AlTi Global, Inc.

Good afternoon. My name is Rocco and I will be your conference operator today. At this time, I would like to welcome everyone to the Altitude Global Third Quarter 2023 Earnings Conference Call. During the call, your lines will remain in a listen-only mode. After the speaker's remarks, there will be a question and answer session. I'd like to advise all parties that this conference call is being recorded And a replay of the webcast is available on Altie Tiedemann Global's Investor Relations website. I will now turn the call over to Lily Arteaga, Head of Investor Relations for Altie Tiedemann Global. Please go ahead.

Good afternoon to everyone on the call today. Joining me this afternoon are Michael Tiedemann, our CEO, and Steve Jarrett, our CFO. We invite you to visit the Investor Relations section of our website at www.altie-global.com. earnings materials, including our updated investor presentation. I would like to remind everyone that certain statements made during the call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, expect, future, intend, may, plan, and will are similar words. Because these forward-looking statements involve both known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. ALFI assumes no obligation or responsibility to update any forward-looking statements. During this call, some comments may include references to non-GAAP financial measures. Full GAAP reconciliations can be found in our earnings presentations and related SEC filings. With that, I'll turn the call over to Mike.

Good afternoon, everyone, and thank you for joining us today for our third quarter 2023 earnings call. In the quarter, we continue to make progress on our strategic initiatives to set ourselves up for a strong 2024 and beyond. Some of these initiatives, particularly the work to restructure and reposition certain businesses, have impacted our gap earnings this quarter, but are consistent with our stated 2023 goal of simplifying the business with a focus on recurring revenues. We've continued to right-size the organization, simplify our business lines, and initiate processes to reduce the number of regulated entities. We've done this while securing important client wins and adding key revenue-generating talent. Since the listing, We've reported healthy AUM, AUA growth amidst a pressured market environment, particularly in the third quarter. We firmly believe that the combination of wealth management and asset management differentiates us from pure play firms in both sectors and provides a growing base of recurring diversified revenues. On a trailing 12-month basis, total assets under management and advisement increased 13%. And within wealth management, These have grown 23% in the last year, validating the attractiveness of our global holistic wealth proposition in the eyes of our target clients. And speaking about wealth management, I'd be remiss not to mention our first Alt-C family retreat held in Lisbon at the end of September. The event was attended by nearly 50 clients and prospects from 11 countries. This demonstrates our unique ability to build connections and a global community amongst our families. and to provide differentiated cross-border services in the process. What our clients appreciate is that we are a global platform with sophisticated institutional quality solutions that operates with the attention, care, and customization of a specialized boutique family office. Turning now to our Q3 performance. ALTI generated revenues of $49 million, 97% of which were recurring revenues, essentially flat to the second quarter when removing revenues from AHRA that were included in Q2, but we exited the business effective June 30th. Year to date, we've generated revenues of nearly 160 million. We believe these results, generated largely through organic client wins, are starting to reflect the power of our franchise, which will continue to flow to an improved bottom line as we look forward to 2024. Despite these top-line results, we reported gap net loss of $171 million for the quarter, primarily due to non-cash goodwill impairment charges. That is largely related to decisions taken this year to restructure or exit unprofitable transaction-oriented business lines in our asset management segment. The results also include several other non-cash items that negatively impacted gap earnings. In addition, adjusted EBITDA was negative $3 million in the quarter, resulting in a year-to-date EBITDA of $19 million. However, as noted previously, our reported financials for GAAP and adjusted EBITDA include certain line items that we do not believe reflect the underlying performance and, importantly, do not impact the cash flows generated by the business. Steve Yared, who recently joined LT as our CFO, will provide more details in his remarks. Turning now to our enterprise strategy. We've been focused on continuing the execution of two principal initiatives for 2023, which will carry on to the next calendar year, leveraging our competitive advantages to accelerate organic growth and execute disciplined and creative acquisitions. And secondly, simplifying the organization, which will in turn enhance the cost-saving initiatives mentioned in the previous calls. Now I want to offer more detail about the ways we're executing these initiatives across both of our business segments. The wealth management segment, Results reflect our ability to capitalize on our competitive advantages, and we've achieved strong organic and inorganic growth since the beginning of the year. Our wealth management business is well integrated, sharing best practices, leveraging expertise and services across offices, and collaborating on global opportunities. As a result of this collaboration and expanded service offering, net new client flows have been $1.6 billion year to date. This reflects significant contributions from the U.S. business, as well as solid performance internationally. The majority of our client wins in 2023 have invested, on average, over $60 million in billable assets for this. The clients, which range from ultra-high net worth individuals, family offices, nonprofits, and foundations, specifically cited Alty's ability to offer holistic wealth management as a deciding factor. Our range of comprehensive services includes investment advisory, trust planning, family office services, cross-border wealth advice, and unique access to impact and value-based investment opportunities. Notably, 40% of the assets received in the quarter were related to impact strategies. As I mentioned in our last call, in the third quarter, we purchased the remaining ownership stake of the Lugano-based multifamily office, that have been part of the legacy ALTI Wealth Management Platform since 2019. This firm has approximately $1 billion in assets and offers exposure to the northern Italian market, an important region for our global platform. This transaction, paired with our acquisition of AL Wealth Partners in Singapore earlier this year, have resulted in nearly $2 billion of net flows to the platform. We will look to replicate this momentum as we evaluate additional opportunities to broaden and densify our platform in key U.S. and international wealth markets. We've identified a robust pipeline of strategic opportunities within wealth management that align with our competitive advantages. Our platform continues to be the destination of choice for ultra high net worth firms that are looking for a comprehensive global solution set to appeal to their current client base. These firms are also seeking the ability to accelerate their growth by leveraging the capability of the Altis unique platform. Turning now to asset management, since our listing in January, we've made great strides in positioning our asset management segment for the long term. That said, this progress and the solid underlying performance of the business in the quarter was partially offset by the impacts of our efforts to strategically reposition the business. We have concentrated on growing our core asset management businesses, which produce strong, predictable management fees from alternative asset classes, where we have a clear advantage. We've also changed the strategy of the real estate co-investment platform to make the business more scalable and profitable by right-sizing the team, exiting and restructuring certain deals and entities, as well as simplifying the fee structure of the business. Additionally, we scaled down our strategic advisory business, and exited our UK broker-dealer business, given their transactional nature. Our uncorrelated strategies that make up our alternatives platform are performing well. This includes our European Long Short Equities Manager and Asia Credit and Special Situations Fund, both of which outperformed their respective benchmarks by more than 5% in the period. Additionally, the event-driven strategy exhibited strong performance, almost up nearly 5% in the quarter. These core strategies are the foundation of our alternatives platform, which is positioned to preserve capital specifically in the face of volatile capital markets. Despite the strong underlying business performance, revenues were down due to a decrease in AUM, AUA levels, reflecting primarily the impact of high interest rates on the global real estate market and strategy-specific pressures in the first half of the year. We are confident that continued execution of our diversified strategies combined with the restructuring of the business and the launch of new strategies will result in strong fundraising opportunities and asset management going forward. In particular, we have some important new fundraising initiatives underway that will leverage our track record of providing capital and services to asset management firms in exchange for equity stakes in our business. I'll now highlight a few strategic initiatives. Subsequent to quarter end, we signed a definitive agreement for the sale of LJ Fiduciary, our Isle of Man and Switzerland-based trust and corporate administration services business, as well as our London-based private office services business. We're pleased with this transaction, as it's an important step in streamlining the operations and focusing on more profitable core recurring revenue businesses, and I look forward to reporting more about this sale on our fourth quarter call. We are on track to achieve Our stated goal of at least $16 million in total net savings on an annualized basis following the strategic review announced during our first quarter call. As a result of this review, we restructured certain businesses across both asset and wealth management, consolidating our facility footprint, initiated SG&A cost reductions, rationalized certain vendors, and reduced professional fees, including those associated with our public listings. We expect the impact of these cost-saving initiatives to be fully reflected in our second quarter 2024 results. Further, we kicked off our 2024 budget and capital planning process. We're going to take the opportunity to build on the progress made this summer to further streamline and improve our operating leverage. In addition to driving organic and inorganic growth initiatives, the budgetary process will be laser-focused on further cost rationalization and continued rightsizing, particularly in professional fees. We believe there's a significant opportunity to further meaningfully reduce professional fee spend as we move past the listing process and reach maturity as a public company. To close, Altie is executing against the strategies discussed on previous calls. Our core platform is performing well and continues to navigate current market conditions. We are confident that the steps we've taken to date in 2023 and going forward are positioning the firm for long-term growth over the next decades. With that, I want to turn the call over to Steve Yard, our CFO, for further details of our financial performance of the quarter. As most of you know, Steve joined our management team in mid-September. He has extensive financial services expertise and has been a public company CFO for over a decade. Steve has already been a major contributor to our financial offerings. Steve, I hand it over.