Andersen Group Inc.

Greetings and welcome to the Q4 2025 Anderson Group Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the form of presentation. If anyone should require operating assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Greg Vistica, Managing Director of Investor Relations. Thank you. You may begin.

Before we begin, please note that certain statements made on this call are forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. These risks and uncertainties are described in our earnings release and SEC filings, including our prospectus dated December 16, 2025, and our form 10-K for the year ended December 31st, 2025, that will be filed with the SEC. Except as required by law, we undertake no obligation to update any forward-looking statements. We will also reference certain non-GAAP financial measures today. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and will be available on our website. Our two speakers today are Mark Vorsatz, Anderson CEO and Global Chairman, and Neil Livingston, Anderson CFO. I turn it over to Mark Vorsatz now.

Thanks, Greg. Greg, with that introduction, I think you can work with Bill Deckelman in our legal department. So I have a couple of introductory comments, and I'm going to cover four points, and then I'm going to turn it over to Neil to talk a little bit more about the detail in our financial results. People often say to me, what's different about your business? And I would say the number one difference about our business is culture. I often comment that we operate like a family business. Steve Foley, who writes for the Financial Times, I've gotten to know over the last few years, asked me about our business when we did the launch of the IPO. And I said, we're like a family business. I often comment to my partners. My wife rang the bell to open the New York Stock Exchange because she's my best partner. I talked to my daughter today. We're very lucky. We have two wonderful children, my son, Blair, my daughter, Tori. And she said that her two and a half year old, we have two grandchildren, two and a half years old and six months old, both girls. She said, Maya, our two and a half year old would be listening in on this call. So I want to give a shout out to Maya. I also want to express my appreciation to the investors who have demonstrated confidence in our business model. I think when you hear the results of our conversation today, I hope that we begin to earn your trust and that confidence. I also want to thank the folks who have been terrific advisors, mentors to me, all the good, the bad, and the ugly. I've been blessed to have people who have been willing to share their perspectives, counsel me, give me some advice, and I think it's been very, very helpful to me personally. I'm going to cover four points today. I'm going to do a macro overview on our financial results for the fourth quarter. Neil will fill in a lot of the detail on that, but I want to communicate what I think is an important message here. The second is I want to talk about areas that I think are focused with respect to our 2026 strategy. Thirdly, I'm going to talk a little bit about acquisitions. I'm going to not get into a lot of information about projections, but I will give you an update on where we are in the process and where we think we're going to go conceptually and what the strategy is around that. It's probably different than any other professional service firm that you've encountered because we built out a network with different firms. Many of these groups we have a close working relationship with and we know them very well. I know their spouses, I know their children, I know their partners, I know their business. And then the last thing I'm gonna talk about is technology. I'm not gonna call it AI. Everybody wants to talk about AI. I think that's a little bit of a misnomer. I think it's a broader concept around technology as a competitive advantage. We see it as a massive opportunity for our firm. And I'll talk about some of those considerations. Um, with respect to our fourth quarter financial operations, um, in 2024, our revenue was $142 million. Um, we had provided the analysts with a projection, uh, 7% for the fourth quarter, which would have been 157 million. We actually came in a little bit better than I anticipated. We came in at 170 million of revenue. That was a 19.6% increase in revenue. Little better than I would have expected. Multitude of factors in that. All four of our segments of the business, that would be private client services, commercial, alternative investment funds, and valuation at double-digit growth for last year. At the bottom line, we really exceeded, um, we beat what we provided the investors by about the analysts by about $33 million. So I think by any measure, a quarter, I'm never happy with anything, but I think that's reasonable progress for 2025. We came in at 14.6% growth in revenue at about 839 million. Um, when people said to me before we went public, you know, what do you anticipate? And my reaction was, well, we didn't just have a good year. We had a really good year last year, but we had 24 good years. Our average revenue growth for 24 years has been 15%. Our average net income growth for the last eight we've been private has been over 25%. I tend to focus more on the historical numbers because a lot of the gap numbers, because we unvested 59% of our equity. create a little bit of confusion if you're trying to figure out the story as to whether we had income or we had a loss. We unvested 59% of our equity. That has no dilution effect. It has no cash flow effect. That was done because of culture, which is our biggest strength. I joke with some of the investment banking firms, if I had a meeting with your managing directors and said, we're all going to vote on unvesting 59% of your equity, how many people do you think would have voted in favor of that? We had unanimity. 100% of our partners voted in favor of that because it underscores our point about culture. I tend to look more at price earnings because that's what we used historically. For 2024, our net income was $134 million. Our plan for 2025 was 175 million and we came in at 199 million. Even a little better than I expected. That was about a 48% growth in net income. What's what I find I'm very proud of is as a group of partners and our investors, we in mobile mobility and Anderson consulting, and we lost 22 million because those are startups. We needed to build an infrastructure. a pro forma basis for 2025 our net income was really six up 64 percent so i think by any measure pretty solid year um areas of focus for this year what's exciting to me is we have a lot of room for improvement i will also tell you how lucky i am there's an expression it's hard to fly like an eagle when you're surrounded by a bunch of turkeys it's hard to fly like a turkey when you're surrounded by a bunch of eagles. I'm surrounded by a bunch of eagles who leave their ego at the door and are not titles, but how they can contribute to the success for our business. And there are areas that we're going to focus on in 2026. One is productivity. Dan DiPale, who many of the investors and analysts have met. Dan is a partner in our New York office and is serving as an operating partner for the US the last few years. Dan is gonna focus on productivity. We have improvement as I've communicated to our partners. If we can improve our productivity an hour a week in terms of client service across the board for this year, that would add $42 million to our net income. That certainly is an incremental approach that I think has a lot of value. The second is area profitability. That includes not only how we manage our client base, but also cost control. Peter Kasha, who's also a partner in New York office, is taking on that responsibility. Last year, we grew our GSNA by about 3% or more. We were averaging in the high 14s. We grew it to about 18. I'm confident with economies of scale. We'll move that number down about a percent a year over the next couple of years. Peter's going to be working with me on the functional areas of our business, on how we can operate those more effectively. Also, Peter, the last few years has been working on client retention issues and profitability. We are not the right firm for everybody. Our focus is on client selection and value solutions, and I'll talk about the latter in a little bit. The third area of opportunity for us is integration. James Frost, who has worked with me, James is based in the UK. James has worked with me for the last 12 years on our expansion. James knows just about all of our partners because of that role. James will be working on integration. I'll be involved in that. When we first started expanding internationally, I used to say to my partners in the US, one plus one equals seven. What does that mean? Well, if Dan has two clients and I have two clients and we introduced each other, now I have four. If Peter has four, now I have eight. If James has eight, now I have 16. Our ability to drive solutions through our client base and help our clients be successful is a huge competitive advantage because of our platform. What I used to say when I was a partner at Arthur Anderson, I used to say to my partners, it's harder to get fired in 10 countries than it is to get fired in one. And then the last area is acquisitions. As I think Most of the people on this call realize we have built out a terrific network over the last 12 or 13 years. The opportunity for us is to selectively roll that network up into the business. It's a process. It's an ongoing process. We have a lot of conversations in place. We've signed a handful of deals, and I'll explain to you the rationale in that. in the projections for 2026 that we provided to the analysts for the second half of this year 10 million of revenue in tax and legal and 23 million in revenue in consulting in the last week or so we've signed four deals i'll give you a little context on those we signed our practice in canada for a variety of strategic reasons it's in west canada it's based in vancouver steve flynn and krista rabidu are the two lead partners in that practice. The original group had been Ernst and Young. We've had a working relationship with them and they've been part of our network for over seven years. We know them very well. They're a terrific group. They focus mostly on PCS. A lot of synergy with our business in the United States. The second is our tax practice in Nigeria. It's run by Leah. Leah was a director at Arthur Anderson. They joined us almost when they joined us, they had 13 people. Today, they have 128. That was the growth of most of the groups that we've added internationally. The third and fourth groups are based in Uruguay. And by the way, Leah is the co-managing partner in charge of Africa, which will be a theme as I talk about how we're going to add groups. We're going to essentially prioritize our global management. So having Leah at the front end of this story was really important because there's no one who has a better perspective of our business in Africa than Leah. And as we move groups in, we're first going to prioritize our global management group that exists currently for our Swiss variety. And then the third and fourth groups are our legal practice and our tax practice in Uruguay. They have been with us for over eight years. Cecilia Ricciardi runs the tax and accounting practice in Uruguay. Juan Federico Fisher runs our legal practice. Juan Federico is also on our global board of our Swiss for Rhyme. Those four groups and our strategy will be around adding groups where we have a platform and expanding those groups and building them out. That is a much more cost-effective way than to buy big practices with groups you're not familiar with. These people are like family to us. We know them very well. It's a total of 270 people in headcount. It is about 21 million in revenue. What we put in the plan that we provided to the analysts was that we would do 10 million in that space in the second half of this year. So we're already off to a beat. We will be updating. Neil is going to go over later the projections that we gave to the analysts. We'll be updating those in the second quarter. And when we announce our first quarter financial results, we'll also announce our projections for the balance of the year. We have quite a few conversations in process. We had a new partner meeting in Las Vegas last week, along with a meeting for our consulting firm. Our consulting colleagues, I had the honor and privilege to do the opening on both of those meetings. While I was in Las Vegas over a four-day period, we met with 17 consulting firms that we're advancing conversations with. As I indicated that we had put in our plan a 23 million in revenue in the second half of this year. I will tell you that we will substantially outperform that plan. The last topic I'm gonna touch on before I turn it over to Neil is technology. We have had a joint venture with the University of San Francisco that we do a lot of activity with. We did a pilot program in November and December in technology. Anthropic is providing the licensing. We also did one in January. We are being measured, thoughtful, deliberative about this. What I have observed with other firms is they're a little precipitous in acting on technology. Two firms outside the United States had regulatory problems because the way they've introduced artificial intelligence into their solutions. We are going to manage this in a thoughtful process. We are going to have two more pilots with senior people in May and June. We have a potential candidate to run what we'll call artificial intelligence or technology. Some other candidates to add to that. This is a process that's going to take some time. We're going to be thoughtful about it. We're going to be measured about it. We're going to be deliberative, but we're also going to be decisive and nimble. My take on this, we're already implementing it and getting economies of scale in the tax compliance areas. I think there's going to be a number of changes in our business model in the next three to four years. Today we run in the U.S. six and a half to one. I think that's going to change to about three to three and a half to one. I think the level of productivity of senior people is going to be much higher. I think this will be the first year when we probably hire more lateral people than we hire new associates. We had a call today with the office managing partners and Dan underscored a point that I have emphasized for the last 10 or 12 years is that probably in the future, virtually 100% of our associates either in the spring or in the summer. It's an incubation of how we build our relationships. The two things I will suggest that are continued to what I would call I'm not going to suggest we're better than other firms. I'm just going to talk about how we're different. The first is client selection, and the second is the area of how we deliver our services. I'm going to give you a quick few examples on that. Um, Sandra Vander wall who works at our national tax group at the request of Mary Duffy, who runs that group and myself spearheaded an initiative as part of the 2025 legislation to work on getting cost segregation projects out of our existing client base. In the fourth quarter alone, we secured 64 projects. I'll give you an example of one on one of my clients. I reviewed the, the valuation last week, along with the tax return on that client. We saved that client because of soft cost segregation where we could expense anything that a useful life of less than 20 years. We saved that client 19 million in front end costs. That client will not pay any income taxes in 2025 for federal purposes. The second is a strategy that we launched on October 16th. I had made an introduction to several of our clients in the area of cybersecurity for family offices. Peter Kasha, who was working with some of our colleagues in private client services. We had a call October 16th with 65 partners in what we call PCS. Over a period of about two months, we were able to secure about 230 qualified introductions for cybersecurity for our family offices. The third initiative that we've launched is what we call tax transformation. It's about 15% or 20% tax, and the balance We've added a terrific group that's led by Mark Tucker, who used to be a partner at Ernst & Young. We're ramping up that business. A fourth area that we're working on has to do with the tariff refunds. Many companies were not equipped to pay the tariffs. They're less equipped to secure refunds. I've suggested to our national tax group is that would be a business that would lend its agency fee where we would provide services to both existing clients and non-clients. The last two I'll comment on, one is what's emerging in the United States is a wealth tax. And there were a couple of questions from the analysts. I'm happy to expand the discussion on this later. California has a potential proposition to impose a wealth tax of 5% on anybody with a net worth in excess of $1 billion. Senator Sanders just introduced a bill in the Congress that would tax unrealized appreciation on anybody with a net worth of over $1 billion. The new mayor of New York is introducing a variety of legislation, one that would reduce the inheritance tax by 90% or increase the inheritance tax by 90% by reducing the The state of Washington has introduced potential legislation to create an income tax and only tax those worth over a million dollars. For the type of client base, this is a huge opportunity because of our technical capabilities in this space and also our resources across the entire country. The last comment I'll make is just a bread and butter. And I got an email on Sunday from somebody who runs a family office. for a client of mine, and what they needed indicated that because of a variety of considerations, they needed services in New Zealand, in Singapore, and in Norway. The strength of our global platform enables me to identify resources immediately. They said, why don't we start with New Zealand? I made an introduction today. We've already got a call in process. This is the strength of having a global platform. We are continuing conversations on the tax, legal, and valuation side and expanding that in consulting to build this out and merge these groups into our public company. So with that, I'm going to stop and I'm going to turn it over to Neil.