AlTi (US:ALTI)2023-08-19 18:46Financial Data and Key Metrics Changes - AlTi generated revenues of $52 million in Q2 2023, with 95% representing recurring revenues, and adjusted EBITDA of $11 million [5][20] - Net income for the quarter was $29 million, while adjusted net income normalized for one-off items was $2 million [5] - Total assets under management and advisement reached $69 billion, reflecting a 3% sequential increase [18] Business Line Data and Key Metrics Changes - Wealth Management segment revenues were $34 million, an 8% increase compared to Q1, driven by strong market performance and new business wins [20] - Asset Management revenues were $18 million, with 87% being recurring, but reflected a decline due to market headwinds [20][21] - Wealth Management experienced a 7% quarter-over-quarter increase in AUM to $49 billion, while Asset Management AUM declined 4% to approximately $20 billion [18][20] Market Data and Key Metrics Changes - The company reported a 15% increase in total assets on a trailing 12-month basis, with a 7% sequential asset growth in Wealth Management [6][18] - The public real estate strategy faced challenges due to interest rate hikes, but there are signs of recovery as market conditions improve [14] Company Strategy and Development Direction - The company is focused on streamlining operations and growing recurring revenues, with strategic initiatives aimed at enhancing margins and capitalizing on market opportunities [4][7] - Recent acquisitions, including AL Wealth Partners, are expected to drive growth in key markets like Singapore and Italy [8][9] - The company plans to exit non-core assets to generate capital for reinvestment into core strategies [15][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the diversified platform's ability to perform well across economic cycles, with expectations for continued growth in recurring revenues [5][24] - The regulatory environment for merger arbitrage is improving, which is anticipated to enhance deal activity in the coming quarters [39] - Management highlighted a strong pipeline for future acquisitions and emphasized the importance of cultural fit in potential deals [36] Other Important Information - The company achieved a significant improvement in its capital structure, increasing public float to approximately 22% of shares outstanding [16] - Operating expenses decreased to $93 million from $101 million in the previous quarter, with a normalized operating margin of approximately 12% [22][24] Q&A Session Summary Question: Can you discuss the trajectory of transaction expenses? - Management indicated that transaction expenses from the de-SPAC and warrant exchange are largely behind them, with expectations to trend toward zero in Q3 [28][29] Question: How does the EBITDA margin improvement compare to expectations? - Management noted that the core business is performing well, and streamlining efforts are expected to lead to further improvements in the coming quarters [32] Question: Is the wealth management net flow a sustainable run rate? - Management highlighted the diversity of net flows between Q1 and Q2, with strong pipelines in both U.S. and international markets [34] Question: What is the pipeline for similar deals to AL Wealth? - Management mentioned the recent Lugano acquisition as a similar deal and indicated ongoing discussions with firms that fit their strategic profile [36] Question: Can you provide an outlook for the merger arbitrage fund? - Management noted improvements in the interest rate and regulatory environment, which are expected to enhance M&A activity [38][39] Question: What are the plans for selling non-core assets? - Management is evaluating all business segments and considering bids for non-core assets to generate capital for core investments [41] Question: How are other core investment strategies performing? - Management expressed optimism about the Asia Credit strategy and highlighted strong performance in the long-short equity fund and bridge lending strategy [45]