SEI Reports Third-Quarter 2021 Financial Results

OAKS, Pa., Oct. 20, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the third-quarter 2021. Diluted earnings per share were $0.97 in third-quarter 2021 compared to $0.75 in third-quarter 2020.

Consolidated Overview
(In thousands, except earnings per share)		For the Three Months Ended September 30,								For the Nine Months   Ended September 30,
		2021			2020			%		2021			2020			%
Revenues		$485,322			$424,927			14%		$1,416,659			$1,240,335			14%
Net income		138,045			111,096			24%		401,293			321,404			25%
Diluted earnings per share		$0.97			$0.75			29%		$2.79			$2.14			30%

"Our results reflect positive markets entering the third-quarter, continued sales momentum and delivery across our business segments. As the financial services industry continues to experience unrelenting change, we continue to make strategic investments in our business, our solutions and workforce to drive growth," said Alfred P. West, Jr., SEI Chairman and CEO.

"Our talented workforce is the key to our ability to serve our clients globally and create opportunities for our future. As we look forward, we will continue to capitalize on market opportunities to deliver long-term value to our shareholders, employees, clients and communities."

Summary of Third-Quarter Results by Business Segment

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
(In thousands)
		2021			2020			%		2021			2020			%
Private Banks:
Revenues		$123,018			$114,792			7%		$364,302			$335,739			9%
Expenses		116,679			113,066			3%		345,057			331,442			4%
Operating Profit		6,339			1,726			NM		19,245			4,297			348%
Operating Margin		5	%		2	%				5	%		1	%
Investment Advisors:
Revenues		124,768			103,189			21%		357,458			299,218			19%
Expenses		62,107			51,519			21%		176,267			154,100			14%
Operating Profit		62,661			51,670			21%		181,191			145,118			25%
Operating Margin		50	%		50	%				51	%		48	%
Institutional Investors:
Revenues		85,759			79,583			8%		255,957			235,309			9%
Expenses		41,643			37,812			10%		122,696			113,016			9%
Operating Profit		44,116			41,771			6%		133,261			122,293			9%
Operating Margin		51	%		52	%				52	%		52	%
Investment Managers:
Revenues		147,412			123,846			19%		426,639			359,815			19%
Expenses		89,594			79,838			12%		257,609			228,795			13%
Operating Profit		57,818			44,008			31%		169,030			131,020			29%
Operating Margin		39	%		36	%				40	%		36	%
Investments in New Businesses:
Revenues		4,365			3,517			24%		12,303			10,254			20%
Expenses		12,820			13,315			(4)%		39,855			37,691			6%
Operating Loss		(8,455)			(9,798)			NM		(27,552)			(27,437)			NM
Totals:
Revenues		$485,322			$424,927			14%		$1,416,659			$1,240,335			14%
Expenses		322,843			295,550			9%		941,484			865,044			9%
Corporate Overhead Expenses		21,354			18,040			18%		65,192			53,414			22%
Income from Operations		$141,125			$111,337			27%		$409,983			$321,877			27%

 

Third-Quarter Business Highlights:

• Revenues from Asset management, administration, and distribution fees increased from higher assets under management and administration due to market appreciation and positive cash flows from new and existing clients.
• Average assets under administration increased $116.9 billion, or 16%, to $855.7 billion in the third-quarter 2021, as compared to $738.8 billion during the third-quarter 2020 (see attached Average Asset Balances schedules for further details).
• Average assets under management, excluding LSV, increased $53.9 billion, or 22%, to $300.0 billion in the third-quarter 2021, as compared to $246.1 billion during the third-quarter 2020 primarily due to market appreciation (see attached Average Asset Balances schedules for further details).
• Net sales events in the Private Banks and Investment Managers segments during third-quarter 2021 were $19.4 million and are expected to generate net annualized recurring revenues of approximately $15.1 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 third-quarter 2021 were $6.9 million.
• 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 increased by $6.7 million, or 24%, to $35.0 million in third-quarter 2021, as compared to $28.3 million in third-quarter 2020. The increase in earnings was primarily 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 third-quarter 2021 increased $4.9 million as compared to third-quarter 2020 due to equity awards in late 2020 and from a change in estimate of the timing of when stock-option vesting targets would be achieved.
• We capitalized $7.2 million of software development costs in third-quarter 2021 for continued enhancements to the SEI Wealth Platform^SM. Amortization expense related to SWP was $12.0 million in third-quarter 2021.
• Effective tax rates were 21.7% in third-quarter 2021 and 21.4% in third-quarter 2020.
• We repurchased 2.0 million shares of our common stock for $119.9 million during the third-quarter 2021.
• Cash flow from operations was $158.9 million, or $1.12 per share, and free cash flow was $144.6 million during the third-quarter 2021.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Oct. 20, 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: 4538998.

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 Sept. 30, 2021, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers approximately $1.3 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including approximately $392 billion in assets under management and $866 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 and the timing of such realization,
• whether we will have sales momentum,
• whether we will invest in our business, solutions, or workforce,
• our strategic priorities and commitments and the degree to which we will execute on them, and
• the degree to which we are able to capitalize on market opportunities and deliver long-term value to our shareholders, employees, clients and communities.

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 migrations, implementations and conversions,
• our ability to expand our relationships and revenue opportunities with new and existing clients,
• whether we will be able to take advantage of increasing sales demand,
• the timing of and our ability to integrate acquisition targets and the benefits we will receive from any of our acquisitions,
• the degree to which M&A activity in the industries in which we compete will affect our sales,
• the degree to which our technology is being adopted across both our existing client base and new 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, if at all,
• the strategic initiatives and business segments that we will pursue and those in which we will invest,
• the degree to which our One SEI^SM strategy will allow us to increase our growth opportunities,
• the competition for and cost of talent and the effect of these factors on our business,
• the amount of recurring sales we will generate,
• the strength of our pipelines and demand for our products and services,
• the degree to which the global COVID-19 pandemic is affecting our business,
• the momentum we may have with respect to our businesses,
• the elements of our long-term success,
• the degree to which our business will be successful and what parties will be beneficiaries of any such success,
• 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, increase or normalize,
• when we integrate purchased assets into the SEI Wealth Platform 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 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, 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 September 30,						For the Nine Months Ended September 30,
		2021			2020			2021			2020
Asset management, admin. and distribution fees		$393,296			$339,609			$1,143,451			$992,039
Information processing and software servicing fees		92,026			85,318			273,208			248,296
Total revenues		485,322			424,927			1,416,659			1,240,335
Subadvisory, distribution and other asset mgmt. costs		55,619			45,126			161,610			134,645
Software royalties and other information processing costs		7,348			6,992			20,561			21,828
Compensation, benefits and other personnel		150,188			134,795			429,188			391,607
Stock-based compensation		11,318			6,467			31,173			20,458
Consulting, outsourcing and professional fees		55,868			57,949			165,657			168,350
Data processing and computer related		26,650			24,437			79,746			71,647
Facilities, supplies and other costs		14,124			16,679			49,851			47,448
Amortization		14,674			13,200			43,749			39,417
Depreciation		8,408			7,945			25,141			23,058
Total expenses		344,197			313,590			1,006,676			918,458
Income from operations		141,125			111,337			409,983			321,877
Net (loss) gain on investments		(575)			776			134			(1,310)
Interest and dividend income		892			1,009			2,715			5,582
Interest expense		(101)			(153)			(354)			(456)
Equity in earnings of unconsolidated affiliate		35,005			28,305			103,420			86,488
Income before income taxes		176,346			141,274			515,898			412,181
Income taxes		38,301			30,178			114,605			90,777
Net income		$138,045			$111,096			$401,293			$321,404
Basic earnings per common share		$0.98			$0.76			$2.83			$2.18
Shares used to calculate basic earnings per share		140,507			145,812			141,928			147,586
Diluted earnings per common share		$0.97			$0.75			$2.79			$2.14
Shares used to calculate diluted earnings per share		142,426			147,907			143,981			149,958
Dividends declared per common share		$—			$—			$0.37			$0.35

 

SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
		September 30,			December 31,
		2021			2020
Assets
Current Assets:
Cash and cash equivalents		$793,883			$784,626
Restricted cash		351			3,101
Receivables from investment products		59,808			55,271
Receivables, net of allowance for doubtful accounts of $2,669 and $1,100		442,187			385,219
Securities owned		31,770			34,064
Other current assets		42,615			38,696
Total Current Assets		1,370,614			1,300,977
Property and Equipment, net of accumulated depreciation of $400,679 and $378,639		183,802			189,052
Operating Lease Right-of-Use Assets		35,145			38,397
Capitalized Software, net of accumulated amortization of $531,923 and $491,739		250,280			270,977
Available for Sale and Equity Securities		140,079			105,419
Investments in Affiliated Funds, at fair value		6,893			6,166
Investment in Unconsolidated Affiliate		39,872			98,433
Goodwill		64,489			64,489
Intangible Assets, net of accumulated amortization of $15,768 and $12,456		31,992			24,304
Deferred Contract Costs		34,263			33,781
Deferred Income Taxes		2,148			2,972
Other Assets, net		32,224			32,289
Total Assets		$2,191,801			$2,167,256
Liabilities and Equity
Current Liabilities:
Accounts payable		$10,772			$7,766
Accrued liabilities		231,043			299,845
Current portion of long-term operating lease liabilities		10,412			8,579
Deferred revenue		1,235			1,085
Total Current Liabilities		253,462			317,275
Long-term Income Taxes Payable		803			803
Deferred Income Taxes		47,434			55,159
Long-term Operating Lease Liabilities		29,857			34,058
Other Long-term Liabilities		22,157			20,054
Total Liabilities		353,713			427,349
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 139,305 and 143,396 shares issued and outstanding		1,393			1,434
Capital in excess of par value		1,228,085			1,190,001
Retained earnings		629,153			565,270
Accumulated other comprehensive loss, net		(20,543)			(16,798)
Total Shareholders' Equity		1,838,088			1,739,907
Total Liabilities and Shareholders' Equity		$2,191,801			$2,167,256

 

ENDING ASSET BALANCES
(In millions)  (Unaudited)
		Sept. 30,			Dec. 31			Mar. 31,			Jun. 30,			Sept. 30,
		2020			2020			2021			2021			2021
Private Banks:
Equity and fixed-income programs		$23,499			$25,498			$25,098			$26,264			$25,618
Collective trust fund programs		6			6			7			7			6
Liquidity funds		3,718			3,778			3,793			3,654			3,988
Total assets under management		$27,223			$29,282			$28,898			$29,925			$29,612
Client assets under administration		24,174			26,346			4,379			4,412			4,675
Total assets		$51,397			$55,628			$33,277			$34,337			$34,287
Investment Advisors:
Equity and fixed-income programs		$65,581			$71,247			$73,818			$78,052			$78,560
Collective trust fund programs		3			1			1			1			—
Liquidity funds		3,866			3,832			3,584			3,550			3,477
Total Platform assets under management		$69,450			$75,080			$77,403			$81,603			$82,037
Platform-only assets (E)		10,506			11,862			12,538			13,566			13,728
Total Platform assets (E)		$79,956			$86,942			$89,941			$95,169			$95,765
Institutional Investors:
Equity and fixed-income programs		$83,846			$90,869			$92,040			$93,010			$89,441
Collective trust fund programs		101			98			95			5			5
Liquidity funds		2,096			2,128			2,909			2,516			2,599
Total assets under management		$86,043			$93,095			$95,044			$95,531			$92,045
Client assets under advisement		3,618			4,063			4,333			4,566			4,698
Total assets		$89,661			$97,158			$99,377			$100,097			$96,743
Investment Managers:
Collective trust fund programs		63,277			75,214			78,304			87,012			87,488
Liquidity funds		389			424			449			473			568
Total assets under management		$63,666			$75,638			$78,753			$87,485			$88,056
Client assets under administration (A)		730,369			760,397			831,819			875,942			861,605
Total assets		$794,035			$836,035			$910,572			$963,427			$949,661
Investments in New Businesses:
Equity and fixed-income programs		$1,572			$1,711			$1,777			$1,924			$1,964
Liquidity funds		169			162			289			191			202
Total assets under management		$1,741			$1,873			$2,066			$2,115			$2,166
Client assets under advisement		1,179			1,299			1,355			1,422			1,378
Total assets		$2,920			$3,172			$3,421			$3,537			$3,544
LSV Asset Management:
Equity and fixed-income programs (B)		$82,051			$93,692			$101,565			$102,404			$97,604
Total:
Equity and fixed-income programs (C)		$256,549			$283,017			$294,298			$301,654			$293,187
Collective trust fund programs		63,387			75,319			78,407			87,025			87,499
Liquidity funds		10,238			10,324			11,024			10,384			10,834
Total assets under management		$330,174			$368,660			$383,729			$399,063			$391,520
Client assets under advisement		4,797			5,362			5,688			5,988			6,076
Client assets under administration (D)		754,543			786,743			836,198			880,354			866,280
Platform-only assets		10,506			11,862			12,538			13,566			13,728
Total assets		$1,100,020			$1,172,627			$1,238,153			$1,298,971			$1,277,604

(A)	Client assets under administration in the Investment Managers segment include $12.3 billion of assets that are at fee levels below our normal full-service assets (as of September 30, 2021).
(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 September 30, 2021).
(C)	Equity and fixed-income programs include $7.8 billion of assets invested in various asset allocation funds at September 30, 2021.
(D)	In addition to the numbers presented, SEI also administers an additional $13.7 billion in Funds of Funds assets (as of September 30, 2021) 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)
		3rd Qtr.			4th Qtr.			1st Qtr.			2nd Qtr.			3rd Qtr.
		2020			2020			2021			2021			2021
Private Banks:
Equity and fixed-income programs		$23,740			$24,284			$25,139			$26,056			$26,232
Collective trust fund programs		7			6			6			7			6
Liquidity funds		3,948			3,712			3,876			3,833			3,916
Total assets under management		$27,695			$28,002			$29,021			$29,896			$30,154
Client assets under administration		25,295			25,368			4,317			4,405			4,476
Total assets		$52,990			$53,370			$33,338			$34,301			$34,630
Investment Advisors:
Equity and fixed-income programs		$64,479			$68,396			$73,239			$76,839			$79,602
Collective trust fund programs		3			2			1			1			—
Liquidity funds		4,569			3,788			3,619			3,370			3,403
Total Platform assets under management		$69,051			$72,186			$76,859			$80,210			$83,005
Platform-only assets (E)		10,501			11,214			12,206			13,292			13,863
Total Platform assets (E)		$79,552			$83,400			$89,065			$93,502			$96,868
Institutional Investors:
Equity and fixed-income programs		$82,830			$86,277			$91,349			$93,458			$91,965
Collective trust fund programs		102			102			96			68			5
Liquidity funds		2,120			2,271			2,621			2,681			2,742
Total assets under management		$85,052			$88,650			$94,066			$96,207			$94,712
Client assets under advisement		3,565			3,746			4,146			4,516			4,658
Total assets		$88,617			$92,396			$98,212			$100,723			$99,370
Investment Managers:
Collective trust fund programs		62,028			69,349			78,035			84,553			89,441
Liquidity funds		565			411			490			469			532
Total assets under management		$62,593			$69,760			$78,525			$85,022			$89,973
Client assets under administration (A)		713,528			754,350			817,330			853,810			851,183
Total assets		$776,121			$824,110			$895,855			$938,832			$941,156
Investments in New Businesses:
Equity and fixed-income programs		$1,560			$1,634			$1,743			$1,870			$1,958
Liquidity funds		180			165			169			236			205
Total assets under management		$1,740			$1,799			$1,912			$2,106			$2,163
Client assets under advisement		1,206			1,218			1,327			1,406			1,423
Total assets		$2,946			$3,017			$3,239			$3,512			$3,586
LSV Asset Management:
Equity and fixed-income programs (B)		$83,536			$88,182			$97,476			$103,583			$99,924
Total:
Equity and fixed-income programs (C)		$256,145			$268,773			$288,946			$301,806			$299,681
Collective trust fund programs		62,140			69,459			78,138			84,629			89,452
Liquidity funds		11,382			10,347			10,775			10,589			10,798
Total assets under management		$329,667			$348,579			$377,859			$397,024			$399,931
Client assets under advisement		4,771			4,964			5,473			5,922			6,081
Client assets under administration (D)		738,823			779,718			821,647			858,215			855,659
Platform-only assets		10,501			11,214			12,206			13,292			13,863
Total assets		$1,083,762			$1,144,475			$1,217,185			$1,274,453			$1,275,534

(A)	Average client assets under administration in the Investment Managers segment during third-quarter 2021 include $12.5 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 third-quarter 2021.
(C)	Equity and fixed-income programs include $7.8 billion of average assets invested in various asset allocation funds during third-quarter 2021.
(D)	In addition to the numbers presented, SEI also administers an additional $13.6 billion of average assets in Funds of Funds assets during third-quarter 2021 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	SEI
+1 610-676-4052	+1 610-676-4191
lopsahl@seic.com	lwojcik@seic.com

 

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SOURCE SEI Investments Company