B. Riley Financial
Aug 10, 2015
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B. Riley Financial Reports Second Quarter 2015 Results

- Record Quarterly Revenue of $45.5M Drives Adjusted EBITDA of $15.5M and Net Income of $8.7M or $0.53 per Diluted Share
- Dividend of $0.20 per Share Declared for Stockholders of Record as of August 25, 2015

LOS ANGELES, Aug. 10, 2015 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY), a diversified provider of financial and business advisory services, reported financial results for the second quarter ended June 30, 2015.

B. Riley Financial logo

Second Quarter 2015 Operational Highlights

  • Completed retail liquidation transactions for Target Canada, Schoenenreus and CACHE stores. 
  • Capital Markets segment revenue increased to $13.7 million, representing an 82% increase over the proforma segment revenue for the prior-year period. 
  • Great American Capital Partners led a $17.5 million senior secured term loan financing to Hancock Fabrics.

Second Quarter 2015 Financial Results

Total revenues for the second quarter of 2015 were a record $45.5 million, which represented an increase of 204% compared to $15.0 million in the same year-ago period. The substantial improvement was primarily attributable to the increase in income from operations from the company's auction and liquidation segment, as well as the inclusion of B. Riley & Co.'s full quarter results in the second quarter of 2015. The total revenue of $45.5 million in the second quarter represented an increase of 106% compared to proforma revenue of $22.1 million in the year-ago period, which includes a full quarter of B. Riley & Co.'s results.

  • Capital Markets Segment: B. Riley & Co.'s investment banking, wealth management, and sales and trading revenue totaled $13.7 million, and generated $4.1 million of segment income. This compares to revenue of $367,000 and a loss of $163,000 in the year-ago period, which included results for B. Riley & Co.'s operations from June 18, 2014 to June 30, 2014. The $13.7 million of segment revenue represents an increase of 82% over proforma segment revenue of $7.5 million in the year-ago period, which includes a full quarter of B. Riley & Co. results. 
  • Valuation and Appraisal Segment: Revenue was $7.8 million compared to $8.5 million in the same year-ago period. Segment income for the quarter totaled $2.3 million, a decrease of 2% compared to $2.3 million from the year-ago period.
  • Auction and Liquidation Segment: Revenue totaled $24.0 million, an increase from $6.1 million in the same year-ago period. Revenue from the sale of goods was $6.0 million compared to none in the same year-ago period. Segment income for the quarter totaled $11.9 million, a significant increase from $629,000 in the same year-ago period.

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and amortization of non-cash stock-based compensation) for the second quarter of 2015 increased to $15.5 million from $2.9 million in the same year-ago period (see "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP term).

Net income for the second quarter of 2015 totaled $8.7 million or $0.53 per diluted share, an improvement from a net loss of $0.8 million or $(0.16) per diluted share in the same year-ago period.

At June 30, 2015, the company had $42.1 million of unrestricted cash, $0.5 million of restricted cash, and $5.6 million of net investments in securities. Shareholder equity at June 30, 2015 totaled $112.5 million.

Declaration of Dividend

The company's board of directors approved a $0.20 per share dividend, which will be paid on or about September 10, 2015 to stockholders of record as of August 25, 2015.

Management Commentary

"Q2 was a record quarter for B. Riley Financial," said the company's chairman and CEO, Bryant Riley. "Our strong financial performance was driven by a number of key factors, including the completion of several large retail liquidation projects, as well as continued momentum in our investment banking and sales and trading practices. Our solid results also demonstrate the earnings power of our platform, as well as our ability to capture synergies, further diversify our revenue base, and capitalize on attractive opportunities in our capital markets and liquidation businesses.

"During Q2, we continued to grow our business by expanding our portfolio of services and team of professionals. This included launching our direct lending platform, GA Capital Partners; the bolstering of our technology banking practice, with the addition of the J. Moore team; and the integration of MK Capital Advisors, which was rebranded as B. Riley Wealth Management. We plan to continue to selectively pursue opportunities that we believe provide synergistic benefits to our overall company. 

"We are encouraged by the results we were able to achieve in the first half of the year. We will continue to focus on increasing our recurring revenue streams, maintaining operating discipline, and opportunistically creating outsized opportunities."

Conference Call

B. Riley Financial will host an investor conference call today (August 10, 2015) at 4:30 p.m. Eastern time. The company's chairman and CEO, Bryant Riley, President Tom Kelleher, and CFO and COO, Phillip Ahn, will host the conference call, followed by a question and answer period.

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

Toll-Free Number: 877-407-0789
International Number: 201-689-8562

The conference call will be broadcasted live and available for replay via the investor relations section of the company's website at http://ir.brileyfin.com

A replay of the call will be available after 7:30 p.m. Eastern time through August 17, 2015.

Toll-Free Replay Number: 877-870-5176
International Replay Number: 858-384-5517

Replay ID: 13616485

About B. Riley Financial, Inc.

B. Riley Financial, Inc. (NASDAQ: RILY) provides collaborative financial services and solutions through several subsidiaries, including: B. Riley & Co. LLC, a leading investment bank which provides corporate finance, research, and sales & trading to corporate, institutional and high net worth individual clients; Great American Group, LLC, a leading provider of advisory and valuation services, asset disposition and auction solutions, and commercial lending services; B. Riley Capital Management, LLC, an SEC registered Investment Advisor, which includes B. Riley Asset Management, a provider of investment products to institutional and high net worth investors, and B. Riley Wealth Management (formally MK Capital Advisors), a multi-family office practice and wealth management firm focused on the needs of ultra-high net worth individuals and families; and Great American Capital Partners, a provider of senior secured loans and second lien secured loan facilities to middle market public and private U.S. companies.

B. Riley Financial is headquartered in Los Angeles with offices in major financial markets throughout the United States and Europe. For more information on B. Riley Financial, visit www.brileyfin.com.

Forward-Looking Statements

This press release may contain forward-looking statements by B. Riley Financial that are not based on historical fact, including, without limitation, statements containing the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions and statements. Such forward looking statements include, but are not limited to, express or implied statements regarding future financial performance, as well as statements regarding how management sees opportunities to grow and broaden the firm. 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. Such factors include our ability to successfully integrate recent acquisitions, loss of key personnel, our ability to manage growth, the potential loss of financial institution clients, the timing of completion of significant engagements, and those risks described from time to time in B. Riley Financial's filings with the SEC, including, without limitation, the risks described in B. Riley Financial's (f/k/a Great American Group, Inc.) Annual Report on Form 10-K for the year ended December 31, 2014 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." 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 undertakes no duty to update this information.

Note Regarding Use of Non-GAAP Financial Measures

Certain of the information set forth herein, including adjusted EBITDA, pro forma financial information and proforma 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 income taxes, depreciation, amortization 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. The non-GAAP measures are described above and are reconciled to the corresponding GAAP measure in the unaudited condensed consolidated financial statements portion of this release under the headings "Adjusted EBITDA and Pro Forma EBITDA Reconciliation" and "Pro Forma Financial Information."

Investor Contact:
Scott Liolios or Matt Glover
Liolios Group, Inc.
949-574-3860
rily@liolios.com

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)









June 30,


December 31,









2015


2014









(Unaudited)



Assets





Current assets:






Cash and cash equivalents

$

42,128

$

21,600


Restricted cash


502


7,657


Securities owned, at fair value


13,682


17,955


Accounts receivable, net


23,424


10,098


Advances against customer contracts


3,146


16,303


Due from related parties


1,097



Goods held for sale or auction


39


4,117


Deferred income taxes


4,645


6,420


Prepaid expenses and other current assets


1,229


3,795



Total current assets


89,892


87,945

Property and equipment, net


729


776

Goodwill


34,528


27,557

Other intangible assets, net


4,991


2,799

Deferred income taxes


15,457


19,181

Other assets


1,748


732



Total assets

$

147,345

$

138,990

Liabilities and Equity (Deficit)





Current liabilities:






Accounts payable and accrued liabilities

$

21,071

$

12,233


Due to related parties



213


Auction and liquidation proceeds payable



665


Securities sold not yet purchased


8,057


746


Mandatorily redeemable noncontrolling interests


2,617


2,922


Asset based credit facility



18,506


Revolving credit facility


127


56


Notes payable



6,570


Contingent consideration - current portion


1,195




Total current liabilities


33,067


41,911

Contingent consideration, net of current portion


1,107




Total liabilities


34,174


41,911

Commitments and contingencies





B. Riley Financial, Inc. stockholders' equity (deficit):






Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued




Common stock, $0.0001 par value; 135,000,000 shares authorized; 16,305,236 and 15,968,607 issued and outstanding as of June 30, 2015 and December 31, 2014, respectively


2


2


Additional paid-in capital


115,671


110,598


Retained earnings (deficit)


(2,523)


(12,891)


Accumulated other comprehensive income (loss)


(656)


(648)



Total B. Riley Financial, Inc. stockholders' equity (deficit)


112,494


97,061

Noncontrolling interests


677


18



Total equity (deficit)


113,171


97,079



Total liabilities and equity (deficit)

$

147,345

$

138,990

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except share data)

























Three Months Ended



Six Months Ended









June 30,



June 30,









2015


2014



2015


2014

Revenues:














Services and fees

$

39,442

$

14,947


$

61,026

$

27,332


Sale of goods


6,019




10,466


9,268



Total revenues


45,461


14,947



71,492


36,600

Operating expenses:











Direct cost of services


8,931


5,807



15,317


11,866


Cost of goods sold


2,181




3,071


9,064


Selling, general and administrative 


19,679


10,196



32,973


17,984



Total operating expenses


30,791


16,003



51,361


38,914



Operating income (loss)


14,670


(1,056)



20,131


(2,314)

Other income (expense):











Interest income


3


4



5


6


Interest expense


(419)


(449)



(671)


(1,077)



Income (loss) before income taxes


14,254


(1,501)



19,465


(3,385)

(Provision) benefit for income taxes


(5,685)


594



(7,460)


1,408



Net income (loss)


8,569


(907)



12,005


(1,977)

Net income (loss) attributable to noncontrolling interests


(95)


(130)



659


134



Net income (loss) attributable to B. Riley Financial, Inc.

$

8,664

$

(777)


$

11,346

$

(2,111)

















Basic earnings (loss) per share

$

0.53

$

(0.16)


$

0.70

$

(0.66)

Diluted earnings (loss) per share

$

0.53

$

(0.16)


$

0.70

$

(0.66)

















Weighted average basic shares outstanding


16,237,860


4,972,203



16,177,824


3,212,929

Weighted average diluted shares outstanding


16,310,829


4,972,203



16,236,748


3,212,929

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


























Six Months Ended
June 30,












2015


2014

Cash flows from operating activities:






Net income (loss)

$

12,005

$

(1,977)


Adjustments to reconcile net loss to net cash provided by operating activities:








Depreciation and amortization


421


264




Provision for credit losses


255


33




Share based payments


416


-




Effect of foreign currency on operations


5


(44)




Non-cash interest


73


-




Deferred income taxes


5,499


(1,410)




Income allocated to mandatorily redeemable noncontrolling interests and redeemable noncontrolling interests


1,116


1,281




Change in operating assets and liabilities:









Accounts receivable and advances against customer contracts


(439)


(2,621)





Lease finance receivable


-


107





Due from related party


(1,310)


(288)





Securities owned


4,273


(1,110)





Goods held for sale or auction


52


9,058





Prepaid expenses and other assets


(1,414)


(459)





Accounts payable and accrued expenses


9,218


(2,531)





Securities sold, not yet purchased


7,311


5,567





Auction and liquidation proceeds payable


(665)


-






Net cash provided by operating activities


36,816


5,870

Cash flows from investing activities:






Acquisition of MK Capital, net of cash acquired of $49


(2,451)


-


Purchases of property and equipment


(171)


(42)


Proceeds from sale of property and equipment


4


-


Decrease in note receivable - related party


-


1,200


Cash acquired in acquisition of B. Riley & Co., Inc.


-


2,491


Decrease in restricted cash


7,155


243






Net cash (used in) provided by investing activities


4,537


3,892

Cash flows from financing activities:






Repayment of asset based credit facility


(18,506)


(5,710)


Proceeds from revolving line of credit 


71


1,019


Proceeds from note payable - related party


4,500


-


Repayment of note payable - related party


(4,500)


-


Repayment of notes payable and long-term debt


-


(30,925)


Proceeds from issuance of common stock


-


51,240


Dividends paid


(978)


-


Distribution to mandatorily redeemable noncontrolling interests


(1,421)


(1,249)






Net cash (used in) provided by financing activities


(20,834)


14,375






Increase in cash and cash equivalents


20,519


24,137






Effect of foreign currency on cash


9


39






Net increase in cash and cash equivalents


20,528


24,176

Cash and cash equivalents, beginning of period


21,600


18,867

Cash and cash equivalents, end of period

$

42,128

$

43,043

Supplemental disclosures:






Interest paid

$

413

$

1,107


Taxes paid

$

695

$

2

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

Segment Financial Information

(Unaudited)

(Dollars in thousands)


























Three Months Ended


Six Months Ended









June 30,


June 30,











2015


2014


2015


2014

Auction and Liquidation reportable segment:









Revenues - Services and fees

$ 18,012


$ 6,085


$ 23,134


$ 11,230


Revenues - Sale of goods

6,019


-


10,466


9,268



Total revenues

24,031


6,085


33,600


20,498


Direct cost of services

(5,337)


(2,333)


(8,920)


(5,038)


Cost of goods sold

(2,181)


-


(3,071)


(9,064)


Selling, general, and administrative expenses

(4,500)


(3,092)


(6,465)


(5,832)


Depreciation and amortization

(93)


(31)


(102)


(73)


Segment income

11,920


629


15,042


491

Valuation and Appraisal reportable segment:









Revenues - Services and fees

7,773


8,495


15,027


15,735


Direct cost of services

(3,594)


(3,474)


(6,397)


(6,828)


Selling, general, and administrative expenses

(1,854)


(2,638)


(4,434)


(5,213)


Depreciation and amortization

(35)


(38)


(69)


(76)


Segment income

2,290


2,345


4,127


3,618

Capital markets reportable segment:









Revenues - Services and fees

13,657


367


22,865


367


Selling, general, and administrative expenses

(9,429)


(519)


(15,924)


(519)


Depreciation and amortization

(143)


(11)


(250)


(11)


Segment income (loss)

4,085


(163)


6,691


(163)

Consolidated operating income from reportable segments

18,295


2,811


25,860


3,946

Corporate and other expenses

(3,625)


(3,867)


(5,729)


(6,260)

Interest income

3


4


5


6

Interest expense

(419)


(449)


(671)


(1,077)



















Income (loss) before income taxes

14,254


(1,501)


19,465


(3,385)

(Provision) benefit for income taxes

(5,685)


594


(7,460)


1,408

















1,408


Net income (loss)

8,569


(907)


12,005


(1,977)

Net (loss) income attributable to noncontrolling interests

(95)


(130)


659


134



















Net income (loss) attributable to B. Riley Financial, Inc.

$   8,664


$  (777)


$ 11,346


$ (2,111)

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

Adjusted EBITDA And Proforma Adjusted EBITDA Reconciliation

(Unaudited)

(Dollars in thousands)



























Three Months Ended



Six Months Ended










June 30,



June 30,










2015


2014



2015


2014

Adjusted EBITDA and Proforma Adjusted EBITDA Reconciliation:




























Net income (loss) as reported


$

8,664

$

(777)


$

11,346

$

(2,111)


















Adjustments:














Provision (benefit) for income taxes



5,685


(593)



7,460


(1,407)


Interest expense



418


449



671


1,077


Interest income




(3)


(4)



(5)


(6)


Depreciation and amortization



226


133



421


264


Share based payments



466




466



Transaction costs related to B. Riley & Co., Inc. acquisition




995




995


Severance costs and compensation expense for fair value adjustment for mandatorily redeemable noncontrolling interests




914




914



















Total EBITDA adjustments



6,792


1,894



9,013


1,837


















Adjusted EBITDA


$

15,456

$

1,117


$

20,359

$

(274)


















Proforma Adjusted EBITDA for B. Riley & Co., Inc. operations and new employment agreements




1,813




3,282


















Proforma Adjusted EBITDA


$

15,456

$

2,930


$

20,359

$

3,008

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

Proforma Financial Information

(Unaudited)

(Dollars in thousands, except share data)




























Three Months Ended
June 30,


Six Months Ended
June 30,














2014


2014














Proforma


Proforma

Proforma Revenues By Segment:





Auction and Liquidation reportable segment

$

6,085

$

20,498

Valuation and Appraisal reportable segment


8,495


15,735

Capital markets reportable segment


7,489


14,881

















Total Proforma Revenue

$

22,069

$

51,114

















Proforma net income (loss)

$

268

$

(235)

















Basic income (loss) per share

$

0.03

$

(0.03)

Diluted income (loss) per share

$

0.03

$

(0.03)

















Weighted average basic shares outstanding


8,561,982


7,100,203

Weighted average diluted shares outstanding


8,622,224


7,100,203

 

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SOURCE B. Riley Financial

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