SOURCE: SEI

SEI

January 27, 2016 08:30 ET

SEI Reports Fourth-Quarter 2015 Financial Results

Company Reports Five Percent Annual Growth in Revenues and Six Percent Annual Growth in Diluted Earnings Per Share

OAKS, PA--(Marketwired - Jan 27, 2016) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for the fourth-quarter 2015. Diluted earnings per share were $.48 in fourth-quarter 2015 compared to $.45 in fourth-quarter 2014. Earnings were favorably impacted by the outcome of a state tax petition related to prior years which reduced the effective tax rate. Diluted earnings per share in fourth-quarter 2014 reflect an after-tax charge of approximately $10.7 million, or $.06 per share, related to a write down of an equity investment in a wealth services firm based in China.

                             
Consolidated Overview                            
(In thousands, except earnings per share)   For the Three Months
Ended December 31,
        For the Twelve Months
Ended December 31,
     
    2015   2014   %     2015   2014   %  
                             
Revenues   $ 335,397   $ 322,757   4 %   $ 1,334,208   $ 1,266,005   5 %
Net income     81,379     77,097   6 %     331,655     318,713   4 %
Diluted earnings per share   $ 0.48   $ 0.45   7 %   $ 1.96   $ 1.85   6 %
                                     

"Our financial results for the fourth quarter cap a year of progress throughout our company and reflect the increased investment we are making to effectively serve our clients and support our growth," said Alfred P. West, Jr., SEI Chairman and CEO. "The markets we serve will continue to look for broad-based solutions to solve their complex issues. As a leader in all of our markets, we feel well positioned to capitalize on these opportunities.

"Our focus is unwavering on creating long-term sustainable growth and increased shareholder value. To do so, we never shirk from making the necessary investments."

 
Summary of Fourth-Quarter Results by Business Segment
 
(In thousands)   For the Three Months
Ended December 31,
          For the Twelve Months
Ended December 31,
       
    2015     2014     %     2015     2014     %  
Private Banks:                                    
  Revenues   $ 113,690     $ 111,959     2 %   $ 456,516     $ 441,467     3 %
  Expenses     102,775       99,975     3 %     410,975       399,620     3 %
  Operating Profit     10,915       11,984     (9 )%     45,541       41,847     9 %
  Gain on sale of subsidiary     -       -     - %     2,791       5,582     NM  
  Segment Profit     10,915       11,984     NM       48,332       47,429     NM  
  Operating Margin (A)     10 %     11 %           10 %     9 %      
                                             
Investment Advisors:                                            
  Revenues     78,614       72,872     8 %     306,620       283,811     8 %
  Expenses     46,522       38,448     21 %     171,968       146,500     17 %
  Operating Profit     32,092       34,424     (7 )%     134,652       137,311     (2 )%
  Operating Margin     41 %     47 %           44 %     48 %      
                                             
Institutional Investors:                                            
  Revenues     73,525       72,466     1 %     297,568       284,677     5 %
  Expenses     37,189       36,044     3 %     145,851       140,659     4 %
  Operating Profit     36,336       36,422     - %     151,717       144,018     5 %
  Operating Margin     49 %     50 %           51 %     51 %      
                                             
Investment Managers:                                            
  Revenues     68,154       64,211     6 %     267,963       251,310     7 %
  Expenses     45,431       40,387     12 %     172,094       159,176     8 %
  Operating Profit     22,723       23,824     (5 )%     95,869       92,134     4 %
  Operating Margin     33 %     37 %           36 %     37 %      
                                             
Investments in New Businesses:                                            
  Revenues     1,414       1,249     13 %     5,541       4,740     17 %
  Expenses     5,808       5,063     15 %     20,656       18,377     12 %
  Operating Loss     (4,394 )     (3,814 )   NM       (15,115 )     (13,637 )   NM  
                                             
Totals:                                            
  Revenues   $ 335,397     $ 322,757     4 %   $ 1,334,208     $ 1,266,005     5 %
  Expenses     237,725       219,917     8 %     921,544       864,332     7 %
  Corporate overhead expenses     15,465       12,576     23 %     54,451       48,889     11 %
  Income from operations   $ 82,207     $ 90,264     (9 )%   $ 358,213     $ 352,784     2 %
                                               
(A) Percentages determined exclusive of gain on sale of subsidiary.
   

Fourth-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 and market appreciation of assets. The market volatility occurring during the second half of 2015 negatively impacted our asset-based fee revenues and partially offset our revenue growth.
  • Sales events, net of client losses, during fourth-quarter 2015 totaled approximately $27.2 million and are expected to generate net annualized recurring revenues of approximately $24.6 million when contract values are fully realized. For the year ended 2015, sales events, net of client losses, totaled approximately $124.0 million and are expected to generate new annualized recurring revenues of approximately $99.7 million when contract values are fully realized.
  • Our average assets under management, excluding LSV, increased $14.3 billion, or eight percent, to $183.4 billion, as compared to $169.1 billion during the fourth-quarter 2014 (see attached Average Asset Balances schedules for further details).
  • Our average assets under administration increased $35.5 billion, or ten percent, to $407.9 billion in the fourth-quarter 2015, as compared to $372.4 billion during the fourth-quarter 2014 (see attached Average Asset Balances schedules for further details).
  • Our earnings from LSV decreased by $3.2 million, or nine percent, to $32.1 million in fourth-quarter 2015 as compared to $35.3 million in fourth-quarter 2014. The reduction in earnings was due to a decline in assets under management from market volatility, reduced performance fees and increased personnel expenses of LSV.
  • Amortization expense related to the SEI Wealth Platform(SM) increased to $10.8 million during the fourth-quarter 2015 as compared to $10.0 million during the fourth-quarter 2014 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.
  • Stock-based compensation expense during the fourth-quarter 2015 increased $1.9 million primarily from the acceleration of expense recognition for stock options that achieved performance vesting targets earlier than originally estimated. 
  • Corporate overhead expenses during the fourth-quarter 2015 include $1.6 million in costs attributable to the relocation of our London operations to a new facility. The cost of the new facility will be approximately $700 thousand higher per quarter than our previous facility. We expect this additional amount to be recognized in Corporate overhead expenses.
  • Our effective tax rates were 29.3 percent in fourth-quarter 2015 and 33.3 percent in fourth-quarter 2014. The decrease in our tax rate was primarily related to a state tax petition related to prior years which resulted in a net refund of $3.7 million.
  • We repurchased 1.5 million shares of our common stock for $77.5 million during the fourth-quarter 2015.

Earnings Conference Call
A conference call to review earnings is scheduled for 2 p.m. Eastern time on January 27, 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 384303.

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 December 31, 2015, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $670 billion in mutual fund and pooled or separately managed assets, including $262 billion in assets under management and $408 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 December 31,
    For the Twelve Months
Ended December 31,
 
    2015     2014     2015     2014  
                         
Asset management, admin. and distribution fees   $ 254,410     $ 242,966     $ 1,010,511     $ 948,932  
Information processing and software servicing fees     72,128       70,437       290,893       285,463  
Transaction-based and trade execution fees     8,859       9,354       32,804       31,610  
                                 
Total revenues     335,397       322,757       1,334,208       1,266,005  
                                 
Subadvisory, distribution and other asset mgmt costs     40,443       38,798       160,062       149,791  
Software royalties and other information processing costs     7,903       7,990       31,497       33,522  
Brokerage commissions     6,525       6,785       24,388       23,002  
Compensation, benefits and other personnel     103,128       95,663       395,774       376,873  
Stock-based compensation     5,836       3,982       17,312       13,463  
Consulting, outsourcing and professional fees     37,876       33,535       146,436       136,818  
Data processing and computer related     15,784       12,959       58,884       52,512  
Facilities, supplies and other costs     18,773       16,759       74,968       66,113  
Amortization     10,824       10,068       42,630       38,679  
Depreciation     6,098       5,954       24,044       22,448  
                                 
Total expenses     253,190       232,493       975,995       913,221  
                                 
Income from operations     82,207       90,264       358,213       352,784  
                                 
Net gain (loss) on investments     88       565       (456 )     614  
Interest and dividend income     788       1,106       3,358       3,354  
Interest expense     (141 )     (116 )     (483 )     (458 )
Equity in earnings of unconsolidated affiliates     32,140       23,706       137,057       127,786  
Gain on sale of subsidiary     -       -       2,791       5,582  
                                 
Income before income taxes     115,082       115,525       500,480       489,662  
                                 
Income taxes     33,703       38,428       168,825       170,949  
                                 
Net income     81,379       77,097       331,655       318,713  
                                 
Basic earnings per common share   $ 0.49     $ 0.46     $ 2.00     $ 1.89  
                                 
Shares used to calculate basic earnings per share     164,473       167,146       165,725       168,246  
                                 
Diluted earnings per common share   $ 0.48     $ 0.45     $ 1.96     $ 1.85  
                                 
Shares used to calculate diluted earnings per share     168,461       171,326       169,598       172,565  
 
 
SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
    December 31,     December 31,  
    2015     2014  
Assets            
  Current Assets:            
    Cash and cash equivalents   $ 679,661     $ 667,446  
    Restricted cash     5,500       5,801  
    Receivables from regulated investment companies     48,098       48,393  
    Receivables, net     223,023       194,419  
    Securities owned     21,235       21,175  
    Other current assets     26,207       18,193  
      Total Current Assets     1,003,724       955,427  
                 
  Property and Equipment, net     143,977       125,535  
  Capitalized software, net     290,522       309,040  
  Investments available for sale     81,294       77,609  
  Investments in affiliated funds, at fair value     4,039       4,523  
  Investment in unconsolidated affiliates     49,580       54,290  
  Other assets, net     15,492       16,451  
      Total Assets   $ 1,588,628     $ 1,542,875  
                 
Liabilities and Equity                
  Current Liabilities:                
    Accounts payable   $ 4,511     $ 10,588  
    Accrued liabilities     217,587       207,429  
    Deferred revenue     2,385       1,749  
      Total Current Liabilities     224,483       219,766  
                 
  Deferred income taxes     63,028       65,169  
  Other long-term liabilities     11,397       10,327  
      Total Liabilities     298,908       295,262  
                 
  Shareholders' Equity:                
    Common stock     1,637       1,667  
    Capital in excess of par value     910,513       834,615  
    Retained earnings     402,860       420,226  
    Accumulated other comprehensive loss, net     (25,290 )     (8,895 )
      Total Shareholders' Equity     1,289,720       1,247,613  
      Total Liabilities and Shareholders' Equity   $ 1,588,628     $ 1,542,875  
 
 
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
 
    Dec 31,   Mar. 31,   Jun. 30,   Sept. 30,   Dec 31,
    2014   2015   2015   2015   2015
Private Banks:                    
  Equity/Fixed Income programs   $ 18,666   $ 19,296   $ 19,686   $ 18,243   $ 18,150
  Collective Trust Fund programs     8     9     13     3     4
  Liquidity funds     5,889     5,551     5,280     5,469     5,835
  Total assets under management   $ 24,563   $ 24,856   $ 24,979   $ 23,715   $ 23,989
  Client assets under administration     16,741     17,643     17,485     16,896     17,532
  Total assets   $ 41,304   $ 42,499   $ 42,464   $ 40,611   $ 41,521
                               
Investment Advisors:                              
  Equity/Fixed Income programs   $ 43,845   $ 45,800   $ 46,951   $ 43,988   $ 46,123
  Collective Trust Fund programs     9     8     8     9     7
  Liquidity funds     3,173     3,047     2,817     4,677     4,924
  Total assets under management   $ 47,027   $ 48,855   $ 49,776   $ 48,674   $ 51,054
                               
Institutional Investors:                              
  Equity/Fixed Income programs   $ 72,828   $ 74,178   $ 75,341   $ 70,818   $ 72,263
  Collective Trust Fund programs     95     94     93     96     96
  Liquidity funds     2,929     3,246     2,960     2,655     2,883
  Total assets under management   $ 75,852   $ 77,518   $ 78,394   $ 73,569   $ 75,242
                               
Investment Managers:                              
  Equity/Fixed Income programs   $ 27   $ 25   $ 24   $ 59   $ 66
  Collective Trust Fund programs     20,833     20,965     20,632     19,863     32,117
  Liquidity funds     946     1,091     1,007     848     832
  Total assets under management   $ 21,806   $ 22,081   $ 21,663   $ 20,770   $ 33,015
  Client assets under administration (A)     355,890     372,116     381,963     376,133     390,282
  Total assets   $ 377,696   $ 394,197   $ 403,626   $ 396,903   $ 423,297
                               
Investments in New Businesses:                              
  Equity/Fixed Income programs   $ 736   $ 756   $ 779   $ 752   $ 764
  Liquidity funds     98     106     57     51     47
  Total assets under management   $ 834   $ 862   $ 836   $ 803   $ 811
                               
LSV Asset Management:                              
  Equity/Fixed Income programs   $ 82,665   $ 84,123   $ 86,334   $ 76,958   $ 78,335
                               
Total:                              
  Equity/Fixed Income programs (B)   $ 218,767   $ 224,178   $ 229,115   $ 210,818   $ 215,701
  Collective Trust Fund programs     20,945     21,076     20,746     19,971     32,224
  Liquidity funds     13,035     13,041     12,121     13,700     14,521
  Total assets under management   $ 252,747   $ 258,295   $ 261,982   $ 244,489   $ 262,446
                               
  Client assets under administration (C)     372,631     389,759     399,448     393,029     407,814
  Total assets   $ 625,378   $ 648,054   $ 661,430   $ 637,518   $ 670,260
                                 
(A) Client assets under administration in the Investment Managers segment include $50.3 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of December 31, 2015).
(B) Equity/Fixed Income programs include $4.7 billion of assets invested in various asset allocation funds at December 31, 2015.
(C) In addition to the numbers presented, SEI also administers an additional $11.0 billion in Funds of Funds assets (as of December 31, 2015) on which SEI does not earn an administration fee.
   
   
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
 
    4th Qtr.   1st Qtr.   2nd Qtr.   3rd Qtr.   4th Qtr.
    2014   2015   2015   2015   2015
Private Banks:                    
  Equity/Fixed Income programs   $ 18,606   $ 18,869   $ 19,872   $ 19,080   $ 18,603
  Collective Trust Fund programs     10     8     12     6     3
  Liquidity funds     5,537     5,755     5,256     5,443     5,511
  Total assets under management   $ 24,153   $ 24,632   $ 25,140   $ 24,529   $ 24,117
  Client assets under administration     16,451     17,504     17,823     17,504     17,775
  Total assets   $ 40,604   $ 42,136   $ 42,963   $ 42,033   $ 41,892
                               
Investment Advisors:                              
  Equity/Fixed Income programs   $ 43,104   $ 44,809   $ 47,027   $ 45,992   $ 46,044
  Collective Trust Fund programs     9     9     8     9     8
  Liquidity funds     3,087     3,072     2,819     3,523     4,784
  Total assets under management   $ 46,200   $ 47,890   $ 49,854   $ 49,524   $ 50,836
                               
Institutional Investors:                              
  Equity/Fixed Income programs   $ 72,771   $ 73,760   $ 75,426   $ 73,568   $ 72,463
  Collective Trust Fund programs     96     95     94     93     96
  Liquidity funds     2,973     3,021     3,354     2,843     3,109
  Total assets under management   $ 75,840   $ 76,876   $ 78,874   $ 76,504   $ 75,668
                               
Investment Managers:                              
  Equity/Fixed Income programs   $ 64   $ 27   $ 25   $ 24   $ 59
  Collective Trust Fund programs     21,140     21,108     21,387     20,449     30,960
  Liquidity funds     904     1,066     1,010     978     960
  Total assets under management   $ 22,108   $ 22,201   $ 22,422   $ 21,451   $ 31,979
  Client assets under administration     355,903     367,206     378,347     380,247     390,080
  Total assets   $ 378,011   $ 389,407   $ 400,769   $ 401,698   $ 422,059
                               
Investments in New Businesses:                              
  Equity/Fixed Income programs   $ 731   $ 755   $ 784   $ 776   $ 788
  Liquidity funds     97     101     75     49     47
  Total assets under management   $ 828   $ 856   $ 859   $ 825   $ 835
                               
LSV Asset Management:                              
  Equity/Fixed Income programs   $ 83,187   $ 83,439   $ 87,409   $ 80,656   $ 79,634
                               
Total:                              
  Equity/Fixed Income programs   $ 218,463   $ 221,659   $ 230,543   $ 220,096   $ 217,591
  Collective Trust Fund programs     21,255     21,220     21,501     20,557     31,067
  Liquidity funds     12,598     13,015     12,514     12,836     14,411
  Total assets under management   $ 252,316   $ 255,894   $ 264,558   $ 253,489   $ 263,069
                               
  Client assets under administration     372,354     384,710     396,170     397,751     407,855
  Total assets   $ 624,670   $ 640,604   $ 660,728   $ 651,240   $ 670,924
                                 

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