Heritage Global Inc. (NASDAQ:HGBL) Q2 2022 Earnings Conference Call August 10, 2022 5:00 PM ET

Company Participants

John Nesbett – Investor Relations

Ross Dove – Chief Executive Officer

Brian Cobb – Chief Financial Officer

Conference Call Participants

Mark Argento – Lake Street

Michael Diana – Maxim Group

Operator

Good afternoon and welcome to the Heritage Global Second Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to John Nesbett, Investor Relations for Heritage Global. Please go ahead.

John Nesbett

Thank you, and good afternoon, everyone. Before we begin, I’d like to remind everyone that this conference call contains forward-looking statements based on our current expectations and projections about future events and are subject to change based on various important factors.

In light of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements, which speak only as of date of this release. For more details and factors that could affect these expectations, please see our filings with the Securities and Exchange Commission.

Now I’d like to turn the call over to Heritage Global’s Chief Executive Officer, Mr. Ross Dove. Ross?

Ross Dove

Thank you, John. Good afternoon, everyone. Welcome to our second quarter 2022 earnings conference call. Let’s start today’s call with Brian Cobb, our Chief Financial Officer. Brian will discuss the financial performance to date. Go ahead, Brian. You are up.

Brian Cobb

Thanks, Ross. As expected, we reported strong operating results in the second quarter with operating income of $3.6 million, improved profitability and EBITDA of $3.8 million. From my perspective, our financial performance during the quarter and the first half of 2022 can be summarized by the following.

First, we have seen a significant increase in the number of principal transactions executed in our Industrial Assets Division evidenced by a 279% increase in asset sales for the six months ended June 30, 2022, as compared to the same period in 2021. This is primarily the result of a record number of industrial auctions held during the second quarter, as well as operations at American laboratory trading, which was not active as a Heritage business in the first six months of 2021.

Second, we have realized increased services revenue during the second quarter due to an increase in financial asset volume industrywide. We saw an increase in spending, charge off, and delinquency rates beginning in the fourth quarter of 2021, which has started to materialize with increased revenues from our financial asset brokerage. Following suit, I would expect that our specialty lending group will see increased opportunity to deploy cash in the second half of the year and into 2023.