SOURCE: SEI

SEI

April 23, 2014 08:30 ET

SEI Reports First-Quarter 2014 Financial Results

SEI Approves Increase in Stock Repurchase Program

OAKS, PA--(Marketwired - Apr 23, 2014) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for the first-quarter 2014. Diluted earnings per share were $.43 in first-quarter 2014 compared to $.41 in first-quarter 2013. Diluted earnings per share reflect pre-tax gains of $5.6 million, or $.02 per share, and $22.1 million, or $.08 per share, from the sale of SEI Asset Korea, in the first-quarter 2014 and 2013, respectively.

In addition, on Tuesday, April 22, 2014, SEI's Board of Directors approved an increase in its stock repurchase program by an additional $200 million, increasing the available authorization under the program to approximately $212 million.

           
Consolidated Overview   For the Three Months      
(In thousands, except earnings per share)   Ended March 31,      
    2014   2013   %  
                   
Revenues   $ 302,386   $ 271,879   11 %
Net income attributable to SEI     74,820     71,920   4 %
Diluted earnings per share   $ 0.43   $ 0.41   5 %
                   

"First quarter results reflect continued progress across our company both in terms of financial results and the expanding market acceptance of our solutions," said Alfred P. West, Jr., SEI Chairman and CEO. "The continued implementation of our integrated business solutions contributed to increased assets under administration and assets under management during the quarter.

"These results reinforce our commitment to the implementation of SEI's long-term market strategies. We continue to invest in solutions we feel position us well for long-term success, sustainable growth, and increased shareholder value."

Summary of First-Quarter Results by Business Segment

             
(In thousands)   For the Three Months Ended March 31,        
    2014     2013     %  
Private Banks:                      
  Revenues   $ 105,179     $ 98,746     7 %
  Expenses     100,190       96,298     4 %
  Operating Profit     4,989       2,448     104 %
  Gain on sale of subsidiary     5,582       22,112     NM  
  Total Profit     10,571       24,560     NM  
  Operating Margin (A)     5 %     2 %      
                       
Investment Advisors:                      
  Revenues     66,424       55,191     20 %
  Expenses     34,577       31,625     9 %
  Operating Profit     31,847       23,566     35 %
  Operating Margin     48 %     43 %      
                       
Institutional Investors:                      
  Revenues     68,657       63,162     9 %
  Expenses     34,095       31,509     8 %
  Operating Profit     34,562       31,653     9 %
  Operating Margin     50 %     50 %      
                       
Investment Managers:                      
  Revenues     61,008       53,820     13 %
  Expenses     39,184       35,162     11 %
  Operating Profit     21,824       18,658     17 %
  Operating Margin     36 %     35 %      
                       
Investments in New Businesses:                      
  Revenues     1,118       960     16 %
  Expenses     4,249       3,738     14 %
  Operating Loss     (3,131 )     (2,778 )   NM  
                       
Totals:                      
  Revenues   $ 302,386     $ 271,879     11 %
  Expenses     212,295       198,332     7 %
  Corporate overhead expenses     11,699       13,794     (15 )%
  Noncontrolling interest reflected in segments     -       (289 )   NM  
  Income from operations   $ 78,392     $ 60,042     31 %
(A)   Percentages determined exclusive of gain on sale of subsidiary.
     

First-Quarter Business Highlights:

  • Revenues increased in first-quarter 2014 as compared to both first-quarter 2013 and fourth-quarter 2013. Revenue growth was primarily driven by higher Asset management, administration, and distribution fees from market appreciation and improved cash flows from new and existing clients.
  • Sales events, net of client losses, during first-quarter 2014 totaled approximately $23.1 million and are expected to generate net annualized recurring revenues of approximately $21.9 million when contract values are fully realized.
  • Our average assets under management, excluding LSV, increased $12.6 billion, or nine percent, to $157.6 billion in the first-quarter 2014, as compared to $145.0 billion during the first-quarter 2013, and increased $5.9 billion, or four percent, as compared to $151.7 billion during the fourth-quarter 2013. Average asset balances for the first-quarter 2013 include $7.0 billion in assets related to SEI Asset Korea (SEI AK), which was sold in first-quarter 2013 (see attached Ending and Average Asset Balances schedules for further details).
  • Our average assets under administration increased $60.1 billion, or 22 percent, to $336.0 billion in the first-quarter 2014, as compared to $275.9 billion during the first-quarter 2013, and increased $18.2 billion, or six percent, as compared to $317.8 billion during the fourth-quarter 2013 (see attached Ending and Average Asset Balances schedules for further details).
  • We recorded pre-tax gains of $5.6 million, or $.02 diluted earnings per share, and $22.1 million, or $.08 diluted earnings per share, from the sale of SEI AK in first-quarter 2014 and 2013, respectively. The operating results of SEI AK were included in the Private Banks business segment.
  • Income from LSV increased in first-quarter 2014 to $32.2 million as compared to $27.8 million in first-quarter 2013 due to an increase in assets under management from market appreciation and an increase in performance fees earned by LSV. Our ownership interest in LSV was approximately 39.3 percent in first-quarter 2014 and 39.8 percent in first-quarter 2013.
  • Amortization expense related to capitalized software increased to $9.2 million during the first-quarter 2014 as compared to $8.2 million during the first-quarter 2013 due to continued releases of the SEI Wealth Platform(SM).
  • The effective tax rates were 35.9 percent in first-quarter 2014, 34.9 percent in first-quarter 2013, and 35.2 percent in fourth-quarter 2013. Due to the expiration of the research and development tax credit on December 31, 2013, the first-quarter 2014 tax rate reflects no benefit for the tax credit, whereas the first-quarter 2013 tax rate reflects the benefit for 2012 and 2013. The increase in our tax rate was partially offset by an increase in the portion of pre-tax income in certain foreign jurisdictions which is taxed at a lower rate during the first-quarter 2014.
  • In first-quarter 2014, we repurchased 2.0 million shares of our common stock for $69.0 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 1:00 p.m. ET on April 23, 2014. Investors may listen to the call at www.seic.com/investors. The call may also be accessed at the financial services sections of numerous web sites, including Google Finance and Yahoo Finance. Investors may also listen to replays at these web sites, or by telephone at (USA) 1-800-475-6701; (International) 320-365-3844, access code 324787.

About SEI
SEI (NASDAQ: SEIC) is a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of March 31, 2014, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $582 billion in mutual fund and pooled or separately managed assets, including $239 billion in assets under management and $343 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)
 
    For the Three Months Ended March 31,  
    2014     2013  
                 
Asset management, admin. and distribution fees   $ 225,071     $ 198,633  
Information processing and software servicing fees     69,178       64,532  
Transaction-based and trade execution fees     8,137       8,714  
                 
Total revenues     302,386       271,879  
                 
Subadvisory, distribution and other asset mgmt costs     34,012       27,934  
Software royalties and other information processing costs     8,553       7,487  
Brokerage commissions     5,979       6,512  
Compensation, benefits and other personnel     94,424       88,610  
Stock-based compensation     2,823       5,293  
Consulting, outsourcing and professional fees     34,933       31,849  
Data processing and computer related     12,620       12,058  
Facilities, supplies and other costs     15,852       18,148  
Amortization     9,214       8,242  
Depreciation     5,584       5,704  
                 
Total expenses     223,994       211,837  
                 
Income from operations     78,392       60,042  
                 
Net gain on investments     136       280  
Interest and dividend income     777       1,053  
Interest expense     (113 )     (113 )
Equity in earnings of unconsolidated affiliates     31,891       27,588  
Gain on sale of subsidiary     5,582       22,112  
                 
Income before income taxes     116,665       110,962  
                 
Income taxes     41,845       38,692  
                 
Net income     74,820       72,270  
                 
Less: Net income attributable to the noncontrolling interest     -       (350 )
                 
Net income attributable to SEI   $ 74,820     $ 71,920  
                 
Basic earnings per common share   $ 0.44     $ 0.42  
                 
Shares used to calculate basic earnings per share     169,306       172,598  
                 
Diluted earnings per common share   $ 0.43     $ 0.41  
                 
Shares used to calculate diluted earnings per share     173,828       176,005  
                 
                 
 
SEI INVESTMENTS COMPANY
BALANCE SHEETS
(In thousands)
(Unaudited)
 
    March 31,   December 31,
    2014   2013
Assets            
  Current Assets:            
    Cash and cash equivalents   $ 545,552   $ 578,273
    Restricted cash     5,500     5,500
    Receivables from regulated investment companies     43,272     39,364
    Receivables, net     207,724     186,664
    Securities owned     21,153     21,133
    Other current assets     19,432     16,166
      Total Current Assets     842,633     847,100
               
  Property and equipment, net     121,039     118,995
  Capitalized software, net     312,866     312,615
  Investments available for sale     81,660     83,323
  Trading securities     4,914     4,849
  Investment in unconsolidated affiliates     61,756     61,370
  Other assets, net     14,113     10,917
      Total Assets   $ 1,438,981   $ 1,439,169
             
Liabilities and Equity            
  Current Liabilities:            
    Accounts payable   $ 8,373   $ 16,235
    Accrued liabilities     141,664     188,123
    Deferred income taxes, net     1,604     1,653
    Deferred revenue     2,078     1,977
      Total Current Liabilities     153,719     207,988
               
  Deferred income taxes     71,578     66,572
  Other long-term liabilities     9,312     8,607
      Total Liabilities     234,609     283,167
               
  Shareholders' Equity:            
    Common stock     1,691     1,692
    Capital in excess of par value     758,645     721,219
    Retained earnings     444,022     431,604
    Accumulated other comprehensive income, net     14     1,487
      Total Shareholders' Equity     1,204,372     1,156,002
      Total Liabilities and Shareholders' Equity   $ 1,438,981   $ 1,439,169
             
             
 
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
 
    Mar. 31,   Jun. 30,   Sept. 30,   Dec 31,   Mar. 31,
    2013   2013   2013   2013   2014
Private Banks:                              
  Equity/Fixed Income programs   $ 12,446   $ 12,876   $ 14,305   $ 15,472   $ 16,918
  Collective Trust Fund programs     9     10     11     14     14
  Liquidity funds     5,143     5,048     5,167     5,685     5,670
  Total assets under management   $ 17,598   $ 17,934   $ 19,483   $ 21,171   $ 22,602
  Client assets under administration     12,970     13,122     14,101     15,272     15,641
  Total assets   $ 30,568   $ 31,056   $ 33,584   $ 36,443   $ 38,243
                               
Investment Advisors:                              
  Equity/Fixed Income programs   $ 34,166   $ 34,447   $ 36,203   $ 38,574   $ 39,981
  Collective Trust Fund programs     15     14     14     11     13
  Liquidity funds     2,094     2,145     2,779     2,846     2,802
  Total assets under management   $ 36,275   $ 36,606   $ 38,996   $ 41,431   $ 42,796
                               
Institutional Investors:                              
  Equity/Fixed Income programs   $ 64,214   $ 61,927   $ 64,429   $ 66,548   $ 69,194
  Collective Trust Fund programs     101     106     107     109     102
  Liquidity funds     2,810     2,901     3,125     2,644     2,505
  Total assets under management   $ 67,125   $ 64,934   $ 67,661   $ 69,301   $ 71,801
                               
Investment Managers:                              
  Equity/Fixed Income programs   $ 73   $ 75   $ 75   $ 69   $ 68
  Collective Trust Fund programs     17,656     18,197     19,868     22,377     22,633
  Liquidity funds     522     542     678     718     782
  Total assets under management   $ 18,251   $ 18,814   $ 20,621   $ 23,164   $ 23,483
  Client assets under administration (A)     275,632     289,807     295,959     311,992     326,735
  Total assets   $ 293,883   $ 308,621   $ 316,580   $ 335,156   $ 350,218
                               
Investments in New Businesses:                              
  Equity/Fixed Income programs   $ 552   $ 572   $ 594   $ 619   $ 632
  Liquidity funds     42     29     26     46     49
  Total assets under management   $ 594   $ 601   $ 620   $ 665   $ 681
                               
LSV Asset Management:                              
  Equity/Fixed Income programs   $ 64,958   $ 65,417   $ 71,149   $ 76,189   $ 77,973
                               
Total:                              
  Equity/Fixed Income programs (B)   $ 176,409   $ 175,314   $ 186,755   $ 197,471   $ 204,766
  Collective Trust Fund programs     17,781     18,327     20,000     22,511     22,762
  Liquidity funds     10,611     10,665     11,775     11,939     11,808
  Total assets under management   $ 204,801   $ 204,306   $ 218,530   $ 231,921   $ 239,336
                                 
  Client assets under administration (C)     288,602     302,929     310,060     327,264     342,376
  Total assets   $ 493,403   $ 507,235   $ 528,590   $ 559,185   $ 581,712
(A)   Client assets under administration in the Investment Managers segment include $51.3 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2014).
(B)   Equity/Fixed Income programs include $4.7 billion of assets invested in various asset allocation funds at March 31, 2014.
(C)   In addition to the numbers presented, SEI also administers an additional $6.2 billion in Funds of Funds assets (as of March 31, 2014) on which SEI does not earn an administration fee.
     
     
 
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
 
    1st Qtr.   2nd Qtr.   3rd Qtr.   4th Qtr.   1st Qtr.
    2013   2013   2013   2013   2014
Private Banks:                              
  Equity/Fixed Income programs   $ 19,197   $ 12,959   $ 13,696   $ 14,901   $ 16,114
  Collective Trust Fund programs     11     10     11     11     14
  Liquidity funds     5,556     5,093     5,142     5,218     5,757
  Total assets under management   $ 24,764   $ 18,062   $ 18,849   $ 20,130   $ 21,885
  Client assets under administration     12,860     13,183     13,760     14,702     15,366
  Total assets   $ 37,624   $ 31,245   $ 32,609   $ 34,832   $ 37,251
                               
Investment Advisors:                              
  Equity/Fixed Income programs   $ 33,189   $ 34,831   $ 35,618   $ 37,520   $ 39,005
  Collective Trust Fund programs     14     14     14     13     13
  Liquidity funds     2,085     2,028     2,520     2,785     2,806
  Total assets under management   $ 35,288   $ 36,873   $ 38,152   $ 40,318   $ 41,824
                               
Institutional Investors:                              
  Equity/Fixed Income programs   $ 63,642   $ 63,466   $ 63,153   $ 65,750   $ 67,697
  Collective Trust Fund programs     101     105     107     110     103
  Liquidity funds     2,960     2,975     3,091     2,720     2,571
  Total assets under management   $ 66,703   $ 66,546   $ 66,351   $ 68,580   $ 70,371
                               
Investment Managers:                              
  Equity/Fixed Income programs   $ 68   $ 75   $ 76   $ 75   $ 68
  Collective Trust Fund programs     17,129     18,205     19,259     21,345     22,004
  Liquidity funds     511     500     613     592     738
  Total assets under management   $ 17,708   $ 18,780   $ 19,948   $ 22,012   $ 22,810
  Client assets under administration     263,054     286,018     292,627     303,131     320,644
  Total assets   $ 280,762   $ 304,798   $ 312,575   $ 325,143   $ 343,454
                               
Investments in New Businesses:                              
  Equity/Fixed Income programs   $ 542   $ 567   $ 584   $ 613   $ 623
  Liquidity funds     38     34     27     33     46
  Total assets under management   $ 580   $ 601   $ 611   $ 646   $ 669
                               
LSV Asset Management:                              
  Equity/Fixed Income programs   $ 63,997   $ 66,781   $ 69,463   $ 75,240   $ 76,306
                               
Total:                              
  Equity/Fixed Income programs (A)   $ 180,635   $ 178,679   $ 182,590   $ 194,099   $ 199,813
  Collective Trust Fund programs     17,255     18,334     19,391     21,479     22,134
  Liquidity funds     11,150     10,630     11,393     11,348     11,918
  Total assets under management   $ 209,040   $ 207,643   $ 213,374   $ 226,926   $ 233,865
                                 
  Client assets under administration     275,914     299,201     306,387     317,833     336,010
  Total assets   $ 484,954   $ 506,844   $ 519,761   $ 544,759   $ 569,875
(A)   Equity/Fixed Income programs in the Private Banks segment for first-quarter 2013 includes $7.0 billion in assets related to SEI Asset Korea, which was sold in first-quarter 2013.

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