Heritage Global (HGBL) investor relations material

Business overview and profitability

• Consistently profitable for 15 years, generating $1–2 million per quarter with a strong, stable business model.

• Operates two divisions: industrial (auctions of surplus/insolvency assets) and financial (NLEX, non-performing loan sales).

• Industrial division serves major multinational clients and is well-known in the insolvency auction space.

• Financial division originated from government contracts during the S&L crisis and evolved to serve major banks and fintechs.

• Maintains zero debt, with a $10 million credit line available for future needs.

Growth strategy and M&A plans

• Focused on transforming from a stable business to a growth company by increasing quarterly profits to $3–5 million.

• Accumulated capital over the past 2.5 years to fund M&A without diluting equity or taking on excessive debt.

• Plans to expand internationally and into new asset classes, including commercial real estate non-performing loans.

• Targeting acquisitions with a total spend not exceeding $20 million, keeping at least $10 million in reserve.

• Upcoming M&A announcements expected to drive business expansion.

Market trends and industry outlook

• Industrial asset sales are currently slow due to supply chain uncertainty, but a surge is expected as companies modernize and right-size.

• M&A activity among large manufacturers is expected to drive future growth in industrial auctions.

• Non-performing loan sales are poised for significant growth over the next two years due to record credit card debt and regional bank charge-offs.

• The circular economy and environmental stewardship are increasing demand for secondary markets in used equipment.

• Anticipates a wave of commercial real estate loan defaults as office vacancies rise and securitization fallout increases.