Good afternoon and welcome to B. Riley Financial’s Fourth Quarter Full Year 2019 Earnings Call. Earlier today, B. Riley issued a press release with its financial results. 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 Co-CEO; Tom Kelleher, Co-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. Mr. Riley, please proceed.

Thank you and welcome everyone. 2019 was another year of continued progress and growth from for B. Riley Financial with total revenues of 662.1 million, a year-over-year increase of 54% and adjusted EBITDA of 207.9 million with net income of 81.3 million for the year, which is at the high end of our previous guidance. Our strong Q4 performance was driven by record investment banking revenues as well as significant investment portfolio gains, which more than offset a large loss in our liquidation segment. Meanwhile, our consulting, appraisal, wealth management and principal investment businesses continue to perform steadily as we pursue new opportunity to create additional value from our platform. Over the last few years, we've meaningfully transformed our business by building and purchasing assets with steadier and more recurring revenue streams. At the same time, we focus on growing market share on our more episodic capital markets and retail liquidation businesses. In Q4, we announced the formation of brand investment portfolio which aligned with our principal investment strategy and delivers additional steady recurring cash flow to our platform. Our brand holdings have already started contributing, generating 4.1 million in revenue and 2.7 in operating income in the fourth quarter. We anticipate this new additional help to provide further down to our more episodic businesses. Our recurring businesses considered more than 50% of pre-tax income before corporate overhead and approximately 40% adjusted EBITDA in 2019. As we look forward to 2020, we expect more than 100 million of our cash flow generated by our steadier businesses, which will enable us to continue to proactively pursue opportunities with our more volatile markets. And as we discussed on our prior calls, we're seeing more and more opportunities, which we believe are uniquely suited to our platform because of the diverse capabilities we…

Thanks, Bryant. Welcome everyone. For the fourth quarter, revenues totaled 165.2 million, up from 102 million for the same period of 2018. As Bryant mentioned, the increase in revenue for the quarter was primarily driven by investment banking and gains in our prop investment portfolio, which offset a large loss in our liquidation segment for the quarter. For the year, our total revenues were 652 million, which is a 54% increase compared to 423 million in total revenue for 2018. Now turning to our individual segments. In capital markets, fourth quarter revenues increased to 172.2 million, up from 60.6 million for the same period of 2018. Segment income increased to 88.6 million, up from a loss of 12.5 million, which included restructuring charges incurred during the fourth quarter of 2018. The significantly quarterly increase in our net capital markets segment was primarily driven by an increase in banking revenue as well as investment gains related to the Company's equity portfolio. For the year, capital market segment revenue increased to 485.9 million, up from 275.1 million for 2018. Segment income increased to 179.3 million, up from 10.2 million for the prior year. The year-over-year increase in our capital market segment was attributed to an increase in investment banking gains in our investment portfolio and a full year's contribution from GlassRatner, which we acquired in August of 2018. Now turning to our auction and liquidation segment, auction liquidation recognized negative revenue of $44.4 million and a segment loss of $60.8 million for the fourth quarter. This compared to $10.1 million of revenue and $2.3 million in segment income for the same period of 2018. The fourth quarter results were impacted by significant expected loss accrual related to a liquidation transaction that started in 2019 and is expected to be completed in 2020.…

Thanks Phil. B. Riley FBR realized record quarterly revenues primarily driven by increased investment banking and capital markets activity. We continue to assert our leadership position in the SPAC space, and our outlook for the sector remains strong. Noteworthy highlights in the quarter include our role as capital markets adviser and the still placement agents to Trinity Merger Corp in support of its combination with Broadmark Realty, which created a $1.5 billion mortgage real estate investment trust and resulted in one of the most successful real estate back of all time. Additionally, we served as the sole underwriter for the software acquisition group and its $150 million spec IPO. During the quarter, we also saw increased contributions from our At The Market or ATM business, as well as from our securities lending and fixed income group. In research, we continue to aggressively reposition our coverage universe to drive further value from our position as the middle market lead. In wealth management, year-over-year revenues remain relatively flat. However, we continue to focus on cross-selling our platform and improving profitability through organic growth with our current and new advisors. Our mandate to add high quality advisors has resulted in a robust pipeline for extremely reputable financial advisors. Those are markets where we have an existing presence and in new markets where we have identified an opportunity for rapid growth. Since last week, we were pleased to announce the addition of MJP Wealth Management Group in our Philadelphia branch, which we established just last year. Our GlassRatner Consulting Group has experienced tremendous growth since joining the B. Riley platform 18 months ago with average monthly mandates doubling in that time period. This growth is due in part to an increase in cases and relevant opportunities to collaborate and cross-sell with other B. Riley…

Thank you. We'll be now conducting a question-and-answer session. [Operator Instructions] Thank you, our first question comes from the line of Wes Cummins with 272 Capital. Please proceed with your question.

Brian, just to start I think the obvious question is the Great American Group historically has been very good, it's been about losing little or really ever losing on projects. Just kind of curious to your take us to what happens on the projects you mentioned in the quarter? And then kind of what the outlook is on larger potential projects in 2020?

Sure, thanks. Thanks for the question. Yes. So, I will say that I'll take the bullet on this one. We've been very aggressive in our approach to liquidation, whether it was on successful ones like Bonton, when we teamed up to the bondholders to credit bid and we own the real estate. And we did things that I think were probably more expensive than we've done historically and worked out. With Barneys, we effectively won this liquidation by taking out the ABL. That was something that I haven't been done before. With that comes a lot of reward effectively after sales and liquidation, but also more risk, risk around line down, risk around obviously, liquidation analysis, add-on. This is a pretty small base of stores with a high end customer. We put all those things together and we felt like we're creating the asset at a level that would make a lot of sense for us we make a lot of money add. In retrospect, clearly, I think we've got all three things wrong. Recoveries were lower than we thought lower than -- we had some insight tour competitors and grow than they thought. The expenses on the wind down were higher than we expected and the Company was in low shape that some of the inventory was in more trouble shape. So, we need to acknowledge that we need to think through and take responsibility for it. And then at the same token, I think we have to look at the mirror and say. What brought us to the dance? Did you get to 270 million EBITDA from 80 by going -- work on projects right in the middle of the fairway and clearly the answer is no. So, we need to make sure that we're learning from our mistakes. We're thinking thoroughly about each deal, but also recognize that if your -- if part of your business model is to take advantage and we think sometimes it's the ability to take risks than calculated risks and get an outsized return, sometimes you're going to have these. This is obviously bigger than anything we would have expected. But as I looked through the whole year, I think we've got a lot, a lot of to be proud of and mentally I think we've all -- we've accrued for it as the estimated losses, as Phil said. And the markets are all at the one-time event, but if you looked at the market for retail and liquidation and environment. And where we said, I'm really excited about that, nothing will change. I mean, we will continue to be aggressive, we'll just -- we got take a deep look at the mirror and say. Where did we go wrong? Where do we go right? And make sure we learn from it.

And then just to going ahead, I think I heard this right. Did you say that in 2020, you expect at least 100 million EBITDA come from your more dedicated businesses?

So, as if you look at Principal Investment Group, if you look at the appraisal side of our business, GlassRatner and now our branded business, that business has been growing through acquisition, we got a couple of businesses in there that are declining, and then we have a couple there growing rapidly. So, we really try to basket some of the profits we had on the episodic side and be opportunistic buyers of asset that that we think, we're buying them cheaply whether by taking orphan company private as the case of magicJack or United Online or having a partnership with a team at Bluestar that we worked with in multiple project that we think would have and have partner with them. So, yes, I think we've got a really good base of cash flow to work off of and take some of those calculated, but hopefully more profitable risk than we did in Q4.

Last one for me just on the capital returned to shareholders. Is it good to see that regular dividends going up again? And do you expect that to kind -- is that a signal that more of the strategy to have to be a larger regular dividend in a smaller special dividend in the future and maybe allocate that capital for acquisitions or stock buyback? Just curious on the thought.

No, I think let's look, I think, there is -- we just bought a big slug of stock which we announced in Q1, we bought 880,000 shares. We have publicly traded bonds that create the opportunity to buy them, or if we think there is a proper use capital to sell them and then we've got shareholders. And so, I think that maybe -- I think there's an opportunity -- there's some opportunities around the stocks and around other things. But for the most part, I would not -- our focus has been 20% of our EBITDA roughly, will be returning to shareholders and we just -- we moved it up because of that recurring revenue, but the whole year it was over $1.70. So, I think there is base strategic change. We feel pretty good about our balance sheet and the opportunity to take advantage of some of the disconnection in stock or in other opportunities.

Thank you [Operator Instructions] Our next question from the line of Sean Haydon with THC. Please proceed with your question.

Given that I believe and I'm sure you agree, you guys have a really nice story of growth and capital return. Have you looked to engage with any sell-side firm to kind of get the word out because it seems like where your valuation is, the disconnect really is just people not knowing beyond kind of your research people on the street knowing the full story?

So, I think that's a fair question that. I was -- we did a couple of conferences in year. I guess at the end of the day, if you're look at I always focus and just take a step back and say look, what's happened in the last five years? I don't know the exact number, maybe Phil know, but I think we paid 350 in dividends from that initial $5 effective IPO. So, that's $1.50 or $2 cost basis. And the stock is where it is whether -- and looking. I think what we think to ourselves is, let's focus on the business -- let's focus on being disciplined about returning capital to shareholders. We acknowledged that our story is as difficult as a variety of business -- business has been here. And our responsibility in the way that we kind of think about making up for that complication is by being very aggressive and returning capital. And so when we like coverage, I mean, look, we absolutely like to get some coverage and get some more sponsorship. But I think, at the end of the day, you've been around stock that not great story, but really high market caps and you've been around and stock to get the nose down and just really worked hard. And I usually will always want to own the ones that they keep the nose down just work hard. And that's kind of where we are, but I appreciate the point.

Yes. And then I guess just the courtesy question. How does this rate cut affect the business?

Well, the disconnects and I think credit have been a really meaningful beneficiary of whether it's in the capital or whether it's on our balance sheet. There is a world of kind of have and have not in getting credit. And to the extent that our ability to get credit at lower rates and must be some bond often was meaningfully lower than the first when we did over a percent lower. And the flow that we see that arbitrage or cost to capital put money to work at a higher rate and get significant fees. And at the same time, that's really good for us. Volatility is good. It's painful in the short term. It's tough when market sell off 10% or 15%, but at the end of the day, starting from when we started in '97. There opportunities always have been around volatility and others that might not have been in position as we are in our operating expenses are the way of diversification now. So, I like the volatility. I think this is opportunistic for us.

[Operator Instructions] This concludes our question-and-answer session. Right now, I'd now like to turn the call back over to Mr. Riley for his closing comments.

Great, well, thank you operator. Once a quarter, we get to thank our partners, our shareholders, everybody that works here. And obviously, we appreciate all of the support and look forward to continue deliver and look forward to talking next quarter. 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 any other statements regarding matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Actually 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 fourth quarter and full year 2019 earnings conference call. You may now all disconnect.