BRC Group Holdings, Inc.

Good morning, and welcome to the B. Reilly Financial's third quarter 2023 earnings call. My name is Britt, and I will be your call coordinator. Earlier this morning, B. Reilly issued its third quarter earnings release. A copy of the release can be found on B. Reilly's investor relations website at ir.breillyfin.com or on the right side of your screen if you're joining us today via web. Today's call includes prepared remarks from the company, which will be followed by a question and answer session with the management team. Joining us today from B. Riley are Bryant Riley, Chairman, Co-Founder, and 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. As a reminder, today's call is being recorded, and an audio replay of this call will be available later today. Finally, 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, everyone, and thanks for joining our call. During the quarter, we continued to execute our platform strategy, generating a meaningful amount of operating EBITDA while at the same time maintaining disciplined focus on balance sheet flexibility to pursue a continued growth. We generated operating adjusted EBITDA of $107.5 million for the third quarter of 2023, up 34% from Q2, an operating EBITDA of $267.8 million for the first nine months of 2023. Net loss of $76 million was driven by investment losses, which were primarily unrealized, and relates to changes in mark-to-market valuation on investments that we hold. As we noted before, our investment gains and losses for any particular period are not indicative of our overall business performance, and we have a high degree of confidence in these investments. Our third quarter operating results highlighted strength across our platform with increased revenue and client activity levels picking up from earlier this year. To put this into perspective, our Q3 operating revenue is the highest quarterly total in our firm's history, and our Q3 operating EBITDA ranks third highest. On a year-to-date basis for the first nine months, our 2023 operating revenue also ranks highest, and operating EBITDA ranks second. This is a direct outcome of our strategy and the steps we've taken to change the relative mix of stable lower margin revenue versus episodic higher margin revenue. A few highlights for the quarter include strong performance from retail liquidation and another record revenue period for advisory services, which continue to outperform as an additional bright spot on our platform with increased contributions from both our specialty consulting and appraisal units, in addition to a strong corner from our real estate restructuring division. During the quarter, we also saw meaningful increase in investment banking activity and improved performance from wealth management as a result of the actions we undertook to right-size this business last year. In terms of our investments, we believe that equity valuations in the small-cap market are as attractive as we have seen in a number of years, and we'll look to take advantage of this opportunity both as a principle, but also to facilitate transactions for our clients. We have continued our disciplined focus on maintaining an optimal capital structure to both fund our continued growth and to take advantage of future opportunities. During the quarter, we raised approximately $150 million in equity proceeds in connection with our common stock offering in July, expanded our Nomura credit facility by approximately $240 million, and reduced our other outstanding debt by $160 million. Taken together, these events resulted in a meaningful change in our capitalization as of September 30th. With over $2 billion of cash in investment and a balanced debt profile with the vast majority of our debt maturing in 2026 to 2028, our platform is strongly positioned as we look ahead to 2024 and beyond. We founded B. Reilly over 25 years ago on a principle that there was a void of financial service firms that could adequately support the needs of companies and investors focused on the lower middle markets. I think that premise still remains true today, and there is no other platform as diverse and competitively positioned as ours in the ability to provide value to our clients and partners. And there is no better team than the world-class professionals across our B-Rally platform. With that, I will now turn the call over to Phil Ahn, our CFO and COO, to discuss key metrics for the quarter. Phil?

Thanks, Bryant. For the third quarter of 2023, B. Reilly generated total revenues of $462 million, which represents a 48% increase from $312 million for the same period in 2022. Total revenues also increased by 86% to $1.3 billion for the first nine months of 2023, compared to $699 million in the prior year period. Growth in revenue during the quarter was primarily driven by our optional liquidation segment, consumer segment, and financial consulting segment. On a GAAP basis, we recorded a third quarter net loss of 76 million, primarily attributable to unrealized investment losses of the equity investments that we hold. Year to date, we reported a net loss of 16 million. Despite the markdowns in our investment portfolio, our platform continues to deliver strong operating results. For the third quarter of this year, operating revenues increased to 473 million up from 319 million in the prior year quarter. Operating revenues increased to 1.22 billion for the first nine months of 2023, up from 843 million in the same prior year period. Third quarter operating adjusted EBITDA increased to 107.5 million, up from 106.2 million in the prior year quarter. And year to date, operating adjusted EBITDA increased to 268 million up from $265 million in the first nine months of 2022. As a reminder, adjusted EBITDA and our metrics for operating and 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 our financial supplement, which will be posted to our investor relations website. Now turning to a summary of our balance sheet as of September 30th, At quarter end, we had approximately $252 million of unrestricted cash and cash equivalents, $1.2 billion in net securities and other investments owned at fair value, and $549 million in loans receivable at fair value. Total cash and investments was $2.05 billion, including $58 million of other investments reported in prepaid and other assets. Total debt as of September 30th was approximately $2.36 billion. Total debt net of cash and investments was 311 million at quarter end. Finally, we declared our regular quarterly dividend of $1 per share, which we paid on or about November 30th to stockholders of record as of November 20th. In addition, our board has approved an annual share repurchase plan under which B. Reilly may repurchase up to 50 million of our common shares. This completes my financial summary. I'll now turn the call over to Tom Kellher, our co-CEO, to discuss our business segments. Tom?