Good afternoon, and welcome to B. Riley Financial’s Fourth Quarter and Full Year 2018 Earnings Call. My name is Hector, and I will be your conference operator. Earlier today, B. Riley issued a press release with its financial results. A copy can be found in the Investor section [ph] 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 Co-CEO; Tom Kelleher, Co-CEO; and Phillip Ahn, CFO and COO. After management’s remarks, we will open the line for question. And before we conclude today’s call, I will provide the necessary cautions regarding forward-looking statements. I will now turn the call over to Mr. Bryant Riley. Mr. Riley, please proceed.

Thanks, and welcome, everyone. Thank you for joining us on today’s call. 2018 was another year of substantial growth for B. Riley Financial. Throughout 2018, we focused on finding ways to better leverage our expanding resources and capabilities to drive new opportunities across the entire B. Riley platform. We also completed several important acquisitions during the year, including the acquisition of GlassRatner and magicJack which we expect will be meaningful contributors to the future of both the Capital Markets business and Principal Investments business respectfully. We believe that our overall results for the year speak to continued momentum across our businesses and also to the unique ability that we have to successfully capitalize on the opportunities our growth has created for us. As it relates to our fourth quarter, the revenue growth we achieved in our Liquidation, Appraisals and Principal Investments segments was offset by trading losses in our investment account under our Capital Markets segment results. The losses were due to declines in the portfolio value at year-end, which were in line with the performance of the broader markets in December and have since been recovered in the first quarter rebound. To be clear, we were comfortable with the investments we made in spite of the uncharacteristic losses. This activity is core to our business. We take position in the companies and we believe to be undervalued and take advantage of dislocations in the market. Our platform is very unique. To put this in perspective, we cover over 500 companies in research, conduct appraisals for an additional 900 companies, and provide a variety of specialized services for many more. If we cannot find unique opportunities from this broad and unique platform, then we are not doing our job for shareholders. We will continue to use our balance sheet to…

Thanks, Bryant, and welcome, everyone. For the fourth quarter of 2018, revenues totaled $102 million compared to $110.2 million for the same period in 2017. As Bryant mentioned briefly earlier, the decline in revenue for the quarter was impacted by losses of approximately $16 million in our investment account, which are included in our Capital Markets segment results. For the full year 2018, total revenues increased to $423 million compared to $322.2 million for the same year-ago period. Results for 2018 included a full year of revenues for B. Riley FBR and B. Riley Wealth Management, in addition to partial year contributions from GlassRatner and magicJack, which we acquired in August and November respectively. Turning to our revenue mix and operating income by business segment. Our Capital Markets segment includes results from B. Riley FBR, B. Riley Wealth Management, Great American Capital Partners and GlassRatner. For the fourth quarter of 2018, Capital Markets segment revenues totaled $60.6 million compared to $84.4 million for the same year-ago period. This segment recorded a loss of $12.5 million for the quarter, which included approximately $5.9 million in restructuring charges, primarily related to severance in the rebrand of B. Riley Wealth Management, as well as the previously mentioned investment portfolio losses. For the full year Capital Markets segment revenues increased to $275.1 million compared to $189.7 million for 2017. Segment income for the year totaled $10.2 million compared to $15.9 million for the same year-ago period. Results for the year in our Capital Markets segment were driven primarily by an increase in revenues from investment banking and wealth management services with the additions of B. Riley FBR and B. Riley Wealth Management to our full year results, as well as the addition of fees generated from GlassRatner since August 2018. Now, turning to our…

Thanks, Phil. Now, I’ll share more detail on recent developments and some updates from each of our business by segment. I’ll begin with our Capital Markets segment, which includes our B. Riley FBR banking and brokerage business, our B. Riley Wealth Management RIA business, our asset and fund management business, which includes GA Capital Partners and the addition of GlassRatner. B. Riley FBR’s business was stable in Q4, despite the trading losses we mentioned at the top of the call. During the quarter we completed several notable banking deals, which contributed to our Q4 revenues and we have a robust backlog of deals in our pipeline as we look ahead. Our work with SPAC continue to be a key driver of revenue and we expect to see increased activity in this space in early 2019. Our securities lending and fixed-income division performed well throughout 2018, despite the volatility in Q4, and we expect these divisions to continue to perform well in future quarters. As it relates to institutional brokerage in our research platform, we recently announced the firm’s realignment and research, and our efforts to increase our focus on small and mid-cap opportunities. We eliminated coverage of approximately 70 larger cap names in January, and have reallocated resources on existing small and mid-cap names as well as also in new initiations. There are a few catalysts for this decision, but the primary one is our ability to find proprietary investment ideas that appreciate in value. Personally, my view is that the larger the market cap, the harder it is to differentiate valuation. We’ve been focused on the small cap market place for over 20 years. Small caps have been the basis for much of our success and are core to our roots as a firm. This May, we will be…

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Wes Cummins with Nokomis Capital. Please proceed with your question.

Hey, thanks. Hey, Bryant, I don’t mean to push on this, but since you guys gave your guidance a few months ago, it seems like that the Payless liquidation and other liquidations you’ve announced and that kind of a reversal in the market. Did you expect that in the guidance that you’ve given – given that you maintained at the spend level?

So, hey, Wes, I would say that we didn’t expect that. I think what we’re trying to balance is what we are seeing in our business and some opportunities, and a strong business with the volatility of the markets. Obviously, liquidations is not a perfect science, some of that is fee, but some of it is principal and we’ve got some concentrated positions, but I think we’re off to a really good start and feel optimistic about all the business units.

Okay. And then my other question is, historically, you’ve paid out 20% or 25% of EBITDA and dividend. do you expect to continue to do that? I think you’ve implied kind of $1 plus in dividends for the year?

So, we’ve also been buying back some stock as we’ve announced, but I would say that, we believe strongly that if we were given the opportunity to run this business, we’re running it for long-term and we’re also running it to make sure that our shareholders receive a return and it’s defined. So as you think about us, I think using that 20% to 25% EBITDA number makes a lot of sense. And at the appropriate time, if we felt that it was the appropriate time, we would – we’d raise the regular dividend and then just balance that off with the special dividend. So, yes, I think that philosophy will be maintained.

Okay. Thanks.

All right. Thanks, Wes.

[Operator Instructions] This concludes our question-and-answer session. I’d now like to turn the call back over to Mr. Bryant Riley for closing remarks.

Great. Thanks, Hector, and thanks everybody for joining the call. We’ll be hard at work until the next quarterly call and appreciate everybody’s interest and to the extent that there’s employees and others on the line, we greatly appreciate all the work. Thank you.

Before we conclude today’s call, I would like to provide B. Riley Financial’s Safe Harbor statement that 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, as well as any 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 as a result of new information, future events or otherwise. Further, this conference call 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 fourth quarter 2018 earnings conference call. You may now disconnect.