B. Riley Financial(RILY) - 2025 Q2 - Quarterly Results

Executive Summary and Outlook The company projects significant H1 2025 profitability and a substantial reduction in its debt profile First Half 2025 Outlook The company projects H1 2025 net income of $125.0M-$145.0M and a significant debt reduction of approximately $600M H1 2025 Financial Projections | Metric | Estimated Range (H1 2025) | | :--- | :--- | | Net Income to Common Shareholders | $125.0M - $145.0M | | Diluted EPS | $4.08 - $4.74 | | Cash (as of June 30, 2025) | $268M | | Total Debt (as of June 30, 2025) | $1.46B | | Net Debt (as of June 30, 2025) | $809M - $839M | Projected Debt Reduction | Debt Reduction (Sept 30, 2024 to June 30, 2025) | Estimated Decrease | | :--- | :--- | | Total Debt | $600M | | Net Debt | $544M - $574M | Management Commentary Management is focused on rightsizing the balance sheet while investing in core financial services, with regulatory filings expected shortly - Management's strategic focus is on rightsizing the balance sheet while continuing to invest in and grow the core financial services businesses, supported by cash flows from its Telecom segment[4] - The company is in the final stages of its complex 2024 audit and will file the 10-K shortly, with plans to file the Q1 and Q2 2025 10-Qs within 30-45 days after the 10-K[6] Financial and Business Performance The company's performance reflects significant strategic actions in H1 2025 and major write-downs impacting FY 2024 results First Half 2025 Business Update & Financial Estimates The company executed key strategic initiatives in H1 2025, including asset sales and debt reduction, projecting revenues of $405.0M-$425.0M - Key operational achievements in H1 2025 include: - Executed B. Riley Securities ("BRS") carve out in March 2025 - Reduced total company debt by an estimated $600 million from Sept 30, 2024 to June 30, 2025 - Realized approximately $187 million in cash proceeds from the sales of GlassRatner and Atlantic Coast Recycling - Achieved approximately $126 million of debt reduction through five bond exchanges[3] - Expected net income for H1 2025 includes estimated gains of $53 million from the sale of Atlantic Coast Recycling, $66 million from GlassRatner, and $55 million on senior note exchanges[9] H1 2025 Preliminary Unaudited Estimates | H1 2025 Preliminary Unaudited Estimates | Low Range | High Range | | :--- | :--- | :--- | | Revenue | $405.0M | $425.0M | | Net Income | $125.0M | $145.0M | | Net Income from Continuing Operations | $52.4M | $72.4M | | Operating Adj. EBITDA (Continuing Ops) | $20.0M | $26.0M | | Basic EPS | $4.10 | $4.75 | | Diluted EPS | $4.08 | $4.74 | Preliminary Full Year 2024 Results The company reported a preliminary 2024 net loss of $772.3M, driven by significant write-downs and a decrease in total revenues - The 2024 net loss was primarily caused by write-downs of $510.0 million related to the equity investment in Freedom VCM Holdings LLC and a loan receivable from Vintage Capital Management, plus a $105.4 million impairment of goodwill and other intangible assets[11] - Total investments decreased by 67.3% to $432.6 million at year-end 2024 from $1.32 billion at year-end 2023[12] FY 2024 Preliminary Results | Metric (Full Year Ended Dec 31) | 2024 (Preliminary) | 2023 | | :--- | :--- | :--- | | Total Revenues | $838.6M | $1,465.8M | | Net Loss to Common Shareholders | $(772.3)M | $(108.0)M | | Diluted Loss per Common Share | $(25.46) | $(3.69) | | Operating Adjusted EBITDA | $126.4M | $274.6M | Preliminary Fourth Quarter 2024 Results The company reported preliminary Q4 2024 net income of $0.9M, a significant turnaround from the prior year's loss, despite a decline in Operating Adjusted EBITDA Q4 2024 Preliminary Results | Metric (Q4 Ended Dec 31) | 2024 (Preliminary) | 2023 | | :--- | :--- | :--- | | Net Income (Loss) to Common Shareholders | $0.9M | $(91.6)M | | Operating Adjusted EBITDA (Continuing Ops) | $21.5M | $59.1M | Additional Updates The company has secured amended financing terms to enhance operational flexibility Oaktree Capital Management Financing The company amended its credit agreement with Oaktree to enhance financial flexibility through new and upsized investment baskets - The amended credit agreement with Oaktree provides incremental flexibility through several key provisions[13] - - A new $100 million investment basket for balance sheet transactions - An upsized parent company investment basket, increased from $20 million to $30 million - The ability to use up to $25 million of cash to repurchase the Company's unsecured notes[16] Appendix: Preliminary Financial Statements and Reconciliations This appendix provides detailed preliminary financial statements and non-GAAP reconciliations for fiscal year 2024 and H1 2025 estimates Preliminary Condensed Consolidated Balance Sheets The company's balance sheet shows a significant decrease in total assets and liabilities as of year-end 2024, resulting in a total equity deficit Balance Sheet Summary | Balance Sheet Item (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1,783,263 | $6,080,604 | | Cash and cash equivalents | $154,877 | $222,690 | | Securities and other investments owned | $282,325 | $809,049 | | Loans receivable, at fair value | $90,103 | $532,419 | | Total Liabilities | $2,239,279 | $5,721,038 | | Senior notes payable, net | $1,530,561 | $1,668,021 | | Total Equity (Deficit) | $(456,016) | $359,566 | Preliminary Consolidated Statement of Operations The company's 2024 operating statement reflects a significant revenue decrease and a widened net loss available to common shareholders Income Statement Summary | Income Statement (Twelve Months Ended Dec 31) | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Total Revenues | $838,597 | $1,465,777 | | Operating (Loss) Income | $(475,738) | $96,051 | | Loss from Continuing Operations | $(900,854) | $(160,161) | | Net Loss Available to Common Shareholders | $(772,334) | $(107,967) | | Diluted Loss per Common Share | $(25.46) | $(3.69) | Non-GAAP Reconciliations This section reconciles GAAP net loss to non-GAAP metrics, showing a 2024 Operating Adjusted EBITDA of $126.4M and projecting $20.0M-$26.0M for H1 2025 FY 2024 Non-GAAP Reconciliation | Reconciliation (Twelve Months Ended Dec 31) | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Loss from continuing operations | $(900,854) | $(160,161) | | Adjusted EBITDA | $(542,797) | $123,870 | | Operating Adjusted EBITDA | $126,399 | $274,576 | H1 2025 Estimated Non-GAAP Reconciliation | Estimated Reconciliation (Six Months Ended June 30, 2025) | Low Range (in thousands) | High Range (in thousands) | | :--- | :--- | :--- | | Net income from continuing operations | $52,400 | $72,400 | | Adjusted EBITDA | $5,400 | $40,400 | | Operating Adjusted EBITDA | $20,000 | $26,000 | Total Investments and Net Debt The company's total investments and debt levels saw significant changes in 2024, with further debt reduction projected for H1 2025 Historical Investments and Net Debt | Metric (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Investments | $432,616 | $1,323,969 | | Total Debt | $1,774,340 | $2,356,364 | | Net Debt | $1,055,659 | $756,496 | Estimated H1 2025 Investments and Net Debt | Estimated Metric (in thousands) | June 30, 2025 (Low) | June 30, 2025 (High) | | :--- | :--- | :--- | | Total Investments | $310,000 | $340,000 | | Total Debt | $1,463,000 | $1,463,000 | | Net Debt | $839,000 | $809,000 |