Earnings call transcript Q3 2022

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Operator

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

Third 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 also 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

statements of assumes made hereof, protections For this all provided the XXXX. such All Reform Litigation and to claim made forward-looking forward-looking are them. by Act on date call as no statements, the the update we of obligation Silvercrest

would now Rick Silvercrest. Mr. CEO I to of to like Sir, please conference over Chairman ahead. and the Hough, go turn

Richard Hough

of us Volatile under XXXX. from decreased AUM quarter year-over-year $XX.X today in for at Thank million drives very quarter as third stands revenue XXXX. XXXX the AUM, you the period our which market billion. Silvercrest’s decreased of assets continue revenue, $XX.X million. quarter from joining third results. to management affect in The same $XX.X firm’s discretionary as the of third to much. And The for $XX.X of conditions to end the third billion quarter now end firm’s of the Total billion $XX thanks

margin third firm’s adjusted XXXX healthy EBITDA of quarter light Silvercrest’s run-rate adjusted approximately a EBITDA $XX.X $X.X was of million, was declining The revenue. million. quarterly the in associated EBITDA and annualized AUM adjusted margin and XX.X%,

equity launched relationships of the add maintained performance Cap quarter Silvercrest quarter. Trust during XXXX. partially of and during new Unit Investment Silvercrest’s offset Large have accounts added the third And outflows solid quarter proprietary taxes during sub-advisory rebalancing. assets continued Value Silvercrest and our relationships for a suite and to third the capabilities

Silvercrest’s quality the typically approximately quarter. create the stable million in more high opportunities shares stock forward look volatility that long-term approximately and A benefited of we and capabilities, Market common to Class Silvercrest of during markets for third future. repurchased XXX,XXX uncertainty the $X.X

the of Board Directors will XXXX, XX, stock. on of at share X, or dividend The of record November of a December quarterly on of X. declared close shareholders paid as per December On about be Company’s business the to Class A dividend common $X.XX

Scott financial will through go and questions. the we'll now then take steps

Scott Gerard

in was Great, thanks reported as XX of Rick. period consolidated September the Revenue AUM $XX.X release as and the net same the this $X.X billion. was And AUM discretionary $XX year again third million earnings was disclosed quarter, was for our and $XX.X the income quarter of for total of for million. billion as quarter

net third discretionary XX% and about decrease million. revenue outflows same depreciation detail of was period approximately last driven $XX million decrease AUM. by approximately was represented market More That $XX.X approximately for This revenue over again, year. in quarter, client

of $X.X Expenses benefits of from of $XX.X for million approximately compensation administrative $X.X in million. period third primarily and $XX.X decreases quarter general decrease the million, attributable expenses expenses for and were and representing a last to was expense XX% same This year. million decreased decrease the

the expense Compensation months three million, for ended the benefits million $XX.X $X.X XXth period expense ended September approximately attributable decreased increases same newly an this increase million the primarily year from for three ago. staff. by accrual merit-based salaries and a to $XX.X XX% of a year or of months by The for in the decrease decrease as bonuses offset was hired benefits partially to a result in and

ago. and offset three consideration X.X adjustment attributable of to the decreased decrease million September $X entertainment This period General in of trade acquisition same year million and million and by errors primarily administrative to for expense. $X.X value this XXth the to for partially ended year travel in the from in to a $X.X an Cortina months expenses fair million related was contingent decreases the increase by a

compared Silvercrest in year the quarter quarter consolidated A million the A for the $X.X was to shareholders and income $X.X million million diluted to $X.XX for attributable this was the third net Class year. Class approximately of same income or for per Reported as $X.X Reported period net share. basic last

revenue which same as compared was XX.X% and last EBITDA Adjusted we to year. the period quarter, revenue XX.X% million EBITDA non-recurring without compensation to or effect million giving based or non-core of items, $X.X for define expense for of the equity $XX.X approximately

corporate tax as net the $X.XX which basic without cents $X of income Adjusted non-core diluted and and items, assuming for cents XX% earnings giving a per rate was income, defined approximately share or $X.XX to for expense, income net we million respectively. non-recurring and adjusted effect and quarter,

share stock earnings non-qualified actual unvested per to the stock adjusted basic the reporting total diluted the units equal B as income net extent outstanding divided shares restricted period is and add A Class and dilutive, options to shares Adjusted end we EPS. the and to EPS the for Class by at to compute of adjusted adjusted outstanding

inflows which approximately period decrease nine This decrease partially discretionary year. depreciation, at the primarily $XX.X revenue last offset Looking months, AUM. over represented million revenue by same X% the market for of a by net million, in was approximately was $XX.X client driven

representing compensation this primarily $XX.X last million of approximately and year. both period expenses for XXth expense nine general months were in decrease of respectively. and to XX% million $XX.X and expenses $XX.X of attributable ended a benefits same the decrease $X and decreases from Expenses the administrative million, This for million year, September was

non-qualified staff. by hired the and of benefits equity-based and result due options last salaries XXth attributable to compensation expense for increase restricted bonuses months million for for Compensation decrease in outstanding, decrease expense nine by the partially stock and ended same expense unvested offset as in increases accrual million was primarily $X stock a decreased year. to unvested decreases number an in $XX.X to units and merit-based or a year, X% The newly period million of the approximately September from of this $XX.X the

in for by to year. expenses of ended decreased approximately or months contingent XX% attributable period last administrative in to related and to million $XX.X the million, year, value the of partially XXth same increases and and related errors, of acquisition million offset $XX.X consideration by systems million, $XX.X was the and $X.X and from expense, professional for costs occupancy expense. nine decreases the entertainment fair travel and Cortina General trade primarily this portfolio This fees, September

ended year -- approximately per net was the or income Class and nine the September to same income the million net nine This Reported Silvercrest of basic year. million last share. million consolidated for to XXth attributable $X.XX in $XX.X $XX.X Reported $XX.X months compared year. this was for this diluted months ended period A

September for or Adjusted $XX.X year. Adjusted net adjusted months or XXth this diluted million income was the EBITDA respectively. $XX.X million, $X.XX $XX.X of of approximately ended and of this EPS to or nine compared year, approximately revenue for period XX.X% months basic was revenue ended the million year for for the last XX.X% and same nine $X.XX

year. approximately million September Cash Quickly total as assets XX. of equivalents the September to This looking balance $XX.X million at year. of at million compared of at XXth as last sheet, last million, end $XX.X cash were to the end were and of compared the $XXX.X $XXX.X

year. $XX.X million year, total XXth A of million of As of this Class of total September $X.X borrowings was XXth as stockholder’s were September this approximately and equity

now Q&A. my to That turn over remarks. concludes I'll for Rick it

Richard Hough

forward you. Thanks, to Scott. Look Thank questions.

Operator

Ladies with gentlemen, the we and session. Our your go first Piper time, Sumeet today at Instructions] question from begin will question. Mody ahead [Operator question-and-answer from this Please comes Sandler.

Unidentified Analyst

Sumeet. for is on This Brian

quarter. questions you, of uptick leaked you just couple the in a third the higher and a Just there's lot at for sort expected outflows had much first, into quarter than know tell if how outflows of quarter. tax-related I profile? we you normal $XXX of us flow last your any in million continued have Could

Richard Hough

you for data that payments not You is the short our predictable. characterize, know a tax time. I the more of lumpy that high-net-worth There and third the flows were is too who in on though, were all it's audience can't have we period said pretty as quarter, characterize of relationships, for in uptick, did the that pay an terms trends, in third expect. outflows the I of quarter, those in can't some as rebalancing. new might I

for no beyond have really color you I So those observations. more

Unidentified Analyst

fourth the we in to then accrue expect the it, quarter? modeling should the a dynamics, expenses. revenue the that for quarter? see come year question given ratio up see we comp the it, full And to you than expect on or How just this Should think XX% that full thanks. we level true the in for comp about higher can that Got got and year

Richard Hough

basis. quarter. directly our markets. way the XX%. accrue for going determined A so in we happen Well, of There's That's to to is predict comp fourth a heavily on influenced formula by what's lot no

this X%. nine is revenue with compared down trend of of in year The months revenue terms the does markets. it of to think, I year nine So and last months down,

dramatic also not the a So change. can in with performances fourth which some adds that's volatility. quarter, potentially, end We up

there's this time, we So the point at no compare we when good things ultimately true how XX% will visibility in to into up.

We been bit a year. quite years, we've Some below. a were last little below

don't this been Some in spot I above. past seen we've see bit time, We've a difference always years, around it. hovered in material we've what or to years. point At on just a

Unidentified Analyst

of the $X helpful, yeah, buybacks me. advantage seeing solid the million. And a you for at That's guys over dip then great. We like of Okay, last one thank level quarter take in you. with

should Thanks. should depending regular how more we a more forward you think and the market you opportunistic, of how planned about repurchases? ahead? So cadence we environment? expect going just Is appetite be to your the it on prioritize Or

Richard Hough

amount course, more in it, forward. repurchasing have this it you having do we in work is in you it's of can opportunity to clearly have environment sensitive in like that wanted buybacks, the more I market as to capital, we're shareholders very And but active still shares. buybacks that way. Yeah, current in seen treat and the them aside that left, we to we significant an to see to shareholder money get this, saw, given stated to of We've so. committed for think use below, as Obviously, expect to we at an since we've that are price of been for levels the value set going

Unidentified Analyst

you. thank Great,

Operator

from ahead go comes your Please Research. question Sandy from next Mehta Evaluate with Our question.

Sandy Mehta

terms have of flows morning, actionable in a good a the pipeline? questions. a or you so number couple pipeline Do Yes, of

Richard Hough

to sure what me. line? What asking not you're I'm

Sandy Mehta

actionable The pipeline?

Richard Hough

the Oh, sorry. I'm actionable pipeline?

audio, fact, fuzzy the a of this two is the in for room. in us or last just touch call Some

very apologize I listening just -- if So we're hard.

yes So actionable the --

Sandy Mehta

No, problem. no

Richard Hough

actionable Yeah, pipeline the so is billion. $X.XX

quarter, is as as come what That international US for we down down well reason growth, primary of last quarter. announced from has wins. OCIO. it's that The value, because US This come is

because that, strong. hit define as you pipeline drawn that down rate had we the have But as The we're tightly final, RFP, bit. that remains would good. pipeline. pipeline wins in we have very the that very, that's high invite-only on expect a we a pipeline know, invite-only And So the We so recently searches.

Sandy Mehta

And And opportunity in an in launching Thank question it bear value but always this has year. is, you, held growth because up further Value you a help the of interest asset doesn't that it is Unit and second market a What more Investment you of the year as class, significantly marketing little the comment seeing in that? Trust? or Does Cap has terms it's the are of Large this this, could you should. It value on bit as outperformed that? also,

Richard Hough

a because just pipeline, has down that's wins. know, again, come but You that US touch for of value actually

We know, shift well for you value are in environment growth growth The has been takes I as was over allocators so in a of their outperformance so long-term lately. say I long attention of the value a versus and with thing meant I sustained working working the can't there that to has looking that while -- towards and increase decade outperforming think consultants. activity recently. don't it an our for that partnerships consultants

be doing, can't the on don't just preservation basis, of rather a do again, necessarily a the to relative But seen starting relative what the noticed I of we've yet. perform they've much help investors on the always it basis. which doing, for on it if will I what coming risk But that We'd is think margins, class of management quality in I've because say want to we we're getting outperformance the than capital, asset had. sustained. we're the

just up have large have way, once fourth a Trust, to of cap that that And into format than going. is cut, a better that's mandates it in a that With an a for future. we'll a that fund. that's to I the lot get up growth. pulled open It when you regards can to vehicle quarter you to for of to, of and avenue opportunity starting with useful we setting mutual course, into strategies. that provides another capital way just exposure investors And capital we're get the And But provides more our other where expect strategies. have value the grow you in course,

Sandy Mehta

Great, thank you so much.

Richard Hough

welcome. You're

Operator

next question question. Strickland Please from go Fig comes from ahead Our Feddie your with Partners.

Unidentified Analyst

actually they but anyways, good Danny, the morning hi. Rick, Thanks. It's company never asked

Richard Hough

Hey, good you? morning. How are

Unidentified Analyst

Good. I'm good. I'm good.

of in just you wondering, and was also and I was talked overall Can those specifically some just what's there I curious going you pipeline. pipeline? just clients business know So know a to versus of international? little about kind if more actionable both I the on-boarding speak on you the European domestic the bit have there's OCIO

Richard Hough

we as were on mute, you Sorry, listening. were

are European Europe and Netherlands, and talking had exposure We've we're families to. are the wealthy they Germany, Switzerland, OCIO, that So to not always significantly. clients

we think be families referring, recently that's invasion Ukraine, enormously as Polish large they not an office. unless a of I to family were you're going Russia's to just but talking were of OCIO result

where and diversification dollar management US structural the relationship from away are Europe for in and US for that's traditional looking people a So markets reasons. wealth exposure

market. $XXX It there, come do client had families. There's distinguish just any that the a where more shy in With of growing, which be the from and to But to case. don't regards We've happens I that referrals, pipeline new to the a to new certainly focus I US US largely like, we're talking is right footprint. lot means global actionable is is of kind particular ultimately, to happening for pipeline that. which a always OCIO, almost It's multiple tend that exactly is million, what's The our for now. within business. just potential OCIO

total think thereabouts pipeline. billion of million its or $XXX I that $X.XX

part of substantial our new total of a it's business. pipeline So potential

the The come were it's We well markets a been might before down has a amount so with bit of you a below OCIO markets down. business it's dollars. just hovering AUM within expect, the the over as been dollars billion came billion

were finals provides whether that hope couple should of enough won mandates to So quite we a the we've soon. or color, expect hear very close that in

should that the So in quarter. happen fourth

Unidentified Analyst

Got appreciate and European the clients on it clarification the there.

Richard Hough

Sure.

Unidentified Analyst

You to you focused retained spend increases thinking or dividend I was just And guess on the curious regards right prefer know, dividend to it do is are are are more now the buyback you're you what with possible to more was? a you earnings possible, elsewhere? or dividend increase

Richard Hough

Yeah.

cash is our case. pay more who at that sitting to important year. us. and a very had dramatic flow much in our basis So sustained in are dividend the increase time when can it determining over meaningful we're stock shareholders pullbacks ultimately, a of where is that long dividend this fact, policy. markets to the pay said even the think And is with the we've level that We've than a to goes with really important it that our regular watch way in ratio dividend be it's we on we amount a holding out, And

know, we we As will support continue and do this flow last firm the it to can cash increased so quarter, revenue assuming continue of the it. to you

We target dividend don't a per have se.

It at right think now. good a it's I pays quite well. level

It'll two quarter next predict quarter second looked the a you've end course. buyback basically or at well year. come of years, that annual kind be, of just year, sit, can't assess first pattern, year Whether next we that, over an think we increase. of remember do depends or approved that I which, it, we'll next The where I I if The so it year. And is not ago. can't was like

know, haven't haven't we've you we cash so obviously did more been we what even kitty the accruing And we we spent that. necessarily I refilling since announced been But that have. since

on use appropriate the continues that, relative investment, stock executing. our are for depending current reassess If other is, which will where cash we it have be a don't we we've that to been buybacks and acquisition we with or value,

going the -- you back, necessarily continue I expect set to that. aside the work be buy -- did first caller getting I've will already to But that what's to that can the so just steadily to asked, what are active in the haven't money we committed cash, plan? markets. As I've we

another that So year, that look is thing I at will next we decision around same made time the the originally.

Unidentified Analyst

Got one it. And just question. then more

benefactor look would much under all on how there longer volatility those their Just your to thinking pricing whether want firms calculus for And they for has companies? that's the for think radar, do or about at not investment that you changed partners? term

Richard Hough

the well with market I firms ways, feel business. question. high for then as different of and we this two compatible that's well, than That's looking be get as brand. don't and how an a I acquisition you're geographic is think area we think been would Silvercrest think that its But when a much. the compatible, it's worth be very I our clear for do market is that about in the culturally desirable in grow, about one run bit might I felt than net ultra talk organically smaller fit changing can do that that is great would to well number

against at EBITDA, going. the in wealth It's the I'm financial rates, was work are prudent management in this the that obviously, reasons. especially some which buyers and that confident some a all a business were that when noticing thought time, level of things. space I market period using changed the never couple dynamics. the more leverage be to scrutiny interest a make to that buyers bull or engineering have is engineering sustained One a over harder getting are buyers One, of in meaningful different two financial are deals done tailwinds the of for lot by low undergoing

that's So number one.

a always So bit the which of much the observers true lower in growth of business. more And prudence done this future. can in seeing much I'm earn-outs more closer we're organic those than We're a seeing think organically a whether market scrutiny grow seeing many in we've understand is I deals. which around companies, company

thing On the of strain eating but A of we on economics, put companies all the look on in revenue, the are business at Lowering smaller at it means happening, for puts the of a invest lot question not does growth, on same their into the business, least businesses. wealth this bodies. being to lot and future which raises more constraints selling is of it. side, if more able side sustainability

So at right honest. grow haven't be I the selective seen we're is company think this yet in could the fit margins, Again, that order to the future. into to to it I part be of for that though, about help. how going

I am might can't do conversations firm more even I for opportunities and a I the Certainly having be certainly I finger a always has something way. favor, have really my get has as down there which management, as moving us. a I a been our way to asset so but on sense come it's out said bit have of bit wealth. in it's comparatively were that put it compared sense,

more reasons, and well. as sensitive at done to just look For board, our or the you're whether much growth leveraged value, performance looking performance. obvious has the to across much at equity you extremely Thankfully, our it's company, more market

Unidentified Analyst

your That's I the question. color. it. for appreciate taking really Got Thanks helpful, all

Richard Hough

Absolutely.

Operator

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

Chris Sakai

good morning. Hi,

Richard Hough

morning. Good

Chris Sakai

had you added? uptick how Can mentioned in you on many you comment You relationships. new an

Richard Hough

several. how it Chris just comment, was Yeah, say I don't normally many, on I'll

Chris Sakai

there color out adding guys new you Okay. And for then you can What some see? the relationships? environment provide do on

Richard Hough

and reported for lumpy. it's So for business business, the relationship referral never example, result. I've for you it's know, a a It's pipeline, wealth management as us, -- a

a for In can conversations confidence something until it For us relationships with of talking in hard the a is some longer one families, we couple thing, to we more, be years most measure pipeline that realized. business. for a or terms much it's tail. lot ultimately of extremely It's to resulting even a have in

family characterize. just there's can stand And where can't not is measure by likelihood we the So equity extremely enough it's me clearly for institutional and ultimately and or allocators us professional we RFPs, a build to do business, of pipeline, where very consultants a just wealth. that we're the hard to gaining really fact talking have, by process we unlike with the to we business, driven

is clients reach That proactive can large tell are friends. or in our doing out way portfolios, to to allocations, that. us the that what's business a compared to of happening speaking, them, to markets Those distinguish you a about happening clients. we're talk portfolios our brokerage, of in clients, talk with to people not and performance help what's them refer to relationship who are, I bank why understand and their happening the service, disruption helps volatility their of their in very as and the way, even starting to a important in ability things who's perhaps generally the wealthy positioned we maybe competitor periods say, to is have could do high-net-worth client what levels high or their

etc. to the And come once time have coming to do us business their ultimately, the is volatility. experience, managed. matter tends does for in happen the global in it people these of doesn't of thinking how not business, more is is necessarily to an in do comfort markets clients be things these that back an out the So in wealth and that looking being And increase crisis around it upswing, markets least the with but regards the and on our there's economy, an about for It lead at to periodic help really softer at a disruptions us to perform the financial well just volatile our relationship. opportunity

lumpy a characterize. so see this to pipeline, that, pretty say hard we've speculate to -- would through that that for it's about business Chris, So to really, again, there's work really while I a without happen. if got I a I'm going But before

Chris Sakai

for Okay, that. thanks

Operator

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

Richard Hough

just I to appreciation third us my you calls. for to the all look color able the end was here fourth forward and appreciated our for show Thanks. Thanks. as compared call. some some to of joining to pretty And quarter questions. at I talking I want the give other thank quarter. good to everyone

Operator

And that, you today's conclude We will for with we attending presentation. call. today's conference thank

You disconnect lines. may now your

Silvercrest Asset Management (SAMG) 4 Nov 222022 Q3 Earnings call transcript