Lazard(US:LAZ)2022-07-28 21:50Financial Data and Key Metrics Changes - The company reported operating revenue of $676 million for Q2 2022, down from $821 million in Q2 2021, reflecting challenging market conditions [8] - For the first half of 2022, operating revenue was $1.4 billion, compared to $1.5 billion in the same period of 2021 [8] - The effective tax rate for Q2 2022 was 26.4%, compared to 25.2% in the prior year quarter [18] Business Line Data and Key Metrics Changes - In Financial Advisory, Q2 revenue was $407 million, down from $471 million in Q2 2021, while the first half revenue was $795 million, 1% higher than the same period in 2021 [9] - Asset Management reported Q2 operating revenue of $266 million, down from $343 million in Q2 2021, with management fees decreasing by 16% and performance fees declining by 79% [10] - As of June 30, Assets Under Management (AUM) was $217 billion, a decrease of 22% year-over-year and 14% sequentially [12] Market Data and Key Metrics Changes - Average AUM for Q2 was $230 billion, down 17% year-over-year and 10% sequentially, reflecting global market sell-offs in equities and fixed income [13] - The company experienced net outflows of $4.6 billion, driven by market depreciation and negative foreign currency impacts [12] Company Strategy and Development Direction - The company is focused on serving clients with diversified investment platforms and is seeing increased interest in fundamental active investment strategies [24][25] - The management emphasized the importance of ESG integration and customized solutions for clients, presenting opportunities for the Lazard platform [15] - The company plans to continue investing in people, resources, and technology to enhance market capabilities and geographic reach [26] Management's Comments on Operating Environment and Future Outlook - The global macroeconomic environment remains uncertain, characterized by high inflation and rising interest rates, but the company performed well in Q2 [22] - Management expressed cautious optimism for the second half of the year, noting strong activity levels in Financial Advisory and a robust pipeline [23][36] - The company is well-positioned for the remainder of the year with a diversified business model and a global client base [26] Other Important Information - The company returned $246 million to shareholders in Q2, including $46 million in dividends and $199 million in share repurchases [19] - The Board of Directors authorized additional share repurchases of up to $500 million, bringing the total authorization to $559 million [20] - A quarterly dividend of $0.50 per share was declared, reflecting a 6% increase from the previous quarter [21] Q&A Session Summary Question: Outlook for advisory in Europe and restructuring trends - Management noted a strong year in Europe with a record first half and a solid outlook for the second half, despite tightening credit conditions [36][37] Question: Capital management and buyback expectations - The company plans to continue aggressive share buybacks, having repurchased 5.9 million shares in Q2 and 10.6 million year-to-date [39][41] Question: Engagement with financial sponsors and financing conditions - Management indicated a pause in financial sponsor transactions due to credit market conditions, with expectations for a reset in financing terms [45][46] Question: Activity levels and geographic mix in M&A - The company has seen diversified activity across sectors and regions, with strong performance in healthcare, industrials, and energy transition [56][58] Question: Opportunities in asset management amidst market dislocation - Management expressed confidence in the current environment for fundamental active investment strategies and is continuously exploring expansion opportunities [62][63] Question: Trajectory of fee rates and expenses - The fee rate has remained stable, with expectations for continued growth in travel-related expenses as business normalizes [70][73] Question: Strategic dialogue with clients in Europe - Management confirmed ongoing strong levels of strategic dialogue, despite geopolitical challenges, with multinational companies maintaining a global perspective [78][82]