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. [Operator Instructions] And 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 the organization as a whole. With that, for nearly 30 years, BRC Group Holdings has been defined by a key principle, our 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 on those opportunities. The last 2 years required the firm to apply those same skills to itself, rebuilding our balance sheet, shifting operations, refocusing parts of the platform and positioning BRC GH 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 BRC GH'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 2 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 Communications Business Group continues to generate consistent predictable cash flow. Our broker-dealer executes complex transactions, raise significant capital for our clients and continues to grow and add talent. In our investment portfolio, anchored by our position in Babcock & Wilcox delivered results that reflect the hands-on work our team put…

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 BRC GH of approximately $69 million after adjustments. In April 2025, we sold a portion of our W2 Wealth Management business representing 36 financial advisers and approximately $4 billion in assets under management for a net consideration of $26 million. In June 2025, we completed the sale of GlassRatner Advisory and 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 multiyear 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, BRC GH 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 revenue 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 Revel, Noggin 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, and finally, $22 million of lower investment banking revenue. Fourth quarter operating expenses were $218 million compared to $345 million in 2024 and full…

[Operator Instructions] Our first question comes from Amer with Imperial Capital.

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?

So thanks for the questions. And Scott, feel free to join in. I think the way that we've looked over the last 2 years, if you try to put in a playbook you would have changed directions 15x. So our portfolio is opportunistic. You don't know it's going to pop up in different ways. I think the year ago, it wasn't known that we had -- and we hadn't counted as much of a SpaceX partnership, ownership that we had. And -- and so there's just -- it's a pretty big book. And we've got a fair amount of assets, and we're going to be opportunistic. So I wouldn't point to one thing or another. I would point to a combination of opportunities, whether it's SPAN 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, do you want to add anything to that?

Yes. Thanks, Bryant. Really appreciate the question. And I think Bryant had summarized it very well. The way we look at it is we have investments and assets to the company that we want to maximize the value to. And we also have opportunities to supply capital to our clients. And so we balance all those different factors against our liquidity requirements for those bond redemptions. And so we have some high cash flow generating businesses and other opportunities, and then the capital actions that Bryant had levered on. So we'll be opportunistic and make the best decision for the shareholder, but we have many different levers in which to pay down the redemptions this year. And I'd also just note that the redemptions because we have had these capital actions so far this year. The principal balance on the RILYN's due in September 30 is $167 million. And then the Riley G's are -- which are due on December 31, 2026, they're down to $170 million. So those have already reduced from our reported in our 10-K.

My next question is, when you guys look at BRF, I know you guys have talked about a SPAC transaction. Is there any sense of the timing for that?

Well, if anyone talked about a SPAC transaction, maybe it was -- yes, we have not talked about a stock transaction. We have carved it out so that it is an entity that you can -- there is some equity ownership by the management team, some of the partners there, and it's an asset of BRC and we're always evaluating our assets to maximize value. But it's very much an integrated part of our business as well and it does feed off -- we still do feed off of each other in terms of creating opportunities, whether it's myself being involved on the BRF side or some of the BRF helping on the wealth management side. And so we're really -- when we did have a carve-out to identify that asset a little more clearly. I would view those as still pretty integrated.

Congratulations you guys have accomplished an incredible amount over the last year or so. So it's been pretty frenetic in terms of things that have happened. But seems like you guys have found yourself in a very good spot at this point in time. So congratulations.

Our next question comes from Sean Haydon of Charles Lane Capital.

Thanks for all the information and congrats on the recent developments. Bryant, in your prepared remarks, you spoke of a, I believe, the word Specialty Finance Platform within the boundaries, could you kind of expand on that? And is that going to be something that's going to be on balance sheet or shared with investors? How should we kind of think about that going forward?

Sure. So Thanks, Sean. This is not incredibly different from what we've done for a long time, helping facilitate transactions. And as we mentioned in our in our press release, there is a gap in the market for 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. And so we will -- we did a loan -- we completed a loan. I think it's done maybe was done today, but it was for a public company, a $10 million loan against receivables and those receivables go directly a lot, so we take a fee off of those and they'll pay us back in 4 months, but they had a direct use for that. 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 that has a loan business like that, where we will consider syndicating. We have a dedicated family office that is -- partnership is a wrong word. It's not formalized, but we have a high degree of confidence that, that family office will be a participant to the extent we want to do some things bigger. So on balance sheet, depending on timing, depending on size, syndicated depending on timing, depending 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 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 most lenders need a duration of their capital and a defined MOIC and have very kind of strict mandates within the lending portfolio. So we think we can be opportunistic and also be really good partners. And so we're really excited about formalizing it. And we think we're already seeing just from that press release, we're seeing opportunities. So that's how that will work. Does that answer your question?

Yes. Yes. No, that was helpful. And then 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?

So that's -- it's a question every day based on your cash flows and realize this year, our expenses -- our cash flows were hit quite a bit because of these expenses associated with the financials and changing orders and all the legal things. And so we expect to get some tailwinds there. We think that from operations, obviously, there's going to be meaningful cash flows. And we look at it all the time. If you were to take to market our portfolio now, the debt-to-EBITDA on a trailing basis would not be hugely uncomfortable, but that's net debt, right? So we have to constantly hit these things. I don't think there's -- I don't think there's a number of mine. We just want to make sure that we can, one way or another, be on the offense and helping our clients and being able to utilize capital to do that. And so that will always be mindful of that, and we'll balance that against whether we need to utilize other methods, selling an asset or doing bond swaps. So I can give you a target. I could tell you that we feel pretty good about where we are right now, obviously, relative to where we were 18 months ago, and we're just going to keep grinding away.

Yes. I guess obviously, we don't have to get any specifics here, but directionally, when those maturities come up in the latter half of the year, should we expect replenishment from that? Or is that 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 call or if -- in this business, 6 months and 9 months is like equivalent to 5 years in a legit business, if things changed 18 different ways. And I just -- I would I couldn't tell you exactly what the next steps are going to be other than we feel really comfortable about our -- about 2026 and going forward. So I would love to give you an exact linear description on the next steps, but we're just going to continue to think through what is best for the overall business and where we are in markets and how markets are. And if we're seeing a ton of opportunities, as Scott said, to put money to work at really good rates are really good opportunities that we'll be thoughtful of that. But it's similar to how we got to March. I mean, by the time we got to March, there was $96 million of maturities, and we had tipped away at them from a couple of different ways. And that's how I would think about September and December.

Congrats. It's been a ride.

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

[Operator Instructions] Our next question is a follow-up from Amer of Imperial Capital.

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

Yes. I was going to just touch on the accounting and the booking and that part of it, and then turn to you, Bryant. Yes. So there's -- the nature of the capital structure at GA Group after we did sold a portion and now have roughly 43% to 45% of that business. Because of that structure, we had to use an accounting treatment hypothetical liquidation and book value method. And it just sort of gives you a book value of that company. And when you think about the value of a firm like the GA Group, the balance sheet is not primarily the element to it. It's a fantastic business, which you know, we've honed for well over a decade. And so the part of the reason for my remarks on the call was just to identify that the -- well, we will communicate its performance as we are required to 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 the performance of the business may not necessarily be reflective of a hypothetical liquidation, but value, which I know everyone is very good at understanding book value versus market value. And so that's how -- sort of how to think about it is that we want to communicate the performance in its P&L sense and earnings sense, but may not be able to reflect the actual valuation change in the balance sheet. And with respect to the equity. The equity returns that we earned on the JOANN's deal, that was -- those are very, very high. We -- that was a very, very successful deal for us, something that we were very comfortable in being with as part of our means of organizing that partnership with Oaktree, the majority owner now. And those are equity participations in transactions or something that we want to supply capital for and continue to. And we also provided some lending last year to that business operation. And so we want to outside of our ownership through that equity investment, provide additional capital to support the business. So Bryant, I'd like to pick it up from there.

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

Our next question comes from Jonathan of JH Lane Partners.

I had a couple of 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 of the company. I have 2 other follow-ups. Maybe if you just want to answer that one first, and then I'm happy to get to the other questions.

We are -- 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 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. So we do have a requirement to follow some volume restrictions based on our ownership, but they are not -- they don't come into play with volumes here.

Okay. Great. And then just on the -- I've been following the story for a little bit. You guys have made obviously, a lot of progress. Is there any general comment you could comment you could provide to the broader market about changes maybe at the governance level given, obviously, it's obviously great that you got the positive litigation rule today or yesterday. But for someone new to the story and perhaps for people to just understand, there's a lot that went on here in the last couple of years. Have you had changes to the Board, other than changing your auditor is the law firm that you had worked with closely over the last couple of years, still kind of involved in your company at all? Like how can we understand kind of OldCo and NewCo, just understanding that is this kind of a new company, a new stage, obviously, some of the management have been the same, but is there any kind of fresh moves on the board and just a sense how we're going into the...

There hasn't been any new member to the board. I think you can tell by -- as you may know we had a lot of governance around investigations and things like that. I think that center newer to the story, and I certainly appreciate the dynamics around FRG. But BW which you spoke of was not a dissimilar situation. That's a 20-year relationship with the management team and that company, obviously, with our help and with the number that the management team has really ended up having great returns for us. And so you're balancing things that you've done in the past and things -- and the way you're going to look in the future and what is best for the business. And I think that certainly, we have -- Scott Yessner is here, and we've implemented I think the proper amount of procedures, and I think our Board is incredibly additive and we have a new auditor, which we're very thankful for. And so 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 creating the right environment for everyone. And I think the disclosures we're providing, that Scott is providing is more and more, and we're trying to walk the right line between thinking about the dynamic of an FRG, but also realizing that a lot of the opportunities we have in front of us are going to be -- we need to take advantage of. So Tom or Scott...

Yes, 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 in the past, like obviously, FRG ended up being a very significant part of the story, obviously, not comparing the 2, but just in terms of like as a percentage of your value and assets is something cognizant from the ex markets in terms of people that invest with you, obviously, that's the more diversified you could be, I think, the better. And then 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 we did in post the bond pay down that was -- that took place at the end March, I guess now.

Yes. So I mean, we're going to be back on the phone, hopefully, in 5 weeks, right? I think maybe my [ otters ] are listening. So that's absolutely a hope or 4 or 5 weeks. So we'll get back to -- we're not providing guidance right now. So hopefully, we...

[Operator Instructions]

I think, operator, I think we're good. Thank You. Just before we go, 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, and the new team members, it's been just an amazing experience to be able to be in a situation where you watch arms and you go and you battle and and we're seeing the rewards of that. And I think that the people that have been fighting through it are seeing the rewards of that. So very thankful for this team, very thankful for for TK and Scott and everybody else from our team on the call, and we're excited to be able to have a quarterly earnings call that will be normal and normalized and have a regular cadence. So thank you very much, and we 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.