Financial Advisory record operating revenue
year to date, driven by strength in Europe
Asset Management resilient
performance amid challenging market and foreign exchange
headwinds
Returned $812 million in capital to
shareholders, including a record 17 million shares
repurchased year to date
Lazard Ltd (NYSE: LAZ) today reported operating revenue1 of $724
million for the quarter ended September 30, 2022. Net income, as
adjusted2, was $106 million, or $1.05 per share (diluted) for the
quarter. On a U.S. GAAP basis, third-quarter 2022 net income was
$106 million, or $1.06 per share (diluted).
For the first nine months of 2022, net income, as adjusted, was
$317 million, or $3.02 per share (diluted). On a U.S. GAAP basis,
net income for the first nine months was $315 million, or $3.03 per
share (diluted).
“Our record third-quarter revenue reflects the strength of our
diversified business model and our commitment to providing
innovative client solutions during challenging market conditions,”
said Kenneth M. Jacobs, Chairman and Chief Executive Officer of
Lazard. “We remain focused on helping our clients navigate the
uncertainty of the global macroenvironment, while we continue to
invest in our business through the cycle, exercise cost discipline
and deliver long-term value for shareholders."
($ in millions, except
Quarter Ended
Nine Months Ended
per share data and AUM)
September 30,
September 30,
2022
2021
%'22-'21
2022
2021
%'22-'21
Net Income
U.S. GAAP
$106
$107
(1%)
$315
$318
(1%)
Per share, diluted
$1.06
$0.94
13%
$3.03
$2.78
9%
Adjusted2
$106
$111
(4%)
$317
$358
(11%)
Per share, diluted
$1.05
$0.98
7%
$3.02
$3.13
(4%)
Operating Revenue1
Total operating revenue
$724
$702
3%
$2,098
$2,171
(3%)
Financial Advisory
$454
$381
19%
$1,249
$1,170
7%
Asset Management
$263
$311
(15%)
$840
$982
(14%)
AUM ($ in billions)
Period end
$198
$273
(27%)
Average
$212
$278
(24%)
$233
$272
(14%)
Note: Endnotes are on page 7 of this release. A reconciliation
of adjusted GAAP to U.S. GAAP is on pages 14-15.
OPERATING REVENUE
Operating revenue1 was a third-quarter record $724 million for
the third quarter of 2022, up 3% from the third quarter of 2021,
and $2,098 million for the first nine months of 2022, down 3% from
the first nine months of 2021.
Financial Advisory
Our Financial Advisory results include M&A Advisory, Capital
Advisory, Capital Raising, Restructuring, Shareholder Advisory,
Sovereign Advisory, and other strategic advisory work for
clients.
For the third quarter of 2022, Financial Advisory operating
revenue was a third-quarter record $454 million, 19% higher than
the third quarter of 2021.
For the first nine months of 2022, Financial Advisory operating
revenue was a record $1,249 million, an increase of 7% from the
first nine months of 2021.
During and since the third quarter of 2022, Lazard has been
engaged in significant and complex M&A transactions and other
strategic advisory assignments globally, including the following
(clients are in italics): Intel’s joint $30 billion investment with
Brookfield in U.S.-based chip factories; Orange’s combination with
Masmovil in Spain, for a combined value of €18.6 billion; AVEVA
Group’s $11.6 billion recommended offer from Schneider Electric;
Continental Grain (CGC) and its subsidiary Wayne Farms, in CGC’s
and Cargill's $4.5 billion acquisition of Sanderson Farms; Bungie’s
$3.6 billion sale to Sony Interactive Entertainment; Saint-Gobain’s
$2.3 billion acquisition of GCP Applied Technologies; Rolls-Royce's
€1.7 billion sale of ITP Aero to a Bain Capital-led consortium;
Brewin Dolphins’ £1.6 billion sale to Royal Bank of Canada; Obagi’s
$1.2 billion combination with Waldencast and Milk Makeup;
Infrastructure & Energy Alternatives’ $1.1 billion sale to
MasTec; Aqua Finance’s majority sale to Athene and Apollo at a
valuation of approximately $1 billion; Investindustrial’s $950
million acquisition of a significant portion of TreeHouse Food’s
Meal Preparation business; Institut Mérieux's partnership with and
investment of €833 million in the company by Exor; Germany’s
Federal Ministry for Economic Affairs and Climate Action on the
Federal Republic of Germany’s acquisition of a 99% stake in Uniper;
KIRKBI’s acquisition of BrainPOP; and Kofax's sale to Clearlake
Capital Group and TA Associates.
Lazard has one of the world’s preeminent restructuring
practices. During and since the third quarter of 2022, we have been
engaged in a broad range of visible and complex restructuring and
debt advisory assignments for debtors or creditors, including roles
involving: Bed Bath & Beyond; Brazos Electric Power
Cooperative; Corp Group Banking S.A.; Endo; GenapSys and Rockall
Energy.
Our Capital and Shareholder Advisory practices remain active
globally, advising on a broad range of public and private
assignments. Our Sovereign Advisory practice continues to be active
advising governments, sovereign and sub-sovereign entities across
developed and emerging markets.
For a list of publicly announced Financial Advisory transactions
on which Lazard advised in the third quarter of 2022, or continued
to advise or completed since September 30, 2022, please visit our
website at www.lazard.com/businesses/transactions.
Asset Management
In the text portion of this press release, we present our Asset
Management results as 1) Management fees and other revenue, and 2)
Incentive fees.
For the third quarter of 2022, Asset Management operating
revenue was $263 million, 15% lower than the third quarter of 2021.
For the first nine months of 2022, Asset Management operating
revenue was $840 million, 14% lower than the first nine months of
2021.
For the third quarter of 2022, management fees and other revenue
was $241 million, 20% lower than the third quarter of 2021, and 7%
lower than the second quarter of 2022. For the first nine months of
2022, management fees and other revenue was $786 million, 13% lower
than the first nine months of 2021.
Average assets under management (AUM) for the third quarter of
2022 was $212 billion, 24% lower than the third quarter of 2021,
and 8% lower than the second quarter of 2022. Average AUM for the
first nine months of 2022 was $233 billion, 14% lower than the
first nine months of 2021.
AUM as of September 30, 2022, was $198 billion, down 9% from
June 30, 2022, and down 27% from September 30, 2021. The sequential
decrease from June 30, 2022 was driven by market depreciation of
$10.3 billion, foreign exchange depreciation of $6.6 billion and
net outflows of $2.0 billion.
For the third quarter of 2022, incentive fees were $22 million,
compared to $7 million for the third quarter of 2021. For the first
nine months of 2022, incentive fees were $54 million, compared to
$75 million for the first nine months of 2021.
OPERATING EXPENSES
Compensation and
Benefits
In managing compensation and benefits expense, we focus on
annual awarded compensation (cash compensation and benefits plus
deferred incentive compensation with respect to the applicable
year, net of estimated future forfeitures and excluding charges), a
non-GAAP measure. We believe annual awarded compensation reflects
the actual annual compensation cost more accurately than the GAAP
measure of compensation cost, which includes applicable-year cash
compensation and the amortization of deferred incentive
compensation principally attributable to previous years’ deferred
compensation. We believe that by managing our business using
awarded compensation with a consistent deferral policy, we can
better manage our compensation costs, increase our flexibility in
the future and build shareholder value over time.
For the third quarter of 2022, we accrued compensation and
benefits expense at an adjusted compensation1 ratio of 60.0%,
compared to the third-quarter 2021 ratio of 59.5%. This resulted in
$434 million of compensation and benefits expense, compared to $417
million for the third quarter of 2021.
For the first nine months of 2022, adjusted compensation and
benefits expense was $1,238 million, compared to $1,292 million for
the first nine months of 2021.
We manage our compensation and benefits expense based on awarded
compensation with a consistent deferral policy. We take a
disciplined approach to compensation, and our goal is to maintain a
compensation-to-operating revenue ratio over the cycle in the mid-
to high-50s percentage range on both an awarded and adjusted basis,
with consistent deferral policies.
Non-Compensation Expense
Adjusted non-compensation expense1 for the third quarter of
2022, was $128 million, 10% higher than the third quarter of 2021.
The increase primarily reflects higher marketing and business
development expenses and technology investments. The ratio of
adjusted non-compensation expense to operating revenue for the
third quarter of 2022 was 17.7%, compared to 16.6% for the third
quarter of 2021.
Adjusted non-compensation expense for the first nine months of
2022 was $376 million, 11% higher than the first nine months of
2021. The adjusted non-compensation ratio1 for the first nine
months of 2022 was 17.9%, compared to 15.6% for the first nine
months of 2021.
Our goal remains to maintain an adjusted non-compensation
expense-to-operating revenue ratio over the cycle of 16% to
20%.
TAXES
The provision for taxes, on an adjusted basis1, was $36 million
for the third quarter and $109 million for the first nine months of
2022. The effective tax rate on the same basis was 25.1% for the
third quarter and 25.6% for the first nine months of 2022, compared
to 25.1% and 26.2% for the respective 2021 periods.
CAPITAL MANAGEMENT AND BALANCE SHEET
Our primary capital management goals include managing debt and
returning capital to shareholders through dividends and share
repurchases.
In the third quarter of 2022, Lazard returned $286 million to
shareholders, which included: $46 million in dividends; $237
million in share repurchases of our common stock; and $3 million in
satisfaction of employee tax obligations in lieu of share issuances
upon vesting of equity grants.
In the first nine months of 2022, Lazard returned $812 million
to shareholders, which included: $139 million in dividends; $612
million in share repurchases of our common stock; and $61 million
in satisfaction of employee tax obligations in lieu of share
issuances upon vesting of equity grants.
During the first nine months of 2022, we repurchased a record
17.2 million shares, which included 6.7 million shares repurchased
in the third quarter. As of September 30, 2022, our remaining share
repurchase authorization was $382 million.
On October 26, 2022, Lazard declared a quarterly dividend of
$0.50 per share on its outstanding common stock. The dividend is
payable on November 18, 2022, to stockholders of record on November
7, 2022.
Lazard’s financial position remains strong. As of September 30,
2022, our cash and cash equivalents were $1 billion. Stockholders’
equity related to Lazard’s interests was $561 million.
***
CONFERENCE CALL
Lazard will host a conference call at 8:00 a.m. EDT on October
27, 2022, to discuss the company’s financial results for the third
quarter and first nine months of 2022. The conference call can be
accessed via a live audio webcast available through Lazard’s
Investor Relations website at www.lazard.com, or by dialing 1
866-831-8711 (toll-free, U.S. and Canada) or +1 203-518-9865
(outside of the U.S. and Canada), 15 minutes prior to the start of
the call. Conference ID: 69483
A replay of the conference call will be available by 10:00 a.m.
EDT, October 27, 2022, via the Lazard Investor Relations website at
www.lazard.com, or by dialing 1 800-839-5676 (toll-free, U.S. and
Canada) or +1 402-220-2565 (outside of the U.S. and Canada).
ABOUT LAZARD
Lazard, one of the world's preeminent financial advisory and
asset management firms, operates from 41 cities across 26 countries
in North, Central and South America, Europe, Asia and Australia.
With origins dating to 1848, the firm provides advice on mergers
and acquisitions, strategic matters, restructuring and capital
structure, capital raising and corporate finance, as well as asset
management services to corporations, partnerships, institutions,
governments and individuals. For more information on Lazard, please
visit www.lazard.com. Follow Lazard at @Lazard.
***
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements. In some
cases, you can identify these statements by forward-looking words
such as “may”, “might”, “will”, “should”, “could”, “would”,
“expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”,
“potential”, “target,” “goal”, or “continue”, and the negative of
these terms and other comparable terminology. These forward-looking
statements, which are subject to known and unknown risks,
uncertainties and assumptions about us, may include projections of
our future financial performance based on our growth strategies,
business plans and initiatives and anticipated trends in our
business. These forward-looking statements, including with respect
to the current COVID-19 pandemic, are only predictions based on our
current expectations and projections about future events. There are
important factors that could cause our actual results, level of
activity, performance or achievements to differ materially from the
results, level of activity, performance or achievements expressed
or implied by these forward-looking statements.
These factors include, but are not limited to, those discussed
in our Annual Report on Form 10-K under Item 1A “Risk Factors,” and
also discussed from time to time in our reports on Forms 10-Q and
8-K, including the following:
- A decline in general economic conditions or the global or
regional financial markets;
- A decline in our revenues, for example due to a decline in
overall mergers and acquisitions (M&A) activity, our share of
the M&A market or our assets under management (AUM);
- Losses caused by financial or other problems experienced by
third parties;
- Losses due to unidentified or unanticipated risks;
- A lack of liquidity, i.e., ready access to funds, for use in
our businesses; and
- Competitive pressure on our businesses and on our ability to
retain and attract employees at current compensation levels.
Although we believe the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, level of activity, performance or achievements.
Neither we nor any other person assumes responsibility for the
accuracy or completeness of any of these forward-looking
statements. You should not rely upon forward-looking statements as
predictions of future events. We are under no duty to update any of
these forward-looking statements after the date of this release to
conform our prior statements to actual results or revised
expectations and we do not intend to do so.
Lazard Ltd is committed to providing timely and accurate
information to the investing public, consistent with our legal and
regulatory obligations. To that end, Lazard and its operating
companies use their websites, Lazard’s Twitter account
(twitter.com/Lazard) and other social media sites to convey
information about their businesses, including the anticipated
release of quarterly financial results, quarterly financial,
statistical and business-related information, and the posting of
updates of assets under management in various mutual funds, hedge
funds and other investment products managed by Lazard Asset
Management LLC and Lazard Frères Gestion SAS. Investors can link to
Lazard and its operating company websites through
www.lazard.com.
***
ENDNOTES
1 A non-U.S. GAAP measure. See attached financial schedules and
related notes for a detailed explanation of adjustments to
corresponding U.S. GAAP results. We believe that presenting our
results on an adjusted basis, in addition to the U.S. GAAP results,
is the most meaningful and useful way to compare our operating
results across periods.
2 Third-quarter and first-nine-months 2022 adjusted results1
exclude pre-tax charges of $0.9 million and $2.9 million,
respectively, relating to office space reorganization. On a U.S.
GAAP basis, these resulted in a net charge of $0.7 million, or
$0.01 (diluted) per share, for the third quarter, and a net charge
of $2.1 million, or $0.02 (diluted) per share, for the first nine
months of 2022.
LAZ-EPE
LAZARD LTD
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. GAAP)
Three Months Ended
% Change From
September 30,
June 30,
September 30,
June 30,
September 30,
($ in thousands, except per share
data)
2022
2022
2021
2022
2021
Total revenue
$
746,431
$
660,658
$
737,807
13%
1%
Interest expense
(19,687
)
(21,112
)
(20,378
)
Net revenue
726,744
639,546
717,429
14%
1%
Operating expenses:
Compensation and benefits
420,937
363,830
419,627
16%
0%
Occupancy and equipment
30,696
29,409
31,015
Marketing and business development
19,633
22,673
9,922
Technology and information services
44,579
42,067
37,559
Professional services
15,665
16,549
16,698
Fund administration and outsourced
services
27,110
28,551
34,137
Amortization of intangible assets related
to acquisitions
15
15
15
Other
9,967
10,614
13,497
Subtotal
147,665
149,878
142,843
(1%)
3%
Operating expenses
568,602
513,708
562,470
11%
1%
Operating income
158,142
125,838
154,959
26%
2%
Provision for income taxes
35,350
34,187
39,446
3%
(10%)
Net income
122,792
91,651
115,513
34%
6%
Net income (loss) attributable to
noncontrolling interests
16,995
(3,829
)
8,304
Net income attributable to Lazard Ltd
$
105,797
$
95,480
$
107,209
11%
(1%)
Attributable to Lazard Ltd Common
Stockholders:
Weighted average shares
outstanding:
Basic
93,275,631
98,660,173
105,415,743
(5%)
(12%)
Diluted
98,865,156
102,753,336
112,994,037
(4%)
(13%)
Net income per share:
Basic
$
1.11
$
0.96
$
1.00
16%
11%
Diluted
$
1.06
$
0.92
$
0.94
15%
13%
LAZARD LTD
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. GAAP)
Nine Months Ended
September 30,
September 30,
($ in thousands, except per share
data)
2022
2021
% Change
Total revenue
$
2,123,233
$
2,260,975
(6%)
Interest expense
(62,051
)
(60,302
)
Net revenue
2,061,182
2,200,673
(6%)
Operating expenses:
Compensation and benefits
1,181,608
1,336,091
(12%)
Occupancy and equipment
91,344
95,638
Marketing and business development
56,429
25,905
Technology and information services
124,577
107,003
Professional services
48,243
51,642
Fund administration and outsourced
services
85,364
94,718
Amortization of intangible assets related
to acquisitions
45
45
Other
29,864
34,121
Subtotal
435,866
409,072
7%
Operating expenses
1,617,474
1,745,163
(7%)
Operating income
443,708
455,510
(3%)
Provision for income taxes
108,290
124,255
(13%)
Net income
335,418
331,255
1%
Net income attributable to noncontrolling
interests
20,265
13,568
Net income attributable to Lazard Ltd
$
315,153
$
317,687
(1%)
Attributable to Lazard Ltd Common
Stockholders:
Weighted average shares
outstanding:
Basic
98,161,027
106,484,652
(8%)
Diluted
103,268,378
114,139,936
(10%)
Net income per share:
Basic
$
3.16
$
2.94
7%
Diluted
$
3.03
$
2.78
9%
LAZARD LTD
UNAUDITED CONDENSED
CONSOLIDATED
STATEMENT OF FINANCIAL
CONDITION
(U.S. GAAP)
September 30,
December 31,
($ in thousands)
2022
2021
ASSETS
Cash and cash equivalents
$
1,000,102
$
1,465,022
Deposits with banks and short-term
investments
1,341,514
1,347,544
Restricted cash
621,099
617,448
Receivables
740,395
805,809
Investments
638,960
1,007,339
Property
218,551
250,005
Goodwill and other intangible assets
375,889
379,571
Operating lease right-of-use assets
420,013
466,054
Deferred tax assets
390,543
435,308
Other assets
460,859
373,081
Total Assets
$
6,207,925
$
7,147,181
LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
Liabilities
Deposits and other customer payables
$
1,499,812
$
1,442,701
Accrued compensation and benefits
531,496
972,303
Operating lease liabilities
502,206
552,522
Tax receivable agreement obligation
192,399
213,434
Senior debt
1,687,092
1,685,227
Other liabilities
539,101
628,030
Total liabilities
4,952,106
5,494,217
Commitments and contingencies
Redeemable noncontrolling interests
578,495
575,000
Stockholders' equity
Preferred stock, par value $.01 per
share
-
-
Common stock, par value $.01 per share
1,128
1,128
Additional paid-in capital
126,746
144,729
Retained earnings
1,682,398
1,560,636
Accumulated other comprehensive loss, net
of tax
(334,382
)
(223,847
)
Subtotal
1,475,890
1,482,646
Class A common stock held by subsidiaries,
at cost
(915,254
)
(507,426
)
Total Lazard Ltd stockholders' equity
560,636
975,220
Noncontrolling interests
116,688
102,744
Total stockholders' equity
677,324
1,077,964
Total liabilities, redeemable
noncontrolling interests and stockholders' equity
$
6,207,925
$
7,147,181
LAZARD LTD
SELECTED SUMMARY FINANCIAL
INFORMATION (a)
(Non-GAAP - unaudited)
Three Months Ended
% Change From
September 30,
June 30,
September 30,
June 30,
September 30,
($ in thousands, except per share
data)
2022
2022
2021
2022
2021
Revenues:
Financial Advisory
$
453,664
$
406,792
$
381,295
12%
19%
Asset Management
262,559
265,707
310,566
(1%)
(15%)
Corporate
7,328
3,412
9,783
NM
(25%)
Operating revenue (b)
$
723,551
$
675,911
$
701,644
7%
3%
Expenses:
Adjusted compensation and benefits
expense (c)
$
434,131
$
395,407
$
417,479
10%
4%
Ratio of adjusted compensation to
operating revenue
60.0%
58.5%
59.5%
Non-compensation expense (d)
$
128,263
$
130,941
$
116,734
(2%)
10%
Ratio of non-compensation to operating
revenue
17.7%
19.4%
16.6%
Earnings:
Earnings from operations (e)
$
161,157
$
149,563
$
167,431
8%
(4%)
Operating margin (f)
22.3%
22.1%
23.9%
Adjusted net income (g)
$
106,472
$
96,108
$
111,398
11%
(4%)
Diluted adjusted net income per
share
$
1.05
$
0.92
$
0.98
14%
7%
Diluted weighted average shares (h)
101,603,367
104,767,897
113,781,092
(3%)
(11%)
Effective tax rate (i)
25.1%
26.4%
25.1%
This presentation includes non-U.S. GAAP
("non-GAAP") measures. Our non-GAAP measures are not meant to be
considered in isolation or as a substitute for the corresponding
U.S. GAAP measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with U.S.
GAAP. For a detailed explanation of the adjustments made to the
corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP
to Selected Summary Financial Information and Notes to Financial
Schedules.
LAZARD LTD
SELECTED SUMMARY FINANCIAL
INFORMATION (a)
(Non-GAAP - unaudited)
Nine Months Ended
September 30,
September 30,
($ in thousands, except per share
data)
2022
2021
% Change
Revenues:
Financial Advisory
$
1,248,586
$
1,169,670
7%
Asset Management
840,047
981,933
(14%)
Corporate
9,464
19,349
(51%)
Operating revenue (b)
$
2,098,097
$
2,170,952
(3%)
Expenses:
Adjusted compensation and benefits
expense (c)
$
1,238,240
$
1,291,717
(4%)
Ratio of adjusted compensation to
operating revenue
59.0%
59.5%
Non-compensation expense (d)
$
376,330
$
338,044
11%
Ratio of non-compensation to operating
revenue
17.9%
15.6%
Earnings:
Earnings from operations (e)
$
483,527
$
541,191
(11%)
Operating margin (f)
23.1%
24.9%
Adjusted net income (g)
$
317,272
$
358,417
(11%)
Diluted adjusted net income per
share
$
3.02
$
3.13
(4%)
Diluted weighted average shares (h)
105,183,136
114,565,986
(8%)
Effective tax rate (i)
25.6%
26.2%
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for the corresponding U.S. GAAP
measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with U.S.
GAAP. For a detailed explanation of the adjustments made to the
corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP
to Selected Summary Financial Information and Notes to Financial
Schedules.
LAZARD LTD
ASSETS UNDER MANAGEMENT
("AUM")
(unaudited)
($ in millions)
As of
Variance
September 30,
June 30,
December 31,
2022
2022
2021
Qtr to Qtr
YTD
Equity:
Emerging Markets
$
20,378
$
22,656
$
31,227
(10.1%)
(34.7%)
Global
43,754
48,742
59,516
(10.2%)
(26.5%)
Local
43,589
46,617
56,310
(6.5%)
(22.6%)
Multi-Regional
45,988
52,259
73,953
(12.0%)
(37.8%)
Total Equity
153,709
170,274
221,006
(9.7%)
(30.5%)
Fixed Income:
Emerging Markets
9,288
9,948
12,231
(6.6%)
(24.1%)
Global
10,252
12,380
14,410
(17.2%)
(28.9%)
Local
4,986
5,302
6,022
(6.0%)
(17.2%)
Multi-Regional
13,786
12,299
13,623
12.1%
1.2%
Total Fixed Income
38,312
39,929
46,286
(4.0%)
(17.2%)
Alternative Investments
3,900
4,145
4,203
(5.9%)
(7.2%)
Private Equity
1,042
1,268
1,290
(17.8%)
(19.2%)
Cash Management
803
1,010
954
(20.5%)
(15.8%)
Total AUM
$
197,766
$
216,626
$
273,739
(8.7%)
(27.8%)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
AUM - Beginning of Period
$
216,626
$
277,378
$
273,739
$
258,642
Net Flows
(2,006
)
(2,331
)
(13,180
)
(4,838
)
Market and foreign exchange appreciation
(depreciation)
(16,854
)
(2,475
)
(62,793
)
18,768
AUM - End of Period
$
197,766
$
272,572
$
197,766
$
272,572
Average AUM
$
212,259
$
277,941
$
232,839
$
271,761
% Change in average AUM
(23.6%)
(14.3%)
Note: Average AUM generally represents the
average of the monthly ending AUM balances for the period.
LAZARD LTD
RECONCILIATION OF U.S. GAAP TO
SELECTED SUMMARY FINANCIAL INFORMATION (a)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
($ in thousands, except per share
data)
2022
2022
2021
2022
2021
Operating Revenue
Net revenue - U.S. GAAP Basis
$
726,744
$
639,546
$
717,429
$
2,061,182
$
2,200,673
Adjustments:
Revenue related to noncontrolling
interests (j)
(20,847
)
(660
)
(11,994
)
(32,302
)
(24,109
)
(Gains) losses related to Lazard Fund
Interests ("LFI") and other similar arrangements
16,180
35,098
1,368
65,601
(22,610
)
Distribution fees, reimbursable deal
costs, bad debt expense and other (k)
(17,588
)
(17,083
)
(23,876
)
(53,493
)
(62,211
)
Losses associated with restructuring and
closing of certain offices (l)
-
-
51
-
23,630
Interest expense
19,062
19,010
18,666
57,109
55,579
Operating revenue, as adjusted (b)
$
723,551
$
675,911
$
701,644
$
2,098,097
$
2,170,952
Compensation and Benefits
Expense
Compensation and benefits expense - U.S.
GAAP Basis
$
420,937
$
363,830
$
419,627
$
1,181,608
$
1,336,091
Adjustments:
(Charges) credits pertaining to LFI and
other similar arrangements
16,180
35,098
1,368
65,601
(22,610
)
Expenses associated with restructuring and
closing of certain offices (m)
-
-
(1,012
)
-
(14,922
)
Compensation related to noncontrolling
interests (j)
(2,986
)
(3,521
)
(2,504
)
(8,969
)
(6,842
)
Compensation and benefits expense, as
adjusted (c)
$
434,131
$
395,407
$
417,479
$
1,238,240
$
1,291,717
Non-Compensation
Expense
Non-compensation expense - Subtotal - U.S.
GAAP Basis
$
147,665
$
149,878
$
142,843
$
435,866
$
409,072
Adjustments:
Expenses related to office space
reorganization (n)
(933
)
(871
)
(991
)
(2,928
)
(3,644
)
Distribution fees, reimbursable deal
costs, bad debt expense and other (k)
(17,588
)
(17,083
)
(23,876
)
(53,493
)
(62,211
)
Amortization of intangible assets related
to acquisitions
(15
)
(15
)
(15
)
(45
)
(45
)
Expenses associated with restructuring and
closing of certain offices (m)
-
-
(39
)
-
(1,424
)
Non-compensation expense related to
noncontrolling interests (j)
(866
)
(968
)
(1,188
)
(3,070
)
(3,704
)
Non-compensation expense, as adjusted
(d)
$
128,263
$
130,941
$
116,734
$
376,330
$
338,044
Pre-Tax Income and Earnings
From Operations
Operating Income - U.S. GAAP Basis
$
158,142
$
125,838
$
154,959
$
443,708
$
455,510
Adjustments:
Losses associated with restructuring and
closing of certain offices (l)
-
-
51
-
23,630
Expenses related to office space
reorganization (n)
933
871
991
2,928
3,644
Expenses associated with restructuring and
closing of certain offices (m)
-
-
1,051
-
16,346
Net (income) loss related to
noncontrolling interests (j)
(16,995
)
3,829
(8,304
)
(20,265
)
(13,568
)
Pre-tax income, as adjusted
142,080
130,538
148,748
426,371
485,562
Interest expense
19,062
19,010
18,666
57,109
55,579
Amortization of intangible assets related
to acquisitions and other
15
15
17
47
50
Earnings from operations, as adjusted
(e)
$
161,157
$
149,563
$
167,431
$
483,527
$
541,191
Net Income attributable to
Lazard Ltd
Net income attributable to Lazard Ltd -
U.S. GAAP Basis
$
105,797
$
95,480
$
107,209
$
315,153
$
317,687
Adjustments:
Losses associated with restructuring and
closing of certain offices (l)
-
-
51
-
23,630
Expenses related to office space
reorganization (n)
933
871
991
2,928
3,644
Expenses associated with restructuring and
closing of certain offices (m)
-
-
1,051
-
16,346
Tax expense (benefit) allocated to
adjustments
(258
)
(243
)
2,096
(809
)
(2,890
)
Net income, as adjusted (g)
$
106,472
$
96,108
$
111,398
$
317,272
$
358,417
Diluted Weighted Average
Shares Outstanding
Diluted Weighted Average Shares
Outstanding - U.S. GAAP Basis
98,865,156
102,753,336
112,994,037
103,268,378
114,139,936
Adjustment: participating securities
including profits interest participation rights
2,738,211
2,014,561
787,055
1,914,758
426,050
Diluted Weighted Average Shares
Outstanding, as adjusted (h)
101,603,367
104,767,897
113,781,092
105,183,136
114,565,986
Diluted net income per share:
U.S. GAAP Basis
$
1.06
$
0.92
$
0.94
$
3.03
$
2.78
Non-GAAP Basis, as adjusted
$
1.05
$
0.92
$
0.98
$
3.02
$
3.13
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for the corresponding U.S. GAAP
measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with U.S.
GAAP. For a detailed explanation of the adjustments made to the
corresponding U.S. GAAP measures, see Notes to Financial
Schedules.
See Notes to Financial
Schedules
LAZARD LTD
RECONCILIATION OF
NON-COMPENSATION U.S. GAAP TO ADJUSTED (a)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
($ in thousands)
2022
2022
2021
2022
2021
Non-compensation expense - U.S. GAAP
Basis:
Occupancy and equipment
$
30,696
$
29,409
$
31,015
$
91,344
$
95,638
Marketing and business development
19,633
22,673
9,922
56,429
25,905
Technology and information services
44,579
42,067
37,559
124,577
107,003
Professional services
15,665
16,549
16,698
48,243
51,642
Fund administration and outsourced
services
27,110
28,551
34,137
85,364
94,718
Amortization of intangible assets related
to acquisitions
15
15
15
45
45
Other
9,967
10,614
13,497
29,864
34,121
Non-compensation expense - Subtotal - U.S.
GAAP Basis
$
147,665
$
149,878
$
142,843
$
435,866
$
409,072
Non-compensation expense -
Adjustments:
Occupancy and equipment (j) (m) (n)
$
(944
)
$
(932
)
$
(1,106
)
$
(3,059
)
$
(4,503
)
Marketing and business development (j) (k)
(m)
(2,516
)
(2,043
)
(1,261
)
(5,784
)
(2,713
)
Technology and information services (j)
(k) (m)
(23
)
(61
)
(72
)
(114
)
(174
)
Professional services (j) (k) (m) (n)
(510
)
(403
)
(1,143
)
(1,651
)
(4,658
)
Fund administration and outsourced
services (j) (k)
(14,362
)
(15,680
)
(19,669
)
(46,554
)
(51,765
)
Amortization of intangible assets related
to acquisitions
(15
)
(15
)
(15
)
(45
)
(45
)
Other (j) (k) (m) (n)
(1,032
)
197
(2,843
)
(2,329
)
(7,170
)
Subtotal Non-compensation adjustments
$
(19,402
)
$
(18,937
)
$
(26,109
)
$
(59,536
)
$
(71,028
)
Non-compensation expense, as adjusted:
Occupancy and equipment
$
29,752
$
28,477
$
29,909
$
88,285
$
91,135
Marketing and business development
17,117
20,630
8,661
50,645
23,192
Technology and information services
44,556
42,006
37,487
124,463
106,829
Professional services
15,155
16,146
15,555
46,592
46,984
Fund administration and outsourced
services
12,748
12,871
14,468
38,810
42,953
Amortization of intangible assets related
to acquisitions
-
-
-
-
-
Other
8,935
10,811
10,654
27,535
26,951
Non-compensation expense, as adjusted
(d)
$
128,263
$
130,941
$
116,734
$
376,330
$
338,044
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for the corresponding U.S. GAAP
measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with U.S.
GAAP. For a detailed explanation of the adjustments made to the
corresponding U.S. GAAP measures, see Notes to Financial
Schedules.
See Notes to Financial
Schedules
LAZARD LTD
Notes to Financial
Schedules
(a)
Selected Summary Financial Information are
non-GAAP measures. Lazard believes that presenting results and
measures on an adjusted basis in conjunction with U.S. GAAP
measures provides a meaningful and useful basis for comparison of
its operating results across periods.
(b)
A non-GAAP measure which excludes (i)
revenue related to noncontrolling interests (see (j) below), (ii)
(gains) losses related to the changes in the fair value of
investments held in connection with Lazard Fund Interests and other
similar deferred compensation arrangements for which a
corresponding equal amount is excluded from compensation &
benefits expense, (iii) revenue related to distribution fees,
reimbursable deal costs in accordance with the revenue recognition
guidance, bad debt expense, and other (see (k) below), (iv) for the
three and nine month periods ended September 30, 2021, losses
associated with restructuring and closing of certain offices (see
(l) below), and (v) interest expense primarily related to corporate
financing activities.
(c)
A non-GAAP measure which excludes (i)
(charges) credits related to the changes in the fair value of the
compensation liability recorded in connection with Lazard Fund
Interests and other similar deferred compensation arrangements,
(ii) for the three and nine month periods ended September 30, 2021,
expenses associated with restructuring and closing of certain
offices (see (m) below), and (iii) compensation and benefits
related to noncontrolling interests (see (j) below).
(d)
A non-GAAP measure which excludes (i)
expenses related to office space reorganization (see (n) below),
(ii) expenses related to distribution fees, reimbursable deal costs
in accordance with the revenue recognition guidance, bad debt
expense, and other (see (k) below), (iii) amortization of
intangible assets related to acquisitions, (iv) for the three and
nine month periods ended September 30, 2021, expenses associated
with restructuring and closing of certain offices (see (m) below),
and (v) expenses related to noncontrolling interests (see (j)
below).
(e)
A non-GAAP measure which excludes (i) for
the three and nine month periods ended September 30, 2021, losses
associated with restructuring and closing of certain offices (see
(l) below), (ii) expenses related to office space reorganization
(see (n) below), (iii) for the three and nine month periods ended
September 30, 2021, expenses associated with restructuring and
closing of certain offices (see (m) below), (iv) net revenue and
expenses related to noncontrolling interests (see (j) below), (v)
interest expense primarily related to corporate financing
activities, and (vi) amortization of intangible assets related to
acquisitions.
(f)
Represents earnings from operations as a
percentage of operating revenue, and is a non-GAAP measure.
(g)
A non-GAAP measure which excludes (i) for
the three and nine month periods ended September 30, 2021, losses
associated with restructuring and closing of certain offices (see
(l) below), (ii) expenses related to office space reorganization
(see (n) below), and (iii) for the three and nine month periods
ended September 30, 2021, expenses associated with restructuring
and closing of certain offices (see (m) below), net of tax expense
(benefits).
(h)
A non-GAAP measure which includes units of
the long-term incentive compensation program consisting of profits
interest participation rights, which are equity incentive awards
that, subject to certain conditions, may be exchanged for shares of
our common stock. Certain profits interest participation rights and
other participating securities may be excluded from the computation
of outstanding stock equivalents for U.S. GAAP net income per
share.
(i)
Effective tax rate is a non-GAAP measure
based upon the U.S. GAAP rate with adjustments for the tax
applicable to the non-GAAP adjustments to operating income,
generally based upon the effective marginal tax rate in the
applicable jurisdiction of the adjustments. The computation is
based on a quotient, the numerator of which is the provision for
income taxes of $35,608, $34,430, and $37,350 for the three month
periods ended September 30, 2022, June 30, 2022, and September 30,
2021, respectively, $109,099 and $127,145 for the nine month
periods ended September 30, 2022 and 2021 and the denominator of
which is pre-tax income of $142,080, $130,538, and $148,748 for the
three month periods ended September 30, 2022, June 30, 2022, and
September 30, 2021, respectively, $426,371 and $485,562 for the
nine month periods ended September 30, 2022 and 2021.
(j)
Noncontrolling interests include revenue
and expenses principally related to Edgewater, ESC Funds and a
Special Purpose Acquisition Company.
(k)
Represents certain distribution,
introducer and management fees paid to third parties and
reimbursable deal costs for which an equal amount is excluded from
both non-GAAP operating revenue and non-compensation expense,
respectively, and excludes bad debt expense, which represents fees
that are deemed uncollectible.
(l)
Represents losses related to the
reclassification of currency translation adjustments to earnings
from accumulated other comprehensive loss associated with
restructuring and closing of certain of our offices.
(m)
Expenses associated with restructuring and
closing of certain offices.
(n)
Represents building depreciation and other
costs related to office space reorganization.
NM
Not meaningful
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221027005336/en/
Media Contact: Judi Frost Mackey +1 212 632 1428
judi.mackey@lazard.com Investor Contact: Alexandra Deignan +1 212
632 6886 alexandra.deignan@lazard.com
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