B. Riley Financial ((RILY)) has held its Q4 earnings call. Read on for the main highlights of the call.
B. Riley Financial’s recent earnings call painted a mixed picture of the company’s current financial landscape. While strategic partnerships and asset sales have provided significant financial benefits and growth opportunities, these positives were overshadowed by substantial financial losses from continuing operations, impairment charges, and ongoing debt challenges.
Strategic Partnership with Oaktree Capital
B. Riley Financial has entered into a joint venture with Oaktree Capital Management for Great American Group. This partnership has brought in approximately $203 million in cash and 44% ownership in the company, highlighting a strategic move to strengthen financial standing and expand business opportunities.
Successful JOANN Liquidation Bid
The collaboration with Oaktree has also enabled B. Riley to secure a significant liquidation opportunity with JOANN fabric and craft stores. This transaction represents a $2 billion retail inventory deal, showcasing the company’s ability to leverage partnerships for substantial business ventures.
Sale of Wealth Management Business
In a move to streamline operations, B. Riley has announced a definitive agreement to sell a portion of its traditional W-2 Wealth Management business to Stifel Financial Corp. for approximately $26 million. This sale is part of the company’s strategy to focus on core business areas.
New Credit Facility with Oaktree
B. Riley has established a new $160 million senior secured credit facility with Oaktree, providing greater financial and strategic flexibility. This facility is expected to support the company’s ongoing operations and strategic initiatives.
Sale of Atlantic Coast Recycling
The company has successfully sold Atlantic Coast Recycling for approximately $70 million in cash, resulting in a $30 million gain. This sale is part of B. Riley’s efforts to monetize non-core assets and improve financial health.
Net Loss from Continuing Operations
B. Riley reported an expected net loss from continuing operations ranging from $178 million to $187 million. This loss is primarily attributed to impairment charges and trading losses, reflecting ongoing financial challenges.
Impairment Charges and Investment Losses
The company has estimated impairment charges between $73 million and $79 million, along with $49 million in trading losses. These figures underscore the financial hurdles B. Riley is currently facing.
Debt and Financial Uncertainty
With total debt standing at $1.78 billion, B. Riley faces ongoing challenges with outstanding debt maturities. Despite a notable decline of $221 million from the third quarter, financial uncertainty remains a critical concern for the company.
Forward-Looking Guidance
Looking ahead, B. Riley Financial has outlined several key financial metrics and strategic initiatives for the 2024 fiscal year. The company expects net income available to common shareholders to range from $48 million to $68 million, influenced by income from discontinued operations. The anticipated diluted net income per share is between $1.57 and $2.22. B. Riley plans to focus on its core businesses, including B. Riley Securities and Wealth Management, while addressing debt maturities and continuing to monetize non-core assets.
In conclusion, B. Riley Financial’s earnings call reflects a company navigating through a complex financial landscape. While strategic partnerships and asset sales offer promising growth opportunities, substantial financial losses and debt challenges remain significant hurdles. The company’s forward-looking guidance suggests a focus on core business areas and strategic initiatives to improve financial health.