B RILEY FINANCIA(RILYL) - 2025 Q3 - Quarterly Report

Financial Performance - Total revenues increased by $102.5 million to $277.9 million for the three months ended September 30, 2025, compared to $175.4 million for the same period in 2024, representing a 58.5% increase[368]. - Operating income improved to $65.4 million from a loss of $82.2 million, marking a significant turnaround[365]. - Net income attributable to common shareholders was $89.1 million, compared to a loss of $286.4 million in the prior year, reflecting a 131.1% improvement[365]. - Total revenues for the nine months ended September 30, 2025, were $689.2 million, an increase of 21.4% compared to $567.8 million for the same period in 2024[402]. - Net income for the nine months ended September 30, 2025, was $220.0 million, a substantial increase from a net loss of $769.3 million in 2024[402]. Revenue Breakdown - The Capital Markets segment saw a revenue increase of $34.9 million to $65.4 million, primarily driven by a $32.6 million rise in corporate finance, consulting, and investment banking fees[370]. - The Wealth Management segment's revenues from services and fees decreased by $15.0 million to $34.3 million, attributed to a reduction in assets under management (AUM) from approximately $25.7 billion to $13.3 billion[371]. - The Communications segment's revenues decreased by $6.9 million to $59.4 million, primarily due to a decline in subscription revenue[372]. - The Consumer Products segment reported a decrease in sales of goods by $2.8 million, contributing to overall revenue declines in certain areas[369]. - The Capital Markets segment saw a revenue decrease of $11.4 million to $129.7 million, primarily due to declines in corporate finance and investment banking fees[407]. Investment and Securities - As of September 30, 2025, the total securities and other investments owned amounted to $315.5 million, an increase from $282.3 million as of December 31, 2024, representing a growth of approximately 11.5%[354][355]. - The carrying value of public equity securities was $149.7 million as of September 30, 2025, up from $124.9 million as of December 31, 2024, indicating a rise of about 19.8%[355]. - The carrying value of private equity securities decreased to $99.0 million as of September 30, 2025, down from $107.6 million as of December 31, 2024, reflecting a decline of approximately 7.9%[355][359]. - The carrying value of Babcock & Wilcox Enterprises, Inc. common stock increased to $79.6 million as of September 30, 2025, compared to $45.0 million as of December 31, 2024, marking a significant increase of 76.5%[356]. - The carrying value of Double Down Interactive Co., Ltd common stock decreased to $32.2 million as of September 30, 2025, from $43.7 million as of December 31, 2024, representing a decline of approximately 26.2%[357]. Operational Strategy - The Company operates in five reportable segments: Capital Markets, Wealth Management, Communications, Consumer Products, and E-Commerce, focusing on diversified financial services and investments[344]. - The Company aims to maximize free cash flow through operational improvements in acquired companies, targeting attractive risk-adjusted returns[342]. - The Company has a value-oriented investment approach, providing advisory services for complex transactions consistent with this philosophy[347]. - The Company plans to pursue future acquisitions to expand its Communications Segment, which includes several cloud and telecommunications businesses[349]. Cash Flow and Liquidity - Cash used in operating activities was $85.9 million for the nine months ended September 30, 2025, compared to cash provided of $266.3 million for the same period in 2024, reflecting a decrease of $352.2 million[451]. - Cash provided by investing activities increased to $275.9 million for the nine months ended September 30, 2025, up from $25.5 million in 2024, primarily due to proceeds from the sale of various businesses[452]. - Cash used in financing activities was $261.0 million for the nine months ended September 30, 2025, a decrease of $93.7 million compared to $354.7 million in 2024, mainly due to the suspension of dividends[453]. - The company expects that current cash, cash equivalents, and available credit will be sufficient to meet working capital and capital expenditure requirements for at least the next 12 months[445]. - The company reported a net decrease in cash, cash equivalents, and restricted cash of $71.2 million for the nine months ended September 30, 2025[451]. Expenses and Impairments - Total selling, general and administrative expenses decreased by $17.2 million to $143.9 million during the three months ended September 30, 2025, from $161.1 million in the same period in 2024[383]. - Selling, general and administrative expenses in the Capital Markets segment increased by $22.2 million to $53.4 million during the three months ended September 30, 2025, from $31.3 million in the same period in 2024[384]. - The company recognized an impairment charge of $1.5 million for the Targus tradename due to potential impairment indicators[362]. - Selling, general and administrative expenses decreased by $64.4 million to $453.6 million, with notable reductions in the Wealth Management and Corporate segments[422]. - Wealth Management segment's selling, general and administrative expenses decreased by $27.9 million to $120.7 million for the nine months ended September 30, 2025, from $148.6 million in 2024, primarily due to a $26.1 million decrease in employee compensation and benefits[424].