B. Riley Financial (RILY) 4 Aug 182018 Q2 Earnings call transcript

Good afternoon. Welcome to B. Riley Financial Second Quarter 2018 Earnings Conference Call. My name is Sabi and I will be your conference operator today. B. of a XXXX with be earlier the Relations issued the results found had Investor quarter website. second today, section Financial press financial release for in Riley company’s the which can

today’s line us by before the Riley’s Chairman I’ll Co-CEO; speaker’s the will B. call, and remarks, today results Tom CFO we Ahn, the Bryant Financial discuss company’s statements we and the forward-looking Joining necessary QX management for for the and And are this cautions Phil Riley; conclude call. Co-CEO, during question-and-answer session. Kelleher, to provide COO. open After regarding made

pass a reminder, Mr. Bryant call Mr. will Riley’s replay on over Riley, As a Riley. B. please call to today’s website at recorded now, the and made And available be to be ir.brileyfin.com. proceed. will like I’d

operator, call our for us thanks this exciting to Riley afternoon. Financial. Thanks, everyone time joining an B. is for and This

most As from you businesses, the from we believe our revenue which platform results, can strength see to up power streams combined of of diverse we and our our offers. speaks the in experienced

$XX.X we’ve million QX estimated and the results our previous guidance which EBITDA retail division quarter as and liquidations be for and net with contributors to Our Riley to $XX $XX American $XX Great million our results income. guidance. million second million million EBITDA to range $XX.X B. the net adjusted income, and We’ve emphasized million of in in FBR our in our to primary $XX.X exceeded adjusted previously for

QX to contributed results. that our important in to note the segments it’s our However, of strength each

by flow helped combined These continued contributions on with Online overall our Appraisal management We continue to business. steady see businesses United our margins. expense and focus profit our cash improve in generated growth

on and be in recently Ton, ever Examples in combined our "R" our Us Vintage Capital’s of multiple create us allowed this to Rent-A-Center than which most demonstrate unique Toys more businesses. effective like to strategy. seeing platform, Bon ability has acquisition both of opportunities opportunities parts We’re through our participation our

his of contributions focus notably us GlassRatner restructuring, regarded some he space, Tom core firm more we long-term business helped a business believe platform. evolve the Young on growth. but services new expertise some dedicated to in advisory services to capabilities, complimentary contribution business parent years of management our but B. that advisory, in The evolution B. has previous me in the role relates the our which We his are to collective also of to not addition with company, to grow growth adds our financial which newest help the investment unique the not now our LA-based diversified to and our XX Riley B. segments, provide but ability Riley recently discussions momentum, strategy, position us FBR, B. in the financial end, will help M&A B. individual is Kenny I continue person firm continue our of Ahn, we’re our to our leadership deep company Financial litigation with as This last continue leverage firm, Kelleher, services, of through excited execute Riley. crisis to our before to Riley B. will Phil prior some to brokerage And firm for research has solutions. strength Last, for will colleagues suite the to we joins member holistic with accelerate welcome today. his growth, gives on to to preserving to performance. I taken look that as appointed consulting Financial, our least, the can was fitting, we to particularly merger QX banking values. in his tenure of business to operational most over our decades together, over and as a joining deep new services vertical offers he of institutional Taken Riley long-standing strong speak partner we’ve Moore given CEO CFO on drive it as as Kenny’s it of nearly executive principles firm matters. leadership and and while team Financial, demonstrated the these momentum and combination to we of role Riley to and our which which formalizing, X,XXX only the this FBR. B. to We highest of and of has from Tom’s is And ability his board Riley results two-person to hand highly is Andy across we who Phil? business build office financial our our B. the platform, the focus a and believe our as our confidence B. on the time. lead. been our existing forward. President Financial. Riley mentioned as single long GlassRatner continued focus from GlassRatner investment end-to-end operating into during clients on franchise efforts discuss changes with business. Andy our the we of His co-CEO throughout dive and announced are Riley has knowledge

everyone. welcome, and Bryant, Thanks,

of The we contributions our Securities, period. revenues our to related last respectively. $XX.X year the same for year-over-year significant million, the from acquisitions – and Our $XXX.X July year, quarter ago second and FBR June from million XXXX completed up Wunderlich increase in of reflects of for totaled which

turning by revenue our mix to Now segment.

recently FBR segment Wealth Riley investment results Management. as driven Riley have Securities, brokerage primarily B. Market predate from institutional is as Capital B. well our of results combined Wunderlich by and Our from which we banking business

Our includes also from segment and management results securities our businesses. asset lending Capital Markets

$XX.X the million well second revenues services revenues For in of which million our via is period. year-over-year with Segment the business. as generated the XXXX. income same the the compares quarter of income and and driven Markets of from XXXX addition for $X.X loss Securities million, from million Company second to as $X.X period. of securities this in segment Wunderlich year million includes $XX this revenues revenues ago the million from by of our increased $XX.X ago Revenues of for Capital fees same Again, $XX.X from quarter a generated acquisitions FBR lending segment in XXXX, segment and for interest totaled associated primarily increase year in

American million the period. primarily quarter. our is first same This ago for retail year increase compared to income increased This $XX.X Next Liquidation of Auction $XX.X from period quarter from and million to liquidation for of to increased ago quarter same liquidations driven million, XXXX. up in second $XX.X segment results division. participation the the year the our this by and driven in second million was retail in the Segment by projects from revenues large million Total is in segment our segment. $XX.X Great primarily $X.X XXXX

engagements. vary As quarter-to-quarter business we’ve segment for of to previously to the from our due mentioned, we from results this retail a nature episodic expect liquidations project-based

segment And Great quarter appraisals American year Appraisal $X to the for our Valuation for quarter, to from consists which businesses, which and ago same million ago period. year this $X.X for for now segment, our $X.X million results currently the up the $X.X contribution final Online. XXXX, to this period. quarter-over-quarter. segment Principal up of continued million includes steady from United our to second increased the Segment for from segment, for Results for of increased Investments, demonstrate revenues Turning million second same income

compares For of XXXX, to second of with the XXXX. the in $X.X segment contributed the million and quarter $XX.X revenues million. United segment Online for $XX.X income revenues $X.X million a income of quarter of of first million This

results time, provide continue our will in over Online we flow future diminish cash it years. from gradually While that is reported will United to meaningful expectation

which look an the we our to have all principal has the been closing once contributions regulatory forward and conditions approval. satisfied of announced acquisition on to await quarters, We’ll In from deal segments pending we deal United investment addition future customary remains previously provide to our been in update results Online, magicJack as completed.

Now Financial a are Riley turning B. as attributable profitability to which to our metrics, whole.

brokerage Bryant diluted Net income per diluted share. the attribute for at top mentioned $XX call, $X.XX net of compares liquidation or our million which same retail the better-than-expected As year from quarter our EBITDA, share businesses. $X.X for guidance ago and results XXXX million for the totaled This $X.XX same diluted to or net per period. second a second of the per period. metric our the which adjusted results income ago year million $X.XX for Adjusted is our quarter to the or share exceeded Adjusted diluted QX income, the we increased another second to compared million $X.XX to the is to year or compares quarter to the XXXX. which This of increased $XX.X for same XXXX metric for share million $X.X ago non-GAAP period. of non-GAAP for $XX.X $XX.X million per EBITDA, and

adjusted earnings refer of nearest the financial EBITDA measures, measures. and release income the today’s GAAP use information more about session regarding net can For to in a adjusted reconciliation you to non-GAAP and

balance our to turning Now sheet.

equivalents, sheet include at $XXX $XXX due million cash of in As customer from debt. contracts net and When brokers, reflects cash held the million million fair of taken debt. June total sheet investments in net cash million $XXX after highlights against XX, advances in million value, $XX deducting in balance balance million $XXX investments other the $XX in some and over securities and our unrestricted and clearing together,

June was B. as $XXX stockholders’ XX. million Financial total Riley of Our equity

Our million. shares approximately were $XX.X the of end at the outstanding quarter

of August share, Board will summary. on share paid our financial of of approved stockholders That to XXXX per of $X.XX of Directors XXXX. XX, to as be dividend per special dividend XX, completes or quarterly about in $X.XX our record August my a Lastly, regular addition which

call Bryant. Now back Bryant? to over I’ll the turn

Thanks, Tom.

earlier when which team to our then most collaboration in accelerated all efforts remarks, added on contributed consolidating focus and the we have efficiencies continued our potential profit to is speak Riley overall to to we last has momentum internal our that vendors, believe Financial. for focus around improved But driving my to continued in mentioned on the our companies. Wunderlich margins. B. opportunities results our we’ve us, FBR our partner year As time notably, and Since in of greater this and across to significantly the which operations on benefit business business,

this by B. the across high-impact by Riley engagements evidenced resources, a that from on Our teams the expertise network. our effort Financial is of leveraging offered have collective relationships success number collaborated recent and

for sold IPOs deals. Moving Merger In QX, $XXX Trinity was million. SPAC Capital which segment. successfully to the FBR gross both Corp, by Markets LF two brokerage side of completed represented Trinity IPO bookrunner on Riley our proceeds the of million largest of bringing proceeds our as $XXX Corp. date and these to raised we B. large sole Acquisition

in or ATM aftermarket We the also closed strong performance business, which results to major a saw our quarter. our deal for QX restructuring contributed from and also

XXth Healthcare successful York FBR’s it to research commitment inaugural Conference an and clients we backdrop despite to conference active trend, continue was and our providing relates a Despite secondary We to we Riley date. research cap as our a hosting and Investor New B. testament investor small most largest challenging X. to Our this our Conference segments, Annual revenue. will for September for in is our May our our on commitment be outlet in to this to demonstrate believe clients,

On external side, the business rebrand we our the B. completed brand Securities and Riley to align recognition Wunderlich marketplace our Management Management the Wealth diversified better and platform resources. further drive in to of Wealth of

of Moving total and gross Partners second loans completed American during two million. the lending, new loans a to size Great million over $XXX with Capital of in quarter approximately with and July direct five launched transaction the additional $XX

strong which institutional GACP received support a the quarter, successfully we closed oversubscribed II, range and was During of from investors. also

strategy over fund capital $XXX Fund the our lending million. has of close commitments overall With II, totaling direct

engagements participated Moving conclude to Liquidation. quarter, recent Toys in which Ton with Auction in a level record Ton the stores by driven includes of end remaining scale working team liquidation Us. Great closing to involvement American in Bon liquidations the to in the Bon our scheduled store activity inventory August. retail history, the and second of currently is and The the the clear at "R" largest

structures in to get industry especially in current liquidation involved our and real expect to creates headwind as take purging retail more unique retailers We and accelerate. us to the large continue continue believe inventory. focus opportunity estate advantage for We platform, retail on creative deal consolidation this as trends excess of

Great to steady earnings valuation maintain Our quarter-after-quarter. and appraisal growth business continues American

revenue Appraisal leverage in to continuing We’re beyond expertise sources verticals expand customer. relationships by to cross-platform industry and approach our our applying our core

Now performing of to to acquisition discussing close serve Principal still magicJack, segment. to look Phil United Online is in forward approval significant us deal And pending we’re segment this moving source for as and to awaiting on has as we once regulatory steady income our mentioned, its of Investment our closed. quarters but continues a future contribution to for expectations. the

we as we as work good always, mention people As needed with. only the are to we

forward with to We’re we very and excited GlassRatner shareholder Group to to working look to add the value. team, them enhance

With units our with we’re as for your quarter. in demonstrates pleased it of quarter to questions. call same ready the the open operating We of platform power the that, the are the several when outperformed undoubtedly

[Operator Instructions].

Cummins go ahead. comes Please question first Capital. Our Nokomis from with Wes

Hey, you the recognize on through just revenue the do of a thanks. the right? One, about as that process recognize you process? I you Bon really go couple full until completed. questions. Or don’t Am thinking got some Bryant, of I Hey, any Ton, is

estate, so The own the acquired that real IP. very really different we’ve we Ton whole company, own we we little. Bon So inventory, so the own is the and the

of sale that over could we is the of the go real will months there period sold that So a inventory assets mentioned six and for estate another at end other call time. what be the on August, company the throughout will on end the

far a a trickier. one’s little over recognize general, to that? Usually, profitability either in it do add swings you liquidation, to Phil over. until we’re not want anything we until or into that and So quarter it’s anything

real think liquidation the No, beyond sale, at The the end liquidation continue will there. I estate August, right. but of sale sales to the inventory conclude set that’s is

a but you can’t could – I’ve opens on you think you than in may the guys Okay. deal that the opportunity seen And know May actual different then that big if Rent-A-Center and area? past. comment kind you be comment more I a is up process, be the that just of in that if do deal

balance a direct lending the given unique distribution whether billion extensive. still wealth that able public opportunities, $X take to add Investments of our magicJack’s months And things now, balance we’ve us it’s got I you back about management And So in talked EBITDA use the ability we previously trailing of over cash. you if million willingness institutions our to think of whether assets, us million for create at got the if $XXX in And our and be sheet one to Wes, there. we do or and our XX that is think through to you’ve Principal you makes and is $XX look stopping numbers, sheet, net transaction obviously with it’s our fund that

interesting things. to we some do So our we lots room in have sheet of balance think

be value creating – something that some our dynamics sheet of. We and a create create shareholders, that, aggressive absolutely our investments more those area will to interesting is really of to will for we balance looking we think using and for do of ways

Okay. thanks.

Wes. Thanks, right. All

[Operator Instructions]. at this are time... no There time. this more At questions

Sorry, go ahead.

We with a from go ArbitrOption. ahead. have question Winter Please Heath

the expected in Hi. Is With or taking we Winter anticipated? things for it the you. where transaction calling. quick to this magicJack with process stand longer and where A be, point. Heath than this regard ArbitrOption are Capital question you’d you at to

public I the I if what I told to you, to magicJack. company obviously like would. just honestly, to say a company that have can’t can exactly I been just that transaction, I It’s to And public could, I I been I and wish how that as anything And you tell not feel say to. I speak knew process. I but around would the speak answer I I about tell I the have told apologize. actual

turn I’d Mr. closing like over remarks. the Riley now his question-and-answer this this At concludes for session. to back to our call Bryant time, to

We your everyone. joined support. thanks, investors you forward special continued and again, next you, call. who on Thank and to Well the employees, our Okay. a for partners look everyone on to call your thanks updating

conference concludes This today’s call.

Thank have a disconnect lines. now may you day. You your participating nice and for