SEI(US:SEIC)2022-10-27 02:19Financial Data and Key Metrics Changes - Third quarter revenues declined 3% year-over-year to $471 million from $485 million in Q3 2021 [9][38] - Earnings per share (EPS) for the third quarter was $0.45, down 54% from $0.97 in the same quarter last year [9][37] - The financial impact of a voluntary separation program was approximately $57 million, equating to $0.32 per share for the quarter [10][37] - Total expenses for the quarter increased to $420 million from $344 million in the previous year [38][40] Business Line Data and Key Metrics Changes - The Investment Managers segment had a record sales quarter, with significant new business from both new and existing clients [18] - The Investment Advisors business saw net cash flow onto the platform of approximately $800 million, reflecting increased momentum in strategic initiatives [52] - The Institutional Investors segment experienced new client wins, particularly with foundations and endowments, with OCIO net sales events totaling $220 million [54] - The Private Bank business had an active quarter with new sales and implementations, including a significant conversion from U.S. Bank [25] Market Data and Key Metrics Changes - The company noted that lower capital markets impacted revenues from asset management and administration [39] - The backlog of sold but expected-to-install revenue in the next 18 months was reported at $44.9 million [43] - The current unfunded client backlog of gross sales at quarter end was $2.8 billion in the Institutional Investors segment [54] Company Strategy and Development Direction - The company announced a strategic alignment of its asset management businesses under one leadership to drive growth [8][14] - There is a focus on leveraging technology and data integration to meet market demand for advanced analytics [17] - The company aims to capitalize on growth opportunities in the wealth management market through both organic and inorganic means [13][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate inflation and market volatility while pursuing growth [12][35] - The company is committed to maintaining a disciplined approach to expense management while also being aggressive in capital allocation [77][78] - Management highlighted the importance of fostering a diverse and inclusive workplace culture as a competitive advantage [34] Other Important Information - The company repurchased 890,000 shares of stock at a price of $55.55 per share, totaling $49.4 million [11] - A strategic partnership with Snowflake was established to enhance data capabilities [17] - The company is actively engaging clients to create cross-sell opportunities across its business segments [27] Q&A Session Summary Question: How should investors think about the incremental revenue and expense opportunity with the new asset management structure? - Management emphasized that the alignment of units under one leader will enhance capital allocation for growth across segments [63][64] Question: Can you clarify the revenue impact from the Wells Fargo relationship? - Management confirmed a potential revenue impact of $1.3 million to $1.7 million per quarter and a one-time reduction of $5 million to $7 million in Q4 [71][72] Question: How much of the expense base is fixed versus variable? - The majority of expenses are fixed due to the employee base, but there are variable costs tied to assets and trading activity [84][85] Question: What changes are being made to the private bank segment to support better sales? - Management highlighted a significant backlog of signed contracts and ongoing engagement with clients to ensure timely implementations [100][102] Question: Can you expand on the deconversion within investment managers? - The decrease in assets was attributed to market impacts and parting ways with a low-fee strategy client, offset by new client fundings [110]