SAMG - NASDAQ

Good morning, and welcome to the Silvercrest Asset Management Group Inc. Q4 and Full Year 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please say to a conference specialist by pressing the star. Please note today's event is being recorded. Before we begin, let me remind you that during today's call, certain statements may be made regarding our future performance are forward-looking statements. They are based on current expectations and projections, which are subject to a number of risks and uncertainties. Many factors could cause actual results to differ materially. The statements that are made. Those factors are disclosed in our filings with the SEC under the caption risk factors. For all such forward-looking statements, we claim the protection provided by the Litigation Reform Act of 1995. All forward-looking statements made on this call are made as of the date hereof, and Silvercrest assumes no obligation to update them. I would now like to turn the conference call over to Richard Hough, Chairman and CEO of Silvercrest. Please go ahead.

Thank you, and good morning. Welcome to our first quarter 2025 earnings call. I will get to my business update for the quarter, but I wanted to highlight the nature of our high net worth and asset management firm strategically given the amount of initiatives that we have underway that I referenced in my business update. Silvercrest is an independent wealth management firm, and we combined top-quality asset management expertise with high levels of customer service. Our customer-facing investment professionals provide that customized advice and service to our well over 600 ultra-high-net-worth individuals and institutions. We have consistently enjoyed annual customer retention rates of over 98%. Most of our revenue comes from recurring management fees, which we'll hear more about today. We've built our investment capabilities to serve the complex needs of our clients who require sophisticated solutions across all public markets, private markets, private credit, as well as bespoke solutions for significant individual holdings. These capabilities support Silvercrest's leading market positions serving wealthy families and select institutions in a manner that generates industry-leading client retention and stable revenues. We've accomplished this with average assets under management of over $50 million per relationship, and that helps generate profitability and cash flows that we enjoy as a firm in which we have been investing over the past year in future growth of the business. Importantly, the depth of our high-quality asset management and intellectual capital is proof of thesis to the wealthiest families globally, and we'll talk more about our ambitions as the firm is growing. We concluded 2024 with strong net organic flows due to new strategic investments made over the past year that are already bearing fruit. The firm garnered $1.4 billion in the fourth quarter and $1.5 billion during 2024 in new client assets under management inflows, the best year for new organic client inflows since at least 2015. The fourth quarter was primarily bolstered by winning a successful seed investment in our global value equity strategy of $1.3 billion, which is $2 billion Australia. In partnership with CBUS, one of Australia's largest superannuation funds, increases during the quarter bode well for future revenue, and we remain highly optimistic about securing more significant organic flows over the course of 2025, to increase our return on invested capital. Total AUM as of year-end 2024 reached $36.5 billion as of December 31st, up 9.6% from $33.3 billion at year-end 2023. Discretionary AUM, which drives our revenue, rose 6.4% to $23.3 billion from $21.9 billion. Overall, total asset flows and market increases were a net positive for the firm and will drive an increase in future revenue. Revenue for the year increased 5.3% to $123.7 million from $117.4 million, with Q4 revenue up 12% over Q4 2023 to $32 million from $28.5 million. Strategically, in addition to building the firm's new global value equity strategy from scratch, we have hired business development and market leads in Atlanta and Singapore. We have our full MAS license for doing business in Singapore, and we'll be opening an office. With significant European assets and growth opportunities, we also will be pursuing more initiatives to better highlight Silvercrest in both the institutional and wealth markets. The firm also has invested in talent across the firm to drive growth and successfully transition the business toward the next generation. Silvercrest developed new and stronger institutional consulting relationships during 2024 with new investment opportunities to develop our strategies. Our pipeline remains robust. As a result, we are optimistic about securing significant new organic flows. Importantly, the firm's pipeline does not yet include mandates for our global value equity strategy, which is a high capacity for significant new assets. We have worked hard over the past year to build the infrastructure team and strategy while undertaking business development. As with our third quarter call, we envision more positive AUM flows and resulting revenue increases. As I've discussed throughout the past year, Silvercrest has never had more business opportunities. Those initiatives are beginning to bear results. We have made and will continue to make investments to drive future growth. We expect to make more hires to complement our outstanding professional team to drive that growth. And Silvercrest continues to accrue a higher interim percentage of revenue for compensation for this purpose. And as mentioned, we will continue to adjust compensation accruals to match these important investments in the business. We will keep you informed of our plans in the progress of these investments. Look forward to taking questions and talking about this this morning. And I'll turn it over to our CFO, Scott Gerard, for the financials, and then we'll get to that.

Great. Thanks, Rick. As disclosed in our earnings release for the fourth quarter, discretionary AUM as of December 31st, 2024, was $23.3 billion, and total AUM as of the end of 2024 was $36.5 billion. Revenue for the fourth quarter was $32 million, and reported consolidated net income for the quarter was $2.7 million. Revenue for the quarter increased year over year by $3.4 million or 12%, primarily driven by increased discretionary AUM resulting from net client inflows partially offset by market depreciation. Expenses for the quarter increased year over year by $0.5 million or 1.7%, primarily driven by increased general and administrative expenses, partially offset by decreased compensation and benefits expense. Compensation benefits expense for the quarter decreased year over year by $0.8 million or 3.4%, primarily due to a decrease in the accrual for bonuses. Based on the increased recurring cash compensation ratio over the past few years due in part to the investment in the next generation of portfolio managers and other associates, we increased the amount of the interim variable compensation accrual during 2024 to narrow the adjustment in the fourth quarter. We intend to do the same accrual management in 2025. Also, compensation and benefits expense for the quarter increased year over year as a result of increases in salaries, due to merit-based increases and newly hired staff. General and administrative expenses increased by $1.3 million or approximately 18.5%, primarily due to increases in professional fees and portfolio and systems expense. Reported net income attributable to Silvercrest or the Class A shareholders for the fourth quarter was approximately $0.18 per basic and diluted Class A share. Adjusted EBITDA, which we define as EBITDA without giving effect to equity-based compensation expense, and non-core nonrecurring items was approximately $5.1 million or 15.9% of revenue for the quarter. Adjusted net income, which we define as net income without giving effect to non-core and nonrecurring items, and income tax expense assuming a corporate rate of 26%, was approximately $2.9 million for the quarter, or $0.21 and $0.20 per adjusted basic and diluted EPS, respectively. Adjusted EPS is equal to adjusted net income divided by the actual Class A and Class B shares outstanding, as of the end of the reporting period for basic adjusted EPS. And to the extent dilutive, we add unrestricted unvested restricted stock units and nonqualified stock options to the total shares outstanding to compute diluted adjusted EPS. Looking at the full year, revenue ended, the full year 2024. In as an increase year over year by $6.2 million or 5.3%, primarily driven by increased discretionary AUM, resulting from market appreciation, partially offset by net client outflows. Expenses increased year over year by $7.5 million or 7.5%, primarily driven by increased compensation and benefits expense, and to a lesser extent, increased G and A expenses. Compensation and benefits increased year over year by $4 million or 5.6%, primarily due to increases in equity-based compensation, salaries due to merit-based increases in newly hired staff, and the accrual for bonuses. G and A expenses increased by $3.4 million or approximately 13.1%, primarily due to increase in infrastructure fees, portfolio and systems expense, occupancy and related costs, and trade error expense. Reported net income attributable to Silvercrest for 2024 was $9.5 million or $1 per basic and diluted Class A share. Adjusted EBITDA was approximately $26.1 million or 21.1% of revenue for all of 2024, and adjusted net income was approximately $15.8 million for 2024 or $1.15 and $1.10 per adjusted basic and diluted EPS, respectively. Quickly looking at the balance sheet, total assets were approximately $194.4 million as of the end of 2024, compared to $199.6 million as of the end of 2023. Cash and cash equivalents were approximately $68.6 million as of the end of 2024, compared to $70.3 million as of the end of 2023. There were no borrowings as of the end of 2024. And total Class A stockholders' equity was approximately $80.7 billion at the end of last year. That concludes my remarks. I'll turn it over to Rick for a Q&A.

Thanks very much, Scott. We'll take questions and some extended commentary, I think, this morning.

Ladies and gentlemen, at this time, we'll begin the question and answer session. Tone telephone. To withdraw your questions, you may press star and two if you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one. Our first question today comes from Sandy Mehta from EvaluATE Research. Please go ahead with your question.

Could you comment a little bit more on the pipeline amount that you're seeing currently? Also an update on OCIO in terms of where you are in assets and the outlook there. And I understand that your pipeline does not include global prospects. A little bit more commentary on, you know, do you see global inflows this year, 2025? And what are the opportunities there this year and next year? Thank you.

Great. Thank you. Appreciate it, Sandy. First of all, on the pipeline, I believe at the end of last year, we had a pipeline of $1.2 billion. That pipeline has now increased to $1.6 billion. That includes some wins out of the pipeline. So the pipeline actually decreased due to some wins, did not include the global team. But for example, our growth team in Milwaukee, which joined us in 2019, had some really nice inflows, I think about $68 million to their strategies net. Or $67 net in the fourth quarter. And we feel really good about that because we've got to transition in a leadership of that team and performance in that particular strategy remains strong. With regards to the pipeline overall, it includes a significant OCIO mandate and we're seeing increased OCIO opportunities. Since your question about that, OCIO now stands at $1.6 billion. I definitely expect that to increase during 2025 based on what I'm seeing. I should comment, of course, that assumes steady markets. And as we know, markets have been down recently. So on a steady state basis where we stand today, I see a nice pipeline and an increase there. I have included only about $100 million in the pipeline for global value, which you just asked about. Part of that is because the nature of measuring our pipeline is becoming a lot more difficult. And hard to measure. And so we tried to add something for global value into the pipeline, but most of this, as you noted in your question, is really about the traditional capabilities that we've had at the firm for some time. I'll get back to global, but let me talk about the pipeline for just a second, Sandy. I think this is important. For the past several years or many years, we have defined the pipeline as either files or semifinals in a search for the capability or an invite-only search by an institution or consultants that we think is actionable in the next six months. So if we get a win, it falls out of the pipeline. We get a lose, it falls out of the pipeline. If something in terms of timing extends beyond the six months, it comes out of the pipeline. A couple of times over the past two or three years, we've seen searches take longer than they used to, and we've had the pipeline come down because there wasn't it wasn't going to happen in the next six months. The problem with our measuring the pipeline now is that we are seeing way less RFPs. Used to be a very important part of the business is filling out RFPs. It's just not being driven that way anymore. More typically, you present information to a consultant or institution. You don't know really to what extent they have a search or not. And you get the phone call that you want something. You don't necessarily even know you're in a finals or semifinals. It's just not working that way anymore. So despite the size of the pipeline, which I think is very strong, and has increased largely according to those rules I gave you. It's becoming increasingly hard to measure. And, therefore, it's going to be increasingly hard for us to give you apples to apples comparison to the past. I don't know how we're gonna resolve that, to be honest. I think we will start handicapping the opportunities we see. And soft circling numbers, but that becomes a little fuzzier and less concrete than what we've given you before. This is part of the reason get back to the global value equity team. This is part of the reason why we really haven't put the opportunity there into our pipeline. As you know, in the third quarter call, last year, I was very optimistic about inflows. In part, it's because I knew about the conversations we were having with potential seed investors for that capability. But I didn't think it would be realistic at that size of the seed and not knowing what kind of conclusion we've come to to put it into the pipeline of that time. And sure enough, it worked out. For that team. We built it from scratch. We're really proud of having the quality of firm and infrastructure to attract the kind of talent that we did with no AUM on the payroll and then to get off to the races with that investment. As I said in the third quarter, I think the opportunity for that team is in the billions and billions of dollars. When we can garner that over the course of 2025 and 2026, is a little up in the air, which is not why it's in the pipeline. And, of course, our performance has to hang in there. I'm pleased to report that so far in 2025, performance is very good in that strategy. In part helped by international markets doing quite well. As well as where that's in that portfolio have been placed. I expect significant new inflows for that capability this year. I think we will get follow-on institutional investors from Europe and from Asia. I will say that to give you an idea of the pipeline, the number of meetings, request for information has been very, very strong. From people who can allocate very large sums of capital to the strategy. In addition, we have opened up new consulting relationships that have a much more global perspective. That we haven't had at the firm and that includes within consulting firms that were mostly focused on our domestic capabilities. So highly optimistic, performance is strong. The potential is enormous. But it's a little hard for me to give you a figure. But I think what happened in the fourth quarter is just to start. And I expect to capitalize that in 2025 and throughout 2026. I think I covered all the bases. Sure. Sandy, but feel free to follow-up.

No. No. Great. Thanks. Thank you so much. Just one last question on my side. The expenses, compensation expense, G&A expense, is this the level that we should expect going forward for both those categories? Thanks.

I would expect it for the foreseeable future. We've tried to be very careful about adjusting that compensation ratio every quarter and to keep investors up to speed with how investments are panning out. We are taking a very close look at expenses elsewhere in the firm, and I think I'll get into this later. But the innovations in technology and some of the productivity that we're seeing operationally eventually will help us lower that and fall to the bottom line a little premature to say that. At this time. But I'm absolutely astounded by the potential for productivity gains in the business over the medium term. And that by that, I mean, through the end of 2026-2027. But I think for this year, it would be smart and prudent to conservatively say, yes. Expect it at this level. Now let's talk about investments in personnel. The team that we brought on board and the infrastructure around it is expensive. That was, you know, of course, a meaningful part of the increase in compensation. We had no revenue to offset it until perhaps two weeks of the fourth quarter. End of December, two weeks. And so we'll have a full year of revenue this year, and that team is now paying for itself. Obviously, that doesn't get us down to the compensation ratio that we would like to see yet. But in pretty short order, that will be a nicely profitable team at the firm. But we're making other investments as I've pointed out. We're hiring other portfolio managers takes time for them to become highly profitable to the firm. We've hired a market and business development lead in the high net worth space. We've never had a pure business development lead, interestingly. To open our Atlanta office where we will be hiring PMs. We have added to Singapore to get that effort going. And so we've got other initiatives across the firm, including institutional business development that we're going to be making that will continue, at least for the foreseeable future, to lead to higher compensation expenses. Obviously, I think this is money very well spent to increase our return on investment. Capital. And we're excited about those opportunities. But you're seeing a lot of initiatives kind of in those numbers all at once.

Great. Thank you so much. All the best.

Thank you. Our next question comes from Christopher Marinac from Janney Montgomery Scott. Please go ahead with your question.

Hey, thanks for the Good morning. Hey, how are you?

Good.

I wanted to ask you and Scott about expenses just kinda continuing the conversation further. And, you know, what's the thought about operating leverage in the big picture not as much about a given quarter as it is kind of where you're going this year, next year. And as you execute on the pipeline. Do you still feel that you're gonna get operating leverage on the sort of profitable, you know, throughput? And then I have a follow-up.

I do. So if Chris, if I were to run the company, in a steady state without making personnel investments, we would bump at least up back up into the high twenties for an EBITDA margin. When we had really great bull markets for our assets ending at 2021. And performance fees we hit an all-time high of around 32% in EBITDA margin. Given the leverage in the institutional business that we're seeing and the new opportunities getting back there is absolutely within the realm of possibility. It's just gonna take some time. If I were to remove some folks who are not yet profitable to the firm where we've made investments, and just sort of run it with where we are. We would pop back up. So, you know, near the medium-term target, it would be to get back there. Assuming I see some investments and just ran a steady state business. But that's not gonna serve our growth in the medium term.

Got it. And is medium term possible as a 2026 target at not to get too specific, but just sort of.

Look, if everything falls into place, I think it is. Yes.

Great. We're pretty careful, as you know, about forecast especially the high net worth side. And OCIO is a bit of a hybrid. It's a bit lumpy. And hard to predict. I have actually more visibility into the institutional pipeline. But where we're headed directionally that you could alone could start to get us there.

Great. And then can you remind us about additional investments? Just thinking, I guess, out loud about the global fund. Is there do you have everything in place for that now with launch or is there additional hirings and therefore expense this year?

Yeah. We have almost everything in place. There'll be more expenses. We hired another analyst on that team. After we brought over the initial team. There is business development needs there because there's just so much activity and coverage that we need to have in Europe, in Asia, in Australia. And by that, I'm not talking multiple hires here, but there's definitely a hire there. We have a need for more client relation support there. These are big numbers at this stage. We hired a new trader for that team. And we'll probably I mentioned the client associate. We may need someone working on settlement in addition to that. They're not big needle movers, but there is more investment.

Great. Then last question for me just goes on to, I guess, sort of the big picture from geopolitical risk. It feels like it's been three years we've had this elevated geopolitical concern. Is that feeding more inquiries into Silvercrest and therefore more business opportunities? Or is that just noise in your still have your business plan separate from that?

Yeah. Great question. Obviously, the volatility globally increases some risk but on balance, it has benefited the firm. And driven assets and interest to us. As a solution. You may recall this. We are working with a significant family maybe families now, but at least one very significant family in Poland. That came about after the Russian invasion of Ukraine and concern about what was happening in Eastern Europe. That is an incredibly dynamic and growing economy of wealth. It is underserved by firms like ours. In fact, globally, the US is well ahead of other places with regards to our fiduciary model for managing assets. So on balance, it absolutely has a lot to do with our focus on serving other places. And it was because of incoming inquiries and the fact that we have the tools to serve both these families as well as institutional investors. I'm fairly optimistic, however, about the global scene. In the medium to long term. A lot of it is noise. And, obviously, I'm hoping for some peaceful resolution like anyone would. With what we're seeing happening globally. But at the end of the day, when people wanna secure their assets and see them grow, and have alternatives given whatever situation they're in in their countries. That's gonna benefit the United States and benefit firms like ours. The new consultant relationships we're seeing the new inquiries that we're seeing, the new conversations that we're having with families, yeah, is all quite meaningful. In fact, I will be going up likely to Poland myself given the interest that we have there. In early April. I'll be in Asia at the end of April. Our business development team spent two weeks in Australia recently, they will be spending at least a week, maybe two weeks in Europe given the opportunities there. We are highly likely to be pursuing a license in the European Union. Right now, we can only receive incoming inquiries. We'd like to be more aggressive and pursue opportunities. So that is something we will be working hard on in 2025. As I mentioned, we got our MAS license in Singapore that took years. It's important for us to be in that time zone. We started building that and really didn't talk about it on any earnings calls. Because we wanted to get it done. We wanted to assess the opportunity before we put more capital into it. And, honestly, I was a little concerned how that might be viewed by investors. What is Silvercrest doing? Extending itself to the other side of the world? Given the nature of our business here in the United States. Well, of course, we did that with the knowledge that we had ambitions to be serving wealth in Southeast Asia as well as knowing that the pools of money available to us both on the wealth side and institutional side in Australia, now it makes total sense given the length of those economies. And the need to be in a time zone closer to Sydney and Melbourne. So along with the count there, so that's now coming together and hangs together quite nicely for our future ambitions. I hope that thoroughly covers you know, kinda what you're getting at.

No. It's great. Thanks a lot for the background and, for hosting us all this morning.

You're welcome.

Our next question comes from Chris Sakai from Singular Research. Please go ahead with your question.

Yes. Hi. Good morning. Good morning. Just wanted to ask about, you know, can you can you explain it? Are you what sort of hurdles are you facing in this international expansion into these other countries? And how is that adding to cost? And how are you facing any regulation hurdles?

Yeah. So I wanna be careful about how it's characterized. We're not aggressively expanding into other countries with regards to our infrastructure. Singapore is really the only one right now outside of the United States. We've always been quite prudent with when we decide to go somewhere and careful with our capital. We need to have a very compelling reason to physically be located somewhere. So, really, when we're talking about this, we're talking about flows into our capabilities from these other places. Which Silvercrest has always had. From day one, we've worked with very significant European clients, and that's only grown. I think I've mentioned before we have clients that are very meaningful to the firm in South America. In the Netherlands, we work with a number of very large industrial families in Germany. That required zero infrastructure on the ground. What we're reaching now is the need really for getting over the regulatory hurdles you just mentioned. With regards to the appropriate licenses in order to solicit business in certain countries. It's certainly a barrier in Europe. But at this stage, I don't necessarily need a physical location. I think there are gonna be ways for us to do that. And if we do do it, we are likely to do it in a very light way to start. And we'll do it because the opportunity presents itself to create a profitable business. Singapore is a very business-friendly place. Working with the regulators there was good. It just takes time. And we've gotten through those hurdles without an issue. And I think this firm is of a size and quality in terms of our operations that we don't have a difficult time surmounting those hurdles for getting licensing. We do extremely well in operational due diligence across the board. In terms of our controls, and infrastructure. Consultants look at that very closely. Well, that translates very well in terms of what the regulators look at it. As well. So it's just a part of doing business, and I wouldn't say that it's a headwind or significant a challenge for this firm. We just need to work through it.

Okay. Great. So can you can you explain, you know, what what are some of the things you're seeing at Atlanta that draws you there? And am I getting the sense that there's greater growth opportunities outside the US? Is that a good way to think about it?

There's two ways to think about this. Or three. Number one, yes, there's very significant growth opportunities outside the US. The United States has a very robust and mature wealth management and asset management business from banks to multiple very large RIAs serving the wealthy and others. That's good. It's a very competitive environment. We've succeeded well in one of the most competitive environments in the world. Wealth is growing globally, arguably at a faster rate than it necessarily is within the United States. Obviously, Europe isn't growing particularly fast. There are lots of places in the world that that is. You combine the fact that places like Europe or Australia or Asia are underserved by what I would call the RIA model. That's opportunity for first mover who can bring capabilities like this firm to those places to garner assets. To stand above others in the field. The United States economy is growing at 2%, let's just say, just around it. That typically means that wealth is growing at 2%. Now it's it may be going in larger segments to the wealthier, as we know from wealth disparities. But generally speaking, you are moving business from one firm to another, very often big banks. To Silvercrest. We get our opportunities at Newell. But those opportunities are just greater in number as we look out across the world. So it's both growing wealth as well as a differentiated business model of places that where wealth is emerging or that is just lagging behind the United States with regards to kind of the way that firms like ours do business. So it's a combination of those things. Next to Atlanta and the United States, in the United States, there's been a tremendous trend of rolling up, as you know, a lot of smaller RIAs backed by private equity. That has pushed multiples up on firms. And it makes it much harder to play the M&A game responsibly with investor capital. This firm has a history of being able to grow organically. We feel confident in our ability to do that. And if we do do an acquisition, we are going to be very selective. It has to be a high net worth firm with compatible culture, in a money center growing city in the United States, that is a well-run business that we think can then grow organically after we have merged. It's not going to be a question of us of just hoping for multiple accretion doing an acquisition. Atlanta and the Southeast is, you know, among, if not the, fastest growing region in the United States. For wealth. So we really felt the need to be there. At the same time, in order to drive organic growth generally across the high net worth segment itself, Silvercrest, I felt we needed to get full-time business development for that and both to help our existing portfolio managers as well as to grow in a new region. If you're not there, it's harder to do. In a referral business. And so given our success, and capabilities of what we have, we thought it was time just go into one of those money center cities and do it ourselves much better use of investor capital. Not to pay out tens and tens of millions of dollars potentially to be in a new city. When we can make a much smaller investment and grow organically. Yes. In the short term, that means hitting EBITDA and earnings, I've been talking about it for three years or two years before I even did it. And now we're executing on that plan.

Okay. Great. Thanks.

And ladies and gentlemen, at this time, I'm showing additional questions. I would like to turn the floor back over to Richard Hough for closing remarks.

Great. Thank you so much, and thank you everyone for joining us. As you can tell from my comments, not unlike the third quarter, I'm very enthusiastic about the initiatives we're taking and the potential for growth at the firm at an organic level. We have a large pipeline. We will continue to update you on how we're measuring that. I'm highly optimistic about what we can do with the global value equity team. Just the fact that we're getting traction is raising our visibility globally in a way that is very intentional. As I said in my very opening remarks, our strategy has always been to hire and build very strong intellectual capital at the firm that is proof of thesis to our very large families and the wealth management business about the quality of the firm and what we're doing as an asset management firm. And it's allowing us to take new initiatives that should compound the organic growth and provide us over the medium terms very nice returns. So I look forward to updating you on these initiatives. As it works out over time. The patience of our investors with regards to investments is already starting to be borne out with them, which we greatly appreciate. And I think, you know, it will be quite in, like, as we go through 2025 directionally. I think there's one more investor question, which I'm happy to take. Sorry to interrupt my concluding remarks there.

Yes, sir. We do have Peter Katz from Herald and Lantern in Investments. Please go ahead with your question.

Hi. Hi, Rick. Hi, Scott. Congratulations on the progress you're making. I am a long-term investor. I just find just as a follow-up, your thoughts on dividend and buyback policy?

Thanks, Peter. Yeah. I mean, we have no debt and a lot of cash. And we have always felt in this business especially at a small company like ours, that it's very important to return capital to our investors. And we have a history of doing that. In the past, when I've been asked about our cash and dividends, or buybacks, I have cautiously conveyed that there can be a use for cash that becomes very apparent if we were to do a deal. You may recall a long-time shareholder, we were going into 2019 with a significant amount of cash. And that and some debt was used for our merger with Cortina, which was very good for the company. And highly accretive. That possibility is always out there, and so I wanna be careful about how we think about it. We did feel it was appropriate once again to do a buyback. And we're working through that. And the markets. We think long term that's a very, very good use of capital. And we will continue to look at buybacks. As we move along here depending on what our alternative use of capital is. As you can imagine, we're in discussions. We haven't talked about M&A in a while, but we're in discussions all the time with firms. And so that is a possibility and a possibility for the use for cash. In the meantime, we're gonna organically grow the company. But we're in a position where we feel we can continue to return capital that way. We will. And I think it's been good, and we like it. So I'm not trying to say we're gonna do more right now. We're still working from what we announced previously. It's always under consideration. Number one. On the dividend, we think it's important to continually pay that out at a high level. To make sure that this stock is providing a very good yield to our investors over the years. And we wanna do it in a prudent way. Our general goal, Peter, is to keep it high, which it is, and to increase it, but at a rate where we feel even with the dramatic downturn in markets, and therefore revenue, if we can still sustain it for a good period of time. And I would say at this level, we can. The market could really fall off along with their revenue, and we would not have to change the dividend policy for an extended period of time. We're comfortable with our payout ratio. But I hope that gives you some idea of how we're looking at it because I do think given the small size of our company, the fact that it's a financial and it's a small cap value stock and we know how small cap value in general has done. Compared to large cap growth in other parts of the market. It's very important to return capital and pay a high dividend. To our investors who are long-term investors like yourself.

Terrific. Thank you.

You're welcome. Any other questions?

I am not showing any additional questions at this time.

Alright. Thank you. And I think I made my concluding remarks. So I just thank everyone for their time and attention this morning. I look forward to speaking with you in the next quarter.