Silvercrest Asset Management Group 2026 Q2 Earnings Call

Thanks for joining us for the second quarter of 2026 earnings call. Silvercrest made strategic progress during the second quarter, and the plan we've described over the past two years is proceeding as we designed. Discretionary assets under management, which primarily drives the firm's revenue, increased 6.9% during the second quarter to $24.7 billion at June 30, 2026, and from $23.1 billion at March 31st, 2026, driven by market appreciation, partially offset by net client outflows. Outflows during the quarter were primarily attributable to seasonal high net worth client withdrawals for tax payments, consistent with prior second quarters, as well as institutional outflows. Over $200 million of those outflows will have no revenue effect at the firm. Year-over-year, discretionary AUM grew 4.2% from $23.7 billion. Total AUM increased 3.6% during the quarter to $37.0 billion. Excuse me one moment. I've got a catch in my throat.

Excuse me. Thank you. Organic new client account flows were $111 million for the second quarter, up from $81 million in the first quarter and $80 million in the prior year period. As discussed in prior quarters, non-discretionary AUM are associated with a small portion of revenue. We will adjust how the firm reports non-discretionary AUM next quarter, likely eliminating the non-discretionary category. The adjustment will substantially lower reported non-discretionary and total AUM on a one-time basis without any revenue effect. We seek to provide investors with a clearer picture of the discretionary AUM and economics that drive our business. While revenue was flat year-over-year, reflecting average AUM levels weighed down by first quarter outflows, we entered the third quarter with discretionary AUM meaningfully higher than the level that drove second quarter billing.

In fact, our discretionary AUM is now at an all-time high for the firm. Our institutional pipeline has grown substantially and remains robust, particularly in our global and international equity strategies, which continue to deliver exceptional performance. This week, we received and are investing an AUD 500 million contribution, that's approximately $350 million, to our Global Value strategy. That strategy now manages $2.5 billion. Silvercrest institutional business now stands at $9.8 billion in AUM, up from $8.7 billion at the end of the first quarter. Our OCIO business, which the firm built from inception, now manages $2.9 billion. We've made significant progress on our global infrastructure and distribution build-out and are entering the revenue phase. We expect to complete our MiFID license through the Central Bank of Ireland by the end of the third quarter.

With our Australian unit trust established, our UCITS vehicle and European licensing near completion, the administrative and legal costs associated with these initiatives will decline meaningfully as the distribution access they create begins to contribute. We've now achieved important third-party ratings for our strategies and vehicles, and we are working on additional ratings with major global consultants, which we expect to further open institutional distribution channels worldwide. We continue to invest in the firm's talent. Our Dublin head of office and our first Dublin-based portfolio manager join the firm next week, and we look forward to making announcements about these impressive professionals. As previously discussed, Silvercrest will continue to adjust our compensation ratio to match compelling opportunities to organically grow the business. Total compensation and benefits expense was $20.5 million, representing 66.6% of revenue for the three months ended June 30, 2026.

As we have consistently communicated, our earnings and adjusted EBITDA reflect deliberate cost of significant investment program in the firm's history, and we expect the compensation ratio to remain elevated as these investments mature. As previously announced, our shareholders approved an increase in the number of shares issuable under our equity incentive plan. Intellectual capital is Silvercrest's most important resource, and we intend to imminently make equity grants to the professionals who are building our business and executing our strategy. Attracting and motivating our professionals and working to align their long-term interests with those of our shareholders is fundamental to how we intend to grow the firm and compound value through this investment cycle and beyond. Look forward to taking your questions later in the call. Scott Gerard, our CFO, will now review the financials.