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    RILY
    Earnings call· Jun 2026(Q2 FY26)

    BRC Group Holdings Q2 FY26 earnings call RILY

    Aug 6, 2026 Source

    Executive summary

    BRC Group Holdings Q2 FY26 — Strong Operating Performance and Debt Reduction

    BRC Group Holdings delivered a strong Q2 FY26, driven by robust core operating units and strategic balance sheet management. The firm's diversified platform, particularly its Capital Markets and Communications segments, demonstrated solid execution and cash generation, while significant debt reduction improved its financial position. Management remains focused on disciplined capital allocation and leveraging its merchant banking approach to capitalize on market opportunities, despite some headwinds in trading gains and the Consumer Products segment.

    Highlights

    4

    • Reported Q2 FY26 net income available to common shareholders of $18.5 million and operating adjusted EBITDA of $66 million, marking the best core operating quarter in nearly 3 years.

    • Successfully reactivated several key institutional accounts and added 5 senior producers, including returning alumni, strengthening the Capital Markets franchise.

    • Total debt reduced by $497 million from December 31, 2024, with net debt declining $87 million to $285 million at June 30, 2026.

    • The Communications business group generated over $1.5 billion in revenue and approximately $300 million in operating income since 2018, demonstrating reliable cash generation.

    Concerns

    3

    • Trading gains in Q2 FY26 were $12.9 million, lower by $14.8 million year-over-year, primarily due to a lower fair value on the Babcock & Wilcox investment.

    • The Consumer Products segment (Targus) reported a loss of $6 million in Q2 FY26 and $8 million in H1 FY26.

    • The company is behind on preferred dividends, prioritizing other capital uses for higher returns.

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Capital Markets
    Driven by increased investment banking and capital markets service and fee income and trading gains in H1. ATM franchise reaccelerated with fees more than doubling sequentially.
    H1 Revenue: $226 millionH1 Income: $150 millionH1 Investment banking and capital markets service and fee income increase: $22 millionH1 Trading gains increase: $136 million (primarily from Babcock & Wilcox investment)Q2 Aggregate deal value participation: $21 billionQ2 Combined equity and debt issuances supported: $8.5 billionQ2 New ATM filings as agent: $12 billion
    		$54 million——$13 million
    Wealth
    H1 revenue and profit increases driven by carried interest in SpaceX funds and trading income. Platform stabilized and cost base reset through structural cost savings.
    H1 Revenue: $110 millionH1 Income: $34 millionAssets under management: $12 billionFinancial advisers: 184H1 Market value of carried interest in SpaceX funds increase: $26.4 millionH1 Trading income increase: $18 million
    		$58 million——$18 million
    Communications Business Group
    Income grew year-over-year despite slight top-line decline due to operational efficiencies. Expected to finish FY26 ahead of budget. Operations remain lean and highly efficient, generating predictable cash flows.
    H1 Revenue: $118 millionH1 Income: $27 millionH1 Income increase: $4.6 millionH1 Revenue reduction: $9 millionRevenue generated since 2018: $1.5 billionOperating income generated since 2018: $300 millionAnnual revenues: $200 million
    		$58 million——$14 million
    Consumer Products (Targus)
    Targeted distribution channel improvements helped narrow segment loss over H1. Taking deliberate action on cost side, streamlining operations, and reducing structural expense.
    H1 Revenue: $88 millionH1 Loss: $8 millionH1 Revenue increase: $2 million
    		$44 million——loss of $6 million

    Operational metrics

    56
    Operating adjusted EBITDA
    $66 million
    Q2 FY26

    Best core operating quarter in nearly 3 years.

    Operating adjusted EBITDA
    $182 million
    TTM

    Trailing 12 months.

    Operating adjusted EBITDA
    $100 million
    H1 FY26
    Adjusted EBITDA
    $61 million
    Q2 FY26
    Adjusted EBITDA
    $323 million
    H1 FY26
    Total revenues increase
    $14 millionYoY
    Q2 FY26
    Total revenues increase
    $180 millionYoY
    H1 FY26
    Service and fee revenue increase
    $27.8 millionYoY
    Q2 FY26
    Service and fee revenue increase
    $21 millionYoY
    H1 FY26
    Investment banking and brokerage fees increase
    $5.7 millionYoY
    Q2 FY26
    Investment banking and brokerage fees increase
    $15 millionYoY
    H1 FY26
    Management fees from carried interest in SpaceX funds increase
    $30 millionYoY
    Q2 FY26
    Management fees from carried interest in SpaceX funds increase
    $36 millionYoY
    H1 FY26
    Telecom and other revenues decrease
    $5.8 millionYoY
    Q2 FY26
    Telecom and other revenues decrease
    $12 millionYoY
    H1 FY26
    Trading gains
    $12.9 milliondown $14.8 million YoY
    Q2 FY26

    Primarily due to lower fair value on Babcock & Wilcox investment.

    Trading gains
    $146 millionup YoY
    H1 FY26
    Total operating expenses decline
    $13.6 million
    Q2 FY26
    Total operating expenses decline
    $62 million
    H1 FY26
    SG&A costs reduction
    $9 million
    Q2 FY26

    Across occupancy, legal, and other expenses.

    SG&A costs reduction
    $29 million
    H1 FY26

    Across occupancy, legal, and other expenses.

    Cost of goods sold and services reduction
    $7.6 million
    Q2 FY26
    Cost of goods sold and services reduction
    $9.3 million
    H1 FY26
    Cost of goods sold and services reduction
    $9.6 million
    H1 FY26
    Cost of goods sold and services reduction
    $3.2 million
    H1 FY26
    Restructuring charges
    $1.9 million
    Q2 FY26

    Related to contemplated B. Riley Securities and Wealth combination.

    Restructuring charges
    $1.9 million
    H1 FY26

    Related to contemplated B. Riley Securities and Wealth combination.

    Other income (excluding interest expense)
    $8 milliondown $80 million YoY
    Q2 FY26

    Compared to $88 million in Q2 2025, which included $44 million in senior note exchange gains, $26 million in JOANN's liquidation gains, and $22 million in investment and financial instrument fair value increases.

    Other income (excluding interest expense)
    $114 million
    H1 FY26

    Compared to $156 million in H1 2025, which included $86 million in income from sale and deconsolidation of businesses and $55 million in senior note exchange gains.

    Income from sale and deconsolidation of businesses
    $86 million
    H1 2025

    Included in H1 2025 other income.

    Senior note exchange gains
    $55 million
    H1 2025

    Included in H1 2025 other income.

    Interest expense decline
    $6 million
    Q2 FY26
    Interest expense decline
    $16 millionYoY
    H1 FY26
    Total debt reduction
    $497 million
    Dec 31, 2024 to June 30, 2026
    Income from discontinued GlassRatner operation
    $69 million
    Q2 2025
    Income from discontinued GlassRatner operation
    $73 million
    H1 2025
    Diluted income per share
    $0.45
    Q2 FY26
    Diluted income per share
    $6.47
    H1 FY26
    Babcock & Wilcox investment fair value increase
    $213 million
    H1 FY26

    Driver for increase in securities and other investments.

    Partnership interest related to SpaceX funds increase
    $43 million
    H1 FY26

    Driver for increase in securities and other investments.

    Loan receivables at fair value increase
    $12 million
    Q2 FY26
    New fundings (lending activity)
    $24 million
    Q2 FY26
    Loan recovery
    $1.9 million
    Q2 FY26

    Recognized through income statement.

    GEA Group investment decline
    $5.5 million
    H1 FY26

    Due to lower seasonal income and retaining cash in lieu of distribution to equity holders.

    Cash, cash equivalents and restricted cash
    $156 milliondown $73 million from Dec 31, 2025
    June 30, 2026
    Debt reduction
    $22 million
    Q2 FY26
    Bond exchanges
    $33 million
    Q2 FY26

    Included in Q2 debt reduction.

    Working capital borrowings increase
    $11 million
    Q2 FY26

    Net increase.

    Total debt
    $1.3 billion
    June 30, 2026
    Net debt
    $285 milliondeclined $87 million
    June 30, 2026
    Senior notes maturing (Sept 30)
    $142 million
    remainder of 2026

    Principal amount of Riley N senior notes.

    Senior notes maturing (Dec 31)
    $164 million
    remainder of 2026

    Principal amount of Riley G senior notes.

    Scheduled paydowns on subsidiary lending facility
    $4.5 million
    remainder of 2026
    Investments in securities
    $723 million
    June 30, 2026

    Available for funding debt maturities.

    Cash
    $150 million
    June 30, 2026

    Available for funding debt maturities.

    Net debt (historical high)
    $1.2 billion
    past couple of years

    Deals & partnerships

    3
    Various issuers and clientsParticipation in capital markets transactions, including equity and debt issuances and ATM filings.$21 billion (aggregate deal value in Q2); $8.5 billion (combined equity and debt issuances); $12 billion (new ATM filings)

    Favorable markets drove robust overall deal activity. Larger syndicates and strong market naturally lowered average economic share per deal, but volume and lead mandates demonstrated execution capabilities.

    UndisclosedBought deal using company's balance sheet.

    Management is excited about this deal but cannot talk about it today.

    UndisclosedInvolvement in a $100 million deal.$100 million

    Mentioned as an example of current deal activity.

    Risks & headwinds

    5
    Lower fair value on Babcock & Wilcox investmentQ2 FY26

    Trading gains lower by $14.8 million YoY in Q2 FY26, primarily due to this.

    Mitigation: Not explicitly stated, but the company holds a diversified investment portfolio.

    Decline in telecom and other revenuesQ2 FY26, H1 FY26

    $5.8 million lower in Q2 FY26 YoY, $12 million lower in H1 FY26 YoY.

    Mitigation: Communications business group income grew due to operational efficiencies, offsetting revenue reduction.

    Consumer Products segment lossQ2 FY26, H1 FY26

    Loss of $6 million in Q2 FY26, $8 million in H1 FY26.

    Mitigation: Taking deliberate action on cost side, streamlining operations, reducing structural expense, and optimizing long-term value.

    Preferred dividend arrearsOngoing

    Acknowledged as 'behind on those dividends'.

    Mitigation: Prioritizing capital for other opportunities with higher returns for now.

    Market volatility impacting capital markets businessOngoing

    Not quantified, but acknowledged that 'markets can turn off and on'.

    Mitigation: Running the business tight, having good people, and aggressively pursuing opportunities when markets are favorable.

    What to watch in Q3 FY26

    4

    Senior Note Maturities

    Q3 FY26
    Current$142 million due Sept 30, 2026; $164 million due Dec 31, 2026
    TargetSuccessful redemption of $142 million senior notes

    Why it matters

    Successful management of debt maturities is crucial for financial stability and investor confidence.

    For the remainder of 2026, the company has 2 senior notes series is maturing, $142 million in principal amount of Riley N senior notes due September 30, and $164 million in principal amount of Riley G senior notes due on December 31.

    Q&A highlights

    4

    How does the company plan to address the $306 million in senior note maturities by year-end 2026, specifically regarding the use of cash, asset sales, exchanges, or equity offerings?

    Management stated they have enough investment and cash ($723 million in securities, over $150 million cash) to comfortably fund the $300 million+ maturities. They emphasize creating optionality and evaluating capital structure to support operating businesses while paying down debt, and will utilize whatever makes sense without eliminating any specific method.

    “We have enough investment in cash to easily fund through the end of the year, the 2 debt maturities are just over $300 million.”

    asked by Kurt with Raymond James · answered by Scott Yessner

    2 min read5 chapters

    Detailed Narrative

    01

    Capital Markets Performance and Strategy

    B. Riley Securities saw robust deal activity, participating in transactions representing $21 billion in aggregate deal value in Q2 FY26. The firm supported combined equity and debt issuances totaling $8.5 billion and served as an agent on new ATM filings representing over $12 billion. The restructuring practice is finding meaningful opportunities, and the recruiting pipeline for senior bankers and institutional sales professionals is active, with several former employees returning, enhancing capacity and coverage.

    02

    Wealth Management Stabilization

    The Wealth segment's first-half improvement was partly due to investment and carried interest activity. The platform has been stabilized, and its cost base permanently reset through structural cost savings, including back-office integrations between B. Riley Securities and B. Riley Wealth, consolidating accounting, finance, and end-market teams, and executing a comprehensive firm-wide vendor rationalization. The segment ended Q2 FY26 with $12 billion in assets under management and 184 financial advisers.

    03

    Communications Business Group as Cash Engine

    The Communications business group, comprising Lingo, Magic Jack, Marconi Wireless, and United Online, continues to be a reliable cash generator. Since 2018, this group has generated over $1.5 billion in revenue and approximately $300 million in operating income, significantly exceeding its combined acquisition enterprise value of just under $280 million. The group came in ahead of budget for Q2 FY26 due to operational efficiencies and is expected to finish FY26 ahead of budget.

    04

    Investment Holdings and Balance Sheet Deployment

    The company actively deploys its balance sheet to solve complex client needs, including structured financing and direct lending. Investment positions provide flexibility for pursuing opportunities, and the pipeline is substantial. Securities and other investments increased by $277 million to $724 million at June 30, 2026, primarily driven by a $213 million fair value increase in the Babcock & Wilcox investment and a $43 million increase in partnership interest related to SpaceX funds.

    05

    Debt Management and Liquidity

    Total debt was reduced by $22 million in Q2 FY26, including $33 million of bond exchanges. Total debt stood at $1.3 billion at June 30, 2026, with net debt declining $87 million to $285 million. The company faces two senior note maturities totaling $306 million in principal amount by year-end 2026 ($142 million in September and $164 million in December), which it plans to address through capital actions, cash generated from operations, and investment liquidations.

    AI-generated summary of the company’s earnings call. Not investment advice.