SEI Investments Company

Ladies and gentlemen, thank you for standing by, and welcome to the SEI third quarter 2022 earnings call. At this time, all lines are in a listen-only mode. Later, we will have a question and answer session. You can queue up at any time during today's call by pressing 1 and 0. As a reminder, today's conference is being recorded. I'd now like to turn the conference over to the head of investor relations, Lindsay Upsall. Please go ahead.

Welcome, everyone. Thank you for joining us on today's third quarter 2022 earnings call. Joining me on today's call are Ryan Higgy, SEI's chief executive officer, Dennis McGonigal, chief financial officer, and the leaders of each of our business segments, Paul Plotter, Bill McCabe, Sanjay Sharma, and Wayne Withrow. Kathy Heilig, SEI's controller, is also with us. As a reminder, we've switched up the format of our calls. Ryan will first provide a business and strategy update, and Dennis will provide an overview of the company's quarterly results, including those for each of our business segments. After our prepared remarks, we'll open up the call to questions. Before we begin, I'd like to point out that our earnings press release can be found under the investor relations section of our website at SEIC.com. This call is being webcast live, and a replay will be available on the events and webcast page of our website. 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 our filings with the Securities and Exchange Commission. We do not undertake to update any of our forward-looking statements. With that, I'll now turn the call over to CEO Ryan Hickey. Ryan?

Thanks, Lindsay. Hello, everyone, and thank you for joining us today. Over the quarter, I've continued to spend time with our employees, clients, and many of you on the call. The engagement and insight has been invaluable. Clients and prospects clearly enjoy working with SDI, and the interaction has helped me focus our energy on delivering more of what the market values to accelerate growth. After the quarter closed, but before the call, we announced the strategic alignment of our asset management businesses and related units under the leadership of Wayne Withrow. Later in my remarks, I will dive deeper into how the evolution in this organizational structure is a critical step to driving SEI's next chapter of growth. Third quarter revenues declined 3% from a year ago. Our third quarter earnings were down 55% from a year ago. Third quarter of EPS of 45 cents decreased 54% from the 97 cents recorded in the third quarter of 2021. As noted in our second quarter call, we executed on a voluntary separation program from which the majority of the financial impact would be recorded in the third quarter of 2022. The final impact was approximately $57 million or 32 cents per share to the quarter. As I stated before, this program was designed to create an opportunity for tenured SEI employees to have an option to explore their life's ambition and concurrently create space for internal mobility, fresh perspectives, diversity, and external experience. We are committed to an environment where our employees bring their best selves to SEI every day. In the quarter, we repurchased 890,000 shares of SEI stock at a price of $55.55 per share. This translates into $49.4 million of stock repurchases. Stock repurchases were down mainly because we were not in the market while we worked through the recent changes in senior executives. Net sales events totaled approximately $36 million, $30 million of which is net recurring. Dennis will go into further details on our financial results later, but this was a really solid sales quarter for SDI, and I applaud all of our teams. We need to continue to build off that positive momentum moving forward. As inflation, volatility, and other economic factors continue to place pressure on markets, we will remain vigilant, but we're going to act with conviction about how we deploy capital and make the changes necessary to grow our business. Since I stepped into the role of CEO in June, we have been strategically reviewing opportunities across our business and markets. Trends across the entire wealth management market present enormous opportunity for SEI to exploit competitive advantages and accelerate our growth, both organically and inorganically. During the quarter, we announced the alignment of our asset management businesses under Wayne Withrow. SEI's advisor business, institutional business, investment management unit, asset management distribution business, and private wealth management business will all report to Wayne. By implementing an organizational structure that aligns our business strategy across all of our asset management businesses, we bring together the breadth of our capabilities and the depth of our asset management expertise globally. This ultimately provides the complete and personalized experience that's critical to investors' financial success. I'm confident that we can more rapidly expand our footprint across both intermediary and institutional channels. While we have a new structure that creates more streamlined decision-making, the distinct market segments will continue to be run by Wayne, Paul, and Sanjay, and we will report the results of these segments accordingly. Wayne, Paul, and Sanjay are here today and available for questions later in the call. Last quarter, we also took steps to meet market demand for more advanced data integrations. As clients increasingly need real-time access to power analytics, application development, consumption of large amounts of data, and advanced reporting. To meet this growing need, we entered into a strategic partnership with Snowflake and launched the SCI Data Cloud. We currently have two SCI Wealth Platform clients deploying SCI Data Cloud, and we continue to engage with multiple clients across all SCI businesses, including our investment managers business, to adopt this solution. Turning to our lines of business, the investment manager segment had another record sales quarter, combining both new name sales events and increasing new business with existing clients. In the alternatives market, we took on a large venture capital manager that was previously operating with a major competitor. And in the traditional market, we added a significant client who utilized SEI for middle office services. Globally, we continued the expansion of both our fund administration and regulatory service offerings and added a new private equity client. We are engaging more strategically with our client base as they seek to expand their access to high net worth in the mass affluent market, especially through professional advisors. We feel that SEI is uniquely positioned to capitalize on this growing market dynamic and have begun to assemble more talent focused on this initiative. we are seeing equivalent demand from our intermediary and institutional clients for more access to alternative investment products. Turning to the investment advisors business, we had another solid and active quarter. While we don't believe our results currently reflect our potential, we are encouraged that they reflected our strategies, including the launch of a team solely focused on the RIA market and the unbundling of our platform and investment offerings are showing great signs of early success. In the quarter, we completed the launch of the first version of SEI Connect, our digital client and prospect engagement portal, and we are on track to have it in production for all clients by the end of this year. This is an entirely cloud-native application built on the platform architecture we acquired last year. The institutional investor segment experienced new client wins as well, predominantly with foundations and endowments. During the quarter, we continue to focus on advancing OCIO opportunities and using SEI Novus for more sophisticated OCOIO deals and leading the ECIO proposition. We are also excited about the integration of SEI private wealth management into the institutional business. We believe this will position us to leverage existing relationships on both sides. We are aware that headwinds will persist for the institutional business, given general market conditions and the impact of increased interest rates on the defined benefit market, and we will remain disciplined in how we manage through this. In the private bank business, we had an active quarter with new sales and implementations. Most notably, we converted the initial book of business from U.S. Bank from Trust 3000 to the SEI Wealth Platform. This conversion is significant. It represents the first client to go live using our software-as-a-service solution. We greatly appreciate U.S. Bank's longstanding partnership and its confidence in SEI to deliver a solution that will carry their business into the future. We also signed two new name clients, both of which were using competitor platforms. We will continue to right-size expenses in this segment and look to accelerate sales activity. As I stated last quarter, to do so, we are working to improve our operating efficiency and consolidating teams across our business, operations, and technology platforms, as well as surgically assessing our investment spend in the segment to ensure appropriate return on investment. Additionally, we are actively engaging clients to create more cross-sell opportunities across the enterprise. I'd also like to take a moment to highlight some positive traction and growth areas in our investments and new business segment. We continue to have strong conviction around SEI Sphere, our cybersecurity platform, making strategic investments to accelerate growth and evaluating new market opportunities. We have sold this solution to clients that are new to SEI, as well as successfully sold the service to existing clients. We've also had early success cross-selling additional services within SCI Sphere, especially in the cloud migration space. In our private wealth management business, we added four new clients during the quarter and continue to build upon our pipelines of prospects. Our goals-based approach has resulted in our clients remaining fully invested and weathering the volatile markets with confidence in their portfolio design and performance. And finally, our partnership with LSV remains strong. Dennis will report on their financial results later on the call. As I mentioned in last quarter's call, we are committed to embracing internal mobility and investing in programs and initiatives focused on talent, future skills, rotation of employees, idea sharing, and professional development. To that end, during the quarter, we also announced that Sandy Ewing has transitioned from our Trust 3000 business to lead SEI's family office and regulatory services. where she is working closely with SEI's business segment leaders to advance opportunities and execute growth strategies for these offerings in existing and new markets. As a 27-year veteran of SEI, I am confident in Sandy's leadership and experience to drive these efforts. Lastly, and of equal importance, I'd like to touch on initiatives that are enriching our culture. We believe culture creates the foundation for why we do what we do every day, and we are going to make SEI's culture an even bigger competitive advantage in the future. We know it's critical to foster a workplace where our employees feel welcomed, valued, and respected every day, regardless of their identity. To that end, I'm excited to share that we launched a multi-year initiative to continue our efforts for diversity, equity, and inclusion. I've also joined more than 2,200 CEOs and presidents in signing the CEO Action for Diversity and Inclusion, pledging to act on supporting a more inclusive workplace for employees, communities, and society at large. As we close out the year and look ahead, we continue to execute on making changes that are designed to help us capitalize on our opportunities. We will remain focused on maintaining and accelerating growth in existing businesses, identifying and developing new organic growth engines, looking for acquisitions that align and accelerate our strategy, and enhancing our culture and talent strategies across the entire company. This concludes my prepared remarks. I will now turn it over to Dennis to discuss our financial results for the quarter. Dennis?