Lazard, Inc. (NYSE: LAZ) today reported net revenue of $806
million and operating revenue1 of $761 million for the quarter
ended December 31, 2023. On a U.S. GAAP basis, fourth-quarter 2023
net income was $64 million or $0.65 per share, diluted. Net income,
as adjusted2 was $65 million, or $0.66 per share, diluted, for the
quarter.
Annual net revenue was $2,515 million and operating revenue was
$2,440 million for the year ended December 31, 2023. On a U.S. GAAP
basis, net loss for the year was $75 million, or $0.90 per share,
diluted. Net income, as adjusted2, was $75 million, or $0.77 per
share, diluted, for the year.
“Lazard’s fourth quarter results represent a strong finish to a
challenging year, and we are pleased with our forward momentum as
we execute our long-term growth strategy,” said Peter R. Orszag,
Chief Executive Officer, Lazard. “We are increasingly winning new
client mandates across our business, and we are well positioned to
serve clients as they consider economic opportunities and
geopolitical risks in the years ahead.”
($ in millions, except
Quarter Ended
Year Ended
per share data and AUM)
December 31,
December 31,
2023
2022
%'23-'22
2023
2022
%'23-'22
Net Income
(Loss)
U.S. GAAP
$64
$42
50%
($75)
$358
NM
Per share, diluted
$0.65
$0.44
48%
($0.90)
$3.51
NM
Adjusted2
$65
$67
(3%)
$75
$384
(80%)
Per share, diluted
$0.66
$0.69
(4%)
$0.77
$3.73
(79%)
Revenue
U.S. GAAP - Net Revenue
$806
$712
13%
$2,515
$2,774
(9%)
Total operating revenue1
$761
$671
13%
$2,440
$2,769
(12%)
Financial Advisory
$477
$404
18%
$1,357
$1,652
(18%)
Asset Management
$274
$259
6%
$1,068
$1,099
(3%)
AUM ($ in
billions)
Period end
$247
$216
14%
Average
$234
$211
11%
$233
$227
2%
Note: Endnotes are on page 5 of this release. A reconciliation
of adjusted GAAP to U.S. GAAP is on pages 14-15.
OPERATING REVENUE
Operating revenue was $761 million for the fourth quarter of
2023, 13% higher than the fourth quarter of 2022, and $2,440
million for 2023, 12% lower than 2022.
Financial Advisory
For the fourth quarter of 2023, Financial Advisory operating
revenue was $477 million, 18% higher than the fourth quarter of
2022.
For the full year of 2023, Financial Advisory operating revenue
was $1,357 million, 18% lower than 2022.
During and since the fourth quarter of 2023, Lazard has been
engaged in significant and complex M&A transactions globally,
including the following (clients are in italics): Lincoln Financial
Group’s $28 billion reinsurance transaction with Fortitude Re;
Newmont’s $19.15 billion acquisition of Newcrest; Iliad’s €14.9
billion proposed merger between Iliad Italia and Vodafone Italia;
ImmunoGen’s $10.1 billion sale to AbbVie; Abcam’s $5.7 billion
acquisition by Danaher; Sanofi’s $2.4 billion acquisition of
Inhibrx; iSource’s $2.15 billion sale of a minority equity interest
in NIPSCO to Blackstone Infrastructure Partners; RPT’s $2 billion
acquisition by Kimco Realty; Elecnor Group’s €1.8 billion sale of
its Spanish based renewables business Enerfin to Statkraf; The
Restaurant Group plc’s £701 million acquisition by Apollo Global
Management; Ajinomoto Group’s $545 million acquisition of Forge
Biologics; Energy Exemplar’s acquisition by Blackstone and Vista
Equity Partners; Renault Group’s partnership agreement with Nissan
and Western Digital Corporation’s separation of HDD and Flash
businesses, creating two independent public companies.
Lazard's preeminent restructuring and liability management
practices have been engaged in a broad range of complex
restructuring and debt advisory assignments, including company
roles involving Air Methods, Enviva, Inversiones Latin America
Power and Tele Columbus and creditor and/or related party roles
involving AFE, Endo Pharmaceuticals, Hilding Anders, Lumen
Technologies, Orpea, SVB Financial Group and Telegraph Media
Group.
Our capital advisory and solutions practices remain active and
engaged in assignments, including Ceva Santé Animale's €2.4 billion
refinancing, McLaren Group’s £1.7 billion recapitalization, Pollen
Street Capital’s closing of its €1 billion multi-asset continuation
fund, Lecta Limited’s €550 million refinancing and new capital
raise and GOJO Industries’ $500 million capital solution from
Silver Point.
Our sovereign advisory practice continues to be active in
advising governments and sovereign entities across developed and
emerging markets including assignments for the governments of
Greece and Mozambique.
For a list of publicly announced transactions please visit our
website.
Asset Management
For the fourth quarter of 2023, Asset Management operating
revenue was $274 million, 6% higher than the fourth quarter of
2022. For the full year of 2023, Asset Management operating revenue
was $1,068 million, 3% lower than 2022.
For the fourth quarter of 2023, management fees and other
revenue was $258 million, 5% higher than the fourth quarter of
2022, and 1% lower than the third quarter of 2023. Management fees
and other revenue was $1,038 million for full-year 2023, 1% higher
than 2022.
For the fourth quarter of 2023, incentive fees were $16 million,
compared to $13 million for the fourth quarter of 2022. For the
full year of 2023, incentive fees were $30 million, compared to $67
million for 2022.
Average assets under management (AUM) for the fourth quarter of
2023 was $234 billion, 11% higher than the fourth quarter of 2022,
and 1% lower than the third quarter of 2023. Average assets under
management for full-year 2023 was $233 billion, 2% higher than
2022.
AUM as of December 31, 2023, was $247 billion, 14% higher than
December 31, 2022, and 8% higher than September 30, 2023. The
sequential change from September 30, 2023 was driven by market and
foreign exchange appreciation of $16.9 billion and $5.0 billion,
respectively, offset by net outflows of $3.6 billion.
OPERATING EXPENSES
Compensation and
Benefits
For the fourth quarter of 2023, adjusted compensation and
benefits expense1 was $516 million, compared to $419 million for
the fourth quarter of 2022. The adjusted compensation ratio for the
fourth quarter of 2023 was 67.8%, compared to the fourth-quarter
2022 ratio of 62.4%.
For the full year of 2023, adjusted compensation and benefits
expense was $1,703 million, 3% higher than 2022. The corresponding
adjusted compensation ratio was 69.8%, compared to 59.8% for
2022.
We focus on a ratio of adjusted compensation-to-operating
revenue to manage costs, balancing a view of current market
conditions alongside our objective to drive long-term shareholder
value. Our goal remains to maintain a compensation-to-operating
revenue ratio over the cycle in the mid- to high-50s percentage
range on an adjusted basis, while targeting a consistent deferral
policy.
Non-Compensation Expense
For the fourth quarter of 2023, adjusted non-compensation
expense1 was $148 million, 4% higher than the fourth quarter of
2022, primarily reflecting increased occupancy costs and
professional services expenses.
The ratio of adjusted non-compensation expense to operating
revenue was 19.5% for the fourth quarter of 2023, compared to 21.1%
for the fourth quarter of 2022.
Adjusted non-compensation expense1 for 2023 was $572 million,
10% higher than 2022, primarily reflecting increased professional
services expenses and occupancy costs. The ratio of
non-compensation expense to operating revenue was 23.4% for 2023,
compared to 18.7% for 2022.
Our goal remains to maintain an adjusted non-compensation
expense to operating revenue ratio between 16% to 20% over the
cycle.
TAXES
The provision for taxes, on an adjusted basis1 was $12 million
for the fourth quarter and $13 million for full-year 2023. The
effective tax rate on the same basis was 16.0% for the fourth
quarter of 2023, compared to 26.3% for the fourth quarter of 2022
and 14.5% for full-year 2023 compared to 25.7% for full-year
2022.
CORPORATE STRUCTURE
Effective January 1, 2024, Lazard completed its conversion to a
U.S. C-Corporation and changed its name from Lazard Ltd to Lazard,
Inc.
CAPITAL MANAGEMENT AND BALANCE SHEET
In the fourth quarter of 2023, Lazard returned $44 million to
shareholders, which included: $43.7 million in dividends and $0.6
million in satisfaction of employee tax obligations in lieu of
share issuances upon vesting of equity grants.
In 2023, Lazard returned $330 million to shareholders, which
included: $173 million in dividends; $102 million in repurchases of
our common stock; and $55 million in satisfaction of employee tax
obligations in lieu of share issuances upon vesting of equity
grants.
During 2023, we repurchased 2.8 million shares. As of December
31, 2023, our remaining share repurchase authorization was $200
million.
On January 31, 2024, Lazard declared a quarterly dividend of
$0.50 per share on its outstanding common stock. The dividend is
payable on February 23, 2024, to stockholders of record on February
12, 2024.
Lazard’s financial position remains strong. As of December 31,
2023, our cash and cash equivalents were $971 million.
ENDNOTES
- 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.
- Fourth-quarter and full-year 2023 adjusted results1 exclude
$0.2 million and $4.9 million, respectively, relating to losses
associated with cost-saving initiatives, pre-tax charges of $16.6
million and $195.1 million, respectively, relating to expenses
associated with cost-saving initiatives, full-year pre-tax charges
of $10.7 million relating to expenses associated with senior
management transition, $3.5 million and $43.9 million in the fourth
quarter and full year relating to a benefit pursuant to tax
receivable agreement obligation (“TRA”), and $19.1 million for the
full year relating to certain asset impairment charges. Including
the effect of taxes, these resulted in a net charge of $1.4
million, or $0.02, per share, diluted, for the fourth quarter, and
a net charge of $150.5 million, or $1.69, per share, diluted, for
the full year of 2023, on a U.S. GAAP basis.
CONFERENCE CALL
Lazard will host a conference call at 8:00 a.m. ET on February
1, 2024, to discuss the company’s financial results for the fourth
quarter and full year 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 1 800-579-2543 (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: LAZQ423.
A replay of the conference call will be available by 10:00 a.m.
ET, February 1, 2024, via the Lazard Investor Relations website at
www.lazard.com, or by dialing +1
800-938-2241 (toll-free, U.S. and Canada) or +1 402-220-1121
(outside of the U.S. and Canada).
ABOUT LAZARD
Founded in 1848, Lazard is one of the world's preeminent
financial advisory and asset management firms, with operations in
North and South America, Europe, the Middle East, Asia, and
Australia. Lazard provides advice on mergers and acquisitions,
capital markets and capital solutions, restructuring and liability
management, geopolitics, and other strategic matters, as well as
asset management and investment solutions to institutions,
corporations, governments, partnerships, family offices, and high
net worth individuals. For more information, please visit
www.lazard.com.
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
- In the event of a change or adverse interpretation of relevant
income tax law, regulation or treaty, or a failure to qualify for
treaty benefits, or in the event tax authorities challenge our tax
computations or classifications.
Although we believe the statements reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, level of activity, performance, achievements or
events. 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, Inc. 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, 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
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (U.S. GAAP - unaudited)
Three Months Ended
% Change From
December 31,
September 30,
December 31,
September 30,
December 31,
($ in thousands, except per share
data)
2023
2023
2022
2023
2022
Total revenue
$825,763
$543,170
$731,860
52%
13%
Interest expense
(19,742)
(19,252)
(19,471)
Net revenue
806,021
523,918
712,389
54%
13%
Operating expenses:
Compensation and benefits
559,207
364,605
474,843
53%
18%
Occupancy and equipment
33,436
33,108
30,907
Marketing and business development
27,259
20,754
26,674
Technology and information services
47,363
46,897
47,125
Professional services
23,129
20,451
21,292
Fund administration and outsourced
services
27,450
27,884
24,614
Amortization and other acquisition-related
costs
95
96
15
Other
19,644
14,980
14,988
Non-compensation expenses - Subtotal
178,376
164,170
165,615
9%
8%
Benefit pursuant to tax receivable
agreement
(3,459)
–
(1,209)
Operating expenses
734,124
528,775
639,249
39%
15%
Operating income (loss)
71,897
(4,857)
73,140
NM
(2%)
Provision (benefit) for income taxes
403
(11,631)
16,075
NM
NM
Net income
71,494
6,774
57,065
NM
25%
Net income (loss) attributable to
noncontrolling interests
7,927
(365)
14,701
Net income attributable to Lazard Ltd
$63,567
$7,139
$42,364
NM
50%
Attributable to Lazard Ltd Common
Stockholders:
Weighted average shares
outstanding:
Basic
90,228,532
89,425,900
88,173,431
1%
2%
Diluted
94,989,330
94,309,224
94,185,566
1%
1%
Net income (loss) per share:
Basic
$0.69
$0.07
$0.47
NM
47%
Diluted
$0.65
$0.06
$0.44
NM
48%
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (U.S. GAAP - unaudited)
Year Ended
December 31,
December 31,
($ in thousands, except per share
data)
2023
2022
% Change
Total revenue
$2,593,162
$2,855,093
(9%)
Interest expense
(77,673)
(81,522)
Net revenue
2,515,489
2,773,571
(9%)
Operating expenses:
Compensation and benefits
1,946,010
1,656,451
17%
Occupancy and equipment
131,117
122,251
Marketing and business development
99,357
83,103
Technology and information services
189,670
171,702
Professional services
89,308
69,535
Fund administration and outsourced
services
110,878
109,978
Amortization and other acquisition-related
costs
334
60
Other
72,666
44,852
Non-compensation expenses - Subtotal
693,330
601,481
15%
Benefit pursuant to tax receivable
agreement
(43,894)
(1,209)
Operating expenses
2,595,446
2,256,723
15%
Operating income (loss)
(79,957)
516,848
NM
Provision (benefit) for income taxes
(22,650)
124,365
NM
Net income (loss)
(57,307)
392,483
NM
Net income attributable to noncontrolling
interests
18,172
34,966
Net income (loss) attributable to Lazard
Ltd
($75,479)
$357,517
NM
Attributable to Lazard Ltd Common
Stockholders:
Weighted average shares
outstanding:
Basic
88,993,985
95,664,129
(7%)
Diluted
88,993,985
100,997,674
(12%)
Net income (loss) per share:
Basic
($0.90)
$3.68
NM
Diluted
($0.90)
$3.51
NM
CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL CONDITION (U.S. GAAP -
unaudited)
December 31,
December 31,
($ in thousands)
2023
2022
ASSETS
Cash and cash equivalents
$971,316
$1,234,773
Deposits with banks and short-term
investments
219,576
779,246
Restricted cash
34,091
625,381
Receivables
762,319
652,758
Investments
701,964
698,977
Property
232,516
250,073
Goodwill and other intangible assets
394,928
377,330
Operating lease right-of-use assets
407,213
431,608
Deferred tax assets
497,340
407,657
Other assets
414,518
394,758
Total Assets
$4,635,781
$5,852,561
LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
Liabilities
Deposits and other customer payables
$443,262
$921,834
Accrued compensation and benefits
781,375
735,576
Operating lease liabilities
485,191
513,688
Tax receivable agreement obligation
115,087
191,189
Senior debt
1,690,200
1,687,714
Other liabilities
550,804
543,690
Total liabilities
4,065,919
4,593,691
Commitments and contingencies
Redeemable noncontrolling interests
87,675
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
247,204
167,890
Retained earnings
1,402,636
1,676,713
Accumulated other comprehensive loss, net
of tax
(289,950)
(295,854)
Subtotal
1,361,018
1,549,877
Class A common stock held by subsidiaries,
at cost
(937,259)
(993,414)
Total Lazard Ltd stockholders' equity
423,759
556,463
Noncontrolling interests
58,428
118,936
Total stockholders' equity
482,187
675,399
Total liabilities, redeemable
noncontrolling interests and stockholders' equity
$4,635,781
$5,852,561
Note: "Property" includes $73 million of property held for sale
at December 31, 2023.
SELECTED SUMMARY FINANCIAL
INFORMATION (a) (Non-GAAP - unaudited)
Three Months Ended
% Change From
December 31,
September 30,
December 31,
September 30,
December 31,
($ in thousands, except per share
data)
2023
2023
2022
2023
2022
Revenues:
Financial Advisory
$477,366
$261,441
$403,836
83%
18%
Asset Management
273,694
262,162
258,618
4%
6%
Corporate
9,898
8,014
8,507
24%
16%
Operating revenue (b)
$760,958
$531,617
$670,961
43%
13%
Expenses:
Adjusted compensation and benefits expense
(c)
$515,724
$363,626
$418,598
42%
23%
Ratio of adjusted compensation to
operating revenue
67.8%
68.4%
62.4%
Adjusted non-compensation expenses (d)
$148,119
$137,450
$141,843
8%
4%
Ratio of adjusted non-compensation to
operating revenue
19.5%
25.9%
21.1%
Earnings:
Earnings from operations (e)
$97,115
$30,541
$110,520
NM
(12%)
Operating margin (f)
12.8%
5.7%
16.5%
Adjusted net income (g)
$65,011
$10,268
$67,130
NM
(3%)
Diluted adjusted net income per share
$0.66
$0.10
$0.69
NM
(4%)
Diluted adjusted weighted average shares
(h)
99,154,021
98,282,239
97,222,787
1%
2%
Adjusted effective tax rate (i)
16.0%
8.4%
26.3%
This presentation includes non-U.S. GAAP ("non-GAAP") measures.
Our non-GAAP measures are not meant to be considered in isolation
or as a substitute for the corresponding U.S. GAAP measures and
should be read only in conjunction with our consolidated financial
statements prepared in accordance with U.S. GAAP. For a detailed
explanation of the adjustments made to the corresponding U.S. GAAP
measures, see Reconciliation of U.S. GAAP to Selected Summary
Financial Information and Notes to Financial Schedules.
SELECTED SUMMARY FINANCIAL
INFORMATION (a) (Non-GAAP - unaudited)
Year Ended
December 31,
December 31,
($ in thousands, except per share
data)
2023
2022
% Change
Revenues:
Financial Advisory
$1,356,835
$1,652,422
(18%)
Asset Management
1,067,559
1,098,665
(3%)
Corporate
15,225
17,971
(15%)
Operating revenue (b)
$2,439,619
$2,769,058
(12%)
Expenses:
Adjusted compensation and benefits expense
(c)
$1,702,537
$1,656,838
3%
Ratio of adjusted compensation to
operating revenue
69.8%
59.8%
Adjusted non-compensation expenses (d)
$571,504
$518,173
10%
Ratio of adjusted non-compensation to
operating revenue
23.4%
18.7%
Earnings:
Earnings from operations (e)
$165,578
$594,047
(72%)
Operating margin (f)
6.8%
21.5%
Adjusted net income (g)
$75,023
$384,402
(80%)
Diluted adjusted net income per share
$0.77
$3.73
(79%)
Diluted adjusted weighted average shares
(h)
97,450,393
103,193,048
(6%)
Adjusted effective tax rate (i)
14.5%
25.7 %
This presentation includes non-U.S. GAAP ("non-GAAP") measures.
Our non-GAAP measures are not meant to be considered in isolation
or as a substitute for the corresponding U.S. GAAP measures and
should be read only in conjunction with our consolidated financial
statements prepared in accordance with U.S. GAAP. For a detailed
explanation of the adjustments made to the corresponding U.S. GAAP
measures, see Reconciliation of U.S. GAAP to Selected Summary
Financial Information and Notes to Financial Schedules.
COMPENSATION AND BENEFITS -
ANALYSIS (Non-GAAP - unaudited)
($ in millions)
Adjusted U.S. GAAP Basis (c)
2023
2022
2021
2020
2019
2018
2017
Base salary
$558
$535
$487
$455
$447
$432
$405
Benefits and other
291
293
287
228
258
264
243
Current cash incentive compensation
(j)
365
458
662
435
391
446
466
Total cash compensation, benefits and
other
1,213
1,286
1,436
1,118
1,096
1,141
1,114
Amortization of deferred incentive
awards
489
371
400
384
368
376
367
Adjusted compensation and benefits
expense (k)
$1,703
$1,657
$1,836
$1,502
$1,464
$1,517
$1,481
% of Operating Revenue
69.8%
59.8%
58.5%
59.5%
57.5%
55.1%
55.8%
Memo:
Operating revenue
$2,440
$2,769
$3,139
$2,524
$2,546
$2,755
$2,655
This presentation includes non-U.S. GAAP ("non-GAAP") measures.
Our non-GAAP measures are not meant to be considered in isolation
or as a substitute for the corresponding U.S. GAAP measures and
should be read only in conjunction with our consolidated financial
statements prepared in accordance with U.S. GAAP. For a detailed
explanation of the adjustments made to the corresponding U.S. GAAP
measures, see Reconciliation of U.S. GAAP to Selected Summary
Financial Information and Notes to Financial Schedules.
ASSETS UNDER MANAGEMENT
(unaudited)
($ in millions)
As of
Variance
December 31,
September 30,
December 31,
2023
2023
2022
Qtr to Qtr
YTD
Equity:
Emerging Markets
$25,288
$23,606
$21,557
7.1%
17.3%
Global
53,528
49,709
46,861
7.7%
14.2%
Local
52,208
48,016
47,504
8.7%
9.9%
Multi-Regional
59,114
53,417
51,473
10.7%
14.8%
Total Equity
190,138
174,748
167,395
8.8%
13.6%
Fixed Income:
Emerging Markets
9,525
9,069
8,944
5.0%
6.5%
Global
10,762
10,924
11,029
(1.5%)
(2.4%)
Local
6,080
5,868
5,352
3.6%
13.6%
Multi-Regional
21,740
19,317
18,061
12.5%
20.4%
Total Fixed Income
48,107
45,178
43,386
6.5%
10.9%
Alternative Investments
3,330
3,593
3,812
(7.3%)
(12.6%)
Other Alternative Investments
2,799
2,799
–
–%
NM
Private Equity
1,623
1,298
1,038
25.0%
56.4%
Cash Management
654
648
494
0.9%
32.4%
Total AUM
$246,651
$228,264
$216,125
8.1%
14.1%
Three Months Ended December
31,
Year Ended December 31,
2023
2022
2023
2022
AUM - Beginning of Period
$228,264
$197,766
$216,125
$273,739
Net Flows (l)
(3,550)
(3,735)
(3,542)
(16,915)
Market and foreign exchange
appreciation (depreciation)
21,937
22,094
34,068
(40,699)
AUM - End of Period
$246,651
$216,125
$246,651
$216,125
Average AUM
$233,949
$211,243
$233,098
$227,444
% Change in average AUM
10.7 %
2.5%
Note: Average AUM generally represents the average of the
monthly ending AUM balances for the period.
RECONCILIATION OF U.S. GAAP TO
SELECTED SUMMARY FINANCIAL INFORMATION (a)
(unaudited)
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
December 31,
($ in thousands, except per share
data)
2023
2023
2022
2023
2022
Operating Revenue
Net revenue - U.S. GAAP Basis
$806,021
$523,918
$712,389
$2,515,489
$2,773,571
Adjustments:
Revenue related to noncontrolling
interests (m)
(10,235)
(2,895)
(16,771)
(30,190)
(49,073)
(Gains) losses related to Lazard Fund
Interests ("LFI") and other similar arrangements
(25,933)
10,598
(21,340)
(41,463)
44,261
Distribution fees, reimbursable deal
costs, bad debt expense and other (n)
(28,782)
(23,880)
(22,736)
(105,681)
(76,229)
Asset impairment charges (o)
–
–
–
19,129
–
Losses associated with cost-saving
initiatives (p)
231
4,647
–
4,878
–
Interest expense
19,656
19,229
19,419
77,457
76,528
Operating revenue, as adjusted (b)
$760,958
$531,617
$670,961
$2,439,619
$2,769,058
Compensation and Benefits
Expense
Compensation and benefits expense - U.S.
GAAP Basis
$559,207
$364,605
$474,843
$1,946,010
$1,656,451
Adjustments:
(Charges) credits pertaining to LFI and
other similar arrangements
(25,933)
10,598
(21,340)
(41,463)
44,261
Expenses associated with cost-saving
initiatives (q)
(15,814)
(8,941)
–
(182,103)
–
Expenses associated with senior management
transition (r)
–
–
(33,019)
(10,674)
(33,019)
Compensation related to noncontrolling
interests (m)
(1,736)
(2,636)
(1,886)
(9,233)
(10,855)
Compensation and benefits expense, as
adjusted (c)
$515,724
$363,626
$418,598
$1,702,537
$1,656,838
Non-Compensation
Expense
Non-compensation expenses - Subtotal -
U.S. GAAP Basis
$178,376
$164,170
$165,615
$693,330
$601,481
Adjustments:
Expenses associated with cost-saving
initiatives (q)
(807)
(2,119)
–
(13,023)
–
Expenses related to office space
reorganization (s)
–
–
(836)
–
(3,764)
Distribution fees, reimbursable deal
costs, bad debt expense and other (n)
(28,782)
(23,880)
(22,736)
(105,681)
(76,229)
Amortization and other acquisition-related
costs
(95)
(96)
(15)
(334)
(60)
Non-compensation expense related to
noncontrolling interests (m)
(573)
(625)
(185)
(2,788)
(3,255)
Adjusted non-compensation expenses (d)
$148,119
$137,450
$141,843
$571,504
$518,173
Pre-Tax Income and Earnings
From Operations
Operating Income (Loss) - U.S. GAAP
Basis
$71,897
($4,857)
$73,140
($79,957)
$516,848
Adjustments:
Benefit pursuant to tax receivable
agreement obligation ("TRA") (t)
(3,459)
–
(1,209)
(43,894)
(1,209)
Asset impairment charges (o)
–
–
–
19,129
–
Losses associated with cost-saving
initiatives (p)
231
4,647
–
4,878
–
Expenses associated with cost-saving
initiatives (q)
16,621
11,060
–
195,126
–
Expenses associated with senior management
transition (r)
–
–
33,019
10,674
33,019
Expenses related to office space
reorganization (s)
–
–
836
–
3,764
Net (income) loss related to
noncontrolling interests (m)
(7,927)
364
(14,701)
(18,173)
(34,966)
Pre-tax income, as adjusted
77,363
11,214
91,085
87,783
517,456
Interest expense
19,656
19,229
19,419
77,457
76,528
Amortization and other acquisition-related
costs
96
98
16
338
63
Earnings from operations, as adjusted
(e)
$97,115
$30,541
$110,520
$165,578
$594,047
Net Income attributable to
Lazard Ltd
Net income (loss) attributable to Lazard
Ltd - U.S. GAAP Basis
$63,567
$7,139
$42,364
($75,479)
$357,517
Adjustments:
Benefit pursuant to tax receivable
agreement obligation ("TRA") (t)
(3,459)
–
(1,209)
(43,894)
(1,209)
Asset impairment charges (o)
–
–
–
19,129
–
Losses associated with cost-saving
initiatives (p)
231
4,647
–
4,878
–
Expenses associated with cost-saving
initiatives (q)
16,621
11,060
–
195,126
–
Expenses associated with senior management
transition (r)
–
–
33,019
10,674
33,019
Expenses related to office space
reorganization (s)
–
–
836
–
3,764
Tax benefit allocated to adjustments
(11,949)
(12,578)
(7,880)
(35,411)
(8,689)
Net income, as adjusted (g)
$65,011
$10,268
$67,130
$75,023
$384,402
Diluted Weighted Average
Shares Outstanding
Diluted Weighted Average Shares
Outstanding - U.S. GAAP Basis
94,989,330
94,309,224
94,185,566
88,993,985
100,997,674
Adjustment: participating securities
including profits interest participation rights and other
4,164,691
3,973,015
3,037,221
8,456,408
2,195,374
Diluted Adjusted Weighted Average Shares
Outstanding (h)
99,154,021
98,282,239
97,222,787
97,450,393
103,193,048
Diluted net income (loss) per
share:
U.S. GAAP Basis
$0.65
$0.06
$0.44
($0.90)
$3.51
Non-GAAP Basis, as adjusted
$0.66
$0.10
$0.69
$0.77
$3.73
This presentation includes non-GAAP measures. Our non-GAAP
measures are not meant to be considered in isolation or as a
substitute for the corresponding U.S. GAAP measures and should be
read only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP. For a detailed explanation
of the adjustments made to the corresponding U.S. GAAP measures,
see Notes to Financial Schedules.
See Notes to Financial
Schedules
RECONCILIATION OF
NON-COMPENSATION U.S. GAAP TO ADJUSTED (a)
(unaudited)
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
December 31,
($ in thousands)
2023
2023
2022
2023
2022
Non-compensation expenses - U.S. GAAP
Basis:
Occupancy and equipment
$33,436
$33,108
$30,907
$131,117
$122,251
Marketing and business development
27,259
20,754
26,674
99,357
83,103
Technology and information services
47,363
46,897
47,125
189,670
171,702
Professional services
23,129
20,451
21,292
89,308
69,535
Fund administration and outsourced
services
27,450
27,884
24,614
110,878
109,978
Amortization and other acquisition-related
costs
95
96
15
334
60
Other
19,644
14,980
14,988
72,666
44,852
Non-compensation expenses - Subtotal -
U.S. GAAP Basis
$178,376
$164,170
$165,615
$693,330
$601,481
Non-compensation expense -
Adjustments:
Occupancy and equipment (m) (q) (s)
($197)
($762)
($828)
($1,898)
($3,887)
Marketing and business development (m) (n)
(q)
(3,748)
(3,659)
(3,656)
(15,299)
(9,440)
Technology and information services (m)
(n) (q)
(149)
(612)
(45)
(8,270)
(159)
Professional services (m) (n) (q) (s)
(1,306)
(1,711)
(618)
(6,408)
(2,269)
Fund administration and outsourced
services (m) (n)
(16,546)
(16,432)
(14,092)
(65,239)
(60,646)
Amortization and other acquisition-related
costs
(95)
(96)
(15)
(334)
(60)
Other (m) (n) (q) (s)
(8,216)
(3,448)
(4,518)
(24,378)
(6,847)
Subtotal Non-compensation adjustments
($30,257)
($26,720)
($23,772)
($121,826)
($83,308)
Non-compensation expenses, as
adjusted:
Occupancy and equipment
$33,239
$32,346
$30,079
$129,219
$118,364
Marketing and business development
23,511
17,095
23,018
84,058
73,663
Technology and information services
47,214
46,285
47,080
181,400
171,543
Professional services
21,823
18,740
20,674
82,900
67,266
Fund administration and outsourced
services
10,904
11,452
10,522
45,639
49,332
Amortization and other acquisition-related
costs
–
–
–
–
–
Other
11,428
11,532
10,470
48,288
38,005
Adjusted non-compensation expenses (d)
$148,119
$137,450
$141,843
$571,504
$518,173
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
Notes to Financial
Schedules
(a)
Selected Summary Financial Information is
prepared on a non-GAAP basis. 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 non-controlling interests (see (m) 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 (n) below), (iv) for the
twelve month period ended December 31, 2023, asset impairment
charges, (see (o) below), (v) for the three and twelve month
periods ended December 31, 2023 and for the three month period
ended September 30, 2023, losses associated with cost-saving
initiatives (see (p) below), and (vi) 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 twelve month periods ended December 31, 2023
and for the three month period ended September 30, 2023, expenses
associated with cost-saving initiatives (see (q) below), (iii) for
the twelve month period ended December 31, 2023 and the three and
twelve month periods ended December 31, 2022, expenses associated
with senior management transition (see (r) below), and (iv)
compensation and benefits related to noncontrolling interests (see
(m) below).
(d)
A non-GAAP measure which excludes (i) for
the three and twelve month periods ended December 31, 2023 and for
the three month period ended September 30, 2023, expenses
associated with cost-saving initiatives (see (q) below), (ii) for
the three and twelve month periods ended December 31, 2022,
expenses related to office space reorganization (see (s) below),
(iii) expenses related to distribution fees, reimbursable deal
costs in accordance with the revenue recognition guidance, bad debt
expense, and other (see (n) below), (iv) amortization and other
acquisition-related costs, and (v) expenses related to
noncontrolling interests (see (m) below).
(e)
A non-GAAP measure which excludes (i) for
the three and twelve month periods ended December 31, 2023 and
December 31, 2022, a benefit pursuant to tax receivable agreement
obligation ("TRA") (see (t) below), (ii) for the twelve month
period ended December 31, 2023, asset impairment charges (see (o)
below), (iii) for the three and twelve month periods ended December
31, 2023 and for the three month period ended September 30, 2023,
losses and expenses associated with cost-saving initiatives (see
(p) and (q) below), (iv) for the twelve month period ended December
31, 2023 and for the three and twelve month periods ended December
31, 2022, expenses associated with senior management transition
(see (r) below), (v) for the three and twelve month periods ended
December 31, 2022, expenses related to office space reorganization
(see (s) below), (vi) net revenue and expenses related to
noncontrolling interests (see (m) 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 three and twelve month periods ended December 31, 2023 and
December 31, 2022, a benefit pursuant to tax receivable agreement
obligation (see (t) below), (ii) for the twelve month period ended
December 31, 2023, asset impairment charges (see (o) below), (iii)
for the three and twelve month periods ended December 31, 2023 and
for the three month period ended September 30, 2023, losses and
expenses associated with cost-saving initiatives (see (p) and (q)
below), (iv) for the twelve month period ended December 31, 2023
and for the three and twelve month periods ended December 31, 2022,
expenses associated with senior management transition (see (r)
below), and (v) for the three and twelve month periods ended
December 31, 2022, expenses related to office space reorganization
(see (s) 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 period ended December 31, 2023,
includes the dilutive effect of weighted average number of
incremental shares of common stock issuable from share-based
incentive compensation.
(i)
The adjusted 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 $12,352, $946, and $23,955 for the three month
periods ended December 31, 2023, September 30, 2023, and December
31, 2022, respectively, $12,760 and $133,054 for the twelve month
periods ended December 31, 2023 and 2022 and the denominator of
which is pre-tax income of $77,363, $11,214, and $91,085 for the
three month periods ended December 31, 2023, September 30, 2023,
and December 31, 2022, respectively, $87,783 and $517,456 for the
twelve month periods ended December 31, 2023 and 2022.
(j)
Current cash incentive compensation is
composed of cash bonuses for a given year which are paid early in
the following year, and for which no future service is
required.
(k)
A reconciliation of U.S. GAAP compensation
and benefits expense to compensation and benefits expense, as
adjusted:
Year Ended December 31,
($ in thousands)
2023
2022
2021
2020
2019
2018
2017
Compensation & benefits expense - U.S.
GAAP Basis
$ 1,946,010
$ 1,656,451
$ 1,895,859
$ 1,550,684
$ 1,563,395
$ 1,514,735
$ 1,512,873
Adjustments:
Expenses associated with restructuring and
closing of certain offices
–
–
(14,922)
–
–
–
–
Charges associated with business
realignment (u)
–
–
–
–
(56,635)
–
–
Charges pertaining to ERP system
implementation
–
–
–
–
–
(1,190)
–
(Charges) credits pertaining to LFI and
other similar arrangements comp. liability
(41,463)
44,261
(35,494)
(40,634)
(31,657)
14,086
(23,526)
Expenses associated with cost-saving
initiatives (q)
(182,103)
–
–
–
–
–
–
Expenses associated with senior management
transition (r)
(10,674)
(33,019)
–
–
–
–
–
Compensation related to noncontrolling
interests (m)
(9,233)
(10,855)
(9,216)
(7,927)
(11,175)
(10,999)
(8,285)
Compensation & benefits expense, as
adjusted
$1,702,537
$1,656,838
$1,836,227
$1,502,123
$1,463,928
$1,516,632
$1,481,062
(l)
For the twelve month period ended December
31, 2023, includes approximately $3.9 billion of net flows related
to a wealth management acquisition.
(m)
Noncontrolling interests include revenue
and expenses principally related to Edgewater, ESC Funds and a
Special Purpose Acquisition Company.
(n)
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 expenses,
respectively, and excludes bad debt expense, which represents fees
and other receivables that are deemed uncollectible.
(o)
Represents certain asset impairment
charges.
(p)
Represents losses associated with the
closing of certain offices as part of the cost-saving initiatives
including the reclassification of currency translation adjustments
to earnings from accumulated other comprehensive loss and
transactions related to foreign currency exchange.
(q)
Represents expenses associated with
cost-saving initiatives including closing certain offices over the
course of 2023.
(r)
Represents expenses associated with senior
management transition reflecting the departure of certain executive
officers.
(s)
Represents building depreciation and other
costs related to office space reorganization.
(t)
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 $3,459 for the three month
period ended December 31, 2023, $43,894 for the twelve month period
ended December 31, 2023 and $1,209 for the three and twelve month
periods ended December 31, 2022.
(u)
Represents expenses and losses associated
with a business realignment which included employee reductions and
the closing of subscale offices and investment strategies.
NM
Not meaningful
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Media Contact: Shannon Houston +1 212 632 6880
shannon.houston@lazard.com Investor Contact: Alexandra Deignan +1
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