NEW YORK, July 27, 2023 (GLOBE NEWSWIRE) -- Silvercrest Asset Management Group Inc. ( SAMG) (the “Company” or “Silvercrest”) today reported the results of its operations for the quarter ended June 30, 2023.
Business Update
Markets continued their recovery during the second quarter of 2023, with Silvercrest concluding the quarter with Total Assets under Management (“AUM”) of $31.9 billion and Discretionary AUM of $21.5 billion. Discretionary AUM, which primarily drives revenue, increased $0.2 billion over the first quarter and has increased $0.6 billion or 2.9 % for the first half of 2023. Discretionary AUM has increased $1.1 billion or 5.4% year-over-year, since the second quarter of 2022. The firm's Total AUM increased by $3.2 billion or 11.2% over the second quarter of 2022, from $28.7 to $31.9 billion.
While the business is improving, most metrics remain down on a year-over-year basis as markets recover. Revenue, for example, fell 9.9% for the first half of 2023 compared with 2022. This decline in revenue affected Adjusted EBITDA1 and Adjusted Diluted Earnings per Share1, 2. Silvercrest’s Adjusted EBITDA Margin1 of 27.5% for the first half of 2023 remains historically healthy for the company, and represents a 5.8 % increase over the year-end 2022 Adjusted EBITDA1 Margin.
Silvercrest's pipeline of new business opportunities remain robust. We are focused on those opportunities as well as investments to drive future growth in the business.
On July 26, 2023, the Company’s Board of Directors declared a quarterly dividend of $0.19 per share of Class A common stock. The dividend will be paid on or about September 15, 2023 to shareholders of record as of the close of business on September 8, 2023.
Second Quarter 2023 Highlights
- Total AUM of $31.9 billion, inclusive of discretionary AUM of $21.5 billion and non-discretionary AUM of $10.4 billion at June 30, 2023.
- Revenue of $29.7 million.
- U.S. Generally Accepted Accounting Principles (“GAAP”) consolidated net income and net income attributable to Silvercrest of $5.1 million and $3.1 million, respectively.
- Basic and diluted net income per share of $0.33.
- Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)1 of $8.1 million.
- Adjusted net income1 of $4.9 million.
- Adjusted basic and diluted earnings per share1, 2 of $0.35 and $0.34, respectively.
The table below presents a comparison of certain GAAP and non-GAAP (“Adjusted”) financial measures and AUM.
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| (in thousands except as indicated) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue | $ | 29,734 | $ | 32,173 | $ | 59,164 | $ | 65,683 | ||||||||
| Income before other income (expense), net | $ | 6,518 | $ | 11,900 | $ | 13,269 | $ | 27,339 | ||||||||
| Net income | $ | 5,135 | $ | 9,473 | $ | 10,445 | $ | 21,869 | ||||||||
| Net income margin | 17.3 | % | 29.4 | % | 17.7 | % | 33.3 | % | ||||||||
| Net income attributable to Silvercrest | $ | 3,085 | $ | 5,770 | $ | 6,289 | $ | 13,338 | ||||||||
| Net income per basic share | $ | 0.33 | $ | 0.58 | $ | 0.66 | $ | 1.35 | ||||||||
| Net income per diluted share | $ | 0.33 | $ | 0.58 | $ | 0.66 | $ | 1.35 | ||||||||
| Adjusted EBITDA1 | $ | 8,116 | $ | 9,163 | $ | 16,297 | $ | 19,413 | ||||||||
| Adjusted EBITDA Margin1 | 27.3 | % | 28.5 | % | 27.5 | % | 29.6 | % | ||||||||
| Adjusted net income1 | $ | 4,877 | $ | 5,799 | $ | 9,919 | $ | 12,451 | ||||||||
| Adjusted basic earnings per share1, 2 | $ | 0.35 | $ | 0.40 | $ | 0.71 | $ | 0.86 | ||||||||
| Adjusted diluted earnings per share1, 2 | $ | 0.34 | $ | 0.39 | $ | 0.69 | $ | 0.83 | ||||||||
| Assets under management at period end (billions) | $ | 31.9 | $ | 28.7 | $ | 31.9 | $ | 28.7 | ||||||||
| Average assets under management (billions)3 | $ | 30.9 | $ | 30.0 | $ | 30.4 | $ | 30.5 | ||||||||
| Discretionary assets under management (billions) | $ | 21.5 | $ | 20.4 | $ | 21.5 | $ | 20.4 | ||||||||
________________________
| 1 | Adjusted measures are non-GAAP measures and are explained and reconciled to the comparable GAAP measures in Exhibits 2 and 3. |
| 2 | Adjusted basic and diluted earnings per share measures for the three and six months ended June 30, 2023 are based on the number of shares of Class A common stock and Class B common stock outstanding as of June 30, 2023. Adjusted diluted earnings per share are further based on the addition of unvested restricted stock units, and non-qualified stock options to the extent dilutive at the end of the reporting period. |
| 3 | We have computed average AUM by averaging AUM at the beginning of the applicable period and AUM at the end of the applicable period. |
AUM at $31.9 Billion
Silvercrest’s discretionary assets under management increased by $1.1 billion, or 5.4%, to $21.5 billion at June 30, 2023, from $20.4 billion at June 30, 2022. The increase was attributable to market appreciation of $2.0 billion partially offset by net client outflows of $0.9 billion. Silvercrest’s total AUM increased by $3.2 billion, or 11.1%, to $31.9 billion at June 30, 2023, from $28.7 billion at June 30, 2022. The increase was attributable to market appreciation of $2.4 billion and net client inflows of $0.8 billion.
Silvercrest’s discretionary assets under management increased by $0.2 billion, or 0.9%, to $21.5 billion at June 30, 2023, from $21.3 billion at March 31, 2023. The increase was attributable to market appreciation of $0.6 billion partially offset by net client outflows of $0.4 billion. Silvercrest’s total AUM increased by $2.0 billion, or 6.7%, to $31.9 billion at June 30, 2023, from $29.9 billion at March 31, 2023. The increase was attributable to market appreciation of $0.7 billion and net client inflows of $1.3 billion.
Second Quarter 2023 vs. Second Quarter 2022
Revenue decreased by $2.4 million, or 7.6%, to $29.7 million for the three months ended June 30, 2023, from $32.2 million for the three months ended June 30, 2022. This decrease was driven by a decrease in the average annual management fee based on the mix of discretionary and non-discretionary assets.
Total expenses increased by $2.9 million, or 14.5%, to $23.2 million for the three months ended June 30, 2023, from $20.3 million for the three months ended June 30, 2022. Compensation and benefits expense decreased by $1.2 million, or 6.8%, to $16.8 million for the three months ended June 30, 2023, from $18.0 million for the three months ended June 30, 2022. The decrease was primarily attributable to a decrease in the accrual for bonuses of $1.6 million partially offset by an increase in salaries and benefits of $0.3 million primarily as a result of merit-based increases and newly hired staff and an increase in equity-based compensation of $0.1 million due to the granting of additional RSUs. General and administrative expenses increased by $4.2 million, or 180.6%, to $6.5 million for the three months ended June 30, 2023, from $2.3 million for the three months ended June 30, 2022. This was primarily attributable to an adjustment to the fair value of contingent consideration related to the acquisition of Cortina of ($4.1) million recorded during the three months ended June 30, 2022, increases in portfolio and system expenses of $0.1 million, professional fees of $0.1 million, marketing expenses of 0.1 million and depreciation and amortization expense of $0.1 million, partially offset by decreases in travel and entertainment expenses of $0.3 million.
Consolidated net income was $5.1 million or 17.3% of revenue for the three months ended June 30, 2023, as compared to consolidated net income of $9.5 million or 29.4% of revenue for the same period in the prior year. Net income attributable to Silvercrest was $3.1 million, or $0.33 per basic share and diluted share for the three months ended June 30, 2023. Our Adjusted Net Income1 was $4.9 million, or $0.35 per adjusted basic share and $0.34 per adjusted diluted share2 for the three months ended June 30, 2023.
Adjusted EBITDA1 was $8.1 million or 27.3% of revenue for the three months ended June 30, 2023, as compared to $9.2 million or 28.5% of revenue for the same period in the prior year.
Six Months Ended June 30, 2023 vs. Six Months Ended June 30, 2022
Revenue decreased by $6.5 million, or 9.9%, to $59.2 million for the six months ended June 30, 2023, from $65.7 million for the six months ended June 30, 2022. This decrease was driven by market depreciation and net client outflows in discretionary assets under management.
Total expenses increased by $7.6 million, or 19.7%, to $45.9 million for the six months ended June 30, 2023, from $38.3 million for the six months ended June 30, 2022. Compensation and benefits expense decreased by $3.4 million, or 9.2%, to $33.3 million for the six months ended June 30, 2023, from $36.6 million for the six months ended June 30, 2022. The decrease was primarily attributable to a decrease in the accrual for bonuses of $4.3 million partially offset by an increase in salaries and benefits of $0.7 million primarily as a result of merit-based increases and newly hired staff an increase in equity-based compensation of $0.2 million due to the granting of additional RSUs. General and administrative expenses increased by $10.9 million to $12.6 million for the six months ended June 30, 2023, from $1.7 million for the six months ended June 30, 2022. This was primarily attributable to an adjustment to the fair value of contingent consideration related to the Cortina Acquisition of ($10.6) million recorded during the six months ended June 30, 2022, increases in portfolio and system expenses of $0.3 million, marketing expenses of 0.1 million and depreciation and amortization expense of $0.1 million, partially offset by decreases in travel and entertainment expenses of $0.2 million.
Consolidated net income was $10.4 million or 17.7% of revenue for the six months ended June 30, 2023, as compared to consolidated net income of $21.9 million or 33.3% of revenue for the same period in the prior year. Net income attributable to Silvercrest was $6.3 million, or $0.66 per basic share and diluted share for the six months ended June 30, 2023. Our Adjusted Net Income1 was $9.9 million, or $0.71 per adjusted basic share and $0.69 per adjusted diluted share2 for the six months ended June 30, 2023.
Adjusted EBITDA1 was $16.3 million or 27.5% of revenue for the six months ended June 30, 2023, as compared to $19.4 million or 29.6% of revenue for the same period in the prior year.
Liquidity and Capital Resources
Cash and cash equivalents were $47.4 million at June 30, 2023, compared to $77.4 million at December 31, 2022. As of June 30, 2023, there was $3.6 million outstanding under our term loan with City National Bank and nothing outstanding on our revolving credit facility with City National Bank.
Silvercrest Asset Management Group Inc.’s total equity was $82.9 million at June 30, 2023. We had 9,373,443 shares of Class A common stock outstanding and 4,529,370 shares of Class B common stock outstanding at June 30, 2023.
Non-GAAP Financial Measures
To provide investors with additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a basis consistent with GAAP with Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Earnings Per Share, which are non-GAAP financial measures of earnings. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.
- EBITDA represents net income before provision for income taxes, interest income, interest expense, depreciation and amortization.
- We define Adjusted EBITDA as EBITDA without giving effect to the Delaware franchise tax, professional fees associated with acquisitions or financing transactions, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations, prior to our initial public offering, as an expense. We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring earnings of the Company, taking into account earnings attributable to both Class A and Class B shareholders.
- Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenue. We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA Margin, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring profitability of the Company, taking into account profitability attributable to both Class A and Class B shareholders.
- Adjusted Net Income represents recurring net income without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations, prior to our initial public offering, as an expense. Furthermore, Adjusted Net Income includes income tax expense assuming a blended corporate rate of 26%. We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted Net Income, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring income of the Company, taking into account income attributable to both Class A and Class B shareholders.
- Adjusted Earnings Per Share represents Adjusted Net Income divided by the actual Class A and Class B shares outstanding as of the end of the reporting period for basic Adjusted Earnings Per Share, and to the extent dilutive, we add unvested restricted stock units (“RSUs”) and non-qualified stock options to the total shares outstanding to compute diluted Adjusted Earnings Per Share. As a result of our structure, which includes a non-controlling interest, we feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted Earnings Per Share, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring earnings per share of the Company as a whole as opposed to being limited to our Class A common stock.
Conference Call
The Company will host a conference call on July 31, 2023, at 8:30 am (Eastern Time) to discuss these results. Hosting the call will be Richard R. Hough III, Chief Executive Officer and President and Scott A. Gerard, Chief Financial Officer. Listeners may access the call by dialing 1-844-836-8743 or for international listeners the call may be accessed by dialing 1-412-317-5723. A live, listen-only webcast will also be available via the investor relations section of www.silvercrestgroup.com. An archived replay of the call will be available after the completion of the live call on the Investor Relations page of the Silvercrest website at http://ir.silvercrestgroup.com/.
Forward-Looking Statements and Other Disclosures
This release contains, and from time to time our management may make, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and assumptions. These statements are only predictions based on our current expectations and projections about future events. Important factors that could cause actual results, level of activity, performance or achievements to differ materially from those indicated by such forward-looking statements include, but are not limited to: incurrence of net losses; fluctuations in quarterly and annual results; adverse economic or market conditions; our expectations with respect to future levels of assets under management, inflows and outflows; our ability to retain clients; our ability to maintain our fee structure; our particular choices with regard to investment strategies employed; our ability to hire and retain qualified investment professionals; the cost of complying with current and future regulation coupled with the cost of defending ourselves from related investigations or litigation; failure of our operational safeguards against breaches in data security, privacy, conflicts of interest or employee misconduct; our expected tax rate; and our expectations with respect to deferred tax assets, adverse economic or market conditions, including the continued adverse effects of the coronavirus pandemic; incurrence of net losses; adverse effects of management focusing on implementation of a growth strategy; failure to develop and maintain the Silvercrest brand; and other factors disclosed under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2022, which is accessible on the U.S. Securities and Exchange Commission's website at www.sec.gov. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
About Silvercrest
Silvercrest was founded in April 2002 as an independent, employee-owned registered investment adviser. With offices in New York, Boston, Virginia, New Jersey, California and Wisconsin, Silvercrest provides traditional and alternative investment advisory and family office services to wealthy families and select institutional investors.
Silvercrest Asset Management Group Inc.
Contact: Richard Hough
212-649-0601
[email protected]
Exhibit 1
| Silvercrest Asset Management Group Inc. Condensed Consolidated Statements of Operations (Unaudited and in thousands, except share and per share amounts or as noted) | ||||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | ||||||||||||||||
| Management and advisory fees | $ | 28,652 | $ | 31,103 | $ | 57,020 | $ | 63,551 | ||||||||
| Performance fees | — | 2 | — | 2 | ||||||||||||
| Family office services | 1,082 | 1,068 | 2,144 | 2,130 | ||||||||||||
| Total revenue | 29,734 | 32,173 | 59,164 | 65,683 | ||||||||||||
| Expenses | ||||||||||||||||
| Compensation and benefits | 16,756 | 17,971 | 33,254 | 36,630 | ||||||||||||
| General and administrative | 6,460 | 2,302 | 12,641 | 1,714 | ||||||||||||
| Total expenses | 23,216 | 20,273 | 45,895 | 38,344 | ||||||||||||
| Income before other (expense) income, net | 6,518 | 11,900 | 13,269 | 27,339 | ||||||||||||
| Other (expense) income, net | ||||||||||||||||
| Other (expense) income, net | 23 | 7 | 68 | 15 | ||||||||||||
| Interest income | 26 | 3 | 45 | 4 | ||||||||||||
| Unrealized gain (l | ||||||||||||||||
