Financial Data and Key Metrics Changes - For the year-to-date ending September 30, total revenues reached $1.3 billion, reflecting a year-over-year increase of 168% [5] - Adjusted EBITDA for the same period was $624.5 million, representing a 327% increase year-over-year [5] - In Q3, total revenues were $381.5 million, up 69% from the prior year [14] - Adjusted EBITDA for Q3 was $114.1 million, which was up 21% year-over-year [14] - Net income available to common shareholders was $48.6 million, or $1.69 per diluted share, compared to $47.3 million, or $1.75 per diluted share in the prior year [14] Business Line Data and Key Metrics Changes - The Capital Markets segment reported operating revenues of $161.7 million, a 98% year-over-year increase, with operating income up 129% to $76.1 million [16] - Wealth Management segment revenues increased to $118.8 million, with segment income rising to $6.6 million, primarily due to the acquisition of National Holdings [17] - Auction and Liquidation segment revenues totaled $37.1 million, with segment income of $6.3 million, reflecting the episodic nature of large retail liquidation engagements [17] - Financial Consulting segment revenues were $21.3 million, with segment income of $2.8 million, impacted by market conditions [18] - Principal Investment companies contributed revenues of $19.3 million and segment income of $6.5 million [18] Market Data and Key Metrics Changes - B. Riley Securities has raised nearly $3 billion in equity transactions year-to-date, establishing itself as a preferred banking partner for small and mid-cap companies [6] - The company ranked number two on Fortune Magazine's fastest-growing companies list for 2021, based on revenue, profits, and total returns over a three-year period [11] Company Strategy and Development Direction - The company aims to grow its steady state and recurring businesses while enhancing cash flows to support accretive acquisitions and return capital to shareholders [4][7] - A commitment to increasing regular quarterly dividends to $1 per share and declaring a special dividend of $3 per share reflects confidence in recurring cash flows [8][9] - The company is diversifying its services by adding practices such as cybersecurity advisory and expanding its asset management and fixed-income divisions [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on opportunities, citing a strong balance sheet and reduced debt expenses [10] - The integration of National Holdings is progressing well, with expectations for increased revenue momentum and potential for significant EBITDA growth [80] - The company remains optimistic about growth in its brand investment business and anticipates continued performance from its Principal Investment companies [31] Other Important Information - The company had $378 million in unrestricted cash and cash equivalents, with total cash and investments of approximately $2.3 billion at quarter-end [20] - Total debt balance was approximately $1.7 billion, with net cash and investments totaling around $593 million [20] Q&A Session Summary Question: What is the company's strategy regarding its valuation and dividend yield? - Management discussed the company's unique position as an investment bank/merchant bank and emphasized the importance of cash returns and a meaningful annual dividend to address valuation concerns [36][37] Question: What are the expectations for the cryptocurrency and asset management businesses? - Management clarified that the focus is on raising capital for miners rather than trading crypto, and expressed confidence in the asset management business potentially generating $20 million to $30 million in income [46][50] Question: How does the company view the volatility of its core investment banking business in relation to dividends? - Management provided detailed calculations showing that recurring businesses and interest income can cover dividends, even in challenging market conditions [55][63] Question: How is the integration of National Holdings progressing and what are the margin expectations? - Management rated the integration process highly and projected potential for significant EBITDA growth, while acknowledging the differences in payout structures between independent and W2 wealth management businesses [75][80] Question: What is the company's approach to brand acquisitions? - Management indicated a focus on opportunistic brand acquisitions, particularly in periods of distress, without setting specific targets [82]
B. Riley Financial(RILY) - 2021 Q3 - Earnings Call Transcript