SEI Reports Fourth-Quarter 2021 Financial Results

Rhea-AI Summary

SEI Investments Company (NASDAQ: SEIC) reported a strong financial performance for Q4 2021, achieving diluted earnings per share of $1.03, up 20% from $0.86 in Q4 2020. Total revenues rose to $501.65 million, a 13% increase year-over-year. The company's net income increased by 15% to $145.3 million. For the full year 2021, SEI reported revenues of $1.92 billion and net income of $546.6 million, both reflecting year-over-year growth.

Strategic acquisitions and a focus on R&D continue to drive SEI's growth prospects, positioning the company for increased shareholder value.

Positive

• Q4 revenues rose 13% to $501.65 million and 2021 revenues increased 14% to $1.92 billion.
• Net income increased by 15% to $145.3 million in Q4 2021, with a full-year net income growth of 22%.
• Diluted EPS improved by 20% to $1.03 in Q4, totaling $3.81 for full-year 2021, a 27% increase.
• Strategic acquisitions, including Novus Partners, enhance market presence and growth avenues.

Negative

• Increased operational expenses due to higher personnel costs and direct costs despite revenue growth.
• Investment Managers segment experienced a decline in operating profit by 6% in Q4 2021.

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 earnings per share)		For the Three Months Ended Dec. 31,						For the Twelve Months Ended Dec. 31,
		2021		2020		%		2021		2020		%
Revenues		$501,650		$443,723		13%		$1,918,309		$1,684,058		14%
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 Ended Dec. 31,						For the Twelve Months 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		$1,684,058		14%
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 Platform^SM (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 Call
A 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^®
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 SEI^SM 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 Ended Dec. 31,				For the Twelve Months 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 costs		7,198		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 $378,639		178,869		189,052
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 shares issued and outstanding		1,384		1,434
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

View original content:https://www.prnewswire.com/news-releases/sei-reports-fourth-quarter-2021-financial-results-301469006.html

SOURCE SEI Investments Company

FAQ

What were SEIC's Q4 2021 earnings results?

SEI reported a diluted EPS of $1.03 for Q4 2021, up 20% from Q4 2020.

How did SEIC's revenues perform in 2021?

SEI's total revenues for 2021 reached $1.92 billion, a 14% increase compared to 2020.

What is SEIC's outlook after Q4 2021 results?

SEI aims to leverage acquisitions and R&D investments for continued growth, enhancing shareholder value.

What were the main drivers of SEIC's financial growth?

Growth was driven by increased assets under management, new client cash flows, and successful strategic acquisitions.

How have SEIC's operational expenses changed?

Operational expenses increased primarily due to higher personnel costs and direct costs linked to rising revenues.