B Riley Financial Inc (RILYL) 2017 Q3 法說會逐字稿

Good afternoon, and welcome to B. Riley Financial's Third Quarter 2017 Earnings Conference Call. My name is David, and I will be your operator for today's call.

Joining us for today are B. Riley Financial's Chairman and CEO, Bryant Riley; President, Tom Kelleher; and CFO and COO, Phillip Ahn. Following their remarks, we will open up the call for your questions. Then before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call.

I would like to remind everyone that this call is being recorded and made available for replay via a link available in the Investor Relations section of the company's website at www.brileyfin.com.

Now I would like to turn the call over to B. Riley Financial's Chairman and CEO, Mr. Bryant Riley. Sir, please proceed.

Welcome, everyone, and thank you for joining us. After the market closed today, we issued a press release announcing our financial results for the third quarter ended September 30, 2017, which can be found on the IR section of our website.

This is an exciting time for our organization, particularly in our Capital Markets segment. We recently reached another key milestone in becoming a dominant investment bank for small-cap issuers. We received FINRA approval to merge B. Riley & Co and FBR Capital Markets under the new name of B. Riley FBR. Tom and I will continually to lead the combined broker dealers as Co-CEOs.

To give you a sense of our combined scale, today our brokerage group makes markets in more than 1,500 securities, covers 1,200 institutional clients and provides research coverage on approximately 500 public companies. Our seasoned banking team has deep industry experience across the consumer, technology, energy, financial and real estate sectors and are market leaders of raising initial equity for companies with $1.5 billion and under market capitalizations and at the market issuances. B. Riley FBR has a total headcount of 263 professionals, including 83 bankers, 93 analysts and 87 equity sales professionals.

In addition to FBR, Q3 also marked the first quarter with Wunderlich Securities under the B. Riley Financial umbrella. Throughout the quarter, we invested significant time and effort, and strategically, refocusing both of these businesses to maximize opportunities and leverage the full capabilities of our diversified financial services platform.

We've completed the vast majority of the necessary changes, including rightsizing both the organizations. The result, 3 industry-leading financial service firms now operating with a single-unified focus and organizational DNA that is opportunistic and performance-driven and an optimized cost structure. These trades were integral to B. Riley's heritage and will continue to serve as key components to our success going forward.

In spite of our integration activities, we still continue to deliver strong results during the quarter, generating $92.4 million in revenue and $15.8 million of adjusted EBITDA. With the vast majority of necessary reorganization activities behind us, we believe we are well positioned to capitalize some strategic opportunities moving forward.

Over the last few years, we have actively put capital to do the work in cash-generating activities while strategically adding multiple uncorrelated sources of recurring revenue and cash flow to help insulate us if adverse conditions should arise in any one of our end markets. Looking at our business as a whole, we have revenue and earnings diversification from investment banking, training, appraisal and retail liquidation businesses, all balanced by our asset management and principal investment businesses. We believe our ability to generate consistent and meaningful EBITDA demonstrates the financial capabilities of our diversified business model.

Now before I dive further into each of our business segments and talk more about our strategic initiatives, I'd like to turn the call over to our COO and CFO, Phil Ahn, to walk us through our financial performance for the quarter. Phil?

Thanks, Bryant, and welcome, everyone. Turning to our results for the third quarter ended September 30, 2017. Our revenues totaled $92.4 million compared to $57 million in Q3 of last year. The significant increase was primarily due to higher revenues from our Capital Markets segment that included contributions from FBR and Wunderlich.

Now looking at our revenue mix and operating income by segment. Revenue in our Capital Markets segment was $63.7 million versus $10.1 million we reported in Q3 of last year. The revenue increase was a result of the inclusion of FBR and Wunderlich into the quarter's results. After factoring in the restructuring charges of approximately $3.3 million, segment loss was $184,000 compared to an income of $1 million in Q3 of last year.

Revenue in our Auction and Liquidation segment decreased $7.4 million from $23.6 million in Q3 last year. The decrease was primarily due to a $9.7 million decrease in services and fees and a $6.5 million decrease in sale of goods primarily from the retail liquidation's engagements. Segment income was $2 million, a decrease from $13 million in Q3 of last year. Revenue in our Auction and Liquidation segment continues to be profitable but is also highly episodic in nature, and results for this segment of our business can be expected to vary substantially from quarter-to-quarter and year-to-year.

Revenue in our Valuation and Appraisal segment for the third quarter was $9 million, up from $7.7 million in Q3 last year. The revenue increase was primarily due to an increase in revenues related to appraisal engagements. Segment income for the quarter was $3 million, which was up from $2 million in Q3 of last year.

And finally, in our Principal Investments segment, which currently consists of United Online, revenues from services and fees along with the sale of products, totaled $12.3 million versus $15.6 million in Q3 last year. Segment income for the quarter was $4.9 million, up from $3.4 million from the same year ago period.

Turning to our profitability metrics. Our GAAP net income for the third quarter totaled $368,000 and $0.01 per diluted share. This compares to net income of $8.9 million or $0.47 per diluted share in Q3 of last year. Our results for this quarter included $5 million of restructuring charges related to the integration of FBR and Wunderlich.

Adjusted net income, a non-GAAP metric for the third quarter of 2017, totaled $10.4 million or $0.38 per diluted share compared to $11.5 million or $0.60 per diluted share in the same year ago period. Adjusted net income excludes the impact of share-based payments, fair value adjustments, amortization of intangible assets, restructuring costs, insurance settlement recoveries and transaction-related cost, net of related tax impact thereof. Adjusted EBITDA, a non-GAAP metric for the third quarter of 2017, totaled $15.8 million compared to $20.8 million in the same year ago period. For further discussion about adjusted EBITDA and adjusted net income and a reconciliation to the nearest GAAP measures, please refer to the section in today's earnings release titled, Use of Non-GAAP Financial Measures.

Now turning to our balance sheet. At quarter end, we had $102.4 million of unrestricted cash, $9.3 million of restricted cash and $96 million of investments and securities and other investments. Shareholders' equity at quarter end totaled $274.7 million, which is up from $149.3 million at the end of -- last year. Our shares outstanding at quarter end were 26.5 million.

And finally, our Board of Directors approved an $0.08 per share regular quarterly cash dividend and a special dividend of $0.04 per share for a total of $0.12 per share, which will be paid on or about November 30 to stockholders of record as of November 22.

That completes my financial summary. And now I'll turn the call back over to Bryant. Bryant?

Thanks, Phil. As I mentioned in my opening remarks, we made significant progress integrating and unifying our brokerage business during Q3. While we plan to talk about this division as a whole in future quarters, for this call, I think it makes sense to discuss both of our broker dealers, B. Riley & Co. and FBR, independently, so you get a better sense of the performance in the individual units.

So let's start with B. Riley & Co., which continued to perform well in the third quarter. On a stand-alone basis, revenue was up $27.8 million year-over-year to $12 million driven by several notable banking transactions and improving trading commissions. It completed 13 investment banking transactions during the period, which was up from 10 in Q3 of last year. Continued improvement in this segment of our business reflects contributions from the key strategic ties we made this year and a favorable small-cap investment climate.

Q3 was the first full quarter with FBR under B. Riley Financial. This strategic acquisition has further strengthened our Capital Markets business in three ways: one, we've added a market-leading equity offering practice; two, we've expanded sector coverage to create a leading research platform; and three, we've expanded our geographic distribution across the country with operations throughout the East and West coasts.

As mentioned we continued restructuring and refocusing initiatives in the third quarter. Our general approach to managing our businesses is to lower our fixed cost overhead in an effort to maintain a manageable breakeven. After we acquired FBR in June, we took meaningful measures to help achieve this goal. Headcount at FBR was reduced by approximately 30% from 229 in May to 156 in September. We reduced headcount in investment banking, research, sales and trading and corporate administration and altered compensation structures to be more variable in nature and performance-based but generally higher to our producers as we passed along a portion of these expense reductions to benefit our employee base.

We also took steps to contain business development expenses by tightening up our expense for travel and entertainment and other nonproductive spending. As a direct result, we saw monthly expenses decline by 60% relative to the monthly average in the first part of the year. Lastly, we moved to consolidate our real estate footprint and consolidated offices with the rest of the B. Riley organization. As we sublease some facilities and let others roll-off lease, we expect to realize meaningful operating savings.

Taken together, these measures helped us to reduce debt fixed cost structure such that we estimate our annualized breakeven for FBR to be approximately $70 million of net revenue versus approximately $120 million pre-acquisition. Again, with these changes now behind us, we feel that our business is well positioned to generate meaningful profits when the market is active and minimize losses when markets are subdued.

Now I want to make some comments about FBR's performance in the quarter. Investment banking generated $14.4 million in revenue during the quarter. Our aftermarket product continues to add a relatively stable revenue stream to our traditional and more volatile Capital Markets business, generating $2.8 million in fees during the quarter. Included in the pre-acquisition period, FBR's ATM product generated $11.9 million year-to-date, already surpassing last year's total ATM revenue. For the first 9 months of 2017, ATM fees are up over 165% on -- and are currently on pace to potentially double last year's fees. In 2017, 43 new ATMs have been filed or refiled with FBR and 64 ATMs are currently on file and available to make sales.

Post acquisitions in investment banking was reduced from 77 employees to 52 employees. The current team in place consists mostly of senior calling officers, which preserves revenue opportunities while simultaneously reduces fixed expenses. As a result, the investment banking group was able contribute to $5.7 million of income to the firm for the 4-month period, following the acquisition and revenue of $20.6 million. That compares very favorably to the first 9 months of 2016 when the group generated a loss of $10.7 million on approximately the same amount of revenue of $21.9 million.

The changes also somewhat dramatically improved our fees-per-head metric for the business. For 2016, average fees per calling officer and per banking employee are $1.2 million and $560,000, respectively. For the third quarter of 2017, annualized average fees were $1.9 million per calling officers and $1 million per banking employee. Improvement in this metric is important as it allows us to fairly compensate and retain key producers on the platform.

Turning to sales and trading. We made several changes to the secondary trading business to improve the profitability of the unit at a time when commissions remain under pressure. First, we rightsized headcount from 54 to 35, reducing our fixed compensation and benefits expense by 55% and realigned account coverage at the levels (inaudible) strongest client relationships across the broker dealers.

Second, we focused on how and when we want to put our capital risk for our clients. As a result, our post-acquisition monthly average client trading losses are down 35% and our gross margin on client-related secondary trading business is now nearly 70%.

Finally, multiple efforts are currently underway to reduce execution costs. We've seen some marginal improvement in per share of cost but don't expect to begin realizing significant savings in this area till later this year or early next year as the effort requires renegotiation of multiple contracts. The above changes have already had a meaningful impact on the business as the breakeven is now substantially lower. From June 2 through September 30, net secondary trading revenue was down 31% at FBR, but the business was able to contribute a positive $880,000 income to the firm.

It's important to note that despite the continued pressure in equity commissions, we view this department as vital to our organization as a whole. Operating as one combined entity makes B. Riley FBR an industry leader in the small cap investment banking and brokerage space. By uniting both companies and operating as one cohesive firm, we're now in a position to bring together all of our resources more efficiently and effectively for our clients. What we're offering clients is unparalleled access to a small cap company and those who invest in them. Looking ahead, we are committed to building upon the firm's market leadership and its deep industry capital markets expertise.

Shifting gears to our acquisition of Wunderlich Securities, which we closed on August 1. Wunderlich was also a very strategic and synergistic acquisition for us, adding significant retail distribution and an established wealth management practice, which had $9.3 billion in AUM at the close of Q3. During the third quarter, we implemented measures to focus Wunderlich on its core competency to wealth management. As such, these measures involve strategic reduction to the investment banking and research teams, allowing those businesses to primarily be focused on the B. Riley FBR entities.

Overall, the (inaudible) in Wunderlich is (inaudible) positive by the 200 wealth management advisers. We are seeing increased deal flow and now have access to more than double the research coverage as well as certain B. Riley asset management offerings. We expect all these changes to be beneficial to the Wealth Management business over time.

Now let's turn on the fund management side of Capital Markets segment, which includes B. Riley Asset Management, B. Riley Wealth Management and Great American Capital Partners. During the quarter, Great American Capital Partners, our direct fund made 3 investments during the period. This included providing a $15 million senior secured credit facility in Staples. With these investments, GA Capital will have completed 18 financings totaling over $230 million investments in just over 2 years since raising its first fund.

As I've said on prior calls, our geo-capital platform is truly unique and proprietary business which we truly feel is poised for growth. We've been very happy with the success of GA Capital direct line in platform and are looking forward to increasing our assets under management in the future.

Now turning to our Auction and Liquidation segment. In our October, we partnered with 3 other asset disposition firms to liquidate the inventory of Sears stores in Canada. The national retailer has been in creditor protection since June, so it was unable to find a buyer which would allow it to keep operating. The litigation sale was approximately 80 Sears stores in Canada, starting October 19, and we expect to successfully complete the process in the next couple of months. The challenges facing retailers continue, and we expect to continue to the benefit from that secular trend. In the latter half of last year, we saw the benefit of several large deals for Hancock Fabrics and Masters that contributed to our results.

This year, while we did not have the benefit of deals such as Hancock and Masters, we are seeing a significant breadth of activity in the retail liquidation space and for that reason, we remain positive on our future prospects.

So our results for our Auction and Liquidation segments were down in Q3 relative to the last year's quarter, we remain optimistic. Overall, we believe that Great American remains ideally positioned with significant capital resources, including a $200 million credit facility to rapidly move on large liquidation projects when they present themselves. We believe these characteristics will enable us to continue capitalizing on this secular trend of online shopping and ongoing investment in physical stores regardless of business cycles.

Our Valuation and Appraisal segment continues to provide us with steady growth, profitability and predictable cash flow. In Q3, we saw a 17% uptick in revenues to $9 million along with $3 million in segment income. As I mentioned in our last call, last April, the leader of appraisal group, Lester Friedman, passed away. During the last quarter, Michael Marchlik was named to take over as the leader of our appraisals practice.

Mike joined Great American Group in 1996, previously serving as National Sales and Marketing Director for the appraisal practice. Our team continue to be the premier service provider to our appraisal banking clients. Appraisal team continues to achieve record performance, having increased revenue of approximately 18% and operating income by almost 50% on a year-over-year basis. Mike and the rest of the appraisal team have done a tremendous job in continuing to build on the business that Lester helped to create. On a side note, Lester did possess some minority interest ownership position in appraisal practice, which was repurchased by the company as a result of his passing.

Moving on to our final segment. Through our Principal Investment business, we continue to look for opportunities to acquire what you would describe as orphaned or misunderstood companies that (inaudible) the challenging market dynamic, ones where we can come in and implement operational and financial changes, generate attractive return much like United Online. As it relates to United Online, the United Online continues to perform beyond our expectations. In Q3, United Online contributed $12.3 million in revenue and $4.9 million in segment income during the quarter. When the market dynamics of this business are not growing, the management team at the company continues to do an excellent job in managing expenses and generating substantial cash flow for B. Riley. Having just acquired the company a little over a year ago, we've demonstrated our abilities to manage these investments and generate expected cash flow as we expect to recoup our initial investment within the next 15 months, meaningfully earlier than initially expected.

Altogether, our combined and unified organization of more than 900 employees and strong balance sheet not only gives us a national footprint in equities and fixed income but also provides the necessary scale and resources to strategically expand our leading position in business services, financial advisory and investment banking.

Now with that, we're ready to open the call for your questions. Operator, please provide the appropriate instruction.

(Operator Instructions) Our first question is from Wes Cummins with Nokomis Capital.

Bryant, just a quick question now that you're at quarter end on the integration with FBR and Wunderlich. Maybe just comment on the kind of the cultural fit between the two firms and how you see that coming together? Yes, that's really it.

So I would say when we acquired FBR, and maybe the difference between the two is FDR was a bit more of a revenue-focused operation while we were a little bit more focused on the bottoms-up organization (inaudible). The difference is we're willing to have a lower margin on the upside, but not take as much risk on the downside. And FBR's model is a little bit different. You get to a nice revenue number and the margins are higher than corporation once you hit those revenue levels. So that's been a meaningful change and so we've -- there's more of that to reflect our business model. And we've asked employees to -- and partners to think about things a little bit differently and that's been challenging. And I think we're towards the end of it. We've -- I think the team we have now in place has mostly bought in and understand what we have, just starting to see that and how we're working at the breakeven. And the fact that on a normalized basis, since the acquisition, we've been EBITDA positive in June and Q3 for FBR. And what this really is (inaudible) how strong B. Riley has been. Year-over-year, I don't think we've put in there but I mean, Phil can tell you about the (inaudible) in revenues and EBITDA has meaningfully increased. So I think that we're -- I feel good about where we are and I think the message is getting out there. It's also nice to get the names together so that we can start to really kind of brand the market, and we're excited. I would say 2 months ago, that answer would have been a little bit different and it's been quite a process to get us there. But as I sit here today, I think we're really (inaudible) one firm and excited to move forward as one firm.

Great. And then just one other question. Given the performance, United Online performance continues to be fairly impressive. Anything else in the pipeline as far as principal investments that you're looking at even in the -- I know it's kind of a challenging valuation environment.

So I would say that we are continuously looking for the similar type of situation as United and just both in public markets and private markets. And there's a -- obviously, it's a (inaudible) we're not a (inaudible) I don't care if guys say either way. But it's -- margins been going up. And that makes it more challenging in finding interesting things. But for the companies that we're looking at where it might be a company with a [declining] revenue stream or something similar to United Online. I don't know that the market (inaudible) with all of those types of assets and we think there's opportunities out there. So the answer is yes, we're seeing a lot of opportunities. We're being obviously careful about how we get a balance sheet that's got meaningful net cash and leverage ability, and we will look to find those assets. So there's activity out there, and we hope to be able to take advantage of some of those assets.

Our next question comes from [Sean Haydon] with THC.

Just given that -- it looks like you're building cash on the balance sheet. Is that for any purpose in particular? Is it dry powder? Or would you guys be looking to return some of that through buybacks?

So a couple of things. I would say that there's an element of dry powder, as I just mentioned. We think there's some interesting opportunities out there. We obviously, have taken a pretty disciplined approach to returning capital to shareholders as it relates to operations that you saw again this quarter. But look, I think we think about that opportunity every day. You can imagine with Capital Markets people and having been around many public companies, including our own, being able to utilize our capital efficiently is one of the -- I think one of the most important skills that a company can have. So without getting into too much detail, I would say that we spent a lot of time thinking about the effectiveness of our balance sheet, the opportunities and the opportunity cost, realized also that the liquidation business can require a fair amount of capital if a situation pops up. We didn't have that as much this quarter, but we certainly can. Obviously, you see the market environment out there. So we're always trying to balance that as well. But I would say it's not -- it's uncomfortable to have this much cash without having a meaningful -- and not putting into work for too long. So I think it's the best way I can answer it.

Okay. And do you guys -- how much further upside in terms of operating leverage do you see in FBR and Wunderlich going forward?

So look. I would say an operating leverage, there is -- if we're talking about how much more availability to think about reducing overhead, we're really happy with where we are. It's about the employee base. And I think at this point, we're really looking at opportunities to bring on people onto the platform. There are some contracts and some things out there that we are heavily negotiating. That will take some time, and we'll continue to hammer our way out. But as I would look at it as an investor, I would say for the most part, those types of things are behind us and we are really focused on taking this firm and what I think is uniquely positioned in the market and driving meaningful revenues and that's kind of where we are.

I have one more. And just in terms of your mutual funds and the direct lending funds. Are you guys seeing any uptick in interest through the Wunderlich channel for those?

So the direct lending fund is more of an institutional product. And so that is probably less relevant than mutual fund. We are -- mutual fund has been surprisingly -- and maybe not surprising others, people are in it. It is a long grind to get on the right platforms, to get to the correct ratings and I think we performed really well, but it's been more of a process than I've certainly expected when you put it together, but I will say that we're absolutely marketing to eyes of Wunderlich and we are starting to see some inflows but there is not a -- I would not call it a meaningful way as of yet. It's clearly a scenario where we are looking at to market that funds.

(Operator Instructions) Our next question is from Richard Haydon with THC.

I listened to a lot of comments about the various business. But as you look at the aggregate, what are your 3-year targets for the company in terms of revenue and EBITDA?

That's I think when you look at our platform, the opportunities that the platform brings to are multiple. And whether that's (inaudible) from really nothing whether as buying Great American, also the B. Riley platform we're buying, United Online also [our research]. We're going to be opportunistic. We don't integrate box and we don't look at that -- the plan of a 3-year plan being as specific as maybe you would like. We think we have great opportunities, and we think that we're going to be able to grow our brokerage business meaningfully. We think there's a long -- we're not in the bottom half of the game in retail. And we have obviously built out our asset management business. And we will continue to be opportunistic. So I don't have an exact number for you other than what you can know is that we will return a meaningful amount of our EBITDA to our shareholders, and we'll be opportunistic we'll manage our balance sheet to maximize shareholder returns. That's the best way I can answer that.

Maybe I could take my thought as you can count on that. Do you think that this company with a current asset base has a capacity of earning $100 million in EBITDA in 3 years?

So our trailing 12 months, and I want to be -- I know there -- let's just say our adjusted trailing 12 months has been around $80 million. And during that period, FBR was not incredibly profitable. So if we can obviously -- if we can continue to start to see the momentum in the brokerage industry, I would be disappointed if we didn't do better than that in 3 years. I mean, we're -- based on where we are on a trailing 12-month basis.

And we should do better than the BD business, do you mean through stabilization commission rates or other...

That would be the last area that I will focus on as a shareholder. That's a tough biz. We have really good people working on it and it's a super-important business, but that business is harder. I think where we are going to see, where I hope we see a meaningful amount of opportunity, is as a combined firm, we are both present and the investment banking opportunities we should see with that and the capital-raising opportunities we should see with a combined operation are really meaningful. So I would say where I would focus on is some of the investment banking opportunities that the combined operation should bring relative to where they are and the level of overhead associated with the business. It's so much lower that once we get over breakeven, 50% of our incremental revenues really should drop to the bottom line. So if we're right about the opportunities that the bigger platform brings, we should -- the thought is that -- and that will be -- now that it will create a lot of opportunities on the EBITDA side.

At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Bryant Riley for his closing remarks.

Right. Well, thank you for joining us on today's call. I particularly want to thank our employees, partners, investors for their discontinued support. We look forward to updating you on our next call. 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.

During today's call, there were forward-looking statements that are not based on historical facts, including without limitation, statements containing the words expects, anticipates, intends, plans, believes, seeks, may, estimates and similar expressions and statements. Such forward-looking statements include but are not limited to expressed or implied statements regarding future financial performance and future dividends, the effects of our business model, the effects of our balance sheet and credit facilities on our ability to pursue business opportunities; the effects and anticipated benefits of our acquisitions of United Online, Inc.; FBR and Co. and Wunderlich Securities, Inc. and related actions; expectations regarding future transactions and the financial impact, size and consistency of returns and timing thereof; as well as statements regarding the effect of investment in our business segments.

Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements. Such factors include risks associated with large engagements in our Auction and Liquidation segment; our ability to achieve expected cost-savings or other benefits with respect to our pending and completed acquisitions in each case within expected time frame or at all our ability to consummate anticipated transactions and the expected financial impact thereof in each case within the expected time frames or at all; our ability to successfully integrate acquisitions, loss of key personnel; our ability to manage growth; the potential loss of financial institution clients; the timing of completion of significant engagements and those risks described from time to time in B. Riley Financial, Inc.'s filings with the SEC, including, without limitation, the risks described in B. Riley Financial, Inc.'s annual report on Form 10-K for the year ended December 31, 2016, under the captions Risk Factors and Management Discussion and Analysis of Financial Condition and Results of Operations.

Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended September 30, 2017. These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. All information discussed on this call is as of today, November 8, 2017, and B. Riley Financial does not intend and undertakes no duty to update such information based on future events or circumstances.

Further, this conference call included a discussion of non-GAAP financial measures as that term is defined in Regulation G. 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, which is posted on the company's website at www.brileyfin.com.

Finally, I would like to remind everyone that a recording of today's call will be available for replay via a link available in the Investors' section of the company's website.

Thank you for joining us today for B. Riley Financial's Third Quarter 2017 Earnings Conference Call. You may now disconnect.