Silvercrest Asset Management Group Inc. Q4 FY2024 earnings call

• Silvercrest is an independent wealth management firm combining top-quality asset management expertise with high levels of customer service, serving over 600 ultra-high-net-worth individuals and institutions with 98%+ annual customer retention.
• Most revenue comes from recurring management fees. Average assets under management per relationship over $50 million.
• Fourth quarter 2024 had $1.4 billion in new client assets under management inflows, with $1.3 billion from a seed investment in global value equity strategy. Total AUM at year-end 2024 was $36.5B.
• Hired business development and market leads in Atlanta and Singapore, obtained MAS license in Singapore, and will open an office there. Pursuing initiatives to highlight Silvercrest in institutional and wealth markets.
• Invested in talent across the firm, developed new institutional consulting relationships, and pipeline remains robust.

Total AUM as of year-end 2024 reached $36.5 billion, up 9.6% from $33.3 billion at year-end 2023. Discretionary AUM, which drives revenue, rose 6.4% to $23.3 billion from $21.9 billion. Revenue for the year increased 5.3% to $123.7 million from $117.4 million, with Q4 revenue up 12% over Q4 2023 to $32 million from $28.5 million.

• Expect more positive AUM flows and resulting revenue increases.
• Optimistic about securing significant new organic flows.
• Compensation expenses are expected to remain at current levels for the foreseeable future, but investments in personnel and initiatives are aimed at increasing return on investment capital.
• Anticipate operating leverage as pipeline executes, with the potential to return to higher EBITDA margins in the medium term.

• Volatility in geopolitical environment could impact business but also drives interest.
• Regulatory hurdles in international expansion, though the firm is prudent and working through them.

Q: Could you comment a little bit more on the pipeline amount that you're seeing currently? Also an update on OCIO in terms of where you are in assets and the outlook there. And I understand that your pipeline does not include global prospects. A little bit more commentary on, you know, do you see global inflows this year, 2025? And what are the opportunities there this year and next year?

A: On the pipeline, at the end of last year it was $1.2 billion and now increased to $1.6 billion. OCIO stands at $1.6 billion and expected to increase in 2025. Global value equity team has strong performance and potential for significant new inflows in 2025 and beyond but pipeline measurement is becoming harder due to fewer RFPs.

Q: How are you thinking about operating leverage in the big picture not as much about a given quarter as it is kind of where you're going this year, next year. And as you execute on the pipeline. Do you still feel that you're gonna get operating leverage on the sort of profitable, you know, throughput?

A: Yes, in steady state without personnel investments, could bump up to high twenties EBITDA margin. With pipeline execution, expect operating leverage. Medium-term target is to get back to high margins.

Q: Can you explain it? Are you what sort of hurdles are you facing in this international expansion into these other countries? And how is that adding to cost? And how are you facing any regulation hurdles?

A: Not aggressively expanding infrastructure. Singapore is current international presence. Regulatory hurdles exist but firm is prudent and working through them. Growth opportunities outside US due to underserved wealth and competitive environment.

Q: Your thoughts on dividend and buyback policy?

A: Have no debt and cash. Historically returned capital to investors. Open to buybacks and dividends, but cautious as alternative uses like potential acquisitions are possible.