Good morning, and welcome to the Silvercrest Asset Management Group Inc. Third Quarter 2025 Earnings Conference Call. Please note that the event is being recorded. Before we begin, let me remind you that during today's call, certain statements made regarding our future performance are forward-looking statements. They are based on current expectations and projections, which are subject to a number of risks and uncertainties, and many factors could cause actual results to differ materially from the statements that are made. Those factors are disclosed in our filings with the SEC under the caption Risk Factors. For all such forward-looking statements, we claim the protections provided by the Litigation Reform Act of 1995. All forward-looking statements made on this call are made as of the date hereof, and Silvercrest assumes no obligation to update them. I would now like to turn the conference over to Rick Hough, Chairman and CEO of Silvercrest. Please go ahead.

Good morning, and welcome to the third quarter 2025 earnings call. Our discretionary assets under management (AUM), which primarily drives the firm's top line revenue, increased $687 million during the third quarter, primarily due to the beneficial equity markets. Silvercrest added $46.4 million in organic new client accounts during the third quarter and has added $564 million in new client accounts through the third quarter of 2025. Despite overall negative flows during the quarter, closed accounts were immaterial, and new client account flows remain on pace to register one of the stronger levels of organic new client flows over the past several years. Silvercrest has added approximately $2 billion in organic new client accounts year-over-year, and we are primarily focused on organic new client acquisition and discretionary AUM as a result of our previously announced and ongoing heavy investments in growing the business. Discretionary AUM now stands at $24.3 billion, which is a 3% sequential quarterly increase and an increase of 8% year-over-year. Assuming supportive markets and continued business development, we hope discretionary AUM will exceed all-time highs in the coming quarters. Total AUM at the end of the third quarter did hit a new high for the firm at $37.6 billion. Of that total, reported nondiscretionary AUM at quarter end comprised $13.3 billion. These nondiscretionary AUM are associated with only 4% of total revenue, mostly comprising fixed fee reporting and family office services. These assets have more than doubled over the past few years, which artificially lowers the apparent average basis points we receive for advising on AUM. To better relay the average basis points of our asset management and advisory businesses, we expect in 2026 to adjust how the firm reports nondiscretionary AUM. This will substantially lower that nondiscretionary AUM on a onetime basis without any revenue effect, providing a clear picture of the business. Barring short-term market volatility, the increase in AUM bodes well for future revenue as Silvercrest primarily bills quarterly in advance. As previously announced and emphasized, Silvercrest has embarked on significant strategic investments to promote growth opportunities. As it takes time for those investments, primarily in intellectual capital and headcount, to bear fruit, our earnings and adjusted EBITDA are substantially lower than the steady-state business and reflect our concerted effort to invest capital to support our long-term strategic priorities. Our strategic initiatives highlight Silvercrest in both the institutional and wealth market. The firm continues to invest in talent across the firm to drive new growth and successfully transition the business toward the next generation. Our new business pipeline remains robust, in particular with regards to our new global value equity strategy. Also, as previously discussed, Silvercrest will continue to adjust our interim compensation ratio to match important investments in the business as long as we have compelling opportunities to organically grow the firm and build our return on invested capital. With important initiatives for marketing in Europe, Oceania and Asia as well as in U.S.-based personnel, our compensation ratio will remain elevated for the foreseeable future. We previously announced a new buyback program of $25 million in May 2025. As of the end of the third quarter of 2025, we have repurchased approximately $16 million worth of shares. Our strong balance sheet supports ongoing capital returns, our substantial dividend as well as our growth initiatives. Silvercrest also previously received shareholder approval to increase the number of shares issuable under our equity incentive plan. We expect to begin rewarding shares to further motivate our professionals in the near future. We announced a dividend of $0.21 per share of Class A common stock, and that dividend will be paid around December 19 to stockholders of record. With that, I will turn things over to Scott Gerard to discuss our financials, and then we will take questions. Thank you.

Thank you, Rick. As disclosed in our earnings release, for the third quarter, discretionary AUM as of September 30 of this year was $24.3 billion, and total AUM as of the same date was $37.6 billion. Revenue for the quarter was $31.3 million and reported consolidated net income for the quarter was $1.1 million. Looking at the third quarter, revenue for the quarter increased $0.9 million or 2.9% year-over-year. Expenses for the quarter increased year-over-year by $4 million or 15.4%, primarily driven by increased compensation and benefits expense and general and administrative expenses. Compensation and benefits expense for the quarter increased year-over-year by $3.1 million or 16.8%, primarily due to increases in salaries and benefits expense, primarily as a result of both merit-based increases and new hires and an increase in the accrual for bonuses, partially offset by a decrease in equity-based compensation. General and administrative expenses increased by $0.9 million or approximately 11.9%, primarily due to increases in professional fees, occupancy and related expenses and recruiting costs, partially offset by decreases in shareholder expenses and trade error expense. Reported net income attributable to Silvercrest or to Class A shareholders for the third quarter was approximately $0.6 million or $0.07 per basic and diluted Class A share. Adjusted EBITDA, which we define as EBITDA without giving effect to equity-based compensation expense and noncore and nonrecurring items, was approximately $4.5 million or 14.5% of revenue for the quarter. Adjusted net income, which we define as net income without giving effect to noncore and nonrecurring items and income tax expense, assuming a corporate rate of 26%, was approximately $2.4 million for the quarter or $0.19 per adjusted basic and diluted earnings per share. Adjusted EPS is equal to adjusted net income divided by the actual Class A and Class B shares outstanding as of the end of the reporting period for basic adjusted EPS. And to the extent dilutive, we add unvested restricted stock units and nonqualified stock options to the total shares outstanding to compute diluted adjusted EPS. Looking at year-to-date September 30 of this year, revenue increased year-over-year by $1.7 million or 1.8%, primarily driven by market appreciation and partially offset by net client outflows. Expenses for the 9 months ended September 30 of this year increased year-over-year by $7.1 million or 9.4%, primarily driven by increased compensation expense and general and administrative expenses. Compensation expense for the 9 months ended September 30 this year increased year-over-year by $4.6 million or 8.5%, primarily due to increases in salaries as a result of both new hires and merit-based increases in addition to an increase in the accrual for bonuses, partially offset by a decrease in equity-based compensation expense. General and administrative expenses increased by $2.5 million through the 9 months ended September 30 this year or approximately 11.7%, primarily due to increase in professional fees, occupancy and related expenses, portfolio and systems expense and travel and entertainment expenses, partially offset by a decrease in trade error expense. Reported net income attributable to Silvercrest or again, the Class A shareholders for the 9 months ended this year was approximately $5 million or $0.56 per basic Class A share and $0.55 per diluted Class A share. Adjusted EBITDA was approximately $16.8 million or 18% through the end of September of this year. Adjusted net income was approximately $9.6 million or $0.77 and $0.74 per adjusted basic and diluted EPS for the 9 months ended September 30 this year. Looking at the balance sheet, total assets were approximately $157.6 million as of September 30 of this year compared to $194.4 million as of the end of last year. Cash and cash equivalents were approximately $36.1 million as of September 30. This compared to $68.6 million at December 31 of last year. There were no borrowings as of September 30. Total Class A stockholders' equity was approximately $58.9 million at September 30. And during the third quarter, we repurchased approximately $4.6 million worth of Class A shares. That concludes my remarks. I'll now turn the call over for Q&A.

Thank you, Scott. We'll take questions at this time.

And our first question will come from Christopher Marinac of Janney Montgomery Scott.

Just want to talk a little bit about calibrating the timing of when the AUM and revenue kind of hit various points to get back to leveraging the expenses that you're having now. I understand the comment on the compensation that you mentioned in the remarks. And I just want to understand, do we think about this as maybe an 18-, 24-month time frame? Or is it any way to kind of give visibility on that?

Yes. So that's a great question. And obviously, we have multiple investments going on. So it depends on the time horizon for each one. Just very briefly, we have domestic expansion efforts. We are active in Asia/Australia. We are opening an Australian investment trust there. In order to get flows, we are working on our MiFID II with the Central Bank of Ireland in order to face Europe and actively market there, both to existing clients as well as to new institutional and family clients. And all of that also includes new marketing professionals, investment team here, et cetera. That is all on a short-term basis, kind of occurred, let's just call it over the past 1.5 years in its bulk. Our headcount has gone up by about 15 to 20 people, I think it's exactly 15 people, say, over the past year-over-year. So that's a lot of hires and quite recent, even though we've started hitting EBITDA and earnings for these investments prior to that. The bulk of it has been quite recent. So when you put it all together, yes, you're looking at a longer time horizon of 18 to 24 months. However, we are done primarily with the investments we made in institutional marketing as well as in our global value equity team. And I expect flows for that in a much shorter term than that. The pipeline is very large. And so I would look to that more like 6 months to 12 months, and we could see even some reasonable allocations in the fourth quarter or first quarter coming up here, which would obviously cover about 6 months. So all things being equal, that would start to creep into the profit side and start increasing the EBITDA and earnings on that basis alone. But there's still other investments to go. So the longer time horizon is probably more realistic. What I look forward to is really being able to report substantial progress that those investments will be making. The potential is very large. And I'm quite confident that it is going to pay off and that we will be able to report meaningful progress soon.

Great. The progress was evident in the last quarter. One related question concerns the professional fees mentioned in the press release. Are any of those temporary? Or will there be new professional fees to address in future periods?

Yes, Chris, some of them are temporary, particularly those related to our global initiatives. In our earnings release and 10-Q, we provide a reconciliation from GAAP numbers to non-GAAP, where we identify those nonrecurring items and add them back. This disclosure can give you an idea of what is temporary.

Okay. Great. And then, Rick, to the extent you can comment on this, as you look out a couple of years, do we get back to where the EBITDA margin was? Does the EBITDA margin get recast because it's now going to be a different company with a different broader focus?

Yes, you look out further and it gets back to where it was barring any other new investments. Of course, where it was before included ongoing investments that were just on a much smaller scale. And we have a lot of wood to chop. So I expect we'll be getting back to that over that time frame. It's really just more about organically building completely new things here. If I were to strip everything away that we have done over the past 1.5 years, 2 years, we would be at a really historic EBITDA and earnings level.

Next question comes from Sandy Mehta of Evaluate Research.

The global strategy has performed very well over the last five years, including one, three, and five-year outlooks. You mentioned having a large pipeline, which presents interesting dynamics. The U.S. makes up 73% of MSCI World, which isn't favorable for global strategies. However, EAFE and emerging markets have outperformed the U.S. this year by two times. This trend is promising for the global outlook. Can you provide more insights on what you’re observing from a marketing perspective, the pipeline, and feedback from clients or consultants regarding global strategies?

I appreciate your question. There are two important points to highlight. First, I've concentrated on the considerable opportunities within the global value portfolio due to its substantial allocations and its novelty at the firm. This focus has influenced my comments. This is also the strategy that received significant backing from a large Australian superannuation fund about nine months ago, which is the performance you mentioned. Since that investment, its performance has been very strong, demonstrating to investors and potential clients that this is a strategy worth considering, especially considering the trends you've pointed out. The strategy has the flexibility to adjust its allocations and adapt against the benchmark to seek relative value and outperformance. In addition, we have other international equity strategies that concentrate solely on investments outside the U.S., in both developed and emerging markets. Those markets have been performing well, and I'm happy to report that these capabilities, managed by a different investment team, have also been successful and attracting interest from investors, creating a growing pipeline. Although the mandates in those areas are not as sizable and differ somewhat, they hold potential as well. Together, these two strategies—covering global and emerging markets—paint a favorable picture for the firm. Regarding our new centralized institutional marketing team and process, they have been actively engaging with substantial sovereign wealth funds, including other Australian superannuation trusts, as well as retail and retirement asset pools. We are receiving interest from Europe and the world's largest consulting firms. Our strategies rate highly in terms of performance, compliance, and the quality of the firm we've developed. Despite being a relatively small asset manager, Silvercrest garners considerable attention for its intellectual capital. For instance, I recently noted that one of our investment policy team’s articles was among the most read within a major consulting firm's internal distribution. About the pipeline, it's not easily quantifiable in the same way it used to be. We previously had strict criteria for what we would discuss on earnings calls regarding the pipeline, such as being in finals or semifinals for proposals or expecting decisions within a six-month timeframe. The consulting industry and marketing dynamics have significantly changed since 2020, gradually making it more challenging for us to measure these aspects accurately. As a result, I'm hesitant to provide the strong numbers we once did. However, I believe the pipeline is quite substantial, especially in those international and global areas, and I am optimistic, as I mentioned earlier. I will share more concrete numbers as I gain insight into how things are progressing. It's important to note that we've hired a professional with a strong background in institutional client relations from a competitor. His experience, particularly in Australia and London, has already proven to be very beneficial. I hope this information helps, and I'm happy to provide further details if needed.

Yes. Yes, yes. Sure. And you already talked about expenses, and you said that you hired 15 key hires. The new hires, is most of the hiring done at this point of the senior people that you were hiring? Is that pace of incremental hires? Is that going to slow down?

We have made significant progress in establishing the new equity strategy and building our institutional team, including the necessary support for trading and marketing analysis. However, we still have various initiatives underway, which will result in new hires in Europe, Asia, and domestically within the wealth division. We are not finished yet. As these initiatives expand and our earlier investments start generating revenue, the impact on our earnings and EBITDA will be less pronounced due to the cash flow we will have to support these efforts. Previously, during a strong investment phase, we continued to hire and invest without negatively affecting our earnings or EBITDA. As we move forward, depending on the timing of these major developments, the effects of our investments may not be as obvious. A few years ago, before COVID, we invested in new portfolio managers and across our business without impacting our EBITDA, thanks to strong growth and cash flow. I expect this trend to accelerate as we start seeing revenues from our current initiatives.

And where are you in terms of OCIO assets, currently?

OCIO currently stands at nearly $2.2 billion and has a very robust pipeline. I typically refrain from discussing wins until the next quarter, but we recently welcomed a new foundation worth approximately $70 million, which joined us around October 1 or 2. Therefore, it won't be reflected in this quarter's numbers. I anticipate more successes from that team. Additionally, the performance of the OCIO portfolio, which is benchmarked against our peers, is exceptionally strong. They have outperformed significantly, which greatly supports us alongside our unique service model.

And one last question from my side. Your share count has declined 11% year-over-year. You had the $16 million buyback. Do you disclose what price you bought the stock? Or can I ask you whether it's more at the $16.5 level or more at the $14.5 level?

We don't disclose the price. However, we believe it has been a very favorable price. In our last call, we mentioned that we executed some significant block trades shortly after the announcement. If you look at the price in June, you can get a good sense of a couple of those block trades. We've been active in the market throughout this period, so you can assume that from the end of June through August and September we were buying back stock. But we don’t disclose the price. I believe we have about $8 million or $9 million remaining in that regard. Is that correct, Scott?

Yes, that's correct. Yes.

There are no further questions at this time. So that will conclude our question-and-answer session. I would like to turn the conference back over to Rick Hough for any closing remarks.

Right. Thank you very much for joining us for this third quarter of 2025 review. As you saw from my business update and the questions, thank you, Sandy and Christopher. This is a critical juncture for the company in terms of our investments. But hopefully, I convey that I expect those investments to pay off for this firm with some progress in the short term in getting back to more elevated levels of earnings and EBITDA as we move further along into 2027 and 2028. The efforts that we have taken to find really talented professionals to enhance our offerings and to grow the visibility of the firm, not just here in the United States, but in other markets with large pools of capital has been very important to us, and I think will have benefits into the future. Thank you again, and we look forward to discussing the fourth quarter and year-end.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.