Can they see it? Hey, Brendan? Yes. We're all up. Are you waiting for us? Yes. Yes. Oh, sorry. We were waiting for you. Yeah. Sorry about that, guys. Looks like we have everybody here with us. Thanks, everybody, for hanging with us there. My name is Brendan McCarthy. I'm an analyst here at Sidoti. I'm pleased to welcome Silvercrest Asset Management Group. Leading the discussions from the company will be Rick Hough, Chairman and CEO, and Scott Gerard, CFO. With that said, I will hand it over to Rick. Great. Thank you so much. Sorry for the confusion. Sidoti was waiting for us, and we were waiting for Sidoti. Thanks for the intro. It's a pleasure to be back at Sidoti talking about our firm, Silvercrest Asset Management Group. If you've seen our presentations before, this will be quite familiar to you, as our long-term strategy has not changed, and the pillars of what we're trying to do at this company remain consistent. However, there have been many significant developments over the past couple of years. With that, let's get on with the presentation. First of all, this firm has always been guided by our strategic principles and guiding principles for which we run every aspect of both our strategy and culture. We will create, build, and maintain an environment that encourages innovation and original thought, apply that fresh thinking to the needs of our clients and the firm. We'll attract, motivate, and retain unusually talented and ambitious professionals, share a passion for the investment business, and an antipathy for corporate bureaucracy and politics. You'll see some statistics later on how that is successful with regards to the tenure of the people who are here. We will conduct ourselves and all our dealings as highly ethical, responsible, competent professionals. We will encourage and nurture an entrepreneurial, collegial, and action-oriented business culture. I've been at the firm now for 22 years. Scott Gerard, our CFO, who's at the table with me and may be answering some questions as well later, has been at the firm with me since 2010. Together, we helped take the firm public in 2013. David Campbell's our General Counsel and Chief Compliance Officer. He's been with the firm since 2009. Allen Gray's our head of institutional business. He's been responsible for the firm's institutional businesses, which has grown substantially since 2013. It's close to $7 billion of our total assets. We'll be talking quite a bit about that today. Matt Arpano is a member of our executive committee. He manages equity and fixed income portfolios as a high-net-worth wealth management manager at the firm. Very quickly, Silvercrest is a premier full-service asset management firm providing investment advisory and family office services. As I mentioned, we were founded in 2002, or at least that was a year before I joined. We'll be 25 years in just two years. We're headquartered here in New York. We have offices in Boston, Virginia, New Jersey, California, and Wisconsin. New Jersey, Boston, and Virginia are primarily wealth management operations. California and Wisconsin represent investment capabilities. Our international capabilities in California, all of our growth equity capabilities are in Wisconsin. We seek to deliver excellent institutional quality capabilities coupled with superb client service. I'll just mention that in many respects, those are table stakes in the RIA business where you have multiple firms that are fiduciaries trying to offer the same. You have to differentiate yourselves in a variety of different ways. We do so by, in particular, offering institutional quality capabilities here at Silvercrest. Many of our competitors don't have that, nor the depth of intellectual capital that we do. Transitioning to that next bullet point, we have proprietary capabilities across asset classes. We complement those with outsourced investment strategies in an unconflicted way. We have family office services primarily focused on tax, financial planning, business advisory work, and comprehensive client reporting. This firm, unlike many, is managed by those responsible for strategy and hiring and motivating very talented professionals. I myself, like many of the executives here, do not have clients or work in the asset management business per se. We have professionals who are heading each of those groups focused on their craft. That makes a very scalable division of labor that can continue to grow. We have diversified revenue streams. We are not just a wealth management firm. We have implemented new strategies over time to organically grow the business. Those all have multiple points of contact with our relationships. We have deep consultant and institutional relationships, family office relationships, straightforward wealth management relationships, and family office services. Those separate revenue pools also become owned by the professionals of those different business divisions, which helps retain and motivate those professionals. Next slide. This is an independent partnership culture. Despite being a public company, the firm always has had a very high internal ownership. We have well over 50 partners out of our 160 employees who own Silvercrest. We are a private partnership that has a public company that is the general partner. That is a great source of independence and pride among our employees and has a lot to do with our long tenure and devotion to the firm as well as our clients. We're not affiliated with a broker-dealer or commercial bank or any other businesses. We're conflict-free. Our financial incentives completely align with those of our clients. We always make investment decisions in our clients' best interests as fiduciaries. The culture. Sorry. Yep. Is that you or the Sidoti? Sidoti. Okay. Just so I know who I'm talking to. Appreciate it. The partnership culture is enhanced by the fact that our principals have personally bought into our equity, many with loans. That aligns them both with the firm and its clients as well as with all of our shareholders in the public markets. Next slide. This has resulted in consistent growth. Our firm has grown consistently in both aspects of our business and the high-net-worth and institutional client business. We started fresh in 2002 and have grown to $36.5 billion as of the end of the year last year. Our first five years saw $8 billion. As you can see, then 10 years in was $11 billion. Twenty years in, $31.2 billion. The CAGR since inception is 26%. As we've scaled, it's obviously harder to grow at that rate. Seven years ago, it was 35%. It has come down. Our inorganic growth is a very important part of our story. We are not a roll-up. We are not doing acquisitions just for the sake of getting larger. Only $7 billion out of our total $37 billion was due to M&A. The business is heavily weighted towards high-net-worth clients at this time. It is about 68%. 32% are the institutional clients. We have a very, very high average client relationship size of $43 million, which is probably top tier for a firm of our size. Our top 50 clients average $472 million. As you can see, that has gone up substantially over time. Seven years ago, that was 29 and $254 million, respectively. Our client retention rate has remained a steady 98% over that time. We have grown from 122 employees to 164 despite the increase of $13 billion in assets. This is a good example of the small strategic mergers that we've done to enhance the firm over time as part of the inorganic growth, the small aspect of the total assets under management. Our last deal was our largest, which was $1.7 billion in assets under management, to merge with wonderful professionals in Wisconsin at Cortina Asset Management. They brought our growth equity portfolios to the firm. Prior to that, we did a very small acquisition in January of 2019 to work with Neosho Capital to bring us institutional quality international capabilities. In 2016, we merged with a long-standing firm, Cappuccelli, which brought us a lot of tax and accounting clients. We're also clients of Silvercrest. It just made sense to bring that under one roof. The others were wealth management mergers. There is one here. I'm looking for it, which would have been, I think, 2012. 2013 for 1060. 1060? I don't see that. Yeah. It's not here. Yeah. Okay. 2013, 1060. We should add that to the slide. That helped us build out our investment policy and strategy group, which is the basis for our growing outsourced CIO or OCIO capability. As I mentioned, we have very loyal clients with a client retention rate of 98% since 2006. It's a very long tenure. It's broadly diversified. No client represents any more than 4% of our total revenue, which has to obviously do with the revenue streams I mentioned. Finally, we have clients in 46 states as well as Europe, Asia, and Latin America. Latin America and Europe, in particular, are growing. We have new news with regards to Asia and Oceania. Our equity performance history. These are the institutional strategies that are also used by our high-net-worth client base. As you can see, the dark blue bars are our performance versus the relevant benchmark, which is to say, if it's large-cap value, we're going to look at the Russell 1000 value. This is not S&P or a benchmark meant for high-net-worth audiences. This is what is compelling in the institutional business. The respective index is in the light blue. You can see that over a very long period of time, net of fees, we have performed very well against the benchmark. Similarly, for fixed income, it's very hard to outperform there, especially in very broad munis. You can see, in particular, our high-yield strategies, which are quite advantaged for Silvercrest and specialized. We outperform the relevant high-yield municipal bond indexes by many basis points. That is without leverage, whereas many of our competitors use leverage. Our growth strategy has four primary pillars: organic growth, which we've discussed. Again, really, our differentiator here is providing institutional quality work on behalf of the wealth management and family offices that we're working with. Second is acquired growth. This is going to be periodic, highly strategic. We're looking for multiple factors to add to the firm: a capability we want that's consistent with the rest of the business, a culture that fits with our firm, that we believe we can organically grow into the future, that has good succession planning, etc., at a reasonable price to make good use of shareholder capital. When we've done so, these acquisitions have almost uniformly succeeded. The one in 2019, when we merged with Cortina, was very highly accretive to our shareholders. Institutional growth. This was 0% of the business despite the institutional quality of our capabilities. As I mentioned, that growth has really been over the past 10 to 12 years. It's now 32% of our discretionary assets under management. It has the potential to grow a lot faster than the high-net-worth business, albeit with more volatility because it is completely performance-driven. It also comes with higher margins that can allow us to invest more into the business or return capital to shareholders. We've continually grown very strong consultant relationships. We've developed new relationships this year as a result of acquiring or at least hiring a global value equity strategy. That strategy, this past year, received $ 2 billion in seed capital from a superannuation fund. We expect a very strong and growing pipeline in that capability. We expect that to enhance our global aspirations. As I mentioned before, we're seeing a lot of activity for this firm in Europe, in Latin America, and in Asia. We're excited about those opportunities. We feel that the growing wealth in those areas, along with the fact that our model of doing business is relatively new to those jurisdictions, gives us first-mover advantage in many situations. We have been very pleased with the relationships we've had to date. It's worth pointing out that this firm has always had international clients. In fact, some of the largest families that we work with over the past 20-plus years were located in Europe. This is not something new. It's really the firm coming of age with regards to its size and visibility that we can do a lot more on behalf of those potential clients and as an institution, as we've gained a reputation over the past 10 years on behalf of institutional clients, like we are doing for Cbus Super, the superannuation fund that decided to seed us this past December. Brand management in a highly dispersed, fragmented, and commodified business is extraordinarily important. In fact, the more commodified it becomes, the more important brand management is. We have a proven ability to have a very high-quality brand that punches way beyond its weight in terms of visibility. We have worked hard to develop this over 20 years. In many respects, given the social media and other traffic we're seeing, it is the strongest in our history. These are just some financial highlights. The downtick that you see from 2021 is just the height of the market. Bad markets in 2022. 2023 and 2024, you see flat or recovering. There is an increase last year as we saw that Cbus and other good net organic flows. 2023, we would have liked to see much more of a recovery than there was. As you can see, with regards to AUM, it increased. Adjusted EBITDA net income went down for two primary reasons. One, market leadership was very narrowly focused on the big tech stocks, as you might imagine. We are highly diversified. We are not going to participate in markets like that to the extent that you would expect necessarily. Two, we have really been aggressively investing in the business, which I have talked to shareholders about for some time. Those investments are beginning to pay off. I think with that, we will take questions. Thank you. Great. Fantastic. Thank you for the overview. We can now open the floor for Q&A here. Thank you. A couple of questions from the attendees. Our first question here is, your client retention rate is very high. I think you mentioned 98%. What are the factors that make you so successful in retaining clients? Yeah. A few things. Number one is we're always going above and beyond and delivering more than clients expect. Many wealth management firms or peers in our wirehouses have an asset management fee, which we do have. They kind of just stick to investing. We have a whole host of holistic services that surround the client, including family office services, that makes those relationships very sticky. We limit the number of relationships per portfolio manager, or there's at least a self-governing mechanism here so that clients are always getting great attention to detail and care. Two, the institutional quality of what we're doing and performance has performed well. I should point out, though, for high-net-worth clients, they might leave a firm due to performance, but it tends to be pretty low on their list. Actually, the reason you lose clients is due to unreturned phone calls or lack of attention or emails or something like that. Performance actually falls down in six-seven-eight range as an item, interestingly. I put it up to our services and capabilities, especially the added value family office type services. We just have a culture here that doesn't view their job as being limited to, "Hey, you've got $10 million with us. We're just going to invest it." We do whatever we can for a family. We know that they expect more than just asset management when they invest with us. Got it. As a follow-up question, does that retention rate include second-generation clients, I guess, of those original clients who may have passed away and have their? Absolutely, it does. We have a pretty good track record with the second- gen. So that retention rate or the family relationships implied in it is absolutely people passing away. In many cases, if you look at predecessor firms of Silvercrest, we're on the fourth generation. We are in the second- generation for many relationships and working on the third. I think it's important to note that I represent the second- generation of this firm. It's 23 years old. I've been here 22. We are on our second- generation of portfolio managers with either legacy accounts or the second- generation of those accounts. There certainly could be higher turnover as a result of aging, which is why it's so important to focus on continuing to add new clients. Last year was one of our best years, not just for net new account flows, but for new relationships. That's something we always look at, even if organic flows are flat or down, because there is a leak in the bucket in this business. It's going to be bumpy. We are pleased with those efforts. We are going to have to double down on that as the firm continues to mature. I think it's safe to say that 25 years in, you've worked through a generation, at least. Got it. Great. It looks like you recently had a win with an Australian fund, obviously outcompeting other asset management firms there. What were the decisive factors that led to that or winning that mandate? Yeah. That really comes down to the high quality of the professionals we were able to recruit to this firm. We took a chance on a team managing a global value equity strategy with very little AUM that had wonderful pedigrees in history, had an intact track record, great relationships, which they brought to the table. That just gets you in the door. We pass compliance, operational, and investment due diligence by consultants. Large institutions like Cbus Super with flying colors. We have a very organized structure operationally for handling that business. The key was really proving that we could manage that kind of capital. The firm is now of a size of discretionary assets, a maturity, both in our operations and investment prowess that I think we became attractive. Effectively, we view them as our partners, and they got a great sense of that. If you look at the tables of global value equity seedings over the past decade, it ranks quite highly up there, certainly with the larger asset management firms. We are very pleased with it. The nice thing, obviously, they are going to get very preferential low basis point terms. That is fine. The water is safe. The door is open. Our conversations have exploded, and we now have new consultant relationships globally. I think if you have heard me before, I do not get overly enthusiastic. I like to deliver. I have never been more excited about our opportunities for additional flows than I have in my 22 years here. Fantastic. Maybe you could talk about your AUM composition a little bit in detail and maybe what asset classes or sectors you're really seeing the most inflow in now and your expectations for inflow going forward. Yeah. Just looking at most recent past history, I obviously have to focus on the global value equity team, right? That kind of inflow is highly unusual, largest in the firm's history. There's more behind it. I see that given my prior comments as a tailwind. High-net-worth is building steam and looked quite good last year in terms of new relationships and flows net of other things that went out the door due to taxes or death or what have you. That's going to be a slow-growing business. The virtue of that business is that it's very, very sticky, as noted before. It's lumpy. That feels good for the traditional basis of the firm. We're not changing that. We always will focus on families and family offices. Again, when it comes to really moving the needle, that's going to be a slower grind, although with great payoff over a very, very long term just because of the sticky nature of those relationships. It is time and labor-intensive as compared with the institutional business. Global equity, it should be noted, is the most in-demand equity strategy globally behind private equity. I expect that trend to continue. There is a realignment economically happening globally that I'm sure everyone's aware of that I think bodes very well for our pivot to looking towards international global markets. We made that call well over a year ago. As you know, looking at markets, that was absolutely the right call given at least short-term and recent history. This is a strategic firm, and that is going to be the in-demand product for wealthy families who work with us. They view the world much more globally as opposed to the U.S. looking at, "Okay, there's a U.S. market, and then we'll allocate internationally or to emerging markets." Families and institutions outside the U.S. obviously want a big slug to the U.S., but they're going to look at the globe first given their own domestic situations. In terms of the firm overall, it's very well balanced when you look at the high-net-worth business. Obviously, there's going to be for our U.S. wealth business a lot in municipal bonds given their tax-advantaged status in the U.S. That's a very significant amount of the assets under management when you look at the 70% of discretionary assets that are in the wealth management business. The rest is kind of split around value equity and growth, at least internally, with a pretty strong bias to value given the nature of wealth management. We're not deep value. We're poor value. It can make a lot of sense. Bringing on the Cortina team, which has done great, was very helpful to us given the growth environment that we've experienced since the global financial crisis. Wealth, as it comes in, is going to be pretty well diversified. When I talk about flows, I tend to start talking about the institutional business a bit more. I hope that helps. Absolutely. That's very helpful. A couple more questions here. Maybe we could look at the balance sheet. I think it looks like roughly 30% of the market cap is in cash at the moment. Can you just kind of rank your capital allocation priorities, kind of how you look at acquisitions? I know you've been active there in the past and then also shareholder returns. Right. Yeah. Very selectively active in the past, and we will continue to be so. A couple of points. Number one is, yes, it's high. That is dry powder. We had a lot going into the merger that we did with Cortina in 2019. There was a question about what you do and on what basis do you return that capital to shareholders or otherwise put it to work so that it makes sense from a capital structure perspective. Obviously, the market didn't know, but we did that we really needed a lot of that cash in order to make that deal happen at our size and for a compelling firm that was going to go for a good price without taking on too much debt. We put a lot of cash out the door. Gratefully, we did because that made that acquisition highly accretive. The same playbook in many respects is there. We're in conversations all the time. We want to be highly selective according to the criteria that I listed before. We're not going to do deals just to get bigger. There has to be strategically compelling. There is always a possibility that that cash is really going to be needed to make that happen on a creative basis. I think it's dangerous to overly lever in this business. That said, I'm happy to at least go to two times and perhaps more depending on the environment. We just haven't seen a compelling value in some of the M&A multiples that are in the private markets right now. We are active in a buyback program now. Should we continue to see an environment where it would be better to return cash in that way to shareholders, we'll absolutely do that. We will continually reassess it. We think it is important and are happy to engage in it. We also pay a sizable dividend that we have materially increased over the years. It is at a level that we can sustain given our cash for a very prolonged period of time without having to reduce it even in a market crash, which I think is important in a small-cap stock to pay our shareholders over time and to see return on capital short of selling their actual holding. One other aspect of our cash. Keep in mind when looking at the December 31 cash, we pay out our annual variable comp at the end of February of each year. That is accrued for at the end of the prior year and does not come out of cash. In this case, it would have come out in 2025. Oh, that's a great point. You're looking at all-time cash. A lot of that cash is actually accrued compensation that went out the door just last month. Yeah. Exactly. Yeah. It's not nearly as high as it looks. Understood. Understood. Rick and Scott, we really appreciate the time and the insight here. We'll conclude there. If there were any questions that we didn't get to, feel free to reach out to Silvercrest directly, or you can contact Sidoti. Thanks again for your time, everybody. Yeah. Just one thing. I know you're thinking, everyone, on that accrued cash. We do account for it, of course, throughout the year. It's just that the cash has not gone out the door. Thank you. That makes sense. Got it. Thanks, everybody. Have a great day. All right. Thank you. Bye. Thanks.