Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

October 26, 2020

Documents


Exhibit 99.1

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Investor Contact:                         Media Contact:
Lindsey Opsahl                        Leslie Wojcik
SEI                                    SEI
+1 610-676-4052                        +1 610-676-4191
lopsahl@seic.com                        lwojcik@seic.com
Pages:        8

FOR IMMEDIATE RELEASE
SEI Reports Third-Quarter 2020 Financial Results
OAKS, Pa., Oct. 21, 2020 – SEI Investments Company (NASDAQ:SEIC) today announced financial results for the third-quarter 2020. Diluted earnings per share were $0.75 in third-quarter 2020 compared to $0.86 in third-quarter 2019. On Tuesday, Oct. 20, 2020 the Board of Directors of SEI Investments Company approved an increase in its stock repurchase program by an additional $250 million, increasing the available authorization under the program to approximately $292 million.
Consolidated Overview
(In thousands, except earnings per share) For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 % 2020 2019 %
Revenues $424,927  $416,254  2% $1,240,335  $1,226,660  1%
Net income 111,096  132,168  (16)% 321,404  372,689  (14)%
Diluted earnings per share $0.75  $0.86  (13)% $2.14  $2.40  (11)%
“The pandemic continues, as does our focus on clients and our employees’ health and safety. We are fortunate to have a strong global workforce that is resilient, engaged and dedicated to providing our clients best-in-class service, and committed to our company’s growth. Words can’t express our appreciation for their efforts, along with all of the healthcare and service providers who look after our health and well-being,” said Alfred P. West, Jr., SEI Chairman and CEO.

“Our business continued to rebound during the quarter, as our markets adjusted to the current environment. Our financial results reflect our strong sales activity, while we invest in our strategic priorities. Our diverse and talented global workforce drives our ability to serve our clients and make an impact on our communities. Looking to the future, we will capitalize on the opportunities in our markets to deliver long-term value to our shareholders, employees and clients.”


Summary of Third-Quarter Results by Business Segment
For the Three Months Ended September 30, For the Nine Months Ended September 30,
(In thousands)
2020 2019 % 2020 2019 %
Private Banks:
Revenues $114,792  $117,250  (2)% $335,739  $351,601  (5)%
Expenses 113,066  110,788  2% 331,442  329,540  1%
Operating Profit 1,726  6,462  (73)% 4,297  22,061  (81)%
Operating Margin 2  % 6  % 1  % 6  %
Investment Advisors:
Revenues 103,189  103,033  —% 299,218  297,916  —%
Expenses 51,519  51,509  —% 154,100  154,569  —%
Operating Profit 51,670  51,524  —% 145,118  143,347  1%
Operating Margin 50  % 50  % 48  % 48  %
Institutional Investors:
Revenues 79,583  80,337  (1)% 235,309  241,559  (3)%
Expenses 37,812  37,268  1% 113,016  115,383  (2)%
Operating Profit 41,771  43,069  (3)% 122,293  126,176  (3)%
Operating Margin 52  % 54  % 52  % 52  %
Investment Managers:
Revenues 123,846  112,186  10% 359,815  326,037  10%
Expenses 79,838  71,889  11% 228,795  209,326  9%
Operating Profit 44,008  40,297  9% 131,020  116,711  12%
Operating Margin 36  % 36  % 36  % 36  %
Investments in New Businesses:
Revenues 3,517  3,448  2% 10,254  9,547  7%
Expenses 13,315  7,926  68% 37,691  20,663  82%
Operating Loss (9,798) (4,478) NM (27,437) (11,116) NM
Totals:
Revenues $424,927  $416,254  2% $1,240,335  $1,226,660  1%
Expenses 295,550  279,380  6% 865,044  829,481  4%
Corporate Overhead Expenses 18,040  16,237  11% 53,414  52,845  1%
Income from Operations $111,337  $120,637  (8)% $321,877  $344,334  (7)%


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Third-Quarter Business Highlights:
•Revenues from Asset management, administration, and distribution fees increased primarily from higher assets under administration due to positive cash flows from new and existing clients in our Investment Managers segment.
•Our average assets under administration increased $84.8 billion, or 13%, to $738.8 billion in the third-quarter 2020, as compared to $654.0 billion during the third-quarter 2019 (see attached Average Asset Balances schedules for further details).
•Our average assets under management, excluding LSV, increased $13.1 billion, or 6%, to $246.1 billion in the third-quarter 2020, as compared to $233.0 billion during the third-quarter 2019 (see attached Average Asset Balances schedules for further details).
•Sales events, net of client losses, during third-quarter 2020 totaled approximately $27.9 million and are expected to generate net annualized recurring revenues of approximately $14.6 million when contract values are fully realized. For the nine months ended Sept. 30, 2020, sales events, net of client losses, totaled approximately $84.8 million and are expected to generate net annualized recurring revenues of approximately $63.5 million when contract values are fully realized.
•The increase in our operational expenses was primarily due to increased consulting costs related to our continued investments in new business opportunities, such as our One SEI strategy and IT Services offering, as well as increased personnel costs to service new clients in our Investment Managers segment. This increase was partially offset by a decline in travel and promotional-related expenses, as our sales and client relationship personnel adapted to COVID-19 restrictions.
•Our earnings from LSV decreased by $9.3 million, or 25%, to $28.3 million in third-quarter 2020, as compared to $37.6 million in third-quarter 2019. The decrease in earnings was due to lower assets under management from negative cash flows from existing clients, market depreciation and client losses.
•We capitalized $5.4 million of software development costs in third-quarter 2020 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $10.9 million in third-quarter 2020.
•Our effective tax rates were 21.4% in third-quarter 2020 and 18.9% in third-quarter 2019. The increase in our effective tax rate was due to decreased tax benefits associated with a lower volume of stock option exercises and a higher effective state tax rate.
•We repurchased 2.1 million shares of our common stock for $108.7 million during the third-quarter 2020.


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Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Oct. 21, 2020. Investors may listen to the call at seic.com/ir-events. Investors may also listen to a replay by telephone at (USA) 866-207-1041; (International) 402-970-0847; Access Code: 4259639.

About SEI
After 50 years in business, SEI (NASDAQ:SEIC) remains a leading global provider of investment processing, investment management, and investment operations solutions designed to help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of Sept. 30, 2020, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers approximately $1 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including approximately $330 billion in assets under management and $755 billion in client assets under administration. For more information, visit seic.com.


This release contains forward-looking statements within the meaning or the rules and regulations of the Securities and Exchange Commission. In some cases you can identify forward-looking statements by terminology, such as ‘'may,’' '‘will,’' ‘'expect,’' ‘'believe’' and ‘'continue’' or ‘‘appear.’’ Our forward-looking statements include our current expectations as to:
• revenue that we believe will be generated by sales events that occurred during the quarter,
• the rebound of our business,
• whether and the degree to which we will invest in our strategic priorities, and
• whether capitalizing on the opportunities in our markets will deliver long-term value for any of our shareholders, employees or clients.
You should not place undue reliance on our forward-looking statements, as they are based on the current beliefs and expectations of our management and subject to significant risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe the assumptions upon which we base our forward-looking statements are reasonable, they could be inaccurate. Some of the risks and important factors that could cause actual results to differ from those described in our forward-looking statements can be found in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended Dec. 31, 2019, filed with the Securities and Exchange Commission.

# # #

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SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2020 2019 2020 2019
Asset management, admin. and distribution fees $339,609  $330,943  $992,039  $969,812 
Information processing and software servicing fees 85,318  85,311  248,296  256,848 
Total revenues 424,927  416,254  1,240,335  1,226,660 
Subadvisory, distribution and other asset mgmt. costs 45,126  44,978  134,645  134,960 
Software royalties and other information processing costs 6,992  7,198  21,828  22,719 
Compensation, benefits and other personnel 134,795  130,579  391,607  386,913 
Stock-based compensation 6,467  5,453  20,458  15,555 
Consulting, outsourcing and professional fees 57,949  48,789  168,350  144,325 
Data processing and computer related 24,437  22,338  71,647  65,514 
Facilities, supplies and other costs 16,679  15,926  47,448  51,771 
Amortization 13,200  12,947  39,417  38,407 
Depreciation 7,945  7,409  23,058  22,162 
Total expenses 313,590  295,617  918,458  882,326 
Income from operations 111,337  120,637  321,877  344,334 
Net gain (loss) on investments 776  611  (1,310) 2,121 
Interest and dividend income 1,009  4,167  5,582  12,737 
Interest expense (153) (154) (456) (477)
Equity in earnings of unconsolidated affiliate 28,305  37,609  86,488  112,758 
Income before income taxes 141,274  162,870  412,181  471,473 
Income taxes 30,178  30,702  90,777  98,784 
Net income $111,096  $132,168  $321,404  $372,689 
Basic earnings per common share $0.76  $0.88  $2.18  $2.45 
Shares used to calculate basic earnings per share 145,812  150,855  147,586  152,009 
Diluted earnings per common share $0.75  $0.86  $2.14  $2.40 
Shares used to calculate diluted earnings per share 147,907  154,227  149,958  155,311 
Dividends declared per common share $—  $—  $0.35  $0.33 

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SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2020 2019
Assets
Current Assets:
Cash and cash equivalents $767,698  $841,446 
Restricted cash 3,101  3,101 
Receivables from investment products 51,644  54,165 
Receivables, net of allowance for doubtful accounts of $1,310 and $1,201 378,170  340,358 
Securities owned 35,820  33,486 
Other current assets 38,475  32,289 
Total Current Assets 1,274,908  1,304,845 
Property and Equipment, net of accumulated depreciation of $370,072 and $353,453 180,531  160,859 
Operating Lease Right-of-Use Assets 38,945  42,789 
Capitalized Software, net of accumulated amortization of $479,159 and $442,677 278,226  296,068 
Available for Sale and Equity Securities 116,564  116,917 
Investments in Affiliated Funds, at fair value 5,207  5,988 
Investment in Unconsolidated Affiliate 33,117  67,413 
Goodwill 64,489  64,489 
Intangible Assets, net of accumulated amortization of $11,536 and $8,773 25,225  27,987 
Deferred Contract Costs 33,833  30,991 
Deferred Income Taxes 2,065  2,822 
Other Assets, net 32,507  30,202 
Total Assets $2,085,617  $2,151,370 
Liabilities and Equity
Current Liabilities:
Accounts payable $13,038  $4,423 
Accrued liabilities 223,217  272,801 
Current portion of long-term operating lease liabilities 8,445  9,156 
Deferred revenue 5,815  7,185 
Total Current Liabilities 250,515  293,565 
Long-term Income Taxes Payable 803  803 
Deferred Income Taxes 47,578  55,722 
Long-term Operating Lease Liabilities 34,768  38,450 
Other Long-term Liabilities 22,520  24,052 
Total Liabilities 356,184  412,592 
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 144,491 and 149,745 shares issued and outstanding 1,445  1,497 
Capital in excess of par value 1,174,142  1,158,900 
Retained earnings 581,244  601,885 
Accumulated other comprehensive loss, net (27,398) (23,504)
Total Shareholders' Equity 1,729,433  1,738,778 
Total Liabilities and Shareholders' Equity $2,085,617  $2,151,370 

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ENDING ASSET BALANCES
(In millions) (Unaudited)
Sept. 30, Dec. 31, Mar. 31, Jun. 30, Sept. 30,
2019 2019 2020 2020 2020
Private Banks:
Equity and fixed-income programs
 $22,580  $23,851  $21,160  $22,974  $23,499 
Collective trust fund programs
 4  4  5  5  6 
Liquidity funds
 3,695  3,405  4,143  4,291  3,718 
Total assets under management
 $26,279  $27,260  $25,308  $27,270  $27,223 
Client assets under administration
 23,985  25,801  21,497  23,903  24,174 
Total assets
 $50,264  $53,061  $46,805  $51,173  $51,397 
Investment Advisors:
Equity and fixed-income programs
 $65,059  $67,895  $54,856  $59,958  $65,581 
Collective trust fund programs
 4  4  2  3  3 
Liquidity funds
 2,673  2,887  5,969  6,648  3,866 
Total assets under management
 $67,736  $70,786  $60,827  $66,609  $69,450 
Institutional Investors:
Equity and fixed-income programs
 $82,659  $84,291  $72,399  $80,257  $83,846 
Collective trust fund programs
 81  83  94  103  101 
Liquidity funds
 2,290  1,746  3,672  1,924  2,096 
Total assets under management
 $85,030  $86,120  $76,165  $82,284  $86,043 
Client assets under advisement
 4,467  3,948  3,406  3,326  3,618 
Total assets
 $89,497  $90,068  $79,571  $85,610  $89,661 
Investment Managers:
Collective trust fund programs
 53,169  58,070  48,226  58,178  63,277 
Liquidity funds
 477  479  392  664  389 
Total assets under management
 $53,646  $58,549  $48,618  $58,842  $63,666 
Client assets under administration (A)
 637,986  657,541  610,794  668,611  730,369 
Total assets
 $691,632  $716,090  $659,412  $727,453  $794,035 
Investments in New Businesses:
Equity and fixed-income programs
 $1,621  $1,688  $1,484  $1,498  $1,572 
Liquidity funds
 132  158  152  194  169 
Total assets under management
 $1,753  $1,846  $1,636  $1,692  $1,741 
Client assets under advisement
 825  1,343  1,056  1,193  1,179 
Total assets
 $2,578  $3,189  $2,692  $2,885  $2,920 
LSV Asset Management:
Equity and fixed-income programs (B)
 $100,295  $107,476  $70,851  $81,134  $82,051 
Total:
Equity and fixed-income programs (C)
 $272,214  $285,201  $220,750  $245,821  $256,549 
Collective trust fund programs
 53,258  58,161  48,327  58,289  63,387 
Liquidity funds
 9,267  8,675  14,328  13,721  10,238 
Total assets under management
 $334,739  $352,037  $283,405  $317,831  $330,174 
Client assets under advisement
 5,292  5,291  4,462  4,519  4,797 
Client assets under administration (D)
 661,971  683,342  632,291  692,514  754,543 
Total assets
 $1,002,002  $1,040,670  $920,158  $1,014,864  $1,089,514 
(A)Client assets under administration in the Investment Managers segment include $51.1 billion of assets that are at fee levels below our normal full-service assets (as of September 30, 2020).
(B)Equity and fixed-income programs include $1.6 billion of assets managed by LSV in which fees are based on performance only (as of September 30, 2020).
(C)Equity and fixed-income programs include $7.5 billion of assets invested in various asset allocation funds at September 30, 2020.
(D)In addition to the numbers presented, SEI also administers an additional $11.5 billion in Funds of Funds assets (as of
September 30, 2020) on which SEI does not earn an administration fee.
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AVERAGE ASSET BALANCES
(In millions) (Unaudited)
3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr.
2019 2019 2020 2020 2020
Private Banks:
Equity and fixed-income programs
 $22,432  $23,106  $24,657  $22,229  $23,740 
Collective trust fund programs
 4  4  4  5  7 
Liquidity funds
 3,625  3,581  3,581  4,366  3,948 
Total assets under management
 $26,061  $26,691  $28,242  $26,600  $27,695 
Client assets under administration
 23,717  24,930  24,840  23,819  25,295 
Total assets
 $49,778  $51,621  $53,082  $50,419  $52,990 
Investment Advisors:
Equity and fixed-income programs
 $64,761  $66,371  $64,933  $57,429  $64,479 
Collective trust fund programs
 5  4  3  3  3 
Liquidity funds
 2,580  2,673  3,284  6,923  4,569 
Total assets under management
 $67,346  $69,048  $68,220  $64,355  $69,051 
Institutional Investors:
Equity and fixed-income programs
 $82,398  $83,304  $79,926  $77,037  $82,830 
Collective trust fund programs
 80  82  86  100  102 
Liquidity funds
 2,287  2,106  2,342  2,476  2,120 
Total assets under management
 $84,765  $85,492  $82,354  $79,613  $85,052 
Client assets under advisement
 3,797  4,106  3,760  3,362  3,565 
Total assets
 $88,562  $89,598  $86,114  $82,975  $88,617 
Investment Managers:
Collective trust fund programs
 52,587  55,499  55,952  54,061  62,028 
Liquidity funds
 460  642  617  482  565 
Total assets under management
 $53,047  $56,141  $56,569  $54,543  $62,593 
Client assets under administration (A)
 630,328  646,592  654,386  649,012  713,528 
Total assets
 $683,375  $702,733  $710,955  $703,555  $776,121 
Investments in New Businesses:
Equity and fixed-income programs
 $1,609  $1,649  $1,663  $1,468  $1,560 
Liquidity funds
 142  145  168  182  180 
Total assets under management
 $1,751  $1,794  $1,831  $1,650  $1,740 
Client assets under advisement
 842  1,044  1,222  1,148  1,206 
Total assets
 $2,593  $2,838  $3,053  $2,798  $2,946 
LSV Asset Management:
Equity and fixed-income programs (B)
 $100,094  $104,814  $88,059  $80,395  $83,536 
Total:
Equity and fixed-income programs (C)
 $271,294  $279,244  $259,238  $238,558  $256,145 
Collective trust fund programs
 52,676  55,589  56,045  54,169  62,140 
Liquidity funds
 9,094  9,147  9,992  14,429  11,382 
Total assets under management
 $333,064  $343,980  $325,275  $307,156  $329,667 
Client assets under advisement
 4,639  5,150  4,982  4,510  4,771 
Client assets under administration (D)
 654,045  671,522  679,226  672,831  738,823 
Total assets
 $991,748  $1,020,652  $1,009,483  $984,497  $1,073,261 
(A)    Average client assets under administration in the Investment Managers segment during third-quarter 2020 include $50.4 billion that are at fee levels below our normal full-service assets.
(B)    Equity and fixed-income programs include $1.6 billion of average assets managed by LSV in which fees are based on performance only during third-quarter 2020.
(C)    Equity and fixed-income programs include $7.5 billion of average assets invested in various asset allocation funds during third-quarter 2020.
(D)    In addition to the numbers presented, SEI also administers an additional $11.4 billion of average assets in Funds of Funds assets during third-quarter 2020 on which SEI does not earn an administration fee.
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