SEI Reports Second-Quarter 2009 Financial Results
OAKS, Pa., July 22 /PRNewswire-FirstCall/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for second-quarter 2009, reporting decreases in revenues, net income attributable to SEI, and diluted earnings per share compared to second-quarter 2008.
Consolidated Overview For the Three Months For the Six Months
(In thousands,
except earnings
per share) Ended June 30, Ended June 30,
2009 2008 % 2009 2008 %
---- ---- - ---- ---- -
Revenues $252,009 $329,523 -24% $500,620 $663,431 -25%
Net Income attributable
to SEI 41,571 46,164 -10% 75,771 95,110 -20%
Diluted Earnings
Per Share $0.22 $0.24 -8% $0.40 $0.48 -17%
"While the capital markets did improve in the second quarter, their still-depressed levels continue to have a significant negative impact on our second-quarter financial results as compared to the second quarter, 2008," said Alfred P. West, Jr., SEI Chairman and CEO.
"We have resized our company and put in place certain cost reduction initiatives which are reflected in our second-quarter results. We are concentrating our marketing and sales activities where we have short and intermediate term opportunities for revenue growth. At the same time, our positive cash flow allows us to maintain a strong capital base and balance sheet so we can implement our long-term strategies to grow our business.
"In these times, it is especially important to focus on our clients' well-being and success. We are firm in our belief that what we are doing today will significantly benefit our clients and SEI both today and in the future."
Summary of Second-Quarter and Year to Date Results by Business Segment
For the Three Month For the Six Month
(In thousands) Period Ended June 30, Period Ended June 30,
2009 2008 % 2009 2008 %
---- ---- - ---- ---- -
Private Banks:
Revenues $86,645 $103,602 -16% $183,593 $210,656 -13%
Expenses 70,761 85,367 -17% 149,559 171,534 -13%
------ ------ ------- -------
Operating Profit $15,884 $18,235 -13% $34,034 $39,122 -13%
Operating Margin 18% 18% 19% 19%
Investment Advisors:
Revenues 39,582 61,848 -36% 77,090 122,367 -37%
Expenses 25,939 31,551 -18% 53,048 62,927 -16%
------ ------ ------ ------
Operating Profit 13,643 30,297 -55% 24,042 59,440 -60%
Operating Margin 34% 49% 31% 49%
Institutional Investors:
Revenues 42,164 51,300 -18% 81,543 101,989 -20%
Expenses 23,264 29,328 -21% 47,434 59,468 -20%
------ ------ ------ ------
Operating Profit 18,900 21,972 -14% 34,109 42,521 -20%
Operating Margin 45% 43% 42% 42%
Investment Managers:
Revenues 33,371 37,307 -11% 66,703 73,800 -10%
Expenses 22,245 25,012 -11% 45,112 50,976 -12%
------ ------ ------ ------
Operating Profit 11,126 12,295 -10% 21,591 22,824 -5%
Operating Margin 33% 33% 32% 31%
Investments in New Businesses:
Revenues 1,169 1,864 -37% 2,423 3,698 -34%
Expenses 2,325 4,147 -44% 5,618 8,799 -36%
----- ----- ----- -----
Operating Loss (1,156) (2,283) -49% (3,195) (5,101) -37%
Operating Margin n/a n/a n/a n/a
LSV:
Revenues 49,078 73,602 -33% 89,268 150,921 -41%
Expenses (1) 31,709 45,840 -31% 58,155 93,196 -38%
------ ------ ------ ------
Operating
Profit 17,369 27,762 -37% 31,113 57,725 -46%
Operating Margin 35% 38% 35% 38%
Consolidated Segment Totals:
Revenues $252,009 $329,523 -24% $500,620 $663,431 -25%
Expenses 176,243 221,245 -20% 358,926 446,900 -20%
------- ------- ------- -------
Operating Profit $75,766 $108,278 -30% $141,694 $216,531 -35%
Operating Margin 30% 33% 28% 33%
(1) Includes $24,428 and $38,072 for the three-month period ended
June 30, 2009 and 2008, respectively, and $43,291 and $79,310 for
the six-month period ended June 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 six-month periods ended June 30, 2009 and 2008 is as follows:
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Total operating profit
from business segments $75,766 $108,278 $141,694 $216,531
Corporate overhead
expenses (8,697) (10,347) (18,338) (20,456)
Noncontrolling interest
reflected in segments 24,737 39,082 43,800 81,270
LSV Employee Group
Expenses (1) (1,820) (1,819) (3,640) (3,640)
------ ------ ------ ------
Income from operations $89,986 $135,194 $163,516 $273,705
(1) Includes $1,806 for the three-month period ending June 30, 2009
and 2008, and $3,611 for the six-month period ended June 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.
Second-Quarter Business Commentary:
-- Revenues were down across all segments due to the decline in the capital
markets. The Institutional Investors and Investment Managers segments
partially offset the negative capital market impact with new business
growth. Investment processing revenues helped the Private Banks segment
offset the negative capital markets as well.
-- The second-quarter 2009 results include losses of $2.3 million
associated with SIV-related issues involving SEI-sponsored money market
funds. SEI has recognized cumulative losses of $200.0 million
associated with these SIV-related issues through June 30, 2009.
Additional information pertaining to SIV-related issues involving
SEI-sponsored money market funds is contained in SEI's 2008 Form
10-K filed February 25, 2009 and SEI's 2009 first-quarter Form 10-Q
filing dated May 4, 2009.
-- In June 2009, SEI purchased the remaining SIVs from the SLAT Prime
Obligation Fund for $57.5 million. SEI borrowed $59.0 million on its
credit facility in order to finance the purchase of the notes. As a
result of this purchase, SEI's obligation under the Capital Support
Agreement with the SLAT Prime Obligation Fund was canceled.
-- Our obligation under the Capital Support Agreement with the SDIT Prime
Obligation Fund is $30.0 million at June 30, 2009.
-- Assets under management increased by $12.9 billion during the
second-quarter 2009 to $135.7 billion, primarily due to market
appreciation.
-- In the second-quarter, SEI purchased 453,000 shares of its common stock
for $7.7 million.
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM ET on July 22, 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 107763.
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 June 30, 2009, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $224 billion in mutual fund and pooled assets and manages $136 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 June 30,
---------------
2009 2008
---- ----
Asset management, admin. and distribution fees $183,209 $260,931
Information processing and software servicing fees 54,694 57,088
Transaction-based and trade execution fees 14,106 11,504
------ ------
Total revenues 252,009 329,523
Commissions and fees 36,139 43,045
Compensation, benefits and other personnel 67,031 83,529
Consulting, outsourcing and professional fees 18,711 26,611
Data processing and computer related 11,177 11,229
Facilities, supplies and other costs 16,203 18,417
Depreciation and amortization 12,762 11,498
------ ------
Total expenses 162,023 194,329
Income from operations 89,986 135,194
Net loss on investments (2,533) (27,294)
Interest and dividend income 1,937 3,223
Interest expense (1,051) (808)
------ ----
Income before taxes 88,339 110,315
Income taxes 24,212 27,572
------ ------
Net income 64,127 82,743
------ ------
Less: Net income attributable to the
noncontrolling interest (22,556) (36,579)
------- -------
Net income attributable to SEI $41,571 $46,164
======= =======
Diluted earnings per common share $0.22 $0.24
===== =====
Shares used to calculate diluted
earnings per common share 191,933 195,992
======= =======
Basic earnings per common share $0.22 $0.24
===== =====
Shares used to calculate basic
earnings per common share 191,023 192,187
======= =======
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Six Months Ended
June 30,
----------------
2009 2008
---- ----
Asset management, admin. and distribution fees $352,573 $520,990
Information processing and software servicing fees 116,911 117,227
Transaction-based and trade execution fees 31,136 25,214
------ ------
Total revenues 500,620 663,431
Commissions and fees 73,692 88,340
Compensation, benefits and other personnel 143,899 167,421
Consulting, outsourcing and professional fees 39,861 53,368
Data processing and computer related 22,692 21,777
Facilities, supplies and other costs 31,636 35,802
Depreciation and amortization 25,324 23,018
------ ------
Total expenses 337,104 389,726
Income from operations 163,516 273,705
Net loss on investments (16,983) (51,340)
Interest and dividend income 3,648 7,361
Interest expense (1,850) (1,775)
------ ------
Income before taxes 148,331 227,951
Income taxes 33,141 56,747
------ ------
Net income 115,190 171,204
------- -------
Less: Net income attributable to the
noncontrolling interest (39,419) (76,094)
------- -------
Net income attributable to SEI $75,771 $95,110
======= =======
Diluted earnings per common share $0.40 $0.48
===== =====
Shares used to calculate diluted
earnings per common share 191,671 197,102
======= =======
Basic earnings per common share $0.40 $0.49
===== =====
Shares used to calculate basic
earnings per common share 191,053 192,908
======= =======
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, December 31,
2009 2008
---- ----
Assets
Cash and short-term investments $493,128 $416,643
Restricted cash 17,000 14,000
Receivables 207,573 208,209
Other current assets 55,300 100,819
------ -------
Total current assets 773,001 739,671
Property and equipment, net 144,058 148,124
Marketable securities 165,295 86,693
Capitalized software, net 285,118 270,606
Goodwill 22,842 22,842
Intangible assets, net 48,689 52,518
Other assets, net 19,819 21,261
------ ------
Total assets $1,458,822 $1,341,715
========== ==========
Liabilities
Current liabilities (1) $147,585 $329,894
Long-term debt 272,288 24,332
Deferred income taxes 96,295 104,548
Long-term liabilities 4,913 4,067
Total SEI Investments Company
shareholders' equity 836,826 769,152
Noncontrolling interest 100,915 109,722
------- -------
Total Equity 937,741 878,874
Total liabilities and equity $1,458,822 $1,341,715
========== ==========
(1) Includes $29,973 and $173,983 at June 30, 2009 and December 31,
2008, respectively, of an accrual related to money market funds
support agreements.
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(Unaudited)
Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30,
2008 2008 2008 2009 2009
---- ---- ---- ---- ----
Private Banks:
Equity/Fixed
Income prgms. $18,163 $14,436 $10,573 $9,679 $10,892
Collective Trust
Fund prgm. 955 1,028 1,145 1,198 1,176
Liquidity funds 8,345 9,253 9,194 8,929 7,581
----- ----- ----- ----- -----
Total assets
under mgmt. $27,463 $24,717 $20,912 $19,806 $19,649
Client assets
under admin. 13,242 12,301 10,622 9,920 10,143
------ ------ ------ ----- ------
Total assets $40,705 $37,018 $31,534 $29,726 $29,792
Investment Advisors:
Equity/Fixed
Income prgms. $31,938 $27,817 $21,631 $18,832 $21,705
Collective Trust
Fund prgm. 2,259 2,471 2,606 2,716 2,621
Liquidity funds 2,410 2,859 3,436 3,458 2,469
----- ----- ----- ----- -----
Total assets
under mgmt. $36,607 $33,147 $27,673 $25,006 $26,795
Institutional Investors:
Equity/Fixed
Income prgms. $43,608 $39,775 $34,966 $32,565 $36,955
Collective Trust
Fund prgm. 947 1,001 942 791 755
Liquidity funds 3,950 3,930 4,582 3,802 3,462
----- ----- ----- ----- -----
Total assets
under mgmt. $48,505 $44,706 $40,490 $37,158 $41,172
Investment Managers:
Equity/Fixed
Income prgms. $19 $10 $8 $3 $3
Collective Trust
Fund prgm. 6,572 6,453 5,974 6,917 6,794
Liquidity funds 438 699 869 898 505
--- --- --- --- ---
Total assets
under mgmt. $7,029 $7,162 $6,851 $7,818 $7,302
Client assets
under admin. (A) 228,722 256,553 234,628 221,798 213,930
------- ------- ------- ------- -------
Total assets $235,751 $263,715 $241,479 $229,616 $221,232
Investments in
New Businesses:
Equity/Fixed
Income prgms. $838 $704 $519 $472 $473
Liquidity funds 98 115 153 157 133
-- --- --- --- ---
Total assets
under mgmt. $936 $819 $672 $629 $606
LSV Asset Management
Equity/Fixed
Income prgms. $57,692 $51,296 $37,714 $32,308 $40,210
Consolidated:
Equity/Fixed
Income prgms (B) $152,258 $134,038 $105,411 $93,859 $110,238
Collective Trust
Fund prgm. 10,733 10,953 10,667 11,622 11,346
Liquidity funds 15,241 16,856 18,234 17,244 14,150
------ ------ ------ ------ ------
Total assets
under mgmt. $178,232 $161,847 $134,312 $122,725 $135,734
Client assets
under admin. ( C ) 241,964 268,854 245,250 231,718 224,073
------- ------- ------- ------- -------
Total assets $420,196 $430,701 $379,562 $354,443 $359,807
(A) Client assets under administration in the Investment Managers
segment include $68,673 of assets balances that require limited
services and therefore are at fee levels below our normal full
service assets.
(B) Equity/Fixed Income programs include $1,941 of assets invested
in various asset allocation funds at June 30, 2009.
( C ) In addition to the numbers presented, SEI also administers an
additional $7,483 in Funds of Funds assets (as of June 30, 2009)
on which SEI does not earn an administration fee.
SOURCE SEI Investments Company
Released July 22, 2009