Silvercrest Asset Management Group Inc. Reports Q1 2021 Results

NEW YORK, May 6, 2021 /PRNewswire/ -- Silvercrest Asset Management Group Inc. (NASDAQ: SAMG) (the "Company" or "Silvercrest") today reported the results of its operations for the quarter ended March 31, 2021.

Business Update

Having been founded in the spring of 2002, Silvercrest has now begun its 20^th year in business to culminate in our 20^th Anniversary celebration in April 2022. Silvercrest's founders and partners embarked on an entrepreneurial journey to create the foremost wealth and asset management boutique in the United States. We are proud at having created an enduring firm founded on bedrock principles and a strong and proud culture. We remain dedicated to putting our clients first and creating a business that serves its clients with highly regarded institutional-quality capabilities for generations. 

We conclude the first quarter of 2021 and begin our 20^th year in business with new highs in assets under management ("AUM"), revenue, and Adjusted EBITDA¹. Silvercrest's discretionary AUM, which drives revenue, increased 6.3% from the fourth quarter of 2020 to reach $21.9 billion, an increase of 47% year over year from the first quarter of 2020. The firm's total AUM grew to $29.0 billion by the end of the first quarter of 2021. Silvercrest concluded the first quarter of this year with $31.2 million in revenue, and the firm's quarterly Adjusted EBITDA¹ was $9.7 million, or an annualized Adjusted EDITDA¹ run-rate of $38.8 million. Adjusted Diluted Earnings Per Share¹ increased 16.7% year over year to $0.42 per Adjusted Diluted Share. The firm's first quarter 2021 Adjusted EBITDA margin¹ was 30.9%.

With strong relative performance, Silvercrest's institutional equity new business opportunities continue to grow across Silvercrest's suite of proprietary equity capabilities. Our new sub-advisory relationships added assets in the first quarter of 2021. We are optimistic about our growth prospects for this business with a robust new business pipeline. Silvercrest's organically built Outsourced Chief Investment Officer ("OCIO") offering continues to grow and its pipeline of opportunities has increased. That business more than doubled during 2020, and we hope to cross the important $1.0 billion AUM threshold during 2021.

We have hired new high net worth portfolio management professionals and will continue to add new talent, both to maintain a high level of client service and to grow the business. Silvercrest has a track record of growing new talent and will continue to do so. We believe our brand, culture, capabilities and technological innovation make Silvercrest a premier partner for select businesses and professionals. Regardless of the environment, Silvercrest will continue to seek to effectively deploy capital to complement our organic growth.

Upon launching our 20^th year, we remain a mature and tested team with a long-term vision, intent on building upon a sustainable and enduring business. As with industry consolidation 20 years ago, unprecedented change in technology, asset management, and waves of consolidation once again threaten business models dedicated to the best interests of the client. We have a lot to accomplish to continue building the premiere wealth and asset management boutique in the nation. Silvercrest has implemented a successful long-term organic growth plan. We plan to continue our growth trajectory and high cash flow generation both organically and through careful, strategic acquisitions.

On May 4, 2021, the Company's Board of Directors declared a quarterly dividend of $0.16 per share of Class A common stock. The dividend will be paid on or about June 18, 2021 to shareholders of record as of the close of business on June 11, 2021.

First Quarter 2021 Highlights

• Total Assets Under Management ("AUM") of $29.0 billion, inclusive of discretionary AUM of $21.9 billion and non-discretionary AUM of $7.1 billion at March 31, 2021.
• Revenue of $31.2 million.
• U.S. Generally Accepted Accounting Principles ("GAAP") consolidated net income and net income attributable to Silvercrest of $4.3 million and $2.6 million, respectively. 
• Basic and diluted net income per share of $0.26.
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")¹ of $9.7 million.
• Adjusted net income¹ of $6.2 million.
• Adjusted basic and diluted earnings per share^{1, 2} of $0.43 and $0.42, respectively.

The table below presents a comparison of certain GAAP and non-GAAP ("adjusted") financial measures and AUM.

AUM at $29.0 billion

Silvercrest's discretionary assets under management increased by $7.0 billion, or 47.0%, to $21.9 billion at March 31, 2021 from $14.9 billion at March 31, 2020.  The increase was attributable to market appreciation of $7.1 billion and client inflows of $4.2 billion partially offset by client outflows of $4.3 billion.  Silvercrest's total AUM increased by $8.4 billion, or 40.8%, to $29.0 billion at March 31, 2021 from $20.6 billion at March 31, 2020.  The increase was attributable to market appreciation of $8.3 billion and client inflows of $4.7 billion partially offset by client outflows of $4.6 billion. 

Silvercrest's discretionary assets under management increased by $1.3 billion, or 6.3%, to $21.9 billion at March 31, 2021 from $20.6 billion at December 31, 2020.  The increase was attributable to market appreciation of $1.6 billion and client inflows of $1.3 billion partially offset by client outflows of $1.6 billion.  Silvercrest's total AUM increased by $1.2 billion, or 4.3%, to $29.0 billion at March 31, 2021 from $27.8 billion at December 31, 2020.  The increase was attributable to market appreciation of $1.4 billion and client inflows of $1.4 billion partially offset by client outflows of $1.6 billion.

Assets under management as of March 31, 2020 were impacted by the effects of COVID-19 on financial markets during the quarter ended March 31, 2020.

First Quarter 2021 vs. First Quarter 2020

Revenue increased by $2.9 million, or 10.1%, to $31.2 million for the three months ended March 31, 2021, from $28.4 million for the three months ended March 31, 2020. This increase was driven by market appreciation and net client inflows in discretionary assets under management, partially offset by net client outflows. 

Total expenses increased by $9.8 million, or 62.2%, to $25.6 million for the three months ended March 31, 2021 from $15.8 million for the three months ended March 31, 2020. This increase was attributable to increases in compensation and benefits expense and general, administrative and other expenses of $1.9 million and $7.9 million, respectively.  Compensation and benefits expense increased by $1.9 million, or 12.4%, to $17.7 million for the three months ended March 31, 2021 from $15.7 million for the three months ended March 31, 2020. The increase was primarily attributable to an increase in the accrual for bonuses of $1.3 million, an increase in salaries and benefits of $0.3 million primarily as a result of merit-based increases and newly hired staff, an increase in equity-based compensation expense of $0.4 million due to an increase in the number of unvested restricted stock units and unvested non-qualified stock options outstanding.  General and administrative expenses increased by $7.9 million to $7.9 million for the three months ended March 31, 2021 from $43 thousand for the three months ended March 31, 2020. This was primarily attributable to an increase in the fair value of contingent consideration related to the Cortina Acquisition of $8.3 million, an increase in occupancy and related costs of $0.1 million due to increased cleaning costs relate to the coronavirus pandemic, and an increase in professional fees of $0.1 million partially offset by a decrease in portfolio and systems expense of $0.3 million and a decrease in travel and entertainment expenses of $0.3 million as a result of the coronavirus pandemic.

Consolidated net income was $4.3 million or 13.9% of revenue for the three months ended March 31, 2021 as compared to consolidated net income of $9.7 million or 34.2% of revenue for the same period in the prior year.  Net income attributable to Silvercrest was $2.6 million, or $0.26 per basic and diluted share for the three months ended March 31, 2021.   Our Adjusted Net Income¹ was $6.2 million, or $0.43 per adjusted basic and $0.42 adjusted diluted² share for the three months ended March 31, 2021.

Adjusted EBITDA¹ was $9.7 million or 30.9% of revenue for the three months ended March 31, 2021 as compared to $8.2 million or 29.0% of revenue for the same period in the prior year.

Liquidity and Capital Resources

Cash and cash equivalents were $42.6 million at March 31, 2021, compared to $62.5 million at December 31, 2020.  As of March 31, 2021, there was $11.7 million outstanding under our term loan with City National Bank and nothing outstanding on our revolving credit facility with City National Bank. 

Total Silvercrest Asset Management Group Inc.'s equity was $71.8 million at March 31, 2021.  We had 9,658,297 shares of Class A common stock outstanding and 4,769,835 shares of Class B common stock outstanding at March 31, 2021.

Non-GAAP Financial Measures

To provide investors with additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a basis consistent with GAAP with Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Earnings Per Share which are non-GAAP financial measures of earnings.  These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

• EBITDA represents net income before provision for income taxes, interest income, interest expense, depreciation and amortization.
   
• We define Adjusted EBITDA as EBITDA without giving effect to the Delaware franchise tax, professional fees associated with acquisitions or financing transactions, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations, prior to our initial public offering, as an expense.  We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring earnings of the Company, taking into account earnings attributable to both Class A and Class B shareholders.  
     
• Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenue.  We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA Margin, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring profitability of the Company, taking into account profitability attributable to both Class A and Class B shareholders.
   
• Adjusted Net Income represents recurring net income without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations, prior to our initial public offering, as an expense. Furthermore, Adjusted Net Income includes income tax expense assuming a blended corporate rate of 26%.  We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted Net Income, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring income of the Company, taking into account income attributable to both Class A and Class B shareholders. 
   
• Adjusted Earnings Per Share represents 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 Earnings Per Share, 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 Earnings Per Share. As a result of our structure, which includes a non-controlling interest, we feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted Earnings Per Share, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring earnings per share of the Company as a whole as opposed to being limited to our Class A common stock.

Conference Call

The Company will host a conference call on May 7, 2021, at 8:30 am (Eastern Time) to discuss these results. Hosting the call will be Richard R. Hough III, Chief Executive Officer and President and Scott A. Gerard, Chief Financial Officer. Listeners may access the call by dialing 1-844-836-8743 or for international listeners the call may be accessed by dialing 1-412-317-5723.  An archived replay of the call will be available after the completion of the live call on the Investor Relations page of the Silvercrest website at http://ir.silvercrestgroup.com/.

Forward-Looking Statements and Other Disclosures

This release contains, and from time to time our management may make, forward-looking statements within the meaning of  Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are subject to risks, uncertainties and assumptions.  These statements are only predictions based on our current expectations and projections about future events. Important factors that could cause actual results, level of activity, performance or achievements to differ materially from those indicated by such forward-looking statements include but are not limited to: incurrence of net losses, fluctuations in quarterly and annual results, adverse economic or market conditions, our expectations with respect to future levels of assets under management, inflows and outflows, our ability to retain clients from whom we derive a substantial portion of our assets under management, our ability to maintain our fee structure, our particular choices with regard to investment strategies employed, our ability to hire and retain qualified investment professionals, the cost of complying with current and future regulation coupled with the cost of defending ourselves from related investigations or litigation, failure of our operational safeguards against breaches in data security, privacy, conflicts of interest or employee misconduct, our expected tax rate, and our expectations with respect to deferred tax assets,  adverse economic or market conditions, including the continued adverse effects of the coronavirus pandemic, incurrence of net losses, adverse effects of management focusing on implementation of a growth strategy, failure to develop and maintain the Silvercrest brand and other factors disclosed under "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2020 which is accessible on the SEC's website at www.sec.gov.  We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

About Silvercrest

Silvercrest was founded in April 2002 as an independent, employee-owned registered investment adviser. With offices in New York, Boston, Virginia, New Jersey, California and Wisconsin, Silvercrest provides traditional and alternative investment advisory and family office services to wealthy families and select institutional investors.

SOURCE Silvercrest Asset Management Group Inc.