Declares Special Dividend of $0.18 Per Share in addition to Regular Dividend of $0.08 Per Share
Significant Increase in Q1 Revenue and Adjusted EBITDA
LOS ANGELES, May 01, 2019 (GLOBE NEWSWIRE) -- B. Riley Financial, Inc. (NASDAQ:RILY), a diversified financial services company which operates through several wholly-owned subsidiaries, announced results for the first quarter ended March 31, 2019.
First Quarter 2019 Highlights
- Total revenues increased to $142.1 million from $95.8 million in Q1 2018
- Adjusted EBITDA of $34.4 million compared to $16.1 million in Q1 2018
- Net income of $8.0 million or $0.30 per diluted share
- Adjusted net income of $16.4 million or $0.61 per diluted share
“We are pleased with our first quarter performance. The integration of GlassRatner and magicJack, as well as our continued focus to enhance our platform, has translated into meaningful top line growth and profitability improvement. We also saw positive results from our investment portfolio during the first quarter as financial markets significantly rebounded from the pullback at the end of 2018,” said Bryant Riley, Chairman and Co-CEO, B. Riley Financial. “Our Capital Markets and Principal Investments segments drove strong first quarter results, and while our Appraisals segment had a relatively soft quarter compared to historical standards, we are seeing improvements in this business for the second quarter. As we head into the second quarter and the remainder of 2019, we have a robust backlog in our retail liquidation business, including our current participation in the Payless ShoeSource and Gymboree store closing events, which should contribute meaningful results in future quarters. We continue to see a number of proprietary investment opportunities and I’m excited for the B. Riley platform as we expand our collection of distinct but complementary businesses into a comprehensive source of end-to-end solutions for our clients and partners.”
First Quarter 2019 Financial Summary
For the three months ended March 31, 2019, total revenues increased to $142.1 million compared to $95.8 million for the same year ago period, representing approximately 48 percent in total revenue growth year-over-year. Revenues increased across each of the company’s segments during the first quarter of 2019.
- Capital Markets Segment: Revenues increased to $85.3 million for the first quarter of 2019 compared to $60.3 million for the same year ago period. Capital markets segment income increased to $13.9 million from a loss of approximately $0.3 million for the same year ago period. The increase for this segment was primarily driven by the addition of GlassRatner Advisory & Capital Group, which the company acquired on August 1, 2018, and an increase in revenue from gains in our investment portfolio for the first quarter of 2019.
- Auction and Liquidation Segment: Revenues increased to $20.7 million from $15.5 million for the same year ago period. Segment income increased to $11.5 million from $8.1 million for the same year ago period. Results for this segment are expected to vary from quarter-to-quarter and year-to-year due to the episodic nature of the liquidation market in which Great American Group conducts business.
- Valuation and Appraisal Segment: Revenues for Great American Group Advisory & Valuations Services increased to $8.6 million from $8.5 million for the same year ago period. Segment income for the quarter totaled $1.4 million compared to $1.9 million for the same year ago period.
- Principal Investments Segment: Revenues increased to $27.5 million from $11.4 million for the same year ago period. Segment income increased to $7.9 million compared to $4.9 million for the same year ago period. Results for this segment include United Online and magicJack vocalTec. The significant increase for this segment’s results was primarily driven by the addition of magicJack, which the company acquired on November 14, 2018.
Net income attributable to B. Riley Financial increased to $8.0 million or $0.30 per diluted share compared to $4.5 million or $0.17 per diluted share for the same year ago period.
Adjusted EBITDA increased to $34.4 million for the first quarter of 2019 compared to $16.1 million for the same year ago period. Adjusted EBITDA includes earnings before interest, taxes, depreciation, amortization, restructuring, share-based compensation, and transaction related and other costs. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term.)
Adjusted net income increased to $16.4 million or $0.61 per diluted share compared to $8.8 million or $0.32 per diluted share for the same year ago period. Adjusted net income excludes the impact of share-based payments, amortization of intangible assets, restructuring costs, transaction costs, and tax impact of aforementioned adjustments. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term.)
As of March 31, 2019, B. Riley Financial had $163.5 million in cash and cash equivalents, $7.5 million in restricted cash, $22.4 million due from clearing brokers, $53.4 million of loans receivable, $252.9 million in net securities and other investments owned, and $555.4 million in total debt. Total B. Riley Financial stockholders’ equity at March 31, 2019 was $263.4 million.
Declaration of Dividend
B. Riley Financial’s board of directors approved a special dividend of $0.18 per share in addition to the regular quarterly dividend of $0.08 per share, which will be paid on or about May 29, 2019 to stockholders of record as of May 15, 2019.
Conference Call
Bryant Riley, Chairman and Co-CEO; Tom Kelleher, Co-CEO; and Phillip Ahn, CFO and COO, will host a conference call today at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss the company’s financial and operational results, followed by a question and answer period.
Please call the conference line 10 minutes prior to the start time and an operator will register your name and organization. The call will be broadcast live and archived on the investor section of the company's website.
| B. Riley Financial Q1 2019 Earnings Call | ||
| Date: | Wednesday, May 1, 2019 | |
| Time: | 4:30 p.m. Eastern time (1:30 p.m. Pacific time) | |
| Toll-Free: | 1-855-327-6837 | |
| International: | 1-631-891-4304 | |
| Replay Dial-In Numbers (Phone Replay Expires on May 8, 2019) | ||
| Toll-Free: | 1-844-512-2921 | |
| International: | 1-412-317-6671 | |
| Replay Pin: | 10006694 | |
For more information, visit ir.brileyfin.com.
About B. Riley Financial, Inc. (NASDAQ:RILY)
B. Riley Financial provides collaborative financial services and solutions tailored to fit the capital raising and financial advisory needs of public and private companies and high net worth individuals. The company operates through several wholly-owned subsidiaries, including B. Riley FBR, a full-service investment bank and institutional brokerage; Great American Group, a leading provider of asset disposition, appraisal, corporate advisory and valuation services; GlassRatner, a specialty financial advisory services and consulting firm; B. Riley Wealth Management, B. Riley Asset Management and B. Riley Alternatives, which offer investment management to institutional and high net worth investors; Great American Capital Partners, which originates and underwrites senior secured loans for asset-rich companies; and B. Riley Principal Investments, which invests in or acquires companies and assets with attractive return profiles.
Forward-Looking Statements
Statements in this press release that are not descriptions of historical facts are forward-looking statements that are based on management’s current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition and stock price could be materially negatively affected. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of the date of this press release. Such forward looking statements include but are not limited to statements regarding the company’s anticipated results of operations for 2019. Other factors that could adversely affect our operating results and cash flows include (without limitation) those risks described from time to time in B. Riley Financial, Inc.’s periodic filings with the SEC, including, without limitation, the risks described in B. Riley Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018 under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019. These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and B. Riley Financial, Inc. undertakes no duty to update this information.
Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including adjusted net income and adjusted EBITDA, may be considered non-GAAP financial measures. B. Riley Financial believes this information is useful to investors because it provides a basis for measuring the company's available capital resources, the operating performance of its business and its cash flow, excluding net interest expense, provisions for or benefit from income taxes, depreciation, amortization, fair value adjustment, transaction and other expenses, restructuring costs, and stock-based compensation that would normally be included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles ("GAAP"). In addition, the company's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the company's operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by the company may not be comparable to similarly titled amounts reported by other companies.
| Contacts | ||
| Investors | Media | |
| Investor Relations | Jo Anne McCusker | |
| ir@brileyfin.com | jmccusker@brileyfin.com | |
| (310) 966-1444 | (646) 885-5425 |
| B. RILEY FINANCIAL, INC. AND SUBSIDIARIES | ||||||||
| Consolidated Balance Sheets | ||||||||
| (Dollars in thousands, except par value) | ||||||||
| March 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 163,462 | $ | 179,440 | ||||
| Restricted cash | 7,491 | 838 | ||||||
| Due from clearing brokers | 22,418 | 37,738 | ||||||
| Securities and other investments owned, at fair value | 288,802 | 273,577 | ||||||
| Securities borrowed | 827,242 | 931,346 | ||||||
| Accounts receivable, net | 43,975 | 42,123 | ||||||
| Due from related parties | 1,965 | 1,729 | ||||||
| Loans receivable | 53,448 | 38,794 | ||||||
| Prepaid expenses and other assets | 87,942 | 79,477 | ||||||
| Operating lease right-of-use assets | 51,086 | — | ||||||
| Property and equipment, net | 15,644 | 15,523 | ||||||
| Goodwill | 223,243 | 223,368 | ||||||
| Other intangible assets, net | 88,479 | 91,358 | ||||||
| Deferred income taxes | 42,789 | 42,399 | ||||||
| Total assets | $ | 1,917,986 | $ | 1,957,710 | ||||
| Liabilities and Equity | ||||||||
| Liabilities: | ||||||||
| Accounts payable | $ | 5,217 | $ | 5,646 | ||||
| Accrued expenses and other liabilities | 90,921 | 108,662 | ||||||
| Deferred revenue | 69,959 | 69,066 | ||||||
| Due to partners | 1,428 | 2,428 | ||||||
| Securities sold not yet purchased | 35,948 | 37,623 | ||||||
| Securities loaned | 824,833 | 930,522 | ||||||
| Mandatorily redeemable noncontrolling interests | 4,529 | 4,633 | ||||||
| Operating lease liabilities | 65,855 | — | ||||||
| Notes payable | 1,193 | 1,550 | ||||||
| Term loan | 89,138 | 79,166 | ||||||
| Senior notes payable | 465,040 | 459,754 | ||||||
| Total liabilities | 1,654,061 | 1,699,050 | ||||||
| Commitments and contingencies | ||||||||
| B. Riley Financial, Inc. stockholders' equity: | ||||||||
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued | — | — | ||||||
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 26,525,216 | 2 | 2 | ||||||
| and 26,603,355 issued and outstanding as of March 31, 2019 and | ||||||||
| December 31, 2018, respectively | ||||||||
| Additional paid-in capital | 257,888 | 258,638 | ||||||
| Retained earnings | 7,468 | 1,579 | ||||||
| Accumulated other comprehensive loss | (1,991 | ) | (2,161 | ) | ||||
| Total B. Riley Financial, Inc. stockholders' equity | 263,367 | 258,058 | ||||||
| Noncontrolling interests | 558 | 602 | ||||||
| Total equity | 263,925 | 258,660 | ||||||
| Total liabilities and equity | $ | 1,917,986 | $ | 1,957,710 | ||||
| B. RILEY FINANCIAL, INC. AND SUBSIDIARIES | ||||||||
| Consolidated Statements of Income | ||||||||
| Unaudited | ||||||||
| (Dollars in thousands, except share data) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenues: | ||||||||
| Services and fees | $ | 131,853 | $ | 88,449 | ||||
| Interest income - Securities lending | 9,330 | 7,291 | ||||||
| Sale of goods | 945 | 38 | ||||||
| Total revenues | 142,128 | 95,778 | ||||||
| Operating expenses: | ||||||||
| Direct cost of services | 18,537 | 11,652 | ||||||
| Cost of goods sold | 1,119 | 41 | ||||||
| Selling, general and administrative expenses | 90,543 | 68,098 | ||||||
| Restructuring charge | 147 | 217 | ||||||
| Interest expense - Securities lending | 6,804 | 5,168 | ||||||
| Total operating expenses | 117,150 | 85,176 | ||||||
| Operating income | 24,978 | 10,602 | ||||||
| Other income (expense): | ||||||||
| Interest income | 637 | 128 | ||||||
| Loss from equity investments | (3,762 | ) | (672 | ) | ||||
| Interest expense | (10,770 | ) | (4,227 | ) | ||||
| Income before income taxes | 11,083 | 5,831 | ||||||
| Provision for income taxes | (3,104 | ) | (989 | ) | ||||
| Net income | 7,979 | 4,842 | ||||||
| Net (loss) income attributable to noncontrolling interests | (44 | ) | 339 | |||||
| Net income attributable to B. Riley Financial, Inc. | $ | 8,023 | $ | 4,503 | ||||
| Basic income per share | $ | 0.31 | $ | 0.17 | ||||
| Diluted income per share | $ | 0.30 | $ | 0.17 | ||||
| Weighted average basic shares outstanding | 26,217,215 | 26,219,277 | ||||||
| Weighted average diluted shares outstanding | 26,687,531 | 27,271,819 | ||||||
| B. RILEY FINANCIAL, INC. AND SUBSIDIARIES | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (Dollars in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 7,979 | $ | 4,842 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 4,913 | 3,337 | ||||||
| Provision for doubtful accounts | 233 | 305 | ||||||
| Share-based compensation | 2,614 | 2,558 | ||||||
| Non-cash interest and other | 736 | 186 | ||||||
| Effect of foreign currency on operations | 130 | (48 | ) | |||||
| Loss from equity investments | 3,762 | 672 | ||||||
| Deferred income taxes | (390 | ) | — | |||||
| Impairment of leaseholds and intangibles, lease loss accrual and loss on disposal of fixed assets | 88 | 286 | ||||||
| Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests | 169 | 175 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Due from clearing brokers | 15,320 | (16,417 | ) | |||||
| Securities and other investments owned | (15,225 | ) | (5,457 | ) | ||||
| Securities borrowed | 104,104 | (54,003 | ) | |||||
| Accounts receivable | (2,845 | ) | (8,078 | ) | ||||
| Prepaid expenses and other assets | (3,706 | ) | (16,012 | ) | ||||
| Accounts payable, accrued payroll and related expenses, accrued value | (1,251 | ) | (10,049 | ) | ||||
| added tax payable and other accrued expenses | ||||||||
| Amounts due to/from related parties and partners | (1,236 | ) | 473 | |||||
| Securities sold, not yet purchased | (1,675 | ) | (8,555 | ) | ||||
| Deferred revenue | 893 | 378 | ||||||
| Securities loaned | (105,689 | ) | 51,352 | |||||
| Net cash provided by (used in) operating activities | 8,924 | (54,055 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of loans receivable | (20,154 | ) | — | |||||
| Repayment of loans receivable | 5,500 | — | ||||||
| Purchases of property, equipment and intangible assets | (1,746 | ) | (693 | ) | ||||
| Proceeds from sale of property, equipment and intangible assets | 12 | — | ||||||
| Equity investments | (10,558 | ) | (3,575 | ) | ||||
| Dividends from equity investments | 433 | — | ||||||
| Net cash used in investing activities | (26,513 | ) | (4,268 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayment of notes payable | (357 | ) | (357 | ) | ||||
| Proceeds from term loan | 10,000 | — | ||||||
| Proceeds from issuance of senior notes | 4,987 | 7,267 | ||||||
| Payment of debt issuance costs | (145 | ) | (76 | ) | ||||
| Payment of employment taxes on vesting of restricted stock | (714 | ) | (1,125 | ) | ||||
| Dividends paid | (2,606 | ) | (1,779 | ) | ||||
| Repurchase of common stock | (2,650 | ) | — | |||||
| Distribution to noncontrolling interests | (274 | ) | (117 | ) | ||||
| Net cash provided by financing activities | 8,241 | 3,813 | ||||||
| Decrease in cash, cash equivalents and restricted cash | (9,348 | ) | (54,510 | ) | ||||
| Effect of foreign currency on cash, cash equivalents and restricted cash | 23 | (314 | ) | |||||
| Net decrease in cash, cash equivalents and restricted cash | (9,325 | ) | (54,824 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of year | 180,278 | 152,534 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 170,953 | $ | 97,710 | ||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | 17,435 | $ | 9,008 | ||||
| Taxes paid | $ | 192 | $ | 136 | ||||
| B. RILEY FINANCIAL, INC. AND SUBSIDIARIES | ||||||||
| Segment Financial Information | ||||||||
| Unaudited | ||||||||
| (Dollars in thousands) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Capital Markets segment: | ||||||||
| Revenues - Services and fees | $ | 75,971 | $ | 53,038 | ||||
| Interest income - Securities lending | 9,330 | 7,291 | ||||||
| Total revenues | 85,301 | 60,329 | ||||||
| Selling, general and administrative expenses | (63,389 | ) | (53,639 | ) | ||||
| Restructuring recovery (charge) | 29 | (255 | ) | |||||
| Interest expense - Securities lending | (6,804 | ) | (5,168 | ) | ||||
| Depreciation and amortization | (1,276 | ) | (1,564 | ) | ||||
| Segment income (loss) | 13,861 | (297 | ) | |||||
| Auction and Liquidation segment: | ||||||||
| Revenues - Services and fees | 20,709 | 15,517 | ||||||
| Direct cost of services | (6,274 | ) | (4,576 | ) | ||||
| Cost of goods sold | (14 | ) | (1 | ) | ||||
| Selling, general and administrative expenses | (2,915 | ) | (2,881 | ) | ||||
| Depreciation and amortization | (2 | ) | (8 | ) | ||||
| Segment income | 11,504 | 8,051 | ||||||
| Valuation and Appraisal segment: | ||||||||
| Revenues - Services and fees | 8,583 | 8,520 | ||||||
| Direct cost of services | (4,421 | ) | (4,198 | ) | ||||
| Selling, general and administrative expenses | (2,766 | ) | (2,345 | ) | ||||
| Depreciation and amortization | (33 | ) | (49 | ) | ||||
| Segment income | 1,363 | 1,928 | ||||||
| Principal Investments - United Online and magicJack segment: | ||||||||
| Revenues - Services and fees | 26,590 | 11,374 | ||||||
| Revenues - Sale of goods | 945 | 38 | ||||||
| Total revenues | 27,535 | 11,412 | ||||||
| Direct cost of services | (7,842 | ) | (2,878 | ) | ||||
| Cost of goods sold | (1,105 | ) | (40 | ) | ||||
| Selling, general and administrative expenses | (7,020 | ) | (1,958 | ) | ||||
| Depreciation and amortization | (3,463 | ) | (1,679 | ) | ||||
| Restructuring charge | (176 | ) | — | |||||
| Segment income | 7,929 | 4,857 | ||||||
| Consolidated operating income from reportable segments | 34,657 | 14,539 | ||||||
| Corporate and other expenses (including restructuring | (9,679 | ) | (3,937 | ) | ||||
| recovery of $38 during the three months ended March 31, 2018.) | ||||||||
| Interest income | 637 | 128 | ||||||
| Loss on equity investments | (3,762 | ) | (672 | ) | ||||
| Interest expense | (10,770 | ) | (4,227 | ) | ||||
| Income before income taxes | 11,083 | 5,831 | ||||||
| Provision for income taxes | (3,104 | ) | (989 | ) | ||||
| Net income | 7,979 | 4,842 | ||||||
| Net (loss) income attributable to noncontrolling interests | (44 | ) | 339 | |||||
| Net income attributable to B. Riley Financial, Inc. | $ | 8,023 | $ | 4,503 | ||||
| B. RILEY FINANCIAL, INC. AND SUBSIDIARIES | ||||||||
| Adjusted EBITDA Reconciliation | ||||||||
| (Unaudited) | ||||||||
| (Dollars in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net income attributable to B. Riley Financial, Inc. | $ | 8,023 | $ | 4,503 | ||||
| Adjustments: | ||||||||
| Provision for income taxes | 3,104 | 989 | ||||||
| Interest expense | 10,770 | 4,227 | ||||||
| Interest income | (637 | ) | (128 | ) | ||||
| Share based payments | 2,614 | 2,558 | ||||||
| Depreciation and amortization | 4,913 | 3,337 | ||||||
| Restructuring costs | 147 | 217 | ||||||
| Transactions related costs and other | 5,496 | 354 | ||||||
| Total EBITDA adjustments | 26,407 | 11,554 | ||||||
| Adjusted EBITDA | $ | 34,430 | $ | 16,057 | ||||
| B. RILEY FINANCIAL, INC. AND SUBSIDIARIES | ||||||||
| Adjusted Net Income Reconciliation | ||||||||
| (Unaudited) | ||||||||
| (Dollars in thousands, except share data) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net income attributable to B. Riley Financial, Inc. | $ | 8,023 | $ | 4,503 | ||||
| Adjustments: | ||||||||
| Share based payments | 2,614 | 2,558 | ||||||
| Amortization of intangible assets | 3,377 | 2,160 | ||||||
| Restructuring costs | 147 | 217 | ||||||
| Transactions related and other costs | 5,496 | 354 | ||||||
| Income tax effect of adjusting entries | (3,245 | ) | (952 | ) | ||||
| Adjusted net income attributable to B. Riley Financial, Inc. | $ | 16,412 | $ | 8,840 | ||||
| Adjusted income per common share: | ||||||||
| Adjusted basic income per share | $ | 0.63 | $ | 0.34 | ||||
| Adjusted diluted income per share | $ | 0.61 | $ | 0.32 | ||||
| Shares used to calculate adjusted basic net income per share | 26,217,215 | 26,219,277 | ||||||
| Shares used to calculate adjusted diluted net income per share | 26,687,531 | 27,271,819 | ||||||