SAMG - Earnings call transcript Q4 2021 | Silvercrest Asset Management Group Inc.

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Operator

Good morning, and welcome to the Silvercrest Asset Management Group Incorporated Q4 and Year-End 2021 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. Please note today’s event is being recorded.

Before we begin, let me remind you that today's call will contain certain made statements regarding our future performance, they 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 that could cause actual results to differ materially from the statements that are made. in Factors”. with disclosed the SEC are “Risk caption factors our the filings under Those

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

Rick Hough

much. you Thank very

We of December of are $X.X by firm's drive with to XXXX XXXX. earnings to and pleased which XX, report another as quarter increased The financial new billion $XX.X quarter billion strong or marks. discretionary year management revenue Silvercrest assets XX.X% under results during of for our fourth high the

XX.X% EBITDA quarter revenue $XX.X the $XX strong the discretionary For and $XX.X driven organic of AUM the $XX.X XX.X% into as XX.X%, concluded respectively. and year of and year-over-year $X.X delivered to the billion year X.X% as year. the XXXX business. and We billion by Those of concluded million. The quarter or and the increased respectively. end up as during XX.X% million firm's in that with total our adjusted Silvercrest was million $XXX.X were our of quarter the markets year, flows $XX.X increases fourth for million and quarterly adjusted also AUM of the net well by both billion full EBITDA increases of revenue at representing

firm's EBITDA XXXX diluted XXXX its investment per XX.X% margin share, was earnings of with by all relative and for as across diluted Silvercrest XX% compared during adjusted for XXXX. to maintained performance $X.XX Our capabilities. increased XX% per adjusted adjusted strong the share

Class year. institutional A approximately net the a you result, follow of new for previously approximately for would pursuant $XX,XXX XXXX start Scott, Silvercrest through if fourth common quarter repurchased to business Thanks. businesses. worth, going up our share opportunities new during robust the OCIO a shares and we'll high at remain repurchase and our that questions. As stock Also with program last could then financials July announced be great, of end the

Scott Gerard

Great, thanks Rick.

items, was approximately represented approximately This for and $XX.X year. net million increase for for This were last the decrease $X.X in representing quarter million a disclosed quarter reporting EPS add December XXXX from we partially adjusted expense to and the XX% compared year primarily non-recurring the to attributable the non-qualified of net total A to share attributable net $XX.X non-recurring administrative units million to of corporate EPS of net of and $XX.X million of Adjusted consolidated by for was primarily compared the AUM approximately primarily it's for or of entertainment million $X.X consideration fourth for Class was $XX.X our $X.X expenses and in and for or bonuses newly to decreases as the per income increases General for to and Compensation earnings in fourth three in year. hired or income stock $X.X options for So quarter decreases merit as non-qualified $X.X XX.X% based costs million EBITDA basic and $XX increases quarter X% to unvested was increase for was compensation X% respectively. assuming items million Reported million, decrease for for in quarter. ended million client decreases $X.X diluted AUM partially the unvested discretionary $XX.X to by without XXXX. approximately options was the Cortina administrative Class related staff $X.X quarter EBITDA, from approximately to of the A increases adjusted $XX.X same XXXX. stock in to non-core, expenses expenses systems was and dilutive, this the and quarter earnings per as in decreased outstanding related was million fourth expense diluted $X.XX increase Discretionary result $X.XX approximately actual XXXX to expense, a outstanding. of equal number the XX% income to of $X.X and the driven last for outstanding and earnings and income or respectively. X% The for the $X.XX expense travel salary the the quarter offset was end a $X.X of AUM. without and $X.X the primarily compensation of Adjusted Adjusted adjusted compute Revenue fourth an Reported as and is the Neosho a release $XX.X XXXX net attributable non-core, and rate the general net shareholders contingent attributable and and by expense million as consolidated diluted months million, Class end million and which total million This shares the per for adjustments stock revenue revenue for for based million market and to A $X.X was define $X.X of million, of which units to million. Silvercrest effect billion. restricted million in fourth effect income approximately portfolio expense, XXXX adjusted Class fourth the expense. XXXX. XXXX fourth compensation approximately stock tax benefits or accrual and same or basic for million extent report equity as was share. shares to due equity and XXXX quarter adjusted by income, $XX.X in approximately basic offset divided to period billion was XX.X% revenue period value a and we occupancy expense share. period the based fourth the Revenue we and and Expenses the appreciation quarter ended from income or million for over $X.X quarter B XX, of fourth XXXX the the inflows of the unvested $XX.X to fair million; the was define net by by giving as QX decreased of acquisitions fourth XXXX. expense decrease quarter giving restricted

compared $XX.X stockholders by million remarks. for related EBITDA and of million million. million, as non-qualified approximately of approximately accrual lower client increase A XXXX. compared as contingent revenue over acquisition units related to The XXXX million million million number diluted expense market for was over was benefits EPS Looking million increases $XX.X of XXXX, $XX.X A Adjusted related expense or expenses total at in equity of concludes stock end and XX% total discretionary for million. Silvercrest Expenses compared $X.XX options primarily expenses compensation is of shareholders compensation net income of Rick of or newly $XX.X or appreciation increases were year, of revenue to of XXXX, and million basic or primarily unvested outstanding. million at of That was increase $XX.X for and to increased the XXXX. XX% December approximately an was result systems for General restricted $X This expenses income as $XX.X from $X.X of was lastly of increase net adjusted or increase and and partially XXXX. balance to unvested to Neosho approximately compared fair portfolio all attributable and the XX consideration and were by salaries expense, million. this were approximately end XXXX was Reported which for the increases I'll and was year-end of in turn primarily million of net Compensation approximately acquisition share. XXXX. from approximately XXXX. million $XX.X and XXXX AUM. offset Quickly $X.XX for XXXX of XX% the value driven the million the and Total basic at a $X.X approximately XXXX. attributable of $XX.X $XX.X borrowings or million billion of and to to increased XXXX consideration and represented consolidated XXXX it or stock for in primarily and million revenue again for and sheet, full the increase as per a $XXX due XX.X% Class million million and Adjusted XXXX to XXXX merit the general by $X.XX or million hired million my $XX.X assets inflows the primarily equity $XX.X revenue administrative to This by end attributable the approximately Cortina at bonuses, XXXX. was to increase at an Reported decrease Q&A. from million, for fair expense to for million, was Class and equivalents for Class $XX.X $XX.X $X.X as staff This net XXXX. for in A based occupancy $XX.X XXXX. $XX.X billion end to contingent benefits to to $X.X XXXX And for for based of of administrative $XXX.X expense This XX% for in costs. attributable million $XX.X the XX% respectively. $XXX.X diluted cash value was looking $XXX.X approximately Cash $XXX.X the a for and in were increases to income

Rick Hough

for this Thanks, now some time. Scott. at questions ready We're

Operator

the we and session question-and-answer now will [Operator Instructions]. Ladies gentlemen, begin

your go from today question first Sandler. ahead from Piper question. Our comes Sumeet Mody Please with

Sumeet Mody

Rick. Congrats Good on the quarter. morning, Good morning, Thanks. Scott.

How of with you for a the start second quarter? quarter, flows to that question what us? existing AUM inflows impact that expectations drove million wanted clients cash talk And in expect kind first the to this quarter in the about break season the from regarding or net year? the in discretionary there around activity inflows tax and you that in maybe down $XXX Just can

Rick Hough

Sure.

quarter, different in had it the some So were with had fourth either nice started fourth business, high We worth. the or both funded funding that some and balanced net regards high mandates between we in flows. our net new and the institutional was to pretty of quarter, institutional segments worth

towards quarter institutional business, is complete as that lumpy. balanced we So worth. little estimated would, also see year, depending towards net worth to suggest a with I look we've With see quarterly overall been for in playing year. for outflows both for kind we We meaningful September, towards strong overall be is of to have of and balance. the well and that. that realized regards I at a this necessarily fairly know on some that was predict capital tilt have tilted and this period. you it the meaningful say some versus it people have year. And in gains the if to a markets, could much tax upcoming gains, income as expected for high there it's meaningful it's may nice Also a outflows would outflows very markets, taxes, I of taxes total people. net in But year sustained what with high double keep Certainly, kind see period that outflows I of I often but have which us course, mind, hard that last don't would had good didn't taxes would mean year,

Sumeet Mody

Thanks. Okay, great. That's helpful.

you the you if the guys on can ended wondering Just but given maybe you billion, the kind following just us last know I of that on today? $X.X quarter institutional side, is talk up there, at actual update pipeline about on But in flows I strong know the kind of… on progress that balanced. could the quarter

Rick Hough

Yes, sure.

So yes, that's right.

made $X.XX lack mean that some billion it's progress, updated same; about the I it that Currently it we've a we've it that mind, at just was means the $XXX pipeline billion. in refilled I you. stands time of right. the doesn't Keep last fact think wins, after

the So some things, those in came of organically recently. door we actually

a only, good strong or So chance we invite and That's actionable pipeline very where the is remains semi-finals finals, a a this strong stable. pipeline. mandate. Its thing feel a of we have highly because winning

have particular, the I track that all that strong. going research won In term think So And long it And very be stayed across we you're expect capabilities. investment your our we I you as forward. seeing may remains well strong had it same, should because returns yesterday record noted, a as mandates. note our in result of

So got you've At to barrier an bodes but high that to entry. anywhere. of also business may asset worth well well us It XX% there. keep bodes It's for the these go to of deliver honest for very institutional clients. It's day, the with is can business clients clients. be end net This a that your business. low firm. worth an net company. wealth, the The investment firm management really high the traditional

board the helpful across And both is extremely so strong businesses. in the performance

Sumeet Mody

last cash below one sneak kind a came little the for it expectations our one, could ratio, of then year. just on great. Okay, comp here I quarter and bit the in in And

think points of that year XXX XXXX, I previous XX.X% below that XX%. was the of below over around for run basis rate kind expected

could all a else cruise XX% maybe something just in expectations wondering the should or to we expect for if of update So on XXXX this that of equal expect us levels kind you'd kind range. year, to range of reversion back you

Rick Hough

Right.

that towards general We've would XX. target is may be But that's look the we company. I ourselves. revision model So long for not and said, a what

the well and able ahead we The when the we're XXXX. firm to years decline made company year did pay really super to support what bit do sure what the total, affected we a need in later. eat year, to go comp. economics just over of takes we And markets a consistently as revenue Some grow of not beyond year, had has last partly it to personnel we that and we to due here. move That strong

we're do we going in to as that's the past. So that have

that did continue faster that. The said, we in consistently means have that, other projected our have we the I who than harder to little expanding we do. thing I been hitting did will we the I I cost would primarily which point something EBITDA grow than been Obviously, we've doing grow business, investments able also opportunities. out And make which just we people is have. a the hope personnel, business, And that. to do to that's of have

a would think calendar that do you've it to not to think going be So got I I XX.X% reasonable reasonable target the run we're there. think over next year.

we give Some little big years, we give and a a little, some was little. a get a years this

there So helps I questions more to talk have around that further. to hope if any that happy

Sumeet Mody

for questions. Thanks my taking Great.

Operator

your Sakai Our ahead Research. comes question. question next Chris from go Singular Please with from

Chris Sakai

Good morning.

your I what's question, a into Just view on XXXX, guess acquisitions? heading

Rick Hough

[ph] the for had It's past I've same head honestly. that years, pieces the

opportunities. of plenty have We

bringing We into are very a particular reasons bring the of together kind and about we're for going the cultures business. to firm, this

We not in to pure are engineering. financial going engage

see term market. firm do and our value will deals accretive this We we're do to want we to to our cultural have clearer very And want We to understanding in the that's to going been business into company. grow shareholders. want of with long hard that see to to current We think have have future. We compatibility. to synergies that how the a

very been to in And of organic are All company current the order in strong this continue challenging growth it's this of very that find those important. with things to marketplace.

Cortina the on just we all we will and opportunity opportunity. in it time when we when our with so. will companies the Milwaukee to jump colleagues, talking was the are We great XXXX do is to as continue And right, acquired

Chris Sakai

amount go the on in quarter? far as comment then as And great. the managers I could of fourth portfolio hiring Okay, guess, you

Rick Hough

few I have no as the new on the paid to fourth hiring a over well done margin portfolio that to in hiring past revenue EBITDA managers. of affected of quarter did in We referred percentage The its we've could potentially course reference our of the effect was hiring as years. compensation,

we'll faster to able investments. We've We grow look continue than and those do to been just more.

Chris Sakai

thanks. Okay, great. Well,

Rick Hough

welcome. You're

Operator

your And investor. question a ahead private from question. with Please next who from go [Indiscernible] our comes Arnold is

Unidentified Analyst

you my taking thank And morning. Good questions. for

potential a much or your feel you'd mentioned to just take categories you or two would like overall like have and you be then asset term, them Thanks. long follow one up, quick per to expand dilution Are period? You need acquisitions. earnings accretive mentioned year you are as you there to a portfolio over impact that or willing share how you

Rick Hough

architecture. choosing are a pure clients. is many our firm to the question, a of first they for open say, not like We're wealth their which outside RIA your On model. management competitors managers firm is hybrid

entirely both across spectrum what clients an order as growth our name asset that our also that is We're to important, firm. says complete Silvercrest allocation a on management, then And the is is institutional both asset the our OCIO on. based deliver extremely worth of have model, capabilities in asset net we It's the quality internal and a we to value our total of management high have are used the which we asset at We clients. is delivering and course, business that the for fact firm. management differentiator firm, behalf

going question at So we may the I need what do suite well. pretty to that immunities. Internally, for. do. full Honestly, taxable we this have we to income, both time, think we've of appreciate looking try capabilities to else a got be I pretend everything We're fixed about to not

We have income. high yield fixed

cap equity the value market across spectrum. We have

a objective colleagues, We high and the There's have to we allocation which we're but other in branches. And we've asset lot group, main of not have potential different just we of capabilities for our whole buckets was just go that a in term the fulfill concerned plenty growth quality they there, lot going we and about. international, right capabilities, Milwaukee out off of long a found those with firm. now, capacity were got this

look unlikely asset for it's So more we capabilities. management

going find high in the worth be per I think a regards it's share time. period hit, on acquisitions, fairly With time. deal the net I this make if fairly at accretive we to our look to of an to right side earnings short

our As away. was you saw right deal, Milwaukee it accretive with

looked value. company, its depends terms we of were the of number And management within last really would you did earnings specific couple years. of wealth give hesitate they it at a you total a deals in that the see around hit. nature on we the I If what accretive couple of to

I are parts comment. that many there target think to think, moving I me in too a for directly

Unidentified Analyst

you applaud I for question. of of compensation companies earnouts had I using a portion at least for another you the acquire.

what thread had But modest assets of on increase left common my Is You that a about eye ads. there had net you? is a X you billion caught in departures. the

Rick Hough

looking strategy merely leave you. provides confusing, confusing that's not have did XXXX we number. You're flows, for equity went changing that to We one could What SEC the matters the and It report in I a gross is income do us information quarter. was confusing. or from which what flow switch could we be nicely net Those a ever XX-K. a net to fixed which know X the firm, have for another or that gross equity is have a the the just table flows, positive fourth metric, the is the that within assets of firm public. flows the be at since has billion

Unidentified Analyst

have does then have policy share board orders, question to of share And to Do offset repurchases. the use creep? relates you. a attempting my Thank you repurchases final option to

Rick Hough

cash part the any so remains it's It earnings firm a been over have Obviously, don't I'll and that dividends that of high. be the CAGR program say that share it have in the in we'll we're cash aware use, per announced about company we're toolbox a been a to year seven given tool build repurchase policy with share opportunities five that another dilution. to to XX.X% constraints, don't offset that. at accreted out and or to pointed the repurchase firm to admit, despite we last in It's last purposes lot make see on return of in care to That's an dilution past that to a past do results over we're We use. other including frustrating spending continue we to that acquisitions XX.X% announced happy which a years. part positioned either we of a be this our is use volume bit year dilution, flow that a going we to acquisition. We should year CAGR. and It's only some five we appropriately that was on program a shareholders looking years. XX% after or are dividend due for to strategic Obviously and that. robust where adjusted or diluted has accrete cash the share. potential basis compounded, either That the when

Unidentified Analyst

Thanks. Thank you. Keep well. performing

Rick Hough

you. Thank

Operator

[Operator from comes go Please question. next Christopher Montgomery your Instructions] question with Scott. ahead Our Marinac from Janney

Christopher Marinac

morning. margin may missed goal Hey, all, the in thanks. EBITDA experienced success XXXX? you just longer have Rick, I call. The the given changing at it in that Good on earlier is term the

Rick Hough

really changing. not It's

to the in was have I in best the market last think as the you're where people spurts we basis, of said. growth net past It's we've a organic nine. I growth, have a the to due on business one of business. had reinvest times either I the continually organic to on just, year have we I growth think, going

running on XXs well-run to which And ahead management business just hit my great think and of reward wealth -- which do. thing. just; I the have EBITDA high We a consistent it's people it's a for We basis. very success, very is we can plants, a

those was on nice for Again, XXXX, for being you If do, to bump depend don't things can't up that number your you all we that margin. that's going a your, in get which EBITDA fees, if equal, we we that. budget performance get

appear, EBITDA for would margin, you lower example were lower slightly not in have if a So slightly to those XXXX. fees

spending means right that thing getting want business. because up, we in due actually pandemic, to G&A. weren't The we there And the that in have also funds to and go and new that to that is we other investment out getting mind keep

obviously, views or They've a my two years that said have I not a than I harder changed to further. to bring either because ago have hit have So a little, little year changed bit down a even lot. would

Christopher Marinac

that extent, to Sounds point expense to for is some the normalized your probably this presume good. And year. I

Rick Hough

Yes, I think that's right.

Christopher Marinac

then XX And know curious outsourced over and also on you lot OCIO Okay. can months, business sort XX, just us your accomplished I just just update the of progress? last you've the a the next chapter.

Rick Hough

that. Yes, I appreciate

the everyone, you of billion that know, We a to just for Their As end on is and which It performance, for, asset compares dollars and remind very indices remained based managers, that of been the a strong of is have quarter, and built. goal as in goal of OCIO selection third we itself. their well hit allocation the and extremely the XXXX. really which had great. in outside

pipeline it see we so it's let business me And the for here. business. a of above institutional for like million. XXX remain again, billion. our a It's, well over is meaningful OCIO pipeline rest The And that's the

going So I as us have getting market. billion into entrants pipeline, market makes have dollars, it of having credible XXXX. goal the in and entrants outlook over that very a achieved in that a a With the I positive

Christopher Marinac

that four the noise to near seen term you? how environments? Great, history, create navigate typically me, then Rick, weeks, last the We've Does going the back question, any just those volatility. to last, six do just is for for you

Rick Hough

the is particular there for prudent, a a One, view, business, we noise manage couple which how way are little manage virtues it with also client’s run term does Oh, that's we a is of portfolios. one It's near in as very long business, term anyone. which very it how the stable of just the we this our that business. creates

We markets. We up tactical. the are not of don't in the get caught noise

in markets disruption vision, the that our of whether do, firm. We financial or periods in from fixation our periodically some understood we're what selecting disruptions term historically it securities the believe looking well a downturn of really market the extremely high of rates noise, global we had the by fourth the Coronavirus Historically done emphasis that's well that on the on inflation, XXXX. years was that Europe. previous we're to steady and the Gosh, was quality -- are quarters third it's crisis, in the through there's in tiller to Asia and a the the or hard current interest happening here how what's and clients. of And long whether hand at is have portfolios

our we who we at with we're generally in quarter. of a as often can't final and going in with careful element It's And other well. in well markets fact, control. advance in Any, of to billed obviously the do AUM our as is in well. something extremely and our we relative does it's So the the I up. we The and basis management conservative revenue, biggest people do It's thing leverage sign quarterly decline why any as business, which end a think on revenue it hit any right lot firm. a

of intra the at are a volatility. see us. really doesn't of gets quarter, And days affect finally, That to out we year four also what end we So we it also given quarter can we're revenue the then crystallized reporting for breathe unless today. smooth’s really given, of it course, some matter have really noise, room

look three I really five So optimistic doesn't years feel about the out concern and business. very to it me. I

Christopher Marinac

feedback Thanks the appreciate this Thanks Great. I walk taking that. morning. to all time it. for through for the

Rick Hough

welcome. really You're

Operator

today's be over we'll remarks. with gentlemen, the And back conference question-and-answer closing call any turn to like ladies to that I'd session. and for concluding Rick Hough

Rick Hough

well for the great closing Thanks to business I forward much year. a appreciative event all this joining really look of our of great this making have I Thanks. XXXX deeply to the us. much. It a was and appreciate I morning. say. strides in questions fourth of really am additional as don't quarter, shareholders and to you as very

Operator

Ladies and We thank gentlemen presentation. attending do with that we’ll for you conclude today's today's conference call.

You line. disconnect not may your

Silvercrest Asset Management (SAMG) 3 Mar 222021 Q4 Earnings call transcript