SEI Reports Second-Quarter 2016 Financial Results

Press Release Investor Contact: Nicole Vattimo SEI +1 610-676-4385 [email protected] Pages: 8 Media Contact: Dana Grosser SEI +1 610-676-2459 dgross...
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Press Release

Investor Contact: Nicole Vattimo SEI +1 610-676-4385 [email protected] Pages: 8

Media Contact: Dana Grosser SEI +1 610-676-2459 [email protected]

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)

Revenues Net income Diluted earnings per share

For the Three Months Ended June 30, 2016 2015 $343,831 81,005 $0.49

$337,745 86,240 $0.51

% 2% (6)% (4)%

For the Six Months Ended June 30, 2016 2015 $678,094 158,502 $0.96

$663,189 170,851 $1.00

% 2% (7)% (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 longterm sustainable growth and increased shareholder value.”

Summary of Second-Quarter Results by Business Segment

(In thousands)

For the Three Months Ended June 30, 2016

Private Banks: Revenues Expenses Operating Profit Gain on sale of subsidiary Segment Profit Operating Margin (A)

$114,836 102,862 11,974 — 11,974 10%

2015

%

$115,333 —% 104,727 (2)% 10,606 13% — —% 10,606 13% 9%

Investment Advisors: Revenues Expenses Operating Profit Operating Margin

81,883 44,721 37,162 45%

77,753 40,857 36,896 47%

Institutional Investors: Revenues Expenses Operating Profit Operating Margin

74,674 36,550 38,124 51%

Investment Managers: Revenues Expenses Operating Profit Operating Margin Investments in New Businesses: Revenues Expenses Operating Loss Totals: Revenues Expenses Corporate overhead expenses Income from operations

For the Six Months Ended June 30, 2015

%

$228,197 $226,546 1% 206,603 203,983 1% 21,594 22,563 (4)% 2,791 2,791 —% 24,385 25,354 (4)% 9% 10%

158,562 89,495 69,067 44%

151,768 4% 79,916 12% 71,852 (4)% 47%

75,980 (2)% 36,528 —% 39,452 (3)% 52%

147,571 71,932 75,639 51%

149,528 (1)% 71,739 —% 77,789 (3)% 52%

70,938 46,968 23,970 34%

67,280 5% 42,141 11% 25,139 (5)% 37%

140,856 92,243 48,613 35%

132,647 6% 82,764 11% 49,883 (3)% 38%

1,500 5,355 (3,855)

1,399 4,803 (3,404)

$343,831 236,456 13,852 $93,523

$337,745 229,056 12,771 $95,918

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

5% 9% 1%

2016

7% 11% NM

2% 3% 8% (2)%

2,908 10,587 (7,679)

$678,094 470,860 26,899 $180,335

2,700 9,669 (6,969)

$663,189 448,071 26,130 $188,988

8% 9% NM

2% 5% 3% (5)%

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 secondquarter 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 secondquarter 2015. We repurchased 1.5 million shares of our common stock for $73.5 million during the secondquarter 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

$262,275 74,992 6,564

$256,748 73,699 7,298

$513,712 148,391 15,991

$503,516 144,352 15,321

Total revenues

343,831

337,745

678,094

663,189

Subadvisory, distribution and other asset mgmt costs Software royalties and other information processing costs Brokerage commissions Compensation, benefits and other personnel Stock-based compensation Consulting, outsourcing and professional fees Data processing and computer related Facilities, supplies and other costs Amortization Depreciation

40,870 7,677 5,093 102,282 4,189 39,575 15,782 17,122 11,284 6,434

40,872 8,057 5,431 98,999 3,859 36,969 14,527 16,659 10,611 5,843

80,065 15,425 12,201 204,213 7,978 78,081 31,500 33,119 22,296 12,881

79,389 15,566 11,403 193,185 7,609 72,597 27,927 33,718 20,969 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 Interest and dividend income Interest expense Equity in earnings of unconsolidated affiliates Gain on sale of subsidiary

250 1,033 (187) 30,285 —

(38) 755 (114) 37,289 —

Asset management, admin. and distribution fees Information processing and software servicing fees Transaction–based and trade execution fees

Income before income taxes

124 2,116 (301) 59,477 2,791

2015

212 1,724 (227) 71,322 2,791

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

$0.50

$0.52

$0.98

$1.03

161,795

166,152

162,404

166,423

$0.49

$0.51

$0.96

$1.00

165,088

169,973

165,616

170,338

$0.26

$0.24

$0.26

$0.24

Basic earnings per common share Shares used to calculate basic earnings per share Diluted earnings per common share Shares used to calculate diluted earnings per share Dividends declared per common share

SEI INVESTMENTS COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) June 30, 2016 Assets Current Assets: Cash and cash equivalents Restricted cash Receivables from investment products Receivables, net of allowance for doubtful accounts of $946 and $649 Securities owned Other current assets Total Current Assets Property and Equipment, net of accumulated depreciation of $272,292 and $259,501 Capitalized Software, net of accumulated amortization of $281,407 and $259,358 Investments Available for Sale Investments in Affiliated Funds, at fair value Investment in Unconsolidated Affiliates Deferred Income Taxes Other Assets, net Total Assets Liabilities and Equity Current Liabilities: Accounts payable Accrued liabilities Deferred revenue Total Current Liabilities Deferred Income Taxes Other Long-term Liabilities Total Liabilities Shareholders' Equity: Common stock, $.01 par value, 750,000 shares authorized; 161,191 and 163,733 shares issued and outstanding Capital in excess of par value Retained earnings Accumulated other comprehensive loss, net Total Shareholders' Equity Total Liabilities and Shareholders' Equity

December 31, 2015

$594,767 5,500 47,066 242,084 21,290 30,213 940,920

$679,661 5,500 48,098 223,023 21,235 26,207 1,003,724

138,696 288,070 88,372 4,420 41,996 4,041 13,856 $1,520,371

143,977 290,522 81,294 4,039 49,580 — 15,492 $1,588,628

$3,541 145,717 3,479 152,737

$4,511 217,587 2,385 224,483

67,089 12,262 232,088

63,028 11,397 298,908

1,612 933,434 380,664 (27,427) 1,288,283 $1,520,371

1,637 910,513 402,860 (25,290) 1,289,720 $1,588,628

SEI INVESTMENTS COMPANY ENDING ASSET BALANCES (In millions) (Unaudited) Jun. 30, 2015

Sept. 30, 2015

Dec 31, 2015

Mar. 31, 2016

Jun. 30, 2016

Private Banks: Equity and fixed-income programs Collective trust fund programs Liquidity funds Total assets under management Client assets under administration Total assets

$19,686 13 5,280 $24,979 17,485 $42,464

$18,243 3 5,469 $23,715 16,896 $40,611

$18,150 4 5,835 $23,989 17,532 $41,521

$18,370 4 5,521 $23,895 18,324 $42,219

$18,328 3 4,848 $23,179 18,537 $41,716

Investment Advisors: Equity and fixed-income programs Collective trust fund programs Liquidity funds Total assets under management

$46,951 8 2,817 $49,776

$43,988 9 4,677 $48,674

$46,123 7 4,924 $51,054

$47,357 7 5,051 $52,415

$50,016 5 3,661 $53,682

Institutional Investors: Equity and fixed-income programs Collective trust fund programs Liquidity funds Total assets under management

$75,341 93 2,960 $78,394

$70,818 96 2,655 $73,569

$72,263 96 2,883 $75,242

$73,468 97 2,390 $75,955

$75,944 88 2,526 $78,558

$24 20,632 1,007 $21,663 381,963 $403,626

$59 19,863 848 $20,770 376,133 $396,903

$66 32,117 832 $33,015 390,282 $423,297

$72 32,385 733 $33,190 400,579 $433,769

$73 33,841 750 $34,664 419,139 $453,803

Investments in New Businesses: Equity and fixed-income programs Liquidity funds Total assets under management

$779 57 $836

$752 51 $803

$764 47 $811

$803 41 $844

$820 37 $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) Collective trust fund programs Liquidity funds Total assets under management

$229,115 20,746 12,121 $261,982

$210,818 19,971 13,700 $244,489

$215,701 32,224 14,521 $262,446

$218,460 32,493 13,736 $264,689

$223,533 33,937 11,822 $269,292

Client assets under administration (C) Total assets

399,448 $661,430

393,029 $637,518

407,814 $670,260

418,903 $683,592

437,676 $706,968

Investment Managers: Equity and fixed-income programs Collective trust fund programs Liquidity funds Total assets under management Client assets under administration (A) Total assets

(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. 2015

3rd Qtr. 2015

4th Qtr. 2015

1st Qtr. 2016

2nd Qtr. 2016

Private Banks: Equity and fixed-income programs Collective trust fund programs Liquidity funds Total assets under management Client assets under administration Total assets

$19,872 12 5,256 $25,140 17,823 $42,963

$19,080 6 5,443 $24,529 17,504 $42,033

$18,603 3 5,511 $24,117 17,775 $41,892

$17,644 3 5,661 $23,308 17,248 $40,556

$18,504 3 5,118 $23,625 18,436 $42,061

Investment Advisors: Equity and fixed-income programs Collective trust fund programs Liquidity funds Total assets under management

$47,027 8 2,819 $49,854

$45,992 9 3,523 $49,524

$46,044 8 4,784 $50,836

$45,175 7 5,009 $50,191

$48,783 6 4,061 $52,850

Institutional Investors: Equity and fixed-income programs Collective trust fund programs Liquidity funds Total assets under management

$75,426 94 3,354 $78,874

$73,568 93 2,843 $76,504

$72,463 96 3,109 $75,668

$71,779 98 2,834 $74,711

$74,984 96 2,868 $77,948

Investment Managers: Equity and fixed-income programs Collective trust fund programs Liquidity funds Total assets under management Client assets under administration Total assets

$25 21,387 1,010 $22,422 378,347 $400,769

$24 20,449 978 $21,451 380,247 $401,698

$59 30,960 960 $31,979 390,080 $422,059

$66 30,784 832 $31,682 387,421 $419,103

$72 33,021 701 $33,794 415,237 $449,031

Investments in New Businesses: Equity and fixed-income programs Liquidity funds Total assets under management

$784 75 $859

$776 49 $825

$788 47 $835

$757 48 $805

$811 39 $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 Collective trust fund programs Liquidity funds Total assets under management

$230,543 21,501 12,514 $264,558

$220,096 20,557 12,836 $253,489

$217,591 31,067 14,411 $263,069

$210,120 30,892 14,384 $255,396

$222,887 33,126 12,787 $268,800

396,170 $660,728

397,751 $651,240

407,855 $670,924

404,669 $660,065

433,673 $702,473

Client assets under administration (A) Total assets

(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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