Q2 2024 AlTi Global Inc Earnings Call

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Ryan: Ladies and gentlemen, please stand by. We are about to begin. Good morning, my name is Ryan, and I will be your conference operator for today. At this time, I would like to welcome everyone to ALTI's second quarter 2024 earnings conference call. During the call, your lines will remain in a listen-only mode.

Speaker Change: Ladies and gentlemen, please stand by. We are about to begin.

Ryan: Good morning. My name is Ryan and I will be your conference operator for today. At this time, I would like to welcome everyone to ALTI's second quarter 2024 earnings conference call.

Ryan: 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.

Ryan: After the speaker's remarks, there will be a question and answer session. I would like to advise all parties that this conference call is being recorded and a replay of the webcast is available on AltE's Investor Relations website. Now, at this time, I will turn things over to Lily Arteaga, Head of Investor Relations for Alti. Please go ahead.

Ryan: I'd like to advise all parties that this conference call is being recorded and a replay of the webcast is available on AalTi's Investor Relations website. Now at this time, I will turn things over to Lily Arteaga, Head of Investor Relations for AalTi.

Lily Arteaga: Good morning to everyone on the call today. Joining me this morning are Michael Tiedemann, our CEO, and Stephen Yarad, our CFO. We invite you to visit the Investor Relations section of our website at www.alti-global.com to view our earnings materials, including our 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

Lily Arteaga: Please go ahead.

Lily Arteaga: Good morning to everyone on the call today.

Speaker Change: Joining me this morning are Michael Tiedemann, our CEO , and Stephen Yarad, our CFO .

Speaker Change: We invite you to visit the Investor Relations section of our website at www.alti-global.com to view our earnings materials, including our investor presentation.

Speaker Change: 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.

Lily Arteaga: Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, expect, future, intend, may, plan, and will, or similar words. There are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. ALTI assumes no obligation or responsibility to update any forward-looking statements.

Speaker Change: Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, expect, and predict.

Speaker Change: Future, Intent, May, Plan, and Will are similar words.

Speaker Change: 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.

Speaker Change: Alte 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 presentations and our related SEC filing. With that, I'd like to turn the call over to my colleague Lily. Thank you, Lily, and thank you all for joining us this morning.

Speaker Change: During this call, some comments may include references to non-GAAP financial measures.

Speaker Change: Full reconciliations can be found in our earnings presentations and our related SEC filings. With that, I'd like to turn the call over to Mike.

Michael Tiedemann: In the second quarter, we made further progress in carrying out our mission to become the leading global, independent, ultra-high-net-worth wealth management organization with targeted expertise and alternative. We continue to execute on our strategic plan with four significant transactions closed in the last four months, two in the U.S. and another two internationally. We've begun integrating the newly acquired companies, which expand our best-in-class platform. And in parallel, we continue to optimize our cost structure and right-size the organization with a focus on our core recurring revenue business.

Mike: Thank you Lily and thank you all for joining us this morning. In the second quarter we made further progress in carrying out our mission to become the leading global independent ultra-high net worth wealth management firm with a targeted expertise and alternatives.

Mike: We continue to execute on our strategic plan with four significant transactions closed in the last four months, two in the U.S. and another two internationally.

Mike: We've begun integrating the newly acquired companies, which expand our best-in-class platform. And, in parallel, we continue to optimize our cost structure and right-size any organization with a focus on our core recurring revenue businesses.

Michael Tiedemann: Last week marked a turning point for AltE as we closed on Allianz's $250 million investment to complement the $150 million received from Constellation Wealth, or CWC, earlier in the year. This high-quality institutional backing is a ringing endorsement from a global blue-chip financial services leader.

Speaker Change: Last week marked a turning point for AltE as we closed on Allianz's $250 million investment to complement the $150 million received from Constellation Wealth, or CWC, earlier in the year.

Speaker Change: This high-quality institutional backing is a ringing endorsement from a global blue-chip financial services leader.

Michael Tiedemann: This capital enables us to expand and fortify our global footprint in key markets, and the Fuel of Creative Acquisitions through Disciplined Deployment of Growth Capital. The partnerships provide an opportunity to strengthen and grow client relationships, as well as expand our platform of client solutions. We're moving forward with the benefit of experienced partner, for the global scale, and a deep network in key geography. Today I'm going to discuss our Q2 results, provide an update on our growth initiatives as we continue to expand the platform, increasing our presence in key domestic and international markets, as well as share our progress in refocusing our business around recurring revenues and inappropriate costs, on a consolidated basis. Our assets under management and advisement have grown 4% to $72 billion for the trailing 12-month period, reflecting a mixture of acquisitions and asset dispositions. It's worth noting.

Speaker Change: This capital enables us to expand and fortify our global footprint in key markets and to fuel accretive acquisitions through disciplined deployment of growth capital.

Speaker Change: The partnerships provide an opportunity to strengthen and grow client relationships, as well as expand our platform of client solutions.

Speaker Change: We're moving forward with the benefit of experienced partners, further global scale, and a deep network in key geographies.

Michael Tiedemann: We have grown assets in our wealth management business by 15% to $56 billion over that same period, reflecting the shift in our asset composition to core businesses that produce consistent recurring revenue. In the second quarter, Alt-E generated revenues of $49 million. Importantly, 99% of the revenues in the quarter were from recurring funds. We reported a net loss of $9 million, compared to a net income of $28 million in Q2-23, largely attributable to a decline in other income, as the prior year period included $66 million unrealized gain on earned outlay.

Speaker Change: Today, I'm going to discuss our Q2 results, provide an update on our growth initiatives as we continue to expand the platform, increasing our presence in key domestic and international markets.

Speaker Change: as well as share our progress in refocusing our business around recurring revenues and an appropriate cost structure.

Speaker Change: On a consolidated basis, our assets under management and advisement have grown 4% to $72 billion for the trailing 12-month period, reflecting a mixture of acquisitions and asset dispositions.

Speaker Change: It's worth noting we have grown assets in our wealth management business by 15% to $56 billion over that same period, reflecting the shift in our asset composition to core businesses that produce consistent recurring revenues.

Speaker Change: In the second quarter, Alt-E generated revenues of $49 million.

Speaker Change: Importantly, 99% of the revenues in the quarter were from recurring fees.

Speaker Change: We reported a net loss of $9 million compared to a net income of $28 million in Q2-23, largely attributable to a decline in other income, as the prior year period included $66 million unrealized gain on earned out liabilities.

Michael Tiedemann: While this item impacts our GAAP-reported results, it is neutral to adjusted EBITDA, which for the second quarter was $5.5 million. Our adjusted EBITDA margin for the second quarter was 11%. While our consolidated results this quarter are impacted by the business repositioning we've been conducting over the last year, I'm very pleased by the growth and expanding margins in our core wealth platform, which I will now discuss in more detail as I review the quarterly highlights from each of our subjects.

Speaker Change: While this item impacts our GAAP-reported results, it is neutral to adjusted EBITDA, which for the second quarter was $5.5 million. Our adjusted EBITDA margin for the second quarter was 11%.

Speaker Change: While our consolidated results this quarter are impacted by business repositioning we've been conducting over the last year, I'm very pleased by the growth and expanding margins in our core wealth platform, which I will now discuss in more detail as I review the quarterly highlights from each of our segments.

Michael Tiedemann: Starting with Wealth Management, as I mentioned, we reported 15% asset growth over the last. This growth is attributed to both inorganic and organic progress. In addition to our strategic acquisitions, we've powered business development through enhanced capabilities, a growing team, and a unique global office. Furthermore, our client portfolios are well diversified across a range of asset classes and have benefited from the strong performance of our various risk exposures. This was an active quarter for us on the M&A front.

Speaker Change: Starting with Wealth Management, as I mentioned, we reported 15% asset growth over the last year.

Speaker Change: This growth is attributed to both inorganic and organic progress.

Speaker Change: In addition to our strategic acquisitions, we've powered business development through enhanced capabilities, a growing team, and a unique global offering.

Speaker Change: Furthermore, our client portfolios are well diversified across a range of asset classes and have benefited from the strong performance of our various risk exposures.

Michael Tiedemann: On April 1st, we announced the acquisition of East End Advisors, adding nearly $6 billion of AUM to the Alti Wealth Management Platform. The New York-based independent advisor has an established investment track record with experience. This acquisition will enable and enhance our ability to compete in the outsourced Chief Investment Officer, or OCIO, market. Our teams have already been collaborating on investment analysis and client portfolio development. Additionally, we're developing a strong collective client pipeline as our business development teams are collaborating closely in meeting with prospective clients. On July 1st, we close the acquisition of Envoy, a $3 billion AUM wealth manager based in Minneapolis.

Speaker Change: This was an active quarter for us on the M&A front. On April 1st, we announced the acquisition of East End Advisors, adding nearly six billion of AUM to the Alti Wealth Management Platform.

Speaker Change: The New York-based independent advisory firm has an established investment track record with an experienced team.

Speaker Change: This acquisition will enable and enhance our ability to compete in the outsourced Chief Investment Officer, or OCIO, market.

Speaker Change: Our teams have already been collaborating on investment analysis and client portfolio development. Additionally, we're developing a strong collective client pipeline as our business development teams are collaborating closely in meeting with prospective clients.

Speaker Change: On July 1st,

Speaker Change: We close the acquisition of Envoy, a $3 billion AUM wealth manager based in Minneapolis. This acquisition expands our presence in the Midwest, adds depth to our investment team, and complements our existing services for the ultra-high net worth segment.

Michael Tiedemann: This acquisition expands our presence in the Midwest, adds depth to our investment team, and complements our existing services for the ultra-high net worth. In the past month, we've made strides in integrating the business into our platform and leveraging our combined expertise to deepen and expand our business development efforts. On the international front, we've been integrating London-based Pointwise Partners into our UK operations after increasing our ownership in a wealth management firm to 100%.

Speaker Change: In the past month, we've made strides in integrating the business to our platform and leveraging our combined expertise to deepen and expand our business development efforts in the region.

Speaker Change: On the international front, we've been integrating London-based Pointwise partners into our UK operations after increasing our ownership in a wealth management firm to 100% in May.

Michael Tiedemann: This partnership is reflective of our ability to provide boutique-level targeted services with the backing of a global platform. In the second quarter, we also completed our sale of the European-based trust and private office services business for approximately 20.

Speaker Change: This partnership is reflective of our ability to provide boutique-level targeted services with the backing of a global platform.

Speaker Change: In the second quarter, we also completed our sale of the European-based trust and private office services businesses for approximately $20 million.

Michael Tiedemann: With these transactions in our belt, we are now focusing all of our efforts on amplifying our investment offerings. Core Recurring Revenue Business Turning to organic growth, we're pleased with the performance of the domestic business, which has increased 11% on an organic basis over the past decade. You will also be encouraged by the momentum of our international platform. Our international team has secured significant wins across multiple jurisdictions in recent months and has the strongest pipeline we've seen since our listing.

Speaker Change: With these transactions in our belt, we are now focusing all of our efforts on amplifying our investment offerings and core recurring revenue businesses globally.

Speaker Change: Turning to organic growth, we're pleased with the performance of the domestic business, which has increased 11% on an organic basis over the past year. We're also encouraged by the momentum of our international platform.

Speaker Change: Our international team has secured significant wins across multiple jurisdictions in recent months and has the strongest pipeline we've seen since our listing. This is driven by a combination of favorable trends, strong collaboration across our scale global platform, and the addition of key talent.

Michael Tiedemann: This is driven by a combination of favorable trends, strong collaboration across our global platform, and the addition of key talent. Most recently, Victoria Sriva, a senior and trusted advisor to many large European families, joined our London team, bringing nearly 15 years of experience gained from her time at several leading global companies.

Speaker Change: Most recently, Victoria Sriva, a senior and trusted advisor to many large European families, joined our London team, bringing nearly 15 years of experience gained from her time at several leading global banks.

Michael Tiedemann: Now let's discuss some of the trends we're observing. We're seeing European and Middle East-based families requesting holistic reviews of their global holdings that are currently managed across a variety of banks, with the objective of engaging an experienced advisor that can provide sophisticated OCIO services. We are also seeing European ultra-high net worth families moving capital and creating structures in various jurisdictions for tax purposes and other considerations.

Speaker Change: Now let's discuss some of the trends we're observing.

Speaker Change: We're seeing European and Middle East-based families requesting holistic reviews of their global holdings that are currently managed across a variety of banks with the objective of engaging an experienced advisor that can provide sophisticated OCIO services.

Speaker Change: We are also seeing European ultra-high net worth families moving capital and creating structures in various jurisdictions for tax purposes and other considerations.

Michael Tiedemann: Additionally, large and complex multi-generational families are engaging trusted advisors to help them plan the transition of businesses and wealth. This is a trend we see only increasing in the coming years... AltE is uniquely positioned to capitalize on the current environment, given our global presence and domiciles, paired with our independence and flexibility. Our cross-border teams can report on accounts spread across multiple banks and jurisdictions and manage complex portfolio compositions with a coherent strategy. Both prospective and existing clients also cite our cost-effective solutions, holistic offerings, creative ideas, and localized teams as important to France.

Speaker Change: Additionally, large and complex multi-generational families are engaging trusted advisors to help them plan the transition of businesses and wealth. This is a trend we see only increasing in the coming years.

Speaker Change: AltE is uniquely positioned to capitalize on the current environment, given our global presence and domiciles, paired with our independence and flexibility. Our cross-border teams can report on accounts spread across multiple banks and jurisdictions, and manage complex portfolio compositions with a coherent strategy.

Speaker Change: Perspective and existing clients also cite our cost-effective solutions, holistic offerings, creative ideas, and localized teams as important differentiators.

Michael Tiedemann: As a global organization with strong local presence, our teams speak the language of our clients and have a differentiated regional focus. Turning to our strategic alternative sector. Throughout the last year, we've been reorganizing this segment to prioritize solutions that deliver predictable revenues, compelling returns, and more, and Diversified Investment Opportunities for our LPs, as well as to complement our wealth management. The sale of LXI and the restructuring of our private real estate business have resulted in lower segment level assets in the company.

Speaker Change: As a global organization with strong local presence, our teams speak the language of our clients and have a differentiated regional expertise.

Speaker Change: Turning to our Strategic Alternatives segment, throughout the last year we've been reorganizing this segment to prioritize solutions that deliver predictable revenues, compelling returns,

Speaker Change: and diversified investment opportunities for our LPs, as well as to complement our wealth management business.

Speaker Change: The sale of LXI and the restructuring of our private real estate business has resulted in lower segment level assets in the quarter.

Michael Tiedemann: However, the segment's revenue mix has improved, with 93% of our business in the quarter being recurring in April. This represents a 6% increase compared to the top line composition in the comparable period in 2020, are uncorrelated strategies, the foundation of all our channels platform, have exhibited positive performance. Our European Long Short and Asia Credit Strategies were up 6.9 and 8.3 respectively through the end of the second quarter.

Speaker Change: However, the segment's revenue mix has improved, with 93% of our business in the quarter being recurring in nature. This represents a 6% increase compared to the top-line composition in the comparable period in 2023.

Speaker Change: Our uncorrelated strategies, the foundation of all alternatives platform.

Speaker Change: have exhibited positive performance this year.

Speaker Change: Our European Long Short and Asia Credit Strategies were up 6.9 and 8.3 respectively through the end of the second quarter.

Michael Tiedemann: Moreover, our streamlining efforts continue to yield a significant reduction in cost, reflected in the 15% decrease in our normalized operating expenses in the second quarter compared to the same period last year. We expect this to continue as we move forward and focus on streamlining our business and the infrastructure needed to serve it. We recognize that the repositioning of the businesses within the segment has negatively impacted our results for the last... On that point, I'd like to note that as we deploy the growth capital from our partners, we will evaluate ways to enhance our reporting methods to offer visibility into the progress we're making as a go-forward enterprise. We will seek to provide the street with the necessary visibility as we execute on our long-term objectives.

Speaker Change: Moreover, our streamlining efforts continue to yield a significant reduction in cost, reflected in a 15% decrease of our normalized operating expenses in the second quarter compared to the same period in 2023.

Speaker Change: We expect this to continue as we move forward and focus on streamlining our business and the infrastructure needed to serve us. We recognize that the repositioning of the businesses within the segment has negatively impacted our results for the last year.

Speaker Change: On that point, I'd like to note that as we deploy the growth capital from our partners, we will evaluate ways to enhance our reporting methods to offer visibility into the progress we're making as a go-forward enterprise.

Speaker Change: We will seek to provide the street with necessary visibility as we execute on our long-term objectives.

Michael Tiedemann: On the subject of our partners, I want to wrap up my comments by reviewing the strategic and transformational nature of these relationships following the closing of Allianz's investment last year. We believe the partnerships we've established result in a pioneering transaction for the insurance, wealth management, and asset management sectors. Delivering long-term benefits to all three, the investments accelerate Alt-E's path to become the leading global platform in the attractive ultra-high net worth wealth management set vertical, and Allianz X and CWC's participation in the estimated $609 trillion global wealth market. The wealth management sector is characterized by stable, recurring revenues, a capital light model, which is what makes it so attractive.

Speaker Change: On the subject for our partners, I want to wrap up my comments by reviewing the strategic and transformational nature of these relationships following the closing of Allianz's investment last week.

Speaker Change: We believe the partnerships we've established result in a pioneering transaction for the insurance, wealth management and asset management sectors, delivering long-term benefits to all three parties.

Speaker Change: Investments accelerate AltE's path to become the leading global platform in the attractive ultra-high net worth wealth management set vertical, and advance Allianz X and CWC's participation in the estimated $609 trillion global wealth market.

Speaker Change: The wealth management sector is characterized by stable, recurring revenues and a capital-like model, which is what made it so attractive to us, and it's one of the core reasons our partners made the investment.

Michael Tiedemann: And it's one of the core reasons our partners made the, The investments will advance the scale and reach of ALTI's expansion strategy, accelerating top-line growth in existing and new markets across the U.S., Europe, and Asia. Already, we've deployed capital from CWC Investments to fund the acquisitions of Envoy and East End Advisors. Looking ahead,

Speaker Change: The investments will advance the scale and reach of ALTI's expansion strategy, accelerating top-line growth in existing and new markets across the U.S., Europe , and Asia. Already, we have deployed capital from CWC Investment to fund the acquisitions of Envoy and East End Advisors.

Michael Tiedemann: We have an actionable pipeline as we evaluate capital deployment opportunities for the Allianz X investor. Our organic growth initiatives will be enhanced through expanded lead generation opportunities and, importantly, the potential to service Allianz clients and families, as well as the ability to leverage our partners' footprints and relationships as we enter the new market. As I mentioned earlier, we bring local expertise to our clients while offering the resources, expertise, and insights of a global platform.

Speaker Change: Looking ahead, we have an actionable pipeline as we evaluate capital deployment opportunities for the Allianz X investment.

Speaker Change: Our organic growth initiatives will be enhanced through expanded lead generation opportunities and, importantly, the potential to service Allianz clients and families, as well as the ability to leverage our partners' footprints and relationships as we enter new markets.

Speaker Change: As I mentioned earlier, we bring a localized expertise to our clients while offering the resources, expertise, and insights of a global platform.

Michael Tiedemann: Our clients benefit from our scale, access, and lower fees and also lean on us for idea generation to maximize their exposures to the private market. Importantly, our relationship with Allianz will enable us to offer our clients favorable fees on key investment products.

Speaker Change: Our clients benefit from our scale, access, and lower fees, and also lean on us for idea generation to maximize their exposures to the private markets.

Speaker Change: Importantly, our relationship with Allianz will enable us to offer our clients favorable fees on key investment products. This is just one way our partnerships will result in operational benefits to our clients.

Michael Tiedemann: This is just one way our partnerships will result in operational benefits to our... Finally, we are privileged to count on the deep, global Financial Services expertise our partners bring to our board as we embark on this new phase. With that, I'll turn the call over to Steve and take you through a deeper dive into our family. Thank you, Mike.

Speaker Change: Finally, we are privileged to count on the deep

Speaker Change: Global financial services expertise our partners bring to our board as we embark on this new phase of LTE.

Speaker Change: With that, I'll turn the call over to Steve and take you through a deeper dive in our financials.

Stephen Yarad: Progress with our strategic partners has positioned Alty for growth in the quarters to come as we continue to execute on our long-term roadmap, streamline operations, and focus on our core recurring revenue business. All degenerated revenues of $49 million in the second quarter, reflecting a 4% decrease compared to the second quarter of 2023. On a like-for-like basis, that is, adjusting for the acquisition of East End Advisors and excluding the European trust business and the public real estate businesses we've exited, revenues would have been up 4% year on year.

Speaker Change: Thank you, Mike.

Steve: Progress with our strategic partners has positioned Alty for growth in the quarters to come as we continue to execute on our long-term roadmap, streamline operations and focus on our core recurring revenue businesses.

Speaker Change: ALDI generated revenues of $49 million in the second quarter, reflecting a 4% decrease compared to the second quarter of 2023.

Speaker Change: On a like-for-like basis, that is, adjusting for the acquisition of EastEnd advisors and excluding the European trust business and the public real estate businesses we've exited, revenues would have been up 4% year on year.

Stephen Yarad: I'm pleased to report that recurring management fee revenues increased by 4% to 99% in the period. Importantly, revenues in our Wealth Management Segment increased 20% to $41 million in the second quarter compared to the second quarter of 2023, along with 15% AUA-AUM growth during this period. Our robust revenue growth compared to the prior year period is primarily driven by the inclusion of EastEnd advisors in our results, in addition to market performance and other organic growth. Excluding the impact of acquisitions and divestitures, assets increased 10%, and revenues increased 15% compared to 2023. Furthermore, 100% of wealth management revenues in Q2 2024 were recurring.

Speaker Change: I'm pleased to report that recurring management fee revenues increased by 4% to 99% in the period.

Speaker Change: Importantly, revenues in our Wealth Management segment increased 20% to $41 million in the second quarter, compared to the second quarter of 2023, along with 15% AUA-AUM growth during this period.

Speaker Change: Our robust revenue growth compared to the prior year period is primarily driven by the inclusion of Eastern Advisors in our results, in addition to market performance and other organic growth.

Speaker Change: Excluding the impact of acquisitions and divestitures, assets increased 10% and revenues increased 15% compared to 2023. Further, 100% of wealth management revenues in Q2 2024 were recurring.

Stephen Yarad: In our Strategic Alternatives segment, revenue totaled $9 million in Q2 compared to $17 million in the second quarter of 2023, largely driven by lower management fees and reduced transactional fees in the real estate division, reflecting our repositioning of the private and public real estate business. That comparable quarter in 2023 included management fee revenue from a public real estate fund, which was deconsolidated from our results starting in the third quarter of 2023. The prior-year quarter also included management fees from LXI, which was sold earlier this year, as well as transactional fees in the private real estate division, adjusted for the sale of LXI, which contributed $2 billion in the second quarter of 2023.

Speaker Change: In our strategic alternatives segment, revenue totaled $9 million in Q2 compared to $17 million in the second quarter of 2023, largely driven by lower management fees and reduced transactional fees in the real estate division, reflecting our repositioning of the private and public real estate businesses.

Speaker Change: The comparable quarter in 2023 included management fee revenue from a public real estate fund, which was deconsolidated from our results starting in the third quarter of 2023.

Speaker Change: The prior year quarter also included management fees from LXI, which was sold earlier this year, as well as transactional fees in the private real estate division.

Speaker Change: Adjusted for the sale of LXI, which contributed $2 billion in the second quarter of 2023.

Speaker Change: Assets decreased by 13% year-on-year, reflecting the repositioning of the private real estate business as we exited or restructured certain deals.

Speaker Change: Notably, recurring revenues for this segment increased by 6% to 93% in the quarter.

Stephen Yarad: Assets decreased by 13% year-on-year, reflecting the repositioning at the private real estate business as we exited or restructured certain deals. Notably, recurring revenues for this segment increased by 6% to 93% in the quarter. Gap's net loss for the second quarter was $9 million, compared to net income of $28 million in the comparable period in 2023.

Speaker Change: Gap net loss for the second quarter was $9 million, compared to net income of $28 million in the comparable period in 2023.

Stephen Yarad: The decrease was driven by lower other income in the current period and tax benefits recorded in the prior year period. Other income decreased as the prior year period included an unrealized gain on earn-out liabilities compared to an unrealized loss in the current period. This decline was partially offset by lower impairment charges in the current year period, as well as gains on investment, compared to losses in the prior year period. Our adjusted net loss for the second quarter was $3 million.

Speaker Change: The decrease was driven by lower other income in the current period and tax benefits recorded in the prior year period.

Speaker Change: Other income decreased as the prior year period included an unrealised gain on earn-out liabilities compared to an unrealised loss in the current period.

Speaker Change: This decline was partially offset by lower impairment charges in the current year period as well as gains on investments compared to losses in the prior year period.

Speaker Change: Our adjusted net loss for the second quarter was $3 million.

Stephen Yarad: Consolidated Normalized Operating Expenses for the second quarter, which exclude non-cash compensation, expenses related to severance costs, depreciation, and amortization, and certain transaction and deal-related expenses, were $46 million, up slightly compared to the first quarter of 2024. However, excluding East End, normalized operating expenses would have declined 4% compared to the first quarter. The second quarter adjusted EBITDA was $5.5 million, a decrease of $1.3 million compared to the previous quarter.

Speaker Change: Consolidated normalised operating expenses for the second quarter, which exclude non-cash compensation, expenses related to severance costs,

Speaker Change: depreciation and amortization and certain transaction and deal related expenses were $46 million up slightly compared to the first quarter of 2024.

Speaker Change: Excluding East End, normalised operating expenses would have declined 4% compared to the first quarter.

Speaker Change: Second quarter adjusted EBITDA was $5.5 million, a decrease of $1.3 million compared to the previous quarter. Our adjusted EBITDA margin was 11% in the second quarter, compared to 13% in the first quarter of 2024.

Stephen Yarad: Our adjusted EBITDA margin was 11% in the second quarter, compared to 13% in the first quarter of 2024. Although our consolidated margin decreased in the quarter, our core wealth management businesses continue to perform well. The adjusted EBITDA margin for our Wealth Management Division improved to 23% in the second quarter from 18% in the prior quarter.

Speaker Change: Although our consolidated margin decreased in the quarter, our core wealth management businesses continue to perform well.

Speaker Change: The adjusted EBITDA margin for our Wealth Management Division improved to 23% in the second quarter from 18% in the prior quarter.

Stephen Yarad: As we have mentioned, we expect that our recently completed acquisitions, in combination with cost savings and restructuring initiatives being implemented, will be key in reorganizing our firm-wide asset composition towards core businesses and recurring revenues, which will drive operating leverage and result in margin improvement going forward. In addition, we believe that we will be able to deploy the capital raised from Allianz to make additional accretive transactions that will further strengthen our results. Further, I'd like to note that, concurrent with the closing of the investment from Allianz at the end of July, management commenced a strategic review of the real estate co-investment and fund management business.

Speaker Change: As we have mentioned, we expect that our recently completed acquisitions, in combination with cost savings and restructuring initiatives being implemented, will be key in reorganising our firm-wide asset composition

Speaker Change: towards core businesses and recurring revenues which will drive operating leverage and result in margin improvement going forward.

Speaker Change: In addition, we believe that we will be able to deploy the capital raised from Allianz to make additional accretive transactions that will further strengthen our results.

Speaker Change: Further, I'd like to note that, concurrent with the closing of the investment from Allianz at the end of July , management commenced a strategic review of the real estate co-investment and fund management businesses.

Stephen Yarad: This review, which is expected to be completed prior to the end of the third quarter of 2024, will consider, among other things, an assessment of the future of these businesses, including whether any changes to our legal entity structure or composition of operating segments may be needed, consistent with any changes in the business that may be determined necessary. Before I conclude my remarks, I'd like to touch on our capital structure. At quarter end, we had $60 million in cash and $163 million in debt.

Speaker Change: This review, which is expected to be completed prior to the end of the third quarter of 2024, will consider, among other things, an assessment of the future of these businesses, including whether any changes to our legal entity structure or composition of operating segments may be needed.

Speaker Change: consistent with any changes in the business that may be determined necessary.

Speaker Change: As I conclude my remarks, I'd like to touch on our capital structure.

Speaker Change: At quarter end, we had $60 million in cash and $163 million in debt.

Stephen Yarad: We deployed $24 million of capital in early July in connection with the acquisition of Envoy, and on July 31st, we received an additional $250 million from Allion. Today, ALTI has a fortified balance sheet, world-class partners, a unique global footprint, and is well positioned to execute its organic and inorganic growth plan. With that, I will turn it back to Mike for concluding remarks. Thank you, Steve.

Speaker Change: We deployed $24 million of capital in early July in connection with the acquisition of Envoy, and on July 31st, we received an additional $250 million from Allianz.

Speaker Change: Today, ALTI has a fortified balance sheet, world-class partners, a unique global footprint, and is well positioned to execute its organic and inorganic growth plan.

Michael Tiedemann: This was an important quarter for our organization, and we're excited about what AltE can accomplish in the attractive global wealth market as we participate in the largest generational wealth transfer, estimated at over $80 trillion over the next decade. As we onboard our strategic partners, deploy capital, and expand our global footprint, we're positioning AltE for long-term success. We look forward to demonstrating how our strategic imperatives will lead to accelerated growth, profitability, and, importantly, create sustainable shareholder value.

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

Mike: Thank you, Steve. This was an important quarter for our organization and we're excited about what AltE can accomplish in the attractive global wealth market as we participate in the largest generational wealth transfer estimated at over 80 trillion over the next 20 years.

Mike: As we onboard our strategic partners, deploy capital and expand our global footprint, we're positioning AltE for long-term success.

Mike: We look forward to demonstrating how our strategic imperatives will lead to accelerated growth, profitability, and importantly, create sustainable shareholder value.

Michael Tiedemann: With that, I'll open up the call for questions. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press stars and 2 if you'd 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.

Operator: Ladies and gentlemen, please stand by. We are about to begin.

Mike: With that, I'll open up the call for questions.

Ryan: Good morning. My name is Ryan and I will be your conference operator for today. At this time, I would like to welcome everyone to all the second quarter of 2024 Oning's 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 did like to advise all parties that this conference call is being recorded and a replay of the webcast is available on all these investor relations websites.

Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session.

Speaker Change: If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: You may press star and 2 if you'd like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Ryan: Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question is from the line of Wilma Burdis with Raymond James. Please go ahead. Hey, good morning.

Speaker Change: Ladies and gentlemen, we will wait for a moment while we poll for questions.

Lily Arteaga: Now, at this time, I will turn things over to Lily Arteaga, head of investor relations for all these. Please go ahead.

Speaker Change: Our first question is from the line of Wilma Burdis with Raymond James. Please go ahead.

Lily Arteaga: Good morning to everyone on the call today. Joining me this morning are Michael Tiedemann, our CEO, and Stephen Yarad, our CFO. We invite you to visit the Investor Relations section of our website at www.altie-global.com to view our earnings materials including our investor presentation.

Wilma Burgess: Hey, good morning. Could you talk a little bit more about the EBITDA margin improvement and wealth management? What are the drivers and what do you expect in the coming quarters? Thanks.

Wilma Burdis: Could you talk a little bit more about the EBITDA Margin Improvement and Wealth Management? What are the drivers, and what do you expect in the coming quarters? Thanks. Good morning, Wilma. It's Steve here. How are you today?

Wilma Burgess: Good morning, Wilma. It's Steve here. How are you today?

Stephen Yarad: I hope I'm doing well. That's great. So, look, we expect as we fully integrate East End and with Envoy coming on board that... Those businesses are resilient, and they will contribute to growth in the EBITDA margin going forward. I think also, now that we have the Allianz investment on board and looking at our pipeline moving forward, we are looking at businesses that generate margins above that 11% that we recorded in the second quarter. However, transactions occur, we would expect margin improvement to be driven by Great, and then I'll turn those AEMs down.

Wilma Burgess: I'm doing well.

Speaker Change: That's great.

Speaker Change: So, look, we expect, as we fully integrate East End and with Envoy coming on board, that

Lily Arteaga: 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 Security's 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, or similar words. 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. Altie assumes no obligation or responsibility to update any forward-looking statements.

Speaker Change: Those businesses are recreative and they will contribute to growth in the EBITDA margin going forward.

Speaker Change: I think also as we now that we have the Allianz investment on board

Speaker Change: and looking at our pipeline moving forward, we are looking at businesses that generate margins above that 11% that we recorded in the second quarter. So as those...

Speaker Change: Transactions occur, we would expect margin improvement to be driven by that M&A activity.

Wilma Burdis: Is that largely due to the repositioning of the real estate business? And I think you guys just touched on that, but it sounds like you might have more. Reviews in the Real Estate Portfolio, so could you go into a little more detail there? Thanks. On a year-over-year basis, yes, it's been driven by, you know, the repositioning that's been done in the real estate business and, in particular, the sale of LXI.

Speaker Change: Great, and then I'll turn those AIMs down. Is that largely due to the repositioning in the real estate business? And I think you guys just touched on it, but it sounds like you might have more.

Lily Arteaga: During this call, some comments may include references to non-gap financial measures. Full reconciliation can be found in our earnings presentations and our related SEC filings.

Wilma Burdis: I'll also note that, in the second quarter of 2023, we were still consolidating the AHRA Home REIT public REIT as well, so that also had, on a year-over-year basis, an impact. Sorry, the second part of your question, Wilma, just so you could repeat that for me? Yeah, I thought in your comments you just touched on possibly reviewing more of that real estate portfolio. Sure.

Speaker Change: Reviews in the Real Estate Portfolio, so could you go into a little more detail there, thanks.

Michael Tiedemann: With that, I'd like to turn the call over to Mike.

Speaker Change: Sure. On a year-over-year basis, yes, it's been driven by, you know, the repositioning that's been done in the real estate business and, in particular, the sale of LXI. I'll also note that we had, in the second quarter of 2023, we were still consolidating

Michael Tiedemann: Thank you, Lily, and thank you all for joining us this morning. In the second quarter, we made further progress in carrying out our mission to become the leading global independent ultra-high net worth wealth management firm with a targeted expertise in alternatives. We continue to execute on our strategic plan with four significant transactions closed in the last four months, two in the US and then other two internationally. We've begun integrating the newly acquired companies, which expand our best-in-class platform. And in parallel, we continue to optimize our construction and right-size in the organization with a focus on our core recurring revenue businesses.

Speaker Change: Sorry, the second part of your question, Wilma, just so you could repeat that for me?

Wilma Burgess: Yeah, I thought in your comments you just touched on possibly reviewing more of that real estate portfolio. Sure. I just wondered what that looks like and if there's the possibility for, you know, more runoff in the AERM.

Stephen Yarad: I just wondered what that looks like and if there's the possibility for, you know, more runoff in the AERM. So, after Allianz Investments closed, we started a review of the Real Estate Co-Investment and the Private Fund businesses. So, as we go through that review, which we do expect to be completed by the end of the third quarter, I'd say that all options are on the table in terms of the strategic direction of those businesses.

Michael Tiedemann: Last week, Mark the turning point for Altie is we close on Allianz's $250 million investment to complement the $150 million received from Constellation Wealth or CWC earlier in the year. This high-quality institutional backing is a ringing endorsement from a global blue chip financial services leader. This capital enables us to expand and fortify our global footprint and key markets and the fuel accretive acquisitions to discipline deployment of growth capital. The partnerships provide an opportunity to strengthen and grow client relationships as well as expand our platform of clients.

Speaker Change: So after the Allianz Investments closed, we have started a review of the real estate co-investment and the private fund businesses.

Speaker Change: So as we go through that review, which we do expect to be completed by the end of the third quarter, I'd say that all options are on the table in terms of the strategic direction of those businesses.

Stephen Yarad: I don't want to get ahead of what we may or may not do there, but it's fair to say that it's possible that there could be runoff in those businesses as a result of that. Okay, thank you, Eddienne. Could you guys just talk about, you know, lots of moving pieces here with the all-in-ops investment, but how much capital do you have left to deploy from this point and just discuss the pipeline, what you're seeing in terms of possible M&A? Thanks. Yes, Wilma, this is Mike.

Speaker Change: I don't want to get ahead of what we may or may not do there, but it's fair to say that it's possible that there could be runoff in those businesses as a result of that review.

Speaker Change: Okay, thank you.

Speaker Change: Could you guys just talk about, you know, lots of moving pieces here with the all-in-ops investment, but how much capital do you have left to deploy from this point, and just discuss the pipeline, what you're seeing in terms of possible M&A, thanks.

Michael Tiedemann: Solutions. We're moving forward with the benefit of experienced partners, further global scale, and a deep network in key geographies.

Michael Tiedemann: In terms of capital deployment, first of all, in terms of inorganic growth, we really are firm believers in the importance of our organic growth, and that, ultimately, we believe, will drive a lot of value for the franchise as we go forward. So the teams are working. Globally, but certainly across regions together, and that's beginning to yield results, as we've described in the call. In terms of the Integrated Pipeline, we have not used any of the Allianz capital thus far, so we have that entire capital amount to deploy. We think of inorganic growth in three ways.

Michael Tiedemann: Today, I'm going to discuss our Q2 results, provide an update on our growth initiatives as we continue to expand the platform, increasing our presence and key domestic and international markets, as well as share our progress in refocusing our business around recurring revenues and in appropriate cost structure. On a consolidated basis, our assets under management and advisement have grown 4% to 72 billion for the trailing 12-month period, reflecting a mixture of acquisitions and asset dispositions.

Speaker Change: Yes, Wilma, this is Mike. In terms of the capital deployment, first of all, in terms of inorganic growth,

Speaker Change: We really are firm believers in the importance of our organic growth, and that ultimately, we believe, will drive a lot of value for the franchise as we go forward, so the teams are working.

Speaker Change: Globally, but certainly across regions together, and that's beginning to yield results as we've described them.

Michael Tiedemann: It's worth noting we have grown assets in our wealth management business by 15% to 56 billion over that same period, reflecting the shift in our asset composition to core businesses that produce consistent recurring revenues. In the second quarter, all T-generated revenues of 49 million. Importantly, 99% of the revenues in the quarter were from recurring fees.

Speaker Change: In terms of the integrated pipeline, we have not used any of the Allianz capital thus far, so we have that entire...

Michael Tiedemann: Talent, individual talent, advisors, or you know, producers to bring into the firm. Teams that can be hired away, and then, obviously, firms to be acquired. And when we think about all three of them there, what needs to be consistent and cuts across all three is the fit within the firm, the underlying clients and profile of clients, the way they operate, invest capital, service them, etc. These are all critically important things to align with the existing firm and the direction of the firm. Beyond that, we have a pipeline across all three of those.

Speaker Change: capital amount to deploy.

Speaker Change: We think of inorganic growth in three ways. Talent, individual talent, advisor, or

Speaker Change: you know, producers to bring into the firm.

Speaker Change: Teams that can be hired away and then obviously firms to be acquired and when we think about all three of them there it needs to be

Michael Tiedemann: We reported a net loss of 9 million compared to a net income of 28 million in Q2, 23, largely attributable to a decline in other income, as the prior year period included 66 million unrealized gain on our net liabilities. While this item impacts our gap-reported results, it is neutral to adjusted EBITDA, which for the second quarter was 5.5 million. Our adjusted EBITDA margin for the second quarter was 11%.

Speaker Change: What is consistent and cuts across all three is the fit within the firm, the underlying clients and profile of clients, the way they operate, invest capital, service them, etc. These are all critically important things to align with the existing firm and the direction of the firm.

Speaker Change: Beyond that we have a pipeline across all three of those as we seated today we have

Michael Tiedemann: As we stated today, the integration of three businesses is really largely behind us, and now we are orienting everything around growth. This really is, in many ways, our public offering moment, you know, with a lot of the labor of integration behind us. So it's an exciting time for us.

Speaker Change: The integration of three businesses is really largely behind us and now we are orienting everything around growth. This really is, in many ways, our public offering moment.

Michael Tiedemann: While our consolidated results this quarter are impacted by business repositioning we've been conducting over the last year, I'm very pleased by the growth and expanding margins in our core wealth platform, which I will now discuss in more detail as a review the quarterly highlights from each of our segments. Starting with wealth management, as I mentioned, we reported 15% asset growth over the last year. This growth is attributed to both inorganic and organic progress.

Speaker Change: with a lot of the labor of integration behind us. So it's an exciting time for us. There are opportunities to densify interrestictions where we already operate, which ultimately helps.

Michael Tiedemann: There are opportunities to densify interrestictions where we already operate, which ultimately helps Accelerated Drive Margins, and we're evaluating new jurisdictions as well, which we think will be strategically important for the firm of the company. Okay, thank you very much. And then operating expenses came in a little bit better than our model. I understand there's a lot of moving pieces there, but is this a decent run rate, or how should we think about the coming quarters? Will there maybe be some additional expenditure on looking at arising opportunities? If you could just give us a little color there, thanks.

Speaker Change: Accelerated Drive Margins, and we're evaluating new jurisdictions as well, which we think will be strategically important for the future.

Speaker Change: for the firm of the coming years.

Michael Tiedemann: In addition to our strategic acquisitions, we've powered business development through enhanced capabilities, a growing team, and a unique global offering. Furthermore, our client portfolios are well diversified across the range of asset classes, and have benefited from the strong performance of our various risk exposures.

Speaker Change: Okay, thank you very much. And then operating expenses, they came in a little bit better than our model.

Speaker Change: I understand there's a lot of moving pieces there, but is this a decent run rate or how should we think about the coming quarters?

Speaker Change: Will there maybe be some additional expenditure on looking at emanated opportunities? If you could just give us a little color there, thanks.

Stephen Yarad: Bye. Sure. So Wilma, it's fair to say that there are still some moving pieces in our reported operating expenses. However, we've seen a significant amount of reduction in reported operating expenses over the past year. In our financials that you'll see posted later today, you'll be able to see the non-compensation expenses, in particular, have been coming down. As we move forward and we embark on additional M&A activity, you'll see a mix of reductions in so-called legacy operating expenses, but you'll also see some additional transaction costs, entities we're acquiring, still a bit of noise in reported operating expenses. As it relates to normalized operating expenses, you'll see less of the noise in normalized. So the current run rate is...

Michael Tiedemann: This was an active quarter for us in the M&A front.

Michael Tiedemann: On April 1st, we announced the acquisition of East End Advisors, adding nearly 6 billion of AUM to the Alt-E wealth management platform. The New York-based independent advisory firm has an established investment track record with an experienced team. This acquisition will enable and enhance our ability to compete in the outsourced chief investment officer or OCIO market. Our teams have already been collaborating on investment analysis and client portfolio development. Additionally, we're developing a strong collective pipeline as our business development teams are collaborating closely in meeting with prospective clients.

Will: So Wilma, it's fair to say that there are still some moving pieces in our reported operating expenses. We've seen a significant amount of reduction in reported operating expenses over the past year. In our financials that you'll see posted later today, you'll be able to see

Will: non-compensation expenses, in particular, have been coming down. As we move forward and we embark on additional M&A activity, I think it's important to understand that

Speaker Change: You'll see a mix of reductions in legacy operating expenses, but you'll also see some additional transaction costs and some additions from entities we're acquiring.

Michael Tiedemann: On July 1st, we close the acquisition of OnVoy, a $3 billion AUM wealth manager based in Minneapolis. This acquisition expands our presence in the Midwest, adds depth to our investment team, and compliments our existing services for the ultra-hynet worth, in the past month, we've made strides in integrating the business to our platform and leveraging our combined expertise to deepen and expand our business development efforts in the region. On the international front, we've been integrating London-based point-wise partners into our UK operations after increasing our ownership in a wealth management firm to 100% today. This partnership is reflective of our ability to provide boutique, level, targeted services for the backing of a global platform.

Speaker Change: and reported operating expenses. As it relates to normalised operating expenses, you'll see less of the noise in normalised, so the current run rate, you know, is...

Stephen Yarad: It's probably fair for the short term, but we continue to work very closely and diligently on reducing longer-term amounts of professional fees and advisers. Okay, thank you. Thank you. Our next question is from the line of Chris Kotowski with Oppenheimer and Company. Please go ahead.

Speaker Change: It's probably fair for the short term, but we continue to work very closely and diligently on reducing longer term amounts of professional fees and advisor spend.

Speaker Change: Okay, thank you.

Speaker Change: Thank you. Our next question is from the line of Chris Kotowski with Oppenheimer & Co. Please go ahead.

Chris Kotowski: Yeah, good morning, and thanks for taking the question. My first question is just to make sure I got the revenue guidance on wealth management correct. And I guess I'm looking at page 12 of the presentation. And if I heard you right, you said that most of the increased quarter to quarter from 36.8 to 40.9 in revenues came from acquisitions. Did I hear that correctly? Yes, and just so this is my calorie Chris, a few things there.

Chris Kotowski: Yeah, good morning, and thanks for taking the question.

Michael Tiedemann: In the second quarter, we also completed our sale of the European-based Trust and Private Office Services businesses for approximately 29. With these transactions in our belt, we are now focusing all of our efforts on amplifying our investment offerings and core recurring revenue businesses globally. Turning to our organic growth, we're pleased with the performance of the domestic business, which has increased 11% on an organic basis over the past year. You're also encouraged by the momentum of our international platform.

Chris Kotowski: My first question is, I wanted to make sure I got the revenue guidance on wealth management correct. I guess I'm looking at page 12 of the presentation.

Speaker Change: And if I heard you right, you said that most of the increased quarter-to-quarter from the $36.8 to the $40.9 in revenues, that most of that came from the acquisitions. Did I hear that correctly?

Michael Tiedemann: This was a quarter where we were exiting Family Office Services, so we had one-third of the quarter revenue is roughly in the quarter. So you have that as a reduced revenue amount, and then you have the addition of East End. Envoy begins July 1st. Important to note, and this is a seasonal...

Speaker Change: Yes, and just, so this is Mike, how are you Chris? There are a few things there. This was a quarter where we were exiting

Michael Tiedemann: Our international team is secured significant wins across multiple jurisdictions in recent months and has the strongest pipeline we've seen since our listing. This is driven by a combination of favorable trends, strong collaboration across our scale global platform, and the addition of key talent. Most recently, Victoria Sriva, a senior and trusted divisor from many large European families joined our London team bringing nearly 15 years of experience gained from a time at several leading global banks.

Speaker Change: Family Office Services Intra-Quarter, so we had one-third of the quarter revenues roughly in the quarter, so you have that as a reduced revenue amount, and then you have the addition of East End. Envoy begins July 1st.

Michael Tiedemann: Observation Q2, specifically in the states, there is a large outflow for taxes, the April 15th date, so it is entirely common to see an exaggerated outflow number from the business from clients that are not exiting but simply paying their tax bills. So any new business wins and offsets really just go to offset that. So that is a seasonal thing for you all when you think about your modeling in Q2 as you go forward within Wealth.

Speaker Change: Important to note, and this is a seasonal

Speaker Change: Observation Q2

Speaker Change: specifically in the states is a large outflow for taxes, the April 15th date, so it is entirely common to see

Michael Tiedemann: Now let's discuss some of the trends we're observing. We're seeing European and Middle East based families requesting holistic reviews of their global holdings that are currently managed across a variety of banks with the objective of engaging an experienced advisor that can provide sophisticated OCIO services. We are also seeing European ultra-high net worth families moving capital and creating structures and various jurisdictions for tax purposes and other considerations. Additionally, large and complex multi-generational families are engaging trusted advisors to help plan the transition of businesses and wealth.

Speaker Change: Exaggerated outflow number from the business from clients that are not exiting but simply paying their tax bills

Speaker Change: So any new business wins and offsets really just goes to offset that. So that is a seasonal thing just for you all when you think about your modeling in Q2 as you go forward within Wealth. And you do see that additionally on the strategic alt side.

Michael Tiedemann: And you do see that additionally on the Strategic Alt side, that there tend to be points of the year where people are rebalancing and reallocating capital. So, Q2 in the wealth segment is a pronounced outflow each and every year, specifically in the States, related to TARGET. Okay, that makes sense. And then, I guess, as you noted, there are a lot of moving parts with, you know, the disposition halfway through, and one acquisition late in the quarter and then another one July 1st.

Speaker Change: There tend to be points of the year where people are rebalancing and reallocating capital. But Q2 in the wealth segment is a pronounced outflow each and every year.

Michael Tiedemann: This is a trend we see only increasing in the coming years. All T is uniquely positioned to capitalize on the current environment, given our global presence in Dava South, paired with our independence and flexibility. Our cross-border teams can report on accounts spread across multiple banks and jurisdictions and manage complex portfolio compositions with a coherent strategy. Perspective and existing clients also cite our cost-effective solutions, holistic offerings, creative ideas and localized teams as important differentiators. As a global organization with strong local presence, our teams speak the language of our clients and have a differentiated regional expertise.

Speaker Change: specifically in the states related to taxes.

Speaker Change: Okay, that makes sense. And then, I guess, as you noted, there are a lot of moving parts with, you know...

Speaker Change: the disposition halfway through.

Michael Tiedemann: If you could say, is there a way, like, if everything were equal, you know, no major inflows or outflows, you know, what the run rate revenues we'd be looking at in the third quarter would be, just given the acquisitions that have already closed? So Chris, as we move forward from here, I would expect you would see a marginal increase related to the acquisition of Envoy, which closed on July 1st. And obviously, that's on the management fee line. Other lines related to the incentive fees are more dependent on the underlying performance of those.

Speaker Change: and one acquisition late in the quarter and then another one July 1st. If you can say, is there a way, like, if everything were equal...

Speaker Change: no major inflows or outflows, what the run rate revenues we'd be looking at in the third quarter would be, just given the acquisitions that have already closed.

Speaker Change: So Chris, as we move forward from here, I would expect you would see a marginal increase related to the acquisition of Envoy, which closed on July 1st.

Michael Tiedemann: Turning to our strategic alternative segment, throughout the last year, we've been reorganizing the segment to prioritize solutions that deliver predictable revenues, compelling returns, and diversified investment opportunities for our LPs, as well as to complement our wealth management business. The sale of LXI and the restructuring and our private real estate business has resulted in lower segment level assets in the in the quarter. However, the segment's revenue mix has improved, with 93% of our business in the quarter being recurring in nature.

Chris: And obviously, that's on the management fee line.

Chris: Other lines related to the incentive fees, that's more dependent on the underlying performance of those investments.

Michael Tiedemann: Okay, cool. And then just moving on to page 15 of the presentation, when you said you were conducting a review of the... Real Estate Funds, and so on page 15, we see. In the upper right, there's roughly $9 billion of AUM there, and then there's the real estate bridge lending fund. I assume it's all under review, or is it primarily the real estate public and private funds that we see in the upper right? It would be in the upper right so the real estate is public and private. Okay.

Speaker Change: Okay, cool. And then, just moving on to page 15 of the presentation, when you said you were conducting a review of the...

Speaker Change: Real Estate Funds. And so on page 15 we see

Michael Tiedemann: This represents a 6% increase compared to the top line composition in the comparable period in 2023. Our uncorrelated strategies, the foundation of all our alternatives platform, have exhibited positive performances here. Our European long short and Asia credit strategies were up 6.9 and 8.3 respectively to the end of the second quarter. Moreover, our streamline efforts continue to yield a significant reduction in cost reflected in a 15% decrease of our normalized operating expenses in the second quarter compared to the same period in 2023.

Speaker Change: You know, in the upper right, there's roughly, you know, $9 billion of...

Speaker Change: of AUM there, and then there's the real estate bridge lending fund. I assume, is it all under review, or is it primarily the real estate public and private funds that we see in the upper right?

Speaker Change: It would be the upper right, so the real estate, public and private funds.

Chris Kotowski: All righty. That's it for me. Thank you. Thank you. As there are no further questions, I would now hand the conference over to Michael Tiedemann for his closing comments. Thank you, operator, and thank you all for joining us this morning. We look forward to updating you on our third quarter financials in November. Have a great weekend. Thank you. The conference of Alt-Tiedemann Global has now concluded. Thank you for your participation. You may now disconnect your lines.

Speaker Change: Okay. All righty. That's it for me. Thank you.

Speaker Change: Welcome.

Speaker Change: Thank you.

Michael Tiedemann: We expect this to continue as we move forward and focus on streamlining our business and the infrastructure needed to service. We recognize that the repositioning of the businesses within the segment has negatively impacted our results for the last year. On that point, I'd like to note that as we deploy the growth capital from our partners, we will evaluate ways to enhance our reporting methods to offer visibility into the progress we were making as a go-forward enterprise. We will seek to provide the street with the necessary visibility as we execute on our long-term objectives.

Speaker Change: As there are no further questions, I will now hand the conference over to Michael Tiedemann for his closing comments. Thank you, Operator, and thank you all for joining us this morning. We look forward to updating you on our third quarter financials in November .

Speaker Change: Have a great weekend

Speaker Change: Thank you. The conference of Alt-Tiedemann Global has now concluded. Thank you for your participation. You may now disconnect your lines.

Michael Tiedemann: On the subject for our partners, I want to wrap up my comments by reviewing the strategic and transformational nature of these relationships following the closing of Allianz's investment last week. We believe the partnerships we've established results in a pioneering transaction for the insurance, wealth management, and asset management sectors, delivering long-term benefits to all three parties. Investments accelerate all T's path to become leading global platform in the attractive ultra-high net worth wealth management vertical and advance Allianz X and CWC's participation in the estimated 609 trillion global wealth market.

Michael Tiedemann: The wealth management sector is characterized by stable, recurring revenues, a capitalite model, which is what made it so attractive to us. And it's one of the core reasons our partners made the investment. The investments will advance the scale and reach of all T's expansion strategy, accelerating top-line growth and existing and new markets across the US Europe and Asia. Already, we've deployed capital from CWC investment to fund the acquisitions of envoy and east end advisors.

Michael Tiedemann: Looking ahead, we have an actionable pipeline as we evaluate capital deployment opportunities for the Allianz X investment. Our organic growth initiatives will be enhanced through expanded lead generation opportunities and importantly, to potential to service Allianz clients and families, as well as the ability to leverage our partners' footprints and relationships as we enter new markets. As I mentioned earlier, we bring a localized expertise to our clients while offering the resources, expertise, and insights of a global platform.

Michael Tiedemann: Our clients benefit from our scale, access, and lower fees and also lean in us for idea generation to maximize their exposures to the private markets. Importantly, our relationship with Allianz will enable us to offer our clients favorable fees and key investment products. This is just one way our partnerships will result in operational benefits to our clients.

Michael Tiedemann: Finance. Finally, we are privileged to count on the deep global financial services expertise our partners bring to our board as we embark on this new phase policy.

Stephen Yarad: With that, I'll turn the collar over to Steve and take you through a deeper dive in our financial. Thank you, Mike. Progress with our strategic partners has positioned all the growth in the quarters to come. As we continue to execute on our long-term roadmap, streamline operations and focus on our core recurring revenue businesses. Oldie generated revenues of 49 million in the second quarter, reflecting a 4% decrease compared to the second quarter of 2023.

Stephen Yarad: On a like-for-like basis, that is, adjusting for the acquisition of East End Advisors and excluding the European Trust business and the public real estate businesses we've exited, revenues would have been up 4% year on year. I'm pleased to report that recurring management fee revenues increased by 4% to 99% in the period. Importantly, revenues in our wealth management segment increased 20% to 41 million in the second quarter compared to the second quarter of 2023, along with 15% AUA slash AUM growth during this period.

Stephen Yarad: Our robust revenue growth compared to the prior year period is primarily driven by the inclusion of East End Advisors in our results, in addition to market performance and other organic growth. Excluding the impact of acquisitions into vestiges, assets increased 10% and revenues increased 15% compared to 2023. Further, 100% of wealth management revenues in Q2 2024 were recurring. In our strategic alternative segment, revenue totaled 9 million in Q2 compared to 17 million in the second quarter of 2023, largely driven by lower management fees and reduced transactional fees in the real estate division, reflecting our repositioning of the private and public real estate businesses.

Stephen Yarad: The comparable quarter in 2023 included management fee revenue from a public real estate fund which was deconsolidated from our results starting in the third quarter of 2023. The prior year quarter also included management fees from LSI which was sold earlier this year, as well as transactional fees in the private real estate division. Adjusted for the sale of LSI which contributed 2 billion in the second quarter of 2023, assets decreased by 13% year on year, reflecting the repositioning at the private real estate business as we exited or restructured certain deals. Notably, recurring revenues for the segment increased by 6% to 93% in the quarter.

Stephen Yarad: Gap net loss for the second quarter was 9 million compared to net income of 28 million in the comparable period in 2023. The decrease was driven by lower other income in the current period and tax benefits recorded in the prior year period. Other income decreased as the prior year period included an unrealised gain on earn out liabilities compared to an unrealised loss in the current period. This decline was partially offset by lower impairment charges in the current year period as well as gains on investments compared to losses in the prior year period.

Stephen Yarad: Our adjusted net loss for the second quarter was 3 million, and Ben. Consolidated, normalized operating expenses for the second quarter, which exclude non-cash compensation, expenses related to severance costs, depreciation and amortization, and certain transaction and deal-related expenses were 46 million, up slightly compared to the first quarter of 2024. Excluding East End, normalized operating expenses would have declined 4% compared to the first quarter. Second Quarter Adjusted EBITDA was 5.5 million, a decrease of 1.3 million compared to the previous quarter.

Stephen Yarad: Our Adjusted EBITDA margin was 11% in the second quarter compared to 13% in the first quarter of 2024. Although our consolidated margin decreased in the quarter, our core wealth management businesses continue to perform well. The Adjusted EBITDA margin for our wealth management division improved to 23% in the second quarter from 18% in the prior quarter. As we have mentioned, we expect that our recently completed acquisitions, in combination with cost savings and restructuring initiatives being implemented, will be key in realising our firm-wide asset composition towards core businesses and recurring revenues which will drive operating leverage and result in margin improvement going forward.

Stephen Yarad: In addition, we believe that we will be able to deploy the capital raise from alliance to make additional accretive transactions that will further strengthen our results. Further, I would like to note that, concurrent with the closing of the investment from alliance at the end of July, management commenced a strategic review of the real estate co-investment and fund management businesses. This review, which is expected to be completed prior to the end of the third quarter of 2024, will consider, among other things, an assessment of the future of these businesses, including whether any changes to our legal entity structure will composition of operating segments may be needed, consistent with any changes in the business that may be determined necessary.

Stephen Yarad: As I conclude my remarks, I'd like to touch on our capital structure. At quarter end, we had 60 million in cash and 163 million in debt. We deployed 24 million of capital in early July in connection with the acquisition of Envoy, and on July 31st, we received an additional 250 million from alliance. Today, Altie has a fortified balance sheet, world class partners, a unique global footprint, and is well positioned to execute its organic and inorganic growth plan.

Michael Tiedemann: With that, I will turn it back to Mike for concluding remarks. Thank you, Steve. This was an important quarter for our organization, and we're excited about what Altie can accomplish, the attractive global wealth market, as we participate in the largest generational wealth transfer estimated at over 80 trillion over the next 20 years. As we onboard our strategic partners, deploy capital and expand our global footprint, we're positioning Altie for long-term success. We look forward to demonstrating how our strategic imperatives will lead to accelerated growth, profitability, and importantly, create sustainable shareholder value.

Operator: With that, I'll open up the call for questions. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. Our confirmation tone will indicate your line is in the question queue. You may press star and two if you'd 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. Ladies and gentlemen, we will wait for a moment while we poll for questions.

Wilma Burdis: Our first question is from the line of Wilma Burdis with Raymond James, please go ahead. Good morning. Could you just talk a little bit more about the EVA.Marger improvement and well-facement? What are the drivers and what do you expect in the coming four years? Thanks. Good morning, Wilma. Steve here. How are you today? I'm doing well. That's great. We expect, as we fully integrate East End and with Envoy coming on board, that those businesses are creative and they will contribute to growth in the EVA.Marger going forward.

Wilma Burdis: I think also as we now that we have the Alleyons investment on board and looking at our pipeline moving forward, we are looking at businesses that generate margins above that 11% that we recorded in the second quarter. So as those transactions occur, we would expect margin improvement to be driven by that M&A activity. Great. And then alternative A&M down, is that largely due to another reposition in the real estate business? And I think you guys just touched on it, but it sounds like you might have more reviews in the real estate portfolio, so could you go in a little more detail there?

Wilma Burdis: Thanks. Sure. On a year-over-year basis, yes. It's been driven by, you know, the repositioning has been done in the real estate business and the P.M. P.M, on the sale of LSI. I'll also note that we had in the second quarter of 2023, we were still consolidating the AHRA Humory Public Read as well, so that also had a year-on-year basis as an impact. Sorry, the second part of your question, Wilma, could you repeat that for me?

Wilma Burdis: Yeah, I thought in your comments, you just touched on possibly reviewing more of that real estate portfolio. Sure. What does that look like, and if there's the possibility for more runoff in A&M, thanks. So, after the allowance investments closed, we have started a review of the real estate co-investment and the private fund businesses, so as we go through that review, which we do expect to be completed by the end of the third quarter, I'd say that all options are on the table in terms of the strategic direction of those businesses, and I don't want to get ahead of what we may or may not do there, but it's fair to say that it's possible that they could be runoff in those businesses as a result of that review.

Wilma Burdis: Okay, thank you, Edwin. Could you guys just talk about, you know, lots of missing pieces here with the all-in-outs investment, but how much capital do you have left to deploy from this point? And just discuss the pipeline, what you're seeing in terms of possible and an A&M. Yes, Wilma, this is Mike. In terms of the capital deployment, first of all, in terms of inorganic growth, we really are firm believers in the importance of our organic growth, and that ultimately we believe will drive a lot of value for the franchises we go forward.

Wilma Burdis: So the teams are working globally but certainly across regions together, and that's beginning to yield results as we described in the call. In terms of the integrated pipeline, we have not used any of the allions capital as far, so we have that entire capital amount to deploy. We think of inorganic growth in three ways, talent, individual talent, advisor, or producers to bring into the firm, teams that can be hired away, and then obviously firms be acquired.

Wilma Burdis: And when we think about all three of them there, it needs to be what is consistent and cuts across all three is the fit within the firm, the underlying clients and profile clients, the way they operate, invest capital, service them, etc. These are all critically important things to align with the existing firm and the direction of the firm. Beyond that, we have a pipeline across all three of those. As we see today, we have the integration of three businesses is really largely behind us, and now we are orienting everything around growth.

Wilma Burdis: This really is in many ways our public offering moment, with a lot of the labor of integration behind us. So it's an exciting time for us, there are opportunities to densify interstictions where we already operate, which ultimately helps accelerate drive margins and or evaluating new jurisdictions as well, which we think will be strategically important for the firm of the coming years. Okay, thank you very much. And then operating expenses, they came in a little bit better than our model.

Wilma Burdis: Understand there's a lot of moving pieces there, but is this a decent run rate or how should we think about the coming quarters? Well, there may be some additional expenditure on looking at emanated opportunities. If you could just give us a little color there, thanks. Sure, so we'll be fair to say that I still have some moving pieces in our reported operating expenses. We've seen a significant amount of reduction in reported operating expenses over the past year.

Wilma Burdis: In our financials that you'll see posted later today, you'll be able to see, you know, the non-compensation expenses in particular have been coming down. As we move forward and we embark on additional M&A activity, you'll see a mix of reductions in cervical legacy operating expenses, but you'll also see some additional transaction costs and some additions from entities we're acquiring. So, you know, sort of the noise and reported operating expenses as it relates to normalised operating expenses, you'll see less of the noise in normalised, so the current run rate, you know, is probably fair for the short term, but we continue to work very closely and diligently on reducing longer term amounts of professional fees and advice, of Perspect. Okay, thank you.

Wilma Burdis: Thank you.

Christ Kotowski: Our next question is from the line of Christ Kotowski with Open Himer and Company. Please go ahead. Yeah, good morning and thanks for taking me a question. My first question is just I wanted to make sure I got kind of the revenue guidance on wealth management, correct? I guess I'm looking at page 12 of the presentation. And if I heard you write, you said that most of the increased quarter to quarter from the 36.8 to the 40.9 revenues that most of that came from the the acquisitions.

Christ Kotowski: Did I hear that correctly? Yes, and it just said this is Michael or Christ. There are a few things that this was a quarter where we were exiting family office services into a quarter. So we had one third of the quarter revenues roughly in the quarter. So you have that as a reduced revenue amount. And then you have the addition of East End on the way begins July 1st. Important to note, and this is a seasonal observation.

Christ Kotowski: Q2, specifically in the states, is a large outflow for taxes, April 15th date. So it is entirely common to see an exaggerated outflow number from the business from clients that are not exiting but simply paying their tax bills. So any new business wins and offsets really just goes off sent that. So that is a seasonal thing just for you all when you think about your modeling and Q2 as you go forward within wealth.

Christ Kotowski: And you that there tends to be points of the year where people are rebalancing and and reallocating capital. So but Q2 in the wealth segment is a pronounced outflow each and every year, specifically in the states related to taxes. Okay, that makes sense. And then I guess and you've not noted there are a lot of moving parts with the you know the disposition halfway through and and one acquisition late in the quarter.

Christ Kotowski: And then another one July 1st is if you can say is there a way like if everything were equal, you know, no major inflows or outflows, you know, what the run rate revenues we'd be looking at in the third quarter would be just given the acquisitions that have already closed. So Chris as we move forward from here, I would expect you would see, you know, a marginal increase related to the acquisition of envoy which closed on July 1st. And obviously that's on the management fee line. Other lines related to the incentive fees, that's more dependent on the underlying performance. Okay, cool.

Christ Kotowski: And then just moving on to page 15 of the presentation, when you said you had you're conducting a review of the real estate funds. And so on page 15 we see, you know, in the upper right there's roughly, you know, nine billion dollars of of AUM there. And then there's the real estate bridge lending fund. I assume the bridge is is it all under review or is it primarily the real estate public and private funds that we see in the upper right. It would be the upper right, so the real estate public and private funds. Okay. Already.

Christ Kotowski: That's it for me. Thank you.

Michael Tiedemann: As that of no further questions, I would now hand the conference over to Michael Tiedemann for his closing comments. Thank you, operator, and thank you all for joining us this morning. We look forward to updating you on our third quarter financials in November.

Operator: Have a great week. Thank you.

Operator: The conference of all Tiedemann Global has now concluded. Thank you for your participation. You may now disconnect your lines. Thank you.