Scott Gerard
Thanks. As disclosed in our earnings release for the fourth quarter, discretionary AUM as of December 31, 2024, was $23.3 billion and total AUM as of the end of 2024 was $36.5 billion. Revenue for the fourth quarter was $32 million and reported consolidating that income for the quarter was $2.7 million. Revenue for the quarter increased year-over-year by $3.4 million or 12%, primarily driven by increased discretionary AUM resulting from net client inflows partially offset by market depreciation.
Expenses for the quarter increased year-over-year by $0.5 million or 1.7%, primarily driven by increased general and administrative expenses partially offset by decreased compensation and benefits expense. Compensation benefits expense for a quarter decreased year-over-year by $0.8 million or 3.4%, primarily due to a decrease in the accrual for bonuses.
Based on the increased recurrent cash compensation ratio over the past few years, due in part to the investment in the next generation of portfolio managers and other associates, we increased the amount of the interim variable compensation accrual during 2024 to narrow the adjustment in the fourth quarter. We intend to do the same accrual management in 2025.
Also, compensation and benefits expense for the quarter increase year-over-year as a result of increases in salaries due to merit-based increases and newly hired staff. General and administrative expenses increased by $1.3 million or approximately 18.5%, primarily due to increases in professional fees and portfolio and systems expense.
Reported net income attributable to Silvercrest or the Class A shareholders for the fourth quarter was approximately $1.6 million or $0.17 for 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 $5.1 million or 15.9% of revenue for the quarter.
Adjusted net income, which we define as net income without giving effect to non-core and non-recurring items and income tax expense assuming a corporate rate of 26% was approximately $2.9 million for the quarter or $0.21 and $0.20 for adjusted basic and diluted EPS respectively.
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 diluted, we had unrestricted, unvested restricted stock units and non-qualified stock options to the total shares outstanding to compute diluted, adjusted EPS.
Looking at the full year revenue ended the full year 2024, as an increased year-over-year by $6.2 million or 5.3% primarily driven by increased discretionary AUM resulting from market appreciation partially offset by net client outflows. Expenses increase year-over-year by $7.5 million or 7.5%, primarily driven by increased compensation and benefits expense and to a lesser extent increased GNA expenses.
Compensation and benefits increase year-over-year by $4 million or 5.6%, primarily due to increases in equity-based compensation, salaries due to merit-based increases and newly hired staff, and the accrual for bonuses. GNA expenses increased by $3.4 million or approximately 13.1%, primarily due to increases in professional fees, portfolio and systems expense, occupancy and related costs, and trade error expense.
Reported that income attributable to Silvercrest for 2024 was $9.5 million or a dollar per basic and diluted Class A share. Adjusted EBITDA was approximately $26.1 million or 21.1% of revenue for all of 2024. An adjusted net income was approximately $15.8 million for 2024 or $1.15 and $1.10 for adjusted basic and diluted EPS, respectively.
Quickly looking at the balance sheet, total assets were approximately $194.4 million as of the end of 2024 compared to $199.6 million as of the end of 2023. Cash and cash equivalents were approximately $68.6 million as of the end of 2024 compared to $70.3 million as of the end of 2023. There were no borrowings as of the end of 2024, and total Class A stockholder's equity was approximately $80.7 billion at the end of last year. That concludes my remarks. I'll turn it over to Rick for Q&A.
Richard Hough
Thanks very much, Scott. So, we'll take questions and have some extended commentary I think this morning.
Operator
Ladies and gentlemen, at this time we'll begin the question-and-answer session. (Operator Instructions)
Sandy Mehta, Evaluate Research.
Sandy Mehta
Yes, good morning. Congratulations on the strong organic inflows. Could you comment a little bit more on the pipeline amount, that you're seeing currently, also an update on OCIO in terms of where you are in assets and the outlook there.
And I understand that your pipeline does not include global prospects. A little bit more commentary on, do you see global inflows this year, 2025, and what are the opportunities there this year and next year? Thank you.
Richard Hough
Great, thank you, appreciate it, Sandy. First of all, on the pipeline, I believe, at the end of last year, we had a pipeline of $1.2 billion, that pipeline has now increased to $1.6 billion. That includes some wins out of the pipeline. So, the pipeline actually decreased due to some winds, did not include the global team, but for example, our growth, team in Milwaukee, which joined us in 2019, had, some really nice, inflows,
I think about $68 million to their strategies, net or $67 million net, in the fourth quarter and, we feel really good about that because we've got a transition and the leadership of that team and performance, in that particular strategy remains, strong.
With regards to, the pipeline overall, it includes a significant OCIO, mandate and we're seeing increased OCIO opportunities to answer your question about that, OCIO now stands at $1.6 billion, I definitely expect that to increase, during 2025 based on what I'm seeing.
I should comment, of course, that assumes steady markets and as we know, markets have been down recently. So, on a steady state basis where we stand today, I see a nice pipeline and, in an increase, there. I have included only about $100 million in the pipeline for, global, value, which you just asked about. Part of that is because the nature of measuring our pipeline is becoming a lot more difficult, and hard to measure
and so, I, we tried to add something for global value into the pipeline, but most of this, as you noted in your question is really about, the traditional, capabilities that we've had at the firm for some time. The -- I'll get back to global but let me talk about the pipeline for just a second, Sandy, I, because I think this is important.
For the past several years or many years we have defined the pipeline as either finals or semifinals in a search for the capability or an invite only search by an institution or consultants that we think is actionable in the next six months.
So, if we get a win, it falls out of the pipeline. If we get a lose, it falls out of the pipeline. If something in in terms of timing extends beyond the six months, it comes out of the pipeline. A couple of times over the past two or three years we've seen searches take longer than they used to, and we've had the pipeline come down because there wasn't, it wasn't going to happen in the next six months.
The problem with our measuring the pipeline now is that we are seeing way less RFPs that used to be a very important part of the business is filling out RFPs. It's just not being driven that way anymore. More typically, you present information to a consultant or institution you don't know really to what extent they have a search or not, and you get the phone call that you want something.
You don't necessarily even know you're in a finals or semifinals. It's just not working that way anymore. So, despite the size of the pipeline, which I think is very strong, and has increased, largely, according to those rules I gave you, it's becoming increasingly hard to measure and therefore it's going to be increasingly hard for us to give you apples to apples comparison to the to the past.
I don't know how we're going to resolve that, to be honest. I think we will start handicapping the opportunities we see and soft circling numbers, but that becomes a little fuzzier and less concrete than what we've given you before. This is part of the reason to get back to the global value equity team. This is part of the reason why we really haven't put the opportunity there into our pipeline.
As in the third quarter call last year, I was very optimistic about inflows, in part it's because I knew about the conversations we were having with potential seed investors for that capability, but I didn't think it would be realistic at that size of a seed and not knowing, what kind of conclusion we've come to put it into the pipeline at that time and sure enough it worked out for that team we built it from scratch.
We're really proud of having the quality of firm and infrastructure to attract the kind of talent that we did, with no AUM on the payroll and then to get off to the races with that with that investment. As I said in the third quarter, I think the opportunity for that team is in the billions and billions of dollars. When we can, garner that over the course of 2025 and '26 is a little up in the air which is not why it's in the pipeline, and of course our performance has to hang in there.
I'm pleased to report that so far in 2025, our performance is very good in that strategy, in part helped by international markets doing quite well as well as where, that's in that portfolio have been placed. I expect significant new inflows for that capability, this year. I think we will get, follow on institutional investors, from Europe and from Asia.
I will say that to give you an idea of the pipeline, the number of meetings, requests for information has been very strong, from people who can allocate very large sums of capital to the strategy. In addition, we have opened up new consulting relationships that have a much more global perspective that we haven't had at the firm,
and that includes within consulting firms, that we're mostly focused on our domestic capabilities. So, highly optimistic performance is strong, the potential is enormous, but it's a little hard for me to give you a figure, but I think what happened in the fourth quarter is just to start, and I expect to capitalize that in 2025 and throughout 2026. I think I covered all the bases for you, Sandy, but feel free to follow up.
Sandy Mehta
No, great, thanks, thank you so much. Just one last question on my side. The expenses, compensation expense, gene expense, is this the level that we should expect going forward for both those categories?
Richard Hough
Thanks. I would expect it for the foreseeable future. We've tried to be very careful about adjusting that compensation ratio every quarter. And to keep investors up to speed with how investments are panning out. We are taking a very close look at expenses elsewhere in the firm, and I think I'll get into this later, but I -- the innovations in technology and some of the productivity that we're seeing operationally eventually will help us lower that and fall to the bottom line.
It's a little premature to say that at this time. But I'm absolutely astounded by the potential for productivity gains, in the business over the medium term. And that, by that I mean through the end of 2026, '27, but I think for this year if we would be smart and prudent to conservatively say yes, expect it, expected at this level now.
Let's talk about investments in personnel. The team that we brought on board and the infrastructure around it is expensive. That was, of course a meaningful part of the increase in compensation, and we had no revenue to offset it until perhaps two weeks of the fourth quarter, end of December 2 weeks, and so we'll have a full year of revenue this year and that team is now, paying for itself.
Obviously, that doesn't get us down to, the compensation ratio that we would like to see yet, but in pretty short order, that will be a nicely profitable team at the firm, but we're making other investments as I pointed out. We're hiring other portfolio managers. It takes time for them to become highly profitable for the firm where we've hired a market and business development lead in the high-net-worth space.
We've never had a pure business development lead interestingly to open our, Atlanta office where we will be hiring PMs. We have added to, Singapore to get that effort going, and so we've got other initiatives, across the foreign firm, including institutional business development that we're going to be making, that will continue at least for the foreseeable future to lead to higher compensation expenses.
Obviously, I think this is money very well spent to increase our return on investment capital and we're excited about those opportunities but you, you're seeing a lot of initiatives kind of in those numbers all at once.
Sandy Mehta
Great. Thank you so much. All the best. Thank you.
Richard Hough
Thank you.
Operator
Christopher Marinac, Janney Montgomery Scott.
Richard Hough
Hey thanks. Good morning.
Christopher Marinac
Good morning. Hey, how are you? Good. I wanted to ask you and Scott about expenses just kind of continuing the conversation further, and what's the thought about operating leverage in the big picture? It's not as much about a given quarter as it is kind of where you're going this year, next year, and as you execute on the pipeline, do you still feel that you're going to get operating leverage on the sort of profitable, throughput, and then I have a follow up.
Richard Hough
I do. So, if Chris, if I were to run the company in a steady state without making personnel, investments, we would bump at least up back up into the high, 20s for an EBITDA margin. When we had really great bull markets, for our assets ending at 2021 and performance fees, we hit an all-time high of around 32% of EBITDA margin.
Given the leverage in the institutional business that we're seeing and the new opportunities, getting back there is absolutely within the realm of possibility. It's just going to take some time. If I were to remove some folks who are not yet profitable for the firm where we've made investments and just sort of run it with where we are, we would pop back up.
So, near the medium-term target, it would be to get back there assuming I cease investments, and just ran, a steady state business, but that's not going to serve our growth in the medium term.
Christopher Marinac
Got it. And this medium term possible as a 2026 target I not to get too specific but just sort of --
Richard Hough
Look if everything falls into place, I think it is, yes. I'm pretty careful, as about forecasting what that looks like, especially the high-net-worth side, and OCIO is a bit of a hybrid. It's a bit lumpy and hard to predict. I have actually more visibility into the institutional pipeline, but where we're headed directionally, that it could that alone could start to get us there.
Christopher Marinac
Great and then can you remind us about additional investments, just thinking I guess out loud about the global the global fund is there do you have everything in place for that now with the launch or is there additional hirings and therefore expense this year?
Richard Hough
Yeah. We have almost everything in place there'll be more expenses. We hired another analyst on that team after we brought over the initial team. There is business development needs there because there's just so much activity and coverage that we need to have in Europe, in Asia, in Australia, and by that, I'm not talking multiple hires here, but there's definitely a higher there.
We have a need for, more client relations support there. These aren't big numbers, at this stage, we hired new trader for that team. And we'll probably, I mentioned a client associate, we may need someone working on settlement, in addition to that. They're not big needle movers, but there is more investment to be made.
Christopher Marinac
Great. And last question for me just goes on. So, I guess, sort of the big picture from, geopolitical risk. It feels like it's been three years we've had this elevated geopolitical concern. Is that feeding more inquiries into Silvercrest and therefore more business opportunities or is that just noise and you still have your business plan separate from that?
Richard Hough
Yeah, great question. Obviously, the volatility globally increases some risk, but on balance it has benefited the firm and driven assets and interest to us as a solution. We, you may recall this, we are working with a significant family, maybe families now, but at least one very significant family in Poland. That came about after the Russian invasion of Ukraine and concern about what was happening in Eastern Europe.
That is an incredibly dynamic and growing economy of wealth. It is underserved by firms like ours. In fact, globally, the US is well ahead of, other places with regards to our fiduciary model for managing assets. So, on balance it's absolutely has a lot to do with our focus on serving other places and it was because of incoming inquiries and the fact that we have the tools to serve both these families as well as institutional investors.
I'm fairly optimistic, however, about the global scene, in the medium to long term, a lot of it is noise and obviously I'm hoping for some peaceful resolution like anyone would with what we're seeing happening globally, but at the end of the day, when people want to secure their assets and see them grow and have alternatives, given whatever situation they're in in their countries, that's going to benefit the United States and benefit firms, like ours.
The new consultant relationships we're seeing the new inquiries that we're seeing, the new conversations that we're having with families, yeah, is all quite meaningful. In fact, I will be going up likely to Poland myself, given the interest that we have there in early April. I will be in Asia at the end of April. Our business development team spent two weeks in Australia recently.
They will be spending at least a week, maybe two weeks in Europe, given the opportunities there. We are highly likely to be pursuing a license in the European Union right now. We can only receive incoming inquiries. We'd like to be more aggressive and pursue opportunities. So, that is something we will be working hard on in 2025 as well.
As I mentioned, we got our MAS license in Singapore that took years. It's important for us to be in that time zone. We started building that and really didn't talk about it on any earnings calls because we wanted to get it done. We wanted to assess the opportunity before we put more capital into it.
And honestly, I was a little concerned how that might be viewed by investors with what is Silvercrest doing extending itself to the other side of the world, given the nature of our business here in the United States? Well, of course we did that with the knowledge that we had ambitions to be serving wealth in Southeast Asia as well as knowing that the pools of money available to us
both on the wealth side and institutional side in Australia, now it makes total sense given the length of those economies and the need to be in in a time zone closer to Sydney and Melbourne. So, along with the talent there. So, that's now coming together and hangs together quite nicely for our future ambitions. I hope that thoroughly covers, kind of what you're getting at.
Christopher Marinac
No, it's great. Thanks a lot for the background and for hosting us all this morning.
Richard Hough
You're welcome.
Operator
(Operator Instructions)
Chris Sakai, Singular Research.
Christopher Sakai
Yes, hi, good morning. I just wanted to ask about -- Can you explain it? Are you -- what sort of hurdles are you facing, in this international expansion into these other countries, and how, is that adding to cost, and how are you facing any regulation?
Richard Hough
Hurdles? Yeah, so, I want to be careful about how it's characterized. We're not aggressively expanding into other countries with regards to our infrastructure. Singapore is really the only one right now outside of the United States. We've always been quite prudent with when we decide to go somewhere and careful with our capital. We will need to have a very compelling reason to physically be located somewhere.
The -- so really when we're talking about this, we're talking about flows into our capabilities from these other places which Silvercrest has always had. From day one we've worked with very significant European clients, and that's only grown. I think I've mentioned before, we have clients that are very meaningful to the firm in South America. In the Netherlands, we work with a number of very large industrial families in Germany,
that required zero infrastructure on the ground. What we're reaching now is the need really for getting over the regulatory hurdles you just mentioned with regards to the appropriate licenses in order to solicit business in certain countries. It's certainly a barrier in Europe, but I -- at this stage I don't necessarily need a physical location. I think there are going to be ways for us to do that.
And if we do it, we are likely, to do it in a very light way to start, and we'll do it because the opportunity presents itself to, create a profitable business. Singapore is a very business friendly place. Working with the regulatory regulators there was good. It just takes time and. We've gotten through those hurdles, without an issue, and I think this firm is of a size and quality in terms of our operations that we don't have a difficult time surmounting those hurdles for getting licensing.
We do extremely well in operational due diligence across the board in terms of our controls and infrastructure, consultants look at that very closely. Well, that translates very well in in terms of what the regulators look at it as well. So, it's just a part of doing business and I wouldn't say that it's, a headwind or significant, a challenge for this firm. We just need to work through it.
Christopher Sakai
Okay, great. So, can you explain, what are some of the things you're seeing in Atlanta that that draws you there? And am I getting the sense that there's greater growth opportunities outside the US? Is that a good way to think about it?
Richard Hough
There's two ways to think about this, or three. Number one, yes, there's very significant growth opportunities outside the US. The United States has a very robust and mature wealth management and asset management business from banks to multiple very large RIA serving the wealthy and others.
That's good. It's a very competitive environment. We've succeeded well in one of the most competitive environments in the world. Wealth is growing globally, arguably at a faster rate than it necessarily is within the United States. Obviously, Europe isn't growing particularly, fast, but there are lots of places in the world that is. You combine the fact that places like Europe or Australia or Asia are underserved by what I would call the RIA model.
That's opportunity for first movers who can bring capabilities like this firm to those places to garner, assets, to stand above others in the, in the field. In the United States, the economy is growing at 2%, let's just say, just around it. That typically means that wealth is growing at 2%.
Now it's, it may be going in larger segments to the wealthier as we know from wealth disparities, but generally speaking, you are moving business from one firm to another very often big banks, to Silvercrest. We get our opportunities at new wealth, but those opportunities, are just greater in number, as we look out across the world.
So, it's both growing wealth as well as a differentiated business model of places that where wealth is emerging or that is just lagging behind the United States with regards to kind of the way that firms like ours do business. So, it's a combination of those things. Next, to Atlanta and the United States.
In the United States, there's been a tremendous trend of rolling up, as a lot of smaller RIAs backed by private equity that has pushed multiples up on firms, and it makes it much harder to play the M&A game responsibly with investor capital. This firm has a history of being able to grow organically. We feel confident in our ability to do that and if we do an acquisition, we are going to be very selective.
It has to be a high-net-worth firm, with compatible culture in a money center growing city in the United States, that is a well-run business, that we think can then grow organically after we have merged. It's not going to be a question of us of just hoping for multiple accretion and doing an acquisition.
Atlanta and the Southeast is, among, if not the fastest growing region, in the United States, for wealth. So, we really felt the need to be there at the same time, in order to drive organic growth generally across the high net worth segment itself, Silvercrest, I felt we needed to get full time business development for that and, both to help our existing portfolio managers as well as to grow in a new region.
If you're not there, it's harder to do in a referral business and so, given our success and capabilities of what we have, we thought it was time to just go into one of those money center cities and do it ourselves, much better use of investor capital, not to pay out, tens and tens of millions of dollars potentially to be in a new city, when we can make a much smaller investment and grow organically.
Yes, in the short term that means hitting even dollar earnings. I've been talking about it for three years or two years before I even did it and now, we're executing on that plan.
Christopher Sakai
Okay, great. Thanks.
Operator
And ladies and gentlemen, at this time and showing no additional questions, I would like to turn the floor back over to Rick Huff for closing remarks.
Richard Hough
Right, thank you so much and thank you everyone for joining us. As you can tell from my comments, not unlike the third quarter, I'm very enthusiastic about the initiatives we're taking and the potential for growth at the firm at an organic level. We have a large pipeline; we will continue to update you on how we're measuring that.
I'm highly optimistic about what we can do with the global value equity team. Just the fact that we're getting traction is raising our visibility, globally in a way, that is very intentional. As I said in my very opening remarks, our strategy has always been to hire and build very strong intellectual capital at the firm that, is proof of thesis to our very large families in OCIO, and the wealth management business about the quality of the firm of what we're doing as an asset management firm.
And it's allowing us to take new initiatives, that should, compound the organic growth and provide us over the medium terms very nice, returns, so I look forward to updating you on these initiatives, as it works out over time, the.
The patience of our investors with regards to investments is already starting to be borne out which we greatly appreciate and.
I think you know it will be quite enlightening as we go through 2025 directionally.
I think there's one more investor question which I'm happy to take. Sorry to interrupt my concluding remarks there.
Operator
Peter Katz, Herold & Lantern Investments.
Peter Katz
Hi Rick. Hi Scott. Congratulations on the progress you're making. I am a long-term investor. I just find, just as a follow up, your thoughts on dividend and buyback policy.
Richard Hough
Thanks Peter. Yeah, I mean we have no debt and a lot of cash, and we have always felt in this business, especially at a small company like ours that it's very important to return capital to our investors and we have a history of doing that.
In the past when I've been asked about our cash and dividends, or buybacks, I have cautiously conveyed that there can be a use for cash that becomes very apparent. If we were to do a deal you may recall as a longtime shareholder we were going into 2019 with a significant amount of cash and that and some debt was used for our merger with Cortina, which was very good for the for the company and highly creative.
That possibility is always out there and so I want to be careful about how we think about it. We did feel it was appropriate once again to do a buyback and we're working through that in the markets. We think long term that's a very good use of capital and we will continue to look at buybacks. As we move along here depending on at our alternative use of capital are.
As you can imagine we're in discussions we haven't talked about M&A in a while but we're in discussions all the time with firms and so that is a possibility and a possibility for the use of our task. In the meantime, we're going to organically grow the company but we're in a position where we feel we can continue to return capital that way we will.
And I think it's been good, and we like it. So, I'm not trying to say we're going to do more right now. We're still working from what we announced previously but it's always under consideration. Number one, on the dividend, we think it's important to continually pay that out at a high level, to make sure that this stock is providing a very good yield to yield to our investors over the years, and we want to do it in a prudent way.
Our general goal, Peter, is to keep it high, which it is and to increase it, but at a rate where we feel even with the dramatic downturn in markets. And therefore, revenue we can still sustain it for a good period of time, and I would say at this level we can, the market could really fall off along with our revenue and we would not have to change the dividend policy for an extended period of time.
We're comfortable with our payout ratio, but I hope that gives you some idea of how we're looking at it because I do think given the small size of our company, the fact that it's a financial and it's a small cap value stock, and we know how the small cap value in general has done compared to large cap growth in other parts of the market, it's very important to return capital and pay a high dividend to our investors who are long term investors like yourself.
Peter Katz
Terrific. Thank you.
Richard Hough
You're welcome. Are there any other questions?
Operator
And once again I am not showing any additional questions at this time.
Richard Hough
All right, thank you. And I think I made my concluding remarks. So, I just thank everyone for their time and attention this morning. I look forward to speaking with you in the next quarter.
Operator
And with that ladies and gentleman, we will conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.
