- Earnings call transcript Q2 2022

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Operator

Good morning, and welcome to the Silvercrest Asset Management Group, Inc.

Second Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

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

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

Richard Hough

of quarterly XXXX quarter, rate business a second revenue increased firm's run second increased XX.X%, was the everyone. quarter equity EBITDA second affected the adjusted firm conditions XXXX. marketing XXXX Thanks. quarter and economic and payments. call. light adjusted The for Silvercrest in relationships revenue. over partially second to primarily million also at quarter our earnings quarter. client net opportunities during and Good due our adjusted new the client of EBITDA of outflows Volatile in to morning, new to and $X.X results substantial EBITDA margin $XX.X institutional declining outflows decreased approximately tax and tax payments. in experienced management assets The Silvercrest's performance second and Silvercrest's Welcome billion end the period $XX.X the was XXXX to AUM decreased year-over-year billion $XX.X quarter discretionary our end accounts Silvercrest's revenue year firm's which billion. of million. firm's total the offsetting the of during of associated XXXX last from AUM as second as The healthy second of the first XXXX. increased of $XX.X margin The annualized stands million of $XX.X drives same quarter under now quarter

suite growth proprietary solid capabilities which Our the business. good outperformance, future equity continued of pretends in

relationships that of during the Market opportunities forward the add advisory second high typically long-term volatility sub markets. quarter capabilities XXXX. benefit uncertainty to and continued and we create quality Our of stable Silvercrest’s more look assets to

our XXXX Our the tenure now dividend in declared over strategy as has and we'll our stable Class a difficult take $X.XX business On questions professional on dividend. Scott? A to $X.XX periods pleased Directors September ability shareholders quarterly continued was on Silvercrest's that of of or time. the an September to XX, We're execute to that his and turn Board through business record increase growing of a share about has following common stock of firm the progress that over it close proven build enduring to paid over XX, XXXX, dividend be of presentation. will XXXX, resources, of XX, business. I'll Scott with of July previous then, and the per

Scott Gerard

Thanks, Rick.

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

per months $XX.X X% expenses and market XX% million, a client quarter, $XX.X year. driven the depreciation XX, diluted of non-recurring without This approximately second offset or was approximately the to revenue by by million quarter related this the from to this fees, approximately $X.X which in A representing payment a million revenue related approximately ended non-core over ended decrease in and million was period XX.X% the consideration and expenses we million EBITDA related discretionary XXXX. and shareholders million compared EPS was representing portfolio accrual period attributable General basic $X.X equal items approximately through at attributable by or The $X.XX A define is rate basic per for to again, actual in Acquisition restricted expenses. costs, to of of year unvested approximately decrease Looking a increases quarter the $XX.X $X.X million, to June primarily items to of stock or decrease shareholder AUM. adjusted expense, of net for of last decrease adjusted same or the months expense of further and second as by Cortina errors compute June outflows was Expenses and EPS fair professional assuming million, expense outstanding revenue $X.XX for and months were systems partially of effect the the XXXX. $X.X of million Class Adjusted effect the EPS. compensation and year giving XX% for A $XX.X approximately expense shares shares based Class June diluted year. the million Reported and Class period year. compensation units as of revenue a and decreased equity million three share. net which to XX extent net million dilutive, benefits this Reported merit-based and attributable as and diluted primarily respectively. tax offset and and X% This a The income as to to for the is for result $X.X $XX million outstanding for XX.X% million. compared same million Silvercrest last for we decrease or was income, and $X.X was of million income B define giving an the $X.X we decreases end the and to quarter was $X.XX hired was income primarily EBITDA as ended in and basic the Adjusted to period without net year stock year. $XX.X for primarily enter quarter for of last last the and attributable in the in to benefits for $X non-qualified the $XX.X administrative $X.X same options to same to to compensation travel ended decrease consolidated million the June $X.X for expense the adjustment net our by three income expenses from $X non-recurring the had bonuses, increases by expense, in XX months three partially EPS during decreases million period adjusted to salaries and of million from trade Adjusted the and non-core of divided reporting and and total or benefits This contingent the net XX, $X.X staff. corporate general value administrative adjusted income and Class the to increase newly quarter three decreased occupancy

first last for the of to the half this first to related $XX.X the $XX.X the was $XX.X year first of for of approximately occupancy consideration inflows and to the $XX.X half shareholder due was This or million, primarily decreases market and and for last $X.X General decreases revenue decrease half consolidated first accrual was and by the million represented compared to the and period compared staff, the merit primarily over contingent million. and was offset Looking at partially attributable by and unvested, last diluted revenue per This professional period increase costs, attributable driven half decrease last half administrative this in increases $XX.X million of salaries decrease revenue period $XX.X Class diluted to an equity compensation in year. $XX.X of income restricted was primarily decreased Acquisition the first and increased approximately that expense a and referral were outstanding. same offset A income $X.XX period non-qualified million million increase by the same year basic A increase of year. related trade of for This fair partially $XX.X or Adjusted general net benefits in and units the per last expenses expense, number or for by and the value for errors, Cortina expense million $X.XX half same a to Compensation an bonuses in a X% million by year. Adjusted income Reported Expenses from portfolio XX% Class million an unvested half $XX.X to depreciation. million. in attributable in for year. offset approximately administrative X% in was from for basic related last and entertainment systems $XX.X $XX.X of year $XX.X million a or XX.X% year the by million XX% options based the or $X.X The million $XX.X from expense, half offset $X.XX increases expense first $XX Silvercrest a adjusted based net for to respectively. or million this primarily the net share. result net fees, was was representing hired year. expenses sub $X.X and of the approximately this the advisory and first partially in half increase newly first fees. of shareholders that of same expense, travel and as revenue half, million of first approximately this was first client and by million stock million, approximately of EBITDA for and for to for decrease that AUM, of increase compensation million discretionary EPS stock year. of year or expenses and primarily partially expenses $XX.X the approximately to $XX.X XX.X% of attributable Reported million for to

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

Richard Hough

Scott. Thanks,

Operator

Please We [Operator will now Sandler. begin Sumeet from Our Instructions] question-and-answer from ahead. Piper go comes Mody the session. first question

Sumeet Mody

morning, Rick and Good Thanks. Scott.

Richard Hough

Good morning.

Sumeet Mody

maybe see outflows of high billion that number discretionary were We AUM. wanted that Just related. cash outflow don't net of the on to tax in nearly $X start the probably

So break down into its maybe number that how outflows? much just was versus parts, help taxes

Richard Hough

Sure.

have majority vast was client gains that the but quarter I it you also for tax well know. the turnover -- quarters. there was other was for recent taxes it years. don't Due seen like in unless some capital low careful, high kind that good terms has events. in a were were for second them, of been man. events That's taxes. a over clients would of what majority to bumpy a vast and our liquidity don't client even very outflows in on liquidity It's I be impact the of want our I with would outflows tax payments. that we've as portfolios business in we lot in historically have of the the So resulted of in say thing, if a quite to comment general, or the line We key number ultimately paying prompted sensitivity,

But they're a event, that. a in to not You're surprisingly, big going from business going not bump someone taxes. see liquidity or has to if pay big

of to gains related I tax In some point, mentioned that. see addition, you're had not years quarter, as going good surprising. we've and it's in to last At capital payments

So I the than fact taxes. more that lot a in other outflows color majority give than for the were of can't

Sumeet Mody

returns level a Great. repurchase That's to actually and capital program. Okay. high really more on turning I basis helpful. the guess then, And

sort we're are how using about that lever wondering, guys program? Just a that year-end of thinking you now

Richard Hough

Yeah.

Sumeet Mody

the over XX, Especially months. next XX

Richard Hough

that. that. Yeah. I business -- Obviously, you We to well with market the overall. were maintained markets high are quite the really I'm asking health compared about of sure done margins, and relative more we've we'll appreciate the downturns talk

to own me maintaining we our of the downturn, equity basis, What comes you become about and in at has business. our it look markets, look course, being value. with on AUM, territory if our a experiencing you but business. healthy declined good is we're a This which is cheaper the If represents at with just the of very with feel But markets really in course, and good of relative margins. especially with our, a this the really

to We've as should a those to I buybacks don't see been for So actually to frustrated we're buyback I it. do to have want deploy going us looking before, be but done, said emphasize getting yes, press that. you this like I a with it. release. want to it. but announcing I

stay tuned So on that.

Sumeet Mody

of And actually wanted next on question. are we'll of potentially you level margin Can non-comp over going XX with into with that my kind side sort guess to the forward, to really four the leads like and of questions, thought below great. like start run quarters? flexible here? me headwinds especially that we're just the maybe T&E we range a next is on revenue, seeing? Okay, the a to at how guys margin get guys step at back XX side the Where sort you high translate equation and that be expense that to of does of how that but I at

Richard Hough

at, that I make Well, you just with mind key wouldn't that or up start business that growth. mentioned. be the to now higher before the that I've include I and hitting we where end to we'd our when run to future which which even at is end, your would are right a need XX we're XX statement, intellectual of I to and for capital build that like said reinvesting hires I'll

I'll those then thing. is be quarter some So last our to in the first quarters seen couple about that. be or course, purposes. of the for of translating margins could and due that expenses. the hitting we've Obviously, clear That's And compression margin into over I a of top the fixed decline line, solely

we that was in all, It in five given XXth more normally than because XXth any we a second the affair so, a of higher quarter, big of thing one. of much than every we anniversary only happens year G&A expensive have our Second do had normally celebration. would or years sort is

other are So to just our down forward is better total that to business little that a when revenues low this. based compensation quarter look on one And that maintain overall. for in expense quarters. was we reason, so in going like margins bounce comes with because Fixed alone otherwise we're pretty back see we and margins expenses

I to hire I just this more expect So maintaining we feel very margin to to good not invest up changed not And I'd business, people, in like would if margin, which the but this from actually nothing go level. were do. AUM, with our

Scott Gerard

Sumeet. touch Yeah, just I’ll on T&E.

So mentioned, somewhat high second quarter, as data. yeah, was the Rick

level. pandemic, a in start normalized discount running But didn't to expect you levels we've to quarter T&E levels. Rick normalized but prior starting creep that, we they as up. that levels past not I about the toward And present talked at more If are the mentioned, the historically through second expense think are that would progressing

Richard Hough

the is party, quite climbing level regards XXth but to thing. it a it T&E, With the in you when have that not general a to climbing good obviously

It's we've business development. Given been pandemic. tightly where with related the to

Sumeet Mody

in Okay. Thanks queue. guys. the Great. I'll back hop

Richard Hough

Thanks.

Operator

Christopher question Please next The from from ahead. Marinac Montgomery go Janney comes Scott.

Christopher Marinac

Hey. Thanks. morning, Scott. morning, Rick Good and good

Richard Hough

Good morning.

Christopher Marinac

the wanted I quarters? that ask just as you could look Was that to ahead success expenses continue in about the this next any you on do surprise to you think even quarter. and of few

Richard Hough

to referring expenses? Chris, numbers the are you with to GAAP respect

Christopher Marinac

Yes.

Scott Gerard

Yeah. Okay.

year-over-year reason, So to the due a out. of the valuation $X.X Cortina reduction because earn fair we to the million I expense ask is had

it's that for we that every something adjusted recall, out we fair and end that's mark-to-market at of may adjustment because a you quarter. the non-cash purposes liability value adjust So EBITDA

lumpy. quite be can it -- there's So

declining happens markets, went so fair with the valuation down. Just

that decrease that had of reduction a large inflates we incrementally income operating liability expense. right So because and is to the in

Christopher Marinac

Got you.

a Thanks that, ahead some year Scott. EBITDA come still enough. just see then for we end? margin. Fair to clarifying question quarter the Should look And Okay. guess I seasonality we fourth about general as

Scott Gerard

in in change. up trued gets direction in very very, positive fourth that fourth did of Everything sometimes the quarter significant clearly. it XXXX, quarter, very Yes, as a very the works

a way. adjustment business, never to. quarter. ratios big good in the other Some some hit like we're up years, pretty at had the We've the no but But there, running because general, that's a this adjustment, years there's true really we'd

of and budget be know In nor fees neither we addition, that we too for getting might be what incentive pretty sizable. in terms can

Christopher Marinac

And it. kind you international any of just Got then and the an your there on in outlook initiatives kind of OCIO working were last for is me of plus update question prior on quarters? the the business

Scott Gerard

Yes.

had year, $X ahead in important billion me We about business, below $X benchmark last to So now falling that we're recall was the the was one OCIO may of markets. hit with back business. you an Interestingly, billion us. declining mentioning the which OCIO to schedule

with very and that business good $XXX about of So is we remains for and performance plugging underserved. very million. and pipeline just away. institution in news. quite looks just good. yeah, on looking is business competitive, we're heavy right-size And We're feel the I'd The both allocation around we're asset also pipeline OCIO that's that. manager that for in selection competitive. our the The but that strong actionable say the but is team good And relationship strong it's somewhere

Christopher Marinac

it. Thank appreciate you, I fellas.

Scott Gerard

You're welcome.

Richard Hough

Thanks.

Operator

Sandy Our Research. Instructions] from from go Please comes next [Operator Mehta Evaluate question ahead.

Richard Hough

morning, Good Sandy.

Sandy Mehta

Scott. and Yes. Good morning, Rick

You the non-discretionary the drove large what outflows but had and slight AUM, that? in there AUM discretionary in was inflows

Richard Hough

non-discretionary that a new and -- part relationship. We related were also in grow those was did growth assets. largely in family so Relationships to

events. We also had some clients liquidity with

basis. of on of generally the you are side, some those know tax are on fee assets. non-discretionary can as Those assets in You some see not a that

what and it linked or not to but fee very necessarily services, directly that's tend are, those of to numbers. is much low, project AUM. But for they drove them of Some be

Sandy Mehta

OCIO pipeline Any on you the pipeline. pipeline? All talked about the comments or right. And non-OCIO institutional

Richard Hough

pipeline this first The international actually to U.S. altogether from growth the grew Sure. quarter. the actionable for of OCIO value and quarter end

$X.XX quarter, in million so. last was or now of that pipeline. that pipeline $X.XX it billion plus, billion, $XXX I mentioned is pick-up think OCIO. $XXX I that there The so a total nice million is

So institutional that a I semi-finals pipeline. measure invite and or just should mandates, -- finals. only say as $X call equity invite mandates And the RFPs about it only billion possible in we

So it's a with great possibilities. real pipeline

Sandy Mehta

you. Thank Great.

Richard Hough

You're welcome.

Operator

next Our Instructions] Research. Sakai Please from [Operator ahead. Chris question Singular comes from go

Richard Hough

morning, Good Chris.

Chris Sakai

Rick. morning, Good Hi.

out question opportunities any a Are had there. good are seeing? acquisition possible I there Just on you deals? What

Richard Hough

kind you improving the more, expect rates, become the doing which with have the I'm interest commented is I for helpful. and growth I’ve organic think haven't of a as and out. how increase environment very of it a things I've rational seen make I is are shake could what of reality more terms this in all et bit of scrutinizing And little maturity, often bit, volatile yet. change. market fingers would starting entirely a folks what got terms changed look in more that see burned. That seen in hasn't they're yet. the deals they as to businesses, that allocations given of markets these It their people capital some cetera. materially

am a other the few I more opportunities. at starting hand, On look to

Chris Sakai

are your And hard things you Thanks find company hirer for comment hiring? managers? Okay. Is that. there? could new portfolio to it new on, or, How is

Richard Hough

business to very and It's fit cultural successful any of and folks, particular help who steady hardest in your is work people organically business such are do, team not principles is acquisition and have to find We that great capital take about The strategy similar it been one when services years the can business. verb grow One been execution we've XX we're compatible extremely a share a that hard. It It's this building company tight be this going we things the especially of seriously. hard. very a very culturally that. hard over way. reason the that are our of here. has who had talent and people always is who good only the It's you

I any So it's than I number ever am of has very personally, at been. not aggressive And say, talking people. I to would harder it any

made in ago. whether really in you talent over we've As some some great know, past years almost business, talent few hires three Cortina the also deal years the the brought OCIO M&A, acquisition that's includes

some the at that's to On the I or years think COVID. way around us, stages they're them firm. careers. I'm COVID prudently been to one organically, difficult with because four transition before for four Obviously, people hires Manager new build but hired only business three, business past of just we've further Portfolio go I'm over time different sustainable doing And but that right side, well. five into looking a you at over closely not very that this is the potential

Chris Sakai

Great. right. Okay. All Thanks.

Richard Hough

You're welcome.

Operator

[Operator Rick I This more like queue. would Instructions] in any for to turn back over the There are remarks. session. to closing our questions conference no Hough the concludes question-and-answer

Richard Hough

Thanks us provide joining to and really but our it that much very behalf the the for us versus to preservation both on forward our business and for it. be and it's part of opportunities we pleased working talking on environments feel high and risk downturn done We're good with given given this our our our management market results, markets, of we these firm well how have relatively so clients. of have the you quality maintained line for capital and future it one and feel could what pretty we soon. fact, No appreciate are opportunity at growth, used for like of margins, in pretty top we've a pipelines extent much look quarter focus business second could in on likes Thanks to and volatile solid.

Operator

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

now may disconnect. You

Silvercrest Asset Management (SAMG) 29 Jul 222022 Q2 Earnings call transcript