B. Riley Financial Reports Strong Third Quarter 2020 Results

Rhea-AI Summary

B. Riley Financial, Inc. (NASDAQ:RILY) reported strong Q3 2020 results, achieving consolidated revenues of $226.3 million, net income of $47.3 million or $1.75 per diluted share, and adjusted EBITDA of $94.1 million. This marked significant improvements from Q3 2019, with net income increasing from $34.3 million and adjusted EBITDA rising from $70.3 million. The company's capital markets segment drove growth, supported by an increase in advisory fees and retail liquidations. A regular dividend of $0.375 per share was announced, reflecting confidence in future performance.

Positive

• Q3 2020 revenues increased by 25.6% YoY to $226.3 million.
• Net income available to common shareholders rose to $47.3 million, up from $34.3 million YoY.
• Adjusted EBITDA grew by 33.8% YoY to $94.1 million.
• Strong performance in capital markets segment, with revenues at $146.8 million, increased from $134.1 million last year.
• Regular quarterly dividend increased to $0.375 per share from $0.30.

Negative

• Valuation and appraisal results negatively impacted by COVID-19, indicating ongoing market challenges.

LOS ANGELES, Oct. 29, 2020 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ:RILY) ("B. Riley" or the "Company") today announced results for the third quarter ended September 30, 2020.

Third Quarter 2020 Financial Highlights

• GAAP consolidated revenues of $226.3 million
• Net income available to common shareholders of $47.3 million, or $1.75 per diluted share
• Adjusted EBITDA ⁽¹⁾ of $94.1 million
• Operating revenues ⁽²⁾ of $194.5 million and operating adjusted EBITDA ⁽³⁾ of $67.2 million

"We delivered strong third quarter results across our business lines which generated net income of $47.3 million compared to $34.3 million last year and operating adjusted EBITDA growth of over 90%," said Bryant Riley, Chairman and Co-Chief Executive Officer. "Our capital markets group was the primary driver of growth this quarter, having realized impressive performance in all of its verticals. Our focus on helping small cap companies navigate financial markets with advisory, capital raising, and restructuring services is the ethos of our firm and this quarter confirmed that we provide vital services during periods of market turmoil like we have seen with COVID-19. As we continue to creatively gain market share in each of our segments within capital markets, we anticipate becoming the market leader within the small cap ecosystem. In addition to capital markets, we have continued to see strong performance out of our liquidation business given the unfortunate ramifications of COVID-19. Additionally, our valuation business, brand portfolio, and wholly owned subsidiaries within our principal investments business continue to generate steady cash flows and healthy returns on invested capital. Finally, we continue to view our balance sheet as a vital differentiator that sets us apart from the competition. We saw investment gains of $32 million in the quarter which marks a continued recovery from our first quarter losses. This understates the importance that our strong balance sheet and our net cash and investments have on driving growth and cash flow across our segments. We pride ourselves on being solution providers to companies in need and use our balance sheet as a tool to generate both fees and returns. When I look through our portfolio, I am as optimistic as I have ever been about its future performance and love our set up as we finish the remainder of the year. Year-to-date, we have delivered net income of $30.3 million and almost $185 million of operating adjusted EBITDA, up 90% over last year. In addition, we have a clear line of sight to delivering strong growth in the fourth quarter as well. Our strong performance and the confidence we have in our business strategy and future are the primary reasons for our increasing our regular quarterly dividend to $0.375."

Mr. Riley added, "Since the formation of B. Riley Financial in 2014, our philosophy has been to provide a regular dividend enhanced by special dividends based on the strength of our episodic businesses. As our overall business has become increasingly diversified and recurring in nature, we feel a larger regular dividend annualized at $1.50 per share is more appropriate to reflect the underlying cash flow generating power of our business. To be clear, we will continue to consider special dividends when appropriate, and trust that a stable and growing regular dividend will be appreciated by our shareholders. In addition, we will continue to opportunistically repurchase shares as noted by our buyback authorization. Year-to-date, we repurchased approximately 1.7 million shares representing approximately 7% of our shares outstanding."

Co-Chief Executive Officer Tom Kelleher added, "This past quarter we took concerted steps to position our platform to drive increased client and shareholder value by rebranding our operating companies and providing greater visibility into the breadth of our offerings. In addition, we launched our venture capital business which should strengthen our capabilities to identify, acquire and invest in attractive emerging growth companies and is a highly strategic addition to our already broad platform. Moving forward, we are confident in our strategy and our ability to drive continued growth."

Third Quarter 2020 Financial Summary

			Three Months Ended								Nine Months Ended
			September 30,								September 30,
	(Dollars in thousands)			2020				2019				2020				2019
	Revenues
	Operating Revenues (2)		$	194,500			$	139,795			$	528,657			$	415,145
	Investment Gains (Loss) (4)			31,753				40,268				(36,142)				71,730
	Total Revenues		$	226,253			$	180,063			$	492,515			$	486,875
	Adjusted EBITDA (1)
	Operating Adjusted EBITDA (3)		$	67,222			$	35,200			$	184,886			$	97,209
	Investment Adjusted EBITDA (5)			26,911				35,130				(38,554)				60,407
	Total Adjusted EBITDA		$	94,133			$	70,330			$	146,332			$	157,616

 

 

B. Riley Financial reported total revenues of $226.3 million for the three months ended September 30, 2020, up from $180.1 million in total revenues for the prior year period. Operating revenues ⁽²⁾ totaled $194.5 million compared to $139.8 million in the prior year period.

Net income available to common shareholders totaled $47.3 million, or $1.75 per diluted share, compared to net income of $34.3 million, or $1.21 per diluted share, for the prior year period.

Total adjusted EBITDA ⁽¹⁾ increased to $94.1 million from $70.3 million for the third quarter of 2019. Operating adjusted EBITDA ⁽³⁾ increased to $67.2 million from $35.2 million for the prior year period.

For the first nine months of 2020, B. Riley's total revenues were $492.5 million, operating revenues ⁽²⁾ totaled $528.7 million and net income totaled $30.3 million. During that same period, total adjusted EBITDA was $146.3 million and operating adjusted EBITDA was $184.9 million.

Investment gains ⁽⁴⁾ of $31.8 million in the third quarter reflected a continued recovery from the significant mark-to-market losses experienced in the first quarter of 2020 due to the impact of COVID-19 on equity markets. B. Riley's proprietary investments are comprised of certain private and public securities and loans which also create revenue opportunities for the Company's operating business while driving long-term value for its clients, partners, and shareholders.

Supplemental Financial Data
B. Riley has presented information related to its operating results and investments to provide investors with additional metrics regarding its performance and overall results of operations. Further details related to these metrics can be found in a Financial Supplement on the Company's investor relations website at ir.brileyfin.com.

Third Quarter 2020 Segment Financial Summary

			Three Months Ended September 30, 2020
	(Dollars in thousands)		Capital Markets				Auction and Liquidation				Valuation and Appraisal				Principal Investments				Brands
	Operating Revenues (2)		$	115,058			$	44,185			$	9,655			$	21,602			$	4,000
	Investment Gains (4)			31,753				-				-				-				-
	Segment Revenue		$	146,811			$	44,185			$	9,655			$	21,602			$	4,000
	Segment Operating Income (6)			37,900			$	12,000			$	2,972			$	8,368			$	2,292
	Investment Gains Income (5)			26,911				-				-				-				-
	Segment Income (Loss)		$	64,811			$	12,000			$	2,972			$	8,368			$	2,292

 

• Capital Markets segment revenues increased to $146.8 million compared to $134.1 million for the prior year period. The increase was primarily driven by increased fees from advisory services, the addition of our real estate consulting business and an increase in income related to minority investments.
• Auction and Liquidation performance was driven by a number of retail liquidations in the US and in Europe as our group further capitalized on the current challenging retail market conditions created by COVID-19.
• Valuation and Appraisal results continue to be negatively impacted by COVID-19 but overall business conditions and activity continue to show signs of recovery.
• Principal Investments companies, United Online and magicJack, continued to deliver solid operating performance and cash flow generation despite the impact of COVID-19.

As of September 30, 2020, cash and investments totaled $991.7 million, including cash and cash equivalents of $169.7 million. The Company's investment balance included approximately $58.4 million of other equity investments reported in prepaid and other assets. Total cash and investments net of debt, including investments reported in prepaid and other assets, was $83.6 million.

Share Repurchases
The Board of Directors has approved an additional share repurchase program for up to $50 million. In July, B. Riley announced an agreement to repurchase 900,000 shares of its common stock as part of a privately negotiated transaction. During the third quarter, the Company repurchased 450,000 shares of these 900,000 shares and expects to purchase the remaining shares by year-end, subject to various factors including price, trading volume, corporate requirements, and market conditions. Year-to-date through September 30^th, B. Riley has repurchased approximately 1.7 million of its common shares.

Dividend
B. Riley's Board of Directors approved an increase in the Company's regular quarterly dividend to $0.375 per common share, from the previous regular quarterly dividend of $0.30 per common share. The quarterly dividend of $0.375 per common share will be paid on or about November 24, 2020 to stockholders of record as of November 10, 2020.

Conference Call
Management will host a conference call today, Thursday, October 29, 2020 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time), to discuss the Company's quarterly results. The live broadcast and archived recording will be available on the Company's investor relations website at https://ir.brileyfin.com/events-and-presentations.

Date:	Thursday October 29, 2020
Time:	4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-Free:	1-877-451-6152
International:	1-201-389-0879
Replay Dial-In (expires on Thursday, November 5, 2020)
Toll-Free:	1-844-512-2921
International:	1-412-317-6671
Replay Pin:	13711619

 

About B. Riley Financial, Inc. (NASDAQ:RILY)
B. Riley Financial, Inc. provides collaborative financial services solutions tailored to fit the capital raising, business, operational, and financial advisory needs of its clients and partners. B. Riley operates through several subsidiaries which offer a diverse range of complementary end-to-end capabilities spanning investment banking and institutional brokerage, private wealth and investment management, corporate advisory, restructuring, due diligence, forensic accounting, litigation support, appraisal and valuation, and auction and liquidation services. Certain registered affiliates of B. Riley originate and underwrite senior secured loans for asset-rich companies. B. Riley also makes proprietary investments in companies and assets with attractive return profiles. For more information about B. Riley and its affiliated companies, 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, 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.
(2)  Operating revenue is defined as the sum of revenues from service and fees, interest income - loans and securities lending, and sales 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 (losses) and fair value adjustments on loans.
(5)  Investment adjusted EBITDA and investment gains income are defined as trading income (losses) and fair value adjustments on loans, less other investment related expenses.
(6)  Segment operating income is defined as segment income excluding trading income (losses) and fair value adjustments on loans and other investment related expenses

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 2020, as well as 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, 2019 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" (as applicable)and any additional information included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. 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 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, 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, 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.

Contacts
Investors	Media
Brad Edwards	Scott Cianciulli
ir@brileyfin.com	press@brileyfin.com

 

B. RILEY FINANCIAL, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except par value)
								September 30,			December 31,
								2020			2019
									(Unaudited)
Assets
Assets:
		Cash and cash equivalents						$	169,676		$	104,268
		Restricted cash							1,410			471
		Due from clearing brokers							19,589			23,818
		Securities and other investments owned, at fair value							459,480			408,213
		Securities borrowed							676,423			814,331
		Accounts receivable, net							45,654			46,624
		Due from related parties							3,766			5,832
		Advances against customer contracts							900			27,347
		Loans receivable, at fair value (includes$236,018 from related parties at September 30, 2020)							344,339			43,338
		Loans receivable, at cost (includes $157,080 from related parties at December 31, 2019)							—			225,848
		Prepaid expenses and other assets							87,560			81,808
		Operating lease right-of-use assets							43,514			47,809
		Property and equipment, net							11,986			12,727
		Goodwill							227,046			223,697
		Other intangible assets, net							194,516			220,525
		Deferred income taxes							14,223			31,522
		Total assets						$	2,300,082		$	2,318,178
Liabilities and Equity
Liabilities:
		Accounts payable						$	4,226		$	4,477
		Accrued expenses and other liabilities							127,036			130,714
		Deferred revenue							70,565			67,121
		Due to related parties and partners							777			1,750
		Securities sold not yet purchased							48,125			41,820
		Securities loaned							667,109			810,495
		Mandatorily redeemable noncontrolling interests							4,462			4,616
		Operating lease liabilities							55,790			61,511
		Notes payable							714			38,167
		Loan participations sold							13,919			12,478
		Term loan							52,452			66,666
		Senior notes payable							854,926			688,112
		Total liabilities							1,900,101			1,927,927
Commitments and contingencies
B. Riley Financial, Inc. stockholders' equity:
		Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 3,831 and 2,349 issued and
		outstanding as of September 30, 2020 and December 31, 2019, respectively; liquidation
		preference of $95,773 and $58,723 as of September 30, 2020 and December 31, 2019, respectively.							—			—
		Common stock, $0.0001 par value; 100,000,000 shares authorized; 25,431,575 and 26,972,332
		issued and outstanding as of September 30, 2020 and December 31, 2019, respectively.							3			3
		Additional paid-in capital							332,085			323,109
		Retained earnings							43,938			39,536
		Accumulated other comprehensive loss							(2,167)			(1,988)
		Total B. Riley Financial, Inc. stockholders' equity							373,859			360,660
Noncontrolling interests									26,122			29,591
		Total equity							399,981			390,251
		Total liabilities and equity						$	2,300,082		$	2,318,178

 

B. RILEY FINANCIAL, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except share data)
							Three Months Ended						Nine Months Ended
							September 30,						September 30,
							2020			2019			2020			2019
Revenues:
	Services and fees						$	144,823		$	113,111		$	429,799		$	356,975
	Trading income (loss) and fair value adjustments on loans							31,753			40,268			(36,142)			71,730
	Interest income - Loans and securities lending							26,026			25,766			72,383			54,147
	Sale of goods							23,651			918			26,475			4,023
		Total revenues						226,253			180,063			492,515			486,875
Operating expenses:
	Direct cost of services							23,264			7,936			51,201			41,715
	Cost of goods sold							9,813			911			11,442			3,835
	Selling, general and administrative expenses							97,143			101,092			291,449			287,963
	Restructuring charge							1,557			—			1,557			1,699
	Impairment of tradenames							—			—			12,500			—
	Interest expense - Securities lending and loan participations sold							10,975			10,273			30,669			22,579
		Total operating expenses						142,752			120,212			398,818			357,791
		Operating income						83,501			59,851			93,697			129,084
Other income (expense):
	Interest income							67			361			537			1,329
	Income (loss) from equity investments							409			1,113			(145)			(4,049)
	Interest expense							(16,374)			(12,772)			(48,537)			(35,130)
		Income before income taxes						67,603			48,553			45,552			91,234
Provision for income taxes								(18,711)			(14,409)			(13,380)			(26,802)
		Net income						48,892			34,144			32,172			64,432
Net income (loss) attributable to noncontrolling interests								513			(158)			(1,382)			(50)
		Net income attributable to B. Riley Financial, Inc.						48,379			34,302			33,554			64,482
Preferred stock dividends								1,088			—			3,230			—
		Net income available to common shareholders					$	47,291		$	34,302		$	30,324		$	64,482
Basic income per common share							$	1.86		$	1.29		$	1.18		$	2.45
Diluted income per common share							$	1.75		$	1.21		$	1.14		$	2.37
Weighted average basic common shares outstanding								25,446,292			26,556,223			25,699,735			26,351,839
Weighted average diluted common shares outstanding								27,050,448			28,233,423			26,689,700			27,251,837

 

B. RILEY FINANCIAL, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
									Nine Months Ended September 30,
									2020			2019
Cash flows from operating activities:
	Net income								$	32,172		$	64,432
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization								14,765			14,217
		Provision for doubtful accounts								2,438			1,646
		Share-based compensation								14,267			10,276
		Fair value adjustments, non-cash								21,755			(13,343)
		Non-cash interest and other								(12,901)			(14,941)
		Effect of foreign currency on operations								(602)			8
		Loss from equity investments								145			4,049
		Deferred income taxes								17,312			6,358
		Impairment of intangibles and loss on disposal of fixed assets								14,057			(327)
		Gain on extinguishment of debt								(1,556)			—
		Income allocated for mandatorily redeemable noncontrolling interests								779			857
		Change in operating assets and liabilities:
			Due from clearing brokers							4,230			9,947
			Securities and other investments owned							(36,859)			(32,122)
			Securities borrowed							137,908			211,139
			Accounts receivable and advances against customer contracts							25,336			(8,645)
			Prepaid expenses and other assets							(3,507)			(9,619)
			Accounts payable, accrued expenses and other liabilities							(10,297)			31,473
			Amounts due to/from related parties and partners							1,093			(4,574)
			Securities sold, not yet purchased							6,304			(8,531)
			Deferred revenue							3,444			(502)
			Securities loaned							(143,386)			(215,575)
				Net cash provided by operating activities						86,897			46,223
Cash flows from investing activities:
	Purchases of loans receivable									(169,100)			(350,695)
	Repayments of loans receivable									75,982			98,742
	Sale of loan receivable to related party									1,800			—
	Proceeds from loan participations sold									2,400			31,806
	Repayment of loan participations sold									(1,131)			(3,175)
	Purchases of property, equipment and other									(1,517)			(2,885)
	Proceeds from sale of property, equipment and intangible assets									1			504
	Purchase of equity investments									(6,486)			(33,391)
	Proceeds from sale of division of magicJack									—			6,196
	Dividends and distributions from equity investments									1,005			1,454
	Acquisition of other businesses									(1,500)			–
				Net cash used in investing activities						(98,546)			(251,444)
Cash flows from financing activities:
	Repayment of asset based credit facility									(37,096)			—
	Repayment of notes payable									(357)			(357)
	Proceeds from term loan									—			10,000
	Repayment of term loan									(14,429)			(17,924)
	Proceeds from issuance of senior notes									171,417			244,497
	Redemption of senior notes									(1,829)			—
	Payment of debt issuance costs									(2,761)			(4,212)
	Payment of employment taxes on vesting of restricted stock									(2,950)			(2,626)
	Common dividends paid									(25,822)			(25,049)
	Preferred dividends paid									(3,230)			—
	Repurchase of common stock									(38,348)			(4,273)
	Repurchase of warrants									—			(2,777)
	Distribution to noncontrolling interests									(3,013)			(1,095)
	Proceeds from issuance of preferred stock									36,007			—
				Net cash provided by financing activities						77,589			196,184
				Increase (decrease) in cash, cash equivalents and restricted cash						65,940			(9,037)
				Effect of foreign currency on cash, cash equivalents and restricted cash						407			(183)
				Net increase (decrease) in cash, cash equivalents and restricted cash						66,347			(9,220)
Cash, cash equivalents and restricted cash, beginning of period										104,739			180,278
Cash, cash equivalents and restricted cash, end of period									$	171,086		$	171,058
Supplemental disclosures:
	Interest paid								$	75,231		$	52,931
	Taxes paid								$	1,460		$	5,029

 

B. RILEY FINANCIAL, INC.
Segment Financial Information
(Unaudited)
(Dollars in thousands)
						Three Months Ended						Nine Months Ended
						September 30,						September 30,
						2020			2019			2020			2019
Capital Markets segment:
	Revenues - Services and fees					$	89,032		$	68,062		$	280,303		$	187,768
	Trading income (losses) and fair value adjustments on loans						31,753			40,268			(36,142)			71,730
	Interest income - Loans and securities lending						26,026			25,766			72,383			54,147
	Total revenues						146,811			134,096			316,544			313,645
	Selling, general and administrative expenses						(68,442)			(70,140)			(204,183)			(196,570)
	Restructuring (charge) recovery						(1,417)			—			(1,417)			4
	Interest expense - Securities lending and loan participations sold						(10,975)			(10,273)			(30,669)			(22,579)
	Depreciation and amortization						(1,166)			(1,281)			(3,362)			(3,844)
		Segment income					64,811			52,402			76,913			90,656
Auction and Liquidation segment:
	Revenues - Services and fees						21,473			11,232			49,340			65,681
	Revenues - Sale of goods						22,712			54			23,757			1,230
	Total revenues						44,185			11,286			73,097			66,911
	Direct cost of services						(18,373)			(2,371)			(36,406)			(21,584)
	Cost of goods sold						(9,046)			(126)			(9,360)			(992)
	Selling, general and administrative expenses						(4,625)			(2,835)			(8,880)			(9,045)
	Restructuring (charge) recovery						(140)			—			(140)			—
	Depreciation and amortization						(1)			(1)			(2)			(5)
		Segment income					12,000			5,953			18,309			35,285
Valuation and Appraisal segment:
	Revenues - Services and fees						9,655			10,818			26,112			29,143
	Selling, general and administrative expenses						(6,632)			(7,331)			(19,643)			(21,492)
	Depreciation and amortization						(51)			(36)			(139)			(100)
		Segment income					2,972			3,451			6,330			7,551
Principal Investments - United Online and magicJack segment:
	Revenues - Services and fees						20,663			22,999			63,037			74,383
	Revenues - Sale of goods						939			864			2,718			2,793
	Total revenues						21,602			23,863			65,755			77,176
	Direct cost of services						(4,891)			(5,565)			(14,795)			(20,131)
	Cost of goods sold						(767)			(785)			(2,082)			(2,843)
	Selling, general and administrative expenses						(4,840)			(5,895)			(14,352)			(18,410)
	Depreciation and amortization						(2,736)			(2,956)			(8,466)			(9,719)
	Restructuring charge						—			—			—			(1,703)
		Segment income					8,368			8,662			26,060			24,370
Brands segment:
	Revenues - Services and fees						4,000			—			11,007			—
	Selling, general and administrative expenses						(994)			—			(2,207)			—
	Depreciation and amortization						(714)			—			(2,143)			—
	Impairment of tradenames						—			—			(12,500)			—
		Segment income (loss)					2,292			—			(5,843)			—
Consolidated operating income from reportable segments							90,443			70,468			121,769			157,862
Corporate and other expenses							(6,942)			(10,617)			(28,072)			(28,778)
Interest income							67			361			537			1,329
Income (loss) on equity investments							409			1,113			(145)			(4,049)
Interest expense							(16,374)			(12,772)			(48,537)			(35,130)
	Income before income taxes						67,603			48,553			45,552			91,234
Provision for income taxes							(18,711)			(14,409)			(13,380)			(26,802)
	Net income						48,892			34,144			32,172			64,432
Net income (loss) attributable to noncontrolling interests							513			(158)			(1,382)			(50)
	Net income  attributable to B. Riley Financial, Inc.						48,379			34,302			33,554			64,482
Preferred stock dividends							1,088			—			3,230			—
	Net income available to common shareholders					$	47,291		$	34,302		$	30,324		$	64,482

 

B. RILEY FINANCIAL, INC.
Adjusted EBITDA and Operating Adjusted EBITDA Reconciliation
(Unaudited)
(Dollars in thousands)
							Three Months Ended September 30,						Nine Months Ended September 30,
							2020			2019			2020			2019
Net income attributable to B. Riley Financial, Inc.							$	48,379		$	34,302		$	33,554		$	64,482
Adjustments:
	Provision for income taxes							18,711			14,409			13,380			26,802
	Interest expense							16,374			12,772			48,537			35,130
	Interest income							(67)			(361)			(537)			(1,329)
	Share based payments							4,778			4,728			14,267			10,276
	Depreciation and amortization							4,886			4,473			14,765			14,217
	Restructuring costs							1,557			—			1,557			1,699
	Impairment of tradenames							—			—			12,500			—
	Transactions related costs and other							(485)			7			8,309			6,339
		Total EBITDA adjustments						45,754			36,028			112,778			93,134
			Adjusted EBITDA				$	94,133		$	70,330		$	146,332		$	157,616
Operating EBITDA Adjustments:
	Trading (income) losses and fair value adjustments on loans							(31,753)			(40,268)			36,142			(71,730)
	Other investment related expenses							4,842			5,138			2,412			11,323
		Total Operating EBITDA Adjustments						(26,911)			(35,130)			38,554			(60,407)
Operating Adjusted EBITDA							$	67,222		$	35,200		$	184,886		$	97,209

 

B. RILEY FINANCIAL, INC.
Adjusted Net Income Reconciliation
(Unaudited)
(Dollars in thousands, except share data)
							Three Months Ended September 30,						Nine Months Ended September 30,
							2020			2019			2020			2019
Net income attributable to B. Riley Financial, Inc.							$	48,379		$	34,302		$	33,554		$	64,482
Adjustments:
	Share based payments							4,778			4,728			14,267			10,276
	Amortization of intangible assets							3,919			3,310			11,967			10,031
	Restructuring costs							1,557			—			1,557			1,699
	Impairment of tradenames							—			—			12,500			—
	Transactions related costs and other							(485)			7			8,309			6,339
	Income tax effect of adjusting entries							(2,725)			(2,380)			(13,456)			(8,185)
Adjusted net income attributable to B. Riley Financial, Inc.							$	55,423		$	39,967		$	68,698		$	84,642
Adjusted income per common share:
	Adjusted basic income per share						$	2.18		$	1.51		$	2.67		$	3.21
	Adjusted diluted income per share						$	2.05		$	1.42		$	2.57		$	3.11
Shares used to calculate adjusted basic net income per share								25,446,292			26,556,223			25,699,735			26,351,839
Shares used to calculate adjusted diluted net income per share								27,050,448			28,233,423			26,689,700			27,251,837

 

 

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SOURCE B. Riley Financial

FAQ

What were B. Riley Financial's Q3 2020 earnings results?

B. Riley Financial reported consolidated revenues of $226.3 million, net income of $47.3 million, or $1.75 per diluted share for Q3 2020.

How did B. Riley Financial perform compared to last year?

B. Riley's Q3 2020 net income increased from $34.3 million to $47.3 million, reflecting strong growth.

What is the recent dividend announced by B. Riley Financial?

B. Riley Financial increased its regular quarterly dividend to $0.375 per share from $0.30.

What factors contributed to B. Riley's revenue growth in Q3 2020?

The capital markets segment, driven by increased advisory fees and retail liquidations, was a primary driver of revenue growth.

What challenges did B. Riley Financial face in Q3 2020?

The valuation and appraisal segment faced negative impacts due to COVID-19, affecting overall performance.