B. Riley Financial Files 2022 Annual Report on Form 10-K

LOS ANGELES, March 16, 2023 /PRNewswire/ — B. Riley Financial, Inc. (NASDAQ: RILY) (“B. Riley” or the “Company”), a diversified financial services platform, today announced the filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Certain previously issued financial statements have been restated to correct the classification of dividends received and realized and unrealized gains (losses) on certain investments held by non-regulated entities from within “Revenue” to “Other Income” in the Company’s consolidated statement of operations.

This reclassification had no impact on previously issued consolidated balance sheets, net income, earnings per share (EPS), adjusted EBITDA, or operating adjusted EBITDA.

Additional information related to operating and investment metrics can be found in the revised Fourth Quarter 2022 Financial Supplement which is available on the Company’s investor relations website. Information about the Company’s use of non-GAAP financial measures is provided under “Use of Non-GAAP Financial Measures.”

These results have been recast in the corresponding tables for the periods presented.
































































Year Ended 


Year Ended 


Year Ended 





December 31, 2022


December 31, 2021


December 31, 2020



(Dollars in thousands)


As Previously

Reported


 Adjustments


As Revised


As Previously

Reported


 Adjustments


As Restated


As Previously

Reported


 Adjustments


As Restated

































Total Revenues


$

915,465


$

165,205


$

1,080,670


$

1,740,561


$

(185,863)


$

1,554,698


$

902,721


$

(68,504)


$

834,217



Total Operating Expenses



(1,011,222)





(1,011,222)



(1,040,170)





(1,040,170)



(557,956)





(557,956)



Other (Expenses) Income



(124,693)



(165,205)



(289,898)



(85,629)



185,863



100,234



(65,308)



68,504



3,196



(Loss) Income Before Income Taxes



(220,450)





(220,450)



614,762





614,762



279,457





279,457

































Net (Loss) Income Available to Common Shareholders

$

(167,837)


$


$

(167,837)


$

437,597


$


$

437,597


$

200,438


$


$

200,438



Diluted (Loss) Income per Common Share


$

(5.95)


$


$

(5.95)


$

15.09


$


$

15.09


$

7.56


$


$

7.56





























































































































Year Ended 


Year Ended 


Year Ended 





December 31, 2022


December 31, 2021


December 31, 2020



(Dollars in thousands)


As Previously

Reported


 Adjustments


As Revised


As Previously

Reported


 Adjustments


As Restated


As Previously

Reported


 Adjustments


As Restated

































    Operating Revenues (2)


$

1,319,172


$

(35,874)


$

1,283,298


$

1,353,885


$

(19,732)


$

1,334,153


$

798,703


$

(21,163)


$

777,540



    Investment (Loss) Gains (4)



(403,707)



201,079



(202,628)



386,676



(166,131)



220,545



104,018



(47,341)



56,677



        Total Revenues


$

915,465


$

165,205


$

1,080,670


$

1,740,561


$

(185,863)


$

1,554,698


$

902,721


$

(68,504)


$

834,217

































   Operating Adjusted EBITDA (3)


$

366,458


$


$

366,458


$

422,029


$


$

422,029


$

311,673


$


$

311,673



   Investment Adjusted EBITDA (5)



(334,176)





(334,176)



340,465





340,465



95,145





95,145



       Total Adjusted EBITDA (1)


$

32,282


$


$

32,282


$

762,494


$


$

762,494


$

406,818


$


$

406,818





























































































































Three Months Ended


Three Months Ended














December 31, 2022


December 31, 2021












(Dollars in thousands)


As Previously

Reported


 Adjustments


As Revised


As Previously

Reported


 Adjustments


Restated










































Total Revenues


$

326,813


$

55,279


$

382,092


$

422,110


$

(21,796)


$

400,314












Total Operating Expenses



(372,094)





(372,094)



(301,588)





(301,588)












Other (Expenses) Income



(42,172)



(55,279)



(97,451)



(29,229)



21,796



(7,433)












(Loss) Income Before Income Taxes



(87,453)





(87,453)



91,293





91,293










































Net (Loss) Income Available to Common Shareholders

$

(59,447)


$


$

(59,447)


$

62,182


$


$

62,182












Diluted (Loss) Income per Common Share


$

(2.08)


$


$

(2.08)


$

2.08


$


$

2.08








































































































Three Months Ended


Three Months Ended














December 31, 2022


December 31, 2021












(Dollars in thousands)


As Previously

Reported


 Adjustments


As Revised


As Previously

Reported


 Adjustments


Restated










































    Operating Revenues (2)


$

450,357


$

(9,595)


$

440,762


$

353,252


$

(7,786)


$

345,466












    Investment (Loss) Gains (4)



(123,544)



64,874



(58,670)



68,858



(14,010)



54,848












        Total Revenues


$

326,813


$

55,279


$

382,092


$

422,110


$

(21,796)


$

400,314










































   Operating Adjusted EBITDA (3)


$

101,807


$


$

101,807


$

106,097


$


$

106,097












   Investment Adjusted EBITDA (5)



(115,847)





(115,847)



31,928





31,928












       Total Adjusted EBITDA (1)


$

(14,040)


$


$

(14,040)


$

138,025


$


$

138,025









































This reclassification had no impact on previously issued consolidated balance sheets, net income, earnings per share (EPS), adjusted EBITDA, or operating adjusted EBITDA.

The Company’s Annual Report on Form 10-K is available in the Investor Relations section of the Company’s website at ir.brileyfin.com under “SEC Filings,” as well as on the SEC’s website at www.sec.gov.

About B. Riley Financial

B. Riley Financial is a diversified financial services platform that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners. B. Riley leverages cross-platform expertise to provide clients with full service, collaborative solutions at every stage of the business life cycle. Through its affiliated subsidiaries, B. Riley provides end-to-end financial services across investment banking, 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. B. Riley opportunistically invests to benefit its shareholders, and certain affiliates originate and underwrite senior secured loans for asset-rich companies. B. Riley refers to B. Riley Financial, Inc. and/or one or more of its subsidiaries or affiliates. 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. For a reconciliation of Adjusted EBITDA, Operating Revenue, Operating Adjusted EBITDA, and Investment 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 on extinguishment of loans, impairment of tradenames, and transaction related and other costs.

(2)

Operating Revenue is defined as the sum of revenues from (i) Service and Fees, (ii) Interest Income – Loans and Securities Lending and (iii) Sales of Goods.

(3)

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.

(4)

Investment Gains (Loss) is defined as Trading Income (Loss) and Fair Value Adjustments on Loans.

(5)

Investment Adjusted EBITDA is defined as the sum of (i) Trading Income (Loss) and Fair Value Adjustments on Loans and (ii) Realized and Unrealized Gains (Losses) on Investments, less other investment related expenses.

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 (loss) 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 charge, 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, aforementioned adjustments for adjusted EBITDA, as well as trading income (loss) and fair value adjustments on loans, realized and unrealized gains (losses) on investments, and other investment related expenses, and (iv) in the case of investment adjusted EBITDA this includes trading income (loss) and fair value adjustments on loans and realized and unrealized gains (losses) on investments, 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.

 

B. RILEY FINANCIAL, INC.

Consolidated Balance Sheets

(Dollars in thousands, except par value)




















December 31,








2022


2021













Assets






Assets











Cash and cash equivalents

$

268,618


$

278,933


Restricted cash


2,308



927


Due from clearing brokers


48,737



29,657


Securities and other investments owned, at fair value


1,129,268



1,532,095


Securities borrowed


2,343,327



2,090,966


Accounts receivable, net


149,110



49,673


Due from related parties


1,081



2,074


Loans receivable, at fair value (includes $98,729 and $167,744 from related parties as of December 31, 2022 and December 31, 2021, respectively)


701,652



873,186


Prepaid expenses and other assets


460,696



463,502


Operating lease right-of-use assets


88,593



56,969


Property and equipment, net


27,141



12,870


Goodwill




512,595



250,568


Other intangible assets, net


374,098



207,651


Deferred income taxes


3,978



2,848



Total assets

$

6,111,202


$

5,851,919

Liabilities and Equity






Liabilities










Accounts payable

$

81,384


$

6,326


Accrued expenses and other liabilities


322,974



343,750


Deferred revenue


85,441



69,507


Deferred income taxes


29,548



93,055


Due to related parties and partners


2,210




Due to clearing brokers


19,307



69,398


Securities sold not yet purchased


5,897



28,623


Securities loaned


2,334,031



2,088,685


Operating lease liabilities


99,124



69,072


Notes payable


25,263



357


Loan participations sold





Revolving credit facility


127,678



80,000


Term loans, net


572,079



346,385


Senior notes payable, net 


1,721,751



1,606,560



Total liabilities


5,426,687



4,801,718













Commitments and contingencies






Redeemable noncontrolling interests in equity of subsidiaries


178,622



345,000

B. Riley Financial, Inc. equity:







Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 4,545 and 4,512 issued and







outstanding as of December 31, 2022 and December 31, 2021, respectively; liquidation preference






of $113,615 and $112,790 as of December 31, 2022 and December 31, 2021, respectively.





Common stock, $0.0001 par value; 100,000,000 shares authorized; 28,523,764 and 27,591,028 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively.


3



3


Additional paid-in capital


494,201



413,486


(Accumulated deficit) retained earnings


(45,220)



248,862


Accumulated other comprehensive loss


(2,470)



(1,080)



Total B. Riley Financial, Inc. stockholders’ equity


446,514



661,271

Noncontrolling interests


59,379



43,930



Total equity


505,893



705,201




Total liabilities and equity

$

6,111,202


$

5,851,919

 

B. RILEY FINANCIAL, INC.




Consolidated Statements of Operations




(Dollars in thousands, except share data)












































Year Ended December 31,









2022


2021


2020










As Revised



As Restated



As Restated

















Revenues:












Services and fees


$

895,623


$

1,153,225


$

645,906


Trading (loss) income and fair value adjustments on loans



(202,628)



220,545



56,677


Interest income – Loans and securities lending



245,400



122,723



102,499


Sale of goods



142,275



58,205



29,135



Total revenues



1,080,670



1,554,698



834,217

Operating expenses:











Direct cost of services



142,455



54,390



60,451


Cost of goods sold



78,647



26,953



12,460


Selling, general and administrative expenses



714,614



906,196



428,537


Restructuring charge



9,011





1,557


Impairment of tradenames







12,500


Interest expense – Securities lending and loan participations sold



66,495



52,631



42,451



Total operating expenses



1,011,222



1,040,170



557,956



Operating income



69,448



514,528



276,261

Other income (expense):











Interest income



2,735



229



564


Dividend income



35,874



19,732



21,163


Realized and unrealized (losses) gains on investments



(201,079)



166,131



47,341


Change in fair value of financial instruments and other



10,188



3,796




Income from equity method investments



3,570



2,801



(623)


Interest expense



(141,186)



(92,455)



(65,249)



(Loss) income before income taxes



(220,450)



614,762



279,457

Benefit from (provision for) income taxes



63,856



(163,960)



(75,440)



Net (loss) income



(156,594)



450,802



204,017

Net (loss) income attributable to noncontrolling interests










and redeemable noncontrolling interests



3,235



5,748



(1,131)



Net (loss) income attributable to B. Riley Financial, Inc.



(159,829)



445,054



205,148

Preferred stock dividends



8,008



7,457



4,710



Net (loss) income available to common shareholders


$

(167,837)


$

437,597


$

200,438

















Basic (loss) income per common share


$

(5.95)


$

15.99


$

7.83

Diluted (loss) income per common share


$

(5.95)


$

15.09


$

7.56

















Weighted average basic common shares outstanding



28,188,530



27,366,292



25,607,278

Weighted average diluted common shares outstanding



28,188,530



29,005,602



26,508,397

 

B. RILEY FINANCIAL, INC.

Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except share data)










































































Year Ended December 31,








2022


2021


2020








As Previously

Reported


 Adjustments


As Revised


As Previously

Reported


 Adjustments


As Restated


As Previously

Reported


 Adjustments


As Restated

Revenues:





























Services and fees

$

931,497


$

(35,874)


$

895,623


$

1,172,957


$

(19,732)


$

1,153,225


$

667,069


$

(21,163)


$

645,906


Trading (loss) income and fair value adjustments on loans


(403,707)



201,079



(202,628)



386,676



(166,131)



220,545



104,018



(47,341)



56,677


Interest income – Loans and securities lending


245,400





245,400



122,723





122,723



102,499





102,499


Sale of goods


142,275





142,275



58,205





58,205



29,135





29,135



Total revenues


915,465



165,205



1,080,670



1,740,561



(185,863)



1,554,698



902,721



(68,504)



834,217

Operating expenses:




























Direct cost of services


142,455





142,455



54,390





54,390



60,451





60,451


Cost of goods sold


78,647





78,647



26,953





26,953



12,460





12,460


Selling, general and administrative expenses


714,614





714,614



906,196





906,196



428,537





428,537


Restructuring charge


9,011





9,011









1,557





1,557


Impairment of tradenames














12,500





12,500


Interest expense – Securities lending and loan participations sold


66,495





66,495



52,631





52,631



42,451





42,451



Total operating expenses


1,011,222





1,011,222



1,040,170





1,040,170



557,956





557,956



Operating (loss) income


(95,757)



165,205



69,448



700,391



(185,863)



514,528



344,765



(68,504)



276,261

Other income (expense):




























Interest income


2,735





2,735



229





229



564





564


Dividend income




35,874



35,874





19,732



19,732





21,163



21,163


Realized and unrealized (losses) gains on investments




(201,079)



(201,079)





166,131



166,131





47,341



47,341


Change in fair value of financial instruments and other


10,188





10,188



3,796





3,796








Income from equity method investments


3,570





3,570



2,801





2,801



(623)





(623)


Interest expense


(141,186)





(141,186)



(92,455)





(92,455)



(65,249)





(65,249)



(Loss) income before income taxes


(220,450)





(220,450)



614,762





614,762



279,457





279,457

Benefit from (provision for) income taxes


63,856





63,856



(163,960)





(163,960)



(75,440)





(75,440)



Net (loss) income


(156,594)





(156,594)



450,802





450,802



204,017





204,017

Net income attributable to noncontrolling interests

and redeemable noncontrolling interests


3,235





3,235



5,748





5,748



(1,131)





(1,131)



Net (loss) income attributable to B. Riley Financial, Inc.


(159,829)





(159,829)



445,054





445,054



205,148





205,148

Preferred stock dividends


8,008





8,008



7,457





7,457



4,710





4,710



Net (loss) income available to common shareholders

$

(167,837)


$


$

(167,837)


$

437,597


$


$

437,597


$

200,438


$


$

200,438


































Basic (loss) income per common share

$

(5.95)





$

(5.95)


$

15.99





$

15.99


$

7.83





$

7.83

Diluted (loss) income per common share

$

(5.95)





$

(5.95)


$

15.09





$

15.09


$

7.56





$

7.56


































Weighted average basic common shares outstanding


28,188,530






28,188,530



27,366,292






27,366,292



25,607,278






25,607,278

Weighted average diluted common shares outstanding


28,188,530






28,188,530



29,005,602






29,005,602



26,508,397






26,508,397

 

B. RILEY FINANCIAL, INC.

Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except share data)




















Three Months Ended








December 31,








2022


2021








As Revised


As Restated

Revenues:








Services and fees

$

243,837


$

308,062


Trading (loss) income and fair value adjustments on loans


(58,670)



54,848


Interest income – Loans and securities lending


62,545



33,443


Sale of goods


134,380



3,961



Total revenues


382,092



400,314

Operating expenses:







Direct cost of services


68,496



12,955


Cost of goods sold


71,313



5,559


Selling, general and administrative expenses


208,552



270,712


Restructuring charge


995




Interest expense – Securities lending and loan participations sold


22,738



12,362



Total operating expenses


372,094



301,588



Operating income


9,998



98,726

Other income (expense):







Interest income


1,482



54


Dividend income


9,595



7,786


Realized and unrealized (losses) gains on investments


(64,874)



14,010


Change in fair value of financial instruments and other


460



(4,471)


Income from equity method investments


285



1,629


Interest expense


(44,399)



(26,441)



(Loss) income before income taxes


(87,453)



91,293

Benefit from (provision for) income taxes


23,998



(23,847)



Net (loss) income


(63,455)



67,446

Net (loss) income attributable to noncontrolling interests






and redeemable noncontrolling interests


(6,010)



3,274



Net (loss) income attributable to B. Riley Financial, Inc.


(57,445)



64,172

Preferred stock dividends


2,002



1,990



Net (loss) income available to common shareholders

$

(59,447)


$

62,182













Basic (loss) income per common share

$

(2.08)


$

2.26

Diluted (loss) income per common share

$

(2.08)


$

2.08













Weighted average basic common shares outstanding


28,545,714



27,569,188

Weighted average diluted common shares outstanding


28,545,714



29,840,704

 

B. RILEY FINANCIAL, INC.

Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except share data)
























































Three Months Ended December 31,








2022


2021








As Previously

Reported


 Adjustments


As Revised


As Previously

Reported


 Adjustments


As Restated

Revenues:




















Services and fees

$

253,432


$

(9,595)


$

243,837


$

315,848


$

(7,786)


$

308,062


Trading (loss) income and fair value adjustments on loans


(123,544)



64,874



(58,670)



68,858



(14,010)



54,848


Interest income – Loans and securities lending


62,545





62,545



33,443





33,443


Sale of goods


134,380





134,380



3,961





3,961



Total revenues


326,813



55,279



382,092



422,110



(21,796)



400,314

Operating expenses:



















Direct cost of services


68,496





68,496



12,955





12,955


Cost of goods sold


71,313





71,313



5,559





5,559


Selling, general and administrative expenses


208,552





208,552



270,712





270,712


Restructuring charge


995





995








Interest expense – Securities lending and loan participations sold


22,738





22,738



12,362





12,362



Total operating expenses


372,094





372,094



301,588





301,588



Operating (loss) income


(45,281)



55,279



9,998



120,522



(21,796)



98,726

Other income (expense):



















Interest income


1,482





1,482



54





54


Dividend income




9,595



9,595





7,786



7,786


Realized and unrealized (losses) gains on investments




(64,874)



(64,874)





14,010



14,010


Change in fair value of financial instruments and other


460





460



(4,471)





(4,471)


Income from equity method investments


285





285



1,629





1,629


Interest expense


(44,399)





(44,399)



(26,441)





(26,441)



(Loss) income before income taxes


(87,453)





(87,453)



91,293





91,293

Benefit from (provision for) income taxes


23,998





23,998



(23,847)





(23,847)



Net (loss) income


(63,455)





(63,455)



67,446





67,446

Net (loss) income attributable to noncontrolling interests

and redeemable noncontrolling interests


(6,010)





(6,010)



3,274





3,274



Net (loss) income attributable to B. Riley Financial, Inc.


(57,445)





(57,445)



64,172





64,172

Preferred stock dividends


2,002





2,002



1,990





1,990



Net (loss) income available to common shareholders

$

(59,447)


$


$

(59,447)


$

62,182


$


$

62,182

























Basic (loss) income per common share

$

(2.08)





$

(2.08)


$

2.26





$

2.26

Diluted (loss) income per common share

$

(2.08)





$

(2.08)


$

2.08





$

2.08

























Weighted average basic common shares outstanding


28,545,714






28,545,714



27,569,188






27,569,188

Weighted average diluted common shares outstanding


28,545,714






28,545,714



29,840,704






29,840,704

 

B. RILEY FINANCIAL, INC.




Adjusted EBITDA and Operating Adjusted EBITDA Reconciliation




(Unaudited)




(Dollars in thousands)




























Year Ended December 31,









2022


2021


2020

Net (loss) income attributable to B. Riley Financial, Inc.


$

(159,829)


$

445,054


$

205,148

Adjustments:













(Benefit from) provision for income taxes



(63,856)



163,960



75,440


Interest expense



141,186



92,455



65,249


Interest income



(2,735)



(229)



(564)


Share based payments



61,140



36,011



18,588


Depreciation and amortization



39,969



25,871



19,369


Restructuring charge 



9,011





1,557


Gain on extinguishment of loans



(1,102)



(6,509)




Impairment of tradenames







12,500


Transactions related costs and other



8,498



5,881



9,531



Total EBITDA Adjustments



192,111



317,440



201,670




Adjusted EBITDA


$

32,282


$

762,494


$

406,818

















Operating EBITDA Adjustments:











Trading loss (income) and fair value adjustments on loans



202,628



(220,545)



(56,677)


Realized and unrealized losses (gains) on investments



201,079



(166,131)



(47,341)


Other investment related expenses



(69,531)



46,211



8,873



Total Operating EBITDA Adjustments



334,176



(340,465)



(95,145)

Operating Adjusted EBITDA


$

366,458


$

422,029


$

311,673

 

B. RILEY FINANCIAL, INC.

Adjusted EBITDA and Operating Adjusted EBITDA Reconciliation

(Unaudited)

(Dollars in thousands)




















Three Months Ended








December 31,








2022


2021

Net (loss) income attributable to B. Riley Financial, Inc.

$

(57,445)


$

64,172

Adjustments:









(Benefit from) provision for income taxes


(23,998)



23,847


Interest expense


44,399



26,441


Interest income


(1,482)



(54)


Share based payments


15,312



12,503


Depreciation and amortization


13,443



6,805


Restructuring charge 


995




Gain on extinguishment of loans





Transactions related costs and other


(5,264)



4,311



Total EBITDA Adjustments


43,405



73,853




Adjusted EBITDA

$

(14,040)


$

138,025













Operating EBITDA Adjustments:







Trading loss (income) and fair value adjustments on loans


58,670



(54,848)


Realized and unrealized losses (gains) on investments


64,874



(14,010)


Other investment related expenses


(7,697)



36,930



Total Operating EBITDA Adjustments


115,847



(31,928)

Operating Adjusted EBITDA

$

101,807


$

106,097

 

Contacts




Investors

Media

Mike Frank

Jo Anne McCusker

ir@brileyfin.com

 press@brileyfin.com

(212) 409-2424

(646) 885-5425

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/b-riley-financial-files-2022-annual-report-on-form-10-k-301773985.html

SOURCE B. Riley Financial

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