Silvercrest Asset Management Group Inc.

Good morning everyone and welcome to the Silvercrest Asset Management Group incorporated Q4 and year end 2021 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. Before we begin, Let me remind you that today's call will contain certain statements made regarding our future performance. They are forward-looking statements. They are based on current expectations and projections, which are subject to a number of risks and uncertainties and many factors that could cause actual results to differ materially from the statements that are made. Those factors are disclosed in our filings with the SEC under the caption risk factors. For all such forward-looking statements, we claim the protections provided by the Litigation Reform Act of 1995. All forward-looking statements made on this call are made as of the date hereof, and Silvercrest assumes no obligation to update them. I'd now like to turn the conference call over to Rick Huff, Chairman and CEO of Silvercrest. Please go ahead.

Thank you very much. We're pleased to report another strong quarter and year of financial results for Silvercrest with new high earnings marks. The firm's discretionary assets under management, which drive our revenue, increased by $2.6 billion, or 11.6% during the fourth quarter of 2021, to $25.1 billion as of December 31, 2021. For the full year, discretionary AUM increased by $4.5 billion, or 21.8%, to $25.1 billion as of the end of the year. The firm's total AUM concluded the quarter and the year at $32.3 billion, That was up 16.2% and 4.2% for the year and during the fourth quarter respectively. Those increases were driven by both strong markets as well as our net organic flows into the business. Silvercrest also concluded our quarter with 33.8 million in revenue and quarterly adjusted EBITDA of 13 million. We delivered 2021 revenue of 131.6 million and adjusted EBITDA of 43.4 million representing year-over-year increases of 21.9% and 43.4% respectively. Our adjusted diluted earnings per share increased by 47.7% during 2021 to $1.89 per adjusted diluted share, and the firm's adjusted EBITDA margin was 33% for 2021 as compared with 28% for 2020. Silvercrest maintained strong relative performance across all of its investment capabilities. As a result, our new business opportunities remain robust for our new high-net-worth institutional and OCIO businesses. Also during the fourth quarter, Silvercrest repurchased approximately 6,000 shares of Class A common stock for approximately 94,000 pursuant to a previously announced share repurchase program at the end of July last year. Scott, if you could start going through the financials, that'd be great. And then we'll follow up with questions. Thanks.

Great. Thanks, Rick. So it's disclosed in our earnings release for the fourth quarter. Discretionary AUM as of the end of 2021 was $25.1 billion. And total AUM as of year ended, $21 was $32.3 billion. Revenue for the fourth quarter was $33.8 million and reported consolidated net income for the quarter was $8.6 million. Revenue for the fourth quarter was approximately $33.8 million. This represented approximately a 19% increase over revenue of approximately $28.4 million for the same period last year. This increase was driven primarily by market appreciation and net client inflows in discretionary AUM. Expenses for the fourth quarter were 24.5 million, representing approximately a 2% decrease from expense of 25.1 million for the same period last year. This increase, I'm sorry, this decrease was primarily attributable to decreases in compensation expense and general and administrative expenses of 0.5 million and 0.1 million, respectively. Compensation expense decreased by 0.5 million, or approximately 3%, to 17.7 million for the three months ended December 31st, 2021, from 18.2 million for the fourth quarter of 2020. The decrease was primarily attributable to decreases in the accrual for bonuses and benefits expense, partially offset by increases in salary expense as a result of merit-based increases and newly hired staff and equity-based compensation expense due to an increase in the number of unvested restricted stock units and unvested non-qualified stock options outstanding. General and administrative expenses decreased by 0.1 million or approximately 1% to 6.8 million for the fourth quarter of 2021 from 6.9 million for Q4 2020. This was primarily attributable to decreases in the fair value adjustments to the contingent consideration related to the Cortina and the Osho acquisitions of 0.8 million occupancy and related costs, partially offset by increases in portfolio and systems expense and travel and entertainment expense. Reported consolidated net income was 8.6 million for the quarter as compared to 3.5 million in 2020. reported net income attributable to Silvercrest or the Class A shareholders for the fourth quarter of 2021 was approximately $5.1 million, or 53 cents per basic and diluted Class A share. Adjusted EBITDA, which we define as EBITDA without giving effect to equity-based compensation expense and non-core, non-recurring items, was approximately $13 million, or 38.5% of revenue for the fourth quarter of 2021, compared to 7.3 million, or 25.7% of revenue for the fourth quarter of 2020. Adjusted net income, which we define as net income without giving effect to non-core, non-recurring items and income tax expense, assuming a corporate rate of 26%, was approximately 8.6 million for the fourth quarter of 2021, or 59 cents and 58 cents per adjusted basic and adjusted diluted earnings per share, respectively. Adjusted EPS is equal to 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 EPS. And to the extent diluted, we add unvested restricted stock units and non-qualified stock options to the total shares outstanding to compute diluted adjusted earnings per share. Looking at the full year, revenue for all of 2021 was approximately 131.6 million, which represented approximately a 22% increase over revenue of 108 million for 2020. This increase, again, was driven primarily by market appreciation and net client inflows in discretionary AUM. Expenses for 2021 were $101.1 million. This was an 18% increase from expenses of $85.7 million for 2020. This increase was primarily attributable to increases in compensation and benefits expense of $10.2 million and general and administrative expenses of $5.2 million. Compensation expense increased by $10.2 million, or approximately 16%, to $72.6 million for 2021 from $62.4 million for 2020. The increase was primarily attributable to increases in the accrual for bonuses, salaries, and benefits expense, primarily as a result of merit-based increases and newly hired staff, and equity-based compensation expense due to an increase in the number of uninvested restricted stock units and uninvested non-qualified stock options outstanding. General and administrative expenses increased by $5.2 million, or approximately 22% to $28.5 million for 2021 from $23.3 million for 2020. This was primarily attributable to increases in the fair value of contingent consideration related to the Cortina acquisition of $4.6 million and portfolio and systems expense. partially offset by a decrease of $0.3 million in the fair value of contingent consideration related to the Niosho acquisition and lower occupancy and related costs. Reported consolidated net income was $24.9 million for 2021 as compared to $17.5 million for 2020. Reported net income attributable to Silver Press or to Class A shareholders for 2021 was approximately $14.7 million, or $1.52 per basic and diluted Class A share. Adjusted EBITDA was approximately 43.4 million, or 33% of revenue for 2021, compared to 30.3 million, or 28.1% of revenue for 2020. Adjusted net income was approximately 28.1 million for 2021, or $1.95 and $1.89 for adjusted basic and diluted EPS, respectively. Quickly looking at the balance sheet, total assets were approximately $229.3 million as of December 31st, 2021, compared to $213.8 million as of year end 2020. Cash and cash equivalents at the end of 2021 were approximately $85.7 million and is compared to $62.5 million at the end of 2020. Total borrowings as of the end of 2021 were $9 million And lastly, total Class A stockholders' equity was approximately $80.4 million at the end of 2021. That concludes my remarks. I'll turn it over to Rick for Q&A. Thanks, Scott.