Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

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

First Quarter 2023 Earnings Conference Call. All participants will in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask question. Please note that this event is being recorded.

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

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

Now CEO conference of I'd over the go and Please Chairman sir. ahead, Hough, like Silvercrest. turn to to Rick

Richard Hough

volatility, markets supportive first of Thanks drives with concluding AUM of our revenue, $XX.X the for Silvercrest AUM, quarter were XXXX, X.X% us billion. quarter the discretionary and primarily you. of quarter of under first management joining $XX.X fourth assets XXXX. Despite Discretionary over with quarter billion total the the during Thank Silvercrest. for results increased for which

recover. a AUM basis our results, since of quarter they first fourth business XX.X% down increased Consequently, declined while remain on Nonetheless, the XXXX. results markets quarter year-over-year as have has discretionary over year-over-year

Our decline revenue with diluted adjusted for affected quarter adjusted and XXXX. first in compared fell XX.X% the This EBITDA significantly share. revenue earnings per

XX.X% also healthy earnings quarter quarter share EBITDA the the since first of remains the quarter the per first first year-over-year first for declined for XXXX. for Silvercrest EBITDA of million adjusted of Adjusted $X.X historically adjusted since company. Our diluted to year-over-year to margin -- quarter XXXX. the declined $X.XX

increased manages has first benefit business Chief since often quality billion. the quarter outsourced AUM the create uncertainty The our XXXX. increased during quarter and the high of first Economic the and fourth opportunities also over pipeline $X.XX has quarter increased firm's XXXX of of of Officer now market long-term The opportunities Investment substantially capabilities. initiative volatility that new of also and

the Silvercrest will And $X.XX stock Class business May Directors or stock. XXXX, shares paid during X, share per A quarter. be first June of repurchased to million quarterly around shareholders of A XX $X.X dividend record of of Class XX,XXX on on common common of dividend a Board of That approximately June X. on of declared the for as approximately the close

could through we'll go Scott, open questions. financials, for you then call if up and the the

Scott Gerard

Sure. Thanks.

As XX AUM quarter, billion. was of disclosed March in of earnings AUM March XX year again, as the year as first of this was this total and our billion release, of $XX.X for discretionary $XX.X

Revenue for of the year-over-year quarter was decrease driven reported the million. first $XX.X $XX.X decreased XX% Revenue million revenue discretionary the net depreciation market client outflows by primarily consolidated net and XXXX. was $X.X in for approximately was in approximately million. quarter AUM. of And income This quarter from

offset of by Expenses first a increase attributable representing expenses million, were period from benefits last in same a The primarily for the quarter of of $X.X in approximately $XX.X $X.X to million, million expense XX% of the $XX.X year partially was G&A million. an and year. for increase this expense compensation decrease increase

$X.X for primarily million, and an $X.X million, salaries increases increase first decrease partially and year. staff. and Compensation newly a the of primarily year offset quarter of accrual for of $X.X in benefits by decreased for $XX.X to last in merit-based as million hired result $XX.X million from decrease is expense, a to or attributable The approximately benefits XX% again, million this same by the the of period bonuses

million that value year primarily for first this period the an fair attributable to from $X.X increased $X.X G&A to million quarter the expense. fees, was was and portfolio adjustment negative to million of last $X.X contingent and first in the to of expenses in this of entertainment XXXX, quarter consideration expense related recorded travel by same to systems addition professional for acquisition during the million of year, and $X.X the increases Cortina

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

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

define we effect EPS, assuming items net $X without XX%, expense for respectively. of the or and which quarter a $X.XX rate diluted and corporate income noncore income, net nonrecurring tax and per approximately income $X.XX to giving Adjusted adjusted was as and basic million

Adjusted as stock of to add Class adjusted the for EPS. And of period diluted basic units the to the dilutive, reported equal EPS extent options is shares A B outstanding adjusted end EPS. shares we the restricted stock compute nonqualified divided to to and income actual total and net the by unvested adjusted Class outstanding

as as the $XX.X assets sheet, of at XXXX. million borrowings Cash equivalents of $X.X of was cash total year. were million the approximately at of million balance Total XX $XX.X the were at $XX.X this year of to total approximately of were XX as compared Looking stockholders' equity to and A year. end $XXX.X and end March XX million compared Class March of March XX of $XXX.X March year approximately million last million this year at this this of

remarks. Q&A. my We'll over for it concludes now That turn

Richard Hough

Scott. Thanks,

Operator

you. Thank

from [Operator Mody begin Please ahead. First Sumeet Piper session. Sandler. go comes the question-and-answer question Instructions] of I’ll Now

Richard Hough

Good morning, Sumeet.

Sumeet Mody

were maybe allocation. was know magnitude to guys It wanting mean, morning, be should at March than Wanted I to your any forward? guys. there like work looking repurchases guys I just last capital be believe, of start the capital help percentage in repurchase as we appetite kind purchases. flows or appreciated. with but some quarter, we And seems net we I Good towards lower to cash little Hi. should you income? let would for expecting. about about it efficiently, how dip put going more talked pretty wondering of your the I'm a you think

Richard Hough

I'll as we're Yes. purchase income got my the a in capital, discussions accretion. great years on with percentage return great with would potential other of ago capital as not because I evaluating. get of opportunities down it may partner invested at we in cash I've Cortina start. as purchases or were look of that opportunity three slow net the look we're more the flows. or we like a really marketplace that I it use can would And if at where

buybacks accretive about much, It's put to use, the back to versus I'm management be I for using more Silvercrest. I can me is one way it which some much shares. asset opportunity other companies, The look that alternative. strategic it is, if cash know, at capital better think cost for to I going of of I've to the back got buy buy

So about much less on a investors. return the capital percentage of to

saw period of investors, steady the a the can sure substantial over stronger high, I at market I'm dividends more much giving nice look than I in terms year. last very of wake one sustain of much but that downdrafts significant to a in return what making even we even time Similarly,

at of So it. way that's how look we the general

in with QX I that, repurchases for that agree mind window that shorter very Keep buybacks, for efficient is were would stock we us. with while the

a in quarter. the has with that were first So able lot to volume the we do to buy

Sumeet Mody

with capital of helpful. sticking Thanks, kind growth And inorganic the on allocation then Rick. That's Great. bit little a side.

it months, mean, alternative management seems M&A As traditional like space really in compared I to over the far last, as XX to asset activity the the XX in management. the say, particularly picked industry-wide just environment, up has wealth

wondering March side any So in of if an can hires just helpful. update if the us lift even would from or that both you've kind M&A and team on perspective business, between maybe today shift be individual conversations of or you outs seen on

Richard Hough

Yes.

Okay.

I a So the really last cliff very the a I'll has with It of year towards well, It ago, end M&A start back on was front. it up. -- off fell picked the and strong, year. think,

a companies to with of is something I've lot Silvercrest. much huge are with else. in of RIAs. firms They for or to We're interest before, clientele retail, high-end center amount looking accounting not A in them of or be regional regards keep As money would smaller mind, focus might said cities. high-end an assets that that activity have a

that So to all It set of there's very the our be Silvercrest of subset picked would up. and of interest small M&A. has activity, absolutely the a of for firms

a how in terms bit, with I I've if have amount, calls small thing on bit I'd like vocal on pricing is a cetera. implicit struck, nominal other pricing of being seen earn-outs, terms bit. money I moderating to is a past have the over used seems in of that on et in fair the only pretty I've what more capital. about used been the prices that. has in assets down be scrutiny much down marketplace our more comment The And deals come would that when think something a come come people

think So supportive. that's I

or -- in potential buying serve and in [indiscernible] hire a work the others look environment outs, that regards private fit to And wirehouses don't broker usually lift changed firms, aggressively well We culture fiduciaries. how recruiting with the into significantly we rule. many are outs more has and just hiring books. participate potential lift and with hiring. from With who we you are regards banking see The those our of to clients. The or and normal work people of to

great. firm, You COVID. at managers years a may quite years ago, hit Those recall is the of ago. that starting growing four which are I portfolio hiring did five bit We

a firm. for more very, than banking has several hires past their value having can potential that work for clients their As conversations recall environment to in over and the probably very potential crisis the years. on currently people busy It's me the result add people resulted front I more to of with questioning

environment, suggest what mislead number that talking the about. I've active terms you people are just don't want we're said that with. I always conversations Because of to worth that have we of but say that those is in and might know we're happen. never I'll very mature certainly discussions it of the holding, speaking M&A anyone

Sumeet Mody

X-month billion. a all the so then equity the last $XXX like Thanks last $X.XX and Great. asset pipeline I and all And for on million OCIO OCIO at color. classes. at between mentioned quarter, actionable you obviously, overall one, around pipeline, know that

So it for kind billion equates around of $X to equity.

Just wondered us update could on those if numbers. you

Richard Hough

quite come again. It's substantially up

as it's billion. $X.XX now very the conservatively out, was total measured quarter, so So a apples-to-apples, quarter. in you pointed actionable true It's careful last $X.XX last institutional way, pipeline billion

the added we've million pipeline. another $XXX So to

It getting some that us in should includes be quarter. pointed the out that, wins

the pipeline decreased for despite have actually pipeline, those the So increased without in would decreased additional but it potential things wins. good reasons, and

So the great that's for news the business. future of

we very I to they institutional a optimistic. long-only U.S. the firms different don't environment is are be working and The pace. want However, us slow. relationship on characterize overly with would how like with would or consultants dealing search characterize just as I

lot a still not are meeting person. in doing There Zooms of them and

just slowed these have cycle long has things the we'll very pipeline. more It for on to it land sales a it happy done of how see like lot years. to job to feels and So much that over We've I'm related a difficult. at takes harvesting is the about behalf. great down the just our

with looking really quarter. just slow. about the itself feels pipeline, want my and interpreted. But or good, environment be a nicely again, XXXX just how year since feels up careful to last I comments So compared ago, search it Great especially certainly -- are

on first $XXX of pipeline bigger. million a approximately, OCIO, With $XX little But new compared quarter. We had around that a quarter. think, at had million the end that client the is OCIO come to $XXX also It's the wins. regards to I fourth million some in

clients which also business, the that now another course, quarter, us, was So client, almost important OCIO. supportive some which in but of $X.XX the of went expanding really is the new our is includes in of billion, it which with number to market, first up OCIO the

it's and just new a it's as the institutions nice really diversity At in we're and as we the to AUM getting working out talk RFPs because this that people important fill as of types stage, us with. important door about

Sumeet Mody

Great. for the questions. Thanks taking

Operator

Thank you.

of ahead. Please be from Mehta question Research. will Evaluate Next go Sandy

Sandy Mehta

still new Good Yes. for any Last seeing? year to of for on product what these active are you're very it's year terms update progress new you do know And launches. morning. likely this products. And what a year days products? was in I early new

Richard Hough

product I Could development. Sandy. could comment on what Sumeet, remember is have mentioned? this just product I'm don't may sorry, if new you you -- new just I

Sandy Mehta

about then press trust last products in cap in release, And There the were quarter value some -- large new you some that launched? unit talked growth. fourth investment were earlier there was year, a

Richard Hough

you. Got Okay.

because I'm what think know. sure a I it was So do I we not year ago --

we So the fantastic really Milwaukee that was referenced year growth, ago. and that's Cortina large micro-cap have acquired build thought and when out and it a and what capability, really important was to built team. cap small would growth, out multi-cap I We cap

referring a cap The in performance really which is It's large within cap of that management ballast attracting you're class. great. I value house, to all it's cap makes has AUM to high enable institutions well, we The in and invest more to is multi-cap it mentioned part value vehicle of have another product. worth That's large capability the that institutional obviously in assets institutional good, been as large-cap for the large that quite trust net that just and doing kind more pipeline our and that capability. under And of is here, strategies. giving viable unit

much asset capabilities We in I'll expansions of now. or of in new classes of flavors what way to help vanilla a have them. quite foresee firm were existing year. this strongly don't plain we at covered lot what order Those product already us the as the that really call development of grow really have I

the in both value growth. We spectrum have value, growth market and and cap international in across

grow growth I focused quite which in doing institutional The know, grow and as growth. business. has already those value team, just think, our team, continue so, had the So we're room mandate had on with performance. to particular, you as has terrific a now, is mature capabilities well, to but It

And one the of was the mention I quarter growth we wins team. first key in to should the that had

what a got lot new grow don't way and development. we've we've a way. I'd I product digest got see in the what So of in rather prudent

Sandy Mehta

down equities QX? as tax-related Are in were markets you. less that redemptions last seeing year you of bonds, given in year, this terms that Thank seeing clients example, from And Okay. are as you for well redemptions of less reason? for

Richard Hough

have in quarters, comment this can in -- I I don't are flows on business. a that huge high don't on usually quite occur after quarter all reasons. in. report But business. The They kind we're granularity the I stage at I the lumpy net have the forward truth, of they the variety of of for that be that results. for worth can

reason quite taxes. you're right, be probably However, regards that last will with this taxes. expectation year was whole my gains exactly well deals, And resulted as exceptional a to and the as capital down clients year there our that means I for as state, capital for outflows less markets for you less think, gains in

at There's and lot payments. file quarterly know a But actually multiple our I Remember, of it my clients have expectation. that's tax this way no stage.

Sandy Mehta

so Thank Great. you much.

Richard Hough

You’re welcome.

Operator

you. Thank

go Next ahead. question Montgomery will Christopher of Janney from Please Marinac Scott. be

Christopher Marinac

Scott ask acquisition. midyear the EBITDA wanted finality of just I the margin about any to forward? and morning. final have can if in here us kind that prior Good Thanks. from on does incentive impact the your remind going payments Rick And or

Richard Hough

Great. that. Yes. Chris. Scott Thanks, will take

Scott Gerard

Yes. Yes.

June balance down basically, the as XX. of -- liability earn-out growth second which go would at -- to at So $X,XXX. going the now basically to the that's have payment than arrangement, to quarter, due zero been less after related the the It's

to payment went adjustment future a year that. the that so on GAAP ago. value we because why any numbers, a be fair won't much there So had arrangement explains G&A that up And our expense related

adjustments that fair numbers from non-GAAP back GAAP are EBITDA in perspective, -- year-over-year are -- or added this context. either so And any adjusted but numbers earn-out apples-to-apples value deducted whether an from

Christopher Marinac

to just could of had it. then, I Got kind good holistically, word guess, use the a normal, EBITDA this that margin And Great. I seemed somewhat what and Is that thought. be if impression? you quarter

Richard Hough

Yes.

we $XX $XX.X that ago is we million that history, company. years with just good public million And several the am today. were that When and I margin very XX actually to even or for after quite went years think margin. I absolutely remind EBITDA happy the those that, without historically in EBITDA is.

were had And and When high. margin closer It be contributing XXXX, back that. our That we of We we that that than of at that we was XX% faster to raced investments. could thereabouts the gosh, It very today. down, ahead performance EBITDA to fees were hitting, high. perhaps -- we was felt I are what end grew expected. well was we would further it investments hit margin bring that making EBITDA that

I call, things bit that this your to a come would I you normal. this in that down mentioned I little cash the when If come some hits because the hit possible yes, we hire P&L. immediately earlier call and So EBITDA pass quite flow people in bit, it's of a

with You advantages don't the tax have do an that you acquisition.

is to But this the big normal the of of that almost comp year. XX.X% a quarter, the lot or yes, pretty from simple and fourth margin answer end albeit is, a for adjustments in related EBITDA the was XX% the at step-up

Christopher Marinac

be of change gears slower more to moving question, tail of kind there's of and you there last have conversations. lot Is ultimately year? to of a where comment even of having can Then Do may that of a them, a they kind just certainly Great. kind forced more process? process to and gone this then think longer within this individuals brand your to a appreciate upon back X, do sort going XX-month about very that. six, is as that nine, I busy

Richard Hough

very, add just And were grabbing firm. what and and here. there looks like that environment those to mix. knowing who see really very new say, generally. compared then and of who have there way characterize environments will been were with those were still these of don't be those, explicitly, maybe lot base the you let I'm actively I hey, we'll we've building. some which client there's people firms And very I we're we'll and a there told with match not be of to honestly going and on look, forced It's what conversations, see our would no assets culture not. me often. It's the to about a their not were careful on then a those We're it talk. if can It sure do. depends or speaking see regards us, I and

see. So we'll

Christopher Marinac

the Got the long-term your override principles, it. and obviously, culture aspect. But growth

thank out. So you pointing that for

Richard Hough

if Yes, critical very business just disrupted. a growing clearly. absolutely doesn't It's you're that building sustainable get

Christopher Marinac

Rick. you Thank Great, and very Scott much.

Richard Hough

you, Thank Chris.

Operator

Thank will be go Please question Research. Singular you. of ahead. [Operator Instructions] Chris from Next Sakai

Chris Sakai

Hi. Good morning.

Richard Hough

morning. Good

Chris Sakai

a the doing just client What marketing on on is Silvercrest some I Could question. had drive to is light anything you shed really gross doing Silvercrest inflows? -- front?

Richard Hough

institutional Yes. Well, One three was there's the is about. that pipeline growth intermediary really institutions. areas key organic institutional primarily I the the done through consultant firm. with talking business, That and is of relationships

have institutional We professionals capabilities. our marketing of associated each dedicated with

consultant across product-specific. But coordinated firm. the are relationships shared yet, they're the So and

I RFP The pipeline as in other consultants Chief pure and OCIO of Investment cultivation That of of sits processes. business second type between the that, intermediaries mentioned $XXX the kind part and institutional would be of million. capability Officer

boards very relationship-oriented by But itself the committee foundation lot high are itself business. driven that. that individuals marketing worth and more a We sit like lot on on net and or worth looks endowment fiduciary a them, the investment Board to those have net of processes often high have is the devoted nonprofit a foundation

with discretionary of involved venues get brand managers is to is advertising, the their is aspect in brand, XX% referral those and existing sponsorship, supporting general, network to communities. third appearance CNBC portfolio worth business. in one That up be or relationship marketing referrals, the That net those our our our a visibility, the for referrals to ask clients That working a to is materials it. and The of business function of is on other with event AUM. our high

to I that busy. hard accuracy kind a the would lumpy, to pipeline just with and you on very because comparison we It's quite a pipeline something can measure say and never I've of predict can't it's side. institutional given the

our a more Just personally business. due and the high to first I net work the looking a prospects, tell on do, banking at probably of which marketing I than have can that was worth lot disruption. I output, quite bit usually to of quarter the related

high-quality who very already which we're of for final business the then potential to this about fit business join with firm, and on And right the pursuing. call, that kind growing the the is about piece professionals active our of culture talked we've

Chris Sakai

about Silvercrest for if Okay. And affect possibly might banking How talk Thanks at crisis? that. you the can all? that

Richard Hough

One, It they not ways. if our does in things at getting deposits have even and three that. banks, fee deposits, qualitatively in with demand different on of terms working a bank clients, for we're

the they wealth fair high-touch and we advice expect Republic. banks. be would clients they clients them banking no are to of do institutions, to firm, us help their face management that surprise to that As have especially learn about a about what have to First number regional view give issues of It and who for they're a to you navigate their at

So et concern happens protect how that the them, questions and how to and there about very accounts Republic, cetera. around to lots things organize navigate busy, First of to was at time what

busy clients. handholding was it quite just quite -- So

business discussion The behalf sure held and fiduciaries clients want second to you that and on that, their there's behalf. make I broker-dealer about how of our and but prudent our clients. best are make protect doing on well to your overall with we're environment looking just assets to and of relationships, we're to lots much what has do and the better you aware at of are how sure feel our

with who like wealth banks periods comments, both an my or not while a being for their Silvercrest keeping lot disruption, those clients in and mentioned banking their that or for In be separate. institutions to the wealth advice of this, I a pure whether there's be third should fiduciary two really conversations may be wondering have like opportunity. separating deposit banking at management, paid I'm they start there's ought relationship needs of the do functions they to The when has management having. with their opening maybe combining

professionals doubt firm no issues professional like occurring. that questions potentially Silvercrest. that be have and talking questions are getting who may lots have clients facing may I institutions who them that those at a of Likewise, be serving to is

how that firm So opportunity the to I business affects really from our in it covers think model the marketplace. the

Chris Sakai

Okay. answers. for Great. Thanks the

Richard Hough

very You’re Thank you. welcomed.

Operator

This you. session. our Thank concludes question-and-answer

Now to I'd like closing Rick turn Hough over to back the conference Mr. remarks. for

Richard Hough

remarks. quarter. really I It any don't Thanks. have was a closing constructive

I pipeline that business. a there's number think lot our any that have conversations of progress opportunity. business It's see we of nice to to and grown development has the

so As you for our always, get and forward We us. that another analysts. giving appreciate shareholders really Thanks questions to I joining the report soon. we look from much

Operator

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

You may now disconnect.

Silvercrest Asset Management (SAMG) 5 May 232023 Q1 Earnings call transcript