Lazard(US:LAZ)2025-07-25 20:47Part I. Financial Information Item 1. Financial Statements (Unaudited) This section presents Lazard's unaudited condensed consolidated financial statements, detailing financial condition, operations, and cash flows for H1 2025 Condensed Consolidated Statements of Financial Condition Lazard's total assets decreased to $4.49 billion as of June 30, 2025, while total stockholders' equity increased to $786.5 million Financial Position Summary | Financial Position | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | $4,493,386 | $4,793,993 | (6.3%) | | Cash and cash equivalents | $978,259 | $1,308,218 | (25.2%) | | Total Liabilities | $3,623,324 | $4,029,210 | (10.1%) | | Accrued compensation and benefits | $391,048 | $844,953 | (53.7%) | | Senior debt | $1,688,631 | $1,687,052 | 0.1% | | Total Stockholders' Equity | $786,484 | $685,154 | 14.8% | Condensed Consolidated Statements of Operations Lazard's Q2 2025 total revenue increased to $817.2 million, with H1 2025 net income attributable to Lazard rising to $115.7 million Key Operating Metrics | Metric (in thousands, except EPS) | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $817,160 | $707,991 | +15.4% | $1,486,324 | $1,493,472 | -0.5% | | Investment banking fees | $493,226 | $408,773 | +20.7% | $853,593 | $861,800 | -0.9% | | Asset management fees | $275,605 | $267,914 | +2.9% | $540,221 | $544,763 | -0.8% | | Operating Income | $93,081 | $63,640 | +46.3% | $147,716 | $118,201 | +25.0% | | Net Income Attributable to Lazard | $55,346 | $49,909 | +10.9% | $115,721 | $85,664 | +35.1% | | Diluted EPS | $0.52 | $0.49 | +6.1% | $1.08 | $0.84 | +28.6% | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $167.8 million for H1 2025, a reversal from cash provided in the prior year period Cash Flow Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(167,846) | $86,255 | | Net cash used in investing activities | $(49,014) | $(109,483) | | Net cash used in financing activities | $(231,548) | $(94,125) | | Net Decrease in Cash | $(361,060) | $(140,530) | Notes to Condensed Consolidated Financial Statements These notes detail Lazard's accounting policies, segment performance, senior debt, and incentive compensation plans - The company's business is divided into two main segments: Financial Advisory and Asset Management, with a Corporate segment for other activities like cash management and investments4852 Net Revenue by Segment | Net Revenue by Segment (in thousands) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Financial Advisory | $864,665 | $864,815 | | Asset Management | $580,578 | $580,963 | - As of June 30, 2025, the company had $1.689 billion in senior debt, with maturities ranging from 2027 to 2031152 - Total share-based incentive compensation expense for H1 2025 was $184.1 million, an increase from $159.5 million in H1 2024179 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Lazard's financial performance, highlighting Q2 2025 revenue growth, H1 2025 operating income increase, and segment performance Business Environment and Outlook Global economic conditions impact Lazard's M&A and restructuring businesses, with M&A deal values increasing and corporate defaults decreasing in H1 2025 Global M&A and Restructuring Activity | Global M&A and Restructuring Activity | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Announced M&A Value (>$500M) | $1,768B | $1,293B | +37% | | Completed M&A Value (>$500M) | $1,320B | $1,098B | +20% | | Completed Restructuring Value | $171B | $246B | -30% | - The number of corporate defaults decreased to 64 in H1 2025 from 80 in H1 2024, according to Moody's301 Consolidated Results of Operations Lazard's H1 2025 GAAP operating income increased 25% to $147.7 million, while adjusted operating income decreased 11% to $182.2 million Key Financial Metrics (H1) | Metric (in thousands) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Revenue (GAAP) | $1,444,048 | $1,450,102 | | Adjusted Net Revenue | $1,413,051 | $1,431,207 | | Operating Income (GAAP) | $147,716 | $118,201 | | Adjusted Operating Income | $182,249 | $203,705 | | Adjusted Operating Margin | 12.9% | 14.2% | Adjusted Expense Ratios (H1) | Expense Ratios (Adjusted) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Compensation & Benefits / Net Revenue | 65.5% | 66.0% | | Non-Compensation / Net Revenue | 21.6% | 19.8% | Business Segments Financial Advisory's adjusted operating income rose 12% in H1 2025, while Asset Management's declined 12%, and Corporate's loss widened Segment Adjusted Operating Income | Segment Adjusted Operating Income (in millions) | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Financial Advisory | $198.9 | $178.2 | +11.6% | | Asset Management | $127.7 | $144.9 | -11.9% | | Corporate (Loss) | $(144.4) | $(119.4) | +20.9% | Cash Flows, Liquidity and Capital Resources Lazard maintains strong liquidity with $978 million in cash, while H1 2025 saw net cash used in operations and share repurchases - As of June 30, 2025, Lazard had $978 million in cash and cash equivalents and $210 million in unused credit facilities414416 Share Repurchase Activity (H1) | Share Repurchases | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Shares Purchased | 859,849 | 1,055,913 | | Average Price Per Share | $46.44 | $38.66 | - On July 23, 2025, the Board declared a quarterly dividend of $0.50 per share429 Critical Accounting Policies and Estimates Management identifies critical accounting policies requiring significant judgment, including revenue recognition, credit losses, compensation, and income taxes - Key areas requiring significant management judgment include revenue recognition, allowance for credit losses, compensation liabilities, income taxes, the Tax Receivable Agreement (TRA) obligation, and goodwill impairment433 Quantitative and Qualitative Disclosures About Market Risk Lazard's market risk exposures include equity, interest rate, credit spread, and foreign exchange risks, partially hedged with derivatives - The company is exposed to equity market, interest rate, credit spread, and foreign exchange risks, which it partially hedges using derivatives464465466 Market Risk Sensitivity | Risk Sensitivity (as of June 30, 2025) | Exposure (in millions) | Net Impact of 10% Adverse Change (in millions) | | :--- | :--- | :--- | | Equity Market Price Risk | $270 | $(1.2) | | Foreign Exchange Rate Risk | $63 | $(2.1) | | Private Equity Risk | $27 | $(2.7) | | Interest Rate/Credit Spread Risk | $18 | $(0.7) (from 100bps change) | Controls and Procedures Management concluded that Lazard's disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that as of the end of the quarter, the company's disclosure controls and procedures were effective481 - No material changes were made to the internal control over financial reporting during the most recent fiscal quarter482 Part II. Other Information Legal Proceedings Lazard is involved in various legal proceedings, but management expects no material adverse effect on its business or financial condition - The company states that based on currently available information, the results of any pending legal matters are not expected to have a material effect on its business or financial condition485 Risk Factors There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors disclosed in the 2024 Form 10-K were reported486 Unregistered Sales of Equity Securities and Use of Proceeds This section details Lazard's Q2 2025 common stock repurchases, including shares bought under its program and those withheld for employee tax obligations Share Repurchase Activity (Q2) | Share Repurchase Activity (Q2 2025) | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Publicly Announced Program | 85,894 | $43.81 | | Employee Tax Withholding | 215,082 | $42.93 | - As of June 30, 2025, approximately $160.1 million remained available for repurchase under the company's authorized plan, expiring December 31, 2026489491 Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate documents, contracts, and certifications