SOURCE: SEI

SEI

January 29, 2014 08:30 ET

SEI Reports Fourth-Quarter 2013 Financial Results

OAKS, PA--(Marketwired - Jan 29, 2014) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for the fourth-quarter 2013. Diluted earnings per share were $.37 in fourth-quarter 2013 compared to $.32 in fourth-quarter 2012. 

                     
Consolidated Overview                            
(In thousands, except earnings per share)   For the Three Months Ended December 31,     For the Twelve Months Ended December 31,  
    2013   2012   %     2013   2012   %  
                                     
Revenues   $ 299,024   $ 261,635   14 %   $ 1,126,132   $ 992,522   13 %
Net Income attributable to SEI     65,515     56,585   16 %     288,124     206,848   39 %
Diluted Earnings Per Share   $ 0.37   $ 0.32   16 %   $ 1.64   $ 1.18   39 %
                                     

"Improvement across all of our businesses continued during the fourth quarter both in our financial results, as well as the continued market acceptance of our solutions," said Alfred P. West, Jr., SEI Chairman and CEO. "We enter 2014 a stronger company thanks to the commitment of our clients and dedicated employees. The investments we have made in our products and services coupled with the strategic role we play in our selected markets sets us up well for the future.

"As always, our focus on creating long-term sustainable growth and increased shareholder value is unwavering."

Summary of Fourth-Quarter and Year to Date Results by Business Segment

                   
(In thousands)   For the Three Months Ended December 31,     For the Twelve Months Ended December 31,        
   
    2013     2012     %     2013     2012     %  
Private Banks:                                            
Revenues   $ 105,880     $ 96,421     10 %   $ 397,138     $ 364,788     9 %
Expenses     102,767       93,389     10 %     392,399       357,001     10 %
Operating Profit     3,113       3,032     3 %     4,739       7,787     (39 )%
Gain on sale of subsidiary     --       --     --       22,112       --     NM  
Total Profit     3,113       3,032     3 %     26,851       7,787     NM  
Operating Margin (A)     3 %     3 %           1 %     2 %      
                                             
Investment Advisors:                                            
Revenues     65,384       52,476     25 %     241,252       202,703     19 %
Expenses     35,671       31,706     13 %     133,962       120,146     11 %
Operating Profit     29,713       20,770     43 %     107,290       82,557     30 %
Operating Margin     45 %     40 %           44 %     41 %      
                                             
Institutional Investors:                                            
Revenues     67,273       60,596     11 %     257,658       227,889     13 %
Expenses     35,623       30,052     19 %     133,218       116,546     14 %
Operating Profit     31,650       30,544     4 %     124,440       111,343     12 %
Operating Margin     47 %     50 %           48 %     49 %      
                                             
Investment Managers:                                            
Revenues     59,539       51,249     16 %     226,081       193,484     17 %
Expenses     39,545       34,814     14 %     148,977       127,525     17 %
Operating Profit     19,994       16,435     22 %     77,104       65,959     17 %
Operating Margin     34 %     32 %           34 %     34 %      
                                             
Investments in New Businesses:                                            
Revenues     948       893     6 %     4,003       3,658     9 %
Expenses     3,949       3,874     2 %     15,723       14,954     5 %
Operating Loss     (3,001 )     (2,981 )   NM       (11,720 )     (11,296 )   NM  
                                             
Totals:                                            
Revenues   $ 299,024     $ 261,635     14 %   $ 1,126,132     $ 992,522     13 %
Expenses     217,555       193,835     12 %     824,279       736,172     12 %
Corporate overhead expenses     13,014       11,929     9 %     53,733       45,759     17 %
  Noncontrolling interest reflected in segments     --       (318 )   NM       (289 )     (975 )   NM  
Income from operations   $ 68,455     $ 56,189     22 %   $ 248,409     $ 211,566     17 %
                                             
(A) Percentage determined exclusive of gain on sale of subsidiary.  
                                             

Fourth-Quarter Business Commentary:

  • Revenues increased in fourth-quarter 2013 as compared to both fourth-quarter 2012 and third-quarter 2013. Revenue growth was primarily driven by higher Asset management, administration, and distribution fees from improved cash flows from new and existing clients and market appreciation. 
  • Our average assets under management, excluding LSV, increased $13.2 billion, or ten percent, to $151.7 billion in the fourth-quarter 2013, as compared to $138.5 billion during the fourth-quarter 2012, and increased $7.8 billion, or five percent, as compared to $143.9 billion during the third-quarter 2013. Average asset balances for the fourth-quarter 2012 include $6.8 billion in assets related to SEI Asset Korea, which was sold in first-quarter 2013 (see attached Ending and 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 attributable to new business, higher one-time project revenue from new and existing bank clients, and increased fees earned from our mutual fund trading solution.
  • Sales events, net of client losses, during fourth-quarter 2013 totaled approximately $21.1 million and are expected to generate net annualized recurring revenues of approximately $17.3 million when contract values are fully realized.
  • Income from LSV increased in fourth-quarter 2013 to $32.1 million as compared to $25.0 million in fourth-quarter 2012 due to an increase in assets under management. Our ownership interest in LSV was approximately 39.3 percent in fourth-quarter 2013 and 39.8 percent in fourth-quarter 2012.
  • Net income attributable to SEI in fourth-quarter 2012 included a gain of $5.3 million from the sale of our last remaining SIV security, the senior notes issued by Gryphon.
  • Stock-based compensation expense in fourth-quarter 2013 increased by $6.9 million as compared to fourth-quarter 2012. This incremental expense reflects a change in our estimate of the timing of when stock option vesting targets will be achieved. The Private Banks segment recognized $2.0 million of this incremental expense. The Investment Advisors, Institutional Investors, and Investment Managers segments each recognized approximately $1.2 million in expense. 
  • Corporate overhead costs increased in fourth-quarter 2013 as compared to fourth-quarter 2012 primarily due to $1.2 million in increased stock-based compensation expense.
  • The effective tax rates were 35.2 percent in fourth-quarter 2013, 35.0 percent in fourth-quarter 2012, and 28.5 percent in third-quarter 2013. The third-quarter 2013 tax rate was benefited by Pennsylvania Tax Law changes that resulted in a reduction of the deferred tax liability which had accumulated during prior years.
  • In fourth-quarter 2013, we repurchased 1.9 million shares of our common stock for $64.7 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 p.m. ET on January 29, 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 317077.

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 December 31, 2013, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $559 billion in mutual fund and pooled or separately managed assets, including $232 billion in assets under management and $327 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 December 31,  
    2013     2012  
                 
Asset management, admin. and distribution fees   $ 220,585     $ 190,980  
Information processing and software servicing fees     70,085       61,835  
Transaction-based and trade execution fees     8,354       8,820  
                 
Total revenues     299,024       261,635  
                 
Subadvisory, distribution and other asset mgmt costs     33,194       26,606  
Software royalties and other information processing costs     8,343       7,385  
Brokerage commissions     6,358       6,406  
Compensation, benefits and other personnel     92,817       90,441  
Stock-based compensation     10,868       3,959  
Consulting, outsourcing and professional fees     32,732       29,230  
Data processing and computer related     14,373       11,744  
Facilities, supplies and other costs     17,333       16,067  
Amortization     9,104       7,845  
Depreciation     5,447       5,763  
                 
Total expenses     230,569       205,446  
                 
Income from operations     68,455       56,189  
                 
Net gain on investments     21       6,490  
Interest and dividend income     828       1,279  
Interest expense     (113 )     (115 )
Equity in earnings of unconsolidated affiliates     31,872       23,701  
                 
Net income before income taxes     101,063       87,544  
                 
Income taxes     35,548       30,570  
                 
Net income     65,515       56,974  
                 
Less: Net income attributable to the noncontrolling interest     --       (389 )
                 
Net income attributable to SEI   $ 65,515     $ 56,585  
                 
Diluted earnings per common share   $ 0.37     $ 0.32  
                 
Shares used to calculate diluted earnings per share     174,766       174,540  
                 
Basic earnings per common share   $ 0.39     $ 0.33  
                 
Shares used to calculate basic earnings per share     170,113       172,574  
                 
                 
                 
SEI INVESTMENTS COMPANY  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
(Unaudited)  
   
    For the Twelve Months Ended December 31,  
    2013     2012  
                 
Asset management, admin. and distribution fees   $ 831,720     $ 723,630  
Information processing and software servicing fees     261,691       236,190  
Transaction-based and trade execution fees     32,721       32,702  
                 
Total revenues     1,126,132       992,522  
                 
Subadvisory, distribution and other asset mgmt costs     121,989       106,048  
Software royalties and other information processing costs     31,255       26,722  
Brokerage commissions     24,649       23,889  
Compensation, benefits and other personnel     357,453       335,296  
Stock-based compensation     37,865       15,736  
Consulting, outsourcing and professional fees     131,399       109,828  
Data processing and computer related     51,401       46,617  
Facilities, supplies and other costs     64,613       60,976  
Amortization     34,602       33,258  
Depreciation     22,497       22,586  
                 
Total expenses     877,723       780,956  
                 
Income from operations     248,409       211,566  
                 
Net gain on investments     659       14,067  
Interest and dividend income     3,248       5,696  
Interest expense     (535 )     (504 )
Equity in earnings of unconsolidated affiliates     118,076       98,671  
Gain on sale of subsidiary     22,112       --  
Other income     43,429       --  
                 
Net income before income taxes     435,398       329,496  
                 
Income taxes     146,924       121,462  
                 
Net income     288,474       208,034  
                 
Less: Net income attributable to the noncontrolling interest     (350 )     (1,186 )
                 
Net income attributable to SEI   $ 288,124     $ 206,848  
                 
Diluted earnings per common share   $ 1.64     $ 1.18  
                 
Shares used to calculate diluted earnings per share     175,718       175,872  
                 
Basic earnings per common share   $ 1.68     $ 1.19  
                 
Shares used to calculate basic earnings per share     171,561       174,295  
                 
                 
                 
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
 
    December 31,   December 31,
    2013   2012
Assets            
             
Cash and short-term investments   $ 578,273   $ 452,247
Restricted cash     5,500     6,000
Receivables, net     226,028     202,818
Securities owned     21,133     20,088
Other current assets     16,166     20,251
             
Total current assets     847,100     701,404
             
Property and equipment, net     118,995     127,581
Investments available for sale     83,323     75,869
Trading securities     4,849     5,909
Capitalized software, net     312,615     307,490
Investment in unconsolidated affiliates     61,370     77,398
Other assets, net     10,917     14,173
             
Total assets   $ 1,439,169   $ 1,309,824
             
             
             
Liabilities            
             
Current liabilities   $ 207,988   $ 152,005
Deferred income taxes     66,572     93,458
Other long-term liabilities     8,607     7,032
             
Total SEI Investments Company shareholders' equity     1,156,002     1,038,180
Noncontrolling interest     --     19,149
Total Equity     1,156,002     1,057,329
             
Total liabilities and equity   $ 1,439,169   $ 1,309,824
             
             
             
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
 
    Dec. 31,   Mar. 31,   Jun. 30,   Sept. 30,   Dec. 31,
    2012   2013   2013   2013   2013
Private Banks:                              
  Equity/Fixed Income prgms.   $ 18,862   $ 12,446   $ 12,876   $ 14,305   $ 15,472
  Collective Trust Fund prgms.     11     9     10     11     14
  Liquidity funds     6,008     5,143     5,048     5,167     5,685
  Total assets under mgmnt.   $ 24,881   $ 17,598   $ 17,934   $ 19,483   $ 21,171
  Client assets under admin.     12,178     12,970     13,122     14,101     15,272
  Total assets   $ 37,059   $ 30,568   $ 31,056   $ 33,584   $ 36,443
                               
Investment Advisors:                              
  Equity/Fixed Income prgms.   $ 31,220   $ 34,166   $ 34,447   $ 36,203   $ 38,574
  Collective Trust Fund prgms.     14     15     14     14     11
  Liquidity funds     2,514     2,094     2,145     2,779     2,846
  Total assets under mgmnt.   $ 33,748   $ 36,275   $ 36,606   $ 38,996   $ 41,431
                               
Institutional Investors:                              
  Equity/Fixed Income prgms.   $ 62,160   $ 64,214   $ 61,927   $ 64,429   $ 66,548
  Collective Trust Fund prgms.     102     101     106     107     109
  Liquidity funds     2,454     2,810     2,901     3,125     2,644
  Total assets under mgmnt.   $ 64,716   $ 67,125   $ 64,934   $ 67,661   $ 69,301
                               
Investment Managers:                              
  Equity/Fixed Income prgms.   $ 67   $ 73   $ 75   $ 75   $ 69
  Collective Trust Fund prgms.     16,197     17,656     18,197     19,868     22,377
  Liquidity funds     408     522     542     678     718
  Total assets under mgmnt.   $ 16,672   $ 18,251   $ 18,814   $ 20,621   $ 23,164
  Client assets under admin. (A)     244,671     275,632     289,807     295,959     311,992
  Total assets   $ 261,343   $ 293,883   $ 308,621   $ 316,580   $ 335,156
                               
Investments in New Businesses:                              
  Equity/Fixed Income prgms.   $ 513   $ 552   $ 572   $ 594   $ 619
  Liquidity funds     43     42     29     26     46
  Total assets under mgmnt.   $ 556   $ 594   $ 601   $ 620   $ 665
                               
LSV Asset Management:                              
  Equity/Fixed Income prgms.   $ 60,947   $ 64,958   $ 65,417   $ 71,149   $ 76,189
                               
Total:                              
  Equity/Fixed Income prgms (B) (D)   $ 173,769   $ 176,409   $ 175,314   $ 186,755   $ 197,471
  Collective Trust Fund prgms.     16,324     17,781     18,327     20,000     22,511
  Liquidity funds     11,427     10,611     10,665     11,775     11,939
  Total assets under mgmnt.   $ 201,520   $ 204,801   $ 204,306   $ 218,530   $ 231,921
  Client assets under admin. (C)     256,849     288,602     302,929     310,060     327,264
  Total assets   $ 458,369   $ 493,403   $ 507,235   $ 528,590   $ 559,185
                               
(A) Client assets under administration in the Investment Managers segment include $53.7 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of Dec. 31, 2013).
(B) Equity/Fixed Income programs include $4.4 billion of assets invested in various asset allocation funds at Dec. 31, 2013.
(C) In addition to the numbers presented, SEI also administers an additional $6.0 billion in Funds of Funds assets (as of Dec. 31, 2013) on which SEI does not earn an administration fee.
(D) Equity/Fixed Income programs in the Private Banks segment at Dec. 31, 2012 included $7.0 billion in assets related to SEI Asset Korea, which was sold in first-quarter 2013.
   
   
   
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
 
    4th Qtr.   1st Qtr.   2nd Qtr.   3rd Qtr.   4th Qtr.
    2012   2013   2013   2013   2013
Private Banks:                              
  Equity/Fixed Income programs   $ 18,301   $ 19,197   $ 12,959   $ 13,696   $ 14,901
  Collective Trust Fund programs     66     11     10     11     11
  Liquidity funds     5,229     5,556     5,093     5,142     5,218
  Total assets under management   $ 23,596   $ 24,764   $ 18,062   $ 18,849   $ 20,130
  Client assets under administration     11,783     12,860     13,183     13,760     14,702
  Total assets   $ 35,379   $ 37,624   $ 31,245   $ 32,609   $ 34,832
                               
Investment Advisors:                              
  Equity/Fixed Income programs   $ 30,881   $ 33,189   $ 34,831   $ 35,618   $ 37,520
  Collective Trust Fund programs     158     14     14     14     13
  Liquidity funds     2,176     2,085     2,028     2,520     2,785
  Total assets under management   $ 33,215   $ 35,288   $ 36,873   $ 38,152   $ 40,318
                               
Institutional Investors:                              
  Equity/Fixed Income programs   $ 61,304   $ 63,642   $ 63,466   $ 63,153   $ 65,750
  Collective Trust Fund programs     120     101     105     107     110
  Liquidity funds     3,493     2,960     2,975     3,091     2,720
  Total assets under management   $ 64,917   $ 66,703   $ 66,546   $ 66,351   $ 68,580
                               
Investment Managers:                              
  Equity/Fixed Income programs   $ 68   $ 68   $ 75   $ 76   $ 75
  Collective Trust Fund programs     15,719     17,129     18,205     19,259     21,345
  Liquidity funds     395     511     500     613     592
  Total assets under management   $ 16,182   $ 17,708   $ 18,780   $ 19,948   $ 22,012
  Client assets under administration     240,520     263,054     286,018     292,627     303,131
  Total assets   $ 256,702   $ 280,762   $ 304,798   $ 312,575   $ 325,143
                               
Investments in New Businesses:                              
  Equity/Fixed Income programs   $ 518   $ 542   $ 567   $ 584   $ 613
  Liquidity funds     33     38     34     27     33
  Total assets under management   $ 551   $ 580   $ 601   $ 611   $ 646
                               
LSV Asset Management:                              
  Equity/Fixed Income programs   $ 59,383   $ 63,997   $ 66,781   $ 69,463   $ 75,240
                               
Total:                              
  Equity/Fixed Income programs (A)   $ 170,455   $ 180,635   $ 178,679   $ 182,590   $ 194,099
  Collective Trust Fund programs     16,063     17,255     18,334     19,391     21,479
  Liquidity funds     11,326     11,150     10,630     11,393     11,348
  Total assets under management   $ 197,844   $ 209,040   $ 207,643   $ 213,374   $ 226,926
  Client assets under administration     252,303     275,914     299,201     306,387     317,833
  Total assets   $ 450,147   $ 484,954   $ 506,844   $ 519,761   $ 544,759
                                 
(A) Equity/Fixed Income programs in the Private Banks segment for fourth-quarter 2012 and first-quarter 2013 included average assets of $6.8 billion and $7.0 billion, respectively, related to SEI Asset Korea, which was sold in first-quarter 2013. 
   
   

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