SEI Reports First-Quarter 2021 Financial Results
OAKS, Pa., April 21, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the first-quarter 2021. Diluted earnings per share were $0.89 in first-quarter 2021 compared to $0.72 in first-quarter 2020.
Consolidated Overview | ||||||||
(In thousands, except earnings per share) | For the Three Months | |||||||
2021 | 2020 | % | ||||||
Revenues | $455,686 | $414,762 | 10% | |||||
Net income | 129,470 | 109,242 | 19% | |||||
Diluted earnings per share | $0.89 | $0.72 | 24% | |||||
"Our first-quarter results reflect positive capital market performance. We continue to execute our business strategies across the company and invest in the strength and expansion of the solutions we bring to our target markets," said Alfred P. West, Jr., SEI Chairman and CEO. "We had solid sales results in processing and operational services, helping us offset the anticipated headwinds our asset management businesses face."
"Our long-term success is built on a strong foundation of advancing our suite of solutions, leading in our markets, effectively executing strategies, and soundly managing finances—all backed by a talented workforce. We will continue to drive our success forward for the benefit of our clients, employees, communities and shareholders."
Summary of First-Quarter Results by Business Segment
(In thousands) | For the Three Months Ended | |||||
2021 | 2020 | % | ||||
Private Banks: | ||||||
Revenues | $117,608 | $113,221 | 4% | |||
Expenses | 110,724 | 110,653 | —% | |||
Operating Profit | 6,884 | 2,568 | 168% | |||
Operating Margin | 6% | 2% | ||||
Investment Advisors: | ||||||
Revenues | 113,294 | 102,321 | 11% | |||
Expenses | 55,027 | 52,432 | 5% | |||
Operating Profit | 58,267 | 49,889 | 17% | |||
Operating Margin | 51% | 49% | ||||
Institutional Investors: | ||||||
Revenues | 84,499 | 79,203 | 7% | |||
Expenses | 39,158 | 38,267 | 2% | |||
Operating Profit | 45,341 | 40,936 | 11% | |||
Operating Margin | 54% | 52% | ||||
Investment Managers: | ||||||
Revenues | 136,419 | 116,629 | 17% | |||
Expenses | 83,020 | 74,289 | 12% | |||
Operating Profit | 53,399 | 42,340 | 26% | |||
Operating Margin | 39% | 36% | ||||
Investments in New Businesses: | ||||||
Revenues | 3,866 | 3,388 | 14% | |||
Expenses | 13,404 | 10,910 | 23% | |||
Operating Loss | (9,538) | (7,522) | NM | |||
Totals: | ||||||
Revenues | $455,686 | $414,762 | 10% | |||
Expenses | 301,333 | 286,551 | 5% | |||
Corporate Overhead Expenses | 21,516 | 17,983 | 20% | |||
Income from Operations | $132,837 | $110,228 | 21% | |||
First-Quarter Business Highlights:
- Revenues from Asset management, administration, and distribution fees increased primarily from higher assets under administration in our Investment Managers segment due to market appreciation and positive cash flows from new and existing clients.
- Average assets under administration increased $142.4 billion, or 21%, to $821.6 billion in the first-quarter 2021, as compared to $679.2 billion during the first-quarter 2020 (see attached Average Asset Balances schedules for further details).
- Average assets under management, excluding LSV, increased $43.2 billion, or 18%, to $280.4 billion in the first-quarter 2021, as compared to $237.2 billion during the first-quarter 2020 (see attached Average Asset Balances schedules for further details).
- Net sales events in the Private Banks and Investment Managers segments during first-quarter 2021 were $17.5 million, and are expected to generate net annualized recurring revenues of approximately $13.0 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 2021 were negative $12.7 million, mainly related to net losses in our legacy Institutional client base of $9.9 million and a single product use client in the AMD business line of the Private Banks segment.
- The increase in operational expenses was primarily due to increased consulting costs related to our continued investments in new business opportunities, such as our One SEISM 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.
- Earnings from LSV increased by $3.5 million, or 12%, to $33.4 million in first-quarter 2021, as compared to $29.9 million in first-quarter 2020. The increase in earnings was 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 first-quarter 2021 increased $2.8 million as compared to first-quarter 2020 due to equity awards in late 2020.
- We recorded a net gain from investments of approximately $332 thousand during the first-quarter 2021 as compared to a net loss of approximately $4.0 million during the first-quarter 2020.
- We capitalized $6.3 million of software development costs in first-quarter 2021 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $11.9 million in first-quarter 2021.
- Effective tax rates were 22.6% in first-quarter 2021 and 21.5% in first-quarter 2020. The increase in our effective tax rate was due to decreased tax benefits associated with a lower volume of stock option exercises.
- We repurchased 1.2 million shares of our common stock for $66.9 million during the first-quarter 2021.
- Cash flow from operations was $136.6 million, or $0.94 per share, and free cash flow was $126.0 million during the first-quarter 2021.
Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on April 21, 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: 1599078.
About SEI
After 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 March 31, 2021, 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 $384 billion in assets under management and $836 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,
- whether we will invest in the strength and expansion of our solutions,
- our strategic priorities and the degree to which we will execute on them,
- the elements of our long-term success, and
- the degree to which our business will be successful and the beneficiaries of any such success.
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,
- the momentum we may have with respect to our businesses,
- the headwinds we will face and our strategies for how we may respond to these headwinds,
- how we will manage our expenses and the degree to which our forecasted expenses will decline or increase,
- when we integrate purchased assets into SWP and the timing of our ability to offer additional services to clients,
- 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, 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 Months | ||||||
2021 | 2020 | |||||
Asset management, admin. and distribution fees | $367,646 | $331,853 | ||||
Information processing and software servicing fees | 88,040 | 82,909 | ||||
Total revenues | 455,686 | 414,762 | ||||
Subadvisory, distribution and other asset mgmt. costs | 50,164 | 45,337 | ||||
Software royalties and other information processing costs | 5,742 | 7,447 | ||||
Compensation, benefits and other personnel | 137,221 | 131,481 | ||||
Stock-based compensation | 9,752 | 6,929 | ||||
Consulting, outsourcing and professional fees | 54,340 | 53,290 | ||||
Data processing and computer related | 25,721 | 22,704 | ||||
Facilities, supplies and other costs | 17,248 | 16,796 | ||||
Amortization | 14,352 | 13,077 | ||||
Depreciation | 8,309 | 7,473 | ||||
Total expenses | 322,849 | 304,534 | ||||
Income from operations | 132,837 | 110,228 | ||||
Net gain (loss) on investments | 332 | (3,989) | ||||
Interest and dividend income | 945 | 3,203 | ||||
Interest expense | (123) | (152) | ||||
Equity in earnings of unconsolidated affiliate | 33,350 | 29,907 | ||||
Income before income taxes | 167,341 | 139,197 | ||||
Income taxes | 37,871 | 29,955 | ||||
Net income | $129,470 | $109,242 | ||||
Basic earnings per common share | $0.90 | $0.73 | ||||
Shares used to calculate basic earnings per share | 143,201 | 149,468 | ||||
Diluted earnings per common share | $0.89 | $0.72 | ||||
Shares used to calculate diluted earnings per share | 145,306 | 152,368 | ||||
SEI INVESTMENTS COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | ||||||
March 31, | December 31, | |||||
2021 | 2020 | |||||
Assets | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $782,582 | $784,626 | ||||
Restricted cash | 3,101 | 3,101 | ||||
Receivables from investment products | 57,291 | 55,271 | ||||
Receivables, net of allowance for doubtful accounts of $2,307 and $1,100 | 406,028 | 385,219 | ||||
Securities owned | 33,040 | 34,064 | ||||
Other current assets | 42,809 | 38,696 | ||||
Total Current Assets | 1,324,851 | 1,300,977 | ||||
Property and Equipment, net of accumulated depreciation of $386,319 and $378,639 | 184,253 | 189,052 | ||||
Operating Lease Right-of-Use Assets | 37,762 | 38,397 | ||||
Capitalized Software, net of accumulated amortization of $505,112 and $491,739 | 263,964 | 270,977 | ||||
Available for Sale and Equity Securities | 114,973 | 105,419 | ||||
Investments in Affiliated Funds, at fair value | 6,623 | 6,166 | ||||
Investment in Unconsolidated Affiliate | 51,743 | 98,433 | ||||
Goodwill | 64,489 | 64,489 | ||||
Intangible Assets, net of accumulated amortization of $13,377 and $12,456 | 34,383 | 24,304 | ||||
Deferred Contract Costs | 33,430 | 33,781 | ||||
Deferred Income Taxes | 2,706 | 2,972 | ||||
Other Assets, net | 31,724 | 32,289 | ||||
Total Assets | $2,150,901 | $2,167,256 | ||||
Liabilities and Equity | ||||||
Current Liabilities: | ||||||
Accounts payable | $5,529 | $7,766 | ||||
Accrued liabilities | 199,235 | 299,845 | ||||
Current portion of long-term operating lease liabilities | 9,813 | 8,579 | ||||
Deferred revenue | 1,335 | 1,085 | ||||
Total Current Liabilities | 215,912 | 317,275 | ||||
Long-term Income Taxes Payable | 803 | 803 | ||||
Deferred Income Taxes | 50,892 | 55,159 | ||||
Long-term Operating Lease Liabilities | 33,089 | 34,058 | ||||
Other Long-term Liabilities | 21,097 | 20,054 | ||||
Total Liabilities | 321,793 | 427,349 | ||||
Shareholders' Equity: | ||||||
Common stock, $0.01 par value, 750,000 shares authorized; 142,701 and 143,396 | 1,427 | 1,434 | ||||
Capital in excess of par value | 1,208,433 | 1,190,001 | ||||
Retained earnings | 634,651 | 565,270 | ||||
Accumulated other comprehensive loss, net | (15,403) | (16,798) | ||||
Total Shareholders' Equity | 1,829,108 | 1,739,907 | ||||
Total Liabilities and Shareholders' Equity | $2,150,901 | $2,167,256 | ||||
ENDING ASSET BALANCES (In millions) (Unaudited) | |||||||||||||||
Mar. 31, | Jun. 30, | Sept. 30, | Dec. 31 | Mar. 31, | |||||||||||
2020 | 2020 | 2020 | 2020 | 2021 | |||||||||||
Private Banks: | |||||||||||||||
Equity and fixed-income programs | $21,160 | $22,974 | $23,499 | $25,498 | $25,098 | ||||||||||
Collective trust fund programs | 5 | 5 | 6 | 6 | 7 | ||||||||||
Liquidity funds | 4,143 | 4,291 | 3,718 | 3,778 | 3,793 | ||||||||||
Total assets under management | $25,308 | $27,270 | $27,223 | $29,282 | $28,898 | ||||||||||
Client assets under administration | 21,497 | 23,903 | 24,174 | 26,346 | 4,379 | ||||||||||
Total assets | $46,805 | $51,173 | $51,397 | $55,628 | $33,277 | ||||||||||
Investment Advisors: | |||||||||||||||
Equity and fixed-income programs | $54,856 | $59,958 | $65,581 | $71,247 | $73,818 | ||||||||||
Collective trust fund programs | 2 | 3 | 3 | 1 | 1 | ||||||||||
Liquidity funds | 5,969 | 6,648 | 3,866 | 3,832 | 3,584 | ||||||||||
Total assets under management | $60,827 | $66,609 | $69,450 | $75,080 | $77,403 | ||||||||||
Institutional Investors: | |||||||||||||||
Equity and fixed-income programs | $72,399 | $80,257 | $83,846 | $90,869 | $92,040 | ||||||||||
Collective trust fund programs | 94 | 103 | 101 | 98 | 95 | ||||||||||
Liquidity funds | 3,672 | 1,924 | 2,096 | 2,128 | 2,909 | ||||||||||
Total assets under management | $76,165 | $82,284 | $86,043 | $93,095 | $95,044 | ||||||||||
Client assets under advisement | 3,406 | 3,326 | 3,618 | 4,063 | 4,333 | ||||||||||
Total assets | $79,571 | $85,610 | $89,661 | $97,158 | $99,377 | ||||||||||
Investment Managers: | |||||||||||||||
Collective trust fund programs | 48,226 | 58,178 | 63,277 | 75,214 | 78,304 | ||||||||||
Liquidity funds | 392 | 664 | 389 | 424 | 449 | ||||||||||
Total assets under management | $48,618 | $58,842 | $63,666 | $75,638 | $78,753 | ||||||||||
Client assets under administration (A) | 610,794 | 668,611 | 730,369 | 760,397 | 831,819 | ||||||||||
Total assets | $659,412 | $727,453 | $794,035 | $836,035 | $910,572 | ||||||||||
Investments in New Businesses: | |||||||||||||||
Equity and fixed-income programs | $1,484 | $1,498 | $1,572 | $1,711 | $1,777 | ||||||||||
Liquidity funds | 152 | 194 | 169 | 162 | 289 | ||||||||||
Total assets under management | $1,636 | $1,692 | $1,741 | $1,873 | $2,066 | ||||||||||
Client assets under advisement | 1,056 | 1,193 | 1,179 | 1,299 | 1,355 | ||||||||||
Total assets | $2,692 | $2,885 | $2,920 | $3,172 | $3,421 | ||||||||||
LSV Asset Management: | |||||||||||||||
Equity and fixed-income programs (B) | $70,851 | $81,134 | $82,051 | $93,692 | $101,565 | ||||||||||
Total: | |||||||||||||||
Equity and fixed-income programs (C) | $220,750 | $245,821 | $256,549 | $283,017 | $294,298 | ||||||||||
Collective trust fund programs | 48,327 | 58,289 | 63,387 | 75,319 | 78,407 | ||||||||||
Liquidity funds | 14,328 | 13,721 | 10,238 | 10,324 | 11,024 | ||||||||||
Total assets under management | $283,405 | $317,831 | $330,174 | $368,660 | $383,729 | ||||||||||
Client assets under advisement | 4,462 | 4,519 | 4,797 | 5,362 | 5,688 | ||||||||||
Client assets under administration (D) | 632,291 | 692,514 | 754,543 | 786,743 | 836,198 | ||||||||||
Total assets | $920,158 | $1,014,864 | $1,089,514 | $1,160,765 | $1,225,615 | ||||||||||
(A) | Client assets under administration in the Investment Managers segment include $54.6 billion of assets that are at fee levels below our normal full-service assets (as of March 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 March 31, 2021). |
(C) | Equity and fixed-income programs include $7.9 billion of assets invested in various asset allocation funds at March 31, 2021. |
(D) | In addition to the numbers presented, SEI also administers an additional $13.3 billion in Funds of Funds assets (as of March 31, 2021) on which SEI does not earn an administration fee. |
AVERAGE ASSET BALANCES (In millions) (Unaudited) | |||||||||||||||
1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | 1st Qtr. | |||||||||||
2020 | 2020 | 2020 | 2020 | 2021 | |||||||||||
Private Banks: | |||||||||||||||
Equity and fixed-income programs | $24,657 | $22,229 | $23,740 | $24,284 | $25,139 | ||||||||||
Collective trust fund programs | 4 | 5 | 7 | 6 | 6 | ||||||||||
Liquidity funds | 3,581 | 4,366 | 3,948 | 3,712 | 3,876 | ||||||||||
Total assets under management | $28,242 | $26,600 | $27,695 | $28,002 | $29,021 | ||||||||||
Client assets under administration | 24,840 | 23,819 | 25,295 | 25,368 | 4,317 | ||||||||||
Total assets | $53,082 | $50,419 | $52,990 | $53,370 | $33,338 | ||||||||||
Investment Advisors: | |||||||||||||||
Equity and fixed-income programs | $64,933 | $57,429 | $64,479 | $68,396 | $73,239 | ||||||||||
Collective trust fund programs | 3 | 3 | 3 | 2 | 1 | ||||||||||
Liquidity funds | 3,284 | 6,923 | 4,569 | 3,788 | 3,619 | ||||||||||
Total assets under management | $68,220 | $64,355 | $69,051 | $72,186 | $76,859 | ||||||||||
Institutional Investors: | |||||||||||||||
Equity and fixed-income programs | $79,926 | $77,037 | $82,830 | $86,277 | $91,349 | ||||||||||
Collective trust fund programs | 86 | 100 | 102 | 102 | 96 | ||||||||||
Liquidity funds | 2,342 | 2,476 | 2,120 | 2,271 | 2,621 | ||||||||||
Total assets under management | $82,354 | $79,613 | $85,052 | $88,650 | $94,066 | ||||||||||
Client assets under advisement | 3,760 | 3,362 | 3,565 | 3,746 | 4,146 | ||||||||||
Total assets | $86,114 | $82,975 | $88,617 | $92,396 | $98,212 | ||||||||||
Investment Managers: | |||||||||||||||
Collective trust fund programs | 55,952 | 54,061 | 62,028 | 69,349 | 78,035 | ||||||||||
Liquidity funds | 617 | 482 | 565 | 411 | 490 | ||||||||||
Total assets under management | $56,569 | $54,543 | $62,593 | $69,760 | $78,525 | ||||||||||
Client assets under administration (A) | 654,386 | 649,012 | 713,528 | 754,350 | 817,330 | ||||||||||
Total assets | $710,955 | $703,555 | $776,121 | $824,110 | $895,855 | ||||||||||
Investments in New Businesses: | |||||||||||||||
Equity and fixed-income programs | $1,663 | $1,468 | $1,560 | $1,634 | $1,743 | ||||||||||
Liquidity funds | 168 | 182 | 180 | 165 | 169 | ||||||||||
Total assets under management | $1,831 | $1,650 | $1,740 | $1,799 | $1,912 | ||||||||||
Client assets under advisement | 1,222 | 1,148 | 1,206 | 1,218 | 1,327 | ||||||||||
Total assets | $3,053 | $2,798 | $2,946 | $3,017 | $3,239 | ||||||||||
LSV Asset Management: | |||||||||||||||
Equity and fixed-income programs (B) | $88,059 | $80,395 | $83,536 | $88,182 | $97,476 | ||||||||||
Total: | |||||||||||||||
Equity and fixed-income programs (C) | $259,238 | $238,558 | $256,145 | $268,773 | $288,946 | ||||||||||
Collective trust fund programs | 56,045 | 54,169 | 62,140 | 69,459 | 78,138 | ||||||||||
Liquidity funds | 9,992 | 14,429 | 11,382 | 10,347 | 10,775 | ||||||||||
Total assets under management | $325,275 | $307,156 | $329,667 | $348,579 | $377,859 | ||||||||||
Client assets under advisement | 4,982 | 4,510 | 4,771 | 4,964 | 5,473 | ||||||||||
Client assets under administration (D) | 679,226 | 672,831 | 738,823 | 779,718 | 821,647 | ||||||||||
Total assets | $1,009,483 | $984,497 | $1,073,261 | $1,133,261 | $1,204,979 | ||||||||||
(A) | Average client assets under administration in the Investment Managers segment during first-quarter 2021 include $53.8 billion that are at fee levels below our normal full-service assets. |
(B) | Equity and fixed-income programs include $2.2 billion of average assets managed by LSV in which fees are based on performance only during first-quarter 2021. |
(C) | Equity and fixed-income programs include $7.9 billion of average assets invested in various asset allocation funds during first-quarter 2021. |
(D) | In addition to the numbers presented, SEI also administers an additional $13.2 billion of average assets in Funds of Funds assets during first-quarter 2021 on which SEI does not earn an administration fee. |
Investor Contact: | Media Contact: |
Lindsey Opsahl | Leslie Wojcik |
SEI | SEI |
+1 610-676-4052 | +1 610-676-4191 |
SOURCE SEI Investments Company
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