B. Riley Financial, Inc. (NASDAQ: RILYN) is a diversified financial services platform that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners. The company operates through several consolidated subsidiaries that provide investment banking, brokerage, wealth management, asset management, direct lending, business advisory, valuation, and asset disposition services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals.

Financials

In the fiscal year ended December 31, 2023, B. Riley Financial reported annual revenue of $1,556,449,000 and a net loss of $78,314,000. The company generated annual operating cash flow of $24,502,000 and annual free cash flow of $16,791,000.

For the first quarter of 2024, the company reported total revenues of $343,032,000, a net loss of $47,954,000, and operating cash flow of $135,357,000. The decrease in revenues during the first quarter of 2024 was primarily due to decreases in the fair value of the portfolio of securities and other investments owned and fair value adjustments on loans of $81,436,000, interest income from loans and securities lending of $17,242,000, and sale of goods of $12,124,000, partially offset by an increase in revenues from services and fees of $21,744,000.

Business Overview

The company's diversified platform includes six reportable business segments: Capital Markets, Wealth Management, Financial Consulting, Auction and Liquidation, Communications, and Consumer Products. During the fourth quarter of 2023, the company reassessed its previously reported Consumer segment due to organizational changes and financial information provided to the Chief Operating Decision Maker. These changes resulted in the Targus operations being reported on a stand-alone basis in the Consumer Products segment and the operations related to brand licensing that were previously reported in the Consumer segment being reported in the All Other Category that is reported with Corporate and Other.

Capital Markets

In the Capital Markets segment, revenues from services and fees increased $2,418,000 or 4.2% to $60,347,000 during the first quarter of 2024 compared to the same period in 2023. The increase was primarily due to increases of $11,000,000 in corporate finance, consulting, and investment banking fees, $500,000 in asset management fees, and $500,000 in other income, partially offset by decreases of $6,500,000 in dividends and $3,000,000 in commission fees.

Wealth Management

The Wealth Management segment reported a $2,640,000 or 5.4% increase in revenues from services and fees to $51,182,000 during the first quarter of 2024, primarily due to a $2,700,000 increase in wealth and asset management fees.

Auction and Liquidation

Revenues from services and fees in the Auction and Liquidation segment decreased $1,884,000 or 34.6% to $3,560,000 during the first quarter of 2024, primarily due to a $2,900,000 decrease in commission fees, partially offset by a $1,000,000 increase in service contract revenues.

Financial Consulting

The Financial Consulting segment reported a $10,075,000 or 40.3% increase in revenues from services and fees to $35,085,000 during the first quarter of 2024. The increase was primarily due to a $8,500,000 increase within the Advisory Services division, consisting of $2,900,000 from a full quarter of revenues from acquisitions in the prior year and $5,600,000 in advisory services. The remaining increase was due to a $1,600,000 increase in Appraisal services.

Communications

Revenues from services and fees in the Communications segment decreased $3,982,000 or 4.7% to $81,070,000 during the first quarter of 2024, primarily due to decreases of $3,300,000 in subscription revenue and $700,000 in advertising, licensing and other revenue.

All Other

The All Other category, which includes the licensing of brand trademarks, merchandise rental fees and sales from bebe stores, inc., a regional environmental services business, and a landscaping business, reported a $12,477,000 or 91.9% increase in revenues from services and fees to $26,059,000 during the first quarter of 2024.

Geographic Distribution

Geographically, the company generated $315,700,000 or 92.0% of its total revenues from North America, $16,590,000 or 4.8% from Europe, Middle East, and Africa, $6,354,000 or 1.9% from Asia, $2,624,000 or 0.8% from Australia, and $1,764,000 or 0.5% from Latin America during the first quarter of 2024.

Liquidity

The company's balance sheet remains strong, with $190,690,000 in cash and cash equivalents, $949,868,000 in securities and other investments owned at fair value, and $452,496,000 in loans receivable at fair value as of March 31, 2024. Total debt as of March 31, 2024 was $2,186,400,000, including $1,553,616,000 in senior notes payable, $596,262,000 in term loans, and $22,197,000 in revolving credit facility borrowings.

Outlook

Looking ahead, the company remains focused on running its business in the best interest of its stakeholders by addressing the needs of its clients, partners and employees. The company believes the market opportunity in the small- and mid-cap space remains attractive, and it is uniquely positioned to meet the needs of companies in this space. To that end, the company recently declared a quarterly dividend of $0.50 per common share, payable on June 11, 2024 to shareholders of record as of May 27, 2024.

Conclusion

Overall, B. Riley Financial's diversified financial services platform, strong balance sheet, and focus on delivering tailored solutions position the company well to navigate the current market environment and capitalize on future growth opportunities.