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DATE

Friday, July 31, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer - Richard Hough
• Chief Financial Officer - Scott Gerard

TAKEAWAYS

• Total Revenue -- $30.8 million, up 0.4% from $30.7 million year over year, primarily due to market appreciation that was partially offset by net client outflows.
• Discretionary AUM -- $24.7 billion, representing 6.9% growth from $23.1 billion on March 31, 2026, and 4.2% growth year over year.
• Total AUM -- $37.0 billion at June 30, 2026, up 3.6% from $35.7 billion on March 31, 2026, reflecting market gains of $2.4 billion.
• Net Client Outflows -- $1.1 billion during the quarter, primarily attributed to seasonal high-net-worth client withdrawals for tax payments and institutional outflows in value strategies.
• Organic New Client Flows -- $111 million for the second quarter, up from $81 million in the first quarter and $80 million in the prior year period.
• Institutional AUM -- $9.8 billion at the end of the second quarter, rising from $8.7 billion at the end of the first quarter of 2026.
• Global Value Strategy Contribution -- Approximately $351 million (AUD 500 million), received the week of the earnings call for investment in the Global Value strategy.
• OCIO AUM -- $2.9 billion, representing the current scale of the Outsourced Chief Investment Officer business which the firm built from inception.
• Total Expenses -- $29.8 million, a 12% increase year over year driven by compensation, professional fees, and international infrastructure initiatives.
• Compensation and Benefits Expense -- $20.5 million, representing 66.6% of revenue, reflecting merit-based increases, new staff hires, and bonus accruals.
• General and Administrative Expenses -- $9.3 million, up 19.3% due to increased professional fees, travel, and systems expenses related to global expansion.
• GAAP Net Income -- $0.5 million, down from $3.1 million in the second quarter of 2025, primarily due to higher operating expenses.
• Adjusted EBITDA -- $3.4 million, or 11.2% of revenue, compared to $5.7 million or 18.7% of revenue in the prior year period.
• Adjusted Net Income -- $1.2 million, or $0.10 per adjusted diluted share, compared to $3.3 million in the second quarter of 2025.
• Cash and Cash Equivalents -- $20.7 million as of June 30, 2026, a decrease from $44.1 million at the end of 2025 following strategic investments and payouts.
• Debt Obligations -- $9.5 million in total borrowings under a term loan with City National Bank at the end of the second quarter.
• Quarterly Dividend -- $0.21 per share of Class A common stock, with the board declaring the payment for Sept. 18, 2026.
• Institutional Pipeline -- Management stated the pipeline is in the multiple billions of dollars, with significant opportunities across Global Value and International strategies.
• First Half Revenue -- $62.2 million, an increase of $0.1 million year over year despite being weighed down by first quarter outflows.
• Average AUM -- $36.4 billion for the three months ended June 30, 2026, up from $36.0 billion in the second quarter of 2025.
• Bonus Accrual -- $1.1 million increase in the second quarter, contributing to the elevated compensation-to-revenue ratio.
• Outflow Revenue Impact -- Over $200 million of second quarter outflows were related to fixed-fee arrangements and had zero revenue effect on the company.

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RISKS

• Hough stated, "most of the outflows... were from the institutional business on the value side of the business, which has had some performance -- relative performance issues," noting that competitive performance remains a headwind for specific strategies.

SUMMARY

Silvercrest Asset Management Group Inc. (SAMG +0.69%) reported that discretionary assets under management reached an all-time high, supported by market appreciation and a significant AUD 500 million institutional contribution received in late July. Management indicated that the company is nearing the completion of a multiyear global infrastructure and distribution build-out, which includes obtaining MiFID and UCITS licensing in Europe. While revenue remained flat year over year, the company continues to invest in professional talent and international operations, leading to an elevated compensation ratio. Silvercrest also announced plans to refine its AUM reporting by potentially eliminating the nondiscretionary category to better reflect the economics that drive the firm's management fees.

• CEO Hough announced that the company will adjust how it reports assets next quarter, stating the firm will likely eliminate the nondiscretionary category because those assets are associated with a "small portion of revenue."
• The company expects to complete its MiFID license through the Central Bank of Ireland by the end of the third quarter, which CEO Hough noted would allow international initiatives to transition into a "revenue phase."
• Management reported that administrative and legal costs associated with global expansion will "decline meaningfully" as the distribution access created by these licenses begins to contribute to the top line.
• CEO Hough noted the firm is working on additional third-party ratings with major global consultants to "further open institutional distribution channels worldwide."
• The firm's first Dublin-based portfolio manager and head of office are scheduled to join the company the week following the earnings call.
• CFO Gerard clarified that while start-up professional fees will dissipate, there will be recurring expenses including "statutory subsidiary audits in Ireland" similar to existing operations in Singapore.
• The company intends to make imminent equity grants to professionals to align their interests with shareholders following recent approval of an increased equity incentive plan.

INDUSTRY GLOSSARY

• AUM: Assets under management; the total market value of the investments that a person or entity manages on behalf of clients.
• Discretionary AUM: Assets for which the investment firm has the authority to make investment decisions without obtaining prior client consent for each transaction.
• MiFID: Markets in Financial Instruments Directive; a European Union regulation that increases transparency across financial markets and standardizes disclosures.
• OCIO: Outsourced Chief Investment Officer; a service where an investment firm acts as a third-party investment office for institutional clients.
• UCITS: Undertakings for Collective Investment in Transferable Securities; a regulatory framework that allows for the sale of mutual funds across the European Union.
• Global Value Strategy: An investment strategy focused on undervalued companies across both domestic and international markets.

Full Conference Call Transcript

Operator: Good morning, and welcome to the Silvercrest Asset Management Group Q2 2026 Earnings Conference Call. 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.

Richard Hough: Good morning, and thanks for joining us for the second quarter of 2026 earnings call. Silvercrest made strategic progress during the second quarter, and the plan we described over the past 2 years is proceeding as we designed. Discretionary assets under management, which primarily drives the firm's revenue, increased 6.9% during the second quarter to $24.7 billion at June 30, 2026, and from $23.1 billion at March 31, 2026, driven by market appreciation, partially offset by net client outflows. Outflows during the quarter were primarily attributable to seasonal high net worth client withdrawals for tax payments, consistent with prior second quarters as well as institutional outflows. Over $200 million of those outflows will have no revenue effect at the firm.

Year-over-year, discretionary AUM grew 4.2% from $23.7 billion. Total AUM increased 3.6% during the quarter to $37.0 billion. Excuse me, one moment. I've got a catch in my throat. Excuse me. Thank you. Organic new client account flows were $111 million for the second quarter, up from $81 million in the first quarter and $80 million in the prior year period. As discussed in prior quarters, nondiscretionary AUM are associated with a small portion of revenue. We will adjust how the firm reports nondiscretionary AUM next quarter, likely eliminating the nondiscretionary category. The adjustment will substantially lower reported nondiscretionary and total AUM on a onetime basis without any revenue effect.

We seek to provide investors with a clearer picture of the discretionary AUM and economics that drive our business. While revenue was flat year-over-year, reflecting average AUM levels weighed down by first quarter outflows, we entered the third quarter with discretionary AUM meaningfully higher than the level that drove second quarter billing. In fact, our discretionary AUM is now at an all-time high for the firm. Our institutional pipeline has grown substantially and remains robust, particularly in our Global and International Equity strategies, which continue to deliver exceptional performance. This week, we received and are investing an AUD 500 million contribution, that's approximately USD 350 million, to our Global Value strategy. That strategy now manages $2.5 billion.

Silvercrest's institutional business now stands at $9.8 billion in AUM, up from $8.7 billion at the end of the first quarter. Our OCIO business, which the firm built from inception, now manages $2.9 billion. We've made significant progress on our global infrastructure and distribution build-out and are entering the revenue phase. We expect to complete our MiFID license through the Central Bank of Ireland by the end of the third quarter. With our Australian unit trust established, our UCITS vehicle and European licensing near completion, and the administrative and legal costs associated with these initiatives will decline meaningfully as the distribution access they create begins to contribute.

We've now achieved important third-party ratings for our strategies and vehicles, and we are working on additional ratings with major global consultants, which we expect to further open institutional distribution channels worldwide. We continue to invest in the firm's talent. Our Dublin head of office and our first Dublin-based portfolio manager will join the firm next week, and we look forward to making announcements about these impressive professionals. As previously discussed, Silvercrest will continue to adjust our compensation ratio to match compelling opportunities to organically grow the business. Total compensation and benefits expense was $20.5 million, representing 66.6% of revenue for the 3 months ended June 30, 2026.

As we have consistently communicated, our earnings and adjusted EBITDA reflect deliberate cost of significant investment program in the firm's history, and we expect the compensation ratio to remain elevated as these investments mature. As previously announced, our shareholders approved an increase in the number of shares issuable under our equity incentive plan. Intellectual capital is Silvercrest's most important resource, and we intend to imminently make equity grants to the professionals who are building our business and executing our strategy. Attracting and motivating our professionals and working to align their long-term interest with those of our shareholders is fundamental to how we intend to grow the firm and compound value through this investment cycle and beyond.

Look forward to taking your questions later in the call. Scott Gerard, our CFO, will now review the financials.

Scott Gerard: Great. Thank you, Rick. And as disclosed, our discretionary AUM as of June 30 of this year was $24.7 billion, and total AUM as of the same period was $37 billion. Revenue for the quarter was $30.8 million. And reported consolidated net income for the quarter was $0.5 million. Revenue for the quarter increased year-over-year by $0.1 million, primarily driven by market appreciation and partially offset by net client outflows. Expenses for the quarter increased year-over-year by $3.2 million or 12%, primarily driven by increased compensation and benefits expense and general and administrative expenses.

Compensation and benefits expense for the quarter increased year-over-year by $1.7 million or 8.9%, primarily due to increases in salaries and benefits expense, primarily as a result of merit-based increases and new hires, including new staff in Ireland, an increase in the accrual for bonuses and increased equity-based compensation expense. General and administrative expenses increased by $1.5 million, or approximately 19.3%, primarily due to increases in professional fees, travel and entertainment expenses, especially related to our global initiatives and portfolio and systems expense. Reported net income attributable to Silvercrest or to Class A shareholders for the second quarter was approximately $0.2 million or $0.02 per basic and diluted Class A share.

Adjusted EBITDA, which we define as EBITDA without giving effect to equity-based compensation expense and noncore and nonrecurring items, was approximately $3.4 million or 11.2% of revenue for the quarter. Adjusted net income, which we define as net income without giving effect to noncore and nonrecurring items and income tax expense assuming a corporate rate of 26%, was approximately $1.2 million for the quarter or $0.10 per adjusted basic and diluted EPS. 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.

And to the extent dilutive, we add unvested restricted stock units and nonqualified stock options to the total shares outstanding to compute diluted adjusted EPS. Looking at the first half of the year, revenue increased year-over-year by $0.1 million, again, primarily driven by market appreciation and partially offset by net client outflows. Expenses for the first half increased year-over-year by $6.8 million, or 12.8%, primarily driven by increased compensation and benefits expense and general and administrative expenses. Compensation and benefits expense for the first half increased year-over-year by $3.9 million, or 10.5%, primarily due, again, to increase in salaries and benefits, primarily as a result of merit-based increases, an increase in the accrual for bonuses, equity-based compensation and severance expense.

General and administrative expenses increased by $2.8 million, or approximately 18.3%, primarily due to increases in professional fees, occupancy and related expenses, travel and entertainment expenses and portfolio and systems expense. Reported net income attributable to the Class A shareholders for the first half was approximately $0.4 million or $0.05 per basic and diluted Class A share. Adjusted EBITDA was approximately $7.2 million or 11.5% of revenue for the first half. And adjusted net income was approximately $2.6 million for the first half or $0.22 per basic adjusted and diluted EPS. Looking at the balance sheet, total assets were approximately $139.9 million as of June 30 of this year compared to $166.6 million as of the end of last year.

Cash and cash equivalents were approximately $20.7 million as of June 30 of this year compared to $44.1 million at the end of last year. Borrowings totaled approximately $9.5 million as of June 30 of this year. And for the same period, total Class A stockholders' equity was approximately $46 million. That concludes my remarks, and we'll go into Q&A.

Operator: The first question comes from Sandy Mehta from Evaluate.

Sandy Mehta: There was a large jump in the general G&A and expenses. So those expenses have gone from 25% to 30.5% in the first half. And you have mentioned in your comments and in the press release that now that you are near the end of the licensing process in Australia and Europe that those expenses might come down meaningfully. So what should we expect as a normal run rate for G&A expenses going forward?

Richard Hough: Yes, unclear. Sandy, I appreciate you asking. I hesitate to give you a precise figure. I just directionally want everyone to understand that with the completion of the Australian trust, with the near completion by the end of the third quarter of the UCITS as well as our work with the Central Bank of Ireland, expenses will come down. There are some ratings done. There's still some more to go. But directionally, we should be seeing that decline, which will be a benefit to the company. So this is a directional comment, not a precise one.

Scott Gerard: Right. And I'll elaborate on that, Sandy. Just to say that there will be some recurring expenses such as statutory subsidiary audits in Ireland, similar to what we've experienced in Singapore. So there will be a certain level of legal and accounting fees and other administrative fees that will be ongoing. But a lot of the start-up type professional fees, those will go away post-licensure.

Sandy Mehta: Okay. Looking at year-to-date overall markets, small cap and value, after a while, both have done really well year-to-date. So are you -- does that help you in terms of your marketing efforts? Are you seeing more interest in those types of strategies?

Richard Hough: With regards to small cap value and the small cap institutional business, absolutely helps. Certainly helps us with future retention of assets. Some of the outflows that we have commented on and experienced have been on the value book. So there's no doubt that the pickup in performance should be helpful. I hope that answers your question.

Sandy Mehta: Yes. Okay. And it was great to see incremental flows into Global. The performance there has been strong. Any further color that you can give us on the inflows into your Global and International strategies?

Richard Hough: Sure, absolutely. Well, first of all, as I announced in the -- in my opening remarks, we received an AUD 0.5 billion investment. So that's now $2.5 billion. So having really meaningful assets in the strategy is obviously a very important hurdle for any large allocator, especially if they're looking at large allocations. We have the Australian trust open. We expect imminently to be able to announce ratings that will make that trust available to investors in Australia, especially wealth investors and others. That's the purpose of that trust. So we are looking forward to the commencement of flows in that strategy through that trust, and we look forward to making those announcements via press release when appropriate.

We're in the process now of multiple ratings discussions, which will really open up the door to consultants globally to be recommending that vehicle, I think, given its very strong, consistent performance along with a consistent process and team that we will do quite well as we go forward. The pipeline itself, as I've mentioned before, is a little harder to measure than it used to be given the change in the institutional business and how consultants work. But the pipeline in general is strong across the Global Value team, the focused emerging markets and International teams. They also have very, very, very strong outperformance.

And our growth equity teams have very strong performance, and their pipeline has been building substantially. So the total pipeline that we see right now of potential opportunity is well into the billions of dollars. And the lack of precision is just that it's hard for me to put a probability on that large number, but it's in the multiple billions. And this is reasonable. This is not kind of a 2-year, 3-year pipeline. It's a better pipeline than that.

Operator: The next question comes from Jim Marrone from Singular Research. Jim Marrone My question is just with regards to the top line and just the offset from the new client flows going out. So can you just reflect on that? Is that like a reflection of risk-off by your clients? Or are they moving to other firms? Can you maybe just shed some light on that?

Richard Hough: Okay. So we need to kind of -- in looking at the top line and the flows in AUM, I think there are 3 important points. One is that we were billing at a real low first quarter -- at the end of the first quarter. AUM is up substantially over the past year, but timing is everything. And given average AUM and when you're billing really only 4 times a year, revenues haven't yet caught up to it. As I mentioned, the discretionary AUM, which drives revenue is effectively at an all-time high where we sit today, given the investment we just received from Australia. It puts us in the ballpark of $25 billion, $24.7 billion for the quarter.

That's point number one. Point number two, we normally see higher outflows in the high-net-worth business in the second quarter for taxes. We also see some in the third quarter, not nearly as much, but that is often a seasonal event. Next point, our high-net-worth clients generally are here to have their wealth managed with a very long-term view, stable asset allocation, management of their cash flows and needs, along with a whole host of other requirements in managing significant family wealth and the complexities involved around it, whether that's estate and trust issues, whether it is aspirations for their wealth with regards to charitable giving, lifestyle, et cetera.

Most of our high-net-worth clients, the vast majority of them, Jim, are not here because of a particular capability. And so we don't tend to see hot flows in or out because of a risk-on or risk-off environment. There may be internal flows between fixed income or credit opportunities and equity, depending where someone is with their overall wealth. A lot of those movements at the company between strategies don't really affect revenue that much because of the nature of how we see our wealth management clients. We like to remain as unbiased as possible as fiduciaries. And therefore, we seek where possible to avoid the conflict of fee compensation.

The next point would be that $200 million or $200-plus million of those outflows that you saw in the second quarter were related to certain family relationships with flat-fee type arrangements or other arrangements, and those outflows had 0 revenue effect on the top line as a result. We're doing a substantial amount of work, have special arrangements with them, and they can see very large cash flows in or out of different things and it doesn't really affect the company or its revenues.

The final point is that most of the outflows, since we're focused on that on the top line, were from the institutional business on the value side of the business, which has had some performance -- relative performance issues. As Sandy just pointed out, that's been picking up. But that is something we're watching carefully, and we all have to be aware of.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Rick Hough for closing remarks.

Richard Hough: Thank you for joining us to review the second quarter of this year and for the questions. I look forward to updating you on further progress in our expansion and investment plans as we go to future quarters. I would ask investors who are interested to pay attention to upcoming press releases. We are going to, given the amount of activity, likely have more news to share intra-quarter, whether that's new hires that are important to the firm or some of the ratings with consultants and others that I have mentioned. Thanks again for joining us and look forward to talking to you soon. Thank you.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.