SOURCE: SEI

SEI

July 22, 2015 08:30 ET

SEI Reports Second-Quarter 2015 Financial Results

Company Announces Sale of SEI Wealth Platform(SM) to a Major U.S. Banking Client

OAKS, PA--(Marketwired - Jul 22, 2015) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for the second-quarter 2015. Diluted earnings per share were $.51 in second-quarter 2015 compared to $.48 in second-quarter 2014.

                             
Consolidated Overview                            
(In thousands, except earnings per share)   For the Three Months Ended June 30,         For the Six Months Ended June 30,      
    2015   2014   %     2015   2014   %  
                             
Revenues   $ 337,745   $ 318,815   6 %   $ 663,189   $ 621,201   7 %
Net income     86,240     82,813   4 %     170,851     157,633   8 %
Diluted earnings per share   $ 0.51   $ 0.48   6 %   $ 1.00   $ 0.91   10 %
                                     

"Our second-quarter results reflect progress across all of our business segments," said Alfred P. West, Jr., SEI Chairman and CEO. "During the quarter, sales results across the company were strong. They included the sale of our SEI Wealth Platform to a current major U.S. client, a significant validation of our Private Banks strategy. These results are further evidence that what we are building and delivering is being accepted by our target markets.

"While challenges remain and the global environment continues to be dynamic, our commitment to long-term, sustainable growth and increased shareholder value is unwavering."

 
Summary of Second-Quarter Results by Business Segment
                         
(In thousands)   For the Three Months Ended June 30,           For the Six Months Ended June 30,        
    2015     2014     %     2015     2014     %  
Private Banks:                                    
  Revenues   $ 115,333     $ 114,182     1 %   $ 226,546     $ 219,361     3 %
  Expenses     104,727       98,957     6 %     203,983       199,147     2 %
  Operating Profit     10,606       15,225     (30 )%     22,563       20,214     12 %
  Gain on sale of subsidiary     --       --     -- %     2,791       5,582     NM  
  Segment Profit     10,606       15,225     NM       25,354       25,796     NM  
  Operating Margin (A)     9 %     13 %           10 %     9 %      
                                             
Investment Advisors:                                            
  Revenues     77,753       70,046     11 %     151,768       136,470     11 %
  Expenses     40,857       35,679     15 %     79,916       70,256     14 %
  Operating Profit     36,896       34,367     7 %     71,852       66,214     9 %
  Operating Margin     47 %     49 %           47 %     49 %      
                                             
Institutional Investors:                                            
  Revenues     75,980       70,994     7 %     149,528       139,651     7 %
  Expenses     36,528       35,025     4 %     71,739       69,120     4 %
  Operating Profit     39,452       35,969     10 %     77,789       70,531     10 %
  Operating Margin     52 %     51 %           52 %     51 %      
                                             
Investment Managers:                                            
  Revenues     67,280       62,451     8 %     132,647       123,459     7 %
  Expenses     42,141       39,449     7 %     82,764       78,633     5 %
  Operating Profit     25,139       23,002     9 %     49,883       44,826     11 %
  Operating Margin     37 %     37 %           38 %     36 %      
                                             
Investments in New Businesses:                                            
  Revenues     1,399       1,142     23 %     2,700       2,260     19 %
  Expenses     4,803       4,451     8 %     9,669       8,700     11 %
  Operating Loss     (3,404 )     (3,309 )   NM       (6,969 )     (6,440 )   NM  
                                             
Totals:                                            
  Revenues   $ 337,745     $ 318,815     6 %   $ 663,189     $ 621,201     7 %
  Expenses     229,056       213,561     7 %     448,071       425,856     5 %
  Corporate overhead expenses     12,771       11,624     10 %     26,130       23,323     12 %
  Income from operations   $ 95,918     $ 93,630     2 %   $ 188,988     $ 172,022     10 %
                                               
(A)  Percentages determined exclusive of gain on sale of subsidiary.
 

Second-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.
  • Sales events, net of client losses, during second-quarter 2015 totaled approximately $45.2 million and are expected to generate net annualized recurring revenues of approximately $32.0 million when contract values are fully realized. Net annualized recurring and one-time revenues include a significant sale of the SEI Wealth Platform to a current major U.S. client.
  • Our average assets under management, excluding LSV, increased $12.8 billion, or 8 percent, to $177.1 billion in the second-quarter 2015, as compared to $164.3 billion during the second-quarter 2014 (see attached Average Asset Balances schedules for further details).
  • Our average assets under administration increased $47.7 billion, or 14 percent, to $396.2 billion in the second-quarter 2015, as compared to $348.4 billion during the second-quarter 2014 (see attached Average Asset Balances schedules for further details).
  • Revenues from Information processing and software servicing fees in our Private Banks segment declined due to $6.0 million, or $.02 diluted earnings per share, in non-recurring professional services fees from a single project recorded in the second-quarter 2014.
  • Income from LSV increased $3.8 million, or 11 percent, to $38.3 million in second-quarter 2015 as compared to $34.5 million in second-quarter 2014 due to an increase in assets under management and an increase in performance fees earned by LSV.
  • Amortization expense related to the SEI Wealth Platform was $10.6 million during the second-quarter 2015 as compared to $9.5 million during the second-quarter 2014 due to continued enhancements.
  • Our operating expenses related to personnel costs in our Investment Advisors and Investment Managers segments increased. These increased operational costs are mainly related to servicing new and existing clients. In addition, sales compensation expense in our Private Banks segment increased due to the significant sales event mentioned above.
  • Our effective tax rates were 35.6 percent in second-quarter 2015 and 35.7 percent in second-quarter 2014.
  • In second-quarter 2015, we repurchased 1.3 million shares of our common stock for $61.0 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 2 p.m. Eastern time on July 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 364810.

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 June 30, 2015, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $661 billion in mutual fund and pooled or separately managed assets, including $262 billion in assets under management and $399 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 June 30,     For the Six Months Ended June 30,  
    2015     2014     2015     2014  
                         
Asset management, admin. and distribution fees   $ 256,748     $ 236,191     $ 503,516     $ 461,262  
Information processing and software servicing fees     73,699       75,828       144,352       145,006  
Transaction-based and trade execution fees     7,298       6,796       15,321       14,933  
                                 
Total revenues     337,745       318,815       663,189       621,201  
                                 
Subadvisory, distribution and other asset mgmt costs     40,872       37,244       79,389       71,256  
Software royalties and other information processing costs     8,057       8,417       15,566       16,970  
Brokerage commissions     5,431       5,119       11,403       11,098  
Compensation, benefits and other personnel     98,999       92,470       193,185       186,894  
Stock-based compensation     3,859       2,872       7,609       5,695  
Consulting, outsourcing and professional fees     36,969       33,404       72,597       68,337  
Data processing and computer related     14,527       13,378       27,927       25,998  
Facilities, supplies and other costs     16,659       17,366       33,718       33,218  
Amortization     10,611       9,584       20,969       18,798  
Depreciation     5,843       5,331       11,838       10,915  
                                 
Total expenses     241,827       225,185       474,201       449,179  
                                 
Income from operations     95,918       93,630       188,988       172,022  
                                 
Net (loss) gain on investments     (38 )     391       212       527  
Interest and dividend income     755       721       1,724       1,498  
Interest expense     (114 )     (114 )     (227 )     (227 )
Equity in earnings of unconsolidated affiliates     37,289       34,226       71,322       66,117  
Gain on sale of subsidiary     --       --       2,791       5,582  
                                 
Income before income taxes     133,810       128,854       264,810       245,519  
                                 
Income taxes     47,570       46,041       93,959       87,886  
                                 
Net income     86,240       82,813       170,851       157,633  
                                 
Basic earnings per common share   $ 0.52     $ 0.49     $ 1.03     $ 0.93  
                                 
Shares used to calculate basic earnings per share     166,152       168,606       166,423       168,956  
                                 
Diluted earnings per common share   $ 0.51     $ 0.48     $ 1.00     $ 0.91  
                                 
Shares used to calculate diluted earnings per share     169,973       172,304       170,338       173,066  
 
 
 
SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
    June 30,     December 31,  
    2015     2014  
Assets            
  Current Assets:            
    Cash and cash equivalents   $ 624,841     $ 667,446  
    Restricted cash     6,635       5,801  
    Receivables from regulated investment companies     46,920       48,393  
    Receivables, net     218,141       194,419  
    Securities owned     21,204       21,175  
    Other current assets     22,846       18,193  
      Total Current Assets     940,587       955,427  
                   
  Property and Equipment, net     128,697       125,535  
  Capitalized software, net     304,254       309,040  
  Investments available for sale     79,898       77,609  
  Investments in affiliated funds, at fair value     4,525       4,523  
  Investment in unconsolidated affiliates     50,765       54,290  
  Other assets, net     17,106       16,451  
      Total Assets   $ 1,525,832     $ 1,542,875  
                 
Liabilities and Equity                
  Current Liabilities:                
    Accounts payable   $ 6,139     $ 10,588  
    Accrued liabilities     131,746       207,429  
    Deferred income taxes, net     1,037       1,414  
    Deferred revenue     5,387       1,749  
      Total Current Liabilities     144,309       221,180  
                 
  Deferred income taxes     64,300       63,755  
  Other long-term liabilities     11,241       10,327  
      Total Liabilities     219,850       295,262  
                 
  Shareholders' Equity:                
    Common stock     1,659       1,667  
    Capital in excess of par value     882,355       834,615  
    Retained earnings     435,660       420,226  
    Accumulated other comprehensive loss, net     (13,692 )     (8,895 )
      Total Shareholders' Equity     1,305,982       1,247,613  
      Total Liabilities and Shareholders' Equity   $ 1,525,832     $ 1,542,875  
                       
                       
                       
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
 
    Jun. 30,   Sept. 30,   Dec 31,   Mar. 31,   Jun. 30,
    2014   2014   2014   2015   2015
Private Banks:                    
  Equity/Fixed Income programs   $ 18,679   $ 18,634   $ 18,666   $ 19,296   $ 19,686
  Collective Trust Fund programs     12     11     8     9     13
  Liquidity funds     5,274     5,331     5,889     5,551     5,280
  Total assets under management   $ 23,965   $ 23,976   $ 24,563   $ 24,856   $ 24,979
  Client assets under administration     15,347     16,288     16,741     17,643     17,485
  Total assets   $ 39,312   $ 40,264   $ 41,304   $ 42,499   $ 42,464
                               
Investment Advisors:                              
  Equity/Fixed Income programs   $ 42,125   $ 42,260   $ 43,845   $ 45,800   $ 46,951
  Collective Trust Fund programs     13     9     9     8     8
  Liquidity funds     2,696     3,086     3,173     3,047     2,817
  Total assets under management   $ 44,834   $ 45,355   $ 47,027   $ 48,855   $ 49,776
                               
Institutional Investors:                              
  Equity/Fixed Income programs   $ 71,598   $ 72,006   $ 72,828   $ 74,178   $ 75,341
  Collective Trust Fund programs     100     98     95     94     93
  Liquidity funds     2,414     2,891     2,929     3,246     2,960
  Total assets under management   $ 74,112   $ 74,995   $ 75,852   $ 77,518   $ 78,394
                               
Investment Managers:                              
  Equity/Fixed Income programs   $ 64   $ 64   $ 27   $ 25   $ 24
  Collective Trust Fund programs     22,598     21,297     20,833     20,965     20,632
  Liquidity funds     802     1,018     946     1,091     1,007
  Total assets under management   $ 23,464   $ 22,379   $ 21,806   $ 22,081   $ 21,663
  Client assets under administration (A)     337,492     346,841     355,890     372,116     381,963
  Total assets   $ 360,956   $ 369,220   $ 377,696   $ 394,197   $ 403,626
                               
Investments in New Businesses:                              
  Equity/Fixed Income programs   $ 659   $ 703   $ 736   $ 756   $ 779
  Liquidity funds     38     118     98     106     57
  Total assets under management   $ 697   $ 821   $ 834   $ 862   $ 836
                               
LSV Asset Management:                              
  Equity/Fixed Income programs   $ 82,026   $ 81,536   $ 82,665   $ 84,123   $ 86,334
                               
Total:                              
  Equity/Fixed Income programs (B)   $ 215,151   $ 215,203   $ 218,767   $ 224,178   $ 229,115
  Collective Trust Fund programs     22,723     21,415     20,945     21,076     20,746
  Liquidity funds     11,224     12,444     13,035     13,041     12,121
  Total assets under management   $ 249,098   $ 249,062   $ 252,747   $ 258,295   $ 261,982
                                 
  Client assets under administration (C)     352,839     363,129     372,631     389,759     399,448
  Total assets   $ 601,937   $ 612,191   $ 625,378   $ 648,054   $ 661,430
(A) Client assets under administration in the Investment Managers segment include $50.7 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of June 30, 2015).
(B) Equity/Fixed Income programs include $5.1 billion of assets invested in various asset allocation funds at June 30, 2015.
(C) In addition to the numbers presented, SEI also administers an additional $6.1 billion in Funds of Funds assets (as of June 30, 2015) 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.
    2014   2014   2014   2015   2015
Private Banks:                    
  Equity/Fixed Income programs   $ 17,829   $ 18,804   $ 18,606   $ 18,869   $ 19,872
  Collective Trust Fund programs     12     12     10     8     12
  Liquidity funds     5,429     5,466     5,537     5,755     5,256
  Total assets under management   $ 23,270   $ 24,282   $ 24,153   $ 24,632   $ 25,140
  Client assets under administration     15,069     15,707     16,451     17,504     17,823
  Total assets   $ 38,339   $ 39,989   $ 40,604   $ 42,136   $ 42,963
                               
Investment Advisors:                              
  Equity/Fixed Income programs   $ 40,887   $ 42,389   $ 43,104   $ 44,809   $ 47,027
  Collective Trust Fund programs     13     11     9     9     8
  Liquidity funds     2,637     2,830     3,087     3,072     2,819
  Total assets under management   $ 43,537   $ 45,230   $ 46,200   $ 47,890   $ 49,854
                               
Institutional Investors:                              
  Equity/Fixed Income programs   $ 70,706   $ 72,010   $ 72,771   $ 73,760   $ 75,426
  Collective Trust Fund programs     134     98     96     95     94
  Liquidity funds     2,664     2,883     2,973     3,021     3,354
  Total assets under management   $ 73,504   $ 74,991   $ 75,840   $ 76,876   $ 78,874
                               
Investment Managers:                              
  Equity/Fixed Income programs   $ 68   $ 64   $ 64   $ 27   $ 25
  Collective Trust Fund programs     22,447     22,123     21,140     21,108     21,387
  Liquidity funds     824     962     904     1,066     1,010
  Total assets under management   $ 23,339   $ 23,149   $ 22,108   $ 22,201   $ 22,422
  Client assets under administration     333,373     344,661     355,903     367,206     378,347
  Total assets   $ 356,712   $ 367,810   $ 378,011   $ 389,407   $ 400,769
                               
Investments in New Businesses:                              
  Equity/Fixed Income programs   $ 640   $ 688   $ 731   $ 755   $ 784
  Liquidity funds     43     139     97     101     75
  Total assets under management   $ 683   $ 827   $ 828   $ 856   $ 859
                               
LSV Asset Management:                              
  Equity/Fixed Income programs   $ 79,866   $ 82,402   $ 83,187   $ 83,439   $ 87,409
                               
Total:                              
  Equity/Fixed Income programs   $ 209,996   $ 216,357   $ 218,463   $ 221,659   $ 230,543
  Collective Trust Fund programs     22,606     22,244     21,255     21,220     21,501
  Liquidity funds     11,597     12,280     12,598     13,015     12,514
  Total assets under management   $ 244,199   $ 250,881   $ 252,316   $ 255,894   $ 264,558
                               
  Client assets under administration     348,442     360,368     372,354     384,710     396,170
  Total assets   $ 592,641   $ 611,249   $ 624,670   $ 640,604   $ 660,728
                                 

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