SEI Reports Fourth-Quarter 2020 Financial Results

Rhea-AI Summary

SEI Investments Company (NASDAQ:SEIC) reported fourth-quarter 2020 earnings with diluted EPS at $0.86, a 2% increase from $0.84 in Q4 2019. Revenues rose 5% to $443.7 million, while net income decreased 2% to $125.9 million. For the year, revenues grew 2% to $1.68 billion, but net income fell 11% to $447.3 million.

Sales events totaled $8.8 million in Q4, expected to yield $4.9 million in annual recurring revenues. The average assets under administration increased 16% to $779.7 billion.

Positive

• Q4 revenues increased 5% to $443.7 million.
• Sales events totaled $8.8 million, projected to generate $4.9 million in annual recurring revenues.
• Average assets under administration rose 16% to $779.7 billion.

Negative

• Net income declined 2% to $125.9 million in Q4.
• Net income for 2020 decreased 11% to $447.3 million.
• Operating profit in Private Banks segment dropped 67% year-over-year.

OAKS, Pa., Jan. 27, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the fourth-quarter 2020. Diluted earnings per share were $0.86 in fourth-quarter 2020 compared to $0.84 in fourth-quarter 2019.

Consolidated Overview
(In thousands, except earnings per share)		For the Three Months Ended Dec. 31,								For the Twelve Months Ended Dec. 31,
		2020			2019			%		2020			2019			%
Revenues		$443,723			$423,225			5%		$1,684,058			$1,649,885			2%
Net income		125,882			128,737			(2)%		447,286			501,426			(11)%
Diluted earnings per share		$0.86			$0.84			2%		$3.00			$3.24			(7)%

"Our financial results for 2020 reflect steady recovery from the pandemic's impact on the markets we serve. The health and safety of our workforce continue to be a priority, and I want to thank all of our employees and the firms that support us for helping us stay safe and thrive," said Alfred P. West, Jr., SEI Chairman and CEO.

"We're living and operating in extraordinary times, but we are unwavering in our focus on executing our long-term strategy to be the provider of choice in the wealth and investment management markets. We believe we have made significant progress on our One SEI approach, making all of our assets available to all of our markets, delivering new, dynamic solutions and creating new opportunities. Our solutions, backed by our talented workforce, are what uniquely position us to capture growth opportunities that will lead to increased shareholder value. Despite 2020's challenging environment, our investments and success in adding new clients and building our backlog of new revenue situate us well for the future."

Summary of Fourth-Quarter Results by Business Segment

(In thousands)		For the Three Months Ended Dec. 31,								For the Twelve Months Ended Dec. 31,
		2020			2019			%		2020			2019			%
Private Banks:
Revenues		$119,654			$118,675			1%		$455,393			$470,276			(3)%
Expenses		115,039			113,596			1%		446,481			443,136			1%
Operating Profit		4,615			5,079			(9)%		8,912			27,140			(67)%
Operating Margin		4	%		4	%				2	%		6	%
Investment Advisors:
Revenues		108,346			105,862			2%		407,564			403,778			1%
Expenses		51,813			53,939			(4)%		205,913			208,508			(1)%
Operating Profit		56,533			51,923			9%		201,651			195,270			3%
Operating Margin		52	%		49	%				49	%		48	%
Institutional Investors:
Revenues		82,318			80,503			2%		317,627			322,062			(1)%
Expenses		36,893			38,554			(4)%		149,909			153,937			(3)%
Operating Profit		45,425			41,949			8%		167,718			168,125			—%
Operating Margin		55	%		52	%				53	%		52	%
Investment Managers:
Revenues		129,647			114,759			13%		489,462			440,796			11%
Expenses		80,204			72,698			10%		308,999			282,024			10%
Operating Profit		49,443			42,061			18%		180,463			158,772			14%
Operating Margin		38	%		37	%				37	%		36	%
Investments in New Businesses:
Revenues		3,758			3,426			10%		14,012			12,973			8%
Expenses		15,180			8,997			69%		52,871			29,660			78%
Operating Loss		(11,422)			(5,571)			NM		(38,859)			(16,687)			NM
Totals:
Revenues		$443,723			$423,225			5%		$1,684,058			$1,649,885			2%
Expenses		299,129			287,784			4%		1,164,173			1,117,265			4%
Corporate Overhead Expenses		20,584			19,351			6%		73,998			72,196			2%
Income from Operations		$124,010			$116,090			7%		$445,887			$460,424			(3)%

Fourth-Quarter Business Highlights:

• Sales events, net of client losses, during fourth-quarter 2020 totaled approximately $8.8 million and are expected to generate net annualized recurring revenues of approximately $4.9 million when contract values are fully realized. For the year ended 2020, sales events, net of client losses, totaled $94.0 million and are expected to generate net annualized recurring revenues of approximately $68.6 million when contract values are fully realized.
• Revenues from Asset management, administration, and distribution fees increased primarily from higher assets under administration in our Investment Managers segment due to sales of new business and market appreciation.
• Our average assets under administration increased $108.2 billion, or 16%, to $779.7 billion in the fourth-quarter 2020, as compared to $671.5 billion during the fourth-quarter 2019 (see attached Average Asset Balances schedules for further details).
• Our average assets under management, excluding LSV, increased $21.2 billion, or 9%, to $260.4 billion in the fourth-quarter 2020, as compared to $239.2 billion during the fourth-quarter 2019 (see attached Average Asset Balances schedules for further details).
• The increase in our operational expenses was primarily due to increased consulting costs related to our continued investments in new business opportunities, such as our One SEI 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, as our sales and client relationship personnel adapted to COVID-19 restrictions.
• Our earnings from LSV decreased by $8.5 million, or 22%, to $30.6 million in fourth-quarter 2020 as compared to $39.1 million in fourth-quarter 2019. The decrease in earnings was primarily due to lower assets under management from market depreciation, negative cash flows from existing clients and client losses. LSV's revenues were $102.1 million in the fourth-quarter 2020, as compared to $126.5 million during the fourth-quarter of 2019.
• Stock-based compensation expense in fourth-quarter 2020 decreased $2.5 million as compared to fourth-quarter 2019 primarily due to a change in our estimate of the timing of when stock option vesting targets would be achieved. We expect stock-based compensation expense during 2021 to be approximately $42.7 million as compared to $27.0 million during 2020 as a result of new options granted in fourth-quarter 2020 net of awards granted in the prior year.
• We capitalized $5.5 million of software development costs in fourth-quarter 2020, which includes $5.0 million for continued enhancements to the SEI Wealth Platform^SM (SWP). Amortization expense related to capitalized software was $12.6 million in fourth-quarter 2020.
• Our effective tax rates were 19.6% in fourth-quarter 2020 and 19.5% in fourth-quarter 2019.
• We repurchased 1.8 million shares of our common stock for $99.1 million during the fourth-quarter 2020 at an average price of $54.36 per share. For the year ended 2020, we repurchased 8.0 million shares of our common stock for $424.7 million at an average price of $53.04 per share.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Jan. 27, 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: 5584674.

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 Dec. 31, 2020, 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 $369 billion in assets under management and $787 billion in client assets under administration. For more information, visit seic.com.

This release contains, and the comments we expect to deliver during the earnings call referenced above will contain, 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 in today's release include our current expectations as to:

• revenue that we believe will be generated by sales events that occurred during the quarter,
• the rebound of our business,
• our strategic priorities and the degree to which we will execute on them,
• whether our solutions position us to capture growth opportunities or will lead to increased shareholder value, and
• whether our investments and new clients and backlog of new revenue situate us well for the future.

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,
• how we will manage our expenses,
• 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, 2019, filed with the Securities and Exchange Commission.

Investor Contact:	Media Contact:
Lindsey Opsahl	Leslie Wojcik
SEI	SEI
+1 610-676-4052	+1 610-676-4191
lopsahl@seic.com	lwojcik@seic.com

 

SEI INVESTMENTS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
		For the Three Months       Ended Dec. 31,						For the Twelve Months       Ended Dec. 31,
		2020			2019			2020			2019
Asset management, admin. and distribution fees		$353,610			$337,232			$1,345,649			$1,307,044
Information processing and software servicing fees		90,113			85,993			338,409			342,841
Total revenues		443,723			423,225			1,684,058			1,649,885
Subadvisory, distribution and other asset mgmt. costs		46,973			46,458			181,618			181,418
Software royalties and other information processing costs		7,109			7,274			28,937			29,993
Compensation, benefits and other personnel		135,902			131,004			527,509			517,917
Stock-based compensation		6,556			9,027			27,014			24,582
Consulting, outsourcing and professional fees		59,566			50,235			227,916			194,560
Data processing and computer related		24,681			22,544			96,328			88,058
Facilities, supplies and other costs		17,467			20,307			64,915			72,078
Amortization		13,558			13,012			52,975			51,419
Depreciation		7,901			7,274			30,959			29,436
Total expenses		319,713			307,135			1,238,171			1,189,461
Income from operations		124,010			116,090			445,887			460,424
Net gain (loss) on investments		1,024			1,053			(286)			3,174
Interest and dividend income		986			3,845			6,568			16,582
Interest expense		(153)			(153)			(609)			(630)
Equity in earnings of unconsolidated affiliate		30,646			39,133			117,134			151,891
Income before income taxes		156,513			159,968			568,694			631,441
Income taxes		30,631			31,231			121,408			130,015
Net income		$125,882			$128,737			$447,286			$501,426
Basic earnings per common share		$0.87			$0.86			$3.05			$3.31
Shares used to calculate basic earnings per share		144,077			150,131			146,709			151,540
Diluted earnings per common share		$0.86			$0.84			$3.00			$3.24
Shares used to calculate diluted earnings per share		146,140			153,672			149,003			154,901
Dividends declared per common share		$0.37			$0.35			$0.72			$0.68

 

SEI INVESTMENTS COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
		Dec. 31,			Dec. 31,
		2020			2019
Assets
Current Assets:
Cash and cash equivalents		$784,626			$841,446
Restricted cash		3,101			3,101
Receivables from investment products		55,271			54,165
Receivables, net of allowance for doubtful accounts of $1,100 and $1,201		385,219			340,358
Securities owned		34,064			33,486
Other current assets		38,696			32,289
Total Current Assets		1,300,977			1,304,845
Property and Equipment, net of accumulated depreciation of $378,639 and $353,453		189,052			160,859
Operating Lease Right-of-Use Assets		38,397			42,789
Capitalized Software, net of accumulated amortization of $491,739 and $442,677		270,977			296,068
Investments Available for Sale		105,419			116,917
Investments in Affiliated Funds, at fair value		6,166			5,988
Investment in Unconsolidated Affiliate		98,433			67,413
Goodwill		64,489			64,489
Intangible Assets, net of accumulated amortization of $12,456 and $8,773		24,304			27,987
Deferred Contract Costs		33,781			30,991
Deferred Income Taxes		2,972			2,822
Other Assets, net		32,289			30,202
Total Assets		$2,167,256			$2,151,370
Liabilities and Equity
Current Liabilities:
Accounts payable		$7,766			$4,423
Accrued liabilities		299,845			272,801
Current portion of long-term operating lease liabilities		8,579			9,156
Deferred revenue		1,085			7,185
Total Current Liabilities		317,275			293,565
Long-term Taxes Payable		803			803
Deferred Income Taxes		55,159			55,722
Long-term Operating Lease Liabilities		34,058			38,450
Other Long-term Liabilities		20,054			24,052
Total Liabilities		427,349			412,592
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 143,396 and 149,745 shares issued and outstanding		1,434			1,497
Capital in excess of par value		1,190,001			1,158,900
Retained earnings		565,270			601,885
Accumulated other comprehensive loss, net		(16,798)			(23,504)
Total Shareholders' Equity		1,739,907			1,738,778
Total Liabilities and Shareholders' Equity		$2,167,256			$2,151,370

 

ENDING ASSET BALANCES (In millions)  (Unaudited)
		Dec. 31,				Mar. 31,				Jun. 30,				Sept. 30,				Dec. 31,
		2019				2020				2020				2020				2020
Private Banks:
Equity and fixed-income programs		$23,851				$21,160				$22,974				$23,499				$25,498
Collective trust fund programs		4				5				5				6				6
Liquidity funds		3,405				4,143				4,291				3,718				3,778
Total assets under management		$27,260				$25,308				$27,270				$27,223				$29,282
Client assets under administration		25,801				21,497				23,903				24,174				26,346
Total assets		$53,061				$46,805				$51,173				$51,397				$55,628
Investment Advisors:
Equity and fixed-income programs		$67,895				$54,856				$59,958				$65,581				$71,247
Collective trust fund programs		4				2				3				3				1
Liquidity funds		2,887				5,969				6,648				3,866				3,832
Total assets under management		$70,786				$60,827				$66,609				$69,450				$75,080
Institutional Investors:
Equity and fixed-income programs		$84,291				$72,399				$80,257				$83,846				$90,869
Collective trust fund programs		83				94				103				101				98
Liquidity funds		1,746				3,672				1,924				2,096				2,128
Total assets under management		$86,120				$76,165				$82,284				$86,043				$93,095
Client assets under advisement		3,948				3,406				3,326				3,618				4,063
Total assets		$90,068				$79,571				$85,610				$89,661				$97,158
Investment Managers:
Collective trust fund programs		$	58,070			$	48,226			$	58,178			$	63,277			$	75,214
Liquidity funds		479				392				664				389				424
Total assets under management		$58,549				$48,618				$58,842				$63,666				$75,638
Client assets under administration (A)		657,541				610,794				668,611				730,369				760,397
Total assets		$716,090				$659,412				$727,453				$794,035				$836,035
Investments in New Businesses:
Equity and fixed-income programs		$1,688				$1,484				$1,498				$1,572				$1,711
Liquidity funds		158				152				194				169				162
Total assets under management		$1,846				$1,636				$1,692				$1,741				$1,873
Client assets under advisement		1,343				1,056				1,193				1,179				1,299
Total assets		$3,189				$2,692				$2,885				$2,920				$3,172
LSV Asset Management:
Equity and fixed-income programs (B)		$107,476				$70,851				$81,134				$82,051				$93,692
Total:
Equity and fixed-income programs (C)		$285,201				$220,750				$245,821				$256,549				$283,017
Collective trust fund programs		58,161				48,327				58,289				63,387				75,319
Liquidity funds		8,675				14,328				13,721				10,238				10,324
Total assets under management		$352,037				$283,405				$317,831				$330,174				$368,660
Client assets under advisement		5,291				4,462				4,519				4,797				5,362
Client assets under administration (D)		683,342				632,291				692,514				754,543				786,743
Total assets		$1,040,670				$920,158				$1,014,864				$1,089,514				$1,160,765

(A)	Client assets under administration in the Investment Managers segment include $54.3 billion of assets that are at fee levels below our normal full-service assets (as of Dec. 31, 2020).
(B)	Equity and fixed-income programs include $2.0 billion of assets managed by LSV in which fees are based on performance only (as of Dec. 31, 2020).
(C)	Equity and fixed-income programs include $7.9 billion of assets invested in various asset allocation funds at Dec. 31, 2020.
(D)	In addition to the numbers presented, SEI also administers an additional $12.9 billion in Funds of Funds assets (as of Dec. 31, 2020 on which SEI does not earn an administration fee.

 

AVERAGE ASSET BALANCES (In millions) (Unaudited)
		4th Qtr.				1st Qtr.				2nd Qtr.				3rd Qtr.				4th Qtr.
		2019				2020				2020				2020				2020
Private Banks:
Equity and fixed-income programs		$23,106				$24,657				$22,229				$23,740				$24,284
Collective trust fund programs		4				4				5				7				6
Liquidity funds		3,581				3,581				4,366				3,948				3,712
Total assets under management		$26,691				$28,242				$26,600				$27,695				$28,002
Client assets under administration		24,930				24,840				23,819				25,295				25,368
Total assets		$51,621				$53,082				$50,419				$52,990				$53,370
Investment Advisors:
Equity and fixed-income programs		$66,371				$64,933				$57,429				$64,479				$68,396
Collective trust fund programs		4				3				3				3				2
Liquidity funds		2,673				3,284				6,923				4,569				3,788
Total assets under management		$69,048				$68,220				$64,355				$69,051				$72,186
Institutional Investors:
Equity and fixed-income programs		$83,304				$79,926				$77,037				$82,830				$86,277
Collective trust fund programs		82				86				100				102				102
Liquidity funds		2,106				2,342				2,476				2,120				2,271
Total assets under management		$85,492				$82,354				$79,613				$85,052				$88,650
Client assets under advisement		4,106				3,760				3,362				3,565				3,746
Total assets		$89,598				$86,114				$82,975				$88,617				$92,396
Investment Managers:
Collective trust fund programs		$	55,499			$	55,952			$	54,061			$	62,028			$	69,349
Liquidity funds		642				617				482				565				411
Total assets under management		$56,141				$56,569				$54,543				$62,593				$69,760
Client assets under administration (A)		646,592				654,386				649,012				713,528				754,350
Total assets		$702,733				$710,955				$703,555				$776,121				$824,110
Investments in New Businesses:
Equity and fixed-income programs		$1,649				$1,663				$1,468				$1,560				$1,634
Liquidity funds		145				168				182				180				165
Total assets under management		$1,794				$1,831				$1,650				$1,740				$1,799
Client assets under advisement		1,044				1,222				1,148				1,206				1,218
Total assets		$2,838				$3,053				$2,798				$2,946				$3,017
LSV Asset Management:
Equity and fixed-income programs (B)		$104,814				$88,059				$80,395				$83,536				$88,182
Total:
Equity and fixed-income programs (C)		$279,244				$259,238				$238,558				$256,145				$268,773
Collective trust fund programs		55,589				56,045				54,169				62,140				69,459
Liquidity funds		9,147				9,992				14,429				11,382				10,347
Total assets under management		$343,980				$325,275				$307,156				$329,667				$348,579
Client assets under advisement		5,150				4,982				4,510				4,771				4,964
Client assets under administration (D)		671,522				679,226				672,831				738,823				779,718
Total assets		$1,020,652				$1,009,483				$984,497				$1,073,261				$1,133,261

(A)	Average client assets under administration in the Investment Managers segment during fourth-quarter 2020 include $53.3 billion that are at fee levels below our normal full-service assets.
(B)	Equity and fixed-income programs include $1.8 billion of average assets managed by LSV in which fees are based on performance only during fourth-quarter 2020.
(C)	Equity and fixed-income programs include $7.9 billion of average assets invested in various asset allocation funds during fourth-quarter 2020.
(D)	In addition to the numbers presented, SEI also administers an additional $12.3 billion of average assets in Funds of Funds assets during fourth-quarter 2020 on which SEI does not earn an administration fee.

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SOURCE SEI Investments Company

FAQ

What were SEIC's fourth-quarter earnings for 2020?

SEI Investments reported diluted earnings per share of $0.86, up 2% from $0.84 in Q4 2019.

What was the revenue growth for SEIC in the fourth quarter of 2020?

SEIC's revenues increased by 5% to $443.7 million in Q4 2020 compared to Q4 2019.

How did SEIC's net income change in the fourth quarter of 2020?

Net income decreased by 2% to $125.9 million in Q4 2020.

What were SEI Investments' key financial metrics for 2020?

In 2020, SEIC's revenues totaled $1.68 billion, a 2% increase, while net income fell 11% to $447.3 million.

How much did SEIC repurchase in shares during the fourth quarter of 2020?

SEI Investments repurchased 1.8 million shares for $99.1 million at an average price of $54.36 per share.