BRC Group Holdings, Inc.

Good afternoon and welcome to the BRC Group Holdings Second Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode for the duration of the prepared remarks. After the speaker's presentation, there will be a question-and-answer session. Please note that this event is being recorded. I would now like to turn the conference over to Bryant Riley, Chairman, Founder, and Co-CEO. Mr. Riley, please go ahead.

Thank you to everyone for joining us today. Joining me on the call are Tom Kelleher, our co-CEO, and Scott Yessner, our Chief Financial Officer. This quarter builds on the momentum for our platform we have demonstrated over the last 12 months. We reported second quarter net income available to common shareholders of $18.5 million and delivered $66 million in operating adjusted EBITDA, making this our best core operating quarter in nearly three years. These results demonstrate the underlying earnings power of our core operating units. Over the trailing 12 months, we generated net income attributable to common shareholders of $404 million and operating adjusted EBITDA of $182 million. Our execution strategy for B. Riley Securities and B. Riley Wealth remains straightforward, deepening client relationships and extending our reach, and we are executing on that front. During the quarter, we added five senior producers, including welcoming back B. Riley Securities alumni. In my mind, there is no stronger validation of our culture than bringing experienced talent back. During the quarter, we successfully reactivated several key institutional accounts that have been inactive over the past year, with positive engagement continuing into July. This, combined with higher secondary commission revenues, highlights our continued progress in further strengthening our franchise. Our relationship-driven execution is anchored by our long-tenured sales and trading team, who are traditional idea generators with decades of experience and are publishing research analysts who are the caretakers of our brand. In investment banking, favorable markets drove robust overall deal activity. In Q2, we participated in transactions representing $21 billion in aggregate deal value. While larger syndicates and a strong market naturally lower our average economic share per deal, The sheer volume of our participation, anchored by lead mandates, demonstrates our proven execution capabilities and our importance to the issuers. Within that broader deal participation, we supported combined equity and debt issuances totaling $8.5 billion and served as an agent on new ATM filings representing over $12 billion in aggregate value. We are also seeing our restructuring practice continuing to find meaningful in-court and out-of-court opportunities in this environment. Above all, a value ethos permeates every part of this organization. This is the most evident in our merchant banking approach. We built this firm to execute for the small and mid-cap market and to provide dedicated capital and advice to a space that remains structurally underserved. A core differentiator of our platform is our willingness to actively deploy our balance sheet to solve complex client needs. This includes facilitating structured financing products and driving new originations in our specialty finance direct lending group. We operate on a fundamental view that if we are not willing to commit our own capital alongside our clients, we cannot ask the same of our partners. To that end, our cash and investment positions provide us flexibility to pursue opportunities in front of us, and our pipeline of actionable opportunities is substantial. Importantly, we have the capital base and partnerships to support our clients as those opportunities develop. Taken together, our second quarter performance, as well as our trailing 12-month results, are the same as what we have done since our firm's formation nearly 30 years ago, operating as idea generators and serving as trusted advisors to our clients. Our platform is performing as designed, and the alignment continues to drive our results today. Together, this translates to proven deal execution in capital markets, disciplined operating leverage in wealth management, reliable cash conversion within our communications portfolio, and steady operational progress in our consumer products portfolio. Our focus remains firmly on execution and disciplined capital allocation to deliver for our colleagues, clients, partners, and shareholders. As we look ahead, we believe we have the optionality and the discipline to maximize value and we will work diligently to execute on all fronts. With that, I'll now turn the call over to our CFO, Scott Yessner, to provide a detailed review of our financial performance. Scott?

Thanks, Bryant. I'll share an update on our second quarter and first half of 2026 financial performance, segment earnings, investment holdings, capital, and liquidity. Please refer to our earnings press release for the reconciliation tables and descriptions of non-GAAP calculations in my remarks. including an updated calculation and description to our operating adjusted EBITDA non-GAAP measurement. To start, I would like to walk through our financial performance for the second quarter and first half of 2026. For the second quarter, total revenues were $239 million, an increase of $14 million year over year. Included in total revenues was service and fee revenue of $174 million, which increased $27.8 million year-over-year, further comprised of increases of $5.7 million in investment banking and brokerage fees, and of $30 million in management fees from carried interest in funds that own SpaceX, partially offset by $5.8 million in lower telecom and other revenues. Trading gains in the second quarter were $12.9 million, Lower by $14.8 million year over year, primarily due to a lower fair value on the Babcock and Wilcox investment. Six-month total revenues were $591 million, an increase of $180 million year over year. The increase in the first half total revenues was driven by higher trading gains of $146 million, primarily due to higher trading gains on Babcock and Wilcox investment of $131 million, and by a $21 million increase in service and fee income, which is further comprised of increases of 15 million in investment banking and brokerage fees and of 36 million in SpaceX carried interest management fees, partially offset by 10 million in lower revenues from exited businesses and 12 million lower telecom and other fees. Next, Second quarter total operating expenses declined $13.6 million to $201 million. The reduction was due to lower SG&A costs across occupancy, legal, and other expenses of $9 million, lower cost of goods sold and services of $7.6 million from lower telecom sales, and lower consumer product cost of goods sold. First half total operating expenses declined $62 million to $400 million for the first half. The reduction was driven by lower SG&A costs across occupancy, legal, and other expenses of $29 million, lower cost of goods sold and services of $9.3 million from telecom, $9.6 million from exited businesses, and $3.2 million from consumer products. Included in our second quarter and first half results are restructuring charges related to the contemplated B-Rally securities and wealth combination of $1.9 million. Continuing down the income statement, second quarter other income excluding interest expense was $8 million compared to $88 million in the second quarter of 2025. The second quarter of 2025 had $44 million in senior note exchange gains, $26 million in Joanne's liquidation gains, and $22 million in investment and financial instrument fair value increases comprising the difference year over year. First half of their income excluding interest expense was $114 million, driven by a $92 million increase in the B&W investment compared to $156 million in the first half of 2025, which included $86 million in income in the sale and deconsolidation of businesses and $55 million in senior note exchange gains. Interest expense declined $6 million to $18 million in the second quarter and declined $16 million to $38 million in the first half year over year. The interest expense decline has tracked our total debt reduction of $497 million from December 31st, 2024 to the ending balance of $1.277 billion at June 30th, 2026. And concluding, the remaining difference in the second quarter and first half year over year financial performance was 69 million and 73 million from income of a discontinued Glass Ratner operation booked in 2025. These details culminate with second quarter 2026 net income attributable to common shares of 19 million, diluted income per share of 45 cents per share, adjusted EBITDA of 61 million, and adjusted operating EBITDA of 66 million. and in the first half of 2026, net income of 230 million with diluted income per share of $6.47. Adjusted EBITDA was 323 million and adjusted operating EBITDA of 100 million. Next, I'll review our segment operating performance. Please note our former communications segment has been separated into four reportable segments, which we aggregate and describe as the communications business group. The capital market segment, which is comprised solely of B. Riley Securities, had revenues of $54 million and income of $13 million in the second quarter and revenues of $226 million and income of $150 million in the first half of 2026. Segment revenue and income for the first half have been driven by a $22 million increase in investment banking in capital markets Service and fee income and $136 million in trading gains primarily from the Babcock and Wilcox investment in the first half of 2026. Next, the wealth segment had revenues of $58 million and income of $18 million in the second quarter and revenues of $110 million and income of $34 million in the first half of 2026. The first half 2026 revenue and profit increases were driven by a $26.4 million increase in the market value of carried interest in a fund that owns SpaceX and an $18 million increase in trading income. The wealth segment ended second quarter with $12 billion in assets under management and $184 financial advice. The Communications Business Group had aggregate revenues of $58 million and income of $14 million in the second quarter and revenues of $118 million and income of $27 million in the first half. First half income increased $4.6 million despite a $9 million revenue reduction. Targus, our consumer product segment, had revenues of $44 million and a loss of $6 million in the second quarter and revenues of $88 million and a loss of $8 million in the first half of 2026. Revenues are $2 million higher in the first half year over year. Next, I'd like to provide an update on the company's investment holdings portfolio, which is reported in our balance sheet in Securities and Other Investments, Loans Receivable at Fair Value, and Equity Investments. Investments are held across consolidating areas where valuation changes are apparently booked as revenue in either trading gains or losses or realized or unrealized gains and losses. At June 30, 2026, securities and other investments increased $277 million to $724 million from December 31, 2025. The increase was primarily driven by a $213 million fair value increase in the Babcock and Wilcox investment and a $43 million increase in partnership interest related to our marked value of carried interest in funds that own SpaceX for all the BRC entities with portfolio trades and fair value changes comprising the remainder of the six-month increase. Continuing with investment holdings, loan receivables at fair value increased 12 million in the second quarter to an ending balance of 39 million at 6-30-2026. In the quarter, lending activity included approximately 24 million in new fundings. Additionally, we received a $1.9 million loan recovery recognized through the income statement and the fair value adjustments on loans. And concluding the investment holdings, Equity Method Investments were $85 million at June 30th, a decline of $5.6 million from December 31st. The GA Group Investment comprises $77.8 million of the June 30th balance with a decline of $5.5 million due to lower seasonal income and retaining cash in lieu of distribution to equity holders. Next, I'll provide an update on our liquidity and capital. At June 30, 2026, cash, cash equivalents, and restricted cash had a total balance of $156 million compared to $229 million at December 31, 2025. In the second quarter of 2026, Birali Corporation reduced debt by $22 million, which included $33 million of bond exchanges, with a net $11 million increase in working capital borrowings. At June 30th, total debt was $1.3 billion, and net debt declined $87 million to $285 million. For the remainder of 2026, the company has two senior note series maturing, $142 million in principal amount of Riley N. senior notes due September 30th, and $164 million in principal amount of Riley G. senior notes due on December 31st. We also have $4.5 million in scheduled pay downs on a subsidiary lending facility. We will continue to use capital actions, cash generated from operations, and investment liquidations to fund market opportunities and operating companies while also redeeming the scheduled senior note pay downs. We've had a very strong second quarter and first half of 2026. I'll turn the call over to Tom Keller, Co-Chief Executive Officer.