B. Riley stock plunges after suspending dividend, reporting Q2 loss

Shares of B. Riley Financial (NASDAQ: RILY) plummeted, falling around 50% at the open on Monday after the company released preliminary second-quarter results, revealing it has suspended its dividend.

The financial services firm expects to report a net loss for the quarter ended June 30, in the range of $435 to $475 million, or a $14 to $15 loss per share.

"Our second quarter results were negatively impacted by non-cash losses, the overwhelming majority of which relate to performance of our investment in Franchise Group, Inc. ("FRG") and our Vintage Capital loan receivable, which is primarily collateralized by equity interests in FRG," said Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial.

"The reports concerning Brian Kahn, FRG's former CEO, and his alleged misconduct at Prophecy have continued to create additional challenges for this investment, despite the fact that these allegations are unrelated to FRG or B. Riley," added Riley.

B. Riley expects to report a non-cash markdown of approximately $330 to $370 million related to its investment in Freedom VCM, the indirect parent entity of FRG, and the Vintage Capital loan receivable.

Furthermore, the company expects to record an impairment charge of $28 million for the quarter ended June 30, primarily related to the goodwill of Targus, which has continued to be impacted by consumer spending habits as mentioned above. In addition, it expects to record a charge of approximately $25 million related to a valuation allowance for deferred income taxes for the quarter.

B. Riley's total outstanding debt as of June 30 is approximately $2.16 billion.

By Sam Boughedda

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