B. Riley Financial(US:RILY)2025-02-21 19:50Fair Value Adjustments - For the three months ended September 30, 2024, fair value adjustments on loans receivable were $(71.5) million, compared to $(0.9) million for the same period in 2023[310]. - For the nine months ended September 30, 2024, fair value adjustments on loans receivable totaled $(259.3) million, contrasting with $51.6 million for the same period in 2023[310]. - The fair value adjustment for the loan receivable from Vintage Capital Management, LLC was $(54.3) million for the three months and $(222.7) million for the nine months ended September 30, 2024, primarily due to a decline in the equity fair value of Freedom VCM[311]. - The fair value adjustment for the loan receivable from Conn's, Inc. was $(18.6) million for the three months and $(27.1) million for the nine months ended September 30, 2024, influenced by Conn's Chapter 11 filing[313]. - The fair value of total securities and other investments owned decreased to $341.8 million as of September 30, 2024, down from $809.0 million at December 31, 2023, a decline of 57.7%[324]. - The investment in Freedom VCM Holdings, LLC was valued at zero as of September 30, 2024, down from $287.0 million at December 31, 2023, reflecting a significant loss of $287.0 million[328]. - The sale of bebe's brand interests resulted in a fair value adjustment of approximately $(20.0) million and a loss of approximately $(133.0) million recorded in the quarter ending September 30, 2024[344]. Revenue Performance - Total revenues decreased by $164.0 million to $199.3 million for the three months ended September 30, 2024, compared to $363.3 million for the same period in 2023, representing a decline of 45.1%[357]. - Total revenues decreased by $514.7 million to $637.2 million for the nine months ended September 30, 2024, compared to $1,151.9 million for the same period in 2023, representing a decline of 44.7%[395]. - Revenues from services and fees in the Capital Markets segment fell by $50.5 million to $30.4 million, a decrease of 62.4% due to reduced underwriting engagements[358]. - Revenues from the Financial Consulting segment increased by $3.7 million to $23.9 million, an 18.4% increase, driven by growth in bankruptcy and restructuring services[360]. - The Wealth Management segment saw an increase in revenues of $3.5 million to $150.2 million, a growth of 2.4%, driven by higher wealth and asset management fees[398]. - Revenues from services and fees in All Other increased by $18.6 million to $28.5 million, a 187.1% increase, due to contributions from newly acquired entities[362]. Operating Expenses - Total operating expenses decreased by $90.2 million to $281.1 million, a reduction of 24.3% compared to the previous year[357]. - Total operating expenses decreased by $52.6 million to $957.9 million, a decline of 5.2%[408]. - Total selling, general and administrative expenses decreased by $17.7 million to $184.6 million during the three months ended September 30, 2024, from $202.3 million during the same period in 2023, representing an 8.8% decline[371]. - Capital Markets segment expenses decreased by $32.5 million to $31.3 million, primarily due to a $26.8 million reduction in payroll and related expenses[372]. - Wealth Management segment expenses increased by $0.3 million to $49.3 million, mainly driven by higher payroll and related expenses[373]. - Financial Consulting segment expenses rose by $1.9 million to $19.8 million, attributed to a $1.6 million increase in payroll related to a business acquired in Q3 2023[374]. - Communications segment expenses decreased by $6.9 million to $21.5 million, largely due to cost-saving measures implemented in 2024[375]. - Consumer Products segment expenses fell by $1.9 million to $16.9 million, primarily due to reduced headcount and fully amortized items[376]. - Corporate and All Other expenses increased by $21.4 million to $45.8 million, driven by acquisitions and increased legal expenses[377]. Net Loss and Financial Performance - The loss from continuing operations increased to $148.9 million, compared to a loss of $100.0 million in the prior year, marking a 48.8% increase[357]. - Net loss attributable to B. Riley Financial, Inc. was $284.4 million, compared to a loss of $73.8 million in the prior year, reflecting a significant increase in losses[357]. - Loss from discontinued operations, net of tax for the Brands Transaction was $134.4 million during the three months ended September 30, 2024, compared to income of $10.3 million in the prior year[383]. - The net loss attributable to B. Riley Financial, Inc. was $767.2 million for the nine months ended September 30, 2024, compared to a net loss of $10.3 million in the same period of 2023[395]. - For the nine months ended September 30, 2024, the company reported a net loss of $645.5 million compared to a net loss of $48.5 million for the same period in 2023[427]. Cash Flow and Liquidity - As of September 30, 2024, the company had $159.2 million in unrestricted cash and cash equivalents, $341.8 million in securities and other investments, and $2,067.8 million in outstanding borrowings[428]. - The company generated $266.3 million in cash from operating activities for the nine months ended September 30, 2024, a significant increase from cash used in operating activities of $41.0 million in the same period of 2023[438]. - Cash used in financing activities was $354.7 million for the nine months ended September 30, 2024, compared to $285.5 million for the same period in 2023[441]. - The company paid cash dividends of $33.6 million on common stock during the nine months ended September 30, 2024, and announced the suspension of common stock dividends in August 2024 to prioritize debt reduction[433]. - The company is monitoring its financial performance to ensure sufficient liquidity to fund operations and execute its business plan, especially given its ineligibility for short form registration with the SEC[432]. Debt and Credit Agreements - The company has $217.4 million of Senior Notes due to mature on March 31, 2026, and is exploring strategic alternatives to satisfy this obligation[431]. - The company has $145.3 million of 6.375% Senior Notes due on February 28, 2025, which will be repaid using cash on hand[429]. - The Targus Credit Agreement includes a five-year term loan of $28.0 million and a revolver loan of $85.0 million, maturing on October 18, 2027[442]. - The Lingo Credit Agreement has a principal balance of $55.0 million as of September 30, 2024, with quarterly installments of $2.7 million due until December 31, 2024[453]. - The interest rate on the Lingo Credit Agreement was 8.59% as of September 30, 2024[449]. - The bebe Credit Agreement includes a $25.0 million term loan with an interest rate of 10.78% as of September 30, 2024[455]. - The outstanding balance on the bebe term loan was $21.7 million as of September 30, 2024[457]. - The New Credit Facilities include a $500.0 million secured term loan and a $100.0 million secured revolving loan, aimed at refinancing previous debts and funding corporate purposes[460]. - The company recorded a loss on extinguishment of debt related to the Prior Credit Agreement of $5.4 million[460]. - As of September 30, 2024, the outstanding balance on the term loan was $369.5 million, down from $475.1 million as of December 31, 2023[464]. - The interest rate on the term loan increased to 12.13% as of September 30, 2024, up from 11.37% as of December 31, 2023[464]. - The company made a payment of $85.9 million on September 17, 2024, reducing the outstanding principal balance on the term loan from $469.8 million to $388.1 million[1]. - The BRPAC Amended Credit Agreement includes a new five-year $80.0 million term loan, with quarterly installments of $4.0 million due[473]. - The interest rate on the BRPAC Amended Credit Agreement is set at the Term SOFR rate plus a margin of 2.75% to 3.50% per annum, with a margin level of 3.25%[474]. - The company is in compliance with all financial covenants in both the Credit Agreement and the BRPAC Credit Agreement as of September 30, 2024[468]. Investigations and Legal Matters - The Company is under investigation by the SEC regarding certain business dealings and has received subpoenas for document production[347].