Q4 2023 SEI Investments Co Earnings Call

January 31, 2024

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Operator: Ladies and gentlemen, welcome to the SEI fourth quarter 2023 earnings call. At this time, all participants are. Q&A Q&A Q&A. If you should require assistance during the call, please press star 1. I would now like to turn the conference over to your host, Alex Whitelam. Thank you and welcome everyone.

Speaker Change: Ladies and gentlemen, welcome to the S E <unk> fourth quarter 2023 earnings call. At this time, all participants are in a listen only line.

Speaker Change: Later, there will be time for <unk>.

Speaker Change: There will be Q&A instructions will be given at that time, if you should require assistance during the call. Please press Star then zero as a reminder, this conference is being recorded I would now like to turn the conference over to your host Alex White Ma'am. Please go ahead.

Alex White: Thank you and welcome everyone. We appreciate you joining us today for our fourth quarter 2023 earnings call.

Alex Whitelam: We appreciate you joining us today for our fourth quarter 2023 earnings call. On the call, we have Ryan Hicke, SEI's Chief Executive Officer, Dennis McGonigle, Chief Financial Officer, and the leaders of our business segments, Wayne Withrow, Paul Klauder, Jay Cipriano, Phil McCabe, Sanjay Sharma, and Sneha Shah. Before we begin, I'd like to point out that our earnings press release can be found in 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.

Alex White: On the call, we have Brian <unk>, Chief Executive Officer, Dennis Mcgonigle, Chief Financial Officer, and the leaders of our business segments Wayne Withrow, Paul Clowder J C Briana, Phil Mccabe Sanjay Sharma SaaS shop before we begin I'd like to point out that our earnings press release can be found under the Investor relations sections of our website at <unk> Dot com.

Alex White: This call is being webcast live and a replay will be available on the events and webcast page of our website.

Alex Whitelam: We would like to remind you that during today's presentation and in our response 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 Exchange Commission. We do not undertake to update any of our forward-looking statements. With that, I'll turn the call over to our CEO, Ryan Hicke. Ryan said,

Alex White: We'd 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.

Alex White: Please refer to our notices regarding forward looking statements that appear in today's earnings press release and in our filings with the Securities Exchange Commission, we do not undertake to update any of our forward looking statements with that I'll turn the call over to our CEO, Ryan Hey, Brian.

Ryan P. Hicke: Thanks, Alex. Good afternoon, everyone. While market conditions varied throughout the year, our team did an excellent job navigating uncertainty, engaging our clients, driving growth, and setting SEI up well for the future. In 2023, we had key strategic objectives that included margin expansion in sales and targeted private bank segments, continued momentum and global expansion in investment managers, further penetration into the RIA space, investments in alternatives for future growth, and driving continued operating leverage, profit growth, and infusing new talent across the company. We are pleased with the performance, momentum, and trajectory of both the private banking and IMS business. Both of these businesses are well positioned to continue to expand and contribute to SEI's top and bottom lines. We know we need to increase our attention and asset management. With the advisor business, we have an opportunity to broaden our message around our value proposition as a more tech-centered offering with investment choice and curated solutions at the forefront of what we provide.

Ryan: Thanks, Alex and good afternoon, everyone.

Ryan: While market conditions vary throughout the year, our team did an excellent job navigating uncertainty engaging our clients driving growth and setting us up well for the future.

Ryan: In 2023, we had key strategic objectives that include it margin expansion in sales and targeted private bank segments continued momentum in global expansion and investment managers further penetration into the <unk> space investments in alternatives for future growth and driving continued operating leverage profit.

Ryan: Growth infusing new talent across the company.

Ryan: We are pleased with the performance momentum and trajectory of both the private banking and IMS businesses.

Ryan: Both of these businesses are well positioned to continue to expand and contribute to <unk> top and bottom line.

Ryan: We know we need to increase our attention in asset management.

Ryan: With the advisory business, we have an opportunity to broaden our message around our value proposition as a more tech centered offering with investment choice and curated solutions at the forefront of what we provide.

Ryan P. Hicke: I expect this will help us maximize new client adoption and exploit the huge opportunity we see in the intermediary market. 2024 is going to be some of the same, but with a surgical focus on continuing sales and revenue growth, accelerating the transformation of our asset management businesses, targeting new segments for sales, and driving margin expansion and profit growth through increased operational leverage and discipline. Let me dive into the financial results. Revenues in the fourth quarter were $485 million, up 6% from the fourth quarter of 2022. Net sales events in the quarter totaled $13.7 million, of which $8.5 million were net returns.

Ryan: I expect this will help us maximize new client adoption and exploit the huge opportunity we see in the intermediary market.

Ryan: 2024 is going to be some of the same but with a surgical focus on continuing sales and revenue growth.

Ryan: Accelerating the transformation of our asset management business is targeting new segments for sales and.

Ryan: And driving margin expansion and profit growth through increased operational leverage and discipline.

Speaker Change: So let me dive into the financial results.

Speaker Change: Revenues in the fourth quarter were $485 million up 6% from the fourth quarter of 2022.

Net sales events in the quarter totaled $13 7 million of which $8 5 million where net vitaros.

Ryan P. Hicke: This was a combination of technology and operational outsourcing sales of $24.2 million, all driven by negative activity in our asset management business. Additionally, we had a separate successful new product launch in late Q4 that will add additional revenue to the advisor business. Net income for the quarter increased 8% over the same period to $121 million. In the quarter, we repurchased approximately 1.2 million shares of SEI stock at an average price of $58.08 per share.

Speaker Change: This was a combination of technology and operational outsourcing sales of $24 $2 million.

Speaker Change: Offset by negative activity in our asset management businesses.

Additionally, we had a separate successful new product launch in late Q4 that will add additional revenue to the advisory business.

Speaker Change: Net income for the quarter increased 8% over the same period to $121 million.

Speaker Change: In the quarter, we repurchased approximately one 2 million shares of ACI stock at an average price of $58 eight per share that translates into $69 million of stock purchases.

Ryan P. Hicke: That translates into $69 million in stock purchases. EPS was $0.91 for the fourth quarter, up 10% over the $0.83 reported in the prior year period. The fourth quarter also included a number of one-time events that Dennis will expand on and are outlined in the release. We remain well positioned for 2024 and beyond. Our unmatched breadth of capabilities enables our clients to connect to what matters most, adapt to constant change, and scale for the future. We're focused on seizing opportunities where we can repeatedly win and drive growth. I firmly believe we can accelerate growth and market share. With that in mind, let me turn to our business line. Our investment managers business continues to thrive, delivering strong revenue and earnings growth. Team successfully implementing clients onto our platform in one new business. During the quarter, we had dozens of cross-sale events and recontracts.

Speaker Change: EPS was <unk> 91 for the fourth quarter up 10% over the <unk> 83 reported in the prior year period.

Speaker Change: The fourth quarter also included a number of one time events that Dennis will expand on in are outlined in the release.

We remain well positioned for 2024 and beyond our unmatched breadth of capabilities enable our clients to connect to what matters most.

Speaker Change: That's a constant change and to scale for the future.

Speaker Change: We're focused on seizing opportunities, where we can repeatedly win and drive growth I firmly believe we can accelerate growth and market share.

Speaker Change: With that let me turn to our business lines.

Speaker Change: Our investment managers business continues to thrive delivering strong revenue and earnings growth.

Speaker Change: <unk> successfully implemented clients onto our platform and won new business.

Speaker Change: During the quarter, we had dozens of cross sale events and re contracts. We also won new business within each of the alternative traditional and global segments, while continuing to grow profit for the unit.

Speaker Change: In alternatives our focus on key clients continues to pay dividends, resulting in significant cross sell opportunities during.

Speaker Change: During the quarter, we signed a top 25 traditional asset manager expanding into alternative asset classes and.

Ryan P. Hicke: We also want new business within each of the alternative, traditional, and global segments while continuing to grow profit for the unit. In alternative, our focus on key clients continues to pay dividends, resulting in significant cross-sale opportunities. During the quarter, we signed a top 25 traditional asset manager expanding into the alternative asset class and another private asset manager through a competitive takeaway. Globally, we signed three new clients and continued to see strong flows in the private asset and private credit space. As we've expanded our sales leadership in this segment, we're excited to see increased pipeline development. In the traditional segment, we added new business in all product lines.

Speaker Change: And another private asset manager through a competitive takeaway.

Speaker Change: Globally, we signed three new clients and continue to see strong flows in the private asset private credit spaces.

Speaker Change: As we've expanded our sales leadership in this segment, we're excited to see increased pipeline development.

Speaker Change: In the traditional segment, we added new business in all product lines.

Speaker Change: In particular the expansion we've seen in our turnkey collective investment trust solution continues to be strong.

Speaker Change: And as we've discussed our larger traditional clients.

Speaker Change: Are beginning to launch alternative funds.

Speaker Change: Private banking had another strong quarter with revenue growth and continued expanded margins compared to a year ago.

Speaker Change: The team has done an outstanding job Reorienting the business for growth, while managing expenses appropriately.

During the quarter, we signed two new deals in re contracted three existing clients. We also exited the year with successful implementations during Q4.

Speaker Change: While we still have some previously announced events to absorb in coming quarters. We are confident in our PB growth strategy.

Moving to our global asset management businesses investment advisors net cash flows were essentially flat in the fourth quarter with positive flows in our separately managed accounts and strategist partner solutions offset by outflows in our active mutual fund products.

Ryan P. Hicke: In particular, the expansion we've seen in our turnkey collective investment trust solution continues to be strong, and as we've discussed, our larger traditional clients are beginning to launch alternative funds. Private banking had another strong quarter with revenue growth and continued expanded margins compared to a year ago.

Speaker Change: During the quarter, we brought on 52, new advisors, including five in the RIAA channel. We also on boarded three advisors for our new service a custody of outside alternative investment and are working towards a larger rollout of that offering.

Speaker Change: Additionally, we pushed out our investor mobile App, which is receiving great feedback as it is sci connect and the investor portal.

Ryan P. Hicke: The team did an outstanding job reorienting the business for growth while managing expenses appropriately. During the quarter, we signed two new deals and recontracted three existing clients. We also exited the year with successful implementations during Q4. While we still have some previously announced events to absorb in the coming quarters, we are confident in our PV growth strategy. Moving to our global asset management businesses, investment advisor net cash flows were essentially flat in the fourth quarter, with positive flows in our separately managed accounts and strategist partner solutions all set by outflows in our active mutual fund products. During the quarter, we brought on 52 new advisors, including five in the RIA channel.

Finally, as mentioned earlier, we launched the insured component of the FBI integrated cash program in late December.

Speaker Change: This program provides bank insured protection to end investors utilizing our standard and custom models.

Speaker Change: We believe the program to generate significant earnings for 2024.

Speaker Change: In the institutional Investor segment, our fourth quarter results reflected the challenges experienced industry wide throughout the year.

Speaker Change: That said, we are seeing positive sales momentum as a result of the structural changes we made in 2023.

Speaker Change: In the quarter, we signed two new OS CIO clients and six unbundle, the CIO clients utilizing our technology and data services.

Speaker Change: We also completed our acquisition of National pension Trust in the UK we.

Speaker Change: We believe the addition of MTT to the Sci Master Trust strengthens STI continued delivery of best in breed services at scale across our global institutional business.

Speaker Change: Within our investments in new business segment, we completed the acquisition of out to go.

Speaker Change: <unk> based technology platform that provides inventory E subscription and reporting capabilities for alternative investments.

Ryan P. Hicke: We also onboarded three advisors for our new service of custody of outside alternative investments and are working towards a larger rollout of that offer. Additionally, we pushed out our investor mobile app, which is receiving great feedback, as is SEI Connect and the investor portal. Finally, as mentioned earlier, we launched the insured component of the SEI Integrated Cash Program in late December.

Speaker Change: As I have discussed many times, we are driving forward into providing more services and capabilities with alternatives.

Speaker Change: Without <unk>, we expect to help simplify and transform private fund investing and widen access to alternative investment products for intermediaries, while also helping our investment management clients more easily create and facilitate distribution of their products.

Speaker Change: Our partnership with LSP remains strong and they had a very good performance quarter, which Dennis will discuss.

Speaker Change: Yes.

Speaker Change: Finally, we've taken continued steps to nurture our culture and ensure that our workforce is best prepared for the future of the industry.

Ryan P. Hicke: This program provides bank insured protection to end investors utilizing our standard and custom models. We believe the program could generate significant earnings for 2024. In the Institutional Investor segment, our fourth quarter results reflect the challenges experienced industry-wide throughout the year. That said, we are seeing positive sales momentum as a result of the structural changes we made in 2023. In the quarter, we signed two new OCIO clients and six unbundled OCIO clients utilizing our technology and data service. We also completed our acquisition of National Pensions Trust in the UK.

Speaker Change: I'd like to thank all my colleagues across SDI for their commitment to our vision.

Speaker Change: This concludes my prepared remarks, I will now turn it over to Dennis to discuss our financial results for the quarter Dennis.

Dennis: Thanks, Brian.

Dennis: Brian mentioned EPS for the quarter was 91 this.

Dennis: This compares to 83 storey fourth quarter of 2022, and <unk> 87 for third quarter of 2023.

Dennis: Revenue for the quarter was $485 million.

Dennis: Compared to $456 million in 2022 and $477 million in the third quarter.

Dennis: Total expenses for the quarter were $383 million, which.

Dennis: <unk> $362 5 billion last year and $368 million in the third quarter.

Ryan P. Hicke: We believe the addition of NPT to the SEI Master Trust strengthens SEI's continued delivery of best-in-breed services at scale across our global institutional business. Additionally, within our Investments in New Business segment, we completed the acquisition of Altego, a cloud-based technology platform that provides inventory, e-subscription, and reporting capabilities for alternative investors. As I have discussed many times, we are driving forward with providing more services and capabilities with alternative assets. With Altego, we expect to help simplify and transform private fund investing and widen access to alternative investment products for intermediaries, while also helping our investment management clients more easily create and facilitate the distribution of their products.

Dennis: Included in the fourth quarter expenses were approximately $11 million of one time items.

Dennis: $5 3 million related to a technology asset write down in our IMS segment, $4 6 million of severance expense and $1 million of professional fees associated with our acquisition activity.

Dennis: Without these items expenses for the quarter would've been approximately $372 million.

Dennis: The EPS impact is approximately 6% to seven.

Dennis: On the sales front, and our technology and investment processing businesses of private banking and investment managers net sales events totaled $22 9 million and are expected to generate $17 6 million and recurring revenue.

Ryan P. Hicke: Our partnership with LSB remains strong, and they had a very good performance quarter, which Dennis will discuss. Finally, we've taken continued steps to nurture our culture and ensure that our workforce is best prepared for the future of the industry. I'd like to thank all my colleagues across SEI for their commitment to our vision. This concludes my prepared remarks. I will now turn it over to Dennis to discuss our financial results for the quarter. Dennis, okay?

Dennis: In our asset management related businesses net sales were approximately negative $10 5 billion, primarily due to asset movement from our mutual fund products into our other investment programs, so client acquisitions as well as net losses in our institutional business.

Dennis: We also sold one 3 million of recurring revenue and our new business segment, mainly Sci sphere.

Dennis: The sphere sale was to a non financial company.

Dennis: This supports our processes that sphere has residents beyond our traditional market segments.

Dennis J. McGonigle: Thanks, Ryan. As Ryan mentioned, EPS for the quarter was $0.91. This compares to $0.83 for the fourth quarter of 2022 and $0.87 for the third quarter of 2023. Revenue for the quarter was $485 million compared to $456 million in 2022 and $477 million in the third quarter. Total expenses for the quarter were $383 million, which compares to $362.5 million last year and $368 million in the third quarter. Included in the fourth quarter expenses were approximately $11 million of one-time items. 5.3 million related to a technology asset breakdown in our IMS segment, 4.6 million of severance expense, and 1 million of professional fees associated with our acquisition activity. Without these items, expenses for the quarter would have been approximately $372 million.

Dennis: Total net sales for the company were $13 7 million of which $8 5 million is recurring.

Dennis: One key highlight for our advisor business is the launch of an FDIC insured deposit program.

Dennis: This takes the cash allocation in our model portfolios generally used for operational purposes like paying fees.

Suites, those balances into an FDIC insured deposit account.

Dennis: While not technically a sales event the level of effort to launch educate and enroll our clients was significant.

Dennis: This new element of our overall offering at approximately $840 million in assets at December 31.

Dennis: And under current estimates will generate approximately 25 million in additional revenue in 2024.

Dennis: The assets are reflected in our earnings release on the asset schedules under the caption platform only assets deposit program.

Dennis: There was minimal financial benefit from the program in the fourth quarter due to the timing of the launch.

Dennis: Private banking sales were $5 7 million of which $2 2 million is recurring.

Dennis: The two new SVP sales, one of which was to a non banking financial institution were partially offset by two client losses, one due to acquisition and the other to a change in their operating model.

Dennis J. McGonigle: The EPS impact is approximately six to seven cents. On the sales front, in our technology and investment processing businesses of private banking and investment managers, net sales events total $22.9 million and are expected to generate $17.6 million in recurring revenue. In our asset management-related businesses, net sales were approximately negative $10.5 million, primarily due to asset movement from our mutual fund products into our other investment programs, some client acquisitions, as well as net losses in our institutional business. We also sold 1.3 million of recurring revenue in our new business segment, mainly SEI Sphere. The sphere sale was to a non-financial company.

Dennis: The three clients retract re contracted during the quarter represent $5 2 million in annual recurring revenue.

Dennis: The private banking segment first focus is paying off in both new business generation and building a quality and growing pipeline.

Dennis: During the quarter, we were active with client implementations and conversions.

Dennis: We installed $5 7 million of recurring revenue from our third quarter backlog.

Dennis: And added to the backlog through sales increasing it to $22 $7 million are expected to be installed revenue in the next 18 months.

Dennis: Asset management revenues in private banking were down slightly from third quarter.

Dennis: This was mainly due to asset levels entering the quarter, resulting in lower average assets during the quarter.

Dennis J. McGonigle: This supports our hypothesis that SPHERE has resonance beyond our traditional market segment. Total net sales for the company were $13.7 million, of which $8.5 million is recurring. One key highlight for our visor business is the launch of an FDIC insured deposit program. This takes the cash allocation in our model portfolios generally used for operational purposes like paying fees and sweeps those balances into an FDIC insured deposit account.

As a side note. This is also true for all of our asset management businesses.

Dennis: We earned revenues based on average assets. The fact that we entered the quarter at lower levels, coupled with the market's not making their positive run until later in the quarter resulted in lower average asset levels.

Dennis: Entering first quarter of 2024, we are at a higher beginning asset base.

Dennis: Expenses and private banking were down from the third quarter of 2023, reflecting efforts to bring private banking back to higher levels of profitability.

Dennis J. McGonigle: While not technically a sales event, the level of effort to launch, educate, and enroll our clients was significant. This new element of our overall offering had approximately $840 million in assets on December 31st. And under current estimates, will generate approximately $25 million in additional revenue in 2024. The assets are reflected in our earnings release on the assets scheduled under the caption Platform Only Assets Deposit Program. There was minimal financial benefit from the program in the fourth quarter due to the timing of the launch.

Dennis: On the investment managers front net sales for the quarter were $17 2 million $15 4 billion of which is recurring.

Dennis: During the quarter, we re contracted 18 clients totaling $36 million in annual recurring revenue.

Dennis: Revenue for the quarter was up compared to third quarter, reflecting the impact of client installs.

Dennis: Expenses were also up however, they included a $5 $3 million <unk> mentioned earlier for an asset write down.

Dennis: Our backlog of sold but expected to install in the next 18 months recurring revenue is $28 million.

Dennis J. McGonigle: Private banking sales were $5.7 million, of which $2.2 million was recurring. The two new SWP sales, one of which was to a non-banking financial institution, were partially offset by two client losses, one due to acquisition and the other to a change in their operating model. The three clients recontracted during the quarter represent $5.2 million in annual recurring revenue. The private banking segment's focus is paying off in both new business generation and building a quality and growing pipeline. During the quarter, we were active with client implementations and conversions. We installed $5.7 million of recurring revenue from our third quarter backlog and added to the backlog through sales, increasing it to $22.7 million of expected revenue in the next 18 months. Asset Management revenues and Private Banking. We're down slightly from the third quarter.

Dennis: In the advisor segment revenues for the quarter were down slightly from the third for reasons previously mentioned <unk>.

Dennis: Expenses were up due to increases in distribution and marketing related costs, along with sales compensation true ups.

Dennis: In the institutional Investor segment net sales for the quarter were negative $4 2 million, reflecting positive client signings offset by losses, and repricing and client retention activities.

Dennis: Revenues for the quarter were down slightly due to lower average assets expense.

Dennis: Expenses were also down slightly reflecting general expense management.

Dennis: And the investments in new business segment revenues were flat to third quarter and expenses were down slightly.

Dennis: LLC produced $35 4 million in profit during the quarter. This.

Dennis: This compares to $29 9 million during the third quarter.

Dennis: Revenues for <unk> were $117 1 million compared to $102 2 million in the third quarter.

Dennis: Fourth quarter revenues included $19 8 million of performance fees.

Dennis: OSB recorded performance fees of $9 million during the third quarter.

Dennis J. McGonigle: This was mainly due to asset levels entering the quarter resulting in lower average assets during the quarter. As a side note, this is also true for all of our asset management businesses. The fact that we entered the quarter at lower levels, coupled with the markets not making their positive run until later in the quarter, resulted in lower average asset levels. However, entering the first quarter of 2024, we are at a higher beginning asset base. Expenses in private banking were down from the third quarter of 2023, reflecting efforts to bring private banking back to higher levels of profitability.

Dennis: Performance fees are a reflection of continued positive relative performance.

Dennis: At the end of the quarter, we acquired alts ago, while not a material capital transactions, we expect the acquired capabilities and talent when coupled with <unk> existing assets will add to our strategic opportunity in the alternative space.

Dennis: This business line will be included in the investments in new business segment going forward.

I point, you to our soon to be filed 10-K and press release for more information.

Dennis: Our tax rate for the quarter was 19, 6%, we expect the tax rate for the first quarter to be approximately 23%.

Dennis: For the full year, our tax rate was 20, 226%.

Speaker Change: That concludes my remarks, all of our unit heads are on the call and we will now take questions. Thank you.

Dennis J. McGonigle: [inaudible] On the investment managers front, net sales for the quarter were $17.2 million, $15.4 million of which is recurring. During the quarter, we closed 18 clients totaling $30.6 million in annual recurring revenue. Revenue for the quarter was up compared to the third quarter, reflecting the impact of client installs. However, expenses were also up, however, they included a $5.3 million item mentioned earlier for an asset write-down. Our backlog of sold but expected to install in the next 18 months recurring revenue is $28 million. In the advisor segment, revenues for the quarter were down slightly from the third for reasons previously mentioned. Expenses were up due to increases in distribution and marketing-related costs, along with sales compensation through-ups. In the Institutional Investors segment, net sales for the quarter were $4.2 million, reflecting positive client signings offset by losses and repricing in client retention activity. Revenues for the quarter were down slightly due to lower average assets.

Speaker Change: Ladies and gentlemen, if you wish to ask a question. Please press one to zero on your telephone keypad you may withdraw your question at any time by repeating the ones that will command.

Speaker Change: Youre using a speakerphone, please pick up the handset before pressing the numbers.

Speaker Change: And first we'll go to the line for Christian Love Piper Sandler. Please go ahead.

Christian Love: Thanks, Paul Good afternoon, everyone. I appreciate taking my questions first on private brands margins. Thanks.

Percent in the quarter.

Speaker Change: I was wondering is there anything one time in there or is that a kind of a good level to expect.

Speaker Change: Going forward, Steve and Bob could be sustainable as you move through 2024, and then just while we're on the topic. If you could speak to on a longer term margin outlook for private banks as well.

Speaker Change: Sure. So I'll ask Christian as Dennis Thanks for question I'll, let <unk> answer the first part there really wasn't anything unusual in <unk>.

Christian Love: Fourth quarter and banking was a pretty clean.

Christian Love: Financial quarter.

Christian Love: Sanjay kind of address the.

Christian Love: 24 outlook for margins and kind of beyond that.

Sanjay: Thank you Dennis.

Sanjay: Our margin expense in Q4, Thats, the reflection of our efforts towards not only managing our expenses, but top line growth as well and we have been very consistent with our strategy going forward as well while expense management will continue to be our focus our focus is shifting on how we can grow our top line.

Dennis J. McGonigle: Expenses were also down slightly, reflecting general expenses. In the Investments & New Business segment, revenues were flat for the third quarter, and expenses were down slightly. LSD produced $35.4 million of profit during the quarter. This compares to $29.9 million during the third quarter. Revenues for LSV were $117.1 million compared to $102.2 million in the third quarter. Fourth quarter revenues included $19.8 million in performance fees. LSB recorded performance fees of $9 million during the third quarter.

Sanjay: And that's what you would see in coming quarters as well.

Speaker Change: Hi, Good morning. Thanks, Sanjay that's all helpful. And then Dennis just on the $11 million of one time expenses in the quarter.

Speaker Change: $10 million of that in facilities, and then $1 million in professional fees or am I missing anything there.

Speaker Change: I'm sorry, Chris.

Dennis: There are three elements to that $11 million.

Chris: One was.

Chris: We wrote down a technology asset. So we had a piece of software that was in development and we found an alternative in the market that we think will serve us better going forward. So we wrote off the capitalized.

Dennis J. McGonigle: Performance fees are a reflection of continued positive relative performance. At the end of the quarter, we acquired, and out to go. While not a material capital transaction, we expect the acquired capabilities and talent, when coupled with SEI's existing assets, will add to our strategic opportunity in the alternative space. This business line will be included in the investments and new business segment going forward. I point you to our soon-to-be-filed 10-K and press release for more information. Our tax rate for the quarter was 19.6%.

Chris: Element of that of that asset.

Chris: In the fourth quarter.

Chris: Because we're not going to bring that to market.

Chris: We had $4 6 million of severance expense.

Chris: Most of which was covered in our recent 8-K filing that we made.

Chris: And then we had about $1 billion of professional fees associated with.

Chris: Which is why I call it out as kind of a little more unique the acquisition two acquisitions we did.

Speaker Change: Okay, and then I guess I am just looking at the facility supplies and other costs line item at $27 million in the quarter is there anything baked in there or is that a good run rate going forward I'm, just curious why that that line item.

Operator: We expect the tax rate for the first quarter to be approximately 23%; for the full year, our tax rate was 22.26%. That concludes my remarks. All of our unit heads are on the call, and we will now take questions. Thank you. Ladies and gentlemen, if you wish to ask a question, please press 1 then 0 on your telephone keypad. You may withdraw your question at any time by repeating the 1-0 command. If you're using a speakerphone, please pick up the handset before pressing the 1-0 command.

Speaker Change: So elevated in the quarter.

Speaker Change: Yes that will come down because thats, where.

Speaker Change: That write off would be sitting right okay.

Speaker Change: So.

Speaker Change: I'll come back, let's say the more kind of the average of last year quarter to quarter.

Speaker Change: Perfect. Okay. Thanks.

Speaker Change: But for me I appreciate you taking my questions.

Speaker Change: Thank you and next we'll go onto the line four Ryan Kenny Morgan Stanley. Please go ahead.

Ryan Kenny: Hi, good afternoon, thanks for taking my questions.

Ryan Kenny: Okay.

Ryan Kenny: I just wanted to dig into the net sales events and the.

Ryan Kenny: Asset management related businesses of the investment advisors and institutional investor segments.

Dennis J. McGonigle: Go to www.fema.gov for reporting on these issues. For more information, visit FEMA.gov. Thanks. Good afternoon, everyone. I appreciate you taking my questions. First, on private banks' margins: they accelerated to 10% in the quarter. I just want to ask, is there anything exceptional about it, or is that kind of a good level to expect going forward? Do you think that that could be sustainable as you move through 2024? And then, just while we're on the topic, if you could speak to a kind of longer-term margin outlook for private banks. Chris, thanks for the question. I'll answer the first part. There really wasn't anything unusual in the fourth quarter, and banking was a pretty clean Financial Quarter, and I'll let Sanjay kind of address the 24 Outlook for margins and kind of beyond that. Thank you, Dennis.

Ryan Kenny: In the AMD business.

Speaker Change: So it's been negative for a few.

Speaker Change: Quarters in a row. So just wanted to understand like how much more of that we should expect going forward of a negative in that and yourselves is this a good run rate I know theres some more client transitions left.

Or of course.

Speaker Change: So that.

Speaker Change: Down overtime.

Speaker Change: Yes, I guess, we'll turn it over to Paul kind of address the.

Paul: Really what happened over the past.

Paul: A couple of quarters, because we've had this kind of phenomenon of shift from.

Paul: Mutual fund products as a product rapidly.

Paul: Yes.

Paul: Program into more Etfs separately managed accounts some of the curated.

Paul: Third party programs we have.

Paul: And then.

Sanjay Sharma: So our margin expense in Q4 is a reflection of our efforts towards not only managing our expenses but our top line growth as well. And we have been very consistent with our strategy going forward as well. While expense management will continue to be our focus, our focus is shifting on how we can grow our top line. And that's what you will see in the coming quarters as well. Thanks guys, thanks Sanjay, that's all very helpful.

Paul: We're all aware there is a lot of consolidation are decent.

Advisory consolidation going on in the market.

Paul: We've had some advisers kind of get picked off in that process.

Paul: So when we talk about.

Paul: We quantified things in the context of revenue and that really reflects the pricing shift in the products we offer.

But I'll, let Paul kind of take it from there in terms of cash flow expectations and what we're what we're seeing from that perspective.

Paul: If you look at cash flow, we did have a positive third quarter, but we had basically a flat to a little bit negative in the fourth quarter a phenomenon that we've seen in the marketplace. Our advisers, who are getting purchased by consolidators and roll up firms and we were not immune to that.

Dennis J. McGonigle: And then Dennis, just on the $11 million of one-time expenses in the quarter, is $10 million of that in facilities and then $1 million in professional fees? Or am I missing something? I'm sorry, Chris. There were three elements to that $11 million. One was we wrote down a technology asset. So we had a piece of software that was in development, and we found an alternative in the market that we think will serve us better going forward. So we wrote off the capitalized element of that asset in the fourth quarter because we're not going to bring that to market.

Paul: In 2023, specifically in the last couple of quarters, we were hit with nine firms that represent $2 billion of assets that were extensively assets under management.

Paul: That moved off the platform that we have a lot of energy on strategic answers that we're looking at the deal with this.

<unk>.

Paul: This trend in the industry, including working with the Aggregators, especially the friendly aggregators and selling them on our overall capabilities of technology operations and investments.

Dennis J. McGonigle: We had $4.6 million in severance expenses, most of which was covered in a recent AK filing that we made. And then we had about a million in professional fees associated with, which is why I call it out as kind of a little more unique, the acquisitions we did. Okay, and then I guess I'm just looking at the facility supplies and other costs line item at 27 million in the quarter. Is there anything baked in there?

Paul: So that certainly was a headwind that we saw in 2023 that said our efforts in the RA market are continuing to be bolstered we're very positive on that and part of our momentum in 2024 is the goal with larger to larger <unk>, because we think we have all the capabilities.

Paul: We've historically had most of our aged between $50 and $500 million, but we think we have all the capability to sell to the greater than $500 million market segment, and Erik calling on Gabe Garcia, who is leading that effort.

Dan on resources and capabilities and we're optimistic there. So I don't want to give any predictions as to what 2024, it's going to look like but we think with our strategic goals with spending the ties with advisers that are de converting through acquisitions and then our focus on the RA channel were positive as we move into 2024.

Dennis J. McGonigle: And so that number will come back, I'd say it's more of a kind of average from quarter to quarter. Perfect. Okay. Thanks. That's it for me.

Paul: Sure.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you and next we'll go on to the line for Owen Lau of Oppenheimer. Please go ahead.

Unknown Executive: I appreciate you taking my question. Yes, I'm going to the line for Ryan. Hi, good afternoon. Thanks for taking my question. I wanted to dig into the net sales events in the asset management-related businesses of the investment advisors and institutional investor segments of the AMD business. So it's been negative for, you know, a few quarters in a row. So just wanted to understand, like how much more of that we should expect going forward with the negative net new sales? Is this a good run rate?

Good afternoon, and thank you for taking my questions.

Owen Lau: Ryan I think you talk a little bit about the pyrites in your prepared remark.

Owen Lau: Please add a little bit more color on your strategic priorities in 2024.

Owen Lau: A little bit more detail and how does it help drive record revenue this year.

Ryan Kenny: Yes, and hope you're doing well.

Ryan Kenny: I think when you think about 2024 as I mentioned part of it is I meant as I've had cut some of the same but if you jump off of Brian's question that he just Pat we've really kind of turn our attention really in the middle of last year around our asset management businesses.

Paul Francis Klauder: I know there's some more client transitions left, or, Of course, so that's come down over time. Yeah, I guess we'll turn over to Paul to kind of address the, You know, really what happened over the past couple quarters because we've had this kind of phenomenon of shift from mutual fund products as a product wrapper type UH program into more ETFs, separate advantage accounts, some of the curated third-party programs we And then, as we're all aware, there is a lot of consolidation or de-somatic advisory consolidation going on in the market, and we've had some advisors kind of get picked off in that process.

Ryan Kenny: Have you kind of go through the last couple of years and you think about the businesses individually.

Ryan Kenny: I'll just start with IMS to continue to drive growth with existing and new clients, but also start relation groundwork for a larger business globally. Sanjay I think has done a terrific job as we've talked about really executing a great playbook around solidifying that client base right sized in the expenses and now he is in growth mode and that team is in growth mode.

And when you look at the asset management businesses, we made a couple of tough decisions around kind of the structure around right sizing some of those businesses.

Ryan Kenny: 2024 is really all about getting those businesses back to growth, we feel pretty strongly and we're enthusiastic about the suite of capabilities that we have to go compete across a broader set of intermediaries that maybe we have in the past and across a broader set of institutional segment.

Paul Francis Klauder: So, you know, when we talk about things, we quantify things in the context of revenue, and that really reflects the pricing shift in the products we offer. But I'll let Paul kind of take it from there in terms of cash flow expectations and what we're seeing from that perspective. So, if you look at cash flow, we did have a positive third quarter, but we had, you know, basically a flat to a little bit negative in the fourth quarter.

Ryan Kenny: And then another area are going to see us lean into is around new business around getting new organic business has launched doing some different things to incubate some ideas because we feel really positive about where we stand right. Now it is time to lean into some of those other areas and getting asset management back on track with really provide a tremendous amount of momentum.

Speaker Change: Got it and then in terms of the margin direction comment and also investment for this year you talked about margin expansion.

Paul Francis Klauder: A phenomenon that we've seen in the marketplace is advisors who are getting purchased by consolidators and roll-up firms, and we were not immune to that. In 2023, specifically in the last couple quarters, we were hit with nine firms that represented $2 billion of assets that were ostensibly assets under management. That moved off the platform.

Speaker Change: Is this something that we should expect.

Speaker Change: In 2020 call.

Speaker Change: Is there any maybe that potential investment like AI that you could potentially we can fast if you kind of capture some of the upside in the business.

Paul Francis Klauder: Now, we have a lot of energy on strategic answers that we're looking at to deal with this. You know, this trend in the industry, including working with the aggregators, especially the friendly aggregators, and selling them on our overall capabilities of technology operations and investment. Um, so that certainly was a headwind that we saw in 2023.

Speaker Change: In fact that upside or we should expect.

Speaker Change: <unk>.

Speaker Change: AUM stay flat or go up a little bit then you should expect margin expansion this year.

Speaker Change: So I think we think about that in three different ways. If you take kind of your question Alan.

Speaker Change: We have.

Speaker Change: Things going on with automation and AI in our technology stack and our operational stack and in our asset management stack. So we are definitely doing things there I don't know if I would predict the outcomes of all of them.

Paul Francis Klauder: That said, our efforts in the RIA market are continuing to be bolstered, and we're very positive about that. And part of our momentum in 2024 is to go larger to larger RIAs because we think we have all the capabilities. We've historically had most RIAs between 50 and 500 million, but we think we have all the capabilities to sell to the greater than $500 million market segment. And Eric Holland and Gabe Garcia, who are leading that effort, have doubled down on resources and capabilities, and we're optimistic there. So I don't want to give any predictions as to what 2024 is going to look like, but we think with our strategic goals, stemming the tides with advisors that are deconverting through acquisitions, and then our focus on the RIA channel, we're positive as we move into 2024. Great, thank you. Thank you. You are next.

Speaker Change: But to your point around expectations around margin expansion. We believe we can drive more operational leverage across this company through a couple of areas. One is about looking at our workforce and thinking about ways that we can actually leverage that talent across different areas I think as we've spoken about before if you look at enterprise sales as a microcosm.

Speaker Change: Some of things that we believe we can do across the company and position the company more horizontally that manifests itself in other functions across Sci.

Speaker Change: And I'll be honest, it's going to be.

Speaker Change: Ill continue level of discipline around how we spend money, where we spend money.

Speaker Change: We're going to make sure that we continue to invest in our future, but running the business in a way where we believe that we can expand those margins on an ongoing basis.

Speaker Change: I think the reason that the executive team and myself are excited about that.

Speaker Change: As we like what we see with the sales activity, we like what we see with our ability to continue to install clients. So we feel like if we continue to drive the right sales momentum and we have the courage and discipline to maximize the operating model as those sales come on to STI as actual revenue, we think that will fall further to the bottomline.

Speaker Change: Sounds great. Thanks, a lot.

Speaker Change: Youre welcome.

Speaker Change: Thank you.

Speaker Change: Once again, if you have a question. Please press one zero Mexico onto the line four Mike Brown. Okay. BW. Please go ahead.

Hi, good evening, Thanks for taking my question.

Ryan P. Hicke: We're going to the line. Owen Lau, Good afternoon and thank you for taking my question. Ryan, I think you talked a little bit about the priorities in your previous remark, but could you please add a little bit more color on your strategic priorities in 2024 in a little bit more detail, and how does it help drive revenue? Yeah, Owen. I hope you're doing well.

BW: So I guess I wanted to just touch on the investment managers business.

BW: This quarter a good result, there.

BW: Looks like there was some new client installs that helped quarter over quarter growth.

BW: Those activities looking healthy as well can you just maybe touch on some of the growth potential for that business as we think about 2024 here.

Ryan P. Hicke: So I think when you think about 2024, as I mentioned, part of it is, as I said, kind of some of the same, but if you jump off of Ryan's question that he just had, you know, we really kind of turned our attention really to the middle of last year around our asset management businesses. If you kind of go through the last couple of years and think about the businesses individually, you know, what Phil has done with IMS to continue to drive growth with existing and new clients but also start to lay some groundwork for a larger business globally. Sanjay, I think has done a terrific job, as we've talked about, of really executing a great playbook around solidifying that client base, right sizing the expenses, and now he is in growth mode, and that team is in growth mode. And when you look at the asset management businesses, we made a couple tough decisions around the kind of structure around right sizing some of those businesses.

BW: It seems like it's got some great tailwind, but just love to hear a little bit more about how to think about that business in 2024.

Bill: Yes, Mike that's a great question, Phil in the room. So I'll, just let bill answer that directly it sounds great Hi, Mike. So quickly as you said sales were great. This quarter of $17 2 million net more importantly year over year. They were up about 16%. So we're seeing good traction there margins were $34, one, but I think if you.

Bill: Look at without the write down there closer to 37%, we're investing heavily in the business and our technology, but as Brian said, we're also looking at automation and operational scale. So we're trying to balance what we're spending and we're trying to just build the platform out for our clients as far as the overall pipeline.

Bill: Cross sales have ever been stronger I mean, I think we're in a great place with our client.

Bill: We're in a great place with our solutions I think everything is resonating in the market.

Bill: Would say from a new business perspective, the pipeline is strong the pipeline and globally in the U K and EMEA is getting stronger as we speak. So every single day, we have more activity in the market. We are building our brand and we're really making a good push the big huge push towards that so I think we're in a good place going into 2024 and we.

Ryan P. Hicke: But 2024 is really all about getting those businesses back to growth, we feel pretty strongly, and we're enthusiastic about the suite of capabilities that we have to go compete across a broader set of intermediaries than maybe we have in the past and across a broader set of institutional segments. And then another area you're going to see us lean into is around new business, around getting new organic businesses launched, doing some different things to incubate some ideas, because we feel really positive about where we stand right now, and it's time to lean into some of those other areas, and getting asset management back on track would really provide a tremendous amount of momentum. And then, in terms of the margin direction, a comment and also investment for this year, you talked about margin expansion.

Bill: Look forward to more good things to come.

Bryan anything to add there I think the only thing I would add though is I think when you look at the client engagement and IMS. It is exceptional and it pays dividends based on our service model and our understanding and positioning with the client and I think the other units have actually tried to drive the same.

Bill: Kind of level of engagement and Sanjay certainly has across banking part of 110 advisors here next week and a J you've been asking all the clients. So I think we feel really optimistic that the significant increase that we've put forward in the last couple of years around market activity and client engagement continues and will continue to pay dividends and as such.

Bill: We're not going to let our foot off the gas.

Speaker Change: Okay, great Yeah. Thank you for all the all the color there I guess just a quick clarification there.

Speaker Change: What is the right growth rate for that business I guess, focusing on the operating income side.

Ryan P. Hicke: Is this something that we should expect in 2024? Is there maybe some potential investment like AI that you could potentially reinvest if you kind of capture some of the upside in the business? Would you would you reinvest that upside, or should we expect? So I think we think about that in three different ways. If you take the kind of your question, Owen, we have.

Speaker Change: Certainly it sounds like if the margins are kind of close to that 37% level or is that does that kind of the natural maybe ceiling for for the business and so with the.

Speaker Change: The longer term growth, just generally being driven by ongoing.

Speaker Change: The growth of the business and therefore revenue growth.

Speaker Change: Actually Mike This is Phil Dennis wants to answer that is pointing with it some higher up in there I'm not sure exactly what that means but what I would say is as he said in the past we've been in the 34% to 36% range will bump around a point or two I think we also have to continue to invest in that business at 37% might be a little bit high.

Ryan P. Hicke: Things are going on with automation and AI in our technology stack, in our operational stack, and in our asset management stack. So we are definitely doing things there. I don't know if I would predict the outcomes of all of them, but to your point around expectations around margin expansion, we believe we can drive more operational leverage across this company in a couple of areas. One is about looking at our workforce and thinking about ways that we can actually leverage that talent across different areas. I think, as we've spoken about before, if you look at enterprise sales as a microcosm of things that we believe we can do across the company and position the company more horizontally, that manifests itself in other functions across SEI.

Speaker Change: So I think it's important for us to kind of capture the market opportunity that's out there in front of us. So we definitely want to continue to invest in the platform and invest in our people and sort of just drive sales growth throughout 2024 alright.

Speaker Change: Alright, great, Mike, we're going to continue to invest for growth and invest for scale in that business, but.

Speaker Change: There is significant opportunity for that business.

Speaker Change: Okay, Great and then maybe just to change gears to kind of the capital allocation side of the business you guys closed on two M&A transactions in the quarter.

Speaker Change: Can you just maybe touch on when you might.

Ryan P. Hicke: And I'll be honest, there's going to be a continued level of discipline around how we spend money, where we spend money, and we're going to make sure that we continue to invest in our future but run the business in a way where we believe that we can expand those margins on an ongoing basis. And I think the reason that the executive team and myself are excited about that is because we like what we see with the sales activity. We like what we see with our ability to continue to attract clients. So we feel like if we continue to drive the right sales momentum, and we have the courage and discipline to maximize the operating model, if those sales come on to SEI as actual revenue, we think that'll fall further to the bottom line. That sounds great! Thanks a lot.

Speaker Change: I'll be back into the market and looking at some other inorganic growth opportunities.

Speaker Change: Those are those were I guess a little bit.

Speaker Change: Kind of a bolt on.

Speaker Change: <unk> transactions would you maybe consider something more transformational and if that's the case any view into strategically what that could look like.

Speaker Change: So we're back in the market right now so we didnt stop our M&A activity and staff, our corporate development team that we put together an 18 months ago.

Speaker Change: Never really know how to define transformational, but what I could tell you assuming you.

Look at the themes and this and the areas, where we're going to continue to invest both organically and Inorganically Paul talk about the <unk>.

Ryan P. Hicke: Oh, you're welcome. Again, if you have a question, please press 1. I guess I want to just touch on the investment managers business. Good result there.

Speaker Change: <unk> segment, that's an area, we will continue to look for opportunities.

Speaker Change: The alternative space. So our <unk> is one example, but we would continue to invest or acquire capabilities are assets that we think would accelerate our growth there and some of the things that <unk> is doing in the new business area and that's around automation AI or data. So we're pretty focused Mike on specific themes are areas that are hot.

Unknown Executive: Unknown Executive, Owen Lau, Lindsey Opsahl, Alex Whitelam, SEI Investments Co., All that. Well, let me just maybe touch on some of the growth potential for that. Yeah, Mike, that's a great question. Phil's in the room, so I'll just let Phil answer that directly. That sounds great.

Speaker Change: We are really consistent with things that we've talked about in the past and the investor presentation, but.

Speaker Change: But we didn't close the door after the two acquisition.

Mike Brown: Okay, great. Thank you Ryan Thank you for taking my questions.

Speaker Change: Thank you.

Speaker Change: Thank you and there are no more questions in queue you may continue.

Philip N. McCabe: Hi Mike. So, quickly, as you said, sales were great this quarter, 17.2 million net. More importantly, year over year, they were up about 16%, so we're seeing good traction there. Margins were 34.1, but I think if you look at them without the write-down, they were closer to 37%.

Speaker Change: Thank you <unk>.

Speaker Change: We've mentioned I'm proud of our achievements in 2023.

Speaker Change: While we have much more to accomplish ahead, we've got to stay laser focused on innovating our business for the future delivering for our clients growing new market and investing in our talent and capabilities.

Speaker Change: Thank you for joining today's call.

Speaker Change: That does conclude our conference for today. Thank you for your participation and for using AT&T Conferencing service you may now disconnect.

Philip N. McCabe: We're investing heavily in the business and our technology, but as Ryan said, we're also looking at automation and operational scale, so it's that, you know, we're trying to balance what we're spending and we're trying to just build the platform out for our clients. As far as the overall pipeline goes, I don't think cross-sales have ever been stronger. I mean, I think we're in a great place with our clients. You know, we're in a great place with our solutions.

Speaker Change: We're sorry your conferences ending now please hang up.

Philip N. McCabe: I think everything's responding in the market. I would say, from a new business perspective, the pipeline is strong. The pipeline globally in the UK and EMEA is getting stronger as we speak, so every single day, we have more activity in the market, we're building our brand, and we're really making a good push, a big, huge push for that. So, I think we're in a good place going into 2024, and we look forward to more good things to come. Ryan, anything to add there?

Ryan P. Hicke: No, I think the only thing I would add, Phil, is that I think when you look at the client engagement in IMS, it is exceptional, and it pays dividends based on our service model and our understanding and conditioning with the client. And I think the other units have actually tried to drive the same kind of level of engagement, and Sanjay certainly has across banking. Paul has 110 advisors here next week.

Unknown Executive: I guess just a quick clarification there, what is the right growth rate for that? Margin is kind of close to that 30 [inaudible] Actually Mike, this is Phil. Dennis wants to answer that, and he's pointing with his thumb higher up in there.

Philip N. McCabe: I'm not sure exactly what that means, but what I would say is, as he said in the past, we've been in the 34 to 36% range. We'll bump around a point or two. I think we also have to continue to invest in that business. The 37% might be a little bit high.

Philip N. McCabe: So I think it's important for us to kind of capture the market opportunities out there in front of us. So we definitely want to continue to invest in the platform and invest in our people and sort of just drive sales growth throughout 2024. I agree. Mike, we're going to continue to invest for growth and invest for scale in that business, but there's a significant opportunity for that business. Okay, great. And then, maybe just to change gears.

Ryan P. Hicke: Unknown Executive, Owen Lau, Lindsey Opsahl, Alex Whitelam, SEI Investments Co., Can you just maybe touch on when you might, you know, be back in the market and looking at some other... You know, those were, I guess, a little bit... more transformational and So, I mean, we're back in the market right now. So, we didn't stop our M&A activity, we I never really know how to define transformational, but what I could tell you is when you look at the themes and the areas where we're gonna continue to invest both organically and inorganically. Paul talked about the RIA segment; that's an area we will continue to look for opportunities.

Speaker Change: [music].

Ryan P. Hicke: Thank you, Ryan. [inaudible] Thank you. Well, as we've mentioned, I'm proud of our achievements in 2023. But we have much more to accomplish ahead. We've got to stay laser focused on innovating our business for the future, delivering for our clients, growing new markets, and investing in our talent and capabilities. Thank you for joining us on today's call. That does conclude our conference. We're sorry, your conference is ending now. Please hang on. Ladies and gentlemen, thank you.

Operator: Welcome to the SEI fourth quarter 2023 earnings call. At this time, all participants are on the line. Later there will be Q&A. Instructions will be given. If you should require assistance during the call, please press star 1.

Alex Whitelam: I would now like to turn the conference over to your host, Alex Whitelam. Thank you, and welcome everyone. We appreciate you joining us today for our fourth quarter 2023 earnings call. On the call, we have Ryan Hicke, SEI's Chief Executive Officer, Dennis McGonigle, Chief Financial Officer, and the leaders of our business segments, Wayne Withrow, Paul Klauder, Jay Cipriano, Phil McCabe, Sanjay Sharma, and Sneha Shah. Before we begin, I'd like to point out that our earnings press release can be found in the investor relations section of our website, SEIC.com. This call is being webcast live, and a replay will be available on the events and webcast page of our website.

Ryan P. Hicke: We would like to remind you that during today's presentation and in our response 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. Please refer to our notices regarding forward-looking statements that appear in today's earnings press release and in our filings with the Securities Exchange Commission. We do not undertake to update any of our forward-looking statements. With that, I'll turn the call over to our CEO, Ryan Hicke. Ryan said,

Ryan P. Hicke: Thanks, Alex. Good afternoon, everyone. While market conditions varied throughout the year, our team did an excellent job navigating uncertainty, engaging our clients, driving growth, and setting SEI up well for the future. In 2023, we had key strategic objectives that included margin expansion in sales and targeted private bank segments, continued momentum in global expansion and investment managers, further penetration into the RIA space, investments in alternatives for future growth, and driving continued operating leverage, profit growth, and infusing new talent across the company. We are pleased with the performance, momentum, and trajectory of both the private banking and IMS business. Both of these businesses are well positioned to continue to expand and contribute to SEI's top and bottom lines. [inaudible] With the advisor business, we have an opportunity to broaden our message around our value proposition as a more tech-centered offering with investment choice and curated solutions at the forefront of what we provide.

Speaker Change: [music].

Ryan P. Hicke: This was a combination of technology and operational outsourcing sales of $24.2 million, all set by negative activity in our asset management business. Additionally, we had a separate successful new product launch in late Q4 that will add additional revenue to the advisor business. Net income for the quarter increased 8% over the same period to $121 million. In the quarter, we repurchased approximately 1.2 million shares of SEI stock at an average price of $58.08 per share.

Ryan P. Hicke: We remain well positioned for 2024 and beyond. Our unmatched breadth of capabilities enables our clients to connect to what matters most, adapt to constant change, and scale for the future. We're focused on seizing opportunities where we can repeatedly win and drive growth. I firmly believe we can accelerate growth and market share. With that, let me turn to our business line. Our investment managers business continues to thrive, delivering strong revenue and earnings growth. Team Successfully Implementing Clients Onto Our Platform In One New Business. During the quarter, we had dozens of cross-sale events and recontracts.

Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the S. E. <unk> fourth quarter 2023 earnings call. At this time all participants are in a listen only line.

Speaker Change: Later, there will be time for <unk>.

Speaker Change: There'll be Q&A.

Ryan P. Hicke: We also want new business within each of the alternative, traditional, and global segments while continuing to grow profit for the unit. In Alternatives, our focus on key clients continues to pay dividends, resulting in significant cross-sale opportunities. During the quarter, we signed a top 25 traditional asset manager expanding into the alternative asset class and another private asset manager through a competitive takeaway. Globally, we signed three new clients and continued to see strong flows in the private asset and private credit space. As we've expanded our sales leadership in this segment, we're excited to see increased pipeline development. In the traditional segment, we added new business in all product lines.

Speaker Change: Actions will be given at that time, if you should require assistance during the call. Please press Star then zero as a reminder, this conference is being recorded I would now like to turn the conference over to your host Alex White Ma'am. Please go ahead.

Alex White: Thank you and welcome everyone. We appreciate you joining us today for our fourth quarter 2023 earnings call.

Alex White: On the call, we have Brian <unk>, Chief Executive Officer, Dennis Mcgonigle, Chief Financial Officer, and the leaders of our business segments Wayne Withrow, Paul Clowder, Jason Briana, Phil Mccabe, Sanjay Sharma and snapshot 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 <unk> Dot com.

Alex White: 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.

Alex White: That I will turn the call over to our CEO, Ryan Hey, Brian. Thanks.

Ryan P. Hicke: The team did an outstanding job reorienting the business for growth while managing expenses appropriately. During the quarter, we signed two new deals and recontracted three existing clients. We also exited the year with successful implementations during Q4. While we still have some previously announced events to absorb in the coming quarters, we are confident in our PB growth strategy. Moving to our Global Asset Management businesses, investment advisors' net cash flows were essentially flat in the fourth quarter, with positive flows in our separately managed accounts and strategist partner solutions, all set by outflows in our active mutual fund products. During the quarter, we brought on 52 new advisors, including five in the RIA channel.

Ryan Bailey: Thanks, Alex and good afternoon, everyone.

Ryan Bailey: While market conditions vary throughout the year, our team did an excellent job navigating uncertainty engaging our clients driving growth and setting us up well for the future.

Ryan Bailey: In 2023, we had key strategic objectives that include it margin expansion in sales and targeted private bank segments continued momentum in global expansion and investment managers further penetration into the <unk> space investments in alternatives for future growth and driving continued operating leverage profit.

Ryan Bailey: Growth infusing new talent across the company.

Ryan Bailey: We are pleased with the performance momentum and trajectory of both the private banking and IMS businesses.

Ryan Bailey: Both of these businesses are well positioned to continue to expand and contribute to <unk> top and bottom line.

We know we need to increase our attention on asset management.

Ryan P. Hicke: We also onboarded three advisors for our new service of custody of outside alternative investments and are working towards a larger rollout of that offer. Additionally, we pushed out our Investor Mobile app, which is receiving great feedback, as is SEI Connect and the Investor Portal. Finally, as mentioned earlier, we launched the insured component of the FDI Integrated Cash Program in late December.

Ryan Bailey: With the advisory business, we have an opportunity to broaden our message around our value proposition as a more tech centered offering with investment choice and curated solutions at the forefront of what we provide.

Ryan Bailey: I expect this will help us maximize new client adoption and exploit the huge opportunity we see in the intermediary market.

Ryan Bailey: 2024 is going to be some of the same but with a surgical focus on continuing sales and revenue growth accelerating the transformation of our asset management businesses targeting new segments for sales and driving margin expansion and profit growth through increased operational leverage and discipline.

Ryan Bailey: Let me dive into the financial results.

Ryan Bailey: Revenues in the fourth quarter were $485 million up 6% from the fourth quarter of 2022.

Ryan Bailey: Net sales events in the quarter totaled $13 7 million of which $8 5 million where net return.

Ryan Bailey: This was a combination of technology and operational outsourcing sales of $24 $2 million.

Ryan Bailey: Offset by negative activity in our asset management businesses.

Ryan Bailey: Additionally, we had a separate successful new product launch in late Q4 that will add additional revenue to the advisory business.

Ryan Bailey: Net income for the quarter increased 8% over the same period to $121 million.

In the quarter, we repurchased approximately one 2 million shares of ACI stock at an average price of $58 <unk> per share that translates into $69 million of stock purchases.

Ryan P. Hicke: We believe the addition of NPT to the SEI Master Trust strengthens SEI's continued delivery of best-in-breed services at scale across our global institutional business. Additionally, within our Investments in New Business segment, we completed the acquisition of Out2Go, a cloud-based technology platform that provides inventory, e-subscription, and reporting capabilities for alternative investments. As I have discussed many times, we are driving forward with providing more services and capabilities with alternative assets. With Altego, we expect to help simplify and transform private fund investing and widen access to alternative investment products for intermediaries, while also helping our investment management clients more easily create and facilitate the distribution of their products.

Ryan Bailey: EPS was <unk> 91 for the fourth quarter up 10% over the 83 reported in the prior year period.

Ryan Bailey: The fourth quarter also included a number of one time events that Dennis will expand on in are outlined in the release.

Ryan Bailey: We remain well positioned for 2024 and beyond our unmatched breadth of capabilities to enable our clients to connect to what matters most.

Ryan Bailey: That's a constant change and the scale for the future.

Ryan Bailey: We're focused on seizing opportunities, where we can repeatedly win and drive growth I firmly believe we can accelerate growth and market share.

Ryan Bailey: With that let me turn to our business lines.

Ryan Bailey: Our investment management business continues to thrive delivering strong revenue and earnings growth.

Ryan Bailey: <unk> successfully implemented clients onto our platform and one new business.

Ryan Bailey: During the quarter, we had dozens of cross sale events and re contracts. We also won new business within each of the alternative traditional global segments, while continuing to grow profit for the unit.

Ryan Bailey: In alternatives our focus on key clients continues to pay dividends, resulting in significant cross sell opportunities during.

Ryan Bailey: During the quarter, we signed a top 25 traditional asset manager expanding into alternative asset classes.

Ryan Bailey: And another private asset manager through a competitive takeaway.

Ryan Bailey: Globally, we signed three new clients and continue to see strong flows in the private asset private credit spaces.

Ryan Bailey: As we've expanded our sales leadership in this segment, we're excited to see increased pipeline development.

Ryan Bailey: In the traditional segment, we added new business in all product lines in particular the expansion we've seen in our turnkey collective investment Trust solution continues to be strong.

Ryan Bailey: And as we've discussed our larger traditional clients.

Ryan Bailey: Are beginning to launch alternative funds.

Ryan Bailey: Private banking had another strong quarter with revenue growth and continued expanded margins compared to a year ago.

Ryan Bailey: The team has done an outstanding job Reorienting the business for growth, while managing expenses appropriately.

During the quarter, we signed two new deals in re contracted three existing clients.

Ryan Bailey: We also exited the year with successful implementations during Q4.

Ryan Bailey: While we still have some previously announced events to absorb in coming quarters. We are confident in our PB growth strategy.

Ryan Bailey: Moving to our global asset management businesses investment advisors net cash flows were essentially flat in the fourth quarter with positive flows in our separately managed accounts and strategies partner solutions offset by outflows in our active mutual fund products.

Dennis J. McGonigle: 5.3 million related to a technology asset breakdown in our IMS segment, $4.6 million of severance expense, and $1 million of professional fees associated with our acquisition activities. Without these items, expenses for the quarter would have been approximately $372 million.

During the quarter, we brought on 52, new advisors, including five in the RIAA channel. We also onboard a three advisors for our new service a custody of outside alternative investment and are working towards a larger rollout of that offering.

Dennis J. McGonigle: The EPS impact is approximately six to seven cents. On the sales front, in our technology and investment processing businesses of private banking and investment managers, net sales events totaled $22.9 million and are expected to generate $17.6 million in recurring revenue. In our asset management-related businesses, net sales were approximately negative $10.5 million, primarily due to asset movement from our mutual fund products into our other investment programs, some client acquisitions, as well as net losses in our institutional business. We also sold $1.3 million of recurring revenue in our new business segment, mainly SEI Sphere. The sphere sale was to a non-financial company.

Ryan Bailey: Additionally, we pushed out our investor mobile App, which is receiving great feedback as soon as Sci connect and the investor portal.

Ryan Bailey: Finally, as mentioned earlier, we launched the insured component of the FBI integrated cash program in late December.

Ryan Bailey: This program provides banking short protection to end investors utilizing our standard and custom models.

Ryan Bailey: We believe the program to generate significant earnings for 2024.

Ryan Bailey: In the institutional Investor segment, our fourth quarter results reflected the challenges experienced industry wide throughout the year.

Ryan Bailey: That said, we are seeing positive sales momentum as a result of the structural changes we made in 2023.

Ryan Bailey: In the quarter, we signed two new OS CIO clients and six unbundle, those CIO clients utilizing our technology and data services.

Ryan Bailey: We also completed our acquisition of National pension stressed in the UK we.

Ryan Bailey: We believe the addition of MTT to the Sci Master Trust strengthens STI continued delivery of best in breed services at scale across our global institutional business.

Ryan Bailey: Within our investments in new business segment, we completed the acquisition of <unk> ago.

Ryan Bailey: <unk> based technology platform that provides inventory E subscription and reporting capabilities for alternative investments.

Ryan Bailey: As I have discussed many times, we are driving forward into providing more services and capabilities with alternatives.

Ryan Bailey: Without <unk>, we expect to help simplify and transform private fund investing and widen access to alternative investment products for intermediaries, while also helping our investment management clients more easily create and facilitate distribution of their products.

Ryan Bailey: Our partnership with LSP remains strong and they had a very good performance quarter, which Dennis will discuss.

Ryan Bailey: Yes.

Ryan Bailey: Finally, we've taken continued steps to nurture our culture and ensure that our workforce is best prepared for the future of the industry.

Ryan Bailey: I'd like to thank all of my colleagues across SDI for their commitment to our vision.

Ryan Bailey: This concludes my prepared remarks, I will now turn it over to Dennis to discuss our financial results for the quarter Dennis Thanks Ryan.

Dennis: Ryan mentioned EPS for the quarter was <unk> 91 this.

Dennis: This compares to 83 storey fourth quarter of 2022, and <unk> 87 for third quarter of 2023.

Dennis: Revenue for the quarter was $485 million.

Dennis: Compared to $456 million in 2022 and $477 million in the third quarter.

Dennis: Total expenses for the quarter were $383 million, which compares to $362 5 billion last year and $368 million in the third quarter.

Dennis: Included in the fourth quarter expenses were approximately 11 million of one time items.

Dennis: $5 $3 million related to a technology asset write down in our IMS segment, $4 6 million of severance expense and $1 million of professional fees associated with our acquisition activity.

Dennis: Without these items expenses for the quarter would have been approximately $372 million.

Dennis: The EPS impact is approximately 6% to seven.

Dennis: So client acquisitions as well as net losses in our institutional business.

Dennis: We also sold one $3 million of recurring revenue and our new business segment, mainly Sci sphere.

Dennis: <unk> sale was to a non financial company.

Dennis: This supports our processes that sphere has residents beyond our traditional market segments.

Dennis J. McGonigle: Entering the first quarter of 2024, we are at a higher beginning asset base. Expenses in private banking were down from the third quarter of 2023, reflecting efforts to bring private banking back to higher levels of profitability. On the investment managers front, net sales for the quarter were $17.2 million, $15.4 million of which is recurring. During the quarter, we closed 18 clients totaling $30.6 million in annual recurring revenue. Revenue for the quarter was up compared to the third quarter, reflecting the impact of client installs. However, expenses were also up, however, they included a $5.3 million item mentioned earlier for an asset write-down. Our backlog of sold but expected to install in the next 18 months recurring revenue is $28 million. In the advisor segment, revenues for the quarter were down slightly from the third for reasons previously mentioned. Expenses were up due to increases in distribution and marketing-related costs, along with sales compensation through-ups. In the Institutional Investors segment, net sales for the quarter were $4.2 million, reflecting positive client signings offset by losses and repricing in client retention activity. Revenues for the quarter were down slightly due to lower average assets.

Dennis: Total net sales for the company were $13 7 million of which $8 5 billion is recurrent.

Dennis: One key highlight for our advisor business is a launch of an FDIC insured deposit program.

Dennis: This takes the cash allocation in our model portfolios generally used for operational purposes like paying fees.

Dennis: Suites, those balances into an FDIC insured deposit account.

Dennis: While not technically a sales event the level of effort to launch educate and enroll our clients was significant.

Dennis: This new element of our overall offering at approximately $840 million in assets at December 31.

Dennis: And under current estimates will generate approximately 25 billion in additional revenue in 2024.

Dennis: The assets are reflected in our earnings release on the asset schedules under the caption platform only assets deposit program.

Dennis: There was minimal financial benefit from the program in the fourth quarter due to the timing of the launch.

Dennis: Private banking sales were $5 7 million of which $2 2 million is recurring.

Dennis: The two new SVP sales, one of which was to a non banking financial institution.

Dennis: Partially offset by two client losses, one due to acquisition and the other to a change in their operating model.

Dennis: The three clients retract re contracted during the quarter represent $5 2 million in annual recurring revenue.

Dennis: The private banking segment first focus is paying off in both new business generation and building a quality and growing pipeline.

Dennis J. McGonigle: Expenses were also down slightly, reflecting general expenses. In the investments and new business segment, revenues were flat for the third quarter, and expenses were down slightly. LSD produced $35.4 million of profit during the quarter. This compares to $29.9 million during the third quarter. Revenues for LSV were $117.1 million compared to $102.2 million in the third quarter. Fourth quarter revenues included $19.8 million in performance fees. LSB recorded performance fees of $9 million during the third quarter.

Dennis: During the quarter, we were active with client implementations and conversions.

Dennis: We installed $5 7 million of recurring revenue from our third quarter backlog in.

Dennis: And added to the backlog through sales increasing it to $22 $7 million are expected to be installed revenue in the next 18 months.

Dennis: Asset management revenues in private banking were down slightly from third quarter.

Dennis: This was mainly due to asset levels entering the quarter, resulting in lower average assets during the quarter.

Dennis: As a side note. This is also true for all of our asset management businesses.

Dennis: We our revenues based on average assets. The fact that we entered the quarter at lower levels, coupled with the market's not making their positive run until later in the quarter resulted in lower average asset levels.

Dennis: Entering first quarter of 2024, we are at a higher beginning asset base.

Expenses and private banking were down from the third quarter of 2023, reflecting efforts to bring private banking back to higher levels of profitability.

Dennis: On the investment managers front net sales for the quarter were $17 2 million $15 4 billion of which is recurring.

Dennis: During the quarter, we re contracted 18 clients totaling $36 million in annual recurring revenue.

Revenue for the quarter was up compared to third quarter, reflecting the impact of client installs.

Dennis: Expenses were also up however, they included a $5 3 million mentioned earlier for an asset write down.

Dennis: Our backlog of sold but expected to install in the next 18 months recurring revenue is $28 million.

Dennis J. McGonigle: We expect the tax rate for the first quarter to be approximately 23%; for the full year, our tax rate was 22.26%. That concludes my remarks. All of our unit heads are on the call, and we will now take questions. Thank you. Ladies and gentlemen, if you wish to ask a question, please press 1-0 on your telephone keypad. You may withdraw your question at any time by repeating the 1-0 command. If you're using a speakerphone, please pick up the handset before pressing the button. Go to www. Visit flydreamers.com to purchase a license.

Dennis: In the advisor segment revenues for the quarter were down slightly from the third for reasons previously mentioned.

Dennis: <unk> were up due to increases in distribution and marketing related costs, along with sales compensation true ups.

Dennis: And the institutional Investor segment net sales for the quarter were negative $4 2 million, reflecting positive client signings offset by losses, and repricing and client retention activities.

Revenues for the quarter were down slightly due to lower average assets.

Expenses were also down slightly reflecting general expense management.

Dennis: And the investments in new business segment revenues were flat to third quarter and expenses were down slightly.

Dennis: LLC produced $35 4 million of profit during the quarter. This compares to $29 9 million during the third quarter.

Unknown Executive: Thanks. Good afternoon, everyone. Appreciate you taking my question. First, on private banks' margins, they accelerated to 10% in the quarter. Is there anything unusual about that?

Dennis: Revenues for <unk> were $117 1 million compared to $102 2 million in the third quarter.

Dennis: Fourth quarter revenues included $19 8 million of performance fees.

Sanjay Sharma: Or is that kind of a good level to expect going forward? Do you think that could be sustainable as we move through 2024? And then, just while we're on the topic, if you could speak to a longer-term margin outlook for private banks? Chris, thanks for the question. I'll answer the first part. There really wasn't anything unusual in the 4th quarter, and banking was a pretty clean Financial Quarter, and I'll let Sanjay kind of address the 24 Outlook for margins and kind of beyond that. Thank you, Dennis.

Dennis: OSB recorded performance fees of $9 million during the third quarter.

Dennis: Performance fees are a reflection of continued positive relative performance.

Dennis: This business line will be included as the investments in new business segment going forward.

Dennis: I point, you to our soon to be filed 10-K and press release for more information.

Dennis J. McGonigle: So our margin expense in Q4 is a reflection of our efforts towards not only managing our expenses but our top line growth as well. And we have been very consistent with our strategy going forward as well. While expense management will continue to be our focus, our focus is shifting on how we can grow our top line. And that's what you will see in the coming quarters as well. Thanks, Sanjay. That's all very helpful.

Dennis: Our tax rate for the quarter was 19, 6%, we expect the tax rate for the first quarter to be approximately 23%.

Dennis: For the full year, our tax rate was $22 two 6%.

Speaker Change: That concludes my remarks, all of our unit heads are on the call and we will now take questions. Thank you.

Dennis J. McGonigle: And then, Dennis, just on the $11 million of one-time expenses in the quarter, is $10 million of that in facilities and then $1 million in professional fees, or am I missing something? I'm sorry, Chris. There were three elements to that $11 million. One was we wrote down a technology asset. So we had a piece of software that was in development, and we found an alternative in the market that we think will serve us better going forward. So we wrote off the capitalized element of that of that asset in the fourth quarter because we're not going to bring that to market. We had $4.6 million of severance expense.

Speaker Change: And first we'll go to the line for Christian Love Piper Sandler. Please go ahead.

Christian Love: Thanks, Paul Good afternoon, everyone I appreciate taking my question.

Christian Love: First on private brands margins. Thanks.

Christian Love: 100% in the quarter.

Christian Love: Is there anything one time in there or is that a kind of a good level to expect.

Dennis J. McGonigle: You know, most of which was covered in a recent AK filing that we made. And then we had about a million dollars in professional fees associated with, which is why I call it out as kind of a little more unique, the acquisitions we did. Okay, and then I guess I'm just looking at the facility supplies and other costs line item at 27 million in the quarter. Is there anything baked in there?

Speaker Change: Sure. So I'll ask Christian as Dennis Thanks for question ill answer the first part there really wasn't anything unusual in <unk>.

Speaker Change: Fourth quarter and banking was a pretty clean.

Speaker Change: Financial quarter.

Speaker Change: Sanjay kind of address the.

Speaker Change: 24 outlook for margins and kind of beyond that.

Sanjay: Thank you Dennis.

Sanjay: Our marketing expense in Q4, Thats, a reflection of our efforts towards not only managing our expenses, but top line growth as well and we have been very consistent with our startup fee going forward as well while expense management will continue to be our focus our focus is shifting on how we can grow our top line.

Dennis J. McGonigle: Or is that a good run rate going forward? I'm just curious why that line item is so elevated in the quarter. Yeah, that would come down because that's where that write-off would be sitting, right? Okay. And so that number will come back, I'd say it's more like the average of last year, quarter to quarter. Perfect. Okay. Thanks. That's it for me.

Sanjay: And that's what you would see in the coming quarter social.

Speaker Change: Hi, Good morning. Thanks, Sanjay that's all helpful. And then Dennis just on the $11 million of one time expenses in the quarter.

Speaker Change: At $10 million of that in facilities, and then $1 million in professional fees or am I missing anything there.

Speaker Change: I'm sorry, Chris.

Speaker Change: There are three elements to that $11 million.

Unknown Executive: I appreciate you taking my question. Yes, I'm going to the line for Ryan. Hi, good afternoon.

One was.

Unknown Executive: Thanks for taking my question. I just wanted to dig into the net sales events in the asset management-related businesses of the investment advisors and institutional investor segments in the AMD business. So it's been negative for, you know, a few quarters in a row. So just wanted to understand, like how much more of that we should expect going forward with the negative net new sales? Is this a good run rate?

Speaker Change: Element of that of that asset.

Speaker Change: In the fourth quarter.

Speaker Change: Because we're not going to bring that to market.

Speaker Change: We had $4 6 million of severance expense.

Speaker Change: Most of which was covered in our recent 8-K filing that we made.

Speaker Change: And then we had about $1 billion of professional fees associated with.

Speaker Change: Which is why I call it out as kind of a little more unique the acquisition two acquisitions we did.

Paul Francis Klauder: I know there's some more client transitions left, or, Of course, so that's come down over time. Yeah, I guess we'll turn over to Paul to kind of address what happened over the past couple quarters because we've had this kind of phenomenon of shift from mutual fund products as a product wrapper type, Uh, program into more ETFs, separate advantage accounts, some of the curated third-party programs we have. And then, as we're all aware, there is a lot of consolidation or a decent amount of advisory consolidation going on in the market, and we've had some advisors kind of get picked off in that process.

Speaker Change: So elevated in the quarter.

Speaker Change: Yes that will come down because thats, where.

Speaker Change: That write off would be sitting right okay.

Speaker Change: So that's what that number will come back, let's say the more kind of the average of last year quarter to quarter.

Speaker Change: Perfect. Okay. Thanks.

Speaker Change: For me I appreciate you taking my questions.

Speaker Change: Thank you and next we'll go on to the nine four Ryan Kenny Morgan Stanley. Please go ahead.

Ryan Kenny: Hi, good afternoon, thanks for taking my questions.

Ryan Kenny: Okay.

Ryan Kenny: I just wanted to dig into the net sales events and the.

Ryan Kenny: Asset management related businesses of the investment advisors and institutional investor segments.

Ryan Kenny: In the AMD business.

Speaker Change: So it's been negative for you.

Speaker Change: Or.

Speaker Change: Or should that come down over time. Thanks.

Speaker Change: I guess, we'll turn it over to Paul kind of the address.

Paul: Really what happened over the past.

Paul: No.

Paul: Couple of quarters, because we've had this kind of phenomenon of shift from.

Paul: Mutual fund products as a product rapid type.

Paul Francis Klauder: Now, we have a lot of energy on strategic answers that we're looking at to deal with this. Um, you know, this trend in the industry, including working with the aggregators, especially the friendly aggregators, and selling them on our overall capabilities of technology operations and investment. Am, So that certainly was a headwind that we saw in 2023.

Paul: <unk>.

Paul: Program into where Etfs separately managed accounts some of the curated.

Paul: Third party programs we have.

Paul: And then.

We're all aware there is a lot of consolidation are decent.

Paul: Advisory consolidation going on in the market.

Paul: We've had some advisers kind of get picked off in that process.

Paul: So our when we talk about.

Paul: We quantified things in the context of revenue and that really reflects the pricing shift in the products we offer.

Paul Francis Klauder: That said, our efforts in the RIA market are continuing to be bolstered. We're very positive about that, and part of our momentum in 2024 is to go larger, to larger RIAs, because we think we have all the capabilities. We've historically had most RIAs between 50 and 500 million, but we think we have all the capabilities to sell to the greater than $500 million market segment.

But I'll, let Paul kind of take it from there in terms of cash flow expectations and what we're what we're seeing from that perspective.

Paul Francis Klauder: And Eric Holland and Gabe Garcia, who are leading that effort, have doubled down on resources and capabilities, and we're optimistic there. So I don't want to give any predictions as to what 2024 is going to look like, but we think with our strategic goals, stemming the tides, with advisors that are deconverting through acquisitions, and then our focus on the RIA channel, we're positive as we move into 2024. Great, thank you. Thank you. You are next.

Paul: In 2023, specifically in the last couple of quarters, we were hit with nine firms that represent $2 billion of assets that were extensively assets under management.

Paul: That moved off the platform that we have a lot of energy on strategic answers that we're looking at the deal with this.

Paul: So that certainly was a headwind that we saw in 2023 that said our efforts in the RA market are continuing to be bolstered we're very positive on that and part of our momentum in 2024 is the goal of larger to larger <unk>, because we think we have all the capabilities we.

Owen Lau: We're going to the line. Owen Lau, Good afternoon and thank you for taking my question. Ryan, I think you talked a little bit about the priorities in your previous remark, but could you please add a little bit more color on your strategic priorities in 2024 in a little bit more detail, and how does it help drive revenue? Yeah, Owen. I hope you're doing well.

Paul: Historically had most of our aged between $50 and $500 million, but we think we have all the capability to sell to the greater than $500 million market segment, and Eric Holland gave garcia leading that effort.

Paul: Dan on resources and capabilities and we're optimistic there. So I don't want to give any predictions as to what 2024 is going to look like but we think with our strategic goals with spending the time with advisers that are de converting through acquisitions and then our focus on the RA channel were positive as we move into 2024.

Ryan P. Hicke: So I think when you think about 2024, as I mentioned, part of it is, as I said, kind of some of the same, but if you jump off of Brian's question that he just had, you know, we really kind of turned our attention really to the middle of last year around our asset management businesses. If you kind of go through the last couple of years, and you think about the businesses individually, you know, what Phil has done with IMS to continue to drive growth with existing and new clients but also start to lay some groundwork for a larger business globally. Sanjay, I think, has done a terrific job, as we've talked about, of really executing a great playbook around solidifying that client base, right sizing the expenses, and And when you look at the asset management businesses, we made a couple tough decisions around the kind of structure around right sizing some of those businesses.

Paul: Sure.

Great. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you and next we'll go on to the line for Owen Lau of Oppenheimer. Please go ahead.

Owen Lau: Good afternoon, and thank you for taking my questions.

Owen Lau: Ryan I think you talk a little bit about the pyrites in your prepared remarks, but could you. Please add a little bit more color on your strategic priorities in 2024.

Owen Lau: Little bit more detail and how does it help drive revenue growth this year.

Speaker Change: Yes, and hope you're doing well.

Ryan: I think when you think about 2024 as I mentioned part of it is I meant as I've had kind of some of the same but if you jump off of Brian's question that he just had we've really kind of turn our attention really in the middle of last year around our asset management businesses.

Ryan: Have you kind of go through the last couple of years and you think about the businesses individually.

Ryan: I'll just start with IMS to continue to drive growth with existing and new clients, but also start relation groundwork for a larger business globally. Sanjay I think has done a terrific job as we've talked about really executing a great playbook around solidifying that client base right sized in the expenses and now he is in growth mode and that team is in growth mode.

Ryan: And when you look at the asset management businesses, we made a couple of tough decisions around kind of the structure around right sizing some of those businesses.

Ryan: <unk> 2024 is really all about getting those businesses back to growth, we feel pretty strongly and we're enthusiastic about the suite of capabilities that we have to go compete across a broader set of intermediaries that maybe we have in the past.

Ryan: And across the broader set of institutional segment and then another area are going to see us lean into is around new business around getting new organic business has launched doing some different things to incubate some ideas because we feel really positive about where we stand right now and kind of lean into some of those other areas and getting asset management back on.

Ryan: Trac will really provide a tremendous amount of momentum.

Speaker Change: Got it and then in terms of the margin direction comment and also investment for this year you talked about margin expansion.

Speaker Change: Is this something that we should expect.

Speaker Change: In 2024.

Speaker Change: Is there any maybe that potential investment like AI that you could potentially we can fast you kind of capture some of the upside in the business.

Speaker Change: <unk> fashion that upside or we should expect.

Speaker Change: <unk>.

Speaker Change: AUM stay flat or go up a little bit then you should expect margin expansion. This year. So I think we think about that in three different ways. If you take kind of your question Alan.

Ryan P. Hicke: So I think we think about that in three different ways. If you take your question, Owen, we have things going on with automation and AI in our technology stack, in our operational stack, and in our asset management stack. So we are definitely doing things there. I don't know if I would predict the outcomes of, you know, all of them, but to your point around expectations around margin expansion, we believe we can drive more operational leverage across this company through a couple of areas. One is about looking at our workforce and thinking about ways that we can actually leverage that talent across different areas. I think, as we've spoken about before, if you look at enterprise sales as a microcosm of things that we believe we can do across the company and position the company more horizontally, that manifests itself in other functions across SEI.

Speaker Change: We have seen.

Speaker Change: CASM or things that we believe we can do across the company and position the company more horizontally that manifests itself in other functions across Sci.

Ryan P. Hicke: And I'll be honest, there's going to be a continued level of discipline around how we spend money, where we spend money. And we're going to make sure that we continue to invest in our future but run the business in a way where we believe that we can expand those margins on an ongoing basis. And I think the reason that the executive team and myself are excited about that is we like what we see with the sales activity. We like what we see with our ability to continue to attract clients. So we feel like if we continue to drive the right sales momentum, and we have the courage and discipline to maximize the operating model, if those sales come on to SEI as actual revenue, we think that'll fall further to the bottom line. That sounds great. Thanks a lot.

Speaker Change: I'll be honest, it's going to be.

Speaker Change: Continued level of discipline around how we spend money, where we spend money.

Speaker Change: We're going to make sure that we continue to invest in our future, but running the business in a way where we believe that we can expand those margins on an ongoing basis.

Speaker Change: And I think the reason that the executive team and myself are excited about that.

Speaker Change: As we like what we see with the sales activity, we like what we see with our ability to continue to install clients. So we feel like if we continue to drive the right sales momentum and we have the cars and discipline to maximize the operating model as those sales come on to STI as actual revenue, we think that will fall further to the bottomline.

Speaker Change: Sounds great. Thanks, a lot.

Speaker Change: Youre welcome.

Speaker Change: Thank you.

Speaker Change: Once again, if you have a question. Please press one zero Mexico onto the line four Mike Brown. Okay. BW. Please go ahead.

Mike Brown: Hi, good evening, Thanks for taking my question Mike.

Unknown Executive: Oh, you're welcome. Again, if you have a question, please press 1. Mike, I guess I want to just touch on the investment managers business. Good results there. All that. Well, let me maybe touch on some of the growth potential for that. Yeah, Mike, that's a great question. Phil's in the room, so I'll just let Phil answer that directly. That sounds great.

Mike Brown: So I guess I wanted to just touch on the investment managers business.

BW: This quarter a good result, there.

BW: Looks like there was some new client installs that helped quarter over quarter growth.

BW: Those activities looking healthy as well can you just maybe touch on some of the growth potential for that business as we think about 2024 here.

BW: It seems like it's got some great tailwind, but just would love to hear a little bit more about how to think about that business in 2024, yes.

Philip N. McCabe: Hi Mike. So, quickly, as you said, sales were great this quarter, $17.2 million net. More importantly, year over year, they were up about 16 percent, so we're seeing good traction there. Margins were $34.1, but I think if you look at them without the write-down, they were closer to 37 percent.

Bill: Look at without the write down there closer to 37%, we're investing heavily in the business and our technology, but as Brian said, we're also looking at automation and operational scale.

Philip N. McCabe: We're investing heavily in the business and our technology, but as Ryan said, we're also looking at automation and operational scale. So, you know, we're trying to balance what we're spending, and we're trying to just build the platform out for our clients. As far as the overall pipeline is concerned, I don't think cross-sales have ever been stronger. I mean, I think we're in a great place with our clients. You know, we're in a great place with our solutions. I think everything's responding in the market. I would say from a new business perspective, the pipeline is strong. The pipeline globally, in the U.K., and EMEA, is getting stronger as we speak.

Bill: We're trying to balance what we're spending and we're trying to just build the platform out for our clients as far as the overall pipeline I don't think cross sales have ever been stronger.

Bill: I think we're in a great place with our client.

Bill: We're in a great place with our solutions I think everything is resonating in the market.

Bill: I would say from a new business perspective, the pipeline is strong the pipeline and globally in the U K and EMEA is getting stronger as we speak. So every single day, we have more activity in the market. We are building our brand and we're really making a good push the big huge push towards that so I think we're in a good place going into 2024 and we.

Philip N. McCabe: So, every single day, we have more activity in the market. We're building our brand, and we're really making a good push, a big, huge push toward that. So, I think we're in a good place going into 2024, and we look forward to more good things to come. Ryan, anything to add there? No, I think the only thing I would add, Phil, is that I think when you look at the client engagement in IMS, it is exceptional, and it pays dividends based on our service model and our understanding and conditioning with the client. And I think the other units have actually tried to drive the same kind of level of engagement, and Sanjay certainly has in cross-banking. Paul has 110 advisors here next week.

Bill: Look forward to more good things to come.

Bill: Bryan anything to add there I think the only thing I would add though is I think when you look at the client engagement and IMS. It is exceptional.

Bryan: Dividends based on our service model and our understanding and positioning with our clients and I think the other units have actually tried to drive the same.

Bryan: Kind of level of engagement and Sanjay certainly has across banking part of 110 advisors here next week and a J you've been asking all of our clients. So I think we feel really optimistic that the significant increase that we've put forward in the last couple of years around market activity and client engagement continues and will continue to pay dividends and it's something.

Bryan: We're not going to let our foot off the gas.

Speaker Change: Okay, great Yeah. Thank you for all the all the color there I guess just a quick clarification there.

Ryan P. Hicke: I know Jay, you've been out seeing all the clients. So I think we feel really optimistic that the significant increase that we have put forward in the last couple of years around market activity and client engagement continues and will continue to pay dividends, and it's something we're not going to let our foot off the gas. Okay, great, yeah, thank you for all the color there. I guess just a quick clarification. What is the right growth rate for that? for the business? Actually, Mike, this is Phil. Dennis wants to answer that, and he's pointing with his thumb higher up in there.

Speaker Change: Is the right growth rate for that that business I guess, focusing on the operating income side.

Speaker Change: Certainly it sounds like if the margins are kind of close to that 37% level or is that does that kind of the natural maybe ceiling for for the business and so with the longer term growth just generally being driven by ongoing.

Philip N. McCabe: I'm not sure exactly what that means, but what I would say is, as he has said in the past, we've been in the 34 to 36% range. We'll bump around by a point or two. I think we also have to continue to invest in that business. The 37% might be a little bit high, so I think it's important for us to kind of capture the market opportunities out there in front of us. So we definitely want to continue to invest in the platform and invest in our people and sort of just drive sales growth throughout 2024. Mike, we're going to continue to invest for growth and invest for scale in that business, but there's a significant opportunity for that business. Okay, great. And then, maybe just to change gears.

Speaker Change: Both of the business and therefore, our revenue growth.

Speaker Change: Actually Mike This is Phil Dennis wants to answer that is pointing with his thumb higher up in there I'm not sure exactly what that means but what I would say is as he said in the past we've been in the 34% to 36% range will bump around a point or two.

Phil: We also have to continue to invest in that business of 37% might be a little bit high. So I think it's important for us to kind of capture the market opportunity that's out there in front of us. So we definitely want to continue to invest in the platform and invest in our people and sort of just drive sales growth throughout 2024 alright.

Speaker Change: Great Mike, we're going to continue to invest for growth and invest for scale in that business, but there is.

Speaker Change: There is significant opportunity for that business.

Speaker Change: Okay, Great and then maybe just to change gears to kind of the capital allocation side of the business you guys closed on two M&A transactions in the quarter.

Speaker Change: Can you just maybe touch on when you might.

Ryan P. Hicke: Kind of the capital allocation side of the business, you guys are close. Can you just maybe touch on when you might, you know, be back into the market and looking at some other... Growth. Those were, I guess, a little bit... http://TheBusinessProfessor.com more transformational in that regard. So, I mean, we're back in the market right now. So we didn't stop our M&A activity. We didn't stop our corporate development team that we put together 18 months ago. I never really know how to define transformational, but what I could tell you is that when you look at the themes and the areas where we're going to continue to invest both organically and inorganically, Paul talked about the RIA segment. That's an area we will continue to look for opportunities.

Speaker Change: I'll be back into the market and looking at some other inorganic growth opportunities.

Speaker Change: Those were I guess a little bit.

Speaker Change: Kind of a bolt on.

Speaker Change: <unk> transactions would you maybe consider something more transformational and if that's the case any view into strategically what that could look like.

Speaker Change: So we're back in the market right now so we didnt stop our M&A activity and staff, our corporate development team that we put together an 18 months ago.

Speaker Change: I don't really know how to define transformational, but what I could tell you assuming you.

Speaker Change: Look at the themes and this and the areas, where we're going to continue to invest both organically and Inorganically Paul talked about.

Speaker Change: <unk> segment, that's an area, we will continue to look for opportunities.

Ryan P. Hicke: The alternative space, so Altego is one example, but we would continue to invest in or acquire capabilities or assets that we think would accelerate our growth there. And some of the things that Smeha is doing in the new business area, whether that's around automation, AI, or data. So we're pretty focused, Mike, on specific themes or areas that are hopefully really consistent with things we have talked about in the past in the investor presentation. But we didn't close the door after the two acquisitions. Okay, great. Thank you, Ryan. [inaudible] Thank you. Well, as we've mentioned, I'm proud of our achievements in 2023. But we have much more to accomplish ahead. We've got to stay laser focused on innovating our business for the future, delivering for our clients, growing new markets, and investing in our talent and capabilities. Thank you for joining today's call. This does conclude our conference.

Speaker Change: The alternative space. So our <unk> is one example, but we would continue to invest or acquire capabilities are assets that we think would accelerate our growth there and some of the things that <unk> is doing in the new business area and that's around automation AI or data. So we were pretty focused Mike on specific themes are areas that are.

Speaker Change: We really consistent with things that we've talked about in the past and the investor presentation.

Speaker Change: But we didn't close the door after the two acquisitions.

Speaker Change: Okay, great. Thank you Ryan Thank you for taking my questions.

Speaker Change: Thank you.

Speaker Change: Thank you and there are no more questions in queue you may continue.

Speaker Change: Thank you.

Speaker Change: We've mentioned I'm proud of our achievements in 2023.

Speaker Change: Thank you for joining today's call.

Speaker Change: That does conclude our conference for today. Thank you for your participation for using AT&T conferencing service you may now disconnect.

Q4 2023 SEI Investments Co Earnings Call

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