Second-quarter operating revenue of $620
million
Asset Management AUM of $239 billion up 11%
year-to-date
Financial Advisory second-quarter operating
revenue up 26% from first quarter
Lazard Ltd (NYSE: LAZ) today reported operating revenue1 of $620
million for the quarter ended June 30, 2023. Net income, as
adjusted2, was $23 million, or $0.24 per share, diluted, for the
quarter. On a U.S. GAAP basis, second-quarter 2023 net loss was
$124 million, or $1.41 per share, diluted.
First-half 2023 net loss, as adjusted, was $0.3 million. On a
U.S. GAAP Basis, first-half 2023 net loss was $146 million, or
$1.68 per share, diluted.
"Lazard’s diversified global business model has proven resilient
during the continued challenging market conditions in the second
quarter," said Kenneth M. Jacobs, Chairman and Chief Executive
Officer of Lazard. "Our Asset Management business is
well-positioned, and we believe the M&A market is stabilizing
and conditions are set for the beginning of a rebound."
($ in millions, except
Quarter Ended
Six Months Ended
per share data and AUM)
June 30,
June 30,
2023
2022
%'23-'22
2023
2022
%'23-'22
Net Income
(Loss)
U.S. GAAP
($124)
$95
NM
($146)
$209
NM
Per share, diluted
($1.41)
$0.92
NM
($1.68)
$1.97
NM
Adjusted2
$23
$96
(76%)
$–
$211
NM
Per share, diluted
$0.24
$0.92
(74%)
$–
$1.97
NM
Operating
Revenue1
Total operating revenue
$620
$676
(8%)
$1,147
$1,375
(17%)
Financial Advisory
$344
$407
(15%)
$618
$795
(22%)
Asset Management
$267
$266
1%
$532
$577
(8%)
AUM ($ in
billions)
Period end
$239
$217
10%
Average
$235
$230
2%
$231
$243
(5%)
Note: Endnotes are on page 5 of this release. A reconciliation
of adjusted GAAP to U.S. GAAP is on pages 13-14.
OPERATING REVENUE
Operating revenue was $620 million for the second quarter of
2023, and $1,147 million for the first half of 2023, 8% and 17%
lower, respectively, from the comparable 2022 periods.
Financial Advisory
Our Financial Advisory results include Strategic and M&A
Advisory, Capital Markets Advisory, Shareholder Advisory,
Restructuring and Capital Solutions, Sovereign Advisory,
Geopolitical Advisory, and other strategic advisory matters and
Capital Raising and Placement.
For the second quarter of 2023, Financial Advisory operating
revenue was $344 million, 15% lower than the second quarter of
2022.
For the first half of 2023, Financial Advisory operating revenue
was $618 million, 22% lower than the first half of 2022.
During and since the second quarter of 2023, Lazard has been
engaged in significant and complex M&A transactions and other
strategic advisory assignments globally, including the following
(clients are in italics): Lincoln Financial Group’s $28 billion
reinsurance transaction with Fortitude Re; Newmont’s $19 billion
acquisition of Newcrest; EDF in the implementation of the
squeeze-out procedure for the shares and OCEANEs of EDF following
the simplified tender offer launched by the French State, valued at
€9.7 billion; CVS Health's $10.6 billion acquisition of Oak Street
Health; NEOM Green Hydrogen Company’s completion of an $8.4 billion
financing for the world’s largest carbon-free green hydrogen plant;
Xylem's $7.5 billion acquisition of Evoqua; Affiliate of Lone Star
Funds’ €5.2 billion sale of MBCC Group to Sika; NiSource’s $2.4
billion agreement to sell a minority equity interest in NIPSCO to
Blackstone Infrastructure Partners; Madison Dearborn Partners'
closing of its $2.2 billion continuation fund; Mars' $1.45 billion
acquisition of Heska; Insight Partners’ closing of its $1.3 billion
continuation fund; Oakley Capital on the closing of its over €1
billion continuation fund for IU Group; Agrofert’s €810 million
acquisition of Borealis' nitrogen business; IFF’s $900 million sale
of its Savory Solutions Group to PAI Partners; Allen & Overy
LLP’s combination with Shearman & Sterling; and Braya Renewable
Fuel’s preferred equity investment from Energy Capital
Partners.
Lazard has one of the world’s preeminent restructuring and
capital solutions practices. During and since the second quarter of
2023, we have been engaged in a broad range of visible and complex
restructuring and debt advisory assignments, including debtor roles
involving Bed Bath & Beyond, IKKS, Latécoère, Naftogaz,
National CineMedia, SiO2 Medical Products and Vroon, and creditor
and/or related party roles involving Ansaldo Energia, Endo
Pharmaceuticals, Orpea, Party City, SVB Financial Group,
Technicolor Creative Studio and Venator.
Our Capital Advisory practice remains 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 second quarter of 2023, or continued
to advise or completed since June 30, 2023, please visit our
website at www.lazard.com/financial-advisory/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 second quarter of 2023, Asset Management operating
revenue was $267 million, 1% higher than the second quarter of
2022. For the first half of 2023, Asset Management operating
revenue was $532 million, 8% lower than the first half of 2022.
For the second quarter of 2023, management fees and other
revenue was $261 million, 1% higher than the second quarter of
2022, and 1% higher than the first quarter of 2023. For the first
half of 2023, management fees and other revenue was $520 million,
5% lower than the first half of 2022.
Average assets under management (AUM) for the second quarter of
2023 was $235 billion, 2% higher than the second quarter of 2022,
and 4% higher than the first quarter of 2023. Average AUM for the
first half of 2023 was $231 billion, 5% lower than the first half
of 2022.
AUM as of June 30, 2023, was $239 billion, 3% higher than March
31, 2023, and 10% higher than June 30, 2022. The sequential change
from March 31, 2023 was driven by market appreciation of $8.8
billion, offset by foreign exchange depreciation of $0.6 billion
and net outflows of $1.0 billion.
For the second quarter of 2023, incentive fees were $6 million,
compared to $7 million for the second quarter of 2022. For the
first half of 2023, incentive fees were $11 million, compared to
$33 million for the first half of 2022.
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 while targeting 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 second quarter of 2023, adjusted compensation and
benefits expense1 was $424 million, compared to $395 million for
the second quarter of 2022. The adjusted compensation ratio for the
second quarter of 2023 was 68.4%, compared to the second-quarter
2022 ratio of 58.5%.
For the first half of 2023, adjusted compensation and benefits
expense was $823 million, compared to $804 million for the first
half of 2022.
Our goal remains 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, while targeting a consistent
deferral policy.
Non-Compensation Expense
For the second quarter of 2023, adjusted non-compensation
expense1 was $144 million, 10% higher than the second quarter of
2022, primarily reflecting increased occupancy costs, as well as
higher travel and business development and professional services
expenses.
The ratio of adjusted non-compensation expense to operating
revenue was 23.2% for the second quarter of 2023, compared to 19.4%
for the second quarter of 2022.
Adjusted non-compensation expense for the first half of 2023 was
$286 million, 15% higher than the first half of 2022. The ratio of
adjusted non-compensation expense to operating revenue for the
first half of 2023 was 24.9%, compared to 18.0% for the first half
of 2022.
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 $10 million
for the second quarter and a benefit of $0.5 million for the first
half of 2023. The effective tax rate on the same basis was 31.2%
for the second quarter of 2023 and 67.8% for the first half of
2023, compared to 26.4% and 25.9% for the respective 2022
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 second quarter of 2023, Lazard returned $47 million to
shareholders, which included: $43 million in dividends and $4
million in satisfaction of employee tax obligations in lieu of
share issuances upon vesting of equity grants.
In the first half of 2023, Lazard returned $234 million to
shareholders, which included: $86 million in dividends; $99 million
in share repurchases of our common stock; and $49 million in
satisfaction of employee tax obligations in lieu of share issuances
upon vesting of equity grants.
During the first half of 2023, we repurchased 2.7 million
shares. As of June 30, 2023, our remaining share repurchase
authorization was $203 million.
On July 26, 2023, Lazard declared a quarterly dividend of $0.50
per share on its outstanding common stock. The dividend is payable
on August 18, 2023, to stockholders of record on August 7,
2023.
Lazard’s financial position remains strong. As of June 30, 2023,
our cash and cash equivalents were $698 million. Stockholders’
equity related to Lazard’s interests was $360 million.
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
Second-quarter and first-half
2023 adjusted results1 exclude pre-tax charges of $146.7 million
and $167.4 million, respectively, relating to expenses associated
with cost-saving initiatives; first-half pre-tax charges of $10.7
million relating to expenses associated with senior management
transition, a benefit pursuant to tax receivable agreement
obligation (“TRA”) of $40.4 million, and $19.1 million relating to
certain asset impairment charges. On a U.S. GAAP basis, these
resulted in a net charge of $146.7 million, or $1.65, per share,
diluted, for the second quarter, and a net charge of $145.9
million, or $1.66, per share, diluted, for the first half of
2023.
CONFERENCE CALL
Lazard will host a conference call at 8:00 a.m. ET on July 27,
2023, to discuss the company’s financial results for the second
quarter of 2023 and first half of 2023. 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
800-245-3047 (toll-free, U.S. and Canada) or +1 203-518-9765
(outside of the U.S. and Canada), 15 minutes prior to the start of
the call. Conference ID: LAZQ223.
A replay of the conference call will be available by 10:00 a.m.
ET, July 27, 2023, via the Lazard Investor Relations website at
www.lazard.com, or by dialing +1 800-839-4016 (toll-free, U.S. and
Canada) or +1 402-220-7240 (outside of the U.S. and Canada).
ABOUT LAZARD
Lazard, one of the world's preeminent financial advisory and
asset management firms, operates from 43 cities across 26 countries
in North and South America, Europe, Asia and Australia. Celebrating
its 175th year, the firm provides advice on mergers and
acquisitions, capital markets and other strategic matters,
restructuring and capital solutions, and 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 strategies, business
plans and initiatives and anticipated trends in our business. These
forward-looking 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 statements 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.
***
LAZ-EPE
LAZARD LTD
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. GAAP)
Three Months Ended
% Change From
June 30,
March 31,
June 30,
March 31,
June 30,
($ in thousands, except per share
data)
2023
2023
2022
2023
2022
Total revenue
$662,318
$561,911
$660,658
18%
–%
Interest expense
(19,204
)
(19,475
)
(21,112
)
Net revenue
643,114
542,436
639,546
19%
1%
Operating expenses:
Compensation and benefits
572,231
449,967
363,830
27%
57%
Occupancy and equipment
32,800
31,773
29,409
Marketing and business development
28,582
22,762
22,673
Technology and information services
51,370
44,040
42,067
Professional services
21,402
24,326
16,549
Fund administration and outsourced
services
28,968
26,576
28,551
Amortization and other acquisition-related
costs
95
48
15
Other
17,739
20,303
10,614
Subtotal
180,956
169,828
149,878
7%
21%
Benefit pursuant to tax receivable
agreement
–
(40,435
)
–
Operating expenses
753,187
579,360
513,708
30%
47%
Operating income (loss)
(110,073
)
(36,924
)
125,838
NM
NM
Provision (benefit) for income taxes
10,303
(21,725
)
34,187
NM
(70%)
Net income (loss)
(120,376
)
(15,199
)
91,651
NM
NM
Net income (loss) attributable to
noncontrolling interests
3,637
6,973
(3,829
)
Net income (loss) attributable to Lazard
Ltd
($124,013
)
($22,172
)
$95,480
NM
NM
Attributable to Lazard Ltd Common
Stockholders:
Weighted average shares
outstanding:
Basic
88,729,654
87,591,852
98,660,173
1%
(10%)
Diluted
88,729,654
87,591,852
102,753,336
1%
(14%)
Net income (loss) per share:
Basic
($1.41
)
($0.27
)
$0.96
NM
NM
Diluted
($1.41
)
($0.27
)
$0.92
NM
NM
LAZARD LTD
UNAUDITED CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. GAAP)
Six Months Ended
June 30,
June 30,
($ in thousands, except per share
data)
2023
2022
% Change
Total revenue
$1,224,229
$1,376,802
(11%)
Interest expense
(38,679
)
(42,364
)
Net revenue
1,185,550
1,334,438
(11%)
Operating expenses:
Compensation and benefits
1,022,198
760,671
34%
Occupancy and equipment
64,573
60,648
Marketing and business development
51,344
36,796
Technology and information services
95,410
79,998
Professional services
45,728
32,578
Fund administration and outsourced
services
55,544
58,254
Amortization of intangible assets related
to acquisitions
143
30
Other
38,042
19,897
Subtotal
350,784
288,201
22%
Benefit pursuant to tax receivable
agreement
(40,435
)
—
Operating expenses
1,332,547
1,048,872
27%
Operating income (loss)
(146,997
)
285,566
NM
Provision (benefit) for income taxes
(11,422
)
72,940
NM
Net income (loss)
(135,575
)
212,626
NM
Net income attributable to noncontrolling
interests
10,610
3,270
Net income (loss) attributable to Lazard
Ltd
($146,185
)
$209,356
NM
Attributable to Lazard Ltd Common
Stockholders:
Weighted average shares
outstanding:
Basic
88,160,753
100,603,724
(12%)
Diluted
88,160,753
105,469,988
(16%)
Net income (loss) per share:
Basic
($1.68
)
$2.05
NM
Diluted
($1.68
)
$1.97
NM
LAZARD LTD
UNAUDITED CONDENSED
CONSOLIDATED
STATEMENT OF FINANCIAL
CONDITION
(U.S. GAAP)
June 30,
December 31,
($ in thousands)
2023
2022
ASSETS
Cash and cash equivalents
$697,756
$1,234,773
Deposits with banks and short-term
investments
446,777
779,246
Restricted cash
35,368
625,381
Receivables
674,558
652,758
Investments
690,199
698,977
Property
236,717
250,073
Goodwill and other intangible assets
394,682
377,330
Operating lease right-of-use assets
426,427
431,608
Deferred tax assets
524,053
407,657
Other assets
476,400
394,758
Total Assets
$4,602,937
$5,852,561
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS &
STOCKHOLDERS' EQUITY
Liabilities
Deposits and other customer payables
$587,838
$921,834
Accrued compensation and benefits
601,689
735,576
Operating lease liabilities
507,157
513,688
Tax receivable agreement obligation
118,546
191,189
Senior debt
1,688,957
1,687,714
Other liabilities
599,282
543,690
Total liabilities
4,103,469
4,593,691
Commitments and contingencies
Redeemable noncontrolling interests
83,583
583,471
Stockholders' equity
Preferred stock, par value $.01 per
share
–
–
Common stock, par value $.01 per share
1,128
1,128
Additional paid-in capital
167,622
167,890
Retained earnings
1,431,181
1,676,713
Accumulated other comprehensive loss, net
of tax
(281,886
)
(295,854
)
Subtotal
1,318,045
1,549,877
Class A common stock held by subsidiaries,
at cost
(958,067
)
(993,414
)
Total Lazard Ltd stockholders' equity
359,978
556,463
Noncontrolling interests
55,907
118,936
Total stockholders' equity
415,885
675,399
Total liabilities, redeemable
noncontrolling interests and stockholders' equity
$4,602,937
$5,852,561
LAZARD LTD
SELECTED SUMMARY FINANCIAL
INFORMATION (a)
(Non-GAAP - unaudited)
Three Months Ended
% Change From
June 30,
March 31,
June 30,
March 31,
June 30,
($ in thousands, except per share
data)
2023
2023
2022
2023
2022
Revenues:
Financial Advisory
$344,167
$273,861
$406,792
26%
(15%)
Asset Management
267,058
264,645
265,707
1%
1%
Corporate
8,801
(11,488
)
3,412
NM
NM
Operating revenue (b)
$620,026
$527,018
$675,911
18%
(8%)
Expenses:
Adjusted compensation and benefits
expense (c)
$424,097
$399,090
$395,407
6%
7%
Ratio of adjusted compensation to
operating revenue
68.4
%
75.7
%
58.5
%
Non-compensation expense (d)
$143,677
$142,258
$130,941
1%
10%
Ratio of non-compensation to operating
revenue
23.2
%
27.0
%
19.4
%
Earnings:
Earnings (loss) from operations
(e)
$52,252
($14,330
)
$149,563
NM
(65%)
Operating margin (f)
8.4
%
(2.7
%)
22.1
%
Adjusted net income (loss) (g)
$22,692
($22,948
)
$96,108
NM
(76%)
Diluted adjusted net income (loss) per
share
$0.24
($0.26
)
$0.92
NM
(74%)
Diluted weighted average shares (h)
95,620,902
87,591,852
104,767,897
9%
(9%)
Effective tax rate (i)
31.2
%
32.1
%
26.4
%
This presentation includes non-U.S. GAAP ("non-GAAP") measures.
Our non-GAAP measures are not meant to be considered in isolation
or as a substitute for the corresponding U.S. GAAP measures and
should be read only in conjunction with our consolidated financial
statements prepared in accordance with U.S. GAAP. For a detailed
explanation of the adjustments made to the corresponding U.S. GAAP
measures, see Reconciliation of U.S. GAAP to Selected Summary
Financial Information and Notes to Financial Schedules.
LAZARD LTD
SELECTED SUMMARY FINANCIAL
INFORMATION (a)
(Non-GAAP - unaudited)
Six Months Ended
June 30,
June 30,
($ in thousands, except per share
data)
2023
2022
% Change
Revenues:
Financial Advisory
$618,028
$794,922
(22%)
Asset Management
531,703
577,488
(8%)
Corporate
(2,687
)
2,136
NM
Operating revenue (b)
$1,147,044
$1,374,546
(17%)
Expenses:
Adjusted compensation and benefits
expense (c)
$823,187
$804,109
2%
Ratio of adjusted compensation to
operating revenue
71.8
%
58.5
%
Non-compensation expense (d)
$285,935
$248,067
15%
Ratio of non-compensation to operating
revenue
24.9
%
18.0
%
Earnings:
Earnings from operations (e)
$37,922
$322,370
(88%)
Operating margin (f)
3.3
%
23.5
%
Adjusted net income (loss) (g)
($256
)
$210,800
NM
Diluted adjusted net income per
share
$–
$1.97
NM
Diluted weighted average shares (h)
88,160,753
106,973,019
(18%)
Effective tax rate (i)
67.8
%
25.9
%
This presentation includes non-U.S. GAAP ("non-GAAP") measures.
Our non-GAAP measures are not meant to be considered in isolation
or as a substitute for the corresponding U.S. GAAP measures and
should be read only in conjunction with our consolidated financial
statements prepared in accordance with U.S. GAAP. For a detailed
explanation of the adjustments made to the corresponding U.S. GAAP
measures, see Reconciliation of U.S. GAAP to Selected Summary
Financial Information and Notes to Financial Schedules.
LAZARD LTD
ASSETS UNDER MANAGEMENT
("AUM")
(unaudited)
($ in millions)
As of
Variance
June 30,
March 31,
December 31,
2023
2023
2022
Qtr to Qtr
YTD
Equity:
Emerging Markets
$24,554
$23,692
$21,557
3.6%
13.9%
Global
51,602
49,797
46,861
3.6%
10.1%
Local
51,223
49,887
47,504
2.7%
7.8%
Multi-Regional
57,346
55,252
51,473
3.8%
11.4%
Total Equity
184,725
178,628
167,395
3.4%
10.4%
Fixed Income:
Emerging Markets
9,196
9,164
8,944
0.3%
2.8%
Global
11,347
11,322
11,029
0.2%
2.9%
Local
6,008
6,002
5,352
0.1%
12.3%
Multi-Regional
19,300
18,973
18,061
1.7%
6.9%
Total Fixed Income
45,851
45,461
43,386
0.9%
5.7%
Alternative Investments
3,959
4,111
3,812
(3.7%)
3.9%
Other Alternative Investments
2,713
2,479
—
9.4%
NM
Private Equity
1,387
821
1,038
68.9%
33.6%
Cash Management
705
640
494
10.2%
42.7%
Total AUM
$239,340
$232,140
$216,125
3.1%
10.7%
Three Months Ended June 30,
Six Months Ended June 30,
2023
2022
2023
2022
AUM - Beginning of Period
$232,140
$252,675
$216,125
$273,739
Net Flows (j)
(997
)
(4,649
)
2,002
(11,174
)
Market and foreign exchange appreciation
(depreciation)
8,197
(31,400
)
21,213
(45,939
)
AUM - End of Period
$239,340
$216,626
$239,340
$216,626
Average AUM
$235,352
$230,162
$231,110
$243,263
% Change in average AUM
2.3
%
(5.0
%)
Note: Average AUM generally represents the average of the
monthly ending AUM balances for the period.
LAZARD LTD
RECONCILIATION OF U.S. GAAP TO
SELECTED SUMMARY FINANCIAL INFORMATION (a)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
($ in thousands, except per share
data)
2023
2023
2022
2023
2022
Operating Revenue
Net revenue - U.S. GAAP Basis
$643,114
$542,436
$639,546
$1,185,550
$1,334,438
Adjustments:
Revenue related to noncontrolling
interests (k)
(6,237
)
(10,823
)
(660
)
(17,060
)
(11,455
)
(Gains) losses related to Lazard Fund
Interests ("LFI") and other similar arrangements
(9,675
)
(16,453
)
35,098
(26,128
)
49,421
Distribution fees, reimbursable deal
costs, bad debt expense and other (l)
(26,338
)
(26,681
)
(17,083
)
(53,019
)
(35,905
)
Asset impairment charges (m)
—
19,129
—
19,129
—
Interest expense
19,162
19,410
19,010
38,572
38,047
Operating revenue, as adjusted (b)
$620,026
$527,018
$675,911
$1,147,044
$1,374,546
Compensation and Benefits
Expense
Compensation and benefits expense - U.S.
GAAP Basis
$572,231
$449,967
$363,830
$1,022,198
$760,671
Adjustments:
(Charges) credits pertaining to LFI and
other similar arrangements
(9,675
)
(16,453
)
35,098
(26,128
)
49,421
Expenses associated with cost-saving
initiatives (n)
(136,608
)
(20,740
)
—
(157,348
)
—
Expenses associated with senior management
transition (o)
—
(10,674
)
—
(10,674
)
—
Compensation related to noncontrolling
interests (k)
(1,851
)
(3,010
)
(3,521
)
(4,861
)
(5,983
)
Compensation and benefits expense, as
adjusted (c)
$424,097
$399,090
$395,407
$823,187
$804,109
Non-Compensation
Expense
Non-compensation expense - Subtotal - U.S.
GAAP Basis
$180,956
$169,828
$149,878
$350,784
$288,201
Adjustments:
Expenses associated with cost-saving
initiatives (n)
(10,097
)
—
—
(10,097
)
—
Expenses related to office space
reorganization (p)
—
—
(871
)
—
(1,995
)
Distribution fees, reimbursable deal
costs, bad debt expense and other (l)
(26,338
)
(26,681
)
(17,083
)
(53,019
)
(35,905
)
Amortization and other acquisition-related
costs
(95
)
(48
)
(15
)
(143
)
(30
)
Non-compensation expense related to
noncontrolling interests (k)
(749
)
(841
)
(968
)
(1,590
)
(2,204
)
Non-compensation expense, as adjusted
(d)
$143,677
$142,258
$130,941
$285,935
$248,067
Pre-Tax Income and Earnings
From Operations
Operating Income (Loss) - U.S. GAAP
Basis
($110,073
)
($36,924
)
$125,838
($146,997
)
$285,566
Adjustments:
Benefit pursuant to tax receivable
agreement obligation ("TRA") (q)
—
(40,435
)
—
(40,435
)
—
Asset impairment charges (m)
—
19,129
—
19,129
—
Expenses associated with cost-saving
initiatives (n)
146,705
20,740
—
167,445
—
Expenses associated with senior management
transition (o)
—
10,674
—
10,674
—
Expenses related to office space
reorganization (p)
—
—
871
—
1,995
Net income (loss) related to
noncontrolling interests (k)
(3,637
)
(6,973
)
3,829
(10,610
)
(3,270
)
Pre-tax income (loss), as adjusted
32,995
(33,789
)
130,538
(794
)
284,291
Interest expense
19,162
19,410
19,010
38,572
38,047
Amortization and other acquisition-related
costs
95
49
15
144
32
Earnings (loss) from operations, as
adjusted (e)
$52,252
($14,330
)
$149,563
$37,922
$322,370
Net Income attributable to
Lazard Ltd
Net income (loss) attributable to Lazard
Ltd - U.S. GAAP Basis
($124,013
)
($22,172
)
$95,480
($146,185
)
$209,356
Adjustments:
Benefit pursuant to tax receivable
agreement obligation ("TRA") (q)
—
(40,435
)
—
(40,435
)
—
Asset impairment charges (m)
—
19,129
—
19,129
—
Expenses associated with cost-saving
initiatives (n)
146,705
20,740
—
167,445
—
Expenses associated with senior management
transition (o)
—
10,674
—
10,674
—
Expenses related to office space
reorganization (p)
—
—
871
—
1,995
Tax benefit allocated to adjustments
—
(10,884
)
(243
)
(10,884
)
(551
)
Net income (loss), as adjusted (g)
$22,692
($22,948
)
$96,108
($256
)
$210,800
Diluted Weighted Average
Shares Outstanding
Diluted Weighted Average Shares
Outstanding - U.S. GAAP Basis
88,729,654
87,591,852
102,753,336
88,160,753
105,469,988
Adjustment: participating securities
including profits interest participation rights and other
6,891,248
—
2,014,561
—
1,503,031
Diluted Weighted Average Shares
Outstanding, as adjusted (h)
95,620,902
87,591,852
104,767,897
88,160,753
106,973,019
Diluted net income (loss) per
share:
U.S. GAAP Basis
($1.41
)
($0.27
)
$0.92
($1.68
)
$1.97
Non-GAAP Basis, as adjusted
$0.24
($0.26
)
$0.92
$–
$1.97
This presentation includes non-GAAP measures. Our non-GAAP
measures are not meant to be considered in isolation or as a
substitute for the corresponding U.S. GAAP measures and should be
read only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP. For a detailed explanation
of the adjustments made to the corresponding U.S. GAAP measures,
see Notes to Financial Schedules.
See Notes to Financial
Schedules
LAZARD LTD
RECONCILIATION OF
NON-COMPENSATION U.S. GAAP TO ADJUSTED (a)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
($ in thousands)
2023
2023
2022
2023
2022
Non-compensation expense - U.S. GAAP
Basis:
Occupancy and equipment
$32,800
$31,773
$29,409
$64,573
$60,648
Marketing and business development
28,582
22,762
22,673
51,344
36,796
Technology and information services
51,370
44,040
42,067
95,410
79,998
Professional services
21,402
24,326
16,549
45,728
32,578
Fund administration and outsourced
services
28,968
26,576
28,551
55,544
58,254
Amortization and other acquisition-related
costs
95
48
15
143
30
Other
17,739
20,303
10,614
38,042
19,897
Non-compensation expense - Subtotal - U.S.
GAAP Basis
$180,956
$169,828
$149,878
$350,784
$288,201
Non-compensation expense -
Adjustments:
Occupancy and equipment (k) (n) (p)
($878
)
($61
)
($932
)
($939
)
($2,115
)
Marketing and business development (k) (l)
(n)
(5,164
)
(2,728
)
(2,043
)
(7,892
)
(3,268
)
Technology and information services (k)
(l) (n)
(7,436
)
(73
)
(61
)
(7,509
)
(91
)
Professional services (k) (l) (n) (p)
(1,989
)
(1,402
)
(403
)
(3,391
)
(1,141
)
Fund administration and outsourced
services (k) (l)
(17,282
)
(14,979
)
(15,680
)
(32,261
)
(32,192
)
Amortization and other acquisition-related
costs
(95
)
(48
)
(15
)
(143
)
(30
)
Other (k) (l) (n) (p)
(4,435
)
(8,279
)
197
(12,714
)
(1,297
)
Subtotal Non-compensation adjustments
($37,279
)
($27,570
)
($18,937
)
($64,849
)
($40,134
)
Non-compensation expense, as adjusted:
Occupancy and equipment
$31,922
$31,712
$28,477
$63,634
$58,533
Marketing and business development
23,418
20,034
20,630
43,452
33,528
Technology and information services
43,934
43,967
42,006
87,901
79,907
Professional services
19,413
22,924
16,146
42,337
31,437
Fund administration and outsourced
services
11,686
11,597
12,871
23,283
26,062
Amortization and other acquisition-related
costs
—
—
—
—
—
Other
13,304
12,024
10,811
25,328
18,600
Non-compensation expense, as adjusted
(d)
$143,677
$142,258
$130,941
$285,935
$248,067
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 (k) 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 (l) below), (iv) for the
six month period ended June 30, 2023 and for the three month period
ended March 31, 2023, asset impairment charges (see (m) 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 six month periods ended June 30, 2023 and
for the three month period ended March 31, 2023, expenses
associated with cost-saving initiatives (see (n) below), (iii) for
the six month period ended June 30, 2023 and for the three month
period ended March 31, 2023, expenses associated with senior
management transition (see (o) below), and (iv) compensation and
benefits related to noncontrolling interests (see (k) below).
(d)
A non-GAAP measure which excludes
(i) for the three and six month periods ended June 30, 2023,
expenses associated with cost-saving initiatives, (ii) for the
three and six month periods ended June 30, 2022, expenses related
to office space reorganization (see (p) below), (iii) expenses
related to distribution fees, reimbursable deal costs in accordance
with the revenue recognition guidance, bad debt expense, and other
(see (l) below), (iv) amortization and other acquisition-related
costs, and (v) expenses related to noncontrolling interests (see
(k) below).
(e)
A non-GAAP measure which excludes
(i) for the six month period ended June 30, 2023 and for the three
month period ended March 31, 2023, a benefit pursuant to tax
receivable agreement obligation ("TRA") (see (q) below), (ii) for
the six month period ended June 30, 2023 and for the three month
period ended March 31, 2023, asset impairment charges (see (m)
below), (iii) for the three and six month period ended June 30,
2023 and for the three month period ended March 31, 2023, expenses
associated with cost-saving initiatives (see (n) below), (iv) for
the six month period ended June 30, 2023 and for the three month
period ended March 31, 2023, expenses associated with senior
management transition (see (o) below), (v) for the three month and
six month periods ended June 30, 2022, expenses related to office
space reorganization (see (p) below), (vi) net revenue and expenses
related to noncontrolling interests (see (k) below), (vii) interest
expense primarily related to corporate financing activities, and
(viii) amortization and other acquisition-related costs.
(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 six month period ended June 30, 2023 and for the three
month period ended March 31, 2023, a benefit pursuant to tax
receivable agreement obligation ("TRA") (see (q) below), (ii) for
the six month period ended June 30, 2023 and for the three month
period ended March 31, 2023, asset impairment charges (see (m)
below), (iii) for the three and six month periods ended June 30,
2023 and for the three month period ended March 31, 2023, expenses
associated with cost-saving initiatives (see (n) below), (iv) for
the six month period ended June 30, 2023 and for the three month
period ended March 31, 2023, expenses associated with senior
management transition (see (o) below), and (v) for the three and
six month periods ended June 30, 2022, expenses related to office
space reorganization (see (p) below), net of tax 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. In addition, for the three month period ended
June 30, 2023, includes dilutive effect of weighted average number
of incremental shares of common stock issuable from share-based
incentive compensation.
(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
(benefit) for income taxes of $10,303, ($10,841), and $34,430 for
the three month periods ended June 30, 2023, March 31, 2023, and
June 30, 2022, respectively, ($538) and $73,491 for the six month
periods ended June 30, 2023 and 2022 and the denominator of which
is pre-tax income (loss) of $32,995, ($33,789), and $130,538 for
the three month periods ended June 30, 2023, March 31, 2023, and
June 30, 2022, respectively, ($794) and $284,291 for the six month
periods ended June 30, 2023 and 2022.
(j)
For the six month period ended
June 30, 2023, includes approximately $3.9 billion of net flows
related to a wealth management acquisition.
(k)
Noncontrolling interests include
revenue and expenses principally related to Edgewater, ESC Funds
and a Special Purpose Acquisition Company.
(l)
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
and other receivables that are deemed uncollectible.
(m)
Represents certain asset
impairment charges.
(n)
Represents expenses associated
with cost-saving initiatives including closing certain offices over
the course of 2023.
(o)
Represents expenses associated
with senior management transition reflecting the departure of
certain executive officers.
(p)
Represents building depreciation
and other costs related to office space reorganization.
(q)
Pursuant to the periodic
revaluation of the TRA liability and the assumptions reflected in
the estimate, the revaluation had the effect of reducing the
estimated liability under the TRA. As a result, the Company
recorded a “benefit pursuant to tax receivable agreement” of
$40,435 for the six month period ended June 30, 2023.
NM
Not meaningful
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727967194/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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