Good morning and welcome to the Silvercrest Asset Management Group Inc. Q3 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. Before we begin, let me remind you that during today's call, and many others. For all such 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 thanks for joining us for our third quarter 2026 results. Silvercrest continued its strategic initiatives during the third quarter and we continue to progress with the plan we have described over the past two years. Discretionary assets under management, which drives the firm revenue, decreased $939.2 million during the third quarter to $23.8 billion, primarily due to weaker markets. Of that, $753 million had a revenue effect. The third quarter's weaker markets followed unusually strong second quarter markets, with the result that capital growth has contributed $1.7 billion in new AUM this year to date. Net flows for the quarter were essentially flat at $58.3 million. Silvercrest added $182.2 million in organic new client accounts, which was the best quarter during 2026, and our net flows included an affirming $373 million follow-on investment in the firm's global value equity strategy. Offsetting outflows during the quarter were primarily attributable to seasonal high net worth client withdrawals for tax payments, as well as some institutional outflows. While total AUM stands at $36.2 billion, we have discussed in prior quarters that non-discretionary AUM are associated with a small portion of revenue, as most of non-discretionary AUM represents flat fee family office and related services. Therefore, changes in the level of non-discretionary AUM do not correlate to revenue change. We will adjust how the firm reports non-discretionary at the end of the first quarter of 2027, likely eliminating the non-discretionary AUM category altogether. This adjustment will substantially lower reported non-discretionary and total AUM on a one-time basis, but without revenue effect. We seek to provide investors with a clear picture of the discretionary AUM and the flows and economics that drive our business. Year-to-date, revenue increased 2% year-over-year, reflecting a recovery in average AUM levels weighed down by first quarter outflows. Our estimated annual run rate increased by a similar percentage year-over-year since September 30, 2025. We announced during the third quarter that we received our full MIFID license through the Central Bank of Ireland. We also opened our Dublin office to serve both high net worth and institutional clients in Europe. With the completion of our Atlanta and Dublin offices, our usage fund, the Australian Trust, and regulatory licensing, we do expect administrative and legal costs associated with these initiatives to decline and begin contributing revenue. Our institutional pipeline has continued to grow substantially and remains robust, particularly in our global and international equity strategies, which continue to deliver exceptional performance. Our pipeline quality has also improved with more possible AUM, as well as in number of opportunities. We completed progress on building our global infrastructure and distribution for our current revenue push. We also have achieved important third-party ratings for our strategies and vehicles, and we continue to seek additional ratings with major global consultants to further open institutional distribution channels. 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 $62.9 million, representing 66.3% of revenue for the nine months ended September 30, 2026. As we have consistently communicated, our earnings and adjusted EBITDA reflect the deliberate costs of the most significant investment program in the firm's history, and we expect the compensation ratio to remain elevated as these investments mature. Also, we have discussed with and reminded investors shareholders approved of an increase in the number of shares issuable under our equity incentive plan. Intellectual capital at Silvercrest is Silvercrest's most important resource, and we've made substantial investments in excellent talent. 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. On October 28, the company's board of directors declared a quarterly dividend of 21 cents per share of Class A common stock. The dividend will be paid on or about December 18, 2026 to stockholders of record as of the close of business on December 11, 2026. Those are my preliminary remarks on the business. Scott Gerard, our CFO, will speak to the financials and then we'll be available for questions. Thank you.

Great. Thanks, Rick. Discretionary AUM as of September 30th of this year was $23.8 billion and total AUM as of September 30th was $36.2 billion. Revenue for the quarter was $32.7 million and reported consolidated net income for the quarter was $1.2 million. Looking at the quarter, revenue increased year over year by $1.4 million, primarily driven by an increase in the average annual management fee. Expenses for the quarter increased year over year by $0.8 million, or 2.9%, primarily driven by increased general and administrative expenses, partially offset by a decrease in compensation and benefits expense. Compensation and benefits expense for the quarter decreased year over year by 0.5 million, or 2.1%, primarily due to a decrease in the accrual for bonuses and severance, partially offset by increases in salaries and benefits expenses, primarily as a result of merit-based increases in new hires, including new staff in Ireland, and increased equity-based compensation expense. General and administrative expenses increased by 1.3 million, were approximately 16%, primarily due to increases in professional fees, travel and entertainment expense, and portfolio and systems expense. Reported net income attributable to Silvercrest or the Class A shareholders for the quarter was approximately 0.6 million, or $0.08 per basic and diluted Class A share. Adjusted EBITDA, which we define as EBITDA without giving effect to equity-based compensation expense, and non-core non-recurring items was approximately 4.4 million or 13.5% of revenue for the quarter. Adjusted net income, which we defined as net income without giving effect to non-core non-recurring items and income tax expense assuming a corporate rate of 26% was approximately 1.9 million for the quarter or 16 cents per adjusted basic and diluted EPS. 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 non-qualified stock options to the total shares outstanding to compute diluted adjusted EPS. Looking year to date, revenue increased year over year by 1.5 million also driven by an increase in the average annual management fee. Year-to-date expenses increased year-over-year by 7.6 million or 9.2% driven by increased compensation and benefits expense and general and administrative expenses. Year-to-date compensation benefits increased year-over-year by 3.5 million or 5.9% primarily due to increases in salaries and benefits primarily as a result of both merit-based increases in newly hired staff, as well as an increase in the accrual for bonuses, equity-based compensation, and severance expense. Year-to-date general and administrative expenses increased by $4.1 million, or approximately 17.2%, primarily due to increase in professional fees, occupancy and related expenses, travel and entertainment expenses, and portfolio and systems expense. Year-to-date reported net income attributable to Silvercrest or to Class A shareholders was approximately 1.1 million or 14 cents per basic and diluted Class A share. Year-to-date adjusted EBITDA was approximately 11.6 million or 12.2% of revenue. Year-to-date adjusted net income was approximately 4.6 million or 38 cents per adjusted basic and diluted EPS. Looking at the balance sheet, Total assets were approximately $146.3 million as of the end of September of this year, compared to $166.6 million as of the end of 2025. Cash and cash equivalents were approximately $27.8 million as of the end of September, compared to $44.1 million at the end of last year. Borrowings totaled approximately $9 million as of September 30th, Total Class A Stockholders' Equity was approximately $45.5 million at the end of September of this year. That concludes my remarks, and I'll now turn it over for Q&A. And thank you very much, Scott.

You're welcome. Welcome questions at this time. Thanks.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we'll pause momentarily to assemble our roster. The first question comes from Sandy Meadows with Evaluate Research. Please go ahead.

Hi, this is Ashish coming from Evaluate Research. I'm speaking on behalf of Sandy. He's on a flight, so I'll be taking two questions on his behalf. So the first question is regarding the staff setup. So is the staff setup in Asia and Europe in place as of now, or what is the status for the same?

You know, our speaker's a little distorted in this room, and so if you could repeat your question one more time, we're going to turn the speaker down so I can fully understand it. Thank you.

Yeah, yeah, I'll repeat it again. So the first question is regarding the staff setup. Is the staff setup in Asia and Europe in place as of now? And what is the status regarding the same?

Okay, so in Europe, where we've opened the Dublin office, we've largely completed our hiring and the staff setup there. That includes representative for our institutional capabilities as we've completed the USITS fund in Ireland and other efforts facing Europe. With regards to the high net worth capability, in order to get our full MIFID license through the Central Bank of Ireland, we had to fully staff. We may be hiring one more individual there for the investment team, but largely complete and they're off and running now that everything is complete. So that effort with that office opening in the third quarter is just fully starting. With regards to Asia, we will have an announcement in the first quarter with regards to head of office there for the high net worth business. We're going to be assessing what our needs are and therefore aligning the staffing required But we do have our licensing there and did our initial hiring already. That's in its early stages. With regards to other work, we have somebody in Australia working on distribution in South Asia, Japan, Australia. We have other domestic needs, but it's going to be rolled out on a slower basis than it has been to date. So as I mentioned in my business update, we're starting to get to the end of the investment period on the personnel side. There are going to be some bits and pieces across the firm, but also other changes. So you're just going to see a dramatic change in that. And the real expectation is now for revenue to start having an effect based on these investments and therefore lowering, hopefully, The percentage of compensation that is being spent out of revenue. 2027 is going to be an important year for that.

Got it. Thank you. One more question, please. So the second question is regarding the value strategies. So the value strategies have had challenging performance. Can you give us broad reason for that?

Yes, a lot of the challenging performance has to do with index construction versus the index, which are extremely heavily weighted towards lower quality companies. We tend to invest in very high quality companies, as well as to an extraordinary concentration among very few companies. This is true of many, many different indices, so it depends what value strategy you're looking at. We have talked about challenges. For the institutional business that we have there in the past, it seems like that has slowed. And we also have seen a lot of our consultants, investors understand how our portfolios are constructed. They're seeing these challenges for a lot of active managers. Right now, and they're in our strategies for a reason, which is tilt towards value and therefore quality. That team is looking very hard, but they are not going to be changing their processes. They're looking to prove how they do things, but it has been proven time and again that if we stick to our knitting, stick to our fundamental research, and build our portfolios around high-quality companies, that inevitably we perform well. We've seen other periods of underperformance going into the global financial crisis during the tech bubble and a couple other periods. It's been in a very, very unusual period of time since the global financial crisis for value investors. The disparity between growth and value has persisted much longer than ever before and is much wider than ever before among other attributes.

Correct. Thank you and all the best. You're welcome.

Again, if you have a question, please press star then 1. This concludes our question and answer session. I would like to turn the conference back over to Rick Hough for any closing remarks.

Thank you. Thank you very much for joining us and appreciate the time this morning. I think we covered a lot in my business update with regards to what we're trying to do and accomplish and we've been discussing this for some period of time including well before we started this heavy investment period two years ago. We're facing the tail end of that and we're quite excited about the pipeline that we have The objective now in 2027 and going forward is to really see the fruits of those investments benefiting the firm and our shareholders. Thank you very much. I'm always available for conversations, as many of you know, and look forward to following up. We'll talk to you next quarter. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.