Results in Line with Previously Released Estimates for Q4 and FY 2018
Reiterates Previous 2019 Guidance
Declares Regular Dividend of $0.08 Per Share
LOS ANGELES, March 05, 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 fourth quarter and full year ended December 31, 2018 and reiterated guidance for 2019.
Fourth Quarter 2018 Highlights
- Revenues of $102.0 million compared to $110.2 million in the same year ago period
- Adjusted EBITDA of $11.2 million
- Net loss of $8.8 million or $0.34 per diluted share (included restructuring charge of $6.3 million)
- Adjusted net income of $0.7 million, or $0.03 per diluted share
Full Year 2018 Highlights
- Revenues rose to $423.0 million from $322.2 million in the same year ago period
- Adjusted EBITDA of $89.6 million
- Net income of $15.5 million or $0.58 per diluted share
- Adjusted net income of $38.8 million, or $1.45 per diluted share
“2018 was another year of profitable growth for B. Riley Financial. Our results reflect positive momentum across our collection of businesses as we continue to develop and expand our platform of assets. We have worked extensively at organic growth in each of our divisions in addition to revenue and cost synergies as we continuously integrate our various operating subsidiaries. To that end, we successfully onboarded GlassRatner and magicJack in 2018 and look forward to growing earnings and cash flow in those businesses,” said Bryant Riley, Chairman and Co-CEO, B. Riley Financial. “Looking ahead, we believe our platform, in partnership with our strong and nimble balance sheet, will continue to generate attractive returns on our capital. We are particularly excited about the opportunities for Great American Group as store closings across the retail industry continue to be active. This is evidenced by recent engagements with Payless ShoeSource and Gymboree in addition to our expectation of realizing significant revenues from the completion of Bon-Ton Stores’ asset liquidation in our results for the first half of 2019. Our valuation and appraisal business continues to provide steady earnings and revenue growth which we expect to continue in 2019. Lastly, we will continue to use our balance sheet to support our clients and as an engine to drive outsized returns over a long period of time. While the volatility in financial markets dampened our fourth quarter results, we have seen a rebound in the first quarter of 2019 and we view this activity as both core to our business and attractively positioned as we look to the rest of 2019 and beyond. We believe the company is stronger than ever and we remain excited for the opportunities ahead.”
Fourth Quarter 2018 Financial Summary
For the three months ended December 31, 2018, total revenues were $102.0 million compared to $110.2 million for the same year ago period. Revenues in the Auction and Liquidation, Valuation and Appraisal, and Principal Investments segments increased $5.9 million, $2.8 million and $7.0 million respectively compared to the same year ago period. Revenues in the Capital Markets segment for the fourth quarter of 2018 were down partly as a result of declines in the Company’s proprietary investment account which were in line with declines in the broader equity markets in Q4 2018.
- Capital Markets Segment: Revenues totaled $60.6 million for the fourth quarter of 2018 compared to $84.4 million for the same year ago period. Capital Markets segment revenues included mark-to-market losses during the quarter. Segment loss of $12.5 million included $1.1 million of impairment of intangible assets, and $4.8 million of severance and other restructuring costs related to the rebrand of B. Riley Wealth Management.
- Auction and Liquidation Segment: Revenues increased to $10.1 million from $4.2 million for the same year ago period. Segment income increased to $2.3 million from $0.1 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 Great American Group’s retail liquidation engagements.
- Valuation and Appraisal Segment: Revenues increased to $11.3 million from $8.5 million for the same year ago period. Segment income for the quarter increased to $3.4 million from $2.5 million for the same year ago period. Fourth quarter results represented record revenue growth for Great American Group Advisory & Valuation Services primarily driven by an increase in appraisal engagements.
- Principal Investments Segment: Revenues increased to $20.0 million from $13.0 million for the same year ago period. Segment income increased to $5.7 million compared to $5.3 million for the same year ago period. Results for this segment were primarily driven by United Online and partially by magicJack which the Company acquired on November 14, 2018.
The Company recorded a loss of $8.8 million or $0.34 per diluted share during the fourth quarter of 2018. Results for the fourth quarter of 2018 included a restructuring charge of $6.3 million, which comprised of $1.1 million of impairment of intangible assets, and $5.2 million of severance and other restructuring charges primarily related to the rebrand of B. Riley Wealth Management. This compared to a loss of $6.1 million or $0.23 per diluted share for the fourth quarter of 2017. The loss in the fourth quarter of 2017 included a one-time tax expense of $13.1 million in a form of non-cash charge related to the U.S Tax Cuts and Jobs Act.
Adjusted EBITDA totaled $11.2 million for the fourth quarter of 2018 compared to $21.4 million for the same year ago period. Adjusted EBITDA includes earnings before taxes, interest, depreciation and amortization, share-based payments, fair value adjustments, insurance settlement recovery, restructuring costs 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 totaled $0.7 million or $0.03 per diluted share for the fourth quarter of 2018. This compares to $11.6 million or $0.44 per diluted share for the fourth quarter of 2017. Adjusted net income excludes the impact of share-based payments, fair value adjustments, amortization of intangible assets, restructuring costs, insurance settlement recovery, transaction-related and other costs, tax impact of aforementioned adjustments and certain tax items. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term).
Full Year 2018 Financial Summary
Total revenues increased $100.8 million to $423.0 million for the full year 2018 from $322.2 million for the same year ago period. Results for 2018 included a full year of revenues for B. Riley FBR and B. Riley Wealth Management. All four segments recorded an increase in revenues in 2018.
- Capital Markets Segment: Revenues increased to $275.1 million from $189.7 million for the same year ago period. Results were driven primarily by an increase in revenues from investment banking, wealth management services, and consulting fees as result of the acquisition of GlassRatner on August 1, 2018. Segment income for the year totaled $10.2 million compared to $15.9 million for the same year ago period.
- Auction and Liquidation Segment: Revenues increased to $55.0 million from $47.4 million in the same year ago period. Segment income increased to $27.0 million from $11.2 million for the same year ago period. Results for this segment were primarily driven by the firm’s involvement in several significant retail liquidations.
- Valuation and Appraisal Segment: Revenues increased to $38.7 million from $33.3 million in the same year ago period, representing another record year for Great American Group Advisory & Valuation Services. Segment income totaled $11.1 million compared to $9.7 million for the same year ago period.
- Principal Investments Segment: Revenues increased to $54.2 million from $51.7 million for the same year ago period. Segment income totaled $19.4 million compared to $19.5 million for the same year ago period. The increase in revenue was primarily attributable to the addition of magicJack in the fourth quarter.
Net income for the full year 2018 increased to $15.5 million or $0.58 per diluted share from $11.6 million or $0.48 per diluted share for the same year ago period.
Adjusted EBITDA for the full year 2018 increased to $89.6 million compared to $69.8 million for the same year ago period. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term).
Adjusted net income for the full year 2018 increased to $38.8 million or $1.45 per diluted share. This compares to $38.5 million or $1.59 per diluted share for the same year ago period. (See “Note Regarding Use of Non-GAAP Financial Measures” below for further discussion of this non-GAAP term).
As of December 31, 2018, B. Riley Financial had $179.4 million in unrestricted cash and cash equivalents, approximately $0.8 million in restricted cash, $37.7 million due from clearing brokers, $38.8 million of loans receivable, $236.0 million in net securities and other investments owned, and $540.5 million in total debt. Total B. Riley Financial stockholders’ equity at December 31, 2018 was $258.1 million.
Full Year 2019 Guidance
The Company reiterates its previously-released guidance for the full year 2019 and forecasts adjusted EBITDA to be in the range of $115 million to $135 million and net income in the range of $39 million to $45 million.
The above financial results exclude any historical or anticipated effects of the pending dispute regarding the Rent-a-Center Merger Agreement. For additional information, investors may refer to the Company’s Current Report on Form 8-K filed on January 4, 2019. An adverse result in the trial regarding the purported termination of the Rent-a-Center Merger Agreement may cause anticipated results for 2019 to differ materially from those contained in this press release. The Company can provide no assurance about the outcome of that trial or any related actions that may arise related to the purported termination of that merger agreement.
Declaration of Dividend
B. Riley Financial’s board of directors has approved a regular quarterly dividend of $0.08 per share, which will be paid on or about March 28, 2019 to stockholders of record as of March 19, 2019.
Conference Call
B. Riley Financial will host a conference call today at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). Bryant Riley, Chairman and Co-CEO; Tom Kelleher, Co-CEO; and Phillip Ahn, CFO and COO, will discuss the Company’s financial and operational results, followed by a question and answer period. The conference call will be broadcast simultaneously and available for replay via the Company's investor relations website. A replay of the call will be available on the site until March 12, 2019.
For more information, visit ir.brileyfin.com.
About B. Riley Financial, Inc. (NASDAQ:RILY)
B. Riley Financial, through its subsidiaries, 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 2018 and 2019 as well as express or implied statements regarding the outcome of the trial regarding the validity of Rent-A-Center's purported termination of the Merger Agreement. Due to the inherent uncertainties of litigation, we may not prevail in the upcoming trial or related actions. Moreover, both the costs of defending lawsuits and any settlements or judgments against us could materially adversely affect our anticipated results of operations and cash flows. 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, 2017 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 Annual Report on Form 10-K for the year ended December 31, 2018. 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, insurance settlement recovery, 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.
Investor Contact
Investor Relations
ir@brileyfin.com
(310) 966-1444
Media Contact
Jo Anne McCusker
jmccusker@brileyfin.com
(646) 885-5425
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except par value)
| December 31, | December 31, | |||||||||||||
| 2018 | 2017 | |||||||||||||
| (Unaudited) | ||||||||||||||
| Assets | ||||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 179,440 | $ | 132,823 | ||||||||||
| Restricted cash | 838 | 19,711 | ||||||||||||
| Due from clearing brokers | 37,738 | 31,479 | ||||||||||||
| Securities and other investments owned, at fair value | 273,577 | 145,360 | ||||||||||||
| Securities borrowed | 931,346 | 807,089 | ||||||||||||
| Accounts receivable, net | 42,123 | 20,015 | ||||||||||||
| Due from related parties | 1,729 | 5,689 | ||||||||||||
| Advances against customer contracts | — | 5,208 | ||||||||||||
| Loans receivable | 38,794 | — | ||||||||||||
| Prepaid expenses and other assets | 79,477 | 22,605 | ||||||||||||
| Property and equipment, net | 15,523 | 11,977 | ||||||||||||
| Goodwill | 223,368 | 98,771 | ||||||||||||
| Other intangible assets, net | 91,358 | 56,948 | ||||||||||||
| Deferred income taxes | 42,399 | 29,229 | ||||||||||||
| Total assets | $ | 1,957,710 | $ | 1,386,904 | ||||||||||
| Liabilities and Equity | ||||||||||||||
| Liabilities | ||||||||||||||
| Accounts payable | $ | 5,646 | $ | 2,650 | ||||||||||
| Accrued expenses and other liabilities | 108,662 | 71,685 | ||||||||||||
| Deferred revenue | 69,066 | 3,141 | ||||||||||||
| Due to partners | 2,428 | 1,578 | ||||||||||||
| Securities sold not yet purchased | 37,623 | 28,291 | ||||||||||||
| Securities loaned | 930,522 | 803,371 | ||||||||||||
| Mandatorily redeemable noncontrolling interests | 4,633 | 4,478 | ||||||||||||
| Notes payable | 1,550 | 2,243 | ||||||||||||
| Term loan | 79,166 | — | ||||||||||||
| Senior notes payable | 459,754 | 203,621 | ||||||||||||
| Total liabilities | 1,699,050 | 1,121,058 | ||||||||||||
| 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; 26,603,355 | 2 | 2 | ||||||||||||
| and 26,569,462 issued and outstanding as of December 31, 2018 and | ||||||||||||||
| December 31, 2017, respectively | ||||||||||||||
| Additional paid-in capital | 258,638 | 259,980 | ||||||||||||
| Retained earnings | 1,579 | 6,582 | ||||||||||||
| Accumulated other comprehensive loss | (2,161 | ) | (534 | ) | ||||||||||
| Total B. Riley Financial, Inc. stockholders' equity | 258,058 | 266,030 | ||||||||||||
| Noncontrolling interests | 602 | (184 | ) | |||||||||||
| Total equity | 258,660 | 265,846 | ||||||||||||
| Total liabilities and equity | $ | 1,957,710 | $ | 1,386,904 | ||||||||||
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except share data)
| Three Months Ended | Year Ended | |||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||
| Services and fees | $ | 92,569 | $ | 102,178 | $ | 390,555 | $ | 304,841 | ||||||||||||||
| Interest income - Securities lending | 8,962 | 7,913 | 31,798 | 17,028 | ||||||||||||||||||
| Sale of goods | 500 | 86 | 638 | 307 | ||||||||||||||||||
| Total revenues | 102,031 | 110,177 | 422,991 | 322,176 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||
| Direct cost of services | 17,847 | 9,277 | 51,580 | 55,501 | ||||||||||||||||||
| Cost of goods sold | 658 | 85 | 800 | 398 | ||||||||||||||||||
| Selling, general and administrative expenses | 77,079 | 80,172 | 293,682 | 213,008 | ||||||||||||||||||
| Restructuring charge | 6,259 | 890 | 8,506 | 12,374 | ||||||||||||||||||
| Interest expense - Securities lending | 6,722 | 5,536 | 23,039 | 12,051 | ||||||||||||||||||
| Total operating expenses | 108,565 | 95,960 | 377,607 | 293,332 | ||||||||||||||||||
| Operating (loss) income | (6,534 | ) | 14,217 | 45,384 | 28,844 | |||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||
| Interest income | 590 | 62 | 1,326 | 420 | ||||||||||||||||||
| Income (loss) from equity investments | 2,937 | (280 | ) | 7,986 | (437 | ) | ||||||||||||||||
| Interest expense | (9,467 | ) | (3,187 | ) | (33,393 | ) | (8,382 | ) | ||||||||||||||
| (Loss) income before income taxes | (12,474 | ) | 10,812 | 21,303 | 20,445 | |||||||||||||||||
| Benefit from (provision for) income taxes | 3,509 | (16,263 | ) | (4,903 | ) | (8,510 | ) | |||||||||||||||
| Net (loss) income | (8,965 | ) | (5,451 | ) | 16,400 | 11,935 | ||||||||||||||||
| Net (loss) income attributable to noncontrolling interests | (160 | ) | 662 | 891 | 379 | |||||||||||||||||
| Net (loss) income attributable to B. Riley Financial, Inc. | $ | (8,805 | ) | $ | (6,113 | ) | $ | 15,509 | $ | 11,556 | ||||||||||||
| Basic (loss) income per share | $ | (0.34 | ) | $ | (0.23 | ) | $ | 0.60 | $ | 0.50 | ||||||||||||
| Diluted (loss) income per share | $ | (0.34 | ) | $ | (0.23 | ) | $ | 0.58 | $ | 0.48 | ||||||||||||
| Weighted average basic shares outstanding | 26,177,560 | 26,150,502 | 25,937,305 | 23,181,388 | ||||||||||||||||||
| Weighted average diluted shares outstanding | 26,177,560 | 26,150,502 | 26,764,856 | 24,290,904 | ||||||||||||||||||
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
| Year Ended December 31, | |||||||||||||||
| 2018 | 2017 | ||||||||||||||
| (Unaudited) | |||||||||||||||
| Cash flows from operating activities: | |||||||||||||||
| Net income | $ | 16,400 | $ | 11,935 | |||||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||||||
| Depreciation and amortization | 13,809 | 11,140 | |||||||||||||
| Provision for doubtful accounts | 1,308 | 1,066 | |||||||||||||
| Share-based compensation | 13,042 | 10,341 | |||||||||||||
| Recovery of key man life insurance | — | (6,000 | ) | ||||||||||||
| Non-cash interest and other | 4,068 | 456 | |||||||||||||
| Effect of foreign currency on operations | (916 | ) | (769 | ) | |||||||||||
| (Income) loss from equity investments | (7,986 | ) | 437 | ||||||||||||
| Deferred income taxes | 1,990 | 5,729 | |||||||||||||
| Impairment of leaseholds and intangibles, lease loss accrual and loss on disposal of fixed assets | 4,142 | 3,602 | |||||||||||||
| Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests | 1,222 | 10,799 | |||||||||||||
| Change in operating assets and liabilities: | |||||||||||||||
| Due from clearing brokers | (6,259 | ) | 3,359 | ||||||||||||
| Securities and other investments owned | (128,217 | ) | (82,143 | ) | |||||||||||
| Securities borrowed | (124,257 | ) | 47,595 | ||||||||||||
| Accounts receivable and advances against customer contracts | (12,948 | ) | 1,614 | ||||||||||||
| Prepaid expenses and other assets | (24,395 | ) | (1,506 | ) | |||||||||||
| Accounts payable, accrued payroll and related expenses, accrued value | 3,559 | (30,374 | ) | ||||||||||||
| added tax payable and other accrued expenses | |||||||||||||||
| Amounts due to/from related parties and partners | 4,705 | (11,826 | ) | ||||||||||||
| Securities sold, not yet purchased | 9,332 | 7,678 | |||||||||||||
| Deferred revenue | (564 | ) | (668 | ) | |||||||||||
| Securities loaned | 127,151 | (64,255 | ) | ||||||||||||
| Net cash used in operating activities | (104,814 | ) | (81,790 | ) | |||||||||||
| Cash flows from investing activities: | |||||||||||||||
| Purchases of loans receivable | (38,794 | ) | — | ||||||||||||
| Acquisition of magicJack, net of cash acquired $53,875 | (89,240 | ) | — | ||||||||||||
| Acquisition of Wunderlich, net of cash acquired $4,259 | — | (25,478 | ) | ||||||||||||
| Cash acquired from acquisition of FBR & Co. | — | 15,738 | |||||||||||||
| Acquisition of other businesses, net of cash acquired | (4,000 | ) | (2,052 | ) | |||||||||||
| Acquisition of United Online, net of cash acquired $125,542 in 2016 | — | (10,381 | ) | ||||||||||||
| Purchases of property and equipment and intangible assets | (5,432 | ) | (825 | ) | |||||||||||
| Proceeds from key man life insurance | — | 6,000 | |||||||||||||
| Proceeds from sale of property and equipment and intangible assets | 37 | 836 | |||||||||||||
| Equity investments | (16,640 | ) | (1,674 | ) | |||||||||||
| Dividends from equity investments | 2,628 | — | |||||||||||||
| Net cash used in investing activities | (151,441 | ) | (17,836 | ) | |||||||||||
| Cash flows from financing activities: | |||||||||||||||
| Proceeds from asset based credit facility | 300,000 | 65,987 | |||||||||||||
| Repayment of asset based credit facility | (300,000 | ) | (65,987 | ) | |||||||||||
| Proceeds from notes payable | 51,020 | — | |||||||||||||
| Repayment of notes payable | (51,713 | ) | (8,336 | ) | |||||||||||
| Payment of participating note payable and contingent consideration | — | (1,250 | ) | ||||||||||||
| Proceeds from term loan | 80,000 | — | |||||||||||||
| Proceeds from issuance of senior notes | 258,997 | 179,471 | |||||||||||||
| Payment of debt issuance costs | (7,260 | ) | (4,289 | ) | |||||||||||
| ESPP shares and payment of employment taxes on vesting of restricted stock | (3,731 | ) | (3,486 | ) | |||||||||||
| Dividends paid | (22,684 | ) | (16,755 | ) | |||||||||||
| Repurchase of common stock | (18,703 | ) | — | ||||||||||||
| Distribution to noncontrolling interests | (1,067 | ) | (11,261 | ) | |||||||||||
| Net cash provided by financing activities | 284,859 | 134,094 | |||||||||||||
| Increase in cash, cash equivalents and restricted cash | 28,604 | 34,468 | |||||||||||||
| Effect of foreign currency on cash, cash equivalents and restricted cash | (860 | ) | 2,667 | ||||||||||||
| Net increase in cash, cash equivalents and restricted cash | 27,744 | 37,135 | |||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 152,534 | 115,399 | |||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 180,278 | $ | 152,534 | |||||||||||
| Supplemental disclosures: | |||||||||||||||
| Interest paid | $ | 50,103 | $ | 18,840 | |||||||||||
| Taxes paid | $ | 6,497 | $ | 14,986 | |||||||||||
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Segment Financial Information
(Dollars in thousands)
| Three Months Ended | Year Ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
| Capital Markets segment: | ||||||||||||||||||||
| Revenues - Services and fees | $ | 51,647 | $ | 76,514 | $ | 243,268 | $ | 172,695 | ||||||||||||
| Interest income - Securities lending | 8,962 | 7,913 | 31,798 | 17,028 | ||||||||||||||||
| Total revenues | 60,609 | 84,427 | 275,066 | 189,723 | ||||||||||||||||
| Selling, general, and administrative expenses | (59,215 | ) | (62,339 | ) | (227,774 | ) | (150,092 | ) | ||||||||||||
| Restructuring charge | (5,921 | ) | (610 | ) | (8,378 | ) | (7,855 | ) | ||||||||||||
| Interest expense - Securities lending | (6,722 | ) | (5,536 | ) | (23,039 | ) | (12,051 | ) | ||||||||||||
| Depreciation and amortization | (1,295 | ) | (1,627 | ) | (5,723 | ) | (3,794 | ) | ||||||||||||
| Segment (loss) income | (12,544 | ) | 14,315 | 10,152 | 15,931 | |||||||||||||||
| Auction and Liquidation segment: | ||||||||||||||||||||
| Revenues - Services and fees | 10,111 | 4,197 | 54,923 | 47,376 | ||||||||||||||||
| Revenues - Sale of goods | 15 | 2 | 63 | 3 | ||||||||||||||||
| Total revenues | 10,126 | 4,199 | 54,986 | 47,379 | ||||||||||||||||
| Direct cost of services | (7,364 | ) | (2,359 | ) | (19,627 | ) | (27,841 | ) | ||||||||||||
| Cost of goods sold | — | — | (41 | ) | (2 | ) | ||||||||||||||
| Selling, general, and administrative expenses | (487 | ) | (1,767 | ) | (8,274 | ) | (8,329 | ) | ||||||||||||
| Depreciation and amortization | (8 | ) | (6 | ) | (31 | ) | (21 | ) | ||||||||||||
| Segment income | 2,267 | 67 | 27,013 | 11,186 | ||||||||||||||||
| Valuation and Appraisal segment: | ||||||||||||||||||||
| Revenues - Services and fees | 11,322 | 8,532 | 38,705 | 33,331 | ||||||||||||||||
| Direct cost of services | (4,438 | ) | (3,845 | ) | (16,826 | ) | (14,876 | ) | ||||||||||||
| Selling, general, and administrative expenses | (3,439 | ) | (2,166 | ) | (10,577 | ) | (8,561 | ) | ||||||||||||
| Depreciation and amortization | (46 | ) | (51 | ) | (205 | ) | (181 | ) | ||||||||||||
| Segment income | 3,399 | 2,470 | 11,097 | 9,713 | ||||||||||||||||
| Principal Investments - United Online and magicJack segment: | ||||||||||||||||||||
| Revenues - Services and fees | 19,489 | 12,935 | 53,659 | 51,439 | ||||||||||||||||
| Revenues - Sale of goods | 485 | 84 | 575 | 304 | ||||||||||||||||
| Total revenues | 19,974 | 13,019 | 54,234 | 51,743 | ||||||||||||||||
| Direct cost of services | (6,045 | ) | (3,073 | ) | (15,127 | ) | (12,784 | ) | ||||||||||||
| Cost of goods sold | (658 | ) | (85 | ) | (759 | ) | (396 | ) | ||||||||||||
| Selling, general, and administrative expenses | (4,641 | ) | (2,768 | ) | (10,962 | ) | (11,304 | ) | ||||||||||||
| Depreciation and amortization | (2,560 | ) | (1,720 | ) | (7,600 | ) | (7,033 | ) | ||||||||||||
| Restructuring charge | (338 | ) | (90 | ) | (338 | ) | (723 | ) | ||||||||||||
| Segment income | 5,732 | 5,283 | 19,448 | 19,503 | ||||||||||||||||
| Consolidated operating (loss) income from reportable segments | (1,146 | ) | 22,135 | 67,710 | 56,333 | |||||||||||||||
| Corporate and other expenses (including restructuring | (5,388 | ) | (7,918 | ) | (22,326 | ) | (27,489 | ) | ||||||||||||
| recovery of $210 for the year ended December 31, 2018; and | ||||||||||||||||||||
| restructuring charge of $190 and $3,796 for the three months and | ||||||||||||||||||||
| year ended December 31, 2017 respectively.) | ||||||||||||||||||||
| Interest income | 590 | 62 | 1,326 | 420 | ||||||||||||||||
| Income (loss) on equity investments | 2,937 | (280 | ) | 7,986 | (437 | ) | ||||||||||||||
| Interest expense | (9,467 | ) | (3,187 | ) | (33,393 | ) | (8,382 | ) | ||||||||||||
| (Loss) income before income taxes | (12,474 | ) | 10,812 | 21,303 | 20,445 | |||||||||||||||
| Benefit from (provision for) income taxes | 3,509 | (16,263 | ) | (4,903 | ) | (8,510 | ) | |||||||||||||
| Net (loss) income | (8,965 | ) | (5,451 | ) | 16,400 | 11,935 | ||||||||||||||
| Net (loss) income attributable to noncontrolling interests | (160 | ) | 662 | 891 | 379 | |||||||||||||||
| Net (loss) income attributable to B. Riley Financial, Inc. | $ | (8,805 | ) | $ | (6,113 | ) | $ | 15,509 | $ | 11,556 | ||||||||||
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Adjusted EBITDA Reconciliation
(Unaudited)
(Dollars in thousands)
| Three Months Ended | Yead Ended | ||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| Net (loss) income attributable to B. Riley Financial, Inc. | $ | (8,805 | ) | $ | (6,113 | ) | $ | 15,509 | $ | 11,556 | |||||||||||||
| Adjustments: | |||||||||||||||||||||||
| (Benefit from) provision for income taxes | (3,509 | ) | 16,263 | 4,903 | 8,510 | ||||||||||||||||||
| Interest expense | 9,467 | 3,187 | 33,393 | 8,382 | |||||||||||||||||||
| Interest income | (590 | ) | (62 | ) | (1,326 | ) | (420 | ) | |||||||||||||||
| Share based payments | 3,286 | 2,662 | 11,596 | 7,950 | |||||||||||||||||||
| Depreciation and amortization | 4,041 | 3,434 | 13,809 | 11,140 | |||||||||||||||||||
| Restructuring costs | 6,259 | 890 | 8,506 | 12,374 | |||||||||||||||||||
| Transactions related and other costs | 1,048 | 1,136 | 3,241 | 7,291 | |||||||||||||||||||
| Fair value adjustment | — | — | — | 9,000 | |||||||||||||||||||
| Insurance settlement recovery | — | — | — | (6,000 | ) | ||||||||||||||||||
| Total EBITDA adjustments | 20,002 | 27,510 | 74,122 | 58,227 | |||||||||||||||||||
| Adjusted EBITDA | $ | 11,197 | $ | 21,397 | $ | 89,631 | $ | 69,783 | |||||||||||||||
B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Adjusted Net Income Reconciliation
(Unaudited)
(Dollars in thousands, except share data)
| Three Months Ended | Year Ended | ||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| Net (loss) income attributable to B. Riley Financial, Inc. | $ | (8,805 | ) | $ | (6,113 | ) | $ | 15,509 | $ | 11,556 | |||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Share based payments | 3,286 | 2,662 | 11,596 | 7,950 | |||||||||||||||||||
| Amortization of intangible assets | 2,734 | 2,174 | 9,133 | 7,422 | |||||||||||||||||||
| Restructuring costs | 6,259 | 890 | 8,506 | 12,374 | |||||||||||||||||||
| Transactions related and other costs | 1,048 | 1,136 | 3,241 | 7,291 | |||||||||||||||||||
| Fair value adjustment | — | — | — | 9,000 | |||||||||||||||||||
| Insurance settlement recovery | — | — | — | (6,000 | ) | ||||||||||||||||||
| Income tax effect of adjusting entries | (3,798 | ) | (2,172 | ) | (9,209 | ) | (15,741 | ) | |||||||||||||||
| Tax benefit from tax election to treat acquisition of UOL | — | — | — | (8,389 | ) | ||||||||||||||||||
| as a taxable business combination | |||||||||||||||||||||||
| Tax expense from new tax legislation change - Reduction | — | 13,051 | — | 13,051 | |||||||||||||||||||
| in Federal rate from 35% to 21% | |||||||||||||||||||||||
| Adjusted net income attributable to B. Riley Financial, Inc. | $ | 724 | $ | 11,628 | $ | 38,776 | $ | 38,514 | |||||||||||||||
| Adjusted income per common share: | |||||||||||||||||||||||
| Adjusted basic income per share | $ | 0.03 | $ | 0.44 | $ | 1.49 | $ | 1.66 | |||||||||||||||
| Adjusted diluted income per share | $ | 0.03 | $ | 0.44 | $ | 1.45 | $ | 1.59 | |||||||||||||||
| Shares used to calculate adjusted basic net income per share | 26,177,560 | 26,150,502 | 25,937,305 | 23,181,388 | |||||||||||||||||||
| Shares used to calculate adjusted diluted net income per share | 26,177,560 | 26,150,502 | 26,764,856 | 24,290,904 | |||||||||||||||||||