B. Riley Financial Reports Second Quarter 2015 Results

- Record Quarterly Revenue of $45.5M Drives Adjusted EBITDA of $15.5M and Net Income of $8.7M or $0.53 per Diluted Share

- Dividend of $0.20 per Share Declared for Stockholders of Record as of August 25, 2015

Aug 10, 2015, 16:05 ET from B. Riley Financial

LOS ANGELES, Aug. 10, 2015 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY), a diversified provider of financial and business advisory services, reported financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Operational Highlights

  • Completed retail liquidation transactions for Target Canada, Schoenenreus and CACHE stores. 
  • Capital Markets segment revenue increased to $13.7 million, representing an 82% increase over the proforma segment revenue for the prior-year period. 
  • Great American Capital Partners led a $17.5 million senior secured term loan financing to Hancock Fabrics.

Second Quarter 2015 Financial Results

Total revenues for the second quarter of 2015 were a record $45.5 million, which represented an increase of 204% compared to $15.0 million in the same year-ago period. The substantial improvement was primarily attributable to the increase in income from operations from the company's auction and liquidation segment, as well as the inclusion of B. Riley & Co.'s full quarter results in the second quarter of 2015. The total revenue of $45.5 million in the second quarter represented an increase of 106% compared to proforma revenue of $22.1 million in the year-ago period, which includes a full quarter of B. Riley & Co.'s results.

  • Capital Markets Segment: B. Riley & Co.'s investment banking, wealth management, and sales and trading revenue totaled $13.7 million, and generated $4.1 million of segment income. This compares to revenue of $367,000 and a loss of $163,000 in the year-ago period, which included results for B. Riley & Co.'s operations from June 18, 2014 to June 30, 2014. The $13.7 million of segment revenue represents an increase of 82% over proforma segment revenue of $7.5 million in the year-ago period, which includes a full quarter of B. Riley & Co. results. 
  • Valuation and Appraisal Segment: Revenue was $7.8 million compared to $8.5 million in the same year-ago period. Segment income for the quarter totaled $2.3 million, a decrease of 2% compared to $2.3 million from the year-ago period.
  • Auction and Liquidation Segment: Revenue totaled $24.0 million, an increase from $6.1 million in the same year-ago period. Revenue from the sale of goods was $6.0 million compared to none in the same year-ago period. Segment income for the quarter totaled $11.9 million, a significant increase from $629,000 in the same year-ago period.

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and amortization of non-cash stock-based compensation) for the second quarter of 2015 increased to $15.5 million from $2.9 million in the same year-ago period (see "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP term).

Net income for the second quarter of 2015 totaled $8.7 million or $0.53 per diluted share, an improvement from a net loss of $0.8 million or $(0.16) per diluted share in the same year-ago period.

At June 30, 2015, the company had $42.1 million of unrestricted cash, $0.5 million of restricted cash, and $5.6 million of net investments in securities. Shareholder equity at June 30, 2015 totaled $112.5 million.

Declaration of Dividend

The company's board of directors approved a $0.20 per share dividend, which will be paid on or about September 10, 2015 to stockholders of record as of August 25, 2015.

Management Commentary

"Q2 was a record quarter for B. Riley Financial," said the company's chairman and CEO, Bryant Riley. "Our strong financial performance was driven by a number of key factors, including the completion of several large retail liquidation projects, as well as continued momentum in our investment banking and sales and trading practices. Our solid results also demonstrate the earnings power of our platform, as well as our ability to capture synergies, further diversify our revenue base, and capitalize on attractive opportunities in our capital markets and liquidation businesses.

"During Q2, we continued to grow our business by expanding our portfolio of services and team of professionals. This included launching our direct lending platform, GA Capital Partners; the bolstering of our technology banking practice, with the addition of the J. Moore team; and the integration of MK Capital Advisors, which was rebranded as B. Riley Wealth Management. We plan to continue to selectively pursue opportunities that we believe provide synergistic benefits to our overall company. 

"We are encouraged by the results we were able to achieve in the first half of the year. We will continue to focus on increasing our recurring revenue streams, maintaining operating discipline, and opportunistically creating outsized opportunities."

Conference Call

B. Riley Financial will host an investor conference call today (August 10, 2015) at 4:30 p.m. Eastern time. The company's chairman and CEO, Bryant Riley, President Tom Kelleher, and CFO and COO, Phillip Ahn, will host the conference call, followed by a question and answer period.

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

Toll-Free Number: 877-407-0789 International Number: 201-689-8562

The conference call will be broadcasted live and available for replay via the investor relations section of the company's website at http://ir.brileyfin.com

A replay of the call will be available after 7:30 p.m. Eastern time through August 17, 2015.

Toll-Free Replay Number: 877-870-5176 International Replay Number: 858-384-5517

Replay ID: 13616485

About B. Riley Financial, Inc.

B. Riley Financial, Inc. (NASDAQ: RILY) provides collaborative financial services and solutions through several subsidiaries, including: B. Riley & Co. LLC, a leading investment bank which provides corporate finance, research, and sales & trading to corporate, institutional and high net worth individual clients; Great American Group, LLC, a leading provider of advisory and valuation services, asset disposition and auction solutions, and commercial lending services; B. Riley Capital Management, LLC, an SEC registered Investment Advisor, which includes B. Riley Asset Management, a provider of investment products to institutional and high net worth investors, and B. Riley Wealth Management (formally MK Capital Advisors), a multi-family office practice and wealth management firm focused on the needs of ultra-high net worth individuals and families; and Great American Capital Partners, a provider of senior secured loans and second lien secured loan facilities to middle market public and private U.S. companies.

B. Riley Financial is headquartered in Los Angeles with offices in major financial markets throughout the United States and Europe. For more information on B. Riley Financial, visit www.brileyfin.com.

Forward-Looking Statements

This press release may contain forward-looking statements by B. Riley Financial that are not based on historical fact, including, without limitation, statements containing the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions and statements. Such forward looking statements include, but are not limited to, express or implied statements regarding future financial performance, as well as statements regarding how management sees opportunities to grow and broaden the firm. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements. Such factors include our ability to successfully integrate recent acquisitions, loss of key personnel, our ability to manage growth, the potential loss of financial institution clients, the timing of completion of significant engagements, and those risks described from time to time in B. Riley Financial's filings with the SEC, including, without limitation, the risks described in B. Riley Financial's (f/k/a Great American Group, Inc.) Annual Report on Form 10-K for the year ended December 31, 2014 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." 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 undertakes no duty to update this information.

Note Regarding Use of Non-GAAP Financial Measures

Certain of the information set forth herein, including adjusted EBITDA, pro forma financial information and proforma 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 income taxes, depreciation, amortization 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. The non-GAAP measures are described above and are reconciled to the corresponding GAAP measure in the unaudited condensed consolidated financial statements portion of this release under the headings "Adjusted EBITDA and Pro Forma EBITDA Reconciliation" and "Pro Forma Financial Information."

Investor Contact: Scott Liolios or Matt Glover Liolios Group, Inc. 949-574-3860 rily@liolios.com

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

June 30,

December 31,

2015

2014

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

42,128

$

21,600

Restricted cash

502

7,657

Securities owned, at fair value

13,682

17,955

Accounts receivable, net

23,424

10,098

Advances against customer contracts

3,146

16,303

Due from related parties

1,097

Goods held for sale or auction

39

4,117

Deferred income taxes

4,645

6,420

Prepaid expenses and other current assets

1,229

3,795

Total current assets

89,892

87,945

Property and equipment, net

729

776

Goodwill

34,528

27,557

Other intangible assets, net

4,991

2,799

Deferred income taxes

15,457

19,181

Other assets

1,748

732

Total assets

$

147,345

$

138,990

Liabilities and Equity (Deficit)

Current liabilities:

Accounts payable and accrued liabilities

$

21,071

$

12,233

Due to related parties

213

Auction and liquidation proceeds payable

665

Securities sold not yet purchased

8,057

746

Mandatorily redeemable noncontrolling interests

2,617

2,922

Asset based credit facility

18,506

Revolving credit facility

127

56

Notes payable

6,570

Contingent consideration - current portion

1,195

Total current liabilities

33,067

41,911

Contingent consideration, net of current portion

1,107

Total liabilities

34,174

41,911

Commitments and contingencies

B. Riley Financial, Inc. stockholders' equity (deficit):

Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued

Common stock, $0.0001 par value; 135,000,000 shares authorized; 16,305,236 and 15,968,607 issued and outstanding as of June 30, 2015 and December 31, 2014, respectively

2

2

Additional paid-in capital

115,671

110,598

Retained earnings (deficit)

(2,523)

(12,891)

Accumulated other comprehensive income (loss)

(656)

(648)

Total B. Riley Financial, Inc. stockholders' equity (deficit)

112,494

97,061

Noncontrolling interests

677

18

Total equity (deficit)

113,171

97,079

Total liabilities and equity (deficit)

$

147,345

$

138,990

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Revenues:

Services and fees

$

39,442

$

14,947

$

61,026

$

27,332

Sale of goods

6,019

10,466

9,268

Total revenues

45,461

14,947

71,492

36,600

Operating expenses:

Direct cost of services

8,931

5,807

15,317

11,866

Cost of goods sold

2,181

3,071

9,064

Selling, general and administrative 

19,679

10,196

32,973

17,984

Total operating expenses

30,791

16,003

51,361

38,914

Operating income (loss)

14,670

(1,056)

20,131

(2,314)

Other income (expense):

Interest income

3

4

5

6

Interest expense

(419)

(449)

(671)

(1,077)

Income (loss) before income taxes

14,254

(1,501)

19,465

(3,385)

(Provision) benefit for income taxes

(5,685)

594

(7,460)

1,408

Net income (loss)

8,569

(907)

12,005

(1,977)

Net income (loss) attributable to noncontrolling interests

(95)

(130)

659

134

Net income (loss) attributable to B. Riley Financial, Inc.

$

8,664

$

(777)

$

11,346

$

(2,111)

Basic earnings (loss) per share

$

0.53

$

(0.16)

$

0.70

$

(0.66)

Diluted earnings (loss) per share

$

0.53

$

(0.16)

$

0.70

$

(0.66)

Weighted average basic shares outstanding

16,237,860

4,972,203

16,177,824

3,212,929

Weighted average diluted shares outstanding

16,310,829

4,972,203

16,236,748

3,212,929

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

Six Months Ended June 30,

2015

2014

Cash flows from operating activities:

Net income (loss)

$

12,005

$

(1,977)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

421

264

Provision for credit losses

255

33

Share based payments

416

Effect of foreign currency on operations

5

(44)

Non-cash interest

73

Deferred income taxes

5,499

(1,410)

Income allocated to mandatorily redeemable noncontrolling interests and redeemable noncontrolling interests

1,116

1,281

Change in operating assets and liabilities:

Accounts receivable and advances against customer contracts

(439)

(2,621)

Lease finance receivable

107

Due from related party

(1,310)

(288)

Securities owned

4,273

(1,110)

Goods held for sale or auction

52

9,058

Prepaid expenses and other assets

(1,414)

(459)

Accounts payable and accrued expenses

9,218

(2,531)

Securities sold, not yet purchased

7,311

5,567

Auction and liquidation proceeds payable

(665)

Net cash provided by operating activities

36,816

5,870

Cash flows from investing activities:

Acquisition of MK Capital, net of cash acquired of $49

(2,451)

Purchases of property and equipment

(171)

(42)

Proceeds from sale of property and equipment

4

Decrease in note receivable - related party

1,200

Cash acquired in acquisition of B. Riley & Co., Inc.

2,491

Decrease in restricted cash

7,155

243

Net cash (used in) provided by investing activities

4,537

3,892

Cash flows from financing activities:

Repayment of asset based credit facility

(18,506)

(5,710)

Proceeds from revolving line of credit 

71

1,019

Proceeds from note payable - related party

4,500

Repayment of note payable - related party

(4,500)

Repayment of notes payable and long-term debt

(30,925)

Proceeds from issuance of common stock

51,240

Dividends paid

(978)

Distribution to mandatorily redeemable noncontrolling interests

(1,421)

(1,249)

Net cash (used in) provided by financing activities

(20,834)

14,375

Increase in cash and cash equivalents

20,519

24,137

Effect of foreign currency on cash

9

39

Net increase in cash and cash equivalents

20,528

24,176

Cash and cash equivalents, beginning of period

21,600

18,867

Cash and cash equivalents, end of period

$

42,128

$

43,043

Supplemental disclosures:

Interest paid

$

413

$

1,107

Taxes paid

$

695

$

2

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

Segment Financial Information

(Unaudited)

(Dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Auction and Liquidation reportable segment:

Revenues - Services and fees

$ 18,012

$ 6,085

$ 23,134

$ 11,230

Revenues - Sale of goods

6,019

-

10,466

9,268

Total revenues

24,031

6,085

33,600

20,498

Direct cost of services

(5,337)

(2,333)

(8,920)

(5,038)

Cost of goods sold

(2,181)

-

(3,071)

(9,064)

Selling, general, and administrative expenses

(4,500)

(3,092)

(6,465)

(5,832)

Depreciation and amortization

(93)

(31)

(102)

(73)

Segment income

11,920

629

15,042

491

Valuation and Appraisal reportable segment:

Revenues - Services and fees

7,773

8,495

15,027

15,735

Direct cost of services

(3,594)

(3,474)

(6,397)

(6,828)

Selling, general, and administrative expenses

(1,854)

(2,638)

(4,434)

(5,213)

Depreciation and amortization

(35)

(38)

(69)

(76)

Segment income

2,290

2,345

4,127

3,618

Capital markets reportable segment:

Revenues - Services and fees

13,657

367

22,865

367

Selling, general, and administrative expenses

(9,429)

(519)

(15,924)

(519)

Depreciation and amortization

(143)

(11)

(250)

(11)

Segment income (loss)

4,085

(163)

6,691

(163)

Consolidated operating income from reportable segments

18,295

2,811

25,860

3,946

Corporate and other expenses

(3,625)

(3,867)

(5,729)

(6,260)

Interest income

3

4

5

6

Interest expense

(419)

(449)

(671)

(1,077)

Income (loss) before income taxes

14,254

(1,501)

19,465

(3,385)

(Provision) benefit for income taxes

(5,685)

594

(7,460)

1,408

1,408

Net income (loss)

8,569

(907)

12,005

(1,977)

Net (loss) income attributable to noncontrolling interests

(95)

(130)

659

134

Net income (loss) attributable to B. Riley Financial, Inc.

$   8,664

$  (777)

$ 11,346

$ (2,111)

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

Adjusted EBITDA And Proforma Adjusted EBITDA Reconciliation

(Unaudited)

(Dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Adjusted EBITDA and Proforma Adjusted EBITDA Reconciliation:

Net income (loss) as reported

$

8,664

$

(777)

$

11,346

$

(2,111)

Adjustments:

Provision (benefit) for income taxes

5,685

(593)

7,460

(1,407)

Interest expense

418

449

671

1,077

Interest income

(3)

(4)

(5)

(6)

Depreciation and amortization

226

133

421

264

Share based payments

466

466

Transaction costs related to B. Riley & Co., Inc. acquisition

995

995

Severance costs and compensation expense for fair value adjustment for mandatorily redeemable noncontrolling interests

914

914

Total EBITDA adjustments

6,792

1,894

9,013

1,837

Adjusted EBITDA

$

15,456

$

1,117

$

20,359

$

(274)

Proforma Adjusted EBITDA for B. Riley & Co., Inc. operations and new employment agreements

1,813

3,282

Proforma Adjusted EBITDA

$

15,456

$

2,930

$

20,359

$

3,008

 

B. RILEY FINANCIAL, INC. (f/k/a GREAT AMERICAN GROUP, INC.) AND SUBSIDIARIES

Proforma Financial Information

(Unaudited)

(Dollars in thousands, except share data)

Three Months Ended June 30,

Six Months Ended June 30,

2014

2014

Proforma

Proforma

Proforma Revenues By Segment:

Auction and Liquidation reportable segment

$

6,085

$

20,498

Valuation and Appraisal reportable segment

8,495

15,735

Capital markets reportable segment

7,489

14,881

Total Proforma Revenue

$

22,069

$

51,114

Proforma net income (loss)

$

268

$

(235)

Basic income (loss) per share

$

0.03

$

(0.03)

Diluted income (loss) per share

$

0.03

$

(0.03)

Weighted average basic shares outstanding

8,561,982

7,100,203

Weighted average diluted shares outstanding

8,622,224

7,100,203

 

Logo - http://photos.prnewswire.com/prnh/20150202/172920LOGO

 

SOURCE B. Riley Financial



RELATED LINKS

http://www.brileyfin.com