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laz-10q_20230331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

001-32492

(Commission File Number)

LAZARD LTD

(Exact name of registrant as specified in its charter)

Bermuda	98-0437848
(State or Other Jurisdiction of Incorporation	(I.R.S. Employer Identification No.)
or Organization)

Clarendon House

2 Church Street

Hamilton HM11, Bermuda

(Address of principal executive offices)

Registrant’s telephone number: (441) 295-1422

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	LAZ	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If the Registrant is an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 21, 2023, there were 112,766,091 shares of the Registrant’s common stock outstanding (including 26,100,048 shares held by subsidiaries).

TABLE OF CONTENTS

When we use the terms “Lazard”, “we”, “us”, “our” and “the Company”, we mean Lazard Ltd, a company incorporated under the laws of Bermuda, and its subsidiaries, including Lazard Group LLC, a Delaware limited liability company (“Lazard Group”), that is the current holding company for our businesses. Lazard Ltd’s primary operating asset is its indirect ownership as of March 31, 2023 of all of the common membership interests in Lazard Group and its controlling interest in Lazard Group. When we use the term “common stock”, we mean Class A common stock of Lazard Ltd, the only class of common stock of Lazard outstanding.

		Page
Part I. Financial Information

Item 1. Financial Statements (Unaudited)		1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		38

Item 3. Quantitative and Qualitative Disclosures About Market Risk		63

Item 4. Controls and Procedures		63

Part II. Other Information

Item 1. Legal Proceedings		64

Item 1A. Risk Factors		64

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		64

Item 3. Defaults Upon Senior Securities		65

Item 4. Mine Safety Disclosures		65

Item 5. Other Information		65

Item 6. Exhibits		66

Signatures		69

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

		Page

Condensed Consolidated Statements of Financial Condition as of March 31, 2023 and December 31, 2022		2

Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2023 and 2022		4

Condensed Consolidated Statements of Comprehensive Income for the three month periods ended March 31, 2023 and 2022		5

Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2023 and 2022		6

Condensed Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests for the three month periods ended March 31, 2023 and 2022		8

Notes to Condensed Consolidated Financial Statements		10

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

MARCH 31, 2023 AND DECEMBER 31, 2022

(UNAUDITED)

(dollars in thousands, except for per share data)

	March 31,		December 31,
	2023		2022
ASSETS
Cash and cash equivalents	$	596,601	$	1,234,773
Deposits with banks and short-term investments		522,560		779,246
Restricted cash		36,985		625,381
Receivables (net of allowance for credit losses of $24,929 and $17,738 at March 31, 2023 and December 31, 2022, respectively):
Fees		509,831		491,861
Customers and other		188,296		160,897
		698,127		652,758
Investments		741,868		698,977
Property (net of accumulated amortization and depreciation of $402,142 and $395,109 at March 31, 2023 and December 31, 2022, respectively)		245,685		250,073
Operating lease right-of-use assets		428,859		431,608
Goodwill and other intangible assets (net of accumulated amortization of $70,131 and $70,118 at March 31, 2023 and December 31, 2022, respectively)		394,260		377,330
Deferred tax assets		367,655		407,657
Other assets		534,917		394,758
Total Assets	$	4,567,517	$	5,852,561

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

MARCH 31, 2023 AND DECEMBER 31, 2022

(UNAUDITED)

(dollars in thousands, except for per share data)

	March 31,			December 31,
	2023			2022
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits and other customer payables	$	697,088		$	921,834
Accrued compensation and benefits		442,890			735,576
Operating lease liabilities		509,761			513,688
Tax receivable agreement obligation		118,563			191,189
Senior debt		1,688,335			1,687,714
Deferred tax liabilities		4,793			3,920
Other liabilities		508,206			539,770
Total Liabilities		3,969,636			4,593,691
Commitments and contingencies
Redeemable noncontrolling interests		89,472			583,471
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; 15,000,000 shares authorized:
Series A - no shares issued and outstanding		-			-
Series B - no shares issued and outstanding		-			-
Common stock:
Class A, par value $.01 per share (500,000,000 shares authorized; 112,766,091 shares issued at March 31, 2023 and December 31, 2022, including shares held by subsidiaries as indicated below)		1,128			1,128
Additional paid-in-capital		94,312			167,890
Retained earnings		1,604,650			1,676,713
Accumulated other comprehensive loss, net of tax		(282,957	)		(295,854	)
		1,417,133			1,549,877
Class A common stock held by subsidiaries, at cost (26,100,898 and 26,814,213 shares at March 31, 2023 and December 31, 2022, respectively)		(965,707	)		(993,414	)
Total Lazard Ltd Stockholders’ Equity		451,426			556,463
Noncontrolling interests		56,983			118,936
Total Stockholders’ Equity		508,409			675,399
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	4,567,517		$	5,852,561

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2023 AND 2022

(UNAUDITED)

(dollars in thousands, except for per share data)

	Three Months Ended
	March 31,
	2023			2022
REVENUE
Investment banking and other advisory fees	$	277,408		$	389,739
Asset management fees		261,479			315,052
Interest income		12,607			1,761
Other		10,417			9,592
Total revenue		561,911			716,144
Interest expense		19,475			21,252
Net revenue		542,436			694,892
OPERATING EXPENSES
Compensation and benefits		449,967			396,841
Occupancy and equipment		31,773			31,239
Marketing and business development		22,762			14,123
Technology and information services		44,040			37,931
Professional services		24,326			16,029
Fund administration and outsourced services		26,576			29,703
Amortization and other acquisition-related costs		48			15
Benefit pursuant to tax receivable agreement		(40,435	)		-
Other		20,303			9,283
Total operating expenses		579,360			535,164
OPERATING INCOME (LOSS)		(36,924	)		159,728
Provision (benefit) for income taxes		(21,725	)		38,753
NET INCOME (LOSS)		(15,199	)		120,975
LESS - NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		6,973			7,099
NET INCOME (LOSS) ATTRIBUTABLE TO LAZARD LTD	$	(22,172	)	$	113,876
ATTRIBUTABLE TO LAZARD LTD CLASS A COMMON STOCKHOLDERS:
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic		87,591,852			102,547,277
Diluted		87,591,852			108,186,642
NET INCOME (LOSS) PER SHARE OF COMMON STOCK:
Basic	$	(0.27	)	$	1.09
Diluted	$	(0.27	)	$	1.05

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2023 AND 2022

(UNAUDITED)

(dollars in thousands)

	Three Months Ended
	March 31,
	2023			2022
NET INCOME (LOSS)	$	(15,199	)	$	120,975
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Currency translation adjustments		14,539			(18,068	)
Employee benefit plans:
Actuarial gain (loss) (net of tax expense (benefit) of $(595) and $788 for the three months ended March 31, 2023 and 2022, respectively)		(2,801	)		3,439
Adjustment for items reclassified to earnings (net of tax expense of $376 and $267 for the three months ended March 31, 2023 and 2022, respectively)		1,160			849
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		12,898			(13,780	)
COMPREHENSIVE INCOME (LOSS)		(2,301	)		107,195
LESS - COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		6,974			7,098
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO LAZARD LTD	$	(9,275	)	$	100,097

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2023 AND 2022

(UNAUDITED)

(dollars in thousands)

	Three Months Ended
	March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(15,199	)	$	120,975
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property		11,144			10,258
Noncash lease expense		15,155			17,089
Amortization of deferred expenses and share-based incentive compensation		108,254			90,633
Amortization and other acquisition-related costs		48			15
Deferred tax provision		40,235			26,261
Benefit pursuant to tax receivable agreement		(40,435	)		-
Impairment of equity method investments and other receivables		22,981			-
Loss on LGAC liquidation		17,929			-
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:
Receivables-net		(43,689	)		(15,160	)
Investments		(160,276	)		44,236
Other assets		(7,717	)		(26,435	)
Accrued compensation and benefits and other liabilities		(359,848	)		(481,402	)
Net cash used in operating activities		(411,418	)		(213,530	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property		(4,612	)		(13,510	)
Disposals of property		2			2
Acquisition of business, net of cash acquired		(10,516	)		-
Net cash used in investing activities		(15,126	)		(13,508	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Customer deposits, net		-			302,342
Contributions from noncontrolling interests		50			191
Payments for:
Customer deposits, net		(239,051	)		-
Distributions to noncontrolling interests		(2,042	)		(4,474	)
Tax receivable agreement		(32,191	)		(20,945	)
Distribution to redeemable noncontrolling interests in connection with LGAC redemption		(585,891	)		-
Purchase of Class A common stock		(98,925	)		(175,797	)
Class A common stock dividends		(42,524	)		(46,664	)
Settlement of share-based incentive compensation in satisfaction of tax withholding requirements		(45,165	)		(58,005	)
LFI Consolidated Funds redemptions		(21,566	)		(10,976	)
Other financing activities		(5,110	)		(4,915	)
Net cash used in financing activities		(1,072,415	)		(19,243	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		15,705			(51,822	)
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(1,483,254	)		(298,103	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— January 1		2,639,400			3,430,014
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— March 31	$	1,156,146		$	3,131,911

See notes to condensed consolidated financial statements.

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION:
	March 31,		December 31,
	2023		2022
Cash and cash equivalents	$	596,601	$	1,234,773
Deposits with banks and short-term investments		522,560		779,246
Restricted cash		36,985		625,381
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	1,156,146	$	2,639,400

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2022

(UNAUDITED)

(dollars in thousands)

					Additional					Accumulated Other Comprehensive			Class A Common Stock					Total Lazard Ltd						Total			Redeemable
	Common Stock				Paid-In-		Retained			Income (Loss),			Held By Subsidiaries					Stockholders’			Noncontrolling			Stockholders’			Noncontrolling
	Shares		$		Capital		Earnings			Net of Tax			Shares		$			Equity			Interests			Equity			Interests
Balance - January 1, 2022		112,766,091	$	1,128	$	144,729	$	1,560,636		$	(223,847	)		12,046,140	$	(507,426	)	$	975,220		$	102,744		$	1,077,964		$	575,000
Comprehensive income (loss):
Net income								113,876											113,876			4,439			118,315			2,660
Other comprehensive loss - net of tax											(13,779	)							(13,779	)		(1	)		(13,780	)
Amortization of share-based incentive compensation						50,766													50,766			2,671			53,437
Dividend equivalents						4,003		(4,284	)										(281	)		(4,627	)		(4,908	)
Class A common stock dividends ($0.47 per share)								(46,664	)										(46,664	)					(46,664	)
Purchase of Class A common stock