B. Riley Financial Reports Third Quarter 2022 Results; Declares $1.00 Dividend

Total Revenues of $340.4 million
Net Income of $45.8 million, Diluted EPS of $1.53
Adjusted EBITDA of $141.4 million

Declares Quarterly Dividend of $1.00 per common share
Board Approves Share Repurchase Plan of up to $50 million

LOS ANGELES, Nov. 3, 2022 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY) ("B. Riley" or the "Company"), a diversified financial services platform, today released results for the three-month period ending September 30, 2022.

Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial, commented: "Our third quarter results represent the underlying strength and continued versatility of our diversified platform despite the meaningful slowdown in capital markets. Our ability to generate solid operating results over the past nine months has enabled us to deliver our shareholders with a third quarter dividend of $1.00 per share, and over $83 million in common dividends related to our performance in the current year."

"Stable operating performance and steady cash flow have provided us a solid foundation with which to operate as we continue to opportunistically invest to enhance our platform. During the quarter, we added BullsEye Telecom to our Lingo subsidiary and expanded our receivables portfolio. And in the beginning of the fourth quarter, we acquired Targus® in a transaction valued at $250 million. These additions are expected to further balance our episodic and cyclical businesses, while meaningfully augmenting our steady and recurring earnings and cash flows as we look ahead," added Riley.

"It has been over a decade since we have endured a capital markets environment as challenging as the one we navigate today. While we have maintained meaningful profitability, we recognize that the current market environment presents both opportunities and challenges for capital markets and wealth management. Our diversified business is well-structured for continued resiliency in the event challenging markets persist, or even intensify. Cost discipline over our 25-year history has afforded us the agility and flexibility to continue to thrive and aggregate share amid periods of market dislocation. At the same time, steady and growing cash flows have enabled us to return meaningful capital to our shareholders as we continue to invest in our business. We expect to see numerous opportunities over the next 12 to 24 months as market valuations adjust, and believe we are in a very strong position to take advantage of those opportunities."

Tom Kelleher, Co-Chief Executive Officer of B. Riley Financial, added: "Our world class team of professionals has continued to make great strides incorporating acquisitions and welcoming new colleagues to B. Riley, while continuing to support our clients and partners amid a difficult environment. Embedded throughout our platform is core expertise across restructuring, debt refinancing, direct lending, bankruptcy advisory, and asset disposition. As financial conditions tighten and demand for these services continue to accelerate, we believe our counter-cyclical businesses will be poised for growth in the coming quarters."

Declaration of Common Dividend
The Company has declared a regular quarterly cash dividend of $1.00 per common share payable on or about November 29 to common stockholders of record as of November 15.

Share Repurchase Authorization
B. Riley's Board of Directors has approved an annual share repurchase plan under which the Company may repurchase up to $50 million of its common shares.

Third Quarter 2022 Financial Summary

B. Riley Financial reported total revenues of $340.4 million, compared with $381.5 million for the third quarter ended September 30, 2021.

Net income available to common shareholders was $45.8 million, or $1.53 per diluted share, compared to $48.6 million, or $1.69 per diluted share in the prior-year period.

Total adjusted EBITDA for the quarter was $141.4 million, compared to $114.1 million in the prior year period.

For the third quarter ended September 30, 2022:
Operating revenues ⁽²⁾ were $328.2 million, compared with $363.3 million for the third quarter ended September 30, 2021. Operating adjusted EBITDA ⁽³⁾ increased to $106.2 million, compared with $101.1 million in the prior year period.

Quarterly investment gains were $12.2 million for the quarter, which reflect certain strategic investments held by the Company.

Quarterly results benefitted from $13.2 million of income related to the deconsolidation of B. Riley Principal 150 Merger Corp. as result of its business combination with FaZe Clan Inc.

Balance Sheet Highlights
As of September 30, 2022, cash and investments ⁽⁶⁾ totaled approximately $2.33 billion including cash and cash equivalents of $231.8 million, $1.2 billion in net securities and other investments owned, and $814.7 million in loans receivable.

Total debt was approximately $2.32 billion as of September 30. Total cash and investments, ⁽⁶⁾ net of debt, was approximately $14 million at quarter-end.

Third Quarter 2022 Segment Financial Summary

For the three months ended September 30, 2022:

Capital Markets revenues of $179.4 million remained relatively flat, despite lower levels of investment banking and underwriting activity. Segment income increased to $124.1 million, up from $87.9 million in the prior year period, primarily driven by interest income from loans and securities lending.

Excluding investment gains⁽⁴⁾, Capital Markets segment operating revenues increased to $168.3 million, up from $161.7 million in the prior year period. Segment operating income ⁽⁷⁾ increased to $90.8 million from $76.1 million in the prior year period.

Wealth Management revenues decreased to $48.2 million, primarily impacted by our strategic exit of several brokers and certain businesses previously affiliated with National Securities, in addition to challenging market conditions which resulted in reduced client activity. Wealth assets under management were approximately $25 billion as of September 30, 2022.

Auction and Liquidation revenues were $7.0 million, primarily driven by ongoing engagements in Europe and smaller liquidation projects in the US. Results for this segment vary from quarter-to-quarter and year-to-year due to the episodic impact of large retail liquidation engagements.

Financial Consulting revenues increased to $22.8 million, up from $21.3 million in the prior year period, primarily driven by sustained demand for appraisals, and bankruptcy restructuring and forensic litigation consulting. Segment income of $2.7 million remained steady compared to $2.8 million in the prior year period.

Principal Investments – Communications and Other segment revenues increased 304% to $77.9 million, up from $19.3 million in the prior year period due to the additions of Marconi Wireless, Lingo, and Bullseye Telecom. On a combined basis, communications businesses, along with other principal investments, continued to perform above expectations, contributing recurring cash flow to the Company.

Brands segment revenues were $5.0 million related to the licensing of trademarks for six brands: Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too, and Nanette Lepore.

Investments in the Hurley and Justice brands contributed dividend income of $7.1 million for the quarter, compared to $4.3 million in the same period last year. Results related to the Hurley and Justice investments are recognized as Capital Markets segment operating income.⁽⁷⁾

Supplemental Financial Data
Additional details related to operating results and investment performance can be found in the Third Quarter 2022 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, November 3, 2022 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). Investors may access the live broadcast and archived recording via ir.brileyfin.com.

     Date and Time:                 Thursday, November 3, 2022 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time)

     Dial In:                               1-800-239-9838 (toll-free) or 1-856-344-9221 (international)

     Audio Webcast:                 https://ir.brileyfin.com/events-and-presentations

     Replay (expires Thursday, November 10, 2022)
     Dial In:                  1-844-512-2921; 9397082 (pin)

About B. Riley Financial
B. Riley Financial is a diversified financial services platform that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners. B. Riley leverages cross-platform expertise to provide clients with full service, collaborative solutions at every stage of the business life cycle. Through its affiliated subsidiaries, B. Riley provides end-to-end, collaborative financial services across investment banking, 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. B. Riley opportunistically invests to benefit its shareholders, and certain registered affiliates originate and underwrite senior secured loans for asset-rich companies. B. Riley refers to B. Riley Financial, Inc. and/or one or more of its subsidiaries or affiliates. For more information, please visit www.brileyfin.com.

Footnotes (See "Note Regarding Use of Non-GAAP Financial Measures" for further discussion of these non-GAAP terms.)

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 charge, 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, 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, 2022. 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.

Contacts

Investors
Mike Frank
[email protected]
(212) 409-2424

Media
Jo Anne McCusker
[email protected]
(646) 885-5425

SOURCE B. Riley Financial