B. Riley Financial(RILY)

Search documents
B. Riley Financial(RILY) - 2020 Q1 - Earnings Call Transcript
2020-05-12 08:44
B. Riley Financial, Inc. (NASDAQ:RILY) Q1 2020 Earnings Conference Call May 11, 2020 4:30 PM ET Company Participants Bryant Riley - Chairman & Co-CEO Phillip Ahn - CFO & COO Thomas Kelleher - Co-CEO & Director Conference Call Participants Sean Haydon - THC Wesley Cummins - 272 Capital James Dressler - Princeton Asset Management Paul Dwyer - Punch & Associates Operator Good afternoon, and welcome to B. Riley Financial's First Quarter 2020 Earnings Call. Earlier today, B. Riley issued a press release and a pr ...
B. Riley Financial(RILY) - 2020 Q1 - Quarterly Report
2020-05-11 20:52
[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis for B. Riley Financial, Inc., along with market risk disclosures and controls [Item 1. Financial Statements](index=4&type=section&id=Item%201%2E%20Financial%20Statements) This section presents B. Riley Financial's unaudited condensed consolidated financial statements and detailed notes for Q1 2020 and 2019 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of B. Riley Financial's financial position, detailing assets, liabilities, and equity as of March 31, 2020, and December 31, 2019 | Metric | March 31, 2020 (Unaudited, Thousands) | December 31, 2019 (Thousands) | | :------------------------------------------------------------------------------------------------ | :--------------------------- | :------------------ | | **Assets:** | | | | Cash and cash equivalents | $124,231 | $104,268 | | Securities and other investments owned, at fair value | $287,786 | $408,213 | | Loans receivable, at fair value | $326,299 | $43,338 | | Total assets | $2,130,896 | $2,318,178 | | **Liabilities:** | | | | Senior notes payable | $853,523 | $688,112 | | Total liabilities | $1,867,875 | $1,927,927 | | **Equity:** | | | | Total equity | $263,021 | $390,251 | - Total assets decreased from **$2,318,178 thousand** at December 31, 2019, to **$2,130,896 thousand** at March 31, 2020[7](index=7&type=chunk) - Total equity decreased from **$390,251 thousand** at December 31, 2019, to **$263,021 thousand** at March 31, 2020[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines B. Riley Financial's financial performance, showing revenues, operating income, and net loss for Q1 2020 and Q1 2019 | Metric | Three Months Ended March 31, 2020 (Thousands) | Three Months Ended March 31, 2019 (Thousands) | | :------------------------------------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Total revenues | $(206) | $142,128 | | Operating (loss) income | $(121,144) | $24,978 | | Net (loss) income attributable to B. Riley Financial, Inc. | $(98,665) | $8,023 | | Basic (loss) income per common share | $(3.83) | $0.31 | | Diluted (loss) income per common share | $(3.83) | $0.30 | - Total revenues significantly decreased from **$142,128 thousand** in Q1 2019 to a loss of **$(206) thousand** in Q1 2020, primarily due to trading losses and fair value adjustments on loans[10](index=10&type=chunk) - The company reported a net loss attributable to B. Riley Financial, Inc. of **$(98,665) thousand** in Q1 2020, a substantial decline from net income of **$8,023 thousand** in Q1 2019[10](index=10&type=chunk) - Basic and diluted loss per common share were **$(3.83)** in Q1 2020, compared to income per share of **$0.31** and **$0.30**, respectively, in Q1 2019[10](index=10&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) This section details B. Riley Financial's comprehensive loss, including net loss and other comprehensive income components for Q1 2020 and Q1 2019 | Metric | Three Months Ended March 31, 2020 (Thousands) | Three Months Ended March 31, 2019 (Thousands) | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net (loss) income | $(99,249) | $7,979 | | Other comprehensive (loss) income, net of tax | $(1,220) | $170 | | Total comprehensive (loss) income | $(100,469) | $8,149 | | Comprehensive (loss) income attributable to B. Riley Financial, Inc. | $(99,885) | $8,193 | - Total comprehensive loss attributable to B. Riley Financial, Inc. was **$(99,885) thousand** in Q1 2020, a significant decrease from comprehensive income of **$8,193 thousand** in Q1 2019[13](index=13&type=chunk) [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section presents changes in B. Riley Financial's equity, reflecting net loss, stock repurchases, and dividends for Q1 2020 | Metric | January 1, 2020 (Thousands) | March 31, 2020 (Thousands) | | :------------------------------------------------ | :-------------- | :------------- | | Total Equity | $390,251 | $263,021 | | Net loss | $(98,665) | | | Common stock repurchased and retired | $(24,068) | | | Dividends on common stock | $(10,048) | | | Dividends on preferred stock | $(1,055) | | - Total equity decreased by **$127,230 thousand** from **$390,251 thousand** at January 1, 2020, to **$263,021 thousand** at March 31, 2020, primarily due to net loss and common stock repurchases[16](index=16&type=chunk) - The company repurchased **$24,068 thousand** of common stock and paid **$10,048 thousand** in common stock dividends during Q1 2020[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details B. Riley Financial's cash flows from operating, investing, and financing activities for Q1 2020 and Q1 2019 | Metric | Three Months Ended March 31, 2020 (Thousands) | Three Months Ended March 31, 2019 (Thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $455 | $8,924 | | Net cash used in investing activities | $(71,492) | $(26,513) | | Net cash provided by financing activities | $92,332 | $8,241 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $19,963 | $(9,325) | | Cash, cash equivalents and restricted cash, end of period | $124,702 | $170,953 | - Net cash provided by operating activities decreased significantly from **$8,924 thousand** in Q1 2019 to **$455 thousand** in Q1 2020[19](index=19&type=chunk) - Net cash used in investing activities increased to **$(71,492) thousand** in Q1 2020 from **$(26,513) thousand** in Q1 2019, primarily due to increased purchases of loans receivable[19](index=19&type=chunk) - Net cash provided by financing activities increased substantially to **$92,332 thousand** in Q1 2020 from **$8,241 thousand** in Q1 2019, driven by proceeds from senior notes and preferred stock issuance[19](index=19&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of B. Riley Financial's significant accounting policies, acquisitions, debt, revenue recognition, and other financial disclosures [NOTE 1—ORGANIZATION AND NATURE OF BUSINESS OPERATIONS](index=12&type=section&id=NOTE%201%E2%80%94ORGANIZATION%20AND%20NATURE%20OF%20BUSINESS%20OPERATIONS) B. Riley Financial, Inc. provides investment banking, financial services, asset disposition, and capital advisory services across five segments, including recent expansion into trademark licensing - B. Riley Financial, Inc. operates in five segments: Capital Markets, Auction and Liquidation, Valuation and Appraisal, Principal Investments (United Online and magicJack), and Brands[22](index=22&type=chunk) - The company expanded its operations with the acquisition of a majority ownership interest in BR Brand Holding, LLC on October 28, 2019, focusing on trademark licensing[21](index=21&type=chunk) [NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=NOTE%202%E2%80%94SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines B. Riley Financial's key accounting policies, including consolidation, estimates, fair value measurements, and the impact of COVID-19 - The company adopted ASU 2016-13 and ASU 2019-05 effective January 1, 2020, electing the irrevocable fair value option for all outstanding loans receivable previously measured at amortized cost, with an immaterial impact[76](index=76&type=chunk)[77](index=77&type=chunk) - The COVID-19 outbreak, classified as a pandemic in March 2020, introduces significant uncertainty, with potential for materially adverse impacts if financial markets or the economy are affected for an extended period[25](index=25&type=chunk) Securities and Other Investments Owned & Sold Not Yet Purchased (Fair Value, Thousands) | Category | March 31, 2020 | December 31, 2019 | | :-------------------------------- | :------------- | :---------------- | | **Securities and other investments owned:** | | | | Equity securities | $234,867 | $353,162 | | Corporate bonds | $18,429 | $19,020 | | Other fixed income securities | $5,243 | $8,414 | | Partnership interests and other | $29,247 | $27,617 | | **Total securities and other investments owned** | **$287,786** | **$408,213** | | **Securities sold not yet purchased:** | | | | Equity securities | $124 | $5,360 | | Corporate bonds | $13,361 | $33,436 | | Other fixed income securities | $813 | $3,024 | | **Total securities sold not yet purchased** | **$14,298** | **$41,820** | [NOTE 3—ACQUISITIONS](index=26&type=section&id=NOTE%203%E2%80%94ACQUISITIONS) B. Riley Financial acquired a majority equity interest in BR Brand for **$116.5 million** in cash and **$0.99 million** in warrant consideration, adding trademark licensing to its portfolio - On October 28, 2019, B. Riley Financial acquired a majority equity interest in BR Brand for **$116.5 million** in cash and **$0.99 million** in warrant consideration[79](index=79&type=chunk) - The acquisition of BR Brand was accounted for as an asset acquisition, not a business combination, and is focused on generating revenue through trademark licensing[81](index=81&type=chunk)[22](index=22&type=chunk) [NOTE 4— RESTRUCTURING CHARGE](index=28&type=section&id=NOTE%204%E2%80%94%20RESTRUCTURING%20CHARGE) No restructuring charges were recorded in Q1 2020, a decrease from **$147 thousand** in Q1 2019, which related to magicJack employee severance | Metric | Three Months Ended March 31, 2020 (Thousands) | Three Months Ended March 31, 2019 (Thousands) | | :----------------------- | :-------------------------------- | :-------------------------------- | | Restructuring charge | $0 | $147 | | Balance, end of period | $1,284 | $3,384 | - No restructuring charges were recorded in Q1 2020, compared to **$147 thousand** in Q1 2019, which was mainly for magicJack employee severance[83](index=83&type=chunk)[84](index=84&type=chunk) [NOTE 5—SECURITIES LENDING](index=29&type=section&id=NOTE%205%E2%80%94SECURITIES%20LENDING) Securities borrowed and loaned balances decreased from December 31, 2019, to March 31, 2020, indicating ongoing substantial securities lending activities | Metric | March 31, 2020 (Thousands) | December 31, 2019 (Thousands) | | :------------------ | :------------- | :---------------- | | Securities borrowed | $674,163 | $814,331 | | Securities loaned | $670,859 | $810,495 | [NOTE 6—ACCOUNTS RECEIVABLE](index=29&type=section&id=NOTE%206%E2%80%94ACCOUNTS%20RECEIVABLE) Accounts receivable, net, remained stable at **$46.45 million** at March 31, 2020, with an increased allowance for doubtful accounts reflecting higher additions to the reserve | Metric | March 31, 2020 (Thousands) | December 31, 2019 (Thousands) | | :-------------------------- | :------------- | :---------------- | | Accounts receivable, net | $46,450 | $46,624 | | Allowance for doubtful accounts | $2,238 | $1,514 | | Additions to reserve (Q1) | $1,141 | $233 | - The allowance for doubtful accounts increased by **$724 thousand** from December 31, 2019, to March 31, 2020, with additions to the reserve significantly higher in Q1 2020 compared to Q1 2019[87](index=87&type=chunk) [NOTE 7—GOODWILL AND OTHER INTANGIBLE ASSETS](index=30&type=section&id=NOTE%207%E2%80%94GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Goodwill remained constant at **$223.7 million**, while total intangible assets decreased, with a **$4.0 million** impairment charge on tradenames due to COVID-19 | Metric | March 31, 2020 (Thousands) | December 31, 2019 (Thousands) | | :-------------------------- | :------------- | :---------------- | | Goodwill | $223,697 | $223,697 | | Total intangible assets, net | $212,500 | $220,525 | | Impairment of tradenames (Q1 2020) | $4,000 | $0 | - An impairment charge of **$4.0 million** was recognized for indefinite-lived tradenames in the Brands segment during Q1 2020, triggered by the COVID-19 outbreak[90](index=90&type=chunk) [NOTE 8—NOTES PAYABLE](index=30&type=section&id=NOTE%208%E2%80%94NOTES%20PAYABLE) The asset-based credit facility had no outstanding balance at March 31, 2020, down from **$37.1 million**, with other notes payable and interest expense also declining | Metric | March 31, 2020 (Thousands) | December 31, 2019 (Thousands) | | :-------------------------------- | :------------- | :---------------- | | Asset Based Credit Facility (outstanding balance) | $0 | $37,096 | | Other Notes Payable (outstanding balance) | $714 | $1,071 | | Interest expense - Asset Based Credit Facility (Q1) | $277 | $481 | | Interest expense - Other Notes Payable (Q1) | $15 | $23 | - The company was in compliance with all financial covenants for the asset-based credit facility at March 31, 2020[93](index=93&type=chunk) [NOTE 9—TERM LOAN](index=32&type=section&id=NOTE%209%E2%80%94TERM%20LOAN) The BRPAC Credit Agreement term loan balance decreased to **$61.9 million** at March 31, 2020, bearing interest at LIBOR plus a margin of 2.5% to 3.0% | Metric | March 31, 2020 (Thousands) | December 31, 2019 (Thousands) | | :-------------------------------- | :------------- | :---------------- | | Term loan outstanding balance (net) | $61,932 | $66,666 | | Interest rate on term loan (March 31, 2020) | 3.74% | | | Interest expense on term loan (Q1) | $829 | $1,278 | - The company was in compliance with all financial covenants in the BRPAC Credit Agreement at March 31, 2020[99](index=99&type=chunk) [NOTE 10—SENIOR NOTES PAYABLE](index=33&type=section&id=NOTE%2010%E2%80%94SENIOR%20NOTES%20PAYABLE) Senior notes payable increased significantly to **$853.5 million** at March 31, 2020, due to new issuances, with a **$1.556 million** gain from bond repurchases | Metric | March 31, 2020 (Thousands) | December 31, 2019 (Thousands) | | :-------------------------------- | :------------- | :---------------- | | Total senior notes payable (net) | $853,523 | $688,112 | | Weighted average interest rate | 6.94% | 7.05% | | Interest expense on senior notes (Q1) | $14,392 | $8,855 | | New senior notes issued (Q1 2020) | $171,078 | | | Gain on bond repurchase (Q1 2020) | $1,556 | | - The company has **$148.4 million** remaining availability under the February 2020 Sales Agreement for at-the-market sales of senior notes[104](index=104&type=chunk) [NOTE 11—REVENUE FROM CONTRACTS WITH CUSTOMERS](index=34&type=section&id=NOTE%2011%E2%80%94REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Total revenues from contracts with customers increased to **$158.144 million** in Q1 2020, driven by significant growth in the Capital Markets segment Revenues from Contracts with Customers by Segment (Thousands) | Segment | Q1 2020 (Services & Fees) | Q1 2019 (Services & Fees) | | :--------------------------------------- | :------------------------ | :------------------------ | | Capital Markets | $102,172 | $46,268 | | Auction and Liquidation | $20,661 | $20,709 | | Valuation and Appraisal | $8,788 | $8,583 | | Principal Investments - United Online and magicJack | $22,722 | $27,535 | | Brands | $3,801 | $0 | | **Total revenues from contracts with customers** | **$158,144** | **$103,095** | - Capital Markets segment revenue from services and fees increased by **$55.9 million** (120.8%) YoY, primarily due to corporate finance, consulting, and investment banking fees[106](index=106&type=chunk)[108](index=108&type=chunk) - Deferred revenue increased to **$73.709 million** at March 31, 2020, from **$67.121 million** at December 31, 2019[109](index=109&type=chunk) [NOTE 12—INCOME TAXES](index=35&type=section&id=NOTE%2012%E2%80%94INCOME%20TAXES) The company reported an effective income tax benefit of **27.4%** in Q1 2020, holding federal and state net operating loss carryforwards with a valuation allowance against capital losses | Metric | Three Months Ended March 31, 2020 (Thousands) | Three Months Ended March 31, 2019 (Thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Effective income tax rate | 27.4% (benefit) | 28.0% (provision) | | Benefit (provision) for income taxes | $37,539 | $(3,104) | - The company had federal net operating loss carryforwards of **$53.932 million** and state net operating loss carryforwards of **$64.088 million** as of March 2020[114](index=114&type=chunk) - A valuation allowance of **$61.945 million** has been provided against capital loss carryforwards, as their realization is not considered more likely than not[115](index=115&type=chunk) [NOTE 13— EARNINGS PER SHARE](index=37&type=section&id=NOTE%2013%E2%80%94%20EARNINGS%20PER%20SHARE) Basic and diluted loss per common share were **$(3.83)** for Q1 2020, a significant decline from income per share in Q1 2019, reflecting the net loss | Metric | Three Months Ended March 31, 2020 (Thousands) | Three Months Ended March 31, 2019 (Thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net (loss) income available to common shareholders | $(99,720) | $8,023 | | Basic (loss) income per common share | $(3.83) | $0.31 | | Diluted (loss) income per common share | $(3.83) | $0.30 | | Weighted average basic common shares outstanding | 26,028,613 | 26,217,215 | | Weighted average diluted common shares outstanding | 26,028,613 | 26,687,531 | - Securities that could potentially dilute basic net income per share in the future, but were anti-dilutive, amounted to **1,820,178 shares** in Q1 2020 and **1,952,868 shares** in Q1 2019[118](index=118&type=chunk) [NOTE 14—COMMITMENTS AND CONTINGENCIES](index=37&type=section&id=NOTE%2014%E2%80%94COMMITMENTS%20AND%20CONTINGENCIES) B. Riley Financial is involved in legal proceedings, including an **$11.4 million** arbitration award, and has significant unsecured commitments to Franchise Group and Babcock & Wilcox - An arbitration panel issued an **$11.4 million** award against B. Riley Wealth Management, LLC and Gary Wunderlich on April 7, 2020, for which the company recorded a loss accrual[124](index=124&type=chunk) - The company committed to provide a **$100 million** asset-based lending facility to Franchise Group, Inc. (FRG) and extended this commitment until 30 days prior to the maturity date of September 30, 2020[129](index=129&type=chunk) - B. Riley Financial guaranteed **$50 million** of FRG's obligations under a Term Loan Credit Agreement and **$125 million** of FRG's obligations under a CIBC Credit Agreement, both of which are unsecured obligations of the company[131](index=131&type=chunk)[133](index=133&type=chunk) [NOTE 15—SHARE-BASED PAYMENTS](index=41&type=section&id=NOTE%2015%E2%80%94SHARE-BASED%20PAYMENTS) Share-based compensation expense increased to **$4.109 million** in Q1 2020, with **$15.238 million** in unrecognized expense to be expensed over 1.3 years | Metric | Three Months Ended March 31, 2020 (Thousands) | Three Months Ended March 31, 2019 (Thousands) | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Share-based compensation expense (2009 Plan) | $4,109 | $1,726 | | Share-based compensation expense (FBR Stock Plan) | $791 | $767 | | Share-based compensation expense (Purchase Plan) | $165 | $121 | - As of March 31, 2020, the expected remaining unrecognized share-based compensation expense is **$15.238 million**, to be expensed over a weighted average period of **1.3 years**[137](index=137&type=chunk) [NOTE 16—NET CAPITAL REQUIREMENTS](index=42&type=section&id=NOTE%2016%E2%80%94NET%20CAPITAL%20REQUIREMENTS) B. Riley's broker-dealer subsidiaries are in compliance with SEC Uniform Net Capital Rule 15c3-1, maintaining net capital significantly above required minimums | Subsidiary | Net Capital (March 31, 2020, Thousands) | Required Net Capital (Thousands) | | :----------------------- | :--------------------------- | :------------------- | | B. Riley FBR | $103,271 | $2,277 | | MLV | $91 | $41 | | BRWM | $5,569 | $594 | - All broker-dealer subsidiaries exceeded their minimum net capital requirements as of March 31, 2020[143](index=143&type=chunk) [NOTE 17—RELATED PARTY TRANSACTIONS](index=42&type=section&id=NOTE%2017%E2%80%94RELATED%20PARTY%20TRANSACTIONS) Related party transactions include **$4.391 million** due from related parties, significant loan receivables from Babcock & Wilcox and Maven, and loan participations sold to B. Riley Partners Opportunity Fund | Metric | March 31, 2020 (Thousands) | December 31, 2019 (Thousands) | | :-------------------------------- | :------------- | :---------------- | | Due from related parties | $4,391 | $5,832 | | Due to related parties and partners | $1,061 | $1,750 | | Loans receivable from related parties (fair value) | | | | - Babcock & Wilcox | $104,998 | $109,147 (cost) | | - Maven | $69,895 | $69,083 (fair value/cost) | | Loan participations sold to B. Riley Partners Opportunity Fund | $12,405 | $12,478 | - Executive officers and board of directors have a **69.8%** financial interest in the B. Riley Partners Opportunity Fund, including Bryant Riley's **48.8%** interest[144](index=144&type=chunk) - The company provided an additional **$30 million** in last-out term loans to Babcock & Wilcox on January 31, 2020, and is negotiating further financing and a limited guaranty[151](index=151&type=chunk) [NOTE 18—BUSINESS SEGMENTS](index=45&type=section&id=NOTE%2018%E2%80%94BUSINESS%20SEGMENTS) B. Riley Financial's five segments experienced varied Q1 2020 performance, with Capital Markets seeing a significant revenue decline due to trading losses, and North America remaining the primary revenue source Segment Revenues and Operating (Loss) Income (Thousands) | Segment | Q1 2020 Total Revenues | Q1 2019 Total Revenues | Q1 2020 Segment (Loss) Income | Q1 2019 Segment Income | | :--------------------------------------- | :--------------------- | :--------------------- | :---------------------------- | :--------------------- | | Capital Markets | $(56,178) | $85,301 | $(120,467) | $13,861 | | Auction and Liquidation | $20,661 | $20,709 | $4,289 | $11,504 | | Valuation and Appraisal | $8,788 | $8,583 | $1,880 | $1,363 | | Principal Investments - United Online and magicJack | $22,722 | $27,535 | $8,504 | $7,929 | | Brands | $3,801 | $0 | $(1,817) | $0 | | **Consolidated operating (loss) income from reportable segments** | | | **$(107,611)** | **$34,657** | - Capital Markets segment experienced a substantial shift from **$85.301 million** in revenue and **$13.861 million** in income in Q1 2019 to a **$(56.178) million** revenue loss and **$(120.467) million** operating loss in Q1 2020, primarily due to trading losses and fair value adjustments on loans[157](index=157&type=chunk) - North America accounted for the vast majority of revenues, with **$158.466 million** in services and fees in Q1 2020[158](index=158&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses B. Riley Financial's Q1 2020 financial condition and results, highlighting a significant decline in revenues and net income due to trading losses and COVID-19 impacts - Total revenues decreased by **$142.3 million** to a loss of **$(0.2) million** in Q1 2020, primarily due to a **$208.3 million** decrease from trading losses and fair value adjustments on loans[181](index=181&type=chunk) - Net loss attributable to B. Riley Financial, Inc. was **$(98.7) million** in Q1 2020, a decrease of **$106.7 million** from net income of **$8.0 million** in Q1 2019[208](index=208&type=chunk) - The COVID-19 pandemic is identified as a significant factor impacting financial markets and the overall economy, creating high uncertainty for the company's future results[176](index=176&type=chunk) [Overview](index=48&type=section&id=Overview) B. Riley Financial, Inc. provides diverse financial services through its subsidiaries and engages in principal investments, with a Brands segment focused on trademark licensing - B. Riley Financial, Inc. provides collaborative financial services through subsidiaries like B. Riley FBR (investment banking), B. Riley Wealth Management (wealth management), B. Riley Capital Management (asset management), Great American Group (asset disposition), and GlassRatner (financial advisory)[165](index=165&type=chunk)[166](index=166&type=chunk)[175](index=175&type=chunk) - The company's principal investment strategy includes United Online (consumer Internet access) and magicJack (cloud communication services)[167](index=167&type=chunk)[173](index=173&type=chunk) - The Brands segment, established in 2019, focuses on generating revenue through trademark licensing, owning assets and intellectual property for six brands[168](index=168&type=chunk)[174](index=174&type=chunk) [Recent Developments](index=50&type=section&id=Recent%20Developments) The COVID-19 pandemic, declared a global health emergency in January 2020, introduces significant uncertainty regarding its full impact on the company's financial results - The World Health Organization declared the COVID-19 outbreak a global health emergency in January 2020 and a pandemic in March 2020[175](index=175&type=chunk) - The full impact of the COVID-19 outbreak on the company's results of operations, financial position, and cash flows is highly uncertain and depends on future developments, including the duration and spread of the outbreak and related restrictions[176](index=176&type=chunk) [Results of Operations](index=52&type=section&id=Results%20of%20Operations) This section analyzes B. Riley Financial's Q1 2020 operating performance, detailing significant revenue declines, particularly from trading losses, and changes in operating expenses [Revenues](index=53&type=section&id=Revenues) Total revenues decreased significantly to a loss of **$(0.2) million** in Q1 2020, primarily due to **$208.3 million** in trading losses and fair value adjustments on loans | Revenue Category | Q1 2020 (Amount, Thousands) | Q1 2019 (Amount, Thousands) | Change (Amount, Thousands) | Change (%) | | :------------------------------------------------ | :--------------- | :--------------- | :-------------- | :--------- | | Services and fees | $159,381 | $103,896 | $55,485 | 53.4% | | Trading (losses) income and fair value adjustments on loans | $(182,442) | $25,867 | $(208,309) | -805.3% | | Interest income - Loans and securities lending | $21,851 | $11,420 | $10,431 | 91.3% | | Sale of goods | $1,004 | $945 | $59 | 6.2% | | **Total revenues** | **$(206)** | **$142,128** | **$(142,334)** | **-100.1%** | - Capital Markets segment services and fees revenue increased by **$56.4 million** to **$104.4 million** in Q1 2020, driven by corporate finance, consulting, and investment banking fees[182](index=182&type=chunk) - Principal Investments - United Online and magicJack segment services and fees revenue decreased by **$4.9 million** to **$21.7 million** in Q1 2020, due to declines in subscription services and advertising[185](index=185&type=chunk) [Sale of Goods, Cost of Goods Sold and Gross Margin](index=55&type=section&id=Sale%20of%20Goods%2C%20Cost%20of%20Goods%20Sold%20and%20Gross%20Margin) Revenues from sale of goods increased slightly to **$1.0 million** in Q1 2020, with gross margin improving to **23.4%** from a negative **18.4%** in Q1 2019 | Metric | Q1 2020 (Amount, Thousands) | Q1 2019 (Amount, Thousands) | | :------------------------- | :--------------- | :--------------- | | Revenues - Sale of Goods | $1,004 | $945 | | Cost of goods sold | $769 | $1,119 | | Gross margin on sale of goods | $235 | $(174) | | Gross margin percentage | 23.4% | -18.4% | - The increase in sale of goods revenue was attributable to **$0.1 million** of sales of magicJack devices[189](index=189&type=chunk) [Operating Expenses](index=55&type=section&id=Operating%20Expenses) Total operating expenses increased by **$3.8 million** to **$120.9 million** in Q1 2020, including a **$4.0 million** impairment charge on tradenames due to COVID-19 | Expense Category | Q1 2020 (Amount, Thousands) | Q1 2019 (Amount, Thousands) | Change (Amount, Thousands) | | :------------------------------------------------ | :--------------- | :--------------- | :-------------- | | Direct cost of services | $19,952 | $14,116 | $5,836 | | Selling, general and administrative expenses | $87,744 | $94,964 | $(7,220) | | Impairment of tradenames | $4,000 | $0 | $4,000 | | Interest expense - Securities lending and loan participations sold | $8,473 | $6,804 | $1,669 | | **Total operating expenses** | **$120,938** | **$117,150** | **$3,788** | - Selling, general and administrative expenses decreased by **$7.2 million**, primarily due to an **$8.8 million** decrease in the Capital Markets segment, partially offset by increases in the Brands and Corporate and Other segments[196](index=196&type=chunk) - A **$4.0 million** impairment charge was recognized on indefinite-lived tradenames in the Brands segment due to the impact of the COVID-19 outbreak[203](index=203&type=chunk) [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) B. Riley Financial's liquidity is supported by cash, operations, and debt, with **$124.2 million** in unrestricted cash and **$939.7 million** in borrowings, and a declared quarterly dividend of **$0.25** per share | Metric | March 31, 2020 (Amount, Thousands) | | :-------------------------------- | :---------------------- | | Unrestricted cash and cash equivalents | $124,200 | | Restricted cash | $500 | | Securities and other investments owned, at fair value | $287,800 | | Loans receivable | $326,300 | | Total borrowings outstanding | $939,700 | - Management believes current cash, investments, and available credit will be sufficient to meet working capital and capital expenditure requirements for at least the next **12 months**[214](index=214&type=chunk) - A quarterly dividend of **$0.25** per share was declared on May 8, 2020, payable on June 10, 2020, an increase from **$0.175** per share[215](index=215&type=chunk) [Credit Agreements](index=62&type=section&id=Credit%20Agreements) The asset-based credit facility had no outstanding balance at March 31, 2020, while the BRPAC Credit Agreement term loan had an outstanding balance of **$61.9 million** - The asset-based credit facility with Wells Fargo Bank, with a maximum borrowing limit of **$200 million**, had no outstanding balance at March 31, 2020[223](index=223&type=chunk) - The BRPAC Credit Agreement term loan had an outstanding balance of **$61.9 million** (net of unamortized debt issuance costs) at March 31, 2020, with quarterly installments ranging from **$4.2 million** to **$0.3 million** depending on the loan tranche[225](index=225&type=chunk) [Senior Note Offerings](index=62&type=section&id=Senior%20Note%20Offerings) B. Riley Financial issued **$132.3 million** in 6.375% 2025 Notes and other senior notes, increasing total senior notes outstanding to **$853.5 million**, with a **$1.6 million** gain from bond repurchases - Issued **$132.3 million** of 6.375% Senior Notes due February 2025, receiving net proceeds of **$129.2 million**[227](index=227&type=chunk) - Issued an additional **$38.8 million** of senior notes with maturities ranging from May 2023 to December 2027[226](index=226&type=chunk) - Repurchased **$3.4 million** in bonds for **$1.8 million**, resulting in a **$1.6 million** gain[228](index=228&type=chunk) - Total senior notes outstanding were **$853.5 million** at March 31, 2020, with a weighted average interest rate of **6.94%**[229](index=229&type=chunk) [Off Balance Sheet Arrangements](index=64&type=section&id=Off%20Balance%20Sheet%20Arrangements) B. Riley Financial has several off-balance sheet arrangements, including commitments to Babcock & Wilcox and unsecured guaranties totaling **$175 million** for Franchise Group's obligations - Committed to fund any shortfall in Babcock & Wilcox's **$200 million** new debt or equity financing as part of a refinancing transaction[232](index=232&type=chunk) - Entered into a commitment letter to provide a **$100 million** asset-based lending facility to Franchise Group, Inc. (FRG)[233](index=233&type=chunk) - Provided a limited guaranty of up to **$50 million** for FRG's obligations under a Term Loan Credit Agreement and a limited guaranty of up to **$125 million** for FRG's obligations under a CIBC Credit Agreement[235](index=235&type=chunk)[238](index=238&type=chunk) - These guaranties are unsecured obligations of the company and are effectively subordinated to all existing and future secured indebtedness[236](index=236&type=chunk)[239](index=239&type=chunk) [Contractual Obligations](index=66&type=section&id=Contractual%20Obligations) Following new senior note issuances, total senior notes payable increased to **$1,117.0 million** and total contractual obligations rose to **$1,295.8 million** at March 31, 2020 - Total senior notes payable increased to **$1,117.0 million** as of March 31, 2020, with **$560.5 million** due in more than **5 years**[241](index=241&type=chunk) - Total contractual obligations increased to **$1,295.8 million**, with **$585.2 million** due in more than **5 years**[241](index=241&type=chunk) [Recent Accounting Standards](index=66&type=section&id=Recent%20Accounting%20Standards) This section refers to Note 2(v) for details on recently adopted and unadopted accounting pronouncements [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) B. Riley Financial's primary market risk is interest rate fluctuations affecting debt and loans, with limited foreign currency exposure - The company's primary exposure to market risk is related to changes in interest rates, affecting both fixed-rate senior notes and floating-rate credit facilities and loans receivable[244](index=244&type=chunk) - Foreign currency risk is limited, with foreign subsidiary revenues totaling **$0.9 million** (0.6% of services and fees) in Q1 2020, and a **10%** appreciation/depreciation of the U.S. dollar would result in less than a **$0.1 million** impact on operating income[246](index=246&type=chunk) [Item 4. Controls and Procedures](index=67&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Disclosure controls and procedures were not effective as of March 31, 2020, with remediation efforts underway to enhance related party oversight and policies - Disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2020[248](index=248&type=chunk) - Remediation actions include creating a related party oversight function and enhancing related party policies and procedures, with expected completion by the end of fiscal 2020[250](index=250&type=chunk)[251](index=251&type=chunk) - No changes to internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control during the fiscal quarter[249](index=249&type=chunk) [PART II. OTHER INFORMATION](index=68&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) This part covers B. Riley Financial's legal proceedings, comprehensive risk factors, and other required disclosures for the reporting period [Item 1. Legal Proceedings](index=68&type=section&id=Item%201%2E%20Legal%20Proceedings) B. Riley Financial is involved in various legal and regulatory proceedings, including an **$11.4 million** arbitration award, but management expects no material impact on financial position - The company is subject to various legal and other claims, including lawsuits, arbitration claims, class actions, and regulatory matters, primarily from its securities business activities[253](index=253&type=chunk) - An arbitration panel issued an **$11.4 million** award against B. Riley Wealth Management, LLC and Gary Wunderlich on April 7, 2020, for which a loss accrual was recorded[256](index=256&type=chunk) - Management does not believe the eventual outcome of pending litigation or other claims is likely to have a material effect on its financial position or results of operations, despite the inherent difficulty in predicting outcomes[253](index=253&type=chunk) [Item 1A. Risk Factors](index=68&type=section&id=Item%201A%2E%20Risk%20Factors) This section details B. Riley Financial's extensive risks, including market volatility, economic conditions, intense competition, credit, liquidity, operational failures, and regulatory compliance - Revenues and results of operations are highly volatile and difficult to predict due to factors like client acquisition, transaction timing, asset resale prices, and general economic conditions, including the COVID-19 pandemic[259](index=259&type=chunk)[262](index=262&type=chunk) - The ongoing COVID-19 pandemic has caused severe disruptions in the U.S. and global economy, impacting business activities, operations, and potentially exacerbating existing risks such as market volatility, credit access, and operational challenges[261](index=261&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) - The company faces intense competition across all its service areas, including asset management, auction and liquidation, valuation and appraisal, and its Principal Investments (UOL, magicJack) and Brands segments, which could impair revenues and market share[274](index=274&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[320](index=320&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk)[325](index=325&type=chunk)[386](index=386&type=chunk) [General Business Risks](index=69&type=section&id=General%20Business%20Risks) B. Riley Financial faces volatile revenues, unpredictable results, and intense competition, exacerbated by the COVID-19 pandemic's impact on business and stock price - Revenues and results of operations are volatile and difficult to predict due to factors such as client acquisition, transaction timing, asset resale prices, and general economic conditions, including the COVID-19 pandemic[259](index=259&type=chunk)[262](index=262&type=chunk) - The ongoing COVID-19 pandemic has caused severe disruptions, impacting the company's ability to generate business and revenues, and could lead to significant fluctuations in stock price[261](index=261&type=chunk)[267](index=267&type=chunk) - The asset management business is intensely competitive, with factors like investment performance, investor perception, service quality, and fees influencing competition; poor performance could reduce assets under management and revenues[274](index=274&type=chunk)[275](index=275&type=chunk)[277](index=277&type=chunk) [Financial Risks](index=75&type=section&id=Financial%20Risks) B. Riley Financial faces significant financial risks from capital commitments, credit exposure, market disruptions, and high indebtedness, which could lead to losses and liquidity challenges - Larger and more frequent capital commitments in trading and underwriting businesses increase the potential for significant losses due to market fluctuations and volatility[290](index=290&type=chunk)[291](index=291&type=chunk) - The company is exposed to credit risk from third parties failing to meet obligations and may not fully realize the value of collateral securing loans, especially with increasing credit exposures[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk)[301](index=301&type=chunk) - Disruptions in credit markets, such as those due to COVID-19, could adversely affect the company's ability to obtain credit and liquidity, increasing funding costs and potentially curtailing business activities[302](index=302&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk) - The company's high level of indebtedness and associated restrictions could adversely affect operations and liquidity, making it difficult to pay or refinance debts and limiting access to capital for business opportunities[460](index=460&type=chunk)[461](index=461&type=chunk) [Operational & System Risks](index=74&type=section&id=Operational%20%26%20System%20Risks) B. Riley Financial's operations are highly dependent on systems and third parties; failures or data breaches could cause significant disruptions, financial losses, and reputational damage - Capital Markets operations are highly dependent on communications, information, and other systems and third parties; failures could significantly disrupt business, lead to financial loss, and reputational damage[283](index=283&type=chunk) - Secure processing, storage, and transmission of confidential information are critical; breaches could jeopardize data, cause interruptions, and lead to significant remediation costs, litigation, and financial losses[285](index=285&type=chunk) - The growth of electronic trading and new technology may adversely affect market-making business and increase competition, potentially reducing profitability[287](index=287&type=chunk) [Acquisition & Investment Risks](index=76&type=section&id=Acquisition%20%26%20Investment%20Risks) Principal investments in high-risk, illiquid assets and new business ventures carry risks of losses, difficult valuations, and integration challenges, especially in volatile markets - Principal Investments in high-risk, illiquid assets with leveraged capital structures may result in failure to realize profits or loss of principal, especially given market conditions like the COVID-19 pandemic[292](index=292&type=chunk)[293](index=293&type=chunk) - Valuation of illiquid and volatile investment securities is difficult, and subsequent valuations or sales may result in significant write-downs and adverse effects on results of operations[299](index=299&type=chunk) - Entering new lines of business, making strategic investments or acquisitions, or forming joint ventures introduces numerous risks, including capital investment, integration challenges, and exposure to new laws and regulations[365](index=365&type=chunk) [Segment-Specific Risks](index=78&type=section&id=Segment-Specific%20Risks) Segment-specific risks include potential losses in Auction and Liquidation, declining subscriber bases for UOL, intense competition for magicJack, and reliance on licensees for the Brands segment - Losses may be incurred from 'guarantee' based engagements in the Auction and Liquidation business if proceeds are less than the guaranteed amount, or from outright purchase transactions if assets cannot be sold at a premium[308](index=308&type=chunk)[311](index=311&type=chunk)[313](index=313&type=chunk) - The UOL business faces declining dial-up and DSL pay accounts due to migration to broadband, intense competition, and potential negative impacts on advertising revenues if subscriber numbers are not maintained[367](index=367&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk) - magicJack operates in a highly competitive telecommunications market, facing challenges in attracting and retaining customers, obtaining phone numbers, and adapting to rapidly changing technology, which could harm growth and profitability[386](index=386&type=chunk)[391](index=391&type=chunk)[393](index=393&type=chunk)[396](index=396&type=chunk)[397](index=397&type=chunk) - The Brands segment is subject to intense competition and relies on licensees to sell products and pay royalties; failure to do so or changing consumer preferences could negatively affect results[451](index=451&type=chunk)[455](index=455&type=chunk) [Regulatory & Legal Risks](index=84&type=section&id=Regulatory%20%26%20Legal%20Risks) B. Riley Financial faces risks from non-compliance with net capital rules, increased regulatory scrutiny, uncertain broadband telephone regulations, and potential liability for emergency service failures - Failure to comply with net capital and other regulatory capital requirements for broker-dealer subsidiaries could significantly harm the business, limiting operations or capital withdrawals[331](index=331&type=chunk)[332](index=332&type=chunk) - Financial services firms face increased scrutiny, leading to higher risk of financial liability and reputational harm from adverse regulatory actions, fines, and penalties[344](index=344&type=chunk) - The current regulatory environment for broadband telephone services (magicJack) is uncertain, with potential for new or expanded regulations, fees, and taxes that could increase costs and limit competitive pricing advantages[421](index=421&type=chunk)[423](index=423&type=chunk) - magicJack's emergency and E911 calling services differ from traditional providers, potentially exposing the company to significant liability for delays or failures in emergency assistance[402](index=402&type=chunk) [Stock & Securities Risks](index=86&type=section&id=Stock%20%26%20Securities%20Risks) The common stock price may fluctuate substantially, and preferred stock and depositary shares rank junior to indebtedness, with future offerings potentially diluting existing holders - The common stock price may fluctuate substantially due to various factors, including operating results, significant contracts, sales of securities, and general economic conditions[337](index=337&type=chunk) - The Series A Preferred Stock and Depositary Shares rank junior to all company indebtedness and are effectively junior to all indebtedness of subsidiaries, increasing risk in bankruptcy or liquidation[476](index=476&type=chunk) - Future offerings of debt or senior equity securities may adversely affect the market price of Depositary Shares and could dilute existing holders[477](index=477&type=chunk) - An active trading market for senior notes may not develop, limiting liquidity and potentially causing them to trade at a discount[469](index=469&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=120&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period [Item 3. Defaults Upon Senior Securities](index=120&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities to report for the period [Item 4. Mine Safety Disclosures](index=120&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company's operations [Item 5. Other Information](index=120&type=section&id=Item%205%2E%20Other%20Information) This section indicates that there is no other information to report for the period [Item 6. Exhibits](index=120&type=section&id=Item%206%2E%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report, including various indentures, commitment letters, guaranty agreements, and certifications - Key exhibits include the Third Supplemental Indenture, Commitment Letter with Franchise Group, Loan Participant Guaranty, CIBC Guaranty, and Amendment No. 20 to Credit Agreement with Babcock & Wilcox Enterprises, Inc[492](index=492&type=chunk)
B. Riley Financial(RILY) - 2019 Q4 - Annual Report
2020-03-09 22:48
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-37503 B. RILEY FINANCIAL, INC. (Exact name of registrant as specified in its charter) Delaware 27-0223495 (State or Other Jurisdictio ...
B. Riley Financial(RILY) - 2019 Q4 - Earnings Call Transcript
2020-03-04 02:22
B. Riley Financial, Inc. (NASDAQ:RILY) Q4 2019 Earnings Conference Call March 3, 2020 4:30 PM ET Company Participants Bryant Riley - Chairman and Co-Chief Executive Officer Phillip Ahn - Chief Financial Officer and Chief Operating Officer Tom Kelleher - Co-Chief Executive Officer Conference Call Participants Wes Cummins - 272 Capital Sean Haydon - THC Operator Good afternoon and welcome to B. Riley Financial’s Fourth Quarter Full Year 2019 Earnings Call. Earlier today, B. Riley issued a press release with i ...
B. Riley Financial(RILY) - 2019 Q3 - Quarterly Report
2019-11-01 18:26
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Exact Name of Registrant as Specified in Its Charter) | Delaware | 27-0223495 | | --- | --- | | (State or Other Jurisdiction of | (I.R.S. Employer | (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to C ...
B. Riley Financial(RILY) - 2019 Q2 - Quarterly Report
2019-08-08 21:41
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-37503 B. RILEY FINANCIAL, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 27-0223495 (State or Other Jurisdi ...
B. Riley Financial(RILY) - 2019 Q1 - Quarterly Report
2019-05-01 21:03
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware 27-0223495 (I.R.S. Employer Identification No.) (State or Other Jurisdiction of Incorporation or Organization) 21255 Burbank Boulevard, Suite 400 Woodland Hills, CA 91367 (Address of Principal Executive Offices) (Zip Code) For the quarterly period ended March 31, 2019 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 ...
B. Riley Financial(RILY) - 2018 Q4 - Annual Report
2019-03-06 01:27
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 Or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _____________ Commission File Number 001-37503 B. RILEY FINANCIAL, INC. (Exact name of registrant as specified in its charter) (State or Other Ju ...