B RILEY FINANCIA(US:RILYL)2025-12-15 21:18Financial Performance - The company reported total revenues of $225.3 million for the three months ended June 30, 2025, a significant increase of $130.4 million or 137.4% compared to $94.9 million in the same period of 2024[380]. - Operating income for the period was $10.8 million, a turnaround from an operating loss of $232.6 million in the same quarter of 2024[377]. - Net income attributable to B. Riley Financial, Inc. was $139.5 million, compared to a net loss of $433.6 million in the prior year, marking a significant recovery[377]. - Total revenues for the six months ended June 30, 2025, were $411.4 million, an increase of 4.8% compared to $392.5 million for the same period in 2024[419]. - The company generated net income of $129.5 million for the six months ended June 30, 2025, compared to a net loss of $482.8 million in the same period of 2024[457]. Revenue Breakdown - Services and fees revenue decreased by $57.1 million or 28.2% to $145.8 million, primarily due to declines in the Capital Markets, Wealth Management, and Communications segments[377]. - 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]. - Revenues from the Communications segment fell to $60.7 million in Q2 2025 from $77.7 million in Q2 2024, a decrease of 22%[384]. - 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]. Investment and Securities - As of June 30, 2025, the total securities and other investments owned amounted to $242.4 million, down from $282.3 million as of December 31, 2024, representing a decrease of approximately 14.1%[363][364]. - The carrying value of equity securities was $186.9 million as of June 30, 2025, compared to $232.5 million as of December 31, 2024, indicating a decline of about 19.6%[364]. - Public equity securities decreased from $124.9 million as of December 31, 2024, to $88.9 million as of June 30, 2025, a reduction of approximately 29%[364]. - 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, reflecting a decline of approximately 41.1%[365]. - The carrying value of Double Down Interactive Co., Ltd common stock fell from $43.7 million as of December 31, 2024, to $34.5 million as of June 30, 2025, a decrease of about 21.1%[366]. Expenses and Cost Management - Selling, general and administrative expenses decreased by $35.6 million to $142.4 million in Q2 2025 from $178.0 million in Q2 2024, a reduction of 20%[397]. - Total selling, general and administrative expenses decreased by $47.2 million to $309.8 million during the six months ended June 30, 2025, from $356.9 million in the same period of 2024, a reduction of 13.2%[439]. - The Capital Markets segment saw a decrease in expenses of $18.1 million to $86.5 million, primarily due to a $21.7 million reduction in employee compensation and benefits[440]. - Wealth Management segment expenses decreased by $13.8 million to $85.5 million, mainly due to a $16.6 million drop in employee compensation and benefits[441]. - Direct cost of services decreased by $42.4 million to $75.9 million, primarily due to reductions in the Communications segment and the sale of a regional environmental services business[437]. Cash Flow and Liquidity - As of June 30, 2025, the company had $267.4 million of unrestricted cash and cash equivalents and $1.5 billion of borrowings outstanding[458]. - 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 increased to $289.2 million for the six months ended June 30, 2025, compared to $6.7 million in 2024[471]. - Cash used in financing activities was $252.4 million for the six months ended June 30, 2025, compared to $243.5 million in 2024, primarily due to increased debt-related payments[472]. - The Company expects current cash, cash equivalents, and available credit facilities to meet working capital and capital expenditure requirements for at least the next 12 months[464]. Debt and Borrowings - Total borrowings outstanding as of June 30, 2025, amounted to $1.5 billion, including $1.3 billion from senior notes with interest rates ranging from 5.00% to 8.00%[463]. - The company utilizes borrowings under senior notes payable and credit facilities to fund acquisitions and operations[475]. - Interest expense decreased by $56.0 million to $2.7 million during the six months ended June 30, 2025, from $58.7 million in the same period of 2024, due to a reduction in securities loaned and loan participations sold[447]. - Approximately 90% of the company's debt obligations bore interest at fixed rates, mitigating exposure to interest rate fluctuations[475]. - Management actively monitors debt obligations and interest income sensitivity to changes in interest rates[476]. Impairments and Adjustments - The company recognized an impairment charge of $1.5 million for the Targus tradename due to potential impairment indicators[374]. - Non-cash impairment charges of $1.5 million were recognized during the three months ended June 30, 2025, compared to $27.7 million in the same period of 2024, which included $26.7 million of goodwill impairment[404]. - Fair value adjustments on loans increased by $176.4 million, contributing significantly to revenue growth, with $150.3 million attributed to a loan to Vintage Capital Management[380]. - Fair value adjustments on loans receivable improved to $0.8 million in Q2 2025 from a loss of $175.6 million in Q2 2024, a favorable variance of $176.4 million[390]. - Other income included a gain of $10.2 million from realized and unrealized investments during the three months ended June 30, 2025, compared to a loss of $155.2 million in the same period of 2024, resulting in a favorable variance of $165.5 million[407]. Strategic Changes - The company is changing its name to BRC Group Holdings, Inc. effective January 1, 2026, reflecting its diversified portfolio and strategic direction[350]. - The Company completed the sale of Atlantic Coast Recycling for approximately $68.6 million, part of the Wealth Management business for $26.0 million, and the financial consulting business for $117.8 million[461]. - Targus entered into a $30.0 million revolving credit agreement with FGI Worldwide LLC, maturing on August 20, 2028, to refinance existing obligations[370]. - The Company anticipates variability in the sale of additional investments over the next twelve months based on economic value realization and liquidity needs[461]. - The company plans to change its name to BRC Group Holdings, Inc., effective January 1, 2026[372].