SEI Reports First-Quarter 2017 Financial Results


OAKS, Pa., April 19, 2017 (GLOBE NEWSWIRE) -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the first-quarter 2017. Diluted earnings per share were $0.55 in first-quarter 2017 compared to $0.47 in first-quarter 2016. Diluted earnings per share in first-quarter 2016 reflect a pre-tax gain of $2.8 million, or $0.01 per share, from the sale of SEI Asset Korea. 

Consolidated Overview      
(In thousands, except earnings per share) For the Three Months
Ended March 31,
  
   2017  2016 %
       
Revenues $359,984  $334,263  8% 
Net income  88,737   77,497  15% 
Diluted earnings per share $0.55  $0.47  17% 

“Our financial results for the quarter reflect new and existing client growth, our focus on expenses, and the necessary investments to expand and strengthen the solutions we bring to our target markets,” said Alfred P. West, Jr., SEI Chairman and CEO.

“While we are committed to executing for clients in the short term, we remain focused on the long-term needs of our markets. Our advanced solutions are at the center of what will help our clients sustain their success, while helping us achieve sustainable growth and provide increased shareholder value.”

Summary of First-Quarter Results by Business Segment

(In thousands) For the Three Months
Ended March 31,
  
   2017  2016 %
Private Banks:      
Revenues $112,634  $113,361  (1)% 
Expenses  108,550   103,741  5% 
Operating Profit  4,084   9,620  (58)% 
Gain on sale of subsidiary     2,791  NM 
Segment Profit  4,084   12,411  NM 
Operating Margin (A)  4%  8%  
           
Investment Advisors:          
Revenues  88,238   76,679  15% 
Expenses  47,539   44,774  6% 
Operating Profit  40,699   31,905  28% 
Operating Margin  46%  42%  
           
Institutional Investors:          
Revenues  77,004   72,897  6% 
Expenses  38,828   35,382  10% 
Operating Profit  38,176   37,515  2% 
Operating Margin  50%  51%  
           
Investment Managers:          
Revenues  80,487   69,918  15% 
Expenses  52,065   45,275  15% 
Operating Profit  28,422   24,643  15% 
Operating Margin  35%  35%  
       
Investments in New Businesses:      
Revenues  1,621   1,408  15% 
Expenses  4,880   5,232  (7)% 
Operating Loss  (3,259)  (3,824) NM 
       
Totals:      
Revenues $359,984  $334,263  8% 
Expenses  251,862   234,404  7% 
Corporate overhead expenses  14,605   13,047  12% 
Income from operations $93,517  $86,812  8% 
            

(A) Percentages determined exclusive of gain on sale of subsidiary.

First-Quarter Business Highlights:

  • Revenue growth in the quarter was primarily driven by higher Asset management, administration, and distribution fees from market appreciation and improved cash flows from new and existing clients.
  • Sales events, net of client losses, during first-quarter 2017 totaled approximately $20.2 million and are expected to generate net annualized recurring revenues of approximately $17.2 million when contract values are fully realized.
  • Our average assets under management, excluding LSV, increased $20.7 billion, or 11 percent, to $201.4 billion, as compared to $180.7 billion during the first-quarter 2016. Our assets under management do not include advised assets (see attached Average Asset Balances schedules for further details).
  • Our average assets under administration increased $69.3 billion, or 17 percent, to $474.0 billion in the first-quarter 2017, as compared to $404.7 billion during the first-quarter 2016 (see attached Average Asset Balances schedules for further details).
  • Our earnings from LSV increased by $4.4 million, or 15 percent, to $33.6 million in first-quarter 2017 as compared to $29.2 million in first-quarter 2016. The increase in earnings was due to an increase in assets under management from market appreciation; however, our earnings were negatively impacted by increased personnel expenses of LSV.
  • We capitalized $16.9 million and $9.5 million of software development costs in first-quarter 2017 and 2016, respectively, of which $15.2 million and $7.6 million are related to continued enhancements to the SEI Wealth Platform. Our expenses related to maintenance and enhancements not eligible for capitalization have increased. A higher portion of these costs are recognized in personnel and consulting costs. These increased costs primarily impacted the Private Banks and Investment Advisors business segments.
  • Amortization expense related to the SEI Wealth Platform increased to $12.0 million during the first-quarter 2017 as compared to $11.0 million during the first-quarter 2016 due to continued enhancements.
  • Our operating expenses, primarily personnel costs, in our Investment Managers segment increased. These expenses primarily consist of operational and marketing costs and are mainly related to servicing existing clients and acquiring and implementing new clients.
  • During the first-quarter 2017, we adopted ASU 2016-09 which will cause volatility in our quarterly effective tax rate. Our effective tax rates were 31.0 percent in first-quarter 2017 and 35.2 percent in first-quarter 2016. Refer to our Form 10-Q for first-quarter 2017 for information regarding the impact of ASU 2016-09 on our effective tax rate.
  • We repurchased 1.1 million shares of our common stock for $55.4 million during the first-quarter 2017.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Apr. 19, 2017. Investors may listen to the call at seic.com/investors. The call may also be accessed at many financial services websites, including Google Finance and Yahoo Finance. Investors may also listen to replays at these websites, or by telephone at (USA) 800-475-6701; (International) 320-365-3844, access code 422405.

About SEI
SEI (NASDAQ:SEIC) is a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of March 31, 2017, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $779 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including $297 billion in assets under management and $478 billion in client assets under administration. For more information, visit 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)
 
  For the Three Months
Ended March 31,
   2017  2016
     
Asset management, admin. and distribution fees $278,565  $251,437 
Information processing and software servicing fees  74,763   73,399 
Transaction–based and trade execution fees  6,656   9,427 
     
Total revenues  359,984   334,263 
     
Subadvisory, distribution and other asset mgmt costs  42,502   39,195 
Software royalties and other information processing costs  7,662   7,748 
Brokerage commissions  4,959   7,108 
Compensation, benefits and other personnel  108,943   101,931 
Stock-based compensation  6,180   3,789 
Consulting, outsourcing and professional fees  43,149   38,506 
Data processing and computer related  16,772   15,718 
Facilities, supplies and other costs  17,478   15,997 
Amortization  12,022   11,012 
Depreciation  6,800   6,447 
     
Total expenses  266,467   247,451 
     
Income from operations  93,517   86,812 
     
Net gain (loss) on investments  347   (126)
Interest and dividend income  1,343   1,083 
Interest expense  (112)  (114)
Equity in earnings of unconsolidated affiliate  33,565   29,192 
Gain on sale of subsidiary     2,791 
     
Income before income taxes  128,660   119,638 
     
Income taxes  39,923   42,141 
     
Net income  88,737   77,497 
     
Basic earnings per common share $0.56  $0.48 
     
Shares used to calculate basic earnings per share  159,091   163,013 
     
Diluted earnings per common share $0.55  $0.47 
     
Shares used to calculate diluted earnings per share  162,742   166,145 
         


SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
  March 31, December 31,
   2017  2016
Assets    
Current Assets:    
Cash and cash equivalents $661,372  $695,701 
Restricted cash  3,500   3,500 
Receivables from investment products  51,453   61,761 
Receivables, net of allowance for doubtful accounts of $518 and $523  252,205   227,957 
Securities owned  21,372   21,339 
Other current assets  29,873   27,575 
Total Current Assets  1,019,775   1,037,833 
     
Property and Equipment, net of accumulated depreciation of $291,500 and $285,322  142,726   146,190 
Capitalized Software, net of accumulated amortization of $315,512 and $303,540  300,756   295,867 
Investments Available for Sale  89,262   84,033 
Investments in Affiliated Funds, at fair value  5,156   4,858 
Investment in Unconsolidated Affiliate  48,759   50,459 
Deferred Income Taxes  1,878   2,127 
Other Assets, net  16,240   15,456 
Total Assets $1,624,552  $1,636,823 
     
Liabilities and Equity    
Current Liabilities:    
Accounts payable $7,372  $5,966 
Accrued liabilities  167,061   240,525 
Deferred revenue  2,337   2,880 
Total Current Liabilities  176,770   249,371 
     
Deferred Income Taxes  69,379   69,693 
Other Long-term Liabilities  15,610   14,645 
Total Liabilities  261,759   333,709 
     
Shareholders' Equity:    
Common stock, $.01 par value, 750,000 shares authorized; 158,687 and 159,031 shares issued and outstanding  1,587   1,590 
Capital in excess of par value  976,007   955,461 
Retained earnings  420,712   384,018 
Accumulated other comprehensive loss, net  (35,513)  (37,955)
Total Shareholders' Equity  1,362,793   1,303,114 
Total Liabilities and Shareholders' Equity $1,624,552  $1,636,823 
         


ENDING ASSET BALANCES
(In millions)  (Unaudited)
 
   Mar. 31, Jun. 30, Sept. 30, Dec 31, Mar. 31,
    2016  2016  2016  2016  2017
Private Banks:           
Equity and fixed-income programs  $18,370  $18,328  $18,668  $17,926  $19,034 
Collective trust fund programs   4   3   3   3   5 
Liquidity funds   5,521   4,848   4,034   4,230   3,903 
Total assets under management  $23,895  $23,179  $22,705  $22,159  $22,942 
Client assets under administration   18,324   18,537   19,269   19,255   20,760 
Total assets  $42,219  $41,716  $41,974  $41,414  $43,702 
            
Investment Advisors:           
Equity and fixed-income programs  $47,357  $50,016  $52,594  $52,847  $55,311 
Collective trust fund programs   7   5   5   5   5 
Liquidity funds   5,051   3,661   2,539   2,741   2,645 
Total assets under management  $52,415  $53,682  $55,138  $55,593  $57,961 
            
Institutional Investors:           
Equity and fixed-income programs  $73,468  $75,944  $78,701  $76,465  $80,136 
Collective trust fund programs   97   88   90   93   89 
Liquidity funds   2,390   2,526   2,612   2,903   2,759 
Total assets under management  $75,955  $78,558  $81,403  $79,461  $82,984 
Advised assets               3,228 
Total assets  $75,955  $78,558  $81,403  $79,461  $86,212 
            
Investment Managers:           
Equity and fixed-income programs  $72  $73  $79  $81  $84 
Collective trust fund programs   32,385   33,841   35,962   36,991   40,646 
Liquidity funds   733   750   812   667   911 
Total assets under management  $33,190  $34,664  $36,853  $37,739  $41,641 
Client assets under administration (A)   400,579   419,139   451,204   448,708   457,356 
Total assets  $433,769  $453,803  $488,057  $486,447  $498,997 
            
Investments in New Businesses:           
Equity and fixed-income programs  $803  $820  $850  $884  $931 
Liquidity funds   41   37   53   61   79 
Total assets under management  $844  $857  $903  $945  $1,010 
Advised assets
               85 
Total assets  $844  $857  $903  $945  $1,095 
            
LSV Asset Management:           
Equity and fixed-income programs  $78,390  $78,352  $83,863  $87,248  $90,611 
            
Total:           
Equity and fixed-income programs (B)  $218,460  $223,533  $234,755  $235,451  $246,107 
Collective trust fund programs   32,493   33,937   36,060   37,092   40,745 
Liquidity funds   13,736   11,822   10,050   10,602   10,297 
Total assets under management  $264,689  $269,292  $280,865  $283,145  $297,149 
Advised assets (C)
               3,313 
Client assets under administration (D)   418,903   437,676   470,473   467,963   478,116 
Total assets  $683,592  $706,968  $751,338  $751,108  $778,578 
                      

(A) Client assets under administration in the Investment Managers segment include $47.4 billion of assets that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2017).
(B) Equity and fixed-income programs include $5.0 billion of assets invested in various asset allocation funds at March 31, 2017.
(C) Assets for which SEI acts as an advisor to the accounts. These assets were excluded in previous periods.  
(D) In addition to the numbers presented, SEI also administers an additional $10.1 billion in Funds of Funds assets (as of March 31, 2017) on which SEI does not earn an administration fee.

 
 
AVERAGE ASSET BALANCES
(In millions) (Unaudited)
 
   1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr.
    2016  2016  2016  2016  2017
Private Banks:           
Equity and fixed-income programs  $17,644  $18,504  $18,650  $17,945  $18,498 
Collective trust fund programs   3   3   3   3   4 
Liquidity funds   5,661   5,118   4,386   4,030   4,051 
Total assets under management  $23,308  $23,625  $23,039  $21,978  $22,553 
Client assets under administration   17,248   18,436   19,039   19,010   20,223 
Total assets  $40,556  $42,061  $42,078  $40,988  $42,776 
            
Investment Advisors:           
Equity and fixed-income programs  $45,175  $48,783  $51,924  $52,267  $54,446 
Collective trust fund programs   7   6   5   5   5 
Liquidity funds   5,009   4,061   2,694   2,638   2,559 
Total assets under management  $50,191  $52,850  $54,623  $54,910  $57,010 
            
Institutional Investors:           
Equity and fixed-income programs  $71,779  $74,984  $77,583  $77,040  $77,852 
Collective trust fund programs   98   96   90   92   90 
Liquidity funds   2,834   2,868   2,751   2,766   2,891 
Total assets under management  $74,711  $77,948  $80,424  $79,898  $80,833 
Advised assets
               3,125 
Total assets  $74,711  $77,948  $80,424  $79,898  $83,958 
            
Investment Managers:           
Equity and fixed-income programs  $66  $72  $73  $79  $75 
Collective trust fund programs   30,784   33,021   35,257   36,170   39,081 
Liquidity funds   832   701   874   813   860 
Total assets under management  $31,682  $33,794  $36,204  $37,062  $40,016 
Client assets under administration   387,421   415,237   436,459   446,666   453,766 
Total assets  $419,103  $449,031  $472,663  $483,728  $493,782 
            
Investments in New Businesses:           
Equity and fixed-income programs  $757  $811  $845  $851  $909 
Liquidity funds   48   39   44   60   63 
Total assets under management  $805  $850  $889  $911  $972 
Advised assets
               82 
Total assets  $805  $850  $889  $911  $1,054 
            
LSV Asset Management:           
Equity and fixed-income programs  $74,699  $79,733  $83,373  $84,676  $90,274 
            
Total:           
Equity and fixed-income programs  $210,120  $222,887  $232,448  $232,858  $242,054 
Collective trust fund programs   30,892   33,126   35,355   36,270   39,180 
Liquidity funds   14,384   12,787   10,749   10,307   10,424 
Total assets under management  $255,396  $268,800  $278,552  $279,435  $291,658 
Advised assets
               3,207 
Client assets under administration   404,669   433,673   455,498   465,676   473,989 
Total assets  $660,065  $702,473  $734,050  $745,111  $768,854 
                      

 


            

Coordonnées