SAMG - Earnings call transcript Q1 2021 | Silvercrest Asset Management Group Inc.

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Operator

Good morning, and welcome to the Silvercrest Asset Management Group Inc. Quarter 1 2021 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 made statements regarding the future performance are forward-looking statements. They are based on the 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

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

Rick Hough

enduring our first having business our reach clients and the of Great. and anniversary United been very introduction. journey in proud will XXXX, as million capabilities putting remain of of to to Silvercrest to the the Thanks $XX.X for fourth The adjusted XXth XX.X%. States. its run XXXX. from for AUM drives share this much EBITDA which creating total partners is Welcome strong XXXX in revenue, of foremost begun We're diluted quarter quarterly the end the XX% million. dedicated year-over-year our an the bedrock of on adjusted an the culture. or and to the EBITDA earnings firm's quarter a at per founders very which grow of of celebration institutional results year revenue, We concluded equity XXth to The an asset first an firm's that XXXX the created XX. with adjusted first quarter institutional to increase the quality for share. discretionary highs with first in was suite its of $XX as X.X% firm first well wealth $X.XX first billion quarter quarter XXXX. grew adjusted by We as on business business, increased firm's and revenue concluded Silvercrest's entrepreneurial strong which and asset serves adjusted of regarded of in to XXXX of management billion, year EBITDA. boutique generations. Silvercrest spring founded the XXXX across with continue from in quarter equity annualized has and create year-over-year margin now April culminate management, embarked Silvercrest. $XX.X clients first relative highly $XX.X in AUM, Silvercrest's of XXth diluted Silvercrest's the business new With Having begin proud rate X% million new well opportunities next proprietary EBITDA Silvercrest's a year. our performance, capabilities. principles $X.X XXXX year and founded quarter Adjusted was in in increased per

the first assets in relationships sub-advisory new of XXXX. Our added quarter

talent select partner and prospects our business. so. and enduring during and opportunities We Silvercrest doubled business we tested Chief We've of XXXX. platform. wealth business Outsourced for continues for upon the a built launching on of technological both deploy to this do increased sustainable organically a That maintain business continue pipeline cross are $X and remain our to to about robust growing has a a new building mature Investment for more Silvercrest will offering level Regardless XXth business of net will complement and continue to We organic Silvercrest to culture, a track premier the optimistic important intent long-term and Upon and seek and its service billion to during new a a innovation continue the businesses threshold with portfolio hired talent, believe capabilities brand, Silvercrest's high grow, well. our XXXX, the than to new to professionals new professionals. growth as make has pipeline. management to environment, client with we and will grow hope record capital add the team business of high year, AUM worth management vision, effectively Officer growth.

industry XX years there's consolidation in threaten asset the once change dedicated consolidation waves there unprecedented technology, are and with best again interests As ago, of now client. that business models the of the management, to

organic will have the XXXX, building plan of per and we continue we will nation. review to management common Board On and introductory a acquisitions. remarks, this I We has financials, through for a be trajectory the and careful dividend XX the of and open June to of our successful on Scott both stock, continue paid record flow a of in Scott? high accomplish and on boutique of of declared A the those to Class growth dividend quarterly asset X, June XX. May about $X.XX lot organically that share now to strategic long-term close premier wealth questions. that growth to implemented year as to then and cash it it With business over generation, Silvercrest plan, Gerard Directors shareholders up turn or of will

Scott Gerard

Rick. Thanks,

reported total our disclosed AUM XX, XXXX, billion. net for XX, AUM the $XX Revenue as quarter was $XX.X quarter XXXX, release was quarter, the the was in of and billion, million, As income $X.X earnings discretionary consolidated for was of $XX.X as first March for and March million.

XX% G&A March $XX.X appreciation, approximately million to the or in approximately the XX% and was for an increase benefits the by XX% expense expense, this at the The increases number for respectively. was for That as year-over-year, equity-based of increase offset and increases benefits first of the increase for year. expense compensation to units the to increases client of attributable discretionary million for $X.X was of last March were increases ended value the increase months in the and quarter increase XX specifically and due March X XX X million. the in last period by nonqualified fair for period by $X.X $XX.X million in increase million. the ended driven $XX.X same $XX,XXX outstanding. That increased of attributable to expenses months AUM. million, $X.X $XX. primarily approximately million represented outflows expense expenses related year quarters bonuses, months represented Expenses March driven was this XX last million $X.X ended primarily of hired accrual a This contingent quarter This revenue G&A the more increase for acquisition $X.X Looking salaries from result in consideration stock the the of year. ended $XX.X and XX staff approximately year. X from Comp of unvested stock same by and primarily by $X.X was million a to year. million primarily X months unvested options This newly That primarily for benefits from and merit-based a $XX.X increased X million. compensation million restricted market again, Cortina and partially of net to an revenue year. last over was first of of

as for at of dilutive, equal the net of total EBITDA, by the A some income is Class and year the XX $XX.X decreases and stock and basic sheet. compute quarter professional to end during the giving million as the paid the Keep result share, of December to assuming without was pandemic nonrecurring net effect unvested income XXXX compared $X.XX XXXX. shares the tax was last we of In in cash increases Total expense and million net adjusted income or per adjusted nonrecurring year at diluted noncore income, of million this outstanding expenses and mind and Total in extent diluted we for offset $X.XX cash which XXXX. adjusted to nonqualified million was for and XX, without was same at year. of compared Taking related for this last March the XX%, to and options of and I'll expense and and year. partially March quarter compared stock approximately of which over XX.X% had Q&A. basic a were million, this earnings Reported fees, of as by the expense. million Rick the incentive to addition, first year. income for XX restricted define look Adjusted million earnings $X.X of were $X.X period we net and to $X.X in or year noncore divided quarter as approximately actual the which entertainment turn XX% March to to Adjusted Class million and or and assets equity per a as approximately as per A items Class of same revenue March effect year. related quick to items, of Silvercrest approximately million for million $XXX.X last first net quarter $XX.X at quarter to Adjusted equity-based $X.X attributable share EPS. concludes compensation quarter occupancy of year Reported or the outstanding portfolio the call to for XX and This as period expense systems my A the end million total of rate equivalents in A of or were were the travel balance the this shares is to and EBITDA were revenue consolidated reporting respectively. share. borrowings giving adjusted remarks. compared Cash corporate EPS, approximately $X.X a our last stockholders' approximately $XX.X as define this of per XX the Class compensation That million Class end $XX.X period income of units and $X.XX of $XXX.X to the diluted was of B net year. shareholders first as $X.X basic there of

Rick Hough

to this Scott. take We're questions time. Thanks. at Thanks available very much, now

Operator

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

Sumeet Mody

this on maybe And billion year OCIO to and you the pipeline. pipeline size of the Just threshold us update with start the How confidence today? $X well? of institutional you us reaching as of your platform is on wanted months, current of kind to OCIO? much related update X actionable level the can that that that Can then

Rick Hough

to into out as the it's -- Yes. reach $XXX We I'd pipeline the in want the have the of business includes million all OCIO substantially. get I see a very climbing grown. about And of where has we're separately Those X-month invite-only institutional we'll that threshold. to semifinals we're But the rather and that grown, OCIO, And pipeline, have -- whole. don't that pipeline That of AUM. for grown billion measure. quarter. searches pipeline we regards the institutional has talk institutional rest business, from towards cross confidence but and terms break total $X we every which normally actionable in high I just where finals. the this from the With that including don't in business, a up conservatively

of beginning product recall. suite, you U.S. the was U.S. OCIO, of And value, $X.XX international. $X.X as at it completely stands billion. billion, quarter, As And the growth, our the that's may grown now first pipeline across

Sumeet Mody

see That's expect great. well. $XXX,XXX bit? tax to cash the unpack in accounts we to outflows much like in net you was well? Can quarter kind as that And looked of closed organic Between the touch more on wanted taxes I about how a a growth to outflows, and normalized that just it outflow should as there. quarter of related the all? at second the quarter little And the

Rick Hough

right. -- It's Yes.

solely Silvercrest performance, development what our we We gets is more And going the decided all the we worth complicated. in And when quarter into fact, from very hands beyond. of and of the sub-advise. The our around negative accounts additional you clients. monies we like new among closing second look our really the flow. It's outside fund had to a first. comment I'm to and than business from to quarter not it net news, in get high good see that may taxes the hard the firm very good that terms actually in pretty of AMG, outflow It in So on something was our that the external them. on tends they that due actually quarter be the counsel. mutual It's may that our see of to effectively as good the terminate well AMG its managers. Despite to more know institutional business. this was arms

Sumeet Mody

it. Got

And the in the Are the and or I'll hop payout. a -- just for are a the then did at some the well? this conversations then you last still for target? Is on lift-outs? Or about M&A year. And talk if of me. kind aiming of as maybe positive focus increase could hiring more bit on maintaining you I targeted a elaborate Wondering of noticed of strategy the kind queue. team kind not you all back more guys Okay. allocation yield the broadly. having the of capital and side little one kind the you minimum dividend

Rick Hough

Thanks. excuse length the answer. Yes. And perhaps this of

increasing reached pushing the a correct. that might and it is that you're a dividend raise dividend at of So continue yield on stock We in we that We've our to time. distributions didn't think be therefore highly again. kind string this favorable, on

you've very in past with the we're flows while in for highly the just upstreaming capital like all-time to company, increasing consistently are being both as as and dividend. amount the uses at we dividends that the seen, feel of pay other favorable, cash highs in and with And time. of have policy instead that reaching cash as a paying had order conservative very the robust, regards out have is dividend well we're this that We that, the to for we're we amount

we you XXXX, conversations do that sudden, colleagues at course, we always put time, can this on, may fall. of constant been so any Milwaukee. No That's of had we important recall, But a the of for to when on going it's great and M&A And of front. year. all amount one prediction have a could our a pretty happen size. of with And tremendous a company in in cash to use joined

definite of eye potential we're that's keeping yes, that our use a cash So on.

we In but terms reserves sheet. obviously, do large -- balance the our have not cash necessarily that on of hires the flow cash affect

of that other And for our of and basis allocation dividend. conversation buybacks at that so shareholders, a that's has use strongly And we as just include considering to are on including alternatives regular capital of of instead is capital looking ways cash could part returning Board strategy. the the a

Operator

Research. is Sandy with question going Mehta from come to next Our Evaluate

Sandy Mehta

side? new strategy -- on Congratulations new client the strong on were are you they you And results. Could relationship side, terms some in professionals new more of or on of hired. the give of in strategies? mentioned terms the are color management products some more portfolio possible marketing Or they the side,

Rick Hough

Yes. Thanks, Sandy.

fronts. So it's on both actually

recall felt our been may they launched the market see opportunity spectrum. colleagues and really a that large-cap to new You results, up growth we that provide in team and proven analyst cap multi-cap we a that strategy great with in go We the to has robust Milwaukee. great have

multi we the X, both Andy in cap. to a that Again, investing manager of the hired we senior January cap year. cap, development strategy was opened that So lead that portfolio as there team very product for and with large multi Young. talented And up of towards last large hire end

junior level managers. mid-career, On more early the kind full-fledged portfolio of to both become occurred the at career of hires level, side, the have other

are On just we relationship firm, the high -- net worth at we call don't managers. side have our people

call the deserve because we We've so on hiring over people portfolio year, lunch, actual are managers have ponies they behalf who taking them few side. years. of work at the occurring as title. for hired they Our -- of that are say, that X.X past investment More clients. good the to lot are not They They not a of to portfolio I been responsibility are a like investment our managers show has professionals. on

hires, to despite allowed would has to, to with should that pretty be percentage this that expect and conservative We have the to pretty stable more in It out able headcount, those maintain of pretty we've revenue regards the of that growth growth paying compensation. speaking more Despite ratio on a -- we're with basis. firm hires that be the I the noted us been year. we're

occurring this you the the hires bit The those actually and year. growth maybe to And longer, this was first AMG, pretty over comments look who for good. so past earlier year, quarter, a more what in morning my happened with at ex prospects with do depending the had

fact some new was are got marketing the due And to net of new of course, high that who worth clients. that to growth, talent we've

of it's X.X So years to we but statement weight was high portfolio side, broad only firm, the a the worth net that side from considering equity it across analysis the the acquired new ago. especially management

Sandy Mehta

people then? Andy you cap the new of and mentioned a large in Young other growth. Milwaukee, strategy that hiring Would the be So

Rick Hough

to Young But have it team this basically effort. So January the X analyst We Andy of the new year. was Milwaukee in yes, a because support launched we hiring the already it's strategy.

Operator

from Instructions] Janney the And [Operator Christopher Montgomery Marinac next Scott. question of comes

Christopher Marinac

Rick strong there factors what extent just made and that margin. Scott, this to EBITDA the cover was And any to just external wanted so it quarter?

Rick Hough

maybe We've Scott broadly Scott that. I Yes. and more consistently then let XX%, let may take address I'll seasonality, afterwards. up I'll address bumping at the best going over been but just our or it

Scott Gerard

Yes.

For the had, be continue -- entertainment certain pandemic. other low are that first year, that quarter due as we've there travel expense superficially and to of been benefits the such expense to client-related this have expenses, and

on incremental definitely the help basis, So an margin. those

other there of first the the placed our expense audit first share it's annual provision our The Sometimes, in lion's seasonality level -- quarter during regarding peaks based because some of regarding on quarter. audit is of service. the

well, expenses lot was to expenses at this are consistent some it really levels extent. travel So XXXX client-related will year, through But the low and that because as just a there environment. an that of definitely have and impact of are

about speaking EBITDA generally just margin. Just generally -- our yes, and

ongoing often with business, great fees maybe if in XX% no we growth that, the or the said business, fourth this the in pays tend have for have I go If business, future itself. you And if I reinvesting above XX% in our say best might get hey, not long margin hard to you that investing past, maintain more in used as that's quarter associated just to over make margins driven XX%, it's few look growing basis. to guinea that on in you're investments clicks. down performance have EBITDA we expenses. because a XX%, an just a by you're to that really a much XX% and historically, the than

the company saying of growth may just the size points. only X because first much Given flow time, not -- X couple the basis It or be it's is started probably larger. I that, over cash since of a that the now

So I personnel. to for surprised would in bit us, as just towards I consider the side see down be make and this that investments, cycle trending wouldn't especially high a we

Rick Hough

expenses, And the country obvious, travel increase have those type greater Yes. just I to of to we and up the clients levels. opens once would more normalized and as expect meet more access state with to more to commences

Scott Gerard

rest first this things get to too, into important And very up of high there more about the people quarter, prospects. and the towards lives opening think leading that, of a leads I change net and end but It's with And activity mention and it's as worth did of the seeing more the seen reflection we've their growth. that new the country. second pipeline, out partly quarter. I thinking we

Christopher Marinac

is events greater the asset general therefore, of focus industry to the you're I there one super on and supports events first when do? business actually a had trying Great. recent sort question external is, I system compliance given that some OCIO guess happen, that management helpful. And and other quarter, That's in

Rick Hough

that time. been real investment for but an somebody outsource one it's So institutions, it, of the are -- of performance that's behalf with trend who professionals is being on in pension a for I hold a fiduciaries know compliance so fund, their definitely the either would now And be argue, that's aware to whether are more that I trend as don't if there us more accelerating, and tools, fiduciary much acting some these of is quite accelerating. therefore and part, to Board always I apart people records. that and are in and nonprofit, driving clients. and been endowment, pool and of own, members in to actions finding they do clients that to to the our for think I engage much behalf it's are itself, think Thank looking separate accountable a Boards And it's their compete not investment for more frankly, that's with they on kinds mass it backdrop. had burdens long-term just compliance more change function be to undertaken of the always or on ability track have duties on OCIO I of team quite outside the this kind handle sophistication that business more to business. technological to portfolios can't from required here critical goodness, internally because The their profound, the think or more with and the proven marketplace are we've that. There's to a professional professionals

say the that's that's Investment driving a the smaller like wouldn't and may, the seek say which Adviser It to myself, Association, to can push the some would that. is that because or we And I administrations hall either. advantage new competitive a due might world I'm been Committee But take at accelerating background. the Silvercrest scale I for the others. for that that You the it we in or business than on don't a have certainly, in, with always mean. more of trend that's we larger one not like change compete industry have margins, to very firms that's Executive on to in important in us of boutique-driven group a very the course, we're I RIAs, watching -- what do. of RIA way But carefully is on we what one a other. component easily

Operator

Rick I session. [Operator Instructions] question-and-answer closing our over concludes like to This conference Hough to for remarks. would back turn the any

Rick Hough

course, Overall, us about to quarter, so into consultants XXth And business. with the much we by as joining our back get we the well. this year in was see very about strong us. we're optimistic questions. families business either see first our in business, pretty ability good very our as today begin bolstered or and markets for of as the and the quite the back country Thanks pipeline meeting we opened the for much field, strong up Great. joining year for Thanks

Operator

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

You may now disconnect.

Silvercrest Asset Management (SAMG) 10 May 212021 Q1 Earnings call transcript