SAMG - Earnings call 3 2023 | Silvercrest Asset Management Group Inc.

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Operator

Good morning and welcome to the Silvercrest Asset Management Group Inc. Q3 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

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

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

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

Richard Hough

results for morning, of and XXXX thanks third Good Silvercrest. us this joining quarter for

and from has quarter, management, has uncertain second billion during with by by revenue, past third concluding and our The or year-over-year billion AUM billion. decreased by $XX.X or increased year-over-year volatile more this $XX.X $XX.X discretionary on quarter of of $XX.X of The since $X quarter markets total drives increased effect AUM outsized quarter AUM, billion firm's our had X.X% billion AUM the billion primarily to and $X.X a the from with an total billion. $X.X AUM assets XX.X% discretionary The under Silvercrest which discretionary XXXX. the

X.X% in third and Revenue same on down increased year-to-date the XXXX our and ended basis. period XX, X the the compared business X.X% revenue to of quarter metrics remain months year-over-year for decreased September for Most XXXX, XXXX. a year-over-year

and margin this ended and quarter EBITDA the Silvercrest adjusted for adjusted our adjusted September for of EBITDA impacted the earnings our remains EBITDA adjusted negatively EBITDA, during months X in company. decline healthy XX.X% share. year-to-date and the diluted XX year revenue EBITDA and XX.X% But the the expenses margin, third affected adjusted X Higher margin per the and adjusted

this result business as opportunities attribute on slower interest as these and changing focused value-added have solid, growth the of in and We're concerns. This Silvercrest well decision-making, the uncertain investments is weakened new since future pipeline a firm. rates to the we lost We not the to including geopolitical opportunities for business drive second business, environment, higher quarter. opportunities of but new remains hires.

On will December October of declared dividend on XX, of $X.XX stock, be or that the company's of quarterly XXXX. Class a paid dividend A and about per Directors XX, common share Board

over With go Gerard that then I'll hand and questions. Scott our will financials, Thanks. to it take to through we

Scott Gerard

Great. Thanks, Rick.

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

average increase based revenue the $XX assets. Looking period last management further in million revenue driven approximately million at by year. the of was and on approximately an quarter, a represented increase for X% mix the the from $XX.X increase again, same of This fee discretionary of annual nondiscretionary

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

of attributable expense benefits The and the increased the to million staff, same period the $XX.X comp X% to further, was quarter result equity-based last and third compensation Looking $XX.X merit-based from million increase for an $X.X benefits due for million primarily granting of in increase an approximately and a year. increase to in increases newly million, $X.X additional RSUs. of and primarily as salaries of hired

and to This the to $X.X by the was $X.X increased expenses adjustment the related million XXXX, and partially quarter systems of professional third for administrative of these primarily to expense during fees. in contingent portfolio entertainment value by last And the offset occupancy, recorded expense, in to were million consideration million expense, Acquisition negative and quarter travel to an attributable third of period lower $X.X as same increases Cortina from for $X.X fair the marketing addition well. year. General million

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

net Adjusted was without Adjusted equity-based XX.X% rate revenue for define revenue assuming corporate prior quarter in for and year. to period EBITDA compared million giving of or million net the and to or to compensation $X.X we effect $X.XX $X.XX items, approximately XX%, and noncore nonrecurring basic income and define respectively. quarter items of for and we noncore the approximately income, XX.X% expense adjusted and effect blended per was million EBITDA, a same as as which the expense which the diluted of $X $X.X income or nonrecurring giving without EPS, tax

divided adjusted Class as income A the is by reporting equal outstanding end EPS net and period. the Class shares the Adjusted to of B of actual

extent unvested and total options adjusted restricted outstanding compute to shares For units and add the EPS the dilutive, to adjusted diluted to we stock stock basic EPS. nonqualified

approximately driven period X X% revenue was of well. in for This the at discretionary million decrease last the market average a and $XX.X of annual year, the impacts mix fee Looking by same year. $XX.X the decrease assets, approximately revenue as million, this decrease based also of on and nondiscretionary was approximately management was a months, this from

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

the X% of $X.X XX for further, increase decrease X the September from this expense benefits an salary last benefits bonuses decrease and Looking ended partially increase in a to accrual million, period in by $X.X in of equity-based attributable and represented year. million. $X.X The of was decrease an a to million compensation expense for primarily the offset year, million and $XX.X $XX approximately compensation months expense of for million same

General and $XX.X period year $XX.X to the same to administrative XX from to value and year. year-to-date contingent the primarily consideration million, million expenses an $X.X by adjustment this of and September was amortization a expense. This September to attributable referral in that professional and decrease the reduction of sub-advisory X expense, fair million, $XX.X expense, a occupancy, last by marketing million was during of systems Increases million months depreciation to for a in Cortina negative was related and XXXX. $XX.X XX fees. and so portfolio That offset fees, partially recorded ended increased

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

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

as and balance were $XX.X end $XX.X this as million of the XXXX. end equivalents of sheet. this $XXX.X million $XXX.X September million to to year at compared year. cash Total year the were as of of Looking compared September approximately at million of XX Cash of assets XX last the

million. as XX as of September year borrowings A was $X.X of this approximately XX Total million stockholders' year. this September of were Total equity Class $XX.X

remarks. my concludes That

over to it turn Rick I'll So for Q&A.

Richard Hough

Thanks, Great. I at look Scott. to taking questions forward this time.

Operator

from come Sandy Research. Instructions] question Mehta [Operator first with will Our Evaluate

Sandy Mehta

you do been the people think Or may decisions about investors? You you now And has action. is be could a some that yesterday slowness will signaled they institutional but in that will Fed a be the it taking Rick, And forward? Yes. at taking pause, in bit are has people more that the little comments talk that things more more your consultants? have you there solid, going -- that remains seeing it from pipeline? said

Richard Hough

ever just my when slow the times, comments just It's mentioned in that I business you're a years, just introductory if of larger in any, measurable that conditions. And one really things pretty our at of a on is commented variety this we're pipeline. in the Yes, past in sort few welcome. the very seeing uncertain well firm of environment environment. and the company We've fact, institutional done through I've the And most XX note, decision-making. one of on

So the business. your question, institutional to I'm mostly, answer characterizing

institutional lot a mandates. harder for uncertainties so different the from decision-making high net It feel of are business. measure But a little side. It's on those very time lines the just in probably worth and looks to just you the

part I'm in consultants for So institutional consultants. also I and drive for just probably have are by who searches but process. to along sure, sure basically, rather driven or withdrawn opportunity the waiting things All And clients business. being move the the equal, and things have seeing it's some would know

means that perhaps bit little it's institutional So more client a driven.

the how the actionable kind the at it. were that $X.X of took opportunities of our period one capabilities. growth And includes our different with of the institutional time the quarter, out invited remind pipeline quarter. were OCIO had it's we longer were everyone, reported just because we for we X-month And has opportunities finalist measure equity the at was just And I occurred lowered that business. processes that of international taking as second U.S. invite-only parts of for months. to well if -- value billion, this or That pipeline not than were semifinalist as time. of end or we times, again where things capability, actually few RFP a The U.S. billion capability because the was $X.X It X ever, pipeline and and those a I

we're I $X.X at situations And last the to an talk window So now it's measuring. the be making our in that which comfortable but investors we're apples-to-apples And want or pipeline, a moving one comparison opportunity, I where sure, quarter, may when period past we're was where these that an to another. million. to is make are there running still that billion $XXX year X-month from

So or sponsoring until is hold, environment. not just drop. a more even where due to there on decision institution just flat pretty will put the that decision-making time little a most or perhaps substantial out the comfortable things with a of again, extended search a feels be But lines for the

X. of period in periods dropped right pipeline back. has actually a where had and came it time nothing, was our to where pipeline gone that We've to COVID, There

So we'll see seeing want be there. what it means. we're really what out to clear about We just

the about be could that interest helpful. or final point should Your your the in would I to rates question Fed. agree decrease, start And -- Fed was that themselves

can has, cause we markets I pressure companies, is and the making as when increased out to capital don't changes decisions, interest much for one as which many in financing it broadening much really And it think allocation as of around reason it have analysis lot rates, course. of as a has due moving investments. changes higher of right, has it's a

related extended environment I'll but So on other to questions, that's the the comment pipeline. take both an

Sandy Mehta

one just continues And OCIO OCI follow-up. business grow. to The --

Richard Hough

The quarter. win continues the good second there. were reported business And basically the similar expect but We'll the see, at in opportunities. it billion near-term really have quarter. I very very during to under of down what the keep OCIO mind, about the $X.X that. end a markets management. I It's in same, remains expect assets But at to I

So that's a report. relatively positive

Operator

Montgomery come Scott. will from Marinac Christopher question Janney with next Our

Christopher Marinac

Just AUM. question, to shift just discretionary trends wanted in And to ask continue going first next maybe to about those a pricing year? the too. nondiscretionary versus Are related the

Richard Hough

Yes.

XX as substantially ever months, so know, with the to experienced quite Okay. up a Yes, the don't than gone you've XX over company. months higher think we've recent, rate has past noticed, it I at really I

and of is primarily fee relationships, a the of to assets majority capabilities, is services That's nondiscretionary of the I up of have That think in project The services. of a not the way, like OCIO if vast work it that point, also by bit your year-over-year, a our family those nature fair relationship. more XX%. is rendered. basis usually for something point related office to note, it's those a should function I nondiscretionary.

due just private other get. revenue to reporting equity, on work function moderate. behalf So a work have on report operating the There clients businesses supervisory increases of of holdings, That's doing to family expect is in amount management. not office reasons, side, the change that assets often wealthy of extremely and have a we the us as and tracking estate, really sheet to I nondiscretionary we, for nonliquid balance who real under that

lot a up goes or on that down that whether a doesn't So really revenue lot, side. change it

about in about billion of the as economics to of number revenue, that make OCIO is $X.X and think that, grow, being additive on, continues And extent which is and then With business we'll most to yes, to to tie there that nondiscretionary, we're optimistic will you continue closer to the business, quite of progress the a you have that total increase. know, AUM. kind that if

that Does help?

Christopher Marinac

guess pace. great. any of Yes, I more change pricing this this of that And kind just of leads if kind basis while, different it for a environment does. points. kind it's it's That's the in know question curious related I just at of been sort trending and secular. I'm about to

Richard Hough

into thing One as backing by in quite basis have of with If points a it. question you is really before because you're could total as ask sure I'll watch I your revenue points to followed say denominator, way, thing don't denominator is one assets clarify. I'm the just you we management not assets our lot have associated with them. under putting taking misleading basis that total another

to is fact, going it like looks office the family management, basis when for that in under extent business So assets nondiscretionary we're increase, that down described that getting is I the which before, points not, the case. the

I'm that's not asking you about. what But were sure

Christopher Marinac

was you going. because kind there Actually, that actually where was right Rick, I it hit of

So the that clarifies point.

basis So in up don't be slippage caught really that. on based too that point

Richard Hough

of assets precisely. as Yes, discretionary revenue. management look at the Primarily under driver

the the institutional compared the But pricing, influence. enterprise. and and it more it's to OCIO the Of is by small some way, business, points, in course, looks there, which -- like basis is we there's still business, overall

our it compared X%. fact, the or billion In of X% around puts $X.X billion to discretionary assets $XX.X

Christopher Marinac

last me for hiring. just do Then Great. has expenses with to of and question sort

does quarters some have of the the and that about, any company? general, decision-making delayed sort on impact you in you hires of how next talked just at in If make as spend couple you

Richard Hough

more Crisis company through. decision-making. our don't company I going to our think over to capital We're including or We're with I private Financial that, partners And We business not done down manage just it when it multiple want with. delaying I'm handle to -- We of business ourselves. Silvercrest, Yes. know things what through to and when XX to about environments, really been too was watching how And It to expenses. how be cash. There we a speaking years, about of We has been affects This decision-making. course, careful tight. Global our is through slowing a course, a really ever. allocation were lot my than really do. comes expenses to have deal we then. deploy not hurt the and our was it. closely we're hard the or know

let changes a worry other alone position expensive enviable of to lot digest not lot an having We, folks, powder. in of we're debt load. and make acquisitions having operational to need our and But of a unlike dry unwieldy are about

for invested with when to So invest know for investors. never there's saw is to XXXX, going and Cortina, on opportunity we return as And that our in a cash. merged be we that you capital just good create great money when

about the to I actually number earlier in fact in initiatives It quite opening than that busier question, on busy. anything, have business of from some in time. and hires. to has other to a also pipeline types having And different of it's lot new And number that an kind business we're for I but ways the alluded a a us score investment speaks of the to that it both it underway, we talked remarks. of opportunities refers new quite Any the speaks perspective. And -- my been of conversations. it's to advance business if I'm

includes decision-making it's things advantages one run environment in management are prolonged general. from institutions decision-making. teams that of on. know. which at we're I the really really don't This this of reports I'm hearing just could I we to change the think in with seeing my the has that in own going their focused potential sense So market, other firm. into clients, business feedback to not The do I'm economist. a earnings and the slowness all that I'm that's a business, good the middle investors, because is an XXXX. I of and we be in are of not And

expense expense inflation. the with difficult changes have the other. side, update. the lot It increasing in on because while any stock companies On in going I vendors prices have been haven't one of made we an been or been really And last direction, gave a the new side everyone that's hires has markets going and since

that new. like this but to management stress issues nothing creates have, used before. and we're of to a our So It's being than little part done It's in more I We've it. would business.

highlighted, we continue dramatic don't That unusual trend business the some that not margin EBITDA And to good and I good for market covering And expect change, as looks overall. I around with pretty is very XX%. a effect. barring

Operator

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

Joichi Sakai

Just on good -- you I targets any had mentioned you -- are the Can comment seeing question M&A a on environment. there? out acquisition you

Richard Hough

kind select worth. high companies. potential this just to executives see net that targets. always other in not my theme talking for is It's of I'm We What that worth business. regularly the and It looking I've we're of job a marketplace. net is a quite described Yes. is M&A before ultra-high

average to anywhere between our as and for million well an million we as above continues at the peers client $XX average. $XX are most is company be of Our size and

it to by know organically if that least I'd succession lower. can that, is post firm good be acquisition Silvercrest. like to how good have to median I at fix grow can want planning, with Our a done.

worth want The net bolt-on not organically might we're where you a if can a having And is location business growing be Boston in in I think. markets interested I'm Richmond. in witnessed ex as or them key Milwaukee, the environment places quite as slow, New common high York, in. not it's That

I'm criteria are be and have right firms so there boxes, really the always time. are that that looking at many the ready -- they so fit to the And all that that check for

it's these that discussions. fact and at the looking the includes in I busy, in advance alluded say company last way, would the I question quite that hires, on always we're and the can things behalf by that would no busy any have wouldn't idea if it to characterize shareholders. call. I just I those suggest of of as anyone to I land, the is on a want period. our imminent And active will and anything

just so many quite and now You are conversations between are active. change I'll what don't There but by that ultimately happens, conclude things we know. can saying

we not welcomed -- Chris, add also, combined geopolitical people's the sorry. the feeling one it's that, think rates, We're interest to just general We're will markets not its yes, outlook rational with, some part I people of ultimately. as in in I actually and last mention it the I have. ways, while of also seeing couple more the thing, think in I'll because other it welcomed increase on effect to concerns certainly, it's lead calls, I've allocation have decisions predicted, just that capital

disruption on lot from the income. actually healthy for Finally, seeing I'm fixed a It people moderating meantime. my But are M&A in perspective. getting side in market just that's creates the the of paid their a

Joichi Sakai

in other expect and then should travel coming expense expense. was on there what of forward? coming my we is, slight a we COVID? entertainment with going -- was expect My out question is Okay. that Great. this question uptick what basically And And should there

Richard Hough

that variable. can out It's pretty coming to COVID. you Yes, expect increase of

view, shares this is So going not I is future. the provide My happen as thing. a going to what know general and good Scott guidance is this CFO, to in think our I'm I

out You active. we're want see that to increasing. there, This means we're

starting side, and Our no and on meet example, as net that's clients way even, so us. just to better clients, face-to-face. occur side, consultants was more but We're to -- is that often well. institutional much high others for prospective want -- And Zoom prospects. the it's see the via seeing of travel, it the worth And and on to

So look also yes, that to COVID, the it expect I environment. don't going we lower there's opportunities. should normalized more during point. that I I've past. know been more might a forward point When out, I in what talked made international would forward. was And about that

that's bit expensive well. little So as travel a more

Operator

question-and-answer to over our would back like the closing concludes I turn This for to any conference Rick remarks. session. Hough

Richard Hough

our update very Great. Thank the us much. quarter. joining you of today I shareholders the all really appreciate on for third for

our uncertainty and think ups years, business business company, ourselves has that navigate opportunity The as As And terms interesting a in our issues is that successfully about ahead. creates got of have of good our the of through through of running growing opportunities we we're I how we any position number is we I and for downs, XX tremendous profitably. this to this been here success. sorts whenever and and affected. feeling we've in environment, businesses environments this all one face that said partners like This we for of before, we've navigated kind work hard very team that and

appreciate I forward and talking again joining to so you to really I much. everyone So Thanks us. look soon,

Operator

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

disconnect. now may You

Silvercrest Asset Management (SAMG) 3 Nov 232023 Q3 Earnings call transcript