SEI Reports Third-Quarter 2013 Financial Results

SEI Reports Third-Quarter 2013 Financial Results 
OAKS, PA -- (Marketwired) -- 10/24/13 --  SEI Investments Company
(NASDAQ: SEIC) today announced financial results for third-quarter
2013. Diluted earnings per share were $.38 in third-quarter 2013
compared to $.29 in third-quarter 2012.  


 
                                                                            
Consolidated Overview                                                       
(In thousands, except         For the Three Months     For the Nine Months  
 earnings per share)           Ended September 30,     Ended September 30,  
                                2013      2012    %     2013      2012    % 
                             --------- --------- --  --------- --------- -- 
                                                                            
Revenues                     $ 280,655 $ 251,752 11% $ 827,108 $ 730,887 13%
Net Income attributable to                                                  
 SEI                            67,195    50,743 32%   222,609   150,263 48%
Diluted Earnings Per Share   $    0.38 $    0.29 31% $    1.26 $    0.85 48%

 
"During the third quarter of 2013, the Company continued its positive
progress across all of our business units. Our growth in revenues and
profits reflect the impact of new client activity, growth of existing
clients, and positive asset flows," said Alfred P. West, Jr., SEI
Chairman and CEO. 
"We continue to be encouraged by the market acceptance of our
solutions. We are engaged in rapidly-changing markets requiring
continued investment in our product and service offering. This
enables us to enhance our competitive strength, accelerate our
growth, and enhance long-term shareholder value." 
Summary of Third-Quarter Results by Business Segment 


 
                                                                            
(In thousands)           For the Three Months       For the Nine Months     
                         Ended September 30,        Ended September 30,     
                         2013       2012     %      2013       2012     %   
                      ---------  ---------  ---  ---------  ---------  ---  
Private Banks:                                                              
  Revenues            $  97,370  $  92,076    6% $ 291,258  $ 268,367    9% 
  Expenses               95,579     91,209    5%   289,632    263,612   10% 
                      ---------  ---------       ---------  ---------       
  Operating Profit        1,791        867  107%     1,626      4,755  (66)%
  Gain on sale of                                                           
   subsidiary                --         --  N/M     22,112         --  N/M  
                      ---------  ---------       ---------  ---------       
  Total Profit        $   1,791  $     867  107% $  23,738  $   4,755  N/M  
  Operating Margin                                                          
   (A)                        2%         1%              1%         2%      
                                                                            
Investment Advisors:                                                        
  Revenues               61,393     51,384   19%   175,868    150,227   17% 
  Expenses               33,768     30,114   12%    98,291     88,440   11% 
                      ---------  ---------       ---------  ---------       
  Operating Profit       27,625     21,270   30%    77,577     61,787   26% 
  Operating Margin           45%        41%             44%        41%      
                                                                            
Institutional                                                               
 Investors:                                                                 
  Revenues               63,539     58,081    9%   190,385    167,293   14% 
  Expenses               33,058     29,654   11%    97,595     86,494   13% 
                      ---------  ---------       ---------  ---------       
  Operating Profit       30,481     28,427    7%    92,790     80,799   15% 
  Operating Margin           48%        49%             49%        48%      
                                                                            
Investment Managers:                                                        
  Revenues               57,266     49,311   16%   166,542    142,235   17% 
  Expenses               37,763     32,122   18%   109,432     92,711   18% 
                      ---------  ---------       ---------  ---------       
  Operating Profit       19,503     17,189   13%    57,110     49,524   15% 
  Operating Margin           34%        35%             34%        35%      
                                                                            
Investments in New                                                          
 Businesses:                                                                
  Revenues                1,087        900   21%     3,055      2,765   10% 
  Expenses                4,146      3,698   12%    11,774     11,080    6% 
                      ---------  ---------       ---------  ---------       
  Operating Loss         (3,059)    (2,798) N/M     (8,719)    (8,315) N/M  
                                                                            
Totals:                                                                     
  Revenues            $ 280,655  $ 251,752   11% $ 827,108  $ 730,887   13% 
  Expenses              204,314    186,797    9%   606,724    542,337   12% 
  Corporate overhead                                                        
   expenses              14,402     11,668   23%    40,719     33,830   20% 
  NCI reflected in                                                          
   segments                  --       (203) N/M       (289)      (657) N/M  
                      ---------  ---------       ---------  ---------       
  Income from                                                               
   operations         $  61,939  $  53,490   16% $ 179,954  $ 155,377   16% 
                                                                            
(A)   Percentage determined exclusive of gain on sale of subsidiary.        

 
Third-Quarter Business Commentary: 


 
--  Revenues increased in third-quarter 2013 as compared to both
    third-quarter 2012 and second-quarter 2013. Revenue growth was
    primarily driven by higher Asset management, administration, and
    distribution fees from improved cash flows from new and existing
    clients and market appreciation.
    
    
--  Our average assets under management, excluding LSV, increased $11.3
    billion, or nine percent, to $143.9 billion in the third-quarter 2013,
    as compared to $132.6 billion during the third-quarter 2012, and
    increased $3.0 billion, or two percent, as compared to $140.9 billion
    during the second-quarter 2013. Average asset balances for the
    third-quarter 2012 include $6.5 billion in assets related to SEI Asset
    Korea, which was sold in first-quarter 2013 (see attached Ending and
    Average Asset Balances schedules for further details).
    
    
--  Sales events, net of client losses, during third-quarter 2013 totaled
    approximately $20.7 million and are expected to generate net
    annualized recurring revenues of approximately $18.3 million when
    contract values are fully realized.
    
    
--  Income from LSV increased in third-quarter 2013 to $31.3 million as
    compared to $24.9 million in third-quarter 2012 due to an increase in
    assets under management. Our ownership interest in LSV was
    approximately 39.3 percent in third-quarter 2013 and 39.8 percent in
    third-quarter 2012.
    
    
--  Stock-based compensation expense in third-quarter 2013 increased by
    $7.2 million as compared to third-quarter 2012. This incremental
    expense reflects a change in our estimate of the timing of when stock
    option vesting targets will be achieved. The Private Banks segment
    recognized $2.1 million of this incremental expense. The Investment
    Advisors, Institutional Investors, and Investment Managers segments
    each recognized approximately $1.3 million in expense.
    
    
--  Corporate overhead costs increased in third-quarter 2013 as compared
    to third-quarter 2012 due to $1.2 million in increased stock-based
    compensation, increased personnel costs, and higher costs related to
    regulatory and compliance matters.
    
    
--  The effective tax rates were 28.5 percent in third-quarter 2013, 39.0
    percent in third-quarter 2012, and 35.5 percent in second-quarter
    2013. The third-quarter 2013 tax rate was benefited by Pennsylvania
    Tax Law changes enacted during the third-quarter 2013. These changes
    resulted in a reduction of the deferred tax liability that has been
    built up over numerous years. The third-quarter 2012 tax rate
    reflected the accrual of taxes on the cumulative undistributed
    earnings of SEI Asset Korea.
    
    
--  In third-quarter 2013, we repurchased 1.9 million shares of our common
    stock for $58.6 million.

  
Earnings Conference Call
 A conference call to review earnings is
scheduled for 2:00 p.m. ET on October 24, 2013. Investors may listen
to the call at www.seic.com/investors. The call may also be accessed
at the financial services sections of numerous web sites, including
Google Finance and Yahoo Finance. Investors may also listen to
replays at these web sites, or by telephone at (USA) 1-800-475-6701;
(International) 320-365-3844, access code 306035. 
About SEI
 SEI (NASDAQ: SEIC) is a leading global provider of
investment processing, fund processing, and investment management
business outsourcing solutions that help corporations, financial
institutions, financial advisors, and ultra-high-net-worth families
create and manage wealth. As of September 30, 2013, through its
subsidiaries and partnerships in which the company has a significant
interest, SEI manages or administers $529 billion in mutual fund and
pooled or separately managed assets, including $219 billion in assets
under management and $310 billion in client assets under
administration. For more information, visit www.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  
                                                       September 30,        
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
                                                                            
Asset management, admin. and distribution fees $     208,780  $     183,083 
Information processing and software servicing                               
 fees                                                 64,606         60,901 
Transaction-based and trade execution fees             7,269          7,768 
                                               -------------  ------------- 
                                                                            
Total revenues                                       280,655        251,752 
                                                                            
Subadvisory, distribution and other asset mgmt                              
 costs                                                31,209         26,022 
Software royalties and other information                                    
 processing costs                                      7,541          6,701 
Brokerage commissions                                  5,519          5,542 
Compensation, benefits and other personnel            89,311         85,781 
Stock-based compensation                              11,097          3,879 
Consulting, outsourcing and professional fees         33,367         27,314 
Data processing and computer related                  12,654         11,749 
Facilities, supplies and other costs                  13,573         15,129 
Amortization                                           8,829         10,384 
Depreciation                                           5,616          5,761 
                                               -------------  ------------- 
                                                                            
Total expenses                                       218,716        198,262 
                                                                            
Income from operations                                61,939         53,490 
                                                                            
Net gain on investments                                  535          3,708 
Interest and dividend income                             679          1,490 
Interest expense                                        (195)          (115)
Equity in earnings of unconsolidated                                        
 affiliates                                           31,028         24,928 
                                               -------------  ------------- 
                                                                            
Net income before income taxes                        93,986         83,501 
                                                                            
Income taxes                                          26,791         32,415 
                                               -------------  ------------- 
                                                                            
Net income                                            67,195         51,086 
                                               -------------  ------------- 
                                                                            
Less: Net income attributable to the                                        
 noncontrolling interest                                  --           (343)
                                               =============  ============= 
                                                                            
Net income attributable to SEI                 $      67,195  $      50,743 
                                               =============  ============= 
                                                                            
Diluted earnings per common share              $        0.38  $        0.29 
                                               =============  ============= 
                                                                            
Shares used to calculate diluted earnings per                               
 share                                               176,043        175,369 
                                               =============  ============= 
                                                                            
Basic earnings per common share                $        0.39  $        0.29 
                                               =============  ============= 
                                                                            
Shares used to calculate basic earnings per                                 
 share                                               171,308        173,429 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                          SEI INVESTMENTS COMPANY                           
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
                   (In thousands, except per share data)                    
                                (Unaudited)                                 
                                                                            
                                                 For the Nine Months Ended  
                                                       September 30,        
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
                                                                            
Asset management, admin. and distribution fees $     611,135  $     532,650 
Information processing and software servicing                               
 fees                                                191,606        174,355 
Transaction-based and trade execution fees            24,367         23,882 
                                               -------------  ------------- 
                                                                            
Total revenues                                       827,108        730,887 
                                                                            
Subadvisory, distribution and other asset mgmt                              
 costs                                                88,795         79,442 
Software royalties and other information                                    
 processing costs                                     22,912         19,337 
Brokerage commissions                                 18,291         17,483 
Compensation, benefits and other personnel           264,636        244,855 
Stock-based compensation                              26,997         11,777 
Consulting, outsourcing and professional fees         98,667         80,598 
Data processing and computer related                  37,028         34,873 
Facilities, supplies and other costs                  47,280         44,909 
Amortization                                          25,498         25,413 
Depreciation                                          17,050         16,823 
                                               -------------  ------------- 
                                                                            
Total expenses                                       647,154        575,510 
                                                                            
Income from operations                               179,954        155,377 
                                                                            
Net gain on investments                                  638          7,577 
Interest and dividend income                           2,420          4,417 
Interest expense                                        (422)          (389)
Equity in earnings of unconsolidated                                        
 affiliates                                           86,204         74,970 
Gain on sale of subsidiary                            22,112             -- 
Other income                                          43,429             -- 
                                               -------------  ------------- 
                                                                            
Net income before income taxes                       334,335        241,952 
                                                                            
Income taxes                                         111,376         90,892 
                                               -------------  ------------- 
                                                                            
Net income                                           222,959        151,060 
                                               -------------  ------------- 
                                                                            
Less: Net income attributable to the                                        
 noncontrolling interest                                (350)          (797)
                                               -------------  ------------- 
                                                                            
Net income attributable to SEI                 $     222,609  $     150,263 
                                               =============  ============= 
                                                                            
Diluted earnings per common share              $        1.26  $        0.85 
                                               =============  ============= 
                                                                            
Shares used to calculate diluted earnings per                               
 share                                               176,036        176,317 
                                               =============  ============= 
                                                                            
Basic earnings per common share                $        1.29  $        0.86 
                                               =============  ============= 
                                                                            
Shares used to calculate basic earnings per                                 
 share                                               172,043        174,869 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                           SEI INVESTMENTS COMPANY                          
                          CONDENSED BALANCE SHEETS                          
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                                September 30,   December 31,
                                                     2013           2012    
                                                -------------  -------------
Assets                                                                      
                                                                            
Cash and cash equivalents                       $     527,214  $     452,247
Restricted cash                                         5,500          6,000
Receivables, net                                      225,961        202,818
Securities owned                                       20,728         20,088
Other current assets                                   20,629         20,251
                                                -------------  -------------
                                                                            
  Total current assets                                800,032        701,404
                                                                            
Property and equipment, net                           118,494        127,581
Investments available for sale                         86,186         75,869
Trading securities                                      4,841          5,909
Capitalized software, net                             313,206        307,490
Investment in unconsolidated affiliates                57,429         77,398
Other assets, net                                      11,511         14,173
                                                -------------  -------------
                                                                            
  Total assets                                  $   1,391,699  $   1,309,824
                                                =============  =============
                                                                            
                                                                            
                                                                            
Liabilities                                                                 
                                                                            
Current liabilities                             $     145,278  $     152,005
Deferred income taxes                                  71,151         93,458
Other Long-term liabilities                             8,703          7,032
                                                                            
Total SEI Investments Company shareholders'                                 
 equity                                             1,166,567      1,038,180
Noncontrolling interest                                    --         19,149
                                                -------------  -------------
Total Equity                                        1,166,567      1,057,329
                                                                            
  Total liabilities and equity                  $   1,391,699  $   1,309,824
                                                =============  =============
                                                                            
                                                                            
                                                                            
                           SEI INVESTMENTS COMPANY                          
                            ENDING ASSET BALANCES                           
                                (In millions)                               
                                 (Unaudited)                                
                                                                            
                           Sept. 30,  Dec. 31,  Mar. 31,  Jun. 30, Sept. 30,
                              2012      2012      2013      2013      2013  
                           --------- --------- --------- --------- ---------
Private Banks:                                                              
  Equity/Fixed Income                                                       
   programs                $  17,960 $  18,862 $  12,446 $  12,876 $  14,305
  Collective Trust Fund                                                     
   programs                      147        11         9        10        11
  Liquidity funds              5,342     6,008     5,143     5,048     5,167
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $  23,449 $  24,881 $  17,598 $  17,934 $  19,483
  Client assets under                                                       
   administration             11,611    12,178    12,970    13,122    14,101
                           --------- --------- --------- --------- ---------
  Total assets             $  35,060 $  37,059 $  30,568 $  31,056 $  33,584
                                                                            
Investment Advisors:                                                        
  Equity/Fixed Income                                                       
   programs                $  30,864 $  31,220 $  34,166 $  34,447 $  36,203
  Collective Trust Fund                                                     
   programs                      370        14        15        14        14
  Liquidity funds              1,868     2,514     2,094     2,145     2,779
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $  33,102 $  33,748 $  36,275 $  36,606 $  38,996
                                                                            
Institutional Investors:                                                    
  Equity/Fixed Income                                                       
   programs                $  59,852 $  62,160 $  64,214 $  61,927 $  64,429
  Collective Trust Fund                                                     
   programs                      153       102       101       106       107
  Liquidity funds              3,272     2,454     2,810     2,901     3,125
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $  63,277 $  64,716 $  67,125 $  64,934 $  67,661
                                                                            
Investment Managers:                                                        
  Equity/Fixed Income                                                       
   programs                $      65 $      67 $      73 $      75 $      75
  Collective Trust Fund                                                     
   programs                   15,433    16,197    17,656    18,197    19,868
  Liquidity funds                396       408       522       542       678
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $  15,894 $  16,672 $  18,251 $  18,814 $  20,621
  Client assets under                                                       
   administration (A)        240,965   244,671   275,632   289,807   295,959
                           --------- --------- --------- --------- ---------
  Total assets             $ 256,859 $ 261,343 $ 293,883 $ 308,621 $ 316,580
                                                                            
Investments in New                                                          
 Businesses:                                                                
  Equity/Fixed Income                                                       
   programs                $     534 $     513 $     552 $     572 $     594
  Liquidity funds                 29        43        42        29        26
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $     563 $     556 $     594 $     601 $     620
                                                                            
LSV Asset Management:                                                       
  Equity/Fixed Income                                                       
   programs                $  58,886 $  60,947 $  64,958 $  65,417 $  71,149
                                                                            
Total:                                                                      
  Equity/Fixed Income                                                       
   programs (B) (D)        $ 168,161 $ 173,769 $ 176,409 $ 175,314 $ 186,755
  Collective Trust Fund                                                     
   programs                   16,103    16,324    17,781    18,327    20,000
  Liquidity funds             10,907    11,427    10,611    10,665    11,775
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $ 195,171 $ 201,520 $ 204,801 $ 204,306 $ 218,530
                                                                            
  Client assets under                                                       
   administration (C)        252,576   256,849   288,602   302,929   310,060
                           --------- --------- --------- --------- ---------
  Total assets             $ 447,747 $ 458,369 $ 493,403 $ 507,235 $ 528,590
                                                                            
(A)   Client assets under administration in the Investment Managers segment 
      include $56.2 billion of assets balances that require limited services
      and therefore are at fee levels below our normal full service assets  
      (as of Sept. 30, 2013).                                               
(B)   Equity/Fixed Income programs include $3.9 billion of assets invested  
      in various asset allocation funds at Sept. 30, 2013.                  
(C)   In addition to the numbers presented, SEI also administers an         
      additional $5.6 billion in Funds of Funds assets (as of Sept. 30,     
      2013) on which SEI does not earn an administration fee.               
(D)   Equity/Fixed Income programs in the Private Banks segment for 2012    
      included assets related to SEI Asset Korea, which was sold in first-  
      quarter 2013. Assets for SEI Asset Korea at Sept. 30, 2012 and Dec.   
      31, 2012 were $6.6 billion and $7.0 billion, respectively.            
                                                                            
                                                                            
                                                                            
                           SEI INVESTMENTS COMPANY                          
                           AVERAGE ASSET BALANCES                           
                                (In millions)                               
                                 (Unaudited)                                
                                                                            
                            3rd Qtr.  4th Qtr.  1st Qtr.  2nd Qtr.  3rd Qtr.
                              2012      2012      2013      2013      2013  
                           --------- --------- --------- --------- ---------
Private Banks:                                                              
  Equity/Fixed Income                                                       
   programs                $  17,527 $  18,301 $  19,197 $  12,959 $  13,696
  Collective Trust Fund                                                     
   programs                      230        66        11        10        11
  Liquidity funds              5,401     5,229     5,556     5,093     5,142
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $  23,158 $  23,596 $  24,764 $  18,062 $  18,849
  Client assets under                                                       
   administration             10,867    11,783    12,860    13,183    13,760
                           --------- --------- --------- --------- ---------
  Total assets             $  34,025 $  35,379 $  37,624 $  31,245 $  32,609
                                                                            
Investment Advisors:                                                        
  Equity/Fixed Income                                                       
   programs                $  30,032 $  30,881 $  33,189 $  34,831 $  35,618
  Collective Trust Fund                                                     
   programs                      532       158        14        14        14
  Liquidity funds              1,886     2,176     2,085     2,028     2,520
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $  32,450 $  33,215 $  35,288 $  36,873 $  38,152
                                                                            
Institutional Investors:                                                    
  Equity/Fixed Income                                                       
   programs                $  57,763 $  61,304 $  63,642 $  63,466 $  63,153
  Collective Trust Fund                                                     
   programs                      284       120       101       105       107
  Liquidity funds              3,253     3,493     2,960     2,975     3,091
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $  61,300 $  64,917 $  66,703 $  66,546 $  66,351
                                                                            
Investment Managers:                                                        
  Equity/Fixed Income                                                       
   programs                $      62 $      68 $      68 $      75 $      76
  Collective Trust Fund                                                     
   programs                   14,797    15,719    17,129    18,205    19,259
  Liquidity funds                287       395       511       500       613
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $  15,146 $  16,182 $  17,708 $  18,780 $  19,948
  Client assets under                                                       
   administration            237,155   240,520   263,054   286,018   292,627
                           --------- --------- --------- --------- ---------
  Total assets             $ 252,301 $ 256,702 $ 280,762 $ 304,798 $ 312,575
                                                                            
Investments in New                                                          
 Businesses:                                                                
  Equity/Fixed Income                                                       
   programs                $     530 $     518 $     542 $     567 $     584
  Liquidity funds                 35        33        38        34        27
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $     565 $     551 $     580 $     601 $     611
                                                                            
LSV Asset Management:                                                       
  Equity/Fixed Income                                                       
   programs                $  57,164 $  59,383 $  63,997 $  66,781 $  69,463
                                                                            
Total:                                                                      
  Equity/Fixed Income                                                       
   programs (A)            $ 163,078 $ 170,455 $ 180,635 $ 178,679 $ 182,590
  Collective Trust Fund                                                     
   programs                   15,843    16,063    17,255    18,334    19,391
  Liquidity funds             10,862    11,326    11,150    10,630    11,393
                           --------- --------- --------- --------- ---------
  Total assets under                                                        
   management              $ 189,783 $ 197,844 $ 209,040 $ 207,643 $ 213,374
                                                                            
  Client assets under                                                       
   administration            248,022   252,303   275,914   299,201   306,387
                           --------- --------- --------- --------- ---------
  Total assets             $ 437,805 $ 450,147 $ 484,954 $ 506,844 $ 519,761
                                                                            
(A)   Equity/Fixed Income programs in the Private Banks segment for 2012 and
      first-quarter 2013 included average assets related to SEI Asset Korea,
      which was sold in first-quarter 2013. Average assets for SEI Asset    
      Korea for the third and fourth quarters of 2012 were $6.5 billion and 
      $6.8 billion, respectively, and $7.0 billion for the first-quarter    
      2013.                                                                 

  
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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