| [April 25, 2019] |
 |
Lazard Ltd Reports First-Quarter 2019 Results
Lazard Ltd (NYSE: LAZ) today reported operating revenue1 of
$620 million for the quarter ended March 31, 2019. Net income, as
adjusted2, was $106 million, or $0.87 (diluted) per share for
the quarter.
First-quarter 2019 net income on a U.S. GAAP basis was $97 million, or
$0.80 per share (diluted).
"Our first quarter results reflect the equity markets' recovery from
their fourth-quarter dislocation, and uneven advisory activity across
geographies," said Kenneth M. Jacobs, Chairman and Chief Executive
Officer of Lazard. "We continue to invest in our people and capabilities
to enhance our competitive edge and build value for all our
stakeholders."
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($ in millions, except
per share data and AUM)
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|
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Quarter Ended March 31,
|
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|
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2019
|
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2018
|
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%'19-'18
|
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Net Income
|
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|
|
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U.S. GAAP
|
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$97
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$160
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(39)%
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Per share, diluted
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$0.80
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$1.21
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(34)%
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Adjusted2
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$106
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$166
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(36)%
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Per share, diluted
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$0.87
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$1.26
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(31)%
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Operating Revenue1
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Total operating revenue
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$620
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$724
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(14)%
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Financial Advisory
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$330
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$389
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(15)%
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Asset Management
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$284
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$330
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(14)%
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AUM ($ in billions)
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Period End
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$235
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$252
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(7)%
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Average
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$229
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$256
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(11)%
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Note: Endnotes are on page 6 of this release. A reconciliation of
adjusted GAAP to U.S. GAAP is on page 11.
OPERATING REVENUE
Operating revenue was $620 million for the quarter ended March 31, 2019,
14% lower than the first quarter of 2018.
Financial Advisory
Our Financial Advisory results include M&A Advisory, Capital
Advisory, Capital Raising, Restructuring, Shareholder Advisory,
Sovereign Advisory, and other strategic advisory work for clients.
Financial Advisory operating revenue was $330 million for 2019, 15%
lower than the first quarter of 2018. The decline reflected lower
first-quarter operating revenue in Europe and Asia, partly offset by
higher first-quarter operating revenue in the Americas.
Among the major M&A transactions that were completed during the first
quarter of 2019 were the following (clients are in italics): Thales' €5.6
billion acquisition of Gemalto through a recommended all-cash offer; athenahealth's
$5.7 billion sale to Veritas Capital and Evergreen Coast Capital; Messer
Industries, a JV between Messer and CVC, in the $3.6 billion
acquisition of parts of Linde's and Praxair's business in the Americas; Cronos
Group in the CAD 2.4 billion strategic investment from Altria; and
Archer Daniels Midland's €1.5 billion acquisition of Neovia.
Among the major M&A transactions that were announced during or since the
first quarter of 2019 or on which we continued to advise were the
following: IBM's $34 billion acquisition of Red Hat; Versum
Materials' €5.8 billion sale to Merck KGaA; Rabobank's $2.1
billion sale of its U.S. bank subsidiary, Rabobank, N.A., to Mechanics
Bank; YY's $1.5 billion acquisition of the remaining 68.3% of
BIGO; Saputo's CAD 1.7 billion acquisition of Dairy Crest Group;
and Principal Financial's $1.2 billion acquisition of Wells Fargo
Institutional Retirement & Trust business.
During or since the first quarter of 2019 we have been engaged in a
broad range of highly visible and complex restructuring and debt
advisory assignments for debtors and creditors, including roles
involving Debenhams; FirstEnergy Solutions; Interserve; Nine West; PG&E
Sears Holdings; and Toys "R" Us.
Our Capital and Shareholder Advisory practices remained active globally
in the first quarter of 2019, advising on a broad range of public and
private assignments. Our Sovereign Advisory practice also remained
active, advising governments, sovereign and sub-sovereign entities
across developed and emerging markets.
For a list of publicly announced Financial Advisory transactions on
which Lazard advised in the first quarter of 2019, or continued to
advise or completed since March 31, 2019, please visit our website at www.lazard.com/businesses/transactions.
Asset Management
In the text portion of this press release, we present our Asset
Management results as 1) Management fees and other revenue, and 2)
Incentive fees.
Asset Management operating revenue was $284 million for 2019, 14% lower
than the first quarter of 2018.
Management fees and other revenue was $283 million, 13% lower than the
first quarter of 2018, and 1% higher than the fourth quarter of 2018.
Average AUM for the first quarter of 2019 was $229 billion, 11% lower
than the first quarter of 2018, and 2% higher than the fourth quarter of
2018.
AUM as of March 31, 2019, was $235 billion, up 9% from December 31,
2018, and down 7% from March 31, 2018. The sequential increase was
primarily driven by market appreciation of $21 billion, offset by $900
million of foreign exchange depreciation, with flat net flows.
Incentive fees during the period were $1 million, compared to $6 million
for the first quarter of 2018.
OPERATING EXPENSES
Compensation and Benefits
In managing compensation and benefits expense, we focus on annual
awarded compensation (cash compensation and benefits plus deferred
incentive compensation with respect to the applicable year, net of
estimated future forfeitures and excluding charges). We believe annual
awarded compensation reflects the actual annual compensation cost more
accurately than the GAAP measure of compensation cost, which includes
applicable-year cash compensation and the amortization of deferred
incentive compensation principally attributable to previous years'
deferred compensation. We believe that by managing our business using
awarded compensation with a consistent deferral policy, we can better
manage our compensation costs, increase our flexibility in the future
and build shareholder value over time.
For the first quarter of 2019, we accrued adjusted compensation and
benefits expense1 at an adjusted compensation ratio of 57.5%,
compared to the first-quarter 2018 ratio of 55.8%. This resulted in $356
million of compensation and benefits expense, compared to $404 million
for the first quarter of 2018.
We manage our compensation and benefits expense based on awarded
compensation with a consistent deferral policy. We take a disciplined
approach to compensation, and our goal is to maintain a
compensation-to-operating revenue ratio over the cycle in the mid- to
high-50s percentage range on both an awarded and adjusted basis, with
consistent deferral policies.
Non-Compensation Expense
For the first quarter of 2019, adjusted non-compensation expense1
was $116 million, 1% higher than the first quarter of 2018, reflecting
investments in our technology infrastructure, and marketing and business
development.
The ratio of adjusted non-compensation expense to operating revenue was
18.7% for the first quarter of 2019, compared to 15.8% for the first
quarter of 2018.
Our goal remains to achieve a non-compensation expense-to-operating
revenue ratio over the cycle of 16% to 20%.
TAXES
The provision for taxes, on an adjusted basis1, was $25
million for the first quarter of 2019. The effective tax rate, on an
adjusted basis, was 19.4% for the first quarter of 2019, compared to
13.9% for the first quarter of 2018 and 22.7% for the full year of 2018.
CAPITAL MANAGEMENT AND BALANCE SHEET
Our primary capital management goals include managing debt and
returning capital to shareholders through dividends and share
repurchases.
In the first quarter of 2019, Lazard returned $386 million to
shareholders, which included: $103 million in dividends; $192 million in
share repurchases of our Class A common stock; and $91 million in
satisfaction of employee tax obligations in lieu of share issuances upon
vesting of equity grants.
In the first quarter of 2019, we issued $500 million aggregate principal
amount of 4.375% Senior Notes due March 2029. We used part of the net
proceeds to redeem the remaining $250 million of 4.25% Senior Notes due
November 2020 ($168 million was redeemed in the first quarter and $82
million was redeemed in April of 2019). We plan to use the remaining net
proceeds for general corporate purposes, including potential repurchases
of shares of our Class A common stock.
As of March 31, 2019, we have repurchased 5.2 million shares at an
average price of $37.10 per share. In line with our objectives, these
repurchases have more than offset the potential dilution from our 2018
year-end equity-based compensation awards (net of estimated forfeitures
and tax withholding to be paid in cash in lieu of share issuances),
which were granted at an average price of $37.69 per share. As of March
31, 2019, our remaining share repurchase authorization is $403 million.
On April 24, 2019, our Board of Directors voted to increase the
quarterly dividend on Lazard's outstanding Class A common stock by 7%,
to $0.47 per share. The dividend is payable on May 17, 2019, to
stockholders of record on May 6, 2019.
Lazard's financial position remains strong. As of March 31, 2019, our
cash and cash equivalents were $1,011 million, and stockholders' equity
related to Lazard's interests was $701 million.
CONFERENCE CALL
Lazard will host a conference call at 8:00 a.m. EDT on Thursday, April
25, 2019, to discuss the company's financial results for the first
quarter of 2019. 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) 239-9838 (U.S. and Canada) or +1 (323) 794-2551
(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,
Thursday, April 25, 2019, via the Lazard Investor Relations website at www.lazard.com,
or by dialing 1 (888) 203-1112 (U.S. and Canada) or +1 (719) 457-0820
(outside of the U.S. and Canada). The replay access code is 6472605.
ABOUT LAZARD
Lazard, one of the world's preeminent financial advisory and asset
management firms, operates from 43 cities across 27 countries in North
America, Europe, Asia, Australia, Central and South America. With
origins dating to 1848, the firm provides advice on mergers and
acquisitions, strategic matters, restructuring and capital structure,
capital raising and corporate finance, as well as asset management
services to corporations, partnerships, institutions, governments and
individuals. For more information on Lazard, please visit www.lazard.com.
Follow Lazard at @Lazard.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements. In some
cases, you can identify these statements by forward-looking words such
as "may", "might", "will", "should", "could", "would", "expect", "plan",
"anticipate", "believe", "estimate", "predict", "potential", "target,"
"goal", or "continue", and the negative of these terms and other
comparable terminology. These forward-looking statements, which are
subject to known and unknown risks, uncertainties and assumptions about
us, may include projections of our future financial performance based on
our growth strategies, business plans and initiatives and anticipated
trends in our business. These 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
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1
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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.
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2
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First-quarter 2019 adjusted results1 exclude pre-tax
charges of (i) $3.2 million of costs associated with the
implementation of a new Enterprise Resource Planning (ERP) system;
(ii) $4.5 million relating to a debt refinancing by Lazard Ltd's
subsidiary Lazard Group LLC; and (iii) $3.0 million of
acquisition-related costs, primarily reflecting changes in fair
value of contingent consideration associated with certain business
acquisitions. On a U.S. GAAP basis, these items resulted in a net
charge of $8.5 million, or $0.07 (diluted) per share, in the first
quarter of 2019.
|
LAZ-EPE
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LAZARD LTD
|
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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
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(U.S. GAAP)
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|
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|
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Three Months Ended
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% Change From
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|
|
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|
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($ in thousands, except per share data)
|
|
March 31,
2019
|
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December 31,
2018
|
|
March 31,
2018
|
|
December 31,
2018
|
|
March 31,
2018
|
|
|
|
|
|
|
|
|
|
|
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|
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Total revenue
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|
$661,678
|
|
$704,300
|
|
$768,205
|
|
(6%)
|
|
(14%)
|
|
Interest expense
|
|
(18,004)
|
|
(17,065)
|
|
(13,507)
|
|
|
|
|
|
Net revenue
|
|
643,674
|
|
687,235
|
|
754,698
|
|
(6%)
|
|
(15%)
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
372,254
|
|
349,542
|
|
405,047
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|
6%
|
|
(8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy and equipment
|
|
28,295
|
|
32,781
|
|
30,238
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|
|
|
|
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Marketing and business development
|
|
27,984
|
|
32,889
|
|
25,659
|
|
|
|
|
|
Technology and information services
|
|
32,055
|
|
37,520
|
|
33,252
|
|
|
|
|
|
Professional services
|
|
14,217
|
|
18,851
|
|
12,431
|
|
|
|
|
|
Fund administration and outsourced services
|
|
28,930
|
|
29,805
|
|
35,184
|
|
|
|
|
|
Amortization and other acquisition-related (benefits) costs
|
|
3,470
|
|
(2,429)
|
|
866
|
|
|
|
|
|
Other
|
|
16,806
|
|
38,454
|
|
26,193
|
|
|
|
|
|
Subtotal
|
|
151,757
|
|
187,871
|
|
163,823
|
|
(19%)
|
|
(7%)
|
|
Benefit pursuant to tax receivable agreement
|
|
-
|
|
(6,495)
|
|
-
|
|
|
|
|
|
Operating expenses
|
|
524,011
|
|
530,918
|
|
568,870
|
|
(1%)
|
|
(8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
119,663
|
|
156,317
|
|
185,828
|
|
(23%)
|
|
(36%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
23,187
|
|
42,633
|
|
24,167
|
|
(46%)
|
|
(4%)
|
|
Net income
|
|
96,476
|
|
113,684
|
|
161,661
|
|
(15%)
|
|
(40%)
|
|
Net income (loss) attributable to noncontrolling interests
|
|
(566)
|
|
288
|
|
1,969
|
|
|
|
|
|
Net income attributable to Lazard Ltd
|
|
$97,042
|
|
$113,396
|
|
$159,692
|
|
(14%)
|
|
(39%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to Lazard Ltd Common Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
111,944,255
|
|
116,333,243
|
|
119,930,106
|
|
(4%)
|
|
(7%)
|
|
Diluted
|
|
120,820,084
|
|
126,819,190
|
|
132,142,394
|
|
(5%)
|
|
(9%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.87
|
|
$0.97
|
|
$1.33
|
|
(10%)
|
|
(35%)
|
|
Diluted
|
|
$0.80
|
|
$0.89
|
|
$1.21
|
|
(10%)
|
|
(34%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAZARD LTD
|
|
UNAUDITED CONDENSED CONSOLIDATED
|
|
STATEMENT OF FINANCIAL CONDITION
|
|
(U.S. GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
($ in thousands)
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$1,011,353
|
|
$1,246,537
|
|
Deposits with banks and short-term investments
|
|
1,138,010
|
|
1,006,969
|
|
Cash deposited with clearing organizations and other segregated cash
|
|
39,302
|
|
38,379
|
|
Receivables
|
|
|
|
695,412
|
|
685,534
|
|
Investments
|
|
|
|
615,781
|
|
575,148
|
|
Goodwill and other intangible assets
|
|
|
375,682
|
|
375,318
|
|
Operating lease right-of-use assets
|
|
|
489,099
|
|
-
|
|
Deferred tax assets
|
|
|
|
591,704
|
|
597,776
|
|
Other assets
|
|
|
|
543,134
|
|
471,580
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
$5,499,477
|
|
$4,997,241
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Deposits and other customer payables
|
|
$1,315,867
|
|
$1,154,207
|
|
Accrued compensation and benefits
|
|
309,794
|
|
585,484
|
|
Senior debt
|
|
1,759,297
|
|
1,434,260
|
|
Tax receivable agreement obligation
|
|
246,966
|
|
270,640
|
|
Operating lease liabilities
|
|
568,108
|
|
-
|
|
Other liabilities
|
|
528,073
|
|
582,557
|
|
Total liabilities
|
|
4,728,105
|
|
4,027,148
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
Preferred stock, par value $.01 per share
|
|
-
|
|
-
|
|
Common stock, par value $.01 per share
|
|
1,298
|
|
1,298
|
|
Additional paid-in capital
|
|
535,926
|
|
750,692
|
|
Retained earnings
|
|
1,171,754
|
|
1,195,563
|
|
Accumulated other comprehensive loss, net of tax
|
|
(268,858)
|
|
(273,818)
|
|
Subtotal
|
|
1,440,120
|
|
1,673,735
|
|
Class A common stock held by subsidiaries, at cost
|
|
(738,899)
|
|
(756,884)
|
|
Total Lazard Ltd stockholders' equity
|
|
701,221
|
|
916,851
|
|
Noncontrolling interests
|
|
70,151
|
|
53,242
|
|
Total stockholders' equity
|
|
771,372
|
|
970,093
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$5,499,477
|
|
$4,997,241
|
|
|
|
|
|
|
|
|
|
LAZARD LTD
|
|
SELECTED SUMMARY FINANCIAL INFORMATION (a)
|
|
(Non-GAAP - unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
% Change From
|
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
|
December 31,
|
|
March 31,
|
|
($ in thousands, except per share data)
|
|
2019
|
|
2018
|
|
2018
|
|
|
2018
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Advisory
|
|
$329,994
|
|
$398,581
|
|
$388,856
|
|
|
(17%)
|
|
(15%)
|
|
Asset Management
|
|
283,734
|
|
280,750
|
|
329,855
|
|
|
1%
|
|
(14%)
|
|
Corporate
|
|
6,262
|
|
5,204
|
|
5,224
|
|
|
20%
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue (b)
|
|
$619,990
|
|
$684,535
|
|
$723,935
|
|
|
(9%)
|
|
(14%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted compensation and benefits expense (c)
|
|
$356,494
|
|
$361,434
|
|
$403,956
|
|
|
(1%)
|
|
(12%)
|
|
Ratio of adjusted compensation to operating revenue
|
|
57.5%
|
|
52.8%
|
|
55.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compensation expense (d)
|
|
$115,737
|
|
$142,239
|
|
$114,081
|
|
|
(19%)
|
|
1%
|
|
Ratio of non-compensation to operating revenue
|
|
18.7%
|
|
20.8%
|
|
15.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations (e)
|
|
$147,759
|
|
$180,862
|
|
$205,898
|
|
|
(18%)
|
|
(28%)
|
|
Operating margin (f)
|
|
23.8%
|
|
26.4%
|
|
28.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (g)
|
|
$105,537
|
|
$118,878
|
|
$165,915
|
|
|
(11%)
|
|
(36%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted adjusted net income per share
|
|
$0.87
|
|
$0.94
|
|
$1.26
|
|
|
(7%)
|
|
(31%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares (h)
|
|
120,934,661
|
|
126,819,190
|
|
132,142,394
|
|
|
(5%)
|
|
(8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate (i)
|
|
19.4%
|
|
27.8%
|
|
13.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This presentation includes non-GAAP measures. Our non-GAAP measures are
not meant to be considered in isolation or as a substitute for the
corresponding U.S. GAAP measures, and should be read only in conjunction
with our consolidated financial statements prepared in accordance with
U.S. GAAP. For a detailed explanation of the adjustments made to the
corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to
Selected Summary Financial Information and Notes to Financial Schedules.
|
|
|
LAZARD LTD
|
|
ASSETS UNDER MANAGEMENT ("AUM")
|
|
(unaudited)
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
As of
|
|
Variance
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
|
|
1Q 2019 vs
|
|
|
2019
|
|
2018
|
|
2018
|
|
Qtr to Qtr
|
|
1Q 2018
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
Emerging Markets
|
$45,112
|
|
$41,899
|
|
$53,862
|
|
7.7%
|
|
(16.2%)
|
|
Global
|
46,788
|
|
41,490
|
|
44,403
|
|
12.8%
|
|
5.4%
|
|
Local
|
40,083
|
|
36,020
|
|
41,407
|
|
11.3%
|
|
(3.2%)
|
|
Multi-Regional
|
63,112
|
|
57,589
|
|
70,405
|
|
9.6%
|
|
(10.4%)
|
|
Total Equity
|
195,095
|
|
176,998
|
|
210,077
|
|
10.2%
|
|
(7.1%)
|
|
Fixed Income:
|
|
|
|
|
|
|
|
|
|
|
Emerging Markets
|
15,308
|
|
14,980
|
|
18,191
|
|
2.2%
|
|
(15.8%)
|
|
Global
|
6,410
|
|
4,851
|
|
4,418
|
|
32.1%
|
|
45.1%
|
|
Local
|
5,378
|
|
6,113
|
|
5,176
|
|
(12.0%)
|
|
3.9%
|
|
Multi-Regional
|
7,912
|
|
6,994
|
|
8,871
|
|
13.1%
|
|
(10.8%)
|
|
Total Fixed Income
|
35,008
|
|
32,938
|
|
36,656
|
|
6.3%
|
|
(4.5%)
|
|
Alternative Investments
|
2,659
|
|
2,430
|
|
2,884
|
|
9.4%
|
|
(7.8%)
|
|
Private Equity
|
1,393
|
|
1,469
|
|
1,455
|
|
(5.2%)
|
|
(4.3%)
|
|
Cash Management
|
824
|
|
899
|
|
608
|
|
(8.3%)
|
|
35.5%
|
|
Total AUM
|
$234,979
|
|
$214,734
|
|
$251,680
|
|
9.4%
|
|
(6.6%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
December 31,
|
|
|
|
|
2019
|
|
2018
|
|
|
|
2018
|
|
|
|
AUM - Beginning of Period
|
$214,734
|
|
$249,459
|
|
|
|
$249,459
|
|
|
|
Net Flows
|
38
|
|
2,407
|
|
|
|
(4,898)
|
|
|
|
Market and foreign exchange
|
|
|
|
|
|
|
|
|
|
|
appreciation (depreciation)
|
20,207
|
|
(186)
|
|
|
|
(29,827)
|
|
|
|
AUM - End of Period
|
$234,979
|
|
$251,680
|
|
|
|
$214,734
|
|
|
|
Average AUM
|
$228,837
|
|
$255,809
|
|
|
|
$241,247
|
|
|
|
% Change in average AUM
|
(10.5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Average AUM generally represents the average of the monthly
ending AUM balances for the period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAZARD LTD
|
|
RECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL
INFORMATION (a)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
($ in thousands, except per share data)
|
|
March 31,
2019
|
|
December 31,
2019
|
|
March 31,
2018
|
|
|
|
|
|
|
|
|
|
Operating Revenue
|
|
Net revenue - U.S. GAAP Basis
|
|
$643,674
|
|
$687,235
|
|
$754,698
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Revenue related to noncontrolling interests (j)
|
|
(2,271)
|
|
(3,436)
|
|
(5,217)
|
|
(Gains) losses related to Lazard Fund Interests ("LFI") and other
similar arrangements
|
|
(13,870)
|
|
15,798
|
|
1,436
|
|
Distribution fees, reimbursable deal costs and bad debt expense (k)
|
|
(24,332)
|
|
(30,883)
|
|
(39,514)
|
|
Interest expense
|
|
16,789
|
|
15,821
|
|
12,532
|
|
|
|
|
|
|
|
|
|
Operating revenue, as adjusted (b)
|
|
$619,990
|
|
$684,535
|
|
$723,935
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits Expense
|
|
Compensation and benefits expense - U.S. GAAP Basis
|
|
$372,254
|
|
$349,542
|
|
$405,047
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Expenses associated with ERP system implementation (l)
|
|
-
|
|
(1,190)
|
|
-
|
|
(Charges) credits pertaining to LFI and other similar arrangements
|
|
(13,870)
|
|
15,798
|
|
1,436
|
|
Compensation related to noncontrolling interests (j)
|
|
(1,890)
|
|
(2,716)
|
|
(2,527)
|
|
|
|
|
|
|
|
|
|
Compensation and benefits expense, as adjusted (c)
|
|
$356,494
|
|
$361,434
|
|
$403,956
|
|
|
|
|
|
|
|
|
|
Non-Compensation Expense
|
|
Non-compensation expense - Subtotal - U.S. GAAP Basis
|
|
$151,757
|
|
$187,871
|
|
$163,823
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Expenses associated with ERP system implementation (l)
|
|
(3,205)
|
|
(7,006)
|
|
(7,426)
|
|
(Expenses) benefits related to office space reorganization (m)
|
|
-
|
|
80
|
|
(1,389)
|
|
Distribution fees, reimbursable deal costs and bad debt expense (k)
|
|
(24,332)
|
|
(30,883)
|
|
(39,514)
|
|
Amortization and other acquisition-related benefits (costs) (n)
|
|
(3,470)
|
|
2,429
|
|
(866)
|
|
Charges pertaining to Senior Debt refinancing (o)
|
|
(4,243)
|
|
-
|
|
-
|
|
Expenses associated with Lazard Foundation (p)
|
|
-
|
|
(10,000)
|
|
-
|
|
Non-compensation expense related to noncontrolling interests (j)
|
|
(770)
|
|
(252)
|
|
(547)
|
|
|
|
|
|
|
|
|
|
Non-compensation expense, as adjusted (d)
|
|
$115,737
|
|
$142,239
|
|
$114,081
|
|
|
|
|
|
|
|
|
|
Pre-Tax Income and Earnings From Operations
|
|
Operating Income - U.S. GAAP Basis
|
|
$119,663
|
|
$156,317
|
|
$185,828
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Reduction of tax receivable agreement obligation ("TRA") (q)
|
|
-
|
|
(6,495)
|
|
-
|
|
Expenses associated with ERP system implementation (l)
|
|
3,205
|
|
8,196
|
|
7,426
|
|
Expenses (benefits) related to office space reorganization (m)
|
|
-
|
|
(80)
|
|
1,389
|
|
Acquisition-related (benefits) costs (n)
|
|
3,039
|
|
(2,912)
|
|
33
|
|
Charges pertaining to Senior Debt refinancing (o)
|
|
4,457
|
|
-
|
|
-
|
|
Expenses associated with Lazard Foundation (p)
|
|
-
|
|
10,000
|
|
-
|
|
Net (income) loss related to noncontrolling interests (j)
|
|
566
|
|
(288)
|
|
(1,969)
|
|
Pre-tax income, as adjusted
|
|
130,930
|
|
164,738
|
|
192,707
|
|
Interest expense
|
|
16,575
|
|
15,821
|
|
12,532
|
|
Amortization (LAZ only)
|
|
254
|
|
303
|
|
659
|
|
Earnings from operations, as adjusted (e)
|
|
$147,759
|
|
$180,862
|
|
$205,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) attributable to Lazard Ltd
|
|
Net income attributable to Lazard Ltd - U.S. GAAP Basis
|
|
$97,042
|
|
$113,396
|
|
$159,692
|
|
Adjustments:
|
|
|
|
|
|
|
|
Reduction of tax receivable agreement obligation ("TRA") (q)
|
|
-
|
|
(6,495)
|
|
-
|
|
Expenses associated with ERP system implementation (l)
|
|
3,205
|
|
8,196
|
|
7,426
|
|
Expenses (benefits) related to office space reorganization (m)
|
|
-
|
|
(80)
|
|
1,389
|
|
Acquisition-related (benefits) costs (n)
|
|
3,039
|
|
(2,912)
|
|
33
|
|
Charges pertaining to Senior Debt refinancing (o)
|
|
4,457
|
|
-
|
|
-
|
|
Expenses associated with Lazard Foundation (p)
|
|
-
|
|
10,000
|
|
-
|
|
Tax benefit allocated to adjustments
|
|
(2,206)
|
|
(3,227)
|
|
(2,625)
|
|
|
|
|
|
|
|
|
|
Net income, as adjusted (g)
|
|
$105,537
|
|
$118,878
|
|
$165,915
|
|
|
|
|
|
|
|
|
|
Diluted Weighted Average Shares Outstanding
|
|
Diluted Weighted Average Shares Outstanding - U.S. GAAP Basis
|
|
120,820,084
|
|
126,819,190
|
|
132,142,394
|
|
Adjustment: profits interest participation rights
|
|
114,577
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Diluted Weighted Average Shares Outstanding, as adjusted (h)
|
|
120,934,661
|
|
126,819,190
|
|
132,142,394
|
|
|
|
|
|
|
|
|
|
Diluted net income per share:
|
|
|
|
|
|
|
|
U.S. GAAP Basis
|
|
$0.80
|
|
$0.89
|
|
$1.21
|
|
Non-GAAP Basis, as adjusted
|
|
$0.87
|
|
$0.94
|
|
$1.26
|
|
|
|
|
|
|
|
|
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 the most meaningful
basis for comparison of its operating results across periods.
|
|
|
|
|
|
(b)
|
|
A non-GAAP measure which excludes (i) revenue related to
non-controlling 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 and reimbursable deal costs in accordance with
the revenue recognition guidance and bad debt expense (see (k)
below), (iv) interest expense primarily related to corporate
financing activities, and (v) for the three month period ended March
31, 2019, excess interest expense pertaining to Senior Debt
refinancing (see (o) below).
|
|
|
|
|
|
(c)
|
|
A non-GAAP measure which excludes (i) for the three month period
ended December 31, 2018, expenses associated with ERP system
implementation (see (l) below), (ii) (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, and (iii) compensation and benefits
related to noncontrolling interests (see (j) below).
|
|
|
|
|
|
(d)
|
|
A non-GAAP measure which excludes (i) expenses associated with ERP
system implementation (see (l) below), (ii) for the three month
periods ended December 31, 2018 and March 31, 2018, (expenses)
benefits related to office space reorganization (see (m) below),
(iii) expenses related to distribution fees and reimbursable deal
costs in accordance with the revenue recognition guidance and bad
debt expense (see (k) below), (iv) amortization and other
acquisition-related benefits (costs) (see (n) below), (v) for the
three month period ended March 31, 2019, charges pertaining to
Senior Debt refinancing (see (o) below), (vi) for the three month
period ended December 31, 2018, expenses associated with Lazard
Foundation (see (p) below), and (vii) expenses related to
noncontrolling interests (see (j) below).
|
|
|
|
|
|
(e)
|
|
A non-GAAP measure which excludes (i) for the three month period
ended December 31, 2018, a benefit relating to the reduction in our
Tax Receivable Agreement obligation (see (q) below), (ii) expenses
associated with ERP system implementation (see (l) below), (iii) for
the three month periods ended December 31, 2018 and March 31, 2018,
(expenses) benefits related to office space reorganization (see (m)
below), (iv) amortization and other acquisition-related costs
(benefits) (see (n) below), (v) for the three month period ending
March 31, 2019, charges pertaining to Senior Debt refinancing (see
(o) below), (vi) for the three month period ended December 31, 2018,
expenses associated with Lazard Foundation (see (p) below), (vii)
net revenue and expenses related to noncontrolling interests (see
(j) below), and (viii) interest expense primarily related to
corporate financing activities.
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(f)
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Represents earnings from operations as a percentage of operating
revenue, and is a non-GAAP measure.
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(g)
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A non-GAAP measure which excludes (i) for the three month period
ended December 31, 2018, a benefit relating to the reduction in our
Tax Receivable Agreement obligation (see (q) below), (ii) expenses
associated with ERP system implementation (see (l) below), (iii) for
the three month periods ended December 31, 2018 and March 31, 2018,
(expenses) benefit related to office space reorganization (see (m)
below), (iv) amortization and other acquisition-related costs, (see
(n) below), (v) for the three month period ended March 31, 2019,
charges pertaining to Senior Debt refinanicng (see (o) below), and
(vi) for the three month period ended December 31, 2018, expenses
associated with Lazard Foundation, net of tax benefits (see (p)
below).
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(h)
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A non-GAAP measure which includes for the three month period ended
March 31, 2019, units of the newly established 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 Class A common stock.
Profits interest participation rights are excluded from the
computation of outstanding stock equivalents for U.S. GAAP net
income per share.
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(i)
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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 $25,393, $45,860, and $26,792 for
the three month periods ended March 31, 2019, December 31, 2018, and
March 31, 2018, respectively, and the denominator of which is
pre-tax income of $130,930, $164,738, and $192,707 for the three
month periods ended March 31, 2019, December 31, 2018, and March 31,
2018, respectively.
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(j)
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Noncontrolling interests include revenue and expenses principally
related to Edgewater, and is a non-GAAP measure.
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(k)
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Represents certain distribution fees and reimbursable deal costs
paid to third parties 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.
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(l)
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Represents expenses associated with Enterprise Resource Planning
(ERP) system implementation.
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(m)
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Represents incremental rent expense and lease abandonment costs
related to office space reorganization and an onerous lease
provision.
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(n)
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Primarily represents the change in fair value of the contingent
consideration associated with certain business acquisitions.
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(o)
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The company incurred charges related to the extinguishment of the
remaining 4.25% Senior Notes maturing in November 2020. $168 million
of the 2020 Notes were redeemed in March 2019 and the remaining $82
million have been redeemed in April 2019. The charges include a
pre-tax loss on the extinguishment of $4.2 million and excess
interest expense of $0.2 million (due to the period of time between
the issuance of the 2029 notes and the settlement of the 2020 notes).
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(p)
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Represents expenses associated with the Lazard Foundation
unconditional commitment.
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(q)
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Represents tax rate adjustments associated with the 2017 US Tax Cuts
and Jobs Act.
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NM
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Not meaningful
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View source version on businesswire.com: https://www.businesswire.com/news/home/20190425005285/en/
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