OAKS, Pa., April 21, 2021 – 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.
“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
For the Three Months Ended March 31,
(In
thousands)
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%
2
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.
3
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.
(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.
7
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.
8
Dates Referenced Herein and Documents Incorporated by Reference