B. Riley Financial Inc (NASDAQ:RILY) Q2 2024 Results Conference Call August 12, 2024 8:30 AM ET

Company Participants

Bryant Riley - Co-Founder, Chairman & Co-CEO

Operator

Good morning, and welcome to the B. Riley Financial Investor Call. Earlier today, B. Riley issued a press release detailing its preliminary results for the second quarter of 2024, which can be found on its Investor Relations website at ir.brileyfin.com. Today's call includes prepared remarks from the company followed by a question-and-a session. [Operator Instructions] As a reminder, this call is being recorded, and an audio replay will be available on the company's Investor Relations website later today.

Today's call will also include non-GAAP measures, the reconciliations for these as well as an explanation for the use of these metrics. And the definition of these terms is available in the press release, which is available on the company's Investor Relations website. And before we conclude today's call, I will provide the necessary cautions regarding forward-looking statements.

Now I will turn the call over to Mr. Bryant Riley. Mr. Riley, please proceed.

Bryant Riley

Thank you for joining the call this morning. As we announced this morning, we are continuing to finalize our financial statements for the second quarter and are working to file our quarterly report as soon as possible. In the meantime, we have released preliminary estimates for the second quarter which included a net loss in the range of $435 million to $475 million. Operating adjusted EBITDA is expected to be in the range of $50 million to $55 million for the second quarter demonstrating the consistent contribution of our core businesses.

The net loss for the quarter reflects a non-cash impairment charge of approximately $28 million for Targus a charge of $25 million, which relates to a deferred tax benefit and a non-cash write-down of approximately $330 million to $370 million our Freedom VCM investment, which relates to the Franchise Group to private transaction and also our loan to Vintage Capital. As it relates to our investment in FRG, the thesis that we and other investors underwrote for this transaction contemplated a continuation of normal course operations from its subsidiaries that would allow the FRG parent to execute on a value unlocking asset monetization strategy.

FRG made early progress to this end with the sale of Sylvan Learning and the sale of Badcock Funiture to Conn's. However, the rapid deterioration in consumer spending, which accelerated over the past quarter, ultimately impacted its operating performance and investments, including in Conn's, which filed for bankruptcy in July.