SEI Reports Third-Quarter 2007 Results
Net Income Up 21% on Revenue Gains of 17%
OAKS, Pa., Oct. 25 /PRNewswire-FirstCall/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for third-quarter 2007, reporting increases in revenues, net income and earnings per share, compared to the corresponding period for the prior year.
Consolidated Overview For the Three Months For the Nine Months
(In thousands, except Ended September 30, Ended September 30,
earnings per share)
2007 2006 % 2007 2006 %
Revenues $349,636 $298,084 17 % $1,015,619 $860,235 18 %
Net Income Before Taxes 111,727 88,724 26 % 324,748 260,702 25 %
Net Income 73,299 60,549 21 % 206,177 173,366 19 %
Diluted Earnings Per
Share $.37 $.30 23 % $1.02 $.85 20 %
"We continue to be satisfied with our quarterly results," said Alfred P. West, Jr., SEI Chairman and CEO.
"We are beginning to realize increased contributions to growth from our core businesses. Our first installation of the global wealth platform continues to meet our expectations and, we continue to make steady progress on our other key investments. In the long run, we remain firm in our belief that what we are doing will provide our clients with increased opportunities for success and allow us to grow our future revenues and profits more rapidly."
Summary of Third-Quarter and Year to Date Results by Business Segment
(In thousands) For the Three Month For the Nine Month
Period Ended Period Ended
September 30, September 30,
2007 2006 % 2007 2006 %
Private Banks:
Revenues $104,280 $94,058 11% $302,108 $273,176 11%
Expenses 82,846 71,512 16% 241,668 204,666 18%
Operating Profit $21,434 $22,546 (5%) $60,440 $68,510 (12%)
Operating Margin 21% 24% 20% 25%
Investment Advisors:
Revenues 65,715 55,117 19% 192,724 165,646 16%
Expenses 31,257 27,535 14% 91,550 82,745 11%
Operating Profit 34,458 27,582 25% 101,174 82,901 22%
Operating Margin 52% 50% 52% 50%
Institutional Investors:
Revenues 51,275 42,115 22% 146,815 119,166 23%
Expenses 30,980 27,210 14% 89,334 77,814 15%
Operating Profit 20,295 14,905 36% 57,481 41,352 39%
Operating Margin 40% 35% 39% 35%
Investment Managers:
Revenues 35,844 29,802 20% 105,131 86,138 22%
Expenses 25,445 22,131 15% 74,649 67,158 11%
Operating Profit 10,399 7,671 36% 30,482 18,980 61%
Operating Margin 29% 26% 29% 22%
Investments in New
Businesses:
Revenues 1,881 1,914 (2%) 5,347 5,346 --
Expenses 5,020 6,118 (18%) 14,597 16,843 (13%)
Operating Loss (3,139) (4,204) 25% (9,250) (11,497) 20%
Operating Margin n/a n/a n/a n/a
LSV
Revenues 90,641 75,078 21% 263,494 210,763 25%
Expenses (1) 56,252 45,990 22% 162,411 129,768 25%
Operating profit 34,389 29,088 18% 101,083 80,995 25%
Operating Margin 38% 39% 38% 38%
Consolidated Segment
Totals:
Revenues $349,636 $298,084 17% $1,015,619 $860,235 18%
Expenses 231,800 200,496 16% 674,209 578,994 16%
Operating Profit $117,836 $97,588 21% $341,410 $281,241 21%
Operating Margin 34% 33% 34% 33%
(1) Includes $47,671 and $39,653 for the three month period ended
September 30, 2007 and 2006, respectively, and $139,204 and $110,519
for the nine month period ended September 30, 2007 and 2006,
respectively, of minority 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, 2007 and 2006 are as follows:
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
Total operating profit from
business segments $117,836 $97,588 $341,410 $281,241
Corporate overhead expenses (9,754) (9,772) (30,459) (28,621)
Minority interest reflected in
segments 49,016 40,749 142,641 114,564
LSV Employee Group Expenses (1) (1,820) (1,806) (5,460) (5,417)
Income from operations $155,278 $126,759 $448,132 $361,767
(1) Includes $1,805 for the three month period ending September 30, 2007
and 2006, and $5,416 for the nine month period ending September 30,
2007 and 2006 of Amortization expense related to intangible assets.
The amortization is offset through Minority interest since SEI does
not have any ownership in LSV Employee Group LLC.
Third-Quarter Business Commentary:
-- All four core business segments (Private Banks, Investment Advisors,
Institutional Investors and Investment Managers) reported double-digit
revenue gains versus a year ago.
-- The Investment Advisors, Institutional Investors, Investment Managers
and LSV segments all realized substantial operating profit growth
versus year ago levels.
-- The Global Wealth Platform was placed into service during the third-
quarter 2007. Expenses reflect an increase of $3.2 million for
amortization. The amortization is primarily recognized in the Private
Banks and Investment Advisors segments.
-- The company's percentage ownership in LSV remained at approximately 43
percent. In the third-quarter 2007, the company recognized $34.4
million as its portion of the earnings from LSV versus $29.1 million in
the third-quarter 2006.
-- The tax rate for the third-quarter 2007 was approximately 34% vs. 32%
for the third-quarter 2006 and approximately 38% for second-quarter
2007.
-- Assets under management grew by almost $3 billion during third-quarter
2007 to $202 billion.
-- In the third-quarter 2007, SEI purchased 2,285,800 shares of its common
stock for $59.2 million.
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM EDT on October 25, 2007. Investors may listen to the call at www.seic.com, 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 889135.
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, 2007, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $423 billion in mutual fund and pooled assets and manages $202 billion in assets. SEI serves clients, conducts or is registered to conduct business and/or operations from more than 20 offices in over a dozen countries. For more information, visit www.seic.com.
Many of our responses 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,
2007 2006
Asset management, admin. and distribution
fees $280,287 $232,251
Information processing and software
servicing fees 58,485 56,717
Transaction-based and trade execution fees 10,864 9,116
Total revenues 349,636 298,084
Commissions and fees 44,184 36,487
Compensation, benefits and other personnel 88,463 80,900
Consulting, outsourcing and professional fees 23,703 19,061
Data processing and computer related 10,410 9,508
Facilities, supplies and other costs 16,607 18,050
Depreciation and amortization 10,991 7,319
Total expenses 194,358 171,325
Income from operations 155,278 126,759
Minority interest (46,463) (37,731)
Net loss on investments (202) (2,226)
Interest and dividend income 4,381 3,397
Interest expense (1,267) (1,475)
Income before taxes 111,727 88,724
Income taxes 38,428 28,175
Net income $73,299 $60,549
Diluted earnings per common share $.37 $.30
Shares used to calculate diluted
earnings per common share 200,321 203,260
Basic earnings per common share $.38 $.31
Shares used to calculate basic
earnings per common share 194,930 197,144
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Nine Months Ended September 30,
2007 2006
Asset management, admin. and distribution
fees $813,338 $668,332
Information processing and software
servicing fees 168,131 159,373
Transaction-based and trade execution fees 34,150 32,530
Total revenues 1,015,619 860,235
Commissions and fees 129,857 107,898
Compensation, benefits and other personnel 261,293 231,374
Consulting, outsourcing and professional fees 67,199 56,926
Data processing and computer related 31,404 27,436
Facilities, supplies and other costs 51,867 52,985
Depreciation and amortization 25,867 21,849
Total expenses 567,487 498,468
Income from operations 448,132 361,767
Minority interest (134,439) (105,858)
Net loss on investments (1,515) (1,866)
Interest and dividend income 13,314 9,149
Interest expense (3,696) (4,078)
Other income 2,952 1,588
Income before taxes 324,748 260,702
Income taxes 118,571 87,336
Net income $206,177 $173,366
Diluted earnings per common share $1.02 $.85
Shares used to calculate diluted
earnings per common share 202,875 202,802
Basic earnings per common share $1.05 $.88
Shares used to calculate basic
earnings per common share 196,720 197,218
Dividends declared per common share $.07 $.06
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2007 2006
Assets
Cash and short-term investments $297,194 $286,948
Restricted cash 10,250 10,250
Receivables 282,807 244,599
Securities owned 16,456 16,431
Other current assets 38,255 28,245
Total current assets 644,962 586,473
Property and equipment, net 138,508 130,732
Investments available for sale 78,808 71,690
Capitalized software, net 224,643 180,014
Goodwill 22,842 22,842
Intangible asset 62,093 67,836
Other assets 21,332 20,118
Total assets $1,193,188 $1,079,705
Liabilities
Current liabilities $186,825 $196,127
Long-term debt 49,943 67,538
Deferred income taxes 90,785 76,148
Long term liabilities 11,910 --
Minority interest 138,549 109,380
Shareholders' Equity 715,176 630,512
Total liabilities and
shareholders' equity $1,193,188 $1,079,705
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(Unaudited)
Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30,
2006 2006 2007 2007 2007
Private Banks:
Equity/Fixed Income
prgms. $15,055 $16,806 $18,196 $20,666 $21,816
Collective Trust Fund
prgm. 1,460 1,251 1,148 1,078 1,056
Liquidity funds 7,707 8,513 8,241 8,224 8,836
Total assets under
mgmt. $24,222 $26,570 $27,585 $29,968 $31,708
Client assets under
admin. 15,001 14,738 14,864 15,019 15,655
Total assets $39,223 $41,308 $42,449 $44,987 $47,363
Investment Advisors:
Equity/Fixed Income
prgms. $32,205 $34,096 $35,225 $36,923 $37,751
Collective Trust Fund
prgm. 2,425 2,480 2,491 2,334 2,325
Liquidity funds 1,263 1,421 1,404 1,400 1,619
Total assets under
mgmt. $35,893 $37,997 $39,120 $40,657 $41,695
Institutional Investors:
Equity/Fixed Income
prgms. $34,674 $37,720 $39,504 $40,771 $43,504
Collective Trust Fund
prgm. 1,150 1,081 1,078 895 907
Liquidity funds 4,167 3,371 5,072 4,128 4,342
Total assets under
mgmt. $39,991 $42,172 $45,654 $45,794 $48,753
Investment Managers:
Equity/Fixed Income
prgms. $34 $30 $29 $32 $24
Collective Trust Fund
prgm. 9,009 8,675 8,300 7,990 6,814
Liquidity funds 253 215 178 271 360
Total assets under
mgmt. $9,296 $8,920 $8,507 $8,293 $7,198
Client assets under
admin. 161,000 170,344 180,745 192,931 205,251
Total assets $170,296 $179,264 $189,252 $201,224 $212,449
Investments in New
Businesses:
Equity/Fixed Income
prgms. $685 $805 $843 $887 $907
Liquidity funds 64 53 43 43 40
Total assets under
mgmt. $749 $858 $886 $930 $947
LSV Asset Management
Equity/Fixed Income
prgms. $58,785 $64,970 $68,225 $73,100 $71,349
Consolidated:
Equity/Fixed Income
prgms (A) $141,438 $154,427 $162,022 $172,379 $175,351
Collective Trust Fund
prgm. 14,044 13,487 13,017 12,297 11,102
Liquidity funds 13,454 13,573 14,938 14,066 15,197
Total assets under
mgmt. $168,936 $181,487 $189,977 $198,742 $201,650
Client assets under
admin. (B) 176,001 185,082 195,609 207,950 220,906
Total assets $344,937 $366,569 $385,586 $406,692 $422,556
(A) Equity/Fixed Income programs include $3,859 of assets invested in
SEI's Asset Allocation Funds at September 30, 2007.
(B) In addition to the numbers presented, SEI also administers an
additional $5,692 in Funds of Funds assets (as of September 30, 2007)
on which SEI does not earn an administration fee.
SOURCE SEI Investments Company
Released October 25, 2007