samg-10q_20210630.htm

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, 2021


☐	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 26, 2021 was 9,669,760 and 4,781,844, respectively.

Part I	Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Condition as of June 30, 2021 and December 31, 2020	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020	2
	Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2021 and 2020	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020	5
	Notes to Condensed Consolidated Financial Statements as of June 30, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and 2020	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48
Part II	Other Information
Item 6.	Exhibits	49

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, 2020 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, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	53,631	$	62,498
Investments		53		914
Receivables, net		9,425		8,341
Due from Silvercrest Funds		1,648		1,018
Furniture, equipment and leasehold improvements, net		5,331		5,523
Goodwill		63,675		63,675
Operating lease assets		28,188		30,068
Finance lease assets		314		254
Intangible assets, net		25,239		26,553
Deferred tax asset—tax receivable agreement		11,324		11,397
Prepaid expenses and other assets		3,934		3,563
Total assets	$	202,762	$	213,804
Liabilities and Equity
Accounts payable and accrued expenses	$	21,522	$	18,040
Accrued compensation		20,530		33,849
Borrowings under credit facility		10,828		12,600
Operating lease liabilities		34,071		36,127
Finance lease liabilities		319		259
Deferred tax and other liabilities		9,514		9,530
Total liabilities		96,784		110,405
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, 2021 and December 31, 2020		—		—
Class A common stock, par value $0.01, 50,000,000 shares authorized; 9,669,760 and 9,650,692 issued and outstanding, as of June 30, 2021 and December 31, 2020, respectively		97		96
Class B common stock, par value $0.01, 25,000,000 shares authorized; 4,781,844 and 4,721,646 issued and outstanding, as of June 30, 2021 and December 31, 2020, respectively		47		46
Additional Paid-In Capital		51,240		51,039
Retained earnings		22,291		19,498
Total Silvercrest Asset Management Group Inc.’s equity		73,675		70,679
Non-controlling interests		32,303		32,720
Total equity		105,978		103,399
Total liabilities and equity	$	202,762	$	213,804

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,
	2021			2020			2021			2020
Revenue
Management and advisory fees	$	31,982		$	23,018		$	62,187		$	50,406
Family office services		1,119			1,003			2,151			1,980
Total revenue		33,101			24,021			64,338			52,386
Expenses
Compensation and benefits		18,475			13,367			36,124			29,075
General and administrative		7,284			9,297			15,184			9,340
Total expenses		25,759			22,664			51,308			38,415
Income before other (expense) income, net		7,342			1,357			13,030			13,971
Other (expense) income, net
Other (expense) income, net		8			8			15			15
Interest income		2			4			4			10
Interest expense		(97	)		(134	)		(202	)		(325	)
Total other (expense) income, net		(87	)		(122	)		(183	)		(300	)
Income before provision for income taxes		7,255			1,235			12,847			13,671
Provision for income taxes		1,594			453			2,851			3,199
Net income		5,661			782			9,996			10,472
Less: net income attributable to non-controlling interests		(2,326	)		(292	)		(4,109	)		(4,450	)
Net income attributable to Silvercrest	$	3,335		$	490		$	5,887		$	6,022
Net income per share:
Basic	$	0.35		$	0.05		$	0.61		$	0.64
Diluted	$	0.35		$	0.05		$	0.61		$	0.64
Weighted average shares outstanding:
Basic		9,662,809			9,511,767			9,657,317			9,451,567
Diluted		9,678,466			9,520,655			9,669,288			9,458,363

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			Retained Earnings			Total Silvercrest Asset Management Group Inc.’s Equity			Non- controlling Interest			Total Equity

January 1, 2020		9,330	$	93		5,031		$	49		$	49,246		$	15,648		$	65,036		$	32,771		$	97,807
Distributions to partners		—		—		—			—			—			—			—			(2,226	)		(2,226	)
Repayment of notes receivable from partners		—		—		—			—			—			—			—			300			300
Equity-based compensation		—		—		—			—			9			—			9			100			109
Net Income		—		—		—			—			—			5,532			5,532			4,158			9,690
Deferred tax, net of amounts payable under tax receivable agreement		—		—		—			—			(364	)		—			(364	)		—			(364	)
Accrued interest on notes receivable from partners		—		—		—			—			—			—			—			(2	)		(2	)
Share conversion		176		2		(176	)		(2	)		1,149			—			1,149			(1,149	)		—
Dividends paid on Class A common stock - $0.15 per share		—		—		—			—			—			(1,520	)		(1,520	)		—			(1,520	)
March 31, 2020		9,506	$	95		4,855		$	47		$	50,040		$	19,660		$	69,842		$	33,952		$	103,794
Distributions to partners		—		—		—			—			—			—			—			(2,798	)		(2,798	)
Repayment of notes receivable from partners		—		—		—			—			—			—			—
Equity-based compensation		2		—		9			—			10			—			10			147			157
Net Income		—		—		—			—			—			490			490			292			782
Deferred tax, net of amounts payable under tax receivable agreement		—		—		—			—			8			—			8			—			8
Accrued interest on notes receivable from partners		—		—		—			—			—			—			—			(2	)		(2	)
Share conversion		12		—		(12	)		—			88			—			88			(88	)		—
Dividends paid on Class A common stock - $0.16 per share		—		—		—			—			—			(1,523	)		(1,523	)		—			(1,523	)
June 30, 2020		9,520	$	95		4,852		$	47		$	50,146		$	18,627		$	68,915		$	31,503		$	100,418

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		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 notes receivable from partners		—		—		—			—		—		—			—			—			—
Issuance of Class B shares		—		—		2					—		—			—			25			25
Repayment of notes receivable from partners		—		—		—			—		—		—			—			—			—
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		—			7			—			7
Accrued interest on notes receivable from partners		—		—		—			—		—		—			—			(1	)		(1	)
Share conversion		11		—		(11	)		—		76		—			76			(76	)		—
Dividends paid on Class A common stock - $0.16 per share		—		—		—			—		—		(1,549	)		(1,549	)		—			(1,549	)
June 30, 2021		9,670	$	97		4,782		$	47	$	51,240	$	22,291		$	73,675		$	32,303		$	105,978

See accompanying notes to condensed consolidated financial statements.

Silvercrest Asset Management Group Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Six months ended June 30,
	2021		2020
Cash Flows From Operating Activities
Net income	$	9,996	$	10,472
Adjustments to reconcile net income to net cash provided by (used in) operating activities: