Good morning, and welcome to the Silvercrest Asset Management Group Inc. Q1 2022 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 note this event is being recorded. Before we begin, let me remind you that today's call contains certain statements made regarding our future performance and our 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 these statements 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 Private Securities Litigation Reform Act of 1995. All forward-looking statements made on this call are as of the date hereof, and Silvercrest assumes no obligation to update them. I would like to turn the call over to Mr. Richard Hough, Chairman and CEO of Silvercrest. Please go ahead, sir. Thank you. Good morning, and thanks for joining us for the Q1 of 2022 results and call. We concluded this quarter with the celebration of our 20th anniversary in business. We actually opened the first day of the Q2 in 2002. Despite the volatile economic conditions and markets, we're pleased with Silvercrest's continued stable progress over time. Our tenure has proven that the firm has the professional resources, ability, and strategy to execute through difficult periods to build a sustainable and enduring business. Silvercrest's discretionary assets under management, our AUM, which drives revenue, increased to $23.8 billion from the Q1 of 2021, which was a YoY increase of 8.7%. Primarily due to the volatile equity markets during the Q1 of 2022, Silvercrest's discretionary AUM declined by 5.2% from December 31, 2021, which also led to a quarterly decline in revenue and adjusted EBITDA. Along with the continued progress in growing AUM YoY, the firm's revenue increased 7.3% from Q1 2021, with $33.5 million in revenue for the quarter ending March 31, 2022. The firm's quarterly adjusted EBITDA was approximately $10.3 million or an annualized adjusted EBITDA run rate of $41 million and grew YoY by 6.2%. Adjusted diluted earnings per share increased 7.1% YoY to $0.45 per adjusted diluted share, and the firm's Q1 2022 adjusted EBITDA margin was 30.6%, which is a consistently high number for Silvercrest. Silvercrest high net worth business grew its relationships during the Q1, and we are pleased with incoming opportunities. Our net flows were muted as compared with historical norms. Silvercrest institutional equity new business was solid during the Q1, and our opportunities remain excellent across Silvercrest's suite of proprietary equity capabilities. Our sub-advisory relationships continued to add assets during the Q1 of 2022. Market volatility and uncertainty have created long-term opportunities that typically benefit the high quality of Silvercrest's capabilities. We have a lot to accomplish to continue building the premier wealth and asset management boutique in the nation, and we embrace those challenges that come with change. On May third, the company's board of directors declared a quarterly dividend of $0.17 per share of Class A common stock, and the dividend will be paid on or about June 17 to shareholders of record as of the close of business on June 10. With that, I'll turn it over to you, Scott, for the financials, and then we'll take questions. Thanks. Great. Thanks, Richard. Again, as disclosed in our earnings release for the Q1, discretionary AUM as of March 31 of this year was $23.8 billion, and total AUM as of March 31 of this year was $31.2 billion. Revenue for the quarter was $33.5 million, and reported consolidated net income for the quarter was $12.4 million. Revenue for the Q1 was approximately $33.5 million, representing approximately a 7% increase over revenue of approximately $31.2 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 Q1 were $18.1 million, representing approximately a 29% decrease from expenses of $25.5 million for the same period last year. This decrease is primarily attributable to a decrease in G&A expenses of $8.5 million, partially offset by an increase in compensation expense of $1 million. Compensation and benefits expense increased by $1 million or approximately 6% to $18.7 million for the Q1 this year, from $17.6 million for the three months ended March 31 of last year. The increase is primarily attributable to an increase in the accrual for bonuses and benefits expense and salaries expense, primarily as a result of merit-based increases and newly hired staff, partially offset by a decrease in equity-based compensation expense due to a decrease in the number of unvested restricted stock units and unvested non-qualified stock options outstanding. General and administrative expenses decreased by $8.5 million to -$0.6 million for the three months ended March 31 of this year, from $7.9 million for the three months ended March 31, 2021. This was primarily attributable to decreases in the fair value adjustment to the contingent consideration related to the Cortina acquisition of $8.8 million and occupancy and related costs, partially offset by increases in travel and entertainment expense, portfolio systems expense and some advisory and referral fee expense. Reported consolidated net income was $12.4 million for the quarter as compared to $4.3 million in the same period last year. Reported net income attributable to Silvercrest or to Class A shareholders for the Q1 of this year was approximately $7.6 million or $0.77 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 $10.3 million or 30.6% of revenue for the quarter, compared to $9.7 million or 30.9% of revenue for the same period last year. 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 $6.7 million for the quarter, or $0.46 and $0.45 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. To the extent diluted, we add unvested restricted stock units and non-qualified stock options to the total shares outstanding to compute diluted adjusted EPS. Quickly looking at the balance sheet, total assets were approximately $197.9 million as of March 31 of this year, compared to $229.3 million as of the end of 2021. Cash and cash equivalents were approximately $57 million as of March 31 of this year, compared to $85.7 million at the end of 2021. Total borrowings as of March 31 of this year were $8.1 million, and total Class A stockholders' equity was approximately $86.3 million at March 31 of this year. That concludes my remarks. I'll turn it over to Richard for Q&A. Thanks very much, Scott. We're welcoming questions at this time. Thanks. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question will come from Sumeet Mody with Piper Sandler. Please go ahead. Thanks. Morning, Richard, Scott. Hope you're both doing well. Good morning. Wanted to start with your thoughts maybe around, you know, what you're seeing from your wealth management institutional clients through the volatile kinda first four months of the year. You know, we didn't see a material shift outflows in the quarter, which was nice, but any update around what you're seeing, you know, around demand for certain strategies, particularly growth? Are there any areas you think Silvercrest does particularly well during these types of more prolonged downturns, maybe contrasted against what we saw in, you know, the beginning of the pandemic in 2020? Sure. I'll try to keep my remarks a bit short only because it's a bit open-ended question, so you can follow up if you want. I appreciate it. Kinda two questions there. In terms of what we're seeing, you know, with regards to flows, number one, that you see, you know, they're pretty muted, which is the word I used in my introduction. It was considering the volatility and the fact that we're, you know, headed into tax season, it was a pretty good quarter, actually. The flows overall, as you saw, were muted. This quarter was basically entirely driven by the markets. I would point out that existing net flows for the quarter were, you know, just about $163 million out of the firm, very small number compared to our base. However, it kinda hides a surprisingly strong inflow from some new clients. We had, you know, a good $250 million of inflows into our institutional business. We had a fair bit of new flows into our high net worth business. Just to give you an idea, just to get a bit of detail here, while it was -$162 million, you know, again, just kind of a very small rounding error when it comes to our AUM, that left the firm, there were only five clients that were effectively responsible for close to $400 million of net outflows this quarter. Rebalancing, you know, some preparation for taxes, a few other things. You know, the muted overall flows in terms of history was kinda hiding some really good news underneath the hood. We grew our number of relationships as well. You know, I'm pretty pleased with all that, especially given the volatility in the markets. In terms of demand in our capabilities on the institutional side, that's just gonna be very client-specific in terms of what pieces of their asset allocation they're looking to fill. I can't say there's been some significant shift in the marketplace over this short period of time. The performance in our growth equity strategies has been very good and continues to be despite, I think, the very well-publicized volatility, in particular on the growth side of the market. You know, no matter where you're looking, you know, it's clearly, you know, in a bear market in certain sectors or areas, it's been on the decline for a good year. Our team has done extremely well. That's going to help us clearly as we try to grow that business. The value side had some, you know, relative performance challenges. As you noted in your notes, recently, our performance remains quite strong. It is in periods like this that we often pick up a lot of good relative performance. It is in periods like this that we serve our clients extremely well, whether that's on the institutional or high net worth side. They are hiring us to be a really steady hand on the tiller and to guide them through volatility like this. This firm, over 20 years, has been through significant periods of volatility, not to mention the global financial crisis. It's really when we have the opportunity to just shine and where our stable focus on high-quality portfolios and the fundamental attributes of the businesses we invest in really shine. In other ways, I think this firm can benefit, because we may be seeing a conclusion to the kind of easy money that has led to a tremendous amount of speculative kind of investing, where, you know, frankly, the market and the number of asset classes kind of look like a casino. People chasing the latest shiny object. Putting an end to that and, hopefully not abruptly because that can have other economic consequences. Putting an end to that, quite frankly, is gonna be very constructive for firms like ours, whether you're talking about our investment capabilities or frankly you're talking about the ability of this firm to make use of capital in a competitive way and at a high return on equity for our shareholders. I wanted to be shorter in this comment, but it was just such kind of a, you know, big question that I have to address different aspects of it. If you wanna follow up on anything, it's a very general comment about how I see things. No, I appreciate that. That's exactly what I was looking for. Thanks, Richard. Just wanted to shift over to index inclusions. Is that something you guys are focused on sort of in the future here? Are you thinking about any maybe structural elements you can address, like dual share class that'll help you get included in future indices, or is that not something that you're focused on today? Yeah. It's not something I'm focused on. You know, I think I've been really clear. My job is to execute a long-term strategy, and continually organically growing this business. Frankly, I don't get too caught up in doing a lot of mechanics to massage either the stock or, you know, where we look in terms of indexes and the rest. It looks like we'll be in the index according to the estimates, which is great. We've been in it before. It'd be good to be back. You know, what really happened and what you saw, it connects to my last comment. You saw a lot of companies that had zero revenue, stocks, very speculative investments, that were running way up in valuation with nothing to show for it, that were all put in the index. What you saw fall out were a lot of small companies, especially financials. We've seen a reversion. We've seen a rotation towards value, which the biggest component of which is financial. We've seen a rotation towards companies with real cash flow, healthy balance sheets, which of course we're one of. We've seen a deflation of those more speculative investments. We're gonna come back in on our own merits. No, we're not doing anything, but obviously, it's a good thing to go back into the index. Okay, great. Thanks. Just last one from me here. You know, just Cortina obviously has been performing really well, since that deal's closed and been a great contributor. Just wondering how conversations are going with potential M&A targets today. Can you talk about how pricing looks for the opportunities you're engaging with that maybe you think fit well with Silvercrest? And then kind of secondly, how those private valuations are being impacted today? You know, is it similar to what we're seeing on the public side or is it sort of not close yet? You would think that there would be a connection between, you know, very large markets that are marked to market on a regular basis and what's happening in the private markets. It's a little too soon to say that I'm seeing an effect. However, I think it's notable that it looks like that there are some significant players on the private side who look to be shopping some of their assets, which I didn't expect. If that's the case, that says there's some players in the market who think that what they're holding now look a bit expensive, right? Obviously, there's a buyer for every seller, so someone else thinks it doesn't. I think it's too early to see where that's gonna go. We have been in discussions, and I will say that in the Q1, the things looked despite the underlying volatility of the quarter, and a lot of it started happening closer to the end of the quarter, but things still look expensive. Honestly, this volatility, that's one of the things I was alluding to, may lead to that. I think it's healthy. I think there's just been a ton of fuel leading to speculation, and we have not had a sustained downturn or increase of interest rates. Whenever we've hit these bumps in the road that have really tested that and pushed it, maybe this is a time where that will happen. Stay tuned. That is an aspect where I think someone disciplined with their capital and looking to be highly accretive to shareholders could benefit if it is sustained. Of course, I would include this firm among them. Number two, you know, with regards to asset management acquisitions, I think I've said before, certainly in other forums, we're not really on the hunt for other institutional capabilities or asset management firms. The Cortina people were really special with a capability that we strongly desire. But we're not seeking to do, you know, every possible strategy. We wanna do the core strategies extremely well. We have them at this point. Our job now is to organically grow the capabilities we have. That is job number one. It's not looking to grow this company with more capabilities at this time. Any M&A is gonna most likely be strategic in the high net worth space in key cities or client bases that are in cultures that are compatible with this firm. Great. Thanks for taking my questions, sir. Mm-hmm. My pleasure. I'm sorry. Scott and I both have an allergy of some sort this morning. The next question will come from Sandy Mehta with Evaluate Research. Please go ahead. Yes. Good morning, Richard and Scott. Can you give us an update on the OCIO assets AUM? Also, I was wondering if you have a number for your actionable pipeline. Yeah. Good morning, Sandy. Thanks. The OCIO has come down in AUM entirely as a result of markets, so it's just under $1 billion right now or about $1 billion. No news there other than, you know, market exposure as you would expect, and seeing, you know, with regards to this quarter. That's the news really. In terms of the pipeline for that business, it remains, you know, nice and strong. It's close to $600 million. You know, that's a nice conservative number. I think we're gonna do quite well over the next quarter. You know, one thing to keep in mind, I think, is that the volatility in the markets really highlights for fiduciaries, that is board members running investment committees, what kind of guidance and help they really need to navigate. When everything is running up in the environment that we've had for a sustained period of time, it makes the job look easy. So this is another reason to kind of welcome this disruption that we're seeing right now. It's why in my opening comments, I referred to the fact that the uncertainty creates long-term opportunities that typically benefit the high quality of this firm. It's specifically because it is now when people start to realize maybe they need more help than they otherwise would have thought. That really affects the dynamics, I would say, of an investment committee sitting on the board of an endowment or a foundation. Yeah, I'm quite optimistic about what we're gonna do with that pipeline and the conversations we're having. On the institutional equity side, the pipeline is a little smaller. I think I reported close to $1.8 billion last quarter. It may have just been shy of that. We're right around $1.6 billion on the actionable pipeline. For those who don't tune in regularly, that pipeline is invite only RFPs, semifinals, and finals. It's a very strong concrete pipeline that we can measure with confidence, and it has a pretty high realization rate. We win a significant portion of the pipeline. The pipeline coming down from $1.8 billion- $1.6 billion is a good example of that. It's largely because we have wins. During the quarter, as I said, underlying those kind of muted net flows, and frankly, very good with regards to closed accounts. The closed accounts this quarter were excellent. It was very small. Underlying that was with some significant inflows into the institutional business. The pipeline just reflects that. It remains very strong. I'm very happy about it. You know, Silvercrest stock is up 25% year to date. Yeah. While the Yeah. Any updated thoughts on the buyback? I mean, I still, I mean, at least in my view, the stock is still very undervalued. What are your thoughts currently on the buybacks? Look, we're strongly in favor of buying back our company. As I've said, it's been difficult primarily because of volume limitations. We have not revealed or talked about what our pricing strategy is around our stock. We're just gonna let our results speak for themselves. You know, it's really nice to see investors realize the value in this company. You know, part of this has to do with the rotation towards companies that are so stable, able to deliver over the long term, have strong cash flows, a conservative balance sheet, et cetera. Given the M&A market and what I had to say about it earlier, and its relative expense and cost if we were to engage at some of the prices that are in the marketplace, I just don't think it's a good use of capital. We're going to buy back what I think is the best firm in our business, which is Silvercrest. I have nothing more to say about, you know, the relative price versus the market or, you know, our fundamentals. One last question. Note that you mentioned the growth strategies did remarkably well, even in this down market. Yeah. Very strong numbers in up and down market. Can you talk specifically about what flows you're seeing in that? And, you know, the underlying stocks tend to have a lot more liquidity in these growth stocks versus, say, value stocks. Is there potential for more flows there or perhaps a new product? Anything specifically on Cortina, please? Thank you. Sure. On the product side, we are incubating multi-cap growth and large-cap growth. You know, those are important asset classes for our high-net-worth group. We have a super talented team. We have and will expand the intellectual capital in Milwaukee to support those capabilities. You know, but the flagship products there, Small Cap Opportunity and Small Cap Growth, with the strong relative performance that you referenced, just have a tremendous opportunity. They should really stick out compared to what's happening in small-cap technology and other small-cap issues. I mentioned obviously technology in particular because of the great volatility there. The pipeline there is pretty strong. It's part of the total institutional pipeline I gave you. I usually don't break it out. I'm happy to do so right now. I think that's close to $400 million. You know, for a very niche products and capabilities, I think that's good. I think one thing we have to get over is for the marketplace to be more aware of those capabilities. We're constantly in touch with consultants and working to introduce that for the long term. I also think that, given the volatility in technology and small cap issues, there are a lot of institutional investors and others, amidst what's going on right now that have a bit of a wait-and-see attitude, only because they may be a bit shy of the asset class, given what's occurred and what's happening to the other capital in their asset class. I think this is gonna shake out really well in our favor, behind a pretty good pipeline. Great. Thank you so much. You're welcome, Sandy. The next question will come from Christopher Marinac with Janney Montgomery Scott. Please go ahead. Hey, thanks. Good morning. Richard and Scott, can you just remind us on sort of the lag of revenues, as you go quarter to quarter, and do you see anything shifting on the EBITDA margin, as a result of that? I'm not sure what you mean by the lag of revenues because most of our revenue is billed quarterly in advance. The sub-period revenue or things that we might do in arrears at the end of the quarter are due to new flows into the business. You know, that's the major lag I can think of. You know, most of it is quarterly in advance, which is nice. It gives everyone a lot of visibility into what's gonna happen and helps us manage the business. You know, you can respond in a second if I didn't address your question. With regards to EBITDA, you know, this is, as I noted in my introductory remarks, being over 30% of EBITDA is still, you know, pretty historically high for the firm on just a normal quarter basis. That is to say, a quarter that doesn't have performance fees, which we crystallize at the end of the year. It can always bump you up significantly, as we did last year. I've said this before, I'll say it again. We wanna invest in the business. We wanna hire new intellectual capital to and portfolio managers to organically grow the business. When I do that, there is a lag towards new revenue. That's the other form of lag you get as people build businesses at this firm, and that can hit EBITDA. We have made those hires over the past two years, three years, four years. It's just that we've been able to grow faster than we've been making the investments, which is great. We're gonna continue to try to do that. It may become more apparent when I do those hires and spend that capital on growing this business organically on EBITDA during volatile markets, but it hasn't come to pass yet. I think you can expect us not to be consistently this high. I've said that repeatedly. It's just nice that we are. The other lag that's possible, and again, please respond after I'm done, is flows into our growth strategies in Milwaukee. The billing there does tend to be more in arrears. It's just smaller compared to the, you know, the size of the entire firm. Right. Chris, also, you know, with great performance in Milwaukee, certainly the hope and expectation is that you will end up with additional flows. But again, those type of flows will lag performance and, you know, challenging to predict when those may come in. All right, great. No, I think you've addressed my revenue question, so thank you for that. You know, from the standpoint of some of the global dislocations, do you think you'll see some benefit from that as future quarters play out? I know, Rick, you touched on that a little bit in your earlier remarks. Yeah, I do. You know, some of it is. One part is just the fundamental strength of this firm, not just its people, culture, intellectual capital, but how we manage this business. That's number one. Number two, just to go back to some of my earlier comments, people in this kind of disruption recognize they may need help. You know, it doesn't look so easy to do it yourself anymore. And that's even heightened for people who are fiduciaries on investment committees. But look, large families have the same issue. We're gonna benefit from that. Third, the way we manage money benefits from this kind of market. We're gonna stand out. We have picked up some really good relative performance in this market. Fourth, it may not be the disruption you need, however, the capital's global and the US dollar, the US markets, US economy still stands out. Even in difficult times, even if we go into recession, you know, we're gonna be the cleanest shirt in the dirty laundry basket. I can tell you, we are seeing opportunities in Europe that I have not seen in some time. We have significant, very significant European relationships already. We have sub-advisory relationships that are quite strong, and we're seeing really good regular inflows that are only picking up. That was happening, you know, during the pandemic when we couldn't even go to Europe. some of these other disruptions, whether you're talking about economy or if you're talking about war, we're seeing more and more interest from foreign capital interested in the U.S. and interested in the kind of work that firms like ours do. That is an opportunity. It's something that's real that I'm seeing and I'm optimistic about. Great. Richard, thank you very much for the insight this morning. You're very welcome. Thanks. Always good to hear from you, Christopher. The next question will come from Chris Sakai with Singular Research. Please go ahead. Hi. Good morning. Good morning. Can you talk about, new hires and how that's looking and evolving the market? You know, I'm always looking for great talent. The challenge there is someone who's gonna fit into this great culture, is going to have the right way to manage money that fits with our philosophy, who has the ability to bring assets and clients, I mean, at the end of the day, that's our business, and has a long-term perspective in terms of a place of work. We've been really successful at doing that when we do, as well as building the next generation here. We make meaningful investments in people to bring up the next generation. We're working very hard on our third generation. Not surprisingly, given our 20th anniversary that I just mentioned in my opening remarks. It's really important to the firm and the sustainability of our strategy. It's hard to do. We want the people we hire to succeed before we do write off too much. We did a fair bit of hiring going into the pandemic, and we've done a bit during. Those folks are doing really well. This business takes a long time to succeed. It takes a long time. There's a long apprenticeship to building up your next generation, many of whom have become partners in recent years. I am becoming more aggressive on hiring and what we might be able to do with hiring because, as I mentioned earlier, of the expense of the M&A market. The kind of people I'm hiring are fiduciaries. They don't tend to be brokers, which is a very different market, very different kind of business from ours. It's going to be very deliberate as we do that. I have not made significant high-level hires, you know, in recent months. I am on the lookout, and that had something to do with my comments that I made about our EBITDA margin, which I've made regularly over the past few years. As I mentioned earlier, we've just been able to grow faster than the expense of the compensation. Great. Okay. Can you talk about your dividend and when you would see an increase there? Well, I've never given any future guidance of any kind really other than to give color around our pipelines and how we feel about the environment of the business generally, in the context of our four-pronged strategy, which we talked about a fair bit. I'm not gonna speculate on that. I will say that just to state our basic policy, we think it's very important to return capital to shareholders on a very regular basis and on a meaningful basis, given the size of the company, in the markets. We want to reward shareholders on a regular basis for holding this stock and return capital in that form, among other things that we're doing. It's an important component. The yield is an important component, that distribution. We have a policy, if we can afford to do so, of increasing it on a regular basis, which if you look at the history of this firm, we have done on a very regular basis. It has been an important part of the compounding return to our shareholders, and we continue to believe that. We do not have a yield target per se. It's more about making sure that we are doing it at a meaningful level, you can interpret that as you wish, and that we have the cash both in the C corp and from the business to sustain whatever dividend we put in place for a prolonged period of time despite market disruptions. We wanna avoid cutting it if we can. We're in very solid position to sustain where we are. That said, you know, the company's doing really well, and we have increased it on a regular basis. You know, we'll see what happens in future quarters, but that's about as much as I can say about it. Yeah. Chris, just for your reference, we last increased the dividend the latter part of last year, just to remind you of that. Okay, great. Thanks for that. You're welcome. Again, if you have a question, please press star then one. This concludes our question and answer session. I would like to turn the conference back over to Mr. Richard Hough for any closing remarks. Please go ahead, sir. Great. Thank you so much for joining us for our Q1 results. Really appreciate the good questions this morning. As I mentioned, you know, despite volatile markets and global news and the economy, you know, I'm very pleased what we see as a company. Our progress looks good. The opportunities are strong. I just wanna reiterate it's environments like this where Silvercrest can shine. We may have to take a step back or two. That's normal in this business. I don't view the past quarter as a step back. That's just, you know, you're just looking at the market. This is normal stuff. Whatever it may be economically or in the markets, this firm is well poised to continue executing our strategy on behalf of our clients as well as shareholders. It's frankly something that has some side benefits that we welcome over the long term. Thanks very much for tuning in, and look forward to talking to you next quarter. Thanks. The conference is now concluded. 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