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

Financial Performance - Total revenues increased by $130.4 million to $225.3 million for the three months ended June 30, 2025, compared to $94.9 million for the same period in 2024, representing a growth of 137.4%[380] - The increase in revenues was primarily driven by a $176.4 million increase in fair value adjustments on loans, partially offset by a $57.1 million decrease in services and fees[380] - Operating income for the period was $10.8 million, a significant turnaround from an operating loss of $232.6 million in the same quarter of 2024[377] - Total revenues increased by 4.8% to $411.4 million for the six months ended June 30, 2025, compared to $392.5 million in 2024[419] - Net income attributable to B. Riley Financial, Inc. was $129.5 million for the six months ended June 30, 2025, compared to a loss of $482.8 million in 2024, reflecting a significant turnaround[419] Revenue Breakdown - Wealth Management segment total revenues decreased to $38.6 million in Q2 2025 from $50.9 million in Q2 2024, a decline of 24%[383] - The Capital Markets segment saw a revenue decrease of $46.3 million to $64.3 million, primarily due to declines in corporate finance and investment banking fees[424] - Communications segment revenues fell by $34.9 million to $123.9 million, largely due to a $34.3 million decrease in subscription revenue following the divestiture of the Lingo wholesale carrier business[426] - E-Commerce segment revenues increased by 27.0% to $3.5 million, driven by growth in the Nogin business[422] Investment and Securities - As of June 30, 2025, the total securities and other investments owned amounted to $242.4 million, a decrease from $282.3 million as of December 31, 2024[364] - The carrying value of public equity securities was $88.9 million as of June 30, 2025, down from $124.9 million at the end of 2024, reflecting a significant decline in value[364] - The company’s investment in private equity securities was valued at $97.9 million as of June 30, 2025, down from $107.6 million at the end of 2024, indicating a decrease in fair values and sales of certain private securities[368] - The carrying value of Babcock & Wilcox Enterprises, Inc. common stock decreased from $45.0 million as of December 31, 2024, to $26.4 million as of June 30, 2025, due to a decline in public share price[365] - The carrying value of Double Down Interactive Co., Ltd common stock decreased from $43.7 million to $34.5 million during the same period, primarily driven by sales of the securities[366] Expenses and Costs - Selling, general and administrative expenses decreased to $142.4 million in Q2 2025 from $178.0 million in Q2 2024, a reduction of 20%[397] - Cost of goods sold decreased to $35.1 million in Q2 2025 from $39.8 million in Q2 2024, a decline of 12%[396] - Direct cost of services decreased to $33.2 million in Q2 2025 from $58.7 million in Q2 2024, a reduction of 43%[395] - Total selling, general and administrative expenses decreased by $47.2 million to $309.8 million during the six months ended June 30, 2025, from $356.0 million in the prior year, a reduction of 13.2%[439] Debt and Financing - The company reported borrowings of $1.5 billion as of June 30, 2025, including $1.3 billion from senior notes with interest rates ranging from 5.00% to 8.00%[463] - A new $30.0 million revolving credit facility was established with FGI Worldwide LLC, maturing on August 20, 2028, to refinance existing obligations[370] - The Company completed private exchange transactions on July 11, 2025, exchanging Exchanged Notes for approximately $24.6 million in New Notes[462] - As of June 30, 2025, approximately 90% of the company's debt obligations bore interest at fixed rates, mitigating exposure to interest rate fluctuations[475] Cash Flow and Liquidity - Cash used in operating activities was $25.4 million for the six months ended June 30, 2025, a decrease of $272.2 million compared to the same period in 2024[469] - Cash provided by investing activities was $289.2 million for the six months ended June 30, 2025, compared to $6.7 million in 2024, primarily due to proceeds from business sales[471] - Cash used in financing activities was $252.4 million for the six months ended June 30, 2025, an increase of $8.9 million compared to the same period in 2024[472] - The company expects sufficient liquidity from cash, cash equivalents, and operating activities to meet working capital and capital expenditure requirements for at least the next 12 months[464] Name Change and Corporate Strategy - The company is changing its name to BRC Group Holdings, Inc. effective January 1, 2026, reflecting its diversified portfolio strategy[350] - The company's investment strategy aims to preserve capital while maximizing income from investments without significantly increasing risk[477] Tax and Dividends - Provision for income taxes decreased to $3.1 million for the three months ended June 30, 2025, from $29.2 million in 2024, with an effective tax rate of 4.1% compared to 6.9%[411] - Dividends on common stock were suspended in August 2024, with no cash dividends paid during the three months ended June 30, 2025[465] - As of June 30, 2025, dividends in arrears for Series A Preferred Stock were $3.2 million and for Series B Preferred Stock were $2.1 million[466][467]