Estimates Operating Adjusted EBITDA range of $90-100 million for Q4 2022; and $355-$365 million for FY2022
LOS ANGELES, Dec. 27, 2022 - B. Riley Financial, Inc. (NASDAQ: RILY) ("B. Riley" or the "Company") today released fourth quarter guidance for Operating Adjusted EBITDA in the range of $90 million to $100 million. For the full year 2022, the Company estimates Operating Adjusted EBITDA in the range of $355 million to $365 million.
The Company estimates investment losses in the range of ($125 million) to ($150 million) for the fourth quarter of 2022, and ($405 million) to ($430 million) for the full year 2022. Estimated mark-to-market investment losses reflect continued softness in small cap markets.
Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial, commented: "It is important to put these numbers into perspective. Over the past two years, we will have delivered Operating Adjusted EBITDA in excess of $775 million (at the lower end of our fourth quarter guidance). Meanwhile, returns from our investment portfolio over the past two years are close to flat despite an approximate 11% decline in the Russell 2000 for the same period. Institutional brokerage accounted for 68% of our Operating Adjusted EBITDA in 2021 compared to 15% percent year-to-date through September 30, 2022. Despite the year-over-year decline in brokerage, our diversified model has created a platform whereby we have been able to deliver our dividend to our shareholders and still maintain sufficient liquidity to take advantage of future opportunities."
Guidance for Operating Adjusted EBITDA includes contributions from Targus since its acquisition on October 19, 2022. The Company reported Operating Adjusted EBITDA of $422.0 million for the full year 2021. Operating Adjusted EBITDA is Adjusted EBITDA (as defined below) excluding trading income (losses) and fair value adjustments on loans and other investment related expenses. Operating Adjusted EBITDA and Adjusted EBITDA are non-GAAP measures; see "Note Regarding Use of Non-GAAP Financial Measures" below.
The Company estimates total cash and investments to be approximately $2.15 billion at year-end. Total debt is estimated to be approximately $2.5 billion at year-end.
As disclosed in previous filings, the Company's investment portfolio comprises certain debt and equity securities and loans. Loans in the Company's investment portfolio were valued at approximately $815 million at September 30, 2022, of which $776 million comprised secured loans to borrowers and $39 million were unsecured.
Investments related to digital asset mining and crypto service businesses were valued at approximately $52 million at September 30, 2022, including $49 million in loans receivable and $3 million in equities and senior notes, representing approximately 2% of total cash and investments at quarter-end. Potential fourth quarter 2022 exposure of related investments is estimated to be approximately $39 million, of which $26 million represents a loan to a borrower that has since filed for bankruptcy.
To read the full announcement, click here.