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): May 2, 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

         

(818) 884-3737

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class 

Common Stock, par value $0.0001 per share 

7.25% Senior Notes due 2027 

7.50% Senior Notes due 2027 

7.375% Senior Notes due 2023 

6.875% Senior Notes due 2023 

7.50% Senior Notes due 2021 

(Title of Class) 

Trading Symbol(s) 

RILY 

RILYG 

RILYZ 

RILYH 

RILYI 

RILYL

 

Name of each exchange on which registered

Nasdaq Global Market 

Nasdaq Global Market 

Nasdaq Global Market 

Nasdaq Global Market 

Nasdaq Global Market 

Nasdaq Global Market

 

 

Not Applicable

(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 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 7.01 Regulation FD Disclosure.

 

On May 2, 2019, B. Riley Financial, Inc. (the “Company”) issued a press release announcing the commencement of its public offering of $50,000,000 aggregate principal amount of senior notes due 2024. The Company expects to grant the underwriters a 30-day option to purchase up to an additional $7,500,000 aggregate principal amount of senior notes in connection with the offering solely to cover overallotments. A copy of the press release is attached hereto as Exhibit 99.1.

 

In addition, in connection with the public offering, the Company will be making road show presentations to certain existing and potential securityholders of the Company. The road show materials are attached hereto as Exhibit 99.2.

 

This Current Report on Form 8-K (and the exhibits attached hereto) may contain “forward-looking” statements as defined by the Private Securities Litigation Reform Act of 1995 or by the U.S. Securities and Exchange Commission (the “SEC”) in its rules, regulations and releases. These statements include, but are not limited to, the Company’s plans, objectives, expectations and intentions regarding the performance of its business, the terms and conditions and timing of the senior notes offering, the intended use of proceeds of the senior notes offering and other non-historical statements. These statements can be identified by the use of words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “continues,” “estimates,” “predicts,” “projects,” “forecasts,” and similar expressions. All forward looking statements are based on management’s current expectations and beliefs only as of the date of this report and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements, including the risks identified and discussed from time to time in the Company’s reports filed with the SEC, including the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2018 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2019. Readers are strongly encouraged to review carefully the full cautionary statements described in these reports. Except as required by law, the Company undertakes no obligation to revise or update publicly any forward-looking statements to reflect events or circumstances after the date of this report, or to reflect the occurrence of unanticipated events or circumstances.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

  99.1

Press release, dated May 2, 2019.

     
  99.2 Road Show Materials.

 

 

 

 

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.

 

May 2, 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 Announces Offering of $50 Million Senior Notes Due 2024

 and “BBB+” Rating from Egan-Jones

 

LOS ANGELES, CA – May 2, 2019 – B. Riley Financial, Inc. (NASDAQ: RILY) (the Company) today announced it has commenced an underwritten registered public offering of $50 million aggregate principal amount of senior notes due 2024, subject to market and certain other conditions. The Company expects to grant the underwriters a 30-day option to purchase additional senior notes in connection with the offering solely to cover overallotments. The Company and this issuance of notes both received an investment grade rating of “BBB+” from Egan-Jones Ratings Company, an independent, unaffiliated rating agency.

 

The Company expects to use the net proceeds of this offering for general corporate purposes.

 

B. Riley FBR, Janney Montgomery Scott, Ladenburg Thalmann and Incapital are acting as book-running managers for this offering. Boenning & Scattergood, National Securities Corporation, Wedbush Securities and William Blair are acting as co-managers.

 

The notes will be offered under the Company’s shelf registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (SEC). The offering of these notes will be made only by means of a prospectus supplement and accompanying base prospectus, which will be filed with the SEC. Copies of the prospectus supplement and the accompanying base prospectus may be obtained when available without charge from the offices of B. Riley FBR, at 1300 North 17th Street, Suite 1400, Arlington, VA 22209 or by calling (703) 312-9580 or by emailing prospectuses@brileyfbr.com. A copy of the prospectus supplement and accompanying base prospectus may also be obtained without charge by visiting the SEC website at www.sec.gov. This announcement shall not constitute an offer to sell or the solicitation of an offer to buy the notes, nor shall there be any sale of the notes in any jurisdiction in which such offer, solicitation or sale would not be permitted.

 

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 terms and conditions and timing of the senior notes offering and the intended use of proceeds. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements. Factors that could cause actual results to differ include (without limitation) the possibility that the notes offering will not be consummated at the expected time, on the expected terms, or at all; and the Company’s financial performance; and 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 is also 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.

 

Investor Contact

Investor Relations 

ir@brileyfin.com 

(310) 966-1444

 

Media Contact 

Jo Anne McCusker 

jmccusker@brileyfin.com 

(646) 885-5425

 

 

 

Exhibit 99.2

 

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NASDAQ:RILY May 2019

 

 

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Title Text FORWARD LOOKING STATEMENTS This presentation contains statements that are forward - looking statements within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended that are based on management’s current expectations and assumptions and are subject to risks and uncertainties . These forward looking statements can often be identified by their use of words such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “forecast,” “intends,” “may,” “outlook,” “plans,” “potential,” “predicts,” “projects,” “should,” “target,” “will,” “would” or the negative of these terms or other comparable terminology . Such forward looking statements include, but are not limited to, expressed or implied statements regarding future financial performance and future dividends, the effects of our business model, the effects of our balance sheet on our ability to pursue business opportunities, the effects and anticipated benefits of our acquisitions and related actions, the strength of our business segments, assessments of future opportunities and performance, expectations regarding future transactions, and the financial impact, size and consistency of returns and timing thereof, expectations regarding market dynamics, as well as statements regarding the effect of investments in our business segments . Because these forward - looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward - looking statements . Factors that could cause actual results to differ from those contained in the forward - looking statements include but are not limited to risks related to : volatility in our revenues and results of operations ; changing conditions in the financial markets ; our ability to generate sufficient revenues to achieve and maintain profitability ; the short term nature of our engagements ; the accuracy of our estimates and valuations of inventory or assets in “guarantee” based engagements ; competition in the asset management business ; potential losses related to our auction or liquidation engagements ; our dependence on communications, information and other systems and third parties ; potential losses related to purchase transactions in our auctions and liquidations business ; the potential loss of financial institution clients ; potential losses from or illiquidity of our proprietary investments ; changing economic and market conditions ; potential liability and harm to our reputation if we were to provide an inaccurate appraisal or valuation ; failure to successfully compete in any of our segments ; loss of key personnel ; our ability to borrow under our credit facilities or raise additional funds through offerings as necessary ; failure to comply with the terms of our credit agreements ; our ability to meet future capital requirements ; our ability to promptly and effectively integrate our business with that of magicJack ; and the diversion of management time on acquisition - related issues . 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“ and 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 presentation is issued, and B . Riley Financial, Inc . undertakes no duty to update this information . 2 Safe Harbor Statement

 

 

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Title Text Table of Contents 3 I. Transaction Summary & Credit Metrics II. B. Riley Financial at a Glance III. Segments Overview IV. Financial Overview V. Appendix

 

 

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Transaction Summary & Credit Metrics

 

 

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Title Text Transaction Summary ___________________________ (1) Actual offering size and pricing may differ materially from the figures shown ; offering size and pricing to be determined by negotiations between the Company and the underwriters . Issuer B. Riley Financial, Inc. Security Senior Unsecured Notes Proposed Ticker / Exchange RILYO / Nasdaq Offering Size $50,000,000 (1) Notes Offered 2,000,000 (1) Overallotment Option 15% Par Value $25.00 Coupon 6.875% area (1) Maturity The Notes will mature on May 31, 2024, unless redeemed prior to maturity. Call Feature The Notes may be redeemed for cash in whole or in part at any time at the Issuer’s option (i) on or after May 31, 2021 and prior to May 31, 2022, at a price equal to $25.50 per note, plus accrued and unpaid interest to, but excluding, the date of redemption, (ii) on or after May 31, 2022 and prior to May 31, 2023, at a price equal to $25.25 per note, plus accrued and unpaid interest to, but excluding, the date of redemption, and (iii) on or after May 31, 2023 and prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption. In each case, redemption shall be upon notice not fewer than 30 days and not more than 60 days prior to the date fixed for redemption. Use of Proceeds Net proceeds from this offering will be used for general corporate purposes. Expected Pricing Date 5/2/2019 Bookrunning Managers B. Riley FBR, Janney Montgomery Scott, Ladenburg Thalmann and Incapital Co - Managers Boenning & Scattergood, Inc., National Securities Corporation, Wedbush Securities and William Blair 5

 

 

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Title Text Credit Metrics 6 ______________________________________ (1) Includes impact of proposed $50M senior unsecured note offering. Actual offering size, pricing, and fees incurred may differ mat erially from the figures shown; offering size and pricing to be determined by negotiations between the Company and the underwriters. (2) The pro forma financial information does not reflect any other changes subsequent to March 31, 2019 and specifically excludes ap proximately $2.4M of incremental sales of senior notes under our at the market sale program. (3) Includes approximately $288.8M in securities and other investments owned minus $35.9M in securities sold not yet purchased. (4) Excludes operating lease liabilities. (5) For a definition of Adjusted EBITDA and a reconciliation to GAAP financial measures, please see the Appendix. (6) Pro forma adjustment to interest expense related to proposed note offering is calculated using a coupon rate of 6.875%. Pro Forma Credit Statistics 3/31/2019 B. Riley Pro Forma Pro Forma ($ in millions) Financial Adjustments (1) Total (1)(2) Cash and Cash Equivalents 163.5$ 48.1$ 211.6$ Net Securities and Other Investments Owned, at Fair Value (3) 252.9 - 252.9 Restricted Cash 7.5 - 7.5 Loans Receivable 53.4 - 53.4 Due from Clearing Brokers 22.4 - 22.4 Total Cash, Net Securities, and Other 499.7 48.1 547.8 Senior Notes Payable - Bonds 465.0 50.0 515.0 Term Loan 89.1 - 89.1 Notes Payable 1.2 - 1.2 Total Debt (4) 555.4 50.0 605.4 Cash, Securities and Other Investments Owned, Net of Debt (4) (55.7) (1.9) (57.6) LTM 3/31/2019 Revenue 469.3$ -$ 469.3$ LTM 3/31/2019 Adjusted EBITDA (5) 108.0 - 108.0 LTM 3/31/2019 Interest Expense (6) 39.9 3.4 43.4 Net Debt / LTM Adj. EBITDA (4)(5) 0.5x N/A 0.5x Total Debt / LTM Adj. EBITDA (4)(5) 5.1x N/A 5.6x LTM Adj. EBITDA / LTM Interest Expense (5)(6) 2.7x N/A 2.5x

 

 

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B. Riley Financial at a Glance

 

 

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Title Text B. Riley Financial (NASDAQ: RILY) At a Glance 8 B . Riley is a diversified provider of financial and business advisory services which invests in and acquires companies with attractive return profiles Gross Revenue Mix (2) Capital Markets 64% Auction & Liquidation 13% [CATEGORY NAME] [PERCENTAGE] Principal Investments 15% Headquartered in Los Angeles with over 1 , 000 ( 1 ) employees in offices across the U . S . as well as in Germany and Australia Investment Bank & Brokerage Asset Disposition & Appraisal Private Wealth & Retail Brokerage Financial Advisory & Consulting SEC Registered Investment Advisor; includes B. Riley Asset Management and Great American Capital Partners Invests in strong cash - flow companies with potential to generate attractive returns Subsidiaries ______________________________________ (1) As of April 29, 2019. (2) Based on March 31, 2019 LTM results. Footprint At a Glance

 

 

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Title Text Meaningful value created; translated into earnings growth History and Milestones 9 B. Riley Financial has developed a unique platform that offers diverse revenue streams and a full suite of end - to - end services and solutions for its clients and partners.

 

 

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Title Text Key Statistics 10 Trading Data Stock Price, at 4/29/19 $18.31 52 Week High/Low $23.70/$13.60 Shares Outstanding (1) 26.5M Public Float, est. (1) 76.0% Inst. Holdings (5) 46.4% Insider Holdings (1) 24.0% Balance Sheet Summary (1) Cash & Cash Equivalents $163.5M Marketable Securities, net (2) $252.9M Restricted Cash & Other (3) $83.4M Total Cash, Net Securities, and Other (2)(3) $499.7M Notes Payable $1.2M Term Loan $89.1M Senior Notes Payable $465.0M Total Debt (4) $555.4M $69.8M $89.6M $108.0M FY 2017 FY 2018 3/31/19 LTM $322.2M $423.0M $469.3M FY 2017 FY 2018 3/31/19 LTM Valuation Measures Market Cap $485.7M Enterprise Value (8) $541.4M EV/Revenue (6)(8) 1.2x EV/Adj. EBITDA (6)(7)(8) 5.0x Adjusted EBITDA (7)(9) Revenues (9) Financial Highlights (6) Revenues $469.3M Adj. EBITDA (7) $108.0M ______________________________________ (1) As of March 31, 2019 (2) Includes approximately $288.8M in securities and other investments owned net of $35.9M in securities sold not yet purcha sed . (3) Includes approximately $7.5M in restricted cash, $22.4M in due from clearing brokers, and $53.4M in loans receivable. (4) Total debt excludes operating lease liabilities. (5) Source : NASDAQ as of 4/29/19 . (6) Revenue and Adjusted EBITDA based on 3/31/19 LTM results. (7) For a definition of Adjusted EBITDA and a reconciliation to GAAP financial measures, please see the Appendix. (8) Enterprise value is defined as market capitalization, less cash and cash equivalents, restricted cash, amounts due from clear ing brokers, advances against customer contracts, loans receivable, and the net amount of securities and other investments owned and securities sold not purchased, plus notes payable, term loan and senior notes payable. (9) Excludes FBR & Co. results prior to 6/1/17, Wunderlich Investment Company, Inc. results prior to 7/3/17, GlassRatner Advisory & Capital Group LLC results prior to 8/1/18, and MagicJack Vocaltec Ltd. results prior to 11/14/18.

 

 

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Segments Overview

 

 

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Title Text Strong research - driven brokerage provider, servicing clients in the small and mid - cap marketplace Capital Markets Segment 12 B. Riley FBR is a leading, full service investment bank ♦ Offers corporate finance, M&A, capital raising, bankruptcy and restructuring services, equity research, sales and trading ♦ Quality research platform; leading equity offering franchise ● 80 investment banking professionals ● 50+ research professionals ● 95+ sales & trading professionals ♦ Deep sector expertise, buyer - seller relationships; broad distribution ● Coverage universe of 450+ companies (2) ● Market - maker in 450+ equity securities (2) ● Covers 1,100+ institutional investors (3) # 2 Research Analyst Rankings Leader in Small & Mid - Cap Coverage Top Earnings Estimator # 2 Thomson Reuters Starmine Awards 2018 Top Stock Pickers 3 Thomson Reuters Starmine Awards 2018 Top Wall Street Analysts # TipRanks Top Analysts for 2017 League Table Ranking Leader in 144A Equity Offerings (1) Rank Book - runner $MM No. % Share 1 B. Riley FBR $8,824.9 28 61% 2 Deutsche Bank $ 1,140.0 2 8% 3 DNB Markets $ 397.4 6 3% 4 Macquarie Group $ 369.7 5 3% 5 GMP Securities $ 350.8 12 2% 6 Canaccord Genuity $ 350.2 6 2% 7 Pareto Securities $ 321.5 7 2% 8 Astrup Fearnley $ 302.9 3 2% 9 BMO Capital $ 269.8 3 2% 10 Peters & Co $ 234.2 4 2% ______________________________________ (1) Dealogic , 144A Equity Offerings since December 31, 2008 to December 31, 2018 (2) As of April 2019 (3) As of February 2019

 

 

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Title Text Capital Markets Segment (cont.) 13 B. Riley Wealth Management is a full - service wealth management firm and registered investment advisor ♦ Offers comprehensive wealth management and brokerage services to individuals and families, corporations and non - profit organizations across the US ♦ Provides retirement planning, financial strategies, investment advisory, annuities and life insurance, separate account management, and corporate retirement plan advisory services Private wealth management business advising on over $10 billion in assets Key Statistics (1) Assets under Administration $10B+ Active Client Accounts 34,000+ B. Riley Wealth Financial Advisors 160+ Office Locations 20+ B. Riley Private Wealth Management Services Investment Management Education Planning Retirement Planning Trust Coordination ______________________________________ (1) As of March 31, 2019 Financial advisors benefit from access to B. Riley’s network of professionals and services including: ♦ Senior investment professionals and industry renown market strategists ♦ Capital markets syndicate deals through investment banking arm, B. Riley FBR ♦ Ancillary investment offerings from B. Riley Asset Management

 

 

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Title Text Great American Capital Partners (Direct Lending) & B. Riley Asset Management (Mutual Funds) Capital Markets Segment (cont.) 14 Great American Capital Partners manages direct lending funds with ability to invest $600M+ in capital (1) ♦ Focused on providing financing to asset - rich companies seeking capital in addition to traditional debt ♦ Underwriting analysis based upon net recovery from liquidation of assets ♦ Leverages Great American Group’s deep experience in liquidation values and asset appraisals across industries B. Riley Asset Management offers proprietary investment products and tailored solutions to institutional and high net worth investors ♦ Mutual fund products based on the “top picks” of B. Riley FBR’s seasoned equity research analysts ♦ Benefits from enhanced distribution through large network of high net - worth, family office and traditional accounts B. Riley’s unique collection of businesses provide opportunity and insight for its fund management businesses. ______________________________________ (1) As of December 31, 2018

 

 

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Title Text Bankruptcy services provider complements B. Riley’s core restructuring and valuation capabilities; expands consulting services Capital Markets Segment (cont.) 15 GlassRatner is a national, specialty financial advisory services firm ♦ Advises companies, shareholders, creditors, and investors on complex business issues and critical Board - level agenda items ♦ Strong referral network among largest law firms, financial institutions ♦ International reach via BTG Global Advisory partner affiliation for cross - border engagements ♦ Offers significant lead generation opportunities for B. Riley platform including: ▪ Due diligence referrals from B. Riley FBR investment banking ▪ Appraisal, valuation and liquidation opportunities for Great American GlassRatner Services Bankruptcy and Restructuring Advisory Forensic Accounting and Litigation Support Corporate Finance and Valuation Real Estate Advisory Services ▪ Best Forensic Accounting Provider ▪ Best Litigation Valuation Provider ▪ Best End to End Litigation Consulting Firm ▪ Best Expert Witness Provider ▪ Valuation Service Provider of the Year ▪ Refinancing Deal of the Year 2018 Highlighted Awards & Accolades

 

 

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Title Text Liquidation business benefits from retail industry headwinds and shift in consumer shopping trends Auction & Liquidation Segment 16 Great American Group is highly - specialized in large - scale liquidations and store closings ♦ Pipeline remains strong with retail industry headwinds expected to continue to accelerate ♦ Utilizes all aspects of B. Riley network to create opportunity ♦ Ability to develop unique deal structures and leverage B. Riley’s balance sheet is a key differentiator ♦ Highly profitable despite cyclical nature of project - based segment revenue ♦ Global network of resources in Europe, Canada and Australia Liquidated assets of over $13 billion in aggregate value since 2013 Completed 6,800+ store closings since 2013 Illustrative Clients

 

 

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Title Text Provides valuation appraisals of assets collateralizing asset based loans Appraisal & Valuation Segment 17 Great American Group Advisory & Valuation Services is one of the largest appraisal practices in the U.S. ♦ Primary clients include large ABL financial institutions, non - bank lenders, direct - lending hedge funds, and private equity firms ♦ Engages in appraisals of retail inventory, machinery & equipment, corporate valuation, and intellectual property ♦ High recurring business rate among financial institution clients ♦ Provides opportunities and expertise for Direct Lending fund Illustrative Clients ~1,275 ~1,350 ~1,475 FY 2016 FY 2017 FY 2018 Annual Completed Appraisals Appraised assets in excess of $200 billion since 2016

 

 

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Title Text Invests in companies with strong cash - flow profiles with potential to generate attractive returns Principal Investments Segment 18 Operationally - focused, control equity investments which leverage B. Riley Financial’s expertise and resources: ♦ United Online (acquired July 2016) ● Internet access subscription and online advertising produce high gross margins; predictable subscriber attrition ● Low overhead from successful execution of cost synergies; highly profitable business generating significant cash flows ♦ bebe stores (OTCQB:BEBE) (acquired 29% ownership in January 2018) ● Assisted in bebe’s transformation into online - only retailer; streamlined operations to achieve significant cost savings ● bebe’s net operating losses provide opportunity to develop a platform to generate attractive investment yields ♦ magicJack VocalTec (acquired in November 2018) ● Offers potential operational synergies with United Online

 

 

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Financial Overview

 

 

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Title Text Historical Financial Results for B. Riley Financial Financial Highlights 20 B. Riley Financial Condensed Consolidated Statements of Income (1) (000’s) FY 2017 FY 2018 3/31/19 LTM Q2 2018 Q3 2018 Q4 2018 Q1 2019 Total Revenues $322,176 $422,991 $469,341 $125,501 $99,681 $102,031 $142,128 Operating Income (Loss) 28,844 45,384 59,760 28,478 12,838 (6,534) 24,978 Net Income (Loss) $11,556 $15,509 $19,029 $16,997 $2,814 ($8,805) $8,023 Other Financial Measures (1) (000’s) FY 2017 FY 2018 3/31/19 LTM Q2 2018 Q3 2018 Q4 2018 Q1 2019 Adjusted EBITDA (2) $69,783 $89,631 $108,004 $41,371 $21,006 $11,197 $34,430 Adjusted Net Income (3) $38,514 $38,776 $46,348 $22,783 $6,429 $724 $16,412 ______________________________________ (1) Excludes FBR & Co. results prior to 6/1/17, Wunderlich Investment Company, Inc. results prior to 7/3/17, GlassRatner Advisory & Capital Group LLC results prior to 8/1/18, and magicJack VocalTec Ltd. results prior to 11/14/18. (2) For a definition of Adjusted EBITDA and a reconciliation to GAAP financial measures, please see the Appendix. (3) For a definition of Adjusted Net Income and a reconciliation to GAAP financial measures, please see the Appendix .

 

 

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Title Text Historical Financial Results for B. Riley Financial Financial Highlights 21 Select Balance Sheet Items (000’s) 12/31/2018 3/31/2019 Cash and Cash Equivalents $179,440 $163,462 Restricted Cash 838 7,491 Due from Clearing Brokers 37,738 22,418 Securities and Other Investments Owned, at Fair Value 273,577 288,802 Loans Receivable, at cost 38,794 53,448 Securities Sold Not Yet Purchased 37,623 35,948 Due to Partners 2,428 1,428 Notes Payable 1,550 1,193 Term Loan 79,166 89,138 Senior Notes Payable 459,754 465,040 Total B. Riley Financial, Inc. Stockholders’ Equity $258,058 $263,367

 

 

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Appendix

 

 

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Title Text Historical Financial Results for B. Riley Financial Financial Highlights 23 ______________________________________ (1) Excludes FBR & Co. results prior to 6/1/17, Wunderlich Investment Company, Inc. results prior to 7/3/17, and GlassRatner Advi sor y & Capital Group LLC results prior to 8/1/18. (2) Excludes magicJack VocalTec Ltd. results prior to 11/14/18. (3) Adjusted EBITDA: earnings before interest expense, interest income, provision for or benefit from income taxes, depreciation and amortization, share - based payments, fair value adjustments, litigation settlement, insurance settlement recovery, transactions - related costs, and restructuring costs. B. Riley Financial Segment Income (000’s) FY 2017 FY 2018 3/31/19 LTM Q2 2018 Q3 2018 Q4 2018 Q1 2019 Revenues: Capital Markets (1) $189,723 $275,066 $300,038 $77,785 $76,343 $60,609 $85,301 Auction and Liquidation 47,379 54,986 60,178 26,836 2,507 10,126 20,709 Valuation and Appraisal 33,331 38,705 38,768 9,459 9,404 11,322 8,583 Principal Investments - UOL and MJ (2) 51,743 54,234 70,357 11,421 11,427 19,974 27,535 Total Revenue 322,176 422,991 469,341 125,501 99,681 102,031 142,128 Segment Operating Income (Loss): Capital Markets (1) 15,931 10,152 24,310 12,019 10,974 (12,544) 13,861 Auction and Liquidation 11,186 27,013 30,466 16,346 349 2,267 11,504 Valuation and Appraisal 9,713 11,097 10,532 2,868 2,902 3,399 1,363 Principal Investments - UOL and MJ (2) 19,503 19,448 22,520 4,741 4,118 5,732 7,929 Total Segment Income (Loss) 56,333 67,710 87,828 35,974 18,343 (1,146) 34,657 Corporate and Other Expenses (27,489) (22,326) (28,068) (7,496) (5,505) (5,388) (9,679) Adjusted EBITDA (3) $69,783 $89,631 $108,004 $41,371 $21,006 $11,197 $34,430

 

 

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Title Text Historical Financial Results for B. Riley Financial Non - GAAP Financial Measures 24 ______________________________________ (1) Excludes FBR & Co. results prior to 6/1/17, Wunderlich Investment Company, Inc. results prior to 7/3/17, GlassRatner Advisory & Capital Group LLC results prior to 8/1/18, and magicJack VocalTec Ltd. results prior to 11/14/18. (2) FY 2017 includes $9.0M fair value adjustment. (3) In addition to restructuring costs, FY 2017 includes $6.0M insurance settlement recovery, and Q4 and FY 2018 include $0.5M li tig ation settlement. B. Riley Financial Adjusted EBITDA Reconciliation (1) (000’s) FY 2017 FY 2018 3/31/19 LTM Q2 2018 Q3 2018 Q4 2018 Q1 2019 Net Income (Loss) $11,556 $15,509 $19,029 $16,997 $2,814 ($8,805) $8,023 Provision for (Benefit from) Income Taxes 8,510 4,903 7,018 5,377 2,046 (3,509) 3,104 Interest Expense, net 7,962 32,067 38,101 10,193 8,898 8,877 10,133 Depreciation and Amortization 11,140 13,809 15,385 3,333 3,098 4,041 4,913 Share-based Compensation and Fair Value Adjustment (2) 16,950 11,596 11,652 2,678 3,074 3,286 2,614 Transaction-Related Costs 7,291 2,741 7,883 1,191 648 548 5,496 Restructuring Costs and Other (3) 6,374 9,006 8,936 1,602 428 6,759 147 Total Adjustments 58,227 74,122 88,975 24,374 18,192 20,002 26,407 Adjusted EBITDA $69,783 $89,631 $108,004 $41,371 $21,006 $11,197 $34,430

 

 

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Title Text Historical Financial Results for B. Riley Financial Non - GAAP Financial Measures 25 ______________________________________ (1) Excludes FBR & Co. results prior to 6/1/17, Wunderlich Investment Company, Inc. results prior to 7/3/17, GlassRatner Advisory & Capital Group LLC results prior to 8/1/18, and magicJack VocalTec Ltd. results prior to 11/14/18. (2) FY 2017 includes $9.0M fair value adjustment. (3) In addition to restructuring costs, FY 2017 includes $6.0M insurance settlement recovery, and Q4 and FY 2018 include $0.5M li tig ation settlement . B. Riley Financial Adjusted Net Income Reconciliation (1) (000’s) FY 2017 FY 2018 3/31/19 LTM Q2 2018 Q3 2018 Q4 2018 Q1 2019 Net Income (Loss) $11,556 $15,509 $19,029 $16,997 $2,814 ($8,805) $8,023 Amortization of Intangible Assets 7,422 9,133 10,350 2,146 2,093 2,734 3,377 Share-based Compensation and Fair Value Adjustment (2) 16,950 11,596 11,652 2,678 3,074 3,286 2,614 Transaction-Related Costs 7,291 2,741 7,883 1,191 648 548 5,496 Restructuring Costs and Other (3) 6,374 9,006 8,936 1,602 428 6,759 147 Income Tax Effect of Adjusting Entries (15,741) (9,209) (11,502) (1,831) (2,628) (3,798) (3,245) 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 - - - - - - Total Adjustments 26,958 23,267 27,319 5,786 3,615 9,529 8,389 Adjusted Net Income $38,514 $38,776 $46,348 $22,783 $6,429 $724 $16,412

 

 

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