SEI Investments Company

Ladies and gentlemen, thank you for standing by. Welcome to the SEI fourth quarter 2022 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. If we should require assistance during the call, please press start and zero. As a reminder, this conference is being recorded. I would like to turn the conference over to our host, Ms. Lindsay Opshaw. Please go ahead.

Welcome, everyone. Thank you for joining us on today's fourth quarter 2022 earnings call. Joining me on today's call are Ryan Hickey, SEI's chief executive officer, Dennis McGonigal, chief financial officer, and the leaders of our business segment, Paul Clauter, Bill McCabe, Sanjay Sharma, and Wayne Withrow. Kathy Heilig, SEI's controller, is also with us. 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 press 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 turn the call over to CEO Ryan Hickey. Ryan?

Thanks, Lindsay. Good afternoon, everyone. I hope you all enjoy the holidays and are off to a great start in 2023. Before the holiday season, we had the pleasure of hosting many of you in Oaks for our investor conference in November. I really hope everyone enjoyed that experience. Personally, I was engaged and energized by the entire engagement of the investment community and I was really excited to share our vision and strategic focus for the future. We are going to continue to apply our proven business model by turning challenges into opportunities, helping clients and prospects more effectively deploy their capital for growth, and leveraging our financial strength. During the quarter, Markets continue to feel the impact of economic factors, including inflationary pressures, geopolitical tensions, fiscal policy, and more. Fourth quarter revenues declined 9% from a year ago. Our fourth quarter earnings were down 23% from a year ago. Fourth quarter EPS of 83 cents decreased 19% from the $1.03 reported in the fourth quarter 2021. In the quarter, we repurchased 1.3 million shares of SEI stock at an average price of $59.36 per share. That translates into $79.6 million of stock purchases. We also declared an annual dividend of $0.43 per share. We continued to build off the third quarter's positive sales momentum, but we're still absorbing some losses that offset our wins. I feel very confident that we are turning the tide in a positive direction here, and we've spent a lot of time with key prospects and clients this year already. Net sales events totaled approximately $20.8 million, $10.9 million of which were net recurrent. During the quarter, we also had a successful execution of a recontracting strategy, resulting in more than $108 million of annual recurring revenue extended across our processing businesses, We expect to also remain surgical and vigilant in our expense management. I'm sure you all saw that one of the major themes coming out of Davos is companies say they are giving priority to profitability and efficiency amid concerns about macroeconomic conditions, whether that's to reach their strategic goals, slim down their workforces, or streamline operations. The market especially the tech and financial services industries, are clearly making adjustments to spending, and we are going to manage SCI well through this time, but lean into those investments where we have high conviction as to our ability to drive growth. We also see this time as catalysts and opportunities for SCI to more actively partner with existing and new clients to help them become more successful. Dennis will go into further details later on our financial results. Turning to our lines of business, in the investment manager segment, our alternative business continues to see our largest clients opportunistically launching new products. One of our large multi-strategy clients expanded into private credit business and a flagship investor platform client added private equity business as well. In the traditional business, we continue to add new business in all product lines with both new and existing clients. In particular, our CIT business continues to thrive and expand. At a global level, we continue to grow our ETF, private equity, and private debt business, primarily through cross-sales with existing clients and successful new client wins. Turning to our investment advisors business, we began immediately leveraging the synergies between our U.S. advisor business and our asset management distribution businesses globally. We are only a few months into this effort, but we are starting to make progress. We've integrated these business segments to better leverage competencies, aligning our talent and go-to-market strategies across segments. Although it is early in the organizational alignment, when we look at the market landscape from institutional clients to BD-affiliated advisors to the growth of pure RIAs, we are excited about the future here and feel strong about our positioning. A key component of our strategy is the continued unbundling of our investment options paired with the conviction and oversight of our investment management unit, providing clients both flexibility and choice. Our ETF product line, the SDI systematic core strategies, strategic partnerships with Capital Group and Dimensional were not only top net cash flow contributors, but they're increasingly resonating with existing and new advisors in solving their client needs. Across this suite of solutions, we saw over $400 million in net cash flow for the quarter. The institutional investor segment experienced new client wins, which included SEI Novus. But revenue and profit during the quarter were directly impacted by capital markets and client losses. Capital market activity was related to a decline in equities, long-duration fixed income balances, and alternative investments. But despite the volatile marketplace last year, OCIO sales in 2022 produced strong results. Asset values will be a headwind as we move into 2023, but we will remain focused on where we believe there are growth opportunities, including selling and installing OCIO new business and growth markets, retaining current OCIO clients, further integrating SEI Novus and advancing the ECIO platform, integrating and leveraging SEI private wealth management in our institutional business. In the private bank business, we had a very active quarter. We recontracted eight clients, including three in the U.S., four clients in the U.K., and one Trust 3000 client. Four of these eight clients were in competitive situations. Our contract with Wells Fargo was resized, as previously announced, and our relationship has been extended until December of 2028. We signed three new names in the quarter, including Hilltop Bank and First Financial in the U.S., and we also implemented two clients that were in our backlog. We will continue to right-size expenses in this segment and look to accelerate sales activity, including cross-sale opportunities across our markets. I am acutely aware of the attention that has been paid to this segment in the past. The leadership changes we made last year, the aggressive increase in client engagement and expense management, combined with a renewed focus on sales and what we believe are attractive segments for SEI, make me optimistic that we have solidified the foundation for this business now for future growth. Highlighting some more positive traction and growth areas in our investments and new business segment, SEI Sphere continues to be a focus area with an aggressive growth plan for 2023. This includes increasing the size of the sales force, investments in marketing, accelerated activity with existing SEI clients and new prospects, and increased traction in the cyber and cloud services offering. During the quarter, we also began building a corporate development team. They will be focused on the development and execution of our strategic transactions plan to drive growth. Finally, our partnership with LSV remains very strong. Dennis will report on their financial results for the quarter. As I've mentioned in these calls, we're also focused on initiatives and programs that support the development of our talent and enrich our culture, particularly in diversity, equity, and inclusion. We continue to invest in these areas as competitive advantages for SEI in the future. To echo my comments at the investor conference in November, SEI is going on offense in 2023. will focus on seizing opportunities that we believe will meaningfully drive growth and will continue to make the changes necessary to keep us on the path that we've laid out. 2022 was a year of organizational transition for SEI, coinciding with a volatile market environment. We remain steadfast in our belief that we are well-positioned to not only help our clients succeed, but continue driving our own success in the year ahead and beyond. This concludes my prepared remarks. I will now turn it over to Dennis to discuss our financial results for the quarter. Dennis?