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Sei Investments Company
SEI Reports Third-Quarter 2020 Financial Results
Oct 21 2020
4 min read

SEI Reports Third-Quarter 2020 Financial Results

OAKS, Pa., Oct. 21, 2020 /PRNewswire/ -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for the third-quarter 2020. Diluted earnings per share were $0.75 in third-quarter 2020 compared to $0.86 in third-quarter 2019. On Tuesday, Oct. 20, 2020 the Board of Directors of SEI Investments Company approved an increase in its stock repurchase program by an additional $250 million, increasing the available authorization under the program to approximately $292 million.

Consolidated Overview

(In thousands, except earnings per share)

For the Three MonthsEnded September 30,

For the Nine MonthsEnded September 30,

2020

2019

%

2020

2019

%

Revenues

$424,927

$416,254

2%

$1,240,335

$1,226,660

1%

Net income

111,096

132,168

(16)%

321,404

372,689

(14)%

Diluted earnings per share

$0.75

$0.86

(13)%

$2.14

$2.40

(11)%

"The pandemic continues, as does our focus on clients and our employees' health and safety. We are fortunate to have a strong global workforce that is resilient, engaged and dedicated to providing our clients best-in-class service, and committed to our company's growth. Words can't express our appreciation for their efforts, along with all of the healthcare and service providers who look after our health and well-being," said Alfred P. West, Jr., SEI Chairman and CEO.

"Our business continued to rebound during the quarter, as our markets adjusted to the current environment. Our financial results reflect our strong sales activity, while we invest in our strategic priorities. Our diverse and talented global workforce drives our ability to serve our clients and make an impact on our communities. Looking to the future, we will capitalize on the opportunities in our markets to deliver long-term value to our shareholders, employees and clients."

Summary of Third-Quarter Results by Business Segment

For the Three Months EndedSeptember 30,

For the Nine MonthsEnded September 30,

(In thousands)

2020

2019

%

2020

2019

%

Private Banks:

Revenues

$114,792

$117,250

(2)%

$335,739

$351,601

(5)%

Expenses

113,066

110,788

2%

331,442

329,540

1%

Operating Profit

1,726

6,462

(73)%

4,297

22,061

(81)%

Operating Margin

2

%

6

%

1

%

6

%

Investment Advisors:

Revenues

103,189

103,033

—%

299,218

297,916

—%

Expenses

51,519

51,509

—%

154,100

154,569

—%

Operating Profit

51,670

51,524

—%

145,118

143,347

1%

Operating Margin

50

%

50

%

48

%

48

%

Institutional Investors:

Revenues

79,583

80,337

(1)%

235,309

241,559

(3)%

Expenses

37,812

37,268

1%

113,016

115,383

(2)%

Operating Profit

41,771

43,069

(3)%

122,293

126,176

(3)%

Operating Margin

52

%

54

%

52

%

52

%

Investment Managers:

Revenues

123,846

112,186

10%

359,815

326,037

10%

Expenses

79,838

71,889

11%

228,795

209,326

9%

Operating Profit

44,008

40,297

9%

131,020

116,711

12%

Operating Margin

36

%

36

%

36

%

36

%

Investments in New Businesses:

Revenues

3,517

3,448

2%

10,254

9,547

7%

Expenses

13,315

7,926

68%

37,691

20,663

82%

Operating Loss

(9,798)

(4,478)

NM

(27,437)

(11,116)

NM

Totals:

Revenues

$424,927

$416,254

2%

$1,240,335

$1,226,660

1%

Expenses

295,550

279,380

6%

865,044

829,481

4%

Corporate Overhead Expenses

18,040

16,237

11%

53,414

52,845

1%

Income from Operations

$111,337

$120,637

(8)%

$321,877

$344,334

(7)%

Third-Quarter Business Highlights:

  • Revenues from Asset management, administration, and distribution fees increased primarily from higher assets under administration due to positive cash flows from new and existing clients in our Investment Managers segment.
  • Our average assets under administration increased $84.8 billion, or 13%, to $738.8 billion in the third-quarter 2020, as compared to $654.0 billion during the third-quarter 2019 (see attached Average Asset Balances schedules for further details).
  • Our average assets under management, excluding LSV, increased $13.1 billion, or 6%, to $246.1 billion in the third-quarter 2020, as compared to $233.0 billion during the third-quarter 2019 (see attached Average Asset Balances schedules for further details).
  • Sales events, net of client losses, during third-quarter 2020 totaled approximately $27.9 million and are expected to generate net annualized recurring revenues of approximately $14.6 million when contract values are fully realized. For the nine months ended Sept. 30, 2020, sales events, net of client losses, totaled approximately $84.8 million and are expected to generate net annualized recurring revenues of approximately $63.5 million when contract values are fully realized.
  • 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 $9.3 million, or 25%, to $28.3 million in third-quarter 2020, as compared to $37.6 million in third-quarter 2019. The decrease in earnings was due to lower assets under management from negative cash flows from existing clients, market depreciation and client losses.
  • We capitalized $5.4 million of software development costs in third-quarter 2020 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $10.9 million in third-quarter 2020.
  • Our effective tax rates were 21.4% in third-quarter 2020 and 18.9% in third-quarter 2019. The increase in our effective tax rate was due to decreased tax benefits associated with a lower volume of stock option exercises and a higher effective state tax rate.
  • We repurchased 2.1 million shares of our common stock for $108.7 million during the third-quarter 2020.

Earnings Conference CallA conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Oct. 21, 2020. 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: 4259639.

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 Sept. 30, 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 $330 billion in assets under management and $755 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,
  • the rebound of our business,
  • whether and the degree to which we will invest in our strategic priorities, and
  • whether capitalizing on the opportunities in our markets will deliver long-term value for any of our shareholders, employees or clients.

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 MonthsEnded September 30,

For the Nine MonthsEnded September 30,

2020

2019

2020

2019

Asset management, admin. and distribution fees

$339,609

$330,943

$992,039

$969,812

Information processing and software servicing fees

85,318

85,311

248,296

256,848

Total revenues

424,927

416,254

1,240,335

1,226,660

Subadvisory, distribution and other asset mgmt. costs

45,126

44,978

134,645

134,960

Software royalties and other information processing costs

6,992

7,198

21,828

22,719

Compensation, benefits and other personnel

134,795

130,579

391,607

386,913

Stock-based compensation

6,467

5,453

20,458

15,555

Consulting, outsourcing and professional fees

57,949

48,789

168,350

144,325

Data processing and computer related

24,437

22,338

71,647

65,514

Facilities, supplies and other costs

16,679

15,926

47,448

51,771

Amortization

13,200

12,947

39,417

38,407

Depreciation

7,945

7,409

23,058

22,162

Total expenses

313,590

295,617

918,458

882,326

Income from operations

111,337

120,637

321,877

344,334

Net gain (loss) on investments

776

611

(1,310)

2,121

Interest and dividend income

1,009

4,167

5,582

12,737

Interest expense

(153)

(154)

(456)

(477)

Equity in earnings of unconsolidated affiliate

28,305

37,609

86,488

112,758

Income before income taxes

141,274

162,870

412,181

471,473

Income taxes

30,178

30,702

90,777

98,784

Net income

$111,096

$132,168

$321,404

$372,689

Basic earnings per common share

$0.76

$0.88

$2.18

$2.45

Shares used to calculate basic earnings per share

145,812

150,855

147,586

152,009

Diluted earnings per common share

$0.75

$0.86

$2.14

$2.40

Shares used to calculate diluted earnings per share

147,907

154,227

149,958

155,311

Dividends declared per common share

$—

$—

$0.35

$0.33

 

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

September 30,

December 31,

2020

2019

Assets

Current Assets:

Cash and cash equivalents

$767,698

$841,446

Restricted cash

3,101

3,101

Receivables from investment products

51,644

54,165

Receivables, net of allowance for doubtful accounts of $1,310 and $1,201

378,170

340,358

Securities owned

35,820

33,486

Other current assets

38,475

32,289

Total Current Assets

1,274,908

1,304,845

Property and Equipment, net of accumulated depreciation of $370,072 and $353,453

180,531

160,859

Operating Lease Right-of-Use Assets

38,945

42,789

Capitalized Software, net of accumulated amortization of $479,159 and $442,677

278,226

296,068

Available for Sale and Equity Securities

116,564

116,917

Investments in Affiliated Funds, at fair value

5,207

5,988

Investment in Unconsolidated Affiliate

33,117

67,413

Goodwill

64,489

64,489

Intangible Assets, net of accumulated amortization of $11,536 and $8,773

25,225

27,987

Deferred Contract Costs

33,833

30,991

Deferred Income Taxes

2,065

2,822

Other Assets, net

32,507

30,202

Total Assets

$2,085,617

$2,151,370

Liabilities and Equity

Current Liabilities:

Accounts payable

$13,038

$4,423

Accrued liabilities

223,217

272,801

Current portion of long-term operating lease liabilities

8,445

9,156

Deferred revenue

5,815

7,185

Total Current Liabilities

250,515

293,565

Long-term Income Taxes Payable

803

803

Deferred Income Taxes

47,578

55,722

Long-term Operating Lease Liabilities

34,768

38,450

Other Long-term Liabilities

22,520

24,052

Total Liabilities

356,184

412,592

Shareholders' Equity:

Common stock, $0.01 par value, 750,000 shares authorized; 144,491 and 149,745 shares issued and outstanding

1,445

1,497

Capital in excess of par value

1,174,142

1,158,900

Retained earnings

581,244

601,885

Accumulated other comprehensive loss, net

(27,398)

(23,504)

Total Shareholders' Equity

1,729,433

1,738,778

Total Liabilities and Shareholders' Equity

$2,085,617

$2,151,370

 

ENDING ASSET BALANCES

(In millions)  (Unaudited)

Sept. 30,

Dec. 31,

Mar. 31,

Jun. 30,

Sept. 30,

2019

2019

2020

2020

2020

Private Banks:

Equity and fixed-income programs

$22,580

$23,851

$21,160

$22,974

$23,499

Collective trust fund programs

4

4

5

5

6

Liquidity funds

3,695

3,405

4,143

4,291

3,718

Total assets under management

$26,279

$27,260

$25,308

$27,270

$27,223

Client assets under administration

23,985

25,801

21,497

23,903

24,174

Total assets

$50,264

$53,061

$46,805

$51,173

$51,397

Investment Advisors:

Equity and fixed-income programs

$65,059

$67,895

$54,856

$59,958

$65,581

Collective trust fund programs

4

4

2

3

3

Liquidity funds

2,673

2,887

5,969

6,648

3,866

Total assets under management

$67,736

$70,786

$60,827

$66,609

$69,450

Institutional Investors:

Equity and fixed-income programs

$82,659

$84,291

$72,399

$80,257

$83,846

Collective trust fund programs

81

83

94

103

101

Liquidity funds

2,290

1,746

3,672

1,924

2,096

Total assets under management

$85,030

$86,120

$76,165

$82,284

$86,043

Client assets under advisement

4,467

3,948

3,406

3,326

3,618

Total assets

$89,497

$90,068

$79,571

$85,610

$89,661

Investment Managers:

Collective trust fund programs

53,169

58,070

48,226

58,178

63,277

Liquidity funds

477

479

392

664

389

Total assets under management

$53,646

$58,549

$48,618

$58,842

$63,666

Client assets under administration (A)

637,986

657,541

610,794

668,611

730,369

Total assets

$691,632

$716,090

$659,412

$727,453

$794,035

Investments in New Businesses:

Equity and fixed-income programs

$1,621

$1,688

$1,484

$1,498

$1,572

Liquidity funds

132

158

152

194

169

Total assets under management

$1,753

$1,846

$1,636

$1,692

$1,741

Client assets under advisement

825

1,343

1,056

1,193

1,179

Total assets

$2,578

$3,189

$2,692

$2,885

$2,920

LSV Asset Management:

Equity and fixed-income programs (B)

$100,295

$107,476

$70,851

$81,134

$82,051

Total:

Equity and fixed-income programs (C)

$272,214

$285,201

$220,750

$245,821

$256,549

Collective trust fund programs

53,258

58,161

48,327

58,289

63,387

Liquidity funds

9,267

8,675

14,328

13,721

10,238

Total assets under management

$334,739

$352,037

$283,405

$317,831

$330,174

Client assets under advisement

5,292

5,291

4,462

4,519

4,797

Client assets under administration (D)

661,971

683,342

632,291

692,514

754,543

Total assets

$1,002,002

$1,040,670

$920,158

$1,014,864

$1,089,514

(A)

Client assets under administration in the Investment Managers segment include $51.1 billion of assets that are at fee levels below our normal full-service assets (as of September 30, 2020).

(B) 

Equity and fixed-income programs include $1.6 billion of assets managed by LSV in which fees are based on performance only (as of September 30, 2020).

(C) 

Equity and fixed-income programs include $7.5 billion of assets invested in various asset allocation funds at September 30, 2020.

(D) 

In addition to the numbers presented, SEI also administers an additional $11.5 billion in Funds of Funds assets (as of September 30, 2020) on which SEI does not earn an administration fee.

 

AVERAGE ASSET BALANCES

(In millions) (Unaudited)

3rd Qtr.

4th Qtr.

1st Qtr.

2nd Qtr.

3rd Qtr.

2019

2019

2020

2020

2020

Private Banks:

Equity and fixed-income programs

$22,432

$23,106

$24,657

$22,229

$23,740

Collective trust fund programs

4

4

4

5

7

Liquidity funds

3,625

3,581

3,581

4,366

3,948

Total assets under management

$26,061

$26,691

$28,242

$26,600

$27,695

Client assets under administration

23,717

24,930

24,840

23,819

25,295

Total assets

$49,778

$51,621

$53,082

$50,419

$52,990

Investment Advisors:

Equity and fixed-income programs

$64,761

$66,371

$64,933

$57,429

$64,479

Collective trust fund programs

5

4

3

3

3

Liquidity funds

2,580

2,673

3,284

6,923

4,569

Total assets under management

$67,346

$69,048

$68,220

$64,355

$69,051

Institutional Investors:

Equity and fixed-income programs

$82,398

$83,304

$79,926

$77,037

$82,830

Collective trust fund programs

80

82

86

100

102

Liquidity funds

2,287

2,106

2,342

2,476

2,120

Total assets under management

$84,765

$85,492

$82,354

$79,613

$85,052

Client assets under advisement

3,797

4,106

3,760

3,362

3,565

Total assets

$88,562

$89,598

$86,114

$82,975

$88,617

Investment Managers:

Collective trust fund programs

52,587

55,499

55,952

54,061

62,028

Liquidity funds

460

642

617

482

565

Total assets under management

$53,047

$56,141

$56,569

$54,543

$62,593

Client assets under administration (A)

630,328

646,592

654,386

649,012

713,528

Total assets

$683,375

$702,733

$710,955

$703,555

$776,121

Investments in New Businesses:

Equity and fixed-income programs

$1,609

$1,649

$1,663

$1,468

$1,560

Liquidity funds

142

145

168

182

180

Total assets under management

$1,751

$1,794

$1,831

$1,650

$1,740

Client assets under advisement

842

1,044

1,222

1,148

1,206

Total assets

$2,593

$2,838

$3,053

$2,798

$2,946

LSV Asset Management:

Equity and fixed-income programs (B)

$100,094

$104,814

$88,059

$80,395

$83,536

Total:

Equity and fixed-income programs (C)

$271,294

$279,244

$259,238

$238,558

$256,145

Collective trust fund programs

52,676

55,589

56,045

54,169

62,140

Liquidity funds

9,094

9,147

9,992

14,429

11,382

Total assets under management

$333,064

$343,980

$325,275

$307,156

$329,667

Client assets under advisement

4,639

5,150

4,982

4,510

4,771

Client assets under administration (D)

654,045

671,522

679,226

672,831

738,823

Total assets

$991,748

$1,020,652

$1,009,483

$984,497

$1,073,261

(A) 

Average client assets under administration in the Investment Managers segment during third-quarter 2020 include $50.4 billion that are at fee levels below our normal full-service assets.

(B) 

Equity and fixed-income programs include $1.6 billion of average assets managed by LSV in which fees are based on performance only during third-quarter 2020.

(C) 

Equity and fixed-income programs include $7.5 billion of average assets invested in various asset allocation funds during third-quarter 2020.

(D) 

In addition to the numbers presented, SEI also administers an additional $11.4 billion of average assets in Funds of Funds assets during third-quarter 2020 on which SEI does not earn an administration fee.

 

Cision View original content:http://www.prnewswire.com/news-releases/sei-reports-third-quarter-2020-financial-results-301157297.html

SOURCE SEI Investments Company