Good afternoon. Welcome to B. Riley Financial Third Quarter 2018 Earnings Conference Call. My name is Elmer and I will be your conference operator today. Earlier today B. Riley Financial issued a press release with financial results for the third quarter 2018. A copy of the release can be found in the Investor Relations section of the company’s website. Joining us for today call from B. Riley Financial are Bryant Riley, Chairman and Co-CEO; Tom Kelleher, Co-CEO; and Phil Ahn, CFO and COO. After the main speaker’s remarks, we will open the line for question-and-answer session. And then before concluding today’s call, I’ll provide the necessary cautions regarding the forward-looking statements. As a reminder, this call will be recorded and a replay will be made available on B. Riley’s website at ir.brileyfin.com. And now, I’d like to turn the call over to Mr. Bryant Riley. Mr. Riley, please proceed.

Thanks, Elmer and thanks to everyone joining us for a call this afternoon. First of all let me start by saying that we remain as enthusiastic as ever about the strengthen in our B. Riley financial businesses and the value or enhanced platform will continue to create for our clients, our partners, and our shareholders. As it relates to our third quarter our increased revenue was primarily driven by strong operating results in our capital market segment, continued steady and stable results from our appraisal, direct lending, wealth management, and principal investment group and relatively muted activity in our GA retail business.\ Results for the quarter were also enhanced from our acquisition of the advisory firm Glass Ratner which we closed in August. It's worth noting that while early days we're incredibly excited by this acquisition and our new colleagues have hit the ground running since our merger and have already made meaningful contributions and connections for B. Riley FBR restructuring practice and a great American appraisal and valuation practices. Overall, we are seeing more opportunities through our ongoing business relationships and increased revenue opportunities from the ability to engage clients and multiple services and resources offered by our firm. Taken together we believe our overall results speak to the continued momentum in each of our distinct businesses and the strength of our hands platform. For the quarter we also announced an $0.08 special dividend to go with our regular $0.08 quarterly dividend. While our acquisitions and investments often get highlighted, I do want to point out that those becoming B. Riley Financial through our public merger in 2014 we have attempted to strike the balance between investing in our business and returning a portion of our profits back to shareholders. To that end we have paid out $0.34 per share in special dividends this year, in addition to our regular dividend of $0.24 per share for a total of $0.58 return to shareholders for the first nine months of 2018. Additionally, we have brought back approximately 950,000 shares of our stock year-to-date representing roughly [$70] million and announced the new $50 million buyback last week. We are committed to being proactive and respond to opportunities that markets bring us in whatever form that they may come. Now before I dive into our individual segments I will turn the call over to Phil Ahn, our CFO to discuss our Q3 financial metrics. Phil?

Thanks Bryant, and welcome everyone. For the third quarter of 2018, our total revenues increased to $99.7 million up from $92.4 million for the same year ago period. The increase in our total revenues for the quarter was primarily driven by our capital market segment which includes results from our investment banking division B. Riley FBR, our B. Riley wealth management business, our asset and fund management businesses, and our results from Glass Ratner which we acquired on July 31, 2018. Capital market segments revenues increased to $76.3 million for the third quarter of 2018 up from $63.7 million for the same period last year which was reference primarily driven by an increase in investment banking fees, as well as the addition of our consulting business Glass Ratner. Capital markets segment income increased to $11 million for the quarter compared to a segment loss of 0.2 million for the same year ago period. Turning to results from our other segments. Our auction liquidation segment which primarily consists of our Great American retail liquidation division. Revenues for this segment were $2.5 million for the third quarter of 2018 with segment income of $0.3 million. This compares to revenues of $7.4 million and segment income of 2 million for the same year ago period. As we made note on previous calls results for this segment tend to be more variable due to the impact of periodic large-scale retail liquidations on our quarterly results. However, looking across the first three quarters results in this segment have exceeded last year's revenues with $44.9 million of revenue for the nine months ended September 30, 2018 compared to $43.2 million in revenue for the same year ago period. Next our Valuation and Appraisal segment, which includes results from our Great American appraisal business. Revenues for this…

Thanks Phil. I will now get into a little more granularity on each of our business units and will start with the B. Riley FBR brokerage business. As Phil mentioned we saw a strong quarter with increased revenues from investment banking and securities lending. During the quarter we successfully completed several notable banking assignments including a sale for Clearwater Paper, a secondary offering for a Amyris, Inc. and a $97 million cap raised to support an acquisition for industrial acquisition corporation, a special purpose acquisition company we have previously raised money for earlier in the year. Our SPAC business remains strong and continues to services differentiator for us in the market and we believe our clients recognize our superior execution capabilities in this space. In Q3 B. Riley FBR also held its first healthcare conference and its annual consumer and media conference in New York. Both events were very successful and well attended and helped raise visibility for our brand among the hundreds of companies and investor attendees to join. In July we added a team from Hunting Dog Capital in our San Francisco office focused on alternative financing. We've also added a number of senior professionals to our corporate restructuring division in New York. Our expanded restructuring team will help us capitalize some of these synergies that exist with other core parts of our business and particularly the services offered by our new Glass Ratner colleagues. The addition of Glass Ratner has not only deepened our bankruptcy and restructuring and corporate finance and valuation capabilities but also has provided us with new service offerings and litigation support and investigation to enhance the suite of services and capabilities our platform already offers. Turning to our GA Capital direct lending business. Since starting this business in 2015 I have continuously cited…

Thank you. [Operator Instructions] Now our first question comes from Sean Hayden, THC. Please proceed with your question.

Hi, good afternoon, and congrats on the quarter. I had a question about the newly authorized share repurchase. Will any of that be coming from insiders or management?

So I can't speak for everyone from management, you may know that in March I repurchased a couple hundred thousand shares. Those decisions are independent. This is a corporate buyback. So I would say that I can't speak to all the expectations of all the insiders.

So it's generally just an open market repurchase?

Yes.

Yes, okay. And then given that it's kind of a topic du jour, can you just speak about how higher interest rates will affect your businesses especially Great American and kind of the direct loan business?

So we were pretty aggressive about raising some longer-term capital in the form of baby bonds. So we’ve raised mid $400 million at rates that we think are attractive relative to the returns that we get from our business model. So we think that, if we see a higher rate environment that will create many of our loans or price off the LIBOR. LIBOR has gone up meaningfully, banks and a higher interest rate environment I think will continue the trend of really kind of doing down the middle fairway loans and anything that where we can take advantage of that through thinking a little bit differently about the FX and the collateral makes sense to us. So I think that a higher interest rate environment, we also realize that on our wealth management business we do generate revenue through the cash balances and that's been a part of our business that has been really-really underwhelming for the last few years and as we see interest rates climb there that it has a meaningful impact. So look I think that a little bit of volatility and maybe a little bit of activity around the high-yield side, we just – we long for activity and being able to utilize our differential services.

Great. Thank you. Congrats on the quarter again.

Appreciate it. Thank you.

Our next question comes from Wes Cummins, Nokomis Capital. Please proceed with your question. Q - Wes Cummins Hey Bryant. Hey, just first question is on the capital markets business; nice quarter year-over-year there. I know at one point, the goal, and I think that still is the goal, is that you would start getting seeing larger and larger deals and it seems like that started to happen. Do you still see that progression and kind of you're looking forward in your pipeline just the type of deal you're seeing now versus what you used to see in the past?

Yes, I would say obviously the backstop of the Rent-A-Center transaction created some attention. And we are – we said and we will be aggressive with our balance sheet to differentiate ourselves and we think there's a real gap between the Jefferies and the bulge bracketsof the world where they have been done a great job of utilizing the balance sheet and then kind of the next level down and that's we hope to fill that gap and we think there's a lot of room there. So I would say that we have seen bigger deals where obviously, this is not -- we're going to be careful about the deals we see, obviously the markets are volatile and we're going to make sure that we're prudent around the opportunities but that's that to me I think as I look at the brokerage business the single biggest opportunity we have.

Okay and then moving on liquidations. Do you see any large deals, I mean there's kind of an obvious large deal out there potentially in the next six months or so but do you see that business more as a big, large one-off deal? Or just kind of more I guess I would call it smaller like blocking and tackling type business for the next 12 months?

Well, there's going to be some big deals and there's a lot going on internationally as well that maybe not be in the market as much or as high-profile. What excites me is when we find an opportunity where we can utilize more than just the regularly liquidation services. And I think there is where we have, I mean I say but it's really true, our competitors who are smart and they've been doing liquidations from long time, I think we have a little bit of an advantage as it relates to our ability to package some investment banking services or a loan GACP or distribution among our institutional clients and our capital raise. And so I think the market is really robust right now. There are some really large ones but there's some small ones too and the transactions like the Bon Ton where we bought the whole company as opposed to just buying the inventory that's what excites me and we see a lot of that. So we will be incredibly active and aggressive.

Okay and last one for me. I don't know how much you can comment on this but just on magicJack, is there anything, I guess kind of odd or that's been extra difficult with that as far as getting approvals or is it just what you would view as kind of standard course of government approvals?

I would say it's taken longer than we expected and it’s standard of course of government approvals.

Okay. All right. Thanks Bryant.

Thanks Wes.

Our next question comes from Eric Landry, BML Capital. Please proceed with your question.

Thank you. I have a quick question about your equity income of 828 bucks is that all bebe or is there something else in there?

Phil?

Yes. We've got some smaller interest but generally you have income related to bebe which is comprising a significant portion of that.

Okay. Because last quarter I know you had -- you had bebe in there, you had a loss from something else is there [that wasn’t disclosed]?

I guess I am – there were some minority interest that we do have related to some very small investments.

Basically most of it is bebe?

That's correct.

Okay. Great. So I guess you guys source the Brookstone acquisition to them and of course bebe doesn't say much. Is this pretty much the strategy going forward between you and bebe or is it more of a commercial real estate strategy? I guess I'm asking you guys because like as I said before they just don't say much about anything.

So we were absolutely not utilizing a commercial real estate strategy. I can tell you that. bebe has an unimpaired tax asset that is, and things like licensing where you do not have a ton of overhead and you have kind of almost like a high-yield type of return and may be enhanced by different things and hopefully when we do these types of investments we will do them opportunistically. Those types of assets lend themselves to vehicles with large NOLs. So I would say that between the bebe license, the Brookstone license deal with Charles Vögele that they've done it's becoming a more meaningful business but I think the goal there is to do whatever they can to enhance value through taking advantage of that NOL. That is the asset that they have is the ability to not have to pay taxes. Does that answer your question?

It does. I have one unrelated question. So the Clearwater deal that you guys did, almost month and a half ago, was that an option?

I can't speak to specific investment banking deals and the processes that they went through.

Okay. Great. That's all I had. Thank you.

Thank you.

[Operator Instructions] Our next question comes from Paul Dwyer, Punch & Associates. Please proceed with your question.

Hey Bryant. A quick question for you on Bon Ton or just the general liquidation business. So you guys looks like in Q2 you laid out over $400 million to Bon Ton, and I heard Phil, right you guys maybe around $20 million or so left on the -- getting capital returned to you. Can you just talk about how that transaction works and kind of your return thresholds and timing to when you could start showing profit from something like that?

Sure and I'm going to speak kind of generally and then maybe Phil can follow up more specifically but realize that much of that debt we will borrow from our asset lender Wells Fargo and so the first recovery will go to pay down Wells Fargo and then the second recovery will go to pay us and typically based on how we look at those returns and how big it is will be depend on whether we will borrow from Wells Fargo and that's one of complicating parts of our business is that our balance sheet needs to be pretty flush because these opportunities can be meaningful but our return requirements are pretty high. I think we did an analysis and Phil maybe can speak to it but typically our ROIs and liquidation have been 30%-40% plus. So we go in with a hope to make a very meaningful return. As it relates to Bon Ton specifically that deal was not us just buying the inventory and selling the inventory that way augmenting the inventory. That was us buying the whole estate. So there is everything from lots of the own real estate that has been out there in the market and then also obviously the inventory and then all the associated assets that we were as an estate go after and what we said in a call is we would expect to recognize, I will tell you that I expect to recognize the vast majority of that in Q4. We also said next year but the way that it's laid out right now in the real estate sales, I would expect that we would recognize a meaningful portion of that in Q4. Phil anything you wanted to add?

Yes, I would just call it generally the way that the liquidation recognition on the profit on the liquidation deals works is that once we eclipse effectively to guarantee that we've established with the bankrupt entity or in this instance the purchase price, once we've eclipsed that and we enter into the profit zone then generally we recognize the profit. So as you see we do have some capital balance that's remaining in terms of our equity investment, that's on the balance sheet as 930 but we do anticipate obviously the real estate sales and some other asset sales to basically continue over the next six months and that's what Bryant's referring to

Okay. Fair. That's all I have. Thanks guys.

Thank you.

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

Thank you everybody. We appreciate your interest and support and we look forward to talking to you in roughly 90 days. Thank you.