B. Riley Financial (RILY) 31 Oct 202020 Q3 Earnings call transcript

Good afternoon and welcome to B. Riley Financial's Third Quarter 2020 Earnings Call. Earlier today, B. Riley issued a press release and presentation detailing its financial results for the third quarter. Copies are available in the Investor Relations section of the company's website at ir.brileyfin.com. a non-GAAP include measures. will conference discussion financial of This accordance and GAAP these company's The included in comparable release. measures the financial GAAP information earnings in prepared the most directly to financial reconciling are measures non-GAAP results with financial

is today's company's will the recorded. An later today. As also call audio available be a being reminder, on website replay

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

everyone. Welcome, Thanks.

demonstrates and diverse strategy executed operational the of B. level our well quarter the model financial as Riley that resiliency and impact platform growth we million This $XXX.X limiting revenues the the third a To business of we of this strength in quarter. the and represents our as performance. at benefits generated XX%. COVID-XX, team. of year-over-year operating high delivered performance of entire and almost solid end, Our Despite

XX% while EBITDA gains, grew QX to which platform operating the growth. adjusted investment delivered strong almost to us revenues $XXX In addition $XX.X our quarter this first up XX%. we have was an compared QX than is a Year-to-date, increased EBITDA, to robust year-over-year believe XX% top-line that diverse million and increase nine $XX.X of million helps million in to a year, total differentiated to We operating compared in last EBITDA months XX% growth, last to million $XX.X year. Including million. of third the of adjusted adjusted $XXX.X total more achieve of

during through markdowns of shock our markets. you pandemic the portfolio. the flipped COVID quarter, underlying we significant on first experienced The financial As recall, the investment initial

across quarterly focus activity performance for normalize our further business putting QX. to accountable while continue, of investment book performance will in COVID of recovered investment on and to operating markets long-term our shareholders effects book. certain While the us continue urge We

Looking in have influence. $X.XXX supports $X.XX accelerating marks our once to strategy an per again growth from That platform confidence our consecutive we strong quarter our see ahead, regular drivers dividend. number quarterly and This our decision our up regular confidence across a we to of quarterly share. the second increase raised share, dividend

years, philosophy augment episodic pay been on six past dividend the based the dividend and strength dividends that with has of special our to For the our regular over businesses.

As per $X.XXX that our at become regular are consistent, instituting investors per share, share. believe quarterly which dividend increasingly us businesses better and rewarded diversified annualizes to by $X.XX we a larger our of

higher the again our model. current a appropriate dividend we special is consider in dividend While we would business our for more regular believe a future, shareholders given

Our be that over greater to hope grow to will dividend that able profit and increase time. regular is we net continue this we will generate

enhance September, elevate Riley benefits. consolidate seeing and already leverage to the will our of to authorized on but Directors prior repurchases us from that us B. you remain means are to businesses executed the we create greater This under collective our legacy recognize heard conditions. COVID about business continue we Additionally, our regards overall we deliver us team a our what initiative environment, in brand. with by unified million as returns. affiliation will to and seeing shareholder was of have share our calls, have strategic On talk $XX The another an businesses, the our we're level With impact among enable rebranding and clients. to across our service Board decision to encouraged market rebranding better capabilities, in

companies B. order this earlier to is we identify our in of public Sims, simple, efforts. will B. the enter and team potential business, Riley member invest Riley be by recently being stepped excited strategic is lead launch and was our platform in addition, headed by VC until pathway B. late-stage platform B. resources. syndication This as down a the The on four for mandate he sheet a Capital. about Todd balance Board the month, who strong business line supported well a growth The new VC. markets. Riley of Riley announced Venture of for In We're to into as and years diversified

the the effort, various the enterprise with across bolstered [indiscernible] by private from and equity brought extensive have come touch to sponsors. formerly we sponsor with relationship dedicated individuals addition to coordination firms have two are community. experience services points In in hiring VC who our Both to all maximize we

our Turning ATM QX. in quarter. to the business our momentum restructuring in our its There a of were while In strong sustained overall and remained market business number highlights notable stack activity platform. capital business,

was QX, busy group the holiday quarter. levels we liquidation retail and retailers particular. to high through remain remain we in this saw very we Challenges brick-and-mortar activity for given activity season Europe, expect globally move In business as in increase into XXXX. and in Our the an group throughout for COVID,

under hampered accounting continues up of offset more as new Riley restructuring by Projects well litigation booked which ports business, to forensic Great B. trajectory. and turnaround The COVID-related strong During and by the its were American GlassRatner as closed shutdowns brand, support Advisor. than business due growth quarter, one mandates. we legacy and primarily consisted GlassRatner Appraisal management,

related performance. but the ABL Our legacy weakness generate continues to Appraisal Great business stable some American COVID, continues to from recover to of market

the restructuring This year. was is spanning group active XX impressive division an fact has just participated and year-to-date approximately in real earlier given projects X,XXX estate this formed remains locations. Our

ahead business. our as cash Our experienced flow recovery position. Principal some our remain finally, Investment And Brands retailers company key reopen for in delivered performance expectations drivers of to our and business began QX for

future. flow us, generator for opportunities of cash and solid we in number a a remains platform Brands see Our the attractive

and to today, unlock success. our our as clients just I there's versatility I we surface my results am B. sets our come excited of stand diversified business how opportunities. differentiator together, driving help our will and We're us and a branding with And incremental of us competitive as how the model apart to to highlights the Both can about of the mission more times. Taken partners. benefit platform we and we as about for a scratching and driving initiatives value platform built enthusiasm be demonstrate Riley and commitment expanding singular do. know and our more potential, I've our execute platform growth a key challenging from clients during these new shared existing can recent

to Let our our a take believe entire who and me working standing were of further deliver to and team ones. with the with B. helping moment ability our COVID is to us maintain to I tied level validates partners. current tirelessly clients clients that of reputation Riley while thank already new commitment value win

focus With entering focused returns that, sustainable on increased Moving and Phil? Ahn, forward, and accelerated XXXX partners the quarter. of with deliver and COO, company. year the discuss We our growth our Phil across and every is strategic financial clients across for to one position strong call CFO this and to metrics to I'll some over increase our finishing turn the from generation our to our us stockholders. long-term each value will Doing clear, best businesses. momentum

everyone. Bryant, Thanks, welcome, and

EBITDA For per adjusted revenues million diluted total our recovery adjusted $X.XX This in share the an businesses $XX.X quarter, increase most or due of year, compared Net $XX.X of total as $X.XX as available million increase to and shareholders prior share our $XX.X increased primarily reported activity EBITDA $XXX.X to B. million Riley million. period. and revenues This QX well million. income or of was for per total $XXX.X recorded the last million investment diluted was across common book. further of of from of to which year was $XX.X

Turning reportable segments. to our

Our fund Capital as and brokerage, our results banking which investments and and includes Markets litigation wealth segment, investment bankruptcy management operating consulting management as financial businesses. our our from business well our our

primarily generated business of segment estate of related an million in to and Excluding third advisory income investments. revenues minority services, operating $XX.X results real the and in were $XXX.X during by fees addition investment segment Capital million quarter. increase driven These income operating gains, our our of the Markets increased

our to segment. Liquidation and Auction Turning

We retail million. March. successful liquidation quarter as of U.S. Our contributed and in following business third the back income concluded revenues in of $XX many million Europe up and of the $XX.X in COVID activity segment the initial impact picked engagements market

calls, we the to due of from have earnings results large-scale liquidation. quarter-to-quarter and noted vary retail can on our liquidation prior As year-to-year impact segment

global we ahead, retail liquidations in Bryant noted, Looking the additional as coming quarters. expect

key activity Appraisal a measure and revenue segment early segment on but COVID-related third this $X.X we sequential in increased Appraisal quarter. from continues progress the generated in and income use Valuation metrics to to Our year, the basis. $X slowdown in million recover million the

pleased in a We’re see of and this to the business, which rebound consistent source generation. flow valuable remains

the Principal a results. the of fashion $X.X back property reminder, overall drivers segment of our and quarterly and in businesses which, cash our both of several segment, of in XXXX, strong income third of These segment million United for $XX.X companies, our revenues and quarter, During Online generated magicJack, platform are Investments million. flow Last related our established brands. fourth delivered interest comprised assets Brands was is of as is intellectual quarter and

income $X million of third quarter million. in contributed incurred portfolio of Our $X.X Brands and segment licensing the revenue

continue be the growth to opportunities We excited future for this about business.

due Now in XX, owned At net million cash participations Riley in securities unrestricted balance $XXX.X receivable loan Financial cash brokerage, loans $XXX.X net equivalents, of million from B. and in turning million had from sold. September some other $XXX.X highlights clearing and investments to in and sheet. our $XX.X million

includes Total our stockholders’ of September As investments included was reported and other equity of other assets, and total, in Financial investments In and was had approximately we of debt, $XX.X cash $XX.X million total million, prepaid including of B. in million and assets. $XXX.X cash which million. investments investments, at quarter-end. $XXX.X Riley equity balance other net prepaid XX,

repurchased share under end Shares the quarter at we Year-to-date approximately the our million. September, million repurchase back of program. we existing the $XX.X through During shares bought totaled X.X quarter, approximately shares. outstanding XXX,XXX over

Lastly, to November record increasing share completes That of our dividend $X.XXX my about $X.XX. $X.XXX our per per summary. dividend payable XX, total to cash common Bryant of from dividend or as on of as financial we quarterly XXXX. November The XX, be noted, regular are of stockholders XXXX, will share the previous common

our few call quarterly individual highlights our Now a Co-CEO, I’ll to Tom turn Tom? from operating units. Kelleher, share the over to

Thanks, Phil.

our heard, third our strong showed model. you’ve As quarter of the resiliency business and diversity and were results

banking diversify face from highlights business key posted institutional platform. our our delivering robust investment further broker-dealer, We’re growth branded of Riley year-over-year taking Within also through results. I’ll businesses. in COVID, steps newly some strong walk while Securities, strengthen and the to B. now our our

are We the experienced year on The in another had for built QX. we or strong pace advisory group the our product for market, at and record ATM, upon offerings. a restructuring quarter momentum

several teams on continued as in of their retail to a products on Our engagements and the work the companies the pandemic. sector due continued pressure placed result consumer

that listed in The very energy energy Corp. the clear disruptive, as and close during storage also definitive active merger for result the into market. entered Eos team need remained in us is growing Storage stack publicly to rapidly business the expected company. in quarter invest addresses a a with Principal opportunity in II solution Riley combination unique will Our Eos deal a becoming to Merger B. Energy the gives QX that sustainable a agreement

opportunities our attractive Australia. a COVID. In activity retail Europe, are in the both continue of We’ve has division. impact transactions we overseas attractive opportunities liquidation projects. to seeing completed of U.S., continued turning in here in in are where we In Business number forward Now including to and participating particular, be Europe and large liquidation to due been strong. the see market, some levels

and potential been these However, structure. opportunities for have deals guaranteed fee-related a COVID shutdowns, given rather the future risk typically of than

projects to sectors, retail, totaling has making we recently estate multiple in platform. added including real These number participated our of and Year-to-date, restaurant, meaningful health a team Our services. grocery, approximately transactions contribution have spanned XX X,XXX active in and engagements a locations. been have overall advisory high-profile entertainment restructuring working on

the during new Bryant under quarter, Riley combined our B. Great As mentioned, American Advisory. and the Appraisal brand, GlassRatner groups

business slowdown with Appraisal of We QX, seen Appraisal, Great increased improved have year. this known recover The among to new QX key and as COVID-XX-related metrics formerly already from American All from mandates employees. their the levels collaboration the throughout earlier continues group, trends sequentially period. the accelerating of coordination to

XXXX. grown trend pandemic. group, has no in not consistently And believe continue. acquiring since continues in we despite known have reason to strong Our will formerly the business as that generate to growth August the environment, GlassRatner, our This group COVID-XX current

subsequently B. to new quarter, Riley million advisors added brought of a firm. number During far who $XXX Wealth in Management the thus assets the

culture growing Our with high-quality management diverse advisors wealth attracts and [indiscernible] platform and practices. sophisticated

see six quarters. We revenue and per advisor continue independent past over claim and channel to the doubled in has assets our our size

the join depth has our With the platform, Wealth of increased to larger Management and interest material seen increase the breadth looking a from advisors in firm. group

United and Our contributors Principal remained and steady cash magicJack flow. have Online companies, Investment of important

We continue acquire would to our seek businesses opportunities complementary to portfolio. to be that current

long-term acquired headwinds. brands recently from its In on impact sector, will potential optimistic impact these Despite this impact the retail to see the the portfolio and group. brands term, Our in continues we challenges, about to this on the the the general. continue are pandemic earnings present of portfolio short

do wavered, open we're today dedication about is the to to to who line and for comments we partners level a in jobs announcing Operator? working upended the and Despite of COVID-XX. that, employees our questions. the that. Bryant's and clients to echo need teams our With their to want will our taken I differently, conditions and response commitment have outlook not reflect new results Lastly, our

question Please Our Rendino is first Kevin from ahead. of Capital. Degree [Operator coming today Instructions] XXX go

Thanks, a review you quarter great your and great team. Bryant, for and

hands lot of areas. So your it's you a in obvious, have different

greater what you Thanks. there B. in most As has universe, to Is than of Riley the of? do short others? scan one the advantage you take area term see that able a any being types opportunities focus

thanks comments. the Thanks, Kevin, for and

et Kelleher, I probably it. – best have at between and have, all platform, B. really I've about the of then little we challenge really doing And that's can internal in talked But bit together Financial we've appraisals the if and you think biggest look organizations a of our Co-CEO, Riley you we're companies job the products synergies clients, our network companies, terms doing and advantage XXX to all done that lot X,XXX and XXX management, take those challenge a delivering done Tom we're on harness to job opportunities. we and do the putting biggest cetera. of cover and getting to of wealth points on Trying have we done. we've the is work touch there, an the really advisory other then companies, over through amazing acquisitions, an has looking all of we

look business through that we So the to I have. on will think as continue I we it, build

We to a a GlassRatner philosophy in was haven't then think episodic recurring more made have our large brought continue side. job, mentioned since to two and We made acquisition some we growing on same we is opportunistic internally really sure But those as from our full of opportunity the saw person investment which Tom I the just the the We're missing and – to around since purchases that. a people, funneling make and it not stream from find we’ll it’s of But they have, opportunities of opportunities one time think seeing opportunity or I taking speaks maybe build that one principal I brand anything. time. lot Goldman, those number think to and a one into the revenue person JPMorgan, really through investment. we on profits we’re new magicJack,

opportunities. think do see on that we the opportunities purchase where big it’s to investments opportunities unique I term principal So, starting in is some short are investment what I to but question, really see a answer side your think you’ll and the

Thanks, Bryant.

you. Thank

coming is XXX [Operator Please of Capital. Instructions] Our next Wes from ahead. Cummins question go

kind EBITDA. out kind QX, just the this right four of of that right normalized of over normalized know of I’m you? XX that I I past when Barneys to the if Does Bryant, around QX getting operating year. $XXX and securities and the look going at EBITDA, months, through in you started just we trailing of I numbers for Great. quarters if kind million the reporting Thanks. operating back sound was I

Yes.

so talk I’m one that to anniversary have QX think thing and will for about excited the that Barneys, going won’t about is up. be So I but when thanks Yes. we again, to we bringing we Wes, report most

about So, we very in took we we and loss I everybody Barneys. think the clear, been have talked to

I bet probably example is equity think that is big think of I didn’t took of an something investment. It of that work. an – a a more We that occurring. super wasn’t

think numbers quarters, loss I for what not, the that’s if – is couple added then within right. of So, it’s you’re you EBITDA four if percent, saying took the if your that are operating back last a and

Okay.

I to about reached is of if the mean I a curious now. forward? level know but that’s think reasonable kind number like just projections, that of you then And going Okay. never kind make to we’ve

feel business. that about So, I of our half think really we comfortable projecting

so the businesses, of you of and retail year-over-year all annualized of brokerage sides And the you up is in million, at sneaking look we’re brokerage. the up $XXX XX% EBITDA. our recurring when then kind $XXX And to and have almost run rate, million

like have and I in And We’ve so I being that’s I presence. years been mid-cap, kind increasing leadership is doing our more feel does and now world that think we group lot of the doing appreciated. small-cap an for amazing continue? doing XX feel job of momentum. like that a a of

cyclical, that of needing and is set had those But some opportunity this a bit a investors pass given COVID having unique create dynamic. and a of said where markets companies capital raise bigger the So bigger. has and that, to companies are you world been giving

doing now larger in And and about were we side, to the deals, market our money, the restructuring so the to advisory really able really help good equity debt I raise on But where the stand. feel them. side addition we winning companies markets capital good side, deals

real a the base I is base. think

year. but about excited next So, we’ll see,

Appreciated. Great. Okay. Thanks.

Wes. Thanks,

is next Alcon ahead. go from Our White Stanford Instructions] question [Operator Partners[ph]. of coming Please

are Great guys. results. you Hey, see to Great progress the all making. guys

three times – stock I XX% guys kind question I take to your dividend just EBITDA and back buying And the company. curious growth get are the EBITDA, of I growing of Bryant, piggyback I valuation your Just guess for of tremendous I you an mean of mean kind market cap, Wes' trading your buying in just on to just in buying. lot looking of back are tailwinds you're stock. was centers the sub and guys at there, on know in a you business. increase And

share but seems raising share and you're a the occasionally kind the So maybe pretty prefer is price, of growth for capital price and lower opportunities. it like the undervalued

So love your your just see would how take of the company. on you valuation

Thanks.

a we're in a put So company difficult box. to

you invest a capital business are market. very companies the If play in in have that of to cycle, a lot capital there want or market a focused

So those purchasing, maybe to enable distress some private or are you firms in BDCs types to things. might want if there you make of invest that equity

So hard to box. I a think us it's put in

if What Great went And a but I like something $X.XX are we coverage we and to through at as quarter I we've it. how get a I hard just because million dividends a business six again, between quarterly our have returned some in would we we to our coverage on of we $XX – difficult know, I understand dividends at we're provide merger every like was in business that that returned – returned would million And to – terms we're buybacks think lot competitors. it's cash, – undervalued million much American. me, it's and roughly it's didn't when the to look our that analyst company kind is with And of XXXX, shareholders. $X company think that last difficult in a of were and measure with generating a $XX quarters, a to and of evaluate. $XX we I'd than public One, say And the overvalued on two, dividend, this a above that, companies rather ours. a feel a it, shareholders. that don't effectively to share I

putting So we're our obviously is. mouth where our money

of seen balance with you've us insiders that As you've multiple directors buy, you've seen our and company almost buy, year X% multiple this dividends. seen buy

is which opportunistic real the good what with So on opportunities we like continue do deal, mean we've all think six enhancing side liquidation with was hired mean which a been do very – GlassRatner. continue we broker look we the a our can is of what it and the at, work the to real industry nothing doing XX around guy situations through beginning well-respected is them. not years, what and the has mandates of from started talked even is we're types in acquisitions announced. knitting the about year last from that sticking estate blind mean to in we're estate principal done to the partnered haven't I we – because including to I I group. We and group JCPenney, that in the or mostly already.

So build we to on. have lot a

lot We have buy. a to a we have opportunities kind lot but also of I evergreen, to of think

to So – it's always about we're hard else. think your one our question, and our management how ask pockets they speaking But feel more really winded anything I than with dollars you to when valuation. answer

the pay And more the Yes. feedback will to great start and attention. see growth the to results. market I'm the and appreciate sure Definitely. strong I

execute. You to guys continue

much. you thank very So

Well, we your appreciate interest. Thanks.

[Operator Instructions] Thank you.

from question go next of coming Hill. Haydon Sean Our Please ahead. Tipp is

on late. talk launched? I quarter. mentioned this, congrats about might I Have few guys, you and Capital on you had the just guys great But hopped Hey a you recently can quick a minutes effort? Venture have question, a

for Sean, thanks the question.

public. a company about be – million with about we Venture going public, So we smaller have platform it's always sub-X that all billion, the that especially Capital, our Venture And later-stage maybe talk to companies, We're that public. dealt the I sub-XXX different you can thinking Capital, if may offering see. think and bring we about the gone opportunities did

with I don't that long being how think we and and We talk or think and how have of about communicate a a a lot public when to for about company of And you know views. time. we've you sing – discuss doing but we how it been a investors, dance, I that lot think

if so in to to able experience underwriting And skill them or of that help banking. a set capacities, go those when – public, companies we those be that can interesting then multiple and on investment investments it's do find and we'll hopefully, whether utilize

so had we an venture who Sims, that Todd background in saw as a in someone enter we or and our And on was has to Board And really opportunity business. investing. – long that

the philosophy. already We've So look at we're those a the got in a in if couple can that's to hopper. past, the efforts. take seeing We've going we done few but a expand really

Great. Thanks.

Sean. Thanks,

this you. time, comments. for turn Thank At to Mr. floor Riley his to I'd over closing like the back

shareholders Well, Well, gist. It's and get the can't thank again? and better in months, thank say appreciate how nine crazy all you. partners six, of been all employees. team the I term do and a [indiscernible] all you really And but think of clients, of that our you a most you be to the

thankful all We are really about we partnerships the have.

quarter. to forward reporting Thank look you. we So next

you. factors from statements and that important subject differ I regarding by are risk statements, because pandemic statements and call. call, for the are as update in Securities that the statements the other expectations, within filings this as prospects Commission. Ladies to earnings All made explained Financial's future various more and, Please during XXXX any call. include of Exchange Harbor regarding publicly third Riley or forward-looking Investors risks may or the to B. whether cause detailed conclude events as Statements of law, undertakes Riley of statements includes as any ongoing facts to which any statements. today's and are made forward-looking B. revise except cautions materially and of and the the company's forward-looking this Thank well B. impact call of actual risks with statement, by no Financial's detail will Safe results plans and should not new joining Securities and Riley of those Litigation a uncertainties and matters forward-looking provide discussion discussed you Act us XXXX. filings made gentlemen, other historical of the during Reform information, for unpredictable the conference could these in quarter otherwise. required statements to Private forward-looking obligation company aware risk factors be before statements Financial's constitute such COVID-XX These today. here Thank forward-looking today for uncertainties today's that we meanings refer future

may now You disconnect.