SAMG - Earnings call transcript Q2 2024 | Silvercrest Asset Management Group Inc.

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Operator

Good morning and welcome to the Silvercrest Asset Management Group Inc. Q2 2024 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 our the filings under Those

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

Richard Hough

quarter under drove U.S. the trend the Thank Generally primarily management Silvercrest's so you The including and during growth firm's to Silvercrest's negatively a our second continued mandates. joining assets. and term during recently sustained, AUM the you remained strategies fourth $XX.X and the the and assets declined $X.X loss to institutional XXXX. Other long cap, much, segments, benefits broadened Broader for Silvercrest's due leadership markets diversified well to narrow billion future which Earnings conditions important management institutional more should growth. Silvercrest's market have Cap the unusually market relative the small-cap quarter, higher us thank U.S. market's billion, Quarter participation that value and improve of if Silvercrest Second perform since during decreased the to quarter primarily Call discretionary quarter. to of strategies and continue for small firm's due during but business. affected the of business It's on value their and a wealth to basis. small-cap exposure economic large-cap supportive the actually growth progress persistent recovery since quarter, of markets, XXXX, second XXXX. Large note markets the

second been relationships in the X.X% higher end billion, quarter at the the quarter quarter modestly growth year-over-year New an increase at Total the the million and client of increased or revenue business, Quarterly modest investing $XX.X but year-over-year future the Silvercrest positive. on from accounts $X.X were compensation. has of including second XXXX. during AUM was X.X%. of

result, last higher has mentioned has business top I are metrics that most to our never expenses. On down business line opportunities while As due call, had a Silvercrest increased, of underway. revenue more the

We have future to to hires. business, in value-added will and made continue make drive investments including growth the

second hiring of announced a well-known the During strategies. complement to international quarter, the investment equity global our high-quality, we team

institutional future alike. We raising are families excited significant about institutions Silvercrest's and for potential quarters, mandates in globally with the visibility

new Southeast, families market We offices. development have serving invested family ultra-high in and the business leader professional the worth in also focused on and net

make complement to expect continues outstanding hires to of accrue drive professional revenue growth. percentage for We our to compensation. future a to Silvercrest interim and higher team more

business, match to team, the inflows. which not will high institutional opportunities informed compensation adjust the up from levels for pipeline keep in investments potential will billion. mandates decreased variable of equity the our new new our of yet quarter you We the last second and business for include pipeline important is firm's importantly, to significant remains And these $X quarter year. The plans. Silvercrest's does global of fourth during a capacity pipeline

equity near-term from for to positive that expect opportunities both capabilities institutional to continue flows in We result our OCIO pipeline. and

Scott the July service. firm that, of tensions, Directors dividend per with firm, to I'll September $X.XX a then per for and serves or of to quarterly be shareholders company's we'll about On new Gerard, you. share to opportunities approximately XXth we of globe. an superior Silvercrest share. That of institutions increase over As substantial Despite management Board on dividend, commentary. families our a high-quality have see asset and approved international and year, headline X% the XXth will company's and client record. With from this $X.XX wealth the across paid capabilities turn of of high-end Thank news with from questions coupled globally things rising

Scott Gerard

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

of primarily discretionary the AUM partially to Looking compensation the to professional and general primarily adjustment $X.X expense million generation a by increased the the outflows. to earnings potentially driven equal over end effect is benefits by due for corporate in was XX%, by for A million and primarily increases or increases million actual second million $X.X $X.XX we rate Expenses a Class quarter. Class A assuming Silvercrest quarter and XX.X%, Adjusted expenses other to and due per period giving $X.X recruiting define market quarter merit-based expense and to due reporting X.X%, outstanding fourth compensation income of items A and next restricted appreciation we had $X.XX or by benefits by the we driven diluted million past basic administrative increased EPS salaries adjusted or in to the and revenue due recurring giving units fees per approximately year-over-year further effect increase the benefits and, the expense nonqualified increased offset approximately compute accrual compensation in the of or share. Adjusted income and diluted nonrecurring an tax noncore we shares Class net resulting expenses. per approximately net as portfolio nonrecurring net of extent, to income dilutive, to the increased define share expenses. Compensation basic which $X.X quarter or for quarter. Also, $X.XX EBITDA, for net quarter EPS. to for noncore General increased the Based per year-over-year Class adjusted of by to extent the quarter, EBITDA increases. XX.X%, managers into items, $X.X and client result investment or variable primarily cash the for as unvested revenue as the divided by adjusted stock increased share, the in income, for amount B XX.X% years, basic stock million and and from or increased and the as shares increased X without and expense approximately or and, to million expense increased of and by which $X.X shareholders the the to without year-over-year total the part adjusted the $X.X income net XX.X%, of diluted quarter a narrow earnings was was outstanding interim lesser ratio options associates, accrual bonuses. compensation in to on Reported attributable for in equity-based compensation and the increased and administrative respectively. Adjusted year-over-year the

an attributable half, travel by and of the approximately half in first client primarily approximately and $X.X or half. half million Looking year-over-year entertainment increased $X.XX approximately net first benefits compensation million diluted to for million million per Compensation discretionary again, expense, first $X.X due $XX.X increased for or and A Silvercrest for to and or primarily at to occupancy the increase income net first first driven salary $X.X increases. $X.X appreciation, extent and in the was increased and increases net Class by million increased and the from for expense approximately the or due income revenue year-over-year offset Adjusted half for X.X%, or for X.X%, million G&A $X.XX basic and professional benefits $X.X $X.X half $X.XX for AUM fees G&A. increased a bonuses. diluted expenses. Reported to by by year-over-year first primarily partially EPS, EBITDA market expenses, accrual outflows. Expenses was or was adjusted by revenue year-over-year share. the per again respectively. first resulting X.X%, driven Adjusted Compensation by increased or increased due million also basic the XX% lesser X.X% recruiting the increased half to primarily by

balance as XXth the to at year. June the $XX.X end of June million million XXth Looking were at equivalents cash sheet, were $XXX.X this of compared and of $XX.X $XXX.X year last Cash this as the assets at million of total of approximately end year. to compared million last approximately year of

had XXth, the As our years. of we facility renew of did portion credit no borrowings, X for June but we term

of $XX.X million over approximately was June remarks, XXth year. my equity at turn it stockholders' and That A we'll for concludes this Q&A. Class total Lastly,

Richard Hough

Thank you, now questions. available We're for Scott.

Operator

comes And [Operator Instructions] Mehta from question Sandy with first Evaluate Research. today's

Sandy Mehta

performance been relative has Scott, and Rick strong.

outflows? hearing clients? you are And is institutional what causing minor consultants what So and the exactly from

Richard Hough

you. Thank

if to strong, about. the We performance or happens. the but of book, is relative was that's fully that that of occurred. large In There in saw were attrition funded seen so, X this particular a a and some yes, of due years that So money them. it The has then, in where X you look some you long-term a can just them. very been their particular, so job, really removed had the over do clients, ago, most shift allocation, we not outflow so to They lot brought consolidated, second and this internally trends management been thankfully. in did managers some institution at something cut year we've have a made years their quarter done great the plans, that the we past value they

institution very was as And So time. out, a change that of for with long was performance worked good. for unusual you quite an this an them point type. We them our

kind that going is happen to business. in look, just So of the thing

that's say performance. short-term institutional institutions. in had, can business And due have stayed underperformance, I with performance, we our places, reversed. to relative certain have in safely but We We've close not touch very lost

time hasn't class. course, of of People value. that do These There allocated very runs, things to Small a been has to just come the you be the a need you asset and and know. a very sustained and cap growth last market. be outflow favorable that did in The have inflows, from investor on right It's others. low just not That offset net more positive not of very and amount just might we will the is value seen as momentum so We a expect, the is just from the of the for argue favor. growth, towards more in investors markets. Small now. to. But in case to value portfolio anemic quarter, might tension, is change. more has a And regime the in growth also period as pipeline even something we strong. very change for given the tremendous be all ought institutional wealth they been cycles. remains it firm. There That cap did

the of with can growth we filled Some revenue-paying strong. been capacity clients. higher cap Small has be that have very

up, happening global We there, some for my are to institutions answer demand comprehensive the heavy is excellent a for That consultants hired you the that remarks have that the in -- mentioned very States. equity right a flows so the of pipeline now bodes team team United that from then strong of outside that in middle strongest look we've I an think, and I that you, is finish new well. And when capability.

Sandy Mehta

or strategy a but terms you opportunity? without hopes? on multibillion-dollar few and can making I give of that can looking a opportunity, global expectations guidance quantify? out predictions, this obviously new In mean, you Any or this is your years

Richard Hough

and know, the building firm, not and a period our certainly as find our new emerging all Yes. capabilities just with very relationships out and that on team that. pipeline have because international I'm but capability but to to capability that also by to this international we and and we're few within it's allocate value already whom allocations. We're that's our come for specific I to have capability incubation well I this strategies way markets of definitely I potential next that, excellent if had. complements new, have the and capability conservative. that would existing new encouraging is making and This goes to that we not capability, exciting be us cannot include large into done not as meeting as the pipeline would markets capabilities track to for honest. But be thing given multibillion-dollar worthy have put with capability, that would you as that a want with well and opportunity. potential than quarters, the develop very allocators long-term growth and those One the team few records. of our allocations purposely that consultants And consultants business, the developing pretty is more that careful relationships think large only years, next be much a well, in we'll with for opportunity get that It's this emerging that along mandate.

awards fact, rolling one top was awarded performance them for periods. from of X In PSN of the the just last one

that pretty positive. So all looks

Sandy Mehta

Okay.

Okay. where terms in you assets And are OCIO of now?

Richard Hough

is OCIO $X.X about billion.

a that's strong bit. there. The is come down Some pretty of pipeline

was think now it's -- more $XXX that, The It's is good been the it's almost of about a million. by potential under believe. comprised OCIO it dominated large couple bigger, just pipeline about of The that I news pipeline but it is I institutions. very variety has mandates. of

and bigger it reliable opportunities, the it looked I crashed bit was little when more great. or and by you didn't, a you before pipeline either was would say got it's it some it So dominated

a Here, there's diversification. little more

more a bit I it be dependable So think. going forward, will little

Sandy Mehta

one And Okay. question. final

You talked you next the year? and higher we for purposes? guide new expenses year us of looking would this sort hires. that compensation key to about of than something normally compensation Are some higher and modeling at Is

Richard Hough

Yes, absolutely.

is to definitely next stick technology be that hired talk a just and the flows or of well X to -- that and we get of XX% be revenue stronger team. investments management investments the very fourth both clear as the of in in in these those That so this I've we as want be clear had time to also that that to talent off for we new equity the the year. going percentage have XX%, to target business while under a in can, avoid, been and new -- for very course, been. business. But right about in portfolio target large XX%, because of But we're to around past to long I'll growth. in years business, the years going sort Let's running required still And a one my been is development, which making hovering it before investments, global year. want company teams, and and X I that's mention as make adjustment have I've were grow reason we we extent It's we've quarter. I'll this justify we above long-term

some large over And compensation. you true know, was things. to at control As and then towards of we We as we're In isn't that Most have years, accruing you years, year-end that an up adjustment have much have don't a the and one, were very been other all. market favorable. adjustments other there large well know. there

visibility are. justified, I if future. so clear that. will you to So that into the update I all That's be where we those numbers have some tried will about

I period making right in expenses We some than COVID be current and can a you were happen kind just grow we in. through what into now expenses. Had the we higher grown, would and it just see to of did on those it have running to we not year, expenses. these of than depends with grew investments, are next We these percentage actually to for grow faster mind, the with we investments. right those come investments. compensation compensation as higher that that also Keep than depends revenue expect prior seen we're faster and it, I As of where the we flows but hiring

about when great. the narrow leadership it that's especially our in we're you're that right climbing situation a hidden markets. So not investors a bit was for in was such talking now, But

talk I to more these need. as you more expenses. very compensation as be that's it Happy that about much we will or clear. into it hope need grow evident to So

Operator

Scott. next from with [Operator Instructions] Marinac Our comes Janney today Christopher question Montgomery

Christopher Marinac

Just one to go further. question, on step go to the last to just

this So unusual accrue is bonuses you're time year? is to it doing Or higher and just extra or it of normal a salary amount?

Richard Hough

that certainly ones the point it's say this doing would mentioned last be -- I way. think before in at earnings earnings I'd this ones hit normal. call, that, and the I before some I We certainly --

as XX% whatever. last been couple of get mentioned to believe the We and make big say, quarter year. I'd level. not about. more instead set call, to the standard, our before investments and is to adjustment we hire specifically kind want think standard I I've of now Christopher, fourth this we a It's the the rather it's happening see talked adjustment in one you stick that, made our actually accruing a the But years. who It all later maybe XX%" I was these is we've -- or I "Oh, would talking unusual. for it about and I say than oops, we then earnings what of at

unusual. from would I'm But with be I ahead, think let have So that, if I his little some everyone look, detail more no, mark Scott hires, Scott. to don't point it's out know. Go to I'm also perspective. going will the a going other off

Scott Gerard

it's been we policy on accordingly. that the Basically, adjustment monitor comp the approach prudent variable -- we that estimates Chris. it's always have, and Yes, our based we

Given and in mode hiring, this dynamic, more it's that that are of it's to ratio. take a we us bit required and little look evaluate introspective a more

in certainly, adjust environment, prudent quarterly. this to that it's So

Christopher Marinac

makes all That sense.

strong It pipeline going have you still picture, contribute But back through and that from in go first still you had June. gave quarter, to the changing pipeline. you March big to to an feels want Just so a the like back. unusually positively. It's maybe

maybe change. on just put pipeline want weight weight to the guess I not I or this So as much

that. kind to through talk wanted of Just

Richard Hough

Okay.

it been have mandate, are rigorous fact how lost So decreased be and because won or about just we manage we that I adjusted mean the measure -- do not just or times it. to -- a when it we're very There you downward but have you we okay. want

And on occur. the is pipeline actively are sometimes action outside the a something meant X-month we're of the very we pipeline. out the next window And things months. that we'll falls X where This working it that be will take strong think for to

in only down, alone. The had variation there too really in can down variability one of book. for a and also fact that happens, little it believe, came a the you of in so not had getting or did come one a couple reason OCIO chunky so And it but more it which not get I real in mandates, them, we

some it So successful, a that way. the pipeline. now or win not out more some, higher kind I off, a It of That's seen on going we've just the same cold. little was lower more And than fact of why right, that quarter. If the not course, pipeline of it's quite the dramatically in hot move -- commenting fourth we was or to on you will, not the the and It's It's it than came be dependable. lose diversified. little pipeline to this. much is going is if

ported markets. is to did the with well the So What strong international hired, I OCIO excellent. and it's The global again, now significant contributor is Silvercrest pretty be growth this note pipeline. in allocators is equity as there just that's is include, to that strategy over has performance right in not unusual potential superb. a we've a for a as really thing that the in was really conversations little about isn't to usually What we're stable it that clear it pipeline value the just would one. The anything that's only seeing the overall team been emerging and I

Australia. come had back weeks X In in just almost marketing fact, we from people

mandates, into overall, to we of just I size quarter a in how in fourth potentially helpful. those very would more that put the a it's know, it's are nicely, year actually on a of pipeline of give more of until capability. you little kind that's I more are But last substantial strong want get of it, which terms very developing. is pools it's say capital of pipeline, a color As from up the feel to don't and it this interested diversified of

Christopher Marinac

on equity weeks. goes back X, market question resonated? we've Understood, know of me X changes the seen sort to of of probably interpreted Has XX. Last post any just weeks early to that that's the it's you here And for of last kind just I sort in great. in how that but have curious of June comment, the recent sort that

Richard Hough

it's Yes, resonated.

XXXX. frustrating and was very or the capital, I fourth And leadership running business, It's meaningful effect assets, The see build out recovery X can intellectual -- in and last great or year quarter. frustrating have strong but like wonderful frankly, a you're such think market so-called gain around when have about narrow in has after really a equity weak here. halls -- markets our quarter big I of of a a a we to talking on year, given loss capital revenue. a And broadens in size it's the stocks. year

it and back narrows that's Okay, through then down great. We it went again.

cap So quarter. And the seen see broadening it course, third out was thing really to to the institutional is really our that very in that other business. stick. small we've Hopefully, we've that get helpful the then, do. for That's important can welcome, is finally seen of

performance, to existing have potential small-cap AUM this to growth in capabilities opening my value. are mentioned international capacity and firm the Those I They remarks. We maintain future relative important from very and it's mandates. really that's superb effect constrained, -- revenue good across that

change So very It's is seeing welcome. good for our regime that business. really

to guess as cap time. and get catch can or Your whether for that our interest be that into as and been good a right? rates economy up very We not caps for say one of the is with mine there Fed long comment, may for word improve waiting why and be all small small We've on It's in their sustained, and can will the change, much earnings recently, of tiresome and been crisis, It's can't the but Chris. a very that economy be to period. healthy unusual about and growing it be for market. Fed And economy argue all a what and has got an about values or nature classes to yes, a hope the happen. of that financial soapbox. what market, me even would ultimately of my somewhat just distorted in been that I of that's answers that's would matters, been and earnings. instead in businesses just since enough more little on we've where course, to ultimately in be the your the such rest. least But so whether That's favor. regime And the fundamental capital argue we've seen has inverted, on allocation companies at certain welcome. I I are asset I have companies. question. focus But

Operator

gentlemen, you. Rick closing turn Ladies for to Thank question-and-answer session. to and the this like back concludes conference remarks. I'd over any Hough our

Richard Hough

Great. Thanks at quarter. of so much. Look to you Thanks end the us. for forward third joining updating the

allocators pipeline asset As up attracted with families. And as diversified, I'm nice and we got that's capabilities in here tier, I about firm, these significant that's come top terms firm. very visibility mentioned, capital about It's we're of to really we've equity potentially we grow. or compatible excited opens this the that this development the generally team the excited investments, we've new for the it's complementary some new others well that or in to intellectual the and of us and business a Southeast opportunities whether new have already at

next much. tuned. stay forward you Thanks Look quarter. updating So to so

Operator

today's you for presentation. call. you. We Thank all attending conference today's This thank concludes

have You disconnect may wonderful weekend. and your now a lines,

Silvercrest Asset Management (SAMG) 2 Aug 242024 Q2 Earnings call transcript