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Sei Investments Company
SEI Reports Fourth-Quarter 2021 Financial Results
Business
Jan 26 2022
4 min read

SEI Reports Fourth-Quarter 2021 Financial Results

OAKS, Pa., Jan. 26, 2022 /PRNewswire/ -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for the fourth-quarter 2021. Diluted earnings per share were $1.03 in fourth-quarter 2021 compared to $0.86 in fourth-quarter 2020.

Consolidated Overview

(In thousands, except earnings per share)

For the Three Months Ended Dec. 31,

For the Twelve Months Ended Dec. 31,

2021

2020

%

2021

2020

%

Revenues

$501,650

$443,723

13%

$1,918,309

$1,684,058

14%

Net income

145,300

125,882

15%

546,593

447,286

22%

Diluted earnings per share

$1.03

$0.86

20%

$3.81

$3.00

27%

"Our record financial results for 2021 reflect continued sales momentum, success in delivering our solutions to our markets, and positive capital markets. We've made significant progress in executing against our growth strategy," said Alfred P. West, Jr., SEI Chairman and CEO.

"We believe our recent acquisitions enhance our capabilities, expand our competitive market presence, and enhance our growth opportunities in our markets. We also continued our research and development investments that have advanced our technology and new business initiatives. At the core of our long-term success is a talented, dedicated workforce and tremendous leadership across SEI globally.

"As we continue to connect our markets to their future potential through our technology and investment solutions, we are well-positioned to continue seizing growth opportunities that will lead to increased shareholder value."

 

Summary of Fourth-Quarter Results by Business Segment

(In thousands)

For the Three MonthsEnded Dec. 31,

For the Twelve MonthsEnded Dec. 31,

2021

2020

%

2021

2020

%

Private Banks:

Revenues

$129,268

$119,654

8%

$493,570

$455,393

8%

Expenses

117,739

115,039

2%

462,796

446,481

4%

Operating Profit

11,529

4,615

150%

30,774

8,912

245%

Operating Margin

9%

4%

6%

2%

Investment Advisors:

Revenues

125,491

108,346

16%

482,949

407,564

18%

Expenses

64,067

51,813

24%

240,334

205,913

17%

Operating Profit

61,424

56,533

9%

242,615

201,651

20%

Operating Margin

49%

52%

50%

49%

Institutional Investors:

Revenues

87,848

82,318

7%

343,805

317,627

8%

Expenses

45,374

36,893

23%

168,070

149,909

12%

Operating Profit

42,474

45,425

(6)%

175,735

167,718

5%

Operating Margin

48%

55%

51%

53%

Investment Managers:

Revenues

154,518

129,647

19%

581,157

489,462

19%

Expenses

91,046

80,204

14%

348,655

308,999

13%

Operating Profit

63,472

49,443

28%

232,502

180,463

29%

Operating Margin

41%

38%

40%

37%

Investments in New Businesses:

Revenues

4,525

3,758

20%

16,828

14,012

20%

Expenses

13,364

15,180

(12)%

53,219

52,871

1%

Operating Loss

(8,839)

(11,422)

NM

(36,391)

(38,859)

NM

Totals:

Revenues

$501,650

$443,723

13%

$1,918,309

$1,684,058

14%

Expenses

331,590

299,129

11%

1,273,074

1,164,173

9%

Corporate Overhead Expenses

26,662

20,584

30%

91,854

73,998

24%

Income from Operations

$143,398

$124,010

16%

$553,381

$445,887

24%

Fourth-Quarter Business Highlights:

  • Revenues from Asset management, administration, and distribution fees increased from higher assets under management and administration due to market appreciation and positive cash flows from new and existing clients.
  • Revenues in the Private Banks segment include $6.8 million from early termination fees from an existing investment processing client.
  • Our average assets under administration increased $104.6 billion, or 13%, to $884.3 billion in the fourth-quarter 2021, as compared to $779.7 billion during the fourth-quarter 2020 (see attached Average Asset Balances schedules for further details).
  • Our average assets under management, excluding LSV, increased $40.6 billion, or 16%, to $301.0 billion in the fourth-quarter 2021, as compared to $260.4 billion during the fourth-quarter 2020 (see attached Average Asset Balances schedules for further details).
  • Net sales events in the Private Banks and Investment Managers segments during fourth-quarter 2021 were $31.3 million and are expected to generate net annualized recurring revenues of approximately $22.1 million when contract values are completely realized. For the year ended 2021, net sales events were $81.4 million and are expected to generate net annualized recurring revenues of approximately $60.1 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 fourth-quarter 2021 were $4.5 million. For the year ended 2021, net sales events were flat primarily due to net losses in the legacy Institutional Investors client base which offset new business growth in the Investment Advisors segment.
  • The increase in operational expenses was primarily due to increased direct costs related to increased revenues, as well as increased personnel costs due to business growth and competitive labor markets.
  • We acquired Novus Partners (Novus), a global portfolio intelligence platform company, in November 2021. The results of operations of Novus are included in the Institutional Investors segment. The segment's fourth-quarter 2021 results were negatively impacted by approximately $868 thousand from the acquisition.
  • Earnings from LSV increased by $3.6 million, or 11%, to $34.2 million in fourth-quarter 2021 as compared to $30.6 million in fourth-quarter 2020. The increase in earnings was primarily 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 fourth-quarter 2021 increased $3.7 million as compared to fourth-quarter 2020 due to equity awards in late 2020, net of forfeitures, and from a change in estimate of the timing of when stock-option vesting targets would be achieved. We expect stock-based compensation expense during 2022 to be approximately $46.3 million as compared to $41.5 million during 2021 as a result of new options granted in fourth-quarter 2021 net of awards granted in the prior year.
  • We capitalized $6.6 million of software development costs in fourth-quarter 2021 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $13.4 million in fourth-quarter 2021.
  • Our effective tax rates were 18.3% in fourth-quarter 2021 and 19.6% in fourth-quarter 2020. The decrease in the effective tax rate was primarily due to increased tax benefits associated with a higher volume of stock option exercises.
  • We repurchased 1.5 million shares of our common stock for $95.5 million during the fourth-quarter 2021 at an average price of $62.44 per share. For the year ended 2021, we repurchased 6.7 million shares of our common stock for $411.5 million at an average price of $61.00 per share.
  • Cash flow from operations was $149.2 million, or $1.06 per share, and free cash flow was $138.7 million during the fourth-quarter 2021.

Earnings Conference CallA conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Jan. 26, 2022. 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: 1785544.

About SEI®SEI (NASDAQ:SEIC) delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to solve problems, manage change, and help protect assets—for growth today and in the future. As of Dec. 31, 2021, SEI manages, advises, or administers approximately $1.3 trillion in assets. 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 the realization of such revenue, if any,
  • whether we will have sales momentum,
  • the effect of our acquisitions on our capabilities, competitive position and growth opportunities,
  • our strategic priorities and commitments and the degree to which we will execute on them, and
  • the degree to which we are well-positioned to seize growth opportunities that will lead to increased shareholder value.

We anticipate that we may deliver forward-looking statements during today's earnings call that include our current expectations as to the matters in this release and set forth above as well as:

  • the timing and success of client migrations, implementations and conversions,
  • our ability to expand our relationships and revenue opportunities with new and existing clients,
  • whether we will be able to take advantage of increasing sales demand,
  • the timing of and our ability to integrate acquisition targets and the potential benefits we may derive from any of our acquisitions,
  • 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, if at all,
  • the strategic initiatives and business segments that we will pursue and those in which we will invest,
  • the degree to which our One SEISM strategy will allow us to increase our growth opportunities,
  • 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 backlog and pipelines,
  • the level of 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 and sales,
  • the elements of our long-term success,
  • the degree to which our business will be successful and what parties will be the beneficiaries of any such success,
  • the headwinds we will face and our strategies for how we may respond to these headwinds,
  • the margins that our businesses may generate,
  • the investments we may make in our technologies and personnel,
  • 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 and develop additional capabilities for the SEI Wealth Platform and the timing of our ability to offer additional services to clients,
  • the organic and inorganic opportunities that will drive our growth,
  • our ability to build upon our fourth quarter results, 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 MonthsEnded Dec. 31,

For the Twelve MonthsEnded Dec. 31,

2021

2020

2021

2020

Asset management, admin. and distribution fees

$403,565

$353,610

$1,547,016

$1,345,649

Information processing and software servicing fees

98,085

90,113

371,293

338,409

Total revenues

501,650

443,723

1,918,309

1,684,058

Subadvisory, distribution and other asset mgmt. costs

56,458

46,973

218,068

181,618

Software royalties and other information processing costs

7,198

7,109

27,759

28,937

Compensation, benefits and other personnel

155,309

135,902

584,497

527,509

Stock-based compensation

10,278

6,556

41,451

27,014

Consulting, outsourcing and professional fees

57,543

59,566

223,200

227,916

Data processing and computer related

27,814

24,681

107,560

96,328

Facilities, supplies and other costs

19,909

17,467

69,760

64,915

Amortization

15,403

13,558

59,152

52,975

Depreciation

8,340

7,901

33,481

30,959

Total expenses

358,252

319,713

1,364,928

1,238,171

Income from operations

143,398

124,010

553,381

445,887

Net (loss) gain on investments

(500)

1,024

(366)

(286)

Interest and dividend income

934

986

3,649

6,568

Interest expense

(209)

(153)

(563)

(609)

Equity in earnings of unconsolidated affiliate

34,152

30,646

137,572

117,134

Income before income taxes

177,775

156,513

693,673

568,694

Income taxes

32,475

30,631

147,080

121,408

Net income

$145,300

$125,882

$546,593

$447,286

Basic earnings per common share

$1.04

$0.87

$3.87

$3.05

Shares used to calculate basic earnings per share

139,080

144,077

141,216

146,709

Diluted earnings per common share

$1.03

$0.86

$3.81

$3.00

Shares used to calculate diluted earnings per share

141,305

146,140

143,312

149,003

Dividends declared per common share

$0.40

$0.37

$0.77

$0.72

 

 

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

Dec. 31,

Dec. 31,

2021

2020

Assets

Current Assets:

Cash and cash equivalents

$825,210

$784,626

Restricted cash

351

3,101

Receivables from investment products

59,036

55,271

Receivables, net of allowance for doubtful accounts of $1,602 and $1,100

441,609

385,219

Securities owned

28,267

34,064

Other current assets

43,559

38,696

Total Current Assets

1,398,032

1,300,977

Property and Equipment, net of accumulated depreciation of $409,248 and $378,639

178,869

189,052

Operating Lease Right-of-Use Assets

33,614

38,397

Capitalized Software, net of accumulated amortization of $545,307 and $491,739

243,446

270,977

Available for Sale and Equity Securities

129,541

105,419

Investments in Affiliated Funds, at fair value

6,916

6,166

Investment in Unconsolidated Affiliate

107,918

98,433

Goodwill and Intangible Assets, net

186,014

88,793

Deferred Contract Costs

36,236

33,781

Deferred Income Taxes

8,809

2,972

Other Assets, net

24,936

32,289

Total Assets

$2,354,331

$2,167,256

Liabilities and Equity

Current Liabilities:

Accounts payable

$10,312

$7,766

Accrued liabilities

318,185

299,845

Current portion of long-term operating lease liabilities

11,328

8,579

Deferred revenue

9,721

1,085

Total Current Liabilities

349,546

317,275

Borrowings Under Revolving Credit Facility

40,000

—

Long-term Income Taxes Payable

803

803

Deferred Income Taxes

54,702

55,159

Long-term Operating Lease Liabilities

27,639

34,058

Other Long-term Liabilities

20,878

20,054

Total Liabilities

493,568

427,349

Shareholders' Equity:

Common stock, $0.01 par value, 750,000 shares authorized; 138,449 and 143,396 shares issued and outstanding

1,384

1,434

Capital in excess of par value

1,246,608

1,190,001

Retained earnings

632,614

565,270

Accumulated other comprehensive loss, net

(19,843)

(16,798)

Total Shareholders' Equity

1,860,763

1,739,907

Total Liabilities and Shareholders' Equity

$2,354,331

$2,167,256

 

 

ENDING ASSET BALANCES

(In millions)  (Unaudited)

 

Dec. 31,

Mar. 31,

Jun. 30,

Sept. 30,

Dec. 31,

2020

2021

2021

2021

2021

Private Banks:

Equity and fixed-income programs

$25,498

$25,098

$26,264

$25,618

$26,281

Collective trust fund programs

6

7

7

6

6

Liquidity funds

3,778

3,793

3,654

3,988

4,724

Total assets under management

$29,282

$28,898

$29,925

$29,612

$31,011

Client assets under administration

26,346

4,379

4,412

4,675

4,481

Total assets

$55,628

$33,277

$34,337

$34,287

$35,492

Investment Advisors:

Equity and fixed-income programs

$71,248

$73,819

$78,053

$78,560

$81,686

Liquidity funds

3,832

3,584

3,550

3,477

4,317

Total Platform assets under management

$75,080

$77,403

$81,603

$82,037

$86,003

Platform-only assets (E)

11,862

12,538

13,566

13,728

14,564

Total Platform assets (E)

$86,942

$89,941

$95,169

$95,765

$100,567

Institutional Investors:

Equity and fixed-income programs

$90,869

$92,040

$93,010

$89,441

$91,719

Collective trust fund programs

98

95

5

5

5

Liquidity funds

2,128

2,909

2,516

2,599

2,118

Total assets under management

$93,095

$95,044

$95,531

$92,045

$93,842

Client assets under advisement

4,063

4,333

4,566

4,698

4,857

Total assets

$97,158

$99,377

$100,097

$96,743

$98,699

Investment Managers:

Collective trust fund programs

$      75,214

$      78,304

$      87,012

$      87,488

$      92,549

Liquidity funds

424

449

473

568

423

Total assets under management

$75,638

$78,753

$87,485

$88,056

$92,972

Client assets under administration (A)

760,397

831,819

875,942

861,605

907,377

Total assets

$836,035

$910,572

$963,427

$949,661

$1,000,349

Investments in New Businesses:

Equity and fixed-income programs

$1,711

$1,777

$1,924

$1,964

$2,096

Liquidity funds

162

289

191

202

240

Total assets under management

$1,873

$2,066

$2,115

$2,166

$2,336

Client assets under administration

1,299

1,355

1,422

1,378

1,410

Total assets

$3,172

$3,421

$3,537

$3,544

$3,746

LSV Asset Management:

Equity and fixed-income programs (B)

$93,692

$101,565

$102,404

$97,604

$98,984

Total:

Equity and fixed-income programs (C)

$283,018

$294,299

$301,655

$293,187

$300,766

Collective trust fund programs

75,318

78,406

87,024

87,499

92,560

Liquidity funds

10,324

11,024

10,384

10,834

11,822

Total assets under management

$368,660

$383,729

$399,063

$391,520

$405,148

Client assets under advisement

5,362

5,688

5,988

6,076

6,267

Client assets under administration (D)

786,743

836,198

880,354

866,280

911,858

Platform-only assets

11,862

12,538

13,566

13,728

14,564

Total assets

$1,172,627

$1,238,153

$1,298,971

$1,277,604

$1,337,837

(A)  

Client assets under administration in the Investment Managers segment include $12.4 billion of assets that are at fee levels below our normal full-service assets (as of Dec. 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 Dec. 31, 2021).

(C) 

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

(D)  

In addition to the numbers presented, SEI also administers an additional $14.4 billion in Funds of Funds assets (as of Dec. 31, 2021 on which SEI does not earn an administration fee.

(E) 

Platform assets under management and Platform-only assets combined are total Platform assets in the Investment Advisors segment.

 

 

AVERAGE ASSET BALANCES

(In millions) (Unaudited)

 

4th Qtr.

1st Qtr.

2nd Qtr.

3rd Qtr.

4th Qtr.

2020

2021

2021

2021

2021

Private Banks:

Equity and fixed-income programs

$24,284

$25,139

$26,056

$26,232

$25,999

Collective trust fund programs

6

6

7

6

6

Liquidity funds

3,712

3,876

3,833

3,916

4,452

Total assets under management

$28,002

$29,021

$29,896

$30,154

$30,457

Client assets under administration

25,368

4,317

4,405

4,476

4,607

Total assets

$53,370

$33,338

$34,301

$34,630

$35,064

Investment Advisors:

Equity and fixed-income programs

$68,398

$73,240

$76,840

$79,602

$80,703

Liquidity funds

3,788

3,619

3,370

3,403

3,644

Total Platform assets under management

$72,186

$76,859

$80,210

$83,005

$84,347

Platform-only assets (E)

11,214

12,206

13,292

13,863

14,341

Total Platform assets (E)

$83,400

$89,065

$93,502

$96,868

$98,688

Institutional Investors:

Equity and fixed-income programs

$86,277

$91,349

$93,458

$91,965

$90,557

Collective trust fund programs

102

96

68

5

5

Liquidity funds

2,271

2,621

2,681

2,742

2,391

Total assets under management

$88,650

$94,066

$96,207

$94,712

$92,953

Client assets under advisement

3,746

4,146

4,516

4,658

4,812

Total assets

$92,396

$98,212

$100,723

$99,370

$97,765

Investment Managers:

Collective trust fund programs

$      69,349

$      78,035

$      84,553

$      89,441

$      90,457

Liquidity funds

411

490

469

532

491

Total assets under management

$69,760

$78,525

$85,022

$89,973

$90,948

Client assets under administration (A)

754,350

817,330

853,810

851,183

879,718

Total assets

$824,110

$895,855

$938,832

$941,156

$970,666

Investments in New Businesses:

Equity and fixed-income programs

$1,634

$1,743

$1,870

$1,958

$2,053

Liquidity funds

165

169

236

205

197

Total assets under management

$1,799

$1,912

$2,106

$2,163

$2,250

Client assets under advisement

1,218

1,327

1,406

1,423

1,423

Total assets

$3,017

$3,239

$3,512

$3,586

$3,673

LSV Asset Management:

Equity and fixed-income programs (B)

$88,182

$97,476

$103,583

$99,924

$97,381

Total:

Equity and fixed-income programs (C)

$268,775

$288,947

$301,807

$299,681

$296,693

Collective trust fund programs

69,457

78,137

84,628

89,452

90,468

Liquidity funds

10,347

10,775

10,589

10,798

11,175

Total assets under management

$348,579

$377,859

$397,024

$399,931

$398,336

Client assets under advisement

4,964

5,473

5,922

6,081

6,235

Client assets under administration (D)

779,718

821,647

858,215

855,659

884,325

Platform-only assets

11,214

12,206

13,292

13,863

14,341

Total assets

$1,144,475

$1,217,185

$1,274,453

$1,275,534

$1,303,237

(A) 

Average client assets under administration in the Investment Managers segment during fourth-quarter 2021 include $12.3billion that are at fee levels below our normal full-service assets.

(B) 

Equity and fixed-income programs include $2.3 billion of average assets managed by LSV in which fees are based on performance only during fourth-quarter 2021.

(C) 

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

(D) 

In addition to the numbers presented, SEI also administers an additional $14.0 billion of average assets in Funds of Funds assets during fourth-quarter 2021 on which SEI does not earn an administration fee.

(E) 

Platform assets under management and Platform-only assets combined are total Platform assets in the Investment Advisors segment.

 

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 View original content:https://www.prnewswire.com/news-releases/sei-reports-fourth-quarter-2021-financial-results-301469006.html

SOURCE SEI Investments Company