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Lazard (LAZ) Q3 Earnings Beat on Higher Revenues, Costs Up
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Lazard Ltd (LAZ - Free Report) reported third-quarter 2021 adjusted earnings of 98 cents per share, beating the Zacks Consensus Estimate of 94 cents. The reported figure also reflects 46% year-over-year growth.
Higher revenues and growth in assets under management (AUM) favored the company. However, operating expenses witnessed a rise. Most likely due to this, shares of the company gained 6.6%, following the earnings release.
Adjusted net income in the reported quarter was $111.4 million, up 46% year over year. On a GAAP basis, Lazard’s net income came in at $107.2 million or 94 cents per share compared with the $75 million or 66 cents recorded in the prior-year quarter.
Revenues Rise, Expenses Flare Up
During the third quarter, adjusted operating revenues totaled a record $701.64 million, up 23% year over year. This upside resulted from an increase in asset management and financial advisory revenues. The reported figure also outpaced the Zacks Consensus Estimate of $830.83 million.
Adjusted operating expenses came in at $534.2 million in the quarter, up 20% year over year. Higher compensation and benefits as well as non-compensation expense resulted in this upsurge.
Adjusted compensation and benefits expenses rose 22% on a year-over-year basis to $417.5 million. Adjusted non-compensation expenses for the quarter were $116.7 million, up 13% year over year.
The ratio of compensation expenses to operating revenues was 59.5%, down from the year-earlier quarter’s 60%. The ratio of non-compensation expenses to operating revenues was 16.6% compared with the year-ago quarter’s 18.1%.
The company affirmed its annual targets of an adjusted non-compensation expense-to-revenue ratio between 16% and 20%, while the compensation-to-operating revenue ratio target is in the mid-to-high 50 percentage range.
Segment Performance
Financial Advisory: The segment’s adjusted revenues were $381.3 million, up 24% from the year-earlier quarter.
Asset Management: The segment’s adjusted revenues were $310.6 million, up 19% from the prior-year quarter.
Corporate: The segment generated $9.8 million adjusted revenues, up substantially from the prior-year quarter.
Growing AUM
As of Sep 30, 2021, AUM was recorded at $272.6 billion, up 5.4% from the prior-year quarter. The quarter witnessed a market depreciation and foreign-exchange depreciation of $2.5 billion and net outflows of $2.3 billion.
Average AUM came in at $277.9 billion, up 23% year over year.
Deteriorating Balance Sheet
Lazard’s cash and cash equivalents totaled $1.18 billion as of Sep 30, 2021, compared with $1.39 billion as of Dec 31, 2020. The company’s stockholders’ equity was $977.7 million compared with $999.4 million as of Dec 31, 2020.
Steady Capital-Deployment Activity
In the third quarter, Lazard repurchased 1.1 million shares at an average cost of $46.01 per share and paid out dividends of $49 million. As of the third-quarter end, the company had $314 million remaining in its share-repurchase authorization.
Our Viewpoint
Results reflect Lazard’s impressive performance during the September-end quarter. Although diverse footprint, steady capital-deployment activities and revenue growth position the company favorably for the long haul; macro headwinds, elevated expenses and overall outflows are straining its financials.
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2021 adjusted earnings of $10.95 per share outpaced the Zacks Consensus Estimate of $9.63. The figure reflects a rise of 18.8% from the year-ago quarter’s number.
Blackstone’s (BX - Free Report) distributable earnings of $1.28 per share comfortably surpassed the Zacks Consensus Estimate of 93 cents for the July-September quarter. The figure reflects a significant rise from 63 cents recorded in the prior-year quarter.
SEI Investments Co.’s (SEIC - Free Report) earnings of 97 cents per share came in line with the Zacks Consensus Estimate for the September-end quarter. The bottom line reflected 29% growth from the prior-year quarter.
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Lazard (LAZ) Q3 Earnings Beat on Higher Revenues, Costs Up
Lazard Ltd (LAZ - Free Report) reported third-quarter 2021 adjusted earnings of 98 cents per share, beating the Zacks Consensus Estimate of 94 cents. The reported figure also reflects 46% year-over-year growth.
Higher revenues and growth in assets under management (AUM) favored the company. However, operating expenses witnessed a rise. Most likely due to this, shares of the company gained 6.6%, following the earnings release.
Adjusted net income in the reported quarter was $111.4 million, up 46% year over year. On a GAAP basis, Lazard’s net income came in at $107.2 million or 94 cents per share compared with the $75 million or 66 cents recorded in the prior-year quarter.
Revenues Rise, Expenses Flare Up
During the third quarter, adjusted operating revenues totaled a record $701.64 million, up 23% year over year. This upside resulted from an increase in asset management and financial advisory revenues. The reported figure also outpaced the Zacks Consensus Estimate of $830.83 million.
Adjusted operating expenses came in at $534.2 million in the quarter, up 20% year over year. Higher compensation and benefits as well as non-compensation expense resulted in this upsurge.
Adjusted compensation and benefits expenses rose 22% on a year-over-year basis to $417.5 million. Adjusted non-compensation expenses for the quarter were $116.7 million, up 13% year over year.
The ratio of compensation expenses to operating revenues was 59.5%, down from the year-earlier quarter’s 60%. The ratio of non-compensation expenses to operating revenues was 16.6% compared with the year-ago quarter’s 18.1%.
The company affirmed its annual targets of an adjusted non-compensation expense-to-revenue ratio between 16% and 20%, while the compensation-to-operating revenue ratio target is in the mid-to-high 50 percentage range.
Segment Performance
Financial Advisory: The segment’s adjusted revenues were $381.3 million, up 24% from the year-earlier quarter.
Asset Management: The segment’s adjusted revenues were $310.6 million, up 19% from the prior-year quarter.
Corporate: The segment generated $9.8 million adjusted revenues, up substantially from the prior-year quarter.
Growing AUM
As of Sep 30, 2021, AUM was recorded at $272.6 billion, up 5.4% from the prior-year quarter. The quarter witnessed a market depreciation and foreign-exchange depreciation of $2.5 billion and net outflows of $2.3 billion.
Average AUM came in at $277.9 billion, up 23% year over year.
Deteriorating Balance Sheet
Lazard’s cash and cash equivalents totaled $1.18 billion as of Sep 30, 2021, compared with $1.39 billion as of Dec 31, 2020. The company’s stockholders’ equity was $977.7 million compared with $999.4 million as of Dec 31, 2020.
Steady Capital-Deployment Activity
In the third quarter, Lazard repurchased 1.1 million shares at an average cost of $46.01 per share and paid out dividends of $49 million. As of the third-quarter end, the company had $314 million remaining in its share-repurchase authorization.
Our Viewpoint
Results reflect Lazard’s impressive performance during the September-end quarter. Although diverse footprint, steady capital-deployment activities and revenue growth position the company favorably for the long haul; macro headwinds, elevated expenses and overall outflows are straining its financials.
Lazard Ltd Price, Consensus and EPS Surprise
Lazard Ltd price-consensus-eps-surprise-chart | Lazard Ltd Quote
Currently, Lazard carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2021 adjusted earnings of $10.95 per share outpaced the Zacks Consensus Estimate of $9.63. The figure reflects a rise of 18.8% from the year-ago quarter’s number.
Blackstone’s (BX - Free Report) distributable earnings of $1.28 per share comfortably surpassed the Zacks Consensus Estimate of 93 cents for the July-September quarter. The figure reflects a significant rise from 63 cents recorded in the prior-year quarter.
SEI Investments Co.’s (SEIC - Free Report) earnings of 97 cents per share came in line with the Zacks Consensus Estimate for the September-end quarter. The bottom line reflected 29% growth from the prior-year quarter.