SEI Reports Third-Quarter 2015 Financial Results
Results Include $.02 Diluted Earnings per Share Charge for Asset Write Off
/EINPresswire.com/ -- OAKS, PA -- (Marketwired) -- 10/21/15 -- SEI Investments Company (NASDAQ: SEIC) today announced financial results for the third-quarter 2015. Diluted earnings per share were $.47 in third-quarter 2015 compared to $.49 in third-quarter 2014. Third-quarter 2015 includes a charge against earnings of approximately $6.0 million, or $.02 diluted earnings per share, from the write off of certain assets related to the SEI Wealth Platform(SM).
Consolidated Overview
For the Three For the Nine
(In thousands, except Months Ended Months Ended
earnings per share) September 30, September 30,
2015 2014 % 2015 2014 %
-------- -------- -- -------- -------- --
Revenues $335,622 $322,047 4% $998,811 $943,248 6%
Net income 79,425 83,983 (5)% 250,276 241,616 4%
Diluted earnings per
share $ 0.47 $ 0.49 (4)% $ 1.47 $ 1.39 6%
"Our third-quarter results reflect short-term challenges resulting from weakened capital markets, balanced by continued market acceptance of our broad solutions," said Alfred P. West, Jr., SEI Chairman and CEO. "We are encouraged by the level of engagement of our target markets and feel the investments we are making in enhancing our technology platforms, operational capacity and investment products serve us well both for today and into the future.
"Despite the market headwinds we face, we are confident in our market positioning and in our ability to help our clients succeed by delivering outsourced enterprise platforms."
Summary of Third-Quarter Results by Business Segment
For the Three Months For the Nine Months
(In thousands) Ended September 30, Ended September 30,
2015 2014 % 2015 2014 %
--------- --------- --- --------- --------- --
Private Banks:
Revenues $ 116,280 $ 110,147 6% $ 342,826 $ 329,508 4%
Expenses 104,217 100,498 4% 308,200 299,645 3%
--------- --------- --------- ---------
Operating Profit 12,063 9,649 25% 34,626 29,863 16%
Gain on sale of
subsidiary -- -- --% 2,791 5,582 NM
--------- --------- --------- ---------
Segment Profit 12,063 9,649 NM 37,417 35,445 NM
Operating Margin (A) 10% 9% 10% 9%
Investment Advisors:
Revenues 76,238 74,469 2% 228,006 210,939 8%
Expenses 45,530 37,796 20% 125,446 108,052 16%
--------- --------- --------- ---------
Operating Profit 30,708 36,673 (16)% 102,560 102,887 --%
Operating Margin 40% 49% 45% 49%
Institutional
Investors:
Revenues 74,515 72,560 3% 224,043 212,211 6%
Expenses 36,923 35,495 4% 108,662 104,615 4%
--------- --------- --------- ---------
Operating Profit 37,592 37,065 1% 115,381 107,596 7%
Operating Margin 50% 51% 51% 51%
Investment Managers:
Revenues 67,162 63,640 6% 199,809 187,099 7%
Expenses 43,899 40,156 9% 126,663 118,789 7%
--------- --------- --------- ---------
Operating Profit 23,263 23,484 (1)% 73,146 68,310 7%
Operating Margin 35% 37% 37% 37%
Investments in New
Businesses:
Revenues 1,427 1,231 16% 4,127 3,491 18%
Expenses 5,179 4,614 12% 14,848 13,314 12%
--------- --------- --------- ---------
Operating Loss (3,752) (3,383) NM (10,721) (9,823) NM
Totals:
Revenues $ 335,622 $ 322,047 4% $ 998,811 $ 943,248 6%
Expenses 235,748 218,559 8% 683,819 644,415 6%
Corporate overhead
expenses 12,856 12,990 (1)% 38,986 36,313 7%
--------- --------- --------- ---------
Income from
operations $ 87,018 $ 90,498 (4)% $ 276,006 $ 262,520 5%
========= ========= ========= =========
(A) Percentages determined exclusive of gain on sale of subsidiary.
Third-Quarter Business Highlights:
- Revenue growth was primarily driven by higher Asset management, administration, and distribution fees from improved cash flows from new and existing clients and the favorable market conditions which prevailed during the first six months of 2015. The recent market volatility during third-quarter 2015 negatively impacted our asset-based fee revenues and partially offset our revenue growth.
- Sales events, net of client losses, during third-quarter 2015 totaled approximately $20.8 million and are expected to generate net annualized recurring revenues of approximately $19.5 million when contract values are fully realized.
- Despite the unfavorable market conditions during third-quarter 2015, our average assets under management, excluding LSV, increased $4.4 billion, or three percent, to $172.8 billion, as compared to $168.5 billion during the third-quarter 2014 (see attached Average Asset Balances schedules for further details).
- Our average assets under administration increased $37.4 billion, or ten percent, to $397.8 billion in the third-quarter 2015, as compared to $360.4 billion during the third-quarter 2014 (see attached Average Asset Balances schedules for further details).
- Our earnings from LSV decreased by $4.6 million, or 12 percent, to $33.6 million in third-quarter 2015 as compared to $38.2 million in third-quarter 2014. The reduction in earnings was due to lower assets under management from market volatility in third-quarter 2015 as well as reduced performance fees earned by LSV.
- We wrote off approximately $6.0 million, or $0.02 diluted earnings per share, in previously capitalized software development costs and purchased software related to the SEI Wealth Platform in the third-quarter 2015. The expense associated with this write off impacted the Private Banks segment by $3.6 million and the Investment Advisors segment by $2.4 million, and is reflected in Facilities, supplies and other costs on the Consolidated Statement of Operations.
- Amortization expense related to the SEI Wealth Platform was $10.8 million during the third-quarter 2015 as compared to $9.8 million during the third-quarter 2014 due to continued enhancements.
- Our operating expenses related to personnel costs in our Investment Advisors and Investment Managers segments increased. These increased operational costs are mainly related to servicing new and existing clients.
- Our effective tax rates were 34.1 percent in third-quarter 2015 and 34.7 percent in third-quarter 2014.
- We repurchased 1.7 million shares of our common stock for $85.8 million during the third-quarter 2015.
Earnings Conference Call
A conference call to review earnings is scheduled for 2 p.m. Eastern time on October 21, 2015. Investors may listen to the call at seic.com/investors. The call may also be accessed at many financial services websites, including Google Finance and Yahoo Finance. Investors may also listen to replays at these websites, or by telephone at (USA) 800-475-6701; (International) 320-365-3844, access code 371051.
About SEI
SEI (NASDAQ: SEIC) is a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of September 30, 2015, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $638 billion in mutual fund and pooled or separately managed assets, including $245 billion in assets under management and $393 billion in client assets under administration. For more information, visit seic.com.
Many of the statements in this release may be considered "forward looking statements" and include discussions about future operations, strategies and financial results. Forward-looking statements are based upon estimates and assumptions that involve risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe our assumptions are reasonable, they could be inaccurate. Our actual future revenues and income could differ materially from our expected results. We have no obligation to publicly update or revise any forward-looking statements.
SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
For the Three
Months Ended For the Nine Months
September 30, Ended September 30,
------------------- -------------------
2015 2014 2015 2014
--------- --------- --------- ---------
Asset management, admin. and
distribution fees $ 252,585 $ 244,704 $ 756,101 $ 705,966
Information processing and software
servicing fees 74,413 70,020 218,765 215,026
Transaction-based and trade
execution fees 8,624 7,323 23,945 22,256
--------- --------- --------- ---------
Total revenues 335,622 322,047 998,811 943,248
Subadvisory, distribution and other
asset mgmt costs 40,230 39,737 119,619 110,993
Software royalties and other
information processing costs 8,028 8,562 23,594 25,532
Brokerage commissions 6,460 5,119 17,863 16,217
Compensation, benefits and other
personnel 99,461 94,316 292,646 281,210
Stock-based compensation 3,867 3,786 11,476 9,481
Consulting, outsourcing and
professional fees 35,963 34,946 108,560 103,283
Data processing and computer related 15,173 13,555 43,100 39,553
Facilities, supplies and other costs 22,477 16,136 56,195 49,354
Amortization 10,837 9,813 31,806 28,611
Depreciation 6,108 5,579 17,946 16,494
--------- --------- --------- ---------
Total expenses 248,604 231,549 722,805 680,728
Income from operations 87,018 90,498 276,006 262,520
Net (loss) gain on investments (756) (478) (544) 49
Interest and dividend income 846 750 2,570 2,248
Interest expense (115) (115) (342) (342)
Equity in earnings of unconsolidated
affiliates 33,595 37,963 104,917 104,080
Gain on sale of subsidiary -- -- 2,791 5,582
--------- --------- --------- ---------
Income before income taxes 120,588 128,618 385,398 374,137
Income taxes 41,163 44,635 135,122 132,521
--------- --------- --------- ---------
Net income 79,425 83,983 250,276 241,616
--------- --------- --------- ---------
Basic earnings per common share $ 0.48 $ 0.50 $ 1.51 $ 1.43
========= ========= ========= =========
Shares used to calculate basic
earnings per share 165,579 167,925 166,142 168,612
========= ========= ========= =========
Diluted earnings per common share $ 0.47 $ 0.49 $ 1.47 $ 1.39
========= ========= ========= =========
Shares used to calculate diluted
earnings per share 169,255 172,905 169,977 173,700
========= ========= ========= =========
SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2015 2014
------------- -------------
Assets
Current Assets:
Cash and cash equivalents $ 647,589 $ 667,446
Restricted cash 6,319 5,801
Receivables from regulated investment
companies 45,792 48,393
Receivables, net 217,696 194,419
Securities owned 21,225 21,175
Other current assets 29,206 18,193
------------- -------------
Total Current Assets 967,827 955,427
Property and Equipment, net 142,352 125,535
Capitalized software, net 294,380 309,040
Investments available for sale 75,650 77,609
Investments in affiliated funds, at fair
value 3,944 4,523
Investment in unconsolidated affiliates 42,294 54,290
Other assets, net 17,082 16,451
------------- -------------
Total Assets $ 1,543,529 $ 1,542,875
============= =============
Liabilities and Equity
Current Liabilities:
Accounts payable $ 4,002 $ 10,588
Accrued liabilities 153,280 207,429
Deferred income taxes, net 176 1,414
Deferred revenue 4,457 1,749
------------- -------------
Total Current Liabilities 161,915 221,180
Deferred income taxes 59,597 63,755
Other long-term liabilities 12,253 10,327
------------- -------------
Total Liabilities 233,765 295,262
Shareholders' Equity:
Common stock 1,646 1,667
Capital in excess of par value 892,549 834,615
Retained earnings 435,915 420,226
Accumulated other comprehensive loss,
net (20,346) (8,895)
------------- -------------
Total Shareholders' Equity 1,309,764 1,247,613
------------- -------------
Total Liabilities and Shareholders'
Equity $ 1,543,529 $ 1,542,875
============= =============
SEI INVESTMENTS COMPANY
ENDING ASSET BALANCES
(In millions)
(Unaudited)
Sept. 30, Dec 31, Mar. 31, Jun. 30, Sept. 30,
2014 2014 2015 2015 2015
--------- --------- --------- --------- ---------
Private Banks:
Equity/Fixed Income
programs $ 18,634 $ 18,666 $ 19,296 $ 19,686 $ 18,243
Collective Trust Fund
programs 11 8 9 13 3
Liquidity funds 5,331 5,889 5,551 5,280 5,469
--------- --------- --------- --------- ---------
Total assets under
management $ 23,976 $ 24,563 $ 24,856 $ 24,979 $ 23,715
Client assets under
administration 16,288 16,741 17,643 17,485 16,896
--------- --------- --------- --------- ---------
Total assets $ 40,264 $ 41,304 $ 42,499 $ 42,464 $ 40,611
Investment Advisors:
Equity/Fixed Income
programs $ 42,260 $ 43,845 $ 45,800 $ 46,951 $ 43,988
Collective Trust Fund
programs 9 9 8 8 9
Liquidity funds 3,086 3,173 3,047 2,817 4,677
--------- --------- --------- --------- ---------
Total assets under
management $ 45,355 $ 47,027 $ 48,855 $ 49,776 $ 48,674
Institutional Investors:
Equity/Fixed Income
programs $ 72,006 $ 72,828 $ 74,178 $ 75,341 $ 70,818
Collective Trust Fund
programs 98 95 94 93 96
Liquidity funds 2,891 2,929 3,246 2,960 2,655
--------- --------- --------- --------- ---------
Total assets under
management $ 74,995 $ 75,852 $ 77,518 $ 78,394 $ 73,569
Investment Managers:
Equity/Fixed Income
programs $ 64 $ 27 $ 25 $ 24 $ 59
Collective Trust Fund
programs 21,297 20,833 20,965 20,632 19,863
Liquidity funds 1,018 946 1,091 1,007 848
--------- --------- --------- --------- ---------
Total assets under
management $ 22,379 $ 21,806 $ 22,081 $ 21,663 $ 20,770
Client assets under
administration (A) 346,841 355,890 372,116 381,963 376,133
--------- --------- --------- --------- ---------
Total assets $ 369,220 $ 377,696 $ 394,197 $ 403,626 $ 396,903
Investments in New
Businesses:
Equity/Fixed Income
programs $ 703 $ 736 $ 756 $ 779 $ 752
Liquidity funds 118 98 106 57 51
--------- --------- --------- --------- ---------
Total assets under
management $ 821 $ 834 $ 862 $ 836 $ 803
LSV Asset Management:
Equity/Fixed Income
programs $ 81,536 $ 82,665 $ 84,123 $ 86,334 $ 76,958
Total:
Equity/Fixed Income
programs (B) $ 215,203 $ 218,767 $ 224,178 $ 229,115 $ 210,818
Collective Trust Fund
programs 21,415 20,945 21,076 20,746 19,971
Liquidity funds 12,444 13,035 13,041 12,121 13,700
--------- --------- --------- --------- ---------
Total assets under
management $ 249,062 $ 252,747 $ 258,295 $ 261,982 $ 244,489
Client assets under
administration (C) 363,129 372,631 389,759 399,448 393,029
--------- --------- --------- --------- ---------
Total assets $ 612,191 $ 625,378 $ 648,054 $ 661,430 $ 637,518
========= ========= ========= ========= =========
(A) Client assets under administration in the Investment Managers segment include $49.3 billion of assets balances that require limited services and therefore are at fee levels below our normal full service assets (as of September 30, 2015).
(B) Equity/Fixed Income programs include $4.7 billion of assets invested in various asset allocation funds at September 30, 2015.
(C) In addition to the numbers presented, SEI also administers an additional $6.4 billion in Funds of Funds assets (as of September 30, 2015) on which SEI does not earn an administration fee.
SEI INVESTMENTS COMPANY
AVERAGE ASSET BALANCES
(In millions)
(Unaudited)
3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr.
2014 2014 2015 2015 2015
--------- --------- --------- --------- ---------
Private Banks:
Equity/Fixed Income
programs $ 18,804 $ 18,606 $ 18,869 $ 19,872 $ 19,080
Collective Trust Fund
programs 12 10 8 12 6
Liquidity funds 5,466 5,537 5,755 5,256 5,443
--------- --------- --------- --------- ---------
Total assets under
management $ 24,282 $ 24,153 $ 24,632 $ 25,140 $ 24,529
Client assets under
administration 15,707 16,451 17,504 17,823 17,504
--------- --------- --------- --------- ---------
Total assets $ 39,989 $ 40,604 $ 42,136 $ 42,963 $ 42,033
Investment Advisors:
Equity/Fixed Income
programs $ 42,389 $ 43,104 $ 44,809 $ 47,027 $ 45,992
Collective Trust Fund
programs 11 9 9 8 9
Liquidity funds 2,830 3,087 3,072 2,819 3,523
--------- --------- --------- --------- ---------
Total assets under
management $ 45,230 $ 46,200 $ 47,890 $ 49,854 $ 49,524
Institutional Investors:
Equity/Fixed Income
programs $ 72,010 $ 72,771 $ 73,760 $ 75,426 $ 73,568
Collective Trust Fund
programs 98 96 95 94 93
Liquidity funds 2,883 2,973 3,021 3,354 2,843
--------- --------- --------- --------- ---------
Total assets under
management $ 74,991 $ 75,840 $ 76,876 $ 78,874 $ 76,504
Investment Managers:
Equity/Fixed Income
programs $ 64 $ 64 $ 27 $ 25 $ 24
Collective Trust Fund
programs 22,123 21,140 21,108 21,387 20,449
Liquidity funds 962 904 1,066 1,010 978
--------- --------- --------- --------- ---------
Total assets under
management $ 23,149 $ 22,108 $ 22,201 $ 22,422 $ 21,451
Client assets under
administration 344,661 355,903 367,206 378,347 380,247
--------- --------- --------- --------- ---------
Total assets $ 367,810 $ 378,011 $ 389,407 $ 400,769 $ 401,698
Investments in New
Businesses:
Equity/Fixed Income
programs $ 688 $ 731 $ 755 $ 784 $ 776
Liquidity funds 139 97 101 75 49
--------- --------- --------- --------- ---------
Total assets under
management $ 827 $ 828 $ 856 $ 859 $ 825
LSV Asset Management:
Equity/Fixed Income
programs $ 82,402 $ 83,187 $ 83,439 $ 87,409 $ 80,656
Total:
Equity/Fixed Income
programs $ 216,357 $ 218,463 $ 221,659 $ 230,543 $ 220,096
Collective Trust Fund
programs 22,244 21,255 21,220 21,501 20,557
Liquidity funds 12,280 12,598 13,015 12,514 12,836
--------- --------- --------- --------- ---------
Total assets under
management $ 250,881 $ 252,316 $ 255,894 $ 264,558 $ 253,489
Client assets under
administration 360,368 372,354 384,710 396,170 397,751
--------- --------- --------- --------- ---------
Total assets $ 611,249 $ 624,670 $ 640,604 $ 660,728 $ 651,240
========= ========= ========= ========= =========
Investor Contact:
Nicole Vattimo
SEI
+1 610-676-4385
nvattimo@seic.com
Media Contact:
Dana Grosser
SEI
+1 610-676-2459
dgrosser@seic.com
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