BRC Group Holdings, Inc.

The line is muted.

Today's call includes prepared remarks from the company, followed by a question and answer session. Joining us today from B. Riley are Bryant Riley, Chairman, Co-Founder, and Co-CEO, Tom Kelleher, Co-Founder, and Co-CEO, and Philip Ahn, CFO and COO. After management's remarks, we will open the line for questions. Please note that all participants will be on a listen-only mode until the Q&A portion of the call. As a reminder, this call is being recorded. An audio replay will be available on the company's investor relations website later today. And before we conclude today's call, I will provide the necessary cautions regarding forward-looking statements. Now, I will turn the call over to Mr. Bryant Riley. Mr. Riley, you may proceed.

Welcome, and thanks for joining our call this afternoon. Throughout 2022, we continued to execute our strategy amid a tough environment, with markets taking back the investment gains we saw in 2021, contributing to a net loss of $168 million for the year. Despite the marks in our investment portfolio, we delivered operating revenues of $1.3 billion in 2022, which is close to where we were at the end of 2021, during a record year that produced operating revenues of $1.4 billion. It is important to put this into perspective. The income and losses over the last two years were largely influenced by our investment portfolio. And over the course of 2021 and 2022, our investment book is effectively flat. During that period, we made approximately $10 per basic share and generated an operating EBITDA of over $780 million. Additionally, during that time, we continued to diversify our business and implement a strategy we began five years ago. which is to invest our excess episodic cash flows into recurring operating businesses that will generate strong cash flows even when our episodic businesses are slow. Our operating performance in 2022 highlights the benefits of this strategy. To highlight this bit further, consider that our investment banking and institutional brokerage business represented roughly 60% of our operating EBITDA in 2021 versus about 10% in 2022. During that same period, overall operating EBITDA declined by less than 20%. Since our inception as a sub-$50 million market cap publicly traded company in 2014, we have delivered in excess of $21 per share or over $570 million in common stock dividends to our shareholders. We have had meaningfully up and down years, and through all cycles, our diversified platform has demonstrated strength and resiliency to yield meaningful returns for our business and our shareholders, including in previous stock market cycles. We are and will continue to be opportunistic. As I mentioned, we made several strategic acquisitions this past year to bolster our platform with additional uncorrelated sources of steady revenue and to enhance capabilities where we see opportunities for longer-term growth. These additions include Targus, which has already contributed meaningful growth in our results, Bullseye Telecom and Lingo, which have enhanced the cash flows generated by our communications segment, and FocalPoint, which has expanded our M&A, debt, and restricting advisory capabilities as part of B-Riley Securities. In addition, we added to our receivables portfolio. This has been a great investment that continues to perform with double-digit rates of return. Since our unlevered purchase of the first portfolio for $400 million, and as of yesterday, we have recovered approximately $395 million of cash and have an incremental $154 million of current receivables. We typically recover 7% to 8% of our receivables per month. The second portfolio that we've purchased in partnership with Pathlight Capital is performing in line with our expectations, and we expect to have an IRR in excess of 40%. Speaking to our corporate loan portfolio, at year end, we had 12 loans with a total failed value of $384 million. This excludes our bad clock or unreceivable portfolio and a few loans under a million of fair value. Approximately 95% of our loan portfolio fair value was represented by secured loans. As a general view, we believe that our loan portfolio, which is almost entirely fair valued by an outside valuation firm, provides a very attractive risk-adjusted returns potential for us over the course of the year. We have received a number of calls on this portfolio, so I will outline a few highlights of our loan portfolio activity for 2022 and including activity thus far for 2023. We received a total paydown by Srento of their $41 million loan. We received a $15 million paydown of our Cadiz loan. We received an $11 million paydown of our Excel loan. The last loan I will update is our Core Scientific loan. We provided Core with a $42 million loan against Future Equity Sales, which now is an unsecured claim in the bankruptcy. We also provided a $70 million dip, of which $35 million has been funded, in order to have a greater speed at the table during the bankruptcy. At the time, our $42 million loan was marked to less than $8 million, which is reflected in our 2022 results. And since that time, Bitcoin has risen from $16.5 million to $24 million, and power costs consisting of mostly natural gas have declined meaningfully. We will continue to utilize our balance sheet to facilitate opportunities for our clients and provide strong returns for our constituents. In summary, we like where we sit heading into 2023 from an earnings power, liquidity, and opportunity perspective, and we will continue to keep our heads down to perform for our colleagues, our clients, our partners, and our shareholders. With that, I'll turn the call over to Phil Hahn, our CFO and COO, to discuss key financial metrics for the quarter. Then Tom Kelleher, our Co-CEO, will discuss results from our business segments before we open up for questions. Over to you, Phil.