SOURCE: SEI

SEI

October 24, 2012 08:15 ET

SEI Reports Third-Quarter 2012 Financial Results

Strong Sales Results Continue

OAKS, PA--(Marketwire - Oct 24, 2012) - SEI Investments Company (NASDAQ: SEIC) today announced financial results for third-quarter 2012. Diluted earnings per share were $.29 in third-quarter 2012 compared to $.27 in third-quarter 2011. 

             
             
Consolidated Overview  For the Three Months    For the Nine Months 
(In thousands, except earnings per share)  Ended September 30,  Ended September 30, 
      2012     2011    %       2012     2011    %  
                                     
Revenues   $ 251,752   $ 233,227   8 %   $ 730,887   $ 703,480   4 %
Net Income attributable to SEI     50,743     49,232   3 %     150,263     160,563   (6 %)
Diluted Earnings Per Share   $ 0.29   $ 0.27   7 %   $ 0.85   $ 0.86   (1 %)
                                     
                                     

"Continued strong new business sales and growing revenue are the highlights of the third-quarter 2012," said Alfred P. West, Jr., SEI Chairman and CEO.

"We continue to see growing acceptance of our solutions and services in all markets. We remain confident that the investments we have made and continue to make will significantly enhance long-term shareholder value."

 
 
Summary of Third-Quarter Results by Business Segment
 
(In thousands)   For the Three Months
Ended September 30,
    For the Nine Months
Ended September 30,
 
   
      2012       2011      %       2012       2011      
Private Banks:                                            
  Revenues   $ 92,076     $ 87,697     5 %   $ 268,367     $ 262,279     2 %
  Expenses     91,209       85,893     6 %     263,612       254,570     4 %
  Operating Profit   $ 867     $ 1,804     (52 %)   $ 4,755     $ 7,709     (38 %)
  Operating Margin     1 %     2 %           2 %     3 %      
                                             
Investment Advisors:                                            
  Revenues     51,384       46,798     10 %     150,227       144,674     4 %
  Expenses     30,114       28,051     7 %     88,440       82,825     7 %
  Operating Profit     21,270       18,747     13 %     61,787       61,849     -  
  Operating Margin     41 %     40 %           41 %     43 %      
                                             
Institutional Investors:                                            
  Revenues     58,081       52,216     11 %     167,293       160,132     4 %
  Expenses     29,654       25,524     16 %     86,494       79,883     8 %
  Operating Profit     28,427       26,692     7 %     80,799       80,249     1 %
  Operating Margin     49 %     51 %           48 %     50 %      
                                             
Investment Managers:                                            
  Revenues     49,311       45,585     8 %     142,235       133,478     7 %
  Expenses     32,122       29,412     9 %     92,711       86,693     7 %
  Operating Profit     17,189       16,173     6 %     49,524       46,785     6 %
  Operating Margin     35 %     35 %           35 %     35 %      
                                             
Investments in New Businesses:                                            
  Revenues     900       931     (3 %)     2,765       2,917     (5 %)
  Expenses     3,698       2,429     52 %     11,080       8,474     31 %
  Operating Loss     (2,798 )     (1,498 )   N/A       (8,315 )     (5,557 )   N/A  
  Operating Margin     N/A       N/A             N/A       N/A        
                                             
Totals:                                            
  Revenues   $ 251,752     $ 233,227     8 %   $ 730,887     $ 703,480     4 %
  Expenses     186,797       171,309     9 %     542,337       512,445     6 %
  Corporate overhead expenses     11,668       11,155     5 %     33,830       32,523     4 %
  Noncontrolling interest reflected in segments     (203 )     (373 )   N/A       (657 )     (1,178 )   N/A  
  Income from operations   $ 53,490     $ 51,136     5 %   $ 155,377     $ 159,690     (3 %)
                                               
                                               

Third-Quarter Business Commentary:

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

  • Our average assets under management, excluding LSV, increased $14.8 billion, or 13 percent, to $132.6 billion in the third-quarter 2012, as compared to $117.8 billion during the third-quarter 2011, and increased $6.0 billion, or five percent, as compared to $126.6 billion during the second-quarter 2012 (See attached Ending and Average Asset Balances schedules for further details). 

  • Sales events, net of client losses, during third-quarter 2012 totaled approximately $23.7 million and are expected to generate net annualized recurring revenues of approximately $21.4 million when contract values are fully realized.

  • Income from LSV increased in third-quarter 2012 to $24.9 million as compared to third-quarter 2011 and second-quarter 2012 due to an increase in assets under management. Our ownership interest was 40 percent in second- and third-quarter 2012 and 41 percent in third-quarter 2011.

  • In the third-quarter 2012, SEI decided to discontinue the use of specific functionality within the Global Wealth Platform and incurred $2.7 million of amortization expense related to the remaining net book value of this component. This expense was recognized in the Private Banks segment. Without this expense Private Banks profits for the quarter would have been $3.5 million, which is comparable to second-quarter 2012. 

  • Net income attributable to SEI includes gains from SIV securities of $3.4 million in third-quarter 2012 compared to losses of $0.8 million in third-quarter 2011 and a gain of $1.1 million in second-quarter 2012. 

  • The effective tax rates were 39.0 percent in the third-quarter 2012 and 33.8 percent in the third-quarter 2011. The increase in the tax rate was due to the accrual of taxes on the cumulative undistributed earnings of SEI Asset Korea, offset by certain tax planning strategies which benefited the tax rate in third-quarter 2011. As a result of the sale of SEI Asset Korea, the Company no longer considers the undistributed earnings to be indefinitely reinvested and therefore accrued U.S. deferred taxes on the cumulative undistributed earnings of SEI Asset Korea.

  • In the third-quarter 2012, SEI purchased 1.55 million shares of its common stock for $33.6 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on October 24, 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 268471.

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 September 30, 2012, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $448 billion in mutual fund and pooled or separately managed assets, including $195 billion in assets under management and $253 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 September 30,  
      2012       2011  
                 
Asset management, admin. and distribution fees   $ 183,083     $ 167,827  
Information processing and software servicing fees     60,901       55,676  
Transaction-based and trade execution fees     7,768       9,724  
                 
Total revenues     251,752       233,227  
                 
Subadvisory, distribution and other asset mgmt costs     26,538       24,613  
Software royalties and other information processing costs     6,185       6,703  
Brokerage commissions     5,542       7,026  
Compensation, benefits and other personnel     85,781       71,198  
Stock-based compensation     3,879       3,424  
Consulting, outsourcing and professional fees     27,314       30,183  
Data processing and computer related     11,749       12,316  
Facilities, supplies and other costs     15,129       14,274  
Amortization     10,384       7,008  
Depreciation     5,761       5,346  
                 
Total expenses     198,262       182,091  
                 
Income from operations     53,490       51,136  
                 
Net gain (loss) on investments     3,708       (1,418 )
Interest and dividend income     1,490       1,400  
Interest expense     (115 )     (126 )
Equity in earnings of unconsolidated affiliate     24,928       23,908  
                 
Net income before income taxes     83,501       74,900  
                 
Income taxes     32,415       25,256  
                 
Net income     51,086       49,644  
                 
Less: Net income attributable to the noncontrolling interest     (343 )     (412 )
                 
Net income attributable to SEI   $ 50,743     $ 49,232  
                 
Diluted earnings per common share   $ 0.29     $ 0.27  
                 
Shares used to calculate diluted earnings per common share     175,369       182,580  
                 
Basic earnings per common share   $ 0.29     $ 0.27  
                 
Shares used to calculate basic earnings per common share     173,429       181,718  
                 
                 
SEI INVESTMENTS COMPANY  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
(Unaudited)  
             
      Nine Months Ended September 30,  
      2012       2011  
                 
Asset management, admin. and distribution fees   $ 532,650     $ 507,662  
Information processing and software servicing fees     174,355       167,535  
Transaction-based and trade execution fees     23,882       28,283  
                 
Total revenues     730,887       703,480  
                 
Subadvisory, distribution and other asset mgmt costs     80,889       77,213  
Software royalties and other information processing costs     17,890       20,908  
Brokerage commissions     17,483       20,206  
Compensation, benefits and other personnel     244,855       214,836  
Stock-based compensation     11,777       10,966  
Consulting, outsourcing and professional fees     80,598       85,579  
Data processing and computer related     34,873       35,229  
Facilities, supplies and other costs     44,909       42,474  
Amortization     25,413       20,031  
Depreciation     16,823       16,348  
                 
Total expenses     575,510       543,790  
                 
Income from operations     155,377       159,690  
                 
Net gain on investments     7,577       3,912  
Interest and dividend income     4,417       4,380  
Interest expense     (389 )     (485 )
Equity in earnings of unconsolidated affiliate     74,970       82,387  
                 
Net income before income taxes     241,952       249,884  
                 
Income taxes     90,892       88,087  
                 
Net income     151,060       161,797  
                 
Less: Net income attributable to the noncontrolling interest     (797 )     (1,234 )
                 
Net income attributable to SEI   $ 150,263     $ 160,563  
                 
Diluted earnings per common share   $ 0.85     $ 0.86  
                 
Shares used to calculate diluted earnings per common share     176,317       186,032  
                 
Basic earnings per common share   $ 0.86     $ 0.87  
                 
Shares used to calculate basic earnings per common share     174,869       184,030  
 
 
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
         
      September 30, 2012     December 31, 2011
Assets            
             
Cash and short-term investments   $ 397,677   $ 420,986
Restricted cash     6,000     6,000
Receivables, net     226,194     167,909
Securities owned     21,081     20,949
Other current assets     19,527     19,107
             
  Total current assets     670,479     634,951
             
Property and equipment, net     131,889     129,548
Marketable securities     132,722     139,333
Capitalized software, net     310,168     309,133
Investment in unconsolidated affiliate     63,618     60,954
Other assets, net     23,528     20,640
             
  Total assets   $ 1,332,404   $ 1,294,559
             
             
             
Liabilities            
             
Current liabilities   $ 126,535   $ 151,073
Deferred income taxes     95,713     93,751
Other Long-term liabilities     11,079     8,276
             
Total SEI Investments Company shareholders' equity     1,081,304     1,025,316
Noncontrolling interest     17,773     16,143
Total Equity     1,099,077     1,041,459
             
  Total liabilities and equity   $ 1,332,404   $ 1,294,559
             
             
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
                     
    Sept. 30,   Dec. 31,   Mar. 31,   Jun. 30,   Sept. 30,
    2011 2011 2012 2012 2012
Private Banks:                              
  Equity/Fixed Income prgms.   $ 15,442   $ 16,435   $ 17,180   $ 16,848   $ 17,960
  Collective Trust Fund prgms.     476     450     435     335     147
  Liquidity funds     5,529     5,553     5,549     5,063     5,342
  Total assets under mgmt.   $ 21,447   $ 22,438   $ 23,164   $ 22,246   $ 23,449
                                 
  Client assets under admin.     9,845     10,355     10,916     10,719     11,611
  Total assets   $ 31,292   $ 32,793   $ 34,080   $ 32,965   $ 35,060
                               
Investment Advisors:                              
  Equity/Fixed Income prgms.   $ 24,757   $ 26,639   $ 29,722   $ 29,153   $ 30,864
  Collective Trust Fund prgms.     1,392     1,298     1,199     705     370
  Liquidity funds     2,653     2,505     1,643     1,880     1,868
  Total assets under mgmt.   $ 28,802   $ 30,442   $ 32,564   $ 31,738   $ 33,102
                               
Institutional Investors:                              
  Equity/Fixed Income prgms.   $ 46,259   $ 49,051   $ 54,537   $ 55,548   $ 59,852
  Collective Trust Fund prgms.     510     492     424     415     153
  Liquidity funds     3,356     3,888     3,725     2,958     3,272
  Total assets under mgmt.   $ 50,125   $ 53,431   $ 58,686   $ 58,921   $ 63,277
                               
Investment Managers:                              
  Equity/Fixed Income prgms.   $ 64   $ 57   $ 62   $ 61   $ 65
  Collective Trust Fund prgms.     10,896     11,255     12,781     13,004     15,433
  Liquidity funds     195     152     147     226     396
  Total assets under mgmt.   $ 11,155   $ 11,464   $ 12,990   $ 13,291   $ 15,894
                                 
  Client assets under admin. (A)     223,620     221,198     228,327     231,549     240,965
  Total assets   $ 234,775   $ 232,662   $ 241,317   $ 244,840   $ 256,859
                               
Investments in New Businesses:                              
  Equity/Fixed Income prgms.   $ 490   $ 515   $ 568   $ 551   $ 534
  Liquidity funds     41     37     34     30     29
  Total assets under mgmt.   $ 531   $ 552   $ 602   $ 581   $ 563
                               
LSV Asset Management                              
  Equity/Fixed Income prgms.   $ 49,444   $ 53,712   $ 60,607   $ 54,922   $ 58,886
                               
Total:                              
  Equity/Fixed Income prgms (B)   $ 136,456   $ 146,409   $ 162,676   $ 157,083   $ 168,161
  Collective Trust Fund prgms.     13,274     13,495     14,839     14,459     16,103
  Liquidity funds     11,774     12,135     11,098     10,157     10,907
  Total assets under mgmt.   $ 161,504   $ 172,039   $ 188,613   $ 181,699   $ 195,171
                                 
  Client assets under admin. (C)     233,465     231,553     239,243     242,268     252,576
  Total assets   $ 394,969   $ 403,592   $ 427,856   $ 423,967   $ 447,747
 
(A) Client assets under administration in the Investment Managers segment include $38.0 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of September 30, 2012).
(B) Equity/Fixed Income programs include $2.8 billion of assets invested in various asset allocation funds at September 30, 2012.
(C) In addition to the numbers presented, SEI also administers an additional $4.6 billion in Funds of Funds assets (as of September 30, 2012) on which SEI does not earn an administration fee.
 
 
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
                     
      3rd Qtr.     4th Qtr.     1st Qtr.     2nd Qtr.     3rd Qtr.
      2011     2011     2012     2012     2012
Private Banks:                              
  Equity/Fixed Income prgms.   $ 16,592   $ 16,624   $ 17,116   $ 16,794   $ 17,527
  Collective Trust Fund prgms.     505     464     436     396     230
  Liquidity funds     5,210     5,401     5,581     5,115     5,401
  Total assets under mgmt.   $ 22,307   $ 22,489   $ 23,133   $ 22,305   $ 23,158
                                 
  Client assets under admin.     10,364     10,290     10,211     10,631     10,867
  Total assets   $ 32,671   $ 32,779   $ 33,344   $ 32,936   $ 34,025
                               
Investment Advisors:                              
  Equity/Fixed Income prgms.   $ 26,658   $ 26,094   $ 28,426   $ 29,103   $ 30,032
  Collective Trust Fund prgms.     1,442     1,314     1,238     984     532
  Liquidity funds     2,224     2,499     2,015     1,806     1,886
  Total assets under mgmt.   $ 30,324   $ 29,907   $ 31,679   $ 31,893   $ 32,450
                               
Institutional Investors:                              
  Equity/Fixed Income prgms.   $ 49,115   $ 48,504   $ 52,270   $ 54,998   $ 57,763
  Collective Trust Fund prgms.     505     500     427     418     284
  Liquidity funds     3,416     3,461     3,765     3,147     3,253
  Total assets under mgmt.   $ 53,036   $ 52,465   $ 56,462   $ 58,563   $ 61,300
                               
Investment Managers:                              
  Equity/Fixed Income prgms.   $ 52   $ 65   $ 58   $ 63   $ 62
  Collective Trust Fund prgms.     11,292     10,773     11,983     12,991     14,797
  Liquidity funds     200     219     190     235     287
  Total assets under mgmt.   $ 11,544   $ 11,057   $ 12,231   $ 13,289   $ 15,146
                                 
  Client assets under admin.     236,953     224,633     224,547     229,873     237,155
  Total assets   $ 248,497   $ 235,690   $ 236,778   $ 243,162   $ 252,301
                               
Investments in New Businesses:                              
  Equity/Fixed Income prgms.   $ 525   $ 515   $ 549   $ 550   $ 530
  Liquidity funds     42     42     39     33     35
  Total assets under mgmt.   $ 567   $ 557   $ 588   $ 583   $ 565
                               
LSV Asset Management                              
  Equity/Fixed Income prgms.   $ 54,679   $ 54,021   $ 59,200   $ 55,994   $ 57,164
                               
Total:                              
  Equity/Fixed Income prgms   $ 147,621   $ 145,823   $ 157,619   $ 157,502   $ 163,078
  Collective Trust Fund prgms.     13,744     13,051     14,084     14,789     15,843
  Liquidity funds     11,092     11,622     11,590     10,336     10,862
  Total assets under mgmt.   $ 172,457   $ 170,496   $ 183,293   $ 182,627   $ 189,783
                                 
  Client assets under admin.     247,317     234,923     234,758     240,504     248,022
  Total assets   $ 419,774   $ 405,419   $ 418,051   $ 423,131   $ 437,805
                                 
                                 

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