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SEI Reports Fourth-Quarter 2019 Financial Results

Cision

OAKS, Pa. , Jan. 29, 2020 /PRNewswire/ --   SEI Investments Company (NASDAQ: SEIC) today announced financial results for the fourth-quarter 2019. Diluted earnings per share were $0.84 in fourth-quarter 2019 compared to $0.73 in fourth-quarter 2018.

Consolidated Overview













(In thousands, except earnings per share)


For the Three Months
Ended Dec. 31,




For the Twelve Months
Ended Dec. 31,





2019


2018


%


2019


2018


%














Revenues


$423,225



$405,057



4%


$1,649,885



$1,624,167



2%

Net income


128,737



116,034



11%


501,426



505,868



(1)%

Diluted earnings per share


$0.84



$0.73



15%


$3.24



$3.14



3%

"Our financial results for 2019 reflect steady success in growing our profits. While we continue to execute our long-term strategy, turning headwinds into tailwinds, we are leveraging all of our assets through our One SEI approach," said Alfred P. West, Jr. , SEI Chairman and CEO.

"The wealth and investment industries are dynamic. We believe our unique position across financial technology, operations and investments provide growth opportunities that will lead to increased shareholder value. The investments we make and our success in 2019 situate us well for the future."

Summary of Fourth-Quarter Results by Business Segment

(In thousands)


For the Three Months
Ended Dec. 31,




For the Twelve Months
Ended Dec. 31,





2019


2018


%


2019


2018


%

Private Banks:













Revenues


$118,675



$121,358



(2)%


$470,276



$483,097



(3)%

Expenses


113,596



114,379



(1)%


443,136



457,894



(3)%

Operating Profit


5,079



6,979



(27)%


27,140



25,203



8%

Operating Margin


4

%


6

%




6

%


5

%
















Investment Advisors:













Revenues


105,862



97,457



9%


403,778



399,089



1%

Expenses


53,939



53,647



1%


208,508



212,439



(2)%

Operating Profit


51,923



43,810



19%


195,270



186,650



5%

Operating Margin


49

%


45

%




48

%


47

%
















Institutional Investors:













Revenues


80,503



80,908



(1)%


322,062



333,299



(3)%

Expenses


38,554



40,919



(6)%


153,937



163,536



(6)%

Operating Profit


41,949



39,989



5%


168,125



169,763



(1)%

Operating Margin


52

%


49

%




52

%


51

%
















Investment Managers:













Revenues


114,759



102,380



12%


440,796



398,076



11%

Expenses


72,698



67,738



7%


282,024



259,693



9%

Operating Profit


42,061



34,642



21%


158,772



138,383



15%

Operating Margin


37

%


34

%




36

%


35

%
















Investments in New Businesses:













Revenues


3,426



2,954



16%


12,973



10,606



22%

Expenses


8,997



6,164



46%


29,660



22,971



29%

Operating Loss


(5,571)



(3,210)



NM


(16,687)



(12,365)



NM














Totals:













Revenues


$423,225



$405,057



4%


$1,649,885



$1,624,167



2%

Expenses


287,784



282,847



2%


1,117,265



1,116,533



%

Corporate Overhead Expenses


19,351



19,248



1%


72,196



65,646



10%

Income from Operations


$116,090



$102,962



13%


$460,424



$441,988



4%

Fourth-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 sales of new business and market appreciation.
  • Our average assets under administration increased $88.8 billion , or 15%, to $671.5 billion in the fourth-quarter 2019, as compared to $582.7 billion during the fourth-quarter 2018 (see attached Average Asset Balances schedules for further details).
  • Our average assets under management, excluding LSV, increased $20.8 billion , or 10%, to $239.2 billion in the fourth-quarter 2019, as compared to $218.4 billion during the fourth-quarter 2018 (see attached Average Asset Balances schedules for further details).
  • Sales events, net of client losses, during fourth-quarter 2019 totaled approximately $26.1 million and are expected to generate net annualized recurring revenues of approximately $17.5 million when contract values are fully realized. For the year ended 2019, sales events, net of client losses, totaled $87.5 million and are expected to generate net annualized recurring revenues of approximately $62.5 million when contract values are fully realized.
  • Our earnings from LSV increased by $2.7 million , or 8%, to $39.1 million in fourth-quarter 2019 as compared to $36.4 million in fourth-quarter 2018. The increase in earnings was due to higher assets under management from market appreciation. The increase was partially offset by negative cash flows from existing clients, client losses and reduced performance fees earned by LSV.
  • We capitalized $7.1 million of software development costs in fourth-quarter 2019 for continued enhancements to the SEI Wealth Platform SM (SWP). Amortization expense related to SWP was $10.7 million in fourth-quarter 2019.
  • Stock-based compensation expense in fourth-quarter 2019 increased $1.6 million as compared to fourth-quarter 2018 and $3.6 million as compared to third-quarter 2019 primarily due to a change in our estimate of the timing of when stock option vesting targets would be achieved. The sequential increase in expense from third-quarter 2019 represents a $0.02 diluted earnings per share impact. We expect stock-based compensation expense during 2020 to be approximately $30.1 million as compared to $24.6 million during 2019 as a result of new options granted in fourth-quarter 2019 that carry a higher per share cost valuation.
  • Our operating expenses increased $11.5 million during fourth-quarter 2019 as compared to third-quarter 2019. This increase was primarily due to the increase in stock-based compensation expense, increased direct costs related to increased revenues, and year-end processing costs.
  • Our effective tax rates were 19.5% in fourth-quarter 2019 and 19.2% in fourth-quarter 2018.
  • We repurchased 1.3 million shares of our common stock for $81.2 million during the fourth-quarter 2019. For the year ended 2019, we repurchased 6.2 million shares of our common stock for $348.3 million .

Earnings Conference Call

A conference call to review earnings is scheduled for 4:30 p.m. Eastern Time on Jan. 29, 2020 . 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: 7950631.

About SEI

After 50 years in business, SEI (NASDAQ: SEIC) remains a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of Dec. 31, 2019 , through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $1 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including $352 billion in assets under management and $683 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,
  • the growth and momentum of our businesses,
  • the degree to which our unique position across financial technology, operations and investments provide growth opportunities,
  • the degree to which our investments will position us to take advantage of market opportunities,
  • whether our current initiatives will create growth opportunities that will lead to increased shareholder value, and
  • whether we are positioned well for the future.

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 December 31, 2018 , 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 Dec. 31,


For the Twelve Months
Ended Dec. 31,



2019


2018


2019


2018










Asset management, admin. and distribution fees


$337,232



$314,685



$1,307,044



$1,270,180


...