8-K
BRC Group Holdings, Inc. (RILY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The SecuritiesExchange Act of 1934
Date of Report (Date of earliest event reported):July 28, 2022
B. RILEY FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-37503 | 27-0223495 |
|---|---|---|
| (State or other jurisdiction | (Commission File Number) | (IRS Employer |
| of incorporation) | Identification No.) |
11100 Santa Monica Blvd., Suite 800
Los Angeles, CA 90025
310 - 966-1444
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Securities registered pursuant to Section 12(b)of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.0001 per share | RILY | Nasdaq Global Market |
| Depositary Shares, each representing a 1/1000th fractional interest in a 6.875% share of Series A Cumulative Perpetual Preferred Stock | RILYP | Nasdaq Global Market |
| Depositary Shares, each representing a 1/1000th fractional interest in a 7.375% share of Series B Cumulative Perpetual Preferred Stock | RILYL | Nasdaq Global Market |
| 6.50% Senior Notes due 2026 | RILYN | Nasdaq Global Market |
| 6.375% Senior Notes due 2025 | RILYM | Nasdaq Global Market |
| 6.75% Senior Notes due 2024 | RILYO | Nasdaq Global Market |
| 6.00% Senior Notes due 2028 | RILYT | Nasdaq Global Market |
| 5.50% Senior Notes due 2026 | RILYK | Nasdaq Global Market |
| 5.25% Senior Notes due 2028 | RILYZ | Nasdaq Global Market |
| 5.00% Senior Notes due 2026 | RILYG | Nasdaq Global Market |
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On July 28, 2022, B. Riley Financial, Inc. (the “Company”) issued a press release reporting its financial results for the fiscal quarter ended June 30, 2022. A copy of the press release is attached hereto as Exhibit 99.1.
Item 7.01. Regulation FD Disclosure.
Additionally, on July 28, 2022, in conjunction with the press release described above, the Company posted to its website at https://ir.brileyfin.com/events-and-presentations, certain supplemental financial information for the fiscal quarter ended June 30, 2022 and certain prior periods. A copy of the information is attached hereto as Exhibit 99.2.
The information set forth in this Current Report, including Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Current Report, including Exhibits 99.1 and 99.2 attached hereto, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing to this Current Report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Earnings Release dated July 28, 2022 |
| 99.2 | Second Quarter 2022 Supplemental Financial Data dated July 28, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
1
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| July 28, 2022 | B. RILEY FINANCIAL, INC. | ||
|---|---|---|---|
| By: | /s/ Phillip J. Ahn | ||
| Name: | Phillip J. Ahn | ||
| Title: | Chief Financial Officer and <br><br>Chief Operating Officer |
2
Exhibit 99.1
B. Riley Financial Reports Second Quarter 2022Results; Declares $1.00 Dividend
Q2 GAAP Revenues of $42.7 million; OperatingRevenues of $266.6 million
Q2 GAAP Net Loss of ($142.2 million), OperatingAdjusted EBITDA of $74.2 million
Declares Quarterly Dividend of $1.00 per commonshare
LOS ANGELES, July 28, 2022 – B. Riley Financial, Inc. (NASDAQ: RILY) (“B. Riley” or the “Company”), a diversified financial services platform, today announced results for the three-month period ended June 30, 2022.
Bryant Riley, Chairman and Co-Chief ExecutiveOfficer of B. Riley Financial, commented: “Our second quarter results demonstrated the relative strength and ability of our non-cyclical businesses to steadily perform amid disruptive markets. Periods of volatility have historically presented our most attractive opportunities to differentiate ourselves with clients, attract top talent, and generate sustainable share gains across key business lines. We believe the current environment is no exception.”
“Despite the markdown on our investments and declines in our underwriting business, our dynamic platform has demonstrated continued resiliency. We have earned over $17.00 per share for our shareholders since 2019, and despite a GAAP net loss of ($43.4 million) over the trailing twelve-month period, we delivered operating EBITDA of $366 million in the same period, representing a meaningful increase compared to $114 million in 2019. Increasing contributions from less cyclical and less episodic businesses have exceeded the capital needed to support our dividend while providing us flexibility to continue to invest across our business.”
“At the same time, strategic investments remain an integral part of our business, as a strategy that helps competitively advantage our clients. Our cash and investment portfolio has been diversified to balance our allocation between debt and equity-related investments. In our credit positions, we have demonstrated an ability to structure lending opportunities that enable us to earn attractive spreads with minimal impairments over time. The remainder of our portfolio is focused on public and private small-cap companies where we have high conviction in capital appreciation over our investment horizon. Securities in our investment portfolio have exceeded the Russell 2000 Index in multiple market cycles, having generated total returns of more than 90% to B. Riley since 2019. As we look ahead, we remain optimistic about the total return potential of our investment portfolio, as well as our ability to capitalize on opportunities being presented by the current market dislocation.”
Tom Kelleher, Co-Chief Executive Officer ofB. Riley Financial, added: “During the quarter, the balance of our operating businesses continued to deliver steady cash flow to our platform while performing to support our clients. Amid another transformative period for B. Riley, we have made meaningful progress in expanding our existing businesses while consolidating recent acquisitions. Our communications business with Lingo serves as a leading source of recurring cash flow for our platform as financial consulting performs steadily quarter-to-quarter and year-to-year. With core capabilities in restructuring, asset disposition, and distressed financing, we believe our diversified platform stands to benefit during periods of market austerity. As we begin to realize synergies from combining National Holdings and FocalPoint into our respective legacy wealth and investment banking businesses, we are looking to the horizon and evaluating other accretive acquisitions to accelerate our growth.”
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 August 23 to common stockholders of record as of August 11.
| www.brileyfin.com | NASDAQ: RILY | 1 |
| --- | --- |
Financial Summary
| Three Months Ended | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||
| (Dollars in thousands, except for share data) | 2022 | 2021 | 2022 | 2021 | ||||||
| Net (loss) income available to common shareholders | $ | (142,161 | ) | $ | 73,887 | $ | (154,225 | ) | $ | 326,794 |
| Basic (loss) income per common share | $ | (5.07 | ) | $ | 2.70 | $ | (5.52 | ) | $ | 12.03 |
| Diluted (loss) income per common share | $ | (5.07 | ) | $ | 2.58 | $ | (5.52 | ) | $ | 11.39 |
Net loss available to common shareholders of ($142.2 million), or ($5.07) diluted earnings per share (EPS), was driven by investment loss ^(4)^ of ($223.9 million) related to the decline in capital markets which impacted the value of the Company’s investment portfolio. Net loss was ($154.2 million) year-to-date, or diluted EPS of ($5.52).
| Three Months Ended | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||
| (Dollars in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||
| Operating Revenues ^(2)^ | $ | 266,627 | $ | 304,091 | $ | 540,606 | $ | 637,308 | ||
| Investment (Loss) Gains ^(4)^ | (223,927 | ) | 32,679 | (292,317 | ) | 299,621 | ||||
| Total Revenues | $ | 42,700 | $ | 336,770 | $ | 248,289 | $ | 936,929 | ||
| Operating Adjusted EBITDA ^(3)^ | $ | 74,220 | $ | 92,124 | $ | 158,407 | $ | 214,841 | ||
| Investment Adjusted EBITDA ^(5)^ | (209,997 | ) | 32,763 | (253,522 | ) | 295,527 | ||||
| Total Adjusted EBITDA ^(1)^ | $ | (135,777 | ) | $ | 124,887 | $ | (95,115 | ) | $ | 510,368 |
| ● | Total<br>revenues were $42.7 million for the quarter and $248.3 million year-to-date. |
|---|---|
| ● | Operating revenues ^(2)^ were $266.6<br>million for the quarter and $540.6 million year-to-date. |
| --- | --- |
| ● | Operating adjusted EBITDA ^(3)^ of $74.2<br>million for the quarter and $158.4 million year-to-date. |
| --- | --- |
| ● | Total adjusted EBITDA ^(1)^loss of<br>($135.8 million) for the quarter and ($95.1 million) year-to-date. |
| --- | --- |
As of June 30, 2022, cash and investments ^(6)^ totaled approximately $2.2 billion including cash and cash equivalents of $216.1 million. Total cash and investments, ^(6)^ net of debt, was $61.5 million.
| www.brileyfin.com | NASDAQ: RILY | 2 |
| --- | --- |
Segment Financial Summary
| Operating<br><br>Revenues ^(2)^ | Investment Gains<br><br>(Loss) ^(4)^ | Total Segment<br><br>Revenue | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended<br><br>June 30, | Three Months Ended<br><br>June 30, | Three Months Ended<br><br>June 30, | ||||||||||||||||
| (Dollars in thousands) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Capital Markets | $ | 129,825 | $ | 151,488 | $ | (225,455 | ) | $ | 29,897 | $ | (95,630 | ) | $ | 181,385 | ||||
| Wealth Management | 60,861 | 87,444 | 1,528 | 2,865 | 62,389 | 90,309 | ||||||||||||
| Auction and Liquidation | 3,924 | 17,277 | - | - | 3,924 | 17,277 | ||||||||||||
| Financial Consulting | 24,310 | 23,735 | - | - | 24,310 | 23,735 | ||||||||||||
| Principal Investments - Communications and Other | 42,533 | 19,646 | - | - | 42,533 | 19,646 | ||||||||||||
| Brands | 5,174 | 4,501 | - | (83 | ) | 5,174 | 4,418 | |||||||||||
| Segment OperatingIncome (Loss) ^(7)^ | Investment Income<br><br>(Loss) ^(5)^ | Total Segment<br><br>Income (Loss) | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended<br><br>June 30, | Three Months Ended<br><br>June 30, | Three Months Ended<br><br>June 30, | ||||||||||||||||
| (Dollars in thousands) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Capital Markets | $ | 53,282 | $ | 74,701 | $ | (211,525 | ) | $ | 29,981 | $ | (158,243 | ) | $ | 104,682 | ||||
| Wealth Management | (8,841 | ) | (3,598 | ) | 1,528 | 2,865 | (7,313 | ) | (733 | ) | ||||||||
| Auction and Liquidation | 451 | 3,555 | - | - | 451 | 3,555 | ||||||||||||
| Financial Consulting | 4,284 | 4,175 | - | - | 4,284 | 4,175 | ||||||||||||
| Principal Investments - Communications and Other | 7,647 | 7,275 | - | - | 7,647 | 7,275 | ||||||||||||
| Brands | 3,773 | 3,096 | - | (83 | ) | 3,773 | 3,013 |
For the three months ended June 30, 2022:
Excluding investment loss of ($225.5 million),^(4)^ Capital Markets segment operating revenues decreased to $129.8 million from $151.5 million in the prior year period. Segment operating income ^(7)^ fell to $53.3 million from $74.7 million in the prior year period. Results for the quarter were impacted by declines in investment banking and institutional brokerage activities that were consistent with the industry-wide reduction in deal activity.
Wealth Management revenues fell to $62.4 million with a segment loss of ($7.3 million) due to reduced activity and the impact of a settlement related to a legacy National Securities regulatory matter which pre-dated the Company’s acquisition in 2021.
Auction and Liquidation revenues were $3.9 million with segment income of $0.5 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 revenues increased to $24.3 million, up from $23.7 million in the prior year period. Segment income increased to $4.3 million, up from $4.2 million in the prior year period. The increase was driven primarily by bankruptcy restructuring and forensic litigation consulting matters, in addition to appraisal engagements and real estate dispositions.
Principal Investments – Communicationsand Other segment revenues increased to $42.5 million, up from $19.6 million in the prior year period due to the addition of Lingo and Marconi Wireless. On a combined basis, communications businesses – magicJack, United Online, Marconi Wireless and Lingo—along with other principal investments, generated segment income of $7.6 million for the quarter.
Brands segment revenues increased to $5.2 million, up from $4.4 million in the prior year period related to the licensing of trademarks for six brands: Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too, and Nanette Lepore. Segment income increased to $3.8 million, up from $3.0 million in the prior year period.
| www.brileyfin.com | NASDAQ: RILY | 3 |
| --- | --- |
| Operating<br><br>Revenues ^(2)^ | Investment<br><br>Gains (Loss) ^(4)^ | Total Segment<br><br>Revenue | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Six Months Ended<br><br>June 30, | Six Months Ended<br><br>June 30, | Six Months Ended<br><br>June 30, | ||||||||||||
| (Dollars in thousands) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||
| Capital Markets | $ | 260,335 | $ | 359,387 | $ | (294,367 | ) | $ | 294,400 | $ | (34,032 | ) | $ | 653,787 |
| Wealth Management | 137,818 | 152,986 | 2,050 | 5,221 | 139,868 | 158,207 | ||||||||
| Auction and Liquidation | 7,279 | 30,727 | - | - | 7,279 | 30,727 | ||||||||
| Financial Consulting | 50,246 | 45,144 | - | - | 50,246 | 45,144 | ||||||||
| Principal Investments - Communications and Other | 75,197 | 40,175 | - | - | 75,197 | 40,175 | ||||||||
| Brands | 9,731 | 8,889 | - | - | 9,731 | 8,889 |
| Segment OperatingIncome (Loss) ^(7)^ | Investment<br><br>Income (Loss) ^(5)^ | Total Segment<br><br>Income (Loss) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Six Months Ended<br><br>June 30, | Six Months Ended<br><br>June 30, | Six Months Ended<br><br>June 30, | ||||||||||||||
| (Dollars in thousands) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||
| Capital Markets | $ | 111,151 | $ | 180,684 | $ | (255,572 | ) | $ | 290,306 | $ | (144,421 | ) | $ | 470,990 | ||
| Wealth Management | (19,459 | ) | (1,927 | ) | 2,050 | 5,221 | (17,409 | ) | 3,294 | |||||||
| Auction and Liquidation | (349 | ) | 4,462 | - | - | (349 | ) | 4,462 | ||||||||
| Financial Consulting | 9,196 | 7,497 | - | - | 9,196 | 7,497 | ||||||||||
| Principal Investments - Communications and Other | 16,491 | 14,806 | - | - | 16,491 | 14,806 | ||||||||||
| Brands | 6,991 | 6,094 | - | - | 6,991 | 6,094 |
For the six months ended June 30, 2022:
Excluding the year-to-date investment loss ^(4)^ of ($294.4 million), Capital Markets segment operating revenues ^(2)^ were $260.3 million with segment operating income ^(7)^ of $111.2 million.
Wealth Management segment revenues were $139.9 million with segment loss of ($17.4 million), year-to-date.
Auction and Liquidation segment revenues were $7.3 million with a segment loss of ($0.3 million), year-to-date.
Financial Consulting year-to-date segment revenues increased to $50.2 million, up from $45.1 million for the prior year-ago period. Segment income of $9.2 million increased compared to $7.5 million in the prior year-ago period.
Principal Investments – Communicationsand Other segment revenues were $75.2 million with segment income of $16.5 million, year-to-date.
Brands segment year-to-date revenues increased to $9.7 million, up from $8.9 million in the prior year-ago period. Segment income increased to $7.0 million, up from $6.1 million in the prior year ago period.
Investments in the Hurley and Justice brands contributed dividend income of $7.4 million for the quarter, and $13.3 million year-to-date. Results related to the Hurley and Justice investments are recognized as Capital Markets segment operating income. ^(7)^
Supplemental Financial Data
Additional details related to operating results and investment performance can be found in the Second Quarter 2022 Financial Supplement on B. Riley’s investor relations website.
| www.brileyfin.com | NASDAQ: RILY | 4 |
| --- | --- |
Conference Call Details
Management will host an investor call to discuss its second quarter results today, Thursday, July 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 ir.brileyfin.com.
| Date and Time: | Thursday, July 28, 2022 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) |
|---|---|
| Dial In: | 1-855-327-6837 (toll-free) or 1-631-891-4304 (international) |
| Audio Webcast: | https://ir.brileyfin.com/events-and-presentations |
| Replay (expires Thursday, August 4, 2022) | |
| --- | --- |
| Dial In: | 1-844-512-2921; 10019761 (pin) |
About B. Riley Financial
B. 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, collaborative 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 registered 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.
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,<br>amortization, restructuring costs, share-based payments, gain on extinguishment of loans, impairment of tradenames, and transaction related<br>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<br>and fees, interest income - loans and securities lending, and sale of goods. |
| --- | --- |
| (3) | Operating adjusted EBITDA is defined as adjusted EBITDA excluding<br>trading income (losses) and fair value adjustments on loans and other investment related expenses. |
| --- | --- |
| (4) | Investment gains (loss) is defined as trading income (losses)<br>and fair value adjustments on loans. |
| --- | --- |
| (5) | Investment adjusted EBITDA and investment income (loss) are<br>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<br>cash equivalents, restricted cash, due from clearing brokers net of due to clearing brokers, securities and other investments owned,<br>at fair value net of (i) securities sold not yet purchased and (ii) noncontrolling interest related to investments, advances against<br>customer contracts, loans receivable, at fair value net of loan participations sold, and other investments reported in prepaid and other<br>assets. |
| --- | --- |
| (7) | Segment operating income (loss) is defined as segment income<br>(loss) excluding trading income (losses) and fair value adjustments on loans and other investment related expenses. |
| --- | --- |
| www.brileyfin.com | NASDAQ: RILY | 5 |
| --- | --- |
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 June 30, 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 undertakes no duty to update this information.
| Contacts | |
|---|---|
| Investors | Media |
| Mike Frank | Jo Anne McCusker |
| ir@brileyfin.com | press@brileyfin.com |
| (212) 409-2424 | (646) 885-5425 |
| www.brileyfin.com | NASDAQ: RILY | 6 |
| --- | --- |
B. RILEY FINANCIAL, INC.
Consolidated Balance Sheets
(Dollars in thousands, except par value)
| December 31, | |||||
|---|---|---|---|---|---|
| 2021 | |||||
| Assets | |||||
| Assets: | |||||
| Cash and cash equivalents | 216,098 | $ | 278,933 | ||
| Restricted cash | 928 | 927 | |||
| Due from clearing brokers | 50,597 | 29,657 | |||
| Securities and other investments owned, at fair value | 1,144,896 | 1,532,095 | |||
| Securities borrowed | 2,414,074 | 2,090,966 | |||
| Accounts receivable, net | 52,935 | 49,673 | |||
| Due from related parties | 645 | 2,074 | |||
| Loans receivable, at fair value (includes 88,893 and 167,744 from related parties as of June 30, 2022 and December 31, 2021, respectively) | 770,840 | 873,186 | |||
| Prepaid expenses and other assets | 480,276 | 463,502 | |||
| Operating lease right-of-use assets | 59,806 | 56,969 | |||
| Property and equipment, net | 14,182 | 12,870 | |||
| Goodwill | 394,331 | 250,568 | |||
| Other intangible assets, net | 270,322 | 207,651 | |||
| Deferred tax assets, net | 5,287 | 2,848 | |||
| Total assets | 5,875,217 | $ | 5,851,919 | ||
| Liabilities and Equity | |||||
| Liabilities: | |||||
| Accounts payable | 22,428 | $ | 6,326 | ||
| Accrued expenses and other liabilities | 245,773 | 343,750 | |||
| Deferred revenue | 79,226 | 69,507 | |||
| Deferred tax liabilities, net | — | 93,055 | |||
| Due to related parties and partners | 470 | — | |||
| Due to clearing brokers | 24,695 | 69,398 | |||
| Securities sold not yet purchased | 5,403 | 28,623 | |||
| Securities loaned | 2,414,201 | 2,088,685 | |||
| Operating lease liabilities | 70,972 | 69,072 | |||
| Notes payable | 23,186 | 357 | |||
| Revolving credit facility | 80,000 | 80,000 | |||
| Term loans, net | 367,815 | 346,385 | |||
| Senior notes payable, net | 1,644,778 | 1,606,560 | |||
| Total liabilities | 4,978,947 | 4,801,718 | |||
| Commitments and contingencies | |||||
| Redeemable noncontrolling interests in equity of subsidiaries | 352,894 | 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 June 30, 2022 and December 31, 2021, respectively; and liquidation preference of 113,380 and 112,790 as of June 30, 2022 and December 31, 2021, respectively | — | — | |||
| Common stock, 0.0001 par value; 100,000,000 shares authorized; 28,290,458 and 27,591,028 issued and outstanding as of June 30, 2022 and December 31, 2020, respectively | 3 | 3 | |||
| Additional paid-in capital | 459,220 | 413,486 | |||
| Retained earnings | 32,570 | 248,862 | |||
| Accumulated other comprehensive loss | (3,884 | ) | (1,080 | ) | |
| Total B. Riley Financial, Inc. stockholders' equity | 487,909 | 661,271 | |||
| Noncontrolling interests | 55,467 | 43,930 | |||
| Total equity | 543,376 | 705,201 | |||
| Total liabilities and equity | 5,875,217 | $ | 5,851,919 |
All values are in US Dollars.
| www.brileyfin.com | NASDAQ: RILY | 7 |
| --- | --- |
B. RILEY FINANCIAL, INC.
Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except share data)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Revenues: | ||||||||||||
| Services and fees | $ | 200,905 | $ | 266,143 | $ | 411,580 | $ | 555,612 | ||||
| Trading (losses) income and fair value adjustments on loans | (223,927 | ) | 32,679 | (292,317 | ) | 299,621 | ||||||
| Interest income - Loans and securities lending | 63,835 | 25,491 | 125,261 | 62,411 | ||||||||
| Sale of goods | 1,887 | 12,457 | 3,765 | 19,285 | ||||||||
| Total revenues | 42,700 | 336,770 | 248,289 | 936,929 | ||||||||
| Operating expenses: | ||||||||||||
| Direct cost of services | 17,785 | 12,094 | 29,436 | 23,416 | ||||||||
| Cost of goods sold | 1,994 | 3,626 | 4,245 | 8,952 | ||||||||
| Selling, general and administrative expenses | 167,136 | 199,922 | 342,335 | 391,266 | ||||||||
| Interest expense - Securities lending and loan participations sold | 14,544 | 10,983 | 26,310 | 30,172 | ||||||||
| Total operating expenses | 201,459 | 226,625 | 402,326 | 453,806 | ||||||||
| Operating (loss) income | (158,759 | ) | 110,145 | (154,037 | ) | 483,123 | ||||||
| Other income (expense): | ||||||||||||
| Interest income | 500 | 56 | 567 | 105 | ||||||||
| Change in fair value of financial instruments and other | 4,321 | 6,509 | 10,302 | 6,509 | ||||||||
| (Loss) income from equity investments | (3,399 | ) | (852 | ) | 3,376 | 23 | ||||||
| Interest expense | (31,764 | ) | (20,856 | ) | (62,200 | ) | (40,642 | ) | ||||
| (Loss) income before income taxes | (189,101 | ) | 95,002 | (201,992 | ) | 449,118 | ||||||
| Benefit from (provision for) income taxes | 52,513 | (19,902 | ) | 56,208 | (117,420 | ) | ||||||
| Net (loss) income | (136,588 | ) | 75,100 | (145,784 | ) | 331,698 | ||||||
| Net income (loss) attributable to<br> noncontrolling interests and redeemable noncontrolling interests | 3,571 | (576 | ) | 4,437 | 1,366 | |||||||
| Net (loss) income attributable to B. Riley Financial, Inc. | (140,159 | ) | 75,676 | (150,221 | ) | 330,332 | ||||||
| Preferred stock dividends | 2,002 | 1,789 | 4,004 | 3,538 | ||||||||
| Net (loss) income available to common shareholders | $ | (142,161 | ) | $ | 73,887 | $ | (154,225 | ) | 326,794 | |||
| Basic (loss) income per common share | $ | (5.07 | ) | $ | 2.70 | $ | (5.52 | ) | $ | 12.03 | ||
| Diluted (loss) income per common share | $ | (5.07 | ) | $ | 2.58 | $ | (5.52 | ) | $ | 11.39 | ||
| Weighted average basic common shares outstanding | 28,051,570 | 27,344,184 | 27,953,845 | 27,159,257 | ||||||||
| Weighted average diluted common shares outstanding | 28,051,570 | 28,668,465 | 27,953,845 | 28,690,444 |
| www.brileyfin.com | NASDAQ: RILY | 8 |
| --- | --- |
B. RILEY FINANCIAL, INC.
Segment Financial Information
(Unaudited)
(Dollars in thousands)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Capital Markets segment: | ||||||||||||
| Revenues - Services and fees | $ | 67,426 | $ | 125,997 | $ | 136,510 | $ | 296,976 | ||||
| Trading (losses) income and fair value adjustments on loans | (225,455 | ) | 29,897 | (294,367 | ) | 294,400 | ||||||
| Interest income - Loans and securities lending | 62,399 | 25,491 | 123,825 | 62,411 | ||||||||
| Total revenues | (95,630 | ) | 181,385 | (34,032 | ) | 653,787 | ||||||
| Selling, general and administrative expenses | (45,865 | ) | (65,473 | ) | (79,982 | ) | (151,613 | ) | ||||
| Interest expense - Securities lending and loan participations sold | (14,544 | ) | (10,983 | ) | (26,310 | ) | (30,172 | ) | ||||
| Depreciation and amortization | (2,204 | ) | (247 | ) | (4,097 | ) | (1,012 | ) | ||||
| Segment (loss) income | (158,243 | ) | 104,682 | (144,421 | ) | 470,990 | ||||||
| Wealth Management segment: | ||||||||||||
| Revenues - Services and fees | 60,861 | 87,444 | 137,818 | 152,986 | ||||||||
| Trading income and fair value adjustments on loans | 1,528 | 2,865 | 2,050 | 5,221 | ||||||||
| Total revenues | 62,389 | 90,309 | 139,868 | 158,207 | ||||||||
| Selling, general and administrative expenses | (68,394 | ) | (88,702 | ) | (154,136 | ) | (150,174 | ) | ||||
| Depreciation and amortization | (1,308 | ) | (2,340 | ) | (3,141 | ) | (4,739 | ) | ||||
| Segment (loss) income | (7,313 | ) | (733 | ) | (17,409 | ) | 3,294 | |||||
| Auction and Liquidation segment: | ||||||||||||
| Revenues - Services and fees | 2,488 | 5,534 | 5,843 | 12,892 | ||||||||
| Revenues - Sale of goods | — | 11,743 | — | 17,835 | ||||||||
| Interest income - Loans and securities lending | 1,436 | — | 1,436 | — | ||||||||
| Total revenues | 3,924 | 17,277 | 7,279 | 30,727 | ||||||||
| Direct cost of services | (1,296 | ) | (7,540 | ) | (3,631 | ) | (14,120 | ) | ||||
| Cost of goods sold | — | (3,105 | ) | — | (7,579 | ) | ||||||
| Selling, general and administrative expenses | (2,177 | ) | (3,077 | ) | (3,997 | ) | (4,566 | ) | ||||
| Segment income (loss) | 451 | 3,555 | (349 | ) | 4,462 | |||||||
| Financial Consulting segment: | ||||||||||||
| Revenues - Services and fees | 24,310 | 23,735 | 50,246 | 45,144 | ||||||||
| Selling, general and administrative expenses | (19,948 | ) | (19,471 | ) | (40,891 | ) | (37,460 | ) | ||||
| Depreciation and amortization | (78 | ) | (89 | ) | (159 | ) | (187 | ) | ||||
| Segment income | 4,284 | 4,175 | 9,196 | 7,497 | ||||||||
| Principal Investments - Communications and Other segment: | ||||||||||||
| Revenues - Services and fees | 40,646 | 18,932 | 71,432 | 38,725 | ||||||||
| Revenues - Sale of goods | 1,887 | 714 | 3,765 | 1,450 | ||||||||
| Total revenues | 42,533 | 19,646 | 75,197 | 40,175 | ||||||||
| Direct cost of services | (16,489 | ) | (4,554 | ) | (25,805 | ) | (9,296 | ) | ||||
| Cost of goods sold | (1,994 | ) | (521 | ) | (4,245 | ) | (1,373 | ) | ||||
| Selling, general and administrative expenses | (12,808 | ) | (4,768 | ) | (21,836 | ) | (9,638 | ) | ||||
| Depreciation and amortization | (3,595 | ) | (2,528 | ) | (6,820 | ) | (5,062 | ) | ||||
| Segment income | 7,647 | 7,275 | 16,491 | 14,806 | ||||||||
| Brands segment: | ||||||||||||
| Revenues - Services and fees | 5,174 | 4,501 | 9,731 | 8,889 | ||||||||
| Trading loss and fair value adjustments on loans | — | (83 | ) | — | — | |||||||
| Total revenues | 5,174 | 4,418 | 9,731 | 8,889 | ||||||||
| Selling, general and administrative expenses | (818 | ) | (690 | ) | (1,574 | ) | (1,366 | ) | ||||
| Depreciation and amortization | (583 | ) | (715 | ) | (1,166 | ) | (1,429 | ) | ||||
| Segment income | 3,773 | 3,013 | 6,991 | 6,094 | ||||||||
| Consolidated operating (loss) income from reportable segments | (149,401 | ) | 121,967 | (129,501 | ) | 507,143 | ||||||
| Corporate and other expenses | (9,358 | ) | (11,822 | ) | (24,536 | ) | (24,020 | ) | ||||
| Interest income | 500 | 56 | 567 | 105 | ||||||||
| Change in fair value of financial instruments and other | 4,321 | 6,509 | 10,302 | 6,509 | ||||||||
| (Loss) Income on equity investments | (3,399 | ) | (852 | ) | 3,376 | 23 | ||||||
| Interest expense | (31,764 | ) | (20,856 | ) | (62,200 | ) | (40,642 | ) | ||||
| (Loss) income before income taxes | (189,101 | ) | 95,002 | (201,992 | ) | 449,118 | ||||||
| Benefit from (provision for) income taxes | 52,513 | (19,902 | ) | 56,208 | (117,420 | ) | ||||||
| Net (loss) income | (136,588 | ) | 75,100 | (145,784 | ) | 331,698 | ||||||
| Net income (loss) attributable to<br> noncontrolling interests and redeemable noncontrolling interests | 3,571 | (576 | ) | 4,437 | 1,366 | |||||||
| Net (loss) income attributable to B. Riley Financial, Inc. | (140,159 | ) | 75,676 | (150,221 | ) | 330,332 | ||||||
| Preferred stock dividends | 2,002 | 1,789 | 4,004 | 3,538 | ||||||||
| Net (loss) income available to common shareholders | $ | (142,161 | ) | $ | 73,887 | $ | (154,225 | ) | $ | 326,794 |
| www.brileyfin.com | NASDAQ: RILY | 9 |
| --- | --- |
B. RILEY FINANCIAL, INC.
Adjusted EBITDA and Operating Adjusted EBITDAReconciliation
(Unaudited)
(Dollars in thousands)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Net (loss) income attributable to B. Riley Financial, Inc. | $ | (140,159 | ) | $ | 75,676 | $ | (150,221 | ) | $ | 330,332 | ||
| Adjustments: | ||||||||||||
| (Benefit from) provision for income taxes | (52,513 | ) | 19,902 | (56,208 | ) | 117,420 | ||||||
| Interest expense | 31,764 | 20,856 | 62,200 | 40,642 | ||||||||
| Interest income | (500 | ) | (56 | ) | (567 | ) | (105 | ) | ||||
| Share based payments | 14,202 | 8,608 | 31,215 | 14,134 | ||||||||
| Depreciation and amortization | 7,961 | 6,165 | 15,809 | 12,924 | ||||||||
| Gain on extinguishment of loans | — | (6,509 | ) | (1,102 | ) | (6,509 | ) | |||||
| Transactions related costs and other | 3,468 | 245 | 3,759 | 1,530 | ||||||||
| Total EBITDA adjustments | 4,382 | 49,211 | 55,106 | 180,036 | ||||||||
| Adjusted EBITDA | $ | (135,777 | ) | $ | 124,887 | $ | (95,115 | ) | $ | 510,368 | ||
| Operating EBITDA Adjustments: | ||||||||||||
| Trading losses (income) and fair value adjustments on loans | 223,927 | (32,679 | ) | 292,317 | (299,621 | ) | ||||||
| Other investment related expenses | (13,930 | ) | (84 | ) | (38,795 | ) | 4,094 | |||||
| Total Operating EBITDA Adjustments | 209,997 | (32,763 | ) | 253,522 | (295,527 | ) | ||||||
| Operating Adjusted EBITDA | $ | 74,220 | $ | 92,124 | $ | 158,407 | $ | 214,841 |
| www.brileyfin.com | NASDAQ: RILY | 10 |
| --- | --- |
B. RILEY FINANCIAL, INC.
Adjusted Net Income Reconciliation
(Unaudited)
(Dollars in thousands, except share data)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Net (loss) income attributable to B. Riley Financial, Inc. | $ | (140,159 | ) | $ | 75,676 | $ | (150,221 | ) | $ | 330,332 | ||
| Adjustments: | ||||||||||||
| Share based payments | 14,202 | 8,608 | 31,215 | 14,134 | ||||||||
| Amortization of intangible assets | 6,940 | 5,134 | 13,756 | 11,020 | ||||||||
| Gain on extinguishment of loans | — | (6,509 | ) | (1,102 | ) | (6,509 | ) | |||||
| Transactions related costs and other | 3,468 | 245 | 3,759 | 1,530 | ||||||||
| Income tax effect of adjusting entries | (6,707 | ) | (1,557 | ) | (12,889 | ) | (5,073 | ) | ||||
| Adjusted net (loss) income attributable to B. Riley Financial, Inc. | $ | (122,256 | ) | $ | 81,597 | $ | (115,482 | ) | $ | 345,434 | ||
| Adjusted (loss) income per common share: | ||||||||||||
| Adjusted basic (loss) income per share | $ | (4.36 | ) | $ | 2.98 | $ | (4.13 | ) | $ | 12.72 | ||
| Adjusted diluted (loss) income per share | $ | (4.36 | ) | $ | 2.85 | $ | (4.13 | ) | $ | 12.04 | ||
| Shares used to calculate adjusted basic net income per share | 28,051,570 | 27,344,184 | 27,953,845 | 27,159,257 | ||||||||
| Shares used to calculate adjusted diluted net income per share | 28,051,570 | 28,668,465 | 27,953,845 | 28,690,444 |
# # #
Source: B. Riley Financial, Inc.
| www.brileyfin.com | NASDAQ: RILY | 11 |
|---|
Exhibit 99.2
1 NASDAQ: RILY Second Quarter 2022 Supplemental Financial Data July 28, 2022
Reconciliation of U.S. GAAP to Non - GAAP Measures 2 (Unaudited, dollars in thousands) Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Adj. EBITDA and Operating Adj. EBITDA Reconciliation Net income (loss) attributable to B. Riley Financial, Inc. $ 75,676 $ 50,550 $ 64,172 $ (10,062) $ (140,159) EBITDA Adjustments: Provision for (benefit from) income taxes 19,902 22,693 23,847 (3,695) (52,513) Interest expense 20,856 25,372 26,441 30,436 31,764 Interest income (56) (70) (54) (67) (500) Share based payments 8,608 9,374 12,503 17,013 14,202 Depreciation and amortization 6,165 6,142 6,805 7,848 7,961 Gain on extinguishment of loans (6,509) — — (1,102) — Transactions related costs and other 245 40 4,311 291 3,468 Total EBITDA Adjustments 49,211 63,551 73,853 50,724 4,382 Adjusted EBITDA $ 124,887 $ 114,101 $ 138,025 $ 40,662 $ (135,777) Operating EBITDA Adjustments: Trading (income) losses and fair value adjustments on loans (32,679) (18,197) (68,858) 68,390 223,927 Other investment related expenses (84) 5,187 36,930 (24,865) (13,930) Total Operating EBITDA Adjustments (32,763) (13,010) (31,928) 43,525 209,997 Operating Adjusted EBITDA $ 92,124 $ 101,091 $ 106,097 $ 84,187 $ 74,220
Operating Income Summary 3 1. Other investment related expenses. (Unaudited, dollars in thousands) Operating Investment Combined Operating Investment Combined Revenues: Services and fees $ 266,143 — $ 266,143 $ 200,905 — $ 200,905 Trading income (losses) and fair value adjustments on loans — 32,679 32,679 — (223,927) (223,927) Interest income – loans & securities lending 25,491 — 25,491 63,835 — 63,835 Sale of goods 12,457 — 12,457 1,887 — 1,887 Total revenues $304,091 $ 32,679 $ 336,770 $ 266,627 $ (223,927) $ 42,700 Operating expenses: Direct cost of services $ 12,094 — $ 12,094 $ 17,785 — $ 17,785 Cost of goods sold 3,626 — 3,626 1,994 — 1,994 Selling, general and administrative expenses 200,006 (84) (1) 199,922 181,066 (13,930) (1) 167,136 Interest expense – securities lending & loan participations sold 10,983 — 10,983 14,544 — 14,544 Total operating expenses $ 226,709 $ (84) $ 226,625 $ 215,389 $ (13,930) $ 201,459 Operating income (loss) $ 77,382 $ 32,763 $ 110,145 $ 51,238 $ (209,997) $ (158,759) Three Months Ended June 30, 2021 Three Months Ended June 30, 2022
Quarterly Operating Revenue and Operating Adjusted EBITDA Operating Revenue and Operating Adjusted EBITDA (1)(3)(5)(6) (Dollars in thousands) Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Operating Revenue (1) $ 304,091 $ 363,325 $ 353,252 $ 273,979 $ 266,627 Investment Gains (Loss) (2) 32,679 18,197 68,858 (68,390) (223,927) Total Revenue $ 336,770 $ 381,522 $ 422,110 $ 205,589 $ 42,700 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Operating Adjusted EBITDA (3) $ 92,124 $ 101,091 $ 106,097 $ 84,187 $ 74,220 Investment Adjusted EBITDA (4) 32,763 13,010 31,928 (43,525) (209,997) Adjusted EBITDA (5)(6) $ 124,887 $ 114,101 $ 138,025 $ 40,662 $ (135,777) Quarterly Revenue and Adjusted EBITDA 1. 2. 3. 4. 5. 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. Investment Gains (Loss) is defined as Trading Income (Losses) and Fair Value Adjustments on Loans. Operating Adjusted EBITDA is defined as Adjusted EBITDA excluding (i) Trading Income (Losses) and Fair Value Adjustments on Loans and (ii) other investment related expenses. Investment Adjusted EBITDA is defined as Trading Income (Losses) and Fair Value Adjustments on Loans, less other investment related expenses. 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. $304.1M $363.3M $353.3M $274.0M $266.6M $92.1M $101.1M $106.1M $84.2M $74.2M Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Operating Revenue Operating Adj. EBITDA 6. For a reconciliation to GAAP financial measures, please see slide 2. 4
Cash and Investments Summary 5 (Dollars in thousands) Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Cash and Cash Equivalents $ 297,396 $ 378,205 $ 278,933 $ 213,584 $ 216,098 Restricted Cash 1,335 927 927 928 928 Due from/(to) Clearing Brokers, net 424,949 599,715 (39,741) 40,350 25,902 Advances Against Customer Contracts 200 200 200 200 200 Securities and Other Investments Owned Equity Securities 1,129,217 1,276,191 1,444,474 1,228,690 1,055,379 Corporate Bonds 42,912 5,401 7,632 10,508 8,231 Other Fixed Income Securities 3,227 4,436 2,606 3,681 2,321 Partnership Interests and Other 103,417 66,072 77,383 74,222 78,965 Securities Sold Not Yet Purchased (272,088) (419,211) (28,623) (7,498) (5,403) Loans Receivable, net of Loan Participations Sold 265,851 350,762 873,186 882,391 770,840 Other investments and deposits (1) 53,510 43,369 40,187 49,391 49,156 Noncontrolling interest (2) (11,254) (16,558) (17,785) (17,135) (25,317) Total Cash, Net Securities, and Other $ 2,038,672 $ 2,289,509 $ 2,639,379 $ 2,479,312 $ 2,177,300 Debt Summary (Dollars in thousands) Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Term Loans, net $ 257,104 $ 252,927 $ 346,385 $ 342,851 $ 367,815 Revolving Credit Facility — 80,000 80,000 80,000 80,000 Notes Payable 357 357 357 22,891 23,186 Senior Notes Payable, net 1,213,105 1,362,847 1,606,560 1,627,649 1,644,778 Total Debt 1,470,566 1,696,131 2,033,302 2,073,391 2,115,779 Total Cash and Investments, Net of Debt $ 568,106 $ 593,378 $ 606,077 $ 405,921 $ 61,521 1. 2. Other investments and investment related deposits reported in prepaid and other assets. Noncontrolling interest related to investments reported in Securities and Other Investments Owned.
Composition of Cash and Investments Percentage by Asset Type – June 30, 2022 Cash and Restricted Cash 9.8% 6 Due from/(to) Clearing Brokers, net 1.2% Public Equity 34.1% Private Equity 15.6% Loans Receivable 34.9% Corporate Bonds and Fixed Income Securities 0.5% Partnership Interests and Other 3.9% ( Dollars in thousands) Gross Value % of Total Cash and Restricted Cash $ 217,026 9.8% Due from/(to) Clearing Brokers, net 25,902 1.2% Public Equity (1)(2) 752,610 34.1% Private Equity (1) 345,131 15.6% Loans Receivable 770,840 34.9% Corporate Bonds and Fixed Income Securities 10,552 0.5% Partnership Interests and Other (1) 85,959 3.9% Total $ 2,208,020 100.0% 1. 2. Includes investments reported in prepaid and other assets. Includes $76 million equity positions held by B.Riley in managed account with gains and losses for client benefit
Condensed Consolidated Balance Sheets 7 (Dollars in thousands) June 30, 2022 (Unaudited) December 31, 2021 Cash and cash equivalents $ 216,098 $ 278,933 Restricted cash 928 927 Due from clearing brokers 50,597 29,657 Securities and other investments owned, at fair value 1,144,896 1,532,095 Securities borrowed 2,414,074 2,090,966 Accounts receivable, net 52,935 49,673 Due from related parties 645 2,074 Loans receivable, at fair value 770,840 873,186 Prepaid expenses and other assets 480,276 463,502 Operating lease right - of - use assets 59,806 56,969 Property and equipment, net 14,182 12,870 Goodwill 394,331 250,568 Other intangible assets, net 270,322 207,651 Deferred tax assets, net 5,287 2,848 Total assets $ 5,875,217 $ 5,851,919 Accounts payable $ 22,428 $ 6,326 Accrued expenses and other liabilities 245,773 343,750 Deferred revenue 79,226 69,507 Due to related parties and partners 470 — Due to clearing brokers 24,695 69,398 Securities sold not yet purchased 5,403 28,623 Securities loaned 2,414,201 2,088,685 Operating lease liabilities 70,972 69,072 Deferred tax liabilities, net — 93,055 Notes payable 23,186 357 Revolving credit facility 80,000 80,000 Term loans, net 367,815 346,385 Senior notes payable, net 1,644,778 1,606,560 Total liabilities $ 4,978,947 $ 4,801,718 Redeemable noncontrolling interests in equity of subsidiaries 352,894 345,000 Total B. Riley Financial, Inc. stockholders' equity 487,909 661,271 Noncontrolling interests 55,467 43,930 Total equity 543,376 705,201 Total liabilities and equity $ 5,875,217 $ 5,851,919
Consolidated Statements of Operations 8 (Unaudited, dollars in thousands, except share data) Three Months Ended June 30, 2022 2021 Revenues: Services and fees $ 200,905 $ 266,143 Trading (losses) income and fair value adjustments on loans (223,927) 32,679 Interest income - Loans and securities lending 63,835 25,491 Sale of goods 1,887 12,457 Total revenues 42,700 336,770 Operating expenses: Direct cost of services 17,785 12,094 Cost of goods sold 1,994 3,626 Selling, general and administrative expenses 167,136 199,922 Interest expense - Securities lending and loan participations sold 14,544 10,983 Total operating expenses 201,459 226,625 Operating (loss) income (158,759) 110,145 Other income (expense): Interest income 500 56 Change in fair value of financial instruments and other 4,321 6,509 Loss from equity investments (3,399) (852) Interest expense (31,764) (20,856) (Loss) income before income taxes (189,101) 95,002 Benefit from (provision for) income taxes 52,513 (19,902) Net (loss) income (136,588) 75,100 Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 3,571 (576) Net (loss) income attributable to B. Riley Financial, Inc. (140,159) 75,676 Preferred stock dividends 2,002 1,789 Net (loss) income available to common shareholders $ (142,161) $ 73,887 Basic (loss) income per common share $ (5.07) $ 2.70 Diluted (loss) income per common share $ (5.07) $ 2.58 Weighted average basic common shares outstanding 28,051,570 27,344,184 Weighted average diluted common shares outstanding 28,051,570 28,668,465
Segment Financial Information 9 (Unaudited, dollars in thousands) Three Months Ended June 30, 2022 2021 Capital Markets segment: Revenues - Services and fees $ 67,426 $ 125,997 Trading (losses) income and fair value adjustments on loans (225,455) 29,897 Interest income - Loans and securities lending 62,399 25,491 Total revenues (95,630) 181,385 Selling, general and administrative expenses (45,865) (65,473) Interest expense - Securities lending and loan participations sold (14,544) (10,983) Depreciation and amortization (2,204) (247) Segment (loss) income (158,243) 104,682 Wealth Management segment Revenues - Services and fees 60,861 87,444 Trading income and fair value adjustments on loans 1,528 2,865 Total revenues 62,389 90,309 Selling, general and administrative expenses (68,394) (88,702) Depreciation and amortization (1,308) (2,340) Segment loss ( 7,313 ) (733) Auction and Liquidation segment: Revenues - Services and fees 2,488 5,534 Revenues - Sale of goods — 11,743 Interest income - Loans and securities lending 1,436 — Total revenues 3,924 17,277 Direct cost of services (1,296) (7,540) Cost of goods sold — (3,105) Selling, general and administrative expenses (2,177) (3,077) Segment income $ 451 $ 3,555 Three Months Ended June 30, 2022 2021 Financial Consulting segment Revenues - Services and fees $ 24,310 $ 23,735 Selling, general and administrative expenses (19,948) (19,471) Depreciation and amortization (78) (89) Segment income 4,284 4,175 Principal Investments – Communications and Other segment: Revenues - Services and fees 40,646 18,932 Revenues - Sale of goods 1,887 714 Total revenues 42,533 19,646 Direct cost of services (16,489) (4,554) Cost of goods sold (1,994) (521) Selling, general and administrative expenses (12,808) (4,768) Depreciation and amortization (3,595) (2,528) Segment income 7,647 7,275 Brands segment: Revenues - Services and fees 5,174 4,501 Trading loss and fair value adjustments on loans — (83) Total revenues 5,174 4,418 Selling, general and administrative expenses (818) (690) Depreciation and amortization (583) (715) Segment income 3,773 3,013 Consolidated operating (loss) income from reportable segments $ (149,401) $ 121,967
Definition of US GAAP to Non - GAAP Financial Measures 10 Certain of the information set forth herein, including operating revenue, 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, aforementioned adjustments for adjusted EBITDA, as well as trading income (losses) and fair value adjustments on loans, and other investment related expenses, and (iv) in the case of investment adjusted EBITDA this includes trading income (losses) and fair value adjustments on loans, net of other investment related expenses, 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 .