Lazard(US:LAZ)2024-11-01 20:32Financial Performance - Consolidated net revenue for the third quarter of 2024 was derived from Financial Advisory (47%), Asset Management (38%), and Corporate (15%) segments, compared to 51%, 54%, and (5%) respectively in the same period of 2023[214]. - Net revenue for the three months ended September 30, 2024, was $784,866 thousand, a 50% increase from $523,918 thousand in the same period of 2023[257]. - Operating income for the three months ended September 30, 2024, was $161,187 thousand, compared to a loss of $4,857 thousand in the same period of 2023[257]. - Net income attributable to Lazard for the three months ended September 30, 2024, was $107,938 thousand, a significant increase from $7,139 thousand in the same period of 2023[257]. - Adjusted net revenue for the three months ended September 30, 2024, was $645,914 thousand, up from $531,617 thousand in the same period of 2023[259]. - Total operating expenses for the three months ended September 30, 2024, were $623,679 thousand, compared to $528,775 thousand in the same period of 2023[257]. - Adjusted operating income for the three months ended September 30, 2024, was $81,372 thousand, compared to $30,541 thousand in the same period of 2023[264]. - The company reported net income attributable to Lazard of $108 million for the three months ended September 30, 2024, compared to $7 million in the same period of 2023[267]. - Net revenue increased by $261 million, or 50%, with adjusted net revenue rising by $114 million, or 21%, compared to the 2023 period[268]. M&A Activity - Completed M&A transactions in Q3 2024 totaled $627 billion, a 20% decrease from $783 billion in Q3 2023, with the number of deals falling by 13% from 8,242 to 7,210[227]. - Announced M&A transactions in Q3 2024 reached $888 billion, a 19% increase from $744 billion in Q3 2023, with the number of deals remaining stable at 8,510[227]. - The company anticipates increased M&A activity alongside greater restructuring and liability management activity due to upcoming debt maturities throughout 2024[218]. - Financial Advisory net revenue increased by $105 million, or 39%, driven by a higher number of completed M&A transactions valued over $500 million[288]. - The number of clients with fees greater than $1 million in Financial Advisory rose to 87 from 64 year-over-year[284]. Asset Management - Asset Management net revenue is significantly influenced by the level and product mix of Assets Under Management (AUM), which is affected by market performance and client inflows/outflows[235]. - Total AUM as of September 30, 2024, was $248 billion, an increase of $1 billion from $247 billion at December 31, 2023, driven by market appreciation, partially offset by net outflows[297]. - Average AUM for the three-month period ended September 30, 2024, increased by 4% compared to the same period in 2023, and by 6% compared to the nine-month period ended September 30, 2023[305]. - Approximately 83% of AUM was managed on behalf of institutional and intermediary clients as of September 30, 2024, down from 85% at December 31, 2023[298]. - Asset Management net revenue increased by $18 million, or 2%, to $857 million, with management fees and other revenue rising by $14 million, or 2%[313]. - Asset Management operating income was $42 million, a decrease of $11 million, or 21%, compared to $53 million in the 2023 period[312]. Corporate Segment - Lazard's corporate segment total assets accounted for 53% of consolidated total assets as of September 30, 2024, primarily from cash, investments, and private equity funds[240]. - Corporate segment reported net interest expense decreased by $2 million, or 12%, compared to the 2023 period[317]. - The carrying value of total senior debt was $1,852.8 million as of September 30, 2024, compared to $1,690.2 million at December 31, 2023[340]. Cost Management - The company completed firm-wide cost-saving initiatives in 2023, which were finalized in the first quarter of 2024[248]. - The company aims to maintain a ratio of adjusted compensation and benefits expense to adjusted net revenue in the mid-to-high 50s percentage range[243]. - Adjusted compensation and benefits expense for the three months ended September 30, 2024, was $426,303 thousand, compared to $363,626 thousand in the same period of 2023[261]. - Compensation and benefits expense increased by $101 million, or 28%, compared to the 2023 period[269]. Economic Conditions - Economic conditions are improving, with inflation moderating and central banks lowering interest rates, which may positively impact the company's financial performance[216]. Shareholder Returns - The company repurchased 1,123,413 shares at an average price of $39.10 during the nine months ended September 30, 2024, with $356 million of share repurchase authorization remaining[347]. - A quarterly dividend of $0.50 per share was declared on October 30, 2024, payable on November 15, 2024[350]. - The company aims to repurchase shares to offset dilution from share-based incentive compensation plans over time[346]. Risk Management - The company has implemented a framework to monitor and manage operational risk, including internal controls and timely information provision[399]. - Business continuity and disaster recovery programs are in place to ensure service provision during disruptions[399]. - The company purchases insurance policies to protect against accidental losses that could significantly impact financial objectives[399].