News

LOS ANGELES, Aug. 02, 2018 (GLOBE NEWSWIRE) -- B. Riley Financial, Inc. (NASDAQ:RILY), a diversified provider of financial and business advisory services, reported results for its second quarter ended June 30, 2018.

Second Quarter 2018 Financial Highlights

• Total revenues of $125.5 million; net income of $17.0 million or $0.64 per diluted share
• Adjusted EBITDA of $41.4 million; adjusted net income of $22.8 million or $0.86 per diluted share

“We’re pleased to report record results for the second quarter which exceeded our guidance for net income and adjusted EBITDA. We saw strength in each of our businesses driven by meaningful fee engagements in both of our more episodic businesses, bolstered by steady recurring revenue from our appraisal, wealth management and asset management businesses, and cash flow generated by principal investments,” said Bryant Riley, Chairman and Co-Chief Executive Officer, B. Riley Financial. “This growth reflects the expanded opportunities our platform offers to create unique opportunities which involve multiple parts of our business. Recent highlights which demonstrate our ability to be effective in this strategy include the purchase of assets of Bon-Ton Stores, our support of the proposed acquisition of Rent-A-Center Inc., and our participation in the Toys ‘R’ Us liquidation. As we continue to focus on growth, we’re excited about the addition of GlassRatner and the expertise this team offers, as well as future contributions from our pending acquisition of magicJack to our principal investments segment.”

Second Quarter 2018 Financial Results
For the three months ended June 30, 2018, total revenues increased to $125.5 million from $66.7 million for the same year-ago period and $95.8 million for the first quarter of 2018. The increase in revenues for the second quarter of 2018 was primarily driven by higher revenues associated with significant fee-based engagements for the company’s Capital Markets and Auction and Liquidation segments.

• Capital Markets Segment: Revenues increased to $77.8 million for the second quarter of 2018 compared to $23.9 million for the same year-ago period and $60.3 million for the first quarter of 2018. Segment income increased to $12.0 million for the second quarter of 2018 compared to a loss of $4.8 million for the same year-ago period and a loss of $0.3 million for the first quarter of 2018. The sequential increase for this segment was primarily driven by an uptick in fee-based engagements for B. Riley FBR. The year-over-year increase was primarily driven by the acquisitions of FBR & Co. and Wunderlich Securities which were completed in June and July of 2017, respectively.
• Auction and Liquidation Segment: Revenues for the second quarter of 2018 increased to $26.8 million from $21.8 million for the same year-ago period and $15.5 million for the first quarter of 2018. Segment income increased to $16.3 million for the second quarter of 2018 from $7.3 million for the same year-ago period and $8.1 million for the first quarter of 2018. Results for this segment were primarily driven by an increase in revenues related to large retail liquidation engagements conducted during the second quarter of 2018.
• Valuation and Appraisal Segment: Revenues increased to $9.5 million for the second quarter of 2018 from $8.0 million for the same year-ago period and $8.5 million for the first quarter of 2018. Segment income increased to $2.9 million for the second quarter of 2018 from $2.3 million for the same year-ago period and $1.9 million for the first quarter of 2018.
• Principal Investments – United Online Segment: Revenues totaled $11.4 million for the second quarter of 2018. Segment income totaled $4.7 million for the second quarter of 2018. Revenues from United Online are primarily driven by services and fees for internet access and related subscription services, and partially by the sale of goods.

Net income for the second quarter of 2018 increased to $17.0 million or $0.64 per diluted share from $3.3 million or $0.15 per diluted share for the same year-ago period and $4.5 million or $0.17 per diluted share for the first quarter of 2018.

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, restructuring costs, transaction costs, share-based compensation, fair value adjustments and insurance settlement recovery) increased to $41.4 million from $17.6 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 (excluding the impact of share-based payments, amortization of intangible assets, restructuring costs, transaction costs, fair value adjustments, insurance settlement recovery, tax impact of aforementioned adjustments, and certain tax items) increased to $22.8 million or $0.86 per diluted share for the second quarter of 2018. This compares to $8.8 million or $0.40 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 June 30, 2018, the company had $191.3 million in cash and cash equivalents, $0.5 million in restricted cash, $35.2 million due from clearing brokers, $143.0 million in net securities and other investments owned (at fair value), $200.0 million in advances against customer contracts, and $491.1 million in total debt. Total B. Riley Financial stockholders’ equity was $263.4 million. Shares outstanding as of June 30, 2018 were approximately 26.1 million.

Declaration of Dividend
B. Riley Financial’s board of directors approved a regular quarterly dividend of $0.08 per share and a special dividend of $0.22 per share which will be paid on or about August 31, 2018 to stockholders of record as of August 16, 2018.

Update on magicJack Acquisition
The company’s previously announced acquisition of magicJack VocalTec Ltd. remains pending final regulatory approval. The company will communicate additional updates once closing conditions have been satisfied.

Conference Call
The company will host a conference call today, Thursday, August 2, 2018 at 4:30 p.m. ET (1:30 p.m. PT). Bryant Riley, Chairman and co-CEO; Tom Kelleher, co-CEO; and Phillip Ahn, CFO and COO, will host the conference call followed by a question and answer period.

A replay of the call will be available after 7:30 p.m. ET on the same day through August 9, 2018.

The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website. For more information, visit ir.brileyfin.com.

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

Forward-Looking Statements
Statements in this press release that are not descriptions of historical facts are forward‐looking statements that are based on management’s current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition and stock price could be materially negatively affected. In some cases, you can identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will,” “would” or the negative of these terms or other comparable terminology. 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, the anticipated benefits of the acquisition of GlassRatner,  the effects of our business model, the effects and anticipated benefits of our completed and pending acquisitions and related actions, 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. Risk 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; potential mark-downs in inventory in connection with purchase transactions; failure to successfully compete in any of our segments; loss of key personnel; our ability to borrow under our credit facilities as necessary; failure to comply with the terms of our credit agreements; our ability to meet future capital requirements; our ability to realize the benefits of our completed and proposed acquisitions, including our ability to achieve anticipated opportunities and operating cost savings, and accretion to reported earnings estimated to result from completed and proposed acquisitions in the time frame expected by management or at all; our ability to promptly and effectively integrate our business with that of GlassRatner; the effect of the GlassRatner acquisition on our and GlassRatner’s customers, employees and counterparties;  the possibility that our proposed acquisition of magicJack VocalTec Ltd. (“magicJack” or “MJ”) does not close when expected or at all; our ability to promptly and effectively integrate our business with that of magicJack if such transaction closes; the reaction to the magicJack acquisition or our and magicJack’s customers, employees and counterparties; the diversion of management time on acquisition-related issues; and those risks described from time to time in B. Riley Financial, Inc.'s 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 is also set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 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, transaction expenses, restructuring costs, stock-based compensation, fair value adjustments and insurance settlement recovery 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 Net Income Reconciliation” and "Adjusted EBITDA Reconciliation.”

Investor Contact
Investor Relations
ir@brileyfin.com
(310) 966-1444

Media Contact
Jo Anne McCusker
jmccusker@brileyfin.com
(646) 885-5425

Source: B. Riley Financial, Inc.