SEIC
$65.87
Sei Investments
($.11)
(.17%)
Earnings Details
1st Quarter March 2018
Wednesday, April 25, 2018 4:01:00 PM
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Summary

Sei Investments (SEIC) Recent Earnings

Sei Investments (SEIC) reported 1st Quarter March 2018 earnings of $0.86 per share on revenue of $405.6 million. The consensus earnings estimate was $0.77 per share on revenue of $411.6 million. Revenue grew 12.7% on a year-over-year basis.

SEI Investments Company is a provider of investment processing, investment management and investment operations solutions that help financial institutions, financial advisors, institutional investors and investment managers create and manage wealth.

Results
Reported Earnings
$0.86
Earnings Whisper
-
Consensus Estimate
$0.77
Reported Revenue
$405.6 Mil
Revenue Estimate
$411.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

SEI Reports First-Quarter 2018 Financial Results

OAKS, Pa., April 25, 2018 /PRNewswire/ -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for the first-quarter 2018. Diluted earnings per share were $0.86 in first-quarter 2018 compared to $0.55 in first-quarter 2017. 

Consolidated Overview







(In thousands, except earnings per share)


For the Three Months
Ended March 31,





2018


2017


%








Revenues


$405,598


$359,984


13%

Net income


139,838


88,737


58%

Diluted earnings per share


$0.86


$0.55


56%

"Our results for the quarter reflect the progress we have made across our business lines during the past year, while continuing to make the necessary investments to expand and strengthen the platforms we bring to our target markets," said Alfred P. West, Jr., SEI Chairman and CEO. "Financially, we also benefited from the change in corporate tax rates that became effective this year.

"The markets we serve continue to face increasingly complex regulations in a highly-competitive environment. Our platforms are built and offered with one key focus, to help our clients achieve lasting success. This will foster growth for the company and increased shareholder value over the long-term."

Summary of First-Quarter Results by Business Segment

(In thousands)


For the Three Months
Ended March 31,





2018


2017


%

Private Banks:







Revenues


$122,164


$112,634


8%

Expenses


112,202


108,550


3%

Operating Profit


9,962


4,084


144%

Operating Margin


8%


4%










Investment Advisors:







Revenues


99,192


88,238


12%

Expenses


52,453


47,539


10%

Operating Profit


46,739


40,699


15%

Operating Margin


47%


46%










Institutional Investors:







Revenues


85,491


77,004


11%

Expenses


41,249


38,828


6%

Operating Profit


44,242


38,176


16%

Operating Margin


52%


50%










Investment Managers:







Revenues


96,855


80,487


20%

Expenses


63,338


52,065


22%

Operating Profit


33,517


28,422


18%

Operating Margin


35%


35%










Investments in New Businesses:







Revenues


1,896


1,621


17%

Expenses


5,098


4,880


4%

Operating Loss


(3,202)


(3,259)


NM








Totals:







Revenues


$405,598


$359,984


13%

Expenses


274,340


251,862


9%

Corporate overhead expenses


14,942


14,605


2%

Income from operations


$116,316


$93,517


24%

 

First-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.
  • Information processing and software servicing fees in our Private Banks segment increased $6.4 million in first-quarter 2018 compared to first-quarter 2017 primarily due to increased assets from new and existing clients processed on the SEI Wealth PlatformSM (the Platform).
  • Revenues from the SEI Archway acquisition were $5.5 million during the first-quarter 2018. SEI Archway was acquired during the third-quarter 2017 and is reported in our Investment Managers segment.
  • Our average assets under management, excluding LSV, increased $32.2 billion, or 16 percent, to $233.6 billion, as compared to $201.4 billion during the first-quarter 2017 (see attached Average Asset Balances schedules for further details).
  • Our average assets under administration increased $56.4 billion, or 12 percent, to $530.3 billion in the first-quarter 2018, as compared to $474.0 billion during the first-quarter 2017 (see attached Average Asset Balances schedules for further details).
  • Sales events, net of client losses, during first-quarter 2018 totaled approximately $18.8 million and are expected to generate net annualized recurring revenues of approximately $11.6 million when contract values are fully realized.
  • Our earnings from LSV increased by $7.0 million, or 21 percent, to $40.6 million in first-quarter 2018 as compared to $33.6 million in first-quarter 2017. 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.
  • Our operating expenses, primarily personnel costs, in our Investment Advisors and Investment Managers segments increased. These expenses primarily consist of operational, technology and marketing costs and are mainly related to servicing existing clients and acquiring new clients. In addition, our Investment Managers segment includes personnel costs related to SEI Archway acquired during the third-quarter 2017.
  • We capitalized $12.9 million and $16.9 million of software development costs in first-quarter 2018 and 2017, respectively, of which $12.0 million and $15.2 million are related to continued enhancements to the 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 Platform decreased to $9.7 million during the first-quarter 2018 as compared to $12.0 million during the first-quarter 2017 due to an adjustment to the estimated useful life of the Platform effective in the fourth-quarter 2017.
  • During the first-quarter 2018, we placed into service an application developed for the Investment Managers segment. This new offering includes components that leverage upon the current infrastructure and add significant enhancements designed to aggregate, transact and process data. Amortization expense related to the application was $1.3 million during first-quarter 2018.
  • Our effective tax rate was 11.9 percent in first-quarter 2018 as compared to 31.0 percent in first-quarter 2017. The decline in our tax rate was primarily due to the tax changes enacted in the Tax Cuts and Jobs Act in December 2017 and increased tax benefits due to a higher volume of stock option exercise activity.
  • We adopted ASU Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09) on January 1, 2018. With our adoption of ASU 2014-09, fees received for research services provided by our brokerage subsidiary, SIDCO, are now recorded net of amounts paid for the soft dollar arrangement. As a result, our revenues and expenses in first-quarter 2018 were each reduced by $3.7 million with no impact to net income. Refer to our first-quarter 2018 Form 10-Q for information regarding the impact of ASU 2014-09 on our financial statements.
  • We repurchased 1.1 million shares of our common stock for $82.3 million during the first-quarter 2018.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Apr. 25, 2018. Investors may listen to the call at seic.com/ir-events. Investors may also listen to a replay by telephone at (USA) 800-475-6701; (International) 320-365-3844, access code 447804.

About SEI
Now in its 50th year of business, 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, 2018, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $869 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including $335 billion in assets under management and $530 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,



2018


2017






Asset management, admin. and distribution fees


$316,209



$279,461


Information processing and software servicing fees


89,389



80,523







Total revenues


405,598



359,984







Subadvisory, distribution and other asset mgmt. costs


45,205



43,152


Software royalties and other information processing costs


8,718



11,971


Compensation, benefits and other personnel


124,277



108,943


Stock-based compensation


5,195



6,180


Consulting, outsourcing and professional fees


48,707



43,149


Data processing and computer related


20,591



18,325


Facilities, supplies and other costs


17,613



15,925


Amortization


11,854



12,022


Depreciation


7,122



6,800







Total expenses


289,282



266,467







Income from operations


116,316



93,517







Net (loss) gain on investments


(410)



347


Interest and dividend income


2,502



1,343


Interest expense


(257)



(112)


Equity in earnings of unconsolidated affiliate


40,607



33,565







Income before income taxes


158,758



128,660







Income taxes


18,920



39,923







Net income


$139,838



$88,737







Basic earnings per common share


$0.89



$0.56







Shares used to calculate basic earnings per share


157,434



159,091







Diluted earnings per common share


$0.86



$0.55







Shares used to calculate diluted earnings per share


163,424



162,742


 

 

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)




March 31,


December 31,



2018


2017

Assets





Current Assets:





  Cash and cash equivalents


$748,299



$744,247


  Restricted cash


3,507



3,505


  Receivables from investment products


54,909



56,666


  Receivables, net of allowance for doubtful accounts of $788 and $695


308,270



282,706


  Securities owned


21,600



21,526


  Other current assets


34,722



31,158


  Total Current Assets


1,171,307



1,139,808







Property and Equipment, net of accumulated depreciation of $317,245 and $309,955


145,280



146,428


Capitalized Software, net of accumulated amortization of $361,065 and $350,045


312,272



310,405


Investments Available for Sale


83,089



87,983


Investments in Affiliated Funds, at fair value


5,534



6,034


Investment in Unconsolidated Affiliate


54,482



59,492


Goodwill


52,990



52,990


Intangible Assets, net of accumulated amortization of $2,328 and $1,552


27,802



28,578


Deferred Contract Costs


19,875




Deferred Income Taxes


2,740



2,767


Other Assets, net


18,334



18,884


  Total Assets


$1,893,705



$1,853,369







Liabilities and Equity





Current Liabilities:





  Accounts payable


$8,463



$5,268


  Accrued liabilities


168,618



265,058


  Deferred revenue


4,998



4,723


  Total Current Liabilities


182,079



275,049







Borrowings Under Revolving Credit Facility


20,000



30,000


Long-term Taxes Payable


10,629



10,629


Deferred Income Taxes


54,384



48,472


Other Long-term Liabilities


12,959



12,380


  Total Liabilities


280,051



376,530







Shareholders' Equity:





  Common stock, $.01 par value, 750,000 shares authorized; 157,990 and 157,069
  shares issued and outstanding


1,580



1,571


  Capital in excess of par value


1,085,312



1,027,709


  Retained earnings


544,923



467,467


  Accumulated other comprehensive loss, net


(18,161)



(19,908)


  Total Shareholders' Equity


1,613,654



1,476,839


  Total Liabilities and Shareholders' Equity


$1,893,705



$1,853,369


 

 

ENDING ASSET BALANCES

(In millions)  (Unaudited)





Mar. 31,


Jun. 30,


Sept. 30,


Dec 31,


Mar. 31,




2017


2017


2017


2017


2018

Private Banks:












Equity and fixed-income programs



$19,034



$20,185



$21,196



$22,764



$22,917


Collective trust fund programs



5



4



4



4



4


Liquidity funds



3,903



3,589



3,345



3,864



3,537


Total assets under management



$22,942



$23,778



$24,545



$26,632



$26,458


Client assets under administration



20,760



20,951



22,107



22,980



22,411


Total assets



$43,702



$44,729



$46,652



$49,612



$48,869














Investment Advisors:












Equity and fixed-income programs



$55,311



$57,358



$59,455



$61,908



$62,176


Collective trust fund programs



5



5



5



5



5


Liquidity funds



2,645



2,451



2,327



2,414



2,399


Total assets under management



$57,961



$59,814



$61,787



$64,327



$64,580














Institutional Investors:












Equity and fixed-income programs



$78,954



$81,723



$85,763



$87,587



$85,607


Collective trust fund programs



89



80



82



78



72


Liquidity funds



2,759



2,468



3,699



2,937



2,727


Total assets under management



$81,802



$84,271



$89,544



$90,602



$88,406


Advised assets



3,228



4,255



3,626



3,942



4,185


Total assets



$85,030



$88,526



$93,170



$94,544



$92,591














Investment Managers:












Equity and fixed-income programs



$84



$92



$93



$96



$97


Collective trust fund programs



40,646



42,662



46,087



49,340



45,062


Liquidity funds



911



999



799



743



732


Total assets under management



$41,641



$43,753



$46,979



$50,179



$45,891


Client assets under administration (A)



457,356



476,543



493,538



495,447



507,694


Total assets



$498,997



$520,296



$540,517



$545,626



$553,585














Investments in New Businesses:












Equity and fixed-income programs



$931



$997



$1,052



$1,104



$1,114


Liquidity funds



79



46



71



53



72


Total assets under management



$1,010



$1,043



$1,123



$1,157



$1,186


Advised assets



85



69



54



49



49


Total assets



$1,095



$1,112



$1,177



$1,206



$1,235














LSV Asset Management:












Equity and fixed-income programs (B)



$91,514



$95,700



$102,901



$107,690



$108,186














Total:












Equity and fixed-income programs (C)



$245,828



$256,055



$270,460



$281,149



$280,097


Collective trust fund programs



40,745



42,751



46,178



49,427



45,143


Liquidity funds



10,297



9,553



10,241



10,011



9,467


Total assets under management



$296,870



$308,359



$326,879



$340,587



$334,707


Advised assets



3,313



4,324



3,680



3,991



4,234


Client assets under administration (D)



478,116



497,494



515,645



518,427



530,105


Total assets



$778,299



$810,177



$846,204



$863,005



$869,046




(A)

Client assets under administration in the Investment Managers segment include $42.4 billion of assets that require limited services and therefore are at fee levels below our normal full service assets (as of March 31, 2018).

(B)

Equity and fixed-income programs include assets managed by LSV in which fees are based on performance only. A portion of these assets were not included in prior period reported assets. The ending value of these assets for each period are as follows: $1.8 billion in March 2017, $2.0 billion in June 2017, $2.3 billion in September 2017, $2.4 billion in December 2017 and $2.4 billion in March 2018.

(C)

Equity and fixed-income programs include $5.7 billion of assets invested in various asset allocation funds at March 31, 2018.

(D)

In addition to the numbers presented, SEI also administers an additional $9.7 billion in Funds of Funds assets (as of March 31, 2018) 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.




2017


2017


2017


2017


2018

Private Banks:












Equity and fixed-income programs



$18,498



$19,610



$20,699



$21,748



$23,412


Collective trust fund programs



4



5



4



4



4


Liquidity funds



4,051



3,677



3,555



3,584



3,720


Total assets under management



$22,553



$23,292



$24,258



$25,336



$27,136


Client assets under administration



20,223



21,166



21,441



22,759



23,398


Total assets



$42,776



$44,458



$45,699



$48,095



$50,534














Investment Advisors:












Equity and fixed-income programs



$54,446



$56,319



$58,406



$60,730



$62,650


Collective trust fund programs



5



5



5



5



5


Liquidity funds



2,559



2,390



2,335



2,235



2,290


Total assets under management



$57,010



$58,714



$60,746



$62,970



$64,945














Institutional Investors:












Equity and fixed-income programs



$77,852



$80,561



$84,520



$86,573



$87,207


Collective trust fund programs



90



85



80



80



77


Liquidity funds



2,891



2,861



3,177



3,052



2,905


Total assets under management



$80,833



$83,507



$87,777



$89,705



$90,189


Advised assets



3,125



3,687



3,552



3,796



4,383


Total assets



$83,958



$87,194



$91,329



$93,501



$94,572














Investment Managers:












Equity and fixed-income programs



$75



$84



$92



$99



$96


Collective trust fund programs



39,081



41,615



44,824



47,772



49,243


Liquidity funds



860



937



952



843



834


Total assets under management



$40,016



$42,636



$45,868



$48,714



$50,173


Client assets under administration



453,766



470,701



486,158



494,201



506,951


Total assets



$493,782



$513,337



$532,026



$542,915



$557,124














Investments in New Businesses:












Equity and fixed-income programs



$909



$954



$1,016



$1,079



$1,105


Liquidity funds



63



64



55



54



70


Total assets under management



$972



$1,018



$1,071



$1,133



$1,175


Advised assets



82



73



73



50



50


Total assets



$1,054



$1,091



$1,144



$1,183



$1,225














LSV Asset Management:












Equity and fixed-income programs (A)



$91,150



$94,010



$100,244



$106,112



$109,904














Total:












Equity and fixed-income programs



$242,930



$251,538



$264,977



$276,341



$284,374


Collective trust fund programs



39,180



41,710



44,913



47,861



49,329


Liquidity funds



10,424



9,929



10,074



9,768



9,819


Total assets under management



$292,534



$303,177



$319,964



$333,970



$343,522


Advised assets



3,207



3,760



3,625



3,846



4,433


Client assets under administration



473,989



491,867



507,599



516,960



530,349


Total assets



$769,730



$798,804



$831,188



$854,776



$878,304




(A)

Equity and fixed-income programs include assets managed by LSV in which fees are based on performance only. A portion of these assets were not included in prior period reported assets. The average of these assets for each period are as follows: $1.7 billion in Q1 2017, $2.0 billion in Q2 2017, $2.2 billion in Q3 2017, $2.4 billion in Q4 2017 and $2.3 billion in Q1 2018.

 

 

Investor Contact:





Media Contact:

Lindsey Opsahl





Dana Grosser

SEI





SEI

+1 610-676-4052





+1 610-676-2459

lopsahl@seic.com





dgrosser@seic.com

 

Cision View original content:http://www.prnewswire.com/news-releases/sei-reports-first-quarter-2018-financial-results-300636625.html

SOURCE SEI Investments Company