• EPS: $1.19, second highest in company history, highest ever excluding onetime items.
• Net Sales Events: $46 million, a record quarter for SEI.
• Revenue Growth: Increased by 13% compared to the prior year.
• Operating Income Growth: Increased by 33% compared to the prior year.
• EPS Growth: Increased by 37% compared to the prior year, including a $0.09 EPS benefit from onetime items.
• Private Banking Operating Margin: 17% in Q3, or 15.5% excluding onetime items.
• Investment Managers Operating Profit Growth: Increased by 19%.
• Institutional Business Operating Profit Growth: Increased by 11% from last year.
• Advisor Business Revenue and Operating Profit Growth: Double-digit growth versus last year.
• Integrated Cash Program Balance: Reached $2.4 billion on September 30.
• LSV Contribution to Equity Income: $37 million, up over 20% from last year.
• Combined AUM and AUA: Nearly $1.6 trillion, a new record.
• Share Repurchases: Approximately 1.3 million shares for $86 million in the quarter.
• Cash Balance: $900 million as of quarter end.

• Warning! GuruFocus has detected 5 Warning Signs with SEIC.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SEI Investments Co (NASDAQ:SEIC) reported a record quarter with an EPS of $1.19, the second highest in the company's history.
• Combined assets under management, administration, and advisement grew nearly 3.5% from the prior quarter, reaching new highs.
• Net sales events totaled $46 million, marking a record quarter for SEI Investments Co (NASDAQ:SEIC).
• The company saw significant growth in its integrated cash program, more than doubling the balances.
• SEI Investments Co (NASDAQ:SEIC) experienced double-digit revenue and operating profit growth across multiple segments, including private banking and advisor businesses.

Negative Points

• The quarter benefited from several one-time items, including an $8 million gain on the sale of real estate and a large one-time performance fee from LSV, which may not recur.
• There were outflows in traditional mutual fund products, which the company is actively working to offset.
• The integrated cash program's balances have fluctuated significantly since quarter-end, making it difficult to predict future contributions to operating income.
• The institutional business saw only modest revenue growth, with some defined benefit terminations offsetting wins.
• Despite strong results, the company acknowledges that the third quarter is just a single quarter and emphasizes the need for sustained growth over the long term.

Q & A Highlights

Q: Is the strong performance in this quarter a one-off event, or is it the result of strategic changes over the past two years that will be sustainable? A: Ryan Hicke, CEO, explained that the performance is a combination of strategic changes and timing benefits. While satisfied with the short-term results, SEI remains focused on medium to long-term growth, ensuring sustainable performance by expanding market opportunities and maintaining a focus on margin and EPS growth.

Q: Can you provide more details on the FDIC cash program's growth and the average spread being captured? A: Paul Klauder, Head of SEI Advisor, noted that modifications to the program on September 30 led to a significant increase in balances. The average yield is around 4% after interest rate adjustments, and the contribution from this program in Q4 is expected to nearly double from Q3.

Q: Could you elaborate on the sales event strength and whether the wins were concentrated or spread out? A: Ryan Hicke, CEO, emphasized that the sales events were broad-based, with no single deal dominating. The wins were well-priced and aligned with SEI's value proposition, indicating a healthy and diversified sales performance across segments.

Q: What drove the positive net flows in the quarter, particularly in investment advisors and managers? A: Paul Klauder highlighted $1.1 billion in net positive cash flow, with strong adoption in strategies and SMAs. The repricing of SMAs contributed to growth, while ETFs and direct indexing also performed well. Phil McCabe added that industry trends like globalization and the convergence of public and private markets are beneficial tailwinds.

Q: What are the revenue growth drivers in private banks, and how are expenses being managed? A: Sanjay Sharma explained that growth is driven by backlog delivery, new client signings, and professional services. Expense management focuses on efficiency improvements rather than R&D cuts, with investments in AI and automation enhancing operational efficiency.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.