Silvercrest Asset Management Group Inc. (NASDAQ:SAMG) Q3 2023 Earnings Conference Call November 3, 2023 8:30 AM ET Company Participants Richard Hough - Chairman and Chief Executive Officer Scott Gerard - Chief Financial Officer Conference Call Participants Sandy Mehta - Evaluate Research Christopher Marinac - Janney Montgomery Scott Christopher Sakai - Singular Research Operator Good morning and welcome to the Silvercrest Asset Management Group Inc. Q3 2023 Earnings Conference Call. All participants will be ...

Part I Financial Information [Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Silvercrest Asset Management Group Inc. as of September **30**, **2023**, and for the three and nine-month periods then ended. It includes the statements of financial condition, operations, changes in equity, and cash flows, accompanied by detailed notes explaining the basis of presentation and significant accounting policies [Condensed Consolidated Statements of Financial Condition](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) The company's total assets decreased to **$191.3 million** as of September **30**, **2023**, from **$212.7 million** at December **31**, **2022**, primarily due to a reduction in cash and cash equivalents. Total liabilities also decreased from **$86.8 million** to **$67.4 million**, largely driven by a significant drop in accrued compensation. Total equity saw a slight decrease over the same period Condensed Consolidated Statements of Financial Condition (in thousands) | Account | September 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$191,291** | **$212,675** | | Cash and cash equivalents | $58,867 | $77,432 | | Goodwill | $63,675 | $63,675 | | **Total Liabilities** | **$67,400** | **$86,843** | | Accrued compensation | $24,819 | $39,734 | | Borrowings under credit facility | $3,624 | $6,337 | | **Total Equity** | **$123,891** | **$125,832** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the third quarter of **2023**, total revenue increased slightly to **$29.7 million** compared to **$29.0 million** in Q**3** **2022**, while net income decreased to **$5.4 million** from **$5.6 million**. For the nine-month period, revenue fell to **$88.9 million** from **$94.7 million** year-over-year, and net income dropped significantly to **$15.8 million** from **$27.5 million** Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q3 2023 (in thousands) | Q3 2022 (in thousands) | Nine Months 2023 (in thousands) | Nine Months 2022 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$29,704** | **$29,042** | **$88,868** | **$94,725** | | Management and advisory fees | $28,425 | $27,949 | $85,445 | $91,500 | | **Total Expenses** | **$23,185** | **$21,940** | **$69,080** | **$60,284** | | Compensation and benefits | $16,691 | $16,271 | $49,945 | $52,901 | | **Net Income** | **$5,380** | **$5,643** | **$15,825** | **$27,512** | | Net Income Attributable to Silvercrest | $3,216 | $3,433 | $9,505 | $16,771 | | **Diluted EPS** | **$0.34** | **$0.35** | **$1.00** | **$1.70** | [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) This statement details the changes in equity accounts for the nine months ended September **30**, **2023**. Key activities impacting equity include net income of **$15.8 million**, distributions to partners of **$7.8 million**, dividends paid on Class A common stock totaling **$5.2 million**, and the repurchase of Class A common stock for **$5.7 million** - During the first nine months of **2023**, the company paid **$5.2 million** in dividends on Class A common stock and repurchased shares for **$5.7 million**[17](index=17&type=chunk) - Total equity decreased from **$125.8 million** at the start of **2023** to **$123.9 million** at the end of Q**3** **2023**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September **30**, **2023**, net cash provided by operating activities was **$6.2 million**, a decrease from **$7.7 million** in the prior-year period. Investing activities used **$3.4 million**, primarily for asset acquisitions. Financing activities used **$21.4 million**, driven by distributions to partners, dividends, and share repurchases. This resulted in a net decrease in cash and cash equivalents of **$18.6 million** Cash Flow Summary (Nine Months Ended Sept 30, in thousands) | Cash Flow Activity | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,248 | $7,694 | | Net cash used in investing activities | $(3,355) | $(669) | | Net cash used in financing activities | $(21,442) | $(25,417) | | **Net Decrease in Cash and Cash Equivalents** | **$(18,565)** | **$(18,392)** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's organization, accounting policies, acquisitions, debt facilities, leases, and equity structure. Key disclosures include details on the Cortina and Neosho acquisitions, the terms of the credit facility with City National Bank, lease commitments, and the specifics of the equity-based compensation plan - The company has a credit facility with City National Bank, which includes a term loan and a revolving credit facility. As of September **30**, **2023**, **$3.6 million** was outstanding under the term loan, and there were no borrowings on the revolving facility[109](index=109&type=chunk)[110](index=110&type=chunk) - The company's **2012** Equity Incentive Plan was amended in June **2022** to increase the number of issuable shares to **2,737,500**. As of September **30**, **2023**, **1,122,400** shares are available for grant[161](index=161&type=chunk) - Contingent consideration liabilities related to the Cortina and Neosho acquisitions were **$0** and **$64 thousand**, respectively, as of September **30**, **2023**. The growth payment for the Cortina acquisition was not earned based on revenue through June **30**, **2023**[82](index=82&type=chunk)[83](index=83&type=chunk)[90](index=90&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a **13.9%** year-over-year increase in Assets Under Management (AUM) to **$31.2 billion**. Despite higher AUM, revenues for the nine-month period decreased **6.2%** due to a lower average management fee rate. Expenses rose significantly, primarily due to a non-recurring favorable adjustment in the prior year related to acquisition contingent consideration. The discussion also covers liquidity, capital resources, and non-GAAP financial measures [Key Performance Indicators](index=37&type=section&id=Key%20Performance%20Indicators) Assets Under Management (AUM) grew to **$31.2 billion** at the end of Q**3** **2023**, up from **$27.4 billion** a year prior. However, profitability metrics declined; for the nine months ended September **30**, **2023**, net income was **$15.8 million** and Adjusted EBITDA was **$24.3 million**, compared to **$27.5 million** and **$27.6 million**, respectively, in the same period of **2022** Key Performance Indicators (in thousands, except AUM) | Indicator | Nine Months 2023 (in thousands) | Nine Months 2022 (in thousands) | | :--- | :--- | :--- | | Revenue | $88,868 | $94,725 | | Net income | $15,825 | $27,512 | | Adjusted EBITDA | $24,297 | $27,585 | | AUM at period end (billions) | $31.2 | $27.4 | [Operating Results Analysis](index=41&type=section&id=Operating%20Results%20Analysis) For Q**3** **2023**, revenue increased **2.3%** YoY to **$29.7 million**, while total expenses rose **5.7%** to **$23.2 million**. For the nine-month period, revenue decreased **6.2%** to **$88.9 million**, and total expenses increased **14.6%** to **$69.1 million**. The nine-month expense increase was primarily due to a **$10.9 million** favorable adjustment to the fair value of contingent consideration related to the Cortina acquisition in **2022**, which did not recur in **2023** Revenue Comparison (in thousands) | Period | 2023 (in thousands) | 2022 (in thousands) | Change ($) (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Three Months Ended Sept 30** | $29,704 | $29,042 | $662 | 2.3% | | **Nine Months Ended Sept 30** | $88,868 | $94,725 | $(5,857) | (6.2)% | Expense Comparison (in thousands) | Period | 2023 (in thousands) | 2022 (in thousands) | Change ($) (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Three Months Ended Sept 30** | $23,185 | $21,940 | $1,245 | 5.7% | | **Nine Months Ended Sept 30** | $69,080 | $60,284 | $8,796 | 14.6% | - The significant increase in nine-month general and administrative expenses was primarily due to a (**$10.9 million**) favorable adjustment to the fair value of contingent consideration for the Cortina Acquisition recorded in **2022**, which was not repeated in **2023**[242](index=242&type=chunk) [Assets Under Management (AUM)](index=42&type=section&id=Assets%20Under%20Management%20(AUM)) Total AUM increased by **$2.3 billion**, from **$28.9 billion** at the start of **2023** to **$31.2 billion** at September **30**, **2023**. This growth was driven by market appreciation of **$1.3 billion** and net client inflows of **$1.0 billion**. Discretionary AUM saw net outflows of **$0.7 billion**, while non-discretionary AUM had net inflows of **$1.7 billion** AUM Change for Nine Months Ended September 30, 2023 (in billions) | AUM Component | Jan 1, 2023 (in billions) | Net Client Flows (in billions) | Market Appreciation (in billions) | Sept 30, 2023 (in billions) | | :--- | :--- | :--- | :--- | :--- | | Discretionary | $20.9 | $(0.7) | $0.3 | $20.5 | | Non-Discretionary | $8.0 | $1.7 | $1.0 | $10.7 | | **Total AUM** | **$28.9** | **$1.0** | **$1.3** | **$31.2** | [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary source of liquidity is cash from operations. Cash and cash equivalents stood at **$58.9 million** as of September **30**, **2023**, down from **$77.4 million** at the end of **2022**. The decrease was mainly due to cash used in financing activities, including **$7.8 million** in partner distributions, **$5.2 million** in dividends, and **$5.8 million** in share repurchases. The company maintains a credit facility and was in compliance with all covenants Cash Flow Summary (Nine Months Ended Sept 30, in thousands) | Cash Flow Activity | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,248 | $7,694 | | Net cash used in investing activities | $(3,355) | $(669) | | Net cash used in financing activities | $(21,442) | $(25,417) | | **Net change in cash** | **$(18,565)** | **$(18,392)** | - Major uses of cash in financing activities for the nine months ended September **30**, **2023** included distributions to partners (**$7.8M**), dividends to Class A shareholders (**$5.2M**), and share repurchases (**$5.8M**)[270](index=270&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, detailed disclosures are not required. The company identifies its primary market risk as the potential for declining securities prices, which would reduce assets under management and, consequently, advisory fee revenue. A **10%** change in average AUM for the first nine months of **2023** would have resulted in an approximate **$11.8 million** annualized change in revenue - The company's main market risk is that a decline in securities prices would lower AUM, directly reducing fee-based revenue and income[281](index=281&type=chunk) - A hypothetical **10%** change in average AUM for the nine months ended September **30**, **2023**, would cause an annualized revenue change of approximately **$11.8 million**[278](index=278&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of September **30**, **2023**, and concluded that they were **effective**. There were no **material changes** to the company's internal control over financial reporting during the quarter, and no **material impact** was noted from the remote work environment due to the COVID-**19** pandemic - Based on an evaluation as of September **30**, **2023**, the CEO and CFO concluded that the company's disclosure controls and procedures were **effective**[282](index=282&type=chunk)[284](index=284&type=chunk) - No changes occurred during the quarter that **materially affected**, or are reasonably likely to **materially affect**, the company's internal control over financial reporting[283](index=283&type=chunk) Part II Other Information [Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the **10**-Q report, which include certifications by the CEO and CFO as required by the Sarbanes-Oxley Act of **2002**, and Inline XBRL documents. It also notes that no directors or executive officers adopted or terminated a **Rule 10b5-1 trading plan** during the quarter - During the third quarter of **2023**, none of the company's directors or executive officers adopted or terminated a **Rule 10b5-1 trading plan**[285](index=285&type=chunk)

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OR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2023 Delaware 45-5146560 (State or Other Jurisdiction of Incorporation or Organization) 1330 Avenue of the Americas, 38th Floor New York, New York 10019 (Address of Principal Executive Offices and Zip Code) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ...

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED December 31, 2022 OR 1330 Avenue of the Americas, 38th Floor New York, New York 10019 (Address of principal executive offices and zip code) (212) 649-0600 (Registrant's telephone number, including area code) Not Applicable ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ...

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission file number: 001-35733 Silvercrest Asset Management Group Inc. (Exact name of registrant as specified in its charter) Delaware 45-5146560 (S ...