UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 5, 2019

 

B. RILEY FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

 

         
Delaware   001-37503   27-0223495
         

(State or other jurisdiction

of incorporation)

  (Commission File Number)   (IRS Employer Identification No.)

 

     

21255 Burbank Boulevard, Suite 400

Woodland Hills, California

  91367
     
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (818) 884-3737

 

(Former name or former address, if changed since last report.)  

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

 

 

 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On March 5, 2019, B. Riley Financial, Inc. issued a press release reporting its financial results for the fiscal quarter and full year ended December 31, 2018. A copy of the press release is attached hereto as Exhibit 99.1.

 

The information set forth in this Current Report, including Exhibit 99.1 attached 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”), or otherwise subject to the liabilities of such section. The information in this Current Report, including Exhibit 99.1 attached hereto, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing to this Current Report.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

     

Exhibit

No.

  Description
99.1   Earnings Release dated March 5, 2019
     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

         
March 5, 2019

B. RILEY FINANCIAL, INC.

 

 
  By:   /s/ Phillip J. Ahn                                   
    Name:  Phillip J. Ahn  
    Title:  

Chief Financial Officer and

Chief Operating Officer

 
 
           

 

 

 

 

 

Exhibit 99.1

 

 

 

B. Riley Financial Reports Fourth Quarter and Full Year 2018 Financial Results

 

Results in Line with Previously Released Estimates for Q4 and FY 2018

Reiterates Previous 2019 Guidance

Declares Regular Dividend of $0.08 Per Share

 

LOS ANGELES, March 05, 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 fourth quarter and full year ended December 31, 2018 and reiterated guidance for 2019.

 

Fourth Quarter 2018 Highlights

Revenues of $102.0 million compared to $110.2 million in the same year ago period

Adjusted EBITDA of $11.2 million

Net loss of $8.8 million or $0.34 per diluted share (included restructuring charge of $6.3 million)

Adjusted net income of $0.7 million, or $0.03 per diluted share

 

Full Year 2018 Highlights

Revenues rose to $423.0 million from $322.2 million in the same year ago period

Adjusted EBITDA of $89.6 million

Net income of $15.5 million or $0.58 per diluted share

Adjusted net income of $38.8 million, or $1.45 per diluted share

 

“2018 was another year of profitable growth for B. Riley Financial. Our results reflect positive momentum across our collection of businesses as we continue to develop and expand our platform of assets. We have worked extensively at organic growth in each of our divisions in addition to revenue and cost synergies as we continuously integrate our various operating subsidiaries. To that end, we successfully onboarded GlassRatner and magicJack in 2018 and look forward to growing earnings and cash flow in those businesses,” said Bryant Riley, Chairman and Co-CEO, B. Riley Financial. “Looking ahead, we believe our platform, in partnership with our strong and nimble balance sheet, will continue to generate attractive returns on our capital. We are particularly excited about the opportunities for Great American Group as store closings across the retail industry continue to be active. This is evidenced by recent engagements with Payless ShoeSource and Gymboree in addition to our expectation of realizing significant revenues from the completion of Bon-Ton Stores’ asset liquidation in our results for the first half of 2019. Our valuation and appraisal business continues to provide steady earnings and revenue growth which we expect to continue in 2019. Lastly, we will continue to use our balance sheet to support our clients and as an engine to drive outsized returns over a long period of time. While the volatility in financial markets dampened our fourth quarter results, we have seen a rebound in the first quarter of 2019 and we view this activity as both core to our business and attractively positioned as we look to the rest of 2019 and beyond. We believe the company is stronger than ever and we remain excited for the opportunities ahead.”

 

Fourth Quarter 2018 Financial Summary

For the three months ended December 31, 2018, total revenues were $102.0 million compared to $110.2 million for the same year ago period. Revenues in the Auction and Liquidation, Valuation and Appraisal, and Principal Investments segments increased $5.9 million, $2.8 million and $7.0 million respectively compared to the same year ago period. Revenues in the Capital Markets segment for the fourth quarter of 2018 were down partly as a result of declines in the Company’s proprietary investment account which were in line with declines in the broader equity markets in Q4 2018.

 

 

 

 

Capital Markets Segment: Revenues totaled $60.6 million for the fourth quarter of 2018 compared to $84.4 million for the same year ago period. Capital Markets segment revenues included mark-to-market losses during the quarter. Segment loss of $12.5 million included $1.1 million of impairment of intangible assets, and $4.8 million of severance and other restructuring costs related to the rebrand of B. Riley Wealth Management.

Auction and Liquidation Segment: Revenues increased to $10.1 million from $4.2 million for the same year ago period. Segment income increased to $2.3 million from $0.1 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 Great American Group’s retail liquidation engagements.

Valuation and Appraisal Segment: Revenues increased to $11.3 million from $8.5 million for the same year ago period. Segment income for the quarter increased to $3.4 million from $2.5 million for the same year ago period. Fourth quarter results represented record revenue growth for Great American Group Advisory & Valuation Services primarily driven by an increase in appraisal engagements.

Principal Investments Segment: Revenues increased to $20.0 million from $13.0 million for the same year ago period. Segment income increased to $5.7 million compared to $5.3 million for the same year ago period. Results for this segment were primarily driven by United Online and partially by magicJack which the Company acquired on November 14, 2018.

 

The Company recorded a loss of $8.8 million or $0.34 per diluted share during the fourth quarter of 2018. Results for the fourth quarter of 2018 included a restructuring charge of $6.3 million, which comprised of $1.1 million of impairment of intangible assets, and $5.2 million of severance and other restructuring charges primarily related to the rebrand of B. Riley Wealth Management. This compared to a loss of $6.1 million or $0.23 per diluted share for the fourth quarter of 2017. The loss in the fourth quarter of 2017 included a one-time tax expense of $13.1 million in a form of non-cash charge related to the U.S Tax Cuts and Jobs Act.

 

Adjusted EBITDA totaled $11.2 million for the fourth quarter of 2018 compared to $21.4 million for the same year ago period. Adjusted EBITDA includes earnings before taxes, interest, depreciation and amortization, share-based payments, fair value adjustments, insurance settlement recovery, restructuring costs 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 totaled $0.7 million or $0.03 per diluted share for the fourth quarter of 2018. This compares to $11.6 million or $0.44 per diluted share for the fourth quarter of 2017. Adjusted net income excludes the impact of share-based payments, fair value adjustments, amortization of intangible assets, restructuring costs, insurance settlement recovery, transaction-related and other costs, tax impact of aforementioned adjustments and certain tax items. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term.)

 

Full Year 2018 Financial Summary

Total revenues increased $100.8 million to $423.0 million for the full year 2018 from $322.2 million for the same year ago period. Results for 2018 included a full year of revenues for B. Riley FBR and B. Riley Wealth Management. All four segments recorded an increase in revenues in 2018.

 

 

 

 

Capital Markets Segment: Revenues increased to $275.1 million from $189.7 million for the same year ago period. Results were driven primarily by an increase in revenues from investment banking, wealth management services, and consulting fees as result of the acquisition of GlassRatner on August 1, 2018. Segment income for the year totaled $10.2 million compared to $15.9 million for the same year ago period.

Auction and Liquidation Segment: Revenues increased to $55.0 million from $47.4 million in the same year ago period. Segment income increased to $27.0 million from $11.2 million for the same year ago period. Results for this segment were primarily driven by the firm’s involvement in several significant retail liquidations.

Valuation and Appraisal Segment: Revenues increased to $38.7 million from $33.3 million in the same year ago period, representing another record year for Great American Group Advisory & Valuation Services. Segment income totaled $11.1 million compared to $9.7 million for the same year ago period.

Principal Investments Segment: Revenues increased to $54.2 million from $51.7 million for the same year ago period. Segment income totaled $19.4 million compared to $19.5 million for the same year ago period. The increase in revenue was primarily attributable to the addition of magicJack in the fourth quarter.

 

Net income for the full year 2018 increased to $15.5 million or $0.58 per diluted share from $11.6 million or $0.48 per diluted share for the same year ago period.

 

Adjusted EBITDA for the full year 2018 increased to $89.6 million compared to $69.8 million for the same year ago period. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term.)

 

Adjusted net income for the full year 2018 increased to $38.8 million or $1.45 per diluted share. This compares to $38.5 million or $1.59 per diluted share for the same year ago period. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term.)

 

As of December 31, 2018, B. Riley Financial had $179.4 million in unrestricted cash and cash equivalents, approximately $0.8 million in restricted cash, $37.7 million due from clearing brokers, $38.8 million of loans receivable, $236.0 million in net securities and other investments owned, and $540.5 million in total debt. Total B. Riley Financial stockholders’ equity at December 31, 2018 was $258.1 million.

 

Full Year 2019 Guidance

The Company reiterates its previously-released guidance for the full year 2019 and forecasts adjusted EBITDA to be in the range of $115 million to $135 million and net income in the range of $39 million to $45 million.

 

The above financial results exclude any historical or anticipated effects of the pending dispute regarding the Rent-a-Center Merger Agreement. For additional information, investors may refer to the Company’s Current Report on Form 8-K filed on January 4, 2019. An adverse result in the trial regarding the purported termination of the Rent-a-Center Merger Agreement may cause anticipated results for 2019 to differ materially from those contained in this press release. The Company can provide no assurance about the outcome of that trial or any related actions that may arise related to the purported termination of that merger agreement.

 

 

 

 

Declaration of Dividend

B. Riley Financial’s board of directors has approved a regular quarterly dividend of $0.08 per share, which will be paid on or about March 28, 2019 to stockholders of record as of March 19, 2019.

 

Conference Call

B. Riley Financial will host a conference call today at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). Bryant Riley, Chairman and Co-CEO; Tom Kelleher, Co-CEO; and Phillip Ahn, CFO and COO, will discuss the Company’s financial and operational results, followed by a question and answer period. The conference call will be broadcast simultaneously and available for replay via the Company’s investor relations website. A replay of the call will be available on the site until March 12, 2019.

 

For more information, visit ir.brileyfin.com.

 

About B. Riley Financial, Inc. (NASDAQ:RILY)

B. Riley Financial, through its subsidiaries, 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 2018 and 2019 as well as express or implied statements regarding the outcome of the trial regarding the validity of Rent-A-Center’s purported termination of the Merger Agreement. Due to the inherent uncertainties of litigation, we may not prevail in the upcoming trial or related actions. Moreover, both the costs of defending lawsuits and any settlements or judgments against us could materially adversely affect our anticipated results of operations and cash flows. 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, 2017 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 Annual Report on Form 10-K for the year ended December 31, 2018. 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, insurance settlement recovery, 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.

 

Investor Contact

Investor Relations

ir@brileyfin.com

(310) 966-1444

 

Media Contact

Jo Anne McCusker

jmccusker@brileyfin.com

(646) 885-5425

 

 

 

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands, except par value)

 

   December 31,   December 31, 
   2018   2017 
   (Unaudited)     
Assets          
Assets        
Cash and cash equivalents  $179,440   $132,823 
Restricted cash   838    19,711 
Due from clearing brokers   37,738    31,479 
Securities and other investments owned, at fair value   273,577    145,360 
Securities borrowed   931,346    807,089 
Accounts receivable, net   42,123    20,015 
Due from related parties   1,729    5,689 
Advances against customer contracts       5,208 
Loans receivable   38,794     
Prepaid expenses and other assets   79,477    22,605 
Property and equipment, net   15,523    11,977 
Goodwill   223,368    98,771 
Other intangible assets, net   91,358    56,948 
Deferred income taxes   42,399    29,229 
Total assets  $1,957,710   $1,386,904 
Liabilities and Equity          
Liabilities          
Accounts payable  $5,646   $2,650 
Accrued expenses and other liabilities   108,662    71,685 
Deferred revenue   69,066    3,141 
Due to partners   2,428    1,578 
Securities sold not yet purchased   37,623    28,291 
Securities loaned   930,522    803,371 
Mandatorily redeemable noncontrolling interests   4,633    4,478 
Notes payable   1,550    2,243 
Term loan   79,166     
Senior notes payable   459,754    203,621 
Total liabilities   1,699,050    1,121,058 
           
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; 26,603,355 and 26,569,462 issued and outstanding as of December 31, 2018 and December 31, 2017, respectively   2    2 
Additional paid-in capital   258,638    259,980 
Retained earnings   1,579    6,582 
Accumulated other comprehensive loss   (2,161)   (534)
Total B. Riley Financial, Inc. stockholders' equity   258,058    266,030 
Noncontrolling interests   602    (184)
Total equity   258,660    265,846 
Total liabilities and equity  $1,957,710   $1,386,904 

 

 

 

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
   (Unaudited)   (Unaudited)   (Unaudited)     
Revenues:        
Services and fees  $92,569   $102,178   $390,555   $304,841 
Interest income - Securities lending   8,962    7,913    31,798    17,028 
Sale of goods   500    86    638    307 
Total revenues   102,031    110,177    422,991    322,176 
Operating expenses:                    
Direct cost of services   17,847    9,277    51,580    55,501 
Cost of goods sold   658    85    800    398 
Selling, general and administrative expenses   77,079    80,172    293,682    213,008 
Restructuring charge   6,259    890    8,506    12,374 
Interest expense - Securities lending   6,722    5,536    23,039    12,051 
Total operating expenses   108,565    95,960    377,607    293,332 
Operating (loss) income   (6,534)   14,217    45,384    28,844 
Other income (expense):                    
Interest income   590    62    1,326    420 
Income (loss) from equity investments   2,937    (280)   7,986    (437)
Interest expense   (9,467)   (3,187)   (33,393)   (8,382)
(Loss) income before income taxes   (12,474)   10,812    21,303    20,445 
Benefit from (provision for) income taxes   3,509    (16,263)   (4,903)   (8,510)
Net (loss) income   (8,965)   (5,451)   16,400    11,935 
Net (loss) income attributable to noncontrolling interests   (160)   662    891    379 
Net (loss) income attributable to B. Riley Financial, Inc.  $(8,805)  $(6,113)  $15,509   $11,556 
                     
Basic (loss) income per share  $(0.34)  $(0.23)  $0.60   $0.50 
Diluted (loss) income per share  $(0.34)  $(0.23)  $0.58   $0.48 
                     
Weighted average basic shares outstanding   26,177,560    26,150,502    25,937,305    23,181,388 
Weighted average diluted shares outstanding   26,177,560    26,150,502    26,764,856    24,290,904 

 

 

 

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Dollars in thousands)

 

   Year Ended December 31, 
   2018   2017 
   (Unaudited)     
Cash flows from operating activities:          
Net income  $16,400   $11,935 
Adjustments to reconcile net income to net cash used in operating activities:          
Depreciation and amortization   13,809    11,140 
Provision for doubtful accounts   1,308    1,066 
Share-based compensation   13,042    10,341 
Recovery of key man life insurance       (6,000)
Non-cash interest and other   4,068    456 
Effect of foreign currency on operations   (916)   (769)
(Income) loss from equity investments   (7,986)   437 
Deferred income taxes   1,990    5,729 
Impairment of leaseholds and intangibles, lease loss accrual and loss on disposal of fixed assets   4,142    3,602 
Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests   1,222    10,799 
Change in operating assets and liabilities:          
Due from clearing brokers   (6,259)   3,359 
Securities and other investments owned   (128,217)   (82,143)
Securities borrowed   (124,257)   47,595 
Accounts receivable and advances against customer contracts   (12,948)   1,614 
Prepaid expenses and other assets   (24,395)   (1,506)
Accounts payable, accrued payroll and related expenses, accrued value added tax payable and other accrued expenses   3,559    (30,374)
Amounts due to/from related parties and partners   4,705    (11,826)
Securities sold, not yet purchased   9,332    7,678 
Deferred revenue   (564)   (668)
Securities loaned   127,151    (64,255)
Net cash used in operating activities   (104,814)   (81,790)
Cash flows from investing activities:          
Purchases of loans receivable   (38,794)    
Acquisition of magicJack, net of cash acquired $53,875   (89,240)    
Acquisition of Wunderlich, net of cash acquired $4,259       (25,478)
Cash acquired from acquisition of FBR & Co.       15,738 
Acquisition of other businesses, net of cash acquired   (4,000)   (2,052)
Acquisition of United Online, net of cash acquired $125,542 in 2016       (10,381)
Purchases of property and equipment and intangible assets   (5,432)   (825)
Proceeds from key man life insurance       6,000 
Proceeds from sale of property and equipment and intangible assets   37    836 
Equity investments   (16,640)   (1,674)
Dividends from equity investments   2,628     
Net cash used in investing activities   (151,441)   (17,836)
Cash flows from financing activities:          
Proceeds from asset based credit facility   300,000    65,987 
Repayment of asset based credit facility   (300,000)   (65,987)
Proceeds from notes payable   51,020     
Repayment of notes payable   (51,713)   (8,336)
Payment of participating note payable and contingent consideration       (1,250)
Proceeds from term loan   80,000     
Proceeds from issuance of senior notes   258,997    179,471 
Payment of debt issuance costs   (7,260)   (4,289)
ESPP shares and payment of employment taxes on vesting of restricted stock   (3,731)   (3,486)
Dividends paid   (22,684)   (16,755)
Repurchase of common stock   (18,703)    
Distribution to noncontrolling interests   (1,067)   (11,261)
Net cash provided by financing activities   284,859    134,094 
Increase in cash, cash equivalents and restricted cash   28,604    34,468 
Effect of foreign currency on cash, cash equivalents and restricted cash   (860)   2,667 
Net increase in cash, cash equivalents and restricted cash   27,744    37,135 
Cash, cash equivalents and restricted cash, beginning of  year   152,534    115,399 
Cash, cash equivalents and restricted cash, end of year  $180,278   $152,534 
           
Supplemental disclosures:          
Interest paid  $50,103   $18,840 
Taxes paid  $6,497   $14,986 

 

 

 

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES

Segment Financial Information

(Dollars in thousands)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
   (Unaudited)   (Unaudited)   (Unaudited)     
Capital Markets segment:                    
Revenues - Services and fees  $51,647   $76,514   $243,268   $172,695 
Interest income - Securities lending   8,962    7,913    31,798    17,028 
    Total revenues   60,609    84,427    275,066    189,723 
Selling, general, and administrative expenses   (59,215)   (62,339)   (227,774)   (150,092)
Restructuring charge   (5,921)   (610)   (8,378)   (7,855)
Interest expense - Securities lending   (6,722)   (5,536)   (23,039)   (12,051)
Depreciation and amortization   (1,295)   (1,627)   (5,723)   (3,794)
Segment (loss) income   (12,544)   14,315    10,152    15,931 
Auction and Liquidation segment:                    
Revenues - Services and fees   10,111    4,197    54,923    47,376 
Revenues - Sale of goods   15    2    63    3 
Total revenues   10,126    4,199    54,986    47,379 
Direct cost of services   (7,364)   (2,359)   (19,627)   (27,841)
Cost of goods sold           (41)   (2)
Selling, general, and administrative expenses   (487)   (1,767)   (8,274)   (8,329)
Depreciation and amortization   (8)   (6)   (31)   (21)
Segment income   2,267    67    27,013    11,186 
Valuation and Appraisal segment:                    
Revenues - Services and fees   11,322    8,532    38,705    33,331 
Direct cost of services   (4,438)   (3,845)   (16,826)   (14,876)
Selling, general, and administrative expenses   (3,439)   (2,166)   (10,577)   (8,561)
Depreciation and amortization   (46)   (51)   (205)   (181)
Segment income   3,399    2,470    11,097    9,713 
Principal Investments - United Online and magicJack segment:                    
Revenues - Services and fees   19,489    12,935    53,659    51,439 
Revenues - Sale of goods   485    84    575    304 
    Total revenues   19,974    13,019    54,234    51,743 
Direct cost of services   (6,045)   (3,073)   (15,127)   (12,784)
Cost of goods sold   (658)   (85)   (759)   (396)
Selling, general, and administrative expenses   (4,641)   (2,768)   (10,962)   (11,304)
Depreciation and amortization   (2,560)   (1,720)   (7,600)   (7,033)
Restructuring charge   (338)   (90)   (338)   (723)
Segment income   5,732    5,283    19,448    19,503 
Consolidated operating (loss) income from reportable segments   (1,146)   22,135    67,710    56,333 
                     
Corporate and other expenses (including restructuring recovery of $210 for the year ended December 31, 2018; and restructuring charge of $190 and $3,796 for the three months and year ended December 31, 2017 respectively.)   (5,388)   (7,918)   (22,326)   (27,489)
Interest income   590    62    1,326    420 
Income (loss) on equity investments   2,937    (280)   7,986    (437)
Interest expense   (9,467)   (3,187)   (33,393)   (8,382)
(Loss) income before income taxes   (12,474)   10,812    21,303    20,445 
Benefit from (provision for) income taxes   3,509    (16,263)   (4,903)   (8,510)
Net (loss) income   (8,965)   (5,451)   16,400    11,935 
Net (loss) income attributable to noncontrolling interests   (160)   662    891    379 
Net (loss) income attributable to B. Riley Financial, Inc.  $(8,805)  $(6,113)  $15,509   $11,556 

 

 

 

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES

Adjusted EBITDA Reconciliation

(Unaudited)

(Dollars in thousands)

 

   Three Months Ended   Yead Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net (loss) income attributable to B. Riley Financial, Inc.  $(8,805)  $(6,113)  $15,509   $11,556 
                     
Adjustments:                    
(Benefit from) provision for  income taxes   (3,509)   16,263    4,903    8,510 
Interest expense   9,467    3,187    33,393    8,382 
Interest income   (590)   (62)   (1,326)   (420)
Share based payments   3,286    2,662    11,596    7,950 
Depreciation and amortization   4,041    3,434    13,809    11,140 
Restructuring costs   6,259    890    8,506    12,374 
Transactions related and other costs   1,048    1,136    3,241    7,291 
Fair value adjustment               9,000 
Insurance settlement recovery               (6,000)
Total EBITDA adjustments   20,002    27,510    74,122    58,227 
                     
Adjusted EBITDA  $11,197   $21,397   $89,631   $69,783 

 

 

 

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES

Adjusted Net Income Reconciliation

(Unaudited)

(Dollars in thousands, except share data)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net (loss) income attributable to B. Riley Financial, Inc.  $(8,805)  $(6,113)  $15,509   $11,556 
Adjustments:                    
Share based payments   3,286    2,662    11,596    7,950 
Amortization of intangible assets   2,734    2,174    9,133    7,422 
Restructuring costs   6,259    890    8,506    12,374 
Transactions related and other costs   1,048    1,136    3,241    7,291 
Fair value adjustment               9,000 
Insurance settlement recovery               (6,000)
Income tax effect of adjusting entries   (3,798)   (2,172)   (9,209)   (15,741)
Tax benefit from tax election to treat acquisition of UOL as a taxable business combination               (8,389)
Tax expense from new tax legislation change - Reduction in Federal rate from 35% to 21%       13,051        13,051 
Adjusted net income attributable to B. Riley Financial, Inc.  $724   $11,628   $38,776   $38,514 
                     
Adjusted income per common share:                    
Adjusted basic income per share  $0.03   $0.44   $1.49   $1.66 
Adjusted diluted income per share  $0.03   $0.44   $1.45   $1.59 
                     
Shares used to calculate adjusted basic net income per share   26,177,560    26,150,502    25,937,305    23,181,388 
Shares used to calculate adjusted diluted net income per share   26,177,560    26,150,502    26,764,856    24,290,904 

 

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