B. Riley Financial Reports Third Quarter 2021 Results; Declares $4.00 Dividend

LOS ANGELES, Oct. 28, 2021 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY), a diversified financial services company, today announced results for the three- and nine-month period ended September 30, 2021.

Third Quarter 2021 Highlights

• Net income of $48.6 million, up 3% year-over-year
• Total revenues of $381.5 million, up 69% year-over-year
• Total adjusted EBITDA ⁽¹⁾ of $114.1 million, up 21% year-over-year
• Operating revenues ⁽²⁾ of $363.3 million, up 87% year-over-year
• Operating adjusted EBITDA ⁽³⁾ of $101.1 million, up 50% year-over-year

Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial, said: "We have never been more confident in the power of our combined platform and the opportunities we see ahead. In line with our stated commitment to return capital to our shareholders, we have increased our regular quarterly dividend to $1.00 and declared a special dividend of $3.00 for a total third quarter dividend of $4.00 per common share. Upon payment of our third quarter dividend, we will have returned a total of $9.00 per share, or approximately $247 million, in common stock dividends to shareholders for the first three quarters. The increase in our regular dividend reflects our increasing confidence in our recurring cash flows, as well as the continued growth in our episodic businesses. Our balance sheet continues to be very strong, and our capital base has continued to increase, reflecting the growing cash flows and strong fundamentals of our business. We acknowledge that our diversified business can be difficult to analyze and believe a recurring dividend is an important measure for our shareholders. Our goal is to continue to utilize our cash flows to enhance our business, make accretive acquisitions, and return capital to our shareholders. Over the last year, we have made meaningful progress in reducing our debt expense by redeeming two of our higher rate corporate bonds and issuing debt at a rate that is over 200 basis points lower. We will continue to seek opportunities to improve our capital structure in the coming quarters."

Tom Kelleher, Co-Chief Executive Officer of B. Riley Financial, added: "Over the last year, B. Riley Securities has established itself as a preferred investment banking partner for small- and mid-cap companies. Our investment banking division drove our strong quarterly performance, supported by contributions from our newly expanded wealth management division, cash flow generated by our principal investment companies, and growth in our brands. The momentum of our combined platform continues to benefit each of our distinct businesses. Our strengthened execution capabilities have enabled us to uncover additional new business opportunities while attracting talented professionals to our platform. During the quarter, we acquired 272 Capital in line with our stated intent to build out asset management and named a senior professional to lead the expansion of our fixed income division. We also added several quality financial advisors to our roster as we work to combine our legacy wealth management business with National Holdings. We are continuing to recruit across our business lines and believe our ability to attract talent of this caliber speaks to the value of our diversified platform."

Declaration of Common Dividend
B. Riley has declared a total quarterly cash dividend of $4.00 per common share which is payable on or about November 23, 2021 to common stockholders of record as of November 9, 2021. The total dividend payment reflects an increased regular quarterly dividend of $1.00 from the previous regular quarterly dividend of $0.50, in addition to a $3.00 special one-time dividend.

Bond Redemption and Share Repurchases
In September, the Company redeemed its 7.375% Senior Notes due 2023 in full for an aggregate redemption price of approximately $140.5 million, including accrued interest.

Under the current share repurchase plan, effective as of October 27, 2020, the Company repurchased approximately 495,000 of its common shares for an aggregate amount of approximately $12.6 million through September 30, 2021. B. Riley's Board of Directors has approved a new annual share repurchase program for up to $50 million.

Financial Summary

For the third quarter, net income available to common shareholders was $48.6 million, or $1.69 diluted earnings per share (EPS). For the first nine months of 2021, net income available to common shareholders was $375.4 million, or $13.07 diluted EPS.

For the three months ended September 30, 2021:

• Total revenues increased 69% to $381.5 million compared to $226.3 million for the prior year quarter.
• Total adjusted EBITDA ⁽¹⁾ increased 21% to $114.1 million compared to $94.1 million for the prior year period.
• Operating revenues ⁽²⁾ increased 87% to $363.3 million from $194.5 million for the prior year period.
• Operating adjusted EBITDA ⁽³⁾ increased 50% to $101.1 million from $67.2 million for the prior year period.
• Quarterly investment gains ⁽⁴⁾ were $18.2 million which reflect certain strategic investments held by the Company.

For the first nine months of 2021:

• Total revenues increased 168% to $1.3 billion compared to $492.5 million for the prior year period.
• Total adjusted EBITDA ⁽¹⁾ increased 327% to $624.5 million compared to $146.3 million for the prior year period.
• Operating revenues ⁽²⁾ increased 89% to $1.0 billion compared to $528.7 million for the prior year period.
• Operating adjusted EBITDA ⁽³⁾ increased 71% to $315.9 million from $184.9 million for the prior year period.

As of September 30, cash and investments ⁽⁶⁾ totaled approximately $2.3 billion including cash and cash equivalents of $378.2 million. Total cash and investments, ⁽⁶⁾ net of debt, was $593.4 million.

Segment Financial Summary and Highlights

Capital Markets segment revenues increased 58% to $178.7 million for the third quarter. Excluding investment gains ⁽⁴⁾ of $16.9 million, segment operating revenues ⁽²⁾ increased 98% year-over-year to $161.7 million, and segment operating income ⁽⁷⁾ increased 129% to $76.1 million for the quarter. Strong performance was primarily driven by investment banking and fees generated from several significant debt and equity capital markets transactions completed during the quarter.

Wealth Management segment revenues and segment income increased to $118.8 million and $6.6 million, respectively, reflecting the addition of National Holdings which was acquired in February 2021. Combined wealth management assets under management were approximately $32 billion as of September 30, 2021.

Auction and Liquidation segment revenues totaled $37.1 million, driven by retail liquidation activity in Europe. Results for this segment vary from quarter-to-quarter and year-to-year due to the episodic impact of large retail liquidation engagements.

Principal Investments segment companies, magicJack and United Online, continued to perform above expectations, contributing recurring cash flow to the Company.

Supplemental Financial Data
Additional metrics related to operating results and investments can be found in the Third Quarter 2021 Financial Supplement on B. Riley's investor relations website.

Conference Call Details
Management will host an investor call to discuss its third quarter results today, Thursday, October 28, 2021, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). Investors may access the live broadcast and archived recording via the Company's investor relations website at ir.brileyfin.com.

About B. Riley Financial
B. Riley Financial provides collaborative solutions tailored to fit the capital raising and business advisory needs of its clients and partners. B. Riley operates through several subsidiaries that offer a diverse range of complementary end-to-end capabilities spanning investment banking and institutional brokerage, private wealth and investment management, financial consulting, corporate restructuring, operations management, risk and compliance, due diligence, forensic accounting, litigation support, appraisal and valuation, auction, and liquidation services. For more information, please visit www.brileyfin.com.

Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including operating revenues, adjusted EBITDA, operating adjusted EBITDA, and investment 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 revenues and cash flow, (i) excluding in the case of operating revenues, trading income (losses) and fair value adjustments on loans, (ii) excluding in the case of adjusted EBITDA, net interest expense, provisions for or benefit from income taxes, depreciation, amortization, fair value adjustment, restructuring costs, gain on extinguishment of loans, impairment of trade names, stock-based compensation and transaction and other expenses, (iii) excluding in the case of operating adjusted EBITDA, the aforementioned adjustments for adjusted EBITDA as well as trading income (losses) and fair value adjustments on loans, and other investment related expenses, (iv) including in the case of investment adjusted EBITDA, trading income (losses) and fair value adjustments on loans, net of other investment related expenses, and (v) including in the case of total cash and investments, net of debt, total cash, net securities and investments, and other minus total debt, 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, management compensation, 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.

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 associated with the unpredictable and ongoing impact of the COVID-19 pandemic and other 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, 2020 and in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" (as applicable). Additional information will be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. 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.

SOURCE B. Riley Financial