Subject: ERN
SEI Reports First-Quarter 2024 Financial Results
OAKS, Pa., April 24, 2024 /PRNewswire/ -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the first-quarter 2024. Diluted earnings per share were $0.99 in first-quarter 2024 compared to $0.79 in first-quarter 2023.
Consolidated Overview (In thousands, except earnings per share) | |||
For the Three Months | |||
2024 | 2023 | % | |
Revenues | $511,579 | $469,119 | 9 % |
Net income | 131,400 | 107,015 | 23 % |
Diluted earnings per share | $0.99 | $0.79 | 25 % |
"We entered 2024 with continued momentum, reflecting our strategic focus on increasing sales and profitability across SEI. In the first quarter, we delivered strong topline growth and margin expansion?with notable sales and implementation activity in our technology and investment processing businesses," said CEO Ryan Hicke.
"We are well-positioned to capitalize on opportunities in the markets we serve globally. Our strong financial position, unmatched set of capabilities, and unique ability to connect the financial services ecosystem enable us to deliver comprehensive solutions to drive growth and deliver long-term value for our clients and shareholders."
Summary of First-Quarter Results by Business Segment | |||
(In thousands) | For the Three Months | ||
2024 | 2023 | % | |
Private Banks: Revenues | $130,137 | $120,902 | 8 % |
Expenses | 112,974 | 112,462 | ? % |
Operating Profit | 17,163 | 8,440 | 103 % |
Operating Margin | 13 % | 7 % | |
Investment Advisors: Revenues | 122,718 | 106,538 | 15 % |
Expenses | 66,958 | 63,546 | 5 % |
Operating Profit | 55,760 | 42,992 | 30 % |
Operating Margin | 45 % | 40 % | |
Institutional Investors: Revenues | 71,778 | 74,290 | (3) % |
Expenses | 40,109 | 40,868 | (2) % |
Operating Profit | 31,669 | 33,422 | (5) % |
Operating Margin | 44 % | 45 % | |
Investment Managers: Revenues | 172,653 | 154,497 | 12 % |
Expenses | 109,550 | 101,685 | 8 % |
Operating Profit | 63,103 | 52,812 | 19 % |
Operating Margin | 37 % | 34 % | |
Investments in New Businesses: Revenues | 14,293 | 12,892 | 11 % |
Expenses | 18,383 | 17,639 | 4 % |
Operating Loss | (4,090) | (4,747) | NM |
Totals: Revenues | $511,579 | $469,119 | 9 % |
Expenses | 347,974 | 336,200 | 4 % |
Corporate Overhead Expenses | 37,754 | 31,152 | 21 % |
Income from Operations | $125,851 | $101,767 | 24 % |
First-Quarter Business Highlights:
- Revenues from Assets under management, administration, and distribution fees increased primarily from higher assets under administration due to sales to new and existing alternative investment clients of the Investment Managers segment. Additionally, first-quarter 2024 revenues included fees of $9.6 million from the SEI Integrated Cash Program of the Investment Advisors segment launched in December 2023.
- Market appreciation and positive cash flows into separately managed account programs and Strategist programs of the Investment Advisors segment also contributed to the increase in revenues. This was partially offset by negative cash flows from SEI fund programs in the Investment Advisors segment and client losses in the Institutional Investors segment.
- Average assets under management in equity and fixed income programs, excluding LSV, increased $8.1 billion, or 5%, to $175.9 billion during the first-quarter 2024, as compared to $167.8 billion during the first-quarter 2023 (see attached Average Asset Balances schedule for further details).
- Average assets under administration increased $121.0 billion, or 14%, to $961.7 billion during the first-quarter 2024, as compared to $840.7 billion during the first-quarter 2023 (see attached Average Asset Balances schedules for further details).
- Revenues from Information processing and software servicing fees increased from new client conversions and growth from existing SEI Wealth PlatformSM (SWP) clients.
- Net sales events in the Private Banks and Investment Managers segments during the first- quarter 2024 were $24.5 million and are expected to generate net annualized recurring revenues of approximately $20.7 million when contract values are completely realized.
- Net sales events in asset management-related businesses of the Investment Advisors and Institutional Investors segments and the Asset Management Distribution (AMD) business in the Private Banks segment during the first-quarter 2024 were negative $5.7 million.
- Net sales events for newer initiatives, which includes SEI Family Office Services, SEI Private Wealth Management and SEI Sphere, were $2.5 million during the first-quarter 2024.
- The increase in operational expenses was due to higher personnel costs from business growth, primarily in the Investment Managers segment, severance costs of $6.2 million, and the impact of inflation on wages and services. Cost containment measures related to consulting and other outsourced vendor costs partially offset the increase in operating expenses during the first-quarter 2024.
- Earnings from LSV increased to $31.6 million in the first-quarter 2024 as compared to $28.9 million in the first-quarter 2023 due to market appreciation and increased performance fees. Net negative cash flows from existing clients and client losses partially offset the increase in earnings from LSV.
- Capitalized software development costs were $6.3 million in the first-quarter 2024, of which $3.8 million was for continued enhancements to SWP. Capitalized software development costs also include $2.5 million in the first-quarter 2024 for a new platform for the Investment Managers segment.
- Effective tax rates were 22.9% in the first-quarter 2024 and 23.6% in the first-quarter 2023.
- Repurchased shares of SEI common stock were 808 thousand for $56.0 million during the first- quarter 2024 at an average price of $69.32 per share.
- Cash flow from operations was $112.3 million, and free cash flow was $92.9 million during the first-quarter 2024.
Earnings Conference Call
A conference call to review earnings is scheduled for 4:30 p.m. Eastern time on April 24, 2024.
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: 3297429.
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 help drive growth, make confident decisions, and protect futures. As of March 31, 2024, SEI manages, advises, or administers approximately $1.5 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 momentum generated by our focus on increasing sales and profitability and the benefits we may realize from such momentum;
- the degree to which we are positioned to capitalize on opportunities in the markets we serve;
- when and if we will generate net annualized recurring revenues from sales events that occurred during the quarter, as well as the amount of any such revenue; and
- the degree to which our financial position, set of capabilities, and ability to connect the financial services ecosystem enable us to deliver comprehensive solutions to drive growth and deliver long-term value for our 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:
- what our strategic priorities will be;
- our ability to execute against our strategic priorities;
- the size of the markets that we identify as growth areas and our ability to capture market share in these markets;
- the degree to which we are well-positioned for the future;
- whether we will pursue geographic expansion and the benefits that such expansion may yield;
- our ability to align our cost structure to talent and the benefits of such alignment;
- the degree to which our capabilities benefit our clients;
- our ability to accelerate growth and market share;
- the benefits we will derive from the businesses and/or assets we acquire and our ability to successful integrate these assets in order to drive the expected benefits, strategic and otherwise;
- the headwinds our businesses face and our ability to respond to these headwinds;
- our ability to capitalize on our pipeline and opportunities, manage expenses, and drive profit to the bottom line;
- the amount, if any, of our current backlog of sold but expected to be installed revenue and recurring revenue in the next 18 months that will actually be installed during such period, if ever;
- the market dynamics affecting our market units;
- the areas in which we will invest;
- our ability to expand the margins of our Private Banking business and the degree to which this business is positioned for growth;
- the amount of revenue and profit that our new FDIC cash sweep program will generate during 2024; and
- our tax rate for the remainder of 2024.
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, 2023, filed with the Securities and Exchange Commission.
# # #
SEI INVESTMENTS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) | ||
For the Three Months | ||
2024 | 2023 | |
Asset management, admin. and distribution fees | $404,366 | $371,829 |
Information processing and software servicing fees | 107,213 | 97,290 |
Total revenues | 511,579 | 469,119 |
Subadvisory, distribution and other asset mgmt. costs | 46,768 | 47,379 |
Software royalties and other information processing costs | 8,471 | 7,293 |
Compensation, benefits and other personnel | 192,916 | 173,415 |
Stock-based compensation | 11,059 | 8,074 |
Consulting, outsourcing and professional fees | 51,976 | 61,104 |
Data processing and computer related | 37,160 | 33,340 |
Facilities, supplies and other costs | 18,603 | 18,792 |
Amortization | 10,386 | 9,424 |
Depreciation | 8,389 | 8,531 |
Total expenses | 385,728 | 367,352 |
Income from operations | 125,851 | 101,767 |
Net gain from investments | 2,256 | 744 |
Interest and dividend income | 10,819 | 8,778 |
Interest expense | (139) | (141) |
Equity in earnings of unconsolidated affiliate | 31,643 | 28,879 |
Income before income taxes | 170,430 | 140,027 |
Income taxes | 39,030 | 33,012 |
Net income | $131,400 | $107,015 |
Basic earnings per common share | $1.00 | $0.80 |
Shares used to calculate basic earnings per share | 131,417 | 134,020 |
Diluted earnings per common share | $0.99 | $0.79 |
Shares used to calculate diluted earnings per share | 132,745 | 135,311 |
CONSOLIDATED BALANCE SHEETS (In thousands)
| ||
March 31, | December 31, | |
Assets | ||
Current Assets: | ||
Cash and cash equivalents | $846,628 | $834,697 |
Restricted cash | 301 | 301 |
Receivables from investment products | 55,606 | 55,886 |
Receivables, net of allowance for doubtful accounts of $1,165 and $663 | 561,395 | 501,434 |
Securities owned | 31,958 | 31,334 |
Other current assets | 59,136 | 54,464 |
Total Current Assets | 1,555,024 | 1,478,116 |
Property and Equipment, net of accumulated depreciation of $475,832 and $474,034 | 168,204 | 171,364 |
Operating Lease Right-of-Use Assets | 20,687 | 22,477 |
Capitalized Software, net of accumulated amortization of $619,875 and $612,971 | 239,156 | 239,783 |
Available for Sale and Equity Securities | 164,027 | 155,413 |
Investments in Affiliated Funds, at fair value | 8,149 | 7,316 |
Investment in Unconsolidated Affiliate | 57,291 | 110,781 |
Goodwill | 137,204 | 137,333 |
Intangible Assets, net of accumulated amortization of $45,923 and $42,520 | 78,739 | 82,443 |
Deferred Contract Costs | 40,000 | 40,221 |
Deferred Income Taxes | 45,257 | 37,709 |
Other Assets, net | 54,699 | 37,047 |
Total Assets | $2,568,437 | $2,520,003 |
Liabilities and Equity | ||
Current Liabilities: | ||
Accounts payable | $10,290 | $10,618 |
Accrued liabilities | 242,856 | 318,945 |
Current portion of long-term operating lease liabilities | 7,562 | 8,118 |
Deferred revenue | 15,274 | 15,366 |
Total Current Liabilities | 275,982 | 353,047 |
Long-term Income Taxes Payable | 803 | 803 |
Long-term Operating Lease Liabilities | 15,599 | 17,235 |
Other Long-term Liabilities | 16,999 | 17,090 |
Total Liabilities | 309,383 | 388,175 |
Shareholders' Equity: | ||
Common stock, $0.01 par value, 750,000 shares authorized; 131,329 and 131,178 | 1,313 | 1,312 |
Capital in excess of par value | 1,455,162 | 1,404,962 |
Retained earnings | 843,870 | 762,586 |
Accumulated other comprehensive loss, net | (41,291) | (37,032) |
Total Shareholders' Equity | 2,259,054 | 2,131,828 |
Total Liabilities and Shareholders' Equity | $2,568,437 | $2,520,003 |
ENDING ASSET BALANCES (In millions) (Unaudited) | |||||
Mar. 31, 2023 | Jun. 30, 2023 | Sept. 30, 2023 | Dec. 31, 2023 | Mar. 31, 2024 | |
Private Banks: Equity and fixed-income programs | $23,653 | $24,091 | $23,039 | $24,496 | $25,282 |
Collective trust fund programs | 6 | 7 | 6 | 4 | 5 |
Liquidity funds | 3,427 | 3,433 | 3,636 | 3,916 | 2,733 |
Total assets under management | $27,086 | $27,531 | $26,681 | $28,416 | $28,020 |
Client assets under administration | 4,299 | 4,154 | 4,399 | 7,267 | 8,024 |
Total assets | $31,385 | $31,685 | $31,080 | $35,683 | $36,044 |
Investment Advisors: Equity and fixed-income programs | $68,065 | $69,439 | $66,911 | $71,634 | $74,715 |
Liquidity funds | 4,965 | 4,968 | 5,175 | 4,812 | 4,722 |
Total Platform assets under management | $73,030 | $74,407 | $72,086 | $76,446 | $79,437 |
Platform-only assets | 14,980 | 16,103 | 16,232 | 18,324 | 20,516 |
Platform-only assets-deposit program | ? | ? | ? | 843 | 897 |
Total Platform assets | $88,010 | $90,510 | $88,318 | $95,613 | $100,850 |
Institutional Investors: Equity and fixed-income programs | $74,939 | $75,854 | $72,387 | $77,208 | $75,969 |
Collective trust fund programs | 4 | 4 | 4 | 1 | 1 |
Liquidity funds | 1,576 | 1,353 | 2,119 | 1,734 | 2,179 |
Total assets under management | $76,519 | $77,211 | $74,510 | $78,943 | $78,149 |
Client assets under advisement | 4,559 | 4,368 | 4,085 | 6,120 | 6,862 |
Total assets | $81,078 | $81,579 | $78,595 | $85,063 | $85,011 |
Investment Managers: Collective trust fund programs (A) | $146,176 | $149,779 | $146,991 | $156,376 | $161,660 |
Liquidity funds | 203 | 249 | 180 | 114 | 202 |
Total assets under management | $146,379 | $150,028 | $147,171 | $156,490 | $161,862 |
Client assets under administration | 829,352 | 857,801 | 871,385 | 920,757 | 959,904 |
Total assets | $975,731 | $1,007,829 | $1,018,556 | $1,077,247 | $1,121,766 |
Investments in New Businesses: | $2,031 | $2,104 | $2,017 | $2,174 | $2,269 |
Liquidity funds | 217 | 217 | 202 | 209 | 223 |
Total assets under management | $2,248 | $2,321 | $2,219 | $2,383 | $2,492 |
Client assets under advisement | 1,081 | 1,098 | 1,070 | 1,150 | 1,248 |
Client assets under administration | 16,476 | 15,769 | 14,997 | 14,807 | 15,411 |
Total assets | $19,805 | $19,188 | $18,286 | $18,340 | $19,151 |
LSV Asset Management: Equity and fixed-income programs (B) | $84,964 | $86,469 | $83,684 | $89,312 | $93,616 |
Total: Equity and fixed-income programs (C) | $253,652 | $257,957 | $248,038 | $264,824 | $271,851 |
Collective trust fund programs | 146,186 | 149,790 | 147,001 | 156,381 | 161,666 |
Liquidity funds | 10,388 | 10,220 | 11,312 | 10,785 | 10,059 |
Total assets under management | $410,226 | $417,967 | $406,351 | $431,990 | $443,576 |
Client assets under advisement | 5,640 | 5,466 | 5,155 | 7,270 | 8,110 |
Client assets under administration (D) | 850,127 | 877,724 | 890,781 | 942,831 | 983,339 |
Platform-only assets | 14,980 | 16,103 | 16,232 | 19,167 | 21,413 |
Total assets | $1,280,973 | $1,317,260 | $1,318,519 | $1,401,258 | $1,456,438 |
(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 $2.0 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 March 31, 2024). |
(C) | Equity and fixed-income programs include $6.4 billion of assets invested in various asset allocation funds (as of March 31, 2024). |
(D) | In addition to the assets presented, SEI also administers an additional $11.0 billion in Funds of Funds assets on which SEI does not earn an administration fee (as of March 31, 2024). |
AVERAGE ASSET BALANCES (In millions) (Unaudited) | |||||
1st Qtr. 2023 | 2nd Qtr. 2023 | 3rd Qtr. 2023 | 4th Qtr. 2023 | 1st Qtr. 2024 | |
Private Banks: Equity and fixed-income programs | $23,576 | $23,748 | $23,920 | $23,309 | $24,593 |
Collective trust fund programs | 7 | 7 | 6 | 5 | 4 |
Liquidity funds | 3,253 | 3,500 | 3,585 | 3,808 | 3,902 |
Total assets under management | $26,836 | $27,255 | $27,511 | $27,122 | $28,499 |
Client assets under administration | 4,316 | 4,282 | 4,221 | 7,083 | 7,753 |
Total assets | $31,152 | $31,537 | $31,732 | $34,205 | $36,252 |
Investment Advisors: Equity and fixed-income programs | $67,578 | $68,371 | $69,309 | $68,369 | $72,689 |
Liquidity funds | 4,995 | 4,808 | 4,990 | 5,046 | 4,649 |
Total Platform assets under management | $72,573 | $73,179 | $74,299 | $73,415 | $77,338 |
Platform-only assets | 14,812 | 15,548 | 16,544 | 17,201 | 19,198 |
Platform-only assets-deposit program | ? | ? | ? | 281 | 849 |
Total Platform assets | $87,385 | $88,727 | $90,843 | $90,897 | $97,385 |
Institutional Investors: Equity and fixed-income programs | $74,653 | $74,865 | $75,023 | $73,644 | $76,414 |
Collective trust fund programs | 5 | 4 | 4 | 3 | 1 |
Liquidity funds | 1,715 | 1,537 | 1,611 | 1,682 | 1,812 |
Total assets under management | $76,373 | $76,406 | $76,638 | $75,329 | $78,227 |
Client assets under advisement | 4,431 | 4,583 | 4,294 | 4,607 | 6,498 |
Total assets | $80,804 | $80,989 | $80,932 | $79,936 | $84,725 |
Investment Managers: Collective trust fund programs (A) | $144,914 | $147,543 | $150,379 | $149,551 | $156,737 |
Liquidity funds | 317 | 286 | 237 | 205 | 207 |
Total assets under management | $145,231 | $147,829 | $150,616 | $149,756 | $156,944 |
Client assets under administration | 820,014 | 843,065 | 873,821 | 901,487 | 938,804 |
Total assets | $965,245 | $990,894 | $1,024,437 | $1,051,243 | $1,095,748 |
Investments in New Businesses: | $1,991 | $2,057 | $2,096 | $2,069 | $2,200 |
Liquidity funds | 212 | 199 | 211 | 197 | 214 |
Total assets under management | $2,203 | $2,256 | $2,307 | $2,266 | $2,414 |
Client assets under advisement | 1,098 | 1,075 | 1,101 | 1,080 | 1,194 |
Client assets under administration | 16,396 | 16,231 | 15,682 | 14,781 | 15,147 |
Total assets | $19,697 | $19,562 | $19,090 | $18,127 | $18,755 |
LSV Asset Management: Equity and fixed-income programs (B) | $86,987 | $84,492 | $86,671 | $84,492 | $90,708 |
Total: Equity and fixed-income programs (C) | $254,785 | $253,533 | $257,019 | $251,883 | $266,604 |
Collective trust fund programs | 144,926 | 147,554 | 150,389 | 149,559 | 156,742 |
Liquidity funds | 10,492 | 10,330 | 10,634 | 10,938 | 10,784 |
Total assets under management | $410,203 | $411,417 | $418,042 | $412,380 | $434,130 |
Client assets under advisement | 5,529 | 5,658 | 5,395 | 5,687 | 7,692 |
Client assets under administration (D) | 840,726 | 863,578 | 893,724 | 923,351 | 961,704 |
Platform-only assets | 14,812 | 15,548 | 16,544 | 17,482 | 20,047 |
Total assets | $1,271,270 | $1,296,201 | $1,333,705 | $1,358,900 | $1,423,573 |
(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 first-quarter 2024 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 first-quarter 2024. |
(D) | In addition to the assets presented, SEI also administers an additional $11.1 billion of average assets in Funds of Funds assets during first-quarter 2024 on which SEI does not earn an administration fee. |
Investor Contact: | Media Contact: |
Alex Whitelam | Leslie Wojcik |
SEI | SEI |
+1 610-676-4924 | +1 610-676-4191 |
SOURCE SEI Investments Company
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