B. Riley Financial(RILY) - 2024 Q4 - Annual Report

Debt Management - Total indebtedness reduced from $2.4 billion at December 31, 2023 to $1.8 billion at December 31, 2024, with a focus on further reductions through asset dispositions [368] - The company anticipates that the reduction of indebtedness will remain a key priority for the foreseeable future [368] - A new credit agreement was established on February 26, 2025, providing a three-year $125.0 million secured term loan credit facility [401] - The company redeemed all issued and outstanding 6.375% 2025 Notes on February 28, 2025, with a total redemption payment including approximately $0.7 million in accrued interest [405] - The outstanding balance on the term loan was zero as of December 31, 2024, compared to $17.8 million as of December 31, 2023 [523] - The outstanding balance on the revolver loan decreased from $43.8 million in 2023 to $16.3 million in 2024 [523] - Interest expense on loans for the year ended December 31, 2024, was $4.2 million, down from $7.3 million in 2023 [525] - The outstanding balance on the term loan was $117.3 million as of December 31, 2024, down from $475.1 million in 2023, reflecting a significant reduction in debt [548] - Interest on the term loan for the year ended December 31, 2024, was $23.5 million, compared to $11.7 million in 2023, indicating an increase in interest expenses due to higher outstanding balances [548] - The interest rate on the term loan as of December 31, 2024, was 11.52%, up from 11.37% in 2023 [548] Financial Performance - Total revenues for the year ended December 31, 2024, were $200.7 million, a slight increase from $198.2 million in 2023, but down from $234.3 million in 2022 [382] - The company recorded realized and unrealized losses of $(263.7) million for the year ended December 31, 2024, compared to $(162.1) million in 2023 [394] - Total revenues decreased by approximately $627.2 million to $838.6 million for the year ended December 31, 2024, compared to $1.5 billion for the year ended December 31, 2023, representing a decline of 42.8% [427] - Operating loss for the year ended December 31, 2024, was $475.7 million, compared to an operating income of $96.1 million for the previous year [422] - Net loss attributable to B. Riley Financial, Inc. was $764.3 million for the year ended December 31, 2024, compared to a net loss of $99.9 million for the year ended December 31, 2023 [422] - Loss from continuing operations before income taxes increased to $878.7 million in 2024 from a loss of $199.3 million in 2023, primarily due to a revenue decrease of approximately $627.2 million [454] - Net loss available to common shareholders was $772.3 million in 2024, compared to $108.0 million in 2023, reflecting similar factors affecting the overall net loss [463] Revenue Breakdown - Wealth management revenues are generated from retail brokerage, investment management, insurance, and tax preparation services [381] - Advisory revenues for 2024 were $77.3 million, compared to $73.9 million in 2023, with advisory assets under management totaling approximately $6.9 billion [382] - Revenues from services and fees in the Capital Markets segment decreased by approximately $56.5 million to $192.5 million, primarily due to declines in corporate finance and investment banking fees [429] - The Wealth Management segment saw an increase in revenues of $4.0 million to $197.5 million, driven by higher wealth and asset management fees [430] - The Financial Consulting segment experienced a revenue increase of $14.9 million to $92.2 million, mainly due to growth in bankruptcy and restructuring services [431] - The Communications segment's revenues decreased by $41.5 million to $289.4 million, largely due to a decline in subscription services [432] - E-Commerce segment revenues from services and fees were $13.9 million for the year ended December 31, 2024, including commission fees from the acquired Nogin [433] - Revenues from services and fees in All Other increased by $42.1 million to $90.0 million for the year ended December 31, 2024, driven by merchandise rental fees and sales from bebe [433] Asset Management - Total assets under management decreased to approximately $20.7 billion as of December 31, 2024, down from $25.4 billion in 2023 and $23.9 billion in 2022 [382] - The fair value of total securities and other investments owned was $282.3 million as of December 31, 2024, a significant decrease from $809.0 million in 2023 [389] - The investment in Freedom VCM Holdings, LLC was valued at zero as of December 31, 2024, down from $287.0 million in 2023, primarily due to bankruptcy filings and operational declines [393] Operational Changes - The company engages in opportunistic investments and acquisitions to maximize free cash flow, while focusing on operational improvements [368] - The company sold its interests in GlassRatner and Farber for an aggregate cash consideration of $117.8 million, with a transition services agreement in place [383] - The Communications Segment includes businesses like Lingo Management and magicJack, with plans for future acquisitions to expand this portfolio [384] - The Consumer Products Segment, acquired in October 2022, focuses on productivity products and has a global distribution network in over 100 countries [385] - The E-Commerce Segment operates Nogin, Inc., providing comprehensive e-commerce solutions on a revenue-sharing basis [386] - The company completed the sale of a portion of its Wealth Management business for net cash consideration of $26.0 million, representing approximately 19.3% of AUM as of December 31, 2024 [400] Impairments and Losses - The company recorded a significant non-cash markdown of $287.0 million related to its investment in Freedom VCM due to the unexpected announcement concerning FRG's former CEO [398] - As of December 31, 2024, the fair value of the Vintage Loan Receivable was $2.1 million, with additional non-cash impairments totaling $118.0 million [398] - Impairment charges recognized during the year ended December 31, 2024 totaled $105.4 million, compared to $70.3 million in the previous year [450] - Realized and unrealized losses on investments were $263.7 million in 2024, up from $162.1 million in 2023, due to a decrease in overall investment values [452] - Loss on extinguishment of debt was $18.7 million in 2024, compared to $5.4 million in 2023, primarily from accelerated paydowns of the Nomura facility [452] Cash Flow and Liquidity - Net cash provided by operating activities increased significantly to $263.6 million in 2024 from $24.5 million in 2023, despite a net loss of $774.9 million adjusted for noncash items [512] - Cash provided by investing activities rose to $440.5 million in 2024 compared to $301.2 million in 2023, driven by significant sales including $234.1 million from Brands Interests and $167.1 million from the Great American Group [514] - Cash used in financing activities increased to $671.9 million in 2024 from $365.9 million in 2023, primarily due to term loan repayments of $444.8 million and senior notes redemption of $140.5 million [515] - The Company’s liquidity is supported by cash flows from operations and proceeds from recent transactions, which are expected to meet working capital and capital expenditure requirements for at least the next 12 months [509]