Silvercrest Asset Management Group Inc. Q1 FY2026 earnings call

Strategic Milestones and Geographic Expansion

• Silvercrest entered its 25th year of business at the start of Q2 2026, and is executing the largest strategic investment program in its history, focused on building a more enduring, globally capable firm.
• New offices opened in Atlanta and Singapore in Q1 2026, with business development activity already underway; the Dublin office is on track to open in late 2026 pending Bank of Ireland regulatory approval.
• Legal investment trusts have been established in Ireland and Australia, materially expanding distribution opportunities across Europe and Oceania, culminating a multi-year expansion process.
• International business development has been reorganized, with dedicated professionals based in London and Australia to drive global growth.

Investment and Talent Initiatives

• The firm's investment program is focused primarily on building intellectual capital and adding headcount, which takes time to generate revenue results, so current earnings reflect the deliberate upfront cost of this initiative.
• Deliberate next-generation portfolio management succession transitions are underway to protect the firm's investment process, preserve its culture, and deepen leadership bench for long-term competitive positioning.
• The global and international equity strategies have exceptional top-tier investment performance, creating a robust new business pipeline with strong interest from global institutional consultants and asset allocators; the 2026 institutional priority is converting this pipeline into consultant approvals and funded mandates.

Balance Sheet and Capital Return

• The board of directors declared a Q1 2026 quarterly dividend of 21 cents per Class A common share, payable June 19 to shareholders of record as of June 12.
• The $25 million previously announced share repurchase program was completed in Q1 2026, with $1.9 million in Class A shares repurchased during the quarter.
• A future reporting change will adjust non-discretionary AUM reporting, resulting in a one-time material reduction to reported non-discretionary AUM with no impact on revenue, designed to give investors a clearer view of revenue-driving AUM.

Silvercrest does not break out results into distinct product segments in this transcript. Overall firm financials for Q1 2026 are as follows: Total revenue was flat year-over-year at $31.4 million. Reported consolidated net income was $0.5 million, with net income attributable to Class A shareholders at ~$0.2 million ($0.03 per basic/diluted share). Adjusted EBITDA was ~$3.7 million, equal to 11.8% of revenue. Adjusted net income was ~$1.5 million, with adjusted basic/diluted EPS of $0.13/$0.12. Total expenses increased 13.5% year-over-year by $3.6 million, driven by higher compensation and general/administrative costs. Total compensation and benefits expense was $21.1 million, representing 67.2% of revenue, up from $18.9 million (60.2% of revenue) in Q1 2025. As of March 31 2026, discretionary AUM was $23.1 billion (down 3.7% from December 31 2025, up nearly 2% year-over-year), and total AUM was $35.7 billion (up 1.1% year-over-year).

• Management expects the compensation ratio to remain elevated as the firm's global growth and talent investments mature and begin contributing to revenue growth.
• No formal numerical financial guidance was provided, but management expects the multi-year global expansion initiative to contribute meaningfully to positive AUM flows in 2026 and beyond, and anticipates substantial progress in revenue and AUM growth in coming quarters after an 18-month investment period.
• No upward or downward revisions to prior long-term strategic guidance were announced, as management reaffirmed commitment to the current investment plan.

• Forward-looking statements are based on current expectations, and actual results may differ materially due to a range of risks and uncertainties, which are disclosed in the firm's SEC filings.
• Global expansion AUM flows are binary: the total potential pipeline is billions of dollars, but outcomes can range from large inflows to zero inflows, as the firm is newly established in these markets and timing of allocator decisions is uncertain.
• U.S. small cap strategy faces headwinds: the strategy has experienced near-term performance lags, and new inflows are not expected until the firm delivers sustained improved performance and completes the current portfolio management succession transition.
• Current cash balances are low following 2025 bonus compensation payments, and the firm has drawn on its credit facility to support working capital during the investment period, leading to a planned near-term pause in additional share repurchases.

Q: Management noted optimism about the firm's global equity strategies; can you provide more detail on the pipeline and potential 2026 inflows? / A: Multiple global, international and emerging market strategies have top-tier sustainable performance that stands out relative to struggling peer active managers, which has driven strong consultant and allocator interest. The pipeline totals billions of dollars in potential inflows, but allocator due diligence and consultant rating processes are lengthy, so outcomes are binary and timing is uncertain. Newly approved Irish and Australian trusts will enable distribution to both institutional and high net worth investors once Irish regulatory approval is secured, and management remains optimistic for progress on flows in 2026.

Q: Will you continue share repurchases after completing your existing authorized program? / A: Silvercrest has a strong history of returning capital to shareholders, with $87 million in buybacks over the past 5 years and a 23% 2025 shareholder yield (dividends plus buybacks). Cash balances are currently low after annual bonus payments, and the firm has drawn modest debt to support working capital during the expansion investment cycle, so management plans a slight near-term pause in buybacks. The firm's cash flow and credit facilities can support both growth initiatives and continued capital returns long-term, and capital return remains a high priority for management.

Q: What is driving higher expenses amid flat revenue, and will margin pressure continue into Q2 2026? / A: Most expense growth comes from intentional investments: compensation as a share of revenue has risen from 60% to 67% to add headcount across investment, operations and marketing, including new international roles. Higher G&A comes from increased global travel for marketing and legal/administrative costs to establish the new Irish and Australian trusts. The firm is not heavily concentrated in the red-hot large-cap technology rally, so AUM will be less sensitive to equity market swings and more stable if large-cap stocks pull back. The expense increases are an intentional early-cycle investment that could reverse quickly if large mandates are secured, but margin pressure will persist until investments generate revenue growth.