SEI Reports Second-Quarter 2015 Financial Results

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

OAKS, PA -- (Marketwired) -- 07/22/15 -- 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

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 July 22, 2015