SEI Reports First-Quarter 2022 Financial Results

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SEI Investments Company (NASDAQ:SEIC) reported first-quarter 2022 earnings with diluted EPS of $1.36, up 53% from $0.89 in Q1 2021, boosted by a one-time revenue event of $88 million. Revenues rose 28% to $581 million, driven by strong asset management fees despite adverse market conditions. Net income increased 47% to $190 million. Average assets under administration grew 9% to $893 billion. Operational expenses climbed 14% amid business growth. The company plans to use new technology investments for sustained growth.

Positive

• Diluted EPS increased 53% to $1.36.
• Revenues rose 28% to $581 million.
• Net income increased 47% to $190 million.
• Average assets under administration grew 9% to $893 billion.

Negative

• Adverse market conditions negatively impacted revenues from assets under management.
• One significant client termination resulted in a $88 million hit to revenue.
• Operational expenses increased by 14%.

OAKS, Pa., April 20, 2022 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the first-quarter 2022. Diluted earnings per share were $1.36 in first-quarter 2022 compared to $0.89 in first-quarter 2021. Diluted earnings per share reflect a one-time revenue event of $88.0 million, or $0.47 per share net of associated costs. 

Consolidated Overview
(In thousands, except earnings per share)		For the Three Months Ended March 31,
		2022		2021		%
Revenues		$581,443		$455,686		28%
Net income		190,308		129,470		47%
Diluted earnings per share		$1.36		$0.89		53%

 

"Our first-quarter financial profits were challenged by negative capital markets, but we achieved solid sales results and successfully implemented new business. We continue investing in our future through new technology and business initiatives to deliver best-in-class platforms and service to our markets and create new growth opportunities," said SEI Chairman and CEO Alfred P. West, Jr.

"SEI is uniquely positioned in the financial services industry for sustainable growth. I'm thrilled that Ryan Hicke will become SEI's next CEO, and I'm excited to see him lead the company into the future. His diverse, global experience at SEI informs his commitment to our company's strengths across our three pillars of expertise: investments, operations, and technology. With this change in leadership, I'm confident SEI has great days ahead.

"The strength of our leadership and talented workforce globally is key to driving SEI's enduring success and helping our clients manage change with confidence. Looking toward the future, we will make sound decisions to improve our results and continue to capitalize on market opportunities to deliver long-term value to our shareholders and build brave futures^SM for our employees, clients, and communities."

Summary of First-Quarter Results by Business Segment
(In thousands)		For the Three Months Ended March 31,
		2022		2021		%
Private Banks:
Revenues		$213,548		$117,608		82%
Expenses		121,955		110,724		10%
Operating Profit		91,593		6,884		NM
Operating Margin		43%		6%
Investment Advisors:
Revenues		119,230		113,294		5%
Expenses		64,520		55,027		17%
Operating Profit		54,710		58,267		(6)%
Operating Margin		46%		51%
Institutional Investors:
Revenues		86,839		84,499		3%
Expenses		45,358		39,158		16%
Operating Profit		41,481		45,341		(9)%
Operating Margin		48%		54%
Investment Managers:
Revenues		156,901		136,419		15%
Expenses		98,837		83,020		19%
Operating Profit		58,064		53,399		9%
Operating Margin		37%		39%
Investments in New Businesses:
Revenues		4,925		3,866		27%
Expenses		11,950		13,404		(11)%
Operating Loss		(7,025)		(9,538)		NM
Totals:
Revenues		$581,443		$455,686		28%
Expenses		342,620		301,333		14%
Corporate Overhead Expenses		24,024		21,516		12%
Income from Operations		$214,799		$132,837		62%

 

First-Quarter Business Highlights:

• Revenues from Asset management, administration, and distribution fees increased from higher assets under management and administration due to market appreciation during 2021 and positive cash flows from new and existing clients. The decline in market conditions during the first quarter 2022 negatively impacted our revenues from assets under management and administration and partially offset our revenue growth.
• A significant, uninstalled investment processing client terminated an agreement for convenience. As a result, we recorded one-time fees of $88.0 million during first-quarter 2022. This early termination fee is included in Information processing and software servicing fees of the Private Banks segment and reflects a diluted earnings per share impact of $0.47 net of associated costs.
• Our average assets under administration increased $71.8 billion, or 9%, to $893.4 billion in the first-quarter 2022, as compared to $821.6 billion during the first-quarter 2021 (see attached Average Asset Balances schedules for further details).
• Our average assets under management, excluding LSV, increased $13.2 billion, or 5%, to $293.6 billion in the first-quarter 2022, as compared to $280.4 billion during the first-quarter 2021 (see attached Average Asset Balances schedules for further details).
• Net sales events, excluding the cancelled contract item, in the Private Banks and Investment Managers segments during first-quarter 2022 were $26.6 million and are expected to generate net annualized recurring revenues of approximately $24.7 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 2022 were $2.1 million.
• Revenues from our acquisition of SEI Novus were $3.1 million during the first-quarter 2022. SEI Novus was acquired during the fourth-quarter 2021 and is reported in the Institutional Investors segment. The Institutional Investors segment also includes personnel, amortization, and other costs related to SEI Novus.
• 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 decreased to $32.5 million in the first-quarter 2022 as compared to $33.4 million in the first-quarter 2021 due to negative cash flows from existing clients and client losses, which offset the positive impact from market appreciation during 2021.
• We capitalized $6.6 million of software development costs in first-quarter 2022 for continued enhancements to the SEI Wealth Platform^SM (SWP). Amortization expense related to SWP was $13.6 million in first-quarter 2022.
• Our effective tax rates were 23.1% in first-quarter 2022 and 22.6% in first-quarter 2021. The increase in the effective tax rate was primarily due to decreased tax benefits associated with a lower volume of stock option exercises.
• We repurchased 1.7 million shares of our common stock for $100.1 million during the first-quarter 2022 at an average price of $58.43 per share.
• Cash flow from operations was $260.4 million, or $1.86 per share, and free cash flow was $244.6 million during the first-quarter 2022.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on April 20, 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: 8875578.

About SEI^®

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 March 31, 2022, 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 our investments will create growth opportunities,
• whether we are positioned for sustainable growth, and
• the degree to which we will make good decisions or capitalize on market opportunities that will deliver long-term 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,
• the margins that out businesses may generate,
• the degree to which one-time and transaction-based revenues during the quarter will be repeated,
• the competition for and cost of talent and the effect of these factors on our business,
• the headwinds we will face and our strategies for how we may respond to these headwinds,
• how we will manage our expenses,
• the degree to which our reported margins will decline, increase or normalize,
• the strategic initiatives and business segments that we will pursue and those in which we will invest,
• the success, if any, of the sales and strategic initiatives we pursue,
• the value of our backlog and the strength of our pipelines,
• our growth prospects,
• the timing of and our ability to integrate any acquisition targets that we may pursue, if any,
• the potential benefits we may derive from any of our acquisitions,
• the organic and inorganic opportunities that will drive our growth,
• the investments we may make in our technologies and personnel, 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, 2021, 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,
		2022		2021
Asset management, admin. and distribution fees		$394,097		$367,646
Information processing and software servicing fees		187,346		88,040
Total revenues		581,443		455,686
Subadvisory, distribution and other asset mgmt. costs		53,128		50,164
Software royalties and other information processing costs		7,547		5,742
Compensation, benefits and other personnel		160,484		137,221
Stock-based compensation		10,566		9,752
Consulting, outsourcing and professional fees		62,491		54,340
Data processing and computer related		29,816		25,721
Facilities, supplies and other costs		17,627		17,248
Amortization		16,887		14,352
Depreciation		8,098		8,309
Total expenses		366,644		322,849
Income from operations		214,799		132,837
Net (loss) gain on investments		(489)		332
Interest and dividend income		848		945
Interest expense		(250)		(123)
Equity in earnings of unconsolidated affiliate		32,459		33,350
Income before income taxes		247,367		167,341
Income taxes		57,059		37,871
Net income		$190,308		$129,470
Basic earnings per common share		$1.38		$0.90
Shares used to calculate basic earnings per share		137,935		143,201
Diluted earnings per common share		$1.36		$0.89
Shares used to calculate diluted earnings per share		139,712		145,306

 

 

SEI INVESTMENTS COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
		March 31,		December 31,
		2022		2021
Assets
Current Assets:
Cash and cash equivalents		$907,831		$831,407
Restricted cash		351		351
Receivables from investment products		57,584		59,036
Receivables, net of allowance for doubtful accounts of $1,388 and $1,602		437,844		441,609
Securities owned		31,258		28,267
Other current assets		46,115		43,559
Total Current Assets		1,480,983		1,404,229
Property and Equipment, net of accumulated depreciation of $417,041 and $409,248		180,458		178,869
Operating Lease Right-of-Use Assets		31,024		33,614
Capitalized Software, net of accumulated amortization of $558,861 and $545,307		236,481		243,446
Available for Sale and Equity Securities		134,717		129,541
Investments in Affiliated Funds, at fair value		7,270		6,916
Investment in Unconsolidated Affiliate		52,778		107,918
Goodwill		117,434		117,232
Intangible Assets, net of accumulated amortization of $20,969 and $17,716		65,339		68,782
Deferred Contract Costs		35,847		36,236
Deferred Income Taxes		2,706		2,983
Other Assets, net		27,569		24,936
Total Assets		$2,372,606		$2,354,702
Liabilities and Equity
Current Liabilities:
Accounts payable		$8,037		$10,312
Accrued liabilities		250,468		324,382
Current portion of long-term operating lease liabilities		11,219		11,328
Deferred revenue		15,422		9,721
Total Current Liabilities		285,146		355,743
Borrowings Under Revolving Credit Facility		30,000		40,000
Long-term Income Taxes Payable		803		803
Deferred Income Taxes		36,561		48,876
Long-term Operating Lease Liabilities		24,997		27,639
Other Long-term Liabilities		22,016		20,878
Total Liabilities		399,523		493,939
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 137,219 and 138,449      shares issued and outstanding		1,372		1,384
Capital in excess of par value		1,266,320		1,246,608
Retained earnings		733,572		632,614
Accumulated other comprehensive loss, net		(28,181)		(19,843)
Total Shareholders' Equity		1,973,083		1,860,763
Total Liabilities and Shareholders' Equity		$2,372,606		$2,354,702

 

 

ENDING ASSET BALANCES (In millions)  (Unaudited)
		Mar. 31,		Jun. 30,		Sept. 30,		Dec. 31,		Mar. 31,
		2021		2021		2021		2021		2022
Private Banks:
Equity and fixed-income programs		$25,098		$26,264		$25,618		$26,281		$25,335
Collective trust fund programs		7		7		6		6		7
Liquidity funds		3,793		3,654		3,988		4,724		4,225
Total assets under management		$28,898		$29,925		$29,612		$31,011		$29,567
Client assets under administration		4,379		4,412		4,675		4,481		4,449
Total assets		$33,277		$34,337		$34,287		$35,492		$34,016
Investment Advisors:
Equity and fixed-income programs		$73,819		$78,053		$78,560		$81,686		$77,614
Liquidity funds		3,584		3,550		3,477		4,317		4,610
Total Platform assets under management		$77,403		$81,603		$82,037		$86,003		$82,224
Platform-only assets (E)		12,538		13,566		13,728		14,564		14,151
Total Platform assets (E)		$89,941		$95,169		$95,765		$100,567		$96,375
Institutional Investors:
Equity and fixed-income programs		$92,040		$93,010		$89,441		$91,719		$87,358
Collective trust fund programs		95		5		5		5		6
Liquidity funds		2,909		2,516		2,599		2,118		2,150
Total assets under management		$95,044		$95,531		$92,045		$93,842		$89,514
Client assets under advisement		4,333		4,566		4,698		4,857		4,778
Total assets		$99,377		$100,097		$96,743		$98,699		$94,292
Investment Managers:
Collective trust fund programs		$78,304		$87,012		$87,488		$92,549		$85,411
Liquidity funds		449		473		568		423		284
Total assets under management		$78,753		$87,485		$88,056		$92,972		$85,695
Client assets under administration (A)		831,819		875,942		861,605		907,377		895,181
Total assets		$910,572		$963,427		$949,661		$1,000,349		$980,876
Investments in New Businesses:
Equity and fixed-income programs		$1,777		$1,924		$1,964		$2,096		$2,057
Liquidity funds		289		191		202		240		305
Total assets under management		$2,066		$2,115		$2,166		$2,336		$2,362
Client assets under administration		1,355		1,422		1,378		1,410		1,401
Total assets		$3,421		$3,537		$3,544		$3,746		$3,763
LSV Asset Management:
Equity and fixed-income programs (B)		$101,565		$102,404		$97,604		$98,984		$95,962
Total:
Equity and fixed-income programs (C)		$294,299		$301,655		$293,187		$300,766		$288,326
Collective trust fund programs		78,406		87,024		87,499		92,560		85,424
Liquidity funds		11,024		10,384		10,834		11,822		11,574
Total assets under management		$383,729		$399,063		$391,520		$405,148		$385,324
Client assets under advisement		5,688		5,988		6,076		6,267		6,179
Client assets under administration (D)		836,198		880,354		866,280		911,858		899,630
Platform-only assets		12,538		13,566		13,728		14,564		14,151
Total assets		$1,238,153		$1,298,971		$1,277,604		$1,337,837		$1,305,284

 

(A)	Client assets under administration in the Investment Managers segment include $12.9 billion of assets that are at fee levels below our normal full-service assets (as of March 31, 2022).
(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 March 31, 2022).
(C)	Equity and fixed-income programs include $7.4 billion of assets invested in various asset allocation funds at March 31, 2022.
(D)	In addition to the numbers presented, SEI also administers an additional $13.3 billion in Funds of Funds assets (as of March 31, 2022) 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)
		1st Qtr.		2nd Qtr.		3rd Qtr.		4th Qtr.		1st Qtr.
		2021		2021		2021		2021		2022
Private Banks:
Equity and fixed-income programs		$25,139		$26,056		$26,232		$25,999		$25,637
Collective trust fund programs		6		7		6		6		6
Liquidity funds		3,876		3,833		3,916		4,452		4,403
Total assets under management		$29,021		$29,896		$30,154		$30,457		$30,046
Client assets under administration		4,317		4,405		4,476		4,607		4,500
Total assets		$33,338		$34,301		$34,630		$35,064		$34,546
Investment Advisors:
Equity and fixed-income programs		$73,240		$76,840		$79,602		$80,703		$77,576
Liquidity funds		3,619		3,370		3,403		3,644		5,151
Total Platform assets under management		$76,859		$80,210		$83,005		$84,347		$82,727
Platform-only assets (E)		12,206		13,292		13,863		14,341		13,978
Total Platform assets (E)		$89,065		$93,502		$96,868		$98,688		$96,705
Institutional Investors:
Equity and fixed-income programs		$91,349		$93,458		$91,965		$90,557		$89,250
Collective trust fund programs		96		68		5		5		5
Liquidity funds		2,621		2,681		2,742		2,391		2,223
Total assets under management		$94,066		$96,207		$94,712		$92,953		$91,478
Client assets under advisement		4,146		4,516		4,658		4,812		4,889
Total assets		$98,212		$100,723		$99,370		$97,765		$96,367
Investment Managers:
Collective trust fund programs		$78,035		$84,553		$89,441		$90,457		$86,633
Liquidity funds		490		469		532		491		432
Total assets under management		$78,525		$85,022		$89,973		$90,948		$87,065
Client assets under administration (A)		817,330		853,810		851,183		879,718		888,854
Total assets		$895,855		$938,832		$941,156		$970,666		$975,919
Investments in New Businesses:
Equity and fixed-income programs		$1,743		$1,870		$1,958		$2,053		$2,025
Liquidity funds		169		236		205		197		286
Total assets under management		$1,912		$2,106		$2,163		$2,250		$2,311
Client assets under advisement		1,327		1,406		1,423		1,423		1,397
Total assets		$3,239		$3,512		$3,586		$3,673		$3,708
LSV Asset Management:
Equity and fixed-income programs (B)		$97,476		$103,583		$99,924		$97,381		$96,449
Total:
Equity and fixed-income programs (C)		$288,947		$301,807		$299,681		$296,693		$290,937
Collective trust fund programs		78,137		84,628		89,452		90,468		86,644
Liquidity funds		10,775		10,589		10,798		11,175		12,495
Total assets under management		$377,859		$397,024		$399,931		$398,336		$390,076
Client assets under advisement		5,473		5,922		6,081		6,235		6,286
Client assets under administration (D)		821,647		858,215		855,659		884,325		893,354
Platform-only assets		12,206		13,292		13,863		14,341		13,978
Total assets		$1,217,185		$1,274,453		$1,275,534		$1,303,237		$1,303,694

 

(A)	Average client assets under administration in the Investment Managers segment during first-quarter 2022 include $12.7 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 first-quarter 2022.
(C)	Equity and fixed-income programs include $7.6 billion of average assets invested in various asset allocation funds during first-quarter 2022.
(D)	In addition to the numbers presented, SEI also administers an additional $13.8 billion of average assets in Funds of Funds assets during first-quarter 2022 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

View original content:https://www.prnewswire.com/news-releases/sei-reports-first-quarter-2022-financial-results-301529476.html

SOURCE SEI Investments Company

FAQ

What were SEIC's earnings for Q1 2022?

SEIC reported diluted earnings per share of $1.36 for Q1 2022.

How did SEIC's revenues perform in Q1 2022?

Revenues increased by 28% to $581 million in Q1 2022.

What is the outlook for SEIC following the Q1 2022 results?

SEIC aims to leverage new technology investments and market opportunities for sustainable growth.

What impact did market conditions have on SEIC's business in Q1 2022?

Negative market conditions affected revenues from assets under management during Q1 2022.