RILY B Riley Financial Inc

On January 12, 2021, B. Riley Financial, Inc. (the “Company”) announced preliminary, unaudited estimates of results for the three months and twelve months ended December 31, 2020 based on currently available information (“Preliminary Estimates”). These Preliminary Estimates are being announced in connection with an offering of the Company’s common stock (the “Offering”). In connection with the Offering, the Company filed a preliminary prospectus supplement (the “Preliminary Prospectus Supplement”) with the Securities and Exchange Commission (“SEC”) and issued a press release announcing the launch of the Offering. The Preliminary Prospectus Supplement contains the Preliminary Estimates.

The Preliminary Estimates are not a comprehensive statement of our financial results for the three months and twelve months ended December 31, 2020. We caution that our final results for the three months and twelve months ended December 31, 2020 that we will file with the SEC could vary significantly from these Preliminary Estimates as a result of the completion of our customary year-end closing, review and audit procedures and other developments arising between now and the time that our financial results for the three months and twelve months ended December 31, 2020 are finalized. These preliminary estimates should not be viewed as a substitute for complete financial statements prepared in accordance with GAAP and they are not necessarily indicative of the results to be achieved in any future period. Accordingly, you should not place undue reliance on these preliminary estimates. The preliminary estimates of results included below have been prepared by, and is the responsibility of, the Company’s management. Marcum LLP (“Marcum”), the Company’s independent registered public accounting firm, has not audited, reviewed, compiled or performed any procedures with respect to the accompanying preliminary financial data. Accordingly, Marcum does not express an opinion or any other form of assurance with respect thereto.

For the three months ended December 31, 2020, we estimate that the net income attributable to the Company will be within the range of $162 million and $167 million, or $6.18 to $6.38 per diluted share. This compares to $17.1 million, or $0.59 per diluted share, for the three months ended December 31, 2019. For the twelve months ended December 31, 2020, we estimate that the net income attributable to the Company shall be within the range of $196 million and $201 million, or $7.20 to $7.39 per diluted share, compared to $81.6 million or $2.95 per diluted share, for the twelve months ended December 31, 2019.

For the three months ended December 31, 2020, we estimate that our adjusted EBITDA will be within the range of $253 million and $260 million compared to $50.3 million for the three months ended December 31, 2019. For the twelve months ended December 31, 2020, we estimate that our adjusted EBITDA will be within the range of $399 million and $407 million compared to $207.9 million for the twelve months ended December 31, 2019. Investment adjusted EBITDA for the three months and twelve months ended December 31, 2020 is estimated to be within the range of $133 million and $135 million and $94 million and $97 million, respectively. Operating adjusted EBITDA for the three months and twelve months ended December 31, 2020 is estimated to be within the range of $120 million and $125 million and $305 million and $310 million, respectively. As of December 31, 2020, the Company estimates its cash and investments balance to be approximately $1.3 billion, with over $300 million in total cash and investments, net of debt.

Certain of the information set forth herein, including operating revenue, adjusted EBITDA, operating adjusted EBITDA, investment adjusted EBITDA and total cash and investments, net of debt, may be considered non-GAAP financial measures. We believe this information is useful to investors because it provides a basis for measuring our available capital resources, the operating performance of our business and our revenues and our 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 tradenames, 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, (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, and (v) in the case of total cash and investments, net of debt, this includes total cash, net securities and investments, and other minus total debt, that would normally be included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles (“GAAP”). In addition, our management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating our 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 us may not be comparable to similarly titled amounts reported by other companies. The following is a reconciliation of Net Income estimates to Adjusted EBITDA and Operating Adjusted EBITDA to the corresponding GAAP measure (in thousands), as well as a reconciliation of diluted income per common share:

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended (the “Securities Act”), except as expressly set forth by specific reference in such filing.