B. Riley Financial (RILY) 5 May 192019 Q1 Earnings call transcript

Good afternoon, and welcome to B. Riley Financial's First Quarter 2019 Earnings Call. My name is Claudia, and I will be your conference operator today. Earlier today, B. Riley issued a press release with its financial results. found ir.brileyfin.com. investor be Company's of can at website copy in section the the A

reminder, call available a call website. As this will of A also today's replay be made on Company's is the being recorded.

I will us regarding And Co-CEO; Phillip now remarks, Mr. before today's Kelleher, will we we Joining Co-CEO; open forward-looking the After I and and are conclude Chairman Ahn, Riley, Bryant call and provide today the line cautions Tom over COO. Riley. will Bryant CFO statements. please the management's necessary Riley, for proceed. turn call, question. to Mr.

Thanks, was a line GlassRatner strong top in quarterly capital improved due operator the as a growth to B. our results. for profitability to Riley part and as of to contributed everyone. additions and conditions the quarter recent welcome, market and good growth and well to Revenue Meaningful magicJack start improved year.

recovered saw our in nicely strategies. we their QX, from portfolio driven store American QX. continue In market the retail to as liquidation increased reassess Additionally, retailers investment business, losses activity Great our in

quarter to the quarterly conducted During Gymboree for our results. which Shoes ongoing and Payless Bon-Ton, we contributed liquidations

recognize meaningful we these QX in to recognize expect more did from we revenue While revenue QX. in liquidations,

for and results Our the to we expect year. continue remains in this pipeline current our very backlog segment contributor meaningful to business this strong to and be a

building our investment quarter, to results and of The standards. to of first United quarter a early appraisal segment. have on Our continue said the business trend. out and full the historical compared the American and are both magicJack included quarter our principal Great meaningfully That about Online beginning strategy. together we not for quarter seeing a valuation concern investment focus do had second in QX magicJack soft under principal we business the to also contributed into this as a our improvement integration with relatively

SPAC, Riley million flow Corp. is B. Riley B. we which opportunistic for Principal raised quarter, our focused platform. also on the During our $XXX deal through the Merger created

& previous $XXX Babcock on announced plan strategy described while necessary liquidity applied investment our for in Babcock we Last where a have & we've financing calls, help examples attractive include also to opportunities [ph]. balance Two creating earnings B. the This employ continue month provides with strategy companies we we Riley. utilizing As of and we Wilcox a Stoneheim million our Wilcox. credit facility arranged company to for sheet in had and XXXX future the transformation to in and focus race. is $XX with in significant. served We've equity flows. this Stoneham our debt we've participated strong and at believe that the banking potential cap lead of funding investment upside table the as cash continued a With back a from investing on multiple companies value increase million strong demonstrates levels in its investor in to revenue generating

public Stoneham source investor experience recently remained our Company's with us initial diverse with offering. solution objectives have and our history in combined Our a the advance filed for an enabled effective business we large which to Stoneham its and platform to

During our quarter to Holdings increased the with also XX%. we National the ownership

over proprietary Opportunities business National's and turn leverage we a has of a results on with which our believe in be Phil more Flexibility us key our like Riley and financial opportunities metrics. summary provide to business exciting. the will Phil? to have excited source about COO we're I'd I'm institutional continue unique retail outsized returns. Ahn, potential to for before continue We ever opportunities which seeing this investment management the wealth distribution our and existing successfully than we platform of B. really and from to partnership. opportunities allows CFO the the sheet been our to balance to our call capitalize to create differentiator and these our and initial happen like

everyone. welcome, and Bryant Thanks,

total For first million for to million $XXX.X to the $XX.X quarter same compared our revenues increased of XXXX the year-ago period.

turning Capital segment, Wealth market and capital and for to Ratner. FBR, includes Management, results Riley B. primarily our Riley income operating our Great B. Partners segment Now by revenue business mix American Glass

For Glass the revenues to from income XXXX in driven market by year-ago increase of first The million, the the $XX.X million an period. which XXXX segment year-ago our to increased our in a segment investment same Bryant million for up revenue for which same earlier. period. quarter this $X.X million for of Segment up of capital portfolio from first Ratner acquired referred we the increase primarily $XX.X loss quarter and increased in was to the $XX.X addition August from

segment. increased option quarter million from Revenues Segment the for $X.X $XX.X $XX.X up XXXX same is our year-ago to of the to first year-ago period. period. increased for in million same liquidation million Next $XX.X up income million the from

due segment year-to-year tend results of the As quarter-to-quarter large vary we retail previous projects. Liquidation calls, and and periodic from to our noted liquidation to scale impact on Auction

period. increased same this our $X.X Segment up on valuation for revenues the quarter for compared income to year-ago the segment, $X.X for period. to Moving million from million million and $X..X totaled million segment $X.X same quarter to appraisal the in for year-ago the

same up results magicJack. is for Our from the our Revenues million, results. the segment's period. million which final $X.X million period. was Principal same increase year-ago XXXX primarily income increased to is segment to which United $XX.X this driven November significant by from the by $X.X increased we results driven our year-ago acquired to for the in of $XX.X compared magicJack The Segment for and addition million Investments Online quarterly to segment,

or $XX.X a compared for are million share to diluted year metrics, per income increased same B. per for whole. per which Net million $X.XX first the attributable diluted quarter to period. to our compared Riley million adjusted year-ago for profitability million Adjusted billion increased diluted $X.XX $X.XX turning $XX.X and $X.XX to same year-ago Financial or same per to to or income the compared or EBITDA diluted million totaled the share Now $X period the $XX.X share $X.X period. for $X.X as to ago share net

more information income this nearest balance the financial to net For to GAAP non-GAAP And in a turning refer release to sheet. and adjusted use measures, EBITDA of the now today's reconciliation highlights regarding our measures. and section you earnings adjusted can of some about

brokers, XX, cash; securities of March cash of million $XXX.X from $X.X unrestricted debt. in million million and in XXXX, receivables, owned $XXX.X $XXX.X cash $XX.X due $XX.X in As in million and the total million equivalents; in had net Company clearing investments loans restricted other and million

was you other when cash total in net securities our factor Our million, total various approximately March and debt as positions against XX, our investments $XX of debt.

the of Our equity with approximately the as financial totaling million stockholders $XXX.X quarter end total million. $XX.X B. March XX, outstanding was at shares Riley of

which our of of regular share Lastly, $X.XX my our XX. I'll per record to on May quarterly of special and be financial Directors Bryant? Bryant. back of or approved to dividend Board summary call turn as $X.XX a dividend stockholders completes XX about That addition paid in of share, will May over per to the

Thanks, Phil.

including FBR largest our Glass asset and management, includes starting our results each This from Great B. banking business, consulting into businesses our wealth American Riley Partners. fund with business and our RIA management Riley is of markets. get B. Capital by and brokerage our segment well business, capital as Ratner segments revenue I'll our Now as

paper FBR to B. and deals advisory completed TMT spot. during our pulp of represent closed the and and restructuring, sweet M&A terms several M&A a Riley mandates our SPAC few In in sectors. We and business restructuring continues quarter notable

Our hosting SPAC business remain conference continued strong see we'll public activity in annual be our anniversary our institutional to investor over is as network. XXX space. celebrating We'll Beverly the joined conference the Hills. and investors across mid-cap private in month we for be success underserved XXth this over and over small Later companies the of forward we the and decades. X,XXX two and with our This look by

we performance the quarter. earlier from As our for results the segment portfolio to investment contributed in mentioned strong improved

our Management. retail business, RIA brokerage Wealth Riley and Moving B. to

business, This us National to distribution a with steady combined of private and wealth continues provides revenues. Holdings Our business network our together RIAs. with XXX over a our be grouped represents institutional contributor which powerful

for offerings platform. remains pipeline quality syndicate is team several in A stronger capital our revenues and quarter participation on advisors than financial the recruits high new Our to markets bringing for the focused contributed it's to been. ever

continue we companies with team. a Next to not network areas restructuring pleased be financial open is a lenders and Riley us this in its across and Glass of synergy and and FBR turnaround spending and work of with have B. diligence agriculture terms our our new created leadership. already for traction Ratner due and opportunity matters Glass touch We're terrific and and more who Riley diligence our They've XX been group are great to Great between we Ratner, could XX internet Healthcare approximately of other energy Group. leads, seeing American and two due in B. bankruptcy softness where are sponsors to forensic month and divisions. to boost

market asset its of direct QX, fund American Capital side capital of one to-date, service Services in one which $XXX On GACP largest led management to GACP a segment, US. Most and loans lending in our BJ grow companies or term Great the oil to of leading the our the fund Partners and continues perform. million loan notably is

invested we expect mode harvest second the two GACP one half in the positions Our be and GACP fund year. remaining is to in fully fund four that of has

the we GCP. subsidiary Credit platform During also Riley our quarter Partners capital B. management called structured credit Gateway added under or new

credit average strategy tranche believe bond opportunities. of sub $XXX platform. Our overall aligns managed is great GCP with a or investment actively us strategy our overlooked we whose which million and management portfolios our loan to addition makes GCP in size specializes active

of companies under areas very generated. enterprise billion that believe be where one with to the Alpha continue few can of values represents We $X

started quarter new the We our of end Crazy quarter of Now X In on have liquidation we closing other stores shoe auction Payless and approximately moving our a and continued our in February hundred winding on the began down stores partners. already projects of the closing with the JV X,XXX April. by completed liquidation to during and several assignments Gymboree other cause we source store We participation projects. store and few closed segment.

We of opportunity and QX busiest and continue in expect been are this XXXX. of activity business ever much remainder the and the will this through we've

Great results still more to of sources Business Appraisal Services. historical is strong seeing to American profit consists muted new driven this and while quarterly which Group of our appraisals our efforts business segment & by standards, QX by Valuation positive steady we for the in revenue. are a Valuation & segment results grow generated Advisory remains comparison Next were in

increased advisory and engagements corporate, our growth has pipeline we divisions. new Our for valuation to in and expand business continue

principal Online, segment, now last our includes Finally include historically United the investments also magicJack. which

contributor to we continue leverage QX opportunities significant our a we which stock our As was our results skill discussed for new mentioned magicJack sets. earlier operational earlier. to look and briefly I

Our expertise to benefit team will known that is the markets the for. B. bring the Riley currently that business looking for from platform public mid-cap is to

momentum relies execute on questions. on Taken quarters. and believe for forward core our together strength strategy. franchise With the in the in look and to that employees, support business We success, upon we ready we're as we for partners call we positioned investors future our our to our our to recognize building open us of continue

Thank first question with Hayden [Operator go question-and-answer Our Shawn the [ph]. THC you. begin from Well Please will Instructions] ahead. now session. is

congrats quarter. the on guys Hi,

your rationale the can behind First the whatever degree with question spec that goal -- to is effort what is? explain you you can that and on just

the for Thanks Sure. question.

a been that think a cannabis gap different very what also, kind but around company or in a while whatever look in changed growth roll management or but I have a by opportunities in view would might if so the or in that popular not would and stocks fit Maybe team industries So to it that back just offering group really and hasn't market, a public story, new we there's deserves cachet of there's to up backstopping characterized grow more the to at companies is. ways. portion say be think are in that We really whether it's our a market IPO some and credibility we other stocks story that public you quant it's shrunk it's accountability Initial as that companies of find in bring and that for small by can cap amount companies being IPO I have team. of and company we and situation think it's think much needs, and a of part create there opportunities of now companies are good the the companies a that and and the really the to lending, of of like world their excited we're that. in out -- try of we something gap

with as dividends priority capital share where then Board pretty the as you've today, special it repurchases guys done would the consider stock all? And regularly is in management goes you far Okay. a at the

Yeah, It's stock's we bought so I only don't, the quarter not shares. liquid. a I was over buy X,XXX the We're great, able percentage to couple a think certain not number volume. the of of incredibly

members multitude You Board the of and did see quarter. a buying myself during

answer we and is a in have -- times. buy And it's the it's yes tough at buyback place. to So just

And out Yeah. quarter, kind then or the just you that of specific was the anomaly an there finally slow? call business, appraisal is in something

Yeah.

for Our business long. steady has been so so

and April had was it's a an while we back if anomaly, previous So strong the QX. right numbers super counter to

bit. of an there's little So I was the for it [indiscernible] think maybe closing -- a a just effect

as down for be covers. concerned at looked to -- not banks some slowing we're loans that things in them all. like us the Some but we've or Nothing

And Got you. you. congrats Thank again.

I appreciate it.

next Our ahead. Nokomis is Please from Hendrickson Brett Instructions] Capital. question with [Operator go

Bryant. give office Hey, just guess or update you back with any services, online? us such synergies going any and Can us in for if is sharing And facilities magicJack magicJack. be I on to remind quick shared a

don't So first the comments give, know the we I on show. probably many get I people have think to hand. a right that

people up There's magicJack yeah team a ran in online. great management. effectively I'm sure but Kenny so, some from have business still leadership total came [ph] United his the -- from Online Wildman is and we and the Hill So, with united that that that taking Young the team

building We have support, by providing utilized support XXX in now being magicJack team. people service that support, India are the

has but we -- just you where more will back that's that surprising banking, it really been operating much good. Glass the mean question, gone So line. not, business I synergies in that very and did didn't really synergies the this transaction, disposition Glass just forth I are there's tell and amazing Ratner amount They Ratner asset an in asked amount between appraisal, it's of provides services the and expected of been

it's that TK -- So I I in think to two. integrating we're you anything know, question long to that? or -- want we've come ahead whether synergies way The or for revenue add specific always a looking those do but operational sorry. accounting don't go Phil

there's for We're Hyderabad operations. great other just we instance for in addition would broker for have throw utilize where I to Bryant Yeah, magicJack American to and engineers engineers. ways in our synergies finding India those dealer

and that's wouldn't just It's over So do we it's all -- to that business. a we where office big since with have is open these and location normally gone parts that engineers convenient over put some very already to to we part of an office other there. add to have what India to the support of companies up easy

all our So I businesses. on over of amongst say would that all goes place the

never see office. India opening about where the I you Tom day say just I thought talk I up heard the

with. along come it's yeah So

give take to of give operating number standalone when on -- out was how care you synergy business a a much care to a it guys from savings guys You magicJack basis? on do you

when that's Well think say a company XX% and I going just public of XX%ish get but of I'm out be and that's higher I are and was would maybe would the XX% in at costs expect we to expect way that XX% to Brett, was subtracting look of run we same rates I run between that EBITDA magicJack going rate lot as different base. EBITDA public to somewhere a in to think these rough, that kind

looking We -- I then, and so ask related That's it's verticals stuff. releases auto paid what of if other guess, the the going in? what and about so how they're me I kind of strong are what is And see Ratner, the you up nice, in. from they brought press just then industry question that guess, to much it that not -- dealerships considering auto Glass is the outside to we're it. what for are

if people or it's So industry. one of more STI advisory than the kinds of think business, an of the these about you

can to brought applied can of work. just applied kind could witness of applied three be that to to -- quality be we've expert experts be earnings, healthcare So

need Glass that got liquidation got we they've I bond really in about it's brought mean And real they've kind Ratner great pre us that the done maybe public company So as excess IPO Ratner's to CRO providing company they lend Glass work that of there's But a excellent the might they those estate synergies. of that situation some terrific then where ones time some not estate, people to help find to see job industry, where private and dispose a It's some there. and they're they've collection a the mind individuals even some they in though that's and leadership kind platform of and his litigation need the and opportunities real expertise banking or stuff. markets in to of we we offer advisory team. that a terms get assets the Ian the of or something that itself of have could or -- with come that when is

Okay.

they expert actually are in litigation? providing So witnesses

just show business, as LA them to bigger and was just had to that recently we just recover with lawyers another helping Riley gotten know, Yeah another that's you it we Companies with all but have We've with them a yesterday the way keen some have we company. do more was you super opportunity are -- business last like for know, Yeah. to party in us -- a clients unfortunately products we We team that do well litigators is the and just do. attendance. and and and we've of that it cocktail more litigators and attended B. cross-sell. actually as night one have I got they in firm think in relationships

Good. Okay.

thanks, Well, guys. Okay.

All Brett. right. Thanks,

with Please sir. Our BHC next question ahead, go Hayden is from Richard [ph].

today? How are you afternoon. Good

Great.

I second -- understand quarter is the any Is think, but quantitatively that way the there doing? I how and vertical characterize can you pulling for industry visibility acknowledged having has that. qualitatively

Well I quarters revenue. currently. lot asset I that's liquidation There's report we disposition our always times can going There case. business the where what think times what are which has we said we a not repeat not liquidations are when there's on said. there where only of was

And businesses that. businesses over So we a are bit the you the get for some of good of or we can there. steady declining of any that growing our can the business part really didn't business have little color gauge banking a carry kind feel episodic pretty And provide you I the then on. think, or then and which other is side the

provide any But -- stock. we've I regularly. purchasing really insiders had can't been $X.XX we've had back We fairly I So announced and say additional will we've dividend buying color.

speaks volumes could price that I than with I So words. think more speak

Okay. thank the Again congratulations the and you congratulations response. quarter on on -- for

Thank you.

now This closing his Mr. concludes our to Riley for question-and-answer call over the session. remarks. Bryant to like turn back I'd

thanks, that service people a Okay. Well, work here business, but this of business. always the and key it, We it's thank you everyone. say are elements the

to continue the So make so will really But obviously, more work to try it's us with we're our we we'll we and shareholders do that acquisitions, and and the continue us always confidence about the that for reward team appreciate them. to appreciate all give and so cause we thankful all hard some disruption.

next you So operator talk we'll quarter. and thank you, to

you. Thank

these results matters may I as today's plans during Financial's call about call. explained cautions Harbor prospects and Act and expectations, constitute XXXX includes to detail by forward-looking of the the other made the from new to update within statements Securities earnings conference made Please Financial's detailed provide materially and comparable factors statement future joining looking statements All a of uncertainties as the Riley made are historical this B. during measures Securities statements should statements non-GAAP XXXX. call first release. in today Commission. and that forward result for no like a and information well statements accept events risk this to as and B. are Reform this Further, call Company's measures, Before undertakes Thank any that any in not are most of cause earnings facts us we filings future today. as to of Riley Statements that with as quarter risks GAAP forward-looking whether Financial's forward-looking refer of directly important discussion law, required to These a publicly statements aware the and those financial otherwise. for B. such are discussion obligation included information, forward-looking the these Investors would more measures conclude regarding statements be that regarding conference call. with Safe included financial actual Company's meaning various any the uncertainties Company or GAAP to you of discussed results revise subject or non-GAAP differ accordance of risks Exchange forward-looking in Litigation in prepared Riley the filings here for the reconciling financial Private today are financial could statements.

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