SEI Reports Third-Quarter 2009 Financial Results
OAKS, Pa., Oct. 21 /PRNewswire-FirstCall/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for third quarter 2009, reporting decreases in revenues and increases in net income attributable to SEI and diluted earnings per share compared to third quarter 2008.
Consolidated Overview For the For the
(In thousands, except Three Months Nine Months
earnings per share) Ended September 30, Ended September 30,
2009 2008 % 2009 2008 %
---- ---- --- ---- ---- ---
Revenues $275,933 $316,086 (13%) $776,553 $979,517 (21%)
Net Income
attributable to
SEI 52,727 34,495 53% 128,498 129,605 (1%)
Diluted Earnings Per
Share $0.27 $0.18 50% $0.67 $0.66 2%
"Our third-quarter results reflect the impact from improving capital markets and the cost reduction initiatives we put in place earlier this year," said Alfred P. West, Jr., SEI Chairman and CEO.
"While improving capital markets resulted in favorable comparisons to second quarter 2009; the still-depressed levels continue to have a negative impact on company results compared to third quarter 2008. That said, our financial strength enables us to continue to implement the long term strategies vital to the sustained success of our company.
"As always, we are focused on our clients' well-being and success. We are firm in our belief that what we are doing will significantly benefit our clients and SEI both today and in the future."
Summary of Third-Quarter and Year to Date Results by Business Segment
(In thousands) For the Three Month For the Nine Month
Period Ended September 30, Period Ended September 30,
2009 2008 % 2009 2008 %
---- ---- --- ---- ---- ---
Private Banks:
Revenues $88,561 $99,882 (11%) $272,154 $310,538 (12%)
Expenses 79,549 79,545 0% 229,108 251,079 (9%)
------ ------ ------- -------
Operating Profit $9,012 $20,337 (56%) $43,046 $59,459 (28%)
Operating Margin 10% 20% 16% 19%
Investment Advisors:
Revenues 43,467 58,846 (26%) 120,557 181,213 (33%)
Expenses 28,001 30,775 (9%) 81,049 93,702 (14%)
------ ------ ------ ------
Operating Profit 15,466 28,071 (45%) 39,508 87,511 (55%)
Operating Margin 36% 48% 33% 48%
Institutional
Investors:
Revenues 47,458 52,757 (10%) 129,001 154,746 (17%)
Expenses 27,369 30,525 (10%) 74,803 89,993 (17%)
------ ------ ------ ------
Operating Profit 20,089 22,232 (10%) 54,198 64,753 (16%)
Operating Margin 42% 42% 42% 42%
Investment Managers:
Revenues 35,208 38,202 (8%) 101,911 112,002 (9%)
Expenses 23,047 26,566 (13%) 68,159 77,542 (12%)
------ ------ ------ ------
Operating Profit 12,161 11,636 5% 33,752 34,460 (2%)
Operating Margin 35% 30% 33% 31%
Investments in
New Businesses:
Revenues 1,079 1,811 (40%) 3,502 5,509 (36%)
Expenses 3,171 4,023 (21%) 8,789 12,822 (31%)
----- ----- ----- ------
Operating Loss (2,092) (2,212) (5%) (5,287) (7,313) (28%)
Operating Margin n/a n/a n/a n/a
LSV:
Revenues 60,160 64,588 (7%) 149,428 215,509 (31%)
Expenses (1) 38,928 40,754 (4%) 97,083 133,950 (28%)
------ ------ ------ -------
Operating Profit 21,232 23,834 (11%) 52,345 81,559 (36%)
Operating Margin 35% 37% 35% 38%
Consolidated
Segment Totals:
Revenues $275,933 $316,086 (13%) $776,553 $979,517 (21%)
Expenses 200,065 212,188 (6%) 558,991 659,088 (15%)
------- ------- ------- -------
Operating Profit $75,868 $103,898 (27%) $217,562 $320,429 (32%)
Operating Margin 27% 33% 28% 33%
(1) Includes $29,829 and $32,741 for the three-month period ended September 30, 2009 and 2008, respectively, and $73,120 and $112,051 for the nine-month period ended September 30, 2009 and 2008, respectively of noncontrolling interest to the other partners of LSV.
A reconciliation of the totals reported for the business segments to the applicable line items in the Consolidated Statements of Income for the three-and nine-month periods ended September 30, 2009 and 2008 is as follows:
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Total operating profit from
business segments $75,868 $103,898 $217,562 $320,429
Corporate overhead expenses (8,897) (10,420) (27,235) (30,876)
Noncontrolling interest
reflected in segments 30,168 33,291 73,968 114,561
LSV Employee Group
Expenses (1) (1,836) (1,820) (5,476) (5,460)
------ ------ ------ ------
Income from operations $95,303 $124,949 $258,819 $398,654
(1) Includes $1,805 for the three-month period ending September 30, 2009 and 2008, and $5,416 for the nine-month period ended September 30, 2009 and 2008 of amortization expense related to intangible assets owned by LSV Employee Group LLC. The amortization is offset through noncontrolling interest since SEI does not have any ownership in LSV Employee Group LLC.
Third-Quarter Business Commentary:
-- All segments realized lower third-quarter 2009 revenues compared to
third quarter 2008 primarily due to still-depressed capital markets when
compared to year ago levels.
-- The improvement of capital markets in the third quarter 2009 compared to
second quarter 2009 was the primary driver of improved revenues on a
sequential quarter basis. The Institutional Investors and Investment
Managers segment results were also positively affected by new business
wins.
-- The third-quarter 2009 results include gains of $14.9 million associated
with SIV-related securities held by SEI. Additional information
pertaining to SIV-related issues involving SEI and its sponsored money
market funds is contained in SEI's 2008 Form 10-K filed February 25,
2009 and SEI's 2009 second-quarter Form 10-Q filing dated August 5,
2009.
-- In September 2009, SEI purchased the remaining SIV from the SDIT Prime
Obligation Fund for $60.7 million. As a result of this purchase, SEI's
obligation under the Capital Support Agreement was canceled. SEI has now
purchased all SIVs owned by its money market funds and has no capital
support agreements left in place.
-- The third-quarter 2009 results include $7.7 million of additional
depreciation expense associated with a change in the useful life of
previously capitalized software development costs for some components
related to Global Wealth Platform (GWP). This charge was due to the
expected replacement of these components with components contained in
the next release of GWP scheduled for Q4 2009. The bulk of this expense
is contained in the Private Banks segment ($5 million) and the
Investment Advisors segment ($1.9 million), depressing third-quarter
2009 margins.
-- During the third quarter 2009, the Institutional Investors segment
recorded a one-time charge of $2.2 million related to an operational
error.
-- Assets under management increased by $20.4 billion during the third
quarter 2009 to $156.1 billion, primarily due to market appreciation.
-- In the third quarter, SEI purchased 975,000 shares of its common stock
for $18.5 million.
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 p.m. ET on October 21, 2009. Investors may listen to the call at www.seic.com (Investor Information section), 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 119321.
About SEI
SEI (Nasdaq: SEIC) is a leading global provider of outsourced asset management, investment processing and investment operations solutions. The company's innovative solutions help corporations, financial institutions, financial advisors, and affluent families create and manage wealth. As of September 30, 2009, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $383 billion in mutual fund and pooled assets and manages $156 billion in assets. SEI serves clients, conducts or is registered to conduct business and/or operations, from numerous offices worldwide. 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 INCOME
(In thousands, except per share data)
(Unaudited)
Three Months
Ended September
30,
----------------
2009 2008
---- ----
Asset management, admin. and distribution fees $206,235 $243,162
Information processing and software servicing fees 56,241 56,577
Transaction-based and trade execution fees 13,457 16,347
------ ------
Total revenues 275,933 316,086
Commissions and fees 36,419 42,336
Compensation, benefits and other personnel 73,621 80,932
Consulting, outsourcing and professional fees 20,173 26,213
Data processing and computer related 11,234 11,325
Facilities, supplies and other costs 18,817 18,656
Depreciation and amortization 20,364 11,675
------ ------
Total expenses 180,628 191,137
Income from operations 95,305 124,949
Net gain (loss) on investments 15,616 (42,047)
Interest and dividend income 1,896 3,384
Interest expense (1,034) (903)
------ ----
Income before taxes 111,783 85,383
Income taxes 31,109 19,995
------ ------
Net income 80,674 65,388
------ ------
Less: Net income attributable to the
noncontrolling interest (27,947) (30,893)
------- -------
Net income attributable to SEI $52,727 $34,495
======= =======
Diluted earnings per common share $0.27 $0.18
===== =====
Shares used to calculate diluted
earnings per common share 192,325 194,696
======= =======
Basic earnings per common share $0.28 $0.18
===== =====
Shares used to calculate basic
earnings per common share 190,850 191,554
======= =======
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Nine Months Ended
September 30,
-----------------
2009 2008
---- ----
Asset management, admin. and distribution fees $558,808 $764,152
Information processing and software servicing fees 173,152 173,804
Transaction-based and trade execution fees 44,593 41,561
------ ------
Total revenues 776,553 979,517
Commissions and fees 110,111 130,676
Compensation, benefits and other personnel 217,520 248,353
Consulting, outsourcing and professional fees 60,034 79,581
Data processing and computer related 33,926 33,102
Facilities, supplies and other costs 50,453 54,458
Depreciation and amortization 45,688 34,693
------ ------
Total expenses 517,732 580,863
Income from operations 258,821 398,654
Net loss on investments (1,367) (93,387)
Interest and dividend income 5,544 10,745
Interest expense (2,884) (2,678)
------ ------
Income before taxes 260,114 313,334
Income taxes 64,250 76,742
------ ------
Net income 195,864 236,592
------- -------
Less: Net income attributable to the
noncontrolling interest (67,366) (106,987)
------- --------
Net income attributable to SEI $128,498 $129,605
======== ========
Diluted earnings per common share $0.67 $0.66
===== =====
Shares used to calculate diluted
earnings per common share 191,905 196,300
======= =======
Basic earnings per common share $0.67 $0.67
===== =====
Shares used to calculate basic
earnings per common share 190,986 192,457
======= =======
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December, 31
2009 2008
---- ----
Assets
Cash and short-term investments $507,485 $416,643
Restricted cash 20,000 14,000
Receivables 221,352 208,209
Other current assets 20,918 100,819
------ -------
Total current assets 769,755 739,671
Property and equipment, net 141,103 148,124
Marketable securities 210,897 86,693
Capitalized software, net 282,700 270,606
Goodwill 22,842 22,842
Intangible assets, net 46,775 52,518
Other assets, net 18,952 21,261
------ ------
Total assets $1,493,024 $1,341,715
========== ==========
Liabilities
Current liabilities (1) $129,339 $329,894
Long-term debt 269,792 24,332
Deferred income taxes 90,744 104,548
Long-term liabilities 4,937 4,067
Total SEI Investments Company
shareholders' equity 886,413 769,152
Noncontrolling interest 111,799 109,722
------- -------
Total Equity 998,212 878,874
Total liabilities and equity $1,493,024 $1,341,715
========== ==========
(1) Includes $173,983 at December 31, 2008, respectively, of an accrual related to money market funds support agreements.
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(Unaudited)
Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30,
2008 2008 2009 2009 2009
---- ---- ---- ---- ----
Private Banks:
Equity/Fixed Income
prgms. $14,436 $10,573 $9,679 $10,892 $12,479
Collective Trust Fund
prgm. 1,028 1,145 1,198 1,176 1,098
Liquidity funds 9,253 9,194 8,929 7,581 6,524
----- ----- ----- ----- -----
Total assets under
mgmt. $24,717 $20,912 $19,806 $19,649 $20,101
Client assets under
admin. 12,301 10,622 9,920 10,143 10,941
------ ------ ----- ------ ------
Total assets $37,018 $31,534 $29,726 $29,792 $31,042
Investment Advisors:
Equity/Fixed Income
prgms. $27,817 $21,631 $18,832 $21,705 $24,739
Collective Trust Fund
prgm. 2,471 2,606 2,716 2,621 2,521
Liquidity funds 2,859 3,436 3,458 2,469 2,243
----- ----- ----- ----- -----
Total assets under
mgmt. $33,147 $27,673 $25,006 $26,795 $29,503
Institutional Investors:
Equity/Fixed Income
prgms. $39,775 $34,966 $32,565 $36,955 $43,672
Collective Trust Fund
prgm. 1,001 942 791 755 707
Liquidity funds 3,930 4,582 3,802 3,462 4,624
----- ----- ----- ----- -----
Total assets under
mgmt. $44,706 $40,490 $37,158 $41,172 $49,003
Investment Managers:
Equity/Fixed Income
prgms. $10 $8 $3 $3 $4
Collective Trust Fund
prgm. 6,453 5,974 6,917 6,794 7,075
Liquidity funds 699 869 898 505 528
--- --- --- --- ---
Total assets under
mgmt. $7,162 $6,851 $7,818 $7,302 $7,607
Client assets under
admin. (A) 256,553 234,628 221,798 213,930 216,222
------- ------- ------- ------- -------
Total assets $263,715 $241,479 $229,616 $221,232 $223,829
Investments in New
Businesses:
Equity/Fixed Income
prgms. $704 $519 $472 $473 $473
Liquidity funds 115 153 157 133 93
--- --- --- --- --
Total assets under
mgmt. $819 $672 $629 $606 $566
LSV Asset Management
Equity/Fixed Income
prgms. $51,296 $37,714 $32,308 $40,210 $49,349
Consolidated:
Equity/Fixed Income
prgms. (B) $134,038 $105,411 $93,859 $110,238 $130,716
Collective Trust Fund
prgm. 10,953 10,667 11,622 11,346 11,401
Liquidity funds 16,856 18,234 17,244 14,150 14,012
------ ------ ------ ------ ------
Total assets under
mgmt. $161,847 $134,312 $122,725 $135,734 $156,129
Client assets under
admin. (C) 268,854 245,250 231,718 224,073 227,163
------- ------- ------- ------- -------
Total assets $430,701 $379,562 $354,443 $359,807 $383,292
(A) Client assets under administration in the Investment Managers segment include $64,148 of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of September 30, 2009).
(B) Equity/Fixed Income programs include $2,290 of assets invested in various asset allocation funds at September 30, 2009.
(C) In addition to the numbers presented, SEI also administers an additional $8,552 in Funds of Funds assets (as of September 30, 2009) on which SEI does not earn an administration fee.
SOURCE SEI Investments Company
Released October 21, 2009