B. Riley Financial(RILY) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - B. Riley reported total revenues of $266.5 million for Q2 2020, an increase from $164.7 million in Q2 2019, and total adjusted EBITDA rose to $148.3 million from $52.9 million year-over-year [12][3] - Net income available to common shareholders was $82.8 million or $3.07 per diluted share, compared to $22.2 million or $0.82 per diluted share for the prior year period, primarily due to a rebound in investment performance [12][3] Business Line Data and Key Metrics Changes - The Capital Markets segment generated operating revenues of $111.4 million and operating income of $31.1 million, driven by strong investment banking performance and contributions from financial consulting operations [13] - The Auction and Liquidation segment reported revenues of $8.3 million and segment income of $2 million, with new fee engagements expected to realize in future quarters [14] - The Valuation and Appraisal segment generated $7.7 million in revenue and $1.5 million in segment income, impacted by travel restrictions [15] - The Principal Investment segment, including United Online and magicJack, generated revenues of $21.4 million and segment income of $9.2 million [16] - The Brands segment contributed licensing revenue of $3.2 million but incurred a segment loss of $6.3 million, with signs of improvement expected [17] Market Data and Key Metrics Changes - The company noted a significant increase in bankruptcy advisory and restructuring engagements, with a record number of new mandates signed in June [4][10] - The retail liquidation division engaged in over 1,000 store closings with over $2 billion in associated retail inventory value, indicating ongoing challenges in the retail sector [30] Company Strategy and Development Direction - B. Riley plans to consolidate its legacy companies under a single brand to enhance market alignment and brand recognition [10] - The company aims to capitalize on opportunities created by the current market dislocation while maintaining a disciplined approach to its balance sheet [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sustained activity levels through year-end and into 2021, particularly in sectors pressured by COVID-19 [5][4] - The company highlighted its diversified business model as a competitive advantage amid ongoing market challenges [10][11] Other Important Information - B. Riley announced an increase in its regular dividend to $0.30 per share and a special dividend of $0.05, totaling $0.35 per common share for Q2 [20][7] - The company celebrated its five-year NASDAQ listing anniversary, reflecting on significant growth and acquisitions since going public [6] Q&A Session Summary Question: Inquiry about the B. Riley Principal Merger acquisition of Eos Energy and future SPAC plans - Management discussed the economics of SPACs, emphasizing their unique position to assist smaller companies in going public and the potential for future SPAC opportunities [36] Question: Average price on shares repurchased - Management indicated uncertainty about the average price of shares repurchased but estimated it to be in the low to mid-teens [38] Question: Sustainability of operating EBITDA growth - Management acknowledged the significant year-over-year increase in operating EBITDA and discussed the recurring nature of their business, indicating confidence in future performance [41][44]