B. Riley Financial Reports First Quarter 2024 Results; Declares Quarterly Dividend of $0.50 per share
First Quarter 2024 Summary
- Net loss available to common shareholders of
$51 million primarily driven by non-cash, unrealized investment losses - Total revenues of
$343 million vs$432 million for the first quarter of 2023 - Operating revenues(3) of
$379 million vs$389 million - Operating adjusted EBITDA(4)(5) of
$66 million vs$88 million - Total cash and cash equivalents of
$191 million as ofMarch 31, 2024 - Total cash and investments(1) of
$1.61 billion as of quarter end - Retired
$115 million of 6.75% 2024 Senior Notes; and repaid$57 million of bank debt facilities and notes payable - Declared quarterly dividend of
$0.50 per common share
Riley continued: "Consistent with our business model, we have monetized investments since year-end and used the capital to retire bonds, repay
Declaration of Common Dividend
The Company has declared a quarterly dividend of
Balance Sheet Summary
At
Total debt was
Redemption of 6.75% 2024 Senior Notes
On
First Quarter 2024 Financial Summary
|
|
Three Months Ended |
||||
|
March 31, |
|||||
|
|
|
|
|
|
|
(Dollars in thousands, except for share data) |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
Net (loss) income available to common shareholders |
|
$ |
(51,180) |
|
$ |
15,143 |
|
|
|
|
|
|
|
Basic (loss) income per common share |
|
$ |
(1.71) |
|
$ |
0.53 |
Diluted (loss) income per common share |
|
$ |
(1.71) |
|
$ |
0.51 |
Net loss available to common shareholders was
During the first quarter of 2024, the Company also incurred incremental professional services expenses of approximately
Operating loss was
Total revenues were
Operating revenues(3) were
Interest income from loans and securities lending was
Operating adjusted EBITDA (4)(5) was
Certain of the information set forth herein, including Operating Revenues(3) and Operating Adjusted EBITDA(4)(5), are considered non-GAAP financial measures. Information about
Supplemental Financial Data
Investment gains and losses include realized and unrealized gains and losses on investments, whether realized from dispositions or unrealized due to changes in mark-to-market prices, and often cause volatility in our periodic earnings. For this reason, the Company generally discusses its financial performance in the context of operating revenues (3) and operating adjusted EBITDA (4)(5) which are considered non-GAAP financial measures.
Additional details related to operating results and investment performance can be found in the First Quarter 2024 Financial Supplement on the Company's investor relations website. The Company recast its non-GAAP operating metrics during the fourth quarter of 2023 to include revenues from fixed income trading. This adjustment is reflected in the reconciliation for operating revenues and operating adjusted EBITDA for all periods presented.
Segment Financial Summary for the First Quarter 2024
|
Segment Revenues |
||||
|
Three Months Ended |
||||
(Dollars in thousands) |
2024 |
|
2023 |
||
Capital Markets |
|
$ 89,823 |
|
|
$ 185,411 |
Wealth Management |
|
51,782 |
|
|
49,814 |
Auction and Liquidation |
|
5,780 |
|
|
5,660 |
|
|
35,085 |
|
|
25,010 |
Communications |
|
82,366 |
|
|
86,919 |
Consumer Products |
|
51,522 |
|
|
65,694 |
|
|||||
|
Segment Revenues |
||||
(Dollars in thousands) |
Three Months Ended |
||||
Capital Markets |
2024 |
|
2023 |
||
Operating Revenues (3) |
|
$ 125,544 |
|
|
$ 142,246 |
Investment (Loss) Gains (2) |
|
(35,721) |
|
|
43,165 |
Total Segment Revenues |
|
$ 89,823 |
|
|
$ 185,411 |
Segment Highlights
-
Capital Markets segment revenues were
$90 million in the first quarter of 2024, compared to$185 million in the first quarter of 2023, primarily due to unrealized investment loss. Segment revenues for the first quarter of 2024 increased 7% from$84 million in the fourth quarter of 2023 due in part to the overall improved dealmaking environment for investment banking. Excluding investment loss(2) of$36 million , segment operating revenues(3) of$126 million included$60 million of revenues from services and fees, and$60 million of interest income from loans and securities lending. Segment income was$0.4 million for the first quarter of 2024, which included$30 million of trading loss and fair value adjustment on loans. Excluding trading loss and fair value adjustments on loans, segment operating income(6) was$36 million for the first quarter of 2024. -
Wealth Management revenues increased to
$52 million in the first quarter of 2024, up on a year-over-year and sequential basis from revenues of$50 million in the first quarter of 2023. Brokerage revenues, advisory revenues, and syndicate revenues all showed sequential improvement from the fourth quarter of 2023. Assets under management totaled$25.8 billion atMarch 31, 2024 . -
Auction and Liquidation contributed segment revenues of
$6 million and segment income of$2 million during the first quarter of 2024 primarily related to ongoing retail liquidation projects inEurope and returning clients in theU.S. andCanada . Results for this segment vary quarter-to-quarter and year-to-year due to the episodic impact of large retail liquidation engagements. -
Financial Consulting revenues increased 40% to$35 million , up from$25 million in the first quarter of 2023, primarily related to an increase in appraisal engagements, bankruptcy and litigation consulting assignments, and real estate restructuring projects. The increase in revenue was also driven by the additions of Farber and Crawford & Winiarski in 2023, which contributed to the increase in advisory and bankruptcy consulting and litigation consulting assignments. Segment income increased 62% to$6 million for the first quarter of 2024, up from$4 million in the same period during 2023. -
Communications segment revenues were
$82 million with segment income of$8 million for the first quarter of 2024. The Company's portfolio of communications businesses continued to serve as a steady source of cash flow for the platform. -
Consumer Products segment revenues were
$52 million for the first quarter of 2024 compared to$66 million for the same prior year period. Continued softness in worldwide PC and laptop sales resulted in a segment loss of$3 million for the quarter. Despite macro headwinds, Targus remains a leader in the PC and tablet accessories category and the Company believes Targus is well positioned when the market returns to growth.
Brand investments contributed to increased revenues from services and fees in All Other category during the first quarter of 2024. Dividend income related to securities owned and brand investments was
Earnings Call Details
About
Footnotes See "Note Regarding Use of Non-GAAP Financial Measures" for further discussion of these non-GAAP terms. For a reconciliation of Adjusted EBITDA, Operating Revenue, Operating Adjusted EBITDA, and Segment Operating Income (Loss) to the comparable GAAP financial measures, please see the Appendix hereto.
(1) Total cash and investments is defined as the sum of cash and cash equivalents, net of noncontrolling interest, restricted cash, due from clearing brokers net of due to clearing brokers, securities and other investments owned, at fair value net of (i) securities sold not yet purchased and (ii) noncontrolling interest related to investments, advances against customer contracts, loans receivable, at fair value net of loan participations sold, and other investments reported in prepaid and other assets.
(2) Investment Gains (Losses) is defined as Trading Income (Loss) and Fair Value Adjustments on Loans less fixed income trading revenue.
(3) Operating Revenues is defined as the sum of revenues from (i) Service and Fees, (ii) Interest Income – Loans and Securities Lending and (iii) Sales of Goods. During the fourth quarter of 2023, the Company recast its operating financial metrics to include revenues from fixed income trading. Operating Revenues has been adjusted to include fixed income trading revenue for the periods presented.
(4) Adjusted EBITDA includes earnings before interest, taxes, depreciation, amortization, restructuring charge, share-based payments, gain/loss on extinguishment of loans, gain on bargain purchase, impairment of goodwill and tradenames, and transaction related and other costs.
(5) Operating Adjusted EBITDA is defined as Adjusted EBITDA excluding (i) Trading Income (Loss) and Fair Value Adjustments on Loans, (ii) Realized and Unrealized Gains (Losses) on Investments, and (iii) other investment-related expenses. During the fourth quarter of 2023, the Company recast its operating metrics to include revenues from fixed income trading. Operating Adjusted EBITDA has been adjusted to include fixed income trading revenue for the periods presented.
(6) Segment Operating Income (Loss) is defined as segment income (loss) including fixed income trading revenues and excluding trading income (loss) and fair value adjustments on loans and other investment-related operating expenses.
Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including total cash and investments, investment gains (losses), operating revenues, adjusted EBITDA, operating adjusted EBITDA, and segment operating income (loss), may be considered non-GAAP financial measures.
Forward-Looking Statements
Statements in this press release that are not descriptions of historical facts are forward-looking statements that are based on management's current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition, and stock price could be materially negatively affected. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of the date of this press release. Such forward-looking statements include, but are not limited to, statements regarding our excitement and the expected growth of our business segments. Factors that could cause such actual results to differ materially from those contemplated or implied by such forward-looking statements include, without limitation, the risks described from time to time in
Condensed Consolidated Balance Sheets (Dollars in thousands, except par value) |
|||||||||||
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
2024 |
|
2023 |
||
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
Assets |
|
|
|
|
|
||||||
Assets |
|
|
|
|
|
||||||
|
Cash and cash equivalents |
$ |
190,690 |
|
$ |
231,964 |
|||||
|
Restricted cash |
|
1,889 |
|
|
1,875 |
|||||
|
Due from clearing brokers |
|
40,875 |
|
|
51,334 |
|||||
|
Securities and other investments owned, at fair value |
|
949,868 |
|
|
1,092,106 |
|||||
|
Securities borrowed |
|
2,050,079 |
|
|
2,870,939 |
|||||
|
Accounts receivable, net of allowance for credit losses of
|
|
123,797 |
|
|
115,496 |
|||||
|
Due from related parties |
|
92 |
|
|
172 |
|||||
|
Loans receivable, at fair value (includes
as of |
|
452,496 |
|
|
532,419 |
|||||
|
Prepaid expenses and other assets |
|
246,402 |
|
|
237,327 |
|||||
|
Operating lease right-of-use assets |
|
84,217 |
|
|
87,605 |
|||||
|
Property and equipment, net |
|
24,146 |
|
|
25,206 |
|||||
|
|
|
471,636 |
|
|
472,326 |
|||||
|
Other intangible assets, net |
|
311,850 |
|
|
322,014 |
|||||
|
Deferred income taxes |
|
49,607 |
|
|
33,595 |
|||||
|
|
Total assets |
$ |
4,997,644 |
|
$ |
6,074,378 |
||||
Liabilities and Equity |
|
|
|
|
|
||||||
Liabilities |
|
|
|
|
|
||||||
|
Accounts payable |
$ |
44,791 |
|
$ |
44,550 |
|||||
|
Accrued expenses and other liabilities |
|
253,153 |
|
|
273,193 |
|||||
|
Deferred revenue |
|
68,643 |
|
|
71,504 |
|||||
|
Due to related parties and partners |
|
1,763 |
|
|
2,731 |
|||||
|
Securities sold not yet purchased |
|
6,423 |
|
|
8,601 |
|||||
|
Securities loaned |
|
2,041,169 |
|
|
2,859,306 |
|||||
|
Operating lease liabilities |
|
95,645 |
|
|
98,563 |
|||||
|
Notes payable |
|
14,325 |
|
|
19,391 |
|||||
|
Revolving credit facility |
|
22,197 |
|
|
43,801 |
|||||
|
Term loans, net |
|
596,262 |
|
|
625,151 |
|||||
|
Senior notes payable, net |
|
1,553,616 |
|
|
1,668,021 |
|||||
|
|
Total liabilities |
|
4,697,987 |
|
|
5,714,812 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228,449 |
|
|
291,117 |
||||||
Noncontrolling interests |
|
71,208 |
|
|
68,449 |
||||||
|
|
Total equity |
|
299,657 |
|
|
359,566 |
||||
|
|
|
Total liabilities and equity |
$ |
4,997,644 |
|
$ |
6,074,378 |
Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except share data) |
|||||||||||
|
|||||||||||
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
2024 |
|
2023 |
||
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|||||
|
Services and fees |
$ |
257,303 |
|
$ |
235,559 |
|||||
|
Trading (loss) income and fair value adjustments on loans |
|
(29,868) |
|
|
51,568 |
|||||
|
Interest income - Loans and securities lending |
|
59,944 |
|
|
77,186 |
|||||
|
Sale of goods |
|
55,653 |
|
|
67,777 |
|||||
|
|
Total revenues |
|
343,032 |
|
|
432,090 |
||||
Operating expenses: |
|
|
|
|
|
||||||
|
Direct cost of services |
|
61,126 |
|
|
54,397 |
|||||
|
Cost of goods sold |
|
39,615 |
|
|
47,626 |
|||||
|
Selling, general and administrative expenses |
|
209,548 |
|
|
212,627 |
|||||
|
Restructuring charge |
|
789 |
|
|
93 |
|||||
|
Interest expense - Securities lending and loan participations sold |
|
35,383 |
|
|
32,424 |
|||||
|
|
Total operating expenses |
|
346,461 |
|
|
347,167 |
||||
|
|
|
Operating (loss) income |
|
(3,429) |
|
|
84,923 |
|||
Other income (expense): |
|
|
|
|
|
||||||
|
Interest income |
|
669 |
|
|
2,574 |
|||||
|
Dividend income |
|
11,815 |
|
|
13,204 |
|||||
|
Realized and unrealized losses on investments |
|
(29,545) |
|
|
(28,442) |
|||||
|
Change in fair value of financial instruments and other |
|
314 |
|
|
(209) |
|||||
|
Loss from equity investments |
|
(4) |
|
|
(10) |
|||||
|
Interest expense |
|
(44,864) |
|
|
(47,561) |
|||||
|
|
(Loss) income before income taxes |
|
(65,044) |
|
|
24,479 |
||||
Benefit from (provision for) income taxes |
|
17,090 |
|
|
(7,919) |
||||||
|
|
Net (loss) income |
|
(47,954) |
|
|
16,560 |
||||
Net income (loss) attributable to noncontrolling interests |
|
|
|
|
|
||||||
and redeemable noncontrolling interests |
|
1,211 |
|
|
(595) |
||||||
|
|
Net (loss) income attributable to |
|
(49,165) |
|
|
17,155 |
||||
Preferred stock dividends |
|
2,015 |
|
|
2,012 |
||||||
|
|
Net (loss) income available to common shareholders |
$ |
(51,180) |
|
$ |
15,143 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income per common share |
$ |
(1.71) |
|
$ |
0.53 |
||||||
Diluted (loss) income per common share |
$ |
(1.71) |
|
$ |
0.51 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic common shares outstanding |
|
29,989,584 |
|
|
28,585,337 |
||||||
Weighted average diluted common shares outstanding |
|
29,989,584 |
|
|
29,513,435 |
Adjusted EBITDA(4) and Operating Adjusted EBITDA(5) Reconciliations (Unaudited) (Dollars in thousands) |
|||||||||||
|
|||||||||||
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
2024 |
|
2023 |
||
Net (loss) income attributable to |
$ |
(49,165) |
|
$ |
17,155 |
||||||
Adjustments: |
|
|
|
|
|
|
|
||||
|
(Benefit from) provision for income taxes |
|
(17,090) |
|
|
7,919 |
|||||
|
Interest expense |
|
44,864 |
|
|
47,561 |
|||||
|
Interest income |
|
(669) |
|
|
(2,574) |
|||||
|
Share based payments |
|
8,682 |
|
|
13,746 |
|||||
|
Depreciation and amortization |
|
11,137 |
|
|
13,077 |
|||||
|
Restructuring charge |
|
789 |
|
|
93 |
|||||
|
Transactions related costs and other |
|
1,519 |
|
|
(2,146) |
|||||
|
|
Total EBITDA adjustments |
|
49,232 |
|
|
77,676 |
||||
|
|
|
Adjusted EBITDA(4) |
$ |
67 |
|
$ |
94,831 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Operating EBITDA Adjustments: |
|
|
|
|
|
||||||
|
Trading loss (income) and fair value adjustments on loans |
|
29,868 |
|
|
(51,568) |
|||||
|
Realized and unrealized losses on investments |
|
29,545 |
|
|
28,442 |
|||||
|
Fixed Income Spread |
|
6,052 |
|
|
8,116 |
|||||
|
Other investment related expenses |
|
253 |
|
|
8,421 |
|||||
|
|
Total Operating EBITDA Adjustments |
|
65,718 |
|
|
(6,589) |
||||
Operating Adjusted EBITDA(5) |
$ |
65,785 |
|
$ |
88,242 |
Operating Revenues(3) Reconciliation (Unaudited) (Dollars in thousands) |
|||||||||||
|
|||||||||||
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
2024 |
|
2023 |
||
Total Revenues |
|
$ |
343,032 |
|
$ |
432,090 |
|||||
Operating Revenues Adjustments: |
|
|
|
|
|
||||||
|
Trading loss (income) and fair value adjustments on loans |
|
29,868 |
|
|
(51,568) |
|||||
|
Fixed Income Spread |
|
6,052 |
|
|
8,116 |
|||||
|
|
Total Revenues Adjustments |
|
35,920 |
|
|
(43,452) |
||||
Operating Revenues(3) |
$ |
378,952 |
|
$ |
388,638 |
Revenues Reconciliation (Unaudited) (Dollars in thousands) |
|||||||||||
|
|||||||||||
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
2024 |
|
2023 |
||
Revenues: |
|
|
|
|
|
|
|
|
|||
|
Capital Markets |
$ |
89,823 |
|
$ |
185,411 |
|||||
|
Wealth Management |
|
51,782 |
|
|
49,814 |
|||||
|
Auction and Liquidation |
|
5,780 |
|
|
5,660 |
|||||
|
|
|
35,085 |
|
|
25,010 |
|||||
|
Communications |
|
82,366 |
|
|
86,919 |
|||||
|
Consumer Products |
|
51,522 |
|
|
65,694 |
|||||
|
All Other |
|
|
|
26,674 |
|
|
13,582 |
|||
|
|
Total Revenues |
$ |
343,032 |
|
$ |
432,090 |
Operating (Loss) Income Reconciliation (Unaudited) (Dollars in thousands) |
|||||||||||
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
March 31, |
||||
|
|
|
|
|
|
|
2024 |
|
2023 |
||
Operating (Loss) Income: |
|
|
|
|
|
||||||
|
Capital Markets |
$ |
445 |
|
$ |
86,020 |
|||||
|
Wealth Management |
|
1,679 |
|
|
1,373 |
|||||
|
Auction and Liquidation |
|
2,028 |
|
|
200 |
|||||
|
|
|
6,140 |
|
|
3,783 |
|||||
|
Communications |
|
8,050 |
|
|
10,783 |
|||||
|
Consumer Products |
|
(3,406) |
|
|
(1,614) |
|||||
|
All Other |
|
|
|
(18,365) |
|
|
(15,622) |
|||
|
|
Total Operating (Loss) Income |
$ |
(3,429) |
|
$ |
84,923 |
Capital Markets Operating Revenues(3) Reconciliation (Unaudited) (Dollars in thousands) |
|||||||||||
|
|||||||||||
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
|
|
|
|
March 31, |
||||
Capital Markets |
|
2024 |
|
2023 |
|||||||
Total Revenues |
|
$ |
89,823 |
|
$ |
185,411 |
|||||
Operating Revenues Adjustments: |
|
|
|
|
|
||||||
|
Trading loss (income) and fair value adjustments on loans |
|
30,468 |
|
|
(50,296) |
|||||
|
Fixed Income Spread |
|
5,253 |
|
|
7,131 |
|||||
|
|
Total Revenues Adjustments |
|
35,721 |
|
|
(43,165) |
||||
Operating Revenues(3) |
$ |
125,544 |
|
$ |
142,246 |
Capital Markets Segment Operating Income(6) Reconciliation (Unaudited) (Dollars in thousands) |
|||||||||||
|
|||||||||||
|
|
|
|
|
|
|
Three Months Ended |
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|
|
|
|
|
|
|
March 31, |
||||
Capital Markets |
|
2024 |
|
2023 |
|||||||
Segment Income |
|
$ |
445 |
|
$ |
86,020 |
|||||
Operating Revenues Adjustments: |
|
|
|
|
|
||||||
|
Trading loss (income) and fair value adjustments on loans |
|
30,468 |
|
|
(50,296) |
|||||
|
Fixed Income Spread |
|
5,253 |
|
|
7,131 |
|||||
|
Other investment related expenses |
|
— |
|
|
8,421 |
|||||
|
|
Total Operating Income Adjustments |
|
35,721 |
|
|
(34,744) |
||||
Segment Operating Income(6) |
$ |
36,166 |
|
$ |
51,276 |
Contacts |
|
|
|
Investors |
Media |
|
|
(212) 409-2424 |
(646) 885-5425 |
View original content to download multimedia:https://www.prnewswire.com/news-releases/b-riley-financial-reports-first-quarter-2024-results-declares-quarterly-dividend-of-0-50-per-share-302146733.html
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