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Sei Investments Company
SEI Reports Fourth-Quarter 2023 Financial Results
Business
Jan 31 2024
3 min read

SEI Reports Fourth-Quarter 2023 Financial Results

OAKS, Pa., Jan. 31, 2024 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the fourth-quarter 2023. Diluted earnings per share were $0.91 in fourth-quarter 2023 compared to $0.83 in fourth-quarter 2022.

Consolidated Overview

(In thousands, except earnings per share)

For the Three MonthsEnded December 31,

For the Twelve Months   EndedDecember 31,

2023

2022

%

2023

2022

%

Revenues

$484,858

$456,590

6 %

$1,919,793

$1,991,037

(4) %

Net income

120,731

112,224

8 %

462,258

475,467

(3) %

Diluted earnings per share

$0.91

$0.83

10 %

$3.46

$3.46

— %

 

"Despite variable market conditions throughout the year, we navigated through uncertainty and delivered solid growth and core profitability. Our 2023 results reflect strong sales activity—particularly in our technology, investment processing, and operations segments—demonstrating traction in growth segments where we believe SEI has significant opportunity," said CEO Ryan Hicke.

"With our unmatched breadth of capabilities, we believe we are firmly positioned to capitalize on the positive trends shaping our markets today and well into the future. Looking ahead to 2024 and beyond, we remain committed to our strategic vision for the future, and our financial strength, robust pipeline, and world-class talent reinforce our foundation and the momentum to deliver long-term, sustainable growth for our stakeholders."

Summary of Fourth-Quarter Results by Business Segment

(In thousands)

For the Three MonthsEnded December 31,

For the Twelve MonthsEnded December 31,

2023

2022

%

2023

2022

%

Private Banks:

Revenues

$125,146

$115,233

9 %

$503,317

$575,625

(13) %

Expenses

112,378

113,533

(1) %

455,820

473,209

(4) %

Operating Profit

12,768

1,700

NM

47,497

102,416

(54) %

Operating Margin

10 %

1 %

9 %

18 %

Investment Advisors:

Revenues

109,719

105,777

4 %

436,298

447,766

(3) %

Expenses

67,138

62,605

7 %

259,142

251,650

3 %

Operating Profit

42,581

43,172

(1) %

177,156

196,116

(10) %

Operating Margin

39 %

41 %

41 %

44 %

Institutional Investors:

Revenues

69,794

74,771

(7) %

289,708

323,353

(10) %

Expenses

39,118

40,820

(4) %

165,455

172,252

(4) %

Operating Profit

30,676

33,951

(10) %

124,253

151,101

(18) %

Operating Margin

44 %

45 %

43 %

47 %

Investment Managers:

Revenues

175,168

156,076

12 %

670,486

624,918

7 %

Expenses

115,469

104,330

11 %

437,174

404,850

8 %

Operating Profit

59,699

51,746

15 %

233,312

220,068

6 %

Operating Margin

34 %

33 %

35 %

35 %

Investments in New Businesses:

Revenues

5,031

4,733

6 %

19,984

19,375

3 %

Expenses

11,348

10,450

9 %

45,437

45,159

1 %

Operating Loss

(6,317)

(5,717)

NM

(25,453)

(25,784)

NM

Totals:

Revenues

$484,858

$456,590

6 %

$1,919,793

$1,991,037

(4) %

Expenses

345,451

331,738

4 %

1,363,028

1,347,120

1 %

Corporate Overhead Expenses

37,723

30,804

22 %

132,241

168,164

(21) %

Income from Operations

$101,684

$94,048

8 %

$424,524

$475,753

(11) %

 

Fourth-Quarter Business Highlights:

  • Revenues from Assets under management, administration, and distribution fees increased primarily from higher assets under management and administration due to increases from existing alternative investment clients of the Investment Managers segment due to new products and additional services. Market appreciation and positive cash flows into separately managed account programs and Strategist programs during 2023 also contributed to the increase in revenues.
  • The increase in revenues from Assets under management, administration, and distribution fees was partially offset by negative cash flows from SEI fund programs in the Investment Advisors segment and client losses in the Institutional Investors segment.
  • Average assets under management in equity and fixed income programs, excluding LSV, increased $5.0 billion, or 3%, to $167.4 billion during the fourth-quarter 2023, as compared to $162.4 billion during the fourth-quarter 2022 (see attached Average Asset Balances schedule for further details).
  • Average assets under administration increased $133.5 billion, or 17%, to $923.4 billion during the fourth-quarter 2023, as compared to $789.9 billion during the fourth-quarter 2022 (see attached Average Asset Balances schedules for further details).
  • Revenues from Information processing and software servicing fees increased from new client conversions and growth from existing SEI Wealth PlatformSM (SWP) clients.
  • Net sales events in the Private Banks and Investment Managers segments during the fourth-quarter 2023 were $22.9 million and are expected to generate net annualized recurring revenues of approximately $17.6 million when contract values are completely realized. For the year ended 2023, net sales events were $97.5 million and are expected to generate net annualized recurring revenues of approximately $79.1 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 the fourth-quarter 2023 were negative $10.5 million. For the year ended 2023, net sales events were negative $18.9 million.
  • Net sales events for newer initiatives, which includes SEI Sphere, were $1.3 million during the fourth-quarter 2023. For the year ended 2023, net sales events were $2.2 million.
  • During the fourth-quarter 2023, we completed the acquisition of the National Pensions Trust and also acquired Altigo, a cloud-based technology platform that provides inventory, e-subscription, and reporting capabilities for alternative investments.
  • The increase in operational expenses was due to higher personnel costs from business growth, competitive labor markets, and the impact of inflation on wages and services. Increased personnel costs and investments in compliance infrastructure to meet expanding regulatory requirements also contributed to the increase in operational expenses.
  • One-time expense items during the fourth-quarter 2023 were approximately $11.0 million due to an asset write-off of previously capitalized software development costs of $5.3 million in the Investment Managers segment, $4.7 million in severance costs, and approximately $1.0 million in professional fees related to acquisition activity. Of the amount of severance costs during the fourth-quarter 2023, $4.0 million was recognized in Corporate overhead expenses.
  • Earnings from LSV increased to $35.4 million in the fourth-quarter 2023 as compared to $31.7 million in the fourth-quarter 2022 due to market appreciation and increased performance fees. Net negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV.
  • Capitalized software development costs were $7.4 million in the fourth-quarter 2023, of which $4.5 million was for continued enhancements to SWP. Capitalized software development costs also include $2.9 million in the fourth-quarter 2023 for a new platform for the Investment Managers segment.
  • Interest and dividend income increased to $11.6 million in the fourth-quarter 2023 as compared to $6.6 million in the fourth-quarter 2022, primarily due to higher interest rates.
  • Effective tax rates were 19.6% in the fourth-quarter 2023 and 18.1% in the fourth-quarter 2022. The tax rate in the fourth-quarter 2023 was affected by reduced tax benefits related to stock option exercises.
  • Repurchased shares of SEI common stock were 1.2 million for $68.9 million during the fourth-quarter 2023 at an average price of $58.08 per share.
  • Cash flow from operations was $101.0 million, and free cash flow was $92.0 million during the fourth-quarter 2023.

Earnings Conference CallA conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Jan. 31, 2024. 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: 4801296.

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 help drive growth, make confident decisions, and protect futures. As of Dec. 31, 2023, SEI manages, advises, or administers approximately $1.4 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:

  • the degree to which are positioned to capitalize on trends shaping our markets;
  • when and if we will generate net annualized recurring revenues from sales events that occurred during the quarter, as well as the amount of any such revenue; and
  • the degree to which we will deliver long-term sustainable growth for our stakeholders.

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 degree to which our Private Banking and Investment Manager Services business units are well positioned to continue to expand and contribute to our top and bottom lines;
  • the size of the intermediary market;
  • the opportunities for our Advisor business;
  • whether our strategic initiatives in our Advisor business will help us with new client adoption and exploit the opportunity we see in the intermediary market;
  • the elements of our strategic focus, including, without limitation, our focus on:
    • sales and revenue growth;
    • transforming our asset management businesses;
    • targeting new segments for sales;
    • driving margin expansion and profit growth through increased operational leverage and discipline;
    • innovating our solution for the future;
    • delivering for our clients;
    • engaging with our markets; and
    • investing in our talent and our capabilities;
  • whether we are well-positioned for 2024 and beyond;
  • the degree to which our capabilities benefit our clients;
  • our ability to accelerate growth and market share;
  • the benefits of our focus on key clients in the alternatives space and the cross sale opportunities that this focus may generate;
  • the strength of the expansion opportunities for our turn-key Collective Investment Trust solution;
  • the benefits we will derive from the businesses and/or assets we acquire and our ability to successful integrate these assets in order to drive the expected benefits, strategic and otherwise;
  • the headwinds our businesses face and our ability to respond to these headwinds;
  • our ability to capitalize on our pipeline and opportunities, manage expenses, and drive profit to the bottom line;
  • the amount, if any, of our current backlog of sold but expected to be installed revenue and recurring revenue in the next 18 months that will actually be installed during such period, if ever;
  • the market dynamics affecting our market units;
  • our ability to improve profitability without cannibalizing our medium to long-term growth agendas;
  • the areas in which we will invest;
  • the degree to which the Private Banks segment's focus is paying off in both new business generation and building a quality and growing pipeline;
  • our ability to expand the margins of our Private Banking business and the degree to which this business is positioned for growth;
  • the amount of revenue and profit that our new FDIC cash sweep program will generate during 2024;
  • our tax rate for the first quarter of 2024;
  • the degree to which there is positive sales momentum in our Institutional Investors business segment; and
  • the expected 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, 2022, 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 December 31,

For the Twelve MonthsEnded December 31,

2023

2022

2023

2022

Asset management, admin. and distribution fees

$383,571

$365,239

$1,514,815

$1,514,063

Information processing and software servicing fees

101,287

91,351

404,978

476,974

Total revenues

484,858

456,590

1,919,793

1,991,037

Subadvisory, distribution and other asset mgmt. costs

47,106

46,247

189,263

196,732

Software royalties and other information processing costs

8,505

7,143

32,289

29,006

Compensation, benefits and other personnel

184,508

174,497

714,099

720,029

Stock-based compensation

7,850

8,064

31,308

39,403

Consulting, outsourcing and professional fees

54,850

57,693

231,469

242,013

Data processing and computer related

34,735

32,151

137,036

125,171

Facilities, supplies and other costs

27,011

17,529

85,836

74,993

Amortization

9,818

10,503

38,669

54,280

Depreciation

8,791

8,715

35,300

33,657

Total expenses

383,174

362,542

1,495,269

1,515,284

Income from operations

101,684

94,048

424,524

475,753

Net gain (loss) from investments

1,704

1,437

2,757

(3,078)

Interest and dividend income

11,574

6,645

41,027

13,308

Interest expense

(187)

(145)

(583)

(749)

Other income

—

3,379

—

3,379

Equity in earnings of unconsolidated affiliate

35,413

31,741

126,930

120,667

Income before income taxes

150,188

137,105

594,655

609,280

Income taxes

29,457

24,881

132,397

133,813

Net income

$120,731

$112,224

$462,258

$475,467

Basic earnings per common share

$0.92

$0.83

$3.49

$3.49

Shares used to calculate basic earnings per share

131,269

134,714

132,593

136,071

Diluted earnings per common share

$0.91

$0.83

$3.46

$3.46

Shares used to calculate diluted earnings per share

132,160

135,818

133,728

137,423

Dividends declared per common share

$0.46

$0.43

$0.89

$0.83

 

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

December 31,

December 31,

2023

2022

Assets

Current Assets:

Cash and cash equivalents

$834,697

$853,008

Restricted cash

301

351

Receivables from investment products

55,886

62,014

Receivables, net of allowance for doubtful accounts of $663 and $901

501,434

457,084

Securities owned

31,334

32,148

Other current assets

54,464

48,703

Total Current Assets

1,478,116

1,453,308

Property and Equipment, net of accumulated depreciation of $474,034 and $440,861

171,364

181,029

Operating Lease Right-of-Use Assets

22,477

24,992

Capitalized Software, net of accumulated amortization of $612,971 and $586,744

239,783

237,302

Available for Sale and Equity Securities

155,413

128,201

Investments in Affiliated Funds, at fair value

7,316

6,366

Investment in Unconsolidated Affiliate

110,781

104,673

Goodwill

137,333

115,599

Intangible Assets, net of accumulated amortization of $42,520 and $30,261

82,443

55,532

Deferred Contract Costs

40,221

37,928

Deferred Income Taxes

37,709

4,936

Other Assets, net

37,047

33,687

Total Assets

$2,520,003

$2,383,553

Liabilities and Equity

Current Liabilities:

Accounts payable

$10,618

$13,283

Accrued liabilities

318,945

359,363

Current portion of long-term operating lease liabilities

8,118

10,344

Deferred revenue

15,366

14,893

Total Current Liabilities

353,047

397,883

Long-term Income Taxes Payable

803

803

Long-term Operating Lease Liabilities

17,235

18,786

Other Long-term Liabilities

17,090

12,257

Total Liabilities

388,175

429,729

Shareholders' Equity:

Common stock, $0.01 par value, 750,000 shares authorized; 131,178 and 134,162shares issued and outstanding

1,312

1,342

Capital in excess of par value

1,404,962

1,307,162

Retained earnings

762,586

694,287

Accumulated other comprehensive loss, net

(37,032)

(48,967)

Total Shareholders' Equity

2,131,828

1,953,824

Total Liabilities and Shareholders' Equity

$2,520,003

$2,383,553

 

ENDING ASSET BALANCES

(In millions)  (Unaudited)

Dec. 31,

Mar. 31,

Jun. 30,

Sept. 30,

Dec. 31,

2022

2023

2023

2023

2023

Private Banks:

Equity and fixed-income programs

$22,377

$23,653

$24,091

$23,039

$24,496

Collective trust fund programs

7

6

7

6

4

Liquidity funds

3,201

3,427

3,433

3,636

3,916

Total assets under management

$25,585

$27,086

$27,531

$26,681

$28,416

Client assets under administration

4,151

4,299

4,154

4,399

7,267

Total assets

$29,736

$31,385

$31,685

$31,080

$35,683

Investment Advisors:

Equity and fixed-income programs

$66,240

$68,065

$69,439

$66,911

$71,634

Liquidity funds

5,436

4,965

4,968

5,175

4,812

Total Platform assets under management

$71,676

$73,030

$74,407

$72,086

$76,446

Platform-only assets

13,931

14,980

16,103

16,232

18,324

Platform-only assets-deposit program

—

—

—

—

843

Total Platform assets

$85,607

$88,010

$90,510

$88,318

$95,613

Institutional Investors:

Equity and fixed-income programs

$73,178

$74,939

$75,854

$72,387

$77,208

Collective trust fund programs

5

4

4

4

1

Liquidity funds

1,557

1,576

1,353

2,119

1,734

Total assets under management

$74,740

$76,519

$77,211

$74,510

$78,943

Client assets under advisement

4,314

4,559

4,368

4,085

6,120

Total assets

$79,054

$81,078

$81,579

$78,595

$85,063

Investment Managers:

Collective trust fund programs (A)

$141,285

$146,176

$149,779

$146,991

$156,376

Liquidity funds

199

203

249

180

114

Total assets under management

$141,484

$146,379

$150,028

$147,171

$156,490

Client assets under administration

810,491

845,828

873,570

886,382

935,564

Total assets

$951,975

$992,207

$1,023,598

$1,033,553

$1,092,054

Investments in New Businesses:

Equity and fixed-income programs

$1,912

$2,031

$2,104

$2,017

$2,174

Liquidity funds

215

217

217

202

209

Total assets under management

$2,127

$2,248

$2,321

$2,219

$2,383

Client assets under administration

1,077

1,081

1,098

1,070

1,150

Total assets

$3,204

$3,329

$3,419

$3,289

$3,533

LSV Asset Management:

Equity and fixed-income programs (B)

$83,753

$84,964

$86,469

$83,684

$89,312

Total:

Equity and fixed-income programs (C)

$247,460

$253,652

$257,957

$248,038

$264,824

Collective trust fund programs

141,297

146,186

149,790

147,001

156,381

Liquidity funds

10,608

10,388

10,220

11,312

10,785

Total assets under management

$399,365

$410,226

$417,967

$406,351

$431,990

Client assets under advisement

5,391

5,640

5,466

5,155

7,270

Client assets under administration (D)

814,642

850,127

877,724

890,781

942,831

Platform-only assets

13,931

14,980

16,103

16,232

19,167

Total assets

$1,233,329

$1,280,973

$1,317,260

$1,318,519

$1,401,258

(A)

Collective trust fund program assets in the Investment Managers segment are included in assets under management since SEI is the trustee. Fees earned on this product are less than fees earned on customized asset management programs.

(B)

Equity and fixed-income programs include $1.9 billion of assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee (as of December 31, 2023).

(C)

Equity and fixed-income programs include $6.3 billion of assets invested in various asset allocation funds (as of December 31, 2023).

(D)

In addition to the assets presented, SEI also administers an additional $11.2 billion in Funds of Funds assets on which SEI does not earn an administration fee (as of December 31, 2023).

 

AVERAGE ASSET BALANCES

(In millions) (Unaudited)

4th Qtr.

1st Qtr.

2nd Qtr.

3rd Qtr.

4th Qtr.

2022

2023

2023

2023

2023

Private Banks:

Equity and fixed-income programs

$21,839

$23,576

$23,748

$23,920

$23,309

Collective trust fund programs

7

7

7

6

5

Liquidity funds

3,395

3,253

3,500

3,585

3,808

Total assets under management

$25,241

$26,836

$27,255

$27,511

$27,122

Client assets under administration

4,126

4,316

4,282

4,221

7,083

Total assets

$29,367

$31,152

$31,537

$31,732

$34,205

Investment Advisors:

Equity and fixed-income programs

$66,100

$67,578

$68,371

$69,309

$68,369

Liquidity funds

5,127

4,995

4,808

4,990

5,046

Total Platform assets under management

$71,227

$72,573

$73,179

$74,299

$73,415

Platform-only assets

13,905

14,812

15,548

16,544

17,201

Platform-only assets-deposit program

—

—

—

—

281

Total Platform assets

$85,132

$87,385

$88,727

$90,843

$90,897

Institutional Investors:

Equity and fixed-income programs

$72,581

$74,653

$74,865

$75,023

$73,644

Collective trust fund programs

5

5

4

4

3

Liquidity funds

1,719

1,715

1,537

1,611

1,682

Total assets under management

$74,305

$76,373

$76,406

$76,638

$75,329

Client assets under advisement

4,251

4,431

4,583

4,294

4,607

Total assets

$78,556

$80,804

$80,989

$80,932

$79,936

Investment Managers:

Collective trust fund programs (A)

$140,494

$144,914

$147,543

$150,379

$149,551

Liquidity funds

275

317

286

237

205

Total assets under management

$140,769

$145,231

$147,829

$150,616

$149,756

Client assets under administration

785,813

836,410

859,296

889,503

916,268

Total assets

$926,582

$981,641

$1,007,125

$1,040,119

$1,066,024

Investments in New Businesses:

Equity and fixed-income programs

$1,890

$1,991

$2,057

$2,096

$2,069

Liquidity funds

208

212

199

211

197

Total assets under management

$2,098

$2,203

$2,256

$2,307

$2,266

Client assets under advisement

1,075

1,098

1,075

1,101

1,080

Total assets

$3,173

$3,301

$3,331

$3,408

$3,346

LSV Asset Management:

Equity and fixed-income programs (B)

$83,370

$86,987

$84,492

$86,671

$84,492

Total:

Equity and fixed-income programs (C)

$245,780

$254,785

$253,533

$257,019

$251,883

Collective trust fund programs

140,506

144,926

147,554

150,389

149,559

Liquidity funds

10,724

10,492

10,330

10,634

10,938

Total assets under management

$397,010

$410,203

$411,417

$418,042

$412,380

Client assets under advisement

5,326

5,529

5,658

5,395

5,687

Client assets under administration (D)

789,939

840,726

863,578

893,724

923,351

Platform-only assets

13,905

14,812

15,548

16,544

17,482

Total assets

$1,206,180

$1,271,270

$1,296,201

$1,333,705

$1,358,900

(A)

Collective trust fund program average assets in the Investment Managers segment are included in assets under management since SEI is the trustee. Fees earned on this product are less than fees earned on customized asset management programs.

(B)

Equity and fixed-income programs during fourth-quarter 2023 include $1.8 billion of average assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee.

(C)

Equity and fixed-income programs include $6.1 billion of average assets invested in various asset allocation funds during fourth-quarter 2023.

(D)

In addition to the assets presented, SEI also administers an additional $11.3 billion of average assets in Funds of Funds assets during fourth-quarter 2023 on which SEI does not earn an administration fee.

 

Investor Contact:

Media Contact:

Alex Whitelam

Leslie Wojcik

SEI 

SEI

+1 610-676-4924

+1 610-676-4191

awhitelam@seic.com

lwojcik@seic.com

Cision View original content:https://www.prnewswire.com/news-releases/sei-reports-fourth-quarter-2023-financial-results-302049850.html

SOURCE SEI Investments Company