SEI Reports Second-Quarter 2007 Results
Revenues and Net Income up 20%
OAKS, Pa., July 25 /PRNewswire-FirstCall/ -- SEI Investments Company (Nasdaq: SEIC) today announced financial results for second-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 Six Months
(In thousands, except Ended June 30, Ended June 30,
earnings per share)
2007 2006 % 2007 2006 %
Revenues $343,258 $285,018 20% $665,983 $562,151 18%
Net Income Before Taxes 112,102 85,238 32% 213,021 171,978 24%
Net Income 69,501 57,911 20% 132,878 112,817 18%
Diluted Earnings Per
Share $.34 $.29 17% $.65 $.56 16%
"We are satisfied with our quarterly results, especially since we have shifted into the execution stage of our new strategies," said Alfred P. West, Jr., SEI Chairman and CEO.
"We are excited about the successful implementation this month of the first broad application of our global wealth platform. The platform is now in production and has surpassed our expectations both in the installation and early operating phases. All other key investments continue to be on schedule as we make steady progress in our transformation. 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 Second-Quarter and Year to Date Results by Business Segment
(In thousands) For the Three Month For the Six Month
Period Ended June 30 Period Ended June 30
2007 2006 % 2007 2006 %
Private Banks
Revenues $100,090 $90,816 10% $197,828 $179,118 10%
Expenses 80,829 68,622 18% 158,822 133,154 19%
Operating Profit $19,261 $22,194 (13%) $39,006 $45,964 (15%)
Operating Margin 19% 24% 20% 26%
Investment Advisors:
Revenues 65,446 55,232 18% 127,009 110,529 15%
Expenses 30,919 28,993 7% 60,293 55,210 9%
Operating Profit 34,527 26,239 32% 66,716 55,319 21%
Operating Margin 53% 48% 53% 50%
Institutional
Investors:
Revenues 48,911 38,523 27% 95,540 77,051 24%
Expenses 30,181 26,154 15% 58,354 50,604 15%
Operating Profit 18,730 12,369 51% 37,186 26,447 41%
Operating Margin 38% 32% 39% 34%
Investment Managers:
Revenues 35,293 29,051 21% 69,287 56,336 23%
Expenses 24,302 22,554 8% 49,204 45,027 9%
Operating Profit 10,991 6,497 69% 20,083 11,309 78%
Operating Margin 31% 22% 29% 20%
Investments in New
Businesses:
Revenues 1,836 1,745 5% 3,466 3,432 1%
Expenses 4,725 5,165 (9%) 9,577 10,725 (11%)
Operating Loss (2,889) (3,420) 16% (6,111) (7,293) 16%
Operating Margin n/a n/a n/a n/a
LSV
Revenues 91,682 69,651 32% 172,853 135,685 27%
Expenses (1) 56,262 42,840 31% 106,159 83,778 27%
Operating profit 35,420 26,811 32% 66,694 51,907 28%
Operating Margin 39% 38% 39% 38%
Consolidated Segment
Totals:
Revenues $343,258 $285,018 20% $665,983 $562,151 18%
Expenses 227,218 194,328 17% 442,409 378,498 17%
Operating Profit $116,040 $90,690 28% $223,574 $183,653 22%
Operating Margin 34% 32% 34% 33%
(1) Includes $48,861 and $36,573 for the three month period ended June 30,
2007 and 2006, respectively, and $91,533 and $70,866 for the six month
period ended June 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 six month periods ended June 30, 2007 and 2006 are as follows:
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
Total operating profit from
business segments $116,040 $90,690 $223,574 $183,653
Corporate overhead expenses (10,578) (8,927) (20,705) (18,849)
Minority interest reflected in
segments 50,033 38,199 93,625 73,815
LSV Employee Group Expenses (1) (1,820) (1,805) (3,640) (3,611)
Income from operations $153,675 $118,157 $292,854 $235,008
(1) Includes $1,806 for the three month period ending June 30, 2007 and
2006, and $3,611 for the six month period ending June 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.
Second-Quarter Business Commentary:
-- All major business segments reported double digit revenue gains versus
year ago.
-- The Investment Advisors, Institutional Investors, Investment Managers
and LSV segments all realized substantial operating profit growth
versus year ago levels.
-- The company's percentage ownership in LSV remained at approximately 43
percent. In the second-quarter 2007, the company recognized $35.4
million as its portion of the earnings from LSV versus $26.8 million in
second-quarter 2006.
-- In the second-quarter 2007, SEI recognized a one-time pre-tax gain of
$3.0 million from the sale of its remaining ownership in a joint
venture.
-- The tax rate for the second-quarter 2007 was approximately 38% vs. 32%
for the second-quarter 2006.
-- Assets under management grew by $9 billion during second-quarter to
$199 billion.
-- In the second-quarter 2007, SEI purchased 2,682,800 shares of its
common stock for $79.4 million.
-- In the second-quarter 2007, SEI declared and paid a 2 for 1 stock
split. All per-share information has been adjusted to reflect the
split.
Earnings Conference Call
A conference call to review earnings is scheduled for 2:00 PM EDT on July 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 879867.
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, 2007, through its subsidiaries and partnerships in which the company has a significant interest, SEI administers $407 billion in mutual fund and pooled assets and manages $199 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 June 30,
2007 2006
Asset Management, admin. and distribution
fees $276,653 $222,369
Information processing and software
servicing fees 55,414 52,410
Transaction-based and trade execution fees 11,191 10,239
Total Revenues 343,258 285,018
Commissions and Fees 43,036 35,773
Compensation, benefits and other personnel 88,552 74,795
Consulting, outsourcing and professional fees 22,617 19,787
Data processing and computer related 10,227 9,330
Facilities, supplies and other costs 17,700 19,900
Depreciation and amortization 7,451 7,276
Total Expenses 189,583 166,861
Income from operations 153,675 118,157
Minority Interest (47,242) (35,171)
Net (loss) gain on investments (997) 602
Interest income 4,882 3,098
Interest expense (1,168) (1,448)
Other income 2,952 --
Income before taxes 112,102 85,238
Income taxes 42,601 27,327
Net income $69,501 $57,911
Diluted earnings per common share $.34 $.29
Shares used to calculate diluted
earnings per common share 203,604 202,526
Basic earnings per common share $.35 $.29
Shares used to calculate basic
earnings per common share 197,314 196,990
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
Six Months Ended June 30,
2007 2006
Asset Management, admin. and distribution
fees $533,051 $436,081
Information processing and software
servicing fees 109,646 102,656
Transaction-based and trade execution fees 23,286 23,414
Total Revenues 665,983 562,151
Commissions and Fees 85,673 71,411
Compensation, benefits and other personnel 172,830 150,474
Consulting, outsourcing and professional fees 43,496 37,865
Data processing and computer related 20,994 17,928
Facilities, supplies and other costs 35,260 34,935
Depreciation and amortization 14,876 14,530
Total Expenses 373,129 327,143
Income from operations 292,854 235,008
Minority Interest (87,976) (68,127)
Net (loss) gain on investments (1,313) 360
Interest income 8,933 5,752
Interest expense (2,429) (2,603)
Other income 2,952 1,588
Income before taxes 213,021 171,978
Income taxes 80,143 59,161
Net income $132,878 $112,817
Diluted earnings per common share $.65 $.56
Shares used to calculate diluted
earnings per common share 204,153 202,574
Basic earnings per common share $.67 $.57
Shares used to calculate basic
earnings per common share 197,614 197,254
SEI INVESTMENTS COMPANY
CONDENSED BALANCE SHEETS
(In thousands)
June 30, December 31,
2007 2006
Assets
Cash and short-term investments $246,292 $286,948
Restricted Cash 10,250 10,250
Receivables 272,965 244,599
Securities owned 16,302 16,431
Other current assets 35,092 28,245
Total current assets 580,901 586,473
Property and Equipment, net 136,267 130,732
Investments available for sale 79,463 71,690
Capitalized Software, net 214,154 180,014
Goodwill 22,842 22,842
Intangible asset 64,007 67,836
Other assets 21,130 20,118
Total assets $1,118,764 $1,079,705
Liabilities
Current liabilities $146,469 $196,127
Long-term debt 57,822 67,538
Deferred income taxes 90,333 76,148
Other long-term liabilities 11,619 --
Minority Interest 127,513 109,380
Shareholders' Equity 685,008 630,512
Total liabilities and
shareholders' equity $1,118,764 $1,079,705
SEI INVESTMENTS COMPANY
ASSET BALANCES
(In millions)
(unaudited)
Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30,
2006 2006 2006 2007 2007
Private Banks:
Equity/Fixed Income
prgms. $14,517 $15,055 $16,806 $18,196 $20,666
Collective Trust Fund
prgm. 1,459 1,460 1,251 1,148 1,078
Liquidity funds 7,627 7,707 8,513 8,241 8,224
Total assets under
mgmt. $23,603 $24,222 $26,570 $27,585 $29,968
Client assets under
admin. 19,210 15,001 14,738 14,864 15,019
Total assets $42,813 $39,223 $41,308 $42,449 $44,987
Investment Advisors:
Equity/Fixed Income
prgms. $30,948 $32,205 $34,096 $35,225 $36,923
Collective Trust Fund
prgm. 2,473 2,425 2,480 2,491 2,334
Liquidity funds 1,306 1,263 1,421 1,404 1,400
Total assets under
mgmt. $34,727 $35,893 $37,997 $39,120 $40,657
Institutional Investors:
Equity/Fixed Income
prgms. $32,709 $34,674 $37,720 $39,504 $40,771
Collective Trust Fund
prgm. 1,147 1,150 1,081 1,078 895
Liquidity funds 3,823 4,167 3,371 5,072 4,128
Total assets under
mgmt. $37,679 $39,991 $42,172 $45,654 $45,794
Investment Managers:
Equity/Fixed Income
prgms. $34 $34 $30 $29 $32
Collective Trust Fund
prgm. 8,923 9,009 8,675 8,300 7,990
Liquidity funds 363 253 215 178 271
Total assets under
mgmt. $9,320 $9,296 $8,920 $8,507 $8,293
Client assets under
admin. 153,406 161,000 170,344 180,745 192,931
Total assets $162,726 $170,296 $179,264 $189,252 $201,224
Investments in New
Businesses:
Equity/Fixed Income
prgms. $626 $685 $805 $843 $887
Liquidity funds 49 64 53 43 43
Total assets under
mgmt. $675 $749 $858 $886 $930
LSV Asset Management
Equity/Fixed Income
prgms. $55,687 $58,785 $64,970 $68,225 $73,100
Consolidated:
Equity/Fixed Income
prgms (A) $134,521 $141,438 $154,427 $162,022 $172,379
Collective Trust Fund
prgm. 14,002 14,044 13,487 13,017 12,297
Liquidity funds 13,168 13,454 13,573 14,938 14,066
Total assets under
mgmt. $161,691 $168,936 $181,487 $189,977 $198,742
Client assets under
admin. (B) 172,616 176,001 185,082 195,609 207,950
Total assets $334,307 $344,937 $366,569 $385,586 $406,692
(A) Equity/Fixed Income programs include $3,821 of assets invested in
SEI's Asset Allocation Funds at June 30, 2007.
(B) In addition to the numbers presented, SEI also administers an
additional $5,872 in Funds of Funds assets (as of June 30, 2007) on
which SEI does not earn an administration fee.
SOURCE SEI Investments Company
Released July 25, 2007