SEI Investments Company

Ladies and gentlemen, thank you for standing by. Welcome to the SEI First Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. If you should require assistance during the call, please press stars and zero. As a reminder, this conference is being recorded. I would like to turn the conference over to our host, Ms. Lindsay Opsal. Please go ahead.

Welcome, everyone. Thank you for joining us on today's first quarter 2023 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 segments, Paul Plotter, Bill McCabe, Sanjay Sharma, and Wayne Withrow. Mark Warner, 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. Hello, everyone. I hope you're all doing well and enjoying the beginning of the spring season. We are nearly a year into the leadership changes at SDI, and I'm optimistic about our future and our ability to manage through times of market uncertainty. Turning to this quarter's financial results, first quarter revenues declined 19% from a year ago, First quarter earnings were down 53% from a year ago. First quarter EPS of 79 cents decreased 42% from the $1.36 reported in the first quarter of 2022. Adjusting this for the $88 million one-time revenue event in quarter one 2022, as we discussed at the time, revenue declined 5% and earnings per share decreased 11%. In the quarter, we repurchased 1.4 million shares of SCI stock at an average price of $59.03 per share. This translates into $80.3 million of stock purchases. We had a solid sales quarter. Net sales events totaled approximately $23.4 million, $19 million of which were net recurring. This was an increase over the $11 million net recurring number we reported in the previous quarter. First quarter sales reflect two important indications. First, the positive direction in which we are moving and the increase in overall sales momentum across SDI. Second, when you get underneath the numbers, sales results and pipelines are showing traction in the areas where we have increased our market focus and attention. I am encouraged by the sales results relative to last quarter, particularly the types of clients we are winning and the ability to install them quickly without significant investment to realize the revenue. I'm also happy to see positive sales contributions from multiple business lines across FDI. We remain immersed in closing sales and building our sales pipelines. Additionally, we have increased our focus on expense management. We will constantly assess and revise our alignment of capital to opportunity, and we'll make tough decisions to improve profitability, but without cannibalizing our medium to long-term growth agendas. Dennis will go into further details on our financial results. Turning to our line to business, the investment manager segment started the year well. I had the opportunity to attend our client conference this quarter, and the engagement and commitment we have from this client base gives us great pride. We truly have clients that value the strategic importance of SEI to their growth agendas. We are executing very well on the new business front. In our alternative segment, we onboarded a large West Coast private equity firm, as well as a competitive takeaway of a New York-based real estate manager. Existing clients raised and deployed significant capital across private equity, private credit, real estate, and infrastructure strategies during the quarter. The traditional business has been growing steadily with new clients and expanded product lines, and we see our CIT business experiencing significant growth. We recently signed a new SMA deal with a large U.S. manager, opening up more opportunity, and we're having success and increased traction in our client base with SEI Sphere, securing a large traditional client in the first quarter. On a global level, Our UK, European, and Irish businesses show positive growth. Our private equity, regulatory services, and private credit offerings expanded through cross-sales with existing clients. Turning to investment advisors, we had positive momentum in our business with almost $500 million in net cash flow. We saw more traction in the RIA segment with strong close in the quarter. We are excited about the growth opportunities this segment presents for SEI across our technology, investment processing, and asset management capabilities. We continue to work through the shift of product types used by our clients from mutual funds to SMA, ETFs, direct indexing, and third-party branded products. We expect to see this movement of assets continue, but while there may be a drag on our revenue rate earned on managed assets in the short term, the richness of our offering enables us to keep and capture assets, supporting our long-term growth and health. Our broader investment solutions are increasingly resonating with intermediary clients, and we also continue to invest in product and technology innovations. As I have mentioned many times in the past year, the growth of alternatives for all SEI segments is a key strategic agenda. During the quarter, we began the process of registering two new alternative investment funds, the liquid alternative fund and the alternative income fund. We also see terrific adoption of SEI Connect's investor portal, with clients having access to improved capabilities around advisor and end investor engagement and collaboration tools. In the institutional investor segment, we advanced the combination of OCIO and ECIO platforms to larger, sophisticated investors that embrace delegation but want more real-time portfolio information. Corporate-defined benefit curtailments and annuitizations continue to be a headwind in the U.K. and U.S., and were the primary reason for first-quarter losses. However, we managed to offset some of those losses by improved cross-sales and lead generation for other SEI services in our private wealth management business. In the private bank business, we had a very active quarter. We signed two new clients in the quarter and successfully implemented two clients. We also recontracted three clients, evidencing our focus on client engagement and retention to propel growth. One of the major points of stakeholder feedback last year was to get the private bank's business back on a growth trajectory and improve margins. I believe our results this quarter really displayed the great jobs Sanjay and the team have done in a short time to solidify the foundation for banking, manage expenses thoughtfully, but put us in a position to start adding profitable revenue moving forward. We've reoriented our sales focus over the last nine months with clear segments, including the U.S. community and regional bank space, U.K. private client investment managers and wealth managers, and a targeted universe of larger U.S. institutions. Those strategies have translated into a more robust and predictable pipeline for SCI, and we are focused on advancing those prospects through the sales funnel to get deals closed, install that revenue, and expand the pipeline. Finally, we had modest positive sales in the quarter in SCI's family office services business as well as SCI's sphere, both within existing markets and standalone. And additionally, our partnership with LSV remains strong. On the town and culture front, we have remained steadfast that to achieve our goal, we need to embrace change and align top talent across SCI to accelerate our growth. Today, I would like to highlight a couple immediate leadership changes. Paul Clauter will lead our investment advisors business, which will expand to focus on North American intermediaries. Jay Cipriano will take Paul's current role as head of our institutional asset management business and join the current executive management team at SEI. Jay was most recently senior vice president and head of SEI's alternatives processing business in the IMF segment. both will report to Wayne Withrow. These leadership moves give us greater opportunity to maintain and drive success in both the short and medium term, while also driving talent mobility and opportunity across the organization to position us for the future. Congratulations to both Jay and Paul. We will be issuing a press release tomorrow with the detailed changes and new leadership structure. So, in summary, SEI is going to be very decisive and focused on the following. Driving sales momentum and getting more engines growing like we have with the IMF segment. Managing our expenses and increasing earnings per share. Investing in talent and solutions to expand new and existing market penetration. This concludes my prepared remarks. I will now turn it over to Dennis to discuss our financial results for the quarter. Dennis?