Heritage Global (NASDAQ:HGBL) reported higher revenue and net income for the third quarter of 2026, as stronger industrial auction activity helped offset a decline in operating income from its financial assets division.
Revenue rose to $14.6 million from $11.4 million a year earlier. Net income increased to $1 million, or $0.03 per diluted share, from approximately $600,000, or $0.02 per diluted share. Consolidated operating income fell to $1 million from $1.3 million, while adjusted EBITDA declined to $1.4 million from $1.6 million.
Chief Executive Officer Ross Dove said the industrial business benefited from larger transactions and a broader range of auction sectors. He also said the company has multiple large opportunities in its pipeline, while its financial assets business still has work to do.
Industrial Auctions Gain Momentum
Industrial assets operating income increased to $1.5 million from approximately $900,000 in the third quarter of 2025. Chief Financial Officer Brian Cobb attributed the performance to healthy auction volume and a return of larger-scale transactions.
The division conducted auctions in transportation, metalworking and semiconductors, among other sectors, alongside its existing biotechnology and pharmaceutical activity. Dove said potential opportunities also include trucking, food processing and medical device auctions.
During the quarter, Heritage Global’s HGP business invested $2 million in a joint venture that acquired two pharmaceutical sites in Colorado. Cobb said the company plans multiple auctions to monetize equipment and is evaluating a lease, sale or development of the real estate.
Dove said the company is conducting five auctions involving more than 5,000 lots of pharmaceutical and biotech assets. He said the financial results from the joint venture are anticipated to begin appearing in 2027 as the real estate is monetized, with the process potentially extending into 2028.
DebtX Falls Short as Boston Note Advances
Financial assets operating income declined to approximately $800,000 from $1.6 million a year earlier. Cobb said NLEX delivered solid results and that activity in the charge-off and nonperforming loan market remained steady.
Boston Note, acquired in late July, performed well during the quarter and exceeded early goals, according to management. DebtX, however, did not meet third-quarter expectations.
Dove said DebtX has been slower than he expected to capitalize on commercial real estate loan opportunities, though his enthusiasm for the business has not changed. He said the company plans to broaden its sales coverage, including among nonbank asset sellers, and that DebtX is forecasting a stronger fourth quarter.
At NLEX, Dove said increased supply has come at somewhat lower prices, making higher volume important for growth. The company is working to sign more forward-flow clients, he said.
HGC Wind-Down and Capital Priorities
Heritage Global is winding down HGC, a business Dove described as problematic and distracting. Cobb said specific wind-down costs were not significant in the third quarter, with an immaterial amount of legal costs expected in both the third and fourth quarters.
The specialty lending segment incurred approximately $250,000 in costs in the third quarter, Cobb said. He expects a similar amount in the fourth quarter, with costs beginning to wind down in the new year. He declined to provide an estimate of potential recoveries while the company works through the remaining items.
On capital allocation, Dove said acquisitions are less urgent after the DebtX and Boston Note deals. The company’s primary focus is organic growth and integrating its existing businesses, although he said it wants to retain capital for potential industrial acquisitions or an attractive merger opportunity.
Heritage Global reported $15.6 million in cash at September 30, including amounts due to clients. Net available cash was $6.4 million. The company also entered a new $10 million revolving credit facility with C3bank, with $2 million outstanding at quarter-end in connection with the Colorado joint venture investment.
About Heritage Global (NASDAQ:HGBL)
Heritage Global, Inc (NASDAQ:HGBL) is an asset services company that specializes in the valuation, marketing and disposition of surplus, underutilized and distressed assets. The company serves businesses, lenders, insolvency professionals and other organizations seeking to sell or acquire industrial equipment, machinery, inventory and other tangible assets.
Through its operating businesses, including Heritage Global Partners, the company provides auction and liquidation services, negotiated sales, asset advisory services and valuation expertise.
