SEI Reports Fourth-Quarter 2012 Financial Results
OAKS, PA -- (Marketwire) -- 01/30/13 -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for fourth-quarter 2012. Diluted earnings per share were $.32 in fourth-quarter 2012 compared to $.25 in fourth-quarter 2011.
Consolidated Overview For the Three Months For the Twelve Months
(In thousands, except Ended December 31, Ended December 31,
earnings per share) 2012 2011 % 2012 2011 %
--------- --------- -- --------- --------- --
Revenues $261,635 $226,247 16% $992,522 $929,727 7%
Net Income attributable to SEI 56,585 44,396 27% 206,848 204,959 1%
Diluted Earnings Per Share $0.32 $0.25 28% $1.18 $1.11 6%
"Our fourth-quarter 2012 results reflect the progress we have made in improving the fundamentals of our business," said Alfred P. West, Jr., SEI Chairman and CEO. "We are concentrating our efforts on maintaining highly-satisfied clients, growing new business events, controlling costs, and investing in projects critical to our future."
"In 2013 we will continue building a strong foundation for future growth in revenues and profits. Our focus on creating long-term sustainable growth is unwavering."
Summary of Fourth-Quarter and Year to Date Results by Business Segment
(In thousands) For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2012 2011 % 2012 2011 %
--------- --------- --- --------- --------- ---
Private Banks:
Revenues $ 96,421 $ 85,843 12% $ 364,788 $ 348,122 5%
Expenses 93,389 84,769 10% 357,001 339,339 5%
--------- --------- --------- ---------
Operating Profit $ 3,032 $ 1,074 182% $ 7,787 $ 8,783 (11%)
Operating Margin 3% 1% 2% 3%
Investment Advisors:
Revenues 52,476 45,106 16% 202,703 189,780 7%
Expenses 31,706 27,613 15% 120,146 110,438 9%
--------- --------- --------- ---------
Operating Profit 20,770 17,493 19% 82,557 79,342 4%
Operating Margin 40% 39% 41% 42%
Institutional
Investors:
Revenues 60,596 49,895 21% 227,889 210,027 9%
Expenses 30,052 26,702 13% 116,546 106,585 9%
--------- --------- --------- ---------
Operating Profit 30,544 23,193 32% 111,343 103,442 8%
Operating Margin 50% 46% 49% 49%
Investment Managers:
Revenues 51,249 44,497 15% 193,484 177,975 9%
Expenses 34,814 29,270 19% 127,525 115,963 10%
--------- --------- --------- ---------
Operating Profit 16,435 15,227 8% 65,959 62,012 6%
Operating Margin 32% 34% 34% 35%
Investments in New
Businesses:
Revenues 893 906 (1%) 3,658 3,823 (4%)
Expenses 3,874 3,085 26% 14,954 11,559 29%
--------- --------- --------- ---------
Operating Loss (2,981) (2,179) N/A (11,296) (7,736) N/A
Totals:
Revenues $ 261,635 $ 226,247 16% $ 992,522 $ 929,727 7%
Expenses 193,835 171,439 13% 736,172 683,884 8%
Corporate overhead
expenses 11,929 10,875 10% 45,759 43,398 5%
Noncontrolling
interest
reflected in
segments (318) (442) N/A (975) (1,620) N/A
--------- --------- --------- ---------
Income from
operations $ 56,189 $ 44,375 27% $ 211,566 $ 204,065 4%
Operating Margin 21% 20% 21% 22%
Fourth-Quarter Business Commentary:
- Revenues increased in fourth-quarter 2012 as compared to both fourth-quarter 2011 and third-quarter 2012. This was driven by an increase in Asset management, administration, and distribution fee revenues resulting from increased cash flows from new and existing clients and market appreciation in 2012.
- Net income attributable to SEI increased in fourth-quarter 2012 as compared to both fourth-quarter 2011 and third-quarter 2012. This was driven by the increase in fourth-quarter 2012 revenues when compared to both periods.
- Our average assets under management, excluding LSV, increased $22.0 billion, or 19 percent, to $138.5 billion in the fourth-quarter 2012, as compared to $116.5 billion during the fourth-quarter 2011, and increased $5.9 billion, or four percent, as compared to $132.6 billion during the third-quarter 2012 (See attached Ending and Average Asset Balances schedules for further details).
- Sales events, net of client losses, during fourth-quarter 2012 totaled approximately $27.0 million and are expected to generate net annualized recurring revenues of approximately $21.7 million when contract values are fully realized.
- Income from LSV increased in fourth-quarter 2012 to $25.0 million as compared to $23.4 million in fourth-quarter 2011 due to an increase in assets under management. Our ownership interest in LSV was approximately 40 percent in fourth-quarter 2012 and 41 percent in fourth-quarter 2011.
- Equity in the earnings of unconsolidated affiliates was negatively impacted $1.3 million in fourth-quarter 2012 as a result of our cumulative share of the operating losses related to an ownership position we hold in a Shanghai-based wealth management firm.
- In fourth-quarter 2012, we sold the SIV security, Gryphon, and as a result of the sale we no longer own any SIV securities. Net income attributable to SEI includes gains from SIV securities of $5.9 million in fourth-quarter 2012 compared to losses of $0.7 million in fourth-quarter 2011 and a gain of $3.4 million in third-quarter 2012.
- The effective tax rates were 35.0 percent in fourth-quarter 2012 and 34.7 percent in fourth-quarter 2011 and 39.0 percent in third-quarter 2012. The decrease in the tax rate in fourth-quarter 2012 as compared to third-quarter 2012 was due to the accrual of taxes on the cumulative undistributed earnings of SEI Asset Korea in third-quarter 2012. As a result of the expected sale of SEI Asset Korea, we no longer consider the undistributed earnings to be indefinitely reinvested and therefore accrued U.S. deferred taxes on the cumulative undistributed earnings of SEI Asset Korea.
- On January 3, 2013, President Barack Obama signed into law the American Taxpayer Relief Act of 2012 (the Act), which reinstated the research and development credit retroactively from January 1, 2012 through December 31, 2013. The accounting rules require the determination of current and deferred taxes be based upon the provisions of the enacted tax law as of the balance sheet date. Since the Act was not signed into law until January 2, 2013, the effect was not reflected in the tax provision for 2012. The effect of the 2012 research and development tax credit will be reflected in first-quarter 2013.
- In fourth-quarter 2012, we purchased 1.9 million shares of our common stock for $41.7 million.
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on January 30, 2013. Investors may listen to the call at www.seic.com/investors or listen at www.earnings.com, a service of Thomson Streetevents. The call may also be accessed at numerous financial services web sites including AOL and Yahoo. Investors may also listen to replays at these web sites, or by telephone at (USA) 1-800-475-6701; (International) 320-365-3844, access code 280364.
About SEI
SEI (NASDAQ: SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of December 31, 2012, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $458 billion in mutual fund and pooled or separately managed assets, including $201 billion in assets under management and $257 billion in client assets under administration. For more information, visit www.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)
Three Months Ended
December 31,
--------------------
2012 2011
--------- ---------
Asset management, admin. and distribution fees $ 190,980 $ 162,126
Information processing and software servicing fees 61,835 54,882
Transaction-based and trade execution fees 8,820 9,239
--------- ---------
Total revenues 261,635 226,247
Subadvisory, distribution and other asset mgmt costs 26,606 25,921
Software royalties and other information processing
costs 7,385 6,529
Brokerage commissions 6,406 6,816
Compensation, benefits and other personnel 90,441 74,609
Stock-based compensation 3,959 3,146
Consulting, outsourcing and professional fees 29,230 27,592
Data processing and computer related 11,744 11,774
Facilities, supplies and other costs 16,067 13,105
Amortization 7,845 7,257
Depreciation 5,763 5,123
--------- ---------
Total expenses 205,446 181,872
Income from operations 56,189 44,375
Net gain (loss) on investments 6,490 (552)
Interest and dividend income 1,279 1,449
Interest expense (115) (100)
Equity in earnings of unconsolidated affiliates 23,701 23,431
--------- ---------
Net income before income taxes 87,544 68,603
Income taxes 30,570 23,750
--------- ---------
Net income 56,974 44,853
--------- ---------
Less: Net income attributable to the noncontrolling
interest (389) (457)
--------- ---------
Net income attributable to SEI $ 56,585 $ 44,396
========= =========
Diluted earnings per common share $ 0.32 $ 0.25
========= =========
Shares used to calculate diluted earnings per common
share 174,540 178,412
========= =========
Basic earnings per common share $ 0.33 $ 0.25
========= =========
Shares used to calculate basic earnings per common
share 172,574 178,098
========= =========
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Twelve Months Ended
December 31,
----------------------
2012 2011
---------- ----------
Asset management, admin. and distribution fees $ 723,630 $ 669,788
Information processing and software servicing fees 236,190 222,417
Transaction-based and trade execution fees 32,702 37,522
---------- ----------
Total revenues 992,522 929,727
Subadvisory, distribution and other asset mgmt costs 106,048 103,134
Software royalties and other information processing
costs 26,722 27,437
Brokerage commissions 23,889 27,022
Compensation, benefits and other personnel 335,296 289,445
Stock-based compensation 15,736 14,112
Consulting, outsourcing and professional fees 109,828 113,171
Data processing and computer related 46,617 47,003
Facilities, supplies and other costs 60,976 55,579
Amortization 33,258 27,288
Depreciation 22,586 21,471
---------- ----------
Total expenses 780,956 725,662
Income from operations 211,566 204,065
Net gain on investments 14,067 3,360
Interest and dividend income 5,696 5,829
Interest expense (504) (585)
Equity in earnings of unconsolidated affiliates 98,671 105,818
---------- ----------
Net income before income taxes 329,496 318,487
Income taxes 121,462 111,837
---------- ----------
Net income 208,034 206,650
---------- ----------
Less: Net income attributable to the noncontrolling
interest (1,186) (1,691)
---------- ----------
Net income attributable to SEI $ 206,848 $ 204,959
========== ==========
Diluted earnings per common share $ 1.18 $ 1.11
========== ==========
Shares used to calculate diluted earnings per common
share 175,872 184,127
========== ==========
Basic earnings per common share $ 1.19 $ 1.12
========== ==========
Shares used to calculate basic earnings per common
share 174,295 182,547
========== ==========
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31, December 31,
2012 2011
------------ ------------
Assets
Cash and short-term investments $ 452,247 $ 420,986
Restricted cash 6,000 6,000
Receivables, net 202,818 167,909
Securities owned 20,088 20,949
Other current assets 20,251 19,107
------------ ------------
Total current assets 701,404 634,951
Property and equipment, net 127,581 129,548
Marketable securities 81,778 139,333
Capitalized software, net 307,490 309,133
Investment in unconsolidated affiliates 77,398 68,454
Other assets, net 14,173 13,140
------------ ------------
Total assets $ 1,309,824 $ 1,294,559
============ ============
Liabilities
Current liabilities $ 152,005 $ 151,073
Deferred income taxes 93,458 93,751
Other Long-term liabilities 7,032 8,276
Total SEI Investments Company shareholders'
equity 1,038,180 1,025,316
Noncontrolling interest 19,149 16,143
------------ ------------
Total Equity 1,057,329 1,041,459
Total liabilities and equity $ 1,309,824 $ 1,294,559
============ ============
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
Dec. 31, Mar. 31, Jun. 30, Sept. 30, Dec. 31,
2011 2012 2012 2012 2012
--------- --------- --------- --------- ---------
Private Banks:
Equity/Fixed Income
prgms. $ 16,435 $ 17,180 $ 16,848 $ 17,960 $ 18,862
Collective Trust Fund
prgms. 450 435 335 147 11
Liquidity funds 5,553 5,549 5,063 5,342 6,008
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 22,438 $ 23,164 $ 22,246 $ 23,449 $ 24,881
Client assets under
admin. 10,355 10,916 10,719 11,611 12,178
--------- --------- --------- --------- ---------
Total assets $ 32,793 $ 34,080 $ 32,965 $ 35,060 $ 37,059
Investment Advisors:
Equity/Fixed Income
prgms. $ 26,639 $ 29,722 $ 29,153 $ 30,864 $ 31,220
Collective Trust Fund
prgms. 1,298 1,199 705 370 14
Liquidity funds 2,505 1,643 1,880 1,868 2,514
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 30,442 $ 32,564 $ 31,738 $ 33,102 $ 33,748
Institutional Investors:
Equity/Fixed Income
prgms. $ 49,051 $ 54,537 $ 55,548 $ 59,852 $ 62,160
Collective Trust Fund
prgms. 492 424 415 153 102
Liquidity funds 3,888 3,725 2,958 3,272 2,454
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 53,431 $ 58,686 $ 58,921 $ 63,277 $ 64,716
Investment Managers:
Equity/Fixed Income
prgms. $ 57 $ 62 $ 61 $ 65 $ 67
Collective Trust Fund
prgms. 11,255 12,781 13,004 15,433 16,197
Liquidity funds 152 147 226 396 408
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 11,464 $ 12,990 $ 13,291 $ 15,894 $ 16,672
Client assets under
admin. (A) 221,198 228,327 231,549 240,965 244,671
--------- --------- --------- --------- ---------
Total assets $ 232,662 $ 241,317 $ 244,840 $ 256,859 $ 261,343
Investments in New
Businesses:
Equity/Fixed Income
prgms. $ 515 $ 568 $ 551 $ 534 $ 513
Liquidity funds 37 34 30 29 43
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 552 $ 602 $ 581 $ 563 $ 556
LSV Asset Management
Equity/Fixed Income
prgms. $ 53,712 $ 60,607 $ 54,922 $ 58,886 $ 60,947
Total:
Equity/Fixed Income
prgms (B) $ 146,409 $ 162,676 $ 157,083 $ 168,161 $ 173,769
Collective Trust Fund
prgms. 13,495 14,839 14,459 16,103 16,324
Liquidity funds 12,135 11,098 10,157 10,907 11,427
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 172,039 $ 188,613 $ 181,699 $ 195,171 $ 201,520
Client assets under
admin. (C) 231,553 239,243 242,268 252,576 256,849
--------- --------- --------- --------- ---------
Total assets $ 403,592 $ 427,856 $ 423,967 $ 447,747 $ 458,369
(A) Client assets under administration in the Investment Managers segment
include $40.5 billion of assets balances that require limited services
and therefore are at fee levels below our normal full service assets (as
of December 31, 2012).
(B) Equity/Fixed Income programs include $3.1 billion of assets invested in
various asset allocation funds at December 31, 2012.
(C) In addition to the numbers presented, SEI also administers an additional
$4.6 billion in Funds of Funds assets (as of December 31, 2012) on which
SEI does not earn an administration fee.
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
2011 2012 2012 2012 2012
--------- --------- --------- --------- ---------
Private Banks:
Equity/Fixed Income
prgms. $ 16,624 $ 17,116 $ 16,794 $ 17,527 $ 18,301
Collective Trust Fund
prgms. 464 436 396 230 66
Liquidity funds 5,401 5,581 5,115 5,401 5,229
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 22,489 $ 23,133 $ 22,305 $ 23,158 $ 23,596
Client assets under
admin. 10,290 10,211 10,631 10,867 11,783
--------- --------- --------- --------- ---------
Total assets $ 32,779 $ 33,344 $ 32,936 $ 34,025 $ 35,379
Investment Advisors:
Equity/Fixed Income
prgms. $ 26,094 $ 28,426 $ 29,103 $ 30,032 $ 30,881
Collective Trust Fund
prgms. 1,314 1,238 984 532 158
Liquidity funds 2,499 2,015 1,806 1,886 2,176
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 29,907 $ 31,679 $ 31,893 $ 32,450 $ 33,215
Institutional Investors:
Equity/Fixed Income
prgms. $ 48,504 $ 52,270 $ 54,998 $ 57,763 $ 61,304
Collective Trust Fund
prgms. 500 427 418 284 120
Liquidity funds 3,461 3,765 3,147 3,253 3,493
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 52,465 $ 56,462 $ 58,563 $ 61,300 $ 64,917
Investment Managers:
Equity/Fixed Income
prgms. $ 65 $ 58 $ 63 $ 62 $ 68
Collective Trust Fund
prgms. 10,773 11,983 12,991 14,797 15,719
Liquidity funds 219 190 235 287 395
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 11,057 $ 12,231 $ 13,289 $ 15,146 $ 16,182
Client assets under
admin. 224,633 224,547 229,873 237,155 240,520
--------- --------- --------- --------- ---------
Total assets $ 235,690 $ 236,778 $ 243,162 $ 252,301 $ 256,702
Investments in New
Businesses:
Equity/Fixed Income
prgms. $ 515 $ 549 $ 550 $ 530 $ 518
Liquidity funds 42 39 33 35 33
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 557 $ 588 $ 583 $ 565 $ 551
LSV Asset Management
Equity/Fixed Income
prgms. $ 54,021 $ 59,200 $ 55,994 $ 57,164 $ 59,383
Total:
Equity/Fixed Income
prgms $ 145,823 $ 157,619 $ 157,502 $ 163,078 $ 170,455
Collective Trust Fund
prgms. 13,051 14,084 14,789 15,843 16,063
Liquidity funds 11,622 11,590 10,336 10,862 11,326
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 170,496 $ 183,293 $ 182,627 $ 189,783 $ 197,844
Client assets under
admin. 234,923 234,758 240,504 248,022 252,303
--------- --------- --------- --------- ---------
Total assets $ 405,419 $ 418,051 $ 423,131 $ 437,805 $ 450,147
Investor Contact: Murray Louis SEI +1 610-676-1932 mlouis@seic.com Media Contact: Dana Grosser SEI +1 610-676-2459 dgrosser@seic.com
Source: SEI
Released January 30, 2013