Q4 2020 B. Riley Financial Inc Earnings Call
[music].
Good afternoon, and welcome to B Riley Financial's fourth quarter and full year 2020 earnings call.
B Riley financial has issued a press release and presentation detailing its financial results for the fourth quarter and fiscal year 2020 copies are available in the investors section of the company's website at IR Dot B Riley Finn dotcom.
Today's conference call will include a discussion of non-GAAP financial measures information reconciling. These non-GAAP measures to the company's GAAP financial results can be found in the earnings release.
As a reminder, today's call is being recorded and audio replay will also be available on the company's website later today John.
Joining us today from B Riley, our Bryant Riley Chairman co founder and co CEO, Tom Kelleher co founder and co CEO and Phillip own CFO and C O O.
After management's remarks, we will open the line for questions.
Before we conclude today's call I will provide the necessary cautions regarding forward looking statements.
I will now turn the call over to Mr. Bryant Riley Mr. Riley. Please proceed thanks.
Thanks, and welcome everyone B Riley.
The financial reported record revenues and profitability for both the fourth quarter and full year of 2020 the.
The fourth quarter, we reported revenues in excess of $410 million in total revenues of over $902 million for the full year based on our performance in 2020, despite an otherwise challenging year. We are increasingly confident in the earnings power of the platform. We've developed our results demonstrate the increased profitability from across our businesses and particularly our brokerage business.
Investment banking delivered impressive results in Q4 contributing to record consolidated quarterly operating revenues of $270 million and record quarterly operating EBITDA of $126 8 million.
Currently we have been beneficiaries of not only increased deal flow, but also from a number of larger and more significant deals across our equity capital markets and advisory businesses. We saw strong momentum from Ipos of specs and our quarterly best for ATM desk and.
In addition to our higher operating results, we were a beneficiary of the improved equity markets, which resulted in the investment gains of over $140 million for the quarter, resulting in total gains for the year of approximately 104 million of sharp recovery on our investment book from the markdown on Q1.
With retail liquidation activity continued growth on our consulting and advisory businesses and steady contribution from appraisal principal investments in brands. We believe we have built a platform to not only withstand volatile markets, but also the benefit of amid disruption.
As our businesses have grown we on the fortunate position of generating material free cash flow from our core operations. In addition to our investment portfolio.
Continue to see extremely attractive uses for our capital. Thus the believe it is important to return a portion of our profit is directly to our shareholders with the cash flow that we generate.
As a result, we feel strongly that of balanced capital allocation policy includes substantial returns of capital to our partners.
To that end, we have declared a total dividend of $3 50 per share, which includes an increase to our regular annual dividend to $2 50 per quarter and the special $3 dividend given the prospects of momentum we see across our businesses, we would expect our dividends of grow over time.
Addition to our dividend policy, we repurchased over $2 one shares of 1 million shares during the year, while B Riley's momentum has never been stronger we recognize there is always work to be done.
Look at other opportunities the lower our cost of capital to reflect the current state of operations. In addition, while we were always on the lookout for accretive acquisitions, we're seeing more and more opportunities to enhance our business by bringing on great people and new offerings onto our platform for Tom.
We will talk about some of these later on in the call.
As you will see from our press release earlier today when the final closing process of our acquisition of National Holdings, which again, Tom will talk more about later on the acquisition of National is an important milestone of B. Riley is 25 year history, and we could not be more excited to onboard this talented team to our platform.
We should note we have of long standing history with the national team as the prior board member and Investor and also through our respective teams working together as total underwriters on a number of deals.
So the great mutual respect between our firms and our respective management teams.
Together with our B Riley wealth management Division National and B Riley of the combined platform of close of 900 registered reps and client assets North of 30 billion for.
The combined institutional and retail distribution, we believe this merger enhances our position as a leader in small and mid cap capital markets, which is reflected in our continued market share gains.
The key benefit of our growth is our increasing operating leverage and the opportunities, we're seeing which are significant both in terms of number and in size.
With over $300 million of cash and investments net of debt at year end, we will continue to work to capitalize on the opportunities. We see ahead, while as previously mentioned continuing to take a balance approach of returning capital to our shareholders Lastly.
Lastly, we set of before but we can't say it enough our success relies on our people and we feel incredibly fortunate for the World class team. We have here of B Riley and the new ones joining us from national with that I'll turn it over to Phil on our CFO and COO to discuss our financial metrics Phil.
Thanks, Brian.
Welcome everyone.
I had mentioned our fourth quarter and fiscal 2020 results represented an all time high for B Riley financial in terms of revenues and overall profitability for the three months ended December 31, 2020, we reported record total quarterly revenues of $410 2 million up from $165 2 million for the fourth quarter of 2019.
Net.
Net income available to common shareholders totaled $170 1 million for $6 55 per diluted share up from $16 9 million of 59 per diluted share for the prior year quarter.
Adjusted EBITDA increased to $260 5 million up from $53 million on the fourth quarter of 2019.
Operating revenues increased to $270 million up from $130 5 million for the prior year quarter operating adjusted EBITDA increased to $126 8 million up from $16 4 million for the prior year period.
For the 12 months ended December 31, 2020, we reported record annual total revenues of $902 7 million up from $652 1 billion for 2019.
Net income available to common shareholders was $200 4 million or $7.56 per diluted share up from $81 3 million or $2 95 per diluted share for 2019 total adjusted EBITDA increased to $406 8 million up from $207 9 million for the prior year.
Operating revenues increased to $798 7 million up from $545 6 million for 2019.
And operating adjusted EBITDA totaled $311 7 million for the year upfront of $113 6 million for 2019.
<unk> on the equity markets also contributed to strong performance from our investment book, we saw investment gains of approximately the $140 million for the fourth quarter, resulting in investment gains of approximately $104 million for the year.
These investment gains primarily related to mark to market valuations on strategic investments held by the company.
The investment gains for the year of represented the sharp recovery from the Mark to market losses for the first quarter of 2020.
With the growth and momentum of our platform and we continue to review our reportable financial metrics to provide our investors with greater visibility into our various business units.
To that end during the fourth quarter, we realigned our segment reporting to reflect some of our recent organizational changes, including the rebrand of our legacy glass Ratner consulting business and our appraisal business under the name of B Riley Advisory services.
As noted in our earnings release, we reclassified results from our consulting and appraisal businesses.
Our real estate business underneath the financial consulting segment.
Consulting and real estate were previously reported in the capital market segment and appraised on what's frequency reported at the Standalone segment, we have recast our segment presentation in the relevant materials to reflect these changes.
So now turning to our segment results.
Capital markets is our largest segment and includes investments and operating results for our investment banking brokerage wealth management and fund management businesses.
Excluding investment gains the capital markets generated operating revenue of $201 1 million and segment operating income of $102 5 million for the quarter.
This compares to $127 million in operating revenues and segment operating income of $52 7 million for the fourth quarter of 2019.
The significant increase was primarily driven by strong investment banking performance, the Brian referred to earlier.
Akshay on liquidation fourth quarter results include the segment revenues of $15 7 million and segment income of $7 5 million from retail liquidations and store closing projects completed by B Riley retail solutions are form of Great American group.
As we noted on prior earnings calls our liquidation segment results can vary from quarter to quarter and year to year due to the impact of large retail liquidation projects for.
For the fourth quarter financial consulting segment revenues were $26 5 million up from $20 1 million for the prior year period.
Segment income totaled $6 9 million compared to $4 7 million for the prior year period result.
Results were primarily driven by bankruptcy forensic accounting on appraisal assignments performed by B Riley Advisory services.
Our principal investments segment, which includes results for Magicjack and United online contributed revenues of $21 4 million and segment income of $7 3 million for the fourth quarter.
And our brand segment, which includes the licensing revenues related to brand investments portfolios.
<unk> revenues of $5 $5 million of segment income of $4 1 million.
Now for the full year capital markets generated operating revenue of $514 $7 million in segment operating income of $208 6 million up from 202019 annual operating revenues of $341 9 million and segment operating income of $77 4 million.
Often on liquidation generated annual revenues of $88 8 million and segment income of $25 8 million.
Financial consulting annual revenues increased to $91 6 million up from $76 3 million in 2019 segment income increased to $22 5 million up from $17 8 million for the prior year.
Principal investments segment companies continued to outperform initial investment estimates and provide steady cash flows to the B Riley platform in 2020 for the full year Magicjack and United online contributed revenues of $87 1 million and segment income of $33 4 million.
And finally, our brand segment, which was established in 2019 contributed licensing revenues of $16 5 million for 2020.
Now some highlights from our balance sheet.
As of December 31, B Riley financial had $103 6 million of unrestricted cash and cash equivalents.
$767 2 million in net securities and other investments owned.
And $373 4 million of loans receivables net of loan participations sold.
At year end, we had total cash and investments balance of approximately $1 3 billion, which includes $59 6 million of other equity investments included in our prepaid and other assets.
Net of debt Bureau financial of cash and investments totaled over 300 million at year end.
We repurchased 450000 shares of common stock during the fourth quarter and over $2 1 million shares in 2020.
Lastly, as Brian noted, we continued review of our dividend policy to align with our performance and outlook. We've increased our regular quarterly dividend of <unk> 50 per share from our previous quarterly dividend of <unk> 37 five in.
In addition, our board has declared a special onetime dividend of $3 of share related to our fourth quarter performance.
The fourth quarter dividend is payable on or about March 24th to stockholders of record as of March 10.
Upon payment of this dividend, we will have returned approximately $4 47 per share in common dividends related to our fiscal 2020 earnings.
That completes my financial summary, I will turn the call over to our co CEO, Tom Kelleher to discuss our individual operating units Tom.
Thanks Bill.
Bryant noted earlier the key recent development is our acquisition of National Holdings.
This is a meaningful addition to our platform.
Powerful combination for our respective firms national add 700 registered representatives and close to $20 billion of assets to our current roster of over 170 advisors and 12 billion of assets.
With the National also comes in the established middle market focused banking and capital markets franchise.
The mentoring new service lines like tax advisory and expanded offerings, such as National's private shares platform, which provides qualified clients access to pre IPO of investment opportunities.
At the same time B Riley wealth management, our existing legacy firm has evolved into an integral piece of our platform. We have seen continued growth in this division both in terms of profitability, but also on talent.
With national for critical mass on both of our W. Two and independent advisor channels significantly expands our respective equity syndicate offerings.
The continued growth of our advisors remains our top priority as we work to integrate national's professionals into our platform importantly, we believe this combination will only serve to increase all of our professionals businesses for a broader suite of investment solutions for clients as well as enhanced sales and trading capabilities.
We are incredibly excited to welcome our new colleagues at national in the coming weeks and look forward to sharing more in the coming quarters.
Now moving to our investment banking institutional brokerage division of <unk> Securities as noted B Riley Securities delivered its best quarter, yet we saw momentum both in our capital markets and advisory businesses with meaningful gains driven by several noteworthy transactions. A few highlights include a $292 million IPO.
For software Security Company <unk>.
Healthcare services $331 million back IPO.
The sale of bed Bath, <unk> beyond Christmas tree shops subsidiary the.
The completed the restructuring of RTW <unk>, New York <unk> Company, Inc.
$565 million jointly raise for AMC through our ATM desk.
On this final point Q4 was the best ever quarter for our ATM business.
More than doubled its revenue contribution compared to Q3 B Riley.
He has served as the number one market leader for Atms in the past decade, and we expect increasing activity the coming year as Atms the broader adoption.
On a more widely accepted as the strategic capital markets tool for both the healthy and distress companies our role in health care services $331 million of IPO is just one of the spec of Ipos. We brought in the fourth quarter. In addition, we held three of our spec spots was successfully closed business combinations. We are currently working with others that are actively seeking.
Targets.
Importantly, each of these engagements represent tremendous visibility into future opportunities.
The structural and banking activity also remained strong several mandates closing in Q4 and many more on the pipeline. This business in contrast to our more cyclical capital market segment has quickly established itself as the resilient and opportunistic through both up and down cycles.
We also continue to see the growth in the financial consulting Division, which includes our latest the glass Radnor and appraisal groups under the new B Riley Advisory services brand.
Saw a significant increase of bankruptcy and restructuring consulting engagements during the fourth quarter and our appraisal division returned to growth following the slowdown in lending activity earlier in the year.
As Brian mentioned, we're actively expanding the capabilities and our advisory group during the quarter, we introduced a new operations management service line.
Earlier this week, we announced a new compliance risk and resilience practice focused on business continuity and cyber security consulting on it.
Newest team members bring deep expertise to areas of strength of many of our core capabilities we have.
Cited to welcome these talented professionals to B Riley and look forward to introducing them to our clients.
We continue to assess opportunities to strategically scale, new service offerings across the enterprise to enhance existing core capabilities. Great example of this as a real estate group that we brought on a year ago in February of 2020, amid a very turbulent year for commercial property owners.
Since joining the firm. This group has led over 1700 real estate restructuring and bankruptcy related projects spanning retail department stores restaurant chains grocery entertainment and health services.
Any of these engagements were completed by year end, including Aldo Luigi and possibilities with several more pending completion in 2021, including our ongoing Jcpenney real estate project.
Turning to our retail liquidation division in 2020, we participated in over 2000 store closings with the associated retail inventory value of over $2 8 billion.
Global engagements completed during the quarter, including Stein Mart and Jcpenney.
'twenty was also highly profitable year for our retail liquidation business overseas in Europe and.
So we expect activity to carry into 2021 as retailers continue to face financial stress due to lockdowns and dwindling brick and mortar sales.
Our principal investment companies Magicjack and United on line remained steady and important contributors of cash flow at the end of the November we acquired a 40% interest in lingo for cloud based legacy communication service provider, we expect to acquire an additional 40% upon obtaining necessary regulatory approval the.
The addition of the lingo stands to meaningfully enhance our adjacent communications company investment for.
We continue to seek opportunities to acquire businesses that would be complementary to our current portfolio. While also assisting other investment companies with acquisitions at.
At the same time the brand investment portfolio that we established in late 2019 continues to provide a steady source of reoccurring licensing revenue to the platform.
Our brands portfolio recovered from the initial impact of Covid on retail sales earlier this year.
In late November we added the justice brand to our portfolio, we remain optimistic about the long term earnings potential from this platform.
Taken together, we are extremely proud of our accomplishments amid an otherwise challenging year.
As Brian said this as much of the credit of our.
Dedicated employees and their continued commitment to providing best in class service for our clients on our partners.
We ended the year with more momentum than ever and look forward to continuing to deliver in the year ahead.
With that we'll open the line for questions and turn the call back over to Bryant for closing remarks.
Thank you we will.
I'll now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad Youll hear of tone acknowledging your request if for you.
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Our first question comes from Wes Cummins of.
272 capital. Please go ahead.
Hi, This is <unk> on for what a great quarter quick question on capital allocation.
Really great to see the the minimum of $5 dividend for clients for this year would love to get maybe greater color on how you balance the dividend versus the buyback as well as opportunistic investments such as lingo. Thank you.
Sure.
This year was probably five years on one in the beginning of the year that point in time, we're buying our stock of 14 months 15 Bucks bonds.
On a 50% discount in and now we are paying out. This this dividend and so we're always thinking about the different options.
And what's best for our company and our employees on our shareholders and so there's a balance there. We don't think we've compromised in any way on any of those things.
We have plenty of capital to go find opportunities. We obviously purchased a large chunk of justice the lingo transaction national added meaningful groups into end of the company and we've got plenty of cash to do more but at the same time, we think we're at an interesting inflection point, where we had always said 25% of our EBITDA would be.
With the target to distribute to our shareholders and I think the more stable we get the more the.
Our cash build I can see that number of getting larger but we've got to be really careful. This is the volatile business and it can be humbling.
And right now it is humming and were a beneficiary of that and I think we're a beneficiary of the some of the things we've done as a company, but we've just got to make sure that we're super balance.
As far as Lingo, we're always looking for other ways to create.
Create value off of the platform, we have a lot of inputs and a lot of proprietary opportunities and now we've got the 700 advisers that will also maybe of a proprietary opportunity. So we're well on.
We think we're just going to see a lot of flow and some of that comes directly the company. Obviously, we are of stack out there.
And we've done two stacks and thats an opportunity for us to take some of that proprietary flow. So.
We feel really good about where we have a lot of momentum.
We've been.
We're cognizant that 12 months ago. It was a lot of different we just have to make sure we balance all of those things.
That's great that's great and then on your recent debt debt offering nor the 150 bps below your current highest cost of debt I mean should we expect that you guys will be continue should be able the continuing to lower your cost of debt as we go on or love to hear any color on that thank you.
Yeah look our cash flow and I think all of the inputs too.
Debt is valued the all better.
We are a unique company that makes it a little bit harder to evaluate for for debtors and equity holders. We've got number of different businesses and we we do a lot of different things and I think in and we're able to do a lot of different things and I think that comes with a little bit of of higher cost on our interest rate.
Youre right.
During the most recent baby bond the 6% and.
You would think that if we put a senior facility in there that we can do better than that so that is important.
Mandate of ours over the course of the next year and we've already started on that.
That'd be great and hugely accretive thank you once again.
Thank you.
Our next question comes from Sean Haydon of THC. Please go ahead.
Hey, guys. The first off congrats on the phenomenal quarter and the great year.
As far as your portfolio in light of the National acquisition, and the kind of a realignment of the segments.
Do you foresee.
Hi.
Continuing to be opportunistic with your acquisitions are there.
Holds.
Your product portfolio that you think could be filmed.
Indeed, the b cells.
Okay. Thanks.
Thanks for the comments there is always going to be holes right. I mean, we we could expand on a number of different areas leveraged finance.
Commodities.
Well, we don't sit every day thinking of ourselves I wish we had of commodities group. We are really excited about the team we have national fits for.
<unk> in the if you think of where I think we've got and we've done a lot of market share as our ability to.
Put of deal together and utilize our balance sheet and now we've got 30 $30 billion of assets and 900 advisers that can also.
The part of our transactions and the good news is I think the lead transactions over the course over the last 12 months that we've done have been up over 50%. So people have made money. Obviously the market is strong too so I acknowledge that but we just have.
That's a great add for us and we've already seen that.
But we're going to continue to look around and it's hard if you wanted to buy on M&A business right now there'll be 10 bidders for that and that's not the world of which we found the best value. So we're gonna be other we're looking for that but that's just an example, it's it's a pretty good environment for people like us and and we're just going to be thoughtful.
All about do we do we build it internally doing the we buy it do emerge with it but we don't feel any rush on any pressure to add anything to our to our business.
Yes.
And then.
You guys of wear.
Relatively early.
On the whole snack.
Movement are you running into increased competition, because I know that.
Yeah. This is a good example, youre not looking at.
Quote unquote buzzy.
Private companies.
Right.
There is a lot of capital being deployed.
<unk> deployed in that area is that other certainties.
Sure Riley not as an underwriter, but as a principle the b Riley spec is that what you're referring to.
Yeah Yeah.
Yes, I think we <unk>.
The most compelling argument out there to merge with US. We we went public as a small company. We grew through acquisitions. We grew through equity offerings are a couple of equity offerings, we grew through debt offerings.
And we've got out of <unk>.
<unk> of people on this firm that all want to see whatever company with merger of succeed. So you have all of the M&A group. The <unk> got the capital markets group, we have really good relationships of the sell side with the buy side. So we think and then we're picking from or true.
Kind of picked from a bunch of proprietary relationships just because of the business. We're in so I would say of course theres more competition I mean, I don't know how you could say theres not theres just so many more stacks out there, but I think we have.
A lot of runway for <unk>.
Based on where we sit and Thats why Youll see we just thought of our second one's our fourth one publicly today. So we feel like Theres a lot of opportunities remember.
Years without any kind of smaller cap ipos right. Now obviously this thing a lot of really growth in company's current public but theres a lot of great companies that are.
That should be public and they just the markets weren't open for them and I think they are going to be more open for them on that excites us. So we still think there's a fair amount of runway there.
Great.
Ken.
You guys knocked it out of the park.
Appreciate it.
Once again, if you have a question. Please press Star then one.
Our next question comes from Paul Dwyer of Punch <unk> Associates. Please go ahead.
Hey, guys good afternoon.
Hey, Paul.
Wanted to just.
Alright on the capital market side could you spend a little more Tom touched on it a bit but the spend a little more time on that.
Kind of what <unk>.
One has been in terms of additional capital market strength.
It's obviously been strong and then.
In terms of specs that you've underwritten in Q4.
On through Q1.
Any more insight you can provide the how that.
That provides visibility into the rest of the year for.
Capital market activity.
Yes so.
So look I would say that on the capital markets side. What this has been years and years of investment in small and mid cap companies. We didn't start last year of doing this we we started 97 of them for the first seven years, we didn't have enough of banking. We were just the small cap research firm and so the relationships and the investment we've made.
<unk> are now paying off in a meaningful way with the relationships with the companies we've covered some for.
20 years.
And I think the people that have worked here for a long time are just they are.
And prime to take advantage of that over the course of the last year, we have not added any <unk>.
Additional operating expenses to our brokerage business isn't the same people that were here three years ago, and just taking advantage of all of the experience we've had in sticking to our knitting and now we're we're really reaping the benefits from that.
Currently there is an uplift of <unk>.
<unk> tied for sure effect here, but.
I wouldn't opine on where we are on that I. Just know that we're we have a team that's going to I think outwork, our competition and continue to gain market share.
As it relates to the stack.
Business and I've been asked a bunch of times, where we think we are on that I would say.
As I mentioned earlier Theres a lot of companies that have had the window shop for them for a long time, so I think youre going to see.
Maybe a broader breadth of companies going public not just the Uber growth companies and.
Institutional youre seeing private placements getting done with really quality brand institutions, we're going to help those companies have of surety to go public.
Founders.
Percentages workout may change I don't know, but I think that there is a lot of opportunities and so I think our total number of specs out there, including one we're doing today, which is our biggest yet.
And we've got the backend fee opportunity is 10 times, where it was.
Nine months ago.
And we have not out of spec that has expired without doing a deal obviously theres a lot of newer ones. So take that with a little bit of grain of salt, but we've tried to take the approach of investing with the sponsors not.
Not just being a churning kind of business for us So we feel really confident that the.
But the stacks we have out there that have been.
That of public we will complete the deal in there as you know the $50 million plus backend fee opportunities and obviously helped them with the with the private placements, but most importantly, we help them with taking a good company public debt needs access to capital and hopefully building a long term relationship with those companies. So this is not just the stack it is about <unk>.
Building longer term relationships that benefit of benefit the firm.
Did I answer that yes, okay.
That's perfect. Thank you.
Okay. Thank you I guess next next part I wanted to touch on was the the.
The national just kind of your overall wealth management platform some of the.
30, plus billion of assets can you just flush out what that business looks like on it.
Standalone basis, then I assume that's one of your more predictable businesses.
Well, you've certainly seen.
The move towards advisory of over kind of regular way brokerage.
So that advisor business is usually on assets.
We think that.
Yeah.
So national is we really like the national team and we think that it's going to be of great fit.
Thing about national is that the infrastructure that they put in place for.
The wealth managers, particularly on the independent side.
It makes it hard to the heart business being being independent and again on the management team that has done a great job or super excited, but now youre going to be able to leverage.
Our infrastructure our products.
Already seen and it's been great. We have seen the national network really embrace.
Our research and embrace our deals and so together youll have a business that we'll be doing in excess of three.
$325 million on revenues and we would expect debt, we would hope to get to at least of 10% EBITDA margin and then get a bunch of benefits on the other side of that.
National hasn't been profit greatly profitable for five years and also recognize the interest rates of really been of negative factor.
Usually in.
On the old days, they make the a lot of money from the money on their money getting a piece of the interest rate on the cash on the from the from the clients and that all went away. So that's out there too, but I think you can use those that kind of number but I think it might take a little bit of time, but I think the most important part is.
When you think about the compelling offering we have to accompany of public company that wants to do a deal not only being willing and anxious to utilize our balance sheet to get a deal done and now we've got the retail network and then we have <unk>.
It's like yourself that have been participants on our deal and I think feel highly of the way we put deals together in and.
So all of those things together I think makes us a really really powerful for us. So theres the theres the financial side of it which I kind of outlined but there is also the other benefits and Theres also of the benefits of of of National rap referring company.
Company that one of the clients that we want to be sold or want to buy things and so we need to put all that together is a lot of hard work in.
But we've done it with the glass for Aetna acquisition, and we've done it with other acquisitions. So we think that.
This will just enhance that.
Yes, okay.
That makes sense.
The last for me is on the the.
The brand side.
Turning to the nice little business for you guys.
The other.
I guess, one how seasonal is the as the business and then two as debt.
Yes, the 70% plus the operating margins.
Sustainable in the typical.
Yes, so just.
No.
Describe that business, we have a relationship on most of those brands with Bluestar group and they do they provide all of the operating expenses. So just think of US is for the most part.
The partners.
The already partners on most of those brands. So early we owned 40% Justice we on 40%.
The sixth brand portfolio that we bought.
On a half ago, we on a closer to 80%, but they still manage that so so the numbers that you see us report should be.
Mostly margin.
So so thats sustainable in terms of.
The cyclicality, there's not a ton I mean really there's a little bit better in the summer and so some of the other brands do better in the winter, but most of the just so you understand the the way the business works is there is a minimum.
License that you get from of licensee and that's paid quarterly.
Quarterly or monthly and then you get Overages and so.
The minimum is pretty consistent the overages could be a little seasonal but I wouldn't I wouldn't say to you that its anything thats going to be overly noticeable so.
So we love that we think that.
That that business for us.
<unk> is a good counter to our you know, we always say this episodic and recurring but and we love the relationship with the Bluestar guys and think that we have.
We'll find some more things to do with them.
Okay great.
That's it for me.
On the ninth year and thanks for all of the work.
Well, we appreciate your support of thank you.
Once again, if you have a question. Please press Star then one.
Our next question comes from Keith Rosenbloom of cruiser capital. Please go ahead.
First I just wanted to reiterate all of the congratulations on a great year on a great quarter Brian.
Great job for your team.
Okay.
I wanted to just get a little color on the fire.
Prior questioner was asking about.
You guys have now put a lot of pipe into the marketplace and it seems like.
Youre effectively seating and investment banking business.
For the for the foreseeable future.
Do you have any sense.
As to the earnings.
Have you mentioned the back end fees every time you close the close of staff.
Youre, obviously every time you do it back you've got a pipe.
Of the potential pie, you've got the central eliminate b.
And then obviously the deal that you can get on the east you get when the on the stack itself closes.
Do you think of that as backlog and do you have any concept of what that revenue could be at some of you guys do the work and earn the business and are able to close.
Well I mean, I can speak to specifically to the specs that we have already underwritten there is approximately $50 million of kind of deferred fees as the stacks get the stacked and none of those the pipes involved with them, but what I would what I would say is what excites me more than that.
Is the size of some of the other deals we're doing the advisory deals I mean, managing are running an IP of $300 million IPO of where there's not a lot of firms that have done that for.
Other than the bulge bracket and to the extent, we can continue the CR.
Our brand increase.
Our platform increase when you all of the sudden start picking up.
No 10 plus million dollars fees on the deal Thats when it gets really exciting and I think we have a lot of room. There I mean, I think we're going to be able to put bigger bigger deals together and you'll start to see some outsized.
So the opportunity so and Youre right and I said this on the previous call. It every time, we do a stack of every time, we cover of company. That's that's the relationship that we need to.
The utilized in every way we can I mean, we will sell on the magic Jack if we if it helps our relationship so where.
We've got the advisor and we've got the class Ratner group that can help with the form of glass revenue group that can help them with.
The new businesses and evaluations, we've got our appraisal group then can help them think about their assets and so all of those put together should create opportunities for us to have really has put together a great relationships and now we've just got to make sure we take advantage of that and it feels like there is.
There's a lot of opportunities for us I can't pick a number but others.
It feels like we should really take advantage of those relationships and have a monetary benefit and obviously the spec backlog, Israel and I do think about that as backlog.
Congrats again.
Alright, thank you.
This concludes our question and answer session I would now like to turn the call back over to Mr. Riley for his closing remarks.
Well. Thank you very much we really appreciate all of the support and we're really excited too.
The national team join us on all of their brokers, including Bob with the Audi and.
We couldnt do this with all of the people without all the all of the employees and partners, we have and investors. We have so thank you very much and we look forward to reporting next quarter.
Thank you before we conclude today's call I will provide b Riley financial Safe Harbor statement, which includes important cautions regarding forward looking statements made during this call statements made during this call about B Riley financial's future expectations plans and prospects and any other statements.
Regarding matters that are not historical facts may constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of $19 95.
Investors should be aware that any forward looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here. Today. These risk factors include the unpredictable and ongoing impact of the COVID-19 pandemic as long as the other risk factors are explained in detail in the company's filings with the securities and <unk>.
Change Commission, please refer to the filings for a more detailed discussion of forward looking statements and the risks and uncertainties of such statements. All forward looking statements are made as of today and except as required by law. The company undertakes no obligation to publicly update or revise any forward looking statements, whether because of new information future events or otherwise.
Thank you for joining today for B Riley Financial's fourth quarter and full year 2020 earnings Conference call you may now disconnect.
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