SEI Investments Company

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.

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.

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.