SEI Reports Fourth-Quarter 2022 Financial Results| MENAFN.COM

Thursday, 09 February 2023 11:59 GMT

SEI Reports Fourth-Quarter 2022 Financial Results


(MENAFN- PR Newswire)

OAKS, Pa., Jan. 25, 2023 /PRNewswire/ -- SEI Investments Company (NASDAQ:seic ) today announced financial results for the fourth-quarter 2022. Diluted earnings per share were $0.83 in fourth-quarter 2022 compared to $1.03 in fourth-quarter 2021.

Consolidated Overview













(In thousands, except
earnings per share)


For the Three Months
Ended December 31,




For the Twelve Months
Ended December 31,





2022


2021


%


2022


2021


%














Revenues


$456,590


$501,650


(9)
%


$1,991,037


$1,918,309


4
%

Net income


112,224


145,300


(23)
%


475,467


546,593


(13)
%

Diluted earnings per share


$0.83


$1.03


(19)
%


$3.46


$3.81


(9)
%

'2022 was a year of evolution for SEI. As we reposition our company's future, we've made-and continue to make-the changes we believe are necessary to execute against our strategy to drive growth. As we look at the year ahead, we will work to grow our revenue, improve the overall efficiency and scale of our business, and invest wisely in our future. I'm excited for what lies ahead as we deliver increased value for our employees, clients, and shareholders,' said CEO Ryan Hicke.

'Our financial results for 2022 reflect our focus on growth through new client signings, important recontracts, and successful delivery of our solutions to our markets. Numerous economic factors continue to create change in our industry and challenges for our markets. We believe this environment presents growth opportunities, and we remain committed to our vision for SEI's future.'

Summary of Fourth-Quarter Results by Business Segment

(In thousands)


For the Three Months
Ended December 31,




For the Twelve Months
Ended December 31,





2022


2021


%


2022


2021


%

Private Banks:













Revenues


$115,233


$129,268


(11)
%


$575,625


$493,570


17
%

Expenses


113,533


117,739


(4)
%


473,209


462,796


2
%

Operating Profit


1,700


11,529


(85)
%


102,416


30,774


233
%

Operating Margin


1
%


9
%




18
%


6
%
















Investment Advisors:













Revenues


105,777


125,491


(16)
%


447,766


482,949


(7)
%

Expenses


62,605


64,067


(2)
%


251,650


240,334


5
%

Operating Profit


43,172


61,424


(30)
%


196,116


242,615


(19)
%

Operating Margin


41
%


49
%




44
%


50
%
















Institutional Investors:













Revenues


74,771


87,848


(15)
%


323,353


343,805


(6)
%

Expenses


40,820


45,374


(10)
%


172,252


168,070


2
%

Operating Profit


33,951


42,474


(20)
%


151,101


175,735


(14)
%

Operating Margin


45
%


48
%




47
%


51
%
















Investment Managers:













Revenues


156,076


154,518


1
%


624,918


581,157


8
%

Expenses


104,330


91,046


15
%


404,850


348,655


16
%

Operating Profit


51,746


63,472


(18)
%


220,068


232,502


(5)
%

Operating Margin


33
%


41
%




35
%


40
%
















Investments in New Businesses:













Revenues


4,733


4,525


5
%


19,375


16,828


15
%

Expenses


10,450


13,364


(22)
%


45,159


53,219


(15)
%

Operating Loss


(5,717)


(8,839)


NM


(25,784)


(36,391)


NM














Totals:













Revenues


$456,590


$501,650


(9)
%


$1,991,037


$1,918,309


4
%

Expenses


331,738


331,590


-
%


1,347,120


1,273,074


6
%

Corporate Overhead Expenses


30,804


26,662


16
%


168,164


91,854


83
%

Income from Operations


$94,048


$143,398


(34)
%


$475,753


$553,381


(14)
%

Fourth-Quarter Business Highlights:

  • Revenues from Assets under management, administration, and distribution fees declined primarily from lower assets under management from the significant market depreciation during 2022 which negatively impacted our asset-based fee revenues.
  • Revenues from Information processing and software servicing fees decreased primarily from an adjustment during the quarter to revenue for a client that reduced their business processed with the Company through divestment.
  • Average assets under management in equity and fixed income programs, excluding LSV, decreased $36.9 billion, or 19%, to $162.4 billion in the fourth-quarter 2022, as compared to $199.3 billion during the fourth-quarter 2021 (see attached Average Asset Balances schedules for further details).
  • Average assets under administration decreased $94.4 billion, or 11%, to $789.9 billion in the fourth-quarter 2022, as compared to $884.3 billion during the fourth-quarter 2021 (see attached Average Asset Balances schedules for further details).
  • Net sales events in the Private Banks and Investment Managers segments during fourth-quarter 2022 were $25.0 million and are expected to generate net annualized recurring revenues of approximately $15.1 million when contract values are completely realized. For the year ended 2022, net sales events in the Private Banks and Investment Managers segments were $72.5 million and are expected to generate net annualized recurring revenues of approximately $51.1 million when contract values are completely realized.
  • During the fourth-quarter 2022, the Private Banks and Investment Managers segments recontracted a combined $108.1 million in recurring revenue. One of the recontracts in the Private Banks segment, while successful in extending the relationship, resulted in a reduction in contracted annual recurring revenue of approximately $8.3 million. This reduction is not included in the net sales events in the Private banks segment for the fourth-quarter or the year ended 2022.
  • 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 fourth-quarter 2022 were negative $4.7 million. For the year ended 2022, net sales events were negative $4.9 million primarily due to the previously announced loss of a significant client of the Investment Advisors segment. Without this loss, net sales events were essentially flat.
  • Operational expenses increased due to higher personnel costs from 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 substantially offset by lower direct costs related to asset management revenues and lower amortization expense.
  • Earnings from LSV decreased to $31.7 million in the fourth-quarter 2022 as compared to $34.2 million in the fourth-quarter 2021 due to net negative cash flows from existing clients, market depreciation and client losses. The decline in earnings was partially offset by higher performance fees earned by LSV.
  • We capitalized $6.2 million of software development costs in fourth-quarter 2022 for continued enhancements to SWP. Amortization expense related to SWP was $5.9 million in fourth-quarter 2022 as compared to $11.9 million in fourth-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.
  • We also capitalized $4.3 million of software development costs in fourth-quarter 2022 for enhancements to an existing platform for the Investment Managers segment.
  • We recognized other income of $3.4 million in fourth-quarter 2022 related to insurance recoveries for weather-related damage to our corporate headquarters.
  • Effective tax rates were 18.1% in fourth-quarter 2022 and 18.3% in fourth-quarter 2021.
  • We repurchased 1.3 million shares of our common stock for $79.6 million during the fourth-quarter 2022 at an average price of $59.36 per share.
  • Cash flow from operations was $137.6 million, or $1.01 per share, and free cash flow was $120.3 million during the fourth-quarter 2022.

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on Jan. 25, 2023. 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: 9166923.

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 Dec. 31, 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,
  • our strategic focus, and
  • whether we will:
    • make the necessary changes to execute against our strategy to drive growth,
    • invest wisely in our future, or
    • deliver increased value for 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:

  • whether we will increase our revenue over time from those clients to which we have granted price concessions,
  • whether we will expand any of our relationships with any of our clients,
  • the negative consequences for us, if any, with respect to those of our clients that are involved in M&A activity,
  • the degree to which outsourcing activity will grow and our ability to take advantage of this trend, if any,
  • the strength of activity in our Investment Advisors segment,
  • the expense trends in any of our market segments,
  • whether we will generate positive sales momentum,
  • the extent, scope and strategies of our expense management,
  • our strategies for managing,
  • the success, if any, that we may have in our Investment Managers market segment,
  • our strategy for the unbundling of our investment options and the value our clients may see in this strategy,
  • the growth opportunities for our Institutional Investors market segment,
  • the degree to which our Private Banks market segment is positioned for growth,
  • the drivers of expense growth,
  • our priorities of right sizing our expenses to business growth opportunities and allocating spending to areas of accelerated growth,
  • 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,
  • 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,
  • 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,
  • 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,
  • our commitment to driving greater topline revenue growth and the success of such commitment,
  • 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,
  • 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 December 31,


For the Twelve Months
Ended December 31,



2022


2021


2022


2021










Asset management, admin. and distribution fees


$365,239


$403,565


$1,514,063


$1,547,016

Information processing and software servicing fees


91,351


98,085


476,974


371,293










Total revenues


456,590


501,650


1,991,037


1,918,309










Subadvisory, distribution and other asset mgmt. costs


46,247


56,458


196,732


218,068

Software royalties and other information processing costs


7,143


7,198


29,006


27,759

Compensation, benefits and other personnel


174,497


155,309


720,029


584,497

Stock-based compensation


8,064


10,278


39,403


41,451

Consulting, outsourcing and professional fees


57,693


57,543


242,013


223,200

Data processing and computer related


32,151


27,814


125,171


107,560

Facilities, supplies and other costs


17,529


19,909


74,993


69,760

Amortization


10,503


15,403


54,280


59,152

Depreciation


8,715


8,340


33,657


33,481










Total expenses


362,542


358,252


1,515,284


1,364,928










Income from operations


94,048


143,398


475,753


553,381










Net gain (loss) on investments


1,437


(500)


(3,078)


(366)

Interest and dividend income


6,645


934


13,308


3,649

Interest expense


(145)


(209)


(749)


(563)

Other income


3,379


-


3,379


-

Equity in earnings of unconsolidated affiliate


31,741


34,152


120,667


137,572










Income before income taxes


137,105


177,775


609,280


693,673










Income taxes


24,881


32,475


133,813


147,080










Net income


$112,224


$145,300


$475,467


$546,593










Basic earnings per common share


$0.83


$1.04


$3.49


$3.87










Shares used to calculate basic earnings per share


134,714


139,080


136,071


141,216










Diluted earnings per common share


$0.83


$1.03


$3.46


$3.81










Shares used to calculate diluted earnings per share


135,818


141,305


137,423


143,312










Dividends declared per common share


$0.43


$0.40


$0.83


$0.77

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)




December 31,


December 31,



2022


2021

Assets





Current Assets:





Cash and cash equivalents


$853,008


$831,407

Restricted cash


351


351

Receivables from investment products


62,014


59,036

Receivables, net of allowance for doubtful accounts of $901 and $1,602


457,084


441,609

Securities owned


32,148


28,267

Other current assets


48,703


43,559

Total Current Assets


1,453,308


1,404,229






Property and Equipment, net of accumulated depreciation of $440,861 and $409,248


181,029


178,869

Operating Lease Right-of-Use Assets


24,992


33,614

Capitalized Software, net of accumulated amortization of $586,744 and $545,307


237,302


243,446

Available for Sale and Equity Securities


128,201


129,541

Investments in Affiliated Funds, at fair value


6,366


6,916

Investment in Unconsolidated Affiliate


104,673


107,918

Goodwill


115,599


117,232

Intangible Assets, net of accumulated amortization of $30,261 and $17,716


55,532


68,782

Deferred Contract Costs


37,928


36,236

Deferred Income Taxes


4,936


2,983

Other Assets, net


33,687


24,936

Total Assets


$2,383,553


$2,354,702






Liabilities and Equity





Current Liabilities:





Accounts payable


$13,283


$10,312

Accrued liabilities


359,363


324,382

Current portion of long-term operating lease liabilities


10,344


11,328

Deferred revenue


14,893


9,721

Total Current Liabilities


397,883


355,743






Borrowings Under Revolving Credit Facility


-


40,000

Long-term Income Taxes Payable


803


803

Deferred Income Taxes


-


48,876

Long-term Operating Lease Liabilities


18,786


27,639

Other Long-term Liabilities


12,257


20,878

Total Liabilities


429,729


493,939






Shareholders' Equity:





Common stock, $0.01 par value, 750,000 shares authorized; 134,162 and 138,449 shares issued and outstanding


1,342


1,384

Capital in excess of par value


1,307,162


1,246,608

Retained earnings


694,287


632,614

Accumulated other comprehensive loss, net


(48,967)


(19,843)

Total Shareholders' Equity


1,953,824


1,860,763

Total Liabilities and Shareholders' Equity


$2,383,553


$2,354,702

ENDING ASSET BALANCES

(In millions)
(Unaudited)




Dec. 31,


Mar. 31,


Jun. 30,


Sept. 30,


Dec. 31,



2021


2022


2022


2022


2022

Private Banks:











Equity and fixed-income programs


$26,281


$25,335


$22,277


$20,131


$22,377

Collective trust fund programs


6


7


7


7


7

Liquidity funds


4,724


4,225


3,666


3,778


3,201

Total assets under management


$31,011


$29,567


$25,950


$23,916


$25,585

Client assets under administration


4,481


4,449


3,923


4,161


4,151

Total assets


$35,492


$34,016


$29,873


$28,077


$29,736












Investment Advisors:











Equity and fixed-income programs


$81,686


$77,614


$65,783


$62,579


$66,240

Liquidity funds


4,317


4,610


8,292


5,200


5,436

Total Platform assets under management


$86,003


$82,224


$74,075


$67,779


$71,676

Platform-only assets


14,564


14,151


12,642


12,609


13,931

Total Platform assets


$100,567


$96,375


$86,717


$80,388


$85,607












Institutional Investors:











Equity and fixed-income programs


$91,719


$87,358


$75,506


$69,621


$73,178

Collective trust fund programs


5


6


5


6


5

Liquidity funds


2,118


2,150


1,654


1,640


1,557

Total assets under management


$93,842


$89,514


$77,165


$71,267


$74,740

Client assets under advisement


4,857


4,778


4,218


4,204


4,314

Total assets


$98,699


$94,292


$81,383


$75,471


$79,054












Investment Managers:











Collective trust fund programs (A)


$92,549


$85,411


$142,035


$137,538


$141,285

Liquidity funds


423


284


271


248


199

Total assets under management


$92,972


$85,695


$142,306


$137,786


$141,484

Client assets under administration


907,377


895,181


885,096


781,246


810,491

Total assets


$1,000,349


$980,876


$1,027,402


$919,032


$951,975












Investments in New Businesses:











Equity and fixed-income programs


$2,096


$2,057


$1,903


$1,813


$1,912

Liquidity funds


240


305


242


221


215

Total assets under management


$2,336


$2,362


$2,145


$2,034


$2,127

Client assets under administration


1,410


1,401


1,076


1,026


1,077

Total assets


$3,746


$3,763


$3,221


$3,060


$3,204












LSV Asset Management:











Equity and fixed-income programs (B)


$98,984


$95,962


$81,940


$75,380


$83,753












Total:











Equity and fixed-income programs (C)


$300,766


$288,326


$247,409


$229,524


$247,460

Collective trust fund programs


92,560


85,424


142,047


137,551


141,297

Liquidity funds


11,822


11,574


14,125


11,087


10,608

Total assets under management


$405,148


$385,324


$403,581


$378,162


$399,365

Client assets under advisement


6,267


6,179


5,294


5,230


5,391

Client assets under administration (D)


911,858


899,630


889,019


785,407


814,642

Platform-only assets


14,564


14,151


12,642


12,609


13,931

Total assets


$1,337,837


$1,305,284


$1,310,536


$1,181,408


$1,233,329

(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 $2.1 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 December
31, 2022).

(C)

Equity and fixed-income programs include $6.4 billion of assets invested in various asset allocation funds (as of
December 31, 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 December
31, 2022).

AVERAGE ASSET BALANCES

(In millions) (Unaudited)




4th Qtr.


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.



2021


2022


2022


2022


2022

Private Banks:











Equity and fixed-income programs


$25,999


$25,637


$23,713


$22,115


$21,839

Collective trust fund programs


6


6


7


7


7

Liquidity funds


4,452


4,403


3,795


3,742


3,395

Total assets under management


$30,457


$30,046


$27,515


$25,864


$25,241

Client assets under administration


4,607


4,500


4,163


4,026


4,126

Total assets


$35,064


$34,546


$31,678


$29,890


$29,367












Investment Advisors:











Equity and fixed-income programs


$80,703


$77,576


$70,436


$67,464


$66,100

Liquidity funds


3,644


5,151


7,070


5,380


5,127

Total Platform assets under management


$84,347


$82,727


$77,506


$72,844


$71,227

Platform-only assets


14,341


13,978


13,142


13,271


13,905

Total Platform assets


$98,688


$96,705


$90,648


$86,115


$85,132












Institutional Investors:











Equity and fixed-income programs


$90,557


$89,250


$80,971


$74,859


$72,581

Collective trust fund programs


5


5


5


6


5

Liquidity funds


2,391


2,223


2,097


1,717


1,719

Total assets under management


$92,953


$91,478


$83,073


$76,582


$74,305

Client assets under advisement


4,812


4,889


3,987


4,194


4,251

Total assets


$97,765


$96,367


$87,060


$80,776


$78,556












Investment Managers:











Collective trust fund programs (A)


$90,457


$86,633


$131,435


$143,817


$140,494

Liquidity funds


491


432


285


250


275

Total assets under management


$90,948


$87,065


$131,720


$144,067


$140,769

Client assets under administration


879,718


888,854


893,361


782,559


785,813

Total assets


$970,666


$975,919


$1,025,081


$926,626


$926,582












Investments in New Businesses:











Equity and fixed-income programs


$2,053


$2,025


$2,016


$1,939


$1,890

Liquidity funds


197


286


262


231


208

Total assets under management


$2,250


$2,311


$2,278


$2,170


$2,098

Client assets under advisement


1,423


1,397


1,165


1,126


1,075

Total assets


$3,673


$3,708


$3,443


$3,296


$3,173












LSV Asset Management:











Equity and fixed-income programs (B)


$97,381


$96,449


$87,818


$81,241


$83,370












Total:











Equity and fixed-income programs (C)


$296,693


$290,937


$264,954


$247,618


$245,780

Collective trust fund programs


90,468


86,644


131,447


143,830


140,506

Liquidity funds


11,175


12,495


13,509


11,320


10,724

Total assets under management


$398,336


$390,076


$409,910


$402,768


$397,010

Client assets under advisement


6,235


6,286


5,152


5,320


5,326

Client assets under administration (D)


884,325


893,354


897,524


786,585


789,939

Platform-only assets


14,341


13,978


13,142


13,271


13,905

Total assets


$1,303,237


$1,303,694


$1,325,728


$1,207,944


$1,206,180

(A)

Collective trust fund program average assets in the Investment Managers segment are included in assets under
management since SEI is the trustee. Fees earned on this product are less than fees earned on customized asset
management programs.

(B)

Equity and fixed-income programs during fourth-quarter 2022 include $1.9 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
fourth-quarter 2022.

(D)

In addition to the assets presented, SEI also administers an additional $12.5 billion of average assets in Funds of Funds
assets during fourth-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

[email protected]

[email protected]

SOURCE SEI Investments Company

MENAFN25012023003732001241ID1105477640


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