Good morning. Welcome to the Silvercrest Asset Management Group Inc. fourth quarter and full year 2022 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. 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 Hough, Chairman and CEO of Silvercrest. Please begin. Good morning, thanks for joining us for the fourth quarter of 2022 and year-end 2022 results. Silvercrest finished a volatile fourth quarter in calendar year 2022, with total assets under management of $28.9 billion and discretionary AUM of $20.9 billion. Total AUM declined at 10.5% during the calendar year 2022. Discretionary AUM, which primarily drives our revenue, declined 16.7% during the year 2022. Revenue consequently fell 15.7% and 6.4% for the fourth quarter and full year 2022 respectively compared with 2021. This decline in revenue significantly affected our adjusted EBITDA and adjusted diluted earnings per share. Adjusted EBITDA declined to $4.4 million and $32 million for the fourth quarter and full year 2022 respectively from 2021. Our adjusted diluted earnings per share also declined to $0.15 and $1.35 for the fourth quarter and full year 2022 respectively. Our adjusted EBITDA margin for the fourth quarter and full year 2022 was 15.6% and 26% respectively. While down from the firm's 33% adjusted EBITDA margin for the year-end of 2021, Silvercrest adjusted EBITDA margin remains historically healthy for the company, especially in light of the declining markets last year. The volatile market conditions of 2022 relaxed during the fourth quarter of the year. As a result, 2022 year-end discretionary AUM increased by $1.5 billion or 7.7% over the third quarter to $20.9 billion. Silvercrest also gained $220 million in new relationships during the fourth quarter, which is one of our better new relationship development quarters over the past couple of years. We've stated that market volatility and uncertainty create long-term opportunities that have typically benefited the high quality of Silvercrest capabilities. Silvercrest's suite of asset management capabilities have maintained their solid relative performance. Our pipeline of new business opportunities also increased during the quarter. Finally, the firm's outsourced chief investment officer initiative now manages AUM of $1.45 billion. Silvercrest repurchased approximately 190,000 shares of Class A common stock for approximately $3.5 million during the fourth quarter. Those conclude my preliminary remarks. We'll turn it over to Scott Gerard, our CFO, and then we will take questions. Thank you. Great. Thanks, Rick. As disclosed in our earnings release for the fourth quarter, discretionary AUM as of December 31st, 2022 was $20.9 billion, and total AUM as of the end of 2022 was $28.9 billion. Revenue for the quarter was $28.5 million, and reported consolidated net income for the quarter was $3.3 million. Looking further into the fourth quarter of 2022, again, revenue was approximately $28.5 million, and this represented approximately a 16% decrease over revenue of $33.8 million for the same period last year. This decrease was driven primarily by market depreciation and net client outflows in discretionary AUM. Expenses for the fourth quarter were $24.4 million, representing less than a 1% decrease from expenses of $24.5 million for the same period last year. This decrease was primarily attributable to a decrease in general and administrative expenses of $1.2 million. This was partially offset by an increase in compensation and benefits expense of $1 million. Compensation and benefits increased by $1 million or approximately 6% to $18.7 billion for the fourth quarter of 2022 from $17.7 billion for the same period last year. The increase was primarily attributable to an increase in the accrual for bonuses and salaries and benefits expense primarily as a result of merit-based increases and newly hired staff. General and administrative expenses decreased by $1.2 million to $5.7 million for the fourth quarter of 2022, from $6.8 million for the same period in 2021. This was primarily attributable to a decrease in the adjustment to the fair value of contingent consideration related to the Cortina acquisition of $1.9 million, partially offset by an increase in travel and entertainment expenses and professional fees. Reported consolidated net income was $3.3 million for the quarter. This compared to $8.6 million in the same period last year. Reported net income attributable to Silvercrest or the Class A shareholders for the fourth quarter of 2022 was approximately $2.1 million or $0.22 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 $4.4 million or 15.6% of revenue for the quarter, compared to $13 million or 38.5% of revenue for the same period in the prior year. 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 $2.2 million for the quarter or $0.16 and $0.15 per adjusted basic and diluted EPS, respectively. Adjusted EPS 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 dilutive, we add unvested, restricted stock units and non-qualified stock options to the total shares outstanding to compute diluted adjusted EPS. Looking at the full year, revenue for 2022 was approximately $123.2 million, representing approximately a 6% decrease over revenue of $131.6 million for the same period last year. This decrease was driven primarily by market depreciation, partially offset by net client inflows in discretionary AUM. Expenses for 2022 were $84.7 million, representing approximately a 16% decrease from expenses of $101.1 million for the same period last year. This decrease was primarily attributable to decreases in compensation expense and general administrative expenses of $1 million and $15.5 million, respectively. The compensation and benefits decrease was approximately 1% to $71.6 million for the year, compared to $72.6 million for the same period last year. The decrease was primarily attributable to decreases in the accrual for bonuses and equity-based compensation expense due to a decrease in the number of unvested restricted stock units and unvested non-qualified stock options outstanding, partially offset by an increase in salaries and benefits expense, primarily as a result of merit-based increases in newly hired staff. General and administrative expenses decreased by $15.5 million or approximately 54% to $13 million for 2022, from $28.5 million for the same period in the prior year. This was primarily attributable to decreases in the fair value of contingent consideration related to the Cortina acquisition of $17.5 million, occupancy and related costs and trade errors, partially offset by increases in travel and entertainment expense, professional fees, and portfolio and systems expense. Reported consolidated net income for the year was $30.8 million, compared to $24.9 million in the same period in the prior year. Reported net income attributable to Silvercrest for the year ended December 31st, 2022 was approximately $18.8 million or $1.92 per basic and diluted Class A share. Adjusted EBITDA was approximately $32 million or 26% of revenue for 2022, compared to $43.4 million or 33% of revenue for 2021. Adjusted net income was approximately $19.7 million for 2022 or $1.40 and $1.35 per basic, adjusted and diluted EPS, respectively. Quickly looking at the balance sheet, total assets at the end of 2022 were approximately $212.7 million, compared to $229.3 million as of the end of 2021. At the end of 2022, cash and cash equivalents were approximately $77.4 million, compared to $85.7 million at the end of 2021. Total borrowings as of the end of 2022 were $6.3 million, and total Class A stockholders' equity was approximately $84.6 million at the end of 2022. That concludes my financial remarks. I'll now turn it over to Rick for Q&A. Great. Thanks, Scott. We're now available for questions about the fourth quarter and the year. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Sumeet Mody. Excuse me, Mody, with Piper Sandler. Please go ahead. Thanks, guys. Good morning, guys. Good morning. Just wanted to start. Good morning. Just wanted to start with the institutional pipeline, specifically OCIO. I know last quarter you mentioned you were around $700 million in the pipe and AUM was below $1 billion, and now that you're at $1.45 on AUM, just wanted to see what the update there was on the OCIO pipeline. Then if you could also just secondly touch on the international distribution effort and how that's progressing and how you view that opportunity over the next couple of years. Sure. We'll start with OCIO. Obviously, that's a really nice pickup for us. Some of that effect is going to be the increase that we saw in the fourth quarter in the markets. I think the S&P was up on the order of 7%, which helps. We also have won new business into the OCIO platform, so a meaningful part of that includes those wins, which is great. As I've said before, getting over the billion-dollar threshold was really important for us being a player in the market. We were right up against it, as you know, before the market it declined in 2022, and I have projected that this will be a few to several billion-dollar business for the firm. I feel really good that we're almost at a billion and a half, not quite there. Just a couple more wins. The pipeline is for that capability is looking really solid. It has picked up as well, and I think it's on the order of $700 million, just under that, probably $690 or something like that. That has increased as well. You know, we feel good about the business opportunities there. I might as well get ahead of the general pipeline question since I usually get asked it. The total pipeline for all of our capabilities on the institutional side of the business, including OCIO, is $1.65 billion now, and that is up from $1.43 billion at the end of the third quarter. Your second question had to do with international value. That pipeline has increased. It's small. Most importantly, the performance in that capability has picked up very nicely in the current environment. They are definitely a value-oriented strategy, the risk off and the volatility and kind of return to fundamentals in some parts of the market has definitely helped their strategy. That's great. We've also seen some more allocations internally from our wealth clients into that strategy. Thanks so much for that. It's helpful. Sure. Just to kind of round out the institutional growth strategy overall, on the value and growth sides, you know, it seems like the focus is organic growth, maybe some small team lift- outs. You know, I know from a product perspective, you talked about being comfortable where you are today, but, you know, are there any regions across the U.S. you find most interesting today that maybe you haven't penetrated into yet? Or is it kind of more just scaling within where you're at? Yeah. With regards to the overall institutional strategy, I'm very happy with where we are. We've got a plenty of capacity to build in both value and growth. The growth performance with our Milwaukee professionals has absolutely been outstanding through this environment. Their relative outperformance is really great. You know, for the kind of performance that they can deliver, it's really nice to see them hold value in a down market. Their pipeline has grown commensurately with that. The value equity pipeline also remains strong. You know, I expect good things there, but we're really focused on building those strategies. We've got the main pieces that we need as an asset management company for now. I am not necessarily looking for other lift outs or strategies to enhance the institutional business at this time. You know, with the change in the interest rate environment, there's possibility we look at more credit that has been of less interest to many clients and allocators, as you might expect, given the low interest rates. There's more and more attention being paid to different types of credit strategy, whether that's distressed or other capabilities, even more so than what we were seeing in PE only a few years ago. There may be an opportunity there, but I can't say I'm aggressively looking or trying to add that. We've got enough to try to build here as it is. Regionally, the institutional business isn't something that I'm focused on. The reason we went to Milwaukee was because it was a great strategy. It was a great team and a great growth strategy. It had nothing to do per se with the region. It's nice to be in the Midwest. We work well with Midwesterners. It was a great cultural fit, that's just a circumstance of them being really excellent. They could have been, you know, in another city entirely. Geography is much more important for us when we think about the high net worth business. I'm, as you know, always looking for opportunities to find the right partners in different regions of the country. Great. Thanks. Maybe just one last one for Scott on the G&A costs. I know you guys have run pretty much under just under $6 million a quarter on average in 2021, maybe just over that in 2022 for 10% growth rate year-over-year. Is that a fair growth rate to assume for 2023? You know, what are some of the impacts we should think about for G&A for this year? Yeah, I think one of the noteworthy lines, is related to, you know, travel and entertainment expense. That's certainly, going to, you know, has started normalizing so that, you know, as you can imagine, because of the pandemic, that expense, you know, in 2021 and even, well into 2022, was, you know, lower than historical levels. You know, other fees such as, you know, professional fees, some of the research services that we use, you know, we're in a inflationary environment. As much as we, you know, do our best to negotiate, either, you know, nominal built-in increases in our agreements or, you know, more common now, various services are, you know, hiking up their fees, and we try and do our best to negotiate that down to a reasonable level. I would say that pretty much covers, you know, some of what you've seen in G&A and what I would expect to continue. Great. Thanks for taking my questions, guys. Sure. Thank you. The next question comes from Christopher Marinac with Janney Montgomery Scott. Please go ahead. Hey, good morning. Scott and Rick, can you talk about the EBITDA margin and kind of what's realistic in this environment? I know there's some noise and unique factors in Q4, just thinking going forward, kind of how you see the business unfolding there. Yeah. Thanks, Chris. I'll start, but Scott may be able to fill in some detail. First of all, where we sit in the fourth quarter, I think you may have noted this in your note this morning at what are we? 26%-27% EBITDA for the fourth quarter is actually right in line with historical EBITDA for the company if you go prior to some of our recent growth spurts. We feel really good about that, considering the year and compared to some peers, even looks quite good. As I said, a year ago, 2021, when we were hitting 32%-33% EBITDA, that was really kind of historically high. In part, that was driven by performance fees, which we saw in multiple years leading up to that. Obviously, last year was not a good year for performance fees. You're kind of looking at the true business. It's quite sustainable and will only look better as the markets recover. There's another important point here, which I talked about in several calls, which is that we would be making investments in personnel and the strategy, intellectual capital to grow the company. We've done that. It was hidden a bit in our EBITDA margins because we were growing. We were growing faster than we were even making those investments. Well, you know, with the decline in markets, they've become a little more obvious. They're paying off, that sort of investment takes a long time to pay off in a business like ours, especially on the high net worth side. We were also recognizing high performers in different strategies, with increased compensation due to performance. A good example would be the growth team in Milwaukee I just mentioned. That's gonna hit your EBITDA margin a little bit. It's money we're very happy to pay. I view this as a very sustainable level. I view it as a good level. It's in line with history. It's very good compared to the competitors. If we get performance fees or you see growth from some of those investments, I see increases from there. Anything to add to that, Scott? The only thing I'll add is the fourth quarter trend that you typically see, you know, with us is that we true up our compensation pools at the end of the year. A lot of it is based on, you know, full year results. That's why, you know, you may see atypical margin levels, EBITDA margin levels in the fourth quarter. You know, a year ago, our fourth quarter adjusted EBITDA margin was 38.5%, it was, you know, little bit north of 15% fourth quarter this year. This all reflects, you know, what Rick said, you know, investments in new staff that, you know, takes time to develop their business in a, you know, year where revenue levels and markets were down. Just to, you know, provide that color that it's not unusual in the fourth quarter of each year for, you know, Silvercrest to see some movement in EBITDA related markets. Yeah, I figured we'd get there as well. That's a great point. I would just add that even on compensation, which is the bulk of the obviously the performance fees that can help you to the upside, which happened last fourth quarter in 2021 and hurt us in 2022. There's the compensation adjustment. We're accruing at approximately 55% of revenue, and we went well below that because of the good year we had in 2021. 2022, we went above it. You kind of average it out and you look at the long-term trends of this business, not even that long-term, a year trend, not one year, quarter-over-quarter, but you look at calendar years, and we're hanging right in there around 55 or just below, which we've done historically and managed very well. To Scott's point you just made on the EBITDA margin, you may have hit the fourth quarter at 38% last year and more like 15% this year for the fourth quarter. Well, you average that, and you're right at 27%, 26.5%. Which is exactly where we would expect to sit. I think you need to be careful about where we're what comparison period we're comparing here. Nope, that's all very helpful. I appreciate that. Then could you just continue a little bit down on the sort of the revenue side at the core from sort of the basis points you can charge? I know some of this gets influenced by mix as you continue to be successful in other parts of the business. Right. Is there any additional pressure on fees in general compared to how you've managed this year to year? No. I think it's more mix. As the institutional business grows and accelerates, including OCIO, which had a big, you know, which has increased nicely, you're gonna have lower fees on discretionary assets. That business, as you know, has a lot more leverage in it. Just looking at the fee basis, you sort of miss the enhanced EBITDA margin that you get with those wins. The high net worth side of the business has been very steady with from a fee basis. I pointed out in the past that the very largest high net worth clients have always asked for institutional pricing plus full service and have aggressively negotiated fees for years. At the very top end, they don't look that different from the institutional business. As we've won more of the really large families, that has lowered the fee basis a bit, as well. That's a, that's a high-class problem. I'd rather have that. The aura and reputation of the firm really benefits from associating from that level of wealth. The institutional side, I would say has been, you know, about the same pressure on fees that we've experienced for the past decade. Nothing changing dramatically one way or the other. There's noise in there, of course, depending where people allocate and when we get cash flows in and then where they go with their funds. I don't discern a significant trend, or I haven't noticed anything across the firm that's gonna move around, but it's been pretty stable. Understood. Thank you very much for that background. I appreciate it. Yeah, you're welcome. Thanks, Chris. The next question comes from Chris Sakai with Singular Research. Please go ahead. Yes. Hi, good morning. Morning. Can you talk about the acquisition environment? How are you seeing valuations out there? Valuations have definitely come down a bit. I've observed a couple of things. Obviously, with the higher interest rate environment, for those who've had to reset debt, and have highly levered balance sheets, unlike Silvercrest, it's constrained their ability to continue rolling up and participating in my view, very high pricing in the industry for some mediocre businesses. The higher interest rate is just gonna be a hurdle to that. It's coming down a bit. What I'm seeing more is much more careful scrutiny of deals and the terms of those deals. Much more emphasis on how much AUM comes over with the deal and projecting that. Much more emphasis on earn outs, et cetera. You could view the restrictions in terms of the deal getting tighter as a form of price reduction as well. Yes, it's coming down, coming down a bit. I've also seen some players who had been very active kind of stepping out of the market. That's an indicator potentially of where it's going. The number of deals has definitely come down substantially as well. That's about all the color I can give. I haven't seen a lot, a lot else. Okay, thanks for that. Can you talk about what were the main drivers for client outflows this quarter? Just normal expenses and life. You know, there's always a leak in the bucket in this business. Some of the outflows were due to, you know, pension funds that may be winding down. You know, you see a drip out for that. Some of it's the normal high net worth living. This is why in this business, you've always got kind of 2 steps forwards, 1 back. Obviously, early in the year, both in the 3rd quarter and in the 2nd quarter, we saw very large outflows, primarily for taxes, right? There were some events that caused significant tax outflows. Outflows this quarter were pretty moderate. You know, that it wasn't unusual one way or the other. It's... sometimes we have a little positive there. very often it's a low negative, which is what, you know, this quarter was. can't give you much color beyond that. On the closed account basis, it was very low. In fact, it was quite low this entire year. It was one of the lowest years that we've had for closed accounts since 2017 and 2014. We did really well on that basis in terms of the number of accounts that we've maintained or relationships we've maintained, one of our best years in the past 5. Since we're talking about flows, it was a very good new business, new relationship quarter at $220 million. It was certainly the best quarter of last year. The year as a whole for new relationships, regardless of the net in outflows, but for new relationships, was actually better than 2017 or 2018 or 2019. 2019 looks a bit distorted because that was the year of the Cortina merger. If you take out acquired assets from that, the 2022 is actually better for new relationships than all of those years. I would argue pretty solid, especially in the environment. Okay. Thanks for the answers. You're welcome. The next question comes from Timothy Call with The Capital Management Corporation. Please go ahead. Yeah, that's The Capital Management Corporation. Your balance sheet's very clean. Your cash and receivables almost equal all of your liabilities combined. With your cash being more than 10 times your draw on your credit line, I was wondering why you're not net interest income positive. I would have expected that versus rising net interest expense. Yeah, I mean, we do have some of our, you know, cash invested to get some yield on it. We don't, typically, you know, tie up our cash too long, you know, when we have strategic initiatives and uses for the cash. You know, we also do receive, some, you know, meaningful, what I'm gonna call income credits from our bank, which helps, reduce any, you know, banking fees that we need for our transactions. Strategically, that is definitely something that we look at and we weigh, based on our strategic needs for our cash. Maybe, putting half the cash in a money market would make your net interest income positive. Yeah. Well- Thank you. It looks great. Good balance sheet. Can you comment on when you what factors go in your decision-making for when you buy back stock? Yeah, I've talked about this a bit in the past. Appreciate the question. It's primarily weighing the discussions that we're having in the marketplace and opportunities, where significant cash may be needed, against our ability or desire to purchase, you know, one of the highest quality asset managers, we can, which would be ourselves. You never know when one of those things are gonna hit. I think the acquisition we made in 2019 when we joined forces with Cortina is a great example. That was a good prolonged discussion. It takes us a while to get to know teams we want to join with. The cultural aspect is very important, so we're very careful about those conversations. It was, you know, the biggest merger in our history and required significant cash for us to step up and do all of a sudden. Keeping some of that powder dry is a big reason that we weigh against. As you know, it's also not always easy to buy the stock back that we'd like to. We put quite a bit to work last year. We've still got more to go, as we've revealed in this latest filing. I think, Scott, we've got another $5 million. Yeah, about $5.7 million. $5.7 million or so in potential buybacks. As everyone knows, we've been transparent about it. We've been active in the market. As we work through that, we will again reassess what we might do on that front for the reasons I stated. Thank you. You're welcome. Thank you. 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 Richard Hough for any closing remarks. Great. Thanks so much for joining us for both the fourth quarter and year-end 22 results. It's nice to have a little reprieve in the fourth quarter and continuing on the first quarter this year. I feel quite good about the margins and control of expenses that we were able to maintain throughout 2022, while we also returned very good performance and built our pipelines. Notable was progress in our OCIO business, as I mentioned, and the opportunities we have elsewhere. It was a nice reversal to see and I think really important to keep into context what we've been able to do year-over-year, calendar year-over-calendar year, and not just quarter-to-quarter or a distorted quarter compared to another quarter. Feel free to reach out to us at any time. Look forward to talking to you at the end of next quarter. Thanks so much for joining us. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.