Good afternoon, and welcome to B. Riley Financial’s Third Quarter 2019 Earnings Call. My name is Stacy, and I will be your call operator. B. Riley issued a press release with its financial results shortly after today’s market close. A copy can be found in the Investors section of the company’s website at ir.brileyfin.com. As a reminder, this call is being recorded. A replay of today’s call will also be made available on the company’s website. Joining us today are Bryant Riley, Chairman and CEO; Tom Kelleher, CEO; and Phillip Ahn, CFO and COO. After management’s remarks, we will open the line for questions. And before we conclude today’s call, I will provide the necessary cautions regarding forward-looking statements. I would now turn the call over to Mr. Bryant Riley.

Thanks, Bryant. Welcome, everyone. As Bryant mentioned, the third quarter of 2019 marked a new quarterly high for B. Riley Financial. Total revenues were $180.1 million in Q3, up from…

Hi, operator. Can you hear me?

Your line is live.

Okay. Sorry, we have people in two different places. So Phil recorded his answer earlier today. So sorry for the error. So this is Bryant Riley, and thank you, operator. We’re obviously excited about the outlook for all of our core businesses and to talk to you about them. We have seen tremendous synergies throughout our platform, and the ability for us to utilize all of our operating units to create strong results for our shareholders has exceeded our expectations. Our participation in transactions, which includes some combination of Great American Group, GlassRatner, B. Riley FBR and B. Riley Wealth Management are becoming more commonplace. Being able to pool from all of these resources, while also utilizing our balance sheet, has created more opportunities and better returns than we could have expected. While we are excited by these opportunities, and are aggressively pursuing them, none of this would be possible without the continued momentum, leadership and buy-in from our various operating entities. Tom and Phil will walk through the numbers later, and you will see that every business unit is experiencing growth and managing expenses. The cash flow generated from these business units as well as our announcement today about our brand portfolio purchase are key to providing us with steady cash flows that enable us to be more aggressive with our balance sheet. This strategy also enables us to return cash to our shareholders. Year-to-date, we will have returned approximately $40 million or $1.49 in the form of regular and special dividends upon payment of our latest quarterly dividend. We have raised our regular dividend almost 120%, and we brought back roughly 1.3 million shares and over 600,000 warrants. This demonstrates our balanced approach of reinvesting into our business while, at the same time, returning a portion of our…

Thanks, Bryant. Welcome, everyone. As Bryant mentioned, the third quarter of 2019 marked a new quarterly high for B. Riley Financial. Total revenues were $180.1 million in Q3, up from $99.7 million in revenues for the third quarter of 2018 and up from $164.7 million for the second quarter of 2019, which was our prior quarterly record. In terms of our business segment mix, Capital Markets is our largest segment and includes results from our investment banking and wealth management businesses, our funded management and direct lending businesses and our consulting business, GlassRatner, which we added in August of 2018. Capital Markets segment revenue increased to $134.1 million for the third quarter, up from $76.3 million in the same year-ago period. Segment income increased to $52.4 million, up from $11 million in the same period last year. Results in this segment were driven by the performance of the broker dealer, B. Riley FBR, which includes returns from proprietary investments that Bryant mentioned earlier. Next, in our Auction and Liquidation segment, revenues increased to $11.3 million for the third quarter of 2019, up from $2.5 billion in the same year-ago period. Segment income increased to $6 million, up from $0.3 million in the same year-ago period. Results in this segment were driven by our participation in several store closing projects during the quarter, some of which were repeat client engagements, in addition to other ongoing retail liquidation projects. As we’ve noted in previous calls, our Auction Liquidation segment results will be variable in nature from quarter-to-quarter and year-to-year. Our Valuation and Appraisal segment experienced a modest quarterly increase in Q3 with segment revenue of $10.8 million, up from $9.4 million in Q3 of last year and segment income of $3.5 million up from $2.9 million during the same year-ago period. Our…

During the quarter, B. Riley FBR saw strong performance, which was due in part to the proprietary investment gains Bryant discussed at the top of the call. Banking saw increased deal flow and participated in a couple of large deals during the quarter including the sale of PCM. The firm has become a known leader in advising special purpose acquisition companies, or SPACs, and our participation in the IPO during the quarter further demonstrates the strength of that franchise. In addition, and while a small part of our revenue mix, it is worth noting that both our stock loan and fixed income groups experienced material growth during the quarter. B. Riley Wealth Management saw a modest revenue increase in Q3, driven by deal syndicate participation and improved profitability. With about $10 billion in client assets, this is one of our more steady businesses. We rebranded the group about a year ago, and we believe our platform has resonated with financial advisers looking for alternatives to the traditional wirehouse or small independents. We welcomed several new advisers during the quarter and have a robust pipeline of new recruits as we look ahead to 2020. During the quarter, Chuck Hastings was appointed President. Both he and CEO, Philip Zanone, are making impactful moves to generate incremental growth as we continue to focus on recruiting and enhancing distribution. Our capital management business includes several funds and related products, most notably our direct lending fund, Great American Capital Partners. During the quarter, GACP issued three new loans with a gross transaction size of over $150 million and completed two successful exits. We continue to be very pleased with GACP’s performance and look forward to future growth in this part of our business. The last group within our Capital Markets segment is GlassRatner, our consulting…

Great. Thanks, Tom. Operator, let’s open the line for questions, please.

Thank you. [Operator Instructions] Our first question comes from Wes Cummins with Nokomis Capital. Please go ahead.

Hey, thanks. Bryant, first of all, impressive results. I jumped on the call a little bit later. You were going through the end of the Bluestar discussion. Can you just help me out with the kind of financial impact, how it flows through the P&L for you?

So, Wes, I would say that we’re not going to get into the exact multiple for a variety of reasons that just – I can’t really talk about, but I will say that it’s highly accretive. We probably compromised a bit on valuation for the ability to partner with Bluestar. We think that there’s a tremendous amount of opportunity to partnering with them. And you can – as we mentioned, I’m not sure if you saw, we did make a meaningful investment in Hurley. They compromised, I think, a little bit on valuation because they saw the merits of partnership – partnering with us and some of the things that we could bring to the table, whether it’s the balance sheet or also thinking differently to accumulate or acquire a brand. So highly accretive, steady cash flows. I think what I can say is if I look out 12 months to 18 months, if you take all of those – the brands that we have, including our ownership in bebe and the ones that we’ve acquired, we – our EBITDA should be higher than $30 million from our brand group as we look out a little bit further.

Okay. Great. That’s helpful. That’s all my questions I had. Thanks.

Thanks, Wes.

[Operator Instructions] Our next question comes from [indiscernible]. Please go ahead.

Bryant, can you give any commentary on the National Holdings acquisition and how that’s integrating or, I guess, not into the remainder of the Capital Markets segment you have?

So to – for everybody’s background, we purchased a large portion of National Holdings about 1.5 years ago. As you may know, we signed a standstill – a three-year standstill when we made that purchase. So we are a Board observer. And we have worked together on a number of transactions, but that is a separate business, a separate public company that we are an investor in. So I would say you can see the financial results as you look through their public filings. We’ve been pleased with the back and forth between the two companies and being able to work with them, but, at this point, we are really a passive holder.

Got it. Okay. That’s helpful. Thank you.

Thank you.

Thank you. Before we conclude today’s call, I will provide B. Riley Financial’s safe harbor statement, which includes important cautions regarding forward-looking statements made during this call. Statements made during this call about B. Riley Financial’s future expectations, plans and prospects and other statements regarding matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company’s filings with the Securities and Exchange Commission. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. All forward-looking statements are made as of today. And except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. This conference call also included a discussion of non-GAAP financial measures. The most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the company’s financial results prepared in accordance with GAAP are included in the earnings release. Thank you for joining us today for B. Riley Financial’s Third Quarter 2019 Earnings Conference Call. You may now all disconnect.