EX-99.1 5 seic-earningsreleaseex.htm PRESS RELEASE Document

Exhibit 99.1
download1.jpg

Investor Contact:       Media Contact:
Lindsey Opsahl      Leslie Wojcik
SEI         SEI
+1 610-676-4052      +1 610-676-4191
lopsahl@seic.com      lwojcik@seic.com
Pages:  8

FOR IMMEDIATE RELEASE
SEI Reports Second-Quarter 2020 Financial Results
OAKS, Pa., July 22, 2020 – SEI Investments Company (NASDAQ:SEIC) today announced financial results for the second-quarter 2020. Diluted earnings per share were $0.68 in second-quarter 2020 compared to $0.82 in second-quarter 2019.
Consolidated Overview
(In thousands, except earnings per share)For the Three Months Ended June 30,For the Six Months Ended June 30,
20202019%20202019%
Revenues$400,646  $409,586  (2)%$815,408  $810,406  1%
Net income 101,066  126,540  (20)%210,308  240,521  (13)%
Diluted earnings per share$0.68  $0.82  (17)%$1.39  $1.54  (10)%
“While we and the rest of the world continue to cope with the pandemic, our employees’ health and safety remain our top priority as we move through our return-to-office plans. We are proud of our global workforce’s resilience as they manage the extended period of a remote workplace—all the while remaining totally committed to supporting and servicing our clients. We greatly appreciate the healthcare workers and others who help us deal with COVID-19’s impact on our lives,” said Alfred P. West, Jr., SEI Chairman and CEO.

“While financial markets somewhat rebounded during the quarter, we experienced headwinds that impacted our results. Our client engagement was high last quarter, resulting in positive sales activity. We continue to invest in our One SEI strategy, using this period to accelerate the necessary development work that will bring this initiative to its full potential.

“Our view of the future is not dampened by the challenges we all face in society today. Our diverse global workforce is the foundation of what will enable us to fulfill our promise of serving our clients and communities in which we work and live. Capitalizing on the opportunities in the markets we serve and the solutions we offer will lead to increased shareholder value.”


Summary of Second-Quarter Results by Business Segment
(In thousands)For the Three Months Ended June 30,For the Six Months Ended June 30,
20202019%20202019%
Private Banks:
Revenues$107,726  $116,092  (7)%$220,947  $234,351  (6)%
Expenses107,723  107,790  —%218,376  218,752  —%
Operating Profit3  8,302  (100)%2,571  15,599  (84)%
Operating Margin— %7 %1 %7 %
Investment Advisors:
Revenues93,708  100,122  (6)%196,029  194,883  1%
Expenses50,149  50,558  (1)%102,581  103,060  —%
Operating Profit43,559  49,564  (12)%93,448  91,823  2%
Operating Margin46 %50 %48 %47 %
Institutional Investors:
Revenues76,523  81,109  (6)%155,726  161,222  (3)%
Expenses36,937  39,361  (6)%75,204  78,115  (4)%
Operating Profit39,586  41,748  (5)%80,522  83,107  (3)%
Operating Margin52 %51 %52 %52 %
Investment Managers:
Revenues119,340  109,202  9%235,969  213,851  10%
Expenses74,668  68,371  9%148,957  137,437  8%
Operating Profit44,672  40,831  9%87,012  76,414  14%
Operating Margin37 %37 %37 %36 %
Investments in New Businesses:
Revenues3,349  3,061  9%6,737  6,099  10%
Expenses13,466  6,797  98%24,376  12,737  91%
Operating Loss(10,117) (3,736) NM(17,639) (6,638) NM
Totals:
Revenues$400,646  $409,586  (2)%$815,408  $810,406  1%
Expenses282,943  272,877  4%569,494  550,101  4%
Corporate Overhead Expenses17,391  16,573  5%35,374  36,608  (3)%
Income from Operations$100,312  $120,136  (17)%$210,540  $223,697  (6)%


2

Second-Quarter Business Highlights:
•Revenues from Asset management, administration, and distribution fees decreased primarily from lower assets under management from the carryover effect of the sharp market depreciation during March 2020, which negatively impacted our asset-based fee revenues. This decline was partially offset by increased fees from higher assets under administration from positive cash flows and sales of new business in our Investment Managers segment.
•Our average assets under administration increased $49.2 billion, or 8%, to $672.8 billion in the second-quarter 2020, as compared to $623.6 billion during the second-quarter 2019 (see attached Average Asset Balances schedules for further details).
•Our average assets under management, excluding LSV, declined $1.8 billion, or 1%, to $226.8 billion in the second-quarter 2020, as compared to $228.6 billion during the second-quarter 2019 (see attached Average Asset Balances schedules for further details).
•Information processing and software servicing fees in our Private Banks segment decreased by $5.4 million during the second-quarter 2020 due primarily to previously announced client losses.
•Sales events, net of client losses, during second-quarter 2020 totaled approximately $22.1 million and are expected to generate net annualized recurring revenues of approximately $16.6 million when contract values are fully realized.
•The increase in our operational expenses was primarily due to increased consulting costs related to our continued investments in new business opportunities, such as our One SEI strategy and IT Services offering. This increase was partially offset by a decline in travel and promotional-related expenses, as our sales and client relationship personnel adapted to COVID-19 restrictions.
•Our earnings from LSV decreased by $9.5 million, or 25%, to $28.3 million in second-quarter 2020 as compared to $37.8 million in second-quarter 2019. The decrease in earnings was due to lower assets under management from negative cash flows from existing clients, the carryover effect of negative markets in March 2020, and client losses.
•We capitalized $5.6 million of software development costs in second-quarter 2020 for continued enhancements to the SEI Wealth PlatformSM (SWP). Amortization expense related to SWP was $10.9 million in second-quarter 2020.
•Our effective tax rates were 23.3% in second-quarter 2020 and 22.1% in second-quarter 2019. The increase in our effective tax rate was due to decreased tax benefits associated with a lower volume of stock option exercises and a higher effective state tax rate.
•We repurchased 1.6 million shares of our common stock for $89.5 million during the second-quarter 2020.
3

Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on July 22, 2020. 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: 8812985.

About SEI
After 50 years in business, SEI (NASDAQ:SEIC) remains 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 June 30, 2020, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $1 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including $318 billion in assets under management and $693 billion in client assets under administration. For more information, visit seic.com.


This release contains forward-looking statements within the meaning or the rules and regulations of the Securities and Exchange Commission. In some cases you can identify forward-looking statements by terminology, such as ‘'may,’' '‘will,’' ‘'expect,’' ‘'believe’' and ‘'continue’' or ‘‘appear.’’ Our forward-looking statements include our current expectations as to:
•revenue that we believe will be generated by sales events that occurred during the quarter,
•whether our development initiatives will enable the full potential of our One SEI initiative,
•whether we will fulfill our promise of serving our clients and communities, and
•whether capitalizing on the opportunities in the markets in which we serve and the solutions we offer will lead to shareholder value.
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, 2019, filed with the Securities and Exchange Commission.

# # #

4

SEI INVESTMENTS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended June 30,For the Six Months Ended June 30,
2020201920202019
Asset management, admin. and distribution fees$320,577  $324,925  $652,430  $638,869  
Information processing and software servicing fees80,069  84,661  162,978  171,537  
Total revenues400,646  409,586  815,408  810,406  
Subadvisory, distribution and other asset mgmt. costs44,182  46,177  89,519  89,982  
Software royalties and other information processing costs7,389  7,393  14,836  15,521  
Compensation, benefits and other personnel125,331  125,999  256,812  256,334  
Stock-based compensation7,062  5,064  13,991  10,102  
Consulting, outsourcing and professional fees57,111  45,330  110,401  95,536  
Data processing and computer related24,506  22,184  47,210  43,176  
Facilities, supplies and other costs13,973  17,100  30,769  35,845  
Amortization13,140  12,781  26,217  25,460  
Depreciation7,640  7,422  15,113  14,753  
Total expenses300,334  289,450  604,868  586,709  
Income from operations100,312  120,136  210,540  223,697  
Net gain (loss) on investments1,903  231  (2,086) 1,510  
Interest and dividend income1,370  4,313  4,573  8,570  
Interest expense(151) (166) (303) (323) 
Equity in earnings of unconsolidated affiliate28,276  37,832  58,183  75,149  
Income before income taxes131,710  162,346  270,907  308,603  
Income taxes30,644  35,806  60,599  68,082  
Net income$101,066  $126,540  $210,308  $240,521  
Basic earnings per common share$0.69  $0.83  $1.42  $1.58  
Shares used to calculate basic earnings per share147,478  151,863  148,473  152,587  
Diluted earnings per common share$0.68  $0.82  $1.39  $1.54  
Shares used to calculate diluted earnings per share149,598  155,165  150,983  155,853  
Dividends declared per common share$0.35  $0.33  $0.35  $0.33  

5

SEI INVESTMENTS COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30,December 31,
20202019
Assets
Current Assets:
Cash and cash equivalents$758,276  $841,446  
Restricted cash3,101  3,101  
Receivables from investment products49,873  54,165  
Receivables, net of allowance for doubtful accounts of $1,079 and $1,201351,614  340,358  
Securities owned35,030  33,486  
Other current assets35,005  32,289  
Total Current Assets1,232,899  1,304,845  
Property and Equipment, net of accumulated depreciation of $367,677 and $353,453182,273  160,859  
Operating Lease Right-of-Use Assets39,076  42,789  
Capitalized Software, net of accumulated amortization of $466,937 and $442,677284,341  296,068  
Available for Sale and Equity Securities105,361  116,917  
Investments in Affiliated Funds, at fair value4,749  5,988  
Investment in Unconsolidated Affiliate41,094  67,413  
Goodwill64,489  64,489  
Intangible Assets, net of accumulated amortization of $10,615 and $8,77326,145  27,987  
Deferred Contract Costs33,108  30,991  
Deferred Income Taxes2,343  2,822  
Other Assets, net37,722  30,202  
Total Assets$2,053,600  $2,151,370  
Liabilities and Equity
Current Liabilities:
Accounts payable$10,780  $4,423  
Accrued liabilities210,711  272,801  
Current portion of long-term operating lease liabilities8,285  9,156  
Deferred revenue6,349  7,185  
Total Current Liabilities236,125  293,565  
Long-term Income Taxes Payable803  803  
Deferred Income Taxes50,219  55,722  
Long-term Operating Lease Liabilities35,224  38,450  
Other Long-term Liabilities22,604  24,052  
Total Liabilities344,975  412,592  
Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 146,445 and 149,745 shares issued and outstanding1,464  1,497  
Capital in excess of par value1,174,411  1,158,900  
Retained earnings566,929  601,885  
Accumulated other comprehensive loss, net(34,179) (23,504) 
Total Shareholders' Equity1,708,625  1,738,778  
Total Liabilities and Shareholders' Equity$2,053,600  $2,151,370  

6

ENDING ASSET BALANCES
(In millions) (Unaudited)
Jun. 30,Sept. 30,Dec. 31,Mar. 31,Jun. 30,
20192019201920202020
Private Banks:
Equity and fixed-income programs
$22,563  $22,580  $23,851  $21,160  $22,974  
Collective trust fund programs
4  4  4  5  5  
Liquidity funds
3,322  3,695  3,405  4,143  4,291  
Total assets under management
$25,889  $26,279  $27,260  $25,308  $27,270  
Client assets under administration
23,387  23,985  25,801  21,497  23,903  
Total assets
$49,276  $50,264  $53,061  $46,805  $51,173  
Investment Advisors:
Equity and fixed-income programs
$64,591  $65,059  $67,895  $54,856  $59,958  
Collective trust fund programs
6  4  4  2  3  
Liquidity funds
2,618  2,673  2,887  5,969  6,648  
Total assets under management
$67,215  $67,736  $70,786  $60,827  $66,609  
Institutional Investors:
Equity and fixed-income programs
$82,335  $82,659  $84,291  $72,399  $80,257  
Collective trust fund programs
78  81  83  94  103  
Liquidity funds
2,173  2,290  1,746  3,672  1,924  
Total assets under management
$84,586  $85,030  $86,120  $76,165  $82,284  
Client assets under advisement
3,598  4,467  3,948  3,406  3,326  
Total assets
$88,184  $89,497  $90,068  $79,571  $85,610  
Investment Managers:
Collective trust fund programs
51,838  53,169  58,070  48,226  58,178  
Liquidity funds
472  477  479  392  664  
Total assets under management
$52,310  $53,646  $58,549  $48,618  $58,842  
Client assets under administration (A)
607,086  637,986  657,541  610,794  668,611  
Total assets
$659,396  $691,632  $716,090  $659,412  $727,453  
Investments in New Businesses:
Equity and fixed-income programs
$1,566  $1,621  $1,688  $1,484  $1,498  
Liquidity funds
141  132  158  152  194  
Total assets under management
$1,707  $1,753  $1,846  $1,636  $1,692  
Client assets under advisement
887  825  1,343  1,056  1,193  
Total assets
$2,594  $2,578  $3,189  $2,692  $2,885  
LSV Asset Management:
Equity and fixed-income programs (B)
$103,575  $100,295  $107,476  $70,851  $81,134  
Total:
Equity and fixed-income programs (C)
$274,630  $272,214  $285,201  $220,750  $245,821  
Collective trust fund programs
51,926  53,258  58,161  48,327  58,289  
Liquidity funds
8,726  9,267  8,675  14,328  13,721  
Total assets under management
$335,282  $334,739  $352,037  $283,405  $317,831  
Client assets under advisement
4,485  5,292  5,291  4,462  4,519  
Client assets under administration (D)
630,473  661,971  683,342  632,291  692,514  
Total assets
$970,240  $1,002,002  $1,040,670  $920,158  $1,014,864  
(A)Client assets under administration in the Investment Managers segment include $49.6 billion of assets that are at fee levels below our normal full-service assets (as of June 30, 2020).
(B)Equity and fixed-income programs include $1.6 billion of assets managed by LSV in which fees are based on performance only (as of June 30, 2020).
(C)Equity and fixed-income programs include $7.4 billion of assets invested in various asset allocation funds at June 30, 2020.
(D)In addition to the numbers presented, SEI also administers an additional $11.3 billion in Funds of Funds assets (as of
June 30, 2020) on which SEI does not earn an administration fee.
7

AVERAGE ASSET BALANCES
(In millions) (Unaudited)
2nd Qtr.3rd Qtr.4th Qtr.1st Qtr.2nd Qtr.
20192019201920202020
Private Banks:
Equity and fixed-income programs
$22,088  $22,432  $23,106  $24,657  $22,229  
Collective trust fund programs
4  4  4  4  5  
Liquidity funds
3,388  3,625  3,581  3,581  4,366  
Total assets under management
$25,480  $26,061  $26,691  $28,242  $26,600  
Client assets under administration
23,124  23,717  24,930  24,840  23,819  
Total assets
$48,604  $49,778  $51,621  $53,082  $50,419  
Investment Advisors:
Equity and fixed-income programs
$62,419  $64,761  $66,371  $64,933  $57,429  
Collective trust fund programs
6  5  4  3  3  
Liquidity funds
3,465  2,580  2,673  3,284  6,923  
Total assets under management
$65,890  $67,346  $69,048  $68,220  $64,355  
Institutional Investors:
Equity and fixed-income programs
$82,597  $82,398  $83,304  $79,926  $77,037  
Collective trust fund programs
78  80  82  86  100  
Liquidity funds
2,342  2,287  2,106  2,342  2,476  
Total assets under management
$85,017  $84,765  $85,492  $82,354  $79,613  
Client assets under advisement
3,641  3,797  4,106  3,760  3,362  
Total assets
$88,658  $88,562  $89,598  $86,114  $82,975  
Investment Managers:
Collective trust fund programs
50,108  52,587  55,499  55,952  54,061  
Liquidity funds
497  460  642  617  482  
Total assets under management
$50,605  $53,047  $56,141  $56,569  $54,543  
Client assets under administration (A)
600,509  630,328  646,592  654,386  649,012  
Total assets
$651,114  $683,375  $702,733  $710,955  $703,555  
Investments in New Businesses:
Equity and fixed-income programs
$1,436  $1,609  $1,649  $1,663  $1,468  
Liquidity funds
178  142  145  168  182  
Total assets under management
$1,614  $1,751  $1,794  $1,831  $1,650  
Client assets under advisement
917  842  1,044  1,222  1,148  
Total assets
$2,531  $2,593  $2,838  $3,053  $2,798  
LSV Asset Management:
Equity and fixed-income programs (B)
$102,919  $100,094  $104,814  $88,059  $80,395  
Total:
Equity and fixed-income programs (C)
$271,459  $271,294  $279,244  $259,238  $238,558  
Collective trust fund programs
50,196  52,676  55,589  56,045  54,169  
Liquidity funds
9,870  9,094  9,147  9,992  14,429  
Total assets under management
$331,525  $333,064  $343,980  $325,275  $307,156  
Client assets under advisement
4,558  4,639  5,150  4,982  4,510  
Client assets under administration (D)
623,633  654,045  671,522  679,226  672,831  
Total assets
$959,716  $991,748  $1,020,652  $1,009,483  $984,497  
(A) Average client assets under administration in the Investment Managers segment during second-quarter 2020 include $50.1 billion that are at fee levels below our normal full-service assets.
(B) Equity and fixed-income programs include $1.4 billion of average assets managed by LSV in which fees are based on performance only during second-quarter 2020.
(C) Equity and fixed-income programs include $7.4 billion of average assets invested in various asset allocation funds during second-quarter 2020.
(D) In addition to the numbers presented, SEI also administers an additional $11.3 billion of average assets in Funds of Funds assets during second-quarter 2020 on which SEI does not earn an administration fee.
8