Overview of the Company

B. Riley Financial Inc. (NASDAQ: RILY), which is changing its name to BRC Group Holdings, Inc. (“BRC”) effective January 1, 2026, is a diversified portfolio of companies operating in financial services, telecom, retail, and investments. The company’s core financial services platform provides customized solutions for small and middle market companies. BRC also has wealth management, communications, consumer products, and e-commerce businesses, as well as a portfolio of securities and other investments.

Financial Performance

For the three months ended June 30, 2025, BRC reported total revenues of $225.3 million, up from $94.9 million in the prior year period. This increase was primarily driven by:

• $176.4 million favorable change in fair value adjustments on loans
• $59.0 million increase in trading gains on the company’s investment portfolio
• Partially offset by decreases in services and fees revenue, interest income, and sale of goods

Operating income was $10.8 million in Q2 2025, compared to an operating loss of $232.6 million in Q2 2024. The improvement was due to the increase in revenues and a $113.0 million decrease in operating expenses.

Net income attributable to BRC was $139.5 million in Q2 2025, compared to a net loss of $433.6 million in the prior year period. This turnaround was driven by the improved operating performance as well as a $165.5 million favorable change in realized and unrealized gains/losses on investments.

For the six months ended June 30, 2025, BRC reported total revenues of $411.4 million, up from $392.5 million in the prior year period. The increase was again primarily due to favorable changes in fair value adjustments on loans and the investment portfolio, partially offset by decreases in services and fees, interest income, and sale of goods.

Operating loss for the six-month period was $50.7 million in 2025, compared to a loss of $248.6 million in 2024. Net income attributable to BRC was $129.5 million in the first half of 2025, compared to a net loss of $482.8 million in the prior year period.

Segment Performance

BRC operates in five reportable segments:

Capital Markets: Provides investment banking, equity research, institutional brokerage, asset management, and direct lending services. Revenues decreased due to lower investment banking and trading activity.

Wealth Management: Provides retail brokerage, investment management, insurance, and tax preparation services. Revenues declined due to a reduction in assets under management.

Communications: Includes telecom businesses providing consumer and business services. Revenues decreased due to lower subscription revenue.

Consumer Products: Includes the Targus business, which designs and sells laptop cases, backpacks, and other accessories. Revenues declined due to lower sales volume.

E-Commerce: Includes the Nogin business, which provides e-commerce platform and marketing services. This segment was deconsolidated in Q1 2025.

Strengths and Weaknesses

Strengths:

• Diversified business model across financial services, telecom, retail, and investments
• Strong performance in the Capital Markets segment, with gains from the investment portfolio
• Successful execution of strategic divestitures to improve liquidity

Weaknesses:

• Declining revenues and profitability in the Wealth Management and Communications segments
• Impairment charges related to the Targus tradename in the Consumer Products segment
• High debt levels, with $1.5 billion in borrowings outstanding as of June 30, 2025

Outlook and Future Prospects

BRC has taken several steps to strengthen its financial position and liquidity, including:

• Completing the sale of several businesses for total proceeds of over $200 million
• Exchanging $42.9 million in senior notes for new 8.0% senior secured notes due 2028
• Refinancing the Targus credit facility with a new $30 million revolving credit facility

These actions have improved the company’s cash position and reduced its debt burden. However, BRC still faces challenges in some of its operating segments, particularly Wealth Management and Communications, where revenues and profitability have declined.

Going forward, BRC plans to focus on driving growth and operational efficiencies in its core financial services platform, while continuing to optimize its portfolio of investments and businesses. The company is also exploring additional debt refinancing and capital raising options to further strengthen its balance sheet.

Overall, BRC appears to be making progress in its turnaround efforts, but still has work to do to return to consistent profitability across its diversified operations. Investors will be watching closely to see if the company can capitalize on its strengths and overcome the weaknesses in its business model.