Silvercrest Asset Management Group Q3 Earnings Call Highlights

Key Points

• Third-quarter revenue rose 4.5% year over year to $32.7 million, while reported net income was $1.2 million and adjusted EBITDA reached $4.4 million. Higher management fees and lower compensation costs helped offset increased general and administrative expenses.
• Discretionary AUM declined $939.2 million to $23.8 billion during the quarter, primarily due to weaker markets, while total AUM stood at $36.2 billion. Net flows were nearly flat, but the firm generated a record $182.2 million in organic new client accounts for the quarter.
• Silvercrest continued investing in international growth, opening its Dublin office after receiving a full MiFID license and advancing expansion plans in Asia. Management expects the heavy investment phase to ease and said 2027 should bring lower compensation costs as these initiatives begin contributing revenue.

Silvercrest Asset Management Group NASDAQ: SAMG reported third-quarter revenue of $32.7 million and consolidated net income of $1.2 million, as the wealth and institutional asset manager continued investing in international distribution, personnel and regulatory capabilities.

Chairman and Chief Executive Officer Rick Hough said discretionary assets under management, the primary driver of company revenue, declined by $939.2 million during the third quarter to $23.8 billion. The decline was primarily attributed to weaker markets, with $753 million of the reduction affecting revenue. Total assets under management stood at $36.2 billion at Sept. 30.

Hough noted that weaker third-quarter markets followed unusually strong market conditions in the second quarter. Capital appreciation has contributed $1.7 billion of new AUM year to date, he said.

AUM Flows and Reporting Changes

Net flows were essentially flat in the quarter at $58.3 million. Silvercrest added $182.2 million in organic new client accounts, its strongest quarter for such accounts in 2026, according to Hough. Net flows also included a $373 million follow-on investment in the firm’s Global Value Equity strategy.

Outflows were mainly related to seasonal high-net-worth client withdrawals for tax payments and some institutional redemptions, Hough said.

The company plans to modify its reporting of non-discretionary AUM at the end of the first quarter of 2027 and may eliminate the category entirely. Hough said most non-discretionary AUM is tied to flat-fee family office and related services and has limited revenue significance. The planned change would substantially reduce reported non-discretionary and total AUM on a one-time basis but would not affect revenue.

Revenue increased 2% year over year through the first nine months of 2026, reflecting recovering average AUM levels, though first-quarter outflows weighed on the comparison. Hough said the company’s estimated annual revenue run rate also increased by a similar percentage from Sept. 30, 2025.

Quarterly Financial Results

Chief Financial Officer Scott Gerard said quarterly revenue increased $1.4 million from a year earlier, primarily because of a higher average annual management fee. Expenses rose $0.8 million, or 2.9%, driven principally by higher general and administrative costs, partly offset by lower compensation and benefits expense.

• Reported net income attributable to Silvercrest or Class A shareholders was approximately $600,000, or $0.08 per basic and diluted Class A share.
• Adjusted EBITDA was approximately $4.4 million, representing 13.5% of revenue.
• Adjusted net income was approximately $1.9 million, or $0.16 per adjusted basic and diluted share.

Compensation and benefits expense declined $0.5 million, or 2.1%, year over year in the quarter, reflecting lower bonus and severance accruals. That reduction was partly offset by higher salary and benefit costs related to merit increases, new hires including staff in Ireland, and higher equity-based compensation expense.

General and administrative expense increased $1.3 million, or about 16%, as professional fees, travel and entertainment, and portfolio and systems costs rose.

For the first nine months, revenue increased $1.5 million year over year, while expenses rose $7.6 million, or 9.2%. Year-to-date reported net income attributable to Silvercrest or Class A shareholders was approximately $1.1 million, or $0.14 per basic and diluted Class A share. Adjusted EBITDA was $11.6 million, or 12.2% of revenue, and adjusted net income totaled about $4.6 million, or $0.38 per adjusted basic and diluted share.

As of Sept. 30, total assets were approximately $146.3 million, compared with $166.6 million at the end of 2025. Cash and cash equivalents were $27.8 million, down from $44.1 million at year-end, while borrowings totaled about $9 million. Total Class A stockholders’ equity was approximately $45.5 million.

International Expansion and Investment Spending

Hough said Silvercrest received a full MiFID license from the Central Bank of Ireland and opened its Dublin office during the quarter. The office is intended to serve high-net-worth and institutional clients in Europe. With the Dublin and Atlanta offices completed, along with the company’s UCITS fund, Australian trust and regulatory licensing work, Hough said related administrative and legal costs are expected to decline as the initiatives begin contributing revenue.

The company’s institutional pipeline has grown and remains strongest in global and international equity strategies, Hough said. Silvercrest is also pursuing additional ratings from global consultants to broaden institutional distribution.

During the question-and-answer session, Hough said hiring in Dublin is largely complete, although the company may add one investment professional. In Asia, Silvercrest expects to announce a head of office for its high-net-worth business in the first quarter. The company already has licensing and initial hires in the region, while an employee in Australia is working on distribution across Southeast Asia, Japan and Australia.

Hough said personnel investments are approaching the end of their heavy investment phase, with the company now focused on producing revenue from those investments. He said 2027 would be an important year for reducing compensation expense as a percentage of revenue.

For the nine months ended Sept. 30, compensation and benefits expense was $62.9 million, or 66.3% of revenue. Hough said the company expects its compensation ratio to remain elevated while investments mature and indicated that Silvercrest intends to make equity grants to professionals involved in building the business and carrying out its strategy.

Dividend and Investment Performance Comments

Silvercrest’s board declared a quarterly dividend of $0.21 per Class A common share on Oct. 28. The dividend is scheduled to be paid on or about Dec. 18 to shareholders of record as of Dec. 11.

Asked about challenging performance in value strategies, Hough said comparisons with indexes have been affected by index concentration and exposure to lower-quality companies. He said Silvercrest’s strategies emphasize high-quality companies and that the firm does not intend to change its investment process, though investment teams continue seeking ways to improve execution.

Hough said the disparity between growth and value investing has persisted longer and widened more than in prior periods, while adding that the company believes its focus on fundamental research and high-quality businesses has performed well over longer periods.

About Silvercrest Asset Management Group (NASDAQ:SAMG)

Silvercrest Asset Management Group, Inc is an investment advisory and wealth management firm serving high-net-worth individuals, families, family offices, institutions, and charitable organizations. The company provides customized investment management and financial planning services designed to address clients' long-term wealth objectives.

Its services include portfolio management, asset allocation, manager selection, wealth planning, family office support, and advice related to trusts, estates, and other complex financial matters.

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