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Sei Investments Company
SEI Reports Fourth-Quarter 2020 Financial Results
Jan 27 2021
3 min read

SEI Reports Fourth-Quarter 2020 Financial Results

OAKS, Pa., Jan. 27, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the fourth-quarter 2020. Diluted earnings per share were $0.86 in fourth-quarter 2020 compared to $0.84 in fourth-quarter 2019.

Consolidated Overview

(In thousands, except earnings per share)

For the Three Months Ended Dec. 31,

For the Twelve Months Ended Dec. 31,

2020

2019

%

2020

2019

%

Revenues

$443,723

$423,225

5%

$1,684,058

$1,649,885

2%

Net income

125,882

128,737

(2)%

447,286

501,426

(11)%

Diluted earnings per share

$0.86

$0.84

2%

$3.00

$3.24

(7)%

"Our financial results for 2020 reflect steady recovery from the pandemic's impact on the markets we serve. The health and safety of our workforce continue to be a priority, and I want to thank all of our employees and the firms that support us for helping us stay safe and thrive," said Alfred P. West, Jr., SEI Chairman and CEO.

"We're living and operating in extraordinary times, but we are unwavering in our focus on executing our long-term strategy to be the provider of choice in the wealth and investment management markets. We believe we have made significant progress on our One SEI approach, making all of our assets available to all of our markets, delivering new, dynamic solutions and creating new opportunities. Our solutions, backed by our talented workforce, are what uniquely position us to capture growth opportunities that will lead to increased shareholder value. Despite 2020's challenging environment, our investments and success in adding new clients and building our backlog of new revenue situate us well for the future."

Summary of Fourth-Quarter Results by Business Segment

(In thousands)

For the Three MonthsEnded Dec. 31,

For the Twelve MonthsEnded Dec. 31,

2020

2019

%

2020

2019

%

Private Banks:

Revenues

$119,654

$118,675

1%

$455,393

$470,276

(3)%

Expenses

115,039

113,596

1%

446,481

443,136

1%

Operating Profit

4,615

5,079

(9)%

8,912

27,140

(67)%

Operating Margin

4

%

4

%

2

%

6

%

Investment Advisors:

Revenues

108,346

105,862

2%

407,564

403,778

1%

Expenses

51,813

53,939

(4)%

205,913

208,508

(1)%

Operating Profit

56,533

51,923

9%

201,651

195,270

3%

Operating Margin

52

%

49

%

49

%

48

%

Institutional Investors:

Revenues

82,318

80,503

2%

317,627

322,062

(1)%

Expenses

36,893

38,554

(4)%

149,909

153,937

(3)%

Operating Profit

45,425

41,949

8%

167,718

168,125

—%

Operating Margin

55

%

52

%

53

%

52

%

Investment Managers:

Revenues

129,647

114,759

13%

489,462

440,796

11%

Expenses

80,204

72,698

10%

308,999

282,024

10%

Operating Profit

49,443

42,061

18%

180,463

158,772

14%

Operating Margin

38

%

37

%

37

%

36

%

Investments in New Businesses:

Revenues

3,758

3,426

10%

14,012

12,973

8%

Expenses

15,180

8,997

69%

52,871

29,660

78%

Operating Loss

(11,422)

(5,571)

NM

(38,859)

(16,687)

NM

Totals:

Revenues

$443,723

$423,225

5%

$1,684,058

$1,649,885

2%

Expenses

299,129

287,784

4%

1,164,173

1,117,265

4%

Corporate Overhead Expenses

20,584

19,351

6%

73,998

72,196

2%

Income from Operations

$124,010

$116,090

7%

$445,887

$460,424

(3)%

Fourth-Quarter Business Highlights:

  • Sales events, net of client losses, during fourth-quarter 2020 totaled approximately $8.8 million and are expected to generate net annualized recurring revenues of approximately $4.9 million when contract values are fully realized. For the year ended 2020, sales events, net of client losses, totaled $94.0 million and are expected to generate net annualized recurring revenues of approximately $68.6 million when contract values are fully realized.
  • 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 $108.2 billion, or 16%, to $779.7 billion in the fourth-quarter 2020, as compared to $671.5 billion during the fourth-quarter 2019 (see attached Average Asset Balances schedules for further details).
  • Our average assets under management, excluding LSV, increased $21.2 billion, or 9%, to $260.4 billion in the fourth-quarter 2020, as compared to $239.2 billion during the fourth-quarter 2019 (see attached Average Asset Balances schedules for further details).
  • The increase in our operational expenses was primarily due to increased consulting costs related to our continued investments in new business opportunities, such as our One SEI 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, as our sales and client relationship personnel adapted to COVID-19 restrictions.
  • Our earnings from LSV decreased by $8.5 million, or 22%, to $30.6 million in fourth-quarter 2020 as compared to $39.1 million in fourth-quarter 2019. The decrease in earnings was primarily due to lower assets under management from market depreciation, negative cash flows from existing clients and client losses. LSV's revenues were $102.1 million in the fourth-quarter 2020, as compared to $126.5 million during the fourth-quarter of 2019.
  • Stock-based compensation expense in fourth-quarter 2020 decreased $2.5 million as compared to fourth-quarter 2019 primarily due to a change in our estimate of the timing of when stock option vesting targets would be achieved. We expect stock-based compensation expense during 2021 to be approximately $42.7 million as compared to $27.0 million during 2020 as a result of new options granted in fourth-quarter 2020 net of awards granted in the prior year.
  • We capitalized $5.5 million of software development costs in fourth-quarter 2020, which includes $5.0 million for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to capitalized software was $12.6 million in fourth-quarter 2020.
  • Our effective tax rates were 19.6% in fourth-quarter 2020 and 19.5% in fourth-quarter 2019.
  • We repurchased 1.8 million shares of our common stock for $99.1 million during the fourth-quarter 2020 at an average price of $54.36 per share. For the year ended 2020, we repurchased 8.0 million shares of our common stock for $424.7 million at an average price of $53.04 per share.

Earnings Conference CallA conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Jan. 27, 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: 5584674.

About SEIAfter 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 Dec. 31, 2020, 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 $369 billion in assets under management and $787 billion in client assets under administration. For more information, visit seic.com.

This release contains, and the comments we expect to deliver during the earnings call referenced above will contain, 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 in today's release include our current expectations as to:

  • revenue that we believe will be generated by sales events that occurred during the quarter,
  • the rebound of our business,
  • our strategic priorities and the degree to which we will execute on them,
  • whether our solutions position us to capture growth opportunities or will lead to increased shareholder value, and
  • whether our investments and new clients and backlog of new revenue situate us well for the future.

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,
  • how we will manage our expenses,
  • 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, 2019, filed with the Securities and Exchange Commission.

Investor Contact:  

Media Contact:

Lindsey Opsahl      

Leslie Wojcik

SEI   

SEI

+1 610-676-4052 

+1 610-676-4191

lopsahl@seic.com   

lwojcik@seic.com

 

 

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,

2020

2019

2020

2019

Asset management, admin. and distribution fees

$353,610

$337,232

$1,345,649

$1,307,044

Information processing and software servicing fees

90,113

85,993

338,409

342,841

Total revenues

443,723

423,225

1,684,058

1,649,885

Subadvisory, distribution and other asset mgmt. costs

46,973

46,458

181,618

181,418

Software royalties and other information processing costs

7,109

7,274

28,937

29,993

Compensation, benefits and other personnel

135,902

131,004

527,509

517,917

Stock-based compensation

6,556

9,027

27,014

24,582

Consulting, outsourcing and professional fees

59,566

50,235

227,916

194,560

Data processing and computer related

24,681

22,544

96,328

88,058

Facilities, supplies and other costs

17,467

20,307

64,915

72,078

Amortization

13,558

13,012

52,975

51,419

Depreciation

7,901

7,274

30,959

29,436

Total expenses

319,713

307,135

1,238,171

1,189,461

Income from operations

124,010

116,090

445,887

460,424

Net gain (loss) on investments

1,024

1,053

(286)

3,174

Interest and dividend income

986

3,845

6,568

16,582

Interest expense

(153)

(153)

(609)

(630)

Equity in earnings of unconsolidated affiliate

30,646

39,133

117,134

151,891

Income before income taxes

156,513

159,968

568,694

631,441

Income taxes

30,631

31,231

121,408

130,015

Net income

$125,882

$128,737

$447,286

$501,426

Basic earnings per common share

$0.87

$0.86

$3.05

$3.31

Shares used to calculate basic earnings per share

144,077

150,131

146,709

151,540

Diluted earnings per common share

$0.86

$0.84

$3.00

$3.24

Shares used to calculate diluted earnings per share

146,140

153,672

149,003

154,901

Dividends declared per common share

$0.37

$0.35

$0.72

$0.68

 

 

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

Dec. 31,

Dec. 31,

2020

2019

Assets

Current Assets:

Cash and cash equivalents

$784,626

$841,446

Restricted cash

3,101

3,101

Receivables from investment products

55,271

54,165

Receivables, net of allowance for doubtful accounts of $1,100 and $1,201

385,219

340,358

Securities owned

34,064

33,486

Other current assets

38,696

32,289

Total Current Assets

1,300,977

1,304,845

Property and Equipment, net of accumulated depreciation of $378,639 and $353,453

189,052

160,859

Operating Lease Right-of-Use Assets

38,397

42,789

Capitalized Software, net of accumulated amortization of $491,739 and $442,677

270,977

296,068

Investments Available for Sale

105,419

116,917

Investments in Affiliated Funds, at fair value

6,166

5,988

Investment in Unconsolidated Affiliate

98,433

67,413

Goodwill

64,489

64,489

Intangible Assets, net of accumulated amortization of $12,456 and $8,773

24,304

27,987

Deferred Contract Costs

33,781

30,991

Deferred Income Taxes

2,972

2,822

Other Assets, net

32,289

30,202

Total Assets

$2,167,256

$2,151,370

Liabilities and Equity

Current Liabilities:

Accounts payable

$7,766

$4,423

Accrued liabilities

299,845

272,801

Current portion of long-term operating lease liabilities

8,579

9,156

Deferred revenue

1,085

7,185

Total Current Liabilities

317,275

293,565

Long-term Taxes Payable

803

803

Deferred Income Taxes

55,159

55,722

Long-term Operating Lease Liabilities

34,058

38,450

Other Long-term Liabilities

20,054

24,052

Total Liabilities

427,349

412,592

Shareholders' Equity:

Common stock, $0.01 par value, 750,000 shares authorized; 143,396 and 149,745 shares issued and outstanding

1,434

1,497

Capital in excess of par value

1,190,001

1,158,900

Retained earnings

565,270

601,885

Accumulated other comprehensive loss, net

(16,798)

(23,504)

Total Shareholders' Equity

1,739,907

1,738,778

Total Liabilities and Shareholders' Equity

$2,167,256

$2,151,370

 

 

ENDING ASSET BALANCES

(In millions)  (Unaudited)

 

Dec. 31,

Mar. 31,

Jun. 30,

Sept. 30,

Dec. 31,

2019

2020

2020

2020

2020

Private Banks:

Equity and fixed-income programs

$23,851

$21,160

$22,974

$23,499

$25,498

Collective trust fund programs

4

5

5

6

6

Liquidity funds

3,405

4,143

4,291

3,718

3,778

Total assets under management

$27,260

$25,308

$27,270

$27,223

$29,282

Client assets under administration

25,801

21,497

23,903

24,174

26,346

Total assets

$53,061

$46,805

$51,173

$51,397

$55,628

Investment Advisors:

Equity and fixed-income programs

$67,895

$54,856

$59,958

$65,581

$71,247

Collective trust fund programs

4

2

3

3

1

Liquidity funds

2,887

5,969

6,648

3,866

3,832

Total assets under management

$70,786

$60,827

$66,609

$69,450

$75,080

Institutional Investors:

Equity and fixed-income programs

$84,291

$72,399

$80,257

$83,846

$90,869

Collective trust fund programs

83

94

103

101

98

Liquidity funds

1,746

3,672

1,924

2,096

2,128

Total assets under management

$86,120

$76,165

$82,284

$86,043

$93,095

Client assets under advisement

3,948

3,406

3,326

3,618

4,063

Total assets

$90,068

$79,571

$85,610

$89,661

$97,158

Investment Managers:

Collective trust fund programs

$

58,070

$

48,226

$

58,178

$

63,277

$

75,214

Liquidity funds

479

392

664

389

424

Total assets under management

$58,549

$48,618

$58,842

$63,666

$75,638

Client assets under administration (A)

657,541

610,794

668,611

730,369

760,397

Total assets

$716,090

$659,412

$727,453

$794,035

$836,035

Investments in New Businesses:

Equity and fixed-income programs

$1,688

$1,484

$1,498

$1,572

$1,711

Liquidity funds

158

152

194

169

162

Total assets under management

$1,846

$1,636

$1,692

$1,741

$1,873

Client assets under advisement

1,343

1,056

1,193

1,179

1,299

Total assets

$3,189

$2,692

$2,885

$2,920

$3,172

LSV Asset Management:

Equity and fixed-income programs (B)

$107,476

$70,851

$81,134

$82,051

$93,692

Total:

Equity and fixed-income programs (C)

$285,201

$220,750

$245,821

$256,549

$283,017

Collective trust fund programs

58,161

48,327

58,289

63,387

75,319

Liquidity funds

8,675

14,328

13,721

10,238

10,324

Total assets under management

$352,037

$283,405

$317,831

$330,174

$368,660

Client assets under advisement

5,291

4,462

4,519

4,797

5,362

Client assets under administration (D)

683,342

632,291

692,514

754,543

786,743

Total assets

$1,040,670

$920,158

$1,014,864

$1,089,514

$1,160,765

(A)  

Client assets under administration in the Investment Managers segment include $54.3 billion of assets that are at fee levels below our normal full-service assets (as of Dec. 31, 2020).

(B) 

Equity and fixed-income programs include $2.0 billion of assets managed by LSV in which fees are based on performance only (as of Dec. 31, 2020).

(C) 

Equity and fixed-income programs include $7.9 billion of assets invested in various asset allocation funds at Dec. 31, 2020.

(D) 

In addition to the numbers presented, SEI also administers an additional $12.9 billion in Funds of Funds assets (as of Dec. 31, 2020 on which SEI does not earn an administration fee.

 

 

AVERAGE ASSET BALANCES

(In millions) (Unaudited)

 

4th Qtr.

1st Qtr.

2nd Qtr.

3rd Qtr.

4th Qtr.

2019

2020

2020

2020

2020

Private Banks:

Equity and fixed-income programs

$23,106

$24,657

$22,229

$23,740

$24,284

Collective trust fund programs

4

4

5

7

6

Liquidity funds

3,581

3,581

4,366

3,948

3,712

Total assets under management

$26,691

$28,242

$26,600

$27,695

$28,002

Client assets under administration

24,930

24,840

23,819

25,295

25,368

Total assets

$51,621

$53,082

$50,419

$52,990

$53,370

Investment Advisors:

Equity and fixed-income programs

$66,371

$64,933

$57,429

$64,479

$68,396

Collective trust fund programs

4

3

3

3

2

Liquidity funds

2,673

3,284

6,923

4,569

3,788

Total assets under management

$69,048

$68,220

$64,355

$69,051

$72,186

Institutional Investors:

Equity and fixed-income programs

$83,304

$79,926

$77,037

$82,830

$86,277

Collective trust fund programs

82

86

100

102

102

Liquidity funds

2,106

2,342

2,476

2,120

2,271

Total assets under management

$85,492

$82,354

$79,613

$85,052

$88,650

Client assets under advisement

4,106

3,760

3,362

3,565

3,746

Total assets

$89,598

$86,114

$82,975

$88,617

$92,396

Investment Managers:

Collective trust fund programs

$

55,499

$

55,952

$

54,061

$

62,028

$

69,349

Liquidity funds

642

617

482

565

411

Total assets under management

$56,141

$56,569

$54,543

$62,593

$69,760

Client assets under administration (A)

646,592

654,386

649,012

713,528

754,350

Total assets

$702,733

$710,955

$703,555

$776,121

$824,110

Investments in New Businesses:

Equity and fixed-income programs

$1,649

$1,663

$1,468

$1,560

$1,634

Liquidity funds

145

168

182

180

165

Total assets under management

$1,794

$1,831

$1,650

$1,740

$1,799

Client assets under advisement

1,044

1,222

1,148

1,206

1,218

Total assets

$2,838

$3,053

$2,798

$2,946

$3,017

LSV Asset Management:

Equity and fixed-income programs (B)

$104,814

$88,059

$80,395

$83,536

$88,182

Total:

Equity and fixed-income programs (C)

$279,244

$259,238

$238,558

$256,145

$268,773

Collective trust fund programs

55,589

56,045

54,169

62,140

69,459

Liquidity funds

9,147

9,992

14,429

11,382

10,347

Total assets under management

$343,980

$325,275

$307,156

$329,667

$348,579

Client assets under advisement

5,150

4,982

4,510

4,771

4,964

Client assets under administration (D)

671,522

679,226

672,831

738,823

779,718

Total assets

$1,020,652

$1,009,483

$984,497

$1,073,261

$1,133,261

(A) 

Average client assets under administration in the Investment Managers segment during fourth-quarter 2020 include $53.3 billion that are at fee levels below our normal full-service assets.

(B) 

Equity and fixed-income programs include $1.8 billion of average assets managed by LSV in which fees are based on performance only during fourth-quarter 2020.

(C) 

Equity and fixed-income programs include $7.9 billion of average assets invested in various asset allocation funds during fourth-quarter 2020.

(D) 

In addition to the numbers presented, SEI also administers an additional $12.3 billion of average assets in Funds of Funds assets during fourth-quarter 2020 on which SEI does not earn an administration fee.

Cision View original content:http://www.prnewswire.com/news-releases/sei-reports-fourth-quarter-2020-financial-results-301216617.html

SOURCE SEI Investments Company