PR Newswire | Jul 21, 2021 04:01PM EDT

07/21 15:01 CDT

SEI Reports Second-Quarter 2021 Financial Results OAKS, Pa., July 21, 2021

OAKS, Pa., July 21, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the second-quarter 2021. Diluted earnings per share were $0.93 in second-quarter 2021 compared to $0.68 in second-quarter 2020.

Consolidated Overview

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

2021 2020 % 2021 2020 %



Revenues $475,651$400,64619%$931,337$815,40814%

Net income 133,778 101,066 32%263,248 210,308 25%

Diluted earnings per $0.93 $0.68 37%$1.82 $1.39 31%share

"Our second-quarter results reflect positive markets, improving sales momentum and solid capital returns to shareholders. We continue to invest in our technology and investment solutions to deliver best-in-class products and services to our clients," said Alfred P. West, Jr., SEI Chairman and CEO.

"As the industry evolves coming out of the pandemic, we continue to execute growth strategies across our business and take advantage of increasing demands for integrated technologies, sound operational solutions and a market-responsive investment approach. For more than 50 years, our stability, scale and success have been driven by seizing opportunities powered by our dedicated, talented workforce and tech-driven solutions. We are committed to delivering long-term value to our shareholders, employees, clients and communities."

Summary of Second-Quarter Results by Business Segment

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

2021 2020 % 2021 2020 %

Private Banks:

Revenues $123,676 $107,726 15%$241,284 $220,947 9%

Expenses 117,654 107,723 9% 228,378 218,376 5%

Operating Profit 6,022 3 NM 12,906 2,571 402%

Operating Margin 5 %- % 5 %1 %



Investment Advisors:

Revenues 119,396 93,708 27%232,690 196,029 19%

Expenses 59,133 50,149 18%114,160 102,581 11%

Operating Profit 60,263 43,559 38%118,530 93,448 27%

Operating Margin 50 %46 % 51 %48 %



Institutional Investors:

Revenues 85,699 76,523 12%170,198 155,726 9%

Expenses 41,895 36,937 13%81,053 75,204 8%

Operating Profit 43,804 39,586 11%89,145 80,522 11%

Operating Margin 51 %52 % 52 %52 %



Investment Managers:

Revenues 142,808 119,340 20%279,227 235,969 18%

Expenses 84,995 74,668 14%168,015 148,957 13%

Operating Profit 57,813 44,672 29%111,212 87,012 28%

Operating Margin 40 %37 % 40 %37 %



Investments in New Businesses:

Revenues 4,072 3,349 22%7,938 6,737 18%

Expenses 13,631 13,466 1% 27,035 24,376 11%

Operating Loss (9,559) (10,117) NM (19,097) (17,639) NM



Totals:

Revenues $475,651 $400,646 19%$931,337 $815,408 14%

Expenses 317,308 282,943 12%618,641 569,494 9%

Corporate Overhead 22,322 17,391 28%43,838 35,374 24% Expenses

Income from $136,021 $100,312 36%$268,858 $210,540 28% Operations

Second-Quarter Business Highlights:

* Revenues from Asset management, administration, and distribution fees increased primarily from higher assets under administration in our Investment Managers segment due to market appreciation and positive cash flows from new and existing clients. * Average assets under administration increased $185.4 billion, or 28%, to $858.2 billion in the second-quarter 2021, as compared to $672.8 billion during the second-quarter 2020 (see attached Average Asset Balances schedules for further details). * Average assets under management, excluding LSV, increased $66.6 billion, or 29%, to $293.4 billion in the second-quarter 2021, as compared to $226.8 billion during the second-quarter 2020 primarily due to market appreciation (see attached Average Asset Balances schedules for further details). * Net sales events in the Private Banks and Investment Managers segments during second-quarter 2021 were $13.2 million and are expected to generate net annualized recurring revenues of approximately $9.8 million when contract values are completely realized. * Net sales events in asset management-related businesses of the Investment Advisors and Institutional Investors segments and the Asset Management Distribution (AMD) business in the Private Banks segment during second-quarter 2021 were $2.8 million, reflecting positive asset flows in the Advisor and AMD businesses, offset by net losses in our legacy Institutional client base. * The increase in operational expenses was primarily due to increased direct costs related to increased revenues, as well as increased personnel costs to service new clients in our Investment Managers segment. * Earnings from LSV increased by $6.8 million, or 24%, to $35.1 million in second-quarter 2021, as compared to $28.3 million in second-quarter 2020. The increase in earnings was due to higher assets under management from market appreciation. Negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV. * Stock-based compensation expense in second-quarter 2021 increased $3.0 million as compared to second-quarter 2020 due to equity awards in late 2020 and from a change in estimate of the timing of when stock-option vesting targets would be achieved. We expect to recognize $25.7 million in stock-based compensation expense during the remainder of 2021. * We capitalized $5.9 million of software development costs in second-quarter 2021 for continued enhancements to the SEI Wealth PlatformSM. Amortization expense related to SWP was $12.0 million in second-quarter 2021. * Effective tax rates were 22.3% in second-quarter 2021 and 23.3% in second-quarter 2020. The decrease in our effective tax rate was due to increased tax benefits associated with a higher volume of stock option exercises. * We repurchased 2.1 million shares of our common stock for $129.2 million during the second-quarter 2021. * Cash flow from operations was $188.4 million, or $1.31 per share, and free cash flow was $171.3 million during the second-quarter 2021.

Earnings Conference CallA conference call to review earnings is scheduled for 4:30 p.m. Eastern time on July 21, 2021. 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: 1520669.

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 June 30, 2021, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers approximately $1.3 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including approximately $399 billion in assets under management and $880 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 and the timing of such realization, * whether we will have sales momentum, * whether we will be able to take advantage of increasing sales demand, * whether we will invest in the strength and expansion of our solutions, * our strategic priorities and commitments and the degree to which we will execute on them, * the elements of our long-term success, and * the degree to which our business will be successful and the beneficiaries of any such success.

We anticipate that we may deliver forward-looking statements during today's earnings call that include our current expectations as to:

* our ability to capture the opportunities inherent in significant change, * the timing and success of client migrations, implementations and conversions, * our ability to expand our relationships and revenue opportunities with new and existing clients, * the timing of and our ability to integrate acquisition targets, * the degree to which M&A activity in the industries in which we compete will affect our sales, * the degree to which our technology is being adopted across both our existing client base and new clients, * our ability to leverage our technologies and scale our businesses, * the degree to which one-time and transaction-based revenues during the quarter will be repeated, * revenue that we believe will be generated by sales events that occurred during the quarter or when our unfunded backlog may fund, * the strategic initiatives and business segments that we will pursue and those in which we will invest, * the competition for and cost of talent and the effect of these factors on our business, * the amount of recurring sales we will generate, * the strength of our pipelines and demand for our products and services, * the degree to which the global COVID-19 pandemic is affecting our business, * the momentum we may have with respect to our businesses, * the headwinds we will face and our strategies for how we may respond to these headwinds, * how we will manage our expenses and the degree to which our forecasted expenses will decline, increase or normalize, * when we integrate purchased assets into SWP and the timing of our ability to offer additional services to clients, * the organic and inorganic opportunities that will drive our growth, and * the success and benefits of our strategic investments.

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, 2020, 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,

2021 2020 2021 2020



Asset management, admin. and $382,509$320,577$750,155$652,430distribution fees

Information processing and 93,142 80,069 181,182 162,978 software servicing fees



Total revenues 475,651 400,646 931,337 815,408



Subadvisory, distribution and 55,827 44,182 105,991 89,519 other asset mgmt. costs

Software royalties and other 7,471 7,389 13,213 14,836 information processing costs

Compensation, benefits and other 141,779 125,331 279,000 256,812 personnel

Stock-based compensation 10,103 7,062 19,855 13,991

Consulting, outsourcing and 55,449 57,111 109,789 110,401 professional fees

Data processing and computer 27,375 24,506 53,096 47,210 related

Facilities, supplies and other 18,479 13,973 35,727 30,769 costs

Amortization 14,723 13,140 29,075 26,217

Depreciation 8,424 7,640 16,733 15,113



Total expenses 339,630 300,334 662,479 604,868



Income from operations 136,021 100,312 268,858 210,540



Net gain (loss) on investments 377 1,903 709 (2,086)

Interest and dividend income 878 1,370 1,823 4,573

Interest expense (130) (151) (253) (303)

Equity in earnings of 35,065 28,276 68,415 58,183 unconsolidated affiliate



Income before income taxes 172,211 131,710 339,552 270,907



Income taxes 38,433 30,644 76,304 60,599



Net income $133,778$101,066$263,248$210,308



Basic earnings per common share $0.94 $0.69 $1.85 $1.42



Shares used to calculate basic 142,074 147,478 142,638 148,473 earnings per share



Diluted earnings per common share $0.93 $0.68 $1.82 $1.39



Shares used to calculate diluted 144,212 149,598 144,759 150,983 earnings per share



Dividends declared per common $0.37 $0.35 $0.37 $0.35 share

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



June 30, December 31,

2021 2020

Assets

Current Assets:

Cash and cash equivalents $780,928 $784,626

Restricted cash 351 3,101

Receivables from investment products 56,177 55,271

Receivables, net of allowance for doubtful accounts409,568 385,219 of $3,188 and $1,100

Securities owned 26,174 34,064

Other current assets 38,158 38,696

Total Current Assets 1,311,356 1,300,977



Property and Equipment, net of accumulated 184,042 189,052 depreciation of $394,743 and $378,639

Operating Lease Right-of-Use Assets 36,871 38,397

Capitalized Software, net of accumulated 256,473 270,977 amortization of $518,514 and $491,739

Available for Sale and Equity Securities 130,039 105,419

Investments in Affiliated Funds, at fair value 6,932 6,166

Investment in Unconsolidated Affiliate 47,420 98,433

Goodwill 64,489 64,489

Intangible Assets, net of accumulated amortization 33,187 24,304 of $14,573 and $12,456

Deferred Contract Costs 33,352 33,781

Deferred Income Taxes 2,447 2,972

Other Assets, net 33,082 32,289

Total Assets $2,139,690$2,167,256



Liabilities and Equity

Current Liabilities:

Accounts payable $9,291 $7,766

Accrued liabilities 211,984 299,845

Current portion of long-term operating lease 10,344 8,579 liabilities

Deferred revenue 1,280 1,085

Total Current Liabilities 232,899 317,275



Long-term Income Taxes Payable 803 803

Deferred Income Taxes 47,644 55,159

Long-term Operating Lease Liabilities 31,697 34,058

Other Long-term Liabilities 21,041 20,054

Total Liabilities 334,084 427,349



Shareholders' Equity:

Common stock, $0.01 par value, 750,000 shares authorized; 141,027 and 143,396 shares issued and 1,410 1,434 outstanding

Capital in excess of par value 1,219,487 1,190,001

Retained earnings 599,231 565,270

Accumulated other comprehensive loss, net (14,522) (16,798)

Total Shareholders' Equity 1,805,606 1,739,907

Total Liabilities and Shareholders' Equity $2,139,690$2,167,256

ENDING ASSET BALANCES

(In millions) (Unaudited)



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

2020 2020 2020 2021 2021

Private Banks:

Equity and fixed-income $22,974 $23,499 $25,498 $25,098 $26,264 programs

Collective trust fund 5 6 6 7 7 programs

Liquidity 4,291 3,718 3,778 3,793 3,654 funds

Total assets under $27,270 $27,223 $29,282 $28,898 $29,925 management

Client assets under 23,903 24,174 26,346 4,379 4,412 administration

Total assets $51,173 $51,397 $55,628 $33,277 $34,337



Investment Advisors:

Equity and fixed-income $59,958 $65,581 $71,247 $73,818 $78,052 programs

Collective trust fund 3 3 1 1 1 programs

Liquidity 6,648 3,866 3,832 3,584 3,550 funds

Total assets under $66,609 $69,450 $75,080 $77,403 $81,603 management



Institutional Investors:

Equity and fixed-income $80,257 $83,846 $90,869 $92,040 $93,010 programs

Collective trust fund 103 101 98 95 5 programs

Liquidity 1,924 2,096 2,128 2,909 2,516 funds

Total assets under $82,284 $86,043 $93,095 $95,044 $95,531 management

Client assets under 3,326 3,618 4,063 4,333 4,566 advisement

Total assets $85,610 $89,661 $97,158 $99,377 $100,097



Investment Managers:

Collective trust fund 58,178 63,277 75,214 78,304 87,012 programs

Liquidity 664 389 424 449 473 funds

Total assets under $58,842 $63,666 $75,638 $78,753 $87,485 management

Client assets under 668,611 730,369 760,397 831,819 875,942 administration (A)

Total assets $727,453 $794,035 $836,035 $910,572 $963,427



Investments in New Businesses:

Equity and fixed-income $1,498 $1,572 $1,711 $1,777 $1,924 programs

Liquidity 194 169 162 289 191 funds

Total assets under $1,692 $1,741 $1,873 $2,066 $2,115 management

Client assets under 1,193 1,179 1,299 1,355 1,422 advisement

Total assets $2,885 $2,920 $3,172 $3,421 $3,537



LSV Asset Management:

Equity and fixed-income $81,134 $82,051 $93,692 $101,565 $102,404 programs (B)



Total:

Equity and fixed-income $245,821 $256,549 $283,017 $294,298 $301,654 programs (C)

Collective trust fund 58,289 63,387 75,319 78,407 87,025 programs

Liquidity 13,721 10,238 10,324 11,024 10,384 funds

Total assets under $317,831 $330,174 $368,660 $383,729 $399,063 management

Client assets under 4,519 4,797 5,362 5,688 5,988 advisement

Client assets under 692,514 754,543 786,743 836,198 880,354 administration (D)

Total assets $1,014,864$1,089,514$1,160,765$1,225,615$1,285,405



Client assets under administration in the Investment Managers segment (A)include $49.6 billion of assets that are at fee levels below our normal full-service assets (as of June 30, 2021).

(B)Equity and fixed-income programs include $2.4 billion of assets managed by LSV in which fees are based on performance only (as of June 30, 2021).

(C)Equity and fixed-income programs include $8.0 billion of assets invested in various asset allocation funds at June 30, 2021.

In addition to the numbers presented, SEI also administers an additional (D)$13.5 billion in Funds of Funds assets (as of June 30, 2021) 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.

2020 2020 2020 2021 2021

Private Banks:

Equity and fixed-income $22,229 $23,740 $24,284 $25,139 $26,056 programs

Collective trust fund 5 7 6 6 7 programs

Liquidity funds4,366 3,948 3,712 3,876 3,833

Total assets under $26,600 $27,695 $28,002 $29,021 $29,896 management

Client assets under 23,819 25,295 25,368 4,317 4,405 administration

Total assets $50,419 $52,990 $53,370 $33,338 $34,301



Investment Advisors:

Equity and fixed-income $57,429 $64,479 $68,396 $73,239 $76,839 programs

Collective trust fund 3 3 2 1 1 programs

Liquidity funds6,923 4,569 3,788 3,619 3,370

Total assets under $64,355 $69,051 $72,186 $76,859 $80,210 management



Institutional Investors:

Equity and fixed-income $77,037 $82,830 $86,277 $91,349 $93,458 programs

Collective trust fund 100 102 102 96 68 programs

Liquidity funds2,476 2,120 2,271 2,621 2,681

Total assets under $79,613 $85,052 $88,650 $94,066 $96,207 management

Client assets under 3,362 3,565 3,746 4,146 4,516 advisement

Total assets $82,975 $88,617 $92,396 $98,212 $100,723



Investment Managers:

Collective trust fund 54,061 62,028 69,349 78,035 84,553 programs

Liquidity funds482 565 411 490 469

Total assets under $54,543 $62,593 $69,760 $78,525 $85,022 management

Client assets under 649,012 713,528 754,350 817,330 853,810 administration (A)

Total assets $703,555$776,121 $824,110 $895,855 $938,832



Investments in New Businesses:

Equity and fixed-income $1,468 $1,560 $1,634 $1,743 $1,870 programs

Liquidity funds182 180 165 169 236

Total assets under $1,650 $1,740 $1,799 $1,912 $2,106 management

Client assets under 1,148 1,206 1,218 1,327 1,406 advisement

Total assets $2,798 $2,946 $3,017 $3,239 $3,512



LSV Asset Management:

Equity and fixed-income $80,395 $83,536 $88,182 $97,476 $103,583 programs (B)



Total:

Equity and fixed-income $238,558$256,145 $268,773 $288,946 $301,806 programs (C)

Collective trust fund 54,169 62,140 69,459 78,138 84,629 programs

Liquidity funds14,429 11,382 10,347 10,775 10,589

Total assets under $307,156$329,667 $348,579 $377,859 $397,024 management

Client assets under 4,510 4,771 4,964 5,473 5,922 advisement

Client assets under 672,831 738,823 779,718 821,647 858,215 administration (D)

Total assets $984,497$1,073,261$1,133,261$1,204,979$1,261,161



Average client assets under administration in the Investment Managers (A)segment during second-quarter 2021 include $51.6 billion that are at fee levels below our normal full-service assets.

Equity and fixed-income programs include $2.4 billion of average assets (B)managed by LSV in which fees are based on performance only during second-quarter 2021.

(C)Equity and fixed-income programs include $8.0 billion of average assets invested in various asset allocation funds during second-quarter 2021.

In addition to the numbers presented, SEI also administers an additional (D)$13.5 billion of average assets in Funds of Funds assets during second-quarter 2021 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