SEI Reports First-Quarter 2021 Financial Results

Rhea-AI Summary

SEI Investments Company (NASDAQ:SEIC) reported a strong performance in Q1 2021, with diluted EPS increasing to $0.89 from $0.72 year-over-year. Revenues reached $455.7 million, a 10% increase from $414.8 million in Q1 2020. Net income grew 19% to $129.5 million. Key segments showed positive revenue growth: Investment Managers up 17%, Investment Advisors up 11%, and Institutional Investors up 7%. Average assets under administration rose to $821.6 billion, a 21% increase. However, operational expenses increased by 5% to $301.3 million, reflecting investments in new business opportunities.

Positive

• Diluted earnings per share increased by 24% to $0.89.
• Total revenues grew 10% year-over-year, reaching $455.7 million.
• Net income increased by 19% to $129.5 million.
• Investment Managers segment revenues up 17% to $136.4 million.
• Average assets under administration rose to $821.6 billion, a 21% increase.

Negative

• Operational expenses rose by 5% to $301.3 million, impacting profit margins.
• Negative net sales events in Investment Advisors and Institutional Investors segments totaled $12.7 million.

OAKS, Pa., April 21, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the first-quarter 2021. Diluted earnings per share were $0.89 in first-quarter 2021 compared to $0.72 in first-quarter 2020.

Consolidated Overview
(In thousands, except earnings per share)		For the Three Months Ended March 31,
		2021			2020			%
Revenues		$455,686			$414,762			10%
Net income		129,470			109,242			19%
Diluted earnings per share		$0.89			$0.72			24%

"Our first-quarter results reflect positive capital market performance. We continue to execute our business strategies across the company and invest in the strength and expansion of the solutions we bring to our target markets," said Alfred P. West, Jr., SEI Chairman and CEO. "We had solid sales results in processing and operational services, helping us offset the anticipated headwinds our asset management businesses face."

"Our long-term success is built on a strong foundation of advancing our suite of solutions, leading in our markets, effectively executing strategies, and soundly managing finances—all backed by a talented workforce. We will continue to drive our success forward for the benefit of our clients, employees, communities and shareholders."

Summary of First-Quarter Results by Business Segment

(In thousands)		For the Three Months Ended March 31,
		2021		2020		%
Private Banks:
Revenues		$117,608		$113,221		4%
Expenses		110,724		110,653		—%
Operating Profit		6,884		2,568		168%
Operating Margin		6%		2%
Investment Advisors:
Revenues		113,294		102,321		11%
Expenses		55,027		52,432		5%
Operating Profit		58,267		49,889		17%
Operating Margin		51%		49%
Institutional Investors:
Revenues		84,499		79,203		7%
Expenses		39,158		38,267		2%
Operating Profit		45,341		40,936		11%
Operating Margin		54%		52%
Investment Managers:
Revenues		136,419		116,629		17%
Expenses		83,020		74,289		12%
Operating Profit		53,399		42,340		26%
Operating Margin		39%		36%
Investments in New Businesses:
Revenues		3,866		3,388		14%
Expenses		13,404		10,910		23%
Operating Loss		(9,538)		(7,522)		NM
Totals:
Revenues		$455,686		$414,762		10%
Expenses		301,333		286,551		5%
Corporate Overhead Expenses		21,516		17,983		20%
Income from Operations		$132,837		$110,228		21%

First-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 $142.4 billion, or 21%, to $821.6 billion in the first-quarter 2021, as compared to $679.2 billion during the first-quarter 2020 (see attached Average Asset Balances schedules for further details).
• Average assets under management, excluding LSV, increased $43.2 billion, or 18%, to $280.4 billion in the first-quarter 2021, as compared to $237.2 billion during the first-quarter 2020 (see attached Average Asset Balances schedules for further details).
• Net sales events in the Private Banks and Investment Managers segments during first-quarter 2021 were $17.5 million, and are expected to generate net annualized recurring revenues of approximately $13.0 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 first-quarter 2021 were negative $12.7 million, mainly related to net losses in our legacy Institutional client base of $9.9 million and a single product use client in the AMD business line of the Private Banks segment.
• The increase in operational expenses was primarily due to increased consulting costs related to our continued investments in new business opportunities, such as our One SEI^SM 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.
• Earnings from LSV increased by $3.5 million, or 12%, to $33.4 million in first-quarter 2021, as compared to $29.9 million in first-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 first-quarter 2021 increased $2.8 million as compared to first-quarter 2020 due to equity awards in late 2020.
• We recorded a net gain from investments of approximately $332 thousand during the first-quarter 2021 as compared to a net loss of approximately $4.0 million during the first-quarter 2020.
• We capitalized $6.3 million of software development costs in first-quarter 2021 for continued enhancements to the SEI Wealth Platform^SM (SWP). Amortization expense related to SWP was $11.9 million in first-quarter 2021.
• Effective tax rates were 22.6% in first-quarter 2021 and 21.5% in first-quarter 2020. The increase in our effective tax rate was due to decreased tax benefits associated with a lower volume of stock option exercises.
• We repurchased 1.2 million shares of our common stock for $66.9 million during the first-quarter 2021.
• Cash flow from operations was $136.6 million, or $0.94 per share, and free cash flow was $126.0 million during the first-quarter 2021.

Earnings Conference Call

A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on April 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: 1599078.

About SEI

After 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 March 31, 2021, 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 $384 billion in assets under management and $836 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 we will invest in the strength and expansion of our solutions,
• our strategic priorities 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 implementations and conversions,
• our ability to expand our relationships and revenue opportunities with new and existing 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 strength of our pipelines,
• 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 or increase,
• 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 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 Ended March 31,
		2021			2020
Asset management, admin. and distribution fees		$367,646			$331,853
Information processing and software servicing fees		88,040			82,909
Total revenues		455,686			414,762
Subadvisory, distribution and other asset mgmt. costs		50,164			45,337
Software royalties and other information processing costs		5,742			7,447
Compensation, benefits and other personnel		137,221			131,481
Stock-based compensation		9,752			6,929
Consulting, outsourcing and professional fees		54,340			53,290
Data processing and computer related		25,721			22,704
Facilities, supplies and other costs		17,248			16,796
Amortization		14,352			13,077
Depreciation		8,309			7,473
Total expenses		322,849			304,534
Income from operations		132,837			110,228
Net gain (loss) on investments		332			(3,989)
Interest and dividend income		945			3,203
Interest expense		(123)			(152)
Equity in earnings of unconsolidated affiliate		33,350			29,907
Income before income taxes		167,341			139,197
Income taxes		37,871			29,955
Net income		$129,470			$109,242
Basic earnings per common share		$0.90			$0.73
Shares used to calculate basic earnings per share		143,201			149,468
Diluted earnings per common share		$0.89			$0.72
Shares used to calculate diluted earnings per share		145,306			152,368

 

SEI INVESTMENTS COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
		March 31,			December 31,
		2021			2020
Assets
Current Assets:
Cash and cash equivalents		$782,582			$784,626
Restricted cash		3,101			3,101
Receivables from investment products		57,291			55,271
Receivables, net of allowance for doubtful accounts of $2,307 and $1,100		406,028			385,219
Securities owned		33,040			34,064
Other current assets		42,809			38,696
Total Current Assets		1,324,851			1,300,977
Property and Equipment, net of accumulated depreciation of $386,319 and $378,639		184,253			189,052
Operating Lease Right-of-Use Assets		37,762			38,397
Capitalized Software, net of accumulated amortization of $505,112 and $491,739		263,964			270,977
Available for Sale and Equity Securities		114,973			105,419
Investments in Affiliated Funds, at fair value		6,623			6,166
Investment in Unconsolidated Affiliate		51,743			98,433
Goodwill		64,489			64,489
Intangible Assets, net of accumulated amortization of $13,377 and $12,456		34,383			24,304
Deferred Contract Costs		33,430			33,781
Deferred Income Taxes		2,706			2,972
Other Assets, net		31,724			32,289
Total Assets		$2,150,901			$2,167,256
Liabilities and Equity
Current Liabilities:
Accounts payable		$5,529			$7,766
Accrued liabilities		199,235			299,845
Current portion of long-term operating lease liabilities		9,813			8,579
Deferred revenue		1,335			1,085
Total Current Liabilities		215,912			317,275
Long-term Income Taxes Payable		803			803
Deferred Income Taxes		50,892			55,159
Long-term Operating Lease Liabilities		33,089			34,058
Other Long-term Liabilities		21,097			20,054
Total Liabilities		321,793			427,349
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 142,701 and 143,396 shares issued and outstanding		1,427			1,434
Capital in excess of par value		1,208,433			1,190,001
Retained earnings		634,651			565,270
Accumulated other comprehensive loss, net		(15,403)			(16,798)
Total Shareholders' Equity		1,829,108			1,739,907
Total Liabilities and Shareholders' Equity		$2,150,901			$2,167,256

 

ENDING ASSET BALANCES (In millions)  (Unaudited)
		Mar. 31,			Jun. 30,			Sept. 30,			Dec. 31			Mar. 31,
		2020			2020			2020			2020			2021
Private Banks:
Equity and fixed-income programs		$21,160			$22,974			$23,499			$25,498			$25,098
Collective trust fund programs		5			5			6			6			7
Liquidity funds		4,143			4,291			3,718			3,778			3,793
Total assets under management		$25,308			$27,270			$27,223			$29,282			$28,898
Client assets under administration		21,497			23,903			24,174			26,346			4,379
Total assets		$46,805			$51,173			$51,397			$55,628			$33,277
Investment Advisors:
Equity and fixed-income programs		$54,856			$59,958			$65,581			$71,247			$73,818
Collective trust fund programs		2			3			3			1			1
Liquidity funds		5,969			6,648			3,866			3,832			3,584
Total assets under management		$60,827			$66,609			$69,450			$75,080			$77,403
Institutional Investors:
Equity and fixed-income programs		$72,399			$80,257			$83,846			$90,869			$92,040
Collective trust fund programs		94			103			101			98			95
Liquidity funds		3,672			1,924			2,096			2,128			2,909
Total assets under management		$76,165			$82,284			$86,043			$93,095			$95,044
Client assets under advisement		3,406			3,326			3,618			4,063			4,333
Total assets		$79,571			$85,610			$89,661			$97,158			$99,377
Investment Managers:
Collective trust fund programs		48,226			58,178			63,277			75,214			78,304
Liquidity funds		392			664			389			424			449
Total assets under management		$48,618			$58,842			$63,666			$75,638			$78,753
Client assets under administration (A)		610,794			668,611			730,369			760,397			831,819
Total assets		$659,412			$727,453			$794,035			$836,035			$910,572
Investments in New Businesses:
Equity and fixed-income programs		$1,484			$1,498			$1,572			$1,711			$1,777
Liquidity funds		152			194			169			162			289
Total assets under management		$1,636			$1,692			$1,741			$1,873			$2,066
Client assets under advisement		1,056			1,193			1,179			1,299			1,355
Total assets		$2,692			$2,885			$2,920			$3,172			$3,421
LSV Asset Management:
Equity and fixed-income programs (B)		$70,851			$81,134			$82,051			$93,692			$101,565
Total:
Equity and fixed-income programs (C)		$220,750			$245,821			$256,549			$283,017			$294,298
Collective trust fund programs		48,327			58,289			63,387			75,319			78,407
Liquidity funds		14,328			13,721			10,238			10,324			11,024
Total assets under management		$283,405			$317,831			$330,174			$368,660			$383,729
Client assets under advisement		4,462			4,519			4,797			5,362			5,688
Client assets under administration (D)		632,291			692,514			754,543			786,743			836,198
Total assets		$920,158			$1,014,864			$1,089,514			$1,160,765			$1,225,615

(A)	Client assets under administration in the Investment Managers segment include $54.6 billion of assets that are at fee levels below our normal full-service assets (as of March 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 March 31, 2021).
(C)	Equity and fixed-income programs include $7.9 billion of assets invested in various asset allocation funds at March 31, 2021.
(D)	In addition to the numbers presented, SEI also administers an additional $13.3 billion in Funds of Funds assets (as of March 31, 2021) on which SEI does not earn an administration fee.

 

AVERAGE ASSET BALANCES (In millions) (Unaudited)
		1st Qtr.			2nd Qtr.			3rd Qtr.			4th Qtr.			1st Qtr.
		2020			2020			2020			2020			2021
Private Banks:
Equity and fixed-income programs		$24,657			$22,229			$23,740			$24,284			$25,139
Collective trust fund programs		4			5			7			6			6
Liquidity funds		3,581			4,366			3,948			3,712			3,876
Total assets under management		$28,242			$26,600			$27,695			$28,002			$29,021
Client assets under administration		24,840			23,819			25,295			25,368			4,317
Total assets		$53,082			$50,419			$52,990			$53,370			$33,338
Investment Advisors:
Equity and fixed-income programs		$64,933			$57,429			$64,479			$68,396			$73,239
Collective trust fund programs		3			3			3			2			1
Liquidity funds		3,284			6,923			4,569			3,788			3,619
Total assets under management		$68,220			$64,355			$69,051			$72,186			$76,859
Institutional Investors:
Equity and fixed-income programs		$79,926			$77,037			$82,830			$86,277			$91,349
Collective trust fund programs		86			100			102			102			96
Liquidity funds		2,342			2,476			2,120			2,271			2,621
Total assets under management		$82,354			$79,613			$85,052			$88,650			$94,066
Client assets under advisement		3,760			3,362			3,565			3,746			4,146
Total assets		$86,114			$82,975			$88,617			$92,396			$98,212
Investment Managers:
Collective trust fund programs		55,952			54,061			62,028			69,349			78,035
Liquidity funds		617			482			565			411			490
Total assets under management		$56,569			$54,543			$62,593			$69,760			$78,525
Client assets under administration (A)		654,386			649,012			713,528			754,350			817,330
Total assets		$710,955			$703,555			$776,121			$824,110			$895,855
Investments in New Businesses:
Equity and fixed-income programs		$1,663			$1,468			$1,560			$1,634			$1,743
Liquidity funds		168			182			180			165			169
Total assets under management		$1,831			$1,650			$1,740			$1,799			$1,912
Client assets under advisement		1,222			1,148			1,206			1,218			1,327
Total assets		$3,053			$2,798			$2,946			$3,017			$3,239
LSV Asset Management:
Equity and fixed-income programs (B)		$88,059			$80,395			$83,536			$88,182			$97,476
Total:
Equity and fixed-income programs (C)		$259,238			$238,558			$256,145			$268,773			$288,946
Collective trust fund programs		56,045			54,169			62,140			69,459			78,138
Liquidity funds		9,992			14,429			11,382			10,347			10,775
Total assets under management		$325,275			$307,156			$329,667			$348,579			$377,859
Client assets under advisement		4,982			4,510			4,771			4,964			5,473
Client assets under administration (D)		679,226			672,831			738,823			779,718			821,647
Total assets		$1,009,483			$984,497			$1,073,261			$1,133,261			$1,204,979

(A)	Average client assets under administration in the Investment Managers segment during first-quarter 2021 include $53.8 billion that are at fee levels below our normal full-service assets.
(B)	Equity and fixed-income programs include $2.2 billion of average assets managed by LSV in which fees are based on performance only during first-quarter 2021.
(C)	Equity and fixed-income programs include $7.9 billion of average assets invested in various asset allocation funds during first-quarter 2021.
(D)	In addition to the numbers presented, SEI also administers an additional $13.2 billion of average assets in Funds of Funds assets during first-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

FAQ

What were SEIC's earnings results for Q1 2021?

SEIC reported diluted earnings per share of $0.89 for Q1 2021, up 24% from $0.72 in Q1 2020.

How did SEI Investments perform in terms of revenue in Q1 2021?

SEI Investments reported revenues of $455.7 million in Q1 2021, a 10% increase from $414.8 million in Q1 2020.

What was the trend in net income for SEIC in the first quarter of 2021?

Net income for SEIC in Q1 2021 was $129.5 million, reflecting a 19% increase over the previous year.

What are the key drivers of SEIC's revenue growth in Q1 2021?

Revenue growth was primarily driven by increases in asset management, administration, and distribution fees due to higher assets under administration.

What challenges did SEIC face in Q1 2021?

SEIC faced negative net sales events totaling $12.7 million in its Investment Advisors and Institutional Investors segments.