Form: 8-K

Current report filing

January 28, 2015


Exhibit 99.1


Investor Contact:                         Media Contact:
Nicole Vattimo                            Dana Grosser
SEI    SEI
+1 610-676-4385                        +1 610-676-2459
nvattimo@seic.com                         dgrosser@seic.com
Pages:        8

FOR IMMEDIATE RELEASE

SEI REPORTS FOURTH-QUARTER 2014 FINANCIAL RESULTS
Income from Operations Increases 32 Percent

OAKS, Pa., January 28, 2015 -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the fourth-quarter 2014. Diluted earnings per share were $.45 in fourth-quarter 2014 compared to $.37 in fourth-quarter 2013. Earnings were negatively affected by an after-tax charge of approximately $10.7 million related to the write down of an equity investment in a wealth services firm based in China. This charge was partially offset by the tax benefit derived from the reinstatement of the Research and Development Tax Credit during the fourth-quarter 2014 (see Fourth-Quarter Business Highlights for more information).
Consolidated Overview
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except earnings per share)
 
For the Three Months Ended December 31,
 
 
 
For the Twelve Months Ended December 31,
 
 
 
 
2014
 
2013
 
%
 
2014
 
2013
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$322,757

 

$299,024

 
8%
 

$1,266,005

 

$1,126,132

 
12%
Net income attributable to SEI
 
77,097

 
65,515

 
18%
 
318,713

 
288,124

 
11%
Diluted earnings per share
 

$0.45

 

$0.37

 
22%
 

$1.85

 

$1.64

 
13%
"Our financial results for the fourth quarter finish a year of solid progress across all of our units," said Alfred P. West, Jr., SEI Chairman and CEO. "In addition, the continued market acceptance of our solutions validate the ongoing investments we make to effectively serve our clients in the rapidly changing wealth, investment and asset management markets.
"As always, our focus on creating long-term sustainable growth and increased shareholder value is unwavering."





Summary of Fourth-Quarter Results by Business Segment
(In thousands)
 
For the Three Months Ended December 31,
 
 
 
For the Twelve Months Ended December 31,
 
 
 
 
2014
 
2013
 
%
 
2014
 
2013
 
%
Private Banks:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 

$111,959

 

$105,880

 
6%
 

$441,467

 

$397,138

 
11%
   Expenses
 
99,975

 
102,767

 
(3)%
 
399,620

 
392,399

 
2%
   Operating Profit
 
11,984

 
3,113

 
NM
 
41,847

 
4,739

 
NM
   Gain on sale of subsidiary
 

 

 
—%
 
5,582

 
22,112

 
NM
   Total Profit
 
11,984

 
3,113

 
NM
 

$47,429

 

$26,851

 
NM
   Operating Margin (A)
 
11
%
 
3
%
 
 
 
9
%
 
1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Advisors:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 
72,872

 
65,384

 
11%
 
283,811

 
241,252

 
18%
   Expenses
 
38,448

 
35,671

 
8%
 
146,500

 
133,962

 
9%
   Operating Profit
 
34,424

 
29,713

 
16%
 
137,311

 
107,290

 
28%
   Operating Margin
 
47
%
 
45
%
 
 
 
48
%
 
44
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institutional Investors:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 
72,466

 
67,273

 
8%
 
284,677

 
257,658

 
10%
   Expenses
 
36,044

 
35,623

 
1%
 
140,659

 
133,218

 
6%
   Operating Profit
 
36,422

 
31,650

 
15%
 
144,018

 
124,440

 
16%
   Operating Margin
 
50
%
 
47
%
 
 
 
51
%
 
48
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Managers:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 
64,211

 
59,539

 
8%
 
251,310

 
226,081

 
11%
   Expenses
 
40,387

 
39,545

 
2%
 
159,176

 
148,977

 
7%
   Operating Profit
 
23,824

 
19,994

 
19%
 
92,134

 
77,104

 
19%
   Operating Margin
 
37
%
 
34
%
 
 
 
37
%
 
34
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in New Businesses:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 
1,249

 
948

 
32%
 
4,740

 
4,003

 
18%
   Expenses
 
5,063

 
3,949

 
28%
 
18,377

 
15,723

 
17%
   Operating Loss
 
(3,814
)
 
(3,001
)
 
NM
 
(13,637
)
 
(11,720
)
 
NM
 
 
 
 
 
 
 
 
 
 
 
 
 
Totals:
 
 
 
 
 
 
 
 
 
 
 
 
   Revenues
 

$322,757

 

$299,024

 
8%
 

$1,266,005

 

$1,126,132

 
12%
   Expenses
 
219,917

 
217,555

 
1%
 
864,332

 
824,279

 
5%
   Corporate overhead expenses
 
12,576

 
13,014

 
(3)%
 
48,889

 
53,733

 
(9)%
   NCI reflected in segments
 

 

 
—%
 

 
(289
)
 
NM
   Income from operations
 

$90,264

 

$68,455

 
32%
 

$352,784

 

$248,409

 
42%

(A) Percentages determined exclusive of gain on sale of subsidiary.

2



Fourth-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. Our average assets under management, excluding LSV, increased $17.4 billion, or 11 percent, to $169.1 billion in the fourth-quarter 2014, as compared to $151.7 billion during the fourth-quarter 2013.
Our average assets under administration increased $54.5 billion, or 17 percent, to $372.4 billion in the fourth-quarter 2014, as compared to $317.8 billion during the fourth-quarter 2013 (see attached Ending and Average Asset Balances schedules for further details).
Sales events, net of client losses, during fourth-quarter 2014 totaled approximately $23.1 million and are expected to generate net annualized recurring revenues of approximately $20.0 million when contract values are fully realized.
All four core business segments realized revenue and profit margin growth as compared to fourth-quarter 2013 results. Operating margins in all four core business segments improved primarily from increased recurring revenues generated from the higher levels of assets under management and administration.
Income from LSV increased $3.2 million, or 10 percent, to $35.3 million in fourth-quarter 2014 as compared to $32.1 million in fourth-quarter 2013 due to an increase in assets under management from market appreciation and an increase in performance fees earned by LSV.
We recorded an after-tax charge of approximately $10.7 million, or $0.06 diluted earnings per share, during the fourth-quarter 2014 for the write down of our investment in Gao Fu, a wealth services firm based in China. The after-tax earnings per share impact is a result of the non-deductibility of the charge for U.S. federal tax purposes due to the investment in Gao Fu being held by an Irish subsidiary. This charge against earnings is reflected in Equity in earnings of unconsolidated affiliates on the accompanying Consolidated Statements of Operations.
Stock-based compensation expense during the fourth-quarter 2014 decreased by $6.9 million primarily due to the acceleration of expense recognition during the comparable period of 2013 for stock options that achieved performance vesting targets earlier than originally estimated.
Amortization expense related to capitalized software was $10.0 million during the fourth-quarter 2014 as compared to $9.0 million during the fourth-quarter 2013 due to continued releases of the SEI Wealth PlatformSM.
Our effective tax rates were 33.3 percent in fourth-quarter 2014 and 35.2 percent in fourth-quarter 2013. The decrease in our tax rate was primarily due to reinstatement of the Research and Development Tax Credit, which occurred during the fourth-quarter 2014. This tax benefit was offset by the non-deductibility of a significant portion of the Gao Fu charge noted above.
In fourth-quarter 2014, we repurchased 1.6 million shares of our common stock for $62.6 million.

3



Earnings Conference Call
A conference call to review earnings is scheduled for 2 p.m. Eastern time on January 28, 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 351742.

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, 2014, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $625 billion in mutual fund and pooled or separately managed assets, including $253 billion in assets under management and $372 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.




4



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,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
Asset management, admin. and distribution fees
 

$242,966

 

$220,585

 

$948,932

 

$831,720

Information processing and software servicing fees
 
70,437

 
70,085

 
285,463

 
261,691

Transaction–based and trade execution fees
 
9,354

 
8,354

 
31,610

 
32,721

 
 
 
 
 
 
 
 
 
Total revenues
 
322,757

 
299,024

 
1,266,005

 
1,126,132

 
 
 
 
 
 
 
 
 
Subadvisory, distribution and other asset mgmt costs
 
38,798

 
33,194

 
149,791

 
121,989

Software royalties and other information processing costs
 
7,990

 
8,343

 
33,522

 
31,255

Brokerage commissions
 
6,785

 
6,358

 
23,002

 
24,649

Compensation, benefits and other personnel
 
95,663

 
92,817

 
376,873

 
357,453

Stock-based compensation
 
3,982

 
10,868

 
13,463

 
37,865

Consulting, outsourcing and professional fees
 
33,535

 
32,732

 
136,818

 
131,399

Data processing and computer related
 
12,959

 
14,373

 
52,512

 
51,401

Facilities, supplies and other costs
 
16,759

 
17,333

 
66,113

 
64,613

Amortization
 
10,068

 
9,104

 
38,679

 
34,602

Depreciation
 
5,954

 
5,447

 
22,448

 
22,497

 
 
 
 
 
 
 
 
 
Total expenses
 
232,493

 
230,569

 
913,221

 
877,723

 
 
 
 
 
 
 
 
 
Income from operations
 
90,264

 
68,455

 
352,784

 
248,409

 
 
 
 
 
 
 
 
 
Net gain on investments
 
565

 
21

 
614

 
659

Interest and dividend income
 
1,106

 
828

 
3,354

 
3,248

Interest expense
 
(116
)
 
(113
)
 
(458
)
 
(535
)
Equity in earnings of unconsolidated affiliates
 
23,706

 
31,872

 
127,786

 
118,076

Gain on sale of subsidiary
 

 

 
5,582

 
22,112

Other income
 

 

 

 
43,429

 
 
 
 
 
 
 
 
 
Income before income taxes
 
115,525

 
101,063

 
489,662

 
435,398

 
 
 
 
 
 
 
 
 
Income taxes
 
38,428

 
35,548

 
170,949

 
146,924

 
 
 
 
 
 
 
 
 
Net income
 
77,097

 
65,515

 
318,713

 
288,474

 
 
 
 
 
 
 
 
 
Less: Net income attributable to the noncontrolling interest
 

 

 

 
(350
)
 
 
 
 
 
 
 
 
 
Net income attributable to SEI
 

$77,097

 

$65,515

 

$318,713

 

$288,124

 
 
 
 
 
 
 
 
 
Basic earnings per common share
 

$0.46

 

$0.39

 

$1.89

 

$1.68

 
 
 
 
 
 
 
 
 
Shares used to calculate basic earnings per share
 
167,146

 
170,113

 
168,246

 
171,561

 
 
 
 
 
 
 
 
 
Diluted earnings per common share
 

$0.45

 

$0.37

 

$1.85

 

$1.64

 
 
 
 
 
 
 
 
 
Shares used to calculate diluted earnings per share
 
171,326

 
174,766

 
172,565

 
175,718





5



SEI INVESTMENTS COMPANY
BALANCE SHEETS
(In thousands)
(Unaudited)

 
 
December 31,
 
December 31,
 
 
2014
 
2013
Assets
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
 

$667,446

 

$578,273

Restricted cash
 
5,801

 
5,500

Receivables from regulated investment companies
 
48,393

 
39,364

Receivables, net
 
194,419

 
186,664

Securities owned
 
21,175

 
21,133

Other current assets
 
18,193

 
16,166

Total Current Assets
 
955,427

 
847,100

 
 
 
 
 
Property and Equipment, net
 
125,535

 
118,995

Capitalized software, net
 
309,040

 
312,615

Investments available for sale
 
77,609

 
83,323

Investments in affiliated funds, at fair value
 
4,523

 
4,849

Investment in unconsolidated affiliates
 
54,290

 
61,370

Other assets, net
 
16,451

 
10,917

Total Assets
 

$1,542,875

 

$1,439,169

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
 

$10,588

 

$16,235

Accrued liabilities
 
207,429

 
188,123

Deferred income taxes, net
 
1,414

 
1,653

Deferred revenue
 
1,749

 
1,977

Total Current Liabilities
 
221,180

 
207,988

 
 
 
 
 
Deferred income taxes
 
63,755

 
66,572

Other long-term liabilities
 
10,327

 
8,607

Total Liabilities
 
295,262

 
283,167

 
 
 
 
 
Shareholders' Equity:
 
 
 
 
Common stock
 
1,667

 
1,692

Capital in excess of par value
 
834,615

 
721,219

Retained earnings
 
420,226

 
431,604

Accumulated other comprehensive (loss) income, net
 
(8,895
)
 
1,487

Total Shareholders' Equity
 
1,247,613

 
1,156,002

Total Liabilities and Shareholders' Equity
 

$1,542,875

 

$1,439,169




6



SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
 
 
 
Dec 31,
 
Mar. 31,
 
Jun. 30,
 
Sept. 30,
 
Dec 31,
 
 
 
2013
 
2014
 
2014
 
2014
 
2014
Private Banks:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$15,472

 

$16,918

 

$18,679

 

$18,634

 

$18,666

Collective Trust Fund programs
 
 
14

 
14

 
12

 
11

 
8

Liquidity funds
 
 
5,685

 
5,670

 
5,274

 
5,331

 
5,889

Total assets under management
 
 

$21,171

 

$22,602

 

$23,965

 

$23,976

 

$24,563

Client assets under administration
 
 
15,272

 
15,641

 
15,347

 
16,288

 
16,741

Total assets
 
 

$36,443

 

$38,243

 

$39,312

 

$40,264

 

$41,304

 
 
 
 
 
 
 
 
 
 
 
 
Investment Advisors:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$38,574

 

$39,981

 

$42,125

 

$42,260

 

$43,845

Collective Trust Fund programs
 
 
11

 
13

 
13

 
9

 
9

Liquidity funds
 
 
2,846

 
2,802

 
2,696

 
3,086

 
3,173

Total assets under management
 
 

$41,431

 

$42,796

 

$44,834

 

$45,355

 

$47,027

 
 
 
 
 
 
 
 
 
 
 
 
Institutional Investors:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$66,548

 

$69,194

 

$71,598

 

$72,006

 

$72,828

Collective Trust Fund programs
 
 
109

 
102

 
100

 
98

 
95

Liquidity funds
 
 
2,644

 
2,505

 
2,414

 
2,891

 
2,929

Total assets under management
 
 

$69,301

 

$71,801

 

$74,112

 

$74,995

 

$75,852

 
 
 
 
 
 
 
 
 
 
 
 
Investment Managers:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$69

 

$68

 

$64

 

$64

 

$27

Collective Trust Fund programs
 
 
22,377

 
22,633

 
22,598

 
21,297

 
20,833

Liquidity funds
 
 
718

 
782

 
802

 
1,018

 
946

Total assets under management
 
 

$23,164

 

$23,483

 

$23,464

 

$22,379

 

$21,806

Client assets under administration (A)
 
 
311,992

 
326,735

 
337,492

 
346,841

 
355,890

Total assets
 
 

$335,156

 

$350,218

 

$360,956

 

$369,220

 

$377,696

 
 
 
 
 
 
 
 
 
 
 
 
Investments in New Businesses:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$619

 

$632

 

$659

 

$703

 

$736

Liquidity funds
 
 
46

 
49

 
38

 
118

 
98

Total assets under management
 
 

$665

 

$681

 

$697

 

$821

 

$834

 
 
 
 
 
 
 
 
 
 
 
 
LSV Asset Management:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$76,189

 

$77,973

 

$82,026

 

$81,536

 

$82,665

 
 
 
 
 
 
 
 
 
 
 
 
Total:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs (B)
 
 

$197,471

 

$204,766

 

$215,151

 

$215,203

 

$218,767

Collective Trust Fund programs
 
 
22,511

 
22,762

 
22,723

 
21,415

 
20,945

Liquidity funds
 
 
11,939

 
11,808

 
11,224

 
12,444

 
13,035

Total assets under management
 
 

$231,921

 

$239,336

 

$249,098

 

$249,062

 

$252,747

 
 
 
 
 
 
 
 
 
 
 
 
Client assets under administration (C)
 
 
327,264

 
342,376

 
352,839

 
363,129

 
372,631

Total assets
 
 

$559,185

 

$581,712

 

$601,937

 

$612,191

 

$625,378

(A)
Client assets under administration in the Investment Managers segment include $53.0 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of December 31, 2014).
(B)
Equity/Fixed Income programs include $5.2 billion of assets invested in various asset allocation funds at December 31, 2014.
(C)
In addition to the numbers presented, SEI also administers an additional $6.5 billion in Funds of Funds assets (as of
December 31, 2014) on which SEI does not earn an administration fee.



7



SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
 
 
 
4th Qtr.
 
1st Qtr.
 
2nd Qtr.
 
3rd Qtr.
 
4th Qtr.
 
 
 
2013
 
2014
 
2014
 
2014
 
2014
Private Banks:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$14,901

 

$16,114

 

$17,829

 

$18,804

 

$18,606

Collective Trust Fund programs
 
 
11

 
14

 
12

 
12

 
10

Liquidity funds
 
 
5,218

 
5,757

 
5,429

 
5,466

 
5,537

Total assets under management
 
 

$20,130

 

$21,885

 

$23,270

 

$24,282

 

$24,153

Client assets under administration
 
 
14,702

 
15,366

 
15,069

 
15,707

 
16,451

Total assets
 
 

$34,832

 

$37,251

 

$38,339

 

$39,989

 

$40,604

 
 
 
 
 
 
 
 
 
 
 
 
Investment Advisors:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$37,520

 

$39,005

 

$40,887

 

$42,389

 

$43,104

Collective Trust Fund programs
 
 
13

 
13

 
13

 
11

 
9

Liquidity funds
 
 
2,785

 
2,806

 
2,637

 
2,830

 
3,087

Total assets under management
 
 

$40,318

 

$41,824

 

$43,537

 

$45,230

 

$46,200

 
 
 
 
 
 
 
 
 
 
 
 
Institutional Investors:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$65,750

 

$67,697

 

$70,706

 

$72,010

 

$72,771

Collective Trust Fund programs
 
 
110

 
103

 
134

 
98

 
96

Liquidity funds
 
 
2,720

 
2,571

 
2,664

 
2,883

 
2,973

Total assets under management
 
 

$68,580

 

$70,371

 

$73,504

 

$74,991

 

$75,840

 
 
 
 
 
 
 
 
 
 
 
 
Investment Managers:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$75

 

$68

 

$68

 

$64

 

$64

Collective Trust Fund programs
 
 
21,345

 
22,004

 
22,447

 
22,123

 
21,140

Liquidity funds
 
 
592

 
738

 
824

 
962

 
904

Total assets under management
 
 

$22,012

 

$22,810

 

$23,339

 

$23,149

 

$22,108

Client assets under administration
 
 
303,131

 
320,644

 
333,373

 
344,661

 
355,903

Total assets
 
 

$325,143

 

$343,454

 

$356,712

 

$367,810

 

$378,011

 
 
 
 
 
 
 
 
 
 
 
 
Investments in New Businesses:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$613

 

$623

 

$640

 

$688

 

$731

Liquidity funds
 
 
33

 
46

 
43

 
139

 
97

Total assets under management
 
 

$646

 

$669

 

$683

 

$827

 

$828

 
 
 
 
 
 
 
 
 
 
 
 
LSV Asset Management:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$75,240

 

$76,306

 

$79,866

 

$82,402

 

$83,187

 
 
 
 
 
 
 
 
 
 
 
 
Total:
 
 
 
 
 
 
 
 
 
 
 
Equity/Fixed Income programs
 
 

$194,099

 

$199,813

 

$209,996

 

$216,357

 

$218,463

Collective Trust Fund programs
 
 
21,479

 
22,134

 
22,606

 
22,244

 
21,255

Liquidity funds
 
 
11,348

 
11,918

 
11,597

 
12,280

 
12,598

Total assets under management
 
 

$226,926

 

$233,865

 

$244,199

 

$250,881

 

$252,316

 
 
 
 
 
 
 
 
 
 
 
 
Client assets under administration
 
 
317,833

 
336,010

 
348,442

 
360,368

 
372,354

Total assets
 
 

$544,759

 

$569,875

 

$592,641

 

$611,249

 

$624,670





8