Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 30, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | B. Riley Financial, Inc. | |
Entity Central Index Key | 0001464790 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 26,927,947 | |
Entity File Number | 001-37503 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Cash and cash equivalents | $ 170,587 | $ 179,440 |
Restricted cash | 471 | 838 |
Due from clearing brokers | 27,791 | 37,738 |
Securities and other investments owned, at fair value | 326,616 | 273,577 |
Securities borrowed | 720,207 | 931,346 |
Accounts receivable, net | 47,419 | 42,123 |
Due from related parties | 6,689 | 1,729 |
Loans receivable | 295,898 | 38,794 |
Prepaid expenses and other assets | 112,309 | 79,477 |
Operating lease right-of-use assets | 49,642 | |
Property and equipment, net | 13,171 | 15,523 |
Goodwill | 220,562 | 223,368 |
Other intangible assets, net | 79,488 | 91,358 |
Deferred income taxes | 36,041 | 42,399 |
Total assets | 2,106,891 | 1,957,710 |
Liabilities: | ||
Accounts payable | 6,239 | 5,646 |
Accrued expenses and other liabilities | 115,062 | 108,662 |
Deferred revenue | 68,385 | 69,066 |
Due to related parties and partners | 2,814 | 2,428 |
Securities sold not yet purchased | 29,092 | 37,623 |
Securities loaned | 714,947 | 930,522 |
Mandatorily redeemable noncontrolling interests | 4,395 | 4,633 |
Operating lease liabilities | 63,817 | |
Notes payable | 1,193 | 1,550 |
Loan participations sold | 28,872 | |
Term loan | 71,393 | 79,166 |
Senior notes payable | 701,278 | 459,754 |
Total liabilities | 1,807,487 | 1,699,050 |
Commitments and contingencies (note 15) | ||
B. Riley Financial, Inc. stockholders' equity: | ||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding as of September 30, 2019 and December 31, 2018, respectively. | ||
Common stock, $0.0001 par value; 100,000,000 shares authorized; 26,921,500 and 26,603,355 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively. | 3 | 2 |
Additional paid-in capital | 259,237 | 258,638 |
Retained earnings | 41,957 | 1,579 |
Accumulated other comprehensive loss | (2,345) | (2,161) |
Total B. Riley Financial, Inc. stockholders' equity | 298,852 | 258,058 |
Noncontrolling interests | 552 | 602 |
Total equity | 299,404 | 258,660 |
Total liabilities and equity | $ 2,106,891 | $ 1,957,710 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 1,000,000 | 1,000,000 |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 26,921,500 | 26,603,355 |
Common stock, outstanding | 26,921,500 | 26,603,355 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues: | ||||
Total revenues | $ 180,063 | $ 99,681 | $ 486,875 | $ 320,960 |
Operating expenses: | ||||
Direct cost of services | 12,441 | 8,156 | 55,210 | 33,733 |
Cost of goods sold | 911 | 52 | 3,835 | 142 |
Selling, general and administrative expenses | 96,587 | 71,782 | 274,468 | 216,603 |
Restructuring charge | 428 | 1,699 | 2,247 | |
Interest expense - Securities lending and loan participations sold | 10,273 | 6,425 | 22,579 | 16,317 |
Total operating expenses | 120,212 | 86,843 | 357,791 | 269,042 |
Operating income | 59,851 | 12,838 | 129,084 | 51,918 |
Other income (expense): | ||||
Interest income | 361 | 442 | 1,329 | 736 |
Income (loss) from equity investments | 1,113 | 828 | (4,049) | 5,049 |
Interest expense | (12,772) | (9,340) | (35,130) | (23,926) |
Income before income taxes | 48,553 | 4,768 | 91,234 | 33,777 |
Provision for income taxes | (14,409) | (2,046) | (26,802) | (8,412) |
Net income | 34,144 | 2,722 | 64,432 | 25,365 |
Net (loss) income attributable to noncontrolling interests | (158) | (92) | (50) | 1,051 |
Net income attributable to B. Riley Financial, Inc. | $ 34,302 | $ 2,814 | $ 64,482 | $ 24,314 |
Basic income per share | $ 1.29 | $ 0.11 | $ 2.45 | $ 0.94 |
Diluted income per share | $ 1.21 | $ 0.10 | $ 2.37 | $ 0.91 |
Weighted average basic shares outstanding | 26,556,223 | 25,968,997 | 26,351,839 | 25,856,339 |
Weighted average diluted shares outstanding | 28,233,423 | 26,854,261 | 27,251,837 | 26,776,133 |
Services and fees [Member] | ||||
Revenues: | ||||
Total revenues | $ 153,379 | $ 89,824 | $ 428,705 | $ 295,416 |
Interest income - Securities lending [Member] | ||||
Revenues: | ||||
Total revenues | 25,766 | 9,785 | 54,147 | 25,406 |
Sale of goods [Member] | ||||
Revenues: | ||||
Total revenues | $ 918 | $ 72 | $ 4,023 | $ 138 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 34,144 | $ 2,722 | $ 64,432 | $ 25,365 |
Other comprehensive income (loss): | ||||
Change in cumulative translation adjustment | (521) | (77) | (184) | (1,162) |
Other comprehensive loss, net of tax | (521) | (77) | (184) | (1,162) |
Total comprehensive income | 33,623 | 2,645 | 64,248 | 24,203 |
Comprehensive (loss) income attributable to noncontrolling interests | (158) | (92) | (50) | 1,051 |
Comprehensive income attributable to B. Riley Financial, Inc. | $ 33,781 | $ 2,737 | $ 64,298 | $ 23,152 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Noncontrolling Interests [Member] | Total |
Balance at Beginning at Dec. 31, 2017 | $ 2 | $ 259,980 | $ 6,582 | $ (534) | $ (184) | $ 265,846 | |
Balance at Beginning, shares at Dec. 31, 2017 | 26,569,462 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock for acquisition of GlassRatner Advisory & Capital Group LLC | 8,050 | 8,050 | |||||
Issuance of common stock for acquisition of GlassRatner Advisory & Capital Group LLC, shares | 405,817 | ||||||
Vesting of restricted stock, net of shares withheld for employer taxes | (4,106) | (4,106) | |||||
Vesting of restricted stock, net of shares withheld for employer taxes, shares | 522,399 | ||||||
Common stock repurchased and retired | (17,338) | (17,338) | |||||
Common stock repurchased and retired, shares | (950,000) | ||||||
Common stock warrants repurchased | |||||||
Common shares cancelled - resolution of escrow claim | (21,233) | ||||||
Share based payments | 8,650 | 8,650 | |||||
Dividends on common stock | (16,054) | (16,054) | |||||
Net income (loss) | 24,314 | 946 | 25,365 | ||||
Foreign currency translation adjustment | (1,162) | (1,162) | |||||
Balance at End at Sep. 30, 2018 | $ 2 | 255,236 | 14,842 | (1,696) | 762 | 269,146 | |
Balance at End, shares at Sep. 30, 2018 | 26,526,445 | ||||||
Balance at Beginning at Jun. 30, 2018 | $ 2 | 244,631 | 20,408 | (1,619) | 854 | 264,276 | |
Balance at Beginning, shares at Jun. 30, 2018 | 26,070,165 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock for acquisition of GlassRatner Advisory & Capital Group LLC | 8,050 | 8,050 | |||||
Issuance of common stock for acquisition of GlassRatner Advisory & Capital Group LLC, shares | 405,817 | ||||||
Vesting of restricted stock, net of shares withheld for employer taxes | (536) | (536) | |||||
Vesting of restricted stock, net of shares withheld for employer taxes, shares | 71,696 | ||||||
Common shares cancelled - resolution of escrow claim | (21,233) | ||||||
Share based payments | 3,091 | 3,091 | |||||
Dividends on common stock | (8,380) | (8,380) | |||||
Net income (loss) | 2,814 | (92) | 2,722 | ||||
Foreign currency translation adjustment | (77) | (77) | |||||
Balance at End at Sep. 30, 2018 | $ 2 | 255,236 | 14,842 | (1,696) | 762 | 269,146 | |
Balance at End, shares at Sep. 30, 2018 | 26,526,445 | ||||||
Balance at Beginning at Dec. 31, 2018 | $ 2 | 258,638 | 1,579 | (2,161) | 602 | 258,660 | |
Balance at Beginning, shares at Dec. 31, 2018 | 26,603,355 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
ESPP shares issued and vesting of restricted stock, net of shares withheld for employer taxes | $ 1 | (2,627) | (2,626) | ||||
ESPP shares issued and vesting of restricted stock, net of shares withheld for employer taxes, shares | 556,077 | ||||||
Common stock repurchased and retired | (4,273) | (4,273) | |||||
Common stock repurchased and retired, shares | (237,932) | ||||||
Common stock warrants repurchased | (2,777) | 2,777 | |||||
Share based payments | 10,276 | 10,276 | |||||
Dividends on common stock | (24,104) | (24,104) | |||||
Net income (loss) | 64,482 | (50) | 64,432 | ||||
Foreign currency translation adjustment | (184) | (184) | |||||
Balance at End at Sep. 30, 2019 | $ 3 | 259,237 | 41,957 | (2,345) | 552 | 299,404 | |
Balance at End, shares at Sep. 30, 2019 | 26,921,500 | ||||||
Balance at Beginning at Jun. 30, 2019 | $ 3 | 255,865 | 22,424 | (1,824) | 710 | 277,178 | |
Balance at Beginning, shares at Jun. 30, 2019 | 26,919,941 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Vesting of restricted stock, net of shares withheld for employer taxes | (335) | (335) | |||||
Vesting of restricted stock, net of shares withheld for employer taxes, shares | 51,730 | ||||||
Common stock repurchased and retired | (1,021) | (1,021) | |||||
Common stock repurchased and retired, shares | (50,171) | ||||||
Share based payments | 4,728 | 4,728 | |||||
Dividends on common stock | (14,769) | (14,769) | |||||
Net income (loss) | 34,302 | (158) | 34,144 | ||||
Foreign currency translation adjustment | (521) | (521) | |||||
Balance at End at Sep. 30, 2019 | $ 3 | $ 259,237 | $ 41,957 | $ (2,345) | $ 552 | $ 299,404 | |
Balance at End, shares at Sep. 30, 2019 | 26,921,500 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||
Dividends on common stock per share | $ 0.50 | $ 0.30 | $ 0.84 | $ 0.58 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 64,432 | $ 25,365 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 14,217 | 9,768 |
Provision for doubtful accounts | 1,646 | 840 |
Share-based compensation | 10,276 | 8,650 |
Non-cash interest and other | (14,941) | 1,384 |
Effect of foreign currency on operations | 8 | (352) |
Loss (income) from equity investments | 4,049 | (5,049) |
Deferred income taxes | 6,358 | 7 |
Impairment of leaseholds and intangibles, lease loss accrual and gain on disposal of fixed assets | (327) | 1,718 |
Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests | 857 | 847 |
Change in operating assets and liabilities: | ||
Due from clearing brokers | 9,947 | (23,412) |
Securities and other investments owned | (45,465) | (77,161) |
Securities borrowed | 211,139 | (235,206) |
Accounts receivable and advances against customer contracts | (8,645) | (35,982) |
Prepaid expenses and other assets | (9,619) | (19,418) |
Accounts payable, accrued payroll and related expenses, accrued expenses and other liabilities | 31,473 | 10,111 |
Amounts due to/from related parties and partners | (4,574) | (4,487) |
Securities sold, not yet purchased | (8,531) | 31,381 |
Deferred revenue | (502) | 64 |
Securities loaned | (215,575) | 232,037 |
Net cash provided by (used in) operating activities | 46,223 | (78,895) |
Cash flows from investing activities: | ||
Purchases of loans receivable | (350,695) | (35,111) |
Acquisition of other businesses | (4,000) | |
Repayments of loans receivable | 98,742 | |
Loan participations sold | 31,806 | |
Repayment of loan participations sold | (3,175) | |
Purchases of property, equipment and intangible assets | (2,885) | (2,314) |
Proceeds from sale of property, equipment and intangible assets | 504 | 37 |
Equity investments | (33,391) | (6,856) |
Proceeds from sale of division of magicJack | 6,196 | |
Dividends from equity investments | 1,454 | 1,695 |
Net cash used in investing activities | (251,444) | (46,549) |
Cash flows from financing activities: | ||
Proceeds from asset based credit facility | 300,000 | |
Repayment of asset based credit facility | (300,000) | |
Proceeds from notes payable | 51,020 | |
Repayment of notes payable | (357) | (51,591) |
Proceeds from term loan | 10,000 | |
Repayment of term loan | (17,924) | |
Proceeds from issuance of senior notes | 244,497 | 255,290 |
Payment of debt issuance costs | (4,212) | (6,356) |
Payment of employment taxes on vesting of restricted stock | (2,626) | (4,106) |
Dividends paid | (25,049) | (17,912) |
Repurchase of common stock | (4,273) | (17,338) |
Repurchase of warrants | (2,777) | |
Distribution to noncontrolling interests | (1,095) | (915) |
Net cash provided by financing activities | 196,184 | 208,092 |
(Decrease) increase in cash, cash equivalents and restricted cash | (9,037) | 82,648 |
Effect of foreign currency on cash, cash equivalents and restricted cash | (183) | (796) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (9,220) | 81,852 |
Cash, cash equivalents and restricted cash, beginning of year | 180,278 | 152,534 |
Cash, cash equivalents and restricted cash, end of period | 171,058 | 234,386 |
Supplemental disclosures: | ||
Interest paid | 52,931 | 35,289 |
Taxes paid | $ 5,029 | $ 2,455 |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS OPERATIONS | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND NATURE OF BUSINESS OPERATIONS | NOTE 1—ORGANIZATION AND NATURE OF BUSINESS OPERATIONS B. Riley Financial, Inc. and its subsidiaries (collectively, the “Company”) provide investment banking and financial services to corporate, institutional and high net worth clients, and asset disposition, valuation and appraisal and capital advisory services to a wide range of retail, wholesale and industrial clients, as well as lenders, capital providers, private equity investors and professional services firms throughout the United States, Australia, Canada, and Europe and with the acquisitions of United Online, Inc. (“UOL”) on July 1, 2016 and magicJack VocalTec Ltd. (“magicJack”) on November 14, 2018, provide consumer Internet access and cloud communication services. The Company operates in four operating segments: (i) Capital Markets, through which the Company provides investment banking, corporate finance, securities lending, restructuring, consulting, research, sales and trading and wealth management services to corporate, institutional and high net worth clients; (ii) Auction and Liquidation, through which the Company provides auction and liquidation services to help clients dispose of assets that include multi-location retail inventory, wholesale inventory, trade fixtures, machinery and equipment, intellectual property and real property; (iii) Valuation and Appraisal, through which the Company provides valuation and appraisal services to clients with independent appraisals in connection with asset based loans, acquisitions, divestitures and other business needs; and (iv) Principal Investments — United Online and magicJack, through which the Company provides consumer Internet access and related subscription services from United Online and cloud communication services primarily through the magicJack devices. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( a) Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements include the accounts of B. Riley Financial, Inc. and its wholly-owned and majority-owned subsidiaries. The condensed consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which is controlled by the Company as a result of its ownership of a 50% member interest, appointment of two of the three executive officers and significant influence over the funding of operations, and (b) GA Retail Investments, L.P. which is controlled by the Company as a result of its ownership of a 50% partnership interest, appointment of executive officers and significant influence over the operations. The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 6, 2019. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods. (b) Use of Estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expense during the reporting period. Estimates are used when accounting for certain items such as valuation of securities, allowance for doubtful accounts, the fair value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling interests, fair value of share based arrangements and accounting for income tax valuation allowances. Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ. (c) Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our condensed consolidated financial statements. The new revenue standard was applied prospectively in the Company’s condensed consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods was revised and will continue to be reported under the accounting standards in effect during those historical periods. Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services. There have been no material changes to the Company’s revenue recognition accounting policy set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. See Note 12 for information on revenue from contracts with customers. (d) Direct Cost of Services Direct cost of services relates to service and fee revenues. The costs consist of employee compensation and related payroll benefits, travel expenses, the cost of consultants assigned to revenue-generating activities and direct expenses billable to clients in the Valuation and Appraisal segment. Direct costs of services include participation in profits under collaborative arrangements in which the Company is a majority participant. Direct costs of services also include the cost of consultants and other direct expenses related to Auction and Liquidation contracts pursuant to commission and fee based arrangements in the Auction and Liquidation segment. Direct cost of services in the Principal Investments — United Online and magicJack segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks, servers and data centers, sales commissions associated with multi-year service plans, depreciation of network computers and equipment, amortization expense, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees. Direct cost of services does not include an allocation of the Company’s overhead costs. (e) Interest Expense — Securities Lending Activities and Loan Participations Sold Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $9,721 and $6,425 for the three months ended September 30, 2019 and 2018, respectively, and $22,027 and $16,317 for the nine months ended September 30, 2019 and 2018, respectively. Loan participations sold as of September 30, 3019 totaled $28,872. Interest expense from loan participations sold totaled $552 for both the three and nine months ended September 30, 2019. (f) Concentration of Risk Revenues in the Capital Markets, Valuation and Appraisal and Principal Investments — United Online and magicJack segments are currently primarily generated in the United States. Revenues in the Auction and Liquidation segment are primarily generated in the United States, Australia, Canada and Europe. The Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured creditors. Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors. The Company seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s exposure to losses on any one specific liquidation services contract or concentration within any one specific industry. To mitigate the exposure to losses on any one specific liquidations services contract, the Company sometimes conducts operations with third parties through collaborative arrangements. The Company maintains cash in various federally insured banking institutions. The account balances at each institution periodically exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts. The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed to parties in accordance with the collaborative arrangements. (g) Advertising Expenses The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $437 and $371 for the three months ended September 30, 2019 and 2018, respectively, and $1,383 and $1,656 for the nine months ended September 30, 2019 and 2018, respectively. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of income. (h) Share-Based Compensation The Company’s share-based payment awards principally consist of grants of restricted stock, restricted stock units and costs associated with the Company’s employee stock purchase plan. In accordance with the applicable accounting guidance, share-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the condensed consolidated statements of income over the requisite service or performance period the award is expected to vest. The fair value of the liability-classified award will be subsequently remeasured at each reporting date through the settlement date. Change in fair value during the requisite service period will be recognized as compensation cost over that period. In June 2018, the Company adopted the 2018 Employee Stock Purchase Plan (“Purchase Plan”) which allows eligible employees to purchase common stock through payroll deductions at a price that is 85% of the market value of the common stock on the last day of the offering period. In accordance with the provisions of ASC 718, Compensation — Stock Compensation (i) Income Taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods. Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reduced. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. (j) Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. (k) Restricted Cash As of September 30, 2019, restricted cash balance is $471 related to one of the Company’s telecommunication suppliers. As of December 31, 2018, restricted cash balance of $838 included $469 cash collateral for one of the Company’s telecommunication suppliers and $369 certificate of deposits collateral for certain letters of credit. (l) Securities Borrowed and Securities Loaned Securities borrowed and securities loaned are recorded based upon the amount of cash advanced or received. Securities borrowed transactions facilitate the settlement process and require the Company to deposit cash or other collateral with the lender. With respect to securities loaned, the Company receives collateral in the form of cash. The amount of collateral required to be deposited for securities borrowed, or received for securities loaned, is an amount generally in excess of the market value of the applicable securities borrowed or loaned. The Company monitors the market value of the securities borrowed and loaned on a daily basis, with additional collateral obtained, or excess collateral recalled, when deemed appropriate. The Company accounts for securities lending transactions in accordance with ASC “Topic 210: Balance Sheet,” which requires companies to report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned and these items are presented on a gross basis in the condensed consolidated balance sheets. (m) Due from/to Brokers, Dealers, and Clearing Organizations The Company clears all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount receivable from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s clearing deposits and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company and amounts payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for securities loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the securities owned by the Company and held on deposit at the clearing broker. (n) Accounts Receivable Accounts receivable represents amounts due from the Company’s Auction and Liquidation, Valuation and Appraisal, Capital Markets and Principal Investments — United Online and magicJack customers. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes a specific customer identification methodology. Management also considers historical losses adjusted for current market conditions and the customers’ financial condition and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. The Company’s bad debt expense and changes in the allowance for doubtful accounts for the three and nine months ended September 30, 2019 and 2018 are included in Note 6. (o) Leases The Company determines if an arrangement is, or contains, a lease at the inception date. Operating leases are included in right-of-use assets, with the related liabilities included in operating lease liabilities in the condensed consolidated balance sheet. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We use our estimated incremental borrowing rate in determining the present value of lease payments. Variable components of the lease payments such as fair market value adjustments, utilities, and maintenance costs are expensed as incurred and not included in determining the present value. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components which are accounted for as a single lease component. See Note 8 for additional information on leases. (p) Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. Property and equipment held under finance leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Depreciation and amortization expense on property and equipment was $1,163 and $1,005 for the three months ended September 30, 2019 and 2018, respectively, and $4,186 and $3,369 for the nine months ended September 30, 2019 and 2018, respectively. (q) Loans Receivable Loans receivable are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans, and for purchased loans, net of any unamortized premiums or discounts. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related loans. Unearned income, discounts and premiums are amortized to interest income using a level yield methodology. At September 30, 2019 and December 31, 2018, loans receivable had a carrying value of $295,898 and $38,794, respectively, with various maturity dates through June 2022. (r) Securities and Other Investments Owned and Securities Sold Not Yet Purchased Securities owned consist of marketable securities and investments in partnership interests and other securities recorded at fair value. Securities sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices. Changes in the value of these securities are reflected currently in the results of operations. As of September 30, 2019 and December 31, 2018, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities: September 30, December 31, 2019 2018 Securities and other investments owned: Common and preferred stocks and warrants $ 244,556 $ 193,459 Corporate bonds 21,580 18,825 Fixed income securities 4,816 3,825 Loans receivable at fair value 35,511 33,731 Partnership interests and other 20,153 23,737 $ 326,616 $ 273,577 Securities sold not yet purchased: Common stocks $ 6,684 $ 11,130 Corporate bonds 18,630 16,338 Fixed income securities 3,778 10,155 $ 29,092 $ 37,623 (s) Fair Value Measurements The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) for identical instruments that are highly liquid, observable and actively traded in over-the-counter markets. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common and preferred stocks and warrants, corporate bonds, loans receivable valued at fair value and investments in partnerships. Investments in common stocks that are based on quoted prices in active markets are included in Level 1 of the fair value hierarchy. The Company also holds nonpublic common and preferred stocks and warrants for which there is little or no public market and fair value is determined by management on a consistent basis. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks. These investments are included in Level 3 of the fair value hierarchy. Investments in partnership interests include investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds. The Company also invests in priority investment funds and the underlying securities held by these funds are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. The Company’s partnership and investment fund interests are valued based on the Company’s proportionate share of the net assets of the partnerships and funds; the value for these investments are derived from the most recent statements received from the general partner or fund administrator. These partnership and investment fund interests are valued at net asset value (“NAV”) in accordance with ASC “Topic 820: Fair Value Measurements.” The fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models. The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2019 and December 31, 2018. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2019 Using Quoted prices in Fair value at active markets for identical Other observable Significant unobservable September 30, assets inputs inputs 2019 (Level 1) (Level 2) (Level 3) Assets: Securities and other investments owned: Common and preferred stocks and warrants $ 244,556 $ 193,625 $ — $ 50,931 Corporate bonds 21,580 — 21,580 — Fixed income securities 4,816 — 4,816 — Loans receivable at fair value 35,511 — — 35,511 Total 306,463 $ 193,625 $ 26,396 $ 86,442 Investment funds valued at net asset value (1) 20,153 Total assets measured at fair value $ 326,616 Liabilities: Securities sold not yet purchased: Common stocks $ 6,684 $ 6,684 $ — $ — Corporate bonds 18,630 — 18,630 — Fixed income securities 3,778 — 3,778 — Total securities sold not yet purchased 29,092 6,684 22,408 — Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,395 — — 4,395 Total liabilities measured at fair value $ 33,487 $ 6,684 $ 22,408 $ 4,395 Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2018 Using Quoted prices in Fair value at active markets for identical Other observable Significant unobservable December 31 assets inputs inputs 2018 (Level 1) (Level 2) (Level 3) Assets: Securities and other investments owned: Common and preferred stocks and warrants $ 193,459 $ 168,882 $ — $ 24,577 Corporate bonds 18,825 — 18,825 — Fixed income securities 3,825 — 3,825 — Loans receivable at fair value 33,731 — — 33,731 Total 249,840 $ 168,882 $ 22,650 $ 58,308 Investment funds valued at net asset value (1) 23,737 Total assets measured at fair value $ 273,577 Liabilities: Securities sold not yet purchased: Common stocks $ 11,130 $ 11,130 $ — $ — Corporate bonds 16,338 — 16,338 — Fixed income securities 10,155 — 10,155 — Total securities sold not yet purchased 37,623 11,130 26,493 — Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,633 — — 4,633 Total liabilities measured at fair value $ 42,256 $ 11,130 $ 26,493 $ 4,633 (1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy in accordance with ASC “Topic 820 Fair Value Measurements.” The fair value amounts presented in the tables above for investment funds valued at net asset value are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the condensed consolidated balance sheets. As of September 30, 2019 and December 31, 2018, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $86,442 and $58,308, respectively, or 4.1% and 3.0%, respectively, of the Company’s total assets. In determining the fair value for these Level 3 financial assets, the Company analyzes various financial, performance and market factors to estimate the value, including where applicable, over-the-counter market trading activity. The following table summarizes the significant unobservable inputs in the fair value measurement of level 3 financial assets and liabilities by category of investment and valuation technique as of September 30, 2019: Fair value at September 30, Valuation Unobservable Weighted 2019 Technique Input Range Average Assets: Common and preferred stocks and warrants $ 50,931 Market approach Over-the-counter trading activity $8.00/share $ 8.00 Market price of related security $4.79/share $ 4.79 Recent transaction $210.02/share $ 210.02 Multiple of EBITDA 10.1x 10.1 x Yield analysis Cost of capital 13.2% 13.2 % Option pricing model Annualized volatility 50% - 100% 68 % Loans receivable at fair value 35,511 Discounted cash flow Market interest rate 15.1% -15.3% 15.3 % Market approach Market price of related security $2,100.21/share $ 2,100.21 Total level 3 assets measured at fair value $ 86,442 Liabilities: Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 4,395 Market approach Operating income multiple 6.0x 6.0 x The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2019 and 2018 are as follows: Level 3 Level 3 Changes During the Period Level 3 Balance at Fair Relating to Purchases, Transfer in Balance at Beginning of Value Undistributed Sales and and/or out End of Year Adjustments Earnings Settlements of Level 3 Period Nine Months Ended September 30, 2019 Common and preferred stocks and warrants $ 24,577 $ 715 $ 1,424 $ 24,215 $ — $ 50,931 Loans receivable at fair value 33,731 11,648 1,621 (11,489 ) — 35,511 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,633 — (238 ) — — 4,395 Nine Months Ended September 30, 2018 Common stocks and warrants $ 28,346 $ (3,247 ) $ 578 $ 4,250 $ (20,970 ) $ 8,957 Loans receivable at fair value 33,713 (11 ) 100 2,785 — 36,587 Partnership interests and other 26,104 1,411 (2,735 ) 28,044 — 52,824 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,478 — (69 ) — — 4,409 The amount reported in the table above for the nine months ended September 30, 2019 and 2018 includes the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis. The carrying amounts reported in the condensed consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value based on the short-term maturity of these instruments. The carrying amount of the senior notes payable and term loan approximate fair value because the contractual interest rates or effective yields of such instruments are consistent with current market rates of interest for instruments of comparable credit risk. During the nine months ended September 30, 2019 and 2018, there were no assets or liabilities measured at fair value on a non-recurring basis. (t) Derivative and Foreign Currency Translation The Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain Auction and Liquidation engagements with operations outside the United States. The Company did not use any derivative contracts during the nine months ended September 30, 2019. During the nine months ended September 30, 2018, the Company’s use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $54,406 Canadian dollars, that were settled during the first and second quarter of 2018 and (b) $1,500 Euro’s that settled in March 2018. The net loss from forward exchange contracts was $91 during the nine months ended September 30, 2018. This amount is reported as a component of selling, general and administrative expenses in the condensed consolidated statements of income. The Company transacts business in various foreign currencies. In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets. Transaction gains (loss) were $446 and ($51) during the three months ended September 30, 2019 and 2018, respectively, and $121 and $843 during the nine months ended September 30, 2019 and 2018, respectively. These amounts are included in selling, general and administrative expenses in the Company’s condensed consolidated statements of income. (u) Common Stock Warrants The common stock warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from the Company at a price of $17.50 per share (the “Exercise Price”), subject to, among other matters, the proper completion of an exercise notice and payment. The Exercise Price and the number of shares of Company common stock issuable upon exercise are subject to customary anti-dilution and adjustment provisions, which include stock splits, subdivisions or reclassifications of the Company’s common stock. The common stock warrants expire on July 3, 2022. As of December 31, 2018, warrants to purchase 821,816 shares of common stock were outstanding. On May 16, 2019, the Company repurchased 638,311 warrants for $2,777 ($4.35 per warrant) which is included in common stock warrants repurchased in the condensed consolidated statements of equity. As of September 30, 2019, warrants to purchase 183,505 shares of common stock were outstanding. (v) Equity Investment bebe stores, inc. At September 30, 2019, the Company had a 30.5% ownership interest in bebe stores, inc. (“bebe”). The equity ownership in bebe is accounted for under the equity method of accounting, and is included in prepaid expenses and other assets in the condensed consolidated balance sheets. National Holdings Corporation On November 14, 2018, the Company entered into an agreement to acquire shares of National Holdings Corporation (“National Holdings”), a Nasdaq-listed issuer, from Fortress Biotech, Inc. for an aggregate purchase price totaling approximately $22.9 million. The transaction was completed in two tranches. In the first tranche, which was completed in the fourth quarter of 2018, the Company acquired shares representing 24% of the total outstanding shares of National Holdings. The second tranche was completed in the first quarter of 2019. As of September 30, 2019, the Company had purchased 6,159,550 shares of National Holdings’ common |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
ACQUISITIONS | NOTE 3— ACQUISITIONS Acquisition of magicJack VocalTec Ltd On November 9, 2017, the Company entered into an Agreement and Plan of Merger (the “magicJack Merger Agreement”) with B. R. Acquisition Ltd., an Israeli corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and magicJack VocalTec Ltd., an Israeli corporation (“magicJack”), pursuant to which Merger Sub would merge with and into magicJack, with magicJack continuing as the surviving corporation and as an indirect subsidiary of the Company. Pursuant to the magicJack Merger Agreement, customary closing conditions were satisfied, and the acquisition was completed on November 14, 2018. Subject to the terms and conditions of the Agreement and Plan of Merger, each outstanding share of magicJack converted into the right to receive $8.71 in cash without interest, representing approximately $143,115 in aggregate merger consideration. The assets and liabilities of magicJack, both tangible and intangible, were recorded at their estimated fair values as of the November 14, 2018, acquisition date for magicJack. The application of the purchase method of accounting resulted in goodwill of $106,539 which represents the benefits from synergies with the Company’s existing business and acquired workforce. The purchase accounting for the acquisition has been accounted for as a stock purchase with all of the recognized goodwill is expected to be non-deductible for tax purposes. The preliminary purchase price allocation was as follows: Consideration paid by B. Riley: Number of magicJack shares outstanding at November 14, 2018 16,248,299 Cash merger consideration per share $ 8.71 Total cash consideration for magicJack common shares 141,523 Cash consideration for magicJack stock options and accelerated vesting of restricted stock awards 1,592 Total consideration $ 143,115 Tangible assets acquired and assumed: Cash and cash equivalents $ 53,875 Restricted cash 369 Accounts receivable 3,103 Inventory 2,033 Prepaid expenses and other assets 4,961 Property and equipment 2,922 Deferred taxes 16,769 Accounts payable (2,313 ) Contract liabilities (66,489 ) Accrued payroll and related expenses (1,989 ) Accrued expenses and other liabilities (21,315 ) Developed technology 6,400 Tradename 1,750 Customer list 34,500 Process-know-how 2,000 Goodwill 106,539 Total $ 143,115 Pro Forma Financial Information The unaudited pro-forma financial information in the table below summarizes the combined results of operations of the Company and magicJack as though the acquisitions had occurred as of January 1, 2018. The pro-forma financial information presented includes the effects of adjustments related to the amortization charges from the acquired intangible assets and the elimination of certain activities excluded from the transaction and transaction related costs. The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results. Pro Forma (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, Revenues $ 118,372 $ 378,126 Net income attributable to B. Riley Financial, Inc. $ 5,985 $ 31,025 Basic earnings per share $ 0.23 $ 1.20 Diluted earnings per share $ 0.22 $ 1.16 Weighted average basic shares outstanding 25,968,997 25,856,339 Weighted average diluted shares outstanding 26,854,261 26,776,133 |
RESTRUCTURING CHARGE
RESTRUCTURING CHARGE | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring Charge [Abstract] | |
RESTRUCTURING CHARGE | NOTE 4— RESTRUCTURING CHARGE The Company recorded no restructuring charges for the three months ended September 30, 2019. The Company recorded restructuring charges in the amount $428 for the three months ended September 30, 2018 and $1,699 and $2,247 for the nine months ended September 30, 2019 and 2018, respectively. The restructuring charges during the nine months ended September 30, 2019 were primarily related to severance costs for magicJack employees from a reduction in workforce and lease termination costs in the Principal Investments – United Online and magicJack segment. The restructuring charges during the three and nine months ended September 30, 2018 were primarily related to the planned consolidation of office space related to operations in the Capital Markets segment. The following tables summarize the changes in accrued restructuring charge during three and nine months ended September 30, 2019 and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Balance, beginning of period $ 2,642 $ 1,827 $ 3,855 $ 2,600 Restructuring charge — 428 1,699 2,247 Cash paid (779 ) (504 ) (3,827 ) (2,954 ) Non-cash items 60 (1 ) 196 (143 ) Balance, end of period $ 1,923 $ 1,750 $ 1,923 $ 1,750 The following tables summarize the restructuring activities by reportable segment during the three and nine months ended September 30, 2019 and 2018: Three Months Ended September 30, 2019 2018 Principal Principal Investments - Investments - Capital United Online and Capital United Online and Markets magicJack Corporate Total Markets magicJack Corporate Total Restructuring charge (recovery): Employee termination costs $ — $ — $ — $ — 76 $ — $ — $ 76 Facility closure and consolidation — — — — 352 — — 352 Total restructuring charge $ — $ — $ — $ — 428 $ — $ — $ 428 Nine Months Ended September 30, 2019 2018 Principal Principal Investments - Investments - Capital United Online and Capital United Online and Markets magicJack Corporate Total Markets magicJack Corporate Total Restructuring charge (recovery): Employee termination costs $ — $ 1,594 $ — $ 1,594 729 $ — $ — $ 729 Facility closure and consolidation (4 ) 109 — 105 1,728 — (210 ) 1,518 Total restructuring charge $ (4 ) $ 1,703 $ — $ 1,699 2,457 $ — $ (210 ) $ 2,247 |
SECURITIES LENDING
SECURITIES LENDING | 9 Months Ended |
Sep. 30, 2019 | |
Securities Lending [Abstract] | |
SECURITIES LENDING | NOTE 5— SECURITIES LENDING The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of September 30, 2019 and December 31, 2018: Gross amounts recognized Gross amounts offset in the consolidated balance sheets (1) Net amounts included in the consolidated balance sheets Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default (2) Net amounts As of September 30, 2019 Securities borrowed $ 720,207 $ — $ 720,207 $ 720,207 $ — Securities loaned $ 714,947 $ — $ 714,947 $ 714,947 $ — As of December 31, 2018 Securities borrowed $ 931,346 $ — $ 931,346 $ 931,346 $ — Securities loaned $ 930,522 $ — $ 930,522 $ 930,522 $ — (1) Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred. (2) Includes the amount of cash collateral held/posted. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 6— ACCOUNTS RECEIVABLE The components of accounts receivable, net, include the following: September 30, December 31, 2019 2018 Accounts receivable $ 29,198 $ 12,594 Investment banking fees, commissions and other receivables 14,961 26,581 Unbilled receivables 4,721 3,644 Total accounts receivable 48,880 42,819 Allowance for doubtful accounts (1,461 ) (696 ) Accounts receivable, net $ 47,419 $ 42,123 Additions and changes to the allowance for doubtful accounts consist of the following: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Balance, beginning of period $ 1,360 $ 796 $ 696 $ 800 Add: Additions to reserve 615 192 1,681 840 Less: Write-offs (376 ) (164 ) (759 ) (816 ) Less: Recovery (138 ) — (157 ) — Balance, end of period $ 1,461 $ 824 $ 1,461 $ 824 Unbilled receivables represent the amount of contractual reimbursable costs and fees for services performed in connection with fee and service based auction and liquidation contracts. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 7— GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill was $220,562 and $223,368 at September 30, 2019 and December 31, 2018, respectively. During the nine months ended September 30, 2019, goodwill decreased by $2,806. The decrease in goodwill included a decrease of $3,213 as a result the allocation of goodwill related to the sale of a division of magicJack offset by an increase in goodwill of $407 from magicJack’s purchase price allocation adjustments during the nine months ended September 30, 2019. At September 30, 2019, goodwill was comprised of $95,820 in the Capital Markets segment, $1,975 in the Auction and Liquidation segment, $3,713 in the Valuation and Appraisal segment, and $119,054 in the Principal Investments – United Online and magicJack segment. At December 31, 2018, goodwill was comprised of $95,820 in the Capital Markets segment, $1,975 in the Auction and Liquidation segment, $3,713 in the Valuation and Appraisal segment, and $121,860 in the Principal Investments – United Online and magicJack segment. Intangible assets consisted of the following: As of September 30, 2019 As of December 31, 2018 Gross Gross Carrying Accumulated Intangibles Carrying Accumulated Intangibles Useful Life Value Amortization Net Value Amortization Net Amortizable assets: Customer relationships 4 to 16 Years $ 90,330 $ 24,217 $ 66,113 $ 92,330 $ 16,608 $ 75,722 Domain names 7 Years 233 108 125 237 85 152 Advertising relationships 8 Years 100 41 59 100 31 69 Internally developed software and other intangibles 0.5 to 5 Years 11,765 4,230 7,535 11,773 2,436 9,337 Trademarks 7 to 10 Years 4,600 1,184 3,416 4,600 762 3,838 Total 107,028 29,780 77,248 109,040 19,922 89,118 Non-amortizable assets: Tradenames 2,240 — 2,240 2,240 — 2,240 Total intangible assets $ 109,268 $ 29,780 $ 79,488 $ 111,280 $ 19,922 $ 91,358 Amortization expense was $3,310 and $2,093 for the three months ended September 30, 2019 and 2018, respectively, and $10,031 and $6,399 for the nine months ended September 30, 2019 and 2018, respectively. At September 30, 2019, estimated future amortization expense is $3,309, $12,856, $12,473, $12,453, and $12,209 for the years ended December 31, 2019 (remaining three months), 2020, 2021, 2022 and 2023, respectively. The estimated future amortization expense after December 31, 2023 is $23,948. |
LEASING ARRANGEMENTS
LEASING ARRANGEMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
LEASING ARRANGEMENTS | NOTE 8— LEASING ARRANGEMENTS The Company’s operating lease assets primarily represent the lease of office space where the Company conducts its operations with the weighted average lease term of 8.0 years. The operating leases have lease terms ranging from one month to twelve years. The weighted average discount rate used to calculate the present value of lease payments was 5.58% at September 30, 2019. For the three and nine months ended September 30, 2019, total operating lease expense was $3,337 and $9,632, respectively. Of the $3,337 and $9,632 operating lease expense for the three and nine months ended September 30, 2019, respectively, $337 and $915 were attributable to variable lease expenses. Operating lease expense is included in selling, general and administrative expenses in the condensed consolidated statements of income. For the nine months ended September 30, 2019, cash payments against operating lease liabilities totaled $9,580 and non-cash transactions totaled $2,801 to recognize operating lease right-of-use assets and operating lease liabilities. Cash flows from operating leases are classified as net cash flows from operating activities in the accompanying condensed consolidated statements of cash flows. As of September 30, 2019, maturities of operating lease liabilities were as follows: Operating Leases Year ending December 31: 2019 (remaining three months) $ 3,357 2020 12,580 2021 10,699 2022 9,823 2023 9,127 Thereafter 33,478 Total lease payments 79,064 Less: imputed interest (15,247 ) Total operating lease liability $ 63,817 At September 30, 2019, the Company did not have any significant leases executed but not yet commenced. |
ASSET BASED CREDIT FACILITY
ASSET BASED CREDIT FACILITY | 9 Months Ended |
Sep. 30, 2019 | |
Line of Credit Facility [Abstract] | |
ASSET BASED CREDIT FACILITY | NOTE 9— ASSET BASED CREDIT FACILITY On April 21, 2017, the Company amended its credit agreement (as amended, the “Credit Agreement”) governing its asset based credit facility with Wells Fargo Bank, National Association (“Wells Fargo Bank”) to increase the maximum borrowing limit from $100,000 to $200,000. Such amendment, among other things, also extended the expiration date of the credit facility from July 15, 2018 to April 21, 2022. The Credit Agreement continues to allow for borrowings under the separate credit agreement (a “UK Credit Agreement”) which was dated March 19, 2015 with an affiliate of Wells Fargo Bank which provides for the financing of transactions in the United Kingdom. Such facility allows the Company to borrow up to 50 million British Pounds. Any borrowings on the UK Credit Agreement reduce the availability on the asset based $200,000 credit facility. The UK Credit Agreement is cross collateralized and integrated in certain respects with the Credit Agreement. Cash advances and the issuance of letters of credit under the credit facility are made at the lender’s discretion. The letters of credit issued under this facility are furnished by the lender to third parties for the principal purpose of securing minimum guarantees under liquidation services contracts more fully described in Note 2(c). All outstanding loans, letters of credit, and interest are due on the expiration date which is generally within 180 days of funding. The credit facility is secured by the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract. The Company paid Wells Fargo Bank a closing fee in the amount of $500 in connection with the April 2017 amendment to the Credit Agreement. The interest rate for each revolving credit advance under the Credit Agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25% depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided. The credit facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein. Interest expense totaled $240 and $809 for the three months ended September 30, 2019 and 2018, respectively, and $826 and $4,138 for the nine months ended September 30, 2019 and 2018, respectively. There was no outstanding balance on this credit facility at September 30, 2019 and December 31, 2018. At September 30, 2019, there were no open letters of credit outstanding. We are in compliance with all financial covenants in the asset based credit facility at September 30, 2019. |
TERM LOAN
TERM LOAN | 9 Months Ended |
Sep. 30, 2019 | |
Long-term Construction Loan [Abstract] | |
TERM LOAN | NOTE 10 — TERM LOAN On December 19, 2018, BRPI Acquisition Co LLC (“BRPAC”), a Delaware limited liability company, UOL, and YMAX Corporation, Delaware corporations (collectively, the “Borrowers”), indirect wholly owned subsidiaries of the Company, in the capacity as borrowers, entered into a credit agreement (the “BRPAC Credit Agreement”) with the Banc of California, N.A. in the capacity as agent (the “Agent”) and lender and with the other lenders party thereto (the “Closing Date Lenders”). Certain of the Borrowers’ U.S. subsidiaries are guarantors of all obligations under the BRPAC Credit Agreement and are parties to the BRPAC Credit Agreement in such capacity (collectively, the “Secured Guarantors”; and together with the Borrowers, the “Credit Parties”). In addition, the Company and B. Riley Principal Investments, LLC, the parent corporation of BRPAC and a subsidiary of the Company, are guarantors of the obligations under the BRPAC Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares outstanding membership interests of BRPAC are pledged as collateral. The obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the Credit Parties, including a pledge of (a) 100% of the equity interests of the Credit Parties, (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India; and (c) 65% of the equity interests in magicJack VocalTec LTD., a limited company organized under the laws of Israel. Such security interests are evidenced by pledge, security and other related agreements. The BRPAC Credit Agreement contains certain covenants, including those limiting the Credit Parties’, and their subsidiaries’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the BRPAC Credit Agreement requires the Credit Parties to maintain certain financial ratios. The BRPAC Credit Agreement also contains customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of amounts due under the outstanding BRPAC Credit Agreement. Under the BRPAC Credit Agreement, the Company borrowed $80,000 due December 19, 2023. Pursuant to the terms of the BRPAC Credit Agreement, the Company may request additional optional term loans in an aggregate principal amount of up to $10,000 at any time prior to the first anniversary of the agreement date (the “Option Loan”) with a final maturity date of December 19, 2023. On February 1, 2019, the Credit Parties, the Closing Date Lenders, the Agent and City National Bank, as a new lender (the “New Lender”), entered into the First Amendment to the Credit Agreement and Joinder (the “First Amendment”) pursuant to which, among other things, (i) New Lender became a party to the BRPAC Credit Agreement, (ii) the New Lender extended to Borrowers the Option Loan in the amount of $10,000, (iii) the aggregate outstanding principal amount of the term loans was increased from $80,000 to $90,000; and (iv) the amortization schedule under the BRPAC was amended as set forth in the First Amendment. Additionally, in connection with the Option Loan, the Borrowers executed a term note in favor of New Lender dated February 1, 2019 in the amount of $10,000. Borrowings under the BRPAC Credit Agreement bear interest at a rate equal to (a) the LIBOR rate for Eurodollar loans, plus (b) the applicable margin rate, which ranges from two and one-half percent (2.5%) to three percent (3.0%) per annum, based upon the Borrowers’ ratio of consolidated funded indebtedness to adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the preceding four fiscal quarters or other applicable period. At September 30, 2019 interest rate on the BRPAC Credit Agreement was at 5.05%. Interest payments are to be made each one, three or nine months. Amounts outstanding under the BRPAC Credit Agreement are due in quarterly installments commencing on March 31, 2019 with any remaining amounts outstanding due at maturity. For the $80,000 loan, quarterly installments from September 30, 2019 to December 31, 2022 are in the amount of $4,244 per quarter and from March 31, 2023 to December 31, 2023 are $2,122 per quarter. For the $10,000 loan, quarterly installments from September 30, 2019 to December 31, 2022 are $566 per quarter and from March 31, 2023 to December 31, 2023 are $265 per quarter. As of September 30, 2019 and December 31, 2018, the outstanding balance on the term loan was $71,393 (net of unamortized debt issuance costs of $683) and $79,166 (net of unamortized debt issuance costs of $834), respectively. Interest expense on the term loan during the three and nine months ended September 30, 2019 was $1,118 (including amortization of deferred debt issuance costs of $87) and $3,653 (including amortization of deferred debt issuance costs of $268), respectively. We are in compliance with all financial covenants in the BRPAC Credit Agreement at September 30, 2019. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2019 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTE 11—NOTES PAYABLE Senior Notes Payable Senior notes payable, net, is comprised of the following as of September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 7.50% Senior notes due October 31, 2021 $ 52,154 $ 46,407 7.50% Senior notes due May 31, 2027 110,028 108,792 7.25% Senior notes due December 31, 2027 112,429 100,441 7.375% Senior notes due May 31, 2023 116,800 111,528 6.875% Senior notes due September 30, 2023 105,254 100,050 6.75% Senior notes due May 31, 2024 100,050 — 6.50% Senior notes due September 30, 2026 115,000 — 711,715 467,218 Less: Unamortized debt issuance costs (10,437 ) (7,464 ) $ 701,278 $ 459,754 During the nine months ended September 30, 2019, the Company issued $29,447 of senior notes due with maturities dates ranging from October 2021 to December 2027 pursuant to At the Market Issuance Sales Agreements with B. Riley FBR, Inc. which governs the program of at-the-market sales of the Company’s senior notes. A series of prospectus supplements were filed by the Company with the SEC which allowed the Company to sell these senior notes. On May 7, 2019, the Company issued $100,050 senior notes due in May 2024 (“6.75% 2024 Notes”) pursuant to the prospectus supplement dated May 2, 2019. Interest on the 6.75% 2024 Notes is payable quarterly at 6.75%. The 6.75% 2024 Notes are unsecured and due and payable in full on May 31, 2024. In connection with the issuance of the 6.75% 2024 Notes, the Company received net proceeds of $98,137 (after underwriting commissions, fees and other issuance costs of $1,913). On September 23, 2019, the Company issued $115,000 senior notes due in September 2026 (“6.50% 2026 Notes”) pursuant to the prospectus supplement dated September 18, 2019. Interest on the 6.50% 2026 Notes is payable quarterly at 6.50%. The 6.50% 2026 Notes are unsecured and due and payable in full on September 30, 2026. In connection with the issuance of the 6.50% 2026 Notes, the Company received net proceeds of $112,673 (after underwriting commissions, fees and other issuance costs of $2,327). At September 30, 2019 and December 31, 2018, the total senior notes outstanding was $701,278 (net of unamortized debt issue costs of $10,437) and $459,754 (net of unamortized debt issue costs of $7,464) with a weighted average interest rate of 7.08% and 7.28%, respectively. Interest on senior notes is payable on a quarterly basis. Interest expense on senior notes totaled $11,255 and $7,248 for the three months ended September 30, 2019 and 2018, respectively, and $30,181 and $16,628 for the nine months ended September 30, 2019 and 2018, respectively. Sales Agreement Prospectus to Issue Up to $100,000 of Senior Notes and Common Stock On September 23, 2019, the Company entered into a new At Market Issuance Sales Agreement (the “September 2019 Sales Agreement”) with B. Riley FBR, Inc. governing a program of at-the-market sales of certain of the Company’s senior notes and common stock. The most recent sales agreement prospectus was filed by the Company with the SEC on September 23, 2019 and became effective on September 30, 2019 (the “Sales Agreement Prospectus”). The Sales Agreement Prospectus allows the Company to sell up to $100,000 of certain of the Company’s senior notes and common stock, pursuant to an effective Registration Statement on Form S-3. As of September 30, 2019, the Company had $100,000 remaining availability under the September 2019 Sales Agreement. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | NOTE 12—REVENUE FROM CONTRACTS WITH CUSTOMERS Revenue from contracts with customers by reportable segment for the three and nine months ended September 30, 2019 and 2018 is as follows: Three Months Ended September 30, 2019 Reportable Segment Capital Markets Auction and Liquidation Valuation and Appraisal Principal Investments - United Online and magicJack Total Corporate finance, consulting and investment banking fees $ 37,827 $ — $ — $ — $ 37,827 Wealth and asset management fees 18,984 — — — 18,984 Commissions, fees and reimbursed expenses 9,077 4,151 10,818 — 24,046 Subscription services — — — 19,425 19,425 Service contract revenues — 7,081 — — 7,081 Advertising and other — 54 — 4,438 4,492 Total revenues from contracts with customers 65,888 11,286 10,818 23,863 111,855 Interest income - Loans and securities lending 25,766 — — — 25,766 Trading gain on investments 37,236 — — — 37,236 Other 5,206 — — — 5,206 Total revenues $ 134,096 $ 11,286 $ 10,818 $ 23,863 $ 180,063 Three Months Ended September 30, 2018 Reportable Segment Capital Markets Auction and Liquidation Valuation and Appraisal Principal Investments - United Online and magicJack Total Corporate finance, consulting and investment banking fees $ 35,902 $ — $ — $ — $ 35,902 Wealth and asset management fees 19,171 — — — 19,171 Commissions, fees and reimbursed expenses 10,533 2,399 9,404 — 22,336 Subscription services — — — 9,151 9,151 Service contract revenues — 108 — — 108 Advertising and other — — — 2,276 2,276 Total revenues from contracts with customers 65,606 2,507 9,404 11,427 88,944 Interest income - Loans and securities lending 9,785 — — — 9,785 Trading gain on investments (3,462 ) — — — (3,462 ) Other 4,414 — — — 4,414 Total revenues $ 76,343 $ 2,507 $ 9,404 $ 11,427 $ 99,681 Nine Months Ended September 30, 2019 Reportable Segment Capital Markets Auction and Liquidation Valuation and Appraisal Principal Investments - United Online and magicJack Total Revenue from contracts with customers: Corporate finance, consulting and investment banking fees $ 95,260 — — — $ 95,260 Wealth and asset management fees 55,028 — — — 55,028 Commissions, fees and reimbursed expenses 30,350 39,250 29,143 — 98,743 Subscription services — — — 62,894 62,894 Service contract revenues — 26,431 — — 26,431 Advertising and other — 1,230 — 14,282 15,512 Total revenues from contracts with customers 180,638 66,911 29,143 77,176 353,868 Interest income - Loans and securities lending 54,147 — — — 54,147 Trading gain on investments 64,372 — — — 64,372 Other 14,488 — — — 14,488 Total revenues $ 313,645 $ 66,911 $ 29,143 $ 77,176 $ 486,875 Nine Months Ended September 30, 2018 Reportable Segment Capital Markets Auction and Liquidation Valuation and Appraisal Principal Investments - United Online and magicJack Total Revenue from contracts with customers: Corporate finance, consulting and investment banking fees $ 84,927 — — — $ 84,927 Wealth and asset management fees 56,928 — — — 56,928 Commissions, fees and reimbursed expenses 31,546 33,212 27,383 — 92,141 Subscription services — — — 27,335 27,335 Service contract revenues — 11,648 — — 11,648 Advertising and other — — 6,925 6,925 Total revenues from contracts with customers 173,401 44,860 27,383 34,260 279,904 Interest income - Loans and securities lending 25,406 — — — 25,406 Trading gain on investments 1,449 — — — 1,449 Other 14,201 — — — 14,201 Total revenues $ 214,457 $ 44,860 $ 27,383 $ 34,260 $ 320,960 Contract Balances The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. Receivables related to revenues from contracts with customers totaled $47,419 and $42,123 at September 30, 2019 and December 31, 2018, respectively. The Company had no significant impairments related to these receivables during the three and nine months ended September 30, 2019. The Company’s deferred revenue primarily relates to retainer and milestone fees received from corporate finance and investment banking advisory engagements, asset management agreements, Valuation and Appraisal engagements and subscription services where the performance obligation has not yet been satisfied. Deferred revenue at September 30, 2019 and December 31, 2018 was $68,385 and $69,066, respectively. During the three and nine months ended September 30, 2019, the Company recognized revenue of $9,166 and $34,331 that was recorded as deferred revenue at the beginning of the respective year. During the three and nine months ended September 30, 2018, the Company recognized revenue of $5,423 and $9,889 respectively, that was recorded as deferred revenue at the beginning of the year. Contract Costs Contract costs include: (1) costs to fulfill contracts associated with corporate finance and investment banking engagements are capitalized where the revenue is recognized at a point in time and the costs are determined to be recoverable; (2) costs to fulfill Auction and Liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation where the revenue is recognized over time when the performance obligation is satisfied; and (3) commissions paid to obtain magicJack contracts which are recognized ratably over the contract term and third party support costs for magicJack and related equipment purchased by customers which are recognized ratably over the service period. The capitalized costs to fulfill a contract were $1,900 and $2,920 at September 30, 2019 and December 31, 2018, respectively, and are recorded in prepaid expenses and other assets in the condensed consolidated balance sheets. For the three and nine months ended September 30, 2019, the Company recognized expenses of $246 and $1,277 related to capitalized costs to fulfill a contract, respectively. For the three and nine months ended September 30, 2018, the Company recognized expenses of $0 and $602, related to capitalized costs to fulfill a contract, respectively. There were no significant impairment charges recognized in relation to these capitalized costs during the nine months ended September 30, 2019 and 2018. Remaining Performance Obligations and Revenue Recognized from Past Performance The Company does not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at September 30, 2019. Corporate finance and investment banking fees and retail liquidation engagement fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price at September 30, 2019. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 13— INCOME TAXES The Company’s effective income tax rate was a provision of 29.4% and 24.9% for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, the Company had federal net operating loss carryforwards of $60,637 and state net operating loss carryforwards of $61,930. The Company’s federal net operating loss carryforwards will expire in the tax years commencing in December 31, 2029 through December 31, 2034. The state net operating loss carryforwards will expire in the tax years commencing in December 31, 2029. The Company establishes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits of operating loss, capital loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. The Company’s net operating losses are subject to annual limitations in accordance with Internal Revenue Code Section 382. Accordingly, the Company is limited to the amount of net operating loss that may be utilized in future taxable years depending on the Company’s actual taxable income. As of September 30, 2019, the Company believes that the existing net operating loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided a valuation allowance. The Company does not believe that it is more likely than not that the Company will be able to utilize the benefits related to capital loss carryforwards and has provided a valuation allowance in the amount of $61,127 against these deferred tax assets. The Company files income tax returns in the U.S., various state and local jurisdictions, and certain other foreign jurisdictions. The Company is currently under audit by certain federal, state and local, and foreign tax authorities. The audits are in varying stages of completion. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities. Uncertain tax positions are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, case law developments and closing of statutes of limitations. Such adjustments are reflected in the provision for income taxes, as appropriate. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the calendar years ended December 31, 2015 to 2018. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 14— EARNINGS PER SHARE Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic common shares outstanding exclude 387,365 common shares in 2019 and 453,365 common shares in 2018 that are held in escrow and subject to forfeiture. The common shares held in escrow includes 387,365 common shares that are subject to forfeiture to indemnify the Company for certain representations and warranties in connection with the acquisition of Wunderlich, and in 2018 excluded 66,000 common shares held in escrow issued to the former members of Great American Group, LLC that were subject to forfeiture upon the final settlement of claims for goods held for sale in connection with the transaction with Alternative Asset Management Acquisition Corp. in 2009. In August 2018, the shares held in escrow issued to the former members of Great American Group, LLC were released and 21,233 of the 66,000 shares held in escrow were cancelled to satisfy the resolution of escrow claims. The shares that remain in escrow are subject to forfeiture upon the final settlement of claims as more fully described in the related escrow instructions. Dilutive common shares outstanding includes contingently issuable shares that are currently in escrow and subject to release if the conditions for the final settlement of claims in accordance with the escrow instructions were satisfied at the end of the respective years. Securities that could potentially dilute basic net income per share in the future that were not included in the computation of diluted net income per share were 1,369,674 and 1,925,872 for the three months ended September 30, 2019 and 2018, respectively, and 1,474,104 and 1,838,492 for the nine months ended September 30, 2019 and 2018, respectively, because to do so would have been anti-dilutive. Basic and diluted earnings per share were calculated as follows: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income attributable to B. Riley Financial, Inc. $ 34,302 $ 2,814 $ 64,482 $ 24,314 Weighted average shares outstanding: Basic 26,556,223 25,968,997 26,351,839 25,856,339 Effect of dilutive potential common shares: Restricted stock units and warrants 1,613,993 705,557 836,791 740,087 Contingently issuable shares 63,207 179,707 63,207 179,707 Diluted 28,233,423 26,854,261 27,251,837 26,776,133 Basic income per share $ 1.29 $ 0.11 $ 2.45 $ 0.94 Diluted income per share $ 1.21 $ 0.10 $ 2.37 $ 0.91 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 15 — COMMITMENTS AND CONTINGENCIES (a) Letters of Credit At September 30, 2019, there were letters of credit outstanding totaling $471 related to the Principal Investments — United Online and magicJack segment. (b) Legal Matters The Company is subject to certain legal and other claims that arise in the ordinary course of its business. In particular, the Company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from the Company’s securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters. Some of these claims seek substantial compensatory, punitive, or indeterminate damages. The Company and its subsidiaries are also involved in other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. In view of the number and diversity of claims against the Company, the number of jurisdictions in which litigation is pending, and the inherent difficulty of predicting the outcome of litigation and other claims, the Company cannot state with certainty what the eventual outcome of pending litigation or other claims will be. Notwithstanding this uncertainty, the Company does not believe that the results of these claims are likely to have a material effect on its financial position or results of operations. On August 11, 2017, a putative class action lawsuit titled Freedman v. magicJack VocalTec Ltd. et al., Case 9-17-cv-80940, was filed against magicJack and its Board of Directors in the United States District Court for the Southern District of Florida (Case No: 9:17-cv-80940-RLR). On September 30, 2019, the court determined that oral arguments will be required for this matter. The Company cannot estimate the amount of potential liability, if any, that could arise from this matter. In June 2018, Galilee Acquisition LLC f/k/a Sutton View Acquisition LLC (“GAL”) filed a complaint, served the following month, (case No.:50-2018-CA-007976-XXXX-MB) in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida against magicJack VocalTec Ltd. alleging a claim for negligent misrepresentation. On April 4, 2019, the plaintiff’s counsel advised the court that it intended to file an amended complaint, and the court gave the plaintiff 30 days from that date to file such amended complaint. However, the plaintiff failed to file the amended complaint within the Court appointed time and has filed a request for an extension of time to file the amended complaint which the court is likely to grant. A case management conference was held in July 2019 in which the plaintiff submitted the proposed amended complaint. In August 2019, the plaintiff’s counsel filed a motion with the court seeking to withdraw from the case for “irreconcilable differences” with the plaintiff. On October 29, 2019, the Court dismissed the case with prejudice. On January 5, 2017, complaints filed in November 2015 and May 2016 naming MLV & Co. (“MLV”), a broker-dealer subsidiary of FBR, as a defendant in putative class action lawsuits alleging claims under the Securities Act, in connection with the offerings of Miller Energy Resources, Inc. (“Miller”) have been consolidated. The Master Consolidated Complaint, styled Gaynor v. Miller et al., is pending in the United States District Court for the Eastern District of Tennessee, and, like its predecessor complaints, continues to allege claims under Sections 11 and 12 of the Securities Act against nine underwriters for alleged material misrepresentations and omissions in the registration statement and prospectuses issued in connection with six offerings (February 13, 2013; May 8, 2013; June 28, 2013; September 26, 2013; October 17, 2013 (as to MLV only) and August 21, 2014) with an alleged aggregate offering price of approximately $151,000. Court ordered mediation before a federal magistrate took place on August 6, 2019, with no resolution. In February 2017, certain former employees filed an arbitration claim with FINRA against WSI alleging misrepresentations in the recruitment of claimants to join WSI. Claimants also allege that WSI failed to support their mortgage trading business resulting in the loss of opportunities during their employment with WSI. Claimants are seeking $10,000 million in damages. WSI has counterclaimed alleging that claimants misrepresented their process for doing business, particularly their capital needs, resulting in substantial losses to WSI. Arbitration hearings were held in April 2019 and all claims were dismissed as of August 15, 2019. (c) Tax Contingencies magicJack believes that it files all required tax returns and pays all required federal, state and municipal taxes (such as sales, excise, utility, and ad valorem taxes), fees and surcharges. magicJack is the subject of inquiries and examinations by various states and municipalities in the normal course of business. In accordance with generally accepted accounting principles, magicJack makes a provision for a liability for taxes when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. magicJack believes any possible claims are without merit and vigorously defends its rights. However, if a government entity were to prevail in any matter, it could have a material adverse effect on magicJack’s financial condition, results of operation and cash flows. In addition, it is at least reasonably possible that a potential loss may exist for tax contingencies in addition to the provisions taken by magicJack. In a letter dated April 23, 2018, magicJack received notice that the Internal Revenue Service (the “IRS”) has selected magicJack’s 2015 United States income tax return for examination. magicJack had an initial meeting with the IRS in June 2018 and has supplied responses for all of the IRS’s document requests to date. In February 2019, the IRS auditor requested that the Company extend the period to assess tax, as the audit had been delayed due to IRS staffing issues. The Company agreed to the request. On April 4, 2019, the company received an email from the IRS auditor stating that the audit will be closed with no adjustments. However, to date, the auditor has not closed the audit nor has the auditor requested any additional information. magicJack believes that the positions taken in its 2015 return are reasonable and appropriate, however, magicJack cannot be sure of the ultimate outcome of the examination and cannot estimate the likelihood of liability or the amount of potential assessments, if any, that could arise from the examination. Historically, magicJack considered the requirements to collect sales taxes under the auspices of a 1991 Supreme Court case, Quill Corp. v. North Dakota, which established the precedent that a physical presence in the respective state is required for an entity to be subject to a state’s sales and use tax requirements. Accordingly, magicJack had concluded that it did not have nexus for sales tax in those states in which it had no physical presence (i.e., it had no employees regularly and systematically there and it had no property there). On June 21, 2018, via South Dakota v. Wayfair, Inc. (No. 17-494) (“Wayfair”) the U.S. Supreme Court reversed its prior ruling and eliminated the “physical presence” requirement. In consideration of the ruling, magicJack made the decision to start collecting sales tax on direct sales of its magicJack device and access right renewals in states that have adopted similar “Economic Nexus” laws. magicJack began registering for, collecting and remitting sales tax to identified jurisdictions during the third quarter of 2018. The Company will continue to monitor the situation and add additional states if deemed necessary. Though the South Dakota law is to be applied prospectively, it is not certain if other states may try to enact laws on a retrospective basis based on the Wayfair ruling, and the Company cannot estimate the likelihood of liability or the potential amount of assessments that could arise from prior periods if other states tried to apply the ruling on a retrospective basis. In a letter dated September 12, 2019, the Company received notice that the State of California has selected the Company’s 2016 and 2017 California corporate income tax returns for examination. Other than providing responses to a brief auditing scheduling information questionnaire that was attached to the notice of audit, the Company has not yet received any additional information document requests. The Company believes that the positions taken in its 2016 and 2017 California corporate income tax returns are reasonable and appropriate, however, the Company cannot be sure of the ultimate outcome of the examination and cannot estimate the likelihood of liability or the amount of potential assessments, if any, that could arise from the examination. |
SHARE-BASED PAYMENTS
SHARE-BASED PAYMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
SHARE-BASED PAYMENTS | NOTE 16— SHARE-BASED PAYMENTS (a) Amended and Restated 2009 Stock Incentive Plan Share- based compensation expense for restricted stock units under the Company’s Amended and Restated 2009 Stock Incentive Plan (the “Plan”) was $3,604 and $1,714 for the three months ended September 30, 2019 and 2018, respectively, and $7,165 and $4,085 for the nine months ended September 30, 2019 and 2018, respectively. Of the 1,857,328 restricted stock units granted during the nine months ended September 30, 2019, 407,328 restricted stock units were granted to executives and employees with a grant date fair value of $7,870 and 1,450,000 performance based restricted stock units granted to certain executives and managers with a grant date fair value of $10,904. The restricted stock units generally vest over a period of one to three years based on continued service. Performance based restricted stock units generally vest based on both the employee’s continued service and the Company’s common stock price, as defined in the grant, achieving a set threshold during the three-year period following the grant. In determining the fair value of restricted stock units on the grant date, the fair value is adjusted for (a) estimated forfeitures, (b) expected dividends based on historical patterns and the Company’s anticipated dividend payments over the expected holding period and (c) the risk-free interest rate based on U.S. Treasuries for a maturity matching the expected holding period. As of September 30, 2019, the expected remaining unrecognized share-based compensation expense of $22,256 will be expensed over a weighted average period of 1.7 years. A summary of equity incentive award activity for the nine months ended September 30, 2019 was as follows: Weighted Average Shares Fair Value Nonvested at January 1, 2019 896,817 $ 16.94 Granted 1,857,328 10.11 Vested (474,362 ) 15.04 Forfeited (9,384 ) 18.92 Nonvested at September 30, 2019 2,270,399 $ 11.77 The total fair value of shares vested during the nine months ended September 30, 2019 was $7,136. (b) Amended and Restated FBR & Co. 2006 Long-Term Stock Incentive Plan In connection with the acquisition of FBR & Co. on June 1, 2017, the equity awards previously granted or available for issuance under the FBR & Co. 2006 Long-Term Stock Incentive Plan (the “FBR Stock Plan”) may be issued under the Plan. During the three months ended September 30, 2019, the Company granted restricted stock units representing 513 shares of common stock with a total grant date fair value of $10 under the FBR Stock Plan. The share-based compensation expense in connection with the FBR Stock Plan restricted stock awards was $1,056 and $1,321 during the three months ended September 30, 2019 and 2018, respectively and $2,848 and $4,509 during the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, the expected remaining unrecognized share-based compensation expense of $6,101 will be expensed over a weighted average period of 1.8 years. A summary of equity incentive award activity for the three months ended September 30, 2019 was as follows: Weighted Average Shares Fair Value Nonvested at January 1, 2019 689,430 $ 17.64 Granted 130,509 19.14 Vested (210,978 ) 17.59 Forfeited (110,801 ) 16.49 Nonvested at September 30, 2019 498,160 $ 18.31 The per-share weighted average grant-date fair value of restricted stock units was $19.14 during the nine months ended September 30, 2019. There were 210,978 restricted stock units with a fair value of $3,711 that vested during the nine months ended September 30, 2019 under the FBR Stock Plan. |
NET CAPITAL REQUIREMENTS
NET CAPITAL REQUIREMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Brokers and Dealers [Abstract] | |
NET CAPITAL REQUIREMENTS | NOTE 17— NET CAPITAL REQUIREMENTS B. Riley FBR, MLV and B. Riley Wealth Management (“BRWM”), the Company’s broker-dealer subsidiaries, are registered with the SEC as broker-dealers and are members of the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Company’s broker-dealer subsidiaries are subject to SEC Uniform Net Capital Rule (Rule 15c3-1) which requires the subsidiaries to maintain minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. As such, they are subject to the minimum net capital requirements promulgated by the SEC. As of September 30, 2019, B. Riley FBR had net capital of $133,682, which was $131,780 in excess of its required net capital of $1,902; MLV had net capital of $679, which was $579 in excess of its required net capital of $100; and BRWM had net capital of $5,914, which was $5,447 in excess of its required net capital of $467. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 18— RELATED PARTY TRANSACTIONS At September 30, 2019, amounts due from related parties of $6,689 includes $161 from GACP I, L.P. (“GACP I”) and $1,210 from GACP II, L.P. (“GACP II”) for management fees and other operating expenses, $13 due from B. Riley Principal Merger Corp, a company that consummated its initial public offering on April 11, 2019, and our wholly owned subsidiary, B. Riley Principal Sponsor Co. LLC, is the Sponsor, and $5,304 due from John Ahn, President of Great American Partners, LLC, our indirect wholly owned subsidiary (“GACP”), pursuant to a Secured Line of Promissory Note connected with a Transfer Agreement as further discussed below. At September 30, 2019, amounts due to related parties includes $1,358 due from CA Global Partners (“CA Global”) for operating expenses related to wholesale and industrial liquidation engagements managed by CA Global on behalf of GA Global Ptrs, and is included in due to related parties and partners on the accompanying condensed balance sheets. At September 30, 2019, the Company had sold loan participations to B. Riley Partners Opportunity Fund, a private equity fund managed by one of our subsidiaries, in the amount of $13,066, and recorded interest expense of $429 during the nine months ended September 30, 2019 related to B. Riley Partners Opportunity Fund’s loan participations. Our executive officer’s and board of directors have a 58.5% financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 50.7% in the B. Riley Partners Opportunity Fund at September 30, 2019. At December 31, 2018, amounts due from related parties of $1,729 include $194 from GACP I, $724 from GACP II, and $812 from CA Global for management fees, incentive fees and other operating expenses. On April 1, 2019, the Company entered into a Transfer Agreement (the “Transfer Agreement”) with GACP II, a fund managed by GACP, and John Ahn, the President of GACP. The Transfer Agreement provides for among other things, the transfer to Mr. J. Ahn 55.56% of the Company’s limited partnership interest in GACP II (the “Transferred Interest”), which represents a capital commitment in the aggregate amount of $5,000. In connection with the Transfer Agreement, the Company provided Mr. J. Ahn with a non-recourse, secured line of credit in an aggregate amount of up to $5,003 pursuant to the terms of a Secured Line of Credit Promissory Note (the “Note”) dated April 1, 2019, to fund the purchase price of the Transferred Interest. We also entered into a Security Agreement with Mr. J. Ahn on April 1, 2019, which granted to the Company a security interest in the Transferred Interest to secure Mr. J. Ahn’s obligations under the Note. The Note is subject to an interest rate per annum of 7.00%. As of September 30, 2019 the principal and accrued interest on the Note were $5,167 (amount transferred as of September 30, 2019) and $137, respectively. For the period from April 1, 2019 (inception) to September 30, 2019 interest earned on the note was $137. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | NOTE 19— BUSINESS SEGMENTS The Company’s business is classified into the Capital Markets segment, Auction and Liquidation segment, Valuation and Appraisal segment and Principal Investments — United Online and magicJack segment. These reportable segments are all distinct businesses, each with a different marketing strategy and management structure. The following is a summary of certain financial data for each of the Company’s reportable segments: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Capital Markets segment: Revenues - Services and fees $ 108,330 66,558 259,498 189,051 Interest income - Loans and securities lending 25,766 9,785 54,147 25,406 Total revenues 134,096 76,343 313,645 214,457 Selling, general and administrative expenses (70,140 ) (57,207 ) (196,570 ) (168,559 ) Restructuring (charge) recovery — (428 ) 4 (2,457 ) Interest expense - Securities lending and loan participations sold (10,273 ) (6,425 ) (22,579 ) (16,317 ) Depreciation and amortization (1,281 ) (1,309 ) (3,844 ) (4,428 ) Segment income 52,402 10,974 90,656 22,696 Auction and Liquidation segment: Revenues - Services and fees 11,232 2,459 65,681 44,812 Revenues - Sale of goods 54 48 1,230 48 Total revenues 11,286 2,507 66,911 44,860 Direct cost of services (2,371 ) (838 ) (21,584 ) (12,263 ) Cost of goods sold (126 ) (24 ) (992 ) (41 ) Selling, general and administrative expenses (2,835 ) (1,289 ) (9,045 ) (7,787 ) Depreciation and amortization (1 ) (7 ) (5 ) (23 ) Segment income 5,953 349 35,285 24,746 Valuation and Appraisal segment: Revenues - Services and fees 10,818 9,404 29,143 27,383 Direct cost of services (4,505 ) (4,067 ) (13,495 ) (12,388 ) Selling, general and administrative expenses (2,826 ) (2,379 ) (7,997 ) (7,138 ) Depreciation and amortization (36 ) (56 ) (100 ) (159 ) Segment income 3,451 2,902 7,551 7,698 Principal Investments - United Online and magicJack segment: Revenues - Services and fees 22,999 11,403 74,383 34,170 Revenues - Sale of goods 864 24 2,793 90 Total revenues 23,863 11,427 77,176 34,260 Direct cost of services (5,565 ) (3,251 ) (20,131 ) (9,082 ) Cost of goods sold (785 ) (28 ) (2,843 ) (101 ) Selling, general and administrative expenses (5,895 ) (2,348 ) (18,410 ) (6,321 ) Depreciation and amortization (2,956 ) (1,682 ) (9,719 ) (5,040 ) Restructuring charge — — (1,703 ) — Segment income 8,662 4,118 24,370 13,716 Consolidated operating income from reportable segments 70,468 18,343 157,862 68,856 Corporate and other expenses (including restructuring recovery of $210 during the nine months ended September 30, 2018) (10,617 ) (5,505 ) (28,778 ) (16,938 ) Interest income 361 442 1,329 736 Income (loss) on equity investments 1,113 828 (4,049 ) 5,049 Interest expense (12,772 ) (9,340 ) (35,130 ) (23,926 ) Income before income taxes 48,553 4,768 91,234 33,777 Provision for income taxes (14,409 ) (2,046 ) (26,802 ) (8,412 ) Net income 34,144 2,722 64,432 25,365 Net income attributable to noncontrolling interests (158 ) (92 ) (50 ) 1,051 Net income attributable to B. Riley Financial, Inc. $ 34,302 $ 2,814 $ 64,482 $ 24,314 The following table presents revenues by geographical area: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenues: Revenues - Services and fees: North America $ 153,379 $ 89,818 $ 428,629 $ 294,148 Australia — — 15 — Europe — 6 61 1,268 Total Revenues - Services and fees $ 153,379 $ 89,824 $ 428,705 $ 295,416 Revenues - Sale of goods North America $ 918 $ 72 $ 4,023 $ 138 Revenues - Interest income - Loans and securities lending: North America $ 25,766 $ 9,785 $ 54,147 $ 25,406 Total Revenues: North America $ 180,063 $ 99,675 $ 486,799 $ 319,692 Australia — — 15 — Europe — 6 61 1,268 Total Revenues $ 180,063 $ 99,681 $ 486,875 $ 320,960 The following table presents long-lived assets, which consists of property and equipment and other assets, by geographical area: As of As of September 30, December 31, 2019 2018 Property and equipment, net: North America $ 13,171 $ 15,489 Europe — 34 Total $ 13,171 $ 15,523 Segment assets are not reported to, or used by, the Company’s Chief Operating Decision Maker to allocate resources to, or assess performance of, the segments and therefore, total segment assets have not been disclosed. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20— SUBSEQUENT EVENTS Membership Interest Purchase Agreement with BR Brand Acquisition LLC On October 11, 2019, the Company and B. Riley Brand Management LLC, an indirect wholly-owned subsidiary of the Company (the “B. Riley Member”), entered into a Membership Interest Purchase Agreement (the “MIPA”) with BR Brand Acquisition LLC (the “BR Brand Member”) and BR Brand Holdings LLC (the “Operating Company,” and, together with the B. Riley Member, the BR Brand Member and the Company, the “Parties”), pursuant to which the B. Riley Member agreed to acquire a majority of the equity interest in the Operating Company. The closing of the transactions contemplated by the MIPA (the “Closing”) occurred on October 28, 2019. On October 28, 2019, the B. Riley Member completed the Closing of a majority of the equity interest in the Operating Company pursuant to the terms of the MIPA in exchange for (i) aggregate consideration of approximately $116,500 in cash, $78,250 of which was paid at the Closing, and the remainder of which will be paid on or before November 4, 2019, and (ii) the issuance by the Company to Bluestar Alliance LLC (“Bluestar”), an affiliate of the BR Brand Member, of a warrant to purchase up to 200,000 shares of the Company’s Common Stock, par value $0.0001 per share, at an exercise price per share equal to $26.24. One-third of the shares of common stock issuable under the Warrant will immediately vest and become exercisable upon its issuance at the Closing, and the remaining two-thirds of such shares of common stock will vest and become exercisable following the first and/or second anniversaries of the Closing, subject to the Operating Company’s (or another related joint venture with Bluestar) satisfaction of specified financial performance targets. In connection with the Closing, (i) the BR Brand Member has caused the transfer of certain trademarks, domain names, license agreements and related assets from existing brand owners to the Operating Company and (ii) the Company, Bluestar and certain of their affiliates (including the B. Riley Member and the BR Brand Member) entered into an amended and restated operating agreement for the Operating Company and certain other commercial agreements. Each of the B. Riley Member and the BR Brand Member is subject to certain post-Closing obligations to indemnify the Operating Company for breaches of representations or warranties or covenants in the MIPA, for certain tax liabilities, and, with respect to the BR Brand Member only, certain pre-closing liabilities. The Company is guaranteeing the performance by the B. Riley Member of its obligations under the MIPA to make the Closing Payment and to make any payments in respect of its indemnification obligations. Preferred Stock Offering On October 7, 2019, the Company closed its underwritten public offering of depositary shares (the “Depositary Shares”), each representing 1/1000 th On October 4, 2019, the Company filed a Certificate of Designation (“Certificate of Designation”) for the Series A Preferred Stock with the Secretary of State of the State of Delaware, which became effective upon acceptance for record. The Certificate of Designation classified a total of 10,000 shares of the Company’s authorized shares of preferred stock, $0.0001 par value per share, as Series A Preferred Stock. As set forth in the Certificate of Designation, the Series A Preferred Stock ranks, as to dividend rights and rights upon the Company’s liquidation, dissolution or winding up: (i) senior to all classes or series of the Company’s common stock and to all other equity securities issued by the Company other than equity securities issued with terms specifically providing that those equity securities rank on a parity with the Series A Preferred Stock, (ii) junior to all equity securities issued by the Company with terms specifically providing that those equity securities rank senior to the Series A Preferred Stock with respect to payment of dividends and the distribution of assets upon the Company’s liquidation, dissolution or winding up and (iii) effectively junior to all of the Company’s existing and future indebtedness (including indebtedness convertible into our common stock or preferred stock) and to the indebtedness and other liabilities of (as well as any preferred equity interests held by others in) the Company’s existing or future subsidiaries. Holders of Series A Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 6.875% per annum of the $25,000 liquidation preference ($25.00 per depositary share) per year (equivalent to $1,718.75 or $1.71875 per depositary share). Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and October, beginning on or about October 31, 2019. Generally, the Series A Preferred Stock is not redeemable by the Company prior to October 7, 2024. However, upon a change of control or delisting event, the Company will have the special option to redeem the Series A Preferred Stock. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | ( a) Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements include the accounts of B. Riley Financial, Inc. and its wholly-owned and majority-owned subsidiaries. The condensed consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which is controlled by the Company as a result of its ownership of a 50% member interest, appointment of two of the three executive officers and significant influence over the funding of operations, and (b) GA Retail Investments, L.P. which is controlled by the Company as a result of its ownership of a 50% partnership interest, appointment of executive officers and significant influence over the operations. The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 6, 2019. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods. |
Use of Estimates | (b) Use of Estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expense during the reporting period. Estimates are used when accounting for certain items such as valuation of securities, allowance for doubtful accounts, the fair value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling interests, fair value of share based arrangements and accounting for income tax valuation allowances. Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ. |
Revenue Recognition | (c) Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on our condensed consolidated financial statements. The new revenue standard was applied prospectively in the Company’s condensed consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods was revised and will continue to be reported under the accounting standards in effect during those historical periods. Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services. There have been no material changes to the Company’s revenue recognition accounting policy set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. See Note 12 for information on revenue from contracts with customers. |
Direct Cost of Services | (d) Direct Cost of Services Direct cost of services relates to service and fee revenues. The costs consist of employee compensation and related payroll benefits, travel expenses, the cost of consultants assigned to revenue-generating activities and direct expenses billable to clients in the Valuation and Appraisal segment. Direct costs of services include participation in profits under collaborative arrangements in which the Company is a majority participant. Direct costs of services also include the cost of consultants and other direct expenses related to Auction and Liquidation contracts pursuant to commission and fee based arrangements in the Auction and Liquidation segment. Direct cost of services in the Principal Investments — United Online and magicJack segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks, servers and data centers, sales commissions associated with multi-year service plans, depreciation of network computers and equipment, amortization expense, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees. Direct cost of services does not include an allocation of the Company’s overhead costs. |
Interest Expense - Securities Lending Activities | (e) Interest Expense — Securities Lending Activities and Loan Participations Sold Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $9,721 and $6,425 for the three months ended September 30, 2019 and 2018, respectively, and $22,027 and $16,317 for the nine months ended September 30, 2019 and 2018, respectively. Loan participations sold as of September 30, 3019 totaled $28,872. Interest expense from loan participations sold totaled $552 for both the three and nine months ended September 30, 2019. |
Concentration of Risk | (f) Concentration of Risk Revenues in the Capital Markets, Valuation and Appraisal and Principal Investments — United Online and magicJack segments are currently primarily generated in the United States. Revenues in the Auction and Liquidation segment are primarily generated in the United States, Australia, Canada and Europe. The Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured creditors. Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors. The Company seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s exposure to losses on any one specific liquidation services contract or concentration within any one specific industry. To mitigate the exposure to losses on any one specific liquidations services contract, the Company sometimes conducts operations with third parties through collaborative arrangements. The Company maintains cash in various federally insured banking institutions. The account balances at each institution periodically exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts. The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed to parties in accordance with the collaborative arrangements. |
Advertising Expenses | (g) Advertising Expenses The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $437 and $371 for the three months ended September 30, 2019 and 2018, respectively, and $1,383 and $1,656 for the nine months ended September 30, 2019 and 2018, respectively. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of income. |
Share-Based Compensation | (h) Share-Based Compensation The Company’s share-based payment awards principally consist of grants of restricted stock, restricted stock units and costs associated with the Company’s employee stock purchase plan. In accordance with the applicable accounting guidance, share-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the condensed consolidated statements of income over the requisite service or performance period the award is expected to vest. The fair value of the liability-classified award will be subsequently remeasured at each reporting date through the settlement date. Change in fair value during the requisite service period will be recognized as compensation cost over that period. In June 2018, the Company adopted the 2018 Employee Stock Purchase Plan (“Purchase Plan”) which allows eligible employees to purchase common stock through payroll deductions at a price that is 85% of the market value of the common stock on the last day of the offering period. In accordance with the provisions of ASC 718, Compensation — Stock Compensation |
Income Taxes | (i) Income Taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods. Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reduced. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. |
Cash and Cash Equivalents | j) Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. |
Restricted Cash | (k) Restricted Cash As of September 30, 2019, restricted cash balance is $471 related to one of the Company’s telecommunication suppliers. As of December 31, 2018, restricted cash balance of $838 included $469 cash collateral for one of the Company’s telecommunication suppliers and $369 certificate of deposits collateral for certain letters of credit. |
Securities Borrowed and Securities Loaned | (l) Securities Borrowed and Securities Loaned Securities borrowed and securities loaned are recorded based upon the amount of cash advanced or received. Securities borrowed transactions facilitate the settlement process and require the Company to deposit cash or other collateral with the lender. With respect to securities loaned, the Company receives collateral in the form of cash. The amount of collateral required to be deposited for securities borrowed, or received for securities loaned, is an amount generally in excess of the market value of the applicable securities borrowed or loaned. The Company monitors the market value of the securities borrowed and loaned on a daily basis, with additional collateral obtained, or excess collateral recalled, when deemed appropriate. The Company accounts for securities lending transactions in accordance with ASC “Topic 210: Balance Sheet,” which requires companies to report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned and these items are presented on a gross basis in the condensed consolidated balance sheets. |
Due from/to Brokers, Dealers, and Clearing Organizations | (m) Due from/to Brokers, Dealers, and Clearing Organizations The Company clears all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount receivable from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s clearing deposits and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company and amounts payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for securities loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the securities owned by the Company and held on deposit at the clearing broker. |
Accounts Receivable | (n) Accounts Receivable Accounts receivable represents amounts due from the Company’s Auction and Liquidation, Valuation and Appraisal, Capital Markets and Principal Investments — United Online and magicJack customers. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes a specific customer identification methodology. Management also considers historical losses adjusted for current market conditions and the customers’ financial condition and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. The Company’s bad debt expense and changes in the allowance for doubtful accounts for the three and nine months ended September 30, 2019 and 2018 are included in Note 6. |
Leases | (o) Leases The Company determines if an arrangement is, or contains, a lease at the inception date. Operating leases are included in right-of-use assets, with the related liabilities included in operating lease liabilities in the condensed consolidated balance sheet. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We use our estimated incremental borrowing rate in determining the present value of lease payments. Variable components of the lease payments such as fair market value adjustments, utilities, and maintenance costs are expensed as incurred and not included in determining the present value. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components which are accounted for as a single lease component. See Note 8 for additional information on leases. |
Property and Equipment | (p) Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. Property and equipment held under finance leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Depreciation and amortization expense on property and equipment was $1,163 and $1,005 for the three months ended September 30, 2019 and 2018, respectively, and $4,186 and $3,369 for the nine months ended September 30, 2019 and 2018, respectively. |
Loans Receivable | (q) Loans Receivable Loans receivable are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans, and for purchased loans, net of any unamortized premiums or discounts. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related loans. Unearned income, discounts and premiums are amortized to interest income using a level yield methodology. At September 30, 2019 and December 31, 2018, loans receivable had a carrying value of $295,898 and $38,794, respectively, with various maturity dates through June 2022. |
Securities and Other Investments Owned and Securities Sold Not Yet Purchased | (r) Securities and Other Investments Owned and Securities Sold Not Yet Purchased Securities owned consist of marketable securities and investments in partnership interests and other securities recorded at fair value. Securities sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices. Changes in the value of these securities are reflected currently in the results of operations. As of September 30, 2019 and December 31, 2018, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities: September 30, December 31, 2019 2018 Securities and other investments owned: Common and preferred stocks and warrants $ 244,556 $ 193,459 Corporate bonds 21,580 18,825 Fixed income securities 4,816 3,825 Loans receivable at fair value 35,511 33,731 Partnership interests and other 20,153 23,737 $ 326,616 $ 273,577 Securities sold not yet purchased: Common stocks $ 6,684 $ 11,130 Corporate bonds 18,630 16,338 Fixed income securities 3,778 10,155 $ 29,092 $ 37,623 |
Fair Value Measurements | (s) Fair Value Measurements The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) for identical instruments that are highly liquid, observable and actively traded in over-the-counter markets. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common and preferred stocks and warrants, corporate bonds, loans receivable valued at fair value and investments in partnerships. Investments in common stocks that are based on quoted prices in active markets are included in Level 1 of the fair value hierarchy. The Company also holds nonpublic common and preferred stocks and warrants for which there is little or no public market and fair value is determined by management on a consistent basis. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks. These investments are included in Level 3 of the fair value hierarchy. Investments in partnership interests include investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds. The Company also invests in priority investment funds and the underlying securities held by these funds are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. The Company’s partnership and investment fund interests are valued based on the Company’s proportionate share of the net assets of the partnerships and funds; the value for these investments are derived from the most recent statements received from the general partner or fund administrator. These partnership and investment fund interests are valued at net asset value (“NAV”) in accordance with ASC “Topic 820: Fair Value Measurements.” The fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models. The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2019 and December 31, 2018. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2019 Using Quoted prices in Fair value at active markets for identical Other observable Significant unobservable September 30, assets inputs inputs 2019 (Level 1) (Level 2) (Level 3) Assets: Securities and other investments owned: Common and preferred stocks and warrants $ 244,556 $ 193,625 $ — $ 50,931 Corporate bonds 21,580 — 21,580 — Fixed income securities 4,816 — 4,816 — Loans receivable at fair value 35,511 — — 35,511 Total 306,463 $ 193,625 $ 26,396 $ 86,442 Investment funds valued at net asset value (1) 20,153 Total assets measured at fair value $ 326,616 Liabilities: Securities sold not yet purchased: Common stocks $ 6,684 $ 6,684 $ — $ — Corporate bonds 18,630 — 18,630 — Fixed income securities 3,778 — 3,778 — Total securities sold not yet purchased 29,092 6,684 22,408 — Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,395 — — 4,395 Total liabilities measured at fair value $ 33,487 $ 6,684 $ 22,408 $ 4,395 Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2018 Using Quoted prices in Fair value at active markets for identical Other observable Significant unobservable December 31 assets inputs inputs 2018 (Level 1) (Level 2) (Level 3) Assets: Securities and other investments owned: Common and preferred stocks and warrants $ 193,459 $ 168,882 $ — $ 24,577 Corporate bonds 18,825 — 18,825 — Fixed income securities 3,825 — 3,825 — Loans receivable at fair value 33,731 — — 33,731 Total 249,840 $ 168,882 $ 22,650 $ 58,308 Investment funds valued at net asset value (1) 23,737 Total assets measured at fair value $ 273,577 Liabilities: Securities sold not yet purchased: Common stocks $ 11,130 $ 11,130 $ — $ — Corporate bonds 16,338 — 16,338 — Fixed income securities 10,155 — 10,155 — Total securities sold not yet purchased 37,623 11,130 26,493 — Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,633 — — 4,633 Total liabilities measured at fair value $ 42,256 $ 11,130 $ 26,493 $ 4,633 (1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy in accordance with ASC “Topic 820 Fair Value Measurements.” The fair value amounts presented in the tables above for investment funds valued at net asset value are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the condensed consolidated balance sheets. As of September 30, 2019 and December 31, 2018, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $86,442 and $58,308, respectively, or 4.1% and 3.0%, respectively, of the Company’s total assets. In determining the fair value for these Level 3 financial assets, the Company analyzes various financial, performance and market factors to estimate the value, including where applicable, over-the-counter market trading activity. The following table summarizes the significant unobservable inputs in the fair value measurement of level 3 financial assets and liabilities by category of investment and valuation technique as of September 30, 2019: Fair value at September 30, Valuation Unobservable Weighted 2019 Technique Input Range Average Assets: Common and preferred stocks and warrants $ 50,931 Market approach Over-the-counter trading activity $8.00/share $ 8.00 Market price of related security $4.79/share $ 4.79 Recent transaction $210.02/share $ 210.02 Multiple of EBITDA 10.1x 10.1 x Yield analysis Cost of capital 13.2% 13.2 % Option pricing model Annualized volatility 50% - 100% 68 % Loans receivable at fair value 35,511 Discounted cash flow Market interest rate 15.1% -15.3% 15.3 % Market approach Market price of related security $2,100.21/share $ 2,100.21 Total level 3 assets measured at fair value $ 86,442 Liabilities: Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 4,395 Market approach Operating income multiple 6.0x 6.0 x The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2019 and 2018 are as follows: Level 3 Level 3 Changes During the Period Level 3 Balance at Fair Relating to Purchases, Transfer in Balance at Beginning of Value Undistributed Sales and and/or out End of Year Adjustments Earnings Settlements of Level 3 Period Nine Months Ended September 30, 2019 Common and preferred stocks and warrants $ 24,577 $ 715 $ 1,424 $ 24,215 $ — $ 50,931 Loans receivable at fair value 33,731 11,648 1,621 (11,489 ) — 35,511 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,633 — (238 ) — — 4,395 Nine Months Ended September 30, 2018 Common stocks and warrants $ 28,346 $ (3,247 ) $ 578 $ 4,250 $ (20,970 ) $ 8,957 Loans receivable at fair value 33,713 (11 ) 100 2,785 — 36,587 Partnership interests and other 26,104 1,411 (2,735 ) 28,044 — 52,824 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,478 — (69 ) — — 4,409 The amount reported in the table above for the nine months ended September 30, 2019 and 2018 includes the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis. The carrying amounts reported in the condensed consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value based on the short-term maturity of these instruments. The carrying amount of the senior notes payable and term loan approximate fair value because the contractual interest rates or effective yields of such instruments are consistent with current market rates of interest for instruments of comparable credit risk. During the nine months ended September 30, 2019 and 2018, there were no assets or liabilities measured at fair value on a non-recurring basis. |
Derivative and Foreign Currency Translation | (t) Derivative and Foreign Currency Translation The Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain Auction and Liquidation engagements with operations outside the United States. The Company did not use any derivative contracts during the nine months ended September 30, 2019. During the nine months ended September 30, 2018, the Company’s use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $54,406 Canadian dollars, that were settled during the first and second quarter of 2018 and (b) $1,500 Euro’s that settled in March 2018. The net loss from forward exchange contracts was $91 during the nine months ended September 30, 2018. This amount is reported as a component of selling, general and administrative expenses in the condensed consolidated statements of income. The Company transacts business in various foreign currencies. In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets. Transaction gains (loss) were $446 and ($51) during the three months ended September 30, 2019 and 2018, respectively, and $121 and $843 during the nine months ended September 30, 2019 and 2018, respectively. These amounts are included in selling, general and administrative expenses in the Company’s condensed consolidated statements of income. |
Common Stock Warrants | (u) Common Stock Warrants The common stock warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from the Company at a price of $17.50 per share (the “Exercise Price”), subject to, among other matters, the proper completion of an exercise notice and payment. The Exercise Price and the number of shares of Company common stock issuable upon exercise are subject to customary anti-dilution and adjustment provisions, which include stock splits, subdivisions or reclassifications of the Company’s common stock. The common stock warrants expire on July 3, 2022. As of December 31, 2018, warrants to purchase 821,816 shares of common stock were outstanding. On May 16, 2019, the Company repurchased 638,311 warrants for $2,777 ($4.35 per warrant) which is included in common stock warrants repurchased in the condensed consolidated statements of equity. As of September 30, 2019, warrants to purchase 183,505 shares of common stock were outstanding. |
Equity Investment | (v) Equity Investment bebe stores, inc. At September 30, 2019, the Company had a 30.5% ownership interest in bebe stores, inc. (“bebe”). The equity ownership in bebe is accounted for under the equity method of accounting, and is included in prepaid expenses and other assets in the condensed consolidated balance sheets. National Holdings Corporation On November 14, 2018, the Company entered into an agreement to acquire shares of National Holdings Corporation (“National Holdings”), a Nasdaq-listed issuer, from Fortress Biotech, Inc. for an aggregate purchase price totaling approximately $22.9 million. The transaction was completed in two tranches. In the first tranche, which was completed in the fourth quarter of 2018, the Company acquired shares representing 24% of the total outstanding shares of National Holdings. The second tranche was completed in the first quarter of 2019. As of September 30, 2019, the Company had purchased 6,159,550 shares of National Holdings’ common stock, representing 48.8% of National Holdings’ outstanding shares, at $3.25 per share. The carrying value for the National Holdings investment is included in prepaid expenses and other assets in the condensed consolidated balance sheets. The equity ownership in National Holdings is accounted for under the equity method of accounting. |
Loan Participations Sold | (w) Loan Participations Sold As of September 30, 2019, the Company has sold investments (“Loan Participations Sold”) to third parties (“Participants”) that are accounted for as secured borrowings under ASC Topic 860, Transfers and Servicing. Under ASC Topic 860, a partial loan transfer does not qualify for sale accounting in order for sale treatment to be allowed. A participation or other partial loan transfer that meets the definition of a participating interest is classified as loan receivable and the portion transferred is recorded as a secured borrowing under loan participations sold in the condensed consolidated balance sheet. The Participants are entitled to payments made by the borrower of the related loan equal to the current Loan Participations Sold outstanding at the interest rates for the respective investment. In the event that the borrower defaults, the Participants have rights to payments from such borrower, but do not have recourse to the Company. The terms of the Loan Participations Sold are commensurate with the terms of the related loan. As of September 30, 2019, the Company had entered into participation agreements for a total of $28,872. In addition, the interest income and interest expense related to the Loan Participations Sold resulted in interest income and interest expense which is presented gross on the condensed consolidated statement of income. |
Reclassifications and Supplemental Non-cash Disclosures | (x) Reclassifications and Supplemental Non-cash Disclosures During the three and nine months ended September 30, 2018, interest income earned on loans of $831 and $2,570, respectively, was previously included in services and fees income in the capital markets segment. These amounts have been reclassified and reported in interest income – loans and securities lending to conform to the 2019 presentation. During the nine months ended September 30, 2018, non-cash investing activities included the conversion of a loan receivable in the amount of $16,867 and accrued interest receivable of $51 into an equity investment that totaled $16,918. During the nine months ended September 30, 2019, non-cash investing activities included the conversion of a loan receivable in the amount of $7,574 into securities and other investments owned. |
Variable Interest Entity | (y) Variable Interest Entity In 2018, the operations of GACP II, LP, a private debt investment limited partnership (the “Partnership”) commenced operations. The Company’s investment in the Partnership is a variable interest entity (“VIE”) since the unaffiliated limited partners do not have substantive kick- out or participating rights to remove the Company’s subsidiary that is the general partner managing the Partnership. The Company has determined that it is not the primary beneficiary due to the fact that its fee arrangements are considered at-market and thus not deemed to be variable interests, and it does not hold any other interests in the Partnership that are considered to be more than insignificant. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. The carrying value of the Company’s investments in the VIE that was not consolidated is shown below. September 30, Partnership investments $ 12,074 Due from related party 1,209 Maximum exposure to loss $ 13,283 |
Recent Accounting Pronouncements | (z) Recent Accounting Pronouncements Not yet adopted In January 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The revised guidance will be applied prospectively and is effective for calendar year-end SEC filers for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not yet adopted this update and currently evaluating the effect this new standard will have on its financial condition and results of operations. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This standard requires an allowance to be recorded for all expected credit losses for certain financial assets. The new standard introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments. ASU 2016-13 is effective for public companies for interim and annual period beginning December 15, 2019. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company has not yet adopted this update and is currently evaluating the effect this new standard will have on its financial condition and results of operations. Recently adopted In February 2016, FASB issued ASU. 2016-02: Leases (Topic 842) which requires a lessee to recognize a right-of-use (ROU) asset and lease liability on the balance sheet for all leases with a contract term longer than 12 months and provide enhanced disclosures. The Company adopted the new standard effective January 1, 2019 using the modified retrospective method. The Company elected the ‘package of practical expedients,’ which permits the Company not to reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. Upon adoption of ASC 842 on January 1, 2019, the Company recognized $67,519 operating lease liabilities with corresponding operating lease right-of-use assets. See Note 8 to the accompanying financial statements for additional information on leases. In February 2018, the FASB issued ASU 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income that provides for the reclassification from accumulated other comprehensive income to retained earnings for stranded effects resulting from the Tax Reform Act. The accounting update should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. The accounting update is effective for the fiscal year beginning after December 15, 2018. The adoption of this standard did not have a material impact to the Company’s financial condition and results of operations. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for us in our first quarter of fiscal year 2019. The adoption of this standard did not have a material impact to the Company’s financial condition and results of operations. On January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers using the modified retrospective method and the impact was determined to be immaterial on the Company’s consolidated financial statements. The new revenue standard was applied prospectively in the Company’s consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods. See Note 12 to the financial statements for additional information on the adoption of this standard. In August 2018, the FASB issued ASU No. 2018-13: Fair Value Measurement (Topic 820) (“ASU 2018-13”). The amendments in this update change the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. The Company early adopted ASU 2018-13 in the third quarter of 2018 and the adoption did not have a material impact on our consolidated financial statements. In March 2018, the FASB issued ASU 2018-05: Income Taxes (Topic 740) — Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The amendments in this update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Reform Act. The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. This ASU also discusses required disclosures that an entity must make with regard to the Tax Reform Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. The Company has adopted this standard and will continue to evaluate indicators that may give rise to a change in the Company’s tax provision as a result of the Tax Reform Act. See Note 13 to the accompanying financial statements for additional information on the Tax Reform Act. On January 1, 2018, the Company adopted ASU 2016-18 — Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) using the retrospective method which requires adjustment to prior periods in the statement of cash flows. ASU 2016-18 clarifies how restricted cash should be presented on the statement of cash flows and requires companies to include restricted cash with cash and cash equivalents when reconciling the beginning of period and end of period totals on the statement of cash flows. Restricted cash previously classified under investing activities is now included in the reconciliation of beginning and ending cash on the statement of cash flows. The adoption of ASU 2016-18 did not have a material impact on the Company’s financial condition and results of operations. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of securities and other investments owned and securities sold not yet purchased at fair value | As of September 30, 2019 and December 31, 2018, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities: September 30, December 31, 2019 2018 Securities and other investments owned: Common and preferred stocks and warrants $ 244,556 $ 193,459 Corporate bonds 21,580 18,825 Fixed income securities 4,816 3,825 Loans receivable at fair value 35,511 33,731 Partnership interests and other 20,153 23,737 $ 326,616 $ 273,577 Securities sold not yet purchased: Common stocks $ 6,684 $ 11,130 Corporate bonds 18,630 16,338 Fixed income securities 3,778 10,155 $ 29,092 $ 37,623 |
Schedule of financial assets and liabilities measured on recurring basis | The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2019 and December 31, 2018. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2019 Using Quoted prices in Fair value at active markets for identical Other observable Significant unobservable September 30, assets inputs inputs 2019 (Level 1) (Level 2) (Level 3) Assets: Securities and other investments owned: Common and preferred stocks and warrants $ 244,556 $ 193,625 $ — $ 50,931 Corporate bonds 21,580 — 21,580 — Fixed income securities 4,816 — 4,816 — Loans receivable at fair value 35,511 — — 35,511 Total 306,463 $ 193,625 $ 26,396 $ 86,442 Investment funds valued at net asset value (1) 20,153 Total assets measured at fair value $ 326,616 Liabilities: Securities sold not yet purchased: Common stocks $ 6,684 $ 6,684 $ — $ — Corporate bonds 18,630 — 18,630 — Fixed income securities 3,778 — 3,778 — Total securities sold not yet purchased 29,092 6,684 22,408 — Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,395 — — 4,395 Total liabilities measured at fair value $ 33,487 $ 6,684 $ 22,408 $ 4,395 Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2018 Using Quoted prices in Fair value at active markets for identical Other observable Significant unobservable December 31 assets inputs inputs 2018 (Level 1) (Level 2) (Level 3) Assets: Securities and other investments owned: Common and preferred stocks and warrants $ 193,459 $ 168,882 $ — $ 24,577 Corporate bonds 18,825 — 18,825 — Fixed income securities 3,825 — 3,825 — Loans receivable at fair value 33,731 — — 33,731 Total 249,840 $ 168,882 $ 22,650 $ 58,308 Investment funds valued at net asset value (1) 23,737 Total assets measured at fair value $ 273,577 Liabilities: Securities sold not yet purchased: Common stocks $ 11,130 $ 11,130 $ — $ — Corporate bonds 16,338 — 16,338 — Fixed income securities 10,155 — 10,155 — Total securities sold not yet purchased 37,623 11,130 26,493 — Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,633 — — 4,633 Total liabilities measured at fair value $ 42,256 $ 11,130 $ 26,493 $ 4,633 (1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy in accordance with ASC “Topic 820 Fair Value Measurements.” The fair value amounts presented in the tables above for investment funds valued at net asset value are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the condensed consolidated balance sheets. |
Schedule of changes in Level 3 fair value hierarchy | The following table summarizes the significant unobservable inputs in the fair value measurement of level 3 financial assets and liabilities by category of investment and valuation technique as of September 30, 2019: Fair value at September 30, Valuation Unobservable Weighted 2019 Technique Input Range Average Assets: Common and preferred stocks and warrants $ 50,931 Market approach Over-the-counter trading activity $8.00/share $ 8.00 Market price of related security $4.79/share $ 4.79 Recent transaction $210.02/share $ 210.02 Multiple of EBITDA 10.1x 10.1 x Yield analysis Cost of capital 13.2% 13.2 % Option pricing model Annualized volatility 50% - 100% 68 % Loans receivable at fair value 35,511 Discounted cash flow Market interest rate 15.1% -15.3% 15.3 % Market approach Market price of related security $2,100.21/share $ 2,100.21 Total level 3 assets measured at fair value $ 86,442 Liabilities: Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 4,395 Market approach Operating income multiple 6.0x 6.0 x The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2019 and 2018 are as follows: Level 3 Level 3 Changes During the Period Level 3 Balance at Fair Relating to Purchases, Transfer in Balance at Beginning of Value Undistributed Sales and and/or out End of Year Adjustments Earnings Settlements of Level 3 Period Nine Months Ended September 30, 2019 Common and preferred stocks and warrants $ 24,577 $ 715 $ 1,424 $ 24,215 $ — $ 50,931 Loans receivable at fair value 33,731 11,648 1,621 (11,489 ) — 35,511 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,633 — (238 ) — — 4,395 Nine Months Ended September 30, 2018 Common stocks and warrants $ 28,346 $ (3,247 ) $ 578 $ 4,250 $ (20,970 ) $ 8,957 Loans receivable at fair value 33,713 (11 ) 100 2,785 — 36,587 Partnership interests and other 26,104 1,411 (2,735 ) 28,044 — 52,824 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,478 — (69 ) — — 4,409 |
Schedule of investments in the VIE | The carrying value of the Company’s investments in the VIE that was not consolidated is shown below. September 30, Partnership investments $ 12,074 Due from related party 1,209 Maximum exposure to loss $ 13,283 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of preliminary purchase price allocation | The preliminary purchase price allocation was as follows: Consideration paid by B. Riley: Number of magicJack shares outstanding at November 14, 2018 16,248,299 Cash merger consideration per share $ 8.71 Total cash consideration for magicJack common shares 141,523 Cash consideration for magicJack stock options and accelerated vesting of restricted stock awards 1,592 Total consideration $ 143,115 Tangible assets acquired and assumed: Cash and cash equivalents $ 53,875 Restricted cash 369 Accounts receivable 3,103 Inventory 2,033 Prepaid expenses and other assets 4,961 Property and equipment 2,922 Deferred taxes 16,769 Accounts payable (2,313 ) Contract liabilities (66,489 ) Accrued payroll and related expenses (1,989 ) Accrued expenses and other liabilities (21,315 ) Developed technology 6,400 Tradename 1,750 Customer list 34,500 Process-know-how 2,000 Goodwill 106,539 Total $ 143,115 |
Schedule of pro forma financial information | Pro Forma (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, Revenues $ 118,372 $ 378,126 Net income attributable to B. Riley Financial, Inc. $ 5,985 $ 31,025 Basic earnings per share $ 0.23 $ 1.20 Diluted earnings per share $ 0.22 $ 1.16 Weighted average basic shares outstanding 25,968,997 25,856,339 Weighted average diluted shares outstanding 26,854,261 26,776,133 |
RESTRUCTURING CHARGE (Tables)
RESTRUCTURING CHARGE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring Charge [Abstract] | |
Schedule of changes in accrued restructuring charge | The following tables summarize the changes in accrued restructuring charge during three and nine months ended September 30, 2019 and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Balance, beginning of period $ 2,642 $ 1,827 $ 3,855 $ 2,600 Restructuring charge — 428 1,699 2,247 Cash paid (779 ) (504 ) (3,827 ) (2,954 ) Non-cash items 60 (1 ) 196 (143 ) Balance, end of period $ 1,923 $ 1,750 $ 1,923 $ 1,750 |
Schedule of restructuring activities by reportable segment | The following tables summarize the restructuring activities by reportable segment during the three and nine months ended September 30, 2019 and 2018: Three Months Ended September 30, 2019 2018 Principal Principal Investments - Investments - Capital United Online and Capital United Online and Markets magicJack Corporate Total Markets magicJack Corporate Total Restructuring charge (recovery): Employee termination costs $ — $ — $ — $ — 76 $ — $ — $ 76 Facility closure and consolidation — — — — 352 — — 352 Total restructuring charge $ — $ — $ — $ — 428 $ — $ — $ 428 Nine Months Ended September 30, 2019 2018 Principal Principal Investments - Investments - Capital United Online and Capital United Online and Markets magicJack Corporate Total Markets magicJack Corporate Total Restructuring charge (recovery): Employee termination costs $ — $ 1,594 $ — $ 1,594 729 $ — $ — $ 729 Facility closure and consolidation (4 ) 109 — 105 1,728 — (210 ) 1,518 Total restructuring charge $ (4 ) $ 1,703 $ — $ 1,699 2,457 $ — $ (210 ) $ 2,247 |
SECURITIES LENDING (Tables)
SECURITIES LENDING (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Securities Lending [Abstract] | |
Schedule of contractual gross and net securities borrowing and lending balances | The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of September 30, 2019 and December 31, 2018: Gross amounts recognized Gross amounts offset in the consolidated balance sheets (1) Net amounts included in the consolidated balance sheets Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default (2) Net amounts As of September 30, 2019 Securities borrowed $ 720,207 $ — $ 720,207 $ 720,207 $ — Securities loaned $ 714,947 $ — $ 714,947 $ 714,947 $ — As of December 31, 2018 Securities borrowed $ 931,346 $ — $ 931,346 $ 931,346 $ — Securities loaned $ 930,522 $ — $ 930,522 $ 930,522 $ — (1) Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred. (2) Includes the amount of cash collateral held/posted. |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Schedule of components of accounts receivable, net | The components of accounts receivable, net, include the following: September 30, December 31, 2019 2018 Accounts receivable $ 29,198 $ 12,594 Investment banking fees, commissions and other receivables 14,961 26,581 Unbilled receivables 4,721 3,644 Total accounts receivable 48,880 42,819 Allowance for doubtful accounts (1,461 ) (696 ) Accounts receivable, net $ 47,419 $ 42,123 |
Schedule of allowance for doubtful accounts | Additions and changes to the allowance for doubtful accounts consist of the following: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Balance, beginning of period $ 1,360 $ 796 $ 696 $ 800 Add: Additions to reserve 615 192 1,681 840 Less: Write-offs (376 ) (164 ) (759 ) (816 ) Less: Recovery (138 ) — (157 ) — Balance, end of period $ 1,461 $ 824 $ 1,461 $ 824 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets consisted of the following: As of September 30, 2019 As of December 31, 2018 Gross Gross Carrying Accumulated Intangibles Carrying Accumulated Intangibles Useful Life Value Amortization Net Value Amortization Net Amortizable assets: Customer relationships 4 to 16 Years $ 90,330 $ 24,217 $ 66,113 $ 92,330 $ 16,608 $ 75,722 Domain names 7 Years 233 108 125 237 85 152 Advertising relationships 8 Years 100 41 59 100 31 69 Internally developed software and other intangibles 0.5 to 5 Years 11,765 4,230 7,535 11,773 2,436 9,337 Trademarks 7 to 10 Years 4,600 1,184 3,416 4,600 762 3,838 Total 107,028 29,780 77,248 109,040 19,922 89,118 Non-amortizable assets: Tradenames 2,240 — 2,240 2,240 — 2,240 Total intangible assets $ 109,268 $ 29,780 $ 79,488 $ 111,280 $ 19,922 $ 91,358 |
LEASING ARRANGEMENTS (Tables)
LEASING ARRANGEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of maturities of operating lease liabilities | As of September 30, 2019, maturities of operating lease liabilities were as follows: Operating Leases Year ending December 31: 2019 (remaining three months) $ 3,357 2020 12,580 2021 10,699 2022 9,823 2023 9,127 Thereafter 33,478 Total lease payments 79,064 Less: imputed interest (15,247 ) Total operating lease liability $ 63,817 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Notes Payable [Abstract] | |
Schedule of senior notes payable | Senior notes payable, net, is comprised of the following as of September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 7.50% Senior notes due October 31, 2021 $ 52,154 $ 46,407 7.50% Senior notes due May 31, 2027 110,028 108,792 7.25% Senior notes due December 31, 2027 112,429 100,441 7.375% Senior notes due May 31, 2023 116,800 111,528 6.875% Senior notes due September 30, 2023 105,254 100,050 6.75% Senior notes due May 31, 2024 100,050 — 6.50% Senior notes due September 30, 2026 115,000 — 711,715 467,218 Less: Unamortized debt issuance costs (10,437 ) (7,464 ) $ 701,278 $ 459,754 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenues from contracts with customers | Revenue from contracts with customers by reportable segment for the three and nine months ended September 30, 2019 and 2018 is as follows: Three Months Ended September 30, 2019 Reportable Segment Capital Markets Auction and Liquidation Valuation and Appraisal Principal Investments - United Online and magicJack Total Corporate finance, consulting and investment banking fees $ 37,827 $ — $ — $ — $ 37,827 Wealth and asset management fees 18,984 — — — 18,984 Commissions, fees and reimbursed expenses 9,077 4,151 10,818 — 24,046 Subscription services — — — 19,425 19,425 Service contract revenues — 7,081 — — 7,081 Advertising and other — 54 — 4,438 4,492 Total revenues from contracts with customers 65,888 11,286 10,818 23,863 111,855 Interest income - Loans and securities lending 25,766 — — — 25,766 Trading gain on investments 37,236 — — — 37,236 Other 5,206 — — — 5,206 Total revenues $ 134,096 $ 11,286 $ 10,818 $ 23,863 $ 180,063 Three Months Ended September 30, 2018 Reportable Segment Capital Markets Auction and Liquidation Valuation and Appraisal Principal Investments - United Online and magicJack Total Corporate finance, consulting and investment banking fees $ 35,902 $ — $ — $ — $ 35,902 Wealth and asset management fees 19,171 — — — 19,171 Commissions, fees and reimbursed expenses 10,533 2,399 9,404 — 22,336 Subscription services — — — 9,151 9,151 Service contract revenues — 108 — — 108 Advertising and other — — — 2,276 2,276 Total revenues from contracts with customers 65,606 2,507 9,404 11,427 88,944 Interest income - Loans and securities lending 9,785 — — — 9,785 Trading gain on investments (3,462 ) — — — (3,462 ) Other 4,414 — — — 4,414 Total revenues $ 76,343 $ 2,507 $ 9,404 $ 11,427 $ 99,681 Nine Months Ended September 30, 2019 Reportable Segment Capital Markets Auction and Liquidation Valuation and Appraisal Principal Investments - United Online and magicJack Total Revenue from contracts with customers: Corporate finance, consulting and investment banking fees $ 95,260 — — — $ 95,260 Wealth and asset management fees 55,028 — — — 55,028 Commissions, fees and reimbursed expenses 30,350 39,250 29,143 — 98,743 Subscription services — — — 62,894 62,894 Service contract revenues — 26,431 — — 26,431 Advertising and other — 1,230 — 14,282 15,512 Total revenues from contracts with customers 180,638 66,911 29,143 77,176 353,868 Interest income - Loans and securities lending 54,147 — — — 54,147 Trading gain on investments 64,372 — — — 64,372 Other 14,488 — — — 14,488 Total revenues $ 313,645 $ 66,911 $ 29,143 $ 77,176 $ 486,875 Nine Months Ended September 30, 2018 Reportable Segment Capital Markets Auction and Liquidation Valuation and Appraisal Principal Investments - United Online and magicJack Total Revenue from contracts with customers: Corporate finance, consulting and investment banking fees $ 84,927 — — — $ 84,927 Wealth and asset management fees 56,928 — — — 56,928 Commissions, fees and reimbursed expenses 31,546 33,212 27,383 — 92,141 Subscription services — — — 27,335 27,335 Service contract revenues — 11,648 — — 11,648 Advertising and other — — 6,925 6,925 Total revenues from contracts with customers 173,401 44,860 27,383 34,260 279,904 Interest income - Loans and securities lending 25,406 — — — 25,406 Trading gain on investments 1,449 — — — 1,449 Other 14,201 — — — 14,201 Total revenues $ 214,457 $ 44,860 $ 27,383 $ 34,260 $ 320,960 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted earnings per share | Basic and diluted earnings per share were calculated as follows: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income attributable to B. Riley Financial, Inc. $ 34,302 $ 2,814 $ 64,482 $ 24,314 Weighted average shares outstanding: Basic 26,556,223 25,968,997 26,351,839 25,856,339 Effect of dilutive potential common shares: Restricted stock units and warrants 1,613,993 705,557 836,791 740,087 Contingently issuable shares 63,207 179,707 63,207 179,707 Diluted 28,233,423 26,854,261 27,251,837 26,776,133 Basic income per share $ 1.29 $ 0.11 $ 2.45 $ 0.94 Diluted income per share $ 1.21 $ 0.10 $ 2.37 $ 0.91 |
SHARE-BASED PAYMENTS (Tables)
SHARE-BASED PAYMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Amended and Restated FBR & Co. 2006 Long-Term Stock Incentive Plan [Member] | |
Schedule of equity incentive award activity | Weighted Average Shares Fair Value Nonvested at January 1, 2019 896,817 $ 16.94 Granted 1,857,328 10.11 Vested (474,362 ) 15.04 Forfeited (9,384 ) 18.92 Nonvested at September 30, 2019 2,270,399 $ 11.77 |
Amended and Restated 2009 Stock Incentive Plan [Member] | |
Schedule of equity incentive award activity | Weighted Average Shares Fair Value Nonvested at January 1, 2019 689,430 $ 17.64 Granted 130,509 19.14 Vested (210,978 ) 17.59 Forfeited (110,801 ) 16.49 Nonvested at September 30, 2019 498,160 $ 18.31 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of reportable segments | The following is a summary of certain financial data for each of the Company’s reportable segments: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Capital Markets segment: Revenues - Services and fees $ 108,330 66,558 259,498 189,051 Interest income - Loans and securities lending 25,766 9,785 54,147 25,406 Total revenues 134,096 76,343 313,645 214,457 Selling, general and administrative expenses (70,140 ) (57,207 ) (196,570 ) (168,559 ) Restructuring (charge) recovery — (428 ) 4 (2,457 ) Interest expense - Securities lending and loan participations sold (10,273 ) (6,425 ) (22,579 ) (16,317 ) Depreciation and amortization (1,281 ) (1,309 ) (3,844 ) (4,428 ) Segment income 52,402 10,974 90,656 22,696 Auction and Liquidation segment: Revenues - Services and fees 11,232 2,459 65,681 44,812 Revenues - Sale of goods 54 48 1,230 48 Total revenues 11,286 2,507 66,911 44,860 Direct cost of services (2,371 ) (838 ) (21,584 ) (12,263 ) Cost of goods sold (126 ) (24 ) (992 ) (41 ) Selling, general and administrative expenses (2,835 ) (1,289 ) (9,045 ) (7,787 ) Depreciation and amortization (1 ) (7 ) (5 ) (23 ) Segment income 5,953 349 35,285 24,746 Valuation and Appraisal segment: Revenues - Services and fees 10,818 9,404 29,143 27,383 Direct cost of services (4,505 ) (4,067 ) (13,495 ) (12,388 ) Selling, general and administrative expenses (2,826 ) (2,379 ) (7,997 ) (7,138 ) Depreciation and amortization (36 ) (56 ) (100 ) (159 ) Segment income 3,451 2,902 7,551 7,698 Principal Investments - United Online and magicJack segment: Revenues - Services and fees 22,999 11,403 74,383 34,170 Revenues - Sale of goods 864 24 2,793 90 Total revenues 23,863 11,427 77,176 34,260 Direct cost of services (5,565 ) (3,251 ) (20,131 ) (9,082 ) Cost of goods sold (785 ) (28 ) (2,843 ) (101 ) Selling, general and administrative expenses (5,895 ) (2,348 ) (18,410 ) (6,321 ) Depreciation and amortization (2,956 ) (1,682 ) (9,719 ) (5,040 ) Restructuring charge — — (1,703 ) — Segment income 8,662 4,118 24,370 13,716 Consolidated operating income from reportable segments 70,468 18,343 157,862 68,856 Corporate and other expenses (including restructuring recovery of $210 during the nine months ended September 30, 2018) (10,617 ) (5,505 ) (28,778 ) (16,938 ) Interest income 361 442 1,329 736 Income (loss) on equity investments 1,113 828 (4,049 ) 5,049 Interest expense (12,772 ) (9,340 ) (35,130 ) (23,926 ) Income before income taxes 48,553 4,768 91,234 33,777 Provision for income taxes (14,409 ) (2,046 ) (26,802 ) (8,412 ) Net income 34,144 2,722 64,432 25,365 Net income attributable to noncontrolling interests (158 ) (92 ) (50 ) 1,051 Net income attributable to B. Riley Financial, Inc. $ 34,302 $ 2,814 $ 64,482 $ 24,314 |
Schedule of revenues by geographical area | The following table presents revenues by geographical area: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenues: Revenues - Services and fees: North America $ 153,379 $ 89,818 $ 428,629 $ 294,148 Australia — — 15 — Europe — 6 61 1,268 Total Revenues - Services and fees $ 153,379 $ 89,824 $ 428,705 $ 295,416 Revenues - Sale of goods North America $ 918 $ 72 $ 4,023 $ 138 Revenues - Interest income - Loans and securities lending: North America $ 25,766 $ 9,785 $ 54,147 $ 25,406 Total Revenues: North America $ 180,063 $ 99,675 $ 486,799 $ 319,692 Australia — — 15 — Europe — 6 61 1,268 Total Revenues $ 180,063 $ 99,681 $ 486,875 $ 320,960 |
Schedule of long-lived assets of property and equipment and other assets, by geographical area | The following table presents long-lived assets, which consists of property and equipment and other assets, by geographical area: As of As of September 30, December 31, 2019 2018 Property and equipment, net: North America $ 13,171 $ 15,489 Europe — 34 Total $ 13,171 $ 15,523 |
ORGANIZATION AND NATURE OF BU_2
ORGANIZATION AND NATURE OF BUSINESS OPERATIONS (Details) | 9 Months Ended |
Sep. 30, 2019Number | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segment | 4 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Securities and other investments owned: | ||
Securities and other investments owned | $ 326,616 | $ 273,577 |
Securities sold not yet purchased: | ||
Securities sold not yet purchased | 29,092 | 37,623 |
Partnership Interests and Other [Member] | ||
Securities and other investments owned: | ||
Securities and other investments owned | 20,153 | 23,737 |
Corporate Bonds [Member] | ||
Securities and other investments owned: | ||
Securities and other investments owned | 21,580 | 18,825 |
Securities sold not yet purchased: | ||
Securities sold not yet purchased | 18,630 | 16,338 |
Loans Receivable At Fair Value [Member] | ||
Securities and other investments owned: | ||
Securities and other investments owned | 35,511 | 33,731 |
Common Stocks and Preferred Stocks and Warrants [Member] | ||
Securities and other investments owned: | ||
Securities and other investments owned | 244,556 | 193,459 |
Fixed Income Securities [Member] | ||
Securities and other investments owned: | ||
Securities and other investments owned | 4,816 | 3,825 |
Securities sold not yet purchased: | ||
Securities sold not yet purchased | 3,778 | 10,155 |
Common Stock [Member] | ||
Securities sold not yet purchased: | ||
Securities sold not yet purchased | $ 6,684 | $ 11,130 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Securities and other investments owned: | |||
Total securities and other investments owned | $ 326,616 | $ 273,577 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 29,092 | 37,623 | |
Corporate Bonds [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 21,580 | 18,825 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 18,630 | 16,338 | |
Fixed Income Securities [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 4,816 | 3,825 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 3,778 | 10,155 | |
Common Stock [Member] | |||
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 6,684 | 11,130 | |
Loans Receivable At Fair Value [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 35,511 | 33,731 | |
Common Stocks and Preferred Stocks and Warrants [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 244,556 | 193,459 | |
Partnership Interests and Other [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 20,153 | 23,737 | |
Fair Value, Inputs, Level 3 [Member] | |||
Securities and other investments owned: | |||
Total assets measured at fair value | 86,442 | 58,308 | |
Fair Value, Measurements, Recurring [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 306,463 | 249,840 | |
Investment funds valued at net asset value | [1] | 20,153 | 23,737 |
Total assets measured at fair value | 326,616 | 273,577 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 29,092 | 37,623 | |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 4,395 | 4,633 | |
Total liabilities measured at fair value | 33,487 | 42,256 | |
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 21,580 | 18,825 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 18,630 | 16,338 | |
Fair Value, Measurements, Recurring [Member] | Fixed Income Securities [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 4,816 | 3,825 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 3,778 | 10,155 | |
Fair Value, Measurements, Recurring [Member] | Common Stock [Member] | |||
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 6,684 | 11,130 | |
Fair Value, Measurements, Recurring [Member] | Loans Receivable At Fair Value [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 35,511 | 33,731 | |
Fair Value, Measurements, Recurring [Member] | Common And Preferred Stocks And Warrants [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 244,556 | 193,459 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 86,442 | 58,308 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | |||
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 4,395 | 4,633 | |
Total liabilities measured at fair value | 4,395 | 4,633 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Corporate Bonds [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | |||
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Fixed Income Securities [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | |||
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Common Stock [Member] | |||
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Loans Receivable At Fair Value [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 35,511 | 33,731 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Common And Preferred Stocks And Warrants [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 50,931 | 24,577 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 26,396 | 22,650 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 22,408 | 26,493 | |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | |||
Total liabilities measured at fair value | 22,408 | 26,493 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Corporate Bonds [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 21,580 | 18,825 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 18,630 | 16,338 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Fixed Income Securities [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 4,816 | 3,825 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 3,778 | 10,155 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Common Stock [Member] | |||
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Loans Receivable At Fair Value [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Common And Preferred Stocks And Warrants [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | 193,625 | 168,882 | |
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 6,684 | 11,130 | |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | |||
Total liabilities measured at fair value | 6,684 | 11,130 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Corporate Bonds [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | |||
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Fixed Income Securities [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | |||
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Common Stock [Member] | |||
Securities sold not yet purchased: | |||
Total securities sold not yet purchased | 6,684 | 11,130 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Loans Receivable At Fair Value [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | |||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Common And Preferred Stocks And Warrants [Member] | |||
Securities and other investments owned: | |||
Total securities and other investments owned | $ 193,625 | $ 168,882 | |
[1] | Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy in accordance with ASC "Topic 820 Fair Value Measurements." The fair value amounts presented in the tables above for investment funds valued at net asset value are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Fair value assets | $ 86,442 | $ 58,308 |
Common And Preferred Stocks And Warrants [Member] | Market Approach [Member] | Over-The-Counter Trading Activity [Member] | ||
Fair value assets | $ 50,931 | |
Range | 8.00 | |
Weighted Average | 8.00 | |
Common And Preferred Stocks And Warrants [Member] | Market Approach [Member] | Recent Transaction [Member] | ||
Range | 210.02 | |
Weighted Average | 210.02 | |
Common And Preferred Stocks And Warrants [Member] | Market Approach [Member] | Market Price Of Related Security [Member] | ||
Range | 4.79 | |
Weighted Average | 4.79 | |
Common And Preferred Stocks And Warrants [Member] | Discounted Cash Flow [Member] | Cost Of Capital [Member] | ||
Range | 13.2% | |
Weighted Average | 13.2% | |
Common And Preferred Stocks And Warrants [Member] | Option Pricing Model [Member] | Annualized Volatility [Member] | ||
Weighted Average | 68% | |
Common And Preferred Stocks And Warrants [Member] | Option Pricing Model [Member] | Annualized Volatility [Member] | Minimum [Member] | ||
Range | 50% | |
Common And Preferred Stocks And Warrants [Member] | Option Pricing Model [Member] | Annualized Volatility [Member] | Maximum [Member] | ||
Range | 100% | |
LoanReceivablesMember | Market Approach [Member] | Market Price Of Related Security [Member] | ||
Range | 2,100.21 | |
Weighted Average | 2,100.21 | |
LoanReceivablesMember | Market Approach [Member] | Multiple of EBITDA [Member] | ||
Range | 10.1% | |
Weighted Average | 10.1% | |
LoanReceivablesMember | Discounted Cash Flow [Member] | Market Interest Rate [Member] | ||
Fair value assets | $ 35,511 | |
Weighted Average | 15.3% | |
LoanReceivablesMember | Discounted Cash Flow [Member] | Market Interest Rate [Member] | Minimum [Member] | ||
Range | 15.1% | |
LoanReceivablesMember | Discounted Cash Flow [Member] | Market Interest Rate [Member] | Maximum [Member] | ||
Range | 15.3% | |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 [Member] | Market Approach [Member] | Operating Income Multiple [Member] | ||
Fair value liabilities | $ 4,395 | |
Range | 6% | |
Weighted Average | 6% |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Common and preferred stocks and warrants [Member] | ||
Changes in Level 3 fair value hierarchy | ||
Balance at Beginning of Period | $ 24,577 | |
Fair Value Adjustments | 715 | |
Relating to Undistribute Earnings | 1,424 | |
Purchases, Sales and Settlements | 24,215 | |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 50,931 | |
Loans receivable at fair value [Member] | ||
Changes in Level 3 fair value hierarchy | ||
Balance at Beginning of Period | 33,731 | $ 33,713 |
Fair Value Adjustments | 11,648 | (11) |
Relating to Undistribute Earnings | 1,621 | 100 |
Purchases, Sales and Settlements | (11,489) | 2,785 |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 35,511 | 36,587 |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 [Member] | ||
Changes in Level 3 fair value hierarchy | ||
Balance at Beginning of Period | 4,633 | 4,478 |
Fair Value Adjustments | ||
Relating to Undistribute Earnings | (238) | (69) |
Purchases, Sales and Settlements | ||
Transfer in and/or out of Level 3 | ||
Balance at End of Period | $ 4,395 | 4,409 |
Common stocks and warrants [Member] | ||
Changes in Level 3 fair value hierarchy | ||
Balance at Beginning of Period | 28,346 | |
Fair Value Adjustments | (3,247) | |
Relating to Undistribute Earnings | 578 | |
Purchases, Sales and Settlements | 4,250 | |
Transfer in and/or out of Level 3 | (20,970) | |
Balance at End of Period | 8,957 | |
Partnership interests and other [Member] | ||
Changes in Level 3 fair value hierarchy | ||
Balance at Beginning of Period | 26,104 | |
Fair Value Adjustments | 1,411 | |
Relating to Undistribute Earnings | (2,735) | |
Purchases, Sales and Settlements | 28,044 | |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | $ 52,824 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - Variable Interest Entity, Primary Beneficiary [Member] $ in Thousands | Sep. 30, 2019USD ($) |
Variable Interest Entity [Line Items] | |
Partnership investments | $ 12,074 |
Due from related party | 1,209 |
Maximum exposure to loss | $ 13,283 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Advertising costs | $ 437 | $ 371 | $ 1,383 | $ 1,656 | ||
Share based compensation expense | 10,276 | 8,650 | ||||
Cash collateral | 471 | 471 | $ 469 | |||
Certificate of deposits | 369 | |||||
Transaction gains (loss) | 446 | (51) | 121 | 843 | ||
Depreciation and amortization | 1,163 | 1,005 | 4,186 | 3,369 | ||
Securities and other investments owned | 7,574 | 16,867 | 7,574 | 16,867 | ||
Loan accrued interest | 51 | |||||
Interest expense | (12,772) | (9,340) | (35,130) | (23,926) | ||
Interest expense from loan participations | 552 | 552 | ||||
Loan participations sold | 28,872 | 28,872 | ||||
Fixed Income Securities [Member] | ||||||
Interest expense | 9,721 | 6,425 | 22,027 | 16,317 | ||
Foreign Exchange Contract [Member] | ||||||
Net loss from forward exchange contracts | 91 | |||||
Foreign Exchange Contract [Member] | EUR | ||||||
Derivatives | 1,500 | 1,500 | ||||
Foreign Exchange Contract [Member] | CAD | ||||||
Derivatives | $ 54,406 | $ 54,406 | ||||
2018 Employee Stock Purchase Plan [Member] | ||||||
Description of stock based payment award | Eligible employees to purchase common stock through payroll deductions as a price that is 85% of the market value of the common stock on the last day of the offering period. | |||||
Share based compensation expense | 68 | 263 | ||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||||||
Total assets measured in Level 3 of the hierarchy level | $ 86,442 | $ 86,442 | $ 58,308 | |||
Percentage of total assets measured in Level 3 of the hierarchy level | 4.10% | 4.10% | 3.00% | |||
Bebe Stores Inc. ("bebe") [Member] | ||||||
Ownership percentage | 30.50% | 30.50% | ||||
GA Retail Investments, L.P. [Member] | ||||||
Ownership, percentage | 50.00% | 50.00% | ||||
Great American Global Partners, LLC [Member] | ||||||
Ownership, percentage | 50.00% | 50.00% | ||||
Number of shares reserved for future issuance | 625,055 | 625,055 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual 1) - USD ($) $ / shares in Units, $ in Thousands | Nov. 14, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | May 16, 2019 | Jan. 02, 2019 |
Loans receivable maturity period | $ 295,898 | $ 38,794 | |||||
Operating lease liabilities | $ 63,817 | $ 67,519 | |||||
Interest income | $ 831 | $ 2,570 | |||||
Bebe Stores Inc. ("bebe") [Member] | |||||||
Percentage of voting interests acquired | 30.50% | ||||||
National Holdings Corporation [Member] | |||||||
Payments to acquire businesses | $ 22,900 | ||||||
Number of shares acquire (in shares) | 6,159,550 | ||||||
Percentage of voting interests acquired | 48.80% | ||||||
Number of share acquire (in dollars per share) | $ 3.25 | ||||||
Great American Global Partners, LLC [Member] | |||||||
Percentage of voting interests acquired | 50.00% | ||||||
GA Retail Investments, L.P. [Member] | |||||||
Percentage of voting interests acquired | 50.00% | ||||||
Warrant [Member] | |||||||
Number of shares issued | $ 821,816 | ||||||
Exercise price (in dollars per share) | $ 17.50 | $ 4.35 | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 638,311 | ||||||
Warrants and Rights Outstanding | $ 2,777 | ||||||
Class of Warrant or Right, Outstanding | 183,505 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - MagicJack VocalTec [Member] - Merger Agreement [Member] $ / shares in Units, $ in Thousands | Nov. 14, 2018USD ($)$ / sharesshares |
Consideration paid by B. Riley: | |
Number of magicJack shares outstanding at November 14, 2018 | shares | 16,248,299 |
Cash merger consideration per share | $ / shares | $ 8.71 |
Total cash consideration for magicJack common shares | $ 141,523 |
Cash consideration for magicJack stock options and accelerated vesting of restricted stock awards | 1,592 |
Total consideration | $ 143,115 |
ACQUISITIONS (Details 1)
ACQUISITIONS (Details 1) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Nov. 14, 2018 |
Tangible assets acquired and assumed: | |||
Goodwill | $ 220,562 | $ 223,368 | |
MagicJack VocalTec [Member] | Merger Agreement [Member] | |||
Tangible assets acquired and assumed: | |||
Cash and cash equivalents | $ 53,875 | ||
Restricted cash | 369 | ||
Accounts receivable | 3,103 | ||
Inventory | 2,033 | ||
Prepaid expenses and other assets | 4,961 | ||
Property and equipment | 2,922 | ||
Deferred taxes | 16,769 | ||
Accounts payable | (2,313) | ||
Contract liabilities | (66,489) | ||
Accrued payroll and related expenses | (1,989) | ||
Accrued expenses and other liabilities | (21,315) | ||
Developed technology | 6,400 | ||
Tradename | 1,750 | ||
Customer list | 34,500 | ||
Process-know-how | 2,000 | ||
Goodwill | 106,539 | ||
Total | $ 143,115 |
ACQUISITIONS (Details 2)
ACQUISITIONS (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Weighted average basic shares outstanding | 26,556,223 | 25,968,997 | 26,351,839 | 25,856,339 |
Weighted average diluted shares outstanding | 28,233,423 | 26,854,261 | 27,251,837 | 26,776,133 |
MagicJack VocalTec [Member] | ||||
Revenues | $ 118,372 | $ 378,126 | ||
Net income attributable to B. Riley Financial, Inc. | $ 59,085 | $ 31,025 | ||
Basic earnings per share | $ 0.23 | $ 1.20 | ||
Diluted earnings per share | $ 0.22 | $ 1.16 | ||
Weighted average basic shares outstanding | 25,968,997 | 25,856,339 | ||
Weighted average diluted shares outstanding | 25,854,261 | 26,776,133 |
ACQUISITIONS (Details Textual)
ACQUISITIONS (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Nov. 14, 2018 | Sep. 30, 2019 | Dec. 31, 2018 |
Goodwill | $ 220,562 | $ 223,368 | |
MagicJack VocalTec [Member] | Merger Agreement [Member] | |||
Business combination right shares | $ 8.71 | ||
Total consideration | $ 143,115 | ||
Goodwill | $ 106,539 |
RESTRUCTURING CHARGE (Details)
RESTRUCTURING CHARGE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Summary of the changes in accrued restructuring charge | ||||
Balance, beginning of period | $ 2,642 | $ 1,827 | $ 3,855 | $ 2,600 |
Restructuring charge | 428 | 1,699 | 2,247 | |
Cash paid | (779) | (504) | (3,827) | (2,954) |
Non-cash items | 60 | (1) | 196 | (143) |
Balance, end of period | $ 1,923 | $ 1,750 | $ 1,923 | $ 1,750 |
RESTRUCTURING CHARGE (Details 1
RESTRUCTURING CHARGE (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring charge (recovery): | ||||
Employee termination costs | $ 76 | $ 1,594 | $ 729 | |
Facility closure and consolidation | 352 | 105 | 1,518 | |
Total restructuring charge | 428 | 1,699 | 2,247 | |
Capital Markets [Member] | ||||
Restructuring charge (recovery): | ||||
Employee termination costs | 76 | 729 | ||
Facility closure and consolidation | 352 | (4) | 1,728 | |
Total restructuring charge | 428 | (4) | 2,457 | |
Principal Investments - United Online and MagicJack [Member] | ||||
Restructuring charge (recovery): | ||||
Employee termination costs | 1,594 | |||
Facility closure and consolidation | 109 | |||
Total restructuring charge | 1,703 | |||
Corporate [Member] | ||||
Restructuring charge (recovery): | ||||
Employee termination costs | ||||
Facility closure and consolidation | (210) | |||
Total restructuring charge | $ (210) |
RESTRUCTURING CHARGE (Details T
RESTRUCTURING CHARGE (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring Charge (Textual) | ||||
Restructuring charge | $ 428 | $ 1,699 | $ 2,247 |
SECURITIES LENDING (Details)
SECURITIES LENDING (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Securities borrowed | |||
Gross amounts recognized | $ 720,207 | $ 931,346 | |
Gross amounts offset in the consolidated balance sheets | [1] | ||
Net amounts included in the consolidated balance sheets | 720,207 | 931,346 | |
Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default | [2] | 720,207 | 931,346 |
Net amounts | |||
Securities loaned | |||
Gross amounts recognized | 714,947 | 930,522 | |
Gross amounts offset in the consolidated balance sheets | [1] | ||
Net amounts included in the consolidated balance sheets | 714,947 | 930,522 | |
Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default | [2] | 714,947 | 930,522 |
Net amounts | |||
[1] | Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred. | ||
[2] | Includes the amount of cash collateral held/posted. |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||
Accounts receivable | $ 29,198 | $ 12,594 |
Investment banking fees, commissions and other receivables | 14,961 | 26,581 |
Unbilled receivables | 4,721 | 3,644 |
Total accounts receivable | 48,880 | 42,819 |
Allowance for doubtful accounts | (1,461) | (696) |
Accounts receivable, net | $ 47,419 | $ 42,123 |
ACCOUNTS RECEIVABLE (Details 1)
ACCOUNTS RECEIVABLE (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Receivables [Abstract] | ||||
Balance, beginning of period | $ 1,360 | $ 796 | $ 696 | $ 800 |
Add: Additions to reserve | 615 | 192 | 1,646 | 840 |
Less: Write-offs | (376) | (164) | (759) | (816) |
Less: Recovery | (138) | (157) | ||
Balance, end of period | $ 1,461 | $ 824 | $ 1,461 | $ 824 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Amortizable assets: | ||
Gross Carrying Value | $ 107,028 | $ 109,040 |
Accumulated Amortization | 29,780 | 19,922 |
Intangibles Net | 77,248 | 89,118 |
Non-amortizable assets: | ||
Gross Carrying Value | 109,236 | 111,280 |
Accumulated Amortization | 29,780 | 19,922 |
Intangibles Net | 79,488 | 91,358 |
Customer Relationships [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | 90,330 | 92,330 |
Accumulated Amortization | 24,217 | 16,608 |
Intangibles Net | $ 66,113 | 75,722 |
Customer Relationships [Member] | Minimum [Member] | ||
Amortizable assets: | ||
Useful Life | 4 years | |
Customer Relationships [Member] | Maximum [Member] | ||
Amortizable assets: | ||
Useful Life | 16 years | |
Domain Names [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | $ 233 | 237 |
Accumulated Amortization | 108 | 85 |
Intangibles Net | $ 125 | 152 |
Useful Life | 7 years | |
Advertising Relationships [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | $ 100 | 100 |
Accumulated Amortization | 41 | 31 |
Intangibles Net | $ 59 | 69 |
Useful Life | 8 years | |
Internally Developed Software and Other Intangibles [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | $ 11,765 | 11,773 |
Accumulated Amortization | 4,230 | 2,436 |
Intangibles Net | $ 7,535 | 9,337 |
Internally Developed Software and Other Intangibles [Member] | Minimum [Member] | ||
Amortizable assets: | ||
Useful Life | 6 months | |
Internally Developed Software and Other Intangibles [Member] | Maximum [Member] | ||
Amortizable assets: | ||
Useful Life | 5 years | |
Trademarks [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | $ 4,600 | 4,600 |
Accumulated Amortization | 1,184 | 762 |
Intangibles Net | $ 3,416 | 3,838 |
Trademarks [Member] | Minimum [Member] | ||
Amortizable assets: | ||
Useful Life | 7 years | |
Trademarks [Member] | Maximum [Member] | ||
Amortizable assets: | ||
Useful Life | 10 years | |
Tradenames [Member] | ||
Non-amortizable assets: | ||
Gross Carrying Value | $ 2,240 | 2,240 |
Accumulated Amortization | ||
Intangibles Net | $ 2,240 | $ 2,240 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Goodwill | $ 220,562 | $ 220,562 | $ 223,368 | ||
Amortization expense | 3,310 | $ 2,093 | 10,031 | $ 6,399 | |
Estimated future amortization expense | |||||
Estimated future amortization expense 2019 (Remaining six months) | 3,309 | 3,309 | |||
Estimated future amortization expense 2020 | 12,856 | 12,856 | |||
Estimated future amortization expense 2021 | 12,473 | 12,473 | |||
Estimated future amortization expense 2022 | 12,453 | 12,453 | |||
Estimated future amortization expense 2023 | 12,209 | 12,209 | |||
Estimated future amortization expense after 2023 | 23,948 | $ 23,948 | |||
Goodwill, change in goodwill allocation, description | During the nine months ended September 30, 2019, goodwill decreased by $2,806. The decrease in goodwill included a decrease of $3,213 as a result the allocation of goodwill related to the sale of a division of magicJack offset by an increase in goodwill of $407 from magicJack’s purchase price allocation adjustments during the nine months ended September 30, 2019. | ||||
Valuation and Appraisal Reportable Segment [Member] | |||||
Goodwill | 3,713 | $ 3,713 | 3,713 | ||
Auction and Liquidation Reportable Segment [Member] | |||||
Goodwill | 1,975 | 1,975 | 1,975 | ||
Capital Markets Segment [Member] | |||||
Goodwill | 95,820 | 95,820 | 95,820 | ||
Principal Investments - United Online And MagicJack [Member] | |||||
Goodwill | $ 119,054 | $ 119,054 | $ 121,860 |
LEASING ARRANGEMENTS (Details)
LEASING ARRANGEMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 02, 2019 | Dec. 31, 2018 |
Year ending December 31, 2019: | |||
2019 (remaining three months) | $ 3,357 | ||
2020 | 12,580 | ||
2021 | 10,699 | ||
2022 | 9,823 | ||
2023 | 9,127 | ||
Thereafter | 33,478 | ||
Total lease payments | 79,064 | ||
Less: imputed interest | (15,247) | ||
Total operating lease liability | $ 63,817 | $ 67,519 |
LEASING ARRANGEMENTS (Details T
LEASING ARRANGEMENTS (Details Textual) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Weighted average lease term | 8 years | 8 years |
Operating lease, weighted average discount rate | 5.58% | 5.58% |
Operating lease expenses | $ 3,337 | $ 9,632 |
Variable lease expenses | $ 337 | 915 |
Operating lease payments | 9,580 | |
Non-cash transactions recognize to operating lease right-of-use assets and operating lease liabilities | $ 2,801 | |
Minimum [Member] | ||
Lease term | 1 month | 1 month |
Maximum [Member] | ||
Lease term | 12 years | 12 years |
ASSET BASED CREDIT FACILITY (De
ASSET BASED CREDIT FACILITY (Details) - USD ($) $ in Thousands | Apr. 21, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Mar. 19, 2015 |
Interest expense | $ 11,255 | $ 7,248 | $ 30,181 | $ 16,628 | ||
Second Amended and Restated Credit Agreement [Member] | Asset Based Credit Facility [Member] | Wells Fargo Bank, National Association [Member] | ||||||
Credit facility expiration date | Apr. 21, 2022 | |||||
Description of interest rate | The interest rate for each revolving credit advance under the Credit Agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25% depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided. | |||||
Description of success fees | The credit facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein. | |||||
Interest expense | $ 240 | $ 809 | 826 | $ 4,138 | ||
Description of collateral | The credit facility is secured by the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract. | |||||
Payment for closing fee | $ 500 | |||||
Letter of credits outstanding | ||||||
Second Amended and Restated Credit Agreement [Member] | Asset Based Credit Facility [Member] | Wells Fargo Bank, National Association [Member] | Maximum [Member] | ||||||
Maximum borrowing capacity credit facility | 200 | |||||
Second Amended and Restated Credit Agreement [Member] | Asset Based Credit Facility [Member] | Wells Fargo Bank, National Association [Member] | Minimum [Member] | ||||||
Maximum borrowing capacity credit facility | 100 | |||||
UK Credit Agreement [Member] | ||||||
Credit facility | $ 200 | |||||
UK Credit Agreement [Member] | Line of Credit [Member] | Wells Fargo Bank, National Association [Member] | GBP [Member] | ||||||
Maximum borrowing capacity credit facility | $ 50,000 |
TERM LOAN (Details)
TERM LOAN (Details) - USD ($) $ in Thousands | Dec. 19, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2023 | Sep. 30, 2019 | Sep. 30, 2018 | Feb. 01, 2019 | Dec. 31, 2018 |
Term Loan (Textual) | ||||||||
Unamortized debt issuance costs | $ 10,437 | $ 10,437 | $ 7,464 | |||||
Interest expense | 11,255 | $ 7,248 | 30,181 | $ 16,628 | ||||
BRPI Acquisition Co LLC [Member] | BRPAC Credit Agreement [Member] | Term Loan [Member] | ||||||||
Term Loan (Textual) | ||||||||
Principal amount | $ 71,393 | $ 71,393 | 79,166 | |||||
Interest rate terms | (a) the LIBOR rate for Eurodollar loans, plus (b) the applicable margin rate, which ranges from two and one-half percent (2.5%) to three percent (3.0%) per annum, based upon the Borrowers’ ratio of consolidated funded indebtedness to adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the preceding four fiscal quarters or other applicable period. | |||||||
Interest rate | 5.05% | 5.05% | ||||||
Date of first required periodic payment | Sep. 30, 2019 | |||||||
Frequency of periodic payment | Quarterly installments | |||||||
Unamortized debt issuance costs | $ 683 | $ 683 | $ 834 | |||||
Interest expense | 1,118 | 3,653 | ||||||
Amortization of deferred debt issuance costs | 87 | 268 | ||||||
BRPI Acquisition Co LLC [Member] | BRPAC Credit Agreement [Member] | Term Loan [Member] | December 31, 2023 [Member] | ||||||||
Term Loan (Textual) | ||||||||
Quarterly installments for term loan | 278 | |||||||
BRPI Acquisition Co LLC [Member] | Banc of California, N.A. [Member] | BRPAC Credit Agreement [Member] | Term Loan [Member] | ||||||||
Term Loan (Textual) | ||||||||
Description of collateral | The obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the Credit Parties, including a pledge of (a) 100% of the equity interests of the Credit Parties, (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India; and (c) 65% of the equity interests in magicJack VocalTec LTD., a limited company organized under the laws of Israel. Such security interests are evidenced by pledge, security and other related agreements. | |||||||
Principal amount | 80,000 | $ 80,000 | ||||||
Debt maturity date | Dec. 19, 2023 | |||||||
Additional borrowed amount (the "Option Loan") | $ 10,000 | $ 10,000 | ||||||
Quarterly installments for term loan | 4,244 | |||||||
BRPI Acquisition Co LLC [Member] | City National Bank [Member] | BRPAC Credit Agreement [Member] | Minimum [Member] | ||||||||
Term Loan (Textual) | ||||||||
Principal amount | $ 80,000 | |||||||
BRPI Acquisition Co LLC [Member] | City National Bank [Member] | BRPAC Credit Agreement [Member] | Maximum [Member] | ||||||||
Term Loan (Textual) | ||||||||
Principal amount | 90,000 | |||||||
BRPI Acquisition Co LLC [Member] | City National Bank [Member] | BRPAC Credit Agreement [Member] | Term Loan [Member] | ||||||||
Term Loan (Textual) | ||||||||
Additional borrowed amount (the "Option Loan") | $ 10,000 | |||||||
Quarterly installments for term loan | $ 265 | 566 | ||||||
BRPI Acquisition Co LLC [Member] | City National Bank [Member] | BRPAC Credit Agreement [Member] | Term Loan [Member] | December 31, 2023 [Member] | ||||||||
Term Loan (Textual) | ||||||||
Quarterly installments for term loan | $ 2,122 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Senior notes payable | $ 711,715 | $ 467,218 |
Less: Unamortized debt issuance costs | (10,437) | (7,464) |
Senior notes payable, net | 701,278 | 459,754 |
7.50% Senior notes due October 31, 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes payable | 52,154 | 46,407 |
7.50% Senior Notes Due May 31, 2027 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes payable | 110,028 | 108,792 |
7.25% Senior Notes Due December 31, 2027 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes payable | 112,429 | 100,441 |
7.375% Senior notes due May 31, 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes payable | 116,800 | 111,528 |
6.875% Senior Notes Due September 30, 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes payable | 105,254 | 100,050 |
6.75% Senior notes due May 31, 2024 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes payable | 100,050 | |
6.50% Senior notes due September 30, 2026 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes payable | $ 115,000 |
NOTES PAYABLE (Details Textual)
NOTES PAYABLE (Details Textual) - USD ($) $ in Thousands | Sep. 23, 2019 | May 07, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Notes Payable (Textual) | |||||||
Senior notes payable | $ 711,715 | $ 711,715 | $ 467,218 | ||||
Interest expense | 11,255 | $ 7,248 | 30,181 | $ 16,628 | |||
Unamortized debt issuance costs | 10,437 | 10,437 | 7,464 | ||||
Net Proceeds | $ 51,020 | ||||||
Outstanding notes payable | 701,278 | 459,754 | |||||
Notes payable | $ 1,193 | $ 1,193 | $ 1,550 | ||||
Weighted average interest rate | 7.08% | 7.08% | 7.28% | ||||
6.50% Senior Notes Payable due September, 2026 [Member] | |||||||
Notes Payable (Textual) | |||||||
Senior notes payable | $ 115,000 | ||||||
Net Proceeds | 112,673 | ||||||
Underwriting commissions, fees and other issuance costs | $ 2,327 | ||||||
6.75% Senior Notes Payable due May 31, 2024 [Member] | |||||||
Notes Payable (Textual) | |||||||
Senior notes payable | $ 100,050 | ||||||
Interest rate | 6.75% | ||||||
Net Proceeds | $ 98,137 | ||||||
Underwriting commissions, fees and other issuance costs | $ 1,913 | ||||||
Senior Notes [Member] | Market Issuance Sales Agreements [Member] | B. Riley FBR, Inc. [Member] | |||||||
Notes Payable (Textual) | |||||||
Senior notes payable | $ 29,447 | $ 29,447 | |||||
Senior Notes [Member] | Market Issuance Sales Agreements [Member] | B. Riley FBR, Inc. [Member] | Minimum [Member] | |||||||
Notes Payable (Textual) | |||||||
Maturity date, range | 2021-10 | ||||||
Senior Notes [Member] | Market Issuance Sales Agreements [Member] | B. Riley FBR, Inc. [Member] | Maximum [Member] | |||||||
Notes Payable (Textual) | |||||||
Maturity date, range | 2027-12 | ||||||
Senior Notes And Common Stock [Member] | Sales Agreement Prospectus [Member] | B. Riley FBR, Inc. [Member] | |||||||
Notes Payable (Textual) | |||||||
Senior notes payable | $ 100,000 | $ 100,000 | |||||
Senior Notes And Common Stock [Member] | September 2019 Sales Agreement [Member] | B. Riley FBR, Inc. [Member] | |||||||
Notes Payable (Textual) | |||||||
Outstanding notes payable | $ 100,000 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Other sources of revenue: | ||||
Total revenues | $ 180,063 | $ 99,681 | $ 486,875 | $ 320,960 |
Revenue [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 111,855 | 88,944 | 353,868 | 279,904 |
Other sources of revenue: | ||||
Total revenues | 180,063 | 99,681 | 486,875 | 320,960 |
Capital Markets Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 65,888 | 65,606 | 180,638 | 173,401 |
Other sources of revenue: | ||||
Total revenues | 134,096 | 76,343 | 313,645 | 214,457 |
Principal Investments - United Online And MagicJack [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 23,863 | 11,427 | 77,176 | 34,260 |
Other sources of revenue: | ||||
Total revenues | 23,863 | 11,427 | 77,176 | 34,260 |
Auction and Liquidation Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 11,286 | 2,507 | 66,911 | 44,860 |
Other sources of revenue: | ||||
Total revenues | 11,286 | 2,507 | 66,911 | 44,860 |
Valuation and Appraisal Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 10,818 | 9,404 | 29,143 | 27,383 |
Other sources of revenue: | ||||
Total revenues | 10,818 | 9,404 | 29,143 | 27,383 |
Other [Member] | ||||
Other sources of revenue: | ||||
Total revenues | 5,206 | 4,414 | 14,488 | 14,201 |
Other [Member] | Capital Markets Segment [Member] | ||||
Other sources of revenue: | ||||
Total revenues | 5,206 | 4,414 | 14,488 | 14,201 |
Other [Member] | Principal Investments - United Online And MagicJack [Member] | ||||
Other sources of revenue: | ||||
Total revenues | ||||
Other [Member] | Auction and Liquidation Reportable Segment [Member] | ||||
Other sources of revenue: | ||||
Total revenues | ||||
Other [Member] | Valuation and Appraisal Reportable Segment [Member] | ||||
Other sources of revenue: | ||||
Total revenues | ||||
Trading Gain On Investments [Member] | ||||
Other sources of revenue: | ||||
Total revenues | 37,236 | (3,462) | 64,372 | 1,449 |
Trading Gain On Investments [Member] | Capital Markets Segment [Member] | ||||
Other sources of revenue: | ||||
Total revenues | 37,236 | (3,462) | 64,372 | 1,449 |
Trading Gain On Investments [Member] | Principal Investments - United Online And MagicJack [Member] | ||||
Other sources of revenue: | ||||
Total revenues | ||||
Trading Gain On Investments [Member] | Auction and Liquidation Reportable Segment [Member] | ||||
Other sources of revenue: | ||||
Total revenues | ||||
Trading Gain On Investments [Member] | Valuation and Appraisal Reportable Segment [Member] | ||||
Other sources of revenue: | ||||
Total revenues | ||||
Corporate finance, consulting and investment banking fees [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 37,827 | 35,902 | 95,260 | 84,927 |
Corporate finance, consulting and investment banking fees [Member] | Capital Markets Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 37,827 | 35,902 | 95,260 | 84,927 |
Corporate finance, consulting and investment banking fees [Member] | Principal Investments - United Online And MagicJack [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Corporate finance, consulting and investment banking fees [Member] | Auction and Liquidation Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Corporate finance, consulting and investment banking fees [Member] | Valuation and Appraisal Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Wealth And Asset Management Fees [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 18,984 | 19,171 | 55,028 | 56,928 |
Wealth And Asset Management Fees [Member] | Capital Markets Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 18,984 | 19,171 | 55,028 | 56,928 |
Wealth And Asset Management Fees [Member] | Principal Investments - United Online And MagicJack [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Wealth And Asset Management Fees [Member] | Auction and Liquidation Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Wealth And Asset Management Fees [Member] | Valuation and Appraisal Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Commissions, Fees And Reimbursed Expenses [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 24,046 | 22,336 | 98,743 | 92,141 |
Commissions, Fees And Reimbursed Expenses [Member] | Capital Markets Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 9,077 | 10,533 | 30,350 | 31,546 |
Commissions, Fees And Reimbursed Expenses [Member] | Principal Investments - United Online And MagicJack [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Commissions, Fees And Reimbursed Expenses [Member] | Auction and Liquidation Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 4,151 | 2,399 | 39,250 | 33,212 |
Commissions, Fees And Reimbursed Expenses [Member] | Valuation and Appraisal Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 10,818 | 9,404 | 29,143 | 27,383 |
Subscription Services [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 19,425 | 9,151 | 62,894 | 27,335 |
Subscription Services [Member] | Capital Markets Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Subscription Services [Member] | Principal Investments - United Online And MagicJack [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 19,425 | 9,151 | 62,894 | 27,335 |
Subscription Services [Member] | Auction and Liquidation Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Subscription Services [Member] | Valuation and Appraisal Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Service Contract Revenues [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 7,081 | 108 | 26,431 | 11,648 |
Service Contract Revenues [Member] | Capital Markets Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Service Contract Revenues [Member] | Principal Investments - United Online And MagicJack [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Service Contract Revenues [Member] | Auction and Liquidation Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 7,081 | 108 | 26,431 | 11,648 |
Service Contract Revenues [Member] | Valuation and Appraisal Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Advertising And Other [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 4,492 | 2,276 | 15,512 | 6,925 |
Advertising And Other [Member] | Capital Markets Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Advertising And Other [Member] | Principal Investments - United Online And MagicJack [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 4,438 | 2,276 | 14,282 | 6,925 |
Advertising And Other [Member] | Auction and Liquidation Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | 54 | 1,230 | ||
Advertising And Other [Member] | Valuation and Appraisal Reportable Segment [Member] | ||||
Revenues from contracts with customers: | ||||
Total revenues from contracts with customers | ||||
Interest Income - Loan And Securities Lending [Member] | ||||
Other sources of revenue: | ||||
Total revenues | 25,766 | 9,785 | 54,147 | 25,406 |
Interest Income - Loan And Securities Lending [Member] | Capital Markets Segment [Member] | ||||
Other sources of revenue: | ||||
Total revenues | 25,766 | 9,785 | 54,147 | 25,406 |
Interest Income - Loan And Securities Lending [Member] | Principal Investments - United Online And MagicJack [Member] | ||||
Other sources of revenue: | ||||
Total revenues | ||||
Interest Income - Loan And Securities Lending [Member] | Auction and Liquidation Reportable Segment [Member] | ||||
Other sources of revenue: | ||||
Total revenues | ||||
Interest Income - Loan And Securities Lending [Member] | Valuation and Appraisal Reportable Segment [Member] | ||||
Other sources of revenue: | ||||
Total revenues |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |||||
Accounts receivable, net | $ 47,419 | $ 47,419 | $ 42,123 | ||
Deferred revenue | 68,385 | 68,385 | 69,066 | ||
Recognized revenue from contract | 9,166 | $ 5,423 | 34,331 | $ 9,889 | |
Prepaid expenses and other assets | 1,900 | 1,900 | $ 2,920 | ||
Capitalized costs | $ 246 | $ 0 | $ 1,277 | $ 602 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Taxes (Textual) | ||
U.S. federal corporate tax rate | 29.40% | 24.90% |
Deferred tax assets valuation allowance | $ 61,127 | |
Federal Tax Authority [Member] | ||
Income Taxes (Textual) | ||
Net operating loss carryforwards | $ 60,637 | |
Federal Tax Authority [Member] | Minimum [Member] | ||
Income Taxes (Textual) | ||
Expiration date | Dec. 31, 2029 | |
Federal Tax Authority [Member] | Maximum [Member] | ||
Income Taxes (Textual) | ||
Expiration date | Dec. 31, 2034 | |
State and Local Jurisdiction [Member] | ||
Income Taxes (Textual) | ||
Net operating loss carryforwards | $ 61,930 | |
Expiration date | Dec. 31, 2029 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to B. Riley Financial, Inc. | $ 34,302 | $ 2,814 | $ 64,482 | $ 24,314 |
Weighted average shares outstanding: | ||||
Basic | 26,556,223 | 25,968,997 | 26,351,839 | 25,856,339 |
Effect of dilutive potential common shares: | ||||
Restricted stock units and warrants | 1,613,993 | 705,557 | 836,791 | 740,087 |
Contingently issuable shares | 63,207 | 179,707 | 63,207 | 179,707 |
Diluted | 28,233,423 | 26,854,261 | 27,251,837 | 26,776,133 |
Basic income per share | $ 1.29 | $ 0.11 | $ 2.45 | $ 0.94 |
Diluted income per share | $ 1.21 | $ 0.10 | $ 2.37 | $ 0.91 |
EARNINGS PER SHARE (Details Tex
EARNINGS PER SHARE (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Number of antidilutive securities were excluded from the computation of diluted net income (loss) per share | 1,369,674 | 1,925,872 | 1,474,104 | 1,838,492 | |
Escrow Subject to Cancellation Escrow Claims [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Number of shares held in escrow account | 453,365 | ||||
Escrow Subject to Cancellation Escrow Claims [Member] | Great American Group, LLC [Member] | Maximum [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Number of shares held in escrow account | 66,000 | ||||
Number of shares issued in escrow account to forfeiture for final settlement of claims | $ 387,365 | ||||
Escrow Subject to Cancellation Escrow Claims [Member] | Great American Group, LLC [Member] | Minimum [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Number of shares held in escrow account | 21,233 | ||||
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Common Stock [Member] | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Number of shares held in escrow account | 387,365 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Aug. 11, 2017 | Jan. 05, 2017 | Feb. 28, 2017 | Sep. 30, 2019 |
Lawsuit filing date | August 11, 2017 | |||
Name of defendant | Freedman v. magicJack VocalTec Ltd | |||
Name of plaintiff | Board of Directors | |||
Trial or alternative dispute resolution | United States District Court for the Southern District of Florida | |||
Principal Investments - United Online And MagicJack [Member] | ||||
Letters of credit outstanding | $ 471 | |||
Arbitration Claim Against Wunderlich Securities, Inc. [Member] | ||||
Damages value | $ 10,000 | |||
MLV & Co. [Member] | Arbitration Claim Against WSI and Gary Wunderlich [Member] | ||||
Offering price | $ 151,000 |
SHARE-BASED PAYMENTS (Details)
SHARE-BASED PAYMENTS (Details) - Amended and Restated 2009 Stock Incentive Plan [Member] - Restricted Stock Units (RSUs) [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Shares [Roll Forward] | |
Nonvested, beginning | shares | 896,817 |
Granted | shares | 1,857,328 |
Vested | shares | (474,362) |
Forfeited | shares | (9,384) |
Nonvested, ending | shares | 2,270,399 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Fair Value [Roll Forward] | |
Nonvested, beginning | $ / shares | $ 16.94 |
Granted | $ / shares | 10.11 |
Vested | $ / shares | 15.04 |
Forfeited | $ / shares | 18.92 |
Nonvested, ending | $ / shares | $ 11.77 |
SHARE-BASED PAYMENTS (Details 1
SHARE-BASED PAYMENTS (Details 1) - Amended and Restated FBR & Co. 2006 Long-Term Stock Incentive Plan [Member] - Restricted Stock Units (RSUs) [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Shares [Roll Forward] | |
Nonvested, beginning | shares | 689,430 |
Granted | shares | 130,509 |
Vested | shares | (210,978) |
Forfeited | shares | (110,801) |
Nonvested, ending | shares | 498,160 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Fair Value [Roll Forward] | |
Nonvested, beginning | $ / shares | $ 17.64 |
Granted | $ / shares | 19.14 |
Vested | $ / shares | 17.59 |
Forfeited | $ / shares | 16.49 |
Nonvested, ending | $ / shares | $ 18.31 |
SHARE-BASED PAYMENTS (Details T
SHARE-BASED PAYMENTS (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-Based Payments (Textual) | ||||
Share based compensation expense | $ 10,276 | $ 8,650 | ||
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | ||||
Share-Based Payments (Textual) | ||||
Share based compensation expense | $ 3,604 | $ 1,714 | 7,165 | 4,085 |
Unrecognized share based compensation expense | 22,256 | $ 22,256 | ||
Unrecognized share based compensation weighted average period | 1 year 8 months 12 days | |||
Total fair value of shares vested | 7,136 | $ 7,136 | ||
Weighted average grant date fair value, shares | $ 10.11 | |||
Granted | 1,857,328 | |||
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Executives And Employees [Member] | ||||
Share-Based Payments (Textual) | ||||
Total grant date fair value of restricted stock units | $ 7,870 | |||
Granted | 407,328 | |||
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Minimum [Member] | ||||
Share-Based Payments (Textual) | ||||
Vesting periods | 1 year | |||
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Maximum [Member] | ||||
Share-Based Payments (Textual) | ||||
Vesting periods | 3 years | |||
Amended and Restated 2009 Stock Incentive Plan [Member] | Performance Based Restricted Stock Units [Member] | Executives And Managers [Member] | ||||
Share-Based Payments (Textual) | ||||
Total grant date fair value of restricted stock units | $ 10,904 | |||
Granted | 1,450,000 | |||
Amended and Restated FBR & Co. 2006 Long-Term Stock Incentive Plan [Member] | ||||
Share-Based Payments (Textual) | ||||
Share based compensation expense | $ 2,848 | |||
Unrecognized share based compensation weighted average period | 1 year 9 months 18 days | |||
Total grant date fair value of restricted stock units | $ 513 | |||
Number of restricted stock units | 10 | |||
Amended and Restated FBR & Co. 2006 Long-Term Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | ||||
Share-Based Payments (Textual) | ||||
Share based compensation expense | 1,056 | $ 1,321 | $ 4,509 | |
Unrecognized share based compensation expense | $ 6,101 | $ 6,101 | ||
Weighted average grant date fair value, shares | $ 19.14 | |||
Total grant date fair value of restricted stock units | $ 210,978 | |||
Number of restricted stock units | 3,711 | |||
Granted | 130,509 |
NET CAPITAL REQUIREMENTS (Detai
NET CAPITAL REQUIREMENTS (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Net Capital Requirements (Textual) | |
Excess capital | $ 100 |
FBR & Co. ("FBR") [Member] | |
Net Capital Requirements (Textual) | |
Net capital | 133,682 |
Excess capital | 131,780 |
FBR & Co. ("FBR") [Member] | Maximum [Member] | |
Net Capital Requirements (Textual) | |
Excess capital | 1,902 |
MLV & Co. [Member] | |
Net Capital Requirements (Textual) | |
Net capital | 679 |
Excess capital | 579 |
B. Riley Wealth Management [Member] | |
Net Capital Requirements (Textual) | |
Net capital | 5,914 |
Excess capital | 5,447 |
B. Riley Wealth Management [Member] | Maximum [Member] | |
Net Capital Requirements (Textual) | |
Net capital | $ 467 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Apr. 02, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Related Party Transactions (Textual) | ||||||
Due from related party | $ 6,689 | $ 6,689 | $ 1,729 | |||
Transfer Agreement, description | The Company entered into a Transfer Agreement (the “Transfer Agreement”) with GACP II, a fund managed by GACP, and John Ahn, the President of GACP. The Transfer Agreement provides for among other things, the transfer to Mr. J. Ahn 55.56% of the Company’s limited partnership interest in GACP II (the “Transferred Interest”), which represents a capital commitment in the aggregate amount of $5,000. In connection with the Transfer Agreement, the Company provided Mr. J. Ahn with a non-recourse, secured line of credit in an aggregate amount of up to $5,003 pursuant to the terms of a Secured Line of Credit Promissory Note (the “Note”) dated April 1, 2019, to fund the purchase price of the Transferred Interest. We also entered into a Security Agreement with Mr. J. Ahn on April 1, 2019, which granted to the Company a security interest in the Transferred Interest to secure Mr. J. Ahn’s obligations under the Note. | The Note is subject to an interest rate per annum of 7.00%. As of September 30, 2019 the principal and accrued interest on the Note were $5,167 (amount transferred as of September 30, 2019) and $137, respectively. | ||||
Interest expense | $ 11,255 | $ 7,248 | $ 30,181 | $ 16,628 | ||
Executive Officer's And Board Of Directors [Member] | ||||||
Related Party Transactions (Textual) | ||||||
Financial interest | 58.50% | 58.50% | ||||
Co-Chief Executive Officer [Member] | B. Riley Partners Opportunity Fund [Member] | ||||||
Related Party Transactions (Textual) | ||||||
Financial interest | 50.70% | 50.70% | ||||
GACP II, L.P [Member] | ||||||
Related Party Transactions (Textual) | ||||||
Due from related party | $ 1,210 | $ 1,210 | 724 | |||
GACP I, L.P [Member] | ||||||
Related Party Transactions (Textual) | ||||||
Due from related party | 161 | 161 | 194 | |||
CA Global Partners, LLC [Member] | ||||||
Related Party Transactions (Textual) | ||||||
Due from related party | 1,358 | 1,358 | $ 812 | |||
President [Member] | ||||||
Related Party Transactions (Textual) | ||||||
Due from related party | 5,304 | 5,304 | ||||
Sponsor [Member] | ||||||
Related Party Transactions (Textual) | ||||||
Due from related party | 13 | 13 | ||||
B. Riley Partners Opportunity Fund [Member] | B. Riley Partners Opportunity Fund's Loan Participations [Member] | ||||||
Related Party Transactions (Textual) | ||||||
Due from related party | $ 13,066 | 13,066 | ||||
Interest expense | $ 429 |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | $ 153,379 | $ 89,824 | $ 428,705 | $ 295,416 |
Selling, general and administrative expenses | (96,587) | (71,782) | (274,468) | (216,603) |
Restructuring (charge) recovery | (428) | (1,699) | (2,247) | |
Interest expense - Securities lending | 10,273 | 6,425 | 22,579 | 16,317 |
Depreciation and amortization | (14,217) | (9,768) | ||
Segment income | 59,851 | 12,838 | 129,084 | 51,918 |
Cost of goods sold | 911 | 52 | 3,835 | 142 |
(Loss) income on equity investments | 1,113 | 828 | (4,049) | 5,049 |
Interest expense | (12,772) | (9,340) | (35,130) | (23,926) |
Income before income taxes | 48,553 | 4,768 | 91,234 | 33,777 |
Provision for income taxes | (14,409) | (2,046) | (26,802) | (8,412) |
Net income | 34,144 | 2,722 | 64,432 | 25,365 |
Net income attributable to noncontrolling interests | (158) | (92) | (50) | 1,051 |
Net income attributable to B. Riley Financial, Inc. | 34,302 | 2,814 | 64,482 | 24,314 |
Capital Markets Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | 108,330 | 66,558 | 259,498 | 189,051 |
Interest income - Securities lending | 25,766 | 9,785 | 54,147 | 25,406 |
Total revenues | 134,096 | 76,343 | 313,645 | 214,457 |
Selling, general and administrative expenses | (70,140) | (57,207) | (196,570) | (168,559) |
Restructuring (charge) recovery | (428) | 4 | (2,457) | |
Interest expense - Securities lending | (10,273) | (6,425) | (22,579) | (16,317) |
Depreciation and amortization | (1,281) | (1,309) | (3,844) | (4,428) |
Segment income | 52,402 | 10,974 | 90,656 | 22,696 |
Auction and Liquidation segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | 11,232 | 2,459 | 65,681 | 44,812 |
Revenues - Sale of goods | 54 | 48 | 1,230 | 48 |
Total revenues | 11,286 | 2,507 | 66,911 | 44,860 |
Selling, general and administrative expenses | (2,835) | (1,289) | (9,045) | (7,787) |
Depreciation and amortization | (1) | (7) | (5) | (23) |
Segment income | 5,953 | 349 | 35,285 | 24,746 |
Direct cost of services | (2,371) | (838) | (21,584) | (12,263) |
Cost of goods sold | (126) | (24) | (992) | (41) |
Valuation and Appraisal segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | 10,818 | 9,404 | 29,143 | 27,383 |
Selling, general and administrative expenses | (2,826) | (2,379) | (7,997) | (7,138) |
Depreciation and amortization | (36) | (56) | (100) | (159) |
Segment income | 3,451 | 2,902 | 7,551 | 7,698 |
Direct cost of services | (4,505) | (4,067) | (13,495) | (12,388) |
Principal Investments - United Online and magicJack segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | 22,999 | 11,403 | 74,383 | 34,170 |
Revenues - Sale of goods | 864 | 24 | 2,793 | 90 |
Total revenues | 23,863 | 11,427 | 77,176 | 34,260 |
Selling, general and administrative expenses | (5,895) | (2,348) | (18,410) | (6,321) |
Restructuring (charge) recovery | (1,703) | |||
Depreciation and amortization | (2,956) | (1,682) | (9,719) | (5,040) |
Segment income | 8,662 | 4,118 | 24,370 | 13,716 |
Direct cost of services | (5,565) | (3,251) | (20,131) | (9,082) |
Cost of goods sold | (785) | (28) | (2,843) | (101) |
Consolidated operating income from reportable segments | 70,468 | 18,343 | 157,862 | 68,856 |
Corporate and other expenses (including restructuring recovery of $210 during the nine months ended September 30, 2018) | (10,617) | (5,505) | (28,778) | (16,938) |
Interest income | 361 | 442 | 1,329 | 736 |
(Loss) income on equity investments | 1,113 | 828 | (4,049) | 5,049 |
Interest expense | (12,772) | (9,340) | (35,130) | (23,926) |
Income before income taxes | 48,553 | 4,768 | 91,234 | 33,777 |
Provision for income taxes | (14,409) | (2,046) | (26,802) | (8,412) |
Net income | 34,144 | 2,722 | 64,432 | 25,365 |
Net income attributable to noncontrolling interests | (158) | (92) | (50) | 1,051 |
Net income attributable to B. Riley Financial, Inc. | $ 34,302 | $ 2,814 | $ 64,482 | $ 24,314 |
BUSINESS SEGMENTS (Details 1)
BUSINESS SEGMENTS (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Total Revenues - Services and fees | $ 153,379 | $ 89,824 | $ 428,705 | $ 295,416 |
Total Revenues | 180,063 | 99,681 | 486,875 | 320,960 |
North America [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues - Services and fees | 153,379 | 89,818 | 428,629 | 294,148 |
Revenues - Sale of goods | 918 | 72 | 4,023 | 138 |
Revenues - Interest income - Loans and securities lending | 25,766 | 9,785 | 54,147 | 25,406 |
Total Revenues | 180,063 | 99,675 | 486,799 | 319,692 |
Australia [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues - Services and fees | 15 | |||
Total Revenues | 15 | |||
Europe [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues - Services and fees | 6 | 61 | 1,268 | |
Total Revenues | $ 6 | $ 61 | $ 1,268 |
BUSINESS SEGMENTS (Details 2)
BUSINESS SEGMENTS (Details 2) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Property and equipment, net | $ 13,171 | $ 15,523 |
North America [Member[ | ||
Property and equipment, net | 13,171 | 15,489 |
Europe [Member] | ||
Property and equipment, net | $ 34 |
BUSINESS SEGMENTS (Details Narr
BUSINESS SEGMENTS (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Corporate and other expenses including restructuring recovery | $ 428 | $ 1,699 | $ 2,247 | |
Corporate [Member] | ||||
Corporate and other expenses including restructuring recovery | $ (210) |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Nov. 04, 2019 | Oct. 28, 2019 | Oct. 11, 2019 | Oct. 07, 2019 | Oct. 04, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Number of common shares issues | 26,921,500 | 26,603,355 | |||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||||
Number of preferred stock issued | |||||||
Preferred Stock, authorized | 1,000,000 | 1,000,000 | |||||
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||||
Subsequent Event [Member] | |||||||
Number of depositary shares issued | 2,300,000 | ||||||
Gross proceeds from depository shares | $ 57,500 | ||||||
Description of certificate of designation | The Certificate of Designation classified a total of 10,000 shares of the Company’s authorized shares of preferred stock, $0.0001 par value per share, as Series A Preferred Stock. | ||||||
Description of series A preferred stock holder | Entitled to cumulative cash dividends at the rate of 6.875% per annum of the $25,000 liquidation preference ($25.00 per depositary share) per year (equivalent to $1,718.75 or $1.71875 per depositary share). | ||||||
Subsequent Event [Member] | Underwriters [Member] | |||||||
Number of additional shares granted | 300,000 | ||||||
Subsequent Event [Member] | Series A Preferred Stock [Member] | |||||||
Preferred Stock, authorized | 10,000 | ||||||
Preferred Stock, par value (in dollars per share) | $ 0.0001 | ||||||
Subsequent Event [Member] | Underwritten Public Offering [Member] | |||||||
Description of depositary shares | Each representing 1/1000th of a share of 6.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”). | ||||||
Subsequent Event [Member] | Underwritten Public Offering [Member] | Series A Preferred Stock [Member] | |||||||
Preferred stock, liquidation preference value | $ 25,000 | ||||||
Preferred stock, liquidation preference (per depositary share) | $ 25 | ||||||
Number of preferred stock issued | 20 | ||||||
Number of depositary shares issued | 2,000,000 | ||||||
Subsequent Event [Member] | Over-Allotment Option [Member] | Underwriters [Member] | |||||||
Number of additional depositary shares issued | 300,000 | ||||||
Subsequent Event [Member] | Membership Interest Purchase Agreement [Member] | B. Riley Member [Member] | |||||||
Cash payment to acquire majority interest | $ 78,250 | $ 116,500 | |||||
Subsequent Event [Member] | Membership Interest Purchase Agreement [Member] | B. Riley Member [Member] | Bluestar Alliance LLC [Member] | Warrant [Member] | |||||||
Number of common shares issues | 200,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.0001 | ||||||
Warrant exercise price (in dollars per share) | $ 26.24 | ||||||
Description of common stock | One-third of the shares of common stock issuable under the Warrant will immediately vest and become exercisable upon its issuance at the Closing, and the remaining two-thirds of such shares of common stock will vest and become exercisable following the first and/or second anniversaries of the Closing, subject to the Operating Company’s (or another related joint venture with Bluestar) satisfaction of specified financial performance targets. |