SEI Investments Co. (SEIC) reported fourth-quarter 2014 adjusted earnings per share of 51 cents beating the Zacks Consensus Estimate of 48 cents. Moreover, the reported figure was up 38% from the year-ago quarter. The current quarter earnings were adjusted for a one-time after-tax charge associated with the write down of an equity investment.
For full-year 2014, earnings per share came in at $1.85, up 13% year over year. However, this missed the Zacks Consensus Estimate by a penny.
Robust growth in the top line continued to be the main contributor in the better-than-expected results. Moreover, the asset position reflected consistent improvement. However, weak expense management was on the downside.
After considering the non-recurring charge, net income attributable to common shareholders rose 18% year over year to $77.1 million. For 2014, net income attributable to common shareholders climbed 11% year over year to $318.7 million.
Behind the Headlines
Revenues at SEI Investments grew 8% year over year to $322.8 million. The improvement was mainly owing to an increase in asset management, administration and distribution fees as well as elevated cash flows. However, the figure missed the Zacks Consensus Estimate of $328.0 million.
For 2014, revenues rose 12% year over year to $1.27 billion. Further, it came in line with the Zacks Consensus Estimate.
Total expenses amounted to $232.5 million, up 1% from the prior-year quarter. The expense rise primarily resulted from higher subadvisory, distribution and other asset management costs, compensation, benefits and other personnel, brokerage commissions as well as amortization costs. These were, however, partly mitigated by a reduction in stock-based compensation, data processing and computer related expenses as well as facilities, supplies and other costs.
Operating income surged 32% year over year to $90.3 million.
As of Dec 31, 2014, assets under management (AUM) grew 9% year over year to $252.7 billion. Total client AUM was recorded at $372.6 billion, up 14% year over year.
Share Repurchase
In the reported quarter, SEI Investments bought back 1.6 million shares of its common stock for $62.6 million.
Our Take
Overall, SEI Investments has been witnessing a rising trend in revenues for the past several quarters. Moreover, robust asset inflows would prove accretive to the company’s overall growth in the coming quarters. Enhanced capital deployment activities remain impressive too.
However, high dependence on fee-based revenues, slow economic recovery, mounting expenses and a stringent regulatory landscape will likely continue to dent the investment manager’s profitability in the upcoming quarters.
Currently, SEI Investments has a Zacks Rank #3 (Hold).
Among other investment mangers, Waddell & Reed Financial, Inc. (WDR) and Apollo Global Management, LLC (APO) are scheduled to announce their fourth-quarter 2014 earnings results on Feb 3 and Feb 5, respectively, while Franklin Resources Inc. (BEN) is slated to release first-quarter fiscal 2015 results on Jan 30.
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