Financial Data and Key Metrics Changes - The company reported EBITDA of $1.4 million for Q3 2025, a decrease from $1.9 million in the prior year period [3][10] - Consolidated operating income was $1.3 million in Q3 2025, down from $1.5 million in Q3 2024 [7] - Net income for Q3 2025 was approximately $600,000 or $0.02 per diluted share, compared to $1.1 million or $0.03 per diluted share in Q3 2024 [10] - Adjusted EBITDA decreased to $1.6 million from $1.9 million year-over-year [10] - Stockholders' equity increased to $66.5 million as of September 30, 2025, compared to $65.2 million at the end of 2024 [11] Business Line Data and Key Metrics Changes - The industrial assets division reported operating income of approximately $900,000 in Q3 2025, up from approximately $700,000 in the prior year [8] - The financial assets division reported operating income of $1.6 million in Q3 2025, down from $1.8 million in Q3 2024 [8] - The ALT segment improved operating income to approximately $400,000 in Q3 2025 from approximately $200,000 in Q3 2024 [8] Market Data and Key Metrics Changes - The company noted a healthy amount of auctions, primarily smaller-scale activities, as larger companies opted to delay significant transactions due to economic uncertainty [9] - Consumer debt remains high, but credit performance metrics suggest market stabilization [10] - Regional banks are facing increased scrutiny over loan quality, which may lead to higher charge-offs and non-performing loan volumes [10] Company Strategy and Development Direction - The company is focused on M&A as a critical component of its long-term strategy, with a sharpened focus on accretive transactions [11][12] - The CEO emphasized a tactical execution phase for M&A, identifying companies that can plug gaps and create long-term shareholder value [5][13] - The company is nearing completion of a new facility in San Diego, which supports its next growth phase [9] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about future opportunities, particularly in light of increasing distressed assets reported by regional banks [4][10] - The company is prepared to capture market share as opportunities arise, with a strong balance sheet and cash position [11][12] - Management acknowledged the challenges of a wait-and-see economy but highlighted successful smaller transactions that contributed to profitability [4][18] Other Important Information - The company authorized a new share repurchase program allowing for the repurchase of up to $7.5 million in common stock over the next three years [12] - The only remaining debt on the balance sheet is a mortgage for the new headquarters, with a capacity on the line of credit at zero balance [20] Q&A Session Summary Question: Capital allocation strategy regarding M&A versus stock buybacks - Management indicated that while the stock is undervalued, the focus remains on M&A transactions that will drive growth, but they are prepared to buy back stock if necessary [16] Question: Activity in the industrial assets division - Management noted that many companies are in a hold-on mode, releasing surplus assets but delaying significant decisions due to economic uncertainty [18] Question: Update on Heritage Capital portfolio - Management reported progress in aligning with senior lenders and executing a plan to work down the portfolio, with positive initial results [28]