SEI INVESTMENTS CO - FORM 10-Q - EX-99.1 - PRESS RELEASE

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10-Q - FORM 10-Q - SEI INVESTMENTS CO	seic-6301610q.htm
EX-32 - SECTION 906 CEO AND CFO CERTIFICATION - SEI INVESTMENTS CO	seic-63016ex32.htm
EX-31.2 - SECTION 302 CFO CERTIFICATION - SEI INVESTMENTS CO	seic-63016ex312.htm
EX-31.1 - SECTION 302 CEO CERTIFICATION - SEI INVESTMENTS CO	seic-63016ex311.htm

Exhibit 99.1

Investor Contact: Media Contact:

Nicole Vattimo Dana Grosser

SEI SEI

+1 610-676-4385 +1 610-676-2459

nvattimo@seic.com dgrosser@seic.com

Pages: 8

FOR IMMEDIATE RELEASE

SEI REPORTS SECOND-QUARTER 2016 FINANCIAL RESULTS

OAKS, Pa., July 27, 2016 -- SEI Investments Company (NASDAQ:SEIC) today announced financial results for the second-quarter 2016. Diluted earnings per share were $.49 in second-quarter 2016 compared to $.51 in second-quarter 2015.



Consolidated Overview
(In thousands, except earnings per share)	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016		2015		%	2016		2015		%

Revenues		$343,831		$337,745	2%		$678,094		$663,189	2%
Net income	81,005		86,240		(6)%	158,502		170,851		(7)%
Diluted earnings per share		$0.49		$0.51	(4)%		$0.96		$1.00	(4)%

“Our second-quarter results reflect the broad market adoption of our solutions across our business segments,” said Alfred P. West, Jr., SEI Chairman and CEO. “The new client signings and growth of existing client relationships demonstrate the success we are having in our markets.

“Our larger and more complex client signings are proof of our ability to compete successfully in highly regulated, dynamic markets. Implementing these clients and sustaining this success requires an increase in our technology and operational investments. These investments position us to deliver long-term sustainable growth and 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,
	2016			2015			%	2016			2015			%
Private Banks:
Revenues		$114,836			$115,333		—%		$228,197			$226,546		1%
Expenses	102,862			104,727			(2)%	206,603			203,983			1%
Operating Profit	11,974			10,606			13%	21,594			22,563			(4)%
Gain on sale of subsidiary	—			—			—%	2,791			2,791			—%
Segment Profit	11,974			10,606			13%	24,385			25,354			(4)%
Operating Margin (A)	10		%	9		%		9		%	10		%

Investment Advisors:
Revenues	81,883			77,753			5%	158,562			151,768			4%
Expenses	44,721			40,857			9%	89,495			79,916			12%
Operating Profit	37,162			36,896			1%	69,067			71,852			(4)%
Operating Margin	45		%	47		%		44		%	47		%

Institutional Investors:
Revenues	74,674			75,980			(2)%	147,571			149,528			(1)%
Expenses	36,550			36,528			—%	71,932			71,739			—%
Operating Profit	38,124			39,452			(3)%	75,639			77,789			(3)%
Operating Margin	51		%	52		%		51		%	52		%

Investment Managers:
Revenues	70,938			67,280			5%	140,856			132,647			6%
Expenses	46,968			42,141			11%	92,243			82,764			11%
Operating Profit	23,970			25,139			(5)%	48,613			49,883			(3)%
Operating Margin	34		%	37		%		35		%	38		%

Investments in New Businesses:
Revenues	1,500			1,399			7%	2,908			2,700			8%
Expenses	5,355			4,803			11%	10,587			9,669			9%
Operating Loss	(3,855		)	(3,404		)	NM	(7,679		)	(6,969		)	NM

Totals:
Revenues		$343,831			$337,745		2%		$678,094			$663,189		2%
Expenses	236,456			229,056			3%	470,860			448,071			5%
Corporate overhead expenses	13,852			12,771			8%	26,899			26,130			3%
Income from operations		$93,523			$95,918		(2)%		$180,335			$188,988		(5)%

(A) Percentages determined exclusive of gain on sale of subsidiary.

Second-Quarter Business Highlights:


•	Revenue growth in the quarter was primarily driven by higher Asset management, administration, and distribution fees from improved cash flows from new and existing clients. The market volatility occurring during the course of the preceding 12 months negatively impacted our asset-based fee revenues and partially offset our revenue growth.


•	Sales events, net of client losses, during second-quarter 2016 totaled approximately $29.1 million and are expected to generate net annualized recurring revenues of approximately $23.4 million when contract values are fully realized.


•	Our average assets under management, excluding LSV, increased $11.9 billion, or seven percent, to $189.1 billion, as compared to $177.1 billion during the second-quarter 2015 (see attached Average Asset Balances schedules for further details).


•	Our average assets under administration increased $37.5 billion, or nine percent, to $433.7 billion in the second-quarter 2016, as compared to $396.2 billion during the second-quarter 2015 (see attached Average Asset Balances schedules for further details).


•	Our earnings from LSV decreased by $8.0 million, or 21 percent, to $30.3 million in second-quarter 2016 as compared to $38.3 million in second-quarter 2015. The decline in earnings was due to lower assets under management from market volatility and reduced performance fees.


•	We capitalized $10.1 million and $8.1 million of software development costs in second-quarter 2016 and 2015, respectively, of which $8.5 million and $6.3 million are related to continued enhancements to the SEI Wealth Platform.


•	Amortization expense related to the SEI Wealth Platform increased to $11.1 million during the second-quarter 2016 as compared to $10.6 million during the second-quarter 2015 due to continued enhancements.


•	Our operating expenses, primarily personnel costs, in our Investment Advisors and Investment Managers segments increased. These expenses primarily consist of operational and marketing costs and are mainly related to servicing existing clients and acquiring new clients. Additionally, sales compensation expense in our Investment Managers segment increased due to new business activity.


•	The strengthening of the U.S. dollar against the British pound and Canadian dollar during 2016 negatively impacted our revenues and operating income of our Private Banks and Institutional Investors segments. A prolonged period of a strengthening U.S. dollar against these currencies could have a further negative impact to our revenues and operating profits of these segments.


•	Our effective tax rates were 35.2 percent in second-quarter 2016 and 35.6 percent in second-quarter 2015.


•	We repurchased 1.5 million shares of our common stock for $73.5 million during the second-quarter 2016.

Earnings Conference Call

A conference call to review earnings is scheduled for 2 p.m. Eastern time on July 27, 2016. Investors may listen to the call at seic.com/investors. The call may also be accessed at many financial services websites, including Google Finance and Yahoo Finance. Investors may also listen to replays at these websites, or by telephone at (USA) 800-475-6701; (International) 320-365-3844, access code 398089.

About SEI

SEI (NASDAQ:SEIC) is 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, 2016, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $707 billion in mutual fund and pooled or separately managed assets, including $269 billion in assets under management and $438 billion in client assets under administration. For more information, visit 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 June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015

Asset management, admin. and distribution fees		$262,275			$256,748			$513,712			$503,516
Information processing and software servicing fees	74,992			73,699			148,391			144,352
Transaction–based and trade execution fees	6,564			7,298			15,991			15,321

Total revenues	343,831			337,745			678,094			663,189

Subadvisory, distribution and other asset mgmt costs	40,870			40,872			80,065			79,389
Software royalties and other information processing costs	7,677			8,057			15,425			15,566
Brokerage commissions	5,093			5,431			12,201			11,403
Compensation, benefits and other personnel	102,282			98,999			204,213			193,185
Stock-based compensation	4,189			3,859			7,978			7,609
Consulting, outsourcing and professional fees	39,575			36,969			78,081			72,597
Data processing and computer related	15,782			14,527			31,500			27,927
Facilities, supplies and other costs	17,122			16,659			33,119			33,718
Amortization	11,284			10,611			22,296			20,969
Depreciation	6,434			5,843			12,881			11,838

Total expenses	250,308			241,827			497,759			474,201

Income from operations	93,523			95,918			180,335			188,988

Net gain (loss) on investments	250			(38		)	124			212
Interest and dividend income	1,033			755			2,116			1,724
Interest expense	(187		)	(114		)	(301		)	(227		)
Equity in earnings of unconsolidated affiliates	30,285			37,289			59,477			71,322
Gain on sale of subsidiary	—			—			2,791			2,791

Income before income taxes	124,904			133,810			244,542			264,810

Income taxes	43,899			47,570			86,040			93,959

Net income	81,005			86,240			158,502			170,851

Basic earnings per common share		$0.50			$0.52			$0.98			$1.03

Shares used to calculate basic earnings per share	161,795			166,152			162,404			166,423

Diluted earnings per common share		$0.49			$0.51			$0.96			$1.00

Shares used to calculate diluted earnings per share	165,088			169,973			165,616			170,338

Dividends declared per common share		$0.26			$0.24			$0.26			$0.24

SEI INVESTMENTS COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



	June 30,			December 31,
	2016			2015
Assets
Current Assets:
Cash and cash equivalents		$594,767			$679,661
Restricted cash	5,500			5,500
Receivables from investment products	47,066			48,098
Receivables, net of allowance for doubtful accounts of $946 and $649	242,084			223,023
Securities owned	21,290			21,235
Other current assets	30,213			26,207
Total Current Assets	940,920			1,003,724

Property and Equipment, net of accumulated depreciation of $272,292 and $259,501	138,696			143,977
Capitalized Software, net of accumulated amortization of $281,407 and $259,358	288,070			290,522
Investments Available for Sale	88,372			81,294
Investments in Affiliated Funds, at fair value	4,420			4,039
Investment in Unconsolidated Affiliates	41,996			49,580
Deferred Income Taxes	4,041			—
Other Assets, net	13,856			15,492
Total Assets		$1,520,371			$1,588,628

Liabilities and Equity
Current Liabilities:
Accounts payable		$3,541			$4,511
Accrued liabilities	145,717			217,587
Deferred revenue	3,479			2,385
Total Current Liabilities	152,737			224,483

Deferred Income Taxes	67,089			63,028
Other Long-term Liabilities	12,262			11,397
Total Liabilities	232,088			298,908

Shareholders' Equity:
Common stock, $.01 par value, 750,000 shares authorized; 161,191 and 163,733 shares issued and outstanding	1,612			1,637
Capital in excess of par value	933,434			910,513
Retained earnings	380,664			402,860
Accumulated other comprehensive loss, net	(27,427		)	(25,290		)
Total Shareholders' Equity	1,288,283			1,289,720
Total Liabilities and Shareholders' Equity		$1,520,371			$1,588,628

SEI INVESTMENTS COMPANY

ENDING ASSET BALANCES

(In millions)

(Unaudited)



	Jun. 30,		Sept. 30,		Dec 31,		Mar. 31,		Jun. 30,
	2015		2015		2015		2016		2016
Private Banks:
Equity and fixed-income programs		$19,686		$18,243		$18,150		$18,370		$18,328
Collective trust fund programs	13		3		4		4		3
Liquidity funds	5,280		5,469		5,835		5,521		4,848
Total assets under management		$24,979		$23,715		$23,989		$23,895		$23,179
Client assets under administration	17,485		16,896		17,532		18,324		18,537
Total assets		$42,464		$40,611		$41,521		$42,219		$41,716

Investment Advisors:
Equity and fixed-income programs		$46,951		$43,988		$46,123		$47,357		$50,016
Collective trust fund programs	8		9		7		7		5
Liquidity funds	2,817		4,677		4,924		5,051		3,661
Total assets under management		$49,776		$48,674		$51,054		$52,415		$53,682

Institutional Investors:
Equity and fixed-income programs		$75,341		$70,818		$72,263		$73,468		$75,944
Collective trust fund programs	93		96		96		97		88
Liquidity funds	2,960		2,655		2,883		2,390		2,526
Total assets under management		$78,394		$73,569		$75,242		$75,955		$78,558

Investment Managers:
Equity and fixed-income programs		$24		$59		$66		$72		$73
Collective trust fund programs	20,632		19,863		32,117		32,385		33,841
Liquidity funds	1,007		848		832		733		750
Total assets under management		$21,663		$20,770		$33,015		$33,190		$34,664
Client assets under administration (A)	381,963		376,133		390,282		400,579		419,139
Total assets		$403,626		$396,903		$423,297		$433,769		$453,803

Investments in New Businesses:
Equity and fixed-income programs		$779		$752		$764		$803		$820
Liquidity funds	57		51		47		41		37
Total assets under management		$836		$803		$811		$844		$857

LSV Asset Management:
Equity and fixed-income programs		$86,334		$76,958		$78,335		$78,390		$78,352

Total:
Equity and fixed-income programs (B)		$229,115		$210,818		$215,701		$218,460		$223,533
Collective trust fund programs	20,746		19,971		32,224		32,493		33,937
Liquidity funds	12,121		13,700		14,521		13,736		11,822
Total assets under management		$261,982		$244,489		$262,446		$264,689		$269,292

Client assets under administration (C)	399,448		393,029		407,814		418,903		437,676
Total assets		$661,430		$637,518		$670,260		$683,592		$706,968


(A)	Client assets under administration in the Investment Managers segment include $50.0 billion of assets that require limited services and therefore are at fee levels below our normal full service assets (as of June 30, 2016).


(B)	Equity and fixed-income programs include $4.6 billion of assets invested in various asset allocation funds at June 30, 2016.


(C)	In addition to the numbers presented, SEI also administers an additional $12.0 billion in Funds of Funds assets (as of

June 30, 2016) on which SEI does not earn an administration fee. Client assets under administration as of June 30, 2016 do not reflect $1.3 billion in Funds of Funds assets that were reported at December 31, 2015.

SEI INVESTMENTS COMPANY

AVERAGE ASSET BALANCES

(In millions)

(Unaudited)



	2nd Qtr.		3rd Qtr.		4th Qtr.		1st Qtr.		2nd Qtr.
	2015		2015		2015		2016		2016
Private Banks:
Equity and fixed-income programs		$19,872		$19,080		$18,603		$17,644		$18,504
Collective trust fund programs	12		6		3		3		3
Liquidity funds	5,256		5,443		5,511		5,661		5,118
Total assets under management		$25,140		$24,529		$24,117		$23,308		$23,625
Client assets under administration	17,823		17,504		17,775		17,248		18,436
Total assets		$42,963		$42,033		$41,892		$40,556		$42,061

Investment Advisors:
Equity and fixed-income programs		$47,027		$45,992		$46,044		$45,175		$48,783
Collective trust fund programs	8		9		8		7		6
Liquidity funds	2,819		3,523		4,784		5,009		4,061
Total assets under management		$49,854		$49,524		$50,836		$50,191		$52,850

Institutional Investors:
Equity and fixed-income programs		$75,426		$73,568		$72,463		$71,779		$74,984
Collective trust fund programs	94		93		96		98		96
Liquidity funds	3,354		2,843		3,109		2,834		2,868
Total assets under management		$78,874		$76,504		$75,668		$74,711		$77,948

Investment Managers:
Equity and fixed-income programs		$25		$24		$59		$66		$72
Collective trust fund programs	21,387		20,449		30,960		30,784		33,021
Liquidity funds	1,010		978		960		832		701
Total assets under management		$22,422		$21,451		$31,979		$31,682		$33,794
Client assets under administration	378,347		380,247		390,080		387,421		415,237
Total assets		$400,769		$401,698		$422,059		$419,103		$449,031

Investments in New Businesses:
Equity and fixed-income programs		$784		$776		$788		$757		$811
Liquidity funds	75		49		47		48		39
Total assets under management		$859		$825		$835		$805		$850

LSV Asset Management:
Equity and fixed-income programs		$87,409		$80,656		$79,634		$74,699		$79,733

Total:
Equity and fixed-income programs		$230,543		$220,096		$217,591		$210,120		$222,887
Collective trust fund programs	21,501		20,557		31,067		30,892		33,126
Liquidity funds	12,514		12,836		14,411		14,384		12,787
Total assets under management		$264,558		$253,489		$263,069		$255,396		$268,800

Client assets under administration (A)	396,170		397,751		407,855		404,669		433,673
Total assets		$660,728		$651,240		$670,924		$660,065		$702,473

(A) Client assets under administration during second-quarter 2016 do not reflect $1.3 billion in Funds of Funds assets that were reported during fourth-quarter 2015.

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