Heritage Global Inc. Q2 FY2025 earnings call

• Ross Dove emphasized the company's confidence due to a strong pipeline spread across revenue sectors, healthy industrial activity with late-model assets selling at premiums, and a strong NLEX team onboarding new clients in financial assets. - Brian Cobb provided details on consolidated operating results, segment performances, adjusted EBITDA, net income, balance sheet strength, and share repurchases, and highlighted focus on executing auction pipeline opportunities and continued performance in financial assets. - The company is in an acquisition mode, evaluating strategic opportunities in industrial and financial asset segments.

Industrial Assets division: Operating income was $1.3 million in Q2 2025 compared to $2.1 million in Q2 2024. This division benefited from high auction volume and steady asset pricing. Financial Assets division: Operating income was $2.2 million in Q2 2025 compared to $2.7 million in Q2 2024, with relatively consistent performance and strong sequential improvement. Appraisals business: Reported operating income of approximately $250,000, a positive change from a loss in Q1. ALT business: Achieved operating income of approximately $400,000, up from a breakeven quarter in the prior year. The Industrial Auctions Group had improved day-to-day operating results excluding a one-time gain from the prior year.

• Goal is to get past $2 million NOI each quarter without material M&A or one-time events, building on organic growth and potential M&A. - Anticipate strong performance in financial assets segment throughout 2025, with focus on surpassing $2 million NOI as a baseline and growing from there.

• Uncertainties in the macroeconomic environment, including difficulty in forecasting due to geopolitical and tariff impacts. - Unclear availability of near-term capital. - Volatility in asset pricing and market conditions affecting performance.

Q: What's the baseline for NOI and future expectations?

A: Ross mentioned $2 million NOI was a good quarter but not a permanent baseline, with goal to surpass it through organic growth and M&A.

Q: Thoughts on asset flows and pricing in financial assets?

A: Ross noted NLEX is seeing new sellers and clients, with pricing normalizing but still aligning with market.

Q: Impact of tariffs on industrial side?

A: Late-model assets selling at premiums due to supply chain and tariff fears, driving more bidders at auctions.

Q: Acquisitions in Europe?

A: Ross stated company is actively looking at international expansion, particularly in Europe, with no material announcements but ongoing efforts.

Q: Activity with specialty lending and legal collections?

A: Brian Cobb said work continues on underlying loans and collateral, trending in the right direction but no major news to disclose.