Silvercrest Asset Management Group Inc. Reports Q2 2024 Results

NEW YORK, Aug. 01, 2024 (GLOBE NEWSWIRE) — Silvercrest Asset Management Group Inc. (NASDAQ: SAMG) (the “Company” or “Silvercrest”) today reported the results of its operations for the quarter ended June 30, 2024.

Business Update

Generally supportive markets and economic conditions continued their progress since the fourth quarter of 2023. Market leadership remained unusually narrow, however, during the second quarter. Large Cap Growth primarily drove higher markets, a persistent trend of the market’s recovery since 2022. Other market segments, including Large Cap Value and Small Cap, actually declined during the second quarter, which negatively affected Silvercrest’s assets. It is important to note that Silvercrest’s U.S. Value strategies and U.S. Small cap growth strategies continued to perform well on a relative basis. Broader market participation benefits Silvercrest long-term due to the firm’s diversified wealth management business and the firm’s exposure to the small cap institutional business. The markets have more recently broadened during the current quarter, and if sustained, should improve Silvercrest’s future assets under management (“AUM”) growth.

Silvercrest’s discretionary AUM decreased $1.1 billion during the quarter to $21.6 billion, primarily due to the loss of institutional mandates. New client accounts and relationships during the quarter were modest but positive. Total AUM at the end of the second quarter was $33.4 billion and increased modestly at 4.7% year-over-year from the second quarter of 2023. Quarterly revenue year-over-year increased $1.3 million or 4.2%. Silvercrest has been investing in the future growth of the business, including on higher compensation. As a result, while top-line revenue has increased, most metrics of the business are down due to higher expenses.

On our last call, I mentioned that Silvercrest has never had more business opportunities underway. We have made and will make investments to drive future growth in the business, including value-added hires. During the second quarter we announced the hiring of a high-quality, well-known global equity investment team to complement our international strategies. We are excited about the potential for significant institutional mandates in future quarters, raising the Silvercrest’s visibility globally with institutions and families alike. We also have invested in a new business development professional and market leader in the Southeast focused on serving ultra high net worth families and family offices. We expect to make more hires to complement our outstanding professional team and to drive future growth. Silvercrest continues to accrue a higher interim percentage of revenue for compensation. We will adjust variable compensation levels to match these important investments in the business and will keep you informed of our plans.

Silvercrest’s pipeline of new institutional business opportunities decreased during the second quarter to $1.0 billion. The pipeline remains up from the fourth quarter of last year. Importantly, the firm’s pipeline does not yet include potential mandates for our new Global Equity team which has a high capacity for significant inflows. We continue to expect near-term positive flows to result from opportunities for both our institutional equity and OCIO capabilities.

As a high-end wealth and asset management firm, Silvercrest serves families and institutions from across the globe. Despite headline news of international tensions, we see substantial new opportunities globally for a firm with our high-quality capabilities coupled with superior client service. 

On July 30, 2024, the Company’s Board of Directors approved an increase of approximately 5.0% to the Company’s quarterly dividend, from $0.19 per share of Class A common stock to $0.20 per share of Class A common stock.  The dividend will be paid on or about September 20, 2024 to shareholders of record as of the close of business on September 13, 2024.

Second Quarter2024 Highlights

• Total Assets Under Management (“AUM”) of $33.4 billion, inclusive of discretionary AUM of $21.6 billion and non-discretionary AUM of $11.8 billion at June 30, 2024.
• Revenue of $31.0 million.
• U.S. Generally Accepted Accounting Principles (“GAAP”) consolidated net income and net income attributable to Silvercrest of $4.4 million and $2.7 million, respectively.
• Basic and diluted net income per share of $0.28.
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)¹ of $7.2 million.
• Adjusted net income¹ of $4.4 million.
• Adjusted basic and diluted earnings per share^{1, 2} of $0.31 and $0.30, respectively.

The table below presents a comparison of certain GAAP and non-GAAP (“Adjusted”) financial measures and AUM.

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AUM at $33.4 Billion

Silvercrest’s discretionary assets under management increased by $0.1 billion, or 0.5%, to $21.6 billion at June 30, 2024, from $21.5 billion at June 30, 2023. The increase was attributable to market appreciation of $2.1 billion partially offset by net client outflows of $2.0 billion. Silvercrest’s total AUM increased by $1.5 billion, or 4.7%, to $33.4 billion at June 30, 2024, from $31.9 billion at June 30, 2023. The increase was attributable to market appreciation of $3.3 billion partially offset by net client outflows of $1.8 billion.

Silvercrest’s discretionary assets under management decreased by $1.1 billion, or 4.8%, to $21.6 billion at June 30, 2024, from $22.7 billion at March 31, 2024. The decrease was attributable to market depreciation of $0.2 billion and net client outflows of $0.9 billion. Silvercrest’s total AUM decreased by $1.1 billion, or 3.2%, to $33.4 billion at June 30, 2024, from $34.5 billion at March 31, 2024. The decrease was attributable to market depreciation of $0.2 billion and net client outflows of $0.9 billion.

Second Quarter 2024 vs. Second Quarter 2023

Revenue increased by $1.3 million, or 4.2%, to $31.0 million for the three months ended June 30, 2024, from $29.7 million for the three months ended June 30, 2023. This increase was driven by market appreciation partially offset by net client outflows.

Total expenses increased by $2.5 million, or 10.6%, to $25.7 million for the three months ended June 30, 2024, from $23.2 million for the three months ended June 30, 2023. Compensation and benefits expense increased by $1.7 million, or 10.4%, to $18.5 million for the three months ended June 30, 2024, from $16.8 million for the three months ended June 30, 2023. The increase was primarily attributable to an increase in the accrual for bonuses of $1.3 million and an increase in salaries and benefits of $0.4 million primarily as a result of merit-based increases. General and administrative expenses increased by $0.7 million, or 11.3%, to $7.2 million for the three months ended June 30, 2024, from $6.5 million for the three months ended June 30, 2023. This was primarily attributable to increases in travel and entertainment expenses of $0.1 million, occupancy and related costs of $0.1 million, professional fees of $0.3 million, portfolio systems expense of $0.1 million and recruiting expenses of $0.3 million, partially offset by decreases in marketing expenses of $0.1 million and shareholder expenses of $0.1 million.

Consolidated net income was $4.4 million or 14.1% of revenue for the three months ended June 30, 2024, as compared to consolidated net income of $5.1 million or 17.3% of revenue for the same period in the prior year. Net income attributable to Silvercrest was $2.7 million, or $0.28 per basic share and diluted share for the three months ended June 30, 2024. Our Adjusted Net Income¹ was $4.4 million, or $0.31 per adjusted basic share and $0.30 per adjusted diluted share² for the three months ended June 30, 2024.

Adjusted EBITDA¹ was $7.2 million, or 23.3% of revenue for the three months ended June 30, 2024, as compared to $8.1 million or 27.3% of revenue for the same period in the prior year.

Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023

Revenue increased by $2.1 million, or 3.6%, to $61.3 million for the six months ended June 30, 2024, from $59.2 million for the six months ended June 30, 2023. This increase was driven by market appreciation partially offset by net client outflows.

Total expenses increased by $4.2 million, or 9.1%, to $50.1 million for the six months ended June 30, 2024, from $45.9 million for the six months ended June 30, 2023. Compensation and benefits expense increased by $2.9 million, or 8.7%, to $36.2 million for the six months ended June 30, 2024, from $33.3 million for the six months ended June 30, 2023. The increase was primarily attributable to an increase in the accrual for bonuses of $2.2 million, an increase in salaries and benefits of $0.6 million primarily as a result of merit-based increases and severance of $0.1 million paid in the current quarter and an increase in equity-based compensation of $0.1 million.  General and administrative expenses increased by $1.3 million, or 9.9%, to $13.9 million for the six months ended June 30, 2024 and 2023, from $12.6 million for the six months ended June 30, 2023. This was primarily attributable to increases in travel and entertainment expenses of $0.2 million, occupancy and related costs of $0.2 million, professional fees of $0.5 million, portfolio and systems expenses of $0.1 million, recruiting expenses of $0.3 million and depreciation and amortization expense of $0.1 million, partially offset by a decrease in marketing expenses of $0.1 million.

Consolidated net income was $9.3 million or 15.2% of revenue for the six months ended June 30, 2024, as compared to consolidated net income of $10.4 million or 17.7% of revenue for the same period in the prior year.  Net income attributable to Silvercrest was $5.7 million, or $0.60 per basic share and diluted share for the six months ended June 30, 2024.  Our Adjusted Net Income¹ was $9.1 million, or $0.65 per adjusted basic share and $0.63 per adjusted diluted share² for the six months ended June 30, 2024.

Adjusted EBITDA¹was $14.7 million or 24.0% of revenue for the six months ended June 30, 2024, as compared to $16.3 million or 27.5% of revenue for the same period in the prior year.

Liquidity and Capital Resources

Cash and cash equivalents were $49.9 million at June 30, 2024, compared to $70.3 million at December 31, 2023. As of June 30, 2024, there was nothing outstanding under our term loan or under our revolving credit facility with City National Bank.

Silvercrest Asset Management Group Inc.’s total equity was $85.3 million at June 30, 2024. We had 9,547,396 shares of Class A common stock outstanding and 4,443,159 shares of Class B common stock outstanding at June 30, 2024.

Non-GAAP Financial Measures

To provide investors with additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a basis consistent with GAAP with Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Earnings Per Share, which are non-GAAP financial measures of earnings. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

• EBITDA represents net income before provision for income taxes, interest income, interest expense, depreciation and amortization.
• We define Adjusted EBITDA as EBITDA without giving effect to the Delaware franchise tax, professional fees associated with acquisitions or financing transactions, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations, prior to our initial public offering, as an expense. We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring earnings of the Company, taking into account earnings attributable to both Class A and Class B shareholders.
• Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenue. We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA Margin, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring profitability of the Company, taking into account profitability attributable to both Class A and Class B shareholders.
• Adjusted Net Income represents recurring net income without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations, prior to our initial public offering, as an expense. Furthermore, Adjusted Net Income includes income tax expense assuming a blended corporate rate of 26%. We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted Net Income, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring income of the Company, taking into account income attributable to both Class A and Class B shareholders.
• Adjusted Earnings Per Share represents Adjusted Net Income divided by the actual Class A and Class B shares outstanding as of the end of the reporting period for basic Adjusted Earnings Per Share, and to the extent dilutive, we add unvested restricted stock units and non-qualified stock options to the total shares outstanding to compute diluted Adjusted Earnings Per Share. As a result of our structure, which includes a non-controlling interest, we feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted Earnings Per Share, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring earnings per share of the Company as a whole as opposed to being limited to our Class A common stock.

Conference Call

The Company will host a conference call on August 2, 2024, at 8:30 am (Eastern Time) to discuss these results. Hosting the call will be Richard R. Hough III, Chief Executive Officer and President and Scott A. Gerard, Chief Financial Officer. Listeners may access the call by dialing 1-844-836-8743 or for international listeners the call may be accessed by dialing 1-412-317-5723. A live, listen-only webcast will also be available via the investor relations section of www.silvercrestgroup.com. An archived replay of the call will be available after the completion of the live call on the Investor Relations page of the Silvercrest website at http://ir.silvercrestgroup.com/.

Forward-Looking Statements and Other Disclosures

This release contains, and from time to time our management may make, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and assumptions. These statements are only predictions based on our current expectations and projections about future events. Important factors that could cause actual results, level of activity, performance or achievements to differ materially from those indicated by such forward-looking statements include, but are not limited to: incurrence of net losses; fluctuations in quarterly and annual results; adverse economic or market conditions; our expectations with respect to future levels of assets under management, inflows and outflows; our ability to retain clients; our ability to maintain our fee structure; our particular choices with regard to investment strategies employed; our ability to hire and retain qualified investment professionals; the cost of complying with current and future regulation coupled with the cost of defending ourselves from related investigations or litigation; failure of our operational safeguards against breaches in data security, privacy, conflicts of interest or employee misconduct; our expected tax rate; and our expectations with respect to deferred tax assets, adverse economic or market conditions, including the continued adverse effects of the coronavirus pandemic; incurrence of net losses; adverse effects of management focusing on implementation of a growth strategy; failure to develop and maintain the Silvercrest brand; and other factors disclosed under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2023, which is accessible on the U.S. Securities and Exchange Commission’s website at www.sec.gov. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

About Silvercrest

Silvercrest was founded in April 2002 as an independent, employee-owned registered investment adviser. With offices in New York, Boston, Virginia, New Jersey, California and Wisconsin, Silvercrest provides traditional and alternative investment advisory and family office services to wealthy families and select institutional investors.

Silvercrest Asset Management Group Inc.

Contact: Richard Hough
212-649-0601
rhough@silvercrestgroup.com

(a) Other adjustments consist of the following: