SEI(US:SEIC)2023-01-25 23:58Financial Data and Key Metrics Changes - EPS for Q4 2022 was $0.83, down from $1.03 in Q4 2021 and $0.45 in Q3 2022 [18] - Revenue for the quarter was $457 million, compared to $502 million in 2021 and $471 million in Q3 2022 [18] - Fourth quarter revenues declined 9% year-over-year, and earnings were down 23% from the previous year [22][23] Business Line Data and Key Metrics Changes - In the Investment Managers segment, the alternative business saw large clients launching new products, while the traditional business added new clients across all product lines [9][10] - The Institutional Investors segment faced revenue and profit impacts due to capital market declines, but OCIO sales produced strong results in 2022 [12] - Private Banking had a busy quarter with eight clients recontracted, representing $53 million in annual recurring revenue [20] Market Data and Key Metrics Changes - The market environment was influenced by inflation, geopolitical tensions, and fiscal policy, affecting capital market performance [22] - The unfunded client backlog of gross sales at quarter end was $2.5 billion, with negative net flows from existing clients due to de-risking [38] Company Strategy and Development Direction - The company aims to leverage its business model to turn challenges into opportunities and focus on growth areas such as outsourcing, cybersecurity, and RIA [8][15] - SEI is focusing on unbundling investment options and enhancing client engagement to drive growth [11][16] - The company is building a corporate development team to execute strategic transactions for growth [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current volatile market and emphasized the importance of maintaining investments for future growth [25][26] - The leadership highlighted a renewed focus on expense management and strategic client engagement to drive profitability [24][32] Other Important Information - The company repurchased 1.3 million shares at an average price of $59.36, totaling $79.6 million [24] - A dividend of $0.43 per share was declared for the year [24] Q&A Session Summary Question: What is the trajectory for pretax margin and expense flexibility? - Management indicated that margin compression is a function of market conditions and that they have the ability to adjust variable costs based on performance [54][55] Question: Can you elaborate on the investments in compliance infrastructure? - The CFO explained that these investments are necessary to meet regulatory requirements and are part of a long-term strategy [46][47] Question: What are the growth areas for 2023? - Management identified cybersecurity and outsourcing as key focus areas, with increased sales force and capabilities in SEI Sphere [72][73] Question: How should we think about operating margins going forward? - Management expects margins to trend back to historical levels, with improvements in private banking and institutional business margins over time [81][84] Question: What opportunities exist for cross-selling with recontracted clients? - Management noted that recontracting is part of their growth strategy, allowing for deeper relationships and cross-selling opportunities [85][88]