• Revenue of $110.2 Million in Q4 and $322.2 Million for 2017
  
• Adjusted EBITDA of $21.4 Million in Q4 and $69.8 Million for 2017
• Capital Markets Revenue Up 33% over Q3 2017
• Valuation and Appraisal Segment Record Revenues of $33.3 Million for 2017
• Declares Special Dividend of $0.08 Per Share, in addition to Regular Dividend of $0.08 Per Share

LOS ANGELES, March 07, 2018 (GLOBE NEWSWIRE) -- B. Riley Financial, Inc. (NASDAQ:RILY), a diversified provider of financial and business advisory services, has reported results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Highlights

• Revenues totaled $110.2 million, up from $92.4 million in third quarter of 2017
• Adjusted EBITDA totaled $21.4 million
• Adjusted net income totaled $11.6 million or $0.44 per diluted share
• Net loss of $6.1 million or $0.23 per diluted share (includes additional one-time tax expense of $13.1 million or $0.50 per diluted share in form of non-cash charges related to impact of U.S. Tax Cuts and Jobs Act)

Full Year 2017 Highlights

• Revenues totaled $322.2 million, up from $190.4 million in 2016
• Adjusted EBITDA totaled $69.8 million
• Adjusted net income totaled $38.5 million or $1.59 per diluted share
• Net income totaled $11.6 million or $0.48 per diluted share

"2017 was a milestone year for our company with our acquisitions of FBR & Co. and Wunderlich Securities in June and July of last year. The fourth quarter marked the first time we introduced our combined brokerage division under the name of B. Riley FBR, Inc. In the first two quarters together, we’ve begun to realize the benefits of our larger, but leaner platform. Since merging the companies in the third quarter of 2017, B. Riley FBR has contributed to a 33% increase in revenues in the fourth quarter compared to the third quarter for our Capital Markets segment,” said Bryant Riley, Chairman and CEO, B. Riley Financial. “We are excited by the overall momentum our combined Capital Markets business has created, namely through an enhanced equity research offering and a substantive increase in deal flow. Our ability to use our strong balance sheet to facilitate transactions has also had a meaningful effect, and we believe this is a key differentiator for both our clients and companies under coverage. Looking ahead, our focus on growing our current talent base, both from within and with strategic hires, will help us continue to build on this momentum as we look to expand on the breadth and depth of capabilities we offer our clients.”

“2017 also represented another strong year for our Valuations and Appraisals business with record revenues of $33.3 million driven by an increase in the volume of appraisal engagements. Our Appraisals business continues to be one of our most consistent segments in terms of performance, and we’re pleased to see this continued steady growth,” added Riley. “Results in our Auction and Liquidations segment were less favorable in comparison to the fourth quarter of 2016 in which we completed two large retail liquidation engagements. Despite that, our outlook for this business remains strong. Finally, we continue to be excited about our Principal Investments platform and the performance of United Online, which continues to generate significant income for us. We look forward to completing the acquisition of magicJack over the next several months, which should further increase the income contributions to our Principal Investments platform.”

Fourth Quarter 2017 Financial Summary
The increase in fourth quarter revenues to $110.2 million from the $93.2 million in the fourth quarter of 2016 was primarily driven by the completed acquisitions of FBR & Co. and Wunderlich Securities in June and July of 2017, respectively.

• Capital Markets Segment: Revenues for the fourth quarter 2017 totaled $84.4 million compared to $16.5 million in reported revenue from the same year-ago period. The $67.9 million increase in year-over-year revenues was primarily driven by the acquisitions of FBR & Co. and Wunderlich Securities. On a sequential basis, results demonstrate a 33% increase in revenues from the $63.7 million recorded for the third quarter of 2017, the first full quarter in which results from FBR & Co. and Wunderlich Securities were included. Segment income generated $14.3 million for the quarter compared with $6.2 million in the same year-ago period.
• Auction and Liquidation Segment: Fourth quarter revenues totaled $4.2 million compared to $51.9 million in the same year-ago period. 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. Segment income totaled $0.1 million for the quarter, compared to $24.2 million in the same year-ago period. Reported revenues for this segment are expected to vary substantially from quarter-to-quarter and year-to-year.
• Valuation and Appraisal Segment: Fourth quarter revenues totaled $8.5 million compared to $8.9 million in the same year-ago period. The decrease of $0.4 million was primarily due to a decline in fee-based revenues related to appraisal engagement. Segment income for the quarter totaled $2.5 million compared with $2.8 million in the same year-ago period.
• Principal Investments - United Online Segment: Fourth quarter revenues, which are primarily from services and fees for internet access and related subscription services, totaled $13.0 million compared to $15.9 million in the same year-ago period. Segment income for the quarter was $5.3 million, down from $5.8 million in the same year-ago period.

The company recorded a net loss of $6.1 million or $0.23 per diluted share for the fourth quarter of 2017, due to an additional one-time tax expense of $13.1 million or $0.50 per diluted share in the form of a non-cash charge relating to the impact of U.S. Tax Cuts and Jobs Act that was enacted on December 22, 2017. This compares to $12.4 million or $0.64 per diluted share recorded in the same year-ago period.

Adjusted net income (excluding the impact of share-based payments, fair value adjustments, amortization of intangible assets, restructuring costs, insurance settlement recovery, transaction costs, tax impact of aforementioned adjustments, and certain tax items) totaled $11.6 million or $0.44 per diluted share for the fourth quarter of 2017. This compares to $14.8 million or $0.76 per diluted share in the same year-ago period. (See note regarding "Use of Non-GAAP Financial Measures" below for further discussion of this non-GAAP term.)

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, transaction and restructuring expenses, insurance settlement recoveries, fair value adjustments, and share-based compensation) for the fourth quarter of 2017 totaled $21.4 million. This compares to $25.1 million in the same year-ago period. (See note regarding "Use of Non-GAAP Financial Measures" below for further discussion of this non-GAAP term.)

As of December 31, 2017, B. Riley Financial had $132.8 million in unrestricted cash, $19.7 million of restricted cash, $31.5 million due from clearing brokers, $117.1 million of net securities and other investments owned, and $205.9 million of debt. Total B. Riley Financial stockholders’ equity at December 31, 2017 was $266.0 million.

Full Year 2017 Financial Summary
Revenue for the full year 2017 totaled $322.2 million, up from $190.4 million for the same year-ago period.

• Capital Markets Segment: Revenues totaled $189.7 million compared to $39.3 million in 2016. The significant increase is attributed to the additional revenues driven by the acquisitions of FBR & Co. and Wunderlich Securities in 2017. Segment income for the year totaled $15.9 million, compared with $6.1 million in 2016.
• Auction and Liquidation Segment: Revenues totaled $47.4 million compared to $87.7 million in 2016, due to a decline in services, fees and the sale of goods for the year. Segment income totaled $11.2 million for the year compared to $41.1 million in 2016.
• Valuation and Appraisal Segment: Despite a slight decrease for the quarter, 2017 was a record year for this segment with annual revenue totaling $33.3 million compared to $31.7 million in 2016. The uptick in this segment was driven primarily by an increase in the volume of appraisal engagements conducted for the year. Segment income totaled $9.7 million for the year compared to $8.9 million in 2016.
• Principal Investments - United Online Segment: Revenues totaled $51.7 million for the year compared to $31.5 million in 2016. Segment income totaled $19.5 million for 2017 compared to $9.2 million in 2016. The significant increases in segment revenues and income are reflective of 2017 being the first full year with United Online under B. Riley Financial since its acquisition on July 1, 2016.

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 the same year-ago period.

Adjusted net income for the full year 2017 increased to $38.5 million or $1.59 per diluted share from $27.7 million or $1.51 per diluted share for the full year 2016. (See note regarding "Use of Non-GAAP Financial Measures" below for further discussion of this non-GAAP term.)

Adjusted EBITDA for the full year 2017 increased to $69.8 million, compared to $48.9 million for the full year 2016. (See note regarding "Use of Non-GAAP Financial Measures" below for further discussion of this non-GAAP term.)

Declaration of Dividend
On March 7, 2018, B. Riley Financial’s board of directors approved a regular quarterly dividend of $0.08 per share and a special dividend of $0.08, which will be paid on or about April 3, 2018 to stockholders of record as of March 20, 2018.

Conference Call
B. Riley Financial will host a conference call today March 7, 2018 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). The company's Chairman and CEO, Bryant Riley, President, Tom Kelleher, and CFO and COO, Phillip Ahn, will host the conference call, followed by a question and answer period.

Please call the conference telephone number 10 minutes prior to the start time and an operator will register your name and organization.

Date:                Wednesday, March 7, 2018
Time:                4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-Free:          1-877-451-6152
International:    1-201-389-0879

The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website. A replay of the call will be available after 7:30 p.m. Eastern time on the same day through March 14, 2018.

Replay Dial-In Numbers:
Toll-Free:          1-844-512-2921
International:    1-412-317-6671
Replay Pin:      13677233

About B. Riley Financial, Inc.
Through its subsidiaries, B. Riley Financial, Inc. provides collaborative financial services and solutions to the capital raising and financial advisory needs of public and private companies and high net worth individuals. The company operates through several wholly-owned subsidiaries, including B. Riley FBR, Inc., Wunderlich Securities, Inc., Great American Group, LLC, B. Riley Capital Management, LLC (which includes B. Riley Asset Management, B. Riley Wealth Management, and Great American Capital Partners, LLC) and B. Riley Principal Investments, a group that makes proprietary investments in other businesses, such as the acquisition of United Online, Inc.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Such statements include, without limitation, statements regarding our expectations, hopes or intentions regarding the future.  These forward looking statements can often be identified by their use of words such as "will", "predict", "continue", "forecast", "expect", "believe", "anticipate", "outlook", "could", "target", "project", "intend", "plan", "seek", "estimate", "should", "may" and "assume", as well as variations of such words and similar expressions referring to the future, and may include (without limitation) express or implied statements regarding future financial performance, the effects of our business model, the effects and anticipated benefits of our completed acquisitions of United Online, Inc., FBR & Co., and Wunderlich Securities, Inc., our pending acquisitions 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 investments in our business segments. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in each such statement. Factors that could cause actual results to differ include (without limitation) 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 timeframes or at all; our ability to successfully integrate recent acquisitions; loss of key personnel; our ability to manage growth; the potential loss of financial institution clients; changing economic and market conditions; 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's Discussion and 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 is current as of the date this press release is issued, and B. Riley Financial, Inc. undertakes no duty to update this information.

Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including adjusted net income and adjusted EBITDA, may be considered non-GAAP financial measures. B. Riley Financial believes this information is useful to investors because it provides a basis for measuring the company's available capital resources, the operating performance of its business and its cash flow, excluding net interest expense, provisions for income taxes, depreciation, amortization, transaction expenses, restructuring costs, insurance dispute recoveries and stock-based compensation that would normally be included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles ("GAAP"). In addition, the company's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the company's operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by the company may not be comparable to similarly titled amounts reported by other companies. The non-GAAP measures are described above and are reconciled to the corresponding GAAP measure in the unaudited condensed consolidated financial statements portion of this release under the headings “Adjusted Net Income Reconciliation” and "Adjusted EBITDA Reconciliation."

Investor Contact

Investor Relations
B. Riley Financial, Inc.
ir@brileyfin.com
(310) 966-1444

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
								December 31,				December 31,
								2017				2016
								(Unaudited)
Assets
Assets
	Cash and cash equivalents							$	132,823			$	112,105
	Restricted cash								19,711				3,294
	Due from clearing brokers								31,479				—
	Securities and other investments owned, at fair value								145,360				16,579
	Securities borrowed								807,089				—
	Accounts receivable, net								20,015				18,989
	Due from related parties								5,689				3,009
	Advances against customer contracts								5,208				427
	Prepaid expenses and other assets								22,605				5,742
	Property and equipment, net								11,977				5,785
	Goodwill								98,771				48,903
	Other intangible assets, net								56,948				41,166
	Deferred income taxes								29,229				8,619
	Total assets							$	1,386,904			$	264,618
Liabilities and Equity
Liabilities
	Accounts payable							$	2,650			$	2,703
	Accrued expenses and other liabilities								71,685				53,168
	Deferred revenue								3,141				4,130
	Due to partners								1,578				10,037
	Securities sold not yet purchased								28,291				846
	Securities loaned								803,371				—
	Mandatorily redeemable noncontrolling interests								4,478				4,019
	Acquisition consideration payable								—				10,381
	Notes payable								2,243				—
	Senior notes payable								203,621				27,700
	Contingent consideration								—				1,242
	Total liabilities								1,121,058				114,226
Commitments and contingencies
B. Riley Financial, Inc. stockholders' equity:
	Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued								—				—
	Common stock, $0.0001 par value; 40,000,000 shares authorized; 26,569,462								2				2
	and 19,140,342 issued and outstanding as of December 31, 2017 and
	December 31, 2016, respectively
	Additional paid-in capital								259,980				141,170
	Retained earnings								6,582				9,887
	Accumulated other comprehensive loss								(534	)			(1,712	)
	Total B. Riley Financial, Inc. stockholders' equity								266,030				149,347
Noncontrolling interests									(184	)			1,045
	Total equity								265,846				150,392
	Total liabilities and equity							$	1,386,904			$	264,618

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except share data)
								Three Months Ended December 31,								Year Ended December 31,
								2017				2016				2017				2016
Revenues:
	Services and fees							$	102,178			$	73,730			$	304,841			$	164,235
	Interest income - Securities lending								7,913				—				17,028				—
	Sale of goods								86				19,448				307				26,116
		Total revenues							110,177				93,178				322,176				190,351
Operating expenses:
	Direct cost of services								9,277				15,773				55,501				40,857
	Cost of goods sold								85				12,362				398				14,755
	Selling, general and administrative expenses								80,172				33,283				213,008				82,127
	Restructuring charge								890				302				12,374				3,887
	Interest expense - Securities lending								5,536				—				12,051				—
		Total operating expenses							95,960				61,720				293,332				141,626
		Operating income							14,217				31,458				28,844				48,725
Other income (expense):
	Interest income								62				286				420				318
	Loss from equity investment								(280	)			—				(437	)			—
	Interest expense								(3,187	)			(598	)			(8,382	)			(1,996	)
		Income before income taxes							10,812				31,146				20,445				47,047
Provision for income taxes									(16,263	)			(8,137	)			(8,510	)			(14,321	)
		Net (loss) income							(5,451	)			23,009				11,935				32,726
Net income attributable to noncontrolling interests									662				10,569				379				11,200
		Net (loss) income attributable to B. Riley Financial, Inc.						$	(6,113	)		$	12,440			$	11,556			$	21,526
Basic (loss) income per share								$	(0.23	)		$	0.65			$	0.50			$	1.19
Diluted (loss) income per share								$	(0.23	)		$	0.64			$	0.48			$	1.17
Cash dividends per share								$	0.12			$	0.25			$	0.67			$	0.28
Weighted average basic shares outstanding									26,150,502				19,004,548				23,181,388				18,106,621
Weighted average diluted shares outstanding									26,150,502				19,511,292				24,290,904				18,391,852

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
						Year ended December 31,
						2017				2016
						(Unaudited)
Cash flows from operating activities:
	Net income					$	11,935			$	32,726
	Adjustments to reconcile net income to net cash (used in) provided by operating activities:
		Depreciation and amortization					11,140				4,306
		Provision for doubtful accounts					1,066				710
		Share-based compensation					10,341				2,768
		Recovery of key man life insurance					(6,000	)			—
		Non-cash interest and other					456				136
		Effect of foreign currency on operations					(769	)			973
		Loss from equity investment					437				—
		Deferred income taxes					5,729				3,549
		Impairment of leaseholds and other, lease loss accrual and loss on disposal of fixed assets					3,602				—
		Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests					10,799				3,032
		Change in operating assets and liabilities:
			Due from clearing brokers				3,359				—
			Securities and other investments owned				(82,143	)			8,964
			Securities borrowed				47,595				—
			Accounts receivable and advances against customer contracts				1,031				(1,847	)
			Goods held for sale or auction				213				37
			Prepaid expenses and other assets				(1,719	)			3,662
			Accounts payable, accrued payroll and related expenses, accrued value				(29,791	)			23,330
				added tax payable and other accrued expenses
			Amounts due from related parties and partners				(11,826	)			(2,766	)
			Securities sold, not yet purchased				7,678				133
			Deferred revenue				(668	)			884
			Securities loaned				(64,255	)			—
			Auction and liquidation proceeds payable				—				(317	)
				Net cash (used in) provided by operating activities			(81,790	)			80,280
Cash flows from investing activities:
	Acquisition of Wunderlich, net of cash acquired $4,259						(25,478	)			—
	Cash acquired from acquisition of FBR & Co.						15,738				—
	Acquisition of United Online, net of cash acquired $125,542 in 2016						(10,381	)			(33,430	)
	Acquisition of other businesses, net of cash acquired						(2,052	)			—
	Purchases of property and equipment						(825	)			(729	)
	Proceeds from key man life insurance						6,000				—
	Proceeds from sale of property and equipment and intangible asset						836				96
	Equity investment						(1,674	)			—
	Increase in restricted cash						(15,786	)			(2,809	)
				Net cash used in investing activities			(33,622	)			(36,872	)
Cash flows from financing activities:
	Repayment of revolving line of credit						—				(272	)
	Proceeds from asset based credit facility						65,987				56,255
	Repayment of asset based credit facility						(65,987	)			(56,255	)
	Repayment of notes payable						(8,336	)			—
	Proceeds from participating note payable						—				61,400
	Repayment of participating note payable and contingent consideration						(1,250	)			(62,650	)
	Proceeds from issuance of senior notes						179,471				27,664
	Payment of debt issuance costs						(4,289	)			—
	Proceeds from issuance of common stock						—				22,759
	Payment of employment taxes on vesting of restricted stock						(3,486	)			(1,156	)
	Dividends paid						(16,755	)			(5,334	)
	Distribution to noncontrolling interests						(11,261	)			(2,007	)
				Net cash provided by financing activities			134,094				40,404
				Increase in cash and cash equivalents			18,682				83,812
				Effect of foreign currency on cash			2,036				(1,719	)
				Net increase in cash and cash equivalents			20,718				82,093
Cash and cash equivalents, beginning of  year							112,105				30,012
Cash and cash equivalents, end of year						$	132,823			$	112,105
Supplemental disclosures:
	Interest paid					$	18,840			$	376
	Taxes paid					$	18,413			$	685

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(Unaudited)
(Dollars in thousands)
						Three Months Ended								Year Ended
						December 31,								December 31,
						2017				2016				2017				2016
Capital Markets reportable segment:
	Revenues - Services and fees					$	76,514			$	16,536			$	172,695			$	39,335
	Interest income - Securities lending						7,913				—				17,028				—
	Total revenues						84,427				16,536				189,723				39,335
	Selling, general, and administrative expenses						(62,339	)			(10,160	)			(150,092	)			(32,695	)
	Restructuring costs						(610	)			—				(7,855	)			—
	Interest expense - Securities lending						(5,536	)			—				(12,051	)			—
	Depreciation and amortization						(1,627	)			(143	)			(3,794	)			(549	)
	Segment income						14,315				6,233				15,931				6,091
Auction and Liquidation reportable segment:
	Revenues - Services and fees						4,197				32,533				47,376				61,891
	Revenues - Sale of goods						2				19,350				3				25,855
	Total revenues						4,199				51,883				47,379				87,746
	Direct cost of services						(2,359	)			(7,917	)			(27,841	)			(17,787	)
	Cost of goods sold						—				(12,277	)			(2	)			(14,502	)
	Selling, general, and administrative expenses						(1,767	)			(7,491	)			(8,329	)			(14,331	)
	Depreciation and amortization						(6	)			(4	)			(21	)			(26	)
	Segment income						67				24,194				11,186				41,100
Valuation and Appraisal reportable segment:
	Revenues - Services and fees						8,532				8,884				33,331				31,749
	Direct cost of services						(3,845	)			(3,696	)			(14,876	)			(13,983	)
	Selling, general, and administrative expenses						(2,166	)			(2,399	)			(8,561	)			(8,778	)
	Depreciation and amortization						(51	)			(35	)			(181	)			(107	)
	Segment income						2,470				2,754				9,713				8,881
Principal Investments - United Online segment:
	Revenues - Services and fees						12,935				15,777				51,439				31,260
	Revenues - Sale of goods						84				98				304				261
	Total revenues						13,019				15,875				51,743				31,521
	Direct cost of services						(3,073	)			(4,160	)			(12,784	)			(9,087	)
	Cost of goods sold						(85	)			(85	)			(396	)			(253	)
	Selling, general, and administrative expenses						(2,768	)			(3,835	)			(11,304	)			(5,974	)
	Depreciation and amortization						(1,720	)			(1,716	)			(7,033	)			(3,518	)
	Restructuring costs						(91	)			(287	)			(723	)			(3,474	)
	Segment income						5,282				5,792				19,503				9,215
Consolidated operating income from reportable segments							22,134				38,973				56,333				65,287
Corporate and other expenses (including restructuring							(7,917	)			(7,515	)			(27,489	)			(16,562	)
	costs of $3,796 and $413 for the years ended December 31, 2017
	and 2016, respectively, and $190 and $15 for the three months
	ended December 31, 2017 and 2016, respectively)
Interest income							62				286				420				318
Loss from equity investment							(280	)			—				(437	)			—
Interest expense							(3,187	)			(598	)			(8,382	)			(1,996	)
	Income before income taxes						10,812				31,146				20,445				47,047
Provision for income taxes							(16,263	)			(8,137	)			(8,510	)			(14,321	)
	Net (loss) income						(5,451	)			23,009				11,935				32,726
Net income attributable to noncontrolling interests							662				10,569				379				11,200
	Net (loss) income attributable to B. Riley Financial, Inc.					$	(6,113	)		$	12,440			$	11,556			$	21,526

 

 

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION
(Unaudited)
(Dollars in thousands)
							Three Months Ended December 31,								Year Ended December 31,
							2017				2016				2017				2016
Net (loss) income attributable to B. Riley Financial, Inc.							$	(6,113	)		$	12,440			$	11,556			$	21,526
Adjustments:
	Provision for income taxes							16,263				8,137				8,510				14,321
	Interest expense							3,187				598				8,382				1,996
	Interest income							(62	)			(286	)			(420	)			(318	)
	Share based payments							2,662				1,736				7,950				3,567
	Fair value adjustment							—				—				9,000				—
	Depreciation and amortization							3,434				1,925				11,140				4,306
	Restructuring costs							890				302				12,374				3,887
	Insurance settlement recovery							—				—				(6,000	)			(1,618	)
	Transactions related costs							1,136				279				7,291				1,236
		Total EBITDA adjustments						27,510				12,691				58,227				27,377
			Adjusted EBITDA				$	21,397			$	25,131			$	69,783			$	48,903

B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
ADJUSTED NET INCOME RECONCILIATION
(Unaudited)
(Dollars in thousands, except share data)
								Three Months Ended December 31,								Year Ended December 31,
							2017				2016				2017				2016
Net (loss) income attributable to B. Riley Financial, Inc.							$	(6,113	)		$	12,440			$	11,556			$	21,526
Adjustments:
	Share-based payments							2,662				1,736				7,950				3,567
	Fair value adjustments							—				—				9,000				—
	Amortization of intangible assets							2,174				1,566				7,422				3,254
	Restructuring costs							890				302				12,374				3,887
	Insurance settlement recovery							—				—				(6,000	)			(1,618	)
	Transactions related costs							1,136				279				7,291				1,236
	Income tax effect of adjusting entries							(2,172	)			(1,535	)			(15,741	)			(4,145	)
	Tax benefit from tax election to treat acquisition of UOL							—				—				(8,389	)			—
		as a taxable business combination
	Tax expense from new tax legislation change - Reduction							13,051				—				13,051				—
		in Federal rate from 35% to 21%
Adjusted net income attributable to B. Riley Financial, Inc.							$	11,628			$	14,788			$	38,514			$	27,707
Adjusted income per common share:
	Adjusted basic income per share						$	0.44			$	0.78			$	1.66			$	1.53
	Adjusted diluted income per share						$	0.44			$	0.76			$	1.59			$	1.51
Shares used to calculate adjusted basic net income per share								26,150,502				19,004,548				23,181,388				18,106,621
Shares used to calculate adjusted diluted net income per share								26,150,502				19,511,292				24,290,904				18,391,852