B. Riley Financial, Inc. - 6.50 Q2 FY2024 earnings call

• Preliminary net loss for Q2 is in the range of $435 million to $475 million, with operating adjusted EBITDA expected to be $50 million to $55 million.
• Net loss reflects non-cash impairment charges: ~$28 million for Targus, $25 million related to deferred tax benefit, and ~$330 million to $370 million write-down on Freedom VCM investment.
• FRG investment issues: Rapid deterioration in consumer spending, FRG's former CEO misconduct, and Conn's bankruptcy impacted valuation.
• Received SEC subpoenas in July related to dealings with Brian Kahn, and are cooperating with the SEC.
• Pausing dividend to retire outstanding debt and maintain a prudent leverage ratio of 2 to 3x.
• Review of Great American Group business is advancing, focusing on asset appraisal and asset disposition.
• Acquired Interface Consulting International to enhance forensic accounting and litigation support practice.
• 24th Annual Institutional Investor Conference held, with renewed optimism in small cap stocks and interest in energy infrastructure, fintech, and cryptocurrency.

Great American Group business generated approximately $153 million in revenue and approximately $35 million in operating income for fiscal year 2023. The advisory practice formerly known as GlassRatner is on an approximately $23 million EBITDA run rate. Wealth Management is generating double-digit EBITDA. B. Riley Securities delivers value to clients and provides opportunities to subsidiaries.

• Pausing dividend to retire debt and maintain a prudent leverage ratio.
• Continuing to work towards maximizing value from existing principal positions.
• Advancing the review of the Great American Group business and looking to provide updates on that process.

• Impact of FRG's operational issues, consumer spending deterioration, and its former CEO's misconduct on investment valuation.
• Compliance risks related to the SEC subpoenas.
• Potential negative impact on business operating results, financial condition, and stock price from various risks described in the company's annual report.