Mr. Ross Dove reports
HERITAGE GLOBAL INC. ANNOUNCES 2019 THIRD QUARTER OPERATING RESULTS
Heritage Global Inc. has released its financial results for the third quarter ended Sept. 30, 2019.
Heritage Global Chief Executive Officer Ross Dove stated, "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.
"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 nonperforming 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 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 29% to $6.6 million, compared to 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 $0.2 million. 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 a step up 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 $0.4 million a year ago, reflecting higher gross profit, a more favorable business mix, ongoing expense discipline, and rising operating leverage.
Net income was $1.2 million, or $0.04 per share, compared to $0.4 million, or $0.01 per share, in the prior-year quarter.
EBITDA totaled $1.3 million in the third quarter versus $0.5 million 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 to $0.6 million 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% compared to $7.6 million at December 31, 2018, and net cash of $3.3 million, representing an increase of 26% 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. 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, real estate, intellectual property, and entire business enterprises.
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