AlTi Global, Inc.

Ladies and gentlemen, please stand by. We are about to begin. Good morning. My name is Ryan, and I will be your conference operator for today. At this time, I would like to welcome everyone to ALTI's second quarter 2024 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 just like to advise all parties that this conference call is being recorded and a replay of the webcast is available on ALTI's Investor Relations website. Now, at this time, I will turn things over to Lily Arteaga, Head of Investor Relations for ALTI. Please go ahead.

Good morning to everyone on the call today. Joining me this morning are Michael Tiedemann, our CEO, and Stephen Yarad, our CFO. We invite you to visit the investor relations section of our website at www.alt-global.com to view our earnings materials, including our 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. ALTI 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 reconciliations can be found in our earnings presentations and our related SEC filings. With that, I'd like to turn the call over to Mike.

Thank you, Lily, and thank you all for joining us this morning. In the second quarter, we made further progress in carrying out our mission to become the leading global independent ultra-high net worth wealth management firm with a targeted expertise in alternatives. We continue to execute on our strategic plan with four significant transactions closed in the last four months, two in the U.S. and another two internationally. We've begun integrating the newly acquired companies, which expand our best-in-class platform. And in parallel, we continue to optimize our cost structure and right-size any organization with a focus on our core recurring revenue businesses. Last week marked the turning point for Altie as we closed on Allianz's $250 million investment to complement the $150 million received from Constellation Wealth, or CWC, earlier in the year. This high-quality institutional backing is a ringing endorsement from a global blue-chip financial services leader. This capital enables us to expand and fortify our global footprint in key markets, and to fuel accretive acquisitions through disciplined deployment of growth capital. The partnerships provide an opportunity to strengthen and grow client relationships, as well as expand our platform of client solutions. We're moving forward with the benefit of experienced partners, further global scale, and a deep network in key geographies. Today, I'm going to discuss our Q2 results. provide an update on our growth initiatives as we continue to expand the platform, increasing our presence in key domestic and international markets, as well as share our progress in refocusing our business around recurring revenues and an appropriate cost structure. On a consolidated basis, our assets under management and advisement have grown 4% to $72 billion for the trailing 12-month period, reflecting a mixture of acquisitions and asset dispositions. It's worth noting We have grown assets in our wealth management business by 15% to 56 billion over that same period, reflecting the shift in our asset composition to core businesses that produce consistent recurring revenues. In the second quarter, AltE generated revenues of 49 million. Importantly, 99% of the revenues in the quarter were from recurring fees. We reported a net loss of 9 million, compared to a net income of $28 million in Q2-23, largely attributable to a decline in other income, as the prior year period included $66 million unrealized gain on earn-add liabilities. While this item impacts our GAAP-reported results, it is neutral to adjusted EBITDA, which for the second quarter was $5.5 million. Our adjusted EBITDA margin for the second quarter was 11%. While our consolidated results this quarter are impacted by business repositioning we've been conducting over the last year, I'm very pleased by the growth and expanding margins in our core wealth platform, which I will now discuss in more detail as I review the quarterly highlights from each of our segments. Starting with wealth management, as I mentioned, we reported 15% asset growth over the last year. This growth is attributed to both inorganic and organic progress. In addition to our strategic acquisitions, we've powered business development through enhanced capabilities, a growing team, and a unique global offering. Furthermore, our client portfolios are well diversified across a range of asset classes and have benefited from the strong performance of our various risk exposures. This was an active quarter for us on the M&A front. On April 1st, we announced the acquisition of EastEnd Advisors, adding nearly $6 billion of AUM to the Altie Wealth Management Platform. The New York-based independent advisory firm has an established investment track record with an experienced team. This acquisition will enable and enhance our ability to compete in the outsourced chief investment officer, or OCIO, market. Our teams have already been collaborating on investment analysis and client portfolio development. Additionally, we're developing a strong collective client pipeline as our business development teams are collaborating closely in meeting with prospective clients. On July 1st, we closed the acquisition of Envoy, a $3 billion AUM wealth manager based in Minneapolis. This acquisition expands our presence in the Midwest, adds depth to our investment team, and complements our existing services for the ultra-high net worth segment. In the past month, we've made strides in integrating the business to our platform and leveraging our combined expertise to deepen and expand our business development efforts in the region. On the international front, we've been integrating London-based Pointwise partners into our UK operations after increasing our ownership in a wealth management firm to 100% in May. This partnership is reflective of our ability to provide boutique-level targeted services with the backing of a global platform. In the second quarter, we also completed our sale of the European-based Trust and Private Office Services businesses for approximately $20 million. With these transactions in our belt, we are now focusing all of our efforts on amplifying our investment offerings and core recurring revenue businesses globally. Turning to organic growth, we're pleased with the performance of the domestic business, which has increased 11% on an organic basis over the past year. We are also encouraged by the momentum of our international platform. Our international team has secured significant wins across multiple jurisdictions in recent months, and has the strongest pipeline we've seen since our listing. This is driven by a combination of favorable trends, strong collaboration across our scale global platform, and the addition of key talent. Most recently, Victoria Sriva, a senior and trusted advisor to many large European families, joined our London team, bringing nearly 15 years of experience gained from her time at several leading global banks. Now let's discuss some of the trends we're observing. We're seeing European and Middle East-based families requesting holistic reviews of their global holdings that are currently managed across a variety of banks with the objective of engaging an experienced advisor that can provide sophisticated OCIO services. We're also seeing European ultra-high net worth families moving capital and creating structures in various jurisdictions for tax purposes and other considerations. Additionally, Large and complex multi-generational families are engaging trusted advisors to help them plan the transition of businesses and wealth. This is a trend we see only increasing in the coming years. Alty is uniquely positioned to capitalize on the current environment, given our global presence and domiciles, paired with our independence and flexibility. Our cross-border teams can report on accounts spread across multiple banks and jurisdictions, and manage complex portfolio compositions with a coherent strategy. Perspective and existing clients also cite our cost-effective solutions, holistic offerings, creative ideas, and localized teams as important differentiators. As a global organization with strong local presence, our teams speak the language of our clients and have a differentiated regional expertise. Turning to our strategic alternative segment, Throughout the last year, we've been reorganizing this segment to prioritize solutions that deliver predictable revenues, compelling returns, and diversified investment opportunities for our LPs, as well as to complement our wealth management business. The sale of LXI and the restructuring of our private real estate business has resulted in lower segment-level assets in the quarter. However, the segment's revenue mix has improved. with 93% of our business in the quarter being recurring in nature. This represents a 6% increase compared to the top line composition in the comparable period in 2023. Our uncorrelated strategies, the foundation of all alternatives platform, have exhibited positive performance this year. Our European long short and Asia credit strategies were up 6.9 and 8.3 respectively through the end of the second quarter. Moreover, our streamlining efforts continued to yield a significant reduction in costs reflected in the 15% decrease of our normalized operating expenses in the second quarter compared to the same period in 2023. We expect this to continue as we move forward and focus on streamlining our business and the infrastructure needed to serve us. We recognize that the repositioning of the businesses within the segment has negatively impacted our results for the last year. On that point, I'd like to note that as we deploy the growth capital from our partners, we will evaluate ways to enhance our reporting methods to offer visibility into the progress we're making as a go-forward enterprise. We will seek to provide the street with necessary visibility as we execute on our long-term objectives. On the subject of our partners, I want to wrap up my comments by reviewing the strategic and transformational nature of these relationships following the closing of Allianz's investment last week. We believe the partnerships we've established result in a pioneering transaction for the insurance, wealth management, and asset management sectors, delivering long-term benefits to all three parties. Investments accelerate Alty's path to become the leading global platform in the attractive ultra-high net worth wealth management vertical and advance Allianz X and CWC's participation in the estimated $609 trillion global wealth market. The wealth management sector is characterized by stable, recurring revenues, a capital-light model, which is what made it so attractive to us. And it's one of the core reasons our partners made the investment. The investments will advance the scale and reach of Alty's expansion strategy, accelerating top-line growth in existing and new markets across the U.S., Europe, and Asia. Already, we've deployed capital from CWC investment to fund the acquisitions of Envoy and East End Advisors. Looking ahead, We have an actionable pipeline as we evaluate capital deployment opportunities for the Allianz X investment. Our organic growth initiatives will be enhanced through expanded lead generation opportunities and, importantly, the potential to service Allianz clients and families, as well as the ability to leverage our partners' footprints and relationships as we enter new markets. As I mentioned earlier, we bring a localized expertise to our clients while offering the resources, expertise, and insights of a global platform. Our clients benefit from our scale, access, and lower fees, and also lean on us for idea generation to maximize their exposures to the private markets. Importantly, our relationship with Allianz will enable us to offer our clients favorable fees on key investment products. This is just one way our partnerships will result in operational benefits to our clients. We are privileged to count on the deep global financial services expertise our partners bring to our board as we embark on this new phase of Alty. With that, I'll turn the call over to Steve and take you through a deeper dive in our financials.