BRC Group Holdings, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues were $33.0 million for the three months ended September 30, 2026, compared to $277.9 million in the prior year period; year-to-date total revenues were $624.2 million compared to $689.2 million in the prior year.
• Operating revenues were $161.3 million for the quarter and $617.9 million year-to-date, down from $244.1 million and $666.0 million, respectively, in the prior year periods.
• Net loss available to common shareholders was $(243.0) million, or $(6.04) per diluted share, for the quarter, compared to a net income of $89.1 million, or $2.91 per diluted share, in the prior year; year-to-date net loss was $(13.2) million, or $(0.40) per diluted share, compared to net income of $214.5 million, or $7.02 per diluted share.
• Adjusted EBITDA was $(219.1) million for the quarter and $104.3 million year-to-date, compared to $112.2 million and $126.9 million, respectively, in the prior year periods.
• Operating Adjusted EBITDA was $2.9 million for the quarter and $103.3 million year-to-date, compared to $54.9 million and $93.2 million, respectively, in the prior year periods.
• Total investments decreased to $408.6 million at September 30, 2026, from $520.5 million at December 31, 2025.
• Net debt declined 10% to $562.3 million at September 30, 2026, from $627.0 million at December 31, 2025.
• Total debt reduced to $1.14 billion from $1.43 billion over the same period.
• Cash, cash equivalents, and restricted cash totaled $145.7 million at September 30, 2026, compared to $229.3 million at December 31, 2025.
• Deferred revenue was $45.0 million at September 30, 2026, compared to $49.9 million at December 31, 2025.

Guidance and Future Outlook:

• Management stated they enter year-end with an active pipeline across equity, debt, and M&A advisory.
• The company plans to showcase its full platform capabilities at the Convergence Conference in December 2026.
• The pending acquisition of Sangoma Technologies is expected to close no later than early 2027, subject to shareholder, court, and regulatory approvals.

Business Segments and Product Lines:

• Capital Markets: Reported segment revenues of $(90.2) million for the quarter and $135.6 million year-to-date; segment loss was $(120.0) million for the quarter and $30.3 million year-to-date. Results were driven by trading losses of $(125.7) million, primarily on Babcock & Wilcox, and lower ATM, private placement, and underwriting revenues due to smaller average deal sizes, partially offset by higher M&A and advisory revenues.
• Wealth Management: Reported segment revenues of $24.3 million for the quarter and $134.5 million year-to-date; segment loss was $(3.7) million for the quarter and income of $29.8 million year-to-date. Year-to-date growth was driven by trading activity and carried interest. B. Riley Wealth had approximately $12.8 billion of client assets under management at September 30, 2026.
• Communications Business Group (Lingo, magicJack, Marconi Wireless, UOL): Combined segment revenues were $52.6 million for the quarter and $172.1 million year-to-date; combined segment income was $13.2 million for the quarter and $39.7 million year-to-date. Income growth reflected successful cost-reduction initiatives offsetting revenue declines from customer attrition.
• Consumer Products: Reported segment revenues of $39.3 million for the quarter and $126.9 million year-to-date; segment loss was $(4.3) million for the quarter and $(12.7) million year-to-date. Lower revenue reflected weaker consumer demand, while the wider loss primarily reflected lower sales volume.

Market and Competitive Landscape:

• The third quarter was challenging for small- and mid-cap issuers due to rising rates and wider credit spreads, which weighed on transaction activity and concentrated equity capital markets issuance in the largest issuers.
• B. Riley Securities expanded institutional research coverage to more than 430 companies and added two senior bankers.
• Rising demand was seen for restructuring and advisory services despite smaller average deal sizes tempering underwriting fee revenue.

Risks and Challenges:

• The quarter reflected a $(226.7) million pre-tax loss on the investment in Babcock & Wilcox, which was valued at $160.3 million at September 30, 2026.
• A $14.6 million non-cash impairment was recorded to reduce the carrying value of the investment in GA Group to the subsequent sale price.
• Consumer Products segment losses were driven by lower sales volume and weaker consumer demand.
• Communications Business Group revenue declined due to expected customer attrition.

Management Commentary and Tone:

• Chairman and Co-Chief Executive Officer Bryant Riley stated that operating businesses demonstrated resilience despite third-quarter declines in investment portfolio value.
• Management emphasized taking key strategic actions to strengthen core franchises and allocate capital toward near-term cash flow opportunities.
• Riley noted the sale of GA Group sharpens strategic focus, reduces debt, and enhances liquidity, supporting a long-term approach to investments through market dislocations.
• Management expressed confidence in the platform's ability to support clients across every cycle, including navigating dislocation and creating capital markets opportunities.

Other Key Points:

• GA Group Sale: On November 3, 2026, the Company completed the sale of its remaining equity interest in GA Group to affiliates of Oaktree for $62.3 million in cash. $51.7 million was used to repay term-loan indebtedness, and the Company added $36.5 million of liquidity net of fees.
• Sangoma Acquisition: On September 28, 2026, the Company entered a definitive agreement to acquire Sangoma Technologies Corporation for a total enterprise value of $203.7 million. Sangoma shareholders will receive cash and stock, holding approximately 4% of the pro forma outstanding shares. The transaction will be funded with $212.3 million of committed senior secured term loans and $54 million in equity contributions ($38 million from the Company, $16 million from subsidiaries).
• B. Riley Securities Ownership: The Company restored 100% ownership of B. Riley Securities Holdings on October 22, 2026.
• Debt Reduction: The Company fully redeemed $238.1 million of senior notes year-to-date, including $142.1 million in September.
• Non-GAAP Update: The Company updated its Operating Adjusted EBITDA calculation to better bifurcate investment activities from operating businesses, excluding income/loss related to GA Group and noncontrolling interest in investment gains/losses.