Record operating revenue for the third
quarter and first nine months of 2021
Record Financial Advisory third-quarter
revenue; high levels of activity globally
Record average assets under management of
$278 billion in third quarter
Lazard Ltd (NYSE: LAZ) today reported operating revenue1 of $702
million for the quarter ended September 30, 2021. Net income, as
adjusted2, was $111 million, or $0.98 per share (diluted) for the
quarter. On a U.S. GAAP basis, third-quarter 2021 net income was
$107 million, or $0.94 per share (diluted).
For the first nine months of 2021, net income, as adjusted, was
$358 million, or $3.13 per share (diluted). On a U.S. GAAP basis,
net income for the first nine months was $318 million, or $2.78 per
share (diluted).
“Record third-quarter and year-to-date operating revenue reflect
continued strong performance across the firm globally,” said
Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard.
“We are well positioned with unprecedented advisory activity and a
record level of average assets under management, and we continue to
invest for growth across our businesses.”
($ in millions, except per share data and
AUM)
Quarter Ended Sept.
30,
Nine Months Ended Sept.
30,
2021
2020
%’21-’20
2021
2020
%’21-’20
Net
Income
US GAAP
$107
$75
43%
$318
$213
49%
Per share, diluted
$0.94
$0.66
42%
$2.78
$1.88
48%
Adjusted2
$111
$76
46%
$358
$218
65%
Per share, diluted
$0.98
$0.67
46%
$3.13
$1.92
63%
Operating
Revenue1
Total operating revenue
$702
$569
23%
$2,171
$1,675
30%
Financial Advisory
$381
$307
24%
$1,170
$895
31%
Asset Management
$311
$261
19%
$982
$775
27%
AUM ($ in
billions)
Period End
$273
$228
20%
Average
$278
$226
23%
$272
$219
24%
Note: Endnotes are on page 6 of this release. A reconciliation
of U.S. GAAP to adjusted GAAP is on pages 13-14.
OPERATING REVENUE
Operating revenue1 was $702 million for the third quarter of
2021, and $2,171 million for the first nine months of 2021, both
record levels, up 23% and 30% from the respective 2020 periods.
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 2021, Financial Advisory operating
revenue was a record $381 million, 24% higher than the third
quarter of 2020.
For the first nine months of 2021, Financial Advisory operating
revenue was a record $1,170 million, 31% higher than the first nine
months of 2020.
During and since the third quarter of 2021, Lazard has been
engaged in significant and complex M&A transactions and other
advisory assignments globally, including the following (clients are
in italics): Faurecia in its €6.7 billion combination with Hella
GmbH & Co. KGaA; Macquarie Infrastructure Corporation’s $4.5
billion sale of Atlantic Aviation to KKR; Brown Brothers Harriman's
$3.5 billion sale of its Investor Services business to State
Street; Quanta Services’ $2.7 billion acquisition of Blattner
Energy; Sitel’s $2.2 billion acquisition of Sykes Enterprises;
Rolls-Royce's €1.8 billion sale of ITP Aero to a consortium led by
Bain Capital; Southwest Gas’ $2.0 billion acquisition of Questar
Pipeline from Dominion Energy; Vitrolife's €1.25 billion
acquisition of Igenomix; Daily Mail and General Trust’s £1.4
billion sale of RMS to Moody's Corporation; St. Modwen Properties
on its £1.56 billion recommended cash acquisition by Blackstone;
DistroKid’s investment from Insight Partners, valuing the company
at $1.3 billion; Saint-Gobain’s €1.0 billion acquisition of Chryso;
Lincoln Financial’s reinsurance transaction with Resolution Life;
Environmental Resources Management on OMERS and AIMCo’s sale of a
majority stake in the company to KKR; APEX Clean Energy on the sale
of a majority stake in the company to Ares; and Swinerton's sale of
its Renewable Energy Division & SOLV, Inc. to American
Securities.
Lazard has one of the world’s preeminent restructuring
practices. During and since the third quarter of 2021, we have been
engaged in a broad range of highly visible and complex
restructuring and debt advisory assignments for debtors or
creditors, including roles involving: Andrade Gutierrez; Assured
Guaranty in connection with Puerto Rico’s restructuring; Basic
Energy Services; Brazos Electric Power Cooperative; Cinepolis; Corp
Grupo Banking S.A.; Grupo GICSA; Intelsat S.A.; NMC Health; Nordic
Aviation Capital; Seadrill Limited; and Stoneway Capital.
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 Lazard’s publicly announced Financial Advisory
transactions, 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 2021, Asset Management operating
revenue was $311 million, 19% higher than the third quarter of
2020. For the first nine months of 2021, Asset Management operating
revenue was a record $982 million, 27% higher than the first nine
months of 2020.
For the third quarter of 2021, management fees and other revenue
was $303 million, 18% higher than the third quarter of 2020, and 2%
lower than the second quarter of 2021. For the first nine months of
2021, management fees and other revenue was $907 million, 18%
higher than the first nine months of 2020.
Average assets under management (AUM) for the third quarter of
2021 was a record $278 billion, 23% higher than the third quarter
of 2020, and 1% higher than the second quarter of 2021. Average AUM
for the first nine months of 2021 was a record $272 billion, 24%
higher than the first nine months of 2020.
AUM as of September 30, 2021, was $273 billion, up 20% from
September 30, 2020, and down 2% from June 30, 2021. The sequential
decrease was driven primarily by foreign exchange depreciation of
$3.3 billion and net outflows of $2.3 billion, partially offset by
market appreciation of $838 million.
For the third quarter of 2021, incentive fees were $7 million,
compared to $3 million for the third quarter of 2020. For the first
nine months of 2021, incentive fees were $75 million, compared to
$6 million for the first nine months of 2020.
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).
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 2021, we accrued adjusted compensation
and benefits expense1 at an adjusted compensation1 ratio of 59.5%,
compared to the third-quarter 2020 ratio of 60%. This resulted in
$417 million of adjusted compensation and benefits expense,
compared to $341 million for the third quarter of 2020.
For the first nine months of 2021, adjusted compensation and
benefits expense was $1,292 million, compared to $1,005 million for
the first nine months of 2020.
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 2021
was $117 million, 13% higher than the third quarter of 2020. The
ratio of adjusted non-compensation expense to operating revenue1
for the third quarter of 2021 was 16.6%, compared to 18.1% for the
third quarter of 2020.
Adjusted non-compensation expense for the first nine months of
2021 was $338 million, 7% higher than the first nine months of
2020. The ratio of adjusted non-compensation expense to operating
revenue for the first nine months of 2021 was 15.6%, compared to
18.8% for the first nine months of 2020.
Our goal remains to achieve 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 $37 million
for the third quarter of 2021 and $127 million for the first nine
months of 2021. The effective tax rate on the same basis was 25.1%
for the third quarter and 26.2% for the first nine months of 2021,
compared to 27.9% and 26.9% for the respective 2020 periods.
CAPITAL MANAGEMENT AND BALANCE SHEET
Our primary capital management goals include managing debt and
returning capital to shareholders through dividends and share
repurchases.
For the third quarter of 2021, Lazard returned $103 million to
shareholders, which included: $49 million in dividends; $52 million
in share repurchases of our Class A common stock; and $1.9 million
in satisfaction of employee tax obligations in lieu of share
issuances upon vesting of equity grants.
For the first nine months of 2021, Lazard returned $501 million
to shareholders, which included: $148 million in dividends; $286
million in share repurchases of our Class A common stock; and $68
million in satisfaction of employee tax obligations in lieu of
share issuances upon vesting of equity grants.
During the first nine months of 2021, we repurchased 6.5 million
shares at an average price of $44.24 per share, which included 1.1
million shares repurchased in the third quarter at an average price
of $46.01 per share. As of September 30, 2021, our remaining share
repurchase authorization was $314 million.
On October 28, 2021, Lazard declared a quarterly dividend of
$0.47 per share on its outstanding common stock. The dividend is
payable on November 19, 2021, to stockholders of record on November
8, 2021.
Lazard’s financial position remains strong. As of September 30,
2021, our cash and cash equivalents were $1,185 million.
Stockholders’ equity related to Lazard’s interests was $878
million.
***
CONFERENCE CALL
Lazard will host a conference call at 8:00 a.m. EDT on October
29, 2021, to discuss the company’s financial results for the third
quarter and first nine months of 2021. 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 (800)
367-2403 (toll-free, U.S. and Canada) or +1 (334) 777-6978 (outside
of the U.S. and Canada), 15 minutes prior to the start of the
call.
A replay of the conference call will be available by 10:00 a.m.
EDT on October 29, 2021, via the Lazard Investor Relations website,
www.lazard.com, or by dialing 1 (888) 203-1112 (toll-free, U.S. and
Canada) or +1 (719) 457-0820 (outside of the U.S. and Canada). The
replay access code is: 2407222.
ABOUT LAZARD
Lazard, one of the world's preeminent financial advisory and
asset management firms, operates from 41 cities across 26 countries
in North America, Europe, Asia, Australia, and Central and South
America. 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 statements 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 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 2021 adjusted results1
exclude losses of $0.1 million and $23.6 million, respectively,
associated with restructuring and closing of certain offices;
pre-tax charges of $1.0 million and $3.6 million, respectively,
relating to office space reorganization; and $1.1 million and $16.3
million, respectively, relating to expenses associated with
restructuring and closing of certain offices. On a U.S. GAAP basis,
these resulted in a net charge of $4.2 million, or $0.04 (diluted)
per share, for the third quarter, and a net charge of $40.7
million, or $0.36 (diluted) per share, for the first nine months of
2021.
LAZ-EPE
LAZARD LTD UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S.
GAAP)
Three Months Ended
% Change From
($ in thousands, except per share data) September 30,2021 June
30,2021 September 30,2020
June 30, 2021
September 30, 2020
Total revenue
$737,807
$843,264
$598,022
(13%)
23%
Interest expense
(20,378)
(20,127)
(20,344)
Net revenue
717,429
823,137
577,678
(13%)
24%
Operating expenses:
Compensation and benefits
419,627
514,918
354,625
(19%)
18%
Occupancy and equipment
31,015
29,875
31,318
Marketing and business development
9,922
9,332
7,562
Technology and information services
37,559
35,774
33,457
Professional services
16,698
19,996
14,701
Fund administration and outsourced services
34,137
31,302
26,196
Amortization of intangible assets related to acquisitions
15
15
458
Other
13,497
15,664
4,681
Subtotal
142,843
141,958
118,373
1%
21%
Operating expenses
562,470
656,876
472,998
(14%)
19%
Operating income
154,959
166,261
104,680
(7%)
48%
Provision for income taxes
39,446
41,345
28,165
(5%)
40%
Net income
115,513
124,916
76,515
(8%)
51%
Net income attributable to noncontrolling interests
8,304
1,738
1,423
Net income attributable to Lazard Ltd
$107,209
$123,178
$75,092
(13%)
43%
Attributable to Lazard Ltd Common Stockholders:
Weighted average shares outstanding:
Basic
105,415,743
106,746,654
107,168,615
(1%)
(2%)
Diluted
112,994,037
113,603,478
113,181,564
(1%)
(0%)
Net income per share:
Basic
$1.00
$1.14
$0.69
(12%)
45%
Diluted
$0.94
$1.08
$0.66
(13%)
42%
LAZARD LTD UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S.
GAAP)
Nine Months Ended
($ in thousands, except per share data) September 30,2021 September
30,2020
% Change
Total revenue
$2,260,975
$1,748,443
29%
Interest expense
(60,302)
(60,459)
Net revenue
2,200,673
1,687,984
30%
Operating expenses:
Compensation and benefits
1,336,091
1,025,948
30%
Occupancy and equipment
95,638
94,090
Marketing and business development
25,905
34,265
Technology and information services
107,003
97,444
Professional services
51,642
45,974
Fund administration and outsourced services
94,718
76,639
Amortization of intangible assets related to acquisitions
45
1,359
Other
34,121
27,623
Subtotal
409,072
377,394
8%
Operating expenses
1,745,163
1,403,342
24%
Operating income
455,510
284,642
60%
Provision for income taxes
124,255
76,720
62%
Net income
331,255
207,922
59%
Net income (loss) attributable to noncontrolling interests
13,568
(4,650)
Net income attributable to Lazard Ltd
$317,687
$212,572
49%
Attributable to Lazard Ltd Common Stockholders:
Weighted average shares outstanding:
Basic
106,484,652
106,711,547
(0%)
Diluted
114,139,936
112,929,830
1%
Net income per share:
Basic
$2.94
$1.96
50%
Diluted
$2.78
$1.88
48%
LAZARD LTDUNAUDITED CONDENSED
CONSOLIDATEDSTATEMENT OF FINANCIAL CONDITION(U.S.
GAAP) ($ in thousands) September 30,2021 December
31,2020
ASSETS
Cash and cash equivalents
$1,184,772
$1,389,876
Deposits with banks and short-term investments
1,360,957
1,134,463
Restricted cash
615,297
44,488
Receivables
700,136
743,141
Investments
914,975
658,532
Goodwill and other intangible assets
379,847
384,071
Operating lease right-of-use assets
468,524
513,923
Deferred tax assets
480,533
538,448
Other assets
621,539
564,919
Total Assets
$6,726,580
$5,971,861
LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
Liabilities Deposits and other customer payables
$1,450,764
$1,201,150
Accrued compensation and benefits
711,779
734,544
Operating lease liabilities
554,900
606,963
Tax receivable agreement obligation
211,236
221,451
Senior debt
1,684,606
1,682,741
Other liabilities
560,581
525,579
Total liabilities
5,173,866
4,972,428
Commitments and contingencies Redeemable
noncontrolling interests
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
110,470
135,439
Retained earnings
1,402,191
1,295,386
Accumulated other comprehensive loss, net of tax
(246,534)
(238,368)
Subtotal
1,267,255
1,193,585
Class A common stock held by subsidiaries, at cost
(389,448)
(281,813)
Total Lazard Ltd stockholders' equity
877,807
911,772
Noncontrolling interests
99,907
87,661
Total stockholders' equity
977,714
999,433
Total liabilities, redeemable noncontrolling interests and
stockholders' equity
$6,726,580
$5,971,861
LAZARD LTD SELECTED
SUMMARY FINANCIAL INFORMATION (a) (Non-GAAP -
unaudited)
Three Months Ended
% Change From
($ in thousands, except per share data) September 30,2021 June
30,2021 September 30,2020
June 30, 2021
September 30, 2020
Revenues:
Financial Advisory
$381,295
$471,075
$306,977
(19%)
24%
Asset Management
310,566
343,453
261,047
(10%)
19%
Corporate
9,783
6,918
1,023
41%
NM
Operating revenue (b)
$701,644
$821,446
$569,047
(15%)
23%
Expenses:
Adjusted compensation and benefits expense (c)
$417,479
$488,760
$341,428
(15%)
22%
Ratio of adjusted compensation to operating revenue
59.5%
59.5%
60.0%
Non-compensation expense (d)
$116,734
$118,830
$103,081
(2%)
13%
Ratio of non-compensation to operating revenue
16.6%
14.5%
18.1%
Earnings:
Earnings from operations (e)
$167,431
$213,856
$124,538
(22%)
34%
Operating margin (f)
23.9%
26.0%
21.9%
Adjusted net income (g)
$111,398
$145,798
$76,102
(24%)
46%
Diluted adjusted net income per share
$0.98
$1.28
$0.67
(23%)
46%
Diluted weighted average shares (h)
113,781,092
114,058,944
113,780,625
(0%)
0%
Effective tax rate (i)
25.1%
25.2%
27.9%
This presentation includes non-U.S. GAAP
("non-GAAP") measures. Our non-GAAP measures are not meant to be
considered in isolation or as a substitute for the corresponding
U.S. GAAP measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with U.S.
GAAP. For a detailed explanation of the adjustments made to the
corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP
to Selected Summary Financial Information and Notes to Financial
Schedules.
LAZARD LTDSELECTED SUMMARY FINANCIAL INFORMATION
(a)(Non-GAAP - unaudited) Nine Months Ended ($ in
thousands, except per share data) September 30,2021 September
30,2020
% Change
Revenues:
Financial Advisory
$1,169,670
$894,656
31%
Asset Management
981,933
775,346
27%
Corporate
19,349
4,770
NM
Operating revenue (b)
$2,170,952
$1,674,772
30%
Expenses:
Adjusted compensation and benefits expense (c)
$1,291,717
$1,004,863
29%
Ratio of adjusted compensation to operating revenue
59.5%
60.0%
Non-compensation expense (d)
$338,044
$315,330
7%
Ratio of non-compensation to operating revenue
15.6%
18.8%
Earnings:
Earnings from operations (e)
$541,191
$354,579
53%
Operating margin (f)
24.9%
21.2%
Adjusted net income (g)
$358,417
$217,805
65%
Diluted adjusted net income per share
$3.13
$1.92
63%
Diluted weighted average shares (h)
114,565,986
113,261,923
1%
Effective tax rate (i)
26.2%
26.9%
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for the corresponding U.S. GAAP
measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with U.S.
GAAP. For a detailed explanation of the adjustments made to the
corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP
to Selected Summary Financial Information and Notes to Financial
Schedules.
LAZARD LTDASSETS UNDER MANAGEMENT
("AUM")(unaudited)($ in millions) As of
Variance September 30,2021 June 30,2021 December 31,2020 Qtr to Qtr
YTD
Equity: Emerging Markets
$31,316
$32,363
$33,254
(3.2%)
(5.8%)
Global
58,348
61,874
56,246
(5.7%)
3.7%
Local
54,764
53,917
48,672
1.6%
12.5%
Multi-Regional
74,840
76,405
71,560
(2.0%)
4.6%
Total Equity
219,268
224,559
209,732
(2.4%)
4.5%
Fixed Income: Emerging Markets
12,917
13,213
13,651
(2.2%)
(5.4%)
Global
14,469
14,617
11,962
(1.0%)
21.0%
Local
6,070
5,788
5,600
4.9%
8.4%
Multi-Regional
13,731
13,532
12,571
1.5%
9.2%
Total Fixed Income
47,187
47,150
43,784
0.1%
7.8%
Alternative Investments
3,934
3,529
2,748
11.5%
43.2%
Private Equity
1,288
1,343
1,420
(4.1%)
(9.3%)
Cash Management
895
797
958
12.3%
(6.6%)
Total AUM
$272,572
$277,378
$258,642
(1.7%)
5.4%
Three Months Ended September
30
Nine Months Ended September
30,
2021
2020
2021
2020
AUM - Beginning of Period
$277,378
$214,704
$258,642
$248,239
Net Flows
(2,331)
(201)
(4,838)
(11,082)
Market and foreign exchangeappreciation (depreciation)
(2,475)
13,249
18,768
(9,405)
AUM - End of Period
$272,572
$227,752
$272,572
$227,752
Average AUM
$277,941
$226,046
$271,761
$218,652
% Change in average AUM
23.0%
24.3%
Note: Average AUM generally represents the
average of the monthly ending AUM balances for the period.
LAZARD LTDRECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY
FINANCIAL INFORMATION (a)(unaudited) Three Months Ended
Nine Months Ended ($ in thousands, except per share data) September
30,2021 June 30,2021 September 30,2020 September 30,2021 September
30,2020
Operating Revenue Net revenue - U.S. GAAP
Basis
$717,429
$823,137
$577,678
$2,200,673
$1,687,984
Adjustments: Revenue related to noncontrolling interests (j)
(11,994)
(5,754)
(4,042)
(24,109)
(3,443)
(Gains) losses related to Lazard Fund Interests ("LFI") and other
similar arrangements
1,368
(16,491)
(11,261)
(22,610)
(15,427)
Distribution fees, reimbursable deal costs, bad debt expense and
other (k)
(23,876)
(21,625)
(12,016)
(62,211)
(50,336)
Losses associated with restructuring and closing of certain offices
(l)
51
23,579
-
23,630
-
Interest expense
18,666
18,600
18,688
55,579
55,994
Operating revenue, as adjusted (b)
$701,644
$821,446
$569,047
$2,170,952
$1,674,772
Compensation and Benefits Expense Compensation and
benefits expense - U.S. GAAP Basis
$419,627
$514,918
$354,625
$1,336,091
$1,025,948
Adjustments: (Charges) credits pertaining to LFI and other
similar arrangements
1,368
(16,491)
(11,261)
(22,610)
(15,427)
Expenses associated with restructuring and closing of certain
offices (m)
(1,012)
(7,287)
-
(14,922)
-
Compensation related to noncontrolling interests (j)
(2,504)
(2,380)
(1,936)
(6,842)
(5,658)
Compensation and benefits expense, as adjusted (c)
$417,479
$488,760
$341,428
$1,291,717
$1,004,863
Non-Compensation Expense Non-compensation expense -
Subtotal - U.S. GAAP Basis
$142,843
$141,958
$118,373
$409,072
$377,394
Adjustments: Expenses related to office space reorganization
(n)
(991)
(1,237)
(2,311)
(3,644)
(8,462)
Distribution fees, reimbursable deal costs, bad debt expense and
other (k)
(23,876)
(21,625)
(12,016)
(62,211)
(50,336)
Amortization of intangible assets related to acquisitions
(15)
(15)
(458)
(45)
(1,359)
Income (expenses) associated with restructuring and closing of
certain offices (m)
(39)
1,586
-
(1,424)
-
Non-compensation expense related to noncontrolling interests (j)
(1,188)
(1,837)
(507)
(3,704)
(1,907)
Non-compensation expense, as adjusted (d)
$116,734
$118,830
$103,081
$338,044
$315,330
Pre-Tax Income and Earnings From Operations Operating
Income - U.S. GAAP Basis
$154,959
$166,261
$104,680
$455,510
$284,642
Adjustments: Losses associated with restructuring and
closing of certain offices (l)
51
23,579
-
23,630
-
Expenses related to office space reorganization (n)
991
1,237
2,311
3,644
8,462
Expenses associated with restructuring and closing of certain
offices (m)
1,051
5,701
-
16,346
-
Net (income) loss related to noncontrolling interests (j)
(8,304)
(1,738)
(1,423)
(13,568)
4,650
Pre-tax income, as adjusted
148,748
195,040
105,568
485,562
297,754
Interest expense
18,666
18,600
18,688
55,579
55,994
Amortization of intangible assets related to acquisitions and other
17
216
282
50
831
Earnings from operations, as adjusted (e)
$167,431
$213,856
$124,538
$541,191
$354,579
Net Income attributable to Lazard Ltd Net
income attributable to Lazard Ltd - U.S. GAAP Basis
$107,209
$123,178
$75,092
$317,687
$212,572
Adjustments: Losses associated with restructuring and closing of
certain offices (l)
51
23,579
-
23,630
-
Expenses related to office space reorganization (n)
991
1,237
2,311
3,644
8,462
Expenses associated with restructuring and closing of certain
offices (m)
1,051
5,701
-
16,346
-
Tax expense (benefit) allocated to adjustments
2,096
(7,897)
(1,301)
(2,890)
(3,229)
Net income, as adjusted (g)
$111,398
$145,798
$76,102
$358,417
$217,805
Diluted Weighted Average Shares Outstanding Diluted
Weighted Average Shares Outstanding - U.S. GAAP Basis
112,994,037
113,603,478
113,181,564
114,139,936
112,929,830
Adjustment: participating securities including profits interest
participation rights
787,055
455,466
599,061
426,050
332,093
Diluted Weighted Average Shares Outstanding, as adjusted (h)
113,781,092
114,058,944
113,780,625
114,565,986
113,261,923
Diluted net income per share: U.S. GAAP Basis
$0.94
$1.08
$0.66
$2.78
$1.88
Non-GAAP Basis, as adjusted
$0.98
$1.28
$0.67
$3.13
$1.92
This presentation includes non-GAAP
measures. Our non-GAAP measures are not meant to be considered in
isolation or as a substitute for comparable U.S. GAAP measures, and
should be read only in conjunction with our consolidated financial
statements prepared in accordance with U.S. GAAP. For a detailed
explanation of the adjustments made to comparable U.S. GAAP
measures, see Notes to Financial Schedules.
See Notes to Financial
Schedules
LAZARD LTDRECONCILIATION OF NON-COMPENSATION U.S. GAAP TO
ADJUSTED (a)(unaudited) Three Months Ended Nine Months
Ended ($ in thousands) September 30,2021 June 30,2021 September
30,2020 September 30,2021 September 30,2020 Non-compensation
expense - U.S. GAAP Basis: Occupancy and equipment
$31,015
$29,875
$31,318
$95,638
$94,090
Marketing and business development
9,922
9,332
7,562
25,905
34,265
Technology and information services
37,559
35,774
33,457
107,003
97,444
Professional services
16,698
19,996
14,701
51,642
45,974
Fund administration and outsourced services
34,137
31,302
26,196
94,718
76,639
Amortization of intangible assets related to acquisitions
15
15
458
45
1,359
Other
13,497
15,664
4,681
34,121
27,623
Non-compensation expense - Subtotal - U.S. GAAP Basis
$142,843
$141,958
$118,373
$409,072
$377,394
Non-compensation expense - Adjustments: Occupancy and
equipment (j) (m) (n)
($1,106)
$788
($2,278)
($4,503)
($8,459)
Marketing and business development (j) (k) (m)
(1,261)
(1,247)
(185)
(2,713)
(3,631)
Technology and information services (j) (k) (m)
(72)
(88)
(169)
(174)
(771)
Professional services (j) (k) (m) (n)
(1,143)
(2,054)
(2,269)
(4,658)
(5,705)
Fund administration and outsourced services (j) (k)
(19,669)
(16,826)
(13,593)
(51,765)
(35,842)
Amortization of intangible assets related to acquisitions
(15)
(15)
(458)
(45)
(1,359)
Other (j) (k) (m) (n)
(2,843)
(3,686)
3,660
(7,170)
(6,297)
Subtotal Non-compensation adjustments
($26,109)
($23,128)
($15,292)
($71,028)
($62,064)
Non-compensation expense, as adjusted: Occupancy and
equipment
$29,909
$30,663
$29,040
$91,135
$85,631
Marketing and business development
8,661
8,085
7,377
23,192
30,634
Technology and information services
37,487
35,686
33,288
106,829
96,673
Professional services
15,555
17,942
12,432
46,984
40,269
Fund administration and outsourced services
14,468
14,476
12,603
42,953
40,797
Amortization of intangible assets related to acquisitions
-
-
-
-
-
Other
10,654
11,978
8,341
26,951
21,326
Non-compensation expense, as adjusted (d)
$116,734
$118,830
$103,081
$338,044
$315,330
This presentation includes non-GAAP measures. Our non-GAAP
measures are not meant to be considered in isolation or as a
substitute for comparable 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 comparable U.S. GAAP measures, see Notes
to Financial Schedules.
See Notes to Financial
Schedules LAZARD LTDNotes 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 and for the three month period ending June 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 and for the three month period ended June 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 and for the three month period ended June 30,
2021, income (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 and for the three month period ended June 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 and for the three month period
ended June 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 (iv) 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 and for the three month period
ended June 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 and for the
three month period ended June 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 $37,350, $49,242, and $29,466 for the three month
periods ended September 30, 2021, June 30, 2021, and September 30,
2020, respectively, $127,145 and $79,949 for the nine month periods
ended September 30, 2021 and 2020 and the denominator of which is
pre-tax income of $148,748, $195,040 and $105,568 for the three
month periods ended September 30, 2021, June 30, 2021, and
September 30, 2020, respectively, $485,562 and $297,754 for the
nine month periods ended September 30, 2021 and 2020. (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 incremental rent expense, building depreciation,
impairment losses, and legal fees related to office space
reorganization.
NM
Not meaningful
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version on businesswire.com: https://www.businesswire.com/news/home/20211029005104/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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