SEI Reports Fourth-Quarter 2012 Financial Results

Marketwired

OAKS, PA--(Marketwire - Jan 30, 2013) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for fourth-quarter 2012. Diluted earnings per share were $.32 in fourth-quarter 2012 compared to $.25 in fourth-quarter 2011.

                             
                             
Consolidated Overview   For the Three Months     For the Twelve Months  
(In thousands, except earnings per share)   Ended December 31,     Ended December 31,  
    2012   2011   %     2012   2011   %  
                             
Revenues   $261,635   $226,247   16 %   $992,522   $929,727   7 %
Net Income attributable to SEI   56,585   44,396   27 %   206,848   204,959   1 %
Diluted Earnings Per Share   $0.32   $0.25   28 %   $1.18   $1.11   6 %
                             
                             

"Our fourth-quarter 2012 results reflect the progress we have made in improving the fundamentals of our business," said Alfred P. West, Jr., SEI Chairman and CEO. "We are concentrating our efforts on maintaining highly-satisfied clients, growing new business events, controlling costs, and investing in projects critical to our future."

"In 2013 we will continue building a strong foundation for future growth in revenues and profits. Our focus on creating long-term sustainable growth is unwavering."

Summary of Fourth-Quarter and Year to Date Results by Business Segment

                                     
                                     
(In thousands)   For the Three Months     For the Twelve Months  
    Ended December 31,     Ended December 31,  
    2012     2011     %     2012     2011     %  
Private Banks:                                            
  Revenues   $ 96,421     $ 85,843     12 %   $ 364,788     $ 348,122     5 %
  Expenses     93,389       84,769     10 %     357,001       339,339     5 %
  Operating Profit   $ 3,032     $ 1,074     182 %   $ 7,787     $ 8,783     (11 %)
  Operating Margin     3 %     1 %           2 %     3 %      
                                             
Investment Advisors:                                            
  Revenues     52,476       45,106     16 %     202,703       189,780     7 %
  Expenses     31,706       27,613     15 %     120,146       110,438     9 %
  Operating Profit     20,770       17,493     19 %     82,557       79,342     4 %
  Operating Margin     40 %     39 %           41 %     42 %      
                                             
Institutional Investors:                                            
  Revenues     60,596       49,895     21 %     227,889       210,027     9 %
  Expenses     30,052       26,702     13 %     116,546       106,585     9 %
  Operating Profit     30,544       23,193     32 %     111,343       103,442     8 %
  Operating Margin     50 %     46 %           49 %     49 %      
                                             
Investment Managers:                                            
  Revenues     51,249       44,497     15 %     193,484       177,975     9 %
  Expenses     34,814       29,270     19 %     127,525       115,963     10 %
  Operating Profit     16,435       15,227     8 %     65,959       62,012     6 %
  Operating Margin     32 %     34 %           34 %     35 %      
                                             
Investments in New Businesses:                                            
  Revenues     893       906     (1 %)     3,658       3,823     (4 %)
  Expenses     3,874       3,085     26 %     14,954       11,559     29 %
  Operating Loss     (2,981 )     (2,179 )   N/A       (11,296 )     (7,736 )   N/A  
                                             
Totals:                                            
  Revenues   $ 261,635     $ 226,247     16 %   $ 992,522     $ 929,727     7 %
  Expenses     193,835       171,439     13 %     736,172       683,884     8 %
  Corporate overhead expenses     11,929       10,875     10 %     45,759       43,398     5 %
  Noncontrolling interest reflected in segments     (318 )     (442 )   N/A       (975 )     (1,620 )   N/A  
  Income from operations   $ 56,189     $ 44,375     27 %   $ 211,566     $ 204,065     4 %
  Operating Margin     21 %     20 %           21 %     22 %      
                                             
                                             

Fourth-Quarter Business Commentary:

  • Revenues increased in fourth-quarter 2012 as compared to both fourth-quarter 2011 and third-quarter 2012. This was driven by an increase in Asset management, administration, and distribution fee revenues resulting from increased cash flows from new and existing clients and market appreciation in 2012.

  • Net income attributable to SEI increased in fourth-quarter 2012 as compared to both fourth-quarter 2011 and third-quarter 2012. This was driven by the increase in fourth-quarter 2012 revenues when compared to both periods.

  • Our average assets under management, excluding LSV, increased $22.0 billion, or 19 percent, to $138.5 billion in the fourth-quarter 2012, as compared to $116.5 billion during the fourth-quarter 2011, and increased $5.9 billion, or four percent, as compared to $132.6 billion during the third-quarter 2012 (See attached Ending and Average Asset Balances schedules for further details).

  • Sales events, net of client losses, during fourth-quarter 2012 totaled approximately $27.0 million and are expected to generate net annualized recurring revenues of approximately $21.7 million when contract values are fully realized.

  • Income from LSV increased in fourth-quarter 2012 to $25.0 million as compared to $23.4 million in fourth-quarter 2011 due to an increase in assets under management. Our ownership interest in LSV was approximately 40 percent in fourth-quarter 2012 and 41 percent in fourth-quarter 2011.

  • Equity in the earnings of unconsolidated affiliates was negatively impacted $1.3 million in fourth-quarter 2012 as a result of our cumulative share of the operating losses related to an ownership position we hold in a Shanghai-based wealth management firm.

  • In fourth-quarter 2012, we sold the SIV security, Gryphon, and as a result of the sale we no longer own any SIV securities. Net income attributable to SEI includes gains from SIV securities of $5.9 million in fourth-quarter 2012 compared to losses of $0.7 million in fourth-quarter 2011 and a gain of $3.4 million in third-quarter 2012.

  • The effective tax rates were 35.0 percent in fourth-quarter 2012 and 34.7 percent in fourth-quarter 2011 and 39.0 percent in third-quarter 2012. The decrease in the tax rate in fourth-quarter 2012 as compared to third-quarter 2012 was due to the accrual of taxes on the cumulative undistributed earnings of SEI Asset Korea in third-quarter 2012. As a result of the expected sale of SEI Asset Korea, we no longer consider the undistributed earnings to be indefinitely reinvested and therefore accrued U.S. deferred taxes on the cumulative undistributed earnings of SEI Asset Korea.

  • On January 3, 2013, President Barack Obama signed into law the American Taxpayer Relief Act of 2012 (the Act), which reinstated the research and development credit retroactively from January 1, 2012 through December 31, 2013. The accounting rules require the determination of current and deferred taxes be based upon the provisions of the enacted tax law as of the balance sheet date. Since the Act was not signed into law until January 2, 2013, the effect was not reflected in the tax provision for 2012. The effect of the 2012 research and development tax credit will be reflected in first-quarter 2013.

  • In fourth-quarter 2012, we purchased 1.9 million shares of our common stock for $41.7 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on January 30, 2013. Investors may listen to the call at www.seic.com/investors or listen at www.earnings.com, a service of Thomson Streetevents. The call may also be accessed at numerous financial services web sites including AOL and Yahoo. Investors may also listen to replays at these web sites, or by telephone at (USA) 1-800-475-6701; (International) 320-365-3844, access code 280364.

About SEI
SEI (NASDAQ: SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of December 31, 2012, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $458 billion in mutual fund and pooled or separately managed assets, including $201 billion in assets under management and $257 billion in client assets under administration. For more information, visit www.seic.com.

Many of the statements in this release may be considered "forward looking statements" and include discussions about future operations, strategies and financial results. Forward-looking statements are based upon estimates and assumptions that involve risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe our assumptions are reasonable, they could be inaccurate. Our actual future revenues and income could differ materially from our expected results. We have no obligation to publicly update or revise any forward-looking statements.

   
   
SEI INVESTMENTS COMPANY  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
(Unaudited)  
             
    Three Months Ended December 31,  
    2012     2011  
                 
Asset management, admin. and distribution fees   $ 190,980     $ 162,126  
Information processing and software servicing fees     61,835       54,882  
Transaction-based and trade execution fees     8,820       9,239  
                 
Total revenues     261,635       226,247  
                 
Subadvisory, distribution and other asset mgmt costs     26,606       25,921  
Software royalties and other information processing costs     7,385       6,529  
Brokerage commissions     6,406       6,816  
Compensation, benefits and other personnel     90,441       74,609  
Stock-based compensation     3,959       3,146  
Consulting, outsourcing and professional fees     29,230       27,592  
Data processing and computer related     11,744       11,774  
Facilities, supplies and other costs     16,067       13,105  
Amortization     7,845       7,257  
Depreciation     5,763       5,123  
                 
Total expenses     205,446       181,872  
                 
Income from operations     56,189       44,375  
                 
Net gain (loss) on investments     6,490       (552 )
Interest and dividend income     1,279       1,449  
Interest expense     (115 )     (100 )
Equity in earnings of unconsolidated affiliates     23,701       23,431  
                 
Net income before income taxes     87,544       68,603  
                 
Income taxes     30,570       23,750  
                 
Net income     56,974       44,853  
                 
Less: Net income attributable to the noncontrolling interest     (389 )     (457 )
                 
Net income attributable to SEI   $ 56,585     $ 44,396  
                 
Diluted earnings per common share   $ 0.32     $ 0.25  
                 
Shares used to calculate diluted earnings per common share     174,540       178,412  
                 
Basic earnings per common share   $ 0.33     $ 0.25  
                 
Shares used to calculate basic earnings per common share     172,574       178,098  
                 
                 
   
   
SEI INVESTMENTS COMPANY  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
(Unaudited)  
             
    Twelve Months Ended December 31,  
    2012     2011  
                 
Asset management, admin. and distribution fees   $ 723,630     $ 669,788  
Information processing and software servicing fees     236,190       222,417  
Transaction-based and trade execution fees     32,702       37,522  
                 
Total revenues     992,522       929,727  
                 
Subadvisory, distribution and other asset mgmt costs     106,048       103,134  
Software royalties and other information processing costs     26,722       27,437  
Brokerage commissions     23,889       27,022  
Compensation, benefits and other personnel     335,296       289,445  
Stock-based compensation     15,736       14,112  
Consulting, outsourcing and professional fees     109,828       113,171  
Data processing and computer related     46,617       47,003  
Facilities, supplies and other costs     60,976       55,579  
Amortization     33,258       27,288  
Depreciation     22,586       21,471  
                 
Total expenses     780,956       725,662  
                 
Income from operations     211,566       204,065  
                 
Net gain on investments     14,067       3,360  
Interest and dividend income     5,696       5,829  
Interest expense     (504 )     (585 )
Equity in earnings of unconsolidated affiliates     98,671       105,818  
                 
Net income before income taxes     329,496       318,487  
                 
Income taxes     121,462       111,837  
                 
Net income     208,034       206,650  
                 
Less: Net income attributable to the noncontrolling interest     (1,186 )     (1,691 )
                 
Net income attributable to SEI   $ 206,848     $ 204,959  
                 
Diluted earnings per common share   $ 1.18     $ 1.11  
                 
Shares used to calculate diluted earnings per common share     175,872       184,127  
                 
Basic earnings per common share   $ 1.19     $ 1.12  
                 
Shares used to calculate basic earnings per common share     174,295       182,547  
                 
                 
 
 
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
         
         
    December 31,
2012
  December 31,
2011
Assets            
             
Cash and short-term investments   $ 452,247   $ 420,986
Restricted cash     6,000     6,000
Receivables, net     202,818     167,909
Securities owned     20,088     20,949
Other current assets     20,251     19,107
             
  Total current assets     701,404     634,951
             
Property and equipment, net     127,581     129,548
Marketable securities     81,778     139,333
Capitalized software, net     307,490     309,133
Investment in unconsolidated affiliates     77,398     68,454
Other assets, net     14,173     13,140
             
  Total assets   $ 1,309,824   $ 1,294,559
             
             
             
Liabilities            
             
Current liabilities   $ 152,005   $ 151,073
Deferred income taxes     93,458     93,751
Other Long-term liabilities     7,032     8,276
             
Total SEI Investments Company shareholders' equity     1,038,180     1,025,316
Noncontrolling interest     19,149     16,143
Total Equity     1,057,329     1,041,459
             
  Total liabilities and equity   $ 1,309,824   $ 1,294,559
             
             
 
 
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
                     
    Dec. 31,   Mar. 31,   Jun. 30,   Sept. 30,   Dec. 31,
    2011   2012   2012   2012   2012
Private Banks:                              
  Equity/Fixed Income prgms.   $ 16,435   $ 17,180   $ 16,848   $ 17,960   $ 18,862
  Collective Trust Fund prgms.     450     435     335     147     11
  Liquidity funds     5,553     5,549     5,063     5,342     6,008
  Total assets under mgmt.   $ 22,438   $ 23,164   $ 22,246   $ 23,449   $ 24,881
                               
  Client assets under admin.     10,355     10,916     10,719     11,611     12,178
  Total assets   $ 32,793   $ 34,080   $ 32,965   $ 35,060   $ 37,059
                               
Investment Advisors:                              
  Equity/Fixed Income prgms.   $ 26,639   $ 29,722   $ 29,153   $ 30,864   $ 31,220
  Collective Trust Fund prgms.     1,298     1,199     705     370     14
  Liquidity funds     2,505     1,643     1,880     1,868     2,514
  Total assets under mgmt.   $ 30,442   $ 32,564   $ 31,738   $ 33,102   $ 33,748
                               
Institutional Investors:                              
  Equity/Fixed Income prgms.   $ 49,051   $ 54,537   $ 55,548   $ 59,852   $ 62,160
  Collective Trust Fund prgms.     492     424     415     153     102
  Liquidity funds     3,888     3,725     2,958     3,272     2,454
  Total assets under mgmt.   $ 53,431   $ 58,686   $ 58,921   $ 63,277   $ 64,716
                               
Investment Managers:                              
  Equity/Fixed Income prgms.   $ 57   $ 62   $ 61   $ 65   $ 67
  Collective Trust Fund prgms.     11,255     12,781     13,004     15,433     16,197
  Liquidity funds     152     147     226     396     408
  Total assets under mgmt.   $ 11,464   $ 12,990   $ 13,291   $ 15,894   $ 16,672
                               
  Client assets under admin. (A)     221,198     228,327     231,549     240,965     244,671
  Total assets   $ 232,662   $ 241,317   $ 244,840   $ 256,859   $ 261,343
                               
Investments in New Businesses:                              
  Equity/Fixed Income prgms.   $ 515   $ 568   $ 551   $ 534   $ 513
  Liquidity funds     37     34     30     29     43
  Total assets under mgmt.   $ 552   $ 602   $ 581   $ 563   $ 556
                               
LSV Asset Management                              
  Equity/Fixed Income prgms.   $ 53,712   $ 60,607   $ 54,922   $ 58,886   $ 60,947
                               
Total:                              
  Equity/Fixed Income prgms (B)   $ 146,409   $ 162,676   $ 157,083   $ 168,161   $ 173,769
  Collective Trust Fund prgms.     13,495     14,839     14,459     16,103     16,324
  Liquidity funds     12,135     11,098     10,157     10,907     11,427
  Total assets under mgmt.   $ 172,039   $ 188,613   $ 181,699   $ 195,171   $ 201,520
                                 
  Client assets under admin. (C)     231,553     239,243     242,268     252,576     256,849
  Total assets   $ 403,592   $ 427,856   $ 423,967   $ 447,747   $ 458,369
                               
(A) Client assets under administration in the Investment Managers segment include $40.5 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of December 31, 2012).
(B) Equity/Fixed Income programs include $3.1 billion of assets invested in various asset allocation funds at December 31, 2012.
(C) In addition to the numbers presented, SEI also administers an additional $4.6 billion in Funds of Funds assets (as of December 31, 2012) on which SEI does not earn an administration fee.
   
 
 
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
                     
    4th Qtr.   1st Qtr.   2nd Qtr.   3rd Qtr.   4th Qtr.
    2011   2012   2012   2012   2012
Private Banks:                              
  Equity/Fixed Income prgms.   $ 16,624   $ 17,116   $ 16,794   $ 17,527   $ 18,301
  Collective Trust Fund prgms.     464     436     396     230     66
  Liquidity funds     5,401     5,581     5,115     5,401     5,229
  Total assets under mgmt.   $ 22,489   $ 23,133   $ 22,305   $ 23,158   $ 23,596
                                 
  Client assets under admin.     10,290     10,211     10,631     10,867     11,783
  Total assets   $ 32,779   $ 33,344   $ 32,936   $ 34,025   $ 35,379
                               
Investment Advisors:                              
  Equity/Fixed Income prgms.   $ 26,094   $ 28,426   $ 29,103   $ 30,032   $ 30,881
  Collective Trust Fund prgms.     1,314     1,238     984     532     158
  Liquidity funds     2,499     2,015     1,806     1,886     2,176
  Total assets under mgmt.   $ 29,907   $ 31,679   $ 31,893   $ 32,450   $ 33,215
                               
Institutional Investors:                              
  Equity/Fixed Income prgms.   $ 48,504   $ 52,270   $ 54,998   $ 57,763   $ 61,304
  Collective Trust Fund prgms.     500     427     418     284     120
  Liquidity funds     3,461     3,765     3,147     3,253     3,493
  Total assets under mgmt.   $ 52,465   $ 56,462   $ 58,563   $ 61,300   $ 64,917
                               
Investment Managers:                              
  Equity/Fixed Income prgms.   $ 65   $ 58   $ 63   $ 62   $ 68
  Collective Trust Fund prgms.     10,773     11,983     12,991     14,797     15,719
  Liquidity funds     219     190     235     287     395
  Total assets under mgmt.   $ 11,057   $ 12,231   $ 13,289   $ 15,146   $ 16,182
                               
  Client assets under admin.     224,633     224,547     229,873     237,155     240,520
  Total assets   $ 235,690   $ 236,778   $ 243,162   $ 252,301   $ 256,702
                               
Investments in New Businesses:                              
  Equity/Fixed Income prgms.   $ 515   $ 549   $ 550   $ 530   $ 518
  Liquidity funds     42     39     33     35     33
  Total assets under mgmt.   $ 557   $ 588   $ 583   $ 565   $ 551
                               
LSV Asset Management                              
  Equity/Fixed Income prgms.   $ 54,021   $ 59,200   $ 55,994   $ 57,164   $ 59,383
                               
Total:                              
  Equity/Fixed Income prgms   $ 145,823   $ 157,619   $ 157,502   $ 163,078   $ 170,455
  Collective Trust Fund prgms.     13,051     14,084     14,789     15,843     16,063
  Liquidity funds     11,622     11,590     10,336     10,862     11,326
  Total assets under mgmt.   $ 170,496   $ 183,293   $ 182,627   $ 189,783   $ 197,844
                               
  Client assets under admin.     234,923     234,758     240,504     248,022     252,303
  Total assets   $ 405,419   $ 418,051   $ 423,131   $ 437,805   $ 450,147
                               
                               
Contact:
Investor
Murray Louis
SEI
+1 610-676-1932
mlouis@seic.com

Media
Dana Grosser
SEI
+1 610-676-2459
dgrosser@seic.com
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