BRC Group Holdings, Inc.

Good afternoon and welcome to B. Reilly Financial's third quarter 2020 earnings call. Earlier today, B. Reilly issued a press release and presentation detailing its financial results for the third quarter. Copies are available in the investor relations section of the company's website at ir.breillyfin.com. This conference will include a discussion of non-GAAP financial measures. The most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the company's financial results prepared in accordance with GAAP are included in the earnings release. As a reminder, today's call is being recorded. An audio replay will also be available on the company's website later today. Joining us today from B. Riley are Brian Riley, Chairman and Co-CEO, Tom Kelleher, Co-CEO, and Phillip Vaughn, CFO, and COO. After management's remarks, we will open the line for questions. And before we conclude today's call, I will provide the necessary notions regarding forward-looking statements. I will now turn the call over to Mr. Bryant Riley. Mr. Riley, please proceed.

Thanks. Welcome, everyone. Our performance this quarter demonstrates the benefits and resiliency of our diverse platform and business model, as well as the strength of the entire B-Riley team. Despite the lingering impact of COVID-19, we executed our strategy at a high level and delivered solid financial and operational performance. To that end, we generated operating revenues of $194.5 million in the third quarter. This represents year-over-year growth of almost 40%. In addition to our robust top-line growth, operating adjusted EBITDA was $67.2 million compared to $35.2 million in the third quarter of last year, an increase of more than 90%. Year-to-date, we have delivered almost $185 million of operating adjusted EBITDA, which is up 90% compared to the first nine months of last year. We believe that our diverse and differentiated platform helps us to achieve this strong year-over-year growth. Including investment gains, Q3 total revenues increased 26% to $226.3 million, while total adjusted EBITDA in Q3 grew 34% to $94.1 million. As you recall, during the first quarter, we experienced significant unrealized markdowns on our investment portfolio. The initial shock of the COVID pandemic swept through the financial markets. While certain effects of COVID are no longer, business activity across our markets continue to normalize and our investment books further recover and increase rate. We urge shareholders to focus on quarterly operating performance while holding us accountable to the long-term performance of our investment books. Looking ahead, we see an accelerating number of growth drivers across our platform and have strong confidence in our strategy influence. That confidence supports our decision to once again increase our regular quarterly dividend to 37.5 cents a share, up from 30 cents per share. This marks the second consecutive quarter we've raised our regular quarterly dividend. For the past six years, our dividend philosophy has been to pay a lower regular dividend and augment that with special dividends based on the strength of our episodic business. As our business has diversified and become increasingly consistent, we believe that our investors are better rewarded by us instituting a larger regular quarterly dividend of 37.5 cents per share, which annualizes at $1.50 per share. While we would consider a special dividend again in the future, we believe a higher regular dividend is more appropriate for our shareholders given our current business model. Our hope is that we will continue to grow and generate greater net profits and we will be able to increase this regular dividend over time. Additionally, our board of directors has authorized up to $50 million in share repurchases as another means to enhance shareholder returns. With regards to the overall business environment, we remain encouraged by what we're seeing across our businesses, but recognize that COVID will continue to have an impact on market conditions. On prior calls, you heard us talk about our strategic rebranding and our decision to consolidate from legacy businesses under a unified BYU brand. This will enable us to better leverage our collective capabilities and create greater affiliation among our team, and elevate the level of service we deliver to our clients. The rebranding initiative was executed in September, and we are already seeing the benefits. In addition, earlier this month, we announced the launch of a new line of business, B. Reilly Venture Capital. This business is being headed by Todd Sims, who was a B. Reilly board member for four years until he recently stepped down in order to lead our efforts. The strategic mandate of Be Riley VC is simple. Identify and invest in late-stage growth companies on the pathway to entering the public markets. The team will be supported by a strong balance sheet and syndication platform, as well as our diversified platform and resources. We're excited about the potential for Be Riley VC. In addition to the VC effort, we bolstered our sponsor coordination across the enterprise by hiring two individuals who are dedicated to maximize all of the various touchpoints and services we have across the platform with the private equity community. Both have come from bulge-backed firms with extensive experience and relationship with sponsors. Turning to our overall business platform, there were a number of notable highlights in the quarter. In our capital market business, restructuring and SPAC activity remained strong, while our ATM business sustained its momentum in Q3. Our retail liquidation group was very busy throughout the quarter. In Q3, we saw an increase in business activity for this group, in Europe in particular. Challenges remain for brick-and-mortar retailers globally given COVID, and we expect activity levels to remain high as we move through the holiday season and into 2021. During the quarter, we bucked up the Glass Ratner and Great American Appraisal business under one brand, D. Riley Advisor. The latency-graphed Ratner business, which consisted primarily of forensic accounting and litigation support, as well as restructuring and turnaround management, continues its strong work trajectory. Projects hampered by closed courts due to COVID-related shutdowns were more than offset by new mandates. Our legacy Great American appraisal business continues to recover from some of the ABL market weakness related to COVID but continues to generate stable performance. Our real estate group remains active and, at the end of the day, has participated in 17 restructuring projects spanning approximately 1,600 locations. This is an impressive fact given that the vision was formed just earlier this year. Our principal investment companies delivered performance ahead of our expectations and remain key cash flow drivers for our business. And finally, our brand's business experienced some recovery in Q3 as retailers began to reopen for business. Our brand's platform remains a solid cash flow generator for us, and we'll see a number of attractive opportunities in the future. Taken together, these highlights demonstrate the versatility of our business model and how a diversified platform can be a key competitive differentiator during challenging times. I've shared my enthusiasm about our results and how the platform we've built sets us apart as we execute with a singular mission of driving value for our clients and partners. As excited as I am about today, I know there's more to come and more we can do. We're just scratching the surface of our potential, and our recent branding initiatives will help us unlock incremental growth opportunities. Both new and existing B-Riley clients stand to benefit from our expanding platform and commitment to driving success. I want to take a moment to thank the entire B-Riley team. who are already working tirelessly to deliver value to our clients and partners. I believe our ability to maintain that level of commitment, despite the challenges of COVID, further validates our reputation in standing as a current client and is helping us win new ones. Moving forward, our strategic focus is clear. Deliver increased value to our clients and partners across each and every one of our businesses. Doing this will best provision us for long-term sustainable growth generation and increased returns to stockholders. We focused on finishing the year strong and entering 2021 with accelerated momentum across our company. With that, I'll turn the call over to Phil Ahn, our CFO and COO, to discuss some financial metrics from the quarter. Phil?

Thanks, Brian, and welcome, everyone. For the quarter, V. Reilly reported total revenues of $226.3 million and total adjusted EBITDA of $94.1 million. This was an increase from Q3 of last year, which recorded $180.1 million in total revenues and adjusted EBITDA of 70.3 million. Net income available to common shareholders was 47.3 million, or $1.75 per diluted share, compared to 34.3 million, or $1.21 per diluted share for the prior year period. This increase was primarily due to increased activity across most of our businesses, as well as further recovery of our investment book. Turning to our reportable segments, Our capital market segment, which includes our investments, as well as our operating results from our investment bank and brokerage, our bankruptcy and litigation financial consulting business, and our wealth management and fund management businesses. Excluding investment gains, our capital market segment generated operating revenues of $115.1 million and segment operating income of $37.9 million during the third quarter. These results were primarily driven by increased fees in advisory services the addition of our real estate business, and an increase in income related to minority investments. Turning to our auction liquidation segment, our retail liquidation business contributed revenues of $44.2 million and segment income of $12 million. We concluded many successful engagements in the third quarter as market activity in the U.S. and Europe picked up following the initial impact of COVID back in March. As we have noted on prior earnings calls, our liquidation segment results can vary from quarter to quarter and year to year due to the impact of large-scale retail liquidation. Looking ahead, as Bryant noted, we expect additional global retail liquidations in the coming quarters. Our valuation of appraisal segment generated $9.7 million in revenue and $3 million in segment income in the third quarter. Appraisal activity continues to recover from COVID-related slowdown earlier this year, but the key metrics we used to measure the progress increased on a sequential basis. We're pleased to see the rebound in this business, which remains a valuable and consistent source of flow generation. During the third quarter, our principal investment segment companies, United Online and MagicJack, generated revenues of $21.6 million and segment income of $8.4 million. These businesses are drivers of cash flow for our overall platform, and both delivered strong quarterly results. Last is our brand segment. which, as a reminder, was established back in the fourth quarter of 2019, is comprised of our interest in intellectual property and related assets of several fashion brands. Our brand's portfolio contributed licensing revenue of $4 million in the third quarter and encouraged segment income of $2.3 million. We continue to be excited about the future growth opportunities for this business. Now, turning to some highlights from our balance sheet, at September 30th, B-Rally Financial head, $169.7 million in unrestricted cash and cash equivalents, $19.6 million in due from clearing brokers, $411.4 million in net securities and other investments owned, and $330.4 million in loans receivable, net of loan participation sold. As of September 30th, we had total cash and investments balance of $991.7 million, which includes $58.4 million of other equity investments included in prepaid and other assets. Total cash and investments net of debt, including investments reported in our prepaid and other assets, was approximately $83.6 million. And total B-Raleigh financial stockholders' equity was $373.9 million at quarter end. During the quarter, we repurchased over 450,000 shares under our existing share repurchase program. Year-to-date through September, we've bought back approximately 1.7 million shares. Shares outstanding at the end of the quarter totaled approximately 25.4 million. Lastly, as Brian noted, we are increasing our regular dividend to 37.5 cents per common share from the previous dividend of 30 cents. Our total quarterly cash dividend of 37.5 cents per common share will be payable to stockholders of record as of November 10, 2020, on or about November 24, 2020. That completes my financial summary. Now I'll turn the call over to our co-CEO, Tom Kelleher, to share a few quarterly highlights from our individual operating units. Tom?