Silvercrest Asset Management Group Inc.

Good morning and welcome to the Silvercrest Asset Management Group Incorporated fourth quarter and full year 2023 earnings conference call. All participants will be in 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 note, this event is being recorded. Before we begin, Let me remind you that during today's call, certain statements made regarding our future performance 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 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 would now like to turn the conference over to Rick Huff, Chairman and CEO of Silvercrest. Please go ahead.

Thank you very much, and good morning to our Q4 and year-end 2023 results. After the volatile and difficult market environment of 2022, we hope 2023 would lead to improved markets helping to recover both Silvercrest's discretionary assets under management as well as our top-line revenue. The year 2023 was unusual. Equity market gains were highly concentrated in a handful of large-cap technology companies. As a result of such narrow leadership and economic uncertainty during the third quarter 2023 earnings call, I had stated we could face challenging market conditions at Silvercrest for yet another year. During the fourth quarter of 2023, company participation in equity market gains broadened significantly. Progress has continued into 2024, setting the stage for a better environment for our business. During the fourth quarter of 2023, Silvercrest's discretionary AUM rose by 1.4 billion or 6.8% to 21.9 billion. And Silvercrest's total AUM increased by $2.1 billion or 6.7% to $33.3 billion during the fourth quarter. For 2023, Silvercrest's discretionary AUM increased by $1 billion or 4.8%. Our total AUM increased during 2023 by 15% or $4.4 billion to $33.3 billion from $28.9 billion at the end of 2022. The total 2023 increase was attributable to market appreciation of $3.8 billion and client net inflows of $0.6 billion or $600 million. Silvercrest's revenue for the year, however, significantly lagged increases in assets under management due to broad market gains concentrated in the fourth quarter of 2023. Silvercrest primarily bills quarterly in advance. Revenue decreased by $5.8 million or 4.7% 117.4 million for 2023 from 123.2 million for 2022. This decrease was driven by market depreciation in prior years, partially offset by market appreciation and net inflows during 2023. Revenue for the fourth quarter of 2023 was flat year over year. Our financial results in the fourth quarter also were negatively affected by adjustments to total compensation for 2023. with total recurring cash compensation as a percentage of revenue rising to 59% from Silvercrest's typical interim accrual rate of 55%. Silvercrest completed the year with adjusted EBITDA of $26.9 million or 22.9% of revenue down from $32 million or 26% of revenue. Adjusted diluted earnings per share for 2023 was $1.12 down from $1.35 in 2022. For the fourth quarter, adjusted EBITDA was 2.6 million or 9 percent of revenue down from 4.4 million or 15.6 percent of revenue in the fourth quarter of 2022, both affected by fourth quarter adjustments. Adjusted diluted earnings per share for the fourth quarter was 7 cents down from 15 cents in the fourth quarter of 2022. With the AUM increases during the fourth quarter and so far in 2024, we expect a better environment in 2024. Silvercrest's pipeline of new business opportunities have significantly improved since the fourth quarter of 2023. While the institutional search environment remains slow, Silvercrest's actionable institutional business pipeline has increased to $735 million. Silvercrest's outsourced chief investment officer, or OCIO AUM, has risen to $1.7 billion, which includes a new small college endowment. The OCO-IO pipeline has increased to 585 million, and our consultant relationships have strengthened. Silvercrest has never been busier with its new initiatives. We're focused on those new opportunities as well as investments to drive growth in the business, including value-added hires. Scott, that concludes my opening remarks. If you could cover financials.

Thanks.