BRC Group Holdings, Inc.

Good afternoon, and welcome to B. Reilly Financial's first quarter 2023 earnings call. My name is Harry, and I will be your call coordinator. Earlier this afternoon, B. Reilly issued its first quarter earnings release and financial supplement. Copies can be found on B. Reilly's investor relations website at ir.breillyfin.com, or on the right side of your screen if you are joining us today via web. Today's call includes prepared remarks from the company to be followed by a question and answer session with company management. Joining us today from B. Reilly are Bryant Reilly, 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. If you would like to ask a question and you are dialed in via phone, please press star 1. If you have joined us via web, click on the raise hand icon on the right side of your Deal Roadshow screen. As a reminder, today's call is being recorded. and an audio replay will be available on the company's investor relations website later today. Finally, before we conclude today's call, I will provide the necessary caution regarding forward-looking statements. Now I will turn the call over to Mr. Brian Riley. Mr. Riley, you may proceed.

Thanks, Operator, and welcome, everyone. Our first quarter results again demonstrate the versatility and resiliency of our platform. During the first quarter, we generated total revenues of $432 million, including operating revenues of 380 million and 80 million of operating EBITDA. To deliver these results in a period with minimal contribution from our episodic businesses, which historically served as our largest profit drivers, only validates our strategy. This was not by accident. We appreciate the markets we serve are volatile. Over the past five years, we undertook several initiatives to further enhance and diversify our platform and generate an excessive amount of cash to fund our business model. We made a series of strategic acquisitions and expanded our sources of steady and recurring earnings to further insulate our business from any downturn in capital markets like the one we are seeing today. The benefits of this strategy were highlighted by our quarter and by the fact, despite a lack of large banking and retail liquidation deals during the quarter, we continue to generate enough free operating cash flow to cover our dividend, our overhead, our tax, and our interest requirements. This strategy allows us to play offense while others are contracting. For example, in Q4, we made a large push to expand our middle market health care service practice, which is already beginning to bear fruit. In February, we brought on a team of about 45 professionals from Farber to complement our advisory services. And we recently announced several senior level hires in consumer and have also boosted our TMT business with multiple senior hires that will be announced shortly. Tom will expand on this a little bit more, but this is taking place across all our businesses, and we continue to invest to grow our talent base in line with client demand. As we look at our strategic equity investments, the equity markets continue to prove challenging. In contrast, our loan book is benefiting from stressed environment for lenders and create a multitude of opportunities for us. As it relates to our balance sheet, over the last year and a half, we have shifted a meaningful amount of our investments into our loan book. And we believe that this is not only opportunistic, but also benefits our clients in a number of ways. A recent example of this strategy is Harrow Health. We provided Harrow with $60 million in debt financing in January to support an acquisition and previously helped the company raise $65 million as lead book lender on its equity and notes offering in December. This fully backstopped commitment of $125 million helped the finances acquisition, and our loan was repaid in full in March. This is just one example of how we've utilized our balance sheet to partner with our clients and enable their continued success. As we mentioned last quarter, we were providing a little more detail on our loan portfolio, which you will see in our quarterly supplement. At the end of 2022, we had 12 companies in our loan portfolio, which was fair valued at approximately $380 million. This excludes our Badcock furniture receivables portfolio and a few smaller loans at less than $1 million at fair value. Since year end, two of those 12 positions were closed out and repaid in full. We invested an additional $112 million across five new loans during the quarter, of which $65 million was repaid within the quarter. At quarter end, our loan portfolio was valued at approximately $448 million across 14 companies with an average loan size of approximately $34 million. Our combined Badcock furniture receivables portfolio was valued at approximately $320 million at year end, of which we expect 8% to be paid down every month. During the quarter, we made an additional investment in our receivables portfolio. We continue to see performance in line with our underwriting with 25 plus rates of return. Regarding our unleveled purchase of the first portfolio, as of March, we have recouped our initial investment of $400 million, and today have an incremental 112 million of current receivables. We expect to generate unlevered IRR of greater than 25%. The second portfolio that we purchased in partnership with Pathlight Capital using leverage is performing in line with our expectations. The debt associated with that purchase stood at 176 million and will be paid down rapidly as receivables are collected. We expect to have a levered IRR of over 40% on this portfolio. As the general lending environment tightens and market volatility and distress continue to accelerate, we are well positioned to deliver value to our clients, both in a capacity as a lender and as a strategic advisor to companies navigating a restructuring and distress situation. And while we are opportunistic, we remain diligent about our capital allocation and assessing the various opportunities being presented by the current dislocation of markets. For example, we participated in Blue Star Alliance's recent acquisition of Scotch & Soda, which is a men's clothing brand. This investment builds on the success of our long-standing relationship with Blue Star and enhances our existing brands business, which has generated meaningful returns for us since its inception on our platform in late 2019. Similar to our prior co-investments with Blue Star, which included the Hurley brand, the Justice brand, and our Six Brands portfolio, Bluestar will continue to operate the Scotch and Shota brand while expanding its distribution strategy and introducing the brand to new consumer demographics. As we look ahead, we see many opportunities to capitalize on the dislocations being presented by the current market environment. We recognize and appreciate that our story becomes a little more complex as we further diversify our platform. However, we remain steadfast in our approach and in our commitment to deliver for our colleagues, clients, partners, and shareholders. With that, I'll turn the call over to Phil Onn, our CFO and COO, to discuss key financial metrics for the quarter. Our co-CEO, Tom Kelleher, will discuss results from our business segments before we open for questions. Phil?

Thanks, Brian. For the first quarter of 2023, B. Reilly reported net income available to common shareholders of $15 million, or $0.51 per diluted share. Income before taxes was approximately $24 million. Total revenues were 432 million for the first quarter of 2023. This represented a 75% increase compared to total revenues of 247 million in the prior year period. Total adjusted EBITDA increased to 95 million, up from 41 million in the prior year period. Excluding investment gains and losses, operating revenues were 381 million, which represented an increase of 43%. up from $266 million in the prior year quarter. Operating adjusted EBITDA for the quarter was $80 million, down slightly from $84 million in the prior year quarter. Our quarterly results were enhanced by our recent acquisitions, including Lingo and Bullseye Telecom, which we acquired last May and August, respectively, and Targus, which we acquired in October of last year. These additions to our platform served as an offset to the slowdown in the investment banking and equity capital markets. As a reminder, adjusted EBITDA and our metrics for operating investment results may be considered non-GAAP financial measures. Investors can find additional details relating to these metrics, including a reconciliation to the nearest GAAP measures in our earnings release and financial supplement for the first quarter. Now turning to highlights from our balance sheet, As of March 31st, we had $210 million in unrestricted cash and cash equivalents, $1.04 billion in net securities and other investments owned, and $772 million in loans receivable at fair value. At quarter end, we had a total cash and investments balance of approximately $2 billion, which includes approximately $73 million in other investments reported in prepaid and other assets. Total debt as of March 31st was approximately $2.5 billion, and net of our cash and investments, our total net debt was approximately $427 million. During the quarter, we completed approximately $54 million in stock buybacks, and as of quarter end, we had approximately $30 million remaining under our current share repurchase program, which our board authorized this past March. And finally, our Board of Directors has approved our regular quarterly dividend of $1 per share, which will be paid on or about May 23rd to common stockholders of record as of May 16th. Now that completes my financial summary, and I'll turn the call over now to our co-CEO, Tom Kelleher, who will provide highlights from our business opinions.