SEI Reports First-Quarter 2021 Financial Results
04/21/2021 - 04:01 PM
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 Ended March 31,
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 March 31,
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 Ended March 31,
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 shares issued and outstanding
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.
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SOURCE SEI Investments Company