Good day, everyone, and welcome to today's Heritage Global Inc. second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. Please note this call will be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to John Nesbett with IMS Investor Relations. Please go ahead. 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 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, which speak only as of the date of this call. For more detailed 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? Thank you, John. Hello and good afternoon, everyone. Thank you for joining, and once again, thank you for your continued interest. As always, Brian will drill down on the quarter's performance nuts and bolts across the board. Clearly, it was a solid quarter, and actually, more importantly, it was a solid quarter with no real concentration issues, but a solid quarter countrywide. We are proud to say we blew by the $2 million NOI goal to $2.2 million, and it felt very encouraging. Let me start by trying to add some color beyond the numbers on how we're currently feeling, where we see ourselves headed, and with some of the reasons on the how and the why. This last month, I was at a CEO peer group conference, a virtual conference of micro-cap and small-cap CEOs. We were all asked around the horn to basically talk about how we felt in this virtual room briefly about the state of the economy, how our company was facing its challenges in the current macro economy, etc. I spoke last. Pretty much everyone seemed to mirror each other's comments with the same safeguards I'm sure you're all hearing regularly. Typical flight to safety, which makes sense in this macro geopolitical economy. They were saying it's very hard to forecast with so much uncertainty. They were saying we're unsure when and how severe the impact of the tariffs will be on our supply chains. They were then again reiterating it's unclear if capital will be available near term. It was my turn. I heard myself say, wow, Heritage Global feels really very, very able, very stable, and very capable right now. I just have the sense we're built to last for whatever comes opportunistically. I know that sounded arrogant, and this is an earnings call and not a sales pitch. Forgive me any over-exuberance. Let me just focus on where that confidence right now is coming from. First of all, I believe now, and I've always believed very much in the concept of SINLOA, S-I-N-L-O-A, Safety in Numbers, Law of Averages. It's paramount to my CEO dashboard. I measure everything both short-term and long-term, where I get my confidence from safety in numbers. Right now, our pipeline is very, very strong, and it's not just strong. It's equally spread out across all of our revenue sectors, which is most important. It's also very important that we have a really good mixture of both new clients we're attempting to add and ongoing business from repeat clients in all of our sectors. Spread out pretty equally. Let me begin a bit on the industrial side before I then shift to the financial and back to Brian to more details. What we're seeing is a very healthy spread of both large successful multinational firms we do business with, increasingly and aggressively managing their surplus even more diligently, combined with a more meaningful move to get their surplus on the market and out the doors of their factories and warehouses. That's combined with the venture community and a buyout sector that is now really becoming a bit more Darwinian in their approach to where companies who are not performing on fast paths to profitability are under greater pressure to right-size, and we're seeing increased surplus assets, continued planned closures, and pressure on downsizing and right-sizing. At both our ALT and our industrial auctions, what's happening now in this supply chain and this marketplace is the magic really happens when we're able to offer new and late-model assets. The late-model assets are really selling on the industrial side at a very large premium now with supply chain and tariff fears. We're getting more and more late-time assets, and we're getting more and more bidders at our auctions, and we've done a fantastic job, in my opinion, at the leadership at ALT of upgrading our bio-inventory to where we have really modern, fresh assets and an aggressive base of buyers that are looking to buy secondhand equipment that's really in pristine condition. On the industrial side, I feel very confident that's kind of the how and the why and why I said that I think we're stable and capable and able right now. Transfer over to the financial assets and back to my same statements. When it comes to selling charged-off consumer loans, our team at NLEX has built the most respected and trusted brand in the industry. It's really well-deserved, our success, because of the effort our team has put in. They've invested in best-in-class services for both the sellers and the buyers. With the singular best data protections in the industry and the most transparent ease of use in their trusted offerings, they have a growing cadre of repeat sellers, and they're adding new sellers and new bulk sellers on a regular basis, literally week by week and month by month. It's very, very strong approaching at NLEX. As we move through the year and into next year, I feel that this will continue on a regular basis. That blowing by $2 million NOI was no fluke. It should continue and be pretty stable the next few quarters and onward past that. More important than that, being stable and able is not our goal. Our goal is to put a massive effort now into the next stage of our company, which is the giddy-up-and-make-hay stage. We are now in a very, very serious acquisition mode, and that would be an understatement to tell you how serious we are. We are looking at multiple companies. We are sitting here because we've worked very hard, and we've planned very well with what I'll brag and say is a fat wallet. We got a fat wallet, and we got an empty belly ready to fill up. We are looking hard as we speak at multiple deals. I think that we're going to get some announcements done, definitely within the next 6- 12 months. Our goal is even sooner. We are talking to multiple people at once. We know that that's the secret sauce to get the kind of growth we need to go from able and stable to, really on a takeoff, position to really build this thing into something significantly larger. I feel good about where we are. I feel proud of our team, and I'll let Brian walk you through the details of this quarter. I'll quiet down now and give him his turn. Before I do that, thank you all, and anytime you want to talk with us, we're available, we're around, and we very much appreciate you guys joining in. Brian, go ahead and get down to the nuts and bolts. Thank you, Ross, and good afternoon, everyone. I'll begin with a brief overview of our second quarter operating results before walking through our industrial and financial segment performance. I'll then conclude with consolidated financials. Consolidated operating income was $2.2 million in the second quarter of 2025, compared to $3.5 million in the second quarter of 2024. Our industrial assets division reported operating income of $1.3 million in the second quarter of 2025, compared to $2.1 million in the prior year quarter. Our financial assets division reported operating income of $2.2 million in the second quarter of 2025, compared to $2.7 million in the second quarter of 2024. Our industrial assets division had a solid quarter, benefiting from a high volume of auctions and steady asset pricing levels for both the auction, liquidation, and refurbishment and resale segments. Our appraisals business delivered a sound quarter with operating income of approximately $250,000, compared to a loss in the first quarter of the year. Our ALT business benefited from an increased number of auctions in addition to its core retail channel, achieving operating income of approximately $400,000, compared to a break-even quarter in the prior year period. Taking out the $1.3 million in earnings achieved in the second quarter of 2024 from the Fenton, Missouri pharmaceutical plant, the industrial auctions group, HGP, had improved day-to-day operating results this quarter compared to the prior year period. As we move through the second half of the year, we're focused on continuing to execute on the opportunities in our auction pipeline to build momentum and drive operational success. Our financial assets division delivered relatively consistent performance as compared to the second quarter of 2024 and drove strong sequential improvement in the quarter. We saw meaningful improvement in the brokerage business, which continued to add high-quality portfolio sales, resulting in increased pricing during the quarter as compared to the first quarter. Yet pricing is still in closer alignment with a normalized market. The NLEX team has been and continues to be actively onboarding new clients. This focus, coupled with a strong pipeline of opportunities, has led to an increase in client transactions, and we anticipate that this segment will continue to see strong performance throughout 2025. Additional consolidated financial results include the following: adjusted EBITDA was $2.6 million compared to $4 million in the prior year period. The difference quarter over quarter was primarily due to earnings recorded from our pharmaceutical plant transaction in the second quarter of 2024, mentioned earlier. Net income was $1.6 million or $0.05 per diluted share compared to net income of $2.5 million or $0.07 per diluted share in the second quarter of 2024. Our balance sheet is strong with stockholders' equity of $65.7 million as of June 30, 2025, compared to $65.2 million at December 31, 2024, with net working capital of $16.4 million. Our cash balance reflects a total of $19.8 million as of June 30, 2025, and after removing amounts due to our clients, payables to sellers on our balance sheet, our net available cash balance was $11.7 million. We also repurchased approximately 750,000 shares in the open market during the second quarter for a total of $1.6 million, or an average cost of $2.13 per share. As of July 31st, the company has formally extended the repurchase program for an additional three years with an allowable spend of $7.5 million. On the M&A front, acquisitions remain a capital allocation focus as the company continues to evaluate several strategic opportunities, both the industrial and financial asset segments of the business. We look forward to reporting on any developments as they occur. With that, back over to you, Ross. Thank you, Brian. I've been doing this a very long time, and the only thing I can give you is my feelings. It just feels like Heritage Global is in the right place at the right time with the right Board of Directors fully supporting us, the right young, strong management team other than old loss, really ready to step forward. I couldn't pick a better time or a better opportunity for us to seize the day, to seize the month, to seize the year, and to produce everything that we should produce. We're at the point in time right now. The assets are there, the marketplace is there, and we're at a no-excuses place that it's our turn to shine. Thank you all for paying attention, and thank you for your continued interest, and we're always around, and we're grateful that you're here with us. Brian and I are ready to take any questions that anybody has, and we're anxious to hear from you. Thanks again, and the lines are open. At this time, if you would like to ask a question, please press the star one on your telephone keypad. You may withdraw yourself from the queue at any time by pressing star two. We'll take our first question from Mark Argento with Lake Street. Your line is open. Hey, Ross. Hey, Brian. Just got a couple of questions here. First off, when we're thinking about just kind of 10,000 ft in terms of the model, you've kind of thrown out that $2 million in operating income. Is that kind of a good baseline for you guys the way the business is today, you know, kind of on a quarter in and quarter out basis? If that's the case, how should we think about, you know, the opportunity to start nudging that higher? I think historically, you guys, you know, there's a decent amount of variability in terms of quarter in and quarter out, operating income, but maybe just philosophically talk about how you're thinking about the business and, you know, how you, how that could expand over time. In Q1, we were lower than the $2 million numbers. It wouldn't be fair to say that by any stretch of the means it's an automatic. We got to work really hard, and everybody's got to perform and show up, and things have to work to make over $2 million. We're 100 people, and we got to row hard, but it's a reasonable expectation. You know, our hope is to get it to where that is pretty much a baseline that we can build the platform and grow from. Looking at Q3 and looking at Q4, our goal is to get past the $2 million each quarter without M&A and without any special one-time significant big hit and have that be pretty much a really solid, proud operating company with growth platforms of both DNA, organic growth, some spiked earnings, and getting some M&A done. It's fair to say we're very pleased with that quarter. We're not pleased with thinking that's going to be the quarter that we perform for the rest of our careers. I'll take it for today. It's not the answer for tomorrow. The answer for tomorrow is to beat it up and go way past it. Got it. You mentioned a year ago, $3.5 million, but $1.3 million to that with real estate. You guys are kind of on par with, you know, kind of run rate with where you were last year. We're always going to be close to getting one or have one because we're focusing on it on a regular basis. They're not an anomaly. We've never seen the last one. They're just not the kind of transactions that you can pin a date on or forecast exactly when you close it or exactly when once you close it, you monetize it. We have one in the works now that we're already in control of, and we have multiple ones that we're chasing. They're not in the $2 million number. When we get them, that's where we leap past it, Mark. Right. No, understood. That makes sense. In terms of the kind of asset flows and kind of pricing that you touched a little bit on, let's say on the financial assets pricing continues to normalize. Are you guys seeing more portfolios coming to market? Any kind of anecdotal stories you can share with us in terms of how you see that for your financial? What the NLEX guys are telling me is that they're seeing now more meetings and more signing of people that haven't traditionally been using an outside broker or people that hadn't been selling over the last year or two. They're seeing some new entries to the market coupled with the existing entries. The volume on the existing entries isn't really growing. Our good quarters are because we're continuing to maintain all of our clients, and we've been adding new clients to our portfolio or suite of existing clients. Our growth there is obviously that we think that we're gaining market share with new sellers, Mark. Got it. Just shifting gears, tariffs, obviously, you guys aren't directly impacted because you're, you know, doing a good resell on the used equipment. Have you seen that play out in terms of, like, you know, more demand for used equipment, especially if, you know, they're looking, you know, somebody's looking to buy equipment that might have a tariff attached to it? I think it really, the reaction now is preliminary that, you know, we are seeing really good crowds when we have really modern equipment. It's a little bit harder to sell some of the older, more dated equipment. There's really a lot of people that are very aggressive when there's six-month-old, one-year-old, two-year-old equipment for kind of an early fear that they could have some troubles down the road in the supply chain, not always just with the cost, but with the timing, Mark, that when you're a biotech company and you need the assets or any kind of manufacturing company, you know, it's not always as price-sensitive. Sometimes it's time-sensitive. When it's time-sensitive, they will pay, you know, a premium to get the equipment today. That's when used equipment, you know, really can move the needle for us if we have it and it's six months to get it, you know, new. It hasn't really got to a point where there's real fear in the market, but I'd say there's real concern in the market now. Great. I'll hop back in the queue. Thanks, guys. Thank you, Mark. Once more for your questions, that is star and one. We'll move next to George Sutton with Craig -Hallum. Your line is open. Hi, George. Hey, guys. This is Logan on for George this afternoon. Hi, Logan. Congrats on the first quarter here. Thank you. Ross, as you talk about kind of new sellers coming into the NLEX market, I wonder if you can just give us a little more color on that. Is it concentrated at all? Is it pretty broad-based? What types of companies are you seeing come into the market? It is somewhat broad-based. I wouldn't really say that it's a lot of what you'd call the money center banks, the really major big national banks. It'll be a combination of regional banks, some of which have not been aggressive sellers, but in this new economy where you're having the FDIC and people really want banks to increase the comfort level by the regulators, you're seeing some more regional banks enter the market. You're seeing some of the, what I'll call alternative lending companies that have now basically built up a larger amount of NPL assets than they had. Some of these companies obviously are only two, three, four, five years old, and it took them a while to get to the point where they had to develop a program for selling non-performing loans because they're not 50-year-old or 100-year-old financial institutions. We're seeing some of the newer alternative lenders now growing to the point where they need the service. It's kind of across the board. It's half fintech and half smaller banks. There's been an increase in the residential real estate portfolios we've been selling to. Overall, it's just kind of a healthy, steady growth, not some massive exponential growth, but a little bit more each quarter. Got it. That's helpful. If we can turn to the acquisition front, I think you've previously indicated that there might be some opportunities for you in Europe. I'm just curious if that's still the case. Are the back and forth with tariffs having any impact on those potential conversations? We're definitely in the marketplace to expand internationally. The first place to expand internationally would be, you know, obviously in Europe. We're looking, obviously, at multiple opportunities. We're actively engaged with, that is one of our strategies, and it's one of the strategies we've been talking about that is ongoing. Nothing material to announce other than there's no shift in that strategy, and we're farther down the road than we were when we were not as far down the road. Okay. Got it. If I can just throw out one more, on the specialty lending side with your large borrower, are you having any sort of traction with the legal collections, which I think you were kind of turning to? I'm just curious to get an update there. I'll let Brian answer that. I would tell you as steady as it goes, and I haven't had any earth-shattering news, because it's a long haul, and it's years and years before you get to an end result. I guess I'm not as focused on it every 90 days, understanding now what a long haul it is. Brian is focused on it. Brian, I'll let you give the update. Yeah, sure. We are working really hard on the underlying loans, the underlying collateral, and working with everyone, as I've said in prior quarters, our senior lenders and the borrower, to essentially make the collateral or get the collateral into the most valuable spot or best position to collect over the long term. Work there has been a lot, and it's been progressing. I said at this point, we don't have any big news or key developments to disclose. However, we are trending in the right direction. We continue to pursue the legal initiative, and we're analyzing the data and the performance of all those accounts as we go throughout the year. We're getting better data and better insight into how that looks. That's kind of all I got for today. Okay. Thanks. Good to see the momentum, and thanks for taking my questions. Thank you. We'll take our next question from David Marsh with Singular Research. Your line is open. Hey, guys. Thanks for taking the questions. Hey, Ross, you caught my attention with your comment about regional banks on the financial asset side. Are you seeing any flow at all from other, you know, other institutions that may be less likely to be participants, such as credit unions and things of that nature? Across the board, there is a greater pressure for people to monetize non-performing loans now. It started at the top with the fallout from commercial-backed mortgage securities, and it kind of trickled down into our space, which is primarily much more on the consumer focus. Pretty much across the board, people are looking at monetizing NPL on consumer loans. As you know, we've reached pretty much all-time highs in the amount of defaults right now. There's a multi-year period of working through the existing amount of consumer defaults, and they're across the board. They're everything from auto to credit card to buy now, pay later to peer-to-peer. They're pretty much not category-specific. They kind of touch every regional bank, and they kind of touch every alternative lending company from a BNPL to a peer-to-peer to a fintech. What's happening now is simultaneously, every quarter, you read about somebody raising, not a regional bank, but a fintech, another $100 million, $500 million, $1 billion. It's putting more capital out into the marketplace. We feel pretty safe going forward on that end of it. On the regional bank end of it, there's going to be, I think, growth in the regional banks wanting to have a really open, transparent platform rather than just selling direct, but a competitive marketplace right now. Prices are not going up. With prices not going up, they want to make sure they're getting the right price. The best way to get the right price, at least is our belief, is through enough exposure and having enough different potential buyers look at the assets. We think that the regional bank business is going to grow from people who don't want to just deal with one buyer but want to look at the marketplace at large. The NLEX team feels pretty comfortable that their business is in a great position for the next year or two. Yeah, it sounds like you have some pretty strong momentum there. That's pretty encouraging for you all. I'm not for sure it's great for the overall economy, but it's great for you guys. Another one of the companies that I covered just had a call. They have a call center business for a solar operator, and the solar operator went bankrupt. Is that something that you guys have played in in the past? We've done dozens of solar projects, everything from the complete manufacturing plants down to a massive amount of the actual physical inventory for literally 40 or 50 different companies over the long run. We were kind of the early innovator in taking solar assets to the marketplace when we did the Solyndra auction, which was during the Obama administration. You can remember Solyndra was kind of the big political, really major solar difficulty that came number one. That kind of branded us in the solar industry. Every quarter, pretty much since then, we've done solar projects. It would be not as big a business for us right now as our pharma business, but it's an ongoing business that we're an industry leader in. Got it. That's helpful. I guess, you know, some of these new regulations took a toll on this little solar operator. I don't know. Maybe you guys have seen more opportunities. A lot of it was, there was a lot of impact from solar moving, you know, not just to North America, but, you know, the Asian companies became pretty dominant in the solar industry, which impacted a lot of the North American manufacturers, which eventually trickled down to some of the installers, etc. It's also in any kind of relatively new industry, even though it's 15 or 20 years old, it's still going through Darwinian transactions and, you know, M&A, and there'll be ongoing activity for multiple years in the solar sector that we intend to kind of stay with. Great. Thank you for taking the question. Congrats on the quarter and good luck for the rest of the year. Thank you. Once more for your questions, that is star and one. We'll pause a moment to allow any further questions to queue. It does appear that there are no further questions at this time. I would now like to turn it back to management for any additional or closing remarks. Hi, this is Ross. I'd like to thank everybody who's paid attention, everybody who joined in and listened. We're feeling good about where we're at. Hopefully, as investors, you're feeling good about our performance and our ability, and we know that it's time to go from doing good to doing great. Our focus isn't on just doing good. Our focus is on stepping it up and building from here. Hopefully, you'll stick with us, and hopefully, we'll do what's needed to earn your trust and respect going forward. Thank you all, and everybody have a great day. Goodbye. This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful afternoon.