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Dec 31, 2024
B. Riley Q3 2024 Earnings Report
B. Riley Financial, Inc. reported a significant net loss in Q2 2024, primarily due to fair value adjustments on loans and investments, despite growth in services and fees revenue.
Key Takeaways
B. Riley Financial, Inc. experienced a substantial net loss of $(433.781) million in the second quarter of 2024, a sharp decline from a net income of $43.781 million in the same period last year. This was primarily driven by significant fair value adjustments on loans and investments, totaling $(175.582) million and $(155.690) million respectively. Despite these losses, the company saw an increase in services and fees revenue, reaching $248.025 million.
Net loss of $(433.781) million in Q2 2024, a significant reversal from $43.781 million net income in Q2 2023.
Fair value adjustments on loans resulted in a loss of $(175.582) million, a substantial decrease from a gain of $9.207 million in Q2 2023.
Realized and unrealized losses on investments amounted to $(155.690) million, compared to a gain of $18.843 million in Q2 2023.
Services and fees revenue increased by 7.7% to $248.025 million in Q2 2024, up from $230.327 million in Q2 2023.
B. Riley
B. Riley
Forward Guidance
The company anticipates that current cash, cash equivalents, securities, and available funds from credit facilities and operating activities will be sufficient to meet working capital and capital expenditure requirements for at least the next 12 months. However, the company acknowledges that accessing capital markets could take longer and cost more due to its current status.
Positive Outlook
- Current cash and cash equivalents, securities, and available funds are expected to be sufficient for the next 12 months.
- Strategic review process for Appraisal and Valuation Services, and Retail, Wholesale & Industrial Solutions businesses is ongoing, with potential for de-levering the balance sheet.
- Secured financing transaction for brand operations and equity investments received proceeds of $189.331 million, used to reduce credit facility balance.
- Great American Group Transaction involved contribution of interests to a new subsidiary and issuance of preferred and common units for approximately $203.0 million.
- Wealth Management business is expected to close early in Q2 2025, with estimated net consideration of $27.0 million to $35.0 million in cash.
Challenges Ahead
- The company incurred a net loss of $(482.769) million for the six months ended June 30, 2024, primarily due to fair value adjustments.
- The Nomura credit facility requires the company to reduce the principal amount of the term loan to no greater than $100.0 million by September 30, 2025.
- The fair value of the investment in Freedom VCM was reduced to zero at September 30, 2024, due to bankruptcy filing.
- The company is no longer a well-known seasoned issuer, which may impact future access to capital markets.
- Common stock dividend was suspended in August 2024 to prioritize debt reduction.