and unique global asset solutions and services during the second quarter. In this regard, in May we launched Heritage Zetabid Realty Services, a real estate auction division that will allow us to more effectively monetize clients’ commercial, industrial and luxury bank-owned real estate assets through a transparent open-bidding platform. Additionally, we recently introduced our new fixed asset financing services division, Heritage Global Capital that will provide term loans and leases secured by equipment and real estate to our customers, further leveraging and complementing our service offering.
“The formation and successful launch of our new divisions is another step in our plan to strategically grow our portfolio of global asset solutions by adding complementary capabilities that serve a broad range of businesses, while creating added value for our corporate clients, customers and investors. We are encouraged by the progress we have made in the first half of 2015 and 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.”
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.
|
HERITAGE GLOBAL INC. |
||||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
|
AND COMPREHENSIVE INCOME (LOSS) |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
|
(in thousands of US dollars, except share and per share amounts) |
||||||||||||||||
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, |
June 30, |
|||||||||||||||
| Revenue: | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Asset liquidation | ||||||||||||||||
| Commissions and other | $ | 2,379 | $ | 2,312 | $ | 5,191 | $ | 3,322 | ||||||||
| Asset sales | 579 | 499 | 1,412 | 1,474 | ||||||||||||
| Total revenue | 2,958 | 2,811 | 6,603 | 4,796 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Asset liquidation | 582 | 569 | 1,612 | 1,034 | ||||||||||||
| Selling, general and administrative, including expenses paid to related parties | 2,985 | 2,609 | 5,908 | 4,758 | ||||||||||||
| Depreciation and amortization | 165 | 120 | 324 | 238 | ||||||||||||
| Total operating costs and expenses | 3,732 | 3,298 | 7,844 | 6,030 | ||||||||||||
| Earnings (loss) of equity accounted asset liquidation investments | 105 | 18 | 139 | (12 | ) | |||||||||||
| Operating loss | (669 | ) | (469 | ) | (1,102 | ) | (1,246 | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Earnings of other equity method investments | — | 24 | 5 | 35 | ||||||||||||
| Interest expense – third party | (1 | ) | (100 | ) | (135 | ) | (171 | ) | ||||||||
| Interest expense – related party | (23 | ) | (39 | ) | (45 | ) | (106 | ) | ||||||||
| Total other expense | (24 | ) | (115 | ) | (175 | ) | (242 | ) | ||||||||
| Loss before income tax expense | (693 | ) | (584 | ) | (1,277 | ) | (1,488 | ) | ||||||||
| Income tax expense | — | — | 3 | 24,667 | ||||||||||||
| Net loss | (693 | ) | (584 | ) | (1,280 | ) | (26,155 | ) | ||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustments | 1 | 22 | (29 | ) | 16 | |||||||||||
| Comprehensive loss | $ | (692 | ) | $ | (562 | ) | $ | (1,309 | ) | $ | (26,139 | ) | ||||
| Weighted average common shares outstanding – basic and diluted (in thousands) | 28,240 | 28,167 | 28,204 | 28,167 | ||||||||||||
| Net loss per share – basic and diluted | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.93 | ) | ||||
The notes contained in our Quarterly Report on Form 10-Q are an integral part of these condensed consolidated financial statements.
|
HERITAGE GLOBAL INC. |
||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
|
(unaudited) |
||||||||
|
(in thousands of US dollars, except share and per share amounts) |
||||||||
|
June 30, |
December 31, |
|||||||
|
2015 |
2014 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,707 | $ | 3,633 | ||||
| Accounts receivable (net of allowance for doubtful accounts of $31; 2014 - $31) | 612 | 3,043 | ||||||
| Deposits | 140 | 173 | ||||||
| Inventory – equipment | 115 | 139 | ||||||
| Other current assets | 492 | 587 | ||||||
| Total current assets | 4,066 | 7,575 | ||||||
| Non-current assets: | ||||||||
| Inventory – real estate | 6,508 | 6,508 | ||||||
| Equity method investments | 442 | 1,134 | ||||||
| Property and equipment, net | 129 | 150 | ||||||
| Identifiable intangible assets, net | 7,354 | 7,657 | ||||||
| Goodwill | 8,846 | 8,846 | ||||||
| Total assets | $ | 27,345 | $ | 31,870 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 5,587 | $ | 7,225 | ||||
| Debt payable to third parties | 2,500 | 525 | ||||||
| Debt payable to related party | 1,604 | 2,985 | ||||||
| Contingent consideration | 513 | 803 | ||||||
| Total current liabilities | 10,204 | 11,538 | ||||||
| Non-current liabilities: | ||||||||
| Debt payable to third parties | — | 2,500 | ||||||
| Contingent consideration | 3,737 | 3,395 | ||||||
| Deferred tax liabilities | 960 | 960 | ||||||
| Total liabilities | 14,901 | 18,393 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 569 Class N shares at June 30, 2015 and 575 Class N shares at December 31, 2014 | 6 | 6 | ||||||
| Common stock, $0.01 par value, authorized 300,000,000 shares; issued and outstanding 28,467,648 shares at June 30, 2015 and 28,167,408 shares at December 31, 2014 | 285 | 282 | ||||||
| Additional paid-in capital | 283,964 | 283,691 | ||||||
| Accumulated deficit | (271,748 | ) | (270,468 | ) | ||||
| Accumulated other comprehensive loss | (63 | ) | (34 | ) | ||||
| Total stockholders’ equity | 12,444 | 13,477 | ||||||
| Total liabilities and stockholders’ equity | $ | 27,345 | $ | 31,870 | ||||
The notes contained in our Quarterly Report on Form 10-Q are an integral part of these condensed consolidated financial statements.
