May 1,2019

B. Riley Financial Reports First Quarter 2019 Financial Results

Declares Special Dividend of $0.18 Per Share in addition to Regular Dividend of $0.08 Per Share

Significant Increase in Q1 Revenue and Adjusted EBITDA

LOS ANGELES, May 01, 2019 (GLOBE NEWSWIRE) -- B. Riley Financial, Inc. (NASDAQ:RILY), a diversified financial services company which operates through several wholly-owned subsidiaries, announced results for the first quarter ended March 31, 2019.

First Quarter 2019 Highlights

  • Total revenues increased to $142.1 million from $95.8 million in Q1 2018
  • Adjusted EBITDA of $34.4 million compared to $16.1 million in Q1 2018
  • Net income of $8.0 million or $0.30 per diluted share
  • Adjusted net income of $16.4 million or $0.61 per diluted share

“We are pleased with our first quarter performance. The integration of GlassRatner and magicJack, as well as our continued focus to enhance our platform, has translated into meaningful top line growth and profitability improvement. We also saw positive results from our investment portfolio during the first quarter as financial markets significantly rebounded from the pullback at the end of 2018,” said Bryant Riley, Chairman and Co-CEO, B. Riley Financial. “Our Capital Markets and Principal Investments segments drove strong first quarter results, and while our Appraisals segment had a relatively soft quarter compared to historical standards, we are seeing improvements in this business for the second quarter. As we head into the second quarter and the remainder of 2019, we have a robust backlog in our retail liquidation business, including our current participation in the Payless ShoeSource and Gymboree store closing events, which should contribute meaningful results in future quarters. We continue to see a number of proprietary investment opportunities and I’m excited for the B. Riley platform as we expand our collection of distinct but complementary businesses into a comprehensive source of end-to-end solutions for our clients and partners.”

First Quarter 2019 Financial Summary
For the three months ended March 31, 2019, total revenues increased to $142.1 million compared to $95.8 million for the same year ago period, representing approximately 48 percent in total revenue growth year-over-year. Revenues increased across each of the company’s segments during the first quarter of 2019.

  • Capital MarketsSegment: Revenues increased to $85.3 million for the first quarter of 2019 compared to $60.3 million for the same year ago period. Capital markets segment income increased to $13.9 million from a loss of approximately $0.3 million for the same year ago period. The increase for this segment was primarily driven by the addition of GlassRatner Advisory & Capital Group, which the company acquired on August 1, 2018, and an increase in revenue from gains in our investment portfolio for the first quarter of 2019.
  • Auction and Liquidation Segment: Revenues increased to $20.7 million from $15.5 million for the same year ago period. Segment income increased to $11.5 million from $8.1 million for the same year ago period. Results for this segment are expected to vary from quarter-to-quarter and year-to-year due to the episodic nature of the liquidation market in which Great American Group conducts business.
  • Valuation and Appraisal Segment: Revenues for Great American Group Advisory & Valuations Services increased to $8.6 million from $8.5 million for the same year ago period. Segment income for the quarter totaled $1.4 million compared to $1.9 million for the same year ago period.
  • Principal Investments Segment: Revenues increased to $27.5 million from $11.4 million for the same year ago period. Segment income increased to $7.9 million compared to $4.9 million for the same year ago period. Results for this segment include United Online and magicJack vocalTec. The significant increase for this segment’s results was primarily driven by the addition of magicJack, which the company acquired on November 14, 2018.

Net income attributable to B. Riley Financial increased to $8.0 million or $0.30 per diluted share compared to $4.5 million or $0.17 per diluted share for the same year ago period.

Adjusted EBITDA increased to $34.4 million for the first quarter of 2019 compared to $16.1 million for the same year ago period. Adjusted EBITDA includes earnings before interest, taxes, depreciation, amortization, restructuring, share-based compensation, and transaction related and other costs. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term.)

Adjusted net income increased to $16.4 million or $0.61 per diluted share compared to $8.8 million or $0.32 per diluted share for the same year ago period. Adjusted net income excludes the impact of share-based payments, amortization of intangible assets, restructuring costs, transaction costs, and tax impact of aforementioned adjustments. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term.)

As of March 31, 2019, B. Riley Financial had $163.5 million in cash and cash equivalents, $7.5 million in restricted cash, $22.4 million due from clearing brokers, $53.4 million of loans receivable, $252.9 million in net securities and other investments owned, and $555.4 million in total debt. Total B. Riley Financial stockholders’ equity at March 31, 2019 was $263.4 million.

Declaration of Dividend
B. Riley Financial’s board of directors approved a special dividend of $0.18 per share in addition to the regular quarterly dividend of $0.08 per share, which will be paid on or about May 29, 2019 to stockholders of record as of May 15, 2019.

Conference Call
Bryant Riley, Chairman and Co-CEO; Tom Kelleher, Co-CEO; and Phillip Ahn, CFO and COO, will host a conference call today at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss the company’s financial and operational results, followed by a question and answer period.

Please call the conference line 10 minutes prior to the start time and an operator will register your name and organization. The call will be broadcast live and archived on the investor section of the company's website.

     
B. Riley Financial Q1 2019 Earnings Call
Date:   Wednesday, May 1, 2019
Time:   4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-Free:   1-855-327-6837
International:   1-631-891-4304

 

Replay Dial-In Numbers (Phone Replay Expires on May 8, 2019)
Toll-Free:   1-844-512-2921
International:   1-412-317-6671
Replay Pin:   10006694
     

For more information, visit ir.brileyfin.com.

About B. Riley Financial, Inc. (NASDAQ:RILY)
B. Riley Financial provides collaborative financial services and solutions tailored to fit the capital raising and financial advisory needs of public and private companies and high net worth individuals. The company operates through several wholly-owned subsidiaries, including B. Riley FBR, a full-service investment bank and institutional brokerage; Great American Group, a leading provider of asset disposition, appraisal, corporate advisory and valuation services; GlassRatner, a specialty financial advisory services and consulting firm; B. Riley Wealth Management, B. Riley Asset Management and B. Riley Alternatives, which offer investment management to institutional and high net worth investors; Great American Capital Partners, which originates and underwrites senior secured loans for asset-rich companies; and B. Riley Principal Investments, which invests in or acquires companies and assets with attractive return profiles.

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 2019. Other factors that could adversely affect our operating results and cash flows include (without limitation) those 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, 2018 under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019. 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 adjusted net income and 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 cash flow, excluding net interest expense, provisions for or benefit from income taxes, depreciation, amortization, fair value adjustment, transaction and other expenses, restructuring costs, and stock-based compensation 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
Investor Relations   Jo Anne McCusker
ir@brileyfin.com   jmccusker@brileyfin.com
(310) 966-1444   (646) 885-5425

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except par value)
 
    March 31,   December 31,
    2019   2018
    (Unaudited)      
Assets            
Assets:            
Cash and cash equivalents   $ 163,462     $ 179,440  
Restricted cash     7,491       838  
Due from clearing brokers     22,418       37,738  
Securities and other investments owned, at fair value     288,802       273,577  
Securities borrowed     827,242       931,346  
Accounts receivable, net     43,975       42,123  
Due from related parties     1,965       1,729  
Loans receivable     53,448       38,794  
Prepaid expenses and other assets     87,942       79,477  
Operating lease right-of-use assets     51,086        
Property and equipment, net     15,644       15,523  
Goodwill     223,243       223,368  
Other intangible assets, net     88,479       91,358  
Deferred income taxes     42,789       42,399  
Total assets   $ 1,917,986     $ 1,957,710  
Liabilities and Equity            
Liabilities:            
Accounts payable   $ 5,217     $ 5,646  
Accrued expenses and other liabilities     90,921       108,662  
Deferred revenue     69,959       69,066  
Due to partners     1,428       2,428  
Securities sold not yet purchased     35,948       37,623  
Securities loaned     824,833       930,522  
Mandatorily redeemable noncontrolling interests     4,529       4,633  
Operating lease liabilities     65,855        
Notes payable     1,193       1,550  
Term loan     89,138       79,166  
Senior notes payable     465,040       459,754  
Total liabilities     1,654,061       1,699,050  
             
Commitments and contingencies            
B. Riley Financial, Inc. stockholders' equity:            
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued            
Common stock, $0.0001 par value; 100,000,000 shares authorized; 26,525,216     2       2  
and 26,603,355 issued and outstanding as of March 31, 2019 and            
December 31, 2018, respectively            
Additional paid-in capital     257,888       258,638  
Retained earnings     7,468       1,579  
Accumulated other comprehensive loss     (1,991 )     (2,161 )
Total B. Riley Financial, Inc. stockholders' equity     263,367       258,058  
Noncontrolling interests     558       602  
Total equity     263,925       258,660  
Total liabilities and equity   $ 1,917,986     $ 1,957,710  

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Unaudited
(Dollars in thousands, except share data)
 
    Three Months Ended
    March 31,
    2019   2018
Revenues:            
Services and fees   $ 131,853     $ 88,449  
Interest income - Securities lending     9,330       7,291  
Sale of goods     945       38  
Total revenues     142,128       95,778  
Operating expenses:            
Direct cost of services     18,537       11,652  
Cost of goods sold     1,119       41  
Selling, general and administrative expenses     90,543       68,098  
Restructuring charge     147       217  
Interest expense - Securities lending     6,804       5,168  
Total operating expenses     117,150       85,176  
Operating income     24,978       10,602  
Other income (expense):            
Interest income     637       128  
Loss from equity investments     (3,762 )     (672 )
Interest expense     (10,770 )     (4,227 )
Income before income taxes     11,083       5,831  
Provision for income taxes     (3,104 )     (989 )
Net income     7,979       4,842  
Net (loss) income attributable to noncontrolling interests     (44 )     339  
Net income attributable to B. Riley Financial, Inc.   $ 8,023     $ 4,503  
             
Basic income per share   $ 0.31     $ 0.17  
Diluted income per share   $ 0.30     $ 0.17  
             
Weighted average basic shares outstanding     26,217,215       26,219,277  
Weighted average diluted shares outstanding     26,687,531       27,271,819  

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
 
    Three Months Ended March 31,
    2019   2018
Cash flows from operating activities:            
Net income   $ 7,979     $ 4,842  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:            
Depreciation and amortization     4,913       3,337  
Provision for doubtful accounts     233       305  
Share-based compensation     2,614       2,558  
Non-cash interest and other     736       186  
Effect of foreign currency on operations     130       (48 )
Loss from equity investments     3,762       672  
Deferred income taxes     (390 )      
Impairment of leaseholds and intangibles, lease loss accrual and loss on disposal of fixed assets     88       286  
Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests     169       175  
Change in operating assets and liabilities:            
Due from clearing brokers     15,320       (16,417 )
Securities and other investments owned     (15,225 )     (5,457 )
Securities borrowed     104,104       (54,003 )
Accounts receivable     (2,845 )     (8,078 )
Prepaid expenses and other assets     (3,706 )     (16,012 )
Accounts payable, accrued payroll and related expenses, accrued value     (1,251 )     (10,049 )
added tax payable and other accrued expenses            
Amounts due to/from related parties and partners     (1,236 )     473  
Securities sold, not yet purchased     (1,675 )     (8,555 )
Deferred revenue     893       378  
Securities loaned     (105,689 )     51,352  
Net cash provided by (used in) operating activities     8,924       (54,055 )
Cash flows from investing activities:            
Purchases of loans receivable     (20,154 )      
Repayment of loans receivable     5,500        
Purchases of property, equipment and intangible assets     (1,746 )     (693 )
Proceeds from sale of property, equipment and intangible assets     12        
Equity investments     (10,558 )     (3,575 )
Dividends from equity investments     433        
Net cash used in investing activities     (26,513 )     (4,268 )
Cash flows from financing activities:            
Repayment of notes payable     (357 )     (357 )
Proceeds from term loan     10,000        
Proceeds from issuance of senior notes     4,987       7,267  
Payment of debt issuance costs     (145 )     (76 )
Payment of employment taxes on vesting of restricted stock     (714 )     (1,125 )
Dividends paid     (2,606 )     (1,779 )
Repurchase of common stock     (2,650 )      
Distribution to noncontrolling interests     (274 )     (117 )
Net cash provided by financing activities     8,241       3,813  
Decrease in cash, cash equivalents and restricted cash     (9,348 )     (54,510 )
Effect of foreign currency on cash, cash equivalents and restricted cash     23       (314 )
Net decrease in cash, cash equivalents and restricted cash     (9,325 )     (54,824 )
Cash, cash equivalents and restricted cash, beginning of year     180,278       152,534  
Cash, cash equivalents and restricted cash, end of period   $ 170,953     $ 97,710  
             
Supplemental disclosures:            
Interest paid   $ 17,435     $ 9,008  
Taxes paid   $ 192     $ 136  

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Segment Financial Information
Unaudited
(Dollars in thousands)
 
    Three Months Ended
    March 31,
    2019   2018
Capital Markets segment:            
Revenues - Services and fees   $ 75,971     $ 53,038  
Interest income - Securities lending     9,330       7,291  
Total revenues     85,301       60,329  
Selling, general and administrative expenses     (63,389 )     (53,639 )
Restructuring recovery (charge)     29       (255 )
Interest expense - Securities lending     (6,804 )     (5,168 )
Depreciation and amortization     (1,276 )     (1,564 )
Segment income (loss)     13,861       (297 )
Auction and Liquidation segment:            
Revenues - Services and fees     20,709       15,517  
Direct cost of services     (6,274 )     (4,576 )
Cost of goods sold     (14 )     (1 )
Selling, general and administrative expenses     (2,915 )     (2,881 )
Depreciation and amortization     (2 )     (8 )
Segment income     11,504       8,051  
Valuation and Appraisal segment:            
Revenues - Services and fees     8,583       8,520  
Direct cost of services     (4,421 )     (4,198 )
Selling, general and administrative expenses     (2,766 )     (2,345 )
Depreciation and amortization     (33 )     (49 )
Segment income     1,363       1,928  
Principal Investments - United Online and magicJack segment:            
Revenues - Services and fees     26,590       11,374  
Revenues - Sale of goods     945       38  
Total revenues     27,535       11,412  
Direct cost of services     (7,842 )     (2,878 )
Cost of goods sold     (1,105 )     (40 )
Selling, general and administrative expenses     (7,020 )     (1,958 )
Depreciation and amortization     (3,463 )     (1,679 )
Restructuring charge     (176 )      
Segment income     7,929       4,857  
Consolidated operating income from reportable segments     34,657         14,539    
             
Corporate and other expenses (including restructuring     (9,679 )     (3,937 )
recovery of $38 during the three months ended March 31, 2018.)            
Interest income     637       128  
Loss on equity investments     (3,762 )     (672 )
Interest expense     (10,770 )     (4,227 )
Income before income taxes     11,083       5,831  
Provision for income taxes     (3,104 )     (989 )
Net income     7,979       4,842  
Net (loss) income attributable to noncontrolling interests     (44 )     339  
Net income attributable to B. Riley Financial, Inc.   $ 8,023     $ 4,503  

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Adjusted EBITDA Reconciliation
(Unaudited)
(Dollars in thousands)
 
    Three Months Ended
March 31,
    2019   2018
Net income attributable to B. Riley Financial, Inc.   $ 8,023     $ 4,503  
Adjustments:            
Provision for income taxes     3,104       989  
Interest expense     10,770       4,227  
Interest income     (637 )     (128 )
Share based payments     2,614       2,558  
Depreciation and amortization     4,913       3,337  
Restructuring costs     147       217  
Transactions related costs and other     5,496       354  
             
Total EBITDA adjustments     26,407       11,554  
             
Adjusted EBITDA   $ 34,430     $ 16,057  

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Adjusted Net Income Reconciliation
(Unaudited)
(Dollars in thousands, except share data)
 
    Three Months Ended
    March 31,
    2019   2018
Net income attributable to B. Riley Financial, Inc.   $ 8,023     $ 4,503  
Adjustments:            
Share based payments     2,614       2,558  
Amortization of intangible assets     3,377       2,160  
Restructuring costs     147       217  
Transactions related and other costs     5,496       354  
Income tax effect of adjusting entries     (3,245 )     (952 )
Adjusted net income attributable to B. Riley Financial, Inc.   $ 16,412     $ 8,840  
             
Adjusted income per common share:            
Adjusted basic income per share   $ 0.63     $ 0.34  
Adjusted diluted income per share   $ 0.61     $ 0.32  
             
Shares used to calculate adjusted basic net income per share     26,217,215       26,219,277  
Shares used to calculate adjusted diluted net income per share     26,687,531       27,271,819  

B Riley Financial Logo.jpg

 

Source: B. Riley Financial, Inc.