Lazard(US:LAZ)2024-07-26 20:31Financial Performance - Consolidated net revenue for the second quarter of 2024 was derived from Financial Advisory (60%), Asset Management (42%), and Corporate (-2%) segments, compared to 55%, 45%, and 0% respectively in the same period of 2023[267]. - As of June 30, 2024, Lazard's net revenue was $685,349,000, an increase from $643,114,000 in the same period of 2023, representing a year-over-year growth of approximately 6.3%[312]. - Operating income for the three months ended June 30, 2024, was $63,640,000, compared to a loss of $110,073,000 in the same period of 2023, indicating a significant recovery[312]. - Lazard's net income attributable to the company for the three months ended June 30, 2024, was $49,909,000, a recovery from a loss of $124,013,000 in the same period of 2023[312]. - For the six months ended June 30, 2024, net income attributable to Lazard was $86 million, compared to a net loss of $146 million in the same period of 2023[340]. - Net revenue increased by $265 million, or 22%, with adjusted net revenue increasing by $284 million, or 25%, compared to the 2023 period[341]. M&A and Restructuring Activity - Completed M&A transactions in Q2 2024 totaled $710 billion, an 18% increase from $601 billion in Q2 2023, while the number of deals decreased by 26% to 7,058[278]. - The value of announced M&A transactions in Q2 2024 was $785 billion, a 6% increase from $742 billion in Q2 2023, with a decrease in the number of deals by 18%[278]. - Completed restructuring transactions in Q2 2024 reached a value of $177 billion, a 75% increase from $101 billion in Q2 2023[278]. - The company anticipates increased M&A activity alongside greater restructuring efforts throughout 2024, driven by a recovering economic environment and high interest rates[270]. - Financial Advisory net revenue increased by $59 million, or 17%, for the three months ended June 30, 2024, reflecting an increase in completed M&A transactions[356]. Asset Management - The company's asset management net revenue is primarily driven by the level of assets under management (AUM), which is influenced by market performance and client inflows[287]. - Total Assets Under Management (AUM) decreased by $2 billion, or 1%, to $244.67 billion as of June 30, 2024, due to net outflows and foreign exchange depreciation[365]. - Net revenue for the Asset Management segment for the three months ended June 30, 2024, was $285.49 million, a decrease of $3 million or 1% compared to $288.31 million in 2023[377]. - Operating income for the Asset Management segment increased to $50.08 million for the three months ended June 30, 2024, up by $31 million or 162% from $19.09 million in 2023[378]. - Average AUM for the six months ended June 30, 2024, was $246.13 billion, compared to $231.11 billion for the same period in 2023, reflecting a growth of 6.5%[373]. Expenses and Cost Management - The total operating expenses for the six months ended June 30, 2024, were $1,331,901,000, slightly down from $1,332,547,000 in the same period of 2023[312]. - Compensation and benefits expenses decreased to $452,560,000 for the three months ended June 30, 2024, from $572,231,000 in the same period of 2023, reflecting a reduction of approximately 21%[312]. - Non-compensation expense decreased by $12 million, or 7%, while adjusted non-compensation expense increased by $5 million, or 3%[336]. - Operating expenses for the Asset Management segment decreased by $34 million or 13% compared to the 2023 period, which included $37 million associated with cost-saving initiatives[377]. - The company completed firm-wide cost-saving initiatives during the first quarter of 2024, aimed at improving operational efficiency[303]. Tax and Corporate Structure - Following the conversion to a U.S. C-Corporation on January 1, 2024, Lazard anticipates an increase in its effective tax rate due to U.S. federal corporate income taxes being applicable to all operating income[304]. - The effective tax rate was 18.2%, compared to (9.4)% in 2023, primarily due to changes in the geographic mix of earnings[338]. - The provision for income taxes reflected an effective tax rate of 21.9%, compared to 7.8% for the 2023 period[346]. Cash Flow and Liquidity - Cash provided by operating activities for the six months ended June 30, 2024, was $86 million, compared to a cash used of $211 million in the same period of 2023[390]. - As of June 30, 2024, Lazard had approximately $848 million in cash and cash equivalents, including $434 million held outside the U.S.[398]. - The company had approximately $209 million in unused lines of credit available as of June 30, 2024, including a $200 million senior revolving credit facility[399]. - The company expects to meet its annual obligations through cash flow generated from operations[404]. Shareholder Returns - Lazard repurchased 1,055,913 shares at an average price of $38.66 during the six months ended June 30, 2024[413]. - The Board of Directors authorized an additional $200 million share repurchase program on July 24, 2024, bringing total authorization to approximately $360 million[414]. Market Risks - The company's exposure to equity market price risk was approximately $149 million as of June 30, 2024, compared to $150 million as of December 31, 2023[452]. - The company's exposure to interest rate and credit spread risk was $118 million as of June 30, 2024, up from $18 million as of December 31, 2023[453]. - The company's exposure to foreign exchange rate risk was $63 million as of June 30, 2024, down from $69 million as of December 31, 2023[454].