26.07.2017 22:01:00

SEI Reports Second-Quarter 2017 Financial Results

OAKS, Pa., July 26, 2017 /PRNewswire/ -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for the second-quarter 2017. Diluted earnings per share were $0.57 in second-quarter 2017 compared to $0.49 in second-quarter 2016. Subsequent to the end of the second quarter, SEI completed its acquisition of Archway Technology Partners, LLC (Archway), a provider of technology and services to the family office and related markets.

Consolidated Overview













(In thousands, except
earnings per share)


For the Three Months
Ended June 30,




For the Six Months 
Ended June 30,





2017


2016


%


2017


2016


%














Revenues


$372,331



$343,831



8%


$732,315



$678,094



8%

Net income


91,769



81,005



13%


180,506



158,502



14%

Diluted earnings per share


$0.57



$0.49



16%


$1.11



$0.96



16%

"Our financial results for the quarter reflect the strength inherent in our overall business, even as we continue to invest in and advance our solutions for all of our markets," said Alfred P. West, Jr., SEI Chairman and CEO.

"Our recent acquisition of Archway strategically strengthens our company and our Investment Managers segment and is an indication of our interest in very targeted transactions that expand our market footprint, solution capabilities and talent base. We are excited about the progress we've made and the opportunities for growth ahead for our company and shareholders."

Summary of Second-Quarter Results by Business Segment

(In thousands)


For the Three Months      
Ended June 30,




For the Six Months      
Ended June 30,





2017


2016


%


2017


2016


%

Private Banks:













Revenues


$116,184



$114,836



1%


$228,818



$228,197



—%

Expenses


112,353



102,862



9%


220,903



206,603



7%

Operating Profit


3,831



11,974



(68)%


7,915



21,594



(63)%

Gain on sale of subsidiary


—



—



—


—



2,791



NM

Segment Profit


3,831



11,974



(68)%


7,915



24,385



NM

Operating Margin (A)


3

%


10

%




3

%


9

%
















Investment Advisors:













Revenues


92,746



81,883



13%


180,984



158,562



14%

Expenses


49,380



44,721



10%


96,919



89,495



8%

Operating Profit


43,366



37,162



17%


84,065



69,067



22%

Operating Margin


47

%


45

%




46

%


44

%
















Institutional Investors:













Revenues


78,068



74,674



5%


155,072



147,571



5%

Expenses


38,668



36,550



6%


77,496



71,932



8%

Operating Profit


39,400



38,124



3%


77,576



75,639



3%

Operating Margin


50

%


51

%




50

%


51

%
















Investment Managers:













Revenues


83,616



70,938



18%


164,103



140,856



17%

Expenses


53,847



46,968



15%


105,912



92,243



15%

Operating Profit


29,769



23,970



24%


58,191



48,613



20%

Operating Margin


36

%


34

%




35

%


35

%
















Investments in New Businesses:













Revenues


1,717



1,500



14%


3,338



2,908



15%

Expenses


5,124



5,355



(4)%


10,004



10,587



(6)%

Operating Loss


(3,407)



(3,855)



NM


(6,666)



(7,679)



NM














Totals:













Revenues


$372,331



$343,831



8%


$732,315



$678,094



8%

Expenses


259,372



236,456



10%


511,234



470,860



9%

Corporate overhead expenses


15,732



13,852



14%


30,337



26,899



13%

Income from operations


$97,227



$93,523



4%


$190,744



$180,335



6%



(A)

Percentages determined exclusive of gain on sale of subsidiary.


Second-Quarter Business Highlights:

  • Revenue growth in the quarter was primarily driven by higher Asset management, administration, and distribution fees from market appreciation and positive cash flows from new and existing clients.
  • Sales events, net of client losses, during second-quarter 2017 totaled approximately $24.4 million and are expected to generate net annualized recurring revenues of approximately $14.5 million when contract values are fully realized.
  • Our average assets under management, excluding LSV, increased $20.1 billion, or 11 percent, to $209.2 billion, as compared to $189.1 billion during the second-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 $58.2 billion, or 13 percent, to $491.9 billion in the second-quarter 2017, as compared to $433.7 billion during the second-quarter 2016 (see attached Average Asset Balances schedules for further details).
  • Our earnings from LSV increased by $6.0 million, or 20 percent, to $36.3 million in second-quarter 2017 as compared to $30.3 million in second-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 $16.4 million and $10.1 million of software development costs in second-quarter 2017 and 2016, respectively, of which $12.8 million and $8.5 million are related to continued enhancements to the SEI Wealth Platform. The remaining amounts of the Company's software development costs capitalized during the second quarter of 2017 and 2016 are related to an application for the Investment Managers segment. 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 $12.5 million during the second-quarter 2017 as compared to $11.1 million during the second-quarter 2016 due to continued enhancements.
  • The direct costs associated with our investment management programs increased in our Private Banks, Investment Advisors and Institutional Investors segments. These costs primarily relate to fees charged by investment advisory firms for day-to-day portfolio management of SEI-sponsored investment products.
  • Our operating expenses, primarily personnel costs, in our Investment Advisors and Investment Managers segments increased. These expenses primarily consist of operational and marketing costs and are mainly related to servicing existing clients and acquiring and implementing new clients.
  • We adopted Accounting Standards Update (ASU) 2016-09 in 2017 which will cause volatility in our quarterly effective tax rate. Our effective tax rates were 32.1 percent in second-quarter 2017 and 35.2 percent in second-quarter 2016. Refer to our Form 10-Q for second-quarter 2017 for information regarding the impact of ASU 2016-09 on our effective tax rate.
  • We repurchased 1.3 million shares of our common stock for $64.6 million during the second-quarter 2017.

Earnings Conference Call

A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Jul. 26, 2017. Investors may listen to the call at seic.com/investors/events and webcasts. Investors may also listen to a replay by telephone at (USA) 800-475-6701; (International) 320-365-3844, access code 427384.

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 June 30, 2017, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $809 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including $307 billion in assets under management and $497 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 June 30,


For the Six Months      
Ended June 30,



2017


2016


2017


2016










Asset management, admin. and distribution fees


$288,490



$262,275



$567,055



$513,712


Information processing and software servicing fees


77,816



74,992



152,579



148,391


Transaction–based and trade execution fees


6,025



6,564



12,681



15,991











Total revenues


372,331



343,831



732,315



678,094











Subadvisory, distribution and other asset mgmt costs


43,288



40,870



85,790



80,065


Software royalties and other information processing costs


7,712



7,677



15,374



15,425


Brokerage commissions


4,226



5,093



9,185



12,201


Compensation, benefits and other personnel


109,555



102,282



218,498



204,213


Stock-based compensation


6,259



4,189



12,439



7,978


Consulting, outsourcing and professional fees


48,335



39,575



91,484



78,081


Data processing and computer related


17,883



15,782



34,655



31,500


Facilities, supplies and other costs


18,682



17,122



36,160



33,119


Amortization


12,565



11,284



24,587



22,296


Depreciation


6,599



6,434



13,399



12,881











Total expenses


275,104



250,308



541,571



497,759











Income from operations


97,227



93,523



190,744



180,335











Net gain on investments


44



250



391



124


Interest and dividend income


1,686



1,033



3,029



2,116


Interest expense


(114)



(187)



(226)



(301)


Equity in earnings of unconsolidated affiliate


36,315



30,285



69,880



59,477


Gain on sale of subsidiary


—



—



—



2,791











Income before income taxes


135,158



124,904



263,818



244,542











Income taxes


43,389



43,899



83,312



86,040











Net income


$91,769



$81,005



$180,506



$158,502











Basic earnings per common share


$0.58



$0.50



$1.14



$0.98











Shares used to calculate basic earnings per share


158,325



161,795



158,708



162,404











Diluted earnings per common share


$0.57



$0.49



$1.11



$0.96











Shares used to calculate diluted earnings per share


161,709



165,088



162,226



165,616











Dividends declared per common share


$0.28



$0.26



$0.28



$0.26


 

SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)








June 30,


December 31,



2017


2016

Assets





Current Assets:





Cash and cash equivalents


$660,362



$695,701


Restricted cash


3,502



3,500


Receivables from investment products


49,048



61,761


Receivables, net of allowance for doubtful accounts of $680 and $523


262,544



227,957


Securities owned


21,412



21,339


Other current assets


31,953



27,575


Total Current Assets


1,028,821



1,037,833







Property and Equipment, net of accumulated depreciation of $298,294 and $285,322


145,537



146,190


Capitalized Software, net of accumulated amortization of $328,026 and $303,540


304,673



295,867


Investments Available for Sale


86,085



84,033


Investments in Affiliated Funds, at fair value


5,350



4,858


Investment in Unconsolidated Affiliate


45,197



50,459


Deferred Income Taxes


1,773



2,127


Other Assets, net


16,653



15,456


Total Assets


$1,634,089



$1,636,823







Liabilities and Equity





Current Liabilities:





Accounts payable


$5,407



$5,966


Accrued liabilities


170,577



240,525


Deferred revenue


2,809



2,880


Total Current Liabilities


178,793



249,371







Deferred Income Taxes


69,419



69,693


Other Long-term Liabilities


14,142



14,645


Total Liabilities


262,354



333,709







Shareholders' Equity:





Common stock, $.01 par value, 750,000 shares authorized; 157,986 and 159,031 shares issued and outstanding


1,580



1,590


Capital in excess of par value


988,761



955,461


Retained earnings


409,409



384,018


Accumulated other comprehensive loss, net


(28,015)



(37,955)


Total Shareholders' Equity


1,371,735



1,303,114


Total Liabilities and Shareholders' Equity


$1,634,089



$1,636,823


 

ENDING ASSET BALANCES

(In millions)  (Unaudited)
















Jun. 30,


Sept. 30,


Dec 31,


Mar. 31,


Jun. 30,




2016


2016


2016


2017


2017

Private Banks:












Equity and fixed-income programs



$18,328



$18,668



$17,926



$19,034



$20,185


Collective trust fund programs



3



3



3



5



4


Liquidity funds



4,848



4,034



4,230



3,903



3,589


Total assets under management



$23,179



$22,705



$22,159



$22,942



$23,778


Client assets under administration



18,537



19,269



19,255



20,760



20,951


Total assets



$41,716



$41,974



$41,414



$43,702



$44,729














Investment Advisors:












Equity and fixed-income programs



$50,016



$52,594



$52,847



$55,311



$57,358


Collective trust fund programs



5



5



5



5



5


Liquidity funds



3,661



2,539



2,741



2,645



2,451


Total assets under management



$53,682



$55,138



$55,593



$57,961



$59,814














Institutional Investors:












Equity and fixed-income programs (E)



$75,944



$78,701



$76,465



$78,954



$81,723


Collective trust fund programs



88



90



93



89



80


Liquidity funds



2,526



2,612



2,903



2,759



2,468


Total assets under management



$78,558



$81,403



$79,461



$81,802



$84,271


Advised assets



—



—



—



3,228



4,255


Total assets



$78,558



$81,403



$79,461



$85,030



$88,526














Investment Managers:












Equity and fixed-income programs



$73



$79



$81



$84



$92


Collective trust fund programs



33,841



35,962



36,991



40,646



42,662


Liquidity funds



750



812



667



911



999


Total assets under management



$34,664



$36,853



$37,739



$41,641



$43,753


Client assets under administration (A)



419,139



451,204



448,708



457,356



476,543


Total assets



$453,803



$488,057



$486,447



$498,997



$520,296














Investments in New Businesses:












Equity and fixed-income programs



$820



$850



$884



$931



$997


Liquidity funds



37



53



61



79



46


Total assets under management



$857



$903



$945



$1,010



$1,043


Advised assets



—



—



—



85



69


Total assets



$857



$903



$945



$1,095



$1,112














LSV Asset Management:












Equity and fixed-income programs



$78,352



$83,863



$87,248



$90,611



$94,774














Total:












Equity and fixed-income programs (B)



$223,533



$234,755



$235,451



$244,925



$255,129


Collective trust fund programs



33,937



36,060



37,092



40,745



42,751


Liquidity funds



11,822



10,050



10,602



10,297



9,553


Total assets under management



$269,292



$280,865



$283,145



$295,967



$307,433


Advised assets (C)



—



—



—



3,313



4,324


Client assets under administration (D)



437,676



470,473



467,963



478,116



497,494


Total assets



$706,968



$751,338



$751,108



$777,396



$809,251




(A)

Client assets under administration in the Investment Managers segment include $48.3 billion of assets that require limited
services and therefore are at fee levels below our normal full service assets (as of June 30, 2017).

(B)

Equity and fixed-income programs include $4.7 billion of assets invested in various asset allocation funds at June 30, 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 $9.8 billion in Funds of Funds assets (as of
June 30, 2017) on which SEI does not earn an administration fee.

(E)

Ending asset balance for Institutional Investors as of Mar. 31, 2017 were revised from $80.1 billion to $79.0 billion.

 

AVERAGE ASSET BALANCES

(In millions) (Unaudited)

















2nd Qtr.


3rd Qtr.


4th Qtr.


1st Qtr.


2nd Qtr.




2016


2016


2016


2017


2017

Private Banks:












Equity and fixed-income programs



$18,504



$18,650



$17,945



$18,498



$19,610


Collective trust fund programs



3



3



3



4



5


Liquidity funds



5,118



4,386



4,030



4,051



3,677


Total assets under management



$23,625



$23,039



$21,978



$22,553



$23,292


Client assets under administration



18,436



19,039



19,010



20,223



21,166


Total assets



$42,061



$42,078



$40,988



$42,776



$44,458














Investment Advisors:












Equity and fixed-income programs



$48,783



$51,924



$52,267



$54,446



$56,319


Collective trust fund programs



6



5



5



5



5


Liquidity funds



4,061



2,694



2,638



2,559



2,390


Total assets under management



$52,850



$54,623



$54,910



$57,010



$58,714














Institutional Investors:












Equity and fixed-income programs



$74,984



$77,583



$77,040



$77,852



$80,561


Collective trust fund programs



96



90



92



90



85


Liquidity funds



2,868



2,751



2,766



2,891



2,861


Total assets under management



$77,948



$80,424



$79,898



$80,833



$83,507


Advised assets



—



—



—



3,125



3,687


Total assets



$77,948



$80,424



$79,898



$83,958



$87,194














Investment Managers:












Equity and fixed-income programs



$72



$73



$79



$75



$84


Collective trust fund programs



33,021



35,257



36,170



39,081



41,615


Liquidity funds



701



874



813



860



937


Total assets under management



$33,794



$36,204



$37,062



$40,016



$42,636


Client assets under administration



415,237



436,459



446,666



453,766



470,701


Total assets



$449,031



$472,663



$483,728



$493,782



$513,337














Investments in New Businesses:












Equity and fixed-income programs



$811



$845



$851



$909



$954


Liquidity funds



39



44



60



63



64


Total assets under management



$850



$889



$911



$972



$1,018


Advised assets



—



—



—



82



73


Total assets



$850



$889



$911



$1,054



$1,091














LSV Asset Management:












Equity and fixed-income programs



$79,733



$83,373



$84,676



$90,274



$93,094














Total:












Equity and fixed-income programs



$222,887



$232,448



$232,858



$242,054



$250,622


Collective trust fund programs



33,126



35,355



36,270



39,180



41,710


Liquidity funds



12,787



10,749



10,307



10,424



9,929


Total assets under management



$268,800



$278,552



$279,435



$291,658



$302,261


Advised assets



—



—



—



3,207



3,760


Client assets under administration



433,673



455,498



465,676



473,989



491,867


Total assets



$702,473



$734,050



$745,111



$768,854



$797,888


 

Investor / Media Contact:
Dana Grosser
SEI
+1 610-676-2459
dgrosser@seic.com

View original content:http://www.prnewswire.com/news-releases/sei-reports-second-quarter-2017-financial-results-300494802.html

SOURCE SEI Investments

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