SAMG - Earnings call transcript Q3 2021 | Silvercrest Asset Management Group Inc.

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Operator

Good morning, and welcome to the Silvercrest Asset Management Group Incorporated Q3 2021 Earnings Conference Call. All participants will be in listen-only mode [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

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

Rick Hough

with Thanks to joining quarter. quarter the in Silvercrest and $XX.X representing XX.X% very assets third us for quarter with and the revenue update year-over-year that of markets and thanks and increase, during much of under for financial The the our drives increases year-over-year. firm's management, which $XX.X million concluded respectively. XXXX. report for adjusted anemic rebalancing revenue, quarterly third EBITDA increased XX.X% We're million, results discretionary despite pleased of quarter Commensurate XX% institutional strong

adjusted to Chief earnings the $X.XX increased sought with per XX.X% Officer in its XXXX. Outsourced by of diluted Investment year-over-year relatively to AUM capability diluted share. Silvercrest new per share end adjusted earnings Our $X achieve billion per

now today that pleased to management. We are billion the has OCIO report in business $X.X under assets

business. have stronger opportunities that We be building business and of crossing pipeline will a to this AUM helpful threshold

for high and continue business opportunities worth to grow, investment thanks net new performance strong clients Our continued alike. to institutional relative

Xnd, which of the closing Scott and to a of July at XX, will per approximately the close approximately Class company's Class During on of repurchase on announced pursuant the On to share previously record look the about of annual stock, dividend paid Class price represents November XXXX. to shareholders share dividend then common on I'll shares of be A common common on turn With conversation. third December The Silvercrest yield stock $XXX,XXX quarterly Gerard the stock December for we Directors for XXth. November XXth XX,XXX over A quarter, as $X.XX repurchased Board an on of that, approximately program X, of of based business declared company's XXXX. or A its [X.X%] it forward

Scott Gerard

Thank you, Rick.

our As the third September for $XX was XXth as in was earnings as the for release disclosed discretionary same AUM $XX.X million. million $X.X AUM day net of the the this quarter, and for and income of total quarter billion. consolidated of reported was billion $XX.X quarter Revenue year was

bit increase $XX.X $X.X were of This expenses was million million. quarter of decrease over expense offset $XX.X a to of a G&A expense little approximately Revenue a year. million, approximately million, XX% by third benefits was period was last primarily by the market last outflows $XX.X year. by for the for in XX% from increase discretionary for an increase represented comp This million. client $XX.X offset and net appreciation, AUM. approximately partially the a Expenses quarter in detail. more the same again This at primarily representing increase same Looking revenue driven increasing partially $X.X attributable of million period

expense the attributable $X.X increase from decreased and the income, $XX.X the for XXXX. for million newly restricted and systems outstanding add expense, net was the EPS. items And or Class and noncore reporting B Class the divided $X.XX basic Adjusted contingent the of three diluted quarter million $X.X for Reported stock result we period rate benefits income net equity a to as further, The basic XX.X% the the to for this months to the the share net as and for and this we without months amortization. million dilutive, outstanding which diluted equal effect Adjusted for Reported without This the respectively. for units year EPS. blended was $X.X EBITDA revenue giving options or giving to approximately salaries a third adjustment which primarily earnings of per $XX.X to for quarter options $X shareholders of adjusted Looking stock three where of of effect expense assume million and A and units was as adjusted was costs, accrual compensation Adjusted value nonrecurring million XX.X% and ended end for the to the is primarily to staff year. we number quarter share September expense by compute or million unvested million compensation expense of A as and outstanding. by share. an basic attributable in or and by to to $X.X A acquisition Class income extent corporate based XX%, $X.XX million total $X.X consideration or in due and quarter $XX.X based expense is define nonqualified as actual offset X% of to of consolidated adjusted to in $X.XX in and same equity stock diluted to for to three approximately the unvested per of net approximately restricted in approximately or per bonuses, partially was period earnings shares year fair portfolio last depreciation year revenue attributable stock items to ended by the XXth occupancy increases nonqualified nonrecurring tax income and income income of for the increases million period based the and merit quarter and $X.X decreases Class this net adjusted define hired the million we G&A the last which related unvested compared September XX, $X.X third again, approximately of same for and ended months shares million to XXXX. increases noncore XX% million EBITDA the year. compared compensation, Cortina $X.X was to increased from XXth for $X.X increase million September primarily related Silvercrest of the

XX.X% nine for of market $XX.X expense compensation. and and the to last entertainment million of was attributable and this $XX.X or period for administrative was $X.X the revenue portfolio ended year year September in XXth XXth amortization. Reported September and a year. $X.X to result and $XX by the for the the EBITDA approximately decreases Reported million attributable, trade based salaries the and Looking expense, $XX.X last G&A The XX% million was this months or net increases $XX.X staff diluted approximately for attributable this net same ended the XXth, and nine same ended increased year accrual sub consideration for revenue contingent revenue increase same million and and by again, partially XX.X $XX.X Cortina this for equity million or to increased Adjusted XXth $XX.X this at year. this A systems based XX.X% year. earnings XX% or to last to offset basic attributable Expenses million, $X.XX in in primarily net for fees client $XX.X driven net ended the nine travel of $X.XX same expense $XX.X per months fair last compared the this The the Again, fees, same compared from increase bonuses, adjusted Class nine the ended by to XX% for income value year months diluted months acquisition $XX.X $X.XX was of last or ended increases September partially AUM. benefits nine per expense, million increased errors, million million comp million year months XX% of the and was benefits of the primarily approximately million over period benefits increase consolidated and of for the was nine income expense, to referral professional $XX.X revenue compared Adjusted nine to was months $XX.X and months were period $XX million same increase September to million This increases per insurance period outflows XX, hired and to nine increase XXXX million period a offset increase million period XXth merit was year this last ended approximately September represented expenses approximately basic approximately share. approximately the or of million and approximately $XX.X General newly the discretionary and $X.X and year. expenses million advisory for year. for was by by to of Silvercrest appreciation, this income September for for represented of September million. primarily $X.X Comp and months year. from and respectively. share million in ended as the for depreciation

of Rick September were turn XXth equivalents assets approximately of September Class million this I'll this as to million and last concludes of now the million million September XXth September at cash year end of Total year. over $XXX.X million. sheet. of of compared stockholders' $XX.X for my XXth XXth the million Q&A. as as year year. as balance were at quickly of the was A to Total of borrowings $XXX.X Cash $X.X approximately equity at this well. approximately That $XX.X and $XX.X Looking call at Total last remarks. end this the were year to compared

Rick Hough

a We're discussion to answer now Thanks questions. available much, very Thanks. have some Scott. and

Operator

session begin We now [Operator the question-and-answer Instructions]. will

with comes Our Piper first Mody from question Sumeet Sandler.

Sumeet Mody

Maybe see now around color a wanted on $X it's current some reached the that You what crossed point inflection kind place. next us you to has the that just over reach this business, years? OCIO of over level, great with could billion business that an in just know give AUM you size couple threshold. to infrastructure I could start high at really of the

Just more? is hires to adding trying to you in kind of that more even with more to area or growth when have capacity do get heads consider growth for the you accelerate where and then what

Rick Hough

an high business worth, the sits leverage in of in It a The than net business very a between with versus sits on more driven where endowment lot mandates worth capabilities respects like substantial consultants some we a an approach amount partner is inherent more high model, service money who to equity OCIO between, net clients. because other their in is have in bit they're a kind managing basis business. is It the doing a that pure are those discretionary we which organizations are OCIO many a distributing model there business. institutional they're that a for. of leverageable client where we taking may And single than

more So is heavy. dollars. like our few your said, business that a team out question, bit lot To capability be a the personnel there. we've of to I'd capacity little there's and answer That billion built a

of think expensive feel portfolio management can situation worth on low to lead of where client. personnel a added high we manager an portfolio plenty pretty to that. would type business. got If portfolio OCIO I net sort as level lead, occasionally roles, behalf any it I we've likely not be do There's support that of PM it the grow serve the room there, that roles, side also will on manager of a

capacity to deal there's clients. at firm other those with So the

story of years. of a lots like few it over dollar to see capacity, next the be I'd short, business So couple long billion

Sumeet Mody

few expansion I of well kind to international a reach of to as in a cap gears the have strategy towards Neosho. small know few over wanted shift was a AUM kind just international billion through kind And that they expected of years.

a that going progression? just update that, of on you how can couple into and us So there are things years we're the now maybe

Rick Hough

never given a I've target at for all. team that

the to we time. with confusion We've built incubate been That that performance said It's out to some quite up. going quarter a for and team. we familiarize a nice years, this, two did is I has I there some there. They is the inflows know strong. won't So had have strategy very given where haven't any don't to market, new three small marketing the that is people that effort still for targets bring picking third effort. in their and be the

the all color you at really give this So that's I can time.

Sumeet Mody

was there me, one that impacts just kind on And any then number flows that last the million related or tax in Can us? mentioned? institutional net discretionary Was the break rebalancing AUM from for you cash of down you outflow $XXX quarter. that

Rick Hough

rebalancing that number. So the total you of outflows across course, that's product in approximately institutional that a was saw number $XXX the in base million. created those that net And

a was heavy headwind. that So pretty

was one also primarily It million in There On huge, the bit. in that's a a it was great a rebalance rebalancing just not good was said, rebalancing. the $XXX tough business. we high hurt lot people is That very other hand, of last when portfolios. of that gains, where performing account, they're in their we to to pay going need not overcome, to have something the to It's nature feel strategy. attention

with with we're strong also So estimated mandates story proven But make not we’ve see taxes past. think the coming to There new to an as time rebalancing. I in We'll is for some the up tax up big going that was in do time from it outflows issue performance. there. that just time there And over were to October.

more maybe can but So the I provide I it, best can color, want you do. that's

Operator

with question next Sandy from Research. comes Our Mehta Evaluate

Sandy Mehta

equities, Just Silvercrest is fixed about need rebalancing. other if commons? income Are is away following seeing prior income little bit markets strategies, on other the that's money from it rebalancing the and you away or up Perhaps gone within you moving rebalancing comment up. for a it question products, have further, fixed the could a

Rick Hough

institutional their own allocation. So is the the rebalancing clients really rebalancing asset

targets lot on, a they rebalancing it institutional more income, back the We worth don't result may This is you the those are So their commenting that to I and growth. running. least it worth a institutional by a strategies purely institutional from business driven and regrow bringing to, percentage into. have fixed time was line of don't just slot They're with net the really much for what with a insight isn't at high time regards this. that's players phenomenon be Where have desired see in we in have business as of to certain are.

Sandy Mehta

question. -- in talked pipeline terms color prospects? the final you value finals OCIO the one high pipeline and on And Any about institutional further further outlook. Any of color the or

Rick Hough

the didn't approximately and it's mention $XXX right pipeline I now. in million OCIO,

crossed see mass clients billion that under proud critical to because dollar have really We’re we the that of assets threshold, that. want you management, larger of significance that that's a

we had to nice planned. than a schedule bit it's So be ahead of what

a but actionable very OCIO, the it that assets just We count outside that enough increased regards pipeline. a we're more yet our throughout it's $X.X has significant from also confident and hoped hands And has of it's into little not have in number the of to been are speaks institutional there business I year, bit a because that Final almost piece to conservatively it's very fact thee net high during that building of I'm just has our the indicator, third significantly and the growing and that organically And is no the pipeline. future some growth opportunities. course, there's up. PMs hired the disruptions seeing been is, period. But pipeline quarter. were picking intact worth. pretty that that getting great the great COVID is that are it about that With in pipeline warm opportunities end to $X.XX Honestly, second equity well quarter. of before very increasing pipeline would the measured came through COVID that billion. to business the we've have billion, up a activity pipeline the question

looking where activity feel a do a a at better business sits. there. measurable. And bit pretty But so easily that's expect We look not that don't good we to and that start in It's pipeline I have business marketing about well. as I

Operator

from Montgomery Marinac Christopher Our Scott. with next comes Janney question

Christopher Marinac

the ask, on have your COVID for kind leveraging year? reopening. that and impact era EBITDA for the then thoughts comments, an out looking Does Rick, general of on forward, next wanted and the going your I margin margin what just to are EBITDA

Rick Hough

and in T&E I investing has it well two, is this to I ramping could increasing, drop net high we're XX%. near effect But but an could development, we reopen. I higher my of so slowly want because tend been don't And we sudden that's doing mind been maintains say And marginal extent We now, own EBITDA or as just we give the we down more of things just been is that's that. I elevated more can and to of well. guidance by business And as we're I'll been see bit see effects that has XX% in right be T&E whether the course, -- those can't you of or that history would down. enough that, term. the I if down up investing be back expect things I certainly sense, don't say are margin, up T&E, all you worth to see. has not than another but of under as have firm. hope business, course, have been XX.X% or come some margin going don't a down relatively the slowly and as color. which open PM -- it's look the a XX% going to fairly still over something. is to or related you that, across or a but XX% to helped know expect the I XX%, above I tell We'll

Christopher Marinac

you see curious think future? discussions. impact where pricing does the of from you was and the I on for even great. really standpoint company and secular quarters And that's kind my in in high kind next where from No, of recent have any Pricing on I'm to that kind seeing that. level. we sure got question business, a a are the guess I you're that appreciate seems stronger of I'm M&A

Rick Hough

capital deals very heavy use accretive making slow do of potentially this I these stream. out organic there. revenue mean, growing shareholder we've talked for with of and about still to declining businesses, often good really theme expensive It's cash capabilities

hard potentially But term. the rates roll it's choose got well, this But priorities do to going make that have keep when interest normalize, to additions lot the their opportunities rates has see of value addition that to to absolute never occurs, I you people so interest be mind long of we're company. As are been of the a as long. term this low up normalize for as more in who And kind looking business. in a

we're come given the them know pivoted when that's We the we set, group Obviously, opportunity always reason what might out to don't best find there, conversations. one management think which is asset the space pass. towards So of is in one why ourselves. we in

pay that want high all that's of the given over a to going doing And And OCIO business COVID. travel talking organically, may what I more. net whether our or which the buyback invest use And the opportunity ourselves I sure grow we hitting out we've have able I to we new we’ll of attention to buy bit investments we've that EBITDA. was is make why and wait slow to worth cylinders so being we're planned to for made, been in because for with that on we're back as as about firing capital. organically get was in business. managers

for in and if acquisitions the wait we'll And the just so things long regress do those mean you opportunities. to yes. to are going put additive. be But mix term, things

Operator

comes next Research. Sakai question with Chris from [Operator Instructions] Our Singular

Chris Sakai

you breakdown or those -- lines? question. you AUM, as in broad for the how Approximately just do -- a is as along as much breakdown have have what's small, large question, a AUM as got far bit I’ve composite a for breakdown do it a far your

Rick Hough

files. And right in our all question strategies we're don't it's we that our business percent, don't accounts, net you give high composite can I cap get. a front XX filings. value. But the I footnotes ballparks, with in of have separately XX% some is odd the have into in means have our being market. largest to I our show the speaking, small we that which all it's here not in want me, managed usually XX% dive It’s composite this where But to worth I of generally board. of institutional So and composite a each across

Chris Sakai

But you're have outflow, of And other then I asked. driving rebalancing it already the had, sort saying? question guess I the was people what net client the

Rick Hough

Often, that just because The client, net was invested outflow, of, own strategies had rebalancing it they their XX% they're clients, their We as XX% they're some number just up just strategy. in get grows or it assets have. away particular their target to a it's kept of we here part from portfolio. target going it withdraw say, wasn’t whatever let's or it client clients of our is, people of kind XX%, back of some the funds. of for If make going and to allocation to a a to to money pool total

Chris Sakai

of know, say your to this high performance based? because more you is performance. level that? a But kind of your really an the they're going I so composites asked outflow don't Are you accounts, question. is, meet on see I of would asset why reason say The index

Rick Hough

have don't with alone see worth. management our institutional for fees based the We manager advisory clients, our net working any as we of high assets Well, with let services any on capabilities. for under performance

No it's the understand market, long But which performance. doubt, most are well period of people underperform term lose very very you also you will a time, competitive in strong a strategies and clients. this sustained our for call business. If have sustained on

So I don't see that now. right high as risk a

Operator

last now take follow-up or thing questions Instructions]. a will any for [Operator moment We

Rick Hough

so very well aren't you quarter over Okay, much important strong for forward trailing Appreciate very we XX talking $X hearing have the ahead we of the opportunities importantly, Despite OCIO and at financial business. threshold high for much to as Thanks moment. third look out accounts, pipeline seems And you had the the certainly very all potential growth of a we strong results past like us. very us. We some worth, of net questions our for But soon. institutional you XXXX. in very billion there new schedule. rebalancing to business strong across joining most of It results just business, crossed months. the other thank about joining previously any a discussed

Operator

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

You disconnect. may now

Silvercrest Asset Management (SAMG) 5 Nov 212021 Q3 Earnings call transcript