B. Riley Financial(US:RILY)2020-07-31 22:49Financial Performance - Total revenues for the three months ended June 30, 2020, were $266,468,000, representing a 61.8% increase compared to $164,684,000 for the same period in 2019[179]. - Operating income increased by 196.8% to $131,340,000 for the three months ended June 30, 2020, compared to $44,255,000 for the same period in 2019[179]. - Net income attributable to B. Riley Financial, Inc. for the three months ended June 30, 2020, was $83,840,000, a 278.4% increase from $22,157,000 in the same period of 2019[179]. - Total revenues increased approximately $101.8 million to $266.5 million during the three months ended June 30, 2020, from $164.7 million during the same period in 2019[183]. - Income before income taxes increased to $114.7 million for the three months ended June 30, 2020, compared to $31.6 million for the same period in 2019, primarily driven by an increase in revenues from trading income and fair value adjustments of $109.0 million[208]. - Net income attributable to the Company increased to $83.8 million for the three months ended June 30, 2020, up from $22.2 million for the same period in 2019, reflecting an increase in operating income of $87.1 million[211]. Segment Performance - The Capital Markets segment generated revenues of $86,858,000, a 21.2% increase from $71,692,000 in the prior year[182]. - Trading income and fair value adjustments on loans in the Capital Markets segment surged to $114,547,000, compared to $5,595,000 in the same period last year, marking a significant increase[182]. - Revenues from services and fees in the Capital Markets segment increased $15.2 million to $86.9 million during the three months ended June 30, 2020, from $71.7 million during the same period in 2019[184]. - The Auction and Liquidation segment saw a revenue decline of 78.6%, dropping to $7,206,000 from $33,740,000 year-over-year[182]. - Revenues from services and fees in the Auction and Liquidation segment decreased $26.5 million to $7.2 million during the three months ended June 30, 2020, from $33.7 million during the same period in 2019[185]. - Gross margin in the Auction and Liquidation segment decreased to 55.4% of revenues during the three months ended June 30, 2020, compared to 61.7% during the same period in 2019[194]. - Gross margins in the Principal Investments — United Online and magicJack segment increased to 76.9% of revenues during the three months ended June 30, 2020, compared to 72.9% during the same period in 2019[196]. Expenses and Impairments - Total operating expenses increased by 12.2% to $135,128,000, compared to $120,429,000 in the same period of 2019[179]. - Total selling, general and administrative expenses increased approximately $14.7 million to $106.6 million during the three months ended June 30, 2020, from $91.9 million during the same period in 2019[199]. - Impairment of tradenames amounted to $8,500,000, reflecting a 100% increase from zero in the previous year[179]. - The Company recognized an impairment charge of $8.5 million for indefinite-lived tradenames in the Brands segment due to the impact of COVID-19[206]. - Selling, general and administrative expenses for the Corporate and Other segment decreased by approximately $0.9 million to $7.6 million for the three months ended June 30, 2020, from $8.5 million for the same period in 2019[205]. Cash Flow and Financing - Cash provided by operating activities was $13.4 million during the six months ended June 30, 2020, compared to $1.4 million for the same period in 2019[259]. - Cash used in investing activities was $82.6 million during the six months ended June 30, 2020, a decrease from $227.6 million for the same period in 2019[260]. - Cash provided by financing activities was $71.8 million during the six months ended June 30, 2020, compared to $104.1 million for the same period in 2019[261]. - As of June 30, 2020, the Company had $106.3 million of unrestricted cash and cash equivalents and $926.0 million of borrowings outstanding[253]. - The Company declared a regular quarterly dividend of $0.30 per share on July 30, 2020, an increase from $0.25 per share[254]. - The company amended its asset-based credit facility agreement, increasing the maximum borrowing limit from $100.0 million to $200.0 million, with an expiration date extended to April 21, 2022[262]. - The company issued $132.3 million of senior notes due in February 2025, with net proceeds of $129.2 million after costs, intended for general corporate purposes[266]. Market Risks and Economic Impact - The impact of the COVID-19 outbreak on the Company's financial position and cash flows remains uncertain and could materially affect operations[251]. - B. Riley's primary exposure to market risk is related to changes in interest rates, with borrowings under senior notes at fixed rates and credit facilities at floating rates[285]. - Foreign currency risks are present, but operating results for the six months ended June 30, 2020 included less than $0.3 million from foreign subsidiaries[287]. - B. Riley has not used derivative financial instruments for speculation or trading purposes[284]. Other Financial Metrics - The effective income tax rate was 28.1% for the three months ended June 30, 2020, compared to 29.4% for the same period in 2019[209]. - The effective income tax rate was a benefit of 24.2% for the six months ended June 30, 2020, compared to a provision of 29.0% in the prior year[245]. - Net loss attributable to noncontrolling interests was $1.9 million during the six months ended June 30, 2020, compared to net income of $0.1 million in the same period in 2019[246]. - Net loss attributable to the Company for the six months ended June 30, 2020 was $14.8 million, a decrease from net income of $30.2 million for the same period in 2019, primarily due to a decrease in operating income of $59.0 million[247]. - Net loss available to common shareholders for the six months ended June 30, 2020 was $17.0 million, compared to net income of $30.2 million for the same period in 2019, driven by a decrease in operating income and an increase in interest expenses[249].