B. Riley Financial Reports Second Quarter 2021 Results; Declares $2.00 Dividend

Rhea-AI Summary

B. Riley Financial (RILY) reported a net income of $73.9 million for Q2 2021, down 11% year-over-year, with total revenues of $336.8 million, up 26% year-over-year. Adjusted EBITDA stood at $124.9 million. The investment banking division led this growth, while the Wealth Management segment surged 362% year-over-year to $158.2 million in revenues. The company declared a $2.00 dividend per share, effective August 26, 2021. B. Riley aims to capitalize on market opportunities while enhancing recurring revenues.

Positive

• Total adjusted EBITDA increased by 37.1% year-over-year.
• Operating revenues surged by 100% year-over-year to $304.1 million.
• Wealth Management revenues increased by 362% year-over-year to $158.2 million.
• The company returned $8.50 in dividends per share over the last three quarters.

Negative

• Net income decreased by 11% year-over-year.
• Basic income per share dropped from $3.23 to $2.70 year-over-year.

LOS ANGELES, July 29, 2021 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY), a diversified financial services company, today announced its financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights

• Net income available to common shareholders of $73.9 million, down 11% year-over-year
• Total revenues of $336.8 million, up 26% year-over-year
• Total adjusted EBITDA ⁽¹⁾ of $124.9 million
• Operating revenues ⁽²⁾ of $304.1 million, up 100% year-over-year
• Operating adjusted EBITDA ⁽³⁾ of $92.1 million, up 97% year-over-year
• Investment gains ⁽⁴⁾ of $32.7 million

Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial, said: "Our operating EBITDA doubled on a year-over-year basis demonstrating continued strength across our businesses during the second quarter. Our results were driven by our investment banking division which continues to establish its leadership in small and mid-cap equity capital markets, supplemented by steady contributions from Advisory Services and Principal Investments. Increasing our capital base while simultaneously returning capital to shareholders and lowering our cost of capital has provided us with the financial flexibility to pursue the increasing number of opportunities that our diversified platform offers."

Tom Kelleher, Co-Chief Executive Officer of B. Riley Financial, added: "Our recent addition of complementary businesses and key hires have helped increase synergies and cross-selling opportunities across our platform. As we continue to work towards integrating our colleagues from National Holdings and enhancing the services we offer to our clients, recruiting remains a key focus. We continue to seek out new talent and businesses that can expand our reach and capabilities across service lines."

Riley added: "The successful execution of our platform strategy has allowed us to build a solid balance sheet while enabling us to return $8.50 in common stock dividends to shareholders over the last three quarters. As we look ahead, we see multiple pathways with which to grow shareholder value. We will continue to take advantage of market opportunities in our core segments while building on additional recurring revenue streams that are both noncorrelated and counter cyclical."

Declaration of Common Stock Dividend
The Company's Board of Directors has approved a total quarterly cash dividend of $2.00 per share which includes the regular $0.50 dividend and a special dividend of $1.50 per share. The dividend is payable on or about August 26, 2021 to common stockholders of record as of August 13, 2021.

Second Quarter 2021 Financial Summary
For the three months ended June 30, 2021, B. Riley Financial reported net income available to common shareholders of $73.9 million, or $2.58 per diluted share.

		Three Months Ended						Six Months Ended
		June 30,						June 30,
	(Dollars in thousands, except for share data)	2021			2020			2021			2020
	Net income (loss) available to common shareholders	$	73,887		$	82,753		$	326,794		$	(16,967)
	Basic income (loss) per common share	$	2.70		$	3.23		$	12.03		$	(0.66)
	Diluted income (loss) per common share	$	2.58		$	3.07		$	11.39		$	(0.66)

Total revenues were $336.8 million for the second quarter of 2021, a year-over-year increase of 26% compared to $266.5 million for the prior-year period. The Company reported total adjusted EBITDA ⁽¹⁾ of $124.9 million for the quarter.

		Three Months Ended						Six Months Ended
		June 30,						June 30,
	(Dollars in thousands)	2021			2020			2021			2020
	Operating Revenues (2)	$	304,091		$	151,921		$	637,308		$	334,157
	Investment Gains (Loss)(4)		32,679			114,547			299,621			(67,895)
	Total Revenues	$	336,770		$	266,468		$	936,929		$	266,262
	Operating Adjusted EBITDA (3)	$	92,124		$	46,757		$	214,841		$	117,664
	Investment Adjusted EBITDA (5)		32,763			101,507			295,527			(65,465)
	Total Adjusted EBITDA (1)	$	124,887		$	148,264		$	510,368		$	52,199

Second quarter operating revenues ⁽²⁾ were $304.1 million, a year-over-year increase of 100% from $151.9 million for the prior-year period. Operating adjusted EBITDA ⁽³⁾ of $92.1 million increased from $46.8 million for the prior-year period, up 97% year-over-year.

Operating results were enhanced by second quarter investment gains ⁽⁴⁾ of $32.7 million which are primarily driven by mark-to-market valuations on strategic investments held by the Company.

As of June 30, 2021, cash and investments ⁽⁶⁾ totaled approximately $2.0 billion including cash and cash equivalents of $297.4 million. Total cash and investments, ⁽⁶⁾ net of debt, was $568.1 million at quarter-end.

Segment Financial Summary for the Three Months Ended June 30, 2021

		Operating Revenues(2)				Investment Gains (Loss) (4)				Total Segment Revenue
		Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	(Dollars in thousands)	2021		2020		2021		2020		2021		2020
	Capital Markets	$ 151,488		$ 84,870		$ 29,897		$ 114,080		$ 181,385		$ 198,950
	Wealth Management	87,444		15,318		2,865		467		90,309		15,785
	Auction and Liquidation	17,277		8,251		-		-		17,277		8,251
	Financial Consulting	23,735		18,845		-		-		23,735		18,845
	Principal Investments	19,646		21,431		-		-		19,646		21,431
	Brands	4,501		3,206		(83)		-		4,418		3,206
		Segment Operating Income (Loss)(7)				Investment Income (Loss) (5)				Total Segment Income (Loss)
		Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	(Dollars in thousands)	2021		2020		2021		2020		2021		2020
	Capital Markets	$   74,701		$ 29,471		$ 29,981		$ 101,040		$ 104,682		$ 130,511
	Wealth Management	(3,598)		(435)		2,865		467		(733)		32
	Auction and Liquidation	3,555		2,020		-		-		3,555		2,020
	Financial Consulting	4,175		3,504		-		-		4,175		3,504
	Principal Investments	7,275		9,188		-		-		7,275		9,188
	Brands	3,096		(6,318)		(83)		-		3,013		(6,318)

 

• Excluding investment gains, ⁽⁴⁾ Capital Markets operating revenues ⁽²⁾ increased to $151.5 million from $84.9 million from the prior-year period, up 78% year-over-year. Segment operating income ⁽⁷⁾ was $74.7 million, up 153% year-over-year, driven primarily by equity investment banking transactions.
• Wealth Management revenues of $90.3 million increased from $15.8 million for the prior-year period. A majority of the increase in revenue was due to the inclusion of a full quarter of results from National Holdings which the Company acquired in February 2021. Combined wealth management assets under management totaled approximately $32 billion as of June 30, 2021.
• Auction and Liquidation segment revenues increased to $17.3 million from $8.3 million for the prior-year period, up 109% year-over-year. Segment income increased to $3.6 million compared to $2.0 million for the prior-year period.
• Financial Consulting revenues increased to $23.7 million from $18.8 million for the prior-year period, up 26% year-over-year. Segment income increased to $4.2 million from $3.5 million for the prior-year period.
• Principal Investments companies, magicJack and United Online, contributed revenues of $19.6 million and segment income of $7.3 million. magicJack and United Online continued to perform above expectations, contributing recurring cash flow to the Company.
• Brands generated revenues of $4.4 million and segment income of $3.0 million related to the licensing of brand trademarks.

Financial Highlights for the First Six Months of 2021

• Total revenues increased to $936.9 million from $266.3 million, up 252% year-over-year.
• Net income available to common shareholders of $326.8 million, or $11.39 per diluted share, increased compared to a net loss of ($17.0 million), or ($0.66) loss per diluted share for the prior year period.
• Total adjusted EBITDA ⁽¹⁾ of $510.4 million increased compared to $52.2 million for the prior-year period.
• Operating revenues ⁽²⁾ increased to $637.3 million from $334.2 million, up 91% year-over-year.
• Operating adjusted EBITDA ⁽³⁾ of $214.8 million increased 83% compared to $117.7 million for the prior-year period.
• Excluding investment gains (losses), ⁽⁴⁾ Capital Markets operating revenues ⁽²⁾ increased to $359.4 million from $180.3 million, up 99% year-over-year. Segment operating income ⁽⁷⁾ totaled $180.7 million.
• Wealth Management segment revenues increased to $158.2 million from $34.2 million, up 362% year-over-year.
• Auction and Liquidation segment revenues increased to $30.7 million, up from $28.9 million for the prior-year period.
• Financial Consulting segment revenues increased to $45.1 million, up from $39.6 million for the prior-year period.
• Principal Investments contributed segment revenues of $40.2 million and segment income of $14.8 million.
• Brands contributed segment revenues of $8.9 million and segment income of $6.1 million.

Additional Metrics and Supplemental Financial Data
Additional metrics related to operating results and investments are presented to provide investors with greater visibility into the Company's performance and overall results of operations. Further details related to these metrics can be found in B. Riley Financial's Second Quarter 2021 Financial Supplement located on the Company's investor relations website.

Segment Realignment
The Company previously realigned its segment reporting structure for Wealth Management during the first quarter of 2021 as a result of the National Holdings acquisition, and Financial Consulting during the fourth quarter of 2020 to reflect certain organizational changes. Segment results have been recast for all periods presented in conjunction with the new reporting structure.

Conference Call Details
B. Riley Financial will host a conference call to discuss its second quarter 2021 financial results at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) today, Thursday, July 29, 2021. Investors may access the live broadcast and archived recording via the Company's investor relations website.

	Date and Time:		Thursday July 29, 2021 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
	Dial In:		1-855-327-6838 (toll-free) or 1-604-235-2082 (international)
	Audio Webcast:		https://ir.brileyfin.com/events-and-presentations
	Replay (expires Thursday, August 5, 2021)
	Dial In:	1-844-512-2921; 10015719 (pin)
	Replay Link:	https://ir.brileyfin.com/events-and-presentations

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

Footnotes (See "Note Regarding Use of Non-GAAP Financial Measures" for further discussion of these non-GAAP terms.)
(1)	Adjusted EBITDA includes earnings before interest, taxes, depreciation, amortization, restructuring costs, share-based payments, gain on extinguishment of loans, impairment of tradenames, and transaction related and other costs. For a definition of adjusted EBITDA and a reconciliation to GAAP financial measures, please see the Appendix hereto.
(2)	Operating revenue is defined as the sum of revenues from services and fees, interest income - loans and securities lending, and sale of goods.
(3)	Operating adjusted EBITDA is defined as adjusted EBITDA excluding trading income (losses) and fair value adjustments on loans and other investment related expenses.
(4)	Investment gains (loss) is defined as trading income and fair value adjustments on loans.
(5)	Investment adjusted EBITDA and investment income (loss) are defined as trading income (losses) and fair value adjustments on loans, less other investment related expenses.
(6)	Total cash and investments is defined as the sum of cash and cash equivalents, restricted cash, due from clearing brokers net of due to clearing brokers, securities and other investments owned, at fair value net of (i) securities sold not yet purchased and (ii) other investments participation sold reported in noncontrolling interest, advances against customer contracts, loans receivable, at fair value net of loan participations sold, and other equity investments reported in prepaid and other assets.
(7)	Segment operating income (loss) is defined as segment income (loss) excluding trading income (losses) and fair value adjustments on loans and other investment related expenses.

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

Forward-Looking Statements
Statements in this press release that are not descriptions of historical facts are forward-looking statements that are based on management's current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition, and stock price could be materially negatively affected. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of the date of this press release. Such forward-looking statements include, but are not limited to, statements regarding our excitement and the expected growth of our business segments. Factors that could cause such actual results to differ materially from those contemplated or implied by such forward-looking statements include, without limitation, the risks associated with the unpredictable and ongoing impact of the COVID-19 pandemic and other risks described from time to time in B. Riley Financial, Inc.'s periodic filings with the SEC, including, without limitation, the risks described in B. Riley Financial, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2020 and in our Quarterly Report on Form 10-Q for the quarter ended March 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, 2021. These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and B. Riley Financial, Inc. undertakes no duty to update this information.

Contacts
Investors		Media
Mike Frank		Jo Anne McCusker
ir@brileyfin.com		press@brileyfin.com
(212) 409-2424		(646) 885-5425

 

B. RILEY FINANCIAL, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except par value)
				June 30,			December 31,
				2021			2020
				(Unaudited)
Assets
Assets:
	Cash and cash equivalents			$	297,396		$	103,602
	Restricted cash				1,335			1,235
	Due from clearing brokers				424,949			7,089
	Securities and other investments owned, at fair value				1,278,773			777,319
	Securities borrowed				1,140,023			765,457
	Accounts receivable, net				57,853			46,518
	Due from related parties				734			986
	Advances against customer contracts				200			200
	Loans receivable, at fair value (includes $131,379 and $295,809 from related parties at June 30, 2021 and December 31, 2020, respectively)				270,295			390,689
	Prepaid expenses and other assets				119,400			87,262
	Operating lease right-of-use assets				60,933			48,799
	Property and equipment, net				14,447			11,685
	Goodwill				236,005			227,046
	Other intangible assets, net				200,304			190,745
	Deferred tax assets, net				4,080			4,098
		Total assets		$	4,106,727		$	2,662,730
Liabilities and Equity
Liabilities:
	Accounts payable			$	6,101		$	2,722
	Accrued expenses and other liabilities				220,603			168,478
	Deferred revenue				68,398			68,651
	Deferred tax liabilities, net				90,325			34,248
	Due to related parties and partners				230			327
	Due to clearing brokers				—			13,672
	Securities sold not yet purchased				272,088			10,105
	Securities loaned				1,134,359			759,810
	Mandatorily redeemable noncontrolling interests				4,105			4,700
	Operating lease liabilities				73,761			60,778
	Notes payable				357			37,967
	Loan participations sold				4,444			17,316
	Term loans, net				257,104			74,213
	Senior notes payable, net				1,213,105			870,783
		Total liabilities			3,344,980			2,123,770
Commitments and contingencies
B. Riley Financial, Inc. stockholders' equity:
	Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 4,275 and 3,971 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively; and liquidation preference of $106,882 and $99,260 as of June 30, 2021 and December 31, 2020, respectively				—			—
	Common stock, $0.0001 par value; 100,000,000 shares authorized; 27,580,300 and 25,777,796 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively				3			3
	Additional paid-in capital				387,084			310,326
	Retained earnings				338,260			203,080
	Accumulated other comprehensive loss				(1,178)			(823)
		Total B. Riley Financial, Inc. stockholders' equity			724,169			512,586
Noncontrolling interests					37,578			26,374
		Total equity			761,747			538,960
			Total liabilities and equity	$	4,106,727		$	2,662,730

 

B. RILEY FINANCIAL, INC.
Condensed Consolidated Statements of Income
(Unaudited)
(Dollars in thousands, except share data)
			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2021			2020			2021			2020
Revenues:
	Services and fees		$	266,143		$	125,595		$	555,612		$	284,976
	Trading income (losses) and fair value adjustments on loans			32,679			114,547			299,621			(67,895)
	Interest income - Loans and securities lending			25,491			24,506			62,411			46,357
	Sale of goods			12,457			1,820			19,285			2,824
		Total revenues		336,770			266,468			936,929			266,262
Operating expenses:
	Direct cost of services			12,094			7,985			23,416			27,937
	Cost of goods sold			3,626			860			8,952			1,629
	Selling, general and administrative expenses			199,922			106,562			391,266			194,306
	Impairment of tradenames			—			8,500			—			12,500
	Interest expense - Securities lending and loan participations sold			10,983			11,221			30,172			19,694
		Total operating expenses		226,625			135,128			453,806			256,066
		Operating income		110,145			131,340			483,123			10,196
Other income (expense):
	Interest income			56			224			105			470
	Gain on extinguishment of loans			6,509			—			6,509			—
	(Loss) income from equity investments			(852)			(318)			23			(554)
	Interest expense			(20,856)			(16,509)			(40,642)			(32,163)
		Income (loss) before income taxes		95,002			114,737			449,118			(22,051)
(Provision) benefit for income taxes				(19,902)			(32,208)			(117,420)			5,331
		Net income (loss)		75,100			82,529			331,698			(16,720)
Net income (loss) attributable to noncontrolling interests				(576)			(1,311)			1,366			(1,895)
		Net income (loss) attributable to B. Riley Financial, Inc.	$	75,676		$	83,840		$	330,332		$	(14,825)
Preferred stock dividends				1,789			1,087			3,538			2,142
		Net income (loss) available to common shareholders	$	73,887		$	82,753		$	326,794		$	(16,967)
Basic income (loss) per common share			$	2.70		$	3.23		$	12.03		$	(0.66)
Diluted income (loss) per common share			$	2.58		$	3.07		$	11.39		$	(0.66)
Weighted average basic common shares outstanding				27,344,184			25,627,085			27,159,257			25,827,849
Weighted average diluted common shares outstanding				28,668,465			26,992,823			28,690,444			25,827,849

 

B. RILEY FINANCIAL, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
					Six Months Ended June 30,
					2021			2020
Cash flows from operating activities:
	Net income (loss)				$	331,698		$	(16,720)
	Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
		Depreciation and amortization				12,924			9,879
		Provision for doubtful accounts				755			2,081
		Share-based compensation				14,134			9,489
		Fair value adjustments, non-cash				(10,046)			21,975
		Non-cash interest and other				(9,091)			(6,943)
		Effect of foreign currency on operations				(1,486)			(73)
		(Income) loss from equity investments				(23)			554
		Dividends from equity investments				610			797
		Deferred income taxes				51,242			(14,340)
		Impairment of intangibles and gain on disposal of fixed assets				—			12,550
		Gain on extinguishment of loans				(6,509)			—
		Loss (gain) on extinguishment of debt				919			(1,556)
		Gain on equity investment				(3,544)			—
		Income allocated for mandatorily redeemable noncontrolling interests				347			397
		Change in operating assets and liabilities:
			Due from clearing brokers			(424,062)			(5,271)
			Securities and other investments owned			(316,181)			20,009
			Securities borrowed			(374,565)			27,967
			Accounts receivable and advances against customer contracts			808			27,601
			Prepaid expenses and other assets			(25,870)			(19,707)
			Accounts payable, accrued expenses and other liabilities			(22,983)			738
			Amounts due to/from related parties and partners			155			4,404
			Securities sold, not yet purchased			261,476			(32,017)
			Deferred revenue			(3,158)			3,896
			Securities loaned			374,549			(31,481)
				Net cash (used in) provided by operating activities		(147,901)			14,229
Cash flows from investing activities:
	Purchases of loans receivable					(87,309)			(152,228)
	Repayments of loans receivable					95,522			74,450
	Sale of loan receivable to related party					—			1,800
	Proceeds from loan participations sold					—			2,400
	Repayment of loan participations sold					(10,772)			(940)
	Acquisition of business, net of $34,924 cash acquired					(390)			(1,500)
	Purchases of property, equipment and other					(288)			(851)
	Proceeds from sale of property, equipment and intangible assets					—			1
	Purchase of equity investments					(10,485)			(6,486)
				Net cash used in investing activities		(13,722)			(83,354)
Cash flows from financing activities:
	Repayment of asset based credit facility					—			(37,096)
	Repayment of notes payable					(37,610)			(357)
	Repayment of term loan					(11,484)			(9,620)
	Proceeds from term loan					200,000			—
	Proceeds from issuance of senior notes					475,698			171,078
	Redemption of senior notes					(128,156)			(1,829)
	Payment of debt issuance costs					(15,661)			(2,760)
	Payment for contingent consideration					(411)			—
	Payment of employment taxes on vesting of restricted stock					(10,370)			(2,678)
	Common dividends paid					(181,269)			(17,489)
	Preferred dividends paid					(3,538)			(2,142)
	Repurchase of common stock					—			(27,779)
	Distribution to noncontrolling interests					(14,792)			(2,143)
	Contribution from noncontrolling interests					10,650			—
	Proceeds from issuance of common stock					64,713			—
	Proceeds from issuance of preferred stock					8,281			4,630
				Net cash provided by financing activities		356,051			71,815
				Increase in cash, cash equivalents and restricted cash		194,428			2,690
				Effect of foreign currency on cash, cash equivalents and restricted cash		(534)			(705)
				Net increase in cash, cash equivalents and restricted cash		193,894			1,985
Cash, cash equivalents and restricted cash, beginning of period						104,837			104,739
Cash, cash equivalents and restricted cash, end of period					$	298,731		$	106,724
Supplemental disclosures:
	Interest paid				$	66,359		$	45,934
	Taxes paid				$	63,987		$	608

 

B. RILEY FINANCIAL, INC.
Segment Financial Information
(Unaudited)
(Dollars in thousands)
			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2021			2020			2021			2020
Capital Markets segment:
	Revenues - Services and fees		$	125,997		$	60,364		$	296,976		$	133,964
	Trading income (losses) and fair value adjustments on loans			29,897			114,080			294,400			(67,935)
	Interest income - Loans and securities lending			25,491			24,506			62,411			46,357
		Total revenues		181,385			198,950			653,787			112,386
	Selling, general and administrative expenses			(65,473)			(56,623)			(151,613)			(84,924)
	Interest expense - Securities lending and loan participations sold			(10,983)			(11,221)			(30,172)			(19,694)
	Depreciation and amortization			(247)			(595)			(1,012)			(1,191)
		Segment income		104,682			130,511			470,990			6,577
Wealth Management segment:
	Revenues - Services and fees			87,444			15,318			152,986			34,205
	Trading income and fair value adjustments on loans			2,865			467			5,221			40
		Total revenues		90,309			15,785			158,207			34,245
	Selling, general and administrative expenses			(88,702)			(15,283)			(150,174)			(32,831)
	Depreciation and amortization			(2,340)			(470)			(4,739)			(953)
		Segment (loss) income		(733)			32			3,294			461
Auction and Liquidation segment:
	Revenues - Services and fees			5,534			7,206			12,892			27,867
	Revenues - Sale of goods			11,743			1,045			17,835			1,045
		Total revenues		17,277			8,251			30,727			28,912
	Direct cost of services			(7,540)			(3,217)			(14,120)			(18,033)
	Cost of goods sold			(3,105)			(285)			(7,579)			(314)
	Selling, general and administrative expenses			(3,077)			(2,729)			(4,566)			(4,255)
	Depreciation and amortization			—			—			—			(1)
		Segment income		3,555			2,020			4,462			6,309
Financial Consulting segment:
	Revenues - Services and fees			23,735			18,845			45,144			39,559
	Selling, general and administrative expenses			(19,471)			(15,268)			(37,460)			(30,997)
	Depreciation and amortization			(89)			(73)			(187)			(140)
		Segment income		4,175			3,504			7,497			8,422
Principal Investments - United Online and magicJack segment:
	Revenues - Services and fees			18,932			20,656			38,725			42,374
	Revenues - Sale of goods			714			775			1,450			1,779
		Total revenues		19,646			21,431			40,175			44,153
	Direct cost of services			(4,554)			(4,768)			(9,296)			(9,904)
	Cost of goods sold			(521)			(575)			(1,373)			(1,315)
	Selling, general and administrative expenses			(4,768)			(4,049)			(9,638)			(9,512)
	Depreciation and amortization			(2,528)			(2,851)			(5,062)			(5,730)
		Segment income		7,275			9,188			14,806			17,692
Brands segment:
	Revenues - Services and fees			4,501			3,206			8,889			7,007
	Trading losses and fair value adjustments on loans			(83)			—			—			—
		Total revenues		4,418			3,206			8,889			7,007
	Selling, general and administrative expenses			(690)			(309)			(1,366)			(1,213)
	Depreciation and amortization			(715)			(715)			(1,429)			(1,429)
	Impairment of tradenames			—			(8,500)			—			(12,500)
		Segment income (loss)		3,013			(6,318)			6,094			(8,135)
Consolidated operating income from reportable segments				121,967			138,937			507,143			31,326
Corporate and other expenses				(11,822)			(7,597)			(24,020)			(21,130)
Interest income				56			224			105			470
Gain on extinguishment of loans				6,509			—			6,509			—
(Loss) income on equity investments				(852)			(318)			23			(554)
Interest expense				(20,856)			(16,509)			(40,642)			(32,163)
	Income (loss) before income taxes			95,002			114,737			449,118			(22,051)
(Provision) benefit for income taxes				(19,902)			(32,208)			(117,420)			5,331
	Net income (loss)			75,100			82,529			331,698			(16,720)
Net (loss) income attributable to noncontrolling interests				(576)			(1,311)			1,366			(1,895)
	Net income (loss) attributable to B. Riley Financial, Inc.			75,676			83,840			330,332			(14,825)
Preferred stock dividends				1,789			1,087			3,538			2,142
	Net income (loss) available to common shareholders		$	73,887		$	82,753		$	326,794		$	(16,967)

 

B. RILEY FINANCIAL, INC.
Adjusted EBITDA and Operating Adjusted EBITDA Reconciliation
(Unaudited)
(Dollars in thousands)
				Three Months Ended						Six Months Ended
				June 30,						June 30,
				2021			2020			2021			2020
Net income (loss) attributable to B. Riley Financial, Inc.				$	75,676		$	83,840		$	330,332		$	(14,825)
Adjustments:
	Provision (benefit) for income taxes				19,902			32,208			117,420			(5,331)
	Interest expense				20,856			16,509			40,642			32,163
	Interest income				(56)			(224)			(105)			(470)
	Share based payments				8,608			4,168			14,134			9,489
	Depreciation and amortization				6,165			4,923			12,924			9,879
	Gain on extinguishment of loans				(6,509)			—			(6,509)			—
	Impairment of tradenames				—			8,500			—			12,500
	Transactions related costs and other				245			(1,660)			1,530			8,794
		Total EBITDA adjustments			49,211			64,424			180,036			67,024
			Adjusted EBITDA	$	124,887		$	148,264			510,368			52,199
Operating EBITDA Adjustments:
	Trading (income) losses and fair value adjustments on loans				(32,679)			(114,547)			(299,621)			67,895
	Other investment related expenses				(84)			13,040			4,094			(2,430)
		Total Operating EBITDA Adjustments			(32,763)			(101,507)			(295,527)			65,465
			Operating Adjusted EBITDA	$	92,124		$	46,757		$	214,841		$	117,664

 

B. RILEY FINANCIAL, INC.
Adjusted Net Income Reconciliation
(Unaudited)
(Dollars in thousands, except share data)
		Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020
Net income (loss) attributable to B. Riley Financial, Inc.		$	75,676		$	83,840		$	330,332		$	(14,825)
Adjustments:
	Share based payments		8,608			4,168			14,134			9,489
	Amortization of intangible assets		5,134			4,024			11,020			8,048
	Gain on extinguishment of loans		(6,509)			—			(6,509)			—
	Impairment of tradenames		—			8,500			—			12,500
	Transactions related costs and other		245			(1,660)			1,530			8,794
	Income tax effect of adjusting entries		(1,557)			(4,172)			(5,073)			(10,731)
Adjusted net income attributable to B. Riley Financial, Inc.		$	81,597		$	94,700		$	345,434		$	13,275
Adjusted income per common share:
	Adjusted basic income per share	$	2.98		$	3.70		$	12.72		$	0.51
	Adjusted diluted income per share	$	2.85		$	3.51		$	12.04		$	0.51
Shares used to calculate adjusted basic net income per share			27,344,184			25,627,085			27,159,257			25,827,849
Shares used to calculate adjusted diluted net income per share			28,668,465			26,992,823			28,690,444			25,827,849

 

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SOURCE B. Riley Financial