B. Riley Financial, Inc. (NASDAQ:RILY) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 04:30 pm ET


B. Riley Financial, Inc. (NASDAQ:RILY) Q2 2020 Earnings Conference Call - Final Transcript


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Good afternoon, and welcome to the B. Riley Financial Second Quarter 2020 Earnings Conference. Earlier today, B. Riley issued a press release and presentation detailing its financial results for the second quarter. Copies are available in the Investor Relations section of the company's website at ir.brileyfin.com.

As a reminder, today's call is being recorded. An audio replay will also be available on the company's website later today. Joining us from B. Riley are Bryant Riley, Chairman and Co-CEO; Tom Kelleher, Co-CEO; and Phillip Ahn, CFO and COO. After management's remarks, we will open the line for questions. And before we conclude today's call, I will provide the necessary cautions regarding forward-looking statements.

I will now turn the call over to Mr. Bryant Riley. Mr. Riley, please begin.

Bryant Riley

Thanks. Welcome, everyone. Our second quarter results demonstrated solid performance from our operating businesses, along with a sharp rebound in our investments.

Last quarter, we described the unrealized markdowns on our investment results as a moment in time valuations. Those losses were significantly reduced with investment gains of $114.5 million in the second quarter as a result of the market rebound. In the second quarter, our businesses generated $151.9 million in operating revenues and operating EBITDA of $46.8 million. Taken together, these results contributed to consolidated revenues of $266.5 million and total adjusted EBITDA of $148.3 million. And while forward visibility is generally difficult to predict in the markets that we serve, especially the more episodic businesses, we are encouraged by several developments at the end of Q2, which point to a sustained level of activity and a robust set of opportunities on the near horizon.

Investment banking and brokerage has been a beneficiary of the market rebound. Our banking team closed several noteworthy capital markets transactions in Q2 and are engaged in several other deals that are due to close in the coming quarters. At the same time, our countercyclical businesses also saw a meaningful uptick in new engagements at the end of the quarter following the pause in activity in late March. Our bankruptcy advisory and banking restructuring groups signed a record number of new matters [Phonetics] in June. Our retail liquidation group has seen a significant increase in activity as COVID continues to impact retailers and has been engaged to operate over 1,000 stores a day. And our real estate disposition team has also signed multiple assignments since joining our firm this past February.

We expect activity levels will remain high through year-end and into 2021 as a result of the immense pressure on companies during this period and if COVID-19 accelerates challenges of brick-and-mortar retailers. Meanwhile, our steadier businesses continue to perform to balance our more episodic businesses. This includes our Principal Investment companies, United Online and magicJack and our appraisal and wealth management businesses. Importantly, our platform and diversified business model continues to deliver amid the challenges being created by the current environment, and we believe there will be more opportunities for us to capitalize in the near-term future.