Good morning and welcome to the Silvercrest Asset Management Group Incorporated's Fourth Quarter and full-year 2023 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 0. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. Before we begin, let me remind you that during today's call, certain statements made regarding our future performance are forward-looking statements. They are based on current expectations and projections, which are subject to a number of risks and uncertainties, and many factors could cause actual results to differ materially from 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 go ahead. Yeah, good. Yeah, thank you very much. Good morning to our Q4 and year-end 2023 results. After the volatile and difficult market environment of 2022, we hope 2023 would lead to improved markets helping to recover both Silvercrest's discretionary assets under management as well as our top-line revenue. The year 2023 was unusual. Equity market gains were highly concentrated in a handful of large-cap technology companies. As a result of such narrow leadership and economic uncertainty during the third quarter 2023 earnings call, I had stated we could face challenging market conditions at Silvercrest for yet another year. During the fourth quarter of 2023, company participation in equity market gains broadened significantly. Progress has continued into 2024, setting the stage for a better environment for our business. During the fourth quarter of 2023, Silvercrest's discretionary AUM rose by $1.4 billion or 6.8% to $21.9 billion, and Silvercrest's total AUM increased by $2.1 billion or 6.7% to $33.3 billion during the fourth quarter. For 2023, Silvercrest's discretionary AUM increased by $1 billion or 4.8%. Our total AUM increased during 2023 by 15% or $4.4 billion to $33.3 billion from $28.9 billion at the end of 2022. The total 2023 increase was attributable to market appreciation of $3.8 billion and client net inflows of $0.6 billion or $600 million. Silvercrest's revenue for the year, however, significantly lagged increases in assets under management due to broad market gains concentrated in the fourth quarter of 2023. Silvercrest primarily bills quarterly in advance. Revenue decreased by $5.8 million or 4.7% to $117.4 million for 2023 from $123.2 million for 2022. This decrease was driven by market depreciation in prior years, partially offset by market appreciation and net inflows during 2023. Revenue for the fourth quarter of 2023 was flat year- over- year. Our financial results in the fourth quarter also were negatively affected by adjustments to total compensation for 2023, with total recurring cash compensation as a percentage of revenue rising to 59% from Silvercrest's typical interim accrual rate of 55%. Silvercrest completed the year with Adjusted EBITDA of $26.9 million or 22.9% of revenue, down from $32 million or 26% of revenue. Adjusted diluted earnings per share for 2023 was $1.12, down from $1.35 in 2022. For the fourth quarter, Adjusted EBITDA was $2.6 million or 9% of revenue, down from $4.4 million or 15.6% of revenue in the fourth quarter of 2022, both affected by fourth-quarter adjustments. Adjusted diluted earnings per share for the fourth quarter was $0.07, down from $0.15 in the fourth quarter of 2022. With the AUM increases during the fourth quarter and so far in 2024, we expect a better environment in 2024. Silvercrest's pipeline of new business opportunities have significantly improved since the fourth quarter of 2023. While the institutional search environment remains slow, Silvercrest's actionable institutional business pipeline has increased to $735 million. Silvercrest's Outsourced Chief Investment Officer, or OCIO, AUM has risen to $1.7 billion, which includes a new small college endowment. The OCIO pipeline has increased to $585 million, and our consultant relationships have strengthened. Silvercrest has never been busier with its new initiatives. We're focused on those new opportunities as well as investments to drive growth in the business, including value-added hires. Scott, that concludes my opening remarks. If you could cover financials, thanks. Great. Thanks, Rick. As disclosed, our earnings release for the fourth quarter, discretionary AUM as of the end of 2023 was $21.9 billion, and total AUM as of the same period was $33.3 billion. Revenue for the quarter was $28.5 million, and reported consolidated net loss for the quarter was $0.6 million. Revenue for the fourth quarter was approximately $28.5 million and was flat for the same period in the prior year. Expenses for the fourth quarter were $29.5 million, representing approximately a 21% increase from expenses of $24.4 million for the same period last year. This increase was primarily attributable to an increase in compensation and benefits expense of $4 million and general and administrative expenses of $1.2 million. Compensation and benefits, again, increased by $4 million or approximately 21% to $22.7 million for the fourth quarter from $18.7 million for the same period last year. The increase was primarily attributable to increases in bonuses of $3.5 million, salaries and benefits of $0.3 million, primarily as a result of merit-based increases and newly hired staff, and an increase in equity-based compensation of $0.2 million due to the granting of additional restricted stock units. General and administrative expenses increased by $1.1 million or approximately 20.8% to $6.8 million for the fourth quarter from $5.7 million for the same period in the prior year. This was primarily attributable to an adjustment to the fair value of contingent consideration related to the Cortina acquisition of $0.8 million recorded during the three months ended December 31st, 2022, an increase in the adjustment to the fair value of contingent consideration related to the Neosho acquisition of $0.3 million, and also increases in occupancy-related costs and charitable donations, partially offset by a decrease in professional fees. Reported consolidated net loss was $0.6 million for the quarter as compared to $3.3 million of net income in the same period in the prior year. Reported net loss attributable to Silvercrest or the Class A shareholders for the fourth quarter of 2023 was approximately $0.4 million or $0.05 and $0.04 per basic and diluted Class A share, respectively. Adjusted EBITDA, which we define as EBITDA without giving effect to equity-based compensation expense and non-core non-recurring items, was approximately $2.6 million or 9% of revenue for the fourth quarter compared to $4.4 million or 15.6% 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 $1 million for the quarter or $0.08 and $0.07 per 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 RSUs and non-qualified stock options to the total shares outstanding to compute diluted Adjusted EPS. Looking at the full year, revenue for the year was approximately $117.4 million, and that represented a 4.7% decrease from revenue of $123.2 million for the same period last year. This decrease was driven by market depreciation in prior years, partially offset by market appreciation and net client inflows during 2023. Expenses for the year ended December 31st, 2023, were $98.6 million, representing approximately a 16% increase from expenses of $84.7 million for the same period last year. This increase was primarily attributable to increases in compensation and benefits expense of $1 million and general and administrative expenses of $12.9 million. Compensation and benefits expense was approximately 1% higher at $72.6 million for 2023 compared to $71.6 million in 2022. The increase was primarily attributable to increases in equity-based compensation expense of $0.5 million due to an increase in the number of unvested restricted stock units and unvested non-qualified stock options outstanding, and an increase in salaries and benefits expense of $1.3 million, primarily, again, as a result of merit-based increase in newly hired staff, partially offset by a decrease in the accrual for bonuses of $0.8 million. General and administrative expenses increased by $12.9 million to $26 million for 2023 compared to $13 million in 2022. The increase was primarily attributable to increases in the fair value of contingent consideration related to the Cortina and Neosho acquisitions of $11.8 million and $0.3 million, respectively. Also, increases in portfolio and systems expense, occupancy-related costs, marketing costs, depreciation and amortization, and office expense. These increases were partially offset by lower professional fees, supervisory and referral fees, and telephone and internet costs. Reported consolidated net income was $15.2 million for 2023 compared to $30.8 million in the same period in the prior year. Reported net income attributable to Silvercrest for the year ended 12/31/2023 was approximately $9.1 million or $0.96 per basic and diluted Class A share. Adjusted EBITDA was approximately $26.9 million or 22.9% of revenue for 2023 compared to $32 million or 26% of revenue for 2022. Lastly, adjusted net income was approximately $16.1 million for 2023 or $1.16 and $1.12 per adjusted basic and diluted EPS, respectively. Quickly, looking at the balance sheet, total assets as of the end of 2023 were $199.6 million compared to $212.7 million at the end of 2022. Cash and cash equivalents were approximately $70.3 million at the end of 2023 compared to $77.4 million at the end of 2022. Total borrowings as of the end of 2023 were $2.7 million. Total Class A stockholders' equity was approximately $82.7 million at the end of 2023. That concludes my financial remarks. I'll turn it over to Rick for Q&A. Great. Thank you, Scott. Look forward to talking to anyone on the call. Thanks. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Today's first question comes from Feddie Strickland with Janney Montgomery Scott. Please go ahead. Hey. Thanks and good morning. I just wanted to start on expense trends. Understand the revenue drop in the fourth quarter impacted the ratios on G&A and compensation. I mean, should we expect a more normal year for those ratios as we look into this year? With regards to and thanks for joining us, Feddie. I saw the report this morning just as a comment. I think it was pretty close to getting the situation right. With regards to 2024, certainly, as we enter it and build for the first quarter based on the increase Q4 that we saw with the broader market participation, you would expect the compensation ratio to come back down towards our normalized 55% as progress is made. That said, we are making investments in the business and new personnel. And depending on when those occur during the year, it could affect that ratio. And if market progress were to stop, it would affect that ratio or if you've got something in the pipeline. So the expectation is it would go in that direction, but we plan to invest in the business. You may recall that I have commented in several calls about the need to make investments in personnel to grow the business and that that would hit earnings and EBITDA when I did that. Really, what you're seeing in 2023 is the market effect in addition to some new investments that are not yet at the ratio that we strive to achieve for the company, both in terms of contributing compensation as well as EBITDA. What I think we will consider doing is increasing that ratio in 2024 and accrue at a different level. I don't know what that will be yet. It will not be 59%. I can tell you that. But it will be higher than our typical 55%. We don't like making big adjustments in the fourth quarter to normalize the year. Sometimes that works in everyone's favor. You may recall the fourth quarter adjustment for 2021 was very significant in the other direction. I think our ratio that quarter was 52 or 53, maybe even been below 52. I don't quite recall, but it was in that range. So I think given the investments we plan to make and just my general comments carrying over from last quarter about the economic environment, I think it would be prudent for us to accrue at a higher rate, even if on a steady-state basis for the business without significant new investments, we would target and do target that 55% cash compensation ratio. So we haven't changed the business model, what we're looking to do. It's really more about being realistic with where we are with the markets. Hope that's not too long-winded, but I think that deserves a very thorough explanation. No, that's very helpful. I appreciate that. Just switching gears for a second, I appreciate the color on the OCIO pipeline. Sounds like there's still some solid momentum there, plenty of potential. Do you have an idea of how much OCIO could be as a percentage of total AUM just over the next four or five years? Is there a specific goal you have in mind and big picture there? Yeah. I mean, my specific goal is for that to be a few to several billion. I know that's a bit of a range, but I could see us crossing well over $2 billion this year if things go well. Just the pipeline alone is $585 million, up from $400 million last quarter. And it's always been my goal for it to be in that range. When we're talking about total assets, to use the metric you just gave of $33 billion, then the total within a reasonable period of time could well be 15% of total AUM. In terms of discretionary AUM, which is down at $28 billion let's see, but where is it? Where are we at? Sorry, I lost my data here. At any rate, it would be a higher share of that. Let's call it 20% or something like that. But that'll take a couple few years to get to $21.9 billion. Sorry, it eluded me. So if we can increase, as I expect to, let's say double it over the next two years or so, that's going to be a meaningful part of our AUM. One important part about OCIO is that there are a lot of consultants and players that are virtually giving the business away. We don't view it as an economic model. And we're being very selective about the institutions we work with who want a partner, who want bespoke solutions, who want discretionary management. And so in doing that, we're maintaining reasonable fee basis that looks more like our institutional business. But it also means we're passing on really low-fee basis business that we don't think progresses things, that takes a lot of effort for very little reward. The sum total of that means that we will grow steadily, but a bit more slowly if we were just trying to win everything out there. Understood. Just one last one real quick. Just curious in terms of M&A acquiring other asset managers, have you seen pricing shift at all there? I've seen it shift a bit. There are players who have sort of exited temporarily, it seems, the really aggressive acquisition that we were seeing in the past. It continues to be pretty hot, especially at the smaller retail end of things. The multiples definitely have come down, but I would argue they've come down more in deal terms than they have in, say, the nominal multiple that's put on a business. Because if you shift more to earnouts or certain performance goals over a period of years, the nominal multiple on EBITDA for the business may still look the same. But in effect, on a discounted rate and reality, it could well be very different. So if you want to use the analogy of sports contracts, right, those big top multiples are being hit if there is growth, if you win the Super Bowl, whatever it might be. So in practical terms, they've come down, even if they've only slightly come down in terms of the headline nominal number. I think sports analogies always help, so appreciate it. Thanks for taking my question. You're welcome. Thank you. The next question is from Chris Sakai with Singular Research. Please go ahead. Hi. Good morning. Good morning. I had a question on bonuses. How are they calculated, and what can we expect in this quarter and the year? So there's a mix at the firm. Obviously, you have a lot of people who are on discretionary compensation plans. You have equity teams and investment teams that are tightly related both to their AUM revenue as well as to performance. I've mentioned before, for example, that our growth team in Milwaukee has had absolutely outstanding performance. That increases their compensation versus the amount of revenue that you're getting on AUM. Portfolio managers are tightly linked to AUM revenue as well. The pool overall will grow when you make new hires, and those new hires are ahead of any AUM or revenue growth. The real story here is investing in our partners to maintain the business in the face of some declining revenue and difficult environment that we've been in for some time. What you're not seeing is an increase in the bonus pool. What you're seeing is an increase in the ratio to revenue. Bonus pools were actually down across the firm this year. Okay. Thanks for that. Can you help me understand, as far as the AUM and revenue is concerned, it looks like you had higher AUM than a year ago, but about the same revenue. Is that just because of the mix in AUM? If you looked at our AUM a year ago, we ended with $28.9 billion in total AUM, and we ended 2023 with $33.2 billion in AUM. So it's actually up as it was in discretionary. So a lot of that is mixed. But keep in mind, there was a significant change in the fourth quarter that really had a lot to do with increasing that AUM. We don't bill in arrears. We don't bill in the subperiod the money comes in. So the fourth quarter increase that you see in discretionary AUM is really a first Q2024 item because we bill quarterly in advance. 4 days in the year really matter to us, and that's the end of each quarter. So really, our year is set by where we are as of September 30th, 2023. As you know, there was a lot of market appreciation as well as new business in the fourth quarter of 2023 for us. Okay. Great. Thanks. Thank you. As a reminder, if you have a question, you may press star then one. The next question comes from Sandy Mehta with Evaluate Research. Please go ahead. Hi, Sandy. Yes. Good morning. In your comments, you mentioned that the overall equity markets have been broadening out a little bit in the fourth quarter as well as Q1. The Fed is done raising rates, and now they're likely to lower rates. The financial stocks have done well in the last few months, which is a big component of value indices. So can you talk a little bit more about, I think you mentioned, that the pipeline going forward or the marketability probably is improving. Can you talk about where you see in terms of marketing efforts going forward in this environment with a broadening market? Do you see more traction going forward? Thank you. Yes. You're welcome, Sandy. I don't necessarily see a high correlation between the broadening of the market and a more constructive environment and the pipeline opportunities. I think that they're pretty loosely correlated. But the market participation obviously has a big effect on revenue and what our assets look like. The general environment, economic or macro, as well as where people are with their events, is really what drives the pipeline. In terms of the institutional pipeline, I mentioned that it was $735 million. That's really the only pipeline we measure. It's much harder to do it on the high net worth side. That's up from $650 million that I reported on in our last earnings call. We have several new searches, particularly in the small-cap space, small-cap growth, small-cap opportunity, and in small-cap value. But I will say that it's very, despite that pipeline, it's a low, anemic search environment generally. We're seeing rebalancing and performance bleeds that is a bit of a headwind. And the search for active management seems primarily focused right now on alternatives, whether that's credit or private equity. So despite the good pipeline, it's not a great search environment. We've seen it much better. We've had pipelines twice as big, if not close to three times as big. So that's constructive. It's good. I'm optimistic about this year with regards to our new business initiatives. But I think it's important to keep in mind, despite the pipeline growing, it's somewhat of an anemic search environment. On the high net worth side, that's a little bit more serendipitous. It can take a month to acquire a new client. It can take years. There's not a process associated with the high net worth business that I can measure as reliably as I can the institutional pipeline. The institutional pipeline that we report to you all is very rigorously put together. It's only when we're in finals, semifinals, or invited searches. You can't quite do the same on the high net worth side. For the high net worth side, we're seeing more and more activity come to us via the internet, direct phone calls. There are lots of good conversations. That's about the best color I can give you. I feel pretty good about the high net worth business this year. We also will be investing and investigating pure business development roles for that business. Previously, we have tended to leave business development entirely up to the portfolio managers working with clients. But given the maturity of the firm and where we are, I think it's time for us to start focusing on pure business development roles. So we'll be looking potentially to invest in that this year, which has to do with some of my comments on personnel. You talked about the accrual rate or the compensation as a percentage of revenue. Are you still overall targeting EBITDA margins on a normalized basis in the high 20s range? I think the business in a mature, steady state environment without investments should be in that range. Keep in mind as well that we're often in that range when we receive performances. The highest we ever hit, I think, was 32% EBITDA margin in the fourth quarter for 2021 for that year, which is a great market year. But we also had very substantial performance fees, which largely go to the bottom line. So that's in the mix. And of course, we haven't had any the past two years. So that also affects kind of total revenue that affects that compensation ratio when you look at it. The compensation ratio in terms of the EBITDA margin we target has been, as you know, 55%, which leads to that better margin. As we've discussed recently, however, we've also seen higher expenses for some of our fixed costs in this inflationary environment, which occurred at the same time as declining or flat markets. That pressure is going to take a while to grow out of. So while we target that EBITDA margin, it won't be easy to hit near term. I've also said that as we invest in personnel, we could very well hit EBITDA on there for earnings in order to propel growth. We're not afraid to do that. That's a possibility. When we've done it in the past, we grew faster than those investments, in part because of very constructive markets. That's not the environment we find ourselves in. So in effect, when we made those investments previously over the past several years, those increased costs were hidden from our investors because we were able to grow faster than the investments we were making. So that's why I'm looking at accruing at a higher rate this year. It's going to take a while to continue growing out of this. As I said, last quarter, I need to make these investments. I think it's good for the shareholders to continually grow the firm in this way. And then if I were to stop, I would absolutely expect both EBITDA and those margins to rise back to where they have been historically. Great. Thank you. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Rick Hough for any closing remarks. Great. Thank you for joining us for our fourth quarter report as well as 2023 results. As I mentioned, things are looking constructively better, especially with the increases we saw in the fourth quarter continuing in 2024. Many of our new business initiatives are just very active right now, which gives me some optimism for being able to continue to grow throughout this year, especially with the tailwind of constructive markets. Look forward to talking to you in the next quarter, and I appreciate you dialing in. Thanks. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.