NEW YORK, Aug. 4, 2016 /PRNewswire/ -- Silvercrest Asset Management Group Inc. (NASDAQ: SAMG) (the "Company" or "Silvercrest") today reported the results of its operations for the quarter ended June 30, 2016.

Business Update

Silvercrest experienced meaningful organic growth during the second quarter ended June 30, 2016, with Silvercrest adding $242 million in new client assets and accounts, the firm's best new business development quarter since the first quarter of 2014. New business was generated by both the ultra-high net worth and institutional businesses, including new institutional sub-advisory relationships. We remain proud of Silvercrest's ability to maintain its history of organic growth.

Total discretionary assets under management are now $12.6 billion, representing a full recovery of discretionary assets from the market downturn during the third quarter of 2015. Total assets under management are now $17.2 billion. Consistent with the firm's continued organic growth and improved market conditions, top line revenue for the first six months of 2016 increased to $38.6 million, a 7.3% improvement over the first half of 2015. The firm has grown while maintaining its fee basis for assets under management and margins, while investing in the business.

As noted after the first quarter of 2016, our new business pipeline has fully rebuilt since the market turmoil of the third quarter 2015, reflecting the maturity of our business and marketing efforts. That pipeline delivered anticipated growth and remains robust. Importantly, Silvercrest's proprietary value equity strategies have maintained their strong performance.  Each of the firm's six primary equity strategies have outperformed relevant benchmarks for nearly all measured periods, as well as since inception.

We remain focused on finding selective and prudent acquisitions in money-center cities, and we believe Silvercrest's growth, culture and premier brand in the fast-growing RIA business, makes it a desirable business partner. We are optimistic about complementing our organic growth with accretive acquisitions.

Silvercrest maintains a strong balance sheet, with light leverage and meaningful cash. The company continues to maintain its generous dividend policy.

On August 2, 2016, the Company's Board of Directors declared a quarterly dividend of $0.12 per share of Class A common stock.  The dividend will be paid on or about September 16, 2016 to shareholders of record as of the close of business on September 9, 2016.

Second Quarter 2016 Highlights

• Total Assets Under Management ("AUM") of $17.2 billion, inclusive of discretionary AUM of $12.6 billion and non-discretionary AUM of $4.6 billion at June 30, 2016.
• Revenue of $19.3 million.
• U.S. Generally Accepted Accounting Principles ("GAAP") consolidated net income and net income attributable to Silvercrest of $2.1 million and $0.9 million, respectively.
• Basic and diluted net income per share of $0.12.
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")¹ of $5.4 million
• Adjusted net income¹ of $2.3 million.
• Adjusted basic and diluted earnings per share¹ of $0.18 and $0.17, respectively.

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

 

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AUM at $17.2 billion

Silvercrest's discretionary assets under management were $12.6 billion at June 30, 2016 and 2015.  Silvercrest's AUM decreased by $1.8 billion, or 9.5%, to $17.2 billion at June 30, 2016 from $19.0 billion at June 30, 2015.  The decrease in total AUM was attributable to net client outflows of $0.9 billion and market depreciation of $0.9 billion.

Silvercrest's discretionary assets under management increased by $0.4 billion, or 3.3%, to $12.6 billion at June 30, 2016 from $12.2 billion at March 31, 2016.  Silvercrest's AUM increased by $0.2 billion, or 1.2%, to $17.2 billion at June 30, 2016 from $17.0 billion at March 31, 2016.  The increase was attributable to market appreciation of $0.2 billion.

Our total assets under management exclude approximately $15.2 billion of non-discretionary assets of a public treasurers' office for which we became advisor in connection with the acquisition of Jamison, Eaton & Wood, Inc. (the "Jamison acquisition"). Silvercrest provides advisory services to this office with a fee cap of $825 thousand per annum. We exclude these assets because they are related to a unique client relationship for which the fee cap is significantly disproportionate to the related assets under management. This fee arrangement is not indicative of our average fee rate.

Second Quarter 2016 vs. Second Quarter 2015

Revenue increased by $0.8 million, or 4.1%, to $19.3 million for the three months ended June 30, 2016, from $18.6 million for the three months ended June 30, 2015. This increase was driven primarily by growth in our management and advisory fees as a result of increased assets under management, mainly as a result of the Jamison acquisition.  Revenue related to the Jamison acquisition for the three months ended June 30, 2016 was $1.1 million.

Total expenses increased by $1.9 million, or 13.5%, to $15.8 million for the three months ended June 30, 2016 from $13.9 million for the three months ended June 30, 2015. Compensation and benefits expense increased by $1.4 million, or 13.0%, to $11.8 million for the three months ended June 30, 2016 from $10.4 million for the three months ended June 30, 2015. The increase was primarily attributable to an increase in benefits costs of $0.1 million, an increase in equity-based compensation of $0.7 million due to the granting of restricted stock units in August 2015 and May 2016 and an increase in salaries expense of $0.6 million as a result of both merit-based increases and increased headcount due to the Jamison acquisition and the acquisition of Cappiccille & Company, LLC (the "Cappiccille acquisition").  General and administrative expenses increased by $0.5 million, or 15.3%, to $4.0 million for the three months ended June 30, 2016 from $3.5 million for the three months ended June 30, 2015. This increase was primarily due to an increase in investment research costs of $0.1 million, mainly as a result of the Jamison acquisition, an increase in sub-advisory and referral fees of $0.2 million due to the Jamison acquisition, an increase in professional fees of $0.1 million and an increase in depreciation and amortization of $0.2 million due primarily to intangibles acquired as part of the Jamison acquisition.  This was partially offset by a decrease in travel and entertainment expenses of $0.1 million.

Consolidated net income was $2.1 million.  Net income attributable to Silvercrest was $0.9 million, or $0.12 per basic and diluted share for the three months ended June 30, 2016.   Our Adjusted Net Income¹ was $2.3 million, or $0.18 per adjusted basic share and $0.17 per adjusted diluted share³ for the three months ended June 30, 2016.

Adjusted EBITDA¹ was $5.4 million or 28.0% of revenue for the three months ended June 30, 2016 as compared to $5.4 million or 28.9% of revenue for the same period in the prior year.

Six Months Ended June 30, 2016 vs. Six Months Ended June 30, 2015

Revenue increased by $2.6 million, or 7.3%, to $38.6 million for the six months ended June 30, 2016, from $36.0 million for the six months ended June 30, 2015. This increase was driven primarily by growth in our management and advisory fees as a result of increased assets under management, mainly as a result of the Jamison acquisition.  Revenue related to the Jamison acquisition for the six months ended June 30, 2016 was $2.5 million.

Total expenses increased by $4.2 million, or 15.6%, to $31.5 million for the six months ended June 30, 2016 from $27.2 million for the six months ended June 30, 2015. Compensation and benefits expense increased by $3.0 million, or 15.1%, to $23.2 million for the six months ended June 30, 2016 from $20.2 million for the six months ended June 30, 2015.  This increase was primarily attributable to an increase in the accrual for bonuses of $0.2 million, an increase in benefits costs of $0.2 million, an increase in equity-based compensation of $1.4 million due to the granting of restricted stock units in August 2015 and May 2016 and an increase in salaries expense of $1.2 million as a result of both merit-based increases and increased headcount due to the Jamison and Cappiccille acquisitions.  General and administrative expenses increased by $1.2 million, or 17.1%, to $8.2 million for the six months ended June 30, 2016 from $7.0 million for the six months ended June 30, 2015.  The increase in general and administrative expenses was primarily due to an increase in investment research costs of $0.2 million, mainly as a result of the Jamison acquisition, an increase in sub-advisory and referral fees of $0.3 million due to the Jamison Acquisition, an increase in client reimbursements of $0.1 million, an increase in marketing and related expenses of $0.1 million, an increase in telephone expenses of $0.1 million and an increase in depreciation and amortization of $0.4 million due primarily to intangibles acquired as part of the Jamison acquisition.

Consolidated net income was $4.6 million.  Net income attributable to Silvercrest was $2.2 million, or $0.28 per basic and diluted share for the six months ended June 30, 2016.   Our Adjusted Net Income¹ was $4.6 million, or $0.36 per adjusted basic share and $0.33 per adjusted diluted share³ for the six months ended June 30, 2016.

Adjusted EBITDA¹ was $10.6 million or 27.6% of revenue for the six months ended June 30, 2016 as compared to $10.3 million or 28.7% of revenue for the same period in the prior year.

Liquidity and Capital Resources

Cash and cash equivalents were $21.3 million at June 30, 2016, compared to $31.6 million at December 31, 2015. Silvercrest L.P. had notes payable of $3.6 million at June 30, 2015 and $4.5 million at December 31, 2015.  As of June 30, 2016, no amount had been drawn down on our term loan and there was nothing outstanding on our revolving credit facility with City National Bank. 

Total stockholders' equity was $46.3 million at June 30, 2016.  We had 8,027,825 million shares of Class A common stock outstanding and 4,671,047 million shares of Class B common stock outstanding at June 30, 2016.

Non-GAAP Financial Measures

To provide investors with additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a basis consistent with GAAP with Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Earnings Per Share which are non-GAAP financial measures of earnings.  These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

• EBITDA represents net income before provision for income taxes, interest income, interest expense, depreciation and amortization.
• We define Adjusted EBITDA as EBITDA without giving effect to the Delaware franchise tax, professional fees associated with acquisitions or financing transactions, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses. We feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring earnings of the Company.
• Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenue.
• Adjusted Net Income represents recurring net income without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses. Furthermore, Adjusted Net Income includes income tax expense assuming a corporate rate of 40%.
• Adjusted Earnings Per Share represents 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 Earnings Per Share, and to the extent dilutive, we add unvested deferred equity units, restricted stock units and performance units to the total shares outstanding to compute diluted Adjusted Earnings Per Share. As a result of our structure, which includes a non-controlling interest, we feel that it is important to management and investors to supplement our consolidated financial statements presented on a GAAP basis with Adjusted Earnings Per Share, a non-GAAP financial measure of earnings, as this measure provides a perspective of recurring earnings per share of the Company as a whole as opposed to being limited to our Class A common stock.

Conference Call

The Company will host a conference call on August 5, 2016, at 8:30 am (Eastern Time) to discuss these results. Hosting the call will be Richard R. Hough III, Chief Executive Officer and President and Scott A. Gerard, Chief Financial Officer. Listeners may access the call by dialing 1-866-394-9665 or for international listeners the call may be accessed by dialing 1-253-237-1128.  An archived replay of the call will be available after the completion of the live call on the Investor Relations page of the Silvercrest website at http://ir.silvercrestgroup.com/.

Forward-Looking Statements and Other Disclosures

This report contains, and from time to time our management may make, forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as "may", "might", "will", "should", "expects", "intends", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue", the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions, may include projections of our future financial performance, future expenses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in our business or financial results. These statements are only predictions based on our current expectations and projections about future events. Important factors that could cause actual results, level of activity, performance or achievements to differ materially from those indicated by such forward-looking statements include but are not limited to: incurrence of net losses, fluctuations in quarterly and annual results, adverse economic or market conditions, our expectations with respect to future levels of assets under management, inflows and outflows, our ability to retain clients from whom we derive a substantial portion of our assets under management, our ability to maintain our fee structure, our particular choices with regard to investment strategies employed, our ability to hire and retain qualified investment professionals, the cost of complying with current and future regulation, coupled with the cost of defending ourselves from related investigations or litigation, failure of our operational safeguards against breaches in data security, privacy, conflicts of interest or employee misconduct, our expected tax rate, and our expectations with respect to deferred tax assets,  adverse economic or market conditions, incurrence of net losses, adverse effects of management focusing on implementation of a growth strategy, failure to develop and maintain the Silvercrest brand and other factors disclosed under "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2015 which is accessible on the SEC's website at www.sec.gov.  We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

About Silvercrest

Silvercrest was founded in April 2002 as an independent, employee-owned registered investment adviser. With offices in New York, Boston, Virginia and New Jersey, Silvercrest provides traditional and alternative investment advisory and family office services to wealthy families and select institutional investors.

 

 

 

(A)       Other adjustments consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE Silvercrest Asset Management Group Inc.