Press release·12/16/2025 00:57:04

Overview of the Company’s Financial Performance

B. Riley Financial, Inc. (soon to be renamed BRC Group Holdings, Inc.) is a diversified portfolio of companies operating in five reportable segments: Capital Markets, Wealth Management, Communications, Consumer Products, and E-Commerce. The company reported total revenues of $411.4 million for the six months ended June 30, 2025, an increase of 4.8% compared to the prior year period.

The increase in revenues was primarily driven by a $180.5 million favorable variance in fair value adjustments on loans, as well as a $60.5 million increase in trading gains. However, this was partially offset by decreases in revenues from services and fees ($112.4 million), interest income from securities lending ($59.6 million), and interest income from loans ($33.6 million).

The company reported net income attributable to B. Riley Financial, Inc. of $129.5 million for the six months ended June 30, 2025, compared to a net loss of $482.8 million in the prior year period. This significant improvement was largely due to the favorable changes in fair value adjustments on loans and trading gains, as well as gains on the sale and deconsolidation of businesses and the exchange of senior notes.

Revenue and Profit Trends

Looking at the performance of the individual segments:

• Capital Markets: Revenues decreased $46.3 million, or 41.9%, primarily due to declines in investment banking and advisory fees. Segment profit decreased $18.1 million, or 17.3%, due to lower compensation and other expenses.

• Wealth Management: Revenues decreased $20.7 million, or 20.5%, driven by a reduction in assets under management and associated advisory fees. Segment profit decreased $13.8 million, or 13.9%, due to lower headcount and compensation costs.

• Communications: Revenues decreased $34.9 million, or 22.0%, mainly from declines in subscription revenue across the segment’s various telecom businesses. Segment profit decreased $8.8 million, or 17.8%, due to lower headcount, amortization, and occupancy costs.

• Consumer Products: Revenues decreased $17.6 million, or 17.1%, primarily from lower sales volumes in the Targus business. Segment profit decreased $4.3 million, or 12.5%, due to reduced compensation and other expenses.

• E-Commerce: Revenues increased $1.3 million, or 55.8%, from the Nogin business, which was deconsolidated in the first quarter of 2025. Segment profit increased $2.4 million, or 39.6%, due to the Nogin operations.

The company’s overall profitability improved significantly, with net income attributable to B. Riley Financial, Inc. of $129.5 million compared to a net loss of $482.8 million in the prior year period. This was driven by the favorable changes in fair value adjustments on loans, trading gains, and gains on business transactions, which more than offset the declines in revenue and profits across the operating segments.

Strengths and Weaknesses

Strengths:

• Diversified business model with exposure to various industries and asset classes
• Ability to generate significant gains from fair value adjustments on loans and trading activities
• Successful execution of business divestitures and senior note exchanges, providing liquidity
• Strong cash position and access to financing to support operations and growth

Weaknesses:

• Declining revenues and profitability in core operating segments, particularly Capital Markets and Wealth Management
• Reliance on episodic investment banking and advisory fees, which can be volatile
• Impairment charges related to goodwill and tradenames in the Consumer Products segment
• High debt levels, with $1.5 billion in borrowings outstanding as of June 30, 2025

Outlook and Future Prospects

Looking ahead, the company’s financial performance will likely continue to be influenced by the trends in its core operating segments, as well as its ability to effectively manage its debt obligations and liquidity position.

The Capital Markets and Wealth Management segments face headwinds from the decline in investment banking and advisory activities, as well as the reduction in assets under management. The company will need to focus on diversifying its revenue streams and finding new sources of growth in these areas.

The Communications segment’s performance will be critical, as the company looks to stabilize and potentially grow its telecom businesses amid the ongoing industry challenges. The success of the E-Commerce segment, particularly the Nogin business, will also be an important factor in the company’s future prospects.

To address its high debt levels, the company has been actively exploring various funding options, including additional debt exchanges, refinancing, and the sale of operating companies or investments. The company’s ability to effectively manage its capital structure and liquidity will be a key determinant of its long-term financial health.

Overall, BRC Group Holdings, Inc. (formerly B. Riley Financial, Inc.) faces a mix of opportunities and challenges. While the company has demonstrated its ability to generate significant gains from its investment activities, it will need to focus on improving the operational performance of its core business segments to drive sustainable profitability and shareholder value.