Financial Advisory operating revenue reflected high levels of activity globally

Asset Management fundamental investment style well‑positioned in current market environment

Returned $526 million in capital to shareholders, including the repurchase of 10.6 million shares year‑to‑date

NEW YORK--(BUSINESS WIRE)--Jul. 28, 2022-- Lazard Ltd (NYSE: LAZ) today reported operating revenue¹ of $676 million for the quarter ended June 30, 2022. Net income, as adjusted², was $96 million, or $0.92 per share (diluted) for the quarter. On a U.S. GAAP basis, second-quarter 2022 net income was $95 million, or $0.92 per share (diluted).

First-half 2022 net income, as adjusted, was $211 million, or $1.97 per share (diluted). On a U.S. GAAP basis, first-half 2022 net income was $209 million, or $1.97 per share (diluted).

“Our results demonstrate the resilience, diversification and discipline of our business model, and we are well-positioned for the current economic environment,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “We continue to invest for growth while remaining focused on delivering innovative client solutions, generating significant cash flow and returning capital to shareholders.”

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 $676 million for the second quarter of 2022, and $1,375 million for the first half of 2022, 18% and 6% lower, respectively, from the comparable 2021 periods.

Financial Advisory

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

For the second quarter of 2022, Financial Advisory operating revenue was $407 million, 14% lower than the second quarter of 2021.

For the first half of 2022, Financial Advisory operating revenue was $795 million, 1% higher than the first half of 2021.

During and since the second quarter of 2022, Lazard has been engaged in significant and complex M&A transactions and other advisory assignments globally, including the following (clients are in italics): Vivendi's €3.6 billion tender offer for Lagardère; Resource REIT’s $3.7 billion sale to Blackstone Real Estate Income Trust; Oi's BRL 20.0 billion fiber assets carve-out to a BTG Pactual-led consortium; Ferro Corporation's $2.1 billion sale to Prince International; Tivity Health's $2.0 billion acquisition by Stone Point Capital; Sierra Oncology's $1.9 billion sale to GSK; Alpargatas’ strategic partnership and investment in Rothy's; Beeline’s investment from Stone Point Capital; and Q-Energy’s sale of its GW renewable platform to Verbund AG.

Lazard has one of the world’s preeminent restructuring practices. During and since the second 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: Alto Maipo S.P.A.; Andrade Gutierrez; Brazos Electric Power Cooperative; Corp Group Banking S.A.; GenapSys; Grupo GICSA; HEXO; Imagina Media Audiovisual; Nordic Aviation Capital; Rockall Energy; Stoneway Capital; and Vue Entertainment.

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 second quarter of 2022, or continued to advise or completed since June 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 second quarter of 2022, Asset Management operating revenue was $266 million, 23% lower than the second quarter of 2021. For the first half of 2022, Asset Management operating revenue was $577 million, 14% lower than the first half of 2021.

For the second quarter of 2022, management fees and other revenue was $258 million, 16% lower than the second quarter of 2021, and 10% lower than the first quarter of 2022. For the first half of 2022, management fees and other revenue was $545 million, 10% lower than the first half of 2021.

Average assets under management (AUM) for the second quarter of 2022 was $230 billion, 17% lower than the second quarter of 2021, and 10% lower than the first quarter of 2022. Average AUM for the first half of 2022 was $243 billion, 9% lower than the first half of 2021.

AUM as of June 30, 2022, was $217 billion, down 14% from March 31, 2022, and down 22% from June 30, 2021. The sequential decrease from March 31, 2022 was driven by market depreciation of $23.2 billion, foreign exchange depreciation of $8.2 billion and net outflows of $4.6 billion.

For the second quarter of 2022, incentive fees were $7 million, compared to $34 million for the second quarter of 2021. For the first half of 2022, incentive fees were $33 million, compared to $67 million for the first half 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 second quarter of 2022, we accrued compensation and benefits expense at an adjusted compensation¹ ratio of 58.5%, compared to the second-quarter 2021 ratio of 59.5%. This resulted in $395 million of compensation and benefits expense, compared to $489 million for the second quarter of 2021.

For the first half of 2022, adjusted compensation and benefits expense¹ was $804 million, compared to $874 million for the first half 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 second quarter of 2022, was $131 million, 10% higher than the second 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 second quarter of 2022 was 19.4%, compared to 14.5% for the second quarter of 2021.

Adjusted non-compensation expense¹ for the first half of 2022 was $248 million, 12% higher than the first half of 2021. The ratio of adjusted non-compensation expense to operating revenue for the first half of 2022 was 18.0%, compared to 15.1% for the first half of 2021.

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

TAXES

The provision for taxes, on an adjusted basis¹, was $34 million for the second quarter and $73 million for the first half of 2022. The effective tax rate on the same basis was 26.4% for the second quarter and 25.9% for the first half of 2022, compared to 25.2% and 26.7% 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 second quarter of 2022, Lazard returned $246 million to shareholders, which included: $46 million in dividends; $199 million in share repurchases of our common stock; and $1 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

In the first half of 2022, Lazard returned $526 million to shareholders, which included: $93 million in dividends; $375 million in share repurchases of our common stock; and $58 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

During the first half of 2022, we repurchased 10.6 million shares, which included 5.9 million shares repurchased in the second quarter. On July 27, 2022, our Board of Directors authorized additional share repurchases of up to $500 million, which expires as of December 31, 2024, bringing our total outstanding share repurchase authorization to $559 million.

In addition, on July 27, 2022, our Board of Directors voted to increase the quarterly dividend on Lazard’s outstanding common stock by 6% to $0.50 per share. The dividend is payable on August 19, 2022, to stockholders of record on August 8, 2022.

Lazard’s financial position remains strong. As of June 30, 2022, our cash and cash equivalents were $907 million, and stockholders’ equity related to Lazard’s interests was $716 million.

CONFERENCE CALL

Lazard will host a conference call at 8:00 a.m. EDT on July 28, 2022, to discuss the company’s financial results for the second quarter and first half 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 1 800-420-1271 (U.S. and Canada) or +1 785-424-1603 (outside of the U.S. and Canada), 15 minutes prior to the start of the call.

A replay of the conference call will be available by 10:00 a.m. EDT, July 28, 2022, via the Lazard Investor Relations website at www.lazard.com, or by dialing 1 (888) 215-1280 (U.S. and Canada) or +1 (402) 220-4937 (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 Second-quarter and first-half 2022 adjusted results¹ exclude pre-tax charges of $0.9 million and $2.0 million, respectively, relating to office space reorganization. On a U.S. GAAP basis, these resulted in a net charge of $0.6 million, or $0.01 (diluted) per share, for the second quarter, and a net charge of $1.4 million, or $0.01 (diluted) per share, for the first half of 2022.

LAZ-EPE