BRC Group Holdings, Inc.

Good afternoon and welcome to B. Reilly Financial's first quarter 2021 earnings call. Earlier today, the company reported its first quarter results in a press release, which is available on the company's investor website at ir.breillyfin.com. Today's conference call will include a discussion of non-GAAP financial metrics. For more information about these metrics and a reconciliation to the nearest GAAP measures, please refer to the company's earnings release and a financial supplement which can be found in the investor section of the company's website. 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. Reilly are Bryant Reilly, Chairman and Co-CEO, Tom Kelleher, Co-Founder and Co-CEO, and Philip Ahn, CFO and COO. After management's remarks, we will open the lines for questions. Before we conclude today's call, I will provide the necessary cautions regarding forward-looking statements. I will now turn the call over to Mr. Bryant Riley. Mr. Riley, you may proceed.

Thanks. Good afternoon and welcome, everyone. I'll begin with providing a summary of the quarter and a high-level overview of the current state of our overall business. Phil Ahn, our CFO and COO, will cover key financial metrics, And then my partner and co-CEO, Tom Kelleher, will share more detail about our individual business units. We're pleased to report another strong quarter for B-Riley Financial. Revenues totaled $600.2 million, with total adjusted EBITDA of $385.5 million. Our strong operating results were enhanced by equally strong performance from our investment book, which resulted in an exceptional first quarter. Continued strength in the market helped drive outsized investment gains of approximately $267 million from our investment book. Excluding these gains, operating revenues for the quarter were $333.2 million, with $122.7 million of operating adjusted EBITDA. Our operating results reflected the upside from a strong quarter for investment banking, coupled with the steady and recurring contributions from the balance of our business units, principal investments, consulting and appraisal, wealth management, and brands. Investment banking has been the beneficiary of significant deal flow. We're participating in larger transactions while continuing to stick to our core roots, advising small to mid-cap companies as they look to grow their business. We view our clients as long-term partners and are proud of the many clients for which we have done multiple transactions over a long period of years. We believe our continued focus in the small to mid-cap arena, which we have been focusing on for almost 25 years, is recognized and appreciated by our clients on all sides of our businesses. While our first quarter results benefited from the upside in banking activity, this is just one component of our overall business. Our pipeline and the balance of our activity remains highly diverse. Bankruptcy restructuring activity continues to drive our consulting business, which set another record for revenue during the month of March. In January, we were named Middle Market Turnaround Consulting Firm of the Year by Global M&A Network, validating our leadership in restructuring and increased recognition of our brand in the market. In February, we completed the acquisition of National Holdings. Together with our legacy wealth management business, we've added some really terrific talent with nearly 700 new registered reps. And with $31 billion in combined assets as of March 31st, this addition provides meaningful scale and distribution to our overall platform. During the quarter, our appraisal business, brands portfolio, and principal investment companies continue to perform steadily, serving as an important contribution of cash flow for our platform. And while it has been a slower environment for retail liquidations, we're continuing to work with retailers to navigate issues that existed pre-COVID. Coming off two strong quarters, our results demonstrate the earnings power of our platform. We recognize we're in a highly cyclical business, and with the diversity of our platform, we believe B. Riley is exceptionally well-positioned to support our clients and partners through both up and down cycles. In summary, we have operating results, which include the businesses that perform services for our clients and generate cash flow, and our strategic investments, which are often enhanced through utilization of our business services and have the potential to produce outsized returns. In taking a balanced approach to capital allocation, we also strongly believe it is important for our shareholders to share in our success. To that end, we have declared a total dividend of $3 per share, which approximates the free cash flow generated by our businesses during the quarter. We have returned approximately $345 million to our shareholders through dividends and share repurchases since 2017. With a strong balance sheet of over $650 million in cash and investments, net of debt at the end of the quarter, we feel a meaningful return of our capital to our shareholders is warranted and can be done while continuing to aggressively invest in our business. Taken together, this has been one of the strongest periods in B. Reilly's history, and by many measures. Last month, B. Reilly Financial was added to the S&P 600, It has been truly exciting and gratifying to see the growth of our company over the past five years, and our continued momentum only validates our strategy. We could not have accomplished this success without the hard work and dedication of our world-class team of professionals. We believe in the strength of our people and our platform to continue to deliver for all of our stakeholders in the years ahead. It is truly amazing what has been accomplished in the last year. With that, I'll turn the call over to Phil to share a brief summary of our financial metrics for the quarter.

Phil? Thanks, Bryant. For the three months ended March 31, B Reilly Financial reported total revenues of $600.2 million and total adjusted EBITDA of $385.5 million. Net income available to common shareholders was $252.9 million, or $8.81 per diluted share. Our first quarter results included investment gains of $266.9 million, which primarily relate to mark-to-market valuations on our strategic investments. Excluding investments, operating revenues of $333.2 million represented an 83 percent increase compared to operating revenues of $182.2 million for the prior year quarter. Operating adjusted EBITDA increased by 73 percent to $122.7 million, up from $70.9 million for the prior year period. As a reminder, adjusted EBITDA and metrics for operating investment results are non-GAAP financial measures. For a definition of these terms, as well as a reconciliation to the nearest gap measures, please refer to our earnings release. Additional details related to our operating metrics can also be found in the financial supplement located on our investor relations website. And as noted on previous calls, we continue to review our reportable financial metrics to provide our investors with greater visibility into our overall performance and results of operations. During the quarter, we have added wealth management as a sixth reporting segment in conjunction with our acquisition of national holdings in February. Wealth management was previously reported under our capital market segment, and we have recast our segment presentations in the relevant materials to reflect these changes. Now turning to our segment results, capital markets is our largest segment and includes our investments and operating results from investment banking, institutional brokerage, and our fund management businesses. Excluding investment gains, Capital markets operating revenues increased 118% to $207.9 million, up from $95.5 million for the prior year period. Segment operating income totaled $106 million. As noted earlier, wealth management includes results from our recent acquisition of National in addition to our existing business. Wealth management generated revenues of $67.9 million for the quarter, and segment income was $4 million. Combined client assets under management totaled approximately $31 billion as of March 31, 2021. Auction liquidations generated revenues of $13.5 billion for the quarter, and segment income was $907,000. As we have noted on prior earnings calls, our liquidation segment results tend to vary from quarter to quarter and year to year due to the impact of large retail liquidation projects. Financial consulting revenues increased to $21.4 million compared to revenues of $20.7 million for the prior year period. Segment income was $3.3 million. Principal investments, which includes results from MagicJack United Online, contributed revenues of $20.5 million and segment income of $7.5 million for the first quarter. Lastly, our brand segment, which includes licensing revenues related to our brand investments portfolio, generated revenues of $4.5 million and segment income of $3.1 million. Now turning to some highlights from our balance sheet, as of March 31, B. Ronnie Financial had $237.6 million in unrestricted cash and cash equivalents, over $870 million in net securities and other investments owned, and $282.9 million of loans receivable, net of loans participation sold. We had a total cash and investments balance of approximately $1.9 billion. which includes $49 million of other equity investments included in prepaid and other assets. Net of debt, B. Riley Financial's cash and investments totaled over $650 million at quarter end. Finally, we declared a total dividend of $3 related to our first quarter earnings. This includes our $0.50 regular quarterly dividend and a special dividend of $2.50. The quarterly dividend will be paid on or about May 28th to common stockholders of record as of the close of business on May 17th. That completes my financial summary. I'll turn the call over to our co-CEO, Tom Kelleher, to discuss our individual business units.