Heritage Global Inc. Q3 FY2025 earnings call

• M&A: Phased approach completed, now in tactical execution; focused on businesses capable of operating independently, scaling, and matching systems/processes day 1; GS plan (geography and sector growth) in place; advanced negotiations with like-minded companies.
• Facility: New facility in San Diego nearing completion.
• Balance Sheet: Strong with stockholders' equity, net working capital, and cash balance.
• Share Repurchase: Authorized new program for up to $7.5M in common stock over 3 years, but prioritizing M&A now.

Consolidated operating income was $1.3 million in Q3 2025 vs $1.5 million in Q3 2024. Industrial Assets division had operating income ~$900,000 in Q3 2025 vs ~$700,000 in prior year; Refurbishment and Resale segment grew; ALT had ~$400,000 operating income in Q3 2025 vs ~$200,000 in Q3 2024. Financial Assets division had operating income $1.6 million in Q3 2025 vs $1.8 million in Q3 2024; Brokerage down slightly QoQ, but NLEX adding sellers; transaction volumes from largest recurring clients softened early but trended up in Sept. Adjusted EBITDA was $1.6 million vs $1.9 million prior year; net income ~$600,000 or $0.02 per diluted share vs $1.1 million or $0.03 per diluted share in Q3 2024; balance sheet strong with stockholders' equity $66.5M as of 9/30/2025, net working capital $17.9M, cash balance $19.4M, net available cash $12.6M.

• Authorized a new share repurchase program on 7/31 allowing repurchase of up to $7.5 million in common stock over next 3 years.
• Emphasis on near-term execution of M&A strategy for accretive transactions.

• Economic uncertainties with wait-and-see economy affecting large transactions due to interest rates and tariffs.
• Regional banks facing increased scrutiny over loan portfolio quality, leading to potential higher charge-offs and nonperforming loan volumes.

Q: Capital allocation question regarding M&A vs share repurchase.

A: Ross said M&A is prioritized now but $7.5M share repurchase program is authorized and prepared to use.

Q: About Industrial Assets activity mix.

A: Ross said many companies in hold-on mode releasing surplus assets, larger companies waiting on M&A due to supply chain concerns, leading to smaller scale transactions.

Q: Debt status.

A: Brian said paid off ALT note, only debt now is $4.1M interest-only mortgage for new headquarters, line of credit at $0 balance.

Q: Progress on Heritage Capital portfolio.

A: Brian said alignment with senior lenders and borrowers, investing in legal process, operating at small profit with high-performing loans.