Heritage Global (NASDAQ:HGBL) reported a second-quarter operating loss after recording $21.7 million in non-cash charges tied to its decision to substantially wind down Heritage Global Capital, its specialty lending business. Management said the move will allow the company to focus resources on its industrial assets and financial assets platforms, including recently acquired DebtX and Boston Note Company.
“Our board and many investors had weighed in for several months that all focus should now be on growing the business units that are both profitable and strong and core to our future,” Chief Executive Officer Ross Dove said on the company’s earnings call.
Heritage Global posted a net loss of $15.9 million, or $0.46 per diluted share, compared with net income of $1.6 million, or $0.05 per diluted share, in the second quarter of 2025.
Heritage Global Capital Wind-Down Drives Charges
Chief Financial Officer Brian Cobb said the company’s second-quarter results were affected by the write-down of non-performing loans held in Heritage Global Capital. The $21.7 million in charges were non-cash and related to the specialty lending operation’s wind-down.
The financial assets division reported an operating loss of $20.4 million, compared with operating income of $2.2 million in the prior-year quarter, primarily due to the charges associated with Heritage Global Capital.
Dove said the lending business had become a burden on management attention and capital allocation. He said the company determined it was preferable to stop attempting to improve an operation with uncertain collections and instead focus on businesses that are positioned for expansion.
“There’s way better places to put our capital,” Dove said. “It’s time to basically end trying to fix something that is difficult to fix and try to focus all the energy on building what doesn’t need fixing but is ripe for growing.”
Excluding the wind-down charges, Cobb said the financial assets division had a “decent quarter,” supported by activity at NLEX in charge-off and non-performing loan markets and initial gains from DebtX, a full-service loan sale advisor acquired in January 2026.
DebtX and Boston Note Expansion
Following the quarter, Heritage Global completed its acquisition of substantially all the assets of Boston Note Company, a seller-financed real estate brokerage with more than 30 years of operating history in residential transactions. Management described the acquisition as a bolt-on to DebtX that expands the company’s financial assets platform into additional asset classes and distribution channels.
Dove said Boston Note, DebtX and NLEX are expected to work together to broaden Heritage Global’s offerings across performing and non-performing financial assets. Boston Note historically focused on seller-financed residential real estate transactions, while DebtX provides an exit platform for loan assets and NLEX handles non-performing loans, according to management.
During a multi-month trial before the acquisition, Dove said Boston Note and DebtX completed eight transactions producing more than $500,000 in revenue. He said the company sees an opportunity to extend Boston Note’s approach into commercial seller-financed products, larger real estate loans and non-performing loans.
Dove also noted that DebtX’s revenue has historically been seasonal, with approximately 50% to 60%—and sometimes as much as two-thirds—of its annual revenue arriving in the fourth quarter. DebtX’s banking clients often wait until late in the year to bring assets to market, he said. The company said its DebtX pipeline is growing and transactions are closing, though Dove cautioned against overstating progress before year-end.
Industrial Business Sees Broader Pipeline
Heritage Global’s industrial assets division reported operating income of approximately $600,000 in the second quarter, down from $1.3 million in the prior-year period. Cobb said the business continued to execute a steady volume of auctions but encountered a market characterized by smaller opportunities and fewer large auctions.
Still, management said it sees a solid pipeline, including larger auctions than were available during the first half of the year. Dove said the company has been signing several larger assignments and expects a stronger second half, although those comments were forward-looking.
The company has expanded its industrial sales force and is pursuing a more diverse range of assignments. Dove identified activity in pharmaceutical, food and beverage, electric vehicle, cannabis, manufacturing, construction and transportation-related sectors.
In construction and transportation, Heritage Global is targeting regional and smaller transactions rather than competing for the largest fleet auctions. Dove said the company’s focus is generally on auctions ranging from roughly $500,000 to $5 million or $10 million, particularly situations involving individual sellers, retiring owners or distressed businesses requiring more hands-on support.
Cobb added that the company’s refurbishment and resale operation has been performing well, with improved inventory quality contributing to increased asset turnover and better profitability.
Balance Sheet Position
As of June 30, 2026, Heritage Global reported stockholders’ equity of $51.9 million, down from $67 million at Dec. 31, 2025. Net working capital was $9.4 million.
The company had total cash of $13.2 million at quarter-end. After excluding amounts owed to clients and payables to sellers, Heritage Global said its net available cash balance was $6.5 million.
Management said the company intends to direct its focus toward scaling its industrial operations and integrating DebtX, NLEX and Boston Note into a broader financial asset brokerage platform.
About Heritage Global (NASDAQ:HGBL)
Heritage Global Inc operates as a global advisory and disposition firm specializing in the valuation, sale and auction of surplus and idle assets. Through its subsidiaries, Heritage Global Partners and Heritage Global Digital, the company delivers comprehensive end-to-end solutions, including asset appraisals, advisory services and multi-channel auction platforms. Its service offerings encompass industrial machinery and equipment, real estate, storage lockers and specialty assets, all designed to maximize recovery values for clients.
The company leverages both online and live in-person events to facilitate timely and transparent sales across diverse asset classes.
