Lazard Ltd Reports First-Quarter 2021 Results
Lazard Ltd (NYSE: LAZ) reported operating revenue of $648 million for Q1 2021, a 15% increase from Q1 2020. Adjusted net income rose to $101 million, or $0.87 per share, up 52% year-over-year. The firm highlighted strong activity in Financial Advisory and Asset Management, with record assets under management of $265 billion, a 37% increase from the previous year. The company returned $237 million to shareholders via dividends and share repurchases. Financial metrics indicate robust performance, positioning Lazard well amid a strengthening macroeconomic environment.
- Operating revenue increased by 15% to $648 million.
- Adjusted net income rose by 52% to $101 million.
- Financial Advisory revenue grew by 8% to $317 million.
- Asset Management revenue increased by 22% to $328 million.
- Record assets under management of $265 billion, up 37% year-over-year.
- Returned $237 million to shareholders, including $49 million in dividends.
- Net income on a U.S. GAAP basis was $87 million, indicating a 36% increase which, while positive, is lower than adjusted figures.
Lazard Ltd (NYSE: LAZ) today reported operating revenue1 of
First-quarter 2021 net income on a U.S. GAAP basis was
“We are well positioned for the year ahead with record assets under management and high levels of activity across Financial Advisory in a strengthening macroeconomic environment,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “As the rollout of COVID-19 vaccines expands, and fiscal and monetary stimulus take effect, confidence is growing among business leaders and investors globally.”
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($ in millions, except per share data and AUM) |
Quarter Ended March 31, |
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2021 |
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2020 |
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%’21-’20 |
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Net Income |
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U.S. GAAP |
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Per share, diluted |
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Adjusted2 |
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Per share, diluted |
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Operating Revenue1 |
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Total operating revenue |
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Financial Advisory |
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Asset Management |
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AUM ($ in billions) |
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Period End |
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Average |
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Note: Endnotes are on page 6 of this release. A reconciliation of adjusted GAAP to U.S. GAAP is on pages 11-12.
OPERATING REVENUE
Operating revenue was
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.
Financial Advisory operating revenue was
During and since the first 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): The Special Committee of the Board of Brookfield Property Partners in Brookfield Asset Management’s acquisition of
Lazard has one of the world’s preeminent restructuring practices, with a long track record of successfully advising businesses and governments. During and since the first 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: Abengoa; AccorInvest; Assured Guaranty in connection with Puerto Rico’s restructuring; Belk; Cinepolis; CorpGroup; Debenhams; Diamond Offshore Drilling; Europcar; Express; Garrett Motion; NMC Health; Peabody; Premier Oil; Seadrill Limited; Ursa Piceance; and Valaris.
Our Capital and Shareholder Advisory practices remain active globally, advising on a broad range of public and private assignments. Our Sovereign Advisory practice continues to be active advising governments, sovereign and sub-sovereign entities across developed and emerging markets.
For a list of publicly announced Financial Advisory transactions on which Lazard advised in the first quarter of 2021, or continued to advise or completed since March 31, 2021, 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.
Asset Management operating revenue was
Management fees and other revenue was
Average AUM for the first quarter of 2021 was
AUM as of March 31, 2021, was
Incentive fees during the period were
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 first quarter of 2021, we accrued adjusted compensation and benefits expense1 at an adjusted compensation ratio of
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
For the first quarter of 2021, adjusted non-compensation expense1 was
The ratio of adjusted non-compensation expense to operating revenue was
Our goal remains to achieve an adjusted non-compensation expense-to-operating revenue ratio over the cycle of
TAXES
The provision for taxes, on an adjusted basis1, was
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 first quarter of 2021, Lazard returned
As of March 31, 2021, we have repurchased 2.9 million shares of our common stock at an average price of
On April 29, 2021, our Board of Directors authorized additional share repurchases of up to
On April 29, 2021, Lazard declared a quarterly dividend of
Lazard’s financial position remains strong. As of March 31, 2021, our cash and cash equivalents were
***
CONFERENCE CALL
Lazard will host a conference call at 8:00 a.m. EDT on Friday, April 30, 2021, to discuss the company’s financial results for the first quarter 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) 458-4121 (U.S. and Canada) or +1 (323) 794-2093 (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, Friday, April 30, 2021, via the Lazard Investor Relations website at www.lazard.com, or by dialing 1 (888) 203-1112 (U.S. and Canada) or +1 (719) 457-0820 (outside of the U.S. and Canada). The replay access code is 6389433.
ABOUT LAZARD
Lazard, one of the world's preeminent financial advisory and asset management firms, operates from more than 40 cities across 25 countries in North America, Europe, Asia, Australia, 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 forward-looking statements, including with respect to the current COVID-19 pandemic, are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements.
These factors include, but are not limited to, those discussed in our Annual Report on Form 10-K under Item 1A “Risk Factors,” and also discussed from time to time in our reports on Forms 10-Q and 8-K, including the following:
- A decline in general economic conditions or the global or regional financial markets;
- A decline in our revenues, for example due to a decline in overall mergers and acquisitions (M&A) activity, our share of the M&A market or our assets under management (AUM);
- Losses caused by financial or other problems experienced by third parties;
- Losses due to unidentified or unanticipated risks;
- A lack of liquidity, i.e., ready access to funds, for use in our businesses; and
- Competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this release to conform our prior statements to actual results or revised expectations and we do not intend to do so.
Lazard Ltd is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, Lazard and its operating companies use their websites, Lazard’s Twitter account (twitter.com/Lazard) and other social media sites to convey information about their businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates of assets under management in various mutual funds, hedge funds and other investment products managed by Lazard Asset Management LLC and Lazard Frères Gestion SAS. Investors can link to Lazard and its operating company websites through www.lazard.com.
***
ENDNOTES
1 A non-U.S. GAAP measure. See attached financial schedules and related notes for a detailed explanation of adjustments to corresponding U.S. GAAP results. We believe that presenting our results on an adjusted basis, in addition to the U.S. GAAP results, is the most meaningful and useful way to compare our operating results across periods.
2 First-quarter 2021 adjusted results1 exclude pre-tax charges of
LAZ-EPE
| LAZARD LTD | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||
| (U.S. GAAP) | ||||||||||
Three Months Ended |
|
% Change From |
||||||||
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
|
March 31, |
||
| ($ in thousands, except per share data) | 2021 |
|
2020 |
|
2020 |
|
2020 |
|
2020 |
|
| Total revenue |
|
|
|
( |
|
|||||
| Interest expense | (19,797) |
(20,172) |
(20,143) |
|||||||
| Net revenue | 660,107 |
878,154 |
538,014 |
( |
|
|||||
| Operating expenses: | ||||||||||
| Compensation and benefits | 401,546 |
524,736 |
319,755 |
( |
|
|||||
| Occupancy and equipment | 34,748 |
33,592 |
32,198 |
|||||||
| Marketing and business development | 6,651 |
8,161 |
20,186 |
|||||||
| Technology and information services | 33,670 |
36,100 |
31,358 |
|||||||
| Professional services | 14,948 |
20,330 |
14,545 |
|||||||
| Fund administration and outsourced services | 29,279 |
26,431 |
26,390 |
|||||||
| Amortization of intangible assets related to acquisitions | 15 |
436 |
446 |
|||||||
| Other | 4,960 |
11,308 |
9,039 |
|||||||
| Subtotal | 124,271 |
136,358 |
134,162 |
( |
( |
|||||
| Benefit pursuant to tax receivable agreement | - |
(439) |
- |
|||||||
| Operating expenses | 525,817 |
660,655 |
453,917 |
( |
|
|||||
| Operating income | 134,290 |
217,499 |
84,097 |
( |
|
|||||
| Provision for income taxes | 43,464 |
22,729 |
25,766 |
|
|
|||||
| Net income | 90,826 |
194,770 |
58,331 |
( |
|
|||||
| Net income (loss) attributable to noncontrolling interests | 3,526 |
4,881 |
(5,691) |
|||||||
| Net income attributable to Lazard Ltd |
|
|
|
( |
|
|||||
| Attributable to Lazard Ltd Common Stockholders: | ||||||||||
| Weighted average shares outstanding: | ||||||||||
| Basic | 107,291,560 |
107,316,315 |
106,303,962 |
|
|
|||||
| Diluted | 115,822,294 |
115,144,030 |
114,120,179 |
|
|
|||||
| Net income per share: | ||||||||||
| Basic |
|
|
|
( |
|
|||||
| Diluted |
|
|
|
( |
|
|||||
| LAZARD LTD | |||||||
| UNAUDITED CONDENSED CONSOLIDATED | |||||||
| STATEMENT OF FINANCIAL CONDITION | |||||||
| (U.S. GAAP) | |||||||
March 31, |
|
December 31, |
|||||
| ($ in thousands) | 2021 |
|
2020 |
||||
| ASSETS | |||||||
| Cash and cash equivalents |
|
|
|
||||
| Deposits with banks and short-term investments | 1,014,145 |
|
1,134,463 |
||||
| Restricted cash | 615,090 |
|
44,488 |
||||
| Receivables | 739,615 |
|
743,141 |
||||
| Investments | 782,351 |
|
658,532 |
||||
| Goodwill and other intangible assets | 381,947 |
|
384,071 |
||||
| Operating lease right-of-use assets | 492,089 |
|
513,923 |
||||
| Deferred tax assets | 506,836 |
|
538,448 |
||||
| Other assets | 702,790 |
|
564,919 |
||||
| Total Assets |
|
|
|
||||
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY | |||||||
| Liabilities | |||||||
| Deposits and other customer payables |
|
|
|
||||
| Accrued compensation and benefits | 485,739 |
|
734,544 |
||||
| Operating lease liabilities | 582,178 |
|
606,963 |
||||
| Tax receivable agreement obligation | 211,236 |
|
221,451 |
||||
| Senior debt | 1,683,362 |
|
1,682,741 |
||||
| Other liabilities | 565,629 |
|
525,579 |
||||
| Total liabilities | 4,767,860 |
|
4,972,428 |
||||
| Commitments and contingencies | |||||||
| Redeemable noncontrolling interests | 575,000 |
|
- |
||||
| Stockholders' equity | |||||||
| Preferred stock, par value $.01 per share | - |
|
- |
||||
| Common stock, par value $.01 per share | 1,128 |
|
1,128 |
||||
| Additional paid-in capital | - |
|
135,439 |
||||
| Retained earnings | 1,278,907 |
|
1,295,386 |
||||
| Accumulated other comprehensive loss, net of tax | (255,711 |
) |
(238,368) |
||||
| Subtotal | 1,024,324 |
|
1,193,585 |
||||
| Class A common stock held by subsidiaries, at cost | (259,319 |
) |
(281,813) |
||||
| Total Lazard Ltd stockholders' equity | 765,005 |
|
911,772 |
||||
| Noncontrolling interests | 101,694 |
|
87,661 |
||||
| Total stockholders' equity | 866,699 |
|
999,433 |
||||
| Total liabilities, redeemable noncontrolling interests and stockholders' equity |
|
|
|
||||
| LAZARD LTD | |||||||||||||
| SELECTED SUMMARY FINANCIAL INFORMATION (a) | |||||||||||||
| (Non-GAAP - unaudited) | |||||||||||||
| Three Months Ended | % Change From | ||||||||||||
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
|
March 31, |
|||||
| ($ in thousands, except per share data) | 2021 |
|
2020 |
|
2020 |
|
2020 |
|
2020 |
||||
| Revenues: | |||||||||||||
| Financial Advisory |
|
|
|
( |
|
||||||||
| Asset Management | 327,914 |
336,152 |
268,953 |
( |
|
||||||||
| Corporate | 2,648 |
3,990 |
(915) |
( |
NM |
||||||||
| Operating revenue (b) |
|
|
|
( |
|
||||||||
| Expenses: | |||||||||||||
| Adjusted compensation and benefits expense (c) |
|
|
|
( |
|
||||||||
| Ratio of adjusted compensation to operating revenue |
|
|
|
||||||||||
| Non-compensation expense (d) |
|
|
|
( |
( |
||||||||
| Ratio of non-compensation to operating revenue |
|
|
|
||||||||||
| Earnings: | |||||||||||||
| Earnings from operations (e) |
|
|
|
( |
|
||||||||
| Operating margin (f) |
|
|
|
||||||||||
| Adjusted net income (g) |
|
|
|
( |
|
||||||||
| Diluted adjusted net income per share |
|
|
|
( |
|
||||||||
| Diluted weighted average shares (h) | 115,857,922 |
115,831,033 |
114,160,044 |
|
|
||||||||
| Effective tax rate (i) |
|
|
|
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| 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 |
||||||||
March 31, |
|
December 31, |
|
March 31, |
|
|
|
1Q 2021 vs |
||
2021 |
|
2020 |
|
2020 |
|
Qtr to Qtr |
|
1Q 2020 |
||
| Equity: | ||||||||||
| Emerging Markets |
|
|
|
( |
|
|||||
| Global | 58,560 |
56,246 |
39,094 |
|
|
|||||
| Local | 51,246 |
48,672 |
37,496 |
|
|
|||||
| Multi-Regional | 72,953 |
71,560 |
50,335 |
|
|
|||||
| Total Equity | 215,459 |
209,732 |
154,641 |
|
|
|||||
| Fixed Income: | ||||||||||
| Emerging Markets | 12,708 |
13,651 |
11,424 |
( |
|
|||||
| Global | 14,177 |
11,962 |
9,100 |
|
|
|||||
| Local | 5,556 |
5,600 |
5,421 |
( |
|
|||||
| Multi-Regional | 11,808 |
12,571 |
8,376 |
( |
|
|||||
| Total Fixed Income | 44,249 |
43,784 |
34,321 |
|
|
|||||
| Alternative Investments | 3,141 |
2,748 |
1,902 |
|
|
|||||
| Private Equity | 1,324 |
1,420 |
1,406 |
( |
( |
|||||
| Cash Management | 679 |
958 |
778 |
( |
( |
|||||
| Total AUM |
|
|
|
|
|
|||||
Year Ended |
||||||||||
Three Months Ended March 31, |
December 31, |
|||||||||
2021 |
|
2020 |
2020 |
|||||||
| AUM - Beginning of Period |
|
|
|
|||||||
| Net Flows | (1,679) |
(4,913) |
(11,368) |
|||||||
| Market and foreign exchange appreciation (depreciation) | 7,889 |
(50,278) |
21,771 |
|||||||
| AUM - End of Period |
|
|
|
|||||||
| Average AUM |
|
|
|
|||||||
| % Change in average AUM |
|
|||||||||
| 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 |
||||||||
March 31, |
|
December 31, |
|
March 31, |
||||
| ($ in thousands, except per share data) | 2021 |
|
2020 |
|
2020 |
|||
| Operating Revenue | ||||||||
| Net revenue - U.S. GAAP Basis |
|
|
|
|||||
| Adjustments: | ||||||||
| (Revenue) loss related to noncontrolling interests (j) | (6,361) |
(8,054) |
2,772 |
|||||
| (Gains) losses related to Lazard Fund Interests ("LFI") and other similar arrangements | (7,487) |
(25,207) |
19,637 |
|||||
| Distribution fees, reimbursable deal costs, bad debt expense and other (k) | (16,710) |
(14,647) |
(16,384) |
|||||
| Interest expense | 18,313 |
18,522 |
18,772 |
|||||
| Operating revenue, as adjusted (b) |
|
|
|
|||||
| Compensation and Benefits Expense | ||||||||
| Compensation and benefits expense - U.S. GAAP Basis |
|
|
|
|||||
| Adjustments: | ||||||||
| (Charges) credits pertaining to LFI and other similar arrangements | (7,487) |
(25,207) |
19,637 |
|||||
| Expenses associated with restructuring and closing of certain offices (l) | (6,623) |
- |
- |
|||||
| Compensation related to noncontrolling interests (j) | (1,958) |
(2,269) |
(1,706) |
|||||
| Compensation and benefits expense, as adjusted (c) |
|
|
|
|||||
| Non-Compensation Expense | ||||||||
| Non-compensation expense - Subtotal - U.S. GAAP Basis |
|
|
|
|||||
| Adjustments: | ||||||||
| Expenses related to office space reorganization (m) | (1,416) |
(4,184) |
(3,664) |
|||||
| Distribution fees, reimbursable deal costs, bad debt expense and other (k) | (16,710) |
(14,647) |
(16,384) |
|||||
| Amortization of intangible assets related to acquisitions | (15) |
(436) |
(446) |
|||||
| Expenses associated with restructuring and closing of certain offices (l) | (2,971) |
- |
- |
|||||
| Non-compensation expense related to noncontrolling interests (j) | (679) |
(523) |
(1,036) |
|||||
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FAQ
What were Lazard's Q1 2021 operating revenue and net income?
Lazard reported operating revenue of $648 million and adjusted net income of $101 million for Q1 2021.
How much did Lazard return to shareholders in Q1 2021?
In Q1 2021, Lazard returned $237 million to shareholders.
What was Lazard's assets under management (AUM) at the end of Q1 2021?
As of March 31, 2021, Lazard reported record assets under management of $265 billion.
How did Lazard's financial advisory revenue perform in Q1 2021?
Lazard's financial advisory revenue increased by 8% to $317 million in Q1 2021.
What was Lazard's adjusted earnings per share for Q1 2021?
Lazard's adjusted earnings per share for Q1 2021 were $0.87.
Lazard, Inc.
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