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Press release content from Business Wire. The AP news staff was not involved in its creation.

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

October 29, 2021 GMT

NEW YORK--(BUSINESS WIRE)--Oct 29, 2021--

Lazard Ltd (NYSE: LAZ) today reported operating revenue 1 of $702 million for the quarter ended September 30, 2021. Net income, as adjusted 2, 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.”

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($ 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%

Adjusted 2

$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 revenue 1 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 expense 1 at an adjusted compensation 1 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 expense 1 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 revenue 1 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 basis 1, 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 results 1 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 ofVariance
September 30,
2021
June 30,
2021
December 31,
2020
Qtr to QtrYTD
 
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 EndedNine 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 EndedNine 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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CONTACT: Media Contact:

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+1 212 632 1428

judi.mackey@lazard.comInvestor Contact:

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KEYWORD: NEW YORK UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: BANKING PROFESSIONAL SERVICES FINANCE

SOURCE: Lazard Ltd

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PUB: 10/29/2021 06:49 AM/DISC: 10/29/2021 06:49 AM

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