Q1 2024 AlTi Global Inc Earnings Call

Please standby we are about to begin.

Operator: Please stand by; we are about to begin. Good morning, my name is Sherry, and I will be your conference operator today. At this time, I would like to welcome everyone to ALTI's first quarter 2024 earnings conference call. During the call, your lines will remain in a listen-only mode. After the speaker's remarks, there will be a question and answer session. I'd like to advise all parties that this conference call is being recorded, and a replay of the webcast is available on ALTI's Investor Relations website. Now, at this time, I'll turn things over to Lily. Arteaga, the head of investor relations for AltE, please go ahead.

Sherry: Good morning, My name is Sherry and I will be your conference operator today at this time I would like to welcome everyone to <unk> first quarter 'twenty 'twenty four earnings conference call.

Speaker Change: During the call your lines will remain in a listen only mode.

Speaker Change: After the Speakers' remarks, there will be a question and answer session.

Speaker Change: I'd like to advise all parties at this conference call is being recorded and a replay of the webcast is available on all T. Its investor Relations website.

Speaker Change: Now at this time, I'll turn things over to Lilly.

Lilly: Our teacher head of Investor Relations for all T. Please go ahead.

Lilly: Good morning to everyone on the call today joining me. This morning are Michael Freedman, our CEO and Stephen yard our CFO. We invite you to visit the Investor Relations section of our website at Www Dot I'll cheat Dash global Dot com to view, our earnings materials, including our App.

Lily Arteaga: Good morning to everyone on the call today. Joining me this morning are Michael Tiedemann, our CEO, and Stephen Yarad, our CFO.

Lily Arteaga: We invite you to visit the Investor Relations section of our website at www.alt-global.com to view our earnings materials, including our updated investor presentation. I would like to remind everyone that certain statements made during the call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, Expect, Future, Intent, May, Plan, and Will are similar words.

Lilly: Jade at Investor presentation.

Lilly: I would like to remind everyone that certain statements made during the call maybe deemed forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Lilly: Forward looking statements can be identified by the use of words, such as anticipate believe continue estimate.

Lilly: <unk> future.

Lilly: And my plan and will or similar words.

Lily Arteaga: Because these forward-looking statements involve both known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. All Q assumes no obligation or responsibility to update any forward-looking statement.

Lilly: These forward looking statements involve known and unknown risks and uncertainties. There are important factors that could cause actual results.

Lilly: They differ materially from those expressed or implied by these forward looking statements. All she assumes no obligation or responsibility to update any forward looking statements.

Lily Arteaga: During this call, some comments may include references to non-GAAP financial measures. Full reconciliations can be found in our earnings presentation and our related SEC filings. As I mentioned, we filed an updated investor presentation earlier today. With that, I'd like to turn the call over to Mike.

Lilly: During this call. Some comments may include references to non-GAAP financial measures.

Lilly: Reconciliations can be found in our earnings presentation, and a related SEC filings as.

Lilly: As I mentioned, we filed an updated investor presentation earlier today.

Lilly: With that I'd like to turn the call over to Mike.

Michael Glenn Tiedemann: Thank you, Lily, and thank you all for joining us this morning. The first quarter of 2024 will serve as a catalyst for ALTI in the quarters and years to come. During the quarter, we established groundbreaking strategic partnerships, progressed our growth strategy, and importantly, further streamed away from non-core assets and strategies to focus on stable, recurring revenue businesses. We have immense traction across both our core operations and our M&A pipeline, as you can see through the two deals we announced since our last call less than 60 days ago.

Mike: Thank you Lily and thank you all for joining us this morning.

Mike: The first quarter of 'twenty 'twenty four will serve as a catalyst for ultra in the quarters and years to come.

Mike: During the quarter, we established groundbreaking strategic partnerships progressed, our growth strategy and importantly, further streamlined away from noncore assets and strategy is to focus on stable recurring revenue businesses.

Mike: We have a men's traction across both our core operations and our M&A pipeline as you can.

Mike: Can see through the two deals we announced since our last call less than 60 days ago.

Michael Glenn Tiedemann: Today I'm going to share more details on our Q1 results and the progress we are making towards our long-term goals and growth initiatives. Excluding LXI, we have grown our consolidated assets under management and advisement by 10% over the past 12 months to $71 billion. In the first quarter, ALTI generated revenues of $51 million. Importantly, 96% of the revenues in the quarter were from recurring fees.

Mike: Today, I'm going to share more details on our Q1 results.

Mike: And the progress, we're making towards our long term goals and growth initiatives.

Mike: Excluding Alex we have grown our consolidated assets under management and advisement by 10% over the past 12 months to 71 billion.

Mike: In the first quarter <unk> generated revenues of 51 million.

Mike: Fortunately, 96% of the revenues in the quarter were from recurring sheets we.

Michael Glenn Tiedemann: We reported net income of $22 million, adjusted EBITDA was $7 million, and the adjusted EBITDA margin was 13%. Turning to our segments, in Wealth Management, we reported 17% AUM growth in the last year, largely boosted by strong market performance and acquisitions closed in 2023. This robust growth will be further enhanced throughout 2024 as we integrate our recently announced acquisitions. In April, we announced the acquisition of Easton Advisors, which adds nearly $6 billion of AUM to our wealth management platform.

Mike: We reported net income of $22 million adjusted EBITDA was $7 million and the adjusted EBITDA margin was 13%.

Mike: Turning to our segments in wealth management, we reported 17% AUM growth in the last year, largely boosted by strong market performance and acquisitions closed in 2023.

This robust growth will be further enhanced throughout 2024, as we integrate our recently announced acquisitions.

Mike: In April we announced the acquisition of eastern advisers, which adds nearly $6 billion of AUM to our wealth management platform.

Michael Glenn Tiedemann: Headquartered in New York, East End boasts a strong investment record and an experienced team that will densify our operations in key regions across the U.S. Additionally, East End enhances our outsourced Chief Investment Officer, or OCIO, capabilities as we seek to capitalize on that growing market.

Mike: Headquartered in New York, Houston, boast, a strong investment record and an experienced team that will densify our operations in key regions across the U S.

Mike: Additionally, eastern enhances our outsourced chief investment officer.

Four O CIO capabilities as we seek to capitalize on that growing market.

Michael Glenn Tiedemann: AltE has long admired the exceptional team at East End, their investment approach, and the long-standing and trusted relationships they have with their clients. Both firms share industry-leading client retention and a deep understanding of the complexities and changing demands of ultra-high net worth families and foundations. We're pleased with the reception around this transaction so far, and East End clients can now begin benefiting from access to all these global resources and holistic wealth management.

Mike: <unk> has long admired the exceptional team at east and their investment approach and the long standing and trusted relationships they have with their clients.

Mike: Both firms sure industry, leading client retention and a deep understanding of the complexities and changing demands of ultra high net worth families and foundations.

Mike: We've been pleased with the reception around this transaction, so far and eastern clients can now begin benefiting from access to <unk> global resources.

Mike: In holistic wealth management solutions.

Michael Glenn Tiedemann: Yesterday, after the close... We announced the acquisition of Envoy, a $3 billion AUM ultra-high net worth wealth manager based in Minneapolis. Envoy expands our operations into the Midwest region of the United States and has a multi-decade track record within the ultra-high net worth segment. From our earliest conversations, we felt immediate cultural alignment with the Envoy team.

Mike: Yesterday after the close we.

Michael Glenn Tiedemann: Additionally, the firm has not only grown its client base but has doubled its average client size since 2016, all while maintaining a client retention rate of 97%. Envoyal is an ideal fit as we look to deepen our domestic footprint in key markets. We look forward to supporting Envoy's growth through AalTi's global reach, perspective, and comprehensive services. Following the consolidation of these acquisitions, our net asset growth and wealth management will be nearly 45% since Alti's listing, reflecting the successful execution of our organic and inorganic growth strategy.

Mike: We announced the acquisition of onboard.

Mike: 3 billion AUM Ultra high net worth wealth manager based in Minneapolis.

Mike: It expands our operations into the Midwest region of the United States and has a multi decade track record within the ultra high net worth segment.

Mike: From our earliest conversations we felt immediate cultural alignment with the envoy seat.

Mike: Additionally, the firm has not only grown its client base, but it has doubled its average client size since 2016, all while maintaining client retention rate of 97%.

Mike: Envoy was an ideal fit as we look to deepen our domestic footprint in key markets.

Mike: We look forward to supporting envoys growth throughout <unk> global reach perspectives and comprehensive service offering.

Mike: Following the consolidation of these acquisitions, our net asset growth in wealth management will be nearly 45% since all these listing reflecting the successful execution of our organic and inorganic growth strategy.

Michael Glenn Tiedemann: Importantly, they significantly reorganize our firm-wide asset composition towards core strategies and recurring revenues, all while replacing the top-line and bottom-line contributions of the non-core assets we've divested from in the past. On the international front, earlier this week, we closed our acquisition of the remaining 50% stake in Pointwise Partners, and an Independent Ultra High Net Worth Wealth Management Firm. We're delighted to bring the entirety of the Pointwise team onto the ALTI platform and to deepen our operations in the UK.

Mike: Importantly, the significantly reorganize our firm wide asset composition towards core strategies and recurring revenues.

Mike: All while replacing the topline and bottom line contributions of the noncore assets, we've divested from in the past year.

Mike: On the international front earlier this week, we closed our acquisition of the remaining 50% stake and pointwise partners.

Mike: An independent Ultra high net worth wealth management firm based in London, we're delighted to bring the entirety of the pointwise team onto the <unk> platform and to deepen our operations in the U K.

Michael Glenn Tiedemann: Additionally, I'm pleased to report that the previously announced sale of our European-based trust and private office service businesses received regulatory approval and closed subsequent to quarter end. These businesses were previously held as assets for sale, and the proceeds of the sale were approximately $19 million.

Mike: Additionally, I am pleased to report that the previously announced sale of our European based Trust and private office service businesses receive regulatory approval and close subsequent to quarter end.

Mike: These businesses were previously held for sale assets and the proceeds from the sale were approximately $19 million.

Michael Glenn Tiedemann: The transaction is a result of our efforts to streamline, divest, and reinvest in our international wealth operations to focus our operations on our robust service and investment offerings and core recurring revenue business. We're also very pleased with the great strides we've made on our organic growth initiatives, and we're excited about the prospects for both our domestic and international business. The AUM of the U.S. business has increased by 15% on an organic basis over the past 12 months.

Mike: Transaction as a result of our efforts to streamline divest and reinvest in our international wealth operations to focus our operations on a robust service and investment offerings and core recurring revenue businesses.

Mike: We're also very pleased with the great strides we've made on our organic growth initiatives. I mean, we're excited about the prospects for both our domestic and international businesses.

Mike: AUM of the U S businesses increased 15% on an organic basis over the past 12 months.

Michael Glenn Tiedemann: This robust growth results from strong portfolio performance, as well as inflows from new client wins driven by our business development initiative. These efforts were fortified at the beginning of this year as we welcomed Richard Joyner, an award-winning advisor with more than 35 years of experience delivering comprehensive family office services to high net worth families.

Mike: This robust growth results from strong portfolio performance as well as inflows from new client wins, driven by our business development initiatives.

These efforts were fortified at the beginning of this year as we welcomed Richard Joiner.

Richard Joiner: And award winning advisor with more than 35 years of experience delivering comprehensive family office services to ultra high net worth clients.

Michael Glenn Tiedemann: Based out of our Dallas office, Richard heads our central U.S. business and will collaborate closely with the Envoy team in this key region. Internationally, we are also attracting talented and seasoned professionals, and we look forward to updating you on the progress of our future... Turning to our strategic alternative segment, we have successfully repositioned certain businesses and have advanced new initiatives to bring our clients innovative investment opportunities. Recurring revenues made up 88% of the segment's top line contribution in the quarter and were essentially flat quarter over quarter despite the sale of LXI and the broader repositioning of our private real estate business. Importantly, our streamlining efforts resulted in a significant reduction in segment-level costs. Normalized operating expenses in the first quarter decreased by $10 million compared to the same period in 2028.

Richard Joiner: Just out of our Dallas Office, Richard has our central U S business.

Richard Joiner: And we'll collaborate closely with the envoy team in this key region.

Richard Joiner: Internationally, we're also attracting talented and seasoned professionals and we look forward to updating you on the progress in future calls.

Richard Joiner: Turning to our strategic alternatives segment.

Richard Joiner: We have successfully repositioned certain businesses and have advanced new initiatives to bring our clients innovative investment opportunities.

Richard Joiner: Recurring revenues made up 88% the segment's top line contribution in the quarter and were essentially flat quarter over quarter. Despite the sale of Alex Tsai and the broader repositioning of our private real estate business.

Richard Joiner: Importantly, our streamlining efforts have resulted in significant reduction in segment level cost.

Richard Joiner: Normalized operating expenses in the first quarter decreased by $10 million compared to the same period in 2023.

Michael Glenn Tiedemann: Our uncorrelated strategies, the foundation of our alternative platform, exhibited positive performance in the quarter. The performance of our Asia credit strategy was particularly robust, up 5.4% in the first quarter. We remain committed to providing access to innovative and differentiated investment opportunities within our comprehensive range of services and products. To that end, we are excited to announce our partnership with leading tech investor Hero Tomorrow to collaborate on a private market equity strategy investing in growth stage technology.

Richard Joiner: Our uncorrelated strategies the foundation of our alternatives platform exhibited positive performance in the quarter.

Richard Joiner: The performance of our Asia credit strategy was particularly robust up five 4% in the first quarter.

Richard Joiner: We remain committed to providing access to innovative and differentiated investment opportunities within our comprehensive range of services and solutions.

Richard Joiner: To that end, we're excited to announce our partnership with leading tech Investor Hero Tomorrow.

Richard Joiner: To collaborate on a private market equity strategy investing in growth stage technology companies.

Michael Glenn Tiedemann: We have a longstanding model of successfully partnering with leading fund managers, and this latest partnership is set to capitalize on the current compelling valuation environment and dynamic opportunity set of growth stage tech names in the venture economy. We believe this partnership exemplifies the complementary nature of our platform. We're able to allocate capital actively and passively across the platform, not only to benefit our clients but also to produce uncorrelated returns for all teams.

Richard Joiner: We have a long standing model of successfully partnering with leading fund managers and this latest partnership is set to capitalize on the current compelling valuation environment and dynamic opportunity set of growth stage tech names in the venture ecosystem.

Richard Joiner: We believe this partnership exemplifies the complementary nature of our platform.

We're able to allocate capital actively and passively across the platform not only the benefit our clients.

But also to produce uncorrelated returns royalty.

Michael Glenn Tiedemann: As we execute our strategy, we will continue to allocate capital based on identified megatrends, including disruptive technology, which provide a framework for attractive returns with a blended goal of positively impacting the environment and society. As I wrap up my comments on our progress, I would like to highlight the significant advancements we've made on our enterprise strategy. We were pleased to announce the strategic relationships with Allianz X and Constellation Wealth Capital, or CWC, which are transformative for all to see.

Richard Joiner: As we execute our strategy, we will continue to allocate capital based on the identified mega trends, including disruptive technology, which provide a framework for attractive returns with a blended go are positively impacting the environment and society.

Speaker Change: As I wrap up my comments on our progress I would like to highlight the significant advancements we've made on our enterprise strategy.

Speaker Change: We were pleased to announce the strategic relationships with Allianz, Zacks, and constellation wealth capital or CWC, which are transformative for LT.

Michael Glenn Tiedemann: These investments, which total up to $450 million, support our strategy to become the leading global independent multifamily office for the ultra-high net worth segment, with a targeted expertise in the ultra-rich. The first installment of CWC's investment, totaling $115 million, closed in March, and we expect the remaining $35 million to fund later this month.

Speaker Change: These investments, which totaled up to 450 million support our strategy to become the leading global independent multifamily office for the Ultra high net worth segment with a targeted expertise in alternatives.

Speaker Change: The first installment of Cwc's investment totaling $115 million closed in March and we expect the remaining $35 million to fund later this month.

Steve: We anticipate closing our agreement with Allianz X in the second half of 2024. As we've discussed, these partnerships are designed to both enable AltE to expand and to fortify our global footprint in key markets and fuel creative acquisitions through the disciplined deployment of growth capacity. The partnership with CWC is already proving to be immensely valuable, as they are helping to attract and recruit revenue-generating talent and enhance our relationships within the Alternate Worth Wealth Management System.

Speaker Change: We anticipate closing our agreement with Allianz ex in the second half of 'twenty 'twenty four.

Speaker Change: As we've discussed these partnerships are designed both to enable <unk> to expand and fortify our global footprint in key markets and the fuel accretive acquisitions through disciplined deployment of growth capital.

The partnership with CWC is already proving to be immensely valuable loyalty.

Speaker Change: Because they are helping to attract and recruit revenue generating talent and enhance our relationships in the ultra high net worth wealth management sector.

Steve: With respect to Allions, we're excited by the opportunity to strengthen and grow client relationships, expand our platform of client solutions, and benefit from an experienced team, global scale, and broad network when that transaction closes later this year. On the M&A side, we've been leveraging the expertise and capital from our partners, as demonstrated by our recently announced transaction. As we integrate these acquisitions into our existing platform, they'll considerably augment our asset base and accelerate margin expansion through enhancing operating leverage.

Speaker Change: With respect to Allianz, we're excited by the opportunity to strengthen and grow client relationships.

Spanned our platform of client solutions.

Speaker Change: And benefit from this experienced team global scale and broad network.

Speaker Change: When that transaction closes later this year.

Speaker Change: On the M&A side, we've been leveraging the expertise and capital from our partners as demonstrated by our recently announced transactions.

Speaker Change: As we integrate these acquisitions into our existing platform.

Speaker Change: They will considerably augment our asset base and accelerated margin expansion through enhancing operating leverage.

Steve: This is an extremely exciting time to be leading all of this. We have clear momentum across our business and believe that we can drive accelerated growth and profitability in the quarters to come. With that, I'll turn the call over to Steve to take you through a deeper dive into our finances.

Speaker Change: This is an extremely exciting time to be leading <unk> we.

Speaker Change: We have clear momentum across our business.

Speaker Change: I believe that we can drive accelerated growth and profitability in the quarters to come.

Speaker Change: With that I'll.

Speaker Change: I'll turn the call over to Steve to take you through a deeper dive on our financials.

Steve: Thank you Mike.

Steve: Progress with our strategic partners has positioned Alti for growth in the quarters to come, as we continue to execute on our long-term strategy and to streamline and reposition the portfolio on our core recurring revenue business. Multi-generated revenues of $51 million in the first quarter. While this reflects a 12% decrease compared to the first quarter of 2023, recurring management fee revenues were essentially flat during this period. We are pleased with the stability of the management fees given that the sale of LSI was completed during the current quarter.

Steve: Progress with our strategic partners and to position <unk> for growth in the quarters to come as we continue to execute on our long term strategy and to streamline and reposition the portfolio on our core recurring revenue businesses.

Speaker Change: <unk> generated revenues of 51 million in the first quarter.

Speaker Change: While this reflects a 12% decrease compared to the first quarter of 2023.

Speaker Change: Recurring management fee revenues were essentially flat during this period.

Speaker Change: We are pleased with the stability of the management change given the sale of <unk> was completed during the quarter.

Steve: In addition, the prior year period also included approximately $2 million of management fees related to a public real estate fund which was deconsolidated from our results after the second quarter of 2023. Further, on a quarter-over-quarter basis, recurring management-free revenues were up 1.4%, reflecting the stable, predictable nature of the business. Revenues in our Wealth Management segment increased 17% to $37 million in the first quarter compared to the first quarter of 2023, consistent with AUM growth during this period.

Speaker Change: In addition, the <unk>.

Speaker Change: The period also included approximately $2 million of management fees related to like public real estate fund, which was de consolidated from our results. After the second quarter of 2023.

Speaker Change: So that on a quarter over quarter basis.

Speaker Change: Recurring management fee revenues were up one 4%, reflecting the stable predictable nature of the business.

Speaker Change: Yeah.

Speaker Change: Revenues in our wealth management segment increased 17% to $37 million in the first quarter compared to the first quarter of 2023 <unk>.

Speaker Change: Consistent with AUM growth during this period.

Steve: Our robust asset growth is driven by strong market performance, as well as by our acquisition of Singapore-based AO Wealth and our increased stake in the Lugano-based multi-family office in 2023. 99% of our wealth management revenues in Q1 2024 will be recurring.

Speaker Change: Our robust asset growth is driven by strong market performance.

As well as by our acquisition of Singapore based <unk> and our increased stake in the Lugano based multifamily office during 2023.

Speaker Change: 99% of wealth management revenues in Q1 2024 will recurring.

Steve: In our strategic alternative segment, revenue totaled $14 million in Q1, a decrease of $13 million compared to the first quarter of 2023, largely driven by reduced distributions from investments and lower assets compared to the same quarter of 2023. As discussed earlier, the comparable quarter in 2023 included management fee revenue from public real estate, which was deconsolidated from our results starting in the third quarter of 2023. Compared to the immediately prior quarter, management fees were only marginally down, despite a sequential 14% decrease in assets, largely related to the sale of LXI, which removed $2.3 billion in AUM.

Speaker Change: And a strategic alternative segment revenue totaled 14 million in Q1, a decrease of $13 million compared to the first quarter of 2023.

Speaker Change: Largely driven by reduced distributions from investments and lower assets compared to the same quarter in 2023.

Speaker Change: As discussed earlier the comparable quarter in 2023 included management fee revenue from public real estate, which was D E consolidated from our results starting in the third quarter of 2023.

Speaker Change: Compared to the immediately prior quarter management fees were only marginally down.

Speaker Change: Despite a sequential 14% decrease in assets largely related to the salad on Si, which made a $2 3 billion in AUM.

Speaker Change: In addition, the strategic repositioning of the private real estate business resulted in decreased assets as we have exited or restructured certain deals.

Steve: In addition, the strategic repositioning of the private real estate business resulted in decreased assets as we have exited or restructured certain deals. Notably, recurring revenues in the segment were 88% in the quarter. Gap net income for the first quarter was $22 million, compared to a net loss of $90 million in the comparable period in 2023.

Speaker Change: Notably recurring revenues in the segment with 88% quarter.

Speaker Change: Okay.

Speaker Change: GAAP net income for the first quarter was $22 million compared to a net loss of $90 million the comparable period in 2023.

Steve: Primarily due to higher other income, driven by positive mark-to-market in the first quarter, and certain items accounted for at fair value, including EARNET liabilities and the tax receivable agreement. Normalized for one-off items, our adjusted net income for the first quarter was approximately $0.2 million. Normalized operating expenses for the first quarter, which exclude non-cash compensation, expenses related to severance costs, depreciation, and amortization, and certain transaction and deal-related expenses, were $45 million, down $8 million compared to the first quarter of 2023. Excluding incentive compensation, cash compensation costs decreased $6 million, or 20% from the prior year period, demonstrating the progress we achieved in executing our cost-saving initiatives Streamlining our cost structure remains a top priority for us.

Speaker Change: Primarily due to higher other income driven by positive mark to market in the first quarter certain items accounted for at fair value.

Including a net liabilities and the tax receivable agreement.

Speaker Change: Normalized for one off items, our adjusted net income for the first quarter was approximately zero point $2 million.

Speaker Change: Normalized operating expenses for the first quarter, which exclude noncash compensation expenses related to severance costs, depreciation and amortization and certain transaction and deal related expenses were $45 million down 8 million compared to the first quarter of 2023.

Speaker Change: Excluding incentive compensation cash compensation costs.

Speaker Change: <unk> 6 million or 20% from the prior year period, demonstrating the progress we achieved in executing our cost saving initiatives.

Speaker Change: Streamlining our cost structure remains a top priority for us.

Steve: As these efforts continue, we would expect normalized operating expenses to trend further downward. First quarter adjusted EBITDA was $7 million, a decrease of $4 million compared to the first quarter of 2023 and $3 million compared to the previous quarter. The year-over-year decline is driven by lower distributions from investments, while the sequential quarter decline is due to the impact of lower incentive fee income, largely offset by a 24% decrease in normalized non-compensation expenses.

Speaker Change: These efforts continue we would expect normalized operating expenses to trend for the download.

Speaker Change: First quarter adjusted EBITDA was $7 million, a decrease of 4 million compared to the first quarter of 2023 and.

Speaker Change: <unk> compared to the previous quarter.

Speaker Change: The year over year decline was driven by lower distributions from investments.

Speaker Change: The sequential quarter decline is due to the impact of lower incentive fee income.

Speaker Change: Largely offset by 24% decrease in normalized non compensation expenses.

Steve: On a positive note, our adjusted EBITDA margin improved to 13% in the first quarter from 10% in the fourth quarter of 2023, reflecting lower operating expenses from our ongoing efforts to streamline and simplify the platform. We believe that this momentum will continue throughout 2024 as we complete dispositions of more complex, operationally intensive businesses and onboard recurring revenue businesses that have simpler structures and higher operating margins. Furthermore, I would like to provide some more detail on the East End acquisition.

Speaker Change: On a positive note our adjusted EBITDA margin improved to 13% in the first quarter from 10%.

Speaker Change: In the fourth quarter of 2023.

Speaker Change: Reflecting lower operating expenses from our ongoing efforts to streamline and simplify the platform.

Speaker Change: We believe that this momentum will continue throughout 2024, as we complete dispositions at more complex operationally intensive businesses and onboard recurring revenue businesses that have infrastructure and higher operating margins.

Speaker Change: Further I would like to provide some more detail on the <unk> acquisition.

Steve: Each stand reflects the type of transaction we expect to complete as we execute our intergalactic growth strategy. As Mike mentioned, the firm is US-based, with offices in New York and Palm Beach, and focuses exclusively on serving ultra-high net worth clients and foundations.

Speaker Change: <unk> reflects the type of transaction, we expect to complete as we execute our inorganic growth strategy.

Speaker Change: As Mike mentioned, the Sun is U S Bank with offices in New York in Palm Beach, and focus is exclusively on serving ultra high net worth clients and foundations.

Steve: Accordingly, they have an attractive recurring revenue business with $6 billion in AUM. We acquired East End for an initial purchase price of approximately $76 million, with additional contingent consideration payable over a five-year period. Finally, I would like to remind everyone that we are reserving any updates to our financial targets until later this year, after the Allianz X transaction has closed. However, as you think about the rest of the year, it should be noted that our go-forward results will no longer include contributions from LSI or the European Trust and Private Office Service business following completion of those dispositions.

Speaker Change: Accordingly, they have an attractive recurring revenue business with 6 billion in AUM.

Speaker Change: We acquired they stand for an initial purchase price of approximately $76 million with additional contingent consideration payable over a five year period.

Speaker Change: Finally, I would like to remind everyone that we are reserving any updates to that financial targets until later this year.

Speaker Change: After the Allianz X transaction is closed.

Speaker Change: However, as you think about the rest of the year. It should be noted that our go forward results will no longer include contributions from Alex Tsai for the European Trust and private office service business following completion of those dispositions.

Steve: However, starting in the second quarter, we will consolidate the results of East End, and starting in the third quarter, we expect to consolidate the results of Envoy. Both East End and Envoy are purchased at low to mid-teens, enterprise value to EBITDA multiples, in line with our current M&A acquisition criteria. And we anticipate that these acquisitions, along with Pointwise, will produce similar top and bottom line contributions to the recently divested businesses.

However, starting in the second quarter, we will consolidate the results of these stand.

Speaker Change: Starting in the third quarter, we expect to consolidate the results of ongoing.

Speaker Change: Both <unk> and envoy a purchased at low to mid teens enterprise value to EBITDA multiples.

Speaker Change: Along with our current M&A acquisition criteria.

Speaker Change: And we anticipate that will be strong contributors to lp's results going forward.

Speaker Change: As Mike mentioned, we expect that these acquisitions, along with point wise will produce similar top and bottom line contributions to the recently divested businesses.

Steve: Further, they are important components of our growth initiatives that we expect to strengthen our cooperations, and densify our presence in key markets, all while being credited to EBITDA going forward. With that, I will turn it back to Mike for a concluding comment.

Speaker Change: So that they are important components of that growth initiatives.

Speaker Change: We expect the strength in our cooperations densify our presence in key markets.

Speaker Change: While being created to EBITDA going forward.

Speaker Change: With that I will turn it back to Mike for concluding comments.

Michael Glenn Tiedemann: Thanks, Steve, and thanks, everyone, for joining us this morning. As you can see, we've hit the ground running in 2024, establishing strategic partnerships through Creative Acquisitions and expanding our portfolio of products and services to attract and retain an exceptional client. We're committed to delivering disciplined growth while managing our expense profile to offer shareholders long-term margin. Our unwavering focus on the ultra-high net worth segment differentiates us from other public wealth and alternative platforms. We're positioned to be the global leader with this population, and we look forward to updating you on progress in the quarters to come. With that, I'll open up the call to questions.

Mike: Thanks, Steve and thanks, everyone for joining us. This morning as you can see we've hit the ground running in 2020 for establishing strategic partnerships.

Mike: Executing the.

Mike: Accretive acquisitions, and expanding our portfolio of products and services to attract and retain exceptional client base.

Mike: We're committed to delivering disciplined growth, while managing our expense profile to offer shareholders long term margin expansion.

Mike: Our unwavering focus on the ultra high net worth segment differentiates us from other public wealth and alternative platforms.

Mike: We are positioned to be the global leader with this population and we look forward to updating you on our progress in the quarters to come.

Speaker Change: With that I'll open up the call for questions.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we pull for questions. Our first question is from Wilma Burdis with Raymond James. Please proceed.

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question finally, Q for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star he is.

Speaker Change: One moment, while we poll for questions.

Speaker Change: Our first question is from William Wilma Merguez with Raymond James. Please proceed.

Wilma Carter Jackson Burdis: Hey, good morning, everyone. Could you please give us an update on the investment by Allianz and CWC? Specifically, could you talk about the timeline for the approvals process and the potential timing for you to bring in the capital? Thank you.

Speaker Change: Hey, good morning, everyone could.

Speaker Change: Could you please give us an update on the investment I Ali Allison CWT, specifically could you talk about the timeline for the approvals process.

Speaker Change: And the potential timing for our.

Speaker Change: Bringing the capital.

Speaker Change: King.

Michael Glenn Tiedemann: Yes, hi Wilma, how are you? I'll answer that quickly. The CWC did not have to apply for regulatory approval, so $115 million of the $115 million total was drawn, and part of that was used in the E-Standard Acquisition. An additional $35 million will be coming this quarter to complete that. Dalian has put forward all of the regulatory approvals, so that is in the works, and that has been in the works for several months.

Speaker Change: Yes, Hi, Wilmar how are you.

Speaker Change: Answer that quickly.

Speaker Change: They're really separate CWC did not have to.

Speaker Change: Apply for regulatory approval.

Speaker Change: So $115 million of the 115 total withdrawn part of that was used in the east.

Speaker Change: And the acquisition of an additional $35 million will be coming this quarter to complete that.

Speaker Change: Allianz.

Speaker Change: With all of the regulatory approvals. So that is in the works and that has been in the works now for several months.

Michael Glenn Tiedemann: They move very quickly in all the jurisdictions, in the five jurisdictions. We expect that in the second half of the year; obviously, we hope that it occurs earlier in the third quarter than later, but that is our time frame that we're working with.

Speaker Change: We moved very quickly and all are addressed in the five jurisdictions.

Speaker Change: We expect that.

Speaker Change: Second half of the year.

Speaker Change: We hope that it occurs earlier in the third quarter than later, but we're.

Speaker Change: That is our timeframe and we're working with.

Wilma Carter Jackson Burdis: Thank you. And could you talk a little bit about the trajectory of expenses? Is around $60 million ex-notes in professional fees a good run rate? And could you discuss the outlook for professional fees given upcoming investments in organic growth? Sorry, that was hard.

Speaker Change: Thank you and could you talk a little bit about the trajectory of expenses around $60 million ex notables and professional fees a good run rate and can you discuss the outlook for professional fees, giving upcoming investments in <unk>.

Speaker Change: Inorganic growth sorry that was hard to say.

Steve: Thanks Wilma and Steve. How are you? Great.

Speaker Change: Thanks, Steve how I E.

Steve: So, yes, I think, as you've seen in the results, we're starting to see some results or at least, some good trends, at least in the results on the professional fee line and the non-compensation operating expenses. Compared to the first quarter of 2023, we were down about $8 million in the period compared to the end of the same period of last year, which is roughly a 15% decline. As we continue to move forward, we are very focused on further reducing professional fee spend, and with that continued focus, we do expect the trends to continue to trend downward.

Steve: Right, So yes I.

Steve: I think as you've seen in the results, we're starting to see some results.

Steve: With some good trends at least in the results from on the professional fee line in the non compensation operating expenses compared.

Steve: Compared to the first quarter of 2023 were down about $8 million.

Speaker Change: Yes in the period.

Speaker Change: And to the same period last year, roughly a 15% decline as we continue to move forward.

Speaker Change: We are very focused on further reducing professional fee spend.

Speaker Change: And with that continued focus we do expect the trends to continue to trend downward obviously as we embark on M&A activity that will be a series of deal expenses that go with M&A.

Steve: Obviously, as we embark on M&A activity, there will be a series of deal expenses that go with M&A. You won't see those; you'll see those as part of the gross gap expenses, but on a normalized basis, we add those back, and so those won't be the normalized expenses. So you might see a situation where, at least for the next few quarters, as we sort of execute on M&A activity, you might see a little bit higher professional fees on a gross basis, but on a normalized basis, they should continue to trend down.

Speaker Change: Don't see that as Youll say that it's part of the sort of gross GAAP expenses, but on a normalized basis, yes, we add those back and so yes that is what would be the normalized expenses say you might see a situation where at least for the next few quarters as we sort of execute on M&A activity, you might see a little bit higher professional fees.

Speaker Change: Most basis, but on a normalized basis, they should continue to trend down and Linda just to supplement what Steve said. This is a focus of the board senior management, obviously, Steve and his team.

Michael Glenn Tiedemann: And Wilma, just to supplement what Steve said, this is the focus of the board, senior management, and obviously Steve and his team. It is also directly tied to the streamlining and simplification of the Business in Aggregate. So those two are... linked and important to accomplish on a timeline. So that is absolutely one of our top goals for this calendar year, to continue to make significant progress.

Speaker Change: It is also directly tied to the streamlining and simplification of the business in aggregate.

Sure.

Speaker Change: Sure.

Speaker Change: Links important to accomplish them accomplish from the timeline. So that is absolutely one of our top goals for this calendar year to continue to make significant progress.

Speaker Change: Yeah.

Wilma Carter Jackson Burdis: So the $60 million, I think that was ex-notables and professional fees. Um, is that pretty? That's pretty good for now.

Speaker Change: Okay. Thank you.

Speaker Change: 16, $60 million I think that was ex notables and professional fees.

Speaker Change: Is that pretty.

Steve: I think you guys talked a little bit more about the professional fee part, but then I think you guys have talked about $60 million in run rate. Cost Save that should come in later this year, so maybe just talk about that piece as well. So yeah, we'll.

Speaker Change: That's pretty good for now I think you guys talked a little bit more about professional fees partly.

Speaker Change: And then I think you guys had talked about 15 million of run rate.

Speaker Change: Cost savings that should come in later and.

Speaker Change: Later this year, so maybe just talk about that piece as well. Thank you.

Steve: So, yeah, Wilma, I think you're referring to what we've previously discussed, you know, roughly $16 million of cost savings that were identified as part of an exercise we did in 2023. And we talked about the fact that those cost savings would be achieved over a multi-year period. [inaudible] go forward operating expenses, I should say, you'll see the benefit of that cost-saving initiative fully embedded in the results by the end of the second quarter. So I think we're still on track.

Speaker Change: So, yes, I think you're referring to what we've pre releases discussed roughly $6 million to $8 million of cost savings that were identified as part of an exercise. We did during 2023. So we've talked about the fact that those cost savings would would be achieved over a multi multi period.

Speaker Change: <unk> com horizon and would be fully embedded in our results by the end of the second quarter of 2024. So I think I think we still say that that's the case I think when you look at our go forward professional expenses.

Speaker Change: And.

Speaker Change: Sorry go forward operating expenses I should say youll.

Speaker Change: You'll see the benefit of that cost saving initiative fully embedded in the results by the end of the second quarter. So I think we're still on track for that.

Wilma Carter Jackson Burdis: And can you discuss the rationale for exiting the LXI re-advisory business? And, you know, it seems like you brought on a couple of very nice deals, and it sounds like you talked about those offsetting each other from an earnings perspective, but maybe talk a little bit about the businesses you've exited and the businesses you've entered and why you like that trade. Thank you.

Speaker Change: Thank you and can you just talk to the rationale for exiting Alex side.

Speaker Change: The advisory business.

Speaker Change: And.

Speaker Change: It seems like you've brought on a couple of very nice deals in.

Speaker Change: Sounds like you talked about those offsetting each other from an earnings perspective, but maybe talk a little bit about the business that <unk> exited and the businesses you've entered and why you like that trade. Thank you.

Michael Glenn Tiedemann: The board of LXI was the driver of the decision, and we were the manager of the REITs. They felt that the combination of London Metric and LXI was a stronger, more scalable business. So the acquisition was ultimately approved by the board, and we went along with the diligence process and negotiated what we felt was fair value for the exit of the remaining portion of the contract.

Speaker Change: The board of Alex side was the driver of the decision we were the manager of the rights.

Speaker Change: We felt that the combination.

Speaker Change: London metric of Alex I was.

Speaker Change: Stronger.

Speaker Change: More scalable business.

Speaker Change: So the acquisition was ultimately.

Speaker Change: Approved by the board.

Speaker Change: <unk>.

Speaker Change: Obviously.

Speaker Change: Along with the diligence process and then negotiated.

Speaker Change: We felt was fair value for the exit of the remaining portion of the contract that we have.

Steve: And Wilma, what I'd add to Mike's comments in terms of LXI coming off, and it's now out of our numbers starting in the second quarter, but what will be coming on to replace that revenue in EBITDA is the consolidation of East End, and also when we get to the third quarter, there will be the consolidation of Envoy, which we've just recently announced. And so the combination of those, when you think about what's coming off versus what's going on, it will largely be replaced. However, when you think about the...

Speaker Change: And remember what I'd add to Mike's comments in terms of Alex side coming coming off and that's now.

Speaker Change: Out of that number starting in the second quarter, but what will be coming on to replace that revenue and EBITDA is the consolidation of <unk>.

Speaker Change: And also when we get to the third quarter.

Speaker Change:

Speaker Change: There will be.

Speaker Change: The consolidation of <unk>, which we just recently announced and so the combination of those when you think about what's coming off versus what's going on it will largely be replaced.

Speaker Change: However, when you think about the.

Steve: The revenue streams and the complexity of the new businesses versus the old ones, we feel that it's a better fit. These types of acquisitions are very much in line with the type of business that we really like from an operating perspective. Recurring Revenue-Based Activity, at lower headcount, lower operational risk, and a lot of other things. So we really like these.

Speaker Change: The revenue streams and the complexity of the new businesses versus the old we feel that it's a better fit. This is these types of acquisitions are very much in line with the type of business that we that we really like for Matt.

Speaker Change: Operating perspective.

Speaker Change: Yes.

Speaker Change: It's recurring revenue based activity.

Speaker Change: Yes, so the lower head count lower operational risk complexity type of things. So we really like these businesses.

Wilma Carter Jackson Burdis: Okay, thank you. And maybe just talk a little bit about the pipeline. It seems like it's been pretty active, but I just realized you've got a lot of capital to invest, so maybe just talk about what you're seeing out there. Thank you.

Speaker Change: Okay. Thank you and maybe just talk a little bit about the pipeline seems like it's been pretty active.

Speaker Change: You realize you've got a lot of capital to invest so maybe just talk about what youre seeing with Dan. Thank you.

Michael Glenn Tiedemann: You know, we think about it in three ways, and it's important; our top priority is and will always be organic growth, and the importance of why we integrate our offices, our operations globally is because the collaboration and the support for The Business Development Effort that can be driven by that leads to organic growth. So that is a critical focus, and it will always be. And the more we get integration behind us, the more organic growth begins to accelerate.

Speaker Change: We think of it in three ways in this important our top priority is and will always be organic growth.

Speaker Change: The importance of why we integrate.

Speaker Change: Offices are our operations globally.

Speaker Change: Is because the collaboration.

Speaker Change: The support for.

Speaker Change: The business development effort that can be driven by that leads through organic growth. So that is a critical focus will always be good.

Speaker Change: The more we got integration behind us the more of the organic growth begins to accelerate so that's the primary focus of the secondary focus is talent acquisition as we think about our various jurisdictions and where we have offices.

Michael Glenn Tiedemann: So that's the primary focus. The secondary focus is talent acquisition. As we think about our various jurisdictions and where we have offices across these various regions, we want to be able to bring in revenue-producing talent. We have the infrastructure to support them. We have a global infrastructure that is unique, and we are now turning our efforts or recruiting efforts really towards bringing Transcription by https://otter.ai. There really needs to be a strategic fit, and the wealth firms that have joined us fit squarely in. Not only our strategy but culturally, they are perfect fits within our organization. So the integration will be seamless. Michael Tiedemann and Reid Parmelee, Cartesian Growth

Speaker Change: Across these.

Speaker Change: These various reasons, we want to be able to bring in revenue producing talent, we have the infrastructure to support them.

Speaker Change: <unk> infrastructure that is unique.

Speaker Change: And we are now turning our.

Speaker Change: Efforts are recruiting efforts really towards spring.

Talent as we highlighted one in Dallas and a team of people.

Speaker Change: Theyre paying benefits.

Speaker Change: Through in Europe, which we'll talk about later quarters in terms of the inorganic pipeline.

Speaker Change: We are looking at that Holistically, we are.

Speaker Change: They're really needs to be a strategic fit.

Speaker Change: The wealth firms that have joined us squarely in.

Speaker Change: Not only our strategy, but culturally and they are.

Speaker Change: Perfect fits within our organization so the integration will be seamless.

Speaker Change: Vital a vital importance to us we are now beginning to look to spend more time looking across other geographies.

Speaker Change: And obviously, we are engaged as well in the strategic alternative side.

Speaker Change: Okay. Thank you.

Operator: As a reminder, it is star one on your telephone keypad. If you would like to ask a question, we will pause for a brief moment to see if there are any further questions. With no further questions at this time, I would like to turn the conference back over to Mike Tiedemann for closing remarks.

Speaker Change: As a reminder, it is star one on your telephone keypad, if he would like to ask a question, we'll pause for a brief moment to see if there's any further questions.

Speaker Change: With no further questions at this time I would like to turn the conference back over to <unk> for closing remarks.

Michael Glenn Tiedemann: Thank you, Operator, and thank you all for joining us this morning. We look forward to meeting with many of you in the months to come, and if you're interested in meeting with me or other members of the management team, please don't hesitate to reach out to Lily. As I mentioned earlier, we really do feel we are positioned to generate accelerated growth in 2024 and create long-term value for our shareholders.

Thank you operator, and thank you all for joining us this morning.

We look forward to meeting with many of you in the months to come and if Youre interested in meeting with me or other members of the management team. Please don't hesitate to reach out to Lilly.

As I mentioned earlier, we really do feel we are positioned to generate accelerated growth in 2024 and create long term value for our shareholders.

Operator: Wishing you all a happy and healthy beginning of summer before our next update in August. Thank you again. Thank you. This will conclude today's conference. Check your lines at this time, and thank you for your participation.

Speaker Change: Wishing you all a happy and healthy beginning of summer before our next update in August.

Speaker Change: Thank you again.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Music: ?? ?? ?? ?? ?? ?? ??

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Oh.

Speaker Change: Uh huh.

Speaker Change: [music].