SEIC - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the SEI second quarter 2020 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 at that time. [Operator Instructions].

As a reminder, this conference is being recorded. to CEO, conference Al like host, to now and Chairman West. would turn over the our I Please go ahead.

Al West

Welcome everyone and good afternoon.

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

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

of remotely the to employees the Before face begun safety To compromising from circumstances doorstep, we of of are the cover Lately, we the workforce with results of certain globe, delivery defeat the on back our into we the the involved. seamless of of clients. employees has families priority homes have transitioned to speak set their to integrity office. all our today. their of working health this the we of COVID-XX our Around second been and the service dealing will are this our And with We of at robustness our health or pandemic. along the first and crisis, beginning our throw we our operations XX% without services. I slow the quarter, transition

immense workplace all transitioning The SEI other and grateful in XXX the clients pride in best am both take investing extreme. At our the supporting to for while when employees each SEI, workforce the we to and approximately to the and term. for incredibly strengths we of So long home communities. challenges far, are workplace shine home our to I have our returned workplace.

XX from and that positioned advantage years are have our stronger the weather today better been crisis bedrock of of current of to proven shaped past ability opportunities. emerge They the the over take tomorrow's of business We models to have and experience. uncertainties the

Our focused technology, and workforce service our in continuously remain deliver invest straightforward, our and success secret on productive, clients. and best-in-class innovate solutions healthy world-class our to is to keeping

proud We them, executing during will heart the relentless are also will making and And be initiatives in with saving of accomplishments the war the impressive those our thank believe heroes with you. frontlines launching our on growth for sharing be of sacrifices. caring vision true We successes. strategic the our those honor we folks while the real future our COVID-XX on lives. forward to are at we are the who progress look and and are and We others generating

XXXX. financial the to attention our second the turn let's quarter So of results

decreased Second the year $X.XX by of earnings second a decrease for the quarter quarter XX% reported from XX% quarter of ago. is the $X.XX earnings Diluted from XXXX. for per of second share a

XXXX second X% XXXX. second quarter a also We in reported from quarter decrease revenue to

the arrival by the second The of affected first pandemic. earnings quarter and COVID-XX were results

the billion $XX.X With the and quarter non-cash second the This partially in major came balances $XX the arrival asset rebound of markets. the downturn in fall by in first end $XX.X of net quarter. a second capital COVID billion for by caused to by a decrease our billion of

second during rebound a is quarter approximately large an stock In quarter repurchases billion $XX.X net LSV, in a the by the our the dropped we at X.X the generating effort the The $XX.X quarter. million of million quarter, for to of stock and growth $XX.X SEI Also in during translates That by platforms. investment the part growth $XX.X which decrease also our newest billion. share. per $XX.XX strategy. first shares repurchased quarter, of is second price we during of For SEI balances continued One their of second average billion

types will and them other As all One all making you adjacent clients, SEI leverages recall, of all SEI platforms platforms. existing and markets to accessible new by

of we make and we million in of One As $XX.X have a of capitalized the investments capitalized work. byproduct $X.X approximately any quarter, of To-date, we the previously SEI second development. approximately amortized capitalized million development not

Turning to revenue production.

sales million. encouraged entrepreneurial net are generate They reflect Clearly, this events, totaled losses, year's revenues with revenue. that the net driving are company, sales in approximately fact to of we we sales and client the expected successful quarter of annualized million are approximately teams recurring $XX.X results. Second $XX.X throughout

heads sales their unit to will specific Our speak results.

adapt our know We be will business, In look transition to centralized This We to This our seamlessly, remarks. nodes from operations. realities. to of models commitment will addition, uncertainty change. smooth and times catching again these a of formal opportunities my of the to the customer forward operations is middle we of new is inherent employees. key interconnected significant workforce that in went credit need remote things deliver ethic to concludes and to in the volatility, our which particularly and same a never work objective and

segments. turn So an heads will results and After the of that, Dennis? in the over give Dennis segments. investment I on new will it you to update all update to LSV their business segment

Dennis McGonigle

business quarter cover Al. Good investments I Thanks second asset the LSV the in new results everyone. and discuss the of segment for management. will afternoon results

platforms new the modularization wealth and deliver through the segment its on segment opportunity space ultrahigh the to investments processing of business investment in services management management our strategy. the IT worth net During SEI quarter One focus including XXXX, group investor and for our and to continued business technology larger additional components private second related wealth into initiatives on standalone our those business the research and

specifically quarter investments our strategy. During to on million investments of related second SEI accelerated in the strategy, is opportunity mentioned, a this $XX.X progress. expenses to in lines. a significant The to well business business the quarter, across $X.X tied new companywide our our of Of loss increased which the initiative initiative approximately segment Al loss This reflects second of new loss the an making a this company efforts increase XXXX. open entire incurred million million, One as business our to $X segment, creating during One compared as as is quarter that in effort. We during SEI

for We the year expect this losses in in the range segment. remainder this

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

cash billion offsetting market approximately LSV of Revenue quarter $X.X with flow for second the during billion. was fees. $XX.X quarter approximately the quarter performance Assets grew during $XX.X appreciation. no million net approximately experienced negative the

before I it During tax happy the I questions? over to was XX.X%. rate our any will Steve, quarter, any questions. take there turn be And to Operator, effective is

Operator

Sandler. of will with [Operator to go Piper Please the line go Chris Donat we Instructions]. And ahead.

Dennis McGonigle

Chris. Hi

Operator

your is line Chris, open.

to go ahead. will the go of Blair. We Chris line next Shutler William with Please

Chris Shutler

Dennis. are Hi you? How

Dennis McGonigle

What Chris. yourself? Good about

Chris Shutler

Good.

or will XXXX? new the around you the timing when mentioned for business on on like of fall Any remain investments the segment, Just should expenses year. off the of thoughts in level beyond they the magnitude QX remainder

Dennis McGonigle

Yes.

this quarter. nearly, take we accelerate to did have opportunity We things an

on They beginning have there of by year. behind an off the really the will goal also of So But is completely. to that expectation address behind, next certainly is our work we go first call fall in year. this But away a won't next our to other all next us they should goal could decline start this, the see half entering year. folks and

Chris Shutler

lot there way is guess, look a at I So will any level, like XXXX? to a like more high fiscal XXXX expenses categorize

Dennis McGonigle

would I like say Yes. fourth more quarter.

Chris Shutler

quarter, fourth okay. like More

Dennis McGonigle

Yes.

Chris Shutler

then, But performance anything on has LSV that some the that think a as look difficult. on And I anything Obviously, you the are on the been pipeline we of investment forward? there pipeline? hearing

Dennis McGonigle

these LSV, cash even market love are product. right from sun Similar And is less talk Yes. from people we been in love deep carried their not are of new with people firms in to LSV, in love, lot a the through be what deep accounts value They space, a prior event. of flows, market account shine itself conviction that when at. of in past, we leadership know sign quarters, that They cycles know the that was We perspective well is when in had hear doing. active They to it going have They strong with they global that lost it the value really tougher some really have That did They some value. really business, size though to the LSV blended. firm now. in would during the less disciplined. even at really one they their are is But may gone now. large in the potentially, what that have negative interesting get even on and was good when segment they said, again net story are they And in being the all a whereas very quarter. does. are are negative they the I significant believe it's what what the they really net will

Chris Shutler

lot. Thanks right. All a

Dennis McGonigle

welcome. are You

Operator

And of to the Robert with go KBW. next, line will you. ahead. Please we go Thank Lee

Robert Lee

hope I just questions are my Thank But doing Dennis, And you Thanks. asked. you. well. were

Dennis McGonigle

hope and well as I Rob. are you well Thanks family. doing your

Robert Lee

you. Thank

Operator

with will we Services. of Lipper Thank Lipper go Please go next, line you. And the to ahead. Advisory Michael

Michael Lipper

not have you of current growth? more that that? LSV started deep any last end outperform guys value? participating the to information Do on was on that week value the There to Good quarter? you from afternoon. evidence the was since Or on been Are

Dennis McGonigle

in the clearly, will as participate wouldn't are sector period we and their ourselves, of outperform the tech the guess of broad be these if to It's had past that value that I value. on Yes. And of deep past participate be They they year performance recovery of they market again. value. value wouldn't short by a I the would safe of And to more then segment definitely But space. the the begins be remind Really, an footing over in say equal post-quarter. comment of strong as on value overwhelmed segment of things value very that. we moments years, improved to having couple only kind would

Michael Lipper

you. Thank

Dennis McGonigle

Michael. welcome, are You

Operator

to you. next, with And Please go Hill line of the will go ahead. we Rosenblatt. Thank Ken

Ken Hill

hope Hi. well. everyone. you doing Good are I afternoon

Dennis McGonigle

Ken. too, You

Ken Hill

the the I as seemed type SEI some to of wondering that maybe markedly spend? COVID-XX relates decrease If kind quickly accelerate on increase to anything the that type far of of had there? or the you as kind down one all just work that or a is conversely of precluding that as like strategy further spend pretty digital SEI that's home how from worse, guys One spend quick things moved those am I things here? things environment. tasks get from to far markedly at as moving or One from better you you Or would if the there

Dennis McGonigle

project affected I other. don't generally isn't that from get are that changing work one assets work. One on this the with And we way work think And more we to were from by firms of continue work or really some the whether And on not. the we or some I this will at able type of SEI see the pace. home working on

Ken Hill

enough. Thanks. Fair Okay.

Dennis McGonigle

right All Ken.

Operator

you. to with of will go the Donat Thank next, Please And Sandler. we Piper go ahead. Chris line

Chris Donat

Hi Dennis.

Let being me without time. this this try muted

Dennis McGonigle

say admitted mean to mute, you Chris. was you going I were I off yourself.

Chris Donat

question was time. first better It a the

about did statement. it Let the way. put just of to want ask me the that income I geography

expenses. some were appear Can there where that lower income travel release the you statement promotional lines? just the understand and those help in in referenced us You

Dennis McGonigle

in Travel would up would that supplies the kind the in other and Yes. be facilities, show costs. -- of

Chris Donat

it. Got Okay.

that's much promotion about and on we travel the economy? going forward, think in goes as broader or how going dependent to on So whatever be

Dennis McGonigle

Yes.

Chris Donat

Okay. Thanks.

Dennis McGonigle

can come When you again. visit us

Chris Donat

Exactly.

Dennis McGonigle

Right.

Operator

in And queue no I this further have questions at time.

Dennis McGonigle

give And it on and will over update management investment will Steve services. that, to you. and with private I banking Thank an he turn you

Steve Meyer

Dennis. you Thank

management to For which XXXX, $XXX.X the private due and revenues XXXX, second client second totaled of of revenues. the which quarter primarily announced a previously decrease was asset the banking segment our was quarter for losses in down million, for from X.X%

X.X which our years. revenue, The the events $XX.X XXXX, million recurring And profit We for closed for net segment million was recontracted sales $XX quarter sales In announced gross in and to in recurring the losses $XX.X to This breakeven thus quarterly revenue clients of events. decrease the recurring a XX as revenue. the term quarter quarter and primarily activity. second resulted client recontracts previously this another sales and quarter and during second in in for losses was asset XXXX. we million during client For management solidified decline total million $X.X $X.X driven had the our turning average new the quarter, of was million compared down of of quarter. recurring in no by the

million for addition In our $X.X closed recurring one-time sales to events, in we the quarter.

announce to client that extended with have First expanded pleased Bank. are our Horizon recently and relationship our We we longtime

Horizon since which IberiaBank SEI First July XXXX, will XXXX. current competitor larger platform us SEI on currently to services and allows XXXX. a business is technology In to our deal has This new running to First of been scope merged client with an organization. their Horizon continue migrate providing but the in

providing This we create SunTrust us to current have services that relationship last and Bank, in allows organization. which the Truist, expanded our longtime to technology announce BB&T our as new merged quarter, with larger continue recently Additionally, mentioned and pleased largest sixth the the of we to are U.S. client last we with bank deal to scope year our extended

continued and QX Company, a migration SEI's existing Personal SEI with implementation Platform, clients, and testament our unforeseen enhanced circumstances. disruption the Trust both remote both these of XXX% a well turning future. Another ability finalize client SWP conversions training bring partner all Trust Whitney success brought also our and account new our The late live clients milestones capability large ensure converted businesses. for In live and implementation three This we In environment to these workforce during our adjusted SEI of continue QX, Connor Schroders and dates a avoid to U.K. to client that and activity. second teams on Bank as live was to in clients clients' these have a immediately the times will clients under capabilities quarter, the any successfully our and XXXX to Fusion. bodes and implementations met bank to Broadley, in is and remote to environment. Wealth our part disruptive remote of Hills And relationship Wealth teams to and Dorsey TRUST the

our standpoint, period but a the an under recurring at our XXXX. ended in update approximately new backlog, asset million not $XX.X revenue. total an total representing quarter $XX.X increase on X% backlog assets of From As signed management is installed from net second management billion,

during down being our revenues was AOM market due our were average increase the which Our of quarter assets to up, appreciation. quarter. down, end the Despite caused assets be for period to

ongoing extremely we quarter XXXX was across cash negative the has turning a and Our business have to rise the our to challenges executed as million. in flow brought, and And workforce occasion second well. to the $XXX.X for operate to pandemic general. continues continue usual business Despite that company and the our

center half we strategy for On the through continuing One year, focus markets business to SEI true of the and This continue solutions. prior continue quarter's and downward second lost discussed, priorities manage our continue call, the pressure previously year. push to expansion have our our as and we includes I These remain growth. enter of the the of outlined the efforts to on we our

continue We expand platform, the to across market will implementations our and in capabilities also solution. our

over will in prepared result While I to backlog the of now next an quarters, and our my will you expenses to this our concludes few turn questions support it in That in I upticking have. strong remarks as view the business revenue. of may investment our and implementation this any

Operator

to Robert will KBW. Lee we Instructions]. go ahead. [Operator of Please And with go first, the line

Robert Lee

Hi are well. you Steve. Great. Thanks. doing Hope

Steve Meyer

Rob. as you? hope doing are well. How well are I Thanks you

Robert Lee

all you, things Pretty good. considered. Thank

questions. a Just quick of couple

recontracts But with am seem, recurring the one kind guess, to thinking of pretty just movement I to mean gross want sales. is, seen. high I all the that, relative revenue net First the I sales, about of sure kind rose. make

kind that I for better or impacted is kind So concessions that of recontracting something price of of offset and whatnot, kind that number. lack guess, private factoring of of maybe way, some that the a

Steve Meyer

Rob. numbers, lot threw a I I know No. of

So let me explain.

So much fees our same. in across pretty we QX in stayed did the the board, are the recontracts

delta total, are that the that out your their net for had $XX I mentioned basically for I think that fees the clients down put market. recontracted, million gross, that out there, large, the couple X% looking less than literally the I of total mergers business think includes of in large and went into of the

not they So announced loss the sell and we we had current successful. to revenue, those were business go, even have clients, did clients the are of had though unfortunately would we we and and obviously I lost am though while we going the netted going And which sits is the million, active that in that's agenda am net up $X.X net to only an take in current revenue I it for to revenue. I that sales credit door. the the was new announce The even

Robert Lee

work, makes and about the is of of moment, banks understand. things going Okay. running I you you maybe that's to X? backlog forward, a to the given expecting sense. work backlog, pace just That curious, versus as January focused are things you the did of at fund a of of, even I sense of thinking there at period efficiently, other what clarifying time home. look kind And the from the in am than But very I original that. longer sizeable lot but Thank kind assume expectations the is over on for pretty putting around are environment the you

Steve Meyer

Yes. That's a great question, Rob.

probably. have would are base. I we backlog, we to as client months, right change? we over Will that environment would at proven think and But I impacted say that about continue. what said, implementations I I have With looking am is, and we hopeful environment. it XX% they have seen a it am that's remote extended No. communication this bit? yes, we and now, eager of to that within And little I that delays I relayed XX% drastically next fund do will out the did right say, I conversions I our are in very is, XX Yes, three a now hopeful remote in conversions I that can some has think the the as obviously, am I think to certainly pandemic I would think XX that think fact and there that. months. quarter, to I hopeful will that we pointing these we not. during Do called change in it a out why say So this had the

So the longer focus of on, not all there do could while least conversions and But some have of things to still larger active. our the client I this yes, goes, it our some are now right expecting we other don't be, at I think, just think move be implementations backlog, significant we do are we will delays. and delays.

Robert Lee

And maybe more in. if can squeeze I one

the the bid, amount a keeping less. more With of clients assuming kind that am in before process strong I at kind were or recontracting, everything fair that expands of of

are So to in that see kind just now you terms out of of --? the sales stretch more, starting like activity, new

Steve Meyer

Yes.

would the I as is, activity, it's far as new say So and what very engaged active.

diligence in to have harder say a positive going very agendas through the and just or you But think, have do to making a quarter the on my are said paused. hopeful just quarter think these and moving in I remote through might we are think My put doing on we the year. business, I to pursuing it's And two, of be little were little are from a due are are presentations. for a not I prior might can bit I and things that's There doing am continue new contact think U.S. I I believe while alone, the everything they would fruition like is So number process. a signing we delay this bit. I a all still do and will things agendas And and I hold little especially is still bit. standpoint. a But lot decision virtual now. will just this XX push moving. active it we call, that I end think over or right come do delayed seeing, Things that we prediction

Robert Lee

for Thanks my question. Great. Okay. taking

Steve Meyer

Rob. problem, Sure. No

Operator

go of you. with line next, Please Chris the Blair. to we ahead. William Thank go And Shutler

Chris Shutler

Hi Steve. Good afternoon.

Steve Meyer

you? are Chris. Hi How

Chris Shutler

Good.

is wanted looking that the number previously. I only question the correct? is already as So really you that $XX go is Is that right? just $X to to SEI? far that had be at we remaining the million, as And And that delta business first to clear, back should just at the just sales be million

Steve Meyer

a at good look way That's it. Yes.

now is, and I are our would the new of strong Obviously, of our think really expansion revenue $XX.X focus However, would number a and is right I understand million revenue. about. growth, one that $X.X current think on, I don't our say be we want million the current business, things is is to number new achieve what the in two growth, number driving secured $X.X while you I million, revenue that And which growth concerned to quarter. retention I drives a we basically

that's I to number the over. think not pass So a

Chris Shutler

Yes.

all And lastly, FIs of like announcement on just any makes have seeing competitive segment? out competition the at and then you you to what State an some larger extent environment then versus in competitively that impact could the FIs thinking update could And Street, That the term. possible sense. SEI any us longer thoughts on I smaller the on bifurcate FNZ, am Okay. there? give secondly, are

Steve Meyer

Yes.

think I you hard two, really two questions there. So have

first competitive say, environment Chris, remains one, the same. So I would the the

the that seeing with you know well same competitor competing still us. are We

still that's very very and have we value this new I platform, But the of normal dealing our still are technology our The is I proposition. lane resonating pandemic. and think our people, in power we and I strong staying and do everyone's our a we best think well. with think resonating

doing at playbook. competitor I look to we are and them, sticking a what focused while from So I standpoint, am our on more

which was industry. announcements. The in and on business, client so one brought for made this it time, announcements, FNZ, a management sold to specific business wealth up part, There far FNZ announced ours this is has is Street's long they year, been As State always services you is has overseas. been business consolidation that which a public as of competitor a there off

is State we and the folks really competitive still in from to business and a with entering that at us. we what means for standpoint, a client on U.S. the market. Street that still What under But means So term are that. contract another talked competitor, ours it's discussions no of and them really update it from have long outside the U.S.,

Chris Shutler

Okay. Thanks a lot Steve.

Steve Meyer

Sure.

Operator

no queue time. I in at questions this have further

Steve Meyer

Okay. Thank you.

it investment I turn is So will there no questions, to manager.

to turning primarily XXXX. for segment of $XXX.X investment fundings second to client totaled segment, This year-over-year increase million compared was the manager net due X.X% $XX.X or higher million, the quarter of in to revenue the our So which second revenue revenues for as quarter client existing new XXXX, was expansion. the and

driven as Our of the increase quarter Higher an profits investments. $X.X X.X% in compared increase or offset and a to second were higher quarterly by primarily the was in smaller personnel expense segment of for million million XXXX. $XX.X by year-over-year profit revenue

$XX at quarter of new balances $XXX.X billion balances of billion of fundings higher quarter And billion. increase second and XXXX net turning market the $XX.X end the end was appreciation to approximately of the due asset of at asset than billion, client XXXX. This the were $XX.X the market Third-party activity. the first of

strong well $X.X recurring million had of as net totaling we new business quarter a as recontracts XXXX, with in revenue second in million the recurring quarter sales events revenues. During $XX.X of

but implemented stands sold not $XX.X of XXXX. XX, at million backlog events Our at yet June

and included or deployed larger existing products managers our seized as Our robust capital. of additional the events In for quarter following alternative clients market were highlights. sales sophisticated our to new opportunities many market the launched unit,

In full manager In office addition, from segment. the their and standpoint continuing comes our of Archway our trusts this and with signed continue clients to and word highly to Platform From momentum engaged firm has And as as continued navigate $XX business, in single-family see fund overall servicing market to and nothing clients business continue new and existing we the frontline and traditional expanding venture through new market execution resiliency in existing we and of norm. our is a our home. and with unit, Europe, team capital workforce to subscription than mind. see family success appreciated our pandemic billion main by new Across a unit, It sales new and our debt in had from as seven SEI, our strong administration. the the in startup our diverse addition this less to to continued to services In collective operations, were cross selected relationships engaged three be model well impressive an also us work for we the for clients. We demand prospects from product we investment on and with noticed clients, the process credit all lines by with to clients. names to middle clients. sells drivers private office be private equity office automate existing new

disruptive highly new value we our like these is with engaged remarks While The I now sales, prospects. technology times stoppage prepared in it may a we see services feel on we over That have. some our and slowing well you in the remain execute of and of will shines and market and delay, growth we and questions clients not the well-positioned for any will in concludes a to see process platform, turn strategy. this my

Operator

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

Robert Lee

up on A Margins Steve. margins. holding well. again, Thanks, is Thanks. Great. question really

years, last if ever. my bunch you over are have had of think, may the maybe numbers I of right, your least heist at margin

Or profitability, maybe hundred it scale do points range. run this? some are call maybe that it you historically, XX%-ish So than in call where think basis level couple higher it that maybe getting you have a of your

more that closer Is do fair XX% again think like you to Now change. ultimately? in and it like seems XX%,

Steve Meyer

Yes. Rob. I you, get

might what bump scale. bump it business So am mid-XXs. with the I down do over is means the being XX%. at been think confident XX%, what some would business I say this has I the might XX%, up of in say. quarters XX%, always That I

the I business. base had larger and to adds over the of scale think client good have with really we the years, obviously grown five that bit a past

And better so and and in adding tools investing automation getting we our are and we more are business. more

way do at things it's goes. And not helped. that in to There was the for there had still year-over-year a build doing to look were future. say, looking really most quarter-over-quarter, on. lot that how I at for client we lot. out sustainable would and a I to that continue want this of going are those trend that that's is a invest So I the am lot and movement. We quarter, the important But I me to think growth.

up Sure, So do could continued could. be bit the range investment XX%? within make. for to a because business think I we I But while pick do will a that it it's be going over think there little will

Robert Lee

Thanks That's Great. helpful. Steve.

Steve Meyer

Sure.

Operator

queue this Thank you. And time. questions at in have no I further

Steve Meyer

Great. the it Okay. If Wayne? discuss advisor no questions, over there to Withrow am segment. is then to going Wayne I turn to

Wayne Withrow

Steve. Thanks

were our to reflecting and of to Both it quarter XXXX, the crisis. COVID-XX for second an model this the focus model settle started into we During operating improvements us. the to migration

of market Expenses down portfolios revenues were last quarter factors revenues second quarter valuation These of of a were in quarter dominant our impact $XX COVID-XX of from second to the totaled reflected year. compared year. down corresponding X% these last Second million. on The the and the de-risking were results. X%

savings quarter and were in growth client the mostly on and personnel fees, in Dennis mostly As SME increases area. offset These program. sub-advisor increases we significant event predicted to travel by technology increases in costs, some call, in our had conference the attributable first

decline following and XX% our reflecting quarter year's for second last revenue operating our decreased model. profits leveraged Our

Our down roughly the quarter while $XX.X was billion. the assets steep from second is XX, reflected at market management end XXXX, This of under of March. recovery X% of in June much declines the

during in flow recruited lost recruitment Following with We quarter a $XXX quarter, first recovery quarter quarter, our line net in rate. negative was cash our during ground and some advisors first second XX flow cash million. the the our new

engagement Moving product were model there past in and quarter. during the the numbers, operational model changes client line, our

hit this transitioned thinking ground home a forward. the operations Quite will influence our going running we model, As to operations to when work our from our frankly, environment. operations

model, the activity prospect advisors' engagement engagement Our convert that time. and flow. The clients client is our are and good strong SEI, actual investing in activity has client activity so virtual a our was not our are to been changing at we the at that as all marketing easy to and cash virtual same goal however, and advisors with news digital sales

dominated advisors. going Group. and fallout indications and an Bringing its and the by Moving American We the American the Funds the on a crisis both partnership role and for American the Capital designed, the models have constructed managed announced SEI Funds management do this of are a line support with organizations COVID-XX unit investment Funds with thesis. in together implemented offering SEI attractive changes. the Early we should summary, These power are result have forward. quarter prominent models. second maintained product In launched the by and in will what

I of Our scale, to best objective. us challenge. any strong core, will remains welcome primary resilient allow questions position make you rate financial now our its have. restoring infrastructure At growth may the our this and

Operator

[Operator to of Instructions]. line go Sandler. we And Piper ahead. Donat the Please go with will Chris

Chris Donat

you doing? Wayne. are Hi How

Wayne Withrow

Chris. afternoon Great. Good Hi.

Chris Donat

coming I higher ask early am curious that re-risking cash in recovery have that since quarters your then de-risking less with any the we I I maybe seen might about see was wanted in quarter? more to And the portfolios. of because a we mix Is revenue in comment something am on or then/ with prevalent asking probably? about yield the

Wayne Withrow

of and And what yes, you the yield yield, happened. look, point-to-point increase reflects, the reflect change Chris, real in average in guess, the as And does kind look basis. the money that's of much the latter assets, question. your you the exactly when part point-to-point I if other question your was not market risky as at Well, the less

was average drove what So the revenue. the really

expect go has it could So occurred to the other started go way the forward. I yes, de-risking the the it recovering would during and other but quarter, it way. going

Chris Donat

very Okay. Thanks much.

Operator

go Thank Rosenblatt. next, Ken ahead. will with And we go you. Please Hill to

Ken Hill

Hi.

kind or as about it a on more here. little clients thinking of here that you looking to thinking you a a at hoping thinking engage are Just environment? a little for to of client of bit the bringing What quick tools digital through question current you way Just you in types that are moving how going are that's learn different engagement are processes about in forward. bit

Wayne Withrow

Yes.

is, start, of I a the of lot lot a as the engagement engagement think we have a face-to-face. has been

you But Now that offering, components we supplementing on-demand with, WebEx traditional are call Zoom the if certain will, and in engagement digital kind videos of the, we sales are with the of doing I will cycle. kind around certain traditional, what components means. digital of

bit see a from little you sales of of a kind kind to of I process the push sales So a process. poke guess shift a

engagement digital their catalogs will, so major that's changes. at you pace. will own the they shop We can, to are say advisors making I available if of

Ken Hill

quarter. in. pipeline provide I And on par bit it. advisor like? out? then look you kind you Got from XX color the What's That's looking further with can an coming little think perspective, the there of prior And any mentioned a

Wayne Withrow

Yes.

and new I strong advisors the amount strong. digital think engagement of remains very of our really is pipeline

pretty feel we about So it. good

Ken Hill

are Okay. just areas is those more Any from? it Or particular broadly? coming

Wayne Withrow

it's think It's pretty board. broad. the I across

Ken Hill

it. Got

Okay. Thanks for the questions. taking

Operator

you. to with go will line KBW. we the next, ahead. Lee Robert Please go Thank of And

Robert Lee

are you Hi Thanks. Great. doing Hope okay? Wayne.

Wayne Withrow

am I great. Yes. doing

You too.

Robert Lee

of couple A questions. Thanks.

number. the that So right. first on clarify quarter this of would speak. just flows down we the to side AUA just in business flows onto to think from cash net breaking traditional was sure the your start quarter and and cash between cash I fence, the I so $XXX numbers the make million The flows minus whatever, But also the want I then have more

breakdown? us So can that give maybe you

Wayne Withrow

I the I but in right. that's programs. tell That AUA, comments, will would the flow million into What the gave you, you but in wasn't didn't flow the cash $XXX Yes. had number. was call my mention we into what flow cash level, AUA cash I the I positive managed in

Robert Lee

the then just platform, mostly [indiscernible]? assets million. under the was $XXX it And minus Was management Okay. traditional

Wayne Withrow

Yes.

It million. right, was $XXX yes. You have it

Robert Lee

then And know like Great. the you right. Funds All I have am pretty initiative, a from it just kind large to what curious historically departure seems of done. American

a your to American kind I sense of your you a what's great American one have here that was value-added about a Funds mean guess. way. the I for perspective something just different unique really for picking today? manager I a am trying just organization. advisors architecture get reach Funds from way in your right how just advisor Maybe to are maybe versus that a you But the Your and to sense up to products managers get you of picking think of trying

Wayne Withrow

Well, our models sort SEI different I the a our there aspects investment is it. taking think experience and and maintained and unit to in history couple construction portfolio Number of are constructed management. the one, management by of all

if So Funds or if we the will, the comanaging American components, American the will, implementation what them, you and are components Funds the you with provide.

all of platform. the operating SEI these assets In addition, on

So only it's which the of to strength us. platform our is technology available

different. So in the many is That's in SEI will, offering, platform. on level asset our a portfolio it branded implements that product makes structure if ways, it portfolio manager you our at what

don't third-party we ETF have than think our in investment do our our them where manage do management no we adheres strategy. portfolios our When the it tax components. still it, those It's overall product them, we Now, about offer loss to different platform. ETF. what the we we it's when goal-based structure. But run ETF, and them, structure we all It's still you on investment managed harvesting, we we ETFs

Robert Lee

of trended is business sense sense I Great. and as curious. as kind the felt made any then the quarter? pretty mean have Or improving that. was mean of And you us be may or engagement changing SME I any you through was But on end through Any kind since was you went on how over There the like mostly can market course straight your you, it the quarter? rebounded, March. up the may give of have just color advisor that of client way of and there solid? quarter market the kind client

Wayne Withrow

were would just reacting, don't say reacting portfolios, I to quarter, early it look astronomical people the was crisis. their stabilizing de-risking as And and say, want the to guess I were volumes panic in just I we clients. but was everyone

are it not again. advisors, have through quarter, progressed little a in we we was to slowly we wealth. environment as entirely back get COVID-XX may slowly, but bit this us there, returning but operating the and a of think got business be our It world new I when I say to to

change a describe seen would that think as the I during So quarter?

Robert Lee

my you. Thanks questions. Thank Great. for taking

Operator

the with line Blair. Shutler Thank you. Chris go And next, of to we Please William ahead. will go

Chris Shutler

Good afternoon. Wayne. Hi

Wayne Withrow

Chris. afternoon Good

Chris Shutler

or in those or outflows both? tougher I were new due the the quarter, attrition on greater to, So guess, sales

Wayne Withrow

and I not from would existing new more was signings. outflows business it say advisor the

people stress. products. overall the are you I have of managed moving consistent of seeing activities, other new advisor financial think you type safer, with products is, periods entirely it's And think into receipts. in are what market maybe we seeing what but I just an in I slowdown out guaranteed mean just seen

Chris Shutler

I is activity guess happening lot a of consolidation the Okay. TAM space. secondly, there And then in just

your than I better think businesses a are out clip firms frankly growing some other at there today.

feel business in I of a material make contemplating business see more or a the to to is the So any the guess growth? changes or there more to any the question, pickup structure are need you making real

Wayne Withrow

know that. don't how I answer exactly to

continue need line, making to we product continue changes forward. We our our change technology that change platforms going are to constantly to

In terms this am specific, in not I of forum. more of really type talk public prepared anything to about it

Chris Shutler

you Okay. Thank Wayne.

Operator

Thank you. have further I in this no And queue at questions time.

Wayne Withrow

Paul Thank like this At would about very institutional talk it turn much. I you to point, Klauder over our to segment. to

Paul Klauder

going the of XXXX. for Thanks the Good afternoon Wayne. quarter everyone. I to financial discuss am results second

X% the of of revenues $XX.X to second quarter million quarter decreased XXXX. compared Second

million. XX%. of Operating for negative client second and impacted billion costs negative decrease compared positively costs were and $XXX gross $X.X the XXXX. profits of billion Net driven a compared margin a client operating events. the was reflect million currency comprised quarter revenues to the Operating were by quarter Quarter-end $XX.X quarter quarter, travel profits This of quarter profits client $XX.X decrease million million capital $XXX reduced fundings, decreased sales primarily translation. losses Second of of with operating Both and by second associated fundings. client for positive which were was and lower $XXX sales X% asset the markets to lower of of is by XXXX. balances impacted

quarter-end included and signings fiduciary The was unfunded $XXX DB management new not-for-profit million. backlog a hospital, U.S. U.K. client U.S. relationship. New at a

New sales been extended their and impacted crisis, prospects has as momentum activity by timeframes. the have

inquiries OCIO making an second see of the RFPs, half did in processes increase we However, formal inbound and the in decision quarter.

We continue and from to clients proactiveness positive attentiveness. receive our on our feedback

in delivery approach We spent have enhancing our this and time virtual much learning environment.

strategic new initiatives. Regarding

services investment risk We have One large made technology, investor consistent SEI non-fiduciary progress management, on platform the and of mindset. offering a with

and forward launch quarter. answer to or Thank entertain a may much to very formal third happy in questions that have. any you We am the moving I you are

Operator

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

Robert Lee

are Hi Yes. Paul. Hi. How Thanks. you?

Paul Klauder

Good, Robert.

Robert Lee

economic that the Can maybe I we you initiatives fully how economic expand of launch? it that on sure product I maybe and about time function a changed functions understand kind little changing want should product make or capabilities just new through of could what scales? all business the how the bit the Maybe think to business? over

Paul Klauder

Yes. Absolutely, Robert.

are institutional was typically effectively at through It $X looking the to be organizations for would something team, that who This be to the would to have have want don't an and over going to who that these but over billion. the to technology have want Investor Steve market want to investment concept manager the talent Day. segment. $X billion doesn't investors, sells outsource, be technology November investment this larger similar last investment we So who introduced

help entire investments, non-fiduciary to valuation, services. alternative with the technology all administration, So the investment

be we be then them would management providing allocation So a risk managers platform. about and to for taking and for accountability managers picking but and about asset not we and studies access would full opinions them overseeing

them maybe and outsource. taking there some billion, be $X billion, states process in it's team. are offering would us the this flexible billion their their depending $X essence, maybe that not and because it $X firm represents the new level, at on to market will And Robert, investment They all are it organizations segment, the committed a of in whole a environment. So capabilities for

go to into take marker this able SEI whole a able be So be to incremental new and and to this all offer it for segment. is to market us of horsepower that

Robert Lee

it I way guess to of it, characterize to you putting almost I consulted. decades for of did mean want it, don't feel I better of ago, which just like but going back what kind lack And

fair that's really no, of of way something about a So of it? much Or not kind there is more it? different thinking is

Paul Klauder

that consultant. Yes. similar sale. This, organizations to technology an I very would investment heart, technology not to investment these categorize that Steve trying is technology Again, be its delivered at we are is need. This of sophisticated the fragmented to that have has and myriad management to is it a the the spreadsheets run able Excel and global to non-integrated a Most types process. be their segment of of and time, investment help these them organization a process. very custodian have

of say, it's sale. a technology I far So more would

studies. services we would can allocation more it would than consulting asset opinions the the services. to about trying be add with technology are to and definitely at of managers non-fiduciary the it, be sell giving it that heart regard much But Some of sweeteners

Robert Lee

you. were Those Great. questions. Thank my

Paul Klauder

Thank you Robert.

Operator

time. at you. And I Thank this in questions have queue further no

Paul Klauder

to over would I like SEI's now turn Controller. to Kathy Heilig, it

Kathy Heilig

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

was flow Year-to-date, million $X.XX or XXXX cash June from cash operations million XXXX from per per $XXX.X quarter $XXX.X Second operations share. $X.XX share. flow or is

free And flow, Second quarter million. $XXX.X million. year-to-date cash flow, cash $XXX.X free

million $X.X relates year-to-date million building, For $XX.X $XX.X and towards were the the software second $XX.X include expenditures quarter, capital to to new bringing which new capital about million building. expenditures capitalized excluding the million excluding capitalized software did the

$XX projecting million about remaining includes million to facility. which excluding the about year be capitalized software expenditures related $X are We to capital the for

you that of are and risks may, In statements are call or involve would that by like our on the in forward-looking assumptions appear. expect, continue some release remind financial and should, unaudited. and is will, based also statements this believe, forward-looking that such can information our terminologies you comments We cases, to many upon as identify presented

to sales disruptions potential precipitated you opportunities will include COVID-XX our from to our in strategic our the strategic growth, business long in expenses, our and and revenue that which One the consequences our pipeline offerings, that including expectations accelerating that client during ability client invest, that platforms our unfunded we scale drive will the the benefit ability resources to objectives. success opportunities will types segments generated forward-looking execute our fund, of on initiative, by the our the by the the segments degree when and our Our may or increase quarter be of backlog technology we establish our and pandemic, infrastructure, from the SEI statements allocations business our and believe and resulting margins, of term technology will strength events occurred to initiatives as we manage scale and our resources, offerings sustainable of and to choose which pursue,

are they expectations You management of on to beliefs should or not which and undue subject significant risk of reliance our our change. the uncertainty, subject many are beyond based statements place and on current control as our to forward-looking

Although they statements we could believe the assumptions we base upon which forward-looking be reasonable, our are inaccurate.

ask of of in the XX, our those that Factors described factors on any cause the XX-K risks from that to to free forward-looking be can have. year could Section our And Report statements additional and actual XXXX. Form Annual for questions results ended December found you please Some may the Risk now feel important differ in

Operator

[Operator at Instructions]. And queue I time. have no this questions in

Al West

on are we gentlemen, and fronts. ladies So fighting two

time. disruption COVID-XX and revenues disruptive profits growing the and second during First,

to planned to well and workforce we the our been On fortunate we have as able very were first front, keep have healthy productive.

we believe are will the prevail, and we workforce we thanks front, strategic that innovative headwinds our in we face and term second investments short future. making the On our motivated to but

and good So a please be safe happy call. Thank day. and have healthy and attending our remain for you

Operator

does Ladies and participation using conclude today. that and Thank your gentlemen, for for for TeleConference Executive you AT&T Service. conference your

You may now disconnect.

Al West	Chairman, Chief Executive Officer
Dennis McGonigle	Executive Vice President, Chief Financial Officer
Steve Meyer	Executive Vice President, Head of Global Wealth Management Services
Wayne Withrow	Executive Vice President, Independent Advisor Solutions by SEI
Paul Klauder	Executive Vice President, Head of the Institutional Group
Kathy Heilig	Chief Accounting Officer, Controller
Chris Shutler	William Blair
Robert Lee	KBW
Michael Lipper	Lipper Advisory Services
Ken Hill	Rosenblatt
Chris Donat	Piper Sandler

SEI Investments (SEIC) 22 Jul 202020 Q2 Earnings call transcript