LOS ANGELES, May 4, 2023 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY) ("B. Riley" or the "Company"), a diversified financial services platform, today released results for the three-month period ending March 31, 2023.
Q1 2023 Financial Highlights
- Total revenues increased 75% to $432.1 million
- Net income of $15.1 million, or $0.51 diluted earnings per share (EPS)
- Operating revenues increased 43% to $380.5 million
- Operating Adjusted EBITDA of $80.1 million
- Total Adjusted EBITDA of $94.8 million
Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial, commented: "Our first quarter results demonstrate the versatility and resiliency of our platform. Over the past five years, we have undertaken several initiatives to further enhance and diversify our model. To generate $80 million of operating EBITDA amid a period of historically weak investment banking and liquidation activity only validates our strategy. As we look ahead, we see many opportunities to capitalize on the dislocations being presented by the current market environment and remain steadfast in our strategy."
Tom Kelleher, Co-Chief Executive Officer of B. Riley Financial, added: "Against the backdrop of challenging markets, we believe B. Riley is exceptionally positioned to support our clients. We have made a series of strategic hires to meet growing client demand and remain focused on enhancing our platform for the benefit of our colleagues, clients, and partners who continue to place their trust in us."
Declaration of Common DividendThe Company has declared a regular quarterly cash dividend of $1.00 per common share which will be payable on or about May 23 to common stockholders of record as of May 16.
First Quarter 2023 Financial SummaryNet income applicable to common shareholders was $15.1 million, or $0.51 diluted EPS. Income before income taxes was $24.5 million.
Three Months Ended | ||||||||||
March 31, | ||||||||||
(Dollars in thousands, except for share data) | 2023 | 2022 | ||||||||
Net income (loss) available to common shareholders | $ | 15,143 | $ | (12,064) | ||||||
Basic income (loss) per common share | $ | 0.53 | $ | (0.43) | ||||||
Diluted income (loss) per common share | $ | 0.51 | $ | (0.43) | ||||||
Total revenues increased 75% to $432.1 million for the first quarter of 2023, up from $246.8 million in the prior year quarter. The increase in revenues was primarily related to recent acquisitions including Targus, Lingo, and BullsEye Telecom, in addition to a significant increase in interest income from securities lending.
Total Adjusted EBITDA(1) increased 133% to $94.8 million for the first quarter of 2023, up from $40.7 million in the prior year quarter.
Operating revenues(2) increased 43% to $380.5 million for the quarter, up from $266.1 million in the prior year quarter.
Operating Adjusted EBITDA(3) declined slightly to $80.1 million compared to $84.2 million in the prior year quarter.
Three Months Ended | ||||||||||
March 31, | ||||||||||
(Dollars in thousands) | 2023 | 2022 | ||||||||
Operating Revenues (2) | $ | 380,522 | $ | 266,118 | ||||||
Investment Gains (Loss) (4) | 51,568 | (19,278) | ||||||||
Total Revenues | $ | 432,090 | $ | 246,840 | ||||||
Operating Adjusted EBITDA (3) | $ | 80,126 | $ | 84,187 | ||||||
Investment Adjusted EBITDA (5) | 14,705 | (43,525) | ||||||||
Total Adjusted EBITDA (1) | $ | 94,831 | $ | 40,662 | ||||||
Certain of the information set forth herein, including Operating Revenues, Adjusted EBITDA, and Operating Adjusted EBITDA, may be considered non-GAAP financial measures. Information about B. Riley Financial's use of non-GAAP financial measures is provided below under "Use of Non-GAAP Financial Measures."
Balance Sheet HighlightsAs of March 31, 2023, the Company had $210.0 million of cash and cash equivalents; $1.04 billion in net securities and other investments owned; and $772.1 million of loans receivable, at fair value. Cash and investments(6) totaled $2.08 billion at quarter-end. Total debt was $2.51 billion at March 31, 2023. Total debt, net of cash and investments,(6) was $426.7 million.
Segment Financial Summary
- Capital Markets segment revenue increased 80% to $185.4 million, up from $102.8 million in the prior year period. Segment income increased 56% to $86.0 million compared to $55.1 million in the prior year period.Excluding investment gains and losses,(4) Capital Markets segment operating revenue increased 10% to $135.1 million, up from $122.6 million in the prior year period. The increase was primarily driven by a significant increase in interest income from securities lending which helped to offset lower levels of investment banking and equity capital markets activity.
Segment Revenue | Segment Income | ||||||||||||
(Dollars in thousands) | Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||
Capital Markets | 2023 | 2022 | 2023 | 2022 | |||||||||
Operating | $ 135,115 | $ 122,649 | $ 44,145 | (7) | $ 50,008 | (7) | |||||||
Investment | 50,296 | (19,800) | 41,875 | 5,065 | |||||||||
Total | $ 185,411 | $ 102,849 | $ 86,020 | $ 55,073 | |||||||||
- Wealth Management segment revenues decreased to $49.8 million in the first quarter of 2023 from $77.5 million in the prior year quarter, reflecting the strategic realignment of this business throughout 2022. B. Riley Wealth had over $24 billion of client assets under management as of March 31, 2023.
- Auction and Liquidation segment revenues increased to $5.7 million, up from $3.4 million in the prior year period. 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 remained relatively flat at $25.0 million compared to the prior year quarter, reflecting activities related to appraisal engagements, bankruptcy restructuring, and forensic litigation consulting matters, in addition to real estate dispositions.
- Communications segment revenues increased to $86.9 million, up from $32.0 million in the prior year quarter, primarily driven by the acquisitions of Lingo and BullsEye Telecom in May and August of 2022, respectively. On a combined basis, communications businesses – magicJack, United Online, Marconi Wireless, Lingo and BullsEye Telecom— generated segment income of $10.8 million for the quarter.
- Consumer segment revenues increased to $70.0 million, up from $4.6 million in the prior year quarter. The significant increase was primarily driven by the acquisition of Targus in the fourth quarter of 2022, and revenues related the licensing of trademarks.
Segment Revenue | Segment Income (Loss) | ||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||
(Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||
Capital Markets | $ 185,411 | $ 102,849 | $ 86,020 | $ 55,073 | |||||||||
Wealth Management | 49,814 | 77,479 | 1,373 | (10,096) | |||||||||
Auction and Liquidation | 5,660 | 3,355 | 200 | (800) | |||||||||
Financial Consulting | 25,010 | 25,936 | 3,783 | 4,912 | |||||||||
Communications | 86,919 | 31,965 | 10,783 | 8,969 | |||||||||
Consumer | 70,003 | 4,557 | 1,646 | 3,218 | |||||||||
d | |||||||||||||
Share RepurchasesThe Company repurchased an aggregate total of $53.7 million of its common shares during the quarter. As of March 31, 2023, approximately $30 million was remaining under the Company's current share repurchase program authorized in March 2023.
Earnings Call DetailsManagement will host an investor call to discuss its first quarter results today, Thursday May 4, 2023 at 4:30 PM ET (1:30 PM PT). Investors may access the live audio webcast and archived recording at https://ir.brileyfin.com/events-and-presentations. A recording will be made available for replay until May 18, 2023.
Supplemental Financial DataAdditional details related to operating results and investment performance can be found in the First Quarter 2023 Financial Supplement on B. Riley Financial's investor relations website.
About B. Riley FinancialB. Riley Financial is a diversified financial services platform that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners. B. Riley leverages cross-platform expertise to provide clients with full service, collaborative solutions at every stage of the business life cycle. Through its affiliated subsidiaries, B. Riley provides end-to-end financial services across investment banking, 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. B. Riley opportunistically invests to benefit its shareholders, and certain affiliates originate and underwrite senior secured loans for asset-rich companies. B. Riley refers to B. Riley Financial, Inc. and/or one or more of its subsidiaries or affiliates. For more information, please visit www.brileyfin.com.
Note: Certain amounts for the quarter ended March 31, 2022 reflect restated amounts that were reported in our 2022 Annual Report on Form 10-K for the year ended December 31, 2022.
Footnotes (See "Note Regarding Use of Non-GAAP Financial Measures" for further discussion of these non-GAAP terms. For a reconciliation of Adjusted EBITDA, Operating Revenue, Operating Adjusted EBITDA, and Investment Adjusted EBITDA to the comparable GAAP financial measures, please see the Appendix hereto.)
(1) Adjusted EBITDA includes earnings before interest, taxes, depreciation, amortization, restructuring charge, share-based payments, gain on extinguishment of loans, impairment of tradenames, and transaction related and other costs.(2) Operating Revenue is defined as the sum of revenues from (i) Service and Fees, (ii) Interest Income - Loans and Securities Lending and (iii) Sales of Goods.(3) Operating Adjusted EBITDA is defined as Adjusted EBITDA excluding (i) Trading Income (Loss) and Fair Value Adjustments on Loans, (ii) Realized and Unrealized Gains (Losses) on Investments, and (iii) other investment related expenses.(4) Investment Gains (Loss) is defined as Trading Income (Loss) and Fair Value Adjustments on Loans.(5) Investment Adjusted EBITDA is defined as the sum of (i) Trading Income (Loss) and Fair Value Adjustments on Loans and (ii) Realized and Unrealized Gains (Losses) on Investments, 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) Defined as segment income (loss) excluding trading income (losses) and fair value adjustments on loans and other investment related operating expenses.
Note Regarding Use of Non-GAAP Financial MeasuresCertain 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 charge, 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, 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 (a) securities sold not yet purchased and (b) 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, 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 StatementsStatements 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 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 2022 Annual Report on Form 10-K 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, 2023. 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.
B. RILEY FINANCIAL, INC.Consolidated Balance Sheets(Dollars in thousands, except par value) | |||||||||||
March 31, | December 31, | ||||||||||
2023 | 2022 | ||||||||||
(Unaudited) | |||||||||||
Assets | |||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 209,971 | $ | 268,618 | |||||||
Restricted cash | 2,351 | 2,308 | |||||||||
Due from clearing brokers | 19,145 | 48,737 | |||||||||
Securities and other investments owned, at fair value | 1,049,230 | 1,129,268 | |||||||||
Securities borrowed | 2,942,843 | 2,343,327 | |||||||||
Accounts receivable, net | 120,853 | 149,110 | |||||||||
Due from related parties | 372 | 1,081 | |||||||||
Loans receivable, at fair value (includes $97,062 and $98,729 from related parties as of March31, 2023 and December 31, 2022, respectively) | 772,085 | 701,652 | |||||||||
Prepaid expenses and other assets | 491,872 | 460,696 | |||||||||
Operating lease right-of-use asset, net | 88,989 | 88,593 | |||||||||
Property and equipment, net | 27,577 | 27,141 | |||||||||
Goodwill | 523,997 | 512,595 | |||||||||
Other intangible assets, net | 366,060 | 374,098 | |||||||||
Deferred income taxes | 2,845 | 3,978 | |||||||||
Total assets | $ | 6,618,190 | $ | 6,111,202 | |||||||
Liabilities and Equity | |||||||||||
Liabilities | |||||||||||
Accounts payable | $ | 59,969 | $ | 81,384 | |||||||
Accrued expenses and other liabilities | 263,335 | 322,974 | |||||||||
Deferred revenue | 84,019 | 85,441 | |||||||||
Due to related parties and partners | 431 | 2,210 | |||||||||
Due to clearing brokers | 6,033 | 19,307 | |||||||||
Securities sold not yet purchased | 7,806 | 5,897 | |||||||||
Securities loaned | 2,937,982 | 2,334,031 | |||||||||
Operating lease liabilities | 100,075 | 99,124 | |||||||||
Deferred income taxes | 34,274 | 29,548 | |||||||||
Notes payable | 19,882 | 25,263 | |||||||||
Revolving credit facility | 139,463 | 127,678 | |||||||||
Term loan | 626,613 | 572,079 | |||||||||
Senior notes payable, net | 1,722,977 | 1,721,751 | |||||||||
Total liabilities | 6,002,859 | 5,426,687 | |||||||||
Redeemable noncontrolling interests in equity of subsidiaries | 174,967 | 178,622 | |||||||||
Total B. Riley Financial, Inc. stockholders' equity | 381,185 | 446,514 | |||||||||
Noncontrolling interests | 59,179 | 59,379 | |||||||||
Total equity | 440,364 | 505,893 | |||||||||
Total liabilities and equity | $ | 6,618,190 | $ | 6,111,202 | |||||||
B. RILEY FINANCIAL, INC.Consolidated Statements of Operations(Unaudited)(Dollars in thousands, except share data) | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
As Restated | |||||||||||
Revenues: | |||||||||||
Services and fees | $ | 235,559 | $ | 202,814 | |||||||
Trading income (loss) and fair value adjustments on loans | 51,568 | (19,278) | |||||||||
Interest income - Loans and securities lending | 77,186 | 61,426 | |||||||||
Sale of goods | 67,777 | 1,878 | |||||||||
Total revenues | 432,090 | 246,840 | |||||||||
Operating expenses: | |||||||||||
Direct cost of services | 54,397 | 11,651 | |||||||||
Cost of goods sold | 47,626 | 2,251 | |||||||||
Selling, general and administrative expenses | 212,627 | 175,199 | |||||||||
Restructuring charge | 93 | — | |||||||||
Interest expense - Securities lending and loan participations sold | 32,424 | 11,766 | |||||||||
Total operating expenses | 347,167 | 200,867 | |||||||||
Operating income | 84,923 | 45,973 | |||||||||
Other income (expense): | |||||||||||
Interest income | 2,574 | 67 | |||||||||
Dividend income | 13,204 | 7,861 | |||||||||
Realized and unrealized losses on investments | (28,442) | (49,112) | |||||||||
Change in fair value of financial instruments and other | (209) | 5,981 | |||||||||
(Loss) income from equity method investments | (10) | 6,775 | |||||||||
Interest expense | (47,561) | (30,436) | |||||||||
Income (loss) before income taxes | 24,479 | (12,891) | |||||||||
(Provision for) benefit from income taxes | (7,919) | 3,695 | |||||||||
Net income (loss) | 16,560 | (9,196) | |||||||||
Net (loss) income attributable to noncontrolling interests | |||||||||||
and redeemable noncontrolling interests | (595) | 866 | |||||||||
Net income (loss) attributable to B. Riley Financial, Inc. | 17,155 | (10,062) | |||||||||
Preferred stock dividends | 2,012 | 2,002 | |||||||||
Net income (loss) available to common shareholders | $ | 15,143 | $ | (12,064) | |||||||
Basic income (loss) per common share | $ | 0.53 | $ | (0.43) | |||||||
Diluted income (loss) per common share | $ | 0.51 | $ | (0.43) | |||||||
Weighted average basic common shares outstanding | 28,585,337 | 27,855,033 | |||||||||
Weighted average diluted common shares outstanding | 29,513,435 | 27,855,033 | |||||||||
B. RILEY FINANCIAL, INC.Adjusted EBITDA and Operating Adjusted EBITDA Reconciliation(Unaudited)(Dollars in thousands) | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net income (loss) attributable to B. Riley Financial, Inc. | $ | 17,155 | $ | (10,062) | |||||||
Adjustments: | |||||||||||
Provision for (benefit from) income taxes | 7,919 | (3,695) | |||||||||
Interest expense | 47,561 | 30,436 | |||||||||
Interest income | (2,574) | (67) | |||||||||
Share based payments | 13,746 | 17,013 | |||||||||
Depreciation and amortization | 13,077 | 7,848 | |||||||||
Restructuring charge | 93 | — | |||||||||
Gain on extinguishment of loans | — | (1,102) | |||||||||
Transactions related costs and other | (2,146) | 291 | |||||||||
Total EBITDA Adjustments | 77,676 | 50,724 | |||||||||
Adjusted EBITDA | $ | 94,831 | $ | 40,662 | |||||||
Operating EBITDA Adjustments: | |||||||||||
Trading (income) loss and fair value adjustments on loans | (51,568) | 19,278 | |||||||||
Realized and unrealized losses on investments | 28,442 | 49,112 | |||||||||
Other investment related expenses | 8,421 | (24,865) | |||||||||
Total Operating EBITDA Adjustments | (14,705) | 43,525 | |||||||||
Operating Adjusted EBITDA | $ | 80,126 | $ | 84,187 | |||||||
Contacts | |
Investors | Media |
Mike Frank | Jo Anne McCusker |
(212) 409-2424 | (646) 885-5425 |
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SOURCE B. Riley Financial