Yahoo Finance Lazard Inc (LAZ) Q1 2024 Earnings Call Transcript Highlights: Soaring Revenues and Strategic ...
Firm-wide Adjusted Net Revenue: $747 million, up 42% year-over-year.
Financial Advisory Adjusted Net Revenue: $447 million, up 63% from the previous year.
Asset Management Adjusted Net Revenue: $276 million, up 4% year-over-year.
Assets Under Management (AUM): $250 billion, up 8% from the previous year.
Average AUM: $247 billion, up 9% from the first quarter of 2023.
Adjusted Compensation Expense: $493 million, compensation ratio at 66%.
Adjusted Non-Compensation Expense: $134 million, down 6% year-over-year.
Effective Tax Rate: Adjusted rate at 32.6%.
Capital Returned to Shareholders: $121 million, including dividends and share repurchases.
Quarterly Dividend: Declared at $0.50 per share.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you provide insights on the sustainability of the record revenue levels in Q1 and your confidence in achieving the targeted comp ratio beyond 2024? A: Mary Ann Betsch, CFO of Lazard, Inc., explained that the firm did not use the previous year's comp ratio as a proxy due to its high level and the unpredictability of the year. She emphasized the firm's focus on moving towards the target ratio and expressed hope for better performance as the year progresses, with an aim to return to the target ratio by 2025.
Q: What are the current trends in the Asset Management business, particularly regarding outflows despite improved performance? A: Peter Orszag, CEO of Lazard, Inc., noted that the net outflows were largely due to a higher-for-longer interest rate environment causing cash to sit on the sidelines. He highlighted ongoing progress in strengthening the core business, evolving distribution channels, and moving into new opportunities, such as the strategic partnership with Elaia Partners.
Q: Can you discuss the non-comp expenses for this quarter and how we should think about them for the rest of the year? A: Mary Ann Betsch mentioned that while the firm has implemented cost savings, there might be offsets from increases in occupancy costs, market data, and travel expenses. She advised assuming a return to normal levels adjusted for these factors.
Q: How significant is restructuring revenue as a proportion of advisory revenue, and what are the expectations for this segment? A: Peter Orszag highlighted that restructuring and liability management revenue more than doubled compared to the first quarter of the previous year. He expects elevated activity levels to continue, driven by debt maturities and a higher interest rate environment.
Q: Could you provide your perspective on the differences in M&A activity between the U.S. and Europe? A: Peter Orszag observed that there has been a more significant pickup in M&A activity in North America compared to Europe, although both regions are experiencing growth. He emphasized Lazard's strong presence in both markets, which provides diversification and opportunities.
Q: Regarding the corporate revenue line, can you size the gain for this quarter and discuss the sustainability of this revenue? A: Mary Ann Betsch described the gain as sizable but not the majority of the corporate revenue for the quarter. She suggested modeling future corporate revenue based on a return on cash plus or minus investment gains on the seed portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
