SOURCE: SEI

SEI

July 18, 2012 08:30 ET

SEI Reports Second-Quarter 2012 Financial Results

OAKS, PA--(Marketwire - Jul 18, 2012) -  SEI Investments Company (NASDAQ: SEIC) today announced financial results for second-quarter 2012. Diluted earnings per share were $.28 in second-quarter 2012 compared to $.29 in second-quarter 2011. 

                             
Consolidated Overview   For the Three Months     For the Six Months  
(In thousands, except earnings per share)   Ended June 30,     Ended June 30,  
    2012   2011   %     2012   2011   %  
                                     
Revenues   $ 241,237   $ 237,760   1 %   $ 479,135   $ 470,253   2 %
Net Income attributable to SEI     49,555     53,603   (8 %)     99,520     111,331   (11 %)
Diluted Earnings Per Share   $ 0.28   $ 0.29   (3 %)   $ 0.56   $ 0.59   (5 %)
                                     

"Second-quarter 2012 results reflect continued solid sales activity and improving profits and margins across our core business segments," said Alfred P. West, Jr., SEI Chairman and CEO.

"Global financial market uncertainty and market volatility affected our results, particularly earnings from LSV. Despite this, we continue to see strong and growing interest in the solutions we offer from the markets we serve. We are confident we are on the right track and the investments we are making will enable us to significantly increase shareholder value."

                                     
Summary of Second-Quarter Results by Business Segment  
                                     
(In thousands)   For the Three Month Period     For the Six Month Period  
    Ended June 30,     Ended June 30,  
    2012     2011     %     2012     2011     %  
Private Banks:                                            
  Revenues   $ 88,303     $ 87,873     -     $ 176,291     $ 174,582     1 %
  Expenses     84,886       86,274     (2 %)     172,403       168,677     2 %
  Operating Profit   $ 3,417     $ 1,599     114 %   $ 3,888     $ 5,905     (34 %)
  Operating Margin     4 %     2 %           2 %     3 %      
                                             
Investment Advisors:                                            
  Revenues     49,375       49,768     (1 %)     98,843       97,876     1 %
  Expenses     29,025       27,734     5 %     58,326       54,774     6 %
  Operating Profit     20,350       22,034     (8 %)     40,517       43,102     (6 %)
  Operating Margin     41 %     44 %           41 %     44 %      
                                             
Institutional Investors:                                            
  Revenues     55,895       54,731     2 %     109,212       107,916     1 %
  Expenses     28,740       27,406     5 %     56,840       54,359     (5 %)
  Operating Profit     27,155       27,325     (1 %)     52,372       53,557     (2 %)
  Operating Margin     49 %     50 %           48 %     50 %      
                                             
Investment Managers:                                            
  Revenues     46,713       44,452     5 %     92,924       87,893     6 %
  Expenses     30,163       29,282     3 %     60,589       57,281     6 %
  Operating Profit     16,550       15,170     9 %     32,335       30,612     6 %
  Operating Margin     35 %     34 %           35 %     35 %      
                                             
Investments in New Businesses:                                            
  Revenues     951       936     2 %     1,865       1,986     (6 %)
  Expenses     3,684       2,920     26 %     7,382       6,045     22 %
  Operating Loss     (2,733 )     (1,984 )   38 %     (5,517 )     (4,059 )   36 %
  Operating Margin     N/A       N/A             N/A       N/A        
                                             
Totals:                                            
  Revenues   $ 241,237     $ 237,760     1 %   $ 479,135     $ 470,253     2 %
  Expenses     176,498       173,616     2 %     355,540       341,136     4 %
  Corporate overhead expenses     11,080       10,720     3 %     22,162       21,368     4 %
  Noncontrolling interest reflected in segments     (139 )     (533 )   N/A       (454 )     (805 )   N/A  
  Income from operations   $ 53,798     $ 53,957     -     $ 101,887     $ 108,554     (6 %)
                                               
                                               

Second-Quarter Business Commentary:

  • Revenues increased in second-quarter 2012 as compared to both second-quarter 2011 and first-quarter 2012. This was driven by an increase in Asset management, administrative, and distribution fee revenues resulting from increased cash flows from new and existing clients and market appreciation in 2012, despite the market decline in second-quarter 2012.

  • Our average assets under management, excluding LSV, increased $7.4 billion, or six percent, to $126.6 billion in the second-quarter 2012 as compared to $119.2 billion during the second-quarter 2011 and increased $2.5 billion, or 2 percent, as compared to $124.1 billion during the first-quarter 2012 (See attached Ending and Average Asset Balances schedules for further details).

  • Sales events, net of client losses, during second-quarter 2012 totaled approximately $20.3 million and are expected to generate net annualized recurring revenues of approximately $15.7 million when contract values are fully realized.
     
  • Income from LSV decreased $6.8 million to $22.7 million in second-quarter 2012 as compared to $29.5 million in second-quarter 2011. The reduction in earnings was due to lower assets under management from market deprecation in second-quarter 2012 and a decrease in our ownership interest to 40 percent from 41 percent.

  • Net income attributable to SEI includes gains from SIV securities of $1.1 million in second-quarter 2012 compared to losses of $1.9 million in second-quarter 2011 and a gain of $2.9 million in first-quarter 2012. 

  • The effective tax rates were 36.6 percent in the second-quarter 2012 and 34.7 percent in the second-quarter 2011. The increase in the tax rate was due to tax planning strategies which benefited the tax rate in second-quarter 2011.

  • In the second-quarter 2012, SEI purchased 2.25 million shares of its common stock for $42.2 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on July 18, 2012. Investors may listen to the call at www.seic.com/investors or listen at www.earnings.com, a service of Thomson Streetevents. The call may also be accessed at numerous financial services web sites including AOL and Yahoo. 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 254406.

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 June 30, 2012, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $424 billion in mutual fund and pooled or separately managed assets, including $182 billion in assets under management and $242 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)  
             
    Three Months Ended June 30,  
    2012     2011  
                 
Asset management, admin. and distribution fees   $ 176,613     $ 172,331  
Information processing and software servicing fees     57,254       56,035  
Transaction-based and trade execution fees     7,370       9,394  
                 
Total revenues     241,237       237,760  
                 
Subadvisory, distribution and other asset mgmt costs     25,884       26,304  
Software royalties and other information processing costs     5,228       7,188  
Brokerage commissions     5,634       6,599  
Compensation, benefits and other personnel     80,531       72,613  
Stock-based compensation     3,865       3,810  
Consulting, outsourcing and professional fees     26,329       29,398  
Data processing and computer related     11,659       11,610  
Facilities, supplies and other costs     15,272       14,098  
Amortization     7,407       6,792  
Depreciation     5,630       5,391  
                 
Total expenses     187,439       183,803  
                 
Income from operations     53,798       53,957  
                 
Net gain (loss) on investments     664       (1,948 )
Interest and dividend income     1,440       1,436  
Interest expense     (113 )     (155 )
Equity in earnings of unconsolidated affiliate     22,712       29,530  
                 
Net income before income taxes     78,501       82,820  
                 
Income taxes     28,762       28,707  
                 
Net income     49,739       54,113  
                 
Less: Net income attributable to the noncontrolling interest     (184 )     (510 )
                 
Net income attributable to SEI   $ 49,555     $ 53,603  
                 
Diluted earnings per common share   $ 0.28     $ 0.29  
                 
Shares used to calculate diluted earnings per common share     175,913       187,020  
                 
Basic earnings per common share   $ 0.28     $ 0.29  
                 
Shares used to calculate basic earnings per common share     174,830       184,585  
                 
                 
                 
SEI INVESTMENTS COMPANY  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
(Unaudited)  
             
    Six Months Ended June 30,  
    2012     2011  
                 
Asset management, admin. and distribution fees   $ 349,567     $ 339,835  
Information processing and software servicing fees     113,454       111,859  
Transaction-based and trade execution fees     16,114       18,559  
                 
Total revenues     479,135       470,253  
                 
Subadvisory, distribution and other asset mgmt costs     54,351       52,600  
Software royalties and other information processing costs     11,705       14,205  
Brokerage commissions     11,941       13,180  
Compensation, benefits and other personnel     159,074       143,638  
Stock-based compensation     7,898       7,542  
Consulting, outsourcing and professional fees     53,284       55,396  
Data processing and computer related     23,124       22,913  
Facilities, supplies and other costs     29,780       28,200  
Amortization     15,029       13,023  
Depreciation     11,062       11,002  
                 
Total expenses     377,248       361,699  
                 
Income from operations     101,887       108,554  
                 
Net gain on investments     3,869       5,330  
Interest and dividend income     2,927       2,980  
Interest expense     (274 )     (359 )
Equity in earnings of unconsolidated affiliate     50,042       58,479  
                 
Net income before income taxes     158,451       174,984  
                 
Income taxes     58,477       62,831  
                 
Net income     99,974       112,153  
                 
Less: Net income attributable to the noncontrolling interest     (454 )     (822 )
                 
Net income attributable to SEI   $ 99,520     $ 111,331  
                 
Diluted earnings per common share   $ 0.56     $ 0.59  
                 
Shares used to calculate diluted earnings per common share     176,791       187,757  
                 
Basic earnings per common share   $ 0.57     $ 0.60  
                 
Shares used to calculate basic earnings per common share     175,589       185,186  
                 
                 
                 
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
         
         
    June 30,   December 31,
2012   2011
Assets            
             
Cash and short-term investments   $ 347,494   $ 420,986
Restricted cash     6,000     6,000
Receivables, net     202,594     167,909
Securities owned     21,057     20,949
Other current assets     18,265     19,107
             
  Total current assets     595,410     634,951
             
Property and equipment, net     135,011     129,548
Marketable securities     134,491     139,333
Capitalized software, net     312,815     309,133
Investment in unconsolidated affiliate     63,553     60,954
Other assets, net     23,582     20,640
             
  Total assets   $ 1,264,862   $ 1,294,559
             
             
Liabilities            
             
Current liabilities   $ 105,383   $ 151,073
Deferred income taxes     91,819     93,751
Other Long-term liabilities     10,632     8,276
             
Total SEI Investments Company shareholders' equity     1,040,102     1,025,316
Noncontrolling interest     16,926     16,143
Total Equity     1,057,028     1,041,459
             
  Total liabilities and equity   $ 1,264,862   $ 1,294,559
             
             
             
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
                     
    Jun. 30,   Sept. 30,   Dec. 31,   Mar. 31,   Jun. 30,
    2011   2011   2011   2012   2012
Private Banks:                              
  Equity/Fixed Income prgms.   $ 16,720   $ 15,442   $ 16,435   $ 17,180   $ 16,848
  Collective Trust Fund prgms.     504     476     450     435     335
  Liquidity funds     4,918     5,529     5,553     5,549     5,063
  Total assets under mgmt.   $ 22,142   $ 21,447   $ 22,438   $ 23,164   $ 22,246
                                 
  Client assets under admin.     10,994     9,845     10,355     10,916     10,719
  Total assets   $ 33,136   $ 31,292   $ 32,793   $ 34,080   $ 32,965
                               
Investment Advisors:                              
  Equity/Fixed Income prgms.   $ 28,410   $ 24,757   $ 26,639   $ 29,722   $ 29,153
  Collective Trust Fund prgms.     1,499     1,392     1,298     1,199     705
  Liquidity funds     1,651     2,653     2,505     1,643     1,880
  Total assets under mgmt.   $ 31,560   $ 28,802   $ 30,442   $ 32,564   $ 31,738
                               
Institutional Investors:                              
  Equity/Fixed Income prgms.   $ 51,180   $ 46,259   $ 49,051   $ 54,537   $ 55,548
  Collective Trust Fund prgms.     482     510     492     424     415
  Liquidity funds     3,146     3,356     3,888     3,725     2,958
  Total assets under mgmt.   $ 54,808   $ 50,125   $ 53,431   $ 58,686   $ 58,921
                               
Investment Managers:                              
  Equity/Fixed Income prgms.   $ 50   $ 64   $ 57   $ 62   $ 61
  Collective Trust Fund prgms.     10,372     10,896     11,255     12,781     13,004
  Liquidity funds     179     195     152     147     226
  Total assets under mgmt.   $ 10,601   $ 11,155   $ 11,464   $ 12,990   $ 13,291
                                 
  Client assets under admin. (A)     238,432     223,620     221,198     228,327     231,549
  Total assets   $ 249,033   $ 234,775   $ 232,662   $ 241,317   $ 244,840
                               
Investments in New Businesses:                              
  Equity/Fixed Income prgms.   $ 558   $ 490   $ 515   $ 568   $ 551
  Liquidity funds     41     41     37     34     30
  Total assets under mgmt.   $ 599   $ 531   $ 552   $ 602   $ 581
                                 
LSV Asset Management                              
  Equity/Fixed Income prgms.   $ 60,626   $ 49,444   $ 53,712   $ 60,607   $ 54,922
                               
Consolidated:                              
  Equity/Fixed Income prgms (B)   $ 157,544   $ 136,456   $ 146,409   $ 162,676   $ 157,083
  Collective Trust Fund prgms.     12,857     13,274     13,495     14,839     14,459
  Liquidity funds     9,935     11,774     12,135     11,098     10,157
  Total assets under mgmt.   $ 180,336   $ 161,504   $ 172,039   $ 188,613   $ 181,699
                                 
  Client assets under admin. (C)     249,426     233,465     231,553     239,243     242,268
  Total assets   $ 429,762   $ 394,969   $ 403,592   $ 427,856   $ 423,967
                                 
(A) Client assets under administration in the Investment Managers segment include $38.4 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of June 30, 2012).
(B) Equity/Fixed Income programs include $2.6 billion of assets invested in various asset allocation funds at June 30, 2012.
(C) In addition to the numbers presented, SEI also administers an additional $4.6 billion in Funds of Funds assets (as of
  June 30, 2012) on which SEI does not earn an administration fee.
   
   
   
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
                     
    2nd Qtr.   3rd Qtr.   4th Qtr.   1st Qtr.   2nd Qtr.
    2011   2011   2011   2012   2012
Private Banks:                              
  Equity/Fixed Income prgms.   $ 16,176   $ 16,592   $ 16,624   $ 17,116   $ 16,794
  Collective Trust Fund prgms.     543     505     464     436     396
  Liquidity funds     4,909     5,210     5,401     5,581     5,115
  Total assets under mgmt.   $ 21,628   $ 22,307   $ 22,489   $ 23,133   $ 22,305
                                 
  Client assets under admin.     11,114     10,364     10,290     10,211     10,631
  Total assets   $ 32,742   $ 32,671   $ 32,779   $ 33,344   $ 32,936
                               
Investment Advisors:                              
  Equity/Fixed Income prgms.   $ 28,502   $ 26,658   $ 26,094   $ 28,426   $ 29,103
  Collective Trust Fund prgms.     1,544     1,442     1,314     1,238     984
  Liquidity funds     1,576     2,224     2,499     2,015     1,806
  Total assets under mgmt.   $ 31,622   $ 30,324   $ 29,907   $ 31,679   $ 31,893
                               
Institutional Investors:                              
  Equity/Fixed Income prgms.   $ 51,567   $ 49,115   $ 48,504   $ 52,270   $ 54,998
  Collective Trust Fund prgms.     554     505     500     427     418
  Liquidity funds     3,515     3,416     3,461     3,765     3,147
  Total assets under mgmt.   $ 55,636   $ 53,036   $ 52,465   $ 56,462   $ 58,563
                               
Investment Managers:                              
  Equity/Fixed Income prgms.   $ 38   $ 52   $ 65   $ 58   $ 63
  Collective Trust Fund prgms.     9,560     11,292     10,773     11,983     12,991
  Liquidity funds     165     200     219     190     235
  Total assets under mgmt.   $ 9,763   $ 11,544   $ 11,057   $ 12,231   $ 13,289
                                 
  Client assets under admin.     241,423     236,953     224,633     224,547     229,873
  Total assets   $ 251,186   $ 248,497   $ 235,690   $ 236,778   $ 243,162
                               
Investments in New Businesses:                              
  Equity/Fixed Income prgms.   $ 561   $ 525   $ 515   $ 549   $ 550
  Liquidity funds     42     42     42     39     33
  Total assets under mgmt.   $ 603   $ 567   $ 557   $ 588   $ 583
                               
LSV Asset Management                              
  Equity/Fixed Income prgms.   $ 63,000   $ 54,679   $ 54,021   $ 59,200   $ 55,994
                               
Consolidated:                              
  Equity/Fixed Income prgms   $ 159,844   $ 147,621   $ 145,823   $ 157,619   $ 157,502
  Collective Trust Fund prgms.     12,201     13,744     13,051     14,084     14,789
  Liquidity funds     10,207     11,092     11,622     11,590     10,336
  Total assets under mgmt.   $ 182,252   $ 172,457   $ 170,496   $ 183,293   $ 182,627
                                 
  Client assets under admin.     252,537     247,317     234,923     234,758     240,504
  Total assets   $ 434,789   $ 419,774   $ 405,419   $ 418,051   $ 423,131
                                 

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