Investor Relations

News

B. Riley Financial Announces Record Results for Second Quarter 2019 and Increases Quarterly Cash Dividend
Reports record revenues of $164.7 million, adjusted EBITDA of $52.9 million, net income of $22.2 million
Declares regular dividend of $0.175 per share and special dividend of $0.325 per share

LOS ANGELES, Aug. 01, 2019 (GLOBE NEWSWIRE) -- B. Riley Financial, Inc. (NASDAQ:RILY) (the “Company”), a diversified financial services company which operates through several wholly-owned subsidiaries, today announced results for the second quarter ended June 30, 2019.

Second Quarter 2019 Highlights

  • Total revenues of $164.7 million
  • Net income of $22.2 million or $0.82 per diluted share
  • Adjusted EBITDA of $52.9 million
  • Adjusted net income of $28.3 million or $1.05 per diluted share

“Our strong performance demonstrates successful execution in diversifying our revenue while continuing to improve profitability across our distinct businesses. Our record results were primarily driven by the completion of several retail liquidation projects and an increase in investment banking revenues over the prior quarter. GlassRatner and magicJack have contributed meaningfully to our results, while appraisal and wealth management maintain steady contributions,” said Bryant Riley, Chairman and Co-CEO, B. Riley Financial. “The increase in our regular quarterly dividend to $0.175 reflects continued confidence in our long-term outlook and reinforces our commitment to deliver strong returns to shareholders. We remain excited by the proprietary investment opportunities that our growing platform offers, and we expect continued momentum in our business as we look ahead.”

Second Quarter 2019 Financial Summary
For the three-month period ending June 30, 2019, total revenues increased to $164.7 million, up from $125.5 million in revenues for the second quarter of 2018.

  • Capital Markets Segment: Revenues increased to $94.2 million from $77.8 million for the same year ago period. The year-over-year increase was primarily driven by the addition of GlassRatner, which the Company acquired on August 1, 2018, and income from investments. Segment income increased to $24.4 million from $12.0 million for the same year ago period. Improved performance from investment banking contributed to an increase from the prior quarter which recorded segment revenue of $85.3 million and segment income of $13.9 million for the first quarter of 2019.
  • Auction and Liquidation Segment: Revenues increased to $34.9 million from $26.8 million for the same year ago period. Segment income increased to $17.8 million from $16.3 million for the same year ago period. The increase was driven by the completion of several retail liquidation projects during the quarter. Results also increased compared to the first quarter of 2019 which recorded revenues of $20.7 million and segment income of $11.5 million. Results for this segment are expected to vary from quarter-to-quarter and year-to-year due to the episodic and cyclical nature of the retail liquidation industry in which Great American Group conducts business.
  • Valuation and Appraisal Segment: Revenues for Great American Group Advisory & Valuations Services increased to $9.7 million from $9.5 million for the same year ago period. Segment income totaled $2.7 million compared to $2.9 million for the same year ago period. Results for this segment remain relatively steady quarter-over-quarter.
  • Principal Investments Segment: Revenues increased to $25.8 million compared to $11.4 million for the same year ago period. Segment income increased to $7.8 million compared to $4.7 million for the same year ago period. The increase in segment revenue and income was primarily driven by the acquisition of magicJack on November 14, 2018. Results for this segment also include contributions from United Online.

Net income attributable to B. Riley Financial increased to $22.2 million or $0.82 per diluted share compared to $17.0 million or $0.64 per diluted share for the same year ago period.

Adjusted EBITDA increased to $52.9 million for the second quarter of 2019 compared to $41.4 million for the same year ago period. Adjusted EBITDA includes earnings before interest, taxes, depreciation, amortization, restructuring, share-based payments, and transaction related and other costs. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term.)

Adjusted net income increased to $28.3 million or $1.05 per diluted share compared to $22.8 million or $0.86 per diluted share for the same year ago period, and $16.4 million or $0.61 per diluted share for the first quarter of 2019. Adjusted net income excludes the impact of share-based payments, amortization of intangible assets, restructuring costs, transaction related and other costs, and tax impact of aforementioned adjustments. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term.)

As of June 30, 2019, the Company had $55.6 million in cash and cash equivalents, $29.2 million due from clearing brokers, $5.3 million in advances against customer contracts, $250.5 million of loans receivable, $227.5 million in net securities and other investments owned, and $664.6 million of total debt. The Company had a net cash and investments balance of approximately $13 million, net of debt. The investment balance includes approximately $107 million in equity investments and deposits included in prepaid expenses and other assets.

During the quarter, the Company announced the repurchase of approximately 638,000 warrants representing over two percent of total shares outstanding at June 30, 2019. Total B. Riley Financial stockholders’ equity increased to $276.5 million as of June 30, 2019.

Declaration of Dividend
The Company’s Board of Directors declared an increase to the regular quarterly dividend from $0.08 per share to $0.175 per share. The Board of Directors also declared a special dividend of $0.325 per share, when combined with the $0.175 regular dividend, amounts to a total cash dividend of $0.50, which will be paid on or about August 29, 2019 to stockholders of record as of August 15, 2019.

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

Please call the conference line 10 minutes prior to the start time and an operator will register your name and organization. The live broadcast and archive will be available on the Company’s investor relations website.

B. Riley Financial Q2 2019 Earnings Call Details
Date:   Thursday, August 1, 2019
Time:   4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-Free:   1-855-327-6837
International:   1-631-891-4304
     
Replay Dial-In (expires on Thursday, August 8, 2019)
Toll-Free:   1-844-512-2921
International:   1-412-317-6671
Replay Pin:   10007337

For more information, visit ir.brileyfin.com.

About B. Riley Financial
B. Riley Financial (NASDAQ:RILY) 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. For more information, visit www.brileyfin.com.

Forward-Looking Statements
Statements in this press release that are not descriptions of historical facts are forward-looking statements that are based on management’s current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition and stock price could be materially negatively affected. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of the date of this press release. Such forward looking statements include, but are not limited to, statements regarding the Company’s anticipated results of operations for 2019, expectations regarding the size and consistency of returns, expectations regarding market dynamics, as well as statements regarding our excitement and the expected grown of our business segments. Other factors that could adversely affect our operating results and cash flows include (without limitation) those risks described from time to time in B. Riley Financial, Inc.’s periodic filings with the SEC, including, without limitation, the risks described in B. Riley Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018 under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and B. Riley Financial, Inc. undertakes no duty to update this information.

Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including adjusted net income and adjusted EBITDA, may be considered non-GAAP financial measures. B. Riley Financial believes this information is useful to investors because it provides a basis for measuring the Company's available capital resources, the operating performance of its business and its cash flow, excluding net interest expense, provisions for or benefit from income taxes, depreciation, amortization, fair value adjustment, transaction and other expenses, restructuring costs, and stock-based compensation that would normally be included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles ("GAAP"). In addition, the Company's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the Company's operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies.

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated  Balance Sheets
(Dollars in thousands, except par value)
                       
              June 30,   December 31,
              2019     2018  
                (Unaudited)      
Assets          
Assets:                    
  Cash and cash equivalents           $ 55,609     $ 179,440  
  Restricted cash             2,635       838  
  Due from clearing brokers             29,245       37,738  
  Securities and other investments owned, at fair value             270,290       273,577  
  Securities borrowed             759,921       931,346  
  Accounts receivable, net   56,450       42,123  
  Due from related parties   4,318       1,729  
  Advances against customer contracts   5,322        
  Loans receivable   250,521       38,794  
  Prepaid expenses and other assets   140,817       79,477  
  Operating lease right-of-use assets   50,943        
  Property and equipment, net   13,997       15,523  
  Goodwill       220,181       223,368  
  Other intangible assets, net   82,765       91,358  
  Deferred income taxes   35,969       42,399  
  Total assets $ 1,978,983     $ 1,957,710  
Liabilities and Equity          
Liabilities:                
  Accounts payable $ 2,136     $ 5,646  
  Accrued expenses and other liabilities   93,832       108,662  
  Deferred revenue   68,097       69,066  
  Due to related parties and partners   1,563       2,428  
  Securities sold not yet purchased   42,754       37,623  
  Securities loaned   759,109       930,522  
  Mandatorily redeemable noncontrolling interests   4,224       4,633  
  Operating lease liabilities   65,499        
  Notes payable   1,193       1,550  
  Term loan       80,916       79,166  
  Senior notes payable   582,482       459,754  
  Total liabilities   1,701,805       1,699,050  
                       
Commitments and contingencies          
B. Riley Financial, Inc. stockholders' equity:          
  Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued          
  Common stock, $0.0001 par value; 100,000,000 shares authorized; 26,919,941   3       2  
  and 26,603,355 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively.          
  Additional paid-in capital   255,865       258,638  
  Retained earnings   22,424       1,579  
  Accumulated other comprehensive loss   (1,824 )     (2,161 )
  Total B. Riley Financial, Inc. stockholders' equity   276,468       258,058  
Noncontrolling interests   710       602  
  Total equity   277,178       258,660  
  Total liabilities and equity $ 1,978,983     $ 1,957,710  
                       

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands, except share data)
                                   
              Three Months Ended     Six Months Ended
              June 30,     June 30,
              2019     2018     2019     2018  
Revenues:                        
  Services and fees $ 154,859     $ 118,882     $ 286,712     $ 207,331  
  Interest income - Securities lending   7,665       6,591       16,995       13,882  
  Sale of goods   2,160       28       3,105       66  
    Total revenues   164,684       125,501       306,812       221,279  
Operating expenses:                      
  Direct cost of services   24,232       13,925       42,769       25,577  
  Cost of goods sold   1,805       49       2,924       90  
  Selling, general and administrative expenses   87,338       76,723       177,881       144,821  
  Restructuring charge   1,552       1,602       1,699       1,819  
  Interest expense - Securities lending   5,502       4,724       12,306       9,892  
    Total operating expenses   120,429       97,023       237,579       182,199  
    Operating income   44,255       28,478       69,233       39,080  
Other income (expense):                      
  Interest income   331       166       968       294  
  (Loss) income from equity investments   (1,400 )     4,893       (5,162 )     4,221  
  Interest expense   (11,588 )     (10,359 )     (22,358 )     (14,586 )
    Income before income taxes   31,598       23,178       42,681       29,009  
Provision for income taxes   (9,289 )     (5,377 )     (12,393 )     (6,366 )
    Net income   22,309       17,801       30,288       22,643  
Net income attributable to noncontrolling interests   152       804       108       1,143  
    Net income attributable to B. Riley Financial, Inc. $ 22,157     $ 16,997     $ 30,180     $ 21,500  
                                   
Basic income per share $ 0.84     $ 0.67     $ 1.15     $ 0.83  
Diluted income per share $ 0.82     $ 0.64     $ 1.13     $ 0.80  
                                   
Weighted average basic shares outstanding   26,278,352       25,424,178       26,247,952       25,799,077  
Weighted average diluted shares outstanding   26,896,573       26,397,513       26,770,922       26,785,169  
                                   

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
                           
                    Six Months Ended June 30,
                  2019     2018  
Cash flows from operating activities:                
  Net income       $ 30,288     $ 22,643  
  Adjustments to reconcile net income to net cash provided by (used in) operating activities:                    
    Depreciation and amortization         9,744       6,670  
    Provision for doubtful accounts         1,067       648  
    Share-based compensation         5,548       5,559  
    Non-cash interest and other         (3,144 )     1,870  
    Effect of foreign currency on operations         339       (582 )
    Loss (income) from equity investments         5,162       (4,221 )
    Deferred income taxes         6,430       7  
    Impairment of leaseholds and intangibles, lease loss accrual and gain on disposal of fixed assets         (344 )     1,403  
    Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests         446       543  
    Change in operating assets and liabilities:                    
      Due from clearing brokers         8,493       (3,763 )
      Securities and other investments owned         3,287       (15,180 )
      Securities borrowed         171,425       (206,899 )
      Accounts receivable and advances against customer contracts         (22,420 )     (208,658 )
      Prepaid expenses and other assets         (45,500 )     (16,108 )
      Accounts payable, accrued payroll and related expenses, accrued expenses and other liabilities         1,143       5,320  
      Amounts due to/from related parties and partners         (3,454 )     3,362  
      Securities sold, not yet purchased         5,131       (10,708 )
      Deferred revenue         (790 )     459  
      Securities loaned         (171,413 )     208,869  
        Net cash provided by (used in) operating activities         1,438       (208,766 )
Cash flows from investing activities:                    
  Purchases of loans receivable         (225,072 )      
  Repayments of loans receivable         17,640        
  Purchases of property, equipment and intangible assets         (2,514 )     (1,836 )
  Proceeds from sale of property, equipment and intangible assets         503       37  
  Equity investments         (25,183 )     (3,575 )
  Proceeds from sale of division of magicJack         6,196        
  Dividends from equity investments         854       1,695  
        Net cash used in investing activities         (227,576 )     (3,679 )
Cash flows from financing activities:                    
  Proceeds from asset based credit facility               300,000  
  Repayment of asset based credit facility               (194,460 )
  Proceeds from notes payable               51,020  
  Repayment of notes payable         (357 )     (357 )
  Proceeds from term loan         10,000        
  Repayment of term loan         (8,305 )      
  Proceeds from issuance of senior notes         123,935       132,123  
  Payment of debt issuance costs         (2,039 )     (4,936 )
  Payment of employment taxes on vesting of restricted stock         (2,291 )     (3,570 )
  Dividends paid         (9,991 )     (9,549 )
  Repurchase of common stock         (3,252 )     (17,338 )
  Repurchase of warrants         (2,777 )      
  Distribution to noncontrolling interests         (856 )     (782 )
        Net cash provided by financing activities         104,067       252,151  
        (Decrease) increase in cash, cash equivalents and restricted cash         (122,071 )     39,706  
        Effect of foreign currency on cash, cash equivalents and restricted cash         37       (499 )
        Net (decrease) increase in cash, cash equivalents and restricted cash         (122,034 )     39,207  
Cash, cash equivalents and restricted cash, beginning of  year         180,278       152,534  
Cash, cash equivalents and restricted cash, end of period       $ 58,244     $ 191,741  
                               
Supplemental disclosures:                    
  Interest paid       $ 22,112     $ 21,868  
  Taxes paid         $ 891     $ 2,306  
                           

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Segment Financial Information
(Unaudited)
(Dollars in thousands)
                                 
            Three Months Ended   Six Months Ended
            June 30,   June 30,
            2019     2018     2019     2018  
Capital Markets segment:                        
  Revenues - Services and fees $ 86,583     $ 71,194     $ 162,554     $ 124,232  
  Interest income - Securities lending   7,665       6,591       16,995       13,882  
  Total revenues     94,248       77,785       179,549       138,114  
  Selling, general and administrative expenses   (63,041 )     (57,713 )     (126,430 )     (111,352 )
  Restructuring (charge) recovery   (25 )     (1,774 )     4       (2,029 )
  Interest expense - Securities lending   (5,502 )     (4,724 )     (12,306 )     (9,892 )
  Depreciation and amortization   (1,287 )     (1,555 )     (2,563 )     (3,119 )
  Segment income     24,393       12,019       38,254       11,722  
Auction and Liquidation segment:                      
  Revenues - Services and fees   33,740       26,836       54,449       42,353  
  Revenues - Sale of goods     1,176             1,176        
  Total revenues     34,916       26,836       55,625       42,353  
  Direct cost of services     (12,939 )     (6,849 )     (19,213 )     (11,425 )
  Cost of goods sold     (852 )     (16 )     (866 )     (17 )
  Selling, general and administrative expenses   (3,295 )     (3,617 )     (6,210 )     (6,498 )
  Depreciation and amortization   (2 )     (8 )     (4 )     (16 )
  Segment income     17,828       16,346       29,332       24,397  
Valuation and Appraisal segment:                      
  Revenues - Services and fees   9,742       9,459       18,325       17,979  
  Direct cost of services     (4,569 )     (4,123 )     (8,990 )     (8,321 )
  Selling, general and administrative expenses   (2,405 )     (2,414 )     (5,171 )     (4,759 )
  Depreciation and amortization   (31 )     (54 )     (64 )     (103 )
  Segment income     2,737       2,868       4,100       4,796  
Principal Investments - United Online and magicJack segment:                      
  Revenues - Services and fees   24,794       11,393       51,384       22,767  
  Revenues - Sale of goods     984       28       1,929       66  
  Total revenues     25,778       11,421       53,313       22,833  
  Direct cost of services     (6,724 )     (2,953 )     (14,566 )     (5,831 )
  Cost of goods sold     (953 )     (33 )     (2,058 )     (73 )
  Selling, general and administrative expenses   (5,495 )     (2,015 )     (12,515 )     (3,973 )
  Depreciation and amortization   (3,300 )     (1,679 )     (6,763 )     (3,358 )
  Restructuring charge     (1,527 )           (1,703 )      
  Segment income     7,779       4,741       15,708       9,598  
Consolidated operating income from reportable segments   52,737       35,974       87,394       50,513  
                                 
Corporate and other expenses (including restructuring recovery of   (8,482 )     (7,496 )     (18,161 )     (11,433 )
$172 and $210 during the three and six months ended June 30, 2018, respectively)                      
Interest income       331       166       968       294  
(Loss) income on equity investments   (1,400 )     4,893       (5,162 )     4,221  
Interest expense       (11,588 )     (10,359 )     (22,358 )     (14,586 )
  Income before income taxes     31,598       23,178       42,681       29,009  
Provision for income taxes     (9,289 )     (5,377 )     (12,393 )     (6,366 )
  Net income       22,309       17,801       30,288       22,643  
Net income attributable to noncontrolling interests   152       804       108       1,143  
  Net income attributable to B. Riley Financial, Inc. $ 22,157     $ 16,997     $ 30,180     $ 21,500  
                                 

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Adjusted EBITDA Reconciliation
(Unaudited)
(Dollars in thousands)
                                   
              Three Months Ended
June 30,
  Six Months Ended
June 30,
              2019     2018     2019     2018  
Net income attributable to B. Riley Financial, Inc. $ 22,157     $ 16,997     $ 30,180     $ 21,500  
Adjustments:                          
  Provision for income taxes   9,289       5,377       12,393       6,366  
  Interest expense   11,588       10,359       22,358       14,586  
  Interest income   (331 )     (166 )     (968 )     (294 )
  Share based payments   2,934       2,678       5,548       5,236  
  Depreciation and amortization   4,831       3,333       9,744       6,670  
  Restructuring costs   1,552       1,602       1,699       1,819  
  Transactions related costs and other   836       1,191       6,332       1,545  
                                   
    Total EBITDA adjustments   30,699       24,374       57,106       35,928  
                                   
      Adjusted EBITDA $ 52,856     $ 41,371     $ 87,286     $ 57,428  
                                   

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Adjusted Net Income Reconciliation
(Unaudited)
(Dollars in thousands, except share data)
                                   
                Three Months Ended   Six Months Ended
                June 30,   June 30,
                2019     2018     2019     2018  
Net income attributable to B. Riley Financial, Inc. $ 22,157     $ 16,997     $ 30,180     $ 21,500  
Adjustments:                          
  Share based payments   2,934       2,678       5,548       5,236  
  Amortization of intangible assets   3,344       2,146       6,721       4,306  
  Restructuring costs   1,552       1,602       1,699       1,819  
  Transactions related costs and other   836       1,191       6,332       1,545  
  Income tax effect of adjusting entries   (2,560 )     (1,831 )     (5,805 )     (2,783 )
Adjusted net income attributable to B. Riley Financial, Inc. $ 28,263     $ 22,783     $ 44,675     $ 31,623  
                                   
Adjusted income per common share:                      
  Adjusted basic income per share $ 1.08     $ 0.90     $ 1.70     $ 1.23  
  Adjusted diluted income per share $ 1.05     $ 0.86     $ 1.67     $ 1.18  
                                   
Shares used to calculate adjusted basic net income per share   26,278,352       25,424,178       26,247,952       25,799,077  
Shares used to calculate adjusted diluted net income per share   26,896,573       26,397,513       26,770,922       26,785,169  
                                   

Contacts

Investors
B. Riley Financial
ir@brileyfin.com 
(310) 966-1444

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

BRF_Logo_Stacked_wht.jpg

 

Source: B. Riley Financial, Inc.

Quick Nav
Quick Nav
f