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    HGBL
    Earnings call· Jun 2026(Q2 FY26)

    Heritage Global Q2 FY26 earnings call HGBL

    Aug 13, 2026 Source

    Executive summary

    Heritage Global Inc. Q2 FY26 — Strategic Shift and Core Business Growth

    Heritage Global Inc. is undergoing a significant strategic pivot, winding down its Heritage Global Capital segment to eliminate management distraction and financial drag. This allows for a concentrated focus on its core Industrial and Financial Assets divisions, which are being bolstered by recent acquisitions like Boston Note and DebtX. The company anticipates future growth from these integrated financial asset platforms and an expanding pipeline of larger, more diverse industrial auctions, particularly in the second half of the year.

    Highlights

    5

    • Strategic wind-down of Heritage Global Capital (HGC) to focus on core profitable units.

    • Acquisition of Boston Note Company, expanding the Financial Assets division and creating synergy with DebtX and NLEX.

    • Expanded sales force and growing pipeline in Industrial Assets, including new sectors like transportation and construction.

    • Refurbishment and resale business performing well, leading to meaningful increases in asset turnover and improved profitability.

    • Solid pipeline of activity in Industrial Assets, with larger auctions expected in the second half of the year.

    Concerns

    5

    • Consolidated operating loss of $20.9 million in Q2 FY26, compared to $2.2 million operating income in Q2 FY25.

    • Noncash charges of approximately $21.7 million related to the write-down of nonperforming loans from HGC wind-down.

    • Net loss of $15.9 million or $0.46 per diluted share in Q2 FY26, compared to net income of $1.6 million or $0.05 per diluted share in Q2 FY25.

    • Revenue decreased to $12.3 million in Q2 FY26 from $14.3 million in Q2 FY25.

    • Adjusted EBITDA declined to $1.2 million in Q2 FY26 from $2.8 million in Q2 FY25.

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Industrial Assets
    Reported operating income of approximately $600,000 in Q2 FY26, compared to $1.3 million in Q2 FY25. Continued steady volume of auction activity but with smaller scale opportunities. Seeing a solid pipeline of activity and confidence in capitalizing on opportunities. Refurbishment and resale business performing well with increased asset turnover and improved profitability.
    		———$0.6 million
    Financial Assets
    Reported an operating loss of $20.4 million in Q2 FY26, compared to operating income of $2.2 million in Q2 FY25, primarily due to the wind-down of Heritage Global Capital. Excluding these charges, the division had a decent quarter with continued activity in NLEX and gains from DebtX. The acquisition of Boston Note Company post-quarter-end is expected to expand the platform.
    		———($20.4 million)

    Operational metrics

    7
    Adjusted EBITDA
    $1.2 milliondown from $2.8 million
    Q2 FY26

    Compared to the prior year period.

    Stockholders' equity
    $51.9 milliondown from $67 million
    June 30, 2026

    Compared to December 31, 2025.

    Net working capital
    $9.4 million
    June 30, 2026
    Cash balance
    $13.2 million
    June 30, 2026

    Total cash balance.

    Net available cash balance
    $6.5 million
    June 30, 2026

    After removing amounts due to clients or payables to sellers.

    Noncash charges from HGC wind-down
    $21.7 million
    Q2 FY26

    Related to the write-down of nonperforming loans within the specialty lending business.

    Boston Note trial revenue
    over $0.5 million
    several months

    Revenue generated during a trial period for Boston Note prior to its acquisition.

    Deals & partnerships

    2
    Boston Note CompanyAcquisition of substantially all assets of a seller-financed real estate brokerage.

    Acquisition completed subsequent to the quarter end. Boston Note has over 30 years of operating history in the residential space and will act as a bolt-on to DebtX.

    DebtXAcquisition of a leading full-service loan sale adviser.

    Acquired in January of 2026. Forms part of the asset-light brokerage alongside NLEX and Boston Note, serving diverse financial asset classes.

    Risks & headwinds

    3
    Noncash charges from Heritage Global Capital wind-downQ2 FY26

    $21.7 million

    Mitigation: Strategic decision to wind down the segment to create a stronger platform and focus on core businesses, despite the short-term financial impact.

    Lack of larger industrial auctionsQ2 FY26

    Smaller scale opportunities absent larger auctions in the marketplace during Q2 FY26.

    Mitigation: Seeing a solid pipeline of activity for the second half of the year, with larger auctions now being signed across diverse sectors. Expanded sales force to capitalize on opportunities.

    Distraction from Heritage Global CapitalPast quarters, resolved in Q2 FY26

    Significant management time and focus diverted to the segment.

    Mitigation: Decision to wind down the segment to free up management time and focus entirely on building profitable and strong core business units.

    What to watch in Q3 FY26

    4

    DebtX and Boston Note integration

    next quarter / next 6 months
    CurrentTrial period showed >$0.5M revenue from 8 transactions; integration ongoing.
    TargetSuccessful integration and synergy realization, particularly in expanding into commercial seller notes.

    Why it matters

    The successful integration and expansion of these acquisitions are key to the growth of the Financial Assets division and the overall strategic pivot.

    We ran a trial for several months. And during the trial, we closed 8 transactions and over $0.5 million in revenue. And it really became kind of heir apparent that they fit like a glove.

    Q&A highlights

    6

    How do DebtX and Boston Note fit together, and how has DebtX performed relative to Q1?

    Boston Note, initially focused on residential seller-financed products, now complements DebtX's exit platform by expanding into commercial products. DebtX's revenue is highly seasonal, with 50-60% coming in Q4, so current performance is not fully indicative, but the pipeline is growing. The combination of DebtX, NLEX, and Boston Note creates a commanding position in the marketplace for nonperforming and seller-financed loans.

    “We ran a trial for several months. And during the trial, we closed 8 transactions and over $0.5 million in revenue. And it really became kind of heir apparent that they fit like a glove.”

    asked by Jacob Stephan · answered by Ross Dove

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Wind-down of Heritage Global Capital

    Heritage Global made the strategic decision to substantially wind down its Heritage Global Capital (HGC) segment. This move resulted in approximately $21.7 million in noncash charges during Q2 FY26, primarily from the write-down of nonperforming loans. Management emphasized this decision was necessary to remove a significant distraction and allow the company to focus on its profitable and strong core business units, aiming to create a stronger platform and long-term shareholder value.

    02

    Financial Assets Division Expansion and Integration

    The Financial Assets division is expanding through recent acquisitions. Following the DebtX acquisition in January 2026, the company acquired Boston Note Company post-quarter-end. Boston Note, a seller-financed real estate brokerage, is expected to integrate with DebtX and NLEX, creating a robust asset-light brokerage platform covering diverse financial asset classes, including performing and nonperforming loans. A trial period with Boston Note resulted in 8 transactions and over $0.5 million in revenue, demonstrating strong synergy potential.

    03

    Industrial Assets Division Growth and Pipeline

    The Industrial Assets division is expanding its sales force and seeing an expanded and more diverse sector pipeline. This includes an increase in bankruptcy assignments and new product categories such as transportation and construction. While Q2 FY26 saw smaller-scale opportunities, management is confident in a solid pipeline for the second half of the year, with larger auctions now being signed across various sectors like pharma, food and beverage, EV, and cannabis.

    04

    Refurbishment and Resale Business Performance

    The company's refurbishment and resale business, particularly at ALT, has been performing well. Improvements in inventory quality are translating into meaningful increases in asset turnover and enhanced profitability. This business also contributes to bringing more buyers into the broader Heritage Global family.

    05

    Market Opportunity in Seller Notes

    The acquisition of Boston Note provides an entry into the seller note market, specifically seller-financed residential and commercial properties. Management explained that seller notes arise when a property seller acts as the lender for the buyer. Boston Note facilitates the monetization of these notes for individual sellers. The company believes this market is significantly larger than Boston Note's current penetration, especially with expansion into commercial loans and larger real estate loans.

    AI-generated summary of the company’s earnings call. Not investment advice.