Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Lazard Ltd Reports Third-Quarter and Nine-Month 2022 Results By: Lazard Ltd via Business Wire October 27, 2022 at 06:45 AM EDT 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 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005336/en/Contacts Media Contact: Judi Frost Mackey +1 212 632 1428 judi.mackey@lazard.com Investor Contact: Alexandra Deignan +1 212 632 6886 alexandra.deignan@lazard.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Lazard Ltd Reports Third-Quarter and Nine-Month 2022 Results By: Lazard Ltd via Business Wire October 27, 2022 at 06:45 AM EDT 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 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005336/en/Contacts Media Contact: Judi Frost Mackey +1 212 632 1428 judi.mackey@lazard.com Investor Contact: Alexandra Deignan +1 212 632 6886 alexandra.deignan@lazard.com
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
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 View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005336/en/
Media Contact: Judi Frost Mackey +1 212 632 1428 judi.mackey@lazard.com Investor Contact: Alexandra Deignan +1 212 632 6886 alexandra.deignan@lazard.com