SEI(US:SEIC)2021-01-28 05:46Financial Data and Key Metrics Changes - Fourth quarter revenue grew by 5% year-over-year, while earnings decreased by 2% year-over-year, with fourth quarter EPS at $0.86, up 2% from $0.84 in 2019 [6][7] - Asset balances increased by $27 billion in the fourth quarter, with LSV's balances growing by $11.6 billion [7][14] - The company repurchased 1.8 million shares at an average price of $54.36, totaling $99 million in stock repurchases [7] Business Line Data and Key Metrics Changes - The investments in new business segment incurred a loss of $11.4 million, compared to a loss of $9.8 million in the previous quarter, primarily due to increased investments related to the One SEI strategy [12][13] - LSV contributed $30.6 million in income for the fourth quarter, down from $39.1 million in the same quarter of 2019, with revenue at LSV approximately $102.1 million for the quarter [14][15] - The Global Wealth Management Services segment reported revenues of $119.7 million, up 1% year-over-year, with a profit of $4.6 million, slightly down from the previous year [44][45] Market Data and Key Metrics Changes - Total assets under management (AUM) ended the period at $25.5 billion, representing a 9% increase from the previous quarter, driven by market appreciation [55] - The adviser segment reported $245 million in negative net cash flow from SEI-managed assets, with total platform assets at $87 billion [110] Company Strategy and Development Direction - The company is focused on its One SEI strategy, which aims to leverage existing and new platforms to serve various client types across adjacent markets [8] - The company plans to continue investing in growth-generating initiatives while managing expenses to drive sustainable margin growth [78][96] - The adviser segment will enhance its technology platform and broaden its investment offerings, including direct indexing and tax management overlays [112][113] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strong momentum moving into 2021, with a robust backlog of sales and conversions in key prospects [10] - The company acknowledged challenges due to the pandemic but remains focused on capturing growth opportunities and expanding its client base [56][96] - Management indicated that while expenses may increase due to new hires, they aim to manage costs effectively without hindering revenue growth [78] Other Important Information - The effective tax rate for the quarter was 19.6% [15] - The company reported a total signed but not infilled backlog of approximately $70.5 million in net new recurring revenue at the end of the fourth quarter [53] Q&A Session Summary Question: Health insurance costs trajectory - Management indicated that health insurance costs were flat to slightly down in the fourth quarter and expected to remain in a similar range for the year [18][19] Question: One SEI spending trajectory - Management confirmed that spending related to One SEI peaked in the fourth quarter and is expected to decrease gradually throughout 2021 [21] Question: Sales events timing - Management noted that the sales results were a timing issue and not reflective of overall sales efforts, with positive sales activities expected in January [23] Question: 2021 expense expectations - Management projected expenses to be around inflationary rates, with some increases due to compensation inflation and new hires, but aimed for overall flat expenses year-over-year [26][29] Question: Equity-based compensation increase - Management explained that the increase in equity-based compensation is due to new option grants and changes in vesting estimates, impacting both segments and G&A [32][33] Question: U.K. business performance - Management acknowledged that the U.K. business was significantly impacted by the pandemic, with a slowdown in sales but an active pipeline for future growth [73] Question: Strategic partnership with Canoe Intelligence - Management highlighted that the partnership enhances reporting and aggregation capabilities, supporting growth in family office services [81][83] Question: Addressable market and RIA space expansion - Management indicated that the RIA initiative could provide approximately 1,800 new prospects, with ongoing efforts to prospect in that space [86]