PR Newswire | Oct 20, 2021 04:02PM EDT

10/20 15:01 CDT

SEI Reports Third-Quarter 2021 Financial Results OAKS, Pa., Oct. 20, 2021

OAKS, Pa., Oct. 20, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the third-quarter 2021. Diluted earnings per share were $0.97 in third-quarter 2021 compared to $0.75 in third-quarter 2020.

Consolidated Overview

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

2021 2020 % 2021 2020 %



Revenues $485,322$424,92714%$1,416,659$1,240,33514%

Net income 138,045 111,096 24%401,293 321,404 25%

Diluted earnings per share$0.97 $0.75 29%$2.79 $2.14 30%

"Our results reflect positive markets entering the third-quarter, continued sales momentum and delivery across our business segments. As the financial services industry continues to experience unrelenting change, we continue to make strategic investments in our business, our solutions and workforce to drive growth," said Alfred P. West, Jr., SEI Chairman and CEO.

"Our talented workforce is the key to our ability to serve our clients globally and create opportunities for our future. As we look forward, we will continue to capitalize on market opportunities to deliver long-term value to our shareholders, employees, clients and communities."

Summary of Third-Quarter Results by Business Segment

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

2021 2020 % 2021 2020 %

Private Banks:

Revenues $123,018 $114,792 7% $364,302 $335,739 9%

Expenses 116,679 113,066 3% 345,057 331,442 4%

Operating Profit 6,339 1,726 NM 19,245 4,297 348%

Operating Margin 5 % 2 % 5 %1 %



Investment Advisors:

Revenues 124,768 103,189 21% 357,458 299,218 19%

Expenses 62,107 51,519 21% 176,267 154,100 14%

Operating Profit 62,661 51,670 21% 181,191 145,118 25%

Operating Margin 50 % 50 % 51 %48 %



Institutional Investors:

Revenues 85,759 79,583 8% 255,957 235,309 9%

Expenses 41,643 37,812 10% 122,696 113,016 9%

Operating Profit 44,116 41,771 6% 133,261 122,293 9%

Operating Margin 51 % 52 % 52 %52 %



Investment Managers:

Revenues 147,412 123,846 19% 426,639 359,815 19%

Expenses 89,594 79,838 12% 257,609 228,795 13%

Operating Profit 57,818 44,008 31% 169,030 131,020 29%

Operating Margin 39 % 36 % 40 %36 %



Investments in New Businesses:

Revenues 4,365 3,517 24% 12,303 10,254 20%

Expenses 12,820 13,315 (4)%39,855 37,691 6%

Operating Loss (8,455) (9,798) NM (27,552) (27,437) NM



Totals:

Revenues $485,322 $424,927 14% $1,416,659 $1,240,335 14%

Expenses 322,843 295,550 9% 941,484 865,044 9%

Corporate Overhead Expenses 21,354 18,040 18% 65,192 53,414 22%

Income from Operations $141,125 $111,337 27% $409,983 $321,877 27%

Third-Quarter Business Highlights:

* Revenues from Asset management, administration, and distribution fees increased from higher assets under management and administration due to market appreciation and positive cash flows from new and existing clients. * Average assets under administration increased $116.9 billion, or 16%, to $855.7 billion in the third-quarter 2021, as compared to $738.8 billion during the third-quarter 2020 (see attached Average Asset Balances schedules for further details). * Average assets under management, excluding LSV, increased $53.9 billion, or 22%, to $300.0 billion in the third-quarter 2021, as compared to $246.1 billion during the third-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 third-quarter 2021 were $19.4 million and are expected to generate net annualized recurring revenues of approximately $15.1 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 third-quarter 2021 were $6.9 million. * The increase in operational expenses was primarily due to increased direct costs related to increased revenues, as well as increased personnel costs due to business growth and competitive labor markets. * Earnings from LSV increased by $6.7 million, or 24%, to $35.0 million in third-quarter 2021, as compared to $28.3 million in third-quarter 2020. The increase in earnings was primarily 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 third-quarter 2021 increased $4.9 million as compared to third-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 capitalized $7.2 million of software development costs in third-quarter 2021 for continued enhancements to the SEI Wealth PlatformSM. Amortization expense related to SWP was $12.0 million in third-quarter 2021. * Effective tax rates were 21.7% in third-quarter 2021 and 21.4% in third-quarter 2020. * We repurchased 2.0 million shares of our common stock for $119.9 million during the third-quarter 2021. * Cash flow from operations was $158.9 million, or $1.12 per share, and free cash flow was $144.6 million during the third-quarter 2021.

Earnings Conference CallA conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Oct. 20, 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: 4538998.

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, 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 $392 billion in assets under management and $866 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 invest in our business, solutions, or workforce, * our strategic priorities and commitments and the degree to which we will execute on them, and * the degree to which we are able to capitalize on market opportunities and deliver long-term value to our shareholders, employees, clients and communities.

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, * whether we will be able to take advantage of increasing sales demand, * the timing of and our ability to integrate acquisition targets and the benefits we will receive from any of our acquisitions, * 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, if at all, * the strategic initiatives and business segments that we will pursue and those in which we will invest, * the degree to which our One SEISM strategy will allow us to increase our growth opportunities, * 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 elements of our long-term success, * the degree to which our business will be successful and what parties will be beneficiaries of any such success, * 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 the SEI Wealth Platform 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 Nine Months Ended September 30, Ended September 30,

2021 2020 2021 2020



Asset management, admin. and distribution fees $393,296$339,609$1,143,451$992,039

Information processing and software servicing fees 92,026 85,318 273,208 248,296



Total revenues 485,322 424,927 1,416,659 1,240,335



Subadvisory, distribution and other asset mgmt. costs 55,619 45,126 161,610 134,645

Software royalties and other information processing costs7,348 6,992 20,561 21,828

Compensation, benefits and other personnel 150,188 134,795 429,188 391,607

Stock-based compensation 11,318 6,467 31,173 20,458

Consulting, outsourcing and professional fees 55,868 57,949 165,657 168,350

Data processing and computer related 26,650 24,437 79,746 71,647

Facilities, supplies and other costs 14,124 16,679 49,851 47,448

Amortization 14,674 13,200 43,749 39,417

Depreciation 8,408 7,945 25,141 23,058



Total expenses 344,197 313,590 1,006,676 918,458



Income from operations 141,125 111,337 409,983 321,877



Net (loss) gain on investments (575) 776 134 (1,310)

Interest and dividend income 892 1,009 2,715 5,582

Interest expense (101) (153) (354) (456)

Equity in earnings of unconsolidated affiliate 35,005 28,305 103,420 86,488



Income before income taxes 176,346 141,274 515,898 412,181



Income taxes 38,301 30,178 114,605 90,777



Net income $138,045$111,096$401,293 $321,404



Basic earnings per common share $0.98 $0.76 $2.83 $2.18



Shares used to calculate basic earnings per share 140,507 145,812 141,928 147,586



Diluted earnings per common share $0.97 $0.75 $2.79 $2.14



Shares used to calculate diluted earnings per share 142,426 147,907 143,981 149,958



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

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



September 30,December 31,

2021 2020

Assets

Current Assets:

Cash and cash equivalents $793,883 $784,626

Restricted cash 351 3,101

Receivables from investment products 59,808 55,271

Receivables, net of allowance for doubtful accounts of $2,669 and $1,100 442,187 385,219

Securities owned 31,770 34,064

Other current assets 42,615 38,696

Total Current Assets 1,370,614 1,300,977



Property and Equipment, net of accumulated depreciation of $400,679 and 183,802 189,052 $378,639

Operating Lease Right-of-Use Assets 35,145 38,397

Capitalized Software, net of accumulated amortization of $531,923 and $491,739 250,280 270,977

Available for Sale and Equity Securities 140,079 105,419

Investments in Affiliated Funds, at fair value 6,893 6,166

Investment in Unconsolidated Affiliate 39,872 98,433

Goodwill 64,489 64,489

Intangible Assets, net of accumulated amortization of $15,768 and $12,456 31,992 24,304

Deferred Contract Costs 34,263 33,781

Deferred Income Taxes 2,148 2,972

Other Assets, net 32,224 32,289

Total Assets $2,191,801 $2,167,256



Liabilities and Equity

Current Liabilities:

Accounts payable $10,772 $7,766

Accrued liabilities 231,043 299,845

Current portion of long-term operating lease liabilities 10,412 8,579

Deferred revenue 1,235 1,085

Total Current Liabilities 253,462 317,275



Long-term Income Taxes Payable 803 803

Deferred Income Taxes 47,434 55,159

Long-term Operating Lease Liabilities 29,857 34,058

Other Long-term Liabilities 22,157 20,054

Total Liabilities 353,713 427,349



Shareholders' Equity:

Common stock, $0.01 par value, 750,000 shares authorized; 139,305 and 143,396 1,393 1,434 shares issued and outstanding

Capital in excess of par value 1,228,085 1,190,001

Retained earnings 629,153 565,270

Accumulated other comprehensive loss, net (20,543) (16,798)

Total Shareholders' Equity 1,838,088 1,739,907

Total Liabilities and Shareholders' Equity $2,191,801 $2,167,256

ENDING ASSET BALANCES

(In millions) (Unaudited)



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

2020 2020 2021 2021 2021

Private Banks:

Equity and fixed-income programs $23,499 $25,498 $25,098 $26,264 $25,618

Collective trust fund programs 6 6 7 7 6

Liquidity funds 3,718 3,778 3,793 3,654 3,988

Total assets under management $27,223 $29,282 $28,898 $29,925 $29,612

Client assets under administration 24,174 26,346 4,379 4,412 4,675

Total assets $51,397 $55,628 $33,277 $34,337 $34,287



Investment Advisors:

Equity and fixed-income programs $65,581 $71,247 $73,818 $78,052 $78,560

Collective trust fund programs 3 1 1 1 -

Liquidity funds 3,866 3,832 3,584 3,550 3,477

Total Platform assets under management$69,450 $75,080 $77,403 $81,603 $82,037

Platform-only assets (E) 10,506 11,862 12,538 13,566 13,728

Total Platform assets (E) $79,956 $86,942 $89,941 $95,169 $95,765



Institutional Investors:

Equity and fixed-income programs $83,846 $90,869 $92,040 $93,010 $89,441

Collective trust fund programs 101 98 95 5 5

Liquidity funds 2,096 2,128 2,909 2,516 2,599

Total assets under management $86,043 $93,095 $95,044 $95,531 $92,045

Client assets under advisement 3,618 4,063 4,333 4,566 4,698

Total assets $89,661 $97,158 $99,377 $100,097 $96,743



Investment Managers:

Collective trust fund programs 63,277 75,214 78,304 87,012 87,488

Liquidity funds 389 424 449 473 568

Total assets under management $63,666 $75,638 $78,753 $87,485 $88,056

Client assets under administration (A)730,369 760,397 831,819 875,942 861,605

Total assets $794,035 $836,035 $910,572 $963,427 $949,661



Investments in New Businesses:

Equity and fixed-income programs $1,572 $1,711 $1,777 $1,924 $1,964

Liquidity funds 169 162 289 191 202

Total assets under management $1,741 $1,873 $2,066 $2,115 $2,166

Client assets under advisement 1,179 1,299 1,355 1,422 1,378

Total assets $2,920 $3,172 $3,421 $3,537 $3,544



LSV Asset Management:

Equity and fixed-income programs (B) $82,051 $93,692 $101,565 $102,404 $97,604



Total:

Equity and fixed-income programs (C) $256,549 $283,017 $294,298 $301,654 $293,187

Collective trust fund programs 63,387 75,319 78,407 87,025 87,499

Liquidity funds 10,238 10,324 11,024 10,384 10,834

Total assets under management $330,174 $368,660 $383,729 $399,063 $391,520

Client assets under advisement 4,797 5,362 5,688 5,988 6,076

Client assets under administration (D)754,543 786,743 836,198 880,354 866,280

Platform-only assets 10,506 11,862 12,538 13,566 13,728

Total assets $1,100,020$1,172,627$1,238,153$1,298,971$1,277,604

(A) Client assets under administration in the Investment Managers segment include $12.3 billion of assets that are at fee levels below our normal full-service assets (as of September 30, 2021).

(B) Equity and fixed-income programs include $2.3 billion of assets managed by LSV in which fees are based on performance only (as of September 30, 2021).

(C) Equity and fixed-income programs include $7.8 billion of assets invested in various asset allocation funds at September 30, 2021.

(D) In addition to the numbers presented, SEI also administers an additional $13.7 billion in Funds of Funds assets (as of September 30, 2021) on which SEI does not earn an administration fee.

(E) Platform assets under management and Platform-only assets combined are total Platform assets in the Investment Advisors segment.

AVERAGE ASSET BALANCES

(In millions) (Unaudited)



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

2020 2020 2021 2021 2021

Private Banks:

Equity and fixed-income programs $23,740 $24,284 $25,139 $26,056 $26,232

Collective trust fund programs 7 6 6 7 6

Liquidity funds 3,948 3,712 3,876 3,833 3,916

Total assets under management $27,695 $28,002 $29,021 $29,896 $30,154

Client assets under administration 25,295 25,368 4,317 4,405 4,476

Total assets $52,990 $53,370 $33,338 $34,301 $34,630



Investment Advisors:

Equity and fixed-income programs $64,479 $68,396 $73,239 $76,839 $79,602

Collective trust fund programs 3 2 1 1 -

Liquidity funds 4,569 3,788 3,619 3,370 3,403

Total Platform assets under management$69,051 $72,186 $76,859 $80,210 $83,005

Platform-only assets (E) 10,501 11,214 12,206 13,292 13,863

Total Platform assets (E) $79,552 $83,400 $89,065 $93,502 $96,868



Institutional Investors:

Equity and fixed-income programs $82,830 $86,277 $91,349 $93,458 $91,965

Collective trust fund programs 102 102 96 68 5

Liquidity funds 2,120 2,271 2,621 2,681 2,742

Total assets under management $85,052 $88,650 $94,066 $96,207 $94,712

Client assets under advisement 3,565 3,746 4,146 4,516 4,658

Total assets $88,617 $92,396 $98,212 $100,723 $99,370



Investment Managers:

Collective trust fund programs 62,028 69,349 78,035 84,553 89,441

Liquidity funds 565 411 490 469 532

Total assets under management $62,593 $69,760 $78,525 $85,022 $89,973

Client assets under administration (A)713,528 754,350 817,330 853,810 851,183

Total assets $776,121 $824,110 $895,855 $938,832 $941,156



Investments in New Businesses:

Equity and fixed-income programs $1,560 $1,634 $1,743 $1,870 $1,958

Liquidity funds 180 165 169 236 205

Total assets under management $1,740 $1,799 $1,912 $2,106 $2,163

Client assets under advisement 1,206 1,218 1,327 1,406 1,423

Total assets $2,946 $3,017 $3,239 $3,512 $3,586



LSV Asset Management:

Equity and fixed-income programs (B) $83,536 $88,182 $97,476 $103,583 $99,924



Total:

Equity and fixed-income programs (C) $256,145 $268,773 $288,946 $301,806 $299,681

Collective trust fund programs 62,140 69,459 78,138 84,629 89,452

Liquidity funds 11,382 10,347 10,775 10,589 10,798

Total assets under management $329,667 $348,579 $377,859 $397,024 $399,931

Client assets under advisement 4,771 4,964 5,473 5,922 6,081

Client assets under administration (D)738,823 779,718 821,647 858,215 855,659

Platform-only assets 10,501 11,214 12,206 13,292 13,863

Total assets $1,083,762$1,144,475$1,217,185$1,274,453$1,275,534

(A) Average client assets under administration in the Investment Managers segment during third-quarter 2021 include $12.5 billion that are at fee levels below our normal full-service assets.

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

(C) Equity and fixed-income programs include $7.8 billion of average assets invested in various asset allocation funds during third-quarter 2021.

(D) In addition to the numbers presented, SEI also administers an additional $13.6 billion of average assets in Funds of Funds assets during third-quarter 2021 on which SEI does not earn an administration fee.

(E) Platform assets under management and Platform-only assets combined are total Platform assets in the Investment Advisors segment.

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