Heritage Global, Inc. (HGBL) Tops Q4 EPS by 9c, Revenues Beat

Heritage Global, Inc. (NASDAQ: HGBL) reported Q4 EPS of $0.17, $0.09 better than the analyst estimate of $0.08. Revenue for the quarter came in at $8.33 million versus the consensus estimate of $7.17 million.

Fourth Quarter 2020 Highlights:

• The Company achieved operating income of $3.3 million as compared to an operating loss of $0.4 million in the fourth quarter of 2019, primarily due to the completion of multiple large transactions in the Company’s industrial auction business. The fourth quarter of 2019 included a $0.6 million impairment charge related to Equity Partners, which was discontinued as of December 31, 2019.
• Net income increased to $6.3 million, or $0.17 diluted earnings per share, for the fourth quarter of 2020, as compared to $0.6 million or $0.02 diluted earnings per share in the fourth quarter of 2019. The financial results for 2020 include an income tax benefit of $3.0 million for the fourth quarter of 2020, and an income tax benefit of $3.6 million for the year ended December 31, 2020 which included the reversal of the income tax valuation allowance as required according to ASC 740-10-30-5(e). Excluding the income tax benefit resulting from the income tax valuation allowance, the net income for the fourth quarter of 2020 would have been $2.5 million or $0.07 diluted earnings per share, and $4.5 million or $0.14 diluted earnings per share for the year ended December 31, 2020, compared to net loss for the fourth quarter of 2019 of $1.2 million or $0.04 diluted earnings per share, and net income of $2.1 million or $0.07 diluted earnings per share for the year ended December 31, 2019.
• EBITDA totaled $3.4 million versus EBITDA loss of $0.4 million in the fourth quarter of 2019, while Adjusted EBITDA (excluding non-cash stock-based compensation expense) was $3.5 million compared to $0.3 million in the prior-year quarter.
• Heritage Global maintains a strong balance sheet, with stockholders’ equity of $29.9 million as of December 31, 2020, compared to $11.8 million as of December 31, 2019, and cash of $23.4 million.

Heritage Global Chief Executive Officer Ross Dove commented, “We closed out 2020 with record fourth quarter results, reflected in net income of $6.3 million and substantially improved adjusted EBITDA of $3.5 million. Our performance in the quarter, and for the full year, demonstrates the strength and resilience of our diverse business model, which performed well in a challenging economic environment as the pandemic continued to impact global markets.

“As we announced in January, we closed several large transactions at Heritage Global Partners during the fourth quarter, which significantly contributed to the strength of the quarter and enabled us to begin 2021 with significant momentum across our businesses. We are optimistic for our prospects as we have moved into 2021, and expect to see strong supply on the auction side of our business as the pandemic continues to drive the liquidation of industrial equipment and assets. Likewise, we anticipate increased demand for our financial asset services, as we expect to see an increase in the release of non-performing loans into the market this calendar year. Specifically, we are seeing more opportunities related to debt associated with the growing adoption of the ‘Buy Now, Pay Later’ (BNPL) purchasing option among online consumers. In fact, we recently announced the successful sale of a $25 million portfolio of BNPL charged-off accounts. We are pleased with Heritage’s progress in 2020 and are focused on continuing to capitalize on the interest and demand we are seeing across both the industrial and financial sides of our business.”

For earnings history and earnings-related data on Heritage Global, Inc. (HGBL) click here.

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