LOS ANGELES, Dec. 17, 2020 /PRNewswire/ -- B. Riley Financial,
Inc. (NASDAQ: RILY) today released guidance for the fourth
quarter and full year 2020 ending December
31, 2020.
Forecasted Fourth Quarter 2020 Results
- Net income guidance range of $109
to $112 million, or $4.15 to $4.27 per
diluted share
- Adjusted EBITDA(1) in the range of $175 to $180
million
- Operating adjusted EBITDA(2) in the range of
$100 to $105
million
Forecasted Full Year 2020 Results
- Net income of $143 to
$146 million, or $5.19 to $5.31 per
diluted share, up over 75% from FY 2019
- Adjusted EBITDA(1) of $321 to $326
million, up over 55% from FY 2019
- Operating adjusted EBITDA(2) of $285 to $290
million, up over 150% from FY 2019
"Our financial forecast for the fourth quarter and full year
demonstrate the increasing value of our diversified platform as we
continue to optimize our recurring and episodic EBITDA. Our
guidance reflects the combined strength of our operating businesses
which include our core investment banking, advisory services,
retail liquidation, wealth management and principal investments
divisions," said Bryant Riley,
Chairman and Co-Chief Executive Officer of B. Riley Financial.
"We are providing guidance in connection with recent strategic
investments. This includes our investment in Lingo Communications
and our recently announced investment in the Justice clothing brand
– both of which we expect will result in steady cash flow
generation for our platform," added Riley.
"Our expanding platform capabilities, combined with our balance
sheet flexibility, continue to provide compelling, differentiated
solutions for our growing client base. We are more excited than
ever about these proprietary opportunities, and we look forward to
building on this year's momentum," said Riley.
Fourth Quarter and Full Year 2020 Guidance
For the fourth quarter of 2020, B. Riley forecasts net income to
be in the range of $109 to
$112 million, or $4.15 to $4.27 per
diluted share. The Company's guidance for adjusted
EBITDA(1) for the quarter is in the range of
$175 to $180
million, with operating adjusted EBITDA(2) in the
range of $100 to $105 million. The Company forecasts investment
gains of $80 million for the fourth
quarter. The Company's forecast for investment gains is dependent
on financial market conditions for the remainder of the year.
Investment gains include trading income and fair value adjustments
on loans.
For full year 2020, the Company forecasts net income in the
range of $143 to $146 million, or $5.19 to $5.31 per
diluted share, with the lower end of the range up over 75% from
2019. Guidance for adjusted EBITDA(1) for the year is
forecasted to be in the range of $321
to $326 million, up over 55% from
2019. Operating adjusted EBITDA(2) for the full year is
expected to be in the range of $285
to $290 million, up over 150% from
2019. The Company estimates investment gains of $44 million for the full year. The Company's
forecast for investment gains for the fourth quarter and full year
2020 is dependent on financial market conditions for the remainder
of the year.
Actual results for the fourth quarter and full year of 2020 may
differ from these forecasts.
Summary of Recent Strategic Investments
The Company's above guidance includes the results of the
following investments only from the respective date of each such
investment in the fourth quarter.
- Justice Brand Investment: The Company recently announced
it has acquired significant interest in the Justice clothing brand
through an investment in Bluestar Alliance's purchase from ascena
retail group. Results for this investment will be realized in
future quarters under the Brands segment, which comprises licensing
revenue related to B. Riley's interest in the intellectual property
and related assets of various fashion brands.
- Lingo Recapitalization: B. Riley Principal Investments
acquired the outstanding debt of Lingo Communications ("Lingo"),
converting a portion of that debt into a 40% equity ownership held
by B. Riley. The first tranche of the transaction closed on
November 30, 2020. The second
tranche, under which B. Riley can convert additional debt for an
additional 40% equity ownership stake, is expected to close in
2021, subject to receiving customary regulatory approvals. Lingo is
a global Cloud/UC and managed service provider to small- and
medium-sized businesses, and carrier and consumer markets around
the globe. The Lingo investment aligns with the Company's telecom
and cloud vertical principal investment companies, magicJack and
United Online. Lingo's debt restructuring supports the acceleration
of its strategy in the business and carrier markets, while also
utilizing the Company's financial and operational expertise to
generate cash flow for the B. Riley platform. As part of the
transaction, Lingo has also granted B. Riley representation on its
Board.
About B. Riley Financial, Inc. (NASDAQ: RILY)
B. Riley Financial, Inc. provides collaborative financial
services solutions tailored to fit the capital raising, business,
operational, and financial advisory needs of its clients and
partners. B. Riley operates through several subsidiaries which
offer a diverse range of complementary end-to-end capabilities
spanning investment banking and institutional brokerage, private
wealth and investment management, corporate advisory,
restructuring, due diligence, forensic accounting, litigation
support, appraisal and valuation, and auction and liquidation
services. Certain registered affiliates of B. Riley originate and
underwrite senior secured loans for asset-rich companies. B. Riley
also makes proprietary investments in companies and assets with
attractive return profiles. For the latest Company news and
developments, follow B. Riley on Twitter @BRileyFinancial and
on LinkedIn. For more information about B. Riley and our affiliated
companies, visit our website at www.brileyfin.com.
Footnotes (See "Note Regarding Use of Non-GAAP
Financial Measures" for further discussion of these non-GAAP
terms.)
(1) Adjusted EBITDA includes earnings before interest, taxes,
depreciation, amortization, restructuring costs, share-based
payments, impairment of tradenames, and transaction related and
other costs. For a definition of adjusted EBITDA and a
reconciliation to GAAP financial measures, please see the
Appendix.
(2) Operating adjusted EBITDA is defined as adjusted EBITDA
excluding trading income (losses) and fair value adjustments on
loans and other investment related expenses.
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 the Company's anticipated
results of operations for 2020, as well as 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, 2019 and Quarterly Reports on Form
10-Q for the quarters ended March 31,
2020, June 30, 2020 and
September 30, 2020 under the captions
"Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" (as applicable).
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.
Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including operating
revenue, 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,
impairment of trade names, stock-based compensation and transaction
and other expenses, (iii) excluding in the case of operating
adjusted EBITDA, aforementioned adjustments for adjusted EBITDA,
trading income (losses) and fair value adjustments on loans, and
other investment related expenses, and (iv) in the case of
investment adjusted EBITDA this includes trading income (losses)
and fair value adjustments on loans, net of other investment
related expenses, 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, 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.
Contacts
Investor Relations
B. Riley Financial
ir@brileyfin.com
(818) 746-9310
Media Relations
Jo Anne
McCusker
press@brileyfin.com
(646) 885-5425
B. RILEY
FINANCIAL, INC.
Reconciliation of
Net Income Guidance to Adjusted EBITDA and Operating Adjusted
EBITDA Guidance
(Unaudited)
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
Guidance
|
|
|
|
Prior
Period
|
|
|
|
|
Guidance
|
|
|
|
Prior
Period
|
|
|
|
|
|
|
|
3 Months Ended
12/31/2020
|
|
|
|
3 Months Ended
12/31/2019
|
|
|
|
|
12 Months
Ended
12/31/2020
|
|
|
|
12 Months
Ended
12/31/2019
|
|
|
|
|
|
|
|
Low
|
|
High
|
|
|
|
Actual
|
|
|
|
|
Low
|
|
High
|
|
|
|
Actual
|
Net income
attributable to B. Riley Financial, Inc.
|
$
|
109,000
|
|
$
|
112,200
|
|
|
|
$
|
17,129
|
|
|
|
|
$
|
142,554
|
|
$
|
145,754
|
|
|
|
$
|
81,611
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
40,800
|
|
|
42,200
|
|
|
|
|
7,842
|
|
|
|
|
|
54,180
|
|
|
55,580
|
|
|
|
|
34,644
|
|
Interest
expense
|
|
16,200
|
|
|
16,400
|
|
|
|
|
15,075
|
|
|
|
|
|
64,737
|
|
|
64,937
|
|
|
|
|
50,205
|
|
Interest
income
|
|
|
(100)
|
|
|
(100)
|
|
|
|
|
(248)
|
|
|
|
|
|
(637)
|
|
|
(637)
|
|
|
|
|
(1,577)
|
|
Share based
payments
|
|
4,300
|
|
|
4,500
|
|
|
|
|
5,640
|
|
|
|
|
|
18,567
|
|
|
18,767
|
|
|
|
|
15,916
|
|
Depreciation and
amortization
|
|
4,700
|
|
|
4,700
|
|
|
|
|
4,831
|
|
|
|
|
|
19,465
|
|
|
19,465
|
|
|
|
|
19,048
|
|
Restructuring
costs
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
1,557
|
|
|
1,557
|
|
|
|
|
1,699
|
|
Impairment of
tradenames
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
12,500
|
|
|
12,500
|
|
|
|
|
—
|
|
Transactions related
costs and other
|
|
300
|
|
|
300
|
|
|
|
|
—
|
|
|
|
|
|
8,609
|
|
|
8,609
|
|
|
|
|
6,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA
adjustments
|
|
66,200
|
|
|
68,000
|
|
|
|
|
33,140
|
|
|
|
|
|
178,978
|
|
|
180,778
|
|
|
|
|
126,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
175,200
|
|
$
|
180,200
|
|
|
|
$
|
50,269
|
|
|
|
|
$
|
321,532
|
|
$
|
326,532
|
|
|
|
$
|
207,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating EBITDA
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading (income)
losses and fair value adjustments on loans
|
|
(80,000)
|
|
|
(80,000)
|
|
|
|
|
(34,733)
|
|
|
|
|
|
(43,858)
|
|
|
(43,858)
|
|
|
|
|
(106,463)
|
|
Other investment
related expenses
|
|
4,800
|
|
|
4,800
|
|
|
|
|
858
|
|
|
|
|
|
7,212
|
|
|
7,212
|
|
|
|
|
12,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating
EBITDA Adjustments
|
|
(75,200)
|
|
|
(75,200)
|
|
|
|
|
(33,875)
|
|
|
|
|
|
(36,646)
|
|
|
(36,646)
|
|
|
|
|
(94,282)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Adjusted
EBITDA
|
$
|
100,000
|
|
$
|
105,000
|
|
|
|
$
|
16,394
|
|
|
|
|
$
|
284,886
|
|
$
|
289,886
|
|
|
|
$
|
113,603
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/b-riley-financial-releases-guidance-for-fourth-quarter-and-full-year-2020-301195006.html
SOURCE B. Riley Financial