Heritage Global at Planet MicroCap: Strategic Growth Amid Market Cycles

On Wednesday, 23 April 2025, Heritage Global Inc. (NASDAQ:HGBL) participated in the Planet MicroCap Showcase: VEGAS 2025. CEO Ross Dove provided insights into the company’s strategic direction, highlighting both opportunities and challenges. The company, which specializes in financial and industrial asset management, is poised for growth despite market fluctuations.

Key Takeaways

• Heritage Global anticipates growth in financial asset sales due to rising consumer debt.
• The company conducts around 200 industrial auctions annually for major corporations.
• Heritage Global has been consistently profitable for nearly a decade.
• The firm expects a wave of asset sales starting mid-2025, driven by macroeconomic trends.
• CEO Ross Dove describes the stock as a "buy now and get paid later" opportunity.

Financial Results

• Financial Assets:

- 60% of this segment is focused on alternative lending.

- Charged-off loans are sold at approximately $0.0510 on the dollar through the NLEX brokerage.

• Industrial Assets:

- Heritage Global conducts approximately 200 auctions per year, generating about $100 million annually.

- Half of these auctions involve well-known global companies like Pfizer and Boeing.

• Overall Performance:

- The company has maintained profitability for seven to eight years.

- Quarterly earnings range from $1.5 million to $2 million, showing some decline from previous highs of $3 million to $4 million.

Operational Updates

• Financial Assets:

- Focused on selling charged-off loans, particularly from alternative lenders such as PayPal and LendingClub.

- Anticipates increased activity due to rising consumer debt levels.

• Industrial Assets:

- Auctions are conducted for surplus assets, plant closures, and mergers/acquisitions.

- Key sectors include pharmaceuticals, defense, and food and beverage.

- Emphasizes the importance of repurposing assets in light of environmental regulations.

• Macro Trends:

- Monitoring non-performing loans and corporate layoffs, which are expected to create future opportunities.

- Acknowledges a year-long delay between layoffs and the realization of revenue from asset liquidation.

Future Outlook

• Financial Assets:

- A wave of asset sales is expected to begin around June to August 2025, lasting two years.

- Growth is driven by younger generations’ spending habits and increasing consumer debt.

• Industrial Assets:

- Growth is anticipated due to a focus on repurposing surplus assets and potential supply chain disruptions.

- Tariffs and supply chain issues may increase the value of used equipment.

• Overall Growth Potential:

- Heritage Global is well-positioned to capitalize on favorable macro trends due to its operational discipline and experience.

Q&A Highlights

• The presentation concluded earlier than planned, limiting the Q&A session.

For more detailed insights, readers are encouraged to refer to the full conference call transcript.

Full transcript - Planet MicroCap Showcase: VEGAS 2025:

Operator: Hi. Oh, it’s Ross. Hi. Nice to meet you.

Crystal, Unidentified speaker: Crystal. Dove is your last name?

Ross Dove, Heritage Global, CEO of Heritage Global: Dove, d o v e, like the bird.

Unidentified speaker, Unidentified speaker: Okay. So they’re gonna give

Unidentified speaker, Unidentified speaker: you exactly twenty five minutes.

Unidentified speaker, Unidentified speaker: Fine.

Operator: Five minute mark. You’re gonna see them hold up a sign in the back that says Mine’s

Ross Dove, Heritage Global, CEO of Heritage Global: more, interactive. Okay. It’s like more But you

Unidentified speaker, Unidentified speaker: still only have twenty five minutes.

Ross Dove, Heritage Global, CEO of Heritage Global: I know.

Operator: Okay. So they’re gonna hold up a sign in the back that says you have

Unidentified speaker, Unidentified speaker: five minutes left, thirty minutes.

Unidentified speaker, Unidentified speaker: Okay. I’m not worried about it.

Unidentified speaker, Unidentified speaker: Make sure you speak into the microphone so

Unidentified speaker, Unidentified speaker: that the webcam can hear you. Alright.

Ross Dove, Heritage Global, CEO of Heritage Global: I’m an auctioneer. I first time I ever had a microphone.

Operator: Alright. Good afternoon. The next Planet Microcap presentation is Heritage Global. We have Ross Dove.

Ross Dove, Heritage Global, CEO of Heritage Global: Thank you. So I’ll talk for a few minutes, and then I’m gonna hopefully make this interactive. And instead of me just rambling on for twenty five minutes, we can do kind of like a q and a. You can ask me some questions. I actually have some questions I’m gonna ask you guys that maybe you could help me out and give me some answers on to to help me do a better job of my company and maybe, get this darn stock up.

So, you know, I’ll take it from here. So wanted to go to there you go. I’m a one slide guy. So there’s, a 35 slide deck, but I promise you I’ll never get off the first slide because, I’m too old, and I started doing sales a long time before they invented PowerPoint. So Heritage Global is 15 years old, trades on the Nasdaq, about an $80,000,000 market cap, which we’re screaming and complaining about, you know, all the way to the fact that we think it’s better, but that’s where it is.

Couple bucks stock price, been profitable for three quarters of a decade since we’ve run it. We’ll always stay profitable because we’re a disciplined, well run little shop. We do two things, really. We focus on financial assets, and we focus on industrial assets primarily as a disposition firm, as a lending firm, as a valuation firm. So we sell hard to sell stuff that we think is easy to sell because we’re a market maker.

So I’ll start on the financial side, which is kind of easier to explain quicker because it’s really one thing. It’s charged off loans. A long time ago, there was this thing called, SNLs that maybe some of you are old enough to remember. When they shut down the SNLs, the FDIC hired my predecessor firm to auction off hundreds of billions of dollars of struggling credit cards, auto loans, real estate loans from the failed SNLs. When we were all done with that three year run, we woke up and said, shit.

We have these unbelievable buyers. I that’s a bad word. We said, shoot. We said, shoot. We had these unbelievable buyers and no longer a seller.

The government was out of, SNL’s, and it was basically an over with business. But we said, let’s take it to the private sector. All of the banks that remained have nonperforming loans, have charged off loans, and so there wasn’t really a business of selling loans once they were written off. So we were a pioneer that created the business of selling written off loans, credit card loans, Zen and auto loans. We did it for the biggest banks in the world who eventually built recovery departments and basically stopped using us.

But when they stopped using us, we broad based it into regional banks. Fast forward twenty five years, there’s constantly been new clients. Right now, 60% of the business is what we call alternative lending. Work for PayPal, work for LendingClub, work for all the buy now, pay later people, selling charged off loans. It’s about half our revenue stream in financial assets.

It’s a brokerage called NLEX. Why is that growing now? Because an auctioneer’s dream was the invention of buy now, pay later. It’s like I woke up, and I almost couldn’t believe my fortune that they thought everyone’s gonna pay later. And so what happens is you go on a cruise, you lose your money gambling in the casino, you drink a ton of rum and Cokes, you get off the cruise, and you get a bill to pay later.

And you go, oh, man. That was a good cruise, but I’m broke. So that that turns into a charge off where you can’t collect, and and the only way you get that guy to pay is you basically give it to somebody like us at NLEX. We sell it for $5.10 cents on the dollar to somebody who goes out and works really hard to collect 20¢ on the dollar, you know, getting a judgment, getting a garnishment, and chasing them down. That’s a growing business.

If you wanna know why we’re gonna do good, I always say we’re gonna do good at Heritage when supply is going to grow. Why is supply gonna grow? Because the younger generation came out of the pandemic and spent like crazy with no real plan to pay off all their bills. They got spoiled by a pandemic that basically gave them free money from the government, and then all of a sudden, the free money from the government stopped, and we woke up.

Operator: Hi. I’m Ross. Ross, hi. Nice to meet you.

Crystal, Unidentified speaker: Crystal. Dove is your last name?

Ross Dove, Heritage Global, CEO of Heritage Global: Dove, d o v e, like the bird.

Unidentified speaker, Unidentified speaker: Okay. So they’re gonna give

Unidentified speaker, Unidentified speaker: you exactly twenty five minutes.

Unidentified speaker, Unidentified speaker: Five.

Operator: Five minute mark. You’re gonna see them hold up a sign in the back that says

Ross Dove, Heritage Global, CEO of Heritage Global: Mine’s more interactive. Okay. It’s like more pictures.

Unidentified speaker, Unidentified speaker: Only have twenty five minutes.

Ross Dove, Heritage Global, CEO of Heritage Global: I know.

Operator: Okay. So they’re gonna hold up a sign in the back that says you

Unidentified speaker, Unidentified speaker: have five minutes left, thirty minutes.

Unidentified speaker, Unidentified speaker: Okay. I’m not worried about it.

Unidentified speaker, Unidentified speaker: Make sure you speak into

Unidentified speaker, Unidentified speaker: the microphone so that the webcam can hear you. Alright.

Ross Dove, Heritage Global, CEO of Heritage Global: I’m an auctioneer. I first time I ever had a microphone.

Operator: Alright. Good afternoon. The next Planet Microcap presentation is Heritage Global. We have Ross Dove.

Ross Dove, Heritage Global, CEO of Heritage Global: Thank you. So I’ll talk for a few minutes, and then I’m gonna hopefully make this interactive. And instead of me just rambling on for twenty five minutes, we can do kind of like a q and a. You can ask me some questions. I actually have some questions I’m gonna ask you guys that maybe you could help me out and give me some answers on to to help me do a better job of my company and maybe, get this darn stock up.

So, you know, I’ll take it from here. So why don’t you go to there you go. I’m a one slide guy. So there’s, like, a 35 slide deck, but I promise you I’ll never get off the first slide because, I’m too old, and I started doing sales a long time before they invented PowerPoint. So Heritage Global is 15 years old, trades on the Nasdaq, about an $80,000,000 market cap, which we’re screaming and complaining about, you know, all the way to the fact that we think it’s better, but that’s where it is.

Couple bucks stock price, been profitable for three quarters of a decade since we’ve run it. We’ll always stay profitable because we’re a disciplined, well run little shop. We do two things, really. We focus on financial assets, and we focus on industrial assets primarily as a disposition firm, as a lending firm, as a valuation firm. So we sell hard to sell stuff that we think is easy to sell because we’re a market maker.

So I’ll start on the financial side, which is kind of easier to explain quicker because it’s really one thing. It’s charged off loans. A long time ago, there was this thing called, S and Ls that maybe some of you are old enough to remember. When they shut down the SNLs, the FDIC hired my predecessor firm to auction off hundreds of billions of dollars of struggling credit cards, auto loans, real estate loans from the failed s and l’s. When we were all done with that three year run, we woke up and said, shit.

We have these unbelievable buyers. Right? That’s a bad word. We said, shoot. We said, shoot.

We had these unbelievable buyers and no longer a seller. The government was out of, S and L’s, and it was basically an over with business. But we said, let’s take it to the private sector. All of the banks that remained have nonperforming loans, have charged off loans, and so there wasn’t really a business of selling loans once they were written off. So we were a pioneer that created the business of selling written off loans, credit card loans, then an auto loans.

We did it for the biggest banks in the world who eventually built recovery departments and basically stopped using us. But when they stopped using us, we broad based it into regional banks. Fast forward twenty five years, there’s constantly been new clients. Right now, 60% of the business is what we call alternative lending. Work for PayPal, work for LendingClub, work for all the buy now, pay later people, selling charged off loans.

It’s about half our revenue stream in financial assets. It’s a brokerage called NLEX. Why is that growing now? Because an auctioneer’s dream was the invention of buy now, pay later. It’s like I woke up, and I almost couldn’t believe my fortune that they thought everyone’s gonna pay later.

And so what happens is you go on a cruise, you lose your money gambling in the casino, you drink a ton of rum and Cokes, you get off the cruise, and you get a bill to pay later. And you go, oh, man. That was a good cruise, but I’m broke. So that that turns into a charge off where you can’t collect, and and the only way you get that guy to pay is you basically give it to somebody like us at NLECS. We sell it for $5.10 cents on the dollar to somebody who goes out and works really hard to collect 20¢ on the dollar, you know, getting a judgment, getting a garnishment, and chasing them down.

That’s a growing business. If you wanna know why we’re gonna do good, I always say we’re gonna do good at heritage when supply is going to grow. Why is supply gonna grow? Because the younger generation came out of the pandemic and spent like crazy with no real plan to pay off all their bills. They got spoiled by a pandemic that basically gave them free money from the government, and then all of a sudden, the free money from the government stopped.

And we woke up, and we’ve got over a trillion dollars of credit card debt. The first time in our history that credit card debt and auto debt was that high. So you say, why aren’t I making more money now? Because it takes a year or two for the credit card debt to go all the way down to charge offs. It starts out they’re not paying.

Then they try to collect in full. Then after they try to collect in full, they try to settle. And then a year or a year and a half later, they say, we give up. We charge it off. Give it to those junk dealers at NLEX, and let them get $5.10 cents on the dollar.

So that wave of assets you saw grow to a trillion dollars is going to be my wave of asset sales starting probably June, July, August of this year. You’re gonna see it grow, and you’re gonna see two years of growth. So that’s reason a that you should buy my stock now and get paid later rather than buy now the other way. Buy now and get paid later is what I’m telling you about Heritage. So now we’ll move on to the second half of the business.

And, obviously, on that half, there’s other businesses. There’s a lending business that’s a boutique business in comparison. So the primary business is selling from regional banks and selling from, you know, basically, all of the different fintech players as a broker. On the flip side of the business is an industrial auction company that was founded by my grandfather and a predecessor company that’s literally from right after the Great Depression founded. I grew up, with a grandfather and a father that were the auctioneers, basically flying all around the world as we built a business on the ladder.

I got 15, get a bid 20, get a bid 30. And all of a sudden, I woke up one day, and they said, we don’t need you anymore. The Internet disintermediated me as a bid caller, and there was this thing called the Internet. For two years, I tried to beat the Internet and say, hey. I can get more money with the microphone, yelling and figured out that that’s that was the big lie, so we converted it basically to an online marketplace.

We grew the online marketplace to Heritage Global. Heritage Global does about 200 auctions a year. About half the auctions are for household name global companies you all know. We’re the auctioneer for Pfizer. We’re the auctioneer for Amgen.

We we do auctions for Halliburton. We’ve done auctions for Boeing, for Raytheon. I could go on and on, and those are fee based commission auctions where they hire us because they’re selling surplus assets or closing a plant. The other half of that business is is basically happening for two things, really, really good times. Everybody says, oh, you make your money off distress.

I kill it during really good times if really good times are m and a. Because in m and a, if you’re gonna do a merger or an acquisition and you’re Pfizer and you’ve got a hundred billion dollars in the bank and you’re gonna buy a company. You’re not buying the company because you’d want their microscopes, their HPLCs, or their DNA sequencers. You’re buying the company because you want their patents, you want their intellectual capital, you want their scientists, and you don’t need another machine to make a pill or to make a tablet or a cream. So under m and a, we we do really well in every industry.

We also do really well when, so to speak, the oomph hits the fan and there’s trouble. So when is there trouble? There’s trouble for two reasons. One reason is a marketplace leaves North America. So I’m an old guy.

So I had two years where I did nothing but textile plants. I had two years where I did nothing but semiconductor plants. And what we call that in the auction business is selling peanuts when the circus is in town. So those businesses are trans transitional. What happened is I learned my lesson that you don’t wanna be in a business that goes away.

So I had a huge year in February where I did 300 dot com companies. Woke up one day, there were no more .com companies. So what we figured out is get into the industries and the sectors that cannot go away. So our biggest sector is pharma because you do not outsource scientists and trying to cure drugs to another country. It stays here forever.

Another sector that stays here forever is defense. So Boeing is not gonna leave or McDonnell Douglas or Raytheon or Hughes Aircraft. They’re not gonna leave America, so defense stays here. And, obviously, food and beverage stays here. So we’re in 50 secondtors.

Those are the three sectors that we’re most active in because we can grow those continually for the long run. That’s 200 auctions a year. It’s a hundred million dollars in sales. Why is that gonna grow? It’s going to grow because what’s happened now is twofold.

The first thing that’s gonna happen is there’s been this massive push on the environment not to put surplus assets into landfill. I did this all my life, and the big company said, I don’t wanna sell my used equipment to a little company. I’m only getting $5.10, 15¢ on the dollar. I’ll just scrap it. Now scrapping it is unpopular.

It’s bad business practice not to support the supply chain. And to support an ethical supply chain, they’re all pressured now to basically sell their surplus assets. Repurposing is now part of the DNA of corporations, which it wasn’t for most of my life. So it’s growing because they’re paying more attention to the back end of the supply chain. That’s number one.

Number two is this big push to rightsizing, they call it. Rightsizing means shrinking your personnel. It doesn’t mean rightsizing it. It means shrinking it. So as you, like, get rogue personnel and as you try to put more AI into your business, as you try to put more robotics into your business, you create a bunch of surplus equipment.

So the surplus equipment business is growing. Right now, it’s super hot. Why is it super hot? Because everyone is worried about and I don’t wanna get geopolitical. Everyone’s worried about tariffs and clogging up the supply chain like what we watched during the pandemic.

If the supply chain does get clogged up, used equipment goes way up in value because it takes longer to get new equipment. Or if new equipment becomes more expensive, used equipment goes up with it. So in the end of the day, this is, and this is not political on either side. Every auctioneer on Earth is going, wow. This could be good for us.

So, you know, on a self serving reason, I see two or three years in front of me of a lot of financial assets coming to market, and that’s a macro fact. I see the layoff tracker going up. You guys can look at the amount of layoffs that happened in the last six months, and you can say, how come we’re only making a million and a half or 2,000,000 a quarter instead of the 3 or 4,000,000? I can tell you why. Because it takes a year for those layoffs to turn into revenue for us.

We’re a year delay. They announce the layoffs. It takes three to six months to actually do them. And then after they do the layoffs over six months, they wake up and say, wow. What are we gonna do with all that equipment in Building B when there’s nobody in Building B anymore and all the machines are there?

Let’s go figure out what to do with them, and then I get to business. So there’s this built in backlog. If you just look at everything that’s happened over the last eighteen months and just step back and say, I see everything that’s happened. Who’s going to win going forward? Some people, it impacted right then.

Some people, it impacts six months, a year, a year and a half later. We’re in that sweet spot. It’s unarguable that when you see, basically, nonperforming loans going up, you have to say, hey. A year from now, some of those loans are gonna get charged off, and some of those loans are gonna get sold through a broker. When you see six months and eight months ago, all of these plant closure announcements and all of these layoffs, then you say, what’s gonna happen?

And you say, six months, a year from now, somebody’s gonna have to deal with all that surplus. So we’re heading in. We’ve been profitable for seven or eight years. We’ve never had a losing quarter. We’ve had spikes in our revenue.

So if you’re looking to invest in a software services type company that has sequential quarter over quarter growth, you’re in the wrong room. If you’re looking to invest in a company that can have a slow quarter and only make a million bucks and then come back and make 3,000,000, you’re in the right room if if you think this is a company that you believe is going to grow because you believe supply is gonna grow. So if you ask yourself one question, when do I buy stock in an auctioneer, in a broker, and in a liquidator? And when do I sell stock in an auctioneer, a broker, or a liquidator? I buy it when I believe there’s gonna be more stuff to sell, and I sell it when I believe there’s gonna be less stuff to sell because know that we know how to execute or we wouldn’t have been profitable all these quarters.

So the question is, if you if you believe we know how to execute, then your belief becomes, do I believe they’re going to find more things to sell next year than last year. And if I believe that, then I take a look around and I say, there’s not that many companies here making money. This one has made money every quarter for three quarters of a decade during all kinds of economies, and I think they’re moving into, a sweet spot for the next two or three years. So I really feel fortunate that I’m so young that that I got, know, an easy ride here for a while I’m still learning the business. So I’m done.

How long did that take? How how long? Sixteen minutes? Alright. We got nine minutes.

Somebody asked somebody asked me a question, something worthwhile. Somebody. Come on. If you don’t, I’m gonna start repeating myself. There you go.

I think on the industrial side, you know, I think that this whole doge sentiment is going to actually not just go away. And and in the end of the day, it’s not just about auctioning off government assets. It’s all the companies that rely upon government contracts. So a big part of it is spend management. So the defense industry

Operator: This presentation has now finished. Please

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