SEI Reports Third-Quarter 2011 Financial Results
OAKS, PA -- (MARKET WIRE) -- 10/19/11 -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for third-quarter 2011. Diluted earnings per share were $.27 in third-quarter 2011 compared to $.30 in third-quarter 2010.
Consolidated Overview
(In thousands, except For the Three Months For the Nine Months
earnings per share) Ended September 30, Ended September 30,
2011 2010 % 2011 2010 %
--------- --------- --- --------- --------- ---
Revenues $ 233,227 $ 219,513 6% $ 703,480 $ 669,436 5%
Net Income attributable
to SEI 49,232 56,389 (13%) 160,563 169,287 (5%)
Diluted Earnings Per
Share $ 0.27 $ 0.30 (10%) $ 0.86 $ 0.89 (3%)
"Our third-quarter results came in mixed versus year-ago and down versus second-quarter levels," said Alfred P. West, Jr., SEI Chairman and CEO. "These results reflect our investments in new services, particularly the Global Wealth Platform, which we are preparing to launch in the US for our bank and advisor segments. Results were also impacted by the weakened capital markets experienced during the quarter.
"Despite the continued headwinds the market presents, we are confident in our market positioning across all businesses, and are working hard to improve results."
Summary of Third-Quarter and Year to Date Results by Business Segment
(In thousands) For the Three Month Period For the Nine Month Period
Ended September 30, Ended September 30,
2011 2010 % 2011 2010 %
---------- ---------- --- ---------- ---------- ---
Private Banks:
Revenues $ 87,697 $ 83,518 5% $ 262,279 $ 260,730 1%
Expenses 85,893 73,463 17% 254,570 229,674 11%
---------- ---------- ---------- ----------
Operating
Profit $ 1,804 $ 10,055 (82%) $ 7,709 $ 31,056 (75%)
Operating
Margin 2% 12% 3% 12%
Investment
Advisors:
Revenues 46,798 43,422 8% 144,674 135,283 7%
Expenses 28,051 26,426 6% 82,825 82,129 1%
---------- ---------- ---------- ----------
Operating
Profit 18,747 16,996 10% 61,849 53,154 16%
Operating
Margin 40% 39% 43% 39%
Institutional
Investors:
Revenues 52,216 51,036 2% 160,132 152,821 5%
Expenses 25,524 25,940 (2%) 79,883 78,896 1%
---------- ---------- ---------- ----------
Operating
Profit 26,692 25,096 6% 80,249 73,925 9%
Operating
Margin 51% 49% 50% 48%
Investment
Managers:
Revenues 45,585 40,548 12% 133,478 117,598 14%
Expenses 29,412 25,763 14% 86,693 75,918 14%
---------- ---------- ---------- ----------
Operating
Profit 16,173 14,785 9% 46,785 41,680 12%
Operating
Margin 35% 36% 35% 35%
Investments in
New Businesses:
Revenues 931 989 (6%) 2,917 3,004 (3%)
Expenses 2,429 4,080 (40%) 8,474 9,480 (11%)
---------- ---------- ---------- ----------
Operating Loss (1,498) (3,091) (52%) (5,557) (6,476) (14%)
Operating
Margin N/A N/A N/A N/A
Totals:
Revenues $ 233,227 $ 219,513 6% $ 703,480 $ 669,436 5%
Expenses 171,309 155,672 10% 512,445 476,097 8%
Corporate
overhead
expenses 11,155 8,981 24% 32,523 28,639 14%
Noncontrolling
interest
reflected in
segments (373) (279) N/A (1,178) (956) N/A
---------- ---------- ---------- ----------
Income from
operations $ 51,136 $ 55,139 (7%) $ 159,690 $ 165,656 (4%)
Third-Quarter Business Commentary:
- Revenues improved in third-quarter 2011 when compared to third-quarter 2010. Asset management, administration, and distribution fee revenues increased, primarily due to higher asset balances under management and administration from existing clients as a result of improved capital markets from third-quarter 2010.
- Revenues declined in third-quarter 2011 from second-quarter 2011 due to the substantial weakness in the capital markets during the third-quarter. Assets under management, including assets managed by LSV, decreased $19.5 billion to $151.4 billion at September 30, 2011, as compared to $170.9 billion at June 30, 2011. LSV assets under management decreased $11.2 billion to $49.4 billion at September 30, 2011, as compared to $60.6 billion at June 30, 2011 (Please see attached Asset Balances schedule for details).
- Diluted earnings per share declined versus both third-quarter 2010 and second-quarter 2011. The drop in earnings per share versus third-quarter 2010 was primarily the result of increased spending on new services, particularly Global Wealth Services. The comparison to second-quarter 2011 was due primarily to the weakened capital markets experienced during the third-quarter 2011.
- Sales events, net of client losses, during third-quarter 2011 totaled $7.9 million and are expected to generate net annualized recurring revenues of approximately $3.6 million.
- Net income attributable to SEI includes losses from SIV securities of $0.8 million in third-quarter 2011 compared to gains of $8.7 million in third-quarter 2010.
- The effective tax rates were 33.8 percent for the third-quarter 2011 as compared to 37.8 percent for the third-quarter 2010. The decrease in the tax rate was due to tax planning strategies.
- In the third-quarter 2011, SEI purchased 3.7 million shares of its common stock for $63.5 million.
- In the third-quarter 2011, we made a $20.0 million payment on our outstanding debt. As of September 30, 2011, the remaining balance on our debt is $20.0 million.
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on October 19, 2011. 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 220311.
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 September 30, 2011, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $395 billion in mutual fund and pooled assets or separately managed assets, including $151 billion in assets under management and $244 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
September 30,
------------------------
2011 2010
----------- -----------
Asset management, admin. and distribution fees $ 167,827 $ 155,799
Information processing and software servicing fees 55,676 55,226
Transaction-based and trade execution fees 9,724 8,488
----------- -----------
Total revenues 233,227 219,513
Subadvisory, distribution and other asset mgmt
costs 24,613 25,237
Software royalties and other information
processing costs 6,703 6,048
Brokerage commissions 7,026 6,570
Compensation, benefits and other personnel 71,198 64,694
Stock-based compensation 3,424 3,468
Consulting, outsourcing and professional fees 30,183 21,841
Data processing and computer related 12,316 10,167
Facilities, supplies and other costs 14,274 14,749
Amortization 7,008 5,998
Depreciation 5,346 5,602
----------- -----------
Total expenses 182,091 164,374
Income from operations 51,136 55,139
Net (loss) gain on investments (1,418) 9,362
Interest and dividend income 1,400 1,621
Interest expense (126) (336)
Equity in earnings of unconsolidated affiliate 23,908 25,246
----------- -----------
Income before taxes 74,900 91,032
Income taxes 25,256 34,311
----------- -----------
Net income 49,644 56,721
----------- -----------
Less: Net income attributable to noncontrolling
interest (412) (332)
----------- -----------
Net income attributable to SEI $ 49,232 $ 56,389
=========== ===========
Diluted earnings per common share $ 0.27 $ 0.30
=========== ===========
Shares used to calculate diluted earnings per
common share 182,580 189,521
=========== ===========
Basic earnings per common share $ 0.27 $ 0.30
=========== ===========
Shares used to calculate basic earnings per common
share 181,718 187,964
=========== ===========
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Nine Months Ended
September 30,
------------------------
2011 2010
----------- -----------
Asset management, admin. and distribution fees $ 507,662 $ 463,511
Information processing and software servicing fees 167,535 175,148
Transaction-based and trade execution fees 28,283 30,777
----------- -----------
Total revenues 703,480 669,436
Subadvisory, distribution and other asset mgmt
costs 77,213 75,420
Software royalties and other information
processing costs 20,908 18,496
Brokerage commissions 20,206 22,661
Compensation, benefits and other personnel 214,836 198,922
Stock-based compensation 10,966 16,403
Consulting, outsourcing and professional fees 85,579 65,250
Data processing and computer related 35,229 30,512
Facilities, supplies and other costs 42,474 41,829
Amortization 20,031 17,895
Depreciation 16,348 16,392
----------- -----------
Total expenses 543,790 503,780
Income from operations 159,690 165,656
Net gain on investments 3,912 30,435
Interest and dividend income 4,380 4,823
Interest expense (485) (1,222)
Other income, net - 1,070
Equity in earnings of unconsolidated affiliate 82,387 72,839
----------- -----------
Income before taxes 249,884 273,601
Income taxes 88,087 103,183
----------- -----------
Net income 161,797 170,418
----------- -----------
Less: Net income attributable to the
noncontrolling interest (1,234) (1,131)
----------- -----------
Net income attributable to SEI $ 160,563 $ 169,287
=========== ===========
Diluted earnings per common share $ 0.86 $ 0.89
=========== ===========
Shares used to calculate diluted earnings per
common share 186,032 190,694
=========== ===========
Basic earnings per common share $ 0.87 $ 0.90
=========== ===========
Shares used to calculate basic earnings per common
share 184,030 189,090
=========== ===========
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2011 2010
--------------- ---------------
Assets
Cash and short-term investments $ 428,865 $ 496,292
Restricted cash 4,000 4,000
Receivables, net 166,954 165,772
Securities owned 20,032 -
Other current assets 18,595 17,655
--------------- ---------------
Total current assets 638,446 683,719
Property and equipment, net 133,115 140,568
Marketable securities 137,108 179,364
Capitalized software, net 305,589 294,332
Investment in unconsolidated affiliate 67,994 64,409
Other assets, net 21,455 14,831
--------------- ---------------
Total assets $ 1,303,707 $ 1,377,223
=============== ===============
Liabilities
Current liabilities $ 132,973 $ 127,600
Long-term debt - 95,000
Deferred income taxes 90,682 92,253
Long-term liabilities 11,172 5,645
Total SEI Investments Company shareholders'
equity 1,053,590 1,041,570
Noncontrolling interest 15,290 15,155
--------------- ---------------
Total Equity 1,068,880 1,056,725
Total liabilities and equity $ 1,303,707 $ 1,377,223
=============== ===============
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(Unaudited)
Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sept. 30,
2010 2010 2011 2011 2011
--------- --------- --------- --------- ---------
Private Banks:
Equity/Fixed Income
prgms. $ 12,842 $ 13,512 $ 14,809 $ 16,720 $ 15,442
Collective Trust Fund
prgms. 615 626 576 504 476
Liquidity funds 5,034 5,120 5,217 4,918 5,529
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 18,491 $ 19,258 $ 20,602 $ 22,142 $ 21,447
Client assets under
admin. 10,557 10,672 11,227 10,994 9,845
--------- --------- --------- --------- ---------
Total assets $ 29,048 $ 29,930 $ 31,829 $ 33,136 $ 31,292
Investment Advisors:
Equity/Fixed Income
prgms. $ 26,091 $ 27,680 $ 28,296 $ 28,410 $ 24,757
Collective Trust Fund
prgms. 2,028 1,820 1,618 1,499 1,392
Liquidity funds 2,253 1,641 1,551 1,651 2,653
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 30,372 $ 31,141 $ 31,465 $ 31,560 $ 28,802
Institutional Investors:
Equity/Fixed Income
prgms. $ 47,667 $ 48,699 $ 51,287 $ 51,180 $ 46,259
Collective Trust Fund
prgms. 641 623 608 482 510
Liquidity funds 3,475 3,382 3,202 3,146 3,356
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 51,783 $ 52,704 $ 55,097 $ 54,808 $ 50,125
Investment Managers:
Equity/Fixed Income
prgms. $ 1 $ 1 $ 37 $ 50 $ 64
Collective Trust Fund
prgms. (D) 1,582 1,353 1,154 898 830
Liquidity funds 423 313 139 179 195
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 2,006 $ 1,667 $ 1,330 $ 1,127 $ 1,089
Client assets under
admin. (A) (D) 233,976 239,903 246,022 247,906 233,686
--------- --------- --------- --------- ---------
Total assets $ 235,982 $ 241,570 $ 247,352 $ 249,033 $ 234,775
Investments in New
Businesses:
Equity/Fixed Income
prgms. $ 533 $ 569 $ 598 $ 558 $ 490
Liquidity funds 82 65 56 41 41
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 615 $ 634 $ 654 $ 599 $ 531
LSV Asset Management
Equity/Fixed Income
prgms. $ 54,492 $ 60,058 $ 62,369 $ 60,626 $ 49,444
Consolidated:
Equity/Fixed Income
prgms (B) $ 141,626 $ 150,519 $ 157,396 $ 157,544 $ 136,456
Collective Trust Fund
prgms. (D) 4,866 4,422 3,956 3,383 3,208
Liquidity funds 11,267 10,521 10,165 9,935 11,774
--------- --------- --------- --------- ---------
Total assets under mgmt. $ 157,759 $ 165,462 $ 171,517 $ 170,862 $ 151,438
Client assets under
admin. © (D) 244,533 250,575 257,249 258,900 243,531
--------- --------- --------- --------- ---------
Total assets $ 402,292 $ 416,037 $ 428,766 $ 429,762 $ 394,969
(A) Client assets under administration in the Investment Managers segment
include $43.2 billion of assets balances that require limited services
and therefore are at fee levels below our normal full service assets (as
of September 30, 2011).
(B) Equity/Fixed Income programs include $2.2 billion of assets invested in
various asset allocation funds at September 30, 2011.
© In addition to the numbers presented, SEI also administers an additional
$3.8 billion in Funds of Funds assets (as of September 30, 2011) on
which SEI does not earn an administration fee.
(D) Beginning in the third-quarter 2011, third-party collective trust fund
assets in the Investment Manager segment were reclassed to Client assets
under administration from Collective Trust Fund programs. Prior period
amounts were reclassified to conform with current period presentation.
Investor Contact: Murray Louis SEI (610) 676-1932 mlouis@seic.com Media Contact: Dana Grosser SEI (610) 676-2459 dgrosser@seic.com
Source: SEI
Released October 19, 2011