Q1 2024 SEI Investments Co Earnings Call

April 24, 2024

Operator: will begin momentarily. Please continue to hold. Ladies and gentlemen, thank you for standing by. Welcome to the SEI first quarter 2024 earnings call. At this time, all participants are in a listen-only mode.

To hold.

Okay.

Yeah.

[music].

Operator: And later, we will conduct a question and answer session. Instructions will be given at that time. If you should require assistance during the call, please press star, then zero. And as a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Alex Whitelam. Please go ahead.

Okay.

Yes.

Speaker Change: Ladies and gentlemen, thank you for standing by welcome to the S. E T I first quarter 'twenty 'twenty four earnings call.

Speaker Change: At this time all participants are in a listen only mode and later, we will conduct a question and answer session and instructions will be given at that time.

Alex Whitelam: Thank you, Eric. Thank you, everyone. Welcome.

Alex Whitelam: We appreciate you joining us today for our first quarter 2024 earnings call. On the call, we have Ryan Hicke, SEI's Chief Executive Officer, Dennis McGonigle, Chief Financial Officer, and Sean Denham, incoming Chief Financial Officer. We have leaders in our business segments, Jay Cipriano, Sandy Ewing, Paul Klauder, Phil McCabe, Sneha Shah, and Sanjay Sharma. 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, SCIC.com. This call is being webcast live, and a replay will be available on the events of webcast page of our website.

Speaker Change: If you should require assistance during the call. Please press Star then zero and as a reminder, this conference is being recorded.

Speaker Change: I'd now like to turn the conference over to our host Alex White limb. Please go ahead.

Alex Whitelam: Thank you Eric Thank you everyone and welcome. We appreciate you joining us today for our first quarter 2024 earnings call on the call. We have Ryan Hickey Sei's, Chief Executive Officer, Dennis Mcgonigle, Chief Financial Officer, and Sean Denim incoming Chief Financial Officer.

Because of our business segments, Joseph Rihanna and Ewing, Paul powder, Phil Mccabe snail, sure Sanjay Sharma.

Alex Whitelam: 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 Whitelam: We would like to remind you that during today's presentation and in our responses to your questions, we have and will make certain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements that appear in today's earnings press release and in our filings with the Securities and Exchange Commission. We do not undertake to update any of our forward-looking statements. With that, I'll turn the call over to our CEO, Ryan Hicke. Ryan?

Alex Whitelam: This call is being webcast live and a replay will be available in the event the webcast page of our website.

I would like to remind you that during today's presentation and in our responses to your questions. We have and we will make certain forward looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please.

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

Ryan P. Hicke: Thanks, Alex, and good afternoon, everyone. We are out of the gates this year with high-quality results, top-line growth, and margin expansion in the first quarter. This deepens our conviction to maintain our focus on excellent execution against our strategic plan. We are seeing significant traction in our technology and operational businesses as we manage expenses diligently, especially manifesting in profit growth and private banking. Our attention remains on increasing sales and pipeline activity and allocating capital and talent to new growth initiatives and emerging technologies. Accelerating activity and innovation is also a strategic priority in our asset management businesses as market trends and product types, asset allocation, and investment choice continue to be headwinds.

Ryan Schulke: Thanks, Alex and good afternoon, everyone. We are out of the gate this year with high quality results top line growth and margin expansion in the first quarter. This deepens our conviction to maintain our focus on excellent execution against our strategic priorities.

Ryan Schulke: We are seeing significant traction in our technology and operational businesses as we manage expenses diligently, especially manifesting in profit growth in private banking.

Ryan Schulke: Our attention remains on increasing sales and pipeline activity and allocating capital and talent to new growth initiatives and emerging technologies.

Ryan Schulke: Accelerating activity in innovation is also a strategic priority and our asset management businesses as market trends and product types asset allocation and investment choices continue to be headwinds our broader value proposition and solution set is resonating and gaining momentum we need to translate this momentum into increasing new client acquisition and.

Ryan P. Hicke: Our broader value proposition and solution set is responding and gaining momentum. We need to translate this momentum into increasing new client acquisition and adoption. We will continue to lean into growing segments in the intermediary and institutional markets. Let me dive into our results for the quarter. Revenues in the first quarter were $511.6 million, up 9% from the first quarter of 2023. Net sales events in the quarter totaled $21.3 million, of which $16.6 million were net recurring.

Ryan Schulke: Option we.

Ryan Schulke: We will continue to lean into growing segments in the intermediary and institutional markets.

Speaker Change: Let me dive into our results for the quarter.

Speaker Change: Revenues in the first quarter were $511 6 million.

Speaker Change: Up 9% from the first quarter of 2023.

Net sales events in the quarter totaled $21 $3 million of which $16 6 million where net recovery.

Ryan P. Hicke: This was driven largely by a combination of technology and operational outsourcing sales of $24.5 million. All set by net negative activity in our AUM-oriented business. In our advisor business, we generated over $9 million of revenue with the FDIC-insured component of the FDI Integrated Cash Program, which we launched in December 2023. Net income for the quarter increased 23% over the same period to $131.4 million.

This was driven largely by a combination of technology and operational outsourcing sales of $24 $5 million.

Offset by net negative activity in our AUM oriented businesses.

Speaker Change: And our advisor business, we generated over $9 million of revenue with the FDIC insured FDIC insured component of the FBI integrated cash program, which we launched in December 2023.

Net income for the quarter increased 23% over the same period to $131 4 million.

Ryan P. Hicke: This is an important indication that our focus on sales, implementing the backlog, and driving more operational leverage across SEI is starting to show results. We have more to do on all fronts. In the quarter, we repurchased approximately 808,000 shares of SEI stock at an average price of $69.32 per share for a total of $56 million in stock purchases.

Speaker Change: This is an important indication that our focus on sales implementing the backlog and driving more operational leverage across SDI is starting to show results. We have more to do on all fronts in.

Speaker Change: In the quarter, we repurchased approximately 808000 shares of Sci stock at an average price of $69 32 per share for a total of $56 million of stock purchases.

Ryan P. Hicke: EPS was $0.99 for the first quarter, up 25% over the $0.79 reported in the prior year period. We believe we are well positioned for the remainder of 2024 and into the future. Combining a strong financial position, an unmatched set of capabilities, and an engaged client and employee base, we're focused on delivering comprehensive solutions for the markets we serve and enhancing shareholder value. With that, let me turn to our business lines.

Speaker Change: EPS was <unk> 99 for the first quarter up 25% over the 79 reported in the prior year period.

Speaker Change: We believe we are well positioned for the remainder of 2024 and into the future.

Speaker Change: Combining our strong financial position and unmatched set of capabilities and an engaged client and employee base. We're focused on delivering comprehensive solutions for the markets, we serve and enhancing shareholder value.

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

Ryan P. Hicke: Our investment managers business had another exceptional quarter. On the growth front, we had new business and cross sales in the alternative and traditional markets, notably with the expansion of their product lineup, including CITs, and the conversion of mutual funds to ETFs. This is a trend we are seeing increase in the traditional asset management cycle.

Speaker Change: Our investment managers business had another exceptional quarter.

Speaker Change: While the growth front, we had new business and cross sales and the alternative and traditional markets, notably with the expansion of their product lineup, including <unk> and the conversion of mutual funds to Etfs.

Speaker Change: This is a trend we are seeing increase in the traditional asset management segment.

Ryan P. Hicke: We also implemented more than 60 new funds from a competitor onto our private equity platform for one of our larger clients. We continue to expand our reach in global markets. In particular, we are actively engaging with European-based private asset managers.

Speaker Change: We also implemented more than 60, new funds from a competitor onto our private equity platform for one of our larger clients.

Speaker Change: We continue to expand our reach in global markets. In particular, we are actively engaging with European based private asset managers and we've made investments to further strengthen our global operations in Dublin, London and Luxembourg.

Ryan P. Hicke: And we've made investments to further strengthen our global operations in Dublin, London, and Luxembourg. The expansion of our IMS services into non-US markets is an important component of our future growth strategy. Most importantly, we hosted 80 of our clients for an annual event earlier this month, and it makes me extremely proud to be part of SEI. When I get the privilege to hear firsthand the experience our clients are having and the excitement they have to continue to grow with us, it shows how powerful our people, our culture, and our capabilities are in the market. Private banking continues to operate effectively.

Speaker Change: The expansion of our IMS services in the non U S markets is an important component to our future growth strategy.

Most importantly, we hosted 80 of our clients for an annual event earlier this month and it makes me extremely proud to be part of Sci when.

Speaker Change: When I get the privilege to hear firsthand the experience our clients are having and the excitement they have to continue to grow with us. It shows how powerful our people our culture and our capabilities are in the market.

Speaker Change: Private banking continued to execute effectively the team carried last year's momentum through the first quarter with solid revenue growth and margin expansion compared to a year ago.

Ryan P. Hicke: The team carried last year's momentum through the first quarter with solid revenue growth and margin expansion compared to a year ago. While new contract signings were light in the quarter, this is simply a function of contract timing versus activity. The team already has a good start to Q2.

Speaker Change: While new contract signings were light in the quarter. This is simply a function of contract timing versus activity. The team already has a good start to Q2.

Ryan P. Hicke: We are seeing increased activity and success in the regional community bank segments, UK private client investment managers, and our professional services offering across all segments. This go-to-market strategy was a key part of Sanjay's reorientation of the client-facing teams, and it is being received positively in the market. The focus and deployment of additional investments in marketing, R&D, and talent over the past 18 months is paying off. Moving to our global asset management businesses, investment advisors saw positive net cash flows of approximately $915 million.

Speaker Change: We are seeing increased activity and success in the regional community Bank segment's UK private client investment managers and our professional services offering across all segments.

Speaker Change: This go to market strategy was a key part of <unk> re orientation of the client facing teams and it is being received positively in the market.

Speaker Change: The focus and deployment of additional investments in marketing R&D and talent over the past 18 months is paying off.

Speaker Change: Moving to our global asset management businesses investment advisor saw positive net cash flows of approximately $915 million.

Ryan P. Hicke: This was largely driven by our strategic partner solutions and separately managed accounts, along with AUA growth from advisors leveraging our technology and operational solutions. Offsetting these inflows were outflows in our active mutual fund products, as a result of markets shifting to lower cost products and passive solutions. During the quarter, we brought on 61 new advisors.

Speaker Change: This was largely driven by our strategy partner solutions in separately managed accounts, along with AUR growth from advisers, leveraging our technology and operational solutions offsetting these inflows were outflows in our active mutual fund products as a result of market shifting to lower cost products and passive solutions.

Speaker Change: During the quarter, we brought on 61, New advisors and we also saw three of our existing <unk> crossed the $1 billion threshold on our platform.

Ryan P. Hicke: And we also saw three of our existing RIAs cross the $1 billion threshold on our platform, demonstrating our value and helping our advisors scale and grow their business. In the institutional investor segment, we remain focused on growing this business by aligning our cost structure and our talent to drive sales and margin expansion. While our results continue to reflect industry challenges, our teams did a really nice job managing expenses and securing a number of new wins with new and existing clients. Of note, we completed the transition of our first SWP client with a sizable private foundation into our OCIO program.

Speaker Change: Demonstrating our value and helping our advisors scale and grow their businesses.

Speaker Change: In the institutional Investor segment, we remain focused on growing this business by aligning our cost structure and our talent to drive sales and margin expansion.

Speaker Change: While our results continue to reflect industry challenges our teams did a really nice job managing expenses and securing a number of new wins with new and existing clients.

Speaker Change: Of note, we completed the transition of our first <unk> client with a sizable private foundation into our OCI O program.

Speaker Change: We also re contracted three clients in the quarter and finally, we have made adjustments to the cost structure and focus of Sci notice to improve overall business results.

Ryan P. Hicke: We also re-signed three clients in the quarter. And finally, we have made adjustments to the cost structure and focus of SEI Novus to improve overall business results. Within our Investments in New Business segment, we announced our strategic investment in Tippitt, a leading platform accelerating the adoption of artificial intelligence and wealth management. With this partnership, we expect to more rapidly explore, develop, and deliver new offerings that drive growth for our clients and the broader industry. We also had new wins in the family office services and private wealth businesses.

Speaker Change: Within our investments in new business segment, we announced our strategic investment in Titbit, a leading platform accelerating the adoption of artificial intelligence in wealth management.

With this partnership we expect to more rapidly explore develop and deliver new offerings that drive growth for our clients and the broader industry. We also had new wins in the family office services and private wealth businesses.

Speaker Change: Our partnership with LSP remains strong and they had another quarter with positive relative performance, which Dennis will discuss.

Speaker Change: Finally, we've launched new initiatives focus on developing talent for the future and elevating our culture across the organization.

Speaker Change: One focus area is on professional sales development offering programs that are designed to expand and increase our bench of sales talent and support our client centric culture.

Ryan P. Hicke: Our partnership with LSB remains strong, and they had another quarter with positive relative performance, which Dennis will discuss. Finally, we've launched new initiatives focused on developing talent for the future and elevating our culture across the organization. One focus area is on professional sales development, offering programs that are designed to expand and increase our bench of sales talent and support our client-centered culture. Another initiative is the launch of an employee-led group, Seismic. Seismic's goal is to unite our innovation centers across the company, create opportunities for every employee to contribute to our growth, and to actualize new business ideas aligned with our organizational objectives.

Speaker Change: Another initiative is the launch of an employee led group seismic.

Speaker Change: Seismic <unk> goal is to unite our innovation centers across the company create opportunities for every employee to contribute to our growth and to actualize, new business ideas aligns with our organizational objectives.

Speaker Change: With that I'd like to thank all my colleagues across the Sci 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 Thanks Ryan.

Dennis J. McGonigle: As Ryan mentioned EPS for the quarter was <unk> 99 per share. This compares to <unk> 79 during the first quarter of 2023, and <unk> 91 for the fourth quarter of 2023 revenue for the quarter was $512 million.

Dennis J. McGonigle: Third to $469 million in the first quarter of 2003 and $485 million in the fourth quarter.

Ryan P. Hicke: With that, 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?

Dennis J. McGonigle: Total expenses for the quarter were $386 million, which compares to 300 $767 million last year and $383 million in the fourth quarter.

Dennis J. McGonigle: Thanks, Ryan. As Ryan mentioned, DPS for the quarter was $0.99 per share. This compares to $0.79 during the first quarter of 2023 and $0.91 for the fourth quarter of 2023. Revenue for the quarter was $512 million, compared to $469 million in the first quarter of 2023 and $485 million in the fourth quarter. Total expenses for the quarter were $386 million, which compares to $367 million last year and $383 million in the fourth quarter.

Dennis J. McGonigle: Included in the first quarter expenses were approximately $6 2 million of severance expense as a result of workforce changes principally in our soi novus and phenomenal units.

Dennis J. McGonigle: The EPS impact is approximately three to four.

Dennis J. McGonigle: On the sales front, and our technology and investment processing businesses of private banking and investment managers net sales events totaled $24 5 million and are expected to generate $27 million in recurring revenue.

Dennis J. McGonigle: In our asset management related businesses net sales were approximately negative $5 7 million.

Dennis J. McGonigle: Primarily due to asset movement from our mutual fund products into other investment programs as well as net losses in our institutional business.

Dennis J. McGonigle: Included in the first quarter expenses were approximately $6.2 million of severance expense as a result of workforce changes principally in our SEI Novus and Phenomio units. The EPS impact is approximately 3 to 4 cents. On the sales front, in our technology and investment processing businesses of private banking and investment managers, net sales events total $24.5 million and are expected to generate $20.7 million in recurring revenue. In our asset management-related businesses, net sales were approximately negative $5.7 million, primarily due to asset movement from our mutual fund products into other investment programs, as well as net losses in our institutional business.

Dennis J. McGonigle: As Ryan mentioned cash flows and our advisor business were a positive 900 plus $1 million.

Dennis J. McGonigle: We also sold $2 5 million of revenue in our new business segment.

Dennis J. McGonigle: Total net sales were $21 3 million of which $16 $6 million was retiring.

Dennis J. McGonigle: Private banking sales were $2 9 million most of which is one time during the quarter, we had one client wins and one loss both smaller in size that essentially offset each other.

Dennis J. McGonigle: The three clients re contracted during the quarter represented $4 $8 million in annual recurring revenue.

Dennis J. McGonigle: Despite first quarter closes sales activity is strong.

Dennis J. McGonigle: The limited client signings as Ryan referenced are more of an issue of timing versus activity.

Dennis J. McGonigle: During the quarter, we stayed on schedule with client implementations and conversions, we installed $1 4 million of revenue from our fourth quarter backlog. Our current backlog of expected to be installed revenue over the next 18 months is $18 5 million.

Dennis J. McGonigle: As Ryan mentioned, cash flows in our advisor business were positive 900 million dollars. We also sold 2.5 million of revenue in our new business segment. Total net sales were $21.3 million, of which $16.6 million is recurring.

Dennis J. McGonigle: Also note that as part of the segment change, we announced yesterday, we moved $2 8 million from the banking backlog to the IMS backlog. This.

Dennis J. McGonigle: This was a piece of business related to alternative asset processing that while the client as a bank is more aligned with IMS services or delivery.

Dennis J. McGonigle: Private banking sales were 2.9 million, most of which was one-time. During the quarter, we had one client win and one loss, both smaller in size that essentially offset each other. The three clients recontracted during the quarter represent $4.8 million in annual recurring revenue. Despite first quarter closes, sales activity is strong. The limited client signings, as Ryan referenced, are more an issue of timing versus activity.

Dennis J. McGonigle: Asset management revenues in private banking were up from fourth quarter flows were essentially flat, however, higher asset levels and a range of quarter led to higher average AUM, which helped the revenue growth.

Dennis J. McGonigle: Expenses and private banking were up slightly from the fourth quarter of 2023, reflecting overall business growth note that expenses year over year were flat.

Dennis J. McGonigle: On the investment managers front net sales for the quarter were $21 $6 million $24 billion of which is recurrent.

Dennis J. McGonigle: During the quarter, we re contracted for clients totaling $5 $7 million in annual recurring revenue.

Dennis J. McGonigle: During the quarter, we stayed on schedule with client implementations and conversions. We installed $1.4 million of revenue from our fourth quarter backlog. Our current backlog of expected revenue in the next 18 months is $18.5 million. Also note that as part of the segment change we announced yesterday, we moved $2.8 million from the banking backlog to the IMS backlog. This was a piece of business related to alternative asset processing that, while the client is a bank, is more aligned with IMS services and delivery. Asset Management revenues and Private Banking were up from the fourth quarter. Flows were essentially flat.

Dennis J. McGonigle: Revenue for the quarter was up compared to fourth quarter, reflecting the impact of client installations.

Dennis J. McGonigle: Expenses were down slightly however, fourth quarter included a $5 $3 billion item or an asset write down.

Dennis J. McGonigle: Our backlog of sold but expected to install in the next 18 months recurring revenue is $28 9 million, which includes the $2 8 million move from private banking.

Dennis J. McGonigle: As Ryan mentioned for investment advisers net cash flow onto our platform were up.

Dennis J. McGonigle: Including increased flows into our newer strategies partner and platform only programs.

Dennis J. McGonigle: This was offset by negative flows from our mutual fund products.

Dennis J. McGonigle: One key item of note is the $9 6 million of revenue generated in the quarter from the FDIC insured deposit program launched in December.

Dennis J. McGonigle: However, higher asset levels entering the quarter led to higher average AUM, which helped revenue growth. Expenses in private banking were up slightly from the fourth quarter of 2023, reflecting overall business growth. However, note that expenses year-over-year were flat.

Dennis J. McGonigle: As a reminder, this takes the cash allocation in our model portfolios generally used for operational purposes, like paying fees and suites those balances into an FDIC insured deposit account.

Dennis J. McGonigle: At quarter end, there were approximately $897 million in assets in this program.

Also note that we recognized approximately $1 $5 billion in revenue in the fourth quarter.

Dennis J. McGonigle: Revenues for the quarter were up for reasons mentioned expenses were flat for the fourth quarter, reflecting overall good expense management.

Dennis J. McGonigle: On the investment managers front, net sales for the quarter were $21.6 million, $20.4 million of which is recurring. During the quarter, we recontacted four clients totaling $5.7 million in annual recurring revenue. Revenue for the quarter was up compared to the fourth quarter, reflecting the impact of client insulation. Expenses were down slightly, however, the fourth quarter included a $5.3 million item for an asset write-down.

And the institutional Investor segment net sales events for the quarter were negative $4 6 million, reflecting positive client signings offset by losses in repricing and client retention activities.

Dennis J. McGonigle: Revenues for the quarter were up due to positive markets.

Dennis J. McGonigle: Expenses were also up slightly reflecting personnel related costs.

Dennis J. McGonigle: And the investments in new business segment revenues and expenses were also up compared to fourth quarter with modest profit improvement.

Dennis J. McGonigle: <unk> produced $31 6 million of profit during the quarter. This compares to $35 4 million during the fourth quarter revenues for <unk> were $107 3 million compared to $117 1 million in the fourth quarter.

Dennis J. McGonigle: Our backlog of sold but expected to install in the next 18 months recurring revenue is $28.9 million, which includes the $2.8 million moved from private banking. As Ryan mentioned, for investment advisors, net cash flow onto our platform or up, including increased flows into our newer strategic partner and platform only programs. This was offset by negative flows from our mutual fund products. One key item of note is the $9.6 million of revenue generated in the quarter from the FDIC Insured Deposit Program launched in December. As a reminder, 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.

Dennis J. McGonigle: First quarter revenues included $6 million of performance fees.

Dennis J. McGonigle: As a reminder, <unk> record of performance fees of $19 8 million during the fourth quarter.

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

Dennis J. McGonigle: Our tax rate for the quarter was 22, 9%.

Speaker Change: As I'm sure you all noted with our 8-K filing yesterday, we have made a few modest adjustments to our segment reporting.

Speaker Change: All numbers presented today reflect those changes.

Speaker Change: As you all know also know this is the last of by roughly 90 plus earnings calls I would like to thank all of the investment and financial professionals present in the past. This role is giving me the opportunity to meet and engage with.

Dennis J. McGonigle: At quarter end, there were approximately 897 million in assets in this program. Also note that we recognized approximately $1.5 million in revenue in the fourth quarter. Revenues for the quarter were up for reasons mentioned. Expenses were flat for the fourth quarter, reflecting overall good expense management.

Speaker Change: Thank you all for the professional manner in which we engage and the insights and questions that you've brought to me that broadened my in our thinking.

Speaker Change: <unk> is in great hands, and I am sure your interactions and working relationship with Sean with Sean will serve him and the company well.

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

Speaker Change: Last chance to Stump me thank.

Speaker Change: Thank you.

Speaker Change: Okay.

Dennis J. McGonigle: In the Institutional Investors segment, net sales events for the quarter were negative $4.6 million, reflecting positive client signings offset by losses and repricing in client retention activities. However, revenues for the quarter are up due to a positive market, and expenses were also up slightly, reflecting personnel-related costs. In the Investments & New Business segment, revenues and expenses were also up compared to the fourth quarter, with modest profit improvements. LSV produced $31.6 million in profit during the quarter. This compares to $35.4 million during the fourth quarter. Revenues for LSV were $107.3 million compared to $117.1 million in the fourth quarter.

Speaker Change: You would like to ask a question today. Please press one zero you may remove yourself from queue at any time by pressing one zero again.

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

Speaker Change: Once again to ask a question please press one and.

Speaker Change: Zero.

Speaker Change: Our first question will go to Owen Lau with Oppenheimer.

Owen Lau: Alright. Thank you for taking my question, so Dennis as you wish.

Owen Lau: A fastball.

Owen Lau: Okay.

Owen Lau: And could you. Please talk about the traction for the cash program going into the second quarter I know you January that axiom.

Dennis J. McGonigle: First quarter revenues included $6 million in performance fees. As a reminder, LSB recorded performance fees of $19.8 million during the fourth quarter. Performance fees are a reflection of continued positive relative performance. Our tax rate for the quarter was 22.9%.

Speaker Change: $6 million in the first quarter.

Dennis J. McGonigle: Yeah, Great question, I think the quarter end number $97 million how much average cash did you get in the first quarter and in April so far and how we should model out of revenue going forward.

Dennis J. McGonigle: As I am sure you all noted with our AK filing yesterday, we have made a few modest adjustments to our segment reporting. All numbers presented today reflect those changes. As you all also know, this is the last of my roughly 90-plus earnings calls. I would like to thank all the investment and financial professionals present and past. This role has given me the opportunity to meet and engage with them.

Speaker Change: Thanks Alan.

Speaker Change: It is pretty much a fast fall right down the middle of.

Speaker Change: Really appreciate you appreciate doing that you are to kind of I guess, when we traveled together this quarter.

Speaker Change: That helps.

Speaker Change: Average of average assets in that program for the quarter were just under $850 million.

Speaker Change: So the $9 6 million was derived from that average balance.

Speaker Change: Okay.

Speaker Change: But we ended the quarter with higher levels.

Speaker Change: And so this is our first quarter of experience with this program full quarter, Paul and the team are continuing to work.

Speaker Change: With our adviser community.

Dennis J. McGonigle: Thank you all for the professional manner in which we engaged and the insights and questions that you brought to me that broadened my and our thinking. SEI is in great hands, and I'm sure your interactions and working relationship with Sean will serve you and the company well. That concludes my remarks.

Speaker Change: And getting a better feel for how flows are going to occur.

Speaker Change: Under this program.

Speaker Change: As the year progresses, I think we'll get a better feel for kind of whats kind of a consistent rate of cash in this program.

Which can be affected by how much how much rebalancing occurs when fees are paid when this cash is used to meet the operational needs of customer counts, but so far so good.

Operator: All of our unit heads are on the call. We will now take questions. Get your last chance to stump me. If you would like to ask a question today, please press 1 then. You may remove yourself from the queue at any time by pressing star 1. If you are using a speakerphone, please pick up the handset before pressing the button.

Speaker Change: Clearly on track for the.

Speaker Change: $25 million, we talked about back in January.

Speaker Change: Got it that's helpful and then on private banking margin continues to go up.

Speaker Change: Is there any exploration exploration will go on when you can get back to historical 30% margin level. It may or may not be a strict lineup and.

Operator: Once again, to ask a question... And our first question will go to... Owen Lau with Oppenheimer. All right, thank you for taking my question. So Dennis, as you wish, I'm going to give you a fastball.

Speaker Change: Any potential investments that we should be aware of.

Unknown Speaker: [inaudible] Could you please talk about the traction for the cash program going into the second quarter? I know you generated a fee of $9.6 million in the first quarter. You gave us, I think, the quarter-end number, $8.97 million. How much average... Again, in the first quarter and in April so far, and how we should model all the revenue. Thanks, Owen. That is pretty much a fastball right down the middle

Speaker Change: Reaches Hugo Thanks, a lot.

Speaker Change: It's probably best to Ryan answer to this question because I would be im not.

Ryan: I'm not going to be here.

Ryan: I am on my aspirations are now.

Ryan: If they have changed quite a bit.

Ryan: If you treat it differently, but I think we've always said that this business. We expect the type of business. It is how we operate the business of scale.

Ryan: Opportunities within the businesses.

Ryan: Should be a 30% margin business that will get too both through top line growth.

Ryan: And efficiency of delivery that gets that topline growth or a big chunk of it to the bottom line.

Dennis J. McGonigle: I really appreciate you doing that. You're too kind. I guess when we traveled together this quarter, that helped. Average average assets in that program for the quarter were just under $850 million. So, you know, the $9.6 million was derived from that average balance, and we ended the quarter with higher levels. This is our first full quarter of experience with this program full quarter. Paul and the team are continuing to work with our advisor community and getting a better feel for how flows are going to occur into this program.

Ryan: <unk> really done a great job over the past.

Ryan: 2018 20 months in.

Ryan: And re orienting the business both in terms of its market facing activities and client engagement and the level of client engagement and prospect engagement, but also in working with not just with his own unit put across other units within Sci that contribute to.

Ryan: The offering of private banking.

Ryan: To bring costs down or to bring them to a level that we feel really good about the scale will get going forward. So we're still looking at that.

Ryan: I'd say three plus years.

Ryan: Year timeframe three to five years.

Ryan: <unk> is a good target.

Dennis J. McGonigle: So as the year progresses, I think we'll get a better feel for kind of what's the consistent rate of cash in this program, which can be affected by how much rebalancing occurs, when fees are paid, and when this cash is used to meet the operational needs of customer accounts. But so far, so good. We're clearly on track for the... 25 million we talked about back in January. Unknown Speaker: We've got it. That's helpful.

Ryan: But a lot of it depends on continuing to execute the way the team has been executing.

Speaker Change: Got it wrong Giovanni.

Speaker Change: No I'm, sorry, Bryan Glenn.

Speaker Change: No I would echo that I think.

Speaker Change: What's been consistent Alan I mean, I think this is the fifth or sixth quarter that you kind of see consistent improvement.

Speaker Change: I think we said hopefully a very clear message externally and internally when Sanjay took over responsibility that we were going to get this business back to historical margins, we were going to be extremely disciplined and focus on how we do that but I think the thing that is encouraging for us as a leadership team is really seeing how the activity and focus on the revenue.

Unknown Speaker: And then on private banking, margin continues to go up. Is there any aspirational goal on how you can get back to the historical 30% margin level? I mean, it may or may not be a straight line up, but are there any potential investments that we should be aware of before it reaches your goal? Thanks a lot. Probably best that Ryan answer this question because I would be, you know, I'm not going to be here.

Speaker Change: Side and the sales side is starting to pay off with leading indicators that we track such as activity in pipeline engagement. So I mean, I think Dennis is answer is spot on but I think most importantly, sanjay and the team just have this is a really strong blueprint and plan that they're executing against moving forward.

Speaker Change: Got it and thanks, all appointed inside Dennis It's my pressure working with you.

Speaker Change: Thank you own mind as well.

And next we'll hear from Jeff Schmidt with William Blair. Please go ahead.

Thank you Dennis wish you the best in your retirement.

Dennis J. McGonigle: I know what my aspirations are now. They've changed quite a bit. It is treated differently.

Jeffrey Paul Schmitt: Hi, Sean.

Question on the <unk>.

Jeffrey Paul Schmitt: Investment advisors business the margin jumped up 45% expenses were pretty flat from last quarter.

Dennis J. McGonigle: But I think we've always said that this business, the type of business, it is how we operate, the business scale, and opportunities within the business that this should be a 30% margin business that will get to both top line growth and efficiency and delivery that gets that top line growth or a big chunk of it to the bottom line. He's really done a great job over the past 18-20 months in reorienting the business, both in terms of its market-facing activities and client engagement and the level of client engagement and prospect engagement, but also in working with not just within his own unit but across other units within SEI that contribute to This is the offering of the private bank, to bring costs down or to bring them to a level that we feel really good about the scale we'll get going So we're still looking into that. You know, I'd say, you know, the three plus year timeframe, you know, three to five years, is a good target.

Jeffrey Paul Schmitt: Is that improvement in the margin mainly from the additional spread income or are there some expense initiatives underway I'm just trying to think how should we think about that 45% margin going forward.

Jeffrey Paul Schmitt: I mean, I will let Paul Paul jump in here.

Paul: Clearly the revenue and the high margin.

On that revenue stream helped.

Paul: In the first quarter, certainly compared to fourth quarter and in.

Paul: And last year.

But there also is a very concerted effort on.

Cost containment.

Paul: And I would argue that I view towards more like.

Paul: With greater efficiency of delivery.

Paul: Higher quality and delivery higher scale better.

Paul: We always invest in our technology and operational areas to help drive scale.

Paul: So that's also been a help I don't know Paul do you want to yes, I would concur net interest income and the profitability of the FDIC program. Obviously is the big contributor the markets are a contributor.

Paul: Expense management, we continue to be disciplined about that and just from a sales and marketing perspective, we are looking for more larger advisors. The convert I would say we call them chunk plays bigger.

Ryan P. Hicke: But a lot of it depends on, you know, continuing to execute the way the team's been executing. Right. Right. Right. No, I would echo that.

Paul: Bigger advisors over $250 million, we did see three of those this quarter and we continue to have our sales emphasis on those larger advisors why we still work our bread and butter, which is our advisors affiliated with broker dealers. So overall very positive quarter for the segment.

Ryan P. Hicke: I think, you know, what's been consistent, Owen. I think this is the fifth or sixth quarter that you kind of see consistent improvement. And I think we sent, hopefully, a very clear message externally and internally when Sanjay took over responsibility that we were going to get this business back to historical margins. We are going to be extremely disciplined and focused on how we do that. But I think the thing that is encouraging for us as a leadership team is really seeing how the activity and focus on the revenue side and the sales side are starting to pay off with leading indicators that we track, such as activity and pipeline engagement.

Paul: Okay, Great and then a number of your biggest competitors in that segment are starting to implement.

Paul: Price increases in their businesses does that sort of open the door for you to do the same or do you see it more as an opportunity.

Paul: Don.

Don: Yeah on the price increase side I mean, we always look at the competitiveness of all of our offerings I mean, the mutual funds. We know have had some price decreases over time or just.

Don: More investors kind of opting out for other implementation, whether it's etfs separate accounts.

Don: UMH programs. So we're always looking at the competitiveness, we don't see right now.

Don: <unk> increase that we can just build in an absolute price relative to our competitive set.

Ryan P. Hicke: So I mean, I think Dennis's answer is spot on. But I think most importantly, Sanjay and the team just have this is a really strong blueprint and plan that they're executing against moving forward. Got it. And thanks a lot for your insight, Dan. Pressure. Thank you. Might as well.

But we will continue to evaluate that but more importantly is just driving growth through getting more and more assets under management, that's where we really think theres going to be escalation and the profitability of the segment.

Speaker Change: Okay, great. Thank you.

Speaker Change: Yes.

Speaker Change: All of this asset.

Speaker Change: We're operating under under a longer term view that theres going to continue to be price compression.

Operator: Next, we'll hear from Jeff. Iliam Blair. Hi, thank you. Dennis, you know, I wish you the best in your retirement. Out. Question on the Investment Advisors Business, the margin jumped up 45%, while expenses were pretty flat from last quarter. Is that improvement in the margin mainly from the addition of spread income, or are there some expense initiatives underway? I'm just trying to think, what should we think about that 45% margin going forward? Well, we will let Paul jump in here, but clearly, the revenue pop and the high margin on that revenue stream helped in the first quarter, certainly compared to the fourth quarter and last year.

Speaker Change: And that the pricing environment and asset management in particular.

Speaker Change: Is that pressure is not isn't isn't changing it's only going to continue which is why we're so focused on technology build operational efficiency and scale client delivery broadening out our market segments for growth. So it's.

Speaker Change: No that we've seen.

Speaker Change: Price increases in.

Speaker Change: And the competitive set.

Speaker Change: Possibly be a good thing in certain areas of that occurred but we're operating under that this is going to be a more price competitive environment.

Speaker Change: And making sure that from a delivery standpoint.

Speaker Change: Effective and as efficient as scalable as possible and Thats something our clients really appreciate.

Operator: But there is also a very concerted effort on, you know, cost containment. And I would use terms more like greater efficiency and delivery, higher quality and delivery, higher scale, better use. You know, we always invest in our technology and operational areas to help drive scale. So that's also been a help. I don't know, Paul, do you want to?

Speaker Change: Within the advisor channel.

Speaker Change: In the banking channel with many of <unk> clients every one of them is dealing with the same market issue.

Speaker Change: Okay.

Speaker Change: Helpful. Thank you Youre welcome.

Speaker Change: As a reminder, if you'd like to ask a question you can do so by pressing one zero.

Dennis J. McGonigle: Yeah, I would concur. Interest income and the profitability of the FDIC program obviously are a big contributors. The markets are a contributor. Expense management, we continue to be disciplined about that. And just from a sales and marketing perspective, we are looking for more larger advisors to convert. I would say we call them "chunk plays."

Speaker Change: Next we'll hear from Brian Kenney with Morgan Stanley. Please go ahead.

Ryan Michael Kenny: Hey, good afternoon. Thanks for taking my question and Dennis Congratulations on 90 plus quarters.

Ryan Michael Kenny: I survived Brian.

Ryan Michael Kenny: Robert.

Speaker Change: Yes, you've been very helpful. So thank you so much for everything throughout the years.

Speaker Change: I have a question on that new sales so when I look at the three bullets 'twenty.

Paul Francis Klauder: Bigger advisors over $250 million. We did see three of those this quarter. And we continue to have a sales emphasis on those larger advisors while we still work our bread and butter, which is our advisors affiliated with broker dealers. So, you know, overall, a very positive quarter for the segment. Okay, great.

$24 5 million from.

Speaker Change: Private banks and IMS Thats pretty strong you have $2 5 million from the newer initiatives and then theres the drag of negative $5 seven from the asset management related businesses. So when you look over the last few quarters that drag has persisted for a while so how should investors think about how much of.

Unknown Speaker: And then a number of your biggest competitors in that segment are starting to implement price increases in their businesses. Does that sort of open the door for you to do the same, or do you see it more as an opportunity? You know, if you, if you don't.

Speaker Change: Drag Sarah is going forward, if you could give an update on where your current SKU to defined benefit plans.

Unknown Speaker: Yeah, on the price increase side, I mean, we always look at the competitiveness of all of our offerings. I mean, the mutual funds we know have had some price decreases over time, or just, you know, more investors kind of opting out for other implementations, whether it's ETFs, separate accounts, or UMA programs.

Speaker Change: Stands and how much headwinds should we expect going forward on that yes.

Ryan: Yes, Ryan it's Ryan Hope, you're doing well I'll start and then changes in the minimum or Paul can add so let's start with the first of the three so you look at IMS builds in the room as well.

Ryan: Another exceptional quarter of sales as I mentioned, when you think about the breadth of our capability set there the overall market trends around the appetite and the embracing of outsourcing and our ability to continue to invest and deliver differentiation through technology and operational solutions and our people we feel good on the traditional side.

Unknown Speaker: So we're always looking at competitiveness. We don't see right now much of an increase that we can just build in an absolute price relative to our competitive set, but we'll continue to evaluate that. But more importantly, just driving growth through getting more and more assets under management. That's where we really think there's going to be an escalation in the profitability segment. Okay, great. Thank you.

Ryan: The alternative side than the emerging in the global side to continue to drive net new sales numbers, we already touched on what Sanjay and the team are doing so first of all what we feel good we look at the total addressable markets will continue to be nimble will allocate resource where needed and will continue to expand our footprint in areas. There we may.

Made a concerted effort as you know last summer to bring in an executive from the outside and look at our new business initiatives and investments in new business in different ways.

Unknown Speaker: Yeah, I'll just add that I was operating under a longer-term view that there's going to continue to be price compression, and that the pricing environment in asset management, in particular, is that that pressure isn't changing. It's only going to continue, which is why we're so focused on technology build, operational efficiency and scale, client delivery, and broadening out our market segments for growth. So it's You know, I don't know that we've seen Price increases in a competitive set would possibly be a good thing in certain areas if that occurred.

Ryan: I talked about a little bit of that earlier with what we're doing with tiffin in seismic, but when you see family office services and sphere and private wealth management, we know when we think about the company five years to seven years out we won additional growth engines beyond what we have today and we're starting to really lay some railroad tracks to make some investments there.

Ryan: Feel good about that and then when you get to the AUM base businesses I honestly think it's a tale of two cities right. Now you just have an overall market and macro shift in terms of product types, whether that as they move from mutual funds to etfs or lower cost products and I think a continued move overall, especially in developed markets from active portfolio.

Ryan: Management to passive portfolio management, driven partially by price.

So in some ways, we're a victim of success that we've had over many years, but I believe that we have been extremely thoughtful and aggressive in figuring out how do we continue to invest not just in differentiated investment management solutions, but as Dennis mentioned technology and operational platforms that will really is.

Unknown Speaker: But we're operating under the assumption that this is going to be a more price competitive environment and making sure that from a delivery standpoint, we're as effective and efficient as scalable. And that's something our clients really appreciate, both within the advisor channel and the banking channel. I mean, many of Sanjay's clients, every one of them is dealing with Market Issues. Okay. Very helpful. And as a reminder, if you'd like to ask a question, you can do so by pressing. Next, we will hear from Ryan Kenny with Morgan Stanley. Hey, good afternoon.

Ryan: Wow us to deliver value to a broader set of intermediate an intermediary and institutional clients in the future. So really long winded answer to say how should you think about it I think it will continue to be a little bit choppy, but we're looking really at how are we increasing client adoption Paul's point around larger converge.

Ryan: Expanding into different segments, and really continue into rethink what our asset management offering is both proprietary and third party to drive value. So it's there you are on it we're on it.

Operator: Thanks for taking my question. And Dennis, congratulations on 90 plus a quarter. I survived, Ryan. I survived.

And Jay if you want to provide a little commentary maybe of underneath institutional around DB and different segments, there and I can always come back Ryan and unpack anything I said.

Ryan P. Hicke: Yeah, you've been very helpful. So, thank you so much for everything throughout the year. I have a question on net new sales. So when I look at the three bullets, you know, you have 24 and a half million from Private Banks and IMS. That's pretty strong. You have two and a half million from the newer initiatives, and then there's the drag of negative 5.7 from the asset management-related businesses. And when you look over the last few quarters, that drag has persisted for a while.

Jay: Sure. Thanks Ryan.

Jay: Certainly.

Jay: <unk> corporate defined benefit plans, making decision to a newer types. We've touched on this in the past it continues to be a reality in the corporate DB space.

Ryan: Certainly in the rate environment that we've experienced over the last couple of years, it's encouraging to see a few reports out there that the pace of annuities nation has slowed over the last six months and also talking to some of our clients who may experience a funding status over 100%.

Ryan P. Hicke: So how should investors think about how much of a drag there is going forward? If you could give an update on where your current skew to define the benefit plan stands and how much headwinds we should expect going forward on there. Yeah, Ryan, it's Ryan. I hope you're doing well. I'll start and then Jay's in the room or Paul can add.

Ryan: Some are utilizing that cash to fund other opportunities instead of moving towards <unk>, what I'm. Most encouraged about though is as I look across the new business activity that we did close in the first quarter of this year. The new names we brought in span U S corporate defined benefit U S endowments UK mass.

Ryan P. Hicke: So let's start with the first of the three. So you look at IMS; Phil's in the room as well. That's another exceptional quarter of sales, as I mentioned. When you think about the breadth of our capabilities set there, the overall market trends around the appetite for and the embrace of outsourcing, and our ability to continue to invest in and deliver differentiation through technology and operational solutions and our people, we feel good on the traditional side, the alternative side, and emerging on the global side to continue to drive these new sales numbers. We've already touched on what Sanjay and the team are doing. So, you know, first bullet, we feel good.

Ryan: Our trust business no. This business. So we continue to see activity across all those sectors and the new names as we work through some of those plan annuity innovations that we've talked about now for a bit.

Ryan Michael Kenny: And Brian Thank.

Thank you.

Ryan Michael Kenny: Hey, Brian This is Paul I'll, just add one other thing with regard to the FDIC program. I know you know this but I just wanted to call. It out we did not recognize that as the sales of that so that's very strong revenue and profitability that the unit and the firms getting but that is not a sales event. So recognize that lift that's not in there.

But the lift or the decrease associated with moving out of mutual funds to Etfs and other passive implements are in there.

Ryan P. Hicke: We look at the total addressable markets. And we'll continue to be nimble. We'll allocate resources where needed, and we'll continue to expand our footprint in areas there. We made a concerted effort, as you know, last summer to bring in an executive from the outside and look at our new business initiatives and investments in new businesses in different ways. I talked about a little bit of that earlier with what we're doing with Tiffin and Seismic.

Speaker Change: Got it thank you.

And that was our final question I would now like to turn the call over to CEO, Brian Hickey.

Ryan P. Hicke: Thank you as I mentioned, we started the quarter with strong financial results and are poised to drive future success. We also announced in Q1, the hire of Sean denim as Dennis his successor as CFO for STI. Sean is a terrific addition to the executive team and brings a wealth of experience and talent to drive our future growth.

Ryan P. Hicke: But I would like to close by thanking and acknowledging my friend Dennis Mcgonigle for almost 40 years that has set the standard for leadership culture stewardship, and care and that care extended to shareholders clients employees and our families.

Ryan P. Hicke: And then when you get to the AUM-based businesses, I honestly think it's a tale of two cities right now. You just have an overall market and macro shift in terms of product types, whether that is a move from mutual funds to ETFs or lower cost products. And I think a continued move overall, especially in developed markets, from active portfolio management to passive portfolio management, driven partially by price. So, in some ways, we're a victim of the success that we've had over many years.

Ryan P. Hicke: I have the deepest amount of personal and professional respect and admiration for Dennis and I'm extremely proud to have worked with him for 26 years learn from him for 26 years and laughed with him for 26 years. Many more times ahead for us in the future, but on behalf of all of US at Sci I want to say, thank you to Dennis.

And thank you to everybody for joining today's call.

That does conclude our conference for today. Thank you for your participation you may now disconnect.

Ryan P. Hicke: But I believe that we have been extremely thoughtful and aggressive in figuring out how we continue to invest not just in differentiated investment management solutions but, as Dennis mentioned, technology and operational platforms that will really allow us to deliver value to a broader set of intermediary institutional clients in the future. So, a long winded answer to say, how should you think about it?

Ryan P. Hicke: We're sorry your conference.

Speaker Change: As ending now please hang on.

Ryan P. Hicke: I think it'll continue to be a little bit choppy, but we're looking really at how we increase client adoption, Paul's point around larger conversions, expanding into different segments, and really continuing to rethink what our asset management offering is, both proprietary and third-party to drive value. So it's there. You're on it.

Ryan P. Hicke: We're on it. And Jay, if you want to provide a little commentary, maybe underneath institutional around DB and different segments there, and I can always come back, Ryan, and unpack anything I said.

Jay Cipriano: Sure. Thanks, Ryan. Certainly, plans, corporate-defined benefit plans, making the decision to annuitize, we've touched on this in the past. It continues to be a reality in the corporate DB space, certainly in the rate environment that we've experienced over the last couple of years. It's encouraging to see a few reports out there that the pace of annuitization has slowed over the last six months, and also, talking to some of our clients who may experience a funding status over 100%, some are utilizing that cash to fund other opportunities instead of moving towards annuitization.

Jay Cipriano: What I'm most encouraged about, though, is if I look across the new business activity that we did close in the first quarter of this year, the new names we brought in span U.S. corporate-defined benefit, U.S. endowments, U.K. master trust business, and know this business. So we continue to see activity across all of those sectors, and the new names, as we work through some of those plan annuitizations that we Ryan, if I could just add one other thing. With regard to the FDIC program. I know you know this, but I just wanted to call it out. We did not recognize that as a sales event.

Unknown Speaker: That's very strong revenue and profitability that the unit and the firm are getting, but that is not a sales event. Recognize that lift that's not in there, but the decrease associated with moving out of mutual funds to ETFs and other passive implements is in there. Got it.

Operator: Thank you. That was our final question. I would now like to turn the call over to you.

Ryan P. Hicke: Thank you. As I mentioned, we start the quarter with strong financial results and are poised to drive future success. We also announced in Q1 the hire of Sean Denham as Dennis' successor as CFO for SEI. Sean is a terrific addition to the SEI executive team and brings a wealth of experience and talent to drive our future growth. But I would like to close by thanking and acknowledging my friend, Dennis McGonigle. For almost 40 years, Dennis has set the standard for leadership, culture, stewardship, and care, and that care extended to shareholders, clients, employees, and our family.

Speaker Change: [music].

Ryan P. Hicke: Many more times ahead for us in the future, but on behalf of all of us at SEI, I want to say thank you to Dennis and thank you to everybody for joining today's call. That does conclude our conference for today. Thank you for your participation. You may now go. We're sorry, your conference is ending now. Please hang on. Ladies and gentlemen, thank you for standing by. Welcome to the SEI first quarter 2024 earnings call. At this time, all participants are in a listen-only mode.

Alex Whitelam: Thank you, Eric. Thank you, everyone. Welcome.

Ryan P. Hicke: Thanks, Alex, and good afternoon, everyone. We are out of the gates this year with high-quality results, top-line growth, and margin expansion in the first quarter. This deepens our conviction to maintain our focus on excellent execution against our strategic priorities. We are seeing significant traction in our technology and operational businesses as we manage expenses diligently, especially manifesting in profit growth and private banking. Our attention remains on increasing sales and pipeline activity and allocating capital and talent to new growth initiatives and emerging technologies. Accelerating activity and innovation is also a strategic priority in our asset management businesses as market trends and product types, asset allocation, and investment choice continue to be headwinds.

Speaker Change: [music].

Speaker Change: Quarter 2024 earnings call.

At this time all participants are in a listen only mode and later, we will conduct a question and answer session and instructions will be given at that time.

Ryan P. Hicke: Our Investment Managers business had another exceptional quarter. On the growth front, we had new business and cross-sales in the alternative and traditional markets, notably with the expansion of their product lineup, including CITs, and the conversion of mutual funds to ETFs. This is a trend we are seeing increase in the traditional asset management cycle.

If you should require assistance during the call. Please press Star then zero and as a reminder, this conference is being recorded.

Speaker Change: I'd now like to turn the conference over to our host Alex White limb. Please go ahead.

Alex Whitelam: Thank you Eric Thank you everyone and welcome. We appreciate you joining us today for our first quarter 2024 earnings call on the call. We have Ryan Sci's, Chief Executive Officer, Dennis Mcgonigle, Chief Financial Officer, and Sean Denim incoming Chief Financial Officer.

Ryan P. Hicke: And we've made investments to further strengthen our global operations in Dublin, London, and Luxembourg. The expansion of our IMS services in non-US markets is an important component of our future growth strategy. Most importantly, we hosted 80 of our clients for an annual event earlier this month, and it makes me extremely proud to be part of SEI. When I get the privilege to hear firsthand the experience our clients are having and the excitement they have to continue to grow with us, it shows how powerful our people, our culture, and our capabilities are in the market. Private banking continues to operate effectively.

Alex Whitelam: In terms of our business segments, Jason Briana spend viewing.

Alex Whitelam: Paul Powder, Phil Mccabe now sure Sanjay Sharma.

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

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

Ryan: Thanks, Alex and good afternoon, everyone. We are out of the gate. This year with high quality result, top line growth and margin expansion in the first quarter. This deepens our conviction to maintain our focus on excellent execution against our strategic priorities.

Ryan: We are seeing significant traction in our technology and operational businesses as we manage expenses diligently, especially manifesting in profit growth in private banking.

Ryan: Our attention remains on increasing sales and pipeline activity and allocating capital and talent to new growth initiatives and emerging technologies.

Ryan: Accelerating activity in innovation is also a strategic priority and our asset management businesses as market trends and product types asset allocation and investment choices continue to be headwinds our broader value proposition and solution set is resonating and gaining momentum we need to translate this momentum into increasing new client acquisition and.

Ryan: Option we.

Ryan: We will continue to lean into growing segments in the intermediary and institutional markets.

Let me dive into our results for the quarter.

Revenues in the first quarter were $511 6 million.

Ryan: Up 9% from the first quarter of 2023.

Net sales events in the quarter totaled $21 3 million of which $16 6 million where net recurring.

Ryan: This was driven largely by a combination of technology and operational outsourcing sales of $24 $5 million.

Ryan: Offset by net negative activity in our AUM oriented businesses.

Ryan: And our advisor business, we generated over $9 million of revenue with the FBI insured FDIC insured component of the FBI integrated cash program, which we launched in December 2023.

Ryan: Net income for the quarter increased 23% over the same period to $131 4 million.

This is an important indication that our focus on sales implementing the backlog and driving more operational leverage across SDI is starting to show results. We have more to do on all fronts.

Ryan: In the quarter, we repurchased approximately 808000 shares of Sci stock at an average price of $69 32 per share for a total of $56 million of stock purchases.

Ryan: EPS was <unk> 99 for the first quarter up 25% over the 79% reported in the prior year period.

Ryan: We believe we are well positioned for the remainder of 2024 and into the future.

Combining a strong financial position and unmatched set of capabilities and an engaged client and employee base. We're focused on delivering comprehensive solutions for the markets, we serve and enhancing shareholder value.

With that let me turn to our business lines.

Ryan P. Hicke: Our partnership with LSB remains strong, and they had another quarter with positive relative performance, which Dennis will discuss. Finally, we've launched new initiatives focused on developing talent for the future and elevating our culture across the organization. One focus area is on professional sales development, offering programs that are designed to expand and increase our bench of sales talent and support our client-centric culture. Another initiative is the launch of an employee-led group, Seismic. Seismic's goal is to unite our innovation centers across the company, create opportunities for every employee to contribute to our growth, and to actualize new business ideas aligned with our organizational objectives.

Ryan: Our investment managers business had another exceptional quarter.

Ryan: On the growth front, we had new business and cross sales and the alternative and traditional markets, notably with the expansion of their product lineup, including CICS and the conversion of mutual funds to Etfs.

Ryan: This is a trend we are seeing increase in the traditional asset management segment.

We also implemented more than 60, new funds from a competitor onto our private equity platform for one of our larger clients.

Ryan: We continue to expand our reach in global markets. In particular, we are actively engaging with European based private asset managers and we have made investments to further strengthen our global operations in Dublin, London and Luxembourg.

Ryan: The expansion of our IMS services in the non U S markets is an important component to our future growth strategy.

Ryan: Most importantly, we hosted 80 of our clients for an annual event earlier this month and it makes me extremely proud to be part of Sci when I get the privilege to hear firsthand the experience our clients are having and the excitement they have to continue to grow with us it shows how powerful our people our culture.

Dennis J. McGonigle: Thanks, Ryan. As Ryan mentioned, DPS for the quarter was 99 cents per share. This compares to 79 cents during the first quarter of 2023 and 91 cents for the fourth quarter of 2023. Revenue for the quarter was $512 million, compared to $469 million in the first quarter of 2023 and $485 million in the fourth quarter. Total expenses for the quarter were $386 million, which compares to $367 million last year and $383 million in the fourth quarter.

Ryan: <unk> and our capabilities are in the market.

Ryan: Private banking continued to execute effectively the team carried last year's momentum through the first quarter with solid revenue growth and margin expansion compared to a year ago.

Ryan: While new contract signings were light in the quarter. This is simply a function of contract timing versus activity. The team already has a good start to Q2.

Ryan: We are seeing increased activity and success in the regional community Bank segment's UK private client investment managers and our professional services offering across all segments.

Ryan: This go to market strategy was a key part of <unk> re orientation of the client facing teams and it is being received positively in the market.

Ryan: The focus and deployment of additional investments in marketing R&D and talent over the past 18 months is paying off.

Moving to our global asset management businesses investment advisor saw positive net cash flows of approximately $915 million. This was largely driven by our strategy partner solutions in separately managed accounts along with growth from advisers, leveraging our technology and operational solutions offsetting these inflows.

Ryan: Those were outflows in our active mutual fund products as a result of markets shifting to lower cost products and passive solutions.

Ryan: During the quarter, we brought on 61, New advisors and we also saw three of our existing <unk> crossed the $1 billion threshold on our platform.

Ryan: Demonstrating our value and helping our advisors scale and grow their businesses.

Ryan: In the institutional Investor segment, we remain focused on growing this business by aligning our cost structure and our talent to drive sales and margin expansion.

Ryan: While our results continue to reflect industry challenges our teams did a really nice job managing expenses and securing a number of new wins with new and existing clients.

Ryan: Of note, we completed the transition of our first <unk> client with a sizable private foundation into our OCI O program.

Ryan: We also re contracted three clients in the quarter and finally, we have made adjustments to the cost structure and focus of Sci notice to improve overall business results.

Ryan: Within our investments in new business segment, we announced our strategic investment in Titbit, a leading platform accelerating the adoption of artificial intelligence in wealth management.

Ryan: With this partnership we expect to more rapidly explore develop and deliver new offerings that drive growth for our clients and the broader industry.

Ryan: We also had new wins in the family office services and private wealth businesses our.

Ryan: Our partnership with LSP remains strong and they had another quarter with positive relative performance, which Dennis will discuss.

Ryan: Finally, we've launched new initiatives focused on developing talent for the future and elevating our culture across the organization.

Ryan: One focus area is on professional sales development offering programs that are designed to expand and increase our bench of sales talent and support our client centric culture.

Ryan: Another initiative is the launch of an employee led group seismic.

Ryan: Seismic <unk> goal is to unite our innovation centers across the company create opportunities for every employee to contribute to our growth and to actualize, new business ideas aligned with our organizational objectives.

Ryan: With that I'd like to thank all my colleagues across Sci 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 Thanks, Ryan as.

As Ryan mentioned EPS for the quarter was <unk> 99 per share. This compares to <unk> 79 during the first quarter of 2023, and <unk> 91 for the fourth quarter of 2023 revenue for the quarter was $512 million compared to $469 million in the first quarter of 2003 and 400.

Ryan: $85 million in the fourth quarter.

Total expenses for the quarter were $386 million, which compares to 300 $767 million last year and $383 million in the fourth quarter.

Ryan: Included in the first quarter expenses were approximately $6 2 million of severance expense as a result of workforce changes principally in our soi novus and phenomenal units.

Ryan: The EPS impact is approximately three to four.

On the sales front, and our technology and investment processing businesses of private banking and investment managers net sales events totaled $24 5 million and are expected to generate $27 million in recurring revenue.

Dennis J. McGonigle: On the investment managers front, net sales for the quarter were $21.6 million, $20.4 million of which is recurring. During the quarter, we recontacted four clients totaling $5.7 million in annual recurring revenue. Revenue for the quarter was up compared to the fourth quarter, reflecting the impact of client insulation. The expenses were down slightly, however, the fourth quarter included a $5.3 million item for an asset write-down.

Ryan: In our asset management related businesses net sales were approximately negative $5 7 million.

Ryan: Primarily due to asset movement from our mutual fund products into other investment programs as well as net losses in our institutional business.

Ryan: As Ryan mentioned cash flows and our advisor business were a positive 900 plus million we also.

Ryan: <unk> sold $2 5 million of revenue in our new business segment <unk>.

Ryan: Total net sales were $21 3 million of which $16 $6 million was recurrent.

Ryan: Private banking sales were $2 9 million most of which is one time during the quarter, we had one client wins and one loss both smaller in size that essentially offset each other.

Dennis J. McGonigle: Our backlog of sold but expected to install in the next 18 months recurring revenue is $28.9 million, which includes the $2.8 million moved from private banking. As Ryan mentioned, for investment advisors, net cash flow onto our platform or up, including increased flows into our newer strategic partner and platform only programs. This was offset by negative flows from our mutual fund product. One key item of note is the $9.6 million of revenue generated in the quarter from the FDIC Insured Deposit Program launched in December. As a reminder, 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.

Ryan: The three clients re contracted during the quarter represented $4 $8 million in annual recurring revenue.

Ryan: Despite first quarter closes sales activity is strong.

Ryan: The limited client signings as Ryan referenced are more of an issue of timing versus activity.

Ryan: During the quarter, we stayed on schedule with client implementations and conversions, we installed $1 4 billion of revenue for our fourth quarter backlog. Our current backlog is expected to be installed revenue in the next 18 months is $18 5 million.

Ryan: Also note that as part of the segment change, we announced yesterday, we moved $2 8 million from the banking backlog to the IMS backlog.

Ryan: This was a piece of business related to alternative asset processing that while the client as a bank is more aligned with IMS services or delivery.

Ryan: Asset management revenues in private banking were up from fourth quarter flows were essentially flat, however, higher asset levels entering the quarter led to higher average AUM, which helped the revenue growth.

Ryan: Expenses at private banking were up slightly from the fourth quarter of 2023, reflecting overall business growth note that expenses year over year were flat.

Ryan: On the investment managers front net sales for the quarter were $21 6 million $20 4 billion of which is recurrent.

Dennis J. McGonigle: In the Institutional Investors segment, net sales events for the quarter were negative $4.6 million, reflecting positive client signings offset by losses and repricing in client retention activity. Revenues for the quarter were up due to a positive market, and expenses were also up slightly, reflecting personnel-related costs. In the investments and new business segment, revenues and expenses were also up compared to the fourth quarter with modest profit improvement. LSV produced $31.6 million in profit during the quarter. This compares to $35.4 million during the fourth quarter. Revenues for LSV were $107.3 million compared to $117.1 million in the fourth quarter.

Ryan: During the quarter, we re contracted for clients totaling $5 $7 million in annual recurring revenue.

Ryan: Revenue for the quarter was up compared to fourth quarter, reflecting the impact of client installations.

Ryan: Expenses were down slightly however, fourth quarter included a $5 $3 billion item or an asset write down.

Ryan: Our backlog of sold but expected to install in the next 18 months recurring revenue is $28 9 million, which includes the $2 8 million move from private banking.

Ryan: As Ryan mentioned for investment advisers net cash flow onto our platform were up.

Ryan: Including increased flows into our newer strategies partner and platform rolling programs.

Ryan: This was offset by negative flows from our mutual fund products.

Ryan: One key item of note is the $9 6 million of revenue generated in the quarter from the FDIC insured deposit program launched in December.

Ryan: As a reminder, this takes the cash allocation in our model portfolios generally used for operational purposes, like paying fees and suites those balances into an FDIC insured deposit account.

Dennis J. McGonigle: As I am sure you all noted with our AK filing yesterday, we have made a few modest adjustments to our segment reporting. All numbers presented today reflect those changes. You also know this is the last of my roughly 90 plus earnings calls. I would like to thank all the investment and financial professionals present and past. This role has given me the opportunity to meet and engage with them.

Ryan: At quarter end, there were approximately $897 million in assets in this program.

Ryan: I'll also note that we recognized approximately $1 $5 billion in revenue in the fourth quarter.

Ryan: Revenues for the quarter were up for reasons mentioned expenses were flat for the fourth quarter, reflecting overall good expense management.

Ryan: And the institutional investors segment net sales events for the quarter were negative $4 6 million, reflecting positive client signings offset by losses in repricing and client retention activities.

Ryan: Revenues for the quarter were up due to positive markets.

Ryan: Expenses were also up slightly reflecting personnel related costs.

Ryan: And the investments in new business segment revenues and expenses were also up compared to fourth quarter with modest profit improvement.

Ryan: LLC produced $31 6 million of profit during the quarter. This compares to $35 4 million during the fourth quarter revenues for <unk> were $107 3 million compared to $117 1 million in the fourth quarter.

Dennis J. McGonigle: If you would like to ask a question today, please press 1 then. You may remove yourself from the queue at any time by... If you are using a speakerphone, please pick up the handset before pressing the button.

Operator: Once again, to ask a question, please press 1- And our first question will go to... Owen Lau with Oppenheimer. Alright, thank you for taking my question. So Dennis, as you wish, I'm going to give you a fastball.

Ryan: First quarter revenues included $6 million of performance fees.

Ryan: As a reminder, <unk> record of performance fees of $19 8 million during the fourth quarter.

Unknown Speaker: Oh, I get that. Could you please talk about the traction for the cash program going into the second quarter? I know you generated a fee of $9.6 million in the first quarter. You gave us, I think, the quarter-end number, $8.97 million, but how much of an average is it, Unknown Executive, Alexander Whitelam, Owen Lau, Alex Whitelam, SEI Investments Co. Thanks, Owen. That's pretty much a fastball right down the middle.

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

Ryan: Our tax rate for the quarter was 22, 9%.

Speaker Change: As I'm sure you all noted with our 8-K filing yesterday, we have made a few modest adjustments to our segment reporting.

Speaker Change: All numbers presented today reflect those changes.

Speaker Change: As you all know also know this is the last of by roughly 90 plus earnings calls I would like to thank all of the investment and financial professionals present in the past. This role has given me the opportunity to meet and engage with.

Speaker Change: You all for the professional manner in which we engage and the insights and questions that you've brought to me that broadened my in our thinking.

Dennis J. McGonigle: I really appreciate you doing that. You're too kind. I guess when we traveled together this quarter, that helped. Average average assets in that program for the quarter were just under $850 million. So, you know, the $9.6 million was derived from that average balance, and we ended the quarter with higher levels. This is our first full quarter of experience with this program full quarter. Paul and the team are continuing the work with our advisor community and getting a better feel for how flows are going to occur into this program.

Speaker Change: <unk> is in great hands, and I am sure your interactions and working relationship with Sean with Sean will serve him and the company well.

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

Last chance to Stump me thank.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Thank you I'd like to ask a question today. Please press one zero you may remove yourself from queue at any time by pressing one zero again.

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

Speaker Change: Once again to ask a question please press one and zero.

Speaker Change: And our first question will go to Owen Lau with Oppenheimer.

Owen Lau: Alright. Thank you for taking my question, so Dennis as you wish I am going to Q.

Owen Lau: U a fastball.

Owen Lau: Okay.

Owen Lau: Could you. Please talk about the traction for the cash program going into the second quarter. I know you January ex fee of $9 $6 million in the first quarter.

Unknown Speaker: We're clearly on track for the 25 million we talked about back in January. [inaudible] You can get back to the historical 30% margin level. I mean, it may or may not be a straight line up, but are there any potential investments that we should be aware of before it reaches your goal? Thanks a lot. It's probably best that Ryan answers this question because I would be, you know, I'm not going to be here. I know what my aspirations are now. They've changed quite a bit. It's treated differently,

Owen Lau: You gave us I think the quarter end number $97 million.

How much average cash did you get in the first quarter and in April so far and how we should model out of revenue going forward.

Dennis J. McGonigle: But I think we've always said that this business we expect, you know, the type of business it is how we operate the business scale and opportunities within the business that this you should be 30% margin business that will get to both top line growth and you know, efficiency and delivery that gets that top line growth or a big chunk of it to the bottom line. And Sanjay's Really done a great job over the past, 18-20 months, in reorienting the business, both in terms of its market-facing activities and client engagement and the level of client engagement and prospect engagement, but also in working with not just within his own unit, but across other units within SEI that contribute to this the offering of private bank to bring costs down or to bring them to a level that we feel really good about the scale we'll get going forward.

Speaker Change: Thanks Alan.

Speaker Change: That is pretty much a fast fall right down the middle.

Speaker Change: Really appreciate you appreciate doing that you are to kind of I guess, when we traveled together this quarter.

Speaker Change: That helps.

Speaker Change: Average of average assets in that program for the quarter were just under $850 million.

Speaker Change: So the $9 6 million was derived from that average balance.

Speaker Change: Okay.

Speaker Change: But we ended the quarter with higher levels.

And so this is our first quarter of experience with this program full quarter, Paul and the team are continuing to work.

Speaker Change: With our adviser community.

Speaker Change: And getting a better feel for how flows are going to occur.

Speaker Change: Under this program.

Speaker Change: As the year progresses, I think we'll get a better feel for kind of what's kind of a consistent rate of cash in this program.

Speaker Change: Which can be affected by how much how much rebalancing occurs when fees are paid when this cash is used to meet the operational needs of customer accounts, but so far so good.

Speaker Change: Clearly on track for the.

Speaker Change: $25 million, we talked about back in January.

Speaker Change: Got it that's helpful and then on private banking margin continues to go up.

Dennis J. McGonigle: So we're still looking at that. You know, I'd say, you know, the three plus year timeframe, you know, three to five years, is a good target, but a lot of it depends on continuing to execute the way the team's been executing.

Speaker Change: Is there any exploration exploration will go on when you can get back to historical 30% margin level I mean, it may or may not be a strict line any.

Ryan P. Hicke: Right. Right. Right. No, I would echo that.

Speaker Change: Any potential investments that we should be aware of.

Speaker Change: Richard Hugo Thanks, a lot.

Richard Hugo: It's probably best Orion answer to this question because I would be im not.

Speaker Change: I'm not going to be here.

Orion: I don't know my aspirations are.

Orion: They have changed quite a bit.

Orion: If you treat it differently, but I think we've always said that this business. We expect the type of business. It is how we operate the business scale.

Orion: Opportunities within the business.

Orion: Should be 30% margin business that will get too both through topline growth.

Orion: And efficiency of delivery that gets that topline growth or a big chunk of it to the Bottomline and Sanjay has really done a great job over the past.

Orion: 18 20 months.

And re orienting the business both in terms of its market facing activities and client engagement and the level of client engagement and prospect engagement, but also in working with not just with his own unit put across other units within Sci that contribute to.

Ryan P. Hicke: So, I mean, I think Dennis's answer is spot on. But, I think most importantly, Sanjay and the team just have this as a really strong blueprint and plan that they're executing against moving forward. Got it. And thanks a lot for your insight, Dan. Pressure. Thank you, Owen. Might as well.

Orion: The offering of private banking.

Orion: To bring costs down or to bring them to a level that we feel really good about the scale will get going forward. So we're still looking at that.

Operator: Next, we'll hear from Jeff. William Blair, I thank you, Dennis, you know, wish you the best in your retirement. Thank you. Question on the Investment Advisors Business. The margin jumped up 45%. Expenses were pretty flat from last quarter. Is that improvement in the margin mainly from the addition of spread income, or are there some expense initiatives underway? I'm just trying to think about how we should think about that 45% margin

I'd say three plus.

Orion: Year timeframe three to five years.

Orion: <unk> is a good target.

Orion: But a lot of it depends on continuing to execute the way the team has been executing.

Orion: Got it Brian do you have any.

Orion: No I'm, sorry, Bryan Glenn.

Bryan Glenn: Well I would echo that I think.

Bryan Glenn: What's been consistent Alan I mean, I think this is the fifth or sixth quarter that you're going to see consistent improvement and I think we said hopefully a very clear message externally and internally when Sanjay took over responsibility that we were going to get this business back to historical margins, we were going to be extremely disciplined and focus on how we do that but I think the thing that.

Bryan Glenn: Thats encouraging for us as a leadership team is really seeing how the activity and focus on the revenue side and the sales side is starting to pay off with leading indicators that we track such as activity in pipeline engagement. So I mean, I think Dennis is answer is spot on but I think most importantly, sanjay and the team just had.

Operator: Well, we'll let Paul jump in here, but clearly, the revenue pop and the high margin on that revenue stream helped in the first quarter, certainly compared to the fourth quarter and last year. But there also is a very concerted effort on, you know, cost containment. And I would use terms like greater efficiency and delivery, you know, higher quality and delivery, higher scale, better use. We always invest in our technology and operational areas to help drive scale. So that's also a bit of help. I don't know, Paul, do you want to?

Bryan Glenn: This is a really strong blueprint and plan that they're executing against moving forward.

Got it and thanks, a lot for the insight Dennis it might pressure youre working with you.

Speaker Change: Thank you own mine as well.

Speaker Change: And next we'll hear from Jeff Schmidt with William Blair. Please go ahead.

Jeffrey Paul Schmitt: Hi, Thank you Dennis wish you the best in your retirement.

Jeffrey Paul Schmitt: Thanks, John.

Jeffrey Paul Schmitt: Question on the <unk>.

Jeffrey Paul Schmitt: Investment advisors business the margin jumped up 45% expenses were pretty flat from last quarter.

Jeffrey Paul Schmitt: Is that improvement in the margin mainly from the addition of spread income or are there some expense initiatives underway I'm just trying to think how should we think about that 45% margin going forward.

Speaker Change: I mean, I will let Paul jump in here, but.

Paul Francis Klauder: Clearly the revenue and the high margin.

Paul Francis Klauder: On that revenue stream helped.

Paul Francis Klauder: In the first quarter, certainly compared to the fourth quarter and in.

Paul Francis Klauder: And last year.

Paul Francis Klauder: But there also is a very concerted effort on.

Paul Francis Klauder: Cost containment.

Paul Francis Klauder: And I would I use I view towards more like.

Paul Francis Klauder: Greater efficiency of delivery.

Paul Francis Klauder: Higher quality and delivery higher scale better.

Paul Francis Klauder: We always invest in our technology and operational areas to help drive scale. So that's also been a help on our Paul do you want to yes, I would concur net interest income and the profitability of the FDIC program. Obviously is the big contributor the markets are a contributor.

Paul Francis Klauder: Expense management, we continue to be disciplined about that and just from a sales and marketing perspective, we are looking for more larger advisors. The convert I would say we call them chunk plays.

Paul Francis Klauder: Advisors over $250 million, we did see three of those this quarter and we continue to have our sales emphasis on those larger advisors why we still work our bread and butter, which is our advisors affiliated with broker dealers. So overall very positive quarter for the segment.

Okay, Great and then a number of your biggest competitors in that segment are starting to implement.

Price increases in their businesses does that.

Paul Francis Klauder: Sort of opened the door for you to do the same or do you see it more as an opportunity.

Paul Francis Klauder: Al.

al: Yes on the price increase side I mean, we always look at the competitiveness of all of our offerings. The mutual funds. We know have had some price decreases over time or just.

al: More investors kind of opting out for other implementation, whether it's etfs separate accounts.

al: UMH programs. So we're always looking at the competitiveness, we don't see right now might increase that we can just build in an absolute price relative to our competitive set.

Unknown Speaker: Yeah, I'll just add that we're operating under a longer-term view that there's going to continue to be price compression, and that the pricing environment in asset management, in particular, is that that pressure is not going to, isn't changing. It's only going to continue, which is why we're so focused on technology build, operational efficiency, and scale client delivery, broadening out our market segments for growth. So it's You know, I don't know that we've seen price increases in a competitive set. It would possibly be a good thing in certain areas if that occurred.

al: But we will continue to evaluate that but more importantly is just driving growth through getting more and more assets under management, that's where we really think theres going to be escalation and the profitability of the segment.

al: Okay.

Speaker Change: Okay, great. Thank you.

Speaker Change: Yes.

Speaker Change: The desert.

Speaker Change: We're operating under under a longer term view that there is going to continue to be price compression.

Speaker Change: And that the pricing environment and asset management in particular.

Unknown Speaker: But we're operating under the assumption that this is going to be a more price competitive environment and making sure that from a delivery standpoint, we're as effective and efficient as scalable. And that's something our clients really appreciate, both within the advisor channel and the banking channel. Many of Sanjay's clients, every one of them is dealing with Market Issues. Okay. Very helpful. As a reminder, if you'd like to ask a question, you can do so by pressing. Next, we'll hear from Ryan Kenny with Morgan. Hey, good afternoon.

Speaker Change: Yes.

I know that we've seen.

Speaker Change: Price increases.

Speaker Change: And the competitive set.

Speaker Change: Possibly be a good thing in certain areas of that occurred but we're operating under that this is going to be a more price competitive environment.

Speaker Change: And making sure that from a delivery standpoint.

Speaker Change: Active and as efficient as scalable as possible and Thats something that our clients really appreciate both within the advisor channel and the and.

Speaker Change: In the banking channel with many of Sanjay clients every one of them is dealing with the same.

Speaker Change: Market this year.

Operator: Thanks for taking my question. And Dennis, congratulations on 90 plus a quarter. I survived, Ryan. I'm a survivor.

Speaker Change: Okay.

Speaker Change: Helpful. Thank you.

Speaker Change: As a reminder, if you'd like to ask a question you can do so by pressing one zero.

Ryan P. Hicke: Yeah, you've been very helpful. So, thank you so much for everything throughout the year. I have a question on net new sales. So when I look at the three bullets, you know, you have 24 and a half million from private banks and the IMF. That's pretty strong. You have two and a half million from the newer initiatives, and then there's the drag of negative 5.7 from the asset management-related businesses. And when you look over the last few quarters, that drag has persisted for a while.

Speaker Change: Next we'll hear from Brian <unk> with Morgan Stanley. Please go ahead.

Ryan Michael Kenny: Hey, good afternoon. Thanks for taking my question and Dennis Congratulations on 90 plus quarters.

Ryan Michael Kenny: I survived Brian.

Survivor.

Speaker Change: You've been very helpful. So thank you so much for everything throughout the years.

Speaker Change: I have a question on that new sales so when I look at the three bullets.

Speaker Change: $4 5 million from <unk>.

Speaker Change: Private banks and IMS, it's pretty strong you have $2 5 million from the newer initiatives and then theres the drag of negative $5 seven from the asset management related businesses. So when you look over the last few quarters that drag has persist.

Speaker Change: Persisted for a while so how should investors think about how much of a drag Sarah is going forward. If you could give an update on where your current skewed to defined benefit plans.

Speaker Change: Stands and how much headwind should we expect going forward on that thanks.

Ryan P. Hicke: So let's start with the first of the three. So you look at IMS; Phil's in the room as well. That's another exceptional quarter of sales, as I mentioned. When you think about the breadth of our capability set there, the overall market trends around the appetite for and the embrace of outsourcing, and our ability to continue to invest in and deliver differentiation through technology and operational solutions and our people, we feel good on the traditional side, the alternative side, and emerging on the global side to continue to drive these new sales numbers. We've already touched on what Sanjay and the team are doing. So, you know, first bullet, we feel good. We look at the total addressable markets.

Speaker Change: Yes, Brian It's Ryan Hope, you're doing well I'll start and then changes in the minimum or Paul can add so let's start with the first of the three so you look at IMS builds in the room as well.

Ryan: The alternative side than the emerging in the global side to continue to drive net new sales numbers, we already touched on what Sanjay and the team are doing so first of all what we feel good we look at the total addressable markets will continue to be nimble, we will allocate resources, where needed and will continue to expand our footprint in areas there.

Ryan P. Hicke: We'll continue to be nimble. We'll allocate resources where needed, and we'll continue to expand our footprint in areas there. We made a concerted effort, as you know, last summer to bring in an executive from the outside and look at our new business initiatives and investments in new business in different ways. I talked about a little bit of that earlier with what we're doing with Tiffin and Seismic.

Ryan: We made a concerted effort as you know last summer to bring in an executive from the outside and look at our new business initiatives and investments in new business in different ways.

I talked about a little bit of that earlier with what we're doing with tiffin in seismic, but when you see family office services and sphere and private wealth management, we know when we think about the company five years to seven years out we won additional growth engines beyond what we have today and we're starting to really lay some railroad tracks to make some investments there.

Ryan P. Hicke: But when you see family office services and Sphere and private wealth management, we know when we think about the company five to seven years out, we want additional growth engines beyond what we have today. And we're starting to really lay some railroad tracks and make some investments there. I feel good about that. And then when you get to the AUM-based businesses, I honestly think it's a tale of two cities right now. You just have an overall market and macro shift in terms of product types, whether that is them moving from mutual funds to ETFs or lower-cost products.

Ryan: About that and then when you get to the AUM base businesses I honestly think it's a tale of two cities right. Now you just have an overall market and macro shift in terms of product types, whether that as they move from mutual funds to etfs or lower cost products and I think a continued move overall, especially in developed markets from active portfolio.

Ryan P. Hicke: And I think a continued move overall, especially in developed markets, from active portfolio management to passive portfolio management, driven partially by price. So, in some ways, we're a victim of the success that we've had over many years. But I believe that we have been extremely thoughtful and aggressive in figuring out how we continue to invest not just in differentiated investment management solutions but, as Dennis mentioned, technology and operational platforms that will really allow us to deliver value to a broader set of intermediary institutional clients in the future. So, a long-winded answer to say, how should you think about it?

Ryan: <unk> capacity portfolio management, driven partially by price.

Ryan: In some ways, we're a victim of success that we've had over many years, but I believe that we have been extremely thoughtful and aggressive in figuring out how do we continue to invest not just in differentiated investment management solutions, but as Dennis mentioned technology and operational platforms that will really allow.

Ryan: To us to deliver value to a broader set of intermediate Eric intermediary and institutional clients in the future. So really long winded answer to say how should you think about it I think it will continue to be a little bit choppy, but we're looking really at how are we increasing client adoption Paul's point around larger conversions.

Ryan: Expanding into different segment.

Ryan: And really continuing to rethink what our asset management offering is both proprietary and third party to drive value. So it's there youre on it we're on it.

Jay Cipriano: We're on it. And Jay, if you want to provide a little commentary, maybe underneath institutional around DB and different segments there, and I can always come back, Ryan, and unpack anything I said.

Ryan: And Jay if you want to provide a little commentary, maybe underneath institutional around DB and different segments, there and I can always come back Ryan and unpack anything I said.

Jay Cipriano: Sure. Thanks, Ryan. Certainly, plans, corporate-defined benefit plans, making the decision to annuitize, we've touched on this in the past. It continues to be a reality in the corporate DB space, certainly in the rate environment that we've experienced over the last couple of years. It's encouraging to see a few reports out there that the pace of annuitization has slowed over the last six months, and also, talking to some of our clients who may experience a funding status over 100%. Some are utilizing that cash to fund other opportunities instead of moving towards annuitization.

Jay: Sure. Thanks Ryan.

Jay: Certainly planned corporate defined benefit plans, making decision to a newer types. We've touched on this in the past it continues to be a reality in the corporate TV space.

Certainly in the rate environment that we've experienced over the last couple of years, it's encouraging to see a few reports out there that the pace of annuities nation has slowed over the last six months and also talking to some of our clients who may experience a funding status over 100%.

Jay: Some are utilizing that cash to fund other opportunities instead of moving towards the new <unk>.

Jay Cipriano: What I'm most encouraged about, though, is if I look across the new business activity that we did close in the first quarter of this year, the new names we brought in span U.S. corporate-defined benefit, U.S. endowments, U.K. master trust business, and Novus business. So we continue to see activity across all of those sectors, and the new names, as we work through some of those plan annuitizations that we Ryan, if I could just add one more thing.

Jay: I'm most encouraged about though is as I look across the new business activity that we did close in the first quarter of this year. The new names, we brought in Spain U S corporate defined benefit U S. Endowments UK Master Trust business no. This business. So we continue to see activity across all those sectors.

Jay: And the new names as we work through some of those plan annuity innovations that we've talked about now for a bit.

Ryan Michael Kenny: And Brian Thank.

Ryan Michael Kenny: Thank you.

Ryan Michael Kenny: Hey, Brian This is Paul I'll, just add one other thing with regard to the FDIC program I know you noticed but I just wanted to call. It out we did not recognize that as the sales of that so that's very strong revenue and profitability that the unit and the firm is getting but that is not a sales event. So recognize that lift that's not in there.

Jay Cipriano: With regard to the FDIC program, I know you know this, but I just wanted to call it out. We did not recognize that as a sales event. That's very strong revenue and profitability that the unit and the firm are getting, but that is not a sales event. Recognize that lift that's not in there, but the decrease associated with moving out of mutual funds to ETFs and other passive implements is in there.

Ryan Michael Kenny: But the lift or the decrease associated with moving out of mutual funds to Etfs and other passive implements are in there.

Operator: Got it. Thank you. And that was our final question. I would now like to turn the call over to you. Thank you.

Ryan Michael Kenny: Got it thank you.

Ryan Michael Kenny: Okay.

Ryan Michael Kenny: And that was our final question I would now like to turn the call over to CEO, Brian Hickey.

Ryan P. Hicke: As I mentioned, we start the quarter with strong financial results and are poised to drive future success. We also announced in Q1 the hire of Sean Denham as Dennis' successor as CFO for SEI. Sean is a terrific addition to the SEI executive team and brings a wealth of experience and talent to drive our future growth. But I would like to close by thanking and acknowledging my friend, Dennis McGonigle. For almost 40 years, Dennis has set the standard for leadership, culture, stewardship, and care, and that care extended to shareholders, clients, employees, and their families.

Ryan P. Hicke: Thank you as I mentioned, we started the quarter with strong financial results and are poised to drive future success. We also announced in Q1, the hire of Sean denim as Dennis his successor as CFO for Sci Sean is a terrific addition to the executive team and brings a wealth of experience and talent to drive our future growth.

Ryan P. Hicke: But I would like to close by thanking and acknowledging my friend Dennis Mcgonigle for almost 40 years status has set the standard for leadership culture stewardship, and care and that care extended to shareholders clients employees and our families.

Ryan P. Hicke: I have the deepest amount of personal and professional respect and admiration for Dennis, and I'm extremely proud to have worked with him for 26 years, learned from him for 26 years, and laughed with him for 26 years. Many more times ahead for us in the future, but on behalf of all of us at SEI, I want to say thank you to Dennis and thank you to everybody for joining today's call. That does conclude our conference for today. Thank you for your participation. You may now go ahead and do it.

Ryan P. Hicke: I have the deepest amount of personal and professional respect and admiration for Dennis and I am extremely proud to have worked with him for 26 years learn from him for 26 years and laughed with him for 26 years. Many more times ahead for us in the future, but on behalf of all of US at Sci I want to say, thank you to Dennis.

And thank you to everybody for joining today's call.

Speaker Change: That does conclude our conference for today. Thank you for your participation you may now disconnect.

Q1 2024 SEI Investments Co Earnings Call

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