Heritage (US:HGBL)2021-05-14 15:55Financial Data and Key Metrics Changes - The company achieved operating income of $1 million for Q1 2021, a significant improvement from $100,000 in Q1 2020 [19] - Net income increased to $1 million or $0.03 diluted earnings per share in Q1 2021, compared to $38,000 or breakeven diluted earnings per share in Q1 2020 [20] - Adjusted EBITDA was $1.5 million in Q1 2021, up from $300,000 in Q1 2020, indicating improved earnings power [22] Business Line Data and Key Metrics Changes - The industrial assets division saw strong performance due to increased demand for liquidation of surplus industrial equipment as companies adapt to a more asset-light model [7][8] - The financial assets division showed improvement but faced challenges due to pandemic-related waivers and loan forgiveness, with expectations for increased non-performing assets later in the year [12][15] Market Data and Key Metrics Changes - The company noted a growing emphasis on sustainability in the industrial assets sector, with clients seeking to repurpose surplus machinery rather than disposing of it [9][11] - There is a strong demand for non-performing assets, with larger players paying higher prices due to limited availability in the market [12][17] Company Strategy and Development Direction - The company aims to capitalize on the growing demand for industrial and financial asset services as the economy reopens [16][18] - There is a focus on supporting corporate sustainability practices, which is expected to drive growth in the industrial assets business [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2021, anticipating increased spending and a rise in the release of non-performing assets as the economy stabilizes [31][55] - The company is well-positioned to benefit from rising demand for capital by debt buyers as conventional lenders offload underperforming assets [17] Other Important Information - The company's balance sheet remains strong with net cash of $15.9 million and stockholder's equity of $30.9 million as of March 31, 2021 [23] Q&A Session Summary Question: Can you talk about the environment on the industrial side? - Management noted significant activity from large global clients in the pharma and oil and gas sectors, with a focus on lifecycle management and releasing surplus assets [26] Question: What gives you confidence that financial assets will pick up later this year? - Management highlighted strong demand from buyers and record prices due to limited supply, indicating an inevitable increase in supply as the economy normalizes [29][32] Question: Are there going to be any more bigger non-healthcare related auctions going forward? - Management indicated ongoing sales in the pharma sector and anticipated increases in M&A activity, which could lead to more surplus assets for auction [50]