B. Riley Financial Releases Preliminary Second Quarter 2024 Financial Results
Provides Additional Detail on
Investor Call Scheduled for
"We have taken and are continuing to take actions to ensure we maintain a strong, flexible balance sheet and will be suspending our common dividend as we prioritize deleveraging. Our review of strategic alternatives for
Riley concluded, "The operating strength of this platform has recently been masked by the performance of our principal investments. As we look ahead, we will be refocusing on our core financial services businesses and supporting our valued clients across the small-cap and middle-market sectors as we have for the past 27 years. We also recognize the benefits that our other diversified assets deliver in the form of uncorrelated free cash flow. I have the highest confidence in the resilience of our platform, and in the talented professionals across our firm who have relentlessly built this business in the interest of our clients, teammates and our shareholders."
Summary of preliminary estimates for the three-months ending
- Net loss for the quarter ended
June 30, 2024 is expected to be in the range of$435 to$475 million , or$14 to$15 per diluted loss per share based on 30.4 million weighted average common shares outstanding. - The Company expects to report a non-cash markdown of approximately
$330 to$370 million related to its investment in Freedom VCM, the indirect parent entity of FRG, and theVintage Capital loan receivable. The Company is in the process of completing the valuation of these items which could impact these estimates. - The Company expects to record an impairment charge of
$28 million for the quarter endedJune 30, 2024 primarily related to the goodwill of Targus, which has continued to be impacted by consumer spending habits as mentioned above. - The Company expects to record a charge of approximately
$25 million related to a valuation allowance for deferred income taxes for the quarter endedJune 30, 2024 . - Operating adjusted EBITDA (1)(2) for the quarter ended
June 30, 2024 is expected to be in the range of$50 to$55 million . - Cash and cash equivalents as of
June 30, 2024 is approximately$237 million . - Total cash and investments(3) as of
June 30, 2024 is approximately$1.1 billion . - Total outstanding debt as of
June 30, 2024 is approximately$2.16 billion .
This update is not a comprehensive statement of the Company's quarterly financial results and is subject to change. The Company has provided ranges for the preliminary estimates of the unaudited financial data primarily because the Company's financial closing procedures for the quarter ended
The Company anticipates filing a Form 12b-25 with the
Conference Call Details
About
Footnotes See "Note Regarding Use of Non-GAAP Financial Measures" for further discussion of these non-GAAP terms. For a reconciliation of Adjusted EBITDA, and Operating Adjusted EBITDA to the comparable GAAP financial measures, please see the Appendix hereto.
(1) Adjusted EBITDA includes earnings before interest, taxes, depreciation, amortization, restructuring charge, share-based payments, gain/loss on extinguishment of loans, gain on bargain purchase, impairment of goodwill and tradenames, and transaction related and other costs.
(2) Operating Adjusted EBITDA is defined as Adjusted EBITDA excluding (i) Trading Income (Loss) and Fair Value Adjustments on Loans, (ii) Realized and Unrealized Gains (Losses) on Investments, and (iii) other investment-related expenses. During the fourth quarter of 2023, the Company recast its operating metrics to include revenues from fixed income trading. Operating Adjusted EBITDA has been adjusted to include fixed income trading revenue for the periods presented.
(3) Total cash and investments is defined as the sum of cash and cash equivalents, net of noncontrolling interest, restricted cash, due from clearing brokers net of due to clearing brokers, securities and other investments owned, at fair value net of (i) securities sold not yet purchased and (ii) noncontrolling interest related to investments, advances against customer contracts, loans receivable, at fair value net of loan participations sold, and other investments reported in prepaid and other assets.
Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including adjusted EBITDA, and operating adjusted EBITDA, may be considered non-GAAP financial measures.
Forward-Looking Statements
Statements in this press release that are not descriptions of historical facts are forward-looking statements that are based on management's current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition, and stock price could be materially negatively affected. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of the date of this press release. Such forward-looking statements include, but are not limited to, maintaining a strong, flexible balance sheet, the strategic alternative review process for
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Reconciliation of Net Income (Loss) Guidance to Adjusted EBITDA |
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and Operating Adjusted EBITDA Guidance |
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(Unaudited) |
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(Dollars in thousands) |
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Three Months Ended |
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Low |
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High |
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Net loss attributable to |
$ |
(435,000) |
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$ |
(475,000) |
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Adjustments: |
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Provision for income taxes |
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25,000 |
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25,000 |
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Interest expense |
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43,000 |
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43,000 |
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Interest income |
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(800) |
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(800) |
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Share based payments |
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6,200 |
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6,200 |
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Depreciation and amortization |
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11,800 |
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11,800 |
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Gain on extinguishment of loans |
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(100) |
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(100) |
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Impairment of goodwill and tradenames |
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27,700 |
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27,700 |
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Transactions related costs and other |
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7,000 |
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7,000 |
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Total EBITDA adjustments |
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119,800 |
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119,800 |
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Adjusted EBITDA |
$ |
(315,200) |
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$ |
(355,200) |
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Operating EBITDA Adjustments: |
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Trading loss and fair value adjustments on loans |
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205,000 |
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228,000 |
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Realized and unrealized losses on investments |
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155,000 |
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177,000 |
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Fixed Income Spread |
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6,000 |
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6,000 |
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Other investment related expenses |
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(800) |
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(800) |
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Total Operating EBITDA Adjustments |
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365,200 |
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410,200 |
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Operating Adjusted EBITDA |
$ |
50,000 |
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$ |
55,000 |
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Contacts |
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Investors |
Media |
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(212) 409-2424 |
(646) 885-5425 |
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