Lazard Ltd Reports Third-Quarter and Nine-Month 2022 Results

Rhea-AI Summary

Lazard Ltd (NYSE: LAZ) reported record operating revenue of $724 million for Q3 2022, a 3% increase compared to Q3 2021. Adjusted net income was $106 million or $1.05 per diluted share. For the first nine months of 2022, net income, as adjusted, totaled $317 million, down 11% from the previous year. The company returned $812 million to shareholders, including repurchasing 17.2 million shares. Despite challenges in asset management, Lazard remains committed to delivering long-term value through diversified services and robust capital management.

Positive

• Record Q3 operating revenue of $724 million, up 3% YoY.
• Financial Advisory revenue rose 19% YoY to $454 million.
• Returned $812 million to shareholders YTD, including $612 million in share repurchases.

Negative

• Asset Management revenue decreased 15% YoY to $263 million.
• Average Assets Under Management (AUM) fell 24% YoY to $212 billion.
• Adjusted net income YTD down 11% compared to previous year.

Financial Advisory record operating revenue year to date, driven by strength in Europe

Asset Management resilient performance amid challenging market and foreign exchange headwinds

Returned $812 million in capital to shareholders, including a record 17 million shares repurchased year to date

NEW YORK--(BUSINESS WIRE)-- Lazard Ltd (NYSE: LAZ) today reported operating revenue¹ of $724 million for the quarter ended September 30, 2022. Net income, as adjusted², was $106 million, or $1.05 per share (diluted) for the quarter. On a U.S. GAAP basis, third-quarter 2022 net income was $106 million, or $1.06 per share (diluted).

For the first nine months of 2022, net income, as adjusted, was $317 million, or $3.02 per share (diluted). On a U.S. GAAP basis, net income for the first nine months was $315 million, or $3.03 per share (diluted).

“Our record third-quarter revenue reflects the strength of our diversified business model and our commitment to providing innovative client solutions during challenging market conditions,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “We remain focused on helping our clients navigate the uncertainty of the global macroenvironment, while we continue to invest in our business through the cycle, exercise cost discipline and deliver long-term value for shareholders."

($ in millions, except			Quarter Ended							Nine Months Ended
per share data and AUM)			September 30,							September 30,
			2022		2021		%'22-'21			2022		2021		%'22-'21
Net Income
U.S. GAAP			$106		$107		(1%)			$315		$318		(1%)
Per share, diluted			$1.06		$0.94		13%			$3.03		$2.78		9%
Adjusted2			$106		$111		(4%)			$317		$358		(11%)
Per share, diluted			$1.05		$0.98		7%			$3.02		$3.13		(4%)
Operating Revenue1
Total operating revenue			$724		$702		3%			$2,098		$2,171		(3%)
Financial Advisory			$454		$381		19%			$1,249		$1,170		7%
Asset Management			$263		$311		(15%)			$840		$982		(14%)
AUM ($ in billions)
Period end			$198		$273		(27%)
Average			$212		$278		(24%)			$233		$272		(14%)

Note: Endnotes are on page 7 of this release. A reconciliation of adjusted GAAP to U.S. GAAP is on pages 14-15.

OPERATING REVENUE

Operating revenue¹ was a third-quarter record $724 million for the third quarter of 2022, up 3% from the third quarter of 2021, and $2,098 million for the first nine months of 2022, down 3% from the first nine months of 2021.

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 2022, Financial Advisory operating revenue was a third-quarter record $454 million, 19% higher than the third quarter of 2021.

For the first nine months of 2022, Financial Advisory operating revenue was a record $1,249 million, an increase of 7% from the first nine months of 2021.

During and since the third quarter of 2022, Lazard has been engaged in significant and complex M&A transactions and other strategic advisory assignments globally, including the following (clients are in italics): Intel’s joint $30 billion investment with Brookfield in U.S.-based chip factories; Orange’s combination with Masmovil in Spain, for a combined value of €18.6 billion; AVEVA Group’s $11.6 billion recommended offer from Schneider Electric; Continental Grain (CGC) and its subsidiary Wayne Farms, in CGC’s and Cargill's $4.5 billion acquisition of Sanderson Farms; Bungie’s $3.6 billion sale to Sony Interactive Entertainment; Saint-Gobain’s $2.3 billion acquisition of GCP Applied Technologies; Rolls-Royce's €1.7 billion sale of ITP Aero to a Bain Capital-led consortium; Brewin Dolphins’ £1.6 billion sale to Royal Bank of Canada; Obagi’s $1.2 billion combination with Waldencast and Milk Makeup; Infrastructure & Energy Alternatives’ $1.1 billion sale to MasTec; Aqua Finance’s majority sale to Athene and Apollo at a valuation of approximately $1 billion; Investindustrial’s $950 million acquisition of a significant portion of TreeHouse Food’s Meal Preparation business; Institut Mérieux's partnership with and investment of €833 million in the company by Exor; Germany’s Federal Ministry for Economic Affairs and Climate Action on the Federal Republic of Germany’s acquisition of a 99% stake in Uniper; KIRKBI’s acquisition of BrainPOP; and Kofax's sale to Clearlake Capital Group and TA Associates.

Lazard has one of the world’s preeminent restructuring practices. During and since the third quarter of 2022, we have been engaged in a broad range of visible and complex restructuring and debt advisory assignments for debtors or creditors, including roles involving: Bed Bath & Beyond; Brazos Electric Power Cooperative; Corp Group Banking S.A.; Endo; GenapSys and Rockall Energy.

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 third quarter of 2022, or continued to advise or completed since September 30, 2022, 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 2022, Asset Management operating revenue was $263 million, 15% lower than the third quarter of 2021. For the first nine months of 2022, Asset Management operating revenue was $840 million, 14% lower than the first nine months of 2021.

For the third quarter of 2022, management fees and other revenue was $241 million, 20% lower than the third quarter of 2021, and 7% lower than the second quarter of 2022. For the first nine months of 2022, management fees and other revenue was $786 million, 13% lower than the first nine months of 2021.

Average assets under management (AUM) for the third quarter of 2022 was $212 billion, 24% lower than the third quarter of 2021, and 8% lower than the second quarter of 2022. Average AUM for the first nine months of 2022 was $233 billion, 14% lower than the first nine months of 2021.

AUM as of September 30, 2022, was $198 billion, down 9% from June 30, 2022, and down 27% from September 30, 2021. The sequential decrease from June 30, 2022 was driven by market depreciation of $10.3 billion, foreign exchange depreciation of $6.6 billion and net outflows of $2.0 billion.

For the third quarter of 2022, incentive fees were $22 million, compared to $7 million for the third quarter of 2021. For the first nine months of 2022, incentive fees were $54 million, compared to $75 million for the first nine months of 2021.

OPERATING EXPENSES

Compensation and Benefits

In managing compensation and benefits expense, we focus on annual awarded compensation (cash compensation and benefits plus deferred incentive compensation with respect to the applicable year, net of estimated future forfeitures and excluding charges), a non-GAAP measure. We believe annual awarded compensation reflects the actual annual compensation cost more accurately than the GAAP measure of compensation cost, which includes applicable-year cash compensation and the amortization of deferred incentive compensation principally attributable to previous years’ deferred compensation. We believe that by managing our business using awarded compensation 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 2022, we accrued compensation and benefits expense at an adjusted compensation¹ ratio of 60.0%, compared to the third-quarter 2021 ratio of 59.5%. This resulted in $434 million of compensation and benefits expense, compared to $417 million for the third quarter of 2021.

For the first nine months of 2022, adjusted compensation and benefits expense was $1,238 million, compared to $1,292 million for the first nine months of 2021.

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 2022, was $128 million, 10% higher than the third quarter of 2021. The increase primarily reflects higher marketing and business development expenses and technology investments. The ratio of adjusted non-compensation expense to operating revenue for the third quarter of 2022 was 17.7%, compared to 16.6% for the third quarter of 2021.

Adjusted non-compensation expense for the first nine months of 2022 was $376 million, 11% higher than the first nine months of 2021. The adjusted non-compensation ratio¹ for the first nine months of 2022 was 17.9%, compared to 15.6% for the first nine months of 2021.

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

TAXES

The provision for taxes, on an adjusted basis¹, was $36 million for the third quarter and $109 million for the first nine months of 2022. The effective tax rate on the same basis was 25.1% for the third quarter and 25.6% for the first nine months of 2022, compared to 25.1% and 26.2% for the respective 2021 periods.

CAPITAL MANAGEMENT AND BALANCE SHEET

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

In the third quarter of 2022, Lazard returned $286 million to shareholders, which included: $46 million in dividends; $237 million in share repurchases of our common stock; and $3 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

In the first nine months of 2022, Lazard returned $812 million to shareholders, which included: $139 million in dividends; $612 million in share repurchases of our common stock; and $61 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

During the first nine months of 2022, we repurchased a record 17.2 million shares, which included 6.7 million shares repurchased in the third quarter. As of September 30, 2022, our remaining share repurchase authorization was $382 million.

On October 26, 2022, Lazard declared a quarterly dividend of $0.50 per share on its outstanding common stock. The dividend is payable on November 18, 2022, to stockholders of record on November 7, 2022.

Lazard’s financial position remains strong. As of September 30, 2022, our cash and cash equivalents were $1 billion. Stockholders’ equity related to Lazard’s interests was $561 million.

***

CONFERENCE CALL

Lazard will host a conference call at 8:00 a.m. EDT on October 27, 2022, to discuss the company’s financial results for the third quarter and first nine months of 2022. 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 1 866-831-8711 (toll-free, U.S. and Canada) or +1 203-518-9865 (outside of the U.S. and Canada), 15 minutes prior to the start of the call. Conference ID: 69483

A replay of the conference call will be available by 10:00 a.m. EDT, October 27, 2022, via the Lazard Investor Relations website at www.lazard.com, or by dialing 1 800-839-5676 (toll-free, U.S. and Canada) or +1 402-220-2565 (outside of the U.S. and Canada).

ABOUT LAZARD

Lazard, one of the world's preeminent financial advisory and asset management firms, operates from 41 cities across 26 countries in North, Central and South America, Europe, Asia and Australia. 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 Third-quarter and first-nine-months 2022 adjusted results¹ exclude pre-tax charges of $0.9 million and $2.9 million, respectively, relating to office space reorganization. On a U.S. GAAP basis, these resulted in a net charge of $0.7 million, or $0.01 (diluted) per share, for the third quarter, and a net charge of $2.1 million, or $0.02 (diluted) per share, for the first nine months of 2022.

LAZ-EPE

LAZARD LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. GAAP)
	Three Months Ended												% Change From
	September 30,				June 30,				September 30,				June 30,			September 30,
($ in thousands, except per share data)	2022				2022				2021				2022			2021
Total revenue	$	746,431			$	660,658			$	737,807			13%			1%
Interest expense		(19,687	)			(21,112	)			(20,378	)
Net revenue		726,744				639,546				717,429			14%			1%
Operating expenses:
Compensation and benefits		420,937				363,830				419,627			16%			0%
Occupancy and equipment		30,696				29,409				31,015
Marketing and business development		19,633				22,673				9,922
Technology and information services		44,579				42,067				37,559
Professional services		15,665				16,549				16,698
Fund administration and outsourced services		27,110				28,551				34,137
Amortization of intangible assets related to acquisitions		15				15				15
Other		9,967				10,614				13,497
Subtotal		147,665				149,878				142,843			(1%)			3%
Operating expenses		568,602				513,708				562,470			11%			1%
Operating income		158,142				125,838				154,959			26%			2%
Provision for income taxes		35,350				34,187				39,446			3%			(10%)
Net income		122,792				91,651				115,513			34%			6%
Net income (loss) attributable to noncontrolling interests		16,995				(3,829	)			8,304
Net income attributable to Lazard Ltd	$	105,797			$	95,480			$	107,209			11%			(1%)
Attributable to Lazard Ltd Common Stockholders:
Weighted average shares outstanding:
Basic		93,275,631				98,660,173				105,415,743			(5%)			(12%)
Diluted		98,865,156				102,753,336				112,994,037			(4%)			(13%)
Net income per share:
Basic	$	1.11			$	0.96			$	1.00			16%			11%
Diluted	$	1.06			$	0.92			$	0.94			15%			13%

LAZARD LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. GAAP)
	Nine Months Ended
	September 30,				September 30,
($ in thousands, except per share data)	2022				2021				% Change
Total revenue	$	2,123,233			$	2,260,975			(6%)
Interest expense		(62,051	)			(60,302	)
Net revenue		2,061,182				2,200,673			(6%)
Operating expenses:
Compensation and benefits		1,181,608				1,336,091			(12%)
Occupancy and equipment		91,344				95,638
Marketing and business development		56,429				25,905
Technology and information services		124,577				107,003
Professional services		48,243				51,642
Fund administration and outsourced services		85,364				94,718
Amortization of intangible assets related to acquisitions		45				45
Other		29,864				34,121
Subtotal		435,866				409,072			7%
Operating expenses		1,617,474				1,745,163			(7%)
Operating income		443,708				455,510			(3%)
Provision for income taxes		108,290				124,255			(13%)
Net income		335,418				331,255			1%
Net income attributable to noncontrolling interests		20,265				13,568
Net income attributable to Lazard Ltd	$	315,153			$	317,687			(1%)
Attributable to Lazard Ltd Common Stockholders:
Weighted average shares outstanding:
Basic		98,161,027				106,484,652			(8%)
Diluted		103,268,378				114,139,936			(10%)
Net income per share:
Basic	$	3.16			$	2.94			7%
Diluted	$	3.03			$	2.78			9%

LAZARD LTD
UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL CONDITION
(U.S. GAAP)
	September 30,				December 31,
($ in thousands)	2022				2021
ASSETS
Cash and cash equivalents	$	1,000,102			$	1,465,022
Deposits with banks and short-term investments		1,341,514				1,347,544
Restricted cash		621,099				617,448
Receivables		740,395				805,809
Investments		638,960				1,007,339
Property		218,551				250,005
Goodwill and other intangible assets		375,889				379,571
Operating lease right-of-use assets		420,013				466,054
Deferred tax assets		390,543				435,308
Other assets		460,859				373,081
Total Assets	$	6,207,925			$	7,147,181
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY
Liabilities
Deposits and other customer payables	$	1,499,812			$	1,442,701
Accrued compensation and benefits		531,496				972,303
Operating lease liabilities		502,206				552,522
Tax receivable agreement obligation		192,399				213,434
Senior debt		1,687,092				1,685,227
Other liabilities		539,101				628,030
Total liabilities		4,952,106				5,494,217
Commitments and contingencies
Redeemable noncontrolling interests		578,495				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		126,746				144,729
Retained earnings		1,682,398				1,560,636
Accumulated other comprehensive loss, net of tax		(334,382	)			(223,847	)
Subtotal		1,475,890				1,482,646
Class A common stock held by subsidiaries, at cost		(915,254	)			(507,426	)
Total Lazard Ltd stockholders' equity		560,636				975,220
Noncontrolling interests		116,688				102,744
Total stockholders' equity		677,324				1,077,964
Total liabilities, redeemable noncontrolling interests and stockholders' equity	$	6,207,925			$	7,147,181

LAZARD LTD
SELECTED SUMMARY FINANCIAL INFORMATION (a)
(Non-GAAP - unaudited)
	Three Months Ended												% Change From
	September 30,				June 30,				September 30,				June 30,			September 30,
($ in thousands, except per share data)	2022				2022				2021				2022			2021
Revenues:
Financial Advisory	$	453,664			$	406,792			$	381,295			12%			19%
Asset Management		262,559				265,707				310,566			(1%)			(15%)
Corporate		7,328				3,412				9,783			NM			(25%)
Operating revenue (b)	$	723,551			$	675,911			$	701,644			7%			3%
Expenses:
Adjusted compensation and benefits expense (c)	$	434,131			$	395,407			$	417,479			10%			4%
Ratio of adjusted compensation to operating revenue	60.0%				58.5%				59.5%
Non-compensation expense (d)	$	128,263			$	130,941			$	116,734			(2%)			10%
Ratio of non-compensation to operating revenue	17.7%				19.4%				16.6%
Earnings:
Earnings from operations (e)	$	161,157			$	149,563			$	167,431			8%			(4%)
Operating margin (f)	22.3%				22.1%				23.9%
Adjusted net income (g)	$	106,472			$	96,108			$	111,398			11%			(4%)
Diluted adjusted net income per share	$	1.05			$	0.92			$	0.98			14%			7%
Diluted weighted average shares (h)		101,603,367				104,767,897				113,781,092			(3%)			(11%)
Effective tax rate (i)	25.1%				26.4%				25.1%
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
	September 30,				September 30,
($ in thousands, except per share data)	2022				2021				% Change
Revenues:
Financial Advisory	$	1,248,586			$	1,169,670			7%
Asset Management		840,047				981,933			(14%)
Corporate		9,464				19,349			(51%)
Operating revenue (b)	$	2,098,097			$	2,170,952			(3%)
Expenses:
Adjusted compensation and benefits expense (c)	$	1,238,240			$	1,291,717			(4%)
Ratio of adjusted compensation to operating revenue	59.0%				59.5%
Non-compensation expense (d)	$	376,330			$	338,044			11%
Ratio of non-compensation to operating revenue	17.9%				15.6%
Earnings:
Earnings from operations (e)	$	483,527			$	541,191			(11%)
Operating margin (f)	23.1%				24.9%
Adjusted net income (g)	$	317,272			$	358,417			(11%)
Diluted adjusted net income per share	$	3.02			$	3.13			(4%)
Diluted weighted average shares (h)		105,183,136				114,565,986			(8%)
Effective tax rate (i)	25.6%				26.2%
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,				June 30,				December 31,
	2022				2022				2021				Qtr to Qtr				YTD
Equity:
Emerging Markets	$	20,378			$	22,656			$	31,227			(10.1%)				(34.7%)
Global		43,754				48,742				59,516			(10.2%)				(26.5%)
Local		43,589				46,617				56,310			(6.5%)				(22.6%)
Multi-Regional		45,988				52,259				73,953			(12.0%)				(37.8%)
Total Equity		153,709				170,274				221,006			(9.7%)				(30.5%)
Fixed Income:
Emerging Markets		9,288				9,948				12,231			(6.6%)				(24.1%)
Global		10,252				12,380				14,410			(17.2%)				(28.9%)
Local		4,986				5,302				6,022			(6.0%)				(17.2%)
Multi-Regional		13,786				12,299				13,623			12.1%				1.2%
Total Fixed Income		38,312				39,929				46,286			(4.0%)				(17.2%)
Alternative Investments		3,900				4,145				4,203			(5.9%)				(7.2%)
Private Equity		1,042				1,268				1,290			(17.8%)				(19.2%)
Cash Management		803				1,010				954			(20.5%)				(15.8%)
Total AUM	$	197,766			$	216,626			$	273,739			(8.7%)				(27.8%)
	Three Months Ended September 30,												Nine Months Ended September 30,
	2022				2021								2022				2021
AUM - Beginning of Period	$	216,626			$	277,378							$	273,739			$	258,642
Net Flows		(2,006	)			(2,331	)							(13,180	)			(4,838	)
Market and foreign exchange appreciation (depreciation)		(16,854	)			(2,475	)							(62,793	)			18,768
AUM - End of Period	$	197,766			$	272,572							$	197,766			$	272,572
Average AUM	$	212,259			$	277,941							$	232,839			$	271,761
% Change in average AUM	(23.6%)												(14.3%)
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
	September 30,				June 30,				September 30,				September 30,				September 30,
($ in thousands, except per share data)	2022				2022				2021				2022				2021
Operating Revenue
Net revenue - U.S. GAAP Basis	$	726,744			$	639,546			$	717,429			$	2,061,182			$	2,200,673
Adjustments:
Revenue related to noncontrolling interests (j)		(20,847	)			(660	)			(11,994	)			(32,302	)			(24,109	)
(Gains) losses related to Lazard Fund Interests ("LFI") and other similar arrangements		16,180				35,098				1,368				65,601				(22,610	)
Distribution fees, reimbursable deal costs, bad debt expense and other (k)		(17,588	)			(17,083	)			(23,876	)			(53,493	)			(62,211	)
Losses associated with restructuring and closing of certain offices (l)		-				-				51				-				23,630
Interest expense		19,062				19,010				18,666				57,109				55,579
Operating revenue, as adjusted (b)	$	723,551			$	675,911			$	701,644			$	2,098,097			$	2,170,952
Compensation and Benefits Expense
Compensation and benefits expense - U.S. GAAP Basis	$	420,937			$	363,830			$	419,627			$	1,181,608			$	1,336,091
Adjustments:
(Charges) credits pertaining to LFI and other similar arrangements		16,180				35,098				1,368				65,601				(22,610	)
Expenses associated with restructuring and closing of certain offices (m)		-				-				(1,012	)			-				(14,922	)
Compensation related to noncontrolling interests (j)		(2,986	)			(3,521	)			(2,504	)			(8,969	)			(6,842	)
Compensation and benefits expense, as adjusted (c)	$	434,131			$	395,407			$	417,479			$	1,238,240			$	1,291,717
Non-Compensation Expense
Non-compensation expense - Subtotal - U.S. GAAP Basis	$	147,665			$	149,878			$	142,843			$	435,866			$	409,072
Adjustments:
Expenses related to office space reorganization (n)		(933	)			(871	)			(991	)			(2,928	)			(3,644	)
Distribution fees, reimbursable deal costs, bad debt expense and other (k)		(17,588	)			(17,083	)			(23,876	)			(53,493	)			(62,211	)
Amortization of intangible assets related to acquisitions		(15	)			(15	)			(15	)			(45	)			(45	)
Expenses associated with restructuring and closing of certain offices (m)		-				-				(39	)			-				(1,424	)
Non-compensation expense related to noncontrolling interests (j)		(866	)			(968	)			(1,188	)			(3,070	)			(3,704	)
Non-compensation expense, as adjusted (d)	$	128,263			$	130,941			$	116,734			$	376,330			$	338,044
Pre-Tax Income and Earnings From Operations
Operating Income - U.S. GAAP Basis	$	158,142			$	125,838			$	154,959			$	443,708			$	455,510
Adjustments:
Losses associated with restructuring and closing of certain offices (l)		-				-				51				-				23,630
Expenses related to office space reorganization (n)		933				871				991				2,928				3,644
Expenses associated with restructuring and closing of certain offices (m)		-				-				1,051				-				16,346
Net (income) loss related to noncontrolling interests (j)		(16,995	)			3,829				(8,304	)			(20,265	)			(13,568	)
Pre-tax income, as adjusted		142,080				130,538				148,748				426,371				485,562
Interest expense		19,062				19,010				18,666				57,109				55,579
Amortization of intangible assets related to acquisitions and other		15				15				17				47				50
Earnings from operations, as adjusted (e)	$	161,157			$	149,563			$	167,431			$	483,527			$	541,191
Net Income attributable to Lazard Ltd
Net income attributable to Lazard Ltd - U.S. GAAP Basis	$	105,797			$	95,480			$	107,209			$	315,153			$	317,687
Adjustments:
Losses associated with restructuring and closing of certain offices (l)		-				-				51				-				23,630
Expenses related to office space reorganization (n)		933				871				991				2,928				3,644
Expenses associated with restructuring and closing of certain offices (m)		-				-				1,051				-				16,346
Tax expense (benefit) allocated to adjustments		(258	)			(243	)			2,096				(809	)			(2,890	)
Net income, as adjusted (g)	$	106,472			$	96,108			$	111,398			$	317,272			$	358,417
Diluted Weighted Average Shares Outstanding
Diluted Weighted Average Shares Outstanding - U.S. GAAP Basis		98,865,156				102,753,336				112,994,037				103,268,378				114,139,936
Adjustment: participating securities including profits interest participation rights		2,738,211				2,014,561				787,055				1,914,758				426,050
Diluted Weighted Average Shares Outstanding, as adjusted (h)		101,603,367				104,767,897				113,781,092				105,183,136				114,565,986
Diluted net income per share:
U.S. GAAP Basis	$	1.06			$	0.92			$	0.94			$	3.03			$	2.78
Non-GAAP Basis, as adjusted	$	1.05			$	0.92			$	0.98			$	3.02			$	3.13
This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules.
See Notes to Financial Schedules

LAZARD LTD
RECONCILIATION OF NON-COMPENSATION U.S. GAAP TO ADJUSTED (a)
(unaudited)
	Three Months Ended												Nine Months Ended
	September 30,				June 30,				September 30,				September 30,				September 30,
($ in thousands)	2022				2022				2021				2022				2021
Non-compensation expense - U.S. GAAP Basis:
Occupancy and equipment	$	30,696			$	29,409			$	31,015			$	91,344			$	95,638
Marketing and business development		19,633				22,673				9,922				56,429				25,905
Technology and information services		44,579				42,067				37,559				124,577				107,003
Professional services		15,665				16,549				16,698				48,243				51,642
Fund administration and outsourced services		27,110				28,551				34,137				85,364				94,718
Amortization of intangible assets related to acquisitions		15				15				15				45				45
Other		9,967				10,614				13,497				29,864				34,121
Non-compensation expense - Subtotal - U.S. GAAP Basis	$	147,665			$	149,878			$	142,843			$	435,866			$	409,072
Non-compensation expense - Adjustments:
Occupancy and equipment (j) (m) (n)	$	(944	)		$	(932	)		$	(1,106	)		$	(3,059	)		$	(4,503	)
Marketing and business development (j) (k) (m)		(2,516	)			(2,043	)			(1,261	)			(5,784	)			(2,713	)
Technology and information services (j) (k) (m)		(23	)			(61	)			(72	)			(114	)			(174	)
Professional services (j) (k) (m) (n)		(510	)			(403	)			(1,143	)			(1,651	)			(4,658	)
Fund administration and outsourced services (j) (k)		(14,362	)			(15,680	)			(19,669	)			(46,554	)			(51,765	)
Amortization of intangible assets related to acquisitions		(15	)			(15	)			(15	)			(45	)			(45	)
Other (j) (k) (m) (n)		(1,032	)			197				(2,843	)			(2,329	)			(7,170	)
Subtotal Non-compensation adjustments	$	(19,402	)		$	(18,937	)		$	(26,109	)		$	(59,536	)		$	(71,028	)
Non-compensation expense, as adjusted:
Occupancy and equipment	$	29,752			$	28,477			$	29,909			$	88,285			$	91,135
Marketing and business development		17,117				20,630				8,661				50,645				23,192
Technology and information services		44,556				42,006				37,487				124,463				106,829
Professional services		15,155				16,146				15,555				46,592				46,984
Fund administration and outsourced services		12,748				12,871				14,468				38,810				42,953
Amortization of intangible assets related to acquisitions		-				-				-				-				-
Other		8,935				10,811				10,654				27,535				26,951
Non-compensation expense, as adjusted (d)	$	128,263			$	130,941			$	116,734			$	376,330			$	338,044
This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules.
See Notes to Financial Schedules

LAZARD LTD
Notes to Financial Schedules
(a)	Selected Summary Financial Information are non-GAAP measures. Lazard believes that presenting results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides a meaningful and useful basis for comparison of its operating results across periods.
(b)	A non-GAAP measure which excludes (i) revenue related to noncontrolling interests (see (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, 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, 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, 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, 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, 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 (vi) 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, 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, 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 $35,608, $34,430, and $37,350 for the three month periods ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively, $109,099 and $127,145 for the nine month periods ended September 30, 2022 and 2021 and the denominator of which is pre-tax income of $142,080, $130,538, and $148,748 for the three month periods ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively, $426,371 and $485,562 for the nine month periods ended September 30, 2022 and 2021.
(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 building depreciation and other costs related to office space reorganization.
NM	Not meaningful

 

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Media Contact:

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judi.mackey@lazard.com



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Source: Lazard Ltd

FAQ

What were Lazard's Q3 2022 revenue and earnings results?

Lazard reported operating revenue of $724 million and adjusted net income of $106 million for Q3 2022.

How much capital did Lazard return to shareholders in 2022?

Lazard returned $812 million to shareholders in 2022, including share repurchases and dividends.

What is Lazard's stock symbol?

Lazard trades under the stock symbol LAZ.

How did Lazard's Financial Advisory performance change in Q3 2022?

Lazard's Financial Advisory revenue increased by 19% from the previous year, reaching $454 million.

What challenges did Lazard face in Asset Management during 2022?

Lazard's Asset Management revenue dropped 15% YoY in Q3 2022, with average AUM decreasing 24%.