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SEI Reports Second-Quarter 2021 Financial Results

·12 min read

OAKS, Pa., July 21, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the second-quarter 2021. Diluted earnings per share were $0.93 in second-quarter 2021 compared to $0.68 in second-quarter 2020.

Consolidated Overview












(In thousands, except earnings per share)

For the Three Months
Ended June 30,




For the Six Months
Ended June 30,




2021


2020


%


2021


2020


%













Revenues

$475,651



$400,646



19%


$931,337



$815,408



14%

Net income

133,778



101,066



32%


263,248



210,308



25%

Diluted earnings per share

$0.93



$0.68



37%


$1.82



$1.39



31%

"Our second-quarter results reflect positive markets, improving sales momentum and solid capital returns to shareholders. We continue to invest in our technology and investment solutions to deliver best-in-class products and services to our clients," said Alfred P. West, Jr., SEI Chairman and CEO.

"As the industry evolves coming out of the pandemic, we continue to execute growth strategies across our business and take advantage of increasing demands for integrated technologies, sound operational solutions and a market-responsive investment approach. For more than 50 years, our stability, scale and success have been driven by seizing opportunities powered by our dedicated, talented workforce and tech-driven solutions. We are committed to delivering long-term value to our shareholders, employees, clients and communities."

Summary of Second-Quarter Results by Business Segment

(In thousands)

For the Three Months
Ended June 30,




For the Six Months
Ended June 30,




2021


2020


%


2021


2020


%

Private Banks:












Revenues

$123,676



$107,726



15%


$241,284



$220,947



9%

Expenses

117,654



107,723



9%


228,378



218,376



5%

Operating Profit

6,022



3



NM


12,906



2,571



402%

Operating Margin

5

%


%




5

%


1

%















Investment Advisors:












Revenues

119,396



93,708



27%


232,690



196,029



19%

Expenses

59,133



50,149



18%


114,160



102,581



11%

Operating Profit

60,263



43,559



38%


118,530



93,448



27%

Operating Margin

50

%


46

%




51

%


48

%















Institutional Investors:












Revenues

85,699



76,523



12%


170,198



155,726



9%

Expenses

41,895



36,937



13%


81,053



75,204



8%

Operating Profit

43,804



39,586



11%


89,145



80,522



11%

Operating Margin

51

%


52

%




52

%


52

%















Investment Managers:












Revenues

142,808



119,340



20%


279,227



235,969



18%

Expenses

84,995



74,668



14%


168,015



148,957



13%

Operating Profit

57,813



44,672



29%


111,212



87,012



28%

Operating Margin

40

%


37

%




40

%


37

%















Investments in New Businesses:












Revenues

4,072



3,349



22%


7,938



6,737



18%

Expenses

13,631



13,466



1%


27,035



24,376



11%

Operating Loss

(9,559)



(10,117)



NM


(19,097)



(17,639)



NM













Totals:












Revenues

$475,651



$400,646



19%


$931,337



$815,408



14%

Expenses

317,308



282,943



12%


618,641



569,494



9%

Corporate Overhead Expenses

22,322



17,391



28%


43,838



35,374



24%

Income from Operations

$136,021



$100,312



36%


$268,858



$210,540



28%

Second-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 $185.4 billion, or 28%, to $858.2 billion in the second-quarter 2021, as compared to $672.8 billion during the second-quarter 2020 (see attached Average Asset Balances schedules for further details).

  • Average assets under management, excluding LSV, increased $66.6 billion, or 29%, to $293.4 billion in the second-quarter 2021, as compared to $226.8 billion during the second-quarter 2020 primarily due to market appreciation (see attached Average Asset Balances schedules for further details).

  • Net sales events in the Private Banks and Investment Managers segments during second-quarter 2021 were $13.2 million and are expected to generate net annualized recurring revenues of approximately $9.8 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 second-quarter 2021 were $2.8 million, reflecting positive asset flows in the Advisor and AMD businesses, offset by net losses in our legacy Institutional client base.

  • The increase in operational expenses was primarily due to increased direct costs related to increased revenues, as well as increased personnel costs to service new clients in our Investment Managers segment.

  • Earnings from LSV increased by $6.8 million, or 24%, to $35.1 million in second-quarter 2021, as compared to $28.3 million in second-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 second-quarter 2021 increased $3.0 million as compared to second-quarter 2020 due to equity awards in late 2020 and from a change in estimate of the timing of when stock-option vesting targets would be achieved. We expect to recognize $25.7 million in stock-based compensation expense during the remainder of 2021.

  • We capitalized $5.9 million of software development costs in second-quarter 2021 for continued enhancements to the SEI Wealth PlatformSM. Amortization expense related to SWP was $12.0 million in second-quarter 2021.

  • Effective tax rates were 22.3% in second-quarter 2021 and 23.3% in second-quarter 2020. The decrease in our effective tax rate was due to increased tax benefits associated with a higher volume of stock option exercises.

  • We repurchased 2.1 million shares of our common stock for $129.2 million during the second-quarter 2021.

  • Cash flow from operations was $188.4 million, or $1.31 per share, and free cash flow was $171.3 million during the second-quarter 2021.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on July 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: 1520669.

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 June 30, 2021, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers approximately $1.3 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including approximately $399 billion in assets under management and $880 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 and the timing of such realization,

  • whether we will have sales momentum,

  • whether we will be able to take advantage of increasing sales demand,

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

  • our strategic priorities and commitments 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 migrations, implementations and conversions,

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

  • the timing of and our ability to integrate acquisition targets,

  • the degree to which M&A activity in the industries in which we compete will affect our sales,

  • the degree to which our technology is being adopted across both our existing client base and new 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 competition for and cost of talent and the effect of these factors on our business,

  • the amount of recurring sales we will generate,

  • the strength of our pipelines and demand for our products and services,

  • the degree to which the global COVID-19 pandemic is affecting our business,

  • 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, increase or normalize,

  • 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 and benefits 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 June 30,


For the Six Months
Ended June 30,


2021


2020


2021


2020









Asset management, admin. and distribution fees

$382,509



$320,577



$750,155



$652,430


Information processing and software servicing fees

93,142



80,069



181,182



162,978










Total revenues

475,651



400,646



931,337



815,408










Subadvisory, distribution and other asset mgmt. costs

55,827



44,182



105,991



89,519


Software royalties and other information processing costs

7,471



7,389



13,213



14,836


Compensation, benefits and other personnel

141,779



125,331



279,000



256,812


Stock-based compensation

10,103



7,062



19,855



13,991


Consulting, outsourcing and professional fees

55,449



57,111



109,789



110,401


Data processing and computer related

27,375



24,506



53,096



47,210


Facilities, supplies and other costs

18,479



13,973



35,727



30,769


Amortization

14,723



13,140



29,075



26,217


Depreciation

8,424



7,640



16,733



15,113










Total expenses

339,630



300,334



662,479



604,868










Income from operations

136,021



100,312



268,858



210,540










Net gain (loss) on investments

377



1,903



709



(2,086)


Interest and dividend income

878



1,370



1,823



4,573


Interest expense

(130)



(151)



(253)



(303)


Equity in earnings of unconsolidated affiliate

35,065



28,276



68,415



58,183










Income before income taxes

172,211



131,710



339,552



270,907










Income taxes

38,433



30,644



76,304



60,599










Net income

$133,778



$101,066



$263,248



$210,308










Basic earnings per common share

$0.94



$0.69



$1.85



$1.42










Shares used to calculate basic earnings per share

142,074



147,478



142,638



148,473










Diluted earnings per common share

$0.93



$0.68



$1.82



$1.39










Shares used to calculate diluted earnings per share

144,212



149,598



144,759



150,983










Dividends declared per common share

$0.37



$0.35



$0.37



$0.35


SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



June 30,


December 31,


2021


2020

Assets




Current Assets:




Cash and cash equivalents

$780,928



$784,626


Restricted cash

351



3,101


Receivables from investment products

56,177



55,271


Receivables, net of allowance for doubtful accounts of $3,188 and $1,100

409,568



385,219


Securities owned

26,174



34,064


Other current assets

38,158



38,696


Total Current Assets

1,311,356



1,300,977






Property and Equipment, net of accumulated depreciation of $394,743 and $378,639

184,042



189,052


Operating Lease Right-of-Use Assets

36,871



38,397


Capitalized Software, net of accumulated amortization of $518,514 and $491,739

256,473



270,977


Available for Sale and Equity Securities

130,039



105,419


Investments in Affiliated Funds, at fair value

6,932



6,166


Investment in Unconsolidated Affiliate

47,420



98,433


Goodwill

64,489



64,489


Intangible Assets, net of accumulated amortization of $14,573 and $12,456

33,187



24,304


Deferred Contract Costs

33,352



33,781


Deferred Income Taxes

2,447



2,972


Other Assets, net

33,082



32,289


Total Assets

$2,139,690



$2,167,256






Liabilities and Equity




Current Liabilities:




Accounts payable

$9,291



$7,766


Accrued liabilities

211,984



299,845


Current portion of long-term operating lease liabilities

10,344



8,579


Deferred revenue

1,280



1,085


Total Current Liabilities

232,899



317,275






Long-term Income Taxes Payable

803



803


Deferred Income Taxes

47,644



55,159


Long-term Operating Lease Liabilities

31,697



34,058


Other Long-term Liabilities

21,041



20,054


Total Liabilities

334,084



427,349






Shareholders' Equity:




Common stock, $0.01 par value, 750,000 shares authorized; 141,027 and 143,396 shares issued and outstanding

1,410



1,434


Capital in excess of par value

1,219,487



1,190,001


Retained earnings

599,231



565,270


Accumulated other comprehensive loss, net

(14,522)



(16,798)


Total Shareholders' Equity

1,805,606



1,739,907


Total Liabilities and Shareholders' Equity

$2,139,690



$2,167,256


ENDING ASSET BALANCES

(In millions) (Unaudited)



Jun. 30,


Sept. 30,


Dec. 31


Mar. 31,


Jun. 30,


2020


2020


2020


2021


2021

Private Banks:










Equity and fixed-income programs

$22,974



$23,499



$25,498



$25,098



$26,264


Collective trust fund programs

5



6



6



7



7


Liquidity funds

4,291



3,718



3,778



3,793



3,654


Total assets under management

$27,270



$27,223



$29,282



$28,898



$29,925


Client assets under administration

23,903



24,174



26,346



4,379



4,412


Total assets

$51,173



$51,397



$55,628



$33,277



$34,337












Investment Advisors:










Equity and fixed-income programs

$59,958



$65,581



$71,247



$73,818



$78,052


Collective trust fund programs

3



3



1



1



1


Liquidity funds

6,648



3,866



3,832



3,584



3,550


Total assets under management

$66,609



$69,450



$75,080



$77,403



$81,603












Institutional Investors:










Equity and fixed-income programs

$80,257



$83,846



$90,869



$92,040



$93,010


Collective trust fund programs

103



101



98



95



5


Liquidity funds

1,924



2,096



2,128



2,909



2,516


Total assets under management

$82,284



$86,043



$93,095



$95,044



$95,531


Client assets under advisement

3,326



3,618



4,063



4,333



4,566


Total assets

$85,610



$89,661



$97,158



$99,377



$100,097












Investment Managers:










Collective trust fund programs

58,178



63,277



75,214



78,304



87,012


Liquidity funds

664



389



424



449



473


Total assets under management

$58,842



$63,666



$75,638



$78,753



$87,485


Client assets under administration (A)

668,611



730,369



760,397



831,819



875,942


Total assets

$727,453



$794,035



$836,035



$910,572



$963,427












Investments in New Businesses:










Equity and fixed-income programs

$1,498



$1,572



$1,711



$1,777



$1,924


Liquidity funds

194



169



162



289



191


Total assets under management

$1,692



$1,741



$1,873



$2,066



$2,115


Client assets under advisement

1,193



1,179



1,299



1,355



1,422


Total assets

$2,885



$2,920



$3,172



$3,421



$3,537












LSV Asset Management:










Equity and fixed-income programs (B)

$81,134



$82,051



$93,692



$101,565



$102,404












Total:










Equity and fixed-income programs (C)

$245,821



$256,549



$283,017



$294,298



$301,654


Collective trust fund programs

58,289



63,387



75,319



78,407



87,025


Liquidity funds

13,721



10,238



10,324



11,024



10,384


Total assets under management

$317,831



$330,174



$368,660



$383,729



$399,063


Client assets under advisement

4,519



4,797



5,362



5,688



5,988


Client assets under administration (D)

692,514



754,543



786,743



836,198



880,354


Total assets

$1,014,864



$1,089,514



$1,160,765



$1,225,615



$1,285,405




(A)

Client assets under administration in the Investment Managers segment include $49.6 billion of assets that are at fee levels below our normal full-service assets (as of June 30, 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 June 30, 2021).

(C)

Equity and fixed-income programs include $8.0 billion of assets invested in various asset allocation funds at June 30, 2021.

(D)

In addition to the numbers presented, SEI also administers an additional $13.5 billion in Funds of Funds assets (as of June 30, 2021) 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.


2020


2020


2020


2021


2021

Private Banks:










Equity and fixed-income programs

$22,229



$23,740



$24,284



$25,139



$26,056


Collective trust fund programs

5



7



6



6



7


Liquidity funds

4,366



3,948



3,712



3,876



3,833


Total assets under management

$26,600



$27,695



$28,002



$29,021



$29,896


Client assets under administration

23,819



25,295



25,368



4,317



4,405


Total assets

$50,419



$52,990



$53,370



$33,338



$34,301












Investment Advisors:










Equity and fixed-income programs

$57,429



$64,479



$68,396



$73,239



$76,839


Collective trust fund programs

3



3



2



1



1


Liquidity funds

6,923



4,569



3,788



3,619



3,370


Total assets under management

$64,355



$69,051



$72,186



$76,859



$80,210












Institutional Investors:










Equity and fixed-income programs

$77,037



$82,830



$86,277



$91,349



$93,458


Collective trust fund programs

100



102



102



96



68


Liquidity funds

2,476



2,120



2,271



2,621



2,681


Total assets under management

$79,613



$85,052



$88,650



$94,066



$96,207


Client assets under advisement

3,362



3,565



3,746



4,146



4,516


Total assets

$82,975



$88,617



$92,396



$98,212



$100,723












Investment Managers:










Collective trust fund programs

54,061



62,028



69,349



78,035



84,553


Liquidity funds

482



565



411



490



469


Total assets under management

$54,543



$62,593



$69,760



$78,525



$85,022


Client assets under administration (A)

649,012



713,528



754,350



817,330



853,810


Total assets

$703,555



$776,121



$824,110



$895,855



$938,832












Investments in New Businesses:










Equity and fixed-income programs

$1,468



$1,560



$1,634



$1,743



$1,870


Liquidity funds

182



180



165



169



236


Total assets under management

$1,650



$1,740



$1,799



$1,912



$2,106


Client assets under advisement

1,148



1,206



1,218



1,327



1,406


Total assets

$2,798



$2,946



$3,017



$3,239



$3,512












LSV Asset Management:










Equity and fixed-income programs (B)

$80,395



$83,536



$88,182



$97,476



$103,583












Total:










Equity and fixed-income programs (C)

$238,558



$256,145



$268,773



$288,946



$301,806


Collective trust fund programs

54,169



62,140



69,459



78,138



84,629


Liquidity funds

14,429



11,382



10,347



10,775



10,589


Total assets under management

$307,156



$329,667



$348,579



$377,859



$397,024


Client assets under advisement

4,510



4,771



4,964



5,473



5,922


Client assets under administration (D)

672,831



738,823



779,718



821,647



858,215


Total assets

$984,497



$1,073,261



$1,133,261



$1,204,979



$1,261,161




(A)

Average client assets under administration in the Investment Managers segment during second-quarter 2021 include $51.6 billion that are at fee levels below our normal full-service assets.

(B)

Equity and fixed-income programs include $2.4 billion of average assets managed by LSV in which fees are based on performance only during second-quarter 2021.

(C)

Equity and fixed-income programs include $8.0 billion of average assets invested in various asset allocation funds during second-quarter 2021.

(D)

In addition to the numbers presented, SEI also administers an additional $13.5 billion of average assets in Funds of Funds assets during second-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

View original content:https://www.prnewswire.com/news-releases/sei-reports-second-quarter-2021-financial-results-301338835.html

SOURCE SEI Investments Company