Silvercrest Asset Management Group Inc. Reports Q3 2021 Results

PR Newswire

NEW YORK, Nov. 4, 2021

NEW YORK, Nov. 4, 2021 /PRNewswire/ -- Silvercrest Asset Management Group Inc. (NASDAQ: SAMG) (the "Company" or "Silvercrest") today reported the results of its operations for the quarter ended September 30, 2021.

Business Update

Silvercrest is pleased to report strong financial results for the third quarter of 2021, despite anemic markets and institutional rebalancing during the third quarter. The firm's discretionary assets under management ("AUM"), which drives revenue, increased 25.7% year over year. Commensurate with that increase, Silvercrest concluded the quarter with $33.5 million in revenue and quarterly Adjusted EBITDA(1) of $10.3 million, representing year-over-year increases of 23.1% and 27.4% respectively. Adjusted Diluted Earnings Per Share(1) increased 25.7% year over year to $0.44 per Adjusted Diluted Earnings Per Share.

Silvercrest sought to achieve $1.0 billion in AUM with its relatively new Outsourced Chief Investment Officer (OCIO) capability by the end of 2021. We are pleased to report that the OCIO business now has $1.1 billion in AUM. We have a strong new business pipeline of opportunities and crossing this AUM threshold will be helpful to building that business.

Silvercrest's new business opportunities continue to grow thanks to continued strong relative investment performance for high net worth and institutional clients alike.

During the third quarter, Silvercrest repurchased approximately 27 thousand shares of Class A common stock for approximately $0.4 million pursuant to its previously announced share repurchase program on July 28, 2021.

On November 2, 2021, the Company's Board of Directors declared a quarterly dividend of $0.17 per share of Class A common stock which represents an annual yield of approximately 4.1% based on the closing price of the Company's Class A common stock on November 3, 2021. The dividend will be paid on or about December 17, 2021 to shareholders of record as of the close of business on December 10, 2021.

Third Quarter 2021 Highlights

   -- Total assets under management ("AUM") of $31.0 billion, inclusive of 
      discretionary AUM of $22.5 billion and non-discretionary AUM of $8.5 
      billion at September 30, 2021. 
   -- Revenue of $33.5 million. 
   -- U.S. Generally Accepted Accounting Principles ("GAAP") consolidated net 
      income and net income attributable to Silvercrest of $6.4 million and 
      $3.7 million, respectively. 
   -- Basic and diluted net income per share of $0.38. 
   -- Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization 
      ("EBITDA")1 of $10.3 million. 
   -- Adjusted net income1 of $6.6 million. 
   -- Adjusted basic and diluted earnings per share1, 2 of $0.46 and $0.44, 
      respectively. 

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

                 For the Three Months       For the Nine Months 
                  Ended September 30,        Ended September 30, 
(in thousands 
except as 
indicated)       2021         2020          2021         2020 
Revenue          $33,461      $27,182       $97,799      $79,568 
Income before 
 other income 
 (expense), 
 net             $8,181       $4,949        $21,211      $18,920 
Net income       $6,354       $3,480        $16,350      $13,952 
Net income 
 margin           19.0  %      12.8   %      16.7  %      17.5  % 
Net income 
 attributable 
 to 
 Silvercrest     $3,723       $2,059        $9,610       $8,081 
Net income per 
 basic and 
 diluted share   $0.38        $0.22         $0.99        $0.85 
Adjusted 
 EBITDA(1)       $10,345      $8,119        $30,430      $22,999 
Adjusted EBITDA 
 Margin(1)        30.9  %      29.9   %      31.1  %      28.9  % 
Adjusted net 
 income(1)       $6,607       $5,062        $19,530      $14,145 
Adjusted basic 
 earnings per 
 share(1, 2)     $0.46        $0.35         $1.35        $0.98 
Adjusted 
 diluted 
 earnings per 
 share(1, 2)     $0.44        $0.35         $1.31        $0.97 
Assets under 
 management at 
 period end 
 (billions)      $31.0        $24.4         $31.0        $24.4 
Average assets 
 under 
 management 
 (billions)(3)   $31.0        $24.1         $29.4        $24.8 
Discretionary 
 assets under 
 management 
 (billions)      $22.5        $17.9         $22.5        $17.9 
__________________ 
(1)  Adjusted measures are non-GAAP measures and are explained and reconciled 
     to the comparable GAAP measures in Exhibits 2 and 3. 
(2)  Adjusted basic and diluted earnings per share measures for the three and 
     nine months ended September 30, 2021 are based on the number of shares of 
     Class A common stock and Class B common stock outstanding as of September 
     30, 2021. Adjusted diluted earnings per share are further based on the 
     addition of unvested restricted stock units, and non-qualified stock 
     options to the extent dilutive at the end of the reporting period. 
(3)  We have computed average AUM by averaging AUM at the beginning of the 
     applicable period and AUM at the end of the applicable period. 

AUM at $31.0 billion

Silvercrest's discretionary assets under management increased by $4.6 billion, or 25.7%, to $22.5 billion at September 30, 2021 from $17.9 billion at September 30, 2020. The increase was attributable to client inflows of $4.8 billion and market appreciation of $5.2 billion, partially offset by client outflows of $5.3 billion. Silvercrest's total AUM increased by $6.6 billion, or 27.0%, to $31.0 billion at September 30, 2021 from $24.4 billion at September 30, 2020. The increase was attributable to client inflows of $5.4 billion and market appreciation of $7.1 billion, partially offset by client outflows of $5.8 billion.

Silvercrest's discretionary assets under management decreased by $0.4 billion, or 1.7%, to $22.5 billion at September 30, 2021 from $22.9 billion at June 30, 2021. The decrease was attributable to client outflows of $1.3 billion and market depreciation of $0.2 billion, partially offset by client inflows of $1.1 billion. Silvercrest's total AUM remained at $31.0 billion at September 30, 2021 and June 30, 2021. This was attributable to client inflows of $1.2 billion and market appreciation of $0.2 billion, offset by client outflow of $1.4 billion.

Assets under management as of June 30, 2020 were impacted by the effects of COVID-19 on financial markets during the quarter ended March 31, 2020.

Third Quarter 2021 vs. Third Quarter 2020

Revenue increased by $6.3 million, or 23.1%, to $33.5 million for the three months ended September 30, 2021, from $27.2 million for the three months ended September 30, 2020. This increase was driven by market appreciation in discretionary assets under management, partially offset by net client outflows. Revenue for the quarter ended June 30, 2020 was primarily based on market values as of March 31, 2020, and as such was affected by declines in the financial markets caused by COVID-19 during the quarter ended March 31, 2020.

Total expenses increased by $3.0 million, or 13.7%, to $25.3 million for the three months ended September 30, 2021 from $22.2 million for the three months ended September 30, 2020. Compensation and benefits expense increased by $3.6 million, or 23.9%, to $18.8 million for the three months ended September 30, 2021 from $15.2 million for the three months ended September 30, 2020. The increase was primarily attributable to an increase in the accrual for bonuses of $3.0 million, an increase in salaries and benefits of $0.4 million primarily as a result of merit-based increases, newly hired staff, and an increase in equity-based compensation expense of $0.2 million due to an increase in the number of vested and unvested restricted stock units and unvested non-qualified stock options outstanding. General and administrative expenses decreased by $0.6 million, or 8.0%, to $6.5 million for the three months ended September 30, 2021 from $7.1 million for the three months ended September 30, 2020. This was primarily attributable to a decrease in the adjustment to the fair value of contingent consideration related to the Cortina Acquisition of $1.0 million and a decrease in occupancy and related costs of $0.1 million primarily due to a decrease in cleaning and maintenance costs, partially offset by an increase in professional fees of $0.1 million, an increase in portfolio and systems expense of $0.2 and an increase depreciation and amortization expense of $0.1 million.

Consolidated net income was $6.4 million or 19.0% of revenue for the three months ended September 30, 2021 as compared to consolidated net income of $3.5 million or 12.8% of revenue for the same period in the prior year. Net income attributable to Silvercrest was $3.7 million, or $0.38 per basic and diluted share for the three months ended September 30, 2021. Our Adjusted Net Income(1) was $6.6 million, or $0.46 per adjusted basic share and $0.44 per adjusted diluted share(2) for the three months ended September 30, 2021.

Adjusted EBITDA(1) was $10.3 million or 30.9% of revenue for the three months ended September 30, 2021 as compared to $8.1 million or 29.9% of revenue for the same period in the prior year.

Nine Months Ended September 30, 2021 vs. Nine Months Ended September 30, 2020

Revenue increased by $18.2 million, or 22.9%, to $97.8 million for the nine months ended September 30, 2021, from $79.6 million for the nine months ended September 30, 2020. This increase was driven by market appreciation in assets under management, partially offset by net client outflows. Revenue for the first three quarters of 2020 was primarily based on market values as of the end of the respective prior quarter, and as such was partially affected by declines in the financial markets caused by the coronavirus (COVID-19) pandemic during the quarter ended March 31, 2020.