Silvercrest Asset Management Group(US:SAMG)2022-11-06 07:29Financial Data and Key Metrics Changes - Discretionary assets under management (AUM) decreased to $19.4 billion from $22.5 billion year-over-year [4][11] - Third quarter 2022 revenue decreased to $29 million from $33.5 million, representing a 13% decline [4][12] - Total AUM now stands at $27.4 billion [4] - Adjusted EBITDA for the quarter was approximately $8.2 million, with an adjusted EBITDA margin of 28.1% [5][17] - Reported consolidated net income for the quarter was $5.6 million, down from $6.4 million in the same period last year [16] Business Line Data and Key Metrics Changes - The firm added new relationships and accounts during the third quarter, partially offsetting outflows [6] - Compensation and benefits expenses decreased by approximately 13% to $16.3 million [14] - General and administrative expenses decreased by approximately 66% to $5.7 million [15][23] Market Data and Key Metrics Changes - The actionable pipeline for new business is $1.43 billion, down from the previous quarter due to recent wins [37] - The OCIO business pipeline is approximately $670 million, a significant part of the total pipeline [48] Company Strategy and Development Direction - The company launched a Large Cap Value Unit Investment Trust to provide a better investment vehicle for clients [41] - The firm is committed to share repurchases, with approximately $5.2 million spent in the third quarter [7][33] - Management emphasized the importance of maintaining high-quality client relationships during volatile market conditions [66] Management's Comments on Operating Environment and Future Outlook - Management noted that market volatility creates long-term opportunities for the firm [7] - The firm is cautious about predicting future performance due to market influences on compensation and revenue [31] - Management expressed optimism about the potential for new client relationships arising from current market disruptions [68] Other Important Information - The Board of Directors declared a quarterly dividend of $0.18 per share, payable on December 16 [8] - Total assets as of September 30 were $205.1 million, down from $229.3 million at the end of the previous year [26] Q&A Session Summary Question: Outflows higher than expected - Management acknowledged that outflows were $507 million in the quarter, influenced by tax-related outflows and rebalancing [30] Question: Compensation expenses modeling - Management stated that compensation is accrued at 55%, but fourth-quarter results are unpredictable due to market conditions [31] Question: Future buyback strategy - Management indicated a commitment to continue buybacks, viewing current market conditions as an opportunity [33] Question: Actionable pipeline details - The actionable pipeline is $1.43 billion, down due to recent wins, but remains strong [37] Question: Launch of Large Cap Value Unit Investment Trust - Management explained that the new trust format provides a better investment vehicle and expects mandates to begin in the fourth quarter [41] Question: OCIO business specifics - The OCIO pipeline is approximately $670 million, with ongoing discussions with European families for wealth management [47] Question: Dividend policy and potential increases - Management emphasized the importance of a sustainable dividend and indicated that increases depend on revenue and cash flow [52] Question: Market volatility impact on investment firms - Management noted that scrutiny in the acquisition market is increasing, affecting potential deals in the wealth management space [56]