AlTi Global (ALTI) 15 Aug 232023 Q2 Earnings call transcript

Greetings and welcome to AlTi Tiedemann Global Second Quarter 2023 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Lily Arteaga, Head of Investor Relations. you. Thank

begin. may You

everyone call to on afternoon today. the Good

Relations Michael CEO, and www.Alti-global.com and me the Controller. this updated Parmelee, to our Presentation. are afternoon Investor visit materials, to CFO Joining view Reid our website including Tiedemann, our invite you of earnings section our We our at Global Investor Interim

expressed financial based Private that these guidance, meaning statements of during the implied made statements. At I forward-looking assumes this that Because statements and any deemed cause by uncertainties, no be would known time are AlTi responsibility to may obligation Reform of including forward-looking are and statements. XXXX. like those and forward-looking on not forward-looking certain relating the could facts, to to unknown differ risks update or Securities remind statements involve everyone within to any actual these Act historical factors call statements Litigation important results or there from materially the

some related GAAP and reconciliations During this found Full financial presentation be earnings comments non-GAAP to call, our in filings. can measures. SEC references include may

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

call. for Thank afternoon, joining today thank XXXX everyone our earnings second you you, us quarter for and Good Lily.

the on In we to beginning AlTi and strategic our is laid the our priorities quarter, second advanced out performance call, initiatives. last reflect these

of growing base are the primary on our focused revenues. goals on we our discussed call, we streamlining operations quarter As and first our of recurring

approach sustainable strategy margins. As we we that drive will move forward, and higher confident and are this

the in broader structure, both long-term in we our the these and XXXX increase our public the year. capital the goal growth steps together, accomplished in for position important Another sector. which All firm float financials was first-half of to of simplify

million, of advisement. management of summary $XX which million, of adjusted ended revenues with $XX assets represent $XX our a under the and brief in generated billion EBITDA quarter a recurring QX of revenues, and second basis, XX% on AlTi consolidated performance, For

income income net and items for adjusted net million. Our $XX was one-off million for $X normalized the quarter was

is opportunities that to growth our financial by economic confident key on the positioned well environment. diversified capitalize across We reported any and are operating we platform metrics. This is sequential evidenced in

growth basis, have On second We increased XX%. quarter. total by in we the trailing XX-month asset assets a steady delivered

performance headwinds parallel, the Our second we levels quarter growth by organic. alternatives sequential was is our in X% led maintained short-term. In successfully wealth of the asset despite have across strategy-specific in platform, which majority management, asset

times to management hallmark of during capital is resilience. turbulent returns as strategies the improves. environment preserve on We However, and our the the asset generate ability pride ourselves

We expect strengths. our lean strategic momentum initiatives capitalize on opportunities we our in environment, the operating we ensure as to accelerate current and into

days execute As our organization and through to cost-saving include a we initiatives, advantages a as public pillars, company first acquisitions as simplifying competitive spent reminder, strategic leveraging near-term as accretive improvements. disciplined, which the capital our structure growth organic accelerate and identifying XX well the

These long-term priorities current prioritize margin address market expansion. for and nature, organizational enhancements the complementary growth environment are in and

our by of on solid our now has of an bolstered offer investments. revenues segments. overview built is operating business foundation acquisitions recent which Our been a and recurring We’ll two

that in Asia Starting and office grew multi-family growth global with with based management key a the business be a capital financial in Singapore We a Wealth engine wealth April and which acquisition years. Singapore, completed in transaction has believe AL $X approximately segments coming for presence asset in Wealth of our wealth will in for over our Management, the we billion Singapore management. emerged This Partners, as specifically AUM. accretive

firm has Italian northern multi-family platform has and wealth ownership stake region expanded wealth the legacy XXXX. to into platform, to for in operating The our to ecosystem part solutions since integrated is agreement which AlTi exposure of a market, offers we management current the to platform. already its office AlTi that and global end, quarter an largely billion prospective clients. the provides purchase Subsequent signed been team important This remaining Luganobased definitive of approximately a $X the assets and

seek identify and further to margin wealth have will asset our The within client advantages. our align opportunities and with revenues that will drive to transactions build We execute upon expansion. strategic recurring we expand our completed competitive and continue management base,

Organically, Management X% this we Wealth asset growth quarter. in sequential generated

globally. wins Our team evidenced performance robust is strong by producing as client

hubs clients. Additionally, for a premier wealth of their current management AlTi ultra-high-net-worth, for leading that prospective globally of choice set has are and in fulsome are a firms located wealth multi-family offices partner strategic looking a These firms destination emerged and offer solutions and seeking important as investment. can to

to looking are to In a our and is and high-quality summary, Wealth growth delivering experience. opportunities maintaining our unlock are we client enhancing business, growth, grow global outlook Firms substantial in while are strong. Management

public Turning increased sustained estate and private reduction interest activity impacted bridge real despite temporary real market of sector. in capital. strategy, The in now our we cost as well businesses, the to lending has of have levels been Management, a and Asset real rates to as by headwinds. This estate the estate shift our largely historic AUM led

strategies the estate private However, streams. revenue horizon opportunities on we long-dated cycle and normalization real predictable ahead see are on to the by with on and evaluating capitalize focusing

future updating Real Knight business additional Frank’s residential you and leadership added Head and Estate We months environment. have in Global Hay, near-term appointments capitalize We team opportunity team former have Lord Private Andy to a platform. this the on a on to bringing to forward the place by coming on making anticipate we our calls. chair in of look set recently, Most global have to

performing market as in opportunity term. this to real prepared into from current and see to environment leaning stressed credit estate The a is are share robust near-to-medium team the equity. we in We capture

fund funds segment. cycles outperformed and and Earlier peers examples in strategies also in asset managers: equities consistently Asian the Situation based London, across our management types year, Kong. an our stake a of market Special seek differentiated in in Both are long/short manager the of we Arkkan, their of Zebedee, affiliated we two increased in Hong based and our Credit have

quarter event from business, proved the of the recently driven second and The unprecedented in environment to had has challenging. sector faced the our measurably our as coordinated anticipated, improved third the sharp capital. be to This regulators due to due increase in abated the Turning quarter. flow favorable team and reduced cost resistance courts, deal and in to outcomes has

quarter U.K.-listed Our in public real masse at second excellent pressures a a to quarter, are decline due begun performance. to quarter estate to traded hikes capitalization down rate assets financial NAV in the experienced have sight have market off as en inflation abates. better and investors underlying second Subsequent of to end, and discount the the believe inflationary UK. in as the rates In leveling on REITs interest interest persistent the fundamentals trading despite recover resulting line strategy

cost with initiatives footprint, Turning stated professional consolidating annualized and our track of on $XX structures, cost are SG&A we the include total underlying achieve now rationalization reductions, on net of and our businesses goal basis. savings public least at to listing. management, and our associated to vendor facility asset capital across fees wealth an restructuring These our million in both

will growing streams fee we continue recurring the profitability. revenue increasing coming and months, management executing these while In initiatives on also

a cost-saving enhanced and margins. initiatives fully expect simpler contributing P&L be the XXXX, reflected We the creating to to of in first-half

also continue topic, streamline strengths, may as I generate this While invest into platform our capital to exit non-core to and we want mention our assets we to recycle strategies. that certain into our to on core

which and the encourage increased benefit count shareholders quarter, warrant significantly by our overhang. capital improved shares second long-term alleviated warrant we also June, to In structure the approximately In share a million we and exchange X completed for ownership. the share

PIPE efforts significantly our to finalized enhanced approximately XX% float shares also outstanding, of fellow public We liquidity shareholders. shares. registration of XX the of and all for quadrupled our These million

of we I completed AlTi base in am public This grants ownership with in listing. report we of all firm. an million an the Company’s to at X in the aligning the members issuance our additional as resulted is issuance important team that with shares market June, ownership foster employees. broader This step associated celebratory culture pleased AlTi to approximately the

With of for Global Reid to that, in quarter. the the to Controller our interim I review performance Parmelee over financial turn call want a our CFO and

that Mike. again AlTi is are our Tiedemann In you, the as and predecessor I Management case, successor between company to comparison our results accounting company is a guidelines. Holdings presented and Thank want by the the note Wealth required as successor. predecessor

As results comparable. are such, directly the year-over-year not

as As performance the the the results pleased with in strategy of our successful quarter, reflect to show and are the our we initiatives. cost savings beginning benefits growth execution Mike of mentioned, are the

X% Wealth performance billion, quarter-over-quarter in AUM by and the AUA and In our market to Partners, continued Management wins. experienced to performance Wealth of quarter, a Management increased AL billion AlTi’s reflecting $XX Wealth solid business. business acquisition the strong driven $XX X% increase second robust new sequentially

strategy, largely client in $XX flows X% our businesses, from stemming across platform billion, were and estate alternatives primarily by market AUA our both international to In wins new public AUM the declined as approximately as reflecting in decline sequentially Asset U.S. of in growth Net Management, the real well redemptions million, our a $XXX market headwinds. significant and driven capitalization

quarter, in to of a Wealth In increase our of were advisory represents first the fees quarter. quarter. management segment, total, X% consist robust AlTi compared This the million. generated and which million second second entirely the $XX revenues in of Management Revenues $XX in

In managers from was distributions Asset as our Management, management revenue as million; from fee XX% fees, well the recurring from included in component advisory and $XX was management investments. affiliated

sector in facing weaker comparison businesses, event-driven impacted asset private revenues estate. by fees estate real the Management also a from non-deal and level investments distributions The the on Asset lower quarter. headwinds reflected seasonally strategy and driven is strategic reduced and specifically from Sequentially, real in pressure advisory sequential second

we was recurring This consolidated our and XX% profitably position to to a am report milestone from AlTi operate basis, total pleased that the cycles. a key quarter of foundation generated is On revenue I across economic strengthen as in our fees.

starting also of the one-time our expenses. where initiatives. We also in progress to results reflect significant results a made Sequentially, are cost savings expense reduction the see front on we the

streamlining to to Operating organizational million, approximately in AHRA, non-cash, million $XXX expenses and $XX approximately previous include million and $XX of related $X a were deconsolidation one-time in million related in expense. quarter. transaction charge to the the million accounting equity non-cash the compared costs for quarter in approximately the one-time of compensation Results $XX impairment QX

in in items, in an these XX%. a approximately expenses. decline been approximately professional resulting recurring fees as expenses as for in well reflects profitability operating improvement period, reductions of The expenses, margin have $XX T&E would Normalized and million compensation operating the in

cost the the share of value partially Below result line, of year. We depreciation. take a other as liability in changes hold throughout This expense. $XX trend by well expect as is million earnout gain of the non-cash the to and from was and price of fair million, remainder agreement value growth the initiatives as to fair income continue reflecting costs in investments downward non-recurring $XX as change the offset receivable tax interest the

mentioned was As EBITDA earlier, million. $XX adjusted

margin this shareholder value increase Importantly, XX% and EBITDA XX% initiatives, in creation our in the for quarters QX in improved savings our to merits profitability by in believe position adjusted come. continued cost of margin X% growth to We AlTi which the sequentially and QX. will from demonstrates expansion

and We long-term in to high line mid-XXs. teen the rates growth assets, single-digit EBITDA annual achieving to margin adjusted committed expansion annual are growth of goal our top low

$XXX which Turning is due X.X XX-month leverage term to At we drawn to million $XXX we end, in revolver be quarter stable a capital position facility, a $XXX million is times. and BMO to EBITDA multiple five-year balance our sheet, and comprised had a of $XXX million last loan. continue credit million our our

some I’ll closing remarks. for it Now turn to back Mike

AlTi well platform you, Thank believe positioned global operating achieve is grow We to Reid. its scale. to

position to strategic increase strengths, for organically revenues, further opportunities, continued has platform prioritize recurring review into continue success. and accretive enabled Our the AlTi grow lean growth to its profitability

the the I'm pleased We profitable our to we against solutions, team’s which of suite commitment to performance. with years to remain strategic speak have and talent, right plan growth in standards the driving capitalize come. confident financial progress to of and AlTi’s initiatives, high maintaining

we'd that, for Operator? to With open questions. like now up

Burdis gentlemen, time be James. Ladies Wilma this your and of at will Raymond [Operator comes with with you. the Instructions] Our question. a proceed first Thank conducting question-and-answer we Please question session. from line

a improved evening. stop bit expenses - you I’ll quarter-over-quarter. little the off? million, so good so But million quite going first, a bit about $XX.X rolling trajectory me. few until transaction keep I Hey, questions just talk for anyway you significantly these think $XX.X guys a Could pretty Got from down

exchange the continue transaction other de-SPAC to and to expenses. specifically, but Wilma, are there Yes. Hi let will warrant expenses you. thank largely behind Reid from I’m but transaction be the answer going us,

in zero mentioned to Those we costs future incurred QX. much de-SPAC. would in Lugano smaller Hi behind largely we expect which coming will Mike a expenses be deals, trend the to scale toward quarters, so us, What in we expect to to related particular from purchased incur the Wilma. are than Those related transaction we those in August. of

Is it. the to way exchange? any was how warrant Got there related out to break much

Sure. The warrant exchange was million. roughly $X

improved to to about XX%. quarters. your the get understand EBITDA little bit the margin higher trajectory trying quarter-over-quarter, you how you. a quite to a level, can compares Thank that next it We and expectations over talk up few you’re bit a

of The asset itself even of described, is of despite core headwinds of we’ll some the about the management. business that the three, within we will well combination levels, what these as business the anticipating coming lay that Clearly, lot doing that’s quarters four a two streamlining on talk the and we’re so us. the inflection and critical, business to really ahead of two, of lead in is

way, wealth net flows? is Got strong, run for Last little a outsized maybe The net a was management good this in but bit flow it. good it looked a I management wealth extremely think rate pretty quarter strong.

Wilma, diversity. offer. so from company driven point we really highlight wealth dynamic important to that about and both QX and future. QX more the we’re aside came the domicile the impact quarters, do, the very differentiation between to in U.S. the traditional can But international, see from. a between have both but challenging an that real so QX is was excited quarter-to-quarter the from a and and U.S. largely with prospects, key obviously Predicting is as was we QX the two and where great size, pipeline, the was non-U.S. growth of

similar Wealth about very to Thank talk be the deals? Can you Got you. performing for The deal it. AL appears well. pipeline

next with. the as information There be firms deal, that as it’s Singapore examples Lugano some operators, from. are operate, and are come we larger which jurisdictions a contact great operating that that. operating fit we two and do hard profile executed, similar already client consider of to firms that that well in in similar what others call. more But, would have find strategically would have both we great on and and we of obviously we our Lugano so ethos just we’ll the who have in identical There are culturally, in both size have -- excellent

conditions Sounds Maybe more into noted there? bit. fund, good. Then have appear for the little bit merger a arbitrage to a you could go that in you little XQ the improved color

Yes, of specific two which important both ways, are of a improvement their substantial in control. out it’s

activity, of improvement. rolling calculation in activity, rate easier inflation next we interest has it to environment be rate will That expect interest the months. just environment model, let’s call environment deal that driving levelling for debt is so So, costs and the enables M&A been terms forward firms off. The the XX-XX of an

to already. beginning that see You’re

is most regulators coordinating to in that types not seen all regulatory really months monopolistic thing the were -- had environment. just nine the deals, before regulators the nature. were important pursuing never in We The ones six last of

which courts so the the getting is normalized, considering for changed regulators, certainly that deals, has good have spreads been very merger against very into a the investing So, favorable deal, arb those doing are backdrop thing. and and really anyone a

things understood you, a If Thank quick in reposition then could but sell investments. to maybe you about the and some I more into? potential was a maybe core of you. could there you examples statement of out assets reposition misheard non-core And you I few thought right, give to I there

of of you to all or and in jurisdictions we pieces streamlining evaluate have. but our degree say part some business, to regulatory that as entities going we’re can streamlining Inevitably, either simplifying, Yes. that operate we

are ones this to for very a to less goals oriented entities as the that enter be and to that of is we tied towards XXXX, our clear to we have ones are One core. have clearly year and regulated growing direction

like at some businesses reinvest so attractive those As are of and businesses our own, other assets generate into core. bids for to strategically would to that are entertaining have a more few with our capital, then it, we look that we we in-line back

very merger you of little color on fund similar bit could on the thank to mentioned give much. last it, a other arbitrage what you Got Then question, the for strategies? you the investment outlook core

Yes. want just understand I make I to sure exactly.

For XQ going in performance, they you what expect can a forward? talk how performing you little are bit about just and

Asia because a a was in range the distress. does expand strategy for worse indicate of than would for challenging their have the index QX credit the environment they Credit which marketplace,

as a did profile of buy the weakness. quite so a strategy you the and ability the they into and very roll quick good and forward. next robust, been hasn’t earnings survive months, very forward but to XX capital is the that power markets QX, encouraged necessarily investments preserving earnings liquidity There in clock So that to of profile actually going we’re their retaining job retain recovery challenging and the team’s by

I long-short non-directional XX-some-odd really set made in are opportunity in a down example, Their Our year, last really themselves to nicely fund well mentioned so of week-to-week mentioned, non-correlating year a And and, is an is has terms relative arbitrage, recovered did strategy. as earlier. and they equity of move percent they very as take and it. I advantage in how maneuver QX, quite as

it’s you their capital backdrop, the strategy, at an look and as banks particularly lending challenges. Bridge unbelievable regional

estate or tailwinds and a as lot generally a investor being just interest. private in of credit a obviously of So into there’s lender lot private real strategy, a

the over coming that’s we’re focused to XX making really to on strategy we’re that and that months. grow XX a able So, sure

much. very guys you Thank Okay.

Thank you, Wilma.

the for further are like back call I’d closing the to questions queue. in management no to hand There remarks.

if need members diversified follow-up this to any who have quarter any confident questions healthy fall forward contact in want a work invite the wish perform you out have the happy and Take well that cycle strategy look our everyone world with advance this thank or I’m their to laid today. our as that built connecting the and We Operator. be happy for with shareholders we hard are to I We you fellow team summer. dedication any is us to to you this that we’d illustrates fact. call, you, we’ve Thank around AlTi a of platform and scheduled and one. rest economic care. progress for

today’s Thank for you does participation. gentlemen, Ladies and teleconference. this your conclude

disconnect may wonderful You and this at have your day. lines time, a