Lazard Ltd Reports Third-Quarter and Nine-Month 2021 Results

Rhea-AI Summary

Lazard Ltd (NYSE: LAZ) reported record operating revenue of $702 million for Q3 2021, up 23% from Q3 2020. Adjusted net income for the quarter was $111 million, or $0.98 per share, reflecting a 46% increase. Year-to-date, revenue reached $2.171 billion, a 30% rise, with adjusted net income of $358 million. Financial Advisory revenue also saw a record high of $381 million, and average assets under management (AUM) hit $278 billion, a 23% increase. The firm returned $103 million to shareholders, including dividends and share repurchases, and maintains a robust financial position.

Positive

• Record operating revenue of $702 million for Q3 2021, a 23% increase YoY.
• Adjusted net income increased by 46% to $111 million for Q3 2021.
• Year-to-date revenue of $2.171 billion, up 30% from 2020.
• Financial Advisory revenue reached a record $381 million for Q3 2021, up 24% YoY.
• Average assets under management (AUM) increased to $278 billion, a 23% rise.
• Returned $103 million to shareholders through dividends and share repurchases.

Negative

• AUM decreased by 2% from June 30, 2021, due to foreign exchange depreciation and net outflows.

Record operating revenue for the third quarter and first nine months of 2021

Record Financial Advisory third-quarter revenue; high levels of activity globally

Record average assets under management of $278 billion in third quarter

NEW YORK--(BUSINESS WIRE)-- Lazard Ltd (NYSE: LAZ) today reported operating revenue¹ of $702 million for the quarter ended September 30, 2021. Net income, as adjusted², was $111 million, or $0.98 per share (diluted) for the quarter. On a U.S. GAAP basis, third-quarter 2021 net income was $107 million, or $0.94 per share (diluted).

For the first nine months of 2021, net income, as adjusted, was $358 million, or $3.13 per share (diluted). On a U.S. GAAP basis, net income for the first nine months was $318 million, or $2.78 per share (diluted).

“Record third-quarter and year-to-date operating revenue reflect continued strong performance across the firm globally,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “We are well positioned with unprecedented advisory activity and a record level of average assets under management, and we continue to invest for growth across our businesses.”

($ in millions, except per share data and AUM)		Quarter Ended Sept. 30,						Nine Months Ended Sept. 30,
		2021		2020		%’21-’20		2021		2020		%’21-’20
Net Income
US GAAP		$107		$75		43%		$318		$213		49%
Per share, diluted		$0.94		$0.66		42%		$2.78		$1.88		48%
Adjusted2		$111		$76		46%		$358		$218		65%
Per share, diluted		$0.98		$0.67		46%		$3.13		$1.92		63%
Operating Revenue1
Total operating revenue		$702		$569		23%		$2,171		$1,675		30%
Financial Advisory		$381		$307		24%		$1,170		$895		31%
Asset Management		$311		$261		19%		$982		$775		27%
AUM ($ in billions)
Period End		$273		$228		20%
Average		$278		$226		23%		$272		$219		24%

Note: Endnotes are on page 6 of this release. A reconciliation of U.S. GAAP to adjusted GAAP is on pages 13-14.

OPERATING REVENUE

Operating revenue¹ was $702 million for the third quarter of 2021, and $2,171 million for the first nine months of 2021, both record levels, up 23% and 30% from the respective 2020 periods.

Financial Advisory

Our Financial Advisory results include M&A Advisory, Capital Advisory, Capital Raising, Restructuring, Shareholder Advisory, Sovereign Advisory, and other strategic advisory work for clients.

For the third quarter of 2021, Financial Advisory operating revenue was a record $381 million, 24% higher than the third quarter of 2020.

For the first nine months of 2021, Financial Advisory operating revenue was a record $1,170 million, 31% higher than the first nine months of 2020.

During and since the third quarter of 2021, Lazard has been engaged in significant and complex M&A transactions and other advisory assignments globally, including the following (clients are in italics): Faurecia in its €6.7 billion combination with Hella GmbH & Co. KGaA; Macquarie Infrastructure Corporation’s $4.5 billion sale of Atlantic Aviation to KKR; Brown Brothers Harriman's $3.5 billion sale of its Investor Services business to State Street; Quanta Services’ $2.7 billion acquisition of Blattner Energy; Sitel’s $2.2 billion acquisition of Sykes Enterprises; Rolls-Royce's €1.8 billion sale of ITP Aero to a consortium led by Bain Capital; Southwest Gas’ $2.0 billion acquisition of Questar Pipeline from Dominion Energy; Vitrolife's €1.25 billion acquisition of Igenomix; Daily Mail and General Trust’s £1.4 billion sale of RMS to Moody's Corporation; St. Modwen Properties on its £1.56 billion recommended cash acquisition by Blackstone; DistroKid’s investment from Insight Partners, valuing the company at $1.3 billion; Saint-Gobain’s €1.0 billion acquisition of Chryso; Lincoln Financial’s reinsurance transaction with Resolution Life; Environmental Resources Management on OMERS and AIMCo’s sale of a majority stake in the company to KKR; APEX Clean Energy on the sale of a majority stake in the company to Ares; and Swinerton's sale of its Renewable Energy Division & SOLV, Inc. to American Securities.

Lazard has one of the world’s preeminent restructuring practices. During and since the third quarter of 2021, we have been engaged in a broad range of highly visible and complex restructuring and debt advisory assignments for debtors or creditors, including roles involving: Andrade Gutierrez; Assured Guaranty in connection with Puerto Rico’s restructuring; Basic Energy Services; Brazos Electric Power Cooperative; Cinepolis; Corp Grupo Banking S.A.; Grupo GICSA; Intelsat S.A.; NMC Health; Nordic Aviation Capital; Seadrill Limited; and Stoneway Capital.

Our Capital and Shareholder Advisory practices remain active globally, advising on a broad range of public and private assignments. Our Sovereign Advisory practice continues to be active advising governments, sovereign and sub-sovereign entities across developed and emerging markets.

For a list of Lazard’s publicly announced Financial Advisory transactions, please visit our website at www.lazard.com/businesses/transactions.

Asset Management

In the text portion of this press release, we present our Asset Management results as 1) Management fees and other revenue, and 2) Incentive fees.

For the third quarter of 2021, Asset Management operating revenue was $311 million, 19% higher than the third quarter of 2020. For the first nine months of 2021, Asset Management operating revenue was a record $982 million, 27% higher than the first nine months of 2020.

For the third quarter of 2021, management fees and other revenue was $303 million, 18% higher than the third quarter of 2020, and 2% lower than the second quarter of 2021. For the first nine months of 2021, management fees and other revenue was $907 million, 18% higher than the first nine months of 2020.

Average assets under management (AUM) for the third quarter of 2021 was a record $278 billion, 23% higher than the third quarter of 2020, and 1% higher than the second quarter of 2021. Average AUM for the first nine months of 2021 was a record $272 billion, 24% higher than the first nine months of 2020.

AUM as of September 30, 2021, was $273 billion, up 20% from September 30, 2020, and down 2% from June 30, 2021. The sequential decrease was driven primarily by foreign exchange depreciation of $3.3 billion and net outflows of $2.3 billion, partially offset by market appreciation of $838 million.

For the third quarter of 2021, incentive fees were $7 million, compared to $3 million for the third quarter of 2020. For the first nine months of 2021, incentive fees were $75 million, compared to $6 million for the first nine months of 2020.

OPERATING EXPENSES

Compensation and Benefits

In managing compensation and benefits expense, we focus on annual awarded compensation (cash compensation and benefits plus deferred incentive compensation with respect to the applicable year, net of estimated future forfeitures and excluding charges). We believe annual awarded compensation reflects the actual annual compensation cost more accurately than the GAAP measure of compensation cost, which includes applicable-year cash compensation and the amortization of deferred incentive compensation principally attributable to previous years’ deferred compensation. We believe that by managing our business using awarded compensation with a consistent deferral policy, we can better manage our compensation costs, increase our flexibility in the future and build shareholder value over time.

For the third quarter of 2021, we accrued adjusted compensation and benefits expense¹ at an adjusted compensation¹ ratio of 59.5%, compared to the third-quarter 2020 ratio of 60%. This resulted in $417 million of adjusted compensation and benefits expense, compared to $341 million for the third quarter of 2020.

For the first nine months of 2021, adjusted compensation and benefits expense was $1,292 million, compared to $1,005 million for the first nine months of 2020.

We manage our compensation and benefits expense based on awarded compensation with a consistent deferral policy. We take a disciplined approach to compensation, and our goal is to maintain a compensation-to-operating revenue ratio over the cycle in the mid- to high-50s percentage range on both an awarded and adjusted basis, with consistent deferral policies.

Non-Compensation Expense

Adjusted non-compensation expense¹ for the third quarter of 2021 was $117 million, 13% higher than the third quarter of 2020. The ratio of adjusted non-compensation expense to operating revenue¹ for the third quarter of 2021 was 16.6%, compared to 18.1% for the third quarter of 2020.

Adjusted non-compensation expense for the first nine months of 2021 was $338 million, 7% higher than the first nine months of 2020. The ratio of adjusted non-compensation expense to operating revenue for the first nine months of 2021 was 15.6%, compared to 18.8% for the first nine months of 2020.

Our goal remains to achieve an adjusted non-compensation expense-to-operating revenue ratio over the cycle of 16% to 20%.

TAXES

The provision for taxes, on an adjusted basis¹, was $37 million for the third quarter of 2021 and $127 million for the first nine months of 2021. The effective tax rate on the same basis was 25.1% for the third quarter and 26.2% for the first nine months of 2021, compared to 27.9% and 26.9% for the respective 2020 periods.

CAPITAL MANAGEMENT AND BALANCE SHEET

Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases.

For the third quarter of 2021, Lazard returned $103 million to shareholders, which included: $49 million in dividends; $52 million in share repurchases of our Class A common stock; and $1.9 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

For the first nine months of 2021, Lazard returned $501 million to shareholders, which included: $148 million in dividends; $286 million in share repurchases of our Class A common stock; and $68 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

During the first nine months of 2021, we repurchased 6.5 million shares at an average price of $44.24 per share, which included 1.1 million shares repurchased in the third quarter at an average price of $46.01 per share. As of September 30, 2021, our remaining share repurchase authorization was $314 million.

On October 28, 2021, Lazard declared a quarterly dividend of $0.47 per share on its outstanding common stock. The dividend is payable on November 19, 2021, to stockholders of record on November 8, 2021.

Lazard’s financial position remains strong. As of September 30, 2021, our cash and cash equivalents were $1,185 million. Stockholders’ equity related to Lazard’s interests was $878 million.

***

CONFERENCE CALL

Lazard will host a conference call at 8:00 a.m. EDT on October 29, 2021, to discuss the company’s financial results for the third quarter and first nine months of 2021. The conference call can be accessed via a live audio webcast available through Lazard’s Investor Relations website at www.lazard.com, or by dialing 1 (800) 367-2403 (toll-free, U.S. and Canada) or +1 (334) 777-6978 (outside of the U.S. and Canada), 15 minutes prior to the start of the call.

A replay of the conference call will be available by 10:00 a.m. EDT on October 29, 2021, via the Lazard Investor Relations website, www.lazard.com, or by dialing 1 (888) 203-1112 (toll-free, U.S. and Canada) or +1 (719) 457-0820 (outside of the U.S. and Canada). The replay access code is: 2407222.

ABOUT LAZARD

Lazard, one of the world's preeminent financial advisory and asset management firms, operates from 41 cities across 26 countries in North America, Europe, Asia, Australia, and Central and South America. With origins dating to 1848, the firm provides advice on mergers and acquisitions, strategic matters, restructuring and capital structure, capital raising and corporate finance, as well as asset management services to corporations, partnerships, institutions, governments and individuals. For more information on Lazard, please visit www.lazard.com. Follow Lazard at @Lazard.

***

Cautionary Note Regarding Forward-Looking Statements:

This press release contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “could”, “would”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “target,” “goal”, or “continue”, and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies, business plans and initiatives and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements.

These factors include, but are not limited to, those discussed in our Annual Report on Form 10-K under Item 1A “Risk Factors,” and also discussed from time to time in our reports on Forms 10-Q and 8-K, including the following:

• A decline in general economic conditions or the global or regional financial markets;
• A decline in our revenues, for example due to a decline in overall mergers and acquisitions (M&A) activity, our share of the M&A market or our assets under management (AUM);
• Losses caused by financial or other problems experienced by third parties;
• Losses due to unidentified or unanticipated risks;
• A lack of liquidity, i.e., ready access to funds, for use in our businesses; and
• Competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this release to conform our prior statements to actual results or revised expectations and we do not intend to do so.

Lazard Ltd is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, Lazard and its operating companies use their websites, Lazard’s Twitter account (twitter.com/Lazard) and other social media sites to convey information about their businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates of assets under management in various mutual funds, hedge funds and other investment products managed by Lazard Asset Management LLC and Lazard Frères Gestion SAS. Investors can link to Lazard and its operating company websites through www.lazard.com.

***

ENDNOTES

¹ A non-U.S. GAAP measure. See attached financial schedules and related notes for a detailed explanation of adjustments to corresponding U.S. GAAP results. We believe that presenting our results on an adjusted basis, in addition to U.S. GAAP results, is the most meaningful and useful way to compare our operating results across periods.

² Third-quarter and first-nine-months 2021 adjusted results¹ exclude losses of $0.1 million and $23.6 million, respectively, associated with restructuring and closing of certain offices; pre-tax charges of $1.0 million and $3.6 million, respectively, relating to office space reorganization; and $1.1 million and $16.3 million, respectively, relating to expenses associated with restructuring and closing of certain offices. On a U.S. GAAP basis, these resulted in a net charge of $4.2 million, or $0.04 (diluted) per share, for the third quarter, and a net charge of $40.7 million, or $0.36 (diluted) per share, for the first nine months of 2021.

LAZ-EPE

LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. GAAP)
		Three Months Ended						% Change From
($ in thousands, except per share data)		September 30, 2021		June 30, 2021		September 30, 2020		June 30, 2021		September 30, 2020
Total revenue		$737,807		$843,264		$598,022		(13%)		23%
Interest expense		(20,378)		(20,127)		(20,344)
Net revenue		717,429		823,137		577,678		(13%)		24%
Operating expenses:
Compensation and benefits		419,627		514,918		354,625		(19%)		18%
Occupancy and equipment		31,015		29,875		31,318
Marketing and business development		9,922		9,332		7,562
Technology and information services		37,559		35,774		33,457
Professional services		16,698		19,996		14,701
Fund administration and outsourced services		34,137		31,302		26,196
Amortization of intangible assets related to acquisitions		15		15		458
Other		13,497		15,664		4,681
Subtotal		142,843		141,958		118,373		1%		21%
Operating expenses		562,470		656,876		472,998		(14%)		19%
Operating income		154,959		166,261		104,680		(7%)		48%
Provision for income taxes		39,446		41,345		28,165		(5%)		40%
Net income		115,513		124,916		76,515		(8%)		51%
Net income attributable to noncontrolling interests		8,304		1,738		1,423
Net income attributable to Lazard Ltd		$107,209		$123,178		$75,092		(13%)		43%
Attributable to Lazard Ltd Common Stockholders:
Weighted average shares outstanding:
Basic		105,415,743		106,746,654		107,168,615		(1%)		(2%)
Diluted		112,994,037		113,603,478		113,181,564		(1%)		(0%)
Net income per share:
Basic		$1.00		$1.14		$0.69		(12%)		45%
Diluted		$0.94		$1.08		$0.66		(13%)		42%

LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. GAAP)
		Nine Months Ended
($ in thousands, except per share data)		September 30, 2021		September 30, 2020		% Change
Total revenue		$2,260,975		$1,748,443		29%
Interest expense		(60,302)		(60,459)
Net revenue		2,200,673		1,687,984		30%
Operating expenses:
Compensation and benefits		1,336,091		1,025,948		30%
Occupancy and equipment		95,638		94,090
Marketing and business development		25,905		34,265
Technology and information services		107,003		97,444
Professional services		51,642		45,974
Fund administration and outsourced services		94,718		76,639
Amortization of intangible assets related to acquisitions		45		1,359
Other		34,121		27,623
Subtotal		409,072		377,394		8%
Operating expenses		1,745,163		1,403,342		24%
Operating income		455,510		284,642		60%
Provision for income taxes		124,255		76,720		62%
Net income		331,255		207,922		59%
Net income (loss) attributable to noncontrolling interests		13,568		(4,650)
Net income attributable to Lazard Ltd		$317,687		$212,572		49%
Attributable to Lazard Ltd Common Stockholders:
Weighted average shares outstanding:
Basic		106,484,652		106,711,547		(0%)
Diluted		114,139,936		112,929,830		1%
Net income per share:
Basic		$2.94		$1.96		50%
Diluted		$2.78		$1.88		48%

LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (U.S. GAAP)
($ in thousands)		September 30, 2021		December 31, 2020
ASSETS
Cash and cash equivalents		$1,184,772		$1,389,876
Deposits with banks and short-term investments		1,360,957		1,134,463
Restricted cash		615,297		44,488
Receivables		700,136		743,141
Investments		914,975		658,532
Goodwill and other intangible assets		379,847		384,071
Operating lease right-of-use assets		468,524		513,923
Deferred tax assets		480,533		538,448
Other assets		621,539		564,919
Total Assets		$6,726,580		$5,971,861
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
Liabilities
Deposits and other customer payables		$1,450,764		$1,201,150
Accrued compensation and benefits		711,779		734,544
Operating lease liabilities		554,900		606,963
Tax receivable agreement obligation		211,236		221,451
Senior debt		1,684,606		1,682,741
Other liabilities		560,581		525,579
Total liabilities		5,173,866		4,972,428
Commitments and contingencies
Redeemable noncontrolling interests		575,000		-
Stockholders' equity
Preferred stock, par value $.01 per share		-		-
Common stock, par value $.01 per share		1,128		1,128
Additional paid-in capital		110,470		135,439
Retained earnings		1,402,191		1,295,386
Accumulated other comprehensive loss, net of tax		(246,534)		(238,368)
Subtotal		1,267,255		1,193,585
Class A common stock held by subsidiaries, at cost		(389,448)		(281,813)
Total Lazard Ltd stockholders' equity		877,807		911,772
Noncontrolling interests		99,907		87,661
Total stockholders' equity		977,714		999,433
Total liabilities, redeemable noncontrolling interests and stockholders' equity		$6,726,580		$5,971,861

LAZARD LTD SELECTED SUMMARY FINANCIAL INFORMATION (a) (Non-GAAP - unaudited)
		Three Months Ended						% Change From
($ in thousands, except per share data)		September 30, 2021		June 30, 2021		September 30, 2020		June 30, 2021		September 30, 2020
Revenues:
Financial Advisory		$381,295		$471,075		$306,977		(19%)		24%
Asset Management		310,566		343,453		261,047		(10%)		19%
Corporate		9,783		6,918		1,023		41%		NM
Operating revenue (b)		$701,644		$821,446		$569,047		(15%)		23%
Expenses:
Adjusted compensation and benefits expense (c)		$417,479		$488,760		$341,428		(15%)		22%
Ratio of adjusted compensation to operating revenue		59.5%		59.5%		60.0%
Non-compensation expense (d)		$116,734		$118,830		$103,081		(2%)		13%
Ratio of non-compensation to operating revenue		16.6%		14.5%		18.1%
Earnings:
Earnings from operations (e)		$167,431		$213,856		$124,538		(22%)		34%
Operating margin (f)		23.9%		26.0%		21.9%
Adjusted net income (g)		$111,398		$145,798		$76,102		(24%)		46%
Diluted adjusted net income per share		$0.98		$1.28		$0.67		(23%)		46%
Diluted weighted average shares (h)		113,781,092		114,058,944		113,780,625		(0%)		0%
Effective tax rate (i)		25.1%		25.2%		27.9%
This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules.

LAZARD LTD SELECTED SUMMARY FINANCIAL INFORMATION (a) (Non-GAAP - unaudited)
		Nine Months Ended
($ in thousands, except per share data)		September 30, 2021		September 30, 2020		% Change
Revenues:
Financial Advisory		$1,169,670		$894,656		31%
Asset Management		981,933		775,346		27%
Corporate		19,349		4,770		NM
Operating revenue (b)		$2,170,952		$1,674,772		30%
Expenses:
Adjusted compensation and benefits expense (c)		$1,291,717		$1,004,863		29%
Ratio of adjusted compensation to operating revenue		59.5%		60.0%
Non-compensation expense (d)		$338,044		$315,330		7%
Ratio of non-compensation to operating revenue		15.6%		18.8%
Earnings:
Earnings from operations (e)		$541,191		$354,579		53%
Operating margin (f)		24.9%		21.2%
Adjusted net income (g)		$358,417		$217,805		65%
Diluted adjusted net income per share		$3.13		$1.92		63%
Diluted weighted average shares (h)		114,565,986		113,261,923		1%
Effective tax rate (i)		26.2%		26.9%
This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules.

LAZARD LTD ASSETS UNDER MANAGEMENT ("AUM") (unaudited) ($ in millions)
		As of						Variance
		September 30, 2021		June 30, 2021		December 31, 2020		Qtr to Qtr		YTD
Equity:
Emerging Markets		$31,316		$32,363		$33,254		(3.2%)		(5.8%)
Global		58,348		61,874		56,246		(5.7%)		3.7%
Local		54,764		53,917		48,672		1.6%		12.5%
Multi-Regional		74,840		76,405		71,560		(2.0%)		4.6%
Total Equity		219,268		224,559		209,732		(2.4%)		4.5%
Fixed Income:
Emerging Markets		12,917		13,213		13,651		(2.2%)		(5.4%)
Global		14,469		14,617		11,962		(1.0%)		21.0%
Local		6,070		5,788		5,600		4.9%		8.4%
Multi-Regional		13,731		13,532		12,571		1.5%		9.2%
Total Fixed Income		47,187		47,150		43,784		0.1%		7.8%
Alternative Investments		3,934		3,529		2,748		11.5%		43.2%
Private Equity		1,288		1,343		1,420		(4.1%)		(9.3%)
Cash Management		895		797		958		12.3%		(6.6%)
Total AUM		$272,572		$277,378		$258,642		(1.7%)		5.4%

		Three Months Ended September 30				Nine Months Ended September 30,
		2021		2020		2021		2020
AUM - Beginning of Period		$277,378		$214,704		$258,642		$248,239
Net Flows		(2,331)		(201)		(4,838)		(11,082)
Market and foreign exchange appreciation (depreciation)		(2,475)		13,249		18,768		(9,405)
AUM - End of Period		$272,572		$227,752		$272,572		$227,752
Average AUM		$277,941		$226,046		$271,761		$218,652
% Change in average AUM		23.0%				24.3%
Note: Average AUM generally represents the average of the monthly ending AUM balances for the period.

LAZARD LTD RECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL INFORMATION (a) (unaudited)
		Three Months Ended						Nine Months Ended
($ in thousands, except per share data)		September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Operating Revenue
Net revenue - U.S. GAAP Basis		$717,429		$823,137		$577,678		$2,200,673		$1,687,984
Adjustments:
Revenue related to noncontrolling interests (j)		(11,994)		(5,754)		(4,042)		(24,109)		(3,443)
(Gains) losses related to Lazard Fund Interests ("LFI") and other similar arrangements		1,368		(16,491)		(11,261)		(22,610)		(15,427)
Distribution fees, reimbursable deal costs, bad debt expense and other (k)		(23,876)		(21,625)		(12,016)		(62,211)		(50,336)
Losses associated with restructuring and closing of certain offices (l)		51		23,579		-		23,630		-
Interest expense		18,666		18,600		18,688		55,579		55,994
Operating revenue, as adjusted (b)		$701,644		$821,446		$569,047		$2,170,952		$1,674,772
Compensation and Benefits Expense
Compensation and benefits expense - U.S. GAAP Basis		$419,627		$514,918		$354,625		$1,336,091		$1,025,948
Adjustments:
(Charges) credits pertaining to LFI and other similar arrangements		1,368		(16,491)		(11,261)		(22,610)		(15,427)
Expenses associated with restructuring and closing of certain offices (m)		(1,012)		(7,287)		-		(14,922)		-
Compensation related to noncontrolling interests (j)		(2,504)		(2,380)		(1,936)		(6,842)		(5,658)
Compensation and benefits expense, as adjusted (c)		$417,479		$488,760		$341,428		$1,291,717		$1,004,863
Non-Compensation Expense
Non-compensation expense - Subtotal - U.S. GAAP Basis		$142,843		$141,958		$118,373		$409,072		$377,394
Adjustments:
Expenses related to office space reorganization (n)		(991)		(1,237)		(2,311)		(3,644)		(8,462)
Distribution fees, reimbursable deal costs, bad debt expense and other (k)		(23,876)		(21,625)		(12,016)		(62,211)		(50,336)
Amortization of intangible assets related to acquisitions		(15)		(15)		(458)		(45)		(1,359)
Income (expenses) associated with restructuring and closing of certain offices (m)		(39)		1,586		-		(1,424)		-
Non-compensation expense related to noncontrolling interests (j)		(1,188)		(1,837)		(507)		(3,704)		(1,907)
Non-compensation expense, as adjusted (d)		$116,734		$118,830		$103,081		$338,044		$315,330
Pre-Tax Income and Earnings From Operations
Operating Income - U.S. GAAP Basis		$154,959		$166,261		$104,680		$455,510		$284,642
Adjustments:
Losses associated with restructuring and closing of certain offices (l)		51		23,579		-		23,630		-
Expenses related to office space reorganization (n)		991		1,237		2,311		3,644		8,462
Expenses associated with restructuring and closing of certain offices (m)		1,051		5,701		-		16,346		-
Net (income) loss related to noncontrolling interests (j)		(8,304)		(1,738)		(1,423)		(13,568)		4,650
Pre-tax income, as adjusted		148,748		195,040		105,568		485,562		297,754
Interest expense		18,666		18,600		18,688		55,579		55,994
Amortization of intangible assets related to acquisitions and other		17		216		282		50		831
Earnings from operations, as adjusted (e)		$167,431		$213,856		$124,538		$541,191		$354,579
Net Income attributable to Lazard Ltd
Net income attributable to Lazard Ltd - U.S. GAAP Basis		$107,209		$123,178		$75,092		$317,687		$212,572
Adjustments:
Losses associated with restructuring and closing of certain offices (l)		51		23,579		-		23,630		-
Expenses related to office space reorganization (n)		991		1,237		2,311		3,644		8,462
Expenses associated with restructuring and closing of certain offices (m)		1,051		5,701		-		16,346		-
Tax expense (benefit) allocated to adjustments		2,096		(7,897)		(1,301)		(2,890)		(3,229)
Net income, as adjusted (g)		$111,398		$145,798		$76,102		$358,417		$217,805
Diluted Weighted Average Shares Outstanding
Diluted Weighted Average Shares Outstanding - U.S. GAAP Basis		112,994,037		113,603,478		113,181,564		114,139,936		112,929,830
Adjustment: participating securities including profits interest participation rights		787,055		455,466		599,061		426,050		332,093
Diluted Weighted Average Shares Outstanding, as adjusted (h)		113,781,092		114,058,944		113,780,625		114,565,986		113,261,923
Diluted net income per share:
U.S. GAAP Basis		$0.94		$1.08		$0.66		$2.78		$1.88
Non-GAAP Basis, as adjusted		$0.98		$1.28		$0.67		$3.13		$1.92
This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to comparable U.S. GAAP measures, see Notes to Financial Schedules.
See Notes to Financial Schedules

LAZARD LTD RECONCILIATION OF NON-COMPENSATION U.S. GAAP TO ADJUSTED (a) (unaudited)
		Three Months Ended						Nine Months Ended
($ in thousands)		September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Non-compensation expense - U.S. GAAP Basis:
Occupancy and equipment		$31,015		$29,875		$31,318		$95,638		$94,090
Marketing and business development		9,922		9,332		7,562		25,905		34,265
Technology and information services		37,559		35,774		33,457		107,003		97,444
Professional services		16,698		19,996		14,701		51,642		45,974
Fund administration and outsourced services		34,137		31,302		26,196		94,718		76,639
Amortization of intangible assets related to acquisitions		15		15		458		45		1,359
Other		13,497		15,664		4,681		34,121		27,623
Non-compensation expense - Subtotal - U.S. GAAP Basis		$142,843		$141,958		$118,373		$409,072		$377,394
Non-compensation expense - Adjustments:
Occupancy and equipment (j) (m) (n)		($1,106)		$788		($2,278)		($4,503)		($8,459)
Marketing and business development (j) (k) (m)		(1,261)		(1,247)		(185)		(2,713)		(3,631)
Technology and information services (j) (k) (m)		(72)		(88)		(169)		(174)		(771)
Professional services (j) (k) (m) (n)		(1,143)		(2,054)		(2,269)		(4,658)		(5,705)
Fund administration and outsourced services (j) (k)		(19,669)		(16,826)		(13,593)		(51,765)		(35,842)
Amortization of intangible assets related to acquisitions		(15)		(15)		(458)		(45)		(1,359)
Other (j) (k) (m) (n)		(2,843)		(3,686)		3,660		(7,170)		(6,297)
Subtotal Non-compensation adjustments		($26,109)		($23,128)		($15,292)		($71,028)		($62,064)
Non-compensation expense, as adjusted:
Occupancy and equipment		$29,909		$30,663		$29,040		$91,135		$85,631
Marketing and business development		8,661		8,085		7,377		23,192		30,634
Technology and information services		37,487		35,686		33,288		106,829		96,673
Professional services		15,555		17,942		12,432		46,984		40,269
Fund administration and outsourced services		14,468		14,476		12,603		42,953		40,797
Amortization of intangible assets related to acquisitions		-		-		-		-		-
Other		10,654		11,978		8,341		26,951		21,326
Non-compensation expense, as adjusted (d)		$116,734		$118,830		$103,081		$338,044		$315,330
This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to comparable U.S. GAAP measures, see Notes to Financial Schedules.
See Notes to Financial Schedules

LAZARD LTD Notes to Financial Schedules
(a)		Selected Summary Financial Information are non-GAAP measures. Lazard believes that presenting results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides a meaningful and useful basis for comparison of its operating results across periods.
(b)		A non-GAAP measure which excludes (i) revenue related to noncontrolling interests (see (j) below), (ii) (gains) losses related to the changes in the fair value of investments held in connection with Lazard Fund Interests and other similar deferred compensation arrangements for which a corresponding equal amount is excluded from compensation & benefits expense, (iii) revenue related to distribution fees, reimbursable deal costs in accordance with the revenue recognition guidance, bad debt expense, and other (see (k) below), (iv) for the three and nine month periods ended September 30, 2021 and for the three month period ending June 30, 2021, losses associated with restructuring and closing of certain offices (see (l) below), and (v) interest expense primarily related to corporate financing activities.
(c)		A non-GAAP measure which excludes (i) (charges) credits related to the changes in the fair value of the compensation liability recorded in connection with Lazard Fund Interests and other similar deferred compensation arrangements, (ii) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, expenses associated with restructuring and closing of certain offices (see (m) below), and (iii) compensation and benefits related to noncontrolling interests (see (j) below).
(d)		A non-GAAP measure which excludes (i) expenses related to office space reorganization (see (n) below), (ii) expenses related to distribution fees, reimbursable deal costs in accordance with the revenue recognition guidance, bad debt expense, and other (see (k) below), (iii) amortization of intangible assets related to acquisitions, (iv) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, income (expenses) associated with restructuring and closing of certain offices (see (m) below), and (v) expenses related to noncontrolling interests (see (j) below).
(e)		A non-GAAP measure which excludes (i) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, losses associated with restructuring and closing of certain offices (see (l) below), (ii) expenses related to office space reorganization (see (n) below), (iii) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, expenses associated with restructuring and closing of certain offices (see (m) below), (iv) net revenue and expenses related to noncontrolling interests (see (j) below), (v) interest expense primarily related to corporate financing activities, and (iv) amortization of intangible assets related to acquisitions.
(f)		Represents earnings from operations as a percentage of operating revenue, and is a non-GAAP measure.
(g)		A non-GAAP measure which excludes (i) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, losses associated with restructuring and closing of certain offices (see (l) below), (ii) expenses related to office space reorganization (see (n) below), and (iii) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, expenses associated with restructuring and closing of certain offices (see (m) below), net of tax expense (benefits).
(h)		A non-GAAP measure which includes units of the long-term incentive compensation program consisting of profits interest participation rights, which are equity incentive awards that, subject to certain conditions, may be exchanged for shares of our common stock. Certain profits interest participation rights and other participating securities may be excluded from the computation of outstanding stock equivalents for U.S. GAAP net income per share.
(i)		Effective tax rate is a non-GAAP measure based upon the U.S. GAAP rate with adjustments for the tax applicable to the non-GAAP adjustments to operating income, generally based upon the effective marginal tax rate in the applicable jurisdiction of the adjustments. The computation is based on a quotient, the numerator of which is the provision for income taxes of $37,350, $49,242, and $29,466 for the three month periods ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively, $127,145 and $79,949 for the nine month periods ended September 30, 2021 and 2020 and the denominator of which is pre-tax income of $148,748, $195,040 and $105,568 for the three month periods ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively, $485,562 and $297,754 for the nine month periods ended September 30, 2021 and 2020.
(j)		Noncontrolling interests include revenue and expenses principally related to Edgewater, ESC Funds and a Special Purpose Acquisition Company.
(k)		Represents certain distribution, introducer and management fees paid to third parties and reimbursable deal costs for which an equal amount is excluded from both non-GAAP operating revenue and non-compensation expense, respectively, and excludes bad debt expense, which represents fees that are deemed uncollectible.
(l)		Represents losses related to the reclassification of currency translation adjustments to earnings from accumulated other comprehensive loss associated with restructuring and closing of certain of our offices.
(m)		Expenses associated with restructuring and closing of certain offices.
(n)		Represents incremental rent expense, building depreciation, impairment losses, and legal fees related to office space reorganization.
NM		Not meaningful

 

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Media Contact:

Judi Frost Mackey

+1 212 632 1428

judi.mackey@lazard.com

Investor Contact:

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+1 212 632 6886

alexandra.deignan@lazard.com

Source: Lazard Ltd

FAQ

What were Lazard's financial results for Q3 2021?

Lazard reported operating revenue of $702 million, with adjusted net income of $111 million, or $0.98 per share.

How did Lazard perform in terms of assets under management in Q3 2021?

Lazard's average assets under management reached $278 billion, a 23% increase from Q3 2020.

What was the Financial Advisory revenue for Lazard in Q3 2021?

The Financial Advisory revenue for Q3 2021 was a record $381 million, up 24% from the previous year.

How much did Lazard return to shareholders in Q3 2021?

Lazard returned $103 million to shareholders, which included $49 million in dividends and $52 million in share repurchases.

What is Lazard's stock symbol?

Lazard's stock symbol is LAZ.