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SEI Reports Second-Quarter 2019 Financial Results

OAKS, Pa., July 24, 2019 /PRNewswire/ -- SEI Investments Company (SEIC) today announced financial results for the second-quarter 2019. Diluted earnings per share were $0.82 in second-quarter 2019 compared to $0.75 in second-quarter 2018.

In addition, on July 23, 2019, SEI's Board of Directors approved an increase in its stock repurchase program by an additional $250 million, increasing the available authorization under the program to approximately $280 million.

Consolidated Overview













(In thousands, except
earnings per share)


For the Three Months
Ended June 30,




For the Six Months 
Ended June 30,





2019


2018


%


2019


2018


%














Revenues


$409,586



$404,830



1%


$810,406



$810,428



—%

Net income


126,540



121,677



4%


240,521



261,515



(8)%

Diluted earnings per share


$0.82



$0.75



9%


$1.54



$1.61



(4)%

"Our second-quarter results reflect improved capital markets, the implementation of new clients and the delivery of services to existing clients. We are efficiently managing the business while making the necessary investments to expand our opportunities and strengthen the platforms we bring to our target markets," said Alfred P. West, Jr., SEI Chairman and CEO.

"We continue to face up to the challenges presented by the ever-changing markets, while innovating to take advantage of today's opportunities and those we anticipate in the future. Our platforms are built to help our clients achieve lasting success. This key focus will foster the company's growth and increased shareholder value over the long term."

Summary of Second-Quarter Results by Business Segment

(In thousands)


For the Three Months 
Ended June 30,




For the Six Months 
Ended June 30,





2019


2018


%


2019


2018


%

Private Banks:













Revenues


$116,092



$121,126



(4)%


$234,351



$243,290



(4)%

Expenses


107,790



114,842



(6)%


218,752



227,044



(4)%

Operating Profit


8,302



6,284



32%


15,599



16,246



(4)%

Operating Margin


7

%


5

%




7

%


7

%
















Investment Advisors:













Revenues


100,122



99,890



—%


194,883



199,082



(2)%

Expenses


50,558



53,052



(5)%


103,060



105,505



(2)%

Operating Profit


49,564



46,838



6%


91,823



93,577



(2)%

Operating Margin


50

%


47

%




47

%


47

%
















Institutional Investors:













Revenues


81,109



83,434



(3)%


161,222



168,925



(5)%

Expenses


39,361



40,871



(4)%


78,115



82,120



(5)%

Operating Profit


41,748



42,563



(2)%


83,107



86,805



(4)%

Operating Margin


51

%


51

%




52

%


51

%
















Investment Managers:













Revenues


109,202



97,566



12%


213,851



194,421



10%

Expenses


68,371



63,321



8%


137,437



126,659



9%

Operating Profit


40,831



34,245



19%


76,414



67,762



13%

Operating Margin


37

%


35

%




36

%


35

%
















Investments in New Businesses:













Revenues


3,061



2,814



9%


6,099



4,710



29%

Expenses


6,797



5,940



14%


12,737



11,038



15%

Operating Loss


(3,736)



(3,126)



NM


(6,638)



(6,328)



NM














Totals:













Revenues


$409,586



$404,830



1%


$810,406



$810,428



—%

Expenses


272,877



278,026



(2)%


550,101



552,366



—%

Corporate overhead expenses


16,573



16,514



—%


36,608



31,456



16%

Income from operations


$120,136



$110,290



9%


$223,697



$226,606



(1)%

Second-Quarter Business Highlights:

  • Revenues from Asset management, administration, and distribution fees increased primarily from higher assets under administration in our Investment Managers segment.
  • Our average assets under administration increased $78.3 billion, or 14 percent, to $623.6 billion in the second-quarter 2019, as compared to $545.3 billion during the second-quarter 2018 (see attached Average Asset Balances schedules for further details).
  • Our average assets under management, excluding LSV, increased $1.6 billion, or one percent, to $228.6 billion in the second-quarter 2019, as compared to $227.0 billion during the second-quarter 2018 (see attached Average Asset Balances schedules for further details).
  • Information processing and software servicing fees in our Private Banks segment decreased by $3.4 million due to decreased non-recurring fees and previously announced client losses.
  • Our Subadvisory, distribution and other asset management costs increased in second-quarter 2019, primarily from higher assets under management.
  • Sales events, net of client losses, during second-quarter 2019 totaled approximately $12.7 million and are expected to generate net annualized recurring revenues of approximately $10.8 million when contract values are fully realized.
  • Our earnings from LSV decreased by $3.2 million, or eight percent, to $37.8 million in second-quarter 2019 as compared to $41.1 million in second-quarter 2018. The decrease in earnings was primarily due to a decline in assets under management from market depreciation, as well as reduced performance fees earned by LSV and negative cash flows.
  • Our operating expenses during the second-quarter 2019 decreased primarily due to cost containment measures implemented in late 2018 and early 2019. These measures mainly impacted personnel compensation and consulting costs.
  • Total expenses during the second-quarter 2019 in our Investment Advisors segment included approximately $400 thousand of fixed costs associated with TRUST 3000®.
  • We capitalized $9.0 million of software development costs in second-quarter 2019 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $10.5 million in second-quarter 2019.
  • Our effective tax rates were 22.1 percent in second-quarter 2019 and 21.1 percent in second-quarter 2018. The increase in our effective tax rate was primarily due to reduced tax benefits from a lower volume of stock option exercise activity during the quarter as compared to the prior year period.
  • We repurchased 1.8 million shares of our common stock for $97.0 million during the second-quarter 2019.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern Time on July 24, 2019. Investors may listen to the call at seic.com/ir-events. Investors may also listen to a replay by telephone at (USA) 800-475-6701; (International) 320-365-3844, access code 469877.

About SEI
After 50 years in business, SEI (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 June 30, 2019, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $970 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including $335 billion in assets under management and $630 billion in client assets under administration. For more information, visit seic.com.

This release contains forward-looking statements within the meaning of the rules and regulations of the Securities and Exchange Commission.  In some cases you can identify forward-looking statements by the words ''may,'' ''will,'' ''expect,'' ''believe,'' and ''continue'' or ''appear." Our forward-looking statements include discussions about future operations, strategies and financial results, including our expectations as to revenue that we believe will be generated by sales events that occurred during the quarter, the degree to which we are able to take advantage of current and anticipated market opportunities, the degree to which the manner in which we will seek to invest will create opportunities for growth and value, and whether our current initiatives will create growth and shareholder value. 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, 2018, filed with the Securities and Exchange Commission and available on our website at https://www.seic.com/investor-relations and on the Securities and Exchange Commission's website (www.sec.gov). There may be additional risks that we do not presently know or that we currently believe are immaterial which could also cause actual results to differ from those contained in our forward-looking statements. We do not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

 

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)




For the Three Months 
Ended June 30,


For the Six Months 
Ended June 30,



2019


2018


2019


2018










Asset management, admin. and distribution fees


$324,925



$316,508



$638,869



$632,717


Information processing and software servicing fees


84,661



88,322



171,537



177,711











Total revenues


409,586



404,830



810,406



810,428











Subadvisory, distribution and other asset mgmt. costs


46,177



45,209



89,982



90,414


Software royalties and other information processing costs


7,393



7,977



15,521



16,695


Compensation, benefits and other personnel


125,999



127,375



256,334



251,652


Stock-based compensation


5,064



5,323



10,102



10,518


Consulting, outsourcing and professional fees


45,330



50,441



95,536



99,148


Data processing and computer related


22,184



21,133



43,176



41,724


Facilities, supplies and other costs


17,100



17,783



35,845



35,396


Amortization


12,781



12,161



25,460



24,015


Depreciation


7,422



7,138



14,753



14,260











Total expenses


289,450



294,540



586,709



583,822











Income from operations


120,136



110,290



223,697



226,606











Net gain (loss) on investments


231



(139)



1,510



(549)


Interest and dividend income


4,313



3,162



8,570



5,664


Interest expense


(166)



(132)



(323)



(389)


Equity in earnings of unconsolidated affiliate


37,832



41,073



75,149



81,680











Income before income taxes


162,346



154,254



308,603



313,012











Income taxes


35,806



32,577



68,082



51,497











Net income


$126,540



$121,677



$240,521



$261,515











Basic earnings per common share


$0.83



$0.77



$1.58



$1.66











Shares used to calculate basic earnings per share


151,863



157,542



152,587



157,488











Diluted earnings per common share


$0.82



$0.75



$1.54



$1.61











Shares used to calculate diluted earnings per share


155,165



162,225



155,853



162,825











Dividends declared per common share


$0.33



$0.30



$0.33



$0.30


 

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)




June 30,


December 31,



2019


2018

Assets





Current Assets:





  Cash and cash equivalents


$682,266



$754,525


  Restricted cash


3,520



3,514


  Receivables from investment products


52,407



49,869


  Receivables, net of allowance for doubtful accounts of $1,101 and $718


335,144



315,336


  Securities owned


32,289



30,892


  Other current assets


31,915



36,676


  Total Current Assets


1,137,541



1,190,812







Property and Equipment, net of accumulated depreciation of $352,293 and $338,206


150,045



145,863


Operating Lease Right-of-Use Assets


42,940




Capitalized Software, net of accumulated amortization of $418,675 and $395,171


305,184



309,500


Investments Available for Sale


106,671



111,901


Investments in Affiliated Funds, at fair value


5,434



4,887


Investment in Unconsolidated Affiliate


50,203



52,342


Goodwill


64,489



64,489


Intangible Assets, net of accumulated amortization of $6,932 and $5,090


29,828



31,670


Deferred Contract Costs


25,132



24,007


Deferred Income Taxes


1,571



2,042


Other Assets, net


33,761



34,155


  Total Assets


$1,952,799



$1,971,668







Liabilities and Equity





Current Liabilities:





  Accounts payable


$5,494



$10,920


  Accrued liabilities


178,473



279,634


  Short-term operating lease liabilities


8,259




  Deferred revenue


4,705



5,154


  Total Current Liabilities


196,931



295,708







Long-term Taxes Payable

 


803



803


Deferred Income Taxes


55,793



57,795


Long-term Operating Lease Liabilities


39,427




Other Long-term Liabilities


25,344



24,215


  Total Liabilities


318,298



378,521







Shareholders' Equity:





  Common stock, $0.01 par value, 750,000 shares authorized; 150,955 and 153,634
  shares issued and outstanding


1,509



1,536


  Capital in excess of par value


1,122,068



1,106,641


  Retained earnings


541,664



517,970


  Accumulated other comprehensive loss, net


(30,740)



(33,000)


  Total Shareholders' Equity


1,634,501



1,593,147


  Total Liabilities and Shareholders' Equity


$1,952,799



$1,971,668


 

ENDING ASSET BALANCES

(In millions)  (Unaudited)





Jun. 30,


Sept. 30,


Dec 31,


Mar. 31,


Jun. 30,




2018


2018


2018


2019


2019

Private Banks:












Equity and fixed-income programs



$22,448



$22,739



$20,453



$22,369



$22,563


Collective trust fund programs



4



4



4



4



4


Liquidity funds



3,471



3,142



3,633



3,753



3,322


Total assets under management



$25,923



$25,885



$24,090



$26,126



$25,889


Client assets under administration



22,435



23,394



20,226



22,886



23,387


Total assets



$48,358



$49,279



$44,316



$49,012



$49,276














Investment Advisors:












Equity and fixed-income programs



$62,227



$63,958



$55,395



$61,277



$64,591


Collective trust fund programs



5



5



7



5



6


Liquidity funds



3,101



3,182



5,948



4,362



2,618


Total assets under management



$65,333



$67,145



$61,350



$65,644



$67,215














Institutional Investors:












Equity and fixed-income programs



$83,687



$85,248



$78,765



$82,578



$82,335


Collective trust fund programs



73



74



79



79



78


Liquidity funds



2,594



2,544



2,234



2,529



2,173


Total assets under management



$86,354



$87,866



$81,078



$85,186



$84,586


Client assets under advisement



4,544



4,131



3,359



3,694



3,598


Total assets



$90,898



$91,997



$84,437



$88,880



$88,184














Investment Managers:












Equity and fixed-income programs



$95



$99



$89



$—



$—


Collective trust fund programs



45,213



46,934



42,804



49,232



51,838


Liquidity funds



496



580



336



704



472


Total assets under management



$45,804



$47,613



$43,229



$49,936



$52,310


Client assets under administration (A)



522,700



552,411



552,318



585,997



607,086


Total assets



$568,504



$600,024



$595,547



$635,933



$659,396














Investments in New Businesses:












Equity and fixed-income programs



$1,120



$1,179



$1,257



$1,466



$1,566


Liquidity funds



106



162



189



218



141


Total assets under management



$1,226



$1,341



$1,446



$1,684



$1,707


Client assets under advisement



807



730



687



729



887


Total assets



$2,033



$2,071



$2,133



$2,413



$2,594














LSV Asset Management:












Equity and fixed-income programs (B)



$106,505



$109,363



$96,114



$103,163



$103,575














Total:












Equity and fixed-income programs (C)



$276,082



$282,586



$252,073



$270,853



$274,630


Collective trust fund programs



45,295



47,017



42,894



49,320



51,926


Liquidity funds



9,768



9,610



12,340



11,566



8,726


Total assets under management



$331,145



$339,213



$307,307



$331,739



$335,282


Client assets under advisement



5,351



4,861



4,046



4,423



4,485


Client assets under administration (D)



545,135



575,805



572,544



608,883



630,473


Total assets



$881,631



$919,879



$883,897



$945,045



$970,240



(A)

Client assets under administration in the Investment Managers segment include $57.1 billion of assets that are at fee levels below our normal full-service assets (as of June 30, 2019).

(B)

Equity and fixed-income programs include $2.8 billion of assets managed by LSV in which fees are based on performance only (as of June 30, 2019).

(C)

Equity and fixed-income programs include $5.5 billion of assets invested in various asset allocation funds at June 30, 2019.

(D)

In addition to the numbers presented, SEI also administers an additional $11.6 billion in Funds of Funds assets (as of June 30, 2019) on which SEI does not earn an administration fee.


 

AVERAGE ASSET BALANCES

(In millions) (Unaudited)





2nd Qtr.


3rd Qtr.


4th Qtr.


1st Qtr.


2nd Qtr.




2018


2018


2018


2019


2019

Private Banks:












Equity and fixed-income programs



$22,870



$22,516



$21,383



$21,831



$22,088


Collective trust fund programs



4



4



4



4



4


Liquidity funds



3,516



3,376



3,265



3,706



3,388


Total assets under management



$26,390



$25,896



$24,652



$25,541



$25,480


Client assets under administration



22,605



23,175



21,608



22,098



23,124


Total assets



$48,995



$49,071



$46,260



$47,639



$48,604














Investment Advisors:












Equity and fixed-income programs



$62,890



$63,399



$59,954



$58,732



$62,419


Collective trust fund programs



5



5



4



5



6


Liquidity funds



2,429



2,958



3,452



5,298



3,465


Total assets under management



$65,324



$66,362



$63,410



$64,035



$65,890














Institutional Investors:












Equity and fixed-income programs



$85,045



$84,885



$81,833



$81,725



$82,597


Collective trust fund programs



72



74



75



79



78


Liquidity funds



2,621



2,469



2,449



2,375



2,342


Total assets under management



$87,738



$87,428



$84,357



$84,179



$85,017


Client assets under advisement



4,301



4,263



3,566



3,494



3,641


Total assets



$92,039



$91,691



$87,923



$87,673



$88,658














Investment Managers:












Equity and fixed-income programs



$109



$95



$96



$—



$—


Collective trust fund programs



45,646



45,856



44,009



47,322



50,108


Liquidity funds



649



555



480



559



497


Total assets under management



$46,404



$46,506



$44,585



$47,881



$50,605


Client assets under administration (A)



522,679



541,063



561,043



572,065



600,509


Total assets



$569,083



$587,569



$605,628



$619,946



$651,114














Investments in New Businesses:












Equity and fixed-income programs



$1,090



$1,148



$1,198



$1,394



$1,436


Liquidity funds



95



146



179



202



178


Total assets under management



$1,185



$1,294



$1,377



$1,596



$1,614


Client assets under advisement



813



777



958



708



917


Total assets



$1,998



$2,071



$2,335



$2,304



$2,531














LSV Asset Management:












Equity and fixed-income programs (B)



$108,380



$109,527



$99,791



$104,517



$102,919














Total:












Equity and fixed-income programs (C)



$280,384



$281,570



$264,255



$268,199



$271,459


Collective trust fund programs



45,727



45,939



44,092



47,410



50,196


Liquidity funds



9,310



9,504



9,825



12,140



9,870


Total assets under management



$335,421



$337,013



$318,172



$327,749



$331,525


Client assets under advisement



5,114



5,040



4,524



4,202



4,558


Client assets under administration (D)



545,284



564,238



582,651



594,163



623,633


Total assets



$885,819



$906,291



$905,347



$926,114



$959,716



(A)

Average client assets under administration in the Investment Managers segment during second-quarter 2019 include $56.7 billion that are at fee levels below our normal full-service assets.

(B)

Equity and fixed-income programs include $2.8 billion of average assets managed by LSV in which fees are based on performance only during second-quarter 2019.

(C)

Equity and fixed-income programs include $5.6 billion of average assets invested in various asset allocation funds during second-quarter 2019.

(D)

In addition to the numbers presented, SEI also administers an additional $11.5 billion of average assets in Funds of Funds assets during second-quarter 2019 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

 

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