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PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

B. Riley Financial Reports First Quarter 2019 Financial Results

May 1, 2019

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 SummaryFor 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 DividendB. 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 CallBryant 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 StatementsStatements 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 MeasuresCertain 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 88 286 of fixed assets Income allocated and fair value adjustment for mandatorily redeemable 169 175 noncontrolling interests 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