SOURCE: SEI

SEI

April 22, 2015 08:30 ET

SEI Reports First-Quarter 2015 Financial Results

Income From Operations Increases 19 Percent

OAKS, PA--(Marketwired - Apr 22, 2015) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for the first-quarter 2015. Diluted earnings per share were $.50 in first-quarter 2015 compared to $.43 in first-quarter 2014. Diluted earnings per share for first-quarter 2015 and 2014 reflect pre-tax gains of $2.8 million, or $.01 per share, and $5.6 million, or $.02 per share, respectively, from the sale of SEI Asset Korea.

           
Consolidated Overview          
(In thousands, except earnings per share) For the Three Months Ended March 31,    
  2015   2014   %
               
Revenues $ 325,444   $ 302,386   8%
Net income   84,611     74,820   13%
Diluted earnings per share $ 0.50   $ 0.43   16%
               

"Our results for the first quarter demonstrate the success we are having in growing our company, increasing profitability, and expanding our customer base," said Alfred P. West, Jr., SEI Chairman and CEO. "SEI's business model, our ability to execute, and the completeness of our offerings enable us to manage through the mixed nature of global markets.

"Across our company, we are investing in products and services that position us well for long-term, sustainable growth as we work to meet the evolving needs of our clients and markets."

Summary of First-Quarter Results by Business Segment

         
(In thousands) For the Three Months
Ended March 31,
     
  2015     2014     %
Private Banks:                  
  Revenues $ 111,213     $ 105,179     6%
  Expenses   99,256       100,190     (1)%
  Operating Profit   11,957       4,989     140%
  Gain on sale of subsidiary   2,791       5,582     NM
  Interest income   180       --     NM
  Total Profit   14,928       10,571     NM
  Operating Margin (A)   11 %     5 %    
                   
Investment Advisors:                  
  Revenues   74,015       66,424     11%
  Expenses   39,059       34,577     13%
  Operating Profit   34,956       31,847     10%
  Operating Margin   47 %     48 %    
                   
Institutional Investors:                  
  Revenues   73,548       68,657     7%
  Expenses   35,211       34,095     3%
  Operating Profit   38,337       34,562     11%
  Operating Margin   52 %     50 %    
                   
Investment Managers:                  
  Revenues   65,367       61,008     7%
  Expenses   40,623       39,184     4%
  Operating Profit   24,744       21,824     13%
  Operating Margin   38 %     36 %    
                   
Investments in New Businesses:                  
  Revenues   1,301       1,118     16%
  Expenses   4,866       4,249     15%
  Operating Loss   (3,565 )     (3,131 )   NM
                   
Totals:                  
  Revenues $ 325,444     $ 302,386     8%
  Expenses   219,015       212,295     3%
  Corporate overhead expenses   13,359       11,699     14%
  Income from operations $ 93,070     $ 78,392     19%
                     
(A) Percentages determined exclusive of gain on sale of subsidiary and interest income.
   

First-Quarter Business Highlights:

  • 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.
  • Our average assets under management, excluding LSV, increased $14.9 billion, or nine percent, to $172.5 billion in the first-quarter 2015, as compared to $157.6 billion during the first-quarter 2014 (see attached Average Asset Balances schedules for further details).
  • Our average assets under administration increased $48.7 billion, or 14 percent, to $384.7 billion in the first-quarter 2015, as compared to $336.0 billion during the first-quarter 2014 (see attached Average Asset Balances schedules for further details).
  • Revenue growth was also driven by increased Information processing and software servicing fees in our Private Banks segment. The increase was primarily attributable to higher fees from the growth in assets processed on the SEI Wealth Platform(SM) and increased non-recurring professional services fees.
  • Sales events, net of client losses, during first-quarter 2015 totaled approximately $30.9 million and are expected to generate net annualized recurring revenues of approximately $23.6 million when contract values are fully realized.
  • Income from LSV increased $2.1 million, or seven percent, to $34.3 million in first-quarter 2015 as compared to $32.2 million in first-quarter 2014 due to an increase in assets under management and an increase in performance fees earned by LSV.
  • We recorded pre-tax gains of $2.8 million, or $.01 diluted earnings per share, and $5.6 million, or $.02 diluted earnings per share, from the sale of SEI AK in first-quarter 2015 and 2014, respectively.
  • Amortization expense related to capitalized software was $10.3 million during the first-quarter 2015 as compared to $9.2 million during the first-quarter 2014 due to continued enhancements to the SEI Wealth Platform.
  • Our effective tax rates were 35.4 percent in first-quarter 2015 and 35.9 percent in first-quarter 2014.
  • In first-quarter 2015, we repurchased 1.5 million shares of our common stock for $65.3 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 2 p.m. Eastern time on April 22, 2015. Investors may listen to the call at seic.com/investors. The call may also be accessed at many financial services websites, including Google Finance and Yahoo Finance. Investors may also listen to replays at these websites, or by telephone at (USA) 800-475-6701; (International) 320-365-3844, access code 358144.

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, 2015, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $648 billion in mutual fund and pooled or separately managed assets, including $258 billion in assets under management and $390 billion in client assets under administration. For more information, visit 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,
 
  2015     2014  
               
Asset management, admin. and distribution fees $ 246,768     $ 225,071  
Information processing and software servicing fees   70,653       69,178  
Transaction-based and trade execution fees   8,023       8,137  
               
Total revenues   325,444       302,386  
               
Subadvisory, distribution and other asset mgmt costs   38,517       34,012  
Software royalties and other information processing costs   7,509       8,553  
Brokerage commissions   5,972       5,979  
Compensation, benefits and other personnel   94,186       94,424  
Stock-based compensation   3,750       2,823  
Consulting, outsourcing and professional fees   35,628       34,933  
Data processing and computer related   13,400       12,620  
Facilities, supplies and other costs   17,059       15,852  
Amortization   10,358       9,214  
Depreciation   5,995       5,584  
               
Total expenses   232,374       223,994  
               
Income from operations   93,070       78,392  
               
Net gain on investments   250       136  
Interest and dividend income   969       777  
Interest expense   (113 )     (113 )
Equity in earnings of unconsolidated affiliates   34,033       31,891  
Gain on sale of subsidiary   2,791       5,582  
               
Income before income taxes   131,000       116,665  
               
Income taxes   46,389       41,845  
               
Net income   84,611       74,820  
               
Basic earnings per common share $ 0.51     $ 0.44  
               
Shares used to calculate basic earnings per share   166,695       169,306  
               
Diluted earnings per common share $ 0.50     $ 0.43  
               
Shares used to calculate diluted earnings per share   170,703       173,828  
               
               
               
SEI INVESTMENTS COMPANY  
BALANCE SHEETS  
(In thousands)  
(Unaudited)  
   
  March 31,     December 31,  
  2015     2014  
Assets              
  Current Assets:              
    Cash and cash equivalents $ 643,260     $ 667,446  
    Restricted cash   5,805       5,801  
    Receivables from regulated investment companies   47,006       48,393  
    Receivables, net   200,673       194,419  
    Securities owned   21,192       21,175  
    Other current assets   25,028       18,193  
      Total Current Assets   942,964       955,427  
               
  Property and Equipment, net   125,855       125,535  
  Capitalized software, net   306,728       309,040  
  Investments available for sale   74,222       77,609  
  Investments in affiliated funds, at fair value   4,454       4,523  
  Investment in unconsolidated affiliates   51,320       54,290  
  Other assets, net   16,442       16,451  
      Total Assets $ 1,521,985     $ 1,542,875  
               
Liabilities and Equity              
  Current Liabilities:              
    Accounts payable $ 6,050     $ 10,588  
    Accrued liabilities   152,227       207,429  
    Deferred income taxes, net   1,298       1,414  
    Deferred revenue   3,618       1,749  
      Total Current Liabilities   163,193       221,180  
               
  Deferred income taxes   63,742       63,755  
  Other long-term liabilities   10,791       10,327  
      Total Liabilities   237,726       295,262  
               
  Shareholders' Equity:              
    Common stock   1,661       1,667  
    Capital in excess of par value   854,995       834,615  
    Retained earnings   445,368       420,226  
    Accumulated other comprehensive loss, net   (17,765 )     (8,895 )
      Total Shareholders' Equity   1,284,259       1,247,613  
      Total Liabilities and Shareholders' Equity $ 1,521,985     $ 1,542,875  
                     
                     
                     
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
 
  Mar. 31,   Jun. 30,   Sept. 30,   Dec 31,   Mar. 31,
  2014   2014   2014   2014   2015
Private Banks:                            
  Equity/Fixed Income programs $ 16,918   $ 18,679   $ 18,634   $ 18,666   $ 19,296
  Collective Trust Fund programs   14     12     11     8     9
  Liquidity funds   5,670     5,274     5,331     5,889     5,551
  Total assets under management $ 22,602   $ 23,965   $ 23,976   $ 24,563   $ 24,856
  Client assets under administration   15,641     15,347     16,288     16,741     17,643
  Total assets $ 38,243   $ 39,312   $ 40,264   $ 41,304   $ 42,499
                             
Investment Advisors:                            
  Equity/Fixed Income programs $ 39,981   $ 42,125   $ 42,260   $ 43,845   $ 45,800
  Collective Trust Fund programs   13     13     9     9     8
  Liquidity funds   2,802     2,696     3,086     3,173     3,047
  Total assets under management $ 42,796   $ 44,834   $ 45,355   $ 47,027   $ 48,855
                             
Institutional Investors:                            
  Equity/Fixed Income programs $ 69,194   $ 71,598   $ 72,006   $ 72,828   $ 74,178
  Collective Trust Fund programs   102     100     98     95     94
  Liquidity funds   2,505     2,414     2,891     2,929     3,246
  Total assets under management $ 71,801   $ 74,112   $ 74,995   $ 75,852   $ 77,518
                             
Investment Managers:                            
  Equity/Fixed Income programs $ 68   $ 64   $ 64   $ 27   $ 25
  Collective Trust Fund programs   22,633     22,598     21,297     20,833     20,965
  Liquidity funds   782     802     1,018     946     1,091
  Total assets under management $ 23,483   $ 23,464   $ 22,379   $ 21,806   $ 22,081
  Client assets under administration (A)   326,735     337,492     346,841     355,890     372,116
  Total assets $ 350,218   $ 360,956   $ 369,220   $ 377,696   $ 394,197
                             
Investments in New Businesses:                            
  Equity/Fixed Income programs $ 632   $ 659   $ 703   $ 736   $ 756
  Liquidity funds   49     38     118     98     106
  Total assets under management $ 681   $ 697   $ 821   $ 834   $ 862
                             
LSV Asset Management:                            
  Equity/Fixed Income programs $ 77,973   $ 82,026   $ 81,536   $ 82,665   $ 84,123
                             
Total:                            
  Equity/Fixed Income programs (B) $ 204,766   $ 215,151   $ 215,203   $ 218,767   $ 224,178
  Collective Trust Fund programs   22,762     22,723     21,415     20,945     21,076
  Liquidity funds   11,808     11,224     12,444     13,035     13,041
  Total assets under management $ 239,336   $ 249,098   $ 249,062   $ 252,747   $ 258,295
                             
  Client assets under administration (C)   342,376     352,839     363,129     372,631     389,759
  Total assets $ 581,712   $ 601,937   $ 612,191   $ 625,378   $ 648,054
   
(A) Client assets under administration in the Investment Managers segment include $48.9 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2015).
(B) Equity/Fixed Income programs include $5.3 billion of assets invested in various asset allocation funds at March 31, 2015.
(C) In addition to the numbers presented, SEI also administers an additional $6.7 billion in Funds of Funds assets (as of March 31, 2015) 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.
  2014   2014   2014   2014   2015
Private Banks:                            
  Equity/Fixed Income programs $ 16,114   $ 17,829   $ 18,804   $ 18,606   $ 18,869
  Collective Trust Fund programs   14     12     12     10     8
  Liquidity funds   5,757     5,429     5,466     5,537     5,755
  Total assets under management $ 21,885   $ 23,270   $ 24,282   $ 24,153   $ 24,632
  Client assets under administration   15,366     15,069     15,707     16,451     17,504
  Total assets $ 37,251   $ 38,339   $ 39,989   $ 40,604   $ 42,136
                             
Investment Advisors:                            
  Equity/Fixed Income programs $ 39,005   $ 40,887   $ 42,389   $ 43,104   $ 44,809
  Collective Trust Fund programs   13     13     11     9     9
  Liquidity funds   2,806     2,637     2,830     3,087     3,072
  Total assets under management $ 41,824   $ 43,537   $ 45,230   $ 46,200   $ 47,890
                             
Institutional Investors:                            
  Equity/Fixed Income programs $ 67,697   $ 70,706   $ 72,010   $ 72,771   $ 73,760
  Collective Trust Fund programs   103     134     98     96     95
  Liquidity funds   2,571     2,664     2,883     2,973     3,021
  Total assets under management $ 70,371   $ 73,504   $ 74,991   $ 75,840   $ 76,876
                             
Investment Managers:                            
  Equity/Fixed Income programs $ 68   $ 68   $ 64   $ 64   $ 27
  Collective Trust Fund programs   22,004     22,447     22,123     21,140     21,108
  Liquidity funds   738     824     962     904     1,066
  Total assets under management $ 22,810   $ 23,339   $ 23,149   $ 22,108   $ 22,201
  Client assets under administration   320,644     333,373     344,661     355,903     367,206
  Total assets $ 343,454   $ 356,712   $ 367,810   $ 378,011   $ 389,407
                             
Investments in New Businesses:                            
  Equity/Fixed Income programs $ 623   $ 640   $ 688   $ 731   $ 755
  Liquidity funds   46     43     139     97     101
  Total assets under management $ 669   $ 683   $ 827   $ 828   $ 856
                             
LSV Asset Management:                            
  Equity/Fixed Income programs $ 76,306   $ 79,866   $ 82,402   $ 83,187   $ 83,439
                             
Total:                            
  Equity/Fixed Income programs $ 199,813   $ 209,996   $ 216,357   $ 218,463   $ 221,659
  Collective Trust Fund programs   22,134     22,606     22,244     21,255     21,220
  Liquidity funds   11,918     11,597     12,280     12,598     13,015
  Total assets under management $ 233,865   $ 244,199   $ 250,881   $ 252,316   $ 255,894
                             
  Client assets under administration   336,010     348,442     360,368     372,354     384,710
  Total assets $ 569,875   $ 592,641   $ 611,249   $ 624,670   $ 640,604

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