B Riley Financial Inc (RILYL) 2017 Q4 法說會逐字稿

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

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

I would like to remind everyone that this call is being recorded and available for replay via a link 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. Please go ahead.

Thanks, Matt. Welcome, everyone, and thank you for joining us for our call today.

Earlier today at market close, we issued a press release with our financial results for the fourth quarter and full year ended December 31, 2017. A copy of the press release can be found in the IR section of our website.

2017 was a transformative year for B. Riley Financial with the acquisition of both FBR and Wunderlich; the announcement of the not yet closed acquisition of magicJack; continued growth of our Appraisal business and Asset Management fund, specifically our direct lending fund; continued opportunities in our Liquidation business; and the closing of several key transactions in investment banking. We issued over 200 million bonds to support our growth and integrated over 600 employees under our platform.

As you can see from our Q4 results, these changes have had a meaningful impact on our bottom line, the opportunities in front of us and what we believe the upside to our shareholders. While we are proud of our Q4 results, we also recognize that, in addition to the amount we paid for these assets, we also incurred significant onetime charges to rightsize our new company. We appreciate these charges are real dollars spent by our shareholders that need to be earned back in the coming years. Having said that, we believe that we are off to a strong start and have created a meaningful value through these acquisitions and our thesis for the acquisitions have improved and translated into growth in our earnings.

Before I get into a more detailed analysis of individual segments, I will hand it over to Phil Ahn, our CFO, to walk us through our financial performance. Phil?

Thanks, Bryant, and welcome, everyone.

For the fourth quarter of 2017, our revenues totaled $110.2 million, up from $93.2 million we recorded in Q4 of last year. Revenues for the full year of 2017 totaled $322.2 million, up from $190.4 million for 2016.

Turning to our revenue mix and operating income by business segment. For the fourth quarter of 2017, our Capital Markets segment revenues totaled $84.4 million, a significant increase compared to $16.5 million in the same year-ago period and compared to $63.7 million for Q3 2017. Second -- segment income generated was $14.3 million in the fourth quarter compared to $6.2 million in Q4 of 2016 and compared to a segment loss of $184,000 in Q3 of 2017. The increase was driven by higher investment banking fees, trading income and commissions which stemmed from the completed acquisition of FBR and Wunderlich in June and July of 2017, respectively.

For the full year 2017, revenues in this segment totaled $189.7 million compared to $39.3 million reported for the same year-ago period. Segment income for the year totaled $15.9 million compared to $6.1 million for 2016.

Now, revenues for our Auction and Liquidation segment totaled $4.2 million in the fourth quarter of 2017. This compares to $51.9 million of revenues reported for the fourth quarter of 2016. We reported $0.1 million in segment income for the quarter compared to $24.2 million in Q4 of the previous year. The decrease in fourth quarter revenues was primarily due to a $28.3 million decline in services and fees and a $19.3 million decrease in the sale of goods which relates to the completion of 2 large retail liquidation engagements in the fourth quarter of 2016.

For the full year 2017, revenues in this segment totaled $47.4 million compared to $87.7 million in the same period in 2016. We reported $11.2 million in segment income for the year compared to $41.1 million for 2016.

Our Auction and Liquidation segment continues to be profitable, but is also episodic in nature. The variances in reported revenues for this segment is primarily due to a decrease in services and fees when compared to a particularly strong fourth quarter of 2016. As we've made reference to in the past, we expect results for this segment of our business will vary substantially from quarter-to-quarter and year-to-year.

For the fourth quarter of 2017, our Auction and -- our Valuation and Appraisal segment reported revenues of $8.5 million compared to $8.9 million in Q4 of last year. The decrease of $0.4 million was primarily due to a decrease in fee-based revenues of appraisal engagements. Segment income for the quarter totaled $2.5 million compared to $2.8 million for Q4 of 2016.

Despite the slight decrease for the quarter, 2017 was a record year for our Valuation and Appraisal segment with annual revenues totaling $33.3 million compared to $31.7 million recorded in 2016. Segment income totaled $9.7 million for the year compared to $8.9 million in 2016. The year-over-year uptick in our Valuation and Appraisal segment was primarily driven by an increase in the volume of appraisal engagements conducted for the year.

And finally, in our Principal Investments segment, which currently consists of United Online, fourth quarter revenues, which are primarily from services and fees along with the sale of products, totaled $13 million versus $15.9 million in Q4 of last year. Segment income for the quarter was $5.3 million, down from $5.8 million in the same year-ago period.

United Online reported total revenues of $51.7 million for the year, up from $31.5 million in 2016. We generated income of $19.5 million for 2017 compared to $9.2 million for 2016. The significant increase reflects 2017 as the first full year with United Online under B. Riley Financial since acquiring the company back in July of 2016.

In terms of our profitability metrics, which are attributable to B. Riley Financial as a whole, in Q4, the company reported a net loss of $6.1 million or $0.23 per diluted share. This compares to net income of $12.4 million or $0.64 per diluted share in the fourth quarter of 2016.

The results of the fourth quarter included a $13.1 million or $0.50 per diluted share of additional tax expense in the form of noncash charges due to the Tax Cuts and Jobs Act enacted in December of 2017. This tax law change results in an increase in tax provision and a reduction of our total net income.

Our net income for the full year 2017 totaled $11.6 million or $0.48 per diluted share compared to $21.5 million or $1.17 per diluted share in 2016. For the fourth quarter of 2017, adjusted net income, which is a non-GAAP metric, totaled $11.6 million or $0.44 per diluted share. This compares to $14.8 million or $0.76 per diluted share in the same year-ago period. Adjusted net income for the full year 2017 totaled $38.5 million or $1.59 per diluted share compared to $27.7 million or $1.51 per diluted share for the full year 2016.

Adjusted EBITDA, another non-GAAP metric, for the fourth quarter of 2017 totaled $21.4 million. This compares to $25.1 million in same year-ago period. Adjusted EBITDA for the full year of 2017 was $69.8 million compared to $48.9 million for the full year of 2016.

For a further discussion of adjusted EBITDA and adjusted net income and a reconciliation to the nearest GAAP measures, you can refer to the section in today's earnings release entitled use of non-GAAP financial measures.

Now, turning to our balance sheet. At year-end, we had $132.8 million in unrestricted cash, $19.7 million of restricted cash, $31.5 million due from clearing brokers and $117.1 million of net securities and other investments owned. At year-end, we had $205.9 million of debt. Shareholders' equity at year-end totaled $266 million, which was up from $149.3 million at the end of 2016. Our shares outstanding at the end of the year were approximately 26.57 million.

That completes my financial summary. So now, I'll turn it back -- call back over to Bryant. Bryant?

Thanks, Phil.

Now let me walk you through the segments, starting with the brokerage business, specifically the institutional segment of that business represented by B. Riley FBR. This doesn't include Wunderlich Securities, the RIA/wealth management piece of the brokerage business. As this is only the second quarter together, I will focus most in the sequential quarterly changes, but also try and put in perspective the major differences year-over-year.

For Q4, our revenue in this division was $60.5 million, up sequentially approximately 57%. Adjusted EBITDA was up almost 5x to $16.4 million versus $3.4 million in the prior quarter. The fourth quarter represented the first true quarter of an integrated firm with one message and operating under a single brand, B. Riley FBR. We realized strong business momentum in all areas, especially in the investment banking side in both Capital Markets and advisory.

At the same time, we have reduced our breakeven revenue in this segment by 28%, mostly through a reduction in fixed costs. In fact, before the acquisition, we estimate that we've reduced our breakeven by $45 million and our fixed costs by $30 million. Importantly, the variable compensation ratio has gone up for our legacy FBR employees since the start of our integration, absent our net margin.

Simply stated, we have reduced overhead and fixed costs and returned a portion of those savings to our shareholders and a portion of those savings to our employees. Collectively, these changes provide a stronger platform for retaining and recruiting talent and improves our ability to better weather more challenging capital market environments.

Now let me mention a few highlights from the quarter, starting with the $261 million institutional private placement rate for Select Interior Concepts. For those less familiar, this type of equity raise is commonly referred to as 144A.

Working together, we believe we have further improved the 144A practice and distribution, which was previously employed by legacy FBR to raise $10 billion in equity capital over the last decade. Today, B. Riley FBR is the undisputed leader in this niche small cap product with greater than 50% market share.

Select Interior establishes a combination of 2 portfolio of companies of a private equity fund. Both of these investments were successful for that fund, but the opportunity and desire of the management team to continue to grow and acquire created an opportunity for our 144A practice. We provided liquidity for a large portion of the private equity stake while dramatically reducing Select Interior's outstanding debt. We're able to achieve this after an intense marketing process that took place over 3 weeks, resulting in 137 meetings with 116 unique investors. Since pricing this transaction, the shares have appreciated nicely based on secondary institutional transactions in our portal and we are excited to be an important partner and shareholder.

While reestablishing the 144A was an important milestone for our company, it is far from the only highlight in the quarter. During the quarter, we completed a bought deal for Limelight Networks utilizing our balance sheet to facilitate the purchase of approximately $69 million of stock from a venture capital fund. Our restructuring practice continues its strong momentum by helping to restructure and exit the European iron ore from bankruptcy and have helped secure commitments of over $600 million from institutions to do so. In addition, our M&A practice was active as well with a number of advisory assignments, including representing Compass Engineering, O-Tex Holdings and 3DSIM and their corporate sales. On the Capital Markets side, our ATM practice was very active and we were engaged in multiple underwriting assignments.

On the sales and trading side of our business, we saw a small increase Q3 to Q4. We believe this is more a function of accounts getting comfortable with the integration of our firms than anything else. What's encouraging is that we have seen a more pronounced improvement in trading activity during the first quarter. I'm hopeful this reflects the enthusiasm our clients have for the combined platform as well as an appreciation for the quality of our research. We are very excited about our sales team and believe that the combination of our B. Riley and legacy FBR salespeople are some of the best on the street and we will continue to build and grow our team.

On the research front, I believe that none of the above accompaniments could have taken place without a quality research product. Strong returns on our stock picks are the best way to measure sales and hold ourselves accountable. I am pleased to report that our Alpha Generator list was up 1.7 for the fourth quarter while 3 indices we track fell between 30 and 80 basis points. For the year, the Alpha Generator was up 35.8% versus the Russell 2000, which was up 14.6%.

This list represents our analysts' best stock picks and I view as a testament to our success finding undervalued companies. Our current research team consists of 34 senior analysts covering approximately 500 companies. We are proud of the services and quality we provide to our clients and believe these efforts are being recognized.

Moving on to Wunderlich Securities, the RIA wealth management piece of our business, which I will only briefly touch on because it is a less volatile portion of our business that provides steady revenue and enhances our distribution. Assets under administration were approximately $8.6 billion, up from $8.3 billion in Q4 2016. Total number of financial advisors was approximately 185, which have been pared down so that we could focus on our top producers.

Importantly, the integration of this team of advisors has been gaining momentum as participation in each of our deals steadily increases. I am convinced that as we continue the success demonstrating the strength of our platform and the differentiated product, we will be a great home for reps looking for more than just a wirehouse. An example of this is the opening of a new Los Angeles office, which we are very excited about given our long-established roots in Los Angeles.

Now let's move on to our Great American business, starting with the Liquidation side of that business. During the quarter, that segment had segment income of approximately $57,000 versus $24.2 million in Q4 of the previous year, which included a large liquidation of Masters Home Improvement Australia. For the year, our Liquidation business achieved segment income of $11.2 million versus $41.1 million the previous year.

On the face of it, this looks like a large underperformer. However, in many ways, we measure our success in how we do during slower quarters versus strong ones. As the last 2 years' results represent, this business has been able to demonstrate meaningful returns and is our best use of capital. However, it is episodic and requires a large amount of discipline to be targeted on the deals we pursue. Having a breakeven quarter pales in comparison to the large opportunities that we continue to see as brick-and-mortar businesses continue to face extreme headwinds. We are very excited about the opportunities in front of us this year and believe this could be as active a year as we ever had starting with the Q1 liquidation of Sears Canada.

Moving on to our Appraisal business, which had another solid year. While Q4 revenues were down 4%, this represents mostly timing issues as well as a back-loaded 2016. For the full year, revenues were up 5% to approximately $33.7 million and units were up 6.3 representing over 1,300 reports to our clients. Total segment income was up over 9% to $9.7 million for the year.

In addition to the steady cash flow this business provides, it also enhances our business in other ways, including providing opportunities and expertise for our direct lending fund. Leadership at this division has done an excellent job of building on the strong base of business. We're now looking at new verticals to enhance the strong franchise.

Turning to our direct lending fund. GA Capital Partners is an asset-backed direct lending fund that was built off our expertise of understanding asset values. Fund one, which was launched in 2015, has included -- concluded its investment period early and has moved into an investment realization phase after strong investment returns.

Since inception, GACP has invested in 17 portfolio of companies with total transaction size of $876 million. The fund has quickly established itself as a meaningful leader in this market. We're excited about the opportunities that we are seeing and currently have several initiatives going on related to the growth of investment capital for GA Capital Partners, which we plan to update investors on in a future earnings call.

The fourth quarter was also an active period for the Principal Investments group highlighted by the announced acquisition of magicJack VocalTec in November for a total consideration of $143 million. With magicJack, we look to replicate the success we've had with our United Online acquisition by again leveraging our operational expertise to generate significant cash flows. The potential synergies with United Online combined with magicJack's subscriber base and brand name make this an attractive investment opportunity.

In January, we announced the acquisition of 29% of bebe stores through the Principal Investments group. After successfully divesting its retail stores, bebe has minimal expenses and hold a 50% interest in its intellectual property through a JV that generates a consistent line of margins and licensing revenue. With approximately $340 million of unimpaired NOLs and a solid balance sheet, we view bebe as an attractive acquisition vehicle for high cash flow companies that will generate dividends for bebe and B. Riley shareholders. Principal Investments group members joined the bebe board in conjunction with the transaction.

On a side note, our relationship with bebe illustrates our strong suite of services across our platform. Great American was instrumental in helping bebe with its retail strategy while B. Riley Restructuring Group and Great American Capital Partners played a pivotal role in transforming the business and providing the capital it needed to explore other strategies.

In conclusion, acquisitions of FBR and Wunderlich has helped us achieve our vision of being a firm that provides value to our clients as dominant players in the small-cap market. Our integrated business with senior professionals whom are recognized as experts in the field, be it asset liquidation, valuation, research, banking, wealth management, asset management or restructuring, has resulted in significant earning as well as a platform that is poised for continued growth. Our Principal Investments group is on the precipice of closing the magicJack investment, further increasing our earnings and cash flow. We have no sacred cows and reduced expenses significantly. Our senior team has been focused on the market, and we have opportunities across our business which are accretive. We reward our employees for their success, and stockholders benefit, as evidenced by the special dividend of $0.08 to go along with our continued normalized dividend of $0.08. We believe our strong balance sheet puts us in a position of strength as we entered 2018.

With that, we're ready to open the call for questions.

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

Bryant, a couple of questions today. Just maybe spend a little more time on the liquidations business. Obviously, a big change on the revenues, impressive that the segment still generated a little bit of income or was close to breakeven in the quarter. But you talked about potentially having a record year of activity there. Is there any additional color you can give us on -- is it the things that you're chasing in that business?

So, Wes, that's a little tricky in that on many of these situations, we're involved early. I could cite a few publicly announced companies that have filed bankruptcies that would in general be involved in some sort of potential transaction, companies like Bon Ton, Toys "R" Us. There's some international companies that you -- that may not have been highlighted as much. But as we continue to see the environment meltdown bricks and mortars, I just -- I could be wrong. I'm obviously taking all of that into account and pining, but I just think that there will be a lot of opportunities. I also liked the fact that we're enhancing those opportunities by doing different things. I'd cite [BT] as an example to that. So perhaps by utilizing some of our various components of our business, we'll be able to put ourselves in a more proprietary position as it relates to our liquidation side of our business. But I think just in general, everybody can see what's going on in retail and where you're seeing some stocks trade and enterprise values relative to debt, and I just look at all of that and think we're going to have an active year.

Okay. And then on the Principal Investments. I know you're getting close to closing magicJack. Are you seeing other opportunities out there? I mean, where we said valuations are -- seem fairly high across the board, I wonder if you're seeing other interesting opportunities at reasonable prices.

So we're seeing a lot of opportunities. I mean, I think we're trying to establish ourselves as a place to call if you have an asset that either you, for whatever reasons, may decide to dispose of something that might be -- require some operational efficiencies. I think the public markets are interesting to us. Obviously, there's -- I think you can attest to while the Russell index, stocks and some of the more -- the larger stocks haven't got meaningfully higher, there's still a few orphan names, and effectively, that's what magicJack was. And I think there's a lot less competition for those names and those companies, while perhaps will run or in a bit of a box because they might not be growing and might not be getting as much credit for the value that they possess and shareholders get frustrated, and those are opportunities. So I don't -- we don't feel any money burning itself in our pocket. We have plenty of opportunities to utilize our capital, as I've mentioned, through some bought deals and some other things, and we think that's a huge proprietary advantage. But we'll still be proactive around anything that we see that we think we can add value maybe from a differentiated way or by looking at things differently.

Okay. And did you -- I think you said that you're close to closing magicJack. Is it -- did you give an update to date as to when exactly you think that might happen?

Well, since I was specifically warned by Phil Ahn on what date I should say, I'll let him answer that question.

It's -- we anticipate it will be over the next several months. So we don't have a definitive date on it yet.

Okay. All right. And, Bryant, just more of a broader question here, the last one I have. I have some experience with kind of the B. Riley culture, and Brett does here as well. Just curious, now that you're 6 months in, how the companies, FBR and Wunderlich and B. Riley, are coming together from a cultural perspective and kind of -- I see the kind of the cost synergies coming together. And I know your philosophy on cost versus maybe some other companies. Just maybe kind of a high level of how you feel that's coming together.

So interesting question. It's been something that we've talked a lot about internally quite a bit. So I would say that the challenges of integrating FBR, which was just one in a bit of a different way versus a firm that started out with minimal cash and had run in a different way, has been challenging. Interestingly, the B. Riley side of the house never had an expense account, and it was really one in a way that says, "Hey, this is -- you're an owner in this business and run it accordingly." Where when we acquired FBR, there was a lot of different expense account rules. And what we tried to establish is the same thing, which is just be common sense, let's run it the way that you would run it if it was your business. And I think we've gotten complete [by an effect]. I would argue that maybe we're -- at times, we're going too far on that side, which might seem funny to hear, but we'll just -- there's been a culture, I think, and everybody's bought into margin -- increased margin equals increased shareholder earnings and increased compensation. I would say that maybe a little bit, I think, will be on this. We were a little naive in the thought that everybody at FBR would immediately buy into the B. Riley culture. Many of the people at B. Riley have been here for 15 years, have benefited from being shareholders early, and some of that was self-fulfilling. It's been a lot of work, not for anybody's fault other than just different culture is to get all of us aligned, and I think we've seen some people leave because of that. But I think that's behind us. I think where we are now -- or I'm hopeful where we are now is we've got a real -- a great environment, the people who are here that have elected to stay and we've elected to keep, I feel like they're on step with kind of our philosophy, and we're learning from their philosophy. So I would say that's a long-winded answer to say that I think the toughest part is behind us. We're really excited about everybody that's come on. And I would say from this point on, we really consider ourselves one firm and one culture.

Our next question is from Julio Acero from Steel Partners.

Just have a quick question for you all. We noticed that your firms, they popped up on a couple of filings for Babcock & Wilcox. So we were wondering if you could speak a little bit about your involvement with their upcoming rights offering, if any.

Yes. Thanks for the question. We have signed an NDA with the company. It will be inappropriate to comment.

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

What do you guys attribute to the strong growth at United Online?

So on United Online, business is not growing. Phil, do you want to walk through the numbers for the quarter again?

The -- well, yes. As you know, we -- when we acquired United Online, it was a -- as Bryant had described earlier, an asset that was effectively overlooked. But we always look at it as a cash flow investment. So there is a -- obviously, this is a business that is declining in nature in terms of the dial-up Internet business. However, our investment thesis was certainly that for the multiple that we were able to acquire it for, it certainly was a good return on investment capital. So -- you see the segment numbers, which are primarily the Principal Investments group, and so the revenue going down to $13 million from the $15.875 million is basically consistent with what we've been expecting and modeling. Segment income of $5.3 million versus the $5.8 million in last year, some of that related to -- as the business continues to go through its expected decline, we do some commensurate excess reductions.

But just to put that business in perspective, we expect that, on an after-tax basis, we will have recouped our investment by Q3 of this year, and the business will still be on a 20-plus kind of EBITDA, albeit declining run rate. So I think by any measure, it's been a successful investment.

Right. And I'm sorry, just to clarify, I think the '16 -- just so you understood, the '16 result, it reflects -- '16 was basically a half year's result because we acquired it in July of '16.

Got you. Yes, I misinterpreted that. And then I know you haven't closed magicJack yet, but could you just give us an idea of what you're expecting once it's closed in the next couple of months in terms of just time line of integration, how it fits with your other Principal Investments?

So we hold that management team in high regard, and we think they've done a very good job. And we will [hand stop] with not only our own management team but also our own back office. We have 100-plus people in India that help assist us and run United Online efficiently, and we think that can translate into more efficiencies with magicJack. And I think, obviously, benefits to magicJack going from public to private are meaningful, not only in the way you run the business because I think there's different pressures when you're running a public company but also the extreme costs associated with running a public company, whether it's a public board management, they only engage in an activist fight. So we think the combination of all those things, in conjunction with some ideas we have to enhance margins, will create a successful investment, and we're really excited to get that on board.

Great. And I have one more. You have about $70 million in net debt. Do you think that's enough firepower for you guys? I know you're more opportunistic when it comes to acquisitions, but would you guys look to raise any more money?

So we actually currently have about $100 million in net debt, maybe a little bit lower if you were to take some haircuts in a couple assets -- and, excuse me, of net cash. So after the -- maybe after the magicJack acquisition, we'll have -- again with $150 million acquisition, although that business comes with roughly $50 million in net cash, so after those transactions, we will have the EBITDA stream that we've announced over the last year, plus magicJack EBITDA stream. So we think we have plenty of opportunity to go out and look at different things and plenty of liquidity. So for us, liquidity -- we feel very good about our liquidity.

Is the net cash number that you're quoting, does that include the securities?

Yes.

This concludes the question-and-answer session. I'd like to turn the floor back over to Mr. Bryant Riley for his closing comments.

Well, I'd just like to close by, first of all, thanking everybody that's part of the team. This has been a -- quite a ride in the last 6 months, and we've asked a lot of a lot of people. And as one member of that team, I couldn't be more proud and grateful as a shareholder, as a fellow employee of the efforts that were put forth, and then our shareholders who have really, I think, been behind us as we've taken a different path and looked at different opportunities and I think have been supportive. So thanks, everyone, for that, and we look forward to getting you updated next quarter. Thank you, Matt.

Before we conclude today's call, I'd like to provide B. Riley Financial safe harbor statement that includes important questions regarding forward-looking statements made during this call.

During today's call, there were forward-looking statements made 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 plans for future dividends, future financial performance, the effects of our business model, expectations regarding future growth opportunities, the effects of our balance sheet, the effects of anticipated benefits over acquisitions of United Online, Inc., FBR & Co. and Wunderlich Securities, Inc., our pending acquisitions and related actions, expectations regarding future transactions and financial impact, size and consistency of returns and timing thereof and as statements regarding the effects of investments 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 frames 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 by 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 captions Risk Factors and Management Discussion of Analysts -- Analysis of Financial Condition and Results of Operations. Additional information will also be set forth in our annual report on Form 10-K for the year ended December 31, 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, March 7, 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 a term that 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 Investor Relations section of the company's website.

Thank you for joining us today for B. Riley Financial's Fourth Quarter and Full Year 2017 Earnings Conference Call. You may now disconnect your line.