SOURCE: SEI

SEI

May 02, 2012 08:30 ET

SEI Reports First-Quarter 2012 Financial Results

OAKS, PA--(Marketwire - May 2, 2012) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for first-quarter 2012. Diluted earnings per share were $.28 in first-quarter 2012 compared to $.31 in first-quarter 2011.

Consolidated Overview For the Three Months
(In thousands, except earnings per share) Ended March 31,
2012 2011 %
Revenues $ 237,898 $ 232,493 2 %
Net Income attributable to SEI 49,965 57,728 (13 %)
Diluted Earnings Per Share $ 0.28 $ 0.31 (10 %)

"Strong new sales and improving revenues over fourth-quarter 2011 drove first-quarter 2012 results," said Alfred P. West, Jr., SEI Chairman and CEO.

"Despite uncertainty in the financial markets, we are seeing buyers return to our markets. During 2012, we will continue to focus on sales results, improving productivity and service quality, and increasing profits. We are confident that the investments we are making will enable us to significantly increase shareholder value."

Summary of First-Quarter Results by Business Segment
(In thousands) For the Three Month Period
Ended March 31,
2012 2011 %
Private Banks:
Revenues $ 87,988 $ 86,709 1 %
Expenses 87,517 82,403 6 %
Operating Profit $ 471 $ 4,306 (89 %)
Operating Margin 1 % 5 %
Investment Advisors:
Revenues 49,468 48,108 3 %
Expenses 29,301 27,040 8 %
Operating Profit 20,167 21,068 (4 %)
Operating Margin 41 % 44 %
Institutional Investors:
Revenues 53,317 53,185 -
Expenses 28,100 26,953 4 %
Operating Profit 25,217 26,232 (4 %)
Operating Margin 47 % 49 %
Investment Managers:
Revenues 46,211 43,441 6 %
Expenses 30,426 27,999 9 %
Operating Profit 15,785 15,442 2 %
Operating Margin 34 % 36 %
Investments in New Businesses:
Revenues 914 1,050 (13 %)
Expenses 3,698 3,125 18 %
Operating Loss (2,784 ) (2,075 ) 34 %
Operating Margin N/A N/A
Totals:
Revenues $ 237,898 $ 232,493 2 %
Expenses 179,042 167,520 7 %
Corporate overhead expenses 11,082 10,648 4 %
Noncontrolling interest reflected in segments (315 ) (272 ) N/A
Income from operations $ 48,089 $ 54,597 (12 %)

First-Quarter Business Commentary:

  • Revenues increased in first-quarter 2012 as compared to first-quarter 2011 and to fourth-quarter 2011 due to an increase in Asset management, administrative, and distribution fee revenues from improved cash-flows and market appreciation in first-quarter 2012. Our average assets under management, excluding LSV, increased $9.6 billion, or eight percent, to $124.1 billion in the first-quarter 2012 as compared to $114.5 billion during the first-quarter 2011 (See attached Ending and Average Asset Balances schedules for further details).
  • Sales events, net of client losses, during first-quarter 2012 totaled approximately $26.1 million and are expected to generate net annualized recurring revenues of approximately $23.5 million when contract values are fully realized. These sales events resulted in an increase in sales compensation expense when compared to first-quarter 2011 of $1.8 million.
  • Total consolidated expenses in first-quarter 2012 include approximately an additional $1.8 million in fees for other asset management distribution costs and employee severance costs.
  • Net income attributable to SEI includes gains from SIV securities of $2.9 million in first-quarter 2012 compared to gains of $6.9 million in first-quarter 2011.
  • The effective tax rates were 37.2 percent in the first-quarter 2012, 37.1 percent in the first-quarter 2011 and 34.7 percent in the fourth-quarter 2011. The increase in the tax rate in the first-quarter 2012 as compared to the fourth-quarter 2011 was due to the expiration of the research and development tax credit in first-quarter 2012 and tax planning strategies which benefited the tax rate in fourth-quarter 2011.
  • In the first-quarter 2012, SEI purchased 1.8 million shares of its common stock for $37.7 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on May 2, 2012. Investors may listen to the call at www.seic.com/investors or listen at www.earnings.com, a service of Thomson Streetevents. The call may also be accessed at numerous financial services web sites including AOL and Yahoo. Investors may also listen to replays at these web sites, or by telephone at (USA) 1-877-777-1972; (International) 612-332-0636, access code 245414.

About SEI
SEI (NASDAQ: SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of March 31, 2012, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $428 billion in mutual fund and pooled or separately managed assets, including $189 billion in assets under management and $239 billion in client assets under administration. For more information, visit www.seic.com.

Many of the statements in this release may be considered "forward looking statements" and include discussions about future operations, strategies and financial results. Forward-looking statements are based upon estimates and assumptions that involve risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe our assumptions are reasonable, they could be inaccurate. Our actual future revenues and income could differ materially from our expected results. We have no obligation to publicly update or revise any forward-looking statements.

SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
2012 2011
Asset management, admin. and distribution fees $ 172,954 $ 167,504
Information processing and software servicing fees 56,200 55,824
Transaction-based and trade execution fees 8,744 9,165
Total revenues 237,898 232,493
Subadvisory, distribution and other asset mgmt costs 28,467 26,296
Software royalties and other information processing costs 6,477 7,017
Brokerage commissions 6,307 6,581
Compensation, benefits and other personnel 78,543 71,025
Stock-based compensation 4,033 3,732
Consulting, outsourcing and professional fees 26,955 25,998
Data processing and computer related 11,465 11,303
Facilities, supplies and other costs 14,508 14,102
Amortization 7,622 6,231
Depreciation 5,432 5,611
Total expenses 189,809 177,896
Income from operations 48,089 54,597
Net gain on investments 3,205 7,278
Interest and dividend income 1,487 1,544
Interest expense (161 ) (204 )
Equity in earnings of unconsolidated affiliate 27,330 28,949
Net income before income taxes 79,950 92,164
Income taxes 29,715 34,124
Net income 50,235 58,040
Less: Net income attributable to the noncontrolling interest (270 ) (312 )
Net income attributable to SEI $ 49,965 $ 57,728
Diluted earnings per common share $ 0.28 $ 0.31
Shares used to calculate diluted earnings per common share 177,668 188,495
Basic earnings per common share $ 0.28 $ 0.31
Shares used to calculate basic earnings per common share 176,348 185,787
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, 2012 December 31, 2011
Assets
Cash and short-term investments $ 388,127 $ 420,986
Restricted cash 6,000 6,000
Receivables, net 182,093 167,909
Securities owned 21,053 20,949
Other current assets 20,066 19,107
Total current assets 617,339 634,951
Property and equipment, net 136,431 129,548
Marketable securities 140,675 139,333
Capitalized software, net 311,229 309,133
Investment in unconsolidated affiliate 66,691 60,954
Other assets, net 21,261 20,640
Total assets $ 1,293,626 $ 1,294,559
Liabilities
Current liabilities $ 118,877 $ 151,073
Deferred income taxes 92,477 93,751
Other Long-term liabilities 10,832 8,276
Total SEI Investments Company shareholders' equity 1,054,544 1,025,316
Noncontrolling interest 16,896 16,143
Total Equity 1,071,440 1,041,459
Total liabilities and equity $ 1,293,626 $ 1,294,559
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
Mar. 31,
2011
Jun. 30,
2011
Sept. 30,
2011
Dec. 31,
2011
Mar. 31,
2012
Private Banks:
Equity/Fixed Income prgms. $ 14,809 $ 16,720 $ 15,442 $ 16,435 $ 17,180
Collective Trust Fund prgms. 576 504 476 450 435
Liquidity funds 5,217 4,918 5,529 5,553 5,549
Total assets under mgmt. $ 20,602 $ 22,142 $ 21,447 $ 22,438 $ 23,164
Client assets under admin. 11,227 10,994 9,845 10,355 10,916
Total assets $ 31,829 $ 33,136 $ 31,292 $ 32,793 $ 34,080
Investment Advisors:
Equity/Fixed Income prgms. $ 28,296 $ 28,410 $ 24,757 $ 26,639 $ 29,722
Collective Trust Fund prgms. 1,618 1,499 1,392 1,298 1,199
Liquidity funds 1,551 1,651 2,653 2,505 1,643
Total assets under mgmt. $ 31,465 $ 31,560 $ 28,802 $ 30,442 $ 32,564
Institutional Investors:
Equity/Fixed Income prgms. $ 51,287 $ 51,180 $ 46,259 $ 49,051 $ 54,537
Collective Trust Fund prgms. 608 482 510 492 424
Liquidity funds 3,202 3,146 3,356 3,888 3,725
Total assets under mgmt. $ 55,097 $ 54,808 $ 50,125 $ 53,431 $ 58,686
Investment Managers:
Equity/Fixed Income prgms. $ 37 $ 50 $ 64 $ 57 $ 62
Collective Trust Fund prgms. 8,841 10,372 10,896 11,255 12,781
Liquidity funds 139 179 195 152 147
Total assets under mgmt. $ 9,017 $ 10,601 $ 11,155 $ 11,464 $ 12,990
Client assets under admin. (A) 238,335 238,432 223,620 221,198 228,327
Total assets $ 247,352 $ 249,033 $ 234,775 $ 232,662 $ 241,317
Investments in New Businesses:
Equity/Fixed Income prgms. $ 598 $ 558 $ 490 $ 515 $ 568
Liquidity funds 56 41 41 37 34
Total assets under mgmt. $ 654 $ 599 $ 531 $ 552 $ 602
LSV Asset Management
Equity/Fixed Income prgms. $ 62,370 $ 60,626 $ 49,444 $ 53,712 $ 60,607
Consolidated:
Equity/Fixed Income prgms (B) $ 157,397 $ 157,544 $ 136,456 $ 146,409 $ 162,676
Collective Trust Fund prgms. 11,643 12,857 13,274 13,495 14,839
Liquidity funds 10,165 9,935 11,774 12,135 11,098
Total assets under mgmt. $ 179,205 $ 180,336 $ 161,504 $ 172,039 $ 188,613
Client assets under admin. (C) 249,562 249,426 233,465 231,553 239,243
Total assets $ 428,767 $ 429,762 $ 394,969 $ 403,592 $ 427,856
(A) Client assets under administration in the Investment Managers segment include $38.5 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2012).
(B) Equity/Fixed Income programs include $2.6 billion of assets invested in various asset allocation funds at March 31, 2012.
(C) In addition to the numbers presented, SEI also administers an additional $4.6 billion in Funds of Funds assets (as of March 31, 2012) on which SEI does not earn an administration fee.
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
1st Qtr
2011
2nd Qtr
2011
3rd Qtr
2011
4th Qtr
2011
1st Qtr
2012
Private Banks:
Equity/Fixed Income prgms. $ 14,170 $ 16,176 $ 16,592 $ 16,624 $ 17,116
Collective Trust Fund prgms. 593 543 505 464 436
Liquidity funds 5,058 4,909 5,210 5,401 5,581
Total assets under mgmt. $ 19,821 $ 21,628 $ 22,307 $ 22,489 $ 23,133
Client assets under admin. 10,921 11,114 10,364 10,290 10,211
Total assets $ 30,742 $ 32,742 $ 32,671 $ 32,779 $ 33,344
Investment Advisors:
Equity/Fixed Income prgms. $ 27,841 $ 28,502 $ 26,658 $ 26,094 $ 28,426
Collective Trust Fund prgms. 1,687 1,544 1,442 1,314 1,238
Liquidity funds 1,580 1,576 2,224 2,499 2,015
Total assets under mgmt. $ 31,108 $ 31,622 $ 30,324 $ 29,907 $ 31,679
Institutional Investors:
Equity/Fixed Income prgms. $ 50,392 $ 51,567 $ 49,115 $ 48,504 $ 52,270
Collective Trust Fund prgms. 608 554 505 500 427
Liquidity funds 3,418 3,515 3,416 3,461 3,765
Total assets under mgmt. $ 54,418 $ 55,636 $ 53,036 $ 52,465 $ 56,462
Investment Managers:
Equity/Fixed Income prgms. $ 1 $ 38 $ 52 $ 65 $ 58
Collective Trust Fund prgms. 8,288 9,560 11,292 10,773 11,983
Liquidity funds 210 165 200 219 190
Total assets under mgmt. $ 8,499 $ 9,763 $ 11,544 $ 11,057 $ 12,231
Client assets under admin. 237,376 241,423 236,953 224,633 224,547
Total assets $ 245,875 $ 251,186 $ 248,497 $ 235,690 $ 236,778
Investments in New Businesses:
Equity/Fixed Income prgms. $ 579 $ 561 $ 525 $ 515 $ 549
Liquidity funds 61 42 42 42 39
Total assets under mgmt. $ 640 $ 603 $ 567 $ 557 $ 588
LSV Asset Management
Equity/Fixed Income prgms. $ 62,212 $ 63,000 $ 54,679 $ 54,021 $ 59,200
Consolidated:
Equity/Fixed Income prgms $ 155,195 $ 159,844 $ 147,621 $ 145,823 $ 157,619
Collective Trust Fund prgms. 11,176 12,201 13,744 13,051 14,084
Liquidity funds 10,327 10,207 11,092 11,622 11,590
Total assets under mgmt. $ 176,698 $ 182,252 $ 172,457 $ 170,496 $ 183,293
Client assets under admin. 248,297 252,537 247,317 234,923 234,758
Total assets $ 424,995 $ 434,789 $ 419,774 $ 405,419 $ 418,051

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