SEIC - SEI Reports First-Quarter 2022 Financial Results

April, 20 2022 04:01 PM SEI Investments Company

PR Newswire

OAKS, Pa. , April 20, 2022 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the first-quarter 2022. Diluted earnings per share were $1.36 in first-quarter 2022 compared to $0.89 in first-quarter 2021. Diluted earnings per share reflect a one-time revenue event of $88.0 million , or $0.47 per share net of associated costs.

Consolidated Overview






(In thousands, except earnings per share)

For the Three Months Ended March 31,




2022

2021

%







Revenues

$581,443

$455,686

28%
Net income

190,308

129,470

47%
Diluted earnings per share

$1.36

$0.89

53%

"Our first-quarter financial profits were challenged by negative capital markets, but we achieved solid sales results and successfully implemented new business. We continue investing in our future through new technology and business initiatives to deliver best-in-class platforms and service to our markets and create new growth opportunities," said SEI Chairman and CEO Alfred P. West, Jr.

"SEI is uniquely positioned in the financial services industry for sustainable growth. I'm thrilled that Ryan Hicke will become SEI's next CEO, and I'm excited to see him lead the company into the future. His diverse, global experience at SEI informs his commitment to our company's strengths across our three pillars of expertise: investments, operations, and technology. With this change in leadership, I'm confident SEI has great days ahead.

"The strength of our leadership and talented workforce globally is key to driving SEI's enduring success and helping our clients manage change with confidence. Looking toward the future, we will make sound decisions to improve our results and continue to capitalize on market opportunities to deliver long-term value to our shareholders and build brave futures ^SM for our employees, clients, and communities."

Summary of First-Quarter Results by Business Segment

(In thousands)

For the Three Months Ended March 31,




2022

2021

%
Private Banks:






Revenues

$213,548

$117,608

82%
Expenses

121,955

110,724

10%
Operating Profit

91,593

6,884

NM
Operating Margin

43%

6%









Investment Advisors:






Revenues

119,230

113,294

5%
Expenses

64,520

55,027

17%
Operating Profit

54,710

58,267

(6)%
Operating Margin

46%

51%









Institutional Investors:






Revenues

86,839

84,499

3%
Expenses

45,358

39,158

16%
Operating Profit

41,481

45,341

(9)%
Operating Margin

48%

54%









Investment Managers:






Revenues

156,901

136,419

15%
Expenses

98,837

83,020

19%
Operating Profit

58,064

53,399

9%
Operating Margin

37%

39%









Investments in New Businesses:






Revenues

4,925

3,866

27%
Expenses

11,950

13,404

(11)%
Operating Loss

(7,025)

(9,538)

NM







Totals:






Revenues

$581,443

$455,686

28%
Expenses

342,620

301,333

14%
Corporate Overhead Expenses

24,024

21,516

12%
Income from Operations

$214,799

$132,837

62%

First-Quarter Business Highlights:

Revenues from Asset management, administration, and distribution fees increased from higher assets under management and administration due to market appreciation during 2021 and positive cash flows from new and existing clients. The decline in market conditions during the first quarter 2022 negatively impacted our revenues from assets under management and administration and partially offset our revenue growth.
A significant, uninstalled investment processing client terminated an agreement for convenience. As a result, we recorded one-time fees of $88.0 million during first-quarter 2022. This early termination fee is included in Information processing and software servicing fees of the Private Banks segment and reflects a diluted earnings per share impact of $0.47 net of associated costs.
Our average assets under administration increased $71.8 billion , or 9%, to $893.4 billion in the first-quarter 2022, as compared to $821.6 billion during the first-quarter 2021 (see attached Average Asset Balances schedules for further details).
Our average assets under management, excluding LSV, increased $13.2 billion , or 5%, to $293.6 billion in the first-quarter 2022, as compared to $280.4 billion during the first-quarter 2021 (see attached Average Asset Balances schedules for further details).
Net sales events, excluding the cancelled contract item, in the Private Banks and Investment Managers segments during first-quarter 2022 were $26.6 million and are expected to generate net annualized recurring revenues of approximately $24.7 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 first-quarter 2022 were $2.1 million .
Revenues from our acquisition of SEI Novus were $3.1 million during the first-quarter 2022. SEI Novus was acquired during the fourth-quarter 2021 and is reported in the Institutional Investors segment. The Institutional Investors segment also includes personnel, amortization, and other costs related to SEI Novus.
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.
Earnings from LSV decreased to $32.5 million in the first-quarter 2022 as compared to $33.4 million in the first-quarter 2021 due to negative cash flows from existing clients and client losses, which offset the positive impact from market appreciation during 2021.
We capitalized $6.6 million of software development costs in first-quarter 2022 for continued enhancements to the SEI Wealth Platform ^SM (SWP). Amortization expense related to SWP was $13.6 million in first-quarter 2022.
Our effective tax rates were 23.1% in first-quarter 2022 and 22.6% in first-quarter 2021. The increase in the effective tax rate was primarily due to decreased tax benefits associated with a lower volume of stock option exercises.
We repurchased 1.7 million shares of our common stock for $100.1 million during the first-quarter 2022 at an average price of $58.43 per share.
Cash flow from operations was $260.4 million , or $1.86 per share, and free cash flow was $244.6 million during the first-quarter 2022.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on April 20, 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: 8875578.

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 March 31, 2022, 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 our investments will create growth opportunities,
whether we are positioned for sustainable growth, and
the degree to which we will make good decisions or capitalize on market opportunities that will deliver long-term 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,
the margins that out businesses may generate,
the degree to which one-time and transaction-based revenues during the quarter will be repeated,
the competition for and cost of talent and the effect of these factors on our business,
the headwinds we will face and our strategies for how we may respond to these headwinds,
how we will manage our expenses,
the degree to which our reported margins will decline, increase or normalize,
the strategic initiatives and business segments that we will pursue and those in which we will invest,
the success, if any, of the sales and strategic initiatives we pursue,
the value of our backlog and the strength of our pipelines,
our growth prospects,
the timing of and our ability to integrate any acquisition targets that we may pursue, if any,
the potential benefits we may derive from any of our acquisitions,
the organic and inorganic opportunities that will drive our growth,
the investments we may make in our technologies and personnel, 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, 2021 , 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 March 31,


2022

2021





Asset management, admin. and distribution fees

$394,097

$367,646
Information processing and software servicing fees

187,346

88,040





Total revenues

581,443

455,686





Subadvisory, distribution and other asset mgmt. costs

53,128

50,164
Software royalties and other information processing costs

7,547

5,742
Compensation, benefits and other personnel

160,484

137,221
Stock-based compensation

10,566

9,752
Consulting, outsourcing and professional fees

62,491

54,340
Data processing and computer related

29,816

25,721
Facilities, supplies and other costs

17,627

17,248
Amortization

16,887

14,352
Depreciation

8,098

8,309





Total expenses

366,644

322,849





Income from operations

214,799

132,837





Net (loss) gain on investments

(489)

332
Interest and dividend income

848

945
Interest expense

(250)

(123)
Equity in earnings of unconsolidated affiliate

32,459

33,350





Income before income taxes

247,367

167,341





Income taxes

57,059

37,871





Net income

$190,308

$129,470





Basic earnings per common share

$1.38

$0.90





Shares used to calculate basic earnings per share

137,935

143,201





Diluted earnings per common share

$1.36

$0.89





Shares used to calculate diluted earnings per share

139,712

145,306

SEI INVESTMENTS COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)



March 31,

December 31,


2022

2021
Assets




Current Assets:




Cash and cash equivalents

$907,831

$831,407
Restricted cash

351

351
Receivables from investment products

57,584

59,036
Receivables, net of allowance for doubtful accounts of $1,388 and $1,602

437,844

441,609
Securities owned

31,258

28,267
Other current assets

46,115

43,559
Total Current Assets

1,480,983

1,404,229





Property and Equipment, net of accumulated depreciation of $417,041 and $409,248

180,458

178,869
Operating Lease Right-of-Use Assets

31,024

33,614
Capitalized Software, net of accumulated amortization of $558,861 and $545,307

236,481

243,446
Available for Sale and Equity Securities

134,717

129,541
Investments in Affiliated Funds, at fair value

7,270

6,916
Investment in Unconsolidated Affiliate

52,778

107,918
Goodwill

117,434

117,232
Intangible Assets, net of accumulated amortization of $20,969 and $17,716

65,339

68,782
Deferred Contract Costs

35,847

36,236
Deferred Income Taxes

2,706

2,983
Other Assets, net

27,569

24,936
Total Assets

$2,372,606

$2,354,702





Liabilities and Equity




Current Liabilities:




Accounts payable

$8,037

$10,312
Accrued liabilities

250,468

324,382
Current portion of long-term operating lease liabilities

11,219

11,328
Deferred revenue

15,422

9,721
Total Current Liabilities

285,146

355,743





Borrowings Under Revolving Credit Facility

30,000

40,000
Long-term Income Taxes Payable

803

803
Deferred Income Taxes

36,561

48,876
Long-term Operating Lease Liabilities

24,997

27,639
Other Long-term Liabilities

22,016

20,878
Total Liabilities

399,523

493,939





Shareholders' Equity:




Common stock, $0.01 par value, 750,000 shares authorized; 137,219 and 138,449 shares issued and outstanding

1,372

1,384
Capital in excess of par value

1,266,320

1,246,608
Retained earnings

733,572

632,614
Accumulated other comprehensive loss, net

(28,181)

(19,843)
Total Shareholders' Equity

1,973,083

1,860,763
Total Liabilities and Shareholders' Equity

$2,372,606

$2,354,702

ENDING ASSET BALANCES (In millions) (Unaudited)



Mar. 31,

Jun. 30,

Sept. 30,

Dec. 31,

Mar. 31,


2021

2021

2021

2021

2022
Private Banks:










Equity and fixed-income programs

$25,098

$26,264

$25,618

$26,281

$25,335
Collective trust fund programs

7

7

6

6

7
Liquidity funds

3,793

3,654

3,988

4,724

4,225
Total assets under management

$28,898

$29,925

$29,612

$31,011

$29,567
Client assets under administration

4,379

4,412

4,675

4,481

4,449
Total assets

$33,277

$34,337

$34,287

$35,492

$34,016











Investment Advisors:










Equity and fixed-income programs

$73,819

$78,053

$78,560

$81,686

$77,614
Liquidity funds

3,584

3,550

3,477

4,317

4,610
Total Platform assets under management

$77,403

$81,603

$82,037

$86,003

$82,224
Platform-only assets (E)

12,538

13,566

13,728

14,564

14,151
Total Platform assets (E)

$89,941

$95,169

$95,765

$100,567

$96,375











Institutional Investors:










Equity and fixed-income programs

$92,040

$93,010

$89,441

$91,719

$87,358
Collective trust fund programs

95

5

5

5

6
Liquidity funds

2,909

2,516

2,599

2,118

2,150
Total assets under management

$95,044

$95,531

$92,045

$93,842

$89,514
Client assets under advisement

4,333

4,566

4,698

4,857

4,778
Total assets

$99,377

$100,097

$96,743

$98,699

$94,292











Investment Managers:










Collective trust fund programs

$78,304

$87,012

$87,488

$92,549

$85,411
Liquidity funds

449

473

568

423

284
Total assets under management

$78,753

$87,485

$88,056

$92,972

$85,695
Client assets under administration (A)

831,819

875,942

861,605

907,377

895,181
Total assets

$910,572

$963,427

$949,661

$1,000,349

$980,876











Investments in New Businesses:










Equity and fixed-income programs

$1,777

$1,924

$1,964

$2,096

$2,057
Liquidity funds

289

191

202

240

305
Total assets under management

$2,066

$2,115

$2,166

$2,336

$2,362
Client assets under administration

1,355

1,422

1,378

1,410

1,401
Total assets

$3,421

$3,537

$3,544

$3,746

$3,763











LSV Asset Management:










Equity and fixed-income programs (B)

$101,565

$102,404

$97,604

$98,984

$95,962











Total:










Equity and fixed-income programs (C)

$294,299

$301,655

$293,187

$300,766

$288,326
Collective trust fund programs

78,406

87,024

87,499

92,560

85,424
Liquidity funds

11,024

10,384

10,834

11,822

11,574
Total assets under management

$383,729

$399,063

$391,520

$405,148

$385,324
Client assets under advisement

5,688

5,988

6,076

6,267

6,179
Client assets under administration (D)

836,198

880,354

866,280

911,858

899,630
Platform-only assets

12,538

13,566

13,728

14,564

14,151
Total assets

$1,238,153

$1,298,971

$1,277,604

$1,337,837

$1,305,284

(A)

Client assets under administration in the Investment Managers segment include $12.9 billion of assets that are at fee levels below our
normal full-service assets (as of March 31, 2022).

(B)

Equity and fixed-income programs include $2.3 billion of assets managed by LSV in which fees are based on performance only (as of
March 31, 2022).

(C)

Equity and fixed-income programs include $7.4 billion of assets invested in various asset allocation funds at March 31, 2022.

(D)

In addition to the numbers presented, SEI also administers an additional $13.3 billion in Funds of Funds assets (as of
March 31, 2022) 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)



1st Qtr.

2nd Qtr.

3rd Qtr.

4th Qtr.

1st Qtr.


2021

2021

2021

2021

2022
Private Banks:










Equity and fixed-income programs

$25,139

$26,056

$26,232

$25,999

$25,637
Collective trust fund programs

6

7

6

6

6
Liquidity funds

3,876

3,833

3,916

4,452

4,403
Total assets under management

$29,021

$29,896

$30,154

$30,457

$30,046
Client assets under administration

4,317

4,405

4,476

4,607

4,500
Total assets

$33,338

$34,301

$34,630

$35,064

$34,546











Investment Advisors:










Equity and fixed-income programs

$73,240

$76,840

$79,602

$80,703

$77,576
Liquidity funds

3,619

3,370

3,403

3,644

5,151
Total Platform assets under management

$76,859

$80,210

$83,005

$84,347

$82,727
Platform-only assets (E)

12,206

13,292

13,863

14,341

13,978
Total Platform assets (E)

$89,065

$93,502

$96,868

$98,688

$96,705











Institutional Investors:










Equity and fixed-income programs

$91,349

$93,458

$91,965

$90,557

$89,250
Collective trust fund programs

96

68

5

5

5
Liquidity funds

2,621

2,681

2,742

2,391

2,223
Total assets under management

$94,066

$96,207

$94,712

$92,953

$91,478
Client assets under advisement

4,146

4,516

4,658

4,812

4,889
Total assets

$98,212

$100,723

$99,370

$97,765

$96,367











Investment Managers:










Collective trust fund programs

$78,035

$84,553

$89,441

$90,457

$86,633
Liquidity funds

490

469

532

491

432
Total assets under management

$78,525

$85,022

$89,973

$90,948

$87,065
Client assets under administration (A)

817,330

853,810

851,183

879,718

888,854
Total assets

$895,855

$938,832

$941,156

$970,666

$975,919











Investments in New Businesses:










Equity and fixed-income programs

$1,743

$1,870

$1,958

$2,053

$2,025
Liquidity funds

169

236

205

197

286
Total assets under management

$1,912

$2,106

$2,163

$2,250

$2,311
Client assets under advisement

1,327

1,406

1,423

1,423

1,397
Total assets

$3,239

$3,512

$3,586

$3,673

$3,708











LSV Asset Management:










Equity and fixed-income programs (B)

$97,476

$103,583

$99,924

$97,381

$96,449











Total:










Equity and fixed-income programs (C)

$288,947

$301,807

$299,681

$296,693

$290,937
Collective trust fund programs

78,137

84,628

89,452

90,468

86,644
Liquidity funds

10,775

10,589

10,798

11,175

12,495
Total assets under management

$377,859

$397,024

$399,931

$398,336

$390,076
Client assets under advisement

5,473

5,922

6,081

6,235

6,286
Client assets under administration (D)

821,647

858,215

855,659

884,325

893,354
Platform-only assets

12,206

13,292

13,863

14,341

13,978
Total assets

$1,217,185

$1,274,453

$1,275,534

$1,303,237

$1,303,694

(A)

Average client assets under administration in the Investment Managers segment during first-quarter 2022 include $12.7 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 first-quarter 2022.

(C)

Equity and fixed-income programs include $7.6 billion of average assets invested in various asset allocation funds during first-quarter
2022.

(D)

In addition to the numbers presented, SEI also administers an additional $13.8 billion of average assets in Funds of Funds assets during
first-quarter 2022 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

+1 610-676-4052

+1 610-676-4191

lopsahl@seic.com

lwojcik@seic.com

SOURCE SEI Investments Company

Company Name:	SEI Investments Company
Stock Symbol:	SEIC
Market:	NASDAQ
Website:	seic.com

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