SOURCE: SEI

SEI

April 20, 2016 08:30 ET

SEI Reports First-Quarter 2016 Financial Results

OAKS, PA--(Marketwired - Apr 20, 2016) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for the first-quarter 2016. Diluted earnings per share were $.47 in first-quarter 2016 compared to $.50 in first-quarter 2015. Diluted earnings per share in first-quarter 2016 and 2015 each reflect pre-tax gains of $2.8 million, or $.01 per share, from the sale of SEI Asset Korea.

               
Consolidated Overview              
(In thousands, except earnings per share)   For the Three Months
Ended March 31,
     
    2016   2015   %  
               
Revenues   $ 334,263   $ 325,444   3 %
Net income     77,497     84,611   (8 )%
Diluted earnings per share   $ 0.47   $ 0.50   (6 )%
                   

"Our results for the first quarter reflect the growing adoption of our platform solutions across our target markets and customer bases while we manage through capital market volatility," said Alfred P. West, Jr., SEI Chairman and CEO. "SEI's sales success during the quarter is a testament to the relevance of our offerings to our clients' businesses.

"In all segments of our company, we are continuously investing in products and services that will position us well for the long term, while creating sustainable growth and increased shareholder value."

   
Summary of First-Quarter Results by Business Segment  
   
(In thousands)   For the Three Months
Ended March 31,
     
    2016   2015   %  
Private Banks:              
  Revenues   $ 113,361     $ 111,213     2 %
  Expenses     103,741       99,256     5 %
  Operating Profit     9,620       11,957     (20 )%
  Gain on sale of subsidiary     2,791       2,791     NM  
  Segment Profit     12,411       14,748     NM  
  Operating Margin (A)     8 %     11 %      
                   
Investment Advisors:                  
  Revenues     76,679       74,015     4 %
  Expenses     44,774       39,059     15 %
  Operating Profit     31,905       34,956     (9 )%
  Operating Margin     42 %     47 %      
                   
Institutional Investors:                  
  Revenues     72,897       73,548     (1 )%
  Expenses     35,382       35,211     -- %
  Operating Profit     37,515       38,337     (2 )%
  Operating Margin     51 %     52 %      
                   
Investment Managers:                  
  Revenues     69,918       65,367     7 %
  Expenses     45,275       40,623     11 %
  Operating Profit     24,643       24,744     -- %
  Operating Margin     35 %     38 %      
                   
Investments in New Businesses:                  
  Revenues     1,408       1,301     8 %
  Expenses     5,232       4,866     8 %
  Operating Loss     (3,824 )     (3,565 )   NM  
                   
Totals:                  
  Revenues   $ 334,263     $ 325,444     3 %
  Expenses     234,404       219,015     7 %
  Corporate overhead expenses     13,047       13,359     (2 )%
  Income from operations   $ 86,812     $ 93,070     (7 )%
                         
(A) Percentages determined exclusive of gain on sale of subsidiary.
   

First-Quarter Business Highlights:

  • Revenue growth in the quarter was primarily driven by higher Asset management, administration, and distribution fees from improved cash flows from new and existing clients. The market volatility occurring during the second half of 2015 and early 2016 negatively impacted our asset-based fee revenues and partially offset our revenue growth.
  • Sales events, net of client losses, during first-quarter 2016 totaled approximately $38.6 million and are expected to generate net annualized recurring revenues of approximately $33.2 million when contract values are fully realized.
  • Our average assets under management, excluding LSV, increased $8.2 billion, or five percent, to $180.7 billion, as compared to $172.5 billion during the first-quarter 2015 (see attached Average Asset Balances schedules for further details).
  • Our average assets under administration increased $20.0 billion, or five percent, to $404.7 billion in the first-quarter 2016, as compared to $384.7 billion during the first-quarter 2015 (see attached Average Asset Balances schedules for further details).
  • Information processing and software servicing fees in our Private Banks segment increased $2.7 million in the first-quarter 2016 compared to the prior year period primarily due to increased assets from new and existing clients processed on the SEI Wealth Platform(SM).
  • Our earnings from LSV decreased by $5.2 million, or 15 percent, to $29.2 million in first-quarter 2016 as compared to $34.3 million in first-quarter 2015. The decline in earnings was due to lower assets under management from unfavorable market conditions and reduced performance fees.
  • We capitalized $9.5 million and $8.0 million of software development costs in first-quarter 2016 and 2015, respectively, of which $7.6 million and $7.3 million are related to continued enhancements to the SEI Wealth Platform.
  • Amortization expense related to the SEI Wealth Platform increased to $11.0 million during the first-quarter 2016 as compared to $10.3 million during the first-quarter 2015 due to continued enhancements.
  • Although revenues increased in our Investment Advisors and Investment Managers segments, higher personnel and other operating costs mainly related to servicing new and existing clients and increased technology development spending in these segments caused operating margins to decline.
  • We recorded pre-tax gains of $2.8 million, or $.01 diluted earnings per share, from the sale of SEI Asset Korea in first-quarter 2016 and 2015.
  • Our effective tax rates were 35.2 percent in first-quarter 2016 and 35.4 percent in first-quarter 2015.
  • We repurchased 2.1 million shares of our common stock for $80.6 million during the first-quarter 2016.

Earnings Conference Call
A conference call to review earnings is scheduled for 2 p.m. Eastern time on April 20, 2016. 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 391245.

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, 2016, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $684 billion in mutual fund and pooled or separately managed assets, including $265 billion in assets under management and $419 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,
 
    2016     2015  
             
Asset management, admin. and distribution fees   $ 251,437     $ 246,768  
Information processing and software servicing fees     73,399       70,653  
Transaction-based and trade execution fees     9,427       8,023  
                 
Total revenues     334,263       325,444  
                 
Subadvisory, distribution and other asset mgmt costs     39,195       38,517  
Software royalties and other information processing costs     7,748       7,509  
Brokerage commissions     7,108       5,972  
Compensation, benefits and other personnel     101,931       94,186  
Stock-based compensation     3,789       3,750  
Consulting, outsourcing and professional fees     38,506       35,628  
Data processing and computer related     15,718       13,400  
Facilities, supplies and other costs     15,997       17,059  
Amortization     11,012       10,358  
Depreciation     6,447       5,995  
                 
Total expenses     247,451       232,374  
                 
Income from operations     86,812       93,070  
                 
Net (loss) gain on investments     (126 )     250  
Interest and dividend income     1,083       969  
Interest expense     (114 )     (113 )
Equity in earnings of unconsolidated affiliates     29,192       34,033  
Gain on sale of subsidiary     2,791       2,791  
                 
Income before income taxes     119,638       131,000  
                 
Income taxes     42,141       46,389  
                 
Net income     77,497       84,611  
                 
Basic earnings per common share   $ 0.48     $ 0.51  
                 
Shares used to calculate basic earnings per share     163,013       166,695  
                 
Diluted earnings per common share   $ 0.47     $ 0.50  
                 
Shares used to calculate diluted earnings per share     166,145       170,703  
                 
                 
                 
SEI INVESTMENTS COMPANY  
CONSOLIDATED BALANCE SHEETS  
(In thousands)  
(Unaudited)  
   
  March 31,   December 31,  
  2016   2015  
Assets        
    Current Assets:            
  Cash and cash equivalents $ 638,253   $ 679,661  
  Restricted cash   5,500     5,500  
  Receivables from investment products   51,633     48,098  
  Receivables, net   229,558     223,023  
  Securities owned   21,264     21,235  
  Other current assets   28,829     26,207  
      Total Current Assets   975,037     1,003,724  
             
  Property and Equipment, net   141,790     143,977  
  Capitalized software, net   289,044     290,522  
  Investments available for sale   78,356     81,294  
  Investments in affiliated funds, at fair value   4,183     4,039  
  Investment in unconsolidated affiliates   44,247     49,580  
  Deferred income taxes   4,117     --  
  Other assets, net   14,072     15,492  
    Total Assets $ 1,550,846   $ 1,588,628  
             
Liabilities and Equity            
    Current Liabilities:            
  Accounts payable $ 4,354   $ 4,511  
  Accrued liabilities   165,005     217,587  
  Deferred revenue   2,936     2,385  
      Total Current Liabilities   172,295     224,483  
             
  Deferred income taxes   66,410     63,028  
  Other long-term liabilities   11,676     11,397  
    Total Liabilities   250,381     298,908  
             
  Shareholders' Equity:            
    Common stock   1,619     1,637  
    Capital in excess of par value   912,506     910,513  
    Retained earnings   408,684     402,860  
    Accumulated other comprehensive loss, net   (22,344 )   (25,290 )
      Total Shareholders' Equity   1,300,465     1,289,720  
      Total Liabilities and Shareholders' Equity $ 1,550,846   $ 1,588,628  
                   
                   
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
 
    Mar. 31,   Jun. 30,   Sept. 30,   Dec 31,   Mar. 31,
    2015   2015   2015   2015   2016
Private Banks:                              
  Equity/Fixed Income programs   $ 19,296   $ 19,686   $ 18,243   $ 18,150   $ 18,370
  Collective Trust Fund programs     9     13     3     4     4
  Liquidity funds     5,551     5,280     5,469     5,835     5,521
  Total assets under management   $ 24,856   $ 24,979   $ 23,715   $ 23,989   $ 23,895
  Client assets under administration     17,643     17,485     16,896     17,532     18,324
  Total assets   $ 42,499   $ 42,464   $ 40,611   $ 41,521   $ 42,219
                               
Investment Advisors:                              
  Equity/Fixed Income programs   $ 45,800   $ 46,951   $ 43,988   $ 46,123   $ 47,357
  Collective Trust Fund programs     8     8     9     7     7
  Liquidity funds     3,047     2,817     4,677     4,924     5,051
  Total assets under management   $ 48,855   $ 49,776   $ 48,674   $ 51,054   $ 52,415
                               
Institutional Investors:                              
  Equity/Fixed Income programs   $ 74,178   $ 75,341   $ 70,818   $ 72,263   $ 73,468
  Collective Trust Fund programs     94     93     96     96     97
  Liquidity funds     3,246     2,960     2,655     2,883     2,390
  Total assets under management   $ 77,518   $ 78,394   $ 73,569   $ 75,242   $ 75,955
                               
Investment Managers:                              
  Equity/Fixed Income programs   $ 25   $ 24   $ 59   $ 66   $ 72
  Collective Trust Fund programs     20,965     20,632     19,863     32,117     32,385
  Liquidity funds     1,091     1,007     848     832     733
  Total assets under management   $ 22,081   $ 21,663   $ 20,770   $ 33,015   $ 33,190
  Client assets under administration (A)     372,116     381,963     376,133     390,282     400,579
  Total assets   $ 394,197   $ 403,626   $ 396,903   $ 423,297   $ 433,769
                               
Investments in New Businesses:                              
  Equity/Fixed Income programs   $ 756   $ 779   $ 752   $ 764   $ 803
  Liquidity funds     106     57     51     47     41
  Total assets under management   $ 862   $ 836   $ 803   $ 811   $ 844
                               
LSV Asset Management:                              
  Equity/Fixed Income programs   $ 84,123   $ 86,334   $ 76,958   $ 78,335   $ 78,390
                               
Total:                              
  Equity/Fixed Income programs (B)   $ 224,178   $ 229,115   $ 210,818   $ 215,701   $ 218,460
  Collective Trust Fund programs     21,076     20,746     19,971     32,224     32,493
  Liquidity funds     13,041     12,121     13,700     14,521     13,736
  Total assets under management   $ 258,295   $ 261,982   $ 244,489   $ 262,446   $ 264,689
                               
  Client assets under administration (C)     389,759     399,448     393,029     407,814     418,903
  Total assets   $ 648,054   $ 661,430   $ 637,518   $ 670,260   $ 683,592
                                 
(A) Client assets under administration in the Investment Managers segment include $49.2 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2016).
(B) Equity/Fixed Income programs include $4.6 billion of assets invested in various asset allocation funds at March 31, 2016.
(C) In addition to the numbers presented, SEI also administers an additional $11.2 billion in Funds of Funds assets (as of March 31, 2016) on which SEI does not earn an administration fee. Client assets under administration as of March 31, 2016 do not reflect $1.3 billion in Funds of Funds assets that were reported at December 31, 2015. 
   
   
   
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
 
    1st Qtr.   2nd Qtr.   3rd Qtr.   4th Qtr.   1st Qtr.
    2015   2015   2015   2015   2016
Private Banks:                              
  Equity/Fixed Income programs   $ 18,869   $ 19,872   $ 19,080   $ 18,603   $ 17,644
  Collective Trust Fund programs     8     12     6     3     3
  Liquidity funds     5,755     5,256     5,443     5,511     5,661
  Total assets under management   $ 24,632   $ 25,140   $ 24,529   $ 24,117   $ 23,308
  Client assets under administration     17,504     17,823     17,504     17,775     17,248
  Total assets   $ 42,136   $ 42,963   $ 42,033   $ 41,892   $ 40,556
                               
Investment Advisors:                              
  Equity/Fixed Income programs   $ 44,809   $ 47,027   $ 45,992   $ 46,044   $ 45,175
  Collective Trust Fund programs     9     8     9     8     7
  Liquidity funds     3,072     2,819     3,523     4,784     5,009
  Total assets under management   $ 47,890   $ 49,854   $ 49,524   $ 50,836   $ 50,191
                               
Institutional Investors:                              
  Equity/Fixed Income programs   $ 73,760   $ 75,426   $ 73,568   $ 72,463   $ 71,779
  Collective Trust Fund programs     95     94     93     96     98
  Liquidity funds     3,021     3,354     2,843     3,109     2,834
  Total assets under management   $ 76,876   $ 78,874   $ 76,504   $ 75,668   $ 74,711
                               
Investment Managers:                              
  Equity/Fixed Income programs   $ 27   $ 25   $ 24   $ 59   $ 66
  Collective Trust Fund programs     21,108     21,387     20,449     30,960     30,784
  Liquidity funds     1,066     1,010     978     960     832
  Total assets under management   $ 22,201   $ 22,422   $ 21,451   $ 31,979   $ 31,682
  Client assets under administration     367,206     378,347     380,247     390,080     387,421
  Total assets   $ 389,407   $ 400,769   $ 401,698   $ 422,059   $ 419,103
                               
Investments in New Businesses:                              
  Equity/Fixed Income programs   $ 755   $ 784   $ 776   $ 788   $ 757
  Liquidity funds     101     75     49     47     48
  Total assets under management   $ 856   $ 859   $ 825   $ 835   $ 805
                               
LSV Asset Management:                              
  Equity/Fixed Income programs   $ 83,439   $ 87,409   $ 80,656   $ 79,634   $ 74,699
                               
Total:                              
  Equity/Fixed Income programs   $ 221,659   $ 230,543   $ 220,096   $ 217,591   $ 210,120
  Collective Trust Fund programs     21,220     21,501     20,557     31,067     30,892
  Liquidity funds     13,015     12,514     12,836     14,411     14,384
  Total assets under management   $ 255,894   $ 264,558   $ 253,489   $ 263,069   $ 255,396
                               
  Client assets under administration (A)     384,710     396,170     397,751     407,855     404,669
  Total assets   $ 640,604   $ 660,728   $ 651,240   $ 670,924   $ 660,065
                                 
(A) Client assets under administration during first-quarter 2016 do not reflect $1.3 billion in Funds of Funds assets that were reported during fourth-quarter 2015.
   

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