LOS ANGELES, Oct. 29, 2020 /PRNewswire/ -- B. Riley Financial,
Inc. (NASDAQ:RILY) ("B. Riley" or the "Company") today announced
results for the third quarter ended September 30, 2020.
Third Quarter 2020 Financial Highlights
- GAAP consolidated revenues of $226.3
million
- Net income available to common shareholders of $47.3 million, or $1.75 per diluted share
- Adjusted EBITDA (1) of $94.1
million
- Operating revenues (2) of $194.5 million and operating adjusted EBITDA
(3) of $67.2 million
"We delivered strong third quarter results across our business
lines which generated net income of $47.3
million compared to $34.3
million last year and operating adjusted EBITDA growth of
over 90%," said Bryant Riley,
Chairman and Co-Chief Executive Officer. "Our capital markets group
was the primary driver of growth this quarter, having realized
impressive performance in all of its verticals. Our focus on
helping small cap companies navigate financial markets with
advisory, capital raising, and restructuring services is the ethos
of our firm and this quarter confirmed that we provide vital
services during periods of market turmoil like we have seen with
COVID-19. As we continue to creatively gain market share in each of
our segments within capital markets, we anticipate becoming the
market leader within the small cap ecosystem. In addition to
capital markets, we have continued to see strong performance out of
our liquidation business given the unfortunate ramifications of
COVID-19. Additionally, our valuation business, brand portfolio,
and wholly owned subsidiaries within our principal investments
business continue to generate steady cash flows and healthy returns
on invested capital. Finally, we continue to view our balance sheet
as a vital differentiator that sets us apart from the competition.
We saw investment gains of $32
million in the quarter which marks a continued recovery from
our first quarter losses. This understates the importance that our
strong balance sheet and our net cash and investments have on
driving growth and cash flow across our segments. We pride
ourselves on being solution providers to companies in need and use
our balance sheet as a tool to generate both fees and returns. When
I look through our portfolio, I am as optimistic as I have ever
been about its future performance and love our set up as
we finish the remainder of the year. Year-to-date, we have
delivered net income of $30.3 million
and almost $185 million of operating
adjusted EBITDA, up 90% over last year. In addition, we have a
clear line of sight to delivering strong growth in the fourth
quarter as well. Our strong performance and the confidence we have
in our business strategy and future are the primary reasons for our
increasing our regular quarterly dividend to $0.375."
Mr. Riley added, "Since the formation of B. Riley Financial in
2014, our philosophy has been to provide a regular dividend
enhanced by special dividends based on the strength of our episodic
businesses. As our overall business has become increasingly
diversified and recurring in nature, we feel a larger regular
dividend annualized at $1.50 per
share is more appropriate to reflect the underlying cash flow
generating power of our business. To be clear, we will continue to
consider special dividends when appropriate, and trust that a
stable and growing regular dividend will be appreciated by our
shareholders. In addition, we will continue to
opportunistically repurchase shares as noted by our buyback
authorization. Year-to-date, we repurchased approximately 1.7
million shares representing approximately 7% of our shares
outstanding."
Co-Chief Executive Officer Tom
Kelleher added, "This past quarter we took concerted steps
to position our platform to drive increased client and shareholder
value by rebranding our operating companies and providing greater
visibility into the breadth of our offerings. In addition, we
launched our venture capital business which should strengthen our
capabilities to identify, acquire and invest in attractive emerging
growth companies and is a highly strategic addition to our already
broad platform. Moving forward, we are confident in our strategy
and our ability to drive continued growth."
Third Quarter 2020 Financial Summary
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
September
30,
|
September
30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
|
|
2020
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
2019
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues (2)
|
|
$
|
194,500
|
|
|
$
|
139,795
|
|
|
$
|
528,657
|
|
|
$
|
415,145
|
|
|
Investment Gains (Loss) (4)
|
|
|
31,753
|
|
|
|
40,268
|
|
|
|
(36,142)
|
|
|
|
71,730
|
|
|
Total
Revenues
|
|
$
|
226,253
|
|
|
$
|
180,063
|
|
|
$
|
492,515
|
|
|
$
|
486,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Adjusted EBITDA (3)
|
|
$
|
67,222
|
|
|
$
|
35,200
|
|
|
$
|
184,886
|
|
|
$
|
97,209
|
|
|
Investment Adjusted EBITDA (5)
|
|
|
26,911
|
|
|
|
35,130
|
|
|
|
(38,554)
|
|
|
|
60,407
|
|
|
Total
Adjusted EBITDA
|
|
$
|
94,133
|
|
|
$
|
70,330
|
|
|
$
|
146,332
|
|
|
$
|
157,616
|
|
B. Riley Financial reported total revenues of $226.3 million for the three months ended
September 30, 2020, up from
$180.1 million in total revenues for
the prior year period. Operating revenues (2) totaled
$194.5 million compared to
$139.8 million in the prior year
period.
Net income available to common shareholders totaled $47.3 million, or $1.75 per diluted share, compared to net income
of $34.3 million, or $1.21 per diluted share, for the prior year
period.
Total adjusted EBITDA (1) increased to $94.1 million from $70.3
million for the third quarter of 2019. Operating adjusted
EBITDA (3) increased to $67.2
million from $35.2 million for
the prior year period.
For the first nine months of 2020, B. Riley's total revenues
were $492.5 million, operating
revenues (2) totaled $528.7
million and net income totaled $30.3
million. During that same period, total adjusted EBITDA was
$146.3 million and operating adjusted
EBITDA was $184.9 million.
Investment gains (4) of $31.8
million in the third quarter reflected a continued recovery
from the significant mark-to-market losses experienced in the first
quarter of 2020 due to the impact of COVID-19 on equity markets. B.
Riley's proprietary investments are comprised of certain private
and public securities and loans which also create revenue
opportunities for the Company's operating business while driving
long-term value for its clients, partners, and shareholders.
Supplemental Financial Data
B. Riley has presented
information related to its operating results and investments to
provide investors with additional metrics regarding its performance
and overall results of operations. Further details related to these
metrics can be found in a Financial Supplement on the Company's
investor relations website at ir.brileyfin.com.
Third Quarter 2020 Segment Financial Summary
|
|
|
Three Months
Ended
September 30,
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
|
Capital
Markets
|
|
Auction and
Liquidation
|
|
Valuation and
Appraisal
|
|
Principal
Investments
|
|
Brands
|
|
Operating Revenues (2)
|
|
$
|
115,058
|
|
|
$
|
44,185
|
|
|
$
|
9,655
|
|
|
$
|
21,602
|
|
|
$
|
4,000
|
|
|
Investment Gains (4)
|
|
|
31,753
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Segment
Revenue
|
|
$
|
146,811
|
|
|
$
|
44,185
|
|
|
$
|
9,655
|
|
|
$
|
21,602
|
|
|
$
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income (6)
|
|
|
37,900
|
|
|
$
|
12,000
|
|
|
$
|
2,972
|
|
|
$
|
8,368
|
|
|
$
|
2,292
|
|
|
Investment Gains Income (5)
|
|
|
26,911
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Segment
Income (Loss)
|
|
$
|
64,811
|
|
|
$
|
12,000
|
|
|
$
|
2,972
|
|
|
$
|
8,368
|
|
|
$
|
2,292
|
|
- Capital Markets segment revenues increased to
$146.8 million compared to
$134.1 million for the prior year
period. The increase was primarily driven by increased fees
from advisory services, the addition of our real estate consulting
business and an increase in income related to minority
investments.
- Auction and Liquidation performance was driven by a
number of retail liquidations in the US and in Europe as our group further capitalized on the
current challenging retail market conditions created by
COVID-19.
- Valuation and Appraisal results continue to be
negatively impacted by COVID-19 but overall business conditions and
activity continue to show signs of recovery.
- Principal Investments companies, United Online and
magicJack, continued to deliver solid operating performance and
cash flow generation despite the impact of COVID-19.
As of September 30, 2020, cash and
investments totaled $991.7 million,
including cash and cash equivalents of $169.7 million. The Company's investment balance
included approximately $58.4 million
of other equity investments reported in prepaid and other assets.
Total cash and investments net of debt, including investments
reported in prepaid and other assets, was $83.6 million.
Share Repurchases
The Board of Directors has approved
an additional share repurchase program for up to $50 million. In July, B. Riley announced an
agreement to repurchase 900,000 shares of its common stock as part
of a privately negotiated transaction. During the third quarter,
the Company repurchased 450,000 shares of these 900,000 shares and
expects to purchase the remaining shares by year-end, subject to
various factors including price, trading volume, corporate
requirements, and market conditions. Year-to-date through
September 30th, B. Riley
has repurchased approximately 1.7 million of its common shares.
Dividend
B. Riley's Board of Directors approved an
increase in the Company's regular quarterly dividend to
$0.375 per common share, from the
previous regular quarterly dividend of $0.30 per common share. The quarterly dividend of
$0.375 per common share will be paid
on or about November 24, 2020 to
stockholders of record as of November 10,
2020.
Conference Call
Management will host a conference call
today, Thursday, October 29,
2020 at 4:30 p.m. Eastern time
(1:30 p.m. Pacific time), to discuss
the Company's quarterly results. The live broadcast and archived
recording will be available on the Company's investor relations
website at https://ir.brileyfin.com/events-and-presentations.
Date:
|
Thursday October 29,
2020
|
Time:
|
4:30 p.m.
Eastern time (1:30 p.m. Pacific time)
|
Toll-Free:
|
1-877-451-6152
|
International:
|
1-201-389-0879
|
|
|
Replay Dial-In
(expires on Thursday, November 5, 2020)
|
Toll-Free:
|
1-844-512-2921
|
International:
|
1-412-317-6671
|
Replay
Pin:
|
13711619
|
About B. Riley Financial, Inc. (NASDAQ:RILY)
B. Riley
Financial, Inc. provides collaborative financial services solutions
tailored to fit the capital raising, business, operational, and
financial advisory needs of its clients and partners. B. Riley
operates through several subsidiaries which offer a diverse range
of complementary end-to-end capabilities spanning investment
banking and institutional brokerage, private wealth and investment
management, corporate advisory, restructuring, due diligence,
forensic accounting, litigation support, appraisal and valuation,
and auction and liquidation services. Certain registered affiliates
of B. Riley originate and underwrite senior secured loans for
asset-rich companies. B. Riley also makes proprietary investments
in companies and assets with attractive return profiles. For more
information about B. Riley and its affiliated companies, visit
www.brileyfin.com.
Footnotes (See "Note Regarding Use of Non-GAAP Financial
Measures" for further discussion of these non-GAAP terms.)
(1) Adjusted EBITDA includes earnings before interest,
taxes, depreciation, amortization, restructuring costs, share-based
payments, impairment of tradenames, and transaction related and
other costs. For a definition of adjusted EBITDA and a
reconciliation to GAAP financial measures, please see the
Appendix.
(2) Operating revenue is defined as the sum of revenues from
service and fees, interest income - loans and securities lending,
and sales of goods.
(3) Operating adjusted EBITDA is defined as adjusted EBITDA
excluding trading income (losses) and fair value adjustments on
loans and other investment related expenses.
(4) Investment gains (loss) is defined as trading income
(losses) and fair value adjustments on loans.
(5) Investment adjusted EBITDA and investment gains income
are defined as trading income (losses) and fair value adjustments
on loans, less other investment related expenses.
(6) Segment operating income is defined as segment income
excluding trading income (losses) and fair value adjustments on
loans and other investment related expenses
Forward-Looking Statements
Statements in this press
release that are not descriptions of historical facts are
forward-looking statements that are based on management's current
expectations and assumptions and are subject to risks and
uncertainties. If such risks or uncertainties materialize or such
assumptions prove incorrect, our business, operating results,
financial condition and stock price could be materially negatively
affected. You should not place undue reliance on such
forward-looking statements, which are based on the information
currently available to us and speak only as of the date of this
press release. Such forward looking statements include, but are not
limited to, statements regarding the Company's anticipated results
of operations for 2020, as well as statements regarding our
excitement and the expected growth of our business segments.
Factors that could cause such actual results to differ materially
from those contemplated or implied by such forward-looking
statements include, without limitation, the risks associated with
the unpredictable and ongoing impact of the COVID-19 pandemic and
other risks described from time to time in B. Riley Financial,
Inc.'s periodic filings with the SEC, including, without
limitation, the risks described in B. Riley Financial, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form
10-Q for the quarters ended March 31,
2020 and June 30, 2020 under
the captions "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" (as
applicable)and any additional information included in our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2020. These factors should be
considered carefully, and readers are cautioned not to place undue
reliance on such forward-looking statements. All information is
current as of the date this press release is issued, and B. Riley
Financial, Inc. undertakes no duty to update this information.
Note Regarding Use of Non-GAAP Financial
Measures
Certain of the information set forth herein,
including operating revenue, adjusted EBITDA, operating adjusted
EBITDA, and investment adjusted EBITDA may be considered non-GAAP
financial measures. B. Riley Financial believes this information is
useful to investors because it provides a basis for measuring the
Company's available capital resources, the operating performance of
its business and its revenues and cash flow, (i) excluding in the
case of operating revenues, trading income (losses) and fair value
adjustments on loans, (ii) excluding in the case of adjusted EBITDA
, net interest expense, provisions for or benefit from income
taxes, depreciation, amortization, fair value adjustment,
restructuring costs, impairment of trade names, stock-based
compensation and transaction and other expenses, (iii) excluding in
the case of operating adjusted EBITDA, aforementioned adjustments
for adjusted EBITDA, trading income (losses) and fair value
adjustments on loans, and other investment related expenses, and
(iv) in the case of investment adjusted EBITDA this includes
trading income (losses) and fair value adjustments on loans, net of
other investment related expenses, that would normally be included
in the most directly comparable measures calculated and presented
in accordance with Generally Accepted Accounting Principles
("GAAP"). In addition, the Company's management uses these non-GAAP
financial measures along with the most directly comparable GAAP
financial measures in evaluating the Company's operating
performance, capital resources and cash flow. Non-GAAP financial
measures should not be considered in isolation from, or as a
substitute for, financial information presented in compliance with
GAAP, and non-financial measures as reported by the Company may not
be comparable to similarly titled amounts reported by other
companies.
Contacts
|
|
Investors
|
Media
|
Brad
Edwards
|
Scott
Cianciulli
|
ir@brileyfin.com
|
press@brileyfin.com
|
B. RILEY
FINANCIAL, INC.
|
Condensed
Consolidated Balance Sheets
|
(Dollars in
thousands, except par value)
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2020
|
|
2019
|
|
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
169,676
|
|
$
|
104,268
|
|
Restricted
cash
|
|
1,410
|
|
|
471
|
|
Due from clearing
brokers
|
|
19,589
|
|
|
23,818
|
|
Securities and other
investments owned, at fair value
|
|
459,480
|
|
|
408,213
|
|
Securities
borrowed
|
|
|
676,423
|
|
|
814,331
|
|
Accounts receivable,
net
|
|
45,654
|
|
|
46,624
|
|
Due from related
parties
|
|
3,766
|
|
|
5,832
|
|
Advances against
customer contracts
|
|
900
|
|
|
27,347
|
|
Loans receivable, at
fair value (includes$236,018 from related parties at September 30,
2020)
|
|
344,339
|
|
|
43,338
|
|
Loans receivable, at
cost (includes $157,080 from related parties at December 31,
2019)
|
|
—
|
|
|
225,848
|
|
Prepaid expenses and
other assets
|
|
87,560
|
|
|
81,808
|
|
Operating lease
right-of-use assets
|
|
43,514
|
|
|
47,809
|
|
Property and
equipment, net
|
|
11,986
|
|
|
12,727
|
|
Goodwill
|
|
227,046
|
|
|
223,697
|
|
Other intangible
assets, net
|
|
194,516
|
|
|
220,525
|
|
Deferred income
taxes
|
|
14,223
|
|
|
31,522
|
|
Total assets
|
$
|
2,300,082
|
|
$
|
2,318,178
|
Liabilities and
Equity
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
4,226
|
|
$
|
4,477
|
|
Accrued expenses and
other liabilities
|
|
127,036
|
|
|
130,714
|
|
Deferred
revenue
|
|
70,565
|
|
|
67,121
|
|
Due to related
parties and partners
|
|
777
|
|
|
1,750
|
|
Securities sold not
yet purchased
|
|
48,125
|
|
|
41,820
|
|
Securities
loaned
|
|
667,109
|
|
|
810,495
|
|
Mandatorily
redeemable noncontrolling interests
|
|
4,462
|
|
|
4,616
|
|
Operating lease
liabilities
|
|
55,790
|
|
|
61,511
|
|
Notes
payable
|
|
714
|
|
|
38,167
|
|
Loan participations
sold
|
|
13,919
|
|
|
12,478
|
|
Term loan
|
|
|
|
52,452
|
|
|
66,666
|
|
Senior notes
payable
|
|
854,926
|
|
|
688,112
|
|
Total
liabilities
|
|
|
1,900,101
|
|
|
1,927,927
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
B. Riley Financial,
Inc. stockholders' equity:
|
|
|
|
|
|
|
Preferred stock,
$0.0001 par value; 1,000,000 shares authorized; 3,831 and 2,349
issued and
|
|
|
|
|
|
|
outstanding as of
September 30, 2020 and December 31, 2019, respectively;
liquidation
|
|
|
|
|
|
|
preference of $95,773
and $58,723 as of September 30, 2020 and December 31, 2019,
respectively.
|
—
|
|
|
—
|
|
Common stock, $0.0001
par value; 100,000,000 shares authorized; 25,431,575 and
26,972,332
|
|
|
|
|
|
|
issued and
outstanding as of September 30, 2020 and December 31, 2019,
respectively.
|
|
3
|
|
|
3
|
|
Additional paid-in
capital
|
|
332,085
|
|
|
323,109
|
|
Retained
earnings
|
|
43,938
|
|
|
39,536
|
|
Accumulated other
comprehensive loss
|
|
(2,167)
|
|
|
(1,988)
|
|
Total B. Riley
Financial, Inc. stockholders' equity
|
|
373,859
|
|
|
360,660
|
Noncontrolling
interests
|
|
26,122
|
|
|
29,591
|
|
Total equity
|
|
399,981
|
|
|
390,251
|
|
Total
liabilities and equity
|
$
|
2,300,082
|
|
$
|
2,318,178
|
B. RILEY
FINANCIAL, INC.
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(Dollars in
thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services and
fees
|
$
|
144,823
|
|
$
|
113,111
|
|
$
|
429,799
|
|
$
|
356,975
|
|
Trading income (loss)
and fair value adjustments on loans
|
|
31,753
|
|
|
40,268
|
|
|
(36,142)
|
|
|
71,730
|
|
Interest income -
Loans and securities lending
|
|
26,026
|
|
|
25,766
|
|
|
72,383
|
|
|
54,147
|
|
Sale of
goods
|
|
23,651
|
|
|
918
|
|
|
26,475
|
|
|
4,023
|
|
|
Total
revenues
|
|
226,253
|
|
|
180,063
|
|
|
492,515
|
|
|
486,875
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of
services
|
|
23,264
|
|
|
7,936
|
|
|
51,201
|
|
|
41,715
|
|
Cost of goods
sold
|
|
9,813
|
|
|
911
|
|
|
11,442
|
|
|
3,835
|
|
Selling, general and
administrative expenses
|
|
97,143
|
|
|
101,092
|
|
|
291,449
|
|
|
287,963
|
|
Restructuring
charge
|
|
1,557
|
|
|
—
|
|
|
1,557
|
|
|
1,699
|
|
Impairment of
tradenames
|
|
—
|
|
|
—
|
|
|
12,500
|
|
|
—
|
|
Interest expense -
Securities lending and loan
participations sold
|
|
10,975
|
|
|
10,273
|
|
|
30,669
|
|
|
22,579
|
|
|
Total operating
expenses
|
|
142,752
|
|
|
120,212
|
|
|
398,818
|
|
|
357,791
|
|
|
Operating
income
|
|
83,501
|
|
|
59,851
|
|
|
93,697
|
|
|
129,084
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
67
|
|
|
361
|
|
|
537
|
|
|
1,329
|
|
Income (loss) from
equity investments
|
|
409
|
|
|
1,113
|
|
|
(145)
|
|
|
(4,049)
|
|
Interest
expense
|
|
(16,374)
|
|
|
(12,772)
|
|
|
(48,537)
|
|
|
(35,130)
|
|
|
Income before income
taxes
|
|
67,603
|
|
|
48,553
|
|
|
45,552
|
|
|
91,234
|
Provision for income
taxes
|
|
(18,711)
|
|
|
(14,409)
|
|
|
(13,380)
|
|
|
(26,802)
|
|
|
Net income
|
|
48,892
|
|
|
34,144
|
|
|
32,172
|
|
|
64,432
|
Net income (loss)
attributable to noncontrolling interests
|
|
513
|
|
|
(158)
|
|
|
(1,382)
|
|
|
(50)
|
|
|
Net income
attributable to B. Riley Financial, Inc.
|
|
48,379
|
|
|
34,302
|
|
|
33,554
|
|
|
64,482
|
Preferred stock
dividends
|
|
1,088
|
|
|
—
|
|
|
3,230
|
|
|
—
|
|
|
Net income available
to common shareholders
|
$
|
47,291
|
|
$
|
34,302
|
|
$
|
30,324
|
|
$
|
64,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
common share
|
$
|
1.86
|
|
$
|
1.29
|
|
$
|
1.18
|
|
$
|
2.45
|
Diluted income per
common share
|
$
|
1.75
|
|
$
|
1.21
|
|
$
|
1.14
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
basic common shares outstanding
|
|
25,446,292
|
|
|
26,556,223
|
|
|
25,699,735
|
|
|
26,351,839
|
Weighted average
diluted common shares outstanding
|
|
27,050,448
|
|
|
28,233,423
|
|
|
26,689,700
|
|
|
27,251,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. RILEY
FINANCIAL, INC.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
32,172
|
|
$
|
64,432
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
14,765
|
|
|
14,217
|
|
|
Provision for
doubtful accounts
|
|
|
|
|
2,438
|
|
|
1,646
|
|
|
Share-based
compensation
|
|
|
|
|
14,267
|
|
|
10,276
|
|
|
Fair value
adjustments, non-cash
|
|
|
|
|
21,755
|
|
|
(13,343)
|
|
|
Non-cash interest and
other
|
|
|
|
|
(12,901)
|
|
|
(14,941)
|
|
|
Effect of foreign
currency on operations
|
|
|
|
|
(602)
|
|
|
8
|
|
|
Loss from equity
investments
|
|
|
|
|
145
|
|
|
4,049
|
|
|
Deferred income
taxes
|
|
|
|
|
17,312
|
|
|
6,358
|
|
|
Impairment of
intangibles and loss on disposal of fixed assets
|
|
|
|
|
14,057
|
|
|
(327)
|
|
|
Gain on
extinguishment of debt
|
|
|
|
|
(1,556)
|
|
|
—
|
|
|
Income allocated for
mandatorily redeemable noncontrolling interests
|
|
|
|
|
779
|
|
|
857
|
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Due from clearing
brokers
|
|
|
|
|
4,230
|
|
|
9,947
|
|
|
|
Securities and other
investments owned
|
|
|
|
|
(36,859)
|
|
|
(32,122)
|
|
|
|
Securities
borrowed
|
|
|
|
|
137,908
|
|
|
211,139
|
|
|
|
Accounts receivable
and advances against customer contracts
|
|
|
|
|
25,336
|
|
|
(8,645)
|
|
|
|
Prepaid expenses and
other assets
|
|
|
|
|
(3,507)
|
|
|
(9,619)
|
|
|
|
Accounts payable,
accrued expenses and other liabilities
|
|
|
|
|
(10,297)
|
|
|
31,473
|
|
|
|
Amounts due to/from
related parties and partners
|
|
|
|
|
1,093
|
|
|
(4,574)
|
|
|
|
Securities sold, not
yet purchased
|
|
|
|
|
6,304
|
|
|
(8,531)
|
|
|
|
Deferred
revenue
|
|
|
|
|
3,444
|
|
|
(502)
|
|
|
|
Securities
loaned
|
|
|
|
|
(143,386)
|
|
|
(215,575)
|
|
|
|
|
Net cash provided by
operating activities
|
|
|
|
|
86,897
|
|
|
46,223
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of loans
receivable
|
|
|
|
|
(169,100)
|
|
|
(350,695)
|
|
Repayments of loans
receivable
|
|
|
|
|
75,982
|
|
|
98,742
|
|
Sale of loan
receivable to related party
|
|
|
|
|
1,800
|
|
|
—
|
|
Proceeds from loan
participations sold
|
|
|
|
|
2,400
|
|
|
31,806
|
|
Repayment of loan
participations sold
|
|
|
|
|
(1,131)
|
|
|
(3,175)
|
|
Purchases of
property, equipment and other
|
|
|
|
|
(1,517)
|
|
|
(2,885)
|
|
Proceeds from sale of
property, equipment and intangible assets
|
|
|
|
|
1
|
|
|
504
|
|
Purchase of equity
investments
|
|
|
|
|
(6,486)
|
|
|
(33,391)
|
|
Proceeds from sale of
division of magicJack
|
|
|
|
|
—
|
|
|
6,196
|
|
Dividends and
distributions from equity investments
|
|
|
|
|
1,005
|
|
|
1,454
|
|
Acquisition of other
businesses
|
|
|
|
|
(1,500)
|
|
|
–
|
|
|
|
|
Net cash used in
investing activities
|
|
|
|
|
(98,546)
|
|
|
(251,444)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Repayment of asset
based credit facility
|
|
|
|
|
(37,096)
|
|
|
—
|
|
Repayment of notes
payable
|
|
|
|
|
(357)
|
|
|
(357)
|
|
Proceeds from term
loan
|
|
|
|
|
—
|
|
|
10,000
|
|
Repayment of term
loan
|
|
|
|
|
(14,429)
|
|
|
(17,924)
|
|
Proceeds from
issuance of senior notes
|
|
|
|
|
171,417
|
|
|
244,497
|
|
Redemption of senior
notes
|
|
|
|
|
(1,829)
|
|
|
—
|
|
Payment of debt
issuance costs
|
|
|
|
|
(2,761)
|
|
|
(4,212)
|
|
Payment of employment
taxes on vesting of restricted stock
|
|
|
|
|
(2,950)
|
|
|
(2,626)
|
|
Common dividends
paid
|
|
|
|
|
(25,822)
|
|
|
(25,049)
|
|
Preferred dividends
paid
|
|
|
|
|
(3,230)
|
|
|
—
|
|
Repurchase of common
stock
|
|
|
|
|
(38,348)
|
|
|
(4,273)
|
|
Repurchase of
warrants
|
|
|
|
|
—
|
|
|
(2,777)
|
|
Distribution to
noncontrolling interests
|
|
|
|
|
(3,013)
|
|
|
(1,095)
|
|
Proceeds from
issuance of preferred stock
|
|
|
|
|
36,007
|
|
|
—
|
|
|
|
|
Net cash provided by
financing activities
|
|
|
|
|
77,589
|
|
|
196,184
|
|
|
|
|
Increase (decrease)
in cash, cash equivalents and restricted cash
|
|
|
|
|
65,940
|
|
|
(9,037)
|
|
|
|
|
Effect of foreign
currency on cash, cash equivalents and restricted cash
|
|
|
|
|
407
|
|
|
(183)
|
|
|
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
|
|
|
|
66,347
|
|
|
(9,220)
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
|
|
104,739
|
|
|
180,278
|
Cash, cash
equivalents and restricted cash, end of period
|
|
|
|
$
|
171,086
|
|
$
|
171,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
|
|
$
|
75,231
|
|
$
|
52,931
|
|
Taxes
paid
|
|
|
|
$
|
1,460
|
|
$
|
5,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. RILEY
FINANCIAL, INC.
|
Segment Financial
Information
|
(Unaudited)
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Capital Markets
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - Services
and fees
|
$
|
89,032
|
|
$
|
68,062
|
|
$
|
280,303
|
|
$
|
187,768
|
|
Trading income
(losses) and fair value adjustments on loans
|
|
31,753
|
|
|
40,268
|
|
|
(36,142)
|
|
|
71,730
|
|
Interest income -
Loans and securities lending
|
|
26,026
|
|
|
25,766
|
|
|
72,383
|
|
|
54,147
|
|
Total revenues
|
|
|
146,811
|
|
|
134,096
|
|
|
316,544
|
|
|
313,645
|
|
Selling, general and
administrative expenses
|
|
(68,442)
|
|
|
(70,140)
|
|
|
(204,183)
|
|
|
(196,570)
|
|
Restructuring
(charge) recovery
|
|
(1,417)
|
|
|
—
|
|
|
(1,417)
|
|
|
4
|
|
Interest expense -
Securities lending and loan participations sold
|
|
(10,975)
|
|
|
(10,273)
|
|
|
(30,669)
|
|
|
(22,579)
|
|
Depreciation and
amortization
|
|
(1,166)
|
|
|
(1,281)
|
|
|
(3,362)
|
|
|
(3,844)
|
|
|
Segment
income
|
|
|
64,811
|
|
|
52,402
|
|
|
76,913
|
|
|
90,656
|
Auction and
Liquidation segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - Services
and fees
|
|
21,473
|
|
|
11,232
|
|
|
49,340
|
|
|
65,681
|
|
Revenues - Sale of
goods
|
|
|
22,712
|
|
|
54
|
|
|
23,757
|
|
|
1,230
|
|
Total revenues
|
|
|
44,185
|
|
|
11,286
|
|
|
73,097
|
|
|
66,911
|
|
Direct cost of
services
|
|
|
(18,373)
|
|
|
(2,371)
|
|
|
(36,406)
|
|
|
(21,584)
|
|
Cost of goods
sold
|
|
|
(9,046)
|
|
|
(126)
|
|
|
(9,360)
|
|
|
(992)
|
|
Selling, general and
administrative expenses
|
|
(4,625)
|
|
|
(2,835)
|
|
|
(8,880)
|
|
|
(9,045)
|
|
Restructuring
(charge) recovery
|
|
(140)
|
|
|
—
|
|
|
(140)
|
|
|
—
|
|
Depreciation and
amortization
|
|
(1)
|
|
|
(1)
|
|
|
(2)
|
|
|
(5)
|
|
|
Segment
income
|
|
|
12,000
|
|
|
5,953
|
|
|
18,309
|
|
|
35,285
|
Valuation and
Appraisal segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - Services
and fees
|
|
9,655
|
|
|
10,818
|
|
|
26,112
|
|
|
29,143
|
|
Selling, general and
administrative expenses
|
|
(6,632)
|
|
|
(7,331)
|
|
|
(19,643)
|
|
|
(21,492)
|
|
Depreciation and
amortization
|
|
(51)
|
|
|
(36)
|
|
|
(139)
|
|
|
(100)
|
|
|
Segment
income
|
|
|
2,972
|
|
|
3,451
|
|
|
6,330
|
|
|
7,551
|
Principal
Investments - United Online and magicJack segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - Services
and fees
|
|
20,663
|
|
|
22,999
|
|
|
63,037
|
|
|
74,383
|
|
Revenues - Sale of
goods
|
|
|
939
|
|
|
864
|
|
|
2,718
|
|
|
2,793
|
|
Total revenues
|
|
|
21,602
|
|
|
23,863
|
|
|
65,755
|
|
|
77,176
|
|
Direct cost of
services
|
|
|
(4,891)
|
|
|
(5,565)
|
|
|
(14,795)
|
|
|
(20,131)
|
|
Cost of goods
sold
|
|
|
(767)
|
|
|
(785)
|
|
|
(2,082)
|
|
|
(2,843)
|
|
Selling, general and
administrative expenses
|
|
(4,840)
|
|
|
(5,895)
|
|
|
(14,352)
|
|
|
(18,410)
|
|
Depreciation and
amortization
|
|
(2,736)
|
|
|
(2,956)
|
|
|
(8,466)
|
|
|
(9,719)
|
|
Restructuring
charge
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,703)
|
|
|
Segment
income
|
|
|
8,368
|
|
|
8,662
|
|
|
26,060
|
|
|
24,370
|
Brands
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - Services
and fees
|
|
4,000
|
|
|
—
|
|
|
11,007
|
|
|
—
|
|
Selling, general and
administrative expenses
|
|
(994)
|
|
|
—
|
|
|
(2,207)
|
|
|
—
|
|
Depreciation and
amortization
|
|
(714)
|
|
|
—
|
|
|
(2,143)
|
|
|
—
|
|
Impairment of
tradenames
|
|
|
—
|
|
|
—
|
|
|
(12,500)
|
|
|
—
|
|
|
Segment income
(loss)
|
|
|
2,292
|
|
|
—
|
|
|
(5,843)
|
|
|
—
|
Consolidated
operating income from reportable segments
|
|
90,443
|
|
|
70,468
|
|
|
121,769
|
|
|
157,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and other
expenses
|
|
(6,942)
|
|
|
(10,617)
|
|
|
(28,072)
|
|
|
(28,778)
|
Interest
income
|
|
|
|
67
|
|
|
361
|
|
|
537
|
|
|
1,329
|
Income (loss) on
equity investments
|
|
409
|
|
|
1,113
|
|
|
(145)
|
|
|
(4,049)
|
Interest
expense
|
|
|
|
(16,374)
|
|
|
(12,772)
|
|
|
(48,537)
|
|
|
(35,130)
|
|
Income before income
taxes
|
|
|
67,603
|
|
|
48,553
|
|
|
45,552
|
|
|
91,234
|
Provision for
income taxes
|
|
|
(18,711)
|
|
|
(14,409)
|
|
|
(13,380)
|
|
|
(26,802)
|
|
Net income
|
|
|
|
48,892
|
|
|
34,144
|
|
|
32,172
|
|
|
64,432
|
Net income (loss)
attributable to noncontrolling interests
|
|
513
|
|
|
(158)
|
|
|
(1,382)
|
|
|
(50)
|
|
Net income
attributable to B. Riley Financial, Inc.
|
|
48,379
|
|
|
34,302
|
|
|
33,554
|
|
|
64,482
|
Preferred stock
dividends
|
|
|
1,088
|
|
|
—
|
|
|
3,230
|
|
|
—
|
|
Net income available
to common shareholders
|
$
|
47,291
|
|
$
|
34,302
|
|
$
|
30,324
|
|
$
|
64,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. RILEY
FINANCIAL, INC.
|
Adjusted EBITDA
and Operating Adjusted EBITDA Reconciliation
|
(Unaudited)
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
attributable to B. Riley Financial, Inc.
|
$
|
48,379
|
|
$
|
34,302
|
|
$
|
33,554
|
|
$
|
64,482
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
18,711
|
|
|
14,409
|
|
|
13,380
|
|
|
26,802
|
|
Interest
expense
|
|
16,374
|
|
|
12,772
|
|
|
48,537
|
|
|
35,130
|
|
Interest
income
|
|
|
(67)
|
|
|
(361)
|
|
|
(537)
|
|
|
(1,329)
|
|
Share based
payments
|
|
4,778
|
|
|
4,728
|
|
|
14,267
|
|
|
10,276
|
|
Depreciation and
amortization
|
|
4,886
|
|
|
4,473
|
|
|
14,765
|
|
|
14,217
|
|
Restructuring
costs
|
|
1,557
|
|
|
—
|
|
|
1,557
|
|
|
1,699
|
|
Impairment of
tradenames
|
|
—
|
|
|
—
|
|
|
12,500
|
|
|
—
|
|
Transactions related
costs and other
|
|
(485)
|
|
|
7
|
|
|
8,309
|
|
|
6,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA
adjustments
|
|
45,754
|
|
|
36,028
|
|
|
112,778
|
|
|
93,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
94,133
|
|
$
|
70,330
|
|
$
|
146,332
|
|
$
|
157,616
|
Operating EBITDA
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading (income)
losses and fair value adjustments on loans
|
(31,753)
|
|
|
(40,268)
|
|
|
36,142
|
|
|
(71,730)
|
|
Other investment
related expenses
|
|
4,842
|
|
|
5,138
|
|
|
2,412
|
|
|
11,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating
EBITDA Adjustments
|
|
(26,911)
|
|
|
(35,130)
|
|
|
38,554
|
|
|
(60,407)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Adjusted
EBITDA
|
$
|
67,222
|
|
$
|
35,200
|
|
$
|
184,886
|
|
$
|
97,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. RILEY
FINANCIAL, INC.
|
Adjusted Net
Income Reconciliation
|
(Unaudited)
|
(Dollars in
thousands, except share data)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
attributable to B. Riley Financial, Inc.
|
$
|
48,379
|
|
$
|
34,302
|
|
$
|
33,554
|
|
$
|
64,482
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based
payments
|
|
4,778
|
|
|
4,728
|
|
|
14,267
|
|
|
10,276
|
|
Amortization of
intangible assets
|
|
3,919
|
|
|
3,310
|
|
|
11,967
|
|
|
10,031
|
|
Restructuring
costs
|
|
1,557
|
|
|
—
|
|
|
1,557
|
|
|
1,699
|
|
Impairment of
tradenames
|
|
—
|
|
|
—
|
|
|
12,500
|
|
|
—
|
|
Transactions related
costs and other
|
|
(485)
|
|
|
7
|
|
|
8,309
|
|
|
6,339
|
|
Income tax effect of
adjusting entries
|
|
(2,725)
|
|
|
(2,380)
|
|
|
(13,456)
|
|
|
(8,185)
|
Adjusted net income
attributable to B. Riley Financial, Inc.
|
$
|
55,423
|
|
$
|
39,967
|
|
$
|
68,698
|
|
$
|
84,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted basic income
per share
|
$
|
2.18
|
|
$
|
1.51
|
|
$
|
2.67
|
|
$
|
3.21
|
|
Adjusted diluted
income per share
|
$
|
2.05
|
|
$
|
1.42
|
|
$
|
2.57
|
|
$
|
3.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to
calculate adjusted basic net income per share
|
|
25,446,292
|
|
|
26,556,223
|
|
|
25,699,735
|
|
|
26,351,839
|
Shares used to
calculate adjusted diluted net income per share
|
|
27,050,448
|
|
|
28,233,423
|
|
|
26,689,700
|
|
|
27,251,837
|
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SOURCE B. Riley Financial