Q4 2024 AlTi Global Inc Earnings Call
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Matt: Good afternoon. My name is Matt and I'll be your conference operator for today. At this time, I'd love to welcome everyone to Altis' fourth quarter, 2024, Erning's conference call. During the call, your lines will remain in a listen-only mode. After the speaker 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 Alphe's Investor Relations website. Now, at this time, I'll turn things over to Lily Arteaga, head of Investor Relations for Alphe, please go ahead.
http://TheBusinessProfessor.com
Speaker Change: Good afternoon to everyone on the call today. Joining me this afternoon are Michael Tiedemann or CEO Kevin Moran or President and CEO Mike Harrington or CFO and Patrick Keenan or CEO .
Speaker Change: We invite you to visit the Investor Relations section of our website at www.altidashglobal.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 fuller-looking statements within the meaning of the Private Security's litigation reform act of 1995.
Speaker Change: Forward-looking statements can be identified by the use of the words that just anticipate, believe, continue, estimate, expect, future, intent, may, planned, and will, or similar words.
Speaker Change: Because these forward-looking statements involve both known and unknown risks and uncertainties, they're important structures that could cause actual results to differ materially from those expressed or implied by these forward-looking statements.
Arteaga: I'll see you soon with no obligation or responsibility to update any forward-looking statements.
Arteaga: During this call, some comments may include references to non-GAAP financial measures. Full reconciliation can be found in our earnings presentations and our related SEC policy filings. With that, I'd like to turn the call over to Mike.
Mike: Good afternoon everyone, and thank you for joining us this afternoon. I'm excited to share the significant progress we've made in 2024 as we advance towards our goal of becoming the world's leading independent ultra- and net worth wealth management firm with targeted expertise in alternatives and impacts.
Speaker Change: Additionally, I'm pleased to introduce Mike Harrington, R-C-F-O, where I'll throw the heaven on board bringing deep experience across key sectors and a proven ability to scale organizations while driving cost-efficiency and strategic growth.
Speaker Change: 2024 has been a transformative year for all to you. We established groundbreaking strategic partnerships, advanced our growth strategy, streamlined non-core assets, and restructured our segments to focus on stable recurring revenue businesses.
Speaker Change: Importantly, we strengthen our cost-cutting and efficiency initiatives to optimize our operations.
Speaker Change: As a result, we are at a critical inflection point, poised for significant profitable growth and value creation in 2025 and beyond.
Speaker Change: Before diving into the results, it's worth noting that year-of-year comparisons are impacted by a one-time $41 million dollar incentive fee recorded in Q4 2023, which skews direct comparisons.
Speaker Change: On a consolidated basis, our asset center management and advisement grew 6% year-over-year. In our core wealth and capital solution segment, however, assets increased 15%, driven by the inclusion of East End and non-voy, along solid portfolio performance.
Speaker Change: For 2024, ALT generated 207 million in revenues with 96% of that coming from retiring management fees, a significant increase from 77% in 2023. This shift is the key indicator of the sustainability and sustainability of our revenue base.
Speaker Change: Consolidated Adjusted EBITDA was 17 million for the year, while our core wealth management and capital solution segment delivered adjusted EBITDA of 37 million
Speaker Change: with a 19% margin reflecting a stronger profitability of this key segment. I would like to highlight the key accomplishments of 2024, which I mentioned earlier and are just beginning to be reflected in our financials.
Speaker Change: Early in 2024, we announced a strategic partnership with Ali Amzex in Constellation Wealth Capital, which includes a combined investment of up to 450 million, and supports our ambitions to become the go-to global multi-family office for ultra-high net worth individuals.
with a specialized focus on alternative investments.
Importantly, these partnerships bring more than just growth capital.
Speaker Change: They offer strategic collaboration, which should have already proven instrumental in executing on strategic acquisitions in key markets globally, such as our recently announced acquisition of Quantura, expanding our reach, fortifying our team and enhancing our service offerings.
Speaker Change: A great example of the latter is our recently announced partnership with Aliens, which provides unprecedented private market access to the ultra-high net worth segment by enabling clients to invest alongside Aliens' balance sheet.
Speaker Change: This partnership facilitated through a joint venture with Aliens X is a game changer for our clients, opening doors to exclusive investment opportunities.
Speaker Change: Through this unique private-market investment program, ALT clients, both existing and perspectives, will benefit from Aliens' extensive network and scale as an allocator.
Speaker Change: They gain access to leading third-party managers with exceptional track records, significant cost savings, and expanded investment opportunities including secondaries and co-investments.
Speaker Change: and November , we announced the first fund under the program focused on the global private credit market, which was estimated at 1.5 trillion.
Speaker Change: Alliance, with approximately 150 billion allocated to the sector, is one of the largest private investors worldwide, further underscoring the strength and potential of this collaboration. We're excited by the fund's progress since its December launch.
Speaker Change: The joint venture launched and secured 150 million in subscriptions, solely from Alte's International Wealth Management Clients for the January 1st close, and is on track to secure at least an additional 50 million in April .
Speaker Change: Reexpect was robust on growing growth, including from the U.S. client, launch scheduled in the second half of the year.
Speaker Change: In 2024, we made significant strides in executing our growth strategy. We achieved 15% asset growth in our core wealth management and capital solution segment, fueled by both inorganic and organic growth.
Speaker Change: The success stemmed from strategic acquisitions, enhanced business development efforts, a growing team and a unique global offering designed for the expanding ultra-hannet worth market.
with a 102 trillion addressable market growing at 7% compounding.
Speaker Change: The ultra-hynet worth segment is wealth management's fastest growing market.
Speaker Change: During the year, our assets undermanagement and advisement also benefited from the strong performance of our diverse portfolio exposures.
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Speaker Change: Our platform, Success in 2024, has been recognized with several prestigious awards, including Best Multifamily Office over 25 billion for the second consecutive year, as well as Best
Speaker Change: Evaculades from the With Intelligence Private Asset Management Awards Law of the strength of our platform and client relationships.
and support our business development efforts.
Speaker Change: Strategic and Accredives, Feminade Remains, a key priority in driver of both top line growth and margin expansion, as we build on our existing platform.
Speaker Change: We take a discipline approach to our acquisition pipeline, carefully evaluating the prospective profile, footprint, service offerings, and fit within all to you. In 2024, you actively execute it on the strategy with nodal activity in the US and Europe .
Speaker Change: In April , we completed the acquisition of East End Advisors, a New York-based independent advisory firm.
Speaker Change: This acquisition added nearly 6 billion of assets and an annusment to the ALC wealth and capital solutions platform positioning us to better compete in the growing outsourced chief investments or OCIO market.
Speaker Change: And since closing, the teams have been collaborating on investment analysis and client portfolio development and we have a strong pipeline of potential declines.
Speaker Change: At the start of the third quarter, we successfully completed the acquisition of Amvoy and Minneapolis Space Guelph Manager with $3 billion in assets in the management.
Speaker Change: This acquisition expands our footprint to the Midwest, and positions us to serve the needs of the alternate-worth families and foundations in the region through a distinctive offering of combined, unvoiced, low-leg frites, with our comprehensive wealth management services and global platform.
Speaker Change: Over the past few months, we've been integrating the business into our platform and leveraging our combined expertise to strengthen our business development efforts in the region.
Last year we also fortified our European presence.
In May, we completed the acquisition of Point-wise Partners.
Speaker Change: A London-based wealth management firm increasing our ownership to 100%. This transaction, which enables us to deepen our operations in the UK, demonstrates our ability to offer tailored services while benefiting from the backing of the global platform.
Speaker Change: As referenced earlier in the call, with the acquisition of Contora, this momentum has carried us into 2025.
Speaker Change: Last week, we announced the acquisition of this leading Humberg-based multi-family
with 14 billion euros in her manager.
Speaker Change: We'll boost our assets in the wealth management and capital solution segment to approximately 76 billion, as 62% increase since our listing.
Speaker Change: For the transaction, which we expect will be accretive to our EBITDA this year, we are leveraging the funding from Ali Enzac's earmark for Alts' expansion into the Tracks of Market.
Speaker Change: From the outset, we saw strong cultural alignment with contours, independent and entrepreneurial founder run team.
Speaker Change: with nearly 20 years offering a range of services including family office and investment solutions to alter and network clients and Germany and Austria. Contour is an ideal set as we expand our international platform.
Speaker Change: We look forward to supporting its growth by leveraging the significant scale benefit of all T's global platform, including our superior access to world-class investment opportunities at attractive terms.
Speaker Change: Going forward, we will continue to focus on complementary domestic and international markets, with attractive characteristics, including markets of significant size.
which remained underserved by the independent wealth model.
Speaker Change: Our expansion plans will build on all these existing presence, as well as the relationships and footprints of our partners.
Speaker Change: As part of our ongoing focus on enhancing our core recurring revenue businesses, in 2024, we also took important steps to divest non-strategic businesses.
Speaker Change: In the first quarter, we closed the sale of LRA, the advisor to the UK publicly traded fund LXI for 33 million plus a contingent consideration.
Speaker Change: and may be completed the sale of our European Trust and Private Office Services businesses, which primarily serve third-party clients for approximately $29.
Speaker Change: As we mentioned in the last quarter, following a strategic review, we determined the business currently reported on our international real estate segment, or not out of the door of long-term strategy.
Speaker Change: We are currently in advanced stages of negotiating the exit of this business, and expect to provide an update next quarter. With these direct messages, we are sharpening our focus on the wealth management and capital solution segments, which will drive long-term recurring revenues and profitability.
Speaker Change: I'll mail hand the call over to Kevin, discuss our cross-cutting initiatives and provide a deeper dive into our financials.
Speaker Change: Giving Mike Carrington, who's today celebrating a second week at all, the opportunity to equate himself with our business and financials and more depth.
Speaker Change: Thank you, Mike. I'd like to join you in welcoming Mike Carrick into the team. We're excited to leverage his deep expertise as we embark on this catalytic year and look forward to his valuable insights on future calls.
Speaker Change: To drive long-term profitable growth and maximize operating leverage, we kicked off a bold set of initiatives in late 2024 aimed at aggressively reducing costs and boosting efficiency and productivity. While we have made progress on our cost control since the listing, our cost base remains very elevated relative to the scale of our current business.
Speaker Change: This is a direct result of the cost tied to becoming a public company, integrating three companies in the business combination and adding several acquisitions in distinct geographies.
Speaker Change: As a result, we recognize the need for a more comprehensive approach, and in November , we introduced zero-based budgeting, whereas the EVB does streamline costs. The EVB is enabling us to cut unnecessary spending, maximize resource efficiency, and redirect savings in the key growth areas.
Speaker Change: We are in the final stages of its implementation and we are confident that this initiative will deliver significant cost reductions.
We look forward to sharing our progress on teacher calls.
Speaker Change: As part of our broader cost optimization strategy, we also took decisive action in 2-4, by divesting the back and middle office solutions for our turn of their spot for trimming our fixed cost structure by more than 2 million annually.
Speaker Change: Additionally, following the appointment of our CTO in October , we've begun transforming our technology platforms to enhance productivity, scalability, and efficiency.
Speaker Change: Key initiatives include building a core data platform to centralize analytics, incorporating AI initiatives.
Speaker Change: and transforming our CRM to establish globally-consistent workflows that improve advisor productivity.
Speaker Change: These initiatives will also help reduce costs and accelerate acquisition integrations onto our platform.
Speaker Change: As Mike pointed out, we're at a critical inflection point for all T. By focusing on our core recurring revenue businesses, it's successfully executing on our cost optimization efforts.
Speaker Change: We're positioning ALT for sustainable long-term profitable growth and increasing shareholder value in 2025 and beyond. I'll turn now to the results for the quarter and the year.
Speaker Change: Ulti-generated revenues of 207 million for the year and 53 million and Q4.
Speaker Change: To review these numbers on a comparable basis, you need to exclude the one-time 41 million and semi-stay recorded in Q4, 2023, and adjust the acquisitions of East Edward Visor and the Advoid.
Speaker Change: as well as exclude the European trust and pride off the services and the public real estate businesses which we
Speaker Change: As such, on a like-for-like basis, consolidated revenues in the year would have been 183 million up 3% year on year, more notably, Q4 revenues on a like-for-like basis.
were $46 million, up 20% from Q4 2023.
Speaker Change: I'm also pleased to highlight a significant shift towards more predictable revenue streams.
Speaker Change: Our recurring management fee revenue for 2024 was 96% for the full year and 93% for Q4. A sharp increase from 77% and 51% for the topical periods in 2023.
This marks the major milestone in our transformation.
Speaker Change: In our core wealth and capital solution segment, we saw 198 million in revenues for the year and 51 million in Q4. Management fees grew 13% in Q4, driven by strong asset growth.
Speaker Change: assets of remanagement and advisement were up 15% year-over-year, hosted by the inclusion of East End and Envoy, as well as solid portfolio performance.
Speaker Change: and our international real estate segment, which we've announced plans to exit revenues for 9 millions of years and 2 million with you for us.
Speaker Change: On a consolidated basis, adjusted EBITDA to the year was $17 million. However, our core wealth and capital solution segment delivered adjusted EBITDA was $37 million, with an EBITDA margin of 19%, underscoring the profitability of our ongoing business.
Speaker Change: Finally, consolidated operating expenses for the year decreased by 54 million to 292 million compared to 2023.
Speaker Change: This decrease was primarily driven by reductions in compensation expenses and professional trees reflecting the absence in 2024 of the compensation associated with the one time instead of the few recorded last year, as well as the streamlining efforts we've undertaken to position the business for sustained growth.
Speaker Change: We want to reiterate that we are committed to driving further cost efficiencies across the organization.
Speaker Change: As part of our ongoing efforts, we are taking a more aggressive approach to cost management through the implementation of ZBB.
Speaker Change: This methodology will enable us to evaluate every dollar spent and prioritize investments that deliver the highest return.
Speaker Change: By continuously reassessing and reallining our spending, we are confident that ZBD will unlock significant savings, further streamline operations, and position us for sustained profitability only moving forward.
Speaker Change: This disciplined approach to cost control remains a critical component of our strategy as we work to optimize our financial performance.
Speaker Change: We look forward to providing more details on the progress and outcomes of this initiative once we conclude the process and are able to share the full impact on our bottom line.
Speaker Change: As I conclude my remarks, I'd like to briefly address our capital structure.
Speaker Change: In December , we repaid our credit facility as its terms no longer line with our current business model and growth strategy.
Speaker Change: As of year end, we have no bank debt on our balance sheet. Looking forward, we expect our debt instruments to better match the funding requirements for both our organic and inorganic growth initiatives.
Providing the flexibility needed as we continue to scale.
Speaker Change: with a strengthen balance sheet, unique global presence, comprehensive service offerings.
Speaker Change: and ongoing partnerships. We are strategically positioned to execute on our growth plan.
Mike: With that, I'll turn it back to Mike for concluding remarks.
Mike: Thank you, Kevin. In conclusion, we're making significant progress in repositioning the business to focus on recurring revenues, and then streamlining and right-sizing the organization to align with our strategic goals.
Mike: with a large addressable market in our unique position in the wealth management space, particularly with ultra-hundred worth clients.
and Expertisanal Permitives.
We're well equipped to compete.
Our strong strategic partnerships further enhance our capabilities.
Mike: We're confident in our ability to execute on our strategy, drive profitable growth, and create long-term shareholder value. With that, I would like to open up the call for questions.
Speaker Change: Great, thank you. At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star 1 under telephone keypad. A confirmation tone will indicate your line isn't the question cue. You may press star 2 to remove yourself from the cue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment please for the poor for questions.
Speaker Change: Our first question is from Wilma Burdis, from Raymond James, please go ahead.
Wilma Burgess: Hey, good evening. Could you talk a little bit more about the acquisition in Germany and why it makes strategic sense? Thank you.
Wilma Burgess: Yes, I will, Wilma. Why you? The store is generally as a market, it's the third.
Speaker Change: largest in the world. It's clearly a strategic market to enter. It's a very challenging market to enter from the outside.
Contour was established as one of the premieres.
Independent operators dealing with families are very large.
Speaker Change: Quantans and also in a very specific range of sophisticated manners, so they were a perfect fit.
Speaker Change: for the types of clients and also services that we provide globally for our families and let our families need. It's a terrific fit, sounded lead, and obviously the association with Allianz was...
Speaker Change: Very helpful in the conversations and obviously the future of how we will approach that marketplace.
Speaker Change: makes a lot of sense. And then following the deal in Germany, can you talk about where you are on deploying capital? What else is what amount of capital do you have that remains to be deployed? And if you could give us some color on the pipeline.
Speaker Change: Yes, as you saw, we do not currently have a debt facility, so we are 65 as a total 31, of 65 million of available cash, and we will pair...
Speaker Change: that with acquisitions. So we do have an active pipeline of organic growth, which is critically important. Very good pipeline, both in the US, Europe and the Middle East, and then team liftouts.
Speaker Change: Okay, makes a lot of sense. And then is there anything else that we should expect from the strategic review on real estate? I guess financial impacts wise or is that behind us?
Speaker Change: The review was complete and we are in the final stages of...
of the divestment process.
Okay, so no additional financial impacts in the following quarters.
Speaker Change: No, we expect that to really be complete and behind us.
Speaker Change: Great. And then, can you talk a little about the normalized operating expenses? Is it a good run rate going forward or is there a lot more that can be done on the expenses?
Speaker Change: I'm here to let Kevin, who has been leading the ZBB process, natural that one.
Kevin: Wilma, I think we was on a call, but two years ago we met a while ago. Yeah, happy to answer the question. So, as I said in my remarks, we have undertaken doing the budgeting process of 2025 using the ZBB.
Kevin: Methodology, so it's a very comprehensive, you know, ZVB dictates a very comprehensive review of all of our expenses.
Michael Tiedemann, Stephen Yarad
Speaker Change: The firms show, for everything, from occupancy, to technology, to G&A, to, obviously, up professional fees which have been a major expense for us over the last.
Speaker Change: 2 years. So the combination of the strategic nations we made at the firm level, sort of the investments, the Mike just talked about the investment of real estate.
Speaker Change: The focus on really on the core part of the business, which is growing the wealth side. Those are all helping dictate the changes we're making on the expense side. So we do expect that our expenses going forward will be lower than they have been in the past.
Speaker Change: that would be a cross, really all aspects of our non-copy expenses, and we're also, we've also taken a hard look at our comp side as well and have sort of streamlined the comp sides we can really make sure that we're investing into the growth part of the business, which is the wealth business.
Speaker Change: Okay, thank you. And then, what are you seeing on the M&A arbitrage pipeline? Understand the M&A environment's a bit choppy. Just want to see if there's any finger. I guess expecting this year in terms of that kind of activity.
Speaker Change: I presume you're referring to the not the company's Emily, but the actual funds Emily.
Thank you.
Speaker Change: Yes, we'll be clearly the past of the prior years leading up to 25 or arguably the most challenging regulatory environment for M&A-focused traders and
Speaker Change: Research and History. So that has changed from the tone from obviously from the top, but also from the
Speaker Change: will set up well for increased enemy activity and by all accounts there's a big pipeline that bankers are working on. So we're very constructive on the forward view of that strategy.
Okay, thank you guys very much. Have a great evening.
Thank you, Wilma.
Speaker Change: Thank you all for listening in, and we look forward to updating you on our progress in May.
Speaker Change: Thank you. This includes today's teleconference. You may disconnect your lines of this time. Thank you again for your participation.
[inaudible] Thank you very much for your time