SEI Reports Third-Quarter 2022 Financial Results

Rhea-AI Summary

SEI Investments Company (NASDAQ: SEIC) reported third-quarter 2022 results with diluted earnings per share of $0.45, down 54% from $0.97 in the prior year. Revenues fell 3% to $471.3 million, affected by lower capital market performance and a $57 million cost from a voluntary separation program. Net income declined 55% to $61.7 million. Despite challenges, management noted strong sales activity and an 8% revenue increase for the nine months ended September 30, 2022, compared to the same period in 2021. Cash flow from operations stood at $97.9 million.

Positive

• Revenue for nine months increased 8% to $1.53 billion.
• Net cash flows for Investment Advisors were positive at $171.9 million.

Negative

• Diluted earnings per share decreased 54% year-over-year.
• Net income declined 55% compared to third-quarter 2021.
• Average assets under management decreased by $33.4 billion (17%).
• Average assets under administration decreased by $69.1 billion (8%).

OAKS, Pa., Oct. 26, 2022 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the third-quarter 2022. Diluted earnings per share were $0.45 in third-quarter 2022 compared to $0.97 in third-quarter 2021. Diluted earnings per share reflect one-time costs of the voluntary separation program of $57.0 million, or $0.32 per share.

Consolidated Overview
(In thousands, except earnings per share)		For the Three Months Ended September 30,						For the Nine Months   Ended September 30,
		2022		2021		%		2022		2021		%
Revenues		$471,334		$485,322		(3) %		$1,534,447		$1,416,659		8 %
Net income		61,659		138,045		(55) %		363,243		401,293		(9) %
Diluted earnings per share		$0.45		$0.97		(54) %		$2.63		$2.79		(6) %

 

"Our third-quarter financial results reflect strong sales activity from market adoption of our solutions. Revenue and profits were impacted by lower capital market performance, one-time costs associated with our voluntary separation program, and continued inflationary pressures on costs. All of our markets are facing a changing landscape, and while this change is challenging, we believe it reinforces growth opportunity for SEI," said CEO Ryan Hicke.

"We will continue to take the important and necessary steps to invest in our talent and capabilities, while aligning our company for organic and inorganic growth. This is an exciting time for SEI, and we will capitalize on our unmatched position at the intersection of asset management and technology. I remain enthusiastic about SEI's future as we set the direction and pace of growth to deliver value for our employees, clients, and shareholders."

Summary of Third-Quarter Results by Business Segment
(In thousands)		For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2022		2021		%		2022		2021		%
Private Banks:
Revenues		$122,660		$123,018		— %		$460,392		$364,302		26 %
Expenses		116,661		116,679		— %		359,676		345,057		4 %
Operating Profit		5,999		6,339		(5) %		100,716		19,245		NM
Operating Margin		5 %		5 %				22 %		5 %
Investment Advisors:
Revenues		109,565		124,768		(12) %		341,989		357,458		(4) %
Expenses		61,150		62,107		(2) %		189,045		176,267		7 %
Operating Profit		48,415		62,661		(23) %		152,944		181,191		(16) %
Operating Margin		44 %		50 %				45 %		51 %
Institutional Investors:
Revenues		78,260		85,759		(9) %		248,582		255,957		(3) %
Expenses		42,149		41,643		1 %		131,432		122,696		7 %
Operating Profit		36,111		44,116		(18) %		117,150		133,261		(12) %
Operating Margin		46 %		51 %				47 %		52 %
Investment Managers:
Revenues		156,015		147,412		6 %		468,842		426,639		10 %
Expenses		100,876		89,594		13 %		300,520		257,609		17 %
Operating Profit		55,139		57,818		(5) %		168,322		169,030		— %
Operating Margin		35 %		39 %				36 %		40 %
Investments in New Businesses:
Revenues		4,834		4,365		11 %		14,642		12,303		19 %
Expenses		9,915		12,820		(23) %		34,709		39,855		(13) %
Operating Loss		(5,081)		(8,455)		NM		(20,067)		(27,552)		NM
Totals:
Revenues		$471,334		$485,322		(3) %		$1,534,447		$1,416,659		8 %
Expenses		330,751		322,843		2 %		1,015,382		941,484		8 %
Corporate Overhead Expenses		89,537		21,354		319 %		137,360		65,192		111 %
Income from Operations		$51,046		$141,125		(64) %		$381,705		$409,983		(7) %

 

Third-Quarter Business Highlights:

• Revenues from Information processing and software servicing fees increased from new client conversions. Additional revenues from our acquisition of SEI Novus during the fourth-quarter 2021 also contributed to the increase.
• Revenues from Assets under management, administration, and distribution fees declined due to the significant decline in capital markets during the third-quarter 2022. This decline was partially offset by increased revenues from assets under administration.
• Average assets under management in equity and fixed income programs, excluding LSV, decreased $33.4 billion, or 17%, to $166.4 billion in the third-quarter 2022, as compared to $199.8 billion during the third-quarter 2021 (see attached Average Asset Balances schedules for further details).
• Average assets under administration decreased $69.1 billion, or 8%, to $786.6 billion in the third-quarter 2022, as compared to $855.7 billion during the third-quarter 2021 (see attached Average Asset Balances schedules for further details).
• Net sales events in the Private Banks and Investment Managers segments during third-quarter 2022 were $33.9 million and are expected to generate net annualized recurring revenues of approximately $26.7 million when contract values are completely realized.
• Net sales events in asset management-related businesses of the Investment Advisors and Institutional Investors segments and the Asset Management Distribution (AMD) business in the Private Banks segment during third-quarter 2022 were negative $3.1 million due to the previously announced loss of a significant client of the Investment Advisors segment. Without this loss, net sales events were positive $2.5 million. Net cash flows for the Investment Advisors segment were positive $171.9 million into SEI asset management programs and positive $636.5 million into platform-only assets during third-quarter 2022.
• The increase in operational expenses was primarily due to increased personnel costs due to business growth, competitive labor markets, and the impact of inflation on wages and services. Operational expenses also increased due to personnel costs and investments in compliance infrastructure to meet new regulatory requirements. The increase was partially offset by lower direct costs related to asset management revenues and lower amortization expense.
• We finalized the Voluntary Separation Program (VSP) offered to long-tenured employees in July 2022 and recognized the total cost of the program of $57.0 million during the third-quarter 2022. This one-time cost is included in corporate overhead expenses and reflects a diluted earnings per share impact of $0.32 to third-quarter 2022 results. In addition, we incurred severance costs unrelated to the VSP of $5.2 million included in corporate overhead expenses during the third-quarter 2022.
• Earnings from LSV decreased to $26.7 million in the third-quarter 2022 as compared to $35.0 million in the third-quarter 2021 due to net negative cash flows from existing clients, market depreciation and client losses.
• We capitalized $6.8 million of software development costs in third-quarter 2022 for continued enhancements to SWP. Amortization expense related to SWP was $5.8 million in third-quarter 2022 as compared to $12.0 million in third-quarter 2021. The decline in amortization expense was due to the amortization period of the initial development costs related to SWP which ended in second-quarter 2022. Approximately $4.1 million of this reduction in amortization expense was related to the Private Banks segment and $1.3 million was related to the Investment Advisors segment.
• We also capitalized $4.2 million of software development costs in third-quarter 2022 for a new platform for the Investment Managers segment.
• Effective tax rates were 23.0% in third-quarter 2022 and 21.7% in third-quarter 2021. The increase in the effective tax rate was primarily due the timing of one-time state settlements, which reduced the effective rate in third-quarter 2021.
• We repurchased 890 thousand shares of our common stock for $49.4 million during the third-quarter 2022 at an average price of $55.55 per share.
• Cash flow from operations was $97.9 million, or $0.72 per share, and free cash flow was $74.4 million during the third-quarter 2022.

 

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Oct. 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: 6671316.

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 Sept. 30, 2022, SEI manages, advises, or administers approximately $1.2 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:

• the degree to which market conditions and trends create growth opportunities for us,
• 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,
• our strategies for investing in our talent, the timing of these investments and whether these investments will enable us to capitalize on opportunities for organic and inorganic growth, and
• whether we positioned for growth, and to deliver value to our employees, clients, and shareholders

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 drivers of expense growth,
• our priorities of right sizing our expenses to business growth opportunities and allocating spending to areas of accelerated growth are a priority,
• whether our previously announced voluntary separation plan will reduce our run-rate expenses going forward,
• the timing of client deconversions and the effect of these deconversions on our revenue,
• the value of our backlog and the strength of our pipelines,
• the impact of changes to our client's businesses on our recurring revenue, including the divestiture of lines of business by our clients,
• whether we will take a one-time reduction in booked revenue in the 4th quarter as a consequence of discussions with Wells Fargo and the amount of any such reduction,
• whether we will add additional books from the client that went live on our SaaS SWP technology only offering,
• whether we will see revenue growth within many of our top clients,
• 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 creating opportunities for diverse perspectives in talent from inside and outside of SEI will position us for growth or accelerate our growth,
• our ability to align our talent and solutions capabilities with our go-to-market strategy and the degree to which such alignment will enable us to capitalize on opportunities,
• whether our investments will create growth opportunities,
• whether we are positioned for sustainable growth and to take advantage of opportunities,
• the margins that our businesses may generate and the degree to which our reported margins will decline, increase or normalize,
• the degree to which one-time and transaction-based revenues during the quarter will be repeated,
• how we will manage our expenses,
• the strategic initiatives and business segments that we will pursue and those in which we will invest,
• the degree to which our organizational changes will strengthen our offerings and deepen relationships or help our clients succeed,
• our commitment to driving greater topline revenue growth and the success of such commitment,
• whether we have laid the groundwork for our future growth plans,
• whether our voluntary separation program will create space for internal mobility, fresh perspectives, diversity and external experience, and the degree to which this will position us for or accelerate our growth,
• the success, if any, of the sales and strategic initiatives we pursue,
• the timing of when new clients will be on-boarded directly to new technology platforms and when our entire existing client base will be live on such platforms,
• whether we will be able to drive cross-selling opportunities,
• whether we will focus on maintaining and accelerating growth in existing businesses, expanding our focus on new growth engines, or reinvigorating our culture and talent strategies across the company,
• our growth prospects,
• the timing of and our ability to integrate any acquisition targets that we may pursue, if any,
• the potential benefits we may derive from any of our acquisitions,
• the organic and inorganic opportunities that will drive our growth, and the success and benefits of our strategic investments.

You should not place undue reliance on our forward-looking statements, as they are based on the current beliefs and expectations of our management and subject to significant risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe the assumptions upon which we base our forward-looking statements are reasonable, they could be inaccurate. Some of the risks and important factors that could cause actual results to differ from those described in our forward-looking statements can be found in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended Dec. 31, 2021, filed with the Securities and Exchange Commission.

 

SEI INVESTMENTS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
		For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2022		2021		2022		2021
Asset management, admin. and distribution fees		$372,133		$393,296		$1,148,824		$1,143,451
Information processing and software servicing fees		99,201		92,026		385,623		273,208
Total revenues		471,334		485,322		1,534,447		1,416,659
Subadvisory, distribution and other asset mgmt. costs		47,334		55,619		150,485		161,610
Software royalties and other information processing costs		6,909		7,348		21,863		20,561
Compensation, benefits and other personnel		227,127		150,188		545,532		429,188
Stock-based compensation		10,766		11,318		31,339		31,173
Consulting, outsourcing and professional fees		58,558		55,868		184,320		165,657
Data processing and computer related		30,950		26,650		93,020		79,746
Facilities, supplies and other costs		19,704		14,124		57,464		49,851
Amortization		10,382		14,674		43,777		43,749
Depreciation		8,558		8,408		24,942		25,141
Total expenses		420,288		344,197		1,152,742		1,006,676
Income from operations		51,046		141,125		381,705		409,983
Net (loss) gain on investments		(1,406)		(575)		(4,515)		134
Interest and dividend income		3,962		892		6,663		2,715
Interest expense		(143)		(101)		(604)		(354)
Equity in earnings of unconsolidated affiliate		26,654		35,005		88,926		103,420
Income before income taxes		80,113		176,346		472,175		515,898
Income taxes		18,454		38,301		108,932		114,605
Net income		$61,659		$138,045		$363,243		$401,293
Basic earnings per common share		$0.46		$0.98		$2.66		$2.83
Shares used to calculate basic earnings per share		135,203		140,507		136,524		141,928
Diluted earnings per common share		$0.45		$0.97		$2.63		$2.79
Shares used to calculate diluted earnings per share		136,345		142,426		137,958		143,981
Dividends declared per common share		$—		$—		$0.40		$0.37

 

SEI INVESTMENTS COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
		September 30,		December 31,
		2022		2021
Assets
Current Assets:
Cash and cash equivalents		$791,437		$831,407
Restricted cash		351		351
Receivables from investment products		91,223		59,036
Receivables, net of allowance for doubtful accounts of $2,336 and $1,602		482,692		441,609
Securities owned		31,586		28,267
Other current assets		54,931		43,559
Total Current Assets		1,452,220		1,404,229
Property and Equipment, net of accumulated depreciation of $431,473 and $409,248		182,522		178,869
Operating Lease Right-of-Use Assets		24,187		33,614
Capitalized Software, net of accumulated amortization of $579,352 and $545,307		234,228		243,446
Available for Sale and Equity Securities		109,375		129,541
Investments in Affiliated Funds, at fair value		5,620		6,916
Investment in Unconsolidated Affiliate		39,012		107,918
Goodwill		117,509		117,232
Intangible Assets, net of accumulated amortization of $27,133 and $17,716		58,201		68,782
Deferred Contract Costs		37,790		36,236
Deferred Income Taxes		2,253		2,983
Other Assets, net		32,514		24,936
Total Assets		$2,295,431		$2,354,702
Liabilities and Equity
Current Liabilities:
Accounts payable		$8,209		$10,312
Accrued liabilities		294,987		324,382
Current portion of long-term operating lease liabilities		11,202		11,328
Deferred revenue		13,025		9,721
Total Current Liabilities		327,423		355,743
Borrowings Under Revolving Credit Facility		—		40,000
Long-term Income Taxes Payable		803		803
Deferred Income Taxes		3,545		48,876
Long-term Operating Lease Liabilities		18,361		27,639
Other Long-term Liabilities		14,986		20,878
Total Liabilities		365,118		493,939
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 134,816 and 138,449 shares issued and outstanding		1,348		1,384
Capital in excess of par value		1,285,224		1,246,608
Retained earnings		711,330		632,614
Accumulated other comprehensive loss, net		(67,589)		(19,843)
Total Shareholders' Equity		1,930,313		1,860,763
Total Liabilities and Shareholders' Equity		$2,295,431		$2,354,702

 

ENDING ASSET BALANCES (In millions)  (Unaudited)
		Sept. 30,		Dec. 31,		Mar. 31,		Jun. 30,		Sept. 30,
		2021		2021		2022		2022		2022
Private Banks:
Equity and fixed-income programs		$25,618		$26,281		$25,335		$22,277		$20,131
Collective trust fund programs		6		6		7		7		7
Liquidity funds		3,988		4,724		4,225		3,666		3,778
Total assets under management		$29,612		$31,011		$29,567		$25,950		$23,916
Client assets under administration		4,675		4,481		4,449		3,923		4,161
Total assets		$34,287		$35,492		$34,016		$29,873		$28,077
Investment Advisors:
Equity and fixed-income programs		$78,560		$81,686		$77,614		$65,783		$62,579
Liquidity funds		3,477		4,317		4,610		8,292		5,200
Total Platform assets under management		$82,037		$86,003		$82,224		$74,075		$67,779
Platform-only assets		13,728		14,564		14,151		12,642		12,609
Total Platform assets		$95,765		$100,567		$96,375		$86,717		$80,388
Institutional Investors:
Equity and fixed-income programs		$89,441		$91,719		$87,358		$75,506		$69,621
Collective trust fund programs		5		5		6		5		6
Liquidity funds		2,599		2,118		2,150		1,654		1,640
Total assets under management		$92,045		$93,842		$89,514		$77,165		$71,267
Client assets under advisement		4,698		4,857		4,778		4,218		4,204
Total assets		$96,743		$98,699		$94,292		$81,383		$75,471
Investment Managers:
Collective trust fund programs (A)		$87,488		$92,549		$85,411		$142,035		$137,538
Liquidity funds		568		423		284		271		248
Total assets under management		$88,056		$92,972		$85,695		$142,306		$137,786
Client assets under administration		861,605		907,377		895,181		885,096		781,246
Total assets		$949,661		$1,000,349		$980,876		$1,027,402		$919,032
Investments in New Businesses:
Equity and fixed-income programs		$1,964		$2,096		$2,057		$1,903		$1,813
Liquidity funds		202		240		305		242		221
Total assets under management		$2,166		$2,336		$2,362		$2,145		$2,034
Client assets under administration		1,378		1,410		1,401		1,076		1,026
Total assets		$3,544		$3,746		$3,763		$3,221		$3,060
LSV Asset Management:
Equity and fixed-income programs (B)		$97,604		$98,984		$95,962		$81,940		$75,380
Total:
Equity and fixed-income programs (C)		$293,187		$300,766		$288,326		$247,409		$229,524
Collective trust fund programs		87,499		92,560		85,424		142,047		137,551
Liquidity funds		10,834		11,822		11,574		14,125		11,087
Total assets under management		$391,520		$405,148		$385,324		$403,581		$378,162
Client assets under advisement		6,076		6,267		6,179		5,294		5,230
Client assets under administration (D)		866,280		911,858		899,630		889,019		785,407
Platform-only assets		13,728		14,564		14,151		12,642		12,609
Total assets		$1,277,604		$1,337,837		$1,305,284		$1,310,536		$1,181,408

(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 $1.7 billion of assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee (as of September 30, 2022).
(C)	Equity and fixed-income programs include $6.2 billion of assets invested in various asset allocation funds (as of September 30, 2022).
(D)	In addition to the assets presented, SEI also administers an additional $12.5 billion in Funds of Funds assets on which SEI does not earn an administration fee (as of September 30, 2022).

 

AVERAGE ASSET BALANCES (In millions) (Unaudited)
		3rd Qtr.		4th Qtr.		1st Qtr.		2nd Qtr.		3rd Qtr.
		2021		2021		2022		2022		2022
Private Banks:
Equity and fixed-income programs		$26,232		$25,999		$25,637		$23,713		$22,115
Collective trust fund programs		6		6		6		7		7
Liquidity funds		3,916		4,452		4,403		3,795		3,742
Total assets under management		$30,154		$30,457		$30,046		$27,515		$25,864
Client assets under administration		4,476		4,607		4,500		4,163		4,026
Total assets		$34,630		$35,064		$34,546		$31,678		$29,890
Investment Advisors:
Equity and fixed-income programs		$79,602		$80,703		$77,576		$70,436		$67,464
Liquidity funds		3,403		3,644		5,151		7,070		5,380
Total Platform assets under management		$83,005		$84,347		$82,727		$77,506		$72,844
Platform-only assets		13,863		14,341		13,978		13,142		13,271
Total Platform assets		$96,868		$98,688		$96,705		$90,648		$86,115
Institutional Investors:
Equity and fixed-income programs		$91,965		$90,557		$89,250		$80,971		$74,859
Collective trust fund programs		5		5		5		5		6
Liquidity funds		2,742		2,391		2,223		2,097		1,717
Total assets under management		$94,712		$92,953		$91,478		$83,073		$76,582
Client assets under advisement		4,658		4,812		4,889		3,987		4,194
Total assets		$99,370		$97,765		$96,367		$87,060		$80,776
Investment Managers:
Collective trust fund programs (A)		$89,441		$90,457		$86,633		$131,435		$143,817
Liquidity funds		532		491		432		285		250
Total assets under management		$89,973		$90,948		$87,065		$131,720		$144,067
Client assets under administration		851,183		879,718		888,854		893,361		782,559
Total assets		$941,156		$970,666		$975,919		$1,025,081		$926,626
Investments in New Businesses:
Equity and fixed-income programs		$1,958		$2,053		$2,025		$2,016		$1,939
Liquidity funds		205		197		286		262		231
Total assets under management		$2,163		$2,250		$2,311		$2,278		$2,170
Client assets under advisement		1,423		1,423		1,397		1,165		1,126
Total assets		$3,586		$3,673		$3,708		$3,443		$3,296
LSV Asset Management:
Equity and fixed-income programs (B)		$99,924		$97,381		$96,449		$87,818		$81,241
Total:
Equity and fixed-income programs (C)		$299,681		$296,693		$290,937		$264,954		$247,618
Collective trust fund programs		89,452		90,468		86,644		131,447		143,830
Liquidity funds		10,798		11,175		12,495		13,509		11,320
Total assets under management		$399,931		$398,336		$390,076		$409,910		$402,768
Client assets under advisement		6,081		6,235		6,286		5,152		5,320
Client assets under administration (D)		855,659		884,325		893,354		897,524		786,585
Platform-only assets		13,863		14,341		13,978		13,142		13,271
Total assets		$1,275,534		$1,303,237		$1,303,694		$1,325,728		$1,207,944

(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 third-quarter 2022 include $1.8 billion of average assets managed by LSV in which fees are based solely on performance and are not calculated as an asset-based fee.
(C)	Equity and fixed-income programs include $6.3 billion of average assets invested in various asset allocation funds during third-quarter 2022.
(D)	In addition to the assets presented, SEI also administers an additional $12.7 billion of average assets in Funds of Funds assets during third-quarter 2022 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

 

View original content:https://www.prnewswire.com/news-releases/sei-reports-third-quarter-2022-financial-results-301660244.html

SOURCE SEI Investments Company

FAQ

What were SEIC's earnings results for the third quarter of 2022?

SEI Investments Company reported diluted earnings per share of $0.45 for the third quarter of 2022, down from $0.97 in the same period in 2021.

How did SEIC's revenue change in the third quarter of 2022?

Revenues for SEI in the third quarter of 2022 decreased by 3% to $471.3 million compared to $485.3 million in the third quarter of 2021.

What factors impacted SEIC's financial performance in Q3 2022?

SEIC's financial results were affected by lower capital market performance, one-time costs from a voluntary separation program, and inflationary pressures on costs.

What was SEIC's net income for the third quarter of 2022?

SEI Investments Company's net income for the third quarter of 2022 was $61.7 million, a decrease of 55% from $138.0 million in the previous year.

What is SEIC's future outlook based on the recent earnings report?

Management remains optimistic about growth opportunities, emphasizing investments in talent and capabilities while facing a changing market landscape.