B. Riley Financial(US:RILY)2024-03-01 03:51Financial Data and Key Metrics Changes - For the full year 2023, total revenues increased by 52% to $1.65 billion, up from $1.08 billion in 2022. Operating revenues rose by 25% to $1.63 billion from $1.31 billion in the previous year. Operating adjusted EBITDA was $368 million for 2023, with total adjusted EBITDA increasing to $240 million from $32 million in 2022 [42][41][6] - The net loss for the year was $86 million or $2.95 diluted loss per share, primarily due to non-cash impairment charges related to Targus and unrealized investment losses [41][42] Business Line Data and Key Metrics Changes - The Capital Markets segment saw revenues increase by 75% to $575 million in 2023, up from $328 million in 2022, with segment income rising to $198 million from $82 million [45] - Wealth Management returned to profitability with revenues of $198 million and segment income of $3 million, with recurring revenues contributing 60% of total Wealth revenues [29] - The Financial Consulting segment's revenues increased by 35% to $134 million in 2023, driven by increased bankruptcy and litigation consulting assignments [30] - The Communications segment reported a 43% year-over-year revenue increase to $338 million in 2023, with segment income rising to $35 million from $30 million [31] Market Data and Key Metrics Changes - The appraisal and liquidation businesses generated approximately $153 million in revenue and $35 million in operating income, reflecting year-over-year increases of 35% and 69%, respectively [12] - The Consumer Products segment, which includes Targus, faced challenges due to a declining PC and tablet market but is expected to gain market share as conditions improve [32] Company Strategy and Development Direction - The company announced a strategic review of its appraisal and retail liquidation businesses, indicating a focus on maximizing shareholder value through potential divestitures and acquisitions [7][19] - The company aims to leverage its balance sheet to invest in and acquire businesses that can enhance its platform and create shareholder value [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term value creation potential of Franchise Group despite current consumer environment challenges [14] - The company acknowledged the scrutiny surrounding its operations but emphasized the resilience of its employees and the strength of its business model [15][39] Other Important Information - The company reported a total debt of approximately $2.4 billion as of December 31, with net debt (total debt minus cash and investments) around $457 million [43] - A quarterly dividend of $0.50 per common share was declared, reflecting a 50% reduction to allow for reinvestment opportunities [20][43] Q&A Session Summary Question: Can you provide insight into the timing and rationale behind the sale of the former Great American unit? - Management indicated that a larger institution could better leverage the asset, and they expect to have clarity on the process by the end of the second quarter [34][35] Question: What are the priorities for the savings from the dividend cut? - Management stated they would be opportunistic regarding capital structure, considering both share buybacks and debt repurchases [62] Question: Can you comment on the audit and the delay in filing? - Management refrained from commenting on the audit specifics but acknowledged the delay in filing the annual report [59][60]