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spk11: Ladies and gentlemen, thank you for standing by. Welcome to the SEI fourth quarter 2021 earnings call. At this time, all participants are in a listen-only mode. Later, we will have a question-and-answer session. Instructions for queuing up will be provided for you at that time. Should you require operator assistance during the call, press star zero on your phone's keypad. And as a reminder, this conference call is being recorded. I would now like to turn the call over to our host, Chairman and CEO, Mr. Al West. Please go ahead.
spk09: Welcome, everyone. On our call today, we have some new participants due to a change in leadership in our banking and investment manager segments. Al Chiodana will speak for private banking, and Phil McCabe will speak for the investment management segment. They will be joined by the segment leaders on the call, as well as Dennis McGonigal, SEI's FO. CFO and Kathy Hyland, SEI's controller. First, let's turn our attention to the financial results of fourth quarter 2021. Revenues grew 13% during the quarter compared to fourth quarter last year. At the same time, earnings increased 15%. Plus, the fourth quarter EPS of $1.03 increased grew 20% from the 86 cents reported in the fourth quarter 2020. During the quarter, SEI's asset balances increased by $6.2 billion, while LSV's asset balances grew by $1.4 billion. During the quarter, we repurchased 1.5 million shares of SEI stock at a price of $62.44 per share. That translates into $95.5 million of stock repurchases. Next, let's turn to revenue production during the fourth quarter. Net sales events in private banks and investment managers were $31.3 million, of which $22.1 million are expected to be recurring. In addition, net sales events of $4.5 billion incurred in the asset management related units. These events reflect positive asset flows of advisors and institutions. In a few minutes, unit heads will provide more detail on their specific sales results and their new business opportunities. We'll work to build on these results in 2022 and beyond. Now I'd like to provide you an outline of our situation today. As I remember, as I mentioned earlier, we have experienced leadership changes in the private bank and investment manager segments. This leadership involves four individuals, Al Chiodana, Sandy Ewan, Brett Williams, and Phil McCabe. Together, they have deep expertise gained collectively over 88 years working for SEI. They are an example of our strong and talented leadership. One of our businesses steadily grows its revenues and profits. That's IMS. Another business, the advisor segment, has recently been executing a technology-driven strategy. We have strong indicators that the business is returning to preeminence. We are very excited about that. Another business, private banking, is diligently working on a large implementation backlog, a strong sales pipeline, and enhanced client satisfaction. Our last large business is the institutional investor segment. While it faces headwinds in the legacy defined benefit OCIO client base, their strategy is to aggressively address fast-growing markets. We are also focused on building growth engines beyond our four traditional businesses. Here we are finding opportunity in markets and services adjacent to our four main engines. In the past, we have shared a couple of these innovative young businesses. For example, SEI's leading edge service of networks and data security is gaining traction. And the private wealth management business is providing an enterprise platform to alter high-net-worth families and just completed a positive year of growth. Finally, we have made three acquisitions toward the end of the year that will add additional capabilities for both our IMS and institutional investment business lines. They are Atlas, Phenomial, and Novus. We are well on our way integrating these companies into SAI and are already in market with the expanded capabilities they give us. We have built positive momentum during 2021. We have a strong backlog of sales and implementations and a number of key prospects late in the sales cycle. In addition, we have been successful in repositioning our asset management-related business segments. And with that, I'll turn it over to Dennis to give you an update of LSB and the investment in the new business segment. Dennis.
spk13: Thanks, Al. Good afternoon, everyone. I'll cover fourth quarter results for the Investments in New Business segment and discuss the results of LSV asset management. During the fourth quarter, 2021, the Investments in New Business segment activities consisted of the operation of our private wealth management group, SEI Sphere, the modularization of assets and data integration of different platforms to deliver on our One SEI strategy and other investments. During the quarter, the investments in the business segment occurred a loss of $8.8 million, which compared to a loss of $11.4 million during the fourth quarter of 2020. Approximately $5.6 million of expense during the fourth quarter of 2021 is tied to our one SEI effort. Regarding LSV, our approximate 38.7% ownership contributed $34.2 million in income to SEI for the fourth quarter of 2021. This compares to a contribution of $30.6 billion in income for the fourth quarter of 2020. Assets during the quarter grew approximately $1.4 billion. LSE experienced net negative cash flow during the quarter of approximately $2.6 billion, with market appreciation of approximately $4.1 billion. Revenue was approximately $113.3 million for the quarter, with $3.2 million of performance fees. As Al mentioned, in addition to the two acquisitions we discussed on the third quarter call, Phenomial and Atlas, we closed on an additional acquisition of a company called Novus. Novus is a global portfolio intelligence platform company designed to expand SEI's capabilities for both the institutional investor and investment management markets. Paul will provide additional commentary on Novus. Our fourth quarter results reflect the assimilation of their respective operational revenue and expense, as well as the cost of acquisition. Our effective tax rate for the quarter was 18.3 percent. We have also included in our earnings release additional financial information. Please refer to our soon-to-be-filed 10-K for more information. I will now take any questions.
spk11: Ladies and gentlemen, if you'd like to ask a question, please press 1-0 on your phone's keypad. You'll hear a tone acknowledging that you're in queue, and you can remove yourself from the queue by pressing 1-0 again. If you're on a speakerphone, we do ask that you please pick up a handset before pressing the numbers. Once again, for questions, press 1-0. And we'll go to our first question from Olin Lau with Oppenheimer. Please go ahead.
spk12: Good afternoon, and thank you for taking my question, Dennis. So labor and salary and labor costs is a topic that many people pay attention to. I think it's not just SEI specific, but across different industries. And I saw the SEI expect the stock base calm to be approximately 46.3 million this year compared to 41.5 million during 2021, which represents a 12% increase. Could you please talk about how SDI managed comp expense and tackle the rising labor costs this year? Thank you.
spk13: Sure. It was a topic of conversation for most of 2021, particularly the second half. And if you remember, on the third quarter call, we talked about how not only had we addressed, particularly with our kind of early stage professionals, kind of to mid-level professionals, between compensation adjustments we made in the summer and then an additional compensation adjustment we made at the end of the third quarter. We did that not only to certainly reward our employees for the great work they do, but also reflective of market conditions, competition for talent, and the need for us to remain competitive on that front. And all of that cost in terms of cash compensation, if you will, is baked into our fourth quarter results. On stock option expense, that's a little bit different story. We had stock options are generally issued to employees that we feel our board feels are going to be significant contributors to the future success of SEI. Option expense carries its own unique calculation, so how much a expenses attributed to each option issued. That has multiple factors that go into that calculation. If you look back to 2020, we had a fairly significant grant of options in 2020. Generally, we issue options in December of each year, so it's safe to say we had an additional grant that was made in 2021. The expense you saw in 2020 2021 was reflective of, A, the additional options that were granted in 2020, coupled with the shortened timeframe for vesting that we estimated will be in play for some options that we had granted previously. So we accelerated some expensing into 2021 and pulled it forward, if you will, from really 2022 and maybe a little bit from 2023. So you had a little bit of increased option expense in 2021 that we would have incurred eventually. We just pulled it forward given our vesting process. The other thing that did occur in the fourth quarter, and you'll hear this in Phil McCabe's commentary, is that we did have some retirement of unvested options in the fourth quarter. So we did get an expense benefit against option expense in the quarter. Does that offset some of that increase?
spk12: Got it. That's helpful. And then on the SG&A side, could you please give us an update of your latest status about people going back to the office versus working remotely in 2022? Broadly speaking, how do you think about SG&A expense this year compared to 2021? Thank you.
spk13: Sure. Thanks. Now, where we are with bringing people back to our campuses or offices around the globe. In terms of US offices, other than New York, New York kind of has its own unique, as you can probably appreciate, attributes to it, given how the city is and what's going on in the city, particularly. In October, we opened all of our offices up for any employee to come back on a volunteer basis. So we certainly didn't want to force anybody back if they were still not quite comfortable. We were functioning very well as a firm in our current work environment, so we didn't want to really force the issue. But we did open up our offices to anybody who wanted to come back, could come back, whether it's one day a week, two days a week, five days a week. That being said, at that time, we had probably 600, 700 people that were coming in the office every day during the week. So we started to see some pickup of people returning, and it was good to see. We see real benefits in people being in our offices, particularly around team-oriented activities, project-oriented work across different players, different groups across the company. So we want to continue to foster that. But then as we got into December, particularly mid-December, we're all too familiar with the letter of the Greek alphabet that we pronounce Omicron. So for those of us that didn't study ancient history, learning the Greek alphabet this year has been, I guess, one of the silver linings of COVID. So we got a little bit of a setback, but actually, as we've gone into January, we've seen actually more people coming back and the numbers are ticking up. We're currently working on plans that are, I would almost say, COVID neutral, if you will. They're really about the long-term work environment. How do we want to proceed as a company strategically long-term relative to how our folks work, both in an office, outside an office? We certainly... have embraced flexibility in the work environment. We also know there are real benefits to people being together, working together, the spontaneity that comes with that, the cross-pollination that comes with that. So we're working on those plans now, and we expect, and I certainly expect, that over the course of the first half of this year, we'll see additional folks coming back to the office again, but we will... support and continue to sustain us at a certain level in this flexible work environment. Outside the US, it's a little bit different. The UK was having really good success bringing people back. And then the UK government, prior to the holidays because of Omicron, shut things down and really pushed people back into a work-from-home environment. As we know, just recently they reversed that. and have now done a 180 degree shift to getting people back to offices. So I think the UK office will get back to a more regular presence of most of our workforce, again, with certainly the element of flexibility baked in. Ireland is our other larger office. Similarly, the Irish government announced this just this past weekend, also a reversal, similar to the UK, of bringing people back to the office. They were more consistently remote, I would say. So we'll see how our Dublin office responds to that. But we will work to get people back. And maybe Phil can comment on that when he gets his turn at the mic here. So all in all, it's going to play out over, I believe, the first half of this year. Let's hope we don't know the next letter in the Greek alphabet. And we can get back to the kind of new world of flexible but together kind of work environment.
spk12: Got it. That's very helpful. Thank you, Dennis.
spk13: You're welcome. Thanks, Alan.
spk11: Our next question comes from Michael Young with Truist Securities. Please go ahead.
spk14: Hey, Dennis, thanks for taking the question. Wanted to just ask about LSV. I appreciate the update for the fourth quarter, but obviously since then in the first month of this year, we've seen significant outperformance by value versus growth. And just curious if you could provide any sort of update on maybe kind of where things stand now vis-a-vis outperformance of value versus kind of just the secular trends in that business.
spk13: Sure. I mean, 2021, and I would suspect it'll continue. It has continued into this year, but I don't have firm numbers yet. It was a really good relative performance year for LSV, and that certainly will help them in the market, particularly as firms start to weight more towards value. To the extent that occurs, LSV will be on the I'm sure the short list of, you know, a lot of searches for that, for assets. They still struggle a little bit with the three-year and five-year performance number or did in 2021. So having a strong 2021 will also help their longer-term performance numbers. And that, as much as, if not more so, the one-year number should be beneficial. So I know there are, you know, Certainly optimistic given the return to value or, again, the shift that seems to be occurring to value. They certainly feel good about their performance last year and feel like they're in a good position to capture assets if the market moves in that value direction. I tried to emphasize on prior calls that one thing about LSV is they know what they are, they know what they're really good at, They know what their brand stands for. And they have, despite the kind of tough environment over the past five plus years, really, they have stuck to their knitting and stuck to their brand. And that'll serve them well if we get this value shift.
spk14: Okay, great. And just as my follow-up, kind of on just capital allocation more generally, you guys have been a little more active in the M&A arena in the fourth quarter. but the stock's also down a little bit with the market, 6%, 7%, 8% here. How should we think about capital allocation priorities vis-a-vis share buyback versus M&A? What are you seeing in that pipeline?
spk13: First, I would definitely make the point that the two are not. We don't trade one off for the other, per se. We're very much in the market. relative to M&A and good opportunities that we think are good fits for SEI, either enhancing one of our existing businesses, adding to our capabilities that can help us in multiple parts of the company, like some of the recent transactions we've done. Certainly interested in new business lines, potentially, that could further diversify SEI and give us new revenue streams and profit opportunity, new geographies that we have kind of on our landscape strategically, but an acquisition might give us a little bit quicker market entry opportunity. So that's something that we'll continue to press on this year and into the future. It's hard to predict whether anything attractive will come along, but it won't be for lack of us looking and entertaining ideas. Relative to stock repurchase, the board's priorities really haven't changed. So reinvest in the business, which includes M&A, and return capital to shareholders. That's stock buyback is the predominant use of capital. But as you also saw in late December, we were to declare another dividend that was higher than last year's dividend and just continues the progression of year over year consistent growth in our dividend process. I don't know if we're in the, I know we're on these gold lists of dividend-paying companies, but I don't see that changing either.
spk11: Okay, thanks. You're welcome. Our next question comes from Robert Lee with KBW. Please go ahead.
spk02: great thanks uh good morning good morning good afternoon good afternoon everyone hope everyone's doing well um completely confused here um so anyway good evening good evening rob good evening good evening yeah i don't know it's been a long week already um so i guess my question you know i get to really much higher level and you know frank was probably a little uncomfortable to ask but it's something i think is on investors minds so I think rightly or wrongly, with Steve leaving the firm, I do think there were investors who viewed him as, began rightly or wrongly, as a future potential leader of the company. So I think his sudden departure was somewhat jarring for investors, at least some that I've had conversations with. So I guess along those lines, is there... any plan to kind of update us or maybe start to make more transparent, uh, to the, to the outside with some of the, you know, uh, potential succession or leadership, you know, how leadership could evolve over time, you know, going forward. Cause I think it's something investors would, would, would really value. So thank you.
spk09: So, um, yeah, I think that, um, we're back on track with the creating an environment where we're looking for a strong CEO and we'll We'll share that as we go through it. Okay.
spk02: Appreciate that. And then maybe, Dennis, were there – I know you had a few transactions. I think you kind of touched on some transaction expense. Were there any kind of notable or sizable transactions transaction or one-time related expenses that may have flowed through in the quarter that we should think about, you know, going away, going forward. I mean, maybe the flip side of the one-time termination fee that I guess will be in the private bank segment, kind of offsetting that.
spk13: Yeah. So on the, I mean, that you saw the, the termination fee that helped revenue and private banking, you know, that had some offsets. So there were, The net of that, I know you'll hear from Al Chardin, the net of that was about $4 million benefit to bank profit, really bank revenue and profit. While we had the one transaction, we had some other things that went the other way that won't repeat. In terms of the acquisitions, the two smaller acquisitions, Atlas and Phenomial, they really had less impact to P&L, if you will, in the quarter. Novus, it was a larger transaction, and there was only a stub period that we had in the quarter. It wasn't a full quarter. And you'll hear from Paul kind of what the impact was there and what he expected it to be for 2022. So that had some negative impact. Things that impacted the quarter, I would say negatively, but they're in the run rate, and so our salary changes or compensation changes that I talked about when Owen asked his question, that's baked into the P&L. Paul Clauter will tell you about, he had a $1.3 million profit benefit, net benefit from a performance fee that we earned in his business. That won't repeat, so that was beneficial to earnings You know, there's always things that go in both directions. You know, as I mentioned with option expense, you know, the quarter we did get the benefit of the retirement of some unvested options. You know, that won't repeat as we move into 2022. But all in all, you know, the quarter, you know, was really strong. I mean, revenue top line was really strong. Profitability was strong. we continue to manage expenses, but we're doing it, you know, smartly and with a strategic, through a strategic lens, which is, you know, the best way to do it from our perspective. So, you know, it was, you know, we had more moving parts, I'd say, in the fourth quarter than we normally do, but, you know, net, it's, probably, you know, would have brought the earnings down a little, you know, a little bit, but not, They're still a very strong core.
spk02: Great. I appreciate you taking my questions. Thanks. No problem.
spk13: Thanks.
spk11: Our next question comes from Chris Donnett with Piper Sandler. Please go ahead.
spk05: Hey, Dennis. Just wanted to follow up on Rob's question on the acquisitions. I know you just said that the impact, looking backwards from Atlas and Phenomial, was huge. less impactful, but do you expect a meaningful impact on revenue and expenses from those businesses in 2022? And I understand I'll have to wait for Paul's comments on Novus, but just for Atlas and Phenomial for 2022, any thoughts?
spk13: Yeah, I'd say Phenomial, probably a little bit more, you know, the full expense for the year, we'll have a full year of expense, a little bit more there. It's not as... material, I'd say, given the size and scope. Atlas comes with revenue and expense. I'll let Paul speak to that, as well as Novus. But Atlas is really a purchase of a fund with a couple of people. So it's more of a revenue play than anything else.
spk05: OK. I'll wait for Paul then.
spk13: Yeah, I mean, Paul will tell you that his impact when you fully bake it into 2022 for Novus, now that's aside from any growth we get out of it, any improvement we get, you know, just based on the stub period in the fourth quarter is about $7 million. So that includes all the amortization of, you know, tied to the acquisition itself versus operating, you know, operating income. As you know, we're a GAAP reporting firm. We don't do non-GAAP, so I couldn't back all that amortization stuff out that apparently doesn't count sometimes, but we don't. Right. Got it? Yeah, Chris, why not? I'm kidding, Chris, I'm kidding. Thanks, Dennis.
spk11: No, you're welcome. Thank you. For additional questions on this topic, please press 1-0 on your phone. We go now to Ryan Kenney with Morgan Stanley. Please go ahead.
spk07: Hey, Dennis. How are you? Great, Ryan.
spk13: How about yourself?
spk07: Good. Just to follow up to some of the questions on expenses that we've had so far, trying to put everything together. So your margins have been around 28%, 29% for the last few quarters in a row now. That's higher than you've been running at historically. So As we look forward to 2022, when we factor in the comp adjustments and the acquisitions and some of the investments you're making, do you expect that number to move either up or down at all?
spk13: I think generally, given we do have a lot of moving parts going both directions, I would expect it to be relatively stable. It's hard to predict growth. It's hard to predict the markets. If we get neutral, better markets, maybe that'll help us because it's much more scalable revenue and profit. But I think running at that margin level with a growing top line is certainly easy to calculate higher dollar profits. and which is something we always look to do, sustain a fairly healthy reinvestment rate in new opportunities. Whether we would spend all of that new money, if you will, on new things is really dependent upon our optimism and bullishness on the new things. We don't target a margin rate to run at, but I would guess it would be in that same range.
spk00: Thank you.
spk13: You're welcome.
spk11: And we have no additional questions in queue at this time.
spk13: Thank you. Before I turn it over to the other Al, we would like to remind you that during today's presentation and in our responses to your questions, we have and will make certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially Please refer to our notices regarding forward-looking statements that appear in today's earnings release and in other filings with the SEC. We do not undertake to update any of our forward-looking statements. Now, here's the other Al.
spk12: Al?
spk03: All right. Thanks, Dennis. Good afternoon, everyone. Fourth quarter 2021 revenues totaled $129.3 million. which was up $9.6 million, or 8%, as compared to the revenues from fourth quarter 2020. Fourth quarter 2021 quarterly profit of $11.5 million for this segment was up $6.9 million from fourth quarter of 2020. Q4 2021 profits includes approximately $4 million of net positive impact from one-time items. In turning the sales activity during the quarter, we closed approximately 18 million of net investment processing events, 12 million related to recurring revenues, and 6 million related to one-times. Of the 12 million recurring revenues, 6 million is related to SWP, T3K, or Trust 3000, and 6 million is related to cross-sells. Overall, we signed three new clients of note. In the U.S., we signed one SWP agreement, with Fiduciary Trust International, a wholly owned subsidiary of Franklin Templeton. Under the new agreement, Fiduciary Trust International, which acquired Pennsylvania Trust Company, an existing SWP client, will adopt the SEI wealth platform for the combined entity. During the quarter in the UK, we signed two contracts of note. One new contract with Waverton Investment Management, a leading UK wealth management brand, expanding our success in the PCIM segment. Another contract of note in the UK is HSBC, a client that currently has business on our platforms and business in our current backlog. While signing this represents an expansion of our relationship to include alternative fund processing services, we are working with this client to address their changing needs with respect to the business contracted in 2020 that is currently part of our backlog. This demonstrates our ability to help our most complex and large clients respond to ever-changing market environment. The changing environment for our most complex clients creates opportunity and adjustments in our relationships as we try to help them respond to these changes. We're excited to work with all of these firms. Now turning to implementation activity, in the fourth quarter, we successfully converted two clients from competitor platforms to SWPs. Cambridge Trust, headquartered in New England, migrated to SWP. In addition to converting their wealth management business, they also outsourced their back office to SEI. Previously, Cambridge managed their operations in-house. UMB, headquartered in Kansas City, also migrated their private wealth management business to the SEI wealth platform. We believe the momentum is strong and a number of agreements have been signed and new clients implemented throughout the quarter. We feel this is a good indication that while the pandemic continues, it's not ultimately deterred new firms from partnering with SEI. As an update on our backlog, our total signed but not installed global backlog is approximately $81.7 million in net new recurring investment processing revenues. including the signings I just mentioned. We continue to work with our clients with longer tail timelines as their business needs change and new opportunities present themselves. From an asset management standpoint, total assets under management ended the period at $26.3 billion, which was up 3% from the fourth quarter of 2020. Our cash flow for the fourth quarter of 2021 was essentially flat. As we go into 2022, we remain committed to our strategy of building a global pipeline and associated backlog, matriculating that backlog, gradually improving our operating profits, and prudently investing in the business to create sustainable growth. We have a talented team across SEI that is focused on these goals. We remain excited and optimistic. That concludes my prepared remarks, and I'll turn it over to any questions you may have.
spk11: Once again, for questions, press 1-0 on your phone's keypad. We do have one in queue from Ryan Kenney with Morgan Stanley. Your line's open. Please go ahead.
spk07: Hey, I'm just wondering if you have any update on the pace and the path of pre-tax margin expansion in the private bank segment?
spk13: I'm sorry, ask that again?
spk07: Is there any update on the pace of the pre-tax margin expansion in the private bank segment?
spk03: Yes, thanks, Ryan. I appreciate it. As we think about continued operating margin improvement, as you can imagine, we don't foreshadow it going forward, but we feel comfortable with what we've achieved. But we're waiting and monitoring the impact of where the capital markets will be in 2022, as well as where M&A will be an opportunity and a risk for us. But overall, we continue to do the expense management plans we've laid out over the last several quarters, and they're having continued success and progress.
spk07: Thanks. And just one follow-up. Is Wells Fargo still in the backlog, and is there any update on if it's still in the backlog, when that's expected to come through?
spk03: Ryan, good question. Yes, Wells Fargo is still in our backlog. And as you know, we don't talk deliberately about the live implementation dates of the backlog. But as I mentioned before, we're constantly in discussions with our clients about how their business is changing, divestitures they make, investments they make, and then lining those up to our implementation timelines. Thank you.
spk11: And for additional questions on this topic, please press 1-0. And we have Robert Lee from KBW.
spk02: Please go ahead. Great, thanks. And good evening, Al. Good afternoon. I had two questions. First, could you update us on the size of the backlog, given that, you know, you had some new business wins, some things funded, so just kind of where it stands in aggregate right now? It's a My first question.
spk03: Yeah, Robert, no problem. And good evening to you as well. Yes, as I mentioned in my prepared comments, the backlog, the global backlog is at $81.7 million. As you know from previous quarters and then my update today, we continue to make progress matriculating that revenue and installing clients. And I would anticipate over the next 12 months that approximately 50% of the $81.7 million would be installed.
spk02: Great. And then maybe as a follow-up, I mean, clearly from a margin perspective, you know, hard to, you know, no one can predict, you know, what markets do if they stay here, go back up, go down further. But just trying to kind of level set it, you know, heading into the year, given what you see with new business conversions, whatever expense plans you have, would you have expected margins? Can you give us a sense of in a kind of flat asset return environment, let's call it that, heading into this year, how you would have expected margins to progress or maybe kind of finish the year, given kind of where you started? Yeah, I think...
spk03: Yeah, Robert, I think we're obviously happy with how we progressed throughout the year. I think even given capital market neutrality or moderation, I still would point to the fact that there's a lot of ins and outs in our margins, especially as it relates to one time, and that I can't predict. But from where I sit today, the progress we made around expense management and how we're looking at our investment stream has helped our margin improvement, and I would imagine that would continue as we progress into 2022.
spk02: Okay. And as you convert the, you know, that you expect about half the backlog to come on this year, are there any kind of increment? I mean, I know there's usually some incremental costs maybe around installation, certainly around sales, but is there anything, you know, nowhere that we should be thinking about that as that converts, we should expect to see some, I don't know, some lumpy one-time costs, you know, as big conversions happen, just trying to, you know, kind of got my arms around it.
spk03: Yeah, no, it's great, Robert. Thanks. The cost as we talk about our implementations and what's lying ahead, the cost is relatively baked in inside our P&L. I would not expect us to see exceptional costs related to what we implement in our backlog. Obviously, we have personnel that will ebb and flow as we install clients, but it wouldn't be material to our expense line items.
spk02: Okay, great. Thank you for taking my questions.
spk11: Of course. Our next question comes from Ryan Bailey with Goldman Sachs.
spk00: Please go ahead. Hi, Al. Nice to speak to you. Nice to meet you as well, Ryan. I was just wondering if you can help us think about the And I know this is challenging, but maybe if you can just help us think about the number of potential firms that you're watching in terms of some of those M&A comments, and that being a potential headwind. If there's any way you can help us think about what sort of size risk that would be, I think can be very helpful.
spk03: Yeah, Ryan, as I'm sure you can imagine, it's impossible for me to really size the risk or the opportunity of M&A because we don't control that pacing. All we know is that the trend of pages moving up, not moving down. So as a business, we pay attention to that. Now, what I will say, Ryan, is we're actively engaged with our clients. We're intimate with them, and we're going to respond to their needs. And as it relates to our capabilities, like conversion, experience, et cetera, we view that as an asset. But at the end of the day, on an M&A deal, as you know, the M&A is the organization's top priority, and platform decisions become second We're involved in it, but we don't determine its final outcome. So it's really hard for me to predict or monetize that for you.
spk00: Okay. All right. Thank you. I appreciate that. And I'm sorry. I tried getting into the initial line of Q&A, but clearly had some technical difficulties. I want to maybe come back to the other Al and Dennis with a quick question. I am sorry for doing it during the segment discussions, but I'm curious. For Rob's first question, and I'm sorry if I misheard your other Al, did you say that you were in the process of looking for a future CEO?
spk09: We started the look.
spk00: Got it. Okay. Thank you. That's all my questions. Thank you.
spk11: Our next question comes from Michael Young with Truist Securities.
spk14: Go ahead, please. Hey, Al. Just wanted to ask, you know, kind of high level strategically what your priorities are. Maybe if you could kind of stack rank those for the businesses and intentionally leaving that a little bit open-ended, especially for a professor in strategic management. So have at it. Michael, that's funny.
spk03: Yeah, I wasn't sure if I was going to use a lot of humor today, but now that you opened up that can, maybe this call will be two, three hours long. Michael, great question. I think as it relates to the strategy, we're going to remain relatively consistent to our strategy that we talked about over the last several quarters and probably a year and a half. And if I were to summarize that, I think our main focus is serving the clients we have, We have really deep relationships with those clients. We value those relationships, and we think there could be additional potential in those relationships as we see their businesses change and evolve. After serving existing clients, we're focused on really building out a pipeline, and I would say a global pipeline, so we've made some moves in personnel to take some people in the U.S. that have some experience with global selling, helping them help our UK office. So I would expect us to get our pipeline stronger in the UK and then continue to build the momentum in that pipeline that we have in the US. And then I'm laser focused on the matriculation of that revenue, which we would consider the implementations of those clients. And I'm deep experience with the clients. So I've been around for a while here, but almost all Clients that have been installed on SWP I've been involved with, so I know what it takes to matriculate those, so I keep my eye on that. And then as we've talked about in a number of questions before this, we're going to continue to be focused on expense management. And I say that with respect towards new clients and whatever investments are needed to extend relationships or install them. But I would say those four from overall business priority would be out saying, Michael, but I'd be remiss not to mention it, and we're going to work really hard on making sure our employees feel like they have the health and safety necessary to operate in the environment we find ourselves in today, and that's a huge part of SEI's culture.
spk14: Okay, great. And just with the maybe existing ones, you know, recently or, you know, kind of as you move into this year ahead, you know, post-pandemic. I'm just kind of curious about the value proposition and kind of the sales process. You know, is it really, you know, a function of just getting trial kind of with the newer platform with clients, especially internationally, or what is kind of the key, you know, that you feel like is driving success on the sales side?
spk03: Yeah, great question, Michael. I mean, one thing I'll just say about the sales process just to start so that I'm sure you know this. One of the things that's interesting in our business is the sales process can't be timed because the decisions are multifaceted. You may have a CTO involved, a CFO involved, a head of risk involved. So one of the difficult things about our sales pipeline is predicting when things will actually close because the process of selling is complicated. But once you get underneath the process of selling in our market unit, I think I would go to exactly where you pointed. I would start with our value process. And I feel really good about our value proposition. I think the overall macroeconomic trend towards outsourcing, the advent of resiliency as an important strategic priority given COVID, they point in favor of a place like SEI. And when I think about our value proposition and how we position it in the sales cycle, we position ourselves as a differentiated provider and rightly so. We have the most updated infrastructure. inside our space, we lean into that. We are one of the only homegrown, fully captive outsourcers, and we lean into that as a point of differentiation. And then we lean into, and this is hard, it's a little more intangible, we lean into the professionals we have here with deep domain expertise in our relationships and services architecture to show our clients what it means to be a partner of SEI. When I think about how that translates to our momentum, I think you're seeing that over the year, And the deals we're closing, the type of clients we're winning. And I think we'll continue to see that momentum. My goal in 2022 is to make sure that that transcends both the U.S. and the U.K. as we continue to pursue active engagement in the market.
spk14: Okay. Thank you for all that color. I appreciate it.
spk11: My pleasure. Thank you. One left in queue. Once again, for additional questions on this topic, please press 1-0. We go now to Owen Lau with Oppenheimer. Please go ahead.
spk12: Thank you very much. Sorry, I may have missed this one, but I want to go back to that $6.8 million early termination fees from an existing investment processing client. Why did this client terminate and how much revenue impact we should expect in our quarters? And also, is there any offset? Thank you.
spk03: Yeah, oh, and thanks. I don't think you missed it, so good question. The termination fee you're referring to is related to M&A activity. It was an SWP client for us. The buyer of that client was a non-SEI client, and they decided to move... this business onto their platform, which for competitive points, and just so you have this appreciation, the purchaser has a proprietary system. So it wasn't as if we lost this business to another competitor. We actually are losing it because they're going to consolidate it onto that proprietary platform. And then I think this is, you will appreciate this, we don't get into the details on a client-by-client place.
spk12: Okay, thank you very much.
spk11: We have no additional questions in queue at this time.
spk03: All right, so I'm going to send it over to my esteemed colleague, Bill McKay. Thanks, Al.
spk04: Good afternoon, everyone. 2021 marked another strong year of growth and continued momentum for the investment manager segment across all of our business lines. Our focus on executing our growth strategy led to positive results, driven by new sales growth, continued expansion with existing clients, and improved operational efficiency. These results were made possible through the significant efforts of our entire IMS team and our seasoned leadership around the world. FOR THE FOURTH QUARTER OF 2021, REVENUE TOTALS $154.5 MILLION, WHICH WAS 19.2% HIGHER AS COMPARED TO OUR REVENUE IN THE FOURTH QUARTER OF 2020. PROFIT FOR THE FOURTH QUARTER OF $63.5 MILLION WAS 28.4% HIGHER AS COMPARED TO THE FOURTH QUARTER OF 2020. Profit grew as a result of a revenue growth and also benefited by a one-time $3 million reversal of stock option expense related to the retirement of unvested options. Third-party asset balances at the end of the fourth quarter of 2021 were $907.4 billion, approximately $45.8 billion higher than the asset balances at the end of the third quarter of 2021. This increase is primarily due to net client funding of $37.4 billion and market appreciation of $8.4 billion. In returning the market activity during the fourth quarter of 2021, we had another strong sales quarter with net new business events totaling $13 million, which are expected to generate net annualized recurring revenues of $10.1 billion. In addition, we recontracted $37.8 million in recurring revenue. Highlights of these events included, in our alternative market unit, we closed a number of strategic new names ranging from startups to large global managers, and our cross-sale strategy continues to resonate in robust sales to existing clients. We won the business of a private equity fund in a competitive sales process. marking this $60 billion firm's initial entry into outsourcing and fund administration. SCI was also selected to provide fund administration for a multi-billion dollar startup private equity firm, as well as another real estate takeaway from a competitor. In our traditional market unit, we added business in all product lines with new clients, and expanded wallet share with many existing clients. In particular, our business expansion in both our collective trust We are also pleased to announce the conversion of a $10 billion multi-fund complex to our advisors' inter-circle platform. In Europe, we added several new usage funds and continue to expand our ETF, private equity, and private debt business. At the end of the fourth quarter, our backlog of sold but unfunded new business stands at $34.4 million. As we exit a successful 2021, we plan to build on our momentum and strong position in the market, and then as we progress into 2022, we'll focus on the following. Executing our growth strategy, increasing our client acquisition rate, expanding our wallet share with existing clients, and investing in our platform, solutions, and workforce. We are very optimistic and excited about our strong growth prospects and our path forwards. That concludes my prepared remark, and I now will turn it over for any questions you may have.
spk11: And once again, for questions, please press 1, then 0 on your phone's touchpad. And again, we're going to go back to Mr. Robert Lee with KBW. Please go ahead.
spk02: Great, thanks. Thanks for taking my questions. I'm just curious, on the re-contracting, I think you mentioned about, call it $38 million roughly. I'm just kind of curious of what your experience has been on recontracting, if you're able to kind of get the price, give concessions, you're able to get kind of any price increases. I mean, I'm sure it's somewhat unique to each one, but kind of in general, what's the pattern you're seeing when contracts come up?
spk04: Sure. Hi, Rob. Actually, in the quarter, we've had about a number of different re-contracts. They're almost evenly split between alternatives and traditional. They're all multi-year extensions, four-plus years on average. One of them was our second largest alternatives client, and they extended for five years. And in general, we're really seeing these stay the same. We've probably had a few additional services here and there, but we're not seeing any net downs at all with any of these recontracts.
spk02: Great. Thank you. And just as a follow-up, notwithstanding the $3 million reversal, I think in prior calls it was mentioned that margins had been running higher higher than I guess in a normalized pace and that there was an expectation that they maybe would trend back down towards that kind of high 30s range. Is that still the expectation? Is that something we should expect to play out as 2022 progresses? Again, kind of against the backdrop, let's just call it a kind of flat market, whatever that could be. Rob, I think you're kind of spot on. So
spk04: The Q4 margins at 41.1% were running a little bit higher than we've seen in the past, or actually probably the highest we've ever seen. We did have that one-time cost benefit, and if you back that out, we would be in the higher 30, so right in that range or so. But as you know, over the last few quarters, our implementations and clients are converting faster than our operational expense of hiring and catching up. So we're if we're still in a position where revenue is matriculating faster than the actual expense of hiring. But with that being said, in 2022, we're going to trend back down towards the mid-30s that we've been talking about for a long time, probably the 36% range or so, as those expenses, hiring expenses, kind of catch up with the revenue. But we focus, as you know, on managing the business, not managing to a particular... and growing our margins. So we're walking a fine line, but we're trying to get the clients converted as quickly as possible, and at the same time, do a nice job of the business.
spk02: And maybe as a follow-up to that, this was, I guess, really asked earlier, and it seems like most of corporate America is facing this, but as you try to kind of ramp up hiring, staffing, it's as you mentioned, kind of catch up with business, which is good. Are you finding that even with the wage inflation that's out there, that it's even running above what you would have thought when you did your budgeting sometime back in December or the fourth quarter? Or is it kind of meeting your expectations, what you have to spend to get the people you want on board?
spk04: Yeah, and Rob, I think, you know, we're facing the same challenges, you know, as everyone else is in the industry. In the last call, I know Dennis spoke a lot about, you know, investing in our workforce and the additional money that we gave all of our operational employees, and that actually has been helping us out a lot. So anything that's out there is based into our current run rate and P&L, so we don't anticipate... you know, a lot of incremental operating expense on that part of the ledger. So I think we're doing what we can to get people in the door and keep them happy. It's one of our top three initiatives for 2022, and we're just going to stay at it.
spk02: Great. I appreciate you taking my questions. Thank you.
spk11: Perfect. For additional questions on this topic, press 10, please. And with that prompt, gentlemen, there are no additional questions in queue. I retract that. We do have Mr. Owen Lau is back with Oppenheimer. Please go ahead, Mr. Lau.
spk12: Thank you for taking my question. Just a quick one. I think last quarter you got the approval on the Luxembourg servicing license. Could you please talk about your recent traction in Europe overall? Are there any other countries that you may want to get into and expand further? Thank you.
spk04: As you probably know, Luxembourg is the second largest jurisdiction for any alternative fund. We hit the ground running on November 1, and we converted a ton of existing funds and business and investors that we had already had on our European partner, EFA. We moved that business into our own Lux office, and the team is really doing a great job over there. I think we have a lot of traction. A lot of the funds are being launched by all of our alternative clients in the States as well, and I think the office is doing a great job. As far as expansion, we do have some clients that are working with us to try to figure out how to get more of a far eastern presence, and we're just looking at those things as we speak.
spk12: Got it. Thank you very much. Thank you.
spk11: And again, there are no additional questions in queue.
spk04: All right. Thank you. And with that being said, I'm going to transition to Wayne Whitbro, who runs the advisor segment.
spk10: Thanks, Bill. For the fourth quarter and fall of 2021, the headline is that the advisor unit is solidly entrenched in the ongoing implementation of our new strategy. It's our mission to help advisors be better so they can deliver brave futures for their clients. And that mission is fully supported by the pillars of our strategy. It's the execution of that strategy that drove the financial results of the segment, highlighted by what we believe is a key milestone in our growth. achieving over $100 billion in total platform assets. Numerical comparisons of our financial results to last year's are included in the press release. Color explaining some of those comparisons include fourth quarter revenues rose due to positive capital markets and continued momentum in positive net cash flow. For the year, we eclipsed $3.2 billion in managed asset net cash flow and nearly $800 million in non-managed platform asset cash flow. Expenses were up, contributing to a decline in our margins. Direct costs, including subadvisor fees, are reflected in this increase. Investments in our technology platform, including the integration of Orange, and investments in our personnel due both to growth and the tight labor market were other significant items. During the quarter, we had $1.1 billion in positive net cash flow. Of this total, $1 billion was into our managed asset programs. As I mentioned before, total platform assets exceeded $100 billion at December 31st. In Q4, we recruited 58 new advisors and reengaged 43 existing advisory firms, who over the last few years had essentially stopped doing new business with us. For the year, we recruited 257 new advisors and reengaged 126 existing advisory firms. Our pipeline of new and re-engaged advisors remains active. I began my comments by noting we are entrenched in the ongoing execution of our new strategy. The three core principles of the strategy are as follows. Leading with a technology first value proposition, built on the unparalleled capabilities of the SEI wealth platform, including integrated cloud-based front and middle office services. Second, offer our technology platform standalone or bundled with our asset management platform. And third, deconstruct the components of our asset management platform, offering both bundled fee and unbundled fee options and opening our platform to curated third-party providers. While we are still early in the execution phase of our new strategy, I feel we are making good progress. I now welcome any questions you may have.
spk11: Ladies and gentlemen, for questions, please press 1-0 at this time. Our first question is from Mr. Robert Lee with KBW. Please go ahead.
spk02: Great. Good morning, Wayne. Keep doing it. Good afternoon, Wayne. I hope everything's okay. With that in mind, real simple question. Can you just give us the breakdown between, you know, what's an AUA versus total assets on the platform and, you know, understanding your comments around some of the expense growth and what you're seeing. As we think ahead, obviously it's going to bounce around quarter to quarter, but is there anything maybe kind of one-timish in the quarter that maybe goes away or should we kind of feel like this is a pretty good kind of run rate expense base and revenues will do what they do and there's you know, with markets, and there's obviously some linkage there, but this is kind of a good kind of level to kind of think about going forward or building on going forward.
spk10: I don't know where to start, but I guess I wouldn't want to say how the revenues just do what revenues do. But, you know, about 15% of the assets are lack of only assets and non-managed assets. if that was your question. And there's nothing unusual in the quarter.
spk02: Okay, great. And maybe to follow up, the billion of managed cash flows, can you maybe just give us an updated sense of the products or types of products that's flowing? So I know you have your ETF kind of model portfolios or portfolio that's been very successful. But can you maybe dig a little deeper? Is it that or what other things you're seeing and, you know, where demand has shifted or shifting?
spk10: Yeah, I mean, if I take it at a high level, I would say there's two items that are worth noting. Number one, there appears to be a preference for an unbundled fee as opposed to a bundled fee. And I think that gives advisors more flexibility pricing with their clients would be my assessment. So that's definitely going on. And secondly, there's definitely a preference for, you know, the passive from the passive side. ETFs. Right.
spk02: Great. Okay. Thank you for taking that question.
spk10: We both unbundle that passive. So that's both trends.
spk02: Right. Great. Thank you.
spk11: Our next question comes from Owen Lau with Oppenheimer. Go ahead, please.
spk12: Thank you for taking my question, Wayne. I just have a quick one. Could you please give us an update on the direct indexing product? I think there's also an ESG overlay with that. I think you launched this product in February last year. And what have you learned from this for a while? Thank you.
spk10: Yeah, I think we launched it near the end of last year, and we continue to sort of gain some traction in that. That was what I would say is the initial phase of that. And while we're getting a lot of positive results in that, I don't think we've put our full stride in either one of those areas yet. And we have enhanced releases on both of those fronts, both direct indexing and the ESG overlay, coming this year, which will further the momentum on those product loans.
spk12: Got it. All right. Thank you very much, Ray.
spk11: Our next question is Ryan Bailey with Goldman Sachs. Please go ahead.
spk00: Hi, Wayne.
spk06: Hi, Ryan.
spk00: How's it going? I was hoping you could give us a little bit more color on some of these re-engaged advisory firms. So when you say re-engaged, is that you're starting to win incremental in your business with them, or was it that they had converted away and have now come back to the platform? And maybe this is probably the most important part. What was it that caused them to decide to re-engage with you?
spk10: Yeah, it's a multifaceted question, and I think the way I would come at it is We've changed our strategy, you know, over the last, you know, year or so. And we've also, you know, you know, completed the rollout of the wealth platform and we're at, you know, deep into the, you know, really robust enhancement of that platform. So that's technology strategy in addition to how we've changed the way we, you know, bundle on bundle investments, some of the things I talked about. I'd say, you know, we've been in this business almost 30 years and there's a lot of advisors that maybe used to know came on us really don't know us anymore. Or they used to know us and they really don't know who we are and what we do now. So we had a concerted effort to say, you know what, let's reconnect with those people. And maybe they haven't opened a new account in a while. And maybe we're not really getting or, you know, maybe they opened one account over some time. Let's reengage them and see if we can get some steady flow of new business out of them. And that's how we're defining reengagement. So these are people that maybe had assets on the platform, weren't sending us new assets. We said, hey, you know, we want to talk to you about what we're doing now. And they're excited about what we're doing. You know, I don't want to say the new FBI. They're excited about what we're doing, and they're saying, I want to get, you know, I want to start doing new business again. So that's how we define a re-engaged advisor. We have specific metrics that I'm not engaged to talk to, you know, prepared to talk about now, but I would say that. These are people that weren't opening accounts that are now opening, not just a single account, but multiple accounts with us.
spk00: Got it. Okay. It's really interesting. I wonder, maybe you can speak about it sort of qualitatively rather than quantitatively, but 126 re-engaged existing advisory firms during the year. Is this the vast majority of firms you've already reconnected with and re-engaged that previously were part of the platform, or are we still... early in the process of contacting those potential re-engaged firms. Is there any call you can give us around that?
spk10: There's probably 2,000 targeted firms that fit that category.
spk00: Wow. Okay. All right. That's very interesting. Thank you for that call.
spk11: Our next question is Michael Young with Truist Securities. Go ahead, please. We have no additional questions in queue at this time.
spk10: Okay. Thank you very much. With that, I will turn it over to Paul.
spk01: Thanks, Wayne. Good afternoon slash almost evening, everyone. I'm going to discuss the financial results for the fourth quarter of 2021 as well as the entire year. Fourth quarter revenue of $87.8 million increased 7% compared to the prior year. Full year revenue of $343.8 million increased 8% compared to 2020. Operating profits for the fourth quarter were $42.5 million, 6% lower than the prior year. 2021 full-year profits were $175.7 million and were 5% higher than 2020. Higher capital markets were positive for revenue and operating profits, and we earned a one-time performance fee in Q4. Lost clients and higher employee and sales compensation expenses impacted full-year profits. Novus Partners, an acquired business in Q4, operating loss and one-time deal costs directly impacted Q4. to for-profit by 1.6 million. Operating margin for the quarter was 48%, and for the full year 2021 was 51%, and quarter end asset balances were 98.7 billion. Net OCIO asset events for the fourth quarter were a positive 300 million. Gross sales were 1.4 billion, and client losses totaled 1.1 billion. Total new client signings for 2021 were a healthy 5.7 billion, which represents $13.5 million in revenue. Fourth quarter new sales were diversified across U.S. endowment and foundations, healthcare, North American DB and U.K. fiduciary management. Client losses continue to be due to DB terminations, mergers, or competitive rebids. The unfunded OCIO sales backlog at year end was $2.8 billion, with most of it funding in Q1 of 2022. In the quarter, we completed two strategic acquisitions that we feel strengthen our capabilities in two very large and growing markets. As previously announced, we believe the Atlas Master Trust acquisition bolsters our competitiveness and capabilities in the large and fast-growing Master Trust market in the UK. The acquisition of Novus Partners significantly enhances our ECIO platform and our overall capabilities to large, sophisticated global institutional investors. The acquisition brings us institutional investor clients, investment manager clients, and family office clients for which we can leverage the one SDI mindset in the company. While we believe both acquisitions will enhance our strategic position in these markets and we are optimistic on long-term growth potential, the acquisitions bring headwinds to profit and profit margin percentage in 2022. Thank you very much, and I'm happy to answer any questions that you may have.
spk11: For questions, press 1-0, please. We have Robert Leaf from KBW. Please go ahead.
spk02: Hey, good afternoon. I got it right. Good work, Robert. Even I can do that. Just real quickly, Paul, I'm just kind of curious. The ins and outs, the gross sales versus redemptions, any way of kind of characterizing maybe on a If I think of the $300 million of net flows on a revenue basis, would it have been positive, negative, just the changing mix, or relatively even, so to speak?
spk01: When we look at the net $300 million, it is definitely positive, probably a little bit over $1 million. And then we did have the incentive fee that I talked about that we recognized in the fourth quarter as well. So that certainly was a creative, uh, that number just, uh, for your benefit was 2.6 million of revenue, 1.3 million in expense because we pay the sub advisor of that specific product and $1.3 million of profit. It's a 50 50 split.
spk02: Right. Okay, great. And, um, So I guess the comments around some of the headwinds from some of the acquisitions, or at least incremental expense pressures. So if we think about, I know it's in the release, I guess it was $800,000 or so. Is that kind of the incremental pressure we should think about going forward, or is that part of that just kind of deal expenses and it's going to be somewhat less than that?
spk01: Yeah, let me unpack that for you. So I said $1.6 million, which is the $850,000 that's in the release or $868,000. That's the run rate loss. And then there was $750,000 of deal costs. That's how we get to the $1.6 million impact for Q4. Obviously, the deal costs go away. The largest component of the Novus transaction is the amortization. So the business is actually on a non-GAAP basis, a cash flow basis, is just around kind of break-even. But some of the amortization will probably be in the tune of about $7 million impact in both 2022, from an accounting perspective, 2022 and 2023. And then it'll kind of cliff off over time as the schedule kind of diminishes over time.
spk02: Great. And, you know, just kind of curious, I mean, as you acquire some of these, these platforms to add capabilities, you know, are you, do you expect that once you, in addition to whatever their capabilities are that you, they require at least for some period of time, some step up in investment to maybe, you know, bring them to scale or, you know, to enhance their capabilities to, you know, to fit into your network and just, you know, mean post acquisition.
spk01: Yes, absolutely. More so on the Nova side than the Atlas side. But that's all kind of baked into our projections. But equally in the projections is sizable increases in revenue because of the capabilities we bring them, not the least of which is in addition to their technology, which is state-of-the-art awesome technology, is the back office and middle office capabilities that we bring to the table. So really sizing up their clients and being able to upgrade their clients and revenue possibilities because of the additional capabilities that SCI brings to the table, which is why it is such an awesome fit of the two organizations. So I think I've messaged before this market we think is about 25 trillion and about 4,000 global suspects that we're not suspects of OCIO. They are do-it-yourselfers. They're ones that want to have an investment team, which is great. And now we have a capability that we can squarely go into them. And as part of the acquisition, we get instant credibility because we're bringing over 140 clients that we already have. I'm quite bullish about the opportunity. There might be some financial impact that we're going to deal with in 2022, maybe a little bit residual in 2023, but the growth potential is fairly profound for the business.
spk02: Great. That's helpful. I appreciate it. Thanks so much.
spk01: No problem. We have no additional callers in queue at this time. Okay. With that, I'd like to turn the call back over to Al Webb.
spk09: So, ladies and gentlemen, we are building momentum throughout our businesses. We look with optimism to the future and to capturing the opportunities inherent with constantly changing markets. Our new brand reflects our company's strengths, our optimism, and our belief that we will help our clients build brave futures. Please be safe. and remain healthy. Thank you for attending our call.
spk11: Well, ladies and gentlemen, that does conclude your conference call for today. We do thank you for your participation and for using AT&T Event Conferencing. You may now disconnect.
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