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Heritage Global earns $1.21-million in Q3 2019

2019-11-08 10:39 ET - News Release

Mr. Ross Dove reports


Heritage Global Inc. has released its financial results for the third quarter ended Sept. 30, 2019.

Heritage Global's chief executive officer, Ross Dove, commented: "Heritage Global delivered strong third quarter results, highlighted by accelerating growth in revenue and earnings, as we increasingly leverage the company's unique and differentiated model. We maintain durable competitive advantages, including: expertise and relationships built up over our history; global scale; and broad diversification across businesses, products and services, markets and revenue streams. Over the last 12 months, Heritage Global has generated $4.7-million of adjusted EBITDA [earnings before interest, taxes, depreciation and amortization].

"Looking ahead, we remain optimistic about our growth prospects, regardless of the macroeconomic backdrop, given our key strategic initiatives to continue to: broaden target markets; ramp up principal investment activities; and build out product and service capabilities. To the point, we recently launched Heritage Global Capital, a new platform providing specialty financing solutions to small- and medium-sized investors in charged-off and non-performing asset portfolios and other asset-based classes. Over time, we expect Heritage Global Capital to meaningfully enhance the growth, sustainability and diversification of our revenues.

"In turn, our consistent growth is driving strong and improving financial performance. We remain focused on driving operating efficiencies, including recently announced plans to realign our middle-market M&A [mergers and acquisitions] advisory services business, while the continued development of our more predictable fee-based advisory businesses, combined with accelerating higher-margin principal activities, bodes well for the trajectory and sustainability of our earnings growth."

Third quarter 2019 highlights:

  • Total revenue grew by 29 per cent to $6.6-million compared with the year-ago level of $5.1-million, as services revenue increased to $5.2-million from $4.9-million, while asset sales grew to $1.4-million from $200,000. Results reflect the company's building scale and diversification across businesses and revenue streams.
  • Gross profit rose to $5.3-million from $4.2-million in the prior-year quarter, as higher total revenue more than offset an increase in cost of revenue. The variability in size and timing of asset sale transactions impacted quarterly comparisons.
  • Operating income more than tripled to $1.3-million in the third quarter of 2019 from $400,000 a year ago, reflecting higher gross profit, a more favourable business mix, continuing expense discipline and rising operating leverage.
  • Net income was $1.2-million, or four cents per share, compared with $400,000, or one cent per share, in the prior-year quarter.
  • EBITDA totalled $1.3-million in the third quarter, compared with $500,000 in the prior year, while adjusted EBITDA (excluding non-cash stock-based compensation expense and the fair value adjustment of contingent consideration) was $1.4-million, compared with $600,000 in the prior year.
  • Heritage Global maintains a strong balance sheet, with stockholders' equity of $11.1-million at the end of the quarter, up 46 per cent when compared with $7.6-million at Dec. 31, 2018, and net cash of $3.3-million, representing an increase of 26 per cent over the same period.

About Heritage Global Inc.

Heritage Global is a diversified financial services company providing asset-based acquisition, disposition, valuation and lending services.

We seek Safe Harbor.

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