Heritage Global Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
March 13, 2025

Key Takeaways

  • 2024 delivered $9 million in cash flow and $2 million in EBITDA, with every business unit remaining profitable quarter after quarter despite a challenging environment.
  • Demand for used industrial equipment is at an all-time high amid widespread layoffs and corporate rightsizing, and the company has expanded its warehouse space and staffing to support a growing pipeline.
  • An extended period of high consumer default volumes has stabilized pricing and fueled a robust, active market for the company’s financial asset auctions.
  • Consolidated operating income fell to $1.5 million in Q4 from $4.6 million a year ago, leading to a net loss of $0.01 per share, largely due to a $1.3 million tax valuation allowance against deferred tax assets.
  • The balance sheet remains strong with near-zero long-term debt, $65.2 million in shareholders’ equity, and $3 million still available under the share repurchase program.
AI Generated. May Contain Errors.
Earnings Conference Call
Heritage Global Q4 2024
00:00 / 00:00

Transcript Sections

Skip to Participants
Operator

Please note this call may be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. John Nesbett. Please go ahead, sir.

John Nesbett
Founder and President at IMS Investor Relations

Thank you, and good afternoon, everyone. Before we begin, I'd like to remind everyone that this conference call contains forward-looking statements based on our current expectations and projections about future events and are subject to change based on various important factors. In light of these risks, uncertainties, and assumptions, you should not place undue reliance on these forward-looking statements. We speak only as of the date of this call. For more details on factors that could affect these expectations, please see our filings with the Securities and Exchange Commission. Now, I'd like to turn the call over to Heritage Global's Chief Executive Officer, Mr. Ross Dove. Ross?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Thank you, John, and welcome, everyone, and thank you for joining. Let me give you my thoughts first, and then I'll turn it over to Brian to go into more details. 2024 was not the easiest year, as I had originally predicted. I'm really proud of the strength of our team and what they showed throughout a series of challenges, staying profitable all year in all our business units quarter after quarter. $9 million in cash flow for the year and $2 million in EBITDA for Q4 would have, a few short years ago, been considered some giant windfall. In many ways, it's still an extremely positive outcome. Industrial supply was light in Q3 and again in Q4. However, we stayed profitable and continued to grow our pipeline as many projects were continued to delay into 2025.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

We're now seeing much larger asset flow already, and with recorded layoffs here at an all-time high and DOGE accelerating even further corporate right-sizing initiatives, we're now ramping up to meet the supply. We've expanded our warehouse size and our staffing. We've dramatically upgraded our inventory at ALT. We're very positive as we move into the next year. Our M&A efforts have produced now multiple prospects, and we're actively engaged with them. On the financial front, we're excited to be seeing more and more sellers enter the market, and more of them rely upon NLEX. There has been an extended period now of high default volumes driving a steady flow of consumer charge-offs with no end in sight. Pricing has stabilized, and with increasing buyers absorbing supply, we're now in a robust, active, and growing market.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

In summary, we're in our strongest cash flow position yet, with near zero debt and entering what I will call and what I will truly define as an auctioneer's market. Take a look at it. 14,000 industrial workers have been laid off in the U.S., Canada, and Mexico just since February 1, with a wave of closures announced in food processing, in automotive, in trucking, in distribution, and more. It appears clearly there's a rise. That's basically caused by a combination of DOGE, people's thoughts about the defaults, and an increasing likelihood that it will continue. Demand for used equipment is at an all-time high as people are looking at supply chains tightening and the potential of tariffs raising prices on new equipment and possibly delaying orders. It looks like 2025 is the year of the auctioneer.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Near the end of 2024, on the financial side, we saw charge-offs of credit cards hit a decade-plus high, as did with delinquencies. The delinquency high tells us the market will be strong for the next 6-12-18 months. We're seeing the same with auto loans, and we have a very busy fintech schedule also. All signs point to an economy that is live for auctioneers and a great execution for auctioneers to really take advantage of 2025. It's on us to perform. I feel very comfortable we can. We're rolling strong into the new year, and we're starting out with a very positive look going forward. I'll now turn it over to Brian to give you the background and the details. Thank you all for listening in. Thank you all for sticking with us, and we're feeling good about our future. Go ahead, Brian.

Brian Cobb
Brian Cobb
CFO at Heritage Global

Thanks, Ross. Before moving to our consolidated financial results, I'd like to touch upon a few key points. Despite a tough comparison to a record 2023, we reported strong operating income for the full year, demonstrating the strength in our diversified business model and commitment to driving consistent profitability for our shareholders. From a macro standpoint, it's important to point out that with the economic uncertainty that many companies and consumers are facing, we believe we are in an advantageous position given the services which we offer. Our industrial assets division reported divisional operating income of $800,000 in the fourth quarter of 2024, as compared to $1.6 million in the prior year period. The segment saw sequential improvement over the third quarter of 2024 but had a tough comparison to a strong 2023 fourth quarter.

Brian Cobb
Brian Cobb
CFO at Heritage Global

We saw a lot of volume, but the auctions tended to be smaller in terms of total dollars. Looking to 2025, we expect increased economic pressures to continue to drive cost-cutting measures, including layoffs and facility closures. With our proven track record facilitating and executing on a wide range of industrial auctions, we expect increased momentum in our auction pipeline moving forward. Our financial assets division reported total divisional operating income of $1.9 million. Our brokerage business recorded operating income of $1.7 million as compared to $2.7 million in the fourth quarter of 2023. We remain focused on capitalizing on increased charge-off in non-performing loans as a result of elevated consumer spending and household debt, and we're seeing a promising pipeline at the start of the year.

Brian Cobb
Brian Cobb
CFO at Heritage Global

As a reminder, in the second quarter of 2024, Heritage Global Capital's largest borrower was placed into default, and the loans extended to this borrower were placed into non-accrual status. This borrower has since remitted 100% of net collections for the remainder of 2024. While net collections continue to be lower than contractual monthly minimums, we're seeing early signs of progress in our negotiations with this borrower to further improve their cash flows and subsequent collection rates. I also want to quickly mention that segment information can be found in our SEC filings and is now expanded to include gross profit, operating expense, and earnings from equity method investments for each of our segments. We're pleased to be able to make this change and provide further operational transparency to our shareholders. Now on to the consolidated financials.

Brian Cobb
Brian Cobb
CFO at Heritage Global

Consolidated operating income was $1.5 million in the fourth quarter of 2024 compared to $4.6 million in the fourth quarter of 2023. Adjusted EBITDA was $2.1 million compared to $4.9 million in the prior year period. For the quarter, the company recorded a net loss of $200,000 or $0.01 per diluted share compared to net income of $4.9 million or $0.13 per diluted share in the fourth quarter of 2023. It's important to note that the company's net loss in the fourth quarter includes a discrete adjustment to the income tax valuation allowance against its deferred tax assets by approximately $1.3 million, which is reflected as an increase to income tax expense for the quarter. As of December 31, 2024, the company determined that it will likely utilize a lower portion of its net operating loss carryforwards than previously estimated.

Brian Cobb
Brian Cobb
CFO at Heritage Global

This determination was primarily due to the decreased revenue related to the company's extended loans placed in non-accrual status. Our balance sheet reflects stockholders' equity of $65.2 million as of December 31, 2024, up from $61.1 million at December 31, 2023, with net working capital of $18.5 million. The health of our balance sheet remains a key strategic asset for us. In 2024, we further solidified our position with a strong cash balance due to cash provided during the year from both operations and investment activity, while ending the year with no long-term debt. With cash on hand, we were able to repurchase approximately 1.3 million shares in the open market during fiscal 2024. As of December 31, 2024, the company had approximately $3 million in remaining aggregate dollar value of shares that may be purchased under the program.

Brian Cobb
Brian Cobb
CFO at Heritage Global

Additionally, and subsequent to the quarter, we entered into a $4.1 million mortgage loan agreement for the company's new corporate headquarters. The new location will provide us with expanded office and warehouse space to support the company's long-term growth, while also giving us a real estate asset in what we believe to be a prime business district of San Diego. As we move through 2025, we're focused on capitalizing on the opportunities in front of us and delivering continued profitability, particularly given the uncertain economic environment. Our balance sheet strength, coupled with our continued profitability, will provide us with the flexibility to seize new opportunities and drive sustainable growth. I'll turn the call back over to Ross.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Thank you, Brian, and thank you all for listening. It's an exciting time to be the CEO of Heritage Global on pretty much every front. We see huge upside and big things in our future, both short-term and long-term. The goal here is to get back on track to have a record year, and we see that there's a lot of opportunity if we execute to do just that. We're roaring to go ahead, and we thank you all for listening, and we're always around to talk anytime anybody wants to chat. Thanks once again.

Operator

We will now facilitate your questions. At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. We will go first to Mark Argento with Lake Street.

Mark Argento
Mark Argento
Co-Founder and President at Lake Street

Hey, guys. A couple of quick things. Back on the loan book, did you guys increase any more of the provisions there? Is there any relation between that and what you did on the tax asset side? Maybe you could help us think through that a little bit more.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Go ahead, Brian.

Brian Cobb
Brian Cobb
CFO at Heritage Global

Yeah, thanks, Ross. We have not increased or substantially decreased the reserve against the loan book. We did a valuation this year, and Q2 was the time at which our largest borrower went into default. Since then, in my opinion, we've seen a positive sign. We have held steady with the reserve. The balance overall has gone down a little bit during the year, but the reserve is consistent. The tax valuation allowance is really a change based on what we're able to reach as far as our 2024 results, actual results, and the utilization of NOLs, but also an assessment of 2025. The biggest change there was a lower forecast in 2025 due to the loan book and the non-accrual status.

Mark Argento
Mark Argento
Co-Founder and President at Lake Street

Right. I'm assuming that the accrual status, you guys, that gets fairly well scrutinized at your end as well. Yeah, I'm sure it's getting looked at every quarter, but you're in a particular. Is that accurate?

Brian Cobb
Brian Cobb
CFO at Heritage Global

Yeah. The audit team has gone through the full audit for the entire year, and we've touched base on that every quarter since, I guess, we implemented the credit loss reserve back in the beginning of 2023. It's been a big topic.

Mark Argento
Mark Argento
Co-Founder and President at Lake Street

Yep. Great. Just pivoting in the operating business. Ross, it seems like you talk about the financial asset, kind of the backdrop in terms of the macro remains very favorable for the financial asset business. Operating income was on the brokerage side, $1.7 million, I think you said, versus $2.7 million a year ago, if I got my notes right there. What is it that we need to see out of the industry for you guys to actually benefit and actually grow that business? Is it the type of assets coming to market, or is it your guys' ability to land some chunkier flow? What is it that we need to see or you need to see to be able to kind of materially grow that business, given how favorable the backdrop is?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

There's basically a timing issue between when you look at default versus charge-offs. It's kind of common knowledge that defaults ultimately lead to charge loss. Defaults have grown, which means that as defaults mature, some get cured and some turn to charge loss. The increase in defaults dictates an increase in charge loss, which is our marketplace. When you look at a record number of defaults over the last year, you can look forward to the next 6, 12, 18, 24 months of more products coming to market in our marketplace. Yes, we're bullish on the future over the next one to two years just because we see more product flow coming forward, Mark.

Mark Argento
Mark Argento
Co-Founder and President at Lake Street

Similar on the industrial asset side, and it sounds like getting DOGE is obviously going on the federal level, but it's starting to happen at the state level. Even everybody's trying to tighten up a little bit. Do you have any state or federal exposure at this point? How do you see ways to play on that whole trend?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

It was an incredibly frustrating Q3 and Q4 with so many projects that looked like they were about to come to fruition, rolling over. We did not lose a lot of deals, and we did a lot of small deals, but all the big deals, just for whatever reasons, kind of succumbed to just staying basically in a pause period, and they are now coming to fruition. We are seeing a really big bullish anticipation for this year with a lot of everything backed up in our pipeline starting to happen. As far as what our analytics about what is going on on a geopolitical basis, I am not going to try to be some super analyst, but it is pretty clear that layoffs are heightened right now. Plant closures are heightened, and volumes will be heightened. I anticipate that we are going to be extremely busy, Mark.

Mark Argento
Mark Argento
Co-Founder and President at Lake Street

I appreciate the call, guys. I'll back into queue. Thanks.

Operator

Once again, if you would like to ask a question, please press star one on your telephone keypad now. We will go next to George Sutton with Craig-Hallum.

George Sutton
George Sutton
Senior Research Analyst at Craig Hallum

Thank you. Ross, with respect to the industrial opportunity, you mentioned you've increased your capacity fairly significantly. Can you just discuss what kind of capacity you would have to serve the market now versus what you had before?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

We see a wave of plant closings. I mean, not just we see, but the marketplace in general sees. With the wave of plant closings, we basically acquired a new building where we're going to have a lot more space to relocate assets because we're in a situation now where a lot of people need to get the assets out of their buildings. We're going to be able to basically do more acquisitions where we take internal control of the physical assets. At the same time, we've expanded our team that can go out and basically analyze the assets, value the assets, and make the acquisitions. We're basically being aggressively ahead of a marketplace that we anticipate is going to grow, if that's a fair analysis, George.

George Sutton
George Sutton
Senior Research Analyst at Craig Hallum

Okay. On the NLEX business, you called out auto loans. You mentioned a busy fintech schedule. I'm curious if you could give us a sense of what types of assets that you anticipate building up. I mean, would these be credit card loans? Would these be buy now, pay later loans? Just if you can give us any sense of what you're seeing there and any sense of the timing of these.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Pretty much we saw in the last six months of the prior year, everything starting to escalate. Meaning when I say escalate, escalate the amount not just of charge-offs, which we get right away when they charge off, but the amount of defaults. What we look at as far as the future is really looking at defaults on credit cards and on auto loans because ultimately, the higher the default rate, the more likelihood it becomes a charge-off, which is our market. We are not looking at anything other than the facts. The facts are saying that defaults have grown, and the amount of defaults that have grown are going to produce more product going forward. We had a good Q4, and we are looking at a very good Q1, and we are looking at expanded opportunities.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

We're seeing more sellers enter the market now. There's more pressure under the new administration for people to basically not hold on to non-performing loans, but to basically alleviate the non-performing loans from their balance sheet. There's a greater pressure to basically sell those assets, and we're a likely one to win from that, in our opinion.

George Sutton
George Sutton
Senior Research Analyst at Craig Hallum

Lastly, for me on the M&A side, you mentioned a couple of things that were, I think, further along in the process. Can you give us any sense of size or vertical focus that you're seeing there?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

For the last year and a half, we've been really trying hard to do M&A deals, and we had really some difficulty only not in finding deals, but in price points where we just didn't feel that the deals that were available were available at a price that made sense. We're seeing a lot more realistic sellers now of companies that really do want to find a way to monetize themselves and go forward. Specifically, if you're asking in what direction, I would say the closest things we have would be on the bio side. That would be companies that would enlarge our presence at ALT. I don't want to tell you we're close and then not have something done, but I'll tell you we're close. Fair enough.

George Sutton
George Sutton
Senior Research Analyst at Craig Hallum

Fair enough. That's it for me. Thanks, guys.

Operator

We'll go next to Gregory Fortunoff with 60 Squared LLC.

Gregory Fortunoff
Analyst at 60 Squared LLC

Good afternoon. How are you doing?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Good.

Gregory Fortunoff
Analyst at 60 Squared LLC

Good, good. I have a few different questions. Just staying along with the M&A conversation, I think the one thing you didn't answer was the size of the deals and maybe how you'd pay for it. Are you going to use stock? Are you going to use cash on hand? Or how are you financing these deals?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

At this time, I mean, this is coming from the CEO of the company, so it may be self-serving. I don't like our stock price. I think it's way too low to basically use our stock to acquire a company, even no matter how great the buy might be. It would be a combination of debt and equity. We have $10 million on our current credit line at zero. We have $15 million plus cash in the bank. There would be bolt-on acquisitions of a combination of cash and equity. I don't anticipate giving away a lot of stock at its current value. We're more of a buyer of stock than a seller of our stock, if that's fair.

Gregory Fortunoff
Analyst at 60 Squared LLC

Okay. You bring up a good question. You bring up a good point. It was literally on my list of why do you think you're not trading at a proper value? I mean, basically, right now, you're trading for cash. I mean, usually, when you have an operating business, there's whatever you have in cash plus some value for the business. How come you're not getting anything for that, in your opinion?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

I think because the biggest buyer of our stock would have been my mom, and she passed away. We're going to get there. We're going to get there. People are going to figure it out. People are going to see that every other auction company is trading at a 40 PE, and we're trading at a 7 PE or 8 PE. I think that we're just unrecognized, and we're going to get there, and that the people that believe in us are going to really benefit from believing in us because, yeah, I think we're undervalued. Fair enough?

Gregory Fortunoff
Analyst at 60 Squared LLC

Yes. That begs the question. If it's a good market for acquisitions and all that, what would you get if you were to sell? I mean, it goes both ways. Now, if you think you're undervalued, that's always one way to get value, no?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

No, I know. I know. I do not want to sell because I am a builder, not a seller. My company is a builder, not a seller. I am confident we are going to get there, and the market is going to realize at one point in time that the really smart people are the guys that are buying us, not the guys that are selling us.

Gregory Fortunoff
Analyst at 60 Squared LLC

Okay. Fair enough. Fair enough.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

I know that sounds pushy, but I'm the CEO.

Gregory Fortunoff
Analyst at 60 Squared LLC

No, it doesn't sound pushy because you have the optionality. You could always turn around and sell. In the meantime, you're trying to build it, and so you could do. I'm up for it as long as you don't make any mistakes. Speaking of that, have you disclosed the amount of money that's in non-accrual right now, or has that not been disclosed?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

I'll turn that over to Mike to see if I can.

Mike Panzeri
Mike Panzeri
COO at Heritage Global

It's about $22 million. $22-$23 million. It is disclosed in the filing.

Gregory Fortunoff
Analyst at 60 Squared LLC

Okay. When you talk about your book value, and is that taking—I mean, is that still counting that as if it's paid? Or how does that work?

Mike Panzeri
Mike Panzeri
COO at Heritage Global

That's the amortized basis of the loan, how you hold it on the balance sheet, less the reserve against the loan.

Gregory Fortunoff
Analyst at 60 Squared LLC

How much do you have reserve right now?

Mike Panzeri
Mike Panzeri
COO at Heritage Global

About 1.4.

Gregory Fortunoff
Analyst at 60 Squared LLC

Based on that, I mean, you feel there's a high probability that you're getting paid eventually on this money. Otherwise, you'd be reserving more, I would assume, right?

Mike Panzeri
Mike Panzeri
COO at Heritage Global

That's right.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Yes. Yes.

Gregory Fortunoff
Analyst at 60 Squared LLC

Okay. Do you think that's one of the reasons why there's a discount on your stock, that that's sort of an overhang?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Yes.

Gregory Fortunoff
Analyst at 60 Squared LLC

How long do you think it'll take for that to work itself out? I mean, because I guess it goes hand in hand. Stock's cheap, but that's why if that goes away, maybe—I mean, how does that all work itself out, or is it too hard to know?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

At some point, we believe, as a management team, as a board of directors, that people are going to figure out that we're undervalued, and they're going to jump on board. If you're asking me what that date will be, I don't know. If you're asking me, I believe it's going to happen. It's going to happen because, yes, we went from making $14 million to making $10 million. That's not 100% great that we didn't have sequential growth, but it's also not a crime that we're highly profitable for a microcap company. If you go to the conferences and listen to all the other microcap companies, very few of them make $1 million, let alone $5 million, $10 million, $15 million a year.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

We think we can grow it from making a big chunk of money at $10 million, and we think we're in a strong marketplace, and we think that over time, we're going to get recognized. We are very positive on not being a company that's for sale and being a company that's for growth.

Gregory Fortunoff
Analyst at 60 Squared LLC

Okay. Obviously, I've never asked questions. I'm a new shareholder. One of the things I've read concerns the comp of management and the way you comp management. Is that still in place? The article I read is fairly old. Is that still in place, that comp of, I guess, a percentage of sales? I think that's what it was.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Everything we're doing as far as how everybody gets paid is variable, and it's based upon the performance. If we make no money at all, then people do not get paid a lot. If we make $10 million, people get paid quite a bit of money. If we make $20 million, you can get really mad at us because people will get paid more. It is all done on what we achieve. It is variable, and it is all based upon what you—how hard you work is not what we base it on. It is how much you produce.

Gregory Fortunoff
Analyst at 60 Squared LLC

Are the salaries lower than the market because there's so much upside, or is it good at salary plus upside?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

You want to retain the best people. To retain the best people, you give them the best deal they can get so that they stay at the company that you have. We actually want to pay everyone the most that they can make in the industry to get the best people to stay at the company we have. We do not look at it like we are saving money by trying to pay somebody less. We look at it like we are trying to pay somebody more that is more talented than anybody who can work anywhere else. We think in our mind, in our DNA, let's pay the people the most and get the best people. With the best people that you pay the most, you ultimately make the most profit. That is our belief.

Gregory Fortunoff
Analyst at 60 Squared LLC

Okay. Do you know how much was paid in this way in 2024 above and beyond base salaries? I guess you call it a bonus.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Yeah.

Gregory Fortunoff
Analyst at 60 Squared LLC

In other words, everyone gets a salary. Everyone gets a salary, and then they get some performance bonus based on the profitability of the company. Do you know what that extra money equated to in 2024?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Do I know how much bonuses we paid to all of the people in aggregate?

Gregory Fortunoff
Analyst at 60 Squared LLC

Right. In other words, yeah.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Yeah.

Gregory Fortunoff
Analyst at 60 Squared LLC

The money you're.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Yes, I know, but I don't really—I don't feel I need to disclose that to you. We paid them bonuses based upon contracts. If a person was a salesperson and they got paid a commission on each sale, they didn't get a bonus. If the person was in management and we hit our numbers, they got a bonus. It is not something I need to disclose. I know that it was fair, and I know that the people were compensated in a way that we basically have not lost any employee, and we've continued to be substantially profitable.

Gregory Fortunoff
Analyst at 60 Squared LLC

Okay. Okay. Understood. Thank you for your time, and I hope that your people will figure it out sooner than later. Thank you.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Hey, do me a favor.

Gregory Fortunoff
Analyst at 60 Squared LLC

Yes, sir.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

I like you as a new shareholder. Give me a call, and let's talk, and let me see if I can get you to be a bigger shareholder. Fair enough?

Gregory Fortunoff
Analyst at 60 Squared LLC

Yes. Absolutely. I'm already pretty big, but I will be happy to talk to you. Do you want to give me your number now, or should I just look it up online?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

I think we're on a call where we'll just look it up.

Gregory Fortunoff
Analyst at 60 Squared LLC

All right. I'll look it up. I have my Bloomberg. I'll just call the corporate number. All right. Thank you.

Operator

We'll go next to David Marsh with Singular Research.

David Marsh
David Marsh
Equity Research Analyst at Singular Research

Hey, guys. Thanks so much for taking the questions. Hey, just still wanted to ask, with regard to the industrial business, do you guys have exposure to the federal space? I mean, is there an opportunity for you guys to pick up some stuff that might shake out from the actions that DOGE is taking here over here in D.C.?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

We have a very long story history with the government. It goes all the way back to my grandfather working with the GSA to sell Fort Beale, etc. We have done government work literally over a 50- or 60-year decade on and off. We are not a government contractor company. We are a free enterprise company, but we have had multiple government assignments in our history from the SBA to the FDIC, etc. We are obviously looking hard at how we can be opportunistic and get involved with what is going on with DOGE. DOGE is also going to create a lot of basically selling assets outside of DOGE, where they are going to slow down different parts of government contracting with defense industry people. We have done work, obviously, for the Boeings, the Raytheons, etc.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

We think we're going to be a benefactor on the outside of the government contracting with the people that basically we're getting support from the government. We also think that we could potentially have inroads into the assets at DOGE. There's one thing that's undeniable, and that's that Heritage Global Partners, our auction company, was the auctioneer of Twitter. We all know who owns Twitter and who gave the auctions out. We all know that they went from basically they went from the person that is running DOGE to Heritage Global Partners. If you ask us if we're pursuing it, the answer is, of course, we're pursuing it.

David Marsh
David Marsh
Equity Research Analyst at Singular Research

Okay. That's very helpful. Appreciate that. The other question I wanted to ask, I mean, you guys have built a nice little cash balance here. I mean, obviously, I know you need some for the business, but are you able to take advantage of kind of higher interest rates and earn some interest on that cash balance? Is that something that you guys are looking to take advantage of right now, or do you feel like you have an immediate need for the cash that you can't take advantage of that?

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

I'll turn that over to my COO.

Mike Panzeri
Mike Panzeri
COO at Heritage Global

We do take advantage of short-term vehicles to get interest income. This quarter, we actually had interest income rather than interest expense in the fourth quarter. It is more of a short-term proposition right now, and we are basically looking at ways to deploy capital, deploy cash into the business more so than taking advantage of the interest rate. It is a good point. If we did not have other ways to deploy the cash, we are always looking at that.

David Marsh
David Marsh
Equity Research Analyst at Singular Research

I appreciate that. Just last one from me. In terms of the reauthorization, I saw that you guys, the board, gave you an authorization up to $6 million. Can you just give me an update of what the capacity is total in terms of what you could repurchase right now, please?

Mike Panzeri
Mike Panzeri
COO at Heritage Global

Yeah. We had a plan starting in 2022, and it was a $4 million total spend, and that was increased to $6 million. That plan ends in June of this year. We have spent half of the planned dollars, approximately $3 million, over the last three years. We have $3 million left to presumably deploy in the first six months of 2025.

David Marsh
David Marsh
Equity Research Analyst at Singular Research

Great. Thanks so much. Appreciate taking the questions, guys.

Operator

It appears that we have no further questions at this time. I will now turn the program back over to management for any additional or closing remarks.

Ross Dove
Ross Dove
CEO and Board Director at Heritage Global

Thank everybody for listening in, for actually very, very good questions, and for basically being involved and caring and paying attention. I will tell you that we have a very strong feeling that the market is very favorable to what we're trying to accomplish over the next year, two, three years, and stick with this. Hopefully, we're going to be able to do everything that we've been trying to promise we're going to do and that we're all going to be winners together. Thank you all, and thank you for listening.

Operator

This concludes today's call. We thank you for your participation. You may disconnect at any time.

Executives
Analysts
    • Gregory Fortunoff
      Analyst at 60 Squared LLC
    • Mark Argento
      Co-Founder and President at Lake Street
    • George Sutton
      Senior Research Analyst at Craig Hallum
    • John Nesbett
      Founder and President at IMS Investor Relations
    • David Marsh
      Equity Research Analyst at Singular Research
Powered by Quartr