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Friday, Jan 27, 2023
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Diversification Working for B. Riley Financial

B. Riley Financial Inc. is firing on all cylinders when it comes to pushing all its operating units to create wealth for shareholders. That was the takeaway from Bryant Riley, co-chief executive of the Woodland Hills financial services company, when discussing in late October its third quarter financial results. The firm’s participation in transactions, which includes some combination of subsidiaries Great American Group LLC, GlassRatner Advisory & Capital Group, B. Riley FBR and B. Riley Wealth Management, are becoming more commonplace, Riley said. “Being able to pool from all of these resources, while also utilizing our balance sheet, has created more opportunities and better returns than we could have expected,” Riley said during the conference call. “While we are excited by these opportunities, and are aggressively pursuing them, none of this would be possible without the continued momentum, leadership and buy-in from our various operating entities.” GlassRatner is a financial consulting firm in Atlanta that was acquired in August 2018. B. Riley FBR is an investment bank in Los Angeles that was the result of a merger between B. Riley & Co. and FBR Capital Markets & Co. in 2017. Great American Group Inc., a provider of appraisals, lending and retail liquidation services, combined with B. Riley & Co. in 2014, the same year the company changed its name to B. Riley Financial. The company reported back in October an adjusted net income of $40 million ($1.42 a share) for the quarter ending Sept. 30, compared with adjusted net income of $6.4 million (24 cents) in the same period a year earlier. Revenue increased by 80 percent to $180 million B. Riley is expected to release its fourth quarter earnings by the end of the month. But last month the company released fourth quarter guidance that gave a preliminary net income range of $15 million to $17 million. For the full year, the preliminary net income range was calculated at $79.5 million to $81.5 million. On the same day it announced the guidance, the company also reported it would buy back 880,000 shares for an aggregate amount of about $21.5 million. The buyback is a block purchase from an existing stockholder as part of a privately negotiated transaction. At the time of the deal, Riley said the company’s repurchase program was an integral part of its capital allocation strategy and reflected a continued focus on increasing shareholder value. “With this transaction, we have repurchased approximately 2.8 million shares and warrants since January 2018 which represent an amount equivalent to approximately 10 percent of our outstanding shares,” Riley said in a statement. The market responded positively to the news, sending B. Riley’s shares up on Jan. 22 and the following day before dropping. The shares hit a high for the year of $27.96 on Jan. 30. Shares closed at $26.73 on Feb. 12. Fashion investment In the conference call to discuss the third quarter results, Riley gave some details about the company’s newest investment of $117 million in six fashion brands: Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too and Nanette Lepore. B. Riley owns a majority stake in the brands, with BlueStar Alliance having a minority stake. The company also invested in BlueStar’s acquisition of the Hurley surf apparel brand from Nike Inc. “We have options to continue to make investments hand-in-hand with Bluestar,” Riley said during the call. “It is important to note that we have no intention of managing these brands. We cannot think any higher than we do of our partners, and we will stay out of their way as they continue to work to develop and grow.” Another deal in which B. Riley is standing out of the way was its $22.9 million deal from November 2018 to take a majority stake in New York financial services firm National Holdings Corp. Asked about the deal by an analyst during the conference call, Riley explained that the company signed a three-year standstill agreement – or an agreement not to take further action against the company – and was only a board observer. “We have worked together on a number of transactions, but that is a separate business, a separate public company that we are an investor in,” Riley said. “We’ve been pleased with the back-and-forth between the two companies and being able to work with them, but, at this point, we are really a passive holder.” National Holdings offers retail brokerage and advisory services, institutional sales and trading, equity research, financial planning and other services similar to what B. Riley subsidiaries offer.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.
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