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Heritage Global Inc. Reports 2013 Q3 Operating Results

SAN DIEGO & TORONTO--(BUSINESS WIRE)--Heritage Global Inc. (OTCQB: HGBL), a leader in distressed and surplus capital assets valuations and transactions, today reported financial results for the third quarter and nine months ended September 30, 2013 as summarized below.

 
 
Summary Financial Data

(unaudited)

($ in thousands, except per share amounts)          

Three months ended

September 30,

     

Nine months ended
September 30,

2013

     

2012

     

2013

     

2012

Total asset liquidation revenue(1) $ 2,265 $ 3,052 $ 5,589 $ 9,917
Earnings of equity accounted asset liquidation investments(2) 456 222 1,265 1,449
Operating income (loss) 234 (1,575 ) (1,778 ) (1,104 )
Net income (loss) (260 ) (1,000 ) (1,650 ) (1,031 )
Earnings (loss) per diluted common share           $ (0.01 )       $ (0.03 )       $ (0.06 )       $ (0.04 )
(1) Represents revenue generated from activities where Heritage Global Partners acted in a principal capacity or had majority interest in a transaction.
(2) Represents equity income from activities where Heritage Global Partners acted as a member of a syndicate in a transaction.
 
 

2013 Q3 Summary:

  • Heritage Global had operating income of $0.2 million, as compared to an operating loss of $1.6 million level in the corresponding 2012 period.
  • Combined asset liquidation revenue and earnings of equity accounted asset liquidation investments (pre-tax) was approximately $2.7 million, compared to approximately $3.3 million in the prior year quarter.
  • SG&A expenditures, including expenses paid to related parties, dropped approximately 39% versus the year-ago quarter.
  • Total operating costs and expenses declined approximately 36%, year-over-year.
  • Net loss for the period narrowed to $260,000, $0.01 per diluted common share. In the year-earlier period, Heritage Global lost $1.0 million, or $0.03 on a per share basis.

Heritage Global Inc. Managing Partner Ross Dove stated, “In the recent quarter we focused significant time and efforts on successfully reducing the Company’s corporate overhead, infrastructure and controllable expense levels as well as ensuring a virtually seamless transition to the organization’s new senior executive team. Our new business auction and advisory services pipeline, both here in the US and internationally, is robust and we look forward to finishing the year with a solid fourth quarter and getting off to a good start in 2014.”

About Heritage Global Inc. (www.heritageglobalinc.com)

Heritage Global Inc. (OTCQB: HGBL) is a value-driven, innovative leader in distressed and surplus capital assets valuations and transactions. The Company focuses on identifying, valuing, acquiring and monetizing distressed and surplus capital assets in twenty-five global manufacturing and technology sectors. It specializes in both acting as an advisor as well as acquiring turnkey manufacturing facilities, surplus industrial machinery and equipment, industrial inventories, accounts receivable portfolios and related intellectual property.

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

(unaudited)

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands of US dollars, except per share amounts)

2013

2012

         
Revenue:
Asset liquidation
Asset sales $ 1,201 $ 1,284 $ 1,799 $ 5,175
Commissions and other   1,064     1,768     3,790     4,742  
Total asset liquidation revenue 2,265 3,052 5,589 9,917
Patent licensing   624         824      
Total revenue   2,889     3,052     6,413     9,917  
 
Operating costs and expenses:
Asset liquidation 819 1,152 1,401 4,360
Inventory maintenance 86 15 275 (8 )
Patent licensing and maintenance 10 4 166 38
Selling, general and administrative 1,912 3,210 6,682 7,265
Expenses paid to related parties 166 196 574 532
Depreciation and amortization   118     272     358     283  
 
Total operating costs and expenses   3,111     4,849     9,456     12,470  
(222 ) (1,797 ) (3,043 ) (2,553 )
Earnings of equity accounted asset liquidation investments 456 222 1,265 1,449
 
Operating income (loss)   234     (1,575 )   (1,778 )   (1,104 )
 
Other income (expenses):
Other income (expenses) 8 (299 )
Interest expense – third party (39 ) (71 ) (308 ) (175 )
Interest expense – related party   (91 )   11     (91 )    
 
Total other income (expenses)   (130 )   (52 )   (399 )   (474 )
 
Income (loss) before the undernoted 104 (1,627 ) (2,177 ) (1,578 )
Income tax expense (recovery) 387 (638 ) (466 ) (612 )
Earnings (loss) of other equity accounted investments (net of $0 tax)   23     (11 )   61     (65 )
Net income (loss) (260 ) (1,000 ) (1,650 ) (1,031 )
Other comprehensive loss:
Currency translation adjustment (net of tax of $0)   (4 )       (13 )    
 
Comprehensive income (loss) $ (264 ) $ (1,000 ) $ (1,663 ) $ (1,031 )
 
Weighted average common shares outstanding – basic (in thousands) 28,384 28,593 28,759 28,072
 
Weighted average common shares outstanding – diluted (in thousands) 28,384 28,593 28,759 28,072
 
Earnings (loss) per share – basic and diluted:
Common shares $ (0.01 ) $ (0.03 ) $ (0.06 ) $ (0.04 )
 
 
                 
 

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share and per share amounts)

(unaudited)

 

September 30,

2013

     

December 31,

2012

 
ASSETS
Current assets:
Cash and cash equivalents $ 4,543 $ 4,314
Amounts receivable (net of allowance for doubtful accounts of $0; 2012 - $0) 1,960 1,068
Receivable from a related party 2,929
Deposits 119 1,481
Inventory – equipment 486 820
Other current assets 740 312
Income taxes recoverable 118 70
Deferred income tax assets   1,953     1,956  
Total current assets 9,919 12,950
Non-current assets:
Inventory – real estate 6,078 6,078
Asset liquidation investments 3,574 3,618
Investments 1,757 2,426
Property, plant and equipment, net 33 52
Intangible assets, net 4,923 5,263
Goodwill 5,301 5,301
Deferred income tax assets   26,102     25,622  
Total assets $ 57,687   $ 61,310  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 8,353 $ 4,415
Debt payable to third parties 1,541 10,883
Debt payable to a related party   3,649      
Total current liabilities   13,543     15,298  
 
Commitments and contingencies
 
Equity:

Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and
outstanding 592 Class N shares at September 30, 2013 and December 31, 2012,
liquidation preference of $592 at September 30, 2013 and December 31, 2012

6 6

Common stock, $0.01 par value, authorized 300,000,000 shares; issued and
outstanding 28,166,728 shares at September 30, 2013 and 28,945,228 shares at
December 31, 2012

282 290
Additional paid-in capital 283,084 283,281
Accumulated deficit (239,208 ) (237,558 )
Accumulated other comprehensive loss   (20 )   (7 )
Total equity   44,144     46,012  
Total liabilities and equity $ 57,687   $ 61,310  
 
 

Contacts

Heritage Global Inc.
Stephen A. Weintraub, 416-866-3058
Executive Vice President, Secretary & CFO
sweintraub@counselcorp.com
or
JCIR
Robert Rinderman or Jennifer Neuman
HGBL@jcir.com or 212-835-8500