What B. Riley Financial (RILY) Said on Its Q3 Earnings Call

Key Points

• B. Riley reported a $243 million third-quarter net loss, or $6.04 per diluted share, with roughly $227 million in pretax losses tied to its Babcock & Wilcox investment. Excluding that holding, its other securities generated $4.8 million in net gains.
• The company plans to use proceeds from selling its remaining GA Group stake, operating cash flow and anticipated carried-interest realizations to redeem $164 million of senior notes and fund its pending Sangoma acquisition, targeted to close in January 2027.
• Management expects Sangoma to add $35 million to $40 million in EBITDA, including synergies, to the communications business. B. Riley also cited cost reductions in that segment and expects $5 million to $10 million in accounting and legal cost savings in 2027.

B. Riley Financial NASDAQ: RILY, identified as BRC Group Holdings on its earnings call, reported a third-quarter net loss available to common shareholders of $243 million as declines in the value of its Babcock & Wilcox investment weighed on results.

The company posted a diluted loss of $6.04 per share and revenue of $33 million, down $244.8 million from a year earlier. Operating adjusted EBITDA was $2.9 million, while adjusted EBITDA was negative $219.1 million.

Chairman, Founder and Co-CEO Bryant Riley said the Babcock & Wilcox position accounted for roughly $227 million in pretax losses. Excluding that investment, the rest of the securities portfolio generated net gains of $4.8 million, he said.

The company also recorded a $14.6 million noncash impairment to bring the carrying value of its GA Group investment in line with its subsequent sale price. Riley said two items reduced operating adjusted EBITDA by $17.4 million: the reversal of a second-quarter unrealized gain on a structured equity financing exited for cash in the third quarter, and a noncash net markdown of its SpaceX carried interest.

For the first nine months of 2026, the company reported revenue of $624.2 million, a net loss of $13.2 million and operating adjusted EBITDA of $103.3 million. Chief Financial Officer Scott Yessner said the operating measure was on plan for the year.

GA Group Sale and Funding Plans

Management said it is repositioning capital toward cash-generating operating businesses. On November 3, the company sold its remaining GA Group interest to Oaktree for $62.3 million, consisting of $10.6 million in cash and a $51.7 million reduction in its Oaktree loan. It also added a $26.5 million incremental term loan and paid a $3.3 million transaction fee in kind, Yessner said.

The company is preparing to redeem $164 million of senior notes due December 31 and fund its pending Sangoma acquisition, which is targeted to close in January 2027. Riley said GA proceeds, operating cash flow and anticipated carried-interest realizations are expected to cover both obligations without selling long-term investments in a dislocated market.

Asked about the funding gap, Yessner said balance-sheet funding sources could provide up to $50 million in additional cash. He confirmed that SpaceX shares alone could provide up to that amount, though he said the company was still awaiting delivery of most of the shares and had put on a small hedge against price volatility.

Cash, cash equivalents and restricted cash totaled $145.7 million at September 30. Total debt was $1.14 billion, down $291.7 million from the end of 2025, Yessner said. The company has no senior note maturities in 2027.

On larger maturities beyond 2027, Riley did not offer a specific refinancing plan. He said the company would focus on generating cash, improving the value of its investments and keeping multiple financing strategies available.

Communications and Capital Markets

The communications business group generated third-quarter revenue of $54.6 million and income of $13.2 million. For the first nine months, income increased $5.1 million to $39.7 million despite lower revenue, reflecting cost reductions, Yessner said.

Management expects Sangoma to add scale and recurring revenue to that business. Yessner estimated the acquisition would add $35 million to $40 million in EBITDA, including anticipated synergies. The transaction remains subject to customary closing conditions.

In capital markets, the company helped clients raise more than $4.5 billion in combined equity and debt during the quarter, Riley said. Smaller deal sizes and lower at-the-market activity tempered underwriting fees, although mergers and acquisitions and advisory revenue grew from a year earlier.

Co-CEO Tom Kelleher said convertible and debt activity was at a record nine-month pace, while sole- and lead-managed volume was up 20% year to date. The company restored full ownership of B. Riley Securities in October and is integrating it with B. Riley Wealth under shared infrastructure.

The wealth segment reported a third-quarter loss of $3.7 million, partly reflecting lower carried-interest management fees and commissions. Kelleher said advisory fees rose 11% year over year in the quarter. The segment ended September with $12.8 billion in assets under management and 181 financial advisers.

Yessner also said the company expects $5 million to $10 million in accounting and legal cost savings in 2027 as it reduces reliance on external resources and works through legal matters.

About B. Riley Financial (NASDAQ:RILY)

B. Riley Financial, Inc is a diversified financial services company that provides investment banking, institutional brokerage, wealth management, asset appraisal, valuation, liquidation and restructuring services. Through its businesses, the company works with public and private companies, institutional investors, private equity firms, financial institutions and individual clients.

The company's capital markets operations, including B. Riley Securities, offer investment banking, equity research, sales and trading, and related advisory services.

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