10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-35733

Silvercrest Asset Management Group Inc.

(Exact name of registrant as specified in its charter)

Delaware

45-5146560

(State or Other Jurisdiction
of Incorporation or Organization)

(I.R.S. Employer
Identification No.)

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

(Address of Principal Executive Offices and Zip Code)

(212) 649-0600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.01 par value per share	SAMG	The Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s Class A common stock, par value $0.01 per share, and Class B common stock, par value $0.01 per share, as of July 25, 2022 was 9,911,461 and 4,602,632, respectively.


Part I	Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Condition as of June 30, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021	2
	Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2022 and 2021	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	5
	Notes to Condensed Consolidated Financial Statements as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and 2021	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49
Part II	Other Information
Item 6.	Exhibits	50

Except where the context requires otherwise and as otherwise set forth herein, in this report, references to the “Company”, “we”, “us” or “our” refer to Silvercrest Asset Management Group Inc. (“Silvercrest”) and its consolidated subsidiary, Silvercrest L.P., the managing member of our operating subsidiary (“Silvercrest L.P.” or “SLP”). SLP is a limited partnership whose existing limited partners are referred to in this report as “principals”.

Forward-Looking Statements

This report contains, and from time to time our management may make, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and assumptions. 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, including the continued adverse effects of the coronavirus pandemic, 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, 2021 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.

Part I – Financial Information

Item 1. Financial Statements

Silvercrest Asset Management Group Inc.

Condensed Consolidated Statements of Financial Condition

(Unaudited)

(In thousands, except share and par value data)


	June 30, 2022			December 31, 2021
Assets
Cash and cash equivalents	$	67,558		$	85,744
Investments		1,190			1,588
Receivables, net		8,988			8,850
Due from Silvercrest Funds		2,029			428
Furniture, equipment and leasehold improvements, net		4,967			5,257
Goodwill		63,675			63,675
Operating lease assets		23,965			26,130
Finance lease assets		217			247
Intangible assets, net		22,637			23,924
Deferred tax asset—tax receivable agreement		8,485			10,797
Prepaid expenses and other assets		3,598			2,678
Total assets	$	207,309		$	229,318
Liabilities and Equity
Accounts payable and accrued expenses	$	9,622		$	19,820
Accrued compensation		20,782			41,707
Borrowings under credit facility		7,226			9,025
Operating lease liabilities		30,044			32,371
Finance lease liabilities		222			253
Deferred tax and other liabilities		9,681			9,334
Total liabilities		77,577			112,510
Commitments and Contingencies (Note 10)
Equity
Preferred Stock, par value $0.01, 10,000,000 shares authorized; none issued and outstanding, as of June 30, 2022 and December 31, 2021		—			—
Class A common stock, par value $0.01, 50,000,000 shares authorized; 9,944,544 and 9,911,461 shares issued and outstanding as of June 30, 2022, respectively; 9,902,184 and 9,869,101 shares issued and outstanding as of and December 31, 2021, respectively		99			99
Class B common stock, par value $0.01, 25,000,000 shares authorized; 4,602,632 and 4,593,687 issued and outstanding, as of June 30, 2022 and December 31, 2021, respectively		45			45
Additional Paid-In Capital		53,283			52,936
Treasury stock, at cost, 33,083 shares as of June 30, 2022 and December 31, 2021		(512	)		(512	)
Retained earnings		37,749			27,782
Total Silvercrest Asset Management Group Inc.’s equity		90,664			80,350
Non-controlling interests		39,068			36,458
Total equity		129,732			116,808
Total liabilities and equity	$	207,309		$	229,318

See accompanying notes to condensed consolidated financial statements.

Silvercrest Asset Management Group Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenue
Management and advisory fees	$	31,103		$	31,982		$	63,551		$	62,187
Performance fees		2			—			2			—
Family office services		1,068			1,119			2,130			2,151
Total revenue		32,173			33,101			65,683			64,338
Expenses
Compensation and benefits		17,971			18,475			36,630			36,124
General and administrative		2,302			7,284			1,714			15,184
Total expenses		20,273			25,759			38,344			51,308
Income before other (expense) income, net		11,900			7,342			27,339			13,030
Other (expense) income, net
Other (expense) income, net		7			8			15			15
Interest income		3			2			4			4
Unrealized gain (loss)		(1	)		—			(1	)		—
Interest expense		(83	)		(97	)		(161	)		(202	)
Total other (expense) income, net		(74	)		(87	)		(143	)		(183	)
Income before provision for income taxes		11,826			7,255			27,196			12,847
Provision for income taxes		2,353			1,594			5,327			2,851
Net income		9,473			5,661			21,869			9,996
Less: net income attributable to non-controlling interests		(3,703	)		(2,326	)		(8,531	)		(4,109	)
Net income attributable to Silvercrest	$	5,770		$	3,335		$	13,338		$	5,887
Net income per share:
Basic	$	0.58		$	0.35		$	1.35		$	0.61
Diluted	$	0.58		$	0.35		$	1.35		$	0.61
Weighted average shares outstanding:
Basic		9,887,018			9,662,809			9,878,130			9,657,317
Diluted		9,913,437			9,678,466			9,901,738			9,669,288

See accompanying notes to condensed consolidated financial statements.

Silvercrest Asset Management Group Inc.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

(In thousands)


	Class A Common Stock Shares		Class A Common Stock Amount		Class B Common Stock Shares			Class B Common Stock Amount		Additional Paid-In Capital		Treasury Stock Shares		Treasury Shares Amount		Retained Earnings			Total Silvercrest Asset Management Group Inc.’s Equity			Non- controlling Interest			Total Equity

January 1, 2021		9,651	$	96		4,722		$	46	$	51,039		—	$	—	$	19,498		$	70,679		$	32,720		$	103,399
Distributions to partners		—		—		—			—		—		—		—		—			—			(1,758	)		(1,758	)
Issuance of notes receivable from partners		—		—		—			—		—		—		—		—			—			(475	)		(475	)
Issuance of Class B shares		—		—		56			1		—		—		—		—			1			475			476
Repayment of notes receivable from partners		—		—		—			—		—		—		—		—			—			228			228
Equity-based compensation		—		—		—			—		—		—		—		—			—			469			469
Net Income		—		—		—			—		—		—		—		2,552			2,552			1,783			4,335
Deferred tax, net of amounts payable under tax receivable agreement		—		—		—			—		7		—		—		—			7			—			7
Accrued interest on notes receivable from partners		—		—		—			—		—		—		—		—			—			(2	)		(2	)
Share conversion		8		—		(8	)		—		56		—		—		—			56			(56	)		—
Dividends paid on Class A common stock - $0.16 per share		—		—		—			—		—		—		—		(1,545	)		(1,545	)		—			(1,545	)
March 31, 2021		9,658	$	96		4,770		$	47	$	51,102		—	$	—	$	20,505		$	71,750		$	33,384		$	105,134
Distributions to partners		—		—		—			—		—		—		—		—			—			(3,592	)		(3,592	)
Issuance of Class B shares		—		—		2			—		—		—		—		—			—			25			25
Equity-based compensation		1		1		21			—		55		—		—		—			56			237			293
Net Income		—		—		—			—		—		—		—		3,335			3,335			2,326			5,661
Deferred tax, net of amounts payable under tax receivable agreement		—		—		—			—		7