Yahoo Finance SEI Investments Co (SEIC) (Q1 2024) Earnings Call Transcript Highlights: Strong Growth and ...
Revenue: $511.6 million in Q1 2024, up 9% from Q1 2023.
Net Income: $131.4 million in Q1 2024, up 23% from Q1 2023.
Earnings Per Share (EPS): $0.99 in Q1 2024, up 25% from $0.79 in Q1 2023.
Net Sales Events: Total $21.3 million in Q1 2024; $16.6 million net recurring.
Technology and Operational Outsourcing Sales: $24.5 million in Q1 2024.
Stock Repurchases: Approximately 808,000 shares at an average price of $69.32 per share, totaling $56 million.
Advisor Business Revenue: Over $9 million from the FDIC-insured component of the SEI Integrated Cash program.
Global Asset Management: Positive net cash flows of approximately $915 million in Q1 2024.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you please talk about the traction for the cash program going into the second quarter? A: Dennis J. McGonigle, SEI Global Services, Inc. - Executive VP & CFO, noted that the average assets in the FDIC insured deposit program for the quarter were just under $850 million, generating $9.6 million in revenue. The program ended the quarter with higher levels, indicating a positive trajectory. McGonigle expressed optimism about reaching the $25 million revenue target discussed in January, as the team gains a better understanding of cash flow patterns in the program.
Q: On private banking, margin continues to go up. Is there any explorational goal on when you can get back to the historical 30% margin level? A: Dennis J. McGonigle, SEI Global Services, Inc. - Executive VP & CFO, mentioned that the business should ideally be a 30% margin business through top-line growth and efficiency. He highlighted the reorientation of the business under Sanjay's leadership, focusing on market-facing activities and cost management. The target to reach these margins is projected within a 3 to 5-year timeframe.
Q: In the Investment Advisors business, the margin jumped to 45%. Is this improvement mainly from the addition of spread income, or are there some expense initiatives underway? A: Paul Francis Klauder, SEI Investments Management Corporation - Senior VP & MD of Institutional Group, attributed the margin improvement to net interest income from the FDIC program, favorable market conditions, and disciplined expense management. He emphasized the focus on attracting larger advisors to enhance profitability.
Q: A number of your biggest competitors in the Investment Advisors segment are starting to implement price increases. Does this open the door for SEI to do the same? A: Paul Francis Klauder explained that while SEI continuously evaluates the competitiveness of its offerings, there is currently no plan to implement absolute price increases. Instead, the focus remains on driving growth through increasing assets under management.
Q: How should investors think about the ongoing drag from Asset Management-related businesses and the impact of defined benefit plans? A: Ryan P. Hicke, SEI Investments Company - CEO & Director, acknowledged the challenges in the AUM-based businesses due to market shifts towards lower-cost products and passive management. He mentioned efforts to invest in technology and operational platforms to maintain competitiveness. Additionally, there is an ongoing reality of corporate defined benefit plans opting for annuitization, although the pace has slowed, providing a mixed outlook for this segment.
Q: Can you provide an update on the net new sales across different segments? A: Ryan P. Hicke discussed the strong sales in private banking and IMS, ongoing investments in new business initiatives, and the challenges in AUM-based businesses. He highlighted efforts to increase client adoption and expand into different market segments as strategies to mitigate the impacts of negative flows in mutual funds and other asset management products.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
