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