B. Riley Financial NASDAQ: RILY reported a sharp first-quarter profit and lower debt, with executives saying the firm has regained operating momentum after steps to strengthen its balance sheet and bring its financial reporting back to a normal cadence.
Co-CEO Bryant Riley said the company generated net income available to common shareholders of $211.3 million and adjusted EBITDA of $262.2 million for the first quarter of 2026. Operating adjusted EBITDA was $34.6 million, which he said was up close to 40% sequentially. Net debt stood at $372 million, down about $255 million from year-end.
Riley said the company executed on two priorities during the quarter: strengthening the balance sheet and delivering for clients. He said the company fully redeemed its 5.5% senior notes due 2026 in March and retired $40.4 million of debt through bond-for-equity exchanges and open-market repurchases through the end of March. Total debt declined by $129 million during the quarter, he said.
Capital Markets Activity Rebounds
Riley said B. Riley Securities had its most active capital-raising quarter in five years, executing nearly $10 billion in total debt and equity raises for clients. He cited work as joint lead bookrunner on WhiteFiber’s $230 million convertible offering, participation in a DSBC $1.3 million follow-on, and advisory work on the TrueCar take-private transaction.
The firm also saw $8.7 billion in new at-the-market offerings in the quarter, including a $6 billion facility for Highland and a $1 billion facility for SMR, Riley said. He added that B. Riley Securities initiated research coverage on 26 companies during the quarter.
“We see a deep expanding opportunity set for our team in the quarters ahead and expect momentum to continue,” Riley said, according to the call transcript. He said the company’s broader strategy remains to reinvest operating cash flows into its businesses and market opportunities, with its core franchise serving as the primary engine.
Company Plans to Recombine Securities and Wealth Units
Co-CEO Tom Kelleher discussed the company’s April announcement that it intends to repurchase the outstanding minority stake of B. Riley Securities and combine B. Riley Securities with B. Riley Wealth. He said the proposed transaction would streamline the corporate structure and align investment banking, retail and institutional distribution, and equity research.
Kelleher said the company’s platform is continuing to normalize after the activity of the past two years. He said Targus continues to stabilize and is operating at roughly breakeven, with recent improvements in distribution channel sales as tariff concerns begin to ease. He also said the communications group continues to produce high-margin cash flow, supported by the company’s team in India.
Kelleher said B. Riley is using artificial intelligence as both an efficiency tool and a “force multiplier” across revenue-generating teams, including bankers, sales staff and research teams. He said the firm remains focused on efficiency while emphasizing that the business is fundamentally relationship-driven.
Revenue Gains Driven by Investment Marks
Chief Financial Officer Scott Yessner said first-quarter total revenue was $352 million, up from $186 million in the prior-year period. The increase was driven by $161 million of higher trading gains on investments, primarily Babcock & Wilcox common stock. Yessner said $130 million of that amount related to value appreciation in the first quarter of 2026.
Service and fee income was $152 million, down $6.7 million year over year. Investment banking and brokerage revenue rose $12 million, offset by lower revenue from exited businesses, B. Riley Wealth Management and the Communications Business Group.
Total operating expenses were $199 million, down from $247.5 million a year earlier. Yessner said the reduction reflected eliminated costs from exited businesses and subscriber declines in the Communications Business Group, along with lower costs across a range of expense lines. Legal fees declined by $3.7 million, while accounting fees were $4 million higher than in 2025.
Yessner said other income excluding interest expense was $106 million, primarily due to a $99 million increase in fair value appreciation related to Babcock & Wilcox. Across trading income and unrealized income, the company recorded a $229 million increase in its Babcock & Wilcox investment in the quarter. Interest expense was $20 million, down $10 million from the prior year due to lower average borrowing balances.
Net income attributable to common shareholders was $211 million, or diluted income per share of $6.57, compared with a net loss of $12 million, or a diluted loss of $0.39 per share, in the first quarter of 2025. Adjusted EBITDA was $262 million, compared with a loss of $45 million a year earlier.
Segment Results and Investment Holdings
Yessner said the capital markets segment, consisting of B. Riley Securities, reported revenue of $172 million, compared with $2 million a year earlier. Segment income was $137 million, compared with a segment loss of $36 million. He said the increase was primarily driven by fair value gains in Babcock & Wilcox, while core investment banking revenue increased $9.7 million year over year.
The wealth segment reported revenue of $52 million, up from $47 million, and segment income of $16 million, up from $2 million. Yessner said the increase reflected an $8.9 million rise in the market value of carried interest in a fund that owns SpaceX. Wealth ended the quarter with $11.9 billion in assets under management and 190 registered representatives.
The Communications Business Group reported aggregate revenue of $60 million, down from $64.5 million, while aggregate income rose to $12.6 million from $10.6 million. The consumer products segment, which includes Targus, reported revenue of $44 million, up from $42 million, and narrowed its operating loss to $2.6 million from $5.1 million.
As of March 31, securities and other investments were $640 million, up $194 million from Dec. 31. Yessner said the increase was primarily driven by the $229 million increase in Babcock & Wilcox value and a $12.6 million increase tied to carried interest in funds that own SpaceX, partly offset by a $41 million sale of private stock holdings. The company owned about 27.4 million shares of Babcock & Wilcox, valued at $14.69 per share at quarter-end, and marked SpaceX at $526 per share.
Executives Address Debt, Synergies and Client Recovery
During the question-and-answer session, executives said the company is maintaining flexibility in capital allocation, including bond buybacks, bond exchanges, asset sales and reinvestment in the business. Riley said there is “no playbook” and that decisions are being made based on the interests of shareholders and bondholders.
Asked about expected synergies from combining B. Riley Securities and B. Riley Wealth, executives said they had not provided quantitative targets. Yessner said synergies are expected across revenue and cost lines, with early focus on client connectivity between wealth, retail and institutional operations. He also said the return to a normal reporting calendar should help the company evaluate and reduce elevated operating costs, including audit-related expenses.
Executives also discussed the rationale for buying back the minority stake in B. Riley Securities. Riley said the carve-out occurred during a “very unique situation” and created optionality at the time, but that recombining the business now should improve cost of capital and operating efficiency. Kelleher added that the separated structure had become operationally challenging and that the company is simplifying the organization.
When asked whether the company has the in-house solutions necessary to address 2026 maturities without a sale of B. Riley Securities, Riley answered, “Yes.” Yessner said the company has $167 million of RILYN senior notes due Sept. 30 and $170 million of RILYG senior notes due Dec. 31, with those amounts reduced since quarter-end through bond exchanges.
Riley said some capital-raising activity has not yet translated into larger economics for B. Riley because the company had been operating with “one hand behind our back” while its financials were not current. He said the recovery in client activity after resolving delinquent filing issues has been strong, with account onboarding rising over the last quarter.
About B. Riley Financial NASDAQ: RILY
B. Riley Financial, Inc, headquartered in Los Angeles, California, is a diversified financial services company offering a broad range of advisory and investment solutions to individual, corporate and institutional clients. Since its founding in 1997 by Bryant E. Riley, the firm has expanded its capabilities across two primary segments: financial solutions and operations solutions. Its financial solutions segment provides investment banking services, equity research, merger and acquisition advisory, corporate finance, restructuring advisory and private capital solutions.
In addition to traditional investment banking, B.
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