Q1 2025 AlTi Global Inc Earnings Call
All characters and characters in this film are fictional. To protect copyright, all actors and characters, including relatively young, are Feng Chen.
Thank you.
Matt: Good afternoon, my name is Matt and I'll be your conference operator today. At this time, I'd like to welcome everyone to out these first quarter, 2025, or any conference
Matt: During the call your lines will remain in a listen on the load and after the speakers remarks there will be a question and answer session. I'd like to advise all parties who this conference call is being recorded and a replay of the webcast is available on all of these investor relations website.
Speaker Change: Now, at this time, I'd like to turn things over to Lily Arteaga, head of investor relations for ALTI, thank you, you may begin.
Good afternoon to everyone on the call today.
Speaker Change: Joining me this afternoon are Michael Tiedemann, our CEO , and my Carrington, our CFO . We invite you to visit the Investor Relations section of our website at www.altete-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 foreign looking statements within the meaning of the Private Security Litigation Reform Act of 1995.
Speaker Change: These forward-looking statements include, but are not limited to, comments made during the prepared remarks and in response to questions.
Speaker Change: Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, expect, future, intend, may, planned, and will, for similar terms.
Speaker Change: Because these forward-looking statements involve both known and unknown risks and uncertainties, they're important factors that could cause actual results to differ materially from this expressed or implied by these statements.
Speaker Change: for a discussion of the recent uncertainties that could cause actual results to differ. Please refer to all these filings with the Securities and Exchange Commission, including its most recent annual report on Form 10K and subsequent quarterly reports on Form 10Q.
Speaker Change: Altus assumes no obligation or responsibility to update any forward-looking statements.
Speaker Change: During this call, some comments may include references to non-GAAP financial measures. Full reconciliation can be found in our earnings presentation and our related SEC filings. With that, I'd like to turn the call over to Mike Tiedemann.
Mike Tiedemann: Good afternoon everyone and thank you for joining us today. Since the beginning of the year we've made meaningful progress advancing our long-term strategy to become the leading independent global multi-family office and OCIO platform.
Mike Tiedemann: On the growth front, we close the acquisition of Comtora, marking our official entry into Germany, the world's third largest ultra-high net worth market.
Mike Tiedemann: We also began activating the capabilities of our strategic partners, launching our new private credit program to bring differentiated investment opportunities to our clients.
Mike Tiedemann: These efforts expand our global footprint and enhance the strength of our offering.
Mike Tiedemann: At the same time, we continue to lay the foundation for long-term profitability and efficiency by advancing our Resource Optimization Program.
Mike Tiedemann: Through our zero-based budget approach, we are aligning costs to the strategic priorities, enabling us to scale with greater focus and discipline.
Mike Tiedemann: In parallel, we're taking deliberate steps to exit non-core businesses, streamlining our operations, and channeling resources towards our highest conviction opportunities.
Mike Tiedemann: Together, these initiatives are positioning ALT to accelerate business performance and deliver sustained value creation through 2025 and beyond.
Mike Tiedemann: This afternoon I'll walk you through our first quarter results and highlight the strides we're making towards our long-term strategic priorities in growth agenda. In the first quarter, Altie generated 58 million in Consolidated Revenue, representing a 14% increase year-over-year.
Mike Tiedemann: Revenue in our core wealth management and capital solution segment rose 23% driven by a 10% increase in assets and management and advisement, reflecting contributions from last year's acquisitions and solid portfolio performance.
Mike Tiedemann: Revenue is in the segment also benefited from robust investment distributions from our stakes in external managers.
Mike Tiedemann: Notably, 83% of Consolidated revenue came from recurring management fees, underscoring the stability and predictability of the business model we are building.
Mike Tiedemann: Adjusted EBITDA for the quarter was 9 million on a consolidated basis, up from 7 million in the same period last year.
[inaudible]
Mike Tiedemann: The key pillar of our strategy is leveraging the full power of our long-term partners, Aliens X and Constellation Wealth Campbell.
Mike Tiedemann: strategic collaborators who are helping us scale smarter and faster. Together, we're expanding into new markets, blogging our offerings, and strengthening our position as a preferred partner for ultra-honate worth clients globally.
Mike Tiedemann: A compelling example of its collaboration is our joint friendship with Aliens Ice, which was transforming how our clients access private markets.
Mike Tiedemann: Through this platform, international clients can now invest alongside Allianz's balance sheet, unlocking access to top tier third-party managers, secondaries, and co-investments.
Mike Tiedemann: These are opportunities typically reserved for the world's largest institutions and we're proud to bring them to our client base.
Mike Tiedemann: The first launch under the program focused on the 1.5 trillion global private credit market.
Mike Tiedemann: Contour is a standout example, the premier Homburg based multifamily office managers 14 billion euros.
Mike Tiedemann: So it's and represents our official entry into Germany.
Mike Tiedemann: I've referenced earlier, the third largest ultra high net worth market globally.
Mike Tiedemann: This deal was closed on April 30th as our first European transactions since securing the capital from Allianz Zacks.
Mike Tiedemann: From the outset, we saw natural sub some tourists founder loved the independent model aligns with our own and their 16 year track record of serving ultra high net worth clients across Germany, and Austria in a holistic manner made him a clear strategic condition.
Mike Tiedemann: By connecting them to all Ts global scale and capabilities, particularly in alternatives and impact we're enabling the next chapter of our growth story.
Mike Tiedemann: With the addition of Contura total assets in our wealth and capital solutions segments have reached approximately 82 billion <unk>.
Mike Tiedemann: Including around 32 billion from managed through our international platform positioning all tea is one of the largest international multifamily offices.
Mike Tiedemann: Contura will be consolidated into our financial results beginning in the second quarter of 2025.
Mike Tiedemann: We expect the transaction to be accretive to EBITDA this year and to enhance our platform profitability through increased scale and operational synergies.
Mike Tiedemann: You're already seeing commercial momentum take hold since the announcement come towards secured two major client mandates a single family office and an entrepreneurial family and is actively engaged with several high potential prospects.
Mike Tiedemann: These opportunities are being driven by enhanced international reach cross border capabilities and access to impact focused solutions enabled by the L. T combination.
Mike Tiedemann: It's a clear sign that our integration is resonating in the market and opening the door for meaningful long term growth opportunities.
Mike Tiedemann: As we look ahead, our priorities remain clear driving growth through both organic initiatives and strategic acquisitions by expanding into new markets and deepening our presence in existing ones across the U S and internationally.
Mike Tiedemann: We've had a strong year on the M&A front, including the recent acquisition will come tour and have made meaningful progress integrating teams and offices across the platform.
Mike Tiedemann: That said, we see significant untapped potential in our organic growth engine and are encouraged by our current they list prospect pipeline.
Mike Tiedemann: Celebrating our organic momentum as a key focus in 2020 five and we're taking deliberate steps to strengthen this pillar of our strategy.
Mike Tiedemann: To support this we're advancing our marketing strategy with a strong emphasis on segmentation.
Mike Tiedemann: Finding how we position our value proposition to better resonate with both existing and emerging client segments.
Mike Tiedemann: Tailoring our approach to the distinct needs of each segment, we aim to drive differentiated growth.
Mike Tiedemann: More compelling client experience.
Mike Tiedemann: Their offerings and a sharper delivery of our advice and insights.
Mike Tiedemann: In parallel we're embedding technology more deeply across the business transforming our technology stack to support global consistent workflows.
Mike Tiedemann: Increased adviser productivity and further elevate service quality.
Mike Tiedemann: Together, these marketing and technology actions position us to scale more effectively and execute on our long term strategy.
Of course successfully delivering on that strategy requires staying attuned to the broader market environment.
Mike Tiedemann: Since the beginning of the year markets have experienced significant volatility in the first quarter our portfolio has remained resilient.
Mike Tiedemann: Our broad diversification across asset classes and focus on manager selection helped mitigate downside risk and preserve capital.
Mike Tiedemann: Performance was supported by active underway to concentrated equity exposures alongside positive contributions from real assets private credit and international markets and.
Mike Tiedemann: In difficult markets, our clients' long term horizon has meant that we maintained stable asset allocations and use volatility to our advantage to deploy capital.
Mike Tiedemann: <unk> opportunities emerge.
Mike Tiedemann: Hence we remained focus on thoughtful portfolio construction.
Mike Tiedemann: Balancing liquid equals exposures, managing risk with discipline and maintaining a long term loans.
Mike Tiedemann: Our approach is built to navigate complexity and volatility while helping clients captured durable risk adjusted return.
Mike Tiedemann: This disciplined investment philosophy is core to our broader muscle, becoming the leading independent global multifamily office and OCI O platform with deep capabilities in alternatives and impacts.
Mike Tiedemann: That mission extends beyond performance that includes helping clients align their wealth with their values.
Mike Tiedemann: On that note I want to highlight the recent launch of the 20th twenty-five all T Global Social progress index developed in partnership with the social progress imperatives.
Mike Tiedemann: Index, which tracks the performance of 170 countries across key drivers like health education and rights.
Mike Tiedemann: Pilots, where private capital can have the greatest impact at a time when global progress installed.
Mike Tiedemann: As a global wealth manager, we see growing demand from clients to align investments with purpose.
Mike Tiedemann: This index provides a practical tool to help drive meaningful social outcomes along financial the terms.
Mike Tiedemann: Importantly, the index offers investors real world.
Mike Tiedemann: And evidence that their capital is contributing to the impacts of intend to achieve.
Mike Tiedemann: Delivering impact for our clients is at the core of our mission, but realizing our long term vision also demands a sharp focus on operational excellence.
Mike Tiedemann: To support sustained profitable growth and unlock greater operating leverage we launched the program in late 2024 aimed at driving productivity and enhancing cost efficiency.
Mike Tiedemann: While an important tool in this broader effort was the execution of zero based budgeting process.
Mike Tiedemann: Introduced late last year.
Speaker Change: C B b.
Speaker Change: Provides a rigorous line by line approach to expense management, enabling us to reexamine every dollar spend and reallocate resources towards our most strategic priorities.
Speaker Change: We've already begun implementing aspects of our plan across our wealth management segment and corporate functions with a focus on high impact spend category, such as professional services technology marketing travel and occupancy.
Speaker Change: The end of April we've completed reviews across most of the non compensation cost base identifying substantial annual savings that we expect to materialize over the remainder of this year and be fully reflected in 2026.
Speaker Change: Reductions in recurring costs are expected across all major non compensation expense categories.
Speaker Change: To ensure that this is not a onetime exercise we've also implemented cost governance tools, including centralized procurement function and a new executive level cost approval committee designed to ensure ongoing discipline and accountability.
Speaker Change: As part of a broader operational streamlining we're also sharpening our focus on recurring revenue in our core businesses.
Speaker Change: Building on what we shared last quarter, we've made meaningful progress towards exiting our international real estate segment, which we've identified as non core to our strategy.
Speaker Change: We've advanced this effort over the last quarter and expect to provide a definitive plan of action next quarter.
Speaker Change: With the plan to optimize our operating efficiency close to completion.
Speaker Change: <unk> acquisition set to be consolidated in Q2.
Speaker Change: And the decision on the international real estate forthcoming.
Speaker Change: We expect to share more detailed guidance on our long term financial outlook, including margin expansion on capital allocations later this year.
Speaker Change: By focusing on our highest conviction businesses and executing decisively on cost optimization.
Speaker Change: We're positioning all T for sustainable profitable growth and delivering increased value for shareholders in 2025 and beyond.
Speaker Change: With that I'd like to turn the call over to Mike Harrington.
Speaker Change: Thank you Mike.
Mike Harrington: As this is my first earnings call presentation as CFO I want to begin by saying how excited I am to join the Altra team.
Mike Harrington: There's meaningful work ahead, I'm energized by our strong market positioning.
Mike Harrington: The scale of our addressable opportunity strategic initiatives already underway.
Mike Harrington: And unique advantage, we have for our strategic partners.
Mike Harrington: All of this gives me strong conviction in all case ability to drive long term growth.
Mike Harrington: And value creation.
Mike Harrington: Before I walk through the numbers. Please note that.
Mike Harrington: Unless otherwise specified all comparisons are made on a year over year basis.
Mike Harrington: First is the first quarter 2024.
Mike Harrington: Starting with our consolidated results.
Mike Harrington: Altra generated $58 million of revenue for the first quarter of 2025.
Mike Harrington: Representing 14% growth.
Mike Harrington: Approximately 83% of total revenue came from stable recurring sources.
Mike Harrington: Excluding management and advisory fees.
Mike Harrington: And fee components embedded in industrial distributions from external managers.
Mike Harrington: Our core wealth and capital solutions segment was the primary contributor generating $57 million of revenue up 23% from the prior year period.
Mike Harrington: This growth was largely driven by higher management fees supported by a 10% increase in segment assets.
Mike Harrington: Both the successful integration of <unk>.
Mike Harrington: Homeaway acquisition.
Mike Harrington: A strong underlying portfolio performance.
Mike Harrington: The segment also benefited from robust investment distributions, including crystallized incentive fees earned in 2024 from two external managers of which already holds equity Stakes, notably Asian credit and a European long short equity strategy is still very healthy returns of 13, 3% and 11.
Mike Harrington: 9%, respectively for the year.
Mike Harrington: These are paid in the quarter following year.
Mike Harrington: On a GAAP basis, we reported a net loss of $3 million for the quarter.
Mike Harrington: Adjusted net income, which excludes nonrecurring and noncash items was $3 million in the period.
Mike Harrington: Consolidated adjusted EBITDA for the quarter was $9 million up 38% year over year.
Mike Harrington: Figure reflects the combined results of our wealth and capital solutions segment.
Mike Harrington: <unk> functions and the international real estate segment, which we are in the process of exiting.
Mike Harrington: The increase was supported by the accretive impact of distributions from our industrial interests and the acquisitions on a standalone basis, our core wealth and capital solutions segment delivered $19 million and adjusted EBITDA of 34% margin, notably benefitting from investment distributions and acquisitions.
Mike Harrington: Operating expenses totaled $72 million in the quarter up from $66 million in the same period last year.
Mike Harrington: On a normalized basis, excluding nonrecurring and noncash items operating expenses were $50 million compared to $45 million in Q1 2024.
Mike Harrington: A year over year increase primarily reflects higher professional fees and general and administrative expenses related to noncore operations as far as FX gains that benefited the prior year period.
Mike Harrington: Sequentially normalized operating expenses declined by $13 million from Q4, 2024, perfect largely by lower compensation and G&A costs.
Mike Harrington: We've recognized that our recurring cost base remains too high relative to the current scale of the business. We are taking firm steps to address it.
Mike Harrington: As discussed earlier, we have essentially completed our plan to optimize expenses leveraging zero based budgeting and have already begun the process of implementing the plant impact our expense run rate.
Mike Harrington: This effort has unlocked meaningful savings some of which will be reinvested to increase organizational agility and efficiency and support long term margin expansion.
Mike Harrington: More detail on our financial impact once the rollout is complete and reflected in our forward plans.
Mike Harrington: Other income totaled $9 million for the quarter, primarily driven by fair value adjustments, most notably gains on earn out liabilities, partially offset by a decrease in the fair value of some investments.
Mike Harrington: This compares to $37 million in prior year period, which included a $39 million fair value gain on earn out liabilities.
Mike Harrington: Turning to our capital structure, we ended the quarter with $52 million in cash and no debt.
Mike Harrington: As we continue to scale, we're evaluating financing alternatives align with specific needs of our business supporting both organic initiatives and M&A activity, all preserving the flexibility to deploy capital efficiently and strategically.
Mike Harrington: With a more focused organization growing base of recurring revenue and strong alignment with our strategic partners, we're taking purposeful steps to enhance the scalability and financial disappointment purposes, our ongoing cost optimization and productivity efforts are enabling us to better align resources with first priorities.
Mike Harrington: And improve our margin profile.
Mike Harrington: These initiatives position us to drive sustained long term value creation.
Mike: With that I'll turn it back to Mike <unk> for his closing remarks.
Speaker Change: Thank you Mike.
Speaker Change: We've entered 2025 focused on executing our strategic agenda.
Speaker Change: Expanding globally through the contour acquisition and unlocking new capabilities through our partnerships.
Speaker Change: At the same time, we've taken decisive action to streamline operations exit noncore activities and strengthen our technology infrastructure.
Speaker Change: As we look ahead, our attention remains on unlocking operating leverage and scaling with intention.
Speaker Change: These efforts are central to building a durable high performing business that delivers long term value to our clients shareholders and employees many of whom are invested in our collective success.
Speaker Change: With that we can open it up for questions operator.
Speaker Change: Great. Thank you we will now be conducting a question and answer session.
Speaker Change: To ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue you.
Speaker Change: Let me first start to move yourself.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment please poll for questions.
Speaker Change: First question is from Walnut Burtis from Raymond James. Please go ahead.
Speaker Change: Hey, good evening everybody.
Speaker Change: Could you talk a little bit about the zero based budgeting efforts gave some good color on the call, but maybe talk about I don't know if its possible to quantify how much you might be able to reduce their.
Speaker Change: On the expenses and also if you could provide some type of pipeline timeline that would be helpful as well. Thanks.
Bob: Hi, Bob.
Speaker Change: Tiedemann.
Speaker Change: Uh huh.
Speaker Change: Michael Harrington answered some of this but the <unk> process has been a line item by line item.
Speaker Change: Review across all segments of the business.
Speaker Change: And the implementation of that begins immediately some of the cost do have longer tails, but the implementation of the cost saves for the identification of where we want to focus on those cost saves.
Speaker Change: Ill begin immediately or have already begun prior.
Speaker Change: Late Q4 early Q1.
Speaker Change: So it is meaningful but we.
Speaker Change: Do you plan on giving more color on that at a later point in a year, where we can give.
Speaker Change: To give an update on what is already in the numbers.
Speaker Change: Come from there, yes, hi.
Speaker Change: Nice to meet you.
Speaker Change: Yes, as Mike said the processes essentially completed and we're just working on <unk> for a longer term plan and.
Speaker Change: Again, we're not waiting to take action. So we are starting to see some of that even in this quarter to quarter here, where you're starting to see some cost improvements.
Speaker Change: Plans to.
Speaker Change: To provide more detail and quantify that in a more precise way when we talk to you in August.
Speaker Change: Okay.
Speaker Change: Okay. Thank you yeah cost looked like they were down a little bit so I'm good at Harris already sorry.
Speaker Change: <unk>.
Speaker Change: Can you talk a little bit more about the expectations for Germany, and the growth there and also give us a little bit of color on the M&A pipeline and.
Speaker Change: And the capital remaining to be deployed.
Yes, Germany as everyone knows.
Speaker Change: A huge market and a really important market in a very difficult one to come from the outside in.
Speaker Change: To compete on the ground I don't think many people have had success doing that so we were very fortunate to find it.
Speaker Change: Right.
Speaker Change: <unk>.
Speaker Change: Firm income tour, but.
Speaker Change: Very.
Speaker Change: Very similar operating ethos.
Speaker Change: The broader platform in some muscle they deal with very large very complex families and help them with a broad array of areas.
Speaker Change: What they found it appeal to US was the fact that we brought more scale more capabilities globally, coupled with the capabilities they have.
Speaker Change: And obviously, having allianz in the German market behind us.
Speaker Change: As an organization of support.
Speaker Change: That was a real differentiator so we've already begun winning certain business Dave.
Speaker Change: She has a few.
Speaker Change: Great wins, and we are working on.
Speaker Change: Several more prospects right out of the gate. So we think it's a little more Ms opportunity.
Speaker Change: And having that team and the quality of that team will be with our support will ultimately be what drives it up.
Speaker Change: In terms of the pipeline.
Speaker Change:
Speaker Change: There is a range of pipeline there are individuals seamless Dallas.
Speaker Change: And as well as some organizations.
Speaker Change: Several of the markets, we're looking at but certainly in the U S.
Speaker Change: There are some very attractive areas that we are.
Speaker Change: Focused on.
Speaker Change: Arguably as important as anything is our organic pipeline is very strong.
Speaker Change: This is a terrific organic opportunities for us to drive growth.
Speaker Change: History is any guide volatility of markets tends to actually help advance those conversations people will begin to make decisions to either move or to initiate conversations that we've had a lot of activity. Both on the shores of the U S and off.
Speaker Change: Thank you just a quick follow up on that one could you just talk about the capital.
Speaker Change: It can be deployed.
Speaker Change: Yes.
Speaker Change: Couple of things one is depending on the size of any transaction. We obviously are.
Evaluating.
Speaker Change: Debt financing.
Speaker Change: And then took care of that.
Speaker Change: But the capital that we have today is sufficient for the short term smaller.
Speaker Change: Opportunities that we have in front of us.
Speaker Change: Okay. Thank you and I think you touched on it a little bit on the call, but could you provide a more a bit more detail on the.
Speaker Change: Real estate business, and where that's where we should expect that to head near term. Thanks.
Speaker Change: We we are divesting from those from the structures and we are.
Speaker Change: And that is something that we've said on prior calls.
Speaker Change: The operations around those assets.
Speaker Change: These are joint ventures, we have with many developers.
Speaker Change: So in many ways.
Speaker Change: Our reporting function to that.
Speaker Change: But we.
Want to focus on the core of the wealth management business.
Speaker Change: Uh huh.
Speaker Change: We made that decision a year ago, now and have been working towards that but we really believe that will be.
Speaker Change: The complete and packaged.
Speaker Change: Very defined.
Speaker Change: By the next call in August.
Speaker Change: Hum spent a little bit through market volatility we've seen in Q2.
Speaker Change: I know you guys have pretty good uncorrelated.
Speaker Change: But maybe just talk about what you're seeing with your clients and how we should think of your DRAM and how it would react in this particular market. Thank you.
Speaker Change: Yep.
Relatively sanguine.
Speaker Change: Yes.
Speaker Change: Were projecting.
Speaker Change: Just greater volatility generally based on the trailing years.
Muted volatility number one.
Speaker Change: We have.
Speaker Change: I've always had a focus on higher quality risk assets that.
Speaker Change: It becomes quite apparent.
Speaker Change: In times of equity market volatility, that's what we're really talking about.
Speaker Change: We have a balance of.
Speaker Change: Assets like gold in illiquid assets I E private credit or others that are just less.
Speaker Change: Impacted in the short term from markets. There was as you can imagine a lot of.
Speaker Change: This is a global comment although U S comment, there's a lot of conversations related to.
Speaker Change: Currency related to obviously the tariffs what this all means.
Speaker Change: We I think our research team.
Speaker Change: Our Seattle office has done a terrific job of sort of.
Speaker Change: Keeping people updated on the changing.
Speaker Change: News flow related to that I'm, very specifically, what we should not change and would not overreact.
Speaker Change: And then we have the ability for some.
Speaker Change: Families.
Speaker Change: To have.
Speaker Change: Assets hard assets for liquidity in other markets in other jurisdictions and the other currencies. We can do that for families. So we have the ability to have U S clients of capital abroad.
Speaker Change: Some of our other jurisdictions, whether it be Switzerland, Singapore, and we've seen some families take advantage of that.
Speaker Change: Okay. Thank you very much.
Speaker Change: Welcome. Thank you.
Speaker Change: Once again, if you'd like to join the queue. It is star one.
Speaker Change: I'd like to turn the floor back to management now for any closing comments.
Speaker Change: Well if that's the last of the questions. Thank you all for listening in and we look forward to updating people further in our August call.
Speaker Change: Take care.
Speaker Change: Thank you. This does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you again for your participation.
Speaker Change: Okay.
Speaker Change: Uh-huh.
Speaker Change: Hum.
Speaker Change: Hum.
Speaker Change: Uh-huh.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.