PR Newswire | Jul 22, 2020 04:01PM EDT

07/22 15:01 CDT

SEI Reports Second-Quarter 2020 Financial Results OAKS, Pa., July 22, 2020

OAKS, Pa., July 22, 2020 /PRNewswire/ --SEI Investments Company (NASDAQ:SEIC) today announced financial results for the second-quarter 2020. Diluted earnings per share were $0.68 in second-quarter 2020 compared to $0.82 in second-quarter 2019.

Consolidated Overview

(In thousands, except earningsFor the Three Months For the Six Months per share) Ended June 30, Ended June 30,

2020 2019 % 2020 2019 %



Revenues $400,646$409,586(2)%$815,408$810,4061%

Net income 101,066 126,540 (20)210,308 240,521 (13) % %

Diluted earnings per share $0.68 $0.82 (17)$1.39 $1.54 (10) % %

"While we and the rest of the world continue to cope with the pandemic, our employees' health and safety remain our top priority as we move through our return-to-office plans. We are proud of our global workforce's resilience as they manage the extended period of a remote workplace-all the while remaining totally committed to supporting and servicing our clients. We greatly appreciate the healthcare workers and others who help us deal with COVID-19's impact on our lives," said Alfred P. West, Jr., SEI Chairman and CEO.

"While financial markets somewhat rebounded during the quarter, we experienced headwinds that impacted our results. Our client engagement was high last quarter, resulting in positive sales activity. We continue to invest in our One SEI strategy, using this period to accelerate the necessary development work that will bring this initiative to its full potential.

"Our view of the future is not dampened by the challenges we all face in society today. Our diverse global workforce is the foundation of what will enable us to fulfill our promise of serving our clients and communities in which we work and live. Capitalizing on the opportunities in the markets we serve and the solutions we offer will lead to increased shareholder value."

Summary of Second-Quarter Results by Business Segment

(In thousands) For the Three Months For the Six Months Ended June 30, Ended June 30,

2020 2019 % 2020 2019 %

Private Banks:

Revenues $107,726 $116,092 (7)% $220,947 $234,351 (6)%

Expenses 107,723 107,790 -% 218,376 218,752 -%

Operating Profit 3 8,302 (100)2,571 15,599 (84) % %

Operating Margin -% 7% 1% 7%



Investment Advisors:

Revenues 93,708 100,122 (6)% 196,029 194,883 1%

Expenses 50,149 50,558 (1)% 102,581 103,060 -%

Operating Profit 43,559 49,564 (12)%93,448 91,823 2%

Operating Margin 46% 50% 48% 47%



Institutional Investors:

Revenues 76,523 81,109 (6)% 155,726 161,222 (3)%

Expenses 36,937 39,361 (6)% 75,204 78,115 (4)%

Operating Profit 39,586 41,748 (5)% 80,522 83,107 (3)%

Operating Margin 52 51% 52% 52%



Investment Managers:

Revenues 119,340 109,202 9% 235,969 213,851 10%

Expenses 74,668 68,371 9% 148,957 137,437 8%

Operating Profit 44,672 40,831 9% 87,012 76,414 14%

Operating Margin 37% 37% 37% 36%



Investments in New Businesses:

Revenues 3,349 3,061 9% 6,737 6,099 10%

Expenses 13,466 6,797 98% 24,376 12,737 91%

Operating Loss (10,117) (3,736) NM (17,639) (6,638) NM



Totals:

Revenues $400,646 $409,586 (2)% $815,408 $810,406 1%

Expenses 282,943 272,877 4% 569,494 550,101 4%

Corporate 17,391 16,573 5% 35,374 36,608 (3)%Overhead Expenses

Income from $100,312 $120,136 (17)%$210,540 $223,697 (6)%Operations

Second-Quarter Business Highlights:

* Revenues from Asset management, administration, and distribution fees decreased primarily from lower assets under management from the carryover effect of the sharp market depreciation during March 2020, which negatively impacted our asset-based fee revenues. This decline was partially offset by increased fees from higher assets under administration from positive cash flows and sales of new business in our Investment Managers segment. * Our average assets under administration increased $49.2 billion, or 8%, to $672.8 billion in the second-quarter 2020, as compared to $623.6 billion during the second-quarter 2019 (see attached Average Asset Balances schedules for further details). * Our average assets under management, excluding LSV, declined $1.8 billion, or 1%, to $226.8 billion in the second-quarter 2020, as compared to $228.6 billion during the second-quarter 2019 (see attached Average Asset Balances schedules for further details). * Information processing and software servicing fees in our Private Banks segment decreased by $5.4 million during the second-quarter 2020 due primarily to previously announced client losses. * Sales events, net of client losses, during second-quarter 2020 totaled approximately $22.1 million and are expected to generate net annualized recurring revenues of approximately $16.6 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. 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 $9.5 million, or 25%, to $28.3 million in second-quarter 2020 as compared to $37.8 million in second-quarter 2019. The decrease in earnings was due to lower assets under management from negative cash flows from existing clients, the carryover effect of negative markets in March 2020, and client losses. * We capitalized $5.6 million of software development costs in second-quarter 2020 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $10.9 million in second-quarter 2020. * Our effective tax rates were 23.3% in second-quarter 2020 and 22.1% in second-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 1.6 million shares of our common stock for $89.5 million during the second-quarter 2020.

Earnings Conference CallA conference call to review earnings is scheduled for 4:30 p.m. Eastern time on July 22, 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: 8812985.

About SEIAfter 50 years in business, SEI (NASDAQ:SEIC) remains 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, 2020, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $1 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including $318 billion in assets under management and $693 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, * whether our development initiatives will enable the full potential of our One SEI initiative, * whether we will fulfill our promise of serving our clients and communities, and * whether capitalizing on the opportunities in the markets in which we serve and the solutions we offer will lead to shareholder value.

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.

SEI INVESTMENTS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)



For the Three MonthsFor the Six Months Ended June 30, Ended June 30,

2020 2019 2020 2019



Asset management, admin. and $320,577$324,925$652,430 $638,869 distribution fees

Information processing and 80,069 84,661 162,978 171,537 software servicing fees



Total revenues 400,646 409,586 815,408 810,406



Subadvisory, distribution and 44,182 46,177 89,519 89,982 other asset mgmt. costs

Software royalties and other 7,389 7,393 14,836 15,521 information processing costs

Compensation, benefits and 125,331 125,999 256,812 256,334 other personnel

Stock-based compensation 7,062 5,064 13,991 10,102

Consulting, outsourcing and 57,111 45,330 110,401 95,536 professional fees

Data processing and computer 24,506 22,184 47,210 43,176 related

Facilities, supplies and other 13,973 17,100 30,769 35,845 costs

Amortization 13,140 12,781 26,217 25,460

Depreciation 7,640 7,422 15,113 14,753



Total expenses 300,334 289,450 604,868 586,709



Income from operations 100,312 120,136 210,540 223,697



Net gain (loss) on investments 1,903 231 (2,086) 1,510

Interest and dividend income 1,370 4,313 4,573 8,570

Interest expense (151) (166) (303) (323)

Equity in earnings of 28,276 37,832 58,183 75,149 unconsolidated affiliate



Income before income taxes 131,710 162,346 270,907 308,603



Income taxes 30,644 35,806 60,599 68,082



Net income $101,066$126,540$210,308 $240,521



Basic earnings per common share$0.69 $0.83 $1.42 $1.58



Shares used to calculate basic 147,478 151,863 148,473 152,587 earnings per share



Diluted earnings per common $0.68 $0.82 $1.39 $1.54 share



Shares used to calculate 149,598 155,165 150,983 155,853 diluted earnings per share



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

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



June 30, December 31,

2020 2019

Assets

Current Assets:

Cash and cash equivalents $758,276 $841,446

Restricted cash 3,101 3,101

Receivables from investment products 49,873 54,165

Receivables, net of allowance for doubtful accounts351,614 340,358 of $1,079 and $1,201

Securities owned 35,030 33,486

Other current assets 35,005 32,289

Total Current Assets 1,232,899 1,304,845



Property and Equipment, net of accumulated 182,273 160,859 depreciation of $367,677 and $353,453

Operating Lease Right-of-Use Assets 39,076 42,789

Capitalized Software, net of accumulated 284,341 296,068 amortization of $466,937 and $442,677

Available for Sale and Equity Securities 105,361 116,917

Investments in Affiliated Funds, at fair value 4,749 5,988

Investment in Unconsolidated Affiliate 41,094 67,413

Goodwill 64,489 64,489

Intangible Assets, net of accumulated amortization 26,145 27,987 of $10,615 and $8,773

Deferred Contract Costs 33,108 30,991

Deferred Income Taxes 2,343 2,822

Other Assets, net 37,722 30,202

Total Assets $2,053,600$2,151,370



Liabilities and Equity

Current Liabilities:

Accounts payable $10,780 $4,423

Accrued liabilities 210,711 272,801

Current portion of long-term operating lease 8,285 9,156 liabilities

Deferred revenue 6,349 7,185

Total Current Liabilities 236,125 293,565



Long-term Income Taxes Payable 803 803

Deferred Income Taxes 50,219 55,722

Long-term Operating Lease Liabilities 35,224 38,450

Other Long-term Liabilities 22,604 24,052

Total Liabilities 344,975 412,592



Shareholders' Equity:

Common stock, $0.01 par value, 750,000 shares authorized; 146,445 and 149,745 shares issued and 1,464 1,497 outstanding

Capital in excess of par value 1,174,411 1,158,900

Retained earnings 566,929 601,885

Accumulated other comprehensive loss, net (34,179) (23,504)

Total Shareholders' Equity 1,708,625 1,738,778

Total Liabilities and Shareholders' Equity $2,053,600$2,151,370

ENDING ASSET BALANCES (In millions) (Unaudited)



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

2019 2019 2019 2020 2020

Private Banks:

Equity and fixed-income $22,563 $22,580 $23,851 $21,160 $22,974 programs

Collective trust4 4 4 5 5 fund programs

Liquidity funds 3,322 3,695 3,405 4,143 4,291

Total assets $25,889 $26,279 $27,260 $25,308 $27,270 under management

Client assets under 23,387 23,985 25,801 21,497 23,903 administration

Total assets $49,276 $50,264 $53,061 $46,805 $51,173



Investment Advisors:

Equity and fixed-income $64,591 $65,059 $67,895 $54,856 $59,958 programs

Collective trust6 4 4 2 3 fund programs

Liquidity funds 2,618 2,673 2,887 5,969 6,648

Total assets $67,215 $67,736 $70,786 $60,827 $66,609 under management



Institutional Investors:

Equity and fixed-income $82,335 $82,659 $84,291 $72,399 $80,257 programs

Collective trust78 81 83 94 103 fund programs

Liquidity funds 2,173 2,290 1,746 3,672 1,924

Total assets $84,586 $85,030 $86,120 $76,165 $82,284 under management

Client assets 3,598 4,467 3,948 3,406 3,326 under advisement

Total assets $88,184 $89,497 $90,068 $79,571 $85,610



Investment Managers:

Collective trust51,838 53,169 58,070 48,226 58,178 fund programs

Liquidity funds 472 477 479 392 664

Total assets $52,310 $53,646 $58,549 $48,618 $58,842 under management

Client assets under 607,086 637,986 657,541 610,794 668,611 administration (A)

Total assets $659,396$691,632 $716,090 $659,412$727,453



Investments in New Businesses:

Equity and fixed-income $1,566 $1,621 $1,688 $1,484 $1,498 programs

Liquidity funds 141 132 158 152 194

Total assets $1,707 $1,753 $1,846 $1,636 $1,692 under management

Client assets 887 825 1,343 1,056 1,193 under advisement

Total assets $2,594 $2,578 $3,189 $2,692 $2,885



LSV Asset Management:

Equity and fixed-income $103,575$100,295 $107,476 $70,851 $81,134 programs (B)



Total:

Equity and fixed-income $274,630$272,214 $285,201 $220,750$245,821 programs (C)

Collective trust51,926 53,258 58,161 48,327 58,289 fund programs

Liquidity funds 8,726 9,267 8,675 14,328 13,721

Total assets $335,282$334,739 $352,037 $283,405$317,831 under management

Client assets 4,485 5,292 5,291 4,462 4,519 under advisement

Client assets under 630,473 661,971 683,342 632,291 692,514 administration (D)

Total assets $970,240$1,002,002$1,040,670$920,158$1,014,864

(A) Client assets under administration in the Investment Managers segment include $49.6 billion of assets that are at fee levels below our normal full-service assets (as of June 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 June 30, 2020).

(C) Equity and fixed-income programs include $7.4 billion of assets invested in various asset allocation funds at June 30, 2020.

(D) In addition to the numbers presented, SEI also administers an additional $11.3 billion in Funds of Funds assets (as of June 30, 2020) on which SEI does not earn an administration fee.

AVERAGE ASSET BALANCES (In millions) (Unaudited)



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

2019 2019 2019 2020 2020

Private Banks:

Equity and fixed-income $22,088 $22,432 $23,106 $24,657 $22,229 programs

Collective trust 4 4 4 4 5 fund programs

Liquidity funds 3,388 3,625 3,581 3,581 4,366

Total assets under$25,480 $26,061 $26,691 $28,242 $26,600 management

Client assets under 23,124 23,717 24,930 24,840 23,819 administration

Total assets $48,604 $49,778 $51,621 $53,082 $50,419



Investment Advisors:

Equity and fixed-income $62,419 $64,761 $66,371 $64,933 $57,429 programs

Collective trust 6 5 4 3 3 fund programs

Liquidity funds 3,465 2,580 2,673 3,284 6,923

Total assets under$65,890 $67,346 $69,048 $68,220 $64,355 management



Institutional Investors:

Equity and fixed-income $82,597 $82,398 $83,304 $79,926 $77,037 programs

Collective trust 78 80 82 86 100 fund programs

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

Total assets under$85,017 $84,765 $85,492 $82,354 $79,613 management

Client assets 3,641 3,797 4,106 3,760 3,362 under advisement

Total assets $88,658 $88,562 $89,598 $86,114 $82,975



Investment Managers:

Collective trust 50,108 52,587 55,499 55,952 54,061 fund programs

Liquidity funds 497 460 642 617 482

Total assets under$50,605 $53,047 $56,141 $56,569 $54,543 management

Client assets under 600,509 630,328 646,592 654,386 649,012 administration (A)

Total assets $651,114$683,375$702,733 $710,955 $703,555



Investments in New Businesses:

Equity and fixed-income $1,436 $1,609 $1,649 $1,663 $1,468 programs

Liquidity funds 178 142 145 168 182

Total assets under$1,614 $1,751 $1,794 $1,831 $1,650 management

Client assets 917 842 1,044 1,222 1,148 under advisement

Total assets $2,531 $2,593 $2,838 $3,053 $2,798



LSV Asset Management:

Equity and fixed-income $102,919$100,094$104,814 $88,059 $80,395 programs (B)



Total:

Equity and fixed-income $271,459$271,294$279,244 $259,238 $238,558programs (C)

Collective trust 50,196 52,676 55,589 56,045 54,169 fund programs

Liquidity funds 9,870 9,094 9,147 9,992 14,429

Total assets under$331,525$333,064$343,980 $325,275 $307,156management

Client assets 4,558 4,639 5,150 4,982 4,510 under advisement

Client assets under 623,633 654,045 671,522 679,226 672,831 administration (D)

Total assets $959,716$991,748$1,020,652$1,009,483$984,497

(A) Average client assets under administration in the Investment Managers segment during second-quarter 2020 include $50.1 billion that are at fee levels below our normal full-service assets.

(B) Equity and fixed-income programs include $1.4 billion of average assets managed by LSV in which fees are based on performance only during second-quarter 2020.

(C) Equity and fixed-income programs include $7.4 billion of average assets invested in various asset allocation funds during second-quarter 2020.

(D) In addition to the numbers presented, SEI also administers an additional $11.3 billion of average assets in Funds of Funds assets during second-quarter 2020 on which SEI does not earn an administration fee.

Investor Contact: Media Contact:

Lindsey Opsahl Leslie Wojcik

SEI SEI

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

lopsahl@seic.com lwojcik@seic.com

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SOURCE SEI Investments Company