SEI Reports First-Quarter 2016 Financial Results

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OAKS, PA -- (Marketwired) -- 04/20/16 -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for the first-quarter 2016. Diluted earnings per share were $.47 in first-quarter 2016 compared to $.50 in first-quarter 2015. Diluted earnings per share in first-quarter 2016 and 2015 each reflect pre-tax gains of $2.8 million, or $.01 per share, from the sale of SEI Asset Korea.

Consolidated Overview
(In thousands, except earnings per share) For the Three Months
Ended March 31,
2016 2015 %
Revenues $ 334,263 $ 325,444 3 %
Net income 77,497 84,611 (8 )%
Diluted earnings per share $ 0.47 $ 0.50 (6 )%

"Our results for the first quarter reflect the growing adoption of our platform solutions across our target markets and customer bases while we manage through capital market volatility," said Alfred P. West, Jr., SEI Chairman and CEO. "SEI's sales success during the quarter is a testament to the relevance of our offerings to our clients' businesses.

"In all segments of our company, we are continuously investing in products and services that will position us well for the long term, while creating sustainable growth and increased shareholder value."

Summary of First-Quarter Results by Business Segment
(In thousands) For the Three Months
Ended March 31,
2016 2015 %
Private Banks:
Revenues $ 113,361 $ 111,213 2 %
Expenses 103,741 99,256 5 %
Operating Profit 9,620 11,957 (20 )%
Gain on sale of subsidiary 2,791 2,791 NM
Segment Profit 12,411 14,748 NM
Operating Margin (A) 8 % 11 %
Investment Advisors:
Revenues 76,679 74,015 4 %
Expenses 44,774 39,059 15 %
Operating Profit 31,905 34,956 (9 )%
Operating Margin 42 % 47 %
Institutional Investors:
Revenues 72,897 73,548 (1 )%
Expenses 35,382 35,211 -- %
Operating Profit 37,515 38,337 (2 )%
Operating Margin 51 % 52 %
Investment Managers:
Revenues 69,918 65,367 7 %
Expenses 45,275 40,623 11 %
Operating Profit 24,643 24,744 -- %
Operating Margin 35 % 38 %
Investments in New Businesses:
Revenues 1,408 1,301 8 %
Expenses 5,232 4,866 8 %
Operating Loss (3,824 ) (3,565 ) NM
Totals:
Revenues $ 334,263 $ 325,444 3 %
Expenses 234,404 219,015 7 %
Corporate overhead expenses 13,047 13,359 (2 )%
Income from operations $ 86,812 $ 93,070 (7 )%
(A) Percentages determined exclusive of gain on sale of subsidiary.

First-Quarter Business Highlights:

  • Revenue growth in the quarter was primarily driven by higher Asset management, administration, and distribution fees from improved cash flows from new and existing clients. The market volatility occurring during the second half of 2015 and early 2016 negatively impacted our asset-based fee revenues and partially offset our revenue growth.
  • Sales events, net of client losses, during first-quarter 2016 totaled approximately $38.6 million and are expected to generate net annualized recurring revenues of approximately $33.2 million when contract values are fully realized.
  • Our average assets under management, excluding LSV, increased $8.2 billion, or five percent, to $180.7 billion, as compared to $172.5 billion during the first-quarter 2015 (see attached Average Asset Balances schedules for further details).
  • Our average assets under administration increased $20.0 billion, or five percent, to $404.7 billion in the first-quarter 2016, as compared to $384.7 billion during the first-quarter 2015 (see attached Average Asset Balances schedules for further details).
  • Information processing and software servicing fees in our Private Banks segment increased $2.7 million in the first-quarter 2016 compared to the prior year period primarily due to increased assets from new and existing clients processed on the SEI Wealth Platform(SM).
  • Our earnings from LSV decreased by $5.2 million, or 15 percent, to $29.2 million in first-quarter 2016 as compared to $34.3 million in first-quarter 2015. The decline in earnings was due to lower assets under management from unfavorable market conditions and reduced performance fees.
  • We capitalized $9.5 million and $8.0 million of software development costs in first-quarter 2016 and 2015, respectively, of which $7.6 million and $7.3 million are related to continued enhancements to the SEI Wealth Platform.
  • Amortization expense related to the SEI Wealth Platform increased to $11.0 million during the first-quarter 2016 as compared to $10.3 million during the first-quarter 2015 due to continued enhancements.
  • Although revenues increased in our Investment Advisors and Investment Managers segments, higher personnel and other operating costs mainly related to servicing new and existing clients and increased technology development spending in these segments caused operating margins to decline.
  • We recorded pre-tax gains of $2.8 million, or $.01 diluted earnings per share, from the sale of SEI Asset Korea in first-quarter 2016 and 2015.
  • Our effective tax rates were 35.2 percent in first-quarter 2016 and 35.4 percent in first-quarter 2015.
  • We repurchased 2.1 million shares of our common stock for $80.6 million during the first-quarter 2016.

Earnings Conference Call
A conference call to review earnings is scheduled for 2 p.m. Eastern time on April 20, 2016. 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 391245.

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 March 31, 2016, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $684 billion in mutual fund and pooled or separately managed assets, including $265 billion in assets under management and $419 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
March 31,
2016 2015
Asset management, admin. and distribution fees $ 251,437 $ 246,768
Information processing and software servicing fees 73,399 70,653
Transaction-based and trade execution fees 9,427 8,023
Total revenues 334,263 325,444
Subadvisory, distribution and other asset mgmt costs 39,195 38,517
Software royalties and other information processing costs 7,748 7,509
Brokerage commissions 7,108 5,972
Compensation, benefits and other personnel 101,931 94,186
Stock-based compensation 3,789 3,750
Consulting, outsourcing and professional fees 38,506 35,628
Data processing and computer related 15,718 13,400
Facilities, supplies and other costs 15,997 17,059
Amortization 11,012 10,358
Depreciation 6,447 5,995
Total expenses 247,451 232,374
Income from operations 86,812 93,070
Net (loss) gain on investments (126 ) 250
Interest and dividend income 1,083 969
Interest expense (114 ) (113 )
Equity in earnings of unconsolidated affiliates 29,192 34,033
Gain on sale of subsidiary 2,791 2,791
Income before income taxes 119,638 131,000
Income taxes 42,141 46,389
Net income 77,497 84,611
Basic earnings per common share $ 0.48 $ 0.51
Shares used to calculate basic earnings per share 163,013 166,695
Diluted earnings per common share $ 0.47 $ 0.50
Shares used to calculate diluted earnings per share 166,145 170,703
SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
2016 2015
Assets
Current Assets:
Cash and cash equivalents $ 638,253 $ 679,661
Restricted cash 5,500 5,500
Receivables from investment products 51,633 48,098
Receivables, net 229,558 223,023
Securities owned 21,264 21,235
Other current assets 28,829 26,207
Total Current Assets 975,037 1,003,724
Property and Equipment, net 141,790 143,977
Capitalized software, net 289,044 290,522
Investments available for sale 78,356 81,294
Investments in affiliated funds, at fair value 4,183 4,039
Investment in unconsolidated affiliates 44,247 49,580
Deferred income taxes 4,117 --
Other assets, net 14,072 15,492
Total Assets $ 1,550,846 $ 1,588,628
Liabilities and Equity
Current Liabilities:
Accounts payable $ 4,354 $ 4,511
Accrued liabilities 165,005 217,587
Deferred revenue 2,936 2,385
Total Current Liabilities 172,295 224,483
Deferred income taxes 66,410 63,028
Other long-term liabilities 11,676 11,397
Total Liabilities 250,381 298,908
Shareholders' Equity:
Common stock 1,619 1,637
Capital in excess of par value 912,506 910,513
Retained earnings 408,684 402,860
Accumulated other comprehensive loss, net (22,344 ) (25,290 )
Total Shareholders' Equity 1,300,465 1,289,720
Total Liabilities and Shareholders' Equity $ 1,550,846 $ 1,588,628
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
Mar. 31, Jun. 30, Sept. 30, Dec 31, Mar. 31,
2015 2015 2015 2015 2016
Private Banks:
Equity/Fixed Income programs $ 19,296 $ 19,686 $ 18,243 $ 18,150 $ 18,370
Collective Trust Fund programs 9 13 3 4 4
Liquidity funds 5,551 5,280 5,469 5,835 5,521
Total assets under management $ 24,856 $ 24,979 $ 23,715 $ 23,989 $ 23,895
Client assets under administration 17,643 17,485 16,896 17,532 18,324
Total assets $ 42,499 $ 42,464 $ 40,611 $ 41,521 $ 42,219
Investment Advisors:
Equity/Fixed Income programs $ 45,800 $ 46,951 $ 43,988 $ 46,123 $ 47,357
Collective Trust Fund programs 8 8 9 7 7
Liquidity funds 3,047 2,817 4,677 4,924 5,051
Total assets under management $ 48,855 $ 49,776 $ 48,674 $ 51,054 $ 52,415
Institutional Investors:
Equity/Fixed Income programs $ 74,178 $ 75,341 $ 70,818 $ 72,263 $ 73,468
Collective Trust Fund programs 94 93 96 96 97
Liquidity funds 3,246 2,960 2,655 2,883 2,390
Total assets under management $ 77,518 $ 78,394 $ 73,569 $ 75,242 $ 75,955
Investment Managers:
Equity/Fixed Income programs $ 25 $ 24 $ 59 $ 66 $ 72
Collective Trust Fund programs 20,965 20,632 19,863 32,117 32,385
Liquidity funds 1,091 1,007 848 832 733
Total assets under management $ 22,081 $ 21,663 $ 20,770 $ 33,015 $ 33,190
Client assets under administration (A) 372,116 381,963 376,133 390,282 400,579
Total assets $ 394,197 $ 403,626 $ 396,903 $ 423,297 $ 433,769
Investments in New Businesses:
Equity/Fixed Income programs $ 756 $ 779 $ 752 $ 764 $ 803
Liquidity funds 106 57 51 47 41
Total assets under management $ 862 $ 836 $ 803 $ 811 $ 844
LSV Asset Management:
Equity/Fixed Income programs $ 84,123 $ 86,334 $ 76,958 $ 78,335 $ 78,390
Total:
Equity/Fixed Income programs (B) $ 224,178 $ 229,115 $ 210,818 $ 215,701 $ 218,460
Collective Trust Fund programs 21,076 20,746 19,971 32,224 32,493
Liquidity funds 13,041 12,121 13,700 14,521 13,736
Total assets under management $ 258,295 $ 261,982 $ 244,489 $ 262,446 $ 264,689
Client assets under administration (C) 389,759 399,448 393,029 407,814 418,903
Total assets $ 648,054 $ 661,430 $ 637,518 $ 670,260 $ 683,592
(A) Client assets under administration in the Investment Managers segment include $49.2 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2016).
(B) Equity/Fixed Income programs include $4.6 billion of assets invested in various asset allocation funds at March 31, 2016.
(C) In addition to the numbers presented, SEI also administers an additional $11.2 billion in Funds of Funds assets (as of March 31, 2016) on which SEI does not earn an administration fee. Client assets under administration as of March 31, 2016 do not reflect $1.3 billion in Funds of Funds assets that were reported at December 31, 2015.
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr.
2015 2015 2015 2015 2016
Private Banks:
Equity/Fixed Income programs $ 18,869 $ 19,872 $ 19,080 $ 18,603 $ 17,644
Collective Trust Fund programs 8 12 6 3 3
Liquidity funds 5,755 5,256 5,443 5,511 5,661
Total assets under management $ 24,632 $ 25,140 $ 24,529 $ 24,117 $ 23,308
Client assets under administration 17,504 17,823 17,504 17,775 17,248
Total assets $ 42,136 $ 42,963 $ 42,033 $ 41,892 $ 40,556
Investment Advisors:
Equity/Fixed Income programs $ 44,809 $ 47,027 $ 45,992 $ 46,044 $ 45,175
Collective Trust Fund programs 9 8 9 8 7
Liquidity funds 3,072 2,819 3,523 4,784 5,009
Total assets under management $ 47,890 $ 49,854 $ 49,524 $ 50,836 $ 50,191
Institutional Investors:
Equity/Fixed Income programs $ 73,760 $ 75,426 $ 73,568 $ 72,463 $ 71,779
Collective Trust Fund programs 95 94 93 96 98
Liquidity funds 3,021 3,354 2,843 3,109 2,834
Total assets under management $ 76,876 $ 78,874 $ 76,504 $ 75,668 $ 74,711
Investment Managers:
Equity/Fixed Income programs $ 27 $ 25 $ 24 $ 59 $ 66
Collective Trust Fund programs 21,108 21,387 20,449 30,960 30,784
Liquidity funds 1,066 1,010 978 960 832
Total assets under management $ 22,201 $ 22,422 $ 21,451 $ 31,979 $ 31,682
Client assets under administration 367,206 378,347 380,247 390,080 387,421
Total assets $ 389,407 $ 400,769 $ 401,698 $ 422,059 $ 419,103
Investments in New Businesses:
Equity/Fixed Income programs $ 755 $ 784 $ 776 $ 788 $ 757
Liquidity funds 101 75 49 47 48
Total assets under management $ 856 $ 859 $ 825 $ 835 $ 805
LSV Asset Management:
Equity/Fixed Income programs $ 83,439 $ 87,409 $ 80,656 $ 79,634 $ 74,699
Total:
Equity/Fixed Income programs $ 221,659 $ 230,543 $ 220,096 $ 217,591 $ 210,120
Collective Trust Fund programs 21,220 21,501 20,557 31,067 30,892
Liquidity funds 13,015 12,514 12,836 14,411 14,384
Total assets under management $ 255,894 $ 264,558 $ 253,489 $ 263,069 $ 255,396
Client assets under administration (A) 384,710 396,170 397,751 407,855 404,669
Total assets $ 640,604 $ 660,728 $ 651,240 $ 670,924 $ 660,065
(A) Client assets under administration during first-quarter 2016 do not reflect $1.3 billion in Funds of Funds assets that were reported during fourth-quarter 2015.

Investor Contact:
Nicole Vattimo
SEI
+1 610-676-4385
nvattimo@seic.com

Media Contact:
Dana Grosser
SEI
+1 610-676-2459
dgrosser@seic.com

Source: SEI

Released April 20, 2016