SEI Reports First-Quarter 2015 Financial Results

Download as PDF

Related Documents

Income From Operations Increases 19 Percent

OAKS, PA -- (Marketwired) -- 04/22/15 -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for the first-quarter 2015. Diluted earnings per share were $.50 in first-quarter 2015 compared to $.43 in first-quarter 2014. Diluted earnings per share for first-quarter 2015 and 2014 reflect pre-tax gains of $2.8 million, or $.01 per share, and $5.6 million, or $.02 per share, respectively, from the sale of SEI Asset Korea.

Consolidated Overview
(In thousands, except earnings per share) For the Three Months Ended March 31,
2015 2014 %
Revenues $ 325,444 $ 302,386 8%
Net income 84,611 74,820 13%
Diluted earnings per share $ 0.50 $ 0.43 16%

"Our results for the first quarter demonstrate the success we are having in growing our company, increasing profitability, and expanding our customer base," said Alfred P. West, Jr., SEI Chairman and CEO. "SEI's business model, our ability to execute, and the completeness of our offerings enable us to manage through the mixed nature of global markets.

"Across our company, we are investing in products and services that position us well for long-term, sustainable growth as we work to meet the evolving needs of our clients and markets."

Summary of First-Quarter Results by Business Segment

(In thousands) For the Three Months
Ended March 31,
2015 2014 %
Private Banks:
Revenues $ 111,213 $ 105,179 6%
Expenses 99,256 100,190 (1)%
Operating Profit 11,957 4,989 140%
Gain on sale of subsidiary 2,791 5,582 NM
Interest income 180 -- NM
Total Profit 14,928 10,571 NM
Operating Margin (A) 11 % 5 %
Investment Advisors:
Revenues 74,015 66,424 11%
Expenses 39,059 34,577 13%
Operating Profit 34,956 31,847 10%
Operating Margin 47 % 48 %
Institutional Investors:
Revenues 73,548 68,657 7%
Expenses 35,211 34,095 3%
Operating Profit 38,337 34,562 11%
Operating Margin 52 % 50 %
Investment Managers:
Revenues 65,367 61,008 7%
Expenses 40,623 39,184 4%
Operating Profit 24,744 21,824 13%
Operating Margin 38 % 36 %
Investments in New Businesses:
Revenues 1,301 1,118 16%
Expenses 4,866 4,249 15%
Operating Loss (3,565 ) (3,131 ) NM
Totals:
Revenues $ 325,444 $ 302,386 8%
Expenses 219,015 212,295 3%
Corporate overhead expenses 13,359 11,699 14%
Income from operations $ 93,070 $ 78,392 19%
(A) Percentages determined exclusive of gain on sale of subsidiary and interest income.

First-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 $14.9 billion, or nine percent, to $172.5 billion in the first-quarter 2015, as compared to $157.6 billion during the first-quarter 2014 (see attached Average Asset Balances schedules for further details).
  • Our average assets under administration increased $48.7 billion, or 14 percent, to $384.7 billion in the first-quarter 2015, as compared to $336.0 billion during the first-quarter 2014 (see attached Average Asset Balances schedules for further details).
  • Revenue growth was also driven by increased Information processing and software servicing fees in our Private Banks segment. The increase was primarily attributable to higher fees from the growth in assets processed on the SEI Wealth Platform(SM) and increased non-recurring professional services fees.
  • Sales events, net of client losses, during first-quarter 2015 totaled approximately $30.9 million and are expected to generate net annualized recurring revenues of approximately $23.6 million when contract values are fully realized.
  • Income from LSV increased $2.1 million, or seven percent, to $34.3 million in first-quarter 2015 as compared to $32.2 million in first-quarter 2014 due to an increase in assets under management and an increase in performance fees earned by LSV.
  • We recorded pre-tax gains of $2.8 million, or $.01 diluted earnings per share, and $5.6 million, or $.02 diluted earnings per share, from the sale of SEI AK in first-quarter 2015 and 2014, respectively.
  • Amortization expense related to capitalized software was $10.3 million during the first-quarter 2015 as compared to $9.2 million during the first-quarter 2014 due to continued enhancements to the SEI Wealth Platform.
  • Our effective tax rates were 35.4 percent in first-quarter 2015 and 35.9 percent in first-quarter 2014.
  • In first-quarter 2015, we repurchased 1.5 million shares of our common stock for $65.3 million.

Earnings Conference Call
A conference call to review earnings is scheduled for 2 p.m. Eastern time on April 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 358144.

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, 2015, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $648 billion in mutual fund and pooled or separately managed assets, including $258 billion in assets under management and $390 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,
2015 2014
Asset management, admin. and distribution fees $ 246,768 $ 225,071
Information processing and software servicing fees 70,653 69,178
Transaction-based and trade execution fees 8,023 8,137
Total revenues 325,444 302,386
Subadvisory, distribution and other asset mgmt costs 38,517 34,012
Software royalties and other information processing costs 7,509 8,553
Brokerage commissions 5,972 5,979
Compensation, benefits and other personnel 94,186 94,424
Stock-based compensation 3,750 2,823
Consulting, outsourcing and professional fees 35,628 34,933
Data processing and computer related 13,400 12,620
Facilities, supplies and other costs 17,059 15,852
Amortization 10,358 9,214
Depreciation 5,995 5,584
Total expenses 232,374 223,994
Income from operations 93,070 78,392
Net gain on investments 250 136
Interest and dividend income 969 777
Interest expense (113 ) (113 )
Equity in earnings of unconsolidated affiliates 34,033 31,891
Gain on sale of subsidiary 2,791 5,582
Income before income taxes 131,000 116,665
Income taxes 46,389 41,845
Net income 84,611 74,820
Basic earnings per common share $ 0.51 $ 0.44
Shares used to calculate basic earnings per share 166,695 169,306
Diluted earnings per common share $ 0.50 $ 0.43
Shares used to calculate diluted earnings per share 170,703 173,828
SEI INVESTMENTS COMPANY
BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
2015 2014
Assets
Current Assets:
Cash and cash equivalents $ 643,260 $ 667,446
Restricted cash 5,805 5,801
Receivables from regulated investment companies 47,006 48,393
Receivables, net 200,673 194,419
Securities owned 21,192 21,175
Other current assets 25,028 18,193
Total Current Assets 942,964 955,427
Property and Equipment, net 125,855 125,535
Capitalized software, net 306,728 309,040
Investments available for sale 74,222 77,609
Investments in affiliated funds, at fair value 4,454 4,523
Investment in unconsolidated affiliates 51,320 54,290
Other assets, net 16,442 16,451
Total Assets $ 1,521,985 $ 1,542,875
Liabilities and Equity
Current Liabilities:
Accounts payable $ 6,050 $ 10,588
Accrued liabilities 152,227 207,429
Deferred income taxes, net 1,298 1,414
Deferred revenue 3,618 1,749
Total Current Liabilities 163,193 221,180
Deferred income taxes 63,742 63,755
Other long-term liabilities 10,791 10,327
Total Liabilities 237,726 295,262
Shareholders' Equity:
Common stock 1,661 1,667
Capital in excess of par value 854,995 834,615
Retained earnings 445,368 420,226
Accumulated other comprehensive loss, net (17,765 ) (8,895 )
Total Shareholders' Equity 1,284,259 1,247,613
Total Liabilities and Shareholders' Equity $ 1,521,985 $ 1,542,875
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
Mar. 31, Jun. 30, Sept. 30, Dec 31, Mar. 31,
2014 2014 2014 2014 2015
Private Banks:
Equity/Fixed Income programs $ 16,918 $ 18,679 $ 18,634 $ 18,666 $ 19,296
Collective Trust Fund programs 14 12 11 8 9
Liquidity funds 5,670 5,274 5,331 5,889 5,551
Total assets under management $ 22,602 $ 23,965 $ 23,976 $ 24,563 $ 24,856
Client assets under administration 15,641 15,347 16,288 16,741 17,643
Total assets $ 38,243 $ 39,312 $ 40,264 $ 41,304 $ 42,499
Investment Advisors:
Equity/Fixed Income programs $ 39,981 $ 42,125 $ 42,260 $ 43,845 $ 45,800
Collective Trust Fund programs 13 13 9 9 8
Liquidity funds 2,802 2,696 3,086 3,173 3,047
Total assets under management $ 42,796 $ 44,834 $ 45,355 $ 47,027 $ 48,855
Institutional Investors:
Equity/Fixed Income programs $ 69,194 $ 71,598 $ 72,006 $ 72,828 $ 74,178
Collective Trust Fund programs 102 100 98 95 94
Liquidity funds 2,505 2,414 2,891 2,929 3,246
Total assets under management $ 71,801 $ 74,112 $ 74,995 $ 75,852 $ 77,518
Investment Managers:
Equity/Fixed Income programs $ 68 $ 64 $ 64 $ 27 $ 25
Collective Trust Fund programs 22,633 22,598 21,297 20,833 20,965
Liquidity funds 782 802 1,018 946 1,091
Total assets under management $ 23,483 $ 23,464 $ 22,379 $ 21,806 $ 22,081
Client assets under administration (A) 326,735 337,492 346,841 355,890 372,116
Total assets $ 350,218 $ 360,956 $ 369,220 $ 377,696 $ 394,197
Investments in New Businesses:
Equity/Fixed Income programs $ 632 $ 659 $ 703 $ 736 $ 756
Liquidity funds 49 38 118 98 106
Total assets under management $ 681 $ 697 $ 821 $ 834 $ 862
LSV Asset Management:
Equity/Fixed Income programs $ 77,973 $ 82,026 $ 81,536 $ 82,665 $ 84,123
Total:
Equity/Fixed Income programs (B) $ 204,766 $ 215,151 $ 215,203 $ 218,767 $ 224,178
Collective Trust Fund programs 22,762 22,723 21,415 20,945 21,076
Liquidity funds 11,808 11,224 12,444 13,035 13,041
Total assets under management $ 239,336 $ 249,098 $ 249,062 $ 252,747 $ 258,295
Client assets under administration (C) 342,376 352,839 363,129 372,631 389,759
Total assets $ 581,712 $ 601,937 $ 612,191 $ 625,378 $ 648,054
(A) Client assets under administration in the Investment Managers segment include $48.9 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2015).
(B) Equity/Fixed Income programs include $5.3 billion of assets invested in various asset allocation funds at March 31, 2015.
(C) In addition to the numbers presented, SEI also administers an additional $6.7 billion in Funds of Funds assets (as of March 31, 2015) on which SEI does not earn an administration fee.
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr.
2014 2014 2014 2014 2015
Private Banks:
Equity/Fixed Income programs $ 16,114 $ 17,829 $ 18,804 $ 18,606 $ 18,869
Collective Trust Fund programs 14 12 12 10 8
Liquidity funds 5,757 5,429 5,466 5,537 5,755
Total assets under management $ 21,885 $ 23,270 $ 24,282 $ 24,153 $ 24,632
Client assets under administration 15,366 15,069 15,707 16,451 17,504
Total assets $ 37,251 $ 38,339 $ 39,989 $ 40,604 $ 42,136
Investment Advisors:
Equity/Fixed Income programs $ 39,005 $ 40,887 $ 42,389 $ 43,104 $ 44,809
Collective Trust Fund programs 13 13 11 9 9
Liquidity funds 2,806 2,637 2,830 3,087 3,072
Total assets under management $ 41,824 $ 43,537 $ 45,230 $ 46,200 $ 47,890
Institutional Investors:
Equity/Fixed Income programs $ 67,697 $ 70,706 $ 72,010 $ 72,771 $ 73,760
Collective Trust Fund programs 103 134 98 96 95
Liquidity funds 2,571 2,664 2,883 2,973 3,021
Total assets under management $ 70,371 $ 73,504 $ 74,991 $ 75,840 $ 76,876
Investment Managers:
Equity/Fixed Income programs $ 68 $ 68 $ 64 $ 64 $ 27
Collective Trust Fund programs 22,004 22,447 22,123 21,140 21,108
Liquidity funds 738 824 962 904 1,066
Total assets under management $ 22,810 $ 23,339 $ 23,149 $ 22,108 $ 22,201
Client assets under administration 320,644 333,373 344,661 355,903 367,206
Total assets $ 343,454 $ 356,712 $ 367,810 $ 378,011 $ 389,407
Investments in New Businesses:
Equity/Fixed Income programs $ 623 $ 640 $ 688 $ 731 $ 755
Liquidity funds 46 43 139 97 101
Total assets under management $ 669 $ 683 $ 827 $ 828 $ 856
LSV Asset Management:
Equity/Fixed Income programs $ 76,306 $ 79,866 $ 82,402 $ 83,187 $ 83,439
Total:
Equity/Fixed Income programs $ 199,813 $ 209,996 $ 216,357 $ 218,463 $ 221,659
Collective Trust Fund programs 22,134 22,606 22,244 21,255 21,220
Liquidity funds 11,918 11,597 12,280 12,598 13,015
Total assets under management $ 233,865 $ 244,199 $ 250,881 $ 252,316 $ 255,894
Client assets under administration 336,010 348,442 360,368 372,354 384,710
Total assets $ 569,875 $ 592,641 $ 611,249 $ 624,670 $ 640,604

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 22, 2015