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 March 31, 2023


☐	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 Exchange 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 May 1, 2023 was 9,473,655 and 4,543,825, respectively.


Part I	Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Condition as of March 31, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022	2
	Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2023 and 2022	3
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	4
	Notes to Condensed Consolidated Financial Statements as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and 2022	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46
Part II	Other Information
Item 6.	Exhibits	47

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, 2022 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)


	March 31, 2023			December 31, 2022
Assets
Cash and cash equivalents	$	41,636		$	77,432
Investments		146			146
Receivables, net		9,752			9,118
Due from Silvercrest Funds		1,175			577
Furniture, equipment and leasehold improvements, net		5,784			5,021
Goodwill		63,675			63,675
Operating lease assets		23,720			23,653
Finance lease assets		313			342
Intangible assets, net		20,719			21,349
Deferred tax asset—tax receivable agreement		6,617			6,915
Prepaid expenses and other assets		5,076			4,447
Total assets	$	178,613		$	212,675
Liabilities and Equity
Accounts payable and accrued expenses	$	2,940		$	1,704
Accrued compensation		8,064			39,734
Borrowings under credit facility		4,533			6,337
Operating lease liabilities		29,522			29,552
Finance lease liabilities		315			344
Deferred tax and other liabilities		9,195			9,172
Total liabilities		54,569			86,843
Commitments and Contingencies (Note 10)
Equity
Preferred Stock, par value $0.01, 10,000,000 shares authorized; none issued and outstanding, as of March 31, 2023 and December 31, 2022		—			—
Class A common stock, par value $0.01, 50,000,000 shares authorized; 10,078,166 and 9,473,655 shares issued and outstanding as of March 31, 2023, respectively; 10,068,369 and 9,559,587 shares issued and outstanding as of and December 31, 2022, respectively		101			101
Class B common stock, par value $0.01, 25,000,000 shares authorized; 4,543,825 and 4,545,380 issued and outstanding, as of March 31, 2023 and December 31, 2022, respectively		44			44
Additional Paid-In Capital		53,976			53,982
Treasury Stock, at cost, 604,511 and 508,782 shares as of March 31, 2023 and December 31, 2022, respectively		(10,939	)		(9,295	)
Accumulated other comprehensive income (loss)		(2	)		—
Retained earnings		41,241			39,761
Total Silvercrest Asset Management Group Inc.’s equity		84,421			84,593
Non-controlling interests		39,623			41,239
Total equity		124,044			125,832
Total liabilities and equity	$	178,613		$	212,675

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 March 31,
	2023			2022
Revenue
Management and advisory fees	$	28,368		$	32,448
Family office services		1,062			1,062
Total revenue		29,430			33,510
Expenses
Compensation and benefits		16,498			18,659
General and administrative		6,181			(588	)
Total expenses		22,679			18,071
Income before other (expense) income, net		6,751			15,439
Other (expense) income, net
Other (expense) income, net		45			8
Interest income		19			1
Interest expense		(116	)		(78	)
Total other (expense) income, net		(52	)		(69	)
Income before provision for income taxes		6,699			15,370
Provision for income taxes		1,389			2,974
Net income		5,310			12,396
Less: net income attributable to non-controlling interests		(2,106	)		(4,828	)
Net income attributable to Silvercrest	$	3,204		$	7,568
Net income per share:
Basic	$	0.34		$	0.77
Diluted	$	0.33		$	0.77
Weighted average shares outstanding:
Basic		9,548,766			9,869,444
Diluted		9,577,901			9,891,148

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, 2022		9,869	$	99		4,594		$	45	$	52,936		33	$	(512	)	$	27,782		$	80,350		$	36,458		$	116,808
Distributions to partners		—		—		—			—		—		—		—			—			—			(2,685	)		(2,685	)
Repayment of notes receivable from partners		—		—		—			—		—		—		—			—			—			157			157
Equity-based compensation		—		—		—			—		—		—		—			—			—			228			228
Net Income		—		—		—			—		—		—		—			7,568			7,568			4,828			12,396
Deferred tax, net of amounts payable under tax receivable agreement		—		—		—			—		1		—		—			—			1			—			1
Accrued interest on notes receivable from partners		—		—		—			—		—		—		—			—			—			(1	)		(1	)
Share conversion		3		—		(3	)		—		24		—		—			—			24			(24	)		—
Dividends paid on Class A common stock - $0.17 per share		—		—		—			—		—		—		—			(1,681	)		(1,681	)		—			(1,681	)
March 31, 2022		9,872	$	99		4,591		$	45	$	52,961		33	$	(512	)	$	33,669		$	86,262		$	38,961		$	125,223


	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			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Silvercrest Asset Management Group Inc.’s Equity			Non- controlling Interest			Total Equity

January 1, 2023		9,560		$	101		4,545		$	44	$	53,982			509	$	(9,295	)	$	—	$	39,761	$	84,593		$	41,239		$	125,832
Distributions to partners		—			—		—			—		—			—		—			—		—		—			(4,114	)		(4,114	)
Repayment of notes receivable from partners		—			—		—			—		—			—		—			—		—		—			95			95
Equity-based compensation		8			—		—			—		—			—		—			—		—		—			312			312
Net Income		—			—		—			—		—			—		—			—		3,204		3,204			2,106			5,310
Deferred tax, net of amounts payable under tax receivable agreement		—			—		—			—		(20	)		—		—			—		—		(20	)		—			(20	)
Accrued interest on notes receivable from partners		—			—		—			—		—			—		—			—		—		—			(1	)		(1	)
Share conversion		2			—		(2	)		—		14			—		—			—		—		14			(14	)		—
Purchase of shares of Class A common stock of Silvercrest Asset Management Inc.		(96	)		—		—			—		—			96		(1,644	)