SEI Investments Company (SEIC) Q1 2013 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and thank you for standing by, and welcome to the SEI Investments First Quarter 2013 Earnings Conference Call. [Operator Instructions] And as a reminder, this call is being recorded today, April 24, 2013. I would now like to turn the call over to Al West, Chairman and Chief Executive Officer. Please go ahead, sir.

Welcome, everybody, and good afternoon. All of our segment leaders are on the call, as well as Dennis McGonigle, SEI's CFO; and Kathy Heilig, SEI's Controller. I'll start by recapping the first quarter of 2013. I'll then turn it over to Dennis to cover LSV and the Investment in New Business segment. After that, each of the business segment leaders will comment on the results of their segments. And then finally, Kathy will provide you with some important company-wide statistics. Now as usual, we'll field questions at the end of each report. So let me start with the first quarter 2013. First quarter earnings increased by 44% from a year ago. Diluted earnings per share for the first quarter of $0.41 represents a 46% increase from the $0.28 reported for the first quarter of 2012. Now our earnings during the first quarter were positively impacted by the sale of a partially owned subsidiary, SEI Asset Korea. Now due to the sale, we booked a gain of $22.1 million or approximately $0.08 per share. We also reported a 14% increase in revenue during the first quarter. Now during the first quarter, in addition, SEI's assets under management grew before the effects of the sale of SEI Asset Korea by $5.6 billion during the quarter due to market appreciation and new fundings. And the sale of SEI Asset Korea caused us to deduct $7 billion of securities SEI Asset Korea manages from SEI's end of quarter assets under management. Now on top of that, LSV's assets under management at the end of the quarter grew by $5.4 billion over their assets under management at end of year. Now finally, during the first quarter of 2013, we repurchased 1.27 million shares of SEI stock at an average price of $0.285 per share. That translates to $36 million of stock repurchased during the quarter. Now turning to sales, our net new recurring revenue sales remain strong. We generated $19.6 million of net new sales events, of which $16.8 million will be recurring revenues. Now each of the segment heads will address their sales activities. And as you know, we are continuing our investment in GWP and its operational infrastructure. So during the first quarter, we capitalized approximately $6 million of the Global Wealth Platform Development and amortized approximately $8.2 million of previously capitalized development. Now our development agenda for GWP is to further automate our operations and deliver U.S. functionality that's important to the advisor and banking markets in their entry to U.S. markets. Now turning now to our business segments. In the banking segment, we are increasingly encouraged with the sales activity and intermediate-term revenue potential associated with the rollout of GWP in the U.S. At the same time, we're working hard to manage the costs of absorbing new business, building scale and keeping pace with the challenges of a rapidly changing U.K. and U.S. regulatory environment. Now our GWP sales and marketing efforts are concentrating on launching GWP in the U.S., as well as shifting our sales focus in the U.K. to larger prospects. Now in the advisor segment, we have made solid progress in improving our asset gathering, as well as in preparing for the rollout of GWP to the U.S. markets. Both are important to accelerate our growth. In the Institutional segment, the market adoption of our differentiated solution is reflected in our strong sales results globally. Finally, our Investment Management services segment had a strong start to the year while managing the good problem of having a lot of new business to absorb. Now behind all of this, I'm encouraged by the feedback I receive from clients and prospects across our company's -- all of our company's target markets. And our sales activities and events in all units confirm this. We believe our investments in infrastructure and new service offerings coupled with our financial strength position us well for the long-term growth. Now this concludes my remarks. So I'll now ask Dennis to give you an update on LSV and the Investment in New Business segment. After that, I'll turn it over to the other business segments. Dennis?

Thanks, Al. Good afternoon, everyone. I will cover the first quarter results for the Investments in New Business segment and discuss the results of LSV Asset Management and address an additional item. During the first quarter of 2013, the Investments in New Business segment continued its focus on the ultra-high-net-worth investor segment, the integration of our capabilities acquired in the NorthStar acquisition and the further development of new web-based investment services and use of mobile technologies. During the quarter, the Investments in New Business segment incurred a loss of just under $2.8 million, which compares to a $3 million loss during the fourth quarter of 2012 and is flat to the first quarter of 2012. There has been no material change in this segment and we expect losses in this segment to continue in this range during the remainder of 2013. Regarding LSV, our earnings from LSV represent our approximately 40% ownership interest during the first quarter. LSV contributed approximately $27.8 million in income to SEI during the quarter. This compares to approximately $25 million in the fourth quarter of 2012 and $27.2 million during first quarter of 2012. The increase in income is due to an increase in revenue from growth in asset balances during the quarter. Asset balances grew by approximately $5.4 billion during the quarter due to increased market valuation, offset by net negative cash flows. In addition to the business update, I wanted to review one event that occurred during the quarter. On March 28, 2013, SEI completed the previously announced sale of SEI Asset Korea, a Korean manager -- asset manager of which we owned approximately 56.1%. This sale, as Al mentioned, resulted in a gain of $22.1 million recorded in the first quarter. Our proceeds from this sale were $21.6 million, net of $2.5 million in transaction cost at closing. And we will receive -- an additional $32.7 million was placed in an escrow account that will be paid to SEI during the second quarter of 2013 upon final delivery of all remaining outstanding shares of SEI Asset Korea owned by SEI. There is an additional $11.2 million payable to SEI as a contingent purchase price with respect to 3 1-year periods ending December 31, 2013, '14 and '15, depending upon whether SEI Asset Korea achieves specified revenue measures during such periods. As I mentioned, the company's ownership interest in SEI Asset Korea was 56.1%. As referenced, the company consolidated the assets, liabilities and operations of SEI Asset Korea in its consolidated financial statements. As of December 31, 2012, SEI Asset Korea had total corporate assets of $54.8 million, of which $48.3 million was included in cash and cash equivalents on the consolidated balance sheet. Before I end and take questions, I did want to reference that LSV revenue during the quarter was $80.9 million. I'll now take any questions.

[Operator Instructions] And our first question does come from the line of Jeff Hopson with Stifel. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: So Dennis, can you give us anything to help us in regard to where the Korea revenues will come out of and associated expense? It looked like Private Banking lost assets, so I assume it's there. But anything to help us with the income statement effect?

Sure. I mean, Asset Korea was part of the Private Banking segment. Their revenues were approximately $3 million and the net income -- or the income in the first quarter was approximately $450,000. So their income quarter-to-quarter ranged between probably $350,000 and $450,000. And so their [indiscernible] revenues being around $2.8 million to $3 million. And Joe will reference that in his comments, also. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. And one more question on the shares and share repurchase plan. So shares increased this quarter despite the ongoing repurchase. I assume that's mostly or all driven by dilution from the higher stock price. Is that true?

Correct. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: Okay. Any potential for you to accelerate share repurchase to offset that dilution?

I guess I like the use of your word "potential". So yes, there is a potential. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And can you give us LSV, the outflow number?

Their net cash flows were a little over $1 billion. They had $500 million in new client sales and then they had some lost assets as a result of rebalancing. And they lost, in particular, one client, a fairly sizable client. But it was more on the lower price side.

Our next question does come from the line of Chris Donat with Sandler O'Neill. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: Just one other question on Korea. Does this -- as far as your income statement goes, does this mean that your net income attributable to the noncontrolling interest, does that line effectively go away now that the Korea business is sold?

Yes.

And our next question does come from the line of Chris -- Tom McCrohan with Janney.

Dennis, again, a Korea question. Was there any net income contribution from Korea in this quarter's results? Or was it discontinued operations?

It was in the results this quarter. And that was the -- it was a little over $400,000.

So from a business side, it was doing kind of a little under $2 million in annualized...

It was -- they're doing about $2.8 million to $3 million a quarter in revenue. So about $12 million a year.

$12 million a year. And the total cash consideration? You went through like 3 components. If you exclude the $11 million contingent, what's the total cash consideration that SEI gets for its ownership interest?

In the end, it'll be -- this year, it'll approximate about $54 million.

And how much of...

And part of that -- a chunk of that cash, just to make sure you're clear, is part of the cash that was sitting on the balance sheet of SEI Asset Korea at the time of the -- that we closed. So part of it is the sale price, plus the cash on the balance sheet, a portion of that cash.

How much -- I know the cash balance more than [indiscernible] $50 [ph] million this quarter. How much is already on your balance sheet and how much is kind of coming next quarter?

There's a little over $21 million on the balance sheet, and there's a receivable on the balance sheet that we should receive this quarter around $33 million.

Got it. And just a last question. LSV, peak assets of LSV were kind of $70-something million back in the second quarter of 2007. Is there any reason why the assets of LSV cannot, some time in the future, reach those levels, those peak levels once again? Is there any constraint that would prevent that from happening?

No, particularly if the flows are into their larger cap type products. Those are -- even back in 2007 were uncapped. Some of their smaller cap products they do close and some of them are closed to new money from new clients, not necessarily from existing clients. But there's no reason why they couldn't continue to progress north in their assets under management balances.

And at this time, there are no further questions. Please continue.

Thank you, Dennis. I'm going to turn it over to Joe Ujobai to discuss the Private Banking segment. Joe?

Great. Thanks, Al. Private Banking revenue improved by 2.5% to $98.7 million in the fourth quarter and 12% or $10.8 million from the year-ago quarter. Private Banking profits, net of the onetime gain of $22 million on the previously mentioned sale of our subsidiary, SEI Asset Korea, came in at $2.4 million compared to $3 million in Q4 2012 and $500,000 in Q1 2012. The revenue increase for the quarter was largely due to increased investment processing revenue, both in the U.S. and the U.K., as well as mutual fund trading revenue in the U.S. Expenses for the quarter was largely due to costs associated with the continued development and rollout of the SEI Wealth Platform, especially in the U.S. Profit improvement is slower than any of us would like and sometimes choppy. Progress will be made as we continue to grow our revenue and scale our operational and technical -- technology delivery. Going forward, the sale of SEI Asset Korea will have approximately a $2.9 million negative revenue impact and a $400,000 negative profit impact on Private Banking's quarterly results. Turning to business development. Gross sales events for the quarter were $5.8 million, $4.7 million of which is recurring. Net sales events were $400,000, largely due to the loss of a Trust 3000 client. The lost client recently sold a book of fiduciary business and is moving the remaining trust accounts to an in-house accounting system. They are expected to de-convert in the third quarter. In the U.S. during the quarter, we signed 2 additional SEI Wealth Platform clients. We now have 6 signed clients in the U.S. As mentioned in previous calls, we have a strong and growing pipeline and are focused on larger wealth managers. During the quarter, we recontracted 2 clients for $2 million. More than 80% of our Trust 3000 revenue is recontracted through 2015. I don't expect to have much recontract activity this year. In the U.K., we're working hard to convert the backlog, grow assets under administration and scale the infrastructure. We had our strongest cash flow quarter to date with over $800 million in net cash flow from current clients. Similar to the U.S., we have targeted our sales activity on larger opportunities and continue to make solid progress. In the U.K., we have an unfunded but committed backlog of $4 billion from conversion or infrastructure clients signed in 2012 and not yet installed. We expect this backlog to convert over the next 12 months. Worldwide, the platform assets under administration at the end of the first quarter were up $1 billion to approximately $23 billion. Assets under administration were negatively impacted by currency conversion. We have 26 signed contracts and 20 clients are now live. We also have over 150,000 end-client accounts. An additional contributor to our business is asset management. Quarter-ending asset balances were up $600 million to almost $12.4 billion. This asset number is exclusive of assets related to the sale of SEI Asset Korea. In conclusion, 2013 is the year of solution build-out, sales execution in the U.S. and continued momentum in the U.K. The U.S. rollout is well underway, including the build-out of the U.S. operation. We have consolidated our U.K. operating activities in London and are on a path to improve scale, efficiency and quality of service. We are working to drive the revenue as quickly as possible to build the scale. Any questions?

[Operator Instructions] And our next question does come from the line of Tom McCrohan with Janney.

In terms of revenue, quarterly revenue trend, given the lost revenues from Korea and the, I guess, Trust 3000, if I do the math, is a $5 million quarterly revenue headwind, correct me if I'm wrong. But -- so how do we think about revenue trends in the business with the pending departure of this Trust 3000 client and the Korean business sale?

So the Trust 3000 client, as I mentioned, will convert probably towards the end of the third quarter. So we'll see that impact in the fourth quarter. And as I mentioned, it's about $2.9 million of revenue. So we do have some headwinds. And obviously, that [indiscernible] is to continue to recognize revenue from the sales events that we've announced over the last 12 to 18 months.

So $2.9 million for the Trust 3000 client, that's a quarterly number?

I'm sorry. I'm sorry, the $2.9 million is Korea. I'm sorry, I made a mistake, was the SEI Asset Korea. And as I mentioned earlier, the lost client will come off at the end of -- in the fourth quarter.

Can you give us the revenue number from that?

I think you can calculate that from the sales event that I mentioned. But it's a mid-sized client.

Okay. And so that sales event number is an annualized revenue number, right?

That's correct.

Got it. And can you just talk about amortization? It looked like this quarter it bumped up a little bit of $8.2 million. And what should we be modeling in terms of GWP-related amortization for the balance of this year?

I don't have that number off-hand but I'm sure we can give that to you by the end of the call.

And our next question does come from the line of Glenn Greene with Oppenheimer. Glenn Greene - Oppenheimer & Co. Inc., Research Division: I was wondering if you can just give us a little bit of color commentary on the GWP pipeline activity you're seeing both in the U.K. and the U.S., update us on the size of the pipeline and progress actually targeting those bigger U.K. deals?

Great. So in the U.K., the pipeline remains strong. As I mentioned in the past, we're focusing on some bigger deals. I think we can do that now because we have some good momentum and we have some good infrastructure in place. Nothing's really dropped out of that pipeline. So it does remain sort of in the $50 million, $60 million range. But as I said, we're focusing on larger deals that take longer to close. In the U.S., we started building the pipeline last year. That continues to grow, and we are advancing important prospects through the sales cycle. And again, we are generally focused on larger firms than some of the smaller firms that we may have initially signed in the U.K. Glenn Greene - Oppenheimer & Co. Inc., Research Division: All right. And then just sort of more of an administrative thing. Just to be clear that the $23 billion GWP AUM is not disclosed in the asset levels that are in the press release. Is that right?

That's correct. Glenn Greene - Oppenheimer & Co. Inc., Research Division: Maybe Dennis can help. Any reason why it's not in there or you don't sort of break that out?

Well, why don't we disclose the AUA on GWP in the -- it's a new number.

Arguably we could, Glenn. I mean, it's similar to the IMS business in that, to me, in the -- overall -- the overall revenue we generate on AUA in banking relative to total banking revenues is still pretty immaterial. So I think the disclosure that Joe makes on the calls around AUA is, as far as I'm concerned, is sufficient. We can certainly put it in a bullet point in the earnings release, if that would be helpful.

And our next question does come from the line of Jeff Hopson with Stifel. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: So Joe, the 2 new clients that you referenced, have those been announced publicly? And -- go ahead.

No, they have not yet. They have not been announced publicly, no. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: Okay. Can you tell us anything about them in terms of the nature of them, I guess?

So in the U.S., we are stepping into the markets. So we talked about a big -- a big milestone for us late last year was the conversion of our first client, Centier. We've also talked about, in the first quarter, the close of Kanaly. And what we're looking to do -- which would convert later this year. What were looking to do is step into more complex accounts and to larger accounts. So you can see from gross sales events, these weren't gigantic accounts. But again, we're stepping into more complex and to larger accounts over the course of this year. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And in terms of the U.S. pipeline, you've mentioned larger firms. But -- so you've been out there for a little while, that pipeline has developed. What would you say? Can you summarize kind of what you're hearing and were you potentially or favorably surprised or negatively surprised, et cetera? Any sense of that pipeline and any sense -- as regard to the potential timing of some of that coming loose, obviously, if you had 2 here, but anything else you can add?

I think on a positive -- from a positive perspective, banks are beginning to look at more strategic, longer-term decisions around infrastructure. They haven't invested in wealth management infrastructure in a while. Obviously, a lot of these banks were focused on survival and getting through the economic environment. So we do -- we are beginning to see larger organizations beginning to look more strategically at those things. I think that's really positive for us. But these are big firms and the decision timeframe is long. So I think we're progressing nicely through the sales cycle with the pipeline. We're pretty busy. And -- but I do think that these things take a long time. We're also talking to our firms about a broader solution beyond just trust accounting, principal and income accounting. So given sort of the broad integrated nature of GWP, so it's a big decision. But we're making good progress with the -- with our prospects. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And finally, on the expense side. So any sense of the launch costs, I guess, or recent releases? Are we close to the end of expenses associated with that? And then how far are we into the establishment of the infrastructure servicing costs, et cetera? So as we look at that current expense in the first quarter, is that all recurring? Does it -- any sense of how that could accelerate from that level?

We're spending -- we still have a fair amount of development to do, particularly as we move upmarket to the large firms here in the U.S., around things like asset types, around different types of books of businesses. So development will continue and we do capitalize some of that. And we're trying to get that into use as quickly as we can. So that's when the amortization number pops in. So obviously, amortization will continue to increase. I think we're -- we've built out some solid infrastructure from an operation standpoint. But we don't have a lot of clients up and running. So there still -- there will still be additional costs there. So the key is that we will continue to invest in this rollout. And I do expect to sign some big clients over the course of the next couple of years. So sales expenses will go up. So there will be continued investments as we go forward.

And our next question does come from the line of Chris Donat with Sandler O'Neill. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: Joe, just one from me on the sale cycles for GWP. Can you just remind us sort of how long they've been in the U.K. and if they should be similar in the U.S. in terms of going from like first meeting to closed deal to install? I imagine it's measured in months and quarters, not weeks.

Well, it's largely dependent on the size and the complexity of the organization. But it could go anywhere from, at a very best case for a smaller IWA, Independent Wealth Adviser, in the U.K. for a sort of a 6- to 9-month sales cycle to, I'd say, a 18-month to 3-year sales cycle. Some of these firms we've been talking to for a long time. Again, I think the good news is that firms are increasingly more focused on strategic growth plans than they are on survival. And I think that's positive. But these are large, complex organizations and a large complex sale.

And our next question is a follow-up question from the line of Tom McCrohan with Janney.

Joe, just -- I'm just trying to model margins this year and I'll ask the question this way. If you convert the remaining $4 billion of your pipeline, which you expect to convert the rest this year, $4 billion of assets, and assuming the lost Korean business was about $400,000 of profit and assuming that, that client kind of migrates off the platform this year, and so those are the things that we know. How do we think about margins going forward? Are you going to be able to maintain profit margins and absorb the incremental amortization expense and any incremental GWP expenses?

Yes, profit margins will be choppy. So when you're down to sort of a low relative number, you -- we manage things as tightly as we can. So yes, there are some headwinds and sometimes, you lose business faster than you can move it on. But we're doing everything we can to try to keep things flat or improving. But that I can't -- certainly, I'm not guaranteeing that.

And at this time there are no further questions. Please continue.

Thanks, Joe. Our next segment is Investment Advisors, and Wayne Withrow will cover the segment.

Thanks, Al. During the first quarter, we continued to build upon the momentum we established last year and continued to work with our early adopter clients on raying [ph] the wealth platform for its broader U.S. advisor rollout. Assets under management were $36.3 billion at March 31, a 7.5% improvement from December 31. During the quarter, we had almost $1 billion of positive net cash flow. Revenues for the quarter were $55.2 million. This compares to $52.5 million for the fourth quarter and $49.5 million for the first quarter of last year. We managed to hold the line on expenses, so all revenue growth for the quarter dropped to the bottom line, resulting in a 300 basis point improvement in margins. On the new business front, we signed 130 new advisors during the quarter. Our pipeline of new advisors remains very strong. Moving on to the status of the wealth platform. The early adopter process has been very beneficial and has not only allowed us to test the existing functionality but has also provided valuable feedback on how we can improve the platform for U.S. advisors in a real-life environment. We have already rolled out some enhancements as a direct result of our early adopter feedback and expect more significant releases incorporating this feedback during the balance of the year. While I had hoped for a more generalized release to advisors in the latter part of 2013, I now expect to start in early 2014, since that will give us time to incorporate the early adopter's suggested improvements. Momentum on our existing platform remains strong and there is no need to rush the rollout before we have a chance to improve our platform even more by incorporating this valuable feedback. In summary, net cash flow and new advisory recruiting were very positive for the quarter. Momentum continues to build and the wealth platform release is on the horizon. I welcome any questions you have.

[Operator Instructions] And our first question does come from the line of Robert Lee with KBW. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: Just curious, you mentioned kind of held -- that you held the line on expenses and you saw the margin pop up. So just -- I mean, do you think that's sustainable? I mean, was there anything kind of unusual in the quarter that allowed you to do that, that you're going to have to kind of give some of it back, so to speak, over the coming quarters?

I don't think there was really anything unusual in the quarter. We had a little acceleration of the sales comp in the fourth quarter of last year, which helps us in the comparison basis. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And just a little bit of incremental color on the flows. I mean, they remain pretty strong and I'm assuming that it's still kind of the new advisors that you signed up in the last 2 years, I mean, they're really the driving force behind that cash flow and it's kind of the legacy advisors who continue to kind of be an outflow? Or are you just seeing better pickup across -- did you just see more of a pickup across the board in the first quarter?

Yes, Rob, I think it's true that we continue to see acceleration in the new advisor front. But I think we're also seeing improved cash flow from our existing advisors. And I think that's a reflection of the market. And I also think it's a reflection on the impending release of GWP because the existing advisors are looking forward to that. It improves the stickiness of the assets we have. If you remember, it's receipt-side disbursements go to the net number.

And our next question comes from the line of Jeff Hopson with Stifel. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: Maybe the same question, Wayne, but is there any seasonal effect in the $1 billion, would you say? The industry has been fairly vibrant, so anything to add there? And then, in terms of the adjustments or the refinement of the platform, is there anything, say, specific, that you could -- or even general, I guess, to address kind of where the tweaks are coming? Or I guess...

I guess what I would -- well, first of all, to your first question, I don't think there's anything seasonal in the numbers. Secondly, I guess what I would say is as we look at the platform and what it does, as we get a more aggressive rollout, I want to make sure that the platform is really sort of a leapfrog development in the industry, not an incremental development. So we're incorporating all of their comments so we can get truly into a leapfrog kind of position.

And our next question does come from the line of Chris Donat with Sandler O'Neill. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: First question from me. Just the 130 new advisors, can you give some color on where they're coming from, just in terms of size or affiliations?

Yes, I think it reflects our existing book. I think about 70% of them are affiliated with independent BDs, the balance are truly independent. And they're varying sizes, I mean, small shops to what I'd say more mid-sized advisory shops. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: Okay. But it's a lot like the existing book. There hasn't been any change there?

It's a lot like the existing book, that's correct. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: Okay. And then just help me understand, as you leapfrog to the newer version of GWP, is that going to be an upgrade challenge for existing advisors to go to GWP? Or will it -- that's one thing that easier about incremental, is it doesn't seem like a big change. But I'm just trying to understand, is there some risk as you move advisors from the existing one to GWP in 2014 or at some later point?

I mean, as I've said to our advisors, it's sort of our job here at SEI to make sure that it's a nonevent for them as they move over. And you remember, GWP will improve some of the current practices that they conduct and will introduce new capabilities to them and it will be completely up to them whether they want to make the investment of time to take advantage of the improved capabilities. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: So they'll still run the existing line as a legacy offering?

They'll all convert over to the existing platform. It's -- whether they want to change their business practices to take advantage of the more robust functionality will be completely up to them.

And our next question does come from the line of Glenn Greene with Oppenheimer. Glenn Greene - Oppenheimer & Co. Inc., Research Division: Actually, my line of questions was along the lines of what you were just saying. Is there any sense from the advisors that you're speaking with of how many want to avail themselves of the sort of upgraded GWP capabilities and the ability to bring on assets outside of the SEI core, which I think is really the strategic rationale for what you're doing with GWP in your business?

Yes, I think, especially on the larger advisors side, there's a great demand to do that. Glenn Greene - Oppenheimer & Co. Inc., Research Division: Okay...

They're more impatient than I am. Glenn Greene - Oppenheimer & Co. Inc., Research Division: I mean, is there any way you could -- 50% of the advisors are out there, any way to sort of frame it? And just trying to frame how much incremental asset flows we might be able to start thinking about once you bring GWP online in '14?

Yes, I don't know if I can give you an exact percentage right now, to be honest with you. Glenn Greene - Oppenheimer & Co. Inc., Research Division: All right. And then just on the flows, I guess this was probably your best flow number in, I'm guessing, at least 5 years. But was it pretty steady throughout the quarter, month-by-month? And what have you seen in April?

Well, it was the best since the second quarter of 2001, if you asked. But the -- I think it was pretty steady throughout the quarter, yes. Glenn Greene - Oppenheimer & Co. Inc., Research Division: And April continue?

Yes.

And our next question does come from the line of Tom McCrohan with Janney.

Wayne, can you remind us how many advisors today are on GWP?

Tom, there's 85 very small advisors. And to be honest with you, I wouldn't even sort of count them. I think there's 6 advisors of significant size on the platform. So there's technically 91 but I would say 6.

Okay. And those 85 really small ones, that was, like, back in late 2011, right? That they converted?

That's correct.

And has there been any -- although they're small and maybe not material, has there been any significant learnings over the last over a year now that they've been on the platform that has evolved your thinking on how you're positioning the platform or features and functions that needed to be added that you can share with us.

I think for the smaller advisors, they really didn't need the platform. It's the more mid-sized and large-sized advisors that can take advantage of it. So there was, I would say, no valuable feedback from the 85. It was more sort of a pure beta test. From the 6 early adopters, we're getting very valuable feedback because they are bigger, more complex, more robust advisors. And they're, quite frankly, more like our target market.

And just for our benefit, can you just kind of size out what you consider a big advisor versus a small?

I think when we look at bigger advisors, we're looking more at sort of the $250 million to $1 billion range.

And at this time there are no further questions. Please continue.

Thank you, Wayne. Our next segment is the Institutional investment -- excuse me, Investor segment and I'm going to turn it over to Ed Loughlin to discuss the segment.

Thanks, Al. Good afternoon, everyone. Let me start with the financials for the quarter and then discuss sales relatively. Revenues of $63 million for the first quarter increased 18% compared to the year-ago period and 4% compared to the prior quarter. New client funding and market appreciation during the period contributed to these successes. Quarterly profits of $31 million increased 25% compared to the first quarter of 2012 and 4% versus the fourth quarter. Margins were 50% for both periods. Asset balances increased by $8 billion during the year, approaching $67 billion on March 31. Net new client assets funded during the quarter were $267 million and the backlog of committed but unfunded assets at quarter end was $1 billion. First quarter sales from our global business totaled $2.2 billion. Our continued sales growth is consistent with the increasing market demand for outsource investment providers who assume accountability and also investment discretion on behalf of its clients. SEI's 20-year track record, rich resource model and large global client base of fiduciary management relationships positions us well to continue to grow our institutional business and we are optimistic about the growth opportunities for the segment. Thank you very much and I'm happy to entertain any questions you may have.

[Operator Instructions] And at this time I'm not showing any questions.

Thanks, Ed. Our final segment today is Investment Managers and I'm going to turn it over to Steve Meyer to discuss the segment.

Thanks, Al. Good afternoon, everyone. For the first quarter of 2013, revenues for the segment totaled $53.8 million, which was $2.6 million or 5% higher than the fourth quarter of 2012. This also represents a $7.6 million or 16.5% increase in revenue over the first quarter of last year. This quarter-over-quarter increase in revenue was primarily due to an increase in our asset balances, along with new client fundings and some onetime revenue events. Our quarterly profit for this segment of $18.7 million was approximately $2.2 million or 13.4% higher than our profit for the fourth quarter of 2012 and approximately $2.9 million or 18.2% higher than the first quarter of 2012. This increase in profit was largely due to the increase in our revenue for the quarter, offset by a slight increase in our investment and ongoing operational expenses. Third-party asset balances at the end of the first quarter of 2013 were $275.6 billion, approximately $30.9 billion or 12.7% higher as compared to our asset balances at the end of the fourth quarter 2012. The increase in assets was primarily due to net positive cash flows of $24.2 billion, enhanced by market appreciation of $6.7 billion. Positive cash flows were mainly attributable to several client conversions during the quarter, plus a significant asset inflow from one of our global clients into a low-fee liquidity profit, which we view as short term in nature. And turning to market activities. During the first quarter of 2013, our new business momentum continued. We had net new business sales events totaling $7.5 million in annualized revenue during the quarter. This new business represented all of our segments with the majority in our traditional asset managers. In looking at the market, we continue to see strong market activity across all segments and solutions. Most encouraging is the fact that our pipeline continues to grow and, importantly, it is well-diversified across all our solution sets, as well as across all of our key Investment Manager segments. That concludes my prepared remarks and I'll now turn it over for any questions you may have.

[Operator Instructions] And our first question does come from the line of Robert Lee with KBW. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: Can you maybe give us a little bit more color on those very large cash flows? I guess, a couple of questions here. Number one, did those come in kind of towards the latter part of the quarter, so we're really going to see more of the impact going forward? And then if -- with the assets that you called out as being likely temporary, kind of low fee, is it possible to kind of size that within the $24 billion?

Sure. So a little over half, about 60% of the assets were due to that inflow into a liquidity product. And what I would say is -- and this is somewhat typical you'll see in the industry. It was a private equity manager who had a drawdown of investments and has put that investment in a cash vehicle waiting for their next investment. That's why we view it as short term. The remaining conversions happened sporadically during the quarter. Some of the larger ones were at the end of the quarter. But some of them, about a little less than half, you did see a good impact from them from the quarter. I do think probably what you're looking at is the mismatch of the 5% revenue uptick to the asset uptick, which is a little over 12%. And again, that's mainly due to the fact of that, again, liquidity uptick, which again is in a low-fee product.

And our next question does come from the line of Jeff Hopson with Stifel. J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division: So anything new you would say, Steve, in regard to the pipeline as far as a catalyst to -- that your product is being recognized or regulations in the industry that is moving people toward a conversion and/or outsourcing? Anything new, I guess, as far as big-picture drivers?

Well, I'd say the big picture, a couple of things. On the market side, the regulatory environment, which I think impacts all of the segments that we have here and all of our clients, is in continual transition and is becoming increasingly difficult. It's a complex issue for our clients and, obviously, it's one that we look to help them solve. So I think that's one part of the catalyst. The second part is, I think, as managers are starting to feel a little bit more confident, as they have over the past 18 months with growth, expanding their business and their business plans, they're really looking to provide a solid infrastructure. And I think that's pushing them more to an outsourcing position. And then lastly, specific to us, I would say 2 things. One, we're very encouraged that the pipeline that when we continue to move upstream and, quite frankly, we're really competing at some of the very large ends of the market. And secondly, I think as we all have known, the alternative side of the business has really been the growth catalyst over the past several years. What's very encouraging to me is twofold: One, as I said, the sales events in this quarter and the pipeline continue to have a big push from our traditional asset manager side, which is actually really rounding out and bringing very diversified portfolio or a pipeline for us; and two, we're also seeing the global component of that. And finally, another slice of the assets we saw, the new business we saw this quarter, the majority of it was expanding wallet share with existing clients, which, if we all remember, that was one of our key initiatives that we've really been pushing over the past 2 years and we're continuing to see signs of that as we move forward and we're gaining more market share with clients.

And at this time, there are no further questions.

Thank you, Steve. And I would like to now have Kathy Heilig give us a few company-wide statistics. Kathy?

Thanks, Al. Good afternoon, everyone. I have some additional corporate information about this quarter. First quarter cash flow from operations was $42 million or $0.24 per share. First quarter free cash flow was $34 million or $0.19 per share. The capital expenditures excluding capitalized software were $1.7 million and we would expect that the capital expenditures, again, excluding capitalized software for the remainder of 2013 to be about $15 million. To answer an earlier question, the amortization expense for the year 2013 is projected to be between $33 million and $35 million. The tax rate for the first quarter was 35%, which was the same as it was in the fourth quarter. We expect the annual tax rate for 2013 to be between 35% and 36%. Our accounts payable balance at the end of March was $6.6 million. We would also like to remind you that many of our comments are forward-looking statements and are based upon assumptions that involve risks and that the financial information presented in our release and on this call is unaudited. Future revenues and income could differ from expected results. We have no obligation to publicly update or correct any statements herein as a result of future developments. You should refer to our periodic SEC filings for a description of various risks and uncertainties that could affect our future financial results. And now please feel free to ask any additional questions that you may have.

[Operator Instructions] And our next question does come from the line of Chris Donat with Sandler O'Neill. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: I feel bad that no one asked a question of Ed so I'm going to do that now.

We appreciate that.

Chris, he wasn't feeling the love, so he left. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: A business with 50% margins is kind of hard to ignore, I guess. But just on the flows, the $267 million, can you remind us what sort of seasonality we should expect in that business? Do pension funds and endowments, do they tend to have a season that they operate in, that you'll see the funds kind of arrive at specific times in the year?

No, I wouldn't necessarily say there's a seasonality to it. I think that probably the biggest loss in a period for us would be probably more oriented towards year end because I think that people do want to make decisions then maybe kind of start the year clean. That's the only seasonal issue I would see. The buying side is really pretty much sporadic and uneven throughout the year. Christopher R. Donat - Sandler O'Neill + Partners, L.P., Research Division: Okay. And then with the backlog of the $1 billion, is that -- in terms of how long you would normally expect that to sort of -- to flow onto the platform when -- what sort of timing, in general, or can you give a range?

Sure. Generally, it's about a quarter. So by next quarter that should be funded.

And our next question does comes from the line of Tom McCrohan with Janney.

Just had an administrative question. Corporate overhead and minority interest used to be disclosed on Page 2 of the press release. I was wondering if, Dennis, you can give us those numbers?

Yes, I think, I mean, corporate overhead -- I have to pull it out. That got removed because of this whole issue corporations have -- public companies have with non-GAAP information. So -- corporate overhead was just under $13.8 million for the quarter.

Okay. And minority interest?

$289,000.

Great. And so going forward, those disclosures, they were permanently removed?

Yes, I think what we're going to do is -- because I got that question earlier today. We'll put that in a bullet point. When we get those different bullet points on the earnings release because I got that question earlier from somebody. And we should have -- since we took it out of the schedule, we should have referenced it on -- somewhere else in the release. I learned pretty quickly you guys like to plug it into your models.

And our next question does come from the line of Robert Lee with KBW. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: I have a question, Dennis, for you as well. Actually following up, too, with Tom's. The $13.8 million of corporate overhead, that seems like, at least based on what I'm looking at, a decent sequential jump from where it had been running if my numbers are correct. Is there any -- anything kind of onetime or unusual in the corporate overhead that may recede in the -- or is that kind of a reasonable run rate to think about?

I guess I don't know whether you consider it unusual or onetime but we have capital that sits in foreign -- in the U.K., in foreign subsidiaries. And currency fluctuations that occurred during the quarter in the British pound had an impact on -- we had a currency adjustment we booked. And that's why we booked that, because it's a corporate entity. Overall, across the company, we're pretty well neutral in terms of currency exposure because of our source of revenue and our expenses, cash in, cash out. But in this particular case, because we have capital sitting there, we did have a currency impact. Now the capital position has come down so we shouldn't see as much volatility there in the future. And also, what -- Rob, the delta looks bigger because in the fourth quarter it was slightly positive and this quarter it was negative. So you have a bigger delta as a result. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: So it would be a couple-of-million-dollar delta kind of thing? Is that...

Yes, that would explain about $1 million of it. And then another is with the payment of incentive compensation, there is some tax, taxes that flow through corporate overhead in the first quarter. And since we had higher compensation payments this year versus prior years, that was -- there was a chunk of it related to that. That wouldn't repeat itself in the next few quarters. So that, you could argue, is onetime, although it's one time a year. [indiscernible] miscellaneous stuff. There's definitely higher, I would say, costs associated with the regulatory environments, professional fees, that's definitely up year-over-year. And that's just -- there's just more work to do in that area this year than there was last year. That will probably continue. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And maybe just a follow-up, from the beginning of the call, just about a share repurchase and capital. I mean -- and I think you -- and I apologize if you mentioned this at the start but I think you may have mentioned in the past that with the proceeds from the Korea sale that -- I mean, you guys normally buy back a pretty healthy amount of stock. But is it reasonable to assume that, that incremental cash that's now available is going to be redeployed to, most likely, share repurchase at some point?

The accurate answer I can give you is I'm sure, given our cash position and how it has strengthened, the Board will address that. But I don't see our use of capital in terms of, as you know, the priority is to reinvest in the business and return it to shareholders, mainly through buyback. But that will change. Certainly, more capital allows us to have -- I forget the word that Jeff Hopson used earlier in the call, but the potential for an increase in our buyback. And I'd say, the answer still is yes, there is the potential for that.

And at this time, there are no further questions.

Thank you. And so, ladies and gentlemen, in conclusion, we are concentrating our efforts on maintaining highly satisfied clients, growing new business events and gaining operational scale and investing in projects critical to our future. Now as our momentum grows, I am very bullish about our intermediate and longer-term business opportunities and feel good about what we're accomplishing in the short term. So now, before you go, as a reminder, our annual Investor Day is being held on Wednesday, May 29, with a dinner the night before on Tuesday, May 28. I look forward to seeing you there. And since you have asked Ed a question, there might be a couple more still there. Last chance.

[Operator Instructions]

Okay, very good. Have a good afternoon, and thank you for your attendance.

Ladies and gentlemen, that will conclude the conference for today. We do thank you for your participation. You may now disconnect your lines at this time.