SEI Reports Fourth-Quarter 2023 Financial Results
- 10% increase in diluted earnings per share for Q4 2023 compared to Q4 2022
- 6% increase in revenues for Q4 2023 compared to Q4 2022
- 8% increase in net income for Q4 2023 compared to Q4 2022
- Positive sales activity in technology, investment processing, and operations segments
- Confidence in future growth and strategic vision
- 4% decrease in full-year revenues
- 3% decrease in full-year net income
- Negative cash flows from SEI fund programs in the Investment Advisors segment
- Client losses in the Institutional Investors segment
- Operational expenses increased due to higher personnel costs and inflation impact
Insights
The reported increase in diluted earnings per share by 10% from the fourth quarter of the previous year indicates a positive performance trajectory for SEI Investments Company. This is particularly noteworthy given the broader context of a 4% decline in annual revenues. The data suggests that the company has effectively managed costs or found efficiencies to bolster its bottom line in a challenging revenue environment.
Despite the revenue decline, the company's ability to increase net income by 8% for the quarter signals strong operational control. Investors may view this as a positive sign of management's ability to navigate market volatility and maintain profitability. The operating margin improvements in certain segments, such as Investment Managers, also highlight areas of operational strength and potential for future growth.
The reported corporate overhead expenses increased by 22% for the quarter, which could be a point of concern. However, this increase must be weighed against the context of the overall financial picture, including the company's strategic acquisitions and investments in technology, which may account for the uptick in expenses but also position the company for future growth.
The technology, investment processing and operations segments have been highlighted as growth areas, reflecting broader industry trends where technology and operational efficiency are becoming increasingly important competitive differentiators. The company's focus on these areas could signal an alignment with market demands and an opportunity to capture market share.
SEI's strategic acquisitions, such as the National Pensions Trust and Altigo, indicate an aggressive growth strategy focused on expanding capabilities and entering new markets. These moves could potentially open up additional revenue streams and enhance the company's value proposition to clients.
The mention of increased revenues from assets under management and administration, particularly from alternative investment clients, suggests a favorable market response to new products and services. This could be indicative of the company's ability to innovate and adapt to changing market preferences, a critical factor for long-term success in the asset management industry.
The effective tax rates reported show a slight increase from the previous year, which could be due to various factors including legislative changes, the geographic distribution of income, or changes in the company's operations. It's important for investors to consider how tax rates might affect future net income, as well as the potential impact of ongoing tax law changes on the company's financial position.
SEI's report of increased personnel costs and investments in compliance infrastructure aligns with an industry facing heightened regulatory scrutiny. Such investments are critical for maintaining the company's reputation and ensuring adherence to regulatory requirements, which can have significant implications for risk management and investor confidence.
Consolidated Overview | ||||||||||||
(In thousands, except earnings per share) | For the Three Months | For the Twelve Months Ended | ||||||||||
2023 | 2022 | % | 2023 | 2022 | % | |||||||
Revenues | 6 % | (4) % | ||||||||||
Net income | 120,731 | 112,224 | 8 % | 462,258 | 475,467 | (3) % | ||||||
Diluted earnings per share | 10 % | — % | ||||||||||
"Despite variable market conditions throughout the year, we navigated through uncertainty and delivered solid growth and core profitability. Our 2023 results reflect strong sales activity—particularly in our technology, investment processing, and operations segments—demonstrating traction in growth segments where we believe SEI has significant opportunity," said CEO Ryan Hicke.
"With our unmatched breadth of capabilities, we believe we are firmly positioned to capitalize on the positive trends shaping our markets today and well into the future. Looking ahead to 2024 and beyond, we remain committed to our strategic vision for the future, and our financial strength, robust pipeline, and world-class talent reinforce our foundation and the momentum to deliver long-term, sustainable growth for our stakeholders."
Summary of Fourth-Quarter Results by Business Segment
(In thousands) | For the Three Months | For the Twelve Months | ||||||||||
2023 | 2022 | % | 2023 | 2022 | % | |||||||
Private Banks: | ||||||||||||
Revenues | 9 % | (13) % | ||||||||||
Expenses | 112,378 | 113,533 | (1) % | 455,820 | 473,209 | (4) % | ||||||
Operating Profit | 12,768 | 1,700 | NM | 47,497 | 102,416 | (54) % | ||||||
Operating Margin | 10 % | 1 % | 9 % | 18 % | ||||||||
Investment Advisors: | ||||||||||||
Revenues | 109,719 | 105,777 | 4 % | 436,298 | 447,766 | (3) % | ||||||
Expenses | 67,138 | 62,605 | 7 % | 259,142 | 251,650 | 3 % | ||||||
Operating Profit | 42,581 | 43,172 | (1) % | 177,156 | 196,116 | (10) % | ||||||
Operating Margin | 39 % | 41 % | 41 % | 44 % | ||||||||
Institutional Investors: | ||||||||||||
Revenues | 69,794 | 74,771 | (7) % | 289,708 | 323,353 | (10) % | ||||||
Expenses | 39,118 | 40,820 | (4) % | 165,455 | 172,252 | (4) % | ||||||
Operating Profit | 30,676 | 33,951 | (10) % | 124,253 | 151,101 | (18) % | ||||||
Operating Margin | 44 % | 45 % | 43 % | 47 % | ||||||||
Investment Managers: | ||||||||||||
Revenues | 175,168 | 156,076 | 12 % | 670,486 | 624,918 | 7 % | ||||||
Expenses | 115,469 | 104,330 | 11 % | 437,174 | 404,850 | 8 % | ||||||
Operating Profit | 59,699 | 51,746 | 15 % | 233,312 | 220,068 | 6 % | ||||||
Operating Margin | 34 % | 33 % | 35 % | 35 % | ||||||||
Investments in New Businesses: | ||||||||||||
Revenues | 5,031 | 4,733 | 6 % | 19,984 | 19,375 | 3 % | ||||||
Expenses | 11,348 | 10,450 | 9 % | 45,437 | 45,159 | 1 % | ||||||
Operating Loss | (6,317) | (5,717) | NM | (25,453) | (25,784) | NM | ||||||
Totals: | ||||||||||||
Revenues | 6 % | (4) % | ||||||||||
Expenses | 345,451 | 331,738 | 4 % | 1,363,028 | 1,347,120 | 1 % | ||||||
Corporate Overhead Expenses | 37,723 | 30,804 | 22 % | 132,241 | 168,164 | (21) % | ||||||
Income from Operations | 8 % | (11) % | ||||||||||
Fourth-Quarter Business Highlights:
- Revenues from Assets under management, administration, and distribution fees increased primarily from higher assets under management and administration due to increases from existing alternative investment clients of the Investment Managers segment due to new products and additional services. Market appreciation and positive cash flows into separately managed account programs and Strategist programs during 2023 also contributed to the increase in revenues.
- The increase in revenues from Assets under management, administration, and distribution fees was partially offset by negative cash flows from SEI fund programs in the Investment Advisors segment and client losses in the Institutional Investors segment.
- Average assets under management in equity and fixed income programs, excluding LSV, increased
$5.0 billion 3% , to$167.4 billion $162.4 billion - Average assets under administration increased
$133.5 billion 17% , to$923.4 billion $789.9 billion - Revenues from Information processing and software servicing fees increased from new client conversions and growth from existing SEI Wealth PlatformSM (SWP) clients.
- Net sales events in the Private Banks and Investment Managers segments during the fourth-quarter 2023 were
$22.9 million $17.6 million $97.5 million $79.1 million - 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 the fourth-quarter 2023 were negative
$10.5 million $18.9 million - Net sales events for newer initiatives, which includes SEI Sphere, were
$1.3 million $2.2 million - During the fourth-quarter 2023, we completed the acquisition of the National Pensions Trust and also acquired Altigo, a cloud-based technology platform that provides inventory, e-subscription, and reporting capabilities for alternative investments.
- The increase in operational expenses was due to higher personnel costs from business growth, competitive labor markets, and the impact of inflation on wages and services. Increased personnel costs and investments in compliance infrastructure to meet expanding regulatory requirements also contributed to the increase in operational expenses.
- One-time expense items during the fourth-quarter 2023 were approximately
$11.0 million $5.3 million $4.7 million $1.0 million $4.0 million - Earnings from LSV increased to
$35.4 million $31.7 million - Capitalized software development costs were
$7.4 million $4.5 million $2.9 million - Interest and dividend income increased to
$11.6 million $6.6 million - Effective tax rates were
19.6% in the fourth-quarter 2023 and18.1% in the fourth-quarter 2022. The tax rate in the fourth-quarter 2023 was affected by reduced tax benefits related to stock option exercises. - Repurchased shares of SEI common stock were 1.2 million for
$68.9 million $58.08 - Cash flow from operations was
$101.0 million $92.0 million
Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Jan. 31, 2024. Investors may listen to the call at seic.com/ir-events. Investors may also listen to a replay by telephone at (
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 help drive growth, make confident decisions, and protect futures. As of Dec. 31, 2023, SEI manages, advises, or administers approximately
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:
- the degree to which are positioned to capitalize on trends shaping our markets;
- when and if we will generate net annualized recurring revenues from sales events that occurred during the quarter, as well as the amount of any such revenue; and
- the degree to which we will deliver long-term sustainable growth for our stakeholders.
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 degree to which our Private Banking and Investment Manager Services business units are well positioned to continue to expand and contribute to our top and bottom lines;
- the size of the intermediary market;
- the opportunities for our Advisor business;
- whether our strategic initiatives in our Advisor business will help us with new client adoption and exploit the opportunity we see in the intermediary market;
- the elements of our strategic focus, including, without limitation, our focus on:
- sales and revenue growth;
- transforming our asset management businesses;
- targeting new segments for sales;
- driving margin expansion and profit growth through increased operational leverage and discipline;
- innovating our solution for the future;
- delivering for our clients;
- engaging with our markets; and
- investing in our talent and our capabilities;
- whether we are well-positioned for 2024 and beyond;
- the degree to which our capabilities benefit our clients;
- our ability to accelerate growth and market share;
- the benefits of our focus on key clients in the alternatives space and the cross sale opportunities that this focus may generate;
- the strength of the expansion opportunities for our turn-key Collective Investment Trust solution;
- the benefits we will derive from the businesses and/or assets we acquire and our ability to successful integrate these assets in order to drive the expected benefits, strategic and otherwise;
- the headwinds our businesses face and our ability to respond to these headwinds;
- our ability to capitalize on our pipeline and opportunities, manage expenses, and drive profit to the bottom line;
- the amount, if any, of our current backlog of sold but expected to be installed revenue and recurring revenue in the next 18 months that will actually be installed during such period, if ever;
- the market dynamics affecting our market units;
- our ability to improve profitability without cannibalizing our medium to long-term growth agendas;
- the areas in which we will invest;
- the degree to which the Private Banks segment's focus is paying off in both new business generation and building a quality and growing pipeline;
- our ability to expand the margins of our Private Banking business and the degree to which this business is positioned for growth;
- the amount of revenue and profit that our new FDIC cash sweep program will generate during 2024;
- our tax rate for the first quarter of 2024;
- the degree to which there is positive sales momentum in our Institutional Investors business segment; and
- the expected 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, 2022, filed with the Securities and Exchange Commission.
SEI INVESTMENTS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) | ||||||||
For the Three Months | For the Twelve Months | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Asset management, admin. and distribution fees | ||||||||
Information processing and software servicing fees | 101,287 | 91,351 | 404,978 | 476,974 | ||||
Total revenues | 484,858 | 456,590 | 1,919,793 | 1,991,037 | ||||
Subadvisory, distribution and other asset mgmt. costs | 47,106 | 46,247 | 189,263 | 196,732 | ||||
Software royalties and other information processing costs | 8,505 | 7,143 | 32,289 | 29,006 | ||||
Compensation, benefits and other personnel | 184,508 | 174,497 | 714,099 | 720,029 | ||||
Stock-based compensation | 7,850 | 8,064 | 31,308 | 39,403 | ||||
Consulting, outsourcing and professional fees | 54,850 | 57,693 | 231,469 | 242,013 | ||||
Data processing and computer related | 34,735 | 32,151 | 137,036 | 125,171 | ||||
Facilities, supplies and other costs | 27,011 | 17,529 | 85,836 | 74,993 | ||||
Amortization | 9,818 | 10,503 | 38,669 | 54,280 | ||||
Depreciation | 8,791 | 8,715 | 35,300 | 33,657 | ||||
Total expenses | 383,174 | 362,542 | 1,495,269 | 1,515,284 | ||||
Income from operations | 101,684 | 94,048 | 424,524 | 475,753 | ||||
Net gain (loss) from investments | 1,704 | 1,437 | 2,757 | (3,078) | ||||
Interest and dividend income | 11,574 | 6,645 | 41,027 | 13,308 | ||||
Interest expense | (187) | (145) | (583) | (749) | ||||
Other income | — | 3,379 | — | 3,379 | ||||
Equity in earnings of unconsolidated affiliate | 35,413 | 31,741 | 126,930 | 120,667 | ||||
Income before income taxes | 150,188 | 137,105 | 594,655 | 609,280 | ||||
Income taxes | 29,457 | 24,881 | 132,397 | 133,813 | ||||
Net income | ||||||||
Basic earnings per common share | ||||||||
Shares used to calculate basic earnings per share | 131,269 | 134,714 | 132,593 | 136,071 | ||||
Diluted earnings per common share | ||||||||
Shares used to calculate diluted earnings per share | 132,160 | 135,818 | 133,728 | 137,423 | ||||
Dividends declared per common share | ||||||||
SEI INVESTMENTS COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | ||||
December 31, | December 31, | |||
2023 | 2022 | |||
Assets | ||||
Current Assets: | ||||
Cash and cash equivalents | ||||
Restricted cash | 301 | 351 | ||
Receivables from investment products | 55,886 | 62,014 | ||
Receivables, net of allowance for doubtful accounts of | 501,434 | 457,084 | ||
Securities owned | 31,334 | 32,148 | ||
Other current assets | 54,464 | 48,703 | ||
Total Current Assets | 1,478,116 | 1,453,308 | ||
Property and Equipment, net of accumulated depreciation of | 171,364 | 181,029 | ||
Operating Lease Right-of-Use Assets | 22,477 | 24,992 | ||
Capitalized Software, net of accumulated amortization of | 239,783 | 237,302 | ||
Available for Sale and Equity Securities | 155,413 | 128,201 | ||
Investments in Affiliated Funds, at fair value | 7,316 | 6,366 | ||
Investment in Unconsolidated Affiliate | 110,781 | 104,673 | ||
Goodwill | 137,333 | 115,599 | ||
Intangible Assets, net of accumulated amortization of | 82,443 | 55,532 | ||
Deferred Contract Costs | 40,221 | 37,928 | ||
Deferred Income Taxes | 37,709 | 4,936 | ||
Other Assets, net | 37,047 | 33,687 | ||
Total Assets | ||||
Liabilities and Equity | ||||
Current Liabilities: | ||||
Accounts payable | ||||
Accrued liabilities | 318,945 | 359,363 | ||
Current portion of long-term operating lease liabilities | 8,118 | 10,344 | ||
Deferred revenue | 15,366 | 14,893 | ||
Total Current Liabilities | 353,047 | 397,883 | ||
Long-term Income Taxes Payable | 803 | 803 | ||
Long-term Operating Lease Liabilities | 17,235 | 18,786 | ||
Other Long-term Liabilities | 17,090 | 12,257 | ||
Total Liabilities | 388,175 | 429,729 | ||
Shareholders' Equity: | ||||
Common stock, | 1,312 | 1,342 | ||
Capital in excess of par value | 1,404,962 | 1,307,162 | ||
Retained earnings | 762,586 | 694,287 | ||
Accumulated other comprehensive loss, net | (37,032) | (48,967) | ||
Total Shareholders' Equity | 2,131,828 | 1,953,824 | ||
Total Liabilities and Shareholders' Equity | ||||
ENDING ASSET BALANCES (In millions) (Unaudited) | ||||||||||
Dec. 31, | Mar. 31, | Jun. 30, | Sept. 30, | Dec. 31, | ||||||
2022 | 2023 | 2023 | 2023 | 2023 | ||||||
Private Banks: | ||||||||||
Equity and fixed-income programs | ||||||||||
Collective trust fund programs | 7 | 6 | 7 | 6 | 4 | |||||
Liquidity funds | 3,201 | 3,427 | 3,433 | 3,636 | 3,916 | |||||
Total assets under management | ||||||||||
Client assets under administration | 4,151 | 4,299 | 4,154 | 4,399 | 7,267 | |||||
Total assets | ||||||||||
Investment Advisors: | ||||||||||
Equity and fixed-income programs | ||||||||||
Liquidity funds | 5,436 | 4,965 | 4,968 | 5,175 | 4,812 | |||||
Total Platform assets under management | ||||||||||
Platform-only assets | 13,931 | 14,980 | 16,103 | 16,232 | 18,324 | |||||
Platform-only assets-deposit program | — | — | — | — | 843 | |||||
Total Platform assets | ||||||||||
Institutional Investors: | ||||||||||
Equity and fixed-income programs | ||||||||||
Collective trust fund programs | 5 | 4 | 4 | 4 | 1 | |||||
Liquidity funds | 1,557 | 1,576 | 1,353 | 2,119 | 1,734 | |||||
Total assets under management | ||||||||||
Client assets under advisement | 4,314 | 4,559 | 4,368 | 4,085 | 6,120 | |||||
Total assets | ||||||||||
Investment Managers: | ||||||||||
Collective trust fund programs (A) | ||||||||||
Liquidity funds | 199 | 203 | 249 | 180 | 114 | |||||
Total assets under management | ||||||||||
Client assets under administration | 810,491 | 845,828 | 873,570 | 886,382 | 935,564 | |||||
Total assets | ||||||||||
Investments in New Businesses: | ||||||||||
Equity and fixed-income programs | ||||||||||
Liquidity funds | 215 | 217 | 217 | 202 | 209 | |||||
Total assets under management | ||||||||||
Client assets under administration | 1,077 | 1,081 | 1,098 | 1,070 | 1,150 | |||||
Total assets | ||||||||||
LSV Asset Management: | ||||||||||
Equity and fixed-income programs (B) | ||||||||||
Total: | ||||||||||
Equity and fixed-income programs (C) | ||||||||||
Collective trust fund programs | 141,297 | 146,186 | 149,790 | 147,001 | 156,381 | |||||
Liquidity funds | 10,608 | 10,388 | 10,220 | 11,312 | 10,785 | |||||
Total assets under management | ||||||||||
Client assets under advisement | 5,391 | 5,640 | 5,466 | 5,155 | 7,270 | |||||
Client assets under administration (D) | 814,642 | 850,127 | 877,724 | 890,781 | 942,831 | |||||
Platform-only assets | 13,931 | 14,980 | 16,103 | 16,232 | 19,167 | |||||
Total assets | ||||||||||
(A) | Collective trust fund program assets in the Investment Managers segment are included in assets under management since SEI is the trustee. Fees earned on this product are less than fees earned on customized asset management programs. |
(B) | Equity and fixed-income programs include |
(C) | Equity and fixed-income programs include |
(D) | In addition to the assets presented, SEI also administers an additional |
AVERAGE ASSET BALANCES (In millions) (Unaudited) | ||||||||||
4th Qtr. | 1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | ||||||
2022 | 2023 | 2023 | 2023 | 2023 | ||||||
Private Banks: | ||||||||||
Equity and fixed-income programs | ||||||||||
Collective trust fund programs | 7 | 7 | 7 | 6 | 5 | |||||
Liquidity funds | 3,395 | 3,253 | 3,500 | 3,585 | 3,808 | |||||
Total assets under management | ||||||||||
Client assets under administration | 4,126 | 4,316 | 4,282 | 4,221 | 7,083 | |||||
Total assets | ||||||||||
Investment Advisors: | ||||||||||
Equity and fixed-income programs | ||||||||||
Liquidity funds | 5,127 | 4,995 | 4,808 | 4,990 | 5,046 | |||||
Total Platform assets under management | ||||||||||
Platform-only assets | 13,905 | 14,812 | 15,548 | 16,544 | 17,201 | |||||
Platform-only assets-deposit program | — | — | — | — | 281 | |||||
Total Platform assets | ||||||||||
Institutional Investors: | ||||||||||
Equity and fixed-income programs | ||||||||||
Collective trust fund programs | 5 | 5 | 4 | 4 | 3 | |||||
Liquidity funds | 1,719 | 1,715 | 1,537 | 1,611 | 1,682 | |||||
Total assets under management | ||||||||||
Client assets under advisement | 4,251 | 4,431 | 4,583 | 4,294 | 4,607 | |||||
Total assets | ||||||||||
Investment Managers: | ||||||||||
Collective trust fund programs (A) | ||||||||||
Liquidity funds | 275 | 317 | 286 | 237 | 205 | |||||
Total assets under management | ||||||||||
Client assets under administration | 785,813 | 836,410 | 859,296 | 889,503 | 916,268 | |||||
Total assets | ||||||||||
Investments in New Businesses: | ||||||||||
Equity and fixed-income programs | ||||||||||
Liquidity funds | 208 | 212 | 199 | 211 | 197 | |||||
Total assets under management | ||||||||||
Client assets under advisement | 1,075 | 1,098 | 1,075 | 1,101 | 1,080 | |||||
Total assets | ||||||||||
LSV Asset Management: | ||||||||||
Equity and fixed-income programs (B) | ||||||||||
Total: | ||||||||||
Equity and fixed-income programs (C) | ||||||||||
Collective trust fund programs | 140,506 | 144,926 | 147,554 | 150,389 | 149,559 | |||||
Liquidity funds | 10,724 | 10,492 | 10,330 | 10,634 | 10,938 | |||||
Total assets under management | ||||||||||
Client assets under advisement | 5,326 | 5,529 | 5,658 | 5,395 | 5,687 | |||||
Client assets under administration (D) | 789,939 | 840,726 | 863,578 | 893,724 | 923,351 | |||||
Platform-only assets | 13,905 | 14,812 | 15,548 | 16,544 | 17,482 | |||||
Total assets | ||||||||||
(A) | Collective trust fund program average assets in the Investment Managers segment are included in assets under management since SEI is the trustee. Fees earned on this product are less than fees earned on customized asset management programs. |
(B) | Equity and fixed-income programs during fourth-quarter 2023 include |
(C) | Equity and fixed-income programs include |
(D) | In addition to the assets presented, SEI also administers an additional |
Investor Contact: | Media Contact: |
Alex Whitelam | Leslie Wojcik |
SEI | SEI |
+1 610-676-4924 | +1 610-676-4191 |
View original content:https://www.prnewswire.com/news-releases/sei-reports-fourth-quarter-2023-financial-results-302049850.html
SOURCE SEI Investments Company
FAQ
What was the percentage change in diluted earnings per share for SEI Investments Company in Q4 2023 compared to Q4 2022?
What was the percentage change in revenues for SEI Investments Company in Q4 2023 compared to Q4 2022?
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What were the financial results for SEI Investments Company for the full-year 2023?
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