Good afternoon, everybody. I'm here with Ross Dove with Heritage Global. Thank you. My turn. Here's the deal. I've been doing this for 10 years, nobody's more tired of my voice than me. Hearing myself for 10 years, I don't know if I can take it any longer. What I'm going to try to do is tell you a little bit about our company, tell you a little bit about our future, or at least how I see our future, and why I think there's a pretty darn good and pretty big opportunity, and then force you guys to make it interactive. What I really get out of this conference, a lot more than hearing my own voice, is hearing your voice and learning from you guys. Don't get mad if I quit halfway through and switch this to an interactive conversation where we can all work together on me telling you what I'm thinking about and you telling me what you're thinking about, and seeing how we can put that together and maybe get some good ideas that will help me and help you guys decide if you want to invest. Here we go. Heritage Global, I used to say we do two things, that confused everybody. Now I'm going to say we do one thing. We're an asset services company. We're in the business of selling and valuing assets that are basically unregulated assets that are hard to sell for a lot of people that we figured out how to be a market maker in. I'll start on one side of the coin. You see that there's industrial assets on one side, you see financial assets on the other side. I'll start with industrial assets. It's an old line business that was founded by my grandfather after the Great Depression, if you can believe it. My grandfather had a car dealership. He had an Auburn Cord car dealership. Wasn't really smart enough to have a Ford car dealership. When the Auburn Cord went bankrupt, an auctioneer came in to sell off the car dealership, and he said the only guy making money right now was the auctioneer. I think I'll be an auctioneer. I was born into the business. My dad came back from World War II, joined the family business, then my brother and I joined it a little bit after college. It was a regional business that we built back up through all the iterations. It became HGP. What does HGP do? They auction off, inside the building primarily, factory equipment. What is factory equipment? Everything you can think that manufactures anything, from a semiconductor, et cetera. We also do research equipment, everything that a biotech company would have. Everything inside a physical plant, we sell. We also do some outside the building, construction equipment, agriculture equipment, et cetera. We do it two ways. We do it for really big companies like a Pfizer, like an Amgen, like a Halliburton, like a Boeing. Why do they use us? For two reasons. They're modernizing their plant, or they're doing an M&A deal, either one of those produces surplus equipment that used to go into landfill, that now they want to have a greener economy, so they move it to a secondary channel, we sell it. That's one part of the business. The second part of the business is we do insolvency work. Somebody goes bankrupt, a venture capital company closes somebody down, and they have to get rid of the assets. We operate with two different styles. One style is we do it on commission as a broker. The second style is we do it as a principal, and we buy the assets. For the big companies, they don't need our money upfront, so we do it on a fee. For the small companies or the venture capital companies, they say, Ross, just get this shit out of here, write us a check, and we want to get the hell out. We've lost our ass. We're ready to say goodbye. We gave these guys $50 million. You're telling us the equipment's worth $2 million. We don't give a shit if it's worth $1 million. Just write us a check and move it out today. Those are our happiest times. We do both. Do we win in a big economy? Yes. In a bull economy, there's a lot of M&A, and we win. Do we win in a troubled economy? Yes. Do we struggle when nobody's doing anything? Yes. Sometimes in between, there's clogged supply chains, people in a clogged supply chain, even if they want to modernize, are waiting because they don't know if they can get new equipment. People are holding back. Banks are afraid to foreclose on companies because they think it might get better. We have our slow periods. Last year was a bit of a slow period. It's starting to pick up now. Where there's starting to be some clarity, and we're pretty bullish on the future. Before I get into the rest of that business, I'm going to give you the sales pitch because basically, my job as a CEO, I'm not that great a CFO, but I'm a pretty good salesman. Here's the sales pitch. What makes us valuable now and what should you be excited about if you're interested in this company? I can tell you what's happening, and I'm not some analyst on AI, I'm not some predictor of the future, but I can tell you this. If you look at the massive amount of layoffs AI is creating, if you look at the massive amount of corporations now talking about how they're repurposing their manufacturing, and they're repurposing their manufacturing with robotics, they're repurposing their manufacturing with lean manufacturing. We're going to see a renaissance in surplus assets coming to sale over the next four or five years. That's not coming from me, it's coming from any analyst anywhere you can find that follows manufacturing. They all say the same thing, there's going to be a massive supply of surplus equipment across all of the sectors. Yes, first question. Nick, can you bring a mic to the people? I got old ears. I'm the oldest here. In the end of the day, here's the deal. I've been doing this 50 years, and in 50 years, I can tell you this, there is always a buyer. At a price point, I've never found any asset there isn't a buyer other than when you have functional obsolescence. If it's broke, it's broke. If it works, it works. Everybody told me when every single textile company was leaving North America, who's going to buy 500,000 sewing machines? You woke up and you said, Wow, the Dominican Republic's buying them. Thailand's buying them, Malaysia's buying them. If you really call yourself Heritage Global, there is that. There is an arbitrage to nations that buy them. Every time a big biotech goes bankrupt or a pharma company sells assets, some venture company has lent money to somebody who's going to buy the assets. If it's operational, it sells, period. Ross, if I can add, I'm Nick, Ross's nephew. I run our industrial business. The companies that are going to have AI automation are the big guys. Let's take Coca-Cola, right? Coca-Cola is going to automate their manufacturing, but the small mom-and-pop guy making kombucha or making juice, right? Some guy who goes on Shark Tank with a beverage, he's not going to be able to modernize his facility, but he'll take that Coca-Cola bottling line. He'll take that Coca-Cola packaging line. It's the hand-me-downs from the big guys will become the assets of the smaller guys, and then that will be a life cycle. What happened for years is a lot of those assets that could've been sold got scrapped, got cannibalized. Why? Because the companies, when I grew up in the business, they didn't necessarily want to sell their used equipment to a small competitor, so they were happy to throw it away. Now they get a bad grade on their green card for throwing it away, now they're really forced to put it into the secondary market. If you're going to buy stock in Heritage, you ask yourself only one question, and that's in my opinion, the question I would ask myself is, are they going to get more or less supply? Is the supply going to grow? Because you know we can execute because we do 200 auctions a year. Is there going to be more assets available for us to sell or less? I can tell you, I believe it's an empirical truth that over the next four or five years, the amount of assets available will grow. If we can't grow with that amount of assets growing, shame on the guy standing here. Shoot him, it's his fault, and also shoot the guy in the back of the room with the big mouth, too. We have a valuation company. It's not a big deal in the sense that it's a small part of the business, but it does work for big banks and it appraises assets. If assets go bad, they come back to the guy who appraised them and say, Hey, you told us these assets are worth $3 million. We're shutting this company down. Now prove it so we can get auctions from them. We have a resale business that we bought called ALT that repurposes basically biotech assets. Why does that work? Because in the biotech world, we're in a situation right now where there's a massive amount of asset flow, but a lot of the companies want to buy assets with a warranty. We sell the assets as an auctioneer as is. With them, we have the ability to refurbish them and sell them at a premium. That's one side of the business of just one business. Flip to the other side, which is financial assets. NLEX is three decades old. It was founded by me and the guy that runs it, Dave Ludwig, in a prior company. We had a contract with the government, and we sold billions of dollars assets. You guys are probably all too young, but after the S&L crisis. After the S&L crisis, we sold billions of dollars of assets. We were like hot shit for three years, making a ton of money, thinking we were brilliant. All the assets went away. We woke up, and we had this database of buyers who had spent billions of dollars. The government told us, We don't need you anymore, pal. Go home. Going home we thought would've been a tragedy. We figured out, let's go figure out who else we can go to. We started out with the money center banks, the Wells Fargo, the Citibank, the Bank of America. They'd never heard a sales pitch like ours. Our sales pitch was, Everything you think is complete crap, that you value at zero, that you have no interest in, we want to sell. They said, Well, we've never heard that before. We said, When you've charged it off, and written it off, and given up on it, we're your guy. We were like the originator of what at the time we called cash for trash. We invented cash for trash. It was credit card loans, it was auto loans, et cetera. Cash for trash turned into a 30-year business. It migrated. A lot of those people built their own recovery departments. A lot of new things happened. Why is that hot now, and why do I believe you should buy our stock, and why do I believe it's a huge growth? Nothing to do with anything I'm doing. Just look at the simple facts. We now have a trillion dollars. I never used to think I'd ever say the word trillion, but I guess if you get old enough, you get to go from billion to trillion just by living long enough. We now have a trillion dollars in credit card debt. With a trillion dollars in credit card debt and growing, they say by the end of the year, it's going to be $1.2 trillion. I don't even know what those numbers mean. I do know this: some of that is going to turn into charge-offs. It takes a while. Right now the spending is literally out of control on the amount of people using credit cards. That's why we say we're in a good economy, because the consumers are spending like crazy. When the consumers are spending like crazy, we win six months, a year, and a year half later, because ultimately, some of that turns into default. The apple pie is so huge right now that the things we're selling, the credit card loans, the auto loans, et cetera, we're going to have a record year the second half of this year in subprime auto loans. Why is that? Because everyone basically was doing great during COVID, and now there's a real problem. A lot of people that can't make their car payment no longer have equity in the auto. They get the auto towed away, and they have no equity to sell it, and somebody has to go chase them down for the money, and that's the business we're in. We're doing a lot of subprime loans there. We just did an acquisition. The reason we bought DebtX is we were really good at consumer loans. This growing problem with the, I'll say $1 trillion again, you're probably tired of hearing me say it, but this growing problem with the $1 trillion in commercial real estate loans coming due is not really solvable because the banks are saying no versus go. When the banks are saying no versus go, a lot of those loans have to get sold. We didn't have the right image at NLEX. They said, We're not giving you our commercial real estate loans even though we know how to sell them because your brand is consumer. DebtX, this brand, was commercial real estate loans. We bought them, we think, at the exact right time, right before there's an exponential growth in commercial real estate loans to have to get monetized. All right. Have I said enough that you guys can start asking some questions? Come on. All right. You first. Nick's going to pass the mic. Get away. Buy the non-performing loans. There you go. You got all the ears. Oh, thank you. Great. Hi. If you would be so kind to explain me the business model. You buy the non-performing loans from some financial institutions, and then you try to add some percentage to 5%, something like that, and then you try to collect as much as you can. That's how it works, or? No. No. That's how it doesn't work. Okay. No offense. That's why I ask. No. I can never buy the loans because then I'm competing with my buyers, and our buyers will tell me, You're full of shit. I don't trust you. The only way I can do it is as pure broker. Santander Bank comes to me and says, I got $100 million Charged off car loans, I tell them I can get $10 million for them, They say, You suck. I say, Fine, go get more somewhere else. They say, All right, we can't. Go sell them. They give me the loans. I take their $100 million of loans, I sell them for $10 million by going out to brokers that are SOX compliant that I know, collection agents, and I make a fee. I don't buy them. The only time I buy assets is on the industrial side, where on the industrial side, nobody cares. Does a shareholder have to be good at timing these cycles in order to make money, or is it something that can compound over time? We are completely agnostic. We want any shareholder who will write a check. If you want in, you can get in. You don't have to know anything to get in. The only thing that I will tell you is I do not want a shareholder who's really big on buying SaaS, software services companies, because you'll hate us. Because we're not going to make money quarter over quarter, and we have this kind of business. If you haven't got the stomach for a company that's going to have a big quarter and then a medium quarter, you're wrong. If you haven't got the capital to stick around for two or three years, you won't be happy. You're welcome, and come on in. In the back, Nick. What's that? Next question. You made that acquisition. How many other acquisitions are you looking to make? We don't have a quota. I'm working right now on a bolt-on acquisition that fits into the company that is small. Other than that, I need to prove out what I just did. Until DebtX really, really proves out. They lost money in the first quarter, which often happens after M&A, but I'm not going to do anything else until I've proven that one out. Am I going to do more? Yeah. Four, five, six or seven more over the next three years on the plan to build out these circles, but nothing big this year. Okay. Anybody else? I'm just going to make up stuff to talk about if nobody raises their hand. There you go. Thank you. I got two. Nobody wants to hear me, Nick, they're raising their hand. Because other than M&A, how do you think about an organic growth strategy? How do you grow the business organically? Across the cycle. You'll get an influx of assets from CRE, let's say, but then that will eventually abate to a more normalized level. Over time, on average, how do you think about growth? The strategy there is pretty simple. This is a line from my grandfather, Sell peanuts when the circus is in town. Selling peanuts when the circus is in town, right now, buy now, pay later is a massive growth business. There are so many companies that are three and four years old now that are just starting to realize they have a problem. That if you're going to lend people money to go buy groceries, lend people money to get on a cruise ship, drink rum and Cokes and gamble, and then get off the boat, some of them are not going to pay. We're looking for all the guys who got on the boat, had a great time on the buyback the boat and decided it's over with. We don't want to pay for that cruise anymore. There's going to be plenty of them. Buy now, pay later would be an organic growth example. On the corporate side, we have to go a little bit broader. There's a massive amount of surplus in the transportation sector, in the construction sector. We have to get a little bigger outside the building. The guy standing there, his job is to hire more business development people and to figure out how to replace me by growing it. Running out of time? In the back. No, she's telling you you got one minute left. I got one minute left? All right, one minute left. I'll tell you what. Ross, you got a question. Could you talk about your executive compensation philosophy? I see that you are taking 1%-7.5% of floating bonus, which is something that I've never seen. Head of Financial Assets, he takes a flat 12%. Is that correct? Am I reading that correct? He gets a 12% commission on everything he sells. We get 80% of the money, he gets 12%. If I lost him and lost his people, I wouldn't have a business. If we make $1 million, I get $880,000 into the company, $120,000 goes to him. He makes a lot of money, if he grows it, he's worth it. All right, final question. There's a lot to buy back. How do you- We have not bought back as much as I want because it's a capital allocation question. I can tell you, we have a buyback in place, we're going to start using it a little bit more often. Is that a fair answer? I'm not going to give you the exact numbers, yeah, we have a buyback. It's already been approved, just book capital out, things like that. We're not going to do a lot of M&A the rest of this year, we're going to do a little bit more buyback. You get slowing down in buyback when you're doing M&A because there's a complication with the SEC on doing both at once. It's all right. You guys can now applaud if you want. You don't have to, but you can. Thank you all very much. I'll see you later.