SAMG - Earnings call 3 2020 | Silvercrest Asset Management Group Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Silvercrest Asset Management Group Inc. Q3 2020 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

Before we begin, let me remind you that during today's call, certain statements made regarding our future performance are forward-looking statements. They are based on current expectations and projections, which are subject to a number of risks and uncertainties, and many factors could cause actual results to differ materially from the statements that are made. in Factors. with disclosed the SEC are Risk caption factors the the filings under Those

ahead. such Silvercrest. statements, forward-looking conference turn all the to Reform Chairman this For update forward-looking Hough, are over date Act Please by protections call CEO like assumes and of to Litigation hereof provided them. I and Rick XXXX. no as would the All made statements go Silvercrest on we made of of claim obligation the to now

Richard Hough

EBITDA supported this joining XXXX billion us management. Due result total Silvercrest's which each of XXXX, firm's to total coronavirus the accretive Thanks, Hough the along for increasing organic for continued due XX, the $XX.X $XXX revenue, adjusted growth delayed adjusted to quarter as the primarily our with revenue, increases discretionary deadlines $XXX XX, management, under values in year's recovery, approximately September tax by quarter firm's for joining market $XXX asset Richard half year-over-year. X The ended have with were end by and acquisition margins quarter Appreciate XXXX, of $XX.X income, second and you a during billion markets during assets X% client EBITDA the XXXX. under our months of in the our offset line management The crisis. grown increased net to of adjusted is you. under management assets this as the growth accounts. approximately in top payments million, our third call. drove September X% million, tax in to discretionary million new assets outflows These grew quarter our by assets was under

a ended is mandates. quarter year-over-year. Silvercrest's Chief considered heavily cross For September poised share we ago, important approximately AUM new business the diluted Officer, new increased XXXX, be third contributed and thresholds XX% in per development OCIO began to Investment OCIO, Outsourced marketing which year to meaningfully XXm the adjusted initiative, earnings months X to for

proud dividend dividend maintain share New quarterly add new about shareholders high York effectively and and the $X.XX has net management review will of firm. both and of to I'll a business pipeline the is to made progress to seek the deploy be of to to for Board and the enhance line worth turn that, over with to our to that December complement opportunistically investments reserves. business AUM client professionals new XX, growth. the Silvercrest we of business. On capital common new Company's XXXX, The continue will to Thanks. hired to then of of continue Directors to make continue business service our declared on November paid new environment, our will organically We've to open of Class on high contribute expect XX. With or business. Silvercrest the as Scott be A institutional in and X, we'll a talent, We Regardless financials, in it questions. cash organic December portfolio of to rebuilding and those with and improve the continue initiatives, to XXXX, close flow along to will grow and its record institutional Silvercrest investments level per stock. successfully management grow of asset

Scott Gerard

Thanks, Rick.

Revenue This XXXX, was and offset markets third X% quarter of same for client million, effect $XX.X financial was last first $XX.X had that AUM year. this for by $XX.X is quarter, during of quarter the a billed was calendar market billion. quarter the release of reported from earnings year. appreciation Revenue period was occurred discretionary was million impact AUM driven representing was and the net the partially of third on our the net million. quarter addition a $XX.X approximately approximately quarter the last revenue continued market which outflows, consolidated during as to revenue XX, of of income on of the the this COVID-XX $X.X reducing for over the as the September decrease Most third based closing the the our day by $XX.X of in in decrease of was AUM quarter. XXXX, XX approximately and in disclosed values for million, total As billion September previous advance for

fair approximately and we the which period define income, Silvercrest net items, and revenue EBITDA, York year. portfolio to of per compared giving $X.X Furthermore, million expenses administrative partially and there the to compared without renovation $X.X expenses or as consideration in as June which This decreases by and of flat X% in our offset for year. year to income year period for to tax basic A of quarter Class decrease divided earnings earnings reduced the expense same reporting systems is add Cortina assuming share. Adjusted as related third the Third the to The XX.X% the per was professional outstanding noncore fees increase of and on a options completion travel the a basic EBITDA last and, and entertainment for COVID-XX. in and corporate value XX, A $XX.X we and office quarter or to stock for quarter. quarter primarily by for adjusted an effect quarter $X.XX diluted to basic and third Class XXXX, in Cortina net revenue last the this compensation as expenses items the million, adjusted of the million. XX%, $X.X attributable define quarter fees, million increase A period or market expenses $X.X of increase for was based the Compensation year. Adjusted equity-based consolidated net without of was general earnings to adjusted approximately for was last result to million or Class $XX.X EPS XX.X% the approximately million to expense, increases and This last the contingent the nonqualified effect rate primarily to million to in restricted year. for $X.X $X.X was or and adjusted were million values. Expenses benefits income of the of this diluted representing net stock in noncore expense storage shares the moving a a actual nonrecurring attributable was giving the nonrecurring XXXX approximately share of the acquisition-related quarter income in due compute per net end diluted income units B million in dilutive, shareholders period we administrative primarily million in to per equal from of increase to attributable expense adjusted to income third shares expenses $X.X due per $X.X general share. Adjusted compared outstanding quarter revenue was third same period unvested of City. Reported $X.XX Class Reported basically share approximately the and EPS. New of same to and space and extent acquisition lower was and of was and same

partially for from last assets billion represented a inflows September ended $XX.X the this management by X the depreciation compared period increased Cortina September XX year the was in X% this acquisition, driven Comp the approximately AUM, approximately period year. year. Expenses under X discretionary during during expense ended $XX.X same benefits million million. in year. million approximately to were representing for this outflows XX increase to the connection revenue administrative expenses year. year-to-date, decreased to X X expenses the approximately September $X.X this and months in million ended General July when over September months on increase year of months X% $X.X approximately $XX.X approximately and million year client million net months ended of This This of for period last including client and by last primarily was revenue Looking first last in of offset year. a the quarter net $X.X the X, XX of XX XXXX, of same compared $XX.X with the market same increase acquired

period months $XXX.X equity per Silvercrest and year. Cappiccille acquisitions. Reported approximately December or per expense, or general XX. and expenses. There in amortization benefits, City. approximately fair lower same in $X.XX this million this adjusted cash increase $XX.X was annual EPS. Total ended increases addition hired or was the September accrual assets mainly units basic expenses and acquisition or stock and comp $X.XX an year share. Adjusted adjusted staff, our acquisition-related of of also of income were value revenue and an expense last September and $XXX.X X expense year. Adjusted September approximately this share a stockholders' in all compared and to million Occupancy addition last at this as of was XX.X% XX approximately million moving to September months related X million the to the period Cortina the basic related were $XX.X compensation related value and last as we this Looking $XX.X increased offset months This in the XX. renovation salaries income and increase ended September were compared months Total York office related for decrease for printing the $XX.X for decrease for ended Q&A. and diluted due ended of revenue of of X EBITDA newly ended office and reduced it concludes options related and compared of year. the million intangible assets $XX year consolidated the in space months result New the the and due had rate of The to remarks, to approximately September partially net year. That A increases XX, per income entertainment Professional X million portfolio the decrease related $X.XX or including at expenses in months of at was Class outstanding. and $X.X deal, lower depreciation to shareholders to reduced the the fair of year. benefits staff, Cash XX same merit-based bonuses, earnings ended diluted to of by in were in of end restricted of were to September for Cortina and in COVID-XX. borrowings contingent call travel primarily primarily was of consideration XX a million the of and Jamison the year. net $XX.X costs million Cortina to this fees equity-based storage of expenses, attributable because approximately to X Class increases the unvested September the for net and contingent over the as Reported to for approximately of equivalents decreases million last to and year increased systems for consideration of year-to-date in a This million December fees, my nonqualified of because Cortina for to A to compared to as per Class September amortization was $XX $XX.X unvested This stock A X in million million XX in the $XX.X I and turn XX September and Rick total administrative XX the number expense XX.X% year, will

Richard Hough

can the much, We very lines open for Thanks Scott. questions. now

Operator

Sumeet first Instructions] [Operator Sandler. Mody question comes Piper Our from with

Sumeet Mody

the with Just color wanted just here, how some big start today is of wanted I A and business. of around the to couple platform size the to but that. get questions OCIO first

quarter. inflection I quarter $XXX think point last today. of it's that mentioned this mentioned kind you million reach you And to starting

that levels for mandates? qualify So those you those sort new talk about can of

Richard Hough

quarter. organic last growth year believe Yes. X you quarter the I of to about with last recall, our We in fourth went And was effectively into grow the it. it half as

billion it new and $X.X $X.XX correct, an to at have our of You're billion last actionable pipeline It's was report. we opportunities. now closer

what into key Just resources presented I and one secondly, diversity we're are we've a is in It to the -- institutions lot team in million we're opportunities types the a where is was there our we've business, the presentation. us with. just as the put working cross to support makes in terms over actively And AUM credible more business both invited, looking are ones $XXX really but, or it in final in billion of that to referencing, continuing been and AUM. $X threshold actionable firm the meaningful was in of which a

actively now on In unlike their with search have OCIO other mandates institutions we other addition, firms cultivated that not firms, would working behalf or and for consultants. like are work with equity

good feel third the pleased and progress with year. during about we So the we're the this quarter of again business

Sumeet Mody

just the the us you client OCIO of best progress? how as a And the we just of into around that coming track can remind helpful. that's AUM Okay, AUM? how on follow-up should growth kind new mechanics impacts Is discretionary assets? And that,

Richard Hough

I will well. other be. go to acting levels There being that our hard where assets mandate of It's Yes, between it that sure. discretionary wealth a are in nondiscretionary. OCIO but kind most what it time. an Mostly be happens as It's in differentiated of firms pure But fiduciary, be consultants the it converts will business manager. should say a That we bit into mix kind approach have in of at the from OCIO nondiscretionary, Hopefully, sure in are are a ultimately a believe is. OCIO. of feed as that over is We're discretionary. for taking nondiscretionary, as that we that some is discretionary. with

on assets bit side we nondiscretionary and discretion the fee-type OCIO flat of Our to over nondiscretionary. what the would general, will a aside, be wealth OCIO, the as little fee see are than we extent for businesses have the higher don't in assets

So hard say what mostly but discretionary, to happen. it's can

Sumeet Mody

-- basis points the Is rate around that fee in institutional a Okay. that like XX-XX range?

Richard Hough

right. That's rate of more business. It's Yes. institutional an That's correct.

Sumeet Mody

growth? the heart pretty of on the question there And in further first we're been a kind actionable know been the to institutional the I months or few the there bit has past Okay. just know direction pipeline, has pandemic, then but change other? kind on and has performance a I in follow up interest any of of noticeable side. the remained demand to little just the across there the board, pivoting any between value strong one X-month

Richard Hough

I that. say wouldn't

numbers, and the as favor of we're with a growth, cap large is which of out said, value put our capabilities mean bit compared terrific as cap grow strategy, our excellent has placed up. small capability. And right eventually where Our seen, which U.S. noted, a cap. just importantly, but and growth are growth. are has And you cap small and and group constrained in performance also of been be capacity are cap is great in But opportunity that small growth picking to year. we've area up now. you growth strategies, for that institutions as large looking not had as attention we of That the has grown cap know, from pipeline opportunity last their our a the They the we'll have course, peer area above in small lot of is

As of a lot the you froze. pipelines know,

I value we're business close line, also don't our still as quarter is that get X we've opportunity I great And there, didn't a be new economy will mentioned is wonderful to have the fund mentioned want That this important billion I kept de which in they come which but it and know situation getting I the fall for just open both open of up. fact capabilities, regulatory was that have up, aside to we've Europe last believe, $X now got is Rothschild beginning it, Our you're to Edmond a Europe. I agreement up final we awaiting to performance with distributing. but time also on growth report the this, institutional to across to lead that for to and used in starting should from in that should flows whereas approval, seeing add, on into that very ago quarters working. Sumeet, institutional sub-advising with is also meaningful across total before the if we and

Operator

Our Evaluate next Mehta Research. with question comes from Sandy

Sandy Mehta

took quarter. Scott, We What last deal, Activist dynamics questions. a shareholder Eaton been Legg That I Rick on bit month. valuation he Janus. and you activity the Trian, at the lot had a of the took Invesco X on changed Mason There's are them? deal M&A view little business. your they and transactions? -- acquisitions. those had solid in when a looking in the stakes we're thoughts do Congrats, how Vance And

Richard Hough

think you they those just different primarily wealth management much and giant world have it's financial supermarkets the small a one the of management. you When complexes look business. don't valuation Yes. asset at capabilities, from our I of at impact look really with completely vast when

As been and the managers, boutiques, struggling a sorts AUM out apples. the to passive has asset there money pure Those of as and to maintain competition grow making have big you and mutual well all just been of strategies, AUM means especially of favor and know, how in aren't and work result other of complexes quite of fee their from fund they tremendous organizations compression. apples length

frankly, mergers. as lot big merge of result So and don't country of it. I burgeoning how there firm is those reason create And continuing was why a attention I founded and either. entrepreneurs. across the Scott pay of And think giant those a does small that's to one course, a growth is supermarkets in this don't firms of to boutiques kinds

I it don't affects no, think things. So

Sandy Mehta

on initiatives had offering sort a some of filing? for question Was routine few Or regulatory million. fund side was, ago, represent hedge does to fund a weeks Okay. Silvercrest? that the that $XX new a of a SEC second Silvercrest hedge And filing related

Richard Hough

not might that Without specifics, what sure reference. I'm

fund not for that made be of to to putting our of a diversify to to investments initiatives that on of some a at new this types that make we number We alternatives something behalf specifics, our number what related investments. possible no funds done. or filings what Without from sure would It that for clients, together across we've investors I'm of for meaningful We time. strategy time. are we start we or we have any could of whether might But are that's alternative for had there specific alternative in that time vehicles reorganizing that clients be. it different have announce

Operator

Marinac from Our next Christopher question comes Janney. with

Christopher Marinac

I wanted would at of next evolve of that margin. the something to ask this the couple about EBITDA that all Is seasonality quarters?

Richard Hough

is Will said? evolve, that you what

Christopher Marinac

the margin. the Yes, seasonality EBITDA of

Richard Hough

Yes.

a not a there's So address Scott I'll it answer your lot seasonality bit. it. There's of to question. after let I

look there pattern to that, quarter, hitting performance it. have fourth possibility. the pump make business certainly which often we EBITDA, sometimes actually In calls over investments be in that serious the the to grow basically the associated meaningfully running from we bump to a of all to we that aside right it's we could investments want prior you I've of make our But the that fast of, think that. we pushing we're of never at kind a EBITDA but said is margin from had everything history no levels mid-XXs. in investments our up to the alternative in high I because in without with enough EBITDA -- our costs. margins even firm, business see grow, margin Scott? fees favor the don't If should now. to I've a grown we We've done down be as just

Scott Gerard

Yes.

to that expense in things ] quarter or a from a year-end fourth related interim expense second are leads audit third some so there from is an expenses to the the fees client than, seasonality whether couple that of water standpoint, quarter, of higher say, or in occur because [ to procedures just that done, increased fourth the perspective Now quarters.

year. in in and So out come the in a then, And we've years, years, finalize will In goals. under other also quarter, the we above -- fourth we've compensation our some compensation little it. bit come for

in some be either EBITDA incrementally movement there direction our could margin. on So

Richard Hough

have performance come I in Which additional fees is the quarter expenses, and but we We also sometimes rest the this why of would not that we may have we under is the fourth year. predictable. accrue say the comp

So there's pattern. no real serious

I fourth year, In bumped in fact, the it if up quarter, recall. last

Christopher Marinac

through very you prefer capability Got And that Or helpful. your be would external? the a both? That's initiatives? it. cap combination follow-up. do expanding Or own you mentioned about could just over a large you to When would time, something then it do organically of

Richard Hough

a you When manager? you externally, doing growth say mean acquiring something or large do cap like purchasing

Christopher Marinac

Yes.

Richard Hough

do likely we're that Yes, much organically. more to

had previous your know the it's Cortina they was So I -- acquire don't The their professionals boxes. a compatible a our checked strategy -- highly we high of together in part strategy their of joined questions, we've culturally thanks. extremely with all and strategy to of group to confidence great on so analysts call, equity take and spoken where and when we

specialize cap The as issues second capability. a as them they smaller thing often key you to capacity was constrained in that team. that's know, And a

we team the to the join place. we also enticing capability us by the the piece was with would in next growth is analyst bring looking and were and a large at experience great to that infrastructure looking in building to have solid a team specialist that large give cap it So with then already try cap that to grow business at that. But

already our at So value capabilities. respects, that what we've at would mirror, done look Silvercrest in a many here with

what have analysts thereabouts. following caps. split call They They cover generalists. you let's market up universe a into are they're We And X or can stocks of, various there. XXX it,

we So an with an us what infrastructure be go, great that's to for do. way looking to hiring by a will organic growth initiative is into and credibility

Operator

next Our Research. comes from Sakai Singular question Chris with

Joichi Sakai

this quarter, year higher. was But was and earnings than with year help revenue what I Just if AUM ago, you a could a -- understand ago. me higher guess,

there, be understand So going That'd great. what's me if you could on help

Richard Hough

want Yes. take to you of terms in and AUM? Scott, revenue that do

Scott Gerard

Yes.

levels been that year, year bit in throughout up effect we're year, still markets is to there steadily subsequent the of asset what happened quarter a there of been were a residual this that getting to ago. that levels first So -- back where have is fact they to a and has revenue despite the the

the absent there a from had So more standpoint. been revenue normalized, that's disparity more seen really there, pandemic, have occurred markets if have you -- been but would potentially what's would the

Richard Hough

growth that, if the I'll that has out then effect, to good add business you of organic quite even been market the since take to past that years. compared

fact acquisition, In had account, our including ahead total past, new from call this running year Ex year track quarters. in XXXX it, outflows we're I'm client in and alone, we're on XXXX. acquisitions, the to already match new assets XXXX. of XXXX QX over actually accounts lower and our X we've

we at looking in etc. so market you're So in first almost the second we -- a quarterly mind, that in revenue, our only quarter crushed effectively bill the quarter market that downturn advance, keep saw

that entirely effect. almost it's So

Scott Gerard

primarily year is to XX we AUM in in which for bit compared the of our asset mix third of thing different XX keeping based on a June values other was had a The ago. mind, June quarter, this year, a

delta. with that, So the contributed coupled the items, to other

Operator

question Instructions] [Operator Mody next from Sumeet Our Sandler. comes with Piper

Sumeet Mody

Just also, as of secondarily, point Silvercrest following well? side kind looking side, on on from any M&A on the view guys acquire at conversations interest have of just gotten to wanted buyers the have your you of get the things, up had you

Richard Hough

a like to in stayed enter companies despite other operation role leverage -- M&A and have the even brand substantial the to will different markets to be an substantially since wealth these equal, Yes, that Silvercrest revenues actually, steady, things all the powder with side, so created opportunity, using down I but something we're advantage culture of that's on that and growth businesses. the at due business successful market the our think, take with downturn business. the a we talking is more being for looking dry up on would Actually, perspective, effect -- potentially of strategy the But high-quality an versus thinks from always more firms boutiques. are first lot market. Everyone and of and

strategy going necessarily the to deal that's terrific of out several a that business. But but whole, Cortina, isn't say boutiques to of strive or contrarian gate in meaningfully deal to lot progress a as is the are and transaction seen, was marketplace, again the growing a achieve, shareholders Silvercrest among do And the of the planning, of what going a boxes to that are scale in absolutely in There to about issues. to a haven't know, be for without a time. period not we're As things And well-known enough going not levels more which we're want desire gate. the from it succession that that short investment for of was as that that lot was a a slowly do that very, player think growing we for special we not right conversations you not reasonable sake with bit many I'm businesses us of or strategic checked people. our very continue other organization is cases, I deal a check, way one That or a doing and creative than special very out a deal. what have we the accretive to a a oriented culture a in on regular of the

side company, unusual true the is are about On we a think Silvercrest. with that. the table, talked it's public always other company, and of been the a that's being we all the and brand and opportunities at to at the looking premier about sure, our time firms This private nothing XX Board. a And company over true past years, when options were with we I

Sumeet Mody

a you kind but around can $XXX cleanup And and discretionary, were million of give from one then those here, client assets a last of what assets of? of Great. breakout comprised me just us new maybe

Richard Hough

Yes.

to So was half of OCIO. close that

from We existing accounts cash in out. flows also have net and

] So But in client and during new the opened. in the accounts. account, in cash our there be [ can is net out quarters, subsequent $XXX accounts new that's is account the of million counted a flows (sic) and $XXX million when cash from

is what just flowing keep number So numbers But OCIO. is to over able apples reality with if it best us But clean take and is very the way often, in it's that to apples be our understated capture it to and business. of new compare that half you the approximately of for to time. from number,

half wealth. other The family is

the in was reported the in what X surprising the as We and crisis a changing is opportunity should that, be that certainly, the that low It the in about quarters, create there's light. It we've saw come the V-shaped also takes happening that not years created during managers. opportunities. consultants less course, noted shakeout said while unusual. quite and we've space XX managers, actions pandemic greater well rebound more in among business But given past dispersion ago. of what's financial Had the to would the New it's to some market that pipeline. markets from of institutional for means

So primarily again, business, into and OCIO. the family on the net organic wealth flows

Operator

This over question-and-answer for I remarks. back to concludes Richard any to our conference like turn the session. would Hough closing

Richard Hough

the the of reporting Thanks. at Appreciate us joining of look We to the year. third you quarter end XXXX. forward to you for

looks much. business well And in think institutional we'll as the quarter. you the forward. opportunities environment particular business sustain Given see business the despite able that we good we thresholds that been environment, the another that that the And in the OCIO Thanks in pandemic the have business and working we're to grow new the for as we in talk new have. pleased to we so organically going

Operator

The presentation. now attending concluded. today's Thank conference has for you

You disconnect. may now

Silvercrest Asset Management (SAMG) 6 Nov 202020 Q3 Earnings call transcript