PR Newswire | Oct 21, 2020 04:02PM EDT

10/21 15:01 CDT

SEI Reports Third-Quarter 2020 Financial Results OAKS, Pa., Oct. 21, 2020

OAKS, Pa., Oct. 21, 2020 /PRNewswire/ -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for the third-quarter 2020. Diluted earnings per share were $0.75 in third-quarter 2020 compared to $0.86 in third-quarter 2019. On Tuesday, Oct. 20, 2020 the Board of Directors of SEI Investments Company approved an increase in its stock repurchase program by an additional $250 million, increasing the available authorization under the program to approximately $292 million.

Consolidated Overview

(In thousands, except For the Three Months For the Nine Months earnings per share) Ended September 30, Ended September 30,

2020 2019 % 2020 2019 %



Revenues $424,927 $416,254 2% $1,240,335 $1,226,660 1%

Net income 111,096 132,168 (16)%321,404 372,689 (14)%

Diluted earnings per share$0.75 $0.86 (13)%$2.14 $2.40 (11)%

"The pandemic continues, as does our focus on clients and our employees' health and safety. We are fortunate to have a strong global workforce that is resilient, engaged and dedicated to providing our clients best-in-class service, and committed to our company's growth. Words can't express our appreciation for their efforts, along with all of the healthcare and service providers who look after our health and well-being," said Alfred P. West, Jr., SEI Chairman and CEO.

"Our business continued to rebound during the quarter, as our markets adjusted to the current environment. Our financial results reflect our strong sales activity, while we invest in our strategic priorities. Our diverse and talented global workforce drives our ability to serve our clients and make an impact on our communities. Looking to the future, we will capitalize on the opportunities in our markets to deliver long-term value to our shareholders, employees and clients."

Summary of Third-Quarter Results by Business Segment

For the Three Months Ended For the Nine Months September 30, Ended September 30, (In thousands)

2020 2019 % 2020 2019 %

Private Banks:

Revenues $114,792 $117,250 (2)% $335,739 $351,601 (5)%

Expenses 113,066 110,788 2% 331,442 329,540 1%

Operating Profit 1,726 6,462 (73)%4,297 22,061 (81)%

Operating Margin 2 % 6 % 1 %6 %



Investment Advisors:

Revenues 103,189 103,033 -% 299,218 297,916 -%

Expenses 51,519 51,509 -% 154,100 154,569 -%

Operating Profit 51,670 51,524 -% 145,118 143,347 1%

Operating Margin 50 % 50 % 48 %48 %



Institutional Investors:

Revenues 79,583 80,337 (1)% 235,309 241,559 (3)%

Expenses 37,812 37,268 1% 113,016 115,383 (2)%

Operating Profit 41,771 43,069 (3)% 122,293 126,176 (3)%

Operating Margin 52 % 54 % 52 %52 %



Investment Managers:

Revenues 123,846 112,186 10% 359,815 326,037 10%

Expenses 79,838 71,889 11% 228,795 209,326 9%

Operating Profit 44,008 40,297 9% 131,020 116,711 12%

Operating Margin 36 % 36 % 36 %36 %



Investments in New Businesses:

Revenues 3,517 3,448 2% 10,254 9,547 7%

Expenses 13,315 7,926 68% 37,691 20,663 82%

Operating Loss (9,798) (4,478) NM (27,437) (11,116) NM



Totals:

Revenues $424,927 $416,254 2% $1,240,335 $1,226,660 1%

Expenses 295,550 279,380 6% 865,044 829,481 4%

Corporate Overhead Expenses 18,040 16,237 11% 53,414 52,845 1%

Income from Operations $111,337 $120,637 (8)% $321,877 $344,334 (7)%

Third-Quarter Business Highlights:

* Revenues from Asset management, administration, and distribution fees increased primarily from higher assets under administration due to positive cash flows from new and existing clients in our Investment Managers segment. * Our average assets under administration increased $84.8 billion, or 13%, to $738.8 billion in the third-quarter 2020, as compared to $654.0 billion during the third-quarter 2019 (see attached Average Asset Balances schedules for further details). * Our average assets under management, excluding LSV, increased $13.1 billion, or 6%, to $246.1 billion in the third-quarter 2020, as compared to $233.0 billion during the third-quarter 2019 (see attached Average Asset Balances schedules for further details). * Sales events, net of client losses, during third-quarter 2020 totaled approximately $27.9 million and are expected to generate net annualized recurring revenues of approximately $14.6 million when contract values are fully realized. For the nine months ended Sept. 30, 2020, sales events, net of client losses, totaled approximately $84.8 million and are expected to generate net annualized recurring revenues of approximately $63.5 million when contract values are fully realized. * The increase in our operational expenses was primarily due to increased consulting costs related to our continued investments in new business opportunities, such as our One SEI strategy and IT Services offering, as well as increased personnel costs to service new clients in our Investment Managers segment. This increase was partially offset by a decline in travel and promotional-related expenses, as our sales and client relationship personnel adapted to COVID-19 restrictions. * Our earnings from LSV decreased by $9.3 million, or 25%, to $28.3 million in third-quarter 2020, as compared to $37.6 million in third-quarter 2019. The decrease in earnings was due to lower assets under management from negative cash flows from existing clients, market depreciation and client losses. * We capitalized $5.4 million of software development costs in third-quarter 2020 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $10.9 million in third-quarter 2020. * Our effective tax rates were 21.4% in third-quarter 2020 and 18.9% in third-quarter 2019. The increase in our effective tax rate was due to decreased tax benefits associated with a lower volume of stock option exercises and a higher effective state tax rate. * We repurchased 2.1 million shares of our common stock for $108.7 million during the third-quarter 2020.

Earnings Conference CallA conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Oct. 21, 2020. Investors may listen to the call at seic.com/ir-events. Investors may also listen to a replay by telephone at (USA) 866-207-1041; (International) 402-970-0847; Access Code: 4259639.

About SEIAfter 50 years in business, SEI (NASDAQ:SEIC) remains a leading global provider of investment processing, investment management, and investment operations solutions designed to help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of Sept. 30, 2020, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers approximately $1 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including approximately $330 billion in assets under management and $755 billion in client assets under administration. For more information, visit seic.com.

This release contains forward-looking statements within the meaning or the rules and regulations of the Securities and Exchange Commission. In some cases you can identify forward-looking statements by terminology, such as ''may,'' ''will,'' ''expect,'' ''believe'' and ''continue'' or ''appear.'' Our forward-looking statements include our current expectations as to:

* revenue that we believe will be generated by sales events that occurred during the quarter, * the rebound of our business, * whether and the degree to which we will invest in our strategic priorities, and * whether capitalizing on the opportunities in our markets will deliver long-term value for any of our shareholders, employees or clients.

You should not place undue reliance on our forward-looking statements, as they are based on the current beliefs and expectations of our management and subject to significant risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe the assumptions upon which we base our forward-looking statements are reasonable, they could be inaccurate. Some of the risks and important factors that could cause actual results to differ from those described in our forward-looking statements can be found in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended Dec. 31, 2019, filed with the Securities and Exchange Commission.

Investor Contact: Media Contact:

Lindsey Opsahl Leslie Wojcik

SEI SEI

+1 610-676-4052 +1 610-676-4191

lopsahl@seic.com lwojcik@seic.com

SEI INVESTMENTS COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



For the Three MonthsFor the Nine Months Ended September 30, Ended September 30,

2020 2019 2020 2019



Asset management, admin. and $339,609$330,943$992,039 $969,812 distribution fees

Information processing and 85,318 85,311 248,296 256,848 software servicing fees



Total revenues 424,927 416,254 1,240,3351,226,660



Subadvisory, distribution and 45,126 44,978 134,645 134,960 other asset mgmt. costs

Software royalties and other 6,992 7,198 21,828 22,719 information processing costs

Compensation, benefits and 134,795 130,579 391,607 386,913 other personnel

Stock-based compensation 6,467 5,453 20,458 15,555

Consulting, outsourcing and 57,949 48,789 168,350 144,325 professional fees

Data processing and computer 24,437 22,338 71,647 65,514 related

Facilities, supplies and other 16,679 15,926 47,448 51,771 costs

Amortization 13,200 12,947 39,417 38,407

Depreciation 7,945 7,409 23,058 22,162



Total expenses 313,590 295,617 918,458 882,326



Income from operations 111,337 120,637 321,877 344,334



Net gain (loss) on investments 776 611 (1,310) 2,121

Interest and dividend income 1,009 4,167 5,582 12,737

Interest expense (153) (154) (456) (477)

Equity in earnings of 28,305 37,609 86,488 112,758 unconsolidated affiliate



Income before income taxes 141,274 162,870 412,181 471,473



Income taxes 30,178 30,702 90,777 98,784



Net income $111,096$132,168$321,404 $372,689



Basic earnings per common share$0.76 $0.88 $2.18 $2.45



Shares used to calculate basic 145,812 150,855 147,586 152,009 earnings per share



Diluted earnings per common $0.75 $0.86 $2.14 $2.40 share



Shares used to calculate 147,907 154,227 149,958 155,311 diluted earnings per share



Dividends declared per common $- $- $0.35 $0.33 share

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



September 30,December 31,

2020 2019

Assets

Current Assets:

Cash and cash equivalents $767,698 $841,446

Restricted cash 3,101 3,101

Receivables from investment products 51,644 54,165

Receivables, net of allowance for doubtful 378,170 340,358 accounts of $1,310 and $1,201

Securities owned 35,820 33,486

Other current assets 38,475 32,289

Total Current Assets 1,274,908 1,304,845



Property and Equipment, net of accumulated 180,531 160,859 depreciation of $370,072 and $353,453

Operating Lease Right-of-Use Assets 38,945 42,789

Capitalized Software, net of accumulated 278,226 296,068 amortization of $479,159 and $442,677

Available for Sale and Equity Securities 116,564 116,917

Investments in Affiliated Funds, at fair value 5,207 5,988

Investment in Unconsolidated Affiliate 33,117 67,413

Goodwill 64,489 64,489

Intangible Assets, net of accumulated 25,225 27,987 amortization of $11,536 and $8,773

Deferred Contract Costs 33,833 30,991

Deferred Income Taxes 2,065 2,822

Other Assets, net 32,507 30,202

Total Assets $2,085,617 $2,151,370



Liabilities and Equity

Current Liabilities:

Accounts payable $13,038 $4,423

Accrued liabilities 223,217 272,801

Current portion of long-term operating lease 8,445 9,156 liabilities

Deferred revenue 5,815 7,185

Total Current Liabilities 250,515 293,565



Long-term Income Taxes Payable 803 803

Deferred Income Taxes 47,578 55,722

Long-term Operating Lease Liabilities 34,768 38,450

Other Long-term Liabilities 22,520 24,052

Total Liabilities 356,184 412,592



Shareholders' Equity:

Common stock, $0.01 par value, 750,000 shares authorized; 144,491 and 149,745 1,445 1,497 shares issued and outstanding

Capital in excess of par value 1,174,142 1,158,900

Retained earnings 581,244 601,885

Accumulated other comprehensive loss, net (27,398) (23,504)

Total Shareholders' Equity 1,729,433 1,738,778

Total Liabilities and Shareholders' Equity $2,085,617 $2,151,370

ENDING ASSET BALANCES

(In millions) (Unaudited)



Sept. 30, Dec. 31, Mar. 31, Jun. 30, Sept. 30,

2019 2019 2020 2020 2020

Private Banks:

Equity and fixed-income $22,580 $23,851 $21,160 $22,974 $23,499 programs

Collective trust fund 4 4 5 5 6 programs

Liquidity 3,695 3,405 4,143 4,291 3,718 funds

Total assets under $26,279 $27,260 $25,308 $27,270 $27,223 management

Client assets under 23,985 25,801 21,497 23,903 24,174 administration

Total assets $50,264 $53,061 $46,805 $51,173 $51,397



Investment Advisors:

Equity and fixed-income $65,059 $67,895 $54,856 $59,958 $65,581 programs

Collective trust fund 4 4 2 3 3 programs

Liquidity 2,673 2,887 5,969 6,648 3,866 funds

Total assets under $67,736 $70,786 $60,827 $66,609 $69,450 management



Institutional Investors:

Equity and fixed-income $82,659 $84,291 $72,399 $80,257 $83,846 programs

Collective trust fund 81 83 94 103 101 programs

Liquidity 2,290 1,746 3,672 1,924 2,096 funds

Total assets under $85,030 $86,120 $76,165 $82,284 $86,043 management

Client assets under 4,467 3,948 3,406 3,326 3,618 advisement

Total assets $89,497 $90,068 $79,571 $85,610 $89,661



Investment Managers:

Collective trust fund 53,169 58,070 48,226 58,178 63,277 programs

Liquidity 477 479 392 664 389 funds

Total assets under $53,646 $58,549 $48,618 $58,842 $63,666 management

Client assets under 637,986 657,541 610,794 668,611 730,369 administration (A)

Total assets $691,632 $716,090 $659,412$727,453 $794,035



Investments in New Businesses:

Equity and fixed-income $1,621 $1,688 $1,484 $1,498 $1,572 programs

Liquidity 132 158 152 194 169 funds

Total assets under $1,753 $1,846 $1,636 $1,692 $1,741 management

Client assets under 825 1,343 1,056 1,193 1,179 advisement

Total assets $2,578 $3,189 $2,692 $2,885 $2,920



LSV Asset Management:

Equity and fixed-income $100,295 $107,476 $70,851 $81,134 $82,051 programs (B)



Total:

Equity and fixed-income $272,214 $285,201 $220,750$245,821 $256,549 programs (C)

Collective trust fund 53,258 58,161 48,327 58,289 63,387 programs

Liquidity 9,267 8,675 14,328 13,721 10,238 funds

Total assets under $334,739 $352,037 $283,405$317,831 $330,174 management

Client assets under 5,292 5,291 4,462 4,519 4,797 advisement

Client assets under 661,971 683,342 632,291 692,514 754,543 administration (D)

Total assets $1,002,002$1,040,670$920,158$1,014,864$1,089,514

Client assets under administration in the Investment Managers segment(A) include $51.1 billion of assets that are at fee levels below our normal full-service assets (as of September 30, 2020).

(B) Equity and fixed-income programs include $1.6 billion of assets managed by LSV in which fees are based on performance only (as of September 30, 2020).

(C) Equity and fixed-income programs include $7.5 billion of assets invested in various asset allocation funds at September 30, 2020.

(D) In addition to the numbers presented, SEI also administers an additional $11.5 billion in Funds of Funds assets (as of September 30, 2020) on which SEI does not earn an administration fee.

AVERAGE ASSET BALANCES

(In millions) (Unaudited)



3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr.

2019 2019 2020 2020 2020

Private Banks:

Equity and fixed-income $22,432 $23,106 $24,657 $22,229 $23,740 programs

Collective trust4 4 4 5 7 fund programs

Liquidity funds 3,625 3,581 3,581 4,366 3,948

Total assets $26,061 $26,691 $28,242 $26,600 $27,695 under management

Client assets under 23,717 24,930 24,840 23,819 25,295 administration

Total assets $49,778 $51,621 $53,082 $50,419 $52,990



Investment Advisors:

Equity and fixed-income $64,761 $66,371 $64,933 $57,429 $64,479 programs

Collective trust5 4 3 3 3 fund programs

Liquidity funds 2,580 2,673 3,284 6,923 4,569

Total assets $67,346 $69,048 $68,220 $64,355 $69,051 under management



Institutional Investors:

Equity and fixed-income $82,398 $83,304 $79,926 $77,037 $82,830 programs

Collective trust80 82 86 100 102 fund programs

Liquidity funds 2,287 2,106 2,342 2,476 2,120

Total assets $84,765 $85,492 $82,354 $79,613 $85,052 under management

Client assets 3,797 4,106 3,760 3,362 3,565 under advisement

Total assets $88,562 $89,598 $86,114 $82,975 $88,617



Investment Managers:

Collective trust52,587 55,499 55,952 54,061 62,028 fund programs

Liquidity funds 460 642 617 482 565

Total assets $53,047 $56,141 $56,569 $54,543 $62,593 under management

Client assets under 630,328 646,592 654,386 649,012 713,528 administration (A)

Total assets $683,375$702,733 $710,955 $703,555$776,121



Investments in New Businesses:

Equity and fixed-income $1,609 $1,649 $1,663 $1,468 $1,560 programs

Liquidity funds 142 145 168 182 180

Total assets $1,751 $1,794 $1,831 $1,650 $1,740 under management

Client assets 842 1,044 1,222 1,148 1,206 under advisement

Total assets $2,593 $2,838 $3,053 $2,798 $2,946



LSV Asset Management:

Equity and fixed-income $100,094$104,814 $88,059 $80,395 $83,536 programs (B)



Total:

Equity and fixed-income $271,294$279,244 $259,238 $238,558$256,145 programs (C)

Collective trust52,676 55,589 56,045 54,169 62,140 fund programs

Liquidity funds 9,094 9,147 9,992 14,429 11,382

Total assets $333,064$343,980 $325,275 $307,156$329,667 under management

Client assets 4,639 5,150 4,982 4,510 4,771 under advisement

Client assets under 654,045 671,522 679,226 672,831 738,823 administration (D)

Total assets $991,748$1,020,652$1,009,483$984,497$1,073,261

(A) Average client assets under administration in the Investment Managers segment during third-quarter 2020 include $50.4 billion that are at fee levels below our normal full-service assets.

(B) Equity and fixed-income programs include $1.6 billion of average assets managed by LSV in which fees are based on performance only during third-quarter 2020.

(C) Equity and fixed-income programs include $7.5 billion of average assets invested in various asset allocation funds during third-quarter 2020.

(D) In addition to the numbers presented, SEI also administers an additional $11.4 billion of average assets in Funds of Funds assets during third-quarter 2020 on which SEI does not earn an administration fee.

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SOURCE SEI Investments Company