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 Ended March 31,
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 Ended March 31,
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) (Unaudited)
For the Three Months Ended March 31,
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) (Unaudited)
March 31, 2024
December 31, 2023
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 shares issued and outstanding
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: Equity and fixed-income programs
$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: Equity and fixed-income programs
$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.