SEI Reports Second-Quarter 2021 Financial Results

Rhea-AI Summary

SEI Investments Company (NASDAQ:SEIC) reported its second-quarter 2021 financial results, showing a 37% increase in diluted earnings per share to $0.93 compared to $0.68 in Q2 2020. Revenues grew 19% to $475,651 thousand, driven by market appreciation and strong sales momentum. Net income rose 32% to $133,778 thousand. Average assets under administration increased 28% to $858.2 billion. The company repurchased 2.1 million shares for $129.2 million. An earnings call is scheduled for July 21, 2021.

Positive

• Diluted earnings per share increased 37% to $0.93.
• Revenues grew 19% to $475,651 thousand.
• Net income rose 32% to $133,778 thousand.
• Average assets under administration increased 28% to $858.2 billion.
• Repurchased 2.1 million shares for $129.2 million.

Negative

• Increased operational expenses due to higher direct costs and personnel costs.

OAKS, Pa., July 21, 2021 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the second-quarter 2021. Diluted earnings per share were $0.93 in second-quarter 2021 compared to $0.68 in second-quarter 2020.

Consolidated Overview
(In thousands, except earnings per share)	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2021			2020			%		2021			2020			%
Revenues	$475,651			$400,646			19%		$931,337			$815,408			14%
Net income	133,778			101,066			32%		263,248			210,308			25%
Diluted earnings per share	$0.93			$0.68			37%		$1.82			$1.39			31%

"Our second-quarter results reflect positive markets, improving sales momentum and solid capital returns to shareholders. We continue to invest in our technology and investment solutions to deliver best-in-class products and services to our clients," said Alfred P. West, Jr., SEI Chairman and CEO. 

"As the industry evolves coming out of the pandemic, we continue to execute growth strategies across our business and take advantage of increasing demands for integrated technologies, sound operational solutions and a market-responsive investment approach. For more than 50 years, our stability, scale and success have been driven by seizing opportunities powered by our dedicated, talented workforce and tech-driven solutions. We are committed to delivering long-term value to our shareholders, employees, clients and communities."

Summary of Second-Quarter Results by Business Segment

(In thousands)	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2021			2020			%		2021			2020			%
Private Banks:
Revenues	$123,676			$107,726			15%		$241,284			$220,947			9%
Expenses	117,654			107,723			9%		228,378			218,376			5%
Operating Profit	6,022			3			NM		12,906			2,571			402%
Operating Margin	5	%		—	%				5	%		1	%
Investment Advisors:
Revenues	119,396			93,708			27%		232,690			196,029			19%
Expenses	59,133			50,149			18%		114,160			102,581			11%
Operating Profit	60,263			43,559			38%		118,530			93,448			27%
Operating Margin	50	%		46	%				51	%		48	%
Institutional Investors:
Revenues	85,699			76,523			12%		170,198			155,726			9%
Expenses	41,895			36,937			13%		81,053			75,204			8%
Operating Profit	43,804			39,586			11%		89,145			80,522			11%
Operating Margin	51	%		52	%				52	%		52	%
Investment Managers:
Revenues	142,808			119,340			20%		279,227			235,969			18%
Expenses	84,995			74,668			14%		168,015			148,957			13%
Operating Profit	57,813			44,672			29%		111,212			87,012			28%
Operating Margin	40	%		37	%				40	%		37	%
Investments in New Businesses:
Revenues	4,072			3,349			22%		7,938			6,737			18%
Expenses	13,631			13,466			1%		27,035			24,376			11%
Operating Loss	(9,559)			(10,117)			NM		(19,097)			(17,639)			NM
Totals:
Revenues	$475,651			$400,646			19%		$931,337			$815,408			14%
Expenses	317,308			282,943			12%		618,641			569,494			9%
Corporate Overhead Expenses	22,322			17,391			28%		43,838			35,374			24%
Income from Operations	$136,021			$100,312			36%		$268,858			$210,540			28%

Second-Quarter Business Highlights:

• Revenues from Asset management, administration, and distribution fees increased primarily from higher assets under administration in our Investment Managers segment due to market appreciation and positive cash flows from new and existing clients.
• Average assets under administration increased $185.4 billion, or 28%, to $858.2 billion in the second-quarter 2021, as compared to $672.8 billion during the second-quarter 2020 (see attached Average Asset Balances schedules for further details).
• Average assets under management, excluding LSV, increased $66.6 billion, or 29%, to $293.4 billion in the second-quarter 2021, as compared to $226.8 billion during the second-quarter 2020 primarily due to market appreciation (see attached Average Asset Balances schedules for further details).
• Net sales events in the Private Banks and Investment Managers segments during second-quarter 2021 were $13.2 million and are expected to generate net annualized recurring revenues of approximately $9.8 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 second-quarter 2021 were $2.8 million, reflecting positive asset flows in the Advisor and AMD businesses, offset by net losses in our legacy Institutional client base.
• The increase in operational expenses was primarily due to increased direct costs related to increased revenues, as well as increased personnel costs to service new clients in our Investment Managers segment.
• Earnings from LSV increased by $6.8 million, or 24%, to $35.1 million in second-quarter 2021, as compared to $28.3 million in second-quarter 2020. The increase in earnings was due to higher assets under management from market appreciation. Negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV.
• Stock-based compensation expense in second-quarter 2021 increased $3.0 million as compared to second-quarter 2020 due to equity awards in late 2020 and from a change in estimate of the timing of when stock-option vesting targets would be achieved. We expect to recognize $25.7 million in stock-based compensation expense during the remainder of 2021.
• We capitalized $5.9 million of software development costs in second-quarter 2021 for continued enhancements to the SEI Wealth Platform^SM. Amortization expense related to SWP was $12.0 million in second-quarter 2021.
• Effective tax rates were 22.3% in second-quarter 2021 and 23.3% in second-quarter 2020. The decrease in our effective tax rate was due to increased tax benefits associated with a higher volume of stock option exercises.
• We repurchased 2.1 million shares of our common stock for $129.2 million during the second-quarter 2021.
• Cash flow from operations was $188.4 million, or $1.31 per share, and free cash flow was $171.3 million during the second-quarter 2021.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on July 21, 2021. Investors may listen to the call at seic.com/ir-events. Investors may also listen to a replay by telephone at (USA) 866-207-1041; (International) 402-970-0847; Access Code: 1520669.

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 June 30, 2021, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers approximately $1.3 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including approximately $399 billion in assets under management and $880 billion in client assets under administration. For more information, visit seic.com.

This release contains forward-looking statements within the meaning or the rules and regulations of the Securities and Exchange Commission.  In some cases you can identify forward-looking statements by terminology, such as ''may,'' ''will,'' ''expect,'' ''believe'' and ''continue'' or ''appear.'' Our forward-looking statements include our current expectations as to:

• revenue that we believe will be generated by sales events that occurred during the quarter and the timing of such realization,
• whether we will have sales momentum,
• whether we will be able to take advantage of increasing sales demand,
• whether we will invest in the strength and expansion of our solutions,
• our strategic priorities and commitments and the degree to which we will execute on them,
• the elements of our long-term success, and
• the degree to which our business will be successful and the beneficiaries of any such success.

We anticipate that we may deliver forward-looking statements during today's earnings call that include our current expectations as to:

• our ability to capture the opportunities inherent in significant change,
• the timing and success of client migrations, implementations and conversions,
• our ability to expand our relationships and revenue opportunities with new and existing clients,
• the timing of and our ability to integrate acquisition targets,
• 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,
• the strategic initiatives and business segments that we will pursue and those in which we will invest,
• 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 pipelines and 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,
• the headwinds we will face and our strategies for how we may respond to these headwinds,
• how we will manage our expenses and the degree to which our forecasted expenses will decline, increase or normalize,
• when we integrate purchased assets into SWP and the timing of our ability to offer additional services to clients,
• the organic and inorganic opportunities that will drive our growth, and
• the success 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 June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020
Asset management, admin. and distribution fees	$382,509			$320,577			$750,155			$652,430
Information processing and software servicing fees	93,142			80,069			181,182			162,978
Total revenues	475,651			400,646			931,337			815,408
Subadvisory, distribution and other asset mgmt. costs	55,827			44,182			105,991			89,519
Software royalties and other information processing costs	7,471			7,389			13,213			14,836
Compensation, benefits and other personnel	141,779			125,331			279,000			256,812
Stock-based compensation	10,103			7,062			19,855			13,991
Consulting, outsourcing and professional fees	55,449			57,111			109,789			110,401
Data processing and computer related	27,375			24,506			53,096			47,210
Facilities, supplies and other costs	18,479			13,973			35,727			30,769
Amortization	14,723			13,140			29,075			26,217
Depreciation	8,424			7,640			16,733			15,113
Total expenses	339,630			300,334			662,479			604,868
Income from operations	136,021			100,312			268,858			210,540
Net gain (loss) on investments	377			1,903			709			(2,086)
Interest and dividend income	878			1,370			1,823			4,573
Interest expense	(130)			(151)			(253)			(303)
Equity in earnings of unconsolidated affiliate	35,065			28,276			68,415			58,183
Income before income taxes	172,211			131,710			339,552			270,907
Income taxes	38,433			30,644			76,304			60,599
Net income	$133,778			$101,066			$263,248			$210,308
Basic earnings per common share	$0.94			$0.69			$1.85			$1.42
Shares used to calculate basic earnings per share	142,074			147,478			142,638			148,473
Diluted earnings per common share	$0.93			$0.68			$1.82			$1.39
Shares used to calculate diluted earnings per share	144,212			149,598			144,759			150,983
Dividends declared per common share	$0.37			$0.35			$0.37			$0.35

 

SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
	June 30,			December 31,
	2021			2020
Assets
Current Assets:
Cash and cash equivalents	$780,928			$784,626
Restricted cash	351			3,101
Receivables from investment products	56,177			55,271
Receivables, net of allowance for doubtful accounts of $3,188 and $1,100	409,568			385,219
Securities owned	26,174			34,064
Other current assets	38,158			38,696
Total Current Assets	1,311,356			1,300,977
Property and Equipment, net of accumulated depreciation of $394,743 and $378,639	184,042			189,052
Operating Lease Right-of-Use Assets	36,871			38,397
Capitalized Software, net of accumulated amortization of $518,514 and $491,739	256,473			270,977
Available for Sale and Equity Securities	130,039			105,419
Investments in Affiliated Funds, at fair value	6,932			6,166
Investment in Unconsolidated Affiliate	47,420			98,433
Goodwill	64,489			64,489
Intangible Assets, net of accumulated amortization of $14,573 and $12,456	33,187			24,304
Deferred Contract Costs	33,352			33,781
Deferred Income Taxes	2,447			2,972
Other Assets, net	33,082			32,289
Total Assets	$2,139,690			$2,167,256
Liabilities and Equity
Current Liabilities:
Accounts payable	$9,291			$7,766
Accrued liabilities	211,984			299,845
Current portion of long-term operating lease liabilities	10,344			8,579
Deferred revenue	1,280			1,085
Total Current Liabilities	232,899			317,275
Long-term Income Taxes Payable	803			803
Deferred Income Taxes	47,644			55,159
Long-term Operating Lease Liabilities	31,697			34,058
Other Long-term Liabilities	21,041			20,054
Total Liabilities	334,084			427,349
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 141,027 and 143,396 shares issued and outstanding	1,410			1,434
Capital in excess of par value	1,219,487			1,190,001
Retained earnings	599,231			565,270
Accumulated other comprehensive loss, net	(14,522)			(16,798)
Total Shareholders' Equity	1,805,606			1,739,907
Total Liabilities and Shareholders' Equity	$2,139,690			$2,167,256

 

ENDING ASSET BALANCES
(In millions)  (Unaudited)
	Jun. 30,			Sept. 30,			Dec. 31			Mar. 31,			Jun. 30,
	2020			2020			2020			2021			2021
Private Banks:
Equity and fixed-income programs	$22,974			$23,499			$25,498			$25,098			$26,264
Collective trust fund programs	5			6			6			7			7
Liquidity funds	4,291			3,718			3,778			3,793			3,654
Total assets under management	$27,270			$27,223			$29,282			$28,898			$29,925
Client assets under administration	23,903			24,174			26,346			4,379			4,412
Total assets	$51,173			$51,397			$55,628			$33,277			$34,337
Investment Advisors:
Equity and fixed-income programs	$59,958			$65,581			$71,247			$73,818			$78,052
Collective trust fund programs	3			3			1			1			1
Liquidity funds	6,648			3,866			3,832			3,584			3,550
Total assets under management	$66,609			$69,450			$75,080			$77,403			$81,603
Institutional Investors:
Equity and fixed-income programs	$80,257			$83,846			$90,869			$92,040			$93,010
Collective trust fund programs	103			101			98			95			5
Liquidity funds	1,924			2,096			2,128			2,909			2,516
Total assets under management	$82,284			$86,043			$93,095			$95,044			$95,531
Client assets under advisement	3,326			3,618			4,063			4,333			4,566
Total assets	$85,610			$89,661			$97,158			$99,377			$100,097
Investment Managers:
Collective trust fund programs	58,178			63,277			75,214			78,304			87,012
Liquidity funds	664			389			424			449			473
Total assets under management	$58,842			$63,666			$75,638			$78,753			$87,485
Client assets under administration (A)	668,611			730,369			760,397			831,819			875,942
Total assets	$727,453			$794,035			$836,035			$910,572			$963,427
Investments in New Businesses:
Equity and fixed-income programs	$1,498			$1,572			$1,711			$1,777			$1,924
Liquidity funds	194			169			162			289			191
Total assets under management	$1,692			$1,741			$1,873			$2,066			$2,115
Client assets under advisement	1,193			1,179			1,299			1,355			1,422
Total assets	$2,885			$2,920			$3,172			$3,421			$3,537
LSV Asset Management:
Equity and fixed-income programs (B)	$81,134			$82,051			$93,692			$101,565			$102,404
Total:
Equity and fixed-income programs (C)	$245,821			$256,549			$283,017			$294,298			$301,654
Collective trust fund programs	58,289			63,387			75,319			78,407			87,025
Liquidity funds	13,721			10,238			10,324			11,024			10,384
Total assets under management	$317,831			$330,174			$368,660			$383,729			$399,063
Client assets under advisement	4,519			4,797			5,362			5,688			5,988
Client assets under administration (D)	692,514			754,543			786,743			836,198			880,354
Total assets	$1,014,864			$1,089,514			$1,160,765			$1,225,615			$1,285,405

(A)	Client assets under administration in the Investment Managers segment include $49.6 billion of assets that are at fee levels below our normal full-service assets (as of June 30, 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 June 30, 2021).
(C)	Equity and fixed-income programs include $8.0 billion of assets invested in various asset allocation funds at June 30, 2021.
(D)	In addition to the numbers presented, SEI also administers an additional $13.5 billion in Funds of Funds assets (as of June 30, 2021) on which SEI does not earn an administration fee.

 

AVERAGE ASSET BALANCES
(In millions) (Unaudited)
	2nd Qtr.			3rd Qtr.			4th Qtr.			1st Qtr.			2nd Qtr.
	2020			2020			2020			2021			2021
Private Banks:
Equity and fixed-income programs	$22,229			$23,740			$24,284			$25,139			$26,056
Collective trust fund programs	5			7			6			6			7
Liquidity funds	4,366			3,948			3,712			3,876			3,833
Total assets under management	$26,600			$27,695			$28,002			$29,021			$29,896
Client assets under administration	23,819			25,295			25,368			4,317			4,405
Total assets	$50,419			$52,990			$53,370			$33,338			$34,301
Investment Advisors:
Equity and fixed-income programs	$57,429			$64,479			$68,396			$73,239			$76,839
Collective trust fund programs	3			3			2			1			1
Liquidity funds	6,923			4,569			3,788			3,619			3,370
Total assets under management	$64,355			$69,051			$72,186			$76,859			$80,210
Institutional Investors:
Equity and fixed-income programs	$77,037			$82,830			$86,277			$91,349			$93,458
Collective trust fund programs	100			102			102			96			68
Liquidity funds	2,476			2,120			2,271			2,621			2,681
Total assets under management	$79,613			$85,052			$88,650			$94,066			$96,207
Client assets under advisement	3,362			3,565			3,746			4,146			4,516
Total assets	$82,975			$88,617			$92,396			$98,212			$100,723
Investment Managers:
Collective trust fund programs	54,061			62,028			69,349			78,035			84,553
Liquidity funds	482			565			411			490			469
Total assets under management	$54,543			$62,593			$69,760			$78,525			$85,022
Client assets under administration (A)	649,012			713,528			754,350			817,330			853,810
Total assets	$703,555			$776,121			$824,110			$895,855			$938,832
Investments in New Businesses:
Equity and fixed-income programs	$1,468			$1,560			$1,634			$1,743			$1,870
Liquidity funds	182			180			165			169			236
Total assets under management	$1,650			$1,740			$1,799			$1,912			$2,106
Client assets under advisement	1,148			1,206			1,218			1,327			1,406
Total assets	$2,798			$2,946			$3,017			$3,239			$3,512
LSV Asset Management:
Equity and fixed-income programs (B)	$80,395			$83,536			$88,182			$97,476			$103,583
Total:
Equity and fixed-income programs (C)	$238,558			$256,145			$268,773			$288,946			$301,806
Collective trust fund programs	54,169			62,140			69,459			78,138			84,629
Liquidity funds	14,429			11,382			10,347			10,775			10,589
Total assets under management	$307,156			$329,667			$348,579			$377,859			$397,024
Client assets under advisement	4,510			4,771			4,964			5,473			5,922
Client assets under administration (D)	672,831			738,823			779,718			821,647			858,215
Total assets	$984,497			$1,073,261			$1,133,261			$1,204,979			$1,261,161

(A)	Average client assets under administration in the Investment Managers segment during second-quarter 2021 include $51.6 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 second-quarter 2021.
(C)	Equity and fixed-income programs include $8.0 billion of average assets invested in various asset allocation funds during second-quarter 2021.
(D)	In addition to the numbers presented, SEI also administers an additional $13.5 billion of average assets in Funds of Funds assets during second-quarter 2021 on which SEI does not earn an administration fee.

 

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

 

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SOURCE SEI Investments Company

FAQ

What were SEIC's earnings per share for Q2 2021?

SEI Investments reported diluted earnings per share of $0.93 for Q2 2021.

How much did SEIC's revenues increase in the second quarter of 2021?

SEIC's revenues increased by 19% to $475,651 thousand in Q2 2021.

What is SEIC's average assets under administration for Q2 2021?

Average assets under administration were $858.2 billion in Q2 2021.

When is the earnings conference call for SEIC?

The earnings conference call for SEIC is scheduled for 4:30 p.m. Eastern time on July 21, 2021.