SEIC - Earnings call transcript Q3 2018

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Operator

Ladies and gentlemen, thank you very much for standing by. And welcome to the SEI Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given to you at that time. [Operator Instructions] Also as a reminder, today's conference is being recorded. to Al conference West. like Chairman to now CEO, and would turn over the your I Please ahead. go

Alfred West

Thank you, and welcome everyone.

Heilig, SEI's All on of quarter Dennis and XXXX. McGonigle, over turn the to the are I'll Kathy CFO; to call as I'll by our well as third segment recapping SEI's Controller. leaders it start then Dennis their Kathy will cover of the each will segment. After comment the with company-wide LSV on that, some and finally, the statistics. investment in segments. results you provide of segment Heilig business leaders Then new important business

field at will we usual, report. each end As questions the of

start So me quarter with let XXXX. the third

from Third of share quarter third represents quarter from a increased increase for XX% $X.XX, for $X.XX third the year-ago. the Diluted XXXX. reported quarter the by earnings of per XX% earnings a

$X.X in asset quarter. reported quarter third XXXX, Also appreciation. XXXX also X% These We under due management the time, a assets management to increased balances increases from $X.X management were At our third quarter billion third market third under by to revenue by during LSV assets during billion. quarter non-cash the under the in same XXXX. increase increased

quarter of repurchased That average quarter. XXXX, the X.X million over approximately $XXX shares to translates In during of $XX.XX addition, repurchases stock SEI the during third an at share. stock we price per million of

approximately of part and as million million quarter, create investments capitalized SWP previously $XX.X we we the amortized capitalized third IMS of the in Finally, SWP $X.X of development approximately to growth, development. the and made

revenues to $XX.X of generate totaled million. expected million are sales of XXXX Third $XX.X events, approximately net losses, approximately quarter net annualized recurring and client

still take their reflect are that that to and to our and close. results events of complex high are specific large, very activity longer will sales sales units speak is are fact sales larger experiencing Each our pipelines particularly the we Our results.

an update to it the over investment the to on segment. formal in you other to so LSV business I'll it our Dennis? Dennis my segments give concludes this turn turn new and business remarks, over Now then I'll heads.

Dennis McGonigle

afternoon, Management. quarter investments Good everyone. Asset segment in results LSV Al. Thanks, cover for the and results discuss new of the I'll the business third

quarter investments digital the offering the segment ultra-high-net-worth and continued on During segment private group. the new focus in XXXX, its wealth business advice investors third through our our management on

million in During new a business improvement XXXX. incurred to of the third This quarter management wealth of compared loss private the which investments reflects $X.X the $X.X our during segment quarter, a business. loss million, the of growth

earnings the in million a This our XX% our Regarding quarter. contributed SEI interest income third during to third of the compares during LSV XXXX. from LSV, ownership LSV the quarter during contribution of $XX.X to approximate in represent third million quarter. income $XX.X

LSV during the $XXX.X performance which million, $X.X was billion Assets positive quarter Revenue approximately $XXX million. cash the quarter. of fee-related. for less X% flow grew approximately of net experienced was approximately than

the quarter, I’ll questions. was tax now any our XX.X%. take During rate effective

Operator

do Okay. the Chris Please a Shutler. ahead. from you. And of line Instructions] go we [Operator Thank have question

Christopher Shutler

How Dennis. Hey you? are

Dennis McGonigle

yourself? about Chris Great.

Christopher Shutler

Good.

the here? on what rate, just was from tax we One questions. of couple should a expect So just

Dennis McGonigle

back I tax the rate think to what probably quarter. second we'll we were in closer

Christopher Shutler

sequentially was corporate And quarter-over-quarter, a think expense the Okay. in down usually it's Got then it. I little up overhead QX.

happen going line how what at and forward? So QX that in look we should there

Dennis McGonigle

State third mutual in we our of that data the [with applied for a of from taxes expenses] tax investment added through We small – the center came because quarter. in of our Pennsylvania a operations credit benefit from

the on quarter. but a a third helped little that So had would say Company. effort expenses kind that I of bit, We the across during concerted

Christopher Shutler

Okay.

back not somewhere in level between? probably it’s going So to to QX forward, up tick going the

Dennis McGonigle

a probably range. That’s good

Christopher Shutler

you. Thank Okay.

Operator

Robert Lee have from do question ahead. line of a KBW. go the We with Please

Robert Lee

afternoon, good and you, Great. Thank Dennis.

Dennis McGonigle

Rob. Hey,

Robert Lee

Hey.

that their a LSV. flows. I on generating two of mean, and seeing do maybe question get one industry So possibly – strategies the trend bit, was or kind on they specific I have color curious – are a any bucking quick broader

to of little trying drilling get kind of driving this? what on maybe a down a Just sense bit

Dennis McGonigle

of Yes. to cap, I money. – I mean, see the most their products regional of are cap more mid closed smaller new

globally. their the So products. news activities, bread say, into rest going also are butter flows of distribution I’d them still the course foundational their and and for good their is are more, The coming

not they're coming other in from just U.S. So are products. geographies the clients from U.S.

still stuff and helping butter it's bread their So is them.

Robert Lee

Great. Thank you very much.

Dennis McGonigle

welcome. You’re

Operator

with [Operator Shutler William to of the Blair. Instructions] we'll ahead. line you. back go go Please Chris Thank And

Christopher Shutler

Hey, Dennis.

want here. Sorry, I I the or had had guess an We another on update? you visibility but to October? stuff into in so that any June performance, just they their know great some update us challenges to give a ask in get through XX. could quarter like far long-term third one had great this And But LSV, year, on I performance earlier

Dennis McGonigle

that their more strategies, performance market okay. of Value of tough that the out been you and again will as on mean, traditional little play to probably cycle or kind the I a during Yes. down, maybe their continue quarter, market aware, has segment a is change bit. getting the into third

you year is performance bit. our in second even this their down coming Last good. Some bit. it third performance a of or pretty the down number see or year actually their again, little other can is fees or little a strategies, But quarter

a little performance tougher. is bit yes So,

Christopher Shutler

makes It you. sense. Thank Okay.

Dennis McGonigle

You’re welcome.

Operator

further no There continue. Please questions. are

Dennis McGonigle

Thank you.

Alfred West

turn you, I'm discuss now over going to to to our Thank Joe? Ujobai segment. Joe Private Banking Dennis. it

Joe Ujobai

quarter, followed update on Great. Thank an business you, Al. the update activity. I'll start by new on third with financial the

primarily $XXX.X to of mutual second trading due slightly decline from in fund quarter, down revenue. the was million a revenue quarter Third

was operating also down Wealth the fairly Platform. to $X to tied from the For million revenue the largely profit second due expenses, quarter, higher the quarter of and lower SEI

In we the clients QX, prospects. Sales quarter and is to SWP related professional clients. U.S. Cornerstone strong. SWP SWP we It’s was UK, Advisors. and clients. In from SEI. new for current net million agreement, in Year-to-date, with to billion. fees the new solid cross-sell continue to cash seven signed signed UK flow and prospects we the one signed have SWP X.X and also clients quarter, clients new During from new a we SWP services $X.X cash current gather flow Net UK third activity client

As complex I mentioned, of be some the decisions and larger with can are of frankly larger inside very political organizations.

new to SWP from some SWP, client platform. change For we the a we of There’s to business private with example, at while agreement negotiating of strategy UK convert client, we begin a book are large one organizational assets to client, some and accounts. deconvert the new expect would minister books to

to growth this for positive We net a SEI negotiation. still this expected under be and event opportunity is

and million. $X.X in XXXX, is the XXXX QX quarter, XXXX TRUST during numbers, client for notice client relationship. recontracted gave no they us quarter. There that for their recontract SEI the Regarding a that extended during recontracted losses of we they a as annualized TRUST total four TRUST have clients in have XX TRUST revenue. clients XXXX since Year-to-date, a we rescinded were the XXXX Included of have terminations $XX million

the to client client, make segment a non-U.S. services and to revenue. I conversions, They of a a is IMS sales not million approximately client events actually but business flows, as for a Private converted were million UK million distribution to revenue Overall million for quick Platform Banking Cornerstone the did in is approximately are on processing from recurring want $X.X This banking. is SEI’s mainly experienced cash management which XX the client correction. distributors. an new the net total they a update $X of during based or Advisors annual negative we SEI professional $X.X $XX SWP. quarter. currently client were Overall, brings TRUST asset in the Our XXXX space. clients on one-time Wealth

Our total installed not revenue. in signed, new SWP $XX backlog for is net recurring but approximately million

backlog tracking are I relationship value XXXX SWP. momentum previous of mentioned our recurring our recontracted total this to the backlog, illustrate continued on the number The with As includes value of a the years, metric TRUST calls, revenue to greater annual revenue SWP we represent uninstalled term than $XXX million. plus is the recurring six as than net new more And contract revenue these contracted in greater on is average million our SEI. $XX than clients

Fargo the focused the unit backlog with please? to but after not to conversion the date. margins. set actively the the I've end is historical yet that we following; improving and to a to installing conversion of work to and Wells XXXX conclusion, profitability the the on revenue; capitalizing time. XX% Overall, return of SWP, convert In on banking to Any questions of segment robust momentum remaining remained by matriculate backlog expected SWP the our continue We profit on business; conversion activity the to new its to the with is convert grow

Operator

with Lee Robert of line ahead. the to Please go we’ll And Instructions] [Operator KBW. go

Robert Lee

for Good Great. afternoon, questions. Thanks. Joe. Thanks taking my

Joe Ujobai

Hi, Rob.

Robert Lee

now. us, like for SWP? a more and just not the have flat up versus we asset think us original a of was time up get growth a Hi. we you relationships short-term it? to should we of of can look or I to I the asset-based, was sense know just platform the or But I over update get the of you the you mean, have maybe make mix asset-based so kind on at sense give maybe as curious, between that much signing ones maybe proportion obviously clients shaking intent could we’re backlog withstanding volatility that of the existing trying even fee, these new account-based how of

Joe Ujobai

It's asset-based. largely Yes. still

And evolve history Although, over the fairly clients the the of wealth clients. SWP. we UK, growth, advisory is in higher the manager of mix growth pricing pricing are high have generally the

added also through a growth but that's organically – sort them not our good underlying growing much of tendency XXXX have But appreciation, We've been only the were So pricing largely growth and but that. is and businesses have asset-based of the still from In but an more seeing clients, nature depending different seen a our very helped. background, again some asset-based. of solution, and asset-based growing revenue of majority acquisition, have clients overall, been TRUST the we're the mechanisms which have seat have on clients slightly have the are – accounts we the from U.S., around it's functionality. certainly an market been pricing many organically, of still those

Robert Lee

over kind of a coming any maybe then concessions you just are the update update of – repricing quarters, that there's lot if and what a TRUST through if of kind type us much any pretty just look then, quick on on resign, of – you pricing you did of of you're can XXXX we resigning? seeing kind sense maybe maybe forward And the Okay. or

Joe Ujobai

had TRUST are it's been cases and have with recontract. some we're bank XXXX couple a as but that single-digit in they're One not important in I’ve talking, well Well, or past. way downs, engaging net those on also many would where some And clients on the the either recontracted downs, have there their they on solid of Yes. pretty recontracting. year a are had most to accounts our is, on a We've platform comments. SWP. to clients net move may eventual their But

typically have them. So with we long-term strategic a pretty conversation

Some eventual move to for those But so three to all will on talking two to conversations, SWP. or years Trust. the in choose we're recontract more about

Robert Lee

taking Great. for Thank my questions. you

Joe Ujobai

Thanks.

Operator

And line Donat of O'Neill. ahead. to next we’ll go Please Sandler the with Chris go

Christopher Donat

maximum that Does of implementation assets something my number. really a press question, number nine which represent taking and wins when of you've just releases to something clients, eight, clients else? the number? number want but your implementation of Or about SWP ask not really question of been, the for Thanks function the announced been or in Joe. disclosing is you or accounts around is and one something things Great. it's of that I sort

Joe Ujobai

could more for We thing reflection we clients more that. But a That's than or backlog. we more a enough. as maximum we not have not considerably fast selling nine eight us. handle of in than the – can think That's this certainly

Christopher Donat

this flows couple Okay. And it should in? next services then Is of quarters quarter. in million just X.X that the expect professional the on as we signed something

Joe Ujobai

in. that of some has already flowed Yes,

So in – more usually matriculates it some quickly. cases that's

revenue to tied more are we that quickly. and is generally that the to conversions space. fairly And projects some we're we yes, so doing is sales But tied some the discovery that that the that of of recognized or call in,

Christopher Donat

Okay. confirm the is in sales or the some But space discovery? to

Joe Ujobai

That's correct.

Christopher Donat

it. Got

Thanks Joe. Okay.

Joe Ujobai

Thanks.

Operator

Blair. ahead. Shutler go with we'll Please then And go Chris William to

Christopher Shutler

Joe. Hey

Joe Ujobai

Hi. Good afternoon, Chris.

Christopher Shutler

of I gave. couple the just examples dig to that So into you want

change about so there? talk year client, bit the onboard, reiterate a originally of if in kind UK So that maybe you you I could last then, you now said one just what what just that think there, client more. little a that is termination said And notice gave

Joe Ujobai

take that first. I’ll So one

So reconsideration the the and the with type acquirer by other the off another on came was us They to bank were XXXX After and a wanted was smaller they another they bank onto towards The that trust system that system. client, plan system SWP of to to that with client. for move competitive the client, it that conversion, acquired they and on was on couple long-term move community TRUST they of had. to the not wanted to for recontract want TRUST years back XXXX larger did moving consider of said merged to entity. to a and more

is think, that’s, what we've So seen. I

case back the I come us. some be our in there where some with price it maybe think about that to this and systems, been talked it’d for have interested convenience whether in calls, ultimately we've have merger firms other or in been for of competitive

like and over year example last we firm. and with good we've really more most underlying our to because in of strategy with to situation we're we might inside that there, So both that than and of just a we're clients. losses have the have firms accounts the the that about the well, some of client but sooner we of of sort and grow the an large conversations happy mix experienced firm or see or changes XXXX last with give of to there, happened that. some wanted business UK, an that I prospects having that year that, change with inside in losses opportunity then And believe of the we'd And those – of

may the and there. our the were think large I what's making progress are these there in fits of these So to is some that, best accounts. mix But the I SWP point but they around working we're to wanted make good with and meantime, complex, identify opportunity underlying change firms

Christopher Shutler

trading I that just quarter-over-quarter was a you revenue little think, Joe give detail? us main mutual you revenue. also And Okay. reason for mentioned fund then in decline the the more bit Can

Joe Ujobai

fund no clients, essentially. administration an to still deciding Yes, usually take we're some longer from outsource are mutual executed finding coming and trades we to have for as down or that fees clients the points do we we're funds the basis the participating. an doing paid fees administration fee. not are that service where we And trading, are but our they're But

have funds a the industry those of more. are big So the that. to us, and less participating an in revenue But I some they any think directly that's sort significant pattern, business with associated clients volumes for it's not funds still we be might in and still service or going of has either the declined, trading

Christopher Shutler

was XXb-X? This

Joe Ujobai

provide. give fees or XXb-X or it's services would with administration to they others for us us that Yes, that we share the

Christopher Shutler

Thank Okay. you.

Joe Ujobai

to fees. invest Some those deciding not banks shareholder are in servicing just of with funds kinds

Christopher Shutler

Thanks Joe.

Joe Ujobai

Thanks.

Operator

Greene with Thank you. ahead. And line to of next the Glenn go Oppenheimer. we'll go Please

Glenn Greene

Thanks. Good afternoon, Joe.

Joe Ujobai

Glenn. Hi,

Glenn Greene

many mentioned have these the left this terms recontracting as XXXX them, reconstructing points. TRUST you you're sort data a in clients What's quarter. Just few Were of and how of average a duration of you couple just recontracts? you

Joe Ujobai

average years I a is there's years or think duration recontract. so, three and four about still three lot to the or

recontract, the So but have amount large XX so SWP. sorry and there two. We obviously I'm some still of we there's we not ones a to clients decent are decent to still had of very those about move and a number. or

Glenn Greene

are you stay you to dissent anywhere existing you where known XXXX SWP? So TRUST XXXX a in aggressive what I'm send with to more can – or TRUST move time point get where or them you trying sort on if mean as I to tipping get of do to some you where to to close the

Joe Ujobai

Yes, that. getting to close I where think

platform So based as functionality departments. robust U.S. for the trust very

we strong have platform. have functionality We maturity there, and more in the

our a in case more, technology the outside with sometimes is what think about more with else contract, – we're almost from of but area, that I increasingly standpoint every aggressive to to and depends a every So I’d lead that. we say client on trying SWP, move accomplish

Glenn Greene

the then conversion your to are the thesis? Fargo way, about sort address backlog? presumably What don't you But hole correct want conversion question, have if that I’m Wells a given to you of sort answer And to know just you this. of Okay. the I on final doing how obviously

Joe Ujobai

getting by Well, and longer taking we're Fargo the conversion we working implement The still have conversion. we're would paid Wells still to then expected.

is sell and are So there think people working to in we're I are trying we're getting is those the we conversions. the still work Wells. significant pipeline of still to more goal the guess that But and of sitting that continue paid of some not so for amount resource there meantime, eight complex on to that rest I of one for have. accounts some the people and than of – the or around getting sell are the are these more But we're nine – utilize the because accounts, conversions to original waiting

So working And the get in believe them client the in third quickly quarter. converted announced for quarter, example, to we I for fast a possible. those first the and as we as done we're fairly UK platform

So this have use and things is we trying more get resource quickly. to part experience of to also the get converted things

Glenn Greene

Okay. Thanks Joe.

Joe Ujobai

Matriculate faster. revenue more

Glenn Greene

faster. Yes,

Okay, thanks.

Operator

next comes ahead. of with Please our Thank the Lee KBW. you. from go Robert line And question

Robert Lee

quarter. what's and Can private – of this part where that notwithstanding mean…? with update on the some thanks had asset taking I segment follow-up. of the kind growing and quickly a question my was Joe, guess pretty modest – programs, going us on ago that for within the you – couple manager know I a overall segment business, maybe within thanks on outflows Okay, outflows I of I your really years kind

Joe Ujobai

is about we been strong some U.S. than and on this in of Yes, U.S. that have business good business non-U.S. the solid have and talked the little really distributors teams now bit we we've have and year. in in as more The XX% Canada the ground a a our UK. before it’s

good little those solid take have to does that We've you signed for looking assets some pipeline deals take year. this deals a for We're there. big it We matriculate. time a of But assets. bit drive to will

sort at get train promoting got level solution. we've to the So and we force sales headquarters go and and with the signed of there a deal in then

the those the would some would I to is funding got then funds. flow matriculate pipeline events that actually as solid. as expect we into We've and our calculate So deal start to said in sign we assets

Robert Lee

if one could. And more follow-up then maybe I just

this XXXX certain assuming guess I it to, assuming, Just goes unfortunately I going back to call earlier to mean, an to I'll when – some going SWP. past have go date and then decommissioning everyone's TRUST to you're for support to not question. to you’re point, not that announce it going

kind much how So think two in you How do kind you time of make you you and it to the Is in the…? need three think give that clients do of that years, of lead decision? a way that years?

Joe Ujobai

it's I of of about what and certain complexity eventual business. mean more the like our talking our clients of the big we're are, mean down They some others not TRUST take plans time than clients on all aware to are event. all XXXX. I of based would need their

as leave. calls are understanding have smaller firms we're that mostly an clients think to But understanding sort growth though To them we a said that smaller to the take evolved on or having interested convert. and years. long of wouldn't have but – every clients, benefits – leave, and over a to to of those might time SWP want their of a might that that expect one the client suspect situation we their in we've talking some are been eventually and more are ultimately accommodation their that strategy are they to We generally now some clients ones move, most will conversations these an move client with about moving we've I them. very those services There strategy the trust have strategy interested base to SWP. older of multiple are the provided

Robert Lee

Okay. Thank you.

Operator

go Thank ahead. Thomas from you. the line our with question next Mizuho. Please And McCrohan comes of

Thomas McCrohan

Hey Joe.

confirm quarter and on you are business? fund want getting what margin mutual just It kind you there’s quantify sounds margins the can low I trading revenue, a to of impact On the it. like this business, that so

Joe Ujobai

and is business XX%. a Yes. lower we probably It margin about down were

Thomas McCrohan

of and margins any Okay trajectory thoughts from on here? then the

Joe Ujobai

and short in we margins Obviously, we like quarter, this hard get better are out quarter. every build working things to the time as this but to quarter of improve But backlog, the happen will and margins backlog period convert backlog again, more to to continue see sequentially converted. a different and the and a we is sell

Thomas McCrohan

you. Thank Okay.

Operator

our question comes Thank go next from Patrick James. of you. Please the with And O'Shaughnessy line ahead. Raymond

Joe Ujobai

Hi Patrick.

Patrick O'Shaughnessy

Hey, Joe.

that install, what say you been year a into any year you surprised different would learned that Regions the about – key maybe Bank over than we’re expected? had you've takeaways So that you that and or it's anything

Joe Ujobai

We've the it’s the year, a about So been right. so but year, the year, just sort of you’re year been anniversary. talking not celebration,

get relationship with there trust client provide a well, really solution user. are they I some – – to and the able is They the of largest from – are value to to that benefit back. We our platform their we From of the one our going front institutional solid think greatest front buy of out that on were side. private to back think SEI.

in kinds them had includes services things. of for So more the some build calculations and we And out that some reporting on trust to side. institutional those

and think very we very ground prospect a of or in the Birmingham, week progress had are the important year. first ago. prospects our a I just we're fact a in They on proud a so client, in referenceable

so they're we're how about using platform. excited the And

us help we We’re excited to they've – business, referenceable be made. how about excited are their they we've the moved business. and grow We're progress how as and a they've should evolved about the

Patrick O'Shaughnessy

you. Thank Great.

Joe Ujobai

Thanks.

Operator

there [Operator continue. in queue, further please are no questions And Instructions]

Alfred West

Joe. you, Thank

this Wayne? Advisors. will Withrow segment. next Our segment Wayne is cover Investment

Wayne Withrow

to while to Al. of revenues and XXXX, Thanks, the in SEI the Wealth big making quarter our continued Platform. migration profits, our third we In grow simultaneously strides

market the These were third in better and increase driven the third of announced versus direct year-over-year reductions some offset increase year. expense due previously positive than investment in was by to Expenses quarter was to quarter This revenues part quarter our growth. our fee revenues appreciation products. cash almost tied flow, The year. totaled million. last in cost were $X by of million net $XXX Third up and last personnel increased

the relatively expenses QX comparison quarter were did quarter. benefited versus there repeat the some QX not second items quarter, flat. second in to The third from one-time being that expense compared As the in

Our $XX.X improved year's million third quarter profits grew from and margins our X.X%. last

$XX.X at The Assets September billion from both appreciation under management XX. were billion flow. XX, market an increase June driven positive of cash was and by net $X.X increase

third flow cash During $XXX net was the quarter, our million.

During we recruited the new quarter, XX advisers.

of work Our over we billion XX,XXX March accounts the assets advisers assets Wealth migrate migrated the and XX to remains accounts pipeline our remaining on $XX With the advisers. respect of of remaining XXX,XXX we have $X.X over target to year. to continue We billion in on September, SEI and assets. At of in new next now these continued and Platform, end migration XXXX active. on on TRUST

help opportunity While the In benefit in migration financial the us to advisors welcome the completion continued These in SEI our front give confidence of now growth you in us. reflected to the I its have. summary, questions platform, any and our we targeted Wealth progress new the long-term throughout solid quarter Platform. especially migration the continue is items of straight-through for XXXX features from on processing XX, capabilities. March third will our the

Operator

Sandler question Please comes line go with ahead. [Operator Donat our O'Neill. from of Chris the And Instructions] first

Christopher Donat

Wayne. Hey,

Wayne Withrow

How are you doing?

Christopher Donat

Good.

lot bit days. So we quarter, these thing your me we the in basis not one second as to that's fee a rate, from little basis up see surprised this that points quarter XX tick a as and places points calculated, something we saw in of XX

is to higher there your going something you wondering a or fee else just in migrate clients shift as something or that on. So causes mix SWP little

make it why understand see it's on? going to Wayne, happy Just and sure

Wayne Withrow

tell explanation. there’s I really is get things. can't some I you you little little platform of lot a tell get one Yes, I’ve just factor We good driving slightly – we can’t a a it. fee,

Christopher Donat

small like, your on but Okay. changes positive things…. the But no never more in side, fees

Wayne Withrow

work. No, I it wish

Christopher Donat

helps. That Okay. Thanks.

Operator

Thank you. question line our KBW. next Lee with of from comes the And Robert

Robert Lee

are you? Wayne. afternoon, Good How

Wayne Withrow

Good Rob.

Robert Lee

First starting to the kind levels. try on behavior maybe environment. ahead environment little bit if start investor risk question some this, see that getting when you to speak, start longer? you start through risk see to clients, kind I environments, we expecting and kinds is of these really take advisors, that filters of the this kind little down see mean, of a of trade to of of so as to you usually stays kind the of a kind kind in of and you or to for place of of Are to kind look some just

Wayne Withrow

for seen And know little is a think – asset a small you of a I know Yes, year-over-year, don't mean, – risk if think off think our maybe look status. [accuracy there’s I lot our haven't more are direction on] little I and I we're I I seeing overall you But off. a what major balances, a to risk go. I think liquidity yet. people recall that balances as migration this change higher announcements, of percentage

Robert Lee

And a thinking line. quarter around related quarters one growing, just those quarter's kind have seen client is just of Okay. into much there any a flows, been slower trend there a some slowdown we should this in maybe that still seen or about anything of maybe number slow little reading and obviously inflows but last was pace too you without of kind quarter, advisors of be and preferences it's is while to just were – anything and maybe one or was

Wayne Withrow

when biggest at March and two at end guess had the force the the migrations I is what the of September, force. field would say end at we service look I I and think, I to-date, of and

migrated are it a focused on and little of getting these a We distraction. is clients bit

Robert Lee

Great, Thank you.

Wayne Withrow

you. Thank

Operator

comes Blair. is the William go Please Christ next Chris, our open. ahead. line Thank with your question line Shutler you. from And of

Christopher Shutler

Hey, Wayne.

Wayne Withrow

Hey, Chris.

Christopher Shutler

Hey, already were my questions answered. Thanks.

Operator

Thank you. further queue. And questions are currently in no there

Alfred West

Thank you, Wayne.

next Investors segment. Institutional report will segment. on the the Paul Klauder Our is Paul? segment

Paul Klauder

the third for going quarter Good afternoon, to discuss results Thanks, everyone. of financial Al. XXXX. I'm the

to Third million, quarter increased of second quarter compared of XXXX. is X% $XX.X revenue the

fee profit X% asset the operating net $XX operating profits billion changes Both XXXX. the quarter $XX our asset-class third reflect million quarter diversification for decrease appreciation, was is in and million. to by $X.X for This impacted Third decrease by at base. balances driven by increased were were $XXX and XXXX. client low net billion million. positive positively to quarter of by market losses, unfunded but positive compared Net client $XXX of market of of Quarter-end quarter-end balances, revenues third fundings a compared backlog a depreciation. the quarter quarter client fundings offset positive the client lower, new liquidity The

the New $X events quarter revenue were due Fiduciary classes. was U.S. to terms for asset consumption client primarily hospitals in This and UK higher endowments the Client new of Management. U.S. and were clients strong earning foundations, and billion. signings

growing pursuit of Our sales and continue be and we new pipeline our business. is solid in to aggressive

We program. new much, in evaluate would believe may catalyst current Thank I'm investors for to you continue business very that their as any would be would you happy that investment to questions tailwind the be for a markets and volatility financial entertain it a have.

Operator

in are currently questions there continue. [Operator Instructions] queue. And Please no

Alfred West

discuss over today to segment Steve? final turn to And to Investment Managers. Thank Meyer this you, it segment. I'm Paul. going is our Steve

Steve Meyer

Al. Thanks, everyone. afternoon, Good

net segment the XX.X% totaled new increase or of This third appreciation. revenue XXXX. to for in to fundings the due was million third as quarter revenue which the of client our market quarter XXXX, was million, revenues year-over-year For and $XXX.X compared $XX.X higher

quarter segment XX.X% profit $X.X was for to compared of quarterly million as $XXX XXXX. higher of million or this the third Our

and approximately the Third-party of second of end new $XX.X at higher the asset We fund $X The due feel us. continue was expansion increased that business changing. of a of include in client new Managers some end in quarter this this as at market several quarter turn sales see our balances This with clients. primarily in revenues revenues strongest $XX as traditional with manager of in the wallet win to third sales quarter evolving servicing disruption to XXXX may the of win was these X% an process million the large activity, share for recurring a industry globally, net we the million growth appreciation the From of marketing were balances large standpoint, questions And mandates. on XXXX. a included new totaling have were $XXX.X mutual family, assets billion, That new-name of the investors, and dynamics Strategically, Most XXXX, events and billion. or to third have. the net and now servicing continued prepared of during of positioned. of the of of Investment demands compression to events our increase billion, business compared recontract $XX.X importantly, a clients. the market From one well it our and both asset the turning you billion fundings current expand business we entire recurring with to office and of diverse we $X.X enterprise remarks year quarter business of competitive of the as the which the These industry, for all strongly my disruption. needs I’ll fee for feel opportunity presents any concludes creates level new continue well over family

Operator

the have with Lee we from KBW. And question a of line Robert

Robert Lee

Steve. good Hey, afternoon,

Steve Meyer

Good afternoon, Rob.

Robert Lee

they from? viewed the transactions that? did would I then create as a do been past benefit too mean, when I early been Charles to M&A kind states some River. potential in of I could when larger And curious, well Is opportunity that get the that mean how obviously to disruption guess there's acquisition, just and I mean industry, you – of just think new with any clients, it does in you you I'm that and have generally an tell?

Steve Meyer

purchase that in office change front another But then say. it’s think obviously, the specific present and some to transaction regards market now I acquired too early opportunity I’d there was M&A of think type the in the system, activities, I of especially for to [presents] any focus Well, say disruption of us.

Robert Lee

update year just Okay. you asked question you maybe the your of or typical my on quarter, backlog think us And kind since that have every funding so? over of can coming and how I

Steve Meyer

Sure.

So into million. backlog was the quarter going $XX.X our

edge decent coming I At of around so backlog you had in day, from is, the $XX.X When we this XX, from the sold should we take of funding diverse And very over fund alternative Our XX it’s backlog, from in the believe XX traditional. at was the the slight XX. the we the matriculated months. business out look side. backlog. to alternative majority I our that more have a It might quarter What million. end will that next

Robert Lee

you. Thank Great.

Steve Meyer

Sure.

Operator

question of our Josh ahead. Schwartz Thank next line you. go the Investments. And with from comes Please CJE

Josh Schwartz

and the Or sort the of this wondering growth of share Company? out this is market just I'm win at segment growing rapid industry looking a for more I'm is quicker? Hi,

Steve Meyer

but manager we've see and is that industry market time. so decent standpoint, I in years though Josh, starting of to continue now we've expanding, period bit think there winning start been the shrinking clearly you I think to growing, new or we're I think good do we're more a for of the from two is some segments. upstream are doing But But we the a our industry ago do that even that. moving Well, certainly and right

Josh Schwartz

basis what is a Is And are or Okay. segment? there looking the fee stabilizing. the in compression it points like

Steve Meyer

and there Well, – at that and pressure including mentioned partners, level we my from areas their I in their the products, the if to is look the – the – which way pressures, certainly manager pressure you I service. think works down there's at

more a is look premium them compression it on that us, outsource them a having I I business think There of now and segment, in requiring is an Again, the I view fee business tailwind out as think their looking I been really ourselves be level. to battle not presents managers that increase models able there. and they bit the service to how and internal we pride we've more. little it scale the though this a their for kind at commoditized opportunity and pressure pressure. because something investment for operations, managers to and offering, offering, a premium continued on service a think but with But will

Josh Schwartz

you. Thank Great. Okay.

Steve Meyer

Sure.

Operator

questions And further in are no there queue, please continue.

Alfred West

to Thank a you, to Heilig it you turn over few Steve. Kathy? And give company-wide to Kathy I’d statistics. now like

Kathy Heilig

afternoon, everyone. about Thanks Al. have I quarter. additional this some information corporate Good

from $X.XX per per share, $XXX.X Third quarter share. XXXX cash or from operations operations $X.XX cash million year-to-date or was to million flow bringing $XXX flow

there, The $X quarter cash free expansion, and and excluding capitalized fourth free third software software third of cash was for expenditures – $XX million million expansion year-to-date capitalized to that in we software $X $XX.X year-to-date capitalized Our million the was costs excluding be capital project again to capital that facility, capital million, excluding but expenditures million, does were and $X the flow million million. quarter $XXX.X quarter expenditures, did $XX for of $XXX.X the facility flow were include was million about facility. the and of about relate about

the in was and to option tax earnings result. could tax the release, rate due noted of our that’s rate tax Tax we XX.X%, effective As Act combination benefit as exercises fluctuate a the and

to and unaudited. like would are is also of forward-looking many upon in and on involve We information comments are financial that and assumptions our that presented you statements that release our remind call based risk this the

we opportunities for our as our to market to events include to our generated the capitalize and will The us by scope sales revenue also quarter. that implementations that and expectations business. believe ability on strategy. create conditions Our that statements And timing during client forward-looking of the will our grow occurred be

which statements believe they our upon reasonable assumptions are can be base we Although these forward-looking we inaccurate.

can our Form differ December found in cause important which Some have from our of XX, described XXXX, for could Annual risk filed of Exchange and that actual Report, with results ended factors Securities in the the the year Commission. we XX-K to the risk and factor forward-looking be those statements section

any of Q&A feel to End ask further please Now free questions.

Operator

there continue. [Operator questions Instructions] are in And no Please queue.

Alfred West

Thank you, Kathy.

the we’re and by direction our making. am gentlemen, So ladies the and encouraged I businesses progress are taking

headwinds, the attending industry. from all identify us we help place a you will good making in are thank that short-term Have call. face for we benefit a taking we believe investments our and day, changes the While our

Operator

Ladies and participation. gentlemen, today. much that for your does you. you Thank Thank very for your conclude conference

You may disconnect. now

Alfred West	Chairman and Chief Executive Officer
Dennis McGonigle	Executive Vice President and Chief Financial Officer
Joe Ujobai	Executive Vice President, Head-Private Banking
Wayne Withrow	Executive Vice President, Head-SEI Advisor Network
Paul Klauder	Executive Vice President, Head-Institutional Group
Steve Meyer	Executive Vice President, Head-Investment Manager Services
Kathy Heilig	Chief Accounting Officer and Controller
Christopher Shutler	William Blair & Company L.L.C.,
Robert Lee	Keefe, Bruyette & Woods, Inc.
Christopher Donat	Sandler O'Neill & Partners, L.P.
Glenn Greene	Oppenheimer & Co.,
Thomas McCrohan	Mizuho Securities
Patrick O'Shaughnessy	Raymond James
Josh Schwartz	CJE Investments LLC

SEI Investments (SEIC) 23 Oct 182018 Q3 Earnings call transcript