Silvercrest Asset Management Group Inc.

Good morning and welcome to the Silvercrest Asset Management Group Inc. Q1 2025 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 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.

Good morning everyone and welcome to our first quarter 2025 conference call for Silvercrest. We experienced strong new client organic flows of 0.4 billion during the first quarter this year. The new assets under management follow on the significant new client flows of 1.4 billion in the fourth quarter of 2024 for a total of 1.8 billion over the past two quarters in new client accounts. Our first quarter's new client account flow was in itself stronger than some recent years in total. And Silvercrest strategic investments continue to promote our growth. The increases during the quarter bode well for future revenue, and we remain highly optimistic about securing more significant organic flows over the course of 2025, as we discussed during our last call. Total AUM did decline during the quarter as a result of highly volatile markets amidst global economic and trade concerns, and our discretionary AUM now stands at $22.7 billion as of the end of the quarter, which is flat year over year, and our total AUM was $34.3 billion. We expect continued market volatility to affect our short-term results and top-line revenue. That said, we believe market and economic dislocations present meaningful opportunities for our business. Strategically, we will continue to pursue more initiatives to better highlight Silvercrest in both the institutional and wealth markets. The firm has invested in talent across the firm to drive new growth and successfully transition the business toward our next generation. The new business pipeline remains robust. SilverCust will continue to monitor and adjust our interim compensation ratio to match important investments in the business as long as we have compelling opportunities to grow the firm and build our return on invested capital. We will keep you informed of our plans and the progress of these investments. We also completed a $12 million stock repurchase program. We will continue to look for opportunities to return capital to or accrete shareholders, especially as we invest in the business. A strong balance sheet supports ongoing capital returns as well as our growth initiatives. On May 5th, the company declared a quarterly dividend of 20 cents per share of Class A common stock, and that will be paid on or about June 20th of this year to stockholders of record. Scott will now cover our financial highlights, and then we'll go to questions. Over to you, Scott.

Thank you, Rick. So as disclosed in our earnings release for the first quarter, Discretionary AUM as of March 31st was $22.7 billion, and total AUM as of the same period was $35.3 billion. Revenue for the quarter was $31.4 million, and reported consolidated net income for the quarter was $3.9 million. Revenue for the quarter increased year over year by $1.1 million, or 3.7%, primarily driven by market appreciation during the 12-month period. Expenses for the quarter increased year over year by 2.2 million, or 9%, primarily driven by increased compensation and benefits expense and general and administrative expenses. Compensation expense for the quarter increased year over year by 1.2 million, or 6.9%, primarily due to increases in equity-based compensation and salaries and benefits expenses, primarily as a result of merit-based increases, partially offset by decreases in the accrual for bonuses and the decrease in severance expense. General and administrative expenses increased by $1 million, or approximately 14.6%, primarily due to increases in professional fees, portfolio systems expense, recruiting costs, marketing and advertising, and travel and entertainment expenses. Reported net income attributable to Silvercrest or to Class A shareholders for the first quarter was approximately $2.5 million, or $0.26 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 and non-recurring items, was approximately $6.5 million or 20.7% of revenue for the quarter. Adjusted net income, which we define as net income without giving effect to non-core and non-recurring items, and income tax expense assuming a corporate rate of 26% was approximately $3.9 million for the quarter or $0.29 and $0.27 for adjusted basic and diluted earnings per share respectively. Adjusted earnings per share 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 dilutive, we add unvested restricted stock units and non-qualified stock options to the total shares outstanding to compute diluted adjusted EPS. Looking quickly at the balance sheet, total assets were approximately 159 as of March 31st compared to $194.4 million as of the end of 2024. Cash and cash equivalents were approximately $36.3 million as of March 31st compared to $68.6 million at the end of 2024. Please keep in mind that cash at March 31st is net of the payout of 2024 bonuses. There were no borrowings as of March 31st, and total Class A stockholders' equity was approximately 80 million as of the end of the first quarter of this year. That concludes my remarks. I'll now turn the call over for Q&A.