B. Riley Financial Reports Fourth Quarter and Full Year 2017 Financial Results


  • 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