B. Riley Financial Reports First Quarter 2022 Results

Published: Apr. 28, 2022 at 3:05 PM CDT

Continued Diversification of Revenue Mix
Declares regular quarterly dividend of $1.00 per common share

LOS ANGELES, April 28, 2022 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY), a diversified financial services company, today announced results for the three-month period ended March 31, 2022.

B. Riley Financial, Inc. (Nasdaq: RILY) logo (PRNewsfoto/B. Riley Financial)
B. Riley Financial, Inc. (Nasdaq: RILY) logo (PRNewsfoto/B. Riley Financial)(PRNewswire)

First Quarter 2022 Financial Highlights

  • Net loss of $12.1 million, ($0.43) diluted EPS
  • Total revenues of $205.6 million
  • Operating revenues (2) of $274.0 million
  • Total adjusted EBITDA (1) of $40.7 million
  • Operating adjusted EBITDA (3) of $84.2 million

Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial said, "Our first quarter operating results reflect resilient performance from our diversified platform, offset by a challenging environment for our underwriting business and investment portfolio.  Integration of recent acquisitions remain on track, as does the build out of our fixed income team.  While our platform has demonstrated its ability to deliver outstanding results in more accommodating operating environments, current conditions remind us why we remain committed to a highly variable cost structure and a portfolio approach to a complementary but diversified operating model.  We ended the quarter with $213.6 million in cash and equivalents, leaving us well-armed to capitalize on opportunities presented by recent market dislocations within our proprietary ecosystem."

"Within the Capital Markets segment, investment banking underwriting saw declines from the prior quarter due to market conditions.  However, we continued to gain underwriting market share, and saw activity from ATM offerings, sales and trading, and securities lending businesses remain stable from the prior quarter.  In subsequent quarters, we expect to see a more material benefit from M&A assignments as FocalPoint's robust pipeline is amplified by organic momentum.  Our capital management business continues to show strength on the heels of the addition of 272 Capital last year. And finally, our direct lending activity continues to deliver strong performance while addressing an underserved need in the market."

Tom Kelleher, Co-Chief Executive Officer of B. Riley Financial, added: "We continue to diversify our revenue mix by expanding our Communications business within Principal Investments via our pending acquisitions of Lingo Management and Bullseye Telecom which we anticipate will be completed this summer.  These acquisitions should further enhance our uncorrelated, free cash flows – a core tenet of our platform.  In addition, we are actively managing our equity exposure, and ensuring our recurring businesses continue to provide sufficient cash flow to cover our interest and dividend payments. We have an established track record of delivering market-leading returns and fully expect the competitive advantages of our diversified platform will deliver long-term sustainable growth and continued strong returns to our shareholders."

Declaration of Common Dividend
B. Riley has declared a regular quarterly cash dividend of $1.00 per common share which is payable on or about May 20 to common stockholders of record as of May 11.

Financial Summary















Three Months Ended




March 31,













(Dollars in thousands, except for share data)



2022




2021















Net (loss) income available to common shareholders


$

(12,064)



$

252,907















Basic (loss) income per common share 


$

(0.43)



$

9.38




Diluted (loss) income per common share 


$

(0.43)



$

8.81














For the first quarter, net loss available to common shareholders was $12.1 million, or ($0.43) diluted earnings per share (EPS).















Three Months Ended




March 31,













(Dollars in thousands)



2022




2021















    Operating Revenues (2)


$

273,979



$

333,217




    Investment (Loss) Gains (4)



(68,390)




266,942




        Total Revenues


$

205,589



$

600,159















   Operating Adjusted EBITDA (3)


$

84,187



$

122,717




   Investment Adjusted EBITDA (5)



(43,525)




262,764




       Total Adjusted EBITDA (1)


$

40,662



$

385,481














For the three months ended March 31, 2022:

  • Total revenues decreased 66.0% to $205.6 million from $600.2 million for the prior year period.
  • Total adjusted EBITDA (1) of $40.7 million compared to $385.5 million for the prior year period.
  • Operating revenues (2) decreased 18% to $274.0 million from $333.2 million for the prior year period.
  • Operating adjusted EBITDA (3) of $84.2 million compared to $122.7 million for the prior year period.
  • Quarterly investment loss (4) was $68.4 million which reflect certain strategic investments held by the Company.

As of March 31, 2022, cash and investments (6) totaled approximately $2.5 billion including cash and cash equivalents of $213.6 million. Total cash and investments, (6) net of debt, was approximately $406 million.

Segment Financial Summary and Highlights























    Operating Revenues (2)


    Investment Gains (Loss) (4)


Total Segment Revenue




Three Months Ended March 31,


Three Months Ended March 31,


Three Months Ended March 31,



(Dollars in thousands)

2022


2021


2022


2021


2022


2021



Capital Markets


$      130,510



$       207,899



$      (68,912)



$       264,503



$        61,598



$       472,402



Wealth Management


76,957



65,542



522



2,356



77,479



67,898



Auction and Liquidation


3,355



13,450



-



-



3,355



13,450



Financial Consulting


25,936



21,409



-



-



25,936



21,409



Principal Investments


32,664



20,529



-



-



32,664



20,529



Brands


4,557



4,388



-



83



4,557



4,471
























Segment Operating Income (Loss) (7)


    Investment Income (Loss) (5)


Total Segment Income (Loss)




Three Months Ended March 31,


Three Months Ended March 31,


Three Months Ended March 31,



(Dollars in thousands)

2022


2021


2022


2021


2022


2021



Capital Markets


$        57,869



$       105,983



$      (44,047)



$       260,325



$        13,822



$       366,308



Wealth Management


(10,618)



1,671



522



2,356



(10,096)



4,027



Auction and Liquidation


(800)



907



-



-



(800)



907



Financial Consulting


4,912



3,322



-



-



4,912



3,322



Principal Investments


8,844



7,531



-



-



8,844



7,531



Brands


3,218



2,998



-



83



3,218



3,081






















For the three months ended March 31, 2022:
Capital Markets segment revenues decreased 87% year-over-year to $61.6 million for the first quarter. Excluding investment loss(4) of $68.9 million, segment operating revenues (2) decreased 37% to $130.5 million, and segment operating income (7) decreased 45% to $57.9 million for the quarter. Performance for the first quarter was impacted by a slowdown in investment banking activity driven by challenging market conditions.

Wealth Management segment revenues increased to $77.5 million from $67.9 million in prior year period, while segment loss was $10.1 million reflecting reduced market activity combined with the impact of a settlement charge related to litigation prior to B. Riley's acquisition of National Holdings in 2021. Combined wealth management assets under management were over $30 billion as of March 31, 2022.

Auction and Liquidation segment revenues totaled $3.4 million. Results for this segment vary from quarter-to-quarter and year-to-year due to the episodic impact of large retail liquidation engagements.

Financial Consulting segment revenues increased to $25.9 million from $21.4 million in prior year period. Segment income increased to $4.9 million from $3.3 million in the prior year period.

Principal Investments segment companies, magicJack, United Online, and Marconi Wireless, generated segment revenues of $32.7 million up from $20.5 million in the prior year quarter. Segment income increased to $8.8 million up from $7.5 million. Results in this segment were primarily due to the addition of Marconi Wireless results in the quarter.

Brands generated quarterly segment revenues of $4.6 million related to the licensing of brand trademarks. These results do not include $5.8 million of dividend income that we earned in Q1 from our investment in Hurley and Justice which are recognized in our Capital Markets operating results.

Supplemental Financial Data
Additional metrics related to operating results and investments can be found in the First Quarter 2022 Financial Supplement on B. Riley's investor relations website.

Conference Call Details
Management will host an investor call to discuss its first quarter results today, Thursday, April 28, 2022 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). Investors may access the live broadcast and archived recording via the Company's investor relations website at ir.brileyfin.com.

Date and Time:         

Thursday, April 28, 2022 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time)

Dial In:                       

1-855-327-6837 (toll-free) or 1-412-317-6026 (international)

Audio Webcast:             

https://ir.brileyfin.com/events-and-presentations

Replay (expires Thursday, May 5, 2022)

Dial In:             

1-844-512-2921; 10018742 (pin)

Replay Link:   

https://ir.brileyfin.com/events-and-presentations

About B. Riley Financial
B. Riley Financial provides collaborative solutions tailored to fit the capital raising and business advisory needs of its clients and partners. B. Riley operates through several subsidiaries that offer a diverse range of complementary end-to-end capabilities spanning investment banking and institutional brokerage, private wealth and investment management, financial consulting, corporate restructuring, operations management, risk and compliance, due diligence, forensic accounting, litigation support, appraisal and valuation, auction, and liquidation services. For more information, please visit www.brileyfin.com.

Footnotes (See "Note Regarding Use of Non-GAAP Financial Measures" for further discussion of these non-GAAP terms.)

(1)

Adjusted EBITDA includes earnings before interest, taxes, depreciation, amortization, restructuring costs, share-based payments, gain on extinguishment of loans, impairment of tradenames, and transaction related and other costs. For a definition of adjusted EBITDA and a reconciliation to GAAP financial measures, please see the Appendix hereto.

(2)

Operating revenue is defined as the sum of revenues from services and fees, interest income - loans and securities lending, and sale of goods.

(3)

Operating adjusted EBITDA is defined as adjusted EBITDA excluding trading income (losses) and fair value adjustments on loans and other investment related expenses.

(4)

Investment gains (loss) is defined as trading income and fair value adjustments on loans.

(5)

Investment adjusted EBITDA and investment income (loss) are defined as trading income (losses) and fair value adjustments on loans, less other investment related expenses.

(6)

Total cash and investments is defined as the sum of cash and cash equivalents, restricted cash, due from clearing brokers net of due to clearing brokers, securities and other investments owned, at fair value net of (i) securities sold not yet purchased and (ii) noncontrolling interest related to investments, advances against customer contracts, loans receivable, at fair value net of loan participations sold, and other investments reported in prepaid and other assets.

(7)

Segment operating income (loss) is defined as segment income (loss) excluding trading income (losses) and fair value adjustments on loans and other investment related expenses.

Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including operating revenues, adjusted EBITDA, operating adjusted EBITDA, and investment 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 revenues and cash flow, (i) excluding in the case of operating revenues, trading income (losses) and fair value adjustments on loans, (ii) excluding in the case of adjusted EBITDA, net interest expense, provisions for or benefit from income taxes, depreciation, amortization, fair value adjustment, restructuring costs, gain on extinguishment of loans, impairment of trade names, stock-based compensation and transaction and other expenses, (iii) excluding in the case of operating adjusted EBITDA, the aforementioned adjustments for adjusted EBITDA as well as trading income (losses) and fair value adjustments on loans, and other investment related expenses, (iv) including in the case of investment adjusted EBITDA, trading income (losses) and fair value adjustments on loans, net of other investment related expenses, and (v) including in the case of total cash and investments, net of debt, total cash, net securities and investments, and other minus total debt, 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, management compensation, 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.

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 our excitement and the expected growth of our business segments. Factors that could cause such actual results to differ materially from those contemplated or implied by such forward-looking statements include, without limitation, the risks associated with the unpredictable and ongoing impact of the COVID-19 pandemic and other 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, 2021 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" (as applicable). Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022. 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.

Contacts




Investors               

 Media

Mike Frank               

 Jo Anne McCusker / Scott Cianciulli

ir@brileyfin.com          

 press@brileyfin.com

(212) 409-2424         

 (212) 739-6753

B. RILEY FINANCIAL, INC.



Consolidated Balance Sheets



(Dollars in thousands, except par value)










March 31,


December 31,








2022


2021









(Unaudited)




Assets






Assets:













Cash and cash equivalents

$

213,584


$

278,933


Restricted cash







928



927


Due from clearing brokers







40,350



29,657


Securities and other investments owned, at fair value







1,317,101



1,532,095


Securities borrowed







1,629,773



2,090,966


Accounts receivable, net


44,722



49,673


Due from related parties


1,480



2,074


Loans receivable, at fair value (includes $154,862 and $167,744 from related parties as of March
31, 2022 and December 31, 2021, respectively)


882,391



873,186


Prepaid expenses and other assets


470,525



463,502


Operating lease right-of-use assets


60,677



56,969


Property and equipment, net


12,980



12,870


Goodwill




362,466



250,568


Other intangible assets, net


211,915



207,651


Deferred tax assets, net


2,867



2,848


      Total assets

$

5,251,759


$

5,851,919

Liabilities and Equity






Liabilities:










Accounts payable

$

8,634


$

6,326


Accrued expenses and other liabilities


298,905



343,750


Deferred revenue


75,509



69,507


Deferred tax liabilities, net


51,174



93,055


Due to clearing brokers




69,398


Securities sold not yet purchased


7,498



28,623


Securities loaned


1,619,132



2,088,685


Operating lease liabilities


72,339



69,072


Notes payable


22,891



357


Revolving credit facility


80,000



80,000


Term loans, net


342,851



346,385


Senior notes payable, net


1,627,649



1,606,560


      Total liabilities


4,206,582



4,801,718













Commitments and contingencies 






Redeemable noncontrolling interests in equity of subsidiaries


345,000



345,000

B. Riley Financial, Inc. equity:







Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 4,535 and 4,512 issued and





outstanding as of March 31, 2022 and December 31, 2021, respectively; liquidation preference







of $113,380 and $112,790 as of March 31, 2022 and December 31, 2021, respectively







Common stock, $0.0001 par value; 100,000,000 shares authorized; 27,928,234 and 27,591,028 issued
and outstanding as of March 31, 2022 and December 31, 2021, respectively.

3



3


issued and outstanding as of March 31, 2022 and December 31, 2020, respectively







Additional paid-in capital


450,164



413,486


Retained earnings


205,765



248,862


Accumulated other comprehensive loss


(1,568)



(1,080)


      Total B. Riley Financial, Inc. stockholders' equity


654,364



661,271

Noncontrolling interests


45,813



43,930


     Total equity


700,177



705,201


          Total liabilities and equity

$

5,251,759


$

5,851,919













B. RILEY FINANCIAL, INC.

Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except share data)




















Three Months Ended








March 31,








2022


2021

Revenues:








Services and fees

$

210,675


$

289,469


Trading (losses) income and fair value adjustments on loans


(68,390)



266,942


Interest income - Loans and securities lending


61,426



36,920


Sale of goods


1,878



6,828



Total revenues


205,589



600,159

Operating expenses:







Direct cost of services


11,651



11,322


Cost of goods sold


2,251



5,326


Selling, general and administrative expenses


175,199



191,344


Interest expense - Securities lending and loan participations sold


11,766



19,189



Total operating expenses


200,867



227,181




Operating income


4,722



372,978

Other income (expense):







Interest income


67



49


Change in fair value of financial instruments and other


5,981




Income from equity investments


6,775



875


Interest expense


(30,436)



(19,786)



(Loss) Income before income taxes


(12,891)



354,116

Benefit from (provision for) income taxes


3,695



(97,518)



Net (loss) income


(9,196)



256,598

Net income attributable to noncontrolling interests


866



1,942



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


(10,062)



254,656

Preferred stock dividends


2,002



1,749



Net (loss) income available to common shareholders

$

(12,064)


$

252,907













Basic (loss) income per common share 

$

(0.43)


$

9.38

Diluted (loss) income per common share 

$

(0.43)


$

8.81













Weighted average basic common shares outstanding


27,855,033



26,972,275

Weighted average diluted common shares outstanding


27,855,033



28,710,368

B. RILEY FINANCIAL, INC.

Segment Financial Information

(Unaudited)

(Dollars in thousands)


















Three Months Ended







March 31,







2022


2021

Capital Markets segment:







    Revenues - Services and fees

$

69,084


$

170,979

    Trading (losses) income and fair value adjustments on loans


(68,912)



264,503

    Interest income - Loans and securities lending


61,426



36,920

         Total revenues



61,598



472,402

    Selling, general and administrative expenses


(34,117)



(86,140)

    Interest expense - Securities lending and loan participations sold


(11,766)



(19,189)

    Depreciation and amortization


(1,893)



(765)

          Segment income



13,822



366,308

Wealth Management segment:







Revenues - Services and fees


76,957



65,542


Trading income and fair value adjustments on loans


522



2,356


    Total revenues



77,479



67,898


Selling, general and administrative expenses


(85,742)



(61,472)


Depreciation and amortization


(1,833)



(2,399)



Segment (loss) income



(10,096)



4,027

Auction and Liquidation segment:







Revenues - Services and fees


3,355



7,358


Revenues - Sale of goods





6,092


    Total revenues



3,355



13,450


Direct cost of services



(2,335)



(6,580)


Cost of goods sold





(4,474)


Selling, general and administrative expenses


(1,820)



(1,489)



Segment (loss) income



(800)



907

Financial Consulting segment:







Revenues - Services and fees


25,936



21,409


Selling, general and administrative expenses


(20,943)



(17,989)


Depreciation and amortization


(81)



(98)



Segment income



4,912



3,322

Principal Investments - Communications segment:







Revenues - Services and fees


30,786



19,793


Revenues - Sale of goods



1,878



736


    Total revenues



32,664



20,529


Direct cost of services



(9,316)



(4,742)


Cost of goods sold



(2,251)



(852)


Selling, general and administrative expenses


(9,028)



(4,870)


Depreciation and amortization


(3,225)



(2,534)



Segment income



8,844



7,531

Brands segment:









Revenues - Services and fees


4,557



4,388


Trading income and fair value adjustments on loans




83


    Total revenues



4,557



4,471


Selling, general and administrative expenses


(756)



(676)


Depreciation and amortization


(583)



(714)



Segment income



3,218



3,081

Consolidated operating income from reportable segments


19,900



385,176












Corporate and other expenses 


(15,178)



(12,198)

Interest income




67



49

Change in fair value of financial instruments and other


5,981



Income on equity investments


6,775



875

Interest expense




(30,436)



(19,786)


(Loss) income before income taxes


(12,891)



354,116

Benefit from (provision for) income taxes


3,695



(97,518)


Net (loss) income



(9,196)



256,598

Net income attributable to noncontrolling interests


866



1,942


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


(10,062)



254,656

Preferred stock dividends



2,002



1,749


Net (loss) income available to common shareholders

$

(12,064)


$

252,907












B. RILEY FINANCIAL, INC.

Adjusted EBITDA and Operating Adjusted EBITDA Reconciliation

(Unaudited)

(Dollars in thousands)




















Three Months Ended








March 31,








2022


2021

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

$

(10,062)


$

254,656

Adjustments:









(Benefit from) provision for income taxes


(3,695)



97,518


Interest expense


30,436



19,786


Interest income


(67)



(49)


Share based payments


17,013



5,526


Depreciation and amortization


7,848



6,759


Gain on extinguishment of loans


(1,102)




Transactions related costs and other


291



1,285















Total EBITDA adjustments


50,724



130,825
















Adjusted EBITDA

$

40,662


$

385,481

Operating EBITDA Adjustments:







Trading losses (income) and fair value adjustments on loans       

68,390



(266,942)


Other investment related expenses


(24,865)



4,178















Total Operating EBITDA Adjustments


43,525



(262,764)













Operating Adjusted EBITDA

$

84,187


$

122,717

B. RILEY FINANCIAL, INC.

Adjusted Net Income Reconciliation

(Unaudited)

(Dollars in thousands, except share data)




















Three Months Ended








March 31,








2022


2021

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

$

(10,062)


$

254,656

Adjustments:









Share based payments


17,013



5,526


Amortization of intangible assets


6,816



5,886


Gain on extinguishment of loans


(1,102)




Transactions related costs and other


291



1,285


Income tax effect of adjusting entries


(6,182)



(3,516)

Adjusted net income attributable to B. Riley Financial, Inc.

$

6,774


$

263,837













Adjusted income per common share:







Adjusted basic income per share 

$

0.24


$

9.78


Adjusted diluted income per share 

$

0.24


$

9.19













Shares used to calculate adjusted basic net income per share


27,855,033



26,972,275

Shares used to calculate adjusted diluted net income per share


27,855,033



28,710,368

View original content to download multimedia:

SOURCE B. Riley Financial

The above press release was provided courtesy of PRNewswire. The views, opinions and statements in the press release are not endorsed by Gray Media Group nor do they necessarily state or reflect those of Gray Media Group, Inc.