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SEI Reports First-Quarter 2021 Financial Results

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OAKS, Pa., April 21, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the first-quarter 2021. Diluted earnings per share were $0.89 in first-quarter 2021 compared to $0.72 in first-quarter 2020.

Consolidated Overview







(In thousands, except earnings per share)


For the Three Months
Ended March 31,





2021


2020


%








Revenues


$455,686



$414,762



10%

Net income


129,470



109,242



19%

Diluted earnings per share


$0.89



$0.72



24%

"Our first-quarter results reflect positive capital market performance. We continue to execute our business strategies across the company and invest in the strength and expansion of the solutions we bring to our target markets," said Alfred P. West, Jr., SEI Chairman and CEO. "We had solid sales results in processing and operational services, helping us offset the anticipated headwinds our asset management businesses face."

"Our long-term success is built on a strong foundation of advancing our suite of solutions, leading in our markets, effectively executing strategies, and soundly managing finances—all backed by a talented workforce. We will continue to drive our success forward for the benefit of our clients, employees, communities and shareholders."

Summary of First-Quarter Results by Business Segment

(In thousands)


For the Three Months Ended
March 31,



2021


2020


%

Private Banks:







Revenues


$117,608


$113,221


4%

Expenses


110,724


110,653


—%

Operating Profit


6,884


2,568


168%

Operating Margin


6%


2%










Investment Advisors:







Revenues


113,294


102,321


11%

Expenses


55,027


52,432


5%

Operating Profit


58,267


49,889


17%

Operating Margin


51%


49%










Institutional Investors:







Revenues


84,499


79,203


7%

Expenses


39,158


38,267


2%

Operating Profit


45,341


40,936


11%

Operating Margin


54%


52%










Investment Managers:







Revenues


136,419


116,629


17%

Expenses


83,020


74,289


12%

Operating Profit


53,399


42,340


26%

Operating Margin


39%


36%










Investments in New Businesses:







Revenues


3,866


3,388


14%

Expenses


13,404


10,910


23%

Operating Loss


(9,538)


(7,522)


NM








Totals:







Revenues


$455,686


$414,762


10%

Expenses


301,333


286,551


5%

Corporate Overhead Expenses


21,516


17,983


20%

Income from Operations


$132,837


$110,228


21%

First-Quarter Business Highlights:

  • Revenues from Asset management, administration, and distribution fees increased primarily from higher assets under administration in our Investment Managers segment due to market appreciation and positive cash flows from new and existing clients.

  • Average assets under administration increased $142.4 billion, or 21%, to $821.6 billion in the first-quarter 2021, as compared to $679.2 billion during the first-quarter 2020 (see attached Average Asset Balances schedules for further details).

  • Average assets under management, excluding LSV, increased $43.2 billion, or 18%, to $280.4 billion in the first-quarter 2021, as compared to $237.2 billion during the first-quarter 2020 (see attached Average Asset Balances schedules for further details).

  • Net sales events in the Private Banks and Investment Managers segments during first-quarter 2021 were $17.5 million, and are expected to generate net annualized recurring revenues of approximately $13.0 million when contract values are completely realized.

  • Net sales events in asset management related businesses of the Investment Advisors and Institutional Investors segments and the Asset Management Distribution (AMD) business in the Private Banks segment during first-quarter 2021 were negative $12.7 million, mainly related to net losses in our legacy Institutional client base of $9.9 million and a single product use client in the AMD business line of the Private Banks segment.

  • The increase in operational expenses was primarily due to increased consulting costs related to our continued investments in new business opportunities, such as our One SEISM strategy and IT Services offering, as well as increased personnel costs to service new clients in our Investment Managers segment. This increase was partially offset by a decline in travel and promotional-related expenses.

  • Earnings from LSV increased by $3.5 million, or 12%, to $33.4 million in first-quarter 2021, as compared to $29.9 million in first-quarter 2020. The increase in earnings was due to higher assets under management from market appreciation. Negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV.

  • Stock-based compensation expense in first-quarter 2021 increased $2.8 million as compared to first-quarter 2020 due to equity awards in late 2020.

  • We recorded a net gain from investments of approximately $332 thousand during the first-quarter 2021 as compared to a net loss of approximately $4.0 million during the first-quarter 2020.

  • We capitalized $6.3 million of software development costs in first-quarter 2021 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $11.9 million in first-quarter 2021.

  • Effective tax rates were 22.6% in first-quarter 2021 and 21.5% in first-quarter 2020. The increase in our effective tax rate was due to decreased tax benefits associated with a lower volume of stock option exercises.

  • We repurchased 1.2 million shares of our common stock for $66.9 million during the first-quarter 2021.

  • Cash flow from operations was $136.6 million, or $0.94 per share, and free cash flow was $126.0 million during the first-quarter 2021.

Earnings Conference Call

A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on April 21, 2021. Investors may listen to the call at seic.com/ir-events. Investors may also listen to a replay by telephone at (USA) 866-207-1041; (International) 402-970-0847; Access Code: 1599078.

About SEI

After 50 years in business, SEI (NASDAQ:SEIC) remains a leading global provider of investment processing, investment management, and investment operations solutions designed to help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of March 31, 2021, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers approximately $1 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including approximately $384 billion in assets under management and $836 billion in client assets under administration. For more information, visit seic.com.

This release contains forward-looking statements within the meaning or the rules and regulations of the Securities and Exchange Commission. In some cases you can identify forward-looking statements by terminology, such as ''may,'' ''will,'' ''expect,'' ''believe'' and ''continue'' or ''appear.'' Our forward-looking statements include our current expectations as to:

  • revenue that we believe will be generated by sales events that occurred during the quarter,

  • whether we will invest in the strength and expansion of our solutions,

  • our strategic priorities and the degree to which we will execute on them,

  • the elements of our long-term success, and

  • the degree to which our business will be successful and the beneficiaries of any such success.

We anticipate that we may deliver forward-looking statements during today's earnings call that include our current expectations as to:

  • our ability to capture the opportunities inherent in significant change,

  • the timing and success of client implementations and conversions,

  • our ability to expand our relationships and revenue opportunities with new and existing clients,

  • our ability to leverage our technologies and scale our businesses,

  • the degree to which one-time and transaction-based revenues during the quarter will be repeated,

  • revenue that we believe will be generated by sales events that occurred during the quarter or when our unfunded backlog may fund,

  • the strategic initiatives and business segments that we will pursue and those in which we will invest,

  • the strength of our pipelines,

  • the momentum we may have with respect to our businesses,

  • the headwinds we will face and our strategies for how we may respond to these headwinds,

  • how we will manage our expenses and the degree to which our forecasted expenses will decline or increase,

  • when we integrate purchased assets into SWP and the timing of our ability to offer additional services to clients,

  • the organic and inorganic opportunities that will drive our growth, and

  • the success of our strategic investments.

You should not place undue reliance on our forward-looking statements, as they are based on the current beliefs and expectations of our management and subject to significant risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe the assumptions upon which we base our forward-looking statements are reasonable, they could be inaccurate. Some of the risks and important factors that could cause actual results to differ from those described in our forward-looking statements can be found in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended Dec. 31, 2020, filed with the Securities and Exchange Commission.


SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)




For the Three Months
Ended March 31,



2021


2020






Asset management, admin. and distribution fees


$367,646



$331,853


Information processing and software servicing fees


88,040



82,909







Total revenues


455,686



414,762







Subadvisory, distribution and other asset mgmt. costs


50,164



45,337


Software royalties and other information processing costs


5,742



7,447


Compensation, benefits and other personnel


137,221



131,481


Stock-based compensation


9,752



6,929


Consulting, outsourcing and professional fees


54,340



53,290


Data processing and computer related


25,721



22,704


Facilities, supplies and other costs


17,248



16,796


Amortization


14,352



13,077


Depreciation


8,309



7,473







Total expenses


322,849



304,534







Income from operations


132,837



110,228







Net gain (loss) on investments


332



(3,989)


Interest and dividend income


945



3,203


Interest expense


(123)



(152)


Equity in earnings of unconsolidated affiliate


33,350



29,907







Income before income taxes


167,341



139,197







Income taxes


37,871



29,955







Net income


$129,470



$109,242







Basic earnings per common share


$0.90



$0.73







Shares used to calculate basic earnings per share


143,201



149,468







Diluted earnings per common share


$0.89



$0.72







Shares used to calculate diluted earnings per share


145,306



152,368



SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)




March 31,


December 31,



2021


2020

Assets





Current Assets:





Cash and cash equivalents


$782,582



$784,626


Restricted cash


3,101



3,101


Receivables from investment products


57,291



55,271


Receivables, net of allowance for doubtful accounts of $2,307 and $1,100


406,028



385,219


Securities owned


33,040



34,064


Other current assets


42,809



38,696


Total Current Assets


1,324,851



1,300,977







Property and Equipment, net of accumulated depreciation of $386,319 and $378,639


184,253



189,052


Operating Lease Right-of-Use Assets


37,762



38,397


Capitalized Software, net of accumulated amortization of $505,112 and $491,739


263,964



270,977


Available for Sale and Equity Securities


114,973



105,419


Investments in Affiliated Funds, at fair value


6,623



6,166


Investment in Unconsolidated Affiliate


51,743



98,433


Goodwill


64,489



64,489


Intangible Assets, net of accumulated amortization of $13,377 and $12,456


34,383



24,304


Deferred Contract Costs


33,430



33,781


Deferred Income Taxes


2,706



2,972


Other Assets, net


31,724



32,289


Total Assets


$2,150,901



$2,167,256







Liabilities and Equity





Current Liabilities:





Accounts payable


$5,529



$7,766


Accrued liabilities


199,235



299,845


Current portion of long-term operating lease liabilities


9,813



8,579


Deferred revenue


1,335



1,085


Total Current Liabilities


215,912



317,275







Long-term Income Taxes Payable


803



803


Deferred Income Taxes


50,892



55,159


Long-term Operating Lease Liabilities


33,089



34,058


Other Long-term Liabilities


21,097



20,054


Total Liabilities


321,793



427,349







Shareholders' Equity:





Common stock, $0.01 par value, 750,000 shares authorized; 142,701 and 143,396
shares issued and outstanding


1,427



1,434


Capital in excess of par value


1,208,433



1,190,001


Retained earnings


634,651



565,270


Accumulated other comprehensive loss, net


(15,403)



(16,798)


Total Shareholders' Equity


1,829,108



1,739,907


Total Liabilities and Shareholders' Equity


$2,150,901



$2,167,256



ENDING ASSET BALANCES

(In millions) (Unaudited)




Mar. 31,


Jun. 30,


Sept. 30,


Dec. 31


Mar. 31,



2020


2020


2020


2020


2021

Private Banks:











Equity and fixed-income programs


$21,160



$22,974



$23,499



$25,498



$25,098


Collective trust fund programs


5



5



6



6



7


Liquidity funds


4,143



4,291



3,718



3,778



3,793


Total assets under management


$25,308



$27,270



$27,223



$29,282



$28,898


Client assets under administration


21,497



23,903



24,174



26,346



4,379


Total assets


$46,805



$51,173



$51,397



$55,628



$33,277













Investment Advisors:











Equity and fixed-income programs


$54,856



$59,958



$65,581



$71,247



$73,818


Collective trust fund programs


2



3



3



1



1


Liquidity funds


5,969



6,648



3,866



3,832



3,584


Total assets under management


$60,827



$66,609



$69,450



$75,080



$77,403













Institutional Investors:











Equity and fixed-income programs


$72,399



$80,257



$83,846



$90,869



$92,040


Collective trust fund programs


94



103



101



98



...

95


Liquidity funds


3,672



1,924



2,096



2,128



2,909


Total assets under management


$76,165



$82,284

...

$86,043



$93,095



$95,044


Client assets under advisement


3,406



3,326



3,618



4,063



4,333


Total assets


$79,571



$85,610



$89,661



$97,158



$99,377













Investment Managers:











Collective trust fund programs


48,226



58,178



63,277



75,214



78,304


Liquidity funds


392



664



389



424



449


Total assets under management


$48,618



$58,842



$63,666



$75,638



$78,753


Client assets under administration (A)


610,794



668,611



730,369



760,397



831,819


Total assets


$659,412



$727,453



$794,035



$836,035



$910,572













Investments in New Businesses:











Equity and fixed-income programs


$1,484



$1,498



$1,572



$1,711



$1,777


Liquidity funds


152



194



169



162



289


Total assets under management


$1,636



$1,692



$1,741



$1,873



$2,066


Client assets under advisement


1,056



1,193



1,179



1,299



1,355


Total assets


$2,692



$2,885



$2,920



$3,172



$3,421













LSV Asset Management:











Equity and fixed-income programs (B)


$70,851



$81,134



$82,051



$93,692



$101,565













Total:











Equity and fixed-income programs (C)


$220,750



$245,821



$256,549



$283,017



$294,298


Collective trust fund programs


48,327



58,289



63,387



75,319



78,407


Liquidity funds


14,328



13,721



10,238



10,324



11,024


Total assets under management


$283,405



$317,831



$330,174



$368,660



$383,729


Client assets under advisement


4,462



4,519



4,797



5,362



5,688


Client assets under administration (D)


632,291



692,514



754,543



786,743



836,198


Total assets


$920,158



$1,014,864



$1,089,514



$1,160,765



$1,225,615




(A)

Client assets under administration in the Investment Managers segment include $54.6 billion of assets that are at fee levels below our normal full-service assets (as of March 31, 2021).

(B)

Equity and fixed-income programs include $2.4 billion of assets managed by LSV in which fees are based on performance only (as of March 31, 2021).

(C)

Equity and fixed-income programs include $7.9 billion of assets invested in various asset allocation funds at March 31, 2021.

(D)

In addition to the numbers presented, SEI also administers an additional $13.3 billion in Funds of Funds assets (as of March 31, 2021) on which SEI does not earn an administration fee.


AVERAGE ASSET BALANCES

(In millions) (Unaudited)




1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


1st Qtr.



2020


2020


2020


2020


2021

Private Banks:











Equity and fixed-income programs


$24,657



$22,229



$23,740



$24,284



$25,139


Collective trust fund programs


4



5



7



6



6


Liquidity funds


3,581



4,366



3,948



3,712



3,876


Total assets under management


$28,242



$26,600



$27,695



$28,002



$29,021


Client assets under administration


24,840



23,819



25,295



25,368



4,317


Total assets


$53,082



$50,419



$52,990



$53,370



$33,338













Investment Advisors:











Equity and fixed-income programs


$64,933



$57,429



$64,479



$68,396



$73,239


Collective trust fund programs


3



3



3



2



1


Liquidity funds


3,284



6,923



4,569



3,788



3,619


Total assets under management


$68,220



$64,355



$69,051



$72,186



$76,859













Institutional Investors:











Equity and fixed-income programs


$79,926



$77,037



$82,830



$86,277



$91,349


Collective trust fund programs


86



100



102



102



96


Liquidity funds


2,342



2,476



2,120



2,271



2,621


Total assets under management


$82,354



$79,613



$85,052



$88,650



$94,066


Client assets under advisement


3,760



3,362



3,565



3,746



4,146


Total assets


$86,114



$82,975



$88,617



$92,396



$98,212













Investment Managers:











Collective trust fund programs


55,952



54,061



62,028



69,349



78,035


Liquidity funds


617



482



565



411



490


Total assets under management


$56,569



$54,543



$62,593



$69,760



$78,525


Client assets under administration (A)


654,386



649,012



713,528



754,350



817,330


Total assets


$710,955



$703,555



$776,121



$824,110



$895,855













Investments in New Businesses:











Equity and fixed-income programs


$1,663



$1,468



$1,560



$1,634



$1,743


Liquidity funds


168



182



180



165



169


Total assets under management


$1,831



$1,650



$1,740



$1,799



$1,912


Client assets under advisement


1,222



1,148



1,206



1,218



1,327


Total assets


$3,053



$2,798



$2,946



$3,017



$3,239













LSV Asset Management:











Equity and fixed-income programs (B)


$88,059



$80,395



$83,536



$88,182



$97,476













Total:











Equity and fixed-income programs (C)


$259,238



$238,558



$256,145



$268,773



$288,946


Collective trust fund programs


56,045



54,169



62,140



69,459



78,138


Liquidity funds


9,992



14,429



11,382



10,347



10,775


Total assets under management


$325,275



$307,156



$329,667



$348,579



$377,859


Client assets under advisement


4,982



4,510



4,771



4,964



5,473


Client assets under administration (D)


679,226



672,831



738,823



779,718



821,647


Total assets


$1,009,483



$984,497



$1,073,261



$1,133,261



$1,204,979




(A)

Average client assets under administration in the Investment Managers segment during first-quarter 2021 include $53.8 billion that are at fee levels below our normal full-service assets.

(B)

Equity and fixed-income programs include $2.2 billion of average assets managed by LSV in which fees are based on performance only during first-quarter 2021.

(C)

Equity and fixed-income programs include $7.9 billion of average assets invested in various asset allocation funds during first-quarter 2021.

(D)

In addition to the numbers presented, SEI also administers an additional $13.2 billion of average assets in Funds of Funds assets during first-quarter 2021 on which SEI does not earn an administration fee.

Investor Contact:

Media Contact:

Lindsey Opsahl

Leslie Wojcik

SEI

SEI

+1 610-676-4052

+1 610-676-4191

lopsahl@seic.com

lwojcik@seic.com

Cision
Cision

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SOURCE SEI Investments Company