B. Riley Financial Reports Fourth Quarter and Full Year 2021 Results

LOS ANGELES, Feb. 23, 2022 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY), a diversified financial services company, today announced results for the three- and twelve-month period ended December 31, 2021.

Fourth Quarter 2021 Financial Highlights

• Net income of $62.2 million, $2.08 diluted EPS
• Total revenues of $422.1 million
• Total adjusted EBITDA ⁽¹⁾ of $138.0 million
• Operating revenues ⁽²⁾ of $353.3 million
• Operating adjusted EBITDA ⁽³⁾ of $106.1 million

Full Year 2021 Financial Highlights

• Net income of $437.6 million, $15.09 diluted EPS
• Total revenues of $1,740.6 million
• Total adjusted EBITDA ⁽¹⁾ of $762.5 million
• Operating revenues ⁽²⁾ of $1,353.9 million
• Operating adjusted EBITDA ⁽³⁾ of $422.0 million
• Strengthened wealth management, asset management and M&A capabilities
• Significantly lowered cost of debt
• Declared dividends of $10.00 per common share for FY 2021

Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial, said: "We are pleased to report another strong quarter and full year of results thanks to our talented and ambitious team.  By adding to our wealth management, asset management and M&A businesses through acquisition and hiring exceptional talent in all areas, we continue to provide unique capabilities to our clients and partners. In 2021, we strengthened our balance sheet and reduced our cost of capital, allowing us the flexibility to invest across the platform and return capital to shareholders with share buybacks and dividend payments.  Over the past four quarters, B. Riley has declared $10.00 in common dividends thanks to the strong cash flow of our episodic and recurring businesses."

Tom Kelleher, Co-Chief Executive Officer of B. Riley Financial, added: "Operating revenue for the full year 2021 increased 70% to $1.4 billion compared to $799 million for the full year 2020.  Our efforts to cross-sell throughout the platform is gaining traction and creating opportunities. Furthermore, we have continued to expand our platform as we recently welcomed the addition of FocalPoint Securities, which will enhance our firm's investment banking efforts, with a specific emphasis on M&A advisory and financial sponsors.  We also completed the purchase of a portfolio of loan receivables from Badcock Home Furniture which we believe will add an attractive and consistent income stream."

Mr. Riley continued: "Over the past couple of months capital markets have slowed significantly.  While we have been a large beneficiary of these markets, we also recognize the strength and differentiation of our business model if they are to continue to soften.  When we took the business public in 2014 our business was highly correlated to two cyclical businesses, brokerage and liquidation.  Since that time, we have taken aggressive steps to diversify the cash flow profile of our company by adding several non-correlated companies such as our communications, brands and financial consulting businesses in addition to our recent accounts receivables portfolio. In addition, the credit and current income portion of our investment portfolio provides approximately $85 million of interest and dividend income.  Combined, our non-cyclical businesses and assets provide enough cash flow to cover the vast majority of our annual operating expenses, interest and dividend.  Clearly, we expect strong profits from B. Riley Securities this year and every year. As a reminder, that business has generated a majority of our capital markets operating segment income in each of the last three years.  However, we believe our diversification is a competitive advantage and will enable us to invest when others may need to contract."

Declaration of Common Dividend

B. Riley has declared a regular quarterly cash dividend of $1.00 per common share which is payable on or about March 23 to common stockholders of record as of March 9. Including this $1.00 regular dividend, the Company will have paid $10.00 in common dividends to shareholders related to the FY 2021 period.

Share Repurchases

Under the prior share repurchase plan, effective as of October 27, 2020, the Company repurchased approximately 495,000 of its common shares for an aggregate amount of approximately $12.6 million through December 31, 2021. During the fourth quarter of 2021, B. Riley's Board of Directors approved a new annual share repurchase program for up to $50 million.

Financial Summary

For the fourth quarter, net income available to common shareholders was $62.2 million, or $2.08 diluted earnings per share (EPS). For the full year, net income available to common shareholders was $437.6 million, or $15.09 diluted EPS.

For the three months ended December 31, 2021:

• Total revenues increased 3% to $422.1 million from $410.2 million for the prior year period.
• Total adjusted EBITDA ⁽¹⁾ of $138.0 million compared to $260.5 million for the prior year period.
• Operating revenues ⁽²⁾ increased 31% to $353.3 million from $270.0 million for the prior year period.
• Operating adjusted EBITDA ⁽³⁾ of $106.1 million compared to $126.8 million for the prior year period.
• Quarterly investment gains ⁽⁴⁾ were $68.9 million which reflect certain strategic investments held by the Company.

For the full year:

• Total revenues increased 93% to $1.7 billion from $902.7 million for the prior year period.
• Total adjusted EBITDA ⁽¹⁾ increased 87% to $762.5 million from $406.8 million for the prior year period.
• Operating revenues ⁽²⁾ increased 70% to $1.4 billion from $798.7 million for the prior year period.
• Operating adjusted EBITDA ⁽³⁾ increased 35% to $422.0 million from $311.7 million for the prior year period.

As of December 31, 2021, cash and investments ⁽⁶⁾ totaled approximately $2.6 billion including cash and cash equivalents of $278.9 million. Total cash and investments, ⁽⁶⁾ net of debt, was approximately $606 million.

Segment Financial Summary and Highlights

For the three months ended December 31, 2021:
Capital Markets segment revenues decreased 24% to $244.7 million for the fourth quarter. Excluding investment gains ⁽⁴⁾ of $67.7 million, segment operating revenues ⁽²⁾ decreased 2% year-over-year to $176.9 million, and segment operating income ⁽⁷⁾ decreased 14% to $87.2 million for the quarter. Performance was primarily driven by investment banking and fees generated from several significant debt and equity capital markets transactions completed during the quarter.

Wealth Management segment revenues and segment income increased to $104.9 million and $6.1 million, respectively, reflecting the addition of National Holdings which was acquired in February 2021. Combined wealth management assets under management were over $32 billion as of December 31, 2021.

Auction and Liquidation segment revenues totaled $5.7 million. Results for this segment vary from quarter-to-quarter and year-to-year due to the episodic impact of large retail liquidation engagements.

Financial Consulting segment revenues increased to $27.9 million from $26.5 million in prior year period. Segment income decreased to $6.6 million, down from $6.9 million for the prior year period.

Principal Investments segment companies, magicJack, United Online, and Marconi Wireless, acquired during the quarter, continued to perform above expectations, contributing recurring cash flow to the Company.

Brands generated quarterly segment revenues of $5.0 million related to the licensing of brand trademarks. 

For the full year:
Capital Markets operating revenues ⁽²⁾ increased to $698.0 million with segment operating income ⁽⁷⁾ of $344.0 million, compared to operating revenues ⁽²⁾ of $442.4 million and segment operating income ⁽⁷⁾ of $206.5 million in the prior year period.

Wealth Management annual revenues increased to $382.0 million from $73.1 million in prior year period. Segment income increased to $15.9 million, up from $2.9 million for the prior year period. The increases are primarily from the addition of National Holdings.

Auction and Liquidation generated annual revenues of $73.5 million and segment income of $8.1 million related to retail liquidation and store closing projects completed during 2021.

Financial Consulting annual revenues increased to $94.3 million from $91.6 million in prior year period. Segment income decreased to $16.9 million, down from $22.5 million for the prior year period.

Principal Investments companies continued to outperform initial investment estimates and provide steady cash flow for the B. Riley platform. For the full year, magicJack, United Online and Marconi Wireless contributed revenues of $93.3 million and segment income of $27.2 million.

Brands contributed licensing revenue of $20.3 million in 2021.

Supplemental Financial Data
Additional metrics related to operating results and investments can be found in the Fourth Quarter and Full Year 2021 Financial Supplement on B. Riley's investor relations website.

Conference Call Details
Management will host an investor call to discuss its fourth quarter and full year results today, Wednesday, February 23, 2022 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). Investors may access the live broadcast and archived recording via the Company's investor relations website at ir.brileyfin.com.

About B. Riley Financial
B. Riley Financial provides collaborative solutions tailored to fit the capital raising and business advisory needs of its clients and partners. B. Riley operates through several subsidiaries that offer a diverse range of complementary end-to-end capabilities spanning investment banking and institutional brokerage, private wealth and investment management, financial consulting, corporate restructuring, operations management, risk and compliance, due diligence, forensic accounting, litigation support, appraisal and valuation, auction, and liquidation services. For more information, please visit www.brileyfin.com.

Footnotes (See "Note Regarding Use of Non-GAAP Financial Measures" for further discussion of these non-GAAP terms.)

Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including operating revenues, adjusted EBITDA, operating adjusted EBITDA, and investment adjusted EBITDA, may be considered non-GAAP financial measures. B. Riley Financial believes this information is useful to investors because it provides a basis for measuring the Company's available capital resources, the operating performance of its business and its revenues and cash flow, (i) excluding in the case of operating revenues, trading income (losses) and fair value adjustments on loans, (ii) excluding in the case of adjusted EBITDA, net interest expense, provisions for or benefit from income taxes, depreciation, amortization, fair value adjustment, restructuring costs, gain on extinguishment of loans, impairment of trade names, stock-based compensation and transaction and other expenses, (iii) excluding in the case of operating adjusted EBITDA, the aforementioned adjustments for adjusted EBITDA as well as trading income (losses) and fair value adjustments on loans, and other investment related expenses, (iv) including in the case of investment adjusted EBITDA, trading income (losses) and fair value adjustments on loans, net of other investment related expenses, and (v) including in the case of total cash and investments, net of debt, total cash, net securities and investments, and other minus total debt, that would normally be included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles ("GAAP"). In addition, the Company's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the Company's operating performance, management compensation, capital resources, and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies.

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, statements regarding our excitement and the expected growth of our business segments. Factors that could cause such actual results to differ materially from those contemplated or implied by such forward-looking statements include, without limitation, the risks associated with the unpredictable and ongoing impact of the COVID-19 pandemic and other risks described from time to time in B. Riley Financial, Inc.'s periodic filings with the SEC, including, without limitation, the risks described in B. Riley Financial, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2020 and in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" (as applicable). Additional information will be set forth in our Annual Report on Form 10-K for the year ended December 31, 2021. These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and B. Riley Financial, Inc. undertakes no duty to update this information.

SOURCE B. Riley Financial