B. Riley Financial (RILY) 29 Feb 242023 Q4 Earnings call transcript

Good afternoon, and welcome to the B. Riley Financial's Fourth Quarter and Full Year 2023 Earnings Call. My name is Jordan, and I will be your call coordinator. Earlier today, B. Riley issued a press release and financial supplement detailing its results for the fourth quarter and full year 2023, which can be found on its Investor Relations website at ir.brileyfin.com.Today's call includes prepared remarks from the company, followed by a question-and-answer session.

B. from today us Joining Riley are Co-Founder COO. Co-CEO; Kelleher, Co-Founder Riley, Co-CEO; and Chairman, and and and Phillip Tom Bryant Ahn, CFO After call open As management's will for remarks, Instructions] questions.[Operator the a being is line this recorded. reminder, we on An company's website Investor the audio be today. Relations will replay available later the turn before over the And provide to conclude forward-looking regarding Mr. call, today's cautions we call statements.Now will I necessary I will Bryant Riley. Mr. Riley, proceed. please

our joining this call Thank you for afternoon.

role our delayed. our and attended want on to we will looking the taking private while has required the Brian comprehensive matter our Day we're Relations our Investor get Franchise of is event, who into thank addressed Before want to At that our anyone it to majority for we complexities refer this Investor Kahn I attention complete December, our and complete our encourage the to of year team was in Riley surrounding CEO.Given resources the to strong remains posted This year in subsidiaries. terms I it results, the to our B. also a and working results, Group presentation, which our scrutiny on XX-K in business soon.Now a everyone our for current review, annual time the website. to of and for to related XXXX Form report be was our to understand focus

businesses, the losses. increased we related operating for focus a on business, environment remains ahead, and XX% and for at However, we over Targus $X.X of forward the choppy path our strength year across for investment core the was shareholders. look revenues of best employees non-cash core our our $XXX Despite of million delivered our certain EBITDA.As billion charting to by business and unrealized masked write-downs operating

who for have played Great the history and we that with a mind, overall Principal benefit Group. year retail B. our our Those invest acquired team flow. ago.Together, us use American. and entrepreneurs has increase group With and of and services, XXXX, we from cash to who on In respectively. since, growing American, years the in company, XX this particularly since intention grow our joined and market we recurring consistently meaningfully management, number banking, growing significant with our as knowledge platform business generated of enhance of our our in bought these core to operating for of our the tremendous platform XX%, $XXX longer that balance have is an This organically have in in as strategic benefited including has organically. we in the with steady these and partners XXXX which year-over-year role in formerly combination of years income, and led of alternatives businesses the founding our have conduct value appraisal that Online opportunistically have known company stated teams, million have from and company's term Investments capitalize know American businesses investment public then, approximately American share. turn to XXXX, brokerage, a afternoon, number million platform value consulting, our Since initiatives strategic expanded review that revenue Moelis process, liquidation these Great strategy, a experience we success.We public & businesses, a executed announced became Company through businesses and have our high-quality liquidation business businesses formed we we of in shareholders.In and build to by sheet XX% B. Great $XX and a job In done Great of others.Each true our create appraisal management financial a in line is wealth can followed that among our our a we exceptional considerations the combination United we retained a and together, the accounting, sources to of our forensic second and acquire Riley in and Riley's additional X

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is, view us. this an incredible opportunity Our has created for

opportunities the have prices.That team take-private in our roughly me has by many investment and transaction It We been the business, helped based line thesis. our in FRG X X have brings attractive reinvest our reduced Group. repurchasing we our at since months to including with debt has Franchise transactions dividend on to XX% execute our stated

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year X-person our clients' had enable fundamental and to and understand We have firm. to will business our success. dollar a this, from.We important continue this every started continued strategy and stated fully stock research We history opportunistically and came formed with on year our business, This we to after platform we to invested and to XXXX it's is core where deliver where in our to out we build appreciate invest. our is this

B. next few for metrics the that, over We the Over up I before and now business for and will team look support forward our the the Tom results appreciate weeks, our open Riley.With to with Over turn to will catching key from I road, discuss investors. trust call partners in clients, segments you, up on and to be Phil continued quarter. our your to Phil. we discuss questions. executive will

Thanks, Bryant.

start I my that on release call today's are remind in like results financial the and I to preliminary and comments, As everyone would our press discussed unaudited.

will report our complete.Now Form the XXXX, turning a working to the to filing XX-K we our mentioned on of delayed which in for results. As we Form press be SEC with provide annual release, to of XXb-XX filing notice our are

quarter $X.XX per Net related total $XX to and XXXX, $XXX fourth Investment share. losses earnings. investments. of include loss to impairment primarily losses due realized volatility was related continue the Targus and gains on of the million loss create loss These December to and in gains XX, our and For unrealized ended investment B. revenues and and securities to charge our reported will net Riley and periodic non-cash or unrealized investment owned. a have losses for quarter a losses million diluted gains

and steady can adjustment in non-GAAP operating business the refer to quarter, EBITDA. to our and is income well operating to EBITDA, of our fixed a which generally and in of release the include be for we adjusted for non-GAAP a these income institutional which metrics recast spread activity, of measures.During of contributor spread we metrics as an discuss may represents use adjusted these explanation financial for operating definition our reason, our this operating earnings. For reconciliation revenues from operating considered revenues reconciliation our our and our reflected our terms. performance the metrics as for revenues earnings Investors This context fourth

revenues EBITDA the Operating XX% was XXXX, million $X.XX $X.XX revenues $XXX for total Operating up prior QX $X.XX revenues in to in the our year, XX% increased billion Excluding million EBITDA quarter compare year XXXX. to operating billion full XXXX. in results $XXX XXXX. to compared billion billion XXXX. investment the adjusted were loss for $XX for of from period.Turning million in $XXX million of $X.XX increased to to $XX Operating of up XXXX, in million in from adjusted million, $XXX

to mark-to-market increased non-cash the or XXXX million, year and full primarily up related year the $XX which $XX for was $XXX EBITDA highlights per adjusted Net share, valuations on impairment XXXX. in loss changes sheet. Targus' to diluted to for our from loss portfolio.Turning total investment to in balance Our million again million our $X.XX

billion, end. XX $X.X reported cash at of had billion. Total net and $XXX million balance includes securities of had and we As total in December in other $XXX investments cash quarter debt, $X.X and of in $XX approximately and approximately other investments, in At million cash approximately equivalents, receivable. December million as prepaid cash was $X.XX $XXX of billion investments year-end, in unrestricted owned approximately XX, we investments assets.Total which debt net was other loans and million and

note discussed, $X.XX quarter, segment paid on March our as March from share, that quarterly and discusses XX.Now, has will highlights segment shareholders wanted to Consumer segment. Bryant XX our be our which as common during the fourth reporting of about we declared results to Finally, record common businesses, for or of our the reported Board dividend per before Tom realigned I of previously a

on a which segment. from the line our Our other, Consumer results the stand-alone segment, our Products Consumer is reported brands, in financial periods remaining turn previously corporate including and reported these in our the been reclassified I'll Targus into other. now in business for material earnings business all basis and is below The results now Tom? the have to segments. has been businesses over within related The the to reported to presented.That discuss summary. completes Tom my recast data call

Phil. Thanks,

to year XXXX, losses, XX% increased gains XXXX. from increased the majority over revenues Securities, our Securities portfolio mentioned, Riley segment up progress Markets Riley driven and contributed million up Bryant strong primarily brokerage Securities. B. operating adjusted XXXX, XXXX.Excluding Capital from $XXX million, a notable our the million banking operating income activities to slightly increased quarter in underwritten up $XX but to B. in operating offerings. Segment and $XXX revenues institutional million masked results million a million $XXX investments from In investment of strong and year-over-year by in lower of As includes our in increased otherwise which what losses million $XXX quarter investment B. segment, in across non-cash investment vast Riley subsidiaries. loan $XX and revenues was at $XXX of XXXX, $XXX revenues over previous to million EBITDA. lower banking due and were Fourth from versus in QX saw to with

While trading. again uptick have supported market income higher capital recently our increasing number of field to markets restructuring group, demonstrated continues in team seen quarter, in an from remained gained active the a equity we increased capital contribution level share to this an subdued Sales and significant in and Trading fixed M&A improvement, opportunities markets.With and engagements. sequential activity debt saw by respect has of

are for Institutional returned year. Investor profitability of XX% business up with this XXth revenues our million. revenues Reoccurring million our of of for May.Our ahead, the Annual $XXX coming segment Wealth Looking contributed income gearing $X in Wealth we revenues XXXX Management to Conference and

costs, realignment revenues quarter, discussed in This Management Day XXXX. legacy annualized XXXX lines from Holdings, with XXXX. the and year-over-year operational fixed Through of increased our efforts, team has revenue B. compared of Investor our acquired to of while which we realized contributions have Riley throughout fourth the December tremendous as done XXXX, milestone significant following yet is we business, derisking increased assets Wealth job lowered reoccurring their quarter a fourth all business Wealth in another this For presentation.Our leadership savings, during fee-based the business. combining National

to us Wealth efficiencies Importantly, our coast. we serving of includes independent W-X and to coast XXX clients.B. balanced advisors a process support Riley clients, and have improved reps help over better significantly mix today

and $XX at all XX, XXXX, up million increased revenue from where clients' premier billion assets under with our of In XXXX, $XX.X Assets management $XXX custodial in to relationships increased Auction our December Liquidation, up in We XXXX. clearing XX% strong in to XXXX. from billion million maintained held. $XX are partners and

our retailers significant sales, in Retail a revenues of rising B. and to interest effects opportunities poor and with net in XXXX, Prospects reduced our and deal in profit.We promising our Solutions real of completed to Europe saw consumer business strong uptick XX% as in million approximately activity the pipeline Europe. Consulting appraisal.Momentum growth practice, Advisory XXXX retail record GlassRatner consulting legacy XXXX, primarily appraisal steady in restructuring of million consulting for $XX and year assignments our The bankruptcy start asset-based QX. and strong. as throughout real to XXXX. and engagements into has period in and driven from business, This strongest saw along an litigation business, B. business' legacy continue remains by to increase. continuing estate projects. with our GlassRatner in Riley the continued spending U.S. brokerage continue to which levels Financial retail year rates.Turning feel $XX from Our to demand another continue with $XXX be restructuring Canada increase is of the and history segment, revenue in activity increased and increased million Services quarter the been maintained bankruptcy during the fourth includes appraisal Similarly, Riley liquidation liquidation estate up revenues a Advisory mandates strong lenders Services from

Litigation looking in and senior to XXXX, strong this Forensic to support and demand Group heading continued practitioners Our hire Group. in a growth are has and pipeline we

and domestic and build search its also seen management interim practice last added which to continue Canadian our activity Our restructuring affiliate, in insolvency and year, increased practice, we to executive we Farber, has to our the combined in our space.Turning segment million basis, this quarter. niche million Communications a of contributed complement On for segment segment. Communications revenues and Farber's fourth $X $XX established of income

prior platform. million revenues business year, companies steady inception. our leverages maximize in million business line operational income XX% increased from strength in $XX from the to to has with provide earlier, million. XXXX cash million continued and to in full to year-over-year $XXX This our this $XX Segment of and XXXX, cash these in investment the the on $XXX thesis strategy flows since mentioned we a flows basis, For acquire to capabilities our increased formed cost stated XX% Bryant to year.As and up our platform

for has and in discussed XXXX, since Day, XXXX for look the characteristics results negatively with business capabilities Investor to the Targus impacted our what XXXX, add to during that by segment, similar Targus, our continue late companies sales PC leverage since is acquiring worst can We operational Consumer respectively. the we tablet and this the Products Group.Turning been market as reflects from and of which

our is improvement which as to that Targus, this there yet, the While and investments BV dividend million quite gain leader including brands, to category.Finally, worldwide equity are XXXX. Brands Justice, share peers, $XX our $XX relative we brand Hurley, its in our fashion which April, is some investments income in to in market not in ] & increased positioned Scotch from related seeing added we the brands Soda, in we are and portfolio, X well various believe up [ portfolio, million XXXX, to

unique are segments our recognize and As outside that differentiates as of Riley all and we is Brand diversified other.Finally, our our and team. our below line mentioned, Bryant in businesses what mentioned, Phil truly and corporate investments the complex. B. platform reported But is

turning Bryant to and most focus their and what we call the closing Our that, people complete dedication. the remarks. our will continue to are clients' is the paramount has our in before up now This we best both for and open of.With success, been for industries that proud and are among to questions demonstrate back call collective

with Investment Group. question Emerson First Instructions] [Operator from Steve comes

more if with specifically, the and off audit. to a the regarding delay along on bonds, agreed in I'd little sign your stock and -- filing auditor appreciate the has color We're

than Hey Steve, the to in press a on We're what going we while. release. comment audit other said been not the

next comes Sean question from Our Lane with Capital. Charles

Just just of helpful. that walk quick, why unit? through have could that, you sale, you would any And sense former behind the timing American the real us that be Great thinking if on

Sure.

acquisitions management best million, So served where out of that long management whether with My that seen favor at a us GlassRatner that We business, is opportunities, acquired Online, this a was you've over been what helped team. finding million they bought enhance Sean, represent are but when and out just of favor. or or where doing I a either business we is United for and view $X to wealth million us. were and $XX make time we're of at you've it $X time, this finding think, returned great around of $XXX again, opportunity opportunities its Brands, it's great unique million for for EBITDA

off So buying We my the was we is entity. own in that that a is, with perspective, direct institution I done that my a increased.And think consignment. with receivables had asset balance American, we we've got some this. bigger that's right successful. even did more We kill from some if is it you lending of sheet already larger sweet very leveraged is, some know the take and some and spot as asset. direct poised the different brands. We've middle they're lending own opportunities we fund when our business. one.Two did in say Great at around the into a competitors, look businesses to with We business. help And to going think I a And view, that But becomes I of reason our utilized

so timing And thought the good. we was

sense I of think end a the how are good where by As we long, to have of we far like the quarter. second as pretty

the savings, priority then, with to dividend a from have cut, so do shares Okay. versus for And speak, the you bonds?

has we of not not debt core, that be would Yes. buy stack, cap one say and say strip a to I asset is is our around core, more But has we Obviously, that's more going we're be back thinking XX% is. some opportunistic one it Board but that's that that business, should decision. we if I a at XX% our to not that upside worth limited upside. just anything find an utilize that would asset than then yield, can and

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[Operator Instructions]

Okay, operator, are we good?

Instructions] [Operator prompting. just Correct,

times. prompted we think I X

of rather year much and So EBITDA a excited let of we in am part team. we've speak We have let and you for just and highlighted business directly. together, million that to EBITDA in and or in through this saw go our Day, employees in be XX -- with our XX, improvement is XX I $XX a a to mark battle year to markdown. business Many everyone partners great this almost that's This Investor a this $XX operating growing together. clients from years of think me years I'd this me I we been were a was a spot. And all businesses. than what million fighting

focused, just view let's disconnect.So, will we anything stay we a to listening take call. the of everyone huge Phil, advantage can and I I -- what or for want add? TK know focused. stay you as we on will thanks So,

firm of what's they've see shown people It's sentiments. going Yes. this. the last couple No, that us resilience gratifying to through the the echo it's just core truly would and months this over mean, carry I and be overstated. is your our of to cannot

we're on get to we're company and planet doesn't going a through it. not trials So, going that and ours, its the through go through

looking to So it. forward

Alright. operator. you, Thank

Thank you.

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You now may disconnect.