PR Newswire | Jan 26, 2022 04:02PM EST

01/26 15:01 CST

SEI Reports Fourth-Quarter 2021 Financial Results OAKS, Pa., Jan. 26, 2022

OAKS, Pa., Jan. 26, 2022 /PRNewswire/ --SEI Investments Company (NASDAQ: SEIC) today announced financial results for the fourth-quarter 2021. Diluted earnings per share were $1.03 in fourth-quarter 2021 compared to $0.86 in fourth-quarter 2020.

Consolidated Overview

(In thousands, except For the Three Months For the Twelve Months earnings per share) Ended Dec. 31, Ended Dec. 31,

2021 2020 % 2021 2020 %



Revenues $501,650 $443,723 13%$1,918,309$1,684,05814%

Net income 145,300 125,882 15%546,593 447,286 22%

Diluted earnings per share$1.03 $0.86 20%$3.81 $3.00 27%

"Our record financial results for 2021 reflect continued sales momentum, success in delivering our solutions to our markets, and positive capital markets. We've made significant progress in executing against our growth strategy," said Alfred P. West, Jr., SEI Chairman and CEO.

"We believe our recent acquisitions enhance our capabilities, expand our competitive market presence, and enhance our growth opportunities in our markets. We also continued our research and development investments that have advanced our technology and new business initiatives. At the core of our long-term success is a talented, dedicated workforce and tremendous leadership across SEI globally.

"As we continue to connect our markets to their future potential through our technology and investment solutions, we are well-positioned to continue seizing growth opportunities that will lead to increased shareholder value."

Summary of Fourth-Quarter Results by Business Segment

(In thousands) For the Three Months For the Twelve Months Ended Dec. 31, Ended Dec. 31,

2021 2020 % 2021 2020 %

Private Banks:

Revenues $129,268 $119,654 8% $493,570 $455,393 8%

Expenses 117,739 115,039 2% 462,796 446,481 4%

Operating Profit 11,529 4,615 150% 30,774 8,912 245%

Operating Margin 9% 4% 6% 2%



Investment Advisors:

Revenues 125,491 108,346 16% 482,949 407,564 18%

Expenses 64,067 51,813 24% 240,334 205,913 17%

Operating Profit 61,424 56,533 9% 242,615 201,651 20%

Operating Margin 49% 52% 50% 49%



Institutional Investors:

Revenues 87,848 82,318 7% 343,805 317,627 8%

Expenses 45,374 36,893 23% 168,070 149,909 12%

Operating Profit 42,474 45,425 (6)% 175,735 167,718 5%

Operating Margin 48% 55% 51% 53%



Investment Managers:

Revenues 154,518 129,647 19% 581,157 489,462 19%

Expenses 91,046 80,204 14% 348,655 308,999 13%

Operating Profit 63,472 49,443 28% 232,502 180,463 29%

Operating Margin 41% 38% 40% 37%



Investments in New Businesses:

Revenues 4,525 3,758 20% 16,828 14,012 20%

Expenses 13,364 15,180 (12)%53,219 52,871 1%

Operating Loss (8,839) (11,422) NM (36,391) (38,859) NM



Totals:

Revenues $501,650 $443,723 13% $1,918,309$1,684,05814%

Expenses 331,590 299,129 11% 1,273,074 1,164,173 9%

Corporate Overhead Expenses 26,662 20,584 30% 91,854 73,998 24%

Income from Operations $143,398 $124,010 16% $553,381 $445,887 24%

Fourth-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. * Revenues in the Private Banks segment include $6.8 million from early termination fees from an existing investment processing client. * Our average assets under administration increased $104.6 billion, or 13%, to $884.3 billion in the fourth-quarter 2021, as compared to $779.7 billion during the fourth-quarter 2020 (see attached Average Asset Balances schedules for further details). * Our average assets under management, excluding LSV, increased $40.6 billion, or 16%, to $301.0 billion in the fourth-quarter 2021, as compared to $260.4 billion during the fourth-quarter 2020 (see attached Average Asset Balances schedules for further details). * Net sales events in the Private Banks and Investment Managers segments during fourth-quarter 2021 were $31.3 million and are expected to generate net annualized recurring revenues of approximately $22.1 million when contract values are completely realized. For the year ended 2021, net sales events were $81.4 million and are expected to generate net annualized recurring revenues of approximately $60.1 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 fourth-quarter 2021 were $4.5 million. For the year ended 2021, net sales events were flat primarily due to net losses in the legacy Institutional Investors client base which offset new business growth in the Investment Advisors segment. * 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. * We acquired Novus Partners (Novus), a global portfolio intelligence platform company, in November 2021. The results of operations of Novus are included in the Institutional Investors segment. The segment's fourth-quarter 2021 results were negatively impacted by approximately $868 thousand from the acquisition. * Earnings from LSV increased by $3.6 million, or 11%, to $34.2 million in fourth-quarter 2021 as compared to $30.6 million in fourth-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 fourth-quarter 2021 increased $3.7 million as compared to fourth-quarter 2020 due to equity awards in late 2020, net of forfeitures, and from a change in estimate of the timing of when stock-option vesting targets would be achieved. We expect stock-based compensation expense during 2022 to be approximately $46.3 million as compared to $41.5 million during 2021 as a result of new options granted in fourth-quarter 2021 net of awards granted in the prior year. * We capitalized $6.6 million of software development costs in fourth-quarter 2021 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $13.4 million in fourth-quarter 2021. * Our effective tax rates were 18.3% in fourth-quarter 2021 and 19.6% in fourth-quarter 2020. The decrease in the effective tax rate was primarily due to increased tax benefits associated with a higher volume of stock option exercises. * We repurchased 1.5 million shares of our common stock for $95.5 million during the fourth-quarter 2021 at an average price of $62.44 per share. For the year ended 2021, we repurchased 6.7 million shares of our common stock for $411.5 million at an average price of $61.00 per share. * Cash flow from operations was $149.2 million, or $1.06 per share, and free cash flow was $138.7 million during the fourth-quarter 2021.

Earnings Conference CallA conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Jan. 26, 2022. 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: 1785544.

About SEI(r)SEI (NASDAQ:SEIC) delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to solve problems, manage change, and help protect assets-for growth today and in the future. As of Dec. 31, 2021, SEI manages, advises, or administers approximately $1.3 trillion in assets. 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 the realization of such revenue, if any, * whether we will have sales momentum, * the effect of our acquisitions on our capabilities, competitive position and growth opportunities, * our strategic priorities and commitments and the degree to which we will execute on them, and * the degree to which we are well-positioned to seize growth opportunities that will lead to increased shareholder value.

We anticipate that we may deliver forward-looking statements during today's earnings call that include our current expectations as to the matters in this release and set forth above as well as:

* 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 potential benefits we may derive 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 backlog and pipelines, * the level of 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 and sales, * the elements of our long-term success, * the degree to which our business will be successful and what parties will be the beneficiaries of any such success, * the headwinds we will face and our strategies for how we may respond to these headwinds, * the margins that our businesses may generate, * the investments we may make in our technologies and personnel, * 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 and develop additional capabilities for 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, * our ability to build upon our fourth quarter results, 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 Months For the Twelve Months Ended Dec. 31, Ended Dec. 31,

2021 2020 2021 2020



Asset management, admin. and distribution fees $403,565 $353,610 $1,547,016$1,345,649

Information processing and software servicing fees 98,085 90,113 371,293 338,409



Total revenues 501,650 443,723 1,918,309 1,684,058



Subadvisory, distribution and other asset mgmt. costs 56,458 46,973 218,068 181,618

Software royalties and other information processing costs7,198 7,109 27,759 28,937

Compensation, benefits and other personnel 155,309 135,902 584,497 527,509

Stock-based compensation 10,278 6,556 41,451 27,014

Consulting, outsourcing and professional fees 57,543 59,566 223,200 227,916

Data processing and computer related 27,814 24,681 107,560 96,328

Facilities, supplies and other costs 19,909 17,467 69,760 64,915

Amortization 15,403 13,558 59,152 52,975

Depreciation 8,340 7,901 33,481 30,959



Total expenses 358,252 319,713 1,364,928 1,238,171



Income from operations 143,398 124,010 553,381 445,887



Net (loss) gain on investments (500) 1,024 (366) (286)

Interest and dividend income 934 986 3,649 6,568

Interest expense (209) (153) (563) (609)

Equity in earnings of unconsolidated affiliate 34,152 30,646 137,572 117,134



Income before income taxes 177,775 156,513 693,673 568,694



Income taxes 32,475 30,631 147,080 121,408



Net income $145,300 $125,882 $546,593 $447,286



Basic earnings per common share $1.04 $0.87 $3.87 $3.05



Shares used to calculate basic earnings per share 139,080 144,077 141,216 146,709



Diluted earnings per common share $1.03 $0.86 $3.81 $3.00



Shares used to calculate diluted earnings per share 141,305 146,140 143,312 149,003



Dividends declared per common share $0.40 $0.37 $0.77 $0.72

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

Dec. 31, Dec. 31,

2021 2020

Assets

Current Assets:

Cash and cash equivalents $825,210 $784,626

Restricted cash 351 3,101

Receivables from investment products 59,036 55,271

Receivables, net of allowance for doubtful accounts of $1,602 and $1,100 441,609 385,219

Securities owned 28,267 34,064

Other current assets 43,559 38,696

Total Current Assets 1,398,032 1,300,977



Property and Equipment, net of accumulated depreciation of $409,248 and 178,869 189,052 $378,639

Operating Lease Right-of-Use Assets 33,614 38,397

Capitalized Software, net of accumulated amortization of $545,307 and $491,739 243,446 270,977

Available for Sale and Equity Securities 129,541 105,419

Investments in Affiliated Funds, at fair value 6,916 6,166

Investment in Unconsolidated Affiliate 107,918 98,433

Goodwill and Intangible Assets, net 186,014 88,793

Deferred Contract Costs 36,236 33,781

Deferred Income Taxes 8,809 2,972

Other Assets, net 24,936 32,289

Total Assets $2,354,331$2,167,256



Liabilities and Equity

Current Liabilities:

Accounts payable $10,312 $7,766

Accrued liabilities 318,185 299,845

Current portion of long-term operating lease liabilities 11,328 8,579

Deferred revenue 9,721 1,085

Total Current Liabilities 349,546 317,275



Borrowings Under Revolving Credit Facility 40,000 -

Long-term Income Taxes Payable 803 803

Deferred Income Taxes 54,702 55,159

Long-term Operating Lease Liabilities 27,639 34,058

Other Long-term Liabilities 20,878 20,054

Total Liabilities 493,568 427,349



Shareholders' Equity:

Common stock, $0.01 par value, 750,000 shares authorized; 138,449 and 143,396 1,384 1,434 shares issued and outstanding

Capital in excess of par value 1,246,608 1,190,001

Retained earnings 632,614 565,270

Accumulated other comprehensive loss, net (19,843) (16,798)

Total Shareholders' Equity 1,860,763 1,739,907

Total Liabilities and Shareholders' Equity $2,354,331$2,167,256

ENDING ASSET BALANCES (In millions) (Unaudited)

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

2020 2021 2021 2021 2021

Private Banks:

Equity and fixed-income programs $25,498 $25,098 $26,264 $25,618 $26,281

Collective trust fund programs 6 7 7 6 6

Liquidity funds 3,778 3,793 3,654 3,988 4,724

Total assets under management $29,282 $28,898 $29,925 $29,612 $31,011

Client assets under administration 26,346 4,379 4,412 4,675 4,481

Total assets $55,628 $33,277 $34,337 $34,287 $35,492



Investment Advisors:

Equity and fixed-income programs $71,248 $73,819 $78,053 $78,560 $81,686

Liquidity funds 3,832 3,584 3,550 3,477 4,317

Total Platform assets under management$75,080 $77,403 $81,603 $82,037 $86,003

Platform-only assets (E) 11,862 12,538 13,566 13,728 14,564

Total Platform assets (E) $86,942 $89,941 $95,169 $95,765 $100,567



Institutional Investors:

Equity and fixed-income programs $90,869 $92,040 $93,010 $89,441 $91,719

Collective trust fund programs 98 95 5 5 5

Liquidity funds 2,128 2,909 2,516 2,599 2,118

Total assets under management $93,095 $95,044 $95,531 $92,045 $93,842

Client assets under advisement 4,063 4,333 4,566 4,698 4,857

Total assets $97,158 $99,377 $100,097 $96,743 $98,699



Investment Managers:

Collective trust fund programs $ 75,214$ 78,304$ 87,012$ 87,488$ 92,549

Liquidity funds 424 449 473 568 423

Total assets under management $75,638 $78,753 $87,485 $88,056 $92,972

Client assets under administration (A)760,397 831,819 875,942 861,605 907,377

Total assets $836,035 $910,572 $963,427 $949,661 $1,000,349



Investments in New Businesses:

Equity and fixed-income programs $1,711 $1,777 $1,924 $1,964 $2,096

Liquidity funds 162 289 191 202 240

Total assets under management $1,873 $2,066 $2,115 $2,166 $2,336

Client assets under administration 1,299 1,355 1,422 1,378 1,410

Total assets $3,172 $3,421 $3,537 $3,544 $3,746



LSV Asset Management:

Equity and fixed-income programs (B) $93,692 $101,565 $102,404 $97,604 $98,984



Total:

Equity and fixed-income programs (C) $283,018 $294,299 $301,655 $293,187 $300,766

Collective trust fund programs 75,318 78,406 87,024 87,499 92,560

Liquidity funds 10,324 11,024 10,384 10,834 11,822

Total assets under management $368,660 $383,729 $399,063 $391,520 $405,148

Client assets under advisement 5,362 5,688 5,988 6,076 6,267

Client assets under administration (D)786,743 836,198 880,354 866,280 911,858

Platform-only assets 11,862 12,538 13,566 13,728 14,564

Total assets $1,172,627 $1,238,153 $1,298,971 $1,277,604 $1,337,837

(A) Client assets under administration in the Investment Managers segment include $12.4 billion of assets that are at fee levels below our normal full-service assets (as of Dec. 31, 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 Dec. 31, 2021).

(C) Equity and fixed-income programs include $7.9 billion of assets invested in various asset allocation funds at Dec. 31, 2021.

(D) In addition to the numbers presented, SEI also administers an additional $14.4 billion in Funds of Funds assets (as of Dec. 31, 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)

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

2020 2021 2021 2021 2021

Private Banks:

Equity and fixed-income programs $24,284 $25,139 $26,056 $26,232 $25,999

Collective trust fund programs 6 6 7 6 6

Liquidity funds 3,712 3,876 3,833 3,916 4,452

Total assets under management $28,002 $29,021 $29,896 $30,154 $30,457

Client assets under administration 25,368 4,317 4,405 4,476 4,607

Total assets $53,370 $33,338 $34,301 $34,630 $35,064



Investment Advisors:

Equity and fixed-income programs $68,398 $73,240 $76,840 $79,602 $80,703

Liquidity funds 3,788 3,619 3,370 3,403 3,644

Total Platform assets under management$72,186 $76,859 $80,210 $83,005 $84,347

Platform-only assets (E) 11,214 12,206 13,292 13,863 14,341

Total Platform assets (E) $83,400 $89,065 $93,502 $96,868 $98,688



Institutional Investors:

Equity and fixed-income programs $86,277 $91,349 $93,458 $91,965 $90,557

Collective trust fund programs 102 96 68 5 5

Liquidity funds 2,271 2,621 2,681 2,742 2,391

Total assets under management $88,650 $94,066 $96,207 $94,712 $92,953

Client assets under advisement 3,746 4,146 4,516 4,658 4,812

Total assets $92,396 $98,212 $100,723 $99,370 $97,765



Investment Managers:

Collective trust fund programs $ 69,349$ 78,035$ 84,553$ 89,441$ 90,457

Liquidity funds 411 490 469 532 491

Total assets under management $69,760 $78,525 $85,022 $89,973 $90,948

Client assets under administration (A)754,350 817,330 853,810 851,183 879,718

Total assets $824,110 $895,855 $938,832 $941,156 $970,666



Investments in New Businesses:

Equity and fixed-income programs $1,634 $1,743 $1,870 $1,958 $2,053

Liquidity funds 165 169 236 205 197

Total assets under management $1,799 $1,912 $2,106 $2,163 $2,250

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

Total assets $3,017 $3,239 $3,512 $3,586 $3,673



LSV Asset Management:

Equity and fixed-income programs (B) $88,182 $97,476 $103,583 $99,924 $97,381



Total:

Equity and fixed-income programs (C) $268,775 $288,947 $301,807 $299,681 $296,693

Collective trust fund programs 69,457 78,137 84,628 89,452 90,468

Liquidity funds 10,347 10,775 10,589 10,798 11,175

Total assets under management $348,579 $377,859 $397,024 $399,931 $398,336

Client assets under advisement 4,964 5,473 5,922 6,081 6,235

Client assets under administration (D)779,718 821,647 858,215 855,659 884,325

Platform-only assets 11,214 12,206 13,292 13,863 14,341

Total assets $1,144,475 $1,217,185 $1,274,453 $1,275,534 $1,303,237

(A) Average client assets under administration in the Investment Managers segment during fourth-quarter 2021 include $12.3 billion that are at fee levels below our normal full-service assets.

(B) Equity and fixed-income programs include $2.3 billion of average assets managed by LSV in which fees are based on performance only during fourth-quarter 2021.

(C) Equity and fixed-income programs include $7.9 billion of average assets invested in various asset allocation funds during fourth-quarter 2021.

(D) In addition to the numbers presented, SEI also administers an additional $14.0 billion of average assets in Funds of Funds assets during fourth-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