Launched New Products and Services, Reduced Operating Costs and Improved Financial Position Expanded GP Solutions Program to Capitalize on Adjacent Market Growth Opportunities in Fiscal 2025 DALLAS, July 09, 2024 (GLOBE NEWSWIRE) -- Beneficient (NASDAQ:BENF) ("Ben" or the "Company"), a technology-enabled financial services holding company that provides liquidity, primary capital solutions and related trust and custody services to holders of alternative assets, today reported its financial results for the fiscal 2024 fourth quarter and fiscal year ended March 31, 2024. Commenting on the results, Beneficient management said: "We have built a solid platform for growth in large but underserved markets as we seek to transform the alternative asset industry with innovative new liquidity and primary capital products and services offered in a fiduciary capacity. Although our reported operating expenses during the fourth quarter increased substantially compared the prior year period, when adjusted to exclude non-cash accounting adjustments related to our loan collateral portfolio, changes in valuations of securities held in our former parent from 2020 and accrued loss contingency, fourth quarter operating performance was effectively steady from the third quarter. "Looking ahead to Fiscal 2025, we intend to significantly expand our Preferred Liquidity Provider Program, offered through our GP Solutions group, building on our foundation that now includes 20 participating funds representing approximately $1.5 billion in committed capital. Our diverse and growing pipeline of interested GPs continues to demonstrate the compelling need for our solutions within our targeted markets. Our effective, low-cost digital marketing programs have enabled us to reach a large portion of the market and quickly identify interested parties for further discussion and new originations. "We are also seeing increased interest from General Partners for our recently launched Primary Commitment Program, which assists GPs with their fundraising objectives while immediately deploying capital into our equity. We expect to close our initial transactions for this important new product in our current Fiscal Year. We believe that execution against these objectives will drive the ability to scale our operations and begin to demonstrate the economic benefits of our unique fiduciary-centered solutions in the fiscal year ahead." Fourth Quarter Fiscal 2024 and Recent Highlights (for the quarter ended March 31, 2024 or as noted): Reported investments with a fair value of $329.1 million, from $491.9 million at the end of our prior fiscal year, which served as collateral for Ben Liquidity's net loan portfolio of $256.2 million and $366.8 million, at March 31, 2024 and 2023, respectively. Grew the GP Preferred Liquidity Provider Program to 20 funds and $1.5 billion in committed capital compared to 7 participating funds with $300 million in committed capital at December 31, 2022. Operating expenses were $151.9 million in the fourth quarter of 2024, which includes a non-cash goodwill impairment of $68.1 million and a recognized loss contingency totaling $55.0 million, resulting in $28.8 million of operating expenses, excluding the goodwill impairment and loss contingency, compared with $30.5 million of operating expenses in the same period of 2023, which represents an increase of 498%. Operating expenses declined by 6% in the fourth quarter of 2024 when excluding non-cash loss on impairment of goodwill and the recognized loss contingency, as compared with the prior year fourth quarter. GP Solutions capability evolved and closed $2 million of liquidity financings during 4Q24, capping nearly $10 million sourced from GP Preferred Liquidity Provider Program. Announced termination of the previously issued Wells Notice letters issued to the Company with no recommendation of enforcement action. Announced board approval for the launch of a new ExchangeTrust Product Plan to further facilitate market adoption of Ben's fiduciary products and services by completing up to $5 billion of fiduciary financings to Customer ExAlt Trusts through ExchangeTrust transactions using an automated formula-based pricing model intended to achieve a stockholder-accretive risk-adjusted return and ultimately reduce transaction closing times to as little as 15 days. "Ben is designed to fill what we believe to be an increasingly critical market need as the ownership of alternative investments continues to grow across mid-to-high net worth individual investors and small-to-midsize institutional investors. During this fiscal year we are focused on improving our ability to deliver these solutions through expansion of our capital base. Our AltAccess platform uniquely provides price, cost, and time certainty within a fully integrated offering of fiduciary products and services through our fiduciary financial trust company chartered subsidiary," continued Ben management. "Our expanded GP Solutions offering is also gaining interest, and in particular our GP Primary Commitment Program, through which Ben offers its financing products and other trust services to GPs who are currently fund raising. These financings, if completed, would further diversify Ben's existing loan collateral portfolio across an even wider array of managers, asset classes, industry sectors and geographies." Loan Portfolio As a result of executing on our business plan of providing financing for liquidity, or early investment exits, for alternative asset marketplace participants, Ben organically develops a balance sheet comprised largely of loans collateralized by a well- diversified alternative asset portfolio that is expected to grow as Ben successfully executes on its core business. Ben's balance sheet strategy for ExAlt Loan origination is built on the theory of the portfolio endowment model for the fiduciary financings we make by utilizing our patent-pending computer implemented technologies branded as OptimumAlt. Our OptimumAlt endowment model balance sheet approach guides diversification of our fiduciary financings across seven asset classes of alternative assets, over 11 industry sectors in which alternative asset managers invest, and at least six countrywide exposures and multiple vintages of dates of investment into the private funds and companies. At March 31, 2024, Ben's loan portfolio was supported by a highly diversified alternative asset collateral portfolio providing diversification across more than 250 private market funds and approximately 850 investments across various asset classes, industry sectors and geographies. This portfolio includes exposure to some of the most exciting, sought after private company names worldwide, such as the largest private space exploration company, an innovative software and payment systems provider, a designer and manufacturer of shaving products, a large online store for women's clothes and other fashionable accessories that has announced intentions to go public, a mobile banking services provider, and others. Figure 1: Portfolio Diversification Diversification Using Principal Loan Balance, Net of Allowance for Credit Losses As of March 31, 2024, the charts below present the ExAlt Loan portfolio's relative exposure by certain characteristics (percentages determined by aggregate fiduciary ExAlt Loan portfolio principal balance net of allowance for credit losses, which includes the exposure to interests in certain of our former affiliates composing part of the Fiduciary Loan Portfolio). As of March 31, 2024. Represents the characteristics of professionally managed funds and investments in the Collateral (defined as follows) portfolio. The Collateral for the ExAlt Loans in the loan portfolio is comprised of a diverse portfolio of direct and indirect interests (through various investment vehicles, including, limited partnership interests and private and public equity and debt securities, which include our and our affiliates' or our former affiliates' securities), primarily in third-party, professionally managed private funds and investments. Loan balances used to calculate the percentages reported in the pie charts are loan balances net of any allowance for credit losses, and as of March 31, 2024, the total allowance for credit losses was $302 million, for a total gross loan balance of $559 million and a loan balance net of allowance for credit losses of $256 million. Business Segments: Fourth Quarter Fiscal 2024 Ben Liquidity Ben Liquidity offers simple, rapid and cost-effective liquidity products through the use of our proprietary financing and trust structure, or the "Customer ExAlt Trusts," which facilitate the exchange of a Customer's alternative assets for consideration. Ben Liquidity recognized $10.6 million of interest income for the fiscal fourth quarter, down 5.6% from the quarter ended December 31, 2023, primarily due to lower carrying value of loan receivables, driven by higher allowance for credit losses. Operating loss for the fiscal fourth quarter was $29.4 million, compared to an operating loss of $606.4 million for the quarter ended December 31, 2023. The quarter ended December 31, 2023 included non-cash goodwill impairment of $604.7 million while the fiscal fourth quarter operating loss included increased credit loss adjustments, principally related to a decrease in the collateral value associated with one transaction originated during the current fiscal year. Adjusted operating loss(1) for the fiscal fourth quarter was $29.4 million, compared to adjusted operating income(1) of $2.5 million in the quarter ended December 31, 2023. The decrease was primarily due to higher credit loss adjustments related to one transaction, which originated during the current fiscal year partially offset by lower credit loss adjustments related to securities of our former parent company in the fiscal fourth quarter. Ben Custody Ben Custody provides full-service trust and custody administration services to the trustees of certain of the Customer ExAlt Trusts and external parties, which own the exchanged alternative assets following liquidity transactions in exchange for fees payable quarterly. Net asset value ("NAV") of alternative assets and other securities held in custody by Ben Custody was $381.2 million as of March 31, 2024, compared to $491.9 million as of March 31, 2023. The decrease was driven by unrealized losses on existing assets, principally related to interests in a wind down trust for a bankrupt entity, and distributions, which was partially offset by new liquidity transactions of Ben Liquidity of $50.1 million during the current fiscal year, representing 10.2% of NAV as of March 31, 2023. However, approximately $37.7 million of the NAV originated during the current fiscal year was written off during the year ended March 31, 2024. Revenues applicable to Ben Custody were $5.6 million for the fourth fiscal quarter, compared to $5.9 million for the quarter ended December 31, 2023. The decrease was a result of lower NAV of alternative assets and other securities held in custody. Operating loss for the fourth fiscal quarter was $50.0 million, compared to an operating loss of $268.0 million for the quarter ended December 31, 2023. The decrease in operating loss was primarily due to lower non-cash goodwill impairment in the fourth fiscal quarter of $28.7 million compared to $272.8 million in the quarter ended December 31, 2023. Additionally, in the fourth fiscal quarter, we recognized $25.5 million provision for credit losses in the current fiscal year related to accrued fees collateralized by securities of our former parent company, compared to no such credit losses in the quarter ended December 31, 2023. Adjusted operating income(1) for the fourth fiscal quarter was $4.0 million, compared to adjusted operating income(1) of $4.8 million for the quarter ended December 31, 2023. The decrease was primarily due to a change in revenue due to lower NAV of alternative assets and other securities held in custody during the fourth fiscal quarter. Business Segments: Year Ended Fiscal 2024 Ben Liquidity Ben Liquidity recognized $46.9 million of interest income for the year ended March 31, 2024, down 7.6% compared to the year ended March 31, 2023, primarily due to lower loans, net of the allowance for credit losses, resulting from higher levels of non-accrual loans and loan prepayments, partially offset by new loans originated. Operating loss was $1.8 billion for the year ended March 31, 2024 compared to an operating loss of $46.5 million in the prior year period. The current period loss was driven by non-cash goodwill impairment totaling $1.7 billion and credit losses largely related to securities of our former parent company. Adjusted operating loss(1) was $41.2 million for the year ended March 31, 2024 compared to adjusted operating income(1) of $9.7 million in the prior year period with the decrease in adjusted operating income (loss)(1) primarily related to higher credit loss adjustments related to one transaction originated during the current fiscal year offset partially by lower credit loss adjustments related to securities of our former parent company recognized in the current fiscal year and additional interest expense. New liquidity transactions closed during the year ended March 31, 2024 included collateral with a NAV of $50.1 million. However, loans supported by approximately $37.7 million of the NAV originated during the current fiscal year were written off during the year ended March 31, 2024. Ben Custody Ben Custody revenues were $24.5 million for the year ended March 31, 2024, down 15.5%, as compared to the prior year period due to lower NAV of alternative assets and other securities held in custody. Operating loss was $588.8 million for the year ended March 31, 2024 compared to operating income of $24.0 million in the prior year period, with the decrease in operating income principally related to non-cash goodwill impairment of $583.3 million and $25.5 million provision for credit losses in the current fiscal year related to accrued fees collateralized by securities of our former parent company in the current fiscal year. Adjusted operating income(1) for the year ended March 31, 2024 was $19.8 million, compared to adjusted operating income(1) of $24.0 million in the prior year period with the decrease in adjusted operating income(1) due to lower revenue related to lower NAV of alternative assets and other securities held in custody and slightly lower professional service expense during the current fiscal year. Legal Updates On July 1, 2024, the Company and key members of its leadership received termination letters from the SEC advising the Company that SEC has concluded the investigation related to the Company and Mr. Heppner and does not intend to recommend an enforcement action by the SEC under the previously issued Wells Notices. On May 22, 2024 a Federal Judge in the United States District Court for the Eastern District of Texas ruled against a motion to dismiss Beneficient's lawsuit against the Wall Street Journal and its reported Alexander Gladstone for defamation, noting "the article repeatedly juxtaposes facts and uses provocative language in ways to convey the defamatory gist identified by Plaintiffs" and that Beneficient "repeatedly notified Gladstone of specific factual errors in the article and that Gladstone nevertheless rejected or ignored their corrections to serve his preconceived agenda." Capital and Liquidity As of March 31, 2024, the Company had cash and cash equivalents of $7.9 million and total debt of $120.5 million. Distributions received from alternative assets and other securities held in custody totaled $46.3 million for the year ended March 31, 2024 compared to $85.0 million for the prior year period. Total investments (at fair value) of $329.1 million at March 31, 2024 supported Ben Liquidity's loan portfolio. (1) Represents a non-GAAP financial measure. For reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measures and for the reasons we believe the non-GAAP measures provide useful information, see Non-GAAP Reconciliations. Consolidated Fiscal Fourth Quarter Results Table 1 below presents a summary of selected unaudited consolidated operating financial information. Consolidated Fiscal Fourth Quarter Results($ in thousands, except share and per share amounts) Fiscal 4Q24March 31, 2024 Fiscal 3Q24December 31, 2023 Fiscal 4Q23March 31, 2023 Change % vs. Prior Quarter   YTD Fiscal 2024 YTD Fiscal 2023 Change % vs. Prior YTD GAAP Revenues $ (42,957 ) $ (10,235 ) $ (18,468 ) NM   $ (98,696 ) $ (104,903 ) 5.9 % Adjusted Revenues(1)   (39,717 )   8,456     (17,976 ) NM     (31,239 )   (41,367 ) 24.5 % GAAP Operating Loss   (194,861 )   (915,951 )   (49,015 ) 78.7 %     (2,648,546 )   (253,172 ) NM Adjusted Operating Loss(1)   (58,434 )   (11,684 )   (42,874 ) NM     (115,808 )   (143,872 ) 19.5 % Diluted Class A EPS           $ (673.31 ) $ (52.57 ) NM Segment Revenues attributable to Ben's Equity Holders(2)   16,273     17,961     17,282   (9.4) %     69,988     63,969   9.4 % Adjusted Segment Revenues attributable to Ben's Equity Holders (1)(2)   16,306     18,146     17,381   (10.1) %     71,365     76,844   (7.1) % Segment Operating Income (Loss) attributable to Ben's Equity Holders   (195,051 )   (894,617 )   (36,767 ) 78.2 %     (2,609,944 )   (135,311 ) NM Adjusted Segment Operating Loss attributable to Ben's Equity Holders(1)(2) $ (36,544 ) $ (4,594 ) $ (12,648 ) NM   $ (74,127 ) $ (33,074 ) NM NM - Not meaningful. (1) Adjusted Revenues, Adjusted Operating Income (Loss), Adjusted Segment Revenues attributable to Ben's Equity Holders and Adjusted Segment Operating Income (Loss) attributable to Ben's Equity Holders are non-GAAP financial measures. For reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measures and for the reasons we believe the non-GAAP measures provide useful information, see Non-GAAP Reconciliations.(2) Segment financial information attributable to Ben's equity holders is presented to provide users of our financial information an understanding and visual aide of the segment information (revenues, operating income (loss), and adjusted operating income (loss)) that impacts Ben's Equity Holders. Ben's Equity Holders refers to the holders of Beneficient Class A and Class B common stock and Series B-1 Preferred Stock as well as holders of interests in BCH which represent noncontrolling interests. For a description of noncontrolling interests, see Item 7 of our Annual Report on Form 10-K for the year ended March 31, 2024, and Reconciliation of Business Segment Information Attributable to Ben's Equity Holders to Net Income Attributable to Ben Common Holders. Such information is computed as the sum of the Ben Liquidity, Ben Custody and Corp/Other segments since it is the operating results of those segments that determine the net income (loss) attributable to Ben's Equity Holders. See further information in table 5 and Non-GAAP Reconciliations. Table 2 below presents a summary of selected unaudited consolidated balance sheet information. Consolidated Fiscal Third Quarter Results($ in thousands) Fiscal 4Q24As of March 31, 2024   Fiscal 4Q23As ofMarch 31, 2023   Change %   Investments, at Fair Value $ 329,119   $ 497,221   (33.8) % All Other Assets   22,676     42,448   (46.6) % Goodwill and Intangible Assets, Net   16,706     2,371,026   (99.3) % Total Assets $ 368,501   $ 2,910,695   (87.3) %                   Business Segment Information Attributable to Ben's Equity Holders(1) Table 3 below presents unaudited segment revenues and segment operating income (loss) for business segments attributable to Ben's equity holders. Segment Revenues Attributable to Ben's Equity Holders(1)($ in thousands) Fiscal4Q24March 31,2024 Fiscal3Q24December31, 2023 Fiscal4Q23March 31,2023 Change %vs. Prior Quarter     YTD Fiscal2024 YTD Fiscal2023 Change %vs. PriorYTD Ben Liquidity $ 10,644 $ 11,275 $ 12,899   (5.6) %   $ 46,947   $ 50,819   (7.6) % Ben Custody   5,573   5,897   6,762   (5.5) %     24,534     29,042   (15.5) % Corporate & Other   56   789   (2,379 ) (92.9) %     (1,493 )   (15,892 ) 90.6 % Total Segment Revenues Attributable to Ben's Equity Holders(1) $ 16,273 $ 17,961 $ 17,282   (9.4) %   $ 69,988   $ 63,969   9.4 % Segment Operating Income (Loss) Attributable to Ben's Equity Holders(1)($ in thousands) Fiscal 4Q24March 31,2024 Fiscal 3Q24December31, 2023 Fiscal 4Q23March 31,2023 Change %vs. PriorQuarter   YTD Fiscal2024 YTD Fiscal2023 Change %vs. PriorYTD Ben Liquidity $ (29,443 ) $ (606,405 ) $ (18,861 ) 95.1 %   $ (1,810,964 ) $ (46,512 ) NM Ben Custody   (49,971 )   (267,995 )   5,726   81.4 %     (588,811 )   24,046   NM Corporate & Other   (115,637 )   (20,217 )   (23,632 ) NM     (210,169 )   (112,845 ) (86.2)% Total Segment Operating Income (Loss) Attributable to Ben's Equity Holders(1) $ (195,051 ) $ (894,617 ) $ (36,767 ) 78.2 %   $ (2,609,944 ) $ (135,311 ) NM NM - Not meaningful. (1) Segment financial information attributable to Ben's equity holders is presented to provide users of our financial information an understanding and visual aide of the segment information (revenues, operating income (loss), and adjusted operating income (loss)) that impacts Ben's Equity Holders. Ben's Equity Holders refers to the holders of Beneficient Class A and Class B common stock and Series B Preferred Stock as well as holders of interests in BCH which represent noncontrolling interests. For a description of noncontrolling interests, see Item 7 of our Annual Report on Form 10-K for the year ended March 31, 2024, and Reconciliation of Business Segment Information Attributable to Ben's Equity Holders to Net Income Attributable to Ben Common Holders. Such information is computed as the sum of the Ben Liquidity, Ben Custody and Corp/Other segments since it is the operating results of those segments that determine the net income (loss) attributable to Ben's Equity Holders. See further information in table 5 and Non-GAAP Reconciliations. Adjusted Business Segment Information Attributable to Ben's Equity Holders(2) Table 4 below presents unaudited adjusted segment revenue and adjusted segment operating income (loss) for business segments attributable to Ben's equity holders. Adjusted Segment Revenues Attributable to Ben's Equity Holders(1)(2)($ in thousands) Fiscal4Q24March 31,2024 Fiscal3Q24December31, 2023 Fiscal4Q23March 31,2023 Change %vs. Prior Quarter   YTD Fiscal2024 YTD Fiscal2023 Change %vs. PriorYTD Ben Liquidity $ 10,644 $ 11,275 $ 12,899   (5.6)%   $ 46,947   $ 50,819   (7.6)% Ben Custody   5,573   5,897   6,762   (5.5)%     24,534     29,042   (15.5)% Corporate & Other   89   974   (2,280 ) (90.9)%     (116 )   (3,017 ) 96.2% Total Adjusted Segment Revenues Attributable to Ben's Equity Holders(1)(2) $ 16,306 $ 18,146 $ 17,381   (10.1)%   $ 71,365   $ 76,844   (7.1)% Adjusted Segment Operating Income (Loss) Attributable to Ben's Equity Holders(1)(2)($ in thousands) Fiscal4Q24March 31,2024 Fiscal3Q24December31, 2023 Fiscal4Q23March 31,2023 Change %vs. Prior Quarter   YTD Fiscal2024 YTD Fiscal2023 Change %vs. PriorYTD Ben Liquidity $ (29,408 ) $ 2,525   $ (490 ) NM   $ (41,177 ) $ 9,693   NM Ben Custody   3,997     4,835     5,726   (17.3)%     19,764     24,046   (17.8)% Corporate & Other   (11,133 )   (11,954 )   (17,884 ) 6.9%     (52,714 )   (66,813 ) 21.1% Total Adjusted Segment Operating Income (Loss) Attributable to Ben's Equity Holders(1)(2) $ (36,544 ) $ (4,594 ) $ (12,648 ) NM   $ (74,127 ) $ (33,074 ) NM NM - Not meaningful. (1) Adjusted Revenues, Adjusted Operating Income (Loss), Adjusted Segment Revenues attributable to Ben's Equity Holders and Adjusted Segment Operating Income (Loss) attributable to Ben's Equity Holders are non-GAAP financial measures. For reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measures and for the reasons we believe the non-GAAP measures provide useful information, see Non-GAAP Reconciliations.(2) Segment financial information attributable to Ben's equity holders is presented to provide users of our financial information an understanding and visual aide of the segment information (revenues, operating income (loss), and adjusted operating income (loss)) that impacts Ben's Equity Holders. Ben's Equity Holders refers to the holders of Beneficient Class A and Class B common stock and Series B Preferred Stock as well as holders of interests in BCH which represent noncontrolling interests. For a description of noncontrolling interests, see Item 7 of our Annual Report on Form 10-K for the year ended March 31, 2024, and Reconciliation of Business Segment Information Attributable to Ben's Equity Holders to Net Income Attributable to Ben Common Holders. Such information is computed as the sum of the Ben Liquidity, Ben Custody and Corp/Other segments since it is the operating results of those segments that determine the net income (loss) attributable to Ben's Equity Holders. See further information in table 5 and Non-GAAP Reconciliations. Reconciliation of Business Segment Information Attributable to Ben's Equity Holders to Net Income (Loss) Attributable to Ben Common Shareholders Table 5 below presents reconciliation of operating income (loss) by business segment attributable to Ben's Equity Holders to net income (loss) attributable to Ben common shareholders. Reconciliation of Business Segments to Net Income (Loss) Attributable to Ben Common Shareholders($ in thousands) Fiscal 4Q24March 31,2024 Fiscal 3Q24December31, 2023 Fiscal 4Q23March 31,2023   YTD Fiscal2024 YTD Fiscal2023 Ben Liquidity $ (29,443 ) $ (606,405 ) $ (18,861 )   $ (1,810,964 ) $ (46,512 ) Ben Custody   (49,971 )   (267,995 )   5,726       (588,811 )   24,046   Corporate & Other   (115,637 )   (20,217 )   (23,632 )     (210,169 )   (112,845 ) Less: Loss on debt extinguishment, net (intersegment elimination)   —     3,940     —       3,940     —   Less: Income tax expense (benefit) (allocable to Ben and BCH equity holders)   46     75     —       121     (1,072 ) Less: Net loss attributable to noncontrolling interests - Ben   133,172