Lazard Ltd Reports Third-Quarter and Nine-Month 2017 Results
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Record third-quarter and |
Financial Advisory: record |
Asset Management: record |
||||||
For the first nine months of 2017, net income, as adjusted1,2,
was
"Record operating revenue for the third quarter and year to date
reflects the strength of our franchise, the quality of work for our
clients, and the investments we continue to make in the business," said
($ in millions, except per share data and AUM) |
Quarter Ended |
Nine Months Ended |
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2017 |
2016 |
%'17-'16 |
2017 |
2016 |
%'17-'16 |
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Net Income |
|||||||||||||||||||
US GAAP | $ | 109 | $ | 113 | (3 | )% | $ | 337 | $ | 260 | 30 | % | |||||||
Per share, diluted | $ | 0.82 | $ | 0.85 | (4 | )% | $ | 2.55 | $ | 1.96 | 30 | % | |||||||
Adjusted1,2 | $ | 112 | $ | 113 | 0 | % | $ | 352 | $ | 260 | 36 | % | |||||||
Per share, diluted | $ | 0.85 | $ | 0.85 | 0 | % | $ | 2.66 | $ | 1.96 | 36 | % | |||||||
Operating Revenue1 |
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Total operating revenue | $ | 627 | $ | 611 | 3 | % | $ | 1,972 | $ | 1,659 | 19 | % | |||||||
Financial Advisory | $ | 306 | $ | 343 | (11 | )% | $ | 1,053 | $ | 896 | 17 | % | |||||||
Asset Management | $ | 315 | $ | 265 | 19 | % | $ | 901 | $ | 755 | 19 | % | |||||||
AUM ($ in billions) |
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Period End | $ | 238 | $ | 205 | 16 | % | |||||||||||||
Average | $ | 234 | $ | 201 | 16 | % | $ | 221 | $ | 193 | 14 | % | |||||||
Note: Endnotes are on page 7 of this release. A reconciliation of
adjusted GAAP to
OPERATING REVENUE
Operating revenue1 was
Financial Advisory
In the text portion of this press release, we present our Financial Advisory results as 1) Strategic Advisory (M&A Advisory, Capital Advisory, Sovereign Advisory, Shareholder Advisory, Capital Raising, and other advisory work for clients), and 2) Restructuring.
Third Quarter
Financial Advisory operating revenue was
Strategic Advisory operating revenue was
During the third quarter of 2017, Lazard was engaged in highly visible,
complex M&A transactions and other advisory assignments, including
cross-border transactions, spin-offs and distressed asset sales, as well
as sovereign, capital and shareholder advisory in the
Among the major M&A transactions that were completed during the third
quarter of 2017 were the following (clients are in italics): Dow
Chemical's
Transactions on which we continued to advise during or since the third
quarter include: Sempra Energy's acquisition of an 80% ownership
interest in Oncor, valuing Oncor at
Our Sovereign and Capital Advisory services remained active globally, advising governments and corporations on balance sheet matters, financing strategy and capital raising.
Restructuring operating revenue was
Please see M&A transactions on which Lazard advised in the third
quarter, or continued to advise or completed since
First Nine Months
Financial Advisory operating revenue was a record
Strategic Advisory operating revenue was
Restructuring operating revenue was
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.
Third Quarter
Asset Management operating revenue was a quarterly record of
Management fees and other revenue was a quarterly record of
AUM as of
Incentive fees were
First Nine Months
Asset Management operating revenue was a record
Management fees and other revenue was a record
Incentive fees were
OPERATING EXPENSES
Compensation and Benefits
In managing compensation and benefits expense, we focus on annual awarded compensation (cash compensation and benefits plus deferred incentive compensation with respect to the applicable year, net of estimated future forfeitures and excluding charges). We believe annual awarded compensation reflects the actual annual compensation cost more accurately than the GAAP measure of compensation cost, which includes applicable-year cash compensation and the amortization of deferred incentive compensation principally attributable to previous years' deferred compensation. We believe that by managing our business using awarded compensation with a consistent deferral policy, we can better manage our compensation costs, increase our flexibility in the future and build shareholder value over time.
For the third quarter of 2017, we accrued adjusted compensation and
benefits expense1 at an adjusted compensation1
ratio of 56.5%. This resulted in
For the first nine months of 2017, adjusted compensation and benefits
expensewas
We manage our compensation and benefits expense based on awarded compensation with a consistent deferral policy. Assuming that the performance of both of our businesses, our hiring levels, and the compensation environment are similar to 2016, we expect our 2017 awarded compensation ratio1 to be in line with the 2016 awarded compensation ratio.
We take a disciplined approach to compensation, and our goal is to maintain a compensation-to-operating revenue ratio over the cycle in the mid- to high-50s percentage range on both an awarded and adjusted basis, with consistent deferral policies.
Non-Compensation Expense
For the third quarter of 2017, adjusted non-compensation expense1
was
For the first nine months of 2017, adjusted non-compensation expense was
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 basis1,2, was
CAPITAL MANAGEMENT AND BALANCE SHEET
Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases.
For the third quarter of 2017, Lazard returned
For the first nine months of 2017, Lazard returned
Year to date, we have repurchased 6.0 million shares at an average price
of
On
On
Lazard's financial position remains strong. As of
***
CONFERENCE CALL
Lazard will host a conference call at
A replay of the conference call will be available by
ABOUT LAZARD
Lazard, one of the world's preeminent financial advisory and asset
management firms, operates from 43 cities across 27 countries in
***
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may", "might", "will", "should", "could", "would", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "target," "goal", or "continue", and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies, business plans and initiatives and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements.
These factors include, but are not limited to, those discussed in our Annual Report on Form 10-K under Item 1A "Risk Factors," and also discussed from time to time in our reports on Forms 10-Q and 8-K, including the following:
- A decline in general economic conditions or the global or regional financial markets;
- A decline in our revenues, for example due to a decline in overall mergers and acquisitions (M&A) activity, our share of the M&A market or our assets under management (AUM);
- Losses caused by financial or other problems experienced by third parties;
- Losses due to unidentified or unanticipated risks;
- A lack of liquidity, i.e., ready access to funds, for use in our businesses; and
- Competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this release to conform our prior statements to actual results or revised expectations and we do not intend to do so.
***
ENDNOTES
1 A non-
2 Third-quarter and first nine-month results for 2017 were affected primarily by the following charges:
-
Third-quarter and first nine-month 2017 adjusted results exclude
pre-tax charges of (i)
$6.5 million and$15.4 million , respectively, of costs associated with the implementation of a new Enterprise Resource Planning (ERP) system, and (ii)$1.4 million and$4.6 million , respectively, of office space reorganization costs primarily relating to incremental rent expense and lease abandonment costs. On aU.S. GAAP basis, these items collectively resulted in a net charge of$3.8 million , or$0.03 (diluted) per share, in the third quarter and a net charge of$12.8 million , or$0.10 (diluted) per share, for the first nine months of 2017. -
First nine-month 2017 adjusted results also exclude post-tax charges
of
$2.4 million of acquisition-related items, primarily reflecting changes in fair value of contingent consideration associated with certain business acquisitions. On aU.S. GAAP basis, this resulted in a charge of$0.02 (diluted) per share in the first nine months of 2017.
LAZ-EPE
FINANCIAL ADVISORY ASSIGNMENTS
Mergers and Acquisitions (Completed in the third quarter of 2017)
Among the large, publicly announced M&A Advisory transactions or assignments completed during the third quarter of 2017 on which Lazard advised were the following:
-
Dow Chemical's
$130 billion merger of equals with DuPont -
Reynolds American on the
$49 billion acquisition by BAT of the remaining 57.8% of Reynolds -
LVMH Moët Hennessy Louis Vuitton's €6.5 billion acquisition of
Christian Dior Couture -
HgCapital, GIC, Montagu and ICG, led by HgCapital, on
the buyout of
Visma , valuing it at$5.3 billion -
Elis' €2.5 billion acquisition of
Berendsen -
Lexmark's
$1.35 billion sale of itsEnterprise Software business toThoma Bravo -
Milestone AV Technologies'
$1.2 billion sale toLegrand - L'Oréal's €1.0 billion sale of The Body Shop to Natura Cosméticos
-
Astorg's €880 million sale of
Kerneos to Imerys -
Danone's
$875 million sale of Stonyfield toLactalis -
Baxter's
$625 million acquisition ofClaris Injectables - Intermediate Capital Group and Sagesse Retraite Santé on the acquisition of DomusVi
-
Sparta Systems in Thoma Bravo's sale of a majority stake in the
company to
New Mountain Capital - Alpha Group's sale of a significant stake in Caffitaly to CNP
-
F2i's purchase of a wind portfolio from
Veronagest -
Liberty Steel Limited on the acquisition of Arrium Australia -
PDI's strategic partnership with
Genstar Capital
Mergers and Acquisitions (Announced)
Among the ongoing, large, publicly announced M&A transactions and
assignments on which Lazard advised during or since the 2017 third
quarter, or completed since
-
Level 3 Communications on its
$34 billion sale to CenturyLink -
Sempra Energy's acquisition of an 80% ownership interest in
Oncor, valuing Oncor at
$18.8 billion -
Calpine's
$17.1 billion sale to a consortium led byEnergy Capital Partners -
Great Plains Energy's
$14 billion merger of equals with Westar Energy -
Gilead's
$11.9 billion acquisition of Kite Pharma* - Safran's €8.7 billion acquisition of Zodiac Aerospace
-
WGL Holdings'
$6.4 billion sale to AltaGas -
AVEVA's
$4.6 billion combination with Schneider Electric's industrial software business -
Paysafe's £3.0 billion recommended sale to a consortium of
funds managed or advised by
Blackstone and CVC -
Express Scripts'
$3.6 billion acquisition of eviCore healthcare -
Anheuser-Busch InBev's
$3.2 billion transition of its 54.5% stake in Coca-Cola Beverages Africa to The Coca-Cola Company* -
Genworth Financial's
$2.7 billion sale to China Oceanwide -
Special Committee of the Board of Directors of General
Communication, Inc. ("GCI") in the
$2.7 billion sale of GCI to Liberty Interactive -
Blackstone andAlliance Industries Group on the$2.0 billion sale ofAlliance Automotive Group to Genuine Parts - BASF's €1.6 billion acquisition of Solvay's global polyamide business
-
Blackstone in CF Corporation's$1.8 billion consortium acquisition of Fidelity & Guaranty Life -
Google's
$1.1 billion cooperation agreement with HTC -
Special Committee of the Board of Phillips Edison Grocery Center
REIT I in the company's
$1.0 billion acquisition of real estate assets and the third party asset management business from Phillips Edison Limited Partnership* -
VEON on the
$940 million sale of its tower business inPakistan -
Landauer's
$770 million sale to Fortive* -
Investcorp's €605 million sale of
Esmalglass toLone Star Funds * -
AviAlliance in the €600 million 20-year extension of the
Athens International Airport Concession Agreement -
Accella Performance Materials'
$670 million sale to Carlisle Companies -
NYX Gaming Group's
CAD 775 million sale to Scientific Games -
SciClone Pharmaceuticals'
$605 million sale to a consortium led byGL Capital * -
Melita's €506 million merger with
Vodafone Malta -
Areva on its reorganization and recapitalization plan,
including the creation of NewCo, the de-listing of
Areva SA and certain asset disposals - AkzoNobel on the separation of its Specialty Chemicals business
-
Anheuser-Busch InBev's combination of its
Russia andUkraine businesses with those of Anadolu Efes -
IPFS's acquisition of
Premium Assignment Corporation from SunTrust - Quala's sale of its personal care and home care brands to Unilever
-
The Ferrero Group's acquisition of
Ferrara Candy Company -
CDPQ and Ardian's acquisition of a significant interest
in
Alvest - The Carlyle Group's acquisition of ADB SAFEGATE*
-
IK Investment Partners' sale of Schenck Process to
Blackstone -
KKR Credit's sale of its shareholding in URSA to
Xella International - ITS ConGlobal on its sale to AMP Capital*
*Transaction completed since
Capital Advisory
Among the publicly announced Capital Advisory transactions or assignments on which Lazard advised during or since the third quarter of 2017 were the following:
- Banca Monte dei Paschi di Siena's precautionary recapitalization through an €8.1 billion capital increase and €5.5 billion disposal of a bad loan portfolio with a total GBV of €26 billion
- Terveystalo on its €762 million initial public offering
-
Goldman Sachs Merchant Banking Division on the
DKK 4.3 billion secondary disposal of a stake in Dong Energy -
Interconnector Italia on the €415 million
Italy -France Interconnector project financing - Non-Standard Finance on its £260 million acquisition financing
- InfoTrack on its inaugural ratings and an institutional AUD 350 million term loan
-
Via Transportation in its fund raise and strategic investment
from
Daimler
Sovereign Advisory
Among the publicly announced Sovereign Advisory assignments on which Lazard advised during or since the third quarter of 2017 were the following:
-
The OJSC International Bank of Azerbaijan -
Southern Gas Corridor CJSC of
Azerbaijan -
Altiplano (
Bolivia ) -
The
Democratic Republic of the Congo -
The
Republic of the Congo -
The
Republic of Croatia -
Compania Nacional de Telecomunicacion (The
Republic of Ecuador ) -
Refineria del Pacifico (The
Republic of Ecuador ) -
The Federal Democratic Republic of Ethiopia -
The Gabonese Republic -
Sotrader (joint venture between the government of
Gabon and Olam International) -
The Hellenic Republic -
The Hashemite Kingdom of
Jordan -
airBaltic (majority owned by the government of
Latvia ) -
SNIM (
The Islamic Republic of Mauritania) -
The
Republic of Mozambique -
The
Republic of Serbia -
Ukraine and certain sub-sovereign entities -
NJSC Naftogaz of
Ukraine -
The
Republic of Zimbabwe
Restructuring and Debt Advisory Assignments
Restructuring and debtor or creditor advisory assignments completed
during the third quarter of 2017 on which Lazard advised include: Gymboree
and Paragon Offshore in connection with their Chapter 11
bankruptcy restructurings;
Notable ongoing restructuring and debtor or creditor advisory
assignments on which Lazard advised during or since the third quarter of
2017 include: Breitburn Energy Partners, CGG,
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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||||
( |
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Three Months Ended | % Change From | ||||||||||||||||
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($ in thousands, except per share data) | 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Total revenue | $ | 638,131 | $ | 729,946 | $ | 621,102 | (13%) | 3% | |||||||||
Interest expense |
( |
) | (12,766 | ) | (12,194 | ) | |||||||||||
Net revenue | 624,859 | 717,180 | 608,908 | (13%) | 3% | ||||||||||||
Operating expenses: | |||||||||||||||||
Compensation and benefits | 361,787 | 414,612 | 353,756 | (13%) | 2% | ||||||||||||
Occupancy and equipment | 29,156 | 30,828 | 26,973 | ||||||||||||||
Marketing and business development | 19,798 | 24,027 | 16,927 | ||||||||||||||
Technology and information services | 31,373 | 32,032 | 24,179 | ||||||||||||||
Professional services | 11,005 | 11,234 | 10,870 | ||||||||||||||
Fund administration and outsourced services | 18,325 | 18,338 | 17,097 | ||||||||||||||
Amortization and other acquisition-related costs | 172 | 1,257 | 863 | ||||||||||||||
Other | 9,031 | 12,351 | 9,251 | ||||||||||||||
Subtotal | 118,860 | 130,067 | 106,160 | (9%) | 12% | ||||||||||||
Operating expenses | 480,647 | 544,679 | 459,916 | (12%) | 5% | ||||||||||||
Operating income | 144,212 | 172,501 | 148,992 | (16%) | (3%) | ||||||||||||
Provision for income taxes | 32,742 | 51,600 | 36,374 | (37%) | (10%) | ||||||||||||
Net income | 111,470 | 120,901 | 112,618 | (8%) | (1%) | ||||||||||||
Net income attributable to noncontrolling interests | 2,260 | 523 | 82 | ||||||||||||||
Net income attributable to |
$ | 109,210 | $ | 120,378 | $ | 112,536 | (9%) | (3%) | |||||||||
Attributable to Lazard Ltd Common Stockholders: | |||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||
Basic | 121,243,598 | 122,368,150 | 124,408,884 | (1%) | (3%) | ||||||||||||
Diluted | 132,393,664 | 132,139,616 | 132,320,855 | 0% | 0% | ||||||||||||
Net income per share: | |||||||||||||||||
Basic | $ | 0.90 | $ | 0.98 | $ | 0.90 | (8%) | (0%) | |||||||||
Diluted | $ | 0.82 | $ | 0.91 | $ | 0.85 | (10%) | (4%) | |||||||||
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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||
( |
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Nine Months Ended | |||||||||||
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($ in thousands, except per share data) | 2017 | 2016 | % Change | ||||||||
Total revenue | $ | 2,005,497 | $ | 1,677,860 | 20% | ||||||
Interest expense | (39,994 | ) | (36,054 | ) | |||||||
Net revenue | 1,965,503 | 1,641,806 | 20% | ||||||||
Operating expenses: | |||||||||||
Compensation and benefits | 1,138,200 | 959,276 | 19% | ||||||||
Occupancy and equipment | 87,468 | 81,143 | |||||||||
Marketing and business development | 63,577 | 60,492 | |||||||||
Technology and information services | 87,429 | 71,406 | |||||||||
Professional services | 33,701 | 31,877 | |||||||||
Fund administration and outsourced services | 52,576 | 46,427 | |||||||||
Amortization and other acquisition-related costs | 5,003 | 1,837 | |||||||||
Other | 30,639 | 28,743 | |||||||||
Subtotal | 360,393 | 321,925 | 12% | ||||||||
Operating expenses | 1,498,593 | 1,281,201 | 17% | ||||||||
Operating income | 466,910 | 360,605 | 29% | ||||||||
Provision for income taxes | 124,109 | 95,900 | 29% | ||||||||
Net income | 342,801 | 264,705 | 30% | ||||||||
Net income attributable to noncontrolling interests | 5,660 | 4,989 | |||||||||
Net income attributable to |
$ | 337,141 | $ | 259,716 | 30% | ||||||
Attributable to Lazard Ltd Common Stockholders: | |||||||||||
Weighted average shares outstanding: | |||||||||||
Basic | 122,142,303 | 125,303,758 | (3%) | ||||||||
Diluted | 132,407,551 | 132,517,887 | (0%) | ||||||||
Net income per share: | |||||||||||
Basic | $ | 2.76 | $ | 2.07 | 33% | ||||||
Diluted | $ | 2.55 | $ | 1.96 | 30% | ||||||
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UNAUDITED CONDENSED CONSOLIDATED | |||||||||
STATEMENT OF FINANCIAL CONDITION | |||||||||
( |
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($ in thousands) | 2017 | 2016 | |||||||
ASSETS |
|||||||||
Cash and cash equivalents | $ | 1,254,010 | $ | 1,158,785 | |||||
Deposits with banks and short-term investments | 652,484 | 419,668 | |||||||
Cash deposited with clearing organizations and other segregated cash | 35,369 | 29,030 | |||||||
Receivables | 551,888 | 638,282 | |||||||
Investments | 426,948 | 459,422 | |||||||
|
392,068 | 382,024 | |||||||
Deferred tax assets | 1,099,870 | 1,075,777 | |||||||
Other assets | 423,751 | 393,520 | |||||||
Total Assets | $ | 4,836,388 | $ | 4,556,508 | |||||
LIABILITIES & STOCKHOLDERS' EQUITY |
|||||||||
Liabilities | |||||||||
Deposits and other customer payables | $ | 702,014 | $ | 472,283 | |||||
Accrued compensation and benefits | 490,844 | 541,588 | |||||||
Senior debt | 1,189,936 | 1,188,600 | |||||||
Tax receivable agreement obligation | 512,821 | 513,610 | |||||||
Other liabilities | 572,298 | 546,614 | |||||||
Total liabilities | 3,467,913 | 3,262,695 | |||||||
Commitments and contingencies | |||||||||
Stockholders' equity | |||||||||
Preferred stock, par value |
- | - | |||||||
Common stock, par value |
1,298 | 1,298 | |||||||
Additional paid-in capital | 732,981 | 688,231 | |||||||
Retained earnings | 1,219,303 | 1,134,186 | |||||||
Accumulated other comprehensive loss, net of tax | (261,673 | ) | (314,222 | ) | |||||
Subtotal | 1,691,909 | 1,509,493 | |||||||
Class A common stock held by subsidiaries, at cost | (384,067 | ) | (273,506 | ) | |||||
|
1,307,842 | 1,235,987 | |||||||
Noncontrolling interests | 60,633 | 57,826 | |||||||
Total stockholders' equity | 1,368,475 | 1,293,813 | |||||||
Total liabilities and stockholders' equity | $ | 4,836,388 | $ | 4,556,508 | |||||
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SELECTED SUMMARY FINANCIAL INFORMATION (a) | |||||||||||||||||
(Non-GAAP - unaudited) | |||||||||||||||||
Three Months Ended | % Change From | ||||||||||||||||
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($ in thousands, except per share data) | 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||||
Financial Advisory | $ | 305,890 | $ | 410,882 | $ | 343,490 | (26%) | (11%) | |||||||||
Asset Management | 315,470 | 306,796 | 265,066 | 3% | 19% | ||||||||||||
Corporate | 5,965 | 2,483 | 2,212 | NM | NM | ||||||||||||
Operating revenue (b) | $ | 627,325 | $ | 720,161 | $ | 610,768 | (13%) | 3% | |||||||||
Expenses: | |||||||||||||||||
Adjusted compensation and benefits expense (c) | $ | 354,439 | $ | 406,891 | $ | 345,084 | (13%) | 3% | |||||||||
Ratio of adjusted compensation to operating revenue | 56.5 | % | 56.5 | % | 56.5 | % | |||||||||||
Non-compensation expense (d) | $ | 110,507 | $ | 116,111 | $ | 104,832 | (5%) | 5% | |||||||||
Ratio of non-compensation to operating revenue | 17.6 | % | 16.1 | % | 17.2 | % | |||||||||||
Earnings: | |||||||||||||||||
Earnings from operations (e) | $ | 162,379 | $ | 197,159 | $ | 160,852 | (18%) | 1% | |||||||||
Operating margin (f) | 25.9 | % | 27.4 | % | 26.3 | % | |||||||||||
Adjusted net income (g) | $ | 112,433 | $ | 129,840 | $ | 112,536 | (13%) | (0%) | |||||||||
Diluted adjusted net income per share | $ | 0.85 | $ | 0.98 | $ | 0.85 | (13%) | (0%) | |||||||||
Diluted weighted average shares | 132,393,664 | 132,139,616 | 132,320,855 | 0% | 0% | ||||||||||||
Effective tax rate (h) | 24.6 | % | 29.6 | % | 24.4 | % |
This presentation includes non- |
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SELECTED SUMMARY FINANCIAL INFORMATION (a) | |||||||||||
(Non-GAAP - unaudited) | |||||||||||
Nine Months Ended | |||||||||||
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($ in thousands, except per share data) | 2017 | 2016 | % Change | ||||||||
Revenues: | |||||||||||
Financial Advisory | 1,052,584 | 896,471 | 17% | ||||||||
Asset Management | 900,694 | 755,346 | 19% | ||||||||
Corporate | 18,642 | 7,324 | NM | ||||||||
Operating revenue (b) | $ | 1,971,920 | $ | 1,659,141 | 19% | ||||||
Expenses: | |||||||||||
Adjusted compensation and benefits expense (c) | $ | 1,114,135 | $ | 949,460 | 17% | ||||||
Ratio of adjusted compensation to operating revenue | 56.5 | % | 57.2 | % | |||||||
Non-compensation expense (d) | $ | 334,088 | $ | 318,588 | 5% | ||||||
Ratio of non-compensation to operating revenue | 16.9 | % | 19.2 | % | |||||||
Earnings: | |||||||||||
Earnings from operations (e) | $ | 523,697 | $ | 391,093 | 34% | ||||||
Operating margin (f) | 26.6 | % | 23.6 | % | |||||||
Adjusted net income (g) | $ | 352,414 | $ | 259,716 | 36% | ||||||
Diluted adjusted net income per share | $ | 2.66 | $ | 1.96 | 36% | ||||||
Diluted weighted average shares | 132,407,551 | 132,517,887 | (0%) | ||||||||
Effective tax rate (h) | 27.2 | % | 27.0 | % |
This presentation includes non- |
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ASSETS UNDER MANAGEMENT ("AUM") | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
($ in millions) | |||||||||||||||||||
As of | Variance | ||||||||||||||||||
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2017 | 2017 | 2016 | Qtr to Qtr | YTD | |||||||||||||||
Equity: | |||||||||||||||||||
Emerging Markets | $ | 49,548 | $ | 48,115 | $ | 41,363 | 3.0% | 19.8% | |||||||||||
Global | 40,505 | 37,012 | 30,567 | 9.4% | 32.5% | ||||||||||||||
Local | 40,761 | 39,034 | 36,243 | 4.4% | 12.5% | ||||||||||||||
Multi-Regional | 67,707 | 63,930 | 54,668 | 5.9% | 23.9% | ||||||||||||||
Total Equity | 198,521 | 188,091 | 162,841 | 5.5% | 21.9% | ||||||||||||||
Fixed Income: | |||||||||||||||||||
Emerging Markets | 17,243 | 16,330 | 15,580 | 5.6% | 10.7% | ||||||||||||||
Global | 4,213 | 3,860 | 3,483 | 9.1% | 21.0% | ||||||||||||||
Local | 4,447 | 4,391 | 4,245 | 1.3% | 4.8% | ||||||||||||||
Multi-Regional | 9,134 | 8,584 | 7,847 | 6.4% | 16.4% | ||||||||||||||
Total Fixed Income | 35,037 | 33,165 | 31,155 | 5.6% | 12.5% | ||||||||||||||
Alternative Investments | 2,668 | 2,621 | 2,422 | 1.8% | 10.2% | ||||||||||||||
Private Equity | 1,475 | 1,447 | 1,253 | 1.9% | 17.7% | ||||||||||||||
Cash Management | 424 | 437 | 239 | (3.0%) | 77.4% | ||||||||||||||
Total AUM | $ | 238,125 | $ | 225,761 | $ | 197,910 | 5.5% | 20.3% | |||||||||||
Three Months Ended |
Nine Months Ended |
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2017 | 2016 | 2017 | 2016 | ||||||||||||||||
AUM - Beginning of Period | $ | 225,761 | $ | 191,865 | $ | 197,910 | $ | 186,380 | |||||||||||
Net Flows | 15 | 2,773 | 2,953 | 2,865 | |||||||||||||||
Market and foreign exchange | |||||||||||||||||||
appreciation (depreciation) | 12,349 | 10,802 | 37,262 | 16,195 | |||||||||||||||
AUM - End of Period | $ | 238,125 | $ | 205,440 | $ | 238,125 | $ | 205,440 | |||||||||||
Average AUM | $ | 233,808 | $ | 201,028 | $ | 220,840 | $ | 192,989 | |||||||||||
% Change in average AUM | 16.3 | % | 14.4 | % |
Note: Average AUM generally represents the average of the monthly ending AUM balances for the period. |
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RECONCILIATION OF |
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(unaudited) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
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($ in thousands, except per share data) | 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
Operating Revenue | |||||||||||||||||||||
Net revenue - |
$ | 624,859 | $ | 717,180 | $ | 608,908 | $ | 1,965,503 | $ | 1,641,806 | |||||||||||
Adjustments: | |||||||||||||||||||||
Revenue related to noncontrolling interests (i) | (5,039 | ) | (3,098 | ) | (2,661 | ) | (13,079 | ) | (12,271 | ) | |||||||||||
(Gains) losses related to Lazard Fund Interests ("LFI") and other similar arrangements | (4,875 | ) | (5,753 | ) | (6,909 | ) | (17,981 | ) | (4,707 | ) | |||||||||||
Interest expense | 12,380 | 11,832 | 11,430 | 37,477 | 34,313 | ||||||||||||||||
Operating revenue, as adjusted (b) | $ | 627,325 | $ | 720,161 | $ | 610,768 | $ | 1,971,920 | $ | 1,659,141 | |||||||||||
Compensation and Benefits Expense | |||||||||||||||||||||
Compensation and benefits expense - |
$ | 361,787 | $ | 414,612 | $ | 353,756 | $ | 1,138,200 | $ | 959,276 | |||||||||||
Adjustments: | |||||||||||||||||||||
(Charges) credits pertaining to LFI and other similar arrangements | (4,875 | ) | (5,753 | ) | (6,909 | ) | (17,981 | ) | (4,707 | ) | |||||||||||
Compensation related to noncontrolling interests (i) | (2,473 | ) | (1,968 | ) | (1,763 | ) | (6,084 | ) | (5,109 | ) | |||||||||||
Compensation and benefits expense, as adjusted (c) | $ | 354,439 | $ | 406,891 | $ | 345,084 | $ | 1,114,135 | $ | 949,460 | |||||||||||
Non-Compensation Expense | |||||||||||||||||||||
Non-compensation expense - Subtotal - |
$ | 118,860 | $ | 130,067 | $ | 106,160 | $ | 360,393 | $ | 321,925 | |||||||||||
Adjustments: | |||||||||||||||||||||
Expenses associated with ERP system implementation (j) | (6,530 | ) | (8,861 | ) | - | (15,391 | ) | - | |||||||||||||
Expenses related to office space reorganization (k) | (1,412 | ) | (3,161 | ) | - | (4,573 | ) | - | |||||||||||||
Amortization and other acquisition-related costs (l) | (172 | ) | (1,257 | ) | (863 | ) | (5,003 | ) | (1,837 | ) | |||||||||||
Non-compensation expense related to noncontrolling interests (i) | (239 | ) | (677 | ) | (465 | ) | (1,338 | ) | (1,500 | ) | |||||||||||
Non-compensation expense, as adjusted (d) | $ | 110,507 | $ | 116,111 | $ | 104,832 | $ | 334,088 | $ | 318,588 | |||||||||||
Pre-Tax Income and Earnings From Operations | |||||||||||||||||||||
Operating Income (loss) - |
$ | 144,212 | $ | 172,501 | $ | 148,992 | $ | 466,910 | $ | 360,605 | |||||||||||
Adjustments: | |||||||||||||||||||||
Expenses associated with ERP system implementation (j) | 6,530 | 8,861 | - | 15,391 | - | ||||||||||||||||
Expenses related to office space reorganization (k) | 1,412 | 3,161 | - | 4,573 | - | ||||||||||||||||
Acquisition-related costs/(benefits) (l) | (612 | ) | 435 | - | 2,568 | - | |||||||||||||||
Net income related to noncontrolling interests (i) | (2,330 | ) | (454 | ) | (82 | ) | (5,661 | ) | (4,989 | ) | |||||||||||
Pre-tax income, as adjusted | 149,212 | 184,504 | 148,910 | 483,781 | 355,616 | ||||||||||||||||
Interest expense | 12,380 | 11,832 | 11,430 | 37,477 | 34,313 | ||||||||||||||||
Amortization (LAZ only) | 787 | 823 | 512 | 2,439 | 1,164 | ||||||||||||||||
Earnings from operations, as adjusted (e) | $ | 162,379 | $ | 197,159 | $ | 160,852 | $ | 523,697 | $ | 391,093 | |||||||||||
Net Income attributable to |
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Net income attributable to |
$ | 109,210 | $ | 120,378 | $ | 112,536 | $ | 337,141 | $ | 259,716 | |||||||||||
Adjustments: | |||||||||||||||||||||
Expenses associated with ERP system implementation (j) | 6,530 | 8,861 | - | 15,391 | - | ||||||||||||||||
Expenses related to office space reorganization (k) | 1,412 | 3,161 | - | 4,573 | - | ||||||||||||||||
Acquisition-related costs (l) | (612 | ) | 435 | - | 2,568 | - | |||||||||||||||
Tax benefit allocated to adjustments | (4,107 | ) | (2,995 | ) | - | (7,259 | ) | - | |||||||||||||
Net income, as adjusted (g) | $ | 112,433 | $ | 129,840 | $ | 112,536 | $ | 352,414 | $ | 259,716 | |||||||||||
Diluted net income per share: | |||||||||||||||||||||
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$ | 0.82 | $ | 0.91 | $ | 0.85 | $ | 2.55 | $ | 1.96 | |||||||||||
Non-GAAP Basis, as adjusted | $ | 0.85 | $ | 0.98 | $ | 0.85 | $ | 2.66 | $ | 1.96 |
This presentation includes non- |
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Notes to Financial Schedules | |||
(a) |
Selected Summary Financial Information are non- |
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(b) | A non-GAAP measure which excludes (i) revenue related to non-controlling interests (see (i) 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, and (iii) 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, and (ii) compensation and benefits related to noncontrolling interests (see (i) below). | ||
(d) |
A non-GAAP measure which excludes (i) for the three and nine month
periods ended |
||
(e) |
A non-GAAP measure which excludes (i) for the three and nine month
periods ended |
||
(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 |
||
(h) |
Effective tax rate is a non-GAAP measure based upon the |
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(i) | Noncontrolling interests include revenue and expenses principally related to Edgewater, and is a non-GAAP measure. | ||
(j) | Represents expenses associated with Enterprise Resource Planning (ERP) system implementation. | ||
(k) | Represents incremental rent expense and lease abandonment costs related to office space reorganization. | ||
(l) | Represents the change in fair value of the contingent consideration associated with certain business acquisitions. | ||
NM | Not meaningful |
View source version on businesswire.com: http://www.businesswire.com/news/home/20171026005453/en/
Media:
judi.mackey@lazard.com
or
Investors:
armand.sadoughi@lazard.com
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