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Good day, welcome to the BRC Group Holdings Inc. 1st quarter 2026 earnings call. My name is Isabelle, and I will be your EverCall moderator. The format of the call includes prepared remarks from the company, followed by a question-and-answer session. Please note that all attendees will be on a listen-only mode until the Q&A portion of the call. At this time, I will turn the call over to Bryant Riley, Co-CEO of B. Riley. You may now begin.

Good afternoon, and thanks for joining our call. I want to start off by saying how enthusiastic our entire team is by where our firm sits today. The deliberate steps we've taken to strengthen our balance sheet and align our core operating platform have positioned us well to capture this current market opportunity. That conviction is reflected in our momentum, which carried over from 2025 into our 1st quarter. For the 1st quarter, we generated net income available to common shareholders of $211.3 million and adjusted EBITDA of $262.2 million. Operating adjusted EBITDA was $34.6 million, up close to 40% sequentially. Net debt stands at $372 million, down approximately $255 million from year-end. Our CFO, Scott Yessner, will walk through the financials in detail.

My remarks today focus on three points: our first quarter execution, our strategic path forward, and our ongoing commitment to our core franchise. During the quarter, our team executed against two key priorities: strengthening our balance sheet and delivering for our clients. On the balance sheet, we continue to optimize our capital structure. In March, we fully redeemed our 5.5% senior notes due 2026. We also retired $40.4 million of debt through bond for equity exchanges and open market repurchases through the end of March. Altogether, total debt is down $129 million in the quarter, and we expect that trend to continue. While we inherited a solid quarter across the entire platform, B. Riley Securities delivered our most active quarter for capital raising in five years.

During the quarter, we executed on nearly $10 billion in total debt and equity raises for clients. We acted as joint lead book runner on WhiteFiber's $230 million convert, participated in a DSBC $1.3 million follow on, and we had key advisory mandates with the TrueCar take private. We are active across the entire capital structure. We saw $8.7 billion in new ATMs in the first quarter, including a $6 billion facility for Highland and a $1 billion facility for SMR. We also expanded our research footprint, initiating coverage on 26 companies in the first quarter alone. We see a deep expanding opportunity set for our team in the quarters ahead and expect momentum to continue. Ultimately, our broader strategy remains straightforward.

We reinvest operating cash flows into our businesses and compelling market opportunities with our core franchise serving as the primary engine. Next year marks our thirtieth anniversary, and over the last three decades, we've intentionally built our business based on a commitment to be an active, dedicated advisory and liquidity partners for companies in the historically underserved small and midcap market. We have navigated every market cycle. During periods of macro stress, we have stayed committed to this strategy while others have cycled in and out. This consistency and a commitment to this market have proven to be our structural advantage. That same commitment is why we launched BRC Specialty Finance to enhance our commitment to small and midcap companies by providing capital and liquidity solutions. We will continue to leverage our platform and put capital to work to back our clients and our long-term partners.

Executing our strategy requires absolute operational discipline and a world-class team. We're incredibly grateful for our team's hard work and continued dedication to the firm and our clients. I will now turn the call over to Co-CEO Tom Kelleher to provide additional context on our operating performance. Tom?

Thanks, Bryant. In April, we announced our intention to repurchase the outstanding minority stake of B. Riley Securities and combine B. Riley Securities with B. Riley Wealth. We are incredibly excited about this. The proposed transaction streamlines our corporate structure. More importantly, it intentionally aligns our investment banking, our broad retail and institutional distribution, and our equity research engine. Scott will spend some more time on the numbers. From an operational standpoint, the platform is continuing to normalize from all the activity that has transpired over the last two years. Targus continues to stabilize their business, operating at roughly breakeven. We are encouraged by recent improvements in distribution channel sales as tariff concerns begin to ease. Our communications group continues to deliver high-margin cash flow by leveraging our team in India. We remain relentlessly focused on efficiency across the entire enterprise.

We are actively deploying AI not just as a corporate efficiency tool, but as a force multiplier across our entire revenue-generating platform. By equipping our bankers, sales force, and research teams with advanced tools to accelerate analysis and insights, we are empowering our teams to scale their output and capture more market opportunity without proportionally increasing our cost structure. While technology allows us to operate faster and smarter, our core business is fundamentally a relationship business. Our ultimate differentiator remains our people and the partnerships we build. In two weeks, we will host our 26th annual investor conference at The Ritz-Carlton, Marina del Rey. With approximately 200 companies and 1,000 attendees, this conference remains the clearest expression of who we work with and the partnerships we build.

During the conference, we will once again host our annual Big Fighters, Big Cause charitable boxing gala benefiting the Sugar Ray Leonard Foundation and its mission to knock out pediatric diabetes. We are proud to have raised over $6 million for this cause since inception. Next week, on May 13th, B. Riley Securities is hosting our annual Commissions for Charity Day, where 100% of our equity trading commissions will be donated to Children's Hospital L.A. For nearly three decades, our firm has been defined not just by the deals we execute, but by the relationships we build.

While we are incredibly proud of our operational execution this quarter, these events reflect the true character of our firm and our commitment to our clients, our partnerships, and our community. Our proprietary platform continues to serve as a major differentiator for recruiting, and we are actively leveraging it to add high impact talent. We are fielding numerous conversations for positions across the company, and just last month we welcomed back one senior sales trader as well as brought on an institutional salesman new to the firm. High performing producers want to be part of a company where deals are actively getting done, where the platform supports them, and where the culture is set by the fellow producers across our management team. With that, I will turn the call over to our CFO, Scott Yessner, to walk through the detailed financials. Scott?

Thanks, Tom. I'm pleased to share an update on our first quarter 2026 financial performance, investment holdings and capital liquidity. To start, I would like to walk through our financial performance. Year-over-year first quarter total revenues were $352 million, compared to $186 million. The increase in total revenues was driven by $161 million of higher trading gains on investments primarily in Babcock & Wilcox common stock, $130 million of which is related to the value appreciation in the first quarter of 2026. Service and fee income was $152 million for the quarter, lower year-over-year by $6.7 million. Investment banking and brokerage revenues increased $12 million, offset by lower revenues from exited businesses in the prior year of $10.4 million, lower B.

Riley Wealth Management revenues of $4.6 million, and lower Communications Business Group revenues of $4.1 million from normal subscriber attrition. Year-over-year first quarter total operating expenses were $199 million compared to $247.5 million in 2025, a reduction of $48 million. The reduction was primarily due to a combined $20 million of eliminated costs from exited businesses and the Communications Business Group subscriber declines, with a remaining reduction of approximately $20 million from across a range of operating expenses, including lower legal fees of $3.7 million. Despite the lower operating expenses in total and in many expense lines, accounting fees related to the audit and accounting activities was $4 million higher than 2025, which was also at an elevated level.

We have returned to a normal operating calendar which will allow us to drive infrastructure improvements that we believe will ultimately lower our accounting fees and other elevated costs. Continuing down the income statement, first quarter other income excluding interest expense was $106 million, primarily due to a $99 million increase in the Babcock & Wilcox fair value appreciation. The company's total increase in the Babcock & Wilcox investment across trading income and unrealized income for the first quarter in 2026 was $229 million. Booked in different revenue lines due to the investment being owned by multiple entities within the BRC Group Holdings structure. Year-over-year first quarter interest expense was $20 million, decline of $10 million from 2025, driven by lower average borrowing balances from senior note redemptions and other debt reductions.

These details culminate with first quarter 2026 net income attributable to common shareholders of $211 million, diluted income per share of $6.57, compared to a net loss of $12 million, diluted loss per share of $0.39 in the first quarter of 2025. First quarter 2026 adjusted EBITDA was $262 million, compared to a loss of $45 million in 2025. Please refer to the reconciliation tables in our earnings press release for the adjusted EBITDA calculation. Next, I'll review our segment operating performance. Please note our former communications business segment has been separated into four reportable segments, which we aggregate and describe as a Communications Business Group. The capital markets segment, which is comprised solely of B. Riley Securities.

Riley Securities had first quarter 2026 total revenues of $172 million compared to $2 million in 2025, and segment income of $137 million compared to a segment loss of $36 million in 2025. The revenue and segment income increases were primarily driven by fair value increases in Babcock & Wilcox reported in trading gains. Additionally, core investment banking revenues also increased $9.7 million year-over-year. Next, the Wealth segment had first quarter 2026 revenues of $52 million compared to $47 million in 2025, a $5 million increase, and segment income of $16 million compared to $2 million in 2025, a $14 million increase.

The revenue and profit increases were driven by an $8.9 million increase in market value of carried interest in a fund that owns SpaceX for the portion owned by the wealth segment. The wealth segment ended the first quarter with $11.9 billion in assets under management and 190 registered representatives. The Communications Business Group is the aggregate results of Lingo, magicJack, Marconi, and UOL reportable segments. The Communications Business Group had first quarter aggregate revenues of $60 million compared to $64.5 million in 2025, a $4.5 million decline, and aggregate income in the first quarter of $12.6 million compared to $10.6 million in 2025, a $2 million increase. The first quarter results are in line with our expectations.

The operating leverage continues to be a core business strength as demonstrated by the results. Our targets business, which comprises the consumer products segment had first quarter revenues of $44 million compared to $42 million in 2025. An operating segment loss of $2.6 million compared to a loss of $5.1 million in 2025. After a period of declining sales, we are pleased with the revenue increase and the narrowing operating loss, which is due to improving the sales mix margins and lowering operating costs. Next, I'd like to provide an update on the company's investment holdings portfolio, which is reported on our balance sheet in securities and other investments, loans receivable at fair value, and equity investments. Investments are held across consolidated entities where valuation changes are primarily booked as revenue in either trading gains and losses or realized and unrealized gains and losses.

On 31st March 2026, securities and other investments increased $194 million-$640 million from 31st December 2025. The increase is primarily driven by a $229 million value increase in the Babcock & Wilcox investment and a $12.6 million increase in the partnership interest related to our marked value of carried interest in funds that own SpaceX for all BRC entities. Offset by a sale exit of $41 million of private stock holdings, rounding out the balance change. At 31st March 2026, the Babcock & Wilcox stock price used in the valuation was $14.69 a share, with the company owning approximately 27.4 million shares. The SpaceX security value was marked at $526 per share.

Securities and other investments are reported in detail in the 10-Q, with subtotals including public equities, private equities, corporate bonds, other fixed income securities and partnership interests and other. In the public equity subtotal, the Babcock & Wilcox valuation was the primary driver. The private equity subtotal amount, which has over 50 investments including the venture capital portfolio, was lower by $42 million, primarily from the private stock holding exit described earlier. Partnerships and other investments increased $13.4 million, primarily due to the SpaceX carried interest value increase described earlier. Continuing with investment holdings, loans receivable at fair value declined $1.4 million in the first quarter to an ending balance of $24.9 million at 31st March 2026. In the quarter, loan lending activity included approximately $20.1 million in fundings and $21.8 million in repayments.

We received a $6.7 million loan recovery recognized through the income statement in fair value adjustments on loans. For the last balance sheet line item of our investment holdings, equity method investments were $90.7 million at 31st March 2026, virtually flat from 31st December 2025. The GA Group investment, formerly Great American, comprises $83.7 million of the 31st March 2026 balance, also virtually flat to 31st December 2025. GA Group had good quarterly performance, which is disclosed in summary in the file 10-Q. Next, I'll provide an update on our liquidity and capital. At 31st March 2026, cash equivalents and restricted cash had total balances of $178 million compared to $229 million at 31st December 2025.

In the first quarter 2026, BRC reduced total debt by $129 million, which includes a $96 million RILYK bond redemption on March 30th, 2026, and $40 million of bond exchanges and buybacks. At March 31st, 2026, total debt was $1.3 billion, and debt declined $255 million-$372 million. For the remainder of 2026, the company has two senior note series maturing. $167 million in principal amount of RILYN senior notes due September 30th and $170 million in principal amount of RILYG senior notes due on December 31st. These amounts have been reduced through Section three(a)(9) bond exchanges since March 31st. We also have $7 million in scheduled pay downs on a subsidiary lending facility.

As previously described, we will continue to use capital actions, cash generated from operations and investment liquidations to fund market opportunities and the operating companies while also redeeming the scheduled senior note pay downs. We look forward to answering your questions. I'll turn the call back to the operator for the Q&A session.

Thank you. At this time, we'll conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad to enter the queue. Once again, if you'd like to ask a question, please press star then one on your telephone keypad to enter the queue. We will pause here briefly. Our first question comes from Sean of Charles Lane Capital. Sean, your line is open. You may proceed.

Hey, congrats on the quarter. Just had a few questions here. You guys touched on it a bit, but can you kind of elaborate on your philosophy for kind of harvesting some of these gains that you have, and maybe applying them to the debt if that's your preferred, use of capital?

Sean, I think you touched on this last call. You know, we are

I think we've done a pretty good job of creating optionality. You know, that's really important. That means optionality might mean, you know, buying back bonds in the open market, swapping bonds for other bonds. You know, we sold some assets and repurchased bonds. For us, we, you know, we appreciate when we are asked often about our largest position. We don't. Our head's not on the sand. We are taking all of our portfolio as one, we will make the decisions I think that, you know, are in the best interest of the shareholders and the bondholders. There's not a I think I said last time there's no playbook in this business.

You know, PDI, which is a big position for us, is finally going private. In fact, you know, we have $40 million of that. You know, SpaceX, we didn't really have nearly as high a year ago as it is today. You know, that's on our books for over $50 million. There's, you know, a fair amount of cash, and we've got investments. It is a daily discussion and analysis, but I just can't give you the answer that you want, which is A, B, C, D. We are, you know, being very active and I think thoughtful about do we invest in the business? You know, where do we invest to grow the business? When do we buy back bonds? What's the right place to buy back bonds?

When do we swap bonds and all those things?

Okay. Fair enough. On the merger with the wealth division, I might have missed it, but have you put out any sort of quantitative synergies that you think you're going to realize out of that?

We haven't. I think from my perspective, Scott can touch on this a little bit. You know, there's a lot of one-time costs that we have had to deal with as we've gotten our financials current. Our team has done an amazing job of getting our financials current. It was, you know, it was just a massive group of people. We've been, you know, we are now at a point where on a normal cadence where we can really focus on that. Not that we haven't been focusing on it, but, you know, not everything is a mad rush.

As we look through our overall corporation and then we look through the subsidiaries and the mergers, we'll be more clear now that we can really, I don't want to say focus is the wrong word, but maybe to focus on some of those things and not just the mad scramble to get our financials current. Scott, anything you want to add on that?

Yeah, Bryant Riley, I think you touched on the important points there. You know, the merger is going to have synergies across revenues and cost lines, and those are in the early parts. Early on, we're focusing in on the client side and the connectivity between the wealth and the retail, the wealth retail side and the institutional part of the business. That client focus and that connectivity serves the top part as we in the back office sort of determine that the right steps are in there. I'd echo Bryant Riley's comments with respect to, you know, we're really just in the early innings of evaluating our operating cost structure at the company and coming out of a very intensive period.

Now we're gonna have a very normal operating environment that's gonna give us a lot of bandwidth to evaluate our cost structure. There's some easy wins in this. Our audit fees were high just due to the demands we had put on our auditor and with the normal timeline that we're gonna be able to use this year. You know, that's a pretty easy win for us. We have several of those across the entity in different parts of our business and operating expenses. Now we're still staying at the directional, "Hey, there's a lot of opportunity off the outsets." Understand that that's not as easily calculable into a model.

In the future quarters, when we start realizing those and have more dimension, Bryant Riley, we can share you more specifics.

Got it. Just lastly, just because you called it out in the release. For the 26 initiations in the quarter, how much of that is attributable to new hires versus kind of increasing coverage for existing hires?

I don't have that number handy, but I'm just gonna a general thesis. I think that the world is much more efficient given all the capabilities of everything. Everything from AI and so, you know, just the ability to gather information, the ability to, I think a research analyst 10, 12 years ago, it would have been 12-15 companies per analyst. If you can't get to 25, I think that would be, you know, you're just able to distill information quicker. You don't have to download every 10-K and 10-Q and make your, you know, do your analysis faster. I think that the vast majority of that is just from analysts that are already on board.

Got it. All right. Well, appreciate it, and again, congrats.

Yeah. Thank you.

Thank you, Sean. Our next question comes from Griffin of Owl Creek Asset Management. Your line is open. You may proceed.

Hey, guys. Congrats on the, on the good trajectory here. Looks like the clouds are starting to part. I was hoping you could provide some much further clarification on a couple of things. I guess the first thing is, can you kind of walk through the rationale of buying back the minority stake of BRS? Initially, we thought that this was another lever that you had created to potentially partially monetize to help with the cap structure, and now it seems like you're walking back that. Can you kind of help us understand the rationale behind that?

Yeah, I think we, you know, we laid that out when we made the announcement. When we carved that out, it was a different time, and we have to acknowledge it was in the middle of a very unique situation for us. Carving it out and separating it at that time felt like the best thing to do for keeping people and for managing the business and from circling it and refactoring it. I think as we've gotten through and as you said, are seeing some bluer skies, you know, we have balance sheets that have been separated and utilized in different ways and now can be utilized in one way.

You might have a, you know, a BRS which had a lot of money at the money market at 4% of the broker-dealer while we're on corporate utilizing money at, you know, much higher rates. There's also operating synergies. We still think that, you know, that business could be very easily separated if we needed to do that or if somebody came along and determined that that was worth the value that we thought it was worth. You know, in the, in the near term, it's just from a, from a cost of capital perspective, from an operating efficiencies perspective, we felt like that was the right thing to do. Jay or Scott, anything you wanna add to that?

I would just say again, you know, a year ago, two years ago, different landscape. Again, a big part of the reason was just the optionality. You heard earlier, you know, that's one of our focuses here, to make sure that we're in the right position to take advantage of whatever situation we find ourselves in. You know, we went down that road. A year later, a year and a half later, the landscape has changed. It has proven to be, you know, operationally really challenging, among other reasons. Rather than persist with what we're doing, we're going to simplify our lives and, you know, put it back to the way it was.

Can I infer that X, a sale of BRS, you think you have all the solutions necessary in-house to solve the 26s?

Yes.

Okay. Understood. I guess one of the statements you had made, which I thought was obviously great, is, you know, you didn't see the most deal activity in five years in BRS with the capital raising. Maybe I missed the nuance of that. It doesn't look like that's massive increases is showing up in the numbers. Is that because of you're trying to regain market share with lower pricing, or is that, you know, can you kinda help me out there?

We are Yeah. If we are 30% of a deal, that's obviously a lot more valuable than being 5% of the deal. I think what I've been super impressed with is that, you know, companies value our research and value our distribution. You know, the noise that has surrounded us and is dissipating, and I'm hopeful it turns the other way, you know, as it surrounded us, those percentages of those deals, we lost economics. You know, ideally, we would rather be a smaller number and be 100% of the economics. I think it speaks to our position. I think it speaks to the value that we provide to companies and to the markets.

As, you know, we've been playing, I think, with, you know, one hand behind our back. We haven't had our financials current. We've had to spend a lot of time on that. As we are now in a completely different position, I would expect that our percentages of those deals would go up meaningfully. I would hope. That is the goal.

Got it. Then the last one for me is, you had mentioned that because the company was a delinquent filer, there was certain business that was pulled from you guys. How are you thinking about, or how are you seeing the cadence of that recovery of former clients coming?

Yeah, it's been strong. We measure it weekly. You know, we have seen a lot of onboarding in accounts again. It was a big deal for, I think, some of the bigger institutions that it is check a box, and that box was, we're delinquent, so let's cut them off for now. It's been dramatic over the course of the last quarter.

Okay. Good to hear. Congratulations on the quarter, and that's it for me.

All right. Thank you. Thanks for your questions.

Thank you, Griffin. This concludes the Q&A session. Turning it back to Bryant Riley for any final remarks.

Thank you, operator. It really feels good to report on the 7th and have a normal cadence. Now we get to go after, as I mentioned, some of these operating costs that were one-time in nature. None of this would have happened if we didn't have an amazing group that worked 24/7 to get us not only our revenues in line, but also get the financials done. Super thankful, thanks everyone for calling in. We look forward to talking. Our conference is coming up, hopefully we'll see some of you at our conference on the 20th. Appreciate the interest. We'll see you next quarter. Thank you.

Before we conclude, we'd like to inform listeners that today's call may include forward-looking statements. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a discussion of these risks, please refer to our most recent SEC filings, including our annual report on form 10-K and subsequent 10-Qs. We do not undertake any obligation to update these forward-looking statements.

This concludes today's Evercall. A replay will be made available shortly after today's call. Thank you, and have a great day.

Good day, and Welcome to the BRC Group Holdings Fourth Quarter and Full Year 2025 Financial Results Conference Call. My name is Isabelle, and I will be your Evercall moderator. The format of the call includes prepared remarks from the company, followed by a question-and-answer session. Please note that all attendees will be on the listen-only mode until the Q&A portion of the call. At this time, I will turn the call over to Bryant Riley from BRC Group Holdings. You may now begin.

Thank you, and good afternoon. We appreciate everyone joining us. To start, we are pleased to report that our 10-K was filed on time. It's an important milestone for our counterparties, shareholders, and organization as a whole. With that, for nearly 30 years, BRC Group Holdings has been defined by a key principle, a willingness to be opportunistic in the deals we took on, the capital we deployed, the companies we backed, and the businesses we built. Over the years, our team has grown adept at rising to the challenges associated with capitalizing those opportunities. The last two years required the firm to apply those same skills to itself, rebuilding our balance sheet, shifting operations, refocusing parts of the platform, and positioning BRCGH for what comes next.

We made some hard decisions along the way, but we made them deliberately, and we made them so that we could get back to doing what we do best. The bedrock of success of BRCGH's platform is our ability to bring together diverse companies, aligning them to partner creatively for our clients, and building a collaborative ecosystem. Advisory, Capital Markets, Wealth Management, Principal Investments, and Businesses that generate recurring steady cash flow. That combination creates real value for clients and shareholders alike. Over the past two years, we made the difficult decision to sell some of those businesses to strengthen our balance sheet. As we sit here today, the model is intact, as exemplified by our recent results. Our communication business group continues to generate consistent, predictable cash flow. Our broker-dealer executes complex transactions, raises significant capital for our clients, and continues to grow and add talent.

Our investment portfolio, anchored by our position in Babcock & Wilcox, delivered results that reflect the hands-on work our team put into our portfolio over many years. In 2025, we reported net income available to common shareholders of $299.4 million and earnings per share of $9.80. We reduced net debt significantly and continued to invest in the businesses and people that drive the platform. We welcomed a new CFO, Scott Yessner, enhanced our finance staff and transitioned to BDO as our auditing partner. Looking at the opportunity in the market for BRCGH, the small and midcap market we've always served is at an inflection point. Traditional lenders have pulled back. Generalist firms can't cover the complexity. Companies in this space need experienced partners who understand the capital structure, know the equity story, and can move with speed and certainty.

That's our lane, and it's been our lane for 30 years, and the demand for what we do is growing. To that end, yesterday we announced BRC Specialty Finance, a dedicated platform that addresses this exact issue, which is very exciting for us. Also yesterday, the Delaware Court of Chancery dismissed in full the Marstons versus Riley derivative action, finding that the plaintiff failed to adequately plead demand futility. BRCGH believes this outcome reflects the integrity of its board and the governance processes. We will not be commenting further on pending litigation. We're proud of what we accomplished in 2025, and we're committed to building upon these results. We are laser-focused on continued growth and maximizing profitable outcomes. The world is changing fast, AI included, and we will continue to make the shifts necessary to stay relevant and competitive.

Finally, we need to take a moment to acknowledge our team. These past few years have been a demanding period for the firm. Our people leaned in, stayed focused on clients, and kept us moving forward, showing exactly what the platform is built on. They are our competitive advantage. The continuity, shared experience, institutional knowledge. We could not be more proud of what this team has accomplished. I will now turn the call over to Co-CEO Tom Kelleher for a few additional comments.

Thanks, Bryant. As mentioned in our earnings release, we completed a number of strategic and operational objectives throughout the year. In March 2025, we closed the sale of Atlantic Coast Recycling for a purchase price of approximately $102 million, with net cash proceeds to BRCGH of approximately $69 million after adjustments. In April 2025, we sold a portion of our W2 Wealth Management business, representing 36 financial advisors and approximately $4 billion in assets under management for net consideration of $26 million. In June 2025, we completed the sale of GlassRatner Advisory & Capital Group and B. Riley Farber Advisory, generating cash consideration of approximately $118 million. While every one of these divestitures was a challenging decision to make, they fit with our strategy to deleverage the platform and focus the business going forward.

With the GlassRatner sale, we executed a Transition Services Agreement, or TSA, whereby we operationally supported that business through the end of 2025. Similarly, we also executed a TSA with our 2024 partial sale of Great American, and that TSA was also completed at the end of 2025. In 2025, we also completed a multi-year project to consolidate the clearing arrangement for our wealth management business, which streamlines back-office operations and will materially lower costs. Effective January 1, 2026, we rebranded as BRC Group Holdings, reflecting our evolution from a financial services platform into a diversified portfolio of distinct businesses spanning financial services, communications, retail, and investments across equity, debt, and venture capital. Like many other firms, BRCGH has begun deploying artificial intelligence tools.

We standardized around Claude a year ago and are well positioned to capitalize on the opportunities presented by this emerging technology. More than half our corporate staff is using AI tools. Across our operating companies, AI adoption has accelerated, guided by a centralized team focused on developing and expanding these capabilities throughout the enterprise. The story heading into 2026 is straightforward. A stronger balance sheet, a growing business, and a market that needs exactly what we offer. Our CFO, Scott Yessner, will now walk through the financials in detail. Scott, over to you.

Thank you. I'm pleased to share an update on our 2025 financial performance, investment holdings, and liquidity. To start, I'd like to walk through our financial performance for the fourth quarter and full year 2025. Year-over-year fourth quarter revenues were $279 million, compared to $179 million, and full year revenues were $968 million compared to $746 million. The increase in fourth quarter year-over-year revenues was driven by $68 million on higher trading gains on investments, primarily in Babcock & Wilcox common stock, and by a loss of $72 million in fair value adjustments on loans receivable in 2024, which were offset by lower service and fee income of $33 million, which was comprised of $15 million in lower investment banking revenue and $20 million in revenues related to exited businesses.

These fee declines were partially offset by higher net investment advisory fees related to a fund that holds SpaceX. The full year 2025 revenue increase was driven by $183 million in higher trading gains due to $126 million in investment appreciation, primarily in Babcock & Wilcox, and a loss of $325 million on fair value adjustments on loans in 2024. The year-over-year revenue increase was offset by $150 million of lower service and fee revenues and $64 million in lower interest income from securities lending. The components of lower service and fee revenue decline were $66 million lower revenue from exited businesses of Reval, Nogin, and the Stifel wealth sale, partially offset by higher net investment advisory fees related to a fund that holds SpaceX.

Further, $44 million lower communication business group subscription revenue driven by subscriber attrition and a divestiture of a Lingo wholesale business. Finally, $22 million of lower investment banking revenue. Fourth quarter operating expenses were $218 million compared to $345 million in 2024, and full year operating expenses in 2025 were $892 million compared to $1.24 billion in 2024. The $128 million fourth quarter year-over-year reduction of operating expenses was primarily due to costs from exited businesses and a $78 million goodwill impairment in 2024. The $352 million full year reduction of operating expenses was due to $186 million from exited businesses and lower cost of sales linked to revenue declines.

$61 million lower interest expense from securities lending and a $104 million goodwill impairment in 2024. Our administrative costs have been elevated in the past two years, particularly on professional fees. As we return to a normalized operating cadence, we expect to reduce these costs, and we'll update in the future call. Continuing down the income statement. Fourth quarter other income excluding interest expense was $38 million, compared to a loss of $59 million in 2024. Full year other income excluding interest expense was $247 million, compared to a loss of $270 million. The $98 million fourth quarter year-over-year increase was primarily driven by fair value total markups of $66 million on Babcock & Wilcox stock and DoubleDown Interactive.

The $516 million full year year-over-year increase was due to gains of $86 million on gain on sale of deconsolidation businesses, $76 million in Babcock & Wilcox stock value increase, $67 million on senior note exchanges, $34 million in equity gains on the JOANN's GA Group liquidation deal, and $273 million in investment markdowns in 2024. Fourth quarter interest expense was $20 million, compared to $31 million in 2024. Interest expense for the full year 2025 was $93 million, compared to $133 million in 2024, which was driven by debt reduction of $347 million during 2025.

These details culminate with fourth quarter net income attributable to common shareholders in 2025 of $85 million, compared to $900,000 in 2024, and full year net income attributable to the common shareholders in 2025 of $299 million, compared to a net loss of $772 million in 2024. Fourth quarter adjusted EBITDA in 2025 was $104 million, compared to a loss of $114 million in 2024. Full year adjusted EBITDA in 2025 was $231 million, compared to a loss of $568 million in 2024. Please refer to the reconciliation tables in our earnings press release for the adjusted EBITDA calculations. Next, I'll review our segment operating performance. Our segment presentation has been revised with the following changes.

Our former communication segment has been separated into four reportable segments, which we aggregate and describe as the communications business group. The capital markets segment had a few investment entities reclassified as non-reportable segments. These entities are now captured in corporate and other. The capital markets segment, which is comprised solely of B. Riley Securities, had fourth quarter and full year revenues of $93 million and $265 million, and segment income of $53 million and $89 million. The revenue and segment income increases are primarily due to a fair value increase in Babcock & Wilcox in trading gains. Core investment banking revenues were lower by approximately $222 million in 2025, which was a result of lower banker headcount and reduced client engagement from, among other things, late SEC filings at the corporate parent.

The Wealth segment had fourth quarter and full year revenues of $47 million and $176 million, and operating segment income of $8 million and $15 million. After completing the sale of $4 billion in assets under management in April 2025, the Wealth segment completed a back-office integration and cost reduction program. Wealth ended 2025 with $13 billion in assets under management and 197 registered representatives. The communications business group is the aggregate results of Lingo, magicJack, Marconi and United Online reportable segments. The communications business group had fourth quarter and full year aggregate revenues of $63 million and $250 million, and aggregate income for the fourth quarter and full year of $13 million and $47 million. The results exceeded our expectations in 2025.

While the communication services have a declining customer base, we have a strong team who does a very good job of servicing our customers and operating a very profitable and strong cash flow business. We will continue to evaluate opportunities to leverage this business model. The Targus business, which comprises the consumer products segment, had fourth quarter and full year revenues of $49 million and $182 million, and operating segment loss of $4 million and $16 million. Lower revenues, inventory write-downs, goodwill impairments, and tariff costs led to the 2025 operating loss. Tariff costs were approximately $4 million, which have been submitted for reimbursement. We'll update if the reimbursement is realized. Tariffs, conflicts, chip shortages remain risks to the business in 2026.

After several years of declining sales from the consumer product surge around the time of COVID, sales revenues have stabilized year-over-year in the fourth quarter of 2025 and into the first quarter of 2026. We are evaluating options to refine our pricing model and cost structure as key opportunities in 2026. Next, I would like to provide an update on the company's investment holdings portfolio, which are reported on our balance sheet in securities and other investments, loans receivable at fair value and equity investments. Investments are held across consolidated entities where valuation changes are booked as revenue in either trading gains or realized and unrealized gains, depending on the entity. Securities and other investments increased by $165 million to $447 million at year-end 2025.

The increase was primarily driven by a $129 million value increase in Babcock & Wilcox, and a $28 million increase in partnership interest and other related to our carried interest in funds that own SpaceX. At 12/31/2025, the Babcock & Wilcox stock price used in the valuation was $6.34. The company owned approximately 27.5 million shares at December 31, 2025 and at March 31, 2026. The SpaceX carrying value was marked at $421 per share at 12/31/2025. Securities and other investments are reported in the 10-K table, with subtotals including public equities, private equities, corporate bonds, and other fixed income securities, along with partnership interests and other.

In the public equities, in addition to the Babcock & Wilcox valuation change, DoubleDown Interactive and Synchronoss were lower, primarily from selling a portion of the holdings with small changes in price. The private equities subtotal amount, which has over 60 investments including the venture capital portfolio, had $34 million in new investments, $10 million in liquidations, and a balance of the year-over-year change due to valuation updates. The venture capital portfolio has a few maturing investments that may be realized in the next 12-24 months. Corporate bonds increased $2.7 million, primarily due to an increase in value. Partnerships and other investments increased primarily due to the SpaceX carried interest value increase identified earlier. We operate the securities investment portfolio to maximize shareholder returns and to support operational funding and liquidity requirements.

Continuing with investment holdings, loans receivable at fair value declined $64 million in 2025 to an ending balance of $26 million at 12/31/2025. Loan lending activity included approximately $110 million of fundings and $170 million of repayments, primarily driving the balance decline. Acela Technologies represents $21 million of the remaining balance, of which approximately $15 million is due in 2026. We expect to continue to fund loan and credit structures for our clients in 2026. For the last balance sheet line item in our investment holdings, equity measurement investments were $90 million at 12/31/2025, increasing $5 million from December 31, 2024. The increase was primarily due to $4 million of investments transferred from partnerships. The GA Group investment, formerly Great American, comprises $83 million of the 12/31/2025 balance.

In 2025, the GA Group had good financial performance and hired new executives to support their expansion, including a new CEO. Due to the GA Group capital structure, we record the investment using the Hypothetical Liquidation at Book Value method. While we don't anticipate this booking method will result in a significant movement in our balance sheet valuation periodically, we believe the value will grow over the next few years. Having grown GA Group since 2014, we know this business well. We'll continue to update business performance periodically and seek to participate in equity and debt deals as partners to GA Group, as we did in 2025 with the $34 million equity gain in the JOANN's liquidation equity earnings and the lending we provided to GA Group in 2025. Next, I'll provide an update and remarks on our liquidity and capital.

At year-end December 31, 2025, cash, restricted cash and cash equivalents balance was $229 million, compared to $247 million at December 31, 2024. In 2025, BRC Group reduced total debt by $347 million, which included a $147 million RILYM bond redemption on February 28, 2025. $127 million in bond exchanges, and $98 million in pay downs of term loans, offset by $23 million of other increases in debt borrowings. Net debt declined $437 million in 2025 to $627 million at December 31, 2025.

As we enter 2026, we have three senior note series maturing in 2026 for a total principal amount of $457 million, with an additional $16 million in scheduled pay downs on a subsidiary lending facility. On March 30th, 2026, the RILYK senior notes were fully redeemed for approximately $96 million, inclusive of accrued interest. Remaining in 2026 and based on the balances at 12/31/2025, we have $178 million in principal amount of RILYN senior notes due September 30th and $177 million in principal amount of RILYG notes due December 31 maturing. On March 12, we announced $38 million in senior note reductions through Section 3(a)(9) exchanges and buybacks, which are across the senior note series, including all three series in 2026.

We will continue to use capital actions and also use cash generated from operations and investment liquidations to fund the scheduled senior note pay downs and support our operations. Continuing, interest expense in 2025 totaled $93 million. In 2026, interest expense based on scheduled pay downs is estimated to be approximately $81 million, though expected to be lower due to the debt exchanges already announced in our anticipation of continuing these capital actions. To conclude, our capital and liquidity plan in 2026 is to fund our emerging credit market opportunities, support our clients with capital and advisory services, support holding investments to their optimal exits while funding the remaining senior note redemptions in 2026. Thank you for the opportunity to share this update today. We look forward to answering your questions. I'll turn the call back to the operator for a Q&A session.

Thank you. At this time, we will conduct the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to enter the queue. Once again, that is star one on your telephone keypad to enter the queue. We will pause here briefly to allow any questions to generate. Our first question comes from Amer with Imperial Capital. Amer, your line is open. You may proceed.

Thank you very much. Guys, first of all, congratulations on filing the 10-K. Am I reading this correctly that the remaining $350 million, you'll potentially use the investment portfolio as the primary source and some cash flow from operations? Or there are other levers that you intend to pull as well.

Thanks for the questions. Scott, feel free to join in. I think the way that we've looked over the last two years, you know, if you tried to put in a playbook, you would have changed directions 15 times. You know, our portfolio is opportunistic. You don't know what's going to Pop up in different ways. You know, I think that a year ago, it wasn't known that we had and we hadn't counted as much of a SpaceX partnership ownership that we had. You know, there's just. It's a pretty big book. You know, we've got a fair amount of assets and we're gonna be opportunistic. I wouldn't point to one thing or another. I would point to a combination of opportunities, whether it's bond swaps, which we've done a lot of, whether it's buying bonds in the market or selling some investments, all of those things will be considered. Scott or Tom, you want to add anything to that?

Yeah. Thanks, Bryant. Really appreciate the question, and I think Bryant had summarized it very well. You know, the way we look at it is, you know, we have investments and assets to the company that we wanna maximize the value to. We also have opportunities to supply capital to our clients. We balance all those different factors against our liquidity requirements for those bond redemptions. We have some high cash flow generating businesses and other opportunities. Then the capital actions that Bryant had levered on. We'll be opportunistic and, you know, make the best decision for the shareholder, but we have many different levers in which to pay down the redemptions this year.

I'd also just note that the redemptions, because we have had these capital actions so far this year, the principal balance on the RILYNs due in September 30 is $167 million. Then the RILYGs, which are due on December 31, 2026, are down to $170 million. Those have already reduced from as reported in our 10-K.

Oh, great. Thank you so much for that. My next question is, when you guys look at BRS, I know you guys have talked about a stack, you know, a transaction. Is there any sense of the timing for that?

Well, if anyone talked about a stack transaction, maybe it was, yeah, we have not talked about a stack transaction. We have carved it out so that it is an entity that you can. There's some equity ownership by the management team and some of the TP partners there. It's an asset of BRC, and we will. We're always evaluating our assets to maximize value. It's very much an integrated part of our business as well and does feed off. We still do feed off of each other in terms of creating opportunities, whether it's me, myself being involved on the BRS side or somebody at BRS helping on wealth management side.

We're really, while we did have a carve out to identify that asset a little more clearly, I would view those as still pretty integrated.

Understood. Well, I'll let others ask questions, and I'll go back in the queue. Congratulations, you guys have accomplished an incredible amount over the last year or so. It's been pretty frenetic in terms of things that have happened. Seems like you guys have found yourself in a very good spot at this point in time, so congratulations.

Yeah. Thank you for that.

Thank you very much.

We feel the same way. Yeah.

Thank you. Our next question comes from Sean Haydon of Charles Lane Capital. You may proceed with your question.

Hi, guys. Good afternoon, and thanks for all the information and congrats on the recent developments. Bryant, in your prepared remarks, you spoke of a, I believe you used the word specialty finance platform. Within the boundaries, could you kind of expand on that? And is that gonna be something that's gonna be on balance sheet or shared with investors? How should we kind of think about that going forward?

Sure. Thanks, Sean nice to hear from you. This is not an incredibly different from what we've done for a long time, you know, helping facilitate transactions. As we mentioned in our press release, there is a gap in the market for, you know, more short-term loans, especially around public companies, when you're willing to also underwrite not only the business, but the equity and all the assets of the estate. We completed a loan, I think it's done, maybe it was done today. It was for a public company, a $10 million loan against receivables.

Those receivables go directly to us, so we take a fee off of those, and they'll pay us back in four months. They had a direct use for that, and there's not a lot of places you can go for that type of transaction. We certainly have a lot of relationships, just like anyone does, you know, has a loan business like that, where we will consider syndicating. We have a dedicated family office that is, partnership's the wrong word. It's not formalized, but we have a high degree of confidence that family office will be a participant to the extent we wanna do some things bigger. On balance sheet, depending on timing, depending on size, syndicated, depending on timing, dependent on size.

I think the most proprietary thing and the reason that we wanted to make sure that we were in this business is one, it's you know, it's serving clients that are long-term clients, and we think we can put that in perspective. Two, we don't think it's a hugely competitive market because you know, most lenders need a duration of their capital and a defined MOIC can have very kind of strict mandates within their lending portfolio. We think we can be opportunistic and also be really good partners. We're really excited about formalizing it. We think we're already seeing just from that press release, we're seeing opportunities. That's how that will work. Does that answer your question?

Yeah. No, that was helpful. Kind of piggybacking on the first question from the previous person. Where are you guys comfortable bringing the balance sheet in terms of net debt? I mean, should we expect it to be lower, and how should we kind of think about it getting there?

That, you know, that's a question every day based on your cash flows. You know, realize this year our expenses, you know, our cash flows were hit quite a bit because of these expenses associated with the financials and changing orders and all the legal things. You know, we expect to get some tailwinds there. We think that there, you know, from operations, obviously, there's gonna be meaningful cash flows. We look at it all the time. You know, if you were to take and mark to market our portfolio now, the debt to EBITDA on a trailing basis would not be hugely uncomfortable. You know, but that's net debt, right? We have to constantly look at these things.

I don't think there's a number in mind. We just wanna make sure that we can one way or another be on the offense in helping our clients and being able to utilize capital to do that. We'll always be mindful of that. We'll balance that against whether, you know, we need to utilize other methods, selling an asset or doing bond swaps. I couldn't give you a target. I could tell you that, you know, we feel pretty good about where we are right now, obviously relative to where we were 18 months ago, and we're just gonna keep grinding away.

Yeah, I guess, and obviously we don't have to get into specifics here, but directionally, when those maturities come up in the latter half of the year, should we expect a replenishment from that? Or is that, you know, going to be the level we should expect going forward once they've matured?

I kind of answered the same way I answered the prior caller. You know, in this business, six months and nine months is like equivalent of, I think, five years in a widget business and things change 18 different ways. I couldn't tell you exactly what the next steps are, you know, are gonna be other than we feel really comfortable about our, you know, about 2026 and going forward. I just would love to give you an exact linear description of the next steps, but we're just gonna continue to think through what is best for the overall business and where, you know, where we are in markets and how markets are.

You know, if we're seeing a ton of opportunities, as Scott said, to put money to work at really good rates or really good opportunities, then we'll be thoughtful of that. You know, it's similar to how we got to March. I mean, I think by the time we got to March, there was $96 million of maturities. You know, we had chipped away at them from a couple of different ways. You know, that's how I would think about September and December.

All right. Well, I appreciate it. Again, congrats. I don't know if I'd say it was a fun one, but it was. It's been a ride. I appreciate you guys having this call. Thanks.

Well, I know you've been on the ride, and we appreciate it. We're, you know, going forward and, you know, accomplished a lot and are just charging forward. Thank you.

Sounds good. Thank you.

Thank you, Sean. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad to enter the queue. Once again, that's star then one on your telephone keypad to enter the queue. Our next question is a follow-up from Amer of Imperial Capital. You may proceed with your question.

Thank you. I just wanted to dig into the Great American business. Can we talk a little bit about how do you guys value the business on your balance sheet? Secondly, you guys had invested some additional capital for the JOANN liquidation. Can you talk about what kind of return you got or are expecting on those investments?

Yeah. I'll start.

Amer, thank you so much.

Go ahead.

Yeah. I was gonna just touch on the accounting and the booking and that part of it, and then turn to you, Bryant. Yeah. So there's the nature of the capital structure at GA Group after we had sold a portion of it and now have, you know, roughly 43%-45% of that business. Because of that structure, we have to use an accounting treatment called Hypothetical Liquidation at Book Value method, and it just sort of gives you a book value of that company. When you think about the value of a firm like The GA Group, the balance sheet's not primarily the element to it. It's a fantastic business, which you know, we've owned for well over a decade. The part of the reason for my remarks on the call was just to identify that, you know, while we will communicate its performance, as we are required to for the 10-K of the actual business, the valuation on the balance sheet won't move much, and we think that's helpful to communicate to our shareholders and analysts to understand that, you know, the performance of the business may not necessarily be reflective of a hypothetical liquidation book value, which I know everyone is very good at understanding book value versus market value.

That's how, sort of how to think about it, is that we wanna communicate the performance in its P&L sense and earnings sense, but may not be able to reflect, you know, the actual valuation change in the balance sheet. With respect to the equity, you know, the equity returns that we earned on the JOANN's deal, you know, that was, you know, those are very, very high. You know, that was a very, very successful deal for us, something that we were very comfortable in being with, was part of our means of organizing that partnership with Oaktree, the majority owner now. You know, those are equity participations in transactions are something that we want to supply capital for and continue to.

We'd also provided some lending last year to that business operation. We want to, outside of our ownership through that, equity investment, provide additional capital support the business. Bryant, I'll let you pick it up from there.

No, that was perfect. Yep, I wouldn't add anything more.

Okay, thank you guys. That's all I have.

All right. Thank you.

Thank you. Our next question comes from Jonathan of J.H. Lane Partners. Jonathan, you may proceed with your question.

Hi, guys. Good afternoon. Thanks very much for the call. Appreciate it. Had a couple quick ones for you guys. Number one is, what is your ability to sell any of your shares in Babcock for liquidity purposes? Are there any restrictions associated with that, given your significant ownership stake in the company? I have two other follow-ups. Maybe if you just wanna answer that one first, and then I'm happy to get to the other questions.

You know, we've been very involved in BW in a number of ways and advisory roles, et cetera. But in terms of restrictions outside of being restricted because we would have information, our shares are subject to Rule 144A requirements, which means that because we own a fair amount of shares, we would have to measure the volume per month of those shares. But the volume of that company is far more than the shares that we own. We do have a requirement to follow some volume restrictions based on our ownership, but they don't come into play with volumes here.

Okay. Great. Just any. You know, I've been following this story for a little bit. You guys have made, obviously, a lot of progress. Is there any general comment you could provide to the broader market about changes in here at the governance level? You know, given obviously, it's obviously great that you got the positive litigation ruling today or yesterday. For some new to the story and perhaps for people to just understand, there's a lot that went on here in the last couple years. You know, have you had changes to the board, other than changing your auditor? You know, is the law firm that you had worked with closely over the last couple years still kind of involved in your company at all?

Like, how can we understand kind of Old co and New co just understanding that, you know, is this kind of a new company, new stage? You know, obviously, some of management have been the same, but, you know, is there any kind of fresh moves on the board and just a sense of, you know, how we move the Old co into the New co?

There hasn't been any new members of the board. I think you can tell by, you know, as you may know, we had a lot of governance around investigations and things like that. I think that since you're newer to the story and I certainly appreciate the dynamics around, you know, FRG, but you know, BW, which you spoke of, was not a dissimilar situation. That's a 20-year relationship with a management team and, you know, that company obviously with our help and with the members of the management team has really ended up having great returns for us.

You're balancing things that, you know, you've done in the past and things and the way you're gonna look in the future and what is best for the business. I think that certainly we have, obviously Scott Yessner is here, and we've implemented, you know, I think the proper amount of procedures. I think our board is incredibly additive and, you know, we have a new auditor, which, you know, we're very thankful for. I wouldn't. I think that's how I'd answer it. I think I feel good about the procedures we have in place and balancing the opportunities with, you know, creating the right environment for everyone.

I think the disclosures we're providing that Scott's providing is more and more. We're trying to walk the right line between, you know, thinking about the dynamic of an FRG, but also realizing that a lot of the, you know, opportunities we have in front of us are gonna be, you know, we need to take advantage of. Tom or Scott-

Yeah, that's very helpful, and I appreciate it. I just would note that obviously, like, a situation like Babcock is just now such a meaningful part of the situation where, you know, in the past, like, obviously FRG ended up being a very significant part of the story. Not comparing the two, but just in terms of like, as a percentage of your, you know, value and assets and be cognizant of the equity markets in terms of people that invest with you. Obviously that's, you know, the more diversified you could be, I think the better.

The last question I had would be, is there any update on liquidity or maybe your cash position or something you could provide to us, as of 3/31 or post those transactions you did and post the bond pay down that took place at the end of March, I guess now.

Yeah. I mean, we're gonna be back on the phone hopefully in five weeks, right? I think maybe my auditors are listening, so that's absolutely a hope for four or five weeks. We'll get back to you. We're not providing guidance right now. Hopefully, you know, we'll be back.

No, that's okay. Sorry. Yeah. Okay.I apologize. I wasn't looking for guidance. I was just looking for actuals right now, but I'm not looking for much forward. I appreciate the time, guys. Thank you for the call.

Thank you.

Thank you.

Thank you, Jonathan. Once again, if you would like to ask a question, please press star one on your telephone keypad to enter the queue. Once more, that's star then one on your telephone keypad to enter the queue. We will pause here briefly to allow any further questions to generate. One final call at star then one on your telephone keypad to enter the queue.

I think, operator, I think we're good. Thank you. Just before we go, you know, I'll just speak personally as we've gone through this last couple of years and where we are and the momentum we have, and I'm just humbled by the team that we work with every day. The new team members, it's been just an amazing experience to be able to be in a situation where you latch arms and you go and you battle and we're seeing the rewards of that. I think that the people that have been fighting through it are seeing the rewards of that. Very thankful for this team. Very thankful for TK and Scott and everybody else from our team on the call.

We're excited to be able to have a quarterly earnings call that will be, you know, normal and normalized and have a regular cadence. Thank you very much, and really appreciate everyone for joining.

This concludes today's Evercall. A replay will be made available shortly after today's call. Thank you, and have a great day.